Let me establish my argument so we can move forward appropriately. I am not saying that I think the USA is happily chugging along without any issues. I am simply optimistically critical of the USA.
I think the deficit is going to be a huge problem. We live in a country that continually wants more and more government support yet the majority of people are not paying taxes as it is. We cannot continue to tax only one half of the population. Either reduce deductions thereby causing people who otherwise did not pay taxes to have to pay or just increase rates for everyone.
I think the military operations have obviously been very expensive and once they are scaled back you will see an immediate savings.
The economy is a mixed picture. Blue collar workers are the ones being hit the hardest. Educated workers have a much easier time. The age of unskilled manufacturing is done with in the USA. This is perfectly fine, a natural progression. Unskilled manufacturing is best suited for countries without the resources to educate the masses. We do not (in theory) fall into this category. In fact there is a demand for skilled manufacturing, something that is not as easily transferred overseas.
The educational system in this country is in trouble. We fact a unique problem because of the diversity inherent here.
With that said I still think we have the power to either improve or decline. The decision and fate is on our hands. China has and will continue to grow much faster than the world as a whole. They have over 1 billion Chinese who aspire for American middle class. You are seeing now the increase in wages demanded, the demand for white goods, the aging of their country.
The USA is still extremely free, open and vibrant. Our unemployment has been around 10% for 3 years now (or so). How long has Europe been in double digits. Is the United States not allowed a recessions from time to time? We could adopt European style labor laws, but flexibility to hire and fire allow companies the flexibility they need. Hiring is glacial in the UK and Europe because of the impossibility of getting rid of these employees.
I will give online links where I can. Where I can't, I'll have to refer to the literature. The single most important point is to refer to a nation as an organic whole, and one which has its own trajectory of being born, rising to its supreme point, and then declining. The ancient empires -- Assyria, Egypt, Rome -- all went through this cycle. People like Toynbee and Spengler have adopted this perspective of looking at societies and civilisations as organic entities. Not saying it's necessarily right but it has a ring of plausibility and I subscribe to this mode of thought. Thus, for example, post-WW2 Britain was a very different Britain from the exuberant and dynamic Britain of a century earlier. In decline a number of superficially unrelated symptoms of malaise -- reliance on military power, increasing polarisation of income and wealth, decline of industry, decadence in fashion, manners, and education, decaying infrastructure -- start feeding on one another to create an irresistible cycle of downward decay. My central thesis is that the USA -- like earlier powers -- is now in that cycle. How fast it goes on that downward slope, to what extent it can arrest or retard that decline, and where that slope ultimately leads to are open questions to which I don't have the answers.
With regard to the unemployment rate, most commentators are careful to point that 9.5% is the "official" number -- i.e., a lie.
As Paul Craig Roberts points out, if the 1980 criteria were to be used, the figure would be 22%:
I will end this column on unemployment. “Our government” tells us that the unemployment rate is just under 10 percent, a figure that would have wrecked any post-Great Depression administration. But, again, “our government” is lying.
Compare this fact with the number you read from the financial press. Right now, if measured according to the methodology of 1980, the US unemployment rate is about 22%. Thus, the reported rate of unemployment hides more than half of the unemployed.
The only one upbeat about the employment picture is this pathetic figurehead of a president:
If you’ve listened to recent speeches the President has given about the economy and the Iraq war, you’d think that two of the biggest social issues facing working Americans are improving. But facts are stubborn things.
Take for example the numbers of jobs lost in the last two months: 221,000 in June, 131,000 in July.
Instead of taking the drastic measures needed to stop the continued hemorrhaging, the President had this to say on August 5th:
“Even though it's going to take years to repair all the damage caused by this recession, I am absolutely convinced that this nation is finally headed in the right direction. Our economy is growing again. We are adding jobs again [!]. America is moving forward again…”
Since Obama has access to the above job numbers, we must assume that he is either delusional or lying. We also cannot attribute this comment to a one-time slip of the tongue, because Obama has essentially made the same speech several times while promoting Democratic candidates nationwide.
Contrary to his recent statements, Obama has not improved the economy. He has overseen a catastrophic destruction of jobs on a state-by-state basis, in part due to state budget crises and the pathetic lack of response on the national level: Obama’s first stimulus was under-funded and misdirected (too much emphasis on tax cuts for businesses, etc.), while Obama’s recent “stimulus”— only $26 billion — is simply farce.
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It's not only blue-collar workers being affected. It is across the board. Skilled workers have not escaped unscathed as manufacturing has left American shores. The emphasis on education and training -- a false panacea -- comes from mendacious Judas politicians who for their thirty pieces of silver have sold out the population to entrenched financial interests who don't look further than the ratios on financial statements.
Conditions in the United States are now so dire that Indian call centres are now stepping up shop on American shores:
An article published in Wednesday’s Financial Times under the headline “US Matches Indian Call Centre Costs” gives some indication of the impact on American workers of a coordinated and escalating wage-cutting drive by big business, backed by the Obama administration.
The article begins: “Call centre workers are becoming as cheap to hire in the US as they are in India, according to the head of the country’s largest business process outsourcing company. High unemployment levels have driven down wages for some low-skilled outsourcing services in some parts of the US, particularly among the Hispanic population.”
According to the article, a number of Indian outsourcing firms are shifting operations to the US to take advantage of low labor costs, a reversal from the 1990s when many call centers and software firms shuttered American operations to exploit educated but low-paid workers in India.
“We need to be very aware as people [in the US] are open to working at home and working at lower salaries than they were used to,” commented Pramod Bhasin, CEO of Indian firm Genpact. The company, which already outsources work to Chicago, Pennsylvania, Tennessee and New York, intends to triple the size of its US workforce over the next year.
The Financial Times article is a stark indication that the corporate-government campaign to narrow the wage differential between American workers and super-exploited workers in Asia and other “emerging economies” is meeting with considerable success. The breakdown of American and world capitalism is being utilized by the ruling class to carry through a drastic and permanent reduction in American workers’ wages and living standards and raise the level of exploitation.
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The US is a militarised state. Important to keep in mind that the twin engines of postwar growth were suburbanisation and military build-up. The Truman administration was apprehensive that the Depression would rear its ugly head again after the was was over, and so began a process of military Keynesianism that has just grown worse over the decades. Again, it's part and parcel of a process of unsustainable and wasteful expenditure, tied in to a broader pattern of incipient decline.
The housing market is a mess. Well that is what happens when people look at a home like a stock and not a store of value. Imagine if the government or banks started to cool of the housing bubble. I can just imagine the outrage individuals would of had for the "evil" banks destroying the American Dream. Market went up and popped. Now we have people claiming bankruptcy, paying off debt and renting instead of buying. That has deeply hurt our economy, but I think it is an entirely sensible response.
Paucity of time on my part precludes an elaborate reply. Speculative bubbles have become an inherent part of the eviscerated US economy. Again, an inherent part of broader decline.
As far as the two part society, could you please explain to me how people are being held back from moving up? Maybe going from poor to Warren Buffet is unobtainable, but are you telling me a couple who do not have children cannot work and take college classes and eventually get a middle class job?
It's not what it used to be like a generation or two ago. There was a time when you could work your way through college, when CUNY and the various state universities throughout the land were either free or had risibly low fees. That era has gone. Furthermore, a mere degree is now no guarantee of middle-class income and status. The ante has gone up. The jobs -- such as they are -- have become more precarious. Wages have stagnated in real terms while big-ticket items like housing, medical, and education have gone up.
Is this situation unique to the US? Nope. Many of the same symptoms can be seen in Japan and Europe. Indeed, the term "precariat" (precarious + proletariat) has been coined to describe the 30-40% of the workforces in Japan, Germany, Holland and Italy that are in low-paid, semi-skilled, part-time. and seasonal work. Where are the differences? There's more of a welfare setup in Europe. If you're unemployed you get some money from the state. The state pays for retraining. Medical is usually taken care of. The common citizenry has more influence on the state. Wealth and income disparities are not so pronounced. There's a pervasive sense of insecurity in the USA; when Warren Buffett says he can't afford to retire, there's a grain of truth in his asseertion.