State of the "Recovery"

Brenner, Robert; et. al

Publisher:  Against the Current
Date Written:  01/03/2014
Year Published:  2014  
Resource Type:  Article
Cx Number:  CX20376

The editors provide an overview of current issues in American politics, such as the debate over minimum wage, Wall Street, immigration reform, the Trans Pacific Partnership and the need for economic recovery.



What's been half-hidden is how much of the U.S. recovery, particularly the massive rise in corporate profits, has actually been predicated on smashing wage levels to the floor, and keeping them there. At this point, a $15 minimum wage would mean a raise not only for low-paid fast food and service workers, but for many contract (essentially sub-"second-tier") unionized auto workers! President Obama promises "executive action" to create some new retirement savings program for workers to replace disappearing company pensions, but where are struggling families supposed to get the money to put aside?

The contradictory reality now worrying much of the financial press is that such levels of inequality, wage stagnation and longterm unemployment, and the horrible job market and crushing debt facing young people today, have become a drag on the capitalist recovery -- i.e. the recovery of profits -- that these conditions helped produce. The combined effects of crumbling unions and savage attacks on wages and social safety nets; the multi-trillion-dollar bailout of Wall Street; incredibly low interest rates that pushed investors into Treasury bonds and the stock market; all have enriched the affluent and sustained profits, but at the expense of severely suppressing aggregate demand on which "the real economy" ultimately depends.

That's part of the reason that job levels haven't returned to their high point in 2007 prior to the crash.

Over the course of 2013, the U.S. stock market notoriously rose by 20%. In early 2014, when the Federal Reserve hinted it would just begin "tapering off" its monthly $85 billion bond purchases (the "quantitative easing" program that keeps interest rates near zero), the market began "correcting" or "tanking" -- depending on which term you prefer -- with the Dow dropping around 1000 from the mid-16,000s high point. Let's be clear that this doesn't mean a 2008-style market collapse or new Great Recession is about to happen, but it’s a symptom of deep uncertainty.

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