By Cliff Montgomery – Nov. 5th, 2010
“If the news outlets were actually reporting, they would tell us the honest and awful truth,” writes Elizabeth Wurtzel today in The Guardian. The problem is that “the United States is a post-industrial empire in decline, like England or Belgium or worse.
“There is no next,” adds Wurtzel. “We are at next.”
Hence President Obama, Democrats and Republicans now–or soon to be–in control of our crumbling institutions “don’t need to speak truth to power,” writes Wurtzel.
“Rather, they need to tell the truth to the weak. They need to tell [Americans] that their future, maybe even their present, has been outsourced.”
What Wall Street has created over the last 30 years–and what paid-for Republicans and Democrats alike have been all too happy to help them create–is an economy based on ever-increasing debt.
Wall Street is allowed to gamble as freely as it wishes, and this continual gambling is called investment.
Of course, such continual gambling must turn sour–no one gambles and wins forever.
Debt builds.
Jobs with decent wages are openly shipped overseas by business people, who pass it off as job creation right here at home.
In reality, Main Street job losses either are permanent, or low-wage service work is provided to replace better-paying employment. The result is the same: To keep what little they have, average Americans are forced to live on increased credit cards and credit lines.
But “credit” is only so for the lender. For average Americans, it’s actually debt.
Debt builds.
A strong economy creates more value for most members of any society. People must actually own more things of real value–and find themselves more wealthy–as they continue to work.
This can only be achieved by people actually building things, fixing things, and making enough money from those activities to afford their mortgage payments.
But America normally doesn’t build or fix things anymore. Such an economy can only create ever-increasing debt.
In a debt economy, money must always flow from the debtor to the lender.
Let’s employ a simple comparison to illustrate this point.
In 1950, the bottom 90 percent of income earners held 64.44 percent of the nation’s wealth. By 1980, that number had slightly moved upward, to 65.37 percent–a total increase of +0.93 percentage points.
The period from 1950 to 1980 entailed the glory years of Franklin Roosevelt’s “New Deal” policies, which helped manage an economy built on a strongly industrial and heavily unionized workforce.
But since 1980, U.S. business people–along with the politicians they own–have purposely weakened this country’s industrial and unionized base.
The result for average American citizens? In 2008, the bottom 90 percent of income earners have seen their share of U.S. economic wealth drop by 13.59 percentage points, to only 51.77 percent.
Kevin Phillips, a former White House strategist for the Nixon Administration, clearly explained the issue in his 2008 book, Bad Money: Reckless Finance, Failed Politics, And The Global Crisis Of American Capitalism.
“Over the last 30 years,” states the book cover to Bad Money, “financial services, including the ballooning debt and credit industry, have nearly doubled to a record 20 percent of the Gross Domestic Product [GDP], while manufacturing has halved to 13 percent, greatly imperiling the economy.”
Financial services have “muscled past manufacturing…to become the largest sector of the U.S. private economy,” wrote Phillips.
Thus for the first time since the glory years of the New Deal, social mobility in America has been replaced with old-fashioned class struggle.
As Wurtzel pointed out in her engaging essay, America, land of the free to be stupid, the response to the emerging class struggle isn’t always the correct one. In fact, sometimes it doesn’t even make too much sense.
In times of great struggle and necessary change, a group of reaction always appears in an attempt to freeze in time what no longer works, and what everyone else has outgrown. It is a group that has always kissed its chains and blessed its masters–and suddenly acts only because it is scared to death of losing the position of slavery it secretly adores.
But as Thomas Paine wrote in his famed treatise Common Sense, “time makes more converts than reason.”
Those who won the U.S. House in Tuesday’s election are in no position to halt events, but can only be changed by them–or utterly fail.
