Monday, July 6, 2009

Still no recovery in sight for workers

Still no recovery in sight for workers

By Fred Goldstein

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Bob Herbert, who is an op-ed columnist for the New York Times and also an African American, wrote in a recent piece: “There are now five unemployed workers for every job opening in the United States. The ranks of the poor are growing, welfare rolls are rising” and young male workers over a broad front “are falling into an abyss of joblessness.”

Herbert goes on to show that official unemployment, now 9.4 percent, is heading toward 10 percent at a good clip. He continues: “Economists are currently spreading the word that the recession may end sometime this year, but the unemployment rate will continue to climb. That’s not recovery. That’s mumbo jumbo.”

For the working class, employed and unemployed, truer words were never spoken.

Herbert shows that in November 2007 the officially unemployed numbered 7 million. Now the figure is about 14 million. He cites a study by the Center for Labor Market Studies at Northeastern University in Boston showing that, during this period, so-called “underutilized workers” had increased from more than 15 million to close to 30 million.

He points out that three quarters of the 6 million workers laid off in the last year were given permanent layoffs—meaning their jobs were destroyed. And he highlights the plight of young workers. Half of the 7 million job losses since November 2007 were sustained by workers under 30.

Herbert, one of the few Black voices allowed any expression by the rich-white-male-dominated New York Times, shows perplexed frustration: “Why rampant joblessness is not viewed as a crisis and approached with a sense of urgency and commitment the crisis warrants, is beyond me.”

To bosses, revival means profits

Of course, in a newspaper that is really one of the central organs of big business, it is natural that there could be no truthful discussion of this crisis. In the first place, the bosses regard this as a crisis of profits, of lost business. Uppermost in their minds and the minds of the vast majority of their economists and economic advisers is the revival of profits.

But in addition, this is a crisis of a new type. If there should be any sort of “capitalist recovery,” it will be a recovery for the capitalists, not the workers. This sort of recovery first showed itself after the 1991 downturn. It appeared again, even more strongly, after the 2000-2001 downturn in which the high-tech bubble had burst. These were the first “jobless recoveries.”

Herbert points out that the Obama administration is talking about a recovery this year—and yet, at the same time, the administration concedes that unemployment may go up to 10 percent!

The big business economists, when asked about this, mumble about the “lag” between the economic upturn and an upturn in employment. But, after the 1991 downturn, it took 18 months to get back to pre-downturn levels. After the 2001-2002 downturn, it took 27 months. During the present crisis, the drop of 7 million jobs in the 19 months of this recession is the biggest absolute decline and the largest percentage jump in the 68 years since the Great Depression ended. (Real Unemployment Rate Hits a 68-Year High, www.dollarsandsense.org)

What is behind this? There are many factors, but the most important is that this is the age of the scientific-technological revolution. The bosses are in a race to make more profits and reduce their labor costs; they do this by bringing in technology to replace workers. This shows itself in each boom-and-bust cycle.

Each new round of technology puts workers’ skills into machines. This lowers the workers’ skills required. Lower skills mean lower wages and more competition among workers. And the workers have less buying power.

At the same time the development of technology raises the productivity of labor. More goods and services are turned out in less time. With more productive labor, more commodities to sell and less buying power in society, it becomes more and more difficult for the capitalist system to start up the boom part of the boom-and-bust cycle.

It also means that it is harder and harder to bring jobs back into the economy after each bust is over.

With 30 million workers officially unemployed or underemployed—many of them discouraged from even looking for jobs or forced into part-time work— should there be an upturn in business (and that is not guaranteed at all!) massive unemployment will still remain, along with low wages.

Capitalism operates by the boom-and-bust cycle. But those cycles are changing—a lot less boom and a lot more bust, certainly as far as the workers are concerned. The bosses have more and more been relying on artificially created bubbles to revive the profit system. They increasingly rely on paper profits and speculation. This shows the sickness of the capitalist system, that it is in a stage of decline and decay.

Growth ‘based on bubbles’

This was expressed indirectly by one of the more renowned financial experts in the academic establishment, Nouriel Roubini of New York University. Roubini became a renowned figure after the present economic crisis broke out.

Prior to the crisis, in 2006, he challenged all the financial experts who said the housing bubble was no problem and would not really spill over into the economy. He predicted that the masses were overloaded with debt and that the problem was far larger than just the housing bubble. He predicted that the bubble would burst and be followed by a global economic crisis.

When he first put forward his prognosis at a conference of the International Monetary Fund, he was labeled “Dr. Doom.” Now, since the crisis he predicted in detail has materialized, he is one of the most celebrated economists on the lecture circuit.

An interview with Roubini by James Fallows, called “Dr. Doom Has Some Good News,” appeared in the April issue of the Atlantic Monthly. Toward the end of the interview, Fallows asked him about the economic future.

Roubini observed that “We have a growth model that has been based on bubbles. The only time we are growing is when there’s a big bubble. The question is, can the U.S. grow in a non-bubble way?”

When Fallows turned the question back to him, “he answered by returning to the damage caused by the boom-and-bust cycles and the need to find a different path.”

Capitalism has no “different path.” It has been following the boom-and-bust cycle since it began. Now the repetition of that cycle requires bigger and bigger bubbles which lead to bigger and bigger crises for the workers.

The bigger the crisis, the more the bosses try to push it off on the workers. Capital tries even harder to lower its labor costs as a means of restoring profits, lowering wages and replacing workers with machines. This destroys jobs, creating more poverty and more unemployment.

The working class needs a “different path,” all right. It needs a path that leads out of capitalist exploitation and production, a path out of this system where profits come before the rights and the very lives of the workers and the oppressed.

The present crisis must be fought by organizing, by international working class solidarity, by mass mobilization, by organizing the unemployed, by fighting to stop layoffs, by occupying plants before they can be shut down, by demanding the right to a good-paying job, by refusing to accept the capitalist scheme of things and, above all, by putting the rights of workers before the rights of bosses.

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