The greatest single crisis ever of capitalism, the Great Depression of the 1930s, did not have the benefit of the mountains of evidence that we have now…that The Sequestor is an Economy-Killing snake that kills by the methods of a python, not a viper.
In the over 250-year-old history of modern capitalism, the economic output of the West has consistently ticked upward, with just a few inconsistent blips from the dominant trend of growth; and in each case the culprit was exactly what some very callous, very rich, very selfish, yet quite convincing Republican snake-oil salesmen have now bestowed upon a clueless and soon-to-be-sacrificed voting public for the sake of political gain.
And it’s an historical fact that but for two self-inflicted wounds, The U.S. would have been able to spare the globe that terrible economic crisis…
- Britain dragging the U.S. kicking and screaming back to the Gold Standard and
- F.D.R. allowing his political counterparts to convince him to pull back on the stimulus that was working, and implement a recovery-killing, debt & deficit obsession-fueled austerity process.
The U.S. Has Three Huge Real-Time Irrefutable Cases-In-Point
Count them. Three perfect examples. If the economic suicide the GOP has forced on the U.S. was a case of murder, we the people could show beyond a shadow of a doubt that The Sequestor is guilty of a slow but lethal and painful death to the only economy that has been able to eek-out a recovery of ANY sort since the near economic collapse of the world economy at the end of the worst presidency in U.S. history; that being George W. Bush.
Case #1 The UK.
Granted, with all the theatrics and general bullshit going on in Washington, you might well have missed the most important political and economic news of the week: an official confirmation from the United Kingdom that austerity policies don’t work.
The UK began implementing it’s austerity program in 2010, under the theory that rampant budget deficits were destroying public confidence in the UK economy. Therefore, the reasoning goes, if the UK cleaned up their fiscal act, the economy would return to full employment.
George Osborne, the Chancellor of the Exchequer, was forced to admit that his government has failed to meet any of the series of targets it set for itself back in June of 2010, when it slashed the budgets of various government departments by up to thirty per cent. Back then, Osborne said that his austerity policies would cut his country’s budget deficit to zero within four years, enable Britain to begin relieving itself of its public debt, and generate healthy economic growth. None of these things have happened. Britain’s deficit remains stubbornly high, its people have been suffering through a double-dip recession, and many observers now expect the country to lose its “AAA” credit rating.
At every stage of the experiment, critics (myself included) warned that Osborne’s austerity policies would prove self-defeating. Any decent economics textbook will tell you that, all things being equal, cutting government spending causes the economy’s overall output to fall, tax revenues to decrease, and spending on benefits to increase. Almost invariably, the end result is slower growth (or a recession) and high budget deficits. Osborne, relying on arguments about restoring the confidence of investors and businessmen that his forebears at the U.K. Treasury used during the early nineteen-thirties against Keynes, insisted (and continues to insist) otherwise, but he has been proven wrong [Economist Joe Scarborough—can you read?].
With Republicans in Congress still intent on pursuing a strategy similar to the failed one adopted by the Brits and the Europeans, this is a story that needs trumpeting. Austerity policies are self-defeating: they cripple growth and reduce tax revenues. The only way to bring down the U.S. government’s deficit in a sustainable manner, and put the nation’s finances on a firmer footing, is to keep the economy growing. Spending cuts and tax increases can also play a role, but they need to be introduced gradually, but the GOP are either too stupid or too politically calloused to care what long-term effects this mis-guided, irresponsible, and politically-motivated plan of inaction will do to the people they are supposed to be leading.
Case #2 The Eurozone
This one should be so easy. 26% unemployment in the 12th largest economy in the world-Spain. Italy, 22% and rising. Greece-25%. Portugal-21%. France and Germany contracting and about to enter negative growth for a sufficient time to be labeled a recession.
Not a day used to go by when some loud-mouthed Republican would be denigrating the “European-style” something-or-other that “we don’t do in America!”
But by gawd we will look at the economic disintegration taking place across the 17-country Eurozone and say, “Hey! Where can I get me some of what they’re having?”
Welcome to The Sequestor. In puny little anti-government Mississippi, it was announced this week that the Natchez Trace Parkway, a 440-mile , pristine, scenic beauty of a drive from Natchez, MS in southwestern Mississippi to Nashville, TN in eastern Tennessee announced some stunning results that will be caused by The Sequestor.
Along the perfectly quaffed Parkway, trash pickups will go from three times a week to one time. Visitor’s centers that espouse the Old South and try their best to put a positive face to a still-bitter part of the country that supports an undertow of resentment that they were forced to give up their slaves and the free labor they provided which caused their now pervasive poverty, will lose two-thirds of it’s staffing, and only be open on Fridays and Saturdays. Buh-bye tourist dollars Mississippi.
And that’s just the tip of the iceberg. In Vicksburg, MS, the Corps of Engineers will lose one-third of its workforce, the Vicksburg National Military Park, another major tourist attraction, will be left without scheduled maintenance and will likely die a slow death.
Thousands of jobs will be lost…but southerners swear that “government has never created a single job!” Hogwash.
Look at the Eurozone’s unemployment caused by radical cutbacks in government spending and you will see a clear picture of how America will begin to look…slowly, yes, but surely.
Case #3 WalMart.
Yes that’s right, WalMart. Capitalism personified. The McDonalds of discount shopping and American capitalism.
Wal-Mart Stores (WMT) has been cutting staff since the recession—and pallets of merchandise are piling up in its stockrooms as shelves go unfilled. In the past five years the world’s largest retailer added 455 U.S. Walmart stores, a 13 percent increase, according to company filings in late January. In the same period its total U.S. workforce, which includes employees at its Sam’s Club warehouse stores, dropped by about 20,000, or 1.4 percent.
A thinly spread workforce has consequences: longer checkout lines, less help throughout the store, and disorganization. Last month, Walmart placed last among department and discount stores in the American Customer Satisfaction Index, the sixth year in a row the company has either tied or taken the last spot.
Retailers consider labor—usually their largest controllable expense—as an easy target for cost-cutting. That’s what happened at Home Depot (HD) in the early 2000s, when it tried to trim expenses and boost profits by cutting staff and relying more on part-time workers. Eventually customer service and satisfaction deteriorated, and sales growth at established stores fell. “When you tell retailers they have to invest in people, the typical response is, ‘It’s just too expensive,’” says Zeynep Ton, a retail researcher and associate professor of operations management at the MIT Sloan School of Management.
Today, the U.S. deficit stands at about seven per cent of G.D.P., and unemployment was last measured at 7.7%. That number will rise due to The Sequestor. Bank on it.
The British deficit is about five per cent of G.D.P. But with the U.S. growing faster than the U.K,. (or at least it was) the gap is set to close. Next year, according to the latest forecasts from the Congressional Budget Office and the O.B.R., the U.S. deficit was predicted to be considerably smaller than the U.K. deficit: four per cent of G.D.P. compared to six per cent…before The Sequestor.
You’ve seen the mess austerity has created in Europe. No need to re-state. Global demand for goods and services is at an all-time low. China is exploding with inventory and no one to sell it to. But they have to keep making stuff to keep enough of their population happy that they don’t rise up in revolt now that they’ve become accustomed to working and making decent living. But everntually, they too will suffer the consequences of foolish economic policy.
So let’s go over that one more time and just use the folks who speak the same language we speak.
Having adopted the policies of Keynes in response to a devastating recession brought on during the same Republican administration that brought us 9/11, two wars paid for with money largely stolen from the Social Security Trust Fund, a disaster with Katrina, and an economic crash that rivaled the Great Depression, the United States has grown more than twice as fast during the past three years as Britain, which adopted the economics of Hoover (and Paul Ryan).
What kind of deaf, dumb and blind must the U.S. voter be who cannot see that The Sequestor and GOP debt & deficit obsession is literally the beginning of a slow economic death staring them in the face?
Harvey A. Gold