Sunday, May 03, 2009

Its the Wages Stupid!




The problem with the global economy is falling consumer demand.

Consumer demand is falling because people are buying less.

People are buying less because wages have been stagnant for 30 years. Wages have not kept pace with productivity for 30 years. It is as simple as that. Everything else is just a symptom of this root problem.

People have tried to suppliment their lack of wages with debt, but debt has to be paid off with wages. In the last couple decades the debt industry has grown faster and larger than any industry ever in the history of the world. It has exploded into a multi-trillion dollar business and they are making way too much money by screwing us over with 25-30% interest rates and hidden fees to allow us to clean our house and fix our system without a fight. The entire "credit crisis" meme that the corporate media is pushing is just an attempt to prop up a failed system and avoid talking about the real issue - stagnant wages.

The entire system of globalization was based upon a model where China and India are the world's source of cheap labor and the U.S. is the world's consumer market. It was based on assumptions that America's over-consumption was a good thing and that it was going to last indefinately. The only problem with their system is that the reason American was able to be such a thriving market during the 20th century was because we had good jobs where our wages kept pace with our productivity. Then they outsourced all our good jobs, and consumer demand went into freefall. Now they are calling a "crisis" what many economists have for years called the predictable consequences of bad economic policies.

Now this morning, we read that wages are falling again, this time on purpose as a response to the "crisis", by the same people who created this situation in the first place. Cutting wages and jobs is only going to lower consumer demand even more and make the situation worse for working Americans.

This is not only about the war on the middle class, but it is also about redefining American society and our attitudes of hyper-consumerism. We need to reevaluate our lifestyles as Americans and do what is necessary to bring the amount of resouces we consume in line with our population and the rest of the planet.

At the same time, we need to change the rules of the game so that America is no longer economically defenseless. The rest of the world is screaming about how America must not practice any "protectionism" whatsoever, but think about this: When an American company exports a car to Japan, they put a 30% tariff on it, but when a Japanese company exports a car to America we only put a 2% tariff on it. We are being exploited by the rest of the world and they are desperate to stop us from doing anything to protect ourselves. We, as a country, must remember there is nothing wrong with rational tariffs and reasonable protection of our domestic industries.

We had better hurry though, because America doesn't have many domestic industries left to protect.



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