I am not a card carrying member of that dismal science, Economics, in fact I received a stunningly inflated mark of 49% for my Economics exam in HSC (Year 12). Inflation, I knew what it was, but I didn't know what it was, as in the current rate (it was about 15%). I was more the poetic type economist than the strictly scientific one. As No1 son pointed out a few years ago, almost every Nobel Prize winner for Economics has had his theory debunked not long after, so not sticking to the alleged science was probably the correct option, however it made me a failure in the eyes of the scientific examiners - sob, sob. Not.
But after reading an article by a bona fide Economic Scientist - here - damning "post modern" [sic], which is to say Keynesian, thinking, that is, the method of stimulating the economy by giving people money to spend that allegedly saved us from the Great Depression, I got to - look out everybody - thinking.
Perhaps it does take someone from outside the economics profession to state the obvious. The stimulus packages that were applied across the world, failures each and every one of them, were applied in the name of Keynes. Why, then, did these stimulus packages not work?
There is no-one further from the Economics profession than E@L, so here goes.
Is it true that people are saving and not spending? Or is that people have no money to spend? Except on the evil iPhone! (Not me, I'm off to buy a new Samsung phone, this one is three months old.) Many people are just frackin' poor. Money goes on food on rent and servicing their enormous personal debt (and staples like cigarettes and alcohol). It was the easy money offered by credit cards that fueled the personal crises of many and then up comes new, free, money for the banks from the exorbitant interest rates these people struggle to pay. This is where their money goes, not into saving. (I know people in this situation.) And they're not even reducing any of this debt as the interest rates keep slugging them back to max-out each month.
And so many have no jobs. Some can't work thanks to work-induced debilitation, or from psychological problems (I know people in these situations - we all can't be high-flying execs like E@L). Some just don't have the appropriate skill-set, inclination, intelligence (it's true), ability and personalities to work in offices, to wait tables, to flip burgers even (how many new McD's required to soak up the unemployed?) . Much of the physical work in factories and dark satanic mills have gone - well not gone, but moved overseas. Skilled labour is under threat too. In Geelong (my home town in Victoria) the other week, almost every one I saw on the street was wearing the fluoro-yellow vest of a tradie. A tradesman. Brickies, carpenters, electricians, roofies, etc.. They were the brash, loud (violent too) men of an economy that's not doing too bad despite having good unions that protect worker's rights and incomes.
But look here, in Singapore and throughout the Middle-East as well,: who are doing all these tradie jobs? The economies may be coming back after the hit of 2008/9, but It is South-Asians - Indians and Sri-Lankans - Cambodians, Vietnamese and Chinese mainlanders who are sitting on the backs of tray-trucks, or waiting for them, squatting by the road-sides next to sky-scrapers-in-progress. These exploited, these wretched-looking, desperate men who clamber up the concrete and steel without qualm, are paid much less than the previously doing-well thank you Singaporeans builders. And many of those Singaporeans, forced out by cheaper labour, are now driving taxis (which explains their skills and attitude!) And the price of the hundreds of these
Looking at the USA, it seems that low-skilled (nice pejorative term, I note - you know that show where supercilious managers struggle and fail to do the tasks of their "low-skilled" minions? Ha!) jobs went with the factories to Asia, South Asia, China and Africa. And those jobs that didn't and can't be automated go to low-paid immigrants, some illegal. And this is the corporations strategy to maximize their profits, it is not some scheme by Mexicans and others to overthrow that good ole white American frontier spirit.
Not to mention the chronic addiction to automation and robot-ization in many parts of what we used to call work. When flying QANTAS domestic, (when they are flying, and I won't go into the domestic disputes caused by that Irish Ryan-Air twit who is trying to take apart and out-source our national airline) you do your own check-in, get your own boarding pass, put the tags on your own baggage and load it onto the conveyor belt. There is no-one there. The player pianos have taken over.
And with the unemployment benefits scheme cutting out after, what is it six months (Bill Clinton if I am not mistaken), people who remain unemployed just drop off the list and don't get counted anymore.
They're shutting down the factory now,
Just when all the bills are due.
The fields are under lock and key
But the rain and sun shine through."
Leonard Cohen: Coming Back To You
Small farmers are forced off the land by mega-farms who undercut the prices so they can't make a living. Monsanto makes the rest buy hybrid seeds that are sterile and seeds for next year must be purchased not taken form stored gain from last years crop.
To me it seems obvious. Corporations are squeezing for increased profit, as this means increased share prices and this is where the real money is to be had, in the financial world, in the stock exchanges. And as everyone in the #OccupyEverywhere campaigns is showing, the huge payouts to execs are just such a blatant rubbing of shit in of the faces the middle and lower classes, it is aggravating to the tipping point of the anger and frustration, such as they are now demonstrating. Demonstrations are not just for demonstrating against things, sometimes they are just demonstrating (showing) how people feel.
The way to may increase profits is to improve workers' productivity, or to reduce the cost of labour. There is the Wal-Mart Way - just pay shit money. Of course the Waltons girls are now amongst the richest humans (if you can call them that) on earth. Productivity. Love it.
Another way to increase productivity is create ways for fewer workers do the same amount of production - shedding jobs. Automation etc.
Yet another way is make the employees work harder, duh, and increase their output, but after 30 years of this squeeze effort, can much more be done? Health issues, stress and injury, workers have to leave, can't get new employment because of this history and because of my second comment and eventually slip off the employment radar... Pusjing the limits pushes people over the top.
Fourth way: go offshore, pay Asian workers a pittance - double the daily wages of the factory workers in Shenzen and your iPhones (and Samsungs) would cost $2 more (well, maybe $2 divided by the number of products they so productively produce per day). Plus there is the benefits of not paying corporate tax at home, not that the US corporate tax could go any lower (it is half what it was under Reagan, or close, I remember reading somewhere, The Economist?). And so now we hear stories of crippling injuries and horrendous hours of work and child labour coming out of Shenzen (not to mention that pollution that drifts over Hong Kong thanks to un-policed emission standards).
We choke, they die, you have Siri.
Of course all of this is off the top my head, which is why I failed my Economics exam. However, I was (am) passionate, if not poetic, about the people affected by the decisions made by governments under the advice of economists whose theories are about to be blown away. By economists who have a fundamentally flawed view of how the world works.
I always of think of Economics in the terms of people, not of markets, not of institutions.
People are not no spending because have no money. In debt, unemployed and with an about to be repossessed house, what money? It seems much simpler to me than stimulus packages that rescue those financial people and ensure their huge payouts continue by making more and more people un- and underemployed, un- and underpaid.
An nice semi-socialist proposal - put staff and workers on the other side of the economic equation:
"We might note that while employees and the community are left to the protection of the invisible hand, wealth is protected by the visible hand of government and corporations."
Marjorie Kelly - The Divine Right Of Capital
Ah, it's not what I know, it's what I feel.
[Shit, I think my revisions here have made my arguments even weaker and more confused - as if that were possible.]