What Recovery?

[Cees Binkhorst]

REPLY TO: D66 at nic.surfnet.nl

Beter een half ei, dan een lege dop? Of toch maar niet?

Wat heeft D66 in het vat voor wat betreft 'redistributing the effects of slow growth', 'costs of the slowdown', 'class struggle', 'revolt from below',
'economics of inequality' en 'making themselves rich at society’s expense', zoals beschreven in de laatste paragraaf van dit onderstaande stuk?
Noot Cees: We kennen de mening van de vorige minister-president over het laatste, maar wat vindt D66 daar nou van?

En dan bedoel ik _niet_ mooie woorden, maar _vormen_van_beleid_ die het (voor de VS, maar ook van toepassing op Nederland/EU) geschetste
scenario tegengaan.

Gezien de huidige mogelijke deelname van D66 aan de regering geen onbelangrijke vragen. En waarschijnlijk voor het 'kiesvolk' heel wat
relevanter dan een 'gekozen burgemeester (nee, minister-president ... of was het nou toch burgemeester)'

Uiteraard passen 'modernisering van de economie', 'aandacht voor de kenniseconomie', 'meer samenwerking van het onderwijs en bedrijfsleven'
daar weer wel in.
Maar wat voor beleid wordt daar nou onder verstaan?

http://www.monthlyreview.org/0403editors.htm

[knip]

In the four recessions preceding that of the early 1990s, the proportion of job losers who lost their jobs permanently was about equal to those
losing them on a temporary basis. Thus workers losing their jobs permanently averaged 51 percent in the initial phase of the four recessions
prior to 1990, while in the recession of the early 1990s the percentage of those permanently laid off—increased to 70 percent. In the initial
phase of the 2001 recession the share of permanent layoffs increased even further, to 87 percent. This near disappearance of temporary layoffs
as a factor in unemployment means additional hardship for workers who are thrown out of work, and greater fear of job loss among those still
employed, putting downward pressure on wages.

[knip]

The great irony in these circumstances is that the U.S. economy is being propelled forward in the present weak recovery largely by growth in
personal consumption, even as real wages are declining. The main factor holding up consumption is borrowing on the basis of increased home
values—or a housing bubble. With the stock market and many other investment opportunities appearing unattractive, significant amounts of
money have shifted into real estate, driving up prices. The Federal Reserve, which has cut interest rates twelve times in the last two years in order
to encourage investment, has stimulated this trend. As The Economic Report of the President, 2003 acknowledged, “Housing prices... rose much
more quickly than the median household income in 2001,” which left the ratio of the prices of houses to the income of households at its highest
level in decades (p. 44). Many would-be new homeowners are unable to purchase houses selling at high prices and are faced with higher rental
prices. Meanwhile, homeowners have responded to the combination of increased home values and low interest rates by borrowing massively
against their home equity, primarily to maintain their consumption. Refinancing totaled $2.5 trillion in the last two years alone. It has been
estimated that in the third quarter of 2002, on an annualized basis, Americans drew $320 billion more out of the equity in their homes than they
reinvested in real estate. Only about 39 percent of homes in the United States are owned free and clear and the remaining homeowners are
carrying average debt burdens in excess of 80 percent of the value of their homes. This means that “many Americans have little margin of safety
should home prices level off or should they fall as much as 20%, as they did in many overheated areas in the late ’Eighties."
(Cees: hadden wij dat eind 70-er/begin 80-er jaren in Nederland?)

[knip]

For many years imports into the United States have far exceeded exports, resulting in a potentially serious problem for the U.S. economy.
During 2002, imports of goods and services rose faster than exports, resulting in a record $435 billion trade deficit ($77 billion greater than the
previous year). The U.S. current account deficit, a good part of which results from the deficit in the trade in goods and services, was about $400
billion in 2001 and will most likely come in at well over $500 billion for 2002. For over a decade, the trend has been toward increasingly larger
current account deficits.

[knip]

The Bush administration has only one answer (other than stepped-up military spending) to this entire economic quagmire: massive tax cuts for
corporations and the wealthy. Basing its approach on a supply-side theory of investment that should be absolutely discredited by now, the
administration believes that by increasing the economic surplus available to capital and redistributing income and wealth from the poor to the
rich it will open the flood gates to investment and create the conditions for a new period of rapid growth. Yet, there is currently no shortage of
investment-seeking surplus within the wealthy sectors of society. What are missing are the profitable investment opportunities for the
absorption of this surplus. The chief problem has to do with an overaccumulation of money capital together with insufficient consumer demand.
Existing trends with respect to consumption, in particular, do not portend well for those seeking to invest in new productive capacity. The
massive tax cuts now proposed by the administration will only enrich the wealthy at the expense of the greater part of the population. Taking
resources from the mass of the people, who would spend it for consumer goods, and giving them to the rich who would not, means a further
undermining of consumption. At the same time, increasing the money capital in the hands of investors will not convince them to invest unless
they consider it profitable to do so, which means that there has to be an expectation of a growth in future demand that will utilize existing
capacity and justify its expansion. Right now this is simply a bad bet from a business standpoint. Despite twelve interest-rate cuts over the last
two years, bringing the federal funds rate on overnight loans between banks down to 1.25 percent, its lowest level in forty-one years, the Federal
Reserve Board has not been able to spur investment (New York Times, March 1, 2003).

The fact that there is little inkling in establishment circles of the underlying problems facing capitalist economies is hardly surprising. Economic
experts and pundits debate endlessly about the federal government’s budgetary deficit, the current account deficit, the weakness of investment,
and the bursting of the financial bubble, without ever considering the possibility that these might be mere symptoms of an underlying disease of
stagnation. Since the prevailing wisdom is that a capitalist economy naturally tends toward high levels of investment, breakneck growth, and
economic prosperity, the idea of a tendency toward stagnation, intrinsic to a mature capitalist economy, is excluded almost by definition. To the
extent that it is recognized that the rate of growth of the U.S. economy has declined since the 1960s, this is seen as the result of an improper
government policy mix rather than a reflection of a larger tendency endemic to the modern accumulation process.

In our view, a more realistic approach becomes possible once one adopts the hypothesis that stagnation is normal for advanced capitalism. From
this perspective, it is the relatively unique periods of rapid growth such as the 1950s and 1960s that need to be explained rather than the slower
periods of growth that dominated the second half of the twentieth century and the opening years of the twenty-first century.

[knip]

What the representatives of capital do seem to be good at under these circumstances is redistributing the effects of slow growth to make sure the
costs of the slowdown fall primarily on workers and the poor (and on third world countries). Real wages are falling and at the same time drastic
cuts are being made in government in programs that benefit the underlying population. Medicare benefits are being slashed and attempts are
being made by the administration to privatize both Social Security and Medicare.

Like everything else in capitalism, this is ultimately a question of class struggle (intersecting with race and gender struggle). What is needed
most under these conditions is a revolt from below to combat the prevailing politics and economics of inequality. The specter of such a revolt is
perhaps the one thing that most worries those who are currently making themselves rich at society’s expense.

Groet,

Cees Binkhorst - cees at binkhorst.xs4all.nl

Steven Wright:
Remember that half the people you know are below average.

**********
Dit bericht is verzonden via de informele D66 discussielijst (D66 at nic.surfnet.nl).
Aanmelden: stuur een email naar LISTSERV at nic.surfnet.nl met in het tekstveld alleen: SUBSCRIBE D66
Afmelden: stuur een email naar LISTSERV at nic.surfnet.nl met in het tekstveld alleen: SIGNOFF D66
Het on-line archief is te vinden op: http://listserv.surfnet.nl/archives/d66.html
**********