Is America approaching a tipping point?
Unemployment is at 9.1%. More than 14 million Americans are without a job. At the same time, corporations sit on $2.5 trillion in cash.
There’s so much cash out there that a recent Wall Street Journal article reported that Bank of New York Mellon, instead of paying out interest, was set to start charging companies a fee for any new deposits in excess of $50 million.
This is outrageous and perverted. These companies are in essence committing economic sabotage.
If these companies care about America, why won’t they use some of these super surplus dollars to revive the economy by creating jobs? Why not seed a reconstruction and recovery bank independently or with the government?
Meanwhile, wealth continues to be concentrated in an ever smaller segment of the population. Last year, the top 20% of Americans earned about 50% of the nation’s income, while the roughly 15% living below poverty earned 3.4%. The top 1% of Americans account for 24% of all income.
Special catastrophes require extraordinary measures. When Europe’s economy was destroyed after World War II, the Marshall Plan program and lending by the International Bank for Reconstruction and Development, commonly known as The World Bank, helped spur recovery.
The U.S. economy may have reached a Marshall Plan moment. The $780 billion Stimulus averted a depression when the economy was shedding more than 700,000 jobs a month. The huge boulder that had been rolling downhill and demolishing the economy was halted midway; and the slow but steady up-climb started.
The recovery stalled midway. There are legitimate fears the boulder may start rolling downwards again. From 9.1% unemployment, we could see 9.5% and beyond, even as new job creation are outstripped by newly unemployed and new entrances into the job market. Europe’s tottering economies –and the ill-advised colonial misadventure in Libya– adds even more pressure on the U.S. recovery.
Of course the Republican Party, and its extreme Right wing-nuts, the Tea Party, don’t really mind. Anything that makes President Barack Obama look bad is good as far as that alliance is concerned. The alliance is not concerned about the overall impact of economic collapse on Americans; the Tea Party was willing, and is still willing to see the U.S. default on its bills. The alliance has drawn the line on the sand and won’t allow additional Stimulus monies or job creation programs that involves new revenues.
The U.S. government is handcuffed. Republicans continue to preach redneck economics, advocating massive public spending cuts, accompanied by tax cuts for the rich claiming that tax cuts to the very rich will spur job creation. In fact it’s the workers and low income wage earners whose spending spurs growth not the rich’s.
Yet, since millions remain unemployed, consumer spending is diminished and economic “growth” stymied.
At the same time, private corporations, most of who have made record profits, won’t pick up the slack. They have found that they can milk more labor out of employees without increasing he work force –and payroll. They also continue to relocate production abroad in low wage countries with no union protections.
Meanwhile, millions of Americans continue to be unemployed. Companies have no incentive to create jobs. Why pinch into their own profit margins when they aren’t obligated? The national interest? Phew! These companies know of no such concept.
So if the government can’t spend money in order to create jobs –including by launching a national program for infrastructure building and repair– and corporations just won’t, what is to be done?
Will it take social upheavals for people to come to their senses? Already in some urban areas such as parts of Newark, New Jersey, unemployment among Black males reportedly exceeds 50%; this is unconscionable.
As the focus remains on “spending cuts,” meaning elimination of more social welfare programs, educational spending, and jobs, what are the unemployed expected to do?
Will these jobless people remain as mere observers as unemployment increases? What will happen as people become angrier, hungrier, more desperate, and more disillusioned?
Investors such as Warren Buffet are now begging the government to raise taxes on the very wealthy, and the wealthy; Buffet knows very well that the United States isn’t immune to the kind of upheaval and chaos the world briefly witnessed in London recently. He knows there’s sufficient combustibility that could be ignited by some random incident or incidents.
Is that what it will take for Republicans to abandon redneck economics and for corporations to invest in America?