How the bursting of the consumer bubble continues to hold the economy back

[Os Cangaceiros]

THERE is no shortage of explanations for the economy’s maddening inability to leave behind the Great Recession and start adding large numbers of jobs: The deficit is too big. The stimulus was flawed. China is overtaking us. Businesses are overregulated. Wall Street is underregulated.

But the real culprit — or at least the main one — has been hiding in plain sight. We are living through a tremendous bust. It isn’t simply a housing bust. It’s a fizzling of the great consumer bubble that was decades in the making.

etc.

http://www.nytimes.com/2011/07/17/sunday-review/17economic.html?_r=2&pagewanted=1&nl=todaysheadlines&emc=thab1

[RichardAWilson]

The problem is how economies are structured and organized (I.e. Free markets and capitalism). So-called liberal solutions haven't been working.

[Jose Gracchus]

Of course, this coming out of the Grey Lady, I cannot help but this is the ruling class informing the more educated strata that they are in for "tightening of the belt" and "sobriety" and every other cliche. Anything other than this is the malfeasance and contradiction of the rule of capital, coupled with the de rigueur NYT call for another lukewarm Keynesian reconstruction (bribe businesses who hire make-workers? really?).

[jake williams]

I wasn't that impressed by the article. A lot of what's in there seems like euphemism for giving up on American workers. "Moving towards an export-oriented economy" could mean either of two things.

One is already going on: repress American labour so much that it's competitive with the third world, allowing a whole new world of American sweatshops for American capitalists to dump their money into.

The other is to massively subsidize US industry, either through all sorts of direct subsidies which would mostly be illegal via the WTO and various trade agreements (from which the US could of course pull out, but the resulting retaliation would be bad for trade, nullifying a lot of the benefits), or through indirect subsidies, funding R&D and infrastructure. The problem with the latter is, while it's totally necessary to maintain anything like a modern industrial capitalism in the US, it's exceptionally expensive. Frankly I think the author of the article is largely incorrect in asserting that the US deficit is catastrophic, and it's not inconceivable that the US could free up a lot of money by slightly taxing the only people left in the country with any left, and slicing defence spending, but the author barely mentions this.

So it really seems like he's just building up the propaganda for a wholesale attack on the US working class. I think the obsession with America's social democrats with Keynesianism is misguided, but the situation is such that attacks on a "consumer-oriented economy" are attacks on labour's assertions that workers should have high wages for the health of capitalism. I know that capitalists don't really benefit in the long run from high wages, and that capitalists realize this, but that doesn't mean we should join the cheerleading for the collapse of American wages.

[Os Cangaceiros]

^cutting defense spending goes over like a fart in a church pew when it comes to the US Congress.

On the other hand, cutting things like Medicare and Social Security (which make up the lionshare of social expendetures) is political suicide.

I predict a lot of hand-wringing and whining about "entitlements", as well as a continued assault against benefits and the proles in general. These things won't bring the debt down, though. Driving down labor costs to the level of Bangladesh may be a fantasy for some, but it's going to remain a fantasy. Same with withdrawing from international institutions like the IMF, WTO etc...that may be a dream of some of the more extreme fiscal conservatives, the Ron Pauls and such, but those people don't have a snowflake's chance in hell of attaining federal or real legislative power.