robbo203
26th November 2011, 11:15
InterewInter
Interesting article in the Canadian socialist journal, Imagine
http://www.worldsocialism.org/canada/imagine.201109.fall.pdf (http://www.worldsocialism.org/canada/imagine.201109.fall.pdf)
+++++++++++++++++++++++++++++++
Security and Prosperity - An Unlikely Duo
A few years back, Japan was looked upon, by
apologists for capitalism, as a perfect capitalist
success story. Then, it was second only to the US in
industrial production with a high standard of living,
low unemployment, and a guarantee of a job for life with some
companies. “Look,” they said, “Capitalism really works, the
Japanese have proved it.
Now there is trouble in Paradise. Corporations are holding back
on investments, banks are reluctant to loan, jobs are vanishing,
companies are cutting back on spending and delaying expansion
plans, According to Richard Koo, chief economist at Nomura
Securities, “ Millions of individuals and companies see their
balance sheets going under water, so they are using their cash to
pay down debt instead of borrowing and spending.” (The New
York Times, Oct 24, 2010). Recently, Japan’s $(US)1.4 trillion
pension fund called on the government to rein in its massive $10
trillion debt as further downgrading of its credit rating could
result in measures seen in Greece – higher taxes, lower pensions
and lower social expenditures. All this is a far cry from the 1980s
when Japanese companies seemed poised to oust American ones
from auto and computer markets. For a time, they dominated the
business world, buying up Hollywood studios and lucrative real
estate.
Today, Japan’s economy is where it was in 1991, a gross
domestic product of $5.7 trillion, whereas, in the same period,
the US doubled in size to $14.7 trillion. Economists said
deflation is pushing companies and individuals to survive by
cutting costs and selling what they owned, instead of buying new
goods and investing. Shumpei Takemore, an economist at Kieo
University in Tokyo, said it best, “ Deflation destroys the
risk-taking that capitalist economies need in order to grow.”
(Toronto Star, Oct 24, 2010). Nor does the future look brighter,
with a shrinking population and rising rates of poverty and
suicide.
All this has created a downward trend of deflation, which has
sapped the confidence of most of the population, particularly the
young. They refuse to buy expensive products, like cars and TV
sets, preferring to save their money for when it may increase in
value. A typical example being Yukari Higaki, a young single
woman, employed part-time in a furniture store, who buys
clothes at discount stores, makes her own lunches, and doesn’t
travel abroad. She says that she and her peers are in a defensive
crouch ready for the worst.
One may naturally wonder why an economy, which was doing so
well, has taken such a fall, and the answer is very simple –
competition. The last twenty years have seen the rise of China,
India, and South Korea competing for their share of global
markets. If one power is doing well, it means another isn’t.
If this proves anything, it proves that, within capitalism,
prosperity is fleeting and therefore security is an illusion. In the
1960s, when the economy was buoyant in North America, this
writer was often asked, “Why do you want socialism, there’s
jobs for all who want them and the standard of living is so high?”
As if that’s all there was to it and as if it would last forever. The
expansion and contraction of markets means that prosperity is
temporary and comes with great disillusion, disappointment, and
demoralization for all who think it will last.
The working class in Japan has made the same mistake that the
working class has made everywhere. They have, under the
disguise of patriotism, identified their interests with those of the
Japanese capitalist class and are now paying dearly for it. A
country (and all countries are the same in this respect) is a means
whereby a minority of the population, those who own the tools of
production, live well at the expense of the majority, who own
only their ability to work for wages or salaries. “Produce for the
good of your country” really means, “Produce for the good of
your employer”.
The working class everywhere has no country; a worker in Japan
has more in common with a worker as far away as South Africa
than with a capitalist in Japan. The sooner the workers all over
the world realize this, the sooner we’ll have socialism.
Since the above was written, Japan has been hit with the triple
whammy of an earthquake, a tsunami, and a nuclear meltdown.
Furthermore, since March 11th there have been five hundred
aftershocks of 5.0 magnitude or more in northeastern Japan.
Of course, a sane person would wonder why something as
potentially dangerous to a population as a nuclear plant would be
built in a region so obviously prone to earthquakes, if such a
power were to be used at all. A sane society would have chosen a
different path, but, with capitalism, we are not dealing with
sanity.
Yet again, the true nature of the severity of the damage to the
nuclear reactors was revealed only very slowly leading us to
believe that the private company that owned the plant was
withholding valuable information in the hope that the damage
and risks could be minimized.
Ironically, bad as the situation is, some are viewing the tragedy
as a way of kick-starting the Japanese economy and the solution
to the problems related above. CIBC’s chief economist, Peter
Buchanan, said, “But the people of Japan are very resilient.
Every effort will be made to rebuild and companies are good at
managing supply chain operations.” (Toronto Star, April 15).
Davis Malpass, who heads the economic research firm, Encima
Global, said in the same issue, “A lot of Japan’s wealth was
destroyed but its ability to produce new wealth has increased.
Rebuilding the energy infrastructure will add to the GDP in spite
of the losses.” In other words, Japan will be a good investment
again just as after the WWII, some economies took off with the
rebuilding of the massive war destruction. The United States
emerged from the war with $26 billion worth of new factories
and $140 billion in savings and government bonds to invest.
Obviously, curing the boom and bust cycle in capitalism is easy,
just destroy everything in sight and start again! It is a terrible
indictment of capitalism that people have to experience such
losses with its attendant misery for the economy
Interesting article in the Canadian socialist journal, Imagine
http://www.worldsocialism.org/canada/imagine.201109.fall.pdf (http://www.worldsocialism.org/canada/imagine.201109.fall.pdf)
+++++++++++++++++++++++++++++++
Security and Prosperity - An Unlikely Duo
A few years back, Japan was looked upon, by
apologists for capitalism, as a perfect capitalist
success story. Then, it was second only to the US in
industrial production with a high standard of living,
low unemployment, and a guarantee of a job for life with some
companies. “Look,” they said, “Capitalism really works, the
Japanese have proved it.
Now there is trouble in Paradise. Corporations are holding back
on investments, banks are reluctant to loan, jobs are vanishing,
companies are cutting back on spending and delaying expansion
plans, According to Richard Koo, chief economist at Nomura
Securities, “ Millions of individuals and companies see their
balance sheets going under water, so they are using their cash to
pay down debt instead of borrowing and spending.” (The New
York Times, Oct 24, 2010). Recently, Japan’s $(US)1.4 trillion
pension fund called on the government to rein in its massive $10
trillion debt as further downgrading of its credit rating could
result in measures seen in Greece – higher taxes, lower pensions
and lower social expenditures. All this is a far cry from the 1980s
when Japanese companies seemed poised to oust American ones
from auto and computer markets. For a time, they dominated the
business world, buying up Hollywood studios and lucrative real
estate.
Today, Japan’s economy is where it was in 1991, a gross
domestic product of $5.7 trillion, whereas, in the same period,
the US doubled in size to $14.7 trillion. Economists said
deflation is pushing companies and individuals to survive by
cutting costs and selling what they owned, instead of buying new
goods and investing. Shumpei Takemore, an economist at Kieo
University in Tokyo, said it best, “ Deflation destroys the
risk-taking that capitalist economies need in order to grow.”
(Toronto Star, Oct 24, 2010). Nor does the future look brighter,
with a shrinking population and rising rates of poverty and
suicide.
All this has created a downward trend of deflation, which has
sapped the confidence of most of the population, particularly the
young. They refuse to buy expensive products, like cars and TV
sets, preferring to save their money for when it may increase in
value. A typical example being Yukari Higaki, a young single
woman, employed part-time in a furniture store, who buys
clothes at discount stores, makes her own lunches, and doesn’t
travel abroad. She says that she and her peers are in a defensive
crouch ready for the worst.
One may naturally wonder why an economy, which was doing so
well, has taken such a fall, and the answer is very simple –
competition. The last twenty years have seen the rise of China,
India, and South Korea competing for their share of global
markets. If one power is doing well, it means another isn’t.
If this proves anything, it proves that, within capitalism,
prosperity is fleeting and therefore security is an illusion. In the
1960s, when the economy was buoyant in North America, this
writer was often asked, “Why do you want socialism, there’s
jobs for all who want them and the standard of living is so high?”
As if that’s all there was to it and as if it would last forever. The
expansion and contraction of markets means that prosperity is
temporary and comes with great disillusion, disappointment, and
demoralization for all who think it will last.
The working class in Japan has made the same mistake that the
working class has made everywhere. They have, under the
disguise of patriotism, identified their interests with those of the
Japanese capitalist class and are now paying dearly for it. A
country (and all countries are the same in this respect) is a means
whereby a minority of the population, those who own the tools of
production, live well at the expense of the majority, who own
only their ability to work for wages or salaries. “Produce for the
good of your country” really means, “Produce for the good of
your employer”.
The working class everywhere has no country; a worker in Japan
has more in common with a worker as far away as South Africa
than with a capitalist in Japan. The sooner the workers all over
the world realize this, the sooner we’ll have socialism.
Since the above was written, Japan has been hit with the triple
whammy of an earthquake, a tsunami, and a nuclear meltdown.
Furthermore, since March 11th there have been five hundred
aftershocks of 5.0 magnitude or more in northeastern Japan.
Of course, a sane person would wonder why something as
potentially dangerous to a population as a nuclear plant would be
built in a region so obviously prone to earthquakes, if such a
power were to be used at all. A sane society would have chosen a
different path, but, with capitalism, we are not dealing with
sanity.
Yet again, the true nature of the severity of the damage to the
nuclear reactors was revealed only very slowly leading us to
believe that the private company that owned the plant was
withholding valuable information in the hope that the damage
and risks could be minimized.
Ironically, bad as the situation is, some are viewing the tragedy
as a way of kick-starting the Japanese economy and the solution
to the problems related above. CIBC’s chief economist, Peter
Buchanan, said, “But the people of Japan are very resilient.
Every effort will be made to rebuild and companies are good at
managing supply chain operations.” (Toronto Star, April 15).
Davis Malpass, who heads the economic research firm, Encima
Global, said in the same issue, “A lot of Japan’s wealth was
destroyed but its ability to produce new wealth has increased.
Rebuilding the energy infrastructure will add to the GDP in spite
of the losses.” In other words, Japan will be a good investment
again just as after the WWII, some economies took off with the
rebuilding of the massive war destruction. The United States
emerged from the war with $26 billion worth of new factories
and $140 billion in savings and government bonds to invest.
Obviously, curing the boom and bust cycle in capitalism is easy,
just destroy everything in sight and start again! It is a terrible
indictment of capitalism that people have to experience such
losses with its attendant misery for the economy