ECONOMIC RECOVERY FOR WHOM?

ECONOMIC RECOVERY FOR WHOM?

from Truth-out.org, 3/7/12. by Richard D. Wolff

http://brechtforum.org/economywatch/economic-recovery-whom

We expect ever-grosser competitive lying from the presidential primary candidates. We should expect no less from the media "analysts," politicians and academics competing for big business favors. With those expectations, we might be less disappointed by what we get.

These days, the hype about "economic recovery" is intense. Obama pitches it as a reason to reward him with campaign donations and votes. The money should flow in from the business community that wants badly to hide the fact that recovery has - from the beginning of this crisis - been only for them at the expense of recovery for everyone else. They need a president who hypes "recovery" as if it's about helping everyone in some general or "fair" way. The votes should come, Obama's team calculates, because average people are becoming increasingly desperate. They want someone in power who might help them even just a bit.

The Republicans had planned to use the economy against Obama (as he did against them in 2008). The recovery hype drove them to emphasize instead contraception, religion and the ever-popular Iran-bashing. By abandoning their attacks on "Obama's bad economy," Republicans leave the field to those hyping recovery.

The major media take their cues from politicians and their orders from the mega-corporations that own them. Mainstream academics, lowest on the public relations hype totem pole, celebrate recovery, too. Then they remember that they are supposed to be independent thinkers, so they find something about "the recovery" to "debate." That turns out to be, yet again, whether government interventions help or hinder economic recovery. In reality, big business leaders and the top politicians they control collaborate ever more closely for their mutual benefit. To mainstream academics falls the public relations task of pretending that big business and the government are adversaries.

However convenient to some, to speak of economic recovery today is false. There is no general improvement in economic conditions, let alone the sustained, self-reinforcing economic upturn that the word "recovery" is supposed to mean. Here is what we know early in March, 2012. The "good" news is about unemployment (slowly declining for a few months), retail sales (slowly rising) and especially sales of automobiles (rising quickly). It is also about corporate profits (high) and General Motors' (GM) profits (record high). Finally, the stock market had a nice upturn over recent months as well. That's pretty much it for the good news.

Here's the "bad" news.

Housing prices are falling again (their much-hyped "recovery" earlier during the crisis turned out to be false). Manufacturing was down in the latest reports, while consumer spending and construction spending were flat. Consumer debt is rising again. The largest city bankruptcy in US history has been announced for Stockton, California (population: 300,000). State and city services across the country continue to be cut. Real wages and job benefits keep trending down.

A closer look at the good news raises even more doubt about "recovery" than the bad news does.

Let's focus on those robust car sales and the hiring back of some laid-off auto-workers. Consider just two facts. First, the average age of cars on the roads in the US today is 10.8 years, making them the oldest fleet since the records began many years ago. People are not buying cars because they can afford them. Rather, their old cars now cost too much to repair too often. What they borrow to spend on car replacement now will require spending less on everything else in the months ahead. Second, hiring more auto-workers will have a much smaller impact on the US economy than rehiring used to. That is because the auto-industry bailout deal with the unions allows GM, for example, to hire "new" workers at $16 per hour, half of what they used to pay for the exact same jobs.

Looking closer at high corporate profits shows that they come more than ever from overseas activities of US corporations. Indeed, the country's sad condition and worse prospects are why so many US corporations place their hopes and investments outside the US.

The truth about "economic recovery" is that, for the mass of people, it is untrue. For the top 10 percent and especially the top 1 percent - those who brought global capitalism into crisis in 2007 - recovery has been real. They got the huge bailouts from Bush and Obama. They got the trillions in government loans at low interest that they then lent back to the government at higher interest rates (so much for how profits are capitalists' rewards for "taking risks"). To pay for its expensive bailouts (hyped as "stimulus plans"), the US government chose NOT to tax big businesses and their rich executives. Doing that, we were told by business and government alike, might "hamper the recovery."

So, the government borrowed trillions to "fund the recovery." And from whom? From the same banks, insurance companies, large corporations and rich executives whom the government had bailed out and NOT taxed. When those creditors began to worry that the US government's debt was becoming too high to sustain, they demanded that government cut back public services and use the money instead to pay interest and principal back to those creditors. And so it does.

"Recovery" is a recurring hype for a grotesquely unjust economic system. It is dusted off and reused whenever possible to cover the basic policy shared by both major parties in the US during major capitalist crises: help those at the top so maybe it will "trickle down" to everyone else. "Recovery" is the go-to word when business and government impose conditions to make the US more profitable especially for big business. Those conditions now include declining real wages, job benefits and public services for most Americans. They also include the huge numbers of personal and small business bankruptcies that cheapen the costs of second-hand equipment; empty office and retail space; and professionals (accountants, lawyers etc.) desperate for work.

"Recovery," in this capitalist economy, refers to profits, not to people.

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Richard D. Wolff is Professor of Economics Emeritus, University of Massachusetts, Amherst where he taught economics from 1973 to 2008.