Anyone with even a passing knowledge of what the Chattering Classes are chattering about these days is aware of falling wages. Indeed, wages have been falling in the States since 1973. This trend accelerated around 2001 and then again eight or nine months ago and now seems to be constantly intensifying. This is a very important issue to which we will return.
But let’s break for a moment from the concerns of the “wringing the hands”
and “viewing with alarm” section of the wimp Left. Actual contact with working people brings to light other concerns. What folks are talking about more than falling wages is increasing exploitation and oppression. Regardless of who you might be talking with the story will be a version of how harsh management is, how long the hours are, and the additional tasks being added to the work load. On top of this is the problem of the Temp agencies and so-called part-time work of occasionally up to 60 hours per week. Working conditions are deteriorating as rapidly as wages. Also benefits are disappearing and precariousness and marginality are on the increase. However, because class-consciousness is so low in the States, the system will not be brought down by an increase in the grumbling level.
So let us then return to the issue of falling wages. The effects of falling wages were masked in the late ’90’s and early 2000’s by the apparently appreciating value of housing. Take the example of a housing unit valued at $300,000 carrying a $200,000 mortgage. If worse came to worse $100,000 could be realised. However in some mysterious way that isn’t very clear that same housing unit appreciated to $500,000. The owner, feeling the pinch of falling wages and wishing to maintain a level standard of living could re-finance upping the mortgage to $250,000 and pocket the windfall. Likewise in another mysterious value shift the property reverted to is original value of $300,000. Now the owner was reduced to $50,000 in equity. More dire scenarios are available.
Now we find this strata of workers, who have been lead to believe that they are “middle class” are increasingly distressed, beset as they are with increasing precariousness and measurably falling wages. Now car and student loans, and credit cards are also coming under pressure. A very sharp contraction in “consumer” spending is now underway, which is another way of saying that massive and widespread lay-offs are now sweeping the States. Yes, derivatives valued at several times these car and student loans and credit card debts are out there and are non-performing.
As some 19th British general remarked about wars in Afghanistan: they don’t start until they’re over. Likewise the current economic crisis. It hasn’t started yet. The system might be breaking as I write these words.
It looks like the system will snap sometime between mid-August and the end of February. The “global” capitalist system, led by those United States is about to plunge into the mother of all depressions. Massive unemployment. Dramatically collapsing living standards. This will be mush worse than the “thirties” for several reasons. At that time many folks could retreat to the farm from whence they came. Today we are incapable of fixing many of the things we have. When they break they have to be thrown out. We can’t make many of the things we use. When they break we will have to do without.
Further, in the Untied Snakes, the federal government is broke, the state governments are broke, the agencies are broke, the county governments are broke and the municipal governments are broke. Only the federal government can print money. Obviously all jurisdictions are faced with falling revenues and rising expenses. Many have rules against deficit budgets and raising taxes. Some have one restriction and some the other.
In New York State the fiscal year (FY) 2008 began on April 1st. The budget was fiction. Most likely some insiders knew that. (Stupidity is a front for the ruling class.) Reality could not be admitted and so this travesty of a budget was passed lest they spook the horses. By January 2009 the financial situation in New York will be desperate. In California FY09 begins on July 1st. Once again there are most likely insiders who understand that the budget they will bring down will not relate to reality in any meaningful way. This time next year there will be hell to pay in California. Cities will burn in the summer of ’09. Most of the major U.S. corporations, including the Auto Makers, most states, counties, municipalities and the federal government start their FY’s on October 1st. There is absolutely no way that any of their “budgets” will be enacted with a view to reflecting reality. Once again, by this time next year there will be many a bare pantry in those circles. Roads won’t be fixed. Schools, libraries, etc will close; welfare agencies will be broke, their staffs laid off.
Next year at this time millions more will be unemployed. These folks, when they lose their jobs will be deeply in debt.
The main stream media, university professors and others who are in the Ministry of Truth will continue to lie to the masses. One wonders how they will square the circle.
By: Old North