Stock Bubble, Housing Bubble and now ... We're Seeing a Growing Poverty Bubble
I look at the rich and the politicians they've managed to put in office, and my first thought is that they know exactly what they're doing -- business profits are up, taxes for corporations and the wealthy are being cut at the state level, a high level of unemployment seems to be the new normal -- but then I think: What do the economic elite do when something's working for them? Recent history tells us that they keep doing it until everything blows up, and then they get bailed out while we clean up the mess from the burst bubble.
So is that what this is? A class-warfare bubble? An economic-inequality bubble? But if so, what happens when this one blows up? And how will it blow up? And if the whole point of the bubble is to impoverish the middle class, how is the middle class going to clean it up after it bursts?
We know that this is what right-wing politicians and the rich want, obviously. Today, Paul Krugman writes about Republican economic thinking:
... Two weeks ago, Republican staff at the Congressional Joint Economic Committee released a report, "Spend Less, Owe Less, Grow the Economy," that argued that slashing government spending and employment in the face of a deeply depressed economy would actually create jobs.
Here's the report's explanation of how layoffs would create jobs: "A smaller government work force increases the available supply of educated, skilled workers for private firms, thus lowering labor costs." Dropping the euphemisms, what this says is that by increasing unemployment, particularly of "educated, skilled workers" -- in case you’re wondering, that mainly means schoolteachers -- we can drive down wages, which would encourage hiring....
So firing a bunch of people, while forcing down wages for those who remain employed, is good for the economy. Now, I don't understand how putting a lot less money in ordinary people's pockets is supposed to be good for an economy that's two-thirds consumer spending -- it's hard to sustain consumer spending when, as consumers, you have far less to spend -- but, hey, I'm not a Republican.
Elsewhere in Krugman's newspaper, I see that the new jobs we're adding to the economy are simply unable to keep people in the middle class:
... many of the jobs being added in retail, hospitality and home health care, to name a few categories, are unlikely to pay enough for workers to cover the cost of fundamentals like housing, utilities, food, health care, transportation and, in the case of working parents, child care.
A ... report being released Friday tries to go beyond traditional measurements like the poverty line and minimum wage to show what people need to earn to achieve a basic standard of living.
... According to the report, a single worker needs an income of $30,012 a year -- or just above $14 an hour -- to cover basic expenses and save for retirement and emergencies.
... for those who do get jobs, it may be hard to live without public services, say nonprofit groups that assist low-income workers....
But, of course, as our businesspeople create jobs that don't create a decent standard of living in the absence of government assistance, those same businesspeople are (successfully) backing politicians who want to make big cuts in that government assistance. So ordinary Americans are getting shafted by employers and the government.
And then there's this from USA Today:
The heads of the nation’s top companies got the biggest raises in recent memory last year after taking a hiatus during the recession.
At a time most employees can barely remember their last substantial raise, median CEO pay jumped 27% in 2010 as the executives’ compensation started working its way back to prerecession levels, a USA TODAY analysis of data from GovernanceMetrics International found. Workers in private industry, meanwhile, saw their compensation grow just 2.1% in the 12 months ended December 2010, says the Bureau of Labor Statistics....
My belief is that, following the classic bubble pattern, rich people and right-wing politicians are going to impoverish the middle class until we snap. But what will that snapping be like? I'd like to think we'll develop class consciousness and turn on the fat cats, but I think it's just as likely we'll turn to American fascism. I think it's likely that Europeans will turn to racism, with Muslims as the new evil Others. (We'll do that too in America, with Muslims, Mexicans, and blacks. Our fascists will probably also target unarmed coastal liberals.)
I just don't think the plutocrats are ever capable of saying they've had enough of doing anything that's making them money -- and destroying the middle class is what's making them money right now. But if they leave us all poor, who's going to bail them out when this inducing-inequality bubble bursts? And are we going to burn down the country -- or kill one another -- when we don't see any other alternative?