I just heard on the news that the 3rd Al Queda biggie was killed, giving the U.S. the edge on that murky shapeless war on terror we have been officially waging since 2001.
While I am happy to hear these news, I think that even we were to win the 4 wars (1.this “war on terror”; 2. in Afghanistan; 3. in Iraq; 4. in Lybia), we’ve been waging since the fateful 2001 (and I am not counting the “war on drugs”), we are heading to lose our way of life.
It’s not the democracy I am worried about here, but material comfort and relative peace on the streets (outside of occasional shootings and muggings).
It appears that there has been another war waging, and it is on American economy.
It’s beginnings are murky. But I would trace it as far back as Reagan’s Administration, that first began an unofficial war on unions. Unions make labor-intensive manufacturing very expensive and eat into profits of investors.
Well, nobody likes unions (except for unions’ bosses), so what’s the big deal?
The big deal is that everybody likes the middle class.
The middle class is as essential to any economy, as an engine to a car. Without it, economy is dead.
Even if we were to end up with a few thousands of super rich dudes, while the rest of us would struggle to survive (i.e. the middle class would disappear completely), all the many billions of these super rich would not create the job growth a multi-million population requires. They would invest into emerging markets, not the dying ones.
Why would they create a factory of any kind in the U.S., where people are struggling to stretch a dollar to pay rent, bills and buy groceries and their discretional income is so tight that all they can afford is cheap Chinese goods in Walmart, when these super rich investors can build a factory in Brazil, or India, or same China, where people are eager to spend their increasing earnings?
By the way, is not it one of the main reasons, that the numbers of unemployed right now stay where they are despite us giving continuous tax breaks to these super rich?
Yes, the second attack on American economy began during the prosperous 1990s, when Clinton Administration signed away any kind of protection of American labor force, and internet was born (internet makes outsourcing a breeze).
Suddenly, American labor force had to compete with the labor force of other countries, and American people could no longer ask for wage increase, because the majority of the world’s labor force was so much cheaper and just as good.
It took about 10 years for Americans to notice that their incomes were stagnating while their bills grew. They kept waiting for their personal prosperity to come, while changing jobs, professions and investing into 401K and increasingly expensive real estate.
But Clinton Administration also approved the deregulation of financial markets.
Suddenly, the credit was so cheap and so available, that the American people have not noticed that their actual discretional income was dwindling to nothing.
Why worry, if one could still buy a McMansion, and buy even more stuff by turning the McMansion into an ATM machine?
Yes, 1990s were prosperous. The economy was booming as people were eager consumers. The problem was that everything was bought on credit rather then with actual money.
Everyone was expecting the actual income to catch up, as it used to.
But it did not, because so many jobs have either left the country or paid as much as in other (read CHEAPER) countries.
Eventually, the credit bubble had to burst, and it did in 2008.
If the federal government did not pump money into the banks that lost the money by lending it to population so indiscriminately, The economy would have simply collapse like it did in Argentina in 1990s.
Americans were saved, although suddenly they came face to face with their economic reality and realized they were so much poorer than a decade ago.
So many of them have lost their job, that those who did not no longer dared to ask for a wage increase or benefits or union perks. In fact, they started giving up their last benefits and perks just so they could keep a job.
And that is when the final attack on American economy began.
Since it was now the federal government that was pulling the economy down the road as its engine, the middle class, stalled, the enemies in our midst began to attack the federal government.
The ideas Obama put on the table were nothing short of brilliant: invest federal dollars into aging crumbling infrastructure and green economy – labor-intensive enterprises that must hire domestic labor force. Every created job would spur on 10s of other jobs, and the economy would begin humming again.
But the enemies in our midst thought otherwise. Suddenly, federal deficit began to be used as a panic-inspiring weapon of choice.
Of course, the surplus that Clinton Administration left the country with would have been a much better deal. But if credit is sparse everywhere else, how else would you come up with money needed to pump the economy?
The enemies in our midst said, “Let starve the federal government of tax income, let’s keep taxes low so the few super rich would invest their money into economy. The government is too big and lives beyond its means. Its deficit is going to bankrupt our children”.
Americans love their children, so anything threatening the kids works as a great scarecrow.
They are also badly educated (read my American Education Reform ).
So Obama’s proposals were decimated, the government began shedding its work force, unemployment came back to its pick numbers, and unions everywhere lost their power and benefits.
Now there is no one to pull our economy from the brink. Those who are employed, work at REDUCED wages, that are getting closer to the 3rd world range.
Meanwhile, every single life staple, like groceries, rent, cable bills, insurance, etc. doubled or more in price (as compared to 10 yrs ago or less). Even those who work at median salaries have less money to buy desirable but unnecessary things.
This means that businesses producing and selling anything that is not a life staple make less profit so they begin to shed their labor force.
The less there is labor force, the less income the government gets. Since deficit is now a dirty word, the government has no choice but shed its work force and cut services to the impoverished population.
Now the time came to put the final nails into the coffin of what used to be the largest world economy: refuse to raise the ceiling on federal credit.
Once the federal government loses its credit-worthiness, watch American economy collapse into THE GREATER THAN THE GREAT DEPRESSION ditch.
The idiot dream of labor-intensive manufacturers like Koch brothers would come true:
labor in America would become as cheap as in Africa.
Unfortunately, the American workers would no longer be able to afford using the toilet paper they manufacture for Koch brothers. Like their African brethren, they would have to use tree leaves to wipe their asses. So Koch brothers would eventually go broke too.
No, it is not the federal deficit that threatens the future of our children. It is our inability to discern the enemies in our midst.
As for the scary federal deficit, it was Reagan administration that first racked it up into the trillions. Then Bush administration turned the surplus into another multi-trillion dollar debt. No one screamed of deficit while republicans were in power. The congress did not attack neither of the republican presidents for taking us into expensive wars (Reagan’s Panama blitz, Nicaragua fiasco, etc.; Bush’s Afghanistan, Iraq and the amorphous war on terror).
No, I am not happy at all with Lybia war either. I just don’t think it matters much anymore.
Like I predicted in 2008, “FINANCIAL CRISIS – IT’S NOT OVER UNTIL IT’S OVER”