In his New York "State of the City" address, Mayor Michael "Money Bags" Bloomberg moaned that the city's finances were stuck between a "rock and a hard place" because of the state, national, and international financial downturn. His proposed solutions to the problem will be devastating to a city where the official unemployment rate is over 11% and every family, except perhaps his, is affected. Bloomberg, who ran for reelection touting his financial wizardry, is planning to close twenty fire companies, lay off as many as 11,000 teachers, and reduce spending for libraries, HIV/AIDS support, public school nurses, and children's services. It is as if he cynically decided to cut back the things desperate people need the most. But at least those like Bloomberg with money and jobs won't have to worry; Mayor Money Bags proposed no tax increases.
City cuts in services come on top of state budget cuts -- New York State faces a $7.4 billion budget gap -- and a pledge by President Obama to freeze federal discretionary spending. Stimulus spending that was supposed to tide us over until the economy improves has been abandoned across the board.
As things continue to get worse for ordinary people, business and government economists are trying to convince us that they are really getting better. Since July 2009, economists have been announcing the end of the Great Recession. There are increases in major economic indicators including stock market indices, industrial production, housing starts, car sales, and Gross Domestic Product, a measure of goods and services produced in the United States. Unfortunately and mysteriously, unemployment, the biggest problem that plagues us and our families, continues to hover at above ten percent. Who can figure?
The rest of this posting is a second look at the global economic crisis and its impact on life in New York, the United States, and the world.
NYS and the Global Economic Crisis Deepens, Part 2
You thought your student loans were a problem. This country is mortgaged up the wazoo, creditors want to be repaid, and revenues are way down.
The problem is made worse because under the capitalist system, at least according to the Keynesians, borrowing is the only way for a country to spend itself out of a recession. If government cuts back its borrowing and spending or raises taxes to cover costs, the system collapses in on itself like it did from 1929 to 1932 during the Great Depression.
Now there is a tried and true method for getting out of capitalist economic depressions. Borrow and spend without limit to build up your own industrial base while reducing the productive capacity of your competitors. This worked very well from 1939 to 1945 when the US built up its military machine and bombed the hell out of its enemies. But that was World War II, and 60 million people died to produce that economic miracle.
I don't think tinkering with the economic indicators, smarter management, or tightening our belts is going to solve the world's economic problems. The economy is fundamentally irrational and needs a major overhaul. Production is for profit, not to meet human needs. Companies loot the environment and abscond with surplus value. They then gamble it away on worthless ventures.
I do have a plan that might be able to rein in capitalism, provide work for the unemployed, and help the environment, all at the same time. Unfortunately I was not invited to either President Obama's jobs summit or any of his local forums. Maybe you can write your elected officials and demand they give Alan's plan a hearing.
My major proposal is that fair trade must trump free trade because nothing is ever really free. There must be no more child and bonded labor, no more lead paint in children's toys, toxic sheet rock, or contaminated foods and medicines. We must demand that all imported goods meet U.S. and international labor, product safety, environmental, and human rights standards with inspection and certification paid for on site by producers. This will eliminate the incentive for corporations to ship jobs overseas. When goods are imported, the government must inspect all shipping containers with the cost of the inspections borne by the importers.
My second proposal, if the government is really serious about employment and the environment, is government created, subsidized, owned, and operated experimental green factories. With these experimental factories the United States can start producing goods again and American will be put to work doing useful, productive, jobs. I do not trust subsidies to corporations to promote jobs and the environment. The most recent bailout shows that capitalists, in order to maximize their profits, will find loopholes in the law to twist it in ways it was never intended.
To people who worry this is socialism, my reply is "so what?" It is a practical solution that actually addresses many of our nation's economic problems. If the government wants to sell the green companies to the private sector once they are up and running, as a democracy we can always discuss that possibility later.
It is estimated that some 800 million people in the world suffer from hunger and malnutrition and that in the U.S. one out of every eight children under the age of twelve goes to bed hungry every night. We may be approaching a new "Dark Age." If the global economy collapses in the way I anticipate, the only positive thing I see for the future is we won't have to worry about global warming.
Despite what I have said so far, I am not a determinist and I do not believe the future is written in stone. The global economy may implode, or it may gradually unwind. If it unwinds there is more time to stabilize things and there are more options.
What sustains me through times of trouble is the belief that people can understand the nature of the crisis. They can act collectively to create a more socially responsible economic system and a just world that values human needs above short-term corporate profit. We can plan for the future instead of relying on a mysterious market place invisible hand or an as yet to be discovered technology to bail us out.