Saturday, June 2, 2012

Devolution Toward the Neo-Feudal Economy and Society

Feeble U.S. Job Growth Stokes Fears of Global Slowdown. The New York Times.

[excerpt] Last month, the nation’s employers added the fewest jobs in a year and the unemployment rate actually rose, the Labor Department reported Friday. May was not a fluke either. It was the third consecutive month of disappointing results.

...That news came on the heels of several worrisome reports like falling consumer confidence, an uptick in new claims for unemployment benefits and a downward revision of the country’s overall economic growth in the first quarter, to a 1.9 percent annual rate from 2.2 percent. Income grew slightly between March and April, another government report said, though consumer spending grew a little more — a situation that economists say cannot last"


Grim Job Report Sinks Market. The Wall Street Journal June 2-3 p. A1. Excerpt from p. A6 "Manufacturing, which has helped fuel the economy's growth during the three-year-old recovery, appears to have lost steam..."

Majia Here: Earlier this week the WSJ had a rather disconcerting article on the low wages being offered in US manufacturing

Flat US Wages Help Fuel Rebound in Manufacturing. The Wall Street Journal May 29, 2012 p. A2.
[Excerpt] "Scores of U.S. companies have negotiated two-tier contracts with unions that allow them to pay hires less than existing workers and otherwise restrain wage and benefit costs. 

At American Axle & Manufacturing Holdings Inc. plant in Three Rivers Mich., new hires for assembly start at $10 an hour. Those hired before 2008 get a 'legacy' rate of about $18 an hour"

Majia Here: The article describes in detail the shift toward low wages in manufacturing at about $9 or $10 dollars an hour, with some up to $14 or $15 an hour. It is notable that most of the jobs described in the article do offer health insurance, although no account is provided of the relative costs shared by workers.

The problem with low wages is that it adversely impacts aggregate demand, which perpetuates the recession.

I acknowledge that an economy predicated on infinite growth of consumption is pathological and unsustainable.

However, the growing bifurcation of the economy into a small sector of well-paying jobs with benefits and an ever growing ghetto of  low-wage service and manufacturing workers is equally pathological and unsustainable.

It will breed civil unrest and it will degrade the overall resilience and innovativeness of our country.

Furthermore, the significant and relatively abrupt decline in wages is coinciding with massive cuts by state governments in education, health and social welfare.

California Cuts Threaten the Status of Universities. The New York June 2

[Excerpt] "Class sizes have increased, courses have been cut and tuition has been raised — repeatedly. Fewer colleges are offering summer classes. Administrators rely increasingly on higher tuition from out-of-staters. And there are signs it could get worse: If a tax increase proposed by Gov. Jerry Brown is not approved this year, officials say they will be forced to consider draconian cuts like eliminating entire schools or programs...."

MAJIA HERE: The California state university public education system was a model for the world.

I was a working class kid who could not have gone to college had it been costly. I started San Diego State in the early 1980s and paid $265 dollars a semester. Eventually the costs rose to about $365 a semester.

To this day I am grateful to the CSU system for providing me an excellent and affordable university education.

That system is being destroyed in many ways, as are public university systems across the US.

Their role in "lifting" working class kids is being undermined by rising tuition and declining educational quality (that latter is my point of view based on many years working at public universities).

I agree with Max Keiser that the evolving social order that is emerging in the context of these economic changes and enforced austerity is fundamentally NEO-FEUDAL.


Jeffrey Sachs opined: "We give up massive amounts at the top in tax cuts and then we turn around and squeeze the poorest of the poor"

he goes on: "The rich have had 20 years of the greatest boom in the history of this world...and we're turning around and we're just going to keep driving down the poorest of the poorest of the poor...this is a game that's going to end in a bad way..."

"both parties are financed by wealthy people"

 See also Paul Krugman on the Austerity Agenda. The New York Times May 31

1 comment:

  1. I can beat your lowball college tuition. My late mother saved my college receipts and I saw them recently.

    At the University of Houston in the fall semester of 1972 my student fees were $172. Books were $120. Dorm fee was $1,000. I had a new Chevrolet car that cost $2,600.

    My dad was a housepainter and I worked part time for him and at a restaurant to help pay for college. Gas was 20 cents a gallon my freshman year in high school (1968) but rose to 70 cents by my last year of college (1976). The Arab oil embargo of 1973-1974 marked the end of 70 years of cheap oil in America. Our economy has never really recovered as the massive government and consumer debt masked some of the effects.

    For low wage earners the inflation in gas, food, and housing has been a nightmare. It will get worse. The Arab oil producers have played a balancing act for 40 years trying to get the maximum for their product and not collapse the end consumers. Now China and others give them new markets and oil will continue to be an empire-builder an empire killer.

    The civilized countries who find the new non-polluting technologies to end the addiction to oil will be the hope for this century and beyond. Can mankind right the ship? We can only hope so.


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