Over the past year, more than 2.2 million homes have been lost to foreclosure, a record number. Some four million jobs have vanished, and jobs continue to be lost at the rate of about 650,000 a month. One American in three has suffered a job loss or a pay cut in their household. Those once stably employed are becoming destitute, and those who were already destitute are dying.
The question on everyone’s lips is, what is our government doing to
stop the ongoing economic catastrophe that threatens us all? What
should it do? Where do the interests of the people lie?
As this issue of the People’s Tribune goes to press, President Obama
has signed an economic stimulus bill which, we’re told, will create or
save a few million jobs and expand public assistance to the unemployed,
among other things. The government is also pondering how best to bail
out the banks, arguing that helping the banks will restart the flow of
credit and help get the economy going again. And the administration
announced a $75 billion foreclosure-prevention plan that it says could
help up to nine million homeowners keep their homes.
We should be on guard. We should ask ourselves, what actually needs to
be achieved? The end result of the government’s intervention should be
to guarantee the necessities of life for anyone who is doing without
them. If this isn’t happening, then we need to demand that the
government do what is right.
The underlying cause of the crisis is that more and more production is
carried on with less and less labor, because of the introduction of
labor-replacing technology into the economy. This technology has wiped
out jobs and driven down wages for those still working. Because people
with low wages or no jobs buy less, the market for goods and services
is being wiped out. As the market has been undermined, the economy was
kept going with debt – the massive extension of credit to workers and
businesses. Credit was also used to fuel a huge orgy of speculation in
stocks, bonds, credit default swaps, mortgage-backed securities and all
sorts of exotic financial instruments that really had no value. On a
temporary basis, this speculation brought huge profits to the financial
This house of credit, debt and speculation has been standing on a
“real” economy that has been hollowed out by labor-replacing
technology. Eventually the debt-based bubble had to burst, and now that
it has, the real economy is falling to its true level.
In the short term, what is needed is to nationalize large parts of the
economy, such as the banking system, in the interest of the people, not
the corporations. We should be nationalizing the assets of the
corporations—not their risks—and putting those assets to work in such a
way as to guarantee every person has access to housing, health care and
the other necessities of life.
In the longer term, we are going to have to decide whether we’ll have a
society that serves the majority of the people, or a society organized
to serve only the wealthy few. Either the people are going to have to
take the corporations over and run them in society’s interest, or the
privately owned corporations will decide whether the rest of us live or
die. This is the ultimate question we must answer.