Economics 101: If You Take All Our Money, We Can’t Buy Anything


Twenty years ago, Michael Moore started asking, “If corporations won’t pay employees enough to live on, who do they think’s going to buy all the shit they make?”

The answer, when it came, was, basically, “The Chinese”. They thought “emerging markets” were going to take up the slack if they stopped caring about the home market, so they did. They froze wages and increased upper management incomes by some 800% in the last quarter of the 20th century and by more than 2000% over the past decade or so, most of which came directly out of the pockets of their employees. The middle class has been decimated and poverty has risen exponentially but so far there has been no corresponding rise in exports. Emerging markets have failed to emerge, at least they have failed to emerge in a way that would sacrifice their home consumers for the benefit of American corporations.

Finally, after almost 35 years of unfettered greed, the American business press (if not American business) is coming to the conclusion that it may just be possible that the deliberate corporate destruction of the American market by an American business theory that focused on short-term profits and dumped every other consideration was, well, just maybe, a mistake.

The fundamental law of capitalism is that if workers have no money, businesses have no customers. That’s why the extreme, and widening, wealth gap in our economy presents not just a moral challenge, but an economic one, too. In a capitalist system, rising inequalitycreates a death spiral of falling demand that ultimately takes everyone down.

Low-wage jobs are fast replacing middle-class ones in the U.S. economy. Sixty percent of the jobs lost in the last recession were middle-income, while 59 percent of the new positions during the past two years of recovery were in low-wage industries that continue to expand such as retail, food services, cleaning and health-care support. By 2020, 48 percent of jobs will be in those service sectors.

This from Bloomberg News, hardly a left-wing rag. What it means is that things have gotten so bad that even dyed-in-the-wool corporatists are at last attempting to face reality.

Be gentle with them. They’re new to it.

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