The Economy - Eleonore Weil

The Economy - Eleonore Weil

Suddenly, Spain and Greece are being racked by strikes and huge demonstrations. The public in these countries is, in effect, saying that it has reached its limit: With unemployment at Great Depression levels and with erstwhile middle-class workers reduced to picking through garbage in search of food, austerity has already gone too far.  Paul Krugman – New York Times

What began as an economic storm has blown into a full-scale political crisis. Amid popular discontent and separatist protests, Spain has stumbled towards a crossroads: without decisive action by the government, the post-Franco democratic settlement is at risk. Financial Times

It is said that every historical phase carries within it the embryo of the next phase to be born in the future. If this is so, then someday we may come to consider the mountain of debt that threatens to crush our present system as an explanatory, broken condom.

One of the paradoxes here is that the enormous robustness of the United States, its size, population, its natural resources, military power and perhaps most of all, its ability to create money out of thin air to pay its debts, probably means that it would not see the total systemic crisis arriving until it was too late to really do anything about it.

If Americans wonder where the world economic crisis is taking them, a look at what Spain is going through right now might give them some serviceable hints.

Spain is one of the world’s oldest nation-states, with a population of 40M and a large economy somewhere in the world’s top ten. Thus, unlike Greece, it is large enough and complex enough to serve Americans as a guinea pig.

Spain is infinitely more fragile and vulnerable than the USA, but for that very reason it is able to provide a valuable early warning for Americans… in much the same way that coal miners used to take little canary birds down into the mine to detect odorless, poisonous gases. Long before the burly miners noticed anything, the tiny bird would keel over in a faint from gas inhalation. When the canary passed out, the miners would run for the exit. Spain has just keeled over…

The distress signals coming from the American system are much more subtle than those emanating from Spain.

Here, for example is some socially ominous data:

Lower-paying jobs, with median hourly wages from $7.69 to $13.83, accounted for just 21% of the job losses during the recession. But they’ve made up about 58% of the job growth from the end of the recession in late 2009 through early 2012. Los Angeles Times

Whether people are actually “entitled” to “to health care, to food, to housing, to you name it” is open for discussion. But, the fact is that if enough of them don’t have any plausible way of getting health care, food or housing, finally they are going to turn against any system that denies them these things. And if the number of the disgruntled is sufficient then, to maintain some sort of order and domestic tranquility, the system will have to give them health care, food and housing, whether they want to do so or not.

Probably the reason the American right wing has become so grotesquely strange and wacky of late is that the extremely lucid money financing all the zany craziness is aware that somewhere down the road, if the trends of growing middle class impoverishment continue, some sort of serious redistribution, strongly reminiscent of socialism, is going rear its head.

To me it is clear that the people who are willing to pay $50K to hear Romney talk over rubber chicken are trying to deny the declining middle class and the growing mass of working poor any kind of clarity of thought, if possible. If the Spanish crisis is any harbinger of things to come, it will be the people’s stomachs however that will finally do the talking.

Cross posted from: http://seaton-newslinks.blogspot.com

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