THE TRIUMPH OF CAPITALISM: JOBLESS NATIONS

By Prof. John Kozy

Global research

September 20, 2011

The Obama administration is intent on applying supply side principles to get the American economy out of the present recession, but supply side principles are based on the belief that if the government cuts taxes on the wealthy, they will invest their savings in new factories, that newly hired workers will increase employment, and that more output will increase tax receipts. But there is no way to make sure the wealthy actually invest their wealth in productive enterprises, especially in the U.S.

This entire theory is based on the mere pop-psychological belief that if you give a person money, s/he will invest it in productive ways. But nothing forces wealthy people to do that, and they haven't, worse, never really have, since creating jobs is not an essential business function, only making money is, and getting financial incentives from government is merely another way of making money. 

Giving money to businesses will not end recessions or depressions. In fact, it is likely to prolong them, since businesses will not create jobs until it is evident that those jobs will result in profits.

During the California Gold Rush, merchants went to the camps only after gold was discovered, and they left when the lode petered out. They did not use the capital they acquired from the miners to open productive businesses to provide jobs to the now jobless prospectors.

In capitalist economies, capital is not acquired to be spent; it is acquired to be accumulated.

Businesses do not exist to create jobs.

Jobs are created by businesses only when it suits their purposes.

Beliefs in conventional wisdom are always dangerous. More often than not, conventional wisdom is wrong. But there are two kinds of conventional wisdom ~ the pro and the con. Every bit of conventional wisdom has its naysayers, and just as conventional wisdom can amount to nothing more than mere beliefs, so can the beliefs of naysayers.

For instance, that today's economy is failing is rather evident, but many critics of it seem to believe that the problems with today's economy are of recent origin. But that's false.

The economy today is little different in essence than it was in the 1600s when the colonists brought it with them from England. The horrors of England's 17 Century economy then are exactly its horrors today.

Wealth held in the hands of a few and poverty experienced by the many.

High levels of crime infused throughout society.

Widespread unemployment, underemployment, and degrading employment.

The destruction of human dignity.

Homelessness, hunger, and frequent wars fought by common people for the benefit of the merchant class.

Prevalent discrimination of various kinds.

Government which governs for the wealthy and not for the people in general.

And although there have been short-lived periods when the people were led to believe that their prospects were improving, these periods have regularly ended in economic collapses that wiped out any gains the common people had acquired. 

The universal features of this economy are exemplified in the following historical vignette.

On January 24, 1848, gold was discovered by James W. Marshall at Sutter's Mill in Coloma, California.

When people learned about the discovery, hundreds of thousands rushed to California. Wherever gold was discovered, miners collaborated to put up a camp and stake claims. Rough and Ready, Hangtown, and Portuguese Flat, among many others, sprang up, and merchants flocked to them, set up business in hastily built buildings, lean-tos, tents, and anywhere else serviceable to sell everything imaginable.

Miners lived in tents, shanties, and deck cabins removed from abandoned ships. Each camp often had its own saloon and gambling house. Women of various ethnicities played various roles including that of prostitute and single entrepreneurs.

At first, the gold was simply "free for the taking." Disputes were often handled personally and violently.

When gold became increasingly difficult to retrieve, Americans began to drive out foreigners. The State Legislature passed a foreign miners tax of twenty dollars per month, and American prospectors began organized attacks on foreigners, particularly Latin Americans and Chinese.

In addition, the huge numbers of newcomers drove Native Americans out of their traditional hunting, fishing and gathering areas. Some responded by attacking miners. This provoked counter-attacks. The natives were often slaughtered. Those who escaped were unable to survive and starved to death. Natives succumbed to smallpox, influenza, and measles in large numbers.

The Act for the Government and Protection of Indians, passed by the California Legislature, allowed settlers to capture and use natives as bonded workers and traffic in Native American labor, particularly that of young women and children, which was carried on as a legal business enterprise.

Native American villages were regularly raided to supply the demand, and young women and children were carried off to be sold.

The toll on the American immigrants could be severe as well: one in twelve forty-niners perished, as the death and crime rates during the Gold Rush were extraordinarily high, and the resulting vigilantism also took its toll.

Hydraulicking as a means of extracting the gold became prevalent. A byproduct of this was that large amounts of gravel, silt, heavy metals, and other pollutants went into streams and rivers. Many areas still bear the scars of hydraulic mining since the resulting exposed earth and downstream gravel deposits are unable to support plant life.

The merchants made far more money than the miners. The wealthiest man in California during the early years of the Gold Rush was Samuel Brannan, the tireless self-promoter, shopkeeper and newspaper publisher. About half the prospectors made a modest profit. Most, however, made little or wound up losing money.

By 1855, the economic climate had changed dramatically. Gold could be retrieved profitably from the goldfields only by medium to large groups of workers, either in partnerships or as employees.

By the mid-1850s, it was the owners of these gold-mining companies who made the money. When the lode petered-out, the merchants abandoned the sites faster than the miners. The gold rush was over.

I have, in the past, written about many of these horrid features of Capitalist economies, especially its abject immorality. Today I want to discuss an obvious falsehood that still gets repeated especially by right wing politicians and their counterparts in the economics profession and the business community, that is, businesses, not governments, create jobs.

This generic claim is, of course, obviously false and its generality makes it grossly ambiguous. What precisely does it mean, especially since the politicians who utter it spend piles of money and time trying to get jobs that are not created by any business?

No business created the jobs of Congressman or President, so what sense does it make for such a person to claim that businesses, not government, creates jobs? The claim is utterly stupid.

In fact, businesses have no interest in creating jobs. Consider the vignette described above.

Merchants flocked to the mining camps after gold was discovered and they left when the lode petered out. They did not use the capital they acquired from the miners to open productive businesses to provide jobs to the now jobless prospectors.

In capitalist economies, capital is not acquired to be spent; it is acquired to be accumulated. Employees are merely means to that end, and whenever a business can accumulate capital without the use of employees, it will do it. And that is what has happened in large measure in America today. 

Businesses have found ways of accumulating capital without the need for American employees and government has aided and abetted businesses in doing so.

So, when a politician advocates giving financial incentives to businesses to induce them to create jobs, those politicians are involved in a ludicrous absurdity. All the proposal does is provide businesses with another tool for extracting money from common people without even having to deal with them, and the capital acquired by businesses in this way will merely be added to the capital accumulation bank.

Why would a business want to create a job with it and put that capital in jeopardy? To assume that businesses will use that capital to create jobs is the fallacy of supply side economics, which, incidentally, is based on nothing but pop-psychology.

Supply side economics is based on the belief that if the government cuts taxes on the wealthy, they will invest their savings in new factories fitted with new technologies that will produce goods at lower costs, that newly hired workers will increase employment, and that more output will increase tax receipts.

The economy will lift itself by its bootstraps.

But there is no way to make sure the wealthy actually invest their wealth in productive enterprises, especially in the U.S. This entire theory is based on the mere pop-psychological belief that if you give a person money, s/he will do "the right thing" with it, namely, invest it in productive ways.

But nothing forces wealthy people to do that, and they haven't, worse, never really have, since creating jobs is not an essential business function, only making money is, and getting financial incentives from government is merely another way of making money,

Giving money to businesses will not end recessions or depressions. In fact, it is likely to prolong them, since businesses will not go where money cannot be made, because merchants are attracted to money like flies are attracted to dung.

Businesses do not exist to create jobs.

Jobs are created by businesses only when it suits their purposes

John Kozy is a retired professor of philosophy and logic who writes on social, political, and economic issues. After serving in the U.S. Army during the Korean War, he spent 20 years as a university professor and another 20 years working as a writer. He has published a textbook in formal logic commercially, in academic journals and a small number of commercial magazines, and has written a number of guest editorials for newspapers. His on-line pieces can be found on http://www.jkozy.com/ and he can be emailed from that site's homepage.

PHOTOS: THE DEPRESSION: RARE: COLOURED

I do not remember where I found these photos or to whom to give credits. If you happen to know of the photographer, please let me know.

CHARITY BEGINS AT HOME, UNCLE SAM!

By Dr. Ismail Salami and Kourosh Ziabari

September 1, 2011

As the United States is caught up in a number of conflicts and military expeditions around the world, the economic situation of the North American nation is deteriorating on a daily basis, unfolding a devastating crisis with repercussions that go far beyond the tolerance of the U.S. citizens.

The hands of the American politicians are smeared with the blood of Iraqi and Afghan women and children and they are complicit in the sufferings of the Palestinian, Kenyan and Haitian people; still, they're trumpeting for new military adventures in the Middle East, especially the much-favored war with Iran which they have long been talking about. This clearly shows the top echelons of the US government are not prone to learn from their past mistakes but rather opt for plunging into the quagmire they've created for themselves.

The economic situation of the United States in these days brings to mind the bitter and unforgettable days of Great Depression which began in 1929 and lasted until the late 1930s and early 1940s. The global economic depression in the years preceding the World War II started from the U.S. with the stock prices suddenly falling on September 4, 1929 and followed by the Wall Street Crash of October 29, 1929 known as the Black Tuesday.

Now, the U.S. which is spending millions of dollars in the wars which it has waged in Iraq, Afghanistan and Libya is entrapped in an exacerbating economic situation which is reminiscent of those days; a situation which rings the alarm bells for the White House officials who are increasingly losing popularity with the U.S. citizens.

The Rasmussen Reports daily Presidential Tracking Poll for August 28 shows that only 23% of the nation's voters strongly approve of the way that Barack Obama is performing his role as president. Forty percent strongly disapprove, giving Obama a Presidential Approval Index rating of -17. This widespread unpopularity is indicative of the fact that Barack Obama has failed to realize his promise of "change" both in domestic and foreign policy and erroneously trod on the botched path of his hawkish predecessor George W. Bush.

The economic indicators of the United States relate a sad story: the whole country is rife with poverty, unemployment and social inequality. Economic organizations predict a black future for the Wall Street and the ordinary citizens are seriously feeling the pain of economic meltdown.

According to the World Hunger Education Service, there has been a dramatic increase in hunger in the United States in the three years, 2008, 2009 and 2010.

The 2008 statistics of this institute show that 14.6 percent of the U.S. households (approximately one in seven), were food insecure, the highest number ever recorded in the United States.

As reported by the U.S. National Center for Law and Economic Justice, one out of seven people in the U.S. are living in poverty. "In 2009, 43.6 million people - 14.3% of the population - were poor according to the government's definition of poverty," the report says.

Due to the prevalent injustice among the racial and religious minorities in the United States, Blacks and Hispanics are more likely than whites to be poor, and to be in deep poverty. "Although blacks represent 13.3% of the general population, they represent 24.2% of the poor population. Hispanics, who make up 15.9% of the population, represent 28.3% of the poor population," the U.S. Consensus Bureau reported.

Child poverty is also sadly rampant in the United States. As some independent sources believe that 25% of the U.S. children are living below the poverty threshold, the U.S. National Center for Children in Poverty based in the Columbia University Mailman School puts this number at 21%, saying that 15 million children in the United States live in families with incomes below the federal poverty level. However, these are official and state-sanctioned figures.

The U.S. Census Bureau believes that one in five U.S. children under age 18 lived in poor families whose income is below the federal poverty level. The Census Bureau made this announcement in September 2009; however, the Brookings Institute researcher Julia B. Isaacs believes that the government is not telling the whole truth. The 2009 statistics of the U.S. Consensus Bureau "lag considerably behind current economic conditions," Isaacs writes. "Job losses and wage reductions occurring in 2009 were obviously not captured. In addition, many adverse events in 2008 were only partially captured."

In an article co-written by Nikolai Barrickman and Kate Randall for Global Research, the results of a study carried out by the U.S. Children's Defense Fund (CDF) on the state of children after the "Great Recession" of 2008 and 2009 have been cited, showing a significant and remarkable inequality among the different social classes in the United States, especially the children.

"The CDF report notes the tremendous growth of social inequality in America. Since the late 1970s, the incomes of the bottom 90 percent of the population have stagnated or declined, while the incomes of the top one percent in particular-the ultra-rich-have soared," the article mentioned.

"In 2008, the average income for the bottom 90 percent of US households was at its lowest level in more than a decade. In the face of this growth of poverty, however, income assistance programs have been slashed and are ill-equipped to deal with the serious rise in social need," the report added.

Despite all this sad account of rise in poverty and child poverty in particular, the US officials do not seem in the least worried. While the reports of the whopping rate of poverty are surfacing, U.S. Defense Secretary Leon Panetta and Secretary of State Hillary Clinton, in a joint interview, have blatantly said that large new cuts in defense spending would “terribly weaken” U.S. national security, arguing that the US cannot “afford to keep playing partisan chicken with its finances." The big question is are they really capable of human sympathy at all in view of the poverty enveloping their country?

Now, the U.S. is drowning in an economic quagmire. The Iraq War has thus far cost the U.S. the lives of more than 4,000 soldiers and $3 trillion, as the Nobel Prize winning economist Joseph E. Stiglitz has noted. Andrew S. Natsios, the head of the U.S. Agency for International Development believes that reconstructing the dilapidated Iraq will cost the American taxpayers $1.7 billion. The National Priorities Project also established the website "Cost of War" which shows that the Afghanistan war has hitherto cost the American taxpayers $448 billion.

By following a warmongering policy in the world particularly in the Middle East region, the US government while creating havoc on a tragically global scale also seems to be taxing a collective punishment on its own people, namely that the wars which Washington officials have mounted so far and will mount in future, have cost the US public purse billions of dollars which could have been used instead for empowering the American people and ameliorating the deplorable economic situation in the country.

The world would surely be a better place if the US put an end to its adventurism and manslaughter in the region and instead buckled down to combating poverty in its own country before the creeping phenomenon erodes the very fabric of its society. Indeed, the old saying 'charity begins at home' well suits and applies to the US government.

Dr. Ismail Salami is a high-profile Iranian journalist and the website manager of Press TV. He has written numerous books and articles on the Middle East issues. Kourosh Ziabari is an Iranian journalist and media correspondent. He writes for several magazines and news websites on the international affairs.

SIXTEEN STATISTICS WHICH PROVE THAT THE AMERICAN PEOPLE ARE ABSOLUTELY SEETHING WITH ANGER

Welcome to Main Street, Tent City: The community where ever person has lost their job and home because of the U.S. financial crisis

 

The Economic Collapse

According to a whole host of polls and surveys,

the American people are incredibly angry right now.

The American people are hopping mad at the government,

the American people are hopping mad about the economy

and

the American people are hopping mad about the direction that this country is headed.

This is shower room that serves the tent city that the homeless people have made by drilling to the natural water table and then pumping it up to the heater so the residents can wash in the woods

Never before in modern U.S. history have the American people been this angry.  There is vast disagreement about what the solutions to our problems actually are, but what everyone can agree on is that the American people are absolutely seething with anger right now. 

The statistics that you are about to read are mind blowing. 

We used to be such a happy country.

Once upon a time we were one of the happiest places on earth.

But as the economy has fallen to pieces 

anger has been steadily growing.

If something is not done to turn the economy around eventually this anger is going to erupt in frightening and unpredictable ways.

The American people are not equipped to handle hard times.  We are incredibly spoiled.  Most of us have only known good times, and most of us have been taught that we will have endless prosperity all of our lives because we live in the greatest nation on earth.

Well, "the greatest nation on earth" is about to get a massive wake up call.  We are up to our eyeballs in debt and we are bleeding jobs, businesses and wealth at an astounding pace.  Our economy is dying right in front of our eyes, and most Americans have been so "dumbed-down" that they don't even realize what is happening.

But what most Americans do know is that things are "bad" and they want someone to "fix" things.  They know that something is "not right" and they want things to go back to the way things used to be. 

The longer it takes for things to return to "normal",

the angrier they are going to get.

The following are 16 statistics which prove that the American people are absolutely seething with anger right now....

#1 A new Washington Post poll has found that a whopping 78 percent of Americans are dissatisfied "with the way this country’s political system is working".

#2 That same poll found that only 26 percent of Americans believe that the federal government can solve the economic problems that we are now facing.

Getting by: Elwood Hires, 39, and Cynthia Berlinger, 33, inside their recently completed makeshift shelter in the woods

#3 Gallup says that Barack Obama's job approval rating has hit an all-time low of 39%.

#4 According to a recent CBS News/New York Times poll, Congress has a disapproval rating of 82%.

#5 A new Rasmussen survey has found that 85 percent of Americans believe that members of Congress "are more interested in helping their own careers than in helping other people."

#6 That same survey found that 46 percent of the American people believe that most members of Congress are corrupt.  That figure was a new all-time high.

#7 According to a different Rasmussen survey, only 17 percent of Americans now believe that the U.S. government has the consent of the governed.

#8 A recent Reuters/Ipsos poll discovered that 73 percent of the American people believe that the nation is "on the wrong track".

#9 A recent poll taken by Rasmussen found that 68 percent of Americans believe that we are actually in a recession right now.

#10 According to Gallup, the percentage of Americans that lack confidence in U.S. banks is now at an all-time high of 36%.

#11 U.S. consumer confidence is now at its lowest level in 30 years.

#12 According to a recent Washington Post-ABC News poll, 90 percent of Americans believe that the economy is performing poorly.

Destitute: Charlie Errickson, 54, sat eating his lunch outside his shelter as he struggles to survive

#13 That same poll found that approximately 80 percent of Americans believe that it is "difficult" to find a job these days.

#14 According to one recent poll, 39 percent of Americans believe that the U.S. economy has now entered a "permanent decline".

#15 Another recent survey found that 48 percent of Americans believe that it is likely that another great Depression will begin within the next 12 months.

#16 According to a brand new Rasmussen survey, 48% of Americans believe that reductions in government spending are "at least somewhat likely" to result in civil unrest inside the United States.

So why doesn't the government step in and spend a whole bunch of money and make everything all better?

Well, the problem is that we have done this time after time before and now we are broke.

We have been living way, way beyond our means for decades and now the bills are coming due.

David Walker, the former Comptroller General of the United States, has been warning about our debt problem for years.  Walker says that the United States is heading for a "sudden and very painful" economic collapse....

"Here’s the bottom line. If you take the total liabilities of the United States ~ public debt, unfunded pensions, retiree health care, under funding with regard to social security, with regard to medicare, a range of commitments and contingencies ~ as of September 30 2010 we would have had to have had $61.6 trillion dollars in the bank in order to be able to defease those obligations."

 

The cold, hard truth is that the U.S. national debt should have been addressed many years ago when it was still relatively small.

At this point, there is no solution to our national debt problem under our current financial system.

Most state governments are also facing huge financial problems.  The state government of Illinois is so broke at this point that it can't even afford to bury the poor people that are dying.

But Illinois is not alone.  All over the country, state and local governments have been implementing austerity measures.

According to the Center on Budget and Policy Priorities, state and local governments have slashed more than half a million jobs since August 2008.

That is a whole lot of good jobs that aren't there anymore.

But government debt is not the only debt problem that we are facing. 

Personal debt is also a raging crisis.

According to USDebtClock.org, the total amount of personal debt in the United States is now over 16 trillion dollars.  The exploding levels of personal debt have created a tremendous amount of stress in households from coast to coast.

When I was growing up, it seemed like almost everyone was in the middle class.  But today the middle class is shrinking at lightning speed.

According to author David DeGraw, 17.3% of all Americans were living in poverty during 2009.  Not only that, DeGraw also says that 9 major U.S. cities have a poverty rate of over 25 percent.

Can you imagine that?

In fact, there are some cities such as Detroit where the poverty rate is over 35 percent.

It is hard to believe what is happening to America.  Today, there are over 45 million Americans on food stamps.  That number has increased by approximately 12 percent in the last year alone.

There are currently 34 million Americans that need a full-time job.  Unemployment is rampant and there is intense competition even for part-time jobs that pay minimum wage.

So where did all of the jobs go?

Well, as I have written about previously, globalism is absolutely devastating our economy.  Millions of our jobs have been shipped to countries where labor is far, far cheaper and they aren't coming back.

Ramshackle: This home looks barely able to stand up but still houses a homeless person, who has also brought their car to the community

In addition, millions of Americans that do still have jobs are also deeply struggling right now.  There are millions and millions of Americans that are working part-time jobs because that is all that they can find right now.  Millions of other Americans are flat broke and are discovering that their paychecks are "shrinking" due to inflation.  Wages have barely risen while prices for food and other necessities are skyrocketing.

Most families are really struggling to get by right now.

According to the Washington Post, the average yearly income of the bottom 90 percent of U.S. income earners is $31,244.

It is really hard to pay a mortgage and feed a family on that income.

The only people that seem to be doing well are at the very top.

The average yearly income of the top 0.1% of U.S. income earners is 5.6 million dollars.

Not that making money is a bad thing, but when an economic system funnels all of the rewards to the very top you know something is deeply broken.

The poorest 50% of all Americans now own just 2.5% of all the wealth in the United States.

A lot of poor Americans have literally fallen off the map.  The Daily Mail recently did a feature on one tent city that has been constructed deep in a forest in New Jersey....

In scenes reminiscent of the Great Depression these are the ramshackle homes of the desperate and destitute U.S. families who have set up their own 'Tent City' only an hour from Manhattan.

More than 50 homeless people have joined the community within New Jersey's forests as the economic crisis has wrecked their American dream.

You can see shocking pictures of this tent city right here.

So it is no wonder why so many Americans are so angry.

If you lost your job or your home you would probably be angry too.

Most Americans just want to be able to go to work, make a decent living, pay the mortgage and provide for their families.

But in America today that is becoming increasingly difficult to do.

Nowhere to go: Homeless Burt Haut, 43 and his wife Barbara Haut, 48 outside their makeshift shelter in the tent city in the woods in Lakewood, New Jersey

Our economy is a giant mess and the American people are becoming very angry.

If the economy gets even worse, they are going to become even angrier.

Storm clouds are gathering on the horizon.

Things are about to get very, very interesting.