Why Do Stocks Rise While the Country Burns?

By Contention News

This is a special edition of Contention News, a new dissident business news publication, shared exclusively at the Hampton Institute. You can read more and subscribe here. 

A reader sent us a brief, important request this week: “would like to see more on why markets are up when the world is on fire.” 

This is, in many ways, the theme of almost every edition of Contention, and we’ve pulled it apart a number of times:

• Dire economic straits can be good for big business as workers are less likely to press for higher wages, and competition goes bankrupt.

• Investment prices are all about expectations, and the big losses businesses keep reporting aren’t as bad as predicted.

• Those forecasts aren’t rational, and investors are arbitrarily assuming the worst can’t happen.

• Central bank action is swelling asset prices — not like a bubble, but like a tumor.

But let’s elaborate the reasons for this disconnect yet again, because new explanations emerge all the time. Multiple phenomena are causing this contradiction, all part of the same basic force: state manipulation of markets to protect concentrated wealth.

First, let’s be clear: “markets” are not up in every sense. The major indexes are up: the S&P 500 and Nasdaq are already back at record levels and the Dow is not far off its all-time-high. But this is a reflection of the exceptional performance of very few components in each index, not broad-based gains. As of last week:

• Half of the stocks that make up the S&P 500 are down for the year still, only 4% of its components are driving all the record gains. 

• The digital oligopoly — Facebook, Apple, Amazon, Alphabet, and Microsoft — are up 37% this year, but without them the S&P 500 is down 6%.

• Fully 64% of S&P 500 components are underperforming the index, and they’re missing it by an average of 22%. 

• All-country stock performance minus the S&P 500 has done nothing this year. 

This international perspective highlights another crucial, largely unreported aspect of the alleged stock rally: pricing the S&P 500 in euros instead of dollars wipes out all of its record performance. 

The bull run is closely associated with the devaluation of the dollar, because inflated liquidity is being blasted directly at equity markets. 

Remember: stock prices reflect discounted future cash flows. Cash flow means income left over after expenses, so if investors have reason to believe that income will increase or expenses decrease in the future, stock prices move up. Monopoly pricing power means higher income, suppressed wages mean lower expenses, so large-scale bankruptcies and unemployment can actually benefit large firms.

Earnings expectation beats have moved stock prices upwards, but only 1% of that outperformance has come from increased income. The rest has come from cutting expenses, i.e. the very layoffs and cancelled purchases that make the rest of the economy miserable.

Because forecasts around cash flows aren’t certain, prices take into account a risk factor closely associated with interest rates. The larger the risk, the bigger the discount for the future cash flows, and the lower the stock price goes.

The Federal Reserve has taken emergency action this year to suppress interest rates. It dropped the rate it charges banks to near-zero levels, but more importantly it bought up trillions of dollars in bonds — including corporate bonds for the first time. 

Bond prices and their interest rates move inversely to one another, so this single-payer bond market bids up prices and sets a ceiling for rates. This squeezes investment out of safe assets, and makes riskier investments — like stocks — artificially more secure-looking. 

The implicit — sometimes explicit — assumption is that the Fed won’t let markets crash for long. We now have central planning for capital, so why wouldn’t you buy? 

But if the cost cuts that drove earnings beats in the last quarter have now hit bone, if failed fiscal stimulus means a big drop in aggregate demand, or if accelerating political chaos raises volatility too much and markets do drop, what can the Fed do? Their only card left may be to intentionally depreciate the dollar in even more aggressive ways. 

That is to say, the most likely outcomes of our present condition are that things keep burning like they are or the people that started the blaze will throw gasoline on it. Either way Contention will be here to sound the alarm. 

For more anti-imperialist business analysis, subscribe to Contention. 

COVID-19 Discussions Over The U.S. Healthcare System

Pictured: Volunteers from the International Christian relief organization Samaritan’s Purse set up an Emergency Field Hospital for patients suffering from the coronavirus in Central Park across Fifth Avenue from Mt. Sinai Hospital on March 30, 2020 in New York. (Bryan R. Smith / AFP)

By Ekim Kılıç

Since the beginning of January 2020, COVID-19, aka Coronavirus, has continued to devastate peoples’ lives, specifically working classes across the world. Internationally, a prominent aspect of the pandemic is that all working people feel a similar level of fear and anxiety, even to some extent petty-bourgeois classes despite their considerable economic privileges. It has created an unprecedented platform in which more working people and intellectuals tend to see and discuss the inability of capitalist political economic system to address itself to a health crisis and its understanding of public health system.

One of the most affected countries is the United States, which has almost one-third of the international cases, with 815,491 as an outcome of 4,162,922 tests by April 21. On this date, the number of death reached 45,097. The total number of recovered patients is 82,620. This means that there are 2,464 cases and 136 deaths per 1M people.[1] One-third of the national cases are from the State of New York.[2] In the U.S., the primary reason that the epidemic spread like a wildfire is the weak healthcare system along with several other political and social problems here. Especially, the pandemic shook the base, revealed lack of organized working class, fetishism over individualism combined with puritan work ethic, a healthcare system abandoned at the mercy of banks and companies, widespread and dire mental health problems, homelessness, structural racism, a violent prison-industrial complex, a divided American political system over extremely libertarian federal system, and the discourses of nationalist functionalism and blind petty bourgeois ethicism.

The pandemic came as if a “god’s gift” in a time when economic measures have been taken by and for capital to prevent the deepening consequences of the 2008 financial crisis and the present galvanizing crisis. The extortion of abortion rights in several states and the elimination of union elections by the National Labor Relations Board (NLRB), escalating interventionist moves against Venezuela, cutting financial support to World Health Organization (WHO), and expectation for the presidential executive order to suspend immigration reveals for whose benefit the pandemic process was used.[3][4][5][6][7] Even American exceptionalists face stark contradictions, as countries such as China, Vietnam, South Korea, and Cuba have effective attitudes towards the epidemic, Russia’s military aircraft to aid the US with medical equipment, then from Vietnam, and the US’s seizure of medical equipment to Barbados, called modern piracy.[8][9][10][11][12]Also, President Trump’s attempts to blame the pandemic on Chinese conspiracy remark their unpreparedness and desperation to get away with their responsibilities, later framed COVID-19 as “Chinese Virus.”[13]

Although unions, which have a strong bureaucracy, cannot lead the workers, and the government disregards urgent measures for “essential workers,” they, especially healthcare and logistics workers, feel compelled to struggle for vital, urgent demands.[14] In that sense, the working class politics’ wave of the last years definitely shows its effect. Coinciding with the Bernie Sanders campaign in a country where even the limited healthcare demand of “Medicare for All” was almost a joke, universal healthcare became a major part of public agenda. However, in a country where nurses have to make protective uniforms out of big garbage bags due to lack of personal protective equipment (PPE), it turned out that the lives of workers and laborers, who are called “essentials,” hypocritically, are worthless. One has to remember that political elites have always been shamelessly outspoken with their disdain for workers.[15][16][17]

Even after the $2 trillion stimulus package is distributed, details reveal the gap between what was promised and what the reality is. For example, $1,200 aid for individuals and $2,400 for couples is much more meaningful in the Southern states, where the taxes are lower than the states like New York and California. It has to be said that these checks will almost certainly go for student loans, and rent, besides given the fact that almost 1/3 of the country didn’t pay rent for the last month and has that rent due.[18] Students that were graduated last summer or winter, are not be able to get checks. In this regard, and in these new and challenging times, it is a calamity that will trigger millennials and generation Z to question “meaning, morality and mortality in ways they never did before.” This generation has experienced life-altering disruptions, such as 9/11, the Great Recession, the decline of American prestige to a housing affordability crisis, global warming to crushing student debt according to academics at the University of Southern California.[19]

An Overview of the U.S. Healthcare System

The U.S. has always been named as the most developed capitalist country with a liberal democracy that has been perceived alongside western European liberal democracies.[20] Relying on individual liberty in a libertarian sense, the U.S. understanding and structure of organizing daily affairs leave everything to the individual, including healthcare services. Healthcare is a responsibility of the individual, not the state and society. Because of this individualistic conception, it can be said that the U.S. is the most developed country with the worst skewed and insufficient healthcare system.

Becoming an emergent discussion in the wake of former Democratic 2020 presidential primary candidate Bernie Sanders’ campaign, healthcare has been a privilege in the U.S. for a long time except for some reforms called Obamacare, the Patient Protection and Affordable Care Act, which became law on March 23, 2010. Nevertheless, the main requirement of having health insurance with sufficient coverage is to have a full-time employment.

After emerging from the 1929 Great Depression, the Franklin Delano Roosevelt (FDR) government and state institutions utilized the conditions of World War II to provide opportunities for the social democratic expansion of capital. In 1942, the Stabilization Act “limited the amount of wage increases employers could grant, but at the same time permitted the adoption of employee insurance plans.”[21] By 1949, employers benefits programs became common in collective bargaining agreements.[22] In the meantime, the Internal Revenue Service (IRS) decided that, “employer contributions to health insurance premiums were tax free, which meant workers paid less out of their pocket.”[23] After FDR, President Harry Truman signed the National Mental Health Act, which called for the establishment of a National Institute of Mental Health.[24] Under the Johnson presidency, Medicare and Medicaid programs were set up in 1965. By accepting the Health Maintenance Organization Act of 1973, the Nixon government unleashed healthcare as a profitable industry.[25]

The Obama presidency evoked hope among the US people over the crumbling healthcare system. However, insurance companies were the one which benefited from a developing market, although his reforms alleviated the situation a little by extending children on their parents coverage and mandating mental health coverage one very plan, those without insurance were burdened with the tax penalties and forced into high deductible plans.[26] Since 2016, the Trump government began to repeal Obamacare by redoing the enabling acts.[27] While it is claimed that it lessens the tax burden coming from healthcare payments, it is also constricting the accessibility to healthcare.[28]

Recently, there were around 800,000 people with “freelance contracts” working in New York. According to the contract, the employer does not have to make a person’s health insurance because the character of their job is temporary and in a limited time. If the person works at or above the 32-33 hour limit, it is considered full-time. Therefore, bosses are able to force flexible employment without any reservations, being aware of the fear of unemployment or underemployment that dominates the US job market. This exemplifies how the messy system has worsened the crisis substantially.

federal As another example, unemployment climbed by another 5 million people this week, increasing the total number of people who have applied for unemployment to 22 million in the last month. According to the Economic Policy Institute, “approximately 9.2 million workers have likely lost their employer-provided health care coverage in the past four weeks.”[29]

Neo-liberal policies in the healthcare system have left the working class and laborers vulnerable to the epidemic. However, the Trump administration focused on the economy to function as smoothly as possible, rather than taking measures that could be taken more or less against approaching epidemic. They refrained from taking the necessary precautions. Even then, for example, the statements of Trump continue to insist for reopening country on May 1, despite major obstacles from authorities.[30] His persistence on reopening the country was also a matter on April 12.[31] Several expressions of political and economic elites are supportive of this: “I’d rather die’ from coronavirus ‘than kill the country.”[32][33][34] As one of the countries that experienced the 2008 crisis deeply, the sensitivity of the USA to the capitalist capital accumulation in the face of the epidemic caused more people to die.

 An article from the American prospect addresses, for example, the share in the stimulus package for businesses. Out of $2 Trillion package, $500 billion will be used for companies. $75 billion goes to the airline industry and the mysteriously named “businesses critical to national security.” The rest $425 will be used to capitalize a $4.25 trillion, leveraged lending facility at the Federal Reserve.[35] Additionally, seven other industries are lobbying for more stimulus, such as tourism, restaurants, mortgage servicers, hotels, airlines, franchises, and distillers.[36]

Other Aspects of the Crisis

Although we have listed the other problems that have accelerated the severity of the crisis, once again, those have to be elaborated to make sense in their context. To begin with, fetish over individualism elicits an “I don’t care, no-one can decides for me” mentality, which disregards social well-being and solidarity. This fundamental bourgeois idea frustrated many people at the beginning due to its ignorance of the crisis, and refusal to heed the advice of healthcare workers. Different aspects of this same idea might be felt over the larger, individual based healthcare system: “It is every (hu)man for himself.”

Similar to this “I don’t care” individualism, even the excessive mental health problems have been treated “as an individual’s incapacity to function normally within a given setting” by serious academic researches. These problems can be found mostly among poor whites and blacks who are more prone to mental disorders than richer classes.[37] Combining with homelessness, and other problems stemming from unemployment, the mental health question requires urgent social attention, especially during the crisis. People, who are relying on social circles, families, and solidarity, are isolated, trapped, and helpless. On the other hand, homelessness, specifically student one, made states hesitate to cancel schools at the beginning. Many college students were also thrown out of their dorm, with nowhere else to go.

Over all these, as another aspect of “American” values, nowadays, right-wing demonstrators have called to end quarantine by blocking roads with caravans, carrying Confederation and Nazi flags, utilizing the 18th century American revolutionary slogan of “Give me liberty, or give me death!” The other, “liberal” side of American nationalism is not innocent in weaponizing the crisis and its human costs, framing healthcare workers as “heroes,” food and workers from other vital industries as “essentials,” “frontliners,” “soldiers,” who are, fundamentally, expendable. Even the liberal call for “stay home” and “practice social distancing” is full of lack of consideration and clarity, solely blind ethicism, a performative virtue.

Workers’ and the lives of the poor are at the stake, which involves racial and gender issues, too.[38] In the center of epidemic in the country, New York City, most of cases and deaths are coming from poor working class neighborhoods.[39] According to formal data, those who have died have been 34% Hispanic, 28% blacks, 27% white and 7% Asian.[40] Economically and racially segregated neighborhoods are particularly vulnerable in this crisis. These groups’ share in the population are 29%, 22%, 32%, and 14%, respectively. The prison-industrial complex also has figured prominently in the crisis. According to activist and journalist Shaun King, the U.S. is the only nation in the world with 250% more prison cells than hospital beds.[41] That complex is another example of structural racism: “These racial disparities are particularly stark for Black Americans, who make up 40% of the incarcerated population despite representing only 13% of U.S residents.”[42] In other words, it is not surprising that places where COVID-19 has been most devastating, are generally black neighborhoods and towns.[43] Beyond racial lines, the rate of incarceration for women incarceration follows that of the black population: “The same is true for women, whose incarceration rates have for decades risen faster than men’s, and who are often behind bars because of financial obstacles such as an inability to pay bail.”[44] During the pandemic, the issue of rising domestic abuse of women trapped at their home receive almost no public or media attention. Additionally, the LGBTQ population is not independent from same abusive behavior. They are also vulnerable to discrimination, homelessness and other economic problems that increase the likelihood of contracting COVID-19.[45]

There are a considerable amount of cases and deaths especially among transportation, food and market workers.[46] Lack of protective equipment and the government’s token appreciation to workers has pushed many workers to take several actions, from warehouses to hospitals. Until now, over 100 workers’ actions are recorded since the beginning of the pandemic.[47] The most unique one is that General Electric workers’ struggle for their company to shift to produce ventilators.[48] Beyond all, the common quality of workers actions are mostly led by millennial generations. In that sense, it can be counted as a sign which generation of the working class might lead advanced struggles post-pandemic. However, in terms of youth struggle, it is hard to say what might happen, because online education may continue in fall 2020, and beyond.

All in all, other aspects of the crisis are complex and entangled, and reflect all the emergent demands of the US people and working class. However, the struggle against pandemic has been shaped by the political struggle between democrats and republicans towards the 2020 Presidential Elections. The governors of Illinois, New York and several other state governors’ have critiqued president Trump for not utilizing the Defense Production Act exemplifies the tension between democrats and republicans along with federal and state fault lines.[49] For instance, while some smaller states have made commitments to end quarantine on May 1, New York and California are against that, and the federal government doesn’t necessarily intend for imposing an extension to quarantine.

Conclusion

It has been discussed that the working class as we know it is gone, especially by the liberal intellectuals of all spectrum in defense of cold war theories. There was also an illusive reality, in which public spaces has been dominated by petty bourgeoisie and some upper sections of working class. It should be noted that another reason to this for the USA and Western Europe is the surplus value they transfer from the dependent countries through the imperialist exploitation mechanism. While this post-cold war argument has lost credibility for a long time now, it is shattered with the COVID-19 crisis.

The U.S. is experiencing a moment of “the king is naked,” where petty bourgeois classes retreated from streets, and left working class people to fulfill busses, train cars, factories, warehouses, workplaces, and unemployment lines. On the one hand, framing some sections of working class as “essentials,” primarily “hero” healthcare workers, and on the other, failing to provide essential protective equipment to these “essentials,” shows one certain aspect in the contradictions of classes: “Workers’ lives do not matter.”

Due to the same reason, it can be said that president Donald Trump is backing up right-wing demonstrators, who wants to lift the quarantine. Concurrent with deepening polarization of the U.S. political system through several impasses between the Democrats and Republicans, the presidency plays with the libertarian positioned citizen-against-the-government to take advantage of the crisis to gather and energize its avid supporter base for the upcoming elections. However, the statements of the government to end quarantine aim to make people reconcile the situation, while continuing to infuriate workers and saturate the air with fear and resentment.

Ekim Kilic is a Kurdish journalist from Turkey, and regularly reporting to the daily working-class newspaper of Turkey, Evrensel Daily. He also takes an active role as a member of the NY steering committee at the National Writers' Union UAW Local 1981. He is an MA graduate from International Affairs and Global Justice major at CUNY Brooklyn College / New York. He wrote a master thesis on a comparative analysis of working class support for right-wing nationalism in the U.S. and Turkey.

Notes

[1]  United States. (n.d.). Retrieved April 21, 2020, from https://www.worldometers.info/coronavirus/country/us/

[2] Ibid.

[3] Smith, K. (2020, March 25). Abortion-rights groups sue Texas over abortion ban amid coronavirus outbreak. Retrieved April 25, 2020, from https://www.cbsnews.com/news/abortion-rights-planned-parenthood-lawsuit-texas-non-essential-ban/?fbclid=IwAR2biSYvfz_dejWzV5P1bzlwQBCm24yeV5zmrmt9klpVFcoE8-tpUynR8hI

[4] In Midst of a Pandemic, Trump’s NLRB Makes it Nearly Impossible for Workers to Organize a Union. (n.d.). Retrieved April 25, 2020, from https://portside.org/2020-04-02/midst-pandemic-trumps-nlrb-makes-it-nearly-impossible-workers-organize-union?fbclid=IwAR24Xbuzw2sHuLdM155e96xVuX6RntvpQgsDLOMIxbMhLM57Z2H570q8M7I

[5] Borger, J. (2020, March 31). US ignores calls to suspend Venezuela and Iran sanctions amid coronavirus pandemic. Retrieved April 25, 2020, from https://www.theguardian.com/world/2020/mar/31/us-ignores-global-appeals-suspend-sanctions-coronavirus-pandemic-iran-venezuela

[6] Sullivan, P. (2020, April 15). Trump WHO cuts meet with furious blowback. Retrieved April 25, 2020, from https://thehill.com/policy/healthcare/492997-trump-who-cuts-meet-with-furious-blowback

[7] Stelloh, T., Welker, K., Pettypiece, S., & Bennett, G. (2020, April 21). Trump says he is suspending immigration over coronavirus, need to protect jobs. Retrieved April 25, 2020, from https://www.nbcnews.com/politics/donald-trump/trump-says-he-suspending-immigration-over-coronavirus-need-protect-jobs-n1188416?fbclid=IwAR1GpqyKHb9TJHPDs4f5yQSq8jAu9ui4N-S2CByFRp9mdVE_qGy9sADrYwM

[8] Lisnoff, H. (2020, April 6). American Exceptionalism in the Face of Covid-19. Retrieved April 25, 2020, from https://www.counterpunch.org/2020/04/09/american-exceptionalism-in-the-face-of-covid-19/

[9] Kuttner, R. (2020, March 24). The End of American Exceptionalism. Retrieved April 25, 2020, from https://prospect.org/coronavirus/the-end-of-american-exceptionalism/

[10] (n.d.). Retrieved April 25, 2020, from https://www.bloomberg.com/news/articles/2020-04-01/putin-sends-military-plane-with-coronavirus-aid-to-help-u-s

[11] Sweeney, S. (2020, April 16). Vietnam ships 450,000 protective suits for U.S. health care workers. Retrieved April 25, 2020, from https://www.peoplesworld.org/article/vietnam-ships-450000-protective-suits-for-u-s-health-care-workers/?fbclid=IwAR3cV9CBQMWO-TS1ehCi_rXl5jhmqXDO31gv35qz9P9oSYupMg6Ki6a49Lg

[12] Steve SweeneyMonday, A. 6. (2020, April 6). US accused of ‘modern piracy’ after seizing ventilators bound for Barbados. Retrieved April 25, 2020, from https://morningstaronline.co.uk/article/w/us-accused-modern-piracy-after-seizing-ventilators-bound-barbados

[13] Tisdall, S. (2020, April 19). Trump is playing a deadly game in deflecting Covid-19 blame to China. Retrieved April 25, 2020, from https://www.theguardian.com/us-news/commentisfree/2020/apr/19/trump-is-playing-a-deadly-game-in-deflecting-covid-19-blame-to-china

[14] Chediac, J. (2020, April 20). Essential worker strike wave: ‘We fight COVID-19 for ourselves &… Retrieved April 25, 2020, from https://www.liberationnews.org/essential-worker-strike-wave-we-fight-for-ourselves-and-for-the-public/?fbclid=IwAR3aVocvBL2JZCLrY04peKRVpMR3UyHc2fbgqfw6OATRFp7IYc0JVWONzz4

[15] Montanaro, D. (2016, September 10). Hillary Clinton’s ‘Basket Of Deplorables,’ In Full Context Of This Ugly Campaign. Retrieved April 25, 2020, from https://www.npr.org/2016/09/10/493427601/hillary-clintons-basket-of-deplorables-in-full-context-of-this-ugly-campaign

[16] Gruenberg, M. (2019, April 25). GOP lawmaker’s idiotic remark about nurses goes viral and backfires. Retrieved April 25, 2020, from https://www.peoplesworld.org/article/gop-lawmakers-idiotic-remark-about-nurses-goes-viral-and-backfires/

[17] Alternet. (2019, April 9). When the GOP uses the word “bartender” to mock Alexandria Ocasio-Cortez, it shows its ugly classism. Retrieved April 25, 2020, from https://www.salon.com/2019/04/09/when-the-gop-uses-the-word-bartender-to-mock-alexandria-ocasio-cortez-it-shows-its-ugly-classism_partner/

[18] Bahney, A. (2020, April 11). New data shows more Americans are having trouble paying their rent. Retrieved April 25, 2020, from https://www.cnn.com/2020/04/09/business/americans-rent-payment-trnd/index.html

[19] Polakovic, G. (2020, April 3). How does coronavirus affect young people’s psyches? Retrieved April 25, 2020, from https://news.usc.edu/167275/how-does-coronavirus-affect-young-people-psyches/

[20] The Economist Intelligence Unit. (n.d.). Retrieved April 25, 2020, from https://www.eiu.com/topic/democracy-index

[21] Scofea, L. A. (1994). The development and growth of employer-provided health insurance. Monthly Labor Review, 3–10. Retrieved from https://www.bls.gov/opub/mlr/1994/03/art1full.pdf

[22] Ibid.

[23] How did we end up with health insurance being tied to our jobs? (2019, April 29). Retrieved April 25, 2020, from https://www.marketplace.org/2017/06/28/how-did-we-end-health-insurance-being-tied-our-jobs/

[24] National Institute of Mental Health (NIMH). (2017, February 17). Retrieved April 25, 2020, from https://www.nih.gov/about-nih/what-we-do/nih-almanac/national-institute-mental-health-nimh

[25] Gruber, L. R., Maureen, S., & Polich, C. L. (n.d.). From Movement To Industry: The Growth Of HMOs. Retrieved April 25, 2020, from https://www.healthaffairs.org/doi/full/10.1377/hlthaff.7.3.197

[26] Amadeo, K. (n.d.). Pros and Cons of Obamacare. Retrieved April 25, 2020, from https://www.thebalance.com/obamacare-pros-and-cons-3306059

[27] Simmons-Duffin, S. (2019, October 14). Trump Is Trying Hard To Thwart Obamacare. How’s That Going? Retrieved April 25, 2020, from https://www.npr.org/sections/health-shots/2019/10/14/768731628/trump-is-trying-hard-to-thwart-obamacare-hows-that-going

[28] Gonzales, R. (2019, October 5). Trump Bars Immigrants Who Cannot Pay For Health Care. Retrieved April 25, 2020, from https://www.npr.org/2019/10/04/767453276/trump-bars-immigrants-who-cannot-pay-for-health-care

[29] 9.2 million workers likely lost their employer-provided health insurance in the past four weeks. (n.d.). Retrieved April 25, 2020, from https://www.epi.org/blog/9-2-million-workers-likely-lost-their-employer-provided-health-insurance-in-the-past-four-weeks/

[30] Trump’s plans to reopen the country face major obstacles. (n.d.). Retrieved April 25, 2020, from https://www.politico.com/news/2020/04/18/trump-reopen-country-coronavirus-193182

[31] Harris, J. F. (n.d.). ‘I’d love to have it open by Easter’: Trump says he wants to restart economy by mid-April. Retrieved April 25, 2020, from https://www.politico.com/news/2020/03/24/trump-wants-to-restart-economy-by-mid-april-146398

[32] Samuels, A. (2020, April 21). Dan Patrick says “there are more important things than living and that’s saving this country”. Retrieved April 25, 2020, from https://www.texastribune.org/2020/04/21/texas-dan-patrick-economy-coronavirus/

[33] Fredericks, B. (2020, April 15). Congressman says US should reopen economy – even if more would die. Retrieved April 25, 2020, from https://nypost.com/2020/04/15/lawmaker-says-us-should-reopen-economy-even-if-more-will-die/

[34] Concha, J. (2020, March 25). Glenn Beck: ‘I’d rather die’ from coronavirus ‘than kill the country’ from economic shutdown. Retrieved April 25, 2020, from https://thehill.com/homenews/media/489472-glenn-beck-id-rather-die-from-coronavirus-than-kill-the-country-from-economic

[35] Dayen, D. (2020, March 25). Unsanitized: Bailouts, A Tradition Unlike Any Other. Retrieved April 25, 2020, from https://prospect.org/api/amp/coronavirus/unsanitized-bailouts-tradition-unlike-any-other/

[36] Gangitano, A. (2020, April 2). 7 industries lobbying for more stimulus. Retrieved April 25, 2020, from https://thehill.com/business-a-lobbying/business-a-lobbying/490736-7-industries-lobbying-for-more-stimulus

[37] Baran, P. A. & Sweezy P. M. (2020, March). The Quality of Monopoly Capitalist Society: Mental Health. Monthly Review. Volume 71. Pg. 41-43.

[38] Conn, M., Kelly, J., & Heimpel, D. (2020, April 3). Lack of Shelter Beds in New York for LGBTQ Youth During Pandemic. Retrieved April 25, 2020, from https://chronicleofsocialchange.org/coronavirus/lgbtq-youth-struggle-for-shelter-from-coronavirus/41999?fbclid=IwAR0Rko479SG4K9eBvZZTWNXVZxo0Xa4HYpxoyUSNYc-xhWUD2Ri0GO35B80

[39] Virus Hits NYC Hardest in a Few Working-Class Neighborhoods. (n.d.). Retrieved April 25, 2020, from https://www.usnews.com/news/health-news/articles/2020-04-02/coronavirus-hits-harder-in-poorer-nyc-neighborhoods

[40] Workbook: NYS-COVID19-Tracker. (n.d.). Retrieved April 25, 2020, from https://covid19tracker.health.ny.gov/views/NYS-COVID19-Tracker/NYSDOHCOVID-19Tracker-Fatalities?:embed=yes&:toolbar=no&:tabs=n

[41] SHAUN KING: The United States is the Only Nation in the World with 250% More Prison Cells Than Hospital Beds. (2020, March 30). Retrieved April 25, 2020, from https://www.thenorthstar.com/shaun-king-the-united-states-is-the-only-nation-in-the-world-with-250-more-prison-cells-than-hospital-beds/

[42] Sawyer, W., & Wagner, P. (n.d.). Mass Incarceration: The Whole Pie 2020. Retrieved April 25, 2020, from https://www.prisonpolicy.org/reports/pie2020.html

[43] Johnson, A., & Buford, T. (n.d.). Early Data Shows African Americans Have Contracted and Died of… Retrieved April 25, 2020, from https://www.propublica.org/article/early-data-shows-african-americans-have-contracted-and-died-of-coronavirus-at-an-alarming-rate

[44] Ibid.

[45] Conn, M., Kelly, J., & Heimpel, D. (2020, April 3). Lack of Shelter Beds in New York for LGBTQ Youth During Pandemic. Retrieved April 25, 2020, from https://chronicleofsocialchange.org/coronavirus/lgbtq-youth-struggle-for-shelter-from-coronavirus/41999?fbclid=IwAR0Rko479SG4K9eBvZZTWNXVZxo0Xa4HYpxoyUSNYc-xhWUD2Ri0GO35B80

[46] Chediac, J. (2020, April 20). Essential worker strike wave: ‘We fight COVID-19 for ourselves &… Retrieved April 25, 2020, from https://www.liberationnews.org/essential-worker-strike-wave-we-fight-for-ourselves-and-for-the-public/?fbclid=IwAR3aVocvBL2JZCLrY04peKRVpMR3UyHc2fbgqfw6OATRFp7IYc0JVWONzz4

[47] Elk, M. (2020, April 23). COVID-19 Strike Wave Interactive Map. Retrieved April 25, 2020, from https://paydayreport.com/covid-19-strike-wave-interactive-map/?fbclid=IwAR0hqgq8wEeYT-Y8VRFcaJocbzRNd4vb_13bd32_3fZFxqYv3OO7gf6uynQ

[48] GE Workers Protest, Demand to Make Ventilators. (2020, April 16). Retrieved April 25, 2020, from https://labornotes.org/blogs/2020/04/ge-workers-protest-demand-make-ventilators?fbclid=IwAR2_qnmATx97jmyVzESlZ_B7KGce1YtQV4uH86rHXxHEOs3s1G0r-ygXF1w

[49] Trump, Facing Criticism, Says He Will Increase Swab Production. (2020, April 19). Retrieved April 25, 2020, from https://www.nytimes.com/2020/04/19/us/coronavirus-updates.html

Post-Pandemic America: Prelude to Socialism or Fascism?

By Werner Lange

May 8 marks the 75th anniversary of the defeat of fascism in Europe, a historic victory over modern despotism that catapulted American capitalism to world domination by default. As the only combatant country with its cities and infrastructure left intact, the United States emerged from this colossal bloodbath as the single most potent economy on earth. Europe, especially Germany, lay in utter ruins and tens of millions, half of them civilians, lay in early graves. By contrast, the US economy flourished adding some 11 million jobs within the seven years following the war; the minimum wage increased; the poverty rate fell; farm incomes, dividends and corporate profits hit all-time highs; and bank failures along with unemployment had all but disappeared. American capitalism entered a Golden Age.

Fast forward to 2020, and suddenly everything has changed with the explosive advent of another worldwide war, an unprecedented and unforeseen one against an invisible enemy wreaking havoc upon the health and welfare of nearly every nation on earth, especially the USA. The tables have turned, irrevocably. No nation has been hit harder by this insidious invasive enemy than America; and none has suffered more from gross government malfunction and dire social dysfunction. The glittering structure built by American capital since its brief golden age exposed itself in this pandemic to be a top- heavy house of cards on the verge of collapse. What follows the coming collapse is open to debate. Objective forces favor socialism, but subjective ones point toward fascism.

The US economy suddenly hit a solid brick wall this fateful year bringing large sectors to a virtual standstill and driving countless small businesses into bankruptcy. The GDP fell by nearly 5% in the first quarter and is conservatively estimated to minimally shrink at annual rate of 30%, a disastrous decline not experienced since the Great Depression. As of early May, well over 30 million American workers have applied for unemployment insurance, and overwhelmed agencies are hard-pressed to deliver the desperately needed relief on time. Millions more, those either ineligible for such temporary survival compensation or blocked from applying, are also jobless and face destitution. The official unemployment rate, a gross underestimate of actual joblessness, stands at 17% and will likely skyrocket to well over 30% by summer, exceeding Great Depression levels. Loss of a job translates into loss of health insurance for millions of Americans who are now only one medical problem away from family bankruptcy. Soup lines common during the Great Depression now increasingly appear as miles-long stretches of cars lined up for emergency food supplies.

Whatever safety net there once was to absorb such economic shocks, inhumane concentration of wealth without work and politics without principle, both grave social sins, evaporated it. After some 50 years of steadily increasing class inequality, the richest 400 Americans now own more wealth than the bottom 150 million of us; the 5% at the top of our grossly stratified society own 66% of the nation’s wealth, while nearly 70% of US adults have less than $1,000 in savings and 20% have more credit-card debt than emergency savings; over 16 million Americans have negative net worth and one in four African-American families have zero net wealth. Such obscene concentrations of wealth and glaring gaps of inequality have not been experienced since 1928, right before the Great Depression.

Rather than enhance assistance to victims of this drastic decline, the Trump regime proposed massive cuts to America’s meager welfare programs - SNAP, TANF and WIC - which help keep millions of impoverished citizens from utter destitution. However, when it comes to corporate welfare, the flood gates of public funds are thrown wide open. The recently enacted CARES legislation is a thinly disguised gargantuan gift to America’s super-rich; some $500 billion in so-called loans are simply given to America’s largest corporations with no meaningful oversight or accountability. Because of a tax loophole an additional $1.2 million goes, on average, to 43,000 millionaires each, while struggling Americans may receive a one-time $1200 check. That generous gift to the super-rich comes on top of the $1 trillion generated for them by the 2017 statutory corporate tax rate cut and largely deposited in lucrative stock buybacks. Even during this pandemic billionaire wealth increased by nearly 10% and continues to do so.

At the other end of this unsustainable and unstable pyramid of parasitism are 150 million Americans living from paycheck to paycheck and 40 million officially poor Americans living day from day. An astounding 52% of US children are impoverished or low-income and 11 million children live in food insecure households; 50% of renters spend one-third of their modest income on housing; and some 49 million families carry a collective debt of $1.5 trillion in student loans. The richest country on earth harbors highly volatile levels of toxic financial insecurity on a pandemic trajectory toward eruption.

These objective conditions of unprecedented inequality and insecurity have generated subjective conditions of unprecedented mass frustration increasingly giving rise to displaced aggression, scapegoating directed against the victims not victimizers of the crisis. Every economic decline is coupled with a rise in racism to some degree. Yet the looming collapse of our failing capitalist economy carries with it the potential to unleash and empower even more nefarious social forces. Fascism in America is a possibility, thanks to the openly racist Trump regime and mass false consciousness among its rabid base. To prevent this calamity, defeat of Trump this November is necessary, but not sufficient. The social and psychological roots giving rise to his pathetic presidency and sustained popularity despite its abysmal failures need to be addressed. And these run deep within the American psyche and society. Racism, a stepping stone to fascism when unchecked, remains securely at home within the American social fabric, far beyond Trump’s nationalist base. So does its uterine twin, social darwinism. The coronavirus pandemic has stimulated this ideological virus in forms not witnessed since the heyday of the eugenics movement.

Inspired by resurgent social darwinist thought, there is an expanding willingness to let select populations die from the pandemic just so the ailing capitalist economy may be restored to health. According to the barbaric billionaire in the White House, the cure must not be worse than the disease and holding the pandemic death count to 100,000 would be a “great win”; according to one of his cheerleaders in elected office in Texas, grandparents are willing to die to save the economy; according to a popular right-wing pundit, those dying from the pandemic were on their last legs anyway; and another conservative commentator claims everyone is making “actuarial deductions about the costs” in human lives by lifting lockdown orders. Precious little institutional concern is expressed over the rising body count of prisoners, like the 30 year-old Lakota woman who died in federal custody after giving birth while on a ventilator in late April. To accelerate re-opening the country for business, a group of former health officials recently urged Congress to pay infected low-income Americans $50 per day to self- isolate in empty hotel rooms.

Such passive measures in thinning out the herd, a plan straight out of the social darwinist handbook, are slowly and steadily taking their toll in prisons, jails, nursing homes, VA facilities, warehouses, and food-processing plants throughout our troubled land. A more active approach to thinning and targeting certain cohorts manifested itself recently at several state capitals. Angry protestors, many armed with military assault weapons, demanded an immediate end to pandemic containment policies wisely imposed by state governments. Some invaded state capital buildings brandishing their weapons motivating some legislators to wear bullet-proof vests; others vociferously called for select governors to be locked up or even strung up; and among the ubiquitous Trump/Pence flags were occasional swastikas. While not officially a gang of brown shirts, the armed thugs of intimidation at these right-wing rallies, embraced as “good people” by Trump, are their functional equivalent.

Our embattled country is deeply divided and its political polarization grows with each passing day. Yet there is a way out of the current crisis, one decisively declared by a courageous group of American revolutionaries facing another bitter tyranny: “But when a long train of abuses and usurpations pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government and to provide new Guards for their future security”. If Americans heed this historic patriotic call to duty during this despotism, then a new America, a socialist one, will eventually emerge from the coming collapse of capitalism. If not, the despotism will intensify diabolically and decay into fascism. The struggle continues, and the fate of a people caught in the belly of a wounded beast hangs in the balance.

Capitalism's Overproduction Problem: A Primer

By Prabhat Patnaik

Republished from Monthly Review.

It is in the nature of capitalism to have “over-production crises”, i.e., crises arising from “over-production” relative to demand. “Over-production” does not mean that more and more goods keep getting produced relative to demand, so that unsold stocks keep piling up. This may happen only for a brief period in the beginning; but as stocks pile up, production gets curtailed, causing recession and greater unemployment.

“Over-production”, in short, is ex ante, in the sense that if production were to occur at full capacity use (or at some desired level of capacity utilisation), then the amount produced could not be sold because of a shortage of demand. But it manifests itself in reality in terms of recession and greater unemployment.

It is a mistake to believe that such crises are only cyclical in nature, i.e., that they get automatically reversed after a certain period of time. On the contrary, the Great Depression of the 1930s, which was a classic over-production crisis, lasted nearly a decade and was finally overcome because of the war, or, to be precise, because of military expenditure in preparation for the Second World War.

Since 2008, there has again been an over-production crisis that has persisted with varying intensity right until now. There is, thus, no question of an over-production crisis under capitalism automatically disappearing. But what was striking about the erstwhile socialist economies of the Soviet Union and Eastern Europe is that they were free from over-production crises. The question is why?

Over-production crises under capitalism arise because of two main reasons. One, investment decisions under capitalism depend upon the expected growth of demand, for which the current growth of demand is taken as a clue: if demand slows down then investment gets restrained. Two, whenever investment gets restrained, so does consumption and hence total income (this is called the “multiplier” effect of investment).

Both these factors were eliminated under socialism. Investment was undertaken according to a plan and not the dictates of profitability; hence, there was no question of investment being curtailed when the growth of demand slowed down for any reason. This is not to say that there were no fluctuations in the level of investment. These fluctuations, however, arose not in response to profit expectations, but for entirely exogenous reasons, of which, two in particular were important.

One was agricultural output fluctuations. In years when the agricultural output went down for weather-related, or some other, reasons, investment was cut, in order to prevent excessive upward pressures on food prices; correspondingly when agricultural output revived, so did investment. These investment fluctuations, however, had nothing to do with any calculations of profitability on investment; they were unavoidable even in a planned economy.

The second reason was the operation of “echo effects”. Suppose, for instance, that a whole lot of new investment had been installed in a bunched manner at a certain date, say the beginning of the planning period. These pieces of equipment would become due for retirement again in a bunched manner around the same time some years later, which would, therefore, push up the investment plan, and hence the real gross investment around that time, so that both net investment and replacement needs are accommodated. The investment figure, therefore, would not show a steady growth but would exhibit fluctuations. But these fluctuations again had nothing to do with any calculations of profitability; they arose because of past investment history.

But even when such investment fluctuations occurred, socialist economies ensured that they did not lead to fluctuations in consumption and income, i.e., those economies snapped the multiplier relationship that necessarily characterises capitalism. This is because all firms in the economy were asked to produce to their capacity, and, if demand was low because of investment being curtailed, then they were asked to lower their prices until whatever they produced got sold.

At these “market-clearing” prices, some firms would make losses, while others would still make profits; but this would not matter since both the profit-making and the loss-making firms belonged to the State, which could, therefore, cross-subsidise the loss-making ones from the profits of the profit-making ones. And taking both groups of firms together, there would always be positive net profits as long as investment was positive (even if lower than would have been otherwise).

This was a remarkable break from what happens under capitalism, and provides a clue to why output and employment fall in a crisis there. Under capitalism, a firm does not produce when prices do not cover costs; and when demand is low, prices do not fall, because they are “administered” through collusion among the oligopolistic firms. Instead, output, and hence employment, fall in order to equate supply with demand, and to eliminate stocks which might have got built up briefly.

The matter can be looked at somewhat differently. A fall in price, with money wages and employment given, which is what happened under socialism, meant a rise in the share of wages in total output; income distribution in short shifted in favour of the workers. Since workers more or less consume their entire wages, such a shift in income distribution in favour of the workers raised the share of consumption in total output. Thus, socialist economies never experienced over-production crises because even when investment fell for some reason, output was kept unchanged and the share of consumption rose to compensate for the fall in investment (through a rise in the workers’ share in output).

This, however, can never happen under capitalism because capitalists would never voluntarily agree to a lowering of their share in output and a corresponding increase in workers’ share, even in a situation of inadequate aggregate demand. This is why capitalism experiences over-production crises: income distribution here is a matter of intense class-struggle where there is no question of capitalists agreeing to lower their own share and correspondingly raise workers’ share for the sake of overcoming a situation of over-production.

The “multiplier” that operates under capitalism, whereby a reduction in investment causes a reduction in consumption and hence total output, occurs because of income distribution not being adjustable. The “multiplier”, in other words, is predicated upon the relative shares among capitalists and workers being given.

In fact, under capitalism, far from the workers’ share rising to offset the problem of insufficient demand, the tendency in periods of crisis is the exact opposite, namely, to cut wages and raise the share of profits, which, in a situation of reduced investment that brought about the crisis in the first place, actually compounds the crisis. A 10% fall in investment in such a situation does not just bring about a 10% fall in output, as the “multiplier” analysis would suggest, but a more than 10% fall in output, say a 15% fall, because an additional squeeze on consumption through a fall in workers’ share (via the wage cut) is further superimposed upon the reduction in investment.

The fact that the relative share of the workers is not allowed to increase in order to offset the tendency towards over-production, which is a basic characteristic of capitalism, also shows its supreme irrationality as a system. It shows that the system would rather have larger unutilised capacity and unemployment, i.e., a sheer waste of productive resources for lack of demand, than produce as before by avoiding this waste through giving more to the workers. From its point of view, wasted resources are preferable to using these resources to improve workers’ consumption. True, not being a planned system, it does not make such calculations consciously; but that is what its immanent tendencies amount to. Socialism avoids any waste or slack, such as is caused by a crisis, by raising the consumption of workers appropriately to avert it.

As the collapse of the Soviet Union recedes further into history, people increasingly forget that a system had existed there, which, notwithstanding its many limitations and defects, had nonetheless been free of unemployment, of over-production crises and of the irrationality of capitalism.

Prabhat Patnaik is Professor Emeritus at the Centre for Economic Studies and Planning, Jawaharlal Nehru University, New Delhi. His books include Accumulation and Stability Under Capitalism (1997), The Value of Money (2009), and Re-envisioning Socialism (2011).

The Great Recession, Six Years Later: Uneven Recovery, Flawed Indicators, and a Struggling Working Class

By Colin Jenkins

In July of this year, Barack Obama boasted of an impressive recovery the US has undertaken since the Great Recession of 2008, proclaiming, "We've recovered faster and come farther than almost any other advanced country on Earth." To support this claim, the White House released a report showing that, out of 12 countries identified as "advanced" (France, Germany, Greece, Iceland, Ireland, Italy, Netherlands, Portugal, Spain, Ukraine, United Kingdom and United States), the United States is "one of only two (the other being Germany) that experienced systemic financial crises in 2007 and 2008 but have seen real (gross domestic product) per working-age person return to pre-crisis levels."

Reports such as these have become commonplace in 2014, not only from those in the White House, but also from multiple media sources. Within mainstream circles, the recovery has generally been lauded by the Democratic wing of the media (MSNBC, Huffington Post, and of course reports from the White House) and questioned by the Republican wing (Fox News, the Wall Street Journal). Since the reports stemming from these sources are almost always politically-charged, they have a tendency to be misleading in at least some manner. In the rare instance where genuine information or analysis leaks from the mainstream, it is usually the unintended result of a media spin.

Ultimately, the intended purpose of these reports are reduced to either showing Barack Obama and the Democratic Party in a good light (by focusing on seemingly positive statistics) or showing Obama and the Democrats in a bad light (by focusing on seemingly negative statistics). Often times, the same statistics may be used; however, spun differently. Neither side is interested in formulating meaningful analysis, but rather in swaying voters one way or the other. Still, in this media tug-o-war, facts are sometimes used to support political arguments, and thus may be useful from time to time if one is able to pick them out of the fray. But, even when we catch a glimpse of fairly reliable statistics, how do we cut through the politically-charged spins to give them meaning?

Take Obama's July statement for instance. It suggests that the US has experienced a strong recovery since the 2008 economic crisis, right? Well, not necessarily. What it says is that the US has experienced a better recovery than 11 out of 12 of its "advanced" counterparts that "experienced systemic crises," which (it's important to note) were handpicked by the White House. According to the International Monetary Fund, there are actually 36 countries that are considered to have "advanced economies." And considering the global nature of the economy, it's difficult to claim that 67% of them avoided systemic crisis. When compared to the 36, the US ranks 12th in GDP growth and 9th in unemployment rate recovery. Not necessarily bad, but certainly not as good as suggested.

Which brings us to some other questions: How accurate are GDP and unemployment rates when assessing the overall economic well-being of a country? Why are such macroeconomic indicators used so frequently in mainstream analyses? Do they accurately represent the well-being of the working-class majority, or do they simply represent convenient fodder used to supplement political spins? Let's take a look.

Gross Domestic Product and the Dow Jones Industrial Average

Two major indicators used to determine the overall health of the economy are the Gross Domestic Product (GDP) and the Dow Jones Industrial Average (DJIA).

US GDP growth rates over the past six years suggest a strong recovery. Since falling more than 16 percent during the Great Recession of 2008-09, the GDP has experienced growth in 19 out of 21 financial quarters.

2013 was especially successful in terms of GDP growth, averaging over 3 percent for the first time since the recession. 2014 started out slow, dropping a little over 2% in the first quarter (Q1 2014); however, this was written off as an irregularity by analysts, including PNC Senior Economist Gus Faucher, who attributed the drop to " bad weather " that "was a significant drag on the economy, disrupting production, construction, and shipments, and deterring home and auto sales." Since that time, the GDP has been growing at a rate of 4.1% over the past six months.

The DJIA has shown even bigger signs of recovery. After being cut in half between September 2007 (15,865) and February 2009 (7,923), the DJIA has experienced an almost unfathomable boom.

It hit its highest point ever in November 2013, nearly five years after the recession, at 16,429, and has been breaking records ever since. Heading into November of 2014, it stands at 17, 390 - the highest point in its 128-year history.

Corporate Profits

Not surprisingly, the cumulative amount of corporate profits in the United States have paralleled the success of the stock market. American Enterprise Institute economist Mark J. Perry has illustrated a sharp correlation between the S & P 500 Index and after-tax corporate profits in the chart below:

Perry explains this phenomenon:

"Starting about 2009, a one-to-one relationship between stock prices and after-tax corporate profits has once again re-emerged, and both the S&P 500 and corporate profits have increased by the exact same 119% at the end of 2013 from their cyclical, recessionary lows. The all-time record highs for the S&P 500 Index in 2013 were being driven by record-high corporate profits as the chart shows, and it's almost certain that the ongoing bull market rally in 2014 continues to be supported by record-high corporate profits."

The corporate landscape has rarely been as conducive to generating profit as it is right now. As a result, the post-recession years have been dubbed "a golden age of corporate profits" by those in both mainstream and alternate media. Specifically, "corporate earnings have risen at an annualized rate of 20.1 percent since the end of 2008." As a percentage of national income, "corporate profits stood at 14.2 percent in the third quarter of 2012, the largest share at any time since 1950."

To put the significance of this growth in perspective, at the end of 2008, during the peak of the recession, US corporate after-tax profits totaled $671.40 Billion. At the end of June 2014, that total has nearly tripled to $1.842 Trillion.

Unemployment Rate and Job Growth

Another major indicator used to gauge the state of the economy is the unemployment rate. In October of 2009, after the residual effects of the recession had settled, the US unemployment rate officially hit 10% for only the second time since 1940 (10.8% in 1982). After hovering around 9% through 2011, the rate has steadily decreased over the past few years, dropping below 6% in September of 2014 - a level untouched since July of 2008.

This new 6-year low in the rate includes 1.9 million people dropping from the ranks of the unemployed, and the number of "long-term unemployed" falling 1.2 million over the past year.

According to the US Department of Labor, "employers added 248,000 jobs in September (2014)" and "payrolls have expanded an average 227,000 a month this year, putting 2014 on track to be the strongest year of job growth since the late 1990s." The job growth rate in 2014 included a 300,000+ jump in April. And much of this expansion has been fueled by the private sector, which "has now added 10.3 million jobs over 55 straight months of growth" since the recession.

Flawed Indicators

Based on assessments which focus on macroeconomic indicators like the GDP, DJIA, and Unemployment Rate, one could reasonably come to the conclusion that not only has the US fully recovered from the "Great Recession," but it has actually surpassed pre-recession levels in economic well-being. However, this begs the question: whose well-being? And a closer examination uncovers plenty of contradictions.

The contradictions that arise from such assessments are largely due to the inherent flaws of these indicators. According to the New Economy Working Group, "Gross Domestic Product (GDP) has many deficiencies as a measure of economic well-being. Most often noted is the fact that it can only add, which means it makes no distinction between beneficial and harmful economic activity." Also, GDP analyses focus solely on total growth, and do not attempt to assess levels of wealth distribution:

"There could be complete income equality with everyone's purchasing power growing equally. Or the society may be divided between a small minority of the extremely affluent and a majority of the extremely destitute - or anything in between. GDP gives no clue one way or the other. Growth in the incomes of a few billionaires can produce impressive growth in GDP even as a majority of people starve."

In fact, during the past half-century, the DJIA has lost almost all of its credibility as a reliable indicator of economic well-being. And since the rise of globalization in the late-1990s, it has become increasingly irrelevant to economic activity on a national level. "The Dow's biggest flaw, perhaps, is that it doesn't help us to make sense of an increasingly interconnected global economy - one in which what's good for GM isn't always good for the country," explains Adam Davidson. "GE, IBM and Intel, for example, all make more than half their profits in other countries. And while this may be great for their shareholders, it means little for most Americans."

The ever-increasing gap between corporate profit and workers income has also served as a death knell to the DJIA indicator. "In the postwar boom of the 1950s, the economy was growing so fast, and the benefits were so widely shared (throughout the socioeconomic ladder), that following 30 large American companies was a solid measure of most everyone's personal economy," Davidson adds. Back then, "what was good for GM really was good for the country." In a modern economic environment that rewards CEOs 331 times more than the average worker, and 774 times more than minimum wage workers, this is no longer the case. (In 1983, this ratio was 46 to 1)

Historically, the unemployment rate has been considered a fairly weak indicator of economic well-being, and for good reason. Its two major flaws lie in its failure to gauge levels of income, and its inability to consider things like "underemployment" and "hidden unemployment."

These lost categories include "people who have given up looking for jobs or work part time because they can't find full-time position." In 2014, as unemployment statistics suggest a vast improvement in labor participation, "more than 9 million Americans still fit into these categories, about 60 percent - or 3.5 million - above prerecession levels, according to the Labor Department."

Evan Horowitz explains:

"Let's say there are 100 people either working or looking for work. If 94 of those people have jobs, and six are seeking jobs, then the unemployment rate is 6 percent.

Notice that a lot hinges on people 'working or looking for work.' Say you want to work, but the job market is bad and you decide to put off the search until conditions get better. You're still unemployed, just not counted as unemployed by the government.

To return to the example, if three of those six people looking for work get discouraged and give up, the unemployment rate would fall to about 3 percent."

Furthermore, the unemployment rate completely ignores income. In other words, even rates that are considered to represent "full employment" (4-5%) essentially mean nothing if a considerable number of jobs pay poverty wages.

State of the Working Class

Because macro-indicators like the DJIA, GDP, and unemployment rates are severely flawed in their ability to reflect standards of living and economic well-being for a population, it is important to evaluate how the majority is fairing in this so-called recovery.

Since the US population throughout is largely driven by consumerism, a telling statistic is the market-based core personal consumption expenditures (PCE) price index, a measurement used to determine the amount of expendable income the average consumer possesses at a given time. According to Josh Bivens of the Economic Policy Institute, "the market-based price index for core PCE (i.e., excluding food and energy) rose just 1.3% over the past year, well below the Fed's 2% inflation target." This supports further evidence that impressive gains in GDP and corporate profits are simply not reaching (or trickling down to) a majority of Americans.

Despite recent and steady job growth, there are still 1.4 million fewer full-time jobs in the US today than there was in 2008. A recent survey conducted at Rutgers University reports that more than 20 percent of all workers that have been laid off in the past five years still have not found a new job.

When considering workers who have given up on job searches, the unemployment rate is estimated at more than 12 percent.

A more accurate indicator than the unemployment rate may be the actual employment rate. When looking at this, we see that roughly 80 percent of " prime-age workers " (those between 25 and 54) had jobs in 2007. "That bottomed out at around 75 percent during the worst of the downturn, but has risen to only 76.7 percent since."

Despite steady job growth, new jobs simply do not stack up to the jobs that were lost. In sectors that experienced severe job losses due to the recession, workers are earning 23% less today. The average annual salary in the manufacturing and construction sectors - a particularly hard hit area - was $61,637 in 2008. It has now plummeted to $47,171 in 2014. Similar adjustments to income levels imply that $93 billion in lower wage income has been created during the recovery - meaning workers, across the board, are receiving a much smaller share than they were before 2009.

A report by the United States Conference of Mayors (USCM) also showed that "the majority of metro areas - 73 percent - had households earning salaries of less than $35,000 a year," hardly a living wage for families facing ever-rising commodity prices.

Despite increased productivity and corporate profits, most workers' wages have actually fallen. Biven reports, "From the first half of 2013 to the first half of 2014, real hourly wages fell for all deciles, except for a miniscule two-cent increase at the 10th percentile. Underlying this exception to the general trend at the 10th percentile is a set of state-level minimum-wage increases in the first half of 2014 in states where 40 percent of U.S. workers reside."

"As a percentage of national income, corporate profits stood at 14.2 percent in the third quarter of 2012, the largest share at any time since 1950, while the portion of income that went to employees was 61.7 percent, near its lowest point since 1966,"reported Nelson Schwartz in 2013. Dean Maki, chief US economist at Barclay's reports that "corporate earnings have risen at an annualized rate of 20.1 percent since the end of 2008, but disposable income inched ahead by 1.4 percent annually over the same period, after adjusting for inflation," adding that "there hasn't been a period in the last 50 years where these trends have been so pronounced."

In the midst of impressive GDP growth, the US working class is experiencing a legitimate hunger crisis that does not seem to slowing down. "As of 2012,49 million Americans suffer from food insecurity, defined by the U.S. Department of Agriculture (USDA) as lack of access to 'enough food for an active, healthy life.' Nearly one-third of the afflicted are children. And millions of them don't even have access to food stamps, according to a new report from the anti-hunger organization Feeding America."

In May of 2014, there were 46.2 million Americans on food stamps, a slight decrease from a record 47.8 million in December 2012. According to the US Department of Agriculture, 14.8% of the US population is currently on the Supplemental Nutrition Assistance Program (SNAP). Prior to the recession, the percentage of the population requiring such assistance hovered between 8 and 11 percent.

According to the US Census Bureau, "in 2013, there were 45.3 million people living in poverty" and "for the third consecutive year, the number of people in poverty at the national level was not statistically different from the previous year's estimate." The official poverty rate is at 14.5 percent.

Conclusion

Between 2008 and 2013, the number of US households with a net worth of $1 million or more increased dramatically, from 6.7 million to 9.6 million. Households with a net worth of $5 million and $25 million respectively also increased. "There were 1.24 million households with a net worth of $5 million or more last year, up from 840,000 in 2008. Those with $25 million and above climbed to 132,000 in 2013, up from 84,000 in 2008."

The US government, or more specifically, the Federal Reserve, has been instrumental in this uneven recovery that has been characterized by massive corporate profits and booming millionaires on one side (a small minority), and falling wages, increased poverty, and frequent reliance on food stamps on the other side (a large majority).

According to a September 2014 study by the Harvard Business School, the widening gap between America's wealthiest and its middle and lower classes is "unsustainable," and "is unlikely to improve any time soon." The study points the finger at "shortsighted executives" who are "satisfied with an American economy whose firms win in global markets without lifting US living standards" for American workers, and therefore create an extremely polarized population where a majority of workers are disenfrachised from the business world.

The practice of quantitative easing (QE) - "An unconventional monetary policy in which a central bank purchases government securities or other securities from the market in order to lower interest rates and increase the money supply" - has become common during the recovery. Essentially, this practice "increases the money supply by flooding financial institutions with capital in an effort to promote increased lending and liquidity." After three bouts of QE, all occurring since the recession, the Federal Reserve has acquired $4.5 trillion in assets , while adding at least $2.3 trillion of additional currency into the economy.

Robert D. Auerbach - an economist with the U.S. House of Representatives Financial Services Committee for eleven years, assisting with oversight of the Federal Reserve, and now Professor of Public Affairs at the Lyndon B. Johnson School of Public Affairs at the University of Texas at Austin - estimates that 81.5% of this money has not been used to "stimulate the economy," but rather " sits idle as excess reserve in private banks."

Others have reported that, rather than sitting idle as Auerbach suggests, the money has actually funneled through to major corporate players, creating massive personal wealth for a select few. CNBC's Robert Frank reported just last week that "the world's billionaires are holding an average of $600 million in cash each - greater than the gross domestic product of Dominica," which "marks a jump of $60 million from a year ago and translates into billionaires' holding an average of 19 percent of their net worth in cash."

When considering the top-heavy recovery numbers, and increased misery for the working class, this comes as no surprise. And it certainly comes as no surprise to political economist Doug Henwood, who reported such trends back in 2012:

"Despite the strong recovery in cash flow, to record-breaking levels, firms are investing at levels typically seen at cyclical lows, not highs. Some cash flow is going abroad, in the form of direct investment, but still you'd think returns like these would encourage investment. Instead, they've been shipping out gobs to shareholder. Here's a graph of what I call shareholder transfers (dividends plus stock buybacks plus proceeds of mergers and acquisitions) over time:

Though not at the preposterously elevated levels of the late 1990s and mid-2000s, transfers are at the high end of their historical range. Instead of serving the textbook role of raising capital for productive investment, the stock market has become a conduit for shoveling money out of the 'real' sector and into the pockets of shareholders, who besides buying other securities, pay themselves nice bonuses they transform into Jaguars and houses in Southampton."

The Great Recession - like the 2001 recession before it, the 1990-91 recession before that, the 1981-82 recession before that, the 1973-75 recession before that, and so on - was the result of deeper systemic deficiencies. While the emergence of financialization opened the door for manipulative and predatory finance tricks (credit default swaps, mortgage-backed securities, NINJA loans, etc...) and helped to construct an impressively profitable house of cards, it is only part of the story. Ultimately, it is the boom & bust, cyclical nature of capitalism, along with its perpetually falling rates of profit (not cumulative profit), that are truly responsible, though almost always ignored.

The nature of this latest recovery suggests that the final nail in the working-class coffin, whose construction has been underway since the birth of neoliberalism, has been secured into place. Despite desperate measures used to pump massive amounts of currency into the economy through QE, virtually none has trickled down to the 99%. It's like déjà vu, all over again. And again… And again…