There are more than two economies in the US, Natalia. The first, and most durable, is the economy of the super-rich. While, as Reich says, the top 10% of Americans hold 90% of all financial assets, the top 1% receives more than 20% of national income. Well below the topmost, the middle class struggles. It depends on having jobs, and many of its jobs have been exported to Asia, where labour is cheaper. And many of its jobs have been cut by governments that are trying to reduce their debt loads or that have fallen into teaparty dogma that government has no business in the lives of citizens.
The official unemployment rate in the US, the rate that applies to the struggling middle class, is about 10%, but the real rate may be as high as 30%. Many to whom this rate applies are young potential workers between the ages of 16 and 24 who are no longer putting much effort into getting a job or who have stopped trying altogether. As Paul Krugman pointed out, every year that goes by with extremely high unemployment increases the chance that many of the long-term unemployed will never come back to the work force. They could become a permanent underclass. Underclass? Maybe, but perhaps many of them will create a class of their own. Perhaps they have already done so by finding jobs in drugs or other illicit markets. Look for a substantial increase in the underground economy in the next decade. As for the top ten percent, and especially the top one percent, there are quite likely no worries. They have connections. They get politicians elected and the politicians know they have to work with them. The financial assets they hold are not only American assets, they go where the money is by investing globally. As well, the tax cuts that George W. Bush initiated early in the past decade have now been extended to 2012. I'd be willing to bet that they'll be extended beyond that and perhaps become permanent. Not a very nice prospect for the ordinary guy, is it? Ed ----- Original Message ----- From: D and N To: RE-DESIGNING WORK, INCOME DISTRIBUTION,EDUCATION Sent: Monday, February 21, 2011 6:21 PM Subject: [Futurework] US has 2 economies I think the first economy, rather than being in a state of recovery, is more accurately in a state of unrecognized near-extinction. Tax payers won't bail them out again, and it is with their funds that they resumed gambling. I'd like to say Wall Street's demise is just around the corner, but because they own the government and the media, it will take years more for the realization that an illusion of financial success won't possibly restore the government treasury. Natalia America's two economies: one in recovery, one in depression Robert Reich, Huffington Post - We have two economies. The first is in recovery. The second remains in a continuous depression.The first is a professional, college-educated, high-wage economy centered in New York and Washington, that's living well off of global corporate profits. Corporations continue to make money by selling abroad from their foreign operations while cutting costs (especially labor) here at home. Wall Street is making money by taking the Fed's free money and speculating with it. The richest 10 percent of Americans, holding 90 percent of all financial assets, are riding the wave. And their upscale spending has given high-end retailers and producers a bounce. The second is most of the rest of America, and it's still struggling with a mountain of debt, declining home prices, and job losses. In coming months most Americans will also be contending with sharply rising prices of food and fuel. Our representatives in Washington see and hear mostly the first economy. The business press reports mainly on the first economy. Corporate and Wall Street economists are concerned largely with the first economy. But the second economy will determine our politics in 2012 and beyond. And not even the first can be sustained permanently on its own. Corporate profits cannot continue to rise on the basis of foreign sales (which are slowing as Europe adopts austerity and China raises interest rates), the purchases of the richest 10 percent of Americans (which are dependent on a rising stock market), and cost-cutting measures at home (which are necessarily limited). Without a strong and broadly-based middle-class recovery, America's big money economy will fall in on itself. A major stock market "correction" is a certainty. ------------------------------------------------------------------------------ _______________________________________________ Futurework mailing list [email protected] https://lists.uwaterloo.ca/mailman/listinfo/futurework
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