Home News The Economy’s Not Booming. Capitalism Is.

The Economy’s Not Booming. Capitalism Is.

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What Happens Capitalism Booms — But Only at Everyone Else’s Expense?

My whole adult life long, it seems, the very same thing’s been said, over and over again, breathlessly, by every establishment type, forever, as long as I can remember — with the possible exception of the crash in 2008. “The economy’s booming! Woo-hooo!! High-five me, Tucker!!” And yet, here’s the thing. During that very same time period, wages have never risen — they flatlined long before I was born, in fact — and real incomes, what people actually bring home, have shrunk. LOL. Do you see a problem here? I do.

And any sane person should. Because those two dismal facts are just the tip of a dark and grim iceberg. Does it feel to you as if the economy’s booming? As if things are just hunky-dory in the US of A? If so, then why are most Americans the most pessimistic they’ve ever been about the future? Why is democracy being shredded, the republic decapitated, and life seem to be generally falling apart, as people crowdfund healthcare? Can all of things really coexist?

Here’s a secret.

The economy’s not booming — capitalism is. And “the economy” and “capitalism” are hardly the same thing. Hence, economic indicators have stopped telling us how well people’s lives are really faring — the state of their true “welfare”, as it were, which is an economic term for general prosperity (not handouts) — in striking, sharp, and gruesome ways.

That difference is the story that isn’t told. It can’t be — because American economists assume that capitalism is the answer to the question they should be asking. “What kind of institutions does real prosperity require?” Assumption: only capitalist ones. They’re playing Jeopardy — not thinking about society. Hence — “the economy’s booming!!” — as long as a few measures of capitalism are. And over the years, even those measures — which were largely empty to begin with — have had whatever tiny shreds of meaning which were once in them plucked out, excised, and removed.

Let’s start with the most basic facts of economic life. The financial ones. American incomes flatlined in 1971 — the precise year segregation ended. They have never really risen much since. That’s not a coincidence — suddenly capitalism no longer had a regulated pool of ultra-cheap to exploit — black people — and so it began exploiting everyone. So wages are stuck right where they’ve been our whole adult lives long.

But costs have hardly stayed stuck, like wages. In 1971, a vial of insulin cost $2, but today it costs north of $200. Over the same time period, healthcare has risen by 2000%, education by 1000%, childcare 500%, and food by 400%. The result? 80% of Americans live paycheck to paycheck. 70% can’t raise $1000 for an emergency. The average American is broke, my friends — and deep in debt, as a result.

Now, how what would you do if you had to live that way? Working at a humble job — but an important one, which should be rewarded with a decent life — but wasn’t, to the point that you’d never retire? Let’s say as a teacher, or as a carpenter, for example. Well, if you wanted to put a roof over your head, feed your kids, and make sure healthcare was covered — three things half of Americans struggle to do, but people in, say Spain, Canada, or Sweden don’t — then you’d have take another job. And that’s precisely what we see. More and more Americans now work more than one job, an effect which isn’t captured well by statistics, because often, those “multiple jobs” aren’t even “jobs”, but gigs, hence, employment is becoming majority “freelance”.

That might be capitalism’s dream come true, because now it’s hammering you not just once, but several times over, with zero responsibilities to you — but it’s an average person’s nightmare. Because now you are being severely overworked — and yet still somehow going nowhere. Still, even if you just work one job, the truth remains: the jobs people are working aren’t quite those of yesteryear. They don’t pay well. They contain no upwards mobility. Hence, what’s really “growing” in the economy are low-quality jobs. So while economists who assume capitalism is the answer to everything cheer, you might notice, as any sane person would, that the institution of a “job” is yet another one that has been hollowed out. A job is not what it once was — now it is a shell, a simulacrum, really, that offers no pension, future, guarantees, or security.

But the economy is full of shells — shell corporations, banks, patents. They are shells precisely so they don’t have contribute to the real economy, though —aka pay taxes — and so society grows impoverished of public goods, like public healthcare, transport, finance, education, and so on. How much so? Walmart’s profits would be more or less wiped out if it had to stop relying on employees using food stamps just to feed themselves. And so when an economy is full of shells, whether jobs, corporations, offshore vehicles, because they are empty and hollow things, not real ones, then the chances people have to live a truly good life — just a humble one, to be sure, but still one that feels safe, secure, meaningful, fulfilling, and full of aspiration and potential — disappear, too.

So there you are, handing money to banks and corporations and hedge funds in countless different ways. How many? They squeeze you as monopolies, they pursue you once theyve indebted you, and then, you subsidize them with your taxes. Sales, debt, interest, hidden fees, taxes — you’re paying over and over again, for the same things. But producing them doesn’t pay you much of an income to begin with — if you even have a job to begin with, not a gig — unless you’re at the very top. LOL. No wonder capitalism’s booming. What about you, though? How would you feel about all the above?

You’d probably grow depressed. Angry. Lonely. Frustrated. Stressed out and anxious and afraid. And that is exactly what we see. Americans are all those things — to a striking and gruesome degree. So much so that suicide rates are now skyrocketing. Does it make any sense to you that “the economy’s booming” but suicide rates are soaring? Do people who feel secure and safe and happy kill themselves — or people overwhelmed by stress and pressure and depression? Do you think it’s just a coincidence that capitalism is premised on making people feel inherently worthless, like losers, like nobodies, having reduced life to a bruising, endless, dog-eat-dog contest, in which you win nothing if you win, and lose everything if you lose — and more people every year probably just can’t take it anymore? Is it just a coincidence that people are downwardly mobile at precisely the same time suicide is rising?

(Of course it isn’t. Only people who feel inherently worthless must compete with everyone else to to buy another hit power, dominance, and superiority. That is capitalism’s game, in a nutshell. But if you are too poor to afford even that, then all you are left with is a crushing sense feeling of worthlessness, meaninglessness, and uselessness. I’ll return to that in the end.)

And that brings me the paradox, the twist in my little tale. while Americans are killing themselves in record numbers, as their lives simply fall apart — maybe they have to choose between chemotherapy and the mortgage, or maybe between educating the kids and working so hard as to never see them — capitalism is booming like never before.

How much is capitalism booming? This much. Corporate profits are at record highs. And that means that megacorporations are literally making so much money that they have nowhere left to put it. Not a single place. It’s not just that they have nothing to invest it in. It’s that after buying jets, lavishing their CEOs with hundred million dollar packages, and building gleaming billion dollar headquarters, they still can’t find anything to do with all the money they’re making. Hence, there’s only thing left they can do. Give it back to shareholders. So share buybacks are skyrocketing — at precisely the same time that suicide rates are.

That’s not a coincidence. It is an example of what is really happening, beneath the surface, why economists and pundits are so confused by all this. The economy is “growing”, sure — that’s what record corporate profits will do. But that “growth” is no longer coming from doing, making, creating, distributing, sharing, or endowing things of real value. It is coming from hedge funds, bill collectors, payday-lending style usurers, Shkreli-style price gouging, giant monopolies squeezing Americans for every last penny — and then some.

Growth is not coming from benefitting people anymore — by definition, it can’t be, because they’re killing themselves, and every other real indicator, whether life expectancy, maternal survival rates, indebtedness, stress, depression, anxiety, happiness, or meaning is going in the wrong direction, too remember? — hence, it must be coming from preying on people. That is the only way that you get to an economy where real incomes are shrinking, because healthcare, education, finance, media, food, and so on, have exploded in price, while profits and CEO packages reach eye-popping numbers. But that kind of growth is not good or desirable growth. It is the inverse — predatory growth. (And it tells us that gentle, humble mom-and-pop capitalism, which is the kind we probably should want, has degenerated into rapacious, robber-baron, predatory capitalism.)

But economics, especially American economics, has no name, term, concept for this idea, what I’ve called “predatory growth.” Because it assumes capitalism is the economy — by assuming capitalism is the best and only answer to all economic questions — therefore all growth must be good, and it can never be predatory. Hence, it is completely bewildered and baffled by today’s reality: a “growing” economy, in which people’s lives are falling apart, to the point that suicides are soaring, longevity is falling, and the middle class is collapsing. Hence, mostly, American thinking tries to simply ignore the gigantic rampaging elephant in the room — “don’t look now! The stock market’s booming! Quarterly growth is great! Never mind if people are so overwhelmed by despair they’re offing themselves en masse!” And yet the growth of capitalism at the expense of people’s lives, not to mention society, is not worth a penny to anyone, really, who has common sense, decency, wisdom, or an inkling of history’s great lessons.

Why? Remember share buybacks — corporation getting so rich they literally have nowhere left to put all the cash but give it right back to shareholders? The problem is that just 10% of Americans, really, own stocks, and even fewer, bonds. Even fewer than that own large enough numbers of shares to earn a meaningful capital income from them. Now a teacher works two or three jobs — but a trust fund scion grows richer by the nanosecond, for never having contributed a thing to society, read a book, had an idea, or accomplished anything at all. Capitalism’s booming, sure, but most Americans aren’t capitalists — and they never will be, so those gains are had at their expense, not to their benefit. Hence, what all those share buybacks have done is accelerate inequality to a point higher than the Great Depression. Do you see the problem that’s about to happen when a society hits that point? Do you see the implication from the 1930s?

Predatory growth ultimately means an economy is eating itself. I can grow by eating my own limbs, too (gross, I know), as long as I’m just counting my belly. But it’s probably not going to make me a healthier person. An economy based on predatory growth is primed to implode. How so? Not just “implode” as in “it’s a financial bubble.” But genuinely implode, as in “burn down the house.” Because when things reach a high enough level of inequality, do you know what that predicts? Revolution. People lose faith, trust, and hope in their systems. Norms shatter, values fracture, institutions explode. All the things that bind people together turn to dust.

But not all revolutions move the wheel of history forwards. Some are backwards revolutions of the wheel, in which neighbour turns on neighbour, brother on brother, and friend on friend. The difference between them is often made by whether a middle class has fallen — or risen. A rising middle class, reaching a ceiling, tends to shatter it, and expand democracy. But a falling one, one being consumed by capitalism, sadly, does just the opposite: it begins to spite and hate and abuse those beneath it, and those different from it — so that it can take that sense of superiority, power, status, and wealth, that capitalism promised, but failed to deliver, only this time, by force, with a fist, not a handshake.

When a middle class that once expected prosperity, and is denied it, what does history tell us is likely to happen? A catastrophic descent into authoritarianism and fascism. That is the story of Weimar Germany, among others. And right about now, it’s the story of America, too. Capitalism’s booming — for the capitalist. But for the aspiring bourgeois? Who thought he’d be one of the capitalists one day? He’s discovering a cruel trick was played on him. He’s becoming just another downwardly mobile prole. Like those dirty immigrants, those filthy animals, those Muslims and Jews and Mexicans. That isn’t what capitalism promised him! It promised him power, riches, and superiority. And now he will take what was coming to him by other means. Violent and repressive ones, which, all too often, spell the doom of a democracy. Hence, Trumpism.

The economy isn’t booming. Capitalism is. So much so that it is eating itself. It has eaten through the future, the young, the old, the poor — and now it has eaten the core of a society too, it’s middle. Bang! What’s left? Nothing. And so while there’s a big difference between the economy booming and capitalism booming, it can be summarized in three words. Authoritarianism, fascism, and collapse.

Umair
 September 2018

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