The Commondearth of Massachusetts
In an announcement last Wednesday, the governor of Massachusetts boasted about the retention of 23,533 jobs as a result of spending $ 1.9 billion in federal stimulus money over the past eight months. This is the kind of feel-good information political parties like to throw at folks who read only the large print in newspaper headlines.
Then, much to his chagrin, the above-mentioned governor was forced to announce on Thursday – the very next day – that nearly 1,000 state jobs had to be eliminated in order to help close a $ 600 million budget gap. Millions had to be shaved from human services programs, from local school building projects (like maybe some of the “shovel-ready” projects they were telling us about?), and even from an education incentive program that has boosted the salaries of police officers, the governor and his aides said.
1,000 jobs? That’s a lot of jobs. And $ 600 million? That’s a lot of money. Are we supposed to believe that those are signs of “economic recovery”, “green shoots” and a “bottoming out”?
On the same day, last Thursday, we also read these corporate announcements:
• “Cosco Pacific’s 3Q Profit Falls 49 Percent”
• “Matson 3Q Operating Profit Drops 23 Percent”
• “NOL Posts $ 139 Million 3Q Loss”
• “Kansas City Southern Profit Drops 47 Percent”
• “NAFTA Trade Slides 24.9 Percent”
• “All Nippon Airways Lost $ 127 Million”
• “Lufthansa Cargo Losses Reach $ 300 Million”
And on the same day analyst Dave Lindorff submitted this observation:
“So don’t be conned by the happy talk salesmen at the Fed and Treasury and in the White House, or by their propagandists in the newsmedia, who are trumpeting the latest GDP growth figure as a sign that the recession is over, apparently in the hopes that people will run out to the mall and start spending (in those remaining stores that don’t have their windows taped or covered in plywood). What we’ve seen is a blip on the chart, engineered by a couple of ‘going out of business’ sales by the car and housing industries.
“Real unemployment – measured the honest way it used to be 30 years ago, to include those who have given up looking for work or who are working part time involuntarily – is hitting 20% (for those who are bad at math, that’s one out of five working-age Americans). Foreclosures are hitting a record. Half of laid-off workers are cashing out their 401(k)s in order to buy food. State and local governments, both major employers, are hitting a wall as tax collections plummet and federal stimulus funds run out. That is not the foundation for a renewal of economic growth; it is the precondition for a renewed or prolonged recession.
“And if the dollar continues its slide, which is likely given the US’s huge budget deficits and trade deficits, as well as the Federal Reserve’s inability to raise interest rates – a move that could strengthen the dollar but which would crush the economy – all those things that Americans buy abroad which are no longer made at home, as well as the oil that is imported, will cost that much more, driving consumers further into the hole. And remember, 70% of US GDP is consumer spending, a result of our decimation of our industrial base.
“Recession ending? Don’t bet on it.”
Earlier last week the AP gave us some of the “non-corporate” signs of recovery:
• Due to out-of-pocket expenses from rising Medicare premiums, deductibles, and a coverage gap in the prescription drug benefit, about 18.7 percent of Americans 65 and older, or nearly 7.1 million, are in poverty.
• About 14.3 percent of people 18 to 64, or 27 million, are in poverty. Many are low-income, working people with transportation and child-care costs.
• Child poverty is at 17.9 percent, or roughly 13.3 million, because single mothers and their children disproportionately receive non-cash aid such as food stamps.
• Poverty rates are higher for non-Hispanic whites (11 percent), Asians (17 percent), and Hispanics (29 percent). Due to non-cash aid, poverty for blacks is at 24.7 percent.
• The Northeast and West saw bigger jumps in poverty due largely to cities with higher costs of living such as New York, Boston, Los Angeles and San Francisco.
The Northeast – and Boston – that’s where Massachusetts is, right? Most of the folks up there don’t recall the desperate days of the 1930s, and the folks who do remember try to blot out the memories. But poverty back then was destined to end. It was in the cards because another World War was on the drawing board.
Things are different now. No major war is envisioned because there are no takers. True – we’ll be engaged in one skirmish after another for many a year, but there are no circumstances that will require a 1930s-type emergency warship building program. Thank goodness.
So it appears as though our economic slide will continue to accelerate – ad infinitum. It won’t, though. It can’t. That direction can only lead to anarchy, and nobody wants that.
Those in Massachusetts old enough to remember the 1930s recall the steps that bailed them out of the Great Depression. Coincidentally, it was the same effort that prepared the U.S. for World War II. When Bethlehem Steel put the pedal to the metal at their shipyards in Quincy and Hingham, more than 800,000 direct and indirect jobs were created. The Great Depression ended almost overnight.
[How about it, governor? We need container ships. Do you have any clout in the White House?]