Cassandra's back

I've been laying off the doom and gloom for a couple of weeks. But the bad stuff is not getting further away, it's getting closer. I don't post this stuff to bum anyone out. Just to let you know, when it happens, it wasn't something you did - it was done to you.

Social Cycles, Depression and Revolution (Part II)
March 29, 2007
by Michael Nystrom

It's not dark yet, but it's getting there...-Bob Dylan

Last week I gave you the good news, that after we make our way through the current political and economic mess that we find ourselves in, will emerge into a new golden age. This week, the bad news: Before we get we there, we will likely have to first undergo at least a depression, and certainly a revolution before we arrive. The brighter world will not come of its own accord; it will wait patiently until we collectively decide to create it. Until then, Batra predicts that "real wages and family income will continue to fall, while poverty will rise. The rich will keep getting richer and the poor getting poorer; similarly, the middle class will continue to shrink." For many, the motivation for real, fundamental change will only come from the depths of depression. Before continuing with Dr. Batra's theory, let's take a look at two recent news articles that set the stage and concretely depict the points he makes: The first, from today's New York Times, informs us that the nation's income gap widened significantly in 2005 to levels unseen since 1928 - the year before the start of the great depression. According to the story, the top 300,000 Americans collectively own as much wealth as the bottom 150 million. While the top 1% of the population got an average raise of $139,000 in 2005, the bottom 90% of workers saw their incomes fall by $172. These are times that try men's souls. Since these are abstracted numbers, it can be difficult to fully appreciate their meaning. But this second article should make things perfectly clear: Circuit City is firing 3,400 of its hourly sales floor workers, and will rehire either them or new workers at a lower hourly rate. Just so you understand the context, this is a company that is headed by a CEO -- Phillip Schoonover -- who raked in $8.5 million dollars last year. The company itself made a profit of $162 million, though it lost money in the most recent quarter. Apparently this is how Schoonover can justify his brilliant fire/rehire-cheaper scheme. According to the article, the average sales worker now makes $10-11 per hour, or about $21,000 per year, while a new worker would only make about $8.00, or $16,000 per year. That is below the poverty level for a family of four, or even three, so forget about trying to raise a family on that kind of a salary. Schoonover, on the other hand, makes about 530 times the average grunt worker's pay, and in today's climate, he'll likely get a bonus for his great idea. But as Batra points out in this and other books, these are precisely the kinds of conditions -- extreme wealth concentration and inequality -- that lead to depressions, for they weaken the overall capitalist system. With such minimal incomes, the only way for workers such as those at the new and improved Circuit City to continue to consume (the great "engine of global economic growth") is by taking on increased levels of consumer debt. But there are limits to how much debt such poorly paid workers can take on. To make sense of these stories in a larger context, let's take a look at the global economy through Dr. Batra's eyes. Batra asserts that the entire world economy has been colonized by the American Global Business Empire. The acquisitors have taken the reigns of power in both business and government and, motivated by unbrided and unchecked greed, are taking increasingly aggressive action to consolidate their power. As a result, members of the other three classes - both in the US and abroad - are being pushed increasingly into the laborer class, simply trying to make a living in the acquisitor dominated world. (for defintions of these terms, please see Part 1)

For the rest of the review go here.