What About The Economy?
A topic of hot debate recently has been the reason the economy is doing so well and if it will continue. The natural answer would be that everything that goes up must come down. This is especially true with the boom/bust nature of capitalism. However, a new theory has emerged stating that we will have a sustained economic boom due to increasing efficiencies of the Information Age. This idea was popularized by an article in Wired magazine entitled "The Long Boom" which basically stated that we are in for decades of sustained growth in the coming future. The article quickly drew up battle lines between the believers in the new paradigm and those that still believe that the flaws of capitalism remain intact.
Basically, the "Long Boom" believers think that the Internet and global communications will bring economic power to currently impoverished areas as geography is less of a barrier. It's a lot more complex than this but in a nutshell they basically believe the paradigm has shifted from the boom/bust economy to a sustained growth economy due to inventions such as the Internet, wireless communications etc. They sight the American economic boom as a prime example of this new economic system.
Critics believe that this is just another boom time that will eventually come to an end. In turn the "Boomers" say "Why haven't interest rates risen, as they historically do in economic upturns." The answer, discussed often but seemingly dismissed is that of wage stagnation. Everyone remembers the horrific downsizing of the early 90's (recent data suggests the trend never left!) Those who didn't receive the axe were just thankful to have a job let alone worry about raises. So a period goes by where employees receive smaller or no raises at all so the company can remain "profitable." Employees, still thankful to have a job grumble a little but realize that if they demand a decent raise they may be "downsized." So everybody sucks it up until the economy turns around. Well, no doubt the economy has its turn around and is in fact even better than the economy preceding the recession, yet where have the raises gone? Over the past few years salary increase has been at an all-time low. This stagnation of wages has led to increased profitability within the companies, which in turn leads to increased profits for the shareholder. The employee, still remembering his friends receiving pink slips only a few years earlier (or maybe last week,) is fearful of asking for the raise he deserves even though his company is probably earning more money than the pre-recession years.
This concept can be illustrated in the microcosm of my work. In November (this was in '97 folks!) we had a company wide lay off, termed a "restructuring." Naturally, those that remained were concerned about raises which were given in February. The vice president said it shouldn't have any effect on raises as now the company will be profitable after the "restructuring." These people get one raise a year and believe me, they work so hard they deserve that and more. Well February has come and gone and guess what "no raises" until "contract negotiations" are settled. Basically, the company is arguing over how much money it will get paid for its service to its clients. I'm sure that that even the lowest figure is enough o remain profitable but no, hood off raises until we're sure we're going to make as much money as possible, at the expense of the workers. So now people that fear that they might get "restructured" suck it up and don't complain about not getting about not getting a raise (at least not to their supervisors.) Once again the employees are asked to take the brunt of the economic hardship in the name of the company remaining at maximum profit potential. So you ask me which side I am on the economic debate and I'll tell you I wiped my ass with the Wired article. Wage stagnation is what's fueling stock market returns, which fuels the economy. Sure this ride will continue for awhile but as soon as the American workforce starts asking for a crumb of the profits these companies having been gorging themselves on, there's going to be some more "restructuring." Basically, don't believe the hype. We haven't solved the inherent problems of capitalism and we never will. Some utopian concept of globalized equality and growth sounds great on paper with pretty pictures of a smiling earth but when you get down to it, shit hasn't changed. The capitalist pigs remain in control and the workers remain underpaid, overworked and fearful.
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