Economists the wide world over are turning themselves inside out trying to explain what's going on. It would be nice if they tried to understand it first. Sure, everyone, poor folk, rich folk, banks, investors, cities, states, whole nations, borrowed much too much, often on outrageously manipulative terms -- and now the debts have multiplied to the point that they can never be repaid. Sounds simple enough. Only no one ever seems interested in figuring out why it was necessary for all these people and all these institutions to borrow so much in the first place.
I've already tried to explain it by using a single word: "immigration." But of course this too is misleading, because the immigration I've been writing about, both literal and figurative, isn't the root cause either. And "immigration" is now a politically charged term, with all sorts of ideological resonances that have little or nothing to do with the point I'm trying to make.
So let's dig a little deeper. What we see time after time in literally all the reports and all the analyses coming from literally all points (though at the moment Europe has become the focus) is over and over again the same idea, expressed in a variety of ways, but always with the same (unstated) meaning: words like "austerity," "growth," "productivity," "competitiveness," phrases such as "budgetary discipline," "moral hazard," "growth-enhancing reforms," "market reform," pretty much any call for "reform," reform this, reform that.
When we look more closely and more critically at all these terms, pushing aside the fog of obfuscation, what all the rigmarole amounts to can be encapsulated in the following question: how can we squeeze the absolute maximum amount of blood from our workers at the least possible cost without them figuring out what's really going on?
The root cause of the so-called "economic crisis" was neither banking nor the Euro nor monetary policy, nor fiscal policy, nor the Fed, nor Goldman Sachs, nor J. P. Morgan Chase, etc. (though all the above contributed mightily to the depressing outcome), but the relentless ratcheting up of that age-old resource of the wealthy and privileged: the ruthless and relentless exploitation of labor. Only this time, vast new resources became available via the economic miracle known as "globalization." Capitalism has always had a hard time with competition, which is why so many companies collude with one another to fix prices and control markets -- but competition among workers, why that's another thing, no problem there. The more competition along those lines the merrier. So when all sorts of fresh "human resources," from the remotest corners of the globe became available for exploitation, what better way to exploit them then to force them to compete.
The only problem was that workers are also consumers, so by cutting worker pay to the max, the oligarchs were depriving them of the ability to purchase goods and services. How could manufacturers, home builders, insurance companies, pharmaceutical companies, universities, investment houses, entrepreneurs, banks, etc., survive without a steady stream of purchases and investments from the very workers whose paychecks were being steadily eroded? Then suddenly out of the blue, a brilliant "innovation" emerged in the form of: easy credit. Let them borrow what we need for them to have so they can pay us through the nose even when they can't afford it (because we've shaved their incomes down to practically nothing).
Thus was born the magical housing market, where ordinary people at all income levels were persuaded that they could afford a mortgage because the value of their house could only go up up up. And for a while, it all worked marvelously. Until the bubble burst and those values started going down down down.
The oligarchs have overdone it. And now they are in trouble because the world financial system on which they depend is about to collapse thanks to all those bad loans, based on their absurd attempt to milk their victims at both ends. And the only solution they can think of is: austerity, aka "productivity," aka labor reform, market reform, employer "flexibility," etc. And what it amounts to is the squeezing of the labor force far beyond anything ever attempted before. And lo and behold: they are buying it! The workers of the world are buying it. They've been convinced that this is the only way to go and that they have no other recourse, because the only alternative would be the collapse of this mythical beast they've been taught to revere: the economy.
(to be continued . . . )