On May 15, 2012 in the Daily Kos the post states:’
“Something sinister must be happening over at Murdoch’s Wall Street Journal (could it have to do with the ongoing criminal investigation in the UK?). Somehow they’ve allowed the truth of the past year’s government spending cuts to be written in one of their official WSJ economic analysis blogs. Without layoffs in local governments (eg, teachers, firemen, police officers, and other vital public services), the unemployment rate would be a full percentage point lower than it is today, at 7.1% percent.”
“Looking at the data, they come to the undeniable conclusion that spending cuts hurt employment: The unemployment rate would be far lower if it hadn’t been for those cuts: If there were as many people working in government as there were in December 2008, the unemployment rate in April would have been 7.1 percent, not 8.1 percent.”
While it is logical thinking to conclude that budget cuts during an economic crisis hurt the economy, the fact remains that while stimulus through public works projects will result in lower unemployment, this is a “duck tape” approach and does not address our economy’s fundamental structural problems––namely addressing how we distribute earnings generated by an exponential growth in the non-human factor of production embodied in the ever-accelerating shift to productive capital––which reflects tectonic shifts in the technologies of production.
While funding for public schools and public safety services, as well as public works (resulting in temporary short-term job creation) are valid stimulus measures, so much of the American economy is continually stimulated with “make-work,” “military-industrial contracts,” and all kinds of welfare, open and concealed in order to prop up the consumption demands of the economy.
Binary economist Louis Kelso postulated: “When consumer earning power is systematically acquired in the course of the normal operations of the economy by people who need and want more consumer goods and services, the production of goods and services should rise to unprecedented levels; the quality and craftsmanship of goods and services, freed of the cornercutting imposed by the chronic shortage of consumer purchasing power, should return to their former high levels; competition should be brisk; and the purchasing power of money should remain stable year after year.”
Without this necessary balance hopeless poverty, social alienation, and economic breakdown will persist, even though the American economy is ripe with the physical, technical, managerial, and engineering prerequisites for improving the lives of the 99 percent majority. Why? Because there is a crippling organizational malfunction that prevents making full use of the technological prowess that we have developed. The system does not fully facilitate connecting the majority of citizens, who have unsatisfied needs and wants, to the productive capital assets enabling productive efficiency and economic growth.
Kelso said, “We are a nation of industrial sharecroppers who work for somebody else and have no other source of income. If a man owns something that will produce a second income, he’ll be a better customer for the things that American industry produces. But the problem is how to get the working man [and woman] that second income.”
Without a policy shift to broaden productive capital ownership simultaneously with economic growth, further development of technology and globalization will undermine the American middle class and make it impossible for more than a minority of citizens to achieve middle-class status. It will also stymie “real” job growth and make further government stimulus support measures necessary, which translates to higher rates of taxation and increasing government debt to sustain consumer earning power.
