...lufta fillon me kuptimin e shkaqeve të krizave dhe ajo vazhdon me ndryshimin e mendësisë dhe praktikës...

America’s working class at the crossroads*

Ylli Përmeti

20/06/2017 - 07:11

In his first days of the American presidency Trump moved quickly from the principle of “America first” to “American military first”: because in his 2018 budget (pdf) Trump increased by 10% or about $54 billion annually US’s expansionist-defense spending. These savings are being squeezed from social programs (environmental protection, Amtrak etc.). As such, they are not the result of the economic policies of Trump. Unless the “squeezed social programs” are being called “economics”. However, it is clear now that with this shift Trump will pass through Obama’s stalemate: from shutting-down the American government, once again, and increasing the American debt and, as we shall see here in particular, to the perpetuation of the misery of the working class in America in general. The shut-down of the American government in the first days of October 2013, for example, was simply inevitable: because Obama asked to improve the health system through an Act that was modeled in 2006 in Massachusetts by its governor of that time Mitt Romney of the Republican Party. That Act was characterized even by Marin Wolf as a criminal act and as a form of slavery for the employees: because most of the employees get their health insurance through their employers.[1]

However, Obama asked to freeze the debt ceiling at the time when republicans did not vote it. Obama-care program has been supported also by Krugman, for which he opposes the republicans by calling them “the enemies of the poor”[2] on the reason that it ‘boosts incentives of demand, because the subsidies of families receiving health care gradually disappear for those with higher income, instead of disappearing for everyone being too rich to have Medicaid. By boosting the demand means that government spending must be more, not less, in the insurance network, and the taxes on the rich must be raised in order to pay for these spending. To boost his argument, Krugman, in another analysis quotes that “the increase of inequality carries an economic cost: fixed salaries, despite the increasing production, debt increase that makes us more vulnerable in financial crisis. Inequality carries also human and social costs. There are, for example, irrefutable facts that huge inequality leads to deteriorating health and higher mortality... extreme inequality, therefore, creates a class of people detached from reality – and at the same time these people create a frightening ever increasing power, so much so we today risk a plutocratic paranoia and megalomania like that of Hitler.[3] While on the issue of inequality Krugman is right and “Trumpcare” is being predicted by the “Congressional Budget Office” to deteriorate the life of millions of American people, particularly of the lower social stratum, he espouses the idea that America has no fiscal issues, nor has had she debt problems, since, contrary to other countries, it borrows in its own currency and therefore it cannot go bankrupt![4]

However, the Congress passed an agreement and the debt ceiling was raised for a very short time: until Feb. 2014. But, as Chossudovksy points out, following the Congress Budget Office predictions and many other systemic aspects: America will adopt deflationist measures (economic shock therapy).[5] The objective is, according to the analysis, that Wall Street to continue controlling the monetary policies of the FED to the interest of lobbies and of private trusts, while other national sectors are being privatized (Medicaid, Medicare, social security etc.). And indeed the Institute for International Financing (IIF),[6] partaker of which is the largest banking conglomerate (JPMorgan Chase, Deutsche Bank, and BNP Paribas) exerted pressure upon congressmen —through panic— that if the Congress does not raise the ceiling, the consequences will be catastrophic.[7] The strategy of this conglomerate, as Chossudovski analyzes, is that the information remains on their side, to create insecurity through unilateral reports and the information be used by stock speculators advising their clients on “secured investments” – a conglomerate which controls not only the mass media, but also the agencies like Moody’s, Standard and Poor. The four main Wall Street institutions (JP Morgan Chase, City Group, Bank of America, and Goldman Sachs) account for more than 90% of exposed derivatives. Precisely, and in spite of this exposure, they exert organized influence on monetary policy, including the debates within the Congress and the debt ceiling.[8] The pressure, consequently, on Obama, and the promises he made, was double: one was from the bank conglomerates and the other from the republicans, who were not supporting investments on the public sector.

In fact, the public sector investments have been reduced below the levels they used to be after the world war two: form 5% to 3.6% of the American GDP.[9] Whereas the pressure on the infrastructure budget has grown since the Great Depression 2008-’09, the public investment have been weak since 1960. The public investments have been the highest between 1950-1960, during the social-democrat consensus, but low from 1970-1980, a period during which America, together with other Western countries, especially Great Britain, began to orient their economies towards the new paradigm of modernity: the neoliberal globalization. But the public sector investments have dropped more after the year 2000 – when the NWO was formalized by the Anglo-American foreign policy. At the time when offshore investments generally hurt the economy of the origin and is less than half the growth created outside of it.[10] Because when the economic activity is being increased abroad, the growth inside the country is less than half of the growth created out of it. As a result, the expansion of the TNCs (Transnational Corporations) out of the country will weaken the job creation, investments, R7D, and exports, rather than strengthening or increasing the domestic economic activity. It would not be a surprise that business initiatives are in crisis, industries are being concentrated in fewer hands and universities finance the best speculators. As an analysis points out:

…a host of indicators suggest large tracts of America have lost some of the entrepreneurial verve that made the country the biggest economic success story of the past century. Half of the growth in business establishments from 2010-14 occurred in just 20 counties…The patchy performance in business formation comes amid broader signs that the US is not the start-up nation it once was. Despite headline-grabbing tales of tech unicorns in Silicon Valley, the portion of the US workforce employed in young companies has been shrinking, as has the pace at which new employer-owned businesses are created. In another sign of depressed dynamism, Americans change jobs and move between geographies less frequently…the share of companies that are start-ups employing at least one person was at the second-lowest level on record in 2013, and 20 per cent below its pre-recession levels… Companies are growing older, competition is less fierce and market power is consolidating in the hands of a few large companies in many industries. In three-quarters of US sectors, the 50 biggest companies boosted their revenue share between 1997 and 2007…Industries from retail and finance to transportation became increasingly concentrated. Without question there is less fluidity in the US economy, whether it comes to workers moving between jobs or firms entering and exiting… Indexes that show the ease of doing business and global entrepreneurship put the US at or near the top of the rankings. In world-beating, technology-rich areas such as San Francisco and Silicon Valley, business is booming and effervescent activity can be found in plenty of other niches… Around a quarter of new entrepreneurs are aged 20-34, down from 34 per cent in the mid-1990s. That slower start-up activity comes despite an explosion in the number of entrepreneurship classes and diplomas on offer at colleges and universities, with courses growing approximately 20-fold between 1985 and 2008. In a bid to boost business start-ups, a growing number of universities are taking things into their own hands — providing funding to promising students, on top of academic instruction.[11]

Obama, on the other hand, could have unilaterally passed off the ceiling but would have broken the law or bypass the Congress’s power and be suspected. The debt limit was $16.699 trillion (May 2013) because at the time when this letters are being written it passed off the ceiling. Namely, the debt has reached $17tn, whereas the debt to GDP is 73%, double of what it was at the end of 2007.  On the world scale, the American debt is ninth, at 106.5%.[12] The overall American national debt in relation to GDP is almost equal to its annual product.[13] In relation to this Krugman argues that “debt is good”![14] While a proverb in my own country says “it’s better to go to sleep without dinner and waking up without debt”…indeed, it began to grow when America began to abandon the policies of social-democratic consensus and adopted the neoliberal policies, last century, catapulting it every decade: thus, in 1980, the debt was $0.9 trillion (33% of the GDP); in 1990 $3.2 trillion (55,9%); on the eve of the new millennium of the year 2000, $5.6 trillion (58%); and in 2010, the debt passed off $13.8 trillion (96.5% of GDP).[15]

The national debt is divided into marketable debt, designated as treasury bonds, sold in the market (comprising of $13.7 trillion, or 72% of the total) and nonmarketable debt, which belongs to the non-budgetary funds and budgetary organizations and through them, to the state itself. The largest fund is that of Social Security.[16] The biggest owner of the “marketable debt”, packaged on treasury bonds, is the Federal Reserve with 28%.[17] Foreign governments own about 1/3 of the total. In short, the American debt, corporate, family and government is at 244%, the highest among the developed economies.[18] All this debt is being caused by the fiscal deficit and the effects of it are huge: according to the plan of Tax Policy Center (TPC) it would raise the federal deficit (even after allowing for beneficial macroeconomic effects) by a little under 3 per cent of gross domestic product for as long as it remains in place…at the time when the US is already running a general government structural deficit of 4 per cent of GDP, which is being forecasted to rise to just 6 per cent of GDP in the early 2020s (IMF). In short:  

With the addition of the proposed tax cuts, a structural general government deficit of well over 8 per cent of GDP might emerge in the 2020s. This would cause an explosive rise in debt….Among the startlingly regressive changes would be repeal of the alternative minimum tax, repeal of estate taxes and huge reductions in corporate tax rates, including on so-called pass-through businesses. To those that have it shall be given. That is the doctrine of Mr Trump. It is also the old Republican trickle-down doctrine in purest form. Mr Trump won the nomination by promising to be a different sort of Republican. He is not. What he has achieved is to make the “bait and switch” yet more obvious. Post-Reagan Republicans reached out to the base by campaigning on cultural issues, while legislating for the upper 1 per cent. That is “pluto-populism”. Mr Trump added infrastructure spending, trade protectionism and support for Medicare and social security. But he too plans to deliver for the top 1 per cent. Pluto-populism is highly politically effective. But it works by making the base ever angrier and more desperate. That is playing with political fire. The republic may survive Mr Trump. But what comes after?[19]

The other effect of neoliberal policies is the ‘paradox’ of the American consumers, who, while are more “confident” than they have been for years, they are spending less than they have since the Great Recession.[20] As an analysis points out:

US consumer today is “fragile”, likely to close up their wallet more quickly, and open it more slowly, than in the past. The missing metric that explains all this isn’t economic, but social — it’s about trust. Or more notably, the lack of trust among the general population in what the future will look like, and the ability of elites to manage it…Like Chinese consumers, whose high savings rates are a reaction to things such as having lived through huge social upheaval, and coping with an inadequate social safety net, Americans seem less sure of the political economy in which they live… Economists and policymakers everywhere will have to figure out how to incorporate voters’ understandable concern about the demise of the nation state, the rise of corporate power, and their own economic vulnerability. Indeed, growth itself may depend upon it.[21]

In fact, the lack of trust is caused by the great scale of uncertainty, which, in turn, is being caused by neoliberal policies. Politicians and investors, like the working class, must adapt to the age of uncertainty. Yet, the scale of it is not the same to all these sections: while the former fear the loss of their wealth and power; the latter, fear the loss their day-pay.       

From the stalemate of US’s presidents to the unavoidable depression and misery of the working class 

Although the American economy is exposed primarily at home rather than abroad, erasing the debt from the balance sheet does not change the overall outstanding balance of the economy: the American government, in other words, will continue to cover the debt with money borrowed either from the Federal Reserve or national and foreign investors alike. The axiom of the orthodox economists, Carmen Reinhart and Kenneth Rogoff, for countries with debt over 90%, lower the percentage of economic growth at least by 1% per year, consequently, can be applied to the American economy, as well. And if it keeps with the current policies, the American debt will exceed $25trillion in 2025. All these, at a time when America is in a continuous fall of the general economic level. For example, while in 2012, it controlled about 25% of the global wealth, in 1948 it controlled 50% of it.[22] America is the most unequal of all western nations: its “Gini” (inequality) index is 85.1, in line with Chile’s 81.4, India’s 81.3, Indonesia’s 82.8, and Kazakhstan’s 86.7. The top 20% of households own over 84% of the wealth; the bottom 40% own 0.3%.[23]

So, America is not going, as Krugman points out, back to a “patrimonial capitalism” in which, according to him, the commanding heights of the economy are dominated not simply by wealth, but by hereditary wealth, and in which birth has more importance than effort and talent...dominance of income from capital, which can be inherited, over salaries – the dominance of wealth over work...but to “corporate capitalism” both at the national and transnational level, which, in turn, dictates national and transnational policies and concentrate even more economic, political and social power in few “selected” hands! It would not be a surprise then that most of Americans not only do not own any business, but the revenues from business and the capital in general, are increasingly concentrating at the hands of few. In 1970 the top of 1% of the families collected 17% of the revenues from businesses, in 2007, the same group got 43% of income from the business, and 75% of earnings from the capital. This small elite still receives all the affection from the GDP, and the greatest attention for its policies. Huge wealth buys huge political influence – and not only through election campaign contributions. Many conservatives live inside an intellectual bubble of think tankers and seized media, ultimately paid by a few mega donators. At no surprise, those inside the bubble hypothesize, instinctively, that what is good for the oligarchs is good for America, too....The important point to keep in mind, however, is that people inside the bubble have much power, which they keep on behalf of their patrons.[24] In fact, this is part of the truth, because neoliberal globalization and the two-party system, namely, the so called center parties, which differ mainly in the management of taxes, have caused another division of social strata and a series of crisis across America:

Conservative “red states” are poorer and have more teenage mothers, more divorce, worse health, more obesity, more trauma-related deaths, more low-birth-weight babies, and lower school enrolment. On average, people in red states die five years earlier than people in liberal “blue states”. Indeed, the gap in life expectancy between Louisiana (75.7) and Connecticut (80.8) is the same as that between Nicaragua and the United States. Red states suffer more in another important but little-known way, one that speaks to the very biological self-interest in health and life: industrial pollution…During the depression of the 1930s, Americans turned to the federal government for aid in their economic recovery. But in response to the great recession of 2008, the majority turned away from it. As the political divide widens and opinions harden, the stakes have grown vastly higher. Neither ordinary citizens nor leaders are talking much “across the aisle”, damaging the surprisingly delicate process of governance itself… when people move today, it is more often to live near others who share their views. People are segregating themselves into different emotionally toned enclaves – anger here, hopefulness and trust there. And the more people who confine themselves to like-minded company, the more extreme their views become. According to a 2014 Pew study of more than 10,000 Americans, the most politically engaged on each side see those in the “other party” not just as wrong, but as “so misguided that they threaten the nation’s wellbeing”. Compared with the past, each side also increasingly gets its news from its own television channel – the right from Fox News, the left from MSNBC. And so the divide widens… Oil was highly automated and accounted for some 15% of jobs – and even some of those were going to foreign workers at lower pay. The state had made huge cuts to local jobs and social services in order to bring in companies and, instead of money trickling down, a substantial amount was leaking out. To some degree, the community had become the site of local production without being the site of local producers…Giant companies have grown vastly larger, more automated, more global, and more powerful. For them, productivity is increasingly based on cheap labour in plants abroad, cheap imported labour at home, and automation, and less on American labour. The more powerful they have become, the less resistance they have encountered from unions and government. Thus, they have felt more free to allocate more profits to top executives and stockholders, and less to workers.[25]

Clearly, Trump’s policies are a deadlock for the American economy and may well lead to a class war. Yet, a “class war” not in the sense of going to a classless society, but to a war where the working class will either be organized to oppose the conditions created by the American elite or will be ‘absorbed’ by the dynamic of the system. Given the fact that American corporations are being prepared to go back at home, because they understood that the automation of their industries will keep their labour cost low while investing in developing countries they are exposed at greater risks, because of instability of politics, and they are creating new jobs for the workforce, and given the fact that the working class in America has failed to oppose neoliberal policies in the last decades, they will be, once again, ‘absorbed’ by the system.           

*This article has been first published on Pravda.ru International. Here is an extended version of it and is part of a greater study on the American social-economic situation.



[1]America flirts with self-destruction, FT, Martin Wolf, October 1, 2013.

[2]Enemies of the Poor, Paul Krugman, N. Y. Times, JAN. 12, 2014.

[3]Paranoia of the Plutocrats, N. Y. Times, JAN. 26, 2014.

[4]The fiscal fizzle,New York Times, July 20, 2014.

[5]The Shutdown of the U.S. Government and “Debt Default”, Global Research, October 12, 2013.

[7]World top bankers warn of dire consequences if U.S. defaults, Reuters,Oct 12, 2013.

[8]The Speculative Endgame: The Government “Shutdown” and “Debt Default”, Global Research, October 16, 2013.

[9]US public investment falls to lowest level since war, FT, November 3, 2013.

[10]Do multinationals that expand abroad invest less at home? Vox,31 October 2013. These results draw on firm-level data from 1990 through 2009, covering more than 1500 US MNCs and their more than 10,000 affiliates.

[11]US economy: Decline of the start-up nation, Sam Fleming, FT, August 4, 2016.

[12]Houston, We (May) Have A Problem!Goldeagle, October 10, 2013.

[13]How bad are US debt levels? BBC, 17 October 2013.

[14]Debt is good, N. Y. Times, Aug. 21, 2015.

[15]United states government debt to GDP 1940-2016, Trading economics.

[16]America’s debt dilemma: A looming crisis, FT, January 21, 2013.

[17]United states national debt, Nationalprioritie.org, December 15, 2015.

[18]China debt load reaches record high as risk to economy mounts, FT, April 24 2016.

[19]Donald Trump’s Pluto-populism laid bare, Martin Wolf, FT, May 2, 2017.

[20]US consumers’ trust deficit is permanent, FT, Rana Foroohar, May 28, 2017.


[22]US share is still about a quarter of global GDP, FT, 7 February 2012.

[23]‘Throw the bastards out’: an American tradition from settlers to Trump, The Guardian, 8 September 2016.

[24]Wealth Over Work, N. Y. Times, MARCH 23, 2014.

[25]How the ‘Great Paradox’ of American politics holds the secret to Trump’s success, The Guardian,7 September 2016.   

Albania Web Design & Development by: WWW.FIT.ALFIT.AL WEB DESIGN ALBANIA