The decline of the American middle class

The collapse of the Soviet system proved fatal event for America's middle class and, as it turned out disastrous event for the American economy. U.S. corporations began to curtail production in the country, preferring to exploit labor in China, where wages are a fraction of U.S. rates of remuneration.

Even today, this process could be made reversible, returning the production capacity of offshore corporations home by taxing them according to the surplus value due to location of plants producing the product. Let's say if production is located in the States, then this "geographical" tax must be extremely low, and if overseas, then — on the contrary. In other words, the introduction of such a "geographical" tax would negate the savings from overseas production.

But corporations, of course, will strongly discourage the introduction of such legislation, primarily through the efforts of their well-paid experts in economics and lobbyists in Congress

Thus, the production is still made mainly in the United States. Let's see what this means for American society. For nine-year period, from 2002 to 2011, has been lost three and a half million jobs in the manufacturing sector. This unpleasant statistics on the level of employment was offset by the growing number of bartenders and waitresses (1,188,000 people), and also due to the growth of the number of outpatient health care workers and employees in the field of social security (387,000 people).

Over the nine years that we consider the need for new jobs has increased, given the increase in population, and fourteen million jobs, but the private sector could provide employment of 426 thousand people. During this same period of time to find work in their fields could only forty eight thousands of highly skilled engineers and architects. The number of civil servants during the same period has increased to 591 000. The deficit is jobs for all nine years — thirteen million.

This means that skilled workers in the U.S. continue to lose good-paying places, and professionals with university degrees are limited in the choice of career. Figuratively speaking, social lifts America today do not carry people to where they originally hoped to get. At the moment, the official U.S. unemployment rate does not exceed eight percent. In these statistics, there is one "but": it does not cover those who are just desperate to find work.

The federal government released the second criterion of unemployment, which is already taken into account by those who could not find work, standing for registered less than a year. And in view of these statistics, unemployment in the United States for fourteen and seven-tenths percent. Let me remind you that those who give up trying to find a job, is not considered part of the labor reserve of the nation.

Which continued in the first decade of the new century, the outflow of manufacturing facilities outside the United States accompanied by the growth of monopolies in the service sector. Retail giants such as WalMart gradually squeezed out of their competitors from among small businesses, and the growth of franchise networks has led to a noticeable decrease in the number of family businesses traditionally U.S. restaurants, garages and gas stations, grocery and hardware stores.

The U.S. economy has traditionally been based on consumption. And as long as middle-class Americans lost their jobs in manufacturing and service, ceased to earn, and, therefore, spend, then there was a clear risk that the economy will crash. To run it again at full strength, the Federal Reserve (Fed) lowered interest rates on loans, resulting in impaired deposits, and prices for housing climbed up. Homeowners (that is — the middle class) were able to refinance their deposits, and the rest to spend on the consumer needs.

What gave rise to this same unbridled real estate boom? And that's what — Fraud liens are new but obscure to the majority of financial instruments such as derivatives, equilateral debt obligations, credit default swap credit and boundless speculation. This bubble, as everyone knows, has burst with a bang in 2007. Millions of people have discovered that their debt exceeds the installments of the starting value of the property taken by them on credit. And before all those millions glimmer real danger of losing housing.

So America has come to a state where it meets the presidential election of 2012. The policy of the Federal Reserve continues to focus on bailing out the banks. Low interest rates bid up the price of debt, thereby increasing, the solvency and stability of the financial sector.

The American middle class is going through an obvious decline. In what is left of the manufacturing sector (12 million employees — is nine per cent of the one hundred and thirty three million people of working age), the trade unions are subjected to pressure, and the plants on a regular basis are at risk of elimination. Some unions have agreed to a contract guaranteeing workers with experience salary at the same level by reducing the salaries of newcomers. The decline of the trade union movement has put Democrats in the Republican-controlled dependence on sources of funding, which, of course, greatly limiting their traditional policy of social compassion and social compatibility.

A lot of young people with a university degree are now living with parents, not being able to find a job that allows to get your own. Hence the growing interest in new skills that can offer Internet, in particular to web design. Large employers by type WalMart now prefer to hire temporary, not to spend money on medical care and a pension fund. Earnings of employees in such circumstances do not allow it to do.

Another key to the stability of the middle class of America was the presence of government posts, such as, say, a school teacher. However, high levels of unemployment and the financial crisis of 2007-2008 undermined the state budget, and local governments and public unions are heavily attacked by the adherents of austerity among Republicans. In unemployment, Republicans say today, do not blame the offshore manufacturers, and generous benefits to which you can live and lazing around in clover.

In this case, the Republicans lose sight of the obvious fact that in the prevailing conditions in the U.S. offshore capitalismeconomic self-sufficiency can afford only one percent of the population (Or the strength of ten percent of people with free money — "the cream"). And since neither Mitt Romney nor Barack Obama is not ready to change the status quo, then, before the eyes of the American nation begins to loom some new socio-economic system in which, in fact, there is no place in the former middle class sense of the word.

A characteristic feature of the new system is sharp distinction on the financial performance. Among all developed countries, the United States today ranks first in inequality in the distribution of income. This is stated, among other things, in a special report of the Central Intelligence Agency.

Dependence on corporate money makes the Democrats in this system even more Republican than the Republicans themselves. Therefore is not able to Barack Obama as president, to fulfill any of his campaign promises.

Today the difference between the two parties — a matter of taste, not a matter of choice more appropriate for the voter's economic policy. Therefore, it does not matter who is president — Romney or Obama — the country's economy will continue its journey to the uncertainty in the rhythm of the global crisis, as the whole world depends on the dollar as the reserve currency.

Banks have not kept up with inflation, so the Federal Reserve is constantly monetizing huge amounts of debts. But hyperinflation is not coming — huge sums of money are constantly circulating within the banking system, ensuring its viability. It should also be borne in mind that the dollar will undoubtedly strengthened their position at the expense of reserve currency the obvious crisis in the eurozone. 

The continued withdrawal of production outside the U.S. means and the withdrawal of income of the population, which buys consumer products produced by corporations. This means that in this new economic system, the consumer market will continue to shrink. When disposing of the domestic mass market products made outside the U.S., corporations are driving an increase in imports over export performance, adding to pressure on the dollar is still the same.

It is necessary to state the obvious — appearing before our eyes in the U.S. system is unstable, and neither economically nor socially. This means that it will provide stability at the expense of other countries, building relationships in a paradigm in which there will be no room for the once traditional trade and economic partnerships.

This system will treat the rest of the world as a resource to ensure the stability of the U.S. — at any price. And the only reasonable way for the rest of the world is getting rid of the dollar and the development of alternative methods of international financial affairs.

Paul Craig Roberts

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