Back in January of 2018 the Bulletin of the Atomic Scientists’ moved what they call the Doomsday Clock two minutes from midnight. The clock represents the hypothetical global catastrophe as “midnight” and this adjustment is the closest the clock has been set since 1953. The countdown clock was design and developed as a warning since the development of nuclear weapons and the threat of nuclear war. Although the clock in 2018 was moved due to the threat of climate change, nuclear war and, the lack of confidence in U.S. leadership; I bring this up because the clock represents a real threat and humanity should be aware of the probability of crisis, but why don’t we have one for the economy?
I have listened to a number of economists that have warned for years since the Great Recession of 2008 and that wages have stagnated despite productivity increasing and the stock market showing record highs and recovery. For example, the minimum wage has not been raised since 2009, and, although a movement has called for a $15.00 an hour, a minimum wage of $21.72 per hour if adjusted with average productivity growth.
Of course, there are arguments against raising the minimum wage such as it will create inflation; b,t inflation is already rising. Those that make more money and have skills, education or trades should not make the same as those who do not but, if a rising tide raises all boats these skilled laborers would make more money too. Businesses can’t afford a raise in the minimum wage; yet a report by the American Sustainable Business Council showed 61% support for raising the minimum wage with the cost of living by small business owners.
From what I have read the likely threat is to the amount of subsidies the average tax payer has to pay for major corporations to provide low wages. Low wage workers turn to public assistance for help. Medicaid, food stamps, the Earned Income Tax Credit and Temporary Assistance for Needy Families subsidized fast-food workers and their households at $243 billion over four years a paper from UC Berkeley reported. Estimates by Americans for Tax Fairness estimates Walmart costs taxpayers 7.8 billion a year. Amazon’s Jeff Bezos is on the bargain as well.
After the 2008 crash, the Federal Reserve responded by bailing out banks and lowering Federal Interest rates to 0.25% in Dec. effectively making the rate 0. These are the mechanisms in place that financial leaders have used to fix the economy and help the people: and they have failed. Bailouts saved the banks and reinforced that deregulation can work as long as a constituency of taxpayers are available to maintain the the institutions that lobby for “free markets”. With Federal Interest rates lowered banks and those that have assets in non-taxing accounts (such as the Cayman Islands) and can borrow money from the Federal Reserve at these low interest rates and buy stocks back and finally cancelling them driving up the cost. Driving up the cost is rewarded buy bonus and higher valued stocks options. The results are in and the mechanisms didn’t work.
Dani Burger wrote an article for Bloomberg titled “Rife with Anxiety, Markets are Churning at the Fastest Rate Since 2008” in the article Nikolaos Panigirtzoglou, a J.P Morgan “strategist”, is quoted as saying “Market turnover tends to be high when uncertainty is high, as institutional investors tend to reshuffle their portfolios,” This is a period Max Keiser has called “smart money selling to dumb money”. My opinion is to watch as much economic news as you can, the battle of propaganda between investors has begun. While trying to convince some that the economy is fine or as John McCain said in 2008 “The fundamentals of the economy are strong…” or as CNBC’s Jim Cramer from Mad Money answered in March 2008 whether Bear Stearns was still a safe investment his answer was … Bear Stearns is fine. Do not take your money out.” Bear Stearns investment bank and brokerage firm fails and gets a taxpayer bailout.
Media outlets like Bloomberg are late, too late. The failed policies over the past few decades have eroded the middle class and threatened the system that the 1% praise. The problems of our economic system are deeply rooted and originate in our corporate-captured political system. Attacks on Unions, wages, and the deregulation of the banking industry have crippled labor and the blue collared workers
Going back to the Doomsday Clock, maybe it’s time for an Economic Crisis Clock. We know that the economy cycles in booms and busts, some are honest about the causes of these busts other choose to ignore the contradictions. We need those with insight and foresight that have a wide view of the issues challenging or society and economy. This board of economic advisors needs to be a group of economists, environmentalists, biologists, botanists, and climatologists.
Economists such as David Harvey, Richard Wolff, Kate Raworth, Michael Hudson, Stephanie Kelton, Herman Daly, Ann Pettifor and, Nomi Prins have given us warning and solutions to upcoming economic collapse. Suggestions for fixing our economic system have been worker co-ops (like Mondragon), raising minimum the wage, regulating Banks and Wall Street (like the Glass-Steagall Act), instituting a Green New Deal (an economic stimulus package that would invest in renewable energy and resource efficiency while creating new jobs), Framing our understanding of economics within social and planetary boundaries, eliminating college debt, Medicare fore all, or community based cryptocurrencies, all these potential solutions for big problems.
The Bulletin of Atomic Scientists factor in Climate Change in their calculations for the Doomsday Clock, all agree that time is running out (if it hasn’t already) for the nations of the world to respond in a meaningful way to limit the damage that is already predicted. The effects of Climate Change are already making an impact on our planet. 2018 is expected to be the hottest summer on record. Louisiana is losing coastal land to rising sea levels with the lower third of the state expected to be underwater if levels rise 3-5 feet, the islands Laiap and Ros of Micronesia have already lost two-thirds of their land area. The Antarctic is melting three times faster than expect and the largest contributed of rising ocean sea levels. In 2017 an iceberg the size of Delaware was discovered to have broken off from the ice shelf in Antarctica. Our Planet is presenting evidence that we are stressing its’ ability to sustain our living standard, the boundaries are being strained.
Energy Watch Group and The Post Carbon Institute argue that with the largest oil discoveries having been made between the late 1930’s to the late 1970’s new oil discoveries cannot continue to meet the world demand. Not only will these new discoveries be unable to meet current and growing demand these discoveries will not be able to meet the demand that will be need to use this energy for the conversion to renewable, sustainable and more ecological sources of energy. The pursuit of oil as the primary energy resource with coal not far behind has not only made our environment and climate stability tentative but also our economy and our international relations with global nations.
In the meantime industry not only squandering resources that could be used to convert our society to that of a more ecological and sustainable economy. Our financial industry is ruthlessly applying its’ influence and investment to the gain of a few, subsidizing the conspicuous consumption of the wealthy affluent instead of making investments that could be used to ease, develop and optimize our communities and society.
The effects from our lack of planning and investment will present itself more so than it has in our climate. Our chance of limiting global warming to 1.5 degrees will be used up in four years, the Global Carbon Project the rapidly increasing carbon emissions will push us past the 2 degree limit in only three decades. The small rise in global temperature will not only increase the heat but limit availability to freshwater, slow crop production, rise sea levels, melt ice and permafrost, none of these things are going to be good for the people or the economy.
The rich affluent may horde their paper money and gold but when the earth is your home and your home is unlivable those tokens lose value. Today people are concerned about their livelihood and are worried about the mechanisms and markets that affect them the most that is why the subjects of housing, food, water, healthcare, education keep being brought up. These are the issues that matter. If people could be concerned beyond these they could understand and potentially have an impact on the issues mentioned that will also greatly impact them. The economy is what we use to improve ourselves and the community, deregulation, lack of investment in the development of our infrastructure, suppressed wages are steering us toward another financial collapse.
The economy is cycling toward another crisis and we are two minutes to midnight.
Michael DeWitt
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