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As layoffs soar
Fed gives banks $200 billion
By
Gary Wilson
Published Mar 13, 2008 1:17 AM
Just days after the worst jobs report in almost two decades, a giant financial
boost was provided by the capitalist government—not to the laid-off
workers, but to the biggest banks.
The news on March 11 that the Federal Reserve Bank had made the unprecedented
decision to practically give away $200 billion in loans to the biggest banks in
the world at first stunned Wall Street. The Dow Jones average of industrial
stocks stopped falling, then started falling again. But by the end of the day,
it had risen 400 points over the previous day’s close.
Wall Street cheered. The giant giveaway goes into the pockets not of those most
needy but of the rich banks and finance capitalists.
The Federal Reserve Bank is turning over U.S. Treasury funds in exchange for
failing subprime housing loans. The deal relieves the lenders—mostly
banks—of the immediate crisis of the bankrupt loans, but it does nothing
to protect the homeowners from foreclosure or eviction. And eventually the
working class, as taxpayers, foots the bill for all this.
While the Constitution says that only Congress can tax and spend, where were
the howls of protest over this unauthorized giveaway of tax monies?
Of course, last December when Congress was voting on measures to
“alleviate” the economic crisis, including a small “tax
rebate,” the provision that would have extended unemployment benefits and
food stamps was cut out, while the provision of emergency funds to the big
mortgage companies was expanded.
The March 11 Wall Street Journal noted that “The Fed’s effort
won’t eliminate the root cause of the economy’s problems.”
That’s right. It just fattens the pocketbooks of the bankers and
financiers.
While the stock market ended the day with its biggest rise in a couple of
years, it did not even roll back the 500-point drop of the previous three days.
And it is still down about 2,000 points from its October 2007 high.
63,000 jobs lost in February
The sharp drop in jobs last month— 63,000 were lost—was the
steepest one-month decline in more than five years. Unemployment is now at a
level last seen in 1990.
Not included in that 63,000 figure are the 450,000 people the U.S. Labor
Department says have left the labor force in February—that is, have given
up looking for work. If they had been included, the jobless rate would be 5.1
percent instead of 4.8 percent.
But it doesn’t bottom out there. Also left out are the millions in jail
or prison as well as the working class youth who are in the military forces
because they couldn’t find better jobs. None of these are counted, though
they are clearly jobless.
Rebecca Blank of the Economic Policy Institute told Congress’s Joint
Economic Committee on March 7 that the current unemployment rate among young
men is significantly higher than the official figures show.
“By expanding the prison population, we have removed more and more young
men from our labor market count,” she testified. Blank said that the
adjusted figures show that the jobless level now is almost the same as during
the major recession of 1990, when it was officially 5.5 percent. That recession
brought down the first George Bush presidency. It was the stupid economy.
The second George Bush said on March 8 in response to the Labor
Department’s jobless report the day before, “Losing a job is
painful.” He appeared to be thinking mainly of himself.
The tabloid newspapers and the television newscasts, from CNN to Fox,
didn’t shout RECESSION. But the staid voice of the corporate executives,
the New York Times, reported that Wall Street economists all now agree that the
country is in a recession.
“Unemployment typically starts to rise only after a recession has
started,” the March 8 Times reported.
Falling rate of profit
Job cuts are the capitalist response to a falling rate of profit. The failure
to make a profit is the crisis.
In any capitalist crisis, the bosses always blame the workers. Sometimes they
say the problem is that the workers aren’t buying enough, not borrowing
enough or not charging enough on their credit cards. Other times, it’s
that workers’ wages and benefits are too high.
None of this is the reason for the crisis, but that doesn’t stop the
bosses from blaming the workers. It is the falling rate of profit that has put
the capitalist economy into a crisis.
When the profit rate falls, the bosses become ruthless. In an attempt to
increase the rate of profit, jobs are cut, wages and benefits are decreased.
The rate of exploitation of the workers is increased.
Profits are the driving force of capitalism. The profits come from the labor of
the workers. Profits are the unpaid wages.
Capitalists are always competing with each other for profits. Part of that
competition is the introduction of new technology that increases the rate of
exploitation of the workers.
In “Capital,” Karl Marx showed that capitalists introduce new
technology not to reduce costs, though that can happen. They do it in order to
raise the rate of profit.
The first capitalist to introduce a new technology raises the productivity of
labor. The commodities made using the new technology cost less to produce per
unit. So the capitalist increases his own profit by either selling the cheaper
commodities at the old price or selling them at a lower price while increasing
market share.
But once the competing capitalists also start using the new technology or
introduce newer, even more productive technology, then the higher rate of
profit disappears. And, since by this time the capitalists in general are
spending much more on technology and less on workers, the rate of profit
actually falls—because profits come from the exploitation of human
labor.
When the rate of profit falls, the capitalists start cutting wages and benefits
and eliminate jobs. Unemployment rises. Capitalists also respond to the falling
profits by increasing prices, which creates inflation.
For the bosses, laying off workers is a way to try to increase the rate of
profit. Right now there are absolutely no restrictions on job cuts and layoffs.
Bosses can give any reason or no reason. It doesn’t matter how many years
a worker has been on the job or the amount of profits he or she made for the
boss during that time.
Clearly, this is not justice. Even in an economic crisis, workers should have a
say in any decision regarding their own jobs. Workers have a right to protect
the investment of their labor in the company.
Every company is built on the labor of the workers. That makes the workers the
primary investors in the company.
As the recession deepens, it becomes ever more important that workers fight for
and win this essential right to protect their jobs.
Articles copyright 1995-2012 Workers World.
Verbatim copying and distribution of this entire article is permitted in any medium without royalty provided this notice is preserved.
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