Emergency jobs program needed

The record wave of layoffs that seemed to peak in December is continuing into 2009.

At the same time, hundreds of billions of dollars in aid are flowing from Washington to the banks and corporations, not to the unemployed. Reviving corporate profits has taken precedence over providing desperately needed jobs or calling for an immediate end to foreclosures and evictions.

Circuit City announced it is laying off 34,000 workers by the end of March—the largest mass firing since the current crisis began. This second-largest electronic retailer in the U.S. is closing 557 stores.

Just in the first two weeks of this year a series of other layoffs has been announced.

Motorola, which laid off 3,000 workers last October, has announced another 4,000 jobs will be cut. Hertz announced 4,000 jobs will go worldwide. ConocoPhillips will lay off 1,350, Pfizer 2,400, WellPoint 1,500, Saks 1,000 and Neiman Marcus 375. Advanced Micro Devices (AMD), Blue Cross/Blue Shield and other large companies are also scheduled to announce new rounds of layoffs.

These are only the most publicized firings.

The official unemployment rate, which was 7.2 percent at the end of 2008, is expected to shoot up rapidly in the coming months as the bosses continue the onslaught without mercy.

However, there is a less publicized but also official figure called “total” unemployment—and it has reached 13.4 percent. The first thing to remember about this figure is that it amounts to 20 million workers. It includes people who couldn’t get anything but part-time work when they need to work full time, plus the millions who have stopped looking altogether, termed “discouraged” workers.

At the present rate, millions more will lose their jobs in the coming months. Last year 2.6 million lost their jobs—a huge number but still deceptively low when trying to project what will happen this year because, of the 2.6 million, 2 million lost their jobs just in the last four months of 2008.

There is no question that an emergency jobs program, which would involve the immediate direct hiring of millions of workers at living wages, with benefits, and a freeze on layoffs, is urgently needed to stave off the growing crisis of the working class and the oppressed people.

However, instead of reaching out directly to assist the workers who are suffering from the capitalist crisis, Washington and Wall Street are reaching out to bolster the capitalist system and aid the capitalists who caused the crisis in the first place.

Why ‘stimulus’ can’t work

Wall Street told the incoming Obama administration to get hold of the $350 billion fund Congress passed to bail out the banks and use it to clean up their bad loans. In addition, the Democrats have submitted an $825 billion “stimulus” package.

There are many progressive features to the package, such as increases in Pell grants, reduction of payroll taxes for workers, rural assistance, additional food stamp aid and unemployment insurance. But these features, including the declared goal of creating 3 million jobs in the next two years, are utterly inadequate to meet the massive crisis that is unfolding at a rapid rate.

The package calls for $550 billion in direct spending over two years. Some 90 percent of this spending will go through private capitalists. The bill sets up contract procedures and deadlines that range from one year to more than two years for fulfillment. It has no mandatory hiring or wage requirements, save a nebulous “prevailing wage” stipulation. There is no requirement to stabilize employment by requiring that workers be retained for any period of time, nor any funds to provide such stability.

The 20 million workers already considered unemployed or underemployed—and this December figure is sure to rise in the new year—will have to wait for the stimulus package to go into effect. When it does, they will then have to compete for an estimated 1.5 million jobs to be created this year while the government bureaucracies at the local, state and federal levels negotiate contracts with competing capitalist interests and their lobbyists seeking to get a piece of the pie.

None of these bosses has the goal of providing good jobs at living wages with benefits. To them, the goal is to revive and maximize profits.

The entire process is corrupt, agonizingly slow, and totally uncertain as far as the workers are concerned. Furthermore, whatever hiring these bosses do could be cancelled out within a year or less by the drying up of funds or shrinking of the market.

The working class and the communities have no other recourse but to begin organizing on a mass basis to demand jobs now—at living wages.

Need for a direct jobs program

Millions are already unemployed. Millions more face layoffs unless an immediate, direct jobs program is put in place. It can be done. During the Great Depression of the 1930s, government jobs were put in place within two weeks after job programs were set up.

It won’t happen automatically. “Jobs or income” must become a mass demand, backed up by mobilizations, jobs marches and organizing the unemployed, in unity with the employed, who also need the security of jobs or income.

Regarding the bank bailout fund, $20 billion in cash and $100 billion in government-absorbed losses have been promised to Bank of America, which had already received $25 billion earlier. Citicorp is expected to announce $10 billion in new losses, which the government will absorb. Citigroup has already received $45 billion in bailout money and the government has given it a guaranteed backup of $300 billion to cover problematic loans.

The $350 billion bailout doesn’t include these huge new backup commitments. Its goal is to make the banks solvent by dealing with hundreds of billions—the investment bank Goldman Sachs says it’s more like $1 trillion—of remaining bad loans.

The fact is that these bad loans on the books of the banks are for the most part a mirror image of the suffering of the masses. Why are the loans of Citicorp, Bank of America and other banks going bad? Because of credit card defaults, auto loan defaults, student loan defaults, mortgage loan defaults and every other kind of unpayable debt. As people lose their jobs, have their wages and salaries cut, lose their health care, etc., they sink deeper and deeper into debt.

The bankers and the rich investors behind them are losing paper wealth, but their “balance sheet” problems arise from the direct material suffering of the masses. The working class and the middle class are unable to pay their bills, are losing their homes, their cars, their electricity and gas, their health coverage and every other means of survival.

Banks don’t lend when markets are glutted

The handout to the banks is being justified as an attempt to get them to start lending to companies and consumers, which will then get the economy rolling again. But this is a complete fiction. The problem of lending arises not from arbitrary stubbornness by the bankers. It arises from the lack of opportunity of the banks and the corporations to make profit once a crisis of capitalist overproduction hits, with its rising inventories and falling sales leading to falling production. After all, the bankers are in business to make profit.

The term “overproduction” has nothing to do with whether people need goods. It is when more commodities have been produced than can be marketed—i.e., sold at a profit.

The crude facts of capitalist overproduction are obvious. The U.S. auto industry has gone from producing 16 million cars annually to 13.2 million last year, and is expected to drop to 12 million or less this year. Steel production, which is a barometer of the economy, dropped from 2 million tons in November to 1 million tons in December. In recent decades, hundreds of thousands of steel workers were laid off as the industry consolidated and shrunk itself. Now, overproduction has hit again. It is estimated that 20,000 steel workers will be laid off in the coming period.

The overproduction of housing and the consequent crisis in the construction industry and all its ancillary industries is getting worse with each foreclosure.

Giant technology companies like Motorola, Nortel, AMD and Intel are suffering losses due to overproduction and hence executing layoffs. Under those conditions, the banks see no profit in lending, no matter how much money the government hands them.

In fact, they are using their bailout money not for lending but to strengthen themselves financially. According to a New York Times survey of two dozen banks, “The overwhelming majority saw the bailout program as a no-strings-attached windfall that could be used to pay down debt, acquire other businesses or invest for the future.”

At a recent conference at the Palm Beach Ritz-Carlton, “Bankers mingled with investment analysts at an ocean-front luxury hotel, where the agenda featured evening cocktails by the pool and a golf outing at a nearby country club.” They were there to discuss the bailout funds. Referring to the government’s Troubled Asset Relief Program, conference organizer John C. Hope III, chairperson of the Whitney National Bank of New Orleans, said, “We see TARP as an insurance policy.” Hope figures that, “No matter how bad it gets, we’re going to be one of the remaining banks.” (New York Times, Jan. 18)

So much for lending, job creation and recovery.

The “crisis” of the bankers and bosses is calmly discussed at luxury watering holes, while the workers are suffering the greatest attack in three generations.

The only way to get a real working-class recovery program is to organize to shake up the entire capitalist system until the bosses are forced to provide jobs and/or a livable income.

Goldstein is author of the recently published book, “Low-Wage Capitalism: Colossus with Feet of Clay,” which can be ordered through www.lowwagecapitalism.com.