The global financial crisis has a social cause: the low-wage world

The starting point is the weakness of the labor movement, which made ​​possible a world of low wages. However, this world is structurally unstable, which we are now beginning to experience. Today every country tries to keep the wage level low, thereby diminishing the domestic demand, and must find foreign markets for their products. This mechanism has worked for the last ten years because the U.S. acted as a “vacuum cleaner” for surplus products of other countries. And not because the workers’ wages were too high, but because it was a huge private debt accumulated in the U.S.. The system took the workers to pay their mortgage debts with new loans and paying interest on the loans with new credit cards.

Could a fragile credit structure actually hold? This was only one bomb, which exploded now. The consequences are once again passed to the workers and employees, while the Wall Street executives, who manufactured these explosives, could even profit from it. Take, for example, the Paulson plan. It stipulates that the government will buy banks’ risky assets in exchange for investment and place fresh money at their disposal, leaving the possibility that banks, once the storm has passed, can regain their titles. If the government pays very high prices, bankers may eventually pocket a nice profit at the expense of the state budget.

What is the obvious impact of this crisis? Much will depend on its duration and depth. For now, the establishment is pursuing a strategy that Giuseppe Tomasi di Lampedusa described in his book The Leopard: “If you want everything to remain the same, we have to change something.” The Paulson plan is an example of this strategy, because it consists of cash in exchange for debt, designed to intervene as little as possible in terms of ownership and control of bank capital. The same applies to sales of preferred shares to the government because it restricts the right to vote at shareholders meetings and it has the ideology of neoliberalism-has-failed and that capitalism’s days are numbered? more