Thursday, March 20, 2008
Schadenfreude posted by Richard Seymour
Some people are determined to be chipper. Perhaps there is reason to be so. After all, the British government announced a fall in unemployment yesterday, albeit at a much slower rate than in recent months. And consumer spending was up in February (the Bank of England could use this as an excuse to keep interest rates at their present level which, while bad the the 'high street' and for manufacturing, is good for the City). Average earnings are steady. Public sector employment, having fallen for eight consecutive quarters, has suddenly risen. Manufacturing actually experienced some healthy growth in March. And there's still a budget surplus. If the cheermongers are right, then the self-evident distress of the US economy may be ring-fenced, and it may indeed be supported through this difficult period by continued growth in Asian markets and Europe. But who can believe this? First of all, the unemployment drop is based on the claimant count - no one takes this measure seriously. Secondly, earnings increases outside the public sector have actually slowed down. Thirdly, public sector employment increase could be seen as a counter-cyclical move, but it is no testament to the strength of the underlying economy. Of course, the government can plough money into it - and they should - but it will wipe out that budget surplus in a jiffy. Manufacturing growth depends on exports, which depends on a globally sound economy - hardly a guaranteed prospect at the present time. Further, it is likely that this was brought about by the recent low value of the pound, which made exports cheaper. That isn't a sustainable situation, and it is not one that the City will accept (hence, they will demand higher interest rates). Finally, consumer spending was reported as rising in the United States as late as last August. There is a lag between the emergence of an underlying crisis and its impact in spending and prices. Consumer signals are not very reliable when things are changing fast. Growth is predicted to slow to the lowest level since 1992.
I do so wish the Good News bible-thumpers were right because, as this article makes clear, the United States social safety net, such as it is, is likely to fail, and the labour movement and the Left is not in a position to make an assertive defense of working class interests. I daresay we in the United Kingdom not in a very much better position. The one exciting pole on the Left has recently been through a horrible split, and we are still dealing with the consequences. (If Londoners want something other than pandering to the City, they should vote for Respect's Left List in the upcoming assembly and mayoral elections, by the way). Realistically, we are staring disaster in the face, and the only chance we have is if the labour movement mounts a serious fightback against the government on pay and conditions, because this will redound to the benefit of all of us. Mark Serwotka has the right idea.