Wednesday, September 5, 2007

Commentary: Bad Economic News

by Richard Aberdeen

According to today, the housing slump in July is the worst in recorded U.S. history. According to historian Kenneth C. Davis, a significant housing slump is a sure sign that the United States economy is heading towards recession or depression. Also, another little noticed article reported a few days ago that the price of wheat is rising significantly, due to global warming and other reasons. According to the article, the price of wheat might become more significant than the price of oil in the near future; approximately 1/5 of global farming involves wheat production and there are many thousands of products that depend on it, including cereals, breads and everything similar.

In just the U.S. alone, millions of jobs depend on a cheap and easily obtainable supply of wheat; including food manufacturing, intermediate factories, trucking, warehousing, restaurant, fast food and retail store industries, as well as all of the banking, accounting, paper supply chains, uniform suppliers and everything else that goes along with them.

People in the United States, including major both conservative and liberal economists with significant degrees attached to their names, seem to be rather ignorant regarding the truth of economics based on actual historical experience and track record. They tend to get wound into their pet theories, which habitually ignore the actual historical evidence. In particular, de-regulation beginning with Ronald Reagan, continuing on through Clinton and his NAFTA fiasco and now, made even worse under Bush, is a trip down 1929 Stock Market Crash/Great Depression Row waiting to happen.

For example, nobody who clearly understands the historical track record would believe in supply-side economics and/or, the so-called "free" market system. Yet, virtually every U.S. economist blindly believes in either one or both, including Paul Krugman of the NY Times, one of the most liberal major economists writing today. Thus, most Americans who attend public schools, watch mainstream television, read newspapers and/or listen to talk radio, get sucked into the "free" market mentality--nothing new here, this has been going on since Jefferson and the boys decided to pull themselves up by their " own individual bootstraps" and revolt against the other King George.

The 1929 Crash was not a one-day event but rather, a protracted crash that lasted about ten years, as one house of cards built on borrowed credit after another, fell over like so many dominos in a protracted, ten-year row. The more the U.S. system is de-regulated, the easier it becomes for the dominos to start falling all over again--once started, they won't likely stop until the entire developed world is bankrupt.

In America, nobody much seems to understand that the promotion of human greed will not result in a better society for the vast majority, something so basic that any small child can easily grasp it. The less the unbridled greed of the market is regulated, the worse the economic reality becomes for the vast majority (and eventually, even for the super wealthy minority). The promotion of human greed, which is essentially what the "free" market system is based on, is overwhelmingly likely to always result in more of the same global pollution, global human oppression and war after war after war. It doesn't take a college degree to understand that. Rather, it very much appears to get in the way.


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