George W. Bush looked into the TV camera, last Tuesday morning (July 15) and tried to assuage the fears of about 300 million Americans who believed they were in the middle of a recession.
“The economy is growing,” said the President. “Productivity is high,” he told us. “Trade’s up. People are working,” he said. In the Bush White House, the “R” word is just a myth. Of course, the man who once wanted to be known as the “compassionate conservative” did say he knows “It’s been a difficult time for many American families.”
“Difficult” doesn’t even begin to describe what has happened to Americans the past seven years.
Within hours of the President’s speech, a less optimistic Ben Bernanke, chair of the Federal Reserve, told the Senate Banking Committee that inflation is high and “seems likely to move temporarily higher in the near term”. In sworn testimony, he told the senators that, “Many financial markets and institutions remain under considerable stress, in part because of the outlook for the economy and thus for credit quality, remains uncertain”. Market Watch reports that over the past year, “inflation at the wholesale level gained 9.2 per cent - the largest year-over-year gain since June 1981”.
On the day that the President assuaged and the Federal Reserve chairman testified, General Motors announced it would freeze job hirings in several areas, lay off salaried workers, suspend shareholder dividends, and borrow up to US$3 billion. Six weeks earlier, GM announced it was closing four plants; on the day the President spoke, GM announced four more plant closings. The nation’s largest corporation, which saw a 16 per cent sales decline in the first half of the year, announced that it was giving retired workers a slight pension increase but was cutting health care benefits.
About 8.5 million Americans actively seeking work are unemployed, an increase of about 21.4 per cent since a year ago, according to the Bureau of Labor Statistics (BLS). The unemployment rate of 5.5 per cent is up from 4.6 per cent a year ago. More importantly, about 1.5 million of the 8.5 million unemployed have been unemployed at least six months, a 37 per cent increase in the past year, according to the BLS.
Not included in the numbers are the “1.6 million people who are ‘marginally attached’ to the workforce, who had looked for work in the previous 12 months, but not in the last month,” according to Andre Damon of Global Research. Damon also reports that the BLS data does not include about 420,000 “‘discouraged workers’, who had given up looking for work because they think that there is no work available”.
Work is available in dozens of other countries, where American companies seeking to “maximise the bottom line” have been outsourcing jobs for years. About 14 million American jobs are going to be outsourced in the next four years, according to a report issued by the University of California at Berkeley. Short-sighted and greedy, these CEOs and their boards believe child labour and wages that can dip below $1 an hour is just another acceptable business practice. The “Made in America” label is now becoming as extinct as corporate morality.
Americans who have been using credit cards to survive the recession and have now reached their credit limit can raise their limit or sometimes reduce their payments or rate. All they have to do is call a credit card agency’s toll-free number, which is answered by someone at a call centre in India. Those same call centres are also telemarketing Americans to get into even more debt by getting credit cards.
In a true “global economy”, as many now euphemistically refer to outsourcing, persons having trouble with their computers assembled from parts made in Mexico and several Asian countries can now call technicians in India for assistance.
Book and magazine publishers have been outsourcing art, design, editing, and printing overseas. Even newspapers have figured out how to cut even more costs while driving up profits. The Orange County Register (California), which laid off 90 persons in 2007, outsourced copyediting and page design to journalists in India. The Modesto Bee (California) and Sacramento Bee have outsourced most of their advertising design departments to India.
For Americans who have jobs, getting to them is more expensive. It makes no difference if the worker drives or takes public transport, the rising cost of oil has pushed Americans into a crisis. Gas prices rose more than 25 per cent in the past year, to more than US$4 (a gallon) [about AU$0.91 a litre] by July 1; diesel prices are up more than 30 per cent to more than US$5. The higher fuel costs affect almost every service and industry from home heating to food production and road repair.