The jobs report is out and like all of the other economic indicators, it shows that the US economy is going nowhere fast. The whole of this year has been about watching the optimism that started the year turn sour bit by bit as the remaining effects from the stimulus spending have evaporated. The reality is, the Anglo-American model of market driven growth, deregulation and the repression of trade unions, has not done what it claimed - create a virtuous cycle of endless growth that superceded the stagnation in productivity and innovation that supposedly plagues economies that have greater state intervention.
The present "soft patch" - known in the jargon of regular folks as a recession - is one more stake through the heart of the neo-liberal consensus that has haunted us since the end of the 1970s. It's worth noting that this has never been about state vs market capitalism. Every capitalist state uses elements of both. Every American boom has, particularly since the 1980s, been about increasing the levels of debt in the economy as a means to reinflate it in the face of weak growth. This is, in economic effects absolutely not a whit different than Greek (or any other) state debt - as I've discussed elsewhere. In terms of an economy having room to maneuver - through state or corporate or consumer or combined purchasing - the level of total debt is the key number. Attacking state spending is just the latest way of attacking working class living standards, full stop. Now, I'm no fan of the capitalist state but to think that it was more rational to simply print money and drop interests to the floor so that uncontrolled investment and speculation could ensue - rather than focusing investment on things that the national economy needs - was always absolutely barmy.
American political and economic leaders (and Canadians and Brits) have been strutting around since the "Japanese model" went bust about 15 years ago, bragging about how effectively their model was generating wealth. In fact a significant portion of the "new" wealth was made up of phoney speculative wealth, exotic debt instruments, sub-prime mortgages and the like - the Chinese and others were directing investment into needed infrastructure. For example, China now has 13,000 km of high speed rail - more than the rest of the world combined - which will climb to 25,000 km by 2015. The USA (and Canada) have 0 km of high speed rail. Shall I repeat that: there are zero kilometres of high speed rail in North America. And when Obama suggested a role for the US state in spurring investment in high speed rail, the mouth-breathers in the Republican party and Fox News went apoplectic. The only welfare program they support is $1 trillion for the military, tax cuts for the rich and bailouts for the banks. Meanwhile, America has also fallen behind in renewable energy technology in relation to Asia in general and China in particular. Seven of the world's 10 largest solar manufacturers are Asian, with the number two company being China's Suntech Power. And China invests four times the amount in clean technology as the USA.
Don't get me wrong, I'm not at all suggesting that China is a utopian model - neither in terms of long term economic stability, nor in terms of basic freedoms - but if a crash comes in China, at least they can ride the trains. In the US all they'll have is guns and empty, foreclosed houses. Though, come to think of it, having the former could solve the problem of the latter. Who's going to evict a heavily armed squatters' movement?
U.S. jobs growth brakes sharply in May - The Globe and Mail