WHAT WE THINK
December 14, 2001 | Page 3
THE OFFICIAL pronouncement that the U.S. is in recession came as Enron staggered into the biggest corporate bankruptcy ever. The business media pundits quickly declared that the two events were unrelated.
Enron's problems were due to dicey accounting and fudging the books, they said. And the rise in the stock market in early December was a signal that economic recovery would soon be here, they claimed.
But another spike in the unemployment rate--now at its highest level in six years--was yet more evidence that hard times are here. And it turns out that Enron's shady schemes for reporting profits were widely used throughout Corporate America, as managers overstated earnings to boost stock prices.
In any case, the investment bank J.P. Morgan is predicting that profit rates in the last three months of 2001 will be the lowest in 60 years. At the same time, industrial giants like Ford and the entire U.S. steel industry are in deep financial trouble. Manufacturing has declined for the 13th consecutive month--the longest decline since 1932, in the depths of the Great Depression.
Just a couple of years ago, Wall Street analysts would have said that such problems only prove the inferiority of industrial dinosaurs compared to the Internet-driven "new economy." But the dot-com bubble burst--"like a balloon in a nail factory," as the Economist put it.
There's no telling just how severe or long the recession will be. Yet it's already having a devastating impact on millions of people who have lost their jobs. And thanks to five-year lifetime limits on welfare due to the "reform" of 1996, tens of thousands of people will be cut off in coming months--and few states have any legal obligation to assist them.
During the boom of the 1990s, employers hauled in record profits while workers' wages stagnated or increased only modestly. Now these same people are offering "solutions" to the recession that will only make matters worse for working people.
George W. Bush and his allies in Congress want an "economic stimulus" package that would hand hundreds of billions more in tax giveaways to corporations and the rich.
In congressional negotiations underway as Socialist Worker went to press, Senate Democrats claimed to be standing up for working people. But the Democrats won't challenge Bush's fundamental approach--that a bailout for the wealthy is the first order of business. Even Senate Democrats' proposal to extend unemployment benefits beyond 26 weeks won't help the 62 percent of employees who aren't eligible for them.
In the short term, Bush will be able to ward off criticism over the economy by wrapping himself in the flag--and the Democrats will let him off the hook. Bush may also be able to use the war to justify some top items on the corporate agenda--as he did recently on fast-track trade legislation.
But the recession--and the politicians' anti-worker policies--will have wide-ranging political repercussions. A glimpse of this could be seen this month in the willingness of more than 200 striking teachers in New Jersey to go to jail in their fight for a decent contract--and of the determination of 5,100 machinists in Connecticut to strike despite cutting into military production.
The recession will undermine Bush's popularity. It will also fuel the idea among millions of people that something is wrong with society--and lead many to question the priorities of a system that allows hundreds of billions to be spent on high-tech warfare while hunger and want are on the rise.
The growth of such an opposition isn't automatic, however. It will require the active and organized involvement of everyone who is committed to social justice--and their willingness to speak out against every injustice, from unemployment and poverty to war.