WHAT WE THINK
August 9, 2002 | Page 3
STOCK MARKET meltdowns and sleazy CEOs are only the symptoms. The ills plaguing the U.S. economy run much deeper. That's the inescapable conclusion from new government statistics that show last year's recession was deeper than previously thought--and that the weak recovery this year might give way to a new slump.
According to the Bureau of Economic Analysis, the economy shrank in the first nine months of last year. Growth so far this year has been slow--and rests on the thin reed of consumer spending.
Corporate America was expected to match this with new investments. Instead, the overhang of the 1990s boom--markets saturated with too many products and too many factories to produce at a decent profit--has left few businesses willing to invest in new production, despite low interest rates. And banks, hit with big corporate bankruptcies like Kmart, Enron and WorldCom, aren't willing to hand out more loans with poor prospects of making a profit.
The stock market dive is a belated recognition of this reality. Investors realize that share prices are still far in excess of expected profits--even after $7 trillion of losses since the stock market bubble began to burst in March 2000. As the Wall Street Journal observed, "What gives some analysts pause is that the bubble of the late 1990s was in many ways more extreme than anything the country witnessed since the 1920s"--which was followed by the Great Depression of the 1930s.
The U.S. isn't facing anything like such a severe crisis today. But while unemployment has remained steady at 5.9 percent, millions of people who have abandoned searching for a job don't show up in the statistics. Long-term unemployment is the highest since the severe recession of the early 1980s.
With a weak economy and scandals oozing from every corporate boardroom, there's an enormous political opportunity for taking on big business. That's why former Democratic presidential candidate Al Gore wrote a widely publicized New York Times article advocating for "the people, not the powerful." Naturally, he rushed to add that he isn't "anti-business." But Gore's article could be the first sign of real opposition to the Bush gang developing inside official politics.
Organized labor should be seizing the opportunity to mobilize against the discredited CEOs and their pals in the White House. Instead, unions from United Airlines to UPS to the West Coast docks are caving into demands for billions of dollars in concessions.
And the AFL-CIO, while rightly taking up the cause of laid-off workers from Enron to WorldCom, also claims to be a voice for "shareholders" as well--a public relations approach tailored to the middle class and the Democratic Party's fall election message.
At a recent rally on Wall Street, AFL-CIO President John Sweeney even hailed U.S. capitalism as "the most competitive in the world." But it's that ruthless competitive drive that squeezes profits out of workers in good times and abandons them in bad ones--while Corporate America keeps cashing in, legally or not.
We need a real fight for jobs--and a challenge to a system that puts profits ahead of human need.