This Economy is Creating Extreme Have's and Extreme Have Nots
Contradictory Biden Wants both Amnesty and Wage Raises
Employers should pay higher wages in the labor shortage, and the government should cut the labor shortage by welcoming migrants, according to meandering and emotional answers given by President Joe Biden at a CNN town hall.
“The way you raise wages for people at the bottom rungs of the job market is by letting fewer [migrants] in to compete with them,” noted Mark Krikorian, director of the Center for Immigration Studies. But, he added, Biden’s incoherent and contradictory preferences are commonplace in the lobbying hothouse of Washington, D.C.
“I’m not letting this go,” Biden vehemently told the July 21 townhall audience at Cincinnati, Ohio. He continued:
We talk about DREAMers sort of generically. Let’s think about it now, what it really means. You’re 5-years-old. You’re 9-years-old. Your mommy or dad says, “I’m going to take you across the Rio Grande, and we’re illegally going to go into the United States.” What he’s supposed to say? “Not me! That’s against the law.”
…
These are kids who have done well. And so, what we’re going to do is, first of all, appeal the case, number one, but number two, we’re going to make sure that as [a] number of my Republican colleagues say they support the right of DREAMers to come … They should be able to stay in the United States of America.
Yet at the same event, Biden also touted wage raises for working Americans — even though decades of migration have slashed job opportunities and wages for more than 100 million Americans.
Biden’s wage comments came when a restaurant operator asked him, “The entire industry, amongst other industries, continue to struggle to find employees. How do you and the Biden administration plan to incentivize those that haven’t returned to work yet?”
Biden told the restaurant operator he likely will have to raise wages amid the current shortage of workers:
All kidding aside, I think it really is a matter of people deciding now that they have opportunities to do other things and there’s a shortage of employees. People are looking to make more money and to bargain. And so I think your business and the tourist business is really going to be in a bind for a little while.
“There may be other reasons that wages are higher for less-skilled workers, but clearly one of them is when competition from [legal and illegal] immigrant workers creates a loose labor market when there are more workers chasing fewer jobs,” Krikorian noted.
But few politicians want to recognize that their promise to pro-migration lobbyists also wrecks their promises of wage-raises for voters, he said, adding:
Not making the connection between immigration policy and wages for American workers is either obtuse or deliberately deceptive. I just find it hard to believe they can’t make that connection … I think it’s more likely they just literally just put it out of their minds so it never occurs to them. And if it ever whispers to them in the back of their minds, they push it away.
Biden’s pro-amnesty answer — but not his wage-raising answer — was touted by a sprawling network of pro-migration activists funded by Facebook founder Mark Zuckerberg and anonymous progressive donors. For example, Chris Golden, one of the communication activists at Zuckerberg’s FWD.us, applauded Biden’s statement as “animated” and “passionate”:
Zuckerberg’s network of investors is working closely with West Coast Democrats — such as Vice President Kamala harris — to pressure Biden’s East coast deputies to support multiple economy-changing, wage-cutting amnesties in the pending 2021 budget bills.
Overall, investors want to import more migrants — even very poor migrants — because they spike sales, rental rates, profits, and stock values.
But migration damages ordinary Americans’ career opportunities, cuts their wages, raises their rents, curbs their productivity, shrinks their political clout, and wrecks their open-minded, equality-promoting civic culture.
In general, legal and illegal migration moves wealth from employees to employers, from families to investors, from young to old, from children to their parents, from homebuyers to investors, from technology to stoop labor. Biden’s revived federal delivery of legal and illegal labor also helps to move wealth — and social status — from heartland red states to the coastal blue states and from the rural districts to the urban districts within each state.
The gyrations of Wall Street
The sharp swings on Wall Street in recent weeks, with markets down significantly one day only to bounce back the next, reflect great uncertainty over how long the record highs, financed by trillions of dollars from the Fed, can continue, and whether there is a major crisis waiting in the wings.
A series of issues are fuelling the gyrations, including:
- Whether the Fed will tighten its monetary policy in response to increased inflation, and the effect of such a move on the debt mountain in financial markets;
- The effect of the spread of the Delta variant on the economy, irrespective of the drive by the government to keep the US economy open;
- Whether the present growth of the US economy will be sustained in the long run, coupled with fear it may possibly turn into stagflation—low growth combined with rising inflation.
- Just below the surface, though rarely mentioned, is the fear in ruling circles that the push for higher wages and the development of increasingly militant struggles, such as that seen at Volvo, will spread.
This week began with what the Wall Street Journal described as a “dramatic selloff.” The Dow fell by 725 points, or 2.1 percent, while the benchmark S&P 500 index dropped 1.6 percent. Significantly, the yield on the 10-year Treasury bond, which is an indicator of investors’ belief in the future prospects for the economy, fell to around 1.2 percent, while oil prices dropped 7.5 percent, in their biggest one-day fall since last September.
An indicator of the jitters over growth prospects is where the falls took place. The Dow’s Transportation Average, which reflects views about the strength of the underlying economy, entered a technical correction—a fall of more than 10 percent. The airlines fared even worse, entering a bear market, defined as a fall of more than 20 percent from their previous highs.
Energy stocks declined by 4 percent, the sixth consecutive day of losses; companies in the materials sector were down by more than 11 percent from their recent highs; and shares in the major chemicals manufacturer Dow were down by 19 percent.
Reporting on the declines, the Financial Times noted that the Russell 2000 index, which covers small and mid-sized companies that are sensitive to changes in the economic outlook, had been falling consistently, and that its 1.5 percent decline on Monday brought its losses from its peak in March to just below 10 percent.
Since mid-May, the report continued, “more than half the companies in the S&P 500 have fallen in value and 16 percent are down more than 10 percent,” and in the Russell 3000, comprising the 1,000 largest companies plus the Russell 2000, “at least 24 percent of its constituents were in correction territory on Monday.”
Amid the stock market fall there was a rush to safety, with the increased demand for 10-year Treasury bonds pushing up their price, so that the yield fell below 1.2 percent. Bond prices and yields move in opposite directions. When the effect of inflation is stripped out, the real yield on 10-year Treasuries is now down to minus 1.12 percent, its lowest level since January.
The major impulse for the Wall Street selloff, which was reflected globally, with Europe’s Stoxx 600 index having its worst session for the year, is the impact of the Delta variant of the coronavirus.
“This virus [variant] is spreading rapidly. There has been a collective eye opening that this could delay things,” Alex Verode, a financial analyst at Insight Investment, told the Financial Times. “A lot of people had hopes we would be back to normal in September. It is not going to be normal.”
But then, as has happened after previous sharp selloffs, Wall Street bounced back on Tuesday. The S&P 500 rose by 1.5 percent, its biggest one-day rise since March, almost wiping out the losses of the previous day. The Dow also climbed, along with the tech-heavy NASDAQ index, with the result that all three indexes were within 2 percent of their July 12 record highs.
The rise in the market continued on Wednesday, albeit not at the same rate, leaving the S&P just 0.6 percent shy of its record. There was a marginal rise in all three indexes on Thursday.
But the rise in the market did not indicate a surge in the strength of the US economy over the course of a couple of days. Rather, the swings are the outcome of the tidal wave-like movements of money in financial markets. Since March last year, the Fed has pumped in more than $4 trillion and continues to supply money through its asset purchases at the rate of $120 billion a month.
This ocean of money moves out of stocks and into bonds, and then out of bonds back into stocks in the increasingly desperate search for an adequate return.
In its report on the extension of the rebound on Wednesday, the Wall Street Journal noted: “Many money managers say they see few other places than stocks to deploy cash, with yields on government and corporate bonds trading at depressed levels. Some remain concerned that the Delta variant will take some steam out of the global economic rebound, and they expect a jittery stretch of trading heading into the peak summer vacation period.”
There may be more than jitters ahead. The gyrations in the financial markets are the surest sign that none of the issues that led to the market meltdown of March 2020 have been resolved. In fact, the reasons for the crash are still not even fully understood.
Earlier this week, US President Biden declared: “It turns out that capitalism is alive and well. We’re making serious progress to ensure that it works the way it’s supposed to work: for the good of the American people.”
These words—uttered under conditions where the pandemic continues to wreak havoc socially and economically because of the refusal of capitalist governments everywhere to take meaningful measures to bring it under control, where the financial markets operate under the daily fear of a major meltdown, and where the former US president continues to build a fascist movement––have a historical resonance.
They bring to mind, at least for this writer, the remarks of President Herbert Hoover in October 1929, when he declared that the “fundamental business of the country, that is, the production and distribution of commodities, is on a sound and prosperous basis.”
Six months of the Biden administration—A balance sheet
Six months ago, Joseph Biden was inaugurated president of the United States, under conditions of unprecedented crisis of US capitalism and the entire social and political order.
His predecessor, Donald Trump, did not attend the ceremony, signaling his refusal to accept the outcome of the 2020 election. Only two weeks before, on January 6, Trump’s supporters had stormed the Capitol and temporarily halted the congressional certification of state electoral votes. The aim of the attempted coup was to stop the transfer of power and establish a personalist dictatorship. In the words of Chairman of the Joint Chiefs of Staff Mark Milley, it was Trump’s “Reichstag moment.”
When Biden took office, 400,000 people were dead from the COVID-19 pandemic, while millions were unemployed. Just months earlier, every city, town, and village in America had seen protests in opposition to police violence.
Biden marked the six-month anniversary with brief remarks presenting American society in glowing terms. “For all those predictions of doom and gloom six months in, here’s where things stand,” he said. “Record growth, record job creation, workers getting hard-earned breaks.” He added, “Put simply: Our economy is on the move, and we have COVID-19 on the run.”
Summing up his prognosis, the US president proclaimed: “It turns out capitalism is alive and very well.” The truth is that the policies of the Biden administration have entirely failed to resolve the social crisis in America and they cannot, because they are based on the framework of American capitalism.
The pandemic, far from being “on the run,” is undergoing a new resurgence. Since Biden took office, an additional 225,000 people have died from the pandemic. All indications are that by the winter, with the new surge accompanying the spread of the Delta variant, the death toll under Biden will have exceeded that under Trump.
The policies of the Biden administration have been driven by the interests of Wall Street and the super-rich. This is why, despite occasional criticisms of Trump’s callous and anti-scientific response to the coronavirus pandemic, Biden has pursued the same policy of restoring corporate profit-making by forcing workers back to work and children back to school as quickly as possible, regardless of the dangers to their lives and health.
Trump’s response to the economic depression that accompanied the onset of the pandemic was to pour trillions into bolstering the banks, hedge funds and corporations, with bipartisan bills like the CARES Act. Biden pursues essentially the same policy, although with less support from the Republicans than the Democrats gave Trump. He boasts of success on the economic front, although seven million fewer workers have jobs today than before the pandemic began, and millions face wage cuts, poverty, eviction and foreclosure.
Only in foreign policy is there a significant shift from Trump to Biden, and this in tactics only, not strategy. Biden has placed more emphasis on the US utilization of NATO and the “Quad,” a de facto alliance with Japan, Australia and India. Significant sections of the military-intelligence apparatus backed Biden against Trump because they sought a more effective mobilization of US power against Russia and China.
And if Biden’s statement that “capitalism is alive and very well” were true, it begs the question: Why is there a mounting fascist threat to American democracy?
In the six months since Biden’s inauguration, the Republican Party has maintained its intransigent opposition to any serious investigation into the events of January 6. Half-hearted Democratic proposals, first for an “independent” bipartisan commission to investigate the attack, then for a bipartisan congressional investigation, have been blocked outright or endlessly delayed.
Meanwhile, evidence continues to emerge of the central role played by Trump and his allies in Congress in seeking to carry out a political coup d’état to overturn the results of the election and maintain himself in office. But neither Trump nor his accomplices have even been questioned, let alone tried, convicted and jailed.
Instead, Trump has renewed his agitation against the election, seeking to transform the Republican Party into an openly fascistic movement subordinated to his personal authority. And his supporters in the Republican Party are using their control of state legislatures to enact unprecedented and sweeping attacks on the right to vote.
Biden himself acknowledged something of the reality of the crisis of American capitalism in a speech last week in Philadelphia, when he declared “We are facing the most significant test of our democracy since the Civil War.” But he offered no way forward, except to appeal to “my Republican friends in the Congress, states and cities and counties to stand up” against this assault—although they are the very ones carrying it out.
In an effort to prop up illusions in the Democratic Party, the representatives of its “left” wing, portray Biden’s policies in extravagant terms. Last week Senator Bernie Sanders claimed that Biden’s “reconciliation” bill on social spending amounted to “the most consequential piece of legislation for working families since the 1930s.” Or, like Bhaskar Sunkara of Jacobin, affiliated with the Democratic Socialists of America, they express disappointment in what has been achieved so far, but express the hope that “Biden has shown a willingness to think big,” and that additional pressure should be brought to bear on congressional Democrats.
For his part, Biden uses every possible occasion to make clear he has no intention of implementing any measures that challenge the interests of the financial oligarchy, declaring last weekend, “Communism is a failed system, universally failed system. I don’t see socialism as a very useful substitute.”
The truth is that the Biden administration is based on Wall Street and the military, mobilizing behind it sections of the upper middle class through the utilization of identity politics. Well aware of the explosive social conditions developing in America, moreover, the administration supports the union “organization” campaign at Amazon and the PRO Act, to make it easier to install unions at work locations where they otherwise would have difficulty convincing workers to pay dues for the privilege of having their wages and benefits cut.
It is telling that when workers engage in genuine anti-corporate struggles, like the strikes waged by autoworkers against Volvo Trucks in Dublin, Virginia, the supposedly “pro-labor” president falls completely silent. Biden is for the unions, not for the workers, because he correctly sees the unions as an instrument of the US ruling class in policing the working class.
Workers must draw the lessons of six months of the Biden administration. None of the problems confronting the working class, from the disastrous pandemic response to unparalleled levels of social inequality, to the danger of imperialist world war and fascist dictatorship, can be addressed without breaking the grip of the financial oligarchy over every aspect of society.
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