Cramer: “The Multi-Trillion Dollar Question: Whose Consumption Drives the Economy?”
I’m reading the article from Radical Perspectives on the Crisis. This editorial caught my attention because it addresses an issue that involves everyone. We can hear that “consumer-driven economy” but is it true?
“Our economy is a Capitalist economy. We need to appreciate, as well as understand, that. Capitalism is based on production for profit. No profit, no production.”
In capitalistic economy, businesses are privately owned and operated. The government’s role in the business world is limited. Its main function is to protect each part of the economy-big business, small business, and consumers-from abuse. However, we can see that this is not happening.
“Government spending on public works programs detracts from capital that could be spent in private profit-making industries.”
Government turns a blind eye on private businesses actions but at the same time help them to take away workers’ benefits. People try very hard to earn income for their families. These earnings later will drive the economy, but when the revenue is lower, spending is lower. Than government shows up, gives money to industries, and recovers their losses instead of helping lower-wage people. In this conditions,
“(…) under our economic system (Capitalism), public (nonprofit) spending on domestic programs that directly benefit you and me will not jumpstart capitalist (for profit) production.”
By this sentence, author tries to show that people-consumers do not have a lot to say. Our system is for businesses that want to earn money without caring for people and their interest. Money is their goal and they will try to reach it by any cause and any prize.
“Most of the government spending on infrastructure will not be to fix the streets of inner city neighborhoods or the roads of small towns and rural area. It will be used to build super commercial highways, transportation facilities and technology useful to private corporations—more government (taxpayer) subsidies to help boost private industrial profitability.”
This part of article explains everything such as where taxpayers’ money goes. Government spending most affects private sectors than public. In our capitalistic system, government should not interfere in private businesses; however, most actions benefit theses segments.
“Working people’s consumption of everyday necessities is being cut, while billions of taxpayer dollars goes to “bail out” financial institutions who have no incentive to loan those funds to low income people (or to companies) now that most of the fraudulent transactions and speculative securities are supposedly under closer scrutiny.”
Companies’ main goal is to have surplus. Therefore, they can invest money and produce more goods. But what happens when they fail? Nowadays, we can see that government comes up and give them money so they will not bankrupt. Nevertheless, when people lose jobs, they get low unemployment or even not. How this is different from companies that get millions and people gets nickels? But this is how our government pursues capitalism.
“Efforts to overcome this “recession,” like all preceding ones, will focus on lowering workers’ incomes and consumption (consumer goods), while transferring as much economic wealth, labor time, and resources as possible to corporate expansion and capital accumulation (producer goods).”
Therefore, we come to the question “whose consumption drives the economy?” People cannot buy goods because their wages were cut or they lost their jobs. How they can purchase goods without money; they go to banks and loan it. However, bank cannot lend them because people have low income. Then companies cannot produce goods because people do not buy merchandise. The question goes back and forward. I can assume that people-consumers are the ones that run the economy, but then private companies show up with their actions, and I get even more confused. In addition, government is between these two. This is very though question, but to answer it we will have to get all information and analyze it very well, but I believe after that we will get crazy.
