Problems with the labor market and the shrinking middle class in the USA

Most economists are delighted with the situation on the labour market of the world’s largest economy and hardly want to hear about the vision of a recession. They believe that the unemployment rate below 4% (which has been around for over a year) and a sustained increase in new jobs are evidence of the strength of the economy.

They also rejoice because such low unemployment was achieved with moderate household indebtedness. Economists believe that the process if maintained should continue to encourage the optimism of most consumers and encourage them to consume. Until consumers fall into the euphoria of spending (which has always been a harbinger of a crisis or recession), there are still a few quarters of consumption growth ahead of us. The increase will not result from rising salaries, as at such levels salary increases are only possible at a moderate pace, but from the rising household debt, which would be willing to take out loans in such an economic environment.
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Decades of laissez-faire in Europe or the destruction of the middle class

The EU elites pay homage to the laissez-faire of liberalism. They have been deregulating and “liberating” the market for 30 years. The Western governments also follow the philosophy and hardly intervene in the market. There is only one authority that can intervene effectively in the EU: the ECB. Globalisation since the 1980s, as well as the liberation of trade and human traffic, has enabled a violent increase in world GDP and the enrichment of corporations. For emerging economies such as India or China, this was an opportunity to get out of poverty. The liberals, however, who had a global village and human happiness on their banner, were basically interested in opening up the large Asian markets for their products. The tools of these elites, the World Trade Organization and the IMF, ensured that the middle class grew in emerging countries and thus the sales markets for European corporations. Their bosses would probably say: it is a pity that India and China are not allowed to join the EU.

Awesome! In any case, the West monetized Asia’s cheap labour in this way. At the same time, the middle class in China, India, South Korea and other tigers grew, but at the expense of the European workforce and middle class, which were virtually cut off from liberal profits. While corporate profits, and hence GDPs, skyrocketed, real wages did not rise and wealth was concentrated among elites and their lobbyists. This process was accelerated by the reforms of the 2000s: in Germany at that time the reforms of the left-liberal coalitions were supposed to create more jobs for people through unusual forms of employment (mini-jobs, temporary work, fixed-term contracts, etc.), which led to the fact that even today there are more and more people with low incomes in abnormal working conditions. “The middle class has shrunk from 48 per cent in the period 1995-99 to 41 per cent in 2014-15.

The latest SPD proposals (4 billion for housing, 5 billion for the long-term unemployed, etc.) will not stop this process as they propose redistribution in favour of the underclass. Macron, on the other hand, wants to tax the middle class even more and ignores its intelligent, healthy core – the teachers. Awesome! Meanwhile, the two states mentioned, Germany and France, are swimming in money according to mainstream media. In the USA, the incomes of the richest top class (1%) of society reached the level of 1929, the time before the great crisis. Continue reading →

The French government’s spokeswoman or virtue signalling

Some are old enough to remember it, some will have known it from history books or documentaries: a Vienna meeting between President John Kennedy and the first secretary of the Communist Party of the Soviet Union Nikita Khrushchev, both in the company of their wives Jacqueline and Nina Petrovna. Those photos were shown in magazines and brought to every TV viewer, also in the country of the workers and peasants liberated from capitalist exploitation. One can only imagine how embarrassed the Soviet viewers then and in the decades to come must have felt: the simple-minded Khrushchevs, the Brezhnevs and the Chernienkos displaced the well-mannered Romanovs, the Gorchakovs, the Sheremetevs.

Never mind, the system made a statement for all to see. Look, here is the new normal. A descendant of worker class parents, initially a worker himself, leads a two hundred million strong union of nations, giving orders to scientists and scholars. The ideology triumphed. There they were, like Vera Mukhina’s impressive Worker and Kolkhoz Woman steel monument. With this difference, however, that the figures in the sculpture command respect due to the grace and beauty of their shapely bodies.

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WHEN IDEOLOGY TAKES PRECEDENCE OVER ECONOMY or the relevance of South Africa to the European Union

South Africa’s electricity is managed almost entirely by ESKOM, a state-run company. Between 1923, when it was founded, and 1994, the year the African National Congress (ANC) took power, it operated without significant failures. Afterwards, within a couple of years ESKOM began to drift towards crisis and for some time now it has been coping with serious difficulties resulting in frequent and recurrent blackouts or power cuts. What has happened?

Man is driven by two powerful driving forces that satisfy the demands of his body and psyche, and these are economy and ideology respectively. In order to mete out his existence man must work diligently, solve problems, invent tools and methods of production, lead a frugal life, economize for unforeseen times of scarce resources or bad harvest. Anyone who can proceed like that will eventually make it in life and assert his position. Whoever fails to do so is doomed to suffer want. Communities are made up of individuals biologically endowed with qualities that have a high or low survival value. No wonder then that within several years a community will be split into the well-to-do and the destitute. Naturally, individuals brilliant of the mind enslave individuals with smaller intellectual capabilities, or rather it is the other way round, the individuals with smaller mental capabilities out of necessity relinquish their personal freedom and trade their bare work force for sustenance.

Enter ideology. It may petrify the social structure thus serving the needs of the natural elites, or it may try to disrupt the existing system exciting the unsuccessful, the helpless, the less resourceful, and spendthrifts to bring about changes which in plain English means: to strip the haves of the assets and positions and redistribute the wealth among the have-nots. The ideology affirming the world as it is is Aristotelian in origin and is advocated by political movements that are commonly referred to as right-leaning; the ideology that divides societies into the undeservedly privileged and the unjustly downtrodden is Platonic in origin and is advanced by left-leaning political movements. The proponents of the latter work assiduously to reverse the natural social order either violently or by disseminating leftist ideas among the upper classes. In the latter case such subversive ideas act as mental viruses which, if they successfully take control over the minds of the ruling classes, are capable of making them serve the lower classes out of conviction. That is how the power of ideology or religion has manifested itself throughout centuries.

History is fraught with violent or evolutionary changes when the so called underprivileged displaced the so called privileged or captured their minds and made them relinquish all or part of their authority. Neither the French nor the Russian revolutions would have been possible without the participation of some individuals from the classes which the revolutionaries targeted. Both the French and the Russian aristocracy, giving in to liberal ideas, helped their economic and political opponents to topple them down. Similarly, the ruling classes in South Africa and Rhodesia – now Zimbabwe – acting under pressure from abroad or domestic intellectual infiltration broke ranks and made room for the underprivileged to rule the country. Continue reading →

When it comes to business, Ukraine’s independence is dispensable

In December 2019 expires the agreement on natural gas transit through the Yamal Pipeline between Russia and Ukraine. Almost concurrently the Nord Stream 2 pipeline – a joint Russo-German venture in which French and Dutch companies have a stake – is slated to be completed, which in combination with Nord Stream 1 will have a comparable capacity to that of Yamal. Thus Ukraine – but also Belarus and Poland – may be put out of the transit business with the conniving of Ukraine’s European Union partners.

Factual information

(i) In the years 2011 and 2017 Russia transited between – approximately, in round numbers – 50 and 105 billion cubic meters (bcm) of gas annually; both Nord Stream pipelines have a combined capacity of 110 bcm, so theoretically Yamal can be abandoned altogether.

(ii) Without Nord Stream 1 and 2 Ukraine and Russia could hold each other in mutual check: Moscow could not transit gas through Ukraine to Western Europe without having to acquiesce in Kiev’s demands; Kiev would have to be supported by the European Union because its member states would depend and the transit for gas.

(iii) Ukraine receives a considerable amount of transit fee, which replenishes its budget and provides funds for maintenance of the pipeline, so that too low revenues from it will make it hard for Kiev to operate its stretch of it. Continue reading →

Strong fences make good neighbours

Latvia has just completed a 90 km barbed-wire fence along its border with Russia. The Estonian authorities are soon to follow suit. Hungary built a wall along its border with Serbia some time ago. President Donald trump has promised and is going to deliver on his promise to construct a wall separating the United States from Mexico. Israel has long been building walls to shut off the Palestinian population from its territory. There is a heavily guarded border between North and South Korea. The UK built a wall in Calais to keep refugees out. The Spanish-Moroccan border is a fence. Also Saudi Arabia has built an almost 1000-km-long wall along its border with Iraq. Where will the next fence emerge?

Almost right after though Second World War there appeared an iron curtain separating the West from the east, with an isle of the Western world within the precincts of Berlin. When in 1962 East Germany decided to put up a wall around West Berlin, the western world’s criticism had no end. Continue reading →

Poland: Like all over Europe, cities are used to destroy the cohesion of the nation

Whichever party rules in Poland – just as is the case in the United States or United Kingdom – the government’s policy is pro-European. The differences – just like in the United States or United Kingdom – concern details. One of the those details is that the ruling PiS (Law and Order) Party as opposed to the PO (Civic Platform), now acting as an opposition, is traditionalist in moral issues. Poland’s present authorities – the president, the parliament and the resultant government – were elected by the nation’s majority. It so happens that the minority of the the voters – supporters of the Civic Platform – make up the majority of the largest city residents and so in the municipal elections their vote puts in office PO politicians who want to ingratiate themselves with the EU commissioners as much as possible: they pursue policies that are pleasing to Brussels and do anything to spite the government or the president.

And so, almost two years ago the mayors of several Polish cities drafted and signed a declaration in favour of accepting immigrants from the Third World just about the time when the government did all in its powers not to gave in to the EU’s pressure in this respect. Just who instigated the city mayors to take that step – especially so as they all knew that the majority of Poles was against it – remains a secret. Continue reading →