Bernanke backs new stimulus package
By Krishna Guha in Washington
Published: October 20 2008 20:33 | Last updated: October 21 2008 00:30
This seems like pretty good news. A new stimulus package means more spending money for me and people I know. Does this mean that the U.S. Gov. has finally taken to helping out average Joe (six pack or plumber)? I would not jump to that conclusion. Never mind that the $300bn package is less than half the massive bailout we (taxpayers, the working class) gave to the bankers. This stimulus package will do very little to ease the pains of a labor market that is quickly loosening. In fact, this package is intended to be little more than a quick supplement to consumer spending; i.e., this money is expected to be handed right over to capitalists anyway.
The theory behind this type of stimulus package is that a quick injection of cash to the economy will encourage consumer spending. This consumer spending will raise demand and compel firms to do some hiring and investment to meet the new demand. This is supposed to alleviate some of the suffering caused by the crisis. This stimulus package, in theory at least, is supposed to help turn things around.
In reality, I would say that it is a very safe bet that it will initially increase demand (by way of increasing consumption). However, this increase in demand should not be expected to effect the gloomy outlook of American producers in the long run. Retailers, on the other hand, can look forward to increased sales but there is no reason to believe that they will need to hire any new labor to deal with the increase in consumer volume. Neither Wal-mart nor local hardware stores will need to hire anyone new to deal with an increased flow of customers to their aisles. The injection of consumer demand will help capitalists deal with excess inventory and keep the prices high on those very goods that are being purchased. This package will help profits but should have no effect on wages or employment.
Capitalist firms are not blind nor are they stupid. They understand that increased sales are prompted by a stimulus package and, accordingly, they will not be investing in plant, equipment or capacity. There will be nothing to show for this $300bn package with regard to the long term productive capacity of our society. For the more economically inclined readers, this package will increase capacity utilization, not productive capacity; that is to say, the rate of exploitation and the rate of profit should be propped up for U.S. capitalists.
That said, when you get it... spend it. Have drinks and food with your friends or use it to promote anti-capitalist causes. Please do not expect it to improve your job prospects.
In conclusion this could be taken as a sign that Bush and Co. have finally turned around on internationalism. This should be good for exporters with piling surpluses of inventory that needs to be poured into the U.S. market. It will be a continuation of the pro-trade deficit policy that has the American working-class consumer the motor of global growth for the past half decade. But aren't these huge imbalances a source of instability? Oh, and aren't we (see above "we") going to have to pay this back some day? It looks like the government just forced us to take another credit card...