The conversation we're not having.
As much as I dislike corporate media, such as the Washington Post, this tweet by one of their reporters reminded me of an important conversation we should be having. In the nation of “pull yourself up by your bootstraps” most people believe poverty is a choice individuals make. Time and again I hear people defend this trope about hard work by stating “if people don’t want to live in poverty they need to work harder.” It doesn’t matter that most people receiving government assistance have jobs or that the minimum wage is considered below the poverty line in most states. These champions of the “hard work” mantra simply ignore the fact that when someone does work hard and “pull themselves up” they’re cut off from the services that were actually enabling them to work in the first place for the crime of earning a living barely above the poverty line. We tell ourselves these lies about hard work because it is less painful than the truth: we choose, as a society, to have poverty.
For the past 60+ years top eCONomists who serve as advisors to presidents of both parties and chair members of the federal reserve have been utilizing an economic theory known as Non-Accelerating Inflationary Rate of Unemployment (NAIRU). In short, this theory states that there is a certain rate of unemployment that is acceptable and should be maintained in order to prevent certain amounts of inflation. The federal government (being the one trick pony that it is) accomplishes this “acceptable rate” of unemployment via interest rates. If interest rates are low, money is cheap to borrow. People will take out loans to start new businesses and existing businesses will take out loans to expand operations. Thus more jobs are created. The reverse is true when the feds want to raise the unemployment rate. Increased interest rates means less borrowing and fewer jobs are available.
A government that uses an economic strategy that actively keeps some people unemployed and in poverty should stir a rage within you. If human suffering doesn’t do it, have no fear! It gets better. Or should I say worse?
The manner in which the feds (meaning the federal reserve and by extension the federal government) determines if a higher unemployment rate is necessary centers around inflation and wages. When more jobs are available than there are workers to fill them, employers have to compete for labor by increasing wages. If wages go up people have more money to spend. The price of some consumer goods goes up with the increased demand brought on by more disposable income in the hands of wage workers. The feds therefore conclude that in order to keep inflation at an acceptable level they must use unemployment to keep wages down. More workers competing for fewer jobs means people will accept lower pay.
Again, if this mind numbingly stupid and overly simplified interpretation of inflation isn’t enough to make you angry at our economic and political system then I hope this next point will.
The Fed considers higher wages paid to the laboring class as the primary cause of inflation. It does not consider the greed of the ruling class as a cause of inflation. Even though this is literally the exact scenario playing out right now in real time. Prices have risen across the board and the flow of money to the top 1% has accelerated since the pandemic began. Some of the wealthiest people in the world have doubled their net worth in the past two years. Meanwhile worker wages have seen a marginal increase for the first time in several decades (which has been all but eliminated due to price increases), and yet we’re told it’s the wages paid to workers that caused this inflation? Give me a fucking break.
The Fed is being played like a fiddle by the ruling class. They (the bourgeoisie) know they can raise prices at their own discretion and the government will blame worker pay as the culprit for higher prices. Workers making more money is unacceptable to the ruling class. They’ve spent decades rolling back the gains made by laborers following the great depression. As soon as workers make the slightest bit of economic progress here comes the Feds ready to play the important role of oppressor to the laboring class.
Our institutions tell us it’s not our fault there are people living in poverty. Meaning you shouldn’t feel bad because it’s up to individuals as to whether or not they live in poverty. In the most literal way possible this is correct. I doubt any of you are riding around town trying to find ways to create poor people. But this focus on individuals is ultimately a distraction. The ruling class wants you to blame your neighbor instead of looking more closely at our economic and political systems. When we hold up a microscope to our capitalist system we see that poverty is literally baked into the shit cake we call an economy. You cannot have a small fraction of the population accumulating more and more wealth without creating poverty. Understanding that we can, as a society, choose a different economic and political system is a direct threat to capitalist power. So as the feds set us up for another recession let’s make sure we’re having the right conversations about the unemployed. Poverty is not a choice made by individuals. It is a choice made by societies.
This article was republished from Candler Red.