After all, the numbers — and the human tragedies they reflect — could not be bleaker. Nearly 14 million Americans — 9.1 per cent of the working population — are unemployed. That’s just a couple of a million shy of the populations of Greece and Ireland, Europe’s two problem children, combined. Another 8.5 million would like to work full time, but can only find part-time jobs. A further 2.2 million have been so discouraged by the grim labour market that they have given up looking for jobs altogether.
It is hard to blame them — those still actively looking for work have been unemployed for an average of 39.7 weeks. These are cruel numbers, and they depict an unemployment crisis that is deeper and more sustained than at any time since 1948, when records first started to be kept.
Dramatic shift
Yet the debate in Washington is focused on deficit reduction, rather than job creation. The news media are following the same playbook. A recent database analysis by The National Journal found that over the past two years, the leading newspapers in the US had dramatically shifted their attention from unemployment to the deficit and were now publishing more than three times as many stories about the budget as they were about jobs.
But the reality may be even more chilling: Perhaps US business is learning to get by just fine, thank you, without middle-class US consumers. And while that may be good news for chief executives and shareholders, it could be the beginning of a new and socially wrenching political logic that leaves the great American middle behind.
Wall Street, which is paid for smarts, not sentiment, has this figured out. In a interview this month, Robert C Doll, chief equity strategist at BlackRock, the largest money manager in the world, pointed out that the fortunes of US companies and the fortunes of the country as a whole were diverging.
Doll’s explanation for the shift was the increasing importance of international markets rather than the domestic one — of the rising middle class in emerging markets, rather than the stagnating one back home.
Within the US, the advertising agencies on Madison Avenue are discovering that the age of the American mass consumer may be drawing to an end. Instead, a new white paper by Ad Age, the industry’s trade journal, argues that growing income inequality means the only buyers who count are those at the top.
“Simply put, as the discrepancy between the rich and poor has become more and more stark, a small plutocracy of wealthy elites drives a larger and larger share of total consumer spending,” the paper concludes, citing research that shows the top 10 per cent of US households account for nearly 50 per cent of all consumer spending.
Twentieth-century American capitalism was built on what you might call the Henry Ford model — generously compensated workers (Ford paid double the existing rate) created a mass middle class that bought the products of the country’s entrepreneurs. That virtuous circle made the US the world’s economic behemoth, and created a society and a political discourse defined by a proudly acquisitive middle class.
The creative destruction of 21st-century capitalism seems to be requiring US companies to learn to prosper with fewer US workers and with fewer US middle-class consumers. We do not know yet how American democracy, where the middle class has the votes, but the business class has the money, will respond to this tough new economic logic.
Reuters
