NEW YORK — Contrary to the Republican Party/tea party’s fear-mongering, America is not becoming Greece. But it is on its way to becoming Japan.
More than 90 percent of Americans are suffering from the “jobless economic recovery.” Gross domestic product growth, anemic or robust, is increasingly disconnected from the growth of America’s household income and the availability of full-time jobs.
People cannot eat GDP or Wall Street’s Dow Index. Due to the Bush tax cuts for the rich and promotion of Wall Street’s casino, the rich and the speculators have come to garner over 23 percent of America’s annual national income.
Their financial investments create few jobs and little production capacity in the real economy. Just as the roaring 1920s ushered in the Great Depression, the financial and real estate bubbles of the Bush era gave rise to the Great Recession of 2008-2010.
Ever since it adopted the euro and benefited from it, Greece has been without the sovereign freedom to devalue its currency to increase exports for economic growth. Because Greece became saddled with America’s toxic collateralized debt obligations, it must drastically cut government spending and rely on a German-led financial rescue to remain afloat.
This forces Greece into a vicious cycle of shrinking consumption and investment followed by less national income and employment, which in turn further reduces consumption and investment. Greece is increasingly becoming unable to repay domestic and foreign debts.
The dollar is the world’s key reserve and trade vehicle currency. The euro, yen or yuan cannot replace the dollar.
So, the United States can keep selling its Treasury bills to China and others to finance deficit spending, while it has more time to use additional stimulus spending to fill a massive shortfall in the nation’s effective demand left by the “Bush Great Recession.”
Unfortunately, American voters are being swayed by the Republican Party/tea party’s manufactured fear of budget deficits. They wrongly blame President Barack Obama for a “trillion-dollar rescue of banks.”
The bank rescue, which was really made by the Bush administration, saved the entire financial system from collapse. Although the cost of the bank rescue increased U.S. budget deficits, that wasn’t the economic stimulus. Obama’s $700 billion-plus “stimulus” package was too small to fill a $2.6 trillion shortfall in the nation’s effective demand caused by the Bush administration.
If the U.S. rejects a bold economic stimulus to repair the broken economy and society, it will follow Japan’s plight. Japan has been mired in a “lost two decades” of negative economic growth, deflation spirals and widening income gaps between haves and have-nots.
To try to repair the lost decade of the 1990s, Japan followed President George W. Bush’s recommendations on libertarian and free market dogma: tax cuts for the rich and big business, promotion of stock market speculation, outsourcing of manufacturing jobs, deregulation of business and privatization of government functions.
The results have brought undiluted misery to Japan, where per capita GDP, ranked fourth in the world in 2001, fell to 22th in 2009. China’s GDP recently overtook that of Japan, whose political and economic influence in the Asia-Pacific region is rapidly fading.
To increase short-term stock prices, CEOs have destroyed Japan’s famed human resources system that created the quality manufacturing model. Toyota is now paying for its tarnished quality and safety image.
Government budget deficits have exploded. Starved for necessary investment and spending, the quality of primary and secondary education, which used to be the envy of the world, has begun to deteriorate. Professor Lester Thurow of MIT says, “Japan would win the world’s first-place prize for being the worst manager of the economy.” That’s true — if the U.S. were not competing for the prize.
Recently, the World Economic Forum, Switzerland, published its annual rankings of global economic competitiveness for the industrialized and emerging nations. Both the U.S. and Japan have continued to slip from their once leading positions. The long-term global competitiveness of a nation’s economy is determined by such factors as the quality of education, the prevailing public attitude toward government and politicians, and the social capital of civic and democratic society.
Japanese voters have finally ousted the conservative Liberal Democrats who blindly mimicked President George W. Bush’s disastrous policies, and Japan’s ruling Democratic Party is rejecting the “Reagan-Bushnomics” that brought about the Wall Street meltdown and Great Recession, destroying over 8 million jobs in the process. (It also was responsible for creating a business environment that enabled BP to destroy part of the ecosystem in the Gulf of Mexico.)
Fortunately for Japan, the Japanese public is alarmed by an America that is rapidly becoming dysfunctional and disunited. Neoconservative Republicans and the anarchistic tea party are peddling to voters more of the same Reagan-Bushnomics.
Albert Einstein warned that only the insane expect a different and better outcome after repeating an action that has failed.
America’s image is tarnished abroad. How long will it take Americans to see the root cause of their fear and plight?
Yoshi Tsurumi is a business professor in the Department of Marketing and International Business, Baruch College, New York.
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