The issue with my truck engine was clear. I had to get all four cylinders working again. Joseph Stiglitz points out that the weak growth has left wages essentially stagnant. Six years after the financial collapse of the Wall Street Mega Banks the recovery has not gotten under way. Why? From LiveMint:
The malaise afflicting today’s global economy might be best reflected in two simple slogans: “It’s the politics, stupid” and “Demand, demand, demand.” The near-global stagnation witnessed in 2014 is man-made. It is the result of politics and policies in several major economies—politics and policies that choked off demand. In the absence of demand, investment and jobs will fail to materialize. It is that simple.So the problem is that the bankers and holders of wealth do not want more economic activity funded by government borrowed money.
Nowhere is this clearer than in the euro zone, which has officially adopted a policy of austerity—cuts in government spending that augment weaknesses in private spending.
The euro zone’s structure is partly to blame for impeding adjustment to the shock generated by the crisis; in the absence of a banking union, it was no surprise that money fled the hardest-hit countries, weakening their financial systems and constraining lending and investment.
In Japan, one of the three “arrows” of Prime Minister Shinzo Abe’s programme for economic revival was launched in the wrong direction. The fall in gross domestic product that followed the increase in the consumption tax in April provided further evidence in support of Keynesian economics—as if there was not enough already.
The US introduced the smallest dose of austerity, and it has enjoyed the best economic performance. But even in the US, there are roughly 650,000 fewer public-sector employees than there were before the crisis; normally, we would have expected some two million more. As a result, the US, too, is suffering, with growth so anaemic that wages remain basically stagnant.
When you have more money than you need, then you use your wealth to gain social control instead of building more wealth. You use the power conferred by your wealth to suck up the wealth from the middle and working class. This is reflected in the anemic wages since 2008 together with the new records of the stock market as were announced last week.
The power of the very wealthy (corporations, Wall Street Banks, and wealthy families who make up the 0.01%) is permitting them to create a neofeudal system of powerful families supported by their retainers and living off the work of the middle and working classes.
It is not the case that no one knows how to get the economy operating on all cylinders again. It is the case that the 0.01% generally are recreating the society of the French Aristocracy prior to the French Revolution. They want to live on the work of the productive middle and working classes and avoid all taxes and responsibility. Why not? They inherited their social positions so they deserve it.