Retail Sales? Just the tip of an oncoming iceberg for the U.S.S. Titanic

Retail closings
Needless to say, Americans like to shop. So when retail stores begin shuttering in mass there is a lot beneath surface appearances. It is a clear indication real wages are at best stagnant.

This is official Washington policy to drive down the wages of workers through H1-B and H2-B visas. This along with illegal immigration has placed a secular downward trend to American wages, and effective demand. In fact real wages have not advanced since 1973, if statisticians had used methods to measure inflation that were in existence prior to Bill Clinton.

They haven’t so real wages have plummeted.

More importantly they impact general effective demand, the wherewithal to buy goods and services. There is simply too much production capacity for actual demand. So when the recursive feedback loop of stagnant real wages can no longer be propped up with easy credit, shuttering is required lest corporations go under all together.

Not just the visible retail stores will be closing, but also the manufacturers that supply them. And one does not need to be an economist to understand that idle factories also do not need to replace plant and equipment. So the slow down in the growth of real wages sooner or later hits capital goods as well.

So now there are not just retail store employees out of a job, but also a growing surplus army of unemployed in both manufacturing and capital goods, thereby reducing effective demand worldwide, and placing further downward pressures upon wages.

That real wages have remained stagnant has intrigued investors like Jeremy Grantham of Wall Street fame. Because prior to the 1970s real wages would fluctuate but would eventually bounce back or regress to their means or even go higher. The reason real wages remain lower according to Grantham is that the balance of power has shifted toward corporate America.

The government of the United States essentially has become an arm of business, and no longer represents the general public. Globalism is nothing other than a new form of fascism that buys votes with a bag of socialist goodies. But the fundamental means of getting more for themselves, and leaving less for the workers was using their new found power to strip the public of unions and reduce politics to paid TV advertisements.

People like Paul Ryan and Democrat Wall Street toadies was the result (i.e., globalists). Globalism allows the 1 percent to capture the lion’s share of productivity gains at the zero sum expense of a rise in wages generally. Yes, many well heeled people benefit from globalism. Why there is such stiff political resistance to alter the system. But alter it the public will. It has led to the polarization of inequality removing the moderation of the middle class, and leaving only the rich and poor with fatter statistical tails.

But as the middle shrinks, there is less and less need for productive investment, and the velocity of money slows markedly. The system is slowly but inevitably grinding to a halt, and will halt one day. The contradiction or conundrum to use Marx’s imagery perhaps is the notion workers must be paid well but that this runs directly counter to expanding the take of the 1 percent. So instead of this being a conflict between labor and capital, the 1 percent has decided to make this about gender identity, racism, misogyny and any other half-baked identity politics it can conjure up. But as long as the middle class continues to shrink the real problem of the system cannot be fixed–and will get ever more unstable. Like a top that loses angular momentum, it begins to first to wobble and eventually topples over.

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