he economy is like gravity: what goes up must come down. “Downturn,” “slowdown,” “slump”: these are all common catchwords in the economist’s vernacular. It seems to be widely accepted by economists that the economy undergoes frequent fluctuations.
The fact that these fluctuations take place is underscored by the importance of the Federal Reserve in the American economy. When the Federal Reserve cuts or raises interest rates it often has a huge impact on how people choose to spend and invest their money, and it makes headlines in most of the papers. Cutting interest rates is a mechanism to try to prevent the economy from slowing, while raising interests rates when the economy is strong is a mechanism to prevent risky and unwise economic activity that may induce a future downturn.
The economy was supposedly booming in the late ’90s, and according to the experts, it is now in one of its typical downward plunges. Accordingly, the Federal Reserve has begun its practice of cutting interest rates and George W. Bush is campaigning to further help business with a tax cut. Lost in Bush’s campaigning and the business section of the newspaper, however, is any talk of real solutions to help working families and the working class when the recession finally hits. More pro-business solutions are not the answer.
Recessions are nothing new. There were recent recessions in ’90-1991, ’81, ’79, and ’74-1975. According to The New York Times, the chief economist for Morgan Stanley Dean Witter believes that a recession may be a “necessary evil” that helps the long-term prosperity of an economy.
Of course, while the working class benefits least in times of economic prosperity, it always suffers most in times of economic despair when unemployment goes up, wages fall, and the bargaining power of workers (which is already dismal in America) is diminished. Worse, the working class does not have nearly the same amount of wealth and savings to fall back on during difficult economic times as the wealthy, so unemployment may very well mean going hungry or forfeiting payment on a home. In fact, according to The Nation’s Wealth Report, the bottom 40 percent of American families could not maintain their standard of living for even one week if they had to rely solely on their savings. Furthermore, in the United States, many citizens lack health insurance, dental insurance, affordable housing, long-term unemployment benefits and other safety nets that citizens in other countries enjoy in order to help relieve some of the hurt caused by downward economic fluctuations. In light of the fact that recessions are inevitable, the government should put more effort into providing safety nets for American citizens.
Unfortunately, the dialogue on the economy is always pro-business. When productivity is high and the economy is growing, arguments are made that any extra resources going to wage increases or employee benefits will halt growth by hurting the potential for a company to invest. Similarly, politicians argue that increasing welfare spending during times of prosperity will cause tax increases that hurt business and may cause a downturn. When the economy is bad, these same arguments against the creation of safety nets are magnified and additional arguments for tax cuts for the wealthy are added to help spur investment and the potential for growth.
No matter how the economy is doing, economic arguments are always framed in terms of what will best suit business and the wealthy. At no time is the plight of the American worker ever high on the priority list. Unemployment is used as the sole indicator of how workers are affected. Sadly, while it is true that more productivity generally means that more workers will have jobs, it does not mean workers will have their basic needs fulfilled. And when the next slump arrives, these basic needs will still go unfulfilled as unemployment again increases and wages suffer. Workers need more security than knowing that they will most likely be employed when the economy is doing well and may be let go the minute it turns south again. The fact that economic downturns take place so frequently only shows how necessary safety nets are for the working class.
Despite economic fluctuations that frequently place extra hardships on the already suffering working class, few efforts are ever made in America to provide workers with the job security and safety nets they need to ensure an adequate living. Economic fluctuations are to be expected in any economy, whether laissez-faire or socialist, but a socialist economy would ensure that the basic needs of its citizens, including health care, dental care, and job security, were taken care of in both good times and in bad. The suffering of the working class, which is magnified in times of economic downturn, should not be used as an excuse to aid the wealthy, but as a reason to create safety nets that will ensure the welfare of the working class.
