« AMERICA COME FIRST AGAIN » REALITY OR UTOPIA?
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Throughout the electoral campaign, Donald Trump insisted on the slogan “America First Comes Again!”, implying, thus, that with him and through him the United States would become again the first industrial power on the planet, which the United States is no longer for ages, surpassed in this by “emerging” and immense China.
Indeed, the President Trump was not mistaken and abandoning the military crusade Obama-Clinton against the Russia, second in the group, he darts his warheads towards the China Sea (1).
To achieve a “reindustrialization”, assuming that America is “de-industrialized” – which is not assured as we shall see soon – the US economy must manage to maintain a precarious balance between six fluctuating and interdependent variables, over which the capitalist state apparatus – regardless of the titles of the official president – often has little control. The first variable is the currency, its value and its exchange rate relative to competing currencies. This variable is an indicator of the economic health of a country and affects the other variables as we shall see later. The second variable is the tax system, the cost of taxes and national levies, related to fiscal balance and to sovereign debt, indicating that this second variable is strongly correlated with the first one. The third variable concerns the interior and exterior markets for these goods to be marketed. Via the trade balance this third variable strongly influences the currency – its value – its exchange rate, which in turn affects the market access. The fourth variable is the cost of inputs, including labor (the price of labor power that will produce the surplus value, only reason of the operation) and energy. This variable is also connected to the first one. The fifth variable with which the Trump administration must juggle is the productivity of labor. This variable influences the wages and the purchasing power of legionaries of consumption and depends on investments in the fields of labor training, but also of mechanics, robotics, computer and digital industries. Finally, to cap it all, a sixth not decisive, as suggested by the incompetent left, but determined variable, resulting from the preceding, the commercial, tax and labor laws, which take the form of free-trade agreements that will come, not organized or structured all these variables, but validated them. This is also a major error of ‘outraged’ economists and analysts in the pay to have claimed that Donald Trump and the clique, which brought him to power, wanted to repeal the free trade agreements negotiated by the previous administrations (Democrat and Republican). The economic Establishment, who placed their protected to the Presidency, knows very well that these agreements are only ratifying the relationships of economic, political and military strenghts, and that we must first change these international balance of power before hoping to reopen the negotiations to secure further concessions from its allies and competitors. Thus, even before being enthroned, the thundering President is already in a campaign of intimidation against the true adversary of America, the imperialist China (2).
Who attracts the capital?
Let us first examine the level of industrial attractiveness of the various competing countries of America. The map 1 indicates the importance of each country and gives an indication of its attractive force in terms of reception of operations (production, computerization, management, distribution, communication, research / development) outsourced and / or relocated. It is easy to note that China and India are the lion’s share, but it should also be noted that since 2011, India is more attractive than China in terms of outsourcing / relocation of highly developed countries towards the so-called “emerging” countries, dislodging China which, in order to create an internal market, increases the incomes of its employees.
Moreover, the Chinese capitalists are less and less interested in the production of trinkets and are increasing their production in the range requiring better skilled and better paid employees (3).
The size of the country represents its attractive strength in terms of outsourcing / relocation of production, management or marketing operations.
The monetary variable.
If one considers the monetary variable, the US dollar is in a bad position to support the ambitions of the White House tenant. Notwithstanding the speculative frenzy phase that has gripped the US traders in the aftermath of the election: “Not only Wall Street did not record the predicted declines, but chained the increases. In the days following the election, the total US market index Dow Jones Wilshire 5000 (W5000 rated) closed in increase in 1.41%, the index of 30 “blue chip” US Dow Jones Industrial Average (DJI rated) gained 1.40%, while the index of technology stocks
Nasdaq (IXIC rated) was content with a gain of 1.11%. Two weeks after the election, the gains recorded since November 8, settled respectively in + 4.13%, + 3.77% and + 3.71% for these three indices“(4).
It should be noted that the increase in stock prices in the United States is speculative since no increase in production capacity has been recorded in the country since November 8th.
For their part, most European and Asian stock-exchanges have adopted a downward path: “The financial markets reacted in a scattered way in the days following the announcement of the victory of Donald Trump. The Asian markets fell: more than 5% of loss for the index Nikkei in Tokyo and Hang Seng in Hong Kong.
The European markets sulked oscillating between -0.4% in Madrid and + 1.99% in Zurich, the BEL20 and the CAC40 appreciating respectively + 1.42% and + 1.49%”
(5). At the same time the gold resisted in its role of safe investment and appreciated of more than 5 %, sign than the investors do not share the optimism of the American small-time speculators.
The dollar is overvalued vis-à-vis its main competitors, even if the euro is approaching the parity, and even if the yen keeps on falling, the same for the pound sterling and the yuan which the Chinese authorities leave depreciate: “The Chinese authorities have made clear that they considered a depreciation of their currency necessary while warning that they would ensure that the process is not messy” (6). “We are currently in 6.90 yuan to the dollar, even if the yuan were to fall to 7.25 against the dollar, the depreciation would be only 4% from current levels when the yen lost 16% against the US dollar over the last five weeks“(7).
Incidentally, the relative rise in the dollar has the effect of a rocker and reduces the fall of the yuan. The rise in dollar is a bad omen because it restricts the export prospects for US companies whose production facilities are located in the United States. On the other hand, this increase in the currency is advantageous for US companies whose production facilities are outside the country. They will be able, via tax havens, to repatriate their profits denominated in yuan, or in yen, and raise them by turning them into dollars. But for that the interest rates will have to be increased.
Thus, the US Federal Reserve has announced an increase in its key rate in order to curb the hemorrhage of currencies that are fleeing the country. Other increases are foreseeable. It can be anticipated that the increase in the rent of money will lead to the bankruptcy of millions of American households – similar to what the country experienced in 2008. Many households will be unable to make their payments, resulting in lower sales, surplus of inventories and bankruptcies of companies unable to sell their products, and ultimately a decline in generalized profits, including for US companies established abroad.
President Trump has multiplied the warnings to his faithful allies like Saudi Arabia and Emirates of the Persian Gulf, nothing happens, they get rid of their dollars sealed. Even Iran, which Obama had succeeded in bringing about, is threatened by the President-elect who wants that this country calms its frenzy and stop getting rid of its heap of dollars by buying expensive planes and so that it continues to sell its energy in petrodollar (8).
Conclusion, on the side of the currency the conditions are not met to attract the industrial investments nor the capital money in the den of the globalized capitalist “democracy”. Let us analyze the conditions of the second variable, the tax system.
The tax variable.
The US capitalists have always had an antagonistic relationship with the tax authorities and this is particularly evident since the US economy began its ineluctable decline in the late seventies. While in the 1950s the tax rate on corporate profits exceeded fifty and sixty per cent, it has been a long time since the tax evasion, coupled with the reduction in the tax rate, began in the Reagan era, has melted the central government revenues.
From the days of Presidents Nixon and Reagan, the left-wing and right-wing politicians and the so-called “neo-liberal” economists argued that tax and levies cuts freed capital for investment that generates growth and increased revenues for the State. This tactic could be justified if the problem of the US economy was the lack of liquidity to develop, but it is not so. The capital is overabundant, there is overproduction in most sectors and China could double its supply of products if required. It is the domestic market that is paralyzed from where the Trump team, having understood it, launches large public investment programs that will temporarily create demand.
This aversion towards the taxation is so embedded in the American psyche that the Tea Party has made of it his favorite theme, and Donald Trump, the multimillionaire boasted on TV of being a “smart guy” and of having paid nothing to the tax authorities for years. The President-elect has promised to reduce the income tax guaranteeing that he will considerably increase the public investments in infrastructure and expenditure on arms. It should be noted, however, that if the infrastructure investments are productive, the spending on armaments is economically inefficient. Must we conclude that there is a variable favorable to the reindustrialization of America?
Not at all. The federal budget as well as that of the other levels of public administration (states and municipalities) has been in deficit for decades, these projected revenue cuts coupled with the announced increase in spending will entail the sovereign debt in abysmal depths. All the more the rise in the relative value of the dollar, coupled with rising interest rates, will increase the price of government bonds, the Federal Reserve replaces the market to buy these fuzzy bonds, the more will rise the quantity of dollars of junk in circulation. This catastrophic conjuncture will push for a drastic devaluation of the dollar after a spectacular rise following a frantic stock market speculation as before each stock market crash. This is why China, in particular, gets rid of its dollars: “Moreover, although Japan took to China the rank of first holder of US Treasuries, according to official data released on Thursday, December 15 and held in October $ 1131.9 billion against 1115.7 billion accumulated by the mainland China (excluding Hong Kong), Beijing keeps a pressure lever on financing the US debts“(9).
To conclude, we can say that with the globalization of the economy, each country competes with its neighbor in terms of taxation so that this variable has only a secondary impact on the location of investments.
The home market variable and foreign markets.
In a globalized and integrated imperialist economy, it is difficult to control all the variables that can ensure the industrial and commercial recovery. Thus, the injection of US dollars into international financial system has maintained the power of the dollar (the reserve currency) and fueled the stock speculation with junk cash, that is, money not backed by concrete capital (means of production, exchange or communication). On the other hand, this money caused inflation (especially for common consumer goods) and further reduces the purchasing power of American workers. Thus, since the 2008 crisis in the United States, thousands of families live in parks or in their cars, and a third of young households have returned to their parents’ homes. This means that the value of the commodity “labor force” collapsed at the same time as the real value of money. The devaluation of a currency always has a cost for the employees and represents always a way to transfer the weight of the economic crisis on the back of the working class, which no economist-coolie will dare to confirm. Thus, for a few months now the euro is no longer supported by the European Central Bank (ECB) and who will pay the price will be the European workers.
When we think that 70% of US GDP is based on consumption (against 40% of Chinese GDP), all this has a direct impact on the home and export market. The consumer workers see their purchasing power lagging as a result of an overflow of money in circulation causing the devaluation of this money capital. As it is imperative that the goods must be marketed – sold and consumed – to realize surplus value, unique objective of economic activity, the international capitalists have therefore devised a subterfuge, the credit, the anticipated expense of the salary of the proletarian – and the annuitant’s income – which may never be paid or cashed. In doing so, the capitalists dig deeper into the catacombs of their ambitions, causing more inflation and the depreciation of the currency further reducing the consumption, the markets, and the possibilities of disposing of production. It is then easy to imagine that in the absence of a market, the production stops, and doing so ceases the valorization of capital, aim of capitalist economic activity.
Since 1976, the United States has recorded each year a deficit in its trade balance (10). In 2015 this astronomical deficit amounted to 530 billion US dollars or 3% of the US GDP (11). These data reflect the lack of competitiveness of the US production system in the consumer goods sector, but they conceal surpluses in the high-tech sectors (armaments, IT, communication, high-level services, etc.). In any case, a national economy can not survive indefinitely by living on the brackets of foreign countries with which it accumulates debts and repetitive deficits. It is easy to foresee that the creditors of this insolvent debtor will eventually refuse to finance it. It is then that the danger of a military confrontation will reach its apogee.
It must be remembered that there can be no sale of goods if there is no production of goods and there can not be capitalization if there is not first production and then marketing. As can be seen, the home market and / or export market variable is a dependent variable whose fate depends on the evolution of the independent variables that are upstream. Incidentally, the monetary variable here reveals its sensitivity to the costs of the means of production and especially to the social price of the labor force conditioned by the level of productivity of labor, which produces the profitability of capital investment which we shall now examine.
The variable costs of the means of production – energy and labor.
It will be noted that the candidate Trump and his faction of the establishment had a real campaign program. These people pursue a very specific goal and you will notice that, for each of the listed variables, they presented proposals, just like the Clinton team incidentally – it six of one and half dozen of the other, obviously.
In terms of energy, the Trump team is pushing back the ecological nuggets and plans to re-launch the shale coal, gas and oil production, the construction of Canada-US oil pipelines and so on. However, the price of a barrel of oil will have to rise. You now understand the reason for the admonitions of the President-elect to his faithful Saudi ally that America intends to reduce its energy supply towards eccentric regions such as the Persian Gulf where it controls, less and less the situation is folding to its Canadian (40 percent of its supply) and Mexican allies. Yet, all this political and diplomatic rubbish does not prevent us from observing that the United States has no problem of energy supply and that some measures of energy saving could easily generate surpluses … But since when the economy of energy leads to the increase in profits?
The cost of transportation.
The lowering of the cost of intercontinental transport (by liners, containers and bulk carriers) also explains the ease with which the factories can move from a country to another, from a continent to another. A food scandal about spoiled meat in Europe, a few years ago, demonstrated that to produce a simple frozen dish no fewer than six companies and factories in six different countries were involved in the manufacture-marketing of these portions. However, with the globalization of production, this advantage is international and does not benefit the United States any more than other countries.
On the other hand, the American imperialism performs more than others in the management of physical and material flows whose circulation requires an immense and complex system of transport, storage and dispatch. In the United States, the logistics employs 3.5 million people, 85% of them in urban areas. The “clusters”, reception, preparation and distribution bases in Los Angeles, Chicago and New York each have about 100,000 employees. UPS employs 20,000 in Louisville and Fedex 15,000 in Memphis (12). As can be seen, the United States remained a highly productive industrialized country.
Wages, cost of workforce and productivity.
We must first specify that wages and cost of the labor force are not equivalent. The salary includes only the gross remuneration received by the employee, including the levies which he will have to pay, while the social cost of his labor force includes the taxes and indirect costs required to ensure his extended reproduction (income allowance provided by the State, health, education, cultural and sports services and other state services).
Wages and labor costs are an important variable that the Trump team has tackled with speed. Since the eighties, the American bourgeoisie leads a constant war against the American proletarian class and has had great success. Thus, as little as 11.3% of the wage labor is unionized. The unionization is extremely difficult and many workers in the United States consider it unnecessary to organize in the light of the economic struggles liquidated by the petty-bourgeois aristocracy and the union bureaucracy.
“Insecurity is only one aspect of the general deterioration of working and living conditions of the majority of American employees: falling real wages and weekly schedules, now below the 1972 level; inability for 30% of workers to live without public aid; imbalance of profit / wage ratio, the share of capital in national income dropped between 1979 and 2010 from 18.8% to 26.2% “(13).
Precariousness is also the number of employees on short or forced part-time contracts, which rose from 18.7 million in 1995 to 21.6 million in 2005. There are more than 22 million workers in a vulnerable position (that is to say even more vulnerable than the others), which creates a downward pressure on wages and a worsening of working conditions for all employees. As a demagogue, Trump overcame this working despair by attributing the cause to immigrant workers, while illegal immigrants can not even claim these low quality jobs. They are content with even more miserable jobs. Certainly, where 27% of private employees are working in the factory in 1980, they are only 11% in 2010 . “But why have 5 million jobs of this type disappeared? And where? Especially in the traditional sectors such as steel and textile. Only a fifth of these 5 million jobs destroyed were by imports came from low-wage countries. Relocation and subcontracting do not explain everything. In Made in USA products, the share of components manufactured on the US ground (…) is estimated at 85-90%” (14).
“In real terms, the US industrial production rose the 131% between 1982 and 2007 (before the crisis of 2008), namely 5% per year: a slower growth compared to 1960, however, the difference is much less than we can imagine (the “Post-war economic boom” boasted an annual increase of 6%). This increase was achieved by a sharply reduced workforce, but the job losses occurred mainly during the four major recessions: less than 2.5 million jobs during the 1980-82 crisis, less 725,000 during that of 1990-92, less 678,000 during that of 2000-2003, and 2 million less after 2008” (15).
With regard to the petty-bourgeois feminist movement, unconditional supporter of the multimillionaire and war criminal Hillary Clinton, we can say that from 1990 to 2010, an additional 8 million women have “freed themselves” to work in “shops hoodies” practicing painful and poorly paid handicrafts, creating additional downward pressure on wages.
In 2016, the President Obama has raised a few under the minimum wage for the underpaid employees of federal state. It is because the capitalist state has realized two things: on the one hand, the level of wages is so low in the United States that it no longer allows a section of the working class to ensure its enlarged reproduction (to reproduce its workforce and that of his family), leading to shortages of employees in certain sectors of activity leading to upward pressure on wages. Then, the derisory level of wages leads to the abandonment of legal work by a portion of the employees who prefer to offer their services on the illicit market and for the activities of the underworld. Banditry and crime against the person are exploding in the United States, which is expensive in insurance, law enforcement, and clogs the justice system as well as the prison system. Lastly, the steady decline in average and median wage reduces overall the solvent consumer market for an increasingly large portion of employees who today are over-indebted and no longer can borrow and stop consuming, hence the explosion of thrift stores, soup kitchens and other non-lucrative charities for large capital.
In 2015-2016, the Obama administration has implemented the law on compulsory health insurance for all employees, a law that aims at supporting the consumption of health products and shearing working sheep by the big pharmaceutical capital, the private medical services and the insurance companies.
Under the pretext of providing every worker with an insurance for his health care the medical care industry imagined to tax directly the workers in order to fill his pockets and those of the insurance companies. The petty bourgeoisie and the literary hacks do not understand why the American workers, who were previously insured by their employers, rebel against the fact that the “progressive” Democratic State had relieved the big companies from this responsibility for putting it on the backs of employees while the employees who were not insured still do not have the means to ensure their health at work with these prohibitive rates. Incidentally, the Republican candidate Donald Trump has surfed on this dissatisfaction during the elections. As soon as elected he betrayed his promise to abolish this very beneficial program for the capitalists of insurance, health and pharmacology and promised to simply amend the legislation. Thus, the workers were able to confirm during this bogus election that the Republican or Democrat is the same and that the bourgeois elections are “democratic traps”.
In the end, as demonstrated by these data, the first cause of American economic decline is not the relocation, which is only a form of adaptation of productive capital to the conditions of (geographical) expansion and (physical ) intensification of the exploitation of the global labor force, but the increase in productivity, ie the systematic intensification by mechanization, robotization, computerization of the exploitation of the labor force, which means that the measures advocated by the plutocratic team which are directing the government of Donald Trump may eventually lead to an expansion of production without generating an increase in employment, but rather an intensification of the exxploitation of wage-earner, already overexploited.
The variable of free-trade agreements.
As we have indicated previously, this variable is dependent, in the sense that it is not imposed at the beginning of the process of industrial relocation or forced re-industrialization, as the “indignant economists” call it. It takes place at the end of the process of industrial redeployment, when the multinational oligopolies have finally redeployed their activities to exploit the local “labor force” in each of the regions of the globe where it is most “exploitable”. Thus, the aircraft production will not be relocated to Vietnam, but will be directed to China if it can offer a highly trained and qualified workforce (at the expense of the local proletariat), but at a declassified price. The international free-trade agreements will crystallize these relations of strength and pacify these relations of production between allied and competing international powers. The ultimate enemy of each of these imperialist belligerents is not the capitalist competitor, but the proletarian class of each of these countries claiming investment profits. We are here at the heart of the capitalist mode of production rendered in its imperialist phase. Always it is necessary to remember that imperialism is not a hegemonic policy of great power as is thought since Lenin, but a stage of economic development affecting an entire mode of production and consequently producing specific sociological, political, military and diplomatic behaviors … survival behaviors of a decadent mode of production destined to disappear.
The customs, tariff, labor and tax laws that have been shaped (or have been forged by officials from Brussels, Washington, Ottawa and Canberra), the multinationals present in the Schengen area, in the NAFTA region and in the WTO (World Trade Organization) ensure that the lowest paid salaried labor force will be exploited by stateless multinationals and that then their profits can migrate serenely to tax havens in order to avoid the tax and social charges always considered as execrable by those who have the vocation of collecting the maximum profit to be redistributed to the shareholders eager to reinvest this capital for a new cycle of enlarged reproduction, and so goes the economic life under decadent imperialism.
The proletarian class.
Ultimately, America’s problem is not one of industrial delocalisation, a profusion of stateless immigrant labor, mediocrity of hungry allies, or unfair competition from “emerging” capitalist countries, but strictly a problem of valuation of surplus capital in a global economy having reached its maturity and a high productivity thanks to automated work. If the capital came back to the United States or in any other friendly or enemy country – but still competitors – the profit rate would have been restored to the advantage of international capital, and the situation could be only temporary because the organic composition of capital could only begin again to deteriorate until the next widespread war.
Understand me, the problem of America is the one which will be experienced by all the capitalists of this imperialist world, it presents itself with more acquittal in America because this capital is more advanced than the others in the maturation of its contradictions. What is happening in America today prefigures what will happen everywhere else in a few years.
Two paths are open to the proletariat of the whole world, finally globalized: namely, to follow the example of certain American employees and to sell their labor force below the cost price – below the enlarged reproduction threshold – until their extinction as an operating class; or to resist with all their force the disappearance, to refuse the closures of factories and the fall of wages, to strike until participating in the popular insurrection that will happen inexorably, to overthrow and destroy the police state and not to take control or direction of it as the leftists propose, take the direction of the insurrection as a class “in itself” and “for itself” and engage the proletarian revolution, or die, because have no illusion comrades, the capitalists will be pushed until nuclear war to cling to this dying mode of production.
(2) Luc Mampaey director of GRIP . Http://www.les7duquebec.com/7-de-garde-2/trump-et-wall-street-anticipations-positives-pour-secteur-de-larmement/
(3) Robert Bibeau (2015) http://www.les7duquebec.com/7-au-front/les-entreprises-americaines-delocalisent-aux-etats-unis/
(4) Luc Mampaey director of GRIP . Http://www.les7duquebec.com/7-de-garde-2/trump-et-wall-street-anticipations-positives-pour-secteur-de-larmement/
(5) Luc Mampaey director of GRIP . Http://www.les7duquebec.com/7-de-garde-2/trump-et-wall-street-anticipations-positives-pour-secteur-de-larmement/
(12) According to https://ddt21.noblogs.org/?page_id=1260 . Reference Kim Moody, US Labor: What’s New, What’s Not? 2016. Kim Moody has participated in the International Socialist Organization, founded and for a long time hosted the magazine Labor Notes. Among his books: US Labor in Trouble & Transition, Verso, 2007.
(13) According to https://ddt21.noblogs.org/?page_id=1260 . Reference Kim Moody, US Labor: What’s New, What’s Not? Kim Moody has participated in the International Socialist Organization, founded and for a long time hosted the magazine Labor Notes. Among his books: US Labor in Trouble & Transition, Verso, 2007.
(14) According to https://ddt21.noblogs.org/?page_id=1260 “According to the US Department of Commerce, in 2014,” The internal content [domestic content] amounted to 51 cents for every dollar spent by consumers and companies in the purchase of manufactured goods”. This statistic indicates an average, ranging from 79% for food to 7% for tobacco. Significantly different numbers than Moody, but that in any case do not confirm the idea of a deindustrializing tidal wave“
(15) According to https://ddt21.noblogs.org/?page_id=1260 . Reference Kim Moody, US Labor: What’s New, What’s Not? Kim Moody has participated in the International Socialist Organization, founded and for a long time hosted the magazine Labor Notes. Among his books: US Labor in Trouble & Transition, Verso, 2007.