WHEN the American Bureau of Labor publishes its employment statistics later today it will have far reaching consequences for the rest of the world. The US Federal Reserve has been leading the way on interest rate rises this year in an attempt to curb inflation after the US economy bounced back strongly in the wake of COVID.
If unemployment figures are going up it is a sign that their policy is working. Last month, when the central bank opted to impose another large rate increase, Chair Jerome Powell acknowledged that rate hikes are likely to fuel a rise in layoffs but said “that is something that we think we need to have”.
America
Others in America disagree. Mike Mitchell, director of policy and research at the Groundwork Collaborative, voiced his disagreement in a statement yesterday.
“Continuing down this path risks leaving millions of people, disproportionately lower-wage workers and workers of color, without a job or with smaller paychecks… We urge Chair Powell to think twice before plunging our economy into a wholly avoidable recession and completely undoing one of the strongest job recoveries on record.”
And there’s the rub. The law of the market and supply and demand are all very well when they are pushing up commodity prices and profits. Until the commodity is labour power and its price is measured in higher wages.
Truss and Kwarteng can pursue right wing economic ideology and only the UK suffers. But America dominates the world economy. It is the heart of the beast and decisions made in Washington affect us just as much as Tory policies.
If the Federal Reserve decides that not enough Americans are suffering and opts for higher interest rates the UK will likely have to follow suit. That will turn the screw on prices here, increase the pressure on pension funds and threaten a housing market that is already badly shaken.
Growth Growth Growth
Truss wants Growth, Growth, Growth. But the only things that will be growing are unemployment, inflation and homelessness. Even if the USA eases up on interest rates the UK is still in trouble. Deutsche Bank predicts that there will be no growth in the UK economy until 2024. The IMF issued another condemnation of ’Trussonomics’ yesterday. They don’t think cutting taxes works at the same time as interest rates are rising. But true to their capitalist loyalties the IMF opposes price controls while advocating policies that increase unemployment and depress wages.
That is why we say, ‘Enough is Enough’. Of course, we have had enough of the Tories. But unless we are happy to settle for more or less the same from a Starmer government we need to build a movement that says we have had enough of capitalism.