The Second Great Depression

The second great depression deepening across the globe

Webster Tarpley

In Charles Dickens’ celebrated short story A Christmas Carol (1843), the Malthusian miser and London stock exchange speculator Ebenezer Scrooge is told by the ghost of his deceased partner Jacob Marley that “it is required of every man that the spirit within him should walk abroad among his fellow men, and traveled far and wide” for the purpose of doing good works of charity and thus alleviating human suffering.

Press TV,

24 December, 2012

In this spirit, let us briefly examine the economic condition of humanity at the close of 2012. 

Our finding is sadly that the ongoing world economic depression continues to increase the needless privations of the vast majority of the inhabitants of this planet. The great scourges of mankind remain poverty, illiteracy, ignorance, disease, unemployment, homelessness, inadequate sanitation, low social mobility, and exclusion -- and many of these are getting worse. 

27,000 children die each day from needless poverty 

The tragic condition of humanity is perhaps most dramatically reflected in the fact that between 22,000 and 27,000 children die each day due to poverty, largely in the form of starvation, malnutrition, and diseases like diarrhea which can be cured for a few pennies. The upper end of this range corresponds to one needless childhood death caused by poverty every three seconds. Total needless childhood deaths from poverty, these data suggest, must be approaching at least 10 million per year - a yearly total which by itself rivals any of the great genocides of world history. Of the 2.2 billion children who live in today’s world, one billion live in poverty. This is the estimate from the most recent United Nations Human Development Report. 

And these figures only include children. Estimates for total daily avoidable mortality, including children, suggest a level of 40,000 to 50,000 fatalities per day -- for a yearly hecatomb of over 18 million deaths.

We need look no further for the severest condemnation of the existing economic systems of the world, including especially the International Monetary Fund, the World Bank, the Bank for International Settlements, the Asian Development Bank, the Inter-American Development Bank, the international system of privatized central banks, and similar entities. 

Three billion people on less than $2.50 per day 

These deaths occur in the world in which about a billion people try to survive on less than one dollar per day. 2.6 billion people or 40% of the world’s population are struggling to subsist on less than two dollars a day. It is a world in which a total of 3 billion people or 50% of the world total must try to get along on less than $2.50 per day. For all the talk of a growing middle class made possible by globalization, 80% of humanity receives less than $10 per day. At the other end of the scale, the most prosperous 20% of the world’s population account for 75% of total world income, and this distribution becomes even more extreme when permanent assets are considered. 

Almost a billion malnourished worldwide 

Closely correlated with needless death and needless immiseration is the problem of world hunger. According to the United Nations Food and Agricultural Organization in Rome, there are in 2012 some 925 million persons experiencing hunger and malnutrition. Some 578 million of the hungry live in the Asian and Pacific countries, followed by 239 million malnourished in sub-Saharan Africa. Even in the developed countries, the FAO lists 19 million hungry. We should recall that, in the United States, some 50 million people rely on food stamps for their survival, meaning that they may have as little as $1.50 to spend per meal and per person. 

The FAO’s world hunger estimates are very likely too low. This agency assumes that world hunger was about at its current level in 2008, and then rose to over one billion people in 2009, before returning to approximately the 2008 level in 2010. but this may turn out to be wildly optimistic, and perhaps deliberately so. 

Another big factor in economic immiseration is the current high level of world unemployment. Here the statistics are even sketchier. The CIA assumes a world unemployment rate of 9.1%. The United Nations International Labor Organization (ILO) sets this rate at about 6% -- meaning about 200 million current jobless -- but at the same time concedes that in many developed countries - such as the United States and the nations of the European Union - the combined figure for unemployment and underemployment is in the neighborhood of 30%. These are depression levels by any reckoning. 

Especially dramatic is the situation of youth unemployment. According to the ILO, almost 70 5 million young people between the ages of 15 and 24 were unemployed, yielding a global youth unemployment rate of 12.7%, up one full percentage point from pre-depression levels. Young people are currently three times more likely to be unemployed than adults. In Greece and Spain, 50% of youth are jobless.

The ILO notes a global tendency for discouraged workers to drop out of the labor market in despair, thus disappearing from the official unemployment statistics on which these estimates are based. Almost 29 million workers dropped out of the labor force in 2011, according to their figures, On a world scale, more and more of those previously employed are now exiting the labor force: The employed portion of the population has declined from 61.2% in 2007 to 60.2% in 2010. This is no ordinary shrinkage, but rather represents the largest decline recorded since these statistics started being kept in 1991. The ILO thinks that this data series is headed for a double dip, with a new all-time record low set to be registered during 2013. 

The ILO concludes that the world requires a minimum of 600 million new productive jobs to be created over the coming decade. This is once again doubtless a lowball estimate, but at least gives some basis for programmatic discussions. Who could finance the creation of 600 million new productive jobs, with the high level of capital investment per job which this implies? Surely it cannot be the private zombie banks, which barely manage to keep themselves and their mass of toxic, kited derivatives in existence through massive infusions of money from governments and privatized central banks. It is unlikely to be the national treasuries, which are already under heavy pressure to maintain the existing social safety nets. As the Woytinsky-Lautenbach program and the experience of American Lend-Lease suggest, capital investments on such a scale can only come through the nationalization of the central banks, requiring them to provide the necessary trillions in 0% long-term loans and bonds for infrastructure, manufacturing, construction, energy production, agriculture, scientific research, and other productive activities. 

1.1 billion lack clean water 

This work is especially urgent because the lack of modern hard and soft infrastructure plays a central role in the continuing immiseration of mankind. Fully 1.1 billion people in developing countries today lack adequate access to clean water. One third of all children, or 640 million kids, exist without adequate shelter. One fifth of all children, or a total of 400 million, do not have access to safe water. One seventh of all children, or 270 million, are denied access to adequate health services. 

The United Nations report on the World Economic Situation and Prospects 2013, published on December 18, 2012, points to a significant slowdown in the already anemic levels of world economic activity. This reflects first of all the devastating impact of the austerity imposed by the International Monetary Fund, European Central Bank, and European Commission (the “troika”) on the depression-stricken economies of southern Europe. It also tries to factor in the grave danger of a similar deflationary shock in the United States, under the rubric of the “fiscal cliff,” imposed by reactionary Republicans and Obama’s Wall Street Democrats. Another major factor is the marked downturn of the Chinese economy, a byproduct to a large extent of the ongoing recessions in much of Europe. 

Political instability rooted in economic immiseration: Egypt 

The world economic depression has of course been a major factor in the youth unemployment and food price inflation which have played a central role in the destabilizations commonly known as the “Arab Spring.” Those destabilization had been prepared by the austerity demands of the IMF on countries like Libya and Syria. As the imperialists had intended, the new regimes left in the wake of those destabilizations are weaker than their predecessors, and thus even more likely to sell out to the demands of the international financiers. A case in point is the new Egyptian government of Mohammed Morsi. Morsi capitulated to the IMF on the critical question of food and fuel subsidies in the last week of November, setting the stage for a major crisis of his regime. Under Morsi’s sellout to the IMF, the price of a liter of gasoline has gone from 2.75 Egyptian pounds to five Egyptian pounds - a price hike sure to cause riots in any country. The IMF has forced Morsi sea to set a goal of reducing fuel subsidies by one third, cutting them by $5 billion to a level of about $11.4 billion. At the same time, Morsi is supposed to increase the sales tax as part of a transition towards a value added tax (VAT), which translates into a massive shift towards regressive taxation, the most socially destructive type. In addition, new levies on personal property and telecommunications our plan. This is the freshest example of what not to do. 

What the world needs, by contrast, is a decisive repudiation of neoliberal economics, a rejection of austerity measures, and a reaffirmation of the priority of a social safety net, combined with measures to shift the cost of the world depression off the backs of working people and onto the parasitical bankers who created the depression in the first place. The centerpiece of a world recovery program will be the nationalization of the existing central banks and their transformation into Hamiltonian national banks dedicated to providing masses of extremely cheap, long term loans and bond purchases for the purpose of reviving infrastructure and a broad array of tangible, physical production, thus turning the world economy away from the hyper-financialization and casino economy of recent years.