In all the non-stop chatter in the United States about "reopening the economy", has anyone given a thought to answering the question, "What exactly should be 'reopened'?" With more than 40 million jobs lost since the lockdown to "flatten the curve" of the Coronavirus pandemic, which began in March 2020, there is no question that Americans are legitimately fearful about their prospects for the immediate future. With government aid to minimize losses set to run out, how will people afford to pay the bills for food and housing, medical costs, etc.?
As uncertainty about whether it is safe to end the lockdown, and the looming possibility of the "second wave" of infections hitting, a panic has been spreading, reinforced by media coverage, which has pitted those affected by the economic shut down against medical professionals and government officials who are advising caution in reopening. This has provoked angry citizens to march to state capitals in some parts of the country, demanding an end to the social distancing measures, which have been applied in the effort to halt the spread of the pandemic, and that businesses, offices, sport and entertainment venues be opened immediately.
What has been forgotten in the understandable panicked response is that there is no "normal" economy to return to! The bubble economy, which wrongly had been hailed as a sign of economic recovery, began popping last summer, as the volume of unsustainable debt coming due outstripped the liquidity available to service it, threatening to trigger chain-reaction defaults, leading to a complete blowout. By mid-September, the U.S. Federal Reserve had to take over one area of refinancing this bubble, known as Repo lending, as commercial banks bowed out, fearing a coming tsunami of defaults. The Fed eventually was pumping as much as $120 billion a night in 24-hour overnight loans, along with a new round of Quantitative Easing, to provide fresh liquidity to prevent a domino-style collapse from occurring. Yet even this flow of funds was inadequate to sustain the system, as a systemic breakdown is underway.
When a lockdown was initiated to halt the spread of the corona pandemic, the government and the Federal Reserve responded with even more liquidity pumping. While a certain amount of money was made available, through the CARES Act, to aid cities, states, some businesses and hospitals to counter the costs of fighting the pandemic, a much larger volume of liquidity was pumped into the collapsing financial sector, to bail out the shadow banking system, and the speculators who had run up the unsustainable debt. An initial sum of four trillion dollars was made available for this, with the prospect for more, "if necessary", promised by Fed chairman Powell, which enabled zombie corporations to issue new offerings of debt, at junk bond ratings, to roll over existing unpayable obligations, allowing hedge funds and others to buy and sell the new debt, in an effort to stave off a wave of bankruptcies.
The onset of the "Corona recession" provided an excuse to use a wall of money to temporarily hide the unsustainability of the debt. But in order to sustain this level of bailout, there has been little credit made available for the businesses shut down by the measures to combat the pandemic, not to mention to fund a real recovery.
THE "LAROUCHE PLAN"
This systemic breakdown crisis underway was forecast by American economist Lyndon LaRouche, beginning with the lamentable decision in August 1971 by U.S. President Richard Nixon, to end the fixed exchange rate system of Bretton Woods. Nixon was panicked by a City of London-organized assault on the dollar, to couple the dollar from gold, and to adopt a speculator-friendly floating exchange rate system in its place. LaRouche warned then of the intention of the financial establishment to enforce anti-growth measures, through austerity and deregulation, which would "deindustrialize" the advanced sector nations, replacing the labor force there with a cheap, or slave labor force from the former colonial nations. He identified the emergence of the ideological cult of British neo-liberal economics, to be enforced by global central bankers working through the International Monetary Fund, and new "free market" trade agreements, as an attack on sovereign nations, which would be made subservient to supra-national institutions, for the benefit of financial, raw material and industrial cartels.
As this new system was put in place, LaRouche forecast each successive phase of the shift away from science and technological innovation, which characterized what he called cannibalism against the physical economy. This shift led to decline in real wages in the Trans-Atlantic region, and the change in the work force from productive employment, to a "service" and "consumer" economy, kept afloat by increasing debt, of governments, corporations, and consumers. As bubbles popped in the late 1970s, in 1987, at the end of the 1990s decade, and again in 2008, LaRouche intervened repeatedly, with programs designed to reverse both the predatory policies of the global bankers, and the dangerous threat to populations associated with these policies. The ravages of the global Coronavirus pandemic, made worse by the austerity attacks against public health care in most countries, and the failure to introduce a standard of care in the developing sector, confirmed a forecast made by LaRouche in 1974, when he warned of the spread of old and new diseases, resulting from the failure to launch a global recovery plan to replace the discarded Bretton Woods system.
The world economy, and that of the advanced sector, has reached a point today where it would be the height of foolishness to reject LaRouche's authority. With this in mind, LaRouchePAC has published a new strategy document, to provide a blueprint for reversal of the accelerating decline, and the opening of a "New Frontier" in human endeavor, titled "The LaRouche Plan to Reopen the U.S. Economy: The World Needs 1.5 Billion New Productive Jobs".
PRODUCTIVITY IS THE KEY TO REAL WEALTH
With many people under lockdown dreaming of the "good old days", of visits to nail and tattoo parlors, topless bars, sports and pop music concerts, and travel as an example of the "freedoms" they associate with the bygone economy, no amount of such activity will produce an economic recovery. Neither will pouring trillions into stocks in bankrupt corporations, or into the purchase of new financial instruments produced by the casino economy, which do little more than provide enormous fortunes for those controlling the system. The present financial downward spiral is the direct result of failing to continue the progress of the post-World War II period, in which productive innovations were the result of new scientific discovery, and the technologies with resulted from them, and investment in new platforms of infrastructure, which cheapen the overall cost of production.
The LaRouchePAC study proves that the transformation of the work force resulting from scientific advances is the driver behind real economic development. The shift from productive employment to the service or consumer economy is the chief cause of the downward economic spiral. At the end of World War II, 50% of the workforce was involved in productive activity, employed in manufacturing, agriculture, mining and power, construction and transportation. By the 1960s, in spite of the anomaly of NASA, which employed 400,000 in the Apollo Project, to put a man on the Moon, this had fallen to 35%. By 2020, the percentage has dropped further, to 15%.
This is not the result of the emergence of the internet, Artificial Intelligence and robotics, but of the deliberate outsourcing of productive jobs to poor countries, to lower the costs of labor. When this is combined with austerity in infrastructure spending, and the defunding of Research and Development—spending which in the "new economy" is considered to result in an unnecessary cut in profits—the outcome is a collapse in real profit for the economy as a whole. LaRouche correctly insists that it is a fallacy to measure profit in monetary terms, a fallacy embedded in the fake determinations of GDP, which includes money turnover in speculation and other forms of gambling in its calculations. Instead, real profit comes from physical economic growth, driven by science and technology, which increase the productive powers of every person who is employed.
Chapter 3 of the report discusses LaRouche's approach to the effects of measures which increase labor productivity. He argues against the neoliberal theory of free market economics, in which "cheaper is better", showing that improvements in the real economy come from a simultaneous development, in which a.) the share of total production going to consumption for skilled, educated productive workers has to increase; b.) while, at the same time, the share of production to new platforms of infrastructure and capital goods must increase faster. In other words, capital intensity of production must increase at the same time that levels of consumption rise, to produce a surplus, to be deployed in investing in future advances. For this to occur, a minimum of 5% of the workforce must be employed in R&D, which at present makes up less than 1.5%.
The detailed analysis of the present collapse of the numbers employed in necessary goods production, and the failure to invest in areas which will allow future advances in productivity, makes clear why the demand for a "reopening" of the economy, without addressing the degeneration of the goods-producing sector, and the scientific/research vector of the last fifty years, will not lead to a recovery.
Now is the time to "Think Big", beginning with the potential for new areas of discovery, in the infinitely large domain of space exploration, and the infinitely small, in harnessing the power of fusion energy and plasma technologies. In the 1960s, when President John F. Kennedy (JFK) first committed the U.S. to land humans on the Moon, and return them safely to the Earth, the success of this program unleashed a wave of scientific and technological optimism, which threatened to crush the financial establishment's commitment to anti-growth policies, and defeat the efforts aimed at reduction of the world's population.
In a speech shortly after his inauguration, Kennedy outlined a strategy which is coherent with LaRouche's theoretical approach. The history of the U.S. economy, he said, is one of "rising productivity, based on improvements in skills, advances in technology." This is what we wish to do today, he added, as it is reflected in rising wages and standard of living, and a healthy rate of growth for the economy as a whole. The long-term effects of JFK's space program, both in developing new technologies, and in generating real wealth production through deployment of those technologies, produced an optimistic outlook in the population, one which he intended to deploy to shape not just the direction of future policy for the U.S., but for the world, to engage in collaboration with the U.S. for peace and economic development, free from want, and from geopolitical confrontations.
That is the intent of the LaRouche program today—study it, and join with us to implement it, as this is the answer to the question as to what kind of economy we wish to "reopen."