Editorial from the American Socialist Appeal

The recent terrorist attacks in London only confirm the volatile position the world finds itself in at the beginning of the 21st century. Bush and Blair’s war on terror and the invasions of Iraq and Afghanistan have done nothing but further destabilize the situation. Here at home, the mood is finally turning against the war. The anti-war movement has a fresh opportunity to rally millions around the demand for the immediate end to the occupation.    

Grassroots community groups are springing up across the country to organize against the war. Veterans Against the Iraq War, Iraq Veterans Against the War, Veterans for Common Sense, Military Families Speak Out, Patriots for Peace, and hundreds of other groups have emerged in the last period. In New York, hundreds of educators, students, and labor leaders from up and down the East coast met to discuss anti-war organizing strategies. In Vermont, dozens of towns have organized “town hall” meetings to discuss the role the Vermont National Guard should play in the war, and whether American troops should be withdrawn. Similar meetings are taking place from Oregon to Maine.        

The specter of the Vietnam War still haunts the U.S., as we explore in this issue of Socialist Appeal. In the late 1960s, opposition to the war grew inexorably despite the relatively healthy American economy. Based on this economic growth, L.B. Johnson’s Administration was able for a brief time to pursue both massive military spending on Vietnam and the modest expansion of certain social programs. This somewhat delayed mass opposition to the war. Today, the sputtering economy and lavish handouts to the rich mean the colossal costs of war are met through across-the-board cuts in social spending. The connection between the lack of jobs, health care, and education here at home, and the nearly $300 billion squandered in the conquest and occupation of a country posing no threat to the U.S. is increasingly clear to millions of American workers. The eventual mass reaction against these policies and the war in Iraq will be on a qualitatively higher level than during Vietnam.

Like the world political and military situation, the U.S. economy is precariously balanced. Since May of 2003, an average of less than 143,000 jobs have been created each month; 7,000 per month less than is required simply to keep pace with the growing workforce, and nowhere near enough to make up for the millions of jobs lost before then. Those few jobs that are being created are in the low-wage, non-unionized service sector. Some 96,000 manufacturing jobs - the backbone of any economy - have been lost since August 2004 alone.

Bankrupt grocery store operator Winn-Dixie plans to sell or close 326 stores and cut 22,000 jobs, about 28 percent of its work force. Industrial giant General Motors will cut 25,000 jobs by 2008. This is the real state of the economy: fewer workers are being made to do more work while real wages continue to fall. At the same time, Congress proposes raising the retirement age from 65 to 69. The message is clear: work until you drop. The fact is, fewer and fewer Americans are even bothering to look for work. Just 1,000 workers officially joined the workforce in June, keeping the unemployment rate artificially low at 5.0 percent.

The one pillar holding up the American economy, rapidly rising house prices, looks set to bust. As Michael Roberts explains, this could well make the 2000 bust of the Information Technology sector look tame by comparison. According to Merrill Lynch, American households have enjoyed a $4 trillion rise in wealth, thanks to a 40 percent gain in house prices since early 2001, contributing about half a percentage point to annual GDP since 2000. “If home prices just level off, this could slice a full percentage point from GDP growth in 2006.”

The knock-on effects of even a modest collapse in prices is easy to imagine. Paul Ashworth, North American economist for Capital Economics, says 933,000 of the jobs created in the current expansion owe their existence in one way or another to real estate. “A full 37.8 percent of all new jobs created have come in construction, real estate, architecture, building supply, home furnishing retailers and building services, even though those sectors only account for 11.6 percent of total nonfarm payrolls.”

If prices fall or even level off, “You would get fewer houses being built, fewer real estate agents running around, fewer construction workers ... You don’t have to be concerned that house prices fall to worry about the effect on the wider economy.”

Record oil prices, now hovering around $60 a barrel, are having an inevitable effect on the overall economy. Even perennially bullish U.S. Treasury Secretary John Snow had to acknowledge that, “Clearly, energy prices serve as a tax, they reduce the disposable income available to do other things and they take some oxygen out of the economy.” Higher fuel costs and heating bills cut into other spending despite the unprecedented availability of relatively cheap credit.

Corporate earnings, which have surged ahead in recent years on the backs of super-productive workers, are expected to slow down in 2005. After growing at a breakneck 31.4 percent in the second quarter of 2004, they are expected to rise just 7.8 percent a year later. This is still far above the growth in workers’ wages, but in a system based on the extraction of maximum profits, this represents a dramatic slowdown.

This is hardly a rosy picture, and from the perspective of world capitalism, the clouds are even darker south of the U.S. border. Dramatic events are unfolding in Bolivia as the long-suffering masses of that country join the front ranks of the Latin American revolution. No longer are the workers and poor of this vast region willing to be treated as “America’s backyard”. The replacement of one pro-capitalist president by another pro-capitalist president in Bolivia has solved nothing. As in Venezuela, the only way forward is the path of socialism. There is no “third way” somewhere between capitalism and socialism. Capitalism has exhausted itself and its continued existence can mean only continued misery and poverty for billions around the world.               

The Venezuelan revolutionary process continues to be an inspiration to workers and youth around the world. The success or failure of the efforts of millions of Venezuelans to transform their lives will largely determine the outcome of the Latin American revolution as a whole. It is therefore vital that we continue to build the Hands Off Venezuela campaign. Only the U.S. working class can stop U.S. intervention in the region.

Join us in the struggle for a better world!

The Editors