Uncertainty that engenders fear and high anxiety about the US-based global economic crisis of 2008-2011 may be at the tail end, but the uprisings in the Middle East, social unrest in many Western and Eastern European countries indicate that there is a price to be paid politically. For now, major markets are headed higher, corporations are reporting healthy profits, the IMF is predicting robust world GDP growth for 2011, even better for most of the G-20 nations that account for roughly 80% of the world's wealth. Assuming relatively calm global political climate, these conditions should theoretically yield lower unemployment and underemployment in the next 12-24 months for the advanced capitalist countries that are coming our of the recession before the underdeveloped ones.
During the 2008-2011 recession, an estimated 50 million Americans experienced malnutrition each year, mostly children and women, in a population of 310 million. These figures suggest Third World conditions that currently exist within the US will deteriorate unless there is a radical shift in fiscal, economic, and social policy.
Not that the EU is much better off, considering that an estimated 20% of the population is below the poverty line, unemployment is higher than in the US as is underemployment. Despite optimistic GDP growth forecasts, both in EU and US more people have been flocking to shelters and food banks in the last three years than at any time since the Great Depression.
In addition to malnutrition, the US is facing a crisis of homelessness owing to record number of foreclosures, just under 10% unemployment (unofficially much higher especially when counting the underemployed). Untreated illnesses amid skyrocketing health care costs and the uninsured remain permanent problems. To make certain that the government does not stand in the way of profits by supporting cheaper generics or slashing Part D in Medicare, the pharmaceutical lobby spent over $110 million for Congress alone in 2009. This example of a single industry illustrates the nature of parasitic capitalism and how it is likely to continue given the relationship between corporate money and politics.
As I have indicated before and since the bailout plan of finance capitalism, the problem with the economic crisis of 2008-2011 is structural that permeates the entire system and not limited to a few banks that made bad loans or recycled mortgages of real estate whose bubble burst. If indeed we are only faced with a question of liquidity in banks holding "bad paper," then we should never see another such crisis given the regulatory mechanism that governments have in place.
Just as the pharmaceutical lobby has spent millions to prevent unfavorable legislation, so have banks. Given that banks, like other corporations advertise in mainstream media, there is a flood of mainstream news stories in the US as well as Europe suggesting to readers, radio listeners and TV viewers that banks are the foundation of the economy and need government and popular support. The media, therefore, is also advancing parasitic capitalism because it is how it survives within the system.
By inserting debt into every sector of the private and public economy from the unsuspecting college student signing up for credit cards to government borrowing to invest in higher defense spending, bankers, corporate executives and a handful of investors accumulated billions for themselves in profits. In the process, however, these bankers and corporate executives that demanded 'free markets' weakened the very markets from which they made huge profits because they bankrupted the system by late 2007. Inviting government to strengthen the markets at the taxpayers' expense in 2008, the same parasitic capitalists began to sink the system back into deeper into debt and setting the stage for the next downward economic cycle.
Parasitic capitalism will persist because governments have not taken the necessary steps to restructure the unsustainable system that could be called 'Banana Republic capitalism' or 'Robin Hood capitalism', or more accurately parasitic capitalism based on perpetual debt and borrowing. Now that the banking system has been restored thanks to government shifting trillions from taxpayers to finance capital, we will most certainly confront higher inflation owing to higher commodity prices.
World Bank and private studies confirm the rise of commodities in inevitable, owing to a rise in population and limited resources concentrated geographically and within a small group of people. These conditions will results in higher structural (permanent) unemployment and underemployment in a number of countries. The IMF sees unemployment and underemployment as the most challenging problem going forward, thus slower growth on a world scale and grossly uneven social and geographic income distribution.
One route for governments to take in order to cut the debt cycle is to absorb the surplus capital generated by parasitic capitalism in the past two decades, and especially in the past decade and to begin investing in jobs-growth industries to create new wealth instead of piling up debt upon rolled over debt. A G-8 agreement to cut defense by 50% and freeze at those levels would be another move to reduce debt and move away from parasitic capitalism.
More liquidity into the civilian economy by central banks, a 25% rise in minimum wage and social security benefits and a 30% surtax on high income groups would be good steps toward absorbing surplus capital from the top income groups and shifting down to generate growth without debt. Instead of absorbing surplus capital from the wealthy and the parasitic defense sector, capital largely parasitic for it does not create new wealth that generates jobs-based horizontal economic growth throughout the world, the state during the recent recession has opted to absorb capital from labor and the middle class to strengthen parasitic finance capitalism that was responsible for the global recession. US, EU and other governments around the world have opted not to adopt to raise taxes on the middle class and workers, slashing social welfare programs, and continuing to shift capital from the bottom social classes to the same elites that Simon Johnson argues caused the economic crisis of 2008-2011.
The US, EU, Japan, Australia and Canada collectively own more than 50% of the world wealth. Instead of helping to strengthen their own middle classes and labor as well as the economies of the poorest 100 nations on earth that own less than 20 of the world's wealth, they have been introducing fiscal, economic and social policies on how to better exploit resources and labor in order to regenerate growth and development after the 2008-2011 economic crisis. Forgiving the foreign debt of the poorest 100 nations instead of using the IMF and World as instruments to exact financial, trade, and investment concessions from the poorest on earth would actually help stimulate phenomenal growth on a world scale; because such growth would be based on creation of new wealth instead of parasitic capital concentration through electronic trading on Wall Street and the other global markets that only increases debt that the middle class and workers must eventually pay through higher taxes and lower living standards.
Some have argued that the structure of parasitic capitalism is not only hitting labor, but children, women, and non-white people within the US and around the world. Parasitic capitalism, therefore, is at its core racist and sexist, but more broadly intended to deny social justice regardless of gender, ethnicity, or race. The question of how long can the host of the parasite survive is one of speculation. For now, it is certain that a large segment of the world's population is paying for parasitic capitalism to thrive. Debt capitalism designed to further concentrate capital in the hands of a few people gambling in financial markets with the state as a guarantor behind them is not sustainable. People will reach their limit and then demand structural change to a system that promises endless riches for all but delivers them only to very few while the many wind up with endless indebted servitude.