Y no strikes?

Reddit pointed to this important article on the Final Victory of the financial sector over the real economy.

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The financialisation of households is an important overlooked missing piece of the declining strike activity ‘puzzle’. The term ‘financialisation’ broadly describes the increasing dependence of nonfinancial actors on financial institutions and instruments, which, in turn, affects their behaviour and strategies. In particular, since the 1970s, the financial sector has been increasingly financing households rather than corporations, with household debt ratios increasing rapidly across the globe and mortgages being the vast majority of new credit.

Recent studies show that rising dependence on private credit has made indebted workers more self-disciplined and risk-averse at the workplace on the fear of losing their job and defaulting. Related evidence demonstrates that household indebtedness undermines wage demands and, accordingly, that the increasing share of household debt has contributed to reductions in the labour income share and the increase in involuntary atypical work.

Given that for several decades the earnings of richer households are rising relative to low-income earners and that the decline of social housing has been pushing poorer households to borrow large amounts to purchase houses, the burden of over-indebtedness falls disproportionately on the most strike-prone part of the population.

Globalisation and trade openness have contributed to the decline of industrial action over the last decades in a diverse array of economies. Still, it is important to note that the effects can vary across countries and sectors with different structural characteristics. For example, port workers tend to remain militant even in times of increased globalisation given that, by definition, it is virtually impossible to be threatened with relocation.

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The part about globalization is obvious and often discussed. Workers who know that their jobs can be transferred to China will be docile. The part about turning poor people into debt slaves is partly new information. It has surfaced recently in the WEF project to buy all the houses in the country and rent them out, but this article shows it as a much broader and longer tendency.

Putting it together:

2000-2007: Encourage poor people to buy houses.

2008: Crash their mortgages and kick them out. Buy the houses for super-low price.

2009: Bail out the financiers who bought the houses super-low, effectively reducing their expenditure to zero.

2010: Lower interest to zero, encouraging poor people to buy houses again.

2020: Kill the entire economy, disemploy the poor people, crash their mortgages, buy their houses super-low again.

2021: Bail out the financiers who bought the houses super-low, effectively reducing their expenditure to zero.

2022: Raise purchase and rental and interest rates simultaneously, forcing poor people to rent single rooms for $2000.

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