Interview with Professor of Economics Masao Suzuki

In 2023, there have been many announcements of layoffs by technology firms. This is a result of what the media calls post-COVID normalization. But this “normalization” has also shown that many technology companies that boomed during the pandemic were in fact overproducing and building new capacity too quickly, forcing them now to scale back. In the past ten days this slowdown in the technology industry spilled over into the banking system, triggered by the failure of Silicon Valley Bank, based in Santa Clara, California. Soon after the failure of SVB on Friday, March 10, regulators shut Signature Bank in New York. First Republic bank, headquartered in San Francisco, had to borrow $30 billion from other banks, under the direction of the Federal Reserve. The crisis even spilled overseas, as the troubled Swiss banking giant Credit Suisse was forced to sell itself to the even larger Swiss bank UBS. Fight Back! News sat down with Professor Suzuki to ask him about this crisis. Fight Back!: How is the failure of Silicon Valley Bank related the crisis unfolding in the technology industry?

San José, CA – After the collapse of Silicon Valley Bank, headquartered in the city of Santa Clara, just north of San José, the local news was full of interviews with technology entrepreneurs talking about the “importance to the community” to have all of the uninsured depositors get their money back. With the closing of Signature Bank in New York, which had large numbers of crypto-investment related depositors, over the weekend, federal regulators tried and failed to find buyers for the two banks. This made these two banks the biggest ever – with about $200 and $100 billion in deposits, respectively – to have to shut down.

Cracks appear in economy as government regulators shut down Silicon Valley bank

San José, CA – Cracks in economy began to show up as Silicon Valley Bank, based in Santa Clara, California, just north of San José, was shut down on Friday, March 10. The bank was the 18th largest bank in the United States, and mainly served high-tech startups, venture capitalists and wealthy individuals.

San José, CA – On Wednesday, March 1, food stamp benefits were cut for more than 30 million low-income Americans. The average loss will be about one-third of the monthly benefits. Hardest hit would be many seniors getting food stamps, who would lose more than 90% of their monthly benefit.

San José, CA – On Friday, November 4, the U.S. Department of Labor reported that the unemployment rate in October rose from 3.7% from 3.5% in September. The increase was even larger for Asian Americans and Latinos, who saw their unemployment rates rise by 0.4%, twice the overall rise.

Inflation for workers still at 40-year highs

San José, CA – Inflation as measured by the Consumer Price Index for Urban Wage Earners and Clerical Workers or CPI-W has been rising this year at the fastest rate in 40 years. This high inflation continued in September, with prices measured by CPI-W up 8.5% over a year ago. Higher prices combined with fewer hours means that the purchasing power of average weekly earnings for workers fell 3.5% from a year earlier.

San José, CA – On Friday, October 7 the U.S. Department of Labor released their report on new jobs and the unemployment rate in September. According to the Department of Labor, there were 263,000 more jobs in September than in August. This is the weakest job report since December of 2020.

It is a fact of historical materialism that the development of the productive forces reduces the amount of labor required by production. As technology and techniques improve, the amount of work required to meet human needs is reduced. This should be a fact that liberates humanity from toil, freeing us to pursue our interests, hobbies, goals of self-development, and so on.

San José, CA – On July 29, the Bureau of Economic Analysis released their report on Gross Domestic Product for the second quarter of the year, April to June. GDP went down at a 0.9% annual rate. This followed a decline of 1.6% in GDP in the first three months of the year.

Continuing claims hits highest number since November 2021

San José, CA – On Thursday, July 21, the U.S. Department of Labor reported that the number of people collecting unemployment insurance benefits, increased by 51,000 for the week ending July 16. This brought the total number to 1,384,000, the highest since November 2021. New claims for unemployment insurance increased to 251,000, also the highest since November. The increase was only 7000 over the week before, but most economists had expected the number of new claims to fall.