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Globalization has become a dirty word
The commencement speaker at this week’s graduation ceremonies at the University of California at Berkeley just so happened to be Robert Reich, Bill Clinton’s Secretary of Labor, and an old friend of mine, who now a distinguished professor at the Goldman School of Public Policy. I attended a couple of Bob’s economics classes, and his grasp of the subject is mind boggling. Never get into a debate with Bob over labor issues. You will lose.
A Rhodes Scholar who dated Hillary Clinton at Yale, ran for governor of Massachusetts, and authored 13 books, Bob is never without an original thought, nor a stranger to controversy. Bob, who is slightly over four feet tall, never skips an opportunity to joke about his diminutive stature. He warned the grads of the risks of overdependence on raw statistics, pointing out that the average height of himself and Shaquille O’Neal is six feet. He later said that he was over six feet before the last recession beat him down.
After the ceremony I managed to plow my way through the crowds and found Bob shipping a celebratory flute of Champagne. Bob thinks that globalization has become a dirty word. While it has generated immense wealth over the last 30 years, it has accrued only to those who were in position to take advantage of it. Those would be multinationals, technology firms, and emerging nations. If you are not one of those, or a shareholder in them, then you have been basically screwed by globalization.
Corporate profits are now at record highs. CEO pay this year us up 11%. Food and energy prices are rocketing. Those without the skills to benefit from these trends are being bounced out of the economy. As a result, the income, wealth, and power gap in the US are growing, creating a “barbell” economy where the rich are getting richer and the poor are getting poorer at an accelerating rate. Virtually all of the wealth creation over the past three decades has accrued to the top 1% of income earners. The net worth of this top 1% has tripled over the same time frame.
Bob worries about the future of our country. A substantial portion of this wealth is now entering politics. Look no further that the vast expansion of the lobbying industry in Washington. There has been a massive profusion in “independent” research firms that start with a conclusion and work backwards to string together a set of facts to support it.
This is how we hear that that US has the highest tax rates in the world, even though everyone cashes in on loopholes to avoid them, like General Electric (GE), which paid a 3% tax rate last year. We are informed that the oil and agriculture industries are in desperate need of tax subsidies, despite making record profits.
It is also how many have been instructed to believe that spending cuts leads to job creation, that all unions are bad, and that public school teachers are a bunch of lazy, money grubbing opportunists. I belong to the San Francisco Yacht Club, and as far as I know, the only boat that is owned by a teacher is married to a hedge fund manager. Never, ever raise taxes under any circumstances, even though the only ones that will be harmed will be the top 1%.
Bob left his graduates with two final pieces of advice. Grasp every opportunity for leadership. And know the difference between tenacity and martyrdom. As usual, Bob did not disappoint.
To see the data, charts, and graphs that support this research piece, as well as more iconoclastic and out-of-consensus analysis, please visit me at www.madhedgefundtrader.com . There, you will find the conventional wisdom mercilessly flailed and tortured daily, and my last two years of research reports available for free. You can also listen to me on Hedge Fund Radio by clicking on “This Week on Hedge Fund Radio” in the upper right corner of my home page.
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people are obese because they are poor, and can't afford to eat healthy food that doesn't turn you into a disgusting fatass. it's quite a bit cheaper to eat at McDs than it is to cook a healthy meal for your self. how many obese servers do you see working in nice restaurants? not too many. but you see an obese person working in every fast food joint in America. does that lady working the drive through for $5 an hour make too much money? is it her "prosperity" or her "reaping the benefits of globalism" that causes her weight problem? (now that i think about it, the answer to that second part is "yes," although in this case by "benefits" what we actually mean is "curse.")
i didn't think so. all she eats is fast food from her job, since they give free meals, and every other dime she makes goes to keeping a roof over her head. and the shit she eats at her fast food job isn't food. it has no nutritional value. none. fast food is nothing but empty calories made up of the worst kinds of fat and refined sugar. and that fact guarantees that anyone whose diet consists mainly of it will end up obese. watch Super Size Me. the doctors urged him to cut his experiment short, due to the fact that eating nothing but McDs for 3 weeks was quite literally killing him. his liver was already shutting down. they didn't even want him go one more week, because of the likelihoood of him keeling over dead. it's not prosperity that makes the obesity epidemic, it's cheap fast "food."
supersize me in 7 minutes: http://www.youtube.com/watch?v=N2diPZOtty0
I've spent much of my life in poor countries, and there tend to be very few, if any, obese people, the few who are obese tend to be extremely rich compared to the local population.
People are obese because they eat too much and exercise too little. The problem is compounded by an individual's desire for unhealthy food. However, it costs far more in both money and time time to make regular trips to McDonald's several times a day for "fresh" junk food and soda then to go the grocery store once a week and and pick up a supply of healthier food (e.g. canned lentils or tuna fish) which will keep infinitely longer and is more readily portable than a Super-Sized-Value Meal.
Bob thinks that globalization has become a dirty word. While it has generated immense wealth over the last 30 years, it has accrued only to those who were in position to take advantage of it. Those would be multinationals, technology firms, and emerging nations. If you are not one of those, or a shareholder in them, then you have been basically screwed by globalization.
REICH IS FULL OF SHIT, AN AMAZING AMOUNT FOR A MAN SO SMALL.
There is an obesity epidemic in America, if most Americans weren't receiving significant benefits from globalization, THEY COULDN'T AFFORD TO EAT ENOUGH TO GET THAT FAT. Whether the costs outweigh the benefits, especially over the long term, is an entirely different issue. How much would a Bill Dudley iPad diet cost per month if the UAW was responsible for Apple's manufacturing? While some European manufacturers such as Bang & Olufsen are admittedly extremely expensive, a German BMW is only marginally more expensive than a US BMW. Reich is entirely ignoring even the basic definition of wealth- which includes housing equity and other assets, demand for which is inversely correlated to their prices.
Respectfully sir, since you know far more about economics and markets than I;
You said that the top 1%, the rich, are getting richer while the rest of us are being left behind.
Aren't there many factors involved in this phenomenon? Like:
1) Rich folks have more access to investment opportunities than regular folks that generally save at a bank or in their 401k. Now, these investment opportunities have very nice rates of return, much higher than ordinary folks have access to, but concomitantly have a much higher level of risk.
These folks sometimes have people who manage their investments, making sure they're diversified and the risk minimized, so that, overall, their invested amounts enjoy growth at a much higher rate than ordinary people can attain.
2) Since rich folks investments often pay off in the form of dividends and capital gains, they fundamentally pay lower tax rates on those forms of income.
3) Inflation being low for the last 10 or 15 years, isn't it normal that wages paid have also increased slowly?
I guess what I'm saying is, rich folks have the flexibility to take advantage of risky, but high payback, investment. And they pay lower tax rates on these investments that the rest of us pay on ordinary income. And while wages have grown slowly, when the risky rewards are returning 5 to 6 times the inflation rate, on average, at the very least it's not unusual, unfair, or nefarious, on the face of things, that the very rich would grow their fortunes at a greater rate than middle class Joes.
Where the nefarious part comes in is like of late, where the housing market went south and the government bailed out folks; perhaps moreso than necessary.
Because it seems to me that they knowingly, sometimes stupidly, took risks (IIRC Lehman had 70% subprime paper and CDS on their books when they went down-I could be wrong) that had they paid off would have made them fabulously wealthy, but since they went bad should have cost them their shirts.
Please tell me where I'm wrong. I know a lot about engineering, flying, and missiles, but not so much about complex economic systems.
My Regards
MHFT, you mean that Robert Reich who wrote the following BS:
http://robertreich.org/post/3331762717
According to him, you don't have to worry about your SS ever! As of today, we are lacking only 6.6% overall SS tax coverage (84 instead of 90) or so he says, which we just need to take from "the rich" (people earning more than $106,800).
And otherwise there are $2.5 Trillion in the SS Trust Fund to draw from (who cares that the counterparty to that Fund is insolvent: the Federal Government).
We are so lucky to have people like him to save us.
Oh darling little kumquats, let us review: Bill Clinton's administration was that which began the intrusion and implementation of the destruction of the United States via massive, unheralded destructive third-world floatsam upon our shores. Previously, immigration had been those with strong backs and strong arms, limited numbers but welcome, in a nation always needing those qualities. Under Bill Clinton immigration became an adjunct, a sop to the failure of third worlders to control their own birth rates. We were told that we were oh-so-bad because we were: white and successful; thus, a descriptive of "diversity" meant to increase/remove impediments to our own beloved black Americans was subsumed to a political agenda of the liberals and their hatred of this country. Funny about liberals isn't it, can't ever find one up before noon, working a farm tractor, or adopting an American child in need, just saying... (How many children languish in the miasma of foster care; foster care the liberals answer to the abuse of welfare rewards that encourages continued child bearing without regard to decent, loving Child Rearing. Foster care where the children are sexually abused in horrifying numbers and where they are always the "odd man out: at least in children's homes the children have equal standing and that elusive fruit of "family and home" not waived each day before them, a carrot dangled, always unobtainable, yet tantalizingly near. Foster care a construct of grotesque and macabre child torture whereby a child is endlessly moved from place to place as the cash register of necessary social service workers rings and rings, but no angles receive wings for child abuse.)
But returning to the point, we have a country called America. It is a pie and can only be divided up into so many slices. So that division of the United States into polyglot slums of third worlders where no American citizen dare go, and which has started to alarm even a very-few liberals (not long ago a liberal writer was taken to task for writing of his alarm over his hometown, which had become a de facto India) should be considered seriously this Memorial Day: were all those serving, fighting, dying service people only grist for the mill of America's slide into third world oblivion via immigration?
Meanwhile, we are told that the US is in clear financial peril. Well, duh. Watch a few Judge Judy shows and you'll see where all that borrowed money from China is going. Yesterday's show had an illiterate college student, fat and sassy on "aid" money, reveling his "beat the system" system. In the old days you didn't get paid to "live" while you went to college, you worked nights; you worked summers; you dropped in and out as necessary to earn funds; you spoke in ENGLISH, discernable and all syllables distinguishable: these things brought an undeniable Appreciation for education, endeavor, and above all, Borders.
This Memorial Day commit to end all immigration, all green cards, and commit above all, to saving this country for our children and our grandchildren. Those of us who have lived with the benefits of this country, owe our children, our grandchildren, no less.
Globalization has always been a dirty word for people who smart enough to know where it would lead this country.
Globalization has always been a dirty word for people who smart enough to know where it would lead this country.
Uhh no. Globalization has always been a dirty word. WTF have you been?
The main profits generated by globalization have accrued through the theft and transferrence of trillions of dollars of research and infrastructure to commercial enemies. It is tantamount to treason. All of this is in the name of short-term profits. The long-term will show what devastation this has brought to the United States.
Amen, brother! Preach on!
I'd like to get the Bob Reichs of the world into a room for a little game of dodge ball.
MHFT, Zero Hedge's very own Robin Leach.
Robin Leech?
Financial Statement support for the 3% GE paid in Taxes last year, please.
Let's not call you a prevaricator, Let's just say you need to prove that number.
We trust you, but we need to verify.
RR is a Leftist jackass who has contributed mightily to the lies and deceits that have helped to create the stinking mess this nation is in. He would not know the first thing about free enterprise, free markets, or liberty in general, because he is a Statist hack who has made himself fabulously wealthy through cronyism and political prostitution. In short, he is an intellectual whore.
yeah, what Watauga says...
...and add to that he has baaaaaad taste. He dated Hillary? Ewwww. That makes him part of the problem and not part of the answer.
Randy Newman has something to say about him"
Short people got no reason
Short people got no reason
Short people got no reason
To live
They got little hands
Little eyes
They walk around
Tellin' great big lies
They got little noses
And tiny little teeth
They wear platform shoes
On their nasty little feet
Well, I don't want no short people
Don't want no short people
Don't want no short people
`Round here
Short people are just the same
As you and I
(A fool such as I)
All men are brothers
Until the day they die
(It's a wonderful world)
Short people got nobody
Short people got nobody
Short people got nobody
To love
They got little baby legs
That stand so low
You got to pick em up
Just to say hello
They got little cars
That go beep, beep, beep
They got little voices
Goin' peep, peep, peep
They got grubby little fingers
And dirty little minds
They're gonna get you every time
Well, I don't want no short people
Don't want no short people
Don't want no short people
'Round here
Singalong w/ Randy:
http://www.youtube.com/watch?v=1NvgLkuEtkA
Globalization is a dirty word and Reich is an idiot.
"the Goldman School of Public Policy"???
OMFG...when I finally stop laughing I'll read past that point and comment further...this may take a while.
Well, he could have been a Distinguished Professor at the Hitler School of Global Policy, but I guess he has a conscience.
Mad, I think this was the first article you've posted here that didn't make me feel spammed. Thank you.
It was a good interview, but I took issue with this:
"Corporate profits are now at record highs. CEO pay this year us up 11%. Food and energy prices are rocketing. Those without the skills to benefit from these trends are being bounced out of the economy."
Only an elitist could present an individuals failure to engage in theft as a failure on the part of the proletariate. A comperable remark would be that the other men in John Wayne Gacy's neighborhood lacked the skills to make full utilization of the toddler boy resources at their disposal.
++ 14.8 T
What a douche(MHFT) .
Elitists patting themselves on the back when in reality, the chattle that they have so much contempt bailed their asses out three years ago and it continues everyday. They are the ones who have no skills to survive other than exploiting the labor arbitrage of globalization. The world shit a BRIC.
"The only teacher at my yacht club is married to a hedge fund manager." Smug SOB:
http://www.youtube.com/watch?v=kMvW-_pkX3Q&feature=related