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Life is Great ... But Only If You Are Already Mega-Wealthy
As I pointed out in November:
A report
by University of California, Berkeley economics professor Emmanuel Saez
concludes that income inequality in the United States is at an all-time
high, surpassing even levels seen during the Great Depression.The report shows that:
- Income inequality is worse than it has been since at least 1917
- "The top 1 percent incomes captured half of the overall economic growth over the period 1993-2007"
- "In the economic expansion of 2002-2007, the top 1 percent captured two thirds of income growth."
As others have pointed out, the average wage of Americans, adjusting for inflation, is lower than it was in the 1970s. The minimum wage, adjusting for inflation, is lower than it was in the 1950s. See this.
On the other hand, billionaires have never had it better (and see this).
Now, state-run Russian news service RIA Novosti notes that the number of billionaires has soared during the economic crisis:
The
current global financial and economic crisis once again confirms the
fact that during economic upheavals the rich get richer and the poor
become even more destitute.
On Thursday, Forbes Magazine carried an updated list of the world's wealthiest people.
As
of late 2009, the number of billionaires soared from 793 to 1,011 and
their total fortunes from $2.4 trillion to $3.6 trillion. The number of
Russian billionaires almost doubled, from 32 to 62.
***
Despite
the crisis, the list of billionaires has grown by 200 people and their
aggregate capital has expanded by 50%. This may seem paradoxical but
only at first glance. This result was predictable, if we recall how
governments all over the world have dealt with the economic crisis.
Anti-crisis
measures essentially implied massive infusion of money into the
economy. The United States alone spent over $10 trillion. Against the
backdrop of a global recession, the funding could only be put to good
use on stock and raw materials markets, leading to the creation of new
financial bubbles.***
The
volume of federal allocations injected by the Russian government into
the economy was much higher than in Europe and the U.S. Forbes
tactfully referred to this as the government's cooperation with big
business, primarily raw materials companies.
However,
even high-ranking Russian officials have repeatedly complained that
anti-crisis allocations were either used for stock market operations or
deposited in foreign bank accounts.
Life is good ... but only if you are already mega-wealthy.
Even Alan Greenspan recently called
the recovery "extremely unbalanced," driven largely by high earners
benefiting from recovering stock markets and large corporations.
As economics professor and former Secretary of Labor Robert Reich writes today in an outstanding piece:
Are
we finally in a recovery? Who's "we," kemosabe? Big global companies,
Wall Street, and high-income Americans who hold their savings in
financial instruments are clearly doing better. As to the rest of us --
small businesses along Main Streets, and middle and lower-income
Americans -- forget it.
Business cheerleaders naturally want to
emphasize the positive. They assume the economy runs on optimism and
that if average consumers think the economy is getting better, they'll
empty their wallets more readily and -- presto! -- the economy will get
better. The cheerleaders fail to understand that regardless of how
people feel, they won't spend if they don't have the money.
The
US economy grew at a 5.9 percent annual rate in the fourth quarter of
2009. That sounds good until you realize GDP figures are badly
distorted by structural changes in the economy. For example, part of
the increase is due to rising health care costs. When WellPoint
ratchets up premiums, that enlarges the GDP. But you'd have to be out
of your mind to consider this evidence of a recovery.
Part of
the perceived growth in GDP is due to rising government expenditures.
But this is smoke and mirrors. The stimulus is reaching its peak and
will be smaller in months to come. And a bigger federal debt eventually
has to be repaid.
So when you hear some economists say the
current recovery is following the traditional path, don't believe a
word. The path itself is being used to construct the GDP data.
Look
more closely and the only ones doing better are the people and
private-sector institutions at the top ... Companies in the
Standard&Poor 500 stock index had sales of $2.18 trillion in the
fourth quarter, up from $2.02 trillion last year, and their earnings
tripled. Why? Mainly because they're global, and selling into
fast-growing markets in places like India, China, and Brazil.
America's
biggest companies are also showing fat profits and productivity gains
because they continue to slash payrolls and cut expenditures...
Firms
in S&P 500 ... can borrow money cheaply. Corporate bond sales are
brisk. So far in 2010, big U.S. corporations have issued $195.2 billion
of debt, excluding government-guaranteed bonds. Does this spell a
recovery? It all depends on what the big companies are doing with all
this cash. In fact, they're doing two things that don't help at all.
First, they're buying other companies... This buying doesn't create new
jobs. One of the first things companies do when they buy other
companies is fire lots of people who are considered "redundant." That's
where the so-called merger efficiencies and synergies come from, after
all. [My note: As I pointed out a year ago: "The Treasury Department encouraged banks to use the bailout money to buy their competitors, and pushed through an amendment to the tax laws
which rewards mergers in the banking industry (this has caused a lot of
companies to bite off more than they can chew, destabilizing the
acquiring companies)"]
The
second thing big companies are doing with all their cash is buying back
their own stock, in order to boost their share prices. There were 62
such share buy-backs in February, valued at $40.1 billion. We're
witnessing the biggest share buyback spree since Sept 2008. The major
beneficiaries are current shareholders, including top executives, whose
pay is linked to share prices. The buy-backs do absolutely nothing for
most Americans.
***
The picture on Main Street is quite
the opposite. Small businesses aren't selling much because they have to
rely on American -- rather than foreign -- consumers, and Americans
still aren't buying much.
Small businesses are also finding it
difficult to get credit. In the credit survey conducted in February by
the National Federation of Independent Businesses, only 34 percent of
small businesses reported normal and adequate access to credit. Not
incidentally, the NFIB's "Small Business Optimism Index" fell 1.3
points last month, just about where it's been since April.
That's
a problem for most Americans. Small businesses are where the jobs are.
In fact, small businesses are responsible for almost all job growth in
a typical recovery. So if small businesses are hurting, we're not going
to see much job growth any time soon.
The Federal Reserve
reported Thursday that American consumers are shedding their debts like
mad. Total US household debt, including mortgages and credit card
balances, fell 1.7 percent last year - the first drop since the
government began recording consumer debt in 1945. Much of the
debt-shedding has been through default -- consumers simply not repaying
and walking away from homes and big-ticket purchases.
This is
hardly good news. But here's the Wall Street Journal's take on it: "the
defaults are leaving many people with more cash to spend and save,
jump-starting the financial rehabilitiation" of the economy.
Baloney.
As of end of 2009, debt averaged $43, 874 per American, or about 122
percent of annual disposable income. Most economic analysts think a
sustainable debt load is around 100 percent of disposable income --
assuming a normal level of employment and normal access to credit. But
unemployment is still sky-high and it's becoming harder for most people
to get new mortgages and credit cards. And with housing prices still in
the doldrums, they can't refinance their homes or take out new loans on
them...
Some cheerleaders say rising stock prices make
consumers feel wealthier and therefore readier to spend. But to the
extent most Americans have any assets at all their net worth is mostly
in their homes, and those homes are still worth less than they were in
2007. The "wealth effect" is relevant mainly to the richest 10 percent
of Americans, most of whose net worth is in stocks and bonds. The top
10 percent accounted for about half of total national income in 2007.
But they were only about 40 percent of total spending, and a
sustainable recovery can't be based on the top ten percent.
Add
to all this the joblessness or fear of it that continues to haunt a
large portion of the American population. Add in the trauma of what
most of us have been through over the past year and a half. Consider
also the extra need to save as tens of millions of boomers see
retirement on the horizon. Bottom line: Thrifty consumers are doing the
right and sensible thing by holding back from the malls. They saved a
little over 4 percent of their disposable income in fourth quarter of
2009. In the months or years ahead they may save more.
Right
and sensible for each household but a disaster for the economy as a
whole. American consumers accounted for 70 percent of the total demand
for goods and services in the American economy before the Great
Recession, and a sizable chunk of world demand.
So what happens
when the stimulus is over and the Fed begins to tighten again? Where
will demand come from to get Main Street back, create jobs, raise
middle class wages? Not from big businesses. Certainly not from Wall
Street. Not from exports. Not from government.
So, where? That
question is the big unknown hanging over the U.S. economy. Until
there's an answer, an economic "recovery" for anyone other than big
corporations, Wall Street, and the wealthy is a mirage.
- advertisements -
Ban all transfer payments. Wouldn't it be wonderful if the fucking government was totally out of the income redistribution game? No financial crisis, strong economy, the closest we can come to a utopia on this earth.
utopia for whom?
Utopia for everybody. The most we should expect is that those not related to us don't take what's ours by force. To expect forcible separation of property from its owners or some other form of slave labor will improve the human condition in the long term is sheer folly: it never has and it never will.
I know what you are asking though: won't the strongest be a lot better off than the weakest if you don't take from the strongest? Yes they will, but (this is not a rhetorical question) who do you trust to decide what to take from whom?
Bingo. Why anyone would use dollars when they are the instrument of theft is beyond this citizen.
You Americans are the stupidest fucks on the planet with your "income tax" which is another way of saying "welfare for anyone but those earning"
I can't wait for all the affirmation seed planting by people saying that they will be blamed for the crisis.
When it looks like a duck, waddles, quacks and steals your wallet you know what thing - its from the west bank!
Wow ... where can you go where there in no income tax?
So sorry for you. Perhaps you need some meaningful things in your life besides money.
The corollary is that we also live in a world where items considered luxuries are now cheap and commonplace....
The root of the problem has been technology in all its forms. From medicine, to the transistor - we have skewed the natural selection curve completely out of whack. GDP in US is still trucking along with HUGE unemployment i.e. we need fewer bodies to generate a level of GDP. Problem is the political and benefits landscape (ponzi scheme) is built on an assumption of growing population (tax fodder and votes) that rewards more ankle biters while the free market data is screaming "we don't need any more". Medicine keep people alive that genetics, the environment or stupidity would normally have removed from the gene pool. Even worse - those bad genes expand at a logarithmic rate putting even greater pressure on health care costs.
Our social safety nets have rewarded having kids and our tax and political world have taken away the risk of failure (child tax credits, capital loss deductions and too big to fail). Now we will get even more healthy people but there is already an oversupply of potentially employable bodies - and all the while the pinheads in D.C. have been doing the circle jerk - technology and productivity have moved ever forward - pushing the bodies needed number ever further downward (and skewing it to the top and bottom).
The end result is what we see - those with brains and/or connections can exploit technology and productivity far greater and far faster than those less well endowed. Technology has pretty well wiped out the middle class - as many of those jobs vaporized out of existence - replaced by push button software or automation. Coupled with the recessionary times its like a double whammy to that group in the middle - you need highly skilled and raw labor - the value add in the middle was taken over by the microchip. Whole product planning departments were wiped out by SAP - custom sales for coders were wiped by salesforce.com - skilled data center dorks were replaced with HP Openview & CA - what took a 90/hr web designer/coder 10 years ago can had by a devry grad will to do it for 20/hr and robotics killed the UAW....
I got no answers - except we (our political reps) just keep glossing over the reality in the data and market. Capitalism really is a mirror of natural selection in nature. Natural selection is brutal in it's efficiency - there are winners and losers - some will become extinct over time. Those equipped survive and prosper - until they are wiped out. They (top of financial food chain) just tried to wipe themselves out - and in the interest of saving the little guy some pain (votes) - we propped them right back up to keep the system going..!!
Repub way - rising tide lifts all boats (assuming everyone has access to a boat)
Dem way - take boats from those that have them and give to those that don't - or tax and spend to divert the tide away from those that need boats
Neither address the fact we have to many people and too few boats - Titanic ring a bell anyone..??
Demographics ... based upon current reproduction rates in US (Europe, Japan, Korea, and China) by the year 2025 there will be competition all over the globe for workers ... by then the US, Europe, Japan, Korea and others will be paying signing bonuses for immigrants to come to our (their) lands. What looks like a problem today (over population) will turn to into an even bigger problem - under population in a generation. The Titanic will not go down, so hang in there ... unless you're a boomer and can't wait that long
Just back from 3 weeks in Jamaica. Most of the common folks don't have water heaters (and thus take "cold" showers). Ya mon.
I had a period in my life were we had to
take cold showers. Soap up, turn on the water, get in and out as fast as possible
Saves water. Once we were back in civilized life, actually couldn't tolerate hot water
How adaptable we are and most of us don't
even know it!
What you call "repub way" has disappeared in 1913. So any claims that unfettered capitalism doesn't work based on today's results are patently false. If you don't regulated anything OTHER than the use of violence and enforcement of contracts and find a way to avoid corruption, you will have the best possible earthly outcome. The trick is to prevent corruption, and that has never been satisfactorily solved.
Don't know why your post was flagged as junk. It is rather accurate.
One way or another, the "herd" is going be thinned - sooner - rather than later. The first phase (economic and financial terrorism) is well on it's way to achieving that ends.....
Just watch......
They (top of financial food chain) just tried to wipe themselves out - and in the interest of saving the little guy some pain (votes) - we propped them right back up to keep the system going..!!
Thank you, yes. Despite the long lecture on social Darwinism -the new religion that is espoused by all good W elites and those who aspire to be accepted into their particular circle of hell- I do appreciate that frank admission. But I'm not agreeing with the
justification. Those with the understanding of "finaicial instruments" and thus the power to use those tools have both engineered the system and infiltrated any authoritative bodies w ith the ability to place them in check. For this reason I see negative feedback coming to them in the form of calamities both natural
and otherwise. Not all feedback mechanisms are positive and yet they must and will come about.
To participate and buy the argument that the evolution and usefulness ( natural selection ) of a human being is purely economic is one of the aspects being used against the population of the world at large.
A good read about various aspects of this agenda are found here: http://mondediplo.com/1997/09/marcos.pdf
A quote from the essay:
¨ Unlike nuclear bombs, which had a dissuasive, intimidating and coercive character in the third world war, the financial hyperbombs of the fourth world war are
different in nature. They serve to attack territories (national states) by the destruction of the material bases of their sovereignty and by producing a qualitative depopulation of those territories. This depopulation involves the exclusion of all persons who are of no use to the new economy (indigenous peoples,
for instance). But at the same time the financial centres are working on a reconstruction of nation states and are reorganising them within a new logic: the economic has the upper hand over the social.¨
Mind you this was written in 1997! So your observation about extra useless bodies in the economy is accurate, and this was designed to be so, and the solution proposed is depopulation. Ordo ab chao at its best !!
Very refreshing. I don't know what started attracting budding communists to this site which started out as being anti-big government, but their bias towards government involvement in income redistribution needs to be countered. If they are allowed to spew their poison unchallenged here, nothing is safe from their meddling, the real cause of today's economic collapse.
Alan Greenspan recently called the recovery "extremely unbalanced"
While white women in the prime working years of ages 36-49 have a median wealth of $42,600 (still only 61% of their white male counterparts), the median wealth for women of color is only $5.
http://www.nakedcapitalism.com/2010/03/median-net-worth-of-single-black-...
Why would anyone so far behind the curve want to live? No Hope, No Future, No Chance, No Way...
I guess welfare and having kids for no reason other than a paycheck doesn't pay that well (GOOD!)
Perhaps Lakisha should learn to live on her own instead off of the giant government mammary gland in the sky funded by middle class OR she could just incorporate and not have to be accountable, get all the government suckle she can handle and be rich at the same time!
Sho nuff!
In a free society you can chose to pay anyone anything they will accept. If they don't like it, tough. Where in the constitution is it written that you have to pay different "classes" the same? If I don't like purple polka dot transsexuals (who in reality I have nothing against) I should be able to not employ them at all. It's sickening to see all these ruminations and rules about how we need to treat everyone the same. Only the government needs to treat everyone the same because of the equal protection provisions in the constitution. Get the fucking government out of our lives completely, other than defending us from unlawful force and resolving disputes. Most of the disintegration of today's world is coming in large part from the government's "good intentions".
The bitches should save more.
How about proper correlation with education, average cost due to having children, etc. In other words, black women may make life choices that cause their lower income/savings level.
That is like saying stupid whites males make less than their educated counterparts. Average white men with 4th grade level education make less than those with college diplomas that focus on business and finances.
Duh!
OK... I'll reluctantly take on this minefield!
"There you go again!"
So black women make bad "life choices." Of course, it would have nothing to do with the "great society" that is America, would it? Try sending one of your kids to be raised in the "projects," dirt poor, surrounded by crime, drugs, and violence... then add the lowest level of educational systems and health care in the industrialized world.
Even without the inherent prejudice (your child wouldn't have to face), only the very special 0.01% have the tools to break free of the shackles of systemic poverty... the "glass ceiling" in this case being the obscene cost of higher education... the ugly secret used to maintain the status quo in America.
How about proper correlation with systemic injustice?
Just a thought!
Their lack of achievement today is entirely their own fault. That was not the case during slavery, but today they can make choices that will lift them above their surrounding. Blaming society for this or that group's lack of achievement is a sure sign of a crazed liberal. This thinking that the "poor", "the minorities", and other liberal "victim" categories deserve special favors leads to things like the credit crisis because the victim's "rights" to credit are elevated above all other considerations, like their ability to pay or following the law. Today there are whole victim societies like Greece that demand to be saved even through they are the ones who put themselves in the situation they are in. Screw victimology, the greatest of today's evils.
Their own fault.....I am white,59,german and successful in the endeavors i have chosen.
But only because i discovered and fought the low self esteen built into me as a child.
At age 6 i stood under a streetlight in a park late at night. Both my parents were there and as they each walked away in opposite directions it was for me to choose one.
At that moment in my little heart, one thought took form....if my own parents dont want me..i must not be any good.
Later in life i saw how that translated into lower expectations, lower bids given and more work done. I have given much because i did not deserve to have it as much as others.
Everyone was taller and smarter than i from my point of view. Only later in life ,working at self discovery, did i become aware of and fight this.
Many of us are caught in illusions of our own making,sometimes others(media) help us not to see.
I am the one to whose comment you replied. By no means did I intend to imply that one's and one family's history have no influence on one's ability to succeed, fail, or do anything at all. On the contrary, we are shaped by recent events and for that matter some evolutionary developments from 500 million years ago. My point of view in this context is this: you are what you are, for a multitude of reasons. In some sense you have free will. Deal with what you have without requiring others to pay for your deficiencies. Regardless of what shaped you, where you go from here is your own choice and your failures are your own "fault".
When you have society and especially the government "legally" keeping you down, such as with segregation or slavery laws, than it's not your "fault".
So what? Are white women supposed to give half their money away to black women?
These racially tainted stats suck and contribute nothing to the debate about concentration of wealth at the tippy top, the .00041 per cent that are ripping the entire world off.
The barbell effect amply demonstrates that the $5 and multibillonaires are sqeezing the crap out of the middle class where nearly everything gets done, where the workers are.
So what? Are white women supposed to give half their money away to black women?
Are you fucking kidding me? Jesus. Read Yves Smith's piece; it's an illustration of income disparity and class stratification. Your comment reveals your lack of education and a politically incorrect bias which reflects America's "trailer trash." Shame on you.
Trailers go for $3/4 million in Key West.
But, not on Stock Island. So, your point is?
Yes, income disparity is an illustration of income disparity. How quaint! Screw all political correctness, you libtard. You don't like what someone is paying you? Start a business or something. Nobody has a constitutional obligation to pay you the same as anyone else.
What the hell is 'Politically Incorrect' bias? Some rhetorical gimmick?
While you seem to be focused on the fact there are poor people, who don't have lot, the people getting truly screwed are getting it in both ends, by the poor and the mega-rich alike.
I don't really give a shit about poor people or very rich ones. They are both bloodsuckers.
be nice to the people you meet on your way up because you will meet them again on your way down.
Born down, been down, had no money, had money, have some money been everywhere on the economic map but very very rich.
Ain't no one I'm going to meet on the way down I haven't been introduced to before.
Thanks for the excellent read.
Other than a few isolated private sector self employed, the only ones making out (other than those listed above in the mega wealthy category) are public employees who retired on plump pensions and now contract with municipal or state governments, making easily $700,000 per year, plus lavish benefits, and a house purchased pre 1985.
Spot on. Naturally, Reich as a certified *progressive* ignores the staggering theft by the public sector over the last two decades. The private sector has been screwed both coming and going. Say, was it good for you?
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
I recently watched a Robert Reich Speech at the commonwealth conference thingy - hes a funny guy - dry humour and all that.
But after the jokes were over he started to praise his buddys Larry summers and co.
These guys have all the same agenda - its just that some are more subtle then others.
Reich may have a point about the economy but when they get into power they do nothing substantial - the pill is just a little sweater thats all.
Robert Reich is a left-wing nut, always pushing government solutions to any problems. There is nothing good about Robert Reich and the rest of the unbelievers in free markets.
Let's be very, very clear about this, Reich is a total BS specialist, and that's ALL he ever was.
Just go back over all his BS speeches when he was with the Clinton administration --- completely for the screw-the-middle&working-class agenda.
Reich realizes (even with his greedy little brain) that a bunch of people may soon get burned at the stake and he wants to appear separate from them (but Krugman, Reich, Binder, Stiglitz, et al. - have to be considered among the guilty, even though they have suddenly discovered the rest of us.)
Yes thank you.
And Reich has the audacity to go on air and defend the health care reform nonsense that George Will crucified.
If Reich really truly cared about America he'd put his money where his mouth is not his heart where his wallet hides.
Anybody who defends the health care "reform" is as it's currently defined is either dishonest or stupid, or both. This monstrosity is so obviously terrible and unconstitutional that to defend it is pure evil.
What jumped out at me was when Reich lumped himself in with the lower- and middle-class on Main Street. I'm pretty sure I don't get invited to the same parties Robert Reich does.
To be honest I do not care if he considers himself a member of the elite or not - what matters to me is wether he has a pair of balls or not.
I am sure that Eliot Spitzer thought of himself as a member of the elite but that did not stop him going after some criminals.
Parhaps that was a bad example - maybe Eliot had a surplus of balls, Still a great guy in my book although I would disagree with him politically.
Eliot is very selective who he goes after. He is not an equal opportunity prosecutor. Never trust any Democrats, there is always a hidden agenda. Like all liberals, he can't be honest about his motives in order to achieve anything. Doesn't mean he is always bad, you just never know why he is doing what he is doing.
Yes I noticed ,I just admired his cajones - never siad I would be political best friends but you can do a deal with such fellows as they have a concept of honour or at least the idea of honour.
I think I agree. Elite is elite.
As a small business owner, I know very well that most of us are caught between a rock and a hard place that government is impotent to do anything about. I hope for the best, but as a realist expect the worst. My business will be fine, but I still expect the American economy to continue to dive. I recently reviewed my accountant's year end "transaction history by vendor" for 2009 and compared them to 2006. The inflation is staggering, especially in the areas of utilities (up apprx. 150%) and health insurance premiums (up approx. 50%).
In TX they are installing "smart electric meters", which for some reason don't agree with the old meters (due to some algorithm that jacks up measured consumption during peak hours). Many people have seen their electric bills double, though rates are the same.
When is a kWh not a kWh? When the governors friends who own the electric utilities says it is.
Most all of my March 2010 contracts to buy robotic parts for automation have a 10 percent or more price increase.
Despite the fact that our cars are a year older, we have had no accidents in the past year, no claims, ever, no change in coverage, we were customers for over 10 years, our auto insurance went up 5% this year.
I changed carriers (with a 15% decline in price, thank you), but how many people will just swallow the change because it is a hassle to change.
My carrier was Liberty Mutual - fuck you Liberty Mutual.