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Why The Status Quo Is Doomed: Income Stagnates, Costs Rise
Submitted by Charles Hugh-Smith of OfTwoMinds blog,
Why are costs rising inexorably? The answer in most cases is simple: cartels.
Even if nothing else doomed the status quo, the widening gap between household incomes and costs will push the corrupt contraption over the cliff by itself. The status quo (whatever you wish to call it) requires "growth" to sustain itself--growth in consumption, spending, sales, debt, asset valuations, profits and of course taxes, and ultimately all of those "growths" depend on household incomes.
Incomes even for the most highly educated workers are stagnating:
Adjusted for inflation, median household income is down significantly in the 'recovery":
Some observers quibble that since this doesn't include food stamps and other transfer payments, it isn't accurate: in other words, it's not so bad if we include social welfare.
If the status quo now depends on government payments to households to sustain "growth," then the system is nearing the cliff edge.
Another trend that pushes the contraption closer to oblivion is income disparity: virtually all the non-welfare gains in income have gone to the top 5%, with most of those gains concentrated in the top 1%:
We all know what's happened to major household expenses such as higher education, healthcare, rent/housing: they're soaring to the moon. Here's higher education:
The status quo views additional healthcare spending as an unalloyed good thing, but as this chart (courtesy of B.C.) shows, rising healthcare costs correlate to recessions: it turns out paying $500 for a medication that cost $10 a few years ago isn't the kind of "growth" that the system needs to survive:
Here's urban area rents:
Why are costs rising inexorably? The answer in most cases is simple: cartels. Cartels and quasi-monopolies create artificial scarcities by limiting competition (usually via regulatory collusion with the government). This artificial scarcity enables the cartels to raise prices because consumers have no choice: the "competition" (i.e. the other members of the cartel) have the same prices for the same services.
Take college as an example. The artificial scarcity is accreditation: if the institution isn't accredited, the diplomas it issues are worthless.
Suppose (as I propose in my book The Nearly Free University and the Emerging Economy) that college diplomas were awarded on the basis of standardized exams and essay questions: the only thing that matters is what the student learned, not what bureaucratic hoops the cartel has erected to protect itself from real competition.
As for healthcare, the cartel hides behind opaque pricing and complex billing that is paid by insurers or the government; the consumer has no choice and no access to the real costs.
Many cartels are obscured by complex ownership arrangements. The majority of the mainstream media is famously owned by six corporations; this concentration of ownership (and thus of political influence) dominates the cartel-state-dominated American economy.
Cartels will fight to the death to retain their privileges and profits. The status quo works just fine for them, and they will never let reform reduce their privileges, power or profits.
But once the average household depends on government handouts just to remain nominally solvent, the slide over the cliff has already started.
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Not as long as mouth breathers can update Facebook. We will continue to circle the drain ad infinitum.
The guy stepping off the cliff looks like me reaching for my insurance coverage.
I'd like to see chart 1 overlayed with Federal worker salaries+benefits.
“Of all Roman conquests, only Asia yielded a surplus” — Cicero, 66 B.C.
Article: ….the status quo NOW depends on government payments.
Then, this leave us with ONE simple question: Can you tell us the year in which Americans did not depended on the US government?
Americans were –still are— beneficiary of offshore resources, offshore market penetrations, and affordable products because of US federal government, and its world wide operations backed by the American military force.
Ignoring these facts and historical precedents while talking nostalgic exceptionalism are idle and futile.
Is Rome still very much alive and still trying to conquer the world?
Who owns/controls U.S.A Government?
Who is the cartel?
If you Google The City of London, Washington DC, Vatican and BAR Temple together you get some interesting results.
All the following info is from:
http://www.theunhivedmind.com/wordpress2/audio/uhm-uk-gov-luciferian-27a...
The Republican Party is governed by Knight of Malta, George H.W Bush who serves his Great Master Prince Charles
The real big boys in finance over the U.S. is the U.S. Treasury which commands the IMF, World Bank and the Federal Reserve all through the Exchange Stabilization Fund.
But TheCityUK and The Worshipful Company of Mercers dominate the arena tied to Geneva, Switzerland and of course Bern, Switzerland with the Universal Postal Union located only one street away from the powerful Papal Nuncio. Take a look at the location for instance where the stockholders of The Honourable East India Company were based. This was of course the canton of Switzerland known as Geneva which is governed by the House of Savoy and the extremely wealthy Doria family. The House of Savoy is dominated by Prince Vittorio Emanuele IV a man almost as powerful as King Juan Carlos of Spain within the new unHoly Roman Empire. Both are the highest of the high Papists serving the Jesuit Order.
The City of London Corporation controls the United States via the British American Project utilizing organizations such as the Council on Foreign Relations and merchant banking in Wall Street aka JPMorgan which loves to fly the Union Jack on supposed U.S. soil, most of which is owned by Dame of Malta, Elizabeth Mary II and leased to phony U.S. merchants and corporations such as the Rockefeller Institute. The wealthiest land owner in the World is Elizabeth II and she is a Guelph.
...it was Tony Blair who installed George W. Bush as U.S President in 2000.
Tony Blair is a puppet of the Vatican and the City of London! No U.S. President masters any British Prime Minister who represents the City of London Corporation interests. Its the other way my friends...
If America (and other Nations) are actually operated as Companies within greater Corporations, does it matter if America makes a profit to those who own/control many? Clever accounting may never permit one company to make a profit. A company can operate alongside another company and also alongside/within a Trust (Offshore of course).
Clever accounting/magicians behind curtains/legal words (legalese) = spells? Not everything is always as straight forward as it seems.
The Rent Is Too Damn High Party is a political party, primarily active in the state of New York, that has nominated candidates for mayor of New York City in 2005 and 2009, and for governor and senator in 2010. Jimmy McMillan was the mayoral candidate both times as well as a candidate for governor. In 2005, he received more than 4,000 votes, and more than 40,000 in 2010.
And here we are. Its almost 2016, and EVERYTHING Is Too Damn High.
The Monster Raving Looney party already has a lock on US politics.
The Demopublicans just aren't as honest about as thatEnglish political party.
I read Charles' new book, "Radically Beneficial". Charles thinks well, and his ideas for making it through the economic changes that are happening are important and, imho, very good thinking at a system level.
http://www.amazon.com/gp/product/B0178MQI1M?ref_=cm_cr_pr_product_top
No kidding, Uber and such are not the important trends, however much press they get, they are last of the old, not first of the new. Charles has the ideas that are becoming first of the new. My kid works in the kind of business that is first of the new, the business is not conceivable without the internet, all their business is done by internet and package transport like FedEx. They deal with everyone from individuals through the biggest companies in the world.
I want to write a full review for my blog, have to wait for a day when I am smart enough. Keeping up with Charles is hard work, the man's output is amazing and all consistently insightful.
(My wife says I am better looking tho.)
Push the effin' contraption over the effin' cliff quick, before someone notices.
:)
Welcome to the New World Disorder, Uncle Sam.
...but... the lady on the teevee said the gubbermint said there ain't no inflation?!
‘cartels’
There’s only one cartel and it’s our friend banking.
“over the cliff by itself”
Yes, use government services. It’s important we’re safe - see something say something – so if you see a ‘suspicious’ looking vagrant hanging round in front of the stadium, call DHS! Vile of botulism/vodka mini… it’s not our decision to call it safe.
There are "cartels," or money kings, that have created scarcity and monopolies. Someone posted this here a few weeks ago and it is a great read...peruse at your own pleasure.
http://greatreddragon.com
even the most highly educated worker...
that phrase is just not sitting right with me for some reason.
Exactly. It's who you know.
"When most people think "Warren Buffett," they think of money. Though Buffett's father was a congressman and a stock broker, young Warren became a billionaire all on his own. Those who wish to emulate his success should focus on Buffett's process, not the final product who lives in Omaha."
I should buy off the government so companies are forced to ship oil on my trains?
Automation, globalization, and immigration will guarantee that there will not be enough US jobs to support anything close to the status quo. The big SHTF moment will come when it finally becomes clear to the masses that at the debt can never be paid back.
Went grocery shopping yesterday. For the first time in my life I saw ground beef with 27% fat @ almost $4/lb. It looked more white than red. This was at Kroger. All of this is killing me.
Imagine if large scale meat production weren't highly subsidized.
Eating too much at 27% fat will definitely assist in killing you, although I doubt you meant it that way. It would seem that humans need to learn how to digest grass, like cows.
Kroeger is such a low rent operation. And their in house labeled products are sketchy. Everything from meats, poultry to baked goods-even the hot food to go is shipped from Ohio
I live in Augusta, GA home to US Cyber Command. The area is expensive with all the IT jobs, military, medical, a teaching hospital, etc. There is very little in the way of manufacturing. Proctor and Gamble is closing their plant and sending the jobs to China. We cannot continue like this.
Well, now you know what the Democrats are good for. Totally dedicated to the common working man. I mean, they say that. Well, they have no excuse but they can make the reasons it didn't work sound pretty good. But I'm sure it will all get fixed in Obama's third term.
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If you look at the civi Labor Force Participation Rate,
https://research.stlouisfed.org/fred2/series/CIVPART
Notice how it peaks in 1990? Gets slightly higher by ’98 then plummets?
and the Inactivity Rate: Aged 25-54: Males for the United States
https://research.stlouisfed.org/fred2/series/LRIN25MAUSM156S
Notice how it suddenly takes off in 1990?
I see two potential correlations.
One, is the rise of Chinese Balance of Trade. 1982 we did 6 million bucks of business. And now?
The other, is the rise of the computers, which really took off in the early 90’s, but then, with the fast chips, in the late 90’s and early 2000’s the little bastards were everywhere.
I watched computers wipe out the graphics industry in the early 90’s.
And we going to go exponential with in the next 10 years.
•?•
V-V
Actually, so it goes when society's net energy begins to plummet.
Usury Bitches
Transfers from the tax system can never work
When you accept the artifical scarcity of the tax system you accept the banks monopoly of credit.
This author rightly shot down the basic income thingy in a previous article but me thinks he does not understand the national dividend concept.
Do like I'm doing. Go on job interviews and ask for a fair salary. Something in the neighborhood of $600k-$700k, that actually keeps up with inflation.
I have been a residential landlord for 30 years. Here in northern NJ, real estate taxes increase a minimum of 2% per year. Insurance increases about 1% per year. Try to find a licensed plumber or electrician for less than $100 per hour (and they come in twos). For an un-mortgaged house, it takes 3 months per year of rents to pay normal operating expenses (that does not include a new roof, paint job, kitchen, carpeting, interior remodeling, etc.). Price out a new boiler + installation labor + debris removal and permit fees. Rent prices are a function of market price and the cost to do business. It has always been that way. My tenants are regular people. The are roofers, tile setters, painters, kitchen helpers, cleaners in hospitals, house managers for rich people, etc. I charge about 10% under market for apartments in good condition. If anything breaks, I fix it. I have no vacancies. My tenants take care of their apartments. If there are problems, we work them out. I have no written leases. Most tenants stay a long time (like 10 years or more). They are happy and so am I. I respect my tenants, knowing that without their rent, I have nothing but uncovered bills.
Even if nothing else doomed the status quo, the widening gap between household incomes and costs will push the corrupt contraption over the cliff by itself.
exactly...and this is my last biblical statement of the night...people think that God may be dead etc. But if God is God, he cant die, did you go to his funeral? Your statement would be better if you said God never existed...anyway, if the Father of creation took out saatn this very day, then He would be no more than a dicatator. Whidh He is not...He just waits for evil to burn itself out...And He gives the son as forgiveness and the holy spirit as comfort when the hard times come...And we are only here for a short while..Even if you live to 90 years old, its only a speck of time...we are nothing but a speck of a tiny tiny tiny bit of time...what if we do have a soul? then what? If we dont have a soul then who cares. fuck everything and kill and destroy and get as much money and cocaine and hookers as you can. ...you decide.
Never!! Costs can be upped indefinitely, wages pushed down and the increased profits will create jobs. The TPP will also fix it; giving the corporations the right to make legislation will improve the economy beyond belief.
Since 1970.