President Obama went to Austin, Texas, last week in pursuit of an industrial and employment revival. He wants to launch manufacturing institutes to foster American innovation and job creation.
Republicans responded by ridiculing the President, in the same arrogant way that the blooded aristocrats on the British television series Downton Abbey scorned a chauffeur who sought to marry into the patrician Crawley family. “No opportunity for the downtrodden!” the GOP and wealthy vow.
Watching Downton Abbey would be pure escapism, a simple respite from the grind of work and duties of home. That is, except for the disquieting reality that Downton Abbey’s classist mores increasingly intrude on American life. The wealth gap between America’s rich and poor has widened to the point where it was in Downton Abbey days. And that is abetted by the GOP practice of continually cutting taxes on the rich while constantly cutting government services that provide opportunity to everyone else.
Income inequality in America is wide and widening. Just get this: while income stagnated for the middle class, the average annual income of the top .01 percent of U.S. households from 2002 to 2007 rose by 123 percent – a gain of $20 million each.
Even after the crash of 2008, the wealthiest .01 percent did just fine. Now, the stock market and corporate profits are soaring. But only the wealthy are benefitting. The New York Times reported earlier this month that corporate profits in the third quarter of 2012 took the largest share of national income for any time since 1950, while the portion that went to workers fell to the lowest point since 1966.
While making those huge profits, corporations aren’t creating jobs. For those who do have jobs but aren’t in the top 10 percent income bracket, wages fell 7 percent from 2007 to 2008. Unlike the rich, workers didn’t recover after the crash, with median household income declining 1.5 percent in 2011. More »
Posted May 14, 2013 at 8:00 am, in From the USW International President
If you’re a jobless person looking for food or a wounded vet who needs health care, 60 Minutes has a solution: Beg a billionaire for it. That was part of the powerful, if covert, message behind last Sunday’s 60 Minutes broadcast.
The rest of Sunday night’s message, which tracks closely with the right-wing agenda promoted by billionaires like Pete Peterson, goes like this: Keep downsizing government. Keep tolerating and promoting the hijacking of our national wealth by the rich, even as it suffocates the middle class and creates soaring poverty rates. Surrender democratic control over the social safety net to wealthy donors.
And whatever you do, keep stroking their insatiable egos.
Did the 60 Minutes staff sit around a table and choose this message? Probably not. Chances are we’re just seeing more evidence of a herd mentality among our well-paid elites. But they might as well have.
This ideological bias agenda was glaringly evident in Lesley Stahl’s “Counterinsurgency Cops” story. Viewers weren’t informed that Stahl is on the board of anti-government billionaire Pete Peterson’s Foundation, for example, or that her foundation works closely with the defense contractors of “Fix the Debt.” Those contractors stand to make billions more in taxpayer-funded profits if America’s cities buy into Stahl’s premise and purchase even more military equipment — including tanks, sniperscopes, full battle regalia, night vision goggles, and drones.
The Peterson anti-government vision dovetails nicely with a conservative fantasy world in which all government spending is bad – but military and police spending somehow isn’t “government,” or “big government,” or whatever it is they’re railing against today. We discussed “Counterinsurgency Cops” in Part 1 of this piece.
Sunday’s broadcast also featured Scott Pelley’s flattering portrait of a hedge fund billionaire’s generosity, which failed to ask the fundamental question: Why do we need to depend on a hedge fund billionaire’s generosity in the first place?
As they say on 60 Minutes: The answer might astonish you.
The 60 Minutes website  tells us that “Billionaire Paul Tudor Jones’ charity — the Robin Hood Foundation — fights poverty with the hardnosed, business sense of Wall Street.” Say what? The “hardnosed, business sense” of Wall Street? That “hardnosed business sense” was actually, by any objective measure, fiscal incompetence and gross managerial negligence.
Wall Street’s “business sense” would have driven every single financial institution in the country into catastrophic collapse – that is, if the government (which presumably lacks such “sense”) hadn’t stepped in to rescue them. Not only did Wall Street’s titans grievously mismanage their books. There is now overwhelming evidence that executives at every major bank criminally and fraudulently deceived their customers.
You could call that latter trait “hardnosed,” I suppose.
What about Paul Tudor Jones himself? We don’t hesitate to trash bankers and hedge funders, and there are plenty of them who deserve it. (See Robespierre of the Hedge Fund Revolution or any of our Jamie Dimon pieces.) But as hedge fund managers go, Jones seems to be one of the smarter ones.
As hedge fund managers go, that is … Jones’ apparent talent doesn’t change the fact that, based on current incentives, today’s hedge fund industry is unethical by design. We remain unconvinced that hedge funds as they’re currently structured are anything except economically and socially destructive.
That said, Jones the Trader seems to be an intelligent and effective business person. Jones the Political Donor is straight GOP, all the way, but that’s not surprising. And Jones the Philanthropist seems to be well-intentioned enough. He deserves a lot of praise for devoting so much time and energy to good works.
So far, so good. More »
Looking for a quick fix to the deep inequality that so afflicts us? Stop your searching. We need to strategize instead for the long-term. A riveting new work from a leading historian helps us see how.
The 79-year-old corporate gadfly Robert Monks, the former top federal regulator over America’s pension system, earlier this year opined that Corporate America operates “for the personal enrichment and glorification of its manager-kings.”
Too harsh a judgment? Hardly. Current standard corporate operating procedures only make sense if we acknowledge that America’s biggest private enterprises have essentially become the private preserve of an elite executive class.
How else to explain today’s most routine corporate behaviors? The endless rush to mergers that create little more than chaos in newly consolidated workplaces. The ongoing corporate refusal to invest significantly in research and development and employee training. The billions of dollars corporations spend to “buy back” company shares of stock on the open market.
All these moves leave corporations less equipped to succeed in the long term. But all these moves generate multiple millions, sometimes even billions, in the here and now for the corporate executives who make them.
Corporations, of course, have always done well by the executives who run them. But a half-century ago the United States had institutions that kept this enrichment within somewhat reasonable bounds. Trade unions acted as a brake on executive greed grabs. A progressive tax system — with rates as high as 91 percent on income over $400,000 — discouraged the greed grabbing in the first place.
But both these institutions — trade unions and progressive taxes — have atrophied over recent decades. Income and wealth, without these institutional checks in place, have concentrated at America’s economic summit. Below that summit, daily life for average Americans has become ever more insecure.
The United States, in effect, has slid into what University of Maryland historian and political economist Gar Alperowitz calls a “systemic crisis.” For the nation’s vast majority, America has simply stopped working. Daily life has turned into an ever-faster treadmill. And no real relief looms anywhere on the near horizon. More »
Corporate profits are soaring despite declining sales and temps are working longer hours than regular employees. What gives?
One aspect that defines our current economy is that things are happening that shouldn’t be happening. I don’t mean that things are happening that are illegal or immoral. (Well, some of them are immoral, but that’s not what I mean.) Rather, things are happening that defy economic logic—a slippery term that really means, the economic patterns of roughly the past half-century.
The first such logic-defying thing is that corporate profits are soaring even as corporate revenues limp along. The quarterly reports of S&P 500 corporations for the first three months of 2013 are almost entirely in now, and they show profits rising by more than 5 percent even while revenues have risen by less than 1 percent. Seventy percent of these companies—the largest publicly traded U.S. firms—exceeded the analysts’ profit projections. On the other hand, 60 percent came in under the projections for their sales.
Were this disjuncture just a one-time epiphenomenon, we could pass it off as a statistical oddity, but it’s not. Profits of American corporations have become decoupled from the other indices of American economic well-being with which they’ve historically been linked. They currently comprise the largest share of the nation’s economy that they have since World War II. Yet the increase in consumer spending in the 15 quarters since the recession’s official end is lower than its increase 15 quarters after the recessions of 1982, 1991, and 2001 ended. Similarly, 15 quarters after the recession ended, the increase in GDP is lower than it was in those three preceding recessions. So spending and growth are lagging while profits soar. What gives?
Part of the answer is that the S&P 500 now sell roughly half their wares abroad, so they’re less dependent on the health of the U.S. economy to hit or exceed their profit targets. But how to account for the increase in profits when revenues—which, like profits, are measured globally—also decline? More »