Thursday, September 02, 2010

Do you sincerely want to be rich? Well, tough

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When an aristocratic Victorian paterfamilias gambled or drank away the family fortune, leaving his heirs a coat of arms and a few soup plates, the genteel expression for their plight was that they were living in reduced circumstances. If the American economy continues on its present course, most of the middle class will be living in reduced circumstances. The difference is that it will be corporations and government, not necessarily themselves, that put them there.

Michael Snyder, writing at Business Insider, offers … wait. I've been reading Tom Wolfe. Got to try it myself. Ready? Michael Snyder, writing at Business Insider, offers 30 statistics — 30 statistics! — that "prove the elite are getting richer," and you aren't, you sad-sack, frayed-collar piece a nothing.
In case you haven't been paying attention over the past couple of decades, what we have in America today is a system that is designed to funnel as much wealth into the hands of the elite as possible. …

Every single year, the U.S. Congress passes law after law after law that makes it easier for big corporations to dominate and makes it easier for the rich to get even richer.

America's economy is not about competition anymore. It is about eliminating competition.

And unfortunately for middle class Americans, the giant predator corporations that now dominate our economy are realizing that they don't really need nearly as many American workers anymore. Instead, they are slowly but surely shipping our jobs off to the other side of the world where workers are willing to work for about a tenth as much.

And yet we still run out to the "big box" stores and fill up our carts with a bunch of plastic crap made on the other side of the world by these giant corporations. Meanwhile, those giant corporations are taking the profits they make out of our communities and they are taking our jobs and are shipping them overseas.

So in the final analysis, is it any wonder why the income inequality gap is growing?

Here are a few of the statistics Snyder cites.
Even official government figures bear out the fact that the rich are getting richer. An analysis of income-tax data by the Congressional Budget Office a few years ago found that the top 1% of all American households own nearly twice as much of the corporate wealth as they did just 15 years ago.

Most Americans have suffered during the last few years, but not the boys and girls down on Wall Street. New York state Comptroller Thomas DiNapoli says that Wall Street bonuses for 2009 were up 17 percent when compared with 2008.

Government anti-poverty programs are exploding in size in response to the recent economic difficulties. USA Today is reporting that a record one in six Americans are now being served by at least one government anti-poverty program.

The number of Americans in the food stamp program rose to a new all-time record of 40.8 million in May. That number is up almost 50 percent since the beginning of the recession.

The number of Americans who cannot afford even the basic necessities is absolutely staggering. A whopping 50 million Americans could not afford to buy enough food in order to stay healthy at some point over the last year.
And a lot more in that vein. Statistics, of course, can be fiddled in gross or subtle ways. But I think most of us, even if we're lucky enough to still have jobs, can feel in our bones that the U.S. is going through something worse than a common-cold recession. This is a structural change. It's not just downer psychology. We have a lot more to fear than fear itself.

We were conned big time by the apostles of globalization. First we scuppered our decent-paying factory jobs and sent the work to Chinese coolies. For a time, the middle class was down with it. What did they care if a bunch of bolt twisters and lunchbox toters saw their livelihoods evaporate like the morning dew, if it meant el cheapo video games and digital cameras? Anyway, we were all Knowledge Workers now in a Service Economy. From shoe shiner to IT professional in one great leap forward.

Then globalization reached the pod farms. The very kewwl communication technology that made us all Knowledge Workers meant that the back office jobs could now be done in India instead of South Dakota. The In Tray doesn't stop here anymore.

Who's next? Could it be those very Hedge Fund-amentalists that rode through in their carriages, holding a scented handkerchief to their faces as the ghostly faces of the poor filled the streets on every side? Paolo Pellegrini, who appears to be a hedge fund manager (I've never heard of him), thinks the system is collapsing on one and all:
Since the 70s, and most sharply since 2001, the US labor force's share of the economic pie shrank dramatically. The combination of technological advances and free trade suppressed the purchasing power of an ever increasing proportion of American workers. … Compensation of employees as a percentage of GDP declined from approximately 58% in 2001 to approximately 53% in the first quarter of 2010. The increase of household borrowings, from a range of 2.5%–5% of GDP in the 90s to approximately 7.5%–10% in 2002–2006, masked the economic and social consequences of this shift in income distribution.
Here's the sting in the tail:
The policy choices that helped spur the debt bubble concealed the inconvenient twin realities of uncompetitiveness and gaping distributional imbalances. Postponing the political resolution of the problem has only caused it to get bigger. Unfortunately, the US government is continuing to dig the hole deeper, now with a coarser, less-efficient version that uses sovereign borrowing in place of private debt to fill the demand of the deficit created by the labor force's ongoing income decline.
We are not far off from a time when most of the "developed" world's work will be carried out in countries where authoritarian governments keep wages down and encourage strikers to disappear. The whole labor union movement might as well never have happened, except that unions can now flex their muscle to keep government employee salaries, benefits, and pensions soaring. Only a managerial elite, hopping from one of their satrapies to the next in their Gulfstreams, will be left in the private sphere.

Meanwhile, the federal government is throwing its immense blubber behind the invasion of "migrants," adding millions to the rolls of the unemployed and unemployable, and good liberals rally for a Victory Mosque at Ground Zero, a monument to suicidal tolerance.

Something's got to give.

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4 comments:

David said...

Many aspects of public policy...tax, regulatory, educational, and now especially energy..are detrimental to manufacturing. Equally important, there have been strong cultural shifts in directions that are hostile to this kind of activity...see my post faux manufacturing nostalgia.

Marcus Marcellus said...

Pellegrino was the senior analyst for Paul Johnson's outfit. They ended up making billions shorting sub-prime from Goldman Sachs. He now manages his own fund in Bermuda. Funny thing is that Pellegrino was nearly fifty and going through some mid-life, existential malaise when he finally hit it big in 2008. He had lost lots of money in his career as an i-banker and was living in a one br apartment near Greenwich. Anyway, that's just by the bye - and he's also right.

Japan and Germany have outsourced some industrial production (but not their IP) and limit immigration - yes, Germany has seen the light on this issue. Even my vaguely liberal German girlfriend sounds like a VDare contributor. The stats don't lie. But to do both - outsource industry and jobs and import poverty and a new peasantry - is simply wicked.

I fear America is in far greater danger than Europe. The ECB has refused to follow the Nkrumah-Mugabe-Obama model of stimulus spending. This little post-War Empire of ours destroyed the nation once called USA. Seeing the people at the Beck Rally with their shorts, baseball caps, sneakers; undignified, OBESE war mongers, I just don't care anymore. It's every man for himself. This ship ain't worth saving - not if that's what the "European Americans" are like.

Terry Morris said...

I've been doing some statistical checking myself lately. Nearly a full third of the population in Oklahoma is currently getting food stamp benefits. 64% (sixty-four percent!) of all babies born in this State are enrolled in the "federally funded" Sooner Care program. That's not to mention the number of babies born in Indian Hospitals, and we also have a program for aliens called -- get this -- Soon to be Sooners. And, of course, there's a lot of overlap with these and other programs including housing assistance, day care assistance, and on and on and on. How many leaches can a single dog host?

The collapse of the economy, I think, is now a foregone conclusion.

DP111 said...

Marcus
I did a tour around Germany this summer.What surprised me was the sheer scale of manufacturing industry in Germany. Not just software, but real nuts and bolts, to airplanes and sophisticated stuff, that require high precision from skilled machinists. As a consequence, the standard of education in engineering and science is very high. Real manufacturing industry was all over Germany, and not just in industrial areas.

There is precious little of such industrial activity left in the UK, and with it the skills that maintain a skilled society - Outsourced all, or destroyed by greedy unionists or managers. All that is left, is making money out of money for the few in the financial sector. Not much that is wealth producing as such, and again, nothing for a nation to be proud of.