Why Michael Moore's SiCKO is a health care documentary every American must see | Tuesday, June 19, 2007 by: Mike Adams
America's disastrous health care system is heaving the country head-first into near-certain economic collapse. Just about everybody's either financially strained or going broke due to spiraling health care costs: the people, the employers, state governments and even the federal government. Multinational corporations are fleeing the United States due to health care costs, taking jobs and economic productivity with them. Meanwhile, 50 percent of personal bankruptcies in the U.S. are due to medical expenses.
But not everybody's doing badly. The drug companies, surgeons, medical specialists, health insurance companies and private hospitals are making out like bandits, raking in multi-million dollar CEO salaries and -- I'm not making this up -- greater than 500,000% markups on prescription drugs. And while the American people get sicker, the drug companies, insurance companies and many health "care" providers (it's really more like "sick care providers") are rolling in cash. Drug companies are now among the richest corporations in the world, ...
Thursday, June 21, 2007
pressing financial problems ...healthcare costs, lack of money or low wages, and oil and gas prices
By E&P Staff | Published: June 19, 2007
...
A new Gallup Poll will only reinforce those who claim that while the rich get richer most Americans don't feel they are sharing in the growth in our economy. The stock market may be climbing and the unemployment remains relatively low, but 7 in 10 Americans believe the economy is getting worse -- the most negative reading in nearly six years.
...
Gallup adds: "For the first time this year, a majority of Americans are negative about the employment market, saying it is a bad time to find a quality job."
...
"When asked about the most pressing financial problems their family faces today, Americans mention healthcare costs, lack of money or low wages, and oil and gas prices," Gallup reports. "Healthcare costs are mentioned by 16% of Americans while 13% say low wages and 11% say oil and gas prices. These percentages are virtually unchanged from last month."
Monday, June 18, 2007
Bush [v. Clinton] median income falls 2.9%, [11.3%], collece grades earn less, job growth 1.3% [12%] ... taxes, offshoring, immigration, China
The end of the American dream? | Analysis | By Steve Schifferes | Economics reporter, BBC News website
...
...
So far, though, little of that growth has translated into the hands of the average worker, according to new research from the Economic Policy Institute (EPI).
Click here for a graph of wages vs. productivity
For real household incomes, the median point - the level at which half of households earn more and half less - has actually fallen over the past five years.
That marks a notable contrast with the 1990s, when the economic boom boosted both jobs and incomes.
...
Average hourly real wages for both college and high school graduates actually fell between 2000 and 2005, and fewer of the jobs they found carried benefits such as health care or company pensions.
...
For real household incomes, the median point - the level at which half of households earn more and half less - has actually fallen over the past five years.
That marks a notable contrast with the 1990s, when the economic boom boosted both jobs and incomes.
...
"The unprecedented split between growth and living standards is the defining economic agenda of the day," says the EPI's senior economist, Jared Bernstein.
During the five years from 2000 to 2005, the US economy grew in size from $9.8 trillion to $11.2 trillion, an increase in real terms of 14%.
Productivity - the measure of the output of the economy per worker employed - grew even more strongly, by 16.6%.
But over the same period, the median family's income slid by 2.9%, in contrast to the 11.3% gain registered in the second half of the 1990s.
...Average hourly real wages for both college and high school graduates actually fell between 2000 and 2005, and fewer of the jobs they found carried benefits such as health care or company pensions.
...
One way to comprehend what is happening is to look at the split between how much of the economy is won by profits and how much by wages.
The share allotted to corporate profits increased sharply, from 17.7% in 2000 to 20.9% in 2005, while the share going to wages has reached a record low.
...
Unemployment has remained stubbornly high despite the economic recovery, with the latest figure at 4.7% compared to 4% at the end of 2000. Overall job growth in the first half of the current decade has been just 1.3%.
In the 1990s, job growth of some 12% goes some way towards explaining why prosperity in that earlier period spread down the income scale.
....The incomes of the top 20% have grown much faster than earnings of those at the middle or bottom of the income distribution. The income of the top 1% and top 0.1% have grown particularly rapidly.
From 1992 to 2005, the pay of chief executive officers of major companies rose by 186%.
The equivalent figure for median hourly wages was 7.2%, leaving the ratio of CEOs' pay to that of the average worker at 262.
In the 1960s, the comparable figure was 24.
There has been much debate about the extent to which the tax policies of the Bush administration, which lowered many taxes on capital, have contributed to this trend.
...
The authors of the EPI report argue that low minimum wages, weakened union power, and the loss of both blue and white-collar jobs to off shoring do much to explain the jobs picture.
Admittedly the Federal minimum wage has been static for a decade, but the downward pressure on wages is probably coming from other sources.
One is immigration, which may have a greater effect on the wages of low-skilled workers.
Another is the "China effect,", the idea that low prices of imported manufactured goods are pushing US industry to cut its workforce in order to increase productivity.
Wednesday, June 13, 2007
Price increase has been attributed to limited refining capacity, which has generated a sharp rise in refinery profits ... up to $39 per barrel [!]
United States Gasoline prices and the “free market”: Refiners profit after reducing capacity | By Joe Kay | May 31, 2007, 10:21
The recent sharp rise in US gasoline prices and the accompanying hardship for millions of people underscore once again the consequences of an energy market dominated by a few giant corporations. The price increase has been attributed to limited refining capacity, which has generated a sharp rise in refinery profits while facilitating market manipulation.
Gas prices in the US rose to record highs just in time for the Memorial Day weekend at the end of May, traditionally a time when many families drive long distances. Average gasoline prices reached $3.22 last week, approaching the record inflation-adjusted high of $3.29, set in 1981. In some parts of the country, prices rose considerably above that, with gasoline reaching as high as $3.69 a gallon in California.
The main beneficiaries of the surge in prices have been American refiners, which import crude oil and process it into gasoline and other products. Some of the major oil corporations, such as ExxonMobil and Chevron, are vertically integrated, combining oil extraction and refining operations. These companies have seen profitability of the refining portion of their business soar.
A Wall Street Journal article May 18 noted that refiners are pulling in more than $30 in profit before taxes and other expenses for every barrel of oil that they process, the most per barrel since the immediate aftermath of Hurricane Katrina in 2005. On the West Coast, where gasoline prices are higher than the national average, refinery profits are at $39 a barrel, more than double the average of $17 over the past five years, according to a March 9 report in the San Francisco Chronicle.
The large differential between the oil refinery revenues from the sale of gasoline and costs from the purchase of crude has been explained by shortages in refining capacity, which has reduced gasoline reserves as demand increases—leading to a rise in gas prices. All of the extra profit to the major refineries is coming directly out of the pockets of American consumers. ...
...
The shortage of refining capacity is generally attributed in the media to a number of planned and unplanned refinery outages. However, refinery capacity has been deliberately decreased over the course of the past two decades, for the explicit purpose of boosting profit margins.
...
The recent sharp rise in US gasoline prices and the accompanying hardship for millions of people underscore once again the consequences of an energy market dominated by a few giant corporations. The price increase has been attributed to limited refining capacity, which has generated a sharp rise in refinery profits while facilitating market manipulation.
Gas prices in the US rose to record highs just in time for the Memorial Day weekend at the end of May, traditionally a time when many families drive long distances. Average gasoline prices reached $3.22 last week, approaching the record inflation-adjusted high of $3.29, set in 1981. In some parts of the country, prices rose considerably above that, with gasoline reaching as high as $3.69 a gallon in California.
The main beneficiaries of the surge in prices have been American refiners, which import crude oil and process it into gasoline and other products. Some of the major oil corporations, such as ExxonMobil and Chevron, are vertically integrated, combining oil extraction and refining operations. These companies have seen profitability of the refining portion of their business soar.
A Wall Street Journal article May 18 noted that refiners are pulling in more than $30 in profit before taxes and other expenses for every barrel of oil that they process, the most per barrel since the immediate aftermath of Hurricane Katrina in 2005. On the West Coast, where gasoline prices are higher than the national average, refinery profits are at $39 a barrel, more than double the average of $17 over the past five years, according to a March 9 report in the San Francisco Chronicle.
The large differential between the oil refinery revenues from the sale of gasoline and costs from the purchase of crude has been explained by shortages in refining capacity, which has reduced gasoline reserves as demand increases—leading to a rise in gas prices. All of the extra profit to the major refineries is coming directly out of the pockets of American consumers. ...
...
The shortage of refining capacity is generally attributed in the media to a number of planned and unplanned refinery outages. However, refinery capacity has been deliberately decreased over the course of the past two decades, for the explicit purpose of boosting profit margins.
...
[Offshoring,] The notion that there could be any problem with free trade is beyond the imagination of most economists ... READ CAREFULLY
The Truth Comes Out About Offshoring | By Paul Craig Roberts
06/13/07 "ICH" --- -- On January 6, 2004, Senator Charles Schumer (D, NY) and I scandalized the economics profession and Washington policymakers with our New York Times article, “Second Thoughts on Free Trade.” We noted that the two conditions on which the case for free trade rests no longer exist in the present-day world and that there was no basis for the assumption that offshoring of US jobs was beneficial overall to Americans.
The Brookings Institution in Washington, D.C., organized a conference, televised by C-Span, to subject our argument to peer review, and we easily dominated the conference.
...
... and threatened to withdraw his participation if my reference to the latest work in trade theory by Ralph Gomory and William Baumol was included in the edited version of our debate in the Wall Street Journal (May 10, 2004). In Global Trade and Conflicting National Interests published in 2000 by the M.I.T. Press, Gomory and Baumol show that the case for free trade is a special case and had never been one of general validity. Their criticism is more far-reaching than the one made by me and Senator Schumer.
Paul Samuelson, in many respects the dean of American economists, wrote an article supportive of Gomory and Baumol’s work. But nothing happened. Economists simply closed ranks and ignored the points that I brought to their attention as well as the latest work in trade theory. Libertarian free trade ideologues got upset with me. Unable to deny that the case for free trade had lost its necessary foundations, libertarians reduced the issue to one of economic freedom and concluded that I was impure.
Since 2004 I have written a number of articles pointing out that offshoring is really labor arbitrage and that if offshoring had the mutual economic benefits associated with free trade, there would be US employment growth in export and import-competitive industries. Instead, employment in these industries has declined in the US but grown remarkably in Asia. In the 21st century the US economy has been able to create net new jobs only in nontradable domestic services, such as waitresses and bartenders and health and social services. Moreover, the growth in productivity and GDP attributed to the US economy were inconsistent with the stagnant real incomes of Americans. Somehow productivity and GDP were growing strongly, but it wasn’t showing up in the incomes of Americans.
Economists have found it difficult to think about the issues that I have raised. Economists are taught that free trade is a good thing and that anyone who disputes it is a protectionist in the pay of some industry scheming to raise prices that consumers have to pay. The notion that there could be any problem with free trade is beyond the imagination of most economists.
In addition to their unexamined commitment to free trade, economists disbelieved my analysis because they thought it was inconsistent with statistics indicating high US productivity and GDP growth. They thought GDP and productivity statistics trumped my use of job data.
All of this may be about to change. Susan N. Houseman, ... has discovered a problem in the statistical data that produces phantom US GDP. Phantom GDP results when cost reductions achieved by US firms shifting production offshore are miscounted as US GDP growth. ...
...
Business Week’s June 18 cover story by MIchael Mandel explains the problem identified by Houseman. Economist Matthew J. Slaughter, a proponent of offshoring, says: “There are potentially big implications. I worry about how pervasive this is.” Business Week says the implications are big. The cover story estimates that 40% of the gain in US manufacturing output since 2003 is phantom GDP.
Most likely that estimate is low. Consider, for example, that furniture imports have doubled in the past few years (offshored production counts as imports) while US jobs in furniture manufacture have declined 21%. US statistics, however, show that US output and productivity rose even as US manufacturers closed their plants and no new investment went into the industry.
My hat is off to Business Week. It requires courage for a publication dependent on advertising from global corporations to tell the truth about offshoring. ...
06/13/07 "ICH" --- -- On January 6, 2004, Senator Charles Schumer (D, NY) and I scandalized the economics profession and Washington policymakers with our New York Times article, “Second Thoughts on Free Trade.” We noted that the two conditions on which the case for free trade rests no longer exist in the present-day world and that there was no basis for the assumption that offshoring of US jobs was beneficial overall to Americans.
The Brookings Institution in Washington, D.C., organized a conference, televised by C-Span, to subject our argument to peer review, and we easily dominated the conference.
...
... and threatened to withdraw his participation if my reference to the latest work in trade theory by Ralph Gomory and William Baumol was included in the edited version of our debate in the Wall Street Journal (May 10, 2004). In Global Trade and Conflicting National Interests published in 2000 by the M.I.T. Press, Gomory and Baumol show that the case for free trade is a special case and had never been one of general validity. Their criticism is more far-reaching than the one made by me and Senator Schumer.
Paul Samuelson, in many respects the dean of American economists, wrote an article supportive of Gomory and Baumol’s work. But nothing happened. Economists simply closed ranks and ignored the points that I brought to their attention as well as the latest work in trade theory. Libertarian free trade ideologues got upset with me. Unable to deny that the case for free trade had lost its necessary foundations, libertarians reduced the issue to one of economic freedom and concluded that I was impure.
Since 2004 I have written a number of articles pointing out that offshoring is really labor arbitrage and that if offshoring had the mutual economic benefits associated with free trade, there would be US employment growth in export and import-competitive industries. Instead, employment in these industries has declined in the US but grown remarkably in Asia. In the 21st century the US economy has been able to create net new jobs only in nontradable domestic services, such as waitresses and bartenders and health and social services. Moreover, the growth in productivity and GDP attributed to the US economy were inconsistent with the stagnant real incomes of Americans. Somehow productivity and GDP were growing strongly, but it wasn’t showing up in the incomes of Americans.
Economists have found it difficult to think about the issues that I have raised. Economists are taught that free trade is a good thing and that anyone who disputes it is a protectionist in the pay of some industry scheming to raise prices that consumers have to pay. The notion that there could be any problem with free trade is beyond the imagination of most economists.
In addition to their unexamined commitment to free trade, economists disbelieved my analysis because they thought it was inconsistent with statistics indicating high US productivity and GDP growth. They thought GDP and productivity statistics trumped my use of job data.
All of this may be about to change. Susan N. Houseman, ... has discovered a problem in the statistical data that produces phantom US GDP. Phantom GDP results when cost reductions achieved by US firms shifting production offshore are miscounted as US GDP growth. ...
...
Business Week’s June 18 cover story by MIchael Mandel explains the problem identified by Houseman. Economist Matthew J. Slaughter, a proponent of offshoring, says: “There are potentially big implications. I worry about how pervasive this is.” Business Week says the implications are big. The cover story estimates that 40% of the gain in US manufacturing output since 2003 is phantom GDP.
Most likely that estimate is low. Consider, for example, that furniture imports have doubled in the past few years (offshored production counts as imports) while US jobs in furniture manufacture have declined 21%. US statistics, however, show that US output and productivity rose even as US manufacturers closed their plants and no new investment went into the industry.
My hat is off to Business Week. It requires courage for a publication dependent on advertising from global corporations to tell the truth about offshoring. ...
Tuesday, June 12, 2007
U.S. data show that moving jobs overseas hasn't hurt the economy. Here's why those stats are wrong ....
JUNE 18, 2007 | Cover Image: The Real Cost of Offshoring | By Michael Mandel
Chart: Is That Robust U.S. Growth Imaginary?
Whenever critics of globalization complain about the loss of American jobs to low-cost countries such as China and India, supporters point to the powerful performance of the U.S. economy. And with good reason. Despite the latest slow quarter, official statistics show that America's economic output has grown at a solid 3.3% annual rate since 2003, a period when imports from low-cost countries have soared. Similarly, domestic manufacturing output has expanded at a decent pace. On the face of it, offshoring doesn't seem to be having much of an effect at all.
But new evidence suggests that shifting production overseas has inflicted worse damage on the U.S. economy than the numbers show. BusinessWeek has learned of a gaping flaw in the way statistics treat offshoring, with serious economic and political implications. Top government statisticians now acknowledge that the problem exists, and say it could prove to be significant.
The short explanation is that the growth of domestic manufacturing has been substantially overstated in recent years. That means productivity gains and overall economic growth have been overstated as well. And that raises questions about U.S. competitiveness and "helps explain why wage growth for most American workers has been weak," says Susan N. Houseman, an economist at the W.E. Upjohn Institute for Employment Research who identifies the distorting effects of offshoring in a soon-to-be-published paper.
...
The result? BusinessWeek's analysis of the import price data reveals offshoring to low-cost countries is in fact creating "phantom GDP"--reported gains in GDP that don't correspond to any actual domestic production. The only question is the magnitude of the disconnect. ...
...
By BusinessWeek's admittedly rough estimate, offshoring may have created about $66 billion in phantom GDP gains since 2003 (page 31). That would lower real GDP today by about half of 1%, which is substantial but not huge. But put another way, $66 billion would wipe out as much as 40% of the gains in manufacturing output over the same period.
It's important to emphasize the tenuousness of this calculation. In particular, it required BusinessWeek to make assumptions about the size of the cost savings from offshoring, information the government doesn't even collect.
...
But the new numbers also require a reassessment of productivity and wages that could add fire to the national debate over the true performance of the economy in President Bush's second term. The official statistics show that productivity, or output per hour, grew at a 1.8% rate over the past three years. But taking the phantom GDP effect into account, the actual rate of productivity growth might be closer to 1.6%--about what it was in the 1980s.
...
Yet no matter how hard you look, you can't find any trace of the cost savings from offshoring in the import price statistics. The furniture industry's experience is particularly telling. Despite the surge of low-priced chairs, tables, and similar products from China, the BLS is reporting that the import price of furniture has actually risen 6.7% since 2003.
The numbers for Chinese imports as a whole are equally out of step with reality. Over the past three years, total imports have climbed by 89%, as U.S.-based companies have rushed to take advantage of the enormous cost advantages. Yet over the same period, the import price index for goods coming out of China has declined a mere 2.3%. ...
Chart: Is That Robust U.S. Growth Imaginary?
Whenever critics of globalization complain about the loss of American jobs to low-cost countries such as China and India, supporters point to the powerful performance of the U.S. economy. And with good reason. Despite the latest slow quarter, official statistics show that America's economic output has grown at a solid 3.3% annual rate since 2003, a period when imports from low-cost countries have soared. Similarly, domestic manufacturing output has expanded at a decent pace. On the face of it, offshoring doesn't seem to be having much of an effect at all.
But new evidence suggests that shifting production overseas has inflicted worse damage on the U.S. economy than the numbers show. BusinessWeek has learned of a gaping flaw in the way statistics treat offshoring, with serious economic and political implications. Top government statisticians now acknowledge that the problem exists, and say it could prove to be significant.
The short explanation is that the growth of domestic manufacturing has been substantially overstated in recent years. That means productivity gains and overall economic growth have been overstated as well. And that raises questions about U.S. competitiveness and "helps explain why wage growth for most American workers has been weak," says Susan N. Houseman, an economist at the W.E. Upjohn Institute for Employment Research who identifies the distorting effects of offshoring in a soon-to-be-published paper.
...
The result? BusinessWeek's analysis of the import price data reveals offshoring to low-cost countries is in fact creating "phantom GDP"--reported gains in GDP that don't correspond to any actual domestic production. The only question is the magnitude of the disconnect. ...
...
By BusinessWeek's admittedly rough estimate, offshoring may have created about $66 billion in phantom GDP gains since 2003 (page 31). That would lower real GDP today by about half of 1%, which is substantial but not huge. But put another way, $66 billion would wipe out as much as 40% of the gains in manufacturing output over the same period.
It's important to emphasize the tenuousness of this calculation. In particular, it required BusinessWeek to make assumptions about the size of the cost savings from offshoring, information the government doesn't even collect.
...
But the new numbers also require a reassessment of productivity and wages that could add fire to the national debate over the true performance of the economy in President Bush's second term. The official statistics show that productivity, or output per hour, grew at a 1.8% rate over the past three years. But taking the phantom GDP effect into account, the actual rate of productivity growth might be closer to 1.6%--about what it was in the 1980s.
...
Yet no matter how hard you look, you can't find any trace of the cost savings from offshoring in the import price statistics. The furniture industry's experience is particularly telling. Despite the surge of low-priced chairs, tables, and similar products from China, the BLS is reporting that the import price of furniture has actually risen 6.7% since 2003.
The numbers for Chinese imports as a whole are equally out of step with reality. Over the past three years, total imports have climbed by 89%, as U.S.-based companies have rushed to take advantage of the enormous cost advantages. Yet over the same period, the import price index for goods coming out of China has declined a mere 2.3%. ...
Friday, June 8, 2007
flood of 1.3 million graduates to join a stagnant work force ...
A misled generation graduates to a future behind the counter | By Brian Till | Originally published June 6, 2007
Last month, author Barbara Ehrenreich gave a chilling address to the Class of 2007 at Haverford College near Philadelphia. She told the graduates, "At the moment you accept your diploma today, you will have an average debt of $20,000 and no health insurance. You may be feeling desperate enough to take whatever comes along. Some of you will get caged in cubicles until you're ejected by the next wave of layoffs."
She continued: "Others - some of the best and brightest of you, in fact - will still be behind a counter in Starbucks or Borders three years down the road."
...
To be clear, the students Ms. Ehrenreich damned to Starbucks and Borders weren't graduating from a community college or a second-tier state school. Haverford is one of the country's more respected small, liberal arts schools. Almost 90 percent of its students graduated in the top 10 percent of their high school classes.
...
But with the Department of Education predicting a flood of 1.3 million graduates into the job market to join the work force of a stagnant economy this summer, many graduates will find it hard to envision those few leaders among all the bartenders and third-shift managers blocking the view.
A study by the Economic Mobility Project, funded by the Pew Charitable Trusts, found that men in their 30s have a median annual income of about $35,000. Thirty years ago, American men in their 30s were making 12.5 percent more, their median annual income closer $40,000 (after adjusting for inflation).
At Amherst College in Massachusetts, graduates were lectured on our nation's similarities to the Roman Empire. Amherst President Anthony Marx cautioned, "If we do not learn from the limits of our victories, we risk the fate of Rome." ...
Last month, author Barbara Ehrenreich gave a chilling address to the Class of 2007 at Haverford College near Philadelphia. She told the graduates, "At the moment you accept your diploma today, you will have an average debt of $20,000 and no health insurance. You may be feeling desperate enough to take whatever comes along. Some of you will get caged in cubicles until you're ejected by the next wave of layoffs."
She continued: "Others - some of the best and brightest of you, in fact - will still be behind a counter in Starbucks or Borders three years down the road."
...
To be clear, the students Ms. Ehrenreich damned to Starbucks and Borders weren't graduating from a community college or a second-tier state school. Haverford is one of the country's more respected small, liberal arts schools. Almost 90 percent of its students graduated in the top 10 percent of their high school classes.
...
But with the Department of Education predicting a flood of 1.3 million graduates into the job market to join the work force of a stagnant economy this summer, many graduates will find it hard to envision those few leaders among all the bartenders and third-shift managers blocking the view.
A study by the Economic Mobility Project, funded by the Pew Charitable Trusts, found that men in their 30s have a median annual income of about $35,000. Thirty years ago, American men in their 30s were making 12.5 percent more, their median annual income closer $40,000 (after adjusting for inflation).
At Amherst College in Massachusetts, graduates were lectured on our nation's similarities to the Roman Empire. Amherst President Anthony Marx cautioned, "If we do not learn from the limits of our victories, we risk the fate of Rome." ...
Thursday, June 7, 2007
Walmart ... $1.2B in tax breaks ... healthcare costs of Wal-Mart employees
How Wal-Mart Has Used Public Money in Your State
A secret behind Wal-Mart’s rapid expansion in the United States has been its extensive use of public money. This includes more than $1.2 billion in tax breaks, free land, infrastructure assistance, low-cost financing and outright grants from state and local governments around the country. In addition, taxpayers indirectly subsidize the company by paying the healthcare costs of Wal-Mart employees who don’t receive coverage on the job and instead turn to public programs such as Medicaid. This website brings together available information on both kinds of subsidies involved in Wal-Mart’s “double-dipping.” In the future we will add data on other ways Wal-Mart relies on taxpayers to finance its growth.
A secret behind Wal-Mart’s rapid expansion in the United States has been its extensive use of public money. This includes more than $1.2 billion in tax breaks, free land, infrastructure assistance, low-cost financing and outright grants from state and local governments around the country. In addition, taxpayers indirectly subsidize the company by paying the healthcare costs of Wal-Mart employees who don’t receive coverage on the job and instead turn to public programs such as Medicaid. This website brings together available information on both kinds of subsidies involved in Wal-Mart’s “double-dipping.” In the future we will add data on other ways Wal-Mart relies on taxpayers to finance its growth.
The economy has grown ... BUT ... lost private-sector jobs ... median income down ... health care up 80% ,,, business investment stagnant
Bush's "Magic" Economic Formula: The Rich Get Richer; Regular People Lose Ground | By Larry Beinhart, AlterNet. Posted June 4, 2007.
The economy keeps growing, as does the enormous largesse of the wealthy, while the average person makes less than they did when Bush took Office. This is Bush's magic economic formula.
Supposedly we are in a sustained economic recovery and have been since 2002.
...
By a certain measure, however, it's real.
The economy has grown. Corporate profits are at an all-time high. Average income is up. There's lots of money around.
But the recovery has some really strange features. Oddities never before seen in a recovery.
...
Jobs: During Bush's first term the US actually lost private-sector jobs.
...
But median income, the amount that people in the middle of the group earn, barely budges. So let's look at that figure. Median income is down. The average person makes less now than when Bush came into office.
Not only that, the downward pressure on wages is no longer just a blue-collar issue, it's moved up to white-collar workers, the educated classes, even doctors.
...
In particular, fuel is up 100 percent, higher education costs are up about 44 percent, health care premiums are up 80 percent, and affordable housing is scarce.
...
You may have been hearing that the Dow Jones Index is at an all-time high. It's true. However, it is only 16 percent higher than the day George Bush came into office. By comparison, when Clinton left office the Dow was 320 percent higher than when he came into office.
It's a very rough measure of course, and there are many others. But by that measure, during the Clinton years investment in America's leading business had grown more than three times over. Under Bush it's only grown 16 percent in six years. Since the consumer price index is up 18 percent over the same period, when the new all-time high is adjusted for inflation, growth is effectively below zero.
How can there be a "recovery" in which not even businesses grow?
...
If we are to invest public funds -- through government borrowing or spending or through simply spending tax revenues -- we have to be aware that rich people running around with bags of money won't necessarily do what is good for the wealth of our nation. They may run us into bankruptcy, the way the smartest guys in the room ran Enron into bankruptcy.
The economy keeps growing, as does the enormous largesse of the wealthy, while the average person makes less than they did when Bush took Office. This is Bush's magic economic formula.
Supposedly we are in a sustained economic recovery and have been since 2002.
...
By a certain measure, however, it's real.
The economy has grown. Corporate profits are at an all-time high. Average income is up. There's lots of money around.
But the recovery has some really strange features. Oddities never before seen in a recovery.
...
Jobs: During Bush's first term the US actually lost private-sector jobs.
...
But median income, the amount that people in the middle of the group earn, barely budges. So let's look at that figure. Median income is down. The average person makes less now than when Bush came into office.
Not only that, the downward pressure on wages is no longer just a blue-collar issue, it's moved up to white-collar workers, the educated classes, even doctors.
...
In particular, fuel is up 100 percent, higher education costs are up about 44 percent, health care premiums are up 80 percent, and affordable housing is scarce.
...
You may have been hearing that the Dow Jones Index is at an all-time high. It's true. However, it is only 16 percent higher than the day George Bush came into office. By comparison, when Clinton left office the Dow was 320 percent higher than when he came into office.
It's a very rough measure of course, and there are many others. But by that measure, during the Clinton years investment in America's leading business had grown more than three times over. Under Bush it's only grown 16 percent in six years. Since the consumer price index is up 18 percent over the same period, when the new all-time high is adjusted for inflation, growth is effectively below zero.
How can there be a "recovery" in which not even businesses grow?
...
If we are to invest public funds -- through government borrowing or spending or through simply spending tax revenues -- we have to be aware that rich people running around with bags of money won't necessarily do what is good for the wealth of our nation. They may run us into bankruptcy, the way the smartest guys in the room ran Enron into bankruptcy.
The more they can worsen income inequality by offshoring American jobs, the higher they are paid.
Losing the Economy to MythologyBy Paul Craig Roberts
06/04/07 "ICH" -- -- - Economic discussion in the United States is trapped in ancient ruts. Both right and left are stuck in old habitual ways of thinking. Neither shows inclination or ability to think independently of ideology. For a country beset with economic problems, this is problematic.
The ascendency of free market economics during the past quarter century has removed some constraints on corporate power. It is difficult to argue that this is a desirable result. For example, the concentration of media ownership permitted by the Clinton administration in the 1990s has destroyed the independence of the US media, thus reducing the accountability of government. Deregulation has had unintended consequences. The growth of corporate influence has facilitated the reach of special interests into universities and think tanks and turned some from pursuit of truth to “for-profit activities” that compromise the independence of studies and publications.
...
US income inequality was worsened and the unions busted by the collapse of world socialism and the rise of the high speed Internet. These two developments, which were not part of Reagan’s economic program, made it possible for corporations to substitute foreign labor for American labor in the production of goods and services for American markets.
Until the collapse of world socialism, corporations did not have access to the large pools of excess labor in China and India. Until the rise of the high speed Internet, corporations could not hire professional services supplied from distant lands. These two developments meant that highly productive and highly paid American labor could be substituted out of production functions and replaced with equally productive but much cheaper foreign labor, because large excess supplies of Asian labor suppressed Asian wages below the productivity of labor.
Industrial unions were busted by the movement of plant, equipment, and technology abroad.
The professional middle class was adversely impacted by the ability of corporations to contract for the delivery via the Internet of professional services from abroad and by the ability to import cheaper foreign workers on H-1B, L-1 and other work visas.
Jobs offshoring is dismantling the ladders of upward mobility in the US, polarizing the population into rich and poor, and, thereby, worsening the income distribution.
Americans need to understand that it is jobs offshoring, not lower tax rates, that is worsening the income distribution. Because of the million dollar cap on tax-deductible executive pay, executive incomes depend primarily on performance-related bonuses. The multi-million dollar CEO pay checks are not salaries. They are bonuses for making or exceeding profit expectations by such practices as offshoring jobs and lowering production costs. We have created an incentive system in which a few corporate executives are amazingly well paid for destroying jobs and career opportunities for Americans. The more they can worsen income inequality by offshoring American jobs, the higher they are paid.
What to do? Some economists think that the process will produce the solution. At some time in the future the Asian labor supply will be fully utilized. Wages will rise, and Asian labor will be paid in keeping with its productivity. ... What economists leave out of the story is the drop in American real incomes and the corresponding social instability in the US while this process works out.
...
Offshoring of manufacturing and professional services turns domestically produced goods and services into imports that worsen the US trade deficit. The rest of the world is willing to finance America’s $800 billion annual trade deficit, because the dollar is the reserve currency. ... If the dollar were not the reserve currency, foreigners would have less inclination to accept them.
...
It is a puzzle that free traders, who are adamantly opposed to tariffs on the grounds that they result in higher prices and lower consumer real incomes, are unfazed by currency devaluation. An excess of dollars is eroding the dollar’s reserve currency role and undermining its value. As tariffs do, dollar devaluation also confronts American consumers with higher prices and lower real incomes.
The difference is that a tariff would have prevented the loss of jobs, careers, and community tax base to offshoring, which then requires a collapse in the dollar to reverse. The cost of not having the tariff protection is the disrupted lives and hardships associated with jobs offshoring and the loss in purchasing power from a lower valued currency.
Economists cannot understand this straightforward analysis, because economists, like neoconservatives, are not reality-based. Economists are governed by the illusion that America’s post World War II prosperity is based on free trade. It is not. America’s post-war prosperity was based on the destruction of the economic capability of the rest of the world by World War II and communism/socialism. America was prosperous in its trade, because no one else could produce anything.
06/04/07 "ICH" -- -- - Economic discussion in the United States is trapped in ancient ruts. Both right and left are stuck in old habitual ways of thinking. Neither shows inclination or ability to think independently of ideology. For a country beset with economic problems, this is problematic.
The ascendency of free market economics during the past quarter century has removed some constraints on corporate power. It is difficult to argue that this is a desirable result. For example, the concentration of media ownership permitted by the Clinton administration in the 1990s has destroyed the independence of the US media, thus reducing the accountability of government. Deregulation has had unintended consequences. The growth of corporate influence has facilitated the reach of special interests into universities and think tanks and turned some from pursuit of truth to “for-profit activities” that compromise the independence of studies and publications.
...
US income inequality was worsened and the unions busted by the collapse of world socialism and the rise of the high speed Internet. These two developments, which were not part of Reagan’s economic program, made it possible for corporations to substitute foreign labor for American labor in the production of goods and services for American markets.
Until the collapse of world socialism, corporations did not have access to the large pools of excess labor in China and India. Until the rise of the high speed Internet, corporations could not hire professional services supplied from distant lands. These two developments meant that highly productive and highly paid American labor could be substituted out of production functions and replaced with equally productive but much cheaper foreign labor, because large excess supplies of Asian labor suppressed Asian wages below the productivity of labor.
Industrial unions were busted by the movement of plant, equipment, and technology abroad.
The professional middle class was adversely impacted by the ability of corporations to contract for the delivery via the Internet of professional services from abroad and by the ability to import cheaper foreign workers on H-1B, L-1 and other work visas.
Jobs offshoring is dismantling the ladders of upward mobility in the US, polarizing the population into rich and poor, and, thereby, worsening the income distribution.
Americans need to understand that it is jobs offshoring, not lower tax rates, that is worsening the income distribution. Because of the million dollar cap on tax-deductible executive pay, executive incomes depend primarily on performance-related bonuses. The multi-million dollar CEO pay checks are not salaries. They are bonuses for making or exceeding profit expectations by such practices as offshoring jobs and lowering production costs. We have created an incentive system in which a few corporate executives are amazingly well paid for destroying jobs and career opportunities for Americans. The more they can worsen income inequality by offshoring American jobs, the higher they are paid.
What to do? Some economists think that the process will produce the solution. At some time in the future the Asian labor supply will be fully utilized. Wages will rise, and Asian labor will be paid in keeping with its productivity. ... What economists leave out of the story is the drop in American real incomes and the corresponding social instability in the US while this process works out.
...
Offshoring of manufacturing and professional services turns domestically produced goods and services into imports that worsen the US trade deficit. The rest of the world is willing to finance America’s $800 billion annual trade deficit, because the dollar is the reserve currency. ... If the dollar were not the reserve currency, foreigners would have less inclination to accept them.
...
It is a puzzle that free traders, who are adamantly opposed to tariffs on the grounds that they result in higher prices and lower consumer real incomes, are unfazed by currency devaluation. An excess of dollars is eroding the dollar’s reserve currency role and undermining its value. As tariffs do, dollar devaluation also confronts American consumers with higher prices and lower real incomes.
The difference is that a tariff would have prevented the loss of jobs, careers, and community tax base to offshoring, which then requires a collapse in the dollar to reverse. The cost of not having the tariff protection is the disrupted lives and hardships associated with jobs offshoring and the loss in purchasing power from a lower valued currency.
Economists cannot understand this straightforward analysis, because economists, like neoconservatives, are not reality-based. Economists are governed by the illusion that America’s post World War II prosperity is based on free trade. It is not. America’s post-war prosperity was based on the destruction of the economic capability of the rest of the world by World War II and communism/socialism. America was prosperous in its trade, because no one else could produce anything.
Subscribe to:
Posts (Atom)