August 17, 2007 | Offshoring and Free Market Ideology | China is not the Problem | By PAUL CRAIG ROBERTS
...
The pressure put on China is misdirected. The exchange rate is not the main cause of the US trade deficit with China. The costs of labor, regulation and harassment are far lower in China, and US corporations have offshored their production to China in order to benefit from these lower costs. When a company shifts its production from the US to a foreign country, it transforms US Fross Domestic Product (GDP) into imports. Every time a US company offshores goods and services, it adds to the US trade deficit.
Clearly, it is a mistake for the US government and economists to think of the imbalance as if it were produced by Chinese companies underselling goods produced by US companies in America. The imbalance is the result of US companies producing their goods in China and selling them in America.
...
It is not China's fault that American corporations have so little regard for their employees and fellow citizens that they destroy their economic opportunities and give them to foreigners instead.
...
The free market economists ignore the fact that a country that offshores its production also offshores its jobs. It becomes dependent on goods and services made in foreign countries, but lacks sufficient export earnings with which to pay for them. A country whose workforce is being reallocated, under pressure of offshoring, to domestic services has nothing to trade for its imports. That is why the US trade deficit has exploded to over $800 billion annually.
...
The enormous and continuing US deficits are wearing out the US dollar as reserve currency. A time will come when the US cannot pay for the imports, on which it has become ever more dependent, by flooding the world with ever more dollars.
Offshoring and free market ideology are turning the US into a third world country. According to the Bureau of Labor Statistics, one-quarter of all new US jobs created between June 2006 and June 2007 were for waitresses and bartenders. Almost all of the net new US jobs in the 21st century have been in domestic services. ...
Saturday, August 18, 2007
Wednesday, August 15, 2007
GAO comptroller: U.S. government is on a 'burning platform' of unsustainable policies and practices,
August 15, 2007 | Decline and Fall | U.S. comptroller general: America is Rome | by Justin Raimondo
Is America going the way of Rome? David Walker, the comptroller general of the U.S., has issued a report that basically answers in the affirmative: "The U.S. government is on a 'burning platform' of unsustainable policies and practices," Walker avers, including "fiscal deficits" and "overseas military commitments threatening a crisis if action is not taken soon." If we continue on our present course, Walker warns, we are in for "dramatic" tax hikes, a radical reduction in government "services," and "the large-scale dumping by foreign governments of holdings of U.S. debt." The Chinese certainly concur with that last prediction.
"Sound familiar?" asks Walker. It ought to, he contends, because we are going down the path the ancient Romans took. There are, he says, "striking similarities," including "declining moral values and political civility at home, an overconfident and overextended military in foreign lands, and fiscal irresponsibility by the central government."
"In my view," says Walker, "it's time to learn from history and take steps to ensure the American Republic is the first to stand the test of time."
The GAO is as close to an objective, nonpartisan agency as the U.S. government – or any government – could create. ...
Is America going the way of Rome? David Walker, the comptroller general of the U.S., has issued a report that basically answers in the affirmative: "The U.S. government is on a 'burning platform' of unsustainable policies and practices," Walker avers, including "fiscal deficits" and "overseas military commitments threatening a crisis if action is not taken soon." If we continue on our present course, Walker warns, we are in for "dramatic" tax hikes, a radical reduction in government "services," and "the large-scale dumping by foreign governments of holdings of U.S. debt." The Chinese certainly concur with that last prediction.
"Sound familiar?" asks Walker. It ought to, he contends, because we are going down the path the ancient Romans took. There are, he says, "striking similarities," including "declining moral values and political civility at home, an overconfident and overextended military in foreign lands, and fiscal irresponsibility by the central government."
"In my view," says Walker, "it's time to learn from history and take steps to ensure the American Republic is the first to stand the test of time."
The GAO is as close to an objective, nonpartisan agency as the U.S. government – or any government – could create. ...
Tuesday, August 14, 2007
Study: Half of Nation’s Poor Don’t Get Food Stamps
uesday, August 14, 2007 by McClatchy Newspapers | Study: Half of Nation’s Poor Don’t Get Food Stamps | by Rob Hotakainen
WASHINGTON - Half of the nation’s eligible poor aren’t getting the food stamps to which they’re entitled, a study released Tuesday found.
The District of Columbia had the highest participation rate in 2004, at 71.8 percent, while Missouri ranked first among the 50 states in getting food stamps to its low-income residents. Nevada ranked last among states, with 32 percent of its eligible residents getting food stamps.
Overall, 50.2 percent of the nation’s qualified poor received food stamps in 2004, according to the study by the National Priorities Project, a nonprofit and nonpartisan research group that examines the local impact of federal budget policies.
“We’ve got over 35 million people in this country struggling to get enough food to eat, and 50 percent of all low-income people are not receiving the benefit that is intended to alleviate this food insecurity,” said Greg Speeter, the project’s executive director. “While the food-stamp program provides a vital service, clearly too many people are still going without.” ...
...
Under the food-stamp program, a family is eligible for aid if its income is 130 percent of the poverty level. ...
WASHINGTON - Half of the nation’s eligible poor aren’t getting the food stamps to which they’re entitled, a study released Tuesday found.
The District of Columbia had the highest participation rate in 2004, at 71.8 percent, while Missouri ranked first among the 50 states in getting food stamps to its low-income residents. Nevada ranked last among states, with 32 percent of its eligible residents getting food stamps.
Overall, 50.2 percent of the nation’s qualified poor received food stamps in 2004, according to the study by the National Priorities Project, a nonprofit and nonpartisan research group that examines the local impact of federal budget policies.
“We’ve got over 35 million people in this country struggling to get enough food to eat, and 50 percent of all low-income people are not receiving the benefit that is intended to alleviate this food insecurity,” said Greg Speeter, the project’s executive director. “While the food-stamp program provides a vital service, clearly too many people are still going without.” ...
...
Under the food-stamp program, a family is eligible for aid if its income is 130 percent of the poverty level. ...
corporations sell our jobs to the lowest overseas bidders ... credit industry preys on our poor ... health industry => bankruptcy ...
Are You Scared? | By Craig Winters
08/14/07 "ICH" -- -- Multinational corporations sell our jobs to the lowest overseas bidders. The credit industry preys on our poor. The for-profit healthcare system is the leading cause of bankruptcy while hospitals dump indigent patients on skid row. Our country’s infrastructure is breaking down from New Orleans levees to Minnesota bridges even as we are mired in a war that drowns us in debt and advances only the interests of big oil and arms merchants. The Medicare prescription drug law leaves an enormous hole in coverage while it forbids the government from negotiating lower prices on behalf of the people. Bush signed into law a bill making bankruptcy harder and more expensive for people who need relief and now he threatens to veto health insurance for poor children.
How can the government ignore such obvious and immediate needs?
The regulatory and general welfare roles of the government have totally succumbed to the unassailable wealth that corporations have amassed over many generations. Blind quest for personal wealth and power now bind government officials (as well as universities, NGOs and think thanks) into an integrated corporate dominated power structure. Corporations use their money and vast resources to control every aspect of our public institutions. More than just campaign contributions and cash bribes, they offer a rich array of incentives to "team players" including private jets, resort vacations, in kind services, indulgence of vices, and obscenely high paying private positions when they leave government. Corporations use their influence over government officials not just to buy their vote or a favorable ruling, but to seduce them into playing the power game, a life-long pursuit of power and wealth at the expense of principles, allegiances, and common decency. Politicians have neither the will nor the capacity to dismantle this system.
So what can desperate citizens do in the face of a captured government? ...
08/14/07 "ICH" -- -- Multinational corporations sell our jobs to the lowest overseas bidders. The credit industry preys on our poor. The for-profit healthcare system is the leading cause of bankruptcy while hospitals dump indigent patients on skid row. Our country’s infrastructure is breaking down from New Orleans levees to Minnesota bridges even as we are mired in a war that drowns us in debt and advances only the interests of big oil and arms merchants. The Medicare prescription drug law leaves an enormous hole in coverage while it forbids the government from negotiating lower prices on behalf of the people. Bush signed into law a bill making bankruptcy harder and more expensive for people who need relief and now he threatens to veto health insurance for poor children.
How can the government ignore such obvious and immediate needs?
The regulatory and general welfare roles of the government have totally succumbed to the unassailable wealth that corporations have amassed over many generations. Blind quest for personal wealth and power now bind government officials (as well as universities, NGOs and think thanks) into an integrated corporate dominated power structure. Corporations use their money and vast resources to control every aspect of our public institutions. More than just campaign contributions and cash bribes, they offer a rich array of incentives to "team players" including private jets, resort vacations, in kind services, indulgence of vices, and obscenely high paying private positions when they leave government. Corporations use their influence over government officials not just to buy their vote or a favorable ruling, but to seduce them into playing the power game, a life-long pursuit of power and wealth at the expense of principles, allegiances, and common decency. Politicians have neither the will nor the capacity to dismantle this system.
So what can desperate citizens do in the face of a captured government? ...
American families were persuaded to take on more debt, refinancing their mortgages and spending some of the proceeds
A day of reckoning for Americans who lived beyond their means | By Joseph Stiglitz
08/12/07 "Taipei Tomes" -- -- The pessimists who have long forecast that the US economy was in for trouble finally seem to be coming into their own. Of course, there is no glee in seeing stock prices tumble as a result of soaring mortgage defaults. But it was largely predictable, as are the likely consequences for both the millions of Americans who will be facing financial distress and the global economy.
The story goes back to the recession of 2001. With the support of former Federal Reserve chairman Alan Greenspan, US President George W. Bush pushed through a tax cut designed to benefit the richest Americans but not to lift the economy out of the recession that followed the collapse of the Internet bubble.
Given that mistake, the Fed had little choice if it was to fulfill its mandate to maintain growth and employment. It had to lower interest rates, which it did in an unprecedented way -- all the way down to 1 percent.
It worked, but in a way fundamentally different from how monetary policy normally works. Usually, low interest rates lead firms to borrow more to invest more, and greater indebtedness is matched by more productive assets.
But given that overinvestment in the 1990s was part of the problem underpinning the recession, lower interest rates did not stimulate much investment. The economy grew, but mainly because American families were persuaded to take on more debt, refinancing their mortgages and spending some of the proceeds. And, as long as housing prices rose as a result of lower interest rates, Americans could ignore their growing indebtedness.
Even this did not stimulate the economy enough. To get more people to borrow more money, credit standards were lowered, fueling growth in so-called "sub-prime" mortgages. Moreover, new products were invented, which lowered upfront payments, making it easier for individuals to take bigger mortgages.
Some mortgages even had negative amortization: payments did not cover the interest due, so every month the debt grew more. Fixed mortgages, with interest rates at 6 percent, were replaced with variable-rate mortgages, whose interest payments were tied to the lower short-term T-bill rates.
What were called "teaser rates" allowed even lower payments for the first few years. They were teasers because they played off the fact that many borrowers were not financially sophisticated and didn't really understand what they were getting into.
And Greenspan egged them to pile on the risk by encouraging these variable-rate mortgages. On Feb. 23, 2004, he pointed out that "many homeowners might have saved tens of thousands of dollars had they held adjustable-rate mortgages rather than fixed-rate mortgages during the past decade." ..
...
Just as the collapse of the real estate bubble was predictable, so are its consequences: housing starts and sales of existing homes are down and housing inventories are up. By some reckonings, more than two-thirds of the increase in output and employment over the past six years has been real estate-related, reflecting both new housing and households borrowing against their homes to support a consumption binge.
The housing bubble induced Americans to live beyond their means -- net savings have been negative for the past couple of years. With this engine of growth turned off, it is hard to see how the US economy would not suffer from a slowdown. A return to fiscal sanity will be good in the long run, but it will reduce aggregate demand in the short run.
There is an old adage about how people's mistakes continue to live long after they are gone. That is certainly true of Greenspan. In Bush's case, we are beginning to bear the consequences even before he has departed. ...
...
Joseph Stiglitz, a Nobel laureate in economics, is professor of economics at Columbia University and was chairman of the Council of Economic Advisers under US president Bill Clinton and a chief economist and senior vice president at the World Bank. Copyright: Project Syndicate
08/12/07 "Taipei Tomes" -- -- The pessimists who have long forecast that the US economy was in for trouble finally seem to be coming into their own. Of course, there is no glee in seeing stock prices tumble as a result of soaring mortgage defaults. But it was largely predictable, as are the likely consequences for both the millions of Americans who will be facing financial distress and the global economy.
The story goes back to the recession of 2001. With the support of former Federal Reserve chairman Alan Greenspan, US President George W. Bush pushed through a tax cut designed to benefit the richest Americans but not to lift the economy out of the recession that followed the collapse of the Internet bubble.
Given that mistake, the Fed had little choice if it was to fulfill its mandate to maintain growth and employment. It had to lower interest rates, which it did in an unprecedented way -- all the way down to 1 percent.
It worked, but in a way fundamentally different from how monetary policy normally works. Usually, low interest rates lead firms to borrow more to invest more, and greater indebtedness is matched by more productive assets.
But given that overinvestment in the 1990s was part of the problem underpinning the recession, lower interest rates did not stimulate much investment. The economy grew, but mainly because American families were persuaded to take on more debt, refinancing their mortgages and spending some of the proceeds. And, as long as housing prices rose as a result of lower interest rates, Americans could ignore their growing indebtedness.
Even this did not stimulate the economy enough. To get more people to borrow more money, credit standards were lowered, fueling growth in so-called "sub-prime" mortgages. Moreover, new products were invented, which lowered upfront payments, making it easier for individuals to take bigger mortgages.
Some mortgages even had negative amortization: payments did not cover the interest due, so every month the debt grew more. Fixed mortgages, with interest rates at 6 percent, were replaced with variable-rate mortgages, whose interest payments were tied to the lower short-term T-bill rates.
What were called "teaser rates" allowed even lower payments for the first few years. They were teasers because they played off the fact that many borrowers were not financially sophisticated and didn't really understand what they were getting into.
And Greenspan egged them to pile on the risk by encouraging these variable-rate mortgages. On Feb. 23, 2004, he pointed out that "many homeowners might have saved tens of thousands of dollars had they held adjustable-rate mortgages rather than fixed-rate mortgages during the past decade." ..
...
Just as the collapse of the real estate bubble was predictable, so are its consequences: housing starts and sales of existing homes are down and housing inventories are up. By some reckonings, more than two-thirds of the increase in output and employment over the past six years has been real estate-related, reflecting both new housing and households borrowing against their homes to support a consumption binge.
The housing bubble induced Americans to live beyond their means -- net savings have been negative for the past couple of years. With this engine of growth turned off, it is hard to see how the US economy would not suffer from a slowdown. A return to fiscal sanity will be good in the long run, but it will reduce aggregate demand in the short run.
There is an old adage about how people's mistakes continue to live long after they are gone. That is certainly true of Greenspan. In Bush's case, we are beginning to bear the consequences even before he has departed. ...
...
Joseph Stiglitz, a Nobel laureate in economics, is professor of economics at Columbia University and was chairman of the Council of Economic Advisers under US president Bill Clinton and a chief economist and senior vice president at the World Bank. Copyright: Project Syndicate
The delusion that the US is “the world’s sole superpower,” whose currency is desirable regardless of its excess supply, reflects American hubris
August 8, 2007 | Uncle Sam, Your Banker Will See You Now ... | In the Hole to China |
By PAUL CRAIG ROBERTS
Early this morning China let the idiots in Washington, and on Wall Street, know that it has them by the short hairs. Two senior spokesmen for the Chinese government observed that China’s considerable holdings of US dollars and Treasury bonds “contributes a great deal to maintaining the position of the dollar as a reserve currency.”
Should the US proceed with sanctions intended to cause the Chinese currency to appreciate, “the Chinese central bank will be forced to sell dollars, which might lead to a mass depreciation of the dollar.”
If Western financial markets are sufficiently intelligent to comprehend the message, US interest rates will rise regardless of any further action by China. At this point, China does not need to sell a single bond. In an instant, China has made it clear that US interest rates depend on China, not on the Federal Reserve.
The precarious position of the US dollar as reserve currency has been thoroughly ignored and denied. The delusion that the US is “the world’s sole superpower,” whose currency is desirable regardless of its excess supply, reflects American hubris, not reality. This hubris is so extreme that only 6 weeks ago McKinsey Global Institute published a study that concluded that even a doubling of the US current account deficit to $1.6 trillion would pose no problem.
Strategic thinkers, if any remain who have not been purged by neocons, will quickly conclude that China’s power over the value of the dollar and US interest rates also gives China power over US foreign policy. The US was able to attack Afghanistan and Iraq only because China provided the largest part of the financing for Bush’s wars.
If China ceased to buy US Treasuries, Bush’s wars would end. The savings rate of US consumers is essentially zero, and several million are afflicted with mortgages that they cannot afford. With Bush’s budget in deficit and with no room in the US consumer’s budget for a tax increase, Bush’s wars can only be financed by foreigners.
No country on earth, except for Israel, supports the Bush regimes’ desire to attack Iran. ...
By PAUL CRAIG ROBERTS
Early this morning China let the idiots in Washington, and on Wall Street, know that it has them by the short hairs. Two senior spokesmen for the Chinese government observed that China’s considerable holdings of US dollars and Treasury bonds “contributes a great deal to maintaining the position of the dollar as a reserve currency.”
Should the US proceed with sanctions intended to cause the Chinese currency to appreciate, “the Chinese central bank will be forced to sell dollars, which might lead to a mass depreciation of the dollar.”
If Western financial markets are sufficiently intelligent to comprehend the message, US interest rates will rise regardless of any further action by China. At this point, China does not need to sell a single bond. In an instant, China has made it clear that US interest rates depend on China, not on the Federal Reserve.
The precarious position of the US dollar as reserve currency has been thoroughly ignored and denied. The delusion that the US is “the world’s sole superpower,” whose currency is desirable regardless of its excess supply, reflects American hubris, not reality. This hubris is so extreme that only 6 weeks ago McKinsey Global Institute published a study that concluded that even a doubling of the US current account deficit to $1.6 trillion would pose no problem.
Strategic thinkers, if any remain who have not been purged by neocons, will quickly conclude that China’s power over the value of the dollar and US interest rates also gives China power over US foreign policy. The US was able to attack Afghanistan and Iraq only because China provided the largest part of the financing for Bush’s wars.
If China ceased to buy US Treasuries, Bush’s wars would end. The savings rate of US consumers is essentially zero, and several million are afflicted with mortgages that they cannot afford. With Bush’s budget in deficit and with no room in the US consumer’s budget for a tax increase, Bush’s wars can only be financed by foreigners.
No country on earth, except for Israel, supports the Bush regimes’ desire to attack Iran. ...
The Insolvency Crisis: How we got here, and what to expect
Pol/Econ: The Insolvency Crisis: How we got here, and what to expect | Saturday, 11 August 2007 Written by Garrett Johnson
...
In late 1997 the hedge fund Long Term Capital Management was Wall Street royalty. With not one, but two Nobel Prize winners in economics on staff, they consistently generated 40%+ returns for their investors. Their mathematical models seemed to have conquered all the mysteries of high finance.
Then they lost $4.8 Billion in 1998 and nearly became insolvent.
...
A large percentage of those new mortgages were 2/28's - a low, two-year "teaser" interest rate, which then resets to a much higher market rate. As those mortgages reset, foreclosure rates spiked.
"Normal foreclosure rate in the United States is anywhere from 300,000 to 500,000 per year. Now the projected rate is 1.7 million," said Jessica Cecere, president of Consumer Credit Counseling Service.
...
This isn't 1998 all over again. We've gone beyond that.
Today we do not have only a liquidity crisis like in 1998; we also have a insolvency/debt crisis among a variety of borrowers that overborrowed excessively during the boom phase...the recent sharp widening in corporate credit spreads is not just a sign of a liquidity crunch; it is a sign that investors are realizing that there are serious credit/solvency problems in some parts of the corporate system.
If you needed any proof that there is a credit crunch in America today, look at what is happening with credit cards.
In a form letter, Capital One told her the interest rate on her credit card was about to almost double—she’d been bumped up from a fixed 8.9 percent rate to a "variable rate that equals the prime rate plus 6.9 percent"—or about 15.8 percent. The letter blamed rising interest rates across the economy for the decision.[...]
...
...
In late 1997 the hedge fund Long Term Capital Management was Wall Street royalty. With not one, but two Nobel Prize winners in economics on staff, they consistently generated 40%+ returns for their investors. Their mathematical models seemed to have conquered all the mysteries of high finance.
Then they lost $4.8 Billion in 1998 and nearly became insolvent.
...
A large percentage of those new mortgages were 2/28's - a low, two-year "teaser" interest rate, which then resets to a much higher market rate. As those mortgages reset, foreclosure rates spiked.
"Normal foreclosure rate in the United States is anywhere from 300,000 to 500,000 per year. Now the projected rate is 1.7 million," said Jessica Cecere, president of Consumer Credit Counseling Service.
...
This isn't 1998 all over again. We've gone beyond that.
Today we do not have only a liquidity crisis like in 1998; we also have a insolvency/debt crisis among a variety of borrowers that overborrowed excessively during the boom phase...the recent sharp widening in corporate credit spreads is not just a sign of a liquidity crunch; it is a sign that investors are realizing that there are serious credit/solvency problems in some parts of the corporate system.
If you needed any proof that there is a credit crunch in America today, look at what is happening with credit cards.
In a form letter, Capital One told her the interest rate on her credit card was about to almost double—she’d been bumped up from a fixed 8.9 percent rate to a "variable rate that equals the prime rate plus 6.9 percent"—or about 15.8 percent. The letter blamed rising interest rates across the economy for the decision.[...]
...
NAFTA: sweatshops.... 34 to 58 percent of decline in manufacturing ... 1,000,000 net mfg jobs lost .... 23-77% reduction in pay ...
The Tail End of Free Trade | A Preliminary Evaluation of the Impact of NAFTA on the Manufacturing Sector | by Jacob Hill / August 10th, 2007
...
One of the most drastic and disturbing results of NAFTA has been a boom in the Mexican maquiladora sector. In the U.S. and the developed world, these manufacturing units would deservedly be known as sweatshops. ... The sweatshop problem has been well known since the inception of NAFTA. In 1995, just a year after the implementation of the free trade agreement, The New York Times reported on the exploitation of Mexican young girls by the maquiladoras. U.S. companies, often working through third parties, pay children as young as 14 years of age wages under 40 cents per hour. Maquiladoras located within walled and barbed wired free trade zones are not only exempt from import taxes, but are also exempt from state and local imposts for up to 10 years. ... As a result, sweatshop workers possess almost no leverage to negotiate improved labor rights. Refusing to work overtime, taking breaks (in spite of the fact that they are required by un-enforced law), illness, visits to the doctor, and pregnancy rests have all been recorded as reasons for job terminations in the maquiladora sector. ...
...
There is no denying the fact that NAFTA has generated an impressive net growth regarding exports from the U.S. Since the pact’s inception, according to the EPI, U.S. outflows to Mexico have increased 114 percent and exports to Canada have risen 60 percent. On the other hand, imports from Mexico to the U.S. have risen by 274 percent, while those from Canada have grown by 90 percent. As a result, the U.S.’s combined $20.6 billion trade deficit to Mexico and Canada in 1993 has ballooned in the post-NAFTA era by 538 percent to $110.6 billion in 2004 (figures provided in inflation-adjusted 1996 dollars by the EPI). This deficit is a signal of a growing U.S. dependence on the health of external economies and has affected several of the nation’s key historic industries. ...
There is a direct correlation between the growth of the U.S.’s trade deficit and the rise in unemployment throughout the U.S. manufacturing sector over the last 13 years. According to international trade and macroeconomics expert Dr. L. Josh Bivins, growing trade deficits are responsible for 34 to 58 percent of the decline in manufacturing unemployment. When one looks at the whole picture, NAFTA is responsible for a 77 percent increase in jobs supported by domestic exports and a 147 percent increase in jobs displaced by imports.
During the first 10 years of NAFTA, 942,459 jobs were created in the U.S. by the agreement, but 1,956,750 jobs have been nullified by it, resulting in an overall net loss of more than 1,000,000 jobs. A report by Public Citizen found that workers in the U.S. who have lost high-wage jobs with benefits in the manufacturing sector have only been able to find “new work in service sector positions that typically pay 23-77 percent less than their previous wages and offer few or no benefits.” Among the hardest hit in the U.S. have been Latino workers. According to the report by the Labor Council for Latin American Advancement, 47 percent of the total number of workers who received federal assistance under a program for workers certified as having lost jobs in 1999 as a direct result of NAFTA, were Latino. ...
...
One of the most drastic and disturbing results of NAFTA has been a boom in the Mexican maquiladora sector. In the U.S. and the developed world, these manufacturing units would deservedly be known as sweatshops. ... The sweatshop problem has been well known since the inception of NAFTA. In 1995, just a year after the implementation of the free trade agreement, The New York Times reported on the exploitation of Mexican young girls by the maquiladoras. U.S. companies, often working through third parties, pay children as young as 14 years of age wages under 40 cents per hour. Maquiladoras located within walled and barbed wired free trade zones are not only exempt from import taxes, but are also exempt from state and local imposts for up to 10 years. ... As a result, sweatshop workers possess almost no leverage to negotiate improved labor rights. Refusing to work overtime, taking breaks (in spite of the fact that they are required by un-enforced law), illness, visits to the doctor, and pregnancy rests have all been recorded as reasons for job terminations in the maquiladora sector. ...
...
There is no denying the fact that NAFTA has generated an impressive net growth regarding exports from the U.S. Since the pact’s inception, according to the EPI, U.S. outflows to Mexico have increased 114 percent and exports to Canada have risen 60 percent. On the other hand, imports from Mexico to the U.S. have risen by 274 percent, while those from Canada have grown by 90 percent. As a result, the U.S.’s combined $20.6 billion trade deficit to Mexico and Canada in 1993 has ballooned in the post-NAFTA era by 538 percent to $110.6 billion in 2004 (figures provided in inflation-adjusted 1996 dollars by the EPI). This deficit is a signal of a growing U.S. dependence on the health of external economies and has affected several of the nation’s key historic industries. ...
There is a direct correlation between the growth of the U.S.’s trade deficit and the rise in unemployment throughout the U.S. manufacturing sector over the last 13 years. According to international trade and macroeconomics expert Dr. L. Josh Bivins, growing trade deficits are responsible for 34 to 58 percent of the decline in manufacturing unemployment. When one looks at the whole picture, NAFTA is responsible for a 77 percent increase in jobs supported by domestic exports and a 147 percent increase in jobs displaced by imports.
During the first 10 years of NAFTA, 942,459 jobs were created in the U.S. by the agreement, but 1,956,750 jobs have been nullified by it, resulting in an overall net loss of more than 1,000,000 jobs. A report by Public Citizen found that workers in the U.S. who have lost high-wage jobs with benefits in the manufacturing sector have only been able to find “new work in service sector positions that typically pay 23-77 percent less than their previous wages and offer few or no benefits.” Among the hardest hit in the U.S. have been Latino workers. According to the report by the Labor Council for Latin American Advancement, 47 percent of the total number of workers who received federal assistance under a program for workers certified as having lost jobs in 1999 as a direct result of NAFTA, were Latino. ...
China’s announcement that China, not the Federal Reserve, controls US interest rates by its decision to purchase, hold, or dump US Treasury bonds ...
China’s “Nuclear Option” is real | By Paul Craig Roberts
08/11/07 "ICH' -- -- Twenty-four hours after I reported China’s announcement that China, not the Federal Reserve, controls US interest rates by its decision to purchase, hold, or dump US Treasury bonds, the news of the announcement appeared in sanitized and unthreatening form in a few US news sources.
The Washington Post found an economics professor at the University of Wisconsin to provide reassurances that it was “not really a credible threat” that China would intervene in currency or bond markets in any way that could hurt the dollar’s value or raise US interest rates, because China would hurt its own pocketbook by such actions.
US Treasury Secretary Henry Paulson, just back from Beijing, where he gave China orders to raise the value of the Chinese yuan “without delay,” dismissed the Chinese announcement as “frankly absurd.”
Both the professor and the Treasury Secretary are greatly mistaken.
First, understand that the announcement was not made by a minister or vice minister of the government. The Chinese government is inclined to have important announcements come from research organizations that work closely with the government. This announcement came from two such organizations. A high official of the Development Research Center, an organization with cabinet rank, let it be known that US financial stability was too dependent on China’s financing of US red ink for the US to be giving China orders. An official at the Chinese Academy of Social Sciences pointed out that the reserve currency status of the US dollar was dependent on China’s good will as America’s lender.
What the two officials said is completely true. It is something that some of us have known for a long time. What is different is that China publicly called attention to Washington’s dependence on China’s good will. By doing so, China signaled that it was not going to be bullied or pushed around. ...
08/11/07 "ICH' -- -- Twenty-four hours after I reported China’s announcement that China, not the Federal Reserve, controls US interest rates by its decision to purchase, hold, or dump US Treasury bonds, the news of the announcement appeared in sanitized and unthreatening form in a few US news sources.
The Washington Post found an economics professor at the University of Wisconsin to provide reassurances that it was “not really a credible threat” that China would intervene in currency or bond markets in any way that could hurt the dollar’s value or raise US interest rates, because China would hurt its own pocketbook by such actions.
US Treasury Secretary Henry Paulson, just back from Beijing, where he gave China orders to raise the value of the Chinese yuan “without delay,” dismissed the Chinese announcement as “frankly absurd.”
Both the professor and the Treasury Secretary are greatly mistaken.
First, understand that the announcement was not made by a minister or vice minister of the government. The Chinese government is inclined to have important announcements come from research organizations that work closely with the government. This announcement came from two such organizations. A high official of the Development Research Center, an organization with cabinet rank, let it be known that US financial stability was too dependent on China’s financing of US red ink for the US to be giving China orders. An official at the Chinese Academy of Social Sciences pointed out that the reserve currency status of the US dollar was dependent on China’s good will as America’s lender.
What the two officials said is completely true. It is something that some of us have known for a long time. What is different is that China publicly called attention to Washington’s dependence on China’s good will. By doing so, China signaled that it was not going to be bullied or pushed around. ...
Friday, August 10, 2007
spares a small band of the country's richest and most powerful financiers $6 billion a year in personal income taxes ...
Wall Street's Lucrative Tax Break Is Under Fire By Jeffrey H. Birnbaum and Lori Montgomery The Washington Post Friday 03 August 2007
The most controversial tax break on Wall Street, known simply as the Carry, is not authorized by any law and was never approved by Congress.
Instead, it grew quietly over several decades, hinted at but never directly addressed in obscure court cases and arcane regulations issued by the Internal Revenue Service.
Unchallenged by lawmakers, it swelled into a benefit that, by one back-of-the-envelope estimate, spares a small band of the country's richest and most powerful financiers $6 billion a year in personal income taxes.
The astonishing cost of this tax break to the federal government has riveted attention on Wall Street's titans of the moment, the extraordinarily wealthy managers of private-equity firms and hedge funds. Until now, they have gone largely unexamined by Washington. But at a time of rising income inequality and with Congress engaged in a desperate hunt for cash to expand aid to a disgruntled middle class, the Wall Street money men have become an appealing target for Democratic lawmakers and presidential candidates, who say the financiers are woefully undertaxed.
At the heart of the dispute is the way the fund manager's profits are taxed. Known as carried interest, or the Carry, those profits are taxed as capital gains, for which the rate is usually 15 percent. That is less than half the 35 percent rate paid on regular income. ...
The most controversial tax break on Wall Street, known simply as the Carry, is not authorized by any law and was never approved by Congress.
Instead, it grew quietly over several decades, hinted at but never directly addressed in obscure court cases and arcane regulations issued by the Internal Revenue Service.
Unchallenged by lawmakers, it swelled into a benefit that, by one back-of-the-envelope estimate, spares a small band of the country's richest and most powerful financiers $6 billion a year in personal income taxes.
The astonishing cost of this tax break to the federal government has riveted attention on Wall Street's titans of the moment, the extraordinarily wealthy managers of private-equity firms and hedge funds. Until now, they have gone largely unexamined by Washington. But at a time of rising income inequality and with Congress engaged in a desperate hunt for cash to expand aid to a disgruntled middle class, the Wall Street money men have become an appealing target for Democratic lawmakers and presidential candidates, who say the financiers are woefully undertaxed.
At the heart of the dispute is the way the fund manager's profits are taxed. Known as carried interest, or the Carry, those profits are taxed as capital gains, for which the rate is usually 15 percent. That is less than half the 35 percent rate paid on regular income. ...
The hedge fund tax loophole is a crystal-clear example of unjustified privilege. .. quirk in the law ...
Friday, August 03, 2007 A Test for Democrats By PAUL KRUGMAN
...
The hedge fund tax loophole is a crystal-clear example of unjustified privilege. Because of a quirk in the law, the people who run these funds don’t pay taxes like ordinary mortals.
For example, the salaries that pension fund employees receive for managing other peoples’ money are taxed as ordinary income, at rates up to 35 percent. But if that money is invested with a hedge fund — and 40 percent of the money in hedge funds comes from public, corporate and union pension plans — the fees the hedge fund manager receives for his services are mainly taxed as capital gains, with a maximum rate of 15 percent.
The arguments usually made on behalf of this unique privilege make no sense. We’re told that the tax rate on hedge fund managers has to be kept low to encourage risk-taking. But the managers aren’t risking their own money. The only risk they face is the uncertainty of their fees — and as any waitress who depends on tips or salesman who depends on commissions can tell you, most people with uncertain incomes don’t get any special tax breaks.
We’re also told that management fees would rise, reducing returns to investors, if the privileged status of fund managers is eliminated — as if someone with a $100-million-a-year hedge fund job would walk away if his take-home pay fell from $85 million to $65 million.
...
...
The hedge fund tax loophole is a crystal-clear example of unjustified privilege. Because of a quirk in the law, the people who run these funds don’t pay taxes like ordinary mortals.
For example, the salaries that pension fund employees receive for managing other peoples’ money are taxed as ordinary income, at rates up to 35 percent. But if that money is invested with a hedge fund — and 40 percent of the money in hedge funds comes from public, corporate and union pension plans — the fees the hedge fund manager receives for his services are mainly taxed as capital gains, with a maximum rate of 15 percent.
The arguments usually made on behalf of this unique privilege make no sense. We’re told that the tax rate on hedge fund managers has to be kept low to encourage risk-taking. But the managers aren’t risking their own money. The only risk they face is the uncertainty of their fees — and as any waitress who depends on tips or salesman who depends on commissions can tell you, most people with uncertain incomes don’t get any special tax breaks.
We’re also told that management fees would rise, reducing returns to investors, if the privileged status of fund managers is eliminated — as if someone with a $100-million-a-year hedge fund job would walk away if his take-home pay fell from $85 million to $65 million.
...
Over the last several years, America’s imbalances in trade and other global transactions have worsened dramatically, requiring billiions in borrowing
A Weak Dollar and the Fed Published: August 8, 2007
Despite the Federal Reserve’s stay-the-course message yesterday, investors are betting on at least one interest-rate cut by January, intended to quell turmoil in the markets and to juice the slow economy. But with the dollar also weak — recently hitting its lowest point in 15 years against an index of other major currencies — the Fed may be reluctant to oblige.
A declining dollar is a source of inflationary pressure because it can boost the cost of imports. So if the Fed tried to rev up the economy with a rate cut at the same time the dollar is falling, it could end up provoking even more inflation. That would be a drag on economic growth rather than a boost. In an extreme case, it could result in a toxic combination of weak growth and high prices that is a central banker’s nightmare.
How did the Fed lose room to maneuver? The answer is rooted in the Bush administration’s misguided economic policies.
Over the last several years, America’s imbalances in trade and other global transactions have worsened dramatically, requiring the United States to borrow billions of dollars a day from abroad just to balance its books....
Despite the Federal Reserve’s stay-the-course message yesterday, investors are betting on at least one interest-rate cut by January, intended to quell turmoil in the markets and to juice the slow economy. But with the dollar also weak — recently hitting its lowest point in 15 years against an index of other major currencies — the Fed may be reluctant to oblige.
A declining dollar is a source of inflationary pressure because it can boost the cost of imports. So if the Fed tried to rev up the economy with a rate cut at the same time the dollar is falling, it could end up provoking even more inflation. That would be a drag on economic growth rather than a boost. In an extreme case, it could result in a toxic combination of weak growth and high prices that is a central banker’s nightmare.
How did the Fed lose room to maneuver? The answer is rooted in the Bush administration’s misguided economic policies.
Over the last several years, America’s imbalances in trade and other global transactions have worsened dramatically, requiring the United States to borrow billions of dollars a day from abroad just to balance its books....
Beijing may use its $1.33 trillion (£658bn) of foreign reserves as a political weapon to counter pressure from the US Congress
China threatens 'nuclear option' of dollar sales By Ambrose Evans-Pritchard Last Updated: 9:54am BST 08/08/2007
The Chinese government has begun a concerted campaign of economic threats against the United States, hinting that it may liquidate its vast holding of US treasuries if Washington imposes trade sanctions to force a yuan revaluation.
Two officials at leading Communist Party bodies have given interviews in recent days warning - for the first time - that Beijing may use its $1.33 trillion (£658bn) of foreign reserves as a political weapon to counter pressure from the US Congress.
Shifts in Chinese policy are often announced through key think tanks and academies.
Described as China's "nuclear option" in the state media, such action could trigger a dollar crash at a time when the US currency is already breaking down through historic support levels.
It would also cause a spike in US bond yields, hammering the US housing market and perhaps tipping the economy into recession. It is estimated that China holds over $900bn in a mix of US bonds.
Xia Bin, finance chief at the Development Research Centre (which has cabinet rank), kicked off what now appears to be government policy with a comment last week that Beijing's foreign reserves should be used as a "bargaining chip" in talks with the US.
"Of course, China doesn't want any undesirable phenomenon in the global financial order," he added.
He Fan, an official at the Chinese Academy of Social Sciences, went even further today, letting it be known that Beijing had the power to set off a dollar collapse if it choose to do so.
"China has accumulated a large sum of US dollars. Such a big sum, of which a considerable portion is in US treasury bonds, contributes a great deal to maintaining the position of the dollar as a reserve currency. Russia, Switzerland, and several other countries have reduced the their dollar holdings.
"China is unlikely to follow suit as long as the yuan's exchange rate is stable against the dollar. The Chinese central bank will be forced to sell dollars once the yuan appreciated dramatically, which might lead to a mass depreciation of the dollar," he told China Daily. ...
The Chinese government has begun a concerted campaign of economic threats against the United States, hinting that it may liquidate its vast holding of US treasuries if Washington imposes trade sanctions to force a yuan revaluation.
Two officials at leading Communist Party bodies have given interviews in recent days warning - for the first time - that Beijing may use its $1.33 trillion (£658bn) of foreign reserves as a political weapon to counter pressure from the US Congress.
Shifts in Chinese policy are often announced through key think tanks and academies.
Described as China's "nuclear option" in the state media, such action could trigger a dollar crash at a time when the US currency is already breaking down through historic support levels.
It would also cause a spike in US bond yields, hammering the US housing market and perhaps tipping the economy into recession. It is estimated that China holds over $900bn in a mix of US bonds.
Xia Bin, finance chief at the Development Research Centre (which has cabinet rank), kicked off what now appears to be government policy with a comment last week that Beijing's foreign reserves should be used as a "bargaining chip" in talks with the US.
"Of course, China doesn't want any undesirable phenomenon in the global financial order," he added.
He Fan, an official at the Chinese Academy of Social Sciences, went even further today, letting it be known that Beijing had the power to set off a dollar collapse if it choose to do so.
"China has accumulated a large sum of US dollars. Such a big sum, of which a considerable portion is in US treasury bonds, contributes a great deal to maintaining the position of the dollar as a reserve currency. Russia, Switzerland, and several other countries have reduced the their dollar holdings.
"China is unlikely to follow suit as long as the yuan's exchange rate is stable against the dollar. The Chinese central bank will be forced to sell dollars once the yuan appreciated dramatically, which might lead to a mass depreciation of the dollar," he told China Daily. ...
Tuesday, August 7, 2007
Cheneys paid an effective tax rate of 23.4 percent ... less than Buffet's secretary ....
Bush economics: 'Only the little people pay taxes' | ROBYN BLUMNER | Article Last Updated: 08/06/2007 12:02:45 AM MDT
...
Some of the biggest stories of the past few weeks have been about the great tax dodges by the financial kings of the hedge fund and private equity world. Investment managers making upwards of a $1 billion a year are paying lower tax rates than the people who teach their children or deliver their mail.
Warren Buffett, the world's third-richest man, blasted the U.S. tax system earlier this summer because he pays a lower rate of taxes than his secretary. Buffett said, without trying to avoid taxes, that he paid 17.7 percent on the $46 million he made in 2006 while his secretary who made $60,000 was taxed at 30 percent.
Unseemly? Immoral? Outrageous? You bet! This imbalance is a consequence of decades of tax reforms that have benefited those at the top, with a marked acceleration under President Bush. ...
...
Piketty and Saez looked across all major forms of wealth and income taxes, including payroll, estate, income and corporate taxes. In 1960, they say that the top 0.01 percent of earners paid 71 percent of their income in federal taxes. In 2005, the same 0.01 percent, or those making more than $18 million annually, paid only about 35 percent.
Taxes for America's wealthiest are at historic lows, according to the economists. Meanwhile, the average federal tax rate for the middle class has remained roughly constant or ticked up a few percentage points, depending on where in the middle one falls.
Flattening the income tax, reducing if not eliminating capital gains, estate and corporate taxes - all in the service of the rich - have been long-standing Republican priorities. Bush purposely allowed his tax cuts to exacerbate the Alternative Minimum Tax problem for the middle class in order to give bigger breaks to those at the very top.
According to Citizens for Tax Justice, Vice President Dick Cheney and his wife saved $111,000 in taxes last year thanks to the breaks he and the president stewarded through Congress. The Cheneys paid an effective tax rate of 23.4 percent on $1.8 million in income in 2006. Also less than Warren Buffett's secretary. ...
...
Some of the biggest stories of the past few weeks have been about the great tax dodges by the financial kings of the hedge fund and private equity world. Investment managers making upwards of a $1 billion a year are paying lower tax rates than the people who teach their children or deliver their mail.
Warren Buffett, the world's third-richest man, blasted the U.S. tax system earlier this summer because he pays a lower rate of taxes than his secretary. Buffett said, without trying to avoid taxes, that he paid 17.7 percent on the $46 million he made in 2006 while his secretary who made $60,000 was taxed at 30 percent.
Unseemly? Immoral? Outrageous? You bet! This imbalance is a consequence of decades of tax reforms that have benefited those at the top, with a marked acceleration under President Bush. ...
...
Piketty and Saez looked across all major forms of wealth and income taxes, including payroll, estate, income and corporate taxes. In 1960, they say that the top 0.01 percent of earners paid 71 percent of their income in federal taxes. In 2005, the same 0.01 percent, or those making more than $18 million annually, paid only about 35 percent.
Taxes for America's wealthiest are at historic lows, according to the economists. Meanwhile, the average federal tax rate for the middle class has remained roughly constant or ticked up a few percentage points, depending on where in the middle one falls.
Flattening the income tax, reducing if not eliminating capital gains, estate and corporate taxes - all in the service of the rich - have been long-standing Republican priorities. Bush purposely allowed his tax cuts to exacerbate the Alternative Minimum Tax problem for the middle class in order to give bigger breaks to those at the very top.
According to Citizens for Tax Justice, Vice President Dick Cheney and his wife saved $111,000 in taxes last year thanks to the breaks he and the president stewarded through Congress. The Cheneys paid an effective tax rate of 23.4 percent on $1.8 million in income in 2006. Also less than Warren Buffett's secretary. ...
Commerce Department revised its growth data last month ... the economy grew much slower over the last three years than we had previously thought
Economy Goes From Bad to Worse | By Dean Baker | t r u t h o u t | Columnist | Monday 06 August 2007
...
The Commerce Department revised its growth data last month. It now shows the economy grew much slower over the last three years than we had previously thought. In particular, the new data implies productivity has been growing at just a 1.5 percent annual rate over the last three years. This is the same rate the economy experienced during the long productivity slowdown from 1973 to 1995. It is a full percentage point below the 2.5 percent growth rate from 1995 to 2004.
...
The fact productivity growth has now slowed is a very bad sign. It means the economy is not doing well by any measure. The argument for conservative economic policy was always that by giving people more incentive to work and invest, productivity would grow more rapidly, and that this would benefit everyone in the long run. It turns out, even with the massive upward redistribution of income over the last quarter century, productivity is now growing at its slowest pace in the post-war period. In short, we are not seeing much growth and the growth we are seeing is going to those at the top.
...
... We should all want higher, more rapid productivity growth. But this does mean the policy of redistributing income upwards has been a clear failure, insofar as its goal was to increase economic growth ...
...
The Commerce Department revised its growth data last month. It now shows the economy grew much slower over the last three years than we had previously thought. In particular, the new data implies productivity has been growing at just a 1.5 percent annual rate over the last three years. This is the same rate the economy experienced during the long productivity slowdown from 1973 to 1995. It is a full percentage point below the 2.5 percent growth rate from 1995 to 2004.
...
The fact productivity growth has now slowed is a very bad sign. It means the economy is not doing well by any measure. The argument for conservative economic policy was always that by giving people more incentive to work and invest, productivity would grow more rapidly, and that this would benefit everyone in the long run. It turns out, even with the massive upward redistribution of income over the last quarter century, productivity is now growing at its slowest pace in the post-war period. In short, we are not seeing much growth and the growth we are seeing is going to those at the top.
...
... We should all want higher, more rapid productivity growth. But this does mean the policy of redistributing income upwards has been a clear failure, insofar as its goal was to increase economic growth ...
Since leading in 1996 ... there are nine DEVELOPING countries that have more and better broadband service ...
August 3, 2007 | Pulpit | Game Over: The U.S. is unlikely to ever regain its broadband leadership.
...
[In 1996] America was the top broadband country in the world. But now we're in the middle of the pack among developed countries and there are nine DEVELOPING countries that have more and better broadband service than does America according to the Organisation for Economic Co-operation and Development (OECD). To those who say this is BS and that we're actually ahead of the world if you control for rural populations, family size, the effect of Wi-Fi hotspots, etc., I say that is simply wrong: we are behind and losing ground. And the countries ahead of us, a diverse lot including France, Iceland, Japan, Korea, Switzerland, the UK, and even Canada, are for the most part growing faster than we are in large part because of this IT advantage.
...
... Though they are required to operate in the public interest and to provide public services, these monopolies have never been forced to consider our place in the world.
If there's a solution to this problem it isn't wireless. U.S. mobile carriers are as far behind their foreign counterparts as U.S. ISPs are generally. For all the companies' talk of unlimited mobile broadband, three Slingboxes can take down an EVDO cell. What would happen if AT&T gave every iPhone as much bandwidth as it could easily use? Gridlock. And WiMax is effectively useless too, because the sweet spot in cell size is so large that no ISP can provision enough bandwidth to serve even a quarter of the people who might potentially sign up. They could do it with smaller cells, but then the companies wouldn't make money. ...
...
[In 1996] America was the top broadband country in the world. But now we're in the middle of the pack among developed countries and there are nine DEVELOPING countries that have more and better broadband service than does America according to the Organisation for Economic Co-operation and Development (OECD). To those who say this is BS and that we're actually ahead of the world if you control for rural populations, family size, the effect of Wi-Fi hotspots, etc., I say that is simply wrong: we are behind and losing ground. And the countries ahead of us, a diverse lot including France, Iceland, Japan, Korea, Switzerland, the UK, and even Canada, are for the most part growing faster than we are in large part because of this IT advantage.
...
... Though they are required to operate in the public interest and to provide public services, these monopolies have never been forced to consider our place in the world.
If there's a solution to this problem it isn't wireless. U.S. mobile carriers are as far behind their foreign counterparts as U.S. ISPs are generally. For all the companies' talk of unlimited mobile broadband, three Slingboxes can take down an EVDO cell. What would happen if AT&T gave every iPhone as much bandwidth as it could easily use? Gridlock. And WiMax is effectively useless too, because the sweet spot in cell size is so large that no ISP can provision enough bandwidth to serve even a quarter of the people who might potentially sign up. They could do it with smaller cells, but then the companies wouldn't make money. ...
From June 2006 to June 2007: essentially all of the new jobs are in low-paid domestic services that do not require a college education
Return of the Robber Barons | By Paul Craig Roberts
08/02/07 "ICH" -- -- As the Bush Regime outfits B-2 stealth bombers with 30,000 pound monster “bunker buster” bombs for its coming attack on Iran, the US economy continues its 21st century decline. While profits soar for the armaments industry, the American people continue to take it on the chin.
The latest report from the Bureau of Labor Statistics shows that the real wages and salaries of US civilian workers are below those of 5 years ago. It could not be otherwise with US corporations offshoring good jobs in order to reduce labor costs and, thereby, to convert wages once paid to Americans into multi-million dollar bonuses paid to CEOs and other top management.
Good jobs that still remain in the US are increasingly filled with foreign workers brought in on work visas. Corporate public relations departments have successfully spread the lie that there is a shortage of qualified US workers, necessitating the importation into the US of foreigners. The truth is that the US corporations force their American employees to train the lower paid foreigners who take their jobs. Otherwise, the discharged American gets no severance pay. [See, for example, http://www.amren.com/mtnews/archives/2006/06/bofa_train_your.php ]
...
Meanwhile, US colleges and universities continue to graduate hundreds of thousands of qualified engineers, IT professionals, and other professionals who will never have the opportunity to work in the professions for which they have been trained. America today is like India of yesteryear, with engineers working as bartenders, taxi cab drivers, waitresses, and employed in menial work in dog kennels as the offshoring of US jobs dismantles the ladders of upward mobility for US citizens.
Over the last year (from June 2006 through June 2007) the US economy created 1.6 million net private sector jobs. As Charles McMillion of MBG Information Services reports each month, essentially all of the new jobs are in low-paid domestic services that do not require a college education.
The category, “Leisure and hospitality,” accounts for 30% of the new jobs, of which 387,000 are bartenders and waitresses, 38,000 are workers in motels and hotels, and 50,000 are employed in entertainment and recreation.
The category, “Education and health services,” accounts for 35% of the gain in employment, of which 100,000 are in educational services and 456,000 are in health care and social assistance, principally ambulatory health care services and hospitals.
“Professional and technical services” accounts for 268,000 of the new jobs. “Finance and insurance” added 93,000 new jobs, of which about one quarter are in real estate and about one half are in insurance. “Transportation and warehousing” added 65,000 jobs, and wholesale and retail trade added 185,000.
Over the entire year, the US economy created merely 51,000 jobs in architectural and engineering services, less than the 76,000 jobs created in management and technical consulting (essentially laid-off white collar professionals).
...
In Richistan there is a two-year waiting list for $50 million 200-foot yachts. In Richistan Rolex watches are considered Wal-Mart junk. Richistanians sport $736,000 Franck Muller timepieces, sign their names with $700,000 Mont Blanc jewel-encrusted pens. Their valets, butlers (with $100,000 salaries), and bodyguards carry the $42,000 Louis Vitton handbags of wives and mistresses.
Richistanians join clubs open only to those with $100 million, pay $650,000 for golf club memberships, eat $50 hamburgers and $1,000 omelettes, drink $90 a bottle Bling mineral water and down $10,000 “martinis on a rock” (gin or vodka poured over a diamond) at New York’s Algonquin Hotel.
Who are the Richistanians? They are CEOs who have moved their companies abroad and converted the wages they formerly paid Americans into $100 million compensation packages for themselves. They are investment bankers and hedge fund managers, who created the subprime mortgage derivatives that currently threaten to collapse the economy. One of them was paid $1.7 billion last year. The $575 million that each of 25 other top earners were paid is paltry by comparison, but unimaginable wealth to everyone else.
...
America as the land of opportunity has passed into history.
Since Bush has been president: income down $1,300, 3 million less pensions-manufacturing jobs, 7M lost health insurance, graduate earnings down 5%
Monday, August 6, 2007 by CommonDreams.org | Roll Back the Reagan Tax Cuts | by Thom Hartmann
...
There is much discussion of what the floor on earnings should be - the minimum wage - but none about the ceiling. That’s largely because effectively there is no ceiling, and those who control vast wealth in America are happy to have Americans fight over “How poor is too poor?” just so long as nobody asks “How rich is too rich?”
...
But the rich fought back, and won big-time in 1980 when Reagan, until then the fringe “Voodoo economics” candidate who was heading into the election trailing far behind Jimmy Carter, was swept into the White House on a wave of public concern of the Iranians taking US hostages. Reagan promptly cut income taxes on the very rich from 70% down to 27%. Corporate tax rates were also cut so severely that they went from representing over 33% of total federal tax receipts in 1951 to less than 9% in 1983 (they’re still in that neighborhood, the lowest in the industrialized world).
The result was devastating. Our government was suddenly so badly awash in red ink that Reagan doubled the tax paid only by people earning less than $40,000/year (FICA), and then began borrowing from the huge surplus this new tax was accumulating in the Social Security Trust Fund. Even with that, Reagan had to borrow more money in his 8 years than the sum total of all presidents from George Washington to Jimmy Carter combined.
In addition to badly throwing the nation into debt, Reagan’s tax cut blew out the ceiling on the accumulation of wealth, leading to a new Gilded Age and the rise of a generation of super-wealthy that hadn’t been seen since the Robber Baron era of the 1890s or the Roaring 20s.
...
And Bush, following closely in Reagan’s footsteps, is making things worse. As Senator Bernie Sanders pointed out at recent hearings for the confirmation of Bush’s new nominee for the Office of Management and Budget:
Since Bush has been president:
* over 5 million people have slipped into poverty;
* nearly 7 million Americans have lost their health insurance;
* median household income has gone down by nearly $1,300;
* three million manufacturing jobs have been lost;
* three million American workers have lost their pensions;
* home foreclosures are now the highest on record;
* the personal savings rate is below zero - which hasn’t happened since the great depression;
* the real earnings of college graduates have gone down by about 5% in the last few years;
* entry level wages for male and female high school graduates have fallen by over 3%;
* wages and salaries are now at the lowest share of GDP since 1929.
The debate about whether or not to roll Bush’s tax cuts back to Clinton’s modest mid-30% rates is absurd. It’s time to roll back the horribly failed experiment of the Reagan tax cuts. And use that money to pay down Reagan’s debt and rebuild this nation. ...
...
There is much discussion of what the floor on earnings should be - the minimum wage - but none about the ceiling. That’s largely because effectively there is no ceiling, and those who control vast wealth in America are happy to have Americans fight over “How poor is too poor?” just so long as nobody asks “How rich is too rich?”
...
But the rich fought back, and won big-time in 1980 when Reagan, until then the fringe “Voodoo economics” candidate who was heading into the election trailing far behind Jimmy Carter, was swept into the White House on a wave of public concern of the Iranians taking US hostages. Reagan promptly cut income taxes on the very rich from 70% down to 27%. Corporate tax rates were also cut so severely that they went from representing over 33% of total federal tax receipts in 1951 to less than 9% in 1983 (they’re still in that neighborhood, the lowest in the industrialized world).
The result was devastating. Our government was suddenly so badly awash in red ink that Reagan doubled the tax paid only by people earning less than $40,000/year (FICA), and then began borrowing from the huge surplus this new tax was accumulating in the Social Security Trust Fund. Even with that, Reagan had to borrow more money in his 8 years than the sum total of all presidents from George Washington to Jimmy Carter combined.
In addition to badly throwing the nation into debt, Reagan’s tax cut blew out the ceiling on the accumulation of wealth, leading to a new Gilded Age and the rise of a generation of super-wealthy that hadn’t been seen since the Robber Baron era of the 1890s or the Roaring 20s.
...
And Bush, following closely in Reagan’s footsteps, is making things worse. As Senator Bernie Sanders pointed out at recent hearings for the confirmation of Bush’s new nominee for the Office of Management and Budget:
Since Bush has been president:
* over 5 million people have slipped into poverty;
* nearly 7 million Americans have lost their health insurance;
* median household income has gone down by nearly $1,300;
* three million manufacturing jobs have been lost;
* three million American workers have lost their pensions;
* home foreclosures are now the highest on record;
* the personal savings rate is below zero - which hasn’t happened since the great depression;
* the real earnings of college graduates have gone down by about 5% in the last few years;
* entry level wages for male and female high school graduates have fallen by over 3%;
* wages and salaries are now at the lowest share of GDP since 1929.
The debate about whether or not to roll Bush’s tax cuts back to Clinton’s modest mid-30% rates is absurd. It’s time to roll back the horribly failed experiment of the Reagan tax cuts. And use that money to pay down Reagan’s debt and rebuild this nation. ...
Friday, August 3, 2007
Large majorities of people in the US and in Europe want higher taxation for the rich and even pay caps for corporate executives ...
Monday, July 23, 2007 by the Financial Times/UK New Poll: Globalization Backlash in Rich Nations by Chris Giles in London
A popular backlash against globalization and the leaders of the world’s largest companies is sweeping all rich countries, an FT/Harris poll shows.
Large majorities of people in the US and in Europe want higher taxation for the rich and even pay caps for corporate executives to counter what they believe are unjustified rewards and the negative effects of globalization.
Viewing globalization as an overwhelmingly negative force, citizens of rich countries are looking to governments to cushion the blows they perceive have come from the liberalization of their economies to trade with emerging countries.
Those polled in Britain, France, the US and Spain were about three times more likely to say globalization was having a negative rather than a positive effect on their countries. The majority was smaller in Germany, with its large export base.
...
Europeans still overwhelmingly support the principle of free competition within the European Union, contrary to Nicolas Sarkozy’s wishes at the recent European summit, but in France, Germany and Spain, the populations want their political leaders to play a larger role in managing their economies.
...
The issue of rising inequality is now high on the political agenda of every country and will feature prominently in the 2008 US presidential election.
A popular backlash against globalization and the leaders of the world’s largest companies is sweeping all rich countries, an FT/Harris poll shows.
Large majorities of people in the US and in Europe want higher taxation for the rich and even pay caps for corporate executives to counter what they believe are unjustified rewards and the negative effects of globalization.
Viewing globalization as an overwhelmingly negative force, citizens of rich countries are looking to governments to cushion the blows they perceive have come from the liberalization of their economies to trade with emerging countries.
Those polled in Britain, France, the US and Spain were about three times more likely to say globalization was having a negative rather than a positive effect on their countries. The majority was smaller in Germany, with its large export base.
...
Europeans still overwhelmingly support the principle of free competition within the European Union, contrary to Nicolas Sarkozy’s wishes at the recent European summit, but in France, Germany and Spain, the populations want their political leaders to play a larger role in managing their economies.
...
The issue of rising inequality is now high on the political agenda of every country and will feature prominently in the 2008 US presidential election.
where new innovations aren't held hostage to the competition-killing carriers that control the network ... left U.S. generations behind other nations
Members of Congress Call for iPhone Freedom Posted July 11, 2007 06:27 PM (EST)
Bipartisan members of Congress spoke out today to free the iPhone and other next generation hand-held computers from the grip of phone incumbents like AT&T and Verizon.
During the hearing of the House Subcommittee on Telecommunications and the Internet, representatives from both sides of the aisle called for a more open wireless system where new innovations aren't held hostage to the competition-killing carriers that control the network.
...
"The iPhone highlights both the promise and the problems with the wireless industry today," Rep. Markey said holding up before other members his newly acquired iPhone. "On the one hand, it demonstrates the sheer brilliance and wizardry of wireless engineering. On the other hand, the advent of the iPhone raises questions about the fact that a consumer can't use this phone with other wireless carriers."
Markey highlighted myriad problems with our wireless marketplace, where "many consumers feel trapped having bought an expensive device or having been locked into a long-term contract with significant penalties for switching."
...
'Calcified' Markets
Markey and Pickering spoke about the current dilemma in America's wireless system. The iPhone is shackled to AT&T and won't work on any other network. The reason? We have allowed carriers to exert almost complete gatekeeper control over all devices, services and content in the wireless sector.
This has left the U.S. generations behind other nations, a failure that prompted New York Times blogger David Pogue to call American carriers "calcified, conservative and way behind their European and Asian counterparts." ...
...
"I am an entrepreneur and I am mad as hell that I require permission to innovate in the wireless market. I don't have to go to the great companies that built our public highways and ask them for their views for what kind of cars I can put on those roads...
"For some reason I have never been able to understand, I have to ask permission of Verizon Wireless to attach a computer or the computers that they now call phones to their wireless networks and I have to ask their permission to run applications and services on those phones." ...
...
In the wireless world this includes the freedom to use any device on any network, the freedom to choose among competing providers and the freedom to access any content or services without gatekeeper interference.
Bipartisan members of Congress spoke out today to free the iPhone and other next generation hand-held computers from the grip of phone incumbents like AT&T and Verizon.
During the hearing of the House Subcommittee on Telecommunications and the Internet, representatives from both sides of the aisle called for a more open wireless system where new innovations aren't held hostage to the competition-killing carriers that control the network.
...
"The iPhone highlights both the promise and the problems with the wireless industry today," Rep. Markey said holding up before other members his newly acquired iPhone. "On the one hand, it demonstrates the sheer brilliance and wizardry of wireless engineering. On the other hand, the advent of the iPhone raises questions about the fact that a consumer can't use this phone with other wireless carriers."
Markey highlighted myriad problems with our wireless marketplace, where "many consumers feel trapped having bought an expensive device or having been locked into a long-term contract with significant penalties for switching."
...
'Calcified' Markets
Markey and Pickering spoke about the current dilemma in America's wireless system. The iPhone is shackled to AT&T and won't work on any other network. The reason? We have allowed carriers to exert almost complete gatekeeper control over all devices, services and content in the wireless sector.
This has left the U.S. generations behind other nations, a failure that prompted New York Times blogger David Pogue to call American carriers "calcified, conservative and way behind their European and Asian counterparts." ...
...
"I am an entrepreneur and I am mad as hell that I require permission to innovate in the wireless market. I don't have to go to the great companies that built our public highways and ask them for their views for what kind of cars I can put on those roads...
"For some reason I have never been able to understand, I have to ask permission of Verizon Wireless to attach a computer or the computers that they now call phones to their wireless networks and I have to ask their permission to run applications and services on those phones." ...
...
In the wireless world this includes the freedom to use any device on any network, the freedom to choose among competing providers and the freedom to access any content or services without gatekeeper interference.
The U.S. Income Tax Burden:..."legal plunder." ... Where is the hoel in the logic?
The U.S. Income Tax Burden: An Analysis of Congressional Budget Office (CBO) Numbers by Sugi Sorensen and Stephen Cobb Last Revised: 17-Apr-2000
Introduction
Introduction
- Below is an analysis of Congressional Budget Office (CB0) report entitled "Preliminary Estimates of Effective Tax Rates" (07-Sep-1999). The raw numbers can be scrutinized here:
http://www.cbo.gov/showdoc.cfm?index=1545&from=4&sequence=0 - All I did was try to make heads or tails of the data by plotting it and extracting the most salient data. The Income Tax Burden is defined simply as who pays U.S. income taxes in the form of individual and corporate income taxes, payroll taxes, and federal excise taxes.
- Based on this information, the following conclusions clearly emerge:
An enormous percentage of taxes are payed by a minority of Americans:
The Top 1% of taxpayers pay 29% of all taxes.
The Top 5% of taxpayers pay 50% of all taxes. - Our tax system is not so much progressive as it is confiscatory -- Frederic Bastiat called this phenomenon "legal plunder." ...
- ...
- The Top 1% of income earners (comprising about 1 million families) earn about 15% of the total income earned by all wage earners [??? vs, total income? including capital gains?] in the United States, yet they pay almost 30% of all individual income taxes.
economy is built on spending ... produce less, ship jobs overseas, increase our national and trade deficits ... become mired in debt ... not regulated
Hold On to Your Seat: America and Its Debt Based Economy by John Kelley / July 31st, 2007
...
Virtually unreported over at the Washington Post, Michael J. de la Merced was citing a significant crack in the debt dike preventing a flood of defaults on leveraged buyout deals. Most of the run-up on Wall Street has been based on the idea that there is an unlimited amount of debt that can be piled up to buy and flip companies, kind of like the housing market speculators. ...
...
What the general public doesn’t understand is that the wealthy have been taking their extra money from tax breaks and investing it in speculation. The theory of trickle down economics is that the rich will invest it in increased production capacity, hire more people and generally lift everyone (“a rising tide lifts all boats”). But, true to human behavior, that’s not what happens. Instead, when people have extra money over their needs they tend to invest it in more speculative investments because the potential loss won’t affect their lifestyle while the potential gains are higher than from a more stable but slow-growing investment. ...
...
Private Equity and Hedge Funds have been the chief investment vehicles used by the wealthy to speculate on these long shots. Wealthy investors, institutional funds (pension) and other money pools have been joyously jumping on the bandwagon. As more and more people and funds (up to 9,000 hedge funds now) scout for undervalued companies to buy, the competition has grown fierce, driving up prices. In fact, many of the companies bought don’t justify the price, but what the heck? Neither did that $100,000 house you bought for $150,000 because it was going to be worth $175,000 next week. Right?
...
Several indicators say that the end of this bubble is near. One of the first is when Hedge and Private Equity Funds go public as several have attempted to do recently. What this means is they believe the best times are over ...
Another is that debt buyers are getting a belly full and beginning to question the value of the debt whether in the form of loans or bonds. Merced reports that 20 recent debt offerings, including debt to finance the Chrysler Group buyout, have joined $235 billion dollars in loans sales that have been have been postponed. Bond sales are also suffering with billions in offerings being put off by First Data, Alliance Boots, U.S. Foodservice, Service Master International and Dollar General.
...
Cheap financing advanced to consumers in the middle and working classes, who have had declining real income since the ’70s, has been purposeful public policy that forces consumers to borrow more and more to maintain their lifestyle. Incomes have not kept up with inflation, off shored manufacturing jobs have been replaced with service jobs that pay an average of 20% less, federal and state governments have shifted more cost to local entities, increasing property taxes, and the costs to participate in the legal economy for everything from daycare, to college, to medical insurance have been shifted to the worker. The result is a massive transfer of wealth over time from the general population to a very small percentage of super wealthy.
...
As we learned in 1929, great disparity of wealth (which this process has increased tremendously) leads to a disproportionate investment in speculation, driving up prices to unsustainable amounts that then crash back to their real worth. Eventually the transfer of wealth from the working and middle class through increased debt deprives them of both purchasing power and the ability to borrow more, triggering deflation. Of course the devastation occurs mostly to the middle and working class who were already deprived of sharing the wealth of the speculative bubble, but now pay the consequences with layoffs and pension losses.
Our whole economy is built on consumer spending and as we produce less, ship good paying jobs overseas, increase our national and trade deficits, we have become a nation mired in debt. It’s no accident; we long ago passed the point were we “needed” more stuff, so we used advertising and planned obsolescence to create need and cheap financing to acquire it. Debt itself became the primary product. Whether it is the working poor at the window of the payday loan outlet, the Hedge fund manager at the conference table of Goldman Sachs or George W. Bush racking up $10 million an hour in Iraq, debt is the major creative enterprise in America today. ...
...
At some point this must come unraveled in a rather nasty way. Whether it happens tomorrow or not is not the question, the answer is, it will happen and when it does it will be catastrophic for individuals, businesses, and government entities at all levels. ...
...
The private equity and hedge funds are not regulated by the SEC and most are registered offshore for tax and liability purposes. When it all falls apart most will be able to retire to their homes in the Mediterranean and live off their money in the Caymans, while the rest of us pick up the pieces.
...
Virtually unreported over at the Washington Post, Michael J. de la Merced was citing a significant crack in the debt dike preventing a flood of defaults on leveraged buyout deals. Most of the run-up on Wall Street has been based on the idea that there is an unlimited amount of debt that can be piled up to buy and flip companies, kind of like the housing market speculators. ...
...
What the general public doesn’t understand is that the wealthy have been taking their extra money from tax breaks and investing it in speculation. The theory of trickle down economics is that the rich will invest it in increased production capacity, hire more people and generally lift everyone (“a rising tide lifts all boats”). But, true to human behavior, that’s not what happens. Instead, when people have extra money over their needs they tend to invest it in more speculative investments because the potential loss won’t affect their lifestyle while the potential gains are higher than from a more stable but slow-growing investment. ...
...
Private Equity and Hedge Funds have been the chief investment vehicles used by the wealthy to speculate on these long shots. Wealthy investors, institutional funds (pension) and other money pools have been joyously jumping on the bandwagon. As more and more people and funds (up to 9,000 hedge funds now) scout for undervalued companies to buy, the competition has grown fierce, driving up prices. In fact, many of the companies bought don’t justify the price, but what the heck? Neither did that $100,000 house you bought for $150,000 because it was going to be worth $175,000 next week. Right?
...
Several indicators say that the end of this bubble is near. One of the first is when Hedge and Private Equity Funds go public as several have attempted to do recently. What this means is they believe the best times are over ...
Another is that debt buyers are getting a belly full and beginning to question the value of the debt whether in the form of loans or bonds. Merced reports that 20 recent debt offerings, including debt to finance the Chrysler Group buyout, have joined $235 billion dollars in loans sales that have been have been postponed. Bond sales are also suffering with billions in offerings being put off by First Data, Alliance Boots, U.S. Foodservice, Service Master International and Dollar General.
...
Cheap financing advanced to consumers in the middle and working classes, who have had declining real income since the ’70s, has been purposeful public policy that forces consumers to borrow more and more to maintain their lifestyle. Incomes have not kept up with inflation, off shored manufacturing jobs have been replaced with service jobs that pay an average of 20% less, federal and state governments have shifted more cost to local entities, increasing property taxes, and the costs to participate in the legal economy for everything from daycare, to college, to medical insurance have been shifted to the worker. The result is a massive transfer of wealth over time from the general population to a very small percentage of super wealthy.
...
As we learned in 1929, great disparity of wealth (which this process has increased tremendously) leads to a disproportionate investment in speculation, driving up prices to unsustainable amounts that then crash back to their real worth. Eventually the transfer of wealth from the working and middle class through increased debt deprives them of both purchasing power and the ability to borrow more, triggering deflation. Of course the devastation occurs mostly to the middle and working class who were already deprived of sharing the wealth of the speculative bubble, but now pay the consequences with layoffs and pension losses.
Our whole economy is built on consumer spending and as we produce less, ship good paying jobs overseas, increase our national and trade deficits, we have become a nation mired in debt. It’s no accident; we long ago passed the point were we “needed” more stuff, so we used advertising and planned obsolescence to create need and cheap financing to acquire it. Debt itself became the primary product. Whether it is the working poor at the window of the payday loan outlet, the Hedge fund manager at the conference table of Goldman Sachs or George W. Bush racking up $10 million an hour in Iraq, debt is the major creative enterprise in America today. ...
...
At some point this must come unraveled in a rather nasty way. Whether it happens tomorrow or not is not the question, the answer is, it will happen and when it does it will be catastrophic for individuals, businesses, and government entities at all levels. ...
...
The private equity and hedge funds are not regulated by the SEC and most are registered offshore for tax and liability purposes. When it all falls apart most will be able to retire to their homes in the Mediterranean and live off their money in the Caymans, while the rest of us pick up the pieces.
the credit card industry is the only one allowed to increase the price of a product after it has been sold.
Credit Card Buyer Beware | Published: July 31, 2007
The federal agencies that are supposed to regulate the banking and credit card industries have failed utterly to keep pace with deceptive and unfair practices that have become shamefully standard in the business. As a consequence many hard-working Americans who pay their bills are mired in debt — and in danger of losing whatever savings they have, and perhaps their homes. Congress, which sat on its hands while the problem got worse and worse, needs to rein in this sometimes predatory industry.
The scope of the problem was laid out in Congressional hearings this spring held by Senator Carl Levin, the Democrat from Michigan. According to testimony, one witness exceeded his charge card’s $3,000 limit by $200 — triggering what eventually amounted to $7,500 in penalties and interest. After paying an average of $1,000 a year for six years, the man still owed $4,400.
That experience has become all too common as the credit card industry has stealthily adopted methods designed to maximize burdensome penalties and fees, while ratcheting up interest rates as high as 30 percent. Companies bombard unwary consumers with teaser packages that promise very low interest rates to start, while reserving for themselves the right to raise rates whenever they choose. The details are buried in deliberately arcane contracts that run 30 pages long and that even lawyers have trouble understanding.
Congressional investigations and studies by consumer advocates have exposed other unsavory practices. Some card companies apply penalty rates retroactively — to purchases that were made before the penalty was incurred or in some cases to debts that were even paid off. As one Congressional witness pointed out, the credit card industry is the only one allowed to increase the price of a product after it has been sold. ...
A bill introduced by Senator Levin would limit “penalty” interest rates to an additional 7 percent above the previous rate. It would also prohibit retroactive penalties and double cycle billing, and it would limit the amount of fees companies could charge customers who exceed their credit limit. ...
The federal agencies that are supposed to regulate the banking and credit card industries have failed utterly to keep pace with deceptive and unfair practices that have become shamefully standard in the business. As a consequence many hard-working Americans who pay their bills are mired in debt — and in danger of losing whatever savings they have, and perhaps their homes. Congress, which sat on its hands while the problem got worse and worse, needs to rein in this sometimes predatory industry.
The scope of the problem was laid out in Congressional hearings this spring held by Senator Carl Levin, the Democrat from Michigan. According to testimony, one witness exceeded his charge card’s $3,000 limit by $200 — triggering what eventually amounted to $7,500 in penalties and interest. After paying an average of $1,000 a year for six years, the man still owed $4,400.
That experience has become all too common as the credit card industry has stealthily adopted methods designed to maximize burdensome penalties and fees, while ratcheting up interest rates as high as 30 percent. Companies bombard unwary consumers with teaser packages that promise very low interest rates to start, while reserving for themselves the right to raise rates whenever they choose. The details are buried in deliberately arcane contracts that run 30 pages long and that even lawyers have trouble understanding.
Congressional investigations and studies by consumer advocates have exposed other unsavory practices. Some card companies apply penalty rates retroactively — to purchases that were made before the penalty was incurred or in some cases to debts that were even paid off. As one Congressional witness pointed out, the credit card industry is the only one allowed to increase the price of a product after it has been sold. ...
A bill introduced by Senator Levin would limit “penalty” interest rates to an additional 7 percent above the previous rate. It would also prohibit retroactive penalties and double cycle billing, and it would limit the amount of fees companies could charge customers who exceed their credit limit. ...
[Blackstone] Paid capital gains at 15% then arranged to get deductions for $3.7 billion worth of good will at 35 percent rate
Tax Loopholes Sweeten a Deal For Blackstone | July 13, 2007, Friday | By DAVID CAY JOHNSTON (NYT); Business/Financial Desk | Late Edition - Final, Section A, Page 1, Column , 1153 words
Blackstone Group devises way for its partners to effectively avoid paying taxes on $3.7 billion of the $4.75 billion it raised last month from selling shares to public; plan, laid out in fine print of Blackstone's financial documents, is similar to one used by other private equity firms and hedge funds that have gone public; Congress is debating how much managers at private equity firms like Blackstone and hedge funds should pay in taxes on their compensation; at issue is whether most of compensation that fund managers earn should be taxed at 35 percent rate that applies to other highly paid Americans, or at 15 percent rate for capital gains; Blackstone's tax maneuver hinges on its use of good will, accounting term for value of intangible assets that are built up by company over time; Blackstone partners paid 15 percent capital gains rate on shares they sold, then arranged to get deductions for $3.7 billion worth of good will at 35 percent rate; diagram ...
Blackstone Group devises way for its partners to effectively avoid paying taxes on $3.7 billion of the $4.75 billion it raised last month from selling shares to public; plan, laid out in fine print of Blackstone's financial documents, is similar to one used by other private equity firms and hedge funds that have gone public; Congress is debating how much managers at private equity firms like Blackstone and hedge funds should pay in taxes on their compensation; at issue is whether most of compensation that fund managers earn should be taxed at 35 percent rate that applies to other highly paid Americans, or at 15 percent rate for capital gains; Blackstone's tax maneuver hinges on its use of good will, accounting term for value of intangible assets that are built up by company over time; Blackstone partners paid 15 percent capital gains rate on shares they sold, then arranged to get deductions for $3.7 billion worth of good will at 35 percent rate; diagram ...
systematic evasion and violation of employment and labor laws is threatening to become a way of doing business ....
Wednesday, July 11, 2007 by The Nation | What We Owe the Working Poor | by Annette Bernhardt
The Supreme Court handed down an astonishing decision June 11, ruling that under federal law, home-care workers are not entitled to overtime pay or the minimum wage. Upholding outdated distinctions between those who labor inside and outside the home, the Court excluded more than one million workers from the right to earn a fair wage.
...
Some workers–like home health aides, domestic workers and agricultural workers–have for many years been excluded from one or more laws governing the workplace. Other workers are covered by those laws, but weak enforcement has left them unprotected. And growing numbers are falling through the cracks altogether, as employers push them outside the reach of legal protection by misclassifying them as independent contractors.
For the past three years, researchers at the Brennan Center for Justice at New York University School of Law have been documenting this problem in New York City. Industry by industry, we’ve conducted hundreds of interviews with workers, employers, government officials, community groups and legal services providers. Our report, Unregulated Work in the Global City, was released June 19.
What we found is a world that lies outside the experience and imagination of many Americans. It is a world in which workers are paid less than the minimum wage, and sometimes nothing at all; in which employers don’t pay overtime for sixty-hour weeks or provide legally required meal breaks; in which health and safety regulations are routinely ignored; and in which workers are often punished for speaking up or trying to organize.
The traces of this invisible economy are everywhere in our daily lives. We shop at a gourmet grocery store, which may be paying as little as $5 an hour to the worker washing and sorting produce. We pick up clothes from the local dry cleaner, which has likely sent its work to an industrial plant rife with violations of health and safety regulations. We go to a restaurant–a small diner or one rated with four stars–and chances are that the dishwashers and cooks are not receiving overtime for the sixty to seventy hours that they have worked. We pay weekly visits to the neighborhood nail salon, which might well be part of a chain currently under investigation for underpaying its workers. We bring in a small contractor to paint or remodel our homes, and in all probability at least one of the workers has been cheated out of wages during the past six months.
These are not isolated, short-lived cases of exploitation at the fringe of the city’s economy. Instead, the systematic evasion and violation of employment and labor laws is threatening to become a way of doing business for unscrupulous employers–concentrated for now in low-wage industries, but increasingly putting pressure on firms higher up the wage ladder to follow suit.
New York City is not unique in this regard. ...
The Supreme Court handed down an astonishing decision June 11, ruling that under federal law, home-care workers are not entitled to overtime pay or the minimum wage. Upholding outdated distinctions between those who labor inside and outside the home, the Court excluded more than one million workers from the right to earn a fair wage.
...
Some workers–like home health aides, domestic workers and agricultural workers–have for many years been excluded from one or more laws governing the workplace. Other workers are covered by those laws, but weak enforcement has left them unprotected. And growing numbers are falling through the cracks altogether, as employers push them outside the reach of legal protection by misclassifying them as independent contractors.
For the past three years, researchers at the Brennan Center for Justice at New York University School of Law have been documenting this problem in New York City. Industry by industry, we’ve conducted hundreds of interviews with workers, employers, government officials, community groups and legal services providers. Our report, Unregulated Work in the Global City, was released June 19.
What we found is a world that lies outside the experience and imagination of many Americans. It is a world in which workers are paid less than the minimum wage, and sometimes nothing at all; in which employers don’t pay overtime for sixty-hour weeks or provide legally required meal breaks; in which health and safety regulations are routinely ignored; and in which workers are often punished for speaking up or trying to organize.
The traces of this invisible economy are everywhere in our daily lives. We shop at a gourmet grocery store, which may be paying as little as $5 an hour to the worker washing and sorting produce. We pick up clothes from the local dry cleaner, which has likely sent its work to an industrial plant rife with violations of health and safety regulations. We go to a restaurant–a small diner or one rated with four stars–and chances are that the dishwashers and cooks are not receiving overtime for the sixty to seventy hours that they have worked. We pay weekly visits to the neighborhood nail salon, which might well be part of a chain currently under investigation for underpaying its workers. We bring in a small contractor to paint or remodel our homes, and in all probability at least one of the workers has been cheated out of wages during the past six months.
These are not isolated, short-lived cases of exploitation at the fringe of the city’s economy. Instead, the systematic evasion and violation of employment and labor laws is threatening to become a way of doing business for unscrupulous employers–concentrated for now in low-wage industries, but increasingly putting pressure on firms higher up the wage ladder to follow suit.
New York City is not unique in this regard. ...
[Wal-mart Mexico]: 19,000 youngsters (14-16) work for tips ... none of them receives a red cent in wages or fringe benefits
Teens at Work | By Joseph Contreras | Newsweek | Updated: 2:33 p.m. CT July 31, 2007
Thousands of adolescents work as unpaid baggers in Wal-Mart’s Mexican stores. The retail giant isn’t breaking any laws—but that doesn’t mean the government is happy with the practice.
July 31, 2007 - Wal-Mart prides itself on cutting costs at home and abroad, and its Mexican operations are no exception. ... aroused concern among some officials and nongovernmental organizations (NGOs) that Wal-Mart is taking advantage of local customs to pinch pennies at a time when its Mexican operations have never been more profitable.
Wal-Mart is Mexico’s largest private-sector employer in the nation today, with nearly 150,000 local residents on its payroll. An additional 19,000 youngsters between the ages of 14 and 16 work after school in hundreds of Wal-Mart stores, mostly as grocery baggers, throughout Mexico—and none of them receives a red cent in wages or fringe benefits. The company doesn’t try to conceal this practice: ...
...
... But in Mexico City, for example, the 4,300 teenagers who work in Wal-Mart’s retail stores free of charge dwarf similar numbers laboring unpaid for Mexican competitors like Comercial Mexicana (715) and Gigante (427). Although Wal-Mart’s worldwide code of ethics expressly forbids any “associate” from working without compensation, the company’s Mexican subsidiary asserts that the grocery baggers “cannot be considered workers.” ...
Thousands of adolescents work as unpaid baggers in Wal-Mart’s Mexican stores. The retail giant isn’t breaking any laws—but that doesn’t mean the government is happy with the practice.
July 31, 2007 - Wal-Mart prides itself on cutting costs at home and abroad, and its Mexican operations are no exception. ... aroused concern among some officials and nongovernmental organizations (NGOs) that Wal-Mart is taking advantage of local customs to pinch pennies at a time when its Mexican operations have never been more profitable.
Wal-Mart is Mexico’s largest private-sector employer in the nation today, with nearly 150,000 local residents on its payroll. An additional 19,000 youngsters between the ages of 14 and 16 work after school in hundreds of Wal-Mart stores, mostly as grocery baggers, throughout Mexico—and none of them receives a red cent in wages or fringe benefits. The company doesn’t try to conceal this practice: ...
...
... But in Mexico City, for example, the 4,300 teenagers who work in Wal-Mart’s retail stores free of charge dwarf similar numbers laboring unpaid for Mexican competitors like Comercial Mexicana (715) and Gigante (427). Although Wal-Mart’s worldwide code of ethics expressly forbids any “associate” from working without compensation, the company’s Mexican subsidiary asserts that the grocery baggers “cannot be considered workers.” ...
Friday, July 27, 2007
US broadband, little competition ... new we're falling behind Japan, Germany, France ...
Why your Internet connection is too slow | By: Steve Benen on Tuesday, July 24th, 2007 at 10:46 AM - PDT
In 2001, after the explosive growth of the Internet and online businesses in the 1990s, the United States had taken the lead online. In terms of percentage of the population with high-speed access, countries like Japan and Germany had half the penetration we did. France had less than a quarter.
Now, all three of those countries have passed us. We’re falling behind in providing high-speed access to the Internet, and just as importantly, our high-speed connections are much slower and more expensive than other countries.
...
And when the Bush administration put Michael Powell in charge of the F.C.C., the digital robber barons were basically set free to do whatever they liked. As a result, there’s little competition in U.S. broadband — if you’re lucky, you have a choice between the services offered by the local cable monopoly and the local phone monopoly. The price is high and the service is poor, but there’s nowhere else to go.
Effective market competition and effective regulation produced quality results. Then Bush took office.
In 2001, after the explosive growth of the Internet and online businesses in the 1990s, the United States had taken the lead online. In terms of percentage of the population with high-speed access, countries like Japan and Germany had half the penetration we did. France had less than a quarter.
Now, all three of those countries have passed us. We’re falling behind in providing high-speed access to the Internet, and just as importantly, our high-speed connections are much slower and more expensive than other countries.
...
And when the Bush administration put Michael Powell in charge of the F.C.C., the digital robber barons were basically set free to do whatever they liked. As a result, there’s little competition in U.S. broadband — if you’re lucky, you have a choice between the services offered by the local cable monopoly and the local phone monopoly. The price is high and the service is poor, but there’s nowhere else to go.
Effective market competition and effective regulation produced quality results. Then Bush took office.
"Refiners can neglect infrastructure, make too little gasoline, suppress inventories and still haul in record profits,"
Exxon Mobil Rakes in $10 Billion | Nationwide Average Price Falls to $2.94 | By Joe Benton | ConsumerAffairs.Com | July 26, 2007
The worlds largest publicly-owned oil company reported over $10 billion in quarterly profits as higher gasoline prices helped offset a decline in revenue from natural gas.
...
Exxon contends that gasoline production in the U.S. is at an all-time high and that the high gasoline prices are the result of high crude prices and record U.S. demand.
Consumer groups complain that the oil industry is deliberately restricting supply of gasoline to drive pump prices up and a consumer watchdog charged that the oil companies are manipulating prices.
"Refiners can neglect infrastructure, make too little gasoline, suppress inventories and still haul in record profits," said Judy Dugan, research director at OilWatchdog.
"Refiners restricted gasoline inventories instead of boosting them over the winter and early spring, then planned long maintenance shutdowns," she said.
"Even this spring's unplanned refinery outages were not just acts of fate. They are directly related to lack of modernization and quality of maintenance on aging equipment." ...
The worlds largest publicly-owned oil company reported over $10 billion in quarterly profits as higher gasoline prices helped offset a decline in revenue from natural gas.
...
Exxon contends that gasoline production in the U.S. is at an all-time high and that the high gasoline prices are the result of high crude prices and record U.S. demand.
Consumer groups complain that the oil industry is deliberately restricting supply of gasoline to drive pump prices up and a consumer watchdog charged that the oil companies are manipulating prices.
"Refiners can neglect infrastructure, make too little gasoline, suppress inventories and still haul in record profits," said Judy Dugan, research director at OilWatchdog.
"Refiners restricted gasoline inventories instead of boosting them over the winter and early spring, then planned long maintenance shutdowns," she said.
"Even this spring's unplanned refinery outages were not just acts of fate. They are directly related to lack of modernization and quality of maintenance on aging equipment." ...
legislation aims to stop an accounting technique known as ``earnings stripping'' to avoid US taxes ... Bush threatens veto ...
Democrats Propose Bill to Curb Companies' Tax Havens (Update1)| By Ryan J. Donmoyer and Alison Fitzgerald
July 25 (Bloomberg) -- House Democrats proposed legislation that would make it harder for overseas companies to use tax havens to avoid taxes on U.S. profits, drawing immediate opposition from the Bush administration.
...
``This bill requires international tax dodgers to pay their fair share,'' said Doggett, a long-time critic of U.S. companies that establish nameplate offices in countries such as Bermuda to reduce their tax burden while continuing to operate in the U.S.
Doggett's proposal drags foreign companies with extensive operations in the U.S., such as Bermuda-based Accenture Ltd., Tyco International Ltd. and Transocean Inc. into a broader battle between the Democratic-controlled Congress and the Republican White House over a $300 billion farm bill that will be considered by the House of Representatives later this week.
His legislation aims to stop an accounting technique known as ``earnings stripping'' in which foreign companies make high- interest loans to their American subsidiaries, who are able to deduct interest. Debt service payments are routed to another unit of the corporation that is based in countries with no corporate tax rate, such as the Cayman Islands. A similar technique is used to route royalty payments for the use of intellectual property such as trademarks and copyrights.
...
Kenneth Dam, then-deputy Treasury secretary, told an audience of tax professionals on Nov. 14, 2002, that ``opportunities for earnings stripping through artificial deductions and income shifting'' may ``exploit the network of tax treaties the United States maintains around the world.''
North Dakota Representative Earl Pomeroy, a Democrat, said the Treasury Department identified the technique as a tax abuse five years ago. ``This `tax abuse' for foreign corporations became a `tax increase' as they scurried for reasons to kill the House farm bill,'' Pomeroy said in a statement. ...
...
Similar proposals have enjoyed Republican backing in the past. Former Ways and Means Committee Chairman Bill Thomas, a California Republican, in 2003 supported legislation to stop companies from stripping earnings from their U.S. subsidiaries.
July 25 (Bloomberg) -- House Democrats proposed legislation that would make it harder for overseas companies to use tax havens to avoid taxes on U.S. profits, drawing immediate opposition from the Bush administration.
...
``This bill requires international tax dodgers to pay their fair share,'' said Doggett, a long-time critic of U.S. companies that establish nameplate offices in countries such as Bermuda to reduce their tax burden while continuing to operate in the U.S.
Doggett's proposal drags foreign companies with extensive operations in the U.S., such as Bermuda-based Accenture Ltd., Tyco International Ltd. and Transocean Inc. into a broader battle between the Democratic-controlled Congress and the Republican White House over a $300 billion farm bill that will be considered by the House of Representatives later this week.
His legislation aims to stop an accounting technique known as ``earnings stripping'' in which foreign companies make high- interest loans to their American subsidiaries, who are able to deduct interest. Debt service payments are routed to another unit of the corporation that is based in countries with no corporate tax rate, such as the Cayman Islands. A similar technique is used to route royalty payments for the use of intellectual property such as trademarks and copyrights.
...
Kenneth Dam, then-deputy Treasury secretary, told an audience of tax professionals on Nov. 14, 2002, that ``opportunities for earnings stripping through artificial deductions and income shifting'' may ``exploit the network of tax treaties the United States maintains around the world.''
North Dakota Representative Earl Pomeroy, a Democrat, said the Treasury Department identified the technique as a tax abuse five years ago. ``This `tax abuse' for foreign corporations became a `tax increase' as they scurried for reasons to kill the House farm bill,'' Pomeroy said in a statement. ...
...
Similar proposals have enjoyed Republican backing in the past. Former Ways and Means Committee Chairman Bill Thomas, a California Republican, in 2003 supported legislation to stop companies from stripping earnings from their U.S. subsidiaries.
economic wreckage she sensed was coming ... she went back to college ... it didn't help .. food boxes 28,000 .. 250,000 going to 300,000
As wages fall, workers slip from middle class | By Tim Jones | Tribune national correspondent | July 25, 2007
Amid the demise of manufacturing jobs, the birthright of a nice home, college for the kids is under siege
... which is why she went back to college to pick up a degree that would insulate her from the economic wreckage she sensed was coming.
It didn't help. When the end neared for her auto parts assembly plant last year, Seaton, 52, walked off the loading dock, armed with a bachelor's degree. In January she began work as a mental health caseworker for a third less money.
Seaton is paid $9.45 an hour, less than what her 21-year-old daughter earns as a truck dispatcher.
...
... thousands of manufacturing workers who lost their jobs are absorbing the bitter reality that their new jobs almost always pay substantially less than their old ones did.
Dayton's poverty rates are soaring, and the middle-class birthright of a comfortable home, college for the kids and maybe a cabin by the lake is under siege. Mortgage foreclosure rates are among Ohio's highest. A Dayton food pantry operated by the AFL-CIO handed out 28,000 boxes of food in 2005. Last year that number exploded to almost 250,000, and labor officials expect the figure to top 300,000 this year.
"This is not a union issue, it's a community issue," said Kristie McElfresh, vice president and director of AFL-CIO Community Services of Greater Dayton. "The gap between the haves and have-nots is huge, and there's nobody in the middle."
...
Dayton is among dozens of cities, big and small, where wages have slipped or stagnated while poverty rates have jumped. A common remark heard from industrial workers around the Midwest is echoed by 33-year-old laborer Ken Fitzwater, who expects to lose his $30-an-hour job at a Dayton Delphi plant later this year.
...
Amid the demise of manufacturing jobs, the birthright of a nice home, college for the kids is under siege
... which is why she went back to college to pick up a degree that would insulate her from the economic wreckage she sensed was coming.
It didn't help. When the end neared for her auto parts assembly plant last year, Seaton, 52, walked off the loading dock, armed with a bachelor's degree. In January she began work as a mental health caseworker for a third less money.
Seaton is paid $9.45 an hour, less than what her 21-year-old daughter earns as a truck dispatcher.
...
... thousands of manufacturing workers who lost their jobs are absorbing the bitter reality that their new jobs almost always pay substantially less than their old ones did.
Dayton's poverty rates are soaring, and the middle-class birthright of a comfortable home, college for the kids and maybe a cabin by the lake is under siege. Mortgage foreclosure rates are among Ohio's highest. A Dayton food pantry operated by the AFL-CIO handed out 28,000 boxes of food in 2005. Last year that number exploded to almost 250,000, and labor officials expect the figure to top 300,000 this year.
"This is not a union issue, it's a community issue," said Kristie McElfresh, vice president and director of AFL-CIO Community Services of Greater Dayton. "The gap between the haves and have-nots is huge, and there's nobody in the middle."
...
Dayton is among dozens of cities, big and small, where wages have slipped or stagnated while poverty rates have jumped. A common remark heard from industrial workers around the Midwest is echoed by 33-year-old laborer Ken Fitzwater, who expects to lose his $30-an-hour job at a Dayton Delphi plant later this year.
...
Found superior American [social, job] mobility to be—a myth ... stingy leave policies ... quarter get no vacation, sick pay ...
Tuesday, July 10, 2007 by TruthDig.com | While Europeans Holiday, Americans Toil | by Marie Cocco
If you’re reading this while on vacation, great for you. If you’re reading this at work, having just finished a vacation or a five-day weekend cobbled together around last week’s celebration of Independence Day, I hope the time off was as spectacular as the fireworks.
If you won’t get another day off work until December’s holiday season, you’re not alone. Americans and vacations just don’t mix.
This may surprise those who have just spent hours stranded at airports or idling in a hot line for a ride at an amusement park. But a quarter of American workers get no paid vacation or paid holidays. And on average, those private-sector workers who do get paid time off are granted only nine vacation days and six paid holidays each year, according to government statistics analyzed by the Center for Economic and Policy Research.
The liberal-leaning think tank analyzed paid vacation and holiday leave policies among the U.S. and nations with comparably developed economies—the European Union, Canada, Japan, Australia and New Zealand. The predictable portrait is one of the United States as a nation of workaholics—a syndrome related less to the archetype of a striving executive than it is linked to government policy.
In the rest of the industrialized world, a month or more of paid vacation is typical, and often required. Many Americans know that. And there are can-you-top-this supplements to this surfeit of paid time off. Such as: In Austria, workers who labor at “heavy night work” get two or three extra days off. Also in Austria—as well as in Sweden and New Zealand—workers are actually paid at a higher rate when they’re on vacation than when they’re at work.
In France, workers get extra paid time off if they take some of their vacation days outside of the summer season. In Norway, those 60 and older get extra time off. And of course, your vacation could be ruined if you get sick while you’re away. So Sweden guarantees that if a worker becomes sick while on leave, the days of the illness don’t count against vacation time.
Stingy leave policies in the United States go hand and hand with weekly work hours that exceed those in many industrialized countries. And they parallel skimpy sick leave and family leave policies that give millions of Americans no effective safety net when illness or emergencies strike. Nearly half of private-sector workers—57 million people—have no paid sick days, according to Rep. Rosa DeLauro, D-Conn., a chief sponsor of a measure to require at least some sick days for employees who work more than 30 hours per week. The problem is particularly acute for low-wage workers, more than three-fourths of whom get no paid leave when they are ill.
In theory, all this hard work is supposed to spark a more robust economy that is, in turn, an engine of greater upward mobility than what is found in the supposedly coddled precincts of, say, the European Union. But lately, it hasn’t. An ongoing, bipartisan study of intergenerational economic mobility conducted jointly by conservative and liberal-leaning researchers for the Pew Charitable Trusts has found the myth of superior American mobility to be—a myth. ...
If you’re reading this while on vacation, great for you. If you’re reading this at work, having just finished a vacation or a five-day weekend cobbled together around last week’s celebration of Independence Day, I hope the time off was as spectacular as the fireworks.
If you won’t get another day off work until December’s holiday season, you’re not alone. Americans and vacations just don’t mix.
This may surprise those who have just spent hours stranded at airports or idling in a hot line for a ride at an amusement park. But a quarter of American workers get no paid vacation or paid holidays. And on average, those private-sector workers who do get paid time off are granted only nine vacation days and six paid holidays each year, according to government statistics analyzed by the Center for Economic and Policy Research.
The liberal-leaning think tank analyzed paid vacation and holiday leave policies among the U.S. and nations with comparably developed economies—the European Union, Canada, Japan, Australia and New Zealand. The predictable portrait is one of the United States as a nation of workaholics—a syndrome related less to the archetype of a striving executive than it is linked to government policy.
In the rest of the industrialized world, a month or more of paid vacation is typical, and often required. Many Americans know that. And there are can-you-top-this supplements to this surfeit of paid time off. Such as: In Austria, workers who labor at “heavy night work” get two or three extra days off. Also in Austria—as well as in Sweden and New Zealand—workers are actually paid at a higher rate when they’re on vacation than when they’re at work.
In France, workers get extra paid time off if they take some of their vacation days outside of the summer season. In Norway, those 60 and older get extra time off. And of course, your vacation could be ruined if you get sick while you’re away. So Sweden guarantees that if a worker becomes sick while on leave, the days of the illness don’t count against vacation time.
Stingy leave policies in the United States go hand and hand with weekly work hours that exceed those in many industrialized countries. And they parallel skimpy sick leave and family leave policies that give millions of Americans no effective safety net when illness or emergencies strike. Nearly half of private-sector workers—57 million people—have no paid sick days, according to Rep. Rosa DeLauro, D-Conn., a chief sponsor of a measure to require at least some sick days for employees who work more than 30 hours per week. The problem is particularly acute for low-wage workers, more than three-fourths of whom get no paid leave when they are ill.
In theory, all this hard work is supposed to spark a more robust economy that is, in turn, an engine of greater upward mobility than what is found in the supposedly coddled precincts of, say, the European Union. But lately, it hasn’t. An ongoing, bipartisan study of intergenerational economic mobility conducted jointly by conservative and liberal-leaning researchers for the Pew Charitable Trusts has found the myth of superior American mobility to be—a myth. ...
Wednesday, July 25, 2007
America's new faith-based guns-and-butter policy is hurting both guns and butter ... "Reagan proved deficits don't matter." [!!!??]
AUL B. FARRELL | Goldman Sachs guru warns of war-debt failure | By Paul B. Farrell, MarketWatch | Last Update: 7:02 PM ET Jul 23, 2007
Is America becoming a global credit risk? How to get back on track
ARROYO GRANDE, Calif. (MarketWatch) -- Subprimes downgraded. Will Moody's downgrade America's debt next? Actually, that's already happening; our credit rating is collapsing with the dollar.
Foreign banks are dumping dollar reserves, while we gorge on cheap toys and bad pet food. Actually, our biggest "terrorist" threat is internal: Distorted values are downgrading our nation's "creditworthiness." We're like out-of-control kids with stolen credit cards, spending our future with no plans to repay.
...
Conclusion: "One central, constant theme emerges: sound national finances have proved to be indispensable to the country's military strength" and long-term national security
...
America's new faith-based guns-and-butter policy is hurting both guns and butter. The war is costing us $12 billion a month. Hormats examined the Congressional Budget Office's projections for domestic costs: "In 2006, spending on Social Security, Medicare, Medicaid and interest on the federal debt amounted to just under 60% of government revenues" and "if they continue on their current path, they will account for two-thirds by 2015."
* Social security from $550 billion to $960 billion
* Medicare from $372 billion to over $900 billion
* Medicaid from $181 billion to $390 billion
Worse yet, these commitments will continue skyrocketing in later decades. The CBO projects the federal debt rising from 40% of GDP to 100% in the next 25 years: "Continuing on this unsustainable path will gradually erode, if not suddenly damage, our economy, our standard of living, and ultimately our national security."
...
In my opinion, the turning point occurred in late 2002. Remember, the Afghan War was hot. America was in recession and a bear market. The surpluses of the 1990s rapidly disappeared. Corporate scandals were damaging our global standing. Washington was pushing a second round of tax cuts. And the Iraq invasion was imminent.
Treasury Secretary Paul O'Neill, true to Hamiltonian principles, warned the White House of a coming fiscal crisis. The vice president retorted: "Reagan proved deficits don't matter." (Hormats tells me Reagan never said that.) Soon after, Cheney "fired" O'Neill ... and Hamilton's principles of sound war financing were dead.
Unfortunately, Washington's radical new faith-based financing is sabotaging national security. America's unsustainable deficits are making us extremely vulnerable to terrorists whose goal is to "attack the United States, perhaps with chemical, biological, or nuclear weapons capable of killing enormous numbers of people and seriously disrupting the American economy," targeting a "major port or transportation center."
Hormats says America is now "relying on faith over experience, hoping that sustained growth will erase deficits and that the ballooning costs of Social Security, Medicare and Medicaid will be manageable in the coming decades without difficult reforms."
Is America becoming a global credit risk? How to get back on track
ARROYO GRANDE, Calif. (MarketWatch) -- Subprimes downgraded. Will Moody's downgrade America's debt next? Actually, that's already happening; our credit rating is collapsing with the dollar.
Foreign banks are dumping dollar reserves, while we gorge on cheap toys and bad pet food. Actually, our biggest "terrorist" threat is internal: Distorted values are downgrading our nation's "creditworthiness." We're like out-of-control kids with stolen credit cards, spending our future with no plans to repay.
...
Conclusion: "One central, constant theme emerges: sound national finances have proved to be indispensable to the country's military strength" and long-term national security
...
America's new faith-based guns-and-butter policy is hurting both guns and butter. The war is costing us $12 billion a month. Hormats examined the Congressional Budget Office's projections for domestic costs: "In 2006, spending on Social Security, Medicare, Medicaid and interest on the federal debt amounted to just under 60% of government revenues" and "if they continue on their current path, they will account for two-thirds by 2015."
* Social security from $550 billion to $960 billion
* Medicare from $372 billion to over $900 billion
* Medicaid from $181 billion to $390 billion
Worse yet, these commitments will continue skyrocketing in later decades. The CBO projects the federal debt rising from 40% of GDP to 100% in the next 25 years: "Continuing on this unsustainable path will gradually erode, if not suddenly damage, our economy, our standard of living, and ultimately our national security."
...
In my opinion, the turning point occurred in late 2002. Remember, the Afghan War was hot. America was in recession and a bear market. The surpluses of the 1990s rapidly disappeared. Corporate scandals were damaging our global standing. Washington was pushing a second round of tax cuts. And the Iraq invasion was imminent.
Treasury Secretary Paul O'Neill, true to Hamiltonian principles, warned the White House of a coming fiscal crisis. The vice president retorted: "Reagan proved deficits don't matter." (Hormats tells me Reagan never said that.) Soon after, Cheney "fired" O'Neill ... and Hamilton's principles of sound war financing were dead.
Unfortunately, Washington's radical new faith-based financing is sabotaging national security. America's unsustainable deficits are making us extremely vulnerable to terrorists whose goal is to "attack the United States, perhaps with chemical, biological, or nuclear weapons capable of killing enormous numbers of people and seriously disrupting the American economy," targeting a "major port or transportation center."
Hormats says America is now "relying on faith over experience, hoping that sustained growth will erase deficits and that the ballooning costs of Social Security, Medicare and Medicaid will be manageable in the coming decades without difficult reforms."
Wednesday, July 18, 2007
Yet one significant victim of America's market-based health-care system is left out: market capitalism itself
Health Costs Screw Business, Too | he victim Sicko won't acknowledge. | By Timothy Noah | Posted Monday, July 2, 2007, at 2:01 AM ET
...
... Yet one significant victim of America's market-based health-care system is left out: market capitalism itself.
I refer not to health insurers, nor to health-maintenance organizations, nor to for-profit hospitals, but rather to businesses outside the health-care sector that are saddled with the growing cost of providing health insurance to their employees. This obligation puts American companies at a disadvantage with respect to foreign competitors whose governments provide health care. The most obvious victim, ironically, is a company Moore knows very well: General Motors. Because of health-care obligations, the automaker that Moore pilloried in his first film, Roger and Me, is fighting for its life.
...
It's tempting to demonize business for whittling away at health-care benefits, but over the past two decades the cost to business of providing those benefits has roughly doubled, to a great extent because health insurers and hospitals now employ vast bureaucratic armies to fight over medical bills. Health-care costs are now outrunning income gains by about 3 percentage points. This means that for the typical worker, raises are, for the foreseeable future, an artifact of the past. That's terrible news for labor, but it's terrible news for bosses, too, because it robs them of a necessary tool to get employees to perform good work.
...
...
... Yet one significant victim of America's market-based health-care system is left out: market capitalism itself.
I refer not to health insurers, nor to health-maintenance organizations, nor to for-profit hospitals, but rather to businesses outside the health-care sector that are saddled with the growing cost of providing health insurance to their employees. This obligation puts American companies at a disadvantage with respect to foreign competitors whose governments provide health care. The most obvious victim, ironically, is a company Moore knows very well: General Motors. Because of health-care obligations, the automaker that Moore pilloried in his first film, Roger and Me, is fighting for its life.
...
It's tempting to demonize business for whittling away at health-care benefits, but over the past two decades the cost to business of providing those benefits has roughly doubled, to a great extent because health insurers and hospitals now employ vast bureaucratic armies to fight over medical bills. Health-care costs are now outrunning income gains by about 3 percentage points. This means that for the typical worker, raises are, for the foreseeable future, an artifact of the past. That's terrible news for labor, but it's terrible news for bosses, too, because it robs them of a necessary tool to get employees to perform good work.
...
the destruction of the US economy, though far advanced, is still largely unknown ....
Goodbye to the city upon a hill and to its fabled economy | By Paul Craig Roberts
“We shall be as a city upon a hill. The eyes of all people are upon us.”
— John Winthrop
America is being destroyed. Many Americans are unaware, others are indifferent, and some intend it. The destruction is across the board: the political and constitutional system, the economy, social institutions including the family itself, citizenship, and the character and morality of the American people.
...
06/25/07 "ICH " -- -- Those who rely on the Internet for information are aware that the Bush regime has successfully assaulted the separation of powers and civil liberty. Both Bush and Cheney claim that they are not bound by laws that impinge on their freedom of action or that interfere with their ideas of the power of their offices. Bush has issued presidential directives that permit him to make himself a dictator by declaring a national emergency. Cheney asserts that his handling of secret documents is not subject to oversight or investigation or bound by a presidential order governing the protection of classified information.
The foundation of social organization — marriage, family, and parental control over children — is disintegrating.
Mass unassimilated and illegal immigration has destroyed the meaning of American citizenship and forced large numbers of Americans into unemployment. For example, Steve Camarota at the Center for Immigration Studies reported on June 20 that state employment data show that in the first six years of the 21st century 218,000 high school graduates in the state of Georgia have been employment- displaced by immigrants. [Employment Down Among Natives In Georgia] Moreover, wages have stagnated, putting the lie to the claim that there is a shortage of workers. If there were a labor shortage, wages would be bid up and rising.
...
A Google search will call up enough information to make the case for these points many times over. However, the destruction of the US economy, though far advanced, is still largely unknown. It is to this subject that we turn.
For a number of years Charles McMillion of MBG Information Services and I have documented from BLS nonfarm payroll jobs data that the US economy in the 21st century no longer creates net new jobs in tradable goods and services. In the 21st century, job growth in “the world’s only superpower” has a definite third world flavor. US job growth has been limited to domestic services that cannot be moved offshore, such as waitresses and bartenders and health and social services.
These are not jobs that comprise ladders of upward mobility. Income inequality is worsening, and education is no longer the answer.
The problem is that middle class jobs, both in manufacturing and in professional occupations such as engineering, are being offshored as corporations replace their American workforces with foreigners. I have called jobs offshoring “virtual immigration.”
The latest bombshell is that even those professional jobs that remain located in America are not safe. There is a vast industry of immigration law firms that enable American corporations to replace their American workers with foreigners brought in on work visas.
For years Americans have been told that work visas are only issued in cases where there are no Americans with the necessary skills to fill the jobs. Americans have been reassured that safeguards are in place to prevent US companies from using the work visas to replace their American employees with foreigners paid below the prevailing US wage. Now, thanks to a video placed on “YouTube” by a US law firm, Cohen & Grigsby, marketing its services, we now know that it is easy for US companies to legally evade the “safeguards” and to replace their American employees with lower paid foreigners. ...
...
Only a few economists, such as myself and Charles McMillion, noticed the inconsistency between alleged high rates of productivity and GDP growth on one hand and stagnant real median incomes and rising income inequality on the other. Somehow the US economy was having GDP and productivity growth that was not showing up in growth in the incomes of Americans.
Thanks to economist Susan N. Houseman and the March 22 issue of Business Week, we now know, as I reported in the print edition of CounterPunch (June 1-15, 2007) and online at VDARE.com and Online Journal, that much of the growth in US productivity and GDP was an illusion created by statistics that mistakenly attributed productivity gains achieved abroad to the US economy.
With the ladders of upward mobility for Americans dismantled by offshoring and work visas, with the very real problems in mortgage and housing markets, with the very real stress put on the US dollar’s reserve currency role by Bush’s trillion dollar war that is financed by foreigners, with the downward revisions in US GDP and productivity growth that are now mandatory, and with a variety of other problems that I haven’t the space to deal with, the fabled US economy is a thing of the past.
Just like America’s prestige. Just like the world’s goodwill toward America. Just like American liberty. ...
“We shall be as a city upon a hill. The eyes of all people are upon us.”
— John Winthrop
America is being destroyed. Many Americans are unaware, others are indifferent, and some intend it. The destruction is across the board: the political and constitutional system, the economy, social institutions including the family itself, citizenship, and the character and morality of the American people.
...
06/25/07 "ICH " -- -- Those who rely on the Internet for information are aware that the Bush regime has successfully assaulted the separation of powers and civil liberty. Both Bush and Cheney claim that they are not bound by laws that impinge on their freedom of action or that interfere with their ideas of the power of their offices. Bush has issued presidential directives that permit him to make himself a dictator by declaring a national emergency. Cheney asserts that his handling of secret documents is not subject to oversight or investigation or bound by a presidential order governing the protection of classified information.
The foundation of social organization — marriage, family, and parental control over children — is disintegrating.
Mass unassimilated and illegal immigration has destroyed the meaning of American citizenship and forced large numbers of Americans into unemployment. For example, Steve Camarota at the Center for Immigration Studies reported on June 20 that state employment data show that in the first six years of the 21st century 218,000 high school graduates in the state of Georgia have been employment- displaced by immigrants. [Employment Down Among Natives In Georgia] Moreover, wages have stagnated, putting the lie to the claim that there is a shortage of workers. If there were a labor shortage, wages would be bid up and rising.
...
A Google search will call up enough information to make the case for these points many times over. However, the destruction of the US economy, though far advanced, is still largely unknown. It is to this subject that we turn.
For a number of years Charles McMillion of MBG Information Services and I have documented from BLS nonfarm payroll jobs data that the US economy in the 21st century no longer creates net new jobs in tradable goods and services. In the 21st century, job growth in “the world’s only superpower” has a definite third world flavor. US job growth has been limited to domestic services that cannot be moved offshore, such as waitresses and bartenders and health and social services.
These are not jobs that comprise ladders of upward mobility. Income inequality is worsening, and education is no longer the answer.
The problem is that middle class jobs, both in manufacturing and in professional occupations such as engineering, are being offshored as corporations replace their American workforces with foreigners. I have called jobs offshoring “virtual immigration.”
The latest bombshell is that even those professional jobs that remain located in America are not safe. There is a vast industry of immigration law firms that enable American corporations to replace their American workers with foreigners brought in on work visas.
For years Americans have been told that work visas are only issued in cases where there are no Americans with the necessary skills to fill the jobs. Americans have been reassured that safeguards are in place to prevent US companies from using the work visas to replace their American employees with foreigners paid below the prevailing US wage. Now, thanks to a video placed on “YouTube” by a US law firm, Cohen & Grigsby, marketing its services, we now know that it is easy for US companies to legally evade the “safeguards” and to replace their American employees with lower paid foreigners. ...
...
Only a few economists, such as myself and Charles McMillion, noticed the inconsistency between alleged high rates of productivity and GDP growth on one hand and stagnant real median incomes and rising income inequality on the other. Somehow the US economy was having GDP and productivity growth that was not showing up in growth in the incomes of Americans.
Thanks to economist Susan N. Houseman and the March 22 issue of Business Week, we now know, as I reported in the print edition of CounterPunch (June 1-15, 2007) and online at VDARE.com and Online Journal, that much of the growth in US productivity and GDP was an illusion created by statistics that mistakenly attributed productivity gains achieved abroad to the US economy.
With the ladders of upward mobility for Americans dismantled by offshoring and work visas, with the very real problems in mortgage and housing markets, with the very real stress put on the US dollar’s reserve currency role by Bush’s trillion dollar war that is financed by foreigners, with the downward revisions in US GDP and productivity growth that are now mandatory, and with a variety of other problems that I haven’t the space to deal with, the fabled US economy is a thing of the past.
Just like America’s prestige. Just like the world’s goodwill toward America. Just like American liberty. ...
Monday, July 16, 2007
Buffett revealed his puzzlement ...only taxed at a 17.7 percent rate ... those who work for him ... pay on average about 32.9 percent in taxes
Buffett talks tax reform with Sen. Clinton | By David Ellis, CNNMoney.com staff writer | June 27 2007: 12:22 AM EDT
Berkshire Hathaway chairman suggests greater taxes for private equity firm managers and super rich to presidential hopeful.
...
Speaking to several hundred supporters of the U.S. Senator from New York, Buffett revealed his puzzlement that he was taxed at a lower rate than many of the lesser-paid individuals working for his company.
Buffett said he makes $46 million a year in income and is only taxed at a 17.7 percent rate on his federal income taxes. By contrast, those who work for him, and make considerably less, pay on average about 32.9 percent in taxes - with the highest rate being 39.7 percent.
To emphasize his point, Buffett offered $1 million to the audience member who could show that one of the nation's wealthiest individuals pays a higher tax rate than one of their subordinates.
"I'm willing to bet anyone in this room $1 million that those rates are less than the secretary has to pay," said Buffett. ...
Berkshire Hathaway chairman suggests greater taxes for private equity firm managers and super rich to presidential hopeful.
...
Speaking to several hundred supporters of the U.S. Senator from New York, Buffett revealed his puzzlement that he was taxed at a lower rate than many of the lesser-paid individuals working for his company.
Buffett said he makes $46 million a year in income and is only taxed at a 17.7 percent rate on his federal income taxes. By contrast, those who work for him, and make considerably less, pay on average about 32.9 percent in taxes - with the highest rate being 39.7 percent.
To emphasize his point, Buffett offered $1 million to the audience member who could show that one of the nation's wealthiest individuals pays a higher tax rate than one of their subordinates.
"I'm willing to bet anyone in this room $1 million that those rates are less than the secretary has to pay," said Buffett. ...
Wednesday, July 11, 2007
Only the combination of policies to address both innovation and income inequality can build a stronger and more durable economy.
Productive Dialogue vs. Name Calling Posted July 5, 2007 10:21 AM (EST)
...
Considering the economic performance of the past few years illustrates the challenges facing the U.S. economy and points the way for policy to intercede. Specifically, growth in this business cycle stayed below average and was carried by an unsustainable debt boom. Between March 2001 and March 2007, the economy grew at an annual rate of 2.6 percent, compared to 3.3 percent in the past. This growth was based on an unsustainable increase in debt. Since March 2001, household debt relative to disposable income increased over four times faster than in the 1990s. Eventually families stopped borrowing to finance consumption, resulting in less growth.
A healthier path would have been income-based growth, but income growth has been weak by all accounts. For instance, from March 2001 to March 2007, real hourly wages grew by just 2.7 percent, real weekly wages only by 2.1 percent, and average monthly job growth was the lowest since the Great Depression. Moreover, the share of private sector workers with a pension dropped from 50.3 percent in 1995 to 45.0 percent in 2005 and the share of people with employer-provided health insurance fell from 63.6 percent to 59.5 percent at the same time.
With consumption fuelled by unsustainable debt growth, businesses held back on investment. Total investment peaked at 10.7 percent of GDP during the current business cycle, 1.9 percentage points lower than the last investment peak. Instead, the average share of before-tax profits devoted to share repurchases and dividend payouts was the largest of any business cycle.
If it hasn't already done so, this low level of investment may ultimately contribute to permanently slower productivity growth. Researchers have recently raised questions about the measured strength of productivity growth, with Susan Houseman stating that productivity growth inappropriately included input costs that have been offshored, and Dean Baker arguing that what matters for future living standards is the productivity growth that actually adds new value to the economy. This debate over the accurate measurement of productivity growth does not detract from the fact that productivity growth has rapidly declined to less than 2 percent in 2006.
...
Also, business investment requires sustainable consumption growth via stronger income gains. While increases in income inequality have been well documented, observers such as Jacob Hacker, Elizabeth Warren, and Jeff Madrick have also highlighted the growing inequality of opportunity that has resulted largely from increased household debt, slow income growth, and declining insurance coverage. For instance, the share of families that could sustain an economic emergency equal to three months' income gradually rose throughout the 1990s but fell sharply after 2000, so that by 2003 all gains of the 1990s had been erased. This likely contributed to the sense of financial uncertainty that is evident in polls and may leave fewer families willing to take risks, e.g. start a business or pursue more education. Policies that could help raise middle-class security and create new opportunities include more portable health and pension benefits, more equitably distributed incentives for personal saving, and more support for training in addition to a higher minimum wage, more opportunities to join unions, and more progressive taxes.
Only the combination of policies to address both innovation and income inequality can build a stronger and more durable economy. ..
...
Considering the economic performance of the past few years illustrates the challenges facing the U.S. economy and points the way for policy to intercede. Specifically, growth in this business cycle stayed below average and was carried by an unsustainable debt boom. Between March 2001 and March 2007, the economy grew at an annual rate of 2.6 percent, compared to 3.3 percent in the past. This growth was based on an unsustainable increase in debt. Since March 2001, household debt relative to disposable income increased over four times faster than in the 1990s. Eventually families stopped borrowing to finance consumption, resulting in less growth.
A healthier path would have been income-based growth, but income growth has been weak by all accounts. For instance, from March 2001 to March 2007, real hourly wages grew by just 2.7 percent, real weekly wages only by 2.1 percent, and average monthly job growth was the lowest since the Great Depression. Moreover, the share of private sector workers with a pension dropped from 50.3 percent in 1995 to 45.0 percent in 2005 and the share of people with employer-provided health insurance fell from 63.6 percent to 59.5 percent at the same time.
With consumption fuelled by unsustainable debt growth, businesses held back on investment. Total investment peaked at 10.7 percent of GDP during the current business cycle, 1.9 percentage points lower than the last investment peak. Instead, the average share of before-tax profits devoted to share repurchases and dividend payouts was the largest of any business cycle.
If it hasn't already done so, this low level of investment may ultimately contribute to permanently slower productivity growth. Researchers have recently raised questions about the measured strength of productivity growth, with Susan Houseman stating that productivity growth inappropriately included input costs that have been offshored, and Dean Baker arguing that what matters for future living standards is the productivity growth that actually adds new value to the economy. This debate over the accurate measurement of productivity growth does not detract from the fact that productivity growth has rapidly declined to less than 2 percent in 2006.
...
Also, business investment requires sustainable consumption growth via stronger income gains. While increases in income inequality have been well documented, observers such as Jacob Hacker, Elizabeth Warren, and Jeff Madrick have also highlighted the growing inequality of opportunity that has resulted largely from increased household debt, slow income growth, and declining insurance coverage. For instance, the share of families that could sustain an economic emergency equal to three months' income gradually rose throughout the 1990s but fell sharply after 2000, so that by 2003 all gains of the 1990s had been erased. This likely contributed to the sense of financial uncertainty that is evident in polls and may leave fewer families willing to take risks, e.g. start a business or pursue more education. Policies that could help raise middle-class security and create new opportunities include more portable health and pension benefits, more equitably distributed incentives for personal saving, and more support for training in addition to a higher minimum wage, more opportunities to join unions, and more progressive taxes.
Only the combination of policies to address both innovation and income inequality can build a stronger and more durable economy. ..
link income inequality to many various social problems, like higher mortality rates, crime, welfare, substance abuse and educational problems
Steve's note: The following article describes two important studies (from Harvard and Berkeley) that impressively link income inequality to many various social problems, like higher mortality rates, crime, welfare, substance abuse and educational problems. It explains why the growing inequality of the Reagan Years, described in detail on this web site, played such a critical role in worsening our nation's social problems. An extremely important read!
ECONOMIC INEQUALITY AND HEALTH | By Peter Montague
...
What is not so obvious is that the health of the poor is harmed in proportion to the size of the gap between rich and poor. It isn't the absolute level of poverty that matters so much as the size of the gap between rich and poor. In other words, "...what matters in determining mortality and health in a society is less the overall wealth of that society and more how evenly wealth is distributed. The more equally wealth is distributed the better the health of that society," according to an editorial in the BRITISH MEDICAL JOURNAL April 20th.[5] Two recent studies of the U.S. indicate that this is so,[6,7] and they are not the first to make the case.[8,9]
The two recent studies, published in April in the BRITISH MEDICAL JOURNAL, examine all 50 states within the U.S. Each study defines a measure of income inequality and compares it to various rates of disease and other social problems. Both the studies -- one from Harvard and one from University of California at Berkeley -- conclude that the greater the gap between rich and poor, the greater the chances that people will be sick and die young. It isn't the absolute level of wealth in a society that determines health; it is the size of the gap between rich and poor. Let's look at some of the details:
George Kaplan and his colleagues at Berkeley measured inequality in the 50 states as the percentage of total household income received by the less well off 50% of households.[6] It ranged from about 17% in Louisiana and Mississippi to about 23% in Utah and New Hampshire. In other words, by this measure, Utah and New Hampshire have the most EQUAL distribution of income, while Louisiana and Mississippi have the most UNEQUAL distribution of income.
This measure of income inequality was also tested against other social conditions besides health. States with greater inequality in the distribution of income also had higher rates of unemployment, higher rates of incarceration, a higher percentage of people receiving income assistance and food stamps, and a greater percentage of people without medical insurance. Again, the gap between rich and poor was the best predictor, not the average income in the state.
Interestingly, states with greater inequality of income distribution also spent less per person on education, had fewer books per person in the schools, and had poorer educational performance, including worse reading skills, worse math skills, and lower rates of completion of high school.
States with greater inequality of income also had a greater proportion of babies born with low birth weight; higher rates of homicide; higher rates of violent crime; a greater proportion of the population unable to work because of disabilities; a higher proportion of the population using tobacco; and a higher proportion of the population being sedentary (inactive).
Lastly, states with greater inequality of income had higher costs per-person for medical care, and higher costs per person for police protection.
The Harvard researchers used a slightly different measure of inequality, called the Robin Hood index.[10] The higher the Robin Hood index, the greater the inequality in the distribution of income. The researchers calculated the Robin Hood index for all 50 states and then examined its relationship to various measures of health and well being.
They found that the Robin Hood index correlated with the overall age-adjusted death rate. Each percentage point increase in the Robin Hood index was associated with an increase in total mortality of 21.7 deaths per 100,000 population.
The Robin Hood index was also strongly associated with the infant mortality (death) rate; with deaths from heart disease; with deaths from cancer; and with deaths by homicide among both blacks and whites.
The Harvard team concludes that reducing inequality would bring important health benefits. For example, if the Robin Hood index were reduced from 30% to 25% (about where it is in England), deaths from coronary heart disease would be reduced by 25%.
These studies are important because they confirm work that has previously found a relationship between income inequality and health, using data of good quality from all 50 states.[11] Inequality in the distribution of income and wealth[12] has been increasing in the U.S. for about 20 years.[13,14,15,16] In 1977 the wealthiest 5% of Americans captured 16.8% of the nation's entire income; by 1989 that same 5% was capturing 18.9%. During the 4-year Clinton presidency the wealthiest 5% have increased their take of the total to over 21%, "an unprecedented rate of increase," according to the British ECONOMIST magazine.[17]
...
The growing gap between rich and poor has not been ordained by extraterrestrial beings. It has been created by the policies of governments: taxation, training, investment in children and their education, modernization of businesses, transfer payments, minimum wages and health benefits, capital availability, support for green industries, encouragement of labor unions, attention to infrastructuire and technical assistance to entrepreneurs, among others. In the U.S., government policies of the past 20 years have promoted, encouraged and celebrated inequality. These are choices that we, as a society, have made. Now one half of our society is afraid of the other half, and the gap between us is expanding. Our health is not the only thing in danger. They that sow the wind shall reap the whirlwind. ...
ECONOMIC INEQUALITY AND HEALTH | By Peter Montague
...
What is not so obvious is that the health of the poor is harmed in proportion to the size of the gap between rich and poor. It isn't the absolute level of poverty that matters so much as the size of the gap between rich and poor. In other words, "...what matters in determining mortality and health in a society is less the overall wealth of that society and more how evenly wealth is distributed. The more equally wealth is distributed the better the health of that society," according to an editorial in the BRITISH MEDICAL JOURNAL April 20th.[5] Two recent studies of the U.S. indicate that this is so,[6,7] and they are not the first to make the case.[8,9]
The two recent studies, published in April in the BRITISH MEDICAL JOURNAL, examine all 50 states within the U.S. Each study defines a measure of income inequality and compares it to various rates of disease and other social problems. Both the studies -- one from Harvard and one from University of California at Berkeley -- conclude that the greater the gap between rich and poor, the greater the chances that people will be sick and die young. It isn't the absolute level of wealth in a society that determines health; it is the size of the gap between rich and poor. Let's look at some of the details:
George Kaplan and his colleagues at Berkeley measured inequality in the 50 states as the percentage of total household income received by the less well off 50% of households.[6] It ranged from about 17% in Louisiana and Mississippi to about 23% in Utah and New Hampshire. In other words, by this measure, Utah and New Hampshire have the most EQUAL distribution of income, while Louisiana and Mississippi have the most UNEQUAL distribution of income.
This measure of income inequality was also tested against other social conditions besides health. States with greater inequality in the distribution of income also had higher rates of unemployment, higher rates of incarceration, a higher percentage of people receiving income assistance and food stamps, and a greater percentage of people without medical insurance. Again, the gap between rich and poor was the best predictor, not the average income in the state.
Interestingly, states with greater inequality of income distribution also spent less per person on education, had fewer books per person in the schools, and had poorer educational performance, including worse reading skills, worse math skills, and lower rates of completion of high school.
States with greater inequality of income also had a greater proportion of babies born with low birth weight; higher rates of homicide; higher rates of violent crime; a greater proportion of the population unable to work because of disabilities; a higher proportion of the population using tobacco; and a higher proportion of the population being sedentary (inactive).
Lastly, states with greater inequality of income had higher costs per-person for medical care, and higher costs per person for police protection.
The Harvard researchers used a slightly different measure of inequality, called the Robin Hood index.[10] The higher the Robin Hood index, the greater the inequality in the distribution of income. The researchers calculated the Robin Hood index for all 50 states and then examined its relationship to various measures of health and well being.
They found that the Robin Hood index correlated with the overall age-adjusted death rate. Each percentage point increase in the Robin Hood index was associated with an increase in total mortality of 21.7 deaths per 100,000 population.
The Robin Hood index was also strongly associated with the infant mortality (death) rate; with deaths from heart disease; with deaths from cancer; and with deaths by homicide among both blacks and whites.
The Harvard team concludes that reducing inequality would bring important health benefits. For example, if the Robin Hood index were reduced from 30% to 25% (about where it is in England), deaths from coronary heart disease would be reduced by 25%.
These studies are important because they confirm work that has previously found a relationship between income inequality and health, using data of good quality from all 50 states.[11] Inequality in the distribution of income and wealth[12] has been increasing in the U.S. for about 20 years.[13,14,15,16] In 1977 the wealthiest 5% of Americans captured 16.8% of the nation's entire income; by 1989 that same 5% was capturing 18.9%. During the 4-year Clinton presidency the wealthiest 5% have increased their take of the total to over 21%, "an unprecedented rate of increase," according to the British ECONOMIST magazine.[17]
...
The growing gap between rich and poor has not been ordained by extraterrestrial beings. It has been created by the policies of governments: taxation, training, investment in children and their education, modernization of businesses, transfer payments, minimum wages and health benefits, capital availability, support for green industries, encouragement of labor unions, attention to infrastructuire and technical assistance to entrepreneurs, among others. In the U.S., government policies of the past 20 years have promoted, encouraged and celebrated inequality. These are choices that we, as a society, have made. Now one half of our society is afraid of the other half, and the gap between us is expanding. Our health is not the only thing in danger. They that sow the wind shall reap the whirlwind. ...
States with greater inequality ... less education, less books, worse reading, low birth weight, violent crime, disabilities, higher medical care costs
Thursday, May 03, 2007 | Poverty Can Make You Get Sick and Die
Several studies prove it. The policies of Ronald Reagan, George W. Bush, and the GOP, in general, have harmed Americans by attacking the public health, increasing death rates as a result.
...
What might have been common sense has been left to researchers to prove: poverty and poor health go hand in hand. Poverty means many things to a growing number of people but two factors are obvious: bad nutrition and unhealthy living conditions. Indeed, every step down the economic ladder worsens overall health.
There is yet another factor. The latest research leads to the conclusion that the mere fact of inequality increases mortality rates. This is an increase having nothing to do with nutrition or living conditions. It is a matter of inequality in and of itself.
Some of these conclusions may be found in two studies published by the British Medical Journal. The conclusion is impossible for conservatives and Social Darwinists to refute: The more equally wealth is distributed the better the health of that society. There is the possibility, of course, that America's privileged elite, Bush's base, doesn't really care about the health of society. As they might say in London's East End: Oi'm awlroight, Jack!
Interestingly, states with greater inequality of income distribution also spent less per person on education, had fewer books per person in the schools, and had poorer educational performance, including worse reading skills, worse math skills, and lower rates of completion of high school.
States with greater inequality of income also had a greater proportion of babies born with low birth weight; higher rates of homicide; higher rates of violent crime; a greater proportion of the population unable to work because of disabilities; a higher proportion of the population using tobacco; and a higher proportion of the population being sedentary (inactive).
Lastly, states with greater inequality of income had higher costs per-person for medical care, and higher costs per person for police protection.
- Peter Montague, Economic Inequality and Health
Several studies prove it. The policies of Ronald Reagan, George W. Bush, and the GOP, in general, have harmed Americans by attacking the public health, increasing death rates as a result.
...
What might have been common sense has been left to researchers to prove: poverty and poor health go hand in hand. Poverty means many things to a growing number of people but two factors are obvious: bad nutrition and unhealthy living conditions. Indeed, every step down the economic ladder worsens overall health.
There is yet another factor. The latest research leads to the conclusion that the mere fact of inequality increases mortality rates. This is an increase having nothing to do with nutrition or living conditions. It is a matter of inequality in and of itself.
Some of these conclusions may be found in two studies published by the British Medical Journal. The conclusion is impossible for conservatives and Social Darwinists to refute: The more equally wealth is distributed the better the health of that society. There is the possibility, of course, that America's privileged elite, Bush's base, doesn't really care about the health of society. As they might say in London's East End: Oi'm awlroight, Jack!
Interestingly, states with greater inequality of income distribution also spent less per person on education, had fewer books per person in the schools, and had poorer educational performance, including worse reading skills, worse math skills, and lower rates of completion of high school.
States with greater inequality of income also had a greater proportion of babies born with low birth weight; higher rates of homicide; higher rates of violent crime; a greater proportion of the population unable to work because of disabilities; a higher proportion of the population using tobacco; and a higher proportion of the population being sedentary (inactive).
Lastly, states with greater inequality of income had higher costs per-person for medical care, and higher costs per person for police protection.
- Peter Montague, Economic Inequality and Health
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