Money Matters

[ysabetwordsmith]

I first saw this on Doug's computer screen, from the commentary essay "Money Matters."  This is the quote that caught my eye:

The truth is that while the proximate cause of America’s economic plunge was Wall Street’s excesses leading up to the crash of 2008, its underlying cause — and the reason the economy continues to be lousy for most Americans — is so much income and wealth have been going to the very top that the vast majority no longer has the purchasing power to lift the economy out of its doldrums.

Well, yes. I have been saying that for quite some time. But the person who said this version has served as the 22nd Secretary of Labor. You might ignore me, but he has all the fancy paper and experience to show for it. Of course the obvious is still the obvious: no matter what you try, 20% of the wealth can't run 80% of the economy. Further thoughtful details appear in "The Republican Shakedown," which explains how Republicans are digging in taxpayer pockets. The problem with a shakedown, though, is that eventually you get down to pocket lint. Working Americans are running out of pennies to fund the government, or anything else for that matter.

Comments

It's the top 0.5 to 5%, not 20%

[mejeep.livejournal.com]

Back around 1988 I started feeling the effect of "salary erosion": my take-home pay was reduced by increased costs such as higher medical insurance premiums and higher co-pay. And then my work hours increased from the traditional 9-5 to 8 hours a day NOT counting lunch or breaks, and the occasional mandatory unpaid overtime.

I felt the war on the middle class intensify as the banks started squeezing me with 20-30% credit card interest rates (when they borrow money at under 1% and pay maybe 1-2% to accounts). I don't own a home so I have no other way to borrow money. Rich people don't care, they have other ways to borrow money if necessary, the the poor folks just don't have the money at all.

Where do you get 20%? The Robert Reich article says 5% and it's really more like 0.5%

Only the richest 5 percent of Americans are back in the stores because their stock portfolios have soared. The Dow Jones Industrial Average has doubled from its crisis low. Wall Street pay is up to record levels. Total compensation and benefits at the 25 major Wall St firms had been $130 billion in 2007, before the crash; now it’s close to $140 billion.

But a strong recovery can’t be built on the purchases of the richest 5 percent.

And that leads to one of my "standard rants". As a stockholder, I read the stockholder reports. They ALWAYS claim that the president/CEO and board members don't just deserve high pay and outrageous bonuses but they've deluded themselves into believing that such compensation is essential for retaining talent. The article kinda agrees with me: they're not worth retaining since THEY CAUSED THE ECONOMIC PROBLEMS and they'll continue the problems as long as they're overpaid and unaccountable for their actions. What about retaining the talent of all the teachers, firemen and other essential services who are being fired and having their unions busted? School vouchers and "pay to spray" is really a step backwards from what our gov't and society was providing equally and fairly to everyone. Even teachers' and professors' tenure is being busted: the online comic Piled Higher & Deeper noted how universities used Katrina as a way to "downsize" by eliminating entire departments and nullifying contractual obligations such as tenure.

more to follow ...

Re: It's the top 0.5 to 5%, not 20%

[mejeep.livejournal.com]

ack! sorry for the formatting error, but free accounts can't edit replies.

To continue my rants & replies: the article notes

The final truth is as income and wealth have risen to the top, so has political power. The reason all of this is proving so difficult to get across is the super-rich, such as the Koch brothers, have been using their billions to corrupt politics, hoodwink the public, and enlarge and entrench their outsized fortunes. They’re bankrolling Republicans who are mounting showdowns and threatening shutdowns, and who want the public to believe government spending is the problem.

They are behind the Republican shakedown.

And that's another of my "standard rants". What is this "invisible hand" that's behind things like censorship and responsible for the drivel we see on TV and total lack of any fair coverage of news?

At least in WW II, we knew Dr. Joseph Goebbels was propaganda minister

When the Nazis took power the Propaganda Ministry was established almost immediately. It was charged with enforcing Nazi doctrine on the people and controlling public opinion.

"I consider radio to be the most modern and the most crucial instrument
for influencing the masses.." was a famous and important quote from Goebbels.

So too with Fox News and such. It's in ALL the Amerikan media (Internet, tv, radio, newspapers). So who's OUR Goebbels? Nobody knows.


Now that the EPA cannot protect the environment and the FDA cannot protect us, "privatization" is running free and loose thanks to government "downsizing" of anything that was effective and useful for our protection and well being, thus the BP disaster (from a long series of safety violations and illegal shortcuts) and other under-reported industrial accidents.

I fear that someday we'll learn how corn sweetener is more hazardous
than Cyclamates, Saccharin, (Nutrasweet), or Sucralose (Splenda). But there will be no reparations for all those hurt, injured or sickened by it, unless some ambulance-chaser lawyers leave something for the victims after their class-action suit (thus the TV commercials for asbestos litigation and such).

That's why my main totem animal is a ferret. They're enthusiastic, silly and happy, qualities needed to endure this "economy".

thank you and goodnight.

my sweet tooth

[mejeep.livejournal.com]

Oh yea, to the point about sweeteners. I think it's time for the USA to end the Cuba embargo and import their highly desired tobacco, cigars & sugar. We're no longer high and mighty about "human rights", thus all the outsourcing to China with their child labor, slavery/indentured servitude, environmental hazards and other crimes (lead paint in toys, Melamine milk). I see no reason to punish Cuba anymore.

I fear the real reason is that the corn growers are too well supported by ADL with their frankenfoods, and the congressCritters so totally paid off by the lobbyists (using our own money against us!)


http://www.phdcomics.com/comics.php?f=969
Here's the Tulane Univ story, post-Katrina carnage

Yes...

[ysabetwordsmith.livejournal.com]

We're phasing out high-fructose corn syrup as best we can. A friend is allergic to it, so that's one reason, but also I just dislike and distrust the stuff. I'd avoid frankencorn if I had that option, but the labeling ban makes that impossible in effect -- we can't afford to buy only organic corn products.

Re: Yes...

[mejeep.livejournal.com]

Yes indeed: propaganda, economics and lack of oversight leads to misleading food labelling (abuses of "what is organic or natural?") and all the warnings Mad Magazine spoofed in the 70s (same size box, less content for the same price) or "new and improved" to force us away from the better old reliable formula (we almost lost "classic Coke" due to that and even non-Jews love the yellow-cap Passover Coke since that's sugar, not corn).

Most people don't realize how food prices are increasing by the way containers are all downsizing

• tuna went from 7 to 6 to 5 ounce cans, thus ruining all old recipies that require 6-7 oz
• orange juice from 64 to 59 oz
• yogurt from 8 to 6 oz
• Ice Cream from 2 to 1.5 quarts

Re: Yes...

[ysabetwordsmith.livejournal.com]

Granted, the deception sucks.

On the bright side, people tend to eat based on portion size. If the portions sold are getting smaller, maybe that will help reduce the fattening effects of portion bloat.

Re: It's the top 0.5 to 5%, not 20%

[ysabetwordsmith.livejournal.com]

The proportion I see most often is that the top 20% of people own 80% of the wealth, and the bottom 80% own 20% of the wealth.
http://multinationalmonitor.org/mm2003/03may/may03interviewswolff.html

Some estimates are even more extreme:
http://salemsage.newsvine.com/_news/2010/06/06/4471117-20-of-americans-own-93-of-american-wealth-and-they-should-all-get-tax-cuts

And yes, the top 5% own more than half; the top 1% own about a third.

critical typo :-(

[mejeep.livejournal.com]

I intended to say: They ALWAYS claim that the president/CEO and board members REQUIRE AND DESERVE high pay and outrageous bonuses "to retain the talent". Again, it's an excuse for the top 5% to steal more money just 'cause they're rich and feel entitled to more and more ...

The Japanese have the right idea

[mejeep.livejournal.com]

here's a bit of encouraging news. Too bad no US folks will do it

http://www.cbsnews.com/stories/2009/01/28/eveningnews/main4761136.shtml

Japan Airline Boss Sets Exec Example

(CBS) A private jet is an American CEO's perk. But not the CEO of Japan Airlines. He comes to work on the city bus, CBS News correspondent Barry Petersen reports.

Merrill Lynch boss John Thain spent $1 million decorating his office.

Haruka Nishimatsu, the president and CEO of Japan Air, knocked down his office walls so anyone can walk in.

He buys his suits at a discount store, because a boss who wears Armani puts himself at arm's length from his people. "If management is distant, up in the clouds, people just wait for orders," Nishimatsu told CBS News through a translator. "I want my people to think for themselves."

And meeting his people means popping into planes, chatting with flight attendants, even sorting the newspapers. "I'd like to just find what is going on at the front line," he said.

All CEOs say that service is important, but Nishimatsu goes it a step beyond. He says that if you're having a bad experience, don't get angry with the people you're dealing with - blame the person in charge.

The person in charge here walks the walk. Look up, and there's the boss. Got an idea? Catch him at lunch in the company cafeteria.

His salary for running the worlds 10th largest airline: not millions, but one year as low as $90,000. When he was forced to cut salaries for everyone else, he also cut his own.

"My wife said, 'what?'" he said through a translator.

To him, a leader shares the economic pain.

"I feel close to him," said flight attendant Akiko Isobe. "It's encouraging."

These days all airlines are struggling. Even at reliably profitable Southwest, its time to tighten belts.

"It will not work if leaders treat themselves one way and employees another way," said Gary Kelly, the CEO of Southwest Airlines.

Nishimatsu says a CEO doesn't motivate by how many millions he makes, but by convincing employees you're all together in the same boat.

Now that's a spirit that could help survive the current economic storm.

Re: The Japanese have the right idea

[ysabetwordsmith.livejournal.com]

Agreed. This is the way to run a company. The CEO should be a brain inside the body, not a brain slug attached to the outside.

[msstacy13.livejournal.com]

So, yeah, that's what led up to October, 1929.

How does it not occur to wealthy people that whatever a person with one billion dollars
can do with a second billion dollars
could be done better by a million people with a thousand dollars each?

Yes...

[ysabetwordsmith.livejournal.com]

>>So, yeah, that's what led up to October, 1929.<<

That's why history makes me pessimistic about much contemporary news. Too much sounds like what preceded this or that howling disaster.

>>How does it not occur to wealthy people that whatever a person with one billion dollars
can do with a second billion dollars
could be done better by a million people with a thousand dollars each?<<

Because they aren't thinking about what could be done; they're thinking about what they want. If you gave me a billion dollars, I'd dig out of the hole, secure a future income, and spend the rest on making the world a better place. That is not how most rich people handle money.

To be fair, much can be done with a big chunk that can't be done with smaller chunks. The question is: will the billionaire actually DO something with that second billion that couldn't be done with smaller chunks, and if so, will that create a better benefit than the result of all those smaller chunks helping the economy to cycle? Usually, no. But once in a while rich people do something amazingly useful. Right now, I think we're at (past, actually) the point where what could be done justifies draining funds what what NEEDS to be done. The current allocation of wealth does not produce a functional economy, which is bad for everyone.

[siliconshaman.livejournal.com]

Or as I put, if a small number of people are bleeding the economy dry, eventually it's going to die.

Money, unfortunately, is a zero sum game. More for them, means less for everyone else.

Yes...

[ysabetwordsmith.livejournal.com]

>>Or as I put, if a small number of people are bleeding the economy dry, eventually it's going to die.<<

Precisely. Whenever you take out more from a system than gets put into it, the system eventually collapses. There's no way around that effect. So, in order to have an economy that does not collapse, it must either achieve equilibrium, take out less than is put in, or oscillate slowly around the break-even line. Wild swings are bad.

I believe it should be illegal for corporations to behave like parasites. They should be obliged to behave as commensals at least, and encouraged to behave like symbiotes. Those latter two things are possible, as some businesses do so. I just think we'd have a more functional nation if that were the requirement.

>>Money, unfortunately, is a zero sum game. More for them, means less for everyone else.<<

Too true. There is only so much of it, and the fake money -- which exists only in figments of pixels agreed upon by money-handlers -- is almost all in the hands of the fatcats.

Re: Yes...

[siliconshaman.livejournal.com]

Hmm, you know, there's nearly 20-30 times more 'money' in the economy then actual physical printed cash.. and 80-90% of that virtual money is in the hands of the plutocracy.

Is it bad of me to think that a massive solar/geomagnetic storm wiping out all those digital dollars might not be such a bad deal for most of us...

Re: Yes...

[ysabetwordsmith.livejournal.com]

I suspect that we'd lose more than we gained, alas. Too much infrastructure would be hit by a blast like that ... and the rich people wouldn't be the ones paying for repairs.

Re: Yes...

[siliconshaman.livejournal.com]

Yeah, that would be too shattershot..