Thursday, October 20, 2011

Stop feeding the one percent

Initial unemployment claims fell last week closing in on the “magic” 400,000 level that is supposed to indicate jobs are being created. The number of layoffs remains this high not because no jobs are being created but because the workforce is being churned by corporate America to drive down wages.

It’s obvious the official unemployment rate is a far rosier number than the reality.  The participation rate among the civilian workforce is now under 65% and the truth it’s been in decline ever since the election of George Bush. As outsourcing of jobs accelerated at the start of the Republican’s American Century the percentage of Americans with jobs has steadily declined.

This is not the worst news, even if you have a job your standard of living is falling fast. The numbers show that the last three years of economic decline produced the longest and steepest drop in standard of living since statistics have been kept. In fact the only reason that household income remained constant for most of the last 30 years was that the increase in number of jobs in a household went from 1.1 prior to Reagan to 1.8 just before the crash in 2008.

Americans have a irrational belief in individual achievement and tend not to grasp that their own decline is really a result of the decline the 99%. It took three years from the crash of 1929 until 1932 before people really started to demand change. The current crash is now three years old and people are again starting to wake up.

The next big hurdle to overcome is the widespread belief that the problems are “natural” and can’t be fixed. Republicans have all the talking points about job creators, too few millionaires to produce any significant revenue and simultaneously that they pay most of the taxes now, the rich will leave if we tax them or the rich will simply get out of paying the taxes so why bother.

The one talking point that I really like is that corporations will pass along the taxes to us anyway if we dare to raise them. This is of course a simple impossibility as income taxes are only a percentage of profits and to “pass them along” would directly increase those taxable profits resulting in more revenue for the government on those additional profits.

The classical economic theory is that prices are basically what market competition will allow, but with the domination of the economy by fewer and larger corporations tapping an ever shrinking middle class you are really seeing the disappearance of classical economics. It’s more like a study of predator to prey ratios during a drought on the savannah. So much so that the people who chart the course of the retail economy in the US have completely abandoned the middle class as a market at all. The share of retail spending by top ten percent is now closing in on 40% and climbing fast as they harvest an ever bigger share of the prey available.

Wildebeests stand shoulder to shoulder in a circle with horns facing out to keep the predators at bay. Are Americans that smart? Or will they continue to feed the top 1%? www.prairie2.com

9 comments:

Joseph said...

Not only are family incomes constant over the past 30 years, but inflation is also underreported over the same time.

I graduated law school 9 years ago, $100,000 in debt. I can't stop thinking how much easier I'd have it if, like my boss, I'd had a relatively free education.

I'm just a little sad you broke the sendoff pattern. How about "Circle the wagons or surrender your scalp."

Anonymous said...

Good Morning Prarie 2! Enjoyed your analogy of the predator vs. prey on savannah economic theory, put things in better perspective, you guys rock! Thank you! ^___^

Paul said...

Great stuff as always Bruce. I still say we need to wait for the independents to wake up. People are not starving yet. Also the corporations have a lot of money to spend on propaganda. Hope I'm wrong. I have purchased some twenty year cans of food just in case this takes a while...

Paul said...

politics liberal occupy progressive

Paul said...

Right on as always Bruce. I still say we are a bit too early for the Occupy Movement to work. The independents are not starving in the street yet. Give it five more years. I did buys some twenty year canned good just in case it takes a while. Hope I'm wrong this is very exciting.

Dave said...

I just looked up something a bit disturbing. If you're an individual making 30 thousand dollars a year, you're in the upper 50 percent income strata for the US. Really?? That means a whole lot of folks are a whole lot of poor.

Paul said...

Dave,
you sure got that right. Things are still cheap, so everybody still has clean clothes, cell phone, and a TV. When prices of the necessities go out of reach then you will see all h*ll break lose.

Anonymous said...

The magic of compounded interest is a major driver of the growth of wealth of the 1%.

prairie2 said...

"the magic of compounded interest", also known as voodoo economics. The rich do invest heavily in Treasuries, that's why the government can borrow a trillion plus every year. The problem is that can't go on forever, (the interest taxpayers have to pay the rich is subject to the magic of compounding) that's why the tax rate on rich people needs to quadruple from 15% to 60%. And don't say spend less because where will the rich put their money if there are no Treasuries to buy? They don't invest it in jobs, everybody else is too poor to buy anything.