Monday, December 3, 2012

Record profits, lower wages, fewer Republicans

Corporate profits for US companies hit a new record high of $1.75 Trillion for the past quarter. (compare this to the total GDP of $16 trillion) This headline didn't keep Republicans from claiming that Obama has been killing business, and they're saying that 200,000 jobs have already eliminated by the threat of the 'fiscal cliff'.

If you wonder where they're getting these profits, consider that wages have fallen to only 43.5% of US GDP. Historically wages were more than half of GDP, and they were at 49% as recently as the beginning the Bush reign of terror. You also need to keep in mind that the wage total includes astronomical salaries paid to the one percent. Although the really big earners structure their income as capital gains or dividends that aren't counted in this total.

Capital gains, dividends and that favorite of Wall Street, 'carried interest', get taxed at a maximum of 15%, which makes all the noise about a 3 point tax increase on 'earned' income seem rather silly. If the rich were taxed at normal rates and you eliminated their special deductions, that would bring in $1.1 trillion in additional revenue. That's every year, not over ten years as the fiscal bunny slope numbers are calculated.

We don't have an 'entitlements' problem, we have a problem with those who feel entitled to take it all. This isn't about the income of the rich, it's about the rich taking literally everything. Not just the lions share of the money, but the very means of making money for anybody but them. 

Basically this amounts to cash hoarding. In the 19th century the popular name for what we call a recession was a 'cash shortage'. People couldn't do business because there wasn't enough cash in circulation, because the rich would hoard it. Foreclosures were the inevitable consequence, and the rich got richer.

Income taxes were invented to deal with the problem. This is what it's all about with the Republicans hated of income taxes. It keeps them from taking it all for themselves. Of course most people who call themselves Republicans aren't on the 'taking' side of the equation, they just think they'll magically get rich if they help make more poor people.

You can't get through to most conservatives to explain what's really happening to them, they just won't give up their fantasy. It's not hopeless though, you'll notice that there are fewer Republicans every year.


PitchingDoc said...

If the astronomical salaries are included in the 43% of GDP mean wage income, what would the median income be? 41%?

Dave said...

Actually we do have an entitlement problem in the United States. Too many people are stuck having to use them because they can't find jobs at all or ones that pay enough that the workers don't need public assistance to survive.

The people I've known who were on assistance would have been perfectly happy to work to make more money than the pittance they were receiving. They couldn't at the time.

There's one other problem. The tax supported entitlements-so-we-don't-have-people-starving-on-the-street programs are subsidizing the massive profits of huge corporations that make some of their money by not paying employees decently. How do you like paying taxes to support that?