Feeds:
Posts
Comments

Archive for the ‘Economics, recession’ Category

People below demonstrate against US multinational investment banking firm Goldman Sachs buying into the National Danish electricity supplier DONG in front of the Danish Parliament on January 29, 2014. (AFP Photo / Jeppe Bjoern Vejloe)

“Today, banks like Morgan Stanley, JPMorgan Chase and Goldman Sachs own oil tankers, run airports and control huge quantities of coal, natural gas, heating oil, electric power and precious metals. They likewise can now be found exerting direct control over the supply of a whole galaxy of raw materials crucial to world industry and to society in general, including everything from food products to metals like zinc, copper, tin, nickel and, most infamously thanks to a recent high-profile scandal, aluminum. And they’re doing it not just here but abroad as well: In Denmark, thousands took to the streets in protest in recent weeks, vampire-squid banners in hand, when news came out that Goldman Sachs was about to buy a 19 percent stake in Dong Energy, a national electric provider. The furor inspired mass resignations of ministers from the government’s ruling coalition, as the Danish public wondered how an American investment bank could possibly hold so much influence over the state energy grid.”

Here’s how corrupt the process is; Goldman Sachs may not have been the highest bidder for the electricity company. How can that be?

And here’s something to ponder; then President Bill Clinton signed this legislation to redistribute income from the 99 to the 1 percent. If Hilliary Clinton becomes president, expect her to do more of the same. Of course, President Mitt Romney would be at least as bad.

Click the link below to see how investment banks were enabled to become owners and manipulators of industry.

The Vampire Squid Strikes Again–Rolling Stone Magazine

Danish Prime Minister Helle Thorning-Schmidt addresses the media after the Socialist People’s Party quit the government over the controversial sale of a stake in state-controlled energy group DONG to Goldman Sachs. (AFP Photo / Keld Navntoft)

Read Full Post »

The Communications Workers of America and the Teamsters union are both actively campaigning against TPP and Obama’s fast-track authority. Last week the unions released a statement condemning the president’s flip-flop by citing what Obama said when he was campaigning to be president.

In a April 2008 questionnaire provided by the Pennsylvania Fair Trade Coalition, Obama was asked if he supports extending presidential fast-track trade promotion authority, or whether he would support a “new process” that includes congressional approval, consent from the states and binding obligations that must be included in future free-trade agreements.

This is what Obama said at the time:

“I will not support extension of the existing fast track process that expired. I have not and would not support renewing trade promotion authority for this president [George W. Bush]. The current fast track process does not mandate that agreements include binding labor and environmental protections nor does it give an adequate role to Congress in the selection and design of agreements. I will work with congressional leaders to ensure that any new TPA authority fix these basic failings and open up the process to the American people for their participation and scrutiny.”

It should be pointed out that this was hardly the first time Obama lied to working people during his first campaign for the presidency, while engineering backroom deals with members of the 1 percent and Wall Street to screw working people. The Trans Pacific Partnership and Fast Track Authority are just the latest of his lies.

It should also be pointed out that every one of these so-called free trade treaties has resulted in a massive trade deficit, which is bad for the nation.

Read Full Post »

Wall Street Senator Ron Wyden was elected to represent the people of Oregon, but he always represents Wall Street and the 1 percent on all matters pertaining to redistributing income from the 99 percent to the 1 percent and to Wall Street. He has a 100 percent voting record on these issues dating all the back to his days as a US congressman, supposedly from Oregon.

Take the case of the most massive income redistribution treaty of all time, the Trans Pacific Partnership (TPP). Wyden supports it, just like he supported NAFTA and all other income redistribution treaties falsely labeled free trade agreements. Wyden has for years told Oregonians in town hall meetings that Oregon is heavily reliant on trade, but he always lies.

According to the US Census Bureau, Oregon’s exports represent only 1.2 percent of the US total. This is down from 1.4 percent since Wyden voted for the South Korea, Panama and Colombia treaties. In other words, Oregon’s economy is not nearly as dependent on trade as the senator wants us to believe. And since he’s voted for the most recent treaties, Oregon has lost a net number of jobs because of them, just like it lost a net number of jobs to NAFTA.

Furthermore, Oregon imports 7/10 of one percent of all the goods and services that are imported into the US. So Oregon is not as heavily reliant on imports as the senator would have us believe, and by a wide margin. Five states import and export more than fifty percent of all goods and services; Texas, California, Florida, New York, and Ohio. Oregon is on the opposite end of this spectrum.

So if the statistics show the senator is lying to Oregonians on this issue, then why does he lie? Perhaps it is because he serves the 1 percent. He supports so-called free trade agreements because they redistribute income and wealth from the 99 to the 1 percent, and Wyden has a 100 percent voting record on this issue.

When a job is shipped overseas because the senator voted to make it happen, the difference between the old higher wages in the US and the new lower wages overseas goes into the pockets of the 1 percent via higher corporate profits, surging dividends, and rising share prices. The same is true of jobs that are created overseas, because this could not have occurred in the absence of these corporate trade treaties. Their primary purpose is to redistribute income. Wyden knows this. He is not the dumb dumb little boy he pretends to be at town hall meetings.

The result of Wyden’s policies for the people of Oregon is that the income of the people of Oregon has risen in real terms 13.5 percent from 1977 to 2007. The 1 percent have received over 80 percent of this income growth. That means the income of the 1 percent grew 127 percent over the same decades, while those in the bottom 99 percent received a two percent increase in wages over the same period. The difference is because Wyden supports redistributing income via trade treaties, privatization scams, tax cuts for the rich, and lots more. In other words, Wyden’s polices are enormously successful in redistributing income.

This income maldistribution is bad for Oregon. That means only one thing. Wall Street Senator Ron Wyden has been bad for Oregon.

Income Distribution for the USA and the States of the USA–Economic Policy Institute

Read Full Post »

Former Clinton Labor Secretary Robert Reich asked the following on

“Why has America forgotten the three most important economic lessons we learned in the 30 years following World War II? Before I answer that question, let me remind you what those lessons were:

First, America’s real job creators are consumers, whose rising wages generate jobs and growth. If average people don’t have decent wages there can be no real recovery and no sustained growth.

In those years, business boomed because American workers were getting raises, and had enough purchasing power to buy what expanding businesses had to offer. Strong labor unions ensured American workers got a fair share of the economy’s gains. It was a virtuous cycle.

Second, the rich do better with a smaller share of a rapidly growing economy than they do with a large share of an economy that’s barely growing at all.

Between 1946 and 1974, the economy grew faster than it’s grown since, on average, because the nation was creating the largest middle class in history. The overall size of the economy doubled, as did the earnings of almost everyone. CEOs rarely took home more than forty times the average worker’s wage, yet were riding high.

Third, higher taxes on the wealthy to finance public investments — better roads, bridges, public transportation, basic research, world-class K-12 education and affordable higher education – improve the future productivity of America. All of us gain from these investments, including the wealthy.

In those years, the top marginal tax rate on America’s highest earners never fell below 70 percent. Under Republican President Dwight Eisenhower the tax rate was 91 percent. Combined with tax revenues from a growing middle class, these were enough to build the Interstate Highway system, dramatically expand public higher education and make American public education the envy of the world.

We learned, in other words, that broadly-shared prosperity isn’t just compatible with a healthy economy that benefits everyone — it’s essential to it.

But then we forgot these lessons. For the last three decades the American economy has continued to grow but most peoples’ earnings have gone nowhere. Since the start of the recovery in 2009, 95 percent of the gains have gone to the top 1 percent.

What happened?”

Then Reich explains a lot of true stuff, while leaving out a ton of things the Clinton administration did to bring about our current state of massively unequal income distribution.

For starters, instead of defending the middle class, President Clinton joined his Wall Street masters in redistributing income from the middle to the top via free trade treaties, such as NAFTA. Take a look at the graph below.

The US free trade regime began during the 1980s, during the regime of President Ronald Reagan. Jobs, however, had been exported from the US since the 1950s. Under Clinton, and Wall Street Congressmen, such as Ron Wyden, the exportation of jobs accelerated with NAFTA, as anybody with half a brain can see from the graph above, though not Wyden, who apparently still clings to fulfill the desires of his Wall Street masters.

In this case, the financial markets are a Ponzi Scheme. They need to increase steadily in value over the course of time. Otherwise, they’ll accelerate downward. That’s the primary purpose of redistributing income from the 99 to the 1 percent, that is to keep the Ponzi scam known as Wall Street from collapsing, as it did during the Great Depression.

Furthermore, free trade treaties also pave the way for US corporations to create jobs overseas. Millions have been created over there rather here because of NAFTA, the South Korea free trade treaty and more.

And finally, with all the jobs begin shipped away, or created away, from the United States, that meant downward pressure on wages, benefits and salaries. And the difference between the old higher wages and the new lower wages have been redistributed from the pockets of the middle class to the already fat wallets of the 1 percent.

This is precisely why the stock markets tripled in value, more or less, during the last four years of the Clinton regime.

It’s accurate to conclude that the primary purpose of the regime of free trade is to redistribute income upward, and to lower wages, salaries and benefits.

The result of all this has been to diminish the middle class by redistributing the tax bases for our schools and social safety nets to the 1 percent, increase poverty, and corrupt democracy in the USA. And that’s just a few of the negative things this inequality has done.

Now Wall Street Ronnie Wyden wants to continue this process of redistribution via the Trans Pacific Partnership, the biggest income redistribution scam of all time in favor of Wall Street and the 1 percent.

As for the Clinton regime, there were plenty things President Clinton did to redistribute income from the 99 to the 1 percent, but Reich has no intention of letting you in on this, like the free trade scams.

In other words, the political and economic game has been rigged, and Bill Clinton and his labor secretary Robert Reich played big roles in creating this inequality, and now Reich is trying to pretend that his boss and he played no role in creating this rigged game.

For the rest of Reich’s semi-accurate story, click the link below.

Why the Three Biggest Economic Lessons Were Forgotten–BillMoyers.com

Read Full Post »

In Sunday’s paper, The New York Times stunningly devoted its entire editorial space to a thorough analysis and endorsement of raising the national minimum wage to $10.10. Titled “The Case for a Higher Minimum Wage,” the editorial said, “The political posturing over raising the minimum wage sometimes obscures the huge and growing number of low-wage workers it would affect. But the results of the wage debate are clear. Decades of research, facts and evidence show that increasing the minimum wage is vital to the economic security of tens of millions of Americans, and would be good for the weak economy.”

That’s absolutely true. Raising the minimum wage to $10.10 an hour would be good for the economy. However, raising it to $18.28 an hour would massively strengthen the economy by pushing the demand for goods and services into high gear. That’s what creates jobs and raises wages.

The economy can easily afford this, since raising the minimum wage that high would simply be tying it to the rate of productivity growth, which you can see from the graph below. Even by arch conservative logic, raising it that high would be great for the economy since everything in that sphere of supposed logic says that wages should grow with productivity, and it can’t possibly be inflationary since by conservative logic inflation is only caused by an increase in the supply of money.

By the way, the difference between the $18.28 and the current $7.25 per hour minimum wage (11.03 per hour) has been redistributed from the 99 to the 1 percent via the political power of the 1 percent. They’ve used this ill gotten money to redistribute more money from the 99 to the 1 percent, purchased free trade treaties in the halls of congress and the white house so they can ship our jobs overseas, bought privatizations scams, corrupted our federal and state and local governments, raised the prices that we pay for goods and services in violation of the Sherman Anti-Trust Act and paid government officials to look the other way. That’s weakened our tax bases, stolen money from our schools, robbed the elderly of their social safety nets, and destroyed 30 American million jobs since 1990. The list goes on and on, and the one thing this list shows is that the 1 percent have been to the 99 percent as parasites are unto their hosts. That’s all the Koch brothers and their parasitic ilk are.

The New York Times editorial is the link below.

The Case for Raising the Minimum Wage–The New York Times

Read Full Post »

Publicly traded, limited liability corporations are the dominate forms of business structure today, as well as during the past 150 years. This form of business is in its barest form nothing more than “organized money.” The money of rich investors are united into one business, which essentially gives them oligarchic and or monopolistic powers in the various markets into which these business structures reach.

The Reagan tax cuts allowed these corporations and their investors to keep more of their ill gotten gains. They used this extra money to corrupt politicians, such as Wall Street Senator Ronnie Wyden, Orrin Hatch and Mitch McConnell. These corrupt politicians use their political clout to push more legislation that redistributes income from the 99 to the 1 percent, such as NAFTA and the looming Trans Pacific Partnership, which is the largest income redistribution treaty of all time. The also use their ill gotten gains to gain more tax cuts that destroy jobs, such as these so-called free trade treaties, which are nothing more than income redistribution treaties, and Wall Street Senator Ron “Useful Idiot” Wyden knows this.

The only thing that has been corrupted to the core by the money of the rich not mentioned in the cartoon above is the US Supreme Court. A lot of the lower courts have also been corrupted.

Read Full Post »

There are 600 corporate lobbyists helping to craft the latest income redistribution scam, called a free trade treaty. It’s called the Trans Pacific Partnership (TPP). The only US Senator ever called a “useful idiot” by a Nobel Prize winning economist once again shows that he’s Wall Street’s senator. The name of this useful idiot is Wall Street Senator Ron Wyden. Wyden has a 100 percent voting record when it comes to redistributing income from the 99 to the 1 percent. That’s what the TPP is all about. So, naturally, Wall Street’s useful idiot of a senator supports the treaty. The TPP is another rigged game, and like the politics in Washington DC, and in Wall Street Senator Useful Idiot’s office, it’s all about massive amounts of corruption that might make some third world dictators look downright honest.

If you want to discover what corporations are in on this scam, click the link below.

Unlike Everyone Else, Some Big Political Donors Know What’s in the Trans-Pacific Partnership | Money & Politics, What Matters Today | BillMoyers.com.

Read Full Post »

“As Ben S. Bernanke walks away from the Federal Reserve’s marble headquarters on the Mall here after presiding over his last policy meeting on Wednesday, he will leave behind a bittersweet legacy.

On one hand, his unprecedented efforts to drive down interest rates and stimulate the economy are widely credited by his peers with saving the nation from a second Great Depression, strengthening the economic recovery and leaving the nation’s financial condition poised to take off this year.

Yet those same policies have added momentum to one of the greatest surges in economic inequality in US history, helping the wealthiest Americans add to their enormous riches while the incomes of almost everyone else stagnated.”

What isn’t mentioned in Bernanke’s legacy is the probable wholesale corruption going on at the Federal Reserve. The primary purpose of the Fed appears to be to shield rich investors from any market forces they encounter that lessons their wealth. In other words, the Feds primary responsibility appears to be to rescue the rich from their own foolish decisions. This has opened the door to what appears to be a massive amount of corruption, both in the Fed and in the US government. See Breakdown of the $26 Trillion the Federal Reserve Handed Out to Save Incompetent, but Rich Investors–Johnhively.wordpress.com

As for the rest of Bernanke’s dubious legacy, click on the link below.

Ben Bernanke Leaves Legacy of Stimulus and Stagnation–The Sydney Morning Herald

Read Full Post »

Why is President Obama so intent on secretly raising prices of pharmaceutical products, stifling Internet freedom, and redistributing massive amounts of income from the 99 to the 1 percent via the Trans Pacific Partnership, the largest income redistribution scam ever? Why do so many Republicans and Democratic politicians support this secret scam? Just follow the money, like the story does below, and you’ll have your answer.

 

This post originally appeared at Maplight.org.

The United States is currently engaged in secret negotiations on the Trans-Pacific Partnership (TPP), a multinational trade agreement with the goal of liberalizing trade among a dozen or so countries that border on the Pacific Ocean. A draft of the TPP chapter on intellectual property that was recently published by WikiLeaks shows that the U.S. has been pushing the other countries involved in the negotiations to make their laws on copyright, patents and trademarks more agreeable to U.S. companies in the film, telecommunications, and pharmaceuticals industries, among others.

Aside from select members of the Administration, the only people with full access to the working documents on the TPP negotiations are the members of the United States Trade Representative’s (USTR) trade advisory system, including the 18-member Industry Trade Advisory Committee on Intellectual Property Rights (ITAC-15). Members of ITAC-15 include representatives from businesses and industry groups like the Recording Industry Association of America, Verizon, and Pharmaceutical Research and Manufacturers of America; no public-interest groups, academics, or other non-industry experts serve on the committee.

The industry trade advisory system was created by Congress, and membership is partly based on recommendations made from senators and representatives. The organizations represented on ITAC-15 include several top political spenders, who combined have given millions of dollars to members of Congress in recent years.

Data: MapLight analysis of campaign contributions to current members of the Senate and House of Representatives from Political Action Committees (PACs) and employees of organizations represented by the Industry Trade Advisory Committee on Intellectual Property Rights (ITAC-15), from Jan. 1, 2003 – Dec. 31, 2012. Data source: OpenSecrets.org

■The 18 organizations represented by ITAC-15 gave nearly $24 million to current members of Congress from Jan. 1, 2003 – Dec. 31, 2012.
■AT&T has given more than $8 million to current members of Congress, more than any other organization represented by ITAC-15.
■House Speaker John Boehner, R-Ohio, has received $433,350 from organizations represented by ITAC-15, more than any other member of Congress.
■Democrats in Congress have received $11.4 million from organizations represented by ITAC-15, while Republicans in Congress have received $12.6 million.
■The members of Congress sponsoring fast-track legislation, which would allow the President to block Congress from submitting amendments to the TPP, have received a combined $758,295 from organizations represented by ITAC-15. They include Senate Finance Committee Chairman Max Baucus ($140,601), Senate Finance Committee Ranking Members Orrin Hatch ($178,850), House Ways and Means Committee Chairman David Camp ($216,250), House Ways and Means Subcommittee on Trade Chairman Devin Nunes ($86,000), and House Rules Committee Chairman Pete Sessions ($136,594).
Organizations Represented by the Industry Trade Advisory Committee on Intellectual Property Rights (ITAC-15) Contributions to Congress Since 1/1/2003
AT&T $8,056,939
General Electric * $5,262,753
Verizon $5,021,681
Johnson & Johnson $1,812,170
Cisco $1,413,198
Biotechnology Industry Organization $551,792
Pharmaceutical Research and Manufacturers of America $546,155
Recording Industry Association of America $493,986
Mylan Inc. $473,050
Gilead Sciences $196,150
Entertainment Software Association $114,650
Zippo $25,250
Accessory Network Group $4,100
Copyright Clearance Center $860
Infectious Disease Research Institute $500
U.S.-China Business Council $0
MDB Capital Group $0
Coalition for Intellectual Property Rights $0
Grand Total $23,973,234

* Excludes contributions from GE Financial Assurance.

Read Full Post »

The financial markets are soaring, and this has pushed the US economy into a prolonged slump, what Nobel Prize Economist Paul Krugman calls a “low-grade Depression.” Our low grade Depression has been going on since December 2007, while the financial markets have been soaring since 2009, and this is a simple case of cause and effect.

Jobs are being exported year after year, and the difference between the old US wages and the new lower overseas wages go into the pockets of the rich via higher corporate profits, rising dividends and soaring share prices. The unemployed may get unemployment insurance if they’re lucky. It’s a simple case of income redistribution.

Nearly 2 million jobs were exported from the US in 2013. Jobs are the biggest export product produced in the USA. Between 0.9 and 3 million jobs are exported year after year, according to the Federal Reserve, since just before NAFTA.

That doesn’t count the massive numbers of jobs that are created by US companies overseas, that would normally be created in the USA, and performed by US citizens, in the absence of corporate trade treaties, which are specifically negotiated to redistribute income from the 99 to the 1 percent in exactly this way. The difference between the higher wages that should be paid in the USA, and the lower wages paid overseas, is redistributed into the pockets of the super rich, thanks to corporate trade treaties, such as the looming Trans Pacific Partnership, being pushed by Wall Street President Barack Obama, and Wall Street Senators Ron Wyden, Max Baucus and Mitch McConnell.

Where the jobs have gone–Thingprogress.org

The combined job losses have depleted our tax base for schools, other public services, and the US social safety net. Where has the money gone? Directly into the pockets of the rich, which is why the financial markets are soaring.

The 1 percent have taken their ill-gotten gains and invested much of this newly available cash in the financial markets. The result has been the creation of massive financial market bubbles in the US (and perhaps throughout the world, but that’s beyond the scope of this story).

The Dow Jones Industrial average closed at 15,680.35 on December 26 2013, up from 6547.05 in 2009, a rise of almost 240 percent. Meanwhile, the NASDAQ shot up from 1293.85 on March 2, 2009 to 4156.59 on December 26, 2013, an increase of over 320 percent. Other US financial markets have posted similar gains.

Since these advances in the values of corporate share prices have been caused by income being redistributed from the 99 to the 1 percent via federal legislation, such as corporate trade treaties, the result has been a slacking of demand for goods and services in an already weak economy. That’s because the super rich invest their money with an eye toward redistributing more money from the 99 percent into their pockets, while the 99 percent buy stuff, creating demand for goods and services. That’s how the 1 percent weaken the economy and destroy jobs when they redistribute income to themselves from the 1 percent.

All of this is continually made worse by Republican and Democratic Party hacks, such as President Obama, Republican House Leader John Boehner, and Wall Street Senators such as Ron Wyden and Mitch McConnell. 100 percent of the Republican members of the US congress, and 80 to 90 percent of the Democrats elected to congress and the presidency, as well as the corporate toadies of the insanely corrupt US Supreme Court, are doing the bidding of Wall Street and other billionaires (such as the Koch Brothers) at the expense of Main Street and the nation as a whole.

The financial market bubbles will burst sooner than later, in one to five years. When this occurs, our low-grade Great Depression will become a fully ignited Great Depression. This Depression will make the current US economy look really good, although it is historically awful. The official and deliberately understated unemployment rate will rise beyond 20 percent, and perhaps approach 30 percent. The real unemployment rate, as measured during the original Great Depression, will be between 25 and 40 percent. Interest rates will plummet lower than they are now. Housing prices will collapse. The US ranks right up there with Romania when it comes to child poverty, but we will be challenging Haiti and a few African nations for first place when the financial markets burst. The number of people on food stamps will at least double compared to today.

After the bursting, the Federal Reserve will give out trillions of dollars to rich investors, hedge funds, and investment banks, in order to save the day, and their investments. Of course, Fed officials will say they loaned the money out, although it really will be a permanent loan, like last time. See breakdown-of-the-26-trillion-the-federal-reserve-handed-out-to-save-rich-incompetent-investors-but-who-purchase-political-power–Johnhively.wordpress.com.

However, the Fed’s actions will only make things worse because massive investors already know they are protected from losses by the Fed, and so there are no consequences for their insanely bad investment decisions. That’s precisely why the actions of the Fed will only prolong the misery of the bursting bubble.

The super rich will get bailed out while Main Street will have to suck it up. This means more jobs will be shipped overseas, more cities and towns will go bankrupt due to the exporting of jobs, the excess unemployed and illegal labor will continue to drive wages and salaries down.

However, the Federal Reserve bailout will also mean corporate profits will rise, dividends will shoot up, share prices will expand, and the Ponzi scheme known as the financial markets will continue or stabilize their bubbles. In other words, for 99 percent of Americans, the situation will be quite dire.

One way to cut off the bursting of the bubble at the pass is simply to raise the federal minimum wage from its current pathetic $7.25 per hour to $15 in early or mid 2014, and to $20 by early 2015. The economy can absorb this as easily as it absorbs record corporate profits, year after year, during our low-grade Great Depression, with all of its slack demand for goods and services.

This alone should tell you that prices are not connected to any laws of supply and demand. Instead, prices are largely manipulated by the large corporations, otherwise, prices would be going down with the historically lukewarm demand during these tough times, but prices keep going up, up, and up in defiance of the illegally broken laws of supply and demand. The government is looking the other way as prices of food shoot up. This is another income redistribution scam from the 99 to the 1 percent. The difference between the older prices and the newer higher prices go directly from the wallets of the 99 percent straight into the burgeoning wallets of the super wealthy that have corrupted our government and supreme court.

Some people will foolishly argue that an increase in the minimum wage to $20 will mean increased prices. No, it won’t, at least, no more than is currently the case with manipulated prices. However, even today’s manipulative corporations cannot jack-up prices continuously, although they seem to be able to all the time, whenever they want.

To pay the new minimum wage, most US publicly traded corporations will be forced to dig into their record profits, or their trillions of dollars of retained earnings (estimates are $10-14 trillion worldwide for US companies, and this also tells you how uncompetitive and bloated they are. In other words, they are not competitive at all), in order to pay their employees the higher wages.

From a purely conservative point-of-view, which is the purely conceptualized reality that the US has a competitive, free market economic system despite all the evidence to the contrary, corporate management teams will want to be competitive, just as conservatives want to believe, even in the face of such an overdue rise of the minimum wage.

Therefore, under our current conservative point-of-view, any Neanderthal management team that is dumb enough to increase their prices while their more competent rivals pay their employees the higher minimum wage out of their historically high profits and retained earnings, will go the way of the Neanderthals. It’s that simple. The companies that use their bloated, pent up financial resources in this way will live to fight another day as their Neanderthal rivals go out of business.

Investors, of course, may suffer. They may see their share prices drop temporarily, especially, as competition heats up, as corporations use up their record retained earnings, and have to contend with lower profit margins, like in any competitive economic model. However, this will bring the financial markets down much more gently than compared to a bursting bubble that awaits us in the absence of any federal intervention.

Since the bubbles have been created by redistributing money from the 99 percent to the 1 percent, it stands to reason the best antidote to such an approaching disaster is for corporate royalists to give the money back to those to whom it really belongs; the 99 percent. This can most easily and prudently be done by raising the federal minimum wage to $20 per hour over the next year and a half.

That $10 to $14 trillion US corporations are sitting on can be used to pay US citizens, which will then increase the demand for goods and services, and send the US economy into its first long-term non-bubble economic expansion since the 1960s.

Recent studies show increasing the minimum wage beefs up demand, increases employment, and that there are no negative consequences as is claimed, like job losses. Besides, an increased minimum wage is what our weak economy needs right now. And given record corporate retained earnings and record profits, the economy can easily absorb the higher wage. Enhanced demand will create good paying jobs, flood local tax bases with more income for schools and the social safety nets, safely deflate the financial market bubbles, and in the process perhaps head off the coming Great Depression, and likely even end our current low grade Depression. Furthermore, the 1 percent will have less money with which to corrupt government at all levels, and, by the way, the political markets are another area in which the 1 percent use their ill-gotten gains to invest in legislation against the 99 percent. That does create jobs for corporate lobbyists. So the 1 percent will have less money to do that little thing. So let’s do the obvious thing; raise the minimum wage to $20 an hour.

The legal and logical difference between an owner operated business and a business structured on “organized money” (a limited liability corporation) is as obvious as the difference between a single worker and a large labor union.

Therefore, one last thing needs to be mentioned. There is always somebody who will say raising the minimum wage to $20 an hour will kill small mom and pop businesses. Conceded, those are mostly businesses that operate in something that kind of resembles a competitive business environment. Those businesses should be allowed to operate with a minimum wage of say, $$12-15 an hour. However, since limited liability corporations are nothing more than “organized money,” as FDR accurately put it, and since they operate in a more collusive environment, those corporations are a totally different animal from owner operated companies, and should be made to pay the $20 minimum wage, which should also be indexed to inflation.

The government will always pass legislation that redistributes income from the 99 to the 1 percent, leading the nation into absolute disaster. So brace yourself for the looming economic disaster, just like the 1930s, only worse. One thing can be stated with great certainty. The rich have corrupted our government and have been leading us down the road of an unimaginable economic disaster for over thirty years, just like they did back in the 1920s.

Read Full Post »

« Newer Posts - Older Posts »

Follow

Get every new post delivered to your Inbox.

Join 1,341 other followers