Feeds:
Posts
Comments

Posts Tagged ‘Paul Krugman’

There they go again. Congresswoman Alexandria Ocasio-Cortez (AOC) recently suggested the United States should raise the top marginal tax rate on the rich to over 70 percent. Republicans, naturally, have attacked her as being crazy, although all the evidence points toward higher marginal tax rates on the rich produces a stronger United States economy for all citizens, not just the rich ones.

As you can see from the graph above, the higher the tax rate on the rich, the stronger is GNP growth. The same can be said for jobs and wage growth. It can also be pointed out that when the rich have fewer dollars to spend, they have less spare change to bribe politicians with political contributions.

The only crazy people out there on this issue are Republicans, as usual, performing their jobs as lying lap dogs of the rich. As I have been saying for years, there is not a shred of evidence that suggests, as the Republican Party lap dogs proclaim, that lowering taxes on the rich has created a single job, and you can see that from the graph.

There is a ton of evidence in the form of peer-reviewed studies that show AOC is correct.

Paul Krugman recently wrote, “Republicans almost universally advocate low taxes on the wealthy, based on the claim that tax cuts at the top will have huge beneficial effects on the economy. This claim rests on research by … well, nobody. There isn’t any body of serious work supporting G.O.P. tax ideas, because the evidence is overwhelmingly against those ideas.”

Reducing taxes on the rich have always reduced gross domestic product, wages, and job creation. It also creates income and wealth inequality since the rich have more income to burn at buying both Republican and Democratic Party lap dogs, such as Mitch McConnell and Ron Wyden. These guys have voted time and again to redistribute income from the 99 to the 1 percent.

The Case for a Progressive Tax: From Basic Research to Policy Recommendations-Journal of Economic Perspectives

Why one editor won’t run any more op-eds by the Heritage Foundation’s top economist–Columbia Journalism Review

Read Full Post »

You know the Wall Street Democratic Party Establishment has pulled together and is pulling no punches and hitting low in the clinches when New York Times syndicated columnist and Economics Nobel Prize winner Paul Kruger launches a diatribe against the senator from Vermont by feigning ignorance of Wall Street crimes and complicity in the last economic disaster.

This suggests the Establishment and its presidential candidate are worried stiff over Bernie Sanders beating Hillary Clinton in the remaining primaries and winning the nomination. Sanders is gaining momentum while the Wall Street candidate continues to lose it. More and more African-American voters, for example, are voting for Bernie the more they get to know him.

Krugman was corrupt enough to write:

“The easy slogan here is “Break up the big banks.” It’s obvious why this slogan is appealing from a political point of view: Wall Street supplies an excellent cast of villains. But were big banks really at the heart of the financial crisis, and would breaking them up protect us from future crises?

Many analysts concluded years ago that the answers to both questions were no. Predatory lending was largely carried out by smaller, non-Wall Street institutions like Countrywide Financial; the crisis itself was centered not on big banks but on “shadow banks” like Lehman Brothers that weren’t necessarily that big. And the financial reform that President Obama signed in 2010 made a real effort to address these problems. It could and should be made stronger, but pounding the table about big banks misses the point.”

Let’s begin with Lehman Brothers. It was always a big bank on Wall Street. Now Krugman’s calling it a shadow bank. What stupidity! Apparently, Krugman also doesn’t know that Goldman Sachs was shorting home mortgage backed bonds while selling them to investors. Beside that point, Robert Reich landed a series of knockout punches to Krugman’s insanity.

Reich writes:

1. The biggest Wall Street banks did indeed precipitate the crisis on Wall Street in 2008 because of their gambling in newfangled financial instruments and fancy derivatives even they didn’t understand.

2. Their size did make a difference because they were so interconnected with other financial entities both in the U.S. and around the world that they were “too big to fail.” Today’s biggest Wall Street banks are much bigger than they were in 2008.

3. Size also has a bearing on their political influence. The reason the Glass-Steagall Act was scotched by Bill Clinton’s administration, and the Clinton administration wouldn’t agree with the CFTC to regulate derivatives, had a lot to do with the influence of Wall Street over the Clinton administration and over Congress. The political power of the biggest players on the Street is even larger today – as evidenced by their capacity to whittle back significant parts of Dodd-Frank in the regulatory process.

4. Breaking up the biggest banks isn’t a radical idea. In fact, many experts – including the current president of the Federal Reserve Bank of Minneapolis (who’s a Republican and a former executive of Goldman Sachs), and the former head of the Federal Reserve Bank of Dallas — have called for exactly this.

5. Bernie’s other ideas — for a single-payer plan, and for free tuition at public institutions of higher education – are sensible, and also backed by many experts. It’s well-established that a single-payer plan would be far less costly and deliver far better care than our own system, which is based on private for-profit insurers. As to free tuition in public universities, we were well on the way to this goal in the 1950s and 1960s. It was and is a logical extension of free K-12 education.

I should like to point out that California had free college for resident’s until the federal government began redistributing income from the 99 to the 1 percent. So it has been done in the United States.

0-BernieSanders-banks

Read Full Post »

Read Full Post »

Paul Krugman is a typical, and often correct, critic of President Barack Obama. He’s been right on policy decisions on a number of occasions, and most notably, when President Obama has been wrong.

In a new story in Rolling Stone, Krugman has done an about face on Obama and the president’s historical significance.

“When it comes to Barack Obama,” Krugman writes, “I’ve always been out of sync. Back in 2008, when many liberals were wildly enthusiastic about his candidacy and his press was strongly favorable, I was skeptical. I worried that he was naive, that his talk about transcending the political divide was a dangerous illusion given the unyielding extremism of the modern American right. Furthermore, it seemed clear to me that, far from being the transformational figure his supporters imagined, he was rather conventional-minded: Even before taking office, he showed signs of paying far too much attention to what some of us would later take to calling Very Serious People, people who regarded cutting budget deficits and a willingness to slash Social Security as the very essence of political virtue.”

“And I wasn’t wrong. Obama was indeed naive: He faced scorched-earth Republican opposition from Day One, and it took him years to start dealing with that opposition realistically. Furthermore, he came perilously close to doing terrible things to the U.S. safety net in pursuit of a budget Grand Bargain; we were saved from significant cuts to Social Security and a rise in the Medicare age only by Republican greed, the GOP’s unwillingness to make even token concessions.”

All of this is true, and everything Krugman writes in the Rolling Stone appears on surface to be true, but Krugman misses a major point.

Under President Obama, income and wealth equality has skyrocketed. 95 percent of all income growth in the USA over the last four years has gone into the pockets of the 1 percent. Record levels of income and wealth are now in the hands of the 1 percent, which accounts for much lower demand for goods and services, lower job and wage growth, and slower economic growth, all of which hurts the 99 percent, and all of which serves the 1 percent.

The policies the president has championed have played a major role in this.

Free trade treaties, for example, are negotiated with an eye toward shipping US jobs overseas with the difference between the old higher wages and the new lower wages going into the already fat wallets of the super rich via higher corporate earnings, rising share prices and soaring dividends. Right now, as we speak, the president is championing the Trans Pacific Partnership, the largest income redistribution scam of all time. It is a so-called free trade treaty that has been negotiated to jack up prices on goods and services, and lower wages, all of which redistributes income from the 99 to the 1 percent.

Under Obama, student loan interest doubled, and the payments of millions of student loans goes straight into the pockets of those who possess bonds backed by student loans: hedge funds and the rich. With a little work, the president might have stopped this madness.

Obama is not stupid, he knows precisely what he is doing. He’s redistributing income on behalf of his largest campaign contributors, the largest investment banks on Wall Street, hedge funds, and the largest investors of the 1 percent. This is precisely why the president refused to unleash his attorney general against the crimes of Wall Street that brought about the tanking of the world economy five years ago.

And these are just a few of the things Obama has done to redistribute income from the 99 to the 1 percent, something Krugman doesn’t want you to know about.

So while Krugman makes his points in his article, and with passion, his defense of Obama is in very narrow terms.

By the way, despite my critic of Obama, he hardly rates among the worst of presidents. That distinction goes to George W. Bush, the man who created the worst mess in US history. Warren Harding, as well as several others, would have to rate below our current president, as well.

rollingstone.com/politics/news/in-defense-of-obama

Read Full Post »

Inflation redistributes income from the 99 percent and delivers said income to the 1 percent. This is a no-brainer, making inflation nothing more than an income redistribution scam that those on the right and those on the left lie about, although maybe they just don’t know, which is unlikely. Case in point is a Paul Krugman op-ed below.

Krugman claims there is little inflation nowadays, while his right wing opponents claim there is ton’s of inflation and its caused by the Federal Reserve. They’re both right and they’re both wrong, kind of, but not really.

Krugman claimed in his op-ed that inflation is close to zero, and that’s true, kind of. In reality, inflation is currently closer to 8 percent if it was measured as it was back in 1980. Since then the government has switched the way it measures inflation twenty times, and all of these changes show less and less inflation. That is why inflation as measured today is less than 3 percent when it’s probably slightly above 8 percent. The purpose of doing this was to keep people from protesting and getting mad about their loss of real spending power, such as happened back in the 1970s.

Conservatives rightfully claim the inflation numbers are understated, which is remarkably true. However, Republicans claim this is caused by the Federal Reserve and its massive printing of money, which is perhaps a tad true, but mostly false.

Inflation mostly comes from corporate planning. Publicly traded limited liability corporations must always have rising share prices, which is largely a product of increasing profits and dividends. The best way to ensure these constantly increasing returns on investment is for corporate competitors to gather together and plan price increases. Thousands of corporations plan their prices rises in tandem, for the most part, and that’s why we have inflation.

When corporations raise their prices in tandem, it’s called a conspiracy in restraint of trade, a violation of the law, but the government almost always looks the other way, which is a function of corruption. This is not to suggest that to some degree competition doesn’t exist in the corporate world, because it does, but it’s a minor nuisance to our captains of industry which is quickly eliminated when the competition gets too hot, and saner minds quickly impose a truce on any hostilities since the primary enemy of the corporations are their unwitting customers.

Guess who pays the cost of this non-competition? You do. When the price of tuna, or lettuce, or gasoline, or cars, or airline tickets rise due to corporate planning, the difference between the old prices and the new higher prices goes from your pockets into those of rich shareholders.

That’s what the politicos and corporate fat cats don’t want you to know, so they keep the argument within unrealistic and narrow lines of debate.

See Krugman’s op-ed below.

http://www.nytimes.com/2014/07/07/opinion/paul-krugman-conservative-delusions-about-inflation.html?_r=0

Read Full Post »

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 »

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.

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.

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.

pFrom StoctCharts.com. History of the Dow Jones Industrials

Read Full Post »

The first and most important reason the US economy sucks is that the middle class is being gutted by legislation championed by Wall Street, and the rest of the 0.05 percent, which redistributes income from the 99 percent to the 1 percent. That process continues during this so-called economic recovery. Nobel Prize economist Paul Krugman has correctly labeled the so-called recovery a “Low-grade depression.” Legislation such as the South Korea free trade treaty (2012), the Affordable Care Act, and several others continue this redistribution process.

What Krugman and other people in power don’t say, however, is that only the New Deal and deficit spending are holding the economy up. The economy would die in a flash if you took those two things away. Mass poverty would ensue, and the 99 percent would begin to organize–with guns. In the long run, that might be the thing that needs to happen in order to restore the American dream. In other words, only New Deal socialism has prevented the complete collapse of the US capitalist economy. (It should be pointed out that the current US economy does not resemble in the least the theoretical capitalist economy presented by Adam Smith in The Wealth of Nations).

The reasons for the screwed up economy are as follows.

1. The middle class and its spending power is decreasing. “A Pew study this spring found the number of Americans defining themselves as “middle class” has slipped from 53% to 49% since 2008, while those identifying themselves as “lower class” went from 25% to 32%. Actual class slippage mirrors this finding almost exactly: the 2011 census found that since 2007, the share of working families with an income less than double the federal poverty line (the government’s definition of “low income”) rose from 28% to 32%.”

Corporate trade legislation, commonly and incorrectly called “free trade treaties,” is mostly responsible for this. These jobs freely trade higher wage jobs for the unemployment line. They legislatively pave the way for exporting jobs, (which includes a giant part of the US federal, state, and local tax base that supports the jobs of teachers, police officers and other government workers), and creating jobs overseas that would otherwise not be possible to do, and the difference between the higher wage jobs lost in the US due to the treaties, and the now lower wage jobs overseas, goes straight into the pockets of the rich via higher corporate profits, rising share prices and soaring dividend payments; these primarily go to the 1 percent, and especially the top 0.01 percent.

Anybody notice the rise in the Dow Jones Industrials and other stock market indexes? This rise is caused by the shipping of jobs overseas during this low-grade depression. According to the Federal Reserve, between one and three million American jobs have been shipped overseas every year since 1990. That doesn’t count the jobs created US corporations were able to create overseas due to the treaties. This process has probably accelerated during the last five years, which is why the top 1 percent are able to steal over 90 percent of all income growth during the last four years, which means they’ve gone from taking about 21 percent of all US income five years ago, to about 32 percent nowadays. This is up from 8 percent in 1980, before the regime of corporate trade treaties gained full control of the US government. The 99 percent now earn 68 percent of all income compared to 92 percent thirty-three years ago. Income for the 99 percent sucks, and that’s why demand for goods and services sucks. This redistribution process is also why the 1 percent is prospering.

Those whose jobs have bee shipped away get the unemployment line, which pays nothing unless the job losers qualify for unemployment insurance.

The government under President Obama and Wall Street Senator Ron Wyden intend to pass more income redistribution corporate trade treaties so that Wall Street and the 1 percent prosper by sucking the 99 percent dry even more.

The breakdown below of what has occurred might make your blood boil. The corrupt government has rigged the financial game against the middle class.

2. The recession caused a massive decline in consumer demand, but the culprit wasn’t just a loss of housing wealth. Wages for most workers are either stagnating or declining. In fact, real median wages fell by about 2.8% between 2009 and 2012. That’s bad for workers and bad for the economy. It’s also insulting because the drop happened even as productivity increased 4.5%. So much for the sharing economy.

What’s worse, lower-wage workers – who are already struggling to keep up – saw bigger declines than those in the middle and higher end. Those earning between $10.61 and $14.21 per hour saw real wages drop by 4.1% on average.

As Reuters’ Felix Salmon points out in his crafty analysis of the data, hairstylists and cosmetologists earned $12 an hour on average in 2009. But by 2012, they earned just $10.91 an hour – a drop of more than 9%. Restaurant cooks lost 7.1% over the same period. The difference between the old wages and the new has gone toward higher corporate profits, rising share prices and skyrocketing dividend payments for the 1 percent.

As jobs are shipped overseas, unemployment goes up, thereby increasing competition for even low wage jobs. This has pushed wages down.

The same holds true for undocumented immigrants. Politicians of both major political parties seem to love them. It’s as if politicians consciously made a decision to export jobs, while simultaneously letting low wage workers flood the US market for jobs that can’t be exported. The undocumented have increased the labor supply, and put downward pressure on labor rates in the process. This has helped to redistribute income from the 99 to the 1 percent in the same way as corporate trade treaties, which has helped to push the Dow Jones Industrial, corporate profits, share prices and dividends up.

In other words, in passing the South Korea, Panama and Colombia free trade treaties, the government of President Obama has decreased the number of jobs available to Americans, while millions of undocumented immigrants, as well as legal immigrants, have swelled the labor force. In fact, over the last two decades, 95 percent of all US population growth has come either directly or indirectly through immigration to the US. The result has been a downward push on wages, which has resulted in less demand than would otherwise be the case, and this has helped to depress job creation.

Now Wall Street’s Obama team is negotiating the Trans Pacific Partnership, the biggest free trade treaty of them all. The effects will be continued redistribution of income and wealth from the 99 to the 1 percent.

Part 2 coming soon.

Read Full Post »

The new normal, a term coined most likely by economist Paul Krugman during the early stages of our current low-grade depression, is something we’ve got to fight against. Otherwise, we’re all dumbed down frogs, comfortable in our slowly heating economic waters that will eventually boil us financially dry.

The new normal is high unemployment, lower wages and benefits, and redistributing more and more income and wealth from the 99 to the 1 percent via federal legislation, such as free trade treaties and deregulation. It’s about tax bases that support schools, fire, police and other government services being gutted like fish as the jobs that make up our tax base are shipped overseas and the difference between the old higher wages and the new lower wages are swept directly into the already fat wallets of the 1 percent. It’s about letting the government spy on us in violation of the fourth amendment of the US Constitution. The new normal means the end of the American dream for more and more citizens. It’s about massive unemployment and lost opportunity, especially for the young. It’s about creeping poverty until it surrounds us all, starving us physically and intellectually. That’s why we cannot accept the new normal. The new normal is about the end of democracy, a line we’ve already crossed. That’s why we’re fighting in a rigged economic and political game.

The 1 percent is constantly turning up the heat, so everything will continue to get worse for the 99 percent. We’re a nation in decline, with a court system, a congress and a presidency bought by the 1 percent and completely corrupted. Don’t accept the new normal.

Check out the link below for more reasons why US Senator Bernie Sanders of Vermont thinks we cannot accept the new normal.

Bernie Sanders: Fight the New Normal

Read Full Post »

Older Posts »

%d bloggers like this: