Category Archives: liberal
Leave a comment | tags: Consumer Confidence, Deficit, Dow Jones, Economic Growth, economics, GDP, Liberalism, obama, Stock Market, Success, unemployment | posted in business, economics, finance, liberal, Political, progressivism, unemployment
The United States economy has finally recovered all the jobs lost during the Great Recession!
The feat took 51 months from the depth of job loses to do so… but finally.
The Great Recession was characterized by the most massive job losses and the longest time to recover those jobs since the Depression.
Let’s all be thankful (even those who don’t recognize that they should be thankful) that “Tea Partier” economics did not prevail during the recovery, or we would be suffering through Europe’s current fate, where a reliance upon conservative-austerity financial and monetary policies still mire the great EU in misery and stagnation plus 10-26% unemployment rates.
The economy has added 9.4 million private sector jobs since employment bottomed in February 2010 (8.8 million total jobs added when including all the public sector layoffs).
There are 617 thousand more private sector jobs now than when the recession started in 2007, and total employment is now 98 thousand above the pre-recession peak.
Raise your glass in a toast to stimulus spending and expansionary monetary policy! Keynes, where ya’ at, buddy?
Leave a comment | tags: economics, economy, great recession, job losses, jobs, massive job losses, private sector jobs, recovery, stimulus, The Great Recession, The United States economy, unemployment | posted in banking, business, economics, finance, liberal, liberalism, Political, progressivism, unemployment
It’s nice to have successful friends of diverse opinion. When a couple of them are capitalists in the truest sense of the word — i.e., they increase their wealth and incomes by moving their funds around the globe chasing rates of return and potential asset value — are sought after for their investment advise, and have their own financial and economic publications, they also get to disagree with you in the open. In response to “American Middle-Class Now Second-Class To Canada — It Didn’t Have To Be This Way,” I was treated to two alternate views of why I am wrong on specific points.
BENEFITS “RE-COUPLE” THE DECOUPLED PAY & PRODUCTIVITY
First, one such individual referenced a couple of British economic analysts who had addressed the observation I pointed out in my article when writing:
They show that when you add in benefits to pay and use the same measure of inflation for both pay and productivity, the disconnect between worker pay and productivity goes away, both in the US and Britain.
Their conclusion? “Middle-class stagnation and the ‘decoupling’ of pay and productivity are illusions. Yes, the U.S. economy is in the doldrums, thanks to a variety of factors… But by any sensible measure, most Americans are today better paid and more prosperous than in the past.”
Yes, but this is only a sleight-of-hand trick that these partisans pontificate to advance their own agenda, not because it is meaningfully accurate — it is just technically accurate.
Notably, using the “same measure of inflation for both pay and productivity” is a non-starter as that is not how productivity increases over time, nor is this how it’s measured in real terms. It’s just a mathematical trick to reduce or deflate actual productivity growth to bring it closer in line with stagnant incomes. Monetary inflation and production productivity are not connected in this fashion and doing so is disingenuous.
Truth is that what used to not show up on workers’ ledgers now shows up on their ledgers, and truth is that the component now has less value in real terms than it did prior to reassignment to the workers’ ledgers. The analysts also conflate wealth and incomes inappropriately.
What we are both referencing is the change from defined benefits for workers to defined contributions.
For example, as average life spans increased, the financial pressures exerted on organizational pension systems grew overwhelming and a shift occurred across the private and public sectors from traditional pension programs where one received a defined amount per year after retirement for the balance of their lives to one predicated upon 401k and IRA programs and the like where one received a defined contribution from their organization with no guarantee of what that looked like at retirement.
Several things occurred in this transition. What used to show up as an asset of the organizational pension now was moved to the ledger of the worker as an asset in the form of 401k’s etc. But, that move did not make the worker wealthier in reality nor improve their incomes — both are simply mechanisms through which retirement incomes derived. It just changed where things resided accounting-wise and controlled organizations’ costs.
All things equal, the worker is no better off and no worse… as long as the final retirement income remains unchanged. But all things are not equal, and final incomes are not guaranteed, thus we see today retirees not having the same incomes as those previously based upon traditional retirement pensions. So, there is a net loss of income to the worker overall, even while it appears their wealth increased.
Moreover, these 401k programs require more significant worker contributions to obtain the largest matching employer contributions. This reduces the net-net income of a worker and is not reflected in the aggregate numbers used by these analysts. So their view assigns an asset value to workers that is just an accounting move and inappropriately shows increased wealth while also not including the decreased net-net incomes from the move.
Finally, the “benefits” to which they refer are inclusive of health benefits. As we all know, these costs have increased dramatically over the decades. This alone adds an illusory increased benefit to workers when, in fact, they, too, are paying larger premiums for that health benefit, and worker costs are up dramatically more in deductibles, co-pays, and out-of-pocket maximums… Thus, all contributing to reduced net-net incomes — not the improved financial standing these analysts would have us believe.
The “benefit” appears more significant because of cost inflation yet the worker is no better off and receives the same basic benefit of health care provision they received when the “benefit” appeared at lower cost. Now the worker is made poorer on a net basis by the increased direct costs from the benefit’s cost-sharing mechanism. Moreover, just because the benefit cost grew larger on the employer’s ledger does not mean the income of the worker increased accordingly or that the benefit had more “income value.”
“TIME COSTS” OF APPLIANCES HEALS ALL WOUNDS
Second, another individual posited that my position ignores the relative increase in incomes and wealth of workers because improved productivity and globalized production have reduced the “time costs” of attaining and maintaining a middle-class lifestyle. The writer maintains that costs of clothing, major appliances, cars etc. (the lifestyle asset cost of middle-class life) cost less today in terms of how many hours one must work to attain them… and the middle-class person is better off today.
Therefore, if it cost 3000 hours to purchase a standard car back in the 1960’s and now costs 1200 hours to purchase today’s standard car, then the real incomes of average middle-class persons have increased relative to the past. His point is that while this situation may not show up on balance sheets cost-adjusted for inflation, it is a very real phenomenon that means the middle-class is larger and more robust than we believe it to be.
Thus was written:
Bottom Line: The comparison of the “time cost” of appliances over time above confirms what Aparna finds in her analysis – average (and low-income) Americans are much better off today than they were 20, 30, 40 or 50 years ago, thanks in large part to the significant reductions in the cost of common household appliances like refrigerators, washers and dryers, and TVs. The reasons for the significant reductions in the cost of appliances include innovation, technology improvements, supply chain efficiencies, increases in productivity and other market-driven efficiencies that drive prices lower and lower year by year, measured in what is most important: our time, and the amount of labor it takes to earn the money to purchase household appliances and other goods and services. As much as we hear about declines in median income, economic stagnation, the disappearance of the middle class, falling real wages, increasing income inequality, the data tell a much different story: The rich are getting richer and the poor are getting richer.
“The poor are getting richer” — Argh!
To be certain, technology has improved such that the “standard” has shifted and provided a lifestyle unimaginable or unattainable in the past; i.e., today, nearly all persons of age have a personal cell phone and internet access (hence access to instant communications); access to music proliferates on numerous mobile devises (not just families able to afford large stereo systems, or further back, their own music chambers); and the list goes on.
As they say, though, all things are relative. And, thus, to say that one has access to “absolutely” more of something now, or to something that never previously existed, or to say that it takes less working time to purchase a particular staple item of the middle-class lifestyle is not to say that they have access to more or better… relative to what their predecessors had relative to their own time. Standards change.
The average middle-class lifestyle requires more and different inputs than that same lifestyle from 1940. It’s not just a car, a refrigerator, and a radio. It is also a middle-class lifestyle relative to itself over time and those levels above it and below in any given year. As society evolves one would hope that the absolute standard improves (i.e., having only 1940 middle-class assets or household items today may mean you are “poor” today and not [or no longer] middle-class), and that is reality.
The middle-class standard and what it costs to maintain that standard have moved upward. This is called progress and something that we should desire for society. The lifestyle of today’s middle-class may appear to have obtained things impossible for the middle-class in times past, but that same cultural standard is relative to its position of the other classes.
If the death rate from cancer devolved back to that from 1960, would it be correct to say that’s acceptable because even then it was better than the survival rate from the 18th century? Of course not. Standards improve, and if the average person in a period can’t maintain their relative position over time in that moving standard, then we have declined as a society. Here is where America rests today. Fewer American families are able to stay in the current standard of the “middle-class.” Moreover, they are not able to stay in the same income percentile on a global basis — reference again this table of percentiles.
Now, in the second decade of the twenty-first century, it requires well more than two earners working to equal the wages of a one-income household of 40 years ago. In fact, wages have plummeted so low that a two-income household is now (on average) 15% poorer than a one-income household of 40 years ago.
With the year 2000 as a base, real wages peaked in 1970 at around $20/hour. The average worker today earns $8.50/hour — more than 57% less than real earnings in 1970. Moreover, as the average wage directly determines society’s standard of living, it may accurately be said that the average standard of living in the U.S. has plummeted by more than half over the last 40 years.
Inflation for the last 40 years has hidden the 57% collapse in the standard of living for the average person. Nonetheless, if you’re fortunate enough to be at or successful enough to have earned a place at the top of the income charts, the situation is significantly reversed in your favor. While average American workers have seen their real wages plummet by 57% over the past 40 years, in just 15 years (1992-2007) the 400 wealthiest Americans saw their incomes rise by 700%.
Now we have the complete picture: real wages crumbling steadily lower year after year, decade after decade for “The 99%,” while earnings skyrocket for “The One Percent.” Is that acceptable? I don’t know… is going back to the cancer death rates of 1960 acceptable to you because that’s still better than it was in 1700?
Leave a comment | tags: income disparity, income gap, income inequality, incomes, middle class, retirement income, worker | posted in banking, business, economics, Education, Elites, finance, income taxes, liberal, lifestyle, Political, progressivism, Social Security, Socio-Political
America’s middle class has been richest in the world for several generations, but we’ve lost that distinction to our northern neighbors.
Canada is officially home to the richest middle class on the planet, according to figures released from the Luxembourg Income Study Database. The flowing chart details 30 years of destruction to America’s lower and middle classes, the loss of standing internationally, and the concentration of income to the wealthy class in the U.S. (Click Chart For Larger View):
How did we lose the lead? It’s no secret really; economists have been sounding the alarm for twenty-five years, and Americans have continued supporting the policies (both Republican and Democrat, alike) that have furthered their own economic erosion, even as they believe, individually, they are immune to the deleterious aspects of these political and economic choices (privatization, deregulation, free-trade agreements, free-floating exchange rates, globalization, dismantling of the safety net, poor school systems, conservatism, economic libertarianism).
Kevin Phillips wrote about the situation in a 1991 book I read when it came out: “The Politics of Rich and Poor: Wealth and the American Electorate in the Reagan Aftermath.”
Blame three broad factors encompassing the above issues: 1) Canada’s education attainment is outpacing the U.S. and most of the world; 2) American middle-class market wages (driven by globalization) aren’t keeping up with overall economic growth; and (3) Other governments are doing more to redistribute income to poorer families in other countries, particularly in western and northern Europe (the social safety net and progressive taxes).
As a result of America’s belief in the divinity of unfettered virginal markets and the evils of progressive government policy, after-tax middle-class incomes in Canada grew markedly higher than in the United States, while the poor in most of Europe now earn more than poor Americans.
Economic growth in the United States remains as strong or stronger than other industrialized nations, but only a small, elite percentage of American households fully benefits income-wise from that growth. The middle-class wallow in stagnation with no noticeable inflation-adjusted income progress in a decade. The plight of the U.S. poor is even starker than those of the middle class. A family at the 20th percentile of the income distribution in this country makes significantly less real income than in decades past and less than a similar family in Canada, Sweden, Norway, Finland or the Netherlands. Thirty-five years ago, the reverse was true.
Make no mistake, economic statistics — per capita gross domestic product — continue to show the United States maintains the lead as the world’s richest large country. Crucially, those numbers are averages, which do not measure the distribution of income. Here is where America fails: in distribution of incomes. The U.S. is the most unequal in income of mature industrialized nations.
With the majority share of income gains in the U.S. now flowing to an extremely small percentage of high-earning households, for the next generation or more, most Americans will not keep pace with their counterparts around the world — nor will they obtain the economic levels of their parents. Implement progressive policy changes, and this situation may begin to slowly improve. Stay the course and past will be prelude to the average American’s diminished future.
I may be an economic and social liberal with a clear preference, but the facts are undeniable, as are the reasons for these changes. Read ‘em and weep:
Leave a comment | tags: Canada, income, income gap, income inequality, middle class | posted in business, economics, Education, Elites, finance, income taxes, liberal, Political, progressivism, Social Security, Socio-Political
Oh my goodness… Republicans are attempting to rebrand themselves as compassionate conservatives (again)… shades of George W. Bush. “Compassionate conservatism” as a theme and rallying cry seem to arise after Republicans have taken rhetoric to such an extreme that the country is disgusted and the party fears citizens will push them and their nasty ideology of unbridled greed and hate aside. George W. Bush famously resorted to the term campaigning for president after Republicans disgraced themselves with anti-Clinton conspiracy theories, witch hunts, and the unpopular impeachment.
Of course, Bush is better known for wasting trillions of dollars and killing more than a hundred-thousand lives in Iraq, failing citizens injured during Katrina, and the financial collapse of the U.S. and world economies.
And now we have a budget “deal,” courtesy of Paul Ryan, that drops unemployment benefits for 1.3 million long-term unemployed. Earlier, Senator Rand Paul said helping the unemployed does them a “disservice” because it keeps them from getting jobs.
Last month the Washington Post published, “Paul Ryan, GOP’s budget architect, sets his sights on fighting poverty and winning minds,” and portrayed Ryan as attempting to steer Republicans away from the angry Tea Party and toward a “more inclusive vision.” Right. The Paul Ryan of the infamous “Ryan Budget” — also called the “Path to Prosperity” and passed by House Republicans — that privatizes Medicare, repeals Wall Street regulation, wipes out student loan programs, repeals Obamacare, guts Social Security, and dramatically reduces taxes for the “deserving” wealthy and corporations.
That Paul Ryan hardly seems “compassionate” — well not to those who actually want to see all citizens doing better, and at least not toward anyone making less than half a million a year.
One need only seek the source of Ryan’s personal philosophical motivation (his love affair) to understand his deep psychological dysfunction and the reason why he can create such absurd rationalization’s for his priorities. Ryan said it himself, “[T]he reason I got involved in public service, by and large, if I had to credit one thinker, one person, it would be Ayn Rand.”
Who is Ayn Rand, and what is the philosophy of this person Ryan calls a “thinker?”
Ayn Rand’s philosophy actually says it is not only bad for society, but morally wrong to help other people because it makes them “dependent” — sound like familiar rhetoric? Rand’s philosophy says that,
- altruism is evil, and that…
- democracy (which they call “collectivism”) is the ultimate expression of this evil because it brings about a society in which government works to make people’s lives better.
Rand’s, Ryan’s, and current Republican philosophy says that,
- “individualism” — looking out for oneself only—is the moral principle that should rule society, not democracy…
- a “utopia of greed” is most humanly liberating… I suppose they might better claim it’s “compassionate greed,”
- there are but a few “producers” or “makers,” and the rest of citizens are “parasites” or “takers” who live off of the producers,
- Collectivism, or democracy, is bad because the many underserving takers can vote to do things like make the producers pay taxes so regular people can live better.
I’m sure there must be a few ways Paul Ryan and the Republicans can form a philosophy of “compassionate conservatism” out of their core belief that altruism and democracy are not just wrong for people and society, but are actually evil. And, I’m sure some citizens will fall for the ploy. Recall that many slaves during the Civil War supported the South, and even after, refused to leave their plantations.
But here is what compassionate conservatives like Ryan intend in the pursuit of “Randian” Liberty…
- they say that giving the big corporations more tax breaks, subsidies, no-bid contracts, etc. will load them up with so much money that they will just have to use some of it to hire people… eventually, and…
- when they say they want to overhaul federal health and retirement programs they mean
- cut Medicare (healthcare for the elderly),
- cut Medicaid (healthcare for the poor),
- eliminate Obamacare (healthcare for the rest of us) and
- destroy Social Security (retirement)
An evergreen Republican mantra is that government is too big, so it must be cut. What they mean by this is not cutting the huge, bloated, astronomical, sky-high military budget (we spend more on weapons and preparing for destruction than all other nations combined). They mean they want to cut out the things government does to make our lives better, like assistance for the needy, sick, disabled, elderly and unemployed. And get rid of the minimum wage, child labor laws, equal pay for women, workplace safety rules, etc.
So, “Compassionate Conservatism” is a euphemism for Libertarian Individualism that enshrines destruction of society, the commons, the middle-class, and then purchases only further means of destruction through a vast and powerful military power.
Frankly, I only see psychological dysfunction in any of this, in the Libertarian philosophy. I wonder what depravity in formative years leads to such a condition?
Quite the love affair with Ayn Rand utopianism. God help us all.
5 Comments | tags: Ayn Rand, Paul Ryan | posted in business, Civil & Human Rights, economics, health insurance, income taxes, liberal, military, Political, progressivism, Social Security, Socio-Political, unemployment, universal health insurance
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