Once Again, Slow Economic Growth Is NOT Due To Fewer People

Like a bad penny that just keeps bouncing back, bad memes can do the same though they've been shown over and over to have no ballast, no support. One such meme is the one that insists our slow economic growth is because we have slow population growth. This is the most cockeyed non sequitur among countless others that infest the brains of the Neoliberal econ gurus, pundits and other gasbags.

In this case the meme returned in a recent WSJ piece:'A Hidden Risk of Slow Growth' (Sept. 21-22, p. B14) wherein we read:

"In the future economic growth is expected to be slower still. One reason why is that population growth is slipping so the pool of available workers isn't expanding as fast as it used to."

However, this is a non sequitur and certainly if those same workers are essentially being paid no more per hour than they were 45 years ago. Fiat wages, which means limited spending and disposable income - whether for a mortgage or even a used car. So it makes no difference how many more people one has, or how large the pool of available workers is, if their wages remains stagnant.   Why is this so hard to grasp?

The piece also resurrects another "reason" for current and future slower growth, but which is actually a Macguffin:

"The other reason is that improvement in productivity  - how much workers produce per hour, on average- has slowed markedly since the early 2000s."

And why is this?  Northwestern University's Robert Gordon argues, and he's correct, that by the time the digital revolution got under way- say in the 80s- the big payoff in productivity began shrinking. Meanwhile, the PC-computing payoff basically has "come and gone" dissipating by 2004, when EROEI reached below 10:1.

Energy efficiency continues to decline and yet the econ genii still can't fathom why labor productivity is in decline, nor identify the things gov't can do to slow it. For the worker himself, any such claim is taken as nonsense because he is working harder than ever and merely treading water. 

Less noted, but an equally important factor is how productivity is gauged. We are informed that labor productivity is tied to economic growth, i.e.  the GDP. The GDP in turn is dependent by nearly a 75% proportion on consumption. The growth "rate" however seems to basically be stuck at 2 percent per year and no more.

Is this all bad? And what is the root cause?  A major clue was provided over 20 years ago by authors William Wolman and Anne Colamosca  in their (1997) book,  The Judas Economy: The Triumph of Capital and the Betrayal of Work'.  Therein we learn that productivity in relation to GDP has increased more than 40% in the interval since 1973 even as wages-salaries have remained almost stagnant.

From this it emerges that labor productivity is ebbing because wages have stagnated so workers have not been able to earn enough to spend - to contribute to the 75 percent consumption part of the GDP equation.  The inherent problem then appears to be tying labor productivity to economic growth.   In a September 5, 2016 TIME essay (p. 20),  columnist Rana Foroohar reinforced this aspect by noting:

"Nobody is suggesting that productivity isn't rising because individuals aren't working hard enough. On the contrary, most economists believer the American blue and white collar workers alike are firing on all cylinders."

So what the ivory tower economists, or WSJ nabobs are really telling us when they bitch about "moderate productivity" or "labor productivity too low" is that it isn't being translated into economic growth. But that elicits the question, why not? The answer again, is because workers are not being paid enough to purchase most of the goods they make.  Unless it's via credit card debt, of course.

It doesn't take a rocket scientist or math whiz to figure out the disposable income available to those with the lower incomes (than $37,000/ yr.) would not entice them to spend on very many things - whether goods (e.g. new HDTVs, cars) or services (dining out). Hence, to avoid overstocked warehouses companies must cut production of goods. This in turn leads to a problem with aggregate demand.

Aggregate demand is composed of two parts: 1) demand generated by consumers for goods and services, and 2) the demand for investment goods. When the level of aggregate demand is high, both these components are generally equally high, and the levels of production and employment are high. On the other hand, when aggregate demand is low - or even one of the components (e.g. (1)) is very  low, then levels of production  plummet.

The takeaway is that population increases will not solve the slow economic growth issue, nor will making workers push harder.  What is needed is much higher wages - basically a living wage (I reckon at least $25.00/ hr.) so citizens can afford a decent roof over their heads, adequate food, and access to medical care that doesn't bankrupt them.  But because the Neoliberal financial system views these as having too exorbitant  a cost  via -a vis capital it will never implement them - or allow a politician to be elected who might (say by raising taxes).  

The result? There will never be higher economic growth than 2.0 percent.  In addition, the primary index for inequality, the Gini coefficient, will continue to increase - as it has just recently (from 0.482 to 0.485).  The reason is that the Neoliberal system has zero interest in implementing the changes that could reverse its direction, i.e. Bernie Sanders 8 % tax on wealth. 

Don't Blame Immigrants For Slow - Or No- Wage Growth!

Graph showing average hourly earnings growth and  effect of one 'basket' of companies increase in labor costs since 2016, relative to a basket with high labor costs. (From The Wall Street Journal, yesterday, p. A1)

It is odd that the WSJ op-ed 'The Elites Feed Anti-Immigrant Bias' (July 10, p. A15) stands in stark contrast to the same day front page story ('Workers Welcome Wage Gains, But Companies Feel Squeeze').  In the op-ed we are asked to believe that it is hordes of Mexican immigrants getting hired and degrading white Americans' hourly wages.  In the second, we learn the real reason is that companies are simply reluctant to have shrinking profit margins via higher labor costs. (See graph)

The first piece gives an anecdote from a guy  whose fiancee earns $31 an hour and has worked at the same company for "21 years" while "Mexicans have been hired at $8 an hour".  The guy adds:

"I don't want to be racial but that's all they're hiring".

On which I call bollocks.  The fact is, no company or virtually none, is hiring Mexican immigrants at that quoted low wage rate to do quality work at a quality company. Where Mexican immigrants are working  now is where they're most needed, i.e. at landscaping jobs, construction, and agriculture - and even then not enough can be hired because of Dotard's immigration policies. Employers are having to partake in "lottos" to get the workers they need.

The anecdote above was preceded by this remark from the author (Prof. Joan C. Williams):

"Yet real wage growth for the working class has been abysmal for a generation, and for many native born blue collar workers the culprit seems obvious - immigration"   Adding:

"Today less than half of Americans born in the 1980s earn more than their parents did, according to a National Bureau of Economic Research study led by Harvard economist Raj Chetty'>

Yes, but WHY is this the case?  More to the point, why are the blue collars blaming immigrants instead of corporate America and the economic ideology that fuels its excesses?

As I first noted in my book, The Elements of the Corporatocracy, ordinary workers have suffered a 'death of thousand cuts' since Neoliberalism came into vogue during the Reagan years. Robert McChesney in his excellent book, The Problem of the Media, Monthly Review Press, 2004, p. 49, writes:

"With the election of Ronald Reagan, the neoliberal movement had commenced. Neoliberal ideology became hegemonic not only among Republicans but also in the Democratic Party of Bill Clinton, Al Gore, and Joseph Liebermann. Differences remained on timing and specifics, but on core issues both parties agreed that business was the rightful ruler over society"

The problem with the Neoliberal, pro -free market idiom is that it denies the most basic security for the majority of citizens. In this way it feeds economic inequality while it rewards the speculator and banker class. It also helps to corrupt the political class via unregulated campaign contributions.

Jay Bookman aptly noted('The New World Disorder Evident Here, Abroad', in The Baltimore Sun, December 15, 1997):

"The global economy has been constructed on the premise that government guarantees of security and protection must be avoided at all costs, because they discourage personal initiative.  In times of crisis, however, that premise cannot be sustained politically. In times of trouble it is human nature to seek security and protection and to be drawn toward those who promise to provide it. That is how men such as Adolf Hitler, and Vladimir Ilyich Lenin came to power, with disastrous consequences.""

In other words, the global Neoliberal dynamic inevitably paves the way for authoritarian populists like Trump and others to come to power.  Among the "thousand cut" insults sustained by U.S. workers compliments of corporations and the entrenched Neolib state:

(1) Cutting employee benefits, i.e. health plans - even after employees have retired with them.

(2) Eliminating defined benefits plans, such as provided standard corporate pensions - in favor or defined contribution plans (such as 401ks) in which workers are in it for themselves to accumulate adequate savings for retirement.

(3) Cutting wages - either de facto, or through eliminating the unions which protected them (much exacerbated after Reagan ascended to power)

(4) Firing/downsizing workers just before their retirement dates, so the company is free not to have to pay retirement plan benefits, or provide stock options, as per contract clauses.

(5) Re-engineering the workplace to increase its automation factor in order to dump workers, so increase profit margins by not having to pay benefits, etc.

(6) Shipping as many jobs as possible overseas, to places like Bangalore or Beijing, with labor costs barely 20% of what they are in the U.S. and no benefits to factor in.

(7) Firing - downsizing workers after mergers dictated by Wall Street interests, in order to enhance a company' profits through higher Wall Street share prices.

(8) Identifying older (over 50) workers as 'surplus' so that they can be replaced with younger workers for whom half the wages (or less) can be paid, with fewer benefits. (A recent 5-4 Supreme Court ruling a few years ago exacerbated this by asserting anyone claiming "age discrimination" could not file a suit in standing if that was the only charge)

(9) Eliminating nearly all permanent jobs which carry health and pension benefits, in favor of using 'temping', 'outsourcing' or some other device not requiring benefits. On the academic (university) front, using 'adjunct' professors, hired on a per hour, per course basis, without benefits., and with no possibility of 'tenure'.

(10) Tying health insurance to employment, so that when let go or fired, workers are waylaid again by having to do without critical protection

All of these in concert, have forced a massive marginalization of the workforce. It was so odious and extensive  - even by 1996-  that it prompted these powerful words of Charles Reich in his book, Opposing the System,p. 22:

"We have built a machine for dehumanization of such force and destructive power, thorough its accumulated assaults on human dignity, that we are creating kinds and degrees of damage to human beings beyond anything ever known, with totally unforeseeable consequences "


And as  Barbara Ehrenreich observed in her book, 'This Land is THEIR Land', p. 61:

"Market forces ensure that a volunteer army will necessarily be an army of the poor. The trouble is that enlistment doesn't do a lot to brighten one's economic future"

Probably no truer supporting statement ever appeared than barely 20 years ago, in an issue of Psychology Today  (July/August 1998, p. 10. Includes graph):

"Starting in the mid-1970s, the nation's quality of life parted company with its wealth, and the gap between social health, and GDP is now bigger than it's ever been."

A graph of 'quality life indices' vs. GDP (ibid.) shows the measured divergence. It also suggests that we devolved to a much sicker society than anyone imagined. The marginalization of the workforce, is surely one major barometer of that. The GINI coefficient, and research disclosing how it portends social and economic disintegration, is another. (The U.S. Gini coefficient is now at nearly 42.  Readers can track the Gini index increase at this St. Louis Federal Reserve site:

https://fred.stlouisfed.org/series/SIPOVGINIUSA


So how and when did the pre-eminence of market forces over human needs and welfare come about? It was actually brewing for dozens of years, perhaps since the collapse of LBJ's  "Great Society" in the mid to late 60s. From then on the real "elites" (which Prof. Douglas mentions) set out to render labor as cheap as feasible and hostage to Wall Street dictates and decisions.  Part of this was also based on twisted economic reasoning, e.g. as embodied in the Pareto distribution, e.g.


whereby the dollars from the affluent and the poor - or labor class - are treated differently.  This built in economic prejudice drives the Neoliberal machine and causes it to value affluent populations over ordinary workers, even as it tries to discourage the latter from enhancing their own welfare, say to do with health care.

Example:. Economist Marty Feldstein once suggested it makes more sense to give the ordinary worker with health insurance $1,499 NOT to get the colonoscopy, than to let her get the test and consume valuable specialist time and resources via a $2,000 "subsidy".  See also:

http://brane-space.blogspot.com/2011/06/modern-economics-its-evil-basis-pareto.html


In other words, capital is opted for over labor, and  profit margins trump higher wages, this was the topic of The Judas Economy: The Triumph of Capital and the Betrayal of Work, by William Wolman and Anne Colamosca.

The point is then, that labor is devalued precisely because we live in a "Judas Economy" where capital is revered over it. One of the most disgusting aspects is that productivity in relation to GDP has increased more than 40% yet isn't registered because of the skewed way GDP is computed.

All of this is eminently proven by the front page WSJ story cited above,  with the graph) in which we learn:

"Rising wages are beginning to eat into the profits of some U.S. companies. Businesses from dollar stores to hotel operators to fast food chains have warned that higher labor costs have been a drag on their profits - a potential headwind for the nine year stock rally as it struggles for momentum ahead of the second quarter earnings season."

Adding:

"This is good news for U.S. workers ...but the higher costs pose a threat to some U.S. companies"

And we should also dispel the myth that this higher labor cost factor just impinges "some" companies. That's plain blarney and understatement because in fact all corporations have higher labor costs on their radar. I already noted (Jan. 10 post),

According to Paula Harvey, VP of Human Resources at Schulte Building Systems in Houston:

"Companies are really hesitant to give raises. When you give a raise, it's stuck in the pay system. It is something you're guaranteeing: it's becoming a fixed cost. "

She insisted it's much better for companies to preserve "flexibility" so instead companies enact "variable pay". This can come in the form of one off bonuses - say on a per year basis- or if you are a stellar performer you can get a "bigger bump". Say equal to a half year's wage increase of 3 percent. (If you are a super star performer you have the optimal chance of getting a permanent good raise.)

Of particular relevance was the question asked her: Why, if the labor market is so tight (such low unemployment), do wages remain stagnant?   She responded that  "You can blame a combination of factors including the globalization of the work force, job automation and the decline of unions.".

Meanwhile. managing director of Aspen Advisors, Andrew Gadomski (from a WSJ piece), admitted that when companies lament they can't find workers to fill key openings, that is code for: "I can find talent, I just don't want to pay them as much as they cost."

Nowhere are immigrants mentioned, nor should they have been, since they aren't grabbing good paying jobs nor are they the source of wage deterioration. Vastly bigger threats  include corporations too cheap to pay decent wages and AI robots.

In the realm of manual labor, columnist Jim  Hightower cites the example of "SAM" a robotic bricklayer that "lays three times as many bricks in a day as a human can". Hence, it has the potential to displace three times the number of human workers. Immigrants? Not a factor at all compared to 'SAM'.

What about higher level jobs? They're also at risk from bots, not immigrants.  Hightower points out the jobs of "accountants, bank loan officers, and insurance claims adjustors are "falling to the bots".   Why? Because they can calculate more rapidly and more accurately than humans- oh, and they don't require 401ks or health care plans!

It shouldn't take a rocket scientist or astrophysicist to figure out the ultimate goal of the Neoliberals and all economic "efficiency" (i.e. Pareto distribution)  fetishists is to eliminate human labor and its costs as far as possible. That includes immigrants, as well as homegrown American workers - of whatever class.

See also: 'Oil's Technology Spells End Of Roughneck Boom' - Artificial Intelligence and Automation Replace Oil Industry's Blue Collar Jobs'

https://www.wsj.com/articles/oils-new-technology-spells-end-of-boom-for-roughnecks-1531233085


Excerpt:

"Technology has already upended labor needs in most of the world's manufacturing. It's now upending the energy business  foretelling the end for one of the last sectors in America where blue collar workers could hold jobs paying six figure salaries. ....The energy sector has found it can use new technologies, to do the work better and cheaper and with few people. They have invested billions of dollars on what the industry calls 'digital oil fields', embracing artificial intelligence, automation and other technologies"

And:

http://www.smirkingchimp.com/thread/tim-koechlin/80098/imagining-an-economy-that-serves-the-99

Right Wing WSJ Letter Writer Tries To Blame Violence And Rage On The "Radical Left"

It is well known, or ought to be by now, that the resolute faux news Trumpies are not invested in history, facts or objective truth. Look, for example, at all the traction that Alex Jones is getting by featuring a psychotic guest who's claimed there are "child sex slave colonies" on the planet Mars. Then there is the WSJ letter writer, a Mary R. Schneider, from Avon Lake, OH who had her militant letter ('A Double Standard for Violence, Intimidation') published in the June 3rd WSJ.

Schneider's whacked out letter is notable for the gazillion bytes of facts - all well documented- she leaves out to try to make the case the "radical left" are the bad guys in the country, stirring up violence and extremism. This despite the controverting facts that since Trump got in Neo Nazis, Muslim haters, Jew haters and other haters have all been having a heyday - including defiling Jewish cemeteries,  attacking innocents and even good Samaritans on trains -as in Portland, Oregon recently - and scrawling Nazi swastikas all over the damned place, e.g.


All this has been going on, out in the open for the past year, so one wonders what little isolated, right wing cubbyhole Schneider has inhabited . Well, of course if all she watches is FOX News that would explain it. Still, one would have to be deaf, dumb, blind and stupid to miss as many alarm signs as are out there.

Richard Cohen, writing in the SPLC Report ('Welcome To Donald Trump's America', Summer, 2017), notes that what was called "the Trump effect" manifested from a year ago - documented by a survey of 2,000 educators. The gist of the report was that Trump's campaign rhetoric had inflamed racial and ethnic tensions in the classroom leading to a sharp uptick in bullying of minority children. A 2nd survey of 10,000 educators reinforced the original findings, documenting nearly 900 bias-related incidents in the first 10 days after the election. (Many of the perps referenced Trump or his campaign slogans).

Without a doubt, Trump's ascension has really turned the Reich wing nuts loose and now they feel they have a guy in the WH who has their back, so are emboldened to do anything they want.  The SPLC Report (op. cit.) noted especially that "white nationalists and Nazis were enthused" over Trump's first 100 days. Meanwhile, these denizens cheered like drooling morons at every anti-media tweet the Dumpster posted - always hankering for more.

In her letter, Schneider, in answer to a column by Peggy Noonan ('Rage is all the Rage'),  claimed "that If any other Republican had been elected" in 2016, the Left would still have made the person the "target of violent speech".  Which is nonsense in two ways. First, there has not been "violent speech", but rather angry demonstrations such as immediately following Trump's aberrant election including the Women's March. Second, the reason for anger  - which btw is not the same as violence - was clear from months ago when Trump bragged about sexually assaulting women ("you can just grab 'em by the pussy') and then this infamous brag about shooting someone on 5th avenue and not losing voters, See:  https://www.youtube.com/watch?v=iTACH1eVIaA

I am absolutely certain Schneider is one of the voters Trump wouldn't lose if he shot someone dead on Fifth Avenue. Let's also not forget this common thug's own enticement of violent behavior at his rallies, where he actually encouraged Trumpies to punch out protestors, and even go after the media. Then we've seen the latest video, redone from a WWF match, showing Trump beating the daylights out of a suit with a superimposed CNN logo for his head, thereby inciting his more volatile and unstable followers (Schneider?) to take action against the media. Ah yes, following in historical lockstep to Hitler's Sturm Abteilung (S.A.) commissioned to beat the then German reporters to a pulp - especially those that didn't print stories praising the Fuhrer. So, we've seen this act before, also the blindness of followers like Mary Schneider. (See Konrad Heiden's 'The Fuhrer')

Despite all of this, and as the most recent SPLC Intelligence Report notes, "a wave of anti-minority hate crimes washing over the country in the aftermath of Trump's victory" she has the absolute nerve and chutzpah to write:

"The political rage infecting the U.S. is almost exclusively a left-wing phenomenon,"

So I guess she missed all the hateful scenes and instances from the time of Obama, e.g.

But maybe this woman is blind,  lives in a parallel universe or simply doesn't wish to see the ubiquitous rage on the Right.  Maybe she also missed the scene of Montana's thug Greg Gianforte who had left Guardian reporter Ben Jacobs being carted off to an ER after being body slammed, e.g.

See any of that, missy? No? I could post a lot more images but what would be the point? Ordinarily I wouldn't even waste my time rebutting BS like Schneider's but someone has to skewer this type of nonsense and I am damned sure the Journal wouldn't publish any rebuttal letter of mine.

She also demonstrates her historical retardation writing:

"Violence has been part of the radical left's arsenal since the French Revolution"

In fact, the French Revolution disclosed a general popular revolt against a rarefied, entrenched upper crust or French aristocracy,  content to let thousands die of  hunger on the streets and in villages, as embodied in Marie Antoinette's famous put down: "Let them eat cake!"  Well, the entire French populace - not just the "left" (there really was no defined "left" until Karl Marx' 'Communist Manifesto' and  'Das Kapital'  decades later) rose up and put these privileged fools so dedicated to inequality to the guillotine.  It remains an object lesson for nations never to let inequality get too far out of control. (Right now, the Gini coefficient for the U.S. stands at 0.394, the highest it's ever been)

She then adds to this a large dollop of additional ignorance:

"It is the direct result of the hard left's rejection of traditional Christian morality and its embrace of moral relativism in pursuing its agenda, which allows leftists to demonize their political opponents and to use any means to defeat or even eliminate them."

Here she doesn't elaborate what she means by "traditional Christian morality" but in a previous post I already examined that what the left embraces is not moral relativism but moral provisionalism, e.g.

http://brane-space.blogspot.com/2017/05/moral-absolutism-is-trumped-by-moral.html


As for "demonizing" political opponents, this has almost entirely been done by the Right. Obama and Obamacare were a constant victim of this demonization, including depicting him as a witch doctor with a bone through his nose, as well as "Satan's son" , e.g.


If those Reich wing images don't meet the literal definition of "demonization" I don't know what does.

Use any means to defeat them? Here again "Mary, Mary quite contrary"  has her signals crossed. Last I checked it was the Repubs doing all the gerrymandering to ensure they'd never be defeated! As for "eliminating them" it was the Right and its associates in the MIC which eliminated JFK, Martin Luther King, Bobby Kennedy and Malcolm X, last I looked. Maybe the lady needs a course in modern American history. On the other hand, maybe it wouldn't do any good given how many modern American history texts have been converted to pabulum and 'feel good' propaganda..

Schneider, to her minor credit, does acquire a degree of graciousness at the very end, writing:

"Certainly, most liberals in the U.S. don't espouse violence ..."

Gee, thanks a heap, lady! But she goes on to babble:

"but a growing, radicalized minority of them do and often with the tacit approval of their less radical brethren..."

Failing to cite any specific incidents or evidence. If she'd mentioned the Kathy Griffin incident with a prop of Trump's head, I'd have referred her to my previous post on it -


http://brane-space.blogspot.com/2017/06/kathy-griffins-bloody-trump-head-and.html


connected to artistic license and free speech. Was it possibly in poor taste? Yeah, maybe,  but not as much as Ku Kluxers putting up posters of branding and whipping Michelle Obama!

At the very end she bids "mainstream liberals" to reject the "demonization of those who don't share their views", but makes no symmetric demand on the extreme Right, which generated the images above. She then ends with:

"Unless they subordinate their ideology to morality, the rage and violence will get worse."

Indeed, but see, that works both ways: If the Right doesn't subordinate its ideology to a morally refined conscience, then things can only get worse : more bullying and terrorizing of minorities, more instances of Reepos beating up reporters, and more thwarting and threats at minorities trying to vote.

Schneider's missive shows it's damned easy to dictate that others "reject their ideology for morality" and abhor rage and violence . It's much more difficult to issue similar dictates for your own side!

No, Religion Won't Save Working Class Whites

It appears these days as if every manner of political elitist and his pet poodle have sage advice for working class whites. We saw it 4 years ago with the book 'Coming Apart: The State Of White America  1960-2010'  by Charles Murray. Therein he expressed the conviction that an over reliance on government "entitlements" coupled with an inability to get married or stay married caused this demographic to be on a downward spiral into indolence, moral laxity and even moral turpitude.

Not long after there appeared an odious, self-serving 'Lexington' essay in The Economist  channeling Murray's view incorporating the moral opprobrium directed at the same working class. He wrote in part:

"Most in need of instruction is a new lower class, perhaps a fifth of the white population whose plight forms the next part of his book. This class is in the throes of disintegration. Too many of its men will not work, too many of its women raise children out of wedlock, religious worship is in decline... In lower class neighborhoods the togetherness of communities has vanished...."

Okay, let's back up there. This needs an objective examination as opposed to semi-adorational slobbering in the form of a quasi book review. Let's begin with the last, that "lower class neighborhoods have lost togetherness". This very malady in fact, was addressed as long ago as 1995 by Charles Reich in his book, Opposing the System. As Reich noted therein, p. 103:

"When society itself comes to be modeled on economic and organizational principles, all of the forces that bind people together are torn apart in the struggle for survival. Community is destroyed because we are no longer 'in this together' because everyone is a threat to everyone else."

Note especially the highlighted part. We are no longer in this "together". Again, the crime or sin or whatever you wish to call it that Lex and Murray appear to want to hang on the lower classes is in actuality a direct effect of the Pareto-optimality based economic system which destroys equality and cooperation. It enables banks to foreclose homes at will (robo-closings) and thereby fractures neighbors one from the other. It rewards those who are prepared to game the system, but not those are aren't.

In such a capitalist-driven, consumerist, Pareto-organizational economic model, wherein the resource “pie” for the non-wealthy grows ever smaller, the young are threats to us oldsters, as we are threats to them, as neighbor is to neighbor. It can't be otherwise. For example, as threats to our Social Security are ramped up on account of the odious austerity-debt hawks - led by billionaire pricks such as Peter G. Peterson, we oldsters tend to pull back in self-interest and vote ardently against any increase in property taxes to support schools. While we would dearly love to support local schools via higher taxes, we are wary so long as threats exist to cut our benefits and standards of living to the point we need to turn our furnaces off to save money, or split our meds.

And at the forlorn bottom each manjack believes the "other" - his neighbor, to be his enemy as opposed to the savage debased system that spawned such inequities. How irreligious or anti-religious can one get?  In truth, the working class whites could begin by telling these wine and brie eaters that if they want them to marry then fucking provide a LIVING wage, not a mere minimum wage, to enable that to happen. Also, cease sending the highest paying jobs overseas to low wage bastions, including coding jobs, software development. They'd tell them to also provide - parting with some of their ill gotten millions or billions - some free child care services such as exist in Denmark and Norway.

Now, in his NY Times (Sunday Review, June 26, p. 8) essay ('When Paranoia Replaces Piety') , J.D. Vance would have us believe it is insufficient piety and religion. He writes:

 "Despite benefits (less racial prejudice, more community, fewer divorces) church attendance has fallen off substantially among members of the white working class.in recent years just when they need it the most".

He then goes on to cite stats to support the position that this class, by losing its church-forged piety, has fallen into the pit of paranoia including political, e.g. "evolution is a lie secular science tells to counter the biblical story of revelation, the Federal Reserve achieves satanic ends by manipulating the world's money supply " etc.

Because of this these whites have become "wolves" as opposed to "shepherds" raising their kids. Hence, no surprise the kids come from broken families, use heroin or opoids, and suffer from neglectful or abusive parents".

But is this really true, or might it be the case that even with church attendance these whites would still have come out on the wrong side? Hardly! Because at root, in nations where the working classes are most ground under there is actually the flight to religiosity in order to escape economic hardship and horrors visited every day. Don't take my word, just look at this graphic from  Free Inquiry, Vol. 29, No. 1 Jan. 2009:


It shows successful societies in relation to degree of religious beliefs.. Basically, for  18 out of 19 of the most prosperous democracies,  the share of population reporting absolute belief in a god or gods ranges from between as little as a few percent to at most one-half. In some of these nations, mainly in western Europe, two-thirds proclaim to be either atheists or agnostics. Compare this to the outlier U.S. (U) where 83 percent express solid belief- and this is for the patriarchal, personal version of a hyper-engaged deity.

One of the most circulated canards concerning religious belief is that most of humankind is invested in it. We are asked to believe the vast majority – for some reason- find it essential to link up with a religion to make their life meaningful. Of course, this is tommyrot and poppycock, and now there is ample statistical evidence to back it up – starting with a measure known as the ‘Gini coefficient’ which registers the degree of economic and income inequality in any given nation, referenced as a decimal. Or, more often (in non-technical venues) as a plain number between 0 and 100.

In terms of practical applications, a Gini index of zero would denote perfect equality. In terms of western industrial nations, most developed European nations and Canada tend to have Gini indices between 24 and 36, the United States' and Mexico's Gini indices are both above 40, indicating that the United States and Mexico have greater inequality. In the whole panoply of criteria, and the full spectrum of research, the Gini coefficient (the prime indicator of income inequality) is the key factor. To be specific, across the first world (of developed nations) lower economic and income equality correlates with lower religiosity. This pattern is “statistically progressive” according to a recent article in Free Inquiry (Jan. 2009) and “no exceptions are known”.

The warp and woof of advanced, collated sociological research into religiosity and secularism and sociological health as a function of either- is well documented in the aforementioned issue (Vol. 29, No. 1) ‘The Future of Religion’, p. 24. As noted therein, the thrust of this research is that religion is falling like tenpins in all first world democracies, with the exception of the U.S., and that the least dysfunctional societies are the least theistic.

The primary finding that runs likes a thread through all this research is that religious belief and activity is a superficial coping mechanism that is easily cast aside when the majority in a given society enjoy true (not faux) democratic government, and enjoy a secure, comfortable and middle class lifestyle.Those who claim the universality of religion or that it is integral to human nature commit the basic selection effects error, in that they conveniently overlook the data which show broad secularization of western Europe, Anglo-Australia, Canada and other developed nations.
The core of research (largely statistical) directed at this issue shows the primary reason the U.S. is a statistical outlier in religious belief is income inequality (as measured by the Gini coefficient).
This index has seen inequality increase ever since Bush Jr. was handed his presidency, compliments of the five Supremes, in 2000.

Meanwhile, with its historically lower taxes, fewer public safety nets, more poor than rich (by more than a 25:1 ratio), the U.S. displays a greater disparity than any other nation. Moreover, it displays a much greater social pathology. Understanding the basis of this pathology doesn’t take a genius, including the inputs from globalization and worker redundancy derived from it.

Thus we read in the latest issue of TIME (July 11-18, pp. 16-17) that even after the rise of open markets, shuttering of factories, easy access to cheap labor plus "mainstream politicians who took their support for granted but served the interests of the wealthy" that "the white working class never went away". No it "stewed in its own resentments feeling variously patronized, ignored and belittled by the elites".

Hence, they have struck back by knocking down the final pillars of faith to which they had clung, mainstream government and religion in the form of the churches.  Hence, it is not surprising at all the working class to which J.D. Vance refers in his essay no longer wants any part of his hollow creed or any other. What, after all, has it delivered? More joblessness, more despair and more hungry mouths of his children while the elites travel to St Kitts for special chocolate spa treatments and 18 holes of golf.

Mr. Vance poignantly yearns the working class whites would have received from their own faiths those marvelous qualities his delivered: "introspection, moral guidance and social support".

But, of course, because they couldn't even deliver warm bread and soup for their kids' at night, they obviously wouldn't believe the mere abstractions could be delivered. And so the only natural recourse was to drop the faith and "point a finger at the faceless elites in Washington".

Sadly, just as Brexit was incepted by the political elites'  total abandonment of working class whites, so might the election of Trump be incepted here. Let's hope not,  but really, are the "paranoid" working class whites enticed to embrace any hope for their future by the Wall Street- friendly, Neoliberal warhawk Hillary?

Probably no more than they're likely to return to the pews and preacher lectures about the need to return to moral probity.

Examining The Roots of Economic Inequality

Economic Inequality occupies such a prominent place in today's political-economic discussions that even the high-powered elites (at least some of them, like the Bank of International Settlements) have actually warned of its metastasis. This suggests the problem is at once global but still far more pernicious in some nations, such as the USA.

The general measure is the Gini coefficient and for the U.S. it has dramatically increased the past 25 years and is now nearly 0.40. This is nearly on a par with the Philippines and Mexico. Not only that but inequality is increasing.

There are two ways to look at what's happening: 1) simplistic or 2) systemic. In the simplistic narrative inequality is simple because it's just reduced to income inequality. People-workers are naturally unequal in means, salary, perks etc. because they occupy different stations in life, have different training, aptitudes, education, background etc. so some will "get to the top" and have it all or most of it with humongous incomes, while others will flounder as flunkies in bottom feeder jobs like burger flippers or maybe street cleaners.

Following from this, the elites will always be able to buy more and bigger, whether cars, homes, TVs, home theaters or even vacations. By this narrative, it's the fault of the "flunkies" for accepting what are supposed to be starter jobs and keeping them instead of moving on to bigger and better things, preferably by getting more training, education etc. (No mention here at all of the fact that 95% of all wealth is inherited, as first exposed by Michael Parenti in his book 'The Dirty Truth')

As a corollary to this, the poor  - those in poverty and needing welfare or food stamps - are also to blame for not pulling themselves up and making more of their lives by getting higher paid jobs as opposed to say "settling" for a $7.50 an hour fast food McJob.

Of course, this is all a balderdash right wing fairy tale that may console the Right winger's conscience but barely touches on reality.

Thus, to really get at what's going on one needs to use a systemic approach and analysis. In doing so we learn a number of brutal truths:

1) The Job profile in the U.S. now is like a steep pyramid with only a few "great" jobs at the top, mainly techies (Google, Microsoft etc.) but the bulk are mediocre or poorly paid. Also, with few benefits. Look at the typical WalMart worker. The latter doesn't go for food stamps or Medicaid because he is endemically "poor" but rather is too poorly paid. Since his company won't provide him the health benefits he needs, of course he must go on Medicaid.

2) The pyramid took this form since the 1990s, and especially after NAFTA, when millions of manufacturing and production jobs were sent out of the country and plants - as well as steel mills and auto factories (paying truly living wages of $35/hr or more) were shut down.

3) While many econ gurus made predictions that computer -software and other better paying jobs would come to the fore this didn't materialize. Instead companies (e.g. Dell)  "outsourced" their tech help software expertise to India. (Indian schools now train their s/w students not only in the various online help techniques but also how to imitate American accents).

4) Thus, the fact of the matter is the elite jobs never came back and hence upward mobility - once a cornerstone of the U.S. work force- went into abeyance and is perhaps now extinguished permanently according to some authors (See Juliette Schorr, 'The End Of Work') .  The WSJ in one article back in August actually predicted that by 2020 fully 44 percent of the workforce would be in retail- and receiving a truly 'royal' average wage of about $9.50 an hour. When the Wall Street Journal recognizes such a huge proportion of retail jobs you know upward movement is a thing of the past.

All of which shows that claiming income disparity is at the root of economic inequality is true in one big sense, but misplaced if  massive U.S. job outsourcing via globalization is not factored into the equation - and acknowledging this interjects a systemic defect.

5) American workers have gang-busted with productivity gains since the early 1970s, but have virtually nothing to show for it. Wage increases have only marginally increased (last month to barely 2.2 percent)  and meanwhile benefits have been pared back. Worse, productivity is now almost uniformly measured not the way it once was - by how much a worker did per hour - but instead how many workers can be CUT so that those remaining can still do the work of the earlier total.

The other systemic side of economic inequality has to do with how many advantages the wealthiest have which average workers do not. For example, they have enough disposable extra income that they can afford to be in the stock market and sustain heavy losses - say in a correction or downturn - without having to eat cat food. The ordinary worker with his or her 401k of only $100,000 can't afford that luxury.

Also, the wealthy can make use of  computer flash trading to cash in shares before the ordinary Joe can reach for his smart phone. The rich also know how to use fractional trading to benefit as well as get tax write-offs the ordinary bloke can only dream of and can use trusts to protect his estate that the ordinary Joes and Janes can't.

From a systemic viewpoint then we see the plight of the U.S. worker can be laid at several forces which are causing available jobs of any quality to plummet: 1) globalization, including the oncoming TPP trade deal, and 2) automation - which is enabling companies to jettison even more workers and thereby save on salaries and benefits. These factors,  in tandem with the wealthy stacking  market transactions in their favor, means it will always be a rigged game. Worse, the wealthy will make extra money off the backs of the workers via the stock and mutual fund losses of the latter.

The solution to the problem then must be systemic but not as the 'simplistic' folks portray it. First, the market and stock market in particular must be held to account for the little guy. No more flash trades or fractional share buying, selling. No more carry trade. Plus each transaction carries a tax hit, no more unlimited exchanges.

At the same time,  the  rich alone can't be taxed to sustain an economically equitable society. Everyone of middle means must be taxed more highly but also understand they will get it back in higher benefits (like the Europeans do), including: lower health care costs, lower drug costs, and lower thresholds for Medicaid and even food stamps. Also, low cost or free child care to enable parents to work or even have the chance to get better jobs (if such become available0.

In Europe, citizens accept much higher taxation but this is balanced by much more government support they can depend on, whether for pensions, healthcare or childcare. In the U.S. model, Americans are taught to be rabid individualists and "go it alone" without any support,  but if they stumble (say by getting a fatal cancer or being in a bad accident), too bad. However, if they hit life's lottery - yeah, they will live like kings, or at least Trump.

Trouble is 99 percent will not make life's lottery, so will end up scrabbling for a life line at some point. (Which is also why you see so many hard working Americans throwing their money at lottery tickets the only chance they have- in their mind.)

Donald Trump in all his economic bloviations, has gotten one thing correct - and it is driving the anti-tax fanatics of the GOP nuts: higher taxes have to be paid, especially by the super rich. But if economic inequality is ever to be conquered and real productivity returned - higher taxes must be borne by everyone of decent means - which is also why the Bush middle class tax cuts were one of the worst things ever for this country. Especially as they were implemented when Bushie boy was starting $ 4 trillion wars. Sadly, the Dems contributed to that malaise by voting for them in the first place then extending them past their sunset date (which even the Bushies knew was needed to prevent a deficit blowout.)

Now all those war debt coppers got to be paid back, and the rich alone - rich as they are - can't do it. The burden falls on us all. But it's surely a cautionary point against starting any future conflicts we can't pay for and which will only increase inequality!

The truth for my bible -believing friends is that the "parable of talents" would end up a poor joke in today's rigged financial world. I don't believe Yeshua, if he was alive now, would even be daft enough to propose it. He'd know in advance, given he's God, whoever received a talent to invest would lose it - in about the time taken to be fleeced in a flash trade.

See also:

http://www.salon.com/2014/01/08/dear_middle_class_welcome_to_poverty_partner/

http://www.salon.com/2015/09/09/robert_reich_americas_economy_is_immoral_partner/

Piketty, Capital, Soaring Stock Markets and Why Americans Aren't Rioting in the Streets

It's incredible but for the past couple years, on successive European junkets, a question that invariably pops up from the Euros - be they Austrians, Germans or Swiss is: "Why aren't Americans rioting in the streets? Why aren't they burning everything down like those folks in Kiev? Why do they tolerate the super rich getting off at their expense?"

Well, as I informed them, it's not as if the images of the rich haven't been circulated, including their $100,000 gold-plated bathtubs, special electronic, auto-wiping, super-sanitizer butt-cleaner toilets and so on. Not to mention images like these showing the rich at play using the gains from the labor of the rest of us:




And:

And:

























The $ 25,000 (apiece) Frrrozen Haute Chocolate fills the bellies of the wealthy layabouts  as an every day dessert but would incite a workingman to barf.


This isn't "blowing smoke" or instigating  insurrection either. In one candid conversation with Frank Rich last fall, Chris Rock said, “Oh, people don’t even know. If poor people knew how rich rich people are, there would be riots in the streets.” Further, the findings of three studies, published over the last several years in Perspectives on Psychological Science, indicate that Rock is right. We have no idea how unequal our society has become and to address the Europeans' question, most Americans really don't care  (e.g. http://brane-space.blogspot.com/2015/03/clutter-capitalism-and-inequality-why.html   ) since they fancy that one day they will become rich too - just by working hard. Of course, they are deluded. As author Michael Parenti has noted ( 'Dirty Truths') 94 percent of wealth comes by way of the wealthy not doing a damned bit of work but by inheritance.

Thomas Piketty noted the parlous effect of this inherited capital in his masterpiece book: 'Capital in the Twenty-First Century', where he noted the innate tendency for capital to increase  encapsulated by the shorthand,  r > g  with r the long run returns on capital and g is the rate of economic growth. Basically, it shows the "past devours the future". This is highlighted by the fact that the heirs of the fatcats  pay zero capital gains taxes on their stocks or other assets.  Such “unrealized” gains now account for more than half the value of assets held by estates worth more than $100 million. At the same time, the estate tax has been slashed. Before George W. Bush was president, it applied to assets in excess of $2 million per couple at a rate of 55 percent. Now it kicks in at $10,680,000 per couple, at a 40 percent rate.

No wonder these little bastards can afford to eat two or three Frrrozen Haute Chocolates  each day then whiz off to St. Kitts for 18 holes each weekend while their wives enjoy rose wine wraps.

Piketty's data shows  that indeed, inherited wealth has  metastasized inequality because the scions of the wealthy can then park their capital in rentier venues: dividends, profits, capital gains, interest and so on- and just let it grow while they sit on their asses. As a result, the gaping inheritance disparity actually grows more gaping each year after the inheritances have been received.

Worse now, is that the Fed has been feeding these layabouts with crack money via quantitative easing which has propelled the stock market to new heights. (Of course, it will have to come down eventually, which will be when the Fed finally gets the cojones to raise interest rates again instead of feeding crack to the markets and subsidies for chronic borrowers - while savers suck salt.)

Of course, the reason Americans are hard to enrage about this is not only their pie-eyed optimism but also their woeful ignorance.  From recent studies, the average American believes that the richest fifth own 59% of the wealth and that the bottom 40% own 9%. The reality is strikingly different. The top 20% of US households own more than 84% of the wealth, and the bottom 40% combine for a paltry 0.3%. The Walton family, for example, has more wealth than 42% of American families combined.

As the journalist Chrystia Freeland put it I her book about the plutocrats,  “Americans actually live in Russia, although they think they live in Sweden. And they would like to live on a kibbutz.” Norton and Ariely  in their own study also found a surprising level of consensus: everyone — even Republicans and the wealthy—wants a more equal distribution of wealth than the status quo. (Of course, the intelligent wealthy had better get on board if they have any recollections of what transpired during the French Revolution.)

Of course, the Republican Party itself - in the maw of the wealthy business class- is determined to exacerbate the inequality and make the Gini coefficient even lower. Their most recent budget attests to this, cutting not only Obamacare and Medicaid (which more than 20 million currently depend upon) but also Medicare (using Paul Ryan's infamous vouchers or "premium support" - more like premium abort) and cutting Social Security.

If we ever do end up in a scenario in this country resembling the French Revolution you will be able to lay most of the blame on the Republican Party.

See also:
http://www.smirkingchimp.com/thread/john-chuckman/61645/the-enduring-reality-of-government-by-wealth-and-some-of-its-consequences
 

 

More Than Ever True: Americans Will NEVER Get Rich From Work!

 Several years ago I noted how a majority of Americans has been duped by a sustained false consciousness implanted by the elites (including the media and political elite) into believing America is a “classless” society and upward mobility still exists. They keep trying by way of work to "make it" - failing to grasp they never will. Not the way the system is currently structured.

Well, more evidence has since come to the fore, including that the U.S. middle class is no longer the world’s richest. After considering taxes and transfer payments, middle-class incomes in Canada and much of Western Europe are higher than in U.S. The poor in Western Europe earn more than do poor Americans. I can vouch for that, seeing many of these people circulating around the high reach places in Switzerland last September. Money for them was no object.  There is also no big secret to this when you ask them how they manage: Their governments impose higher taxes on the wealthy and redistribute more of it to middle and lower income households. Most of their citizens receive essentially free health care and more generous unemployment benefits than do Americans.

Let's continue with the false consciousness aspect. Here  in the US of A, there is a strongly held conviction that with hard work, anyone can make it into the middle class. This is mostly horse manure, and a merely consistent observer can show it doesn’t hold up and the majority of American workers either tread water where they are (in terms of net wealth, job security) or they go downscale after losing a long held job - to become burger flippers or Walmart greeters.

But despite the evidence, most Americans remain blinded by the work ethic and the pundits' constant yammering it is "the only route up". To fix ideas,  Pew Research  recently found that Americans are far more likely than people in other countries to believe that work determines success, as opposed to other factors beyond an individual’s control. Make no mistake that Pollyannish positivity comes with a negative side:  a tendency to pathologize those living in poverty. Indeed, 60 percent of Americans (compared with 26 percent of Europeans) say that the poor are lazy, and only 29 percent say those living in poverty are trapped in poverty by factors beyond their control (compared with 60 percent of Europeans).

Note that part of this perception also stems from the innate narcissism inherent in too many Americans which douses out their ability to feel any empathy for others. To identify with their travails and setbacks. Reality then usually doesn't rip away the bullshit veneer unless they also hit bottom - whether through layoffs, health crisis or something else. It seems it takes an external 'hammer' to awaken them! 

While a majority of Americans might think that hard work determines success and that it should be relatively simple business to climb and remain out of poverty, the reality is that the United States has a relatively entrenched upper class.  It also has precarious, ever-shifting lower and middle classes. While many Americans might hate welfare, the data suggest they are fairly likely to fall into it at one point or another. Or unemployment and often longer than 6 months.

How do the wealthy get away with sitting pretty while the lower and middle classes pound dirt? Easy! They keep us going at each other's throats, via political divisions ("liberals" vs. "conservatives") or religious divisions - secure that they will prosper so long as the rest of us are too busy fighting with each other. Assisting them in this are stations like FOX which incredibly - according to recent surveys- now sport the largest number of people who say it's the most "trust worthy" news source. This despite having consummate liars like Billo O'Reilly.

SO the hoi polloi remain nicely brainwashed and believing every other factor is responsible for their plight except the elites themselves.

But why don’t Americans get it? Why do they lack the moxie to accept that an Overclass will determine how far they get and nothing else? Several reasons:

1) Americans are obdurate and perennial optimists. Unlike Germans whose native instincts are always to perceive the economic downsides of situations – so they’re more like to detect how they’re being gamed or suckered – Americans typically put the blinkers on. No where is this more evident than in how both sexes approach the stock market. Most American males, raised in hubris and bravado, believe they can beat the market by multiple trades and end up losing most of the time (more than 70%). Women, trained to be more cautious, trade much less and in more conservative outlets and gain more consistently. This same false optimism of most males, especially white, makes them disavow how they’re getting their asses kicked by a gamed economic system. No wonder then, that 63% of white males voted against Obama in 2008. Hell if they were going to buy into a “socialist” equalizer’s “dependency”. But….they bet against their own welfare.

2) Americans are much more poorly educated and informed than their European counterparts. They not only suffer because of deficient secondary (and tertiary) education, but also because of the deficient news offered by the corporate mainstream. This is mainly piffle infused with equal parts PR and propaganda, with little substance. Hence, unless the citizen reads widely he will be susceptible to psychological manipulation and false consciousness.

3) By virtue of (2) Americans more often fall prey to the fundamental attribution error ( which reinforces inequality in society) because of their over-optimism. This error is such that (‘Maxine Baca- Zinn and D. Stanley Eitzen, In Conflict and Order, 1991):

“It tends to credit or blame individuals for their level of failure or success without considering the aspects of the social structure that impel or impede their progress. Thus, it results in praise of the system and condemnation of individuals who are defined as losers.”

Thus, the fundamental attribution error (mostly made by working class whites) works to perfect effect and in favor of the American Overclass because it causes an entire dispossessed electoral segment to screw themselves so the Overclass needn’t fret over their rage. They simply redirect that rage at minorities (immigrants, blacks, or women) while they stick with the political rascals (GOP) that did them in the first time.

This in turn leads to workers who are prepared to tolerate any amount of systematic abuse from a corrupt system, because they lay the blame on their own "lack of ambition" or some other false excuse contrived by the corporate thought controllers to deflect blame from their own greed.

This may well be at the heart and core of why so many of the working and middle classes vote against their own best economic interests.

Meanwhile, the evidence is abundantly around us – for those who have eyes to see- that we are in a society at least three times more unequal than that which existed in the 50s. Back then only one spouse needed to work, bank interest at 4-5% kept passbook savings flush and the middle class had the potential for growth. (Fully supported by Robert Putnam in his new book: 'Our Kids- The American Dream in Crisis')

Now, all of that is inverted: both spouses usually need to work, often at two jobs each, bank passbook interest is near zero percent so people either have next to nothing or chase risky yield in the stock market, and the middle class numbers are crashing as the Gini coefficient and index (the prime measure of inequality) approaches values peculiar to the Philippines and Mexico.

And hold strain because things are about to get a whole lot worse. This will transpire when  the secretive “Trans Pacific Partnership” trade deal  is unleashed.  An outrage on civil society that will show once more that American corporations don’t represent the interests of Americans. They represent the interests of their executives and elite shareholders, who are not only wealthier than most Americans but also reside all over the world.