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

Trump's 401(k) And Stock Market Blather Shows He's Out Of Touch With His Base

Trump at a recent rally in Pensacola bloviating about 401ks. Most of his base don't have one..

A question that comes to mind after a recent Dotard spiel about 401(k)s is whether he really knows his base, his indefatigable deplorables who appear prepared to suffer any insult on behalf of their little dolt messiah. For reference, a recent New Republic article ('It's the Culture, Stupid!', November, p. 14) provided this insight on his prime supporter:

"In last year's election, according to an analysis by political scientist Tim Wood, 61 percent of the poorest whites - those in the bottom third of income distribution - voted for Trump."

Sixty one percent of the poorest whites. That is, a demographic that likely would no more have a 401 (k) than they'd be able to afford an immediate annuity.  But it seems Trump,  aka Donnie Dotard, has no clue about their financial capacities, or he doesn't care. (After all, he did offer the disclaimer remark after being elected "You all knew I was a snake and you still put me in office!"   Well, not everyone, asshole .)

  As observed in a recent  Bloomberg report:  Trump has been trying out a new "campaign" slogan: “How’s your 401(k) doing?” The answer for more than half of Americans is that they don’t have one.  Having one means you are earning enough in a salary to salt money away in such a plan, i.e. you have disposable income. The problem is that most people in the bottom third of income don't have such disposable income. These are exactly the poor white Trumpies.

Alicia Munnell, director of the Center for Retirement Research at Boston College, commented in response:

"I’m not sure he understands that only a fraction of the population has 401(k)s, or he just may not realize that he’s speaking to the privileged few.”

Personally, I suspect he knows he's speaking to the privileged few and his supporters are either too dumb or brainwashed to give a shit.

The fact is only a third of workers contribute anything to their retirement accounts, according to a Census study released this year. Among workers in the bottom half of the income scale, less than 25 percent participate in a retirement program, according to the GAO.. With wages largely stagnant for most Americans in recent years, saving for retirement has been crowded out by other expenses. Student debt and auto loans are at record levels, according to Federal Reserve data released in February, and overall consumer debt is rising at the fastest pace in three years.

According to Douglas Holtz-Eakin, president of the American Action Forum, and former chief economist to the Council of Economic Advisers under George W. Bush:

“You can give people all the tax-deferred accounts you want, but if they don’t have enough money it’s not going to work,”

Despite that, Dotard has repeatedly tested out the line at a fundraiser, a campaign rally and in a White House meeting, predicting that the rising U.S. stock market will help him win re-election. But for his supporters to make that same error again, and I do believe when their healthcare is pared back from his tax cuts they will see it's an error, they'd need to have 401(k)s and be getting benefits from them. They don't and aren't.

The truth? Only about 45 percent of private-sector workers participate in any employer-sponsored retirement plan, and the lower-income workers in Trump’s political base are the least likely to hold money in such an account, according to the Government Accountability Office. Again, this isn't startling given their wages - assuming they have any - are likely so low they can barely afford their rents and utilities, far less groceries. So there's nothing left at the end of any given week to put into a retirement fund.

Donnie Dotard - in another disconnect  - also  mentions the stock market almost daily in tweets or public remarks. He intends to take direct credit for record highs by the Dow Jones Industrial Average and other indexes. He seems not to appreciate that had Obama not pushed for a $797 b stimulus package back in 2009 - passed by Dems - we'd likely still be in a great Depression.  All the financial indices and data that followed the great market meltdown in 2008 showed that without a stimulus - after the credit freeze - the recession would have morphed into depression. By now we'd likely still be in it, with 30 million or more unemployed.

Trump in his elitist, privileged mind, seems not to grasp that only about 14 percent of U.S. families directly own stocks, an asset class dominated by the country’s top earners, according to the Federal Reserve.  (This direct ownership definition directly contradicts Jill Schlesinger's claim on CBS nine days ago that 45 percent directly own stocks. But she was including those who have mutual funds in their 401ks, which is not direct ownership.)

Meanwhile, as Bloomberg reports, Dotard has  rolled back efforts to expand retirement savings options to more middle-class and low-income workers. This involves neutering the fiduciary rule.

For a dolt propelled into office by a sense of grievance - from poor whites who feel left behind economically - Dotard's continual references to the stock market and 401(k)s risk alienation.  This according to Austan Goolsbee, a former chairman of the White House Council of Economic Advisers under President Barack Obama.  Goolsbee,  in the aforementioned Bloomberg piece,  puts it thus:

“As a political slogan, ‘how is your 401(k) doing?’ suggests he’s most interested in the one-third of people who have a 401(k). The more you highlight how great that group of financial winners is doing, you at least run the risk of angering and irritating the very people who revolted against what they perceived as the financial and political elites in the first place.”


White House spokeswoman Lindsay Walters said Trump’s statements reflect “a strong economy” that is “good news for everyone.”  She added to this initial BS by claiming- in an email statement:

“For the Americans that don’t have the opportunity to invest in a 401(k) plan or who choose not to, the Trump agenda of lower taxes, higher wages, and better jobs allows them to save more on their own, and potentially have a better chance of finding a job in the future that provides those benefits,”


Of course this is codswallop that only the most gullible, uncritical thinker would swallow. No set of financial data supports it, period. The agenda of trickle down via lower taxes on the richest, indeed, has always been shown to curtail economic growth and jobs as well. A Financial Times analysis of the Bush tax cuts appearing in the FT issue of 9/15/10 showed precisely this.  Other analyses from the Reagan tax cuts in the 80s showed similar slow growth, coupled with exploding deficits. ( Deficits, by the way, which were later invoked to cut social services and even Social Security (by raising the retirement age.)

It also appears that at least some of Dotard's supporters may be wise to his con. An October Politico/Morning Consult poll found that only a third of voters think Trump “cares about people like me.” Trump’s tax overhaul is opposed by a two-to-one margin because independent analyses have found it largely benefits the wealthy, according to a Quinnipiac University poll released Dec. 13.

Trump also appears not to be aware that the 401(k) was never intended as an investment vehicle but rather as a saving vehicle. This was pointed out by William Wolman and Anne Colamosca, the authors of The Great 401k Hoax.   This saving dynamic was further reinforced and assisted by companies matching the savings of employees.   It was only after this matching diminished that risky investment strategies were emphasized for the 401(k).  But these stock-mutual fund investments were never originally envisaged for ordinary small fry investors with  little disposable income they could afford to lose. (As the stock crash showed in 2008).

Another huge theme of the authors is that labor is devalued precisely because we live in a "Judas Economy" where capital is revered over it.  Look at the abnormal degree to which companies opt for stock buybacks to inflate their stock P/E ratios rather than create enough new jobs.

One of the most disgusting indices as the authors note, is that productivity in relation to GDP has increased more than 40% in the interval since 1973 even as wages-salaries have remained almost stagnant. Of course, one major reason is how "greater productivity" is attained. Often by firing a number of workers and ditching their benefits, and making the remaining force do their work plus that of the downsized one.

The authors' primary advice for little guy would-be investors is to steer clear of the markets until and unless the balance between Maul Street and Main Street is restored. Mainly, that much higher wages emerge which specifically allow more disposable income  to invest so one can afford a measure of loss if such occurs. Otherwise, steer clear and go conservative - saving with a view to ultimately getting an immediate annuity to provide supplemental income as one ages.  A stock crash, meanwhile -  namely in the current bubble - will set millions of 401(k) ordinary investors back years, maybe decades. Hell, they may never get to retire.

Something someone ought to make clear to Trump's followers who praised his stock market and 401(k) speeches for making them believe one day they can strike it rich too. Yep, and pigs fly and I have a beach front acre on Barbados east coast to sell for a Bajan buck. (That's U.S. 50 cents).

American Workers Still Lashed To The Productivity Treadmill - Wage Stagnation

In a WSJ piece from five days ago on declining worker productivity, we learned that "productivity growth, though volatile in the short run has slowed markedly since the information technology fueled boom of the late 1990s and early 2000s." Why is this? Why are American workers, though they are underpaid and work more hours than ever before,  still held to unrealistic productivity standards by the economic pooh bahs and gurus?

 Northwestern University's Robert Gordon has posited that the Industrial  Revolution (at the turn of the 19th century) had a vastly bigger effect on productivity, economic growth than the so-called "PC revolution" in the 20th. Think about it! The former meant transition from the impossibly laughable energy of whale oil to kerosene, coal etc., a mammoth jump in the EROEI of available energy sources. The latter transpired over a period of roughly 20 years over which the EROEI of oil actually decreased from 16:1 to roughly 10:1.  Translation: More work over more hours was needed to get the same 'bang for the productivity buck.'

Little wonder wonder that even millions of computers were not able to match the sheer change in productive output that accompanied the Industrial Revolution- and within the scope of the latter's purview we include the internal combustion engine, electricity, and indoor plumbing.  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 (WSJ, op. cit.) 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 be stuck at 2 percent per year and no more. Indeed, in a number of quarters since the credit meltdown we've barely seen 1-1.5% per year. In addition, we've been informed (op. cit.):

"If labor productivity grows an average of 2 % per year average living standards for our children's generation will be twice what we experience... If labor productivity grows an average of 1 % per year, the difference is dramatic. Living standards will take two generations to double."

Is this all bad? And what is the root cause?  A major clue is provided by authors William Wolman and Anne Colamosca.in their (1997) book,  The Judas Economy: The Triumph of Capital and the Betrayal of Work in which 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. TIME economic columnist Rana Foroohar reinforces this aspect by noting (p. 20, Sept. 5, 2016):

"Nobody us 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 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,

Is this poppycock? Let's delve into it further. Half of the jobs in the U.S. currently pay less than $18 per hour, according to Labor Department data. That's about $37,000 a year - assuming someone works full time. Meanwhile, forty percent of jobs pay less than $15.50 per hour according to the Economic Policy Institute. How far do such incomes go?

In the Denver area the average rent is currently $1,350 a month. Not including utilities that would be   over 50 percent of $2620, the monthly income after taxes, for the earlier class of worker named above.  In terms of home ownership., 6 of 10 homes in the Denver area are over $400,000. The annual income needed to qualify for a mortgage for such a home - assuming a 10 percent down payment and 4 percent interest rate - would be $94,000 a year.  This is over two and a half times more income than half the jobs in the U.S. currently pay.

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.

Meanwhile, we learn hourly earnings for private sector workers "increased 3 cents last month to $26.39 an hour."  This is better than more than half U.S. workers but still not sufficient to rent an apartment or get a mortgage for most homes in Denver. Not to mention, Miami, LA and San Francisco.

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.

Quick and stupid fixes will not solve the situation. Thus, Columbia Business School Dean Glenn Hubbard (the guy who conceived the Bush tax cuts) and his "solution" of "rolling back regulations" (WSJ, op. cit.) will not increase productivity. It will only make more workers ill when they drink degraded water or get exposed to harmful chemicals because regulations (read protections) have been eviscerated.

A more sober and sensible take (ibid.)  is provided by Federal Reserve Vice Chairman Stanley Fischer who observes that policies work best when areas are addressed that the private sector neglects. These include: "investment in basic research, infrastructure, schooling and public health"

Imagine how much more productivity could be improved if roads, bridges were properly maintained - existing ones with issues repaired- enhancing manufacturing to retail outlet times. Imagine also how it could be improved if workers' health was improved, causing fewer work days missed.

The only way in the meantime to increase productivity tied to economic growth is for employers to increase worker wages. They can then  achieve greater purchase power, and a higher standard of living and keep those warehouses filled with product.  This is even more critical now given the weakening of the dollar's value. As per John Tamny's WSJ article ('Trump Is Wrong - A Weak Dollar Doesn't Make Strong Economy', Aug. 9, p. A15):

"American workers are paid in dollars. Devaluing the currency erodes their ability to buy the necessities and pleasures of life, whether they're created across the street or on the other side of the world. This obvious truth has long eluded proponents of a weak currency who are prone to limiting their analysis to first stage implications".

In like manner, one could say the obvious truth of hiking worker wages to enhance productivity (as currently defined) has also eluded the proponents of low wages - who are only obsessed with controlling inflation.   But as Mr. Tamny also writes, applicable here as well:

"The reality, seemingly ignored in the discussion of economic growth is that workers produce in order to consume. The making is all about the getting."

But what if the connection is ruptured? Then so also is labor productivity ruptured from GDP and economic growth.  In this case we may have a more objective measure for productivity not based so much on worker consumption.

For now, because wages are so stagnant, workers are again tapping homes for cash (WSJ, 'Tapping Homes for Cash Is Back', Aug. 28, D1) and maxing out with credit card debt.  ("Home equity line originations rose nearly 8 % to almost  $46 billion in the 2nd quarter- the highest level since 2008".)

In addition, too many American workers now appear to have '"settled" meaning they've lowered work satisfaction levels to the bare minimum or close to it (WSJ, 'Expecting Less Jobholders Cheer Up',  Sept. 2-3, p. D1).  Thus we learn:

"A decade of bruising job cuts, minimal raises and lean staffing has led workers to lower their expectations."

Also:

"The average employee today shoulders more risk for retirement and health care than in past generations, and enjoys less job security.."

Meanwhile, Donald Trump has proposed massive corporate tax cuts, i.e. effectively for the CEOs, companies, while trying to make employees believe this will translate to a few extra nickels for them.  
More than ever, Dems need to make the case that American workers need support, and also expose Trump's idiotic tax "reform" plan for what it is - sheer exercise in fantasy.  I will have more to write about this and why his idiocy now presents a "red flag" to the bond market.

Stay tuned!

See also:

http://www.smirkingchimp.com/thread/peter-dreier/74936/this-labor-day-remember-that-martin-luther-king-s-last-campaign-was-for-workers-rights

The Perils Of Remaining In An Overheated Stock Market

As the DOW passed the magic  22,000 mark,  millions of stock investors began salivating at the prospect of  continued humongous gains - filling their 401ks or IRAs.  But most are barely aware of the treacherous territory they've entered.  Most had never  seen or read Nate Silver's book, The Signal and the Noise- Why So Many Predictions Fail But Some Don’t  - especially where he warned (p. 347):

"Of the eight times in which the S&P 500 has increased at a rate much faster than its historical average over a 5-year period , five cases were followed by a severe and notorious crash, such as the Great Depression and the Black Monday crash of 1987”.

Interestingly, two of the largest stock market dives have followed two of the biggest bubbles: the first of 37.85 percent and on the heels of the bubble that formed from Jan. 14, 2000 to Oct. 9, 2002, and the second of 58.78 percent that formed (mainly due to the housing bubble) from Oct. 9, 2007 to March 9, 2009.

One indicator of a bubble, of course, is the rate of stock  share increase. But another is the rate of inflation related to the trailing P/E ratio.  This is the classic price to earnings which looks at the current price divided by the company's total earnings the past 12 months. .  This is perhaps the most common metric used by investors to value publicly traded companies. While it does not account for growth rates by default, it represents a simple metric that can be compared over long periods of time. Lofty P/E multiples can predict market declines when growth starts to slow down, since investors can no longer justify the higher valuations.

Well, we are in that territory now. For reference, three years ago (in September)  the P/E ratio was about 18.5. Today the P/E for stock in the S& P 500 index is just over 24.  That is, investors are paying $24 for each $1 in corporate earnings. Just before the 2008 crash and 2009 financial meltdown it hit 27.   

What about those profits? Back in September, 2014, the profits for all the companies in the S & P 500 index were about $106 a share.  Currently, we're in the midst of second quarter earnings reports for 2017 and the estimate is that the same S & P 500 profits will be coming in at about $105 a share. That means profits haven't grown at all in three years - and yet the price of the S & P 500 is up about 23 % over the same period.

What gives?   What gives is that there is no genuine support for the share increases or higher PE ratio.  In other words, people are basically being hosed. Let's also note the long term average pE ratio is about 16 and markets tend to revert to that average at some point.

The other aspect is there is no really solid backing to justify the spiking DOW or sizzling S & P 500. The corporate earnings, profits simply don't support it. This is also why there exists a divergence between what we ae seeing with the stock market, and the low growth and wage stagnation plaguing Main Street.

But we were warned of this before. As the authors (William Wolman, Anne Colamosca)  of The Great 401 k Hoax have noted, it is living in a fool's paradise to believe that if the companies you invested in are only increasing their profits at 2-3% a year, that you can be earning 7% or even 10%. In fact, what one has then is an aberration in which the gains are out of whack with reality. (This is one reason why real stock investors demand dividends, and refuse to forego them so fund companies etc. can use the money to do "stock buybacks" thereby artificially inflating the share price!)

Why is this perilous? Some might ask. Consider: though you may be exuberant now to be getting near 10 percent returns, what if the market suddenly reverts back to the more standard 7 percent?  Doing the math it means you would need to save 70 percent more money to get to the same place as you have with the 10 percent returns.   Translated to income saved to pay for mutual funds or stocks, this means if you are taking out 5 percent now - say $150 a month - you will need to shell out $255 in the 7 percent return environment.  Obviously, if the returns go even lower - say to 5 percent or less- the savings burden will increase as well.

Simply put, the notion that you can save less because the market will do most of the heavy lifting is a fool's errand and paradigm. It won't. In fact, you will be in a hell of a lot worse position if the market tanks - say in a 20 percent correction. To get down to even more severe (e.g. crash) cases, a stock – or mutual fund- that drops in share price from $20 to $10 has suffered a 50% loss. But for that $10 stock or fund share price to return to $20  (breakeven point) it must gain 100%, or double.  Those near retirement need to ask themselves if they can sustain such a loss, and to multiple stocks or funds.

The other phantom contributing to the inflated PE ratio accompanied by low corporate profits, is stock buybacks which I've written about before.  The question every investor ought to ask is: WHY should Company X or Y have to buy back its own stock to create an artificial rise in share price if your company is genuinely doing well? It makes no sense. If Company X or Y is going to use any extra money for anything it ought to be for paying dividends, not stock buybacks!

Columnist Jonathan Clements in his piece in the WSJ three years ago wrote:

"Many companies were big buyers of their own stock before the 2007-09 market decline, only to scuttle their buyback programs during the market crash. In recent years with share prices up sharply they have begun to voraciously buy back."

And indeed they are doing it now more than ever.  Why not, because they are then reaping the bounty of their own high share prices? Buy backs also make management's stock options more valuable - so what better way to compensate the Street's honchos?  Strangely, all this has selectively blinded investors to the lack of dividends. As Robert Arnott, quoted by Clements, stated:

"Dividends are reliable, You cut them at your own peril - but you can cut a buyback and hardly anyone notices."

There's one more reason U.S. stocks are soaring which people ought to be aware of: According to the WSJ European investors are buying them up at a rate 25- 30 % greater than historical averages. You may cheer that our friends across the pond are helping us to this extent, but wait. What if they suddenly pull their money out, redeem all those shares, for whatever reason? 

It's time to think now more carefully than ever just where you're putting your money and why.

Is Paid Wage Labor Really Worth It?

Writing in his two-volume masterpiece, An Inquiry into the Nature and Causes of the Wealth Of Nations,  Adam Smith envisaged a market society of individual proprietors: butchers, bakers, printers etc. all of whom would be self-employed and not dependent on performing wage labor under a single employer.  Abraham Lincoln was no different, stating in an 1859 address before the Wisconsin State Agricultural Society:

"The prudent, penniless beginner in the world labors for wages awhile, saves a surplus with which to buy tools or land for himself, then labors on his own account another while and - at length- hires another beginner to help him".

In other words the beginning job taker may work under wage labor himself but ultimately becomes an employer of others.  Thus the takeaway that even well into the 19th century wage labor was seen as only a temporary step to individual entrepreneur.    Today, many who've lost their wage jobs are also attempting this route, but alas- because of the competition - too many are failing.  Most tragically, the yearly glut of degree-holding younger job seekers has pushed many into the unskilled labor force - including as Starbucks baristas and retail clerks.

A lot of other systemic factors contribute too, including lack of guaranteed health care for self-employed folks - so that they now have to gamble they won't fall ill or have a serious accident under Trump Care.  Then there is the scale of initial investment needed, often making it a huge risk even to operate a franchise.

As opposed to Lincoln's era then, establishing a small business today is simply too fraught with risk for too many Americans, who still rely on their employers for health insurance and long term income. And that's assuming they can even get the level of pay and benefits needed.  Too many Americans now, including amongst the Trumpies, are forced to patch together a precarious existence and income from freelance gigs, using Uber, 'TaskRabbit' etc.  Or being an adjunct prof - who has to ply his teaching trade at 5 or 6 different universities.

WSJ columnist William Galston in his May 8 piece ('An Econ Mystery: Why Did Wages Flatline"') makes an even more cogent case for avoiding wage labor, but alas, offers no solutions how to escape it. This is despite the fact, as he points out "the labor-force participation rate which nudged above 67 percent in the 1990s, stands at only 62.9 percent today".

So what's happened? Well, for one thing much less investment in paid work, human labor. As I noted already (April 14), automation is grabbing more and more jobs, citing the WaPo article (4/ 8) by Jeff Guo,  'Robots Take Production Up Another Notch'

"Industrial robots alone have eliminated up to 670,000 American jobs between 1990 and 2007, according to new research from MIT's Daron Acemoglu and Boston University's Pascual Restrepo."

But in addition there is the Neoliberal dynamic explained by William Wolman and Anne Colamosca in their 1997 work, 'The Judas Economy: The Triumph of Capital And The Betrayal of Work'.  The authors argue that the modern Neoliberal state has no interest in human labor, paying it properly, or re-investing. It is capital that takes precedence, hence business is only invested in its own aggrandizement and proliferation at the expense of citizens. A key indicator? The magnitude of investment by corporations in stock buybacks as opposed to labor investment.   Since 2009, U.S. firms - entrenched in their own myopic interests- boosted capital investment by only 43%, dividends by 67% and stock buybacks by a whopping 194%. This according to Jason Thomas of Carlyle Group. In addition, rather than investing in new plants for new jobs, businesses have squandered $2 trillion on mergers and acquisitions .

Galston in his WSJ piece is clear on the trends:

"Firms have gains they could share with workers, but they have chosen not to do so. Even in occupations where there companies complain of labor shortages, there is scant evidence they are responding by raising compensation."

So one arrives at the question of whether paid labor is even worth pursuing anymore, or - to use the refrain of James Livingston - a historian at Rutgers: "Fuck work!".  Livingston takes up this theme in his new book, 'No More Work: Why Full Employment Is A Bad Idea.'.  His arguments are corroborated and reinforced by a similar work by Elizabeth Anderson of the University of Michigan: 'Private Government: How Employers Rule Our Lives (And Why We Don't Talk About It).

I mean think about these titles before even considering the respective content (for which the general theme in each case is that corporations now rule our lives as opposed to the government).  Think this is preposterous? For most workers entering wage labor at a corporation it's no joke. They are warned by finance columnists (like Jill Schlesinger) that they had better take down any anti-capitalist or controversial blogs or posts on news forums before going to that interview. (Some of the material such as I've written on 'Brane Space' would prevent most from even getting in the door for that interview, because employers now Google you first).

Then there are the other warnings, i.e. to remove all "controversial" photos, images etc. from one's Facebook pages. Also, any comments, writings that might be construed as anti-free market, or espousing any kind of "aggressive" environmentalism, or activist protests including climate change tracts.

If one is "lucky' enough to then get hired by "Corporation One", the extensive contract terms in fine print (sometimes given by HR depts.) let you know you are under constant surveillance. That includes all your outgoing (and incoming ) emails read by the boss and oh yeah - your keystrokes recorded as well as time consume for any bathroom breaks. If you have to take a crap - as one boss once confided to a friend at a radiotherapy software company "Make sure you're wearing Depends if you have overtime..")

But it doesn't stop there. In today's proto-fascist corporate work environment where ten million bosses channel Donald Trump, they can dictate how underlings wear and style their hair, when they can eat, how often drug tests are imposed, and the right to rifle through belongings in your desk any time they want. These tyrants can also require their slaves.....errrr, workers, to complete - as endurance test for entry - lengthy questionnaires concerning off-hours alcohol consumption, exercise habits as well as childbearing intentions.  The real howler here? The number of conservatives and Right wingers who whine and moan about "government intrusion" in our lives but are quite okay with a hotshot corporate CEO doing it to them - daily.

So much for any "rights". Meanwhile, Americans are daily fed the codswallop that "work builds character", "work will give you meaning", "work will give you satisfaction"  and other hogwash. Surely, if any of those tropes was true it ought to be possible to work full time in the 'richest nation on Earth" and not have to apply for food stamps or Medicaid. But we all know that's not the case and it isn't because those affected are "lazy" or "lack, ambition". They have plenty of ambition, there just aren't the quality jobs available to provide ample support - including to afford decent housing.

For these reasons, Livingston - like me- believes the cockeyed aspiration to "full employment" is misplaced and in the wrong direction. With automation and shrinking available quality jobs - along with too many people chasing them, it makes more sense to implement a "universal basic income" (UBI) to correct the course.  A start in that direction meanwhile would be to lower the maximum number of hours that comprise a "full work week". The French have already done that, capping the work week at 35 hours.  

A recent WSJ editorial (May 8) didn't like that, carping:

"Successive French presidents have failed to undo the 1999 35-hour workweek law amid militant union protests"

But the French are correct, because on its face the 35-hour week (in the context of a still "full employment" era)  enables more workers to be hired. It also paves the way for further lowering of paid wage hours as automation and other (economic efficiency) forces exert their unstoppable attrition on wage labor.  The next step, at some point, is the implementation of UBI.  The trick is to get politicians and other academic elites to use their heads and get going sooner than later, when it may be too difficult. This is especially as global population continues growing to the point of tripling (by 2050) from what it was 50 years ago.

The two authors cited in this post - Livingston and Anderson - make clear that no one should bemoan the demise of paid wage labor. It has already stolen too much in the way of time from families and caregivers, even while we've ceded an unconscionable amount of our energy in making wage work the primary conduit for our liberty and morality. In the end, all we've done is sacrifice our time and humanity to an entrenched Corporatocracy and its overpaid CEO henchmen.  Insisting the companies can improve our "work-life balance" misses the point, according to the authors, and is too timid. The cold hard fact is that corporate employers hold the means to our well being and currently have the law on their side.

Livingston's recommendation is blunt:  Instead of idealizing work and making it the linchpin of our society he asks: "Why not just get rid of it?"

Something to ponder.

"Fearless Girl": An Empty Symbol For Misplacing Girls' Aspirations

"That we Americans allot the richest rewards of our economy to speculators, is a question of mores; that we allow one-sixth of our fellow citizens to be ill-housed, ill-clad, and ill-nourished is a question of morals. That we shrink from our problems instead of attacking them with eagerness, generosity and hope is a question of morale. The questions are obviously interrelated." - George P. Brockway, in 'The End of Economic Man - Principles of Any Future Economics', p. 86.

The statue 'Fearless Girl' became an instant icon of women's liberation and strength just hours after  it had been placed in front of the famous Wall Street bull in celebration of International Women's Day. The statue is meant to honor women, specifically those in finance who are "historically forgotten". The problem is that high finance, not only in the U.S. but around the world, has made a veritable mess not only of women's lives but men's as well, namely on "Main Street" and for Main Street priorities. Hence, the statue is really an empty symbol paying homage to a system that has more exploited than helped average Americans.  It may make some little girls feel "fearless" for a bit - staring down that bull  - but in the end Wall Street will have its way and grind everyone under unless it is tamed, regulated.

With the Trumpies ready to water down the fiduciary rule - the one that requires financial advisors to disclose any conflicts of interest - things are not going to change for the better any time soon.

It was George P. Brockway in his 'End of Economic Man' who noted that  ultimately our choice as a society is to reward either markets and speculators or the commonweal based on "Main Street". So far, we've made mainly the wrong choices and allowed the market to dictate our future and quality of life.  This has been from its domination over our health care via shares purchased for various insurance companies, to its yen to replace workers with automation to jack up share price for the benefit of speculators.

And let's also be aware that it is Wall Street that has been pushing incessantly for the privatization of Social Security. One big reason the Street desperately wants Social Security monies in its insatiable maw is that it it's pretty well exhausted the largest (boomer) 401k market - and they'll soon be cashing out, along with their IRAs.

Nowhere is the distortion more evident than in the 401k and investments made there, which puts the ordinary person at great financial risk.  Perhaps the best financial education I ever received, was thanks to William Wolman and Anne Colamosca in their book 'The Great 401k Hoax', (2002), which offered the best advice for recognizing real returns as opposed to the bubble variety. With their solid arguments they showed, for any given fiscal environment, what a realist investor could expect to make. As they noted, one needed to look carefully at the percentage profits returned by X, Y or Z company. If it is averaging 1.3% a year, then that is the real return you can expect.  The stock hawkers bejabber of 10% annualized returns, or more often, 7 percent, is purely designed to lure the unwary into stock investment.

The authors' arguments were further reinforced about 6 years later in a Financial Times article (‘A Metaphorical Proposal’, Mar. 13, p. 11A, 2008) by Michael Skapinker. He cited remarks by Joseph Berardino – chief exec of Arthur Andersen- who noted how the existing reporting system “fails to communicate essential information about the real risks facing companies” to the small investor.  If the small investor doesn't know these risks, how can he make judicious choices? He can't.

Skapinker quoted Berardino as noting how accountants can only issue generic ‘pass’ or ‘fail’ judgments on companies – but never disclose the red ink being bled by a company that’s been passed. (What's referred to as a “bleeding edge” company wherein auditors are actually resigning). As the author notes, to do so would precipitate a collapse in share prices. Duh! (But, tough luck!)

Wolman and Colamosca, meanwhile, paid great attention to how the 401k has been abused and misused, usually by financial shysters - often in workers' companies, but also on the "Street".  Their primary beef? The 401k was never designed as an "investment" vehicle but as a purely savings medium! It was meant to salt your money away in safe, low risk abodes - while being matched by your company to some degree- and all the while not having to pay taxes on it. But almost from the start of the plan, named after the section in the tax code, people -workers were driven to put money into stocks, mainly equities, and other high risk instruments.  Little wonder, that small fry investors in 401ks have been fried and refried, over and over again.

They will be again, as sure as the Sun rises in the morning, once the new stock bubble bursts, as it will. As George Brockway has observed: the purpose of every Bull market is to take back all the gains made, mainly from small investors.  So, why would any little girl want to be part of this system? Why not instead be inspired to be a "fearless climate scientist" or astrophysicist?

As Cara Sheffler of The Guardian recently put it:

"State Street Global Advisors, the investment firm behind the ‘Fearless Girl’ sculpture temporarily placed in front of the famous Wall Street bull, pulled off a formidable marketing coup when they placed the statue there on Women’s Day. But let’s not kid ourselves into thinking that it is a brave feminist statement. It is not.  Fearless Girl doesn’t have to worry about affording college – she’s owned by an investment firm! No one can shut her out of the economy, as so many of her flesh-and-blood sisters have been: she owns Manhattan real estate. In the financial district, no less! No wonder she’s so fearless."

Indeed. And another reason she's so fearless is that she isn't subject to Pareto economics the way the rest of us mortals are. (Nor would any females ensconced in the towers of high finance.)  So it is a fact that with few exceptions, modern economics has dictated we are all subject to the Pareto utility function, to Pareto efficiency:














Basically, we are graphing "utils" or nominal units of "utility" on the vertical axis, vs. value of dollars used or consumed along the horizontal. The curves are displayed for two populations, one "rich" (say earning in the top 1% or $340,000/yr.) and the other "poor" (earning about $14,000/yr.). The key aspect to note is the width corresponding to the "delta x" portion of the gradient (delta U over delta x) which translates into the net dollar's worth for each population. As readers can see from inspection, the width of $1 for the rich is significantly longer than the one for the poor. This translates into the argument that the buck is worth more to the rich man, and hence, any transfer from the rich to the poor hurts the rich more than it helps the poor .

Thus, by Pareto's original example (in quotes): Allowing the wolf in the wolf-sheep combo to EAT the sheep expresses less overall "hurt" or pain on it than permitting the sheep to remain unscathed, thereby merrily prancing away eating its grass while the poor wolf starves. "The wolf" let us again bear in mind in concert with George Brockway's thesis, is the Wall Street paradigm.

The Pareto utility also explains why former Fed Chairman Alan Greenspan went on record in an appearance before congress (in 2003) to assert that "Social Security benefits need to be cut to pay for Bush’s tax cuts."  What on Earth was the man thinking? Well, he's thinking on the basis of Pareto efficiency!    Social Security payments, especially with COLAs, do everything the Fed Chairman didn’t want. They pour more money into the economy, but not via productive labor or market indices, returns. People receive their checks merely by existing and breathing day to day, and having paid into the system with FICA deductions. Even then, they receive far more in benefits than actually paid in, making a total mess of "utils" earned.

"The Street" isn't happy with this set up because it is cut out of the Social security income stream especially via potential juicy fees, commissions.  For example, if these expenses and commissions total 3.5% per annum, half of a 7% return is wiped out, leaving our exuberant investor with only 3.5% takings. If the particular privatized account is "churned" - meaning subjected to lots of internal exchanges and activity - that fee/commission factor could easily become 8%, 10% or more. The person left with virtually NO gain. In a down market this would amount to a nightmare.

What about health care? How does it work under a Pareto system? The clue was revealed by Academic Economist (and former Reagan Advisor) Martin Feldstein, after being awarded the presidency of the American Economic Association in 2004. A large part of his address was devoted to the issue of health insurance. Feldstein made the case that health care is in trouble in this country because deductibles and co-payments are too low, and as a result people (mainly the non-wealthy partially subsidized by health insurance) over use the system and go to the doctor too many times.

Hence, it more redounds to the benefit of shareholders (of stocks in health insurance companies) if a sick person is paid something like $134 not to see a doctor, given each doctor visit (then) costs on average $150. In like manner, the Repuke health plan is designed to benefit stock shareholders by containing and minimizing care rather than expanding it. Hence, the $800 b in cuts to Medicaid by 2020 will achieve Ryan's Randian goal of capping health costs as it "de-federalizes" care.

So why erect a "fearless girl" statue facing the notorious Wall Street Bull and encourage women and girls to entertain becoming fellow shysters to the sharks already there? It makes little sense, not that many of them would anyway. (Hopefully!) I can't imagine thousands of women leaving noble professions like nursing or teaching to become cutthroat shylocks on Maul Street. Or, perhaps I have too much of a 60s perspective.

Cara Sheffler again:

"Having it all” for most women won’t mean being Marissa Mayer or Sheryl Sandberg. The women’s movement, the marches for equality, are not about making every little girl a CEO, but rather about rendering the national dialogue more inclusive. Ironically, womensmarch.com has launched a campaign to convince Americans to divest from banks that support the Dakota pipeline.

Not every person has the option to do so, but women need to divest at a deeper level: we need to divest our values of social equality from Wall Street success. We need to understand that economic justice is not the plot of Working Girl; economic empowerment is not taking a helicopter to East Hampton every weekend during the summer season."

Exactly so. But how many  will process that?  How many women and girls mesmerized by that statue facing the bull will grasp that it likely has little to do with establishing economic justice? How many others will realize that just becoming a broker on Wall Street, where you might try to make a mint or earn vacays to the Hamptons, is not exactly economic empowerment for the many?

Most spot on, she writes:

"Feminism is about human decency, not molding young girls in the image of a banking industry that bets against us, shorts us, and then receives government bailout money.

It’s an industry that always has enough in its coffers to bet on both horses. America has companies on both coasts – on Wall Street and in Silicon Valley – that need to be shamed into civic responsibility, yet demand equal protection before the law. They restructure, outsource and demand tax breaks as job creators. Yet the cities in which they are located squeeze out the middle class and become bedroom communities for their very wealthy employees and clients. "

I could not have put it better, and Ms. Sheffler hits several notes to do with the Pareto model that are important, especially shorting the public then getting bailouts and the gentrification aspect noted at the end. Lastly:

"We need women who will realize new possibilities for companies to work toward the common good, to use capitalism to extend the promises of our founding documents to all, rather than serving as a pernicious, perfectly legal tool of oppression. We need female lawmakers to do that, too.

We need to remember these ladies, and we need symbols that will help us to do so. Some, of course, interpret a little girl staring down the mean, old bull of Wall Street as doing precisely that. But it’s really hard to take on Wall Street when you’re funded by Wall Street. That’s something Fearless Girl is sure to find out ."

Again, why not more inspiration for little girls to become scientists?  There was a lame effort back in 2012 called “Science: It’s a Girl Thing!” . The letter I in “science,”  once one accesses the site,  is a tube of lipstick.   The defense for this vacuous nonsense? Máire Geoghegan-Quinn of the European Commission explained that the campaign was trying to “overturn clichés and show women and girls (and boys too!) that science is not about old men in white coats.”    But that is not the way to do it.

Meanwhile, spokesman Michael Jennings added that the clip was “intended to catch the attention of the target audience – 13-to-17-year-old girls,” in a “fun, catchy” attempt to “speak their language to get their attention.”

Errrr.......you really want to know the best way to get their attention? You detach them from their ipads, iphones, cell phones, and Facebook obsessions then let some intellectual light in. You try to stimulate the radiance of that "light" by encouraging independent inquiry. You don't feed their culturally-biased fantasies with superficial baloney and bunkum.

Nature editor Helen Pearson called it “packed with painful patronizing cliché,” while Victoria Herridge, a paleontologist at Britain’s Natural History Museum, declared it “beyond parody… all the things we worry about with gender stereotyping and body image these days.” Meanwhile, University College London social psychologist Petra Boynton succinctly asked, “For the love of all things holy, what is this crap?”

What is it indeed? Basically, as most of us see it, a case of the "tail wagging the dog". The demeaning, superficial and lowest common denominator culture attempting to entice young females into the rarefied realm of rigorous science....by appealing to lowest common denominator social or personal appearance obsessions.

To me, the "fearless girl" attempt to get more girls into Wall Street finance is no different.  What we need is not more traders,  brokers or hedge funders ensconced on Wall Street but a lot more female scientists, and physicians. Especially with the looming shortage of the latter. And the way to encourage them isn't with tubes of lipstick and vacuous 'fun' themes but getting them excited with the subjects by inspired teaching, or well thought out appeals to girls' intelligence.

Above all, as George Brockway argued in his book, we need to restore the balance between Main Street and Wall Street, not distort it further.