No, Not Every American Is Crowing About The Great Bull Market

The endless paeans to the grandiose Bull,  market that is,  abound in the financial press,  see e.g.

https://www.wsj.com/articles/what-can-stop-this-bull-market-1534881350

But also usurp huge spaces in the regular press (Denver Post, p. 1A yesterday)  - and enough to make anyone with sense bring up his or her breakfast. Yes, the DOW (as well as NASDAQ and S&P 500) have reached new heights as well as duration, but do none of its worshippers in the media grasp how it's been jiggered to perform better?  See e.g. http://brane-space.blogspot.com/2018/07/trumps-asset-bubble-economy-based-on.html

And yes, some reports have also rubbed it in about those in the "ordinary middle class" who have been left out while the "rich get richer".   But no one who pens such balderdash goes on to explain why.  For example, that many in the ordinary middle class- squeezed by parental care and youngsters' college costs - are in no position to partake, given they have little or no disposable income, i.e. like the rich.  Hence, the lesson many learned from the 2008- 009 financial crisis and stock crash is don't buy into the Wall Street casino if you can't afford to lose.

That was brought home even more poignantly on the local evening news two nights ago when the economic crunch affecting many in our (EL Paso) county was discussed by a financial expert. The issue was sky high rents which have been rising into the stratosphere even as home prices have also soared (we're getting the excess demand from the overly pressured Denver market) and the accompanying wage stagnation.

According to the finance specialist appearing on KOAA-TV, the average renter in our county is in a retail service job and earning barely $10.22 an hour when that wage needs to be at least $20.65 an hour to make most rents and not pay more than 35 percent of income for them.   This bad news also comports with the enormous pressures on household mortgage debt  and auto loans - which have now pushed U.S. consumer debt to $13.3 trillion   (WSJ, 'Household Borrowing Hits High',  Aug. 15, p. A3)

We find (ibid.):

"Debts rose by $82 billion in the second quarter driven by rising mortgage, credit card and auto loan balances, according to the Federal Reserve Bank of New York's quarterly report on household debt and credit."

Adding, ominously:

"Total debt is now higher than before the financial crisis when widespread defaults, especially on mortgages, contributed to the longest and deepest recession since the Great Depression. After paying down debt through 2013, in aggregate, consumers gradually began to borrow again and household debt is now nearly 20 percent higher than five years ago."


And nattering finance scolds and nabobs wonder why more middle class blokes are not in the stock market?  Especially when "aggregate household debt grew for the 16th quarter."

Another worrisome aspect:  "The total stock of outstanding mortgages climbed to $9 trillion, the highest level since 2009."

What gives? Well it's clear that people - too many in the middle class and lower- are treading water and going under with wage stagnation, so are trying to keep their standard of living by taking on more debt.  Epitomizing this pathetic situation is the news that one actually finds too many employees offered: The Promotion That Comes Without the Pay Raise,  e.g.
https://www.wsj.com/articles/the-promotion-that-comes-without-the-pay-raise-1534944636

What appears to be counter intuitive now that so many Millennials -  who've never experienced a bear market -  are in the stock market now and absolutely blase about the possibility. (41 percent of households age 35 and younger own stocks now compared to 23 percent in 1989)   In the words of one young Turk quoted in a piece in yesterday's Denver Post:

"It's going to sound terrible but I'm actually looking forward to the next downturn."

Well, you might regret it if the stocks (or mutual funds) you own turn out to be duds, leaving you waiting two decades (after 40- 50 percent losses) to reach the breakeven point.

Given all the above it's logical to point out that even the labor participation rate remains low because of the pathetic wage increases. Sadly, it makes more sense for many people just to grab disability or other benefits where and when they can than to plod away in a job that won't pay even a basic rent. So why not instead opt for Medicaid and a Section 8 housing voucher?   As WSJ columnist William Galston has pointed out ('Wage Stagnation Is Everyone's Problem', Aug. 15, p. A15), the "labor share has in fact declined".(The 'labor share' is defined as the share of national income going to working and middle class Americans).

Galston in his column considers several reasons, including the decline of union membership, but mainly points his finger at globalizaton, observing:

"In a 2013 paper for the San Francisco Federal Reserve Bank economists found as much as 85 percent of the declining labor share may be attributable to increased import competition as U.S. producers responded by shifting production to countires with cheaper labor."

And oh by the way, that shift included tech specialists, and call agents as well whose jobs were shifted to Indians in Bangalore or Delhi.

Another less cited source of the declining labor share arises from automation.  As I pointed out, citing a WSJ piece, in November of last year:

Two thirds of large global companies  expect to automate some or all of their finance department tasks over the next two or three years, according to new research by Hackett Group Inc. Hacket's report is based on benchmark and performance studies at hundreds of  large global companies.

Adding:

The new technologies are designed to cut costs, liberate workers from time consuming repetitive tasks and - in many cases - reduce finance and treasury department employee numbers."

In other words, corporations have found human employees to be more like drains on their profits than useful contributors.  Benefits alone clip the profit margins especially for providing any health care, or even sick days. Given these monetary limitations - and the fact humans get sick and machines don't  - who wouldn't  dedicated capitalists manning the corps want to ditch all the bio-based flesh and blood workers for machines and software.?

Jim Hightower provided even more insights that I also cited:

"With corporations socking away massive profits and the labor market still tight why are worker's wages stuck at miserly levels? One big reason is that corporate boards and CEOs have their heads stuck in a dreamy future. Nearly every economic sector is spending vast sums of money on workers p just not on human workers.

While few Americans are aware of it, bosses are investing in hordes of sophisticated autonomous robots powered by a cognitive technology called artificial intelligence. Instead of paying a decent wage to you, corporations are buying millions of these cheap, human-esque thinking machines in order to take a shocking number of jobs away - well, from you!"

Of course, in the midst of all this one will always find cocklemamey fantasies churned out by the delusionary elements of the media such as FOX News or some of its WSJ op-ed counterparts. One example: Phil Gramm's 'The Myth Of American Inequality" (Aug,. 10, p. A15), writing such bollocks as:

"The bottom 90 percent of German earners pay a share of their nation's taxes on income 77 percent larger than that paid by the bottom 90 percent of Americans".

Failing to note the Germans paying those high taxes get an enormous return including for top notch medical care (no worries over bankruptcy and pre-existing conditions), child care, generous unemployment benefits and generous pensions - oh, not the 401(k) kind Americans are forced to pay for on their own!)  Gramm's dreck was also scuttled in a subsequent WSJ letter from Martine Durand ('Many Data Sets Show High U.S. Inequality', Aug. 24). Ms.  Durand, the chief statistician and Director of  the Statistics and Data Directorate of the OECD wrote:

"The  claims by Messrs. Gramm and Early that the OECD  measures overestimate U.S. inequality are unwarranted.  The OECD relies on existing international standards and on source most suitable for international comparison."

Then today, more cheerleading devoid of reality touchstones, e.g. 'The Good Times Can Roll On', WSJ, p. A15,  where Edward  C. Prescott and Lee E. Ohanian wrote:

"The emergence of better job opportunities has reduced the number of people  on disability."

Well, maybe, but only because hundreds of thousands of disability CLAIMS have been tied up in the respective bureaucracies.  For example, we learned two days ago ('Backlog Stalls Veterans' Appeals', WSJ, p. A5):

"As of August, 2018, the appeals backlog (for VA disability) stood at about 238,000 according to VA data'"

The basic reason for so many appeals and their backlog is because the process itself is complex and difficult-- designed to thwart easy access to  disability monies. As the article notes "many veterans claim multiple injuries each of which requires its own decision."

Meanwhile, tens of thousands of civil  (e.g. Social Security Admin.- related) disability claims are tied up here in Colorado and other states - preventing genuinely disabled workers-citizens, as well as economic "refugees",   from gaining access to benefits.  In the latter case, the "refugees"  have made the rational determination they are on more secure footing with disability benefits than toiling in a low wage job for which they are getting chump change and can't even afford basic food or rent.  If the jobs for which they are qualified paid more, they likely wouldn't need to go the SSA disability (or for that matter, Medicaid)  route.  But the sheer number of claims puts the lie to the WSJ's "good times"   claptrap.

William Galston for his part is clear on what the solution needs to be (ibid.):

"There is only one way to go. The high earning Americans who have done so well in recent decades must pay higher taxes to support the portion of the workforce that is falling behind. This isn't charity, nor is it welfare. It's simple common sense, or self interest - rightly understood.  Because an economic system that fails to offer broad gains will end up with disruption."

Or worse, with extinction. So basically, Galston is proposing  - like FDR with his multiple programs after the 1929 stock market crash- of saving capitalism from itself. But perhaps the solution begins and ends with ditching American 'cowboy' capitalism for the more humanized manifestation of Rhine capitalism  (Google!)- say as practiced in Germany and Scandinavian nations.

See also:

http://brane-space.blogspot.com/2016/10/did-you-know-poor-have-gained-most.html

And:

http://www.smirkingchimp.com/thread/paul-street/80803/trump-corporate-media-are-both-enemies-of-the-people

Clutter, Capitalism and Inequality: Why So Many Uncaring 'Muricans ?

Young woman during an Occupy protest in 2011. Young people - under 35 - are more likely to be invested in issues of income inequality.


It was somewhat shocking to read in the Denver Post yesterday ('Income Inequality, Americans Don't Care', p. 12A) how blasé most of our countrymen are to the growing problem of income, economic inequality. It's as if all their brains have been numbed or administered a powerful narcotic. Another possibility is that their consciousness has been falsified by a drumbeat  of framing by the corporate media to ignore the problem or regard it as inapplicable to them. We call this regrettable mental condition "false consciousness" about which I have written earlier, e.g.

http://brane-space.blogspot.com/2011/09/class-consciousness-or-false.html

Anyway, the Post piece is extracted from  this article in the Associated Press, which pulls data from the General Social Survey and the National Opinion Research Center at the University of Chicago. The saddest aspect of the central article is that the gap between the rich and the rest of us continues to grow, but just as American wages have stagnated, so too has the public’s interest in combating income inequality.

Why? Don't they believe this inequality applies to them? Do they not think it will ever catch up to them? Say after losing a job and health care to a serious illness and having no lifeline, not one - while the elites howl with laughter. Who knows? But one of the most pathetic segments of the piece noted:

"The public's focus on income inequality has remained stagnant over the past 36 years.  Less than half of Americans — 46 percent — say the government ought to reduce income differences between the rich and the poor, a level that has held fairly steady since the survey began asking the question in 1978. Thirty-seven percent say the government shouldn't concern itself with income differences, while the rest don't feel strongly either way"

WTF?! Are these people comatose or zombies? Or, maybe they are so enmeshed in their 'toys' - from X-boxes, to new cars or big homes, they don't care anymore. Consumption has converted them all into deadheads  It's as if all their brains have been numbed, de-sensitized by all the crap they've bought. 

This isn't that farfetched. According to Stanford Professor Janet Spitz in her article: "I Have Way More Stuff Than You': How Is This Normal? ('Democratic Left' magazine, p. 4) , consumption and clutter plays a major role in desensitizing brains to the predicaments of others.  How much consumption and clutter are talking about?

According to a recent article in TIME, p. 44, March 23, Americans now have so much 'stuff' they have to either rent storage units to put it all or their homes have become nests of clutter - with stuff piled up in ever room to the extent the living space is non-existent.  There are now 48,500 storage facilities  nationwide- raking in $24 billion a year. There are so many they "could fill three Manhattans and outnumber all the Wendys, McDonalds, Burger Kings and Starbucks in the U.S. put together".

How is this even possible? Well, one reason is that the consumption is fueling ever lower prices. According to the TIME article: "In the past decade, the cost of cell phones, toys, computers and televisions has plunged - thanks in large part to overseas manufacturing."

But that overseas manufacturing is mainly paying slave wages, after the decent American manufacturing jobs were shipped out  (via "globalization") to places as diverse as Beijing, and Bangalore. So, the stuff you have accumulated basically comes from capitalist wage slaves in poor nations. Your cheapo prices sustains their misery while it befuddles your brain by the sheer accumulation and distractions. All this was well described by Benjamin Barber in his book, 'Consumed'.

Thus, according to Prof. Spitz, a large part of our blasé attitude to inequality derives from being blinded by our own consumption. This in turn is fed by a run amuck market fundamentalism. As she puts it (p. 5): "The rightward ideological shift toward market fundamentalism creates problems for practical democracy too."

Well, of course! Because bastardized Supreme Court decisions like 'Citizens United' have basically converted our election process into a race to the bottom by political whores. Those whose money caches are filled the most and fastest by their corporate owners-  whether the Koch bros. or Sheldon Adelson,  become the winners and get to govern. But they do so for the corporations and special monied interests, not us.  That also includes domination of the media by which can they control what we get to see and hear about issues. If those problems like income inequality are never discussed, or else dismissed, then it will be off people's radar. So no wonder their disinterest. As noted in the Post article, quoting the Center for American Progress’ John Halpin: "This is an elite debate, and it's filtered through partisan lenses. It hasn't been strong enough to change the public's mind."

Well, it should!

People's lack of education also plays into their false consciousness or disinterest in inequality, leading to false beliefs regarding perception of class in relation to income levels. As a first test, ask ten Americans off the street what income class they belong to. Nine of ten, or more likely all ten, will say "middle class" - even if unemployed for a year, on food stamps, and about to have their home foreclosed.

A more concrete study of class in relation to income level was a (2003) survey conducted by The Economic Policy Institute. It asked generally where people thought they were in the economic spectrum: upper 1% (earning $320,000 year or more); upper 5% (> $80,000) or where?

Unbelievably, a full 19% in this random survey claimed they were in the privileged class of the top 1%.!  A virtual statistical impossibility in any random study. In fact, internal survey cross-check questions on income category showed many of these working at a little above minimum wage, and even the highest were at barely $44,000/yr. Nowhere near the 1% threshold! Other commentators at the time on this study (e.g. Froma Harrop, Ellen Goodman) pointed to this ignorance as a basis for supporting such crap as the Bush tax cuts, which overwhelmingly favored the rich elites. Thus:

A) They didn't know where they themselves fit, and indeed inflated their wealth and positions and

B) they actually believed they'd be millionaires one fine day and be able to partake of the tax cuts. (Or 'death tax' benefits).

In fact, they were deliriously out of touch with reality. As author Michael Parenti has noted ('Dirty Truths') 94% of all wealth comes by way of inheritance, not paid work. So, they are fooling themselves. Unless they have a rich elder relative hidden away with a vast fortune, they'd be better off thinking they may have to work until they're 70 or 80 and even that may not be enough to stay in place.

But sadly, the Overclass and its minions (including the GOP Party, a basic "sub-division") consistently get working class folk to act against their own vested interests by distracting them with moralism ploys - raising "moral" issues like abortion, porn, gays and what not - just long enough so that many working class voters keep they're eyes off the ball when election day arrives. Then these workers wonder why they never get ahead.

Fortunately, there appears to be a ray of hope. Young people, Millennials, appear to be more likely to have income inequality on their personal radar. According to the AP piece:

"Younger adults — those under age 35 — are more likely than older adults to say the government should do something about the gap.”

Let's hope they take up the banner again, perhaps in a revived 'Occupy Wall Street' movement, driven by as many or more people than we've seen act in the post-Ferguson racial milieu. Because, in the end, the two issues are inextricable bound.