America's Race to the Bottom

Discussion in 'Business & Economics' started by kmguru, Jan 25, 2010.

  1. kmguru Staff Member

    The following article originally appeared on

    I sure hope that there is a full and speedy recovery to the massive recession we are all now suffering under.

    But, I'll be honest. I doubt that there will be. Most of the upticks following our latest national downturns have been dismal enough that economists have had to invent a new term for them. The phrase is jobless recovery, and the implications are as ugly as they sound.

    What it means is that GDP rises, but life remains crappy for real people with real jobs. If they're lucky enough to have one, that is.

    Where does the money from rising GDP go, then? Funny you should ask. It goes exactly where it's been going for the last three decades. Not to the public, and not to raising the living standards of ordinary folks. But, rather, to the über-class.

    My guess is that The Great Recession as some are calling the current disaster (presumably to avoid using the D word) will be followed by what history will record as the The Tepid and Rather Jobless, Thank You Very Much, Recovery. If that.

    And, more importantly, my guess is that this will be the latest and greatest click yet of what is the most massive ratcheting project of the last three decades, perhaps the most wholesale redistribution of wealth in human history.

    Consider the numbers...

    The ratio of executive salary to the average paycheck during the mid-twentieth century was about thirty to one. In the last decade it has ranged from three hundred to over five hundred to one.

    The richest four hundred Americans were worth an average of about $13 million each in the middle of the century, using today's dollars. Now they average over $260 million each.

    The top taxpayers in America now pay the same proportion of their income in taxes as those earning less than $75,000 per year. Those taxes on the wealthy went from being more than half of their income fifty years ago to about a sixth today.

    In the past three decades, the income of the richest Americans quadrupled, while the income of the lowest ninety percent actually fell. Today, the median wage is lower than it was in the 1970s, even though productivity has grown by nearly fifty percent.

    All told, from the 1930s through the 1970s, America produced the biggest and richest middle class in human history. But then many of us made the mistake as I did of assuming that this had become, based on a solid society compact, the default status quo for the foreseeable future.

    In fact, it was instead an aberration. And it was contingent.

    It was an aberration because we are now speedily returning (if we haven't already arrived) to the days prior to the New Deal, when the rich had everything and the middle class was small and insecure. And it was contingent because the good old days depended on a combination of elite satiation and/or a strong progressive defense of an equitable economic order.

    But both have disappeared in the Age of Reagan. Today, there are seemingly no bounds conceivable to what the already astonishingly wealthy will do in order to further magnify their holdings. No suffering of the struggling middle class let alone impoverished brown people inconveniently sitting on top of desirable resources somewhere abroad represents the slightest impediment to a greed which long ago ceased to have any passing relationship with utility. We are simply talking here about sociopaths people who cannot fathom a reason to alter their predatory behavior under any circumstances, even when the lives of millions are at stake, and even when another pile of millions of dollars in their investment portfolio does nothing to improve their condition because they are already so rich to begin with.

    Okay, well, that's not exactly a new thing. Unless, say, you're a geologist and you happen to think that human beings are a new thing. But what is new is that the other possible protection against the gutting of the middle and working classes that is, the existence of a progressive bulwark against greed has all but disappeared. At the level of elites, this has transpired because the Democratic Party has simply joined the GOP in becoming a corporate tool, serving the interests of Goldman Sachs and a few others, with near complete disregard for the public interest. At the mass level, Americans have embraced their own petite bourgeois form of greed, and have become stupider and Republicaner with each passing year.

    The result is that the aberration is ending, albeit slowly and somewhat fitfully, and the country is returning to its natural state, where outrageous disparities of wealth are common. So common, in fact, that no serious political movement exists to redress ths injustice. So common that the wealthy go to churches where Jesus the proto-socialist who talked about camels and needles has been morphed instead into the First Coming of Ayn Rand. So common that a guy can run for president incessantly repeating the word change, invoking the greatest moral struggles of history, and come to office during a time of multiple crises for a deeply stressed American public, only to turn out to be just another Wall Street hack, busy diverting the remaining chunks of the commonwealth to the plutocracy.

    It's not exactly a mystery how we ended up here, although there's more obfuscation on this question than there are hypocritical sinners at a GOP family values convention. And that's a lot. Every American government since Reagan has essentially been consumed with the task of denuding the middle and working classes of their paltry share of the national pie, in order to deliver those dollars into the hands of wealthy political benefactors. This includes Democrats as well as Precambrians. Indeed, probably the president least tenacious in pursuing this project, of the five we've been blessed with these last three decades, was George H. W. Bush. That really tells you something, right there, doesn't it?

    Yes, it's true that even a mixed economy system practicing both Keynesianist and monetarist countercyclical macro-economic strategies will experience oscillations in growth. (Although, remember when, a decade ago, people were speculating about whether the business cycle had forever been tamed? Remember when people thought Alan Greenspan walked on water? Seems like a lot longer than ten years ago now...) But at the same time, government policies on economic and political issues really do matter, especially when it comes to cutting up the pie.

    If you adopt policies that decimates unions, you're gonna wind up decimating unions. Never particularly high in America, and peaking historically at about thirty-five percent, the share of workers who are organized in this country is now down to about seven percent. Guess what sort of effect that is going to have on worker negotiating power over wages, benefits, safety, general treatment and respect?

    If you adopt trade policies that undermine labor at every turn, you're gonna wind up with a lot of unemployed Americans competing against low-wage Mexican, Chinese and Indian workers overseas. This wasn't exactly hard to see coming as NAFTA and the WTO were being negotiated, two of the biggest priorities of the Clinton administration. It was even less hard to see when Republicans created tax incentives for companies to ship jobs outside America, and when John Kerry was either too stupid or too fully coopted to turn that slam-dunk issue into the Willie Horton of the 2004 presidential campaign.

    If you adopt policies that slash taxes on the already wealthy, guess what that's going to do to the distribution of wealth in the country? Guess what impact it will have on the federal government's revenues and debt? Guess who will be stuck, in the future, paying for the loans to finance the share of revenue that the wealthy are excused from today? Plus interest, of course.

    And guess what that will mean for social needs spending as the government grows so deeply indebted that its creditors force it to make cuts in outlays, like some banana republic getting the whip hand from the IMF? Will those cuts be on the military, or on healthcare? Wars or food stamps? We know they won't be on service to the debt. That interest we now pay on the $12 trillion or so we've already borrowed is currently one of the biggest single items in the federal budget, and cannot be defaulted upon without producing disaster. We already know from the Clinton administration the answer to these questions about spending priorities. Even in the flushest of times, this supposed Democratic president slashed welfare spending.

    So how shocking is it, when you add it all together, to find that anti-American labor, trade, tax and spending policies turn out to hurt the middle and working classes?!?! The only thing really shocking about the entire affair is that voters have been swallowing whole that baited hook for thirty years now. And that they will likely do so again, in 2010 and 2012, as they perceive the failure of Democratic Party liberalism', and knee-jerk their way into a reign of repeated GOP pillaging, after just rejecting it in deserved disgust only a year or two ago.

    Of course, new Republican governments won't be any more successful at generating public prosperity than Democrats, not least because neither has much interest in doing so, except perhaps incidentally. What the Grand Old Pricks might be able to pull off, however, is some more raghead slaughtering, fag bashing, or terror traumatizing in order to keep the hoi polloi focused on anything and everything but the emptying of their wallets.

    Ultimately, the game will end, and we'll wind up looking like the British following the Second World War a great empire bled dry, all its people running around with bad teeth. Right now, Republicans and Democrats are essentially competing, as in a game of musical chairs, to avoid being the party in charge when the fictions of our economic condition can absolutely no longer be sustained. Kinda like what you see in California, the once great state. Looks to me like the Democrats lost. Now there's a shocker, huh? the party of Obambi getting reamed by the party of Tom The Hammer DeLay.

    Politicians continue to play the same old cards about resurrecting the same old prosperity. No one will say the truth about how the US standard of living will probably never be restored for the bottom ninety-eight percent, while elites now have the kind of wealth that European kings once had to conquer entire continents in order to acquire. In fact, none of our courageous politicians will even tell you that you can't afford to have tax cuts and full governmental services at the same time. They're too busy borrowing it all from their kids and ours. Well, really just ours. Anyhow, isn't responsibility kinda boring? Isn't that whole honesty thing so twentieth century?

    The simple and sad fact is that greedy elites will always use their power to acquire unseemly quantities of wealth, unless one or both of two conditions obtain. The first is that they are socialized to be slightly less greedy, slightly more patriotic, and remotely compassionate about those who have nothing. They may also recognize, as Henry Ford did, that their long-term prospects are rather heavily tied to those of all the rest of us.

    The other option is that we, acting through genuinely progressive politics, distribute the cash more fairly. Even if we do this, the wealthy will still have ridiculous amounts of absolute wealth, of course, and truly sickening amounts of relative wealth. It's just that the rest of us will be a bit less impoverished. Perhaps all full-time workers would be guaranteed a living wage, for example. What a concept, eh? Perhaps if we throw all-in with our subversive little Bolshevist revolution, we'll go so far as to even join the rest of the world's developed countries in supplying our people with healthcare. Radical, man.

    We got part of the way to a more just society during the middle chunk of the twentieth century, though it was a minor miracle that we did. And it probably really required the Great Depression to do it, along with the twin legislative forces of nature more commonly known as Franklin Roosevelt and Lyndon Johnson.

    We may actually get there again.

    IMHO, we race to the bottom because our Lawyer politicians have no clue as to what we should import and what we need to produce and how that impacts employment, income and quality of life. Therefore we do not have any industrial policy. As they say - flying blind.
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  3. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    The OP is a long winded way to say the US now has a government of the corporations, by the lobbyists, and for the very rich - Sad but true.
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  5. Read-Only Valued Senior Member

    Ho-hum. Just another one of those doom and gloom guys singing the same old tired song. :shrug:

    Meanwhile, the economy IS improving AND more people are going back to work every week. It's not rapid, of course, but it's certainly headed in the right direction.
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  7. kmguru Staff Member

    Frog in boiling water syndrome....amazing...
  8. Michael 歌舞伎 Valued Senior Member

    I guess we'll have to wait and see. I would like to say there is a third option. ALL of the wealth from the upper 0.5% is confiscated by law and redistributed in the form of massive public works projects. OR maybe small bands of poor will take to popping a nut into the side of any Banking CEO's head they happen to target for random and we can descend into a Hell otherwise reserved for third world south American countries like Colombia?

    I know a lot of 25-35 year old guys with a lot of time on their hands and not a lot of money and no job. We'll see how that adds up when they get radicalized by populous politicians. Imagine what the USA will be like just after the next POTUS, a Republican, fails to deliver. THAT'S when shit will finally hit the fan and hit it hard.
  9. Michael 歌舞伎 Valued Senior Member

    I have to say, there are a lot of ideas expressed here that I have thought of myself.

    What does this mean? Does it mean we're both suckered by a liberal leaning media (though I don't watch US News at all) ... I do read the BBC. Or is it that we actually are seeing the same things as we're both being swept along in mainstream middle America?

    I'm not sure, but when ideas sync like that I don't always think: Hey I'm right! I sometimes stop and think about Laughing Man and what is a Stand Alone Complex?

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    Again, we'll have to stop and wait and see. But, unlike working for GM, working at WallMart doesn't make most Americans happy and seeing the rich get more and more and more and more... well, many American will naturally want to kill them.

    This is a great time for a Populous Leader, maybe even Ron Paul, which could mean sweeping change.

    This is also a really good time for the GOP to attack and outright steal the oil wealth of the ME. I'm not talking "working with the people". I'm talking liquidate resistance and control all sources of energy. I think Americans would EASILY be led into a much more "satisfying" war. Which is scary. This is of course after the next POTUS, a GOP, is elected and fails to fulfill any comparing promises except more tax breaks to the uber wealthy, you know, so it trickles down like shit on the side of the bowl....

    It could mean we do collapse or continue on a slow decline into a banana republic? Take a look at Haiti, extreme wealth and extreme poverty, now take a look at what happened in New Orleans. It's not like we're all that far removed. At least not in many inner cities.

    Or maybe things will get better? We can have a Jobless Recovery? What ever the frak that is? Or build more malls to shop in?

    A pandemic a real game-changer?
  10. kmguru Staff Member

    Rich people are already in gated communities sending their domestic help (servants) to the market to buy stuff. In 2009 we stopped importing about $700 Billion of stuff (estimated) than in 2008. That is putting a lot of pressure in Asia and hence the Asian stocks are in trouble. That could have a ripple effect in USA too - because too many uncertainty in the Global Dynamics.

    I really have no idea what is coming but BillyT is tracking this stuff. I just mention nuggets of information and let the reader see what is happening. Whatever is happening, it is not good.
  11. noodler Banned Banned

    Perhaps what most Americans, and the rest of the ordinary crowd around the world, have yet to wake up to is is the indisputable fact they, and the rest of the unwealthy people have been more or less economic slaves for decades.

    Because everyone believes that money is worth something, when it has no real intrinsic value at all - a government can print vaults full of paper. What America needs to do as a society is change things so that the pursuit of wealth for its own ends is no longer possible.

    This will never happen because America was founded on the principle of the pursuit of wealth, and indeed the pursuit of happiness is equated to being happy because you "have" things. Evangelists trumpet the message that God wants everyone to be millionaires, etc.

    If (a dream, I know) everyone spent all their available money of food, then didn't go to work but instead organised a national strike, and refused to accept money or spend any more of it, what would all that paper be worth? How rich would a millionaire be if nobody recognised paper money?

    Some kind of working replacement would have to be put in place, and quickly. So how did people manage to survive before a banking system existed?

    Why this will never happen is because everyone has far too much faith in worthless money, and cannot see past the fact that the rich are using this to enrich themselves, at everyone else's expense.
    So what else could possibly be the case? The system allows a handful of people to become extremely wealthy, but this has always been true, why shouldn't the wealthy do this?
  12. Read-Only Valued Senior Member

    Not at all - it called keeping your eyes open and looking at REALITY despite what all the naysayers are claiming. The people in this country are a lot more flexible and innovative than you give them credit for. You're much to young to remember the Great Depression and the Dust Bowl, but we came out of both of those with precious little help from our government. And we're already coming out of this one, too.
  13. Michael 歌舞伎 Valued Senior Member

    Maybe, but I'm from MI where we used to make cars and I know there's no going back. People working at GM make less now then my Grandfather made in the 1980s. That true too. I know how much he used to make and I know how much they make now. They make a lot less now.

    That said I am not against the game itself. But, I don't think it's working. Much like a Monopoly board towards Game Over. It's fun when everyone is competing against one another but soon the game only has two players - those out of the game can't get back into the game. I feel this is where most Americans are at now.

    If the game were re-set, then Yes, of course we're the most innovative people on the planet. Or so I feel.

    I would like to know what the percentage of the population the Aristocracy made up before and at the start of the American Republic? Was it less than 0.5% of the population? Did they own more than 90% of the wealth? Overthrowing the Aristocracy was not legal was it? It was illegal? This was the Kings land - right? But we did it anyway. MOST people thought the USA, only 13 colonies then, would fail. But we didn't fail. We started the game over, somewhat....

    So, I'm not saying that the game isn't great. I love Capitalism. I just don't think it's working because of the absolutely ungodly grotesque amounts of money and power the wealthy have today. Like the Author said, Kings conquered whole countries in Europe to attain this amount of wealth.

    This isn't nay-saying, it's a fact. We're living under an Aristocracy elite again. I mean come on. They have almost all of the wealth. IMO that's just not good for Democracy OT Capitalism and stifling the creativity that is needed to keep the USA progressing.
  14. kmguru Staff Member

    And here I thought you are a research scientist. I guess the critical thinking skills has passed by your advanced age. As they say - It is hard to teach an old dog new tricks, meaning once your neurons are set, they do not form any new connections at the old age.

    But I thought, research scientists usually develop their brain to be adaptive to very late stage of aging. Prove me right!

    May be my theory is wrong.:bawl:
  15. kmguru Staff Member

    Super rich = 1%
    Rich another 1%
    Upper middle Class = 3%

    Rest = 95% barely hanging by. A large medical bill can wipe them.
  16. Michael 歌舞伎 Valued Senior Member

    I was wondering what the demographics were, say, even in the 1950s.
  17. Read-Only Valued Senior Member

    I take that as PERSONAL ATTACK - and I expected much better from you! (And 66 is not considered "advanced age" by anyone - thank you very little !)

    If you doubt what I'm saying - just take a good, solid look around you. If you cannot see that things ARE getting better then you must be blind in one eye and can't see out of the other either. Banks are repaying the federal loans, employment is rising and so is manufacturing. All stores are increasing their shelf stocking - nearly back to pre-crash levels - and 18-wheelers are packing the highways again. Does all that look like gloom-and-doom to you? If so, you're in a small minority.
  18. noodler Banned Banned

    Is the "recovery" a step away from the unregulated practices of the past, or a return to the same old?

    How much confidence should anyone have about 2007-2008 "never happening again"?

    Confidence in the markets has very little to do with confidence in the system that finances them. People should not have any at all in a pyramid-selling scheme, but people seem to be resigned to having to be in debt, so they can repay it and help make the merchants richer. This is what economics has always been about - making a profit.

    When it gets to a stage where only 5 or 6 people can do this, because everyone else is in debt to a system the few control because they are the wealthiest, people don't question it, because it was always the goal - make yourself poorer by going into debt for the whole of your working life so one person in a million can be extremely wealthy.
  19. kmguru Staff Member

    I assure you it is not


    The trend are, it is 2012 when bottom will fall out (BillyT - 2014). All I did was looked at the trend line since 1960 and used a multiple of variable as to what is happening in USA vis-a-vis around the world. Regulators are scattered with seven different agencies and massive transactions causing lack of vigilance.

    It is that too much information that is not manageable that is causing the trend to shift.

    But it will take too long to explain multi-variable time domain regression analysis. If you believe everything is can rest in peace. Hope you have no grand children. Watch tonight's Jon Stewart....
  20. Read-Only Valued Senior Member

    Have it your way - I'm not here to educate you. And Jon Stewart? He's not worth wasting my time on.
  21. dixonmassey Valued Senior Member

    I understand that your cheerfulness is a byproduct of your blinding political affiliations, I just want to remind you to the fact that Capitalism is inherently crisis prone, this time, the old tricks to fight crisis, to keep wealth&power flowing up, plebeians pacified hit the wall of Earthly constraints. If you keep your eyes open, try to take off your glasses. It's not about flexibility and innovations and all that standard BS. The more flexible & innovative corporations are the less they are employ, the more $ flows to the top. Lion's share of innovation' fruits is being appropriated by a handful of people. Capitalists destroy their customer base as a byproduct of "innovations" be it automation or outsourcing. Until now this "expelled" wage fodder was absorbed by government or by wasteful, unessential, fraudulent etc. start up industries (requiring mountains of resources to generate mountains of waste ). Since combined start up and government efforts are not enough to maintain customer base, owning class utilized credit & mortgage industries to lend de facto expropriated wages back to labor in order to maintain customer base (and to improve docility through debt enslavement). Debt pyramid have tendency to crumble, since real world cannot catch up with compound interest formula. None of the issues leading to recession is resolved. NONE.

    Great depression is absolute national shame. Greatest generation my arse. Fuckers managed to starve among fertile fields, not outsourced industries, low population densities, at the time when even nay sayers had no doubt that ecology can be raped forever, supply of mineral and energy resources is endless, pollution is irrelevant, economy can grow forever. Yet, "greatest generation" of docile work sheep let Wall Street jocks to have their way with them. That's another thing about capitalism, one can starve in the middle of plenty, there are NO, absolutely NO dumber life form under the Sun, no matter how primitive it is. Crown of evolution, huh? WW2 created strong demand for work hands and gun meat, owning class immediately put everybody to work. How insane is that? Why did this so called greatest generation need a war to overcome Depression so you could write all that slogans BS? The answer is clear - because 90%+ are just sheep to handle and to exploit, having no control over anything.
  22. iceaura Valued Senior Member

    Employment is still falling, not rising, and wages are dropping as they have been for many years. The next wave of foreclosures is due later this year, and will include at least the occasional larger chain or well-known commercial interest. The lag in infrastructure maintenance has reached the point where decommissioning of bridges and roads will soon be the only option in many places. The budget deficits in the State governments have soaked up all the common accounting tricks and stopgaps, and the credit market is tight - the next few years' budgets will be real ones. And ugly.
  23. Read-Only Valued Senior Member

    I keep telling you people that you really aren't paying attention to how things are going in the REAL world. Several of you are starting to sound just like Billy T - the only difference is that he WANTS to see the U.S. fail.

    Take a careful look at these two current news reports and note that things ARE getting better all across the world and that employment in the U.S. *IS* right on the verge of rising.

    Both France and Germany have turned around and England is right on the edge of doing so also.

    So if it somehow makes you happier, just keep on singing your sad old song. When reality finally DOES sink in, you'll see how wrong you were. But if you don't want to accept it, it sure won't bother me.:shrug:

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