Supply-Side Boom

[rtwngAvngr]

Mariner, why in the midst of our fair garden do you only smell shit? SNiff a flower for once. Listen to the birdies sing.

 

[ScreamingEagle]

You have to take into account not only inflation, but also the gradual erosion of benefits such as health care and pensions, and the lack of movement in the minimum wage. By those standards, wages for workers in the bottom half of the economy are stagnant or even falling over the past decade, while CEOs and the leisure-investing class have seen vast booms. Bush's economy seems designed to create a fat leisure class.

Personally, I think that what no one wants to admit is that in a truly laissez-faire economy, people with money and property rapidly get more and more of it. This fact was covered up in America by several forces--first, the government created a vast farming middle class via homesteading (forty acres and a mule, free from the government). This was a type of welfare or social-improvement program, yet conservatives rarely refer to it as such. Second, we protected our manufacturing with tariffs. You couldn't buy a Japanese car in 1960. These tariffs allowed companies like GM or textile companies to pay their employees well, and give them good benefits. Third, we had redistributive taxation, in which people making a lot of money a higher percentage, and therefore a vastly higher amount, in taxes.

All three of these conditions (along with many others, such as the GI bill, which sent many lower-class people to college for the first time; their kids then went to graduate school for the first time) undid the historical robber baron/peon worker result of capitalism in the Victorian age. All three of these conditions have now been reversed, and as a result, the wealthy are getting wealthier while the poor get poorer once more. Do we really want to live in a country where the top 1% owns most of our wealth? Already, th top 10% own 100 times more per person than the bottom 50%.

I think conservatives need to face the fact that without redistributive taxation policies, or other ways of supporting the working poor, capitalism simply does not take care of these workers--especially in a global economy, where cheaper labor can be found abroad.

Trickle-down is not working. This is the most anemic recovery of the past 30 years. Job growth is half what it should be at this point in an economy. Why? Because the CEO class is keeping the money for themselves, not re-investing it adequately in their companies. (The Wall Street Journal even ran a piece urging CEO's to reinvest rather than taking profits for themselves a couple of months ago.) Shareholders and management are doing great, but the average worker is sliding slowly downhill. In what kind of recovery does poverty rise?

Today's NYT lead editorial:

"Responding to yesterday's government report showing paltry job creation in December, Treasury Secretary John Snow urged Americans not to overreact to one month's snapshot, but to focus on the bigger picture. But that picture is not so pretty.

In 2005, the economy added about 2 million jobs. At this point in the last recovery, the yearly job-gain total was 3.5 million.

The longer view is even uglier. Job growth in the current period is the worst by far of the four comparable economic upturns since the 1960's: 2.7 percent versus the 7.8 percent tallied in the weakest of those earlier recoveries.

It's little wonder, then, that President Bush cherry-picked his way through the latest economic figures in his speech yesterday before the Economic Club of Chicago, rattling off numbers without context. The president's prescription - more tax cuts - has failed in the past to create a robust job market and is still not the right answer.

For the past two years, average hourly wages and weekly salaries have been flat or falling. Americans' borrowing binge has masked the decline in earning power, but good jobs and rising wages are essential for widespread prosperity. Without them, economic growth has become increasingly concentrated among corporations, shareholders and the top 20 percent or so of earners. The holiday shopping season illustrates this situation: retailers that cater to lower- and middle-income shoppers, like Wal-Mart, Sears and Kohl's had disappointing results, while higher-end chains, like Neiman Marcus and Nordstrom, thrived."

www.nytimes.com/2006/01/07/opinion/07sat2.html?th&emc=th

Mariner

What do you suggest as a solution to these problems? The religion of Marxist socialism?

 

[Huckleburry]

This forum often makes me feel like I am beating my head against a wall, but I will try once again to offer a solution to our current economic conundrum. The way to a better economy is lit by a combination of torches, namely taxes, trade, and fiscal sanity.
We must first simplify our tax code. The current taxation scheme is a nightmare, costs millions of dollars to administer and even more to comply. Simplification must be the watchword in 2006. Second, we need to eliminate the loopholes; the fattest companies in America should not face marginal tax rates of zero or less. That is simply absurd. To those who believe that raising tax rates will lead these firms to abandon American soil and head for greener pastures, I say, NOT LIKELY. The United States provides a business environment that is unrivaled anywhere in the world. Access to highly educated workers, respect for the rule of law, an advanced infrastructure, and highly sophisticated financial markets make the United States the premier place to locate a business. To argue that increasing taxes will cause these firms to abandon the United States is to favor rhetoric over reality.
Second, we should continue to favor trade liberalization. This includes a continued respect for WTO decisions, a renewed faith in international bodies such as the IMF and World Bank, an aversion to bilateral trade agreements, and a renewed effort to pressure friends and foes alike to open their boarders, reduce tariffs, and participate fully in a one-market system.
Fiscal Sanity, while international dealings are important, we must also tend to our own house. The spending binge of late must end. This means that Republicans and Democrats alike need to reign in the current spending binge. Yes, we are at war, however the majority of the increase in spending has not been on defense, rather it has been on entitlement programs for the politically well connected. The last six years have seen our republic slowly slide toward an oligopoly. Such a situation should be avoided at all costs. Yes this means that upper income Americans will have to pay more taxes, yes this means a repeal of the dividend tax cut (additionally the Modigliani-Miller model argues that dividend structure will not increase the value of the firm) and yes this means that patriotism will once again require sacrifice for the good of the republic. Yet America's well to do have understood this before and can understand it again.
Before Closing, I will say what we should spend money on. Education, Defense, Incentives for entrepreneurship, retraining programs for those aversely affected by free trade, and healthcare. I am sure that their others that I cannot think of at the moment but I will respond to them as they come to mind.
Cheers Huck.

 

[Emmett]

Ya'll don know shit! I tell ya whad de damn problum id. Like take Bennyman frum downtown. He can't affod no rock cause dem crakez aint gabe him no damn raze in 8 years. He can barelee affod gas fo his Navigator to get to woyrk. Wid shit like dat goin on, I can't sell my shit man. Dat hurts de damn economee.

Little Wander, she ripped me off cause she din't have my front. Some damn ho took my shit out de damn frigerater cause hwer check aint nough. Dat hurts the damn economee. Yall crakerz dont know shit!!!!!

Need to be concernd bout deez damn law dawgz fringin our cibil liberteez. I can't walk ober to de damn sto widout some 5.0. hassin me man. How can I sell my shit like dat. Dat hurts the damn economee.

I'm gettin sik and tird of dis buwshit, what am I gone do, get a job? That's buwshit!

 

[rtwngAvngr]

This forum often makes me feel like I am beating my head against a wall, but I will try once again to offer a solution to our current economic conundrum. The way to a better economy is lit by a combination of torches, namely taxes, trade, and fiscal sanity.
We must first simplify our tax code. The current taxation scheme is a nightmare, costs millions of dollars to administer and even more to comply. Simplification must be the watchword in 2006. Second, we need to eliminate the loopholes; the fattest companies in America should not face marginal tax rates of zero or less. That is simply absurd. To those who believe that raising tax rates will lead these firms to abandon American soil and head for greener pastures, I say, NOT LIKELY. The United States provides a business environment that is unrivaled anywhere in the world. Access to highly educated workers, respect for the rule of law, an advanced infrastructure, and highly sophisticated financial markets make the United States the premier place to locate a business. To argue that increasing taxes will cause these firms to abandon the United States is to favor rhetoric over reality.
Second, we should continue to favor trade liberalization. This includes a continued respect for WTO decisions, a renewed faith in international bodies such as the IMF and World Bank, an aversion to bilateral trade agreements, and a renewed effort to pressure friends and foes alike to open their boarders, reduce tariffs, and participate fully in a one-market system.
Fiscal Sanity, while international dealings are important, we must also tend to our own house. The spending binge of late must end. This means that Republicans and Democrats alike need to reign in the current spending binge. Yes, we are at war, however the majority of the increase in spending has not been on defense, rather it has been on entitlement programs for the politically well connected. The last six years have seen our republic slowly slide toward an oligopoly. Such a situation should be avoided at all costs. Yes this means that upper income Americans will have to pay more taxes, yes this means a repeal of the dividend tax cut (additionally the Modigliani-Miller model argues that dividend structure will not increase the value of the firm) and yes this means that patriotism will once again require sacrifice for the good of the republic. Yet America's well to do have understood this before and can understand it again.
Before Closing, I will say what we should spend money on. Education, Defense, Incentives for entrepreneurship, retraining programs for those aversely affected by free trade, and healthcare. I am sure that their others that I cannot think of at the moment but I will respond to them as they come to mind.
Cheers Huck.

You're not a capitalist. Tell us about your little project in south america involving governmental confiscation of all land. I guess one of your profs told you you better learn to lie better.

 

[Toro]

You make some interesting points.

You have to take into account not only inflation, but also the gradual erosion of benefits such as health care and pensions, and the lack of movement in the minimum wage. By those standards, wages for workers in the bottom half of the economy are stagnant or even falling over the past decade, while CEOs and the leisure-investing class have seen vast booms. Bush's economy seems designed to create a fat leisure class.

I wouldn't quite characterize it this way as the lower economic classes saw substantial gains into the 1990s, however I agree with your characterization of the top. The pay for CEOs is absolutely f****** ridiculous, and represents a true failing of the system. What makes me say that? Profit growth of corporations has grown at the same clip over the past 10-15 years as it has forever - about 6-7% per year. However, CEO compensation has grown 20-40% over the same time period. And for what?

Personally, I think that what no one wants to admit is that in a truly laissez-faire economy, people with money and property rapidly get more and more of it. This fact was covered up in America by several forces--first, the government created a vast farming middle class via homesteading (forty acres and a mule, free from the government). This was a type of welfare or social-improvement program, yet conservatives rarely refer to it as such. Second, we protected our manufacturing with tariffs. You couldn't buy a Japanese car in 1960. These tariffs allowed companies like GM or textile companies to pay their employees well, and give them good benefits. Third, we had redistributive taxation, in which people making a lot of money a higher percentage, and therefore a vastly higher amount, in taxes.

You are certainly correct about land creating a middle class. As a modern day example, perhaps the single best thing the Chinese government has done is to sell to apartment dwellers their apartments for 15-20% of their value in China. This instantly created hundreds of millions of property owners and solidified a middle class. However, on tariffs, I would have to disagree with you. Tariffs had been coming down since 1945, when they averaged about 30-40% around the globe, to about 4-8% by the mid-80s (and today). Tariffs are generally wealth-destroying or wealth-hindering, as we saw with Smoot-Hawley in the 1930s. Japanese cars weren't bought in America in the 1960s for the same reason why Chinese cars aren't bought in America today - they weren't good enough and there wasn't a good distribution network.

 

[Toro]

I'll quote on this.

Today's NYT lead editorial:

"Responding to yesterday's government report showing paltry job creation in December, Treasury Secretary John Snow urged Americans not to overreact to one month's snapshot, but to focus on the bigger picture. But that picture is not so pretty.

In 2005, the economy added about 2 million jobs. At this point in the last recovery, the yearly job-gain total was 3.5 million.

The longer view is even uglier. Job growth in the current period is the worst by far of the four comparable economic upturns since the 1960's: 2.7 percent versus the 7.8 percent tallied in the weakest of those earlier recoveries.

It's little wonder, then, that President Bush cherry-picked his way through the latest economic figures in his speech yesterday before the Economic Club of Chicago, rattling off numbers without context. The president's prescription - more tax cuts - has failed in the past to create a robust job market and is still not the right answer.

For the past two years, average hourly wages and weekly salaries have been flat or falling. Americans' borrowing binge has masked the decline in earning power, but good jobs and rising wages are essential for widespread prosperity. Without them, economic growth has become increasingly concentrated among corporations, shareholders and the top 20 percent or so of earners. The holiday shopping season illustrates this situation: retailers that cater to lower- and middle-income shoppers, like Wal-Mart, Sears and Kohl's had disappointing results, while higher-end chains, like Neiman Marcus and Nordstrom, thrived."

www.nytimes.com/2006/01/07/opinion/07sat2.html?th&emc=th

Mariner

It certainly is true that wage growth for the lower socio-economic classes has been stagnant while it has been rising for upper classes. However, the point on job growth is a little disingenuous. The reason why is because America experienced the greatest stock market bubble of all time in the 1990s, which lead to over-investment and an unemployment rate of 3.8%. That's a great number, but it wasn't "natural", since many of those jobs would not have existed without the bubble. The "natural" trough in the rate of unemployment was probably in the 4.5-5% range. When the bubble collapsed, the federal reserve and the federal government instituted the greatest stimulation ever seen, cutting the fed funds rate to 1% and giving people large tax cuts while increasing spending. They did this because they feared a deep recession. Because of this stimulation, unemployment rose to 6.5%. By historical trends, the unemployment rate should have risen higher, to around 7.25-7.5%. But it didn't because of government policy. Now if it had risen that high, more jobs would have been created when we came out of the recession, and Bush would have been able to say "We've created 3 or 4 million jobs over the past few years." But mitigating the pain of the recession took away the sizzle coming out of the economy. That is good IMHO. Its better to make the economy less cyclical. Thus, that part of the editorial is misleading.

 

[ScreamingEagle]

We must first simplify our tax code. The current taxation scheme is a nightmare, costs millions of dollars to administer and even more to comply. Simplification must be the watchword in 2006. Second, we need to eliminate the loopholes; the fattest companies in America should not face marginal tax rates of zero or less. That is simply absurd. To those who believe that raising tax rates will lead these firms to abandon American soil and head for greener pastures, I say, NOT LIKELY. The United States provides a business environment that is unrivaled anywhere in the world. Access to highly educated workers, respect for the rule of law, an advanced infrastructure, and highly sophisticated financial markets make the United States the premier place to locate a business. To argue that increasing taxes will cause these firms to abandon the United States is to favor rhetoric over reality.

Are you suggesting a proportional tax rather than a progressive tax? If so, I would agree. A flat tax would truly simplify things. Just plugging loopholes of the wealthy will not accomplish anything despite the fact that America has a great business environment. If one is penalized for making money, then the incentive to make money will diminish.

Second, we should continue to favor trade liberalization. This includes a continued respect for WTO decisions, a renewed faith in international bodies such as the IMF and World Bank, an aversion to bilateral trade agreements, and a renewed effort to pressure friends and foes alike to open their boarders, reduce tariffs, and participate fully in a one-market system.

"trade liberalization"....what's that? Are you advocating that free trade should only come under the auspices of the WTO, IMF and World Bank? What is a "one-market" system?

Fiscal Sanity, while international dealings are important, we must also tend to our own house. The spending binge of late must end. This means that Republicans and Democrats alike need to reign in the current spending binge. Yes, we are at war, however the majority of the increase in spending has not been on defense, rather it has been on entitlement programs for the politically well connected. The last six years have seen our republic slowly slide toward an oligopoly. Such a situation should be avoided at all costs. Yes this means that upper income Americans will have to pay more taxes, yes this means a repeal of the dividend tax cut (additionally the Modigliani-Miller model argues that dividend structure will not increase the value of the firm) and yes this means that patriotism will once again require sacrifice for the good of the republic. Yet America's well to do have understood this before and can understand it again.

I agree with you that we need to curb our spending. I think this is beginning to slowly happen, especially as elections loom on the horizon.

The upper income Americans have always been the ones who pay more taxes....I suppose you are just advocating that they pay even more? Why should we repeal the dividend tax cut? Why should we Americans be required to "sacrifice"?

Before Closing, I will say what we should spend money on. Education, Defense, Incentives for entrepreneurship, retraining programs for those aversely affected by free trade, and healthcare. I am sure that their others that I cannot think of at the moment but I will respond to them as they come to mind.
Cheers Huck.

I pretty much like your laundry list, although I would put Defense first. What type of healthcare program are you advocating?

 

[Markainion]

For the past two years, average hourly wages and weekly salaries have been flat or falling. Americans' borrowing binge has masked the decline in earning power, but good jobs and rising wages are essential for widespread prosperity. Without them, economic growth has become increasingly concentrated among corporations, shareholders and the top 20 percent or so of earners. The holiday shopping season illustrates this situation: retailers that cater to lower- and middle-income shoppers, like Wal-Mart, Sears and Kohl's had disappointing results, while higher-end chains, like Neiman Marcus and Nordstrom, thrived."

Mariner

So far real wages have been down for most of this decade. I have plenty of commentary from this from different sources include stockbrokers. Some say we should just give it time. It usually takes a tight job market for wages to go up and even though the job market is doing well it hasn’t repeated the late nineties level of tightness. Also the more recent job growth has had much to do with housing market which isn’t as deeply in demand for highly educated talent as the dot com bubble of the late nineties. This has resulted in demand for higher wages to be sluggish.

The best comments that I have heard future wages in the US, suggest they will soon be going up. Usually it take a couple years of fairly tight labor market for wages to make major gains, this happened in the nineties as well, the first half wages didn’t grow much, the second half wages exploded. Because we are only half way through the first decade of the new millennium, it is hard to say what will ultimately be the American workers fate. If our economy follows they pattern of the Nineties, American workers will be doing much better soon. If it doesn’t then we may have a real concern, but it is still too soon to panic.

 

[Mariner]

Well, I'm not an economist, but the policies that seem to make sense to me are:

1. Do not renew the President's tax cuts on wealthier people, because we need this income redistribution to maintain a fair society.

2. Increase college loans and grants by the Federal Government (rather than cutting them or outsourcing them to banks, which lose money on them, while the Fed actually makes money on them). Make sure that anyone who wants to go to college can.

3. Play harder hardball with our trading partners in developing nations around issues of pay for their workers, benefits, and environmental protections. That way U.S. workers don't have an unlevel playing field with foreign governments such as China who are willing to sacrifice the environment and their workers' health to make money.

4. Balance the budget, so we're not pay nearly a billion dollars a day in interest, mainly to foreign investors.

5. Simplify the tax code (here I agree with Bush, though I don't agree with flattening it while simplifying it). It's prodigiously wasteful to employ so many accountants and lawyers simply figuring out taxes.

6. Solve the health insurance problem. Uncared-for medical conditions become much more expensive than if prevented or treated in the first place. We pay billions, for example, for dialysis for people whose kidneys could have been saved if they had good diabetic care. Private insurers spend about 30% of the health care dollar on their giant administrative mechanisms and high pay for executives. A national "Medicare for all" would cost much less (Medicare's overhead is 10%), and end the crazy business of doctors (like me) staying up half the night filling out insurance forms (if you ever wonder why I post at 3am sometimes, that's why--I've just gotten home from my paperwork).

7. Invest in technologies that will take America forward and keep us in the leadership position, in particular green technologies. The obvious first step, supported even by most convervative economists, is a gas tax to raise gas to $3 a gallon. At that rate, many forms of alternative energy become viable, and we start making smart choices to drive less, drive more efficient cars, eat food grown nearer our homes, etc. Biodiesel, for example, which I put in my car, cost $2.65 a gallon when regular gas hit $3. I saw fleets of trucks lining up for it during that period a few months ago. Now, biodiesel again costs more than regular gas (though at 43mpg, I still save some money).

8. Add a war tax to cover the cost of the war, rather than paying for it on the international credit card. This will cause everyone to think about why we're in this war and how long we should stay.

Mariner

 

[MtnBiker]

because we need this income redistribution to maintain a fair society.

The government forcing producing people to give to unproducing people is not entirely fair.

 

[ScreamingEagle]

Replies to Mariner:

1. Do not renew the President's tax cuts on wealthier people, because we need this income redistribution to maintain a fair society.

We do? Prove it. Income redistribution is socialism/communism. Do you think we need that?

2. Increase college loans and grants by the Federal Government (rather than cutting them or outsourcing them to banks, which lose money on them, while the Fed actually makes money on them). Make sure that anyone who wants to go to college can.

Why? Shouldn't college be available instead to those who earn the right to go?

3. Play harder hardball with our trading partners in developing nations around issues of pay for their workers, benefits, and environmental protections. That way U.S. workers don't have an unlevel playing field with foreign governments such as China who are willing to sacrifice the environment and their workers' health to make money.

This may have some positive effects.

4. Balance the budget, so we're not pay nearly a billion dollars a day in interest, mainly to foreign investors.

Balancing the budget is usually a good goal. It would be nice to see waste and spending curbed.

5. Simplify the tax code (here I agree with Bush, though I don't agree with flattening it while simplifying it). It's prodigiously wasteful to employ so many accountants and lawyers simply figuring out taxes.

Agreed, we need to simplify the tax code. I'd like to see a flat tax instead of just unfairly gouging the rich.

6. Solve the health insurance problem. Uncared-for medical conditions become much more expensive than if prevented or treated in the first place. We pay billions, for example, for dialysis for people whose kidneys could have been saved if they had good diabetic care. Private insurers spend about 30% of the health care dollar on their giant administrative mechanisms and high pay for executives. A national "Medicare for all" would cost much less (Medicare's overhead is 10%), and end the crazy business of doctors (like me) staying up half the night filling out insurance forms (if you ever wonder why I post at 3am sometimes, that's why--I've just gotten home from my paperwork).

I think it's time to shift the cost of health care from employers to individuals and let the free market sort out the system. Once health care insurance becomes more like auto insurance, individuals will be free to choose the program they want and insurance companies will cater to the individual needs of the consumers instead of a one size fits all. If medical care becomes "free" to everyone, the system will flounder. Just take a look at the future of medicare.

7. Invest in technologies that will take America forward and keep us in the leadership position, in particular green technologies. The obvious first step, supported even by most convervative economists, is a gas tax to raise gas to $3 a gallon. At that rate, many forms of alternative energy become viable, and we start making smart choices to drive less, drive more efficient cars, eat food grown nearer our homes, etc. Biodiesel, for example, which I put in my car, cost $2.65 a gallon when regular gas hit $3. I saw fleets of trucks lining up for it during that period a few months ago. Now, biodiesel again costs more than regular gas (though at 43mpg, I still save some money).

What makes you think that government should lead technology instead of private enterprise?

8. Add a war tax to cover the cost of the war, rather than paying for it on the international credit card. This will cause everyone to think about why we're in this war and how long we should stay.

Who needs another tax to make us think about it? I'd say the nation is already thinking about this issue.

 

[Mariner]

Maybe taking from the rich and giving to the public sphere is communistic. Or maybe it's realistic. As I've mentioned, it looks that if you have a flat tax or a level playing field without some sort of redistribution, then those who are good at making money end up owning almost everything, reducing the rest of us to peons. Remember the robber baron days? Do you want a society where the top 10% do no work, and simply live on the (tax-free) inheritance from their parents? That's where Bush's policies are taking us--to a big, fat leisure class. It's a mistake to think that all wealthy people are busy running companies and making jobs. Many of them are sitting by the pool.

Another way of looking at it, is to ask how the rich people had the opportunity to create their wealth... well, it depended in being in society with a middle class able to buy their products. It depended on the stability of society. Henry Ford realized this, when he purposefully paid his employees enough so they could buy his cars. Without adequate purchasing power, the economy has no one to sell to. Will society remain stable if poverty continues to rise, as it has under Bush, while the wealthy get astronomically wealthier?

Many rich people can look back and find a government gift in their history--perhaps it was a great-grandparent who was a homesteader, a parent who was educated on the GI bill, or a parent who had a job whose benefits were protected by trade tariffs.

As for college, it's going to be a basic survival issue for this country. 1/2 of my cousin's Electrical Engineering graduate class at MIT was non-American. If we don't have an adeqaute technical class of our own, we're going to give up leadership of technology to the rest of the world. What if someone has "earned" college in terms of their academic potential, but can't afford it? It used to be, we helped this person. Under Bush, we do less and less, and the percentage of people from the bottom quarter who go to college has falle to something like 2%. Not good.

I'm not speaking of these things just theoretically, either. I live in an area with vast amounts of wealth. I interact with leisure class people, as well as major business owners. Then at work, as a doctor, I see what it's like for the working poor and the poor, trying to live on minimum wage, with no health insurance. It's not a pretty picture.

There's a big space between pure capitalism, which I think would result in a feudal society, and pure communism, which obviously doesn't work. I think almost everyone here is probably in favor of some degree of middle ground. I just think we've moved a bit in the wrong direction under Bush.

And it in no way helps me personally to say so--I earn enough via work and investments that I would suffer if Bush's tax cuts aren't renewed. Yet I feel for the betterment of society, they should not be. I too wish it were true that we didn't need a highly progressive tax code to ensure equality, but we simply do--a flat tax would massively increase poverty, there's no way around it.

Mariner.

 

[MtnBiker]

Certianly there are those in our society that need help and some government assistance.

Maybe taking from the rich and giving to the public sphere is communistic. Or maybe it's realistic. As I've mentioned, it looks that if you have a flat tax or a level playing field without some sort of redistribution, then those who are good at making money end up owning almost everything, reducing the rest of us to peons.

However I have a fundamental disagreement with the arguement about earning money. I believe that the vast majority of people in this country posses the ablilty to earn enough money to comfortable support themselves. Whether or not they choose to is another thing. Our economic is not a zero sum game. If one family makes more money that does not cause another family to make less. No one need be reduced to anything.

 

[Mariner]

Unfortunately, that's not entirely true. A CEO can choose to compensate himself and his fellow executives with most of a company's profits. If his fellow CEOs do the same, while cutting benefits for employees (such as health insurance and pensions), then there is a zero-sum game, and the CEOs are winning it. And that is exactly what's happened now.

The counterbalancing force will eventually come from unions. Disgruntled workers will re-organize and fight for increased benefits. But in the meantime a lot of people are getting hurt. You can't tell a child that the reason she can't see a doctor is because unionization hasn't yet caught up with making sure that children have health benefits. 1/5 of America's children are currently growing up in poverty. Is this solely their parents' fault? If you think so, then I think you haven't spent enough time with actual working poor people, the type that are working 2-3 jobs to try to feed and care for their families.

Mariner.

 

[MtnBiker]

The counterbalancing force will eventually come from unions.

Or a capitalist competitive labor force that will go work for the competition.

I said our economy is not a zero sum game, not a corporate entity.

 

[Mariner]

what do you do if your competition is in a country without occupational safety and health codes, or environmental protections?

Wages are being held down not only by executives taking a larger chunk of corporate profits, but also by globalization and the weakening of labor unions in the "new economy." We've seen unemployment insurance available to fewer and fewer people, and we're watching pensions begin to evaporate (wth the burden for these private companies' obligations now falling on the Federal Government).

Many of the things workers take for granted--such as weekends--were the result of labor agitation. It wasn't the capitalists' idea that people should work 40 hours a week and have two days off.

I find it unfair that workers' productivity has risen considerably, and the extra money has gone into executives' pockets, not into their own. I guess maybe other people don't care, or feel these CEO's have really earned their $$. Personally, I find it hard to believe anyone is worth $4 million a week.

Here's a piece that summarizes the executive compensation issue:

Quote:

The highest-paid CEO in 2004 was Yahoo's Terry Semel, who hauled in $230.6 million. That's more than $4 million a week.

Yahoo is on the Lou Dobbs Tonight list of companies "sending American jobs overseas, or choosing to employ cheap overseas labor, instead of American workers." It would take the pay of 7,075 average American workers to match the pay of Yahoo's CEO.

William McGuire, of UnitedHealth Group, the nation's leading insurer, was the third-highest-paid CEO on the Forbes list. His pay of $124.8 million could cover the average health-insurance premiums of nearly 34,000 people.

* * *

CEO pay of Fortune 500 public companies averaged $10.2 million in 2004, counting salary, bonus, and other compensation, such as exercised stock options and vested stock grants. Full-time-worker pay averaged just $32,594. That's 11 percent less than 1973's average worker pay, of $36,629, adjusted for inflation, although worker productivity rose 78 percent between 1973 and 2004.

In 1973, CEOs made 45 times as much as workers, according to pay expert Graef Crystal. In 1991 -- when Crystal said that the imperial CEO "is paid so much more than ordinary workers that he hasn't got the slightest clue as to how the rest of the country lives" -- CEOs made 140 times as much as workers. Last year CEOs made more than 300 times as much.

Executive pay now takes more than double the bite out of company earnings that it did a decade ago, according to a recent study by Lucian Bebchuk, a Harvard professor of law, economics, and finance, and Yaniv Grinstein, of Cornell University's School of Management. Looking at data for thousands of publicly traded companies, Bebchuk and Grinstein found that pay for the top-five company executives rose from 4.8 percent of aggregate net company income during 1993-95 to 10.3 percent of aggregate net income during 2001-03.

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Source: http://www.commondreams.org/views05/0510-22.htm

When the top 5 executives are taking away 10% of a company's entire profits, then that's certainly a zero-sum game issue. It's particularly egregious in health insurance companies, which make their profits by denying health care to their members.

There's a fascinating new book out that shows that when times are rough for the middle and lower classes, racism and other forms of social unrest boom. In a few more years of a Bush economy, who knows what the country will feel like? The CEOs won't notice; they'll be safe in their gated communities. For better or worse, we're witnessing the creation of a new aristocracy.

Mariner

 

[MtnBiker]

When the top 5 executives are taking away 10% of a company's entire profits, then that's certainly a zero-sum game issue.

Again I am speaking of our economy as a whole, which continues (despite the efforts of many to claim otherwise) to grow at a healthy pace. With a growing ecomony and capitalistic oppurtunity employees and or entrepueners will continue to find ways to prosper.

The fact that a CEO is earning more has not stopped me from taking advantage of oppurtninties and growing my income.

 

[Mariner]

addressing the fate of the actual people being crushed underfoot at the moment, in particular the 1/5 of our children growing up in poverty and the 45+ million people without medical insurance (rising daily).

Just this week, I had to make a school aide I know promise me she'd go to the doctor for her persistent left-sided chest pain. She's been putting up with it for two months because she has no health insurance. What is Bush's economy doing for her?

The economy is doing well as an abstraction, and at the macro level. At the family level, it's stagnant or even worsening, depending on which economic class you examine--aside from the wealthiest, who are thriving. We have 600,000 homeless kids in our public schools. Do conservatives have answers for these actual human beings? We've waited several years for the trickle-down, and it hasn't happened yet.

Mariner.

 

[MtnBiker]

Redistributing weath via government programs is not the answer. Dependency of such programs rather than personal accountablility will create even more dependency.

Examples of unfortunate children is saddening and does pull at emotional heart strings and certianly there are those that truly do need government assistance and safety nets should always be in place. But make those examples the exception rather than the rule is a better policy.

Historically, individuals and local entities typically provided more assistance than they do today. Over the course of the 20th century in particular, government came to provide more and more of the services that previously had been provided by self-help and mutual-aid organizations. Lower-cost housing is a good example. Mutual-aid, religious, and educational organizations had long provided limited housing assistance. However, after World War II, the federal and state governments began to provide the bulk of low-cost housing. Today, nearly all housing assistance comes from government.

Health care is another example of the pattern. Before World War II, Americans of modest income typically obtained health care and health insurance through a range of community institutions, some operated by churches and social clubs. That entire health care infrastructure has today been replaced by publicly provided health care coverage, largely through Medicaid and Medicare. Whether or not the medical and financial result is better today, the relationship between the person receiving health care assistance and those who are paying for it has changed, and few would dispute that this change has affected the total cost of health care and the politics of the relationships among patients, doctors, hospitals, and those needing care.

Financial help to those in need has also undergone a profound change. Again, local, community-based charitable organizations once played the major role, which resulted in a particular relationship between the person receiving help and the community. Today, Social Security and other government programs provide much or all of the income in indigent and modest households. Unemployment insurance payments provide nearly all of the income to temporarily unemployed workers— income that once was provided by unions, friendly societies, and local charities. Indeed, income assistance is quickly becoming a government program with little if any connection to the local civil society.

This shift from local, community-based mutual-aid assistance to government assistance has clearly altered the relationship between the person in need and the service provider. In the past, the person in need depended on people and organizations in the community for help. The community knew the person’s needs and tailored assistance to meet those needs within the budgetary constraints of the community. Today, housing and other needs are addressed by government employees who typically do not know the person and have no tie to the community where the needy person lives.

Of course, a dependent relationship exists in both cases. However, the first is a dependent relationship with the civil society that includes expectations of the person’s future civil viability or ability to aid another person. The latter is a dependent relationship with a political system without any reciprocal expectations. The former is based on mutual and reciprocal aid with future aid depedent upon returning to civil viability, which in turn is essential to the life of civil society itself. The latter is usually based on unilateral aid in which the return to civil viability is not essential. Indeed, “success” in the latter political system is frequently measured by the growth of the aid program rather than its outcome. While the former leads to a balance between the interests of the person and the community, the latter runs the risk of interest-group political pressure—from provider organizations and local communities as well as from recipients of assistance from distant government—to expand federal support.

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