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Monday, October 20, 2014

How Much Of The Economy Do We Actually Need?




There are other ways of doing things... Sustainable Man



economy


“Earn a living.”

“Be practical.”

“Get a job.”


Odds are that you have heard these statements before. As an adult, we don’t need anyone to tell us these things. We tell ourselves. But there was a time when each of us heard these ideas for the first time. Do you remember?

Perhaps you heard it after you were asked, “What do you want to do when you grow up?” as if you weren’t something already. You might have responded “I want to play with horses,” or “I’d like to travel to the moon,” or maybe even “I want to help reduce the suffering in the world.” If you were young enough, your adult companions might have admired at your youthful innocence and purity. But if you were close to becoming an adult, the response was probably something like, “That’s nice but you need to be practical. You’re going to have to get a job to earn a living.”

And so we trade in our dreams of healing animals to become a plastic surgeon, dreams of surfing the open oceans to become an investment banker, dreams of simply being in harmony with our environment for the relentless push of doing something to earn a living.

You may feel the urge to stop reading because you know where I am headed with this. I am stoking a wound inside all of us living in Western society – the time each of us realized that either directly or indirectly, we were going to have to support ourselves by selling something to someone in order to survive. I know it hurts. I have the wound too.

This wound hurts even more because of its ramifications. Think about it. The reason some people do not have food to eat, the reason there is no cure for the ebola virus, the reason why we recycle fashion and design machines to break down just fast enough not to piss off the customer is because every time we do we enable someone else to “earn a living.” But when do we stop to ask the critical question and, more importantly, come to the natural conclusion that we simply don’t need everyone to “earn a living” anymore?

Think about the activities performed by our ancestors and people living tribal cultures. When they were not playing or acting leisurely, nearly everyone would be engaged in activities that were directly related to the survival of the group with food production being the primary focus. Surely, with all our modern technological advances, we should be able to accomplish what our ancestors were able to – meeting the basic human needs for all – with far more ease.
When the United States declared their independence in the late 1700s, ninety percent of Americans earned their living by growing food. The remaining ten percent were left to be the shopkeepers, blacksmiths, seamstresses, bankers, and all other professions. Today, less than one percent of the population is involved in food production, putting the vast majority in the position of needing to think of some new thing we can get people to buy. Instead of realizing the gift that automation could bring to the entire human race by alleviating the need to “earn a living”, we kept the charade of forcing people to invent new ways to do it. So what are some of those ways we are earning our living today?

Joel Comm made $400,000 by building a mobile app, the iFart that creates farting noises at the push of a button. Gary Dahl made $15 million in six months by selling pet rocks and Richard James made $250 million on his slinky invention. Jessica Vanessa figured out she could make more money making “twerking” videos online than she could educating children. The world spends over $500 billion every year trying to convince people that they need these new products and services, almost twenty times the cost of alleviating hunger. In light of the fact that 17 million children in the United States do not have enough food to eat, these kinds of stories of “earning a living” should stimulate some serious questions. Why must we continue to slave away at unnecessary jobs creating superfluous goods and services when our brothers and sisters can’t even get enough food to eat?

I don’t mean to be insensitive here. Everyone living in Western society is under a very real pressure, even if artificially manufactured, to earn a living. Not only does our survival depend on earning a living but it also influences, whether we like it or not, the respect we receive and, for many, is intimately linked to their self-worth. But set that aside for a moment and ask yourself this question.
Is what I do to “earn a living” really needed by society? In other words, could society get by without whatever I produce? I can honestly say that I have never held a job that was crucial to human survival. That is not true for everyone but I suspect if we are honest with ourselves, most of us would agree. What then is the purpose of our economy, if it is not to meet the needs of all people?

Well, our economy has a purpose. It is to maximize gross domestic product (GDP), a measurement of the sum total of all goods and services exchanged for money. The higher this number gets, so goes the theory, the better and happier our lives will be. This is the fundamental assumption underlying our programmed response – the need to earn a living – to how we spend our precious, limited time on this beautiful spaceship floating through the galaxy.
So how much of the economy is really needed? Well, it turns out that food production and distribution comprise about five percent of the overall economy.
Energy production and distribution is just over three percent, most of which goes towards fueling the transportation of all these superfluous goods and moving us back and forth to our jobs designing, marketing, financing, manufacturing, shipping them. Even at its current levels of catastrophic waste and price gouging, the health care industry is just seven percent of GDP. What else do we need? The Internet? 0.3 percent. Veterinary services? 0.1 percent. When you add it all up, only fifteen percent of the economy is needed to meet our basic needs (and probably much less due to all the wasteful practices designed to increase revenue).

So if we only need fifteen percent of the economy, what makes up the other eighty-five percent? Amazingly, finance, insurance, real estate, rental, and leasing comprise nearly twenty percent of GDP. None of these services meet any real or tangible human need, but rather are part of the economic game we have invented. Another twelve percent of GDP are professional and business services, which exist to help people or companies design, market, finance, manufacture, and ship all those goods that help us to “earn a living.”

One could argue that we need the manufacturing (twelve percent) and construction (four percent) sectors of the economy as well. However, there is so much excess operational capacity of all the machines that we have already produced that we could easily find ways to share them. In fact, we already are. And given that there is five times the number of vacant homes as there are homeless people, we probably could stop building new houses too.

By looking at what comprises GDP, we can see that most of the economy is unnecessary and only exists due to this antiquated notion of the need to justify our existence in terms of what we can produce that others will buy. Not only that but all of this excess production and consumption (and the apparent need to secure the resources needed to keep it going) is the main driver of climate change, inequality, war, and all the other forms of depravation and suffering in the world. All of this to fuel an economy that we don’t even need? What are we doing?

There really is so much work that needs to be done. It just isn’t the kind where it involves creating something to be consumed. We certainly need people to start growing food locally, to begin restoring damaged ecosystems, to spend time nurturing and raising children to become adults capable of dealing with their emotions in healthy ways. But you just aren’t going to convince a bank to loan you money to do these things. The banks will only do that if you will give even more money back to them. This highly limits the scope of what our economy can do.

We need an economic revolution – one that allows us to meet the needs of the entire world, not just those who managed to find a way to “earn a living.” Whereas two hundred years ago, it took nine out of ten people to work to provide enough food for the rest, today one out of a hundred can do the job. Through automation, we have been able to drastically increase our productive capacity while decreasing the human labor required in achieving it. So ingrained is this concept of “earning a living” that was a necessity throughout human history that we have failed to recognize that we could just stop, and instead share the increasingly small burden of providing material needs to all. Instead, we carry on with inventing new ways to “earn a living”.

“Earn a living.” What an interesting phrase. You must do something to earn your life. Your life is not something given to you, but rather something that must be justified by your contribution to it, measured in the form of income earned. As I sit on my porch and watch deer jump the fences people erect to protect their “property” and the squirrels gather the nuts that have freely fallen on the ground, I wonder if we will ever wake up to the reality of our situation, that we have already created an abundant world capable of providing for every human need. All we must do now is, collectively, to realize it.

Thursday, October 16, 2014

What Markets Will



The Opinion Pages | Op-Ed Columnist

What Markets Will



In the Middle Ages, the call for a crusade to conquer the Holy Land was met with cries of “Deus vult!” — God wills it. But did the crusaders really know what God wanted? Given how the venture turned out, apparently not.

Now, that was a long time ago, and, in the areas I write about, invocations of God’s presumed will are rare. You do, however, see a lot of policy crusades, and these are often justified with implicit cries of “Mercatus vult!” — the market wills it. But do those invoking the will of the market really know what markets want? Again, apparently not.

And the financial turmoil of the past few days has widened the gap between what we’re told must be done to appease the market and what markets actually seem to be asking for.

To get more specific: We have been told repeatedly that governments must cease and desist from their efforts to mitigate economic pain, lest their excessive compassion be punished by the financial gods, but the markets themselves have never seemed to agree that these human sacrifices are actually necessary.
Investors were supposed to be terrified by budget deficits, fearing that we were about to turn into Greece — Greece I tell you — but year after year, interest rates stayed low. The Fed’s efforts to boost the economy were supposed to backfire as markets reacted to the prospect of runaway inflation, but market measures of expected inflation similarly stayed low.

How have policy crusaders responded to the failure of their dire predictions? Mainly with denial, occasionally with exasperation. For example, Alan Greenspan once declared the failure of interest rates and inflation to spike “regrettable, because it is fostering a false sense of complacency.” But that was more than four years ago; maybe the sense of complacency wasn’t all that false?

All in all, it’s hard to escape the conclusion that people like Mr. Greenspan knew as much about what the market wanted as medieval crusaders knew about God’s plan — that is, nothing.

In fact, if you look closely, the real message from the market seems to be that we should be running bigger deficits and printing more money. And that message has gotten a lot stronger in the past few days.

I’m not mainly talking about plunging stock prices, although that’s surely telling us something (but as the late Paul Samuelson famously pointed out, stocks are not a reliable indicator of economic prospects: “Wall Street indexes predicted nine out of the last five recessions!”) Instead, I’m talking about interest rates, which are flashing warnings, not of fiscal crisis and inflation, but of depression and deflation.

Most obviously, interest rates on long-term U.S. government debt — the rates that the usual suspects keep telling us will shoot up any day now unless we slash spending — have fallen sharply. This tells us that markets aren’t worried about default, but that they are worried about persistent economic weakness, which will keep the Fed from raising the short-term interest rates it controls.

Interest rates on much European debt are even lower, because Europe’s economic outlook is so bad, and we’re not just talking about Germany. France is currently in conflict with the European Commission, which says that the projected French deficit is too big, but investors — who are still buying French bonds despite a 10-year interest rate of only 1.26 percent — are evidently much more worried about European stagnation than French default.

It’s also instructive to look at interest rates on “inflation-protected” or “index” bonds, which are telling us two things. First, markets are practically begging governments to borrow and spend, say on infrastructure; interest rates on index bonds are barely above zero, so that financing for roads, bridges, and sewers would be almost free. Second, the difference between interest rates on index and ordinary bonds tells us how much inflation the market expects, and it turns out that expected inflation has fallen sharply over the past few months, so that it’s now far below the Fed’s target. In effect, the market is saying that the Fed isn’t printing nearly enough money.

One question you might ask is why the market’s pro-spending, print-more-money message has suddenly gotten louder. My guess is that it’s mainly driven by events in Europe, where the slide into deflation and the growing public backlash against austerity have reached a tipping point. And it’s very reasonable to worry that Europe’s problems may spill over to the rest of us.

In any case, the next time you hear some talking head opining on what we must do to satisfy the markets, ask yourself, “How does he know?” For the truth is that when people talk about what markets demand, what they’re really doing is trying to bully us into doing what they themselves want.

Tuesday, October 14, 2014

We Can't Catch a Break: 14 Depressing Facts About Americans and Vacation








 

Studies indicate that the world's most productive workers work fewer hours.





Photo Credit: Shutterstock.com



October 14, 2014 


Feeling overworked? Like you need a break? You're not alone. Americans are not taking vacations in droves. Partly, the rampant culture of overwork is to blame; how America seems to look askance at people who seek balance and don't want to spend the entirety of their lives grinding away at the office. Partly, it's because many workers in America—especially lower income workers—don't get paid vacation time, and can't afford to take time off. Add to that the fact that many Americans are terrified of losing their jobs or being perceived as lazy, undedicated, or at all dispensible to their bosses, and you get a bunch of exhausted, burned out people, whose happiness and productivity is diminished.
Americans put the most time at work than any other developed country, but lest you think that is just what made America great, the fact is our long work hours were not always number one. In 1979, our working hours were comparable to most other other developed countries, with Japan outworking us. Today, we lead the pack, putting in more hours than all of them. The idea of shrinking the workweek has definitely not caught on here. Our 40-hour workweek is now  47 hours long on average. This despite the fact that studies indicate that the world's most productive workers work fewer hours.

A recent survey of 1,000 people by the travel marketing firm Skift revealed the following depressing statistics.

1. More than half of Americans haven't taken a single day of vacation so far this year.

2. Another 18 percent have taken fewer than five vacation days.

3. The rest is split between those who took fewer than 5, and those who took between 5-10 vacation days this year.

4. More than a quarter of American workers don't get any vacation days off.
5. The lower the income of Americans, the fewer vacation days they have taken this year.

6. Around half of those in the bottom three income groups say they haven’t taken a day off.

7. A quarter of those making $75,000 to $149,000 say the same.

8. No one making more than $150,000 says they’ve gone without a day off.

9. Women take less vacation time than men. More women report having taken zero days off while more men have taken more than 10 vacation days.

10. More than 40 percent of Americans who get paid vacation don’t plan to use it all this year.

11. 15 percent say they haven’t taken paid time off for something other than an illness or emergency in over a year.

12. Americans living on the West Coast are more likely to take vacation days than the rest of the country. (Not depressing if you live on the West Coast.)

13. People living in urban areas are more likely to take vacation days. (Surprisingly.) 

14. Non-parents take less vacation than parents.

h/t Think Progress

Friday, October 10, 2014

4 Cruel Things Corporate Execs Say About Americans Struggling to Get By






  Economy  


Some of the comments are so outlandish that it's hard to believe they actually said them.



October 7, 2014
 
 
 
 
 
The following statements, made by some of our top business leaders, show a remarkable disdain for struggling Americans. Though their coments may seem too outlandish to have been uttered, or inappropriately humorous, all the speakers were serious.

1. Environmental Wisdom from Exxon and Monsanto

Rex Tillerson, CEO of Exxon, which has used tobacco industry tactics to cast doubt on climate change, summed up the whole environmental issue with his own unique brand of logic: "What good is it to save the planet if humanity suffers?"

Monsanto has no such moral compunctions over corporate social responsibility. A company director once said, "Monsanto should not have to vouchsafe the safety of biotech food. Our interest is in selling as much of it as possible." While Monsanto, according to Food & Water Watch, has "wreaked havoc on the environment and public health" with PCBs, dioxin, and other dangerous chemicals, the company reported in its most recent financial report to the SEC: "We are committed to long-term environmental protection."

2. The Art of Delusion: How Business People Fool Themselves

This starts, fittingly, at McDonald's, where a company representative vigorously defended his burgers and nuggets: "We don't sell junk food...We sell lots of fruits and veggies at McDonald's...And we are not marketing food to kids."

Next, on to a company that hides overseas earnings, avoids federal and state taxes, makes $400,000 per employee, pays its store workers an average of about $12 per hour, pays its CEO $143 million a year, and operates overseas factories with working conditions that, according to the Economic Policy Institute, "reflect some of the worst practices of the industrial era." Their CEO Tim Cook says, "Apple has a very strong moral compass."

Such delusional heights are also reached in the financial industry, where Goldman Sachs CEO Lloyd Blankfein is doing God's work, his colleague Brian Griffiths feels that we have to tolerate inequality as a way to achieve greater prosperity and opportunity for all, and Ponzi scheming JP Morgan's Jamie Dimon is not only not embarrassed to be a banker, but also proud of the company that he works for.

3. Talking Down to the Down & Out

It's hard to choose the most insensitive and condescending remark from people who seem to lack empathy for the less fortunate. Perhaps hedge fund manager Andy Kessler, who addressed the issue of why these homeless folks aren't also working. Ignoring the National Coalition for the Homeless conclusion that homelessness is caused by (1) a shortage of affordable rental housing, and (2) a lack of job opportunities, Kessler suggests they're homeless because someone is feeding, clothing and, in effect, bathing them.

Equally condescending is the Walmart executive who presumed to speak for his low-wage workers just before Thanksgiving, saying, "Walmart associates are really excited to work that day."

Now back to McDonald's, which had these infamous budget tips for its own low-wage employees: "You may want to consider returning some of your unopened purchases that may not seem as appealing as they did. Selling some of your unwanted possessions on eBay or Craigslist could bring in some quick cash...Consider bringing a brown bag lunch and skipping the takeout...You might also consider a temporary part time job to dig out of debt quickly."

But the condescension king has to be Charles Koch, whose foundation tried to convince half of America that they were rich: "If you earn over $34,000 a year, you are one of the wealthiest one percent in the world."

4. Paying Taxes with Imaginary Money

Tim Cook, the "moral compass" guy from top tax avoider Apple Corporation, blurted, "We pay all the taxes we owe - every single dollar." He has a lot of support. Whole Foods CEO John Mackey protested, "It's not Apple's fault that they're seeking to avoid paying taxes." And Rand Paul added, "What we need to do is apologize to Apple and compliment them for the job creation they're doing."

Exxon, which once said "any claim we don’t pay taxes is absurd", used a "theoretical tax" to account for almost 90% of last year's income tax bill. The Economist explains theoretical taxes: "Companies have two versions of the truth: the theoretical tax bill, calculated using accounting profits..and the actual cash tax they pay.."


Paul Buchheit teaches economic inequality at DePaul University. He is the founder and developer of the Web sites UsAgainstGreed.org, PayUpNow.org and RappingHistory.org, and the editor and main author of "American Wars: Illusions and Realities" (Clarity Press). He can be reached at paul@UsAgainstGreed.org.

Saturday, October 4, 2014

Another Surge in Employment, but Little Improvement in Workers’ Pay Envelopes










Another Surge in Employment, but Little Improvement in Workers’ Pay Envelopes 

 



Remember that gloomy jobs report for August? Never mind. Revisions in last month’s numbers boosted estimated payroll gains in August from +142,000 to +180,000, and revisions in older BLS numbers increased employment gains in July from +212,000 to +243,000. Thus, updates in the old payroll numbers added 69,000 to previously estimated job gains last summer.

The good news doesn’t end there. The latest BLS estimates show that employers added another 248,000 payroll jobs in September. On average over the past 12 months payrolls have grown 220,000 a month, about three times faster than needed to keep the unemployment rate from rising. As usual, virtually all the job growth took place in the private sector. Public payrolls grew just 12,000 last month, and job gains in the public sector over the past year have averaged only 4,000 a month. In the same period, private employers added 216,000 payroll jobs a month.

Job gains were especially big in business and professional service industries, which added 81,000 positions in September, up from a monthly average of 56,000 a month over the previous year. Both manufacturing and construction also added to payrolls last month, but job gains were meager. The recovery of construction employment has been heartbreakingly slow. Between early 2007 and January 2011, employment in the construction industry fell 2.3 million, or 30%. Since the 2011 low point construction payrolls have recovered about 650,000 jobs, less than 30% of the jobs that were lost. If there is any good news in these numbers it is that a much-anticipated rebound in the construction industry, if it occurs, could significantly lift the nation’s employment totals.

The new numbers from BLS’s household survey also contained a healthy dose of good news. The number of adults who report holding a job increased 232,000 in September, helping to push down the unemployment rate below 6% for the first time in the recovery. September’s unemployment rate – 5.9% – was the lowest rate since July 2008. The number of people classified as unemployed – that is, jobless and actively looking for a job – fell 329,000.

The fact that the reported number of unemployed fell faster than the number of adults holding a job increased means the number of Americans in the labor force fell last month. Indeed, the labor force participation rate touched a new low in September, notwithstanding the strong and fairly steady job gains of the past year. The weak performance of labor force participation in the face of steady employer demand means that many economists will have to reassess their views of the potential size of the U.S. labor force. Many adults whom we would expect to be in the labor force, especially in the prime working ages between 25 and 54, remain on the sidelines, neither working nor looking for work.

One reason jobless adults may be staying on the sidelines is anemic wage growth. Real hourly wages in the year through August were flat. Real weekly earnings rose just 0.4%. The fact that wages remain stuck despite of 48 successive months of job gains suggests that employers’ bargaining power remains exceptionally strong.
  • Gary Burtless researches labor market policy, income distribution, population aging, social insurance, household saving, and the behavioral effects of taxes and government transfers. He was an economist with the U.S. Department of Labo

Tuesday, September 30, 2014

It’s the Inequality, Stupid



In These Times





Sen. Elizabeth Warren presents her student loan relief bill as a choice between “protecting millionaires’ and billionaires’ tax loopholes” and “helping young people.” (Mark Wilson/Getty Images)

It’s the Inequality, Stupid


How to frame the ‘defining challenge of our time.’
BY DAVID MOBERG
When their margin of victory among working-class voters reaches roughly 20 percent, Democrats win; when that margin slips as low as 10 percent, they lose.
President Barack Obama said last December that inequality is “the defining challenge of our time.” Americans agree. A Pew survey from June found that 62 percent think the country’s economic system unfairly favors the powerful, and 78 percent believe that too much power is concentrated in the hands of a few large companies.
Campaigning against the ongoing takeover of the country by the superrich would seem to be a winning strategy for Democrats, then, as they struggle to hold onto the Senate and pick up a few governor’s seats in November. As a campaign issue, growing economic inequality plays to the Democrats’ image as the party of the little guy and to their brightest moments in power, such as the New Deal, when they made the country much more equal.
Yet with a handful of exceptions (see sidebar), Democrats are not talking about inequality. Raising the minimum wage—along with protecting Social Security, a campaign mainstay—may be the closest the Democratic Party has come to a national campaign theme on inequality. Overall, says Sam Pizzigati, editor of the online weekly on inequality Too Much, and author ofGreed and Good, “there’s certainly no great move among Democratic candidates” to make inequality their focus.
Why not?
Democratic political strategists argue that while inequality may bother Americans, it doesn’t move them to vote. Polling seems to bear this out. In a recent Hart Research Associates poll, 60 percent of swing voters reacted favorably to a Democrat promising “economic growth,” and only 36 percent to a candidate pledging to “reduce income inequality.” Candidates seeing those numbers may be wary of making inequality a central theme.
But while voters may turn up their noses at pledges put in those terms, that doesn’t mean that any populist message is doomed to failure.
Hart polling has also found that the goal of “an economy that works for everyone, not just the wealthy few,” beat out other popular economic goals, such as “the creation of jobs and America going back to work” and “a strengthened middle class.” Tellingly, however, it was the phrase “not just the wealthy few” that made the difference. Dropping it did not broaden the Democrats’ appeal to independents, as many “centrist” Democrats might argue; it narrowed the appeal. Given a choice between a Republican who promised to “grow the economy” and a Democrat with this more populist message, swing voters picked the Democrat by 22 points. Without “not just the wealthy few,” the Democrat lost to the Republican by 10 points. What’s more, adding “just the wealthy few” boosted support for Democrats among swing voter groups that typically skew conservative, including men, older voters and those leaning Republican.
To Hart Research analyst Guy Molyneux, this signifies that the most effective populist message today is inclusive, but at the same time draws a sharp differentiation between the 99% and, well, the rich.
Defining the 99% against the 1% also has the benefit of counteracting Republican efforts to divide and conquer working Americans. Since at least the “Southern Strategy” of the early 1970s, the Right has sought to divide working people by drawing lines between poor and middle-income workers, white workers and workers of color, and the native-born and immigrants. In particular, they paint the poor and people of color as lazy and undeserving. Of course, most of the poor work, and work hard—for too little pay—while many businesses show signs of pathological dependence on tax breaks, government contracts and lax regulations. Putting the spotlight on the 1% reminds voters who is really mooching off the hard work of others.
“If it’s the working and middle class against the poor, immigrant, and ‘undeserving,’ we [populist Democrats] lose,” argues long-time political consultant Vic Fingerhut. “If you’re going to tax me to take care of this bum, it gets more difficult. But Democrats discover that a lot of little guys vote for them when they stand up to the big banks. If it’s the working and middle class against the corporations, we win.”
However, the image of the 1% standing against the 99% understandably makes some rich people nervous. Centrist Democrats, reliant on close relationships with corporate and individual wealthy donors, want to comfort and reassure their check-writing supporters. Consequently, Democratic Party leaders, including Hillary Clinton, assert that “we’re all in this together”— fast-food worker and fast stock trader, hand-in-hand, presumably. This brings to mind a version of the 1930s rural populist joke about the elephant who shouts, “We’re all in this together,” as he dances through the chicken yard.
To the extent that Democrats rely on funding from rich individuals and corporations, they are more likely to do their bidding. And that tends to increase with time: Labor unions are more willing than business to back first-time candidates; as time passes, business contributions become more dominant. In other words, the rich help to create a political hegemony that defines the boundaries of acceptable debate for Republicans and Democrats alike.
The politics of the possible
Some strategists on the Left believe that in order to campaign on inequality, Democrats must first demonstrate that ameliorating it is even possible.
“Inequality is an abstract idea,” says AFL-CIO political director Michael Podhorzer. “What is not abstract is that three-fourths of working people can’t make ends meet. They need to hear that candidates are going to do something about that.”
Mobilizing working-class voters is crucial for Democrats, he argues, because they determine elections. As he explained to The Atlantic, AFL-CIO exit polls show that Democrats have won big in elections over recent decades in which working-class voters (defined as those making less than $50,000 a year) come out in force for Democrats. When their margin of victory among working-class voters reaches roughly 20 percent, Democrats win; when that margin slips as low as 10 percent, they lose. And this year, the margins and mobilization for Democrats seem dangerously low among working-class voters.
“They see the rich getting away with murder,” Podhorzer says. “Voters are ready to believe.” But the Democrats too often fail to offer something in which to believe. Podhorzer suggests pushing for “higher living or minimum wages, affordable student loans, progressive taxation, and restrictions on outsourcing.” Many of these pragmatic proposals are indeed on the Democrats’ agenda. The problem with this pragmatic approach, however, is that each of these proposals faces opposition—whether it be practical, self-interested or ideological—from factions within the Democratic Party (especially the Wall Street wing), from independents who might vote Democratic and, of course, from Republicans.
For example, increasing Social Security benefits and making them more progressive would reduce inequality in a concrete way. It could be financed by eliminating the cap on wages and salaries that are subject to Social Security taxes. But such a proposal would have to contend with the propaganda that has convinced many people that Social Security is in financial trouble.
Moreover, as important as they are—and as difficult to win—most current proposals to address inequality are small in relation to the scale of the accumulated income inequity of the past 40 years. Even raising the minimum wage to $15 an hour would leave the United States behind pay levels seen in comparable industrial countries, and behind where the minimum should be set given changes in both prices and productivity.
In the long run, progressives cannot avoid confronting inequality, and that showdown is not likely to get easier as wealth grows more concentrated. Without campaign finance reform, weaning Democrats from corporate hegemony on key economic issues will be even harder. Though candidates can mobilize supporters in the short term with easily understood, concrete proposals, a moral and practical critique of inequality will be necessary to a create broader political appeal in the long run. Keywords can become touchstones of political movements, cultivated to carry a particular basket of meanings.
In this 50th anniversary year of “Freedom Summer,” for example, it is worth remembering that the Civil Rights Movement had concrete goals—such as voting rights and access to public accommodations—but it was also a political movement imbued with the broader, uplifting vision of “freedom.” Unfortunately, today the Right has appropriated “freedom” to mean, among other things, unlimited rights to guns, unfettered rights of private property and a right to act irresponsibly toward others. The progressive meanings of “freedom” have been smothered.
Along with freedom and democracy, the Left still draws on the Enlightenment ideals of the French and American revolutions.Libertéégalité and fraternité serve as touchstones of progressive thought that extend beyond their embodiment in specific institutions. “Democracy” requires free speech and elections, for example, but it also carries a promise that is utopian, in a good way. Likewise, although most Americans associate the ideal of “equality” with movements of groups such as African Americans, women and gays for civil and political rights, it also serves as an expansive touchstone, a value yet to be realized in other ways—including economic—but one that needs to be recognized as worthy of a movement
David Moberg, a senior editor of In These Times, has been on the staff of the magazine since it began publishing in 1976. Before joining In These Times, he completed his work for a Ph.D. in anthropology at the University of Chicago and worked for Newsweek. He has received fellowships from the John D. and Catherine T. MacArthur Foundation and the Nation Institute for research on the new global economy. He can be reached at davidmoberg@inthesetimes.com.

Monday, September 29, 2014

Robert Reich on What's Really Destroying the American Middle Class

Home



ECONOMY  


This is the first economic upturn in which 90% of Americans are worse off.



Photo Credit: Dale Robbins / Moyers & Company


September 29, 2014


I was in Seattle, Washington, recently, to congratulate union and community organizers who helped Seattle enact the first $15 per hour minimum wage in the country.
Other cities and states should follow Seattle’s example.
Contrary to the dire predictions of opponents, the hike won’t cost Seattle jobs. In fact, it will put more money into the hands of low-wage workers who are likely to spend almost all of it in the vicinity. That will create jobs.
Conservatives believe the economy functions better if the rich have more money and everyone else has less. But they’re wrong. It’s just the opposite. 
The real job creators are not CEOs or corporations or wealthy investors. The job creators are members of America’s vast middle class and the poor, whose purchases cause businesses to expand and invest. 
America’s wealthy are richer than they’ve ever been. Big corporations are sitting on more cash they know what to do with. Corporate profits are at record levels. CEO pay continues to soar.
But the wealthy aren’t investing in new companies. Between 1980 and 2014, the rate of new business formation in the United States dropped by half, according to a Brookings study released in May.
Corporations aren’t expanding production or investing in research and development. Instead, they’re using their money to buy back their shares of stock.
There’s no reason for them to expand or invest if customers aren’t buying.
Consumer spending has grown more slowly in this recovery than in any previous one because consumers don’t have enough money to buy. 
All the economic gains have been going to the top.
The Commerce Department reported last Friday that the economy grew at a 4.6 percent annual rate in the second quarter of the year.
So what? The median household’s income continues to drop.
Median household income is now 8 percent below what it was in 2007, adjusted for inflation. It’s 11 percent below its level in 2000.
It used to be that economic expansions improved the incomes of the bottom 90 percent more than the top 10 percent.
But starting with the “Reagan” recovery of 1982 to 1990, the benefits of economic growth during expansions have gone mostly to the top 10 percent.
Since the current recovery began in 2009, all economic gains have gone to the top 10 percent. The bottom 90 percent has lost ground.
We’re in the first economic upturn on record in which 90 percent of Americans have become worse off.
Why did the playing field start to tilt against the middle class in the Reagan recovery, and why has it tilted further ever since?
Don’t blame globalization. Other advanced nations facing the same global competition have managed to preserve middle class wages. Germany’s median wage is now higher than America’s.
One factor here has been a sharp decline in union membership. In the mid 1970s, 25 percent of the private-sector workforce was unionized.
Then came the Reagan revolution. By the end of the 1980s, only 17 percent of the private workforce was unionized. Today, fewer than 7 percent of the nation’s private-sector workers belong to a union.
This means most workers no longer have the bargaining power to get a share of the gains from growth.
Another structural change is the drop in the minimum wage. In 1979, it was $9.67 an hour (in 2013 dollars). By 1990, it had declined to $6.84. Today it’s $7.25, well below where it was in 1979.
Given that workers are far more productive now – computers have even increased the output of retail and fast food workers — the minimum wage should be even higher.
By setting a floor on wages, a higher minimum helps push up other wages. It undergirds higher median household incomes.
The only way to grow the economy in a way that benefits the bottom 90 percent is to change the structure of the economy. At the least, this requires stronger unions and a higher minimum wage.
It also requires better schools for the children of the bottom 90 percent, better access to higher education, and a more progressive tax system.
GDP growth is less and less relevant to the wellbeing of most Americans. We should be paying less attention to growth and more to median household income.
If the median household’s income is is heading upward, the economy is in good shape. If it’s heading downward, as it’s been for this entire recovery, we’re all in deep trouble.
Robert B. Reich has served in three national administrations, most recently as secretary of labor under President Bill Clinton. He also served on President Obama's transition advisory board. His latest book is "Aftershock: The Next Economy and America's Future." His homepage is www.robertreich.org.