Monday, September 5, 2011

Let Them Eat iPads!

Whether or not Marie Antoinette ever uttered the phrase that modern myth-makers have attributed to the much maligned monarch to help spark the French Revolution, there is less doubt surrounding the harsh realities of a peasant's life in late18th century France. Rising bread prices, unemployment, rising war-related debt, an inefficient financial system leading to difficulties managing said debt exacerbated by the burden of an inadequate system of taxation and a ruling class disconnected and isolated from the realities of the day-to-day life of the population are all cited as causes leading up to the storming of the Bastilles. Fortunately, as North Americans finish their Labor Day holiday (Labour up north, eh), they can enjoy those picnic hotdogs all the more in the knowledge we've come a long way since 1789, as democracy and capitalism have spread and taken hold guaranteeing an equal voice and opportunity for all.

The struggle of man against power is the struggle of memory against forgetting
- Milan Kundera
The trick you see is to help/make a majority of the people ignore the relevant facts by distorting or drowning them out. Let's start with the holiday itself. The first Labor Day celebration in the US was nothing but a parade organized by unions in New York on September 5, 1882, as a celebration of "the strength and spirit of the American worker." Their goals were simple: decent wages, an eight-hour workday and the right to organize. The national holiday wasn't instated until twelve years later in 1894 when President Grover Cleveland needed good publicity cover for, get this, crushing a labour strike by sending in troops during the economic depression known as the Panic of 1893. Politicians and labour leaders were content to keep the holiday in September, far from the growing popularity of May Day. Both the workers and Cleveland turned out to be the losers as Grover lost the Democratic nomination in 1896 and the reforms labour sought did not come about for nearly half a century when the Depression-era fair labour laws that were passed under Franklin D. Roosevelt finally set standards like the eight-hour day and an end to child labour.

Those laws (and the US hegemony of the post-WWII world) set the stage for an era of unparallelled growth and prosperity. All this success inevitably bred the hunger for more, and more now. Satiating today's desires became more important than tomorrow's which were less pressing than next week's. In the business world this was reflected in a culture that rewarded results this quarter through increasing stock prices and executive pay and neglected the necessity for planning for a few years down the road. People worked longer hours, women entered the workforce then they took on two jobs or overtime. When this wasn't enough they simply financed it in an orgy of credit cards, payday loans and even turned their homes into cash machines. Of course all of this was cheered on by corporate America which adapted by shifting the entire economy away from manufacturing towards financing all that debt. General Electric doesn't make their money producing light bulbs, they are now first and foremost a finance company. This seemed great for everyone for awhile, those at the bottom needed money to keep buying more stuff, those at the top needed somewhere to invest all the cash they were making and the financial intermediaries gladly created ever more complex securities to shuffle the money from one to the other.

Well, we know all know how that wound up. Luckily the US today is nothing like France in 1789, you remember - "Rising bread prices, unemployment, rising war-related debt, an inefficient financial system leading to difficulties managing said debt exacerbated by the burden of an inadequate system of taxation and ruling royalty disconnected and isolated from the realities of the day-to-day life of the population". We're told by government statistics that inflation is under control so bread prices can't be a problem; somehow printing trillions to bail out the banks and to lend them at near zero interest rates hasn't affected prices. Oh, that's right, core inflation is what they talk about. Core, meaning the price of everything that we don't need to live, as it excludes the price of food and energy. Lucky those new iPads are tasty and keep us warm at night. Meanwhile, the financial industry has done a great job of using their free cash to bid up the price of food and oil.
"Wealth is like sea-water; the more we drink, the thirstier we become"
- Arthur Schopenhauer
Incomes have risen to meet the real increased cost of living - if you were already rich to start with at least. Today, he richest 1% of households earn as much each year as the bottom 60% put together taking in a quarter of the nation's income; they possess as much wealth as the bottom 90%; with each passing year, a greater share of the nation’s treasure flows through their hands and into their pockets giving them control of 40% of the nation's riches. In twenty-five years they have more than doubled their share of income while wealth rose from 33% of the total. "Meh", says Joe six-pack, "it's not so much how you divide the pie that matters, it's how big the pie is, besides, one day, I could be part of the 1%." Unbeknownst to him, median incomes declined outright from 1999 to 2009 for those lucky enough to still have a job. For 90 percent of American workers, incomes have stagnated or fallen for the past three decades, while they've ballooned at the top, and exploded at the very tippy-top: By 2008, the wealthiest 0.1% were making 6.4 times as much as they did in 1980 (adjusted for inflation).

Cruelly, the August jobs report released just last week showed that no jobs were created which really represents a net loss as at least 125,000 are needed to keep up with population growth. Since the end of 2007, America’s potential labour force – working-age people who want jobs – has grown by over 7 million but the number of Americans with jobs has shrunk by more than 300,000. We're told the unemployment rate has been over 9% for a couple of years which sounds horrible enough but is nothing when compared to reality. Again, statistics are manipulated to manufacture cold comfort as reported unemployment only measures active job seekers and takes no account of underemployment. Taking into account long-term discouraged workers who were defined out of official existence in 1994 and those forced to work part-time because they cannot find full-time work, the SGS Alternate Unemployment Rate is 22.8%.

Did someone say rising war related debt? Again, if you live in America, about half of you have been convinced that the debt was either created by greedy teachers or is part of President Obama's plan to sell you into indentured servitude to his Muslim Kenyan drunk uncle. Step back, get off the Tea Party, Koch crack. If the Bush-era tax cuts are renewed next year, that policy will by 2019 be the single largest contributor to the nation's public debt -- "the sum of annual budget deficits, minus annual surpluses" -- according to new (well, May) analysis from the non-partisan Center for Budget and Policy Priorities. Graph's on the right. These tax breaks, combined with the cost of fighting wars in Iraq and Afghanistan, will account for nearly half the public debt in 2019, measured as a percentage of economic output.

Oh, it only gets worse war worriers. These figures surely underestimated the costs associated with almost 50% of returning troops eligible to receive some level of disability payment and more than 600,000 treated so far in veterans’ medical facilities. But the social costs, reflected in veteran suicides (which have topped 18 per day in recent years) and family breakups, are incalculable. Am I the only one twisted enough to find it funny that so many people have been convinced to back the union busting way of governors from Wisconsin to Ohio, Michigan and Florida by snake-oil salesmen to cut deficits when in fact it was increased defense spending, together with the Bush tax cuts that were key reason why America went from a fiscal surplus of 2% of GDP when Bush was elected to its parlous deficit and debt position today. That is the real reason wieners like Rep. Eric Cantor say the country needs to find savings elsewhere before helping the people of Vermont after a catastrophe.

Efficient modern financial market have turned out to be nothing but a pipedream as they've turned out to be worse than those in the time of Jean Valjean. We've spent countless trillions propping up a system that is rotten to the core. Without Faux News or lunatics screaming CNBC about subsidizing deadbeat homeowners creating moral hazard we may have done just that, keeping a roof over people's head instead of, you know, creating moral hazard by giving cash to the bank. The muppets keep droning on spouting supposed financial forecasting knowing full well that economists are nothing but people who see something working in practice and try to figure out if it would work in theory. Voila, socialized losses and privatized gains for the banks. The financial system creates NO wealth on its own, its value lies in its ability to efficiently allocate capital, to smoothly transfer money from savers to spenders. The key word is efficiently, there shouldn't be much friction in the system. Yet the µ (Mu) has been rising - the financial industry has increase its share of US domestic corporate profits from 16% in 1985 to over 40% today.

One need look no further than the hostage taking of Dollarmageddon this summer for proof of a nation having difficulties managing its debt. Here we see the malevolent influence of money on the gears of power as the paid lackeys parading as congressmen in Washington do the bidding of their corporate masters, creating a crisis to allow them to implement their agenda. This Kibuki theatre play is worsened by the false-front democracy of a two-party system where one is dumb, greedy, evil and only exists to be re-elected in the next cycle and the other is well, a bit dumber, greedier and more evil hoping to be elected in the next cycle. In fact, faced with a near insurmountable mountain of debt and only two ways to narrow the deficit, lowering spending and raising taxes, not one of the presidential candidates for the dumber, greedier and eviler side would consider the latter. That'll get you a credit downgrade and qualify as a difficulty managing debt.

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The final ingredient in the French Revolution, a ruling class disconnected and isolated from the realities of the day-to-day life of the population, is in heavy supply in today's America. Wall Street controls Washington through K Street with no regard to Main Street. It turns out that at a time when austerity for everyone but the rich in order to pay back the banks leaving less money for the economy is the only accepted prescription offered by the ruling class, it's better to have no government like in Belgium. You'd expect some empathy when thanks to the recession, the number of American families no longer earning enough to pass the minimum threshold to pay income tax has risen from 30% to 47%. Never mind that the number of children now living in poverty has risen to 15 million, 21% of all children in the US, that 45 million people rely on food stamps to survive, or that these people pay a myriad of other more regressive taxes such as payroll, sales, state and local - no, the crazier party believes they should pay more. That's right, CEO's who are massively rewarded with higher pay for helping their corporations dodge taxes don't need to pay any taxes (a must read report, infographic on the left), but the poor, well, they need to pay more. Forget that it's those people spending that keeps the economy going - consumer spending accounts for 70% of economic activity - they need to be taxed more. About the only elite who doesn't seem blind to the chaos caused by the chasm between us and them is one of the three richest men in the world, Warren Buffet, who took the the NY Times op-ed page to call for an end to the coddling of the super-rich. What, and have them pay as much as under Clinton? Outrageous!
Our democracy is but a name. We vote. What does that mean? It means that we choose between two bodies of real -- though not avowed -- autocrats. We choose between 'Tweedledum' and 'Tweedledee'.
- Helen Keller
In fact, some elites have become so blinded with rage by the situation somehow caused by the rest, they've decided to pull up stakes and let the poor fend for themselves. Yep, John Galt himself would be proud. Those who in their benevolence choose to stay and help us poor plebs will be sure to fight to ensure that all of their tax advantages stay in place. Of course the politicians in Washington, most of whom are part of the 1% anyway, have every incentive to only listen to the richest voices, they'll need jobs after getting out of office, self-interest and all, you know? Strangely - or more correctly - predictably enough, turns out senators only listen to the rich (PDF of study here). No wonder that slightly more evil party even thinks poor people voting is un-American.

It's all about convincing enough of the people things are fine and lies, such as the one that businesses aren't hiring because of taxes and regulation. The corporate tax rate is supposedly the highest in the world at 35% yet over 100 companies on the S&P 500 paid less than 20%, GE earned billions at home while paying nothing as did at least 15 others. Media, from Hollywood to your iPad has served her corporate masters well as it seems as long as we can buy more stuff, never mind if it's made in China and sold at Wal-Mart, everything is better than before. Amazingly, with all of the propaganda their exposed to, when asked about income distribution, Americans tend to think they live in Sweden, wish they lived in a Socialist utopia but in fact live in Turkmenistan or the Uganda. No offense Turkmen and Ugandans.

American workers' have seen their number of hours worked per week rise along with their productivity which magically seems to grow corporate profits but not median salaries. They put in an average of 122 more hours per year than Brits, 137 hours more than Japanese workers and 378 hours (nearly 10 weeks!) more than Germans. It's the only country besides Papua New Guinea, Sierra Leone, Liberia, Samoa, and Swaziland that doesn't legislate paid time off for new moms and the only country in the OECD where a right to weekends off and paid vacation time isn't guaranteed. The only explanation of satisfaction for those living in a country where income mobility is falling and people get excited when McDonald's is hiring is some weird twisted ur-myth of Ben Franklin-Horatio Alger-Henry Ford where through hard work one can attain the American Dream and become rich and successful. To get ahead though, a 70-hour work week has become the new standard. I've got news for anyone who doesn't realize the economic catastophe of the past few years will make it easier for employers to demand more while giving less. Is there any wonder why illegal drug use is at a decade high and prescription drug abuse has surged 400% in a decade while mental illness has skyrocketed?

Reality doesn't hit most until they're one of the 50 million Americans without health insurance and they get sick in a country that spends the most for health care (about double) for less than average results. They don't care until joining the 25.3 million Americans out of work, forced to work part-time, unable to find a full-time job or have given up searching for a job in the past month. Giving up is easy when they realize there is one job for every 4.5 job seekers. If you're wondering where the jobs are check out the chart to the right. By avoiding the responsibilities of taxes that mere people are required to pay and squeezing ever higher productivity out of workers while firing domestically and hiring elsewhere, American corporations are sitting pretty while workers only defense in the past, unions, are losing more and more power. In fact, the ratio of corporate profits to wages is now higher than any time since before the Great Depression. Apple, Exxon and Goldman Sachs don't exist to make our lives better in the crony capitalism that we've allowed to develop, in fact they seem a lot better at making them worse - just like the economy is going to get on our present course, hello double dip, er, recession I mean! Will it take a Robespierre to rally the retards or will enough people simply pitching tents on Wall Street September 17th to let the banksters know the other 99% are suffering? Either way, I'd say let capitalism make you rich and invest in a good, solid guillotine maker.

More suggested reading and doing:
Can the Middle Class be Saved?
The Rise of the New Global Elite
Of the 1%, By the 1%, For the 1%
Occupy Wall Street September 17th
US Uncut
Great charts and graphs here and here