Post war boom
That used to be the norm. For three decades after World War II, America created the largest middle class the world had ever seen. During those years the earnings of the typical American worker doubled, just as the size of the American economy doubled. Over the last thirty years, by contrast, the size of the economy doubled again but the earnings of the typical American went nowhere
Note: Just a quick and dirty post war boom for the deniers in simple language
Market Design and free markets
As I will elaborate in Part I, markets depend for their very existence on rules governing property (what can be owned), monopoly (what degree of market power is permissible), contracts (what can be exchanged and under what terms), bankruptcy (what happens when purchasers can’t pay up), and how all of this is enforced.
Such rules do not exist in nature. They must be decided upon, one way or another, by human beings. These rules have been altered over the past few decades as large corporations, Wall Street, and wealthy individuals have gained increasing influence over the political institutions responsible for them.
Note: Another good sitting in a bar explanation why free markets are an illusion, do not exist in nature, and are the creation and result of human design, usually through a state.
Similarly, you may think buying and selling is simply a matter of agreeing on a price—just supply and demand. But most societies have decided against buying and selling sex, babies, and votes. Most don’t allow the sale of dangerous drugs, unsafe foods, or deceptive Ponzi schemes. Similarly, most civilized societies do not allow or enforce contracts that are coerced or that are based on fraud. But what exactly does “coercion” mean? Or even “fraud”?
Note: How are Libertarians and minarchists prepared to explain how companies will make these determinations, without a transcendent law to appeal to.
Other decisions govern unpaid debts: Big corporations can use bankruptcy to rid themselves of burdensome pension obligations to their employees, for example, while homeowners cannot use bankruptcy to reduce burdensome mortgages, and former students cannot use it to reduce burdensome debts for higher education.
Rich get richer, if you are more powerful you can discharge obligation whereas a less powerful agent cannot.
Yet without collective bargaining, workers weren’t free to negotiate their terms of employment; if they wanted a job, they had to accept whatever terms were dictated by the big businesses that dominated the economy.
It’s that simple
Freedom is Tyranny by the powerful
A corporation that monitors its employees’ every motion from the minute they check in to the minute they check out, even limiting bathroom breaks to six minutes a day, may be a model of free enterprise, but it does not contribute to the liberty of the people working for it.
Note: The bathroom break is used here, but anything can be added that is tyrannical and oppressive by private power. You may add outside of work stuff here too. The structure and wording are very good here.
The freedom of enterprises to monopolize a market likewise reduces the freedom of consumers to choose. Allowing Internet service providers to reduce or eliminate competition, for example, has made Internet service in the United States more expensive than in any other rich country. Permitting drug companies to prolong their patents by paying generic producers to delay lower-cost versions has kept drug prices higher in the United States than in Canada or Europe. Most of us remain “free” in the limited sense of not being coerced into purchasing Internet services or drugs. We can choose to do without them. But this is a narrow view of freedom.
For the right price, you can pay to make your competitors go away. So much for competition driving down prices. Look for examples.
In all these respects, freedom has little meaning without reference to power. Those who claim to be on the side of freedom while ignoring the growing imbalance of economic and political power in America and other advanced economies are not in fact on the side of freedom. They are on the side of those with the power.
This idea can be extruded to many things. Jeremy and his Sawyer from LOST. Freedom just meant he could take things. Ultimately you can transmute this to anything. Without regulation freedom just means whoever is stronger is free to do or take what they want. Then maybe Jeremy is right. They become the State. But it blows up in his face. Their premises lead to the very thing they despise, coercive monopoly of power.
What’s stopping American cities from doing the same? Cable operators with deep pockets and lots of political influence. They exemplify the new monopolists. They pay millions of dollars a year to cities in video franchise fees in order to retain their monopoly, and millions more to lobbyists and lawyers to ensure cities don’t stray. They have successfully pushed twenty states to enact laws prohibiting cities from laying fiber cables. In 2011, John Malone, chairman of Liberty Global, the largest cable company in the world, admitted that when it comes to high-capacity data connections in the United States, “Cable’s pretty much a monopoly now.” Indeed, by 2014 more than 80 percent of Americans had no choice but to rely on one single cable company for high-capacity wired data connections to the Internet. Since none of the cable companies face real competition, they have no incentive to invest in fiber networks or even to pass along to consumers the lower prices their large scale makes possible.
And there is that free market and profit motive working out for the best. They use their money to buy and entrench their existing power, not to provide more value. They pay for competition to go away so that they don’t have to compete.
To enforce and ensure dominance, the company has employed a phalanx of lawyers. They’ve sued other companies for patent infringement and sued farmers who want to save seed for replanting. Monsanto’s lawyers have also prevented independent scientists from studying its seeds, arguing that such inquiries infringe the company’s patents. You might think Monsanto’s overwhelming market power would make it a target of antitrust enforcement. Think again. In 2012, it succeeded in putting an end to a two-year investigation by the antitrust division of the Justice Department into Monsanto’s dominance of the seed industry.
This and the rest of this story on Monsanto show how one makes money not by providing value and a better product but by using power to entrench it’s position through lawsuits, buying competitors,
The consolidation also gave them more bargaining power over hospitals for determining reimbursements. In response, hospitals began merging into giant hospital systems, capable of getting higher reimbursements from insurers. The result was a ratcheting up of health care costs, along with fewer choices. In 1992, the average-sized American city had four hospitals; by 2014, it was served by just two.
Sure it was probably the janitors.
But in a world where information spreads almost instantaneously, and in which large amounts of money can be made getting such information a fraction of a second before everyone else, insider trading is difficult to police, let alone define. In 2014, after hedge fund Level Global Investors made $54 million by shorting Dell Computer stock based on insider information from a Dell employee, Global Investors’ co-founder Anthony Chiasson claimed he didn’t know where the tip came from or whether the leaker benefited from the leak, and that few traders on Wall Street ever know where the inside tips they use come from because confidential information is, according to Chiasson’s lawyer, the “coin of the realm in securities markets.” Chiasson was convicted nonetheless. But in December 2014, the court of appeals overturned Chiasson’s conviction, ruling that Chiasson was so far removed from the leak that he could not possibly have known the source of the information or whether the tipper received a “substantial benefit” in return. The court thereby made official what had been the unofficial law on the Street: It’s all about who you know. If, for example, the CEO of a company gives his golfing buddy a confidential tip about what the company is about to do, and the buddy tells a hedge-fund manager who then makes a fortune off that confidential information, the winnings are perfectly legal.
Use as a classic example of where you earn money not by providing value but through fraud. Insider trading is a failure of Asymmetric Information, the making of money without competition from those who bought the right to that information.
Companies always do what’s right
Consider JPMorgan Chase, the largest bank on the Street with the deepest pockets to dabble in politics and protect its interests with a squadron of high-priced legal talent. In 2012, the bank lost $6.2 billion by betting on credit default swaps tied to corporate debt and then lied publicly about the losses. It later came out that the bank paid illegal bribes to get the business in the first place. That same year, the bank was accused of committing fraud in collecting credit card debt; using false and misleading means of foreclosing on mortgages; hiring the children of Chinese officials to help win business, in violation of the Foreign Corrupt Practices Act; and much else
If they can get away with it, cut corners and even acquire profit through corruption, they will do it. The response, that customers will just go elsewhere, only works if they know fraud is taking place. if it is hidden, this lack of information takes that power away from them.
On the other hand, the worth to society of many CEOs, hedge-fund managers, investment bankers, “high-frequency” traders, lobbyists, and high-end corporate lawyers may be less than they command in the market. Much of what they do entails taking money out of one set of pockets and putting it into another, in escalating zero-sum activity. High-frequency traders, for example, profit by getting information a fraction of a second earlier than other traders, necessitating ever-greater investments in electronic systems that give them that tiny edge. Similarly, squadrons of corporate lawyers are paid substantial sums by their clients because squadrons of corporate lawyers on the other side are paid vast sums to attack them and defend their own clients.
Does that really “create jobs” and “create growth” for everyone? When two meglodon asshole companies engage in an seems race of lawsuits with one another, is society made better off. Are they “contributing more” that doctors teachers Healthcare workers nurses and other essential jobs? Creating value doesn’t tell you much. Child porn peddlers, crack dealers, hitmen, and lobbyists no doubt “create value” for their clients, but that doesn’t tell us that they “created jobs” or actually did anything that contributed to society or people in general worthy of admiration.
Corporate buybacks thereafter soared because they became a ready means for top executives to pump up stock prices and cash in their stock options. Between 2003 and 2012, the chief executives of the ten companies that repurchased the most stock (totaling $859 billion) received 68 percent of their total pay in stock options or stock awards. In 2013 alone, companies in the Standard & Poor’s 500 index repurchased $500 billion of their own shares, thereby disposing of a third of their cash flow. That was close to the record level of buybacks reached in the bubble year of 2007.
How, how can you plausibly argue that these people are “working hard” and “earning” their pay, and “creating jobs” and “providing value” when most of what they make is effectively the result of a stock game they get to play by virtue of being in this position.
CEO pay and performance
One recent study provides an answer. Professors Michael J. Cooper of the University of Utah, Huseyin Gulen of Purdue University, and P. Raghavendra Rau of the University of Cambridge studied 1,500 large companies and how they performed, in three-year periods, from 1994 to 2011. They then compared these companies’ performance to other companies in their same fields. They discovered that the 150 companies with the highest-paid CEOs returned about 10 percent less to their shareholders than did their industry peers. In fact, the more these CEOs were paid, the worse their companies did. Companies that were the most generous to their CEOs—and whose high-paid CEOs received more of that compensation as stock options—did 15 percent worse than their peer companies, on average. “The returns are almost three times lower for the high-paying firms than the low-paying firms,” said Cooper. “This wasteful spending destroys shareholder value.” Even worse, the researchers found that the longer a highly paid CEO was in office, the more the firm underperformed. “The performance worsens significantly over time,” they concluded
If this is true, this longstanding argument is defeated forever, and the conservative rallying cry that CEOs get paid their ridiculous salaries because they “produce” commensurate with their pay, dies. They could argue is the company’s money and not anyone else’s business, fine. They found go the job creator route, or is not governments business, but they lose the ability to argue that it hurts company performance.
Twenty-first-century America already has a rich tradition of moving in the opposite direction—CEOs raking in millions after screwing up royally. On the list: Martin Sullivan, who got $47 million when he left AIG, even though the company’s share price dropped by 98 percent on his watch and American taxpayers had to pony up $180 billion just to keep the firm alive; Thomas E. Freston, who lasted just nine months as CEO of Viacom before being fired, and departed with a severance payment of $101 million; Michael Jeffries, CEO of Abercrombie & Fitch, whose company’s stock price dropped more than 70 percent in 2007, but who received $71.8 million in 2008, including a $6 million retention bonus; William D. McGuire, who in 2006 was forced to resign as CEO of UnitedHealth over a stock-options scandal, and for his troubles got a pay package worth $286 million; Hank A. McKinnell, Jr., whose five-year tenure as CEO of Pfizer was marked by a $140 billion drop in Pfizer’s stock market value but who left with a payout of nearly $200 million, free lifetime medical coverage, and an annual pension of $6.5 million (at Pfizer’s 2006 annual meeting a plane flew overhead towing a banner reading “Give it back, Hank!”); Douglas Ivester of Coca-Cola, who stepped down as CEO in 2000 after a period of stagnant growth and declining earnings, with an exit package worth $120 million; and, as I have noted, Donald Carty, former CEO of American Airlines, who established a secret trust fund to protect his and other executive bonuses even as the firm was sliding into bankruptcy in 2003 and seeking wage concessions from the airline’s employees. If anything, pay for failure appears to be on the rise. In September 2011, Leo Apotheker was shown the door at Hewlett-Packard, with an exit package worth $12 million. The list of shameless CEOs continues to lengthen.
More examples of CEO Failure, some of which we got to subsidize. How can they justify CEO pay is “earned” and a reflection of their value and worth?
CEO pay and us
Meanwhile, you and I, and other taxpayers, are subsidizing all this. That’s because corporations deduct CEO pay from their income taxes, requiring the rest of us to pay more proportionally in taxes to make up the difference. To take but one example, Howard Schultz, CEO of Starbucks, received $1.5 million in salary for 2013, along with a whopping $150 million in stock options and awards. That saved Starbucks $82 million in taxes.
Perhaps the most important passage in the book. Chris, Jon, Jared, and all of them lose their most sacred argument; that CEO pay is the business of private companies and is not our money so we can just shut up about it. Well in addition to the fact we bail them out, subsidize the companies with tax breaks and tax money for no bid contracts and other forms of demand, rents, but their CEO pay comes directly from the public treasury in the form of a tax break, so we not only make up the difference but it contributes to the deficit.
Not incidentally, the $26.7 billion distributed to Wall Street bankers in 2013 bonuses would have been enough to more than double the pay of every one of America’s 1,007,000 full-time minimum-wage workers that year. The remainder of the $83 billion hidden subsidy going to the biggest banks on the Street was $20 billion more than what the government provided that year to twenty-eight million low-wage workers and their families in the form of wage subsidies under the Earned Income Tax Credit
So there is your min wage. Larger banks playing a lower interest rate as a result of the knowledge they will be bailed out results in more profit than min wage workers make.
Wages since Reagonomics
The standard explanation attributes this U-turn to “market forces,” especially globalization and technological improvements that have rendered many working Americans less competitive. Their jobs could be outsourced to workers in Mexico and then Asia who were eager to do them far more cheaply, or done at home more cheaply by automated equipment, computerized machine tools, and robots. Either way, it is commonly argued, American workers who had once earned good paychecks had priced themselves out of the labor market. If they want jobs, they have to settle for lower wages and less security. If they want better jobs, they need better skills. So hath the market decreed.
Yet, while surely relevant, the standard explanation cannot account for much of what has happened. It does not explain why the transformation occurred so suddenly, over a relatively brief number of years, nor why other advanced economies facing similar forces did not succumb to them as readily. (By 2011, the median income in Germany, for example, was rising faster than it was in the United States, and Germany’s richest 1 percent took home about 11 percent of total income, before taxes, while America’s richest 1 percent took home more than 17 percent.) And the standard explanation doesn’t tell us why the average incomes of the bottom 90 percent actually dropped during the first six years of recovery from the Great Recession
The standard argument plus it’s rebuttal to flattening wages.
Prelude to all of this
A fuller understanding of what has happened to the middle class requires an examination of changes in the organization of the market that increased the profitability of large corporations and Wall Street while reducing the middle class’s bargaining power and political clout. This transformation has amounted to a redistribution upward, but not as “redistribution” is normally defined. The government did not tax the middle class and poor and transfer a portion of their incomes to the rich. The government—and those with the most influence over it—undertook the upward redistribution less directly, by altering the rules of the game.
Now this passage isn’t your knockout argument. But it’s getting good you ready for some good tools.
Because CEOs are “job creators”
The easiest and most direct way for CEOs to accomplish this feat was to cut costs—especially payrolls, which constitute most firms’ largest single expense. Accordingly, the corporate statesmen of the 1950s and 1960s were replaced by the corporate butchers of the 1980s and 1990s, whose nearly exclusive focus was—in the meat-ax parlance of that era—to “cut out the fat” and “cut to the bone.” When Jack Welch took the helm of GE in 1981, the company was valued by the stock market at less than $14 billion. When he retired in 2001, it was worth about $400 billion. Welch accomplished this largely by cutting payrolls. Before his tenure, most GE employees had spent their entire careers with the company. But between 1981 and 1985, a quarter of them—one hundred thousand in all—lost their jobs, earning Welch the moniker “Neutron Jack.” Even when times were good, Welch encouraged his senior managers to replace 10 percent of their subordinates every year in order to keep GE competitive
Keep telling us how CEOs “create jobs” when the most effective way to make money is to reduce input costs and throw employees to the curb. Now your rebuttle will be that if they could be cut while the company still makes money, they are maximizing value. Fine, But then stop using the CEOs create jobs rhetoric and just tell us what they really do: maximize shareholder return and make the rich richer. Furthermore, does the CEO watch over every job being performed? Does he really know which ones are lucrative or is some of this a gamble?
They maximize Value Mike: well, by cooking the books.
Other CEOs tried to outdo even Welch. As CEO of Scott Paper, “Chainsaw” Al Dunlap laid off eleven thousand workers, including 71 percent of headquarters staff. Wall Street was impressed, and the company’s stock rose 225 percent. When Dunlap moved to Sunbeam in 1996, he promptly laid off half of Sunbeam’s twelve thousand employees. (Unfortunately for him, though, he was caught cooking Sunbeam’s books; the SEC sued him for fraud and he settled for $500,000, agreeing never again to serve as an officer or director of any publicly held company.
The SEC got this guy for fraud. Thus the government once again maximizes efficiency.
Addressing the standard rebuttal
The results have been touted as efficient because resources theoretically have been shifted to higher and better uses. But the human costs of this transformation have been substantial. Ordinary workers have lost jobs and wages, and many communities have been abandoned. Nor have the efficiency benefits been widely shared. As corporations have steadily weakened their workers’ bargaining power, the link between productivity and workers’ income has been severed. Since 1979, the nation’s productivity has risen 65 percent, but workers’ median compensation has increased by just 8 percent. Almost all the gains from growth have gone to the top. As noted, the average worker today is no better off than his equivalent was thirty years ago, adjusted for inflation. Most are less economically secure. Not incidentally, few own any shares of stock
An important point. He addresses the very rebuttal that is sure to come. Isn’t it increasing efficiency and creating more wealth? Growing the pie? We have a ready made rebuttle. Once again, all the gains go one place, the top. This ever touted growing pie has ever larger slices, which doesn’t help when only one fatass at the table keeps grabbing them along with every new pizza that comes out. You don’t actually get anything more. And sure I get it. It’s your fault. It’s everyone’s fault, all 250 million, instead of some systemic problem. If that isn’t some kind of post hoc patch job to save a tautology (the market verdict is always just fair and never to be questioned) there never was one.
What good for companies is good for you. The hell it is.
But corporate executives and the denizens of Wall Street prefer most workers to have low wages, in order to generate higher corporate profits, which translate into higher returns for shareholders and, directly and indirectly, for themselves. This is not a winning strategy over the long term because higher returns ultimately depend on more sales, which requires that the vast middle class have enough purchasing power to buy what can be produced. But from the limited viewpoint of the CEO of a single large firm, or of an investment banker or fund manager on Wall Street, all operating globally and more concerned about the next quarter’s returns than about profits over the long term, low wages appear advantageous. Low wages are also thought to reduce the risk of inflation, which can erode the value of their assets
Retirement and Social Security
The risk of getting old with no pension is also rising. In 1980, more than 80 percent of large and medium-sized firms gave their workers defined-benefit pensions that guaranteed them a fixed amount of money every month after they retired. Now, the share is below one-third. Instead, they offer defined-contribution plans, where the risk has been shifted to the workers. When the stock market tanks, as it did in 2008, their 401(k) plans tank along with it. Today, a third of all workers with matching defined-benefit plans contribute nothing because they don’t have the cash, which means their employers do not provide any matching funds. Among workers earning less than $50,000, the share that contributes to a defined-benefit plan is even lower. Overall, the portion of workers with any pension connected to their job has fallen from just over half in 1979 to under 35 percent today. In MetLife’s 2014 survey of employees, 40 percent anticipated that their employers would reduce benefits even further.
Relying on private means isn’t working because people don’t have the cash and markets and companies can tank. I’m sure “its their own fault” for not having $500 a week to throw in retirement, when jobs are being cut, shopped overseas, bargaining power and wages are going down, and despite higher productivity, advancements and wage growth remains anemic.
Inequality in a nutshell
The underlying problem, then, is not that average working Americans are “worth” less in the market than they had been, or that they have been living beyond their means. The problem is that they have steadily lost the bargaining power needed to receive as large a portion of the economy’s gains as they commanded in the first three decades after World War II, and their means have not kept up with what the economy could otherwise provide them. To attribute this to the impersonal workings of the “free market” is to ignore how the market has been reorganized since the 1980s, and by whom. It is to disregard the power of moneyed interests who have received a steadily larger share of economic gains as a result of that power. It is not to acknowledge that as their gains have continued to accumulate, so has their power to accumulate even more. And it is to overlook the marked decline of countervailing power in our political-economic system.
This out to be memorized, as a dinner party debate opener. This is as concise of a summery of Inequality, the struggle of the middle class, and the influence of the rich as we can get.
Another simple refutation of min wage opponents.
Had the minimum wage retained the value it had in 1968, it would be $10.86 an hour. And, of course, by 2014 the nation’s economy was far larger than it was then, and far more productive.
We had high min wage and no problem paying it before. Republicans are just pissed. Change is scary. But now of this is unprecedented. We have simply never seen the job growth associated with these lower min wages. Just more money, and spending, by the rich.
Min wage employment refutation
The mythology that a minimum-wage increase (or, in real terms, restoring it to its 1968 level) would cause employers to reduce employment is a common trope. A corollary is that getting rid of the minimum wage altogether and allowing employers to pay what employees are “worth” will reduce or even eliminate unemployment. As former congresswoman Michele Bachmann once put it, if the minimum wage were repealed “we could potentially virtually wipe out unemployment completely because we would be able to offer jobs at whatever level.” Theoretically, Bachmann is correct. But her point is irrelevant. It is no great feat for an economy to create a large number of very-low-wage jobs. Slavery, after all, was a full-employment system.
Beautiful. Yes, you can employ everyone. You can hire 200 poeple at a penny a day to clean and landscape your home. But anyone too stupid to see this misses the point is too stupid to understand anyway.
Min Wage Level 10
In addition, and significantly, the gains from a higher minimum wage extend well beyond those who receive it directly. More money in the pockets of low-wage workers means more sales in the places where they live, which in turn creates faster growth and more jobs. Research by Arindrajit Dube, T. William Lester, and Michael Reich confirms this. They examined employment in several hundred pairs of adjacent counties lying on opposite sides of state borders, each with different minimum wages (one at the federal minimum, the other at a higher minimum enacted by a state) and found no statistically significant increase in unemployment in the higher-minimum-wage counties, even after four years. (Other researchers who found contrary results failed to control for counties where unemployment was already growing before the minimum wage had been increased.) Dube, Lester, and Reich also found that employee turnover was lower where the minimum wage was higher, presumably saving employers money on recruiting and training new workers.
Save this as fundamental min wage argument. Memorize it. He even has the potential rebuttle to the argument and research covered.
Min wage as high school entry level debunked.
Most workers earning the minimum wage are no longer teenagers seeking additional spending money. According to the Bureau of Labor Statistics, the median age of fast-food workers in 2014 was twenty-eight, and the median age of women in those jobs, who constituted two-thirds of such workers, was thirty-two. The median age of workers in big-box retail establishments was over thirty. More than a quarter of them have children. These workers are typically major breadwinners for their families, accounting for at least half their family’s earnings.
Min Wage, and who bears it.
Whatever wage gains these workers receive are rarely passed on to consumers in the form of higher prices. That is because big-box retailers and fast-food chains compete intensely for customers and have no choice but to keep their prices low. It is notable, for example, that in Denmark, where McDonald’s workers over the age of eighteen earn the equivalent of twenty dollars an hour, Big Macs cost only thirty-five cents more than they do in the United States. Any wage gains low-paid workers receive will more than likely come out of profits—which, in turn, will slightly reduce returns to shareholders and the compensation packages of top executives. I do not find this especially troubling. According to the National Employment Law Project, most low-wage workers are employed by large corporations that, by 2013, were enjoying healthy profits. Three-quarters of these employers (the fifty biggest employers of low-wage workers) were generating higher profits than they did before the recession. Between 2000 and 2013, the compensation of the CEOs of fast-food companies quadrupled, in constant dollars, to an average of $24 million a year. Walmart, too, pays its executives handsomely. In 2012, Walmart’s CEO received $20.7 million. Not incidentally, the wealth of the Walton family—which still owns the lion’s share of Walmart stock—by then exceeded the wealth of the bottom 40 percent of American families combined, according to an analysis by the Economic Policy Institute.
The book at this point, we don’t even know what to highlight.
As the income ladder has lengthened and many of its middle rungs have disappeared, moreover, the challenge of moving upward has become more daunting. A smaller middle class yields fewer opportunities for joining it. Shortly after World War II, a child born into poverty had a somewhat better than fifty-fifty chance of becoming middle class by the time he or she was an adult. Today, 43 percent of children born into poverty in the United States will remain in poverty for their entire lives.
Mobility, blame the victim. Rags to riches. It’s your own fault. All 100 million of you.
Long term manifestation of poverty
Some continue to believe that the poor remain poor because they lack ambition. But what they really lack is opportunity and the political power to get the resources needed to realize that opportunity. It begins with inadequate child care and extends through primary and secondary schools, which helps explain the growing achievement gap between lower- and higher-income children. Thirty years ago, the average gap on SAT-type tests between children of families in the richest 10 percent and bottom 10 percent was about 90 points on an 800-point scale. By 2014 it was 125 points. The gap in the mathematical abilities of American kids, by income, is one of the widest among the sixty-five countries participating in the Program for International Student Assessment. On their reading skills, children from high-income families score 110 points higher, on average, than those from poor families.
You all know someone who came from nothing to make it. I get it. But that doesn’t refute the norm, nor the decreasing mobility as a whole.
As a result of all this, the United States is one of only three out of thirty-four advanced nations surveyed by the Organization for Economic Cooperation and Development (OECD) whose schools serving higher-income children have more funding per pupil and lower student-teacher ratios than do schools serving poor students (the two others are Turkey and Israel). Other advanced nations do it differently. Their national governments provide 54 percent of funding, on average, and local taxes account for less than half the portion they do in America. And they target a disproportionate share of national funding to poorer communities. As Andreas Schleicher, who runs the OECD’s international education assessments, told The New York Times, “The vast majority of OECD countries either invest equally into every student or disproportionately more into disadvantaged students. The U.S. is one of the few countries doing the opposite.”
You bitch about our ranking in education. Here it is.
But because the organization of the market increasingly reflects political decisions favoring moneyed interests, the system for distributing economic gains through the market does not necessarily correspond to what people are “worth” in any respect other than the tautological. A close examination of why the pay of top executives of large corporations has soared in recent decades and why the compensation of managers and traders on Wall Street has skyrocketed even further has less to do with any supposed surge in the value of their insights or skills than with their increasing power to set market rules that enrich themselves. Likewise, the declining incomes of the typical middle-class household, and the impoverishment of the working poor, are more related to their waning political and economic influence than to their personal shortcomings. Put simply, large corporations, Wall Street, and wealthy individuals have gained substantial power over market rules that generate outcomes favoring them—power that has been compounded as the additional wealth has accorded them even more influence over the rules. Meanwhile, those in the middle and below have lost much of the power they once had—a process that compounds in the opposite direction as their declining economic positions give them less and less influence over the rules.A great summary of more or less the whole book. We need to find d examples but this argument, if shared up with evidence, could be the end of the Meritocracy argument, and thus the underpinnings of Conservatism. If the free market itself is distorted by virtue of rules in place producing outcomes favoring the wealthy, capital, and influence, than a correction of this isn’t an intrusion, it’s a repair. CEOs setting pay, high unemployment leading to lower bargaining power and wages, min wages reduced, Healthcare education, all sorts of examples.
Ethical Egoism, Self-Interest, Free Market, greed.
As I have taken pains to make clear, I do not mean to suggest that those at the top who are shaping the rules are intentionally malevolent. They are acting out of the same self-interest that has been thought to guide the theoretical “free market” toward efficient, and therefore publicly beneficial, outcomes. But rather than a theoretical “free market” they are acting in the real political economy where economic power generates political influence over the rules of the game, which, in turn, serves to enlarge economic power. They are behaving entirely rationally within this system, although the aggregate consequence of their individually rational calculations is neither efficient nor otherwise rational for the system as a whole. To the contrary, it is gradually undermining the system.
It’s not that they are assholes. Some are. It’s just that collective self-interest doesn’t always lead to collectively good outcomes. Nor would we even expect it to. In fact I’m not even sure what premise they just to suggest it even would.
By late 2007, debt reached 135 percent of disposable income. But none of these techniques was sustainable. In 2008, the debt bubble burst, just as a similar bubble had burst in 1929. It is not coincidental that 1928 and 2007 marked the two peaks of income concentration in America over the last hundred years, in which the richest 1 percent raked in more than 23 percent of total income. The economy cannot function without the purchasing power of a large and growing middle class.
So for all the idiots who deny inequality is a problem, here you go. Though they will deny it, we have strong evidence to suggest that increasing inequality leading to a strangled middle class, massive debt, and inability to put demand into the economy – leading to collapse of say, the housing or financial sector, can have catastrophic consequences for the economy, country, and even the rich assholes who would have been better off making a little less money but having a stronger economy and more stability.
According to polls, in 2015 most Americans were opposed to the Trans-Pacific Partnership, for example, which was devised by American and Asian trade negotiators to further open trade and commerce between the United States and the nations of the Pacific region. While history and policy point to overall benefits from expanded trade because all of us gain access to cheaper goods and services, in recent years the biggest gains from trade have gone to investors and executives while the burdens have fallen disproportionately on those in the middle and below who have lost good-paying jobs. By 2014, according to polls, most Americans no longer supported trade-opening agreements.
Maybe we wound be more open to globalization if it wasn’t just a way for executives and capital owners to further line their pockets and for the rest of us to endure more job insecurity, job loss, layoffs, lower bargaining power, and lower wages. Why Conservatives don’t see why most people would be uncomfortable to this prospect is a mystery. Chris liked to ask “owners can get cheaper labor and make more money. What would YOU do?!” As though it’s obvious. Sure, if I was rich I’d do things that were good for rich people. Now imagine you’re competing with a whole new pool of millions of people, lowering your relative worth, pushing your wages down, throwing you into financial insecurity, and facing layoffs that could leave you horrified at the inability to feed your family. What would YOU do asshole? The policies that work for MOST people are better than the policies that work for a few rich people. Sure, you might want to reward the rich for their supposed moral superiority and punish the poor just for being poor. But it proves the rules of the hands are set by the rich anyway, and so market outcomes aren’t the results of merit after all, but influence money and power, so your position that the rich have a moral advantage for working harder and the poor deserve poverty, is undermined anyway… Meaning you have no good reason other than greed and you’re an asshole.
Obama the communist
Under Obama’s watch the stock market made up for all the losses it suffered in the Great Recession and reached new record highs, and, as I have noted, corporate profits rose to the highest portion of the national economy since 1929
But Obama is a Muslim communist
Bitching instead of fixing
In addition to ending upward pre-distribution inside the market, countervailing power would also seek a fairer pre-distribution inside the market, thereby making taxes and transfer payments less necessary.
You bitch so much about welfare. But you bitch about min wage, or any suggestion increasing market incomes for the bottom, relying instead on one solution onky: bitching that they don’t work hard enough and hope, somehow, this will fix it.
Democrat vs Republipukes
Yet when you take a hard look at the consequences of the shareholder capitalism that took root in the 1980s—a legacy that includes flat or declining wages for most Americans, along with growing economic insecurity, outsourced jobs, abandoned communities, CEO pay that has soared into the stratosphere, a myopic focus on quarterly earnings, and a financial sector akin to a casino whose near failure in 2008 imposed collateral damage on most Americans—you might have some doubts about how well shareholder capitalism has worked in practice. Only some of us are corporate shareholders, and a tiny minority of wealthy Americans own most of the shares traded on America’s stock exchanges. But we are all stakeholders in the American economy, and most stakeholders have not done particularly well. Perhaps more stakeholder capitalism is in order, and less of the shareholder variety.
Just another quick and dirty summery of the problems with the modern economy if you had to explain in quickly, that the ideology of a world of nothing but privatized, blind drooling corporations existing as nothing but entities to “return shareholder profits” is a terrible world for most people, contributes to most of the problems the economy faces, and didn’t provide value of the majority of people.
Consider that in 1964 the four most valuable American companies, with an average market capitalization of $180 billion (in 2011 dollars), employed an average of 430,000 people. Forty-seven years later, the largest American companies were each valued at about twice their former counterparts but were accomplishing their work with less than one-quarter of the number of employees.
It’s all condensing
Value is based on rule of law
If the rules were different—if, for example, the Patent Office defined “new and useful” so strictly that it denied WhatsApp’s patent application as being insufficiently novel or useful relative to other messaging services; or Congress decided patents will last only three years instead of twenty; or antitrust laws prohibited any company that controlled a large network or major platform (such as Facebook) from acquiring another company on the way to gaining control of another network (such as WhatsApp); or enforcement of patents was so lax that anyone could freely appropriate WhatsApp’s messaging service—WhatsApp would not be worth $19 billion. It would be worth far less, or nothing, which would leave its founders with relatively small rewards or no remuneration at all for their efforts
Shows how “value” you create is inside of a context of law, contract, government, taxes and definition. The rich assholes behind Whatsapp wouldn’t be worth that if someone could just rip off the code and do it themselves. Government protects their value, but the goddamned Litertaritards won’t ever know that.
The absence of countervailing power has moved us in the opposite direction, however. To repeat: By 2014 six of the ten wealthiest Americans were heirs to prominent fortunes. The six Walmart heirs together had more wealth than the bottom 42 percent of Americans combined (up from 30.5 percent in 2007). According to political economist Peter Barnes, interest, dividends, capital gains, and inheritances account for one out of every three dollars of income received by Americans—and almost all of that goes to the richest 1 percent
But I thought you were worth what you provided assholes. The wealthy are “the best of us” and work harder. Of all the things we’ve read, this would be a good opening defense against just desserts
Basic minimum income
Countervailing power would not only reverse this but would use the proceeds from the changes in market rules I have suggested to guarantee all citizens a share in the future growth of the economy.
One straightforward way to do this would be to provide all Americans, beginning the month they turn eighteen and continuing each month thereafter, a basic minimum income that enables them to be economically independent and self-sufficient.
This is not as radical as it may sound. In 1979, the conservative economist F. A. Hayek endorsed just such a system:The assurance of a certain minimum income for everyone, or a sort of floor below which nobody need fall even when he is unable to provide for himself, appears not only to be a wholly legitimate protection against a risk common to all, but a necessary part of the Great Society in which the individual no longer has specific claims on the members of the particular small group into which he was born.1
Many who call themselves libertarian are also attracted to a basic minimum income because it eliminates the need for welfare or another form of government transfer to the poor that tells them how to spend the funds or otherwise demeans or stigmatizes them. It would likewise reduce people’s dependence on private employers, thereby freeing them to express their views without fear of retaliation.
This is the most startling revolution in the book. No one, Jeremy, Chris, Jon, Jared, could argue with one if the founding fathers of Libertarianism, Hayek, the mentor to Friedman. This gives us confidence to pilot the argument against anyone.