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US Poverty Data Tells Only Half the Story...
In April this year, Fortune magazine published an insightful analytical piece Fortune 500: Profits bounce back. Two days ago as I went back to the Fortune website to read the piece again, I found something very interesting: sitting right next to it was the story Poverty in the US Spikes. I took a screen-shot right away. The picture is worth much more than a mere thousand words: I think its worth 391 billion dollars (2009 the Fortune 500 earnings) or the 14.9 million Americans without jobs. You choose.
Some excerpts from Profits Bounce Back:
Amazingly, as consumers struggle, U.S. corporations are staging a nearly unprecedented comeback that's largely escaping notice. The gargantuan, dispiriting job cuts that seem to dominate the news have also been the spur for an epic resurgence in profits. For 2009, the Fortune 500 lifted earnings 335%, to $391 billion, a $301 billion jump that's the second largest in the list's 56-year history, approaching the increase in the robust recovery of 2003.
The crucial reductions came in the item accounting for two-thirds of their costs: labor. In 2009, the Fortune 500 shed 821,000 jobs, the biggest loss in its history -- almost 3.2% of its payroll. ... ... The result was a wondrous surge in productivity, defined as the hours needed to make a bicycle, a PC, or a ton of insulation (emphasis mine)
That ‘wondrous surge in productivity’ came from layoffs and by getting less workers to produce the same, or more. No wonder then, that during this same 2009 when profits bounced back and productivity soared, 4 millions more Americans fell into poverty. Or that almost 44 million Americans lived in poverty and 50.7 million were uninsured – the highest ever since the Census was taken.
Let us flip back to the Fortune piece:
The star of 2009 is undoubtedly health care. The sector's earnings jumped to an all-time high of $92 billion.. Health-care earnings rose by $23 billion, or 33%. It wasn't the band of new arrivals that accounted for most of the bounty, but extremely strong earnings from two groups ... medical insurers and pharmaceuticals.
In medical insurance, profits recovered by cutting jobs and raising premiums. Obviously, the number of the uninsured grew.
And there is more. Almost at the same time that the Census Report on poverty was released, Phoenix Marketing released its report on the Size of Affluent Markets in the US.
‘Impressive Resilience of Affluent Investors’ reads the headline of its executive summary. It estimates that there are about 182,000 ‘deca-millionaire’ households in the US - with $10 million or more in liquid wealth, up 17 percent. ‘Wealth households’, i.e. those with $1 million plus investible resources, grew by eight percent from 2009 to 2010 and now constitute nearly 5.6 million households.
The exact same story is being played out country after country. Private ‘fortunes’ of the few continue to grow alongside the misfortunes of many. These fortunes come directly from production and investment strategies which involve layoffs, paying pittance to workers, tax dodging, abuse of tax payers’ money and so on.
And yet, while policy makers speak of poverty, hunger, maternal mortality etc., with so much moral outrage, there is a stony silence on inequality. Even worse, governments actually design and implement policies which fuel inequality. The ‘crisis’ was one such moment of policy intervention for inequality par excellence. Those who laid off the most workers got the most by way of bonuses. As a student of mine once said, “this is so not rocket science!”
What lies at the bottom of this inequality? Fundamentally, a completely irrational and unjust way of valuing people’s work. Over time, the ‘value’ of how much a CEO’s work is worth has increased exponentially while that of the workers have fallen.
In the 70s, American executives made over 30 times what workers made. In 2007, it was 364; in 2009, the figure stands at 263. By and large, an average CEO made in one day what a worker made in the entire year. In Canada from where I write, the highest paid 100 Canadian CEOs earned 173 times the average pay of a Canadian in 2008 - up from 104 times in 1998.
Get this: by 1:06 pm on the first working day of the year, the Canadian CEO had already made what an average Canadian earns in the entire year. Not even a whole day.
The comparisons are much worse if we look at the average worker in the developing world, who are all ‘informal’ workers with no contract or security or bargaining. In India, the alleged emerging economic giant, 93 percent of its workforce is in the informal sector. Wonder how long it takes for a CEO to earn what they earn in 16-17 hours of grueling labor every day, and mostly on empty or quasi-empty stomachs. A nano-second perhaps?
But why is this the case? As Leo Leopold asked very straightforwardly in his piece yesterday: What do these guys actually do that earns them such wealth?
They control. Their decision-making power is without limits. The corporate model allows for unlimited control by a few, a very few. All other stakeholders have only residual power.
This is not to say that corporate power goes entirely unchallenged. Indeed, there are numerous ongoing struggles worldwide that are doing exactly that.
But the challenge is not yet as loud in North America as it needs to be. And there are perhaps important historical reasons for that. Most importantly, when one is out of work and waiting for another, it is difficult to think of challenging those who we think are our prospective employers.
This is not merely a question of asking the minimum wage to be raised, although that would help. But really, seriously asking how those enormous salaries on the one hand – and the minuscule ones on the other - can be justified. In some parts of the world they would not be. It depends entirely on how a society collectively comes to decide on the value of people’s work.
A very interesting example is the Scandinavian model, the ‘Management Theory S’ as Professor Robert Schuter calls it. As he explains, ‘S’ is based on two principles: everyone is equal, and the common good is more important than individual success. Schuter shows how these two principles keep employee compensation differences to the minimum, allows ‘extras’ to be taxed, and subjects all decision-making to constant scrutiny.
There are also other alternatives. The corporate model is not the only one we have. In India, the largest food products marketing organization, Amul, is a cooperative, i.e., it is owned by its producer members. It has 2.79 million members, produces 11.22 million liters of milk per day and has very solid fundamentals certified by India’s top credit rating agencies.
Crucial here are the principles at play. In addition to the principle that everyone is equal, and that everyone’s work is of roughly equal value, the cooperative model also asserts that it is the workers/the producers who should collectively own and control what they produce. Implicit here is the belief that it is people’s work and not just ‘management strategies’ that produces value.
Unfortunately, every crisis drives down the value of work even further and heightens our insecurities so that it is even more difficult to raise these questions. But we have to: and now.
57 Comments so far
Show AllThese rich greedy bastards need to be taxed on their ill gained wealth. We need to raise the tax rates for the millionaires back to the 91% they were in the golden days of capitalism. Thomas Jefferson said, "To lessen the inequality of wealth, we should exempt from taxation below a certain point and tax the wealthy in geometric progression as the wealth increases.
Well that's half the story, the whole story is 91% with loopholes for investment in the US for our factories, payrolls ect. No benefits for overseas expansion or new facilities overseas. So moving factories to China made no business sence, till Reagan, Greenspan and their possie of de-regulators took over.
Then we all got trickled opon.
>^^<
that was a marginal rate (on income earned over $3 million 2005 dollars). Their total rate was closer to 50%
In the US we claim to love democracy, but only in the political sphere. In business we strongly believe in dictatorship and never question it.
Isn't that odd ? ? ?
Jim Shea
Good comment, Jim. I would add that Americans, by and large, are also totally enamoured of two other large, non-democratic Autocratic Bureaucracies - the Military and Organized Religion. Both these institutions are anathema to any kind of 'democratic' ideals.
So Western culture -- spreading all over the globe, even the East -- while what we probably all need is a good yin yang balance of East and West.
Well said.
And Unions, I know from reading how bad UAW and Teamsters have become and from personal expirence that SEIU has no democracy what so ever!
It doesn't surprise me that most Americans have no idea what democracy is by a simple look at their voting patterns. Why the R / D have a lock on our government.
>^^<
"‘S’ is based on two principles: everyone is equal, and the common good is more important than individual success."
OMG! This 'S' thingy is the most fundamentally un-American credo imaginable. I am sure most patriotic Americans would rather be hanged, drawn and quartered then except such an unchristian world view! I must forward this article to my congress woman, Michelle Bachman, before such nefarious notions are allowed to spread!
"If you're not idealistic when you're young, you don't have a heart. If you're not nihilistic when you're old, you don't have a brain." - Sydlitz
I hope that maybe you will tell Michelle Bachman that the S principle is right out of the gospel of Jesus Christ whose example she and her tea partiers claim to follow.
"The poor have the single, most urgent economic claim on the conscience of the nation." U.S. Cath. Bishops
Suggested reading: Economic Justice for All, a 1986 letter by the U.S. Cath. Bishops
You must be part of the greedy 1percenters. Horror of horror that you should wish your neighbor to have a decent quality of life...in fact, in your televangical world, Jesus would be appalled at the prospect of people living in a world of economic equality!
Brilliant! While it is difficult to ignore the very real pain people are suffering through right now, it is amusing to watch all the "conservative" pundits demonizing that "S" thingy as they preach their homilies to "old time values" and "trickle down" economics. Jesus was not a capitalist!
Ahem, sorry folks, but my post above was sarcasm. I thought it was obvious!
"If you're not idealistic when you're young, you don't have a heart. If you're not nihilistic when you're old, you don't have a brain." - Sydlitz
I think moving to Washington DC would insolate me sufficantly that like the Prez and our Congress Critters I too would have no idea anything was really wrong.
>^^<
I agree. I wonder if any of them ever log on to Common Dreams. Perhaps Russ Feingold.
Great comment.
if any of them ever SNIFF out any of their employees - i wouldn't put it past the employers to do that...to "keep and eye on troublemakers" and find a way to FIRE them.
SPYING on employees.
time will come in the USA -- even the "personal lives of workers" will be subject to "review" by employers == and it will be "legal" -- particularly if the worker "is a potential troublemaker" such as READING and TALKING about things such as WAGES and Economic justice.
heck -- in so many ways -- it's already here. ..they just have to complete the control with the right laws covering every nook and cranny of people's lives.
Great comments by everyone , by the way. I keep learning so much from your observations and ideas.
"Time will come in the USA --- "
Ah . . .
'That ‘wondrous surge in productivity’ came from layoffs and by getting less workers to produce the same, or more.'
This says it all.
Fear of losing one's livelihood has become a greater motivator than the forces that once drove American productivity _ hope, ingenuity, creativty & pride.
The stench of fear hangs heavy over the cubicles of a workplace I've just been visiting _ there's no more banter, no encouragement, no exchange of new ideas, no excitement. Just the haze of fear hanging in the air, and the 'motivational' slogans on posters _ like 'Relevance is a Virtue.' We all know exactly who defines that relevance, and just what it means.
The concept of our misery and fear contributing to the extravagant, can't-spend-it-all wealth of the 'productive' administrators has become 'Virtue,' a system of American morality, and to question it is to become exactly evil, a 'Communist.' 'Hanging tough' and accepting your lot, enjoying the little things _ like lunch _ is viewed as a brave and valiant attitude. 'A bad attitude' in this environment is a bright spot of blood that'll get you pecked to death by the other egg-laying chickens packed in the cage.
It's too late for established politics to change this situation, and the entrenched system isn't going to change. It seems maybe the only hope is in a resurgent new Labor Movement, in which workers on the Left & Right may wake up and understand that a Corporation can oppress as thoroughly as a government, and drop the heretical stigma that clings to the words 'Organized Labor.'
AMEN!!!!!!
The worker once had the CARROT (augmenting wages, bonus, vacation) & the STICK (threat of unemployment, loss of health insurance, etc); now, what remains is the stick----or should I say, the slavemaster's whip?
Zell, I hope you're a professional writer.
Maybe it's time ? for the people to heed the Christian advice to "FEAR NOT"
Yep, we are in a shit load of trouble.
You said it !
More like Orginizing Labor, for the pleasure and profit of the Corporations and of course the Union Officers.
Unions have become HR for lazy gangsters who suck out high wages and give back pamphlets stating "WE ARE THE UNION!" but don't forget to send your check.
>^^<
"That ‘wondrous surge in productivity’ came from layoffs and by getting less workers to produce the same, or more."
Apart from my inner grammar nazi screaming "fewer workers, dammit!", I think you're right on the money here. It shows the way that the business pages use sanitised language to mask the realities on the ground. Just like "flexible labor market" means "you can get fired for getting injured on the job and there ain't a damn thing you can do about it".
The happy shiny higher "productivity" framing has been spewed by both parties, but particularly during the Administration of Bill Clinton, as Robert Rubin, and Larry Summers helped design their implementation of the ultimate destruction of the middle class.
The ubiquitous "the American worker is the most productive…yadda yadda yadda" was like Eddie Haskell complementing Mrs. Cleaver.
From Bill Clinton on, the leadership of the Democratic Party, has systematically, through economic policies it has promoted, taken down the middle class, along with Republicans.
Obama is of the same economic vein of course, with the Summers/Paulson/Geithner Wall Street tag team and Robert Rubin as cheerleader. Oilbomber's economic policies have contributed to that Fortune 500, poverty spike, snapshot.
I remember bein a Welder in the 70's and the whip they used was "Japan is out producing and under pricing us because they work harder,
We got stoned anyway.
See todays news, Chryseler workers getting stoned on their lunch break, I'm sure the MSM put it on all the channels. American workers are no good and deserve what they get, break to commercial.
>^^<
This illustrates how this new "Consumer Economy" no longer needs consumers with deep pockets in order to buy the products produced by Industry.
It a return to slave labor days where the labor of the worker is extracted for little more then the cost of food and housing (which is about all those in poverty can afford) while relying on a worldwide marketplace "freed of all those tariffs" to buy that same product.
Within the USA the US consumer buying the same does so with debt ensuring s/he will have to continue to labor for the master.
Outside the US countries take out "Loans" from a Cabal of this Ruling Class and pledge as security not only their peoples labor, but the natural resources and land of those same countries.
The so called "Ownership society" takes the concept of "Private Property" to the extreme wherein EVERYTHING everywhere is to be OWNED by a small handful to milk for wealth into perpetuity while the masses of people labor on the behalf of this "ruling class" just to put food in their bellies.
If there revolution or resistance, the Ruling Class will turn loose the "dogs of war" claiming it a fight to defend democracy and liberty and freedom from "Terrorists".
If a Country resists via other means by electing a leadership that attempts to return a countries resources to the people to be owned in Common , then they are dimissed as "Dictators and tyrants" and every effort is made to topple the same via sanctions and coups and the funding of "Terror groups" inside of those countries.
The Militaries and Police forces of the world are being transformed (if not already there) to be the servants of this "Ruling Class" with promises of food on the table and decent housing so that it becomes a choice ..Serve US and you can prosper, stand against us and you will be homeless.
All of this is being driven by a small cabal of "Investors" who are using the United States of America and its military as their "enforcement arm".
This is not Conspiracy theory. Rockefeller and others have stated this the ultimate Goal of this "Ruling Class" in meetings of groups like the Bilderberg group.
This group of psychotics feel it their divine right to rule and it the plight of the worlds people to serve them.
They call it "freedom".
You read my mind. Bravo and well-said.
By doggies...you are half right.
You are correct Sir, like a repeat of the plot to kill FDR to stop his evil march to socialism... but General Butler blew the whistle and these guys were so powerful FDR made a deal with them in secret that they could be free if they did not block the New Deal.
That plot by forces of the ruling class goes on to fund Hitler and all the Big corps were in on it...
The same forces that are still covering up the JFK coup.
And the name Bush keeps poppin up ....like a long family feud with Folk.
and Poppy Bush was in Dallas the day JFK was killed...
USA's race to the bottom. 2% own 90% of the wealth.
Such obscene inequality is the surest sign of a civilization in steep decline. We have held up the rich as people to be admired instead of admiring and emulating those who know "how much is enough" and who spurn excess wealth in the interest of the common good.
the parasites that live off the back of the workers won't quit sucking the life blood out of the host body,
until the host wakes up and flush the parasites out of the body and keep them out.
Mahmoud Ahmadinijad was right. Capitalism is failing and is the cause of poverty worldwide.
Where is the worthless MSM media showing that the unemployment and poverty is due to greed in American business?
This country sucks. Where's bin Laden when you need him. Planes flying into the WTC didn't wake Americans up to the greed. Those planes should have hit Wall Street. Who would mourn dead rabid hedge fund managers?
bin Laden's antics didn't hurt the guys at the top one iota -- merely a hiccup -- then it was full speed ahead. If the idea, however, was to engage the US in the "graveyard of empire," it worked very well.
I caught part of this HBO documentary last night. It was on too late and I simply couldn't watch the whole thing. It was on the same time a encore showing of Real Time with Bill Maher. I turned that garbage off to watch this on one of the other HBO channels.
My Trip to Al-Qaeda. Information is available to Americans if they would just partake of it. Walk around in someone's shoes, learn their point of view, learn why certain groups form and why they do what they do. This does not pardon the actions, merely explains it.
http://www.hbo.com/index.html#/documentaries/my-trip-to-al-qaeda
This is the type of stuff that should be taught in schools. Not being able to travel beyond your local shores or area is no excuse. I have never been off the Eastern Seaboard, but I've always been learning.
You all know who get's to define "Common Good", right?
It seems that the Democrats have used the John Edwards sex scandal as an excuse to stop talking about poverty.
I just learned about the Global Peace Index that measures many country statistics in determining which are the most peaceful countries in the world and therefore the best for investment. One of the things they've found is that countries with the most equitable distribution of income/wealth are at the top of the list. The U.S. is #85 - http://www.visionofhumanity.org/ Here's a great interview with the founder Steve Killelea on 9/15 - http://peaceweek.info/ After you register the interviews can be downloaded for free.
What happened? The US economy was "Financialized," as Dr Hudson puts it. For those who missed it, here is his presentation to the Brazilian Council of Economic Advisors advising them how they can avoid the Financialization of Brazil's economy, http://michael-hudson.com/2010/09/how-brazil-can-defend-against-financialization/
Many here know of or have heard about the IMF's and World Bank's imfamous Structural Adjustment Policies and their continuation through the WTO. The SAPs represent the evolutionary "advance" of US trade policy known as the Open Door and provided the basis for the USA's super imperialism. Financialization is the evolutionary outcome of the SAPs. Close scrutiny of the Financial Crisis Inquiry Commission hearings show Wall Street to be an illegal enterprise congress is anxious to cover up, http://michael-hudson.com/2010/09/is-the-economy-as-broke-as-lehman-was/ and it shows how the US economy is becoming financialized.
The US economy is a fraud--quite literally. And Obama accuses Afghanistan of corruption. Hell, the USA is #1 when it comes to corruption. So much for the vaunted American system of Free Enterprise.
"A point arrives at which bankers and investors recognize that no society’s productive powers can long support the growth of interest-bearing debt at compound rates. Seeing that the pretense must end, they call in their loans and foreclose on the property of debtors, forcing the sale of property under crisis conditions as the financial system collapses in a convulsion of bankruptcy." http://michael-hudson.com/2010/07/from-marx-to-goldman-sachs-the-fictions-of-fictitious-capital1/
Well it must have been ok, I see on Faux Business that the banksters are back selling mortgage backed derivitives again. I guess stupid investors never learn.
They might as well roll down the streets with carts of rats shouting "Plauge get your fresh Plauge" Americans would line up to buy some Black Death, see if they wouldn't.
>^^<
Do "Americans" really buy the "plauge[sic]"? Or does some other [upper]class of people or an institution buy the plague? The figures seem to indicate that very few Americans have the money to buy such "securities." Do you know how "the Churn" works as practiced by Wall Street, what I term the Yo-Yo? If a securities transaction tax of 1/2-1% were added to every type of financial transaction, the Yo-Yo would have its string cut. The countries that escaped unharmed from the so-called Asian Financial Crisis of 1997 launched by the Clinton admin and its Wall Street allies did so by having very strict currency and financial transaction controls. Look at the countries currently prospering; they were the ones who chose NOT to follow the "Washington Consensus." Ponzi schemes continued after October 1929, too.
Miggy--I suggest you invest some of your time in reading the articles by Hudson I've posted links to on this thread and at Hiro's. They answer some of your questions and others you've yet to pose.
RE: "Crucial here are the principles at play. In addition to the principle that everyone is equal, and that everyone’s work is of roughly equal value, the cooperative model also asserts that it is the workers/the producers who should collectively own and control what they produce. Implicit here is the belief that it is people’s work and not just ‘management strategies’ that produces value."
The above quote represents an example of worker control of the means of production, which, is the fundamental prerequisite and operational definition of socialism. What the article tells us, contrary to the myth of the "invisible hand", is that great poverty is caused by great wealth.
Smith's Invisible Hand was coopted by the economist allies of Finance Capitalism as was the term Free Market--which Smith meant as free from rentiers. As Hudson notes, the Classical/Liberal Economists side with the people in general and were concerned with promoting the Greater Good, http://michael-hudson.com/2010/05/neoliberalism-and-the-counter-enlightenment/ and http://michael-hudson.com/2010/07/from-marx-to-goldman-sachs-the-fictions-of-fictitious-capital1/
To free ourselves from the fix we're in, we MUST understand how we came to be in the fix. That explanation is complex and filled with language many find hard to understand and goes counter to the deeply ingrained Indoctrination and repetitive Propaganda. Somehow, we must reduce the explanation to the size of a pamphlet from its current 20+ pages, and that will be very difficult given the lack of prior knowledge by the intended audience.
It's a long and complex article, but I don't see the need to defend Smith. Marx's critique of capitalism was directed at the classical thinkers of political economy: Smith and Ricardo. Since their writings on political economy were already full of contradictions, (exposed by Marx) it seems a fool's errand to say how neo-liberal economists have distorted their views - since their explanations of how capitalism worked was based on false assumptions and filtered through rose-tinted glasses anyway. It seems to me it's just new "junk economics" (to quote Hudson) piled on top of old "junk economics."
Here's a quote from Marx that could have been written yesterday (from your link):
The credit system, which has its focus in the so-called national banks and the big money-lenders and usurers surrounding them, constitutes enormous centralization, and gives this class of parasites the fabulous power, not only to periodically despoil industrial capitalists, but also to interfere in actual production in a most dangerous manner, and this gang knows nothing about production and has nothing to do with it.”
Source: Capital III (Moscow: Foreign Languages Publishing House, 1958), p. 532.
keynes proved economics is a science,
but the rich don't want to hear the truth because they see a middle class as a threat to their power,
even though a strong a middle class is the proven way to create a strong, stable and vibrant society
and the absolute greatest way for the elite to maintain their wealth, but they are so paranoid that they cut off their nose to spite their face
so they put in place pseudo economists like milton friedman to ignore and "disprove" keynes
yes they hire people like friedman to tell the rich that the best way to stimulate the economy
and make everything wonderful for everyone is for the rich to be as greedy as possible
and so put us all at risk
as keynes described this philosophy (parrotted by friedman, who never had a single original idea)
"you have the worst people behaving in the worst possible ways........to the benefit of all"
Kudos for "pulling back the curtain" with a simple explanation!!
The majority of the population is unable to read between, under, and all around the propaganda lines.
Bring back logic and critical thinking back to the K-12 educational system...only an ignoramus like W-Bush would have dismantled an educational system based on deep learning to one based on (multiple choice) testing!! Actually, the dismantling of Socratic learning started with Reagan's election. "No child left behind" who can think was the actual goal.