Mark Provost: Why the Rich Love Unemployment

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By Mark Provost, a freelance writer from Manchester, New Hampshire. He can be reached at gregsplacenh -at- Cross posted from TruthOut.

Christina Romer, former member of President Obama’s Council of Economic Advisors, accuses the administration of “shamefully ignoring” the unemployed. Paul Krugman echoes her concerns, observing that Washington has lost interest in “the forgotten millions.” America’s unemployed have been ignored and forgotten, but they are far from superfluous. Over the last two years, out-of-work Americans have played a critical role in helping the richest one percent recover trillions in financial wealth.

Obama’s advisers often congratulate themselves for avoiding another Great Depression – an assertion not amenable to serious analysis or debate. A better way to evaluate their claims is to compare the US economy to other rich countries over the last few years.

On the basis of sustaining economic growth, the United States is doing better than nearly all advanced economies. From the first quarter of 2008 to the end of 2010, US gross domestic product (GDP) growth outperformed every G-7 country except Canada.

But when it comes to jobs, US policymakers fall short of their rosy self-evaluations. Despite the second-highest economic growth, Paul Wiseman of the Associated Press (AP) reports: “the U.S. job market remains the group’s weakest. U.S. employment bottomed and started growing again a year ago, but there are still 5.4 percent fewer American jobs than in December 2007. That’s a much sharper drop than in any other G-7 country.” According to an important study by Andrew Sum and Joseph McLaughlin, the US boasted one of the lowest unemployment rates in the rich world before the housing crash – now, it’s the highest.[1]

The gap between economic growth and job creation reflects three separate but mutually reinforcing factors: US corporate governance, Obama’s economic policies and the deregulation of US labor markets.

Old economic models assume that companies merely react to external changes in demand – lacking independent agency or power. While executives must adapt to falling demand, they retain a fair amount of discretion in how they will respond and who will bear the brunt of the pain. Corporate culture and organization vary from country to country.

In the boardrooms of corporate America, profits aren’t everything – they are the only thing. A JPMorgan research report concludes that the current corporate profit recovery is more dependent on falling unit-labor costs than during any previous expansion. At some level, corporate executives are aware that they are lowering workers’ living standards, but their decisions are neither coordinated nor intentionally harmful. Call it the “paradox of profitability.” Executives are acting in their own and their shareholders’ best interest: maximizing profit margins in the face of weak demand by extensive layoffs and pay cuts. But what has been good for every company’s income statement has been a disaster for working families and their communities.

Obama’s lopsided recovery also reflects lopsided government intervention. Apart from all the talk about jobs, the Obama administration never supported a concrete employment plan. The stimulus provided relief, but it was too small and did not focus on job creation.

The administration’s problem is not a question of economics, but a matter of values and priorities. In the first Great Depression, President Roosevelt created an alphabet soup of institutions – the Works Progress Administration (WPA), the Tennessee Valley Authority (TVA) and the Civilian Conservation Corps (CCC) – to directly relieve the unemployment problem, a crisis the private sector was unable and unwilling to solve. In the current crisis, banks were handed bottomless bowls of alphabet soup – the Troubled Asset Relief Program (TARP), the Public-Private Investment Program (PPIP) and the Term Asset-Backed Securities Loan Facility (TALF) – while politicians dithered over extending inadequate unemployment benefits.

The unemployment crisis has its origins in the housing crash, but the prior deregulation of the labor market made the fallout more severe. Like other changes to economic policy in recent decades, the deregulation of the labor market tilts the balance of power in favor of business and against workers. Unlike financial system reform, the deregulation of the labor market is not on President Obama’s agenda and has escaped much commentary.

Labor-market deregulation boils down to three things: weak unions, weak worker protection laws and weak overall employment. In addition to protecting wages and benefits, unions also protect jobs. Union contracts prevent management from indiscriminately firing workers and shifting the burden onto remaining employees. After decades of imposed decline, the United States currently has the fourth-lowest private sector union membership in the Organization for Economic Cooperation and Development (OECD).

America’s low rate of union membership partly explains why unemployment rose so fast and, – thanks to hectic productivity growth – hiring has been so slow.

Proponents of labor-market flexibility argue that it’s easier for the private sector to create jobs when the transactional costs associated with hiring and firing are reduced. Perhaps fortunately, legal protections for American workers cannot get any lower: US labor laws make it the easiest place in the word to fire or replace employees, according to the OECD.

Another consequence of labor-market flexibility has been the shift from full-time jobs to temporary positions. In 2010, 26 percent of all news jobs were temporary – compared with less than 11 percent in the early 1990’s recovery and just 7.1 percent in the early 2000’s.

The American model of high productivity and low pay has friends in high places. Former Obama adviser and General Motors (GM) car czar Steven Rattner argues that America’s unemployment crisis is a sign of strength:

Perversely, the nagging high jobless rate reflects two of the most promising attributes of the American economy: its flexibility and its productivity. Eliminating jobs – with all the wrenching human costs – raises productivity and, thereby, competitiveness.

Unusually, US productivity grew right through the recession; normally, companies can’t reduce costs fast enough to keep productivity from falling.

That kind of efficiency is perhaps our most precious economic asset. However tempting it may be, we need to resist tinkering with the labor market. Policy proposals aimed too directly at raising employment may well collaterally end up dragging on productivity.

Rattner comes dangerously close to articulating a full-unemployment policy. He suggests unemployed workers don’t merit the same massive government intervention that served GM and the banks so well. When Wall Street was on the ropes, both administrations sensibly argued, “doing nothing is not an option.” For the long-term unemployed, doing nothing appears to be Washington’s preferred policy.

The unemployment crisis has been a godsend for America’s superrich, who own the vast majority of financial assets – stocks, bonds, currency and commodities.

Persistent unemployment and weak unions have changed the American workforce into a buyers’ market – job seekers and workers are now “price takers” rather than “price makers.” Obama’s recovery shares with Reagan’s early years the distinction of being the only two post-war expansions where wage concessions have been the rule rather than the exception. The year 2009 marked the slowest wage growth on record, followed by the second slowest in 2010.[2]

America’s labor market depression propels asset price appreciation. In the last two years, US corporate profits and share prices rose at the fastest pace in history – and the fastest in the G-7. Considering the source of profits, the soaring stock market appears less a beacon of prosperity than a reliable proxy for America’s new misery index. Mark Whitehouse of The Wall Street Journal describes Obama’s hamster wheel recovery:

From mid-2009 through the end of 2010, output per hour at U.S. nonfarm businesses rose 5.2% as companies found ways to squeeze more from their existing workers. But the lion’s share of that gain went to shareholders in the form of record profits, rather than to workers in the form of raises. Hourly wages, adjusted for inflation, rose only 0.3%, according to the Labor Department. In other words, companies shared only 6% of productivity gains with their workers. That compares to 58% since records began in 1947.

Workers’ wages and salaries represent roughly two-thirds of production costs and drive inflation. High inflation is a bondholders’ worst enemy because bonds are fixed-income securities. For example, if a bond yields a fixed five percent and inflation is running at four percent, the bond’s real return is reduced to one percent. High unemployment constrains labor costs and, thus, also functions as an anchor on inflation and inflation expectations – protecting bondholders’ real return and principal. Thanks to the absence of real wage growth and inflation over the last two years, bond funds have attracted record inflows and investors have profited immensely.

The Federal Reserve has played the leading role in sustaining the recovery, but monetary policies work indirectly and disproportionately favor the wealthy. Low interest rates have helped banks recapitalize, allowed businesses and households to refinance debt and provided Wall Street with a tsunami of liquidity – but its impact on employment and wage growth has been negligible.

CNBC’s Jim Cramer provides insight into the counterintuitive link between a rotten economy and soaring asset prices: “We are and have been in the longest ‘bad news is good news’ moment that I have ever come across in my 31 years of trading. That means the bad news keeps producing the low interest rates that make stocks, particularly stocks with decent dividend protection, more attractive than their fixed income alternatives.” In other words, the longer Ben Bernanke’s policies fail to lower unemployment, the longer Wall Street enjoys a free ride.

Out-of-work Americans deserve more than unemployment checks – they deserve dividends. The rich would never have recovered without them.

1. “The Massive Shedding of Jobs in America.” Andrew Sum and Joseph McLaughlin. Challenge, 2010, vol. 53, issue 6, pages 62-76.

2. David Wessel, Wall Street Journal, January 30, 2010. “Wage and Benefit Growth Hits Historic Low“; Chris Farrell, Bloomberg Businessweek, February 5, 2010. “US Wage Growth: The Downward Spiral.”

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  1. attempter

    Standard misdirection. Throw up a fog of sympathetic words pretending to care about people who actually work, but don’t propose anything that can work, just vaguely cite obsolete big government/capitalist institutions like the New Deal and business unionism.

    Meanwhile the post starts out pretending that fraudulent “growth” is real and continues in that vein. It explicitly repeats the lie that Wall Street and financialization had to be bailed out:

    When Wall Street was on the ropes, both administrations sensibly argued, “doing nothing is not an option.”

    And then we have the irrationality and evil of statements like this:

    Workers’ wages and salaries represent roughly two-thirds of production costs and drive inflation.

    Let’s try rephrasing that: The workers and only the workers produce anything. They shouldn’t have “wages and salaries” at all; they should have control of 100% of the production. There’s no such thing as “production costs” from the “employer’s” point of view because the employer shouldn’t exist.

    Inflation, meanwhile, is a feature of the elite-imposed and -usurped money system which accompanies the whole criminal structure. Why should any worker grant the validity of inflation fears when those are a purely artificial problem trumped up on behalf of the elite interest? From our point of view: Fine, let’s inflate! If wages have to exist at all, let’s push them as high as we can. “Production costs” aren’t our concern. All we need to know is the level of profits these corporations are reporting.

    BTW, the best measure of the fecklessness and treachery of the business unions is how their Leadership studiously refuses to make the obvious connection between the profit rate and the alleged need for more “austerity” for the workers, and make accordingly rising demands. That’s smoking gun proof that workers need to purge this Leadership. Like all other citizen groups, workers need to organize themselves and fight for themselves.

    1. DownSouth

      attempter said: “…the post starts out pretending that fraudulent “growth” is real and continues in that vein.”

      That’s what I was thinking. Instead of Gross National Product, it looks like GNP is more an indicator of Gross National Pain.

    2. Foppe

      While I agree with your overall assessment of this editorial, I would urge you not to forget about the other elements necessary for producing goods. As such, I’d advise against writing things like “The workers and only the workers produce anything,” because it is quite obviously an incomplete account of what’s needed to produce anything. As we have been seeing over the past decades, quite a lot of work can be done by machine labor; moreover, aside from labor power you also need, among other things, (some type of) organizational structure, as well as some amount of capital to acquire the needed resources and machinery to produce the goods. These are not mere givens, and — especially — technological innovation results in constant changes to the question in which industries the bulk of the population can find gainful employment.

      Having said that, I do agree that, to put it in David Harvey‘s words, we need to find a way to give society (or more specifically the workers) control over the surplus value produced, because leaving the question of distribution to “the market” (that is, the plutocrats) obviously leads to outcomes that are economically unsustainable.

      1. attempter

        When I said only the workers produce anything I was including their right and ability to manage the things you mention. A “manager” who’s not a worker but rather the flunkey of a gangland “owner” isn’t producing anything but has only wrongfully usurped the workers’ own proper and rightful role.

        1. nonclassical


          in order to understand where we’re headed, consider South and Central America, circa 1970’s-1980’s.

          Fundamentalists are “privatizing” water and electricity publicly funded infrastructure, which is being sold off.

          New “jobs” will be “contracted worker” status-whereby employees will be awarded a % of sales-most work to include
          “sales”. No sale=no pay…side benefit; such work does not qualify for unemployment…

          1. Nathanael

            South and Central America are ending up with left-wing governments who are slowly reversing all of that bullshit.

            And it took longer than it would have if the US hadn’t kept intervening to overthrow democratically-elected left-wing governments.

            The US seems to have lost its power to do that south of Honduras.

            The question, then, is how far we will fall in the US and how long it will take before a left-wing government takes power here. And most importantly whether it will happen peacefully or whether the right-wingers will refuse to relinquish power without a civil war.

      2. pebird

        Imagine a world where robots create everything, even repairing and building new robots. There are still people hanging around.

        Ask the question: where will the people get the money to buy the things that the robots create?

        Perhaps the owners of the robots will think up useless but required time-wasting exercises the public is required to perform in order to receive an income.

        You don’t want the public to have too much free time on their hands.

        Value is about owning your time. Material wealth is needed to extend your time on earth.

      3. LifelongLib

        Thanks to modern communications and computers, we no longer need wealthy individuals to provide money for investment. You don’t see many people pointing out that technology has made the rich obsolete.

        1. Maju

          That is a most interesting idea: it reminds me of some concepts by Negri, where the real power is in workers’ knowledge (expressed as technology) and not anymore in mere financial property (which is each day more and more obviously parasitic and dstructive).

          1. Economics 4dummies

            power is in workers’ knowledge

            No problem! We got chew covered. Creditors will lend money to workers for their efforts to accumulate knowledge. Workers will then rent the knowledge by paying off the Sally Mae Loans for education.


    3. Carl Marx

      Wages have stagnated or decreased for decades, yet there’s been plenty of inflation. Even now with the strongest downward pressure on wages, inflation continues (although the government continues to fudge the figure in every possible way).

      1. Tao Jonesing

        Provost clearly has bought into the lie that increasing wages are what drives inflation in spite of the lack of evidence to support it and the mountain of evidence that refutes it.

        At this point, “inflation” is a cypher that political pundits fill with whatever meaning is most useful to them at the moment. Sometimes inflation refers to simple price inflation. Other times it adopts the quantity theory of money, which requires an increase in supply and velocity of money. Sometimes it is simply used as a club against workers looking for a raise.

        1. Anonymous Jones

          Mountain of evidence that refutes it?!?!?!

          Oy…show me the road to the precipice! I want to scale this peak!

          At least your second paragraph is not as filled with delusions of unobtainable knowledge as the first.

          Yes, it’s complicated. There’s not even an agreed upon usage regarding the word “inflation.” How could it not be difficult to talk about this rationally?

          So, back to the point, who exactly said that wages were the only factor driving inflation? Yes, OK, surely if someone did in fact say that, they would be daft. I agree with your vacuous truth. No argument there.

          But to suggest anyone who thinks that labor is one important factor in the spiral that can drive runaway inflation (along with productivity, scarcity, change in money supply, and expectations of any of the previously mentioned items) is part of a lie? Really? Is that what you mean to suggest?

          1. Tao Jonesing

            Thirty years of stagnant wages. Thirty years of inflation.


            Must be rising wages that caused the inflation.

            How did we get thirty years of stagnant wages? Paul Volker, assuming that inflation was caused by rising wages, raised the Fed Funds rate to almost 20 percent, BUT IT DIDN’T WORK. Inflation continued to rise at the same rate in spite of wages remaining flat. We only saw inflation die when low margin American industries were forced out of business and/or to send jobs offshore. The Chicago School monetarist metrics that Volker used to set his policy were abandoned shortly thereafter by the Fed as a complete and utter failure. People forget all this because they’re so used to hearing that Volker slew the inflation monster. Bull. The actual data show otherwise.

            Economic theory is is a pathological lie carefully constructed to normalize evil. Take the time to review the history of its development, and you’ll understand.

            But, by all means, choose the blue pill.

          2. Maju

            Tao: inflation is, everybody knows over here, a system to lower wages. And it is caused by either printing money beyond needs (by the state or in our case EU) or otherwise issuing money beyond needs in forms of loans and other forms of virtual expansion of the monetary mass (by private banks)

            The problem is that you lower everything at the same time (except for those issuing the money) but while commerces can change prices from one day to the next, even from one minute to the next if need be, salaries are only renegotiated (if at all) once a year or even less frequently. That way capitalists have an advantage over workers in exploiting inflation.

            Whatever the case, devaluing the euro should not create so much inflation if done carefully, because it would create more business (and therefore jobs and markets) and feedback would be harmonious. I’m not appealing for a sudden devaluation but for a controlled one. Just that beginning as early as 2008, today we are already three years late.

    4. Susan Truxes

      Don’t we just love the term “jobless recovery?” It is as oxymoronic as the source of profits now claimed by corporations whose stock “value” has soared thanks to the Fed. In fact it is a profitless recovery because the profit part of the capitalist equation no longer makes sense. So if you have both a jobless recovery and a profitless recovery, what exactly do you have?

      1. Susan Truxes

        Also this, speaking of hamster wheels. The recent proclamation from the ECB about which countries in Europe and eastern Europe were credit-worthy. All the countries with low populations were basically not credit-worthy. I think this calculation actually includes Switzerland. So if the population, the “workers,” are considered the ultimate collateral for debt this means a certain tax base must be maintained in Labor New Think. No doubt it will be maintained just above profitless and just below jobless.

  2. Foppe

    I don’t mean to be unkind, but this is a weird article; and while this seems directionally correct, the author strays off-topic far too often to really make his case. Moreover, the fact that the rich prefer high unemployment numbers because of the downward pressure this exerts on wages has been known ever since Reagan came along, so I’m not really sure why this is news.

    Anyway, on to some details:
    “But what has been good for every company’s income statement has been a disaster for working families and their communities.”
    What the author is missing here is that this dynamic is also very bad for aggregate demand, as demand comes from the wages earned by the entire population. Thus, low participation rate and low wages means double hit to demand. (because nondiscretionary spending is far more dependable than discretionary spending.)

    “Workers’ wages and salaries represent roughly two-thirds of production costs and drive inflation.”
    Yves, haven’t you said something rather different on this same topic? I seem to recall a 10% figure, though I don’t remember where you got it. And how does he go from “production costs” to “inflation fears”?

    “The unemployment crisis has its origins in the housing crash”
    Here’s a nice example of correlation/causation confusion. The unemployment crisis started back in the ’80s, then the housing bubble came along thanks largely to Clinton’s and Bush’s Greenspan-policy, and then the bust came. And while it is certainly exceedingly likely that the housing bubble served as cover for the outsourcing of all sustainable jobs, so that it is quite likely that there would’ve been more effective protests against outsourcing earlier if the housing bubble hadn’t been allowed to develop, this does not in any way that the bubble caused GE (and everyone else) to move jobs overseas.

    “Like other changes to economic policy in recent decades, the deregulation of the labor market tilts the balance of power in favor of business and against workers.”
    This is politically naïve at best. The ‘deregulation of the labor market’ was not a policy choice, it was a political power grab that happened at a time when there was a somewhat legitimate case to be made that unions were being unrealistic in their expectations.

    1. DownSouth

      Foppe said:

      “The unemployment crisis has its origins in the housing crash”
      Here’s a nice example of correlation/causation confusion.

      Agreed. The employment crisis came first.

      When wages didn’t keep up with living expenses, households substituted borrowing for income. It was a deliberate policy decision to make this happen. This resulted in an explosion of household debt, which in turn led to the housing crash, which did indeed exacerbate the employment crisis.

      It’s like a vicous, self-reinforcing downward cycle.

    2. Carl Marx

      “…the fact that the rich prefer high unemployment numbers because of the downward pressure this exerts on wages has been known ever since Reagan came along,”

      Actually, my great-great-grandfather Karl noticed this first.

      1. Foppe

        Yes, and I’m an avid fan of his and Dr. Harvey‘s work. However, my point was simply that, before Reagan/Thatcher, the ‘creation of a large reserve army of labor’ was not something that could be discussed in “polite” company, whereas afterwards it became the norm in those two countries.

    3. Glen

      Bingo! What is commonly referred to as structural unemployment has been with us for a long time. When jobs moved from manufacturing to housing, which was unsustainable, the real problem was covered up.

      Ralph Gomory addresses this problem with uncanny clarity…….

      While it is tempting to blame this succession of crises on greedy executives, sub-prime mortgage pushers and others of that ilk, it is in fact much more a system problem than a sudden widespread collapse of human nature. Since 1980 we have gradually developed an economic system that drives corporations to maximize profit at any cost. If corporate leaders conform to this goal, they are rewarded with huge sums. If they don’t, they are likely to be replaced by those who do……

      Although this pursuit of profit at any price may well have a negative effect on the economy as a whole, the response of the previous administration was to endorse offshoring and maintain unlimited faith in the operation of free markets. In the absence of any accepted view opposing what was and is going on, how can we expect the individual CEOs and boards of directors to act against their own self-interest?

      To a large extent our government has not yet realized that the self-interests of our corporations, especially our large global corporations, can diverge from the interests of our country. We need to find ways to fundamentally change the motivations of corporations to align with those of our country.

      Is there an alternative to this profit-before-everything approach? Yes there is, and it is a very natural one. Let us take a historical perspective……….

      Therefore the fundamental social role of organizations, usually corporations, is both to produce the goods and services that are consumed in the modern world and to enable people to participate in that production, so that they earn a share of the value produced for themselves and their families.

      In view of all this, there should be two goals that the United States wants of its corporations. I call them the Ketchum Goals as I am writing this in Ketchum, Idaho.

      The Ketchum Goals:

      (1) We want companies that are productive, each contributing as much as possible to the total of goods and services produced in the United States. It is the sum of these efforts that make America a prosperous nation.

      (2) We want these companies to provide productive and well-paying jobs so that the value the companies create is widely shared by Americans. It is this widely shared wealth that gives the nation and its people economic security and stability.

      What we want and need from our corporations is significantly different from the present goal of profit maximization. What we want and need is more akin to the broader role that corporations played during the prosperous 1950’s and 1960’s when interests other than those of the top executives and large shareholders were also taken into account. We must realize that since that time the goals of this country and the goals of its corporations have diverged……

      1. Tao Jonesing

        Gomory is a smart guy, I wish he were more prolific.

        But, hey, at least I own his book.

  3. DownSouth

    Unemployed Americans need a strong shot of the truth.

    This was a rape, pure and simple. It was deliberate, intentional and malicious.

    It has nothing to do with inexorable economic forces nor with anything the unemployed did. It is a product of choices made by America’s political leadership. Nothing more, nothing less.

    1. Carl Marx

      Yes, but they were asking for it based on the kind of coffee drinks they ordered.

    2. Tao Jonesing

      The problem most Americans have is that they now live paycheck-to-paycheck, which ensures that they don’t have the perspective needed to see a deliberate act that has taken decades to accomplish. Becoming unemployed is unlikely to help them overcome their conditioning.

  4. Mack

    “In 2010, 26 percent of all news jobs were temporary – compared with less than 11 percent in the early 1990′s recovery and just 7.1 percent in the early 2000′s”

    (“news jobs” is a funny-but-true typo)

    I think you could argue that those 90’s and 2K jobs also turned out to be temporary. Just didn’t know it at the time

  5. PQS

    DS has it right: current UI isn’t a result of some “accident”. It was the result of deliberate incompetence in managing the economy, both recently and over the long term. Letting FIRE dominate the entire economy, allowing industrial policy to turn into a tired old trope that none of the Cool People care about, and putting all our eggs into the Internet basket have resulted in what we have now.

    The over 25% UI in construction is directly related to the fact that WS is now hoarding their ill-gotten gains and laughing in the faces of anyone who tells them they should possibly share in terms of lending to business. Especially since the money technicallly isn’t theirs. The still aren’t lending. (Yes, I know there is an oversupply of housing and CRE. But I also know that big clients haven’t been doing the kinds of maintenance work that is standard in the industry. Probably because they don’t want to spend the money.)

    I recently had a client tell me she was turned down by six banks on her restaurant startup. While there may be many reasons for this, I bet she wouldn’t have been turned down in 2006 or 2007. SHe probably would have been loaned more money than she needed to open her business.

    WS needs to pay for what they’ve done. So do their minions in DC.

    What I can’t figure out is how to make people aware of this so they will get as angry as I am and motivated for change. Most people seem to just shrug their shoulders when you tell them these things. Why is that? If someone mugged them or stole their TV out of their house, I bet they’d be furious. This is much, much worse.

    1. alex

      “allowing industrial policy to turn into a tired old trope that none of the Cool People care about”

      Of small consolation is that the techies had their comeuppance for ignoring the importance of smokestack industries when the tech jobs got shipped out too.

      FWIW I’m a techie, but I never underestimated the importance of smokestack industries, and always understood that where manufacturing went engineering would soon follow. Small consolation to say “I told you so” when I’m one of the people the joke is being played on.

      1. PQS

        I feel bad for everyone caught up in this mess – and I mean everyone. Sometimes when I’m very charitable I even feel bad for our Electeds in DC, as many of them are honest and hardworking public servants. But they have been overwhelmed not only by the greedy idiots but also the incompetents and their own unwillingness to call out stupidity when they see it. There is no reason anyone in our First World nation ought to suffer fools who don’t
        “believe” in global warming or evolution. Still less that these people should get elected instead of laughed off the stage. This goes for managing the economy, too – the very fact that incomprehensible boobs like Alan Greenspan (a believer in Ayn Rand? Really?) have been allowed to hold court for decades is infuriating.

        The only thing I can say now is that when their policies are unveiled for the idiocy they are, they very often get handed their hats and shown the door.

        1. alex

          “Alan Greenspan (a believer in Ayn Rand? Really?)”

          In all fairness, most high school students are not idiots, or at least they grow out of the “simpleton superman” stage of Ayn Rand. Alan was the exception.

          1. DownSouth

            alex said: “Alan was the exception.”

            Nah. When it comes to the guys who have their hands on the levers of power, he’s certainly not the exception, but the rule.

            It’s called pathocracy—-rule by psychopaths.

          2. Tao Jonesing

            Alan Greenspan was part of Ayn Rand’s inner circle. They may have even “bumped uglies” as an old college roomie of mine used to say.

  6. alex

    I’m surprised at the tepid to negative reaction to this article, because overall he makes excellent points, and “Why the Rich Love Unemployment” is not exactly a tepid title.

    That being said I will nitpick a bit. “Weak unions, weak worker protection laws and weak overall employment” is an odd ordering, because the last point is the most important. Unfortunately he doesn’t mention how outsourcing and the trade imbalance affect it. Unions have their uses, but nothing encourages employer “flexibility” like a tight labor market.

    While not the best route to full employment, the World Wars offer wonderful illustrations. In WWI dark-skinned folks went from “need not apply” to actively recruited for factory work. In WWII it was women. Neither of these environments exactly hurt employment for white guys either.

  7. Bam_Man

    Remember those rosy predictions from the mid-20th century that the “miracles of technology and automation” would lead to a vast increase in “leisure time” for the working class?

    Guess what? They came true. But not quite in the way most had expected at the time.

    1. Maju

      That depends on political will. Since Lafargue, true socialists have been claiming a radical reduction of working hours per capita – dividing the product equally.

  8. Maju

    My impression is that this is not new but the author is correct in pointing out that there is a major increase of the same blackmail pressures used previously (unemployment basically) against the working class.

    The level of unemployment has doubled in few years in all the OECD. And it was already high before that. And the trend is not stopping.

    Capitalists are trying to push First World workers into Third World conditions. However they have a problem: Third World workers have almost no demand: they can’t afford a home (much less at the hyper-inflated speculative prices en vogue in much of the Western World), they do not buy almost anything but food (and not much). They are, in other words, cutting the grass under their own feet by destroying the demand on which their profits are built.

    This is simply classical.

    And then they have another classical problem: that First World workers will eventually initiate a revolution once certain threshold has been surpassed. As we have just seen in Egypt and other places: there is almost no level of repression that can really stop such a movement.

    So they are like shooting themselves.

  9. Paul Tioxon

    Here is an major front on the class warfare waged by corporations against the citizens of America.

    Here is the standard issue Business Roundtable PR attack on government intervention.

    Of course, the fact that Boeing gets over $30B a year in government contracts, half of it revenue and it just won another $35B military contract for replacing aging in air refueling tankers for the Air Force and the fact that the president personally flies around in custom Boeing 747s, Air Force One, apparently does give the government enough of a stake as the paying customer to make any demands on this business, given their characterizations as thugs from the NLRB.

    What is most significant, other than the disciplining of the work force, is that this very same issue was before the NLRB back in the Kennedy Administration. Outsourcing was ruled a breach of union contracts overturning an Eisenhower dominated NLRB decision, to declare wages, hours and benefits negotiable items, not plant expansion and job creation. Management wanted to diminish the power of unions and their collective bargaining positions, contractually agreed upon, by breaching the outsourcing clauses and declaring it the sole prerogative of management, not labor. So today, Obama following in the footsteps of JFK, in regards to his support of the NLRB actually working for the rights of Americans when they are at work, is again a source of corporate anxiety over feeling powerless.

    Unemployment, in addition to be the reserve pool of labor that functions as a hammer over the employed, confirms the political dominance of the rich. It is the trip wire that once triggered indicates to them that even in the face of any political opposition or numerical disadvantage within the electorate, that they can still at their whim, suppress the ability to retain a livelihood for millions and millions of citizens. It is this dominance, this public spectacle of teaming masses, retreating like refugees, broken in the simple continuity of life that usually occurs only with awful force of nature or war, that demonstrates their raw political power, if not their status and prestige. The unemployed learn that the rich would rather be respected with fear by their show of merciless greed, than preserve the social contract which is the platform for American prosperity.

  10. thump

    I see plenty of commentary saying, “as housing goes, so goes the economy”, inasmuch as housing value contributes to how much money people have to spend. Housing is valued proportionally to median wage, inasmuch as people roughly spend some fraction of their income on housing. Wouldn’t some portion of the elite somewhere see that it’s in their interests to increase employment with decent wages, i.e., do something to support housing more fundamentally than just with stupid temporary tax credits?

    1. PQS

      Oh, but the rich in the third world live very well, thanks very much, without the slightest concern whatsoever for the “other classes.” Why should our wealthy here think any differently?

      1. F. Beard

        Why should our wealthy here think any differently? PQS

        Unemployed chemists, engineers and other folks with deadly knowledge?

        A population that is getting wise to the banking scam?

        A military that might not play ball?

        A tradition of liberty?

        1. PQS

          My point is that the wealthy here share the same unconcern as the wealthy elsewhere – to them, engineers and other “educated serfs” are clearly not much better than the girl who cleans their floors. And as replacable.

          As I mentioned upthread, I keep hoping people will “get wise”, yet I continue to get blank stares when I open a discussion about the Economic Downturn.

          Your hope for the power of the tradition of liberty gives me a lift, however.

          1. F. Beard

            I have hope because Americans will not tolerate naked thieving oppression. Maybe in South America and England they can pull that crap and the peasants will take it but in the US the expectation is that the system is fair. When Americans discover that it is a rigged game for the sake of the financial class then it is over for them.

            Right now the pain is not great enough but eventually it will be since the system cannot help but cause further suffering.

            The question then is what will replace it? Something better or something worse?

          2. LaSierra CristalGuantanamera

            replace it? Something better or something worse?

            Would you guess that revolutions usually end in something worse? Evolution has better track record. Did someone famous predict less than 2 weeks ago that you could expect more decay of human rights in India but improved human rights in China? Because human rights are inversely proportional to quantity of excess humanity? Did you see only this week that Chinese Rulers have eliminated some categories of capital punishment? The prediction is materializing before our very eyes. One child tradition of China is superior to the 9 child tradition of India. Can Dull America learn from the Bright Wisdom of China?

            Should each of us help her/his own community with birth prevention? If one of us doesn’t know how it works, can that individual go to someone who does know to say something like, “Look! I don’t know enough about it to help, but I can free you up. I can do other chores for you to give you more time at what desperately needs to be done. Let me walk your dog. Let me drive your old people to doctor appointments. let me paint your fence. I’ll buy the paint. Then you have more time to prevent excess humanity, more time to enhance human rights.”

            You are number one
            when you get the job done

          3. darms

            ‘naked thieving oppression’ is not only tolerated here, it is glorified. Why else whould Goldman-Sachs be the sole source of high-ranking Treasury officials for the last twenty-plus years?

  11. Aquifer

    “Considering the source of profits, the soaring stock market appears less a beacon of prosperity than a reliable proxy for America’s new misery index.”

    No kidding! This was true in the 90’s as well, and was commented on by at least one media reporter, but most folks didn’t care because at that time it was mostly “blue collar” workers who were getting the shaft because of our “free-trade” policies effect on facilitating the outsourcing of their jobs – the rest of “middle class” America was mesmerized by their new found opportunities for wealth acquisition in the “high tech” stock boom and dismissively told these folks to “get an education” and get a “better” job. Only when this bubble broke and they began to get screwed as well did they begin, and only “begin”, to notice. Most still haven’t really caught on.

    “Eliminating jobs – with all the wrenching human costs – raises productivity and, thereby, competitiveness.- Rattner”

    Well, well, well, maybe “competitiveness” and “efficiency” shouldn’t, necessarily, be 2 of the “cardinal virtues” of life after all? Maybe context is required? No, forget about that, we don’t do “nuance” in the good old USA.

    “Executives are acting in their own and their shareholders’ best interest: maximizing profit margins in the face of weak demand by extensive layoffs and pay cuts. But what has been good for every company’s income statement has been a disaster for working families and their communities.”

    Check out Ha-Joon Chang’s (“23 Things They Don’t Tell You About Capitalism”) Thing #2 “Companies should NOT be run in the interest of their owners”. For those of us who are keenly interested in these issues but don’t have a command of all the jargon, this Cambridge economist is an iconoclast well worth reading, IMO. (His previous book “Bad Samaritans” was also excellent – on trade)

  12. ep3

    I love how an employee is considered “at will” when hired at a non-union employer. You are at the will of the employer to hire and fire you whenever necessary. Right wing whackos say it’s meant for the freedom of the worker to come and go at his leisure.

    And in regards to the “great FDR” and his wonderful jobs programs. The TVA was created to build the infrastructure necessary for Oak Ridge and the birth of the nuclear industry. Creating jobs was just a side effect.

    I have the bond fund of America. It has done terrible recently. All the trading has been in equities so bonds are being ignored and with interest rates in the toilet, investors know bonds will only get worse. So yes and no bonds are doing good.

    1. alex

      “The TVA was created to build the infrastructure necessary for Oak Ridge and the birth of the nuclear industry.”

      The TVA was created six years before the Briggs Advisory Committee on Uranium (predecessor of the Manhattan Project).

      1. ambrit

        You’re right about the TVA and the bomb project. One most definitely preceeded the other. Both, however, exhibited the speed and effectiveness possible when the political will was present. FDR is fondly remembered because he was, after all, the man who got things done. Here was a man who understood that the elites world was based on a real world comprised of millions of smaller worlds. I suggest that he was the exemplar of “emlightened self interest.”

  13. chris

    How much of GDP is from money spent by coporations and individuals on accountants and things dealing with IRS?

    Is that one of the reasons why we won’t have a national sales tax? Seems like the GDP is stuffed with things that are under the radar or that provide no real growth to the economy.

  14. LAS

    Sooner or later policy makers may have to hear their own citizens as well as the corporate lobby.

    Labor (whether union or not) is best aligned with America by being comprised of the people who live in the country and are dependent upon the national services, health and wealth in a broadly distributed sense. They vote.

    Many US Corporations are no longer well aligned to national interests. They can lower wages (increase profits) and still grow their market by expanding overseas (at least temporarily until the slow down is global).

    Some of the biggest owners of US corporate stock are foreign, live elsewhere. Do you think they care about the quality of life in America?

    So why are Congress people still so captive to corporate lobbies and Grover Norquist? They don’t vote.

    Votes still count for something. Election funding isn’t everything; policies count, too.

    A special election in conservative Erie county NY this week resulted in the Democratic candidate winning. This is believed a strong negative reaction to the Paul Ryan budget project. If it happens in one county, it can happen in others.

  15. Hugh

    Echoing attempter’s first comment of the thread, GDP is a fairly meaningless concept. “Growth” based on it is equally meaningless. It is like you are standing on a scale and someone tells you have gained a pound since your last weigh in. But was this because you added on a pound of new muscle, wore new tennis shoes, gained a pound of fat, had some extra change in your pocket, were given a 1 lb. lead weight, or were the scales off?

    Anyone who cites Christina Romer who didn’t do squat for workers when she was part of this Administration or Krugman the ever available Establishment liberal shill is asking for skepticism.

    “At some level, corporate executives are aware that they are lowering workers’ living standards, but their decisions are neither coordinated nor intentionally harmful.”

    This ignores that we live in a kleptocracy or that this has been going on for 35 years. Of course, they are malicious. And yes, they are coordinated. They are the result of a rich investment class controlling the levers of government. the markets, and the money supply steering further wealth to themselves by incentivizing such behavior. The author would have us believe that their looting just sort of happened. This has been one of the hallmarks of modern, and now thoroughly discredited, economics. There is no agency and in its absence there is no blame. But this is specious, and after 35 years of it, dishonest. 5 guys plotting all this behind closed doors is a caricature. This was all done in the open using slogans like trickledown economics, free markets, government is the problem, right to work, efficient allocation of capital, globalization, outsourcing, etc..

    And what’s up with the author and a euphemism like “deregulation of the labor market”. Why not call it what it is, gutting unions? Yes, he discusses the results of this “deregulation”, but again note the lack of agency in avoiding who caused, sponsored, promoted, and ultimately benefited from it.

    Note too how he makes it look as if flat wages are a phenomenon of only the last couple of years, not the last 35. Or how he invokes the specter of inflation to rationalize “recently” flat wages, when of course the real economic driver during this period was deflation. And workes’ wages are 2/3 of production costs? What are we counting as “production”. In manufacturing, labor is what, like 10% of costs?

    And then there is this:

    “Low interest rates have helped banks recapitalize, allowed businesses and households to refinance debt …”

    Have we seen any evidence that banks are helping households to refinance debt?

    It is all fine and good to decry high unemployment but this article, and author, simply refuse to come to terms with those who caused it. It is like describing a bank robbery without identifying the bank robber. Instead we are told that some were impoverished by it and some benefited from it. This is a very odd, confused piece.

    1. Tao Jonesing

      The author has bought into neoliberal memes and can’t see past them. Who knows why?

      The important thing is that so many people here are calling B.S., looking past the attempted use of code words and at the real underlying meaning of the piece as a whole.

  16. Richard

    I see the unemployment crisis as mostly structural. Note how Google recently ramped up pay by 10%. Most tech companies around the Bay in fact are scrambling to find talent. The problem is that most unemployed labour is in unskilled fields and will need retraining to find jobs in new sectors.

    Another issue is that US wage and living standards are out of whack with the rest of the world. The US has lived beyond its means for far too long and the time of reckoning is soon. In a recent visit to South America, I noticed motivated people doing the exact same work as Americans would do for 1/10 the pay. This shows me there’s a lot of wage arbitrage still left to go. The sad thing is that the world has finite resources, and when that is divided more or less evenly across all individuals, living standards in the US will have to fall.

    1. DownSouth


      You are terribly misinformed.

      You make it sound like, as American workers lose, workers in other countries win.

      Neoliberalism doesn’t work that way. The only winners are the multi-national corporations and certain local elites who the corporations install, typically with violence, to do their bidding.

      Take a look at this report, as it debunks your assertion.

    2. Hugh

      You really need to lay off that neoliberal koolaid. It rots the brain. On the one hand, you repeat the discredited line that unemployment is just about education. The jobs are there, it’s just that corps can’t find the skilled workers for them, blah, blah, blah. The idea that corps, gasp, could actually train workers seems not to have occurred to you. But don’t worry, even when the skilled workers are there, the jobs really aren’t anyway because this is all only a bleeding talkingpoint to start with.

      And wage arbitrage is not some immutable force of nature as you seem to think. If our government wasn’t owned by the corps, policy could be used to keep jobs here at home. This is even truer when you consider that labor costs in manufacturing are only a small part of the total, and when jobs are outsourced, companies lose quality control and speed in responding to changing markets and market conditions as well as often contributing to the exploitation of foreign workers and environmental pollution. You could ask why companies do this even if it makes no sense. The answer is weakening workers in this country just makes the whole process of looting them that much easier.

  17. Robin Hood

    So the lazies and unables (pardon my English) all contribute to the society! Great now let’s all become Robin Hood. Yves, you should go to Cuba.

    1. DownSouth

      Robin Hood said: “So the lazies and unables (pardon my English) all contribute to the society!”

      Well that’s what the bankers keep telling us. But I’ve never seen any evidence that they contribute anything. Quite the contrary, it seems like they do just the opposite, they destroy.

    2. F. Beard

      So the lazies and unables (pardon my English) all contribute to the society! Robin Hood

      As opposed to the bankers who hit the golf course by 3:00?

      But I suppose the involuntary unemployed are just not trying hard enough?

      I tell you what. Let’s have a society where the financial class is not allowed to steal from everyone else and recurrently wreck the economy and then we can judge who is lazy or not. Sound fair to you?

      1. Robin Hood

        I am not defending the bankers. However i think the work done with brain is more valuable than the hands so I don’t have problems that the bankers go golf at 3pm. You obviously have socialist seeds in your head. If you try hard, you can find a job in the US or somewhere in the world. But you should not tell the employers that you are entitled for certain things, such as union job ($70 per hour performing a minimum wage job).

        1. Hugh

          Of course you are. You defend bankers whose primary accomplishments these last 10 years have been a massive housing bubble made possible by equally massive control fraud plus a financial meltdown which cost all us “entitled” “socialist” slackers out here trillions.

        2. F. Beard

          I am not defending the bankers. However i think the work done with brain is more valuable than the hands so I don’t have problems that the bankers go golf at 3pm. Robin Hood

          Bankers don’t earn money; they literally create it out of nothing. They aren’t using their brains; they are using government privilege via the Fed and legal tender laws to steal purchasing power from all money holders including and especially the poor.

          You obviously have socialist seeds in your head. Robin Hood

          No. An anti-fascist is not necessarily a socialist. In fact, I am a libertarian.

          If you try hard, you can find a job in the US or somewhere in the world. Robin Hood

          US jobs were automated or outsourced with the workers’ own stolen purchasing power via the banking system. And a shrinking, scared economy means that not everyone can find a job. And the bankers are the cause of that shrinking scared economy.

          But you should not tell the employers that you are entitled for certain things, such as union job ($70 per hour performing a minimum wage job). Robin Hood

          Why should I care? The bankers have a government backed cartel to allow them to loot; why should the workers not have one too? If the game is to loot by government then why shouldn’t everyone play it?

          1. darms

            Stealing fees by structuring check redemptions by maximizing the order of overdraft fees is not brainwork, it is theft.

  18. MyLessThanPrimeBeef

    Another puzzle about the rich that makes you wonder why – why do they want to make all that money so they can give it all or some of it away?

    Why not charge a little less or make no net profit at all and be immediately/instaneously charitable to the source of his wealth – his customers/clients?

    1. Hugh

      Power, control, prestige among peers, vanity. There is a Bill and Melinda Gates Foundation. There is no corresponding Bill and Melinda Gates revenue entry in the federal budget. The question is are we served by letting private players pick and choose where they dispense their ill-gotten billions or if we should just tax them and give some say in their dispersement to the public. I know, in the present kleptocratic environment there is no real difference between the two, but ideally speaking.

  19. Steve B

    Good afternoon,
    I’ve been visiting this website for some time now, and find a strong connection to many of the ideas expressed here. While its clear that not everyone is always on the same page, there nonetheless seems to be a general agreement that the present leadership of the US has proven itself illegitemate and incompetent in light of our shared democratic values. How do we correct this problem? I’m ready to organize, but don’t know how. I’ve dabbled in various local community/labor-oriented groups, mostly in get-out-the-vote campaigns around specific local issues, but have yet to find a group of colleagues with similar, uh, intellectual capacities and inclinations. Quite simply, where are the philosopher-kings capable of challenging the sophists currently in charge, and how do I join them? Pardon my crassness, but reading/posting on this is little more than mental masturbation (which I do enjoy!). While nice, its probably time for real action. I’m in that mid-sized city directly in the center of the continental US, on the confluence of the Missouri and Mississippi. Anybody else nearby and ready for the streets?


    1. Sufferin' Succotash

      Taking to the streets makes sense if there’s some community activism to go with it, for two reasons.
      First, the people taking to the streets need a political education so that they know clearly and precisely what they’re shouting about and the Powers-That-Be know that they know what they’re shouting about. Otherwise, the PsTB will simply shrug, say “BFD”, and go merrily on their way.
      Second, taking to the streets in the name of sweeping economic and social reform isn’t likely to produce swift results and that can be very discouraging, especially to political novices. Action on the local level is a useful Plan B because it can deliver some measurable results without taking forever–a good thing in itself!–and thereby serve as a morale-booster under all sorts of disheartening circumstances.

      1. Steve B

        Thanks for responding Succotash, but I’m not sure I understand your point. Of course direct action will lead to much initial disappointment, and the wilfull ignorance of the general populace is quite an intimidating barrier to surmount. BUT, pontificating on website comment sections, no matter how thoughful and erudite those comments may be, will get us nowhere. The PsTB might read this site and know we are on to them, but their response would surely be “BFD.” Nobody is afraid of a bunch of dorks griping about The Man and patting each other on the back over how smart they are for thinking alike.

        Several hundred peons armed with common purpose and understanding, massed in city centers across the country, will surely command more attention.

        The little fascists get direct action. Why can’t we, the presumably noble intelligentsia capable of challenging the Sophists (or PsTB), do the same? Surely not everyone on this board is a pencil-necked coward, content to hide behind $10 words and internet anonymity while our country is looted and our values trampled???

        Seriously. I’m in St. Louis. Anybody else around and interested? I don’t have any specifc plans, or much of a clue about how to begin, but I’m tired of sitting on my thumbs.


        1. Counter Revolutionary

          “I don’t have any specifc plans, or much of a clue about how to begin, but I’m tired of sitting on my thumbs.”

          This is how all unsuccessful revolutions start. We have countless examples strewn across the pages of history books.

          It’s not enough to know things must change. There needs to be agreement on how they should change, and then dedication afterwards to keeping to the agreement in spite of all obstacles.

          One expects that the kleptocrats will fight back both before and after the revolution, and that people within it will subvert it for their own ends. The kleptocrats are former or current mafiosi so things will get ugly.

          The best you can probably hope for is a situation like in France where there are endless demonstrations over what seem like trifles in an ongoing battle for 1% more fairness.

        2. Sufferin' Succotash

          To start with, I agree completely that pontificating on websites gets us nowhere (he says, pontificating on a website!)
          I am NOT saying “don’t take to the streets”. I am saying that taking to the streets shouldn’t be treated as an end in itself but as one aspect of a strategy for political action. This probably seems like belaboring the obvious, but I’ve been around just long enough to see huge amounts of enthusiasm and energy frittered away on strategically clueless protest movements. I’m talking, of course, about the Sixties.
          If you asked me right now what is a coherent and comprehensive strategy for a new reform movement in this country, you would hear crickets chirping. I don’t know what a coherent and comprehensive strategy would look like. But I’m fairly certain that it would have to entail some combination of action with ongoing education embracing concerns both local and non-local. Political consciousness means cultivating an ability to connect dots, an ability which most Americans don’t have, the lack of which is literally killing them. This is the garden we have to cultivate as an alternative to shmoozing on websites like this one.

          1. Steve B

            Thanks guys. Attempter those are very helpful links, exactly what I’m looking for. John I’m vaguely familiar with Uncut, and will also follow up on what they’re doing. Glad to see not everyone on this board is a flaccid wimp like Counter Revolutionary. What a turd.


  20. Steve B

    Thanks, guys. I do appreciate the feedback.

    “This is how all unsuccessful revolutions start. We have countless examples strewn across the pages of history books.”

    This is a weak excuse, and is exactly what THEY want us to think. Tell me friend, how do successful revolutions start? Do they start with excuses? Do revolutions start with a committee of academics preparing a detailed, peer-reviewed, meticulously crafted policy statement about how and where the revolution must take place and what its specific goals must be? This kind of wimpy thinking is why The Left has been getting its butt kicked for the last 40 years.

    My admission of flying blind is a request to you Counter Revolutionary, or anyone else who claims to know “the pages of history”–HOW HOW HOW do we change the present situation???? Despite my historical ignorance, I’m certain change does not come through an internet comment board.

    And who’s talking about a revolution? Simple changes to the funding and conducting of elections would be a great place to start. There’s clearly a consensus on these and many other boards that prosecution of Fraud (and enforcement of the rest of our white-collar laws) would also yield substantial dividends for democracy.

    Succotash–I’m with ya buddy, but we don’t need a coherent an comprehensive strategy for political consciousness. We the Peons can’t have political consciousness unless we are awakened from the dream.

    We need action. NOW. While there’s still a country worth saving.

    Seriously, there’s got to be at least one other young person on this website who cares more about democratic values than their university tenure, and is willing to ACT.

    Help. please.

    1. Counter Revolutionary


      This is not the first time in history something like this has happened. It is happening in nearly every country in the world and has been for thousands of years. So you don’t have to reinvent the wheel, or in this case the square wheel. It’s not a matter of tweaking this law and that agency; it’s a fundamental flaw in human character running rampant through all of humanity.

      This call to get out and protest sounds as if you are playing chess and thinking only one move ahead. If you feel powerless, it’s because you are. Their system was designed to be resistant to the kinds of protests and reforms you describe. It’s not a winning strategy, although you might be able to lose with more pieces remaining on the chess board.

      The best you can probably do as an individual is to boycott everything corporate including jobs with them, energy, food, and media. If enough people do this worldwide, the corporate systems will fold, and our species will have overcome this character flaw.

  21. Sufferin' Succotash

    “we don’t need a coherent and comprehensive strategy for political consciousness. We the Peons can’t have political consciousness unless we are awakened from the dream.”

    That’s precisely what raising political consciousness is supposed to do: wake people up.

  22. decora

    i have a problem with understanding this.

    higher wages lead to inflation….

    but the way they measure inflation doesn’t really accurately measure what most people spend most of their money on; food, energy, and rent.

    are you telling me that 2/3 of the cost of energy, food, and rent is in labor costs to produce those items?

    is $1000 a month worth of ‘labor’ really going to upkeep the ‘rent’ on an apartment in new york city, or is it just going into the real estate securitization chain?

  23. Francois T

    At some level, corporate executives are aware that they are lowering workers’ living standards, but their decisions are neither coordinated nor intentionally harmful. Call it the “paradox of profitability.” Executives are acting in their own and their shareholders’ best interest: maximizing profit margins in the face of weak demand by extensive layoffs and pay cuts.

    That’ll work until the parasites kills the host. Does anyone in high place think it is possible to have a solid and sustainable economy by making consumers less able to consume? Where do you get your sacrosanct profits? Outside the US? For how long? Which countries will pick up the slack when (not if) the second leg of the Great Recession kicks everyone in the teeth much harder than in 2008? Kazakstan? Egypt?

    Unless the plan is to make US civil society so weak and devastated while enjoying all the advantages of quasi slavery and politicians bearing the Ben Dover alias.

    As for Rattner, he is a despicable asshat.

    1. Tao Jonesing

      In reality, corporate executives do what they do to keep their jobs. They’re not focused on how much they’ll gain by laying off workers, they’re focused on how much they’ll lose by NOT doing so. Their understanding of the harm to workers is top of mind, not buried somewhere deep in the subconscious. The choice is a stark one: it’s them or me.

      The notion that this action is not coordinated is a fallacy. He who makes the rules gets the gold, and the rules that executives in public corporations play by were set up by somebody else. The executives are paid a lot more because they’ve been trained not to care whether their actions are harmful to workers. Staying at the top of the heap, not losing one’s position, requires being ruthless at times.

      You can call that “acting in their own self-interest,” but it’s really being sociopathic. As you essentially say, Francois T, self-interest rightly understood means not crapphing where you eat.

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