If you’re like me and it feels like you’re working harder and making less these days, there’s a very good reason for that. You are.
Wages of working Americans– just like the overall effect of government cuts during an extremely fragile recovery–are being wrung out like an old wash rag; and it’s accommodating our economy’s dying a slow death while poli-tricksters squeeze every drop of blood and every dollar of our wages they can from every working person in our country.
Since Americans like visual aids so much, take a gander at the chart below. It shows total US wages as a proportion of total US GDP — a number which continues to hit all-time lows. On the other hand, corporate profits as a percentage of GDP are hitting new all-time highs. In case you are wondering, this is why the stock market seems so erratically out-of-touch with what the average American is feeling.
Income Trends Show Destructive and Financial Trouble for Your Children— NOT the National Debt
It’s astounding how Americans get wrapped up in the day-to-day distractions offered up by profit-motivated network pundits, bought-off politicians while we sit back and obsess about new smartphones for the kids and allow them to dictate the public discourse. We lose track of trends, similarities, and history repeating itself that is directly affecting us and our shrinking pocketbooks. We forget that houses were so over-priced just five short years ago that when their real value was forced to be revealed, half the home-owners in America were underwater on their mortgages. Now we marvel at Wall Street record highs during an economic downturn and the most fragile economy since 1929? After all, that is the intention of ad-sellers, lobbyists, and the networks that enable them.
Low employee wages are certainly one reason the economy is so weak : those reductions in payroll represent reductions in income, spending power for consumers. But consumer spending is “revenue” for companies. So, yes, short-term corporate profits have been rising, but not because of rising sales, or more demand—the signs of a growing economy—but because of lower payroll, payroll taxes, employee benefits, etc.
It’s because businesses have been borrowing money at near-zero interest and buying other companies’ stocks with that borrowed money. And those kinds of profits don’t last. You don’t have to look far to see that they’re fading quickly. And if you look back at 1929, yes, this is yet another similarity between the events that lead up to the Great Depression that I’ve been trying to alert my readers to for the last four years.
In other words, we’re in a helluva nasty cycle, where low incomes create low demand which in turn means that there’s no appetite to hire workers, who in turn become discouraged and drop out of the labor force.
The employment-to-population ratio fell off an actual fiscal cliff during the Great Recession and will probably never recover. With a solid ten thousand older Americans retiring daily, the current “recovery” is not actually a recovery in the traditional sense as much as the wringing out of the remaining demand from before the fall…mostly from the bottom 99%, the people who need to live on paychecks.
These are not broad and unavoidable trends. They are not really big top-down trends at all. What they reflect is what every non-wealthy American with a bigger number on their IQ score sheet than their shoe size can tell you; that in the end, these numbers simply reflect the inability of individual workers to access learning, retrain, engage in commerce, seek or advertise a job, invent, invest and crowd source.
Oh, and by the way; your representatives in Congress DON’T’ CARE!!!
Enter the Erudite Emotionless Elites
The always pompous, narcissistic Tom Friedman made the following declaration as the focal (or should I say fecal) point of his May Day column:
“If you are self-motivated, wow, this world is tailored for you. The boundaries are all gone. But if you’re not self-motivated, this world will be a challenge because the walls, ceilings and floors that protected people are also disappearing. That is what I mean when I say “it is a 401(k) world.”
This inane drivel manages to be both unintelligible and incredibly bellicose simultaneously. I have no idea what Friedman thinks he’s talking about when he blathers on about disappearing protective floors. But it’s the height of stupidity and pretention when he says that today’s world is “tailored” for anybody who happens to be “self-motivated”. Self-worth and motivation are components of labor, not capital, and as such they’re both on the losing side of the current capital-based, rather than growth-based, global economy.
And by the way, Friedman is a billionaire (by marriage) who — like most billionaires these days — is convinced that he achieved his current bulbous position by merit alone, rather than through luck and through the diligent application of cultural and financial capital. His proclamations always remind me of Donald Trump or Mitt Romney who actually delude themselves into believing that they worked for their money.
The ultimate Friedman kick in the balls, however, doesn’t come from his disingenuous meritocratic blathering. It comes from his overarching meme: the idea that if you have a 401(k) plan, then you’re somehow in charge of your own destiny. Friedman could, by stretching one’s imagination, be half-right that we’re living in a 401(k) world, but if he is, then he’s managed to be half-right for the wrong reason. In Friedman’s mind, a 401(k) plan is an symbol of self-determination: you get out what you put in. “Your specific contribution,” he writes, italics and all, “will define your specific benefits.”
What? Really? Bullshit. Get real Tommy. Marrying wealth must have made you stupid. A 401(k) plan is an symbol of futility and the way in which the owners of capital extract income from the owners of labor. I’ve read Yves Smith is good on this, and Matt Yglesias is good too, but the real expert is Helaine Olen: she says,
“…the 401(k) is a way for both your government and your employer to disown you, and to leave your life savings to be raided by the financial-services industry and its plethora of hidden and invidious fees”.
The well-kept secret about the old-fashioned–and falling-out-of-favor pension funds– is that, for the most part, they were pretty damn good at generating decent returns for their beneficiaries. They tend to have extremely long time horizons, and are run by professionals who know what they’re doing. They also afforded them a fair amount of negotiating leverage when they dealt with Wall Street.
Savers obtain strength by being united: disaggregating them and forcing them to take matters into their own hands is just another way for corporate America to feed them directly to the Wall Street banksters who got us into this mess in 2008 and will get us into another mess soon; be it over-priced and under-valued stocks that will crash and burn taking your 401k with them, or some other “we should’ve-seen-this-coming” event like a series of bridge and infrastructure collapses on one of our major interstates… or a maybe complete and utter blackout of our abysmal and deteriorating power grid. That’s what happens when you wring all the profit out of a business/company/individual. It falls apart and it costs more to fix it than to start over.
The plain fact is that pretty much no one relying on their 401(k) for retirement will actually have sufficient income to be comfortable. If you’re rich today, you’ll probably be fine when you retire. But if you’re someone who (in contrast to Tom Friedman) actually lives on the income of your paycheck alone, then there’s almost no chance that your retirement savings will be enough, when the time comes.
And that’s not your fault: the reasons are deeply universal. And as a result, the solutions cannot possibly be the kind of bottom-up schemes that Friedman is trying to sell you.
Our politicians have failed us. The Democrats are weak and ineffectual and the GOP are crooks and will steal every last piece of candy from a baby’s hands if it will help win them stay in office for two or six more years with their protected, privileged lifestyle. They are all the epitome of moochers; living off of the work, taxes, and support of others. The quintessential embodiment of American Royalty who do nothing, add nothing of value to society but take as much from whoever they can.
But if you sit there on your lazy ass watching Game of Thrones or playing video games or facebooking about your grandbaby’s latest masterpiece of Crayon-awsomeness, you are just as much of the problem as those dawgs you’ve been electing to state and federal offices who have been getting away with murder—not to mention your money– for decades.
Harvey A. Gold