Opinion

Felix Salmon

Job creation in Davos

By Felix Salmon
January 30, 2012

Many thanks to Vikram Pandit for so perfectly encapsulating the hypocrisy of Davos with a pair of big announcements, seven weeks apart.

December 7, 2011:

Citigroup to Cut 4,500 Jobs on Slumping Revenue

Citigroup Inc. Chief Executive Officer Vikram Pandit will cut about 4,500 jobs in coming quarters as he seeks to reduce costs amid slumping revenue and “unprecedented” market conditions.

January 29, 2012:

Jobs are Top Priority, Business Leaders Say as World Economic Forum Annual Meeting 2012 Closes

The 42nd World Economic Forum Annual Meeting closed today, with business leaders urging resolute action to promote growth and employment, particularly among young people. “Jobs should be our number one priority,” declared Annual Meeting Co-Chair Vikram Pandit, Chief Executive Officer of Citi, in a session on the global agenda for 2012.

There was a lot of talk about jobs in Davos, in a way which was directly related to the talk of inequality. The assembled plutocrats had their party line on the latter — that the best way to address inequality is to make poor people richer rather than rich people poorer. (See James Q Wilson for the ur-example of this meme.) And clearly, the best way to make poor people richer is to give the unemployed jobs.

But beyond that, things got very fuzzy very quickly, and more than a little depressing. LSE economist Christopher Pissarides, for instance, basically said that it was delusional to hope for significant job growth from the technology sector or from manufacturing, and that if employment is going to go up, it’s going to be from people basically acting as servants to the rich — whether it’s looking after their children, giving them personal-fitness sessions, or making them coffee.

The sad thing is that I think he’s probably right. The likes of Vikram Pandit can declaim ad nauseam about the importance of creating jobs, but no matter how successful Citigroup becomes, it’s never going back to the headcount it had pre-crisis. And everybody knows, in any case, that profits are Pandit’s number one priority; to be honest I’d be surprised if jobs are on his priority list at all. The markets like it when big banks cut jobs, and hate it when they add jobs. And Pandit’s job is to do what the market wants. Which is, fire people.

Venture capitalists in pre-IPO Silicon Valley circles are good at rewarding companies for growing fast and hiring lots of people. But they’re pretty much the only ones. Once you’re public, your shareholders generally don’t like it very much when you hire rapidly, especially if those new hires don’t immediately feed through into increased profits. And so long as the CEOs in Davos prefer empty exhortations to actually doing something, it’s fair to assume that when they talk about job creation being a high priority, they mean it should be somebody else’s high priority. After all, when was the last time that you heard a public-company CEO boast that she was hiring lots of new people, with money that would otherwise go directly to shareholders?

Comments
50 comments so far | RSS Comments RSS

“… if employment is going to go up, it’s going to be from people basically acting as servants to the rich — whether it’s looking after their children, giving them personal-fitness sessions, or making them coffee.”

That’s BS. That’s what they want you to believe. Employment can go up if the tax system forces it. Right now there is no penalty for hoarding profits. Extremely profitable companies, and the wealthy individuals who receive great incomes when companies they run are extremely profitable, pay no penalty when they extract wealth from the economy and take it out of circulation, effectively shrinking the economy. It used to be that people would save money in banks that would lend out those savings, for business expansion, mortgages, and other vehicles that finance economic growth, but that doesn’t happen any more. Hoarded capital either sits on a computer file, earning nothing, or is used to move assets around to extract more wealth from the economy.

When we have a tax system that either forces private re-use of profits, or public investment through higher taxes, jobs that add value to society, and not just serve the 1%, will be created. If they don’t create those jobs, the government will be forced to spend money it doesn’t have to prevent the middle class standard of living from disappearing, and when it does that, the hoarded wealth will lose more value than they would by paying higher taxes or increasing investment. Everyone will lose.

As for CEOs in Davos only talking about doing something, that is because they are nothing more than private sector politicians. Most of them rose to their current positions via corporate political machinations. Like a congressman or senator that says anything to get re-elected, the CEO will say or do whatever they have to to protect their income stream. That is the free market in action – they don’t do what’s best for their company, they do what’s best for themselves, just like politicians. Don’t expect them to solve the nation’s problems, only their own, and take everything they say with a giant grain of salt, as every word is designed to advance their agenda, not yours.

Posted by KenG_CA | Report as abusive
 

“if employment is going to go up, it’s going to be from people basically acting as servants to the rich..”

If this is true, and it may be, it’s time to break it, not mend it. The system. Who needs globalization under these circumstances? Civil disobedience looks mighty good given the thin gruel ‘Davos Man’ has decided is our just desserts.

Look at it this way: the rich get to use roads and airports. Hey ‘Davos Man’, you don’t necessarily get to use these things. We, the people, through civil disobedience, can take these prerogatives away. We can block the parking lots to your outsourcing corporations. We can shut down the ports. We can END your ability to do business.

These ideas are in the air. There is nothing coming down the pike for young people, regular working people. Watch out.

Posted by nyet | Report as abusive
 

Louis Hyman, writing in the Wilson Quarterly, traces the rise of consumer debt and the way it fueled a shift from manufacturing to finance as the center of the U.S. economy.
“As consumer debt began to crowd out business debt, less money was available to invest in productive businesses and create the kinds of good jobs that made America’s postwar formula work.”
http://www.wilsonquarterly.com/CurrentIs sue.cfm

Posted by emacbride | Report as abusive
 

Referring to Pandit and the Davos crowd as “hypocrites” is taking them too seriously. CEOs are supposed to maximize profits and that’s it.

Government is supposed to maximize benefits to its citizens and is failing because it doesn’t have a solution of even the appropriate language to address the new challenges of the 21st century.

Posted by Engineeer | Report as abusive
 

KenG, I’m basically with you on that… The present system encourages hoarding, not earning. If you invest your money in existing assets, you’ll pay 15% tax on the earnings. If you invest your money in something new, you’ll pay 30%+ tax on the earnings. Easier to leverage when buying existing assets as well. (Nobody will permit you to leverage 30x when starting a business.)

That said, our economic future is divided between entrepreneurship (not for everybody) and services. Manufacturing is not going to pick up the 10%+ slack in employment. Construction comes in spurts, but also can’t absorb that kind of employment (at least not without rapidly overbuilding). Finding ways to extract money from the wealthy through services is one of the few growth industries we have.

Posted by TFF | Report as abusive
 

@TFF, your second paragraph says exactly what I was thinking when I was reading the post. Manufacturing is not nearly as labor-intensive as it was forty years ago. Construction remains labor-intensive, but is largely boon-and-bust. There was a time in our history when a strong back and willingness to work was enough to get into the middle class. Those days are behind us.

Who employs 100,000-plus line workers these days? IBM and HP, but the majority of those are in technical and professional services, which require technical education. Walmart, which remains labor-intensive and doesn’t require education, but won’t get you into the middle class. Government, which despite current downsizing trends may in fact become the employer of last resort.

Posted by Curmudgeon | Report as abusive
 

@TFF:

I’m not sure what is the difference between your two examples. If the cumulative taxes on C-corporate profits + what it takes to get those profits to to the owners (div/cap gains) is about equal to the effective tax rate on a Sch C business (ind. income tax rates), then I don’t have a problem with that.

If you invest your capital in existing asset (via shares in a C-Corp), and there are earnings from using that capital, then the C-Corp pays income tax on those earnings, and then you pay 15% when after-corp-tax-net-income is distributed. That cumulative effective rate is going to be about 30%+. I agree that large corps should not be paying 5-15% effective rates over a business cycle. Effective cumulative tax rate from profit making in a C-Corp distributed to the individual shareholder: 20%+ corp + 15% dividend/cap gains = 35%

If you invest your money in something new (equipment that you’re using for Sch C business?) then you deduct the expense of that equipment (depreciation) and then pay income tax rates, maybe 30% is reasonable, on your profits. How is that a worse tax situation than providing capital to a C-Corp?

Posted by SteveHamlin | Report as abusive
 

Speaking of hypocrisy, Felix, you yourself have indicated that we’d be better off moving a lot of employees from financial companies to, say, tech companies. How would that happen? Citigroup would lower its headcount, while the economy as a whole increases the number of jobs.

Posted by dWj | Report as abusive
 

I’m a bit of a curmudgeon about the overuse of the term “hypocrisy” in general, though in all seriousness I can’t imagine, as noted above, how you would score lower than Pandit in this particular case. I find that proponents of formally socialist healthcare who think the libertarian-minded are hypocritical for using government services never think that they are hypocritical for seeing formally capitalist doctors; that people who think black beneficiaries and opponents of affirmative action are hypocrites rarely think that white beneficiaries and opponents of Jim Crow were hypocrites; in general, that people who think the system should change but fail to act as though it hadn’t already are much less hasty to label their own actions as “hypocrisy” than those of other people doing the same thing with a different concept of a better system. This last practice is one of the few to which I am eager to apply the term.

Posted by dWj | Report as abusive
 

TFF, the wealthy are generally too cheap to spend a whole lot on personal services. They want to pay $10 an hour for everything, and it’s just not an efficient way to increase the trade that comprises an economy. But in any case, let’s assume they would pay more, how do you convince them to do that? The individuals who are hoarding wealth are often the same people who run companies that hoard wealth.

I agree that manufacturing and construction can’t make up the shortfall in employment, but as we have discussed here before, a reduced workweek can do that. If companies that employ thousands of hourly workers reduce the work week from 40 hours to 32 hours, they would need 20% more workers. Given the cost of health care, there is not much incentive for them to do this, but if that system is fixed…

SteveHamlin, the problem is not that people are choosing to invest in new ventures as you describe, but rather they are betting on the value of existing ventures going up or down, and this doesn’t create jobs, or add value to society. It’s still hoarding.

Engineer, CEOs are not “supposed to maximize profits”. If that is the case, what is the time frame? Do they maximize profits for the current quarter at the expense of the company two years in the future? Do they maximize profits only for the length of time the CEO expects to keep the job? So is it ok for a bank executive to make a bunch of loans that will generate enormous short term profits, but blow up in five years, after the CO is gone? He maximized profits, didn’t he?

Posted by KenG_CA | Report as abusive
 

@SteveHamlin, I’m not confident that I’m reading it right, and I’m not an expert in small-business incorporation. Rather, I was thinking about the difference between investing in publicly traded stocks and investing in your own business.

Start your own business and you are creating something new, hiring new employees, drumming up new business… And you pay 30%+ tax, regardless of how you are incorporated.

Buy into an existing multinational company and they offshore their earnings, paying in some cases ZERO tax, with the shareholders paying tax on the distributions at just a 15% rate.

It isn’t simply a question of how the business is incorporate, but also the dynamics of small vs. large. The large corporations have more effective ways to avoid taxation than your typical small business.

@KenG, I’m not sure what the term “personal services” means to you, but you are way off base. The wealthy might not pay their housekeeper more than $10/hour, but they almost certainly pay a higher rate to the lawn service, their personal trainer, for music lessons, tutoring, athletics, and more…

Posted by TFF | Report as abusive
 

dWj, your counterexample doesn’t pass the test of practicality. I’ve worked in several tech firms, and its not as simple as saying that Citigroup would lower its headcount, because a lot of people who currently work at Citigroup couldn’t get a job in tech. They don’t have the right background. At best, a huge number of them would have to go back to school or get a different college degree to produce the result you’re describing. Most tech firms only have a limited number of slots for people with MBAs and a background in Finance.

My take on what Felix was getting at was that in a better world, more young people would opt to pursue a college education that would align their training with what tech firms require and less on what a career in Finance, Insurance and Real Estate (“FIRE”) would require, and in that way the U.S. would have to rely less on people with H1-B visas and immigrants to fill out those staff jobs. Over a long period, we’d have fewer citizens working for citigroup and more citizens working for Apple, Microsoft, Cisco, HP, etc.

Posted by Strych09 | Report as abusive
 

TFF, the wealthy don’t pay a lot for lawn service (as least not here in SoCal). There are enough people willing to do that work for very little, which keeps the prices down.

Personal trainers? Yes, they get paid more than housekeepers, but if 4% of the population can afford them, and only 10% of those people hire them, and then only for a few hours a week, it’s not going to be a lot of jobs.

The same with music lessons, tutoring, athletics, etc. – they don’t amount to a whole lot of jobs. I think those than can afford to hire these kinds of workers already are employing them. Those workers aren’t showing up in employment statistics, but that doesn’t matter, because there already isn’t enough wealth being recycled. If the distribution of wealth gets further concentrated, there will be even less people able to afford to pay for personal services, and it’s unlikely that those who already earn a lot, but see their wealth increase, will spend more on personal services. I think the magnitude of the hoarding is so great it cannot be offset by increasing the personal spending of the hoarders.

Posted by KenG_CA | Report as abusive
 

KenG, you really think that only 0.4% of the people in this country have a personal trainer for a few hours a week? C’mon! It is one thing to suggest the numbers are small — another entirely to pull nonsensical numbers like that out of a hat. Do some research first before you suggest specifics!

As for each of those, I agree. None of them individually are going to employ more than a fraction of one percent of the population. So innovate! You aren’t going to get growth from doing more of the same, you’ll get growth from doing something new.

Posted by TFF | Report as abusive
 

TFF, so if we’re talking about trainers that charge $50 or more per hour, and people see them 2x a week, that’s $5K per year. How much do you think people need to earn to spend $5K per year on a trainer? $100K? $200K? I was saying maybe 4% of the population earn enough, but I don’t even think it’s that many. But let’s say it is, but of those who do make enough money to afford $5K/yr or more just for a trainer, what percentage of them will actually hire one? I really don’t believe it is higher than 10%, if that. I don’t know, that was my approximation, but how much higher do you think it is?

And if you leave out California and a few states in the northeast, do you really think there is a big market for personal trainers who can charge $50/hr and bill at least 30 hours/week? I just don’t see it.

And besides, what you are suggesting is that we can increase the number of people who use personal services. That implies that there will be more people moving into the hoarding class.

Yes, we need to innovate. But you’re expecting people who have lived their lives so far as an employee to learn how to create a new business and market themselves. It can happen, but most will fail. And there’s no safety net for those who do fail.

Posted by KenG_CA | Report as abusive
 

@KenG, according to the department of labor there are (were in 2001) 160,000 fitness trainers and/or aerobics instructors in the US. Perhaps a tenth of one percent of total employment?

Roughly 20% of all households in the US have $100k+ income. That appears to be sufficient to patronize a personal trainer, at least occasionally. If each trainer has a dozen individual clients and teaches a few fitness classes, I think you’ll find that the numbers work.

And yes, I believe the future is in providing more different labor-intensive personal services to a larger segment of the population. Again, 20% of households have $100k+ of income — sufficiently wealthy to splurge on at least some items.

“But you’re expecting people who have lived their lives so far as an employee to learn how to create a new business and market themselves.”

//No, Mr. Bond, I expect you to die!//

“And there’s no safety net for those who do fail.”

//Don’t quit your day job.//

And humor aside, I mean both of the above somewhat seriously… Don’t expect a single lifetime employment to be sufficient to raise a family in style. That ship has sailed. Get accustomed to piecing together a patchwork of part-time employment and odd jobs for much of your life. All the more reason to take health care funding away from the employers!

Posted by TFF | Report as abusive
 

To get a sense of why KenG_CA’s comment above about the rich being too cheap to employ large number of people in the way of personal services is insightful, consider the recent case of Margaret Cushing “Meg” Whitman, the current CEO of Hewlett-Packard and past CEO of eBay.

Before gliding into her current job, Whitman ran for Governor of California, and one of the issues that came up is that her housekeeper was an illegal alien. Now, at the time Whitman employed this person, she was already a billionaire from her previous time working at Goldman Sachs. Surely, she could have employed someone who was a legal resident and at reasonable wages: she wound up spending $140 million on her campaign!

But Whitman didn’t, she went out and hired someone who was working in the U.S. surreptitiously, presumably for less than she could have hired someone who was a citizen or legal resident. The Social Security Administration sent Whitman an “SSN no-match letter” in 2003, but Whitman didn’t fire the person working as a maid for her until 2009, when she decided to run for public office.

The point I am trying to make is this: if people who are by any reasonable definition rich won’t hire people as servants for reasonable wages, then the whole idea of a service-based economy breaks down unless the person providing the service is a highly-educated (and preferably state-licensed) professional providing non-discretionary services which lie outside the tradable sector (Doctors, lawyers, architects, accountants, etc.).

This is also the answer to TFF’s contention that the U.S. labor marketplace is fine, well and dandy. If you’re a personal trainer or a yoga instructor, you’re in the discretionary sector and your job can be eliminated when your rich patron decides to reduce their consumption levels.

Posted by Strych09 | Report as abusive
 

To piggyback on KenG_CA’s comment, the big problem with a patronage economy is that it just doesn’t mobilize enough capital.

You can pretty much assume that the incomes of most middle-Americans retain a pretty high monetary velocity. Most of it is going to get spent again, probably fairly soon, recycled into business income and thence wages, ad nauseum.

But there’s no plausible way that the incomes of the very, very wealthy are anything but idle. There are only so many luxury yachts one man can have. Maybe if this money was being allocated by market efficiencies into profitable new business enterprises that would be fine and dandy. But instead it simply got buried into high-yield securitized AAA issuance that helped fuel a ruinous debt binge, which I’m sure will never result in some sort of global financial catastrophe. Thank God.

The point is you can’t have a functioning high wage economy when a third of your monetary base sits idle. You either have to hope the rich get wildly good at allocating it (trickle-down) seize it (progressive taxation) or borrow it (everything up to this point).

Posted by strawman | Report as abusive
 

“This is also the answer to TFF’s contention that the U.S. labor marketplace is fine, well and dandy.”

Ummmm…. Strych? The James Bond quote was targeted at the US economy. When I write that I expect the middle class to die, I’m very puzzled how you can read that as “fine, well, and dandy”.

KenG is an optimist. He believes the middle class can resume their prior lifestyle if only we adopt policies that encourage the wealthy to spend. I am a pessimist. I believe those days are over, and we need to adapt as best we can.

Manufacturing isn’t coming back, and if it does it will employ fewer people (greater automation). The service sector is the only hope for growth, and the service sector is the LEAST likely to provide highly-compensated long-term employment.

Posted by TFF | Report as abusive
 

“You either have to hope the rich get wildly good at allocating it (trickle-down) seize it (progressive taxation) or borrow it (everything up to this point).”

What about GNP-growth targeting by the Fed? The monetary base is wholly artificial. If it happens to be idling, then why not print some more?

Suppose you could call that “seizing” the idle wealth through inflation, but one way or another it ought to get things moving again.

Posted by TFF | Report as abusive
 

TFF, that last part was sarcastically directed at your advice to non-wealthy households to “provide more different labor-intensive personal services to a larger segment of the population” and “Get accustomed to piecing together a patchwork of part-time employment and odd jobs for much of your life”.

I understand that you think the working class and lower middle class is doomed. So do I, if no steps are taken.

I just think we should actively do something about it and not just to deploy more rhetoric and tell people to adapt to a future standard of living curve that slopes downward, rapidly.

Posted by Strych09 | Report as abusive
 

TFF, I’m sure many of those 160K fitness trainers work for gyms, and not a lot of them are able to free-lance full time.

And yeah, take health care funding away from the employers. Just like Wal-Mart was willing to do, when it supported one of Obama’s health care plans. Unfortunately, few other large employers were in favor of it. And while you say I’m optimistic, I’m not optimistic about a real health care plan being passed until more employers stop providing one. And since CEOs don’t want to give that benefit up, I don’t expect that to happen.

I want to clarify your assessment on my optimism. While I am generally an optimistic person, I am only saying we CAN implement a system that works, not that we will. I do think the American middle class life is salvageable, but I don’t know that it will happen, as people tend to push for ‘ism solutions, which are extreme and doomed to failure. I do hold out hope that we will get someone who is able to get enough people to understand the problems cannot be solved by simple fixes, but I’m not expecting it to happen soon.

I’m with you on printing more money, that is the only response we have for hoarding. It effectively taxes the hoarders/tax avoiders, diluting their wealth beyond their control.

I think that you, Strych09, Strawman, and me are all in agreement that we cannot have an economy that works for most people when so much wealth gets put on the sidelines. However, I’m not ready to accept the effects of that as inevitable, as long as I can vent here. :-)

Posted by KenG_CA | Report as abusive
 

I can’t speak to all the details on Meg Whitman’s maid, but it’s actually not legal to fire someone based on just a no match letter – http://www.justice.gov/crt/about/osc/pdf  /publications/SSA/FAQs.pdf . I personally think that Meg Whitman could have guessed that her maid was not in the country legally, but I also sympathize with employers in states with large Hispanic populations. You can either (i) hire people who you strongly guess are providing someone else’s SS numbers but are providing sufficient documentation to be legally hired, (ii) get sued for discrimination if you subject Hispanic hires to greater scrutiny, or (iii) voluntarily use E-Verify for all employees, and subject yourself to a host of headaches (can’t use it to pre-screen but only for people who have accepted a job offer, some research indicates an over 5% error rate, must use it for all employees, and have to employ people who work with DHS to try to resolve a “tentative” status until DHS rules on their status one way or the other). As 1 person making 1 hire, Ms. Whitman is in a little better spot, but a sizable employer is pushed toward option (i) by the legal system.

Posted by realist50 | Report as abusive
 

It’s for authorize decision maker to take important action than let it be worse.

Posted by ABS2204 | Report as abusive
 

For what it’s worth, TFF has said all that I would say and articulated it progressively and extremely well. Kudos!

realist50, KenG_CA, SteveHamlin, Curmudgeon, Engineer and emacbride all contribute meaningfully to an overall excellent string og insightful commentary.

And then there’s nyet, our token anarchist back online with the dismantlement of the latest “protests” of OWS, who, someday may “get a life”, or not.

Posted by OneOfTheSheep | Report as abusive
 

May “get a life” or not?

Sorry, like it or not, OWS is a primary reason so many discussions have been sparked about income inequality, politics and business and the need to do something. Same ol’, same ‘ol just ins’t going to cut it. Whatever your personal prejudices about OWS, they helped to bring this conversation to the mainstream.

It seems likely – and given our recent experience in the US, fortunate – that 21st-century capitalism will look less and less like the economic Darwinism celebrated on Wall Street. Instead, it will look more like an Asian-led hybrid of the alternatives, with a recognition that markets and companies are granted the freedoms and privileges they have by virtue of the degree to which they directly and measurably improve the quality of life for society at large, not just for the few.

The eurozone crisis underscores the need for activist governments to follow the more disciplined models
of Europe’s north. But to suggest, as Mitt Romney has, that policy failures in southern Europe are an indictment of all socially orientated market policies, is to ignore the overwhelming message from the global marketplace. The US is wrong on the right balance between public and private power. The rest of the world stands ready to define capitalism in new and strikingly different ways.

Posted by LetThemEatCake | Report as abusive
 

After the cold war, many thought we had resolved the big questions about the relationship between public and private power. The leave-it-to-the-government view of Marxists had failed. The leave-it-to-the-market view of the disciples of Milton Friedman had triumphed. But their victory dance was premature. Not only had we not reached the end of history, we were entering a new phase of the centuries-old public-private contest for power: an era of competing capitalisms.

Now, in addition to the economic Darwinism of the Anglo-American model, and capitalism “with Chinese characteristics”, there is “Eurocapitalism”; the “democratic development capitalism” of India and Brazil, with their strong social agendas to go with their growth aspirations; and the small-state entrepreneurial capitalism of Singapore, the Gulf states and Israel.

About all we can safely predict is that the Anglo-American view will become less influential and a global consensus is likely to emerge that there should be a greater role for the state in the marketplace.

For try as they might, even the most ardent free-marketeers cannot ignore the growing worldwide appreciation for the comparative advantages of alternative approaches. Scandinavian social safety nets provide more comfort in dealing with the fallout from globalisation than patchy US labour market policies. Governments such as the UAE boost business growth by playing a private equity role. Singapore’s regular strategic reviews identify and promote its comparative advantages.

History teaches us that as economic power shifts, intellectual influence follows. It is important to acknowledge that virtually all Asian models of capitalism involve a more active role for government. And the rise of these models is taking place as the US approach is discredited by abuse, shrivelling opportunities and a shrinking middle class. Among the alternatives, the US model is now the outlier.

It seems likely – and given our recent experience in the US, fortunate – that 21st-century capitalism will look less and less like the economic Darwinism celebrated on Wall Street. Instead, it will look more like an Asian-led hybrid of the alternatives, with a recognition that markets and companies are granted the freedoms and privileges they have by virtue of the degree to which they directly and measurably improve the quality of life for society at large, not just for the few.

The eurozone crisis underscores the need for activist governments to follow the more disciplined models
of Europe’s north. But to suggest, as Mitt Romney has, that policy failures in southern Europe are an indictment of all socially orientated market policies, is to ignore the overwhelming message from the global marketplace. The US is wrong on the right balance between public and private power. The rest of the world stands ready to define capitalism in new and strikingly different ways. -D. Rothkopf

Posted by LetThemEatCake | Report as abusive
 

@LetThemEatCake,

Your nom de plume marks you as an anarchist and your words a socialist.

The “…growing worldwide appreciation for…Scandinavian social safety nets…is much like my appreciation of Ferraris. Lovely, but I can’t afford one.

The Euro is wobbling on the edge of complete collapse. That would seem to confirm that the lavish benefits the Euro countries have attempted to lavish on themselves are not sustainable in the long term by the efficiency of their concurrent productivity. That is, always the “bottom line”, isn’t it?

The “rest of the world” stood by as America has DEFINED improvement in “the quality of life for society at large” for some six decades, and then, with varying degrees of success, attempted to “catch the magic” in THEIR bottles. It can define capitalism any way it wants, but it still must make each “alternative” succeed. GO, y’all!

Posted by OneOfTheSheep | Report as abusive
 

Sheep, I wouldn’t group all of the Euro economies together, the ones that are in trouble have not all lived lavishly. The one getting the most attention now, Greece, just doesn’t collect enough tax revenue to pay for the services their society demands. The US is not so different, except that the US can print its own money to pay for those services, and Greece cannot. Other countries (Spain, for example) just got hammered by the credit crisis (just like the U.S. did), but again, are not able to print their way out of the mess. Even if they used their own currency, they would still be in trouble, as they would suffer from inflation, since their currency does not enjoy the reserve status of the dollar.

Most societies in developed nations expect and demand a standard of living that requires certain government provided benefits. When governments threaten to reduce those benefits, as happened recently in Greece, the people stand up. Greece could afford to provide those benefits, if they taxed the wealth hoarders at a higher rate, but the wealth hoarders there, just like in the U.S., have enough influence with the government to prevent those higher taxes. They have a choice, however: pay the higher taxes, or pay them indirectly through inflation or a withering economy. the only reason we haven’t faced the full brunt of this choice is our ability to print money.

You are right that capitalism can be defined in different ways, but each alternative must be made to work. Capitalism is a belief system, like a religion. There are no laws of capitalism like there for physics; no theorems like there are in math. The belief system cannot be universally applied, because every implementation has its exceptions and a different environment.

Posted by KenG_CA | Report as abusive
 

@KenG_LA,

“…Greece, just doesn’t collect enough tax revenue to pay for the services their society demands. The US is not so different, except that the US can print its own money to pay for those services…”. You seem to presume that because the U.S. CAN, it SHOULD. I categorically disagree.

Every petroleum exporting country will eventually exhaust that source of revenue. I believe any “leader” worthy of that title has an obligation to their people to have in place by that time an alternate and sustainable economy based on producing something else of value.

In the same sense, yes, the U.S. enjoys a HUGE economic advantage in being the “producer” of the least insecure alternate to gold in the international monetary system of today. That will not always be so. It can “buy us” the time necessary to get our economic house in order before “judgment day” ONLY if we heed the dying canaries in our coal mine.

We’re BROKE! Our expenses not only exceed our tax revenue, but they continue to grow unabated. What part of UNSUSTAINABLE do Socialists not understand? When “…societies in developed nations expect and demand a standard of living…” that they have not earned, the clock is ticking on the demise of that society.

Socialism eventually runs out of other people’s money! A viable society is always production driven, NOT entitlement driven. Is this so hard to see and comprehend?

Posted by OneOfTheSheep | Report as abusive
 

“A viable society is always production driven, NOT entitlement driven.”

Absolutely agree! However, you can’t have a “production driven economy” that leaves 20% of the population on the sidelines. Ethical arguments aside, you simply won’t get the same kind of production with 80% of the population employed that you would with 100%.

Something needs to happen to get the money off the sidelines and reinvested in growing production. One technique is to expand the money supply until it starts flowing again.

You might not even need to print money. Even a credible threat might be enough to get the money put to use? But one way or another, we need to increase employment and production to advance as a nation.

Posted by TFF | Report as abusive
 

Sheep, if X billion dollars are taken out of the economy and put on the sidelines, the government must step in and replace it, otherwise the economy will shrink. Which is what happened in 08/09, among other things. Sure, China and other countries could inject capital into the country, either buy buying assets (not good), or lending us money (also not good). I would prefer that our tax system be modified so that hoarded wealth is penalized by higher tax rates (and investment rewarded with tax credits.

But if that doesn’t happen, then the only thing to keep the peace is printing money. It’s a great time to do that, the dollar is artificially over-valued, and it can only go down, in which case we pay back the loans in cheaper future dollars. But again, I would rather the government not do that, but that will require those who are accumulating wealth to deploy it.

Printing money is unsustainable, but so is extracting wealth from the economy and having it sit unused in a computer file.

I am by far not a socialist. If you think that anyone who believes deficit spending is a socialist, well, you’ve greatly expanded the definition to include Ronald Reagan and both Bushes.

And I’m not in LA.

Posted by KenG_CA | Report as abusive
 

Maybe it’s the matter from Authorized Organisation willing to pay (salary) of their present in the workplace.

Posted by ABS2204 | Report as abusive
 

@TFF,

Maybe my perspective is different, but isn’t it near the “norm” for U.S. society to have “20% of the population on the sidelines”? I would speculate that the total percentage of “the population” that is both unemployed and/or in school, the sick, the unemployable disabled or elderly, the incarcerated, the unemployable mentally ill and those undiagnosed individuals too shy, too aggressive or with other phobias or appearance issues to fit into the productive functions that comprise today’s U.S. society might be closer to 30%.

Even if you wanted to instead discuss the “willing and able work force, issues of literacy, language proficiency, math proficiency, criminal background, drug use, obesity, attitude, and physical condition eliminate many young people from being accepted into our armed forces every day. Some of these things tend to increasingly and adversely affect employability as individuals age.

I’m unaware of any “money on the sidelines”. Let’s look at the “pile of cash” Apple is purported to be “sitting on”. Does anyone really believe that that money is sitting in a vault in Apple’s headquarters in Cupertino? I don’t. Those are smart people, and I believe it is invested at interest somewhere very safe from which it thence springs forth into commerce with all associated and beneficial economic effects.

The U.S. has already been aggressively expanding the domestic money supply during this recession. It is also sending many billions, if not trillions, to “shore up” the European banking system from collapse. So long as the dollars in China’s hands and those of other nations in vaults stay there, inflation will stay low because there will not be an excess of dollars chasing a limited supply of goods.

The moment those vaults open, however, they will all open in a heartbeat. With enough EXCESS dollars “out there” not backed by ANYTHING we will likely be looking a fast forward replay of Weimar Republic inflation where 100,000 Marks could not buy a loaf of bread and all pensions were wiped out. Some of the people ate rats to survive in the aftermath.

I’d sure like to see the U.S. avoid that kind of economic “adjustment” but what will be, will be.

Posted by OneOfTheSheep | Report as abusive
 

@KenG_CA,

Sorry for the typo.

Much of what I wrote to TFF would apply as a response to your post.

Your recent opinions seem more frustration than socialist, and I’m frustrated too. It’s easier to set and hold a course steering in calm weather than in a storm, but it’s the storm and how well one copes under stress that are the measure of a man or a woman.

As far as deficit spending goes, I approve of such tactic ONLY as an emergency patch. Far, far too many view it as legitimate monetary policy.

The difference between intelligent tweaking of an economy for smoother function and deliberate and unceasing actions that debase the value of a currency is comparable to the difference between “lightning bug” and “lightning”.

Posted by OneOfTheSheep | Report as abusive
 

Sheep, there’s still very high unemployment by any standard, and you can’t massage the statistics so it seems normal.

As for the money on the sidelines, this article published a couple days ago says the S&P500 firms have over $1 trillion in cash ( http://in.reuters.com/article/2012/01/30  /investing-kingcash-idINDEE80T04N201201 30) If it’s being lent out, it’s to the government, in the form of treasuries and other safe debt. Companies like Apple can’t “invest” it elsewhere, the CFOs would be asking for a lawsuit if they lost any of it in investments (Apple does invest a small portion of their hoard in suppliers, but that’s only to ensure they enough material at a good price. They still have almost $100 billion in cash that’s not being lent out or used otherwise).

We’re not sending trillions to shore up the European banking system. They’re pretty much on their own, although the ECB could act like the Fed did in 2009, which did end the downward spiral of the economy that was fueled by the credit crisis. We should care what happens to their economy, though, for if it collapses, our economy will take a huge hit, not to mention we will have to deal with all the political instability it will cause.

There are four currencies with enough liquidity to challenge the dollar as the reserve currency, but three of the underlying economies have worse debt issues than the US (GB, Japan, and the EU), and the fourth (China) ties its currency to the dollar. There is no one to hold the US accountable for deficit spending. We are forced into this corner because our currency is artificially higher than it should be, making it difficult for us to compete with lower cost nations. We get priced out of markets solely because the dollar is too valuable. In normal times, when we respond to a trade deficit with a budget deficit, the dollar would lose value, and allow American products to be more competitive, but these are not normal times.

We’re in no way approaching the Weimar Republic, it’s not even close. Inflation is nowhere near an issue; and without deficit spending, deflation would be a bigger concern. China (and the rest of the creditor nations) have way too many dollars, so they have incentive to make sure it doesn’t crash. And even without inflation in the U.S., we have seen pensions getting wiped out, as companies go bankrupt (like when a leveraged buy-out burdens a formerly profitable company with so much debt, it goes under and takes retirement plans with it). That said, I would welcome a 20% haircut on the dollar, it might actually re-open some factories here.

The deficit spending that has occurred in the last 3 years has been an emergency; when businesses spend less, they lay people off, and there’s a downward spiral. A free market economy with no government-financed adjustments is driven by positive feedback loops; when the economy is growing, profits are re-invested and companies hire more people, but when it is shrinking, they cut back on spending and lay off workers, which leads to more decreases in spending and increased unemployment. Without an injection to offset the decrease in private sector spending, the economy will shrink.

There is a solution, as those who have read my comments will skip because they have read it before (and it’s why TFF calls me an optimist): increase tax rates and provide a tax credit for investing in capital expenses, R&D, education, health care, new construction, increased hiring – investing in new ventures. Those with profits who don’t re-invest will pay higher taxes; those who invest will pay lower taxes. We need to make sure money is continuously being re-circulated back into the economy. Use it or lose it, and if people use their money, the government won’t need to step in, and will see tax revenues rise; if they don’t use their profits, they pay more in taxers, and the government covers its bills. Well, more of them, anyway.

I’m beyond frustration. I don’t see the system working, but I think it can be fixed. A free market system is based on positive feedback, which is fuel for instability and chaos. The positive feedback loops need to be attenuated (meaning less of the output gets fed back to the input) and dampened (meaning the rate at which it gets fed back is slowed down), to minimize the damage they cause, and they need to be offset with negative feedback (you take too much wealth out of circulation, you pay more in taxes). That’s the tweaking of the economy you need.

Posted by KenG_CA | Report as abusive
 

@OneOfTheSheep

“Your nom de plume marks you as an anarchist and your words a socialist.”

I find your remarks quite amusing. Those words by the way were written by a fellow ‘anarchist’ and ‘socialist’ named David Rothkopf (followup post). You can read more about that commie/red here:

http://en.wikipedia.org/wiki/David_Rothk opf

From what I can gather, your remark is not that surprising. Your rather defensive, wild deduction and reasoning in general seems to come from a viewpoint that is stuck in the past and lacking present real world context. Anarchist? Socialist? Oh I see, dirty word is it, socialism. Except of course when you’re bailing out the financial industry to the tune of billions. Where would capitalism be if socialism wasn’t there to bail it out? Your rah, rah cheering and nationalistic tone does not help your case at all by the way. That hubris is quite familiar though. You betcha.

You seem to have quite a reductive view of capitalism and how the world works at large.

You make mention of the ‘lavish benefits’ but you don’t seem to take into account how capitalism underwrote this sytem which is rather ridiculous. Let me repeat, rather ridiculous. You choose only to see half the picture. Not surprising from somone who is quick to throw around words like socialist and anarchist. A bit too much FOX News perhaps?

As though capitalism is nice and simple that can do no wrong. The ends simply justify the means in your worldview. Should we bother with context at all?

America deserves praise and it deserves criticism. America more than any other nation DEFINED CONSUMPTION as a way of life. One third of all American Adults are obese. Just walk into any Wal-Mart and you see those figures come to life. That’s some quality of life right there.

Your nom de plume seems to be in the ballpark.

Posted by LetThemEatCake | Report as abusive
 

@LetThemEatCake,

A rose by any other name…

It may surprise you that I believe the McMansion “bubble” was deliberately inflated by an unholy alliance between the financial “system” and our government’s “guarantees” to seduce many, many unsophisticated people who earlier could NOT have qualified for mortgages on the homes they bought to “sign on the dotted line”.

The tax incentives of home ownership had a “second, bigger bounce” effect on our economy as they fueled more and more “bigger fools” to speculate in a housing market overheated and ready to fall. Even if these people WERE motivated by personal greed, they deserved better from their own government.

Personally I would like to see our “financial industry” put under a really bright light in public to see who the vermin are that allowed the housing bubble to build and burst even if many of those unemployed by the process were ones who could not have secured jobs in construction during “normal” times. And yes, I’d like to see indictments, prosecutions and jail time for the culpable.

Government hacks bailing out financial criminals is NOT socialism bailing out capitalism. It is a system gone mad without purpose or restraint.

I write my own opinions. Right or wrong, they are genuine originals. I’m proud of America but I’m not proud of some Americans. Remember Enron? And I have YET to listen to FOX news.

Posted by OneOfTheSheep | Report as abusive
 

“Government hacks bailing out financial criminals is NOT socialism bailing out capitalism. It is a system gone mad without purpose or restraint.”

A rose by any other name…

I’m sorry but you don’t get to pick and choose the good parts of capitalism and ignore and redefine what the ugly parts of capitalism have wrought to suit your worldview.

As for ‘socialism’, well social programs are successfully placed into practice in some form in countries all over the world. Perhaps you would like to see social programs like Social Security and Medicare get eliminated in America? Privatized perhaps and left to be handled and manipulated by the ‘financial vermin’? Or perhaps like the many Tea Party members or ignorant FOx News viewers who also throw around words like socialism but don’t want to see social security or medicare touched. After all, many of them are on the former and require the latter.

You don’t get to pick and choose.

Oh, it may surprise you to believe that I am not a socialist. Or an anarachist and I mean really, it’s 2012, not the Red Scare.

“I write my own opinions. Right or wrong, they are genuine originals.”

So I take it you did not find David Rothkopf to be too ‘red’ and he will remain off your blacklist?

Posted by LetThemEatCake | Report as abusive
 

“Maybe my perspective is different, but isn’t it near the “norm” for U.S. society to have “20% of the population on the sidelines”?”

Depends on precisely the statistic you are looking at. Overall labor force participation rate (age 16+) is under 64% and still dropping. Ten years ago it was pushing 67%. Of those, 8% are unemployed. A decade ago it was under 5%.

The unemployment/underemployment/discouraged rate is likely around 20%. I won’t push the exact number, but it is clearly higher than it was a decade ago. There is clearly room for improvement. And you can’t optimize PRODUCTION while the labor force is under-utilized.

“issues of literacy, language proficiency, math proficiency, criminal background, drug use, obesity, attitude, and physical condition”

Ahh…. The ugly myth of the “worthless individual”. Instead of making excuses why they can’t do anything of value, why don’t you use your imagination to figure out what they might do? A decade ago they found employment. Why not today?

“I believe it is invested at interest somewhere very safe from which it thence springs forth into commerce with all associated and beneficial economic effects.”

Is this opinion merely blind faith? The money supply is historically high, yet GDP has been essentially flat. That suggests to me that the velocity of the money supply is down — in other words the money is NOT “springing forth into commerce”. Do you have any suggestions for convincing it to do so?

“The moment those vaults open, however, they will all open in a heartbeat.”

Maybe true, but leaving the vaults closed isn’t any better a solution. I agree there is a fine line — the Fed needs to crack them open, then act quickly to mop up the extra cash injections from the past few years before the flood gets out of control. This isn’t the Weimar Republic, or at least it doesn’t need to be.

Posted by TFF | Report as abusive
 

@LetThemEatCake,

I do my best to think logically and reason with an open mind. I consider many different points of view, and at my advanced age few are “new” to the extent of not having considered before and accepted or rejected.

By saying: “…you don’t get to pick and choose the good parts of capitalism and ignore and redefine what the ugly parts of capitalism have wrought to suit your worldview…” you presume to tell me how to think. I shall forego the considerable pleasure of an uncensored response to such presumption and just say “Yes, I can”.

You seem unaware that the human brain easily “overloads” and so to handle complex thoughts or tasks it is necessary to split them into elements of a size possible to handle. Thus solving a complex problem is a matter of reducing it to a series of more simple ones and addressing those in perceived sequence or priority of importance or benefit from solution.

Therefore I believe American capitalism to be largely responsible for the success of this country, such as it has been in the past, is today, and will be in the future; but, like religion, can be perverted. It is a tool, like the sledge hammer, which can be used to build the railroad or destroy the locomotive. How a tool is used is a matter of skill and personal choice and with each comes responsibility for the result, good or bad.

We are affected by our day-to-day reality. If we swim in a clear stream a bit of water in the mouth or nose is little problem, but if we swim in sewage that is not the case. While I would not have voted to establish Social Security or Medicare or Medicaid or Part D coverage, when my participation was mandated I contributed and legitimately expect the “bargain made” to be kept. My opposition is philosophical and not moral.

There are many like me who expect honesty from a government that, at times seems incapable of that. So long as government serves us (or perpetuates such myth) we shall attempt to compel good faith functions when and as we can.

Mr. Rothkopf’s impressive credentials merely suggest his opinion(s) worthy of consideration. Acceptance is another matter entirely. Your link did not convince me that further time invested researching him worthwhile.

A “blacklist” of those I do not waste time reading or listening to would include the likes of Jimmy Carter, the most recent Illinois ex-governor and Mullah Omar. It’s neither formal nor long and I don’t dwell on such things.

Posted by OneOfTheSheep | Report as abusive
 

@TFF,

You and I differ somewhat in how we see the world, but you present your perspective clearly and honestly. Your facts and conclusions appear credible and worthy of respect. In that context, here’s my “take” of your latest:

I agree there is “room for improvement” in the current “unemployment/underemployment/discoura ged rate”. Unfortunately, I don’t believe the current situation being so much that the current labor force is under-utilized, but that it is increasingly redundant.

The country’s problem is that buggy-whip makers need to be retrained in the transition from a production economy into an information society. The unfortunate reality is that it is quicker and cheaper to find the people capable of doing that which needs doing by training the young and tech-savvy; and yet those who would hire them patiently wait for a hopelessly outmoded educational system to provide them fully “employment-ready”.

There are going to be people “left behind” by this transition for whom there is no place, and it will be up to each to find a need and fill it. I would be quite willing to act as a paid consultant to the more promising for a percentage of the wages they receive in a position I get them into, just as the employment bureaus of years past did. As to the rest of the problems, first there must be acceptance that each exists before it can or will be resolved.

Is my opinion that your “sideline money” is invested merely blind faith? I would prefer to regard it as “common sense”. There is inflation in America that erodes the purchasing power of dollars in a mattress relentlessly. So you “put it out” for security so no one comes to your house to steal it.

If you put it in a financial institution at interest then, traditionally, it gets loaned out again and again and thus creates economic activity. Banks have been increasingly reluctant to do that and when they pay out 1% or less, the financial pressure for them to do so is inconsequential in a historic sense. I agree with you that’s a HUGE problem, but the ideas to fix it must come from those more familiar with alternatives within the financial system than I.

That does not happen with gold, because the number of dollars one receives when gold is sold typically is proportional to “real” inflation. But gold does not “grow” as dollars do when “invested”. You don’t “invest” gold, you hoard it. Gold is the “dead end” inactive money “on the sidelines” that concerns you. In America the amount of wealth locked up in gold is, proportionally, pocket change.

I don’t know how much of the “cash hoard” Apple is purportedly sitting on is in this country and how much is not and will not be. There is a fine line in legislating what people (or corporations) can and cannot do with THEIR money because feet and couriers are always faster than bureaucrats in keeping it out of the teeth of regulatory control.

Posted by OneOfTheSheep | Report as abusive
 

“There is inflation in America that erodes the purchasing power of dollars in a mattress relentlessly.”

Very little inflation in recent years, which is perhaps part of the problem. When inflation averages 3% to 4% annually, people have a strong incentive to find something to do with their money. When it is averaging under 2%, they are far more willing to wait and watch.

Hopefully inflation will pick up a little? Doesn’t need to be double digits, just enough to keep things moving.

And yes, we need retraining in addition to investment. The new economy will not look like the old economy. (When has it ever?) Read about the Luddites — we’re seeing something of that these days, for similar reasons.

Posted by TFF | Report as abusive
 

Sheep, in theory banks will lend out all the money being hoarded by companies like Apple. However, that’s just theory lately. Because of the pain they still feel from the debt crisis, where they loaned to anyone with a pulse and had it blow up in their faces, they now are far more selective about loaning money out. Combine that with far fewer housing starts (which traditionally consume a lot of banks’ deposits), and you’ll see that much of the money that banks have on deposit is just being lent to the government. And it’s not because they can’t receive a higher interest rate from other borrowers; it’s just that they want to minimize their risk, and that ends up crippling the economy.

The idea that money being saved by individuals or businesses with lots of income is being re-invested in the economy via banks is one of the conventional wisdoms that have reality flying in their faces. Massive deficit spending causes inflation? Yes, usually. But not now, there is no economy with the ability to inflict that kind of penalty on us. There are enough jobs out there if people are willing to take them. Yeah, but are employers willing to hire just anybody, when it’s a buyer’s market?

“If you put it in a financial institution at interest then, traditionally, it gets loaned out again and again and thus creates economic activity.” If the money is being lent to finance a leveraged buyout, it creates no economic activity, just a shuffling of paper.

Nobody is suggesting that we legislate what companies do with their money, just that we adjust the tax system so they don’t idle their money.

And to your last comment that makes insinuations about regulations: I have started or invested in more than a dozen (mostly technology) start-ups in the last 12 years or so, and none of them have been hampered in any way by regulations. The two biggest obstacles they have faced have been a shortage of talent and risk capital. We don’t train enough people for the relevant jobs and we don’t incentivize investment.

Posted by KenG_CA | Report as abusive
 

@KenG_CA,

With much of your latest comment I wholeheartedly agree.

I would even consider legislation as a “legitimate solution” to the flow of money in a given society. An axiom I believe strongly in is that any society is an incredibly complex reflection of it’s tax “system”.

As you change what is taxed or not taxed and how much you change society, for better or worse, or both in different areas. So I feel I must hasten to appropriately clarify such “consideration”.

Just as disconnecting the governor on an internal combustion engine can both improve efficiency or allow the engine to destroy itself, to redefine and refine our existing society from what it is, warts and all, into what we would have it be by rewriting our tax system from “scratch” would require the political will to come to consensus as to what our society should be and then “intelligent regulation” to bring that about. Only once we know what society we want do we know what it will cost. What we want and what we can afford will naturally vary with the “times”, both good and bad.

If we but look closely at how our present tax code and unionized bureaucrats run our FAA, Department of Homeland Security, etc., and the regulations they enforce or do not enforce just in the limited areas of immigration, ethanol, lead removal and aviation policies (which have all but killed private aviation in this country), “ intelligent regulation” would seem an oxymoron.

I’m enough of an optimist to believe it need not always be so if “we, the people” get rid of government unions so that we can establish appropriate duty and power to govern our bureaucrats on the basis of efficiency and accountability. I’m NOT saying this would be easy, but only worth a good faith effort to accomplish.

You’re absolutely correct that “We don’t train enough people for the relevant jobs and we don’t incentivize investment.” But the REAL problem is that neither “status quo” is going to change until specifically and intelligently addressed by our “representatives”! WE have to hold THEIR “feet to the fire”, and we don’t.

Posted by OneOfTheSheep | Report as abusive
 

@OneOfTheSheep

“…you presume to tell me how to think. I shall forego the considerable pleasure of an uncensored response to such presumption and just say “Yes, I can”.”

Thank you for stating the obvious which also reinforces my point about picking and choosing. Remarking about “lavish spending” without giving proper focus and attention to the system that underwrote it is gross negligence.

Again, where would capitalism be if socialism wasn’t there to bail it out and push it along? Try and see the entire system and how it works not just cherry pick parts of it and underline nice sounding ideals that seem to exist mostly on paper.

It’s not just the financial sector, corporations have run amok as well and they take advantage of socialist policies, excuse me, subsidies to their benefit all the time. Do you think it’s only the lazy that benefit from welfare? What do they spend their welfare checks on? Remove welfare in America and suddenly supermarkets would take a serious hit.

I can only imagine how much sales at Wal-Mart would fall. I think it’s safe to assume a great majority of Wal-Mart shoppers and workers are on welfare and state benefits. Good thing so many of those useless items sold and consumed are produced in China. Let’s cheer capitalism here for a moment, in this vacuum where only cheap goods matter, disregarding the consumption and where those products are made and in what conditions. Good thing prices are so low at Wal-Mart I mean the workers and shoppers tend to be poor so they need ‘deals’ on even the most basic necessities. Quite the catch-22.

How about cell phone companies? Everybody has a smartphone and data plan these days, even if you’re on welfare.
This is the gross irony of those who are quick to call out the welfare system. They completely disregrad the welfare that capitalism itself runs on, bankers and corporations.

It takes money to make money and corporations get massive subsidies all the time which get taken from the US taxpayer. They also seem to find a way to avoid paying taxes. They have their cake and eat it all the time. They protect the bottom line at all costs. Western capitalism has become a world that revolves around consumers and investors. Democracy and its citizens seemed to have disappeared.

Again, you can pick and choose and of course think how you want, doesn’t mean that’s been the reality for 7 billion people and should be.

Posted by LetThemEatCake | Report as abusive
 

@LetThemEatCake,

I love the mental simplicity of those who only see a faucet full on or full off and none of the infinite interim options.

You dance back and forth from one extreme to another, seeing only injustice and none of all that is right in America. You are the human equivalent of the dog that would bite the hand that feeds it.

Just as our representatives in Washington have utterly failed to notice and reign in the excesses of the financial sector and effects of globalization on the American work place, you would excuse THEIR failure as unreasonable expectations on the part of “we, the people”? Well, maybe we need to convey our expectations more clearly.

Our individual existence as “boss” or “worker” or “bureaucrat” or student” do not define us as individuals. In most cases these are but are but way points along life as we mature. So individual incentive and dedication are NOT synonymous with a “dog eat dog” society.

Individual success is more lasting and fulfilling if there is also collective success. What we have in common is our individual existence as a citizen of this country, and all that this means. But it would be a waste of my time to try to explain to one blinded by hate that which is beautiful.

Posted by OneOfTheSheep | Report as abusive
 

@Sheep

“I love the mental simplicity of those who only see a faucet full on or full off and none of the infinite interim options.”

Mental simplicity is something you seem to apply readily with your reductive view of capitalism for example.

“You dance back and forth from one extreme to another, seeing only injustice and none of all that is right in America.”

I would characterize it as providing much needed context to your simplistic view of things. You make sweeping statements about what capitalism is and how American capitalism has improved the lot of entire world over the last six decades but you obviously fail to take in the perspective of the actual ENTIRE world, the history, the exploitation, the abuses and the many populations that were also negatively affected. Surely some eggs were cracked making that omelet no? A one way armchair view of the world and history. Pick and choose what suits.

“You are the human equivalent of the dog that would bite the hand that feeds it.”

Strawman. I also noticed you had nothing to say about how socialism has prodded capitalism along in America all these years.
What percent of sales at Wal-Mart (soon to be a global monopoly) do you suppose come from welfare checks?

“But it would be a waste of my time to try to explain to one blinded by hate that which is beautiful.”

Seeing one-third of American adults in a state of obesity walking around sounds like tremendous progress. Yes, watching obese people fill up their carts at Wal-Marts across America must be quite a beautiful site.

American capitalism has come to mean dog eat dog. The culture has become decadent, one that espouses consumption as the way to a better life. Consumers and investors have drowned out democracy and erased the citizen. You have a dysfunctional government that hasn’t served the people, only its paymasters, for quite some time. Most assuredly I agree with you that politicians need their “feet held to the fire”. The consumerist culture however is what also enables them. it is a vicious cycle.

I would excuse no ones failure, especially not the government. It was Bush who gutted the SEC and regulatory power with it. The government has allowed the financial crooks, the corporations and Wall Street to run amok. You can go back to Reagan especially where much of these roots lie as well. Bill Clinton went on to complete the deregulatory Reagan dream and unleashed the banking industry. Bush’s appointment to the Supreme Court would go on to help the Courts ruling which effectively stated that corporations are people and money is speech, only corrupting the electoral process further. I doubt government can be fixed without removing the money from politics.

Capitalism without democracy is dog eat dog.

Posted by LetThemEatCake | Report as abusive
 

@LetThemEatCake,

Those layers under your hoodie you keep revealing are truly amazing. Your latest words accuse all of western civilization, imputing all of the errors, transgressions and exploitation of colonialism to capitalism.

Capitalism, like a gun, is a tool. It is man, in all his imperfection, that is responsible for what happens when a tool is misused.

You hate Walmart, obese people (particularly if they’re poor and filling up their carts there). America, to you, is an image distorted as in a Fun House mirror; a “dog eat dog” decadent society where “consumers” are part of the elite mysteriously disenfranchised whose very citizenship has been “erased”. This image is laughable gibberish.

But you finally tip your hand. You speculate on how “…America must be…”. You DON’T KNOW! You’re not from here! Now I understand the “set” of your “mind”.

DO share with us the blissful socialist paradise in which you choose to live!

Posted by OneOfTheSheep | Report as abusive
 

“What percent of sales at Wal-Mart (soon to be a global monopoly) do you suppose come from welfare checks?”

Not terribly high… Walmart is the largest retailer in the world — you can’t get that kind of scale from welfare alone.

Moreover, Walmart locations are typically in the suburbs, unreachable by public transportation. Those on welfare are far more likely to live in the cities.

Finally, from anecdotal evidence, it would appear to me that most shoppers at Walmart are working-class. Many, of course, are elderly. Shall we shower hate on them too?

Must be nice to live in your world where all that is beneath you…

Posted by TFF | Report as abusive
 

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