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There are many ways to understand our economic situation.  In my view, though, one graph explains the whole thing.  This chart has made the rounds on twitter in the last few days  - though most who follow economics have seen it before.

This chart shows the trend in the share of total income that goes to workers.  
 photo fredgraph1_zps759f7c9f.png

The chart shows up until 1980 a fairly stable trend - labor's share would fall during a recession and then grow until the next recession.  After 1980 the trend changes - the recovery in mid-80's never restored labor's share of income to what it was in 1980.  Even the boom of the '90's did not restore labor's share to what it was before '80.  

Things really start to breakdown after 2000 - where there is a continuing and unprecedented decline in labor's share of income.  

Why does this matter? At its core I think most everyone to the left of center would agree that the fundamental problem with the economy is a problem of demand.  In introductory economics they usually talk about the Marginal Propensity to Consume ("MPC").  One of the first things you learn is that poor people have a higher propensity to consume than the rich.  There are only so many houses and cars the rich can buy until they start stashing money in places like Switzerland.  As the rich increase their share of the economy, you begin to have a systemic problem in the economy.  The rich get more and more share of the wealth, but they don't spend it so the demand problem gets worse and worse.

In my opinion this is the current problem.  Labor's share is declining because companies are offshoring production, or alternatively, automating it.  In either instance, labor gets less and less share of the total income.

I promised one graph - but lets look at one more.  Let's compare labor's share of income to the S&P 500 since 2000.

 photo fredgraph2_zps62d2673f.png

Two things to note - the stock market is going up while labor's share is going down.  I don't think is a a real surprise, but the graph shows the cause pretty well.  But there is a second point I want to make as well.  In addition to a lack of demand, a world where the rich have too much money is a world that is going to be subject to asset bubbles.  If the rich don't spend their money it is going to go somewhere.  That somewhere is in part various financial markets.  But because financial markets are prone to panic, I think you can predict that we will see more bubbles build and then burst.

The graph suggests at least in part that my second point is true is well.

There are many conclusions you can draw on this.  Some here will say that this is a house of cards that will all come crashing down.  I don't think this is really right for a variety of reasons.  But I DO think that until something happens to change the balance of power between labor and capital, the economy will not perform as it could, and the fruits of that economy will be very unequally distributed.

I close with Marriner Eccles' (the head of the Fed under FDR) famous explanation of the cause of the Great Depression.  His words ring true today:

As mass production has to be accompanied by mass consumption, mass consumption, in turn, implies a distribution of wealth -- not of existing wealth, but of wealth as it is currently produced -- to provide men with buying power equal to the amount of goods and services offered by the nation's economic machinery. [Emphasis in original.]

Instead of achieving that kind of distribution, a giant suction pump had by 1929-30 drawn into a few hands an increasing portion of currently produced wealth. This served them as capital accumulations. But by taking purchasing power out of the hands of mass consumers, the savers denied to themselves the kind of effective demand for their products that would justify a reinvestment of their capital accumulations in new plants. In consequence, as in a poker game where the chips were concentrated in fewer and fewer hands, the other fellows could stay in the game only by borrowing. When their credit ran out, the game stopped.

Thu Jun 06, 2013 at  7:01 AM PT: Since this is on the reclist, I thought I would point people to a very wonkish - but still important piece by Brad Delong this morning.  Delong is pretty much required reading if you want to understand the economy - he was one of the leaders of the attacks on Reinhart and Rogoff.

He notes in part about the incredible gap between corporate profits and the Treasury rate:"Right now the profit share in the US economy is at levels far and away higher than I at least ever imagined I would see. And, given the high profit share and the extremely low return on Treasury notes the stock market is far and away lower than I at least ever imagined I would see. With downward pressure on real wages from elevated unemployment making it more likely that profits will grow faster than the economy rather than shrink, the 9% point gap between the S&P earnings yield of 7% and the Treasury note real yield of -2%--I never thought I would see anything like this in my lifetime."


http://delong.typepad.com/...

Originally posted to fladem on Wed Jun 05, 2013 at 08:42 PM PDT.

Also republished by Dream Menders and Community Spotlight.

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  •  Tip Jar (242+ / 0-)
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  •  You Are Exactly Correct (60+ / 0-)

    Since about 1980, real wages have remained flat despite the continuing exponential growth in worker productivity.  All that extra created wealth has gone elsewhere.

    I used to read The Economist back in the '90s, when they were positively hysterical over government interference causing market distortions.   Well, the state of affairs you describe is one hell of a distortion, and it needs to be fixed.

    Time flies like an arrow, fruit flies have nothing to lose but their chains -Marx (-8.75,-8.36)

    by alain2112 on Wed Jun 05, 2013 at 09:09:39 PM PDT

  •  The human economy is being phased out. (73+ / 0-)

    It's becoming easier to make money through speculative trading and various rent-seeking behaviors than by actually building things and selling products and services to customers. The financialization of the economy causes unemployment and underemployment to rise, which causes demand to fall, which makes financial speculation and rent-seeking even more profitable relative to economic activities that require human labor. It's a vicious cycle and it has a long way to go before it plays itself out.

    As the rich discover that they can make more money by using a supercomputer to auto-trade one financial bubble after the next, rather than by starting and running businesses that employ people and produce things to sell to people, the result will be the collapse of the economy to truly Depression-era levels. The rich are currently in the process of figuring that out and making that transition. The next phase in that transition will be when pretty much all corporations realize that they can make higher profits by becoming financial trading firms rather than by actually making anything tangible at all.

    As the transition to an entirely computer-based and non-production-based, "post-human" economy proceeds, money disappears from the real economy (i.e. the pockets of ordinary people), since most of it is simply hoarded rather than invested into employing people to produce things. It crosses the event horizon and exits the economic universe, like matter and energy falling into a black hole -- concentrating into fewer and fewer hands, who have no need to spend more than a minuscule fraction of its immensity.

    I suspect, at some point, people will do something other than meekly accepting their fate of being rendered useless in the new economy. But it may take a while before most people fully catch on to what's happening and decide that something major needs to be done to change it.

    The most serious problem in American politics today is that people with wrong ideas are uncompromising, and people with good ideas are submissive and unwilling to fight. Change that, and we might have a real democracy again.

    by Eric Stetson on Wed Jun 05, 2013 at 09:17:53 PM PDT

    •  The only thing (32+ / 0-)

      I would add to your excellent comment is that there is nothing permanent in technology's relation to production.  Technology can either be labor augmenting or labor replacing.  If technology enables a worker to increase their value ad, it should increase their wages.  

      In 1998 I heard Andy Grove say he thought the Internet was the greatest job killer he had ever seen.  At the time the tech boom was in full swing and people laughed.

      They are not laughing now.

      I work in part in technology - and I can't see a change coming - but humans suck at making predictions anyway.  What I will say is that it is wrong to assume technology will forever be labor replacing and not labor augmenting.

      •  I hope you're right. Some thoughts: (31+ / 0-)

        Technology has caused three major transitions in human employment so far:

        1. From the hunt to the farm.
        2. From the farm to the factory.
        3. From the factory to the office.

        I think it's safe to say that most factory jobs will be replaced by robotics, and this process is well underway. The question is, will most of the office jobs be replaced by artificial intelligence? We haven't seen true AI yet, but some predictions are that it's only a two or three decades away. If office jobs mostly become unnecessary in the future, what will be the next major type of human employment? I can't think of anything off the top of my head. Some say that most people will end up writing software, but I think that's a stretch because the intelligence of the average human is not up to that task.

        If I had to guess, I would say that the jobs of the future will mostly be things where a human touch provides added perceived value. This would basically mean a lot of service-oriented professions: nursing, massage therapy, various kind of personal assistants, nannies, butlers, security guards, etc. In many societies in the past, the rich have enjoyed surrounding themselves with large numbers of subordinate humans to wait on them, guard them, etc. I can't really see what else the majority of people would end up doing in an extremely high-tech future if capitalism as we know it remains the economic system. I hope I'm wrong.

        The most serious problem in American politics today is that people with wrong ideas are uncompromising, and people with good ideas are submissive and unwilling to fight. Change that, and we might have a real democracy again.

        by Eric Stetson on Wed Jun 05, 2013 at 10:07:26 PM PDT

        [ Parent ]

        •  I hope you're wrong, too. (7+ / 0-)

          I don't think writing software is a way to go for most people because we are already being flooded with much too much software nobody needs ... or likes ... or at least has fun with ...

          And a terrible lot of office jobs have already been replaced by technology. Or are being outsorced to India or Morocco or whatever. What manager does still really need a secretary, except for prestige (or personal entertainment)?

          I don't know how we will get out of this mess ...
           

          "This isn't America" - Zenkai Girl

          by mythatsme on Thu Jun 06, 2013 at 03:12:11 AM PDT

          [ Parent ]

          •  More managers than you think (5+ / 0-)

            actually do need a secretary.  Texting is not the way to run a company....too little information, too much misunderstanding, and lots of running in circles.

            Listening to the NRA on school safety is like listening to the tobacco companies on cigarette safety. (h/t nightsweat)

            by PsychoSavannah on Thu Jun 06, 2013 at 06:54:07 AM PDT

            [ Parent ]

          •  Engineering & the Typing Pool (3+ / 0-)

            In my experience, the personal computer has been the greatest destroyer of productivity the engineering profession has ever seen.

            It used to be that you would write up your analysis and send it out to be typed, formatted, and issued.

            These days you have to do all that yourself.  On top of which, every low level manager with a finger in the pie demands the right to wordsmith the document.  This often involves a top to bottom rewrite, with massive and internally inconsistent changes to the underlying analysis.

            The end result is that less actual work winds up getting done, and the quality is systematically lower.

            Time flies like an arrow, fruit flies have nothing to lose but their chains -Marx (-8.75,-8.36)

            by alain2112 on Thu Jun 06, 2013 at 03:06:13 PM PDT

            [ Parent ]

        •  A vast amount of office work has already been (19+ / 0-)

          replaced by automation.  There was a time when there were offices filled with clerks, bookkeepers, and accountants keeping business records.  That ended in the 1980's.

          •  "Computer" used to be a job title. (4+ / 0-)

            "Don't be defeatist, dear. It's very middle class." - Violet Crawley

            by nightsweat on Thu Jun 06, 2013 at 06:27:25 AM PDT

            [ Parent ]

          •  True. But the trend is not over yet. (2+ / 0-)
            Recommended by:
            fladem, radical simplicity

            Most middle class people still do office work, even though the number of office workers has already declined a lot. There's probably still a lot more administrative, secretarial, and analytical kind of work that can be shifted to computers as artificial intelligence is developed.

            The most serious problem in American politics today is that people with wrong ideas are uncompromising, and people with good ideas are submissive and unwilling to fight. Change that, and we might have a real democracy again.

            by Eric Stetson on Thu Jun 06, 2013 at 12:21:37 PM PDT

            [ Parent ]

          •  I am a bookkeeper (1+ / 0-)
            Recommended by:
            Sunspots

            I work 6 days a week, 10-12 hours a day for at least 5 of those days.  I do this because I went from being the Administrative Assistant to bookkeeper when my elderly boss started transition of the company to his 5 children.  

            Now I have 5 bosses and more than 30 family owned companies to keep books for - mostly real estate and investments.

            Remember the scene in Christmas Carol where Crachit and all the "clerks" are working?  They are bookkeepers - if they had had a computer, Scrooge could have gotten away with one bookkeeper.  

            In order for me to have a normal 40 hour work week, to be able to take lunch away from my desk and for every ledger to actually be current (each month closing by the 15th of the month - except the two investment divisions which often wait 30 days for the hedge funds to report), they need to hire 2 more bookkeepers.  

            But they won't.  I am exhausted, worrying about my elderly mother living alone 300 miles away - all of my vacation time is spent taking care of things for her, but after 26 years at least I am grandfathered in for 5 weeks - and I drag ledgers and files with me so I can log on to the network to try to keep up.  

            I am grateful for the job security, but I don't want to work until I die at my desk. I've told them they really should think of hiring a second bookkeeper before I hit 60 so we have a couple of years to transition somebody from newbie to trusted main person who can sign on the accounts, but so far they seem more interested in making more investments, buying more real estate and spending the entire summer traveling.  

            "Focusing your life solely on making a buck shows a certain poverty of ambition. It asks too little of yourself. Because it's only when you hitch your wagon to something larger than yourself that you realize your true potential." - Barack Obama

            by Ricochet67 on Fri Jun 07, 2013 at 03:37:16 AM PDT

            [ Parent ]

        •  we are never going to have enough jobs (20+ / 0-)

          to go around for a 40 hour workweek again.

          we have entered an era of extreme productivity but can't adjust our moral vision to this new era.

          we should all be working less at things which pay a wage and using our free time to do things which make the world better by our own definitions.

          getting us to turn this idea around is key to survival because it isn't that everyone needs a well paying job, it is literally that everyone needs a minimum guaranteed income.

          this is so counter intuitive, i hesitate to write it here.

          the problem at the moment is that all the affluence is concentrated at the top to no good effect.  

          recent studies from OXFAM and others have demonstrated that we could end poverty tomorrow if a fraction of the 1% shared a fraction of their wealth.

          so the jobs problem isn't a problem at all.  We could all work 15-20 hours a week and be guaranteed a certain decent wage and everything would run better across the board.  one bonus would be that people would stop getting ill from stress related diseases.

          another bonus would be that people would use their creativity to come up with things that would be a huge boon to all of us.  still another bonus would be increased family intimacy because we would have the time to devote to  our relationships.

          the answer is quite literally not more jobs, but fewer work hours and either much, much higher pay for those hours or supplemental minimal income for all.

          and, not to be ridiculous as an aside, we need a completely new monetary system that would fit this economic structure.

          it has to happen or we will be in a mad max world.  we don't have any other choice although the 1% will do everything possible to stop any such transition.

          •  Scarcity (8+ / 0-)

            keeps people working.  In the 70's the Unions were beginning to talk about the 32 hour work week.  

            Then corporations found they could offshore production, or alternatively consumers began buying non-US products.  Unions never had the same power - and the idea is never heard of now.

            But the truth is increasing productivity SHOULD be a good thing.  My grandfather worked on the line in a union shop - his main goal in his life was that his kids would not work on a line.

            It is a sign to some degree of our limited ability to think that our first reaction to automation is to think about the jobs that are lost.  And yet since the current system doesn't have an answer and families are destroyed when jobs are lost it is perfectly understandable that our first reaction would be to think about the jobs.

            But if we were smarter it wouldn't.

            •  You left out the part of government. It started to (5+ / 0-)
              Recommended by:
              antirove, KJG52, fladem, Naniboujou, Sunspots

              fail the people when it allowed corporations to outsource and import cheap labor.

              It has a responsibility to the people first, not the bottom line of corporations and shareholders.

              Unless of course, the politicians that make up that government are more beholding to the corporations and shareholders.

              Physics is bulls**t. Don't let them fool you. Fire IS magic.
              (Facts brought to you by the Party of the Future - the GOP)

              by Pescadero Bill on Thu Jun 06, 2013 at 07:12:34 AM PDT

              [ Parent ]

              •  Government has always been a secondary concern (1+ / 0-)
                Recommended by:
                fladem

                ...the cart behind the horse, so to speak. Gov't, in the US at least, does not lead but reacts and protects. In a globalized system now each one gov't has an even reduced capacity to lead.

            •  Unfortunately, your GF (3+ / 0-)
              Recommended by:
              KJG52, fladem, radical simplicity

              would now see his greatgrandkids back on the line. At McDonald's--if they're lucky.

              "Lone catch of the moon, the roots of the sigh of an idea there will be the outcome may be why?"--from a spam diary entitled "The Vast World."

              by bryduck on Thu Jun 06, 2013 at 10:41:02 AM PDT

              [ Parent ]

          •  Never? (0+ / 0-)

            .................expect us......................... FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

            by Roger Fox on Thu Jun 06, 2013 at 11:06:45 AM PDT

            [ Parent ]

          •  Completely agree (1+ / 0-)
            Recommended by:
            radical simplicity

            But reading other comments here and elsewhere, it's taking us way too long to understand this.  Ask the happy so called parttimers (me :) what they think.
            Actually your comment can be a diary on its own.

            Un pour tous et tous pour un aka United we stand

            by livebyChocolate on Thu Jun 06, 2013 at 12:05:41 PM PDT

            [ Parent ]

          •  How about if the gov't gave everyone a portfolio (3+ / 0-)

            of investments, such as land, stocks, bonds, as a guaranteed per-person benefit at birth?

            Then, if somebody can't find a job, they could live off of that portfolio for a while. Especially if it included land, they could always live off their land, at least at a basic level of survival.

            The really scary thing is that most Americans today don't own any land anymore, so they can't even practice subsistence farming if unemployment gets so bad that jobs are simply no longer available for a large segment of the population.

            Capital assets, especially ones that can generate food or economic rent, are very, very unequally distributed among the population. Landlessness among the general public has always been the main cause of serfdom. The only time when it wouldn't cause serfdom is in an economy in which there are ample jobs for human workers, so that people can earn a paycheck instead of living off of their capital assets. That time may be soon coming to an end.

            The most serious problem in American politics today is that people with wrong ideas are uncompromising, and people with good ideas are submissive and unwilling to fight. Change that, and we might have a real democracy again.

            by Eric Stetson on Thu Jun 06, 2013 at 12:30:31 PM PDT

            [ Parent ]

        •  There's movement back to the farm (1+ / 0-)
          Recommended by:
          lehman scott

          It isn't on the scale we're used to, and it isn't getting much big media attention, but it's happening, even in cities:  urban farming with a few chickens or a beehive, serious gardens and orchards in the backyard or the schoolyard, on a rooftop or in vacant lots.  I just saw an ad for a home oil press, for seeds or nuts.

          People are setting up little hoophouses in suburban backyards and taking their produce to farmers' markets.  Milwaukee has a very impressive urban farming project, and there's movement in Detroit's destroyed center.

          There's a wave of people taking home cheesemaking classes, herbology, foraging, and various "old" crafts, in general a focus on self-reliance.  As our civilization crumbles, people are moving to learn how to take care of themselves.  Conventional medicine is another monopoly that people may be giving up on.  

          People living on a few acres in the country, or even fullsize farms, are changing how and what they do things, little by little.  The organic movement is back, now as sustainable farming or permaculture.  

          Small scale still, and slowly, but those are permaculture concept, too.  Now if only everything doesn't collapse overnight.

          Colonialism, I read, destroyed local economies by requiring taxes paid in money, so that people couldn't just focus on taking care of themselves, and we seem to have a version of that problem, but there's at least some recognition of the problems developing, and underground-style efforts to deal with them.

      •  I dunno. Have certainly seen a fair (9+ / 0-)

        amount of articles in the last two years that "robots are the coming thing." There's a heck of a lot that isn't far from being automated.

        If the goal isn't to have a healthy consumer society -- not that consumerism is good, but that's how we manage to live now -- but instead to have a malleable population you don't really need for much...

        Hard to believe the Big Money people don't realize that the more workers are pushed down, or disappeared entirely, the less there is to support our current economic system. And who can afford to buy mercenaries these days?


        Actual Democrats is the surest, quickest, route to More Democrats

        by Jim P on Wed Jun 05, 2013 at 11:34:12 PM PDT

        [ Parent ]

        •  It's someone else's problem (19+ / 0-)
          Hard to believe the Big Money people don't realize that the more workers are pushed down, or disappeared entirely, the less there is to support our current economic system.
          As with everything in the conservative world, selfishness, arrogance, greed, and stupidity cause people to assume that "someone else" will solve the problem while I get rich being part of the problem. Someone else can hire workers and pay them a living so that my crap products, produced by virtual (or actual) slave labor over seas, will have a market and consumers.

          As with taxes versus charity, I can always opt out of charity pretending that someone else's charity (my competitor's charity)  will solve the problem, while my own selfishness and greed will provide the glorious ME with more available capital to beat those fools who engage in charity.

          Just as with health care spending, I can always not buy insurance because I am "healthy" and then, when I get sick, rely on someone else to pay for my care.

          Just as in our current corporate socialist economy that privatizes the profits and socializes the losses, someone else can always pay for my mistakes as long as I can bribe enough of the government to ensure that my losses are always covered by the taxpayers (while I pay the lowest possible taxes, or none at all -- or get a tax refund without ever actually paying any taxes to start with).

          The current system is designed to allow con men and charlatans to profit while the rest of us work to support the economy. Or not work because there are no jobs and no likelihood of ever having a job again and so we sink into poverty and despair.

          But who cares as long as it's only someone else who suffers and/or dies?

          •  con men and charlatans (2+ / 0-)
            Recommended by:
            jbsoul, Sunspots

            Is dead-on, Captain.  The people doing this are no good at real productive activity, but they are excellent at gaming the system to cheat.

            Such a system will eventually come to a permanent end.  But it may take a long, long time to shake out the terrible habits that living in a Con-Economy impose on the people.  I'm thinking of how Soviet Russia, surely one of the biggest con-games ever perpetrated on a population, is still a hotbed of illegal, dicey activity such as internet hacking and spamming.  It's like once a society picks up the vibe that every deal is a chance to screw someone over for nothing, everybody gets in the dirt because there's no other way to survive.

            I am thinking of corrupt societies where you have to bribe public officials just to do their jobs.  We're not far from that.

        •  2 years? Been reading that for decades (1+ / 0-)
          Recommended by:
          Jim P

          .................expect us......................... FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

          by Roger Fox on Thu Jun 06, 2013 at 11:07:36 AM PDT

          [ Parent ]

          •  This is America. I don't expect people's (1+ / 0-)
            Recommended by:
            Roger Fox

            memories to be taxed by thinking back too far. Yeah, easily since the 1950s there's been widespread surveillance of the population.


            Actual Democrats is the surest, quickest, route to More Democrats

            by Jim P on Thu Jun 06, 2013 at 03:56:34 PM PDT

            [ Parent ]

      •  We do know one thing - we'll adapt. (0+ / 0-)
    •  meanwhile, the technology of policing and (4+ / 0-)

      the implements at the State's disposal for surveilling and pacifying the citizenry are advancing to the point where any future attempt to "change things" will be incredibly difficult and dangerous.

      You know you're in Oregon when you only see people using an umbrella to protect themselves from the sun.

      by Keith930 on Thu Jun 06, 2013 at 06:38:50 AM PDT

      [ Parent ]

      •  If the New Deal hadn't happened, socialism would (2+ / 0-)
        Recommended by:
        KJG52, PrahaPartizan

        have eventually won an electoral victory at the ballot box. That's why the liberal class permitted it -- to avoid the victory of a full-fledged political movement to transition from a capitalist to a socialist economy.

        As long as people have the right to vote and for their votes to be accurately counted, there is always the possibility that they could vote for radical change, if they become desperate enough. High and continuously growing unemployment, such as may occur in the next few decades, could be the trigger.

        I think American democracy could still have some surprises up its sleeve in the coming decades.

        The most serious problem in American politics today is that people with wrong ideas are uncompromising, and people with good ideas are submissive and unwilling to fight. Change that, and we might have a real democracy again.

        by Eric Stetson on Thu Jun 06, 2013 at 12:39:24 PM PDT

        [ Parent ]

        •  The End of Weimar (0+ / 0-)
          "...I think American democracy could still have some surprises up its sleeve in the coming decades..."
          The surprise most likely will resemble the spring of 1933 in Weimar Germany.

          "Love the Truth, defend the Truth, speak the Truth, and hear the Truth" - Jan Hus, d.1415 CE

          by PrahaPartizan on Thu Jun 06, 2013 at 07:12:48 PM PDT

          [ Parent ]

    •  Global warming will cook those books (3+ / 0-)
      Recommended by:
      Pescadero Bill, kck, vahana

      The physical world has physical rules that rule them all, if you get my drift. I don't disagree with your comment, but we do live in a physical world and if we want to remain living we will have to make adjustments which I think leave plenty of room for people in the Shire.

    •  Mostly agree... (2+ / 0-)
      Recommended by:
      CFAmick, Eric Stetson

      This is what is happening, but what is a mystery is how long this can sustained....

      The next phase in that transition will be when pretty much all corporations realize that they can make higher profits by becoming financial trading firms rather than by actually making anything tangible at all.
      Agreed - but this will only be viable for corporations that have a lot of wealth assets or cash-on-hand.  And, since only 1/10 of 1% can sustain themselves in the 'neo-economy', It would stand to reason that only a small percentage of corporations would survive - or only a very small percentage of each corporation would survive.

      'Where free unions and collective bargaining are forbidden, freedom is lost' - Ronald Reagan, Communist

      by RichM on Thu Jun 06, 2013 at 08:10:08 AM PDT

      [ Parent ]

      •  The owners will "cash out," first (0+ / 0-)

        Trade their paper wealth for land and minerals.

        I'm living in America, and in America you're on your own. America's not a country. It's just a business.

        by CFAmick on Thu Jun 06, 2013 at 09:36:13 AM PDT

        [ Parent ]

        •  Once they 'own' the clean water & air, it's (2+ / 0-)
          Recommended by:
          rhauenstein, Sunspots

          game over for average people, we all become 'surplus population' they won't need to enable in any way and totally dependent upon their largese.

          When life gives you wingnuts, make wingnut butter!

          by antirove on Thu Jun 06, 2013 at 12:38:56 PM PDT

          [ Parent ]

          •  Water is increasingly being privatized. (2+ / 0-)
            Recommended by:
            RichM, Sunspots

            Air, not yet. But I wouldn't be surprised to see it! (only half snark).

            Remember Perri-Air in Spaceballs?

            The most serious problem in American politics today is that people with wrong ideas are uncompromising, and people with good ideas are submissive and unwilling to fight. Change that, and we might have a real democracy again.

            by Eric Stetson on Thu Jun 06, 2013 at 12:47:32 PM PDT

            [ Parent ]

        •  They're already doing that. The price of farmland (1+ / 0-)
          Recommended by:
          Sunspots

          has skyrocketed in the 2000s. Productive agricultural lands are being bought up en masse by the wealthy and financial corporations.

          The most serious problem in American politics today is that people with wrong ideas are uncompromising, and people with good ideas are submissive and unwilling to fight. Change that, and we might have a real democracy again.

          by Eric Stetson on Thu Jun 06, 2013 at 12:44:25 PM PDT

          [ Parent ]

      •  Yes, only a few corporations wil survive. (0+ / 0-)

        That's the natural end-point of unregulated or underregulated capitalism: monopoly or oligopoly.

        America has been steadily moving in that direction for the past few decades. The banking industry is a great example. There used to be hundreds of major banks. Now there are only four or five.

        The most serious problem in American politics today is that people with wrong ideas are uncompromising, and people with good ideas are submissive and unwilling to fight. Change that, and we might have a real democracy again.

        by Eric Stetson on Thu Jun 06, 2013 at 12:42:22 PM PDT

        [ Parent ]

    •  Shipping this on (1+ / 0-)
      Recommended by:
      Eric Stetson

      to Top Comments.

    •  This was predicted by Karl Marx (1+ / 0-)
      Recommended by:
      lehman scott

      Profits made my finance overtook manufacturing in the USA some time ago in the '90's, I believe, and it has been downhill ever since. Karl Marx predicted this would happen and I believe he was right. Finance controls government and everything else in the world.

    •  Interesting story on NPR the other day (1+ / 0-)
      Recommended by:
      Sunspots

      About "Patent Trolls".

      Companies like Apple, Microsoft, Samsung, Amazon, or whoever regularly file patent applications for software inventions like "point and click" or "shopping cart" or whatever. Then they sue each other for violating the patent. Sometimes a company has a bad business plan and they go out of business but they have a few hundred patents. So somebody buys the skeleton of the company and sues everyone else who uses that idea.

      I suppose this gives employment to lawyers, but it sounds really unproductive to me. I like the idea of intellectual property and copyrights (for musicians or writers), but this is bizarre.

      "Stupid just can't keep its mouth shut." -- SweetAuntFanny's grandmother.

      by Dbug on Thu Jun 06, 2013 at 09:35:14 PM PDT

      [ Parent ]

  •  Well, "competing in the global marketplace" (19+ / 0-)

    sounds promising, though. When we can match slave-, child-, and prison-labor; can match people who's rent and overhead is covered by making $8 day....

    why, then the jobs'll come rushing back home.

    That's the only serious plan I've heard from our official political class.


    Actual Democrats is the surest, quickest, route to More Democrats

    by Jim P on Wed Jun 05, 2013 at 11:07:12 PM PDT

  •  Lack of demand is just a symptom of massive... (38+ / 0-)

    ...income inequality that's worsening with virtually every passing year. In fact, in the past 96 years (since 1917, when adequate metrics were first implemented to properly measure income inequality), the country hasn't witnessed income inequality as extreme as the economy in which we're living, today. And, many of our income inequality issues may be readily fixed with more progressive taxation, along with an aggressive effort by our government to adequately handle the growing problems of hidden offshore assets both by individuals (citizens) and corporations.

    Once the country has significantly more revenue in hand, it may then address the issues of government job creation and true, single-payer health care/insurance. (It would be GREAT if the government addressed it immediately, instead of waiting to have more revenue in-hand; but, that's asking too much of our political class, which is all but totally owned by our elites these days.)

    Meteor Blades had a great post in the community on Tuesday afternoon that captured most of what's posted in this diary (in which I'm commenting now) right here: "Wage-earning Americans are losing ground in race to the bottom and the slippage is not over yet." And, he addressed income inequality, job creation and taxation quite well in that diary.

    Jared Bernstein also made a lot of salient points in a NY Times Op-Ed on May 4th, with regard to many of these matters: "Where Have All the Jobs Gone?"

    In the meantime, organized labor's getting crushed. Corporations have more power in this country now than they've had since at least the Gilded Age. And, "wishful thinking" is about the only term that may be applied to wrong-headed economic thinking that focuses upon "the markets" (i.e.: stocks, bonds, commodities, derivatives, etc.); when, in fact, it's just the top 7% of our society that owns most of the marketable securities in the U.S. these days.

    This top 7%, and the corporations that they control, are provided with most of the significant tax benefits; and what they can't shelter onshore they merely move offshore, legally and illegally.

    I'd posit that the government-enabled offshoring of WEALTH (by people and corporations, in large part due to 30 years of captured government, which has wrought inadequate oversight, which is/was further compounded by tax loopholes/laws through which one may drive a Mack Truck) is a much greater issue and cause, than the symptom of offshored LABOR, these days. Fix that cause, and the symptoms will go away on their own.

    So, while many in the uppermost class talks about symptoms, the greater truths are that this strategy of discussing symptoms is as much a reflection of their bias and self-interest as anything else.

    Lets deal with the diseases in our economy and the symptoms will take care of themselves quite nicely. In the meantime, let's also elect more progressives to government and do everything we can to get corporatist and elite cash, along with the self-enriching laws/legislation they generate, turned back so that the best interests of the public may, once again, be properly represented in Washington, and throughout our society.

    Getting back to truly addressing demand, it's going to continue to be trickle-down bullshit, and misdirection from those whose self-interest depends upon that ongoing misdirection, until we do everything we can to get to the root of these problems.

    Hey, what about a Wall Street Transactions Tax and raising capital gains taxes to the same levels as those paid by everyone else in our society? What about making real progress closing corporate and Wall Street (and laws allowing the intensive offshoring of individual and corporate wealth) tax loopholes?

    Lack of demand is a symptom. Offshoring of jobs is a symptom.

    Income inequality and captured government (creating an inadequately-regulated corporate and Wall Street elite that's unbridled by taxation, unlike the rest of the population) are the real problems.

    (Economic) Demand?

    Let's DEMAND action to correct those two matters, first and foremost.

    Everything else is just a byproduct (symptom) of those greater truths (diseases).

    Employment offshoring and technology/automation?

    Question: Why aren't the words/terms "tax," "taxation," "regulation," "jobs" and "income inequality" even mentioned in this post? How may we even seriously discuss what ills our nation's economy without them? (At least if we're going to discuss these issues from the perspectives [and with regard to the best interests] of the public, at large?)

     

    "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

    by bobswern on Wed Jun 05, 2013 at 11:38:03 PM PDT

    •  And what's the plan for making this happen: (9+ / 0-)

      "Lets deal with the diseases in our economy and the symptoms will take care of themselves quite nicely. In the meantime, let's also elect more progressives to government and do everything we can to get corporatist and elite cash, along with the self-enriching laws/legislation they generate, turned back...."

      I don't see it.  I see Repubs with just enough power to keep it going their way mostly as far as the eye can see.

      The elevation of appearance over substance, of celebrity over character, of short term gains over lasting achievement displays a poverty of ambition. It distracts you from what's truly important. - Barack Obama

      by helfenburg on Thu Jun 06, 2013 at 03:43:48 AM PDT

      [ Parent ]

      •  That will continue as long as we elect (1+ / 0-)
        Recommended by:
        Sunspots

        Democrats who empower Republicans.

        Right now, there is no alternative.

        We better aim to provide one.

        My Grandad had a coal tattoo across half his back and walked with a cane for 30 years BOWP.

        by JesseCW on Thu Jun 06, 2013 at 12:20:43 PM PDT

        [ Parent ]

    •  What you describe is a Fascist Government (11+ / 0-)

      Fascist as in controlled by corporations. For me the first step is to call it what it is. People are not going to wake up until they start hearing that jarring term.

      The Irony is that you can get HRed right here on a "Progressive" blog for using that word.

      People need to WAKE THE FUCK UP.

      No longer Hoping for Change. Now Praying for a Miracle.

      by CitizenOfEarth on Thu Jun 06, 2013 at 05:23:46 AM PDT

      [ Parent ]

      •  People are waking up. (4+ / 0-)

        Our government has been corrupted by money and by corporate interests and people are already waking up to that reality.

        What's really stopping us (the workers) from fighting back effectively is the divide-and-conquer hyper-partisan political environment. Is it a feature and not a bug?

        •  Hyperpartisanship is not what (2+ / 0-)
          Recommended by:
          bobswern, Aquarius40

          we see, but rather its opposite. Both parties agree, apparently, in the end goal of destroying what's left of the middle class and impoverishing everybody. What's stopping us is lethargy born of frustration, poor health born of bad diet and a lack of true affordable health care, and just enough circuses to keep us thinking things aren't collapsing.

          "Lone catch of the moon, the roots of the sigh of an idea there will be the outcome may be why?"--from a spam diary entitled "The Vast World."

          by bryduck on Thu Jun 06, 2013 at 10:45:44 AM PDT

          [ Parent ]

    •  I don't often reply, but I really enjoy your posts (1+ / 0-)
      Recommended by:
      bobswern

      Keep sluggin'.

      The Republican motto: "There's been a lot of progress in this country over the last 75 years, and we've been against all of it."

      by Hillbilly Dem on Thu Jun 06, 2013 at 05:47:10 AM PDT

      [ Parent ]

    •  I completly disagree with you (4+ / 0-)
      Recommended by:
      Aquarius40, J M F, TheLizardKing, KJG52

      offshoring isn't a symptom of anything.

      It is the cause of the change in the balance of power between labor and power.  From that change everything else flows.

      I think you have it exactly backwards.

       

      •  Your Wall St. rationalizations make me laugh... (3+ / 0-)
        Recommended by:
        lostinamerica, JesseCW, KJG52

        ....right out of Kafka! LOL!

        I especially got a chuckle out of this part of your post...

        ...At its core I think most everyone to the left of center would agree that the fundamental problem with the economy is a problem of demand.  In introductory economics they usually talk about the Marginal Propensity to Consume ("MPC").  One of the first things you learn is that poor people have a higher propensity to consume than the rich.  There are only so many houses and cars the rich can buy until they start stashing money in places like Switzerland.  As the rich increase their share of the economy, you begin to have a systemic problem in the economy.  The rich get more and more share of the wealth, but they don't spend it so the demand problem gets worse and worse.

        In my opinion this is the current problem...

        Like I asked in my comment:
        Question: Why aren't the words/terms "tax," "taxation," "regulation," "jobs" and "income inequality" even mentioned in this post?
        Even Joe Stiglitz will tell you that the core reason for our country's economic problems is income inequality.

        Every other explanation is just Wall Street double speak. The again, as Upton Sinclair famously stated it...

        "It is difficult to get a man to understand something when his salary depends upon his not understanding it." - Upton Sinclair
        Oh....wait!  (ROFLMAO...I was going to provide a link...but, it's really not worth it. Inside joke...kinda....)

        "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

        by bobswern on Thu Jun 06, 2013 at 06:46:21 AM PDT

        [ Parent ]

    •  virtual tip and rec / nm (1+ / 0-)
      Recommended by:
      bobswern

      The "extreme wing" of the Democratic Party is the wing that is hell-bent on protecting the banks and credit card companies. ~ Kos

      by ozsea1 on Thu Jun 06, 2013 at 09:46:14 AM PDT

      [ Parent ]

    •  Your comment rings very true for (2+ / 0-)
      Recommended by:
      bobswern, gorgonza

      My household. We run a small publishing house. And a lot of people are always saying, "Next paycheck, I want to get one of the books." But then the car needs a repair or they need to pay their insurance premiums, or they realize how much they are shovelling into their gas tanks, and that "next paycheck" never comes our way. We are surviving because of Chinese people, which blows my mind! They are the number one customers for our books.

      Offer your heart some Joy every day of your life, and spread it along to others.

      by Truedelphi on Thu Jun 06, 2013 at 02:32:06 PM PDT

      [ Parent ]

  •  Graphs, past present and future (16+ / 0-)

    Graphs of labor plummeting and the stock market soaring tell the picture of today's economy, but over the long term the graph that matters most will be of atmospheric carbon dioxide. Not coincidentally, at the moment it's rising very much like the stock market.  

    It's an open question whether labor will turn on capital before the wealth imbalance collapses the economy. It's an open-and-shut case that the way we're headed, environmental chaos will eventually collapse capital and the economy (and labor with it). And all the security forces and media mind programming money can buy won't be able to stop that.

    •  Very important point. (4+ / 0-)
      Recommended by:
      tacet, lehman scott, foresterbob, Sunspots
      It's an open-and-shut case that the way we're headed, environmental chaos will eventually collapse capital and the economy (and labor with it). And all the security forces and media mind programming money can buy won't be able to stop that.
      The economy is in a much more fragile state than many of us realize. Over 7 billion on the planet right now. We get few more food, water, and arable land shortages in the "developed world," the whole damn global marketplace will start collapsing all around us--quick and nasty.
      "Our leadership" obsess over petty squabbles and country club games while riding on this catastrophe train.  It's going off the rails with bells, whistles and warning lights flashing.

      -4.38, -7.64 Voyager 1: proof that what goes up never comes down.

      by pat bunny on Thu Jun 06, 2013 at 07:27:54 AM PDT

      [ Parent ]

    •  Crocodiles in South Dakota last time (0+ / 0-)

      the carbon dioxide was this high.

      Gonna be interesting.

  •  Great Diary. Hope it stays up for awhile (1+ / 0-)
    Recommended by:
    Aquarius40
  •  The Rich Are Bad Stewards of an Economy (15+ / 0-)

    And the density of wealth around our very rich is approaching black hole status, sucking all of the money in the entire globe into its vortex.

    Projected over a forty-hour work week, each of the Koch brothers made $3 million an hour last year.

    "I'll believe that corporations are people when I see Rick Perry execute one."

    by bink on Thu Jun 06, 2013 at 03:33:47 AM PDT

  •  Problem is that the capitalist class can peddle (9+ / 0-)

    their stuff worldwide now, so even if Americans are too poor to consume, consumers in China, Brazil and India are there to pick up the slack.

    The elevation of appearance over substance, of celebrity over character, of short term gains over lasting achievement displays a poverty of ambition. It distracts you from what's truly important. - Barack Obama

    by helfenburg on Thu Jun 06, 2013 at 03:35:00 AM PDT

  •  Add to this the chart of total consumer debt (6+ / 0-)

    Here's a pointer to the chart that should have been included at the end of the diary. The rate of increase in debt dwarfs any other period of history. This chart should be burned into your brain.

    Total consumer debt is at about $14T, about 100% of GDP. Unlike government debt which is not toxic to the economy, private debt is toxic. The boom economy of the naughties was fueled by increasing consumer debt as median income stagnated. The problem with this is two fold. To continue that kind of growth you need to add more consumer debt, and at some point the consumer has to deal with accumulated debt and actually scale back spending.

    Easy credit of the last 20 years formed a perfect cycle. The top earners siphoned income from the economy, they then invested it in various instruments based on consumer debt. This fueled low requirements for debt. Credit cards, student loans, equity loans all skyrocketed. This money was spent in the consumer market by the middle class, growing the economy and resulting in more wealth accumulation. At some point the middle class will not be able to pay back this debt, that is, the system predictably runs into a wall as assets are devalued and the economy shrinks.

  •  2 points (9+ / 0-)

    I've made the remark that wealth doesn't scale. That means, as a person becomes richer, past a certain point things change. They're no longer living check to check; you can only spend so much on food, housing, etc. (You CAN spend more - but you don't have to.) You can pay cash for things in effect - you don't need to borrow money to buy a car or a college education. Money becomes very different once you reach a 'critical mass'.

    The second point is one Kevin Drum made recently over at Mother Jones. He predicts that we're getting close to a point where machines will be able to do most tasks we still need people to do. They've already eliminated many jobs - look at what computers and photocopiers have done for office work.

    Productivity will go way up as the expense of human workers is eliminated....BUT all the gains will go to those who own the robots. What happens when millions of people become redundant? Drum's guesses about the transition period are thought provoking. The old relationships of work, skills, and labor are not going to function well in the coming new economy.

    "No special skill, no standard attitude, no technology, and no organization - no matter how valuable - can safely replace thought itself."

    by xaxnar on Thu Jun 06, 2013 at 04:30:36 AM PDT

    •  That is a fascinating read (4+ / 0-)
      Recommended by:
      xaxnar, side pocket, foresterbob, Sunspots

      And with some good links for even more. And to whatever extent he nails it, all the diaries on this issue - from whatever viewpoint - are pretty much wasted pixels.

      In the economics literature, the increase in the share of income going to capital owners is known as capital-biased technological change. Let's take a layman's look at what that means.

      The question we want to answer is simple: If CBTC is already happening—not a lot, but just a little bit—what trends would we expect to see? What are the signs of a computer-driven economy? First and most obviously, if automation were displacing labor, we'd expect to see a steady decline in the share of the population that's employed.

      Second, we'd expect to see fewer job openings than in the past. Third, as more people compete for fewer jobs, we'd expect to see middle-class incomes flatten in a race to the bottom. Fourth, with consumption stagnant, we'd expect to see corporations stockpile more cash and, fearing weaker sales, invest less in new products and new factories. Fifth, as a result of all this, we'd expect to see labor's share of national income decline and capital's share rise.

      “Texas is a so-called red state, but you’ve got 10 million Democrats here in Texas. And …, there are a whole lot of people here in Texas who need us, and who need us to fight for them.” President Obama

      by Catte Nappe on Thu Jun 06, 2013 at 09:22:29 AM PDT

      [ Parent ]

  •  Be a better consumer. (9+ / 0-)

    Buy stuff from ethical companies.  Try to give less money to banks (use cash whenever possible), give less money to WalMart, etc. Give money to companies that create good jobs.

    Start a business.  Use ethical suppliers. Create jobs.

    Build a new economy.  Invest your money in it.

    •  We don't have enough money for that to matter. (1+ / 0-)
      Recommended by:
      lehman scott

      It's a fine and ethical choice.  I don't mean to disrespect anyone who is striving to reduce their personal share of the guilt for this mess.

      I don't shop at Wal Mart (or target, or big box stores much at all) and I do all financial business with a credit union.  I buy just about everything I can from the farmers market instead of the grocery store.  I find people to cut my hair off-hours instead of giving a cut to some corporation.

      But I don't fool myself into thinking that will change shit.  

      It's like choosing not to wear slave-grown cotton in 1855.  It's the ethical thing to do, but it's not a solution.

      My Grandad had a coal tattoo across half his back and walked with a cane for 30 years BOWP.

      by JesseCW on Thu Jun 06, 2013 at 12:27:05 PM PDT

      [ Parent ]

      •  You're wrong. The consumer is the engine (0+ / 0-)

        of the economy.  Why else would companies spend billions of dollars in advertising?

        Sure, there aren't all that many choices some times but there are choices. It might take some searching.  Oh, that's so hard.  Waaahh.  I just want to go to Target and fill my basket.

        Also, it's good to let companies know that you're concerned about their environmental record, labor record and if they donate to Republican assholes.

        •  WE, the bottom 80%, are a sideshow. We have (1+ / 0-)
          Recommended by:
          Sunspots

          only about 50% of the income.  At least a third goes right out the window for housing, leaving us with about 35% of the total income of the nation to spend on the consumption of anything.

          Very little of that is discretionary.  We don't get to choose which power company we use, and we have very limited transportation choices.  After we get ganked by the insurance trusts and the petrol trusts and the telecom trusts, most the "manufactured goods" we buy are food products.

          The entire food industry could collapse by two thirds without killing this beast.

          That's before we look at the interest on our debts.

          This what the Plutonomy Memo was about.  Our incomes are falling and are expected to continue falling.  We are becoming an afterthought.

          Does Coca Cola spend money advertising to people who earn two dollars a day?  You bet.  But they can't topple capitalism by not buying that Coke.

          It's not part of the foundation of the edifice.

          So, do it.  Make those choices.  It's the ethical thing to do.  At the very least, it reduces the extent to which it can ever be said you were the problem.

          My Grandad had a coal tattoo across half his back and walked with a cane for 30 years BOWP.

          by JesseCW on Thu Jun 06, 2013 at 11:53:04 PM PDT

          [ Parent ]

          •  Cheer up. You do have power. Corporate (0+ / 0-)

            America loves the defeatist attitude.

            Moving money out of big banks has made them take notice.

            Walmart is taking a hit from activism.

            The answer is in the multiplier effect, not individual ethics.  Corporations will sit up and listen to millions of people.  It's called market share.  They want it to grow, not shrink.  Even a 10% drop in revenue is a punch in the gut to them.

  •  "Double production and halve the workforce" (9+ / 0-)

    I worked in ERP management consulting and that was the goal during this time period.  And we did it.

    Through software, EDI, barcoding, supply chain and other technologies we could take a $100 million business unit with 1000 employees and turn it into a $200 million one with 500 employees.

    "The way to see by faith is to shut the eye of reason." - Thomas Paine

    by shrike on Thu Jun 06, 2013 at 04:39:56 AM PDT

  •  The only reason people to the right of center (7+ / 0-)

    would not agree that demand is the problem, is because they are either being disingenuous, or entirely political, or both.  They are willfully disregarding facts, and they have become quite good at it.

    To believe in the multiplier is to believe in the power of the middle class and even the poor to affect the economy.

    Ayn is the bane! Take the Antidote To Ayn Rand and call your doctor in the morning: You have health insurance now! @floydbluealdus1

    by Floyd Blue on Thu Jun 06, 2013 at 05:11:05 AM PDT

    •  Oh,and to concede that the multiplier even (4+ / 0-)

      exists is to concede that govt injections into the economy work, and to concede that even unemployment compensation and SNAP injections into the local economies work.

      Ayn is the bane! Take the Antidote To Ayn Rand and call your doctor in the morning: You have health insurance now! @floydbluealdus1

      by Floyd Blue on Thu Jun 06, 2013 at 05:12:11 AM PDT

      [ Parent ]

      •  I try to make the demand argument... (4+ / 0-)

        and people around here actually do not believe it.  They say things like, "It is not a demand problem because people have plenty of money.  Look at all the iPhones and $200 sneakers out there."  

        They act like if someone has anything remotely nice then they are not poor.  To them, if you do not look like a child from a UNICEF commercial, you are not poor.

        "Perhaps the sentiments contained in the following pages, are not YET sufficiently fashionable to procure them general favour..."

        by Buckeye Nut Schell on Thu Jun 06, 2013 at 05:36:05 AM PDT

        [ Parent ]

        •  People are so ridiculous. Notice how their (4+ / 0-)

          cited evidence impunes others. (oh by the way, let's kill 2 boids with one stone).

          Seriously, think about the other argument.  Ok, tax cuts and trickle down.  How is the trickling down supposed to help the economy?  The con answer is that it provides jobs...and what do those jobs provide???  MIDDLE CLASS SPENDING!  At some point, the spending HAS TO be acknowledged as a vital component in keeping the economy going.  Thus, the con beef then, is with the govt spending only?  (As if money from different sources is a different color and doesn't affect the economy the same way).  I notice that noone ever pins down a con to what happens after the trickle down and tax cuts, what actually, on the ground level, makes the economy grow....beyond just platitudes about investment and jobs.

          Ayn is the bane! Take the Antidote To Ayn Rand and call your doctor in the morning: You have health insurance now! @floydbluealdus1

          by Floyd Blue on Thu Jun 06, 2013 at 05:53:37 AM PDT

          [ Parent ]

  •  More H1Bs with the Immigration bill will fix (9+ / 0-)

    everything. More cheap labor for the Tech industry is on its way so the US Tech workers can be replaced with cheap imports.

    Opps those are the 'good' jobs everyone keeps saying our economy needs. Oh well, no one said life under Fascism would be easy.

    No longer Hoping for Change. Now Praying for a Miracle.

    by CitizenOfEarth on Thu Jun 06, 2013 at 05:11:49 AM PDT

    •  Fascism? (2+ / 0-)
      Recommended by:
      CitizenOfEarth, Sunspots

      Corporatism is more like it. One-half of fresh graduates each year with a bachelor's in STEM cannot get hired to work in their field. Two hundred thousand programmers are currently drawing unemployment checks. Another 800,000 have exhausted their benefits. Two million former high-tech workers who lost their jobs to outsourcing have taken jobs in other fields because they cannot get work in the tech field.

      And yet our elected representatives in Congress insist that we need to import 205,000 tech workers each year because there are no Americans who could fill the jobs. Bullshit.

      A waist is a terrible thing to mind.

      by edg on Thu Jun 06, 2013 at 12:15:34 PM PDT

      [ Parent ]

      •  Yup. My job went to India in 2009 (3+ / 0-)
        Recommended by:
        edg, foresterbob, Sunspots

        I was a software project manager for one of the largest US tech companies. 16,000 US tech jobs from that company were off-shored in 2009.

        I haven't found work since.  A guy I stayed in touch with who has essentially the same skills and education as me is working stocking shelves in a retail store.

        This is what the US Govt did to the entire US Tech industry. And they pretend that they don't know why  the economy can't recover.

        No longer Hoping for Change. Now Praying for a Miracle.

        by CitizenOfEarth on Thu Jun 06, 2013 at 12:49:39 PM PDT

        [ Parent ]

        •  I hear you. (3+ / 0-)
          Recommended by:
          CitizenOfEarth, foresterbob, Sunspots

          I was software development director for a company in Virginia in the early 2000s. I had to train Filipinos to replace the American programmers on my development teams and eventually, the project managers, too. After a while, I quit in disgust and started a small Internet retailer that pays a fraction of what I used to make but leaves my conscience clean enough to sleep at night.

          A waist is a terrible thing to mind.

          by edg on Thu Jun 06, 2013 at 01:16:03 PM PDT

          [ Parent ]

      •  Exactly right. My job was off-shored to India (2+ / 0-)
        Recommended by:
        foresterbob, Sunspots

        in 2009, software project manager, after I was forced to train my replacement.

        No longer Hoping for Change. Now Praying for a Miracle.

        by CitizenOfEarth on Thu Jun 06, 2013 at 12:51:46 PM PDT

        [ Parent ]

  •  The credit ran out. (11+ / 0-)

    We saw this in 2008.

    The extension of credit as a means of income is economic cruelty. So if you look at how income distribution changed after 1980, bearing in mind that credit under the Greenspan fed was so very easy, debt supplanted income growth.

    I call this thirty years on the road to nowhere.

    •  I think this is a key in this whole thing... (4+ / 0-)
      Recommended by:
      LillithMc, bryduck, JesseCW, Sunspots

      I read somewhere, can't remember now, that since women in mass entered the job market in the 60s/70s we have blown through their income (2 person household), blown through huge amounts of credit via cc, then we blown through equity credit with the housing boom, blown through student loan credit which isn't over, and we are now just seeing the effects of a tapped out market. There is no demand because there is no more money. People are tapped out in every conceivable way...no savings, no second income to get, to credit and no equity. Corporations cannot sustain a market for themselves when there isn't anyone to buy their goods. We'll see what happens.

  •  Forest / Trees (4+ / 0-)
    Recommended by:
    vahana, shrike, lehman scott, Keninoakland

    Great diary, interesting content, however I think a point is missed.

    Ok, so we are in an economy where less and less human labor is necessary, right? Wouldn't that seem to imply that we actually need less and less people at all? And the market is bearing this out in reduced family formation due to debt on the young side, and increased suicides across the board on the older side? (Not to mention high prices for everything).

    Now I'm not making any statements about the ethics or morals of these states of affairs or suggesting a solution, but less people who are more educated would mean higher wages and lower inequality?

    This isn't 1979 with 3.5 billion people. This is 2013 with 8 billion. All of them want to live like Americans!

    (-5.50,-6.67): Left Libertarian
    Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

    by Sparhawk on Thu Jun 06, 2013 at 05:56:41 AM PDT

    •  Wait. Did you just suggest that the human (1+ / 0-)
      Recommended by:
      lehman scott

      population should be pared down to just a remnant needed to meet the few needs the idle rich cannot satisfy through non-human means?

      My Grandad had a coal tattoo across half his back and walked with a cane for 30 years BOWP.

      by JesseCW on Thu Jun 06, 2013 at 12:29:39 PM PDT

      [ Parent ]

      •  Re (0+ / 0-)

        I wasn't suggesting that anyone be "pared down".

        But with a lot fewer people, wages would definitely be higher since (a) there is less of a strain on natural resources and (b) workers have more bargaining power since there aren't 3 for every job like there are these days.

        If you can't see the part that population is playing in this mess, you are blind.

        (-5.50,-6.67): Left Libertarian
        Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

        by Sparhawk on Thu Jun 06, 2013 at 08:36:51 PM PDT

        [ Parent ]

        •  A new version of "The Cold Equations" (0+ / 0-)

          and just as amoral and inhuman as that story was - possibly just as deceptive.

          "The Cold Equations" tried to have it both ways: a society where human life was of absolutely no value (consider the utter absence of any warnings or barriers to stowing away on a spaceship, and the official policy of "space 'em alive or dead"), and one where human life was of great importance (speed run to Mars with serum to save the afflicted colony). The cognitive dissonance only shows up when the story is analyzed carefully after the fact.

          What are you/we/they overlooking?

          If it's
          Not your body,
          Then it's
          Not your choice
          And it's
          None of your damn business!

          by TheOtherMaven on Fri Jun 07, 2013 at 09:09:59 AM PDT

          [ Parent ]

    •  We're not staying on Earth (1+ / 0-)
      Recommended by:
      lehman scott

      .................expect us......................... FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

      by Roger Fox on Thu Jun 06, 2013 at 02:42:21 PM PDT

      [ Parent ]

  •  To me this is a symptom, not what is wrong (4+ / 0-)

    with the economy per se.

  •  The Triumph of Reaganomics (7+ / 0-)

    Nothing illlustrates the timeline of the destruction of the American labor movement better than this sort of graph. 1981 was a watershed year indeed. If you further superimpose the curves for average global temperatures and amounts spent on U.S. military hardware onto the economic curves you can really see what Reaganism represents.

    We will never have the elite, smart people on our side. - Rick Santorum

    by easong on Thu Jun 06, 2013 at 06:33:32 AM PDT

  •  the (1+ / 0-)
    Recommended by:
    baldski

    fundamental problem isn't demand, it is trade.  The 'service based' economic model never made sense and the 'demand' problem is based on the fact that wealth creation is made by being a producer NOT a consumer.  The lack of balance is demonstrated clearly by trade deficits.
    In 2012, the US had a $300 billion annual trade deficit with China which is the largest trade deficit with a single country that any country has had in history.

    It only appears that there is less work to do by humans because production has been offshored to every country that has a nice easily exploitable and dirt cheap labor force to use up and spit out.  

    "History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling the money and its issuance." -James Madison

    by FreeTradeIsYourEpitaph on Thu Jun 06, 2013 at 06:45:34 AM PDT

    •  The "service based" economic model (0+ / 0-)

      makes perfect sense once we seize control of the means of production of the primary necessities of life.

      When everyone has three hots and cot, and we can go around trading haircuts for bikini waxes.

      My Grandad had a coal tattoo across half his back and walked with a cane for 30 years BOWP.

      by JesseCW on Thu Jun 06, 2013 at 12:31:10 PM PDT

      [ Parent ]

      •  . (0+ / 0-)

        I think you're being facetious and your comment is funny if that is true but I'm not sure without the '/snark'

        "History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling the money and its issuance." -James Madison

        by FreeTradeIsYourEpitaph on Sat Jun 08, 2013 at 08:35:22 PM PDT

        [ Parent ]

    •  Lots of work, get ready for ocean levels (0+ / 0-)

      going up due to Climate Change, develop renewable energy networks. Start utilizing space based resources.

      .................expect us......................... FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

      by Roger Fox on Thu Jun 06, 2013 at 02:41:02 PM PDT

      [ Parent ]

  •  Something odd about the graphs (0+ / 0-)

    I can't help but notice.. It seems like whenever labor's share gets sufficiently high, a recesssion suddenly happens. Thats what it seems to show at least, almost every time: A sudden crash after labor's share reaches a peak.

    Im not sure what to make of it.

    "Trust not the words of a poet, as he is born to seduce. Yet for poetry to seize the heart, it must ring with the chimes of truth."

    by kamrom on Thu Jun 06, 2013 at 06:50:31 AM PDT

    •  Cause, or effect? (2+ / 0-)
      Recommended by:
      JesseCW, Roger Fox

      Your observation would suggest that a higher share going to labor causes the recession. However, you can read exactly the same graph to conclude that labor's share would increase, or remain high, had a recession not occured.

      “Texas is a so-called red state, but you’ve got 10 million Democrats here in Texas. And …, there are a whole lot of people here in Texas who need us, and who need us to fight for them.” President Obama

      by Catte Nappe on Thu Jun 06, 2013 at 08:24:29 AM PDT

      [ Parent ]

    •  1938-1988 recessions were shorter & shallower (0+ / 0-)

      .................expect us......................... FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

      by Roger Fox on Thu Jun 06, 2013 at 02:38:21 PM PDT

      [ Parent ]

  •  Rogoff had there 90% line..... (0+ / 0-)

    This graph needs to be extended to its logical ends, and we need a "line" of our own...

    ... The Machete Line.

    The line depicting the point at which, the workers portion of GDP has dropped to a breaking point, and the workers rise up in violent action and start hacking the 1% to pieces with Machete's. Say 40% ... and we are rapidly approaching the 40% mark.

    That should get some MSM attention, they love blood and guts talk. ;P

  •  labor & demand don't necessarily match up nowdays (5+ / 0-)

    One thing that's screwing up the economy and employment, and which is only going to get worse, is that technology is eliminating a whole lot of jobs and isn't replacing them with anything.  A lot of demand is now being met by something that doesn't require labor.

    Increasingly, people are downloading things they want... and there's almost no labor involved in that demand - they're just accessing a file.  It doesn't take all that many people to put up and maintain access to those files.

    In past years, if you bought a book, a lot of workers got a piece of that - writers, editors, the people who designed the book, the people who marketed the book, the people in the factories where they manufactured the book (as well as the factories where they made the materials for the paper and the binding), the truckers who helped ship the book, the staff at the store where you bought the book (be that a brick-and-mortar store or a warehouse where someone mailed it to you), libraries... etc.  

    Now, people download things to a Kindle and almost all those people are eliminated.  A lot of Kindle stuff isn't even edited or marketed, and in a lot of cases the author isn't even getting paid much 'cuz there's so much vanity press stuff.  Competition is also through the roof because real writers now have to compete with people who would have previously been weeded out of the market by editors who'd never have published their junk if someone had to put money behind it.

    Same deal goes for the record industry and the movie industry.  Stuff is downloaded or streamed, so record stores, record warehouses, video stores, and all the transportation and manufacturing involved also gets eliminated. And there's trickle down to things like bookshelves, CD racks, etc.    

    Retail is becoming a dying thing in a lot of ways.  It doesn't seem like much, but it's taking a bite, and a larger and larger one.

    And now 3D printing is coming in and as that gets bigger it's gonna wallop the shit out of the manufacturing industry all across the board.

    Meanwhile, the population is booming and people are living longer, so more people are needing jobs while the number of jobs that need doing are shrinking.  That's going to be a major wrench thrown into the economy, and we're just in the infancy of it.

    "Glenn Beck ends up looking like a fat, stupid child. His face should be wearing a chef's hat on the side of a box of eclairs. " - Doug Stanhope

    by Front Toward Enemy on Thu Jun 06, 2013 at 07:31:39 AM PDT

  •  But how do you fix it? (1+ / 0-)
    Recommended by:
    Whatithink

    Labor's share is dwindling because of multiple factors:

    Lower wages

    Global market and workforce

    Increased efficiency/automation

    Even if you raised minimum wage I think you'd only make so much of a dent in the issue.

    Raising taxes on corporations sends them fleeing to more tax-friendly jurisdictions.

    Taxing the wealthy even a tiny bit more is like pushing a boulder uphill.

    I just don't see any solutions here that can actually be implemented that will make a big difference.

  •  re (3+ / 0-)
    Recommended by:
    kck, Sparhawk, Keninoakland
    the stock market is going up while labor's share is going down.
    The stock market has not gone anywhere since 2000, and most of the decline in labor's share of income has occurred since 2000.  If it were essentially a zero sum game, as you imply-- money that does not go to U.S. labor goes to U.S. assets-- why isn't the stock market exploding since 2000?

    What I think is really happening here is a global competition story.  Before 1980 (approximately)-- we were pretty well insulated from global competition. China for example had hundreds of millions of people willing and able to work, but who were earning a couple pennies on the dollar compared to what workers were working here.  That had to change-- especially as technology eroded impediments to international flow of knowledge. Since 1980, global competition in terms of labor has exploded-- particularly accelerating since 2000.  U.S. labor has suffered from the global competition, but non-U.S. labor has benefitted greatly along of course with those with the resources to take advantage of the global labor markets-- big corporations.  As wages elsewhere rise, this trend will eventually ease, but the fact is that labor is still way cheaper in most parts of the world than here, so I expect the trend to continue for awhile.  

    I believe that this trend was more or less necessary, and the world is better off overall because of what has occurred in the past 30 years with the transition of China from an economic backwater to an economic power.  Even in an overall beneficial trend, there are winners and losers, and the loser in this trend happens to be western labor, simply because they are now exposed to competition which previously did not exist.  Our policy task here is to ease the extent to which our labor suffers from this trend, and to that extent, your post is well-taken.  

    •  What happens to the DOW (0+ / 0-)

      after you factor: inflation; government subsidies both military and non-military; one time offshoring; one time movement from defined pensions to 401ks; stuff you and I have no concept of; etc.

      In inflation alone, the DOW is roughly at 11.2k in 2000 dollars, and 5.4k in 1980 dollars.

      I'm living in America, and in America you're on your own. America's not a country. It's just a business.

      by CFAmick on Thu Jun 06, 2013 at 09:54:50 AM PDT

      [ Parent ]

  •  When they squeeze the last drop of blood... (0+ / 0-)

    ...from workers, there will be an uprising.

    Daily Kos an oasis of truth. Truth that leads to action.

    by Shockwave on Thu Jun 06, 2013 at 08:03:04 AM PDT

    •  Not in this country, maybe in China... (3+ / 0-)
      Recommended by:
      Shockwave, Aquarius40, ladybug53

      The big question to me has always been that when the finacialized economy based on a global investor and labor pool actually stops needing so many Americans, how would the US vest so many Americans who did not have their foot in the door. I guess the answer is we won't. Will it simply be stagnant wages with ever smaller prices? Maybe. The de facto strategy seems to assume many people left out. What was Obama's plan? "Win the Future"? Predicated on self-motivated, self-sufficient winners and losers. The real message is the same since the cave men - you're on your own. Those without the basic set of tools (e.g., education, fire in their bellies, intellect, fine decision making, migrating to the right places) will have a day's labor if they're fortunate enough.  

      I just don't foresee a "democratic uprising" because of the vast scale and global nature of the new superstructure (economic and security).  The stale talk about bringing back old industrial era solutions is as archaic as it is unimaginative. People will adapt. Maybe we'll see a resurgence of communities and local-global movements as kids here and around the world grow up so much smarter in this "new world order".

  •  And even with this... (0+ / 0-)
    In consequence, as in a poker game where the chips were concentrated in fewer and fewer hands, the other fellows could stay in the game only by borrowing.
    It wouldn't be as noticeable if we could at least borrow safely because the game is rigged in favor of the lender. I think income inequality is a lofty goal but before that can happen, it would be nice to put things on a level playing field because no matter what laws on income restrictions you pass, unless we are all singing from the same hymnal there will always be stashers without consequence (i.e. no jail time). We need the same laws to apply to everybody. I don't even think capitalism in and of itself is inherently unpopular as an economic system IF the field of play is level and just. Many controls wouldn't be necessary if they would make it the same for everyone...borrowing rates, broken laws, etc.
  •  Great Diary and really good info, thanks! (4+ / 0-)
    Recommended by:
    NoMoreLies, JesseCW, baldski, Sunspots

    I posit, however, that a more fundamental driver of our current economic ills might be better explained with this graph:

    Pessimism of the intellect; optimism of the will. - - Antonio Gramsci

    by lehman scott on Thu Jun 06, 2013 at 08:54:59 AM PDT

  •  I'm surprised DeLong said this... (0+ / 0-)
    "...I never thought I would see anything like this in my lifetime."
    It seemed obvious to me in the early part of this decade that the had become the investor class, the world's bankers with a global pool of labor and demand. The scale of a globalized economy, the interconnectedness an momentum of the system is hard for most to fathom.
  •  The Shock Doctrine plan is progressing (2+ / 0-)
    Recommended by:
    bryduck, Sunspots

    ..slightly ahead of schedule.

  •  So what the heck happened (0+ / 0-)

    cica 2000 that resulted in this massive change?

    When lots of people show up to vote, Democrats tend to win.

    by Audri on Thu Jun 06, 2013 at 11:15:11 AM PDT

    •  Huge tax cuts for the rich, and total lack (1+ / 0-)
      Recommended by:
      Sunspots

      of effective regulation on how much banks could lend.

      They were leveraged at up to 25 to 1.  They weren't giving that money to poor people.

      My Grandad had a coal tattoo across half his back and walked with a cane for 30 years BOWP.

      by JesseCW on Thu Jun 06, 2013 at 12:34:17 PM PDT

      [ Parent ]

  •  Idle Money (2+ / 0-)
    Recommended by:
    Roger Fox, Sunspots

    It is estimated that US corporations are sitting on $5 trillion in domestic cash and cash equivalents plus another $2 trillion in foreign funds. This $7 trillion could employ 14 million Americans at $50,000 per year salary for the next 10 years.

    A waist is a terrible thing to mind.

    by edg on Thu Jun 06, 2013 at 12:10:26 PM PDT

  •  Wow that's poor performance for the S&P (0+ / 0-)

    It's a compounded return.  If you're looking at it in nominal dollars it should shoot sky high at the end of the graph.  (If you look at something doubling every ten years, the largest increase will come in the lat ten years).

    http://www.aeinstein.org/organizations/org/FDTD.pdf From Dictatorship to Democracy, Guide to Non Violent Protests.

    by sdelear on Thu Jun 06, 2013 at 03:50:11 PM PDT

  •  Share of what? (0+ / 0-)

    Guess everyone else knows but me.

  •  Fan-fucking-tastic. Now what? (1+ / 0-)
    Recommended by:
    lehman scott

    We knew this. We feel this on the streets. We've known this for at least 20 years.

    So what are people doing about it? Nothing. That's what.

    "Those who can make you believe absurdities, can make you commit atrocities" Voltaire.

    by JWK on Thu Jun 06, 2013 at 04:48:34 PM PDT

    •  Folks are working on it, JWK (1+ / 0-)
      Recommended by:
      Sunspots

      Don Hazen at Alternet had an article on some recent local successes, but he acknowledges that a comprehensive and forward-looking set of overall objectives and strategies is indeed rather lacking:

      There are dozens of examples like this. Hopefully momentum will build, although the obstacles are formidable and the forces of repression ready to step in at any moment.

      Still, being realistic, the challenges of building resistance, finding ways to reform and change the "system” is hugely daunting. Many thinkers argue that our version of exploitative capitalism is doomed, and will someday fall apart. The only problem is, those thinkers have no idea how to bring down capitalism, or even change the system, beyond critiquing it. The number of people and books that bewail the system are many, but the path to solutions, almost nil. Meanwhile, more people suffer every day.

      I am personally frustrated, that some of our biggest thinkers and experts are not investing much of their brain power or political capital in the bigger picture of strategy and tactics—the battles to gaining more political clout to confront the power centers. The ability to build to a point where millions of people are in the streets is currently not on the horizon. So there is much work to be done in that regard. An assessment of the possibilities to change, and a range of the options is beyond the scope of this article, but will be forthcoming.

      Stay tuned, I guess...

      ..or...

      How's about we brainstorm some new system-wide structures we could theoretically build and tinker with on paper, perhaps... ya gotta start somewhere...

      Pessimism of the intellect; optimism of the will. - - Antonio Gramsci

      by lehman scott on Thu Jun 06, 2013 at 05:19:38 PM PDT

      [ Parent ]

  •  The Problem is even worse than that (0+ / 0-)

    I've been trying to figure this out for a long time and finally came to as succinct a statement as I can just a few months ago when I read about a push to require businesses to pay a "living wage" for a full week's work.

    A living wage could be summarised as workers being paid enough to buy all the goods and services they need to provide for an adequate (however you define it) standard of living in exchange for an adequate amount of work. The net would be that they need to be able to buy all the goods and services produced.

    You can define those terms any way you like; the reality is that retail consumption is the end funder of all economic activity. Taxes can be excluded because they are just a form of compulsory consumption via the agency of government.

    So, the statement goes like this

    The aggregate of all consumers is the aggregate of all employees drawing pay from a company.

    BUT, the aggregate of all payments to employees (wages, salaries, owners' drawings) is, by definition, ALWAYS LESS than the aggregate price of all production.

    The two extra items that have to be paid for in the price of all goods and services are profit and interest. These two costs represent a charge against the price of a good that is superfluous to its cost of production.

    Since wages etc are only even a partial cost of production, they cannot, ever, afford to buy all the goods and services that are produced.

    The difference has been made up with debt and, for a very long time, that debt appeared, on an individual basis, to be manageable. But in the last decade that debt has exploded and ceased to be manageable. \

    I am 62 years old, NEVER in my life had there ever been less aggregate debt at the end of a year than the year before. Debt had ALWAYS grown, year on year, throughout my life, until 2008.

    At that moment we, individually and collectively, realised that we had too much debt and had to pay it down.

    Everything that has happened since then, from QE on out, is the result of the failure of debt to increase. It has stopped being used to make up the difference between wages paid and prices of all goods and services and the economy is trying to shrink fast enough to accommodate that shrinkage.

    It can't. The unpayable debts will, eventually, be accepted as unpayable. The music will stop and the rush for the remaining chairs will get going in earnest.

    Me? I stopped dancing in 2000. All debts paid off when there was plenty of easy money around. Now I have my 10 acres and my whole time is spent trying to turn it into a sufficiently productive landscape to keep the two of us and as many of our family as can get here and help when TSHTF in earnest.

    The game is over. Next job is to figure out what the new game is and be ready to play it.

    Anything else is just a form of denial, or bargaining, very soon, even acceptance will be too late; you need to be acting now.

    Until inauguration day The USA is in the greatest danger it has ever experienced.

    by Deep Dark on Thu Jun 06, 2013 at 10:54:47 PM PDT

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