Over 30 years ago, and in less than 2 1/2 minutes:
And with a smile and a laugh, no less. Friedman would have swatted Obama like an annoying fly. Who’s around any more to articulate his philosophy, his truth?
Over 30 years ago, and in less than 2 1/2 minutes:
And with a smile and a laugh, no less. Friedman would have swatted Obama like an annoying fly. Who’s around any more to articulate his philosophy, his truth?
[See Aggie's companion post below.]
Hard as it was for me to write that title, I actually mean it:
It was the politicians, and not longtime city workers like Olivia Gillon, who brought Detroit to the brink of insolvency, but now Gillon can only watch as lawyers negotiating the Motor City’s bankruptcy bid place a new value on her hard-earned pension: 16 cents on the dollar.
The beleaguered city, facing debt of as much as $20 billion and led by a state-appointed manager, tried nearly a year ago to renegotiate with creditors. When those talks broke down, the city filed for bankruptcy last July, but the filing was ruled unconstitutional by a judge. A series of state and federal rulings followed, culminating in a trial that began last week in which the city must show it is eligible to enter bankruptcy. That’s when the frightening magnitude of the “haircut” being sought for some 21,000 retirees emerged.
“It’s wrong on every possible level,” Gillon, 68, told FoxNews.com. “I earned my pension. I retired expecting it and I feel that I should have it.”
Pause here for a little reality. Sure, she earned her pension; and sure, the politicians drove Detroit into a ditch. But who elected (and re-re-reelected) the politicians? And who never saw this day of reckoning coming, and offered to give back to the city what it couldn’t afford to give away?
Longtime city workers like Olivia Gillon, among others.
The affected workers have been promised some $3.5 billion in pension payments and another $6 billion in health care benefits, money most agree the city can’t pay.
The Michigan-based Mackinac Center for Public Policy, which sounded a warning about Detroit’s fiscal problems more than a decade ago, said the old-style defined benefits pensions that have long been a centerpiece of civil service leave pensioners at the mercy of politicians.
“It’s just another example of the flaws of a defined pension system,” said Ted O’Neil, a Mackinac analyst. “The problem with putting trust in government to invest and save your money is that they don’t always make the best choices.["]
Amen, brother. Couldn’t have said it better myself. Though Margaret Thatcher did: The facts of life are conservative.
Still, this is hard to read:
[A] retiree counting on a modest annual pension of, say $30,000, the proposed cut would leave him or her with $4,800.
From $2,500 a month to $400. Ouch. Don’t say you weren’t warned:
The Mackinac 2000 study looks prophetic now: “If Detroit’s future expenditures were relatively stable, this financial snapshot still would be cause for concern. But the city is looking at two new outlays of monstrous proportions: funding the pension obligations of current and future city employees, which could cost up to $3 billion, and fulfilling requirements under several federal environmental acts, which will cost billions more,” read the report.
No thank you, Detroit. I’ll pass on the fries. It’s called putting off short-term pleasure fur long-term health. Pity you didn’t try it yourself.
The crush of new recipients is putting unsustainable financial pressure on the program. Federal officials project that the program will exhaust its trust fund by 2016 — 20 years before the trust fund that supports Social Security’s old-age benefits is projected to run dry.
The growth of the disability rolls has accelerated since the recession hit in 2007. As the labor market tightened, workers with disabilities that employers previously accommodated on the job — painful hips, mental disorders, weak hearts — were often the first to go. Finding new work often proved difficult, causing many to turn to the disability rolls for support.
The migration of so many people from work to the disability rolls is raising concern among lawmakers in Congress that the program is being stretched beyond its original intent of providing a safety net for former workers whose medical problems make them unable to work.
Last week, the Government Accountability Office found that the program made $1.3 billion in potentially improper payments to people who had jobs when they were supposedly disabled.
How long have we been in “recovery”, boys and girls? That’s right, over four years—since June 2009. Food stamps and disability are the new normal. As Debbie Wasserman-Schultz proclaimed, once people get taste of an entitlement (ObamaCare in her example), they never give it up.
Many recipients first go on unemployment, which can last a few months or even more than year. Disability, by contrast, can pay out benefits for decades. The vast majority of recipients never return to work.
I’m not sure why we conservatives even complain anymore. We’ve lost. The Fed prints money to prop up the ObamaEconomy, and the debt grows exponentially. It’s all fun and games until the bubble bursts or hyperinflation ignites.
There’ll be tears before bedtime.
A great call to Rush Limbaugh yesterday:
CALLER: This is Sean in San Diego, and I believe those workers at McDonald’s and Burger King deserve some more money. The shareholders are getting rich. I watch every day on MarketWatch, and the CEO is getting rich. They’re making their profits. They can afford to pair their workers a bit more money. They’re not asking for much. They haven’t had a raise in 25 years.
RUSH: Really? In 1988, people at McDonald’s were making $7.25 an hour?
CALLER: I’m not exactly sure of that, but –
RUSH: Well, that would be important.
CALLER: They’re not being paid fairly, Rush.
RUSH: They’re not making what?
CALLER: They’re not making enough money to even buy themselves a dinner and pay their rent.
RUSH: Well, then why don’t they go get a job that does pay that?
CALLER: Maybe ’cause they can’t.
RUSH: Why can’t they?
CALLER: Probably no other jobs out there in this bad economy.
RUSH: Why? Why aren’t there any jobs out there?
CALLER: The Democrats have destroyed this economy. We all know that.
RUSH: Okay. Well, the minimum wage, by the way, back 25 years ago was $3.35 an hour, just to get the number out there. It was not what they’re making today. I’ll get the inflation calculator out and take a look at it. They’re asking for double their current wages. Sean, why doesn’t the McDonald’s franchise just pay it? You know, why not just give them more money?
CALLER: Oh, that’s simple. Greed.
RUSH: Greed? Or is it competition?
CALLER: Why should they if they don’t have to and nobody’s making them? Government sets the minimum wage, and they don’t want to do it.
RUSH: Well, okay. Let’s take a look McDonald’s, and let’s say the McDonald’s gives their employees a raise. Let’s just say $10 dollars an hour. Would that be enough?
CALLER: No. I don’t think so.
First of all, does Rush sound mean to you? A bully, a blowhard? The caller has just declared Democrat politics to be the ruin of the country, yet denounces greedy capitalism and wants to set wage levels. No wonder Rush is being patient: he’s talking to a functioning imbecile.
RUSH: How about this? How about McDonald’s raises everybody to $20 an hour? Would that be enough? Would that be okay?
CALLER: I think that would probably help a lot of people.
RUSH: What about $25 an hour?
CALLER: Managers should probably get at least that. They probably already do.
RUSH: Okay, then what about $30 an hour?
CALLER: If that’s the fair market rate.
RUSH: Well, no, that’s what $7.25 is.
CALLER: I don’t believe that.
RUSH: Yeah, that’s why it’s $7.25. It’s the fair market rate. It’s $7.25 not because it’s temporary. That’s the fair market rate. Let’s pay ‘em $50 an hour, how about that?
CALLER: $15 an hour.
RUSH: No, $50.
RUSH: Five-oh, $50 an hour. How about that?
CALLER: Yeah. That should be the new fair market rate.
RUSH: Right on. Right? Well, let’s keep going, how about $75 an hour, let’s pay ‘em $75 an hour.
CALLER: Where you going with this?
RUSH: Well, I want to know whether you agree with $75. I’m not going anywhere with it. If $50 is good, $60 would be better, right?
CALLER: Well, yeah.
RUSH: What about $75 an hour?
CALLER: Where you going with this, though? I don’t understand.
No he doesn’t poor fellow, so Rush explains.
CALLER: I think the workers wanted $15 an hour, and that’s what seems fair to me, not 50.
RUSH: Okay, but if $15 is fair, how about $20? And you agreed, and then he said how about $30.
CALLER: Certain workers, yeah. The management style.
RUSH: Okay, so you want to equal what management’s making? You want no delineation?
CALLER: No, I think the entry-level should be $15.
RUSH: That’s what I asked, “How about $20?” Why shouldn’t the entry-level be $20? If $15 is good, $20 would be better. Why shouldn’t the entry-level be $20 an hour? The point, Sean, is that you just said that $7.25 isn’t the market price, and it is. That $7.25 an hour is what it requires for McDonald’s to be fully staffed. There are people who will work for that, and therefore that sets the wage scale. Now, $10 would be better.
Yeah, you can keep raising it, but at some point, everybody who believes in a minimum wage will say, “No, wait a minute. That’s too much,” and at that point, you have demonstrated that that there’s no market relationship. You’re just talking emotion. You’re just talking “fairness.” You’re just talking being nice, and that’s not how the market works. People aren’t paid a wage because they’re being nice to, or because it’s fair. In the market, the market rules. You can control it all you want, you could add arbitrary numbers on it all you want, and all you’re doing is delaying the inevitable.
The market will always win and will always rule, because it is the market.
Sean was done by then, but not Rush:
RUSH: Teachable moment, market economics. As much as Obama wants to socialize everything and make everybody equal in terms of their outcomes, it hasn’t happened yesterday, and he’s never going to be able to fully do it. If you are a Millennial, if you’re a teenager, I don’t care who you are, there are certain facts of life that have not changed and aren’t going to change no matter how much you want them to.
If you want a “living wage,” if you don’t like what fast food restaurants pay, then do something else. It’s just that simple. Go to a trade school. Go to another business. Start your own business. Maybe the work that you are capable of isn’t yet worth $15 an hour at a fast-food restaurant. Maybe the consumer doesn’t want to pay $10 for a Big Mac so that people working at McDonald’s make $15 an hour. It’s not just a one-way strata.
Now, to those of you who, like Sean from San Diego, are sympathetic to this demand for the minimum wage at Mickey D’s to go from $7.15 or $7.25 an hour to $15, let me ask you this: When you buy a meal, do you make sure that you’re paying a fair price for it?
When you walk in there, do you ask the employee, “Look, am I paying enough here so that you can get a livable wage? When you go in and buy a Big Mac or a Quarter Pounder with cheese or a double Quarter Pounder with cheese, do you look at the price is and say, “Are you sure that this costs enough that you can make a livable wage?” Or do you just get a little upset when you think it’s a little too expensive?
When you buy a meal and you pay a fair price for it, are you doing this to ensure that the employees get health care? When you walk into Mickey D’s and you buy a Big Mac, do you ask them, “By the way, is this thing costing enough so that you get health care here? By the way, is this Big Mac costing enough so that you get a pension here?” Do you think any of that when you go buy a Big Mac? No. You want it to be as cheap as it can be. That’s why you’re there.
Meanwhile, what about the other side of this? The increased cost to the consumer. Many of the people who go to these stores and restaurants are looking for bargains. They themselves are on limited or fixed incomes. They have large families, or they’re unemployed. These people are consumers, too. They have weekly budgets, too.
Rush returned to the theme today:
RUSH: … Instead of asking for the minimum wage to go up because it’s compassionate or makes you feel good, why don’t you go in and demand that a Big Mac only costs half what it costs now? ‘Cause it’s just too expensive. You can’t afford it. Why don’t you do that? Or why don’t you, as I say, agree to pay double what it costs? But any time you want to go into any business and arbitrarily set the value of something in that business, you’re going to affect everything else that happens.
But everything else, price-wise, is attacked by the market, which includes all kinds of factors. Competition, shipping costs, traveling costs, refrigeration, costs. It’s just so involved that you can’t arbitrarily set the price of anything without totally throwing everything out of whack, including the price of labor. But when you go in and think you’re making a really compassionate statement, you really feel good about yourself, ’cause you think the people that work there are underpaid, and you want ‘em to get paid more?
Well, you have a role in that, and your role is higher prices.
And if you’re unwilling to pay higher prices, then shut up.
James Taranto addressed the issue in his column today too:
Tyree Johnson said he’s worked at McDonald’s for 21 years, but is still earning minimum wage–$8.25 an hour in Illinois for workers 18 and older; and $7.75 for those under the age of 18, or older employees on the job less than 90 days.
“Every time I ask for a raise, they tell me ‘You shouldn’t have joined that union, we’re not giving you no raise,’ ” he said.
Why stay at a job for 21 years at minimum wage?
“With the help of this union, I’m going to overcome this,” he said.
[H]ere’s a first-person story from Willietta Dukes in London’s Guardian, titled “Why I’m on Strike Today: I Can’t Support Myself on $7.85 at Burger King”:
I’ve worked at fast-food restaurants in North Carolina for the past 15 years. I’ve spent more hours at Church’s Chicken, McDonald’s and now Burger King than I can remember. I work hard–I never miss a shift and always arrive on time. But today, I’m going on strike.
I make $7.85 at Burger King as a guest ambassador and team leader, where I train new employees on restaurant regulations and perform the manager’s duties in their absence. Before Burger King, I worked at Church’s for 12 years, starting at $6.30 and ending at just a little more than $8 an hour.
I’ve never walked off a job before. I don’t consider myself an activist, and I’ve never been involved with politics. I’m a mother with two sons, and like any mom knows, raising two teenage boys is tough. Raising them as a single mother, on less than $8 an hour, is nearly impossible, though.
So here we have two people who have worked at or near minimum wage for 36 years between them and are claiming, as the slogan has it: “We can’t survive . . .” That is true only in the sense that, as Paul Newman observed in “Hud”: “Happens to everybody. Nobody gets out of life alive.”
Never would I claim that it’s easy to live off $8 an hour. Never would I try to raise two kids on $8 an hour. But Rush is right: they have jobs because they’re willing to work for $8 an hour. If it’s the only jobs they can get, are they lucky or cursed?
The Seans of the country are easily led—by Rush or Obama—into absurd positions. But they can vote only for Obama (and not even him anymore). Alas for Willietta and Tyree, the Seans of the country—and probably the Williettas and Tyrees—did vote for Obama. Asking for double their wages now is like trying to wring blood from a stone. And I’m more sorry than you can imagine that they’re too dumb—sorry, “low-information”—to know it.
After five years of economy misery under this Dufus, he is now proposing that we lower corporate tax rates!
President Barack Obama will propose a “grand bargain for middle-class jobs” on Tuesday that would cut the U.S. corporate tax rate and use billions in revenues generated by a business tax overhaul to fund projects aimed at creating jobs.
Geez, Barry, I thought we had to raise taxes to create jobs? I thought lowering taxes would reduce revenue? I’m so confused.
“As part of his efforts to focus Washington on the middle class, today in Tennessee the president will call on Washington to work on a grand bargain focused on middle-class jobs by pairing reform of the business tax code with a significant investment in middle-class jobs,” Obama senior adviser Dan Pfeiffer said.
Obama wants to cut the corporate tax rate of 35 percent down to 28 percent and give manufacturers a preferred rate of 25 percent. He also wants a minimum tax on foreign earnings as a tool against corporate tax evasion and increased use of tax havens.
The new twist is that in exchange for his support for a corporate tax reduction, he wants money generated by the tax overhaul to be used on a mix of proposals such as funding infrastructure projects like repairing roads and bridges, improving education at community colleges, and promoting manufacturing, senior administration officials said.
Now he wants to work in a bipartisan fashion? Now? After trashing people who pointed out that corporate tax rates were among the highest in the developed world? Suddenly, when he is up to his neck in scandals, he sees the light?
This blog has pointed out since the 2008 election that the only type incentive program that has ever shown a positive return on investment is the large scale public construction project. Our imbecile of a President insisted on “Shovel Ready” Jobs, meaning paving projects. It failed miserably. He has poured trillions down the toilet. Why would we trust him with anything at this point? If he wants to lower corporate taxes, go for it, but the ignorant politicians who created this mess should not dictate how corporations choose to use their assets.
Detroit is 83% black, and dead broke.
So why not build it a new hockey arena? This is just too funny!
Detroit’s financial crisis hasn’t derailed the city’s plans to spend more than $400 million in Michigan taxpayer funds on a new hockey arena for the Red Wings.
Advocates of the arena say it’s the kind of economic development needed to attract both people and private investment dollars into downtown Detroit. It’s an argument that has convinced Michigan Gov. Rick Snyder and Kevyn Orr, the emergency manager he appointed to oversee the city’s finances, to stick with the plan. Orr said Detroit’s bankruptcy filing won’t halt the arena plans.
“I know there’s a lot of emotional concern about should we be spending the money,” said Orr. “But frankly that’s part of the economic development. We need jobs. If it is as productive as it’s supposed to be, that’s going to be a boon to the city.”
Others are not so sure:
But critics say the project won’t have enough economic impact to justify the cost, and that it’s the wrong spending priority for a city facing dire economic conditions.
Detroit city services are already stretched extremely thin. On average, police take about an hour to respond to calls for help, and 40% of street lights are shut off to save money.
“If you want people to live in the city, and not just visit to go to games, you have to invest in schools, in having the police to respond to calls,” said Gretchen Whitmer, the Democratic leader in the state senate. “There are so many investments that should trump a sports stadium.”
As cited above, I’ve heard both arguments in regards to sports stadiums. To be sure, no one’s going to go into downtown Detroit and spend money because of its schools or police force. But they will to see the Red Wings. The team is one of the few bright spots in that city’s loser culture. Say, 20,000 fans pouring into the city center forty times a year (fifty, including playoffs; even more if concerts can be accommodated) to eat, drink, park, etc.—to say nothing of the jobs such a venue would support—that’s not a bad return on investment.
The arena will be paid for with a $450 million bond issue that will be repaid over the next 30 years. Taxpayers will be paying almost two-thirds of the cost of the arena — $283 million — and private developers will cover the rest. Including interest, it’s projected that there will be a total of $444 million in taxpayer funds spent on the project.
Additionally, the developer has committed to spending another $200 million to build retail, office, residential and hotel space as part of the project. The construction is expected to create about 8,000 construction jobs with work due to start next year.
Mark Rosentraub, a University of Michigan professor and an expert on the economic impact of sports teams, did a study for the arena developers, and estimates that it would create more than $1 billion of direct spending in Detroit during the next 30 years. He said many stadium and arena projects have minimal impact on local economies because they’re already thriving or because of poor location.
But he argues that this one — in a depressed city next to football and baseball stadiums — will encourage a lot of private investment in restaurants, bars and other entertainment venues.
“The problem behind the financial issues of Detroit has been a flight of capital to the suburban areas,” he said. “We have to bring foot traffic and investment back to Detroit. This is exactly what it needs.”
As also cited above, Detroit is 83% black, and I can count the number of black hockey players on one hand. And the number of black hockey fans on two. In other words, what the people of the city want is no longer relevant. The city that they have is the city that they wanted, and look how that turned out. No, they’ll get a new hockey arena, and they’ll like it. Or at least work at it.
We’ve gone on about the labor participation rate until we’re blue in the face, and I expect most of you already get it.
If you just looked at April’s official unemployment rate of 7.5 percent, you could easily conclude that the employment situation is at least better than it was when unemployment peaked at 10 percent in October 2009. Yet, as millions of Americans know, jobs are still hard to find, and the labor market feels stagnant at best. These Americans are not mistaken: The official unemployment rate is such a misleading statistic that anyone seeking a true picture of the American economy should stop using it. At the very least, they should consider it in context.
As most people know, the unemployment rate is simply the percentage of workers in the labor force who don’t have a job. But few people know how the BLS defines these terms, particularly “labor force.”
If a worker has not looked for a job in the last 30 days, that person is not considered part of the labor force, even if he or she still wants a job. Perversely, if the economy gets so bad that large numbers of people stop looking for work, these dropouts actually decrease the unemployment rate. Clearly, the unemployment rate gives an incomplete picture unless one also considers the percentage of Americans the BLS counts as the “labor force” — the labor-force-participation rate.
For example, when the unemployment rate peaked in October 2009 at 10.0 percent, the participation rate was 65 percent. It has since dropped to 63.3 percent. If the participation rate had not declined since 2009, we’d have an unemployment rate today of 9.9 percent, nearly identical to the official unemployment peak. In other words, nearly the entire improvement in the unemployment rate since October of 2009 is due to a drop in the percentage of people the BLS considers labor-force participants.
The participation rate last hit 63.3 percent during the Carter administration, in May of 1979.
Not everyone who leaves the work force has given up — others retire, and the Baby Boomer generation is reaching retirement age. But the Boston Federal Reserve published a study recently finding that the bulk of the decline in labor-force participation is due to economic factors rather than demographic ones. The BLS reported that in April there were 6,413,000 people out of work who “want a job now” but were excluded from the ranks of the officially unemployed. Adding them back into the labor force produces an unemployment rate of 11.2 percent.
The BLS also reports an unemployment rate that includes all persons who have searched for work during the prior twelve months (as opposed to the past 30 days), plus all people who want a full-time job but are employed part-time for “economic reasons,” such as reduced hours or an inability to find a full-time job. That unemployment rate, the widest measure the government calculates, is 13.9 percent.
I tried explaining this to Aggie’s prognosticating rodents, Barney and Frank, but they just burrowed under the wood chips until I went away. Undoubtedly, you have too.
How long have we been in “recovery”, boys and girls? That’s right, almost four years.
Which means, as we’ve turned blue in the face telling you, President Obama owns this recovery:
Anyone hoping for signs of a healthy economic recovery was disappointed by lower-than-expected GDP growth for the first quarter of 2013—a mere 2.5%, far short of the forecast 3.2%. Meanwhile, the stock market continues to soar, hitting record levels in recent weeks. It’s a striking disconnect, and one that is discouraging and confusing for Americans as they seek to earn a living and save for the future.
Companies and small businesses are also dealing with the same paradox. Many are in good shape and have money to spend. So why aren’t they pumping more capital back into the economy, creating jobs and fueling the country’s economic engine?
Quite simply, if firms can’t see a clear road to economic recovery ahead, they’re not going to hire and they’re not going to spend. It’s what economists call a “deadweight loss”—loss caused by inefficiency.
Today, there is uncertainty about regulatory policy, uncertainty about monetary policy, uncertainty about foreign policy and, most significantly, uncertainty about U.S. fiscal policy and the national debt. Until a sensible plan is created to address the debt, America will not fulfill its economic potential.
Hey, that sounds like us!
This is my answer to all those mouth-breathing lefties who claim that Obama has tried our policies to no avail. Temporary tax holidays, short-term stimuli, and we’re still mired in the economic slough of despond.
That’s because an economy needs governmental stimulus like a fish needs a bicycle (to borrow from our foxy feminist friends). This is not that hard. Give an economy certainty—as low-tax and low-regulation as prevailing politics allows—and get the hell out of the way.
Give it Obama administration policies, and this is what you get.
As a conservative, I have no patience for mindless bashing of business or finance.
Much was made of the tiny European Union member Cyprus last week as regulators attempt to get their pound of flesh from the savings accounts of its banks, with a 10 percent tax on larger accounts.
And yet, the European Central Bank taxing citizens to pay up front for a $7.4 billion bailout of the banks still pales in comparison with the fleecing of the US depositor.
The Fed has orchestrated a massive transfer of wealth in America from the middle class and the poor to the wealthy. You could call it “Operation Reverse Robin Hood.”
If a Cypriot put $1,000 in an island bank four years ago and left it there, today the saver would have a balance of $1,250. Take 10 percent off, and the saver is still up $125.
If a US middle-class family put $1,000 in JPMorgan or Citibank four years ago, the balance today would be $1,010 — less bank fees, which means it’s probably closer to a $950 balance. That’s $9.3 trillion in US deposits getting nothing in return except the warm, fuzzy feeling of bolstering the banks’ balance sheets.
This does not excuse the ECB action, but it puts into context what Ben Bernanke’s Zero Interest Rate Policy (ZIRP) has done for Americans. The Fed chief or the Obama administration would never be as blunt as their EU counterparts and call it a tax, but if Uncle Sam — through his policies — is reaching into the pockets of Americans . . . it’s a tax.
Millions of responsible Americans — the type who try to put a little away from each paycheck — can’t earn a decent yield from their savings accounts.
Take Jamie Dimon’s whale of a bank, JPMorgan Chase, where accounts below $100,000 yield between .05 percent and .25 percent. Or Citibank, where accounts yield the same demoralizing rate. This is a direct byproduct of the Fed’s policy of ZIRP.
Another fundamental flaw in the Fed’s policy: It doesn’t address the lack of credit for regular, responsible, everyday Americans. The fact is, average Americans can’t earn a buck on their balance in the bank, and they can’t borrow a buck from the bank at these super-low rates.
I’m going to interrupt here to question that. While we all know how low (to the point of nonexistence) interest rates are on savings, the refinance business is booming. Rates are quoted below three percent. The old days of 3-6-3—give 3% in interest in deposits, charge 6% interest on loans, be on the first tee by 3 pm—has now just shifted down 2.75%. Give a quarter percent on deposits, and charge three and a quarter on loans.
True, many people are not eligible to refinance their mortgages because their houses are currently worth less than the outstanding balance, but that’s a separate issue.
Also, nothing is more corrosive the earnings of the middle class and poor than inflation, which the Fed is loath to unleash.
Still, he gets the last word:
Today, US banks are making billions — many are posting record earnings. Meanwhile, real average earnings for all US employees fell 0.6 percent from January to February, seasonally adjusted, the Bureau of Labor Statistics reported. This stems from a 0.2 percent increase in average hourly earnings being more than offset by a 0.7 percent increase in the consumer price index for urban consumers.
So the average American makes almost nothing in the bank, has no access to mortgage or small-business credit and is actually falling behind in real earnings.
Suddenly, Cyprus doesn’t look quite so pathetic.
Actually, I have the last word: it’s my blog. I still challenge his point that the “average American” has “no access” to credit. All the radio commercials I hear for mortgages are a waste of good money if he’s right. But otherwise I accept his premise (without actually checking it) that banks are making enormous profits off our money and passing precious little of it on to the depositers.
Then again, if banks are shrewd enough to find ways to make profits, aren’t they doing their job? Aren’t their shareholders (many of them middle class) reaping the benefits?
I read recently that shareholders are beginning to make their voices heard on compensation for the high officers of financial corporations. Too many years of too many millions have finally rankled the rank and file owners of small pieces of companies for rewarding their CEOs with money that could rightly be spread around. Good for them. If capitalism is the best economic system to draw the poor into the middle class and the middle class into the upper middle class (capitalism is the best system, period), then all aspects of it must work in balance. Corporate presidents should be well compensated for their experience and performance. They should not, however, merely cash blank checks issued by compliant boards of directors.
Investing in a company has to be more than a mug’s game. The collective voice of mugdom must be heard.
The wealth gap between blacks and whites has nearly tripled over the past 25 years, due largely to inequality in home ownership, income, education and inheritances, according to a new study by Brandeis University.
That type of inequality can be a drag on economic growth for everyone, said Thomas Shapiro, director of the university’s Institute on Assets and Social Policy, which conducted the research.
The difference in wealth between typical households in each racial group ballooned to $236,500 in 2009, up from $85,000 in 1984, according to the study, released Wednesday. By 2009, the median net worth of white families was $265,000, while blacks had only $28,500.
Brandeis researchers looked at the same set of 1,700 families over the 25-year period to see how their actual work and school experiences affected their wealth accumulation.
What they found is that home ownership is driving the growing gap. Price appreciation is more limited in non-white neighborhoods, making it harder for blacks to build equity. Also, because whites are more likely to have family financial assistance for down payments, they are able to buy homes an average of eight years earlier than black families and to put down larger upfront payments that lower interest rates and mortgage costs.
If home-ownership is the greatest driver of white wealth, doesn’t that mean the collapse of the housing market fell disproportionately on people of pallor? Doesn’t the end point of this study—2009—miss the crash almost entirely? In fact, wasn’t it the whole push into subprime mortgages and other outreaches to minority home ownership that helped inflate the housing bubble? Only to see those homes almost immediately lose a great deal of their value?
Don’t you think most of those poor people are saying “[bleep] equity, I want my money back”?
There’s no evidence of insidious motives here. It boils down to the long-established truth that you need money to make money. The authors of the study picked a period of time (1984-2009) when housing prices grew dramatically. It’s no wonder they came to their conclusions. But as the last four years have proven, past performance is no guarantee of future returns.
The same holds true here:
When it comes to education, black graduates are often more saddled with college loans, making it harder for them to start socking away savings than their white peers. Four in five black students graduate with debt, compared to 64% of whites.
As with a home title, a college degree is no longer worth the paper it’s written on. Also not exactly a secret.
“Our economy cannot sustain its growth in the face of this type of extreme wealth inequality,” he said.
His own study disproves that assertion. The economy has been doing just fine over the past 25 years. Without do-gooding interventions in the housing market—and without Obama’s punitive economic policies—it might still be.
The best thing for minority families is the best thing for all families. Save money, limit debt, work hard, take advantage without taking undo risk.
“The racial wealth gap is the civil rights agenda for the 21st century.”
Oh stop. It is not. Who says there needs to be a “civil rights agenda” at all? The civil rights laws were passed almost 50 years ago. Let’s celebrate them, not reenact them.
O-o-o-o-o-klahoma, where the jobs come sweepin’ down the plain!
These trends point to a U.S. economic future dominated by four growth corridors that are generally less dense, more affordable, and markedly more conservative and pro-business: the Great Plains, the Intermountain West, the Third Coast (spanning the Gulf states from Texas to Florida), and the Southeastern industrial belt.
Overall, these corridors account for 45% of the nation’s land mass and 30% of its population. Between 2001 and 2011, job growth in the Great Plains, the Intermountain West and the Third Coast was between 7% and 8%—nearly 10 times the job growth rate for the rest of the country. Only the Southeastern industrial belt tracked close to the national average.
Historically, these regions were little more than resource colonies or low-wage labor sites for richer, more technically advanced areas. By promoting policies that encourage enterprise and spark economic growth, they’re catching up.
Such policies have been pursued not only by Republicans but also by Democrats who don’t share their national party’s notion that business should serve as a cash cow to fund ever more expensive social-welfare, cultural or environmental programs. While California, Illinois, New York, Massachusetts and Minnesota have either enacted or pursued higher income taxes, many corridor states have no income taxes or are planning, like Kansas and Louisiana, to lower or even eliminate them.
The result is that corridor states took 11 of the top 15 spots in Chief Executive magazine’s 2012 review of best state business climates. California, New York, Illinois and Massachusetts were at the bottom.
The author explores the economic and sociological implications of this development, but one thing stuck in my mind. As Massachusetts, California, New York, Illinois, etc. are left behind—drifting away like an eskimo elder on an ice floe—maybe that, and only that, will shock the corrupt and sclerotic liberal political establishment to change. Nothing else has.
But the prospect of complete irrelevance—economic, because all the activity will be elsewhere; and political, because so will the population, hence electoral college votes—might be enough to shame our reprehensible leaders to behave more responsibly.
But what am I smokin’, and why so early in the day?
Still, nothing has made me feel more hopeful for the country in months.
But in order to vivir, my Spanish friends, you’ll need less of this:
Tens of thousands of protesters amassed in Madrid and other Spanish cities on Saturday to voice their anger over harsh austerity and the way the country’s being run in the wake of its financial crisis.
In Madrid, demonstrations turned violent and two police officers were injured, Spanish national police said on Twitter. Forty people were arrested.
Many in Spain have been struggling since the global financial crisis knocked the bottom out of the country’s housing market and sparked a major recession that left thousands jobless.
The country’s unemployment rate stands at 26% — its highest level ever — and the situation is even worse for young people, with more than 55% of 16- to 24-year-olds out of work.
With no income, many are finding themselves unable to afford the mortgage payments on homes that are no longer worth the prices paid for them.
The situation has compelled growing numbers to demonstrate against what they see as the gross unfairness of everyday life in Spain in 2013, where struggling citizens are evicted, even as hundreds of homes lie empty.
And more of this:
I’m not unsympathetic. Unemployment, homelessness—hopelessness—suck, even in sunny Spain. Especially in sunny Spain, as 26% unemployment demonstrates. (And I thought misery loved company!) But there’s a reason the PIIGS (Portugal, Italy, Ireland, Greece, Spain) are the PIIGS and Germany is Germany.
To oversimplify, the Germans don’t take siestas.
As I learned from Mark Steyn, seeming generosity is anything but generous when the consequences are that only a single generation (or two at most) profits from “generous” social benefits. The 55% unemployed young people need to have a serious talk with their parents, not the government. (Well, both actually.)
Still, lovely song.