Income Inequality: So What?

[Woodsman]

Re: Income Inequality: So What?

Apparently it never occurs to the executives running America’s offshored corporations that potential customers in America working in part time jobs stocking shelves in Walmart, Home Depot, Lowe’s, etc., will not have enough money to purchase a Ford. Unlike Henry Ford, who had the intelligence to pay workers good wages so they could buy Fords, the executives of American companies today sacrifice their domestic market and the American economy to their short-term “performance bonuses” based on low foreign labor costs.

What is about to happen in America today is that the middle class, or rather those who were part of it as children and expected to join it, are going to be driven into manufactured “double-wide homes” or single trailers. The MacMansions will be cut up into tenements. Even the high-priced rentals along the Florida coast will find a drop in demand as real incomes continue to fall. The $5,000-$20,000 weekly summer rental rate along Florida’s panhandle 30A will not be sustainable. The speculators who are in over their heads in this arena are due for a future shock.

The vast majority of new jobs are in lowly paid nontradable domestic services, such as waitresses and bartenders, retail clerks, and ambulatory health care services. In the payroll jobs report for June, for example, the new jobs, if they actually exist, are concentrated in these sectors: administrative and waste services, health care and social assistance, accommodation and food services, and local government.

High productivity, high value-added manufactured jobs shrink in the US as they are offshored to Asia. High productivity, high value-added professional service jobs, such as research, design, software engineering, accounting, legal research, are being filled by offshoring or by foreigners brought into the US on work visas with the fabricated and false excuse that there are no Americans qualified for the jobs.

America is a country hollowed out by the short-term greed of the ruling class and its shills in the economics profession and in Congress. Capitalism only works for the few. It no longer works for the many.

On national security grounds Trump should respond to Ford’s announcement of offshoring the production of Ford Focus to China by nationalizing Ford. Michigan’s payrolls and tax base will decline and employment in China will rise. We are witnessing a major US corporation enabling China’s rise over the United States. Among the external costs of Ford’s contribution to China’s GDP is Trump’s increased US military budget to counter the rise in China’s power.

Trump should also nationalize Apple, Nike, Levi, and all the rest of the offshored US global corporations who have put the interest of a few people above the interests of the American work force and the US economy. There is no other way to get the jobs back. Of course, if Trump did this, he would be assassinated.

America is ruled by a tiny percentage of people who constitute a treasonous class. These people have the money to purchase the government, the media, and the economics profession that shills for them. This greedy traitorous interest group must be dealt with or the United States of America and the entirety of its peoples are lost. Central banks and international monetary institutions have used the 2008 financial crisis to manipulate markets and the fiscal policies of governments to benefit the super-rich.

These manipulations are used to enable the looting of countries such as Greece and Portugal by the large German and Dutch banks and the enrichment via inflated financial asset prices of shareholders at the expense of the general population.

One would think that repeated financial crises would undermine the power of financial interests, but the facts are otherwise. As long ago as November 21, 1933, President Franklin D. Roosevelt wrote to Col. House that “the real truth of the matter is, as you and I know, that a financial element in the larger centers has owned the Government ever since the days of Andrew Jackson.”

Thomas Jefferson said that “banking institutions are more dangerous to our liberties than standing armies” and that “if the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks . . . will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered.”

[geodrome]

Re: Income Inequality: So What?

... Unlike Henry Ford, who had the intelligence to pay workers good wages so they could buy Fords...

If Henry Ford had been really smart he would've paid them triple the wages, so they could buy even more Fords and other goods...

But alas this great chance to grow the economy was missed.

[jk]

Re: Income Inequality: So What?

the wayne facility where the focus has been made is being converted to make ranger pickups. the focus was supposed to be going to mexico, but now will go to china. the ford plant in kentucky is being expanded to make more navigotors and expeditions - huge suvs.

the best thing the gov't could do is put a revenue neutral $2/gallon tax on gasoline. make it neutral by increasing the earned income credit and lowering taxes in the low brackets.


ps according to harald malmgren it is likely german auto manufacturers will be moving more operations to the u.s. bmw already adds half the economic content of its x3 and x5 suvs in so carolina. mercedes makes its suvs in alabama. the reduction in u.s. corporate taxes combined with the increasingly stringent regulatory regime in the eu plus the possibility to u.s. tariffs all support such a move. their intention will be to manufacture in the u.s. for the u.s but also for export to latam and asia.

these plants will of course be located in the non-unionized lower-cost south, and will do the rust belt no good whatsoever.

the japanese have long been manufacturing in the u.s.- if i'm not mistaken nissan has facilities in tenn, subaru in indiana.

so the displaced auto workers of the midwest will see no relief. and the prevalence of robots will limit the number of new jobs in the south, but that's where they'll be.

[thriftyandboringinohio]

Re: Income Inequality: So What?

If Henry Ford had been really smart he would've paid them triple the wages, so they could buy even more Fords and other goods...

But alas this great chance to grow the economy was missed.

Great to see you around here again geodrome. Do I detect a note of cynicism in your post?

[dcarrigg]

Re: Income Inequality: So What?

the wayne facility where the focus has been made is being converted to make ranger pickups. the focus was supposed to be going to mexico, but now will go to china. the ford plant in kentucky is being expanded to make more navigotors and expeditions - huge suvs.

the best thing the gov't could do is put a revenue neutral $2/gallon tax on gasoline. make it neutral by increasing the earned income credit and lowering taxes in the low brackets.


ps according to harald malmgren it is likely german auto manufacturers will be moving more operations to the u.s. bmw already adds half the economic content of its x3 and x5 suvs in so carolina. mercedes makes its suvs in alabama. the reduction in u.s. corporate taxes combined with the increasingly stringent regulatory regime in the eu plus the possibility to u.s. tariffs all support such a move. their intention will be to manufacture in the u.s. for the u.s but also for export to latam and asia.

these plants will of course be located in the non-unionized lower-cost south, and will do the rust belt no good whatsoever.

the japanese have long been manufacturing in the u.s.- if i'm not mistaken nissan has facilities in tenn, subaru in indiana.

so the displaced auto workers of the midwest will see no relief. and the prevalence of robots will limit the number of new jobs in the south, but that's where they'll be.

It's not just union considerations, although that's part of it. Alabama flat out handed Mercedes an enormous sum of public money--something to the tune of a quarter billion--up front. New York and California very often simply will not play that game. Wisconsin is paying $3 billion to get a Foxconn plant--part of the same one that had such brutal working conditions in China that people were leaping to their death, so they installed nets. It's not just about unions and geography. It's about who's the biggest sucker. Nevada gave Tesla $1.3 billion for the 'gigafactory,' which is basically a half-hollow shell in the desert.

In case you want some back-of-the-envelope math, the Wisconsin deal is the equivalent of paying $200,000 per job--if they actually end up hiring as many people as they promise. And don't go thinking great about expansions. Salesforce just held up Indiana in exchange for an expansion too.

I don't know if you remember, but down I-95 in New London Connecticut there was a crazy Supreme Court case that allowed them to use eminent domain to force a whole neighborhood of people out of their homes so they could bulldoze them and make way for a Pfizer office/plant and neighboring commercial park. The pfizer deal came with free land, free bulldozing, free site readying, cash payments, incentives, and 5 years no taxes, except for some small nominal amount of property tax (like maybe 1/5th of what they really would owe) due after local complaints. Well, Pfizer built their building. But it never ended up anchoring a commercial park. That's just empty. They took the money. And in 5 years (after they went operational, 8 years after the process began), like clockwork, walked away from it. Now there's an empty shell of a building and an empty lot sitting there where a neighborhood used to be--a neighborhood that paid property taxes. For 5 years of jobs, most of which were probably done by people flown in, the city destroyed a part of itself and several people's lives and pissed away state cash to do it in the process.

It's not just about who's non-union. It's about who's the biggest sucker. It's also about who has the weakest local government and people least willing to fight. Pfizer found out the hard way New Englanders have a fair amount of municipal power and democratic input--and they're liable to do things like sell their house for a dollar to someone who will dismantle it and make it a museum to greed while dragging your ass to the supreme court to prove a point. There is no county land to just give away. If these sorts of deals get done up here, it's usually more directly corrupt and lots of people get fired or jailed (like that crazy Curt Shilling deal). If you're giving away some county land in Alabama, there's probably not going to be so much of a fight.

I mean, it's worth stopping for a moment to take stock of how we got here.

Instead of states taxing corporations, we have private corporations taxing states.
Instead of states using eminent domain for public purposes, we have states using eminent domain for private corporations.
Instead of states charging corporations for land, we have corporations charging states for land.

Something is fundamentally off with that picture too. It's another 'bad habit' that really took off in the 2000s and now has reached ludicrous proportions--like $200k per job Scott Walker just giving away the future revenues of Wisconsin to whomever he feels like.

I mean, WI has a bit under a million fewer people than MA, and a much smaller gross state product, about 40% smaller. This plant is going not in Milwakee, not in Madison, but in Racine--actually in a suburb of Racine. Can you imagine MA dropping $3 billion for 15,000 jobs in one of the Lowell suburbs?

It's a treadmill. I'm not even as worried about automation as you. I think a lot of it's hyped up and labor's so cheap that it's not going to be as disruptive as the disruptors imagine it. But I just think it's not a way to get ahead. Companies pay through the nose to be in San Francisco or Manhattan or even Waltham. You don't compete with that by giving away your tax base and cracking shady deals with the most crooked of extortionists who are shopping around such that they basically are flat out telling you they don't want to be in your state and are only coming there for the sweet, sweet bribe. Because once the bribe's gone, they can just go out and ask for a new bribe. And odds are some other state will give it to them. Then, poof, they're gone. Because they were only there for the bribe in the first place.

I mean, when you really think bout it, let's say you have a plant with 5,000 workers and the UAW gets in and unionizes and suddenly they cost on average 60,000 instead of 50,000 or something. Just use any round numbers you like that are approximately sane. That costs, right? Could cost $50 million per year. But when you're getting $250 million incentive packages over 5 years, well, the bribe's just as big as the threat of union costs. It's not an insignificant sum.

[thriftyandboringinohio]

Re: Income Inequality: So What?

You reminded me of the tax scams that Cabelas and Bass Pro Shops are running for their mega stores. They no longer build any stores without lucrative tax abatement and incentives. They go to smaller communities and convince the town council that their "destination stores" will draw tourists from far off to shop at the superstore and juice the town economy. In many cases they install large dioramas of stuffed big game animals and a giant aquarium of native fish, then they deed that portion of the floor space over to the town to be a tax free natural history museum owned by the town, fully within the retail store. For many years Gander Mountain refused to play that game and ran spirited efforts to fight the scam. Gander Mountain went out of business, Cabelas and Bass Pro Shops are still going strong. Apparently large scale sporting goods stores are now only a govt subsidized enterprise.
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[Woodsman]

Re: Income Inequality: So What?

More self-satisfaction than cynicism, to my ear.

And while Ford did say that “The owner, the employees, and the buying public are all one and the same, and unless an industry can so manage itself as to keep wages high and prices low it destroys itself, for otherwise it limits the number of its customers,” his motivation was more related to reducing turnover and retaining a workforce that could handle the pace of his assembly lines. Although by 1919 Ford had raised the wage to $6.00, effectively tripling it from the original $2.00 in 1914, when the company sold some 308,000 cars. And by 1920, Ford became the first company to sell a million cars a year.

Regardless, we have seen no growth in capital spending in the U.S. for the last 18 years since the quisling idiot son George W. Bush pushed (an effort initiated by his kissing cousin Bill Clinton) to admit China to the World Trade Organization (WTO) in December 2001.

This gave China access to world markets and particularly to the American market. Our system is heir to the English Common Law tradition and when we sign an agreement, we generally carry it out. Few other cultures take this view, certainly not China. The Chinese have practiced mercantilism after signing the WTO agreement and getting access to our market, despite the point of the WTO being to keep mercantilism out of world trade.

Economists think mercantilism can never work, based on a myopic view of Ricardo's Theory of Comparative Advantage which states that among trading parties, even if one party's production costs are greater in all goods than the other party's, the first party should focus on those goods where it has a comparative advantage – i.e., where its own cost of production is lower. Accordingly, if the two countries trade, both will improve their welfare. Under these conditions, a country practicing mercantilism impoverishes itself.

But this assumes that capital is fixed as in Ricardo's time. But with today's capital being globally mobile, mercantilism works. By forcing a trading partner to move its assets, technology, know-how, intellectual property, and R&D to the mercantilist country in order to participate in its market, a country can build itself up at the expense of its trading partner. China, following its accession to the WTO and given aid and comfort by our elite economic traitors, has been strip-mining the U.S. economy of high value-added industries and high-wage jobs by doing this. And this is a double loss for Americans because as industry moves to China, we end up buying goods from China on borrowed money. And while the goods wear out, the debt still needs to be repaid, and we have less of a production base to repay it.

Trump, in keeping with his America First approach, has declared his intention to wage trade war - or accurately, fight back in the long trade war waged against us.

As a genuine and unapologetic American patriot, Trump embodies the American ethos of never giving up. We don't give up. We make the other guy do that. What we do in America when we find ourselves in a jam is roll over to the attack. In the most simple terms, that is what Donald Trump is doing in world trade. Trump is not, as he is endlessly accused by the presstitute media - attacking other countries; he is attacking trade policies pursued by other countries and which are to the detriment of the United States; policies which threaten our survival and have resulted in the death and despair of millions of Americans.

This is an affront to countries unaccustomed to being called to account by the U.S. and it offends the sensibilities of the rootless cosmopolitans that dominate elite opinion and policy makers in the U.S. And their unhinged howls and over-the-top reaction to his trade policy (and, not coincidentally, his immigration policy) is evidence of their worst fears materializing.

The working classes have found a most unlikely ally in Trump and it seems evident that both parties know their enemies and are resolved to fight them to the bitter end.

[jk]

Re: Income Inequality: So What?

re:"rootless cosmopolitans"- a term i associate with stalin. a quick google took me to wikipedia, which has an article on the phrase, beginning:

Part of a series on

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Antisemitic canards[hide] Blood libel Deicide Dreyfus affair Franklin Prophecy Host desecration Judensau Judeo-Bolshevism Jewish lobby Judeo-Masonism Kosher tax Rootless cosmopolitan Stab-in-the-back myth Well poisoning ZOG conspiracy Controlling the media Controlling the financial system

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v t e

Rootless cosmopolitan (Russian: безродный космополит, bezrodnyi kosmopolit) was a Soviet pejorative euphemism widely used during Soviet anti-Semitic campaign of 1948–1953, which culminated in the "exposure" of the non-existent Doctors' plot.^[1] The term "rootless cosmopolitan" referred mostly to Jewish intellectuals, as an accusation in their lack of patriotism, i.e., lack of full allegiance to the Soviet Union. The campaign against "rootless cosmopolitans"^[2] began in 1946, when Joseph Stalin in his speech in Moscow attacked writers who were ethnic Jews.^[3] Historically, the expression was first coined in 19th century by Russian literary critic Vissarion Belinsky to describe writers who lacked Russian national character.<sup>[4]


so tell me woodsman, any reason to choose that history-laden phrase instead of the currently widely used term "globalist"?</sup>

[dcarrigg]

Re: Income Inequality: So What?

All else aside, and ignoring the individual level (which is dangerous to do, but for the sake of space, I do it here), I see the trade and immigration policies of the Trump administration as relatively shallow endeavors. I purposely link to the tax foundation there because it's a propaganda arm of the Koch Brothers who hate tariffs and even their biased analysis model shows an impact smaller than 0.5% of GDP with modest federal revenue income. The corporate tax cut absolutely dwarfs this in comparison. And if they get away with their unilateral executive capital gains cut, it will about equal it. From 10,000 feet, the big story is the redistribution of wealth upwards. That same old record that has been playing for 40 years.

[dcarrigg]

Re: Income Inequality: So What?

You reminded me of the tax scams that Cabelas and Bass Pro Shops are running for their mega stores. They no longer build any stores without lucrative tax abatement and incentives. They go to smaller communities and convince the town council that their "destination stores" will draw tourists from far off to shop at the superstore and juice the town economy. In many cases they install large dioramas of stuffed big game animals and a giant aquarium of native fish, then they deed that portion of the floor space over to the town to be a tax free natural history museum owned by the town, fully within the retail store. For many years Gander Mountain refused to play that game and ran spirited efforts to fight the scam. Gander Mountain went out of business, Cabelas and Bass Pro Shops are still going strong. Apparently large scale sporting goods stores are now only a govt subsidized enterprise.
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That's another perfect example. How have we gotten so backwards? We have a federal government that can create money out of thin air. But smaller state and local governments are so desperate for capital--or so corrupt--that they literally pay capitalists up front for capital investment at this point. Even for a damned sporting goods store. How hard could it be, one wonders, for a town to just issue bonds and build a damn sporting goods store itself if it wants one so badly? Why is it paying some distant faceless shareholder and giving away free land in exchange for a building that sells retail stuff? I get that there's no capital for local entrepreneurs to open this kind of thing up themselves. But if Bossier City can pay Bass Pro Shops $40 million to move in, couldn't they just pay $40 million to build a sporting goods store themselves? Really, what's the value-add of paying someone to build a retail building only to funnel the profits away from the community? If they want to pay to build their own retail building, fine. That's the way it worked forever. But that's not how it works now. Bridgeport, CT paid them over $30 million and gave them free land. The whole building, inventory lot and all cost about $70 million. So they only footed half the bill there, a bit more if you count the land. But certainly you could build a sporting goods store half the size and keep those revenues, no? They sold it as an anchor that would revitalize steel point harbor and encourage outside retail investment. So far, there's one dirty old warehouse there that's always been, and Bass Pro Shops. That's it.

[jk]

Re: Income Inequality: So What?

somewhere i read a post noting that the richest man in the nba, lebron james, was donating money to build a school in ohio for at risk kids, as well as funding scholarships at the u. of akron. meanwhile columbus, ohio is offering $100's of millions of dollars to the richest man in the world, jeff bezos, if only he'll set up shop there.

[dcarrigg]

Re: Income Inequality: So What?

I have not had time to look deeply into it, but from what I've read, LeBron's education program in Akron looks really solid...like it may be doing everything right that Zuckerberg Booker and Oprah did wrong in Newark.

[thriftyandboringinohio]

Re: Income Inequality: So What?

somewhere i read a post noting that the richest man in the nba, lebron james, was donating money to build a school in ohio for at risk kids, as well as funding scholarships at the u. of akron. meanwhile columbus, ohio is offering $100's of millions of dollars to the richest man in the world, jeff bezos, if only he'll set up shop there.

Yes to both points. And it’s worth mentioning that Columbus is not desperate we came through the recession very well the local economy stayed very robust.

[jk]

Re: Income Inequality: So What?

Yes to both points. And it’s worth mentioning that Columbus is not desperate we came through the recession very well the local economy stayed very robust.

i guess that's why you can afford to make such a generous offer to amazon.

[vt]

Re: Income Inequality: So What?

That's way too far a reach JK. And has nothing to do with the original meaning of the word, as we can see in Belinsky's background which you cite.

I see it the same way Woodsman did. A privileged elite not caring for the working class. Which describes perfectly why Trump won. The elites are too blind to look in the mirror.