WHAT RECOVERY?

I do not buy that we are in recovery. The 1 percent are. I question whether they actually suffered at any time. The 99 percent are not.

Last week, I wrote about the NFL not paying taxes. Taxes on $9.5 billion in revenue. An organization that pays its Commissioner Roger Goodell $44 million a year.

In the past, I have written about the U.S. corporations making billions and not paying taxes. General Electric being one example.

All the preceding made possible by Congressional action and Presidential approval. They make the laws. The laws which in most instances benefit the very rich.

There recently has been an exuberance, an excitement, a jubilation in Washington. We are told recession recovery has arrived.....look at the good job we have done.

Generally accepted indicators indicate it. I do not agree. In spite of the 321,000 jobs created in November, in spite of the 5 percent growth rate for the GDP in the third quarter, in spite of the Stock Market being at its highest levels ever, in spite of the 5 percent unemployment rate.

New jobs created are not of the quality pre-recession. They pay much less. The stock market primarily benefits only those who can afford to play, the 1 percent. A 5 percent unemployment rate does not take into account the millions who have fallen off the radar screen. Those no longer receiving unemployment benefits. They have become a shadow society.

I will concede the U.S. is getting out of the hole. However, not totally.. We are about half way. The rich have gotten richer, the poor remain where they were in 2008. For them, no recovery.

I say these things based contrary to the indicators the government relies upon.

When Reagan began his Presidency, corporations paid a $1.25 in taxes to the $1 the people paid. Today, American corporations pay twenty cents to every $1 the people pay. 

It was recently reported that for the first time in U.S. history, a majority of public school children live in poverty. For the first time in 50 years. Again, the recovery has benefited the rich only. The poor are still waiting.

Sixteen million public school children are homeless. They live in the woods, cardboard boxes, abandoned cars, etc. They go to school each morning dirty, not well fed.

The organization No Child Held Back recently reported on the less than adequate conditions. The organization quoted Sonya Romero Smith, a veteran teacher at Lew Wallace Elementary School in Albuquerque. She said, "When they first come in my door in the morning, the first thing I do is take an inventory of immediate needs: Did you eat? Are you clean? A big part of my job is making them feel safe."

Smith is a veteran kindergarten teacher. Her present class totals 18. Fourteen are eligible for free lunches. She helps them clean up with bathroom wipes and toothbrushes. Her desk drawers are stocked with clean socks, underwear, pants and shoes.

Something is seriously wrong when a nation does not take care of those least able to care for themselves.

The U.S. economy is divided into two parts. Big business and small business. The economy is good, if not great, for big business. Small businesses are still struggling. Small businesses pre-recession provided 2/3rds of American jobs. They are no where near that number today.

Small business is still in the doldrums. There can be no true recovery unless things get better for them and small business jobs become available.

Those who control government do not seem to care about poor children and small businesses. They are not concerned with the poor. They are more concerned with passing legislation that helps the rich. I am telling you nothing you do not already know.

Unless and until these and similar problems are corrected, the recovery will not be complete. Regardless of the indicators Washington has been throwing at us.

INCOME INEQUALITY

Income inequality is moving to the front burner as a political issue. Mentioned frequently at this time. Expected to be a primary issue in the 2016 Presidential election.

I am motivated at this time to write because of an article which appeared in the September/October edition of Foreign Affairs. Foreign Affairs is the publication of the policy setting Council on Foreign Relations. The Council is a widely respected non profit think tank.

The article was straight forward and to the point. Its message was to the Federal 
Reserve. The Council recommended that the Federal Reserve side step the banks when loaning/processing money out. Banks comprise a significant part of the 1 percent. The money instead should be directly processed to the 99 percent. Again, eliminating banking professionals. 

Main Street not Wall Street is in need of funding. To save the economy, money has to get into the hands of the people.

The reason suggested for the change was simple. The banks are not loaning money to the people. Instead, the banks are generally placing the money they receive in interest bearing Federal Reserve accounts. The profits go back to the 1 percent who then park the monies in offshore accounts to avoid taxes.

Life satisfaction has been in steady decline during the past several decades. The United States is increasingly becoming an early Patrician / Plebeian society.

Through the early 1970's, the economy was stable. Most had a place at  the table and were enjoying the fruits of their labor. Since that time, a change has occurred. The rich have gotten richer and the poor poorer. Today, one half of the American population lives in poverty or on low incomes.

Whereas, a select group has emerged earning incomprehensible sums of money. An example is hedge fund manager John Paulson who is reported to have earned $4.9 billion in in 2011. Note billion, not million.

What has caused our country to become a 1 percent / 99 percent society?

I wish to set forth briefly a number of items which have contributed from my perspective to the dilemma. 

Most income growth has gone to those at the top. The rarefied air of the CEOs and others at the highest levels of corporate and banking life.

The 1 percent / 99 percent gap which became clearly apparent in 2012 is the widest since the 1920's. In 2012, the incomes of the wealthy 1 percent rose 20 percent as opposed to the 99 percent whose incomes rose only 1 per cent.

Productivity has increased over the last 20 years. Average hourly earnings have not. They have remained essentially flat to down. 

Today's dollars equate to 1970 earnings.

Those living in poverty in the United States today number 46.2 million. At a time when corporate profits have reached the highest level in decades. One truth seems to escape attention. The profits in a majority of instances were as a result of reductions in wages and benefits.

From 1992-2007, the top 400 income earners saw their pay increase 392 percent. In addition to which they also experienced a tax rate reduction of 37 percent.

Since the 2008 recession, only the wealthy have received raises. The average American worker has seen no boost in his pay check.

Politics comes into play. Under Democratic Presidents starting with Truman, work men at the bottom of the scale experienced the greatest income gains which tapered off as income rose. Under Republican Presidents, income gains were concentrated at the top, tapering off on the way down the income scale.

The era of income inequality growth coincided with the decline in labor union membership. From 20 percent in 1983 to 12 percent in 2007.

An imbalance between rich and poor is the oldest and most fatal ailment of all republics. The United States is drifting towards a form of oligarchy. The increasing influence of corporations and the wealthy leads to a class system. Unless change occurs, the class system hardens into a permanent one.

Starting in 2000, corporations and businesses have employed thirty times as many Washington lobbyists as trade unions. They also employ sixteen times the lobbyists as labor, consumer and public interest groups combined.

From 1998-2010, business interests and trade groups spent $28.6 billion on lobbying. Labor, only $492 million. Giving business a 60-1 advantage.

Congress is owned by corporate and banking America. Former House Majority Leader Eric Cantor is a perfect example. He lost his primary. He resigned Congress. He has been hired by a banking boutique at $3.45 million the first year. While he was Majority Leader, his wife was on the payroll of Goldman Sachs and NY Private Bank & Trust.

The Federal Reserve reported that since the recession, rich families increased their fortunes while poor families experienced cuts in their incomes.

To stimulate an economy, money has to be spent. Since only the rich have money, they are the ones to do the stimulating. They are not. The rich are not spending their money, except on pleasure items such as planes, yachts and trips. An economy without spending stagnates, will not grow, and eventually will creep downward.

If the Republicans were to be believed, one of the evils screwing up the economy is the social welfare net government provides to those that are not in a position to afford, have less or are without. Things like Social Security, Medicare, food stamps, and breakfasts for children. 

Not so. Surprise. Today the United States has the weakest social safety net of all developed nations. Some where around 23 in number. Our poverty rate is the highest, Our child poverty rate also the highest (1 in 5). One reason for a high poverty rate is a low level of social expenditures.

The government is forced to pick up where corporate America fails. Walmart is an example. Walmart experienced a $15.7 billion profit last year. Their average pay was $10 an hour. A high percentage of Walmart employees are on public assistance. One Wisconsin store's employees received $900,000 in public assistance.

Banks likewise pay poorly their underlings. A significant number of bank employees receive some sort of public assistance.

While the 99 percent suffer, the Dow and S & P 500 hit their highest levels this year. Dow went over $17,000 and the S & P $2,000.

The average American net worth dropped 43 percent since 2007. Just as the recession was about to hit. Things are supposedly better today. However, the average net worth figure has neither improved nor moved significantly.

Of the full time employed, 40 percent receive some sort of welfare. Welfare includes Medicaid, food stamps, women and children programs, public housing subsidies and temporary assistance to needy families.

The Brookings Institute in a recent study reported that 4.3 percent of American families survive on less than $2 a day. A tiny percentage of the 4.3 percent survive on less. Less being described as negative income and benefits.The study was part of a Social Science Review which raised the question whether the United States was becoming a third world country

Half the workers in the United States earn less than $27,520 per year. Not enough to feed a family, make car payments, pay mortgages and health insurance, provide food and clothing. 

Corporate and banker CEO salaries are the highest ever. And yet corporations are opposed to raising the minimum wage to $10.10 over a period of years.

Labor force participation rates are at a 35 year low. There are not enough jobs for everyone. Forty four percent of college grads with bachelor degrees are not working in the area for which they were educated. And whatever the job, they are working at low wages.

Babysitters earn on average twice the minimum wage or more. In Key West, many babysitters are paid $20 an hour.

I could go on. The need for federal programs for highway, bridge and school repair and construction. The Republicans remain adamantly opposed. Somewhere along the line they forgot that a stimulated economy only occurs where both the rich and less than rich are working. Both then spend money which is the only way to get the economy going.

The wealthy's trip to the top of the economic ladder continues to zoom. Like there is no stopping It. In the meantime and as a result of the economy, tens of millions of Americans are dropping out of high school and college. A society requires educated persons to move it ahead.

People in general are unhappy and discouraged by the state of affairs reflected herein. A people will only tolerate being defecated upon for so long. Then they protest. Protests lead to demonstrations. Demonstrations to violence. Then what? I believe one of the reasons for the militarization of the police is to protect the status quo in the event the 99 percent become so unhappy that they won't take it any more.

I do not see things changing. I worry.

MINISTRY OF SUPREME HAPPINESS

The title of this column sounds like something out of a Pearl Buck novel. Wrong time, wrong country. It involves not the China of yesterday, but the Venezuela of today.

 

President Nicholas Maduro of Venezuela announced Friday the creation of a new Venezuelan ministry. The Ministry of Supreme Social Happiness which already is being referred to as the Ministry of Supreme Happiness. Its stated purpose is to enforce happiness.

 

Sounds good! About as good as President Carter telling American citizens during the oil/heating fuel shortages  to wear sweaters.

 

I doubt the new Ministry will be successful in permeating a feeling of supreme happiness. Things have gone too far and are too bad.

 

Hugo Chavez preceded Maduro as President. Chavez died from cancer several years ago. Things were extremely better under Chavez.

 

Venezuela is blessed with the largest oil reserves in the world.  Chavez took advantage of the blessing. He nationalized the oil industry and made Venezuela a major exporter of oil  Add to this Chavez's keen political judgment and it is easy to understand why Venezuela was a success under his rule.  .

 

Maduro has succeeded in screwing things up in his time in office.

 

Chavez upon taking office, nationalized other industries. In effect, screwing foreigners and capitalists. Venezuela for Venezuelans. As a result, Chavez was able to fund health care and education for the masses. He made significant reductions in poverty, constructed thousands of free medical clinics for the poor, and enacted programs to provide food and housing subsidies. Literacy was a problem. Chavez was responsible for more than one million adults becoming literate.

 

During Chavez's tenure, Venezuela had sufficient supplies of toilet paper, toothpaste, powder, milk, and meat. These same items are in short supply today.

 

I have commented on my television show and blog of Venezuela's acute shortage of toilet paper. Much needed and not appreciated till a person is without.

 

Maduro has screwed up. He faces election in six months. His solution.....the Ministry of Supreme Happiness. Sell Venezuelans a bill of goods. Let them think things are better when they are not. Lie, in effect.

 

One thing is successful under Maduro. The stock market. The Caracas Stock Market this year is the most successful stock market in the world. Returns of over 300 per cent.

 

The rich keep getting richer. Very rich. The poor poorer. Sound familiar?  In a fashion similar to what has been occurring in the United States. Record high stock prices, yet 99 per cent of the people suffering economically.

 

Maduro also devalued the currency.

 

Venezuelans have lost purchasing power.They suffer from increased poverty.

 

Whatever money people have buys little. There is little to be bought.

 

Inflation is near 50 percent. The U.S. dollar is seven times the official rate on the black market.

 

Venezuela is a sort of democracy. Elections are held. The President is king pin in actuality, not in name alone. The government is referred to as a Presidential democracy.

 

Physical beatings have become common place under Maduro. Big time. Generally by the police. The situation is reportedly out of control. Opposition party members and journalists are frequently subjected to the beatings.

 

Maduro must have figured that when there was nothing he could do, the creation of a Ministry of Supreme Happiness was the answer. Such genius! Do not put toilet paper, milk and food back on the shelves. Do not correct the economy so Venezuela's 99 per cent could afford these commodities. Merely tell the people they are happy and that the government is working to keep them  happy. It suffices.

 

Hopefully, they will believe Maduro and he will be reelected in six months.

 

Good luck!

 

By the way, the United Nations did a recent study regarding happiness. The title consisted of many words. Shortened, it was the U.N.'s Happiness Report for 2013. Venezuela was listed as the happiest country in Latin America. World wide, Venezuela was listed 20th.

 

My concern with the Happiness Report  is two fold.

 

First, how can Maduro make an already happy people happier? Is the Report really valid? With all their problems, how can the people of Venezuela be happy?

 

Second, the United States is listed 17th world wide. Are we that happy or unhappy?

 

If Obama or his successor establish a Cabinet department of Supreme Happiness, it will be a sure sign we are in trouble. On the other hand, the U.S. has no need for any type happiness ministry/department. Our Founding Fathers spelled it out for us in the Declaration of Independence. The right to "...life, liberty and the pursuit of happiness."