"In the first three decades after World War II, America produced the largest middle class the world had ever seen. But for the last three decades, the middle class has been shrinking."
And why is that? Simple answer: a markedly reduced tax base.
In the 1950s taxes were the highest in history. And these taxes were used to build highways, bridges and schools - which further stimulated the economy, and made possible the strongest middle class in history. This is precisely what was envisaged by the early economists. But it needs strong government, to collect those taxes and redistribute wealth in order to keep the economy strong, and to prevent government takeover by the wealthy.
This, by the way, is not socialism, but vibrant capitalism.
Then along came Milton Friedman and Ronald Reagan, and turned this teaching on its head. Remember Friedman "Government is always the problem, never the solution"? And Reagan "The scariest nine words in the English language are: I'm from the government and I'm here to help."
These brilliant folks made a mockery of government and led to a quorum of Republican politicians who still believe that any increase in taxation will prove disastrous. THAT is why Mitt Romney (Mr. 14%) gets so exercised about even a whiff of increased taxation.
Can anyone blame the bottom 40%, in their inchoate rage, voting for the orange clown?
The time is ripe for a Democratic sweep of the Senate, followed by large tax increases on the corporations and the wealthiest Americans.
Turn the clock back - to Adam Smith - and pretend Reagan didn't happen.
There are many books which contain the empirical facts supporting your arguments such as Piketty's "Brief History of Equality", Blinder's "After the Music Stopped", & "American Amnesia". Republican ideology i.e trickle-down economics & Grover Norquist on taxes, are the false theories Republicans continue to argue in spite of historical evidence. George Orwell predicted this re-telling of false history in 1984. It is time to be pragmatic & move on from theories which have been falsified.
Sick result. Mitt Romney and others made money by robbing the employees of the companies they raided. And still to this day would fight an extra penny coming from their income.
It’s happening everywhere. How people got to be so mean-spirited, greedy, and misguided about what actually works in business I don’t know. Well I do, but how anyone can be so selfish and stupid despite the evidence is beyond me.
I agree with Daniel Solomon -- up to a point. The real problem is NOT the existence of differential rates capital gains vs. earned income, but rather the ABUSE of those rules by clever, greedy rich people and the politicians they own (mostly but not entirely Republicans.) The correct and justifiable philosophical underpinnings of the preferential rate for cap gains relates to the issue of not wishing to tax purely INFLATIONARY gains. The simplistic solution would be to "index" the gains to remove the portion of that gain which simply reflect the diminished value of the dollar--not significant over the short-term, but substantial over five, ten or more years. But there are good reasons for not wanting to imbed such a concept in our laws. The current one-year holding period is a joke--an outright gift to speculators.
A reasonable, if somewhat rough-and-ready, solution would be to make the tax rate for capital gains on assets held 5-10 years 75% of the rate on ordinary income and the current approximate 50% of ordinary income applied only to assets held more than 10 years. Of course for something this sensible to be voted into law would require a critical event: the reduction of the number of GOP Senators to 40 or fewer. Not on the near horizon, but not impossible after three or four more election cycles.
Brian, you have that right. Theories that have been proven wrong just keep showing up particularly in Republican circles because they want them to be true and don't care about the results of such thinking.
Michael, I write because I am struggling with the term “vibrant capitalism.” While I would not dispute those who claim capitalism is an extraordinarily productive system, it, undoubtedly, is not very good at distribution and only works well when wedded to social democratic institutions, which contain its excesses and moderate its self-serving impulses. Hence, were I attempting to select a modifier to increase the prospect of being understood, I would coin the phrase “contained (or perhaps “regulated”) capitalism.”
Barbara, I understand what you're saying, but my reading of Smith is that he intended capitalism (or rather, the free market) to be regulated by strong government. This was the case in America between 1948 and 1980. But since 1980, many Americans have been duped into believing the opposite, that "freedom" and unfettered capitalism go together. This is Randian bullshit.
The only problem with your phrasing - although I agree with it personally - is that it becomes an easy target from the right.
What I wonder about is the "morality" of capitalism. It seems almost a zero sum game, wherein my standard of living is dependent on a huge number of people in undeveloped countries having their resources and labor stolen by corporations, going all the way back to mercantilism and the slave trade. I have no clue how to remedy such a situation. But I feel complicit, and the older I get, the 'dirtier" I feel about my privilege.
Michael, Were I a strategist, I would advise Schumer repeatedly to schedule votes on every reconciliation (BBB) provision all 50 Senate Republicans (plus Manchin & Sinema) opposed: e.g., expanding the child tax credit, providing affordable, quality childcare and universal Pre-K, making investments in housing, in eldercare, and the like to educate people about what they’re losing every time BBB legislative provisions are voted down. I also would suggest holding votes on tax provisions like the carried interest loophole and more to help everyday people understand the massive amounts of wealth unfettered capitalism distributes upward.
Barbara, I like it! But you may get your wish by other means. Remember the assumption by many that the Republicans were simply going to sweep Congress in the midterms (Obama called it a shellacking)? Well, I follow 538 closely. It's a great compendium of numbers and analyses, which early in 2016 predicted a sweep for Sanders in Sanders v Trump, and also predicted that Clinton and Trump were neck and neck for 6 months prior to that election.
Well, the Republican sweep in the 2022 midterms was indeed predicted, with the Senate going to the Republicans 60:40 - until, that is, the last week in June. Now the numbers are going in the opposite direction, and Democrats are predicted to retain the Senate, and even, possibly gain a couple of seats. The same trend is seen in the House, so it is conceivable, if this trend continues, that the Democrats may take both the Senate and the House.
What happened in late June? SCOTUS overturned Roe v Wade.
Michael, Thank you for writing back. While I am aware of the shift, still, between now and November, I plan to operate as though we were trailing by 10 points. Though it’s a relatively small thing, I would note, because cutting the price of insulin was voted down for non-Medicare people, I was pleased to learn that Schumer plans to make the opposition vote on that again.
I wholeheartedly agree with you. The GOP is already using the term socialism when discussing the Democrats. Guess what? It is working in recruiting many Hispanics and people who have no idea as to what Socialism and Communism is. The Democrats must educate the public as to what the GOP considers Socialism. A large number of the public have no idea what socialism is. They think it is like communism. It is time to challenge the GOP regarding what they consider socialism. The big GOP lie must be exposed to the many Americans who are being terrorized.
Elias, my dad used to say that if someone calls you something, find a way to own it in a positive way. If they call us socialists, then tell folks "see that word, 'social" right there at the beginning, it means taking care of each other and sharing responsibility for making a strong fair society. Republicans are scared of that because they want to rule and share nothing but bad feelings, insults, and lies. Our brand of socialism is really great because it includes all of us." It seems we get caught up in the nonsense Republicans spew and try to say how we are not that thing they call us, when we need to "own" it and make it a positive description. We can recruit Spanish-speakers and folks fluent in the many languages that American speak and get the word out. We can do this!
Ruth, I write because I believe Elias has a point. Floridian Latinos, for example, who come primarily from Cuba and countries throughout South America largely are escaping socialist regimes. I think here is where definition is critical.
As I understand, socialism is rooted in government control and ownership of the means of production. I further would note I am not aware of a socialist project that doesn’t invariably devolve into autocracy.
Democratic socialism, meanwhile, practiced throughout much of Western Europe merely calls for a more equitable distribution of a nation’s wealth. Though Europeans largely regard capitalism as a reasonable system, they recognize it’s not very good at distribution unless wedded to social democratic institutions that contain its excesses and moderate its self-serving impulses.
As for the States, I imagine the reason why, for example, real family income growth between 1947-73 was 116.1% for the lowest fifth and 84.8% for the top fifth (Source: Economic Policy Institute) is because we were more regulated, replete with protections which leveled the effects of capitalism.
Returning to Elias, I expect Americans, contrary to their European counterparts, aren’t as attuned to these distinctions and thus are largely susceptible to Republicans’ conflation of the two to serve their own interests.
As I have realized: Reagan and his dementia-addled a-brain was America's killer. He stabbed us in the gut but left the knife in, allowing us to live, but be in constant agony. Moscowmitch twisted the knife four times for each decade in power, then Bunkerboy RIPPED it out!
Luckily: Biden, Bernie, Warren and a dozen others know how to perform life-saving surgery!
We think! That doesn’t make it reality. We have to show people what actually happened when Unions had power, taxes were collected from All so called Americans, what well paid American workers can build when being rewarded, what accomplishments were gained by working hard for a singular purpose! That singular purpose is AMERICA! However, if one doesn’t feel like he/she belongs……First we must get rid of money in politics. That dirty money will always keep most of us powerless. Then we REALLY tax and collect( no loop holes) the entire corporate world. If they do love America prove it. Then we put a limit on class indulgence. If you want to sit in your yacht off shore so taxes can’t be levied, you are not welcome to moor in the United States-ever.
Biden,Bernie, Warren can only do what we support them in doing. That takes proof .., that takes hard unionized labor… for the love of America!
PS. Beware of those flying the American flag off their house. If they have to fly the flag to know where they live they aren’t paying taxes. Fly your tax return!
Totally agree Mr. Hutchinson. And in order to not go down the “ despair” trail again HOW do we get this fact out to those who need to know it best?
We can all post to our egos content, but how do we get the message out? Do we put big highway posters out to say “ this is your government at work!” “ Be a part of the workforce that makes America Great” Build roads, bridges, airports, trains. These realities did not just appear. Hard working Americans built them with the help of their government…. Who by the way is “ the people”! We are the government. Stimulate this thinking by putting it on every kind of communication! Like a giant Valentine…. Send your loved ones a card that shares the facts!
How to get the word out: how about letters to the editor? People actually read them, well, in small town papers they read them anyway. Hey, I kind of like that idea. Maybe I'll write a letter listing Biden's achievements
Michael, you are right about the middle class. It is almost as though the rich don't want a middle class at all. They would be content with everyone but themselves living on the edge of poverty. That way, they can pay crappy wages, cut government programs, and run unchecked. Now, why would we the people permit that? I guess it's because we revere the wealthy and keep putting them in positions where they can bring about this disaster.
I learned in university history classes that revolutions occur because of the middle class—thwarted yet rising expectations combined with a sense of dwindling relevance and financial loss—all cause the middle class to rise up and try to change everything. The rich have always understood that the lower classes don't have the resources or temperament for revolution, so they do what they can to minimize or suppress middle class thinking. Read Crane Brinton's "Anatomy of Revolution."
The middle class believes in the American Dream. Work hard. Take care of your family. Enjoy life in the greatest country on the earth. Network with the right people. Have a great idea like Jeff Bezos. Create a company like Elon Musk. Play basketball like Michael Jordan. Play football like Tom Brady. Invent computers like Bill Gates. Sing like Lady Gaga. If you don't have a talent then help others. Don't sit on your butt and expect the dream to come to you. We all can dream and hope. That will never be taken away by the government.
We're trying to do that but the Repugs have NO interest in actually governing or doing anything for anyone who's not them and their rich friends/donors.
Carbon Copy, U haven’t provided a speck of evidence for ur assertions. And further why can’t u use your given name instead of a silly avatar name?? Might u be a Republican in disguise playing devils advocate?
I am not a republican or a Democrat any longer. If you have been paying attention I would not have to provide you with proof. A quick simple proof Pelosi response when questioned about the illegal stock trades her husband and her have done her response was that it was OK! Maybe you weren't paying attention then either but Martha Stewart went to prison for this very thing! One more item, no one and I don't care who you think you are has the right to go to war and every one of these War Criminal Profiteering whores are doing it. Ask yourself how much does Raytheon or Lockheed or the list goes on PAY ALL OF THESE CRIMINALS? War is always about Profit!
One more item, I do not disagree with 90 percent of what true Democrats are about but here lies the difference, I have 3 different types of cancer caused by the polluted water in my home towns Reservoir, lost 2 sisters to cancer, father, uncle, mother had it before she died, my brother has had it and this was because my parents did not find out in time before they switched where they went to get our water before we moved. It was bad enough that it looked like you could walk across the river on top of it. So back to the original train wreck, every one of these paid for presidents and politicians have managed to gut the EPA at every turn in office clear up to the worst of them all (Trump). Trump put a violating offender in charge of the EPA! This is what you really need to know everytime these con people get you to believe their problems are yours and so many fall for this scam they hang themselves! Trump claimed the EPA wasn't doing anything anyway! So what if I send you out every morning to get me groceries and every night before I steal 10 bucks out of your wallet and put holes in your tires? Then tell you you didn't get to the store by 11am so I am taking half your money and we start over the next morning! Oh by the way I'll put your worst enemy in the back seat too. So here's the real difference between me and the democrats I would hunt you down and put you in prison for crimes against humanity and the planet! Democrats look the other way or take money from the EPA like Obama did and so many others.
Ain’t that the God’s truth! If only Biden had the power to fire non-performing Senators who refuse to do their jobs but rather create disharmony in the entire political process for their own satisfaction.
My view of the role of government is (1) to promote the overall well-being of all who live here and (2) have as a basic principle that you can do whatever you want to as long as it doesn't take advantage of or oppress anyone. Does this at fit with your term of "vibrant capitalism?"
To be clear, Reagan was not the only US President that pushed Friedman's economic policy. Clinton actually passed more Friedman policy than any other president. From ending welfare as we know it to NAFTA to killing Glass Steagall his policy wins were far more Friedman than either Reagan or Trump...
Yes, we need to return to the economic policies from before Reagan. But make no mistake about who will be fighting you. It is Neoliberal Democrats (Pelosi, Schumer, Biden) along with Neoliberal Republicans like McConnell and Romney and Trump that you will be fighting to defend the economic policies of the last 40yrs
I have read many books that touch on this topic including extensive analysis by Nobel prize winners Joseph Stiglitz (People Power and Profits) Paul Krugman (Arguing with Zombies) as well as books like The Lords of Easy Money and of course Goliath.
It is not a GOP problem. It is a problem with leaders in both parties. Both parties are still following tropes from Friedman. Not because they are good for the economy but because they serve the donor class.
Michael - That's an interesting take on taxes/ tax base. I would add that those jobs paid for with tax money were also union which had the biggest effect on earnings. "Shocking" that GOP views Reagan as some kind of hero. Stock buybacks transferred wealth upward to the top 10%. Reagan saw it, knew it, and the GOP passed stock buybacks into law. 30 years later, that law and Citizens' United may be the downfall of these United States. Turns out Greed is the killer of pure capitalism. Weird, didn't see that coming.
Brian, u have it posed exactly right! Citizens United must be abolished along with the Electoral College in order to return this country to a fairer government! Voting rights have been under attack by the Rethugs for far too long ! Then with a hopefully fairer elected Congress the tax system & loopholes could be removed allowing Capitalism to operate like it used to. Removing greed from Capitalists is a fight for another day! I can dream can’t I??
We also need free, effective job training, a much higher minimum wage, single-payer healthcare that decouples health insurance from employment, and a lot less outsourcing. But I agree with you about taxes, Reagan, and anti-government nonsense.
Unfortunately our elected officials have been bought by corporate america. Those people like it that way since it enriches them to enrich their owners. A few fight the corruption but not enough to matter. So who exactly is going to change this before it's too late to change anything?
We need a new National definition of “job”... does it cover your cost of living? Does it allow you to afford good childcare? Education? Health? WTF is a “job” - for too many people it has to have an “s” at the end in order to survive. But... good luck achieving your ripe vision, I fully support it, but ya chant git they-ah from hear-ah...
I bailed on all the US-BS and moved to Mexico... But still work, pay taxes and I still VOTE
In my household I have a budget. It is not what I spend but what I save. The federal government does NOT have a budget. They continue to spend our tax money foolishly. That is why people follow the "orange clown". He is a businessman and not a politician. Career politicians like Joe Biden who have never operated a business do not have a clue what it is like to own/operate a business and make a payroll every month. Politicians spend other people's money. The same with educators. They tell you what to do but have never done it themselves. Same with non profits. They use other people's money. Non profits and churches are not taxed. Only the businesses in the USA. And then people wonder why Trump has half the country that supports his policies.
It is generally beneficial (and moral) for the government to spend money on infrastructure, justice, and the social safety net, and for everyone who lives in the country and benefits from government services to pay their fair share.
Absolutely Glenn! Rethugs think they are special though & above the 90% who pay most of the taxes that support our government spending. There’s very few wealthy people who have the desire to give back to the country that has given them so much! They instead look for loopholes to exploit in order to avoid paying their fair share of taxes!
What government are you referring to? We do not have a government we have Criminal Elites who do nothing for we the people. It's time to go back to the Declaration of Independence and read the lines were we are obligated to Remove a Corrupt Government!
We have already had one Civil War. Any treacherous organization that attempts to violently overthrow the government must be made to pay a much greater price than the treacherous leaders of the first Civil War who withdrew from the union.
So you are not one of "We The People" is what you are saying? The whole country excluding the Criminal Elites running it now need to remove these criminals for our very own survival along with the planet! How can we the people be considered "treacherous" for doing our duty?
In addition I am a strong opponent to war. The Civil War was as is every war ever fought done because one or more rich asshole/s wanted something some other rich asshole or poor country had. Nothing more nothing less. It is always about keeping some rich piece of shit RICH OR RICHER! Currently these filthy rich criminals are doing their "Proxy War" and infiltrating other countries under a false "Moral Guise" that the US is Just and Righteous. What a joke. These ARE CRIMINALS MAKING A PROFIT. Nothing more.
Glenn. I totally agree with you. Government should spend OUR tax money on infrastructure and justice. Social safety net is a joke. People have figured out how to work the system. Many, many people sitting at home collecting money from the government each and every month. In the USA we have the most amazing non profits helping people that need help. The federal government is corrupt it is broken. We all know it. We all can see it with our own eyes. Look at your own state or city governments. In today's world it is not what you know but WHO YOU KNOW! I don't mind paying my taxes but want the system to be fair. Why does non profits and churches not pay taxes. Why does the NBA and NFL not pay taxes. They system is so big the left hand does not know what the right hand is doing.
There is no doubt that there are people that are playing the system, however it is not as large as you imagine. I have worked with the poor as a volunteer for many years. Believe me there is a large number of poor people and that number is growing. If you observe the ongoing change within our economy, you notice that many nonskilled jobs are being eliminated. We must educate our youth for good paying existing jobs, or jobs coming in the near future. In regard to your comment concerning Tax exempt organization helping the poor, let me tell you that much of the money that these tax-exempt organization use comes from Federal Taxes and to a lesser extent State Taxes. Regarding the churches, churches use most of the donations they receive to pay for operating expenses. Churches generally do not accumulate large amounts of money. If it accumulates money, it does not benefit a person, it is accumulated to be use for a specific project that benefit the organization i.e., replace pews, make additions or repairs to the building. From your comment about church, I make the assumption that you do not attend a church. My point being that we do have a problem with REAL poor citizens in need of our help.
Name one “businessman “ who made a good president? Hoover (Great Depression), George W Bush (greatest financial crisis since the Great Depression) & now Trump ( greatest income & wealth inequality in American history & deplorable deficits)? Economics is different from running a business, and is outside the circle of competence of Republicans. America can win the war against poverty by electing Democrats. For in a more just economy, ALL citizens can better flourish. Don't trust me, read "A Brief History of Equality" by economist Thomas Piketty.
Brian. The government IS a business. Perhaps if we could have voted in more savvy business candidates to the Presidency instead of community organizers we would be in better shape as a country. The USA and the federal government are in the worst shape ever in history. The government is bloated and corrupt. Period.
You are entitled to your own opinions, but NOT your own set of facts. Read "A Brief History of Equality" by Piketty. Cecelia wants more "savvy businessmen" like Hoover (Great Depression), George W Bush (greatest financial crisis since Great Depression), & Trump (greatest deficits & wealth & income inequality in American History) to be our President. Meanwhile, she is critical of President Obama. Maybe she should read "We Were 8 Years in Power".
It's a very complex problem that all governing bodies have had to deal with down thru the centuries, but, in the end, what it comes down to, it seems to me, is: Taxes are the price of civilization, the price of a civilized society. Period. Full stop.
Carlos you are correct. We need to pay taxes. But the governments need to become lean machines and spend our money wisely. At the present time that is not happening.
During WW II the Missouri sen. HS Truman headed a committee to oversee govt military contracts to preclude war profiteering ( read corruption ). Truman & his committee got very high marks for keeping the process quite clean, so I have come to understand. Why this SOP is not used more frequently is bewildering. We progress-ives like to scream and holler about fraud, waste, and abuse in the Pentagon, & rightly so, for its record keeping is so shambolic AN AUDIT REQUIRED BY LAW CANNOT BE CONDUCTED, but the trinity exists in civilian spending also.
Cecelia, don’t u believe that tRump was a lousy businessman with 6 bankruptcies & his Father having to bail him out of financial disasters continuously until he died? I don’t believe for a minute that his base was supporting him bec he was a businessman. Rather he tapped into the anger of so many poorly educated white people who felt they were being replaced by immigrants of all races & colors but especially Hispanics. He was especially good at tapping into all their grievances & exploiting them for it! It’s hard for me to comprehend all the GQP outrage that’s been happening since the FBI searched Mar a Lago. They all fully know what kind of lying criminal he is & how he’s destroyed Big parts of our government & still they feel so sorry for the bastard! Maybe they are also feeling scared about some of their bad behaviors becoming the subject of investigation??
Your narrative is very interesting. It is very easy for you to write about your onsite experiences as a businesswoman, however writing about the government and tax-exempt organization you are expressing an opinion as an outsider looking in from afar. In business the interest is solely on how you are going to make the most money to put into YOUR bank account. In Government you are responsible for the well-being of the millions of citizens living within the borders of your country and the well-being of foreign countries that contribute to the well-being of your country. You make it sound like running a corporation or any business is more important and more complicated than running a country. I respectfully disagree with you. Meeting the survival needs of millions of people in our country as well as in other country is much more complicated. In respect to the "Orange Clown", he is only concerned with himself and the wealthy. When he came into power, he provided a major tax break, not for the middle class but rather for the super wealthy. There is a sector of our population that has been completely fooled by the "Orange Clown". He has used the same tactics that other men in history have used. That tactic is using the emotion of FEAR. History clearly shows how a nation can be kidnapped by a MAN. Look at what MUSSOLINI and HITLER did. Look at what is HAPPING NOW. All great world powers have been destroyed from within before the enemies without come in to finish the dirty work. Is this what is happening now?
There are many hallmarks indicating that it is what's happening now. Hopefully, we can forestall the takeover of our Republic without undue civic violence, although many of us are somewhat unnerved at the moment because there are so very many sycophants with extraordinary firepower from militaristic weapons.
Elias. What is happening in America now has been evolving over the past 40 years. The federal government is corrupt. The main stream news is woke. Our education system was taken over by woke ideologies and I watched it happen while my children attended school and now my grand children. We are in a civil war for the heart of this beautiful country. Trump had to fight fire with fire. He is NOT a "career politician" and why the middle class believes in his policies. There is hardly any middle class left. The rich are getting richer and the poor are now out on the streets living in tents. The government has not evolved into a lean machine with up to date technology. They have been too busy fighting each other.
The orange clown proposed a budget that reduced revenue by cutting taxes to the rich and increased spending across the board but especially to the military while we were not even in a war.
Business people don't run the government like a business anymore than Professional Politicians do. The government is not a business and it is not your personal budget. Yet the government is considered the Best Quality debt in the world. No government on earth has been run efficiently going back to the ancient Greeks. That is will never change.
Can you get people to loan you billions of dollars are 1% or 0% interest. No, you can't. But uncle Sam, even with all of his waste, sure can. Why? Because the government is not a company or an individual.
according to my recollections, the unemployment rate does not include anyone who has been looking for work longer than 6 months and nor does it include those who have simply given up ever finding a job again. there actually is a very large (hidden) group of unemployed people who, as soon as wages and benefits increase to liveable levels, will jump back in to the job market.
indeed. i am a member of the gig economy. but i am always looking around for something that might pay me a living wage -- or at least make me happy to wake up and get out of bed in the morning.
The gig economy is sharecropping on the master's terms. I mean, it's better than starving to death; most days. But definitely a step in that process, because sans benefits and IRA contributions, gig workers will find themselves starving to death upon retirement. So they'll continue to crop until they die, at ever diminishing returns. Hmmm: doesn't sound like fun. Not that I have a different trajectory . . . .
Richard, the same goes for companies that hire people as contractors bec they are cheaper to employ! They will only have Social Security to rely on if it’s even still a part of our country’s fiscal policy. If those Rethugs ever gain power again that’s one of their targets to eliminate along with Medicare. Just look at Sen Rick Scott’s 11 point plan to restructure our government if they take over the Senate. Nothing in it benefits anybody but wealthy corporations & maybe CEOs. They believe it’s their job to pay off the debt by punishing 90% of the country!
Member of gig economy and still in US? For the last two years I wake up happy every day... cause I moved to Mazatlán... yes, I got approval to work from down here and I bailed... but I still pay taxes and vote.
More than a decade after moving to a country where calling it a third-world country is almost technically illegal (correction:it’s a chaebol, but never mind), I was diagnosed with three cancers, all at Stage 3 or 4. If I was back in the USA, the funeral industry would have swung into action, sucking every dollar out and casting me aside after I’d run up a considerable debt. Here, the national healthcare system that everyone had paid into said “we’re from the government, and we’re going to help.”
It’s been almost a year since my use-by date and I still expect to wake up next Monday. It’s not a perfect life and it’s not without costs but I’m here and I have the charges carefully explained to me and my wife up front until we understand them for sure. The US hasn’t done that for nearly a century, if ever.
It’s nice to live in a civil country for a change!
"Employers in the restaurant and accommodation sector, which draws a quarter of its employees from the foreign-born population, could not fill about 15% of job openings last year. In professional and business services, where the foreign-born make up a fifth of workers, doing everything from architectural sketches to tax preparation, roughly 10% of jobs went unfilled last year. That, in turn, may be contributing to higher wages, with pay rising especially quickly for low-income earners.
The fact that a decline in immigration could have such an impact is, on the one hand, unsurprising. New immigrants accounted for nearly 70% of the growth in the American labour force in the 2010s. Over the next two decades, immigrants are likely to be the only source of growth. The Pew Research Centre calculates that without new arrivals America’s labour force would decline to 163m in 2040 from 166m in 2020. If net immigration were to return to pre-pandemic levels, the labour force would instead grow to 178m by 2040.
On the other hand, the relentless focus on America’s southern border seems to have obscured the bigger picture. Even the Federal Reserve failed to note the remarkable drop in immigration as a cause of labour-market tightness in either of its monetary-policy reports to Congress last year. In February this year it acknowledged at last that reduced immigration had probably constrained the labour supply."
(from The Economist this week; so yes, some supply will materialize - but the immigration factor should be accounted for in a "first pass" at it-)
Those 'inactive and therefore missing' form the listed rate of inflation are a feature not a bug. Both parties in Congress decades ago favored the bizarre distortion of stripping out 'unemployed but can't find anything to look for' because that makes the unemployment rate look better than it is, and takes political pressure off either party to actually deliver for Main Street rather than for gated communities and super yacht residences. No other country counts unemployment in this crooked way, to call it what it is. Just one more way those of small means are shafted by 'the American way of economy.'
As I follow its actions, a bit contra RR in the post the Federal Reserve doesn't care a tinker's damn about 'the job market' or for the most part even about wages. Oh, its agents TALK about that all the time---but that's just for cover. They don't care at all.
What the Fed cares about are US bond prices, and the profitability of the major banks which buy the great bulk of those bonds as they are issued. Controlling bond prices via interest rates determines the value of the US $. The tacitly (and in some respects overtly) forced use of dollar pricing and dollar transactions internationally is what keeps America disproportionately funded at the World's very considerable expense. It's a greater force projection multiplier of American power and economy than having nuclear weapons. So the Fed cares about keeping that all up to par. And the Fed cares about the profitability of the investment (sic) banks because a) they buy that US$ debt and disseminate it, and b) the Fed is completely of the same class and constituency as those that run said investment banks and wants to keep its peerage just that and supremely remunerated, as now.
This is the cause of the disconnect in American thinking on rates and costs. We are told that "the Fed cares about 'the economy,'" when the Fed cares about the economy _only_ in how that affects interest rates and bond prices, NOT in how the economy affects the living standards or conditions of 99% of the population. Our economic discussions are predicated on, in effect, a lie. The Fed's message to that 99% is "Go die." The Fed's message to the part of that 99% without college degrees is, "Go die, and for Christ's sake hurry up about it."
Now, I don't think the voting of all that chunk of the non-college electorate for Trump in the last two cycles has much to do with the Fed, the economy, or the gross contempt of the American wealthy and their Fed for 'the little people.' I think that electorate has voted primarily on nativist tribal principles and are mesmerized by the Repugnicant Big Lie. They love the Lie more than life itself, in aggregate. Economic stagnation only gooses their pervasive sense of grievance, which was just as evident in good times as it is now in bad. That slice of the electorate has always been nativist, exclusionary, typically bigoted, and possessed of an unshakeable sense of grievance with both historical roots going back centuries---some with justification, most not---and a certain conviction that others are getting more from society than they deserve while deserving (white) folks like themselves are getting less. Giving them better economic conditions is important as a goal in itself, but it won't touch the tribal grievances which are their primary motivators, in my view. But that's a problem for another day.
Yeah, the Fed is going to boost rates in September. They are mistaken in how much and how fast, and because of that are certain to overshoot. They are mistaken because existing rate increases have already sent the dollar soaring and kept the bottom from dropping out of the US bond market so to speak as inflation destroyed the market value of all that Himalayan range of negative real interest bond debt issued over the last ten years. All those huge institutions holding chunks of that Himalayan bond wall now have a modality to swap out those losing bonds for new ones as they are issued paying 'a little something.' But Powell and his ilk are still in a panic on that because that 'little something' is still much less than the quoted rate of inflation, meaning that bond holders will effectively lose some money until rates get above inflation, wherever the crossover price may lie. So the Fed will keep raising rates to get bond returns above inflation. One way to do that is to hike rates to the point that the real economy takes a hit, with the intended 'unintended consequences' of crushing domestic demand to bring down putative real economy price inflation. Except current price inflation isn't driven by domestic demand but rather by supply disruptions and egregious price gouging by market manipulators, as RR points out. So the 'crush demand' strategy won't work as designed---but that won't keep the serial catastrophists of the Fed from trying harder. Because, as history teaches us, "people are dumb." And amongst dumb people, Powell is a special case. So we're not going to like anything he does for the foreseeable future, I think we can bet on that; and make a little money.
Richard, maybe Biden should be thinking about replacing him with someone else that isn’t trying to create a recession unintentionally or otherwise. He is a Retrumplican I believe. Prof Reich, how about sending a bug to Pres Biden’s ear with this info?? U know how many issues are on his plate & he can’t possibly think of everything that’s going in the wrong direction. His aides are not serving him well if they don’t apprise him of these potential problems that could torpedo his agenda!
That horse has already sailed, or words to that effect. Powell was up for renewal last year, and Dopey Joe didn't even like him---but word was he was told "The markets will tank if Powell's replaced." So Biden signed off on another term for Powell. He could, technically, be fired, but the political costs of even trying aren't worth the gains. And Biden would almost certainly appoint someone nearly as bad, just with cleaner hands. We're stuck with Jerome Powell for years to come.
The entire Federal Reserve structure, its chartered duties, and everything about how public financial supervision is conducted in this country needs massive reform. I doubt I'll live long enough to see this, since the uberrich have the body locked up and the body politic just doesn't have the wits to fight for their own economic rights.
MIGHT jump back in... most will be too friggin old by the time the wheel turns back to living wages and benefits... and younger generation is a wild card... all power to them
Numbers lie -- exactly what kind of "jobs" have been added and do they pay a living wage??? NO!! So when the Feds say employment is full and unemployment is at an all-time low - it's not actually helping people who work for a living!
Low wage jobs with no benefits do not provide enough income to feed and house one person, much less a family. I have heard acquaintances complain that people just want to stay home and take government money. If a job paid less than the extra unemployment COVID benefit, what kind of job was that? If your business model depends on paying less than $15/hour do you have a viable business model? I know people who did not go back to their previous jobs they had before COVID. They had enough leeway to find better jobs. Who could blame them?
Who are these people being referred to? Sitting home collecting government money? Restrictions do not allow such a thing. Have you ever applied for unemployment? You are required to actively (and prove) you are looking for a job! After the most 21 weeks (depending on your previous job) you are cut off. Cut and dried. The only ones sitting at home collecting government money are Politicians who are all millionaires plus!
I am really referring to acquaintances I know who have no idea about unemployment benefits. I realize there are serious restrictions. My acquaintances are complaining because businesses who have typically employed hourly workers are struggling to find someone to work for less than $15/hour. The people I take issue with are the folks who, without any evidence, say people don’t want to work. These are first world entitled white people I find most irritating.
In the twisted mindset in question, it's because they're lazy and only interested in taking drugs. That's their justification. Closely related is the right to lifer who doesn't want their tax dollars to pay for abortions.
The same ones rigging all state & local elections while casting multiple votes for dead people. They're all illegal alien rapists, murderers, & drug dealers, as well!
Totally agree with your statement about business models. This includes any business dependent on slavery, which means this country was built on exploitation and still runs on it. Imagine how different things would be if businesses all had to run on a level playing field with sound business models.
And in addition to this if you want to play Monopoly with the big boys your on your own! No bailouts! One more delusion is the way they have paid to become people! Well then they should be treated as such using their own arguments for being treated as such with the acknowledgment that when found to be committing crimes the whole ship goes down including the shareholders. See how fast they run for corporate identity then!
Remember the 47% video where Mitt Romney bragged about how people working on an island off China (or somewhere) were working for 'a pittance'? He was so approving of this arrangement. When someone on a tour of the factory asked why the women did not even look up as they passed by, the 'guide' assured them that 'they are taught to focus on their work', Romney related this approvingly. The 'tour guide' was armed with a rifle. There was razor wire on top of the fences surrounding the island : "to keep people from getting in" according to Romney, "because they wanted the work so badly" Romney should have to work under those conditions just to be able to eat!
Numbers don't lie. Only those who don't tell you >exactly< what they represent lie. Become suspicious as soon as you hear them framed in generalities. I've bitched about politicians taking credit for "creating jobs" since at least Ronald McReagan. I know >exactly< what kind of jobs that sort create, and what those jobs generally pay.
I agree with your assessment, Professor Reich, but I have questions. Both Presidents Biden and Obama kept failed Federal economists from the previous administrations, despite the economic distress Bush and the trumpster left behind, WHY? Biden generally, throuhout his career, has favored the working class, at least verbally. Biden must be able to see the widening wealth gap the same as we do, so, why isn't he stepping in to stop these interest rate increases?
Dr Reich, I think you should lobby Biden for a post at the Fed! We need someone there who promotes economic fairness by prioritizing the needs of lower income workers above all else. The income gap keeps widening. It’s a recipe for social disaster. If folks on the bottom rungs keep getting screwed, their grievances will be easy prey for the next Trump.
I have read Dr. Reich’s critiques of Fed and monetary policies and have long-wondered whether these criticisms have a voice at Jay (Powell) and Janet’s (Yellen) tables. Perhaps they’re presented but not being heard, not convincing enough or overruled?
Our society is quite complex. There are many motivations and movements that interact and change all the time. Some of those things are social: writ broadly, our regard for one another. Another of those things is capitalism, getting the most from the system for ones self. But getting the most for ones self, when carried to the extreme, is greed. And, as the Catholics say, greed is a deadly sin.
A mixed society like ours is healthy when these conflicting things are roughly in balance. Since 1980 we have lost that balance. We elevated greed, the defining characteristic of capitalism, to the defining characteristic of our nation. Mainstream religions, once a repository of those other values, declined apace. Public education is in tatters. Life expectancy is declining.
Capitalism is inherently entropic. Piketty demonstrated that, when r>g, wealth will pass up and concentrate at the top until the whole thing becomes unstable, topples over, and collapses. When we lowered taxes on the very wealthy in the 1980s, we closed a shunt that recycled some accumulating wealth to more social uses and thus prolonged the life of both capitalism and society. That choice will prove ultimately to be bad for both capitalism and society. We now have the most unequal distribution of wealth since at least the 1920's, and we know what happened in 1929. Stay tuned, our next act will be exciting.
The unemployment rate is misleading because it does not include all those unemployed who for whatever reason are no longer looking for work. A better metric would be the unemployed rate of those of working age
Covid hit this household pretty hard. Boomers with a degree and lots of experience in the labor class. Now we are retired, still, own the house and 2 cars, and trying to figure out how (with fixed income/S S & Medicare) how to find the next wolf... True, we are still paying some taxes and get the occasional pittance of cost of living stipends, but this year the wolf barely got beaten off and next year, with rents unaffordable, our IRS account amazingly emaciated, and with costs going up, how long until one of us gets an old age condition that will tear our American dream to shreds? Not to mention credit cards that are maxed.
Welcome to the tarnished 'golden' years. If I hadn't quit working 6 weeks before I turned 88, I'd be ok. But on very small pensions most of us barely scrape by, and look forward to escape by death
In my few years of night school at SUNH to keep my job at the factory in QA, I had many fine retired teachers. We've had some bad news this week so I felt a little bad this morning. Thanks for the note and isn't this a great informative site?
So, how else to control inflation? Taxing the rich instead of raising interest rates? Right now a lot of overpaid accountants are working overtime to get around the new corporate income tax. I hope they find no loopholes.
I know too many Trumpians. Mostly they fit the mold: uneducated, “poor”, and hating all liberal agendas. They are mostly hard workers. But, they aren’t above taking free heat pumps given by local charities due to their (reported) low incomes. They work for wages that give them plenty of time to travel in their RVs. They prefer a somewhat vagabond life rather than the daily office routine of the middle class. They want government out of their lives. No seat belt laws and few environmental protections.
Taxing the rich will not be popular with them. They admire the independence of the rich.
But don’t be deceived by my observations. The inequality within our society has pushed them into their lifestyles. If there were good jobs for the non college educated their attitudes would be very different. Non coastal Maine is a pétri dish of the problem. Few jobs with families holding each other together. Bring back the CCC and watch how many of their youth join. Pay for it by taking the rich. I can’t wait to see the talent that erupts from such a program.
I hope i haven’t offended anyone. I volunteer to provide homes for low- income families. For those who accept that “the poor will always be with us”, I say the rich will never be satisfied with their wealth.
Nancy, by prosecuting price fixing and price gouging.
You're right about jobs. WPA, CCC could be implemented by the state. Consider the soviet state of Alaska. The Alaska Permanent Fund Dividend (PFD) takes the state's oil wealth and shares an annual portion with all permanent residents (both children and adults).
Excellent, Daniel. We need solutions and the example of WPA and CCC are the best we have to change lives with new opportunities.
How to go after price gouging? Other than war times have price controls ever worked? Or, are there better methods? Break up corporations? More anti-trust action?
I've mentioned this previously. Thirty-seven states, Guam, Puerto Rico, the U.S. Virgin Islands and the District of Columbia have statutes or regulations that defining price gouging during a time of disaster or emergency. In most states, price gouging is set as a violation of unfair or deceptive trade practices law.
Thank you for this reference. So Our governor could declare the price of gasoline and food that went up more than 15% as unconscionable gouging. Would the oil companies respond by creating shortages of gasoline and oil to Maine? Can she force them to deliver the goods at the lower price? And would a state declare price gouging from corporations that pay significant taxes to that state or employ many of its people? Perhaps this needs to be done at the federal level?
Independence of the rich? Good grief. They’re “independent” because they exploit everyone else. Do these people you know think the rich are just smarter or more deserving or something? Talk about a lack of critical thinking. (And I’m not criticizing you. It’s those attitudes you cite that make me shake my head in disbelief.)
Hi Paula, these folks want the same freedoms that the rich enjoy-paying the minimum of or no taxes and getting what they want from “connections”. They see that pricey white collar crimes seldom result in jail time.
On the distrust side of the ledger—they see that the majority in Congress are millionaires. They hear of deals to protect pipelines (which they favor anyway) by two powerful Senators who received large campaign donations from that pipeline developer. They see Congress owning stocks of companies they are regulating. They believe that most, particularly Senators, are there because they came from a family of wealth and/or influence. Nearly all Senators are college educated. The average age of the senators is 65. ( I’m older.). Where are the plumbers, the Union, public school teachers, taxi drivers, city workers, hospital worker, people in their 40s, etc?
I say we don’t need a Senate that can stop all bills. Democracies require voting. Our constitution was a great job for the 18th century but it needs revisions. I would start with the Supreme Court and the Senate.
In the same vein there should be evidence of community service in a politicians background (I don't believe we need them at all but if you must!), even if they served at a soup kitchen. They may be scammers but hell at least some poor individuals got soup! These positions are supposed to be a "Public Service" this is completely destroyed down to its rotten core.
I might like having gazillions of dollars too, Nancy, but not if it means screwing other people and ruining the world. It’s that lack of connecting the dots that’s the problem. They need to do that. But I agree with you about what needs to be done. I’m just shaking my head at the willful ignorance.
I saw a short video interviewing a should we say acquaintance of the oldest Rockefeller and he was asked about the wealth and the response was it's not the money it's power.
Do you know why the fed does this when they must know they are lowering the standards of living and kinds of jobs and even having a job available to vast numbers of Americans? is it really so engrained in the minds of average American officials (who usually come from haves when they are high up) that if in doubt make huge numbers of Americans economically vulnerable or desperate or unhoused or overworked? This is why so many have-nots vote for lying and hateful GOP people.
There is no logic. There is only emotion and stupidity. They hate the people they are told are hurting them and they don't see much help coming from them (the present democratic party taken as a whole). They want someone to blame; they want to have high opinions of themselves and dream they too can be super-rich and powerful because (forsooth) they are white. They look at the middling classes and loathe and blame them (especially if they are minority or black people) if they have to listen to broad explanations which leave them as desperate as they are.
And does this Build Back Better Bill contain any provision for direct help. None that I can thik of No young child care. No help for older disabled people (deafness is a disability). No help for college massive debt. Not even limiting insulin prices to $35. Tax credits that's what's there
Exactly! All these bills go to corporations to dole out by whatever means they choose if the money goes into the funding. Example when Busch Jr., was president and it came time for re-election I was a homeless disabled vet. He passed a bill to help find housing etc. for Vets and there was never any money put in to fund it!
I don't think the Fed naively believes the given reason for their continued interest rate hikes. By having most of us gainfully employed and working productively but with diminishing purchasing power it will drive more of the have less population into debt to cover monthly expenses at increasing interest rates on debt owed, The Federal Reserve is international banking interest with a historical pattern of getting borrowers in debt and offering high rate loans to enslave them in a have less situation until war results from the conditions so they can trap nations into high rate loans in classic British Imperialist fashion. To stay sovereign we need to hold more real physical assets in the Constitutionally controlled Treasury and limit the portion of investment in Federal Reserve financial instruments.
As long as excessive profit grabbing under high market demand conditions is not limited or taxed it is. A windfall profits tax is needed until prices normalize.
It's called "wage slavery." Wage slavery is far more cost-effective than chattel slavery. You don't have to house them, feed them, clothe them, or bury them.
It is sad to me that President Biden decided to keep Powell on the Fed. He has no vision and can only think in interest rates. That is a pretty narrow view as Dr. Reich points out. The Fed needs to just step back and see how things go for a little while. Then, Congress needs to consider some windfall taxes for at least 2 years. I think that would do most to bring down prices since corporations are so averse to paying taxes. It is time we the people rein in the super wealthy. We will all pay for it (literally and figuratively) if we don't.
Now you are getting to the crux of the matter. There was a huge imbalance of power and production following WWII. We were what China became, the production arm of the world. The rest of the world was in shambles. Capital found its best return here. As the years passed, capital found better returns elsewhere. No, we are not exceptional. We are just people in a system called capitalism that no longer favors us. Colonialism, capitalism, autocracy, they are all about wealth. Read Aristotle, Adam Smith, John Maynard Keynes, they all warned about the accumulation of wealth. We judge individuals, ethnic groups, and countries by their accumulation of wealth. It is how we measure worth that is our problem. As long as money and wealth are our guideposts, we will continue on our road to destruction. Economist rejected the moral sentiments of Adam Smith long ago:
“The great source of both the misery and disorders of human life, seems to arise from over-rating the difference between one permanent situation and another. Avarice over-rates the difference between poverty and riches: ambition, that between a private and a public station: vain-glory, that between obscurity and extensive reputation. The person under the influence of any of those extravagant passions, is not only miserable in his actual situation, but is often disposed to disturb the peace of society, in order to arrive at that which he so foolishly admires.
"In the first three decades after World War II, America produced the largest middle class the world had ever seen. But for the last three decades, the middle class has been shrinking."
And why is that? Simple answer: a markedly reduced tax base.
In the 1950s taxes were the highest in history. And these taxes were used to build highways, bridges and schools - which further stimulated the economy, and made possible the strongest middle class in history. This is precisely what was envisaged by the early economists. But it needs strong government, to collect those taxes and redistribute wealth in order to keep the economy strong, and to prevent government takeover by the wealthy.
This, by the way, is not socialism, but vibrant capitalism.
Then along came Milton Friedman and Ronald Reagan, and turned this teaching on its head. Remember Friedman "Government is always the problem, never the solution"? And Reagan "The scariest nine words in the English language are: I'm from the government and I'm here to help."
These brilliant folks made a mockery of government and led to a quorum of Republican politicians who still believe that any increase in taxation will prove disastrous. THAT is why Mitt Romney (Mr. 14%) gets so exercised about even a whiff of increased taxation.
Can anyone blame the bottom 40%, in their inchoate rage, voting for the orange clown?
The time is ripe for a Democratic sweep of the Senate, followed by large tax increases on the corporations and the wealthiest Americans.
Turn the clock back - to Adam Smith - and pretend Reagan didn't happen.
There are many books which contain the empirical facts supporting your arguments such as Piketty's "Brief History of Equality", Blinder's "After the Music Stopped", & "American Amnesia". Republican ideology i.e trickle-down economics & Grover Norquist on taxes, are the false theories Republicans continue to argue in spite of historical evidence. George Orwell predicted this re-telling of false history in 1984. It is time to be pragmatic & move on from theories which have been falsified.
The main mechanism was taxing capital gains at lower rates than other income. Was more profitable breaking up businesses than growing them.
Sick result. Mitt Romney and others made money by robbing the employees of the companies they raided. And still to this day would fight an extra penny coming from their income.
It’s happening everywhere. How people got to be so mean-spirited, greedy, and misguided about what actually works in business I don’t know. Well I do, but how anyone can be so selfish and stupid despite the evidence is beyond me.
I agree with Daniel Solomon -- up to a point. The real problem is NOT the existence of differential rates capital gains vs. earned income, but rather the ABUSE of those rules by clever, greedy rich people and the politicians they own (mostly but not entirely Republicans.) The correct and justifiable philosophical underpinnings of the preferential rate for cap gains relates to the issue of not wishing to tax purely INFLATIONARY gains. The simplistic solution would be to "index" the gains to remove the portion of that gain which simply reflect the diminished value of the dollar--not significant over the short-term, but substantial over five, ten or more years. But there are good reasons for not wanting to imbed such a concept in our laws. The current one-year holding period is a joke--an outright gift to speculators.
A reasonable, if somewhat rough-and-ready, solution would be to make the tax rate for capital gains on assets held 5-10 years 75% of the rate on ordinary income and the current approximate 50% of ordinary income applied only to assets held more than 10 years. Of course for something this sensible to be voted into law would require a critical event: the reduction of the number of GOP Senators to 40 or fewer. Not on the near horizon, but not impossible after three or four more election cycles.
Brian, you have that right. Theories that have been proven wrong just keep showing up particularly in Republican circles because they want them to be true and don't care about the results of such thinking.
Michael, I write because I am struggling with the term “vibrant capitalism.” While I would not dispute those who claim capitalism is an extraordinarily productive system, it, undoubtedly, is not very good at distribution and only works well when wedded to social democratic institutions, which contain its excesses and moderate its self-serving impulses. Hence, were I attempting to select a modifier to increase the prospect of being understood, I would coin the phrase “contained (or perhaps “regulated”) capitalism.”
Barbara, I understand what you're saying, but my reading of Smith is that he intended capitalism (or rather, the free market) to be regulated by strong government. This was the case in America between 1948 and 1980. But since 1980, many Americans have been duped into believing the opposite, that "freedom" and unfettered capitalism go together. This is Randian bullshit.
The only problem with your phrasing - although I agree with it personally - is that it becomes an easy target from the right.
What I wonder about is the "morality" of capitalism. It seems almost a zero sum game, wherein my standard of living is dependent on a huge number of people in undeveloped countries having their resources and labor stolen by corporations, going all the way back to mercantilism and the slave trade. I have no clue how to remedy such a situation. But I feel complicit, and the older I get, the 'dirtier" I feel about my privilege.
Yes. Agreed.
Michael, Were I a strategist, I would advise Schumer repeatedly to schedule votes on every reconciliation (BBB) provision all 50 Senate Republicans (plus Manchin & Sinema) opposed: e.g., expanding the child tax credit, providing affordable, quality childcare and universal Pre-K, making investments in housing, in eldercare, and the like to educate people about what they’re losing every time BBB legislative provisions are voted down. I also would suggest holding votes on tax provisions like the carried interest loophole and more to help everyday people understand the massive amounts of wealth unfettered capitalism distributes upward.
Barbara, I like it! But you may get your wish by other means. Remember the assumption by many that the Republicans were simply going to sweep Congress in the midterms (Obama called it a shellacking)? Well, I follow 538 closely. It's a great compendium of numbers and analyses, which early in 2016 predicted a sweep for Sanders in Sanders v Trump, and also predicted that Clinton and Trump were neck and neck for 6 months prior to that election.
Well, the Republican sweep in the 2022 midterms was indeed predicted, with the Senate going to the Republicans 60:40 - until, that is, the last week in June. Now the numbers are going in the opposite direction, and Democrats are predicted to retain the Senate, and even, possibly gain a couple of seats. The same trend is seen in the House, so it is conceivable, if this trend continues, that the Democrats may take both the Senate and the House.
What happened in late June? SCOTUS overturned Roe v Wade.
Michael, Thank you for writing back. While I am aware of the shift, still, between now and November, I plan to operate as though we were trailing by 10 points. Though it’s a relatively small thing, I would note, because cutting the price of insulin was voted down for non-Medicare people, I was pleased to learn that Schumer plans to make the opposition vote on that again.
Barbara Jo. I like your thinking here.
Ruth, I appreciate your validating reply.
I wholeheartedly agree with you. The GOP is already using the term socialism when discussing the Democrats. Guess what? It is working in recruiting many Hispanics and people who have no idea as to what Socialism and Communism is. The Democrats must educate the public as to what the GOP considers Socialism. A large number of the public have no idea what socialism is. They think it is like communism. It is time to challenge the GOP regarding what they consider socialism. The big GOP lie must be exposed to the many Americans who are being terrorized.
Elias, my dad used to say that if someone calls you something, find a way to own it in a positive way. If they call us socialists, then tell folks "see that word, 'social" right there at the beginning, it means taking care of each other and sharing responsibility for making a strong fair society. Republicans are scared of that because they want to rule and share nothing but bad feelings, insults, and lies. Our brand of socialism is really great because it includes all of us." It seems we get caught up in the nonsense Republicans spew and try to say how we are not that thing they call us, when we need to "own" it and make it a positive description. We can recruit Spanish-speakers and folks fluent in the many languages that American speak and get the word out. We can do this!
Ruth, I write because I believe Elias has a point. Floridian Latinos, for example, who come primarily from Cuba and countries throughout South America largely are escaping socialist regimes. I think here is where definition is critical.
As I understand, socialism is rooted in government control and ownership of the means of production. I further would note I am not aware of a socialist project that doesn’t invariably devolve into autocracy.
Democratic socialism, meanwhile, practiced throughout much of Western Europe merely calls for a more equitable distribution of a nation’s wealth. Though Europeans largely regard capitalism as a reasonable system, they recognize it’s not very good at distribution unless wedded to social democratic institutions that contain its excesses and moderate its self-serving impulses.
As for the States, I imagine the reason why, for example, real family income growth between 1947-73 was 116.1% for the lowest fifth and 84.8% for the top fifth (Source: Economic Policy Institute) is because we were more regulated, replete with protections which leveled the effects of capitalism.
Returning to Elias, I expect Americans, contrary to their European counterparts, aren’t as attuned to these distinctions and thus are largely susceptible to Republicans’ conflation of the two to serve their own interests.
Yes, guardrails are needed and regulations/antitrust laws need to be enforced.
Yes, regulation makes a better -best Capitalism!
As I have realized: Reagan and his dementia-addled a-brain was America's killer. He stabbed us in the gut but left the knife in, allowing us to live, but be in constant agony. Moscowmitch twisted the knife four times for each decade in power, then Bunkerboy RIPPED it out!
Luckily: Biden, Bernie, Warren and a dozen others know how to perform life-saving surgery!
We think! That doesn’t make it reality. We have to show people what actually happened when Unions had power, taxes were collected from All so called Americans, what well paid American workers can build when being rewarded, what accomplishments were gained by working hard for a singular purpose! That singular purpose is AMERICA! However, if one doesn’t feel like he/she belongs……First we must get rid of money in politics. That dirty money will always keep most of us powerless. Then we REALLY tax and collect( no loop holes) the entire corporate world. If they do love America prove it. Then we put a limit on class indulgence. If you want to sit in your yacht off shore so taxes can’t be levied, you are not welcome to moor in the United States-ever.
Biden,Bernie, Warren can only do what we support them in doing. That takes proof .., that takes hard unionized labor… for the love of America!
PS. Beware of those flying the American flag off their house. If they have to fly the flag to know where they live they aren’t paying taxes. Fly your tax return!
Well then you can thank Biden and Bernie who have been in office for years for the mess that we now find ourselves in the USA at the present time.
No, we can thank ourselves. Remember, as long as the $ sign equals power... the VOTE equals not much.
We have given the vote away and replaced it with the dollar.
Totally agree Mr. Hutchinson. And in order to not go down the “ despair” trail again HOW do we get this fact out to those who need to know it best?
We can all post to our egos content, but how do we get the message out? Do we put big highway posters out to say “ this is your government at work!” “ Be a part of the workforce that makes America Great” Build roads, bridges, airports, trains. These realities did not just appear. Hard working Americans built them with the help of their government…. Who by the way is “ the people”! We are the government. Stimulate this thinking by putting it on every kind of communication! Like a giant Valentine…. Send your loved ones a card that shares the facts!
As you can see I am fighting despair. Help!
Yes, I am fighting despair too.
How to get the word out: how about letters to the editor? People actually read them, well, in small town papers they read them anyway. Hey, I kind of like that idea. Maybe I'll write a letter listing Biden's achievements
Michael, you are right about the middle class. It is almost as though the rich don't want a middle class at all. They would be content with everyone but themselves living on the edge of poverty. That way, they can pay crappy wages, cut government programs, and run unchecked. Now, why would we the people permit that? I guess it's because we revere the wealthy and keep putting them in positions where they can bring about this disaster.
I learned in university history classes that revolutions occur because of the middle class—thwarted yet rising expectations combined with a sense of dwindling relevance and financial loss—all cause the middle class to rise up and try to change everything. The rich have always understood that the lower classes don't have the resources or temperament for revolution, so they do what they can to minimize or suppress middle class thinking. Read Crane Brinton's "Anatomy of Revolution."
The middle class believes in the American Dream. Work hard. Take care of your family. Enjoy life in the greatest country on the earth. Network with the right people. Have a great idea like Jeff Bezos. Create a company like Elon Musk. Play basketball like Michael Jordan. Play football like Tom Brady. Invent computers like Bill Gates. Sing like Lady Gaga. If you don't have a talent then help others. Don't sit on your butt and expect the dream to come to you. We all can dream and hope. That will never be taken away by the government.
To Michael Hutchinson ....Would a wind fall profit tax on corporations be beneficial at this time?
We're trying to do that but the Repugs have NO interest in actually governing or doing anything for anyone who's not them and their rich friends/donors.
Neither do the embedded controlling band of democrats. They are all bought and paid for.
Carbon Copy, U haven’t provided a speck of evidence for ur assertions. And further why can’t u use your given name instead of a silly avatar name?? Might u be a Republican in disguise playing devils advocate?
I am not a republican or a Democrat any longer. If you have been paying attention I would not have to provide you with proof. A quick simple proof Pelosi response when questioned about the illegal stock trades her husband and her have done her response was that it was OK! Maybe you weren't paying attention then either but Martha Stewart went to prison for this very thing! One more item, no one and I don't care who you think you are has the right to go to war and every one of these War Criminal Profiteering whores are doing it. Ask yourself how much does Raytheon or Lockheed or the list goes on PAY ALL OF THESE CRIMINALS? War is always about Profit!
One more item, I do not disagree with 90 percent of what true Democrats are about but here lies the difference, I have 3 different types of cancer caused by the polluted water in my home towns Reservoir, lost 2 sisters to cancer, father, uncle, mother had it before she died, my brother has had it and this was because my parents did not find out in time before they switched where they went to get our water before we moved. It was bad enough that it looked like you could walk across the river on top of it. So back to the original train wreck, every one of these paid for presidents and politicians have managed to gut the EPA at every turn in office clear up to the worst of them all (Trump). Trump put a violating offender in charge of the EPA! This is what you really need to know everytime these con people get you to believe their problems are yours and so many fall for this scam they hang themselves! Trump claimed the EPA wasn't doing anything anyway! So what if I send you out every morning to get me groceries and every night before I steal 10 bucks out of your wallet and put holes in your tires? Then tell you you didn't get to the store by 11am so I am taking half your money and we start over the next morning! Oh by the way I'll put your worst enemy in the back seat too. So here's the real difference between me and the democrats I would hunt you down and put you in prison for crimes against humanity and the planet! Democrats look the other way or take money from the EPA like Obama did and so many others.
Ain’t that the God’s truth! If only Biden had the power to fire non-performing Senators who refuse to do their jobs but rather create disharmony in the entire political process for their own satisfaction.
No question!
Of course and everyone who is thinking knows this. Make corporations “Proud” to be supporting America!
My view of the role of government is (1) to promote the overall well-being of all who live here and (2) have as a basic principle that you can do whatever you want to as long as it doesn't take advantage of or oppress anyone. Does this at fit with your term of "vibrant capitalism?"
Must revisit the concept of "commonwealth."
To be clear, Reagan was not the only US President that pushed Friedman's economic policy. Clinton actually passed more Friedman policy than any other president. From ending welfare as we know it to NAFTA to killing Glass Steagall his policy wins were far more Friedman than either Reagan or Trump...
Yes, we need to return to the economic policies from before Reagan. But make no mistake about who will be fighting you. It is Neoliberal Democrats (Pelosi, Schumer, Biden) along with Neoliberal Republicans like McConnell and Romney and Trump that you will be fighting to defend the economic policies of the last 40yrs
Read “The Rise & Fall of Neoliberal Capitalism “, it is GOP fallacy.
Brian
I have read many books that touch on this topic including extensive analysis by Nobel prize winners Joseph Stiglitz (People Power and Profits) Paul Krugman (Arguing with Zombies) as well as books like The Lords of Easy Money and of course Goliath.
It is not a GOP problem. It is a problem with leaders in both parties. Both parties are still following tropes from Friedman. Not because they are good for the economy but because they serve the donor class.
Michael - That's an interesting take on taxes/ tax base. I would add that those jobs paid for with tax money were also union which had the biggest effect on earnings. "Shocking" that GOP views Reagan as some kind of hero. Stock buybacks transferred wealth upward to the top 10%. Reagan saw it, knew it, and the GOP passed stock buybacks into law. 30 years later, that law and Citizens' United may be the downfall of these United States. Turns out Greed is the killer of pure capitalism. Weird, didn't see that coming.
Brian, u have it posed exactly right! Citizens United must be abolished along with the Electoral College in order to return this country to a fairer government! Voting rights have been under attack by the Rethugs for far too long ! Then with a hopefully fairer elected Congress the tax system & loopholes could be removed allowing Capitalism to operate like it used to. Removing greed from Capitalists is a fight for another day! I can dream can’t I??
We also need free, effective job training, a much higher minimum wage, single-payer healthcare that decouples health insurance from employment, and a lot less outsourcing. But I agree with you about taxes, Reagan, and anti-government nonsense.
Unfortunately our elected officials have been bought by corporate america. Those people like it that way since it enriches them to enrich their owners. A few fight the corruption but not enough to matter. So who exactly is going to change this before it's too late to change anything?
Carol, That's what we all want to know and not only "who" but how.
Great post Brian. 100%.
We need a new National definition of “job”... does it cover your cost of living? Does it allow you to afford good childcare? Education? Health? WTF is a “job” - for too many people it has to have an “s” at the end in order to survive. But... good luck achieving your ripe vision, I fully support it, but ya chant git they-ah from hear-ah...
I bailed on all the US-BS and moved to Mexico... But still work, pay taxes and I still VOTE
You see it as I do, precisely. Like your "Vibrant Capitalism" term.
In my household I have a budget. It is not what I spend but what I save. The federal government does NOT have a budget. They continue to spend our tax money foolishly. That is why people follow the "orange clown". He is a businessman and not a politician. Career politicians like Joe Biden who have never operated a business do not have a clue what it is like to own/operate a business and make a payroll every month. Politicians spend other people's money. The same with educators. They tell you what to do but have never done it themselves. Same with non profits. They use other people's money. Non profits and churches are not taxed. Only the businesses in the USA. And then people wonder why Trump has half the country that supports his policies.
It is generally beneficial (and moral) for the government to spend money on infrastructure, justice, and the social safety net, and for everyone who lives in the country and benefits from government services to pay their fair share.
Absolutely Glenn! Rethugs think they are special though & above the 90% who pay most of the taxes that support our government spending. There’s very few wealthy people who have the desire to give back to the country that has given them so much! They instead look for loopholes to exploit in order to avoid paying their fair share of taxes!
What government are you referring to? We do not have a government we have Criminal Elites who do nothing for we the people. It's time to go back to the Declaration of Independence and read the lines were we are obligated to Remove a Corrupt Government!
We have already had one Civil War. Any treacherous organization that attempts to violently overthrow the government must be made to pay a much greater price than the treacherous leaders of the first Civil War who withdrew from the union.
So you are not one of "We The People" is what you are saying? The whole country excluding the Criminal Elites running it now need to remove these criminals for our very own survival along with the planet! How can we the people be considered "treacherous" for doing our duty?
In addition I am a strong opponent to war. The Civil War was as is every war ever fought done because one or more rich asshole/s wanted something some other rich asshole or poor country had. Nothing more nothing less. It is always about keeping some rich piece of shit RICH OR RICHER! Currently these filthy rich criminals are doing their "Proxy War" and infiltrating other countries under a false "Moral Guise" that the US is Just and Righteous. What a joke. These ARE CRIMINALS MAKING A PROFIT. Nothing more.
Carbon
You can do that. Vote in the primaries and always vote AGAINST the incumbent. 100% of the time.
The less incumbents can count on getting reelected the more attention they are forced to pay to the needs of citizens over the needs of their donors.
Glenn. I totally agree with you. Government should spend OUR tax money on infrastructure and justice. Social safety net is a joke. People have figured out how to work the system. Many, many people sitting at home collecting money from the government each and every month. In the USA we have the most amazing non profits helping people that need help. The federal government is corrupt it is broken. We all know it. We all can see it with our own eyes. Look at your own state or city governments. In today's world it is not what you know but WHO YOU KNOW! I don't mind paying my taxes but want the system to be fair. Why does non profits and churches not pay taxes. Why does the NBA and NFL not pay taxes. They system is so big the left hand does not know what the right hand is doing.
There is no doubt that there are people that are playing the system, however it is not as large as you imagine. I have worked with the poor as a volunteer for many years. Believe me there is a large number of poor people and that number is growing. If you observe the ongoing change within our economy, you notice that many nonskilled jobs are being eliminated. We must educate our youth for good paying existing jobs, or jobs coming in the near future. In regard to your comment concerning Tax exempt organization helping the poor, let me tell you that much of the money that these tax-exempt organization use comes from Federal Taxes and to a lesser extent State Taxes. Regarding the churches, churches use most of the donations they receive to pay for operating expenses. Churches generally do not accumulate large amounts of money. If it accumulates money, it does not benefit a person, it is accumulated to be use for a specific project that benefit the organization i.e., replace pews, make additions or repairs to the building. From your comment about church, I make the assumption that you do not attend a church. My point being that we do have a problem with REAL poor citizens in need of our help.
Name one “businessman “ who made a good president? Hoover (Great Depression), George W Bush (greatest financial crisis since the Great Depression) & now Trump ( greatest income & wealth inequality in American history & deplorable deficits)? Economics is different from running a business, and is outside the circle of competence of Republicans. America can win the war against poverty by electing Democrats. For in a more just economy, ALL citizens can better flourish. Don't trust me, read "A Brief History of Equality" by economist Thomas Piketty.
Brian. The government IS a business. Perhaps if we could have voted in more savvy business candidates to the Presidency instead of community organizers we would be in better shape as a country. The USA and the federal government are in the worst shape ever in history. The government is bloated and corrupt. Period.
You are entitled to your own opinions, but NOT your own set of facts. Read "A Brief History of Equality" by Piketty. Cecelia wants more "savvy businessmen" like Hoover (Great Depression), George W Bush (greatest financial crisis since Great Depression), & Trump (greatest deficits & wealth & income inequality in American History) to be our President. Meanwhile, she is critical of President Obama. Maybe she should read "We Were 8 Years in Power".
It's a very complex problem that all governing bodies have had to deal with down thru the centuries, but, in the end, what it comes down to, it seems to me, is: Taxes are the price of civilization, the price of a civilized society. Period. Full stop.
Carlos you are correct. We need to pay taxes. But the governments need to become lean machines and spend our money wisely. At the present time that is not happening.
During WW II the Missouri sen. HS Truman headed a committee to oversee govt military contracts to preclude war profiteering ( read corruption ). Truman & his committee got very high marks for keeping the process quite clean, so I have come to understand. Why this SOP is not used more frequently is bewildering. We progress-ives like to scream and holler about fraud, waste, and abuse in the Pentagon, & rightly so, for its record keeping is so shambolic AN AUDIT REQUIRED BY LAW CANNOT BE CONDUCTED, but the trinity exists in civilian spending also.
Cecelia, don’t u believe that tRump was a lousy businessman with 6 bankruptcies & his Father having to bail him out of financial disasters continuously until he died? I don’t believe for a minute that his base was supporting him bec he was a businessman. Rather he tapped into the anger of so many poorly educated white people who felt they were being replaced by immigrants of all races & colors but especially Hispanics. He was especially good at tapping into all their grievances & exploiting them for it! It’s hard for me to comprehend all the GQP outrage that’s been happening since the FBI searched Mar a Lago. They all fully know what kind of lying criminal he is & how he’s destroyed Big parts of our government & still they feel so sorry for the bastard! Maybe they are also feeling scared about some of their bad behaviors becoming the subject of investigation??
Your narrative is very interesting. It is very easy for you to write about your onsite experiences as a businesswoman, however writing about the government and tax-exempt organization you are expressing an opinion as an outsider looking in from afar. In business the interest is solely on how you are going to make the most money to put into YOUR bank account. In Government you are responsible for the well-being of the millions of citizens living within the borders of your country and the well-being of foreign countries that contribute to the well-being of your country. You make it sound like running a corporation or any business is more important and more complicated than running a country. I respectfully disagree with you. Meeting the survival needs of millions of people in our country as well as in other country is much more complicated. In respect to the "Orange Clown", he is only concerned with himself and the wealthy. When he came into power, he provided a major tax break, not for the middle class but rather for the super wealthy. There is a sector of our population that has been completely fooled by the "Orange Clown". He has used the same tactics that other men in history have used. That tactic is using the emotion of FEAR. History clearly shows how a nation can be kidnapped by a MAN. Look at what MUSSOLINI and HITLER did. Look at what is HAPPING NOW. All great world powers have been destroyed from within before the enemies without come in to finish the dirty work. Is this what is happening now?
There are many hallmarks indicating that it is what's happening now. Hopefully, we can forestall the takeover of our Republic without undue civic violence, although many of us are somewhat unnerved at the moment because there are so very many sycophants with extraordinary firepower from militaristic weapons.
Elias. What is happening in America now has been evolving over the past 40 years. The federal government is corrupt. The main stream news is woke. Our education system was taken over by woke ideologies and I watched it happen while my children attended school and now my grand children. We are in a civil war for the heart of this beautiful country. Trump had to fight fire with fire. He is NOT a "career politician" and why the middle class believes in his policies. There is hardly any middle class left. The rich are getting richer and the poor are now out on the streets living in tents. The government has not evolved into a lean machine with up to date technology. They have been too busy fighting each other.
Cecelia
The orange clown proposed a budget that reduced revenue by cutting taxes to the rich and increased spending across the board but especially to the military while we were not even in a war.
Business people don't run the government like a business anymore than Professional Politicians do. The government is not a business and it is not your personal budget. Yet the government is considered the Best Quality debt in the world. No government on earth has been run efficiently going back to the ancient Greeks. That is will never change.
Can you get people to loan you billions of dollars are 1% or 0% interest. No, you can't. But uncle Sam, even with all of his waste, sure can. Why? Because the government is not a company or an individual.
I remember that. And now they’ve taken away the property tax and sales tax deductions too.
Actually it affects me and my husband and we earn way less than $750k. But yes, we live in California.
Mortgage interest is separate. You can deduct a lot more of that.
But the $10k includes income tax. Income tax plus property tax plus sales tax can’t equal more than $10k.
according to my recollections, the unemployment rate does not include anyone who has been looking for work longer than 6 months and nor does it include those who have simply given up ever finding a job again. there actually is a very large (hidden) group of unemployed people who, as soon as wages and benefits increase to liveable levels, will jump back in to the job market.
Doesn't include "working under the table" or the gig economy.
indeed. i am a member of the gig economy. but i am always looking around for something that might pay me a living wage -- or at least make me happy to wake up and get out of bed in the morning.
The gig economy is sharecropping on the master's terms. I mean, it's better than starving to death; most days. But definitely a step in that process, because sans benefits and IRA contributions, gig workers will find themselves starving to death upon retirement. So they'll continue to crop until they die, at ever diminishing returns. Hmmm: doesn't sound like fun. Not that I have a different trajectory . . . .
Richard, the same goes for companies that hire people as contractors bec they are cheaper to employ! They will only have Social Security to rely on if it’s even still a part of our country’s fiscal policy. If those Rethugs ever gain power again that’s one of their targets to eliminate along with Medicare. Just look at Sen Rick Scott’s 11 point plan to restructure our government if they take over the Senate. Nothing in it benefits anybody but wealthy corporations & maybe CEOs. They believe it’s their job to pay off the debt by punishing 90% of the country!
Member of gig economy and still in US? For the last two years I wake up happy every day... cause I moved to Mazatlán... yes, I got approval to work from down here and I bailed... but I still pay taxes and vote.
Yes, do tell.
More than a decade after moving to a country where calling it a third-world country is almost technically illegal (correction:it’s a chaebol, but never mind), I was diagnosed with three cancers, all at Stage 3 or 4. If I was back in the USA, the funeral industry would have swung into action, sucking every dollar out and casting me aside after I’d run up a considerable debt. Here, the national healthcare system that everyone had paid into said “we’re from the government, and we’re going to help.”
It’s been almost a year since my use-by date and I still expect to wake up next Monday. It’s not a perfect life and it’s not without costs but I’m here and I have the charges carefully explained to me and my wife up front until we understand them for sure. The US hasn’t done that for nearly a century, if ever.
It’s nice to live in a civil country for a change!
"Employers in the restaurant and accommodation sector, which draws a quarter of its employees from the foreign-born population, could not fill about 15% of job openings last year. In professional and business services, where the foreign-born make up a fifth of workers, doing everything from architectural sketches to tax preparation, roughly 10% of jobs went unfilled last year. That, in turn, may be contributing to higher wages, with pay rising especially quickly for low-income earners.
The fact that a decline in immigration could have such an impact is, on the one hand, unsurprising. New immigrants accounted for nearly 70% of the growth in the American labour force in the 2010s. Over the next two decades, immigrants are likely to be the only source of growth. The Pew Research Centre calculates that without new arrivals America’s labour force would decline to 163m in 2040 from 166m in 2020. If net immigration were to return to pre-pandemic levels, the labour force would instead grow to 178m by 2040.
On the other hand, the relentless focus on America’s southern border seems to have obscured the bigger picture. Even the Federal Reserve failed to note the remarkable drop in immigration as a cause of labour-market tightness in either of its monetary-policy reports to Congress last year. In February this year it acknowledged at last that reduced immigration had probably constrained the labour supply."
(from The Economist this week; so yes, some supply will materialize - but the immigration factor should be accounted for in a "first pass" at it-)
Those 'inactive and therefore missing' form the listed rate of inflation are a feature not a bug. Both parties in Congress decades ago favored the bizarre distortion of stripping out 'unemployed but can't find anything to look for' because that makes the unemployment rate look better than it is, and takes political pressure off either party to actually deliver for Main Street rather than for gated communities and super yacht residences. No other country counts unemployment in this crooked way, to call it what it is. Just one more way those of small means are shafted by 'the American way of economy.'
As I follow its actions, a bit contra RR in the post the Federal Reserve doesn't care a tinker's damn about 'the job market' or for the most part even about wages. Oh, its agents TALK about that all the time---but that's just for cover. They don't care at all.
What the Fed cares about are US bond prices, and the profitability of the major banks which buy the great bulk of those bonds as they are issued. Controlling bond prices via interest rates determines the value of the US $. The tacitly (and in some respects overtly) forced use of dollar pricing and dollar transactions internationally is what keeps America disproportionately funded at the World's very considerable expense. It's a greater force projection multiplier of American power and economy than having nuclear weapons. So the Fed cares about keeping that all up to par. And the Fed cares about the profitability of the investment (sic) banks because a) they buy that US$ debt and disseminate it, and b) the Fed is completely of the same class and constituency as those that run said investment banks and wants to keep its peerage just that and supremely remunerated, as now.
This is the cause of the disconnect in American thinking on rates and costs. We are told that "the Fed cares about 'the economy,'" when the Fed cares about the economy _only_ in how that affects interest rates and bond prices, NOT in how the economy affects the living standards or conditions of 99% of the population. Our economic discussions are predicated on, in effect, a lie. The Fed's message to that 99% is "Go die." The Fed's message to the part of that 99% without college degrees is, "Go die, and for Christ's sake hurry up about it."
Now, I don't think the voting of all that chunk of the non-college electorate for Trump in the last two cycles has much to do with the Fed, the economy, or the gross contempt of the American wealthy and their Fed for 'the little people.' I think that electorate has voted primarily on nativist tribal principles and are mesmerized by the Repugnicant Big Lie. They love the Lie more than life itself, in aggregate. Economic stagnation only gooses their pervasive sense of grievance, which was just as evident in good times as it is now in bad. That slice of the electorate has always been nativist, exclusionary, typically bigoted, and possessed of an unshakeable sense of grievance with both historical roots going back centuries---some with justification, most not---and a certain conviction that others are getting more from society than they deserve while deserving (white) folks like themselves are getting less. Giving them better economic conditions is important as a goal in itself, but it won't touch the tribal grievances which are their primary motivators, in my view. But that's a problem for another day.
Yeah, the Fed is going to boost rates in September. They are mistaken in how much and how fast, and because of that are certain to overshoot. They are mistaken because existing rate increases have already sent the dollar soaring and kept the bottom from dropping out of the US bond market so to speak as inflation destroyed the market value of all that Himalayan range of negative real interest bond debt issued over the last ten years. All those huge institutions holding chunks of that Himalayan bond wall now have a modality to swap out those losing bonds for new ones as they are issued paying 'a little something.' But Powell and his ilk are still in a panic on that because that 'little something' is still much less than the quoted rate of inflation, meaning that bond holders will effectively lose some money until rates get above inflation, wherever the crossover price may lie. So the Fed will keep raising rates to get bond returns above inflation. One way to do that is to hike rates to the point that the real economy takes a hit, with the intended 'unintended consequences' of crushing domestic demand to bring down putative real economy price inflation. Except current price inflation isn't driven by domestic demand but rather by supply disruptions and egregious price gouging by market manipulators, as RR points out. So the 'crush demand' strategy won't work as designed---but that won't keep the serial catastrophists of the Fed from trying harder. Because, as history teaches us, "people are dumb." And amongst dumb people, Powell is a special case. So we're not going to like anything he does for the foreseeable future, I think we can bet on that; and make a little money.
Richard, maybe Biden should be thinking about replacing him with someone else that isn’t trying to create a recession unintentionally or otherwise. He is a Retrumplican I believe. Prof Reich, how about sending a bug to Pres Biden’s ear with this info?? U know how many issues are on his plate & he can’t possibly think of everything that’s going in the wrong direction. His aides are not serving him well if they don’t apprise him of these potential problems that could torpedo his agenda!
That horse has already sailed, or words to that effect. Powell was up for renewal last year, and Dopey Joe didn't even like him---but word was he was told "The markets will tank if Powell's replaced." So Biden signed off on another term for Powell. He could, technically, be fired, but the political costs of even trying aren't worth the gains. And Biden would almost certainly appoint someone nearly as bad, just with cleaner hands. We're stuck with Jerome Powell for years to come.
The entire Federal Reserve structure, its chartered duties, and everything about how public financial supervision is conducted in this country needs massive reform. I doubt I'll live long enough to see this, since the uberrich have the body locked up and the body politic just doesn't have the wits to fight for their own economic rights.
My understanding is that there are many mothers that are not working because they cannot afford childcare.
MIGHT jump back in... most will be too friggin old by the time the wheel turns back to living wages and benefits... and younger generation is a wild card... all power to them
Why is Powell still chair of the Fed? Why is he there with Biden’s blessing? I wish you would explain this to us. It makes no sense to me at all.
yes, why do Democrats always give away the store?
Numbers lie -- exactly what kind of "jobs" have been added and do they pay a living wage??? NO!! So when the Feds say employment is full and unemployment is at an all-time low - it's not actually helping people who work for a living!
Figures don't lie, but liars can figure.
>EXACTLY!< (I'm a bit embarrassed I didn't remember that old chestnut myself! Senior moment! LOL!)
Low wage jobs with no benefits do not provide enough income to feed and house one person, much less a family. I have heard acquaintances complain that people just want to stay home and take government money. If a job paid less than the extra unemployment COVID benefit, what kind of job was that? If your business model depends on paying less than $15/hour do you have a viable business model? I know people who did not go back to their previous jobs they had before COVID. They had enough leeway to find better jobs. Who could blame them?
Who are these people being referred to? Sitting home collecting government money? Restrictions do not allow such a thing. Have you ever applied for unemployment? You are required to actively (and prove) you are looking for a job! After the most 21 weeks (depending on your previous job) you are cut off. Cut and dried. The only ones sitting at home collecting government money are Politicians who are all millionaires plus!
I am really referring to acquaintances I know who have no idea about unemployment benefits. I realize there are serious restrictions. My acquaintances are complaining because businesses who have typically employed hourly workers are struggling to find someone to work for less than $15/hour. The people I take issue with are the folks who, without any evidence, say people don’t want to work. These are first world entitled white people I find most irritating.
We're on the same page, here. I usually hear that kind of thing said about the homeless. Go figure.
Why would someone rather live in a box on the street than work? What a ridiculous lack of logic.
In the twisted mindset in question, it's because they're lazy and only interested in taking drugs. That's their justification. Closely related is the right to lifer who doesn't want their tax dollars to pay for abortions.
JennSH from NC ; I always finish the sentence " they don't want to work " with 'For nothing'. Slave wages are not rewarding, and are even taxed!
Let me suggest you change "nothing" to "the kind of wage the likes of >you< would have them work for!"
The same ones rigging all state & local elections while casting multiple votes for dead people. They're all illegal alien rapists, murderers, & drug dealers, as well!
Gotta love it!
Totally agree with your statement about business models. This includes any business dependent on slavery, which means this country was built on exploitation and still runs on it. Imagine how different things would be if businesses all had to run on a level playing field with sound business models.
And in addition to this if you want to play Monopoly with the big boys your on your own! No bailouts! One more delusion is the way they have paid to become people! Well then they should be treated as such using their own arguments for being treated as such with the acknowledgment that when found to be committing crimes the whole ship goes down including the shareholders. See how fast they run for corporate identity then!
Sound playing field... That would require us to screen out all the fing sociopaths running US companies - of ALL sizes🤣not sure how we do that🙏✨
I know what you mean. What I meant was that all companies would have to pay decent wages and abide by the rules or go out of business.
Remember the 47% video where Mitt Romney bragged about how people working on an island off China (or somewhere) were working for 'a pittance'? He was so approving of this arrangement. When someone on a tour of the factory asked why the women did not even look up as they passed by, the 'guide' assured them that 'they are taught to focus on their work', Romney related this approvingly. The 'tour guide' was armed with a rifle. There was razor wire on top of the fences surrounding the island : "to keep people from getting in" according to Romney, "because they wanted the work so badly" Romney should have to work under those conditions just to be able to eat!
I’m all for it. Let’s send him to the island.
Hear, Hear!
Numbers don't lie. Only those who don't tell you >exactly< what they represent lie. Become suspicious as soon as you hear them framed in generalities. I've bitched about politicians taking credit for "creating jobs" since at least Ronald McReagan. I know >exactly< what kind of jobs that sort create, and what those jobs generally pay.
Somewhere in this wonderful cluster of comments I said pretty much the exact same thing🤣
It's becoming increasingly difficult to distinguish between legitimate economics and magical thinking!
It has always been thus.
I agree with your assessment, Professor Reich, but I have questions. Both Presidents Biden and Obama kept failed Federal economists from the previous administrations, despite the economic distress Bush and the trumpster left behind, WHY? Biden generally, throuhout his career, has favored the working class, at least verbally. Biden must be able to see the widening wealth gap the same as we do, so, why isn't he stepping in to stop these interest rate increases?
Modern presidents fear the wrath of the bond traders on Wall Street.
Bought and paid for. One of his owners is J.P. Morgan.
Dr Reich, I think you should lobby Biden for a post at the Fed! We need someone there who promotes economic fairness by prioritizing the needs of lower income workers above all else. The income gap keeps widening. It’s a recipe for social disaster. If folks on the bottom rungs keep getting screwed, their grievances will be easy prey for the next Trump.
Social disaster indeed!
I have read Dr. Reich’s critiques of Fed and monetary policies and have long-wondered whether these criticisms have a voice at Jay (Powell) and Janet’s (Yellen) tables. Perhaps they’re presented but not being heard, not convincing enough or overruled?
Being presented. Not being heard.
The issue is so difficult, nuanced given that we’re dealing with the crazy unknown of post-pandemic emergence plus disruption in the energy markets.
One would think best minds gaming out options would be the right way to lead us through this.
Instead, blunt instrument.
Thank you, Robert, for your great insight and tireless effort.
Being DeSantis!
Our society is quite complex. There are many motivations and movements that interact and change all the time. Some of those things are social: writ broadly, our regard for one another. Another of those things is capitalism, getting the most from the system for ones self. But getting the most for ones self, when carried to the extreme, is greed. And, as the Catholics say, greed is a deadly sin.
A mixed society like ours is healthy when these conflicting things are roughly in balance. Since 1980 we have lost that balance. We elevated greed, the defining characteristic of capitalism, to the defining characteristic of our nation. Mainstream religions, once a repository of those other values, declined apace. Public education is in tatters. Life expectancy is declining.
Capitalism is inherently entropic. Piketty demonstrated that, when r>g, wealth will pass up and concentrate at the top until the whole thing becomes unstable, topples over, and collapses. When we lowered taxes on the very wealthy in the 1980s, we closed a shunt that recycled some accumulating wealth to more social uses and thus prolonged the life of both capitalism and society. That choice will prove ultimately to be bad for both capitalism and society. We now have the most unequal distribution of wealth since at least the 1920's, and we know what happened in 1929. Stay tuned, our next act will be exciting.
Nice ambiguity in your last word.
The unemployment rate is misleading because it does not include all those unemployed who for whatever reason are no longer looking for work. A better metric would be the unemployed rate of those of working age
Covid hit this household pretty hard. Boomers with a degree and lots of experience in the labor class. Now we are retired, still, own the house and 2 cars, and trying to figure out how (with fixed income/S S & Medicare) how to find the next wolf... True, we are still paying some taxes and get the occasional pittance of cost of living stipends, but this year the wolf barely got beaten off and next year, with rents unaffordable, our IRS account amazingly emaciated, and with costs going up, how long until one of us gets an old age condition that will tear our American dream to shreds? Not to mention credit cards that are maxed.
Welcome to the tarnished 'golden' years. If I hadn't quit working 6 weeks before I turned 88, I'd be ok. But on very small pensions most of us barely scrape by, and look forward to escape by death
In my few years of night school at SUNH to keep my job at the factory in QA, I had many fine retired teachers. We've had some bad news this week so I felt a little bad this morning. Thanks for the note and isn't this a great informative site?
Yes, it is a great site. Our fellow Subsrackers give me real hope for a better world to come
So, how else to control inflation? Taxing the rich instead of raising interest rates? Right now a lot of overpaid accountants are working overtime to get around the new corporate income tax. I hope they find no loopholes.
I know too many Trumpians. Mostly they fit the mold: uneducated, “poor”, and hating all liberal agendas. They are mostly hard workers. But, they aren’t above taking free heat pumps given by local charities due to their (reported) low incomes. They work for wages that give them plenty of time to travel in their RVs. They prefer a somewhat vagabond life rather than the daily office routine of the middle class. They want government out of their lives. No seat belt laws and few environmental protections.
Taxing the rich will not be popular with them. They admire the independence of the rich.
But don’t be deceived by my observations. The inequality within our society has pushed them into their lifestyles. If there were good jobs for the non college educated their attitudes would be very different. Non coastal Maine is a pétri dish of the problem. Few jobs with families holding each other together. Bring back the CCC and watch how many of their youth join. Pay for it by taking the rich. I can’t wait to see the talent that erupts from such a program.
I hope i haven’t offended anyone. I volunteer to provide homes for low- income families. For those who accept that “the poor will always be with us”, I say the rich will never be satisfied with their wealth.
Nancy, by prosecuting price fixing and price gouging.
You're right about jobs. WPA, CCC could be implemented by the state. Consider the soviet state of Alaska. The Alaska Permanent Fund Dividend (PFD) takes the state's oil wealth and shares an annual portion with all permanent residents (both children and adults).
Excellent, Daniel. We need solutions and the example of WPA and CCC are the best we have to change lives with new opportunities.
How to go after price gouging? Other than war times have price controls ever worked? Or, are there better methods? Break up corporations? More anti-trust action?
I've mentioned this previously. Thirty-seven states, Guam, Puerto Rico, the U.S. Virgin Islands and the District of Columbia have statutes or regulations that defining price gouging during a time of disaster or emergency. In most states, price gouging is set as a violation of unfair or deceptive trade practices law.
You can collect evidence and turn them in, https://www.mainelegislature.org/legis/statutes/10/title10sec1105.html
Thank you for this reference. So Our governor could declare the price of gasoline and food that went up more than 15% as unconscionable gouging. Would the oil companies respond by creating shortages of gasoline and oil to Maine? Can she force them to deliver the goods at the lower price? And would a state declare price gouging from corporations that pay significant taxes to that state or employ many of its people? Perhaps this needs to be done at the federal level?
No authority.
Independence of the rich? Good grief. They’re “independent” because they exploit everyone else. Do these people you know think the rich are just smarter or more deserving or something? Talk about a lack of critical thinking. (And I’m not criticizing you. It’s those attitudes you cite that make me shake my head in disbelief.)
Hi Paula, these folks want the same freedoms that the rich enjoy-paying the minimum of or no taxes and getting what they want from “connections”. They see that pricey white collar crimes seldom result in jail time.
On the distrust side of the ledger—they see that the majority in Congress are millionaires. They hear of deals to protect pipelines (which they favor anyway) by two powerful Senators who received large campaign donations from that pipeline developer. They see Congress owning stocks of companies they are regulating. They believe that most, particularly Senators, are there because they came from a family of wealth and/or influence. Nearly all Senators are college educated. The average age of the senators is 65. ( I’m older.). Where are the plumbers, the Union, public school teachers, taxi drivers, city workers, hospital worker, people in their 40s, etc?
I say we don’t need a Senate that can stop all bills. Democracies require voting. Our constitution was a great job for the 18th century but it needs revisions. I would start with the Supreme Court and the Senate.
In the same vein there should be evidence of community service in a politicians background (I don't believe we need them at all but if you must!), even if they served at a soup kitchen. They may be scammers but hell at least some poor individuals got soup! These positions are supposed to be a "Public Service" this is completely destroyed down to its rotten core.
I might like having gazillions of dollars too, Nancy, but not if it means screwing other people and ruining the world. It’s that lack of connecting the dots that’s the problem. They need to do that. But I agree with you about what needs to be done. I’m just shaking my head at the willful ignorance.
I saw a short video interviewing a should we say acquaintance of the oldest Rockefeller and he was asked about the wealth and the response was it's not the money it's power.
Do you know why the fed does this when they must know they are lowering the standards of living and kinds of jobs and even having a job available to vast numbers of Americans? is it really so engrained in the minds of average American officials (who usually come from haves when they are high up) that if in doubt make huge numbers of Americans economically vulnerable or desperate or unhoused or overworked? This is why so many have-nots vote for lying and hateful GOP people.
I don’t follow the logic here: that the have-less are being fleeced is the reason they vote for the party if the fleecers? Can you unpack a little?
There is no logic. There is only emotion and stupidity. They hate the people they are told are hurting them and they don't see much help coming from them (the present democratic party taken as a whole). They want someone to blame; they want to have high opinions of themselves and dream they too can be super-rich and powerful because (forsooth) they are white. They look at the middling classes and loathe and blame them (especially if they are minority or black people) if they have to listen to broad explanations which leave them as desperate as they are.
And does this Build Back Better Bill contain any provision for direct help. None that I can thik of No young child care. No help for older disabled people (deafness is a disability). No help for college massive debt. Not even limiting insulin prices to $35. Tax credits that's what's there
Exactly! All these bills go to corporations to dole out by whatever means they choose if the money goes into the funding. Example when Busch Jr., was president and it came time for re-election I was a homeless disabled vet. He passed a bill to help find housing etc. for Vets and there was never any money put in to fund it!
I don't think the Fed naively believes the given reason for their continued interest rate hikes. By having most of us gainfully employed and working productively but with diminishing purchasing power it will drive more of the have less population into debt to cover monthly expenses at increasing interest rates on debt owed, The Federal Reserve is international banking interest with a historical pattern of getting borrowers in debt and offering high rate loans to enslave them in a have less situation until war results from the conditions so they can trap nations into high rate loans in classic British Imperialist fashion. To stay sovereign we need to hold more real physical assets in the Constitutionally controlled Treasury and limit the portion of investment in Federal Reserve financial instruments.
For years I've said that inflation is management's way of giving you a pay raise as they simultaneously cut it.
As long as excessive profit grabbing under high market demand conditions is not limited or taxed it is. A windfall profits tax is needed until prices normalize.
Then lets undisputedly win Congress in November!
This is all being done with the purpose of forcing hopeless broke civilians into an enslaved population. They know exactly what they are doing.
It's called "wage slavery." Wage slavery is far more cost-effective than chattel slavery. You don't have to house them, feed them, clothe them, or bury them.
And Imperialist via International Banking have been doing it for millennia.
It is sad to me that President Biden decided to keep Powell on the Fed. He has no vision and can only think in interest rates. That is a pretty narrow view as Dr. Reich points out. The Fed needs to just step back and see how things go for a little while. Then, Congress needs to consider some windfall taxes for at least 2 years. I think that would do most to bring down prices since corporations are so averse to paying taxes. It is time we the people rein in the super wealthy. We will all pay for it (literally and figuratively) if we don't.
Now you are getting to the crux of the matter. There was a huge imbalance of power and production following WWII. We were what China became, the production arm of the world. The rest of the world was in shambles. Capital found its best return here. As the years passed, capital found better returns elsewhere. No, we are not exceptional. We are just people in a system called capitalism that no longer favors us. Colonialism, capitalism, autocracy, they are all about wealth. Read Aristotle, Adam Smith, John Maynard Keynes, they all warned about the accumulation of wealth. We judge individuals, ethnic groups, and countries by their accumulation of wealth. It is how we measure worth that is our problem. As long as money and wealth are our guideposts, we will continue on our road to destruction. Economist rejected the moral sentiments of Adam Smith long ago:
“The great source of both the misery and disorders of human life, seems to arise from over-rating the difference between one permanent situation and another. Avarice over-rates the difference between poverty and riches: ambition, that between a private and a public station: vain-glory, that between obscurity and extensive reputation. The person under the influence of any of those extravagant passions, is not only miserable in his actual situation, but is often disposed to disturb the peace of society, in order to arrive at that which he so foolishly admires.
Think of where the world could have been if we as a species were as passionate about knowledge as those are of money.
We've been saying this since 1985, and nobody listens yet.