Friday, March 20, 2009

Inviting the Sheep for Another Shearing

By Ed Encho
What do you get for pretending the danger's not real.
Meek and obedient you follow the leader
Down well trodden corridors into the valley of steel.
What a surprise!
A look of terminal shock in your eyes.
Now things are really what they seem.
No, this is no bad dream.

-Pink Floyd (sheep)
In the ongoing madness of an America in terminal decline, the great Surge II is now underway. This one has nothing to do with mass brainwashing that all is ell in Iraq and that we are indeed winning thanks to our shining medal festooned superstar quarterback otherwise known as General God (aka David Petraeus) to divert the flocks attention away from a doomed imperialist crusade. Nope, this one hits closer to home, it started last Monday with a sly piece of internal propaganda from Citigroup’s CEO Vikram Pandit having its best quarter since 2007 which triggered a sucker rally in the Wall Street casinos that dictate to the inhabitants of chumpland. The pocket media once again did their job, selling this latest call for the sheep to come and be sheared with all the effectiveness that they pimped the murderous lies of George W. Bush, Karl Rove and Dick Cheney. Things – ARE getting better you see, the gloom-gloomers, the glass is half-empty pessimists, the neurotic nervous nellies and the naysaying Eyores are all wrong, it’s a disease, in their heads, the economy is rocketing its way back to robustitude. The most incredible example of just how thoroughly corrupt that the corporatist media has become is the pernicious cover story of the latest edition of Newsweek magazine that has a picture of good ole Uncle Sam saying that he wants YOU to START SPENDING!... YOU need to INVEST in America – before it’s too late.

The Newsweek story, by Daniel Gross which inside is even more insidious in that it beats the reader over the head with STOP SAVING NOW! – in all caps and taking up the better part of page 27, page 26 is a picture of a squirrel (a cartoon representation of those greedy pigs who dare to save their own money rather than gamble in the Wall Street casinos who holding onto a backload of acorns has caused the branch of the tree to CRAK! Jesus fucking Christ, this is propaganda at its finest, even a cynic like me is astounded by the dastardly nature of this banker swill in one of the nation’s premier ‘news’ magazines.

A more sophisticated version of Mad Money Cramer, Gross goes on to say:
The hum of ambient noise in midtown Manhattan is several decibels lower than it was a year ago. Fewer black Town Cars idle outside the investment-bank offices on Park Avenue. The aisles of the flagship Saks Fifth Avenue are so quiet you'd think you were in a library. The restaurants and shops at Rockefeller Center are open as usual, but they seem oddly depopulated. Where are all the tourists and office workers, the hordes of junior analysts lining up in Starbucks?

Something less tangible is also absent: the spirit of caffeinated, heedless risk taking. For a generation, risk has been the adrenaline of the nation's economy, the substance that made us all—from the denizens of midtown Manhattan to the residents of Manhattan, Kans.—run a little faster and stay up a little later. Now, with the economy in its 16th month of recession and the markets scythed in half, it seems we've all either switched to decaf or simply lost the taste for risk.


As consumers hibernate and investors hoard cash, the economy is withering. This new age of thrift is understandable. But for a recovery to take hold, Americans will need to start taking risks again.


Saving cash and building up reserves is a necessary first step to recovery. But eventually the mountain of cash has to be put to work. Last week's sharp market rally was certainly a sign—however fleeting it may turn out to be—that investors are putting money to work again. Retail sales in February provided another hint that purse strings may be loosening. But there's much more work to be done. Ironically, post-bubble periods are frequently great times to start new ventures. The best time to start a dotcom wasn't in 1999 when the IPO market was raging, it was in 2002, when the price of everything associated with the business—office space, programming talent—had plummeted. When Allied Corp. in the late 1980s didn't want to pursue the development of consumer products based on global-positioning-satellite technology, Gary Burrell left, raised $4 million and formed Garmin, which today employs about 7,000 people.
Great solution, just trust Wall Street with that money, think long term, be patriotic even if the malefactors of great wealth do not and are more than happy to wallow in international troughs and then come back to shit on America. Gross, a highly-paid, high profile stooge is just playing his part in the ongoing relaunch project to save Wall Street looters and protect their plunder. We have seen this story already, Americans with dollar signs in their eyes and cash register bells going off in their heads like some bizarre real life Uncle Scrooge cartoon, duped into thinking that they can actually become rich and powerful themselves just like The Donald line up to be fleeced by the flim-flam men with the political juice and insider knowledge as they seek to cash out one more time. Perhaps a final time before the country impoldes inward upon itself. All aided and abetted by the media, the Wall Street cadre occupying Barack Obama's White House, guys like Lawrence Summers and the conniving little twit Tim Geithner whose announcement as the new treasury secretary was greeted by a 6.5 % spike in the DOW, the crack-ho economy got a mainline spike into the arm and knew that the paper pusher inside the administration would ensure them that the game would go on and on. In the end of course, all has been enabled by the bewildered herd of sheeple themselves, brainwashed from birth into the bastardized capitalist system that is already drooling over being able to suck the blood from their grandchildren on account of their greed, stupidity and folly.

As a counter to the mainstream drivel that Gross and Newsweek are peddling as pearls of infinite wisdom I counter with an excerpt from a piece from his month’s Harpers. Infinite Debt by Thomas Georghegan discusses the ruinous and usurious effects of the debt based economy and its victims The same ones that Gross and his fellow pocket media hacks are now trying to swindle out of whatever little they may now have in their piggy banks having been badly burned by the existing system that has beggared them and cast them out of jobs and homes in addition to destroying their pensions and 401k retirement plans. From the Harper's piece (which I will be addressing at length in my coming post Usurious Bastards):
What is history, really, but a turf war between manufacturing, labor and the banks? In the United States, we shrank manufacturing. We got rid of labor. Now it’s just the banks.

Which is why the middle class is shrinking. Basically, we’re all waiters now; we’re bowing and scraping and working for the banks. Look closely at any American, and it’s even odds that he or she, directly or indirectly, is somehow employed by the “financial services sector,” which covers insurance and real estate and financial instruments of any kind. As brokers, lawyers, loan collectors, loan consolidators, secretaries at big investment firms, chauffeurs of private limousines, or even the high-tech types who exist solely to service banks — all of us, millions of us, are part of it, living off it in some way, as three generations ago we lived off manufacturers.
The game is rigged people, and the hit job done on America by the rotten fuckers on Wall Street and their institutionalized system of debt slavery is all that is left, and STILL the banksters on the street and the gangsters in D.C. are doint everything that they can to continue to bleed the silly and naive masses of asses by doing all that is possible to get the debt/consumerism bubble reinflated. In a rare piece of sanity that slipped by the censors and minders of the memory hole a Reuters story, More debt: a curious solution to a credit crisis dared to utter the heresy that:
Indeed, a huge part of the Treasury's economic rescue plan is based on reviving securitization. This is the process by which everything from real estate and auto loans to credit cards and student debt gets repackaged into bonds and is then sold on to investors in a secondary market.

This worked wonders during the boom of the past couple of decades, leading to rapid capital formation that underpinned a huge rise in lending. But when the music stopped, many investors were left looking for an empty chair as these products of financial "innovation" proved ruinously difficult to value.

Given this history, Wray, also a senior fellow at the Levy Economics Institute, said asset-backed bonds are the problem, not the solution. "We need to kill off securitization and go back to banking -- loan officers and underwriting."
Wall Street is a con game, it depends on confidence in order for the moneychangers to book their fees and peddle their bad paper, given the Surge II it’s apparent that the entrenched elitists are determined to wage war against any sort of change that Obama may have in mind. Given the first two months of the administration and while being mindful that it’s still early, despite some initial guarded optimism I am becoming more and more certain that nothing is changing except the management of the whorehouse. I now find myself in agreement more or less with those progressives who were wary of Obama from the onset, with his government packed with recycled Clinton era swine, the usual assortment of Wall Street and Federal Reserve grifters running fiscal policy and his still stinging kick in the balls from the Israel lobby over the Freeman resignation it only looks like more of the same shit but in a different package. Helicopter Ben's announcement that the Fed would now be buying American debt to save their fucking system, the dollar immediately took a shit and with the coming wave of hyperinflationi as a result of this latest idiocy this story should send a cold chill up the spine of all who are onto what has really been going on as America has been gutted: The US is Facing a Weimar Moment. Read it if you dare.

As Orwell once wrote in the literary classic Animal Farm:

“All animals are equal, some are just more equal than others”

Republican ‘free marketers’ are unscrupulous and pathologically greedy, they also delight in the trafficking of human misery for profit. It makes them feel empowered. They are like the S.O.B. sitting at the Monopoly table who is not content in owning Boardwalk and Park Place as well as all of the utilities and railroads but also buys Baltic and Mediterranean and loads them up with houses and hotels then squeals with childlike glee when some poor bastard lands on one of them and is driven into bankruptcy. The game of Monopoly is very relevant to life itself in laissez-faire hell, where the rich are able to accumulate property on a rapidly escalating scale and as wealth rapidly increases the less fortunate are driven into bankruptcy with the winner being the monopolists.

This is Laissez-Faire ‘free market’ Capitalism in its ultimate form, the ‘free market’ is only truly advantageous and 'free' to those who have the most cash and assets and they are gathered at the expense of the poor who eventually are the losers but hey, that’s what it’s all about isn’t it in the Wall Street Journal's perfect world. Now that the rape of the system has nearly been completed how long is it going to take until there is a realization of just how thoroughly the free market fanatics have cannibalized the country in pursuit of profit? And the denial needs to stop immediately, the existing system has already failed and failed miserably.

Capitalism is eating itself. Like a python slowly trying to digest it’s own tail, the economic master plan, the Shock Doctrine has come home now and the sheep are being prepped for yet another shearing, soon they will served up with a side of mint jelly.

It is important to understand that a distinction needs to be made when it comes to capitalism between that which is regulated and the ‘free market’ aka Lassez Faire strain that the road to hell is paved with. The end result of unregulated capitalism is monopoly of the most extreme sort as well as the redistribution of wealth to those at the top of the class system, I wonder why nobody has ever dubbed this as ‘trickle up economics’ which is of course exactly what it is. One of history’s most important and enduring lessons is that hundreds of thousands must toil in the muck in order to allow one rotten, greedy son of a bitch to have his face displayed on a sphinx. The American middle class are the ones who are forced by their Wall Street pharaohs to build the bricks for the monuments to the super wealthy under increasingly hostile conditions in increasingly dangerous work environments with an increasingly smaller amount of straw.

The establishment after all has a vested interest in the existence of a huge and desperate underclass. The accompanying crime and urban rot helps to breed the necessary fear that justifies increased police powers and surveillance so as to keep the interests of the elite safe and sound while they sleep behind the walls of their gated communities each night. We were swindled by the free market pimps and deregulation pushers, all that it all did was create conditions for monopolies and trusts and consumer gouging. Take an honest look at yourself, are you truly better off today than you were yesterday? Or the day before? Or five years ago?

Well understand one is as good as you are going to have it for the rest of your life under this existing rotten system.

We Are All Losers: The system itself is designed to make losers of us all except that extreme few with the means to purchase influence and therefore protection.

Under this system we all lose, mainly our losses are incremental.

We lose our lives through an increasing amount of time spent on a job locked in a struggle of diminishing gains to even survive.

We lose our health

We lose time with our children and families, this is the most tragic loss of all in most instances as it perpetuates the cycle of the decline in human relationships and destroys the family. Despite what the establishment propagandists and their phony religious wars with their insipid ‘pro family’ sloganeering it is not the loss of morality in through cultural changes in society that is causing the degradation of the family but the greed of an unfettered and monstrous capitalist system that demands more and more in order to slake its bloodsucking appetite for profits. It is the pursuit of these profits at the expense of our humanity that has laid waste to the family, and our values and every day that we are forced to prostitute ourselves in order for the wealthiest of the greed mongers to further entrench themselves is one more day closer to the day that we will ultimately die in vain for their sins.

And in buying into the legitimacy of this lie of a system we ultimately lose our souls.

In a system that is designed to ultimately make losers out of all but the very few who are able to parlay their inordinate influence into being able to utilize it as a weapon of exclusion I found the following from the late, great Hunter S. Thompson to be words of wisdom, this in reference to the ultimate outsiders The Hells Angels:
There is an important difference between a 'loser' and an 'outlaw' . One is passive and the other is active and the main reasons that the Angels are such good copy is that they are acting out the daydreams of millions of losers who don't wear any defiant insignia and who don't know how to be outlaws."

The Angels don't like being called losers but they have learned to live with it. "Yeah, I guess I am" said one "But you're looking at one loser who's going to make a hell of a scene on the way out"
Let's just hope that there are still some outlaws left out there amongst the sheeple, they are all that we have when it comes down to whatever hope there may be left in an increasingly hopeless and hostile world.

Thursday, March 19, 2009

Conversation with George W. Bush

The audience of 2,000 of your sycophants paid $3,100 dollars per table to, I can only assume, listen to you apologize for your pathetically corrupt and mostly incompetent eight years as president. ...No. That would have been too unlike you. Huh, George?
"I want the president to succeed.

Gee! That’s mighty patriotic, not to mention grown-up of you, junior!

“I love my country more than I love politics.”

You’ve got one hell of an unpleasant way of showing it. This tells me that you haven’t a clue as to what the word “love” even means, which goes a long way in explaining why you think water boarding isn’t torture.

“I'm not going to spend my time criticizing Obama.”

That’s right, George. Your time will best be spent making jokes like the one you made in front of the crowd- "I actually paid for a house last fall. I think I'm the only American to have bought a house in the fall of 2008." –you miserable sack of shit!

“It's time for the former president to tap dance off the stage.”

Oh, but you’re still dancing, George! You’re still imagining yourself a Fred Astaire instead of a Fred Muggs!

“My purpose here today is not to criticize the president. He deserves my silence.”

The world deserves your silence, George. I’m rather sure, if they could’ve had their druthers, you’d have been silenced years ago.

“If he wants my help, he can pick up the phone and call me."

Again, George, you imagine yourself a man who has anything worthy to offer President Obama or humanity… other than your sincerest apology.

"I think it is essential that he be helped in office."

That’s funny. I, and millions of others, thought it was essential that you be helped OUT of office all the way back in two thousand and three.

"This is my maiden voyage.”

Damn, George! Must you also scare the children of Canada?

“My first speech since I was the president of the United States and I couldn't think of a better place to give it than Calgary."

You meant “…a safer place”, didn’t you?

"I’m going to write a book that’ll ask people to consider what they would do if they had to protect the United States as president.”

I can save you the trouble of writing a book that you’ll never read and neither will anyone else. The answer to your fallacious argument is `the opposite of you’.

“It's going to be about the 12 toughest decisions I had to make."

Fascinating stuff, George! I suppose if the title of your book were “…the 12 mistakes (or crimes) I committed while in office.” then the number 12 would be laughably small, but at least it wouldn’t be a work of fiction...

"I'm going to put people in my place, so when the history of this administration is written at least there's an authoritarian voice saying exactly what happened."

What the-? …Okay. A couple of things right off the bat. Firstly, the Geneva Conventions do not permit you to put people in your place, George. Torture, I’m happy to say, is illegal again.

And secondly, when history is written about you George, it will indeed employ the word `authoritarian …And it will certainly, I hope, unlike your administration’s secrecy involving every-goddamned-thing, illustrate exactly what, when, where, how, why and to whom it happened!

"I want people to understand what it was like to sit in the Oval Office and have them come in and say we have captured Khalid Sheik Mohammed, the mastermind of the Sept. 11 attacks, the alleged killer of a guy named Danny Pearl because he was simply Jewish, and we think we have information on further attacks on the United States."

You’re not the president anymore, George, so stop repeating the idiotic talking points (lies), you slithering shit-heel!

"I'm flattered people even want to hear me in the first place."

Come on, George! Your flatterers or ‘have mores’ can hardly be considered people, if, by people, you mean `human, with a heart, a brain, and dignity’…

"We just had a poll in our country where people decided that the foreign policy of the Bush administration ought to stay in place for four more years."

I guess one thing’s for certain; you haven’t changed one measly nth of a damned iota of a hairsbreadth of a mite-sized smidgen! You’re still lying like a damn dog!

(In the 1950s, the Russian newspaper, Izvestia, described J. Fred Muggs, as "a symbol of the American way of life", and said, "Muggs is necessary in order that the average American should not look into reports on rising taxes, and decreasing pay, but rather laugh at the funny mug of a chimpanzee.")

Tip of the hat to The Huffington Post

Wednesday, March 18, 2009

Why the GOP Nurtures Lies and Myths about Ronald Reagan

by Len Hart, The Existentialist Cowboy

Until Reagan, the GOP, like grinches, snarled and toiled amid memories of Eisenhower's recession and, earlier, Herbert Hoover's 'Great Depression'. It was Democrats who were associated with labor, prosperity and, under LBJ, civil rights! It was the Democratic party that often stirred our better natures. The GOP never tried nor gave a shit! Eisenhower's crowning achievement was his prescient warning of the rise of a 'Military-Industrial Complex', a warning that fell on deaf ears. After that, it has been all down hill for an increasingly corrupt and morally moribund party, a party adrift, bereft of new ideas, in fact, contemptuous of the very words 'liberal', 'progressive' or creative.

Reagan cut taxes but not spending. Years following 1982 were deficit years. Thus: 'Supply-side' economics was and remains a fraud. By fiscal 2000, the share of GDP collected by the federal government as taxes amounted to 21%, up from an average of 18.7% in the last five pre-Reagan years 1976-1980. These facts alone reveal both the hypocrisy and the lie behind 'trickle-down' theory. As this unwelcome outcome was revealed, the CIA had likewise compiled a chart of world 'Current Account Balance[s]'. The US is at the very bottom of the list with the world's largest NEGATIVE current account balance, a negative balance about four times that of the runner up debtor --Spain. If, as classical economists believed, that recessions are caused by 'contractions' of both monies in circulation and total productivity, then 'supply-side economics' is not merely bunkum and bullshit, it has left us on the brink and about to fall off the cliff.

How did this come to pass? As the ink was drying, Reagan-heads were pointing accusing fingers at one another. It was not always the fore finger! Budget Director David Stockman, famously, blamed a 'noisy faction of Republicans' for Reagan's tax cut and, more specifically, the 'trickle down' theory with which it was sold. Stockman called it a 'Trojan Horse'. No one in the Reagan administration or the GOP wanted to take the rap for the growing deficit. They would still have you believe that it was no one's fault. Or --more absurdly --it was because Clinton got a blow job!

Domestic Policy Advisor Martin Anderson resorted to GOP form, blaming Congress for the deficit. House and Senate leaders, however, pointed out that had Congress merely rubber stamped Reagan's plan, about 90 percent of the deficit would have remained. But rabid righters will not easily or willingly give up delusion. In the mid-1990s, so-called right-wing intellectual Irving Kristol, an early champion of 'supply side economics', tried to exculpate Reagan. The mistake, he said, was in the implementation! Supply-siders divided themselves four ways depending upon to whom they were devout li'l cultists --David Stockman, Robert Dole, Martin Anderson or Irving Kristol.

While only a truly bored person is fascinated by GOP in-fighting, there is to be had a satisfying sense of Schadenfraude when evil goppers turn on themselves. There is also satisfaction in the knowledge that the GOP is dead wrong and incompetent. There is frustration, however, that most folk just have not yet connected Reagan's policies with the impending collapse. Even now GOP consultants are spamming threads and 'forums' with buzzwords and focus-group approved slogans and claptrap. That these paid and rabid amateurs are soooooo adamant in dead Reagan's defense should set off alarm bells. What are the implications for this utterly failed party should the truth be known about Reagan?

One of their first victims may have been the late Steve Kangas, who was found dead in a bathroom stall in Richard Mellon Scaife's office building. What Kangas was doing in the belly of the beast has never been addressed or answered. I think his unlikely presence is relevant to his equally unlikely death! I am convinced that Kangas, like many another 'liberal", was murdered because he dared to challenge the oligarchs; he dared to tell the truth. Nevertheless, Kangas who had angered a teeth-gnashing Scaife, left us an impressive body of statistical work with respect to the 'Reagan Years'.
Tax progressivity was highest in the decades after World War II, when the rich were taxed a stratospheric 88 percent for nearly two decades. This was also an era in which the U.S. economy was a juggernaut, and the American Dream was indisputably alive and well. Because of this, most economists do not believe that high tax rates on the rich are bad for the economy.

The following chart shows the effectiveness of a progressive tax system. When the top rates were truly high from 1950 to 1978, American income at all levels grew at about the same pace. But when progressivity was lost in the 80s, the income of the poor began falling, while that of the rich continued growing.

Income Growth by Quintile2

Quintile 1950-1978 1979-1993

Lowest 20% 138% -15%
2nd 20% 98 -7
3rd 20% 106 -3
4th 20% 111 5
Highest 20% 99 18

--Steve Kangas, The Reagan Years: Income and Wealth Inequality
The consequences of all deficits are slower economic growth accompanied by pressure to raise taxes. For the increasingly tiny elite of Americans who grew very, very rich because Reagan paid them off would, as expected, dig in to defend their booty with every dirty trick in the book. Most often, they just lied and expected you to believe them. They are, after all, rich and you are dirt poor even if you live in Sugar Land, TX. What the fuck do you know? If you were truly as rich as you think you are, you wouldn't be mortgaged up to your ass in Sugar Land, TX. You would be living next door to Khalid bin Mahfouz in River Oaks! You don't have bread? Eat cake! And --by the way --shut up!

So --by the early 1990s deficit forecasts were 'pessimistic and horrifying'. There were pressures to increase taxes. By 1994-95 federal revenues as a share of GDP match those of the oil embargo years in the 1970s.

In the Clinton years, the end of the deficits lowered interest rates. This was concurrent with a flourishing IT sector that Clinton is accused of 'funding'. Hey! Even if that absurd 'accusation' were true, so what? Every other American industry --steel, electronics, manufacturing of all sorts --had already been exported, primarily to China. We have Nixon and Bush to thank for that!

The IT boom may have been our last hurrah! Asset prices increased. Those made richer by Reagan/Bush tax policies seized upon the opportunity to cash out and count their gains. These 'paper' gains are not GDP which is, to be precise, the total value of newly produced goods and services. The paper value of assets already on the books doesn't count. Clinton most certainly benefited when the IRS collected taxes on the capital gains. He left to Bush a surplus that Bush would piss away by cutting taxes for his 'base'.

As to be expected, the GOP turned a whopping surplus into a deficit, just as the GOP routinely turns positives into negatives, phantoms into 'threats to national security'! The GOP had a 'base' to appease, a population to terrorize into compliance.

In the late 70s many people worked hard to elect Ronald Reagan who would cut federal spending and roll back the 'safety net'. Selfish and self-absorbed, the Reaganites could not, or would not foresee the consequence of Reagan's disastrous regime: deficits without end, the dissolution of American industry, the export of American jobs, the Nixon-Bush sellouts to China, the deterioration of infrastructure, and the rapid decline of once proud, industrial powerhouse cities like Detroit!

This time, it would appear that the GOP has, at last, left to a Democrat a disaster of such monumental proportions than not even Obama can undo! Given what he was left, Clinton worked miracles but, for his efforts, he was accused by grinches of lying about things that were not even crimes.

There are several reasons the GOP lies about everything and especially 'economics'. Because the record is consistently against the GOP, it is getting harder to get away with lying. But as 'economics' is often dull, dry and full of numbers and abstruse terminology, GOP insiders are lulled into thinking that they can get away with bald faced lies. Who's gonna bother to look up the truth in a computer printout, a data base at the BEA, or the myriad of stats from the Bureau of Labor Statistics?

Looking up the truth may not be a dirty job but it is almost always thankless. The truth is: the GOP is not a political party and should not be treated as one. The GOP is a crime syndicate and a kooky cult! If the truth about the US economy were ever widely known, the GOP would never get a vote outside the ever dwindling 1 percent of the nation, the GOP base of filthy rich elites. The GOP has castrated itself.

Addendum: for a comprehensive statistical survey of US eocnomics since WWII, it is hard to beat the work of the late Steve Kangas who left us a treasure trove of cold, hard official stats that indict the axis of the GOP/right wing.

The following chart shows the effectiveness of a progressive tax system. When the top rates were truly high from 1950 to 1978, American income at all levels grew at about the same pace. But when progressivity was lost in the 80s, the income of the poor began falling, while that of the rich continued growing.

Income Growth by Quintile2

Quintile 1950-1978 1979-1993
Lowest 20%     138%          -15%
2nd 20% 98 -7
3rd 20% 106 -3
4th 20% 111 5
Highest 20% 99 18
Economists have a standard measure of income inequality, called

the Gini Index. In this index, the higher the number, the greater
the income disparity between the rich and the poor. (0 = perfect equality,
1 = only one person in the economy has all the income.)

Gini Index of Income Inequality3

        Before   After
Taxes Taxes
1979 0.403 0.352
1980 0.401 0.347
1981 0.404 0.350
1982 0.409 0.359
1983 0.412 0.368
1984 0.413 0.372
1985 0.418 0.381
1986 0.423 0.404
1987 0.424 0.380
1988 0.425 0.384
1989 0.429 0.387
1990 0.426 0.381
1991 0.425 0.379
1992 0.430 0.381
As mentioned earlier, the U.S. economy slowed in 1973 for reasons
still not completely understood. The average weekly earnings of nonsupervisory workers -- about four-fifths of the civilian workforce -- peaked in 1973, and have been falling ever since:

Average weekly earnings of nonsupervisory workers, total private industry,
1982 dollars4

1965  $290
1970 297
1973 315 (Peak)
1975 292
1976 297
1977 299
1978 301
1979 291
1980 274
1981 271
1982 267
1983 272
1984 274
1985 271
1986 271
1987 269
1988 266
1989 263
1990 259
1991 255
1992 255 (Nadir)

The above chart is especially useful in rebutting supply-siders who use other measures to argue that everyone's incomes rose during the 80s. For detailed refutations of these other measures, see More.

Average hourly earnings also fell over the 80s:
Average hourly earnings, total private industry (1982 dollars)4

1973 $8.55
1980 7.78
1985 7.77
1990 7.52
1993 7.39

Presidents Reagan and Bush froze the minimum wage for 9 years, essentially
giving those workers a pay cut each year as inflation bit into their paychecks.
In 1992 dollars, the 1963 minimum was $5.74 -- or 35 percent more than
it is today.

Raises in the Federal Minimum Wage5

                  Percent of average
Year New rate production earnings
1950* $0.75 54%
1981 3.35 43
1990 3.80 35
1991 4.25 38
1994 -- 35

*For brevity's sake, this chart omits the 15 minimum wage increases between 1950 and 1981. No newly introduced minimum wage has ever been lower than 35 percent of the average wage, although old minimum wages have certainly gone below this. For a fuller chart, see More.

Economists previously believed that raising the minimum wage would cost jobs, especially among teenagers. However, recent research suggests that the truth might be a bit more complicated than this, and that when the minimum wage falls too low (due to inflation), it can be raised safely. For more on the controversy stemming from the Card/Krueger study, see More.

On the other hand, the salaries of executives skyrocketed during the 80s:

Salaries and benefits of corporate CEOs as a multiple of the average factory worker's6

1980   30 times
1991 130-140 times

And these super-salaries did not come primarily from greater profits, but from a larger slice of the profits: (More)

Executive Compensation as a Share of Corporate Profits7

1953   22%
1987 61

The following chart shows the growth in the number of millionaires and billionaires during the 80s. Notice that their numbers skyrocketed in the years 1985-87.

Approximate number of millionaires and billionaires in the U.S., 1978-19888

Year  Millionaires  Decamillionaires  Centamillionaires  Billionaires
1978 450,000 1
1979 519,000
1980 574,000 ?
1981 638,000 ?
1982 38,885 400 13
1983 500 15
1984 600 12
1985 832,000 700 13
1986 900 26
1987 1,239,000 81,816 1,200 49
1988 1,500,000 100,000 1,200 51

Percent Increase of Combined Salaries by Income Bracket, unadjusted for inflation (1980s)9

Income Bracket       Percent Increase
$20,000 - 50,000 44%
200,000 - 1 million 697
Over $1 million 2,184

Viewing the above chart more broadly, the total wages of all people who earned less than $50,000 a year -- about 85 percent of all Americans -- increased an average of 2 percent a year from 1980 to 1989, which did not even keep pace with inflation. By contrast, the total wages of all millionaires shot up 243 percent a year.

Defenders of the Reagan era claim that income mobility in the U.S. is great enough to overcome income inequality. That is, if people move up and down the income scale to a significant degree, then, over a lifetime, your average income is going to match my average income. However, there are a few flaws with this argument. First, income mobility in the U.S. is not even close to making this a reality. (More.) Second, one could hardly justify slavery on the basis that, for 1 percent of your life, you, too, will be the master.

So who gets ahead, and who gets left behind? The single most decisive factor is education:

Education, Experience and Wages10

Percent change in earnings
New Workers (1-5 years experience)      from 1979 to 1987
Less than 12 years of school -15.8%
High school degree -19.8
16 or more years of school +10.8

Old Workers (26-35 years of experience)
Less than 12 years of school -1.9
High school degree -2.8
16 or more years of school +1.8
Some people claim that if the poor want to get ahead, they should just return to college. However, the job market can bear only a limited percentage of educated professionals, and there is already a glut of college grads in most fields. This makes competition the hallmark of today's meritocracy, which critics call destructive in its extreme form. (More)

Although the following chart is one of the largest, it is also one of the most important. This chart shows how the incomes of most American families stagnated or fell during the 80s, with gains posted only by the top 20 percent. It also reveals how supply-siders lie with statistics, but more on this in a moment. For those unfamiliar with the term "decile," the 1st decile is the poorest 10 percent of the population, the 2nd decile the 2nd poorest, and so on.

Average Income Level and Effective Federal Tax Rates in Each Family Decile by Year, in 1988 dollars (Corporate income tax allocated to capital income)11

                                                 Percent change:
1977- 1980- 1985-
Decile 1977 1980 1985 1990 90 90 90
1st $4,277 3,852 3,568 3,805 -11.0% -1.2 6.7
2nd 8,663 7,982 7,717 8,251 -4.8 3.4 6.9
3rd 13,510 12,530 12,230 13,110 -3.7 4.6 7.2
4th 18,980 17,240 17,010 18,200 -4.1 5.6 7.0
5th 24,520 22,380 22,070 23,580 -3.8 5.4 6.9
6th 30,430 28,100 27,620 29,490 -3.1 5.0 6.8
7th 36,880 34,370 34,620 36,890 0.0 7.3 6.5
8th 44,820 42,050 43,370 46,280 3.3 10.1 6.7
9th 56,360 53,660 56,190 59,860 6.2 11.6 6.5
10th 111,100 107,900 123,200 133,200 19.9 23.4 8.2
top 5% 149,500 146,000 172,100 187,400 25.4 28.3 8.9
top 1% 319,100 321,400 415,700 463,800 45.4 44.3 11.6
All 34,830 32,850 34,480 37,050 6.4 12.8 7.4

As you can see, the majority of American families were worse off in 1990 than they were in 1977, at the beginning of Carter's presidency!

When supply-siders talk about family income in the 80s, they are always careful to use 1980 as a benchmark for their comparisons, and never 1977. This is because the recession of 1980-82 was the worst since World War II -- perfect for comparing the later Reagan years in their best light. But comparing the Reagan recovery to the non-recession year of 1977 puts everything in perspective: most Americans lost ground, even at the end of the recovery.

Which leads to the question: are presidents responsible for creating recessions and recoveries? If yes, then Reagan deserves credit for rescuing the economy from Carter's mismanagement. But if not -- which is what almost all mainstream economists believe -- then the supply-sider's praise of the 80s rings hollow. In that case, it is natural for recessions to be followed by recoveries, and supply-siders might as well take credit for the incoming of the tide. In reality, the Chairman of the Federal Reserve Board is far more responsible for influencing recessions and recoveries. (More)

Supply-siders have a partial rebuttal to the above chart. They point out that family size decreased during the 70s and 80s, which means that less family income would cover fewer people, and therefore not lower their standard of living. The following chart shows the long-term decline in average family size:

Average Family Size12

1970   3.58 persons
1975 3.42
1980 3.29
1985 3.23
1990 3.17
But this counter-argument runs into a few others. First, falling individual income is responsible for declining family size, so to say that families are maintaining their standard of living despite everything is missing the point. (More) Second, the rather small decline in family size does not explain or justify the massive income gains seen by the top 1 percent, while 80 percent of all families are treading water.

The following chart shows how large a slice of the economic pie everyone is getting. More specifically, it shows how much of the total national income that each 20 percent of American families are making. As you can see, everyone's slice of the pie grew smaller in the 80s except the top 20 percent, which grew. And the top 1 percent was responsible for most of that quintile's growth, as the last chart reveals.

Percent of National Aggregate Income Received by Each Quintile (by Family, in 1992 dollars)13

Quintile       1980   1992
Lowest 20% 5.2% 4.4
2nd 20% 11.5 10.5
3rd 20% 17.5 16.5
4th 20% 24.3 24.0
Top 20% 41.5 44.6

Top 5% 15.3 17.6
Shares of Pretax Adjusted Family Income14
Quintile        1977     1980    1985    1988    1989
Lowest 20% 4.7% 4.3 3.7 3.5 3.5
2nd 20% 10.8 10.5 9.5 9.1 9.2
3rd 20% 16.3 16.0 15.1 14.6 14.7
4th 20% 22.9 22.9 22.2 21.7 21.7
Top 20% 45.6 46.7 50.1 51.4 51.4*

Top 1% 8.3 9.2 11.6 13.4 13.0

*Table reads that 51.4 percent of all adjusted pretax family income in 1989 belonged to families in fifth or highest quintile. Quintiles are weighted by persons.

A common defense of these charts runs something like this: "How equally the pie is sliced is not as important as the fact that the pie itself is growing. Our GDP grows almost every year, so everyone benefits." But this argument becomes incoherent when paired with the claim that America should be an unrestricted meritocracy. If competition is the primary basis of American society, then how equally the pie is sliced becomes significantly more important than the size of the pie itself. (More)

An even stronger refutation is that, over the 80s, as the pie has grown, 70 percent of the extra growth has gone to the top one percent, with the rest going to the next 5 percent or so. The middle class share has simply stayed the same size.15 This means that the average American worker is working harder, producing more, and creating overall growth, but is not seeing any of the rewards. And this largely explains why middle class anxiety, voter anger and economic uncertainty are gripping the nation today. (More)

Next Section: Taxes

Return to The Reagan Years Home Page


1 Internal Revenue Service.

2 U.S. Bureau of the Census, Current Population Survey.

3 U.S. Bureau of Labor Statistics. The "before tax" column is Measure 1 of the Gini Index. The "after tax" column is Measure 15, which measures inequality after all taxes and government transfers.
4 U.S. Bureau of Labor Statistics, Bulletin 2445, and Employment and Earnings, monthly, June and March issues.
5 U.S. Department of Labor, Employment Standards Administration, Minimum Wage and Maximum Hour Standards Under Fair Labor Standards Act, 1981, annual and unpublished data.
6 Kevin Phillips, Boiling Point

(New York: HarperPerennial, 1993), p. 251.

7 Internal Revenue Service.
8 The statistics and estimates for millionaires are drawn from multiple sources, according to Kevin Phillips in The Politics of Rich and Poor (New York: Random House, 1990), Appendix A, p. 239. The decamillionaire data for 1982-88 comes from Thomas J. Stealey, Marketing to the Affluent (Homewood, Ill.: Dow Jones-Irwin, 1988). The remaining data comes from Forbes and Fortune surveys of the richest Americans during the 1980s.

9 Internal Revenue Service.
10 Calculations based on L.F. Katz and K.M. Murphy, Changes in Relative Wages, 1963-1987: Supply and Demand Factors (Cambridge, Massachusetts: National Bureau of Economic Research,1990).

11 Congressional Budget Office, House Ways and Means Committee, 1992 Green Book.

12 U.S. Bureau of the Census, Current Population Reports, P20-477.

13 U.S. Bureau of the Census, Current Population Reports, P60-184; and unpublished reports.

14 Congressional Budget Office tax simulation model, cited in U.S. House Ways and Means Committee, 1992 Green Book, p. 1521.

15 This is the so-called "Krugman calculation," which has successfully resisted various statistical challenges by supply-siders. See Paul Krugman, Peddling Prosperity: Economic Sense and Nonsense in the Age of Diminished Expectations (W.W. Norton & Company, 1994), p. 138.


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Monday, March 16, 2009

Right-thinking among righteous anger

by Doug Drenkow

After reading about the dangers of righteous anger in the current economic crisis ...

Bracing for a Backlash Over Wall Street Bailouts

... I asked myself a few questions.

If the economy is to recover, do we need to put the banking and financial system on a new, sound footing? Absolutely. No economy can function without a functioning financial sector.

Since the taxpayers have invested hundreds of billions of dollars in AIG and other financial companies because they are "too big to fail" -- that is, they'd take the rest of us down with them -- doesn't that entitle the taxpayers to some say in how that money is spent? And entitle the taxpayers to some rewards, down the road, for covering the risks? Of course.

And if the companies couldn't survive without the taxpayers' assistance -- like the 80% share of AIG the U.S. Treasury has bought -- shouldn't the shots be called by the U.S. government, not executives giving themselves hundreds of millions of dollars in bonuses for their "performance" (Lord, forgive us our ungodly thoughts)?

Whether you call it "nationalization" or "rationalization" or any other "zation" in the nation, we need to just do what we need to do and 1) not let ideology ("Never nationalize") trump common sense ("We the people are already paying the price, because nobody else could"), and 2) not cut off our nose to spite our face (Don't let our entire financial system collapse just to punish a limited number of individuals).

In the short term, stop the bleeding before it's too late (and enough already with these insane, obscene bonuses!). And in the long term, never again let so much money and power accumulate in so few hands, in any sector of our economy. We're all too important to fail.


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The Origins of Collapse in Nixon/Reagan/Bush Sellouts, Criminality and Incompetence

by Len Hart, The Existentialist Cowboy

Bailouts for Wall Street insiders are a complete waste of $trillions$. It was Ronald Reagan whose policies began the process by which American jobs --the very source of American wealth --were exported 'offshore' to China, Japan, India, Viet Nam, et al. US robber baron elites are lying and/or wrong about the source of this nation's wealth. Every economist of significance --right or left --has said that 'labor' is the source of 'value'.

Not content to merely export American jobs, these 'robber barons' have demanded and received whopping bailouts which they've likewise exported to offshore tax havens. The 'robber baron elites' --a mere one percent of the total population and decreasing still --had set this nation on a 'race to the bottom' where we have, in fact, arrived.

It was the Reagan's tax cut of 1982 that began the dissolution of the US economy. Since that time an increasingly tiny elite has gotten exponentially richer. I am no coincidence theorist. This was by design.

It must be pointed out that following the tax cut, the nation plunged into recession, the worst since Herbert Hoover's Great Depression of 1929. 'Tax cuts' benefiting only the upper classes remove monies from circulation, monies that might be spent, monies that might have prevented a recession or cut short those already begun. Unfair, inequitable tax cuts create what economists call a 'contraction' of the money supply. A more familiar word is 'depression'.

It must also be pointed out that there was 'no Reagan recovery'! The record shows that between 1979 and 1989 the growth rate was 3% --the same as the growth rate between 1973 and 1979! There was, then, no improvement with "voodoo economics" than without it. There was no "Reagan recovery"! Wealth did not trickle down; it flowed upward at alarming rates.

The nation had been plunged unnecessarily into recession upon a pack of lies. The only beneficiaries were those who were rich already. At the end of his disastrous misrule, the economy had barely gotten back to where it had been before Reagan screwed it up. That's not 'recovery'; it's theft!

Wages have been stagnant since 1982. Prices, however, have inevitably risen and only the 'elites' have benefited. Result: you are much, much poorer in terms of what your money will buy. I would direct you to the Bureau of Labor Statistics, the Department of Commerce - BEA, the Census Bureau. It's all there in black and white.

The unkindest cut of all is the Faustian deal Nixon cut with China. China --thanks to Reagan/Bush axis of treason and betrayal --has the world's largest POSITIVE account balance --the result of deals cut by the GOP, deals which have resulted in China dumping its crap on the US via Wal-Mart. As a result of those deals, the US sustains, by far, the world's largest NEGATIVE current account balance of $ -568,800,000,000. [See: CIA: The World Factbook] The famous trip and the deal had been set up earlier by Bush Sr with what St. Thomas More would have called a 'conspiracy of rich men seeking to procure their commodities under the name and title of the commonwealth'.

Every economist of significance --right or left --has said that 'labor' is the source of 'value' and thus a nation's 'wealth'. This outcome was inevitable. The GOP regimes of Reagan, Bush, and Bush Jr presided over the export of US jobs to China, Japan, India, Viet Nam. Who benefited? Quick response: only one percent of the total population, the GOP base of elitist robber barons.

Not content to export American jobs, these 'robber barons' have demanded and received whopping bailouts which they've likewise exported to offshore tax havens. The end result of this 'contraction' of the money supply may very well make the 'Great Depression' look like a Sunday outing. In the thirties, the US still had a steel industry, an automotive industry, appliances, et al. What can the US fall back on today that China has not already pre-empted? Not even the oil industry will save us. The fact that the US attacked and invaded Iraq for its oil is proof of that.

Wages have been stagnant since 1982. I cited the Bureau of Labor Statistics, the Department of Commerce - BEA, the Census Bureau. It's all there in black and white. Following the Reagan tax cuts of 1982, every one not in the upper quintile lost ground.

Reagan did not perform nearly so well as Jimmy Carter, who is, in fact, among the nation's best 'performing' Presidents in terms of the growth of GDP and jobs. Everything said by the right wing about Carter is a bald face lie! Carter ranks number two on the list of best Presidents since World War II.

From that same list, the top five are Democrats. The bottom three are goppers [politely, Republicans!!].

Very early, the upper twenty percent outstripped every other segment. Now even the poorest of the rich are in danger of falling off the ladder: only one percent of the population owns more than the rest of us combined. This has been a deliberate transfer of wealth, a deliberate assault upon the economic foundation of 'value', a subversion of the US by the very richest of right wingers. A crime of this magnitude is not merely the biggest heist in history, as I have called it, it borders on high treason. Certainly --this crisis undermines national security, exposes weaknesses to enemies.

The 'bailouts' are premised on 'trickle down theory', a crazy right wing idea that only the investor class creates wealth and that's why they need money. This is just crazy. The source of a nation's wealth is the work that is done. Elites do not work and do not create wealth! Most of these 'elites' should be rounded up and thrown in jail for various and numerous frauds. They should never, ever be bailed out!

At the height of the Great Depression, economist John Maynard Keynes said that the government might get better results if, instead of 'bailing out' the big wigs and fat cats, it just put "pound notes' in mason jars, bury them in a landfill and let people dig them up. Clearly --money in the hands of those who will SPEND their money will stimulate the economy. Fat cats squirrelling away bailouts in offshore tax havens will not!.

Lately, it has become fashionable to say that debt is money! That's stupid on its face. Debt may represent 'leverage' but not 'value' and most certainly not 'money'. Debt is nothing more than a promise to pay with something of 'real' value at some point in time.

Paper money was --at one time --backed up by gold. Gold had intrinsic value as a metal of not inconsiderable practical applications. A 'practical application' is, ultimately the product of work or 'labor'. Almost every major economist from Adam Smith (the godfather of capitalism) to Karl Marx (the godfather of socialism) are in agreement: the source of value in an economy is 'labor'.

A simple illustration may make the point. If I own land, I may wish to dig a ditch in order to irrigate my crops. I can either dig the ditch myself or, if I should have 'capital', I may wish to hire the ditch dug for me while I manage the enterprise. In any case, the work that is done is of 'value' to me and, presumably, my enterprise is more valuable for my having done it.

Young, arrogant hotshots came to believe --like Gordan Gecko --that all one needed to do to get rich was just move money around. This 'class' leeches off the labors of others who had, in simpler times, made the factories run.

A balance sheet disproves the bogus theory that 'debt' is 'money'. A 'balance sheet' is composed of three parts: assets, liabilities, net worth. It's a simple equation: net worth is equal to total assets minus liabilities. If 'debt' were 'wealth', you would have to add 'liabilities' --not subtract them! Adding liabilities would give one a grossly inflated value of the enterprise. Making money would be easy: just take out another loan! Perhaps an absurd perversion of this most elementary accounting principle accounts for the sorry state of US business and GOP dominated government.

One is reminded of Enron and lesser known crooks cooking the books, scamming customers, putting the screws to California. An investigation to discover the cause of the imbalance is imperative. The entire point of the 'accounting equation' is to arrive at a figure for 'net worth'. If 'debt' were money, the 'net worth' of individuals, corporations, sole proprietorships would be figured differently. A mentality that equates the ability to take on more debt with REAL money is what got us into this mess to begin with.


No! Democrats are NOT just as bad!

The following stats are just a sample of the numerous, seemingly endless instances in which the GOP has been dead wrong and the Democratic party has been absolutely correct. Let's take a look at the history before it gets re-written:
  • Any Democratic President has presided over greater economic growth and job creation than any Republican President since World War II.
  • When Bush Jr took office, job creation was worst under a Republican, Bush Sr, at 0.6% per year and best under a Democrat, Johnson, at 3.8% per year.
  • Economic growth under President Carter was far greater than under Reagan or Bush Sr. In fact, economic growth in general was greater under Johnson, Kennedy, Carter, and Clinton than under Reagan or Bush. Democrats always outperform a failed party: the GOP!
  • The job creation rate under Clinton was 2.4% significantly higher than Ronald Reagan's 2.1% per year.
  • The "top performing Presidents" by this standard, in order from best down, were Johnson, Carter, Clinton, and Kennedy. The "worst" (in descending order) were Nixon, Reagan, Bush.
  • Half of jobs created under Reagan were in the public sector --some 2 million jobs added to the Federal Bureaucracy. Hadn't he promised to reduce that bureaucracy?
  • Reagan, though promising to reduce government and spending, tripled the national debt and left huge deficits to his successor. Bush Jr's record will be even worse.
  • By contrast, most of the jobs created on Clinton's watch were in the private sector.
  • Put another way: any Democratic President beats any Republican President since World War II.
These are just a few that I had knocked out quickly in preparation for a previous article. With any real work, any one with a nodding acquaintance of economics can demolish the GOP. The GOP is a crime syndicate, specifically a FRAUD foisted upon the American populace in order to enrich the increasingly tiny elite. That they have been highly successful is convincing evidence, perhaps absolute proof of the cult-like nature of this phony 'party'.


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