Corporate profit margins just hit an all-time high

Wages as a percent of the economy are at an all-time low

If you suggest there is something wrong with this, you are a socialist class warrior who hates America, not a Catholic who thinks that defrauding workers of their wages is a sin that cries out to heaven for vengeance. There’s only one kind of unnatural screwing we are to care about in the pared down social vision of the Thing that Used to be Conservatism.

  • http://chicagoboyz.net TMLutas

    Generally all libertarians consider that there is something wrong with the US wage structure. We adopted employee benefits as a dodge against wage controls applied to WW II and this big government nastiness has distorted wage rates ever since. That isn’t to say that the libertarian critique is right or wrong. It’s just not a status quo position.
    What should be happening, and what used to happen is that high profit margins drew new entrants into a field who then drove margins down. So why isn’t that happening today? I would suggest that too many of these potential new entrants just never come into being or don’t survive to grow into significant new competitors that drive prices down. This is something that needs to be fixed because those new entrants also drive job creation, something the US desperately needs more of.
    The hostility to critique of corporate profits is that it generally comes from the big regulation/big government viewpoint and the solutions presented are not to liberate new entrants to appear and increase competition. You’ll get better progress on economic issues by not being confrontational when you could be creating cross ideological alliances.

    • Timothy of Seattle

      “Driving margins down” is hardly synonymous with “increasing wages.”

      • The Deuce

        It does, however, increase wages as a percentage of the economy (since there are more people making them), and relative to corporate profits. Furthermore, the dollar buys more in a strong economy with strong competition.

    • http://natewinchester.wordpress.com/ Nate Winchester

      If you suggest there is something wrong with this, you are a socialist class warrior who hates America, not a Catholic who thinks that defrauding workers of their wages is a sin that cries out to heaven for vengeance.

      Where are the workers being defrauded? If they agreed to work for X ($5 an hour or $50 an hour), then get paid X, what is being defrauded? By all means, if employees aren’t making their agreed upon wages, then that’s fraud and should be prosecuted/sued, but I don’t see any of that in the graphs.

      What I DO see is that when profits were at one of their lowest points (looks like around 2010), employee wages were pretty high. So, as I pointed out before, was it unjust back then for employees to not take part in the loss? The downside of being a working man is that you don’t get to partake of the company’s profits, but the upside is that you don’t deal with the risk of its losses.

      Besides, looking at the charts, it almost seems to be a correlation delay to them. Look at the 1950 recession. Profits tanked, wages soared, but then shortly thereafter, profits started going up as wages tanked (eventually wages started to climb as well). In other words, looks like wages do share in profits, but there’s a slight delay. Thus, what we’re seeing now is the bottoming out from the 2010 recession, but in a few more years, they’ll be due for a spike to mirror the current profit spike. (like it did in the 2000 recession too)

      See Mark, it’s not that others think you’re “a socialist class warrior who hates America”, just that you’re really bad at math, as well as cause and effect.

      • John H.

        Where are the workers being defrauded? If they agreed to work for X ($5 an hour or $50 an hour), then get paid X, what is being defrauded?

        The thing about justice is, you don’t have to know you are being treated unjustly or consent to it for it to be an injustice. The morality in your statement is basically saying “it’s okay to coerce others.” People take these jobs because they usually don’t have a choice, not because they simply “agree” to take them. And as an employer, just because someone agrees to an unfair wage, and according to Catholic teaching therefore an unjust wage, does not mean you can in all good conscience offer that wage.

        I’m not saying government is the solution here. In fact I think it’s 90% of the problem. But the problem still is a matter of injustice whether people “agree” to be treated this way or not.

        • http://natewinchester.wordpress.com/ Nate Winchester

          I looked up “defraud”: Illegally obtain money from (someone) by deception.

          Defrauding is completely separate and apart from justice. Or rather, what committing fraud is always unjust, not every unjust act is fraud. So while Shea might be right about injustice happening, he is technically incorrect about any fraud being committed.

          • http://coalitionforclarity.blogspot.com/ Robert King

            “Defrauding is completely separate and apart from justice.”

            In that case, why is it illegal? Or is law “completely separate and apart from justice” as well?

            Deception is itself unjust, and theft is itself unjust; therefore these things also are proscribed in law.

            I’ll agree that Mark is sometimes sloppy with his language, and that technically “defraud” is not the best label for the injustice of our current wage system. But that does not imply that fraud is not itself an injustice.

            I’ll also note, for the record, that our current wage system is unjust largely because it is part of an economic system that (at best) considers itself “completely separate and apart from justice” and ethics and morality.

            • http://natewinchester.wordpress.com/ Nate Winchester

              In that case, why is it illegal? Or is law “completely separate and apart from justice” as well? … But that does not imply that fraud is not itself an injustice.

              Oh gee, could that be why I IMMEDIATELY clarified my sentence?
              “Or rather, what [i meant to type 'while'] committing fraud is always unjust, not every unjust act is fraud. ” L2R.

              I’ll also note, for the record, that our current wage system is unjust largely because it is part of an economic system that (at best) considers itself “completely separate and apart from justice” and ethics and morality.

              Only in the same way that physics is “completely separate and apart” from justice, ethics and morality. It just is like all the other factors of life & reality. What people do with it (in the same way people use physics to fire a bullet or drop an a-bomb) is what is justice, ethics and morality.

              • http://coalitionforclarity.blogspot.com/ Robert King

                If you meant to correct yourself, might I introduce you to the [BACKSPACE] or [DELETE] key on the keyboard?

                Physics is indeed “completely separate and apart from justice”; it does not deal with human actions except as abstracted to mere mechanics. Economics and politics, of which our wage system is one aspect, are not separate or apart from justice – because economics and politics are nothing other than human actions; that is, they are exactly the subject of justice, ethics, and morality.

                • http://natewinchester.wordpress.com/ Nate Winchester

                  Yes, I apologize for the typo. (though I would hope the complete incoherence of the sentence would have been a clue there was something misspelled)

                  Physics is indeed “completely separate and apart from justice”; it does not deal with human actions except as abstracted to mere mechanics. Economics and politics, of which our wage system is one aspect, are not separate or apart from justice – because economics and politics are nothing other than human actions; that is, they are exactly the subject of justice, ethics, and morality.

                  Politics- yes, economics- no. The later is almost as mechanical as physics. Yes, you could imagine a world where people have no wants or desires and all things are infinite, just as you can imagine a world without inertia or gravity (the physics there will be just as different as the economics in a world lacking the other). As long as we live in a finite universe where humans have needs, certain laws of economics will apply as solidly as the laws of gravity. The moral & ethics quality is what you do about it and with it. Or to quote a Catholic blogger:

                  To deny this isn’t so much to deny Capitalism as it is to deny the human psyche. Socialism ignored people’s interests, desires and what incentivized them; millions died as a result. If Distributism ignores the importance of profit and loss it too will unintentionally lead to negative consequences.

                  • Jeremy Dobbs

                    Actually, economics is nor an “invisible” force, as Smith said. It is the result of people with intellect and wills making choices with their wealth in their day to day living. Pure capitalism is as foreign to morality as pure socialism. But giving a fair price for product, giving an honest day’s work, setting a reasonable price for goods, and giving laborers a living wage are matters of justice and equitty, and one sins by refusing to do so, no matter what the economic conditions.
                    In Les Miserables, Victor Hugo gave an interesting thought about the Englishman and the communist. The Englishman (writing in the 19th Century: the glory years of unbridled capitalism) knew about accumulating wealth, but was clueless about how to give everyone his fair share. The communist (socialist) likewise, overemphasized equity to the point of marginalizing achievement, and therefore wealth. The accumulation of wealth must never lead to advancement of poverty.
                    To me, free markets are quintessentialy human. But Big Business is just as capable (and have been very effective in the past) in enslaving the masses as any despotic king.

                    • http://natewinchester.wordpress.com/ Nate Winchester

                      Actually, economics is nor an “invisible” force, as Smith said. It is the result of people with intellect and wills making choices with their wealth in their day to day living.

                      Partially incorrect. (partially) I recommend John C Wright’s intro on the subject.

                      With quotes like:

                      Economics studies the invariant relations of cause and effect surrounding human action, particularly economic phenomena. Economists deal with categories like cause and effect, cost and benefit, barter, currency, scarcity, priority, price, interest, time-preference, trade barriers, transaction costs, and so on and on. There are invariants in the phenomena that fit these categories.

                      For example, there is something called scarcity, which says that one factor of production cannot at the same time fulfill all possible mutually exclusive uses to which it might be put. This is also known as the law that “you cannot keep your cake and eat it too.”

                      Unless you want to say that there is some morality to the law of nature that an object can’t be in two places at once (for example), the basics of economics start out from simple observations about reality. Then facts about human nature build on that (i.e. the more valuable something is, the more people are willing to do to obtain it), then after that, you get into the consequences of people’s actions. Beyond that there’s all sorts of room for debate and questions and considerations, but you’ll never be able to change the basics this side of eternity.

                    • The Deuce

                      Nate:

                      Heh, I just noticed that we both recommended the same post by John in different parts of this thread.

                  • sal magundi

                    “Socialism ignored people’s interests, desires and what incentivized them; millions died as a result.”

                    that wasn’t socialism. it was a very horrible thing, but it wasn’t socialism.

    • http://www.rosariesforlife.com Dave

      “What should be happening, and what used to happen is that high profit margins drew new entrants into a field who then drove margins down. So why isn’t that happening today?”

      Because the big corporations own the government, which crafts the laws so as to make it exceedingly difficult to compete?

      • http://natewinchester.wordpress.com/ Nate Winchester

        Largely less. (though not so much “own” as “invested”)

        Which is why I’m not a fan of regulation. It just gives the big guys incentive to buy up government stock. Let the market be freer, let there be more competition and the big guys will probably be spending too much time fighting off competition to worry about government.

        • http://natewinchester.wordpress.com/ Nate Winchester

          Above I meant to say “Largely yes.” (remember kids, don’t blog before your coffee)

      • Ye Olde Statistician

        Because the big corporations own the government
        They ought to trade it in for one that works better. You would think that if they owned the government, they would be doing better as a result.
        Besides, it is more like the government owns GM than that GM owns the government.

  • Marthe Lépine

    It may be that the main obstacle to “new entrants” is the disappearing middle class. People who are increasingly struggling to survive from day to day are not in any position to put money aside in order to start new businesses. In that sense, the saying that goes that “there are not enough capitalists” appears to be increasingly true – fewer and fewer people are able to do much else with their money than just surviving. And whatever “free” money they might have often gets spent on consumer goods of dubious value. However in this case, IMHO, it seems that it is not enough to preach some form of “frugality” when people are constantly met with a barrage of advertising trying to make them want a lot of gadgets that they lived perfectly well without and do not really need now. I often wonder why so little is said about the influence of advertising when criticizing our consumer society. After all, at least according to Canadian standards (CRTC), there can be as much as 24 minutes of advertising in any one-hr segment of TV viewing, e.g. almost half of people’s free time while watching TV is used to bombard them with loud ads…

    • Marion (Mael Muire)

      Another thought might be to ask whether we as Christians want to devote significant amounts of our free time to watching TV? Partly for the reasons mentioned – being bombarded by advertising – but also for other reasons as well.

      • Marthe Lépine

        I fully agree, and I have not subscribed to any cable or satellite tv for at least 15 years. If I am interested in a subject, I already know more than any tv production can afford to present to the average viewer; and if I am not really interested, why watch? And much of the entertainment is either silly or objectionable, plus I do not enjoy sports. Anything else, I can watch on my computer.

    • ivan_the_mad

      “People who are increasingly struggling to survive from day to day are not in any position to put money aside in order to start new businesses.” Yes, a fact which refers back to the previous conversation on the just wage, which would enable people to do just that. Le Pope Leo XIII, Rerum Novarum (note also the “heresy” of the law encouraging widespread ownership):

      46. If a workman’s wages be sufficient to enable him comfortably to support himself, his wife, and his children, he will find it easy, if he be a sensible man, to practice thrift, and he will not fail, by cutting down expenses, to put by some little savings and thus secure a modest source of income. Nature itself would urge him to this. We have seen that this great labor question cannot be solved save by assuming as a principle that private ownership must be held sacred and inviolable. The law, therefore, should favor ownership, and its policy should be to induce as many as possible of the people to become owners.

      • http://natewinchester.wordpress.com/ Nate Winchester

        If a workman’s wages be sufficient to enable him comfortably to support himself, his wife, and his children, he will find it easy, if he be a sensible man, to practice thrift, and he will not fail, by cutting down expenses, to put by some little savings and thus secure a modest source of income.

        Oop, I see the problem there. Really, what makes you think that most of the human race is ‘sensible’? ;)

        • Marthe Lépine

          Of course all of the human race is fallen, and as Mark often quotes, “sin makes you stupid”… The problem is in defining what is meant by “support himself comfortably”. It seems that people often seem to expect the poor to live like monks, a life of extreme frugality, even asceticism, in order to be considered to be “deserving poor”…

  • The Deuce

    The real “winner” here is the financial sector, with the aid and abettment of the government.

    Every time you take out a home loan, you transfer part of the economy to the banks that they wouldn’t have gotten if you had bought your home outright.

    Every time you take out a car loan, you transfer part of the economy to the banks that they wouldn’t have gotten.

    Every time you take out a student loan, you transfer part of the economy to the banks that they wouldn’t have gotten.

    Every time you finance something on your credit card, you transfer part of the economy to the banks that they wouldn’t have gotten.

    Every time the government sells Treasuries to allow itself to go further into debt, it transfers part of the economy to the banks that they wouldn’t have gotten otherwise. Whenever the Fed prints money and gives it to the banks, it transfers part of the economy that they wouldn’t have gotten otherwise.

    Furthermore, every time credit is used to buy something that you would have otherwise saved up for or not bought, it marks an increase in demand for that thing, which raises the price for the next person who wants to buy it, so that they’ll have to pony up even more cash or else buy it on credit themselves. Finally, it gets to the point that nobody can buy things without going into debt, which means that prices keep ballooning while wages sink in terms of buying power and as a percentage of the economy, and the financial sector grows.

    • The Deuce

      (Cont)
      Have you noticed how the prices of houses, college educations, cars, food, etc have ballooned over the past few decades, while Wall Street has grown out of control? This is why. It’s the increase in debt. And it’s been driven by the federal government. The government has acted to deliberately increase home loans to people who couldn’t afford houses (seemingly a “charitable” thing to do, but in actuality merely traps those people in debt, puts homes further out of the reach of other poor people, and enriches Wall Street). The government has acted to blow up the federal student loan program (again, an example of phony “aid” which merely enriches Wall Street while harming everyone else). The government has gone deeply into debt itself, taking loans from the banks and thereby transferring the value of your savings to them. And the government gave even more money to those banks when it turned out that so many of the loans they had made couldn’t be paid back.

      Btw, this is why CEO pay is so high now. Modern-day CEOs are heavily invested in various financial derivatives, which far outstrip their actual salaries. Thus, as more and more of the economy is transferred to the financial sector, they get richer. This is why Walmart’s CEO can have an annual income of $18 million despite an actual salary of less than $2 million.

      Here’s the bottom line: What we’re seeing is the results of widespread, government-promoted usury, plain and simple. This is something that Christians *used* to rail against. *Nothing* will change until the underlying cause does. Any Catholic who is angered at what has happened to wages and CEO pay needs to start denouncing the taking on of debt, both by individuals and by the government, rather than screaming for the government to do something with yet another program. Any “charitable” program the already-indebted government takes on will require it to create even more debt, thus making the problem worse.

      • Mercury

        How do you suggest people buy homes and cars, or pay for their education?

        I agree that these things are inflated – well, at least the price of college is. I also agree that while reasonable interest is well, reasonable, a situation where people end up paying twice what they originally borrowed is clearly usurious.

        But if people do not take out loans, mortgages, etc., how will they buy homes and other things? An while credit card debt and student loan debt are relatively new, taking out loans for homes, cars, an major equipment for businesses is very old indeed.

        • ivan_the_mad

          The Church teaches that all interest is usury, and usury is a sin.

          • Mercury

            Not true, not true at all.

            Unless you want to call several reputable priests heretics, say that the 1910 Catholic encyclopedia is written by heretics, and that the Vatican itself has been involved in this sin since the 19th century.

            I’m sure someone else can explain why you are wrong, but the Catholic Encyclopedia is a good place to start.

            I guess I’m going to hell for having a checking account.

            • Mercury

              And by reputable priests I include 99% of all moral theologians in union with Rome since the mid-nineteenth century, and likewise the overwhelming majority (perhaps all) moral theologians writing today. Also Fr. John Hardon.

            • ivan_the_mad

              A bit of an over-reaction, but it does appear that I am wrong. My understanding is based off of CotCC 2249, but I see that the CE article paints a very different picture. I’ll have to investigate.

              • Mercury

                Why is that an overreaction? That’s what would be implied if the Church did indeed condemn all interest charging as one and the same as sinful usury.

                The difference is that money is now understood as a productive good (like equipment), not as an exhaustible one (like bushels of corn). Therefore, the sin is in the overcharging and gouging, not in the interest itself (which is reasonable).

                • ivan_the_mad

                  *rolls eyes* Yeah, in my ignorance, I was totally trying to imply all those things. Have fun with your hysterics.

                  • Mercury

                    I never said you were trying to imply anything. I was merely pointing out the logical conclusions of what you are saying – the whole points is that I DIDN’T believe you’d actually think that,therefore your original premise was wrong.

                    Where did I sound hysterical?

                  • Mercury

                    Also, CCC 2249: “The conjugal community is established upon the covenant and consent of the spouses. Marriage and family are ordered to the good of the spouses, to the procreation and the education of children.”

                    Surely there is a mistake here?

                    • ivan_the_mad

                      There is, but I trust you can work the index as well as I.

        • dpt

          “But if people do not take out loans, mortgages, etc., how will they buy homes and other things?”
          Definitely a challenge when it comes to home ownership, but cash is doable for purchasing cars and other things–as long as you manage your expectations. Also, what things are we taking loans out on? Seems that our economic mess is due to our willingness to go into debt to take buy things, take vacations, etc. The debt lifestyle certainly impacts individuals, institutions, and governments.

          Living in the Bay Area, CA, we heard through much of the early 2000s that rising home values were detrimental to families as housing costs consumed a large percentage of a families income.
          Then the bubble burst and tables were switched: declining home values were know a detriment to family finances.

          Seems we can win in either direction.

          • Mercury

            What about just taking out loans on decent-sized homes with manageable mortgages? As in, don’t take out a loan on a $300,000 home when one that is $100,000 will do just fine. Same with cars.

            And yes, cash IS doable for a car, but a lot of families do not buy cars after they have saved for one, and most people cannot wait. Sometimes there re savings set aside, but really what often happens is that the old car goes out and you need a new one immediately. But again, keeping our tastes at a reasonable level can get us a relatively small monthly payment – get the Ford instead of the Lexus, get textile seats instead of leather.

            I agree that it’s silly to go into debt for the things you mentioned. But most of the debt I have incurred has been for things like cars, computers, and student loans. The last one is the killer. I will be paying student loans until the day I die. I cannot express how evil I think that industry is – and it has gotten that way with the open collusion of government and the universities themselves.

            • dpt

              Student loans are bad news.
              Never understood why politicians touted creating more access to such:
              Thanks for putting young people in debt.

              • Mercury

                I’m deep in debt, yes, but I am able to manage it, thank God. And it wouldn’t be so bad if I was better about paying them off for the first few years.

                However, I do have a masyer’s degree, which has allowed me lots of opportunities. While I might have gone to a state school for free if I couldo it all over again, I am very grateful for the degree I do have, since I doubt I’d have my job otherwise.

                And while, yes, undergrads can often work through college, it is extremely hard to work a 30-40 hour week while trying to earn a higher degree. I worked part-time for spending money while in graduate school, but there is no way I’d have been able to work enough to pay tuition and rent AND actually complete my studies.

                Of course, according the commenter below, I was lazy and impatient and greedy because I took out a loan for school. I should have waited until I could pay tuition in cash, just like no one should own a home unless they can pay in cash.

                • Marthe Lépine

                  I have occasionally met people who were trying to save in order to purchase a home. The problem was that it took so many years to save enough money that, by the time they thought they had finally done it, housing prices had gotten higher. Then they tried to save again, but housing prices went up again… and again… And they were waiting to have a home in order to start their family…

                  • Mercury

                    And the whole time they spent just as much paying rent, all with absolutely nothing to show for it at the end. Look, it’s great if people do that – I am simply reacting to the implication that people who take out a mortgage are being lazy and irresponsible, or that people who take out loans to start a business are destroying the future.

        • The Deuce

          How do you suggest people buy homes and cars, or pay for their education?

          By saving their money/buying used/renting/working through college/prioritizing/not getting more car, house, or classes than they need/exercising some patience/etc.

          Of course, it has become impossible to do most of those things now, precisely because the government’s encouragement of ever-increasing debt in our society has driven the prices of those things up. That’s what’s so sinister about it.

          When the government acts to increase credit in the economy for people to buy specific goods, it increases effective demand for those goods (demand being determined by the number of people willing to buy that good at any given price), which in turn drives up prices. Eventually, this culminates in prices being inflated to such an extent that people are *forced* to take out credit to buy them, which is the situation we have now. And this continues until the debts become too great for people to pay back, at which point the credit bubble pops. And then, because so many people have become dependent upon the banks and their Ponzi schemes by that point, the government takes even *more* of their wages (either by taxation or money-printing/going into debt itself, which amount to the same thing) to keep the banks solvent.

          It is ineffectual foolishness for Christians to turn a blind eye to this stuff and fail to condemn it, and then to turn around and complain about the inevitable, inescapable result that wages sink while CEOs and Wall Street cronies get richer. When you pile on debt, you are consuming more than you produce, and leaving less (and driving up prices) for everyone else. When the government encourages debt and goes into debt itself, it is defrauding the public of their wages. These are the sins of greed, laziness, and impatience at work, and Christians should be denouncing it at every level.

          • Mercury

            So you think the only people who should own homes are those who have saved up the $100,000 or so that it costs to own a decent home in most places? Or that people who need cars should just tough it out when they are in desperate need of one?

            The problem is not that people take out loans for major purchases like homes, cars, etc., but that they go into debt for BS, or they take out loans where they cannot afford the monthly payments. Most people who manage to stay out of serious debt don’t manage to do so by renting apartments (in which case they are STILL paying a monthly payment, but for nothing at the end) instead of taking out mortgages, but by not going into debt for BS.

            • The Deuce

              You’re still not getting the point. Houses wouldn’t cost what they do if everyone weren’t taking out loans to buy them, and buying more home than they need. Saving up and buying a place used to be quite doable for most people. Working through college used to be quite doable for most people. The same is true for cars and other goods that nearly everyone buys on credit. All the debt has done is to offer a tiny bit of instant gratification at the cost of steeply declining wages and a transfer of resources to the financial sector. And anybody who complains about the declining wages and the rising fortunes of CEOs and Wall Streeters, but isn’t willing to speak out against those responsible for accumulating debt at all levels, should just shut their mouths, because you can’t have one without the other and that makes them part of the problem.

              • Mercury

                Do you actually have any statistics on the average price of homes in the early 20th century compared to average income? Do you have any way to prove that “most people” used to be able to “save up and buy a place?”

                Anyway, isn’t it better to pay a mortgage and eventually own the home than to pay rent for several years and have nothing to show for it AND not have enough money to save up and buy a home? I do not see why the first is a good idea and the second is “lazy, impatient and greedy.” How many people who rent have looked back on what they spent and realized they could have bought a home with all that money, but never had ti all at once?

                I do not take issue with your saying that it would be better to save and buy things all at once if at all possible. I do take issue with your implication that anyone who takes out a mortgage or finances a car, or takes out a loan for college (and by the way many people take loans AND work, because the kind of jobs they get are rarely enough to cover tuition AND housing and other expenses) – that these people are lazy and greedy and in search of instant gratification.

                A person who finances a new boat – yes, I get it. A family who buys a huge home on credit, I get it. But people who buy a modest house or piece of property, or people who take out a loan to buy a vehicle they couldn’t otherwise afford, or people who take out a (small) student loan to they can go to grad school, and then work hard to pay off those debts – I do not see them as doing anything sinful.

                And you are very smug if you can assume all working-class people are able to save up for such major purchases. Yeah, they can buy a house, after saving for 200 years.

                • The Deuce

                  Average income, 1960: $11,900
                  Average home price, 1960: $5,315.00

                  Median (can’t find average, but I believe it’s a bit lower) income, 2007: $50,740
                  Average home price, 2007: $313,600

                  Any questions?

                  • Mercury

                    Those are good numbers – wow.

                    But then why is it that I know my grandparents didn’t buy their homes outright in the 1950s and 1960s, but took out a mortgage, even though they had good jobs? I mean, that is anecdotal, sure.

                    And still, even if a home cost $25,000 or so, someone who makes $50,000 doesn’t just have that lying around, especially if he has a family … it would still take a while to save up, and in the mean time he’d be pissing his money into paying rent.

                    • Mercury

                      btw, where do those numbers come from? Just wondering. I find it fascinating that a home could cost less than an average yearly income.

                  • dpt

                    Those home prices sound right for the Bay Area, CA according to my older neighbors.

                    Back then folks took our shorter term loans too (20 years or less instead of 30). Access to debt has contributed to higher housing costs, and 30 year mortgages means more interest for the banks.

                    • Mercury

                      Of course, those home prices are astronomically high for Louisiana, but our incomes are probably also lower on average.

                  • Ye Olde Statistician

                    Yes. What did the typical new home include 1960 vs. 2007? What sort of fittings and utilities did it come equipped with. What were the building standardsWhat building codes did it have to comply with? One reason why X today costs more than X yesterday is that it is no longer the same X. In most cases, it has become a more complex object, either because of technological advances or mandated modifications for such things as fire-proofing, earthquake or flood, electrical, waste disposal, etc. For housing in particular, population increase relative to available real estate also comes into play.
                    Complexity also accounts for much of the inflation of medical care: compare what a hospital stay could deliver in 1960 versus 2007. No MRIs back then; not much more really than the sulfas and penicillin. Cancer was a death sentence and hearts could not be transplanted.
                    (Automobiles have decreased in relative price, and when you take account of the increased complexity of the automobile the customer gets a lot more for the buck than someone in 1960. Besides, as the old maxim has it, people don’t buy cars, they buy miles.)
                    Stretching mortgages from 20 to 30 years also reduced the monthly payment and for many people the cash flow may have mattered more than the cumulative payout.

                • The Deuce

                  And you are very smug if you can assume all working-class people are able to save up for such major purchases. Yeah, they can buy a house, after saving for 200 years.

                  I’m not sure how many times I have to acknowledge that most people *can’t* save up for major purchases anymore before you’ll acknowledge that it’s been acknowledged.

                  Though, I gotta say, if a house would take you 200 years to save up for, you’ve got no business buying it with a loan either, since that means there’s pretty much no chance that you’ll pay off that loan.

                  • Mercury

                    Not necessarily, since the money in your budget that would be going towards paying rent could go towards paying a mortgage.

                    If someone is going to be paying a certain amount each month towards housing, why NOT let it go towards home ownership?

                    If someone can only put away a few hundred a month, and families with children can hardly do that much, are you saying that person is simply stuck paying rent for the rest of their lives? Yes, theoretically they could change jobs or get money some other way.

                    You sound like you’d condemn the Bailey Building and Loan in “It’s a Wonderful Life.” :)

                  • Mercury

                    200 years was an exaggeration, obviously. But let’s say 20, 25 years.

                • sal magundi

                  i’ve rented my entire life, and am glad of it.

                  - no complicated tax rules to know
                  - no debt to assume
                  - problem? call the superintendant, that what he’s hired for
                  - i still haven’t reached in rent payments the amount i would have had to spend to by a house

                  yes, my situation isn’t that of the majority, but it’s not a small minority i’m in either.

          • Mercury

            And do you really think that “working through college” can really do it nowadays for most people? Do yo know how much college costs now? That is the universities’ and the governments’ faults, but really, a lot of people DO work 30+ hours a week while in college an STILL cannot pay tuition without assistance.

            And I’m the biggest sinner of all, because I am so deep in college loan debt that I will be paying it my whole life.

          • Mercury

            One last thing – can you prove that the prices of average homes and cars are higher relative to average income than they were 50, 75, 100 years ago? 150 years ago?

            Also, if getting a mortgage for a home is such an evil thing, or if financing a car is such an offense against God as you say, why do the Vatican and the bishops not condemn this, while they DO condemn frivolous spending and the like? I have never heard anyone condemn going into debt per se, simply getting oneself irresponsibly mired in it. And most people I know who ARE deeply mired are the ones who had no choice.

            Finally, what is the difference between renting a house for $700 per month, or buying a house and paying a similar amount for a mortgage each month? Why is one “right” and the other “evil,” especially since, all things being equal, the latter ends in ownership of something, whereas the former simply pays the landlord over time.

            Is it better to just pay the landlord one’s whole life and never get out of the slum (in some people’s cases)?

          • dpt

            “When you pile on debt, you are consuming more than you produce, and leaving less (and driving up prices) for everyone else. ”

            Leaving less and a mess for future generations too.

            • Mercury

              So people who take out mortgages on their homes, people who finance a new car, people who borrow money to start up or expand a business – all of these people are hurting future generations in doing so?

              dpt, that is not what you are saying, but what the other gentleman is implying. Also that people who do these things are sinfully lazy, greedy, and impatient.

              I would like to know just when it was that average middle-class and working class families could EVER buy a home or property outright and didn’t have to take out a loan to do so. Or when people were able to start up profitable small businesses without any loans whatsoever to buy equipment and the like. Almost every small business we know of, almost every piece of technology we use, was developed by people who took out loans to do so.

              Certainly the Vatican itself wouldn’t lend money (at interest) if this were such a sinful and problematic thing in and of itself.

              • dpt

                “people who take out mortgages on their homes, people who finance a new car, people who borrow money to start up or expand a business – all of these people are hurting future generations in doing so?”

                You need to go into any debt situation eyes wide open, and easy access to credit has contributed to our economic mess. Folks were tempted to purchase more home then they could honestly afford.

                40 years or more ago, shorter term mortgages were the norm, then we the consumer were sold the 30 year mortgage which on paper reduced the monthly payment but meant higher interest payments to the banks.

                Ultimately, debt can and will hurt future generations. Who is being called to pay for the mess we’ve created today? Our kids and grandkids.

          • Marthe Lépine

            Do you mean that prices go up on their own accord? People increase prices. If demand increases and the people who sell the goods become more greedy, those people increase their prices just in order to make more profit. It is not a law of nature, but a consequence of human weakness and their feeding their own greed instead of keeping solidarity with their fellow people and restraining to increase their prices “just because they can get away with it”!

            • http://natewinchester.wordpress.com/ Nate Winchester

              You… honestly believe prices do not reflect any bit of reality?

              Well why have prices at all? It’s a consequence of human weakness and their feeding their own greed instead of keeping solidarity that keeps everything from being free! And if people would all stop having sex, we could all get unicorns.

              That is how looney your post is. So mind-boggling insane, that from a child it’s cute, from an adult, medication is recommended (or a career in academia). I can’t remember which part it was of Sowell’s speech here (so I’m just linking to part one since it seems like a lot here need to watch it), but he said something to effect of “people do not believe that prices reflect reality; and that reality is optional”. Seriously, how is the weather in cloudcukooland?

            • Mercury

              So selling a product at the level of demand is evil now? It’s automatically “feeding greed” is it? So a farmer who finds that people will now pay him $10 per load of carrots instead of the previous $7 is sinning?

              I am a freelance translator – I get paid anywhere from $.07 – $.09 per word for my work. If let’s say all of sudden the demand for German translation goes up and the number of translators is limited, I would be sinning and “greedy” if I increase my price to $.12 – $.15 per word?

              What about when demand increases due to scarcity? What about people who went and sold their gold when the price of gold shot up? They were greedy I guess. As are people who invest in stocks when they are low and sell them when the price goes up.

            • Mercury

              Also, Marthe, how do we know that the “right” price for a good or service is the low one? Why should the carrot farmer assume that $7 per bundle is correct and not $10 or $5? who determines how much carrots are worth, and how do we know what the right and fair price for carrots is?

              Or what about a rare commodity that suddenly becomes popular, such as certain spice. Are traders morally obligated to sell at the price they were offered before demand increased? Again, how do we know what the “right” price is?

              • http://natewinchester.wordpress.com/ Nate Winchester

                Clearly prices are evil. We should give everything away for free. ;)

            • The Deuce

              Good heavens, Marthe, you’re so completely off-base I don’t even know where to start. Just read this fine post by John C Wright and honestly try to understand what he’s saying: http://www.scifiwright.com/2012/06/economists-and-antieconomists-2/

    • The Deuce

      Btw, if you’d like to see the point I’m making with numbers and colorful graphs to substantiate it, see here:
      http://market-ticker.org/akcs-www?singlepost=3083015

      • Mercury

        This chart does not take inflation over the past 30 years into account, nor the increase in population. I’m sure the per-capita inflation-adjusted numbers woudl also show an upward change, but would it be so dramatic?

        • The Deuce

          He does indeed take the population and inflation into account. Note where he says, “If you look at GDP in unit-invariant terms (that is, getting “dollars” out of the definition) you would find that of course it has grown materially since 1980, as population has gone up as well in the United States. But population has not gone up by a factor of 10, nor has gross output. The difference is monetary inflation, and much of it (that “green bar”) has been hidden as that part of the chart does not circulate.”

          His point is, that massive increase in debt you see *is* most of the monetary inflation we’ve seen over the past 30 years. That’s what he’s talking about when he says that debt and dollars are fungible. When banks create debt by issuing loans in our fractional reserve system, they actually increase the effective money supply, thus causing monetary inflation (and thereby price inflation as well).

          Anyhow, the most important part of that graph is not simply the fact that debt has grown by 10X since 1980 (that’s the second most important part). The important part is how much bigger that green part of the graph (which represents the share of the economy taken up by the financial sector) has gotten as a share of the economy. In fact, the two are basically one and the same. The financial sector has been issuing tons of debt, which is the primary reason total debt has grown by 10X, which is also why the financial sector (which produces nothing *but* debt) has increased as a percentage of the economy.

          • Mercury

            Okay, I see what you mean now.

            Still, people have been taking out loans on homes and cars for a long, long time. I’d imagine people did not buy home with cash in the early 20th century any more than they do today.

  • http://gravitationisnotresponsible.blogspot.com/ William J. Eichenberger

    If one is not a shareholder in a company whose executive are percieved as too high, then one has nothing to say. I hate to see Catholic hoodwinked, by way of watchwords like subsidiarity and distributism, into socialism. The answer to our cultural, economic, and moral malaise (Thank you mister Carter) is to get the government (btw…the biggest corporation) out of the private sector (i.e. – lower corporate and individual tax rates). This includes the EPA and its onerous regulations need to be abolished. Finally, the Catholic and her social support apparatus needs to be allowed to work, unencumbered by government interference, like Obabmacare and adoption restrictions.

    • Bill

      No, the key is to convert souls. If people really believed what the Church taught, there wouldn’t be problems.
      It’s not the government or business or entertainment. It’s all of us.

      • http://ohnimus.wordpress.com Christian Ohnimus

        Bill, the same could be said of any social problem. Obviously conversion of souls (including our own continuing conversion) is the most fundamental issue. However, this is also a political/economic matter and therefore a discussion of politics and economics is not just relevant but necessary. Good public policy concerning economic matters requires a healthy understanding of economics in addition to just following church teaching.

  • vox borealis

    I’m not sure that wages as a percent of economy necessarily tells the whole story. It seems to me that a far larger percentage of “regular” people invest these days. Should we look instead at the total *income* of “regular” people, rather than only at wages?

    Also, looking at wages excludes state benefits that individuals receive. But that’s another discussion.

  • Michaelus

    The chart is misleading. If 10% of workers are unemployed then wags as % of GDP is naturally going to drop. If lots of people are working part time it has the same effect.

  • Michaelus
  • Jeff T.

    Two words: Rerum Novarum.

  • Paul H

    I’m a conservative/libertarian, and I definitely think that this wage issue is a MAJOR problem. I don’t think it is a problem that calls for a federal government solution, but I do think that it is a big problem.

    Labor unions in theory could be an important part of a fix for this issue. But in practice, I find actual modern labor unions in the U.S. to be the types of organizations that I would never want to associate with — because of some of their slimy tactics, their protecting of bad employees, and their leftist political activism. It’s really too bad that we don’t have some good labor unions motivated by Catholic values that look out for the needs of the working man, without all the extra negative baggage.

    • Paul H

      The text and charts on this page do a terrific job of explaining our economic problems in the U.S., including the problem with wages:

      http://www.businessinsider.com/whats-wrong-with-economy-charts-2012-10?op=1

    • R.C.

      Exactly.

      If I were in Poland in 1980, I’d be proud to be a member of Solidarity.

      But the “Thugs R Us” class warriors of U.S. industry? Who buy off legislators to compel even non-union members to pay union dues? Count me out. I don’t associate with mobsters, either.

  • R.C.

    Heck, I’ve long said that true conservatives ought to support a “progressive” income tax on businesses.

    Let the large businesses — the ones who buy off Congressmen to let them write the rules of their own industries — pay 30%, while the one-man startups pay 3%.

    That would be the proper dynamic. After all, the problem with large businesses is not their success. It’s that they get big enough to realize they can protect themselves from competition from two ways: (a.) Making a better product, or (b.) Buying Congressmen to write complex and onerous rules for their industry which they’re big enough to implement, but which it would impoverish a small competitor to comply with.

    Thus what they call “corporate welfare” rarely comes through handouts and bailouts.

    Mostly it comes by allowing GM to write the rules of auto-manufacturing in such a way as to advantage carmakers that are already big, and disadvantage any scrappy little competitors that might come along and eat their lunch.

    And the Congresscritters comply with this, naturally, because it gets them campaign funds to ensure their re-election.

    In short, it’s trading one form of “Incumbent Protection” for another form of “Incumbent Protection.”

    The conservative thing would be to throw the bastards out. In politics, that happens through voting. But in business…?

    In business, the best way to do it is to disadvantage the bigness of the big, so that their “Economies of Scale” advantage has a counterweight, and entrepreneurial competition is encouraged.

    Thus: Progressive business income tax. If I make a computer in my basement, I should pay 1% on the income from selling it; if Apple does, they should pay 20%.

    Naturally this would cause some businesses to split into independent spinoffs, which would end up competing with one another as smaller entities. And that’s all to the good: If a hundred competing firms pay off a Congressman, he’ll be hard-pressed to figure out which firm to advantage through his regulatory legislation.

    Better that they fight for each customer by improving customer service…something small businesses tend to do. It’s your gigantic firms that care so little about each customer that they can afford to ignore them.

    • Paul H

      That’s a very interesting idea — a progressive income tax to level the playing field between large and small businesses. I haven’t heard that one before. At first glance it seems to make a lot of sense.

    • http://ohnimus.wordpress.com Christian Ohnimus

      Or we could get rid of the regulatory boards allowing GM to make the rules thus forcing them to take the alternative path of making a better product. I’d prefer that to an arbitrary progressive income tax that places prohibitory level rates on a company just because its bigger than what the Washington ideologues demand.

      Also, contrary to defending big nasty corporations as some might suggest, its precisely big corporations that oppose the approach I suggest. They’d rather pay more in overhead and make the rules than subject themselves to a free market where anybody can come in and knock them down with a superior product. These regulatory boards kill small businesses that can’t afford an army of lawyers to sift through the paperwork and they are meant to work that way.

    • http://ohnimus.wordpress.com Christian Ohnimus

      Also, you might want to brush up on your economics. Economies of scale are actually a very good thing. Its how people like you and me are able to afford cars, or refrigerators or computers. Modern medicine would be impossible without the hundreds of millions of dollars in research and development necessary just to produce one safe and effective new drug for example. Slap a prohibitory tax on that and pharmaceuticals doesn’t become any more competitive, but drugs become more expensive and availability to new drugs declines.

      Instead of favoring small business/localism over big business/globalism or the other way around we need to accept that both realities are necessary for a healthy economy and that government intervention more often than not leads to a disruption of that balance with serious negative consequences.

      • R.C.

        Oh, of course economies of scale are very good things!

        But they aren’t such good things that we always desire to maximize them. Sometimes we can afford to sacrifice some economies of scale in favor of increasing competition and customer responsiveness.

        Don’t misunderstand me: If corporations were run by angels, I’d be willing to let them have all the sales volume they could get! Being run by angels, they would be trustworthy to use whatever remained after production costs to improve customer service, lower prices, and increase wages. Why have more than one company, then? Let GloboCorp, Inc. have a monopoly in every industry!

        Likewise if government were run by angels, I’d propose a centralized totalitarian dictatorship: Put all the power in the hands of the good guys who know more than we. Why not?

        But government is not run by angels, but by men. So it becomes prudent to keep most power in towns and counties, and that which we just can’t manage to limit to towns and counties we delegate to the state, and that which just can’t work even at a state level, we delegate to the Federal government. It is our least-preferred place to run things (because of its distance from the persons governed and its insulation from the consequences of its policies) but sometimes it’s the only place that’ll get certain jobs done (e.g. national defense).

        And even that isn’t enough decentralization of power. After all, government is that entity in society to which we grant a near-monopoly on the use of force to achieve its ends. Scary stuff. So not only do we limit its reach with Federalism, we limit the scope of power of any one man or group within it through the checks and balances of the three branches and the bicameral legislature. ALL THIS IS NECESSARY because the people running government aren’t angels.

        But corporations are not run by angels, either.

        And we find in practice that while the steroid-enhanced growth of corporations to massive proportions does, in fact, lower a lot of prices, it has other impacts as well:

        (a.) Some firms become “too big to fail” which tempts us into moral-hazard bailouts to prevent the economic damage of their failures

        (b.) Some firms become big enough to be effectively immune to the consequences of bad customer service — think about the big banks here! — to the point that we increasingly joke that you can call their “Customer No-Service Line.” Why is the Kafka-esque treatment customers get from large firms not a source of outrage?

        (c.) Some firms start off naive about the Washington D.C. game — I remember back when Microsoft spent little or no money on lobbying and nearly got their heads handed to them as a result because others played the game better. Eventually they all learn to pad the bank accounts of their Congressmen: It’s protection money, and you don’t want your competitor to get there first. But a Congressman who owes a sizable amount of his campaign war-chest to one firm in an industry but not another (Apple but not Amazon), or to one industry and not its near-substitute (Auto Manufacturers but not the Mass-Transit Lobby), is a BOUGHT Congressman. He will write the legislation to favor his contributors, and thus his own re-election. If they have competition from small startups, he will ensure that regulations favor the big firm who gave him funds. The small firm that can’t afford to give him funds, also can’t afford to comply with all the regulations, loses value, and either goes under or gets bought out by the larger firm at fire-sale prices. That’s the way it works.

        Now these are consequences of bigness, of dominant market share, of the non-commoditization of products and industries.

        But imagine how things change should we find a way to balance out the productivity impact of bigness against some additional cost which makes bigness difficult to sustain!

        And, especially imagine how things would change if we encouraged entrepreneurialism by shifting the tax and regulatory burden off the small businesses and on to the bigger ones!

        We would, in effect, “term limit” the market dominance of firms. Given the choice between using profit to increase market share or campaign contributions, or to increase customer service or lower prices or pay dividends, we want them to choose the latter options.

        I suspect that a progressive “income” tax on business profits, the rate of which scales proportionally to the profits themselves, is not quite the correct way to structure the plan. We don’t mind a company keeping its costs below its income! Would that more companies could do that more consistently!

        But perhaps we should scale the tax rate proportional to other factors, such as employee work hours, total market cap, and ratio of total profits to total value of all shares outstanding.

        Something like this: Take the company’s percentile in each of those three areas, divide each percentile by ten, sum the three numbers: That’s the % of profits you pay.

        So a company that employs more workers for more hours than 90% of all other firms is in the 90th percentile; 90/10 is 9. If the same firm has a bigger market cap than 80% of all other firms, 80/10 is 8. If the same firm’s ratio of total profits to total value of all shares outstanding is greater than 70% of all firms, well, 70/10 is 7. So you take 9+8+7 and get 24: This firm will pay 24% of its profits in taxes.

        But the 1-man-shop? He works 50 hours a week 51 weeks a year, but that’s more than only 1% of all firms. His company makes diddly-squat after his pay comes out. And total profits to the total value of the shares, which he owns all of anyway, is likewise in single-digits percentile. So his “company” may end up paying no more than 3% on all his business profits.

        And the 300-person up-and-coming Silicon Valley firm will fall somewhere in-between.

        I’m not saying it’s a perfect plan. In fact I probably have half the details wrong. My intention is twofold: to present a straw-man that other folk can pick apart and tweak until it actually becomes a better plan, and to highlight the possibility and desirability of counterweighting against “bigness” in corporations. We’d know it was working well if prices rose only a little, but the number of firms competing in a given market rose significantly, the firm with the highest market-share kept changing on a regular basis, no firm ever managed a majority of a market for long, customers started reporting improvements in customer support and service, and Congressmen were confused about whom to sell advantage to, because they got contributions from a zillion different little firms, all with competing interests, and each contribution was too small to really bother about.

        • http://ohnimus.wordpress.com Christian Ohnimus

          The examples you cite like “too big to fail” and banks are symptoms of our central banking system and not a free market. That is where the moral hazard originates from. Without a central banking system to finance them, our government would never bailout corporations or prop up failing banks and such businesses would quickly lose to their competitors.

          Here’s another economic principle you may want to look up: reverse economy of scale. The bigger a company becomes the more efficiently it can produce – but only up to a point. There is a peak to every economy of scale at which point, should a given business grow any larger, it will then become less efficient and become more susceptible to losing out to its smaller competitors.

          Essentially, this principle acts as a free market’s natural immunity to monopolies. There is always room for competition even in an industry that may be dominated for a few massive corporations. A business that is too big might have just as much trouble surviving as one that is too small.

          The problem today of course is that we have a central banking system and government regulatory boards which are essentially corporation-controlled. The result is that our system, far from being free and equal, is rigged in favor of big bussiness, allowing said businesses to perpetuate even after they have surpassed their optimal size according to the principles of economies of scale and reverse economies of scale.

          The solution then is of course to eliminate the central banking system and the corrupted regulatory boards that are responsible for the rigged system to begin with.

  • tz

    1. Corp(se)orations are the undead creations of the (Franken)state. Frankenstate monsters. Undead monsters without souls. What do you expect? Corpseorations can’t go to hell. Only their directors and the C*Os can. Perhaps they think the veil of the corpseoration is stronger than the gates of hell.

    2. The Bishops (and even the Catechism says we need “social insurance”! even if the cash is embezzled and it is a ponzi scheme) say your wages can be withheld and sent elsewhere. In Germany the Bishops have threatened excommunication if Catholics don’t register with the taxing authority so they can receive their vigorish. Then there is the robbery by proxy (Is it OK if I threaten to shoot you if you don’t give me money which I promise to give to the poor after taking a cut) called taxation – it’s not OK if I do it, but if I appoint a “tax collector’ who does the identical act for the identical reason, it becomes righteous. So much for the corporal and many spiritual works of mercy. Charity is so much harder than coercion. Workers aren’t so much defrauded as directly robbed with the hierarchy’s approval. The Borgia popes will rise up against this generation much like the queen of the South… Yet any reading of church history shows the Bishops are rarely saints.

    3. That said, a “just” wage is the market wage – but only after all the distortions are removed. Slavery and pollution in China or Mexico. Not paying with scrip but gold or silver of proper, accurately measured weight. But the people demand their 401k’s need to go up, the price of their house too – isn’t it a virtual 401k?

    • dpt

      “But the people demand their 401k’s need to go up, the price of their house too – isn’t it a virtual 401k?”

      Agree,,,retirees, pension funds, 401K holders, & politicians loved the right up during the housing bubble as the growth in paper wealth made folks seem well-off. I understand that the UC system in California took an 18 year or so contribution holiday regarding its pension plan. Neither UC or the employees contributed as returns were good…so much for preparing for a rainy day.

  • http://pavelspoetry.com Pavel Chichikov

    “…put by some little savings and thus secure a modest source of income.”

    Have you looked at interest rates lately. Save and be punished.

    • http://ohnimus.wordpress.com Christian Ohnimus

      Can’t remember who said it but I heard a quote a little while back that stated that, in response to artificially low interest rates, “if you’re stupid then you’ll go into all sorts of debt. If you’re really stupid you’ll put it all in a bank and save it.”

      On a personal level: Invest your money in things like productive property and mutual funds.

      In regards to public policy: end the Federal Reserve, end Keynesian tactics meant to “encourage” spending and punish saving, and let the market set appropriate interests rates based on people’s actual spending and savings habits and not on what they “should” be spending according the chairman of a central bank in Washington.

  • http://pavelspoetry.com Pavel Chichikov

    ” That said, a “just” wage is the market wage – but only after all the distortions are removed.”
    By whom?

  • http://ohnimus.wordpress.com Christian Ohnimus

    Wrote this to a friend and thought it was worth repeating here:

    These charts are percentages of GDP so this doesn’t say a whole lot to me. This could mean a lot of different things. I’d be more interested in knowing how actual take-home pay and standards of living are trending followed by an analysis of all the possible contributing factors (as opposed to just one). Just looking at GDP can hardly tell us anything about a national economy much less flesh-and-blood people and their conditions of living.

    Now, I’m not saying that the article’s conclusions are wrong, simply that the statistics provided don’t really qualify as supporting evidence. For example, it does not follow that simply because corporate profit has increased relative to GDP (which is itself a highly relative, fluctuating, abstract number) that corporate profits have risen absolutely, much less reaching record numbers. Maybe we just built less bombs this year (although I doubt it).

    I believe that the article is correct however in that we need to stop focusing on trying to force the economy to “grow” and instead invest in our employees. However, our attention should not be primarily focused on corporations who are simply reacting to the circumstances that they have been placed in, no matter how flawed such corporations may be. They have little to no power when it comes to manipulating the economy or affecting economic growth (even if a few at the top may be in bed with government and have some power to manipulate regulations within their industry). Instead, we need to turn our attention to the Federal Reserve and other governmental and quasi-governmental entities that do possess extensive power over the economy and have made it their mission to “grow” and “stabilize” the economy by means of manipulation (the irony being that they have done the exact opposite, forcing unnatural booms and then failing in inevitable busts – the result being a highly unstable, unpredictable and less prosperous economy). By entrusting these entities and centralizing power to them we have effectively subjected the economic well-being of millions to the whims of a few individuals.

    A couple (but by no means comprehensive list) of things that should be done:

    The termination of monetary manipulation and a decentralization of banking power by eliminating our federal reserve system is the single best step that we can take in order to restore economic health and benefit workers.

    Secondly, in addition to putting an end to all manipulation of our money supply we need to end corporate welfare. Don’t punish taxpayers and reward incompetent or corrupt CEOs. Let failing businesses fail and let successful businesses succeed. Bailouts are obvious but regulatory boards also lend to the problem of corporate welfare when they get “bought out” by corporations. The end result is Monsanto regulating Monsanto (and all its competitors) which is truly a sickening thought.

    Finally, we need to eliminate many government interventions supposedly meant to “help workers” or “help the lower and middle class.” Contrary to promoting the common good many of these interventions simply benefit some people but hurt many others and have a net negative impact. Obamacare is a perfect example. Some people might receive short-term benefits from it but it also has many more far reaching negative consequences. There’s the HHS Mandate of course but then there’s also the fact that it makes many workers, especially low-skill workers or new graduates, undesirable. Companies aren’t going to spend $40/hr on a new grad on training, health insurance, other government mandates, taxes and finally wages when that employee will only be producing $30/hr worth of goods or services. The result is that businesses will either hire lots of part-time staff (now defined under Obamacare as less than 30 hours per week – hardly enough work to live off of for many people; many restaurants are now taking this approach) or hire only a few full-time staff members, understaffing and mandating overtime (leading to more unemployment; this is what a lot of hospitals are now doing). Another tactic is to lower wages offered in order to cover all the other government-mandated expenses associated with hiring employees. Perhaps these methods are immoral but unless we change the circumstances in which we place businesses then often the alternative is bankruptcy which will be even worse for workers (not to mention many needy people who rely on the goods and services provided as is especially the case with hospitals).

  • http://ohnimus.wordpress.com Christian Ohnimus

    Also very relevant:

    The American Conservative has a piece entitled “How the Rich Rule” that is very worth the read.
    http://www.theamericanconservative.com/articles/how-the-rich-rule/

    Some highlights:

    “In short, financial intervention on behalf of well-heeled, well-connected groups begets recessions, depressions, and long-term unemployment, which in turn beget vulnerable working and middle classes who, ignorant of economics, are willing to accept more powerful government, which begets more intervention on behalf of the wealthy, and so on—a vicious circle indeed.

    Fiat money, central banking, and deficit spending foster and reinforce plutocracy in a variety of ways. Government debt offers opportunities for speculation by insiders and gives rise to an industry founded on profitable trafficking in Treasury securities. That industry will have a profit interest in bigger government and chronic deficit spending.”

    “While some rich people may be hurt by the recession, they are far better positioned to hedge and recover than workers who are laid off from their jobs. Moreover, even after the recovery, the knowledge that the threat of recession looms can make the workforce more docile. The business cycle thus undermines workers’ bargaining power, enabling bosses to keep more of the fruits of increased productivity.

    Bottom line: inflation and the business cycle channel wealth from poorer to richer.

    The financial system isn’t the only way that the rich benefit at the expense everyone else. The corporate elite have better access to the regulatory agencies and rule writers than the rest of us. (University of Chicago economist George Stigler dubbed this “regulatory capture.”) Wealth also gives the elite a clearer path to politicians and candidates for office, who will be amenable to policies that make wealthy contributors happy, such as subsidies, bailouts, and other measures that socialize costs and privatize extra-market profits. Campaign finance “reform” doesn’t change this, and even tax-funded campaigns would only drive the quid-pro-quo process underground.”

    Money manipulation and the cyclic, bipolar swings of booms and busts intrinsic to the central banking system (as opposed to being intrinsic to a free market as many people, even many self-described Capitalists, believe) hurt the lower and middle classes. The solution, then, is not to double down on failed government interventions but to end the Federal Reserve, abolish the central banking system and eliminate or reform regulatory boards being controlled or influenced by a few rich elite. To promote the common good means that we must stop rigging the system, whether it be through a central banking system, a progressive income tax, or some other means of central planning meant to favor some at the expense of everyone else.

  • JDP

    “If you suggest there is something wrong with this, you are a socialist class warrior who hates America, not a Catholic who thinks that defrauding workers of their wages is a sin that cries out to heaven for vengeance.”

    no, though the particular way you put it does make you sound like you graduated from the Barack Obama school of how to frame your opponents’ arguments.


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