Class Warfare Blog

March 4, 2013

The Job Creation Bank Shot

GOP meme makers went way overboard in painting wealthy people as “job creators.” Their logic is actually sound: wealthy people invest their money in banks and stock markets which in turn use that money to foster new businesses and grow existing ones. as far as it goes, this is true. Their argument continued, but if the government took money (as taxes) from the “job creators” fewer jobs would be created. This is not true, especially right now. (All political truths are conditional.) It was ignored that the government might be using those funds to hire laid off government workers and thus be creating jobs that the job creators were not, but that is beside the point.

An entrepreneur made a splash by using a TED Talk to dispute this, saying that, in effect, it was not wealthy people who created jobs, it was customers. This was being proven by the fact that American businesses had (and still have) mountains of cash piled up but they aren’t spending it to hire new workers because there is no demand for the goods those new jobs would create. In effect, there are not enough customers to create the demand, therefore there are no jobs. Ergo, jobs are created by customers, grown spontaneously or created by advertisers.

One could take this one step farther. What if there was demand and businesses jumped at opportunity to fill it by buying machinery, plants, etc. and hiring workers to operate that machinery and build those widgets to meet that demand, but there were no workers available to take those jobs or maybe not workers with the correct skills. Those hires would not happen. Could not one then argue that the workers themselves are the job creators?

Obviously this is a “system,” one in which there is a role for customers, workers (labor), and capital. (Welcome to Econ 101.) The obvious question then is: how are these system components compensated. Customers are compensated with quality goods and services at reasonable prices. Workers are compensated by a fair return for their labor. And capitalists are compensated by a fair return on their investment. See, it works!

So, what is wrong with this picture?

According to a report from The Century Foundation “Corporate profits are currently at an all-time high while worker wages as a percentage of the economy have plummeted to record lows. But despite those sky-high profits, corporate income tax revenue is projected to be just 1.5 percent of GDP this year, below the recent average and far below the amount raised by the tax just a few decades ago.”

corporateprofitsuptaxesdown

In addition, economists from Northeastern University have released a study that shows that our sluggish economic recovery has almost solely benefited corporations. According to the study: “Between the second quarter of 2009 and the fourth quarter of 2010, real national income in the U.S. increased by $528 billion. Pre-tax corporate profits by themselves had increased by $464 billion while aggregate real wages and salaries rose by only $7 billion or only 0.1%. Over this six quarter period, corporate profits captured 88% of the growth in real national income while aggregate wages and salaries accounted for only slightly more than 1% of the growth in real national income. … the absence of any positive share of national income growth due to wages and salaries received by American workers during the current economic recovery is historically unprecedented.” (My italics.)

The Titans of Industry put this phenomenon at the feet of “market forces.” (Anytime anyone invokes “market forces” you need to deploy a can of aerosol bullshit repellant.) The market forces are “technology” and “global competition.” Ah, bullshit, indeed. Yes, technology has accounted for part of the productivity gain of workers and it is right to lay that at the feet of the companies because they paid for the technology and the training programs, etc. But it doesn’t account for all or even most of the productivity gains, so global competition? If global competition were the cause of worker’s wages being basically unchanged for the last forty years, we should have seen corporate profits going down, causing labor concessions, with profits possibly coming back up to former levels thereafter. But what we are seen is record profit levels, even during a major economic recession.

Wake up America, your pocket is being picked by the clever ruse of picking it before any money ever got into your pocket.

Then after it does get to your pocket (what little the cheap bastards want to pay you), look at what comes to you in the way of taxes. In 1952 corporations paid about 32% of all federal taxes. In 2011, a little over 3% . . . a ten fold decrease. Guess who picked up the slack? Let’s see there are corporations … and individuals . . . and excise taxes. Hmm, was it us? Bingo.

The wealthy and Titans of Industry are trying to destroy the very system that made them rich by extracting more than their fair share from it. And that extraction is coming at the expense of workers.

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2 Comments »

  1. It’s hard to believe how many people are using technology as a scape goat for falling wages. Workers have been slowly replaced by technology since the start of the Industrial Revolution over 200 years ago. Why have wages only been lagging the last 30-40 years?

    Like

    Comment by Michael — March 4, 2013 @ 2:36 pm | Reply

    • It accounts for some of the rate of increase of productivity as it always has and the rate of change has increased over time. What I object to is just utter the word as ii waving a magic wand and the Titans of Industry all harumph and agree that that is why wages haven’t gone up. It has nothing to do with law changes, or union suppression, or the myriad other things done to suppress wages.

      Steve

      Like

      Comment by stephenpruis — March 4, 2013 @ 5:08 pm | Reply


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