Class Warfare Blog

November 21, 2017

Teachers Unions? Bah, Who Needs Them?

Six years ago, the state of Wisconsin passed the highly controversial 2011 Wisconsin Act 10, which virtually eliminated collective bargaining rights for most public-sector workers, as well as slashed those workers’ benefits, among other changes.

As Gov. Scott Walker (R-WI) argued, “We no longer have seniority or tenure. That means we can hire and fire based on merit, we can pay based on performance. That means we can put the best and the brightest in our classrooms and we can pay them to be there.”

Well, did they?

What do you think will happen to an employer who slashes wages and benefits? People will leave their employ. Who leaves first? The people who have the most confidence they can find another job, that is the best workers. Who stays. The sluggards, the unimaginative, the fearful … not all, of course, but a higher concentration of these stay. (Studies have shown this to be the case.)

Action Reaction
An analysis of the effect of Act 10 has found:

  • In the year immediately following the law’s passage, median compensation for Wisconsin teachers decreased by 8.2 percent in inflation-adjusted terms, with median benefits being cut by 18.6 percent and the median salary falling by 2.6 percent. Median salaries and benefits continued to fall during the next four years so that median compensation in the 2015-16 school year was 12.6 percent—or $10,843 dollars—lower than it was before the passage of Act 10.

  • The percentage of teachers who left the profession spiked to 10.5 percent after the 2010-11 school year, up from 6.4 percent in the year before Act 10 was implemented. Exit rates have remained higher than before, with 8.8 percent of teachers leaving after the 2015-16 school year— the most recent school year for which data are available.
  • The percentage of teachers with less than five years of experience increased from 19.6 percent in the 2010-11 school year to 24.1 percent in the 2015-16 school year.
  • Average teaching experience decreased from 14.6 years in the 2010-11 school year to 13.9 in the 2011-12 school year, which is where it remained in the 2015-16 school year.
  • Interdistrict moves—when a teacher leaves one Wisconsin district to teach at another the next school year—has increased from 1.3 percent before the passage of Act 10 to 3.4 percent at the end of the 2014-15 school year.

Are you surprised?

The False Narrative
The core of the false narrative is in plain sight; it is “That means we can hire and fire based on merit, we can pay based on performance.” This is a business model. The problem is that in a business, the “boss” owns the company (or the boss’s boss or the …). The owner has the right to hire and fire inherent in his ownership. In a public school, the “owner” is the public, the taxpayers of the school district. There is no mechanism by which those owners can fire anyone (by state law). Prior to Act 10, the “owner” of each school district elected a school board which carried out negotiations with the employees to determine wages and working conditions. In no school district of which I am aware are teachers getting rich. When you think of employees getting rich, you think of doctors, lawyers, stock brokers, high level executives, but teachers … not so much. Having high educational attainment did not result in abnormally high wages for teachers, but there were tradeoffs: instead of higher salaries, better benefits and working conditions were offered and accepted, through negotiation. Act 10 chopped the head off of local control and took it over at the state level. (Republicans in favor of local control? Not so much.)

So, how did the minions of the schools (principals?) do in hiring the best and the brightest? How did they do in paying for performance? How did they do with getting the bums out of the racket? Aren’t these business types always talking about how important good management is? Was there any effort to improve the quality of the people in charge? No? (No.)

As usual, the actual motives for Act 10 was not in the bullshit offered by proponents. The Koch Brothers-fueled politician, Scott Walker, was executing a typical anti-union action for the billionaire class. Unions are the only organization with enough power to resist the oppression of workers by employers, hence they have to go. (Plus they tend to vote Democrat.)

But actions have reactions. Too bad Scott Walker doesn’t feel any of the reaction … just the teachers and the students and the “owners” of the school district. The Koch Brothers, in reaction, kept pouring money into Scott Walker’s presidential candidacy and into his gubernatorial re-election campaign coffers. If you want quality workers, you gotta pay them!

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November 10, 2017

Boy, I Love Ian Welsh

But unlike most of the rest of the world, China is actually trying to tackle problems, to think decades ahead, to plan and to do big important things. Some of what China considers important, like its expansion of a truly oppressive surveillance citizen which will include a public score for every citizen, I don’t like, but China does big things, good, bad or flawed, while we watch approaching catastrophes and gently hum to ourselves, then check our phones.

Follow the brilliant mind of Ian Welsh at his blog.

November 3, 2017

Conservative A-hole Tanks Own Company Because Union

According to the California Today column in today’s NY Times:

“… popular news sites went dark on Thursday after its parent company DNAinfo shut down the entire Gothamist network of city-centric websites.
“The move came a week after reporters and editors at the New York newsrooms of Gothamist and DNAinfo voted to join a union.
“On Thursday, visitors to the websites were greeted by a post from Joe Ricketts, the company’s billionaire owner and founder of TD Ameritrade. He praised journalists who ‘reported tens of thousands of stories that have informed, impacted, and inspired millions of people.’
“But he added, ‘DNAinfo is, at the end of the day, a business, and businesses need to be economically successful if they are to endure.’“Mr. Ricketts, who started DNAinfo in 2009 and bought Gothamist last spring, had been outspoken in his dislike of unions.“As the company’s New York employees moved to unionize last spring, management warned that DNAinfo had been losing money for years. Mr. Ricketts later wrote, ‘I believe unions promote a corrosive us-against-them dynamic that destroys the esprit de corps businesses need to succeed.’”

Conservatives have poisoned their own minds about unions so much that this, er, gentlemen, couldn’t see a major opportunity right in front of himself.

If it were true that the company had been losing money for years (one has to ask why one expands a company by buying another one when one is losing money, but we understand one has to spend money to make money), but I digress, if the company has been losing money for years, open the books to your new union and ask them to be part of the solution rather than part of the problem. Closing the company is still an option, in fact it is a big hammer to use if conventional negotiations were to occur. (I’d rather avoid conventional negotiations and instead prefer interest-based negotiations, but one doesn’t always control how things will go.)

Possibly, if the company were losing money, the union could be a source of ideas as to how to reverse that trend. Certainly it would damper a unions lust after better wages and working conditions for its members.

Companies of European origin who set up shop in the U.S. actively encourage the formation of unions as being effective partners in the running of a profitable company. European countries include union officers on their boards of governors, often by law as well as custom. Of course, in the U.S. they run into conservative state and federal government representatives who put the kibosh on such efforts when they occur. We can’t have examples of working, cooperative unions to be able to point to now, can we?

We would like to know whether Mr. Ricketts has ever been a member of a union, or worked in a union environment, or managed a union-based company. I suspect not. I assume he got his information from other rich assholes like himself, who have no idea what they are talking about and would rather put out their eyes than see what is right in front of them.

In this case the creator of the “corrosive us-against-them dynamic” is certainly not the newly created labor union, it never had a chance to act one way or the other. Gosh, I wonder then, what the source of that “corrosive dynamic” was? Hmm.

October 17, 2017

They Are All For Competition … Until

The conservatives in this country are all for market-based solutions and competition under a capitalistic regime … until … until it hurts their bottom line.

The “party line” is that competition is good because better businesses succeed and poorer business fail, thus improving the overall quality of business. (I wonder if Trump’s evangelical Christian base understands how Darwinian capitalism is? Hmm.) But when it comes to businesses some of the elite have stock in or receive “campaign contributions” from (Wink, wink, nudge, nudge, know what I mean?), then it is all hands on deck to preserve the privileges of that business, or the business itself.

The coal industry has been in decline for a very long time. In the early 1900’s almost a million people had jobs mining coal. By the early 2000’s that was down to around 75,000 and recently some say down to closer to 55,000. In those early days the reductions in the numbers of jobs was due to mechanization. Coal didn’t need as many men wielding picks and shovels when they got steam power, then electrical power to their mines. More recently, the demand for coal has dropped. Its primary use has always been as a fuel to create motive power, e.g. steam railroad engines, or stationary power, e.g. electrical generation. Recently, the POTUS unveiled a plan to lower the regulations of coal mining to unleash the sleeping giant. At the same time, a Southwestern energy company decided to do through with their plans to mothball three coal-fired electricity generating plants. The reason? There was a bit of a glut in capacity, electricity being cheaper to produce in plants using natural gas as a fuel. Coal is being displaced by … wait for it … wait for it … another fossil fuel. (Oh the irony! Har de har har …)

Even if it could withstand the challenge of cheaper natural gas, renewables like solar and wind are waiting in the wings to deliver a knock out blow. The only coal being mined in the future will be to make chemical feedstocks (chemicals used to make other chemicals). Burning it to make energy (and CO2 that is causing Climate Change) will no longer be part of the picture. In addition as “smart grids” become implement to distribute electricity, the huge amount of electricity being lost/wasted will become available for use, and …

Dude, the coal party is over. But archbusinessman and President of the United States, Donald Trump, still things coal is being killed by excess governmental regulation. Donald Trump is also dumb as a post. This is capitalism baby, you are supposed to be fer it, not agin’ it. (Somebody please tell Trump.)

And, I cannot stop by this topic without noting that some of the store-bought politicians are claiming that solar power and wind power are only succeeding because of government tax breaks and purchaser tax credits … and they say this with a straight face! These are the same elites that made sure that the coal and oil industries got healthy protections from foreign competition and … wait for it … direct government subsidies. The oil subsidy (the tap is still open) is a century old and costs tax payers $8 billion dollars per year. Will someone tell those pols that the idea was to protect the industry in its infancy, not through to the old age home.

I wonder if the coal industry will continue to get their subsidies after they close their businesses. After all, the bribes they pay the politicians for continuing to vote them in have to come from somewhere.

August 6, 2017

The Invisible Lesson of Martin Shkreli

The New Yorker described Mr. Shkreli as “A former hedge-fund entrepreneur and drug-company C.E.O., Shkreli came to prominence while he was running a company called Turing Pharmaceuticals. During his tenure, Turing bought a drug called Daraprim, which is used to treat rare but serious parasitic infections in AIDS patients, and Shkreli raised the price per pill from thirteen dollars and fifty cents to seven hundred and fifty dollars, sparking public condemnation and outrage.”

That guy. He just lost a lawsuit, brought by the government, that accused him of fraud.

What’s missing here is something you should not mistake. In all of the current discussions regarding freedom, religious freedom, political freedom, campaign finance freedom, etc., Mr. Shkreli’s was the freedom they were talking about, not your idea of freedom.

The plutocratic cabal, now in charge of our governments, by and large wants the freedom to pursue their interests (primarily involving getting as rich as they may) without collective opposition. They do not want laws being passed, or movements recognized, or any group activity whatsoever being recognized. They want labor unions gone, they want government limited to very basic basics, they want their right to do business as they see fit unfettered. If indentured servitude were to be promoted now, they would not be opposed.

According to them, Mr. Shkreli’s freedom to change the price of a pill from $13.50 to $750 is his and his alone and everybody else should butt out. For some of this, I tend to agree. I do not think people should be sent to jail for being assholes (too expensive, would need to build too many prisons, etc.) but capitalism is and has been our problem for a very long time. Unregulated, capitalism leads to doom, just like any other economic ideology (communism, socialism, etc.). The people collectively need to confine ideas that have this much scope and reach.

The idiots promoting this “freedom” think that competition is an absolute good, yet they do not really believe this, otherwise their children would be thrown into the public schools to compete and excel and survive and not sent to “country day” schools and then Harvard and then given a lofty position in their family’s company.

The plutocrats are definitely in a “this is good for us but not you” cadre and they need to be restrained from harming the rest of us. Instead they have gotten the upper hand in restraining us from causing them any harm. Look to see Mr. Shkreli’s verdict overturned in a higher court. (The plutocrats own the Supreme Court and a few of the federal circuit courts at this point.)

May 20, 2017

An Argument for a Minimum Wage

There have been myriad studies about the impact of having a minimum wage. Some indicate that there is no particularly strong linkage between creating a higher wage for low wage workers and some indicate that a rise in the min wage causes unemployment.

The politicians arguing against a min wage use a very simplified argument: namely that if employers have to pay their workers more, they will only be able to hire so many workers, mostly fewer. This is way too simple in thinking this. For one, if people are paid more money, they then spend more money (what goes around, comes around) which is good for business. There are many more facets to this issue.

If labor costs go up, and they have myriad times due to labor contracts, etc. how, oh how, do companies cope? (Yes, I am being sarcastic.) The amount of money that goes to labor in any company is not a fixed amount or even a fixed percentage of the company’s budget. There are many, many ways that those increased labor costs can be offset. For one, you can raise prices for the goods created. You could decrease profits. You could find other ways to reduce operating costs (reduce energy costs by going solar, etc.).

Knee jerk responses to these actions abound, of course. “If we raise prices, we will reduce sales!” Really? Companies never raise prices, then? C’mon, get real. Just raising prices alone, of course, is the lazy way to deal with increased labor costs; a combination of actions would be better.

Most of these minimum wage discussions are shallow and politically motivated. Basically, the opponents of min wage increases give minimal arguments and only add to them if we don’t accept (aka we reject vehemently) their overly simplistic argument.

Let me explain a real reason for min wage increases. Minimum wage increases are justified for the simple reason is that business interests (aka the plutocrats) have conspired to suppress wages for a long, long time. This involves bribing politicians to undermine union powers and privileges, delaying minimum wage increases, changing the laws in favor of employers over employees, etc. They have been particularly effective over the past 40 years (see the chart below as to the effectiveness of wage suppression over the past 40 years). The only power source of ordinary people to oppose these powerful business interests is government. The cabal wants wages low (too low) and so government must set a floor on wages. It is not simple but at least that is the political dynamic.

If you want to see this playing out right now, consider the current stance of the GOP. The GOP has been the champion of local rights for a long time. Education, for example, should not be a federal issue, but should reside in the states, with the states deferring to local communities and their school boards. So, what has been the GOP response to cities who have enacted their own min wage increases? GOP dominated states are passing laws to roll back those democratically achieved minimum wage increases and to bar such local increases in the future. Local control doesn’t mean a fig when the GOP’s paymasters issue directives (You will keep wages down, or else).

May 3, 2017

Getting Sharp with Razor Blades

Filed under: Business,Culture — Steve Ruis @ 2:35 pm
Tags: , ,

I am getting very tired of things invented just to be able to make money and which actually do not create any value. (tag line Capitalism Amok!)

What got me thinking about this was razor blades, of all things. I had blanched at the last time I went to buy razor blades. They were thirty dollars for six “cartridges.” And I was in a discount store! So, I had my eyes open for an alternative and I found “Harry’s” (A good shave at a good price!) and they had a special offer on a handle and a set of blades, so I took a chance. The handle was quite nice (plastic but not flimsy) and the blades, er, cartridges were similar looking to many of the others. When I tried shaving with one, I discovered that there was a bit more drag than with a new Gillette cartridge, but they seemed to retain their sharpness for longer. The Gillette blades grew more dull faster. And they were a small fraction of the cost, so I was good to go.

Then I needed to reorder blades and I received a different cartridge, one “new” and “improved.” Nothing can be both new and improved, I assumed this one was new and better than the old one. Why change the design if it isn’t to improve the quality? Well, these new cartridges had much more drag than the old ones. They were still using (supposedly) German steel (not surprising as they have stopped making steel in the U.S.) so what was the problem? I looked at the new design and noticed that now there are five blades when before there were four.

I was disgusted. I then ran across an article extolling the virtues of old safety razors, like our fathers used, especially since you didn’t have to track down an old one; they were still making them. I hadn’t used one of these in over 50 years but the article was convincing. I bought an inexpensive razor and, at the recommendation of the article razor blades from Amazon: 100 blades for $10! Now we are talking! My cheap core soared like a bird.

The really interesting thing I learned when I took my first shave was that I got the best shave I had had in my memory. Not recent memory, all of it! I also got a bit of a nick, being out of practice with that instrument.

Why did this single edge razor perform so much better than these high tech modern ones. It was all very puzzling. The old razor took much less pressure and seemed to do a better job without needing a lot more strokes to get the job done. Then it occurred to me.

Can you see the gaps between the blades? They are there but really small.

Do you know how a knife cuts? Most people think that a knife cuts like a saw but really a knife is a pressure generating tool. The entire weight of a kitchen knife plus whatever force you add to that (usually not much is needed) gets distributed on a surface of very little area: the knife’s edge. Pressure is “force per unit area” and is calculated by taking the weight involved (weight is a force) and dividing it by the area it is spread over. How much area do you thing a knife’s edge has? (Hint: damned little.) And, of course, the only part of the edge that counts is the part in contact with the carrot or whatever, the rest doesn’t matter. A weight of just a few pounds (combined weight of knife and simulated weight added by your skillful manipulation of the knife) divided by a very tiny area and you get enormous pressures. This pressure basically pushes the carrot apart. (This is also why dull knives are so dangerous. The pressure created over a dull edge is much less which leads us to press harder and harder which leads to slips and … ouch!)

What is true for a knife is also true for a razor blade. When one blade was replaced by two you increase the area of edge by 2X. Now if what you were cutting was two times wider, that would have averaged out, but those blades are not cutting the same hairs. So, two blades, three, four, five…! We now have five times the blade area, so we have to use five times the push to get them to cut the same as the old razors.

So, thinking like “two blades ought to be twice as efficient/good/etc. than one” lead us down the garden path to $6 shaving cartridges (Each!) which do no better than the old one-bladed ones. We did not check our thinking; we just accepted their marketing as true and forgot about it. (Remember the frog in the pot of water with the temperature slowly rising?)

Does a two-bladed razor require half of the strokes to do the job? I didn’t notice any effort saving all the way up the ladder to five-blade “cartridges.” I did notice fewer nicks, though, even though I was pressing harder and harder all the time. The reason there are fewer nicks is plain to the naked eye. If you look at one of these cartridges, you will see than none of the blades is exposed much at all. This is where the safety razor had its fault. It exposed a lot of blade and that blade mowed down facial hair like a scythe; it also could nick you if you didn’t pay attention. To help with this, new safety razors have different amounts of blade exposure built in and there are various blade designs, etc. to enable a best set up for your face and skin.

It is a whole new … old … world. Old and Improved!

March 13, 2017

We Have Met the Enemy … and It Isn’t Us

We have met the enemy and it is … our corporations. Consider first a couple of examples:

You have heard, I am sure, of the so-called “skills gap,” which is that American workers just do not have the skills needed for “today’s marketplace,” so we need to issue more foreign worker visas to fill the necessary jobs. One of the fields clamoring for more of these visas has been Information Technology (IT). IBM, a quintessential American IT company, hid the facts for many years but now it is clear. Between 2003 and 2010, IBM fired so many American IT professionals and hired so many engineers and computer programmers in India that the workforce of IBM India is now larger than that of IBM USA. IBM India had a mere 6,000 workers in 2003 but by 2010 had somewhere in the range of 100,000-130,000 workers. How did IBM manage this into the teeth of the worst global recession ever? It did it by firing over 30,000 workers here in the U.S.

IBM calls this “cross border job shifting,” which sounds ever so much more like a transfer than people getting fired here and others getting hired there. And IBM is not alone in doing this, so how can there be a shortage of IT workers in the US when there are so many Americans who used to hold the very same jobs that are claimed are “going wanting?” What is the real rationale for the demand to be issuing more visas for foreign workers? There is no shortage of highly qualified IT workers. This is simply a classic wage-suppression tactic. Bring in foreign workers and pay them less than you would American workers with the same qualifications. This makes it very much harder for Americans to get wage increases here and also harder to form unions that would look into such practices. Foreign workers do not want to anger their employers because if they lose their job, they lose their job sponsor, and it is back to India for them. They will not join a union, period.

Now, consider another quintessential American company, Ford. Can there be a more American story involving business that the creation of the Ford Motor Company from scratch? But in the late 1990’s, Alex Trotman, Ford’s then CEO, admitted “Ford isn’t even an American company, strictly speaking; we’re global.”

And if American companies like these do not consider themselves “American companies,” how much can we expect them to act on our behalf? When I was a young man, many corporations had multiple stakeholders. These corporations considered their customers to be one, along with their workers as another, and their communities, too. And, of course, also their shareholders. Modern business practices, spurred along by quack economists like Milton Friedman, had reduced the number of corporate stakeholders to one: the shareholders. Well, just one stakeholder if you do not count the executive’s self-interest in their own remuneration, which has skyrocketed while worker wages have been experiencing trickle-up growth.

As a union officer in the 1980’s and 90’s I participated in an experiment with management of our enterprise ($150 million annual budget) on creating a more cooperative governance structure. Part of that effort was coming to an understanding of relationships between and among the two groups. One facet of that learning was that “workers” (we all worked for the company) we all tended to imbue our work relationship with trust, that is we put our trust into our employer to some extent. This was not earned trust but, basically, we trusted our employer because we wanted to have a job in which we could trust our employer. This wishful thinking trust usually had no repercussions, but when something happen that a worker or workers did not like, they felt betrayed by someone they had trusted (trusted to do what was never specific, usually it was “the right thing”). Such “betrayals” existed in collective memory for decades. (I know this as when I was hired into this company I heard “stories” from other employees. I found out later that some of them were almost 30 years old.)

We are making that mistake now. We are told by representatives of these “American companies” that we should “trust the marketplace” and “trust them.” But their actions indicate that not only are they untrustworthy but they are not even American companies. Imagine how you would feel if a foreign company, say from China, wanted to come into your community and build a plant, one with a bit of pollution associated with it. Then think how you would view that intention were is an American company? Would your response be the same? Yet, these American companies no longer consider themselves to be American, and have acted accordingly for decades now, but we still “trust” them more than we do others.

These companies have no issue with firing you and hiring a replacement from overseas and ask you to train your cheaper replacement (happens all the time, happened to my ex-wife). These companies have no problem with going through bankruptcy to eliminate their obligation to pay into their worker’s pensions. These companies have no problem with manipulating our tax laws so that they pay no taxes, with the burden to make up the difference shifted to you and me. These companies have no problem in bribing our public officials to do their bidding instead of the people’s. And if you want to know why our recovery from the Mother of all Recessions was so weak, with employment struggling to get back to anything approximating normal, realize that business leaders see every crisis as an opportunity and in this crisis they used the opportunity to outsource even more jobs. They were hiring, just not in the U.S. That is how much loyalty they have to their bottom line and how much they have to you and me.

Ironically, we have just elected a corporate businessman President to fix this mess (drain the swamp). If this were not so ironic, so funny, I would be crying. When are we going to wake up? When are we going to invest our passion and our votes in organizations, like labor unions, that have proven track records for countering these un-American corporate interests?

Wake up people! It is very close to “too late.”

March 8, 2017

More Run the Government Like a Business BS

We have elected a “businessman” as president and we often hear a campaign trope that we “ought to run our government as a business.” This is inherently stupid. How many businesses do you know which have an army with nuclear weapons and which can print money? Government is not a business and while some business methods do apply, many more do not.

Consider the recommendation of the Trump administration to cut the budget of the IRS. Imagine a business take over artist, taking the reins of a troubled business and the first action he takes is to cut the budget of the Accounts Receivable department. This is guaranteed to reduce the company’s income for no benefit whatsoever. Reducing the budget of the IRS is no different. Increasing their budget would make more sense, even for the GOP.

Opponents of the IRS have an acute case of “shoot the messenger syndrome.” The IRS does not make the tax laws, it does not set tax rates. Congress does. The IRS only does what Congress tells it to do. To cut the budget of the IRS is Congress telling the IRS to not do what Congress says. This is at best bizarre.

When one examines this most recent budget proposal, one is reminded of the movie Dave in which an impersonator of the President (played brilliantly by Kevin Klein) asks his friend Murray, an accountant, to help him find budget cuts that allow for a program near and dear to the First Lady’s heart receive funding. The cuts in the movie are patently ridiculous (e.g. a program to make people who have already purchased autos feel good about their purchases) which reinforces the public’s idea of “stupid government programs,” but in the Trump budget, programs which are inherently valuable are being axed to fund tax cuts for the rich and a budget increase for the Pentagon that was neither requested, nor is it needed.

This is not running government like a business, it is running a government via a bizarre ideology that rewards militarism (as long as it is profitable to GOP donors), diminishes succor to the poor and enriches those already rich.

We really need to have a serious conversation about the ideology of the GOP, being a manifestation of the mind of Scrooge McDuck at best and a national tragedy at worst.

March 3, 2017

The Utter Failure of Economics and Politics to Prevent the Ravaging of the Rich

I ran across this rather incredible graph recently:

20-year-annualized-productivty-growth-in-the-uk

The data are from the UK so I looked to see if I could find any similarities to data from the US, and yes, they are there.

The graph shows the growth of worker productivity from the years 1800 to 2010. Since all of the values are positive, productivity has trended upward in general. But you can see four distinct trends on this graph: first there is a strong increase in productivity from 1800 to about 1870, then a general decline in the rate from 1870 to about 1900 (while still being positive, the amount of increase dropped period by period). Then there is another long period of productivity increase improvements from roughly 1900 to the mid 1970’s, followed by another decline in the rate of increase from 1970’s to the present.

What do these periods in which productivity changes steadily decline in magnitude correlate with? Ah, the period 1870-1900 is often referred to as the “Gilded Age.” And the mid-1970’s to the present started with Reganism/Thatcherism and is the second great period of wealth transference to the few in this entire time period.

We have been told over and over that the accumulation of wealth by the few in our society is a good thing. The wealthy are the “job creators,” the movers and shakers who get things done. But the reality is exactly the opposite. The people who have been telling us that wealth inequality is a standard feature of capitalism and a “good thing” are just the PR men for the wealthy, trying to avoid pitchforks and torches showing up in the gated communities of their rich paymasters. That so many of these flacks are economists should be appalling to the intellectual community. (Maybe we should disbar them and transfer academic economic departments to become part of the marketing programs of schools of business.)

All of the data show that periods of extreme wealth accumulation by the few devastate economies instead of facilitating them. The steepest upward portion of this graph takes place between the end of World War 2 and the arrival of Reganism/Thatcherism and anti-unionism. Productivity grows the fastest when the wealth is shared more fairly.

Please note that there were rich people during this post-war period. There were many people getting rich for the first time. They weren’t, however, getting filthy rich by distorting the political systems in their favor. Becoming rich through your own skills is one thing. Becoming obscenely rich by hook or crook, though, hurts all of us.

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