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Is there a conspiracy to keep wages from rising or is it just plain-old class warfare?
Check out these charts from a recent report by Deutsche Bank and see what you think:
(Feeling Underpaid, Zero Hedge)
Well, what do you know? Everywhere the global bank cartel has its tentacles, wages are either flatlining or drifting lower.
“Coincidence”, you say?
Not bloody likely, I say. There’s either policy coordination between the various heads of state and their central banks or wealthy elites have secretly seized the levers of power and imposed their neoliberal dogma when no one was looking. Either way, it’s pretty easy to see the effects of “extraordinary monetary accommodation” on wages. It’s done absolutely nothing, which is why inflation has stayed in check. Because if wages aren’t rising, then inflation remains subdued which gives central bankers an excuse for launching another one of their trillion dollar QE programs that further enriches their crooked friends on Wall Street.
Yipee! More free money for Wall Street and the investor class!
See how it works?
And what about productivity? Why are wages no longer rising along with productivity?
(What Killed the Middle Class, Zero Hedge)
It seems fairly obvious that if wages don’t rise with productivity, then personal consumption is going to flag and the economy’s going to tank. If that’s the case, then boosting wages should be a top priority among policymakers, right?
But it’s not. The top priority for most politicians is kowtowing to their private sector bosses who fund their campaigns and make sure they have a nice-comfy job when they finally call it quits after years of groveling service. Isn’t that the way it usually works for these so-called “public servants”; they craft legislation that serves their fatcat constituents and then count the days until their next big payoff?
The point is that economic policy is not designed to improve conditions for ordinary working people. It’s not even designed to strengthen the economy. If that was the case, then there’d be some effort to hire more public workers to increase activity, boost business investment and strengthen growth. That would be the obvious remedy for today’s sluggish economy, wouldn’t it? Instead, Obama has done the exact opposite. He’s slashed the deficits by a full trillion dollars and allowed more than 500,000 government employees to get their pink slips. As a result, the economy has been chugging along at half-speed for nearly a decade. Thanks for nothing, Barry. Don’t let the door hit you on the way out.
Now check out this “Government Job Destruction” chart at the Streetlight blog:
(Government Job Destruction, Streetlight blog)
And it doesn’t stop there either, because all this wretched belt-tightening has reduced consumer demand which has forced corporations to decrease the amount capital they reinvest in their businesses. So, just as wages have been suppressed in developed countries around the world, so too, business investment has been sharply curtailed just about everywhere eliminating another critical source of stimulus. Check out this clip from the Daily Reckoning:
“Yesterday’s release of domestic capital expenditure (capex) figures were a sorry sight. In the three months to September, business investment fell a barely believable 9.2%. …
In light of plunging domestic spending, it’s a good opportunity to reflect on what’s happening to global capex. (Capital Expenditures) Like Australia, the world as a whole has something of an investment problem. And there’s no sign that things are likely to improve anytime soon…
Outside of the US, it appears as if the world has decided to forego investing altogether. Business spending is down by 6% in the US; over 20% in Europe; 15% in China and Japan. As for the rest of the world, Australia included, capex is down a whopping 28%.” (Australia’s Capex Collapse is Part of a Global Disease, Daily Reckoning)
Okay, so corporations aren’t investing in their businesses because wages are flat and demand is weak. Is that really a big deal?
It IS a big deal, because there are only so many sources of spending in the economy, and when businesses, governments and consumers all reduce their spending at the same time, the economy slows to a crawl and stays like that until something changes. Unfortunately, nothing has changed which is why GDP is still hovering around 2 percent a full eight years after Lehman Brothers blew up.
But, why? Have policymakers suddenly forgotten how the economy works or what fiscal levers to pull to kick-start growth?
Of course not. They simply refuse to do what’s needed. Instead, Congress has used the crisis to hand over control of the system to the central banks and their deep-state powerbrokers. Now, wherever you look, the politicians are on the sidelines sitting on their hands while the CBs dictate policy. It’s crazy. It’s like regime change without all the blood.
And how has this bloodless coup effected working people?
It’s been terrible. While stock prices have nearly tripled and speculators have raked in trillions, median household income has dropped by more than 7.2 percent, incomes are falling, wages are flatlining and more and more people are hanging on by the skin of their teeth.
Did you know that 85 percent of Americans say that it’s harder to maintain a middle class standard of living today than it was 10 years ago? (Pew Research Center) Or that “77 percent of all Americans live paycheck to paycheck at least some of the time”, or that “one of every four workers in the US brings home wages that are at or below the federal poverty level”, or that “47 million Americans are on food stamps, or that “40.4% of the U.S. workforce is now made up of contingent workers,” mainly temps, contract workers and part-time labor?
Anyway, you get the picture. Making ends meet is getting harder all the time. But why would wealthy elites support policies that are so obviously destructive to working people and the overall economy?
For money, that’s why. Lots of money. Check it out:
“Between 2009 and 2012, according to updated data from Emmanuel Saez …The top 1 percent saw their real income grow by 34.7 percent while the bottom 99 percent only saw a 0.8 percent gain, meaning that the 1 percent captured 91 percent of all real income…
Wage income continues to be flat. Wages grew just 1.7 percent last year, the slowest rate since at least the 1960s. That’s not because American workers are slacking off, though. While they have seen an entire decade of stagnant or falling wages, they’ve increased their productivity by nearly 25 percent.
At the same time, the stock market has been reaching record highs, which mostly helps the wealthy who are much more likely to own stocks, thus exacerbating income inequality. Corporate profits have also hit records and boosted executive pay without trickling down to workers.” (The 1 Percent Have Gotten All The Income Gains From The Recovery, Think Progress)
But it could just be a big mistake, couldn’t it? I mean, maybe the central banks really didn’t know that their policies would work the way they have.
Be serious. Do you really think that this relentless upward waterfall of money to uber-rich tycoons (“95% of income gains from 2009 to 2012 went to the top 1% of the earning population”) is a mistake, that it’s merely the unintended consequence of well-meaning monetary policies that were designed to spur lending and strengthen growth but, by pure happenstance, backfired and triggered the biggest redistribution of wealth to voracious, do-nothing plutocrats in history?
Is that what you think?
You don’t need to be Leon Trotsky to figure out what’s really going on here. Heck, even Warren Buffett nailed it when he said, “There’s class warfare, all right, but it’s my class, the rich class, that’s…winning.”
You got that right, Warren.
MIKE WHITNEY lives in Washington state. He is a contributor to Hopeless: Barack Obama and the Politics of Illusion (AK Press). Hopeless is also available in a Kindle edition. He can be reached at [email protected].
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You prop up consumption through mass immigration.
How can it be class warfare when most all concerned have no class all. Consumerism and entertainment has reduced us to a thundering herd of slavering Pavlovs Hogs. Whether upgrading from a houseboat with a hot tub to a yacht with a pool or putting a velvet Elvis for the lebensraum on the visa card, the motives are the same, it is only skill that differs.
I note that the bottom 200 of the previously mentioned 250 richest people must be feeling the pinch themselves. The bottom third of thoroughbred broodmares in the US have been rendered into something other than broodmares due to sale prices below production costs.
The snag, as Lee Kwan Yew pointed out once, is 3,000,000,000 billion people joining the race. This is still ongoing and no, it won’t be reversed anytime soon.
As another Chinaman put it (talking about workers in the developed world), “if you want to make 10 times more than the rest of the world, you can either work 10 times longer, be 10 times more productive of something in between. Apparently most will have to take a pay cut.”
Correct. Supply and demand.
Not too soon, but I expect wars to make a sizeable enough dent in the population to reverse the trend. The world is so inter-dependent that it is going to take one hell of a lot of stress to make major nations fight, but it is coming.
Probably won’t start in earnest for 15-20 years, but we could see first instances of bio-weapon use well before that. The technology to create these weapons will eventually get developed enough that the crazies will get their hands on them. Defenses will also get better, but they will not be so available to third worlders.
Interesting times.
What world does this columnist live in where “500,000 government employees” supposedly “got their pink slips”?? NOT even close to true of the federal government.
According to the U.S. Office of personnel Management (OPM), total federal government employment at the end of the calendar year was as follows:
2008 — 4,296,000
2014 — 4,185,000
That is a drop of only 111,000, nowhere close to half a million. And federal government expenditures still skyrocketed during that period, both for the military and for nonmilitary programs.
If you are going to attack “austerity”, first find some evidence that the fed gov has actually engaged in such a parsimonious policy.
Also, why do you assume that gov jobs boost the economy? They cause non-government employees and businesses — mainly smaller businesses — to pay more in taxes, and/or they cause the fed gov to print more unbacked money to monetize its growing debt and “pay for” the fed salaries, benefits, and pensions.
P.S. If the columnist is referring to loss of non-federal gov jobs, it’s hard to say how a u.s. President could alter that consistent with our constitution or with a free-ish decentralized system as we are supposed to have.
Radical Center:
This is from calculated risk the number one economics blog on the internet:
the “public sector has declined significantly since Mr. Obama took office (down 578,000 jobs). These job losses had mostly been at the state and local level, but more recently at the Federal level. This has been a significant drag on overall employment.
Read more at http://www.calculatedriskblog.com/2016/01/public-and-private-sector-payroll-jobs.html#0xXktCC4M9kF4hcY.99
A larger fiscal stimulus program (that was advocated by all the competent responsible economists across the country) could have prevented this loss of jobs. The Obama-Summers combo chose instead, to put pressure on wages by keeping unemployment high. The results of Obama’s policy speaks for themselves.
For production to be competitive in the U.S. the cost of production has to be rather low. This is largely accomplished by means of automation such as robots. Such automation is a capital expense rather than a labor cost that is paid by –you guessed it- the wealthy. So as productivity increases the actual labor input decreases and the wealthy collect on their capital investment in productivity.
Or, put another way, the rich get richer.
“You prop up consumption through mass immigration.”
AND you get lower wages.
It’s a two’ fer.
You can call it class warfare when the working class starts fighting back. We are almost there.
State and local workers are being pared. I can travel hundreds of miles on my motorcycle at triple-digit speeds with impunity from the New England Coast throughout New Hampshire, Vermont and upstate New York and never cross paths with State Troopers which used to be in great abundance. Interstates are in good shape, but local roads in towns are cratered, indicating few public works folks. Or fewer anyway. Great cities, Detroit, Baltimore, Newark and many others lie in ruins, they surely have bled jobs. We’ve become accustomed to crumbling infrastructure, but that’s attributable to fewer public workers. The military is downsizing, too. The Feds suck up the last morsels, but the locals are dying on the vine. Rot and decay and decline are slow processes.
By the time you figure it out, you’re done.
In my opinion WWIII is already underway, we’re in the economic/propaganda phase at the moment. I agree about the use of bio warfare but I think starvation will be the easiest weapon to deploy against the greatest numbers. Almost all nations, even the poorest, export foods and then rely on imports.
Anything people need can be a weapon, check out Sec. Earl Butz.
Also real estate balloons.
The USA has a long and colorful tradition of bringing in migrants to work for peanuts or less.
From the slavery business to the importing of Chinese coolies to the Mexican braceros, to now, letting many in w/o proper vetting, the Fortune 500 crowd is assured of cheap labor and cheaper wages for decades to come.
Perhaps it’s the number one economic blog, and perhaps not… Calculated Risk accepts advertising and its content is “free”. What does that tell me? That the reader is the product.
My personal preference for economic information is John William’s ShadowStats — altho it does cost to read his reports, I’m not concerned that an “advertiser” might have an influence on his reasoning and conclusions.
As for Calc Risks “endorsements” by the mainstream media (Time, CNBC and the like), I’ll simply note, with contempt, the quality of their financial and economic reporting.
Well said.
Between attacking illegal immigration and disasterous “free trade deals”, Trump is kicking at two of the three legs supporting neoliberal economic policy. Perhaps he’ll recognise The Fed for what it is too…
Western Capitalism is based on economic disparity. If you raise minimum wages according to inflation – more and more large western manufacturing companies will move their operations to foreign countries for cheaper labor, such as, China, Vietnam, India, etc. – leaving more unemployment in Europe. This provides a good excuse for the White racists to blame non-White immigrants who historically had played a major role in the industrialization of Europe and North America.
On July 30, 2015, the Fortune magazine claimed that that raising minimum wage to $15 in New York “could harm America’s poorest people”!
In recent years, the higher minimum wage movement has got momentum in several states.
Indian-born Kshama Sawant, a computer engineer and professor (Seattle University) by profession, is the socialist member at Seattle City Council since January 2014. She captured the media headlights for her tiresome campaign to raise minimum wage to $15 in Seattle. She has expanded funding for social services and blocked, along with housing advocates, an attempt by the Seattle Housing Authority to allow a rent increase of up to 400 percent. She has successfully lobbied for city money to support tent encampments and is fighting for an excise tax on millionaires. And for this she has become the bête noire of America’s 1% fat-cats , Wall Street and the Jewish Lobby….
Chris Hedge has called Kshama Sawant, The Most Dangerous Woman in America.
https://rehmat1.com/2015/04/05/kshama-sawant-why-jewish-lobby-hate-her/
Hey Homer
I agree. Life in the west is tough.
You should take your goat and move back to Pakistan.
Now that’s a successful and prosperous country!
Sherm
“It seems fairly obvious that if wages don’t rise with productivity” – How is this productivity measured? Isn’t it that low wages mean high productivity?
It’s not about money, per se, but about forcing the lower 99% (99.9%???) to unlock more of their human capital for less and less value in return. They are being stripped of what wealth they have (actual and potential) and being reduced/returned to serfdom, which the top 1% believe is a return to the rightful order of things.
Government has not cut any jobs, but has grown in spending and hiring. It has only gotten worse since the number of government employees exceeded the number of private sector manufacturing jobs.
I am sure that you could find out the average number of private sector jobs destroyed for every government employee hired. I figure is it is about 10 jobs destroyed for every government hire. The government produces nothing, but continually expands the cost of supporting it and strangling our economy through regulation and taxation.
Time to sharpen the blades on your guillotines.
March 31st, 2016 How They Brainwash Us
News” is used to control our perceptions in order to ensure public acceptance of the Oligarchy’s agendas. Whatever officials say is reported as factual.True facts are not perceived and governments can pursue hidden agendas by manipulating news.
http://www.paulcraigroberts.org/2016/03/30/how-they-brainwash-us-paul-craig-roberts/
Bio weapons will work quite well on crops and livestock. I would not be surprised to see them as targets of the first instances.
Are you sure the Rich don’t qualify for some Government programs (welfare for them!!) to help Automate?? !!
Trump is tapering off now to accomplish his deed, he now will slowly wither away, and go back to just being a simple…BBBbillionaire.
Let Hillary do the ”heavy lifting”, she will have grey hair!! She will dispense with the trademark smiley face!
Productivity gains over the past 50 years are owed entirely to technological innovations. Say you run a gardening business. You don’t pay one of your workers more just because YOU put a better weed whacker in his hands. Now he does twice as many yards? Great. But he’s paid an hourly wage, not a per yard wage. And you aren’t motivated by some altruistic profit sharing instinct. You’re paying what it costs to replace him and not a penny more.
Meanwhile, 3,000,000,000 more gardeners just joined the party.
There is no conspiracy to suppress wages. It’s actually a damn miracle wages haven’t dropped more than they have.
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┳┻| _ Hey, kid…..
┻┳| •.•) want to start a
┳┻|⊂ﾉ cultural revolution??
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Nothing new here. What`s happened and remains to happen to the Western workforce has been obvious since the 1994 debate on the GATT agreement (aka the WTO) that opened the West to competition from the Rest.
The outcome was clearly stated at the time by James Goldsmith, Ross Perot, and many others, i.e., (1) the off-shoring of jobs, whether jobs with crap wages, such as those in the garment industry or electronics manufacturing, or jobs in the highest paid technical sectors such as engineering, software development, design, and drug R&D; (2) the off-shoring of Western capital and technology to jurisdictions with low wages, low workplace health and safety regulation, and poor or non-existent environmental protection; (3) the retention and reinvestment offshore of the profits of Western-owned global corporations in off-shore low-tax jurisdictions; (4) wage convergence between the West and the Rest, a process that has barely begun.
As outline in my article, The Economic Consequences of Mr. Trump, which was declined for publication in the Unz Review, Trumpism is all about protecting American Workers, by reviving investment in America, stemming the flood of cheap, exploitable illegal immigrant labor, and giving American workers some protection from offshore sweatshops.
A prophetic interview about globalization with the late Sir James Goldsmith in 1994
Phew!! That’s a relief. For a while there, I thought I was Leon Trotsky.
Or you can just slap a 900% tariff on the goods coming in from China, while working the same hours at the same pay as before.
Your choice …
Hi Sharon – didn’t your mama told you the Jewish life in Israel is more tough than the west and Pakistan?
Even after sucking $3 trillion out of American-tax payers and $93 billion from German taxpayers – one out of three Israeli Jew children lives in poverty (Ha’aretz 2006).
There dozens of Jewish and Christian charities in United States and Canada collecting money for hungry Jewish children in Israel. When I was working at a Jewish consulting firm in Toronto – I used to contribute $10 per month for your parasite kids.
Do you really believe that insider trading constitutes “either work 10 times longer, be 10 times more productive of something in between?”
Hi Sharon – how is life in Hell. It could be better than living in coma on land stolen from Palestinians.
Do you, since you finally got rid of your mass-murderer body – your Polished brothers have stopped in believing that they burned 4 million Polish Jews in ovens.
https://rehmat1.com/2016/04/01/poland-changes-holocaust-narrative/
What was so irritating for you in Kshama Sawant’ program? The US, thanks god, are still able to be engaged in democracy and social experimentation.
neo-feudalism
Well said! Kudos!
But: “Is there a conspiracy to keep wages from rising or is it just plain-old class warfare?”
Isn’t that a non-choice? Like asking if the central banks are a threat or a menace? Or was it a joke that was just too subtle for me to get?
Yes, you can’t sell too many low riders and dominoes! lol. And all those $15 minimum wage laws are supposed to make people feel like there’s plenty of money to go around, but all it does is increase unemployment and diminish consumption.
Or you can just slap a 900% tariff on the goods coming in from China…
It’s not that bad.
Americans are still competitive at many things despite their high wages. Give them a bit of moat, maybe just a 10 or 20% value added tax, applicable to all imports and refunded on all exports, and you’d see a surge in hiring and a firming of wage rates.
Knock out Japan’s ingenious non-tariff import barriers and China’s huge tariffs on imported Tesla automobiles, etc., etc., and you see a boom in American manufacturing, with a huge multiplier effect on the rest of the economy.
Time to stop trying to revive the economy with more coffee shops.
Even to a libertarian like myself, much of what you say makes sense.
But you miss the bigger picture. The whole mess is based on avoidance of discomfort, like a heroin addict dreading withdrawal. Yes, businesses need to expand, but we need to liquidate the bad ones first. We also need to liquidate at least 50% of America’s counter-productive and imperialistic “defense” [sic] budget, especially military foreign aid to places like Israel and Egypt. That’ll be A LOT of government AND weapons industry pink slips.
“News” is used to control our perceptions in order to ensure public acceptance of the Oligarchy’s agendas.”
Guess who the “News’” is — Jews — Jew oligarchs own the news – they are the ones who subvert the news to their Western culture crushing tribal aims.
It is OK to say the word “Jew” – six million Jews did not die at the hands of the Nazis – they lied about that – they are still lying today – they will continue to coerce us, until we fight for our Wester culture.
We have been terrorized into NOT using the word “Jew” when complaining about how bad things are going.
Because of the six million lie, as they destroy our culture, we actually feel sorry for them – how perverse.
In the world of utility engineers, it is absolutely a conspiracy, practiced right out in the open with everybody watching.
Utility executives hire “compensation consultants” who advise them on what they should be paying engineers. So the consultants get the intel on all the power companies in an area, pass that around in the form of “advice,” and keep wages in check.
All perfectly legal.
In this economy, businesses are being liquidated every day, left and right. What usually happens is that the big ones get even bigger, while the little ones simply vanish.
So this all started with “neoliberal” policies. Isn’t that just another word for Reaganomics?
That’s certainly the strategy of Canada, Australia and New Zealand, where centre-right government’s bring in Asian immigrants to buy houses and boost the local construction and real estate industries. Unfortunately it also tends to result in a surge in house prices, and Australia now has some of the world’s most expensive real estate relative to wages.
Since the death camp Auswitch was determined during forensic studies in 1990, to have had only about a million deaths, and not 4 million as they had claimed for years — 3 million of them Jews — then the 6 million figure does not hold up. I don’t know why the total of Jewish dead hasn’t been recalculated. Even the signs in front of Auswitch reflected the 1990 research and reduced the total. Still, while it was certainly much less than 6 million, there was still persecution and genocide, but not only of Jews, others as well. The Soviet take over of Eastern Europe after the war obscured and controlled a lot of information. They hated the Germans, no surprise.
When I get rich I’ll let you know.
It also reduces welfare.
CLASS WARFARE via ISRAELI SECURITY
ISDS & Leo Gleser – Olympics Without Apartheid / Olimpíadas sem Apartheid [En/Pt]