Let Them Eat Beautiful Chocolate Cake

When the Republican tax plan was signed into law near the end of 2017 we were told that the lower tax rates on business would allow them to keep more of their profits and pour money back into jobs in the United States and employee pay. Six months in the year of 2018 and it seems that the tax plan was not working as sold. The Bureau of Labor Statistics stated the following:

Real average hourly earnings were unchanged, seasonally adjusted, from May 2017 to May 2018. Combined with a 0.3- percent increase in the average workweek, real average weekly earnings increased by 0.3 percent over this period.

https://www.bls.gov/news.release/pdf/realer.pdf

So if increased profits from companies paying lower taxes didn’t go to workers in the form of higher wages, where did that extra money go. Large public companies use their additional profits to buy their own stock back and pay dividends to their shareholders. As warned by many, the trickle down of trickle-down economics never happened, but according to the Congressional Budget Office the tax plan is pushing the United States towards a debt disaster:

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At 78 percent of gross domestic product (GDP), federal debt held by the public is now at its highest level since shortly after World War II. If current laws generally remained unchanged, CBO projects, growing budget deficits would boost that debt sharply over the next 30 years; it would approach 100 percent of GDP by the end of the next decade and 152 percent by 2048. That amount would be the highest in the nation’s history by far. Moreover, if lawmakers changed current law to maintain certain policies now in place—preventing a significant increase in individual income taxes in 2026, for example—the result would be even larger increases in debt. The prospect of large and growing debt poses substantial risks for the nation and presents policymakers with significant challenges.  

https://www.cbo.gov/publication/53919

Many Americans are cheering the politicians enacting these budget busting and economic crisis inducing policies, so where is the pushback from those of means with platforms? The current tax plan is structured to pump a lot of money into the bank accounts of those at the top of the economic ladder and has bought their silence. As for the rest who will shoulder the debt, get no pay raises and possibly have their Medicare and Social Security cut to lower the self-inflicted deficit, the message is like Trump said about his meal with China’s President Xi,”It was the most beautiful piece of chocolate cake.”

It seems, like Marie-Antoinette, Trump is saying let them eat the most beautiful piece of chocolate cake.

Photo of cake authored by Carl Black from Decatur, GA, US - Creative Commons Attribution-Share Alike 2.0 Generic license

Will Mitt Romney Do A Leveraged Buyout Of America

Mitt Romney touts his business experience as a basis for his ability to turn around the United States economy. That’s a frightening proposition given that given that Romney’s experience as a venture capitalist involves leveraged buyouts. Wow, imagine the feeding frenzy of a LBO of the United States, what a business windfall.

If someone is using their business background as a basis for becoming President of the United States then you have to examine that business experience and determine how it would be used to reach their goals. Someone like Mitt Romney was involved in making profits from investments in start-ups and struggling companies. Mitt Romney’s firm was not interested in profiting from long term operating profits from the organizations it invested in, but in extracting the largest payout it could within a certain time frame. How would that apply in a government setting?

Don’t think that what would amount to a LBO of the United States is far fetched. Some of the most valued assets we have are being sold off or lease right now. One of the most precious assets the country possesses is its infrastructure.  Many public roads across the nation are being converted to toll roads under long term lease deals. A study  by the U.S. PIRG Education Fund details this growing trend.

Private/public partnerships and small government are the new code words for moving government services over to private for profit generating activities. The federal government is filled with opportunities for profit making transitions if the skids are greased with the President and Congress being of like mind. A nation with the riches of the United States is ripe with opportunities with obvious choices being the transition of Medicare and Social Security into the private account investment market. National parks could be opened for drilling and almost any agency you can think of could be outsourced on a consultant basis.

Some may ask why the scenario above would be a problem since we are running deficits as a country. The problem comes in because the government is based upon a service model and not a for-profit model. Government is here to serve it citizens and not profit off them as customers. When profit comes into the picture someone is not going to be able to afford the price and go wanting.

Mitt Romney is a businessman who is great at making money for himself and his investors, the question is can he deliver services to the citizens of the United States. There may have been a ray of hope given that he delivered a healthcare plan to the citizens of Massachusetts when he was Governor, but he avoids that subject like the plague in order to please his current supporters that are sitting at the table with their forks and knives hoping that a great feast is at hand.

Mugged American Style – Bank of America Debit Card Fees

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The latest outrage to be thrust upon an economically beaten down American populace was the announcement that the nation’s largest bank, Bank of America, will begin charging customers $5 per month to use debit cards to make purchases. Excuse me, if you let me hold your money, I will charge you when you spend it. Do we have a deal?

Now some of the same institutions involved in taking down the economy are now involved in a near literal shakedown of the very citizens that bailed them out with taxpayer funds. The economic collapse that burst forth during the last few months of 2008 has been long lasting and deep. Millions of Americans were flushed out of the workforce and over 14 million still find themselves unemployed and seemingly unemployable. In many ways this was a double crime with hardworking citizens in the United States being initially mugged by those manipulating our financial system and then taken hostage by politicians corrupting our political process. As this socioeconomic terrorism was taking place, the wealth of those caught in the crossfire was melting away as they strove to survive by burning through personal savings, retirement funds and other assets of value. While millions were free falling from their former positions on the economic ladder, the wealthy were becoming wealthier. The future of the United States will be decided by a struggle between new age robber barons aided by their political enablers versus sane, rational Americans seeking to return this nation to its full former glory. A fee to use your money is one more insult on top of injury.

What are besieged consumers to do? A system has been set up that runs on electronic transactions from using debit cards, online bill payment and electronic funds transfer. Sure banks have invested in worldwide automated teller systems but that saved manpower costs and allowed them to operate with fewer physical branch offices. ATMs don’t take weekly salaries, health insurance or vacations. This is strictly about taking money out of the hide of customers since new regulations limit how much banks could charge merchants to process transactions so it went to its own account holders. This $5 fee does not hit everyone. Account holders with larger average balances can avoid the fee so it really only hits those that can least afford it, is this the new American way.

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Blackout – Black Unemployment Rate Rises As Overall Rate Falls

 Empty - Ghosts of The Middle Class

Sometimes statistics speak louder than shouts from rooftops. Cheers went up as the March 2011 jobless rate fell from 8.9% to 8.8%. Hold the celebrations unemployment rate for black increased from 15.3% to 15.5%, almost twice the 7.9% of whites.

What is going on in the face of celebrations surrounding the number of jobs being created and an unemployment rate that has dropped to 8.8% from 8.9% the month before, blacks seemed to be left off the party invitation list. Hispanics have little cause to be raising their glasses for a toast as well. The unemployment rate for Hispanics fell from 11.3% to 11.1%, but it is the unemployment rate among blacks that is totally disconnected and going against the tide.

The Bureau of Labor Statistics report lists the rates for blacks, whites, Hispanics and all other groups in the United States. Even inside the black community the pain is unevenly spread. Black women had a drop in their unemployment rate from 13% to 12.5% while black men went from 16.2% to 16.8%.  Let’s not gloss over the gap between black men and black women with a 4.3% more of an unemployment percentage among black men.

Let’s get away from percentages and get into how many people this represents. The tables state that 7,923,000 black women are employed compared to 6,758,000 black men. That means that 1,165,000 more black women have jobs than black men. On the flip side the number of unemployed black women is listed at 1,127,000 versus 1,361,000 black men. There is a quirk in the numbers that show fewer black women have jobs than before. The number of black women that were employed in February was 7,993,000 compared to 7,923,000 which are 70,000 fewer jobs and the jobless rate went down for black women. You may ask how fewer working black women mean a decreased in the unemployment rate, it is because so many gave up looking for work and were not counted in the numbers.

The participation rate for black women went from 63.1% to 62.1% and that caused the rate to decrease even though 70,000 fewer black women had jobs. Black men actually had an increase in the number holding jobs from 6,745,000 to 6,758,000 which is 13,000 more jobs and the jobless rate among black men went up because the participation rate went up from 68.2% to 68.7%. Simply speaking, more black men looked for jobs and the jobless rate went up due to math.

So, what is going on? Blacks don’t seem to be included in this slow recovery and what does it mean for the long term future of the black community. The unemployment rates reported are always lower than reality. What is the rate if part-time and underemployment are factored in. Where are the crisis level emergency outcries, because as we speak, decades of economic gains in the black community are being destroyed?

The Mean Index – Profit Over Jobs In U.S. – Opposite In Europe & Japan

 Empty - Ghosts of the Middle Class

There was a time when recessions caused employers in the United States to figure out ways to keep employees busy in order to keep from losing them. Now laying off workers seems to be the first, not last option for U.S. companies compared to the rest of the world.

In the past when economic downturns would hit, U.S. companies would do everything it could to keep from losing employees. Employees would be assigned cleanup tasks, filing and straightening up the storeroom. It seems that something has dramatically changed in the United States. An article titled “Unlike competition, U.S. values profits over jobs” by Paul Wiseman March 31, 2011 and published on the MSNBC website shows the difference in how some foreign country based companies treat employees in a recession versus United States based firms.

In the United States worker productivity is up as fewer employees are producing more output after companies shed workers during the recession. According to the article that is not the case in Japan and Europe. Productivity actually went down during the height of the recession during 2009 by 3.7 percent in Japan and 2.2 percent in Europe while U.S. productivity growth doubled from 2008 to 2009 and again in 2010. Now that U.S. corporate profits are at record levels, U.S. firms are hiring a pace far lower than businesses in other recovering nations.

It seems that companies in other developed nations kept more of their employees during the downturn, even at the cost of profits and productivity. Something has changed in the United States as employees are not seen as being as valuable as they once were. Downsizing and trimming the workforce seems to be the first strategy to deal with a downturn as opposed to keeping more employees and sacrificing some level of profitability. Earnings per share and bottom line profits have won out over retaining skilled employees throughout a downturn. Pumping every ounce of output from the remaining workers is seen as a better strategy than hiring new employees as profits bounce back, employee morale and well being take a back seat.

I guess the United States is firmly entrenched in the “employee as a unit of labor input” formula as opposed to an individual with respect, responsibility and loyalty if treated well. This should be no surprise when the action that are taking place in some states towards professionals such as teachers and firefighters as they are hammered down into the roles of “just shut up and work.”