It’s really not so difficult: The greed of corporations and a few individuals has resulted in their amassing huge piles of money while leaving behind just about everybody else. An increasing number of people seem to be waking up to that fact. But the claim that the Davos crowd is worried about populism and nationalism rings hollow. Many of the companies represented at the summit will gladly do business with anybody if it’s good for their bottom line. Case in point is the appearance of Brazilian President Jair Bolsonaro, the recently elected right-wing populist, who promised a tax-cutting, privatization agenda in his remarks. Oh, and the Saudis were also in Davos. It seems pretty clear that the politicians and captains of industry rubbing elbows at the summit realize that the rise of populism is fueled by anger at the inequality that is playing out for everybody to see. Headlines like this aren’t helping their cause: “The top 26 billionaires own $1.4 trillion — as much as 3.8 billion other people.”
So maybe these “elites” are not really confused as to why people are getting frustrated but rather why now. After all, especially in the US, they have successfully conned the masses into believing that ordinary people will benefit from this accumulation of wealth, which will somehow “trickle down.” That, too, is no big mystery. In the wake of the 2008 financial meltdown, only those at the top have recovered — and prospered — while the middle class is falling behind. Instead of addressing this growing problem, the Trump administration and Republicans in Washington handed a massive tax cut to corporations and those at the top. This is not just happening in the US. A recent report commissioned by the Green Party in Germany shows that major corporations throughout Europe are gaming the system and paying much less in taxes than they are supposed to. Which begs the question: If it’s so apparent why people are unhappy and why now, and if the Davos crowd has no qualms about palling around with populists and repressive regimes, what are they really worried about? Could it be that they are coming to realize that they have squeezed the rest of the world too much and that things might get ugly?
The violent yellow-jacket protests in France could be a harbinger of what’s to come elsewhere in the world. At its root, that movement is about regular people objecting to being burdened with more taxes while the rich keep getting richer. It’s interesting that this is starting in France, a country with a history of dealing rather harshly with fat cats. Let’s just say that US Commerce Secretary Wilbur Ross, who doesn’t seem to understand why not getting a paycheck would be a hardship for the 800,000 government workers affected by the shutdown, might have found himself on a guillotine in a Paris square had he made such an obtuse comment in another era. It’s no surprise that one of the politicians in Davos who figured out what is happening is Bruno Le Maire, the French Minister of the Economy and Finance. “I think that capitalism is not on the right track,” he told CNN this week, adding that his biggest worry is inequality in the world. “There are many people in France, but [also] in many other countries that are disappointed by [. . .] capitalism,” Le Maire said.
While the heads of the super-rich probably won’t end up on a chopping block this time around, their bank accounts might. Right now, populists are succeeding in large part because they make their voters afraid of the “other.” Whether that’s refugees in Europe, immigrants in the UK or “caravans” in the US, xenophobia is a driving force that helped propel Donald Trump to the White House, turned Matteo Salvini into a political force in Italy, and got British voters to support a Brexit that will be a disaster for them. The reason this works is that many people see life as a zero-sum game. They believe that every time somebody gains something, somebody else is losing something of equal value. With that mindset, they are easy prey for populists who tell them that the “others” are getting the jobs or benefits meant for native citizens.
Upon closer examination, this is a laughable concept. Even if the zero-sum theory were true, whatever is spent on immigrants in the US, for example, is dwarfed by the amount of money that goes to billionaires and corporations. At the same time, the “trickle down” effect is exposed as little more than a pyramid scheme. And that is why the jig may finally be up — and the folks in Davos are feeling the heat. Some participants were openly worried about what will happen when they become the target, and not the beneficiary, of fiscal policies. There was much debate on a proposal pitched by Rep. Alexandria Ocasio-Cortez (D-NY), who wants to tax income above $10 million at a rate of 70 percent. Her idea proved surprisingly popular. A recent poll found that 59 percent of Americans approve.
The rich aren’t merely different from you and me. … They’re ridiculous! I mean the uber-rich, the billionaire barons of Wall Street who literally live above the real world and are clueless about the gross inequality their financial schemes are creating. Take Kenneth Griffin, a hedge fund tycoon who’s the latest gold medal champion of conspicuous consumption. He just paid an obscene $238 million for a sprawling 24,000-square-foot New York City penthouse located 79 stories above street level at Central Park South — a strip nicknamed “Billionaire Row.” Griffin’s splurge on three floors of the luxury building is the most expensive residential purchase in U.S. history, exceeding the excesses of robber barons in the Gilded Age. Adding to the overindulgence, he will live in his mansion in the sky only occasionally, for he also has a little $60 million penthouse in Miami, a backup $122 million mansion in London and posh crash pads elsewhere. Griffin is the poster child for that disgraceful Trump-GOP tax cut for the superrich, which they passed by claiming that beneficiaries like Griffin would put their windfall into jobs and wage increases for the working class.
Interestingly, his exclusive new skyscraper residence replaces a modest, 20-story building of affordable, rent-controlled apartments where dozens of middle-class tenants lived. All of them were evicted by the corporate developers to provide opulent digs for a few house-hopping billionaires. That ought to be illegal, but instead a state law specifically empowers high-dollar landlords to toss out middle-class and low-income tenants, demolish their apartments and put up a swanky new building. If you wonder where inequality and America’s affordable-housing crisis comes from … there it is. Yet, Griffin is so out of touch with reality that he has complained that rich elites like him have “insufficient influence” in politics. Really, Ken? Who had the political clout to eject dozens of families from their homes? Once upon a time, there was a place where the prevailing ethic of the very richest people was that monetary self-indulgence was tacky, and they had an awareness that wealth was a matter of good fortune, carrying with it an obligation to the Common Good. Believe it or not, that place was the USA! Where did it go?
The prevailing ethic of today’s billionaires club is one of entitlement, superiority and grandiosity — including flaunting their wealth like the robber barons of old. They’ve contrived a new Gilded Age of plutocratic privilege, with the same sort of excesses as the old one, erecting ostentatiously enormous residences. For example, a ludicrously large “house” is now under construction in Florida for one of our modern-day barons, boasting 11 kitchens, five swimming pools, and a 30-car garage. A monument to garish greed. Worse, the billionaire class is asserting its sense of plutocratic privilege by weaponizing their huge fortunes to get more for themselves at the expense of the rest of us. They’ve been spending massively (and often secretly) to build a culture of inequality across our land, using such ploys as the Republicans’ deplorable trillion-dollar tax giveaway to the rich. To their dismay, however, America’s workaday majority is rebelling, with newly elected democratic populists like Alexandria Ocasio-Cortez proposing a top tax rate of 70 percent on incomes above $10 million. “Oh, the horror!” shrieked billionaires like computer magnate Michael Dell: “Name a country where that’s worked,” he demanded dismissively. Okay, Michael: How about the United States?
Yes, between the end of World War II in 1945 and Ronald Reagan’s start of coddle-the-rich government in 1981, the top tax rate never fell below 70 percent — and that was a period of unparalleled growth and prosperity for America’s middle class. Dell, who lives in a sprawling 33,000-square-foot house with all the charm of a shopping mall, confuses value with money and has no grasp of the essential richness of American egalitarianism. We should not be listening to people like him (much less be governed by them) just because they are rich.
Last month, Tucker Carlson, the Fox News host, delivered a bombshell 15-minute monologue in which he denounced market capitalism, Wall Street exploitation, private equity, payday loan outlets and America’s ruling class. In a follow-up interview, he even said he would consider voting for Elizabeth Warren. Ever since, he has been pounded from both left and right. The Limits of Tucker Carlson’s Anti-Free Market Vision, declared a headline in Slate. Tucker Carlson’s Monologue Insults His Viewers, ran a title line in the Atlantic. In National Review, David French urged the right to reject Carlson’s “victimhood populism”, while Bret Stephens in the New York Times mocked him for questioning elite rule when he himself has so benefited from it. The uproar reflected the messenger as much as the message. A fixture of Fox’s primetime lineup, Carlson has been a gleeful scourge of liberals, a tireless disparager of social programs and a fierce critic of immigration. After he said in December that immigrants made America “poorer and dirtier”, more than two dozen companies dropped their ads from his show. In his jeremiad, however, Carlson sounded like Bernie Sanders. “For generations,” he declared, “Republicans have considered it their duty to make the world safe for banking while simultaneously prosecuting ever more foreign wars.” Americans “are ruled by mercenaries who feel no long-term obligation to the people they rule”.
In a rousing peroration, Carlson noted that Americans want to live in a country “whose leaders don’t accelerate the forces of change purely for their own profit and amusement” and at the expense of the family – the foundation of a healthy society. Republicans had to acknowledge that market capitalism is not a religion but a tool like a toaster or staple gun, which it would be foolish to worship. They had to “unlearn decades of bumper sticker talking points and corporate propaganda”. While libertarians were sure to brand any deviation from market fundamentalism a form of socialism, socialism is exactly what America will get unless a group of responsible leaders reform its economy “in a way that protects normal people”. Carlson’s warning recalled several similar ones of late. Last year, Laurence Fink, the powerful head of BlackRock, the asset management giant, wrote to CEOs that while those with capital had reaped “enormous benefits”, many faced low wages and inadequate retirement plans, feeding the anxiety and polarization afoot in the world today. He urged companies to adopt “a new model of shareholder engagement” focused less on quarterly earnings and more on producing long-term value for employees and communities.
Henry Blodget, a former Wall Street analyst who now runs Business Insider, said in a talk on Better Capitalism that shareholder capitalism had turned America into a “nation of overlords and serfs”. Noting that executives “have forgotten that one of the reasons companies exist is for the people who work for them”, he urged them to “to share a little bit more of the value with those who make it”. It was Carlson’s very excoriation of free-market capitalism, however, that most goaded his critics, especially on the right. That economic system, Ben Shapiro asserted, “has powered most of the world’s human beings out of extreme poverty and led to the richest society in human history. It has allowed us to live longer, in bigger houses, in more comfort. It has meant fewer dead children and more living parents.” Shapiro, in turn, was upbraided by JD Vance, the author of Hillbilly Elegy. “Our economy has not produced fewer dead children and more living parents in America, at least not in the section of the country where I live,” he wrote, citing in particular the opioid epidemic, which has ravaged so many communities. In states such as Ohio, West Virginia and Kentucky, “countless children are growing up with parents in jail, incapacitated or underground”. They may live in a country with a higher GDP than a generation ago, but few would claim they’re better off. If conservatives can’t talk about people’s real problems “because it promotes victimhood”, then “we are fighting a battle that we both deserve to lose and will lose”. In Hillbilly Elegy, Vance expressed deep skepticism of government programs, but, as these comments suggest, his views seem to be shifting.
From the outset, several top-tier Democratic presidential candidates are pushing for new taxes on the wealthiest Americans and attempting to portray themselves as best positioned to fight the country’s yawning inequality gap. It is an indication of how much the Democratic Party is shifting and how far the candidates are willing to go to appeal to the party’s energetic liberal faction. The debate over wealth — particularly with billionaires in the field and Democrats challenging a president whose riches helped get him to the White House — is a dominant theme of the early primary season.
Among the first advisers the candidates are consulting are not foreign affairs veterans or domestic policy experts, but economists. Sen. Elizabeth Warren of Massachusetts is proposing a new “wealth tax”that would impose added levies on the 75,000 U.S. households with a net worth above $50 million. Sen. Kamala D. Harris of California — who also plans to unveil a proposal to increase taxes on the rich — wants to provide a tax credit of up to $500 per month to families making less than $100,000. Sen. Bernie Sanders (I-Vt.), who in his 2016 presidential run was an early advocate for higher taxes on the wealthy, introduced a bill Thursday to significantly increase the amount heirs would pay on the estates of their wealthy relatives. Under his plan, billionaires’ estates would be taxed at a 77 percent rate, and he would also lower the estate tax threshold to those inheriting $3.5 million.
The proposals reflect a broad shift in the mood of the Democratic Party and the country more generally, as the recent financial crisis and a distrust of big institutions has fueled a populist surge in both parties. A few years ago, Democrats were shifting to the center amid concerns they had drifted too far left, and emphasizing tax hikes was anathema; now some in the party are happy to call themselves socialists. The tax plans are jump-starting a debate within the party over how far-reaching an overhaul should be, and they’ve prompted immediate criticism from moderates and wealthy potential candidates.
We’ve read the recent headlines: “U.S. birth rate plummets to lowest point in 30 years.” “U.S. fertility rate declines for seventh year running.” It turns out we’re 16 percent below the level needed for our population to replace itself. Even if I wanted to stay home, the equation doesn’t work. While day care is expensive — the average weekly cost for an infant child is $211 for a day-care center, $195 for a family care center, and $580 for a nanny — I make enough money, thankfully, to cover the expense and more. If I were to stay home, yes, we’d save on day care expenses, but to afford housing, food and any extracurriculars, we need two incomes. According to 2014 numbers, a home costs approximately three times as much as a home in 1970, compared to the average wage a person earns. So, wages went further 50 years ago than they do today, and we’re trying to make up for it by having both adults in the family unit work. In short, we — not just women, men too — are emotionally, physically and financially tapped out. We don’t have the bandwidth for more children.
Work in the United States is a mixed bag: in many cases, you can get a job if you want one, even if you’re a convicted felon, a former opioid addict, or have no resume to speak of. But if you are outside higher-skilled occupations, don’t expect much in the way of outsize wages — or pay increases as time passes.
What’s happening: In reports yesterday, the government said the U.S. economy is roaring into 2019 — but not wages.
*Month-to-month employment growth, at 304,000 in January, was some four times the 60,000-80,000 required to absorb new entrants to the work force, the Bureau of Labor Statistics reported.
*That was the 100th straight month of job growth — by far the longest streak since the number has been tracked in the 1930s.
And the economic expansion is now just five months shy of a record. As one example, factory production picked up steam last month, rising to 56.6 on the Institute for Supply Management Index (above 50 means expansion), up from 54.2 in December.
*“Usually, as expansions go on, they slow down a little bit. But it’s really unclear when that is going to happen,” said Martha Gimbel, research director at Indeed’s Hiring Lab.
*“Job seekers are still in the driver seat,” said Andrew Chamberlain, chief economist at Glassdoor, the jobs site.
But, but, but: Though wages grew by 3.2%, or 1.3% after accounting for inflation, that is about half what it should be, said Joe Brusuelas, chief economist at RSM.
*“At this point in the business cycle, we traditionally have 4% to 5% nominal wage gains,” he said, and about 2.5% after inflation.
*“It was another month of anemic gains in hourly wages,” Brusuelas said.
Like a growing number of economists, Brusuelas blames monopsony wage-setting power enjoyed by large companies that dominate metropolitan population areas. “They are so large, they are able to set a prevailing wage” that other companies then follow, he said.
The bottom line: “Large behemoths essentially set wages,” Brusuelas said. “This creates a ceiling that wages are simply not going to move above.”
January marked the 100th consecutive month of job creation in the United States – a record breaking streak of job creation that has left employers scrambling to find workers and dragged the long-term unemployed back into the market. Yet even now, 20m jobs later, there are some parts of the US economy that have yet to reflect the positive image projected by the continuous job growth and low unemployment rate. “That we’ve had the unemployment rate at or below 4% since last February is obviously historically remarkable,” said Mark Hamrick, senior economic analyst at Bankrate.com. “But the composition of the workforce or employment obviously paints a much more complicated story.”
What troubles analysts like Hamrick, as well as the central bankers at the Federal Reserve, is the fact that the US economy is now dominated by high skill, high wage jobs and low skill, low wage jobs. Gone are many of the middle skill, middle wage jobs and that, said Hamrick, a trend that has led to “not only the economic divisiveness of our country but to some degree the political divisiveness”. Take manufacturing for example, where about 25% of jobs have disappeared over the last two decades thanks to globalization and automation. It isn’t just middle wage jobs that are missing from this job market. There is also the mystery of stagnant wages. Even as jobs were added, the one thing that remained mostly the same for large part of those 100 months were the wages. In December, wages were up 3.2% from a year earlier, their largest gain since 2008 but nothing to boast about. In January growth slipped to 3.1%. According to the Economic Policy Institute (EPI), a left-leaning thinktank, wages would have to grow between 3.5% to 4% for average workers to really feel an impact.
The wage growth figures, particularly in the early part of the recovery, should have come with “a sad trombone sound effect” said Hamrick. That low wage growth will be one of the main things people remember about this recovery, he added. If anyone needed a reminder that many Americans live paycheck to paycheck while working full-time, the past month should have done the job. The 35-day government shutdown led to two missed paycheck for about 800,000 workers and many of them had to rely on food banks for their meals, deferred some of their bills and skipped payments on those they couldn’t cover. A recent survey by Bankrate.com found that just 40% of US households have enough money to cover a $1,000 in emergency expenses. Another survey found that 62% of employees received no salary increase in 2018 and just 25% were determined to look for a better job this year.
All these dark clouds seem counterintuitive to the numbers coming out of the Department of Labor each month. When the labor market is tight – meaning the unemployment rate is low and fewer people are looking for jobs – the bargaining power is supposed to be in the hands of the workers. The employers competing to fill empty jobs are supposed to be offering better wages and benefits to attract the best candidates. Low unemployment rate number is also supposed to make workers optimistic about their chances of getting a new, better paying job. And yet the shadow of the Great Recession still seems to loom large over America’s workers. People are still scared and mainly want job security, according to Elise Gould, senior economist at EPI.
“A little bit of what happened is that in the recession, employers got a lot more bargaining power and strength because workers really needed to try to have whatever job that they could get and some of that’s left over,” she explained. “Employers think they should be able to get whoever they want at those lower wages. And I think that that will turn around, but it’s surprising that it hasn’t yet given the unemployment rate that we’re at today.” Gould pointed out that the unemployment rate only considers people who are actively looking for work. It does not count people who are working part time but want full-time jobs or those long-term unemployed who have stopped looking but are available to work. The rate that does count all of them is called U-6. In January, that number was 8.1% – double the unemployment rate which was 4%.
Instead, he asks: What made millennials the way they are? Why are they so burned out? Why are they having fewer kids? Why are they getting married later? Why are they obsessed with efficiency and technology? And his answer, in so many words, is the economy. Millennials, he argues, are bearing the brunt of the economic damage wrought by late-20th-century capitalism. All these insecurities — and the material conditions that produced them — have thrown millennials into a state of perpetual panic. If “generations are characterized by crises,” as Harris argues, then ours is the crisis of extreme capitalism. I spoke to Harris about the case he lays out in the book, and why he thinks millennials will have to overthrow the system and rewrite the social contract if they want to meaningfully improves their lives — and the lives of future generations.
The Trump administration is arguing in court that it would be too “traumatic” for immigrant children taken from their parents to be reunited, claiming it might present “grave child welfare concerns” for the children to be taken from their temporary homes. The administration has been under fire for its policy of taking immigrant children from their parents and placing them in detention centers, and continues to draw criticism for its slow and stilted efforts to reunite those children with their families. As the Associated Press reported, the administration is now arguing in court that it could be “traumatic” for those children to be reunited with their parents again and that it would take “extraordinary effort” for the administration to do so. “It would destabilize the permanency of their existing home environment, and could be traumatic to the children,” Jonathan White, the Trump administration official tasked with leading the efforts to reunite separated children with parents, argued in court.
The administration also argued that its focus should be on reuniting children currently being held in detention facilities, not those who were sent to live with sponsor families. The argument came just days after a government report said that the Trump administration separated thousands more migrant children than had been previously made public. The report, which was issued by the inspector general for the Department of Health and Human Services, also noted that there was no one in the Trump administration even keeping count of how many children had been separated until after a lawsuit filed last year. As the Washington Post reported, officials had only an estimate of the number of children taken based on “informal tracking” by Health and Human Services. Critics seized on the report, with the American Civil Liberties Union releasing a statement saying that the HHS report “reaffirms that the government never had a clear picture of how many children it ripped from their parents.. . . We will be back in court over this latest revelation.” Donald Trump had come under worldwide criticism after officials went public with the “zero tolerance” policy that had immigrant children separated from parents and put into detention centers. Trump initially argued that it was the fault of Democrats for not addressing immigration, but critics pointed out that the policy to separate children did not exist before his administration, and that previous administrations only put children in detention centers if they crossed the border unaccompanied by a family member.
Trump SOTU Song
They give us those nice bright colors
They give us the greens of summers
Makes you think all the world’s a sunny day
I got a Nikon camera
I love to take a photograph
So mama don’t take my Kodachrome away