05 November 2021

Enemy economics

The system is rigged against you.

The article I'm excerpting here is posted at CNN, a mainstream news site.  This is not fringe thinking.  This is a conventional view of how economics is supposed to work.  I'm not even particularly singling out this one essay, just using it as an example.  It starts by explaining that the shortage of workers is intensifying despite more available jobs and the end of enhanced unemployment benefits:

.....many expected workers to go back to work and the nation's labor shortage to ease significantly by September.  But recent data suggest that, if anything, the shortage is getting more severe.  And though the risk of a severe shortage continuing into 2022 is not the most likely scenario, the chances of it are increasing.

The article cites some reasons for people's continued reluctance to return to work, mainly high savings and fear of covid-19.  Shitty pay, shitty bosses, and shitty working conditions are not mentioned.  Then it gets down to the real core of the matter:

When businesses have difficulty recruiting and retaining workers, wage acceleration follows.  According to the September jobs report, average hourly earnings increased at an annual rate of 6% over the past six months. That is more than double the average rate over the decade prior to the pandemic.  Such wage acceleration will take a bite from corporate profits and may lead companies to raise prices. What's more, not only did labor costs dramatically accelerate in 2021, but the inability to find workers impacted some companies' operations and contributed to lower profits.

Lower profits?  Can't have that, can we.  Obviously, wages going up by 6% is a problem.  And problems require solutions.

The US needs to find ways to raise the number of workers through larger and more economically motivated immigration policies.....

I appreciate the reminder that immigration policy based on corporate interests is a gun pointed at the head of the American worker.  But that's a side issue.  Now, read the next part carefully:

.....a continuing labor shortage would pose a serious risk to the 2022 US inflation and economic growth outlook.  First, wages for new hires will continue to rapidly grow.  That, on top of an escalating cost of living, will increase wage growth for workers who stay in their jobs.  Across the board, higher annual raises and special adjustments to retain workers are likely to further increase companies' overall labor costs.  For the first time in decades, the scenario of a wage-price spiral, where higher prices and rising wages feed each other, leading to faster growth in both, could actually hinder economic growth.  In such an environment, the Federal Reserve will be forced to raise interest rates multiple times in 2022 and materially slow GDP growth by more than what is already currently being forecasted.

Yes.  It actually says that.  Rising wages for new hires, wage growth for existing workers, and higher annual raises constitute a risk.  They're a threat.  The Federal Reserve will "be forced to" take action to put a stop to this dangerous trend.

The skyrocketing wealth of billionaires, and its escalation to even more obscene levels during the recent pandemic, is perfectly OK.  When the supermarket check-out girl starts being able to afford better food and a few more toys for the kids, suddenly it's dangerous and drastic action is needed to grind her back down.  They don't even really believe in the free market.  As long as that free market is letting the parasite class skim off the extra wealth created by workers' increasing productivity, it's working as intended -- but as soon as it begins to empower those workers a little, giving them a chance to improve their circumstances, the state needs to intervene in the economy by manipulating interest rates and importing more cheap labor to put a stop to it.  By these rules, we can never win.

Oh, and our rising wages could "materially slow GDP growth"?  Is the imagination of these types even capable of encompassing the possibility that the mass of people in this country no longer give a shit about GDP growth, when they pay the price for it in hard work and the benefits go to others?  When they sacrifice their time and energy and health and dignity to produce more and more wealth which ends up, not in their own hands, but in the form of more and more yachts, mcmansions, dick-shaped rockets, etc in the hands of a tiny aristocracy -- and all this is recorded in the economic statistics as "growth"?

That pattern has prevailed since the Reagan administration:
Since the 1980s real income for the median and below has remained practically flat, even as productivity -- the value those workers were producing -- soared.  And if that top 5% red line represented the top 1% or 0.1%, the real parasite class, its rise would be far steeper.  That's where that extra value those workers were producing went, not into their own pockets.  The parasite class stole it.

If this is what capitalism means, then to hell with capitalism.

And yes, I take this personally.  The period from the 1980s to today is my entire working lifetime.  I spent those years producing a hell of a lot of value that was skimmed off by others.  The same is true for tens of millions of people.  It's a fundamentally different reality than what was experienced by someone who began his working life in, say, the 1950s.

The system is rigged against you and in favor of the ultra-wealthy, and has been for decades.  You owe it no loyalty.  Seize whatever advantages and opportunities you can to take back some of the wealth which you produced and which was taken from you.  And vote accordingly.


Blogger Sixpence Notthewiser said...

You are right. The system is rigged against the worker. When the main preoccupation is to provide MORE money for the overlords while the workers still are expected to produce while being paid shite, we're talking trouble. Capitalism is not everything it's touted to be. A system meant to make the richer even richer to the exclusion of everybody else is gonna fail.


05 November, 2021 04:22  
Blogger Jack said...

It seems almost impossible to read this or dig into how our economic system functions and not come away thinking (1) we do in fact have a class system, and (2) this is how the system was designed. I'm not sure how feasible the notion of "capitalism with a heart" ever was, but we move away from seeing any need for a heart as soon as it threatens corporate profits. I suspect the focus on corporate profits may also be the #1 obstacle to doing anything meaningful to slow climate change.

05 November, 2021 05:05  
Blogger Mike said...

I can't remember what year it was when things got out of hand, but when CEO's pay was tied to the stock price, workers started getting screwed big time. I think democratic socialism with regulated capitalism works and we need the democratic party to get their heads out of their collective asses and start working together.

05 November, 2021 09:24  
Anonymous Carol said...

I notice that despite the warnings of impending inflation, the stock market is up today. I don't understand why more people don't condemn the inequities of the current system. I appreciate the graphic you've presented. The rich profiting disproportionately well above everyone else is nothing new. So, why don't people get it?

05 November, 2021 09:46  
Blogger Shaw Kenawe said...

My father was an Italian immigrant who had only a 8th grade education because he had to go to work to help support his parents and siblings in Italy. He immigrated to America where he learned a trade; he became a barber. In his lifetime, that trade allowed him to buy an apartment building in a city, and then to sell it and put that money toward building a home in the suburbs, and then eventually to buy the building (a rental property) his barber shop was situated in. (He also bought used cars, but finally a new one in the late 60s! I still remember that red and white Buick!) My mother was a stay-at-home mom, going to work just part time, as a seamstress, only when my brother and I were in the upper grades and able to look after ourselves when we got home from school. This all happened in the middle 50s to 60s. We lived in a middle class neighborhood surrounded by neighbors who were firemen, policemen, salesmen, carpenters, all one-income families.

Could a one-income family on a barber's income do that now? I know the answer.

05 November, 2021 10:04  
Blogger SickoRicko said...

I totally agree with your essay and the commenters. However, I think it's going to take more than voting to fix this mess. Humans have not outgrown the need for revolutions and that is what I see on the horizon.

05 November, 2021 12:42  
Blogger Diz Liz said...

This is depressingly true and not anything new. I remember during Clinton's presidency I was listening to a news report. It said that people were leaving jobs for other, higher paying jobs in large numbers. This was considered a terrible eventuality, it would lead to inflation and that somehow the unemployment rate needed to be increased to make the economy "more stable". That was I gave up and realized I REALLY needed to look out for myself. Society did not give a s*** about me.

05 November, 2021 15:09  
Anonymous Doug Holland said...

You're my favorite infidel, and every point you make here is correct. It's gotta be said, though, that it's an *opinion* piece at CNN you're responding to, not a *news* report.

Lots of opinion pieces are written by Republicans, megacapitalists, and other assorted idiots, and they're wrong about all sorts of things, because Republicans and megacapitalists are idiots (obviously).

05 November, 2021 15:59  
Blogger W. Hackwhacker said...

Not to put too fine a point on it, but you goddamn nailed it.

06 November, 2021 05:31  
Blogger Infidel753 said...

Sixpence: Capitalism and the free market have become sacred cows, worshiped by the very people they shit upon. It's amazing the system has lasted so long when things have become so extreme. The French would have broken out the tumbrels a long time ago.

Jack: A country that started out with a landed gentry and slaves never really had any claim to being a classless society. The Southern feudal system eventually gave way to the industrial-capitalist robber-baron class, and in one form or another it's remained that way. We now have less class mobility than almost any other Western country. And it feeds on itself because enormous wealth buys enormous influence on the political system.

Mike: Where it's been tried, democratic socialism seems to work better than what we have. Canada, western Europe, and even Japan have far less inequality than we do and provide better for their people. I still don't see why we have to be the only advanced country that can't do universal health coverage.

Carol: The stock market has been doing great recently -- which implies investors are not expecting interest rate hikes any time soon, since that prospect normally spooks them. If there's inflation, it's caused by all these shortages of goods that inflate prices. If the government adopts a policy that wages can't be allowed to rise, that's a declaration of war on the people.

06 November, 2021 07:44  
Blogger Infidel753 said...

Shaw: We do all know the answer, and it's infuriating. The skills and education needed to be a barber or a carpenter can't have changed much since the 1950s. Nor is there any radically new expensive technology involved. What's changed is the rise of this new parasite class and the government's loss of focus on the economic situation of the working people.

Ricko: They're damn lucky that hasn't happened already. This country reached the Louis XVI stage some time ago.

Liz: Society may not give a damn about us. The ruling class definitely doesn't, and government policy only sporadically does. The Democrats have managed to do some good since January (and earlier with Obamacare), but so far it's just nibbling around the edges.

Doug: Thank you. I knew it was an opinion piece, of course, but that's pretty much my point -- it was published on a mainstream news site, so it's within the range of mainstream conventional thinking. Also, the Republicans are one of the two major parties -- so whatever ideas are commonplace in that party, idiotic or not, are part of the mainstream by definition.

Hackwhacker: Thanks! These points have been on my mind for a long time. The CNN piece just provided a framework for getting them all out.

06 November, 2021 07:53  
Blogger Mary Kirkland said...

The shitty pay and shitty bosses is so true. Just a look around any social media right now will attest to that. My daughter found a job and just made assistant manager in less than a year because there's such a high turnover at her store, because no one wants to stay and deal with the manager or district manager. It's crazy.

06 November, 2021 14:34  
Anonymous Johnny Profane said...

You know I'm with ya.

06 November, 2021 20:02  
Blogger Bohemian said...

The obscenely Rich can buy Options and People. They and their wealthy Corporations and Special Interests pretty much drive all Political decisions since they are the Donors the Politicians rely upon. Which pretty much ensures a conflict of interest where they're not looking out for the well being of their Constituents and have been bought and paid for by whoever their biggest Donors were. Follow the Money and it always leads to where the problem started and whose behind every decision being made. I remember as a Corporate Executive in my Banking Career I got huge Bonuses and was the only Exec I knew who actually Shared it with my Employees, since they were the ones that made everything work out so well in our Departments. Capitalism without checks and balances is dangerous, when EVERYTHING is controlled by Private Owners for PROFIT, well, are we REALLY Surprised at the end results? I think not. Power corrupts, absolutely Power absolutely corrupts.

06 November, 2021 21:57  
Blogger Infidel753 said...

Mary K: Toxic managers are the worst. I once stuck with such a job for several years hoping things would get better, but they never do. At least now people have more options.

Johnny: Glad to hear it!

Bohemian: The thing is, it's short-sighted. Politicians are stuck on money, but money isn't as powerful as they think. More and more often, politicians far out-spend their opponents and still lose. They need to get back in touch with the voters.

Most corporate executives these days seem equally cut off from reality. They're almost like a different species.

07 November, 2021 02:41  
Blogger Johnny Profane said...

Marx didn't foresee mass media...

He talked about the dangers if the "cult of personality"...

But didn't firesee the power of sheer celebrity by the 21st Century.

Trump. Essentially little money... in the big picture.

But a power... and an audience.. through social media... far surpassing that of Gandhi, MLKjr, Hitler.

Wealth isn't the only thing to fear.

Imagine if Zuckerberg had a *personality.*

We'd REALLY be in deep shit.

Btw, he didn't foresee the power of Data either...

07 November, 2021 04:44  

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