Wages and salaries as a proportion of GDP in blue, contrasted with government expenditure as a proportion of GDP in red:
Yes; correlation does not prove causation. Yes; there are lots and lots and lots of other factors involved — the end of Bretton Woods, globalisation, deindustrialisation, the birth of the computer and the internet, financialisation, the United States’ growth into a global imperial power and more recently the beginnings of a decline.
But whatever the exact causality this does not make happy reading for those who lean toward the idea that more government involvement in the economy translates to a bigger share of the pie for the working class.
Quite the opposite — while wages have just hit an all-time low, corporate profits have just hit an all-time high:
Since you consistently demonstrate that the government is in the employ of private wealth and power, your surprise is absolutely baffling. Are you unfamiliar with Dean Baker, who talks about this constantly? E.g., http://www.cepr.net/index.php/blogs/beat-the-press/eduardo-porter-is-badly-confused-about-free-trade-and-protectionism. (You read Krugman but not Baker? Further bafflement.) The government is trying to redistribute income/wealth upwards, and is succeeding. If the government were trying to do the opposite, things might be otherwise.
Why would you ever think that the US government is trying to increase worker power, when everything in the world, including your own articles, tell you the opposite?
Where are you reading surprise?
This is written for the benefit of misguided statists who think the government is in the business of helping the working class. Aziz clearly doesn’t believe that.
Your comment’s insinuation otherwise is baffling.
I read this as Aziz only now discovering these facts. Glad that I evidently misread it. But if it’s remedial for the benefit of misguided statists, it should state that the purpose of government policy is to achieve these ends. It’s not some accident. That corporate profits are at their peak because of depressed wages should also be stated, if he’s just explaining basic facts to those unfamiliar.
Without explanation, it can be misread as surprise.
“But if it’s remedial for the benefit of misguided statists, it should state that the purpose of government policy is to achieve these ends.”
skeri, this is incorrect. This would be like saying that the purpose of the U.S. health care system is to produce maximum corporate profits. Purpose is one thing, outcome is another.
Obviously, the process of government has been co-opted by corporate and other interests, but this should NOT distract you from the reality that the government still functions as well as can be expected in all kinds of ways.
I believe, as has been pointed out, that there is a very large contingent of people who still believe that the government can help the economy by instituting more government programs. And although there might be a place for such an approach in non-debt crisis [prudent infrastructure projects], the one we currently enjoy needs the opposite, debt write-downs, less spending, less leverage, etc.
Having said that, I am not sure that too many people would disagree that the only place for the government [at this point] is in providing a safely net for the millions sure to fall through the gaping cracks [food, basic health care, etc.].
Surviving a crisis is simply stumbling down the mountain, facing up to it, though, is the long trek up.
Yeah I am not surprised. We are governed by criminals…they make the laws and they bend them for their benefit, so they are ‘not criminals’. In the film Scarface, Tony Montana (Al Pacino) who plays the big Cocaine don tells his banker who wants an extra 8% for laundering services, you are a bigger crook than me, yet I am called a crook, a drug dealer and you get people to open doors for you and treat you with respect.Summed up nicely the crooks that govern us.
Have a read of this if you get a chance:
The Five Levels of the Economy
Posted on August 18, 2012
I read an interesting article. It said that the economy had five distinct levels: red, pink, white, grey, and black. The red market is the market of legal overt violence, value destruction, and wealth confiscation. The pink market is the market of government-endorsed monopolies and oligopolies of useful services. The white market is legal productive activity. The grey market is activity that would otherwise be legal, conducted off the books. The black market is forbidden activity.
Could governments continue to disperse streams of income to “employees” & “welfare” recipients if everybody stopped working? Of course not, and that basically sums it up!
Al: I don’t know what the “it” is that is summed up, but we (U.S.) have provided at least partial proof of your hypothesis — about half of us HAVE stopped working, and the streams of income are clearly unsustainable!
First step to survival of our (U.S.) Constitutional Republic: In any State with a 3rd party candidate on the ballot, we must resist the temptation to “make a statement” at the price of repeating the Perot suicide of 1992.
Aziz, buddy, please listen to me.
It’s not my thing to tell people what to do, but seriously bro, you need to update this post. Few people are as familiar with the FRED database as you, so while you are well aware what WASCUR/GDP is, the rest of us aren’t (and I am quite familiar with FRED).
I’m sure you’re making a great point here, you always do, but you need to explain to readers what the blue and red lines represent more.
Updated post: WASCUR means wages and salary accruals. I apologise for ambiguity.
Thanks. One of my favorite things about your writing is you don’t spoon feed the audience, but once in awhile, we need some help.
The “it” was:
governments only extort the savings of producers who consume less than they’re (voluntarily) paid for the services and or goods which they supply to their community because governments either can’t or fear that they can’t serve their community well enough for people to them pay voluntarily.
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What do you mean by government involvement. If you mean involvement to run the economy, then few would dispute what you say, but if you mean government involvement to regulate civil society in a way that stops it from functioning in a way that leads to great gaps between the rich and the poor, that is another matter. Even staunch sdvocates of markets advocated this sort of government intervention.
“…but if you mean government involvement to regulate civil society in a way that stops it from functioning in a way that leads to great gaps between the rich and the poor, that is another matter.”
rrl, what leads the wealth disparity IS government intervention. Without government, do you believe that people would put up with all the corporate non-sense that goes on?
The primary purpose of government is in enforcing the economic system, that is, interfere in the free market, the natural state of individual independent people.
People in high levels of business and government don’t believe for a minute that the system works in any way other than, “insider everything.” Corruption is the natural order of all group activity. The larger the group, the greater the corruption [generally speaking].
What choice would they have ? Without something to rein them in, everything would be owned by a few giant corporations and we’d be back in a fuedalist system.
“What choice would they have ? Without something to rein them in, everything would be owned by a few giant corporations and we’d be back in a feudalist system.”
drsmithy, corporations were legislated into existence. In the U.S., ALL corporations were originally non-profit and had charters up up for review q10years.
People well understood the potential power and abuse that would manifest if corporations became, “for profit,” and then eventually the dominant form of economic power.
Check out the documentary, “The Corporation.” It’s a review of how corporations metastasized into the virulent cancers they are today.
If it were up to me, I would revoke ALL corporate charters…period.
I’m not sure what your point is. “Corporation” is just a label. Whether you call them that or, say, a guild, the end result is going to be the same.
A “for-profit” corporation is a VERY dangerous legal entity.
This should be obvious to all by this point.
RRL — very true. What I am measuring here is spending, i.e. level of economy being commanded by government. (Sensible) regulations cost very little, so lead to very little additional spending. For instance, Glass-Steagall costs much less to enforce than a bank bailout costs.
Yes you are correct
But the collapse of the Fed as the fifth central bank collapse of the United states is not far off.
While the highly “sophisticated” traders that make up the gold market continue to buy or sell the precious metal based on whether the Fed will or will not do the NEW QE tomorrow (or just because, like Bruno Iskil, they have a massive balance sheet, and can create margin position out of thin air with impunity), China continues to do one thing. Buy. Because while earlier today we were wondering (rhetorically, of course) what China is doing with all that excess trade surplus if it is not recycling it back into Treasurys, now we once again find out that instead of purchasing US paper, Beijing continues to buy non-US gold, in the form of 68 tons in imports from Hong Kong in the month of June. The year to date total (6 months)? 383 tons. In other words, in half a year China, whose official total tally is still a massively underrepresented 1054 tons, has imported more gold than the official gold reserves of Portugal, Venezuela, Saudi Arabia, the UK, and so on, and whose YTD imports alone make it the 14th largest holder of gold in the world. Realistically, by now China, which hasn’t provided an honest gold reserve holdings update to the IMF in years, most certainly has more gold than the IMF, and its 2814 tons, itself. Of course, the moment the PBOC does announce its official updated gold stash, a gold price in the mid-$1000 range will be a long gone memory
World Offical God Holding
1 United States ( down from 18,290 mtins in 1958) to 8,135.5 tonnes
2 German 3,395.5
4 Italy 2,814.0
5 China 1,054.1
7 Russia 918.0
9 Japan 765.2
10 Netherlands 612.5
11 India 557.7
12 ECB 502.1
13 Taiwan 422.7
14 Portugal 382.5
15 Venezuela 365.8
16 Saudi Arabia 322.9
17 United Kingdom 310.3
18 Lebanon 286.8
19 Spain 281.6
20 Austria 280.0
Peter, this is why I have been predicting the demise of the USD and Treasury implosion after the US Elections (When the winner is announced Geopolitical certainty will manifest in BRIC policy announcements)
I would rather invest in Yuan ten USD, and China;s Military can enforce its economic power now.
Most people accept the USA is in decline and China on the rise, so the average Joe will have more confidence in a Yuan Reserve currency over a USD.
My non economic mate said that the USD is backed by gold in Fort Know. I laughed and explained the situation. When the Yuan is actually backed by Gold, what will be the world reserve currency? China makes everything now anyway.
QAssange or Corzine??
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…Reaganomics, the rise of the right, the reductions of workers rights, decrease in unionisation…
Of course, WASCUR does not just include unionised labour, it includes even Romney’s salary. This tends to suggest that financialisation has played a larger role.
People like Romney don’t get paid more than a nominal salary, they make money from investments, stock options, and the like.
Or is that what you mean by “financialisation” ?
Romney does get a “salary” of speaking engagements, etc. Most of his income though is non-earned. This data reflects financialisation inasmuch as much, much more income is now not earnings and much more is income from credit market assets, etc.
“Or is that what you mean by “financialisation” ?”
The term, financialization, is commonly used to denote the practice of setting up financial roadblocks, e.g., interest, fees, levies, or whatever other way there is to grab a portion of the profits being generated in a particular industry/business.
A great example is the credit card corporations that take a cut of not only the sale, but also finance the purchase [in many cases]. Financialization creates no value, and in fact, raises the costs of doing business.
In health care, insurance companies capture the market and sell it back to health providers at a steep discount, pocketing a nice profit for doing nothing other than making a complete mess out of health care.
This is financialization, again something that is wholly anti-free market, and complete state-sponsored. It could not exist without the government.
Michael Hudson has written extensively on this subject and explains it quite well.
I’m not sure if financialisation is completely state sponsored, but certainly a lot of it is.
Since EVERY financial transaction is a “legal” one, by definition, it is state-sponsored. 99.9% of all law is economic [financial] in nature.
The so-called, “check and balance,” system which served this country [moderately well?] at times, was a relative success, that is, it prevented what happens when the entire system becomes captured, but even in its best days, it was the insiders who always made out like bandits.
The difference in times past is that is was easily camouflaged.
The only thing I ever suggest on this board is to look at things are they truly are, as reality certainly suggests that individuals must be as vigilant as is possible against the power of the group, be in the form of government, corporation, or the local PTA!.
I fail to see how you get to this conclusion. Certainly the two examples you gave were not of things that require “state sponsorship”.
Perhaps, drsmithy, you can explain how it is possible to do business with out state-sponsorship [unless you are un-reported, no employees, no tax id, etc.].
Both of my examples, credit card companies and health insurance companies are enormously regulated [state-sponsored], albeit, they wrote many of their own laws over the past couple of decades.
In other words, without governmental regulation, i.e., an actual functioning free-market, almost none of the non-sense going on today would be taking place. THIS is what many people fail to grasp, so they either blame the government [rightists] or business [leftists].
Business has ALWAYS been in bed with government, it’s just now to the point where these two have become hyper-obsessive nymphomaniacs.
So your argument is that a legal system implicitly makes every business state-sponsored ?
That’s because we’ve seen what happens in free markets without regulation before. Extensive pollution, melamine in milk, food poisoning, fraudulent advertising, etc.
drsmithy, if it is a sanitized life you seek, then you must take the authoritarian corporate-state with it.
Freedom comes not without its challenges/imperfections, but what it does offer is the option of finding your own path through life.
Somewhat poetic, but completely meaningless.
I’m quite happy to find my own way through life. What I’m not happy for is to go into a restaurant without feeling some assurance that the kitchen isn’t overrun with rats, to buy food at a supermarket without some assurance that what’s on the label is actually what’s in the packet, to see a doctor without some assurance his qualifications are meaningful, to talk to a retailer without some assurance that he’s not hiding important information, etc.
Well, then you need to go to McDonald’s for dinner and the local doc in a box for your health care. That way you can be sure that you are, “safe.”
It’s like good ole Ben Franklin quipped, “He who sacrifices freedom for security, has neither.”
We need to hook a dynamo up to “ole Ben”, we could power the world with the spinning induced from people abusing and exploiting his writing.
The Wages have declined because Corporate profits as a percentage of wages have escalated. The Corporate profits are taxed, and as a result Government spends more.
Effectively what is happening now is the 1% is supporting the Government (Donations which does not get counted in taxes), and this is why there is regulatory capture.
Wages [subject to supply and demand] have declined for two major reasons, one is globalization, the second is the glut of labor [as a result of both financialization and globalization].
In that the financialization process has tremendously decreased the amount of industrial capital available, this has added to the problem. As long as the vermin in the financial sector can generate higher profits via their magicians hat of fraudulent tricks, capital will continue to be siphoned off from the productive economy, and wages will be depressed.
After all, why create wealth when you can just steal it?
I’m telling you man, this is the book to read:
Click to access Markets-Not-Capitalism-2011-Chartier-and-Johnson.pdf
Hey, Imp., re your Aug 19 @15:41:18: the LOCAL PTA is precisely where we SHOULD be — to screen the misinformation/disinformation coming out of Washington, D.C. to brainwash our children. Local example: 6th grade granddaughter was given a homework assignment based on carbon pollution leading to catastrophic global warming — a fraudulent premise! Washington society news example: head of the largest teachers’ union attended White House event with her lesbian partner, a Democrat Party official.
Buy your granddaughter a pot plant. Buy a fish tank. Put the pot plant in it. Fill with pure Oxygen.
Watch said plant die. Your Grand Daughter will put 2 and 2 together.
Home schooling and socialising at sport and other hobbies with other home schooled children is the solution to a State education system.
Watch the movie “Idiocracy”
And reach a conclusion of… ponies ?
What, exactly, do you think the above is demonstrating, and what relevance is it supposed to have to global warming ?
Buddy — re your two posts of Aug 22 and drsmithey’s puzzlement over O2, CO2 and ponies:
Good idea — I’ll see if my granddaughter knows that plants require CO2 and give off O2, the reverse of animals. Should we ask DRS, along with Al Gore and Obama, if they have stopped exhaling CO2 in order to save the planet? You are spot on about home schooling or nightly tutoring.
I wish I had confidence that your A+ grade for research and (gasp) independent thinking would be replicated in our schools! Congratulations to you and your high school or college!
If you don’t understand the science, why should anyone take your opinion seriously ?
Maybe if your definition of “fraudulent premise” is something supported by all known science.
I suppose you get equally apoplectic about biology assignments involving evolution, as well ?
Where’s the “brainwashing” here ? How is the participant’s sexuality even vaguely relevant ?
Hey, folks: in order to avoid violating the old admonition to “never get in a hissing contest with a goose”, I’ll address this To Whom It May Concern. Once again, DRS follows the Obama/DemNatComm standard procedure of telling “whoppers” and attacking (slandering) the messenger rather than debating the issues.
MAN-CAUSED (CO2 emissions as a significant factor in) global warming has been thoroughly disproved, debunked and EXPOSED as a career, profit, and politics fraud. [There remains one NASA scientist who admits it’s developing far slower than he thought, but he still believes it will happen].
I, my children, grandchildren, and (as far as I know) all political candidates I support are fully aware of the proven science of evolution; in fact, I cite belief in “creationism” along with belief in a flat earth, man-caused global warming, and Obama’s promises as evidence of gullibility.
But I should be patient with the gulled and/or ignorant. DRS asks “Where’s the ‘brainwashing’ here?” The answer is that advocacy (not just tolerance) of homosexual behavior/experimentation is emerging in teaching guides in various locations, not apparently at the behest of local teachers or parents, but “top-down” from Washington.
The sad thing is the hypocrisy of this statement is clearly beyond your comprehensive.
The effect of increased CO2 levels in the atmosphere is well understood, predicted and supported science that dates back to the late 19th century. Similarly, the mechanism behind other significant effects like ocean acidification due to increased CO2 absorption is also well known, predictable and supported by evidence.
These two effects are fairly easy to experimentally verify with simple equipment, and I would assume that even a primary-school science class would do so in this day and age.
As for your move of the goalposts from “CO2 doesn’t cause warming” to “”human caused CO2 is insignificant”, that the human contribution is significant is a matter of simple accounting: we are emitting CO2 at twice the rate its concentration is increasing.
To demonstrate the stupidity and bigotry behind your attitude, all we need to do is replace a few words and wind the clock back a couple of hundred years:
I cannot even comprehend how small-minded, immature and just flat-out cowardly someone must be to feel threatened by the genders of two people in a relationship, regardless of whether that relationship is “tolerated”, “accepted”, “advocated”, or anything else-ed. It is doubly hypocritical from someone who undoubtedly champions “liberty” and “freedom of choice” above all else to criticise those who do so in a way that has no impact on others whatsoever, simply because they find it icky.
Lest anyone fall for DRS’s latest regurgitation* of false, misleading and insulting comments:
Part I. There are three bodies of factual evidence against the HUMAN-CAUSED CO2 global warming fraud.
(1) Theory. Excluding transient effects of meteor/comet impacts and volcanoes, cyclical SOLAR activity dominates variations in global** atmospheric temperature. Next in effect are very-long-cycle earth axis-wobble and planetary orbit-convergence. THEN we get down to the minor effects of “greenhouse gasses”, principally H2O, CH4, CO2; the presence of all three of these is dominated by natural processes, NOT human activity.
(2) Human and geological history. Hundreds of years of climate records and thousands of years of ice cores show the same climatic patterns as in industrial age times.
(3) The dishonest science — selective data points, biased choice of peer reviewers, and dishonest analysis, editing and publishing — was exposed in leaked emails implicating academics (centered in a UK university), U.N. entities (as usual), U.S. government people, investment houses, etc.
The recent overwhelming public counter-demonstration against the ridiculous attempted boycott of Chick-Fil-A was a result of “Americans growing less tolerant of INtolerance”, NOT the issue of same-sex marriage. Similarly, parental fear of Washington D.C. radicals’ control*** of public school educational content is NOT about issues such as adult homosexuality — it’s about insinuating ideological prejudice and revisionist history into children’s minds. And do I need to remind everyone that the teachers unions are subservient to Democratic Party politics.
* Please pardon the impolite language. But I lose respect for anyone who deliberately and repeatedly violates truth, reason, and the dissemination of knowledge.
** LOCALIZED climate anomalies are caused by ocean currents, etc.
*** In evasion of parental or local school board evaluation.
This is a lie.
Also a lie.
And another lie.
Three from three again. At least you’re consistent.
This is what’s called a Red Herring Fallacy.
If you wish to return to the topic of why the genders of sexual partners is relevant to anything at all, and how advocating equality for people regardless of the gender of their sexual partners is “brainwashing”, by all means do so.
Global Warming is a Fraud. 2 years ago we had drought in Australia. Now I have had sheep deaths from the cold and paddocks flooded. This is normal. People just don’t have good memories. we have 5 years of a drought cycle, warming and then the news and other Government mouth pieces preach the end of the world. People vote out of panic. People have objectives and they manipulate the gullible.
I got a A+ in Environmental Science, arguing AGAINST man made climate change. It is amazing what books you can find, not on the “suggested reading” list.
This is what’s called a non-sequitur.
Global warming has been around for a lot longer than five years.
And ? I got an A+ in Grade 11 English with a report on the lack of relevancy of the English curriculum to students.
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To further and, hopefully, finally deal with DRS’s collectivist insecurities and lack of confidence in individual people and communities, let’s try to help him with his fears of contaminated food, pollution, unqualified care givers, and “fraudulent advertising”. [Gee, how did he miss “It takes a village to raise a child”, i.e., parents should get out of the way].
Most of us in the U.S. are still hanging on to a bottom-up system — individual, family, neighborhood, community (including non-government support organizations), school district, city*, county, state*, federal*. Occasional lapses have occurred for various reasons, usually from basic screw-ups, neglect, Murphy’s Law and CYA. Long-ignored chemical and nuclear contamination (none worse than at government’s AEC-DOE facilities) and low-quality healthcare in VA hospitals, are examples of large-scale institutional failures. So maybe we should convert to the authoritarian Soviet Chernobyl or the Chinese mine-safety systems?
I wonder if DRS could find in the present Russia the collectivist paradise described by a friend when visiting the USSR before its collapse: “Everybody has a job. Nobody works. Nobody has any money. If anybody had any money, there is nothing to buy.”
*Ordinarily, each city and state makes and enforces laws protecting the public. The federal government regulates interstate commerce, and, since the post-war Clean Air and Water Acts, has authority over pollution.
Parents are the ONLY effective protection of children from harmful television and internet.
Institutional failures usually involve corruption — the bigger the more $ and more corruption.
As to fraudulent advertising, government/politics is undisputed champ!
Wait, what ? Communities should be praised or ridiculed ? It can be a bit confusing when you can’t even get two sentences into your cookie-cutter right-wing paranoid ramblings without exposing their contradictions.
DRS: If you have not advanced from brainwashed to brain dead, you should be able to understand that BOTH families/parents AND communities are necessary — especially since I “spelled it out” twice in my post.
Oh, I realise it quite well, I was merely pointing out that your obvious sarcasm in “Gee, how did he miss “It takes a village to raise a child”, […]” was a criticism of communities.
“A village” is the same thing as a “community”, in case you weren’t aware.
Reblogged this on SNB & CHF: A beleaguered central bank in the dangerous world of global macro and euro crisis.
OK, DRS — I see from your spelling (realiSe) that you are not an American, so you may not know about Hillary Clinton’s “village” quote. It was political support for public education unions, lobbyists, bureaucrats and control from Washington, D.C. VERSUS local school boards and parents; her “village” was understood by all to be the national “political class”, NOT a true village or community. Similarly, her “I could have stayed home and baked cookies” was political pandering to “feminist” (anti-family) political forces by denigrating motherhood and home-making. Perhaps you also are unaware of Hillary’s utter disinterest in child and family in favor of politics — public tolerance of her husband’s notorious serial adultery, and private lack of involvement in her daughter’s life.
Let me make it simple for you, DRS: my quoting “It takes a village to raise a child” is NOT a “criticism of communities” as you chose to misinterpret it. It is a criticism of authoritarian central CONTROL OVER families, communities, local governments, and — in the US — State authority delegated in the Constitution.
I’m quite aware of the source of the quote. I’m also unsurprised to see you parroting some paranoic far-right-wing interpretation of the need for a strong, stable and generous society to provide opportunity and prosperity for all.
Nor is it unsurprising to see you continue your hypocritical (and now, unashamedly misogynist) character assassinations, and complete lack of substantive argument. Apparently you not only fear people attracted to the same sex as themselves, but women who dare to stray out of the house and act independently as well.
Well, I do fear people exhibiting “None is so blind as he who will not see.”
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I hope this is a suitable place to relate a recent instructive exchange on perception of government: I was explaining how obtaining an oil & gas lease on private farms/ranches differs from in the Gulf of Mexico, when I heard, “Oh, I see — the Gulf of Mexico is owned by the government.” I said “NO! The Gulf of Mexico is owned by the American people — the government is hired to look after it for us”.