Wednesday, July 6, 2011

How Is Your Recovery Going?

     It should come as no surprise to readers of this blog to learn that the transfer of resources to the super-rich from everyone else is well underway. For details see the series “The Recession Is Over For Some People...” posted between 16 February and 18 March, 2011. A May, 2011, study by the Center for Labor Market Studies of Northeastern University, Boston, confirms it. For my purpose, two findings from the study are relevant:
     (1) Using the lowest point, 30 June 2009, of the recent recession as the base figure, as of 30 April 2011, real corporate profits increased 39.6%, the Dow Jones Industrial Average increased 45.8%, and Average Real Weekly Earnings of the Private Sector decreased 1.0%.
     (2) During the same period, Annualized National Income grew by $505B. While corporations' share of the growth was 92%, the share going to wages and salaries was 0%.
     A recent article in Forbes provided further evidence of the transfer of resources: “The Hay and Equilar executive pay surveys show that in 2010 the average pay package for the head of a large U.S. company was over eight million dollars – an increase of about 25 percent from the previous year.
     The pay difference between the top and the bottom in large corporations has expanded tremendously since the early 1980s (roughly speaking, it has gone from 100 to 1 to 500 to 1).”
     Now the super-rich have come up with another scheme to accelerate the upward flow of resources. According to The Washington Post, a powerful coalition of more than two dozen business groups and corporations, e.g. the U.S. Chamber of Commerce and technology giants Apple, Google and Microsoft, have come up with a seemingly great offer to the government: Give us a big tax break, and we’ll give you $50 billion or more in fresh revenue.
     Currently, U.S. companies can avoid paying taxes on foreign profits until they bring the money back home. The coalition is proposing a one time reduction in income tax rates, say to 5% instead of 35%, on “repatriated” funds. Supposedly these funds would be used to improve the economy.
     But which economy - the corporate economy or the not-so-rich economy? Keep in mind that corporations are presently sitting on the largest aggregate domestic cash amount in history - $1.8 trillion dollars. For starters, why not inject some of that into the general economy?
     What does history tell us about repatriated funds amnesty? The Homeland Investment Act was enacted in 2004. The Washington Post reports “In the most recent study of the 2004 law, to be published in June, a team of researchers from MIT, Harvard Business School and the University of Illinois found that up to 92 percent of the estimated $299 billion brought back to the United States went to shareholders. That happened despite language in the statute aimed at forbidding companies from using the money to raise dividends or repurchase shares, the study found.”
     According to a recent study by the University of California at Santa Cruz, 91% of the stock is owned by 20% of the shareholders, the very wealthy, leaving 9% for the rest of us.
     A second objection to the amnesty proposition is that it appears to be a reward to those corporations which shipped jobs overseas.
     A popular metaphor for the “trickle-down” theory of economics is that of a horse (business), to which you feed oats (resources). Supposedly some oats will pass through undigested which will feed the sparrows (the rest of us) on the ground. The horse is rapidly developing a bad case of constipation.
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     To give you a head start, the categories are distortions of: truth, the human body, spelling, pronunciation, construction (topsy-turvy language), idea, and double entendre.
     Introduction – There Are Only Seven Jokes

“There Are Only Seven Jokes” and “The Spirit Runs Through It” and are available in paperback, or at the Kindle Store.

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