Archive for the ‘income inequality’ category

Beware Of Hubris

November 30, 2016

Donald Trump won the 2016 Presidential election “fair and square” as much as we know today. While he did not win the popular vote, Trump won a significant majority in the electoral college. Do these outcomes represent a mandate?

If you couple the Trump victory with Republican control of both Houses of Congress, whether Trump’s victory counts as a mandate or not may seem to Republicans as immaterial. The next two years belong to the GOP and barring upsets in 2018, the Trump team should have its way for 4 years. This reflects American democracy in action.

When George W Bush won the 2000 Presidential election, only with activist help from the Supreme Court, one would have thought a President who lost the popular vote and squeaked by with the electoral college vote would have approached his office with a moderate perspective. Instead, the Bush team felt empowered and tried to impose the views of each of the GOP’s separate factions.

The neocons got an unjust war and one of the greatest foreign policy failures in history, the small government faction got the shameful “hurricane Katrina” response, the deficit hawks blinked over tax cuts and were rewarded with 6 years of unbalanced budgets, and the anti-regulatory advocates got a run away Wall Street which lead to a near global depression.

None of this needs to happen to President Trump. But all these events and more could happen.

The new Trump government’s enemy is as much “hubris” as it might be any particular policy. Team Trump may just think that since they won, anything and everything goes. President Trump needs to keep a short lease on Congress and direct his Cabinet to operate right of center but closer to the center than the Congress.

While Trump has walked back most of his campaign promises, danger lies ahead since nothing has changed about the Republican Party’s composition, ambitions, and dangerous policies.

The Republican Party still favors suppressing voter participation, discrimination under the guise of religious freedom, less regulations which act against the interest of gays, Hispanics, and women’s rights, and don’t forget the flat earth faction which continues to deny global warming.

Oh, and income inequality is not a concern of the Republican Party unless one is talking about how the rich can become richer.

So, President-elect Trump, beware of hubris.

Remember, your margin of victory was actually quite narrow and 2020 is not that far away. Steady economic progress will serve you well while steroid-like induced stimulus could easily put all the increased wealth generation into the already wealthy’s pockets and reward the average American with another deep recession.

The white working class voter liked you this time but they can turn on you just as easily. Run the economy so all boats rise and a second term is there if you want it.

The Dark Side Of Cruz and Trump

April 8, 2016

With New York as the next big primary delegate prize, an amazing yet frightening picture is emerging. Main stream Republicans are racing to support Ted Cruz in order to block Donald Trump from gaining the nomination.

Conservatives, that is real conservatives like Ted Cruz see the US quite differently from most everyone else. These conservatives seem to lack any capacity to comprehend income inequality and the hardships it brings to so many. Getting “government” out of the way and getting “tough” on undocumented workers will reignite America’s economic growth, they say. Hmmm.

Getting government out of the way, of course, includes repealing Obamacare, eliminating government departments (like Department of Education), and doing away with the “inconvenient” regulations which provide the rules businesses must follow. Cruz promises that jobs will grow practically on every tree when he is President. He neglects, however, to say how much these jobs will pay, nor why Americans will line up for the jobs currently performed by soon to be deported undocumented workers.

Another GOP theme this year deals with law enforcement. The conservative candidates promise to have law enforcement’s back. They point a finger at those politicians who have supported careful reviews of incidents where excessive force was suspected of having been used. For Ted Cruz, it is black and white, police are your friends, suspects are the enemy.

Exactly how much of Cruz’ campaign rhetoric he actually believes, of course, is debatable. That Cruz is a calculating, mean spirited, ego centric demagogue seems pretty clear. His policy statements could be self serving and aimed to simply build a support base. But there is no reason to believe that a President Cruz would walk away from his pronouncements on Obamacare, religious freedoms, immigration, and “neoconservative” foreign policy.

Donald Trump is different.

Trump has said some outrageous things. For example, black mailing Mexico in order for Mexico to pay for building a wall along the border, or stopping entry into the US for anyone who is Muslim (whether US citizen or not), or unilaterally renegotiating trade deals involving China, all masquerade as solutions designed to improve a hurting middle class.

In reality Trump’s proposals will just create more problems… if they were actually implemented… And there in lies the difference.  Trump is highly likely to walk away from these extreme views.  He is a business man after all.

Both candidates have spewed half baked ideas which are economically foolish and values wise bankrupt, but one candidate is backed by Americans who believe in Tea Party conservatism and the other who is backed by Americans who are sick and tired of income inequality, don’t know its cause, and see Trump as the only candidate who promises to try and rebalance the playing field.

What a mess.

For those who always look for a bright spot, this current GOP front runners situation presents a potential which might not be obvious. There is no longer a majority and genuine Republican Party in America. The Cruz segment, Tea Party or Freedom Coalition members, espouse economics which are dead ended mixed in with quasi religious values which allow an individual to pick and choose who they wish to disadvantages… with a clear conscience.

Relatively speaking more moderate GOP members find themselves handicapped with unattractive policies necessary to maintain their coalitions majority and looking at the wrong side of demographic trends. In America, the voices of gays, Hispanics, and women see the Cruz type Republicans unfavorably and will express this dissatisfaction at the polls.

For those who look for what can go wrong, Democrats without a strong and viable opposition represents only a slightly better economic policy option and within a short period of time could drive the ship of State onto the rocks.

But given the current candidates, is there really any other choice?

What American Voters Owe To Donald Trump

March 29, 2016

With due respect to Bernie Sanders and Hillary Clinton (and all the other progressives before them), not until Donald Trump tapped into the anger of average American workers has the income stagnation and accompanying income inequality been put forth in inescapable terms.

Progressives have always spoken about wages and salaries of the masses, but their solutions were considered impractical and did not reflect the real world. Raising wages in a world where the same quality or better can be made in foreign lands, shipped to the US, and sold for far less than a similarly US manufactured good, offered the worst of both worlds, lost jobs and lower pay.

Donald Trump, of course, has not offered any solution at all. Trump, however, has lifted the curtain of what will happen if income inequality is not addressed soon. Xenophobia, tariffs and duties (the end of free trade), and racial/ethnic hatred are on the table if the next President and Congress does not deal with income inequality.

So what do American voters owe to Donald Trump?

Trump has exposed a sizable raw nerve among a significant percent of American voters. The voters live in the riches country in the world, observe daily Wall Street investors making millions, and business executives making decisions which increase their personal pay and bonuses while sacrificing pay and jobs of their employees. This voting group “isn’t going to take it anymore”.

Americans owe Trump for making it crystal clear what lies ahead unless Congress deals with rising income inequality. The Country can look forward to more articulate “Donald Trumps”.  In turn, these hate based leaders will likely preside over further increases in income inequality while the overall economic America viability declines.

The income inequality issue is not that top executives and investors are not going to receive higher pay and dividends than the average employee. They will and they must. The issue is how much more.

The most straight forward approach is through the tax code. Using a baseline based upon the 1970s and 1980s the ratio of top executive’s pay to average hourly pay, senior executives and corporations should be asked to meet this ratio with their businesses.

Any company which persists in exceeding this ratio, would incur additional corporate tax and its executives would also… until the ratio meet goal. For those not producing products, like Wall Street traders, dividends and capital gains would be treated as ordinary income if these gains were attributed to companies not meeting the goal ratio.

The objective is income equality using a standard of when US life was good.  If it tuns out that globalization or simply business maturity will not support higher average wages, then it becomes an issue of fairness.  Why should the top 1/2 of 1% continue to get wealthier while the bulk of employees remain stagnant or decline in wealth?

Sound progressive? Maybe, but remember during the 70s and 80s when life was good and the American dream still seemed possible, these were the conditions and tax rates.

Actually, this solution, reaching backwards, sounds more conservative than progressive.

Should Anyone Be Surprised?

March 13, 2016

GOP pundits, political operatives, and big money donors are all aghast about Donald Trumps potential to steal the Republican Presidential nomination. These authorities claim Americans are angry and say Trump is just feeding voters someone or someplace to target their fears. Mexico, Muslims, or anyone who is not us allow Trump supporters to accept Trump’s promise to fix it.

Hmmm.

Listening to the GOP “establishment” Trump must be some type of low life to conduct his campaign by appealing to voters’ fears. So, what does the establishment think voters want to hear? How about defunding Planned Parenthood, repealing Obamacare, and tax code reform featuring lower marginal rates. The GOP is also keen on increasing defense spending while reducing entitlements (Social Security, Medicare, and Medicaid). Rounding out the GOP’s list includes applying religious freedom interpretations to discriminate against gays and same sex couples. Are any of the GOP’s “must do” list designed to deal with Trump supporters’ fears?

Consider, in addition, what if many voters are victims of income inequality? What if many believe the American Dream either no longer exists or at least is not within their grasp? What if globalization just hasn’t worked well for many Americans and they haven’t figured out how overcome this global change? Does the mainstream Republican pitch deal in any way with this view of reality?

Here’s a bulletin. Neither the GOP establishment nor Donald Trump appears to have a clue. Income inequality is linked to globalization to be sure, but it is also connected to workers’ skill base and the ethical behavior of business leaders.

At this time, too many Americans lack the skills necessary for higher paying jobs, and too many corporations simply see their workers as throw away commodities. Corporate leaders are more concerned about stock price and personal bonuses.

As a consequence, corporate leaders have lost sight that their employees are also in some way their corporation’s customers. A customer with no money cannot buy the corporation’s products or services. Hmmm.

So which policies might lead to increased jobs, salaries, and wages?

Attempting to deal with globalization by imposing tariffs and duties, while often popular, only leads to equal and opposite trade restrictions from our trading partners. Some workers might get old jobs back while others employed in export related work lose theirs.

Retraining workers and developing more competitive skills with new workers are positive steps, but who will pay?

Simply paying workers more or sharing productivity gains with all workers would help but why would a capitalist pay more for labor than he must?

Here’s the conundrum. The GOP and Donald Trump have no policies which will deal with globalization or to unilaterally improve the wages of average people. GOP policies either do nothing or aggravate income inequality. Trump promises much, for example “to make America great again”, but how?

It should be clear that making globalization work better (more and better jobs) and reducing income inequality would be a worthwhile focus for both political parties.  But focusing upon Planned Parenthood or Obamacare has nothing to do with globalization/jobs or income inequality. If the mainstream GOP continues on its same path, the unproven case Trump is making sounds a better alternative.

Should anyone be surprised?

Wall Street Money?

February 5, 2016

Bernie Sanders and Hillary Clinton are going toe to toe for the Democrat Presidential nomination. One of Sanders’ stump speech trademarks is Clinton’s acceptance of $675,000 for speeches given to Wall Street firms. Last night she called him on it and asked what exactly did this money do to change her views on policies? Hillary asked whether Bernie had a specific charge or was he just trying to “smear” her reputation? Hmmm.

Three hundred thousand plus does seem like a lot of money for an hours work. But is it?

Access to someone like Hillary, especially if she should become President would be “priceless”. And for these large banks, $325,000 is not too much money considering what they spend on lobbying anyways. And Hillary is not a new recipient, former Secretary of States Powell and Rice both have received large honorariums.  So, is Bernie pointing out a naked attempt to influence a public figure and potential President, or is he just pointing out a questionable practice?

More probable these firms were willing to spend these large sums of money because Clinton (and former senior Government officials) had both fresh insight and direct knowledge of happenings around the world, including developments in foreign capitals. Hillary also had insight into thinking within the White House and the Administration’s view of the domestic economy. For global financial firms in the business of advising clients around the world, information such as Clinton might have is critically important.

Sanders makes a point of saying he has not accepted Wall Street money and has gone further, saying he has no “Super Pac” money either. Sanders emphasizes his campaign money comes from small donations by average Americans. The implication is that he will be immune to special interest pressure. Hmmm.

From an appearance perspective, Hillary might wish she had not accepted these paid speaking engagements.  Sanders appears to have hit an awakening feeling that income inequality and general dissatisfaction with the American Dream is tied to Wall Street. In the general election, Wall Street money will not be an issue since if it isn’t Wall Street, its big oil, the NRA, or maybe even the Koch brothers. The Democrat primary, however, is another question.

Wall Street money is like salt and water. Too much is lethal while not enough is deadly too. Clinton can’t deny these paid speeches and can only minimize the damage to her campaign. Regardless, should Hillary become President, Wall Street will be only one of many potential special interests trying to reach her.

With the Supreme Court’s Citizens United decision, corporations are “people” and as such have a first amendment right to donate money to politicians. The issue remains whether free speech demands a kick back for the money donated. We shall see no matter who is elected President.  The Supreme Court doesn’t seem so supreme in this light, however.

Hillary, Bernie, and The GOP’s Worst Nightmare

July 8, 2015

Bernie Sanders is drawing large and enthusiastic crowds, and attracting generous campaign donations. Problems for Hillary Clinton? Maybe, but most likely a greater problem for the GOP.

Sanders strength seems tied to his populous themes, income inequality and how big business and big banks are linked to the loss of the American Dream. The response to Sanders and his message has surprised most pundits as it unleashes the energy of millennials. So why isn’t this a problem for Hillary?

In political contests, of course, anything is possible. Hillary could become over confident or arrogant and ruin her appeal to most Democrat voters. Iowa, New Hampshire, and Maine, however, do not represents the heart of the Democrat Party.  Mainstream Democrats, while sympathetic to Sanders’ message would still see Hillary as more qualified to become President, Accordantly, Clinton would seem still the overwhelming favorite to gain the Democrat nomination.

So where do the nightmares come in?

Sanders is speaking to a core issue for many Americans for which no GOP candidate has offered a believable answer. Sanders’ supporters will not jump to a GOP candidate should Sanders inevitably lose out to Hillary. While there might be the tendency for Bernie’s helpers to stay home on election day and avoid support for Hillary, the Paul Ryan budget which more or less all GOP candidates salute, will stand in such stark contrast to Sanders’ message that his supporters will hold their nose and vote for Hillary.

When Sanders first announced his candidacy, the GOP hopefuls thought what a blessing to have him nipping at Hilary’s heels. They will soon be waking up to the prospect that Bernie Sanders is their worst nightmare.

Income Inequality – Really?

January 20, 2015

President Obama tonight with present his 7th State of the Union in a speech before Congress. Feeling giddy? If so, I suggest you imagine our Capital Building full of eager and respectful lawmakers sitting on the edge of their chairs awaiting word on how the US can address the income inequality besieging the middle class. Hmmm.

Reports have recently revealed that the average income ($54,000 and change) has dropped by about $3000 to $51,000 and change during President Obama’s watch. What has the President been doing? Has he not been looking out for the middle class?

Surprisingly (hmmm)), the Fortune 500 companies saw their CEOs compensation gain of over $13 million from an average of $2.2 million in 2008 to $15.5 in 2014, while the middle class was losing 6% on average. What can be done about that?

Business lobbies have been pleading for a reform of the US corporate tax (35%). Reform in their minds means a lowering corporate tax to maybe the 20% range but with no change to exceptions, credits and other loopholes which enable companies like GE to legally pay no corporate tax at all. Hmmm.

The President will propose tonight changes to an obscure provision in the Estate Tax which allows the top 1/2 of 1% to pass assets to their beneficiaries tax free. The White House proposes to eliminate this loophole and use the funds to provide tax credits to the middle class. Hmmm.

Let’s think about this. The decline in the average income raises questions of fairness (how can the top earners earn more and the average person earn less) and the unintended negative consequence a poorer middle class represents upon the economy.

So tell me again why any asset should be able to be sold without being charged a capital gain? Tax credits are also a bit squirrelly. Why should any American not pay their proportionate share of the tax burden? But at least the President is opening the conversation and leaving plenty of room for a GOP response.

I wonder if the GOP will seize the opportunity to address the injustice of a company not passing on “productivity gains” to all workers. I wonder if the GOP will think about capping the senior executives pay at some historic ratio to their average workers’ pay?

Certainly we don’t want the Government setting wages and salaries but the Government could and should impose a surtax on companies (like CBS or Oracle) whose CEO take home obscene amounts of money simply because he/she can. (Make no mistake, CEOs and other senior executives will always and should always make much more than factory or office workers. It is simply a matter of degree.)

If companies that insist upon paying the senior executives over the top compensation packages, then their shareholders need to understand the company will pay a surtax. Hmmm.

There are a compelling arguments that says the global price of labor has simply reduced the American workers’ wagees and salaries on a competitive basis. Undoubtably there is truth in this assertion. It does not follow, however, that senior executives and especially CEOs should garner all the value productivity gains produce.

Morally and maybe business sense-wise, the growing gap between the wealthy and everyone else is an unstable situation. Whose going to consume the products of business if each year they are earning less than the year before?

In the olden days, most good paying jobs were manual in nature. All that was required was a strong back and a good attitude. Today, globalization demands more skills from workers if workers want “good pay”. In the time it will take to convert the middle class to these higher skill levels (using their heads and less of their backs), there is no excuse for companies to reward senior executives with the spoils of globalization.

Too bad the President won’t address this.  I wonder whether Senator Joni Ernst will in the GOP response?