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January 30, 2006


Great post mimikatz. Thanks for this.

I was thinking about it tonight when I read this piece that the former chairman of the Public Company Accounting Oversight Board, who in 2004 said that the level of compensation of CEOs is "grotesquely immoral" is now a vice chairman of Merrill Lynch, where the CEO is one of those who takes his grotesque immorality all the way to the bank.

Also this accompanying piece by Ben Stein (of all people) in which he essentially calls the executives at United Airlines murderers for robbing their employees of their pensions and their holdings in the company.

Not to mention this piece on the CEO of Nike, who just left the company after only 13 months with a $14 million severance. He was asked why he was paid so much. He says he deserved it: "And needless to say the year at Nike, while it had its ups, had many days of frustration accompanied by sleepless nights."

Know who else has a lot of sleepless nights? The working poor.

For a generation Americans have accepted this growing inequality with disturbing passivity. Whether that can continue even as income inequality accelerates is anyone’s guess.

I hate to be cynical - I really do hate it - but I can't escape the conclusion that leaders in our current government know full well that our current economic arrangement is unsustainable, and they want to make sure their buddies cash in before it the inevitable happens. George Bush went to China recently with the traditional list of Chinese political prisoners, and for the first time in memory, none were released, not one. China's our banker now, or one of them. We're borrowing $2 billon a DAY. I would love to be wrong, but I fear that we're seeing just the beginning of income inequality in this country. Now, at least, we still have more than three or so classes.

A wierd mix of politics and delusion is driving this train.

The biggest driver is the "free money" propaganda campaign that the Republicans have used for last 25 years. No need to cut services; just cut taxes. Miracles will happen.

Yeah, right. But it has worked at the polls.

That has been the main driver.

Whatever Dem spine there might have been to oppose gwb tax giveaway in 2001 was undercut by Greenspan, partisan hack.

And, among the Repub central strategists, there a few like Rove. Well, maybe just Rove. Somwhere I read that he is obsessed with positioning US to "compete with China" economically, and he sees it necessary to reduce labor power to rough equivalent of Chinese labor. I read this in context of Social Security reform.

I do not believe most, or even many, Republicans think this way. And maybe Rove has been libeled.

But, I cannot help it, I do not trust this crowd. They seem crazy.

I'm with jonnybutter. They're squeezing what they can out before it all collapses, so that once it does collapse, they'll be able to pay for their personal armies to protect their huge gated estates. Neo-fuedalism, that's where they want to take us, to a time when the very wealthy could dress up in facy suits and claim to be protecting the glory of their god so they could go plunder less-well-armed peoples.

I also keep thinking about when I showed La hora des los hornos and my fat and happy middle class students were complaining about how strident the movie is. "Well I can understand if I were Argentine and just one percent of the population owned forty percent of the wealth, I'd be really pissed too." I made the big mistake of telling them we were basically Argentina. Should have made them all look up the data themselves for better effect.

We're a RICH Argentina for the moment, which is different. I hate to be all doomsday-y, but we have ceded our economic independence in many ways, and it's just a matter of time before we have to pay the price, whatever that will be. I know it's in other country's interests to keep the goods (and financing) flowing into the US and money flowing out, but it can't go on forever.

It was Hitchens who said, refering to the 2k election result, that the US was becoming a Banana Republic. When he's right he's right, for whatever reason.

I was stunned to find that in 24 years, a whole generation, the average income of people in the bottom 20% had increased only $600 in constant dollars. For the next quintile it has gone up $3500 (less than $150 a year) to $30,800. The median household income has gone all the way to $37,800. Maybe people feel ok because the price of consumer electronics has gone down so much and what is available has gone up so much. And car prices have been relatively stable for the past 10 years.

Where the crunch really comes, though, is housing. So few young people can afford apartments when they start out, let alone houses. We were able to be really independent at a much younger age because of lower education and housing costs.


Yeah, we're a rich Argentina, but remember, Argentina has been a rich Argentina in the past, too. Top 6 economies in teh world, at one point. Problem is, when your economy is dependent on one sector (Ag), and you switch bankers from a country that doesn't compete in that sector (England) to a country that does compete (the US) then you're pretty much doomed.

Our former bankers? The Saudis, who needed our weapons and educated workers and so forth. Our current bankers? Well, the Chinese can compete with us on sheer numbers of educated workers, that's for sure.

but remember, Argentina has been a rich Argentina in the past, too.

Oh yes, EW. I wasn't being sanguine. I was just thinking about how some students might react, ie 'Gee, we're not like Argentina! That's gloom n' doom liberal talk! Look at all the stuff we can buy!'.

Absolutely, mimikatz, cheaper electronics (more and more from China now, so, in effect, partially subsidized), stable car prices, subsidized food, effectively subsidized cheap clothing, etc. makes a difference. But prices for that stuff can go only so low. And of course prices for other things are going up. See, if we'd had HSAs a generation ago, the bottom quintile could've saved that $600 tax free!

About housing, I think lots of younger people and less than wealthy people are 'house poor' - own more dwelling than they can afford. Of course you're right that housing and education costs have gone up (and that it's therefore definitely harder to start out now) but home ownership has done too, no? Maybe we'll all move to the Great Plains and Pittsburgh...

I too was stunned at these figures when I first read your post.

"the budget deficit cannot help but widen as tax receipts continue to exceed government spending."

How does the deficit widen as tax receipts exceed spending? Is this a typo?

There is hope for our US economy, we just need to stop trying to be competitive in the manufacturing department and focus on what we are good at- R&R...this is the proven path and it is what makes the US great!

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