Corporate profits soar as U.S. workers still struggle
The economic recovery has been sluggish for U.S. workers, but that is not the case for corporate profits. The result is a gap in income inequality that has not been seen in America since the Great Depression of the 1930s. Is this due to a failure on the part of the government to promote fairness, or is capitalism and government hopelessly broken?
On Friday, the latest jobs report showed that job creation is not keeping up with demand. Part of the reason may be because businesses have no reason to hire workers, since this would cut into their staggering post-recovery profit margins.
Time said, "According to a study by researchers at Northeastern University, during the first nine months of the recovery, pretax corporate profits rose by $388 billion while total wages and salaries rose by only $68 billion. Of the total, therefore, corporate profits received 85%." The study adds, "By contrast, in four previous recoveries since 1980, the share going to corporate profits averaged just 19%. As a result, corporate profits are now at their highest level since World War II."
What has changed since the 1980's is multi-faceted, but the overall pattern remains focused on the attitude of the government to allow deregulated capitalism to rule economic policy.
Under the Bush Administration, banking and Wall Street investment regulations were all but eliminated. That led to the collapse of the financial markets in 2008. Without a U.S. taxpayer bailout, world markets would have fallen into depression. In it's wake, America still faces a foreclosure crisis and one of the worst housing markets in its history. Furthermore, after sparking the worst recession in nearly a century, unemployment rates since the mortgage securities fraud debacle nearly four years ago, have still not fully recovered.
The U.S. government has failed to correct the bad economic policies of the 1980s, allowing business to continue to ship jobs overseas, where workers are paid less. While no one in Washington has called for economic protectionism along the lines of Japan's strict rules, the need for some increased regulation on the corporate world has been fought off by an increasingly conservative, pro-big business Congress.
"On top of joblessness is the stagnation in earnings. During the month of April, average hourly pre-tax wages for non-supervisory workers rose by only a penny, to $23.38. Average weekly wages have risen by 2.1 percent over the past year, while prices have risen more than 3 percent: in effect, the entire working class is taking a pay cut, while corporate profits reach new records," according to wsws.org.
Adding to the job growth issues are tax policies that favor the rich. As Congress continues to refuse to raise revenue on the highest income earners, the deficit grows worse. This is fueling continuing cut backs on the state and local level, which also creates pockets of higher than average unemployment rates.
The federal deficit is a numbers game that is progressively being exacerbated by a mood of deregulation and trickle-down economic tax policy. With the government being starved of enough revenue to function at standard levels, the victims of corporate favoritism and tax loopholes are more than just the poor. Such policy is unsustainable because America cannot survive without a middle class.
Looked at strictly by the numbers, trickle-down economic policy has proven to be the primary cause of lower wages, fewer jobs, and the degradation of upward mobility for the next generation of American families. In essence, continually lowering taxes on the rich has been the worst economic policy in U.S. history for everyone but the top 1%, who reap its rewards.
Starving the federal government of revenue has also led to shifting the burden of expenses onto states, so on some level, the debt on a federal level appears lower. The same is true for governors who proudly declare that they have solved their budget woes, when all they have really done is pass along their expenses to county, city and town governments. For the most part, budget remedies have come in the form of higher local taxes, and government worker layoffs, further aggravating the disintegration of America's essential middle class.
Conservatives claim that evening out the playing field between workers and business is Socialism and should be avoided at all costs. But the policies they promote on behalf of big business is an even greater form of Socialism. Conservative policy calls entitlement programs for the poor, middle class, and elderly, unwarranted government handouts that should be defunded. Yet those same politicians endorse tax rebates and discounts for millionaires.
America cannot function as a two-class society. And if some elements of economic socialism is good for millionaires, then it is also good for everyone else.
No form of government is pure in its ideology, with each taking bits from the best from each system. Elements of Socialism already exist in the US, through Social Security Medicare, education grants, and other programs which have proven to be efficient and beneficial to US society as a whole.
The double standard of the conservative movement is misleading the public into thinking that helping the rich is good, and helping anyone else is Socialism. In truth, the role of government is to take care of all of its people, not just a selected few.
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