Sunday, July 24, 2011

Corporate America Abandoned America

The fortunes of U.S. companies and the fortunes of the country as a whole have been diverging: The U.S. stock market and the U.S. economy have gone their separate ways. The explanation for the shift was the increasing importance of international markets rather than the domestic one — of the rising middle class in emerging markets, rather than the stagnating one here at home. Over the next five years, 70 percent of the incremental earnings of S&P 500 companies will come from outside the United States.

As we've witnessed the financial and corporate stocks on Wall Street recover over these last 2 years, real people in America have seen very little-to-no positive economic changes in their lives...and most likely the vast majority of us never will again.

American corporations no longer NEED the 40 million under-employed and unemployed workers in America to remain increasingly profitable. So they don't NEED to create any more jobs here...especially full-time jobs paying a "living wage". It appears that the jobless situation in America is now a permanent condition, and it will only get worse.

But the Republicans don't want to tax these profitable corporations job creators to pay for the growing demand in social services that all these displaced American workers will need to survive on. Instead, the GOP wants to tax corporations and CEOs less AND cut social services for the unemployed workers that corporate America created and abandoned.

A college education will be of less importance that it once was. Even today, a Master's degree is needed to get you a job that only required a Bachelor's degree 5 years ago. And those jobs aren't paying near what they once were. And as more and more lower paying jobs are being outsourced (soon to Colombia, Korea and Panama), so will the higher paying jobs be going overseas to these emerging markets as well. (I pity most of you if you're just graduating from high school or college. Will you have healthcare and Social Security when you're my age? You'd better start saving your money now; forget about that new car!)

The middle-class is not only shrinking at an alarming rate, but this will most probably be a permanent inequality of the wealth in America. The discrepancy between the rich and poor has become more and more stark; a small plutocracy of wealthy elites drives a larger and larger share of total consumer spending. Recent research shows that the top 10 percent of U.S. households account for nearly 50 percent of all consumer spending.

The creative destruction of 21st-century capitalism seems to be requiring U.S. companies to learn to prosper with fewer U.S. workers and with fewer U.S. middle-class consumers. It won't get any better, only worse. The unemployment rate just went up again - - - and where I live in Las Vegas, it's now reported at 13.8% - - - so the REAL unemployment rate must be closer to 1 out of 5 people.

This isn't "doom and gloom", lack of faith, or pessimism - - - it's cold hard fact.

American corporations (and our political leaders) have already abandoned America and her citizens...they've written us off like a nasty loss on their tax returns. We were depreciated, deducted, and erased from their books. The American worker was a corporate loss, and is now being treated like nothing more than a liability and a risky investment.

For corporate America, the middle-class have become the decaying inner-city slums, and the emerging markets have become their new suburban frontier. God may have blessed America, but not the American worker. But American corporations don't care, so long as they aren't taxed. Corporations aren't religious or patriotic, nor do they feel empathy for humans. The exist solely for profits.

The Republicans want to reduce government - they say it's "too big"; but yet they won't reduce military spending. Soldiers are also "government workers". But the biggest difference is, government contracts go to corporations. Most of the logistics in Iraq and Afghanistan are being performed by American corporations. Research and development is being done by corporations. Weapons and supplies are being produced by corporations. Diplomatic security is provided by corporations. But it's the people who pick up their trash (as well as the teachers and firefighters) who don't generate a profit. The GOP believes it's OK to spend tax dollars on military excursions into foreign lands if profits can be made (even though soldiers will die), but it's not OK for a sanitation worker to be paid a living wage and belong to a union. Maybe if they joined the Chamber of Commerce (a corporate union), they might be tolerated.

At the rate we're going, this country will only be left with government workers (those that the Republicans don't cut), healthcare workers (for those who can still afford healthcare), low-paying service workers (McDonalds, U-Haul, etc.), and corporate positions (for those only paying 15% in capital gains taxes).

Hopefully, within the next 50 years, after the workers in China and India (and soon Iraq and Libya) start demanding higher wages, America will once again become an emerging nation like it once was in 1492...and the jobs will eventually return to our shores. But until then, most of us will be S.O.L.

Four Recent New York Times Articles You Must Read:

Getting by Without the Middle Class 

College Is (Still) Worth It 

Is There Hope for the Unemployed? 

Four Deformations of the Apocalypse

And also:

"Cut, Cap, and Balance My Ass!"


  1. Addendum: The above article pertains to non-farm jobs. If you are willing to compete for a migratory farm job, I refer you to immigration reform.

  2. I don't worry about China at all.

    China presents today as a primarily agrarian country of 1300 million people. Claims that it manufactures most of America's goods, or is the principal manufacturing country of the world, are false: that title rests with the United States and her heavily mechanized factories.

    Fearmongers in the USA point to China and in shrill tones proclaim she is sweatshopping us to death; but, in reality, this is nonsense. Such a plot needs two acts -- in Act I, the country sells so many goods so cheaply as to wreck the production and capacity of its buyers (check the books: this is not happening. The USA produces more goods today than it did in the heyday of 1970 but with far fewer workers). In Act II, the country breaks off exports and turns against its former customer.

    My friends, there is no such Act II on the horizon. China's industrial rise of the past 40 years has lifted it from Afghanistan-poverty into Mexico-poverty, and there it shall stay. Assembly workers building plastic toys or steel tools do not generate USA-style wealth and they never will.

    Americans make toys, but they are more than manufacturers. Americans are designers. In this category, China lags far, far behind and their pitiful gains are not enough. "Hello Kitty" is not going to eclipse Disney or even Ronald McDonald.

    Ladies and gentlemen, China saw a world where she was too big to fail and has simply become too big to succeed.

    China's military buildup is cause for concern, yes, but they are pushing a bamboo ceiling they won't be able to crack. Could China invade its neighbors -- India, Russia, Japan, steal their wealth, and become the new superpower? No. Any such plan is foolish, self-defeating, and insufficient. China can field millions of soldiers but it cannot feed them. To war with her customers is to lose them, and she certainly cannot afford to do that. America doesn't relish a war with China but it will not shrink from one and it is prepared for one.

    We should worry about China joining with Muslim terror groups. We should worry about China trading nuclear technology with less visible actors who believe in national suicide (China doesn't).

    We shouldn't worry about 21st century capitalism breaking down before 19th century communism, because that is not going to happen.

    To sum-up, China makes 10 percent of our stuff. We buy it because it's cheap. That, my friends, is an arrangement made in hell. They'll never get rich from it, and their power over us is centered on the idea that Americans need more and more cheap stuff... but the dynamic is, people who have cheap stuff want good stuff, and those goods are not Chinese. So.. bamboo ceiling.