The news items in this file come from our most prestigious conservative financial publications: The Wall Street Journal, Forbes, Fortune, Barron’s and Bloomberg Businessweek.
Don’t pay any attention to their editorials or their staff’s opinions on radio or tv. They always reflect the interests of their aristocratic clients and supporters, and America’s right-wing crackpot politicians. The difference between their hypocritical public propaganda and their own news stories is like night and day.
You’ll find that their news items demonstrate beyond any doubt that conservative business persons and politicans have to know that:
- Conservative politicians deliberately enact legislation that is designed to benefit corporations and the established wealthy, even though
- They also know how their policies hurt workers, the disadvantaged and society-at-large, and they even
- Proclaim to the public how virtuous and deserving they are for being so “successful.”
In addition, bear in mind that articles just like these have been appearing in our most prestigious conservative financial publications over the past 30 years, as documented in the Class War in America book.
Note: the abstracts below are presented for purposes of criticism only. Because of copyright laws—and in the interests of brevity and readability—they are necessarily incomplete. Those who are interested in the investment or other implications of the articles should read the originals.
Note #2: I’m a one-person operation and my political priorities have shifted. As a result, I’m no longer maintaining this file consistently. Reason: it’s incredibly repetitious because the same issues keep repeating themselves. Read this file as it is and you’ll see what I mean.
It took a conservative member of the conservative financial press to state the obvious about one of the most important causes of our current economic crisis: the Bush tax cuts, primarily for the wealthy.
From Bloomberg Businessweek
, August 6-12, 2012:
The Cliff We All Saw Coming
The crisis was built into the Bush
Tax cuts a decade ago.
In early 2001 Paul O’Neill, the new secretary of The Treasury for a new president, began work on a plan for radical tax reform. He wanted simpler forms and fewer deductions, which would make it easy for people to prepare their taxes and cost the government less to process them.
He presented a 5-inch thick binder of research to a senior White House official. “Don’t ever let that see the light of the day,” O’Neill says he was told. George Bush didn’t want to deliver tax reform. He wanted to deliver the tax cuts he’d promised as a candidate….
It’s now more than 10 years later, and Bush’s tax cuts are still with us—adding to the debt, exactly as predicted….
Now, more than a decade’s worth of tax cuts are set to come due in six months, each dreamed up and extended under the fiction that it would be temporary. In 2011 they contributed $1.1 trillion to the debt. In total, since 2001 the CBO calculates that tax cuts have put the Treasury $6.1 trillion in the red. This is what Washington now calls a crisis: completely predictable arithmetic, compounded over a decade by a consistent refusal to acknowledge reality.
The Republicans have finally achieved their goal of “starving the beast.” Now Republicans like Mitt Romney and Mick Mulvaney can claim, since the wealthy want to keep their tax breaks, that our nation can’t afford the programs that benefit the bottom 99%.
Allan Sloan does a beautiful job of describing the vulture capitalism side of today’s so-called “capitalism.” It’s definitely not the kind of democratic capitalism that made this country great.
It’s a capitalism where investors are assured of making a huge profit, yet workers end up taking all the risks.
From Fortune magazine, August 13, 2012:
My last word on the private equity political debate
By Allan Sloan
…Democrats, as you know, claim that Bain is a job-destroying vulture operation, which echoes what some of Romney’s Republican competitors said. By contrast, Romney and his campaign claim that Bain is a noble, job-creating enterprise. Let’s settle this once and for all, okay? Who’s right? Neither.
Despite buyouts being a numbers-intense business, there are no reliable statistics about jobs created or destroyed by private equity; no one in Buyout Land knows or wants to know about it. Bain and its fellow buyout barons don’t care in the slightest about whether they create jobs or destroy them. All they care about is making money for their investors and themselves, not necessarily in that order.
If the managers think there’s money to be made by expanding and improving a business that they’ve bought, they will try to expand and improve it. If they think they can make more money by loading additional debt onto the company and sucking out the proceeds in dividends and fees, they’ll load and suck.
If they think there’s more money to be made by firing all the U.S. employees and moving operations to China, they’ll do so in a heartbeat. They’re neither moral nor immoral when it comes to U.S. jobs and U.S. society. They’re amoral—they don’t care one way or the other, as long as what they’re doing isn’t illegal.
I’ve been watching private equity at work since the 1980s, when it was known by the more accurate name “leveraged buyouts,” or LBOs. “Leverage” means using borrowed money. That’s why I prefer “leveraged buyouts”—buyouts funded by borrowing—to the meaningless “private equity.”
The LBO industry adopted the private equity moniker in the mid-1990s when “LBO” came into disrepute because some large buyouts cratered. Buyout companies didn’t change what they did; they changed what they called it.
Let me give you a simplified, not-so-theoretical example of the kind of thing that works beautifully for the buyout folks and their investors but works badly for the country at large. It’s the kind of thing that has happened with some of the Bain buyouts that Democrats are using to flog Romney.
Let’s say that an LBO firm spends $300 million to buy a company and borrows $200 million—two-thirds of the price—to finance the purchase. The buyout firm’s investors thus have only $100 million invested. The company’s value doubles to $600 million because of luck, skill, or both. The company then borrows another $200 million—two-thirds of the increased value—and uses the cash for a payout to the investors, who have now recovered more than they put in and still own the upside potential. (Managers get a piece of the profit; I’m ignoring that to keep the math simple.)
Employees of the now more heavily indebted company are at greater risk because the company is more vulnerable to failing if anything goes wrong. But the buyout firm’s investors have already made out well. Then the company runs into trouble. Workers lose their jobs, but investors and the LBO firm nevertheless have come out ahead.
So, even when a deal goes bad, “the buyout firm’s investors have already made out well. Then the company runs into trouble. Workers lose their jobs, but investors and the LBO firm nevertheless have come out ahead.”
And when workers lose out on these bad deals, Republicans like Mitt Romney and Mick Mulvaney want to protect their ill-gotten gains by cutting the Social Security, Medicare and Medicaid benefits that bankrupted workers depend on.
Republicans have thoroughly snookered President Obama and his Democratic Leadership Council advisers. They convinced them that he can’t win the election if he doesn’t prove that our economy is making a turnaround. In other words, he must defend the indefensible.
Instead, he and all other Democrats should admit that our economy will not turn around until we reverse the past 30 years of Republican unregulated free market ideology—which has also been accepted by Wall Street Democrats (who are really Republican-lites.)
Bloomberg Businessweek hit the nail on the head with the following, which describes the core problem of our economy.
From Bloomberg Businessweek
, July 9, 2012:
Gone to China, Not Coming Back
This spring, President Obama said he had “good news” to report: Lost American jobs are returning to the U.S. “For a lot of businesses,” the president told a crowd in Albany, N.Y., on May 8, “it’s now starting to make sense to bring jobs back home.” In trumpeting this “reshoring” of jobs from abroad, the administration points to employers, including General Electric and Caterpillar, that have shifted some manufacturing to the U.S….
Yet there’s little data to back up claims of a reshoring rush. For every company Obama praises for coming back home, there are others still shipping jobs out of the country. Honeywell International in Acton, Mass., plans to eliminate 23 positions by yearend when manufacturing of the company’s stainless steel products moves to Nanjing, China. Boston Scientific let go about 1,100 workers when the company moved production of its medical stents from Miami to Costa Rica.
The net effect of this two-way traffic on the labor market has been “zero,” says Michael Janssen of the Hackett Group, a business consulting firm that released a contrarian report on reshoring in May. “Some of these jobs that are coming back get a lot of press,” he says. “There are just as many that get no press coverage still going offshore.”…
So far, many of the jobs China is losing aren’t heading to the U.S. but to other low-cost Asian nations. Rising wages in China led Coach to start looking for alternate places to make its wallets and handbags. By 2015 the company aims to reduce China’s share of its production to about 50 percent from almost 80 percent today.
New orders will be sent to factories in Vietnam, Indonesia, Thailand, and the Philippines. Reshoring to somebody else’s shores will be more common in coming years than jobs returning to the U.S., says Tim Leunig, who teaches economic history at the London School of Economics: “The next president of the United States, whoever he is, will end his term with fewer Americans working in manufacturing than he inherited.”
Great! “So far, many of the jobs China is losing aren’t heading to the U.S. but to other low-cost Asian nations.” If that’s not bad enough, realize that the jobs that are coming back to the U.S. are nonunion jobs, and they pay at 1980 levels relative to inflation.
Of course, top corporate executives and their investors are big time winners in this process, since they are in ruthless control of the labor market.
As long as the U.S. insists on participating in an unregulated world economy, all corporations will always go to the lowest wage countries, especially when they can sell their duty free goods in the U.S.
If you want this condition to change, vote Mick Mulvaney out of office, and elect Joyce Knott for S.C. District 5.
Advocates of deregulated, tariff-free international trade promised the world’s workers that they would all benefit from “globalization.”
Articles like this demonstrate that, still now, they are either deliberate liars or they’ve been conned by deliberate liars. Read below what globalization has actually done in Mexico: it has created horribly underpaid workers and large numbers of millionaire and billionaire Mexican and American investors.
From Bloomberg Busisnessweek
, June 21. 2012:
Stagnant Wages May Decide Mexico’s Election
Julio Don Juan makes $400 a month working at a noisy, cramped call center in Mexico City that counts major American companies among its clients. The 37-year-old hasn’t had a raise in three years, he says, and was forced to pull his son out of a special-needs school because he could no longer afford the tuition. “Because costs keep rising, I’m actually getting a pay cut each year,” says Don Juan, who lives with his parents. “We’re scraping by.”
The plight of millions of Mexicans stuck in similarly low-paying jobs is a major campaign issue ahead of a July 1 general election. Since 2005, wages in Latin America’s second-biggest economy have risen at an annual pace of just 0.4 percent adjusted for inflation, according to the International Labour Organization. In Brazil, wage growth averaged 3.4 percent over the same period.
On the flip side, Mexico is now on its way to surpassing China as a low-cost supplier of manufactured goods to the U.S. and is drawing foreign direct investment away from Asia. Among companies that have shifted production in recent years are Nissan Motor, Japan’s No. 2 automaker, and Plantronics (PLT), a Santa Cruz (Calif.)-based maker of telephone headsets. Thanks to a combination of low wages, a cheap peso, and surging exports, Mexico’s economy is poised to outperform Brazil’s for the second consecutive year. Government forecasts put growth this year at 3.5 percent….
Delphi Automotive (DLPH), the former parts unit of General Motors (GM), is banking on wages in Mexico rising slowly no matter whom voters move into Los Pinos, the presidential residence. About half of the Troy (Mich.)-based company’s global workforce of 101,000 is employed in its 46 Mexico plants, compared with less than 30 percent in China. “We are always monitoring this, and we don’t see the possibility of an extreme boom in the next two or three years,” says Enrique Calvillo, the company’s human-resources manager in Mexico.
That’s bad news for Antonio Chavero, who makes less than $1,000 a month as an engineering supervisor with three decades of experience in the car industry. To supplement his income from his work at an auto parts plant in the central state of Querétaro, Chavero does metalwork in his basement. Still, his family doesn’t earn enough to eat meat more than once a week. “I supervise 15 workers,” he says. “I should be making more money.”
This comment says it all: “Delphi Automotive (DLPH), the former parts unit of General Motors (GM), is banking on wages in Mexico rising slowly no matter whom voters move into Los Pinos, the presidential residence.”
The former U.S. based manufacturing company it still counting on Mexico providing low wage workers who have no realistic workplace protections. HALF of its workforce is in Mexico, and 30 percent in China.
Face it. Top U.S. corporate executives and their investors will locate in any place in the world that will offer desperate workers who are willing to labor for the least amount of income—and under the worst conditions.
Until this incredibly unjust condition is addressed by our national politicians, the U.S. will continue to degenerate.
It’s déjà vu all over again. The economy crashes, middle and low income citizens lose their homes, the wealthy buy them up at fire-sale prices, and then rent them out at outrageous rates when the economy recovers.
This is how it is playing out in San Francisco:
From the Wall Street Journal
, June, 26, 2012:
Tech Boom Hits San Francisco Rental Prices
Prices Soar as Well-Paid Tech Workers
Stream Into City After a Long Exodus
SAN FRANCISCO—The latest technology boom is helping to stem a decadelong exodus of residents from San Francisco, but the influx of well-paid workers is driving up already-high housing costs and straining public resources.
The promise and perils of the boom are evident in the experience of Genevieve Sheehan and her husband, who are relocating from the Boston area for her new job at social-games maker Zynga Inc. They have endured a grinding hunt for a home.
Ms. Sheehan, a 29-year-old recent Harvard Business School graduate, said open houses were “a zoo.” The couple was forced to boost their rental budget 40% to $3,500 a month before they landed a two-bedroom apartment. “A lot of people want to live here and are willing and able to pay incredibly high prices” to do so, Ms. Sheehan said….
Economists and real-estate experts say San Francisco, with its tight supply of apartments and strict limits on the construction of new developments, can’t keep up with the flood of techies streaming in. The result, beyond happy landlords, is soaring costs and a chaotic scrum for rentals. …
Gentrification is raising alarms among advocates for renters with low to moderate incomes. Some are being pushed out to cities up to 100 miles from San Francisco in search of affordable homes, advocates say.
“People have a lot of money and are willing to do whatever it takes to land a spot,” said Ryan Paredez, a 26-year-old student at San Francisco State University who on a recent apartment hunt found himself contending with doctors and other professionals. “I can’t compete with that.”
The “happy landlords” category goes well beyond those who own real estate and includes all those who profited handsomely from the thirty years of an economy that benefited corporate executives and their investors at the expense of workers.
For more insights about how absurd increases in the incomes of the wealthy directly hurt those who are victimized by the economy, check out the file “Wealth is a Zero-Sum Game.”