Why Capitalism Thrives–and how it self-destructs

Earlier conservative press reports 2

This is a relatively new website and “the conservative financial press” is going to be a huge file. To keep downloads faster, it’s broken up into stages. This is the overflow from the previous one.

The following is a classic example of how the conservative press can put a positive spin on terrible news.

Can you tell what’s bad about the statement: “other measures of American financial health … are more positive”?

From the Wall Street Journal, September 14, 2011


Income Slides to 1996 Levels
Median Household Earnings Fall for
Third Year, Census Says

The income of the typical American family—long the envy of much of the world—has dropped for the third year in a row and is now roughly where it was in 1996 when adjusted for inflation.

The income of a household considered to be at the statistical middle fell 2.3% to an inflation-adjusted $49,445 in 2010, which is 7.1% below its 1999 peak, the Census Bureau said….

Earnings of the typical man who works full-time year round fell, and are lower—adjusted for inflation—than in 1978. Earnings for women, meanwhile, are a relative bright spot: Median incomes have been rising in recent years and rose again last year, though women still make 77 cents for every dollar earned by comparably employed men.

The fraction of Americans living in poverty clicked up to 15.1% of the population, and 22% of children are now living below the poverty line, the biggest percentage since 1993.

To be sure, there are other measures of American financial health that are more positive. The nation’s per capita net worth, for instance, hit $169,691 at the end of 2010, according to the Federal Reserve, up from $147,889 in 2007. Much of that gain is in the form of stocks, retirement accounts and other investments.

After citing the continued degenerating living standards of typical working Americans, the Journal noted that per capita net worth actually went up. Anyone with even a passing familiarity with statistics knows that the top half of income earners were even better off than the average per capita increase would suggest. In other words, the lower income earners suffered serious declines, but the upper income earners more than made up for their losses, thus raising the per capita average.

The obvious conclusion: our economy continues to favor the well positioned in our society, and the wealth and income disparity between rich and poor continues to grow.

Until politicians like Mick Mulvaney are voted out of office and this trend is reversed, our national degeneration will continue.


The incredible power of corporations’ to influence economic policy is evidenced in the following news item. Even the Obama administration is now yielding to corporation blackmail: if you don’t reduce our taxes, we’ll move more operations to low-wage, low-tax countries.

People don’t remember that, prior to 1986, virtually all developed nations taxed corporations at around 50%. Then Milton Friedman and the “Chicago boys” from the University of Chicago convinced President Reagan and Congress that corporations weren’t profitable enough because of high taxes and high labor costs.

Among other things, this led to the Reagan Tax Act of 1986, when the corporate tax was reduced from 46% to 34%. Naturally, other nations followed suit, and reduced their taxes even more. Since then, there has been an international tax-lowering competition for industries.

Naturally, the nations with the lowest taxes are in the undeveloped world, which is desperate for new industry.

The result of this international yielding to corporate blackmail: huge benefits for corporations and a loss of industry in the developed world—along with huge government deficits.


From the Wall Street Journal, Sept. 10, 2011

Treasury Weighs New Tax Scheme

WASHINGTON—The Treasury Department is considering a proposal to eliminate some but not all taxes on the overseas profits of U.S. multinational companies, a central element of the administration’s broader plans to overhaul the corporate-tax code, according to two people familiar with the deliberations.

U.S. businesses have pushed hard to exempt all overseas earnings from U.S. taxes, claiming the current system puts them at a disadvantage to foreign competitors.

The taxation of overseas income is a political hot potato. Liberals and trade unions have warned that eliminating U.S. taxes on overseas earnings could encourage businesses to shift operations and jobs overseas. Conservatives and businesses, meanwhile, could be disappointed that the proposal from the Obama administration, which is still in the discussion stage, doesn’t go far enough.

It’s true that “U.S. businesses have pushed hard to exempt all overseas earnings from U.S. taxes, claiming the current system puts them at a disadvantage to foreign competitors.” However, it’s also true that that is the condition that corporations—through their supporters like Mick Mulvaney in Congress—wanted to create. The whole point of globalization is to give corporations the power to pit nations against each other in giving them low labor costs and low taxes.

(For earlier conservative financial press releases, go here.)

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