Wednesday, March 6, 2013

Robert Reich on the bull market

Yesterday the US stock market hit an all-time high, with record corporate profits. Despite this Reich reports that median income has dropped 8% since 2000 and unemployment remains high. How can we have such a disparity? He lists 4 reasons.

Corporations are investing in technology, where they get tax incentives. They get no such incentives for investing in workers. Hence they have more tech and fewer workers which mean higher profits.

High unemployment reduces worker bargaining power, which in turn allows corporations to keep wages much lower than they could otherwise. Given the bottom line is profit it matters not that the workers must struggle to make ends meet with a full-time job, as long as the corp and its leaders keep getting richer.

Globalization has allowed US corps to move a lot of jobs overseas largely due to tax incentives to do so. Plus many of those countries don't have pesky human rights getting in the way of slave wages and inhumane working conditions. Again the worker is not the focus or even the care. They are a commodity to be used up and thrown away when they malfunction or die, since there are 10 unemployed people waiting to take their abuse rather than starve to death.

 The Fed's easy money policy induces those with it to invest in the stock market instead of low-interest bonds, hence it doing so well. Of course the only ones that can do the investing are those with money in the first place. Even those with jobs that have 401k programs aren't investing much, since their wages are lower and they have to spend most of that income on the necessities. Only those that already have shitloads of money make the large investments and make even more back, which is of course taxed at lower income rates than the abused worker making their profits for them.

A vicious cycle. One that will never change unless the workers revolt. It is time once again for mass organizing through unions, and mass strikes. Only by shutting off the profits generated by the worker are we going to regain some semblance of power to redress that incredible inequities of income disparity now rampant is this regressive return to feudalism, i.e., corporate capitalism.

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