Going down

Do you feel a bit poorer of late? Here’s a chart showing real disposable income per capita from 1950 to the end of 2012 (data from FRED):

real per capita disposable income from 1950 to 2012


Notice the dip at the end? That would be the Great Recession. If we look at the trend in annual change, you’ll feel even worse.

change in real disposable income per capita 1950 to 2012


We can look at the data decade by decade.

decade change in real per capita disposable income


Ah, but you knew this was coming. The above charts show averages, which really distort the reality of the Rest of Us. After all, we’re becoming more unequal.



We like to think that America is number one—in something. Well, as far as inequality goes, we’re just a bit behind Mexico, Turkey, and Chile. Now aren’t you proud? (OECD data in chart below)

Screen Shot 2013-12-31 at 2.32.45 PM


See the little yellow dots in the chart above? They represent the ratio of the average earnings of those in the top 10 percent over the average earnings of the bottom 90 percent (right scale). The U.S. is above 15. If you were a wealthy Icelander or Dane you’d be only five times richer than everyone else.

Berkeley economist Brad DeLong despairs. He writes:

…for everyone else – roughly 90% of the US population – there has been no jump in income share relative to ten or 20 years ago to offset what now looks to be a permanent lost decade. On the contrary, the bottom 90% has continued to lose ground.

When income inequality began to rise in the 1980’s and 1990’s, those of us who cut our teeth on the long march of North Atlantic history expected to see a political reaction. Democratic politics, we thought, would check the rising power of a largely parasitic economic over-class, especially if its influence caused governments to fail to live up to their commitments to provide full employment with increasing – and increasingly shared – prosperity.

I understand that both Lowe’s and Home Depot have a surplus of pitch forks. What are we waiting for?

But you can’t eat respect

Noah Smith offers provocative commentary on the notion of respect. More specifically, he advocates equality of respect.

While he shares the distaste for America’s income and wealth inequality, nearly the highest in the world, he believes that we could better achieve democracy in practice were we to honor the efforts of work, regardless of title, description, or status. Thus, someone who toils in a fast-food restaurant or cleans hotel toilets deserves as much respect as the Wall Street broker earning millions.

And Smith doesn’t put the blame for our failure to do so exclusively on the right; he chides liberals as well for embracing a society of “crass materialism,” in which money defines nearly everything, and the more you have the more respect you warrant.


Whether we’re questing after a narrow money-based vision of equality or callously celebrating the “competitiveness” created by material inequality, we Americans seem to have mostly forgotten about equality of respect. This is bad not just because I personally dislike it, but because in a developed country like ours, respect is a big part of what makes people happy. In fact, I suspect that our turn away from egalitarianism is one factor behind our bifurcation into a class society.

I want this to change. I want to move back toward a society where the hard work of an unskilled laborer is considered worthwhile in social interactions, regardless of how many dollars it brings home. I want to move back toward a society where being a good parent or a friendly neighbor earns as much respect as making a hundred million dollars on Wall Street.

In other words, I want our “democracy” back. We need to redistribute respect.

Okay. But as I suggest in the title to this blog, you can’t eat respect, and tens of millions of Americans face food insecurity, not knowing when they’ll eat their next meal or what it will be. When the Waltons (not the TV show) pay their employees so little that they must turn to government programs to supplement their meager wages, their workers confront three humiliations: their jobs, their scant paychecks, and their dependency. Oh, and the Walton family (the Walmart owners) enjoys a combined $145 billion in wealth.

America’s grotesque capitalism generates fortunes for the few and crumbs for the many. True respect should not require the voluntary nod in the direction of a hamburger flipper. Rather, a meaningful job paying meaningful wages develops genuine respect, the kind discovered in mirrors.

The pope and two movements

Tom Cahill in his interview with Bill Moyers:

… I’ve come to the conclusion that there are really only two movements in the world. One is kindness, and the other is cruelty.

Cahill, the author of six books on the Hinges of History, was asked for his views on Pope Francis. It’s clear that Cahill embraces the new pontiff, likening him to John XXIII, who had opened the Church’s windows to the world. Here’s an excerpt:

BILL MOYERS: Pope Francis is being pummeled, as you know, by many conservatives. Rush Limbaugh says, “He’s spouting pure Marxism.” And there’s a headline on FoxNews.com that says, “The pope is the Catholic Church’s Obama, God help us.” What are they afraid of?

THOMAS CAHILL: Well, I think they’re not really afraid of pure Marxism. They might be more afraid of pure Christianity which it sounds to me is what he’s spouting. He’s talking about the poor, as Jesus did. He’s talking about the absolute necessity for us to take care of the poor, to do something for them. You know, which is a necessary part of the Christian message. If you don’t have that, you’re not talking about Christianity. You’re talking about something else.

I think it was Chesterton who said:

Christianity has not been tried and found wanting; it has been found difficult and not tried.

This “necessary part” has been ignored or even denied. Christians, according to Cahill, can discover all they need to know about the essence of their faith by consulting the Sermon on the Mount.

That’s Christianity. The rest of it, isn’t worth a hill of beans.

The tragedy of John XXIII is that he lasted less than five years as pope. True Christians must hope that Francis lives long enough to truly transform the Church. Reactionary forces forever lurk in the wings.

I’m old but not Fox old

I kind of liked this piece at ginandtacos.com about the Fox News demographics. It seems that most of its viewers have reached 65 and won’t be looking back soon. While I am in that cohort, I’ve never watched Fox News or listened to Rush Limbaugh or any of the other rightwing nuts plying the airwaves. (Actually, I no longer watch any news, but choose to consume it via the Internet and a few subscriptions, pared down considerably from my more energetic reading days when I had dozens of publications reaching my mailbox each month.) In addition to the obvious blessing of not being subjected to unending falsehoods promoted as “fair and balanced” journalism, I do not have to endure the commercials intended for old farts.

Just watch Fox News for an hour or two and keep track of the advertisements. Hip implants. “Mobility scooters”. Prescription drugs for arthritis. The companies ponying up for these ads know goddamn well who is watching before they write the check.


Francis the traditional


A former director of the World Bank writes that the messages of Pope Francis are doctrinally conventional though conveyed with a different flair and, certainly, emphasis. Robert Calderisi:

As a result of its work in basic health and education — and despite its obtuse views on birth control — in the last 50 years the church has probably lifted more people out of poverty than any other civic institution in history.

Until the election of Pope Francis, that mission seemed under threat as priests, religious and lay people raised in the reforming spirit of the Second Vatican Council (1962-65) were retiring or dying off. At the same time, many younger clergy members were emphasizing evangelization and personal salvation, emphasizing the church’s message rather than just its outreach. In the opening hours of his papacy, Francis seemed to echo this complaint.

“We can build many things, but if we do not witness to Jesus Christ then it doesn’t matter,” he told the cardinals in the Sistine Chapel during his first Mass as pope. “We might become a philanthropic NGO, but we wouldn’t be the church.”

Since then, Francis has stressed that serving the poor and promoting social justice are central to the church’s identity and mission.


Democrats, look in the mirror

During Ronald Reagan’s first term I deluded myself by thinking that four more years of his conservative excesses would finally awaken Americans to the cruelty and ignorance of the Republican Party. As I said, that was a delusion. Reagan easily won re-election, sowing the seeds of what I’ve called ‘The Great Divergence’: The rich got much richer and the Rest of Us said goodbye to worker prosperity.

Yet, I found myself returning to the delusion under G.W. Bush. He was awful. Right? Iraq. Fiscal irresponsibility. Katrina response. You name it. But he beat back a challenge by John Kerry.

More recently the Republicans took control of the U.S. House. This is not our grandmother’s Republican Party now holding the reins. It is a breed that historian Thomas Frank calls “basically the Klan.” They are more than that, of course, posing as fierce guardians of small, weak governments and champions of self-reliance in an age devoid of individuals and institutions upon which to rely.

In his most recent essay for Harper’s, Frank upbraids Democrats, mind you. He attacks the delusion I mentioned at the outset. Yes, the Republicans are bastards, as my grandfather was wont to say. But, as Frank chastens us, “there is no point in persuading [them].” Democrats have adopted a philosophy of “pure fatalism,” assuming that Americans will surely reject Republican Party candidates at the poll. We’re still waiting. What should progressives (and Democrats) do? Here’s Frank:

Suppose they were able to wake themselves up, rise from their chairs, and actually do something other than wait for the world to come their way…

…they might start by taking note of the factors mentioned [in the Washington Post, of all places]: “On average, the economy in the districts those Republicans represent is significantly worse than it is in the nation at large.”

Then I came across this headline in the New York Times today:

Democrats Turn to Minimum Wage for 2014 Strategy

The Times:

In a series of strategy meetings and conference calls among them in recent weeks, they have focused on two levels: an effort to raise the federal minimum wage, which will be pushed by President Obama and congressional leaders, and a campaign to place state-level minimum wage proposals on the ballot in states with hotly contested congressional races.

With polls showing widespread support for an increase in the $7.25-per-hour federal minimum wage among both Republican and Democratic voters, top Democrats see not only a wedge issue that they hope will place Republican candidates in a difficult position, but also a tool with which to enlarge the electorate in a nonpresidential election, when turnout among minorities and youths typically drops off.

Incoming Seattle mayor Ed Murray has formed a committee whose purpose is to put forward a proposal for a minimum wage, no doubt buoyed by the vote at Sea-Tac and the election of socialist Kshama Sawant, whom Murray appointed to the committee.

Now Frank, of all people, knows that people don’t always vote their economic interests, as he noted in What’s the Matter with Kansas? Have to start somewhere, though, and a minimum wage effort just might work here and beyond the Left Coast.

Low demand, high profits

How is it that corporations continue to enhance their profits when so many workers lack employment or suffer flat or even declining wages? After all, if the Rest of Us are no longer spending the way we used to, because we haven’t as much money, then corporate revenues should suffer. But firms are doing just fine, thank you very much. Moreover, they see no collective need to alter the status quo by, for example, allowing a broader distribution of income.


Paul Krugman has been wrestling with this phenomenon of lower demand and higher profits.

The point is that we have a depressed economy for workers, but not at all for corporations. How much of this is due to the bargaining-power issue is obviously something we don’t know, but the disconnect between the economy at large and profits is undeniable. A depressed economy may or may not actually be good for corporations, but it evidently doesn’t hurt them much.

Here’s an interesting graph from the St. Louis FED.

corporate proftis before and after tax

Unless I’m reading the graph wrong, after-tax profits (red) are considerably higher than pre-tax profits (blue) over the last two decades. Huh? It wasn’t always that way, as the graph illustrates. If we subtract one from the other, we get this:

corporate profits difference between before and after tax


Corporate welfare?

One commenter to Krugman’s post wrote this:

Meanwhile, US based transnational corporations continue to move labor intensive activities to fast growing overseas markets and replacing labor for machines domestically.

Given the scenario described above, two conclusions. First, the US market is no longer the most important market for larger transnational corporations. Second, wages in the US continue to be eroded and converging downward to lower paid competing countries.

In sum, the US economy — via the political system — became increasingly biased against labor and more favorable to capital. Labor is fixed while capital became more mobile. As a result, labor loses and capital wins.

median wage


Let’s suppose that the commenter has a point, and that U.S. wages will steadily fall, ultimately converging with the international mean. If the latter does not rise over time, then the American worker’s fall will be dramatic, indeed. Yet, whenever the convergence occurs, we can justifiably assume that corporate profits will continue their rise until then, if not beyond.

I find myself being described by Krugman: “A lot people have the instinctive reaction that it can’t be possible — that businesses would prefer to have stronger demand, even if it means that they have to pay their workers more and treat them better.” But the numbers indicate an obvious disconnect between profits and demand.

Perhaps the conventional wisdom about our economy—that people buying things increases corporate earnings—no longer applies, since profits rise despite diminished domestic demand. Corporations evidently find no need to expand their operations in order to pad their bottom line. What’s going on?

The commenter suggests that demand is rising elsewhere even as ours falls. If we imagine millions of people in China and India, for example, seeing incremental increases in their paychecks, even though their total wages pale in comparison to ours, their ability to purchase goods and services improves. Apple, for one, will now sell its phones in China, the largest market on the planet. If only five percent of the Chinese population can afford a new iPhone, that’s still a lot of new customers for Cupertino.

But I also wonder if corporations make more money these days outside their respective businesses. Suppose, for example, that firms invest their net earnings in financial instruments that have nothing to do with their core enterprise. Instead of increasing productive capacity to sell more widgets (an iffy proposition in a depressed economy) the companies buy stocks or bonds or both.

dow jones


I await Krugman’s further exploration of the conundrum.