Income Inequality

http://www.nytimes.com/2011/03/26/opinion/26herbert.html?emc=eta1

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"Anyone who is capable of getting themselves made President should on no account be allowed to do the job." (Douglas Adams)

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Bob Herbert's last post for the NY Times (3/25) is attached. It's a strong warning about income inequality.

Herbert quotes Arthur Miller, borrowing from poet Archibald MacLeish, saying that the essence of America was its promises: "So here we are pouring shiploads of cash into another war, this time Libya, while simultaneously demolishing school budgets, closing libraries, laying off teachers and police officers, and generally letting the bottom fall out of the quality of life here at home."

There is a general consensus that young people today are staring at a future where they will be less well off than their parents. Not only are 14 million Americans jobless (many of them long term), but their outlook is grim. To this we add that there is plenty of economic activity but the folks at the top are "stealing all the marbles." This is a term Herbert uses to make a point and I'll use it too, but the problem with American capitalism is that you play to win with the rules you have and the game is what it is. Tax laws and regulations are what they are (or aren't).

Just to digress for a moment, did we NOT start this century with a U.S. BUDGET SURPLUS? And now we are being preached to about the fact that there's a huge deficit because we want to buy a shirt made in China at Walmart with a credit card. Really? What did Iraq, Afghanistan and now Libya cost? But, I digress.

So, the Economic Policy Institute has reported the richest 10% of Americans received 100% of the average income growth in the years 2000 to 2007 (the most recent years of economic expansion). We had a country where that ratio used to be much more balanced.

In 2009, the richest 5% claimed 63.5% of the nation's wealth, while the bottom 80% collected just 12.8%. Herbert quotes from the Times' own article on Friday ("G.E.'s Strategies Let It Avoid Taxes Altogether") that, despite profits of $14.2 billion - $5.1 billion from its operations in the U.S. - G.E. did not have to pay any U.S. taxes last year. Quoting the article's author, "It's extraordinary success is based on an aggressive strategy that mixes fierce lobbying for tax breaks and innovative accounting that enables it to concentrate its profits offshore," Herbert goes on to point out that G.E's CEO Jeff Immelt is now the leader of President Obama's Council on Jobs and Competitiveness. As we pointed out in a prior post, do you want a CEO who's company has shipped out more jobs than it's created over the last ten years in a "public service" post like that? So, G.E. doesn't just concentrate it's profits offshore but also its jobs.

As Herbert implies, how about some nation-building here at home? We have a monumental number of poor and unemployed people in the U.S. who could be "invested in" - that means trained or retrained with half the money that's been and being spent overseas on wars and/or "statesmanship." Is it $3 billion per year we were sending Hosney Mubarak so that Egypt would make nice with Israel? This is probably how Mubarak could wear $25,000 custom made suits with pinstripes that, when you looked closely, were stitched so that each "stripe" was his NAME continuously appearing. Google it.

I'm for nation building here in the U.S. In the past, that has been helpful to the rest of the world from a business point of view.