Obama's answer to globalization: Demagoguery
The Senate is scheduled to vote on a $60 billion bill to rebuild aging infrastructure.
Barack Obama might be on to something. He has brought class warfare to American politics. Well, revived it anyway, after Al Gore rode it to a loss in the 2000 presidential election. In fact, America has seen such outbreaks from time to time, most notably when William Jennings Bryan represented the debtor class by calling for a debased currency in his "You shall not crucify mankind on a cross of gold" presidential campaigns of 1896, 1900, and 1908. He lost all three.
That was then, and this is now. For one thing, Obama's attack on "fat cat bankers" who, he says, brought on our current troubles, but escaped unscathed after taxpayer bailouts, is falling on the sympathetic ears of the unemployed and underemployed, families who have been converted to renters from homeowners after being dispossessed by those bankers, and parents worried that even their college-graduated children will slide down the living standard scale. As Manhattan Institute economist Diana Furchtgott-Roth points out at RealClearMarkets.com, "The unemployment rate in 2010 for newly graduated men and women with bachelor degrees was 9.2 percent, far higher than the 5.1 percent rate such adults experienced in 2005." Worse still, she cites new studies that show that "graduating in a recession leads to earnings losses that last for 10 years after graduation."
A taxing debate: Who should pay more?
25% of millionaires pay lower tax rates than many middle-class Americans
For another, the president's attacks on "millionaires and billionaires" are getting a sympathetic hearing from Americans once immune to such populist rabble-rousing. During the good times--1993-2000 and 2001-2007--the real incomes of the top 1 percent of earners grew at rates of over 10 percent, while those of 99 percent of earners increased at rates of only 2.7 percent and 1.3 percent in those periods, respectively. Much-publicized bankers' bonuses, often in the tens of millions of dollars, challenged the long-held quintessentially American view that income is related to performance. Failed bankers and CEOs who were cashiered for unsatisfactory performance rode off into the sunset with millions in their pockets, and free time in which to lower their golf scores.
So goes the populist version. Right on many of the facts, wrong on the diagnosis and prescription. There is no denying that income inequality has increased in recent years. Or that it is tempting for politicians to equate inequality with inequity, or unfairness, and to propose to solve the problem by taxing the rich, defined by candidate Obama as those millionaires and billionaires, and by legislation-proposing Obama as families with annual incomes of more than $250,000. Just how taking money from these people will put any cash into the pockets of those who have not done well of late is unexplained.
As any thoughtful leftist knows, the culprit is globalization, the very same phenomenon that has done more to end poverty in the world than all the well-intentioned aid programs have ever done. Millions of Chinese and Indian workers have ridden the production of stuff for world markets to a level of affluence undreamt of only a decade or so ago. Millions of Russians and residents of former satellite nations are increasingly prosperous and free to travel and spend.
So far, so good. But globalization has also exacerbated inequality in many Western countries, including most especially America. Managerial skills can now be marketed internationally, and fetch higher prices. The dealmaker who could make his tens of thousands merging one U.S. company with another can now make tens of millions putting together larger, cross-border mergers. The wealth manager who could cater to clients in New York, Chicago, and Los Angeles can now add rich Indians to her client list. In short, the talented are now writing on bigger slates, and their rewards have risen commensurately.
The news is less good for the woman sewing t-shirts or making trainers. She is the collateral damage of globalization. She did all that was asked of her: worked hard, paid her taxes, saw her children off to school every day. Not her fault that millions of $1-per-day Chinese were more than willing to compete with her, and that Walmart snapped up their products, triggering a massive shift of wealth from the U.S. to China, and from producers to consumers.
Equally disadvantaged, but somewhat less entitled to our sympathy, are the unionized workers in the manufacturing sector who in a closed economy could extract high wages from employers willing and able to pass on the higher costs. The extent to which globalization put an end to that ride on the backs of consumers is shown by the recent settlement agreed to by the United Auto Workers union and the car makers. New hires are to receive about half the hourly wage of old timers, gradually bringing the costs of American manufacturers down to those of Japanese and other auto makers--and now lower-cost China is dipping its toe into the U.S. auto market.
The only group not directly affected by globalization is public sector workers. Policemen, firemen, clerks in the office that issues drivers' licenses have no fear of foreign competition. Because their unions are also large contributors to the campaigns of the politicians who sit across the table from them in wage negotiations, they pretty much could get the wage and pension packages they sought.
But that party, too, is coming to an end, an indirect effect of globalization. Hard-pressed voters, their real incomes stuck at years-ago levels, are no longer willing to pay the taxes needed to support the life styles and large pensions of public sector workers. In Wisconsin, Republican governor Scott Walker faced down his Democratic opposition and massed demonstrations to reform the public sector bargaining process and start to get public sector compensation under control. Ohio Republican governor John Kasich did the same, and Democratic governors Andrew Cuomo (New York) and Jerry Brown (California) are moving in that direction. These moves will help relieve the burden on taxpayers, but they will also reduce the number of relatively high-paying jobs in America, and the compensation of those who survive the staffing cuts.
Nothing the president is proposing can do anything about these trends. He could, of course, reduce inequality by raising taxes on "the rich": his Democratic colleagues in the Senate are proposing a 5 percent surtax on incomes in excess of $1 million, a move most voters favor. But that won't pass a Republican House of Representatives, and anyhow might discourage job-creating entrepreneurs. Longer-term solutions such as massive retraining programs and growth-inducing tax reform would help. But those wouldn't have much noticeable effect until after next year's elections, and so at best receive only passing mention from politicians-on-the-make. Better to concentrate on attacking those evil bankers and greedy millionaires and billionaires.
Bio: Irwin M. Stelzer is a contributor to the Weekly Standard. The opinions expressed in this commentary are solely those of the author.
They have RobMe the Wall Street plastic parasite to finish the job for the Top 1%. RobMe he is so crazed with making huge amounts of money at any cost to people that he is literally crazy. He thinks that government should turn a profit and be run like a race-to-the-bottom business like Staples or Outback Steakhouse.
This is what the half brained conservatives are talking about when they speak out for freedom. It is the freedom for their corporate brainwashing masters to rape and pillage the earth and commit crimes against people with impunity.
I give you Chevron or BP as one example. I give you the Wall Street Banksters who colluded to commit multi-billion dollar fraud. I give you Massey Energy who killed miners because they were in charge of safety. And on and on and on...
I think it's a race problem. I think if Mr. Cain manages to get elected, he might not have as difficult a time, since he is a repub and could expect support from the conservative who would be afraid to admit an "error". I don't think most who call themselves democrats would give a hoot if the president was green, so Mr. Cain would be safe.
Mr. Obama seems to have walked into it. Mr. Bush had already started the bank bailout before he took office. You could even say he, Mr. Bush, began it when he furthered deregulation. Unfortunately, the once illegal derivatives have backfired.
Mr. Obama has not told congress what he is doing. Many of them have sworn to make him a one-term president. Seem logical to keep them, the repubs, generally "cluless".
CREATING PRIVATE SECTOR AMERICAN JOBS:
Taxation from Private Sector employment is the only way Government can be financed without creating even more unsustainable debt. This is an incontrovertible fact: germane to all developed economies.
Regrettably our private sector jobs have been exported to china making the USA a virtural pauper nation, reduced to pandering to the Chinese for loans, just like the EU!
The EU financial crisis, like ours, is a direct result of European Union countries exporting domestic (JOBS) manufacturing to China, et al.
As you know President Obama recently appointed GE Chairman Jeff Immelt to head his commission on American job creation, putting Americans back to work.
American Job Czar?
General Electric is moving its 115-year-old X-ray division from Waukesha, Wisconsin: to Beijing. In addition to moving the headquarters, the company will invest $2 billion in China to relocate a handful of managers, but hire about 200 engineers and create six research centers. This is the same GE that made $5.1 billion in the United States last year, but paid no taxes. Because of bad press, GE now says it has a small tax liability for 2010.
General Electric, last year invested a total of $2 billion in China, $500 million of which was allocated to what it calls customer innovation centers and now employs more people overseas than it does in the United States.
Apple, the darling of Wall Street: employees thousands of Chinese through Foxconn, a Taiwanese company that produces components for the new IPhone. The labor cost of an IPhone is about $8, "Eight dollars!
The IPhone sold one million (sold out) on the first day it was introduced. The price range $199~~~$650 and it cost $8 to manufacture: on average an astounding $350, net profit on just one IPhone. A $350 million profit in just one day and tax-free.
This is standard modus operandi of all American corporations manufacturing in China and exporting their products to the USA. The list of American corporations sending millions of American jobs to China is endless. Just go to any store in America and try to find a product made in the USA.
There is only one-way to save this economy: CREATE AMERICAN JOBS!!
The Grimes Economic Recovery Plan:
Suspend all so-called free trade agreements immediately. Western Europe and most developed economies much like the USA have exported their manufacturering base for exactly the same reason. Cheap labor.
All developed economies will do the same thing, for the same reason. In truth, formally suspending trade agreements is irrelevant; trade will cease as global manufacturering grinds to a halt.
It's important to note: this will have no effect on trade with countries where there is wage parity.
This plan will allow for an orderly transition over a period of three years and will fund the entire stimulus plan: (a graduated tax, beginning at 1% for the first 6 months, 2% between, 6 & 9 months, 3 % between 9 & 12 months, 5% between 12 & 18 months, 10 % between 18 & 24 months and 15 % from 24 months & over) on all manufactured imports and outsourced services, i.e.; tech support.
To jump-start this economy, the fund will provide billions to the federal treasury, allowing for a massive infrastructure construction project to begin almost immediately.
The surcharge will force offshore American corporations like General Electric and Apple to relocate all manufacturing and assembly back to this country on all products sold in the USA and pay American wages or pay the surcharge.
Foreign corporations are more than welcome to sell in the USA, as long as they manufacture their products in the USA and pay livable wages.
Meanwhile, the phoney GOP candidates are yammering on about birth certificates, and religious tests of purity, and gay marriage. The sad part is that the yokels eat that stuff up - they DO, in fact, cling to their guns and Bibles and don't pay attention to where their job went (or where it will be going this year or next.) THAT'S demagoguery, and you know it.
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Gee - you mean the exact same technique that the Republicans have been using on him for the last 3 years?
How dare Obama stoop to the tricks that the Republicans use constantly on everything that isn't RIGHT (wing) and holy.
How hypocritial.
They don't recognize, that the Democratic Party is attempting to take permanent control of the country, by increasing the population of their party supporters, to the point, where no other ideology can oppose them. They are gradually, and deliberately, trying to set up the stage for dictatorship in America.
That's what happens, when people stop thinking for themselves, when the media are controlled by a political party (which is now the case with only one network offering an opposing viewpoint), and when people are more concerned with low class, reality TV, than with what goes on in their government.
Decency in America starts with individuals. If those individuals don't care, and just want to lay around getting hand outs from government, so they can take drugs, and play......then the country goes down the tubes. That's where we are.
The Republicans on the other hand have 1/4 the approval rating the President does - and yet they scream that they speak FOR the will of the American People.
They constantly demonize all that is not RIGHT and holy - in other words anything that comes from Obama and the democrats.
They only want one thing and it comes at the cost of all else - they want control of America. The ends justify the means. They don't care how much damage they create, they only want total control of America.
But I guess that because it's the party you clearly agree with - that it's ok to do the things you complain about the democrats doing.
Of course the politicians will use demagoguery, or whatever they can to win elections, stay in power, this is all they are interested in. Besides they have absolutely no freedom, they are just puppets on strings under all the lobbies and strong interest groups. This is why I do not understand people still analyzing the speeches of politicians, watching debates with great interests, as if anything in our lives depended on them.
No changes will come from politicians, if we want to change our lives, our future, we have to do it ourselves. Thus the Occupy movement is a refreshing step in the right direction, as only an aware, mutually connected public forum will be able to establish a new mode of decision making system, where everybody is part of any decision, calculation.
Regarding globalization there is no point lamenting it now, this is the system we exist in today, and it is all the result of the profit chasing with minimal investment that brought on the multi-national companies, immigration for better life, global virtual connections and so on.
Any attempt of isolation or protectionism will bring on an even deeper crisis, because the process cannot be turned back, we have become completely interdependent, and no individual or nation can hope to become self sufficient.
Instead we have to understand the new conditions we are facing, adjust to the integral, interconnected system, and start the public discussion which later on will include the "elite" too as they have nowhere to go, and the crisis will reduce them to a "normal" level very soon as well.
Outsourcing has given rise to the complete opposite - the US has a trade DEFICIT - the goal of implementing tariffs would be to BALANCE trade, and the extent to which trade partner nations could retaliate is ZERO because they stand to hurt themselves more than they would help themselves.
People just accept crap they've read in magazines without really stopping to try and understand the underlying logic ... it's the most frustrating thing ... because half the time they make conclusions that are actually wrong ...
To the extent that trade isn't balanced, it's actually economically inefficient - for trade to be a NET gain, there needs to be TRADE!!!!!!!!!!! Not sure why people think outsourcing is some form of trade ... THERE'S NO TRADE to the extent that there's a deficit!