THE LOOTING WILL CONTINUE UNTIL MORALE IMPROVES

Guest Post by Jesse

“A man must always live by his work, and his wages must at least be sufficient to maintain him.” – Adam Smith

“The issue isn’t just jobs. Even slaves had jobs. The issue is wages.” – Jim Hightower

Some analysts are confusing higher wages with monetary stimulus. Nothing could be further from the truth, at least in the real world of today.

Monetary stimulus is what the Federal Reserve does, that is, increasing the money supply by expanding the monetary base. It is a non-organic growth of money.

I think it is a well-noted and oft-remarked upon feature that the monetary stimulus that the Fed is providing is being given directly and almost exclusive to the Banks, in order to shore up their damaged balance sheets and provide them an artificial stream of profits.

And of that stimulus, the bulk of it seems to be finding its way into financial speculation and a new bubble in paper assets, and the acquisition of more companies to build even greater monopolies.

Wage increases, that are not merely a secondary effect of a general monetary inflation, are indeed not useful, except that the workers at least keep pace with the rate of price inflation. But I don’t think that this is what anyone is recommending who talks about higher wages. The Fed is not an actor on that stage.

The currently imbalanced and distorted financial system is taking the lion’s share of all new growth, and continues to do so as it has been doing for the past twenty years. This cannot last.

When consumers purchase things, they must either use cash or credit. And to obtain the cash they can work more hours, or have more family members working. To obtain more credit, they can mortgage their house, and increase their debts.

We have seen the explosion of a consumer credit bubble in housing debt, facilitated and engineered by historic levels of financial fraud by the very Banks who are now taking their subsidies of monetary stimulus from the Fed. It happened almost six years ago, but the economy remains in ‘the new noe-feudal normal.’

At some point the long abused consumer says ‘enough’ and cuts back their purchasing to the barest of essentials. And the economy grows stagnant at home, which gives the moneyed interests a strong incentive to seek captive markets overseas. And so a new round of neo-colonialism is born. Which in turn creates its own sets of problems, lies, and economic distortions.

The data indicates that we are now, at long last, finally at that point.

And corporate profit margins are at new highs.

And the one percent has never been richer, or had more influence with the political class.

How much is enough for them? When will they be content? With them it is with wealth as it is with power.

‘Wir haben keine Hemmungen, und einen großen Magen.’

I think that the solution is rather obvious. We have been here before.

“After many requests on my part the Congress passed a Fair Labor Standards Act, what we call the Wages and Hours Bill. That Act –applying to products in interstate commerce — ends child labor, sets a floor below wages, and a ceiling over hours of labor.

Except perhaps for the Social Security Act, it is the most far-reaching, the most far-sighted program for the benefit of workers ever adopted here or in any other country. Without question it starts us toward a better standard of living and increases purchasing power to buy the products of farm and factory.

Do not let any calamity-howling executive with an income of $1,000.00 a day, who has been turning his employees over to the Government relief rolls in order to preserve his company’s undistributed reserves, tell you — using his stockholders’ money to pay the postage for his personal opinions — tell you that a wage of $11.00 a week is going to have a disastrous effect on all American industry.

Fortunately for business as a whole, and therefore for the Nation, that type of executive is a rarity with whom most business executives most heartily disagree…

Some of my opponents and some of my associates have considered that I have a mistakenly sentimental judgment as to the tenacity of purpose and the general level of intelligence of the American people.

I am still convinced that the American people, since 1932, continue to insist on two requisites of private enterprise, and the relationship of Government to it. The first is a complete honesty, a complete honesty at the top in looking after the use of other people’s money, and in apportioning and paying individual and corporate taxes (according to) in accordance with ability to pay. And the second is sincere respect for the need of all people who are at the bottom, all people at the bottom who need to get work — and through work to get a (really) fair share of the good things of life, and a chance to save and a chance to rise.

After the election of 1936 I was told, and the Congress was told, by an increasing number of politically — and worldly– wise people that I should coast along, enjoy an easy Presidency for four years, and not take the Democratic platform too seriously. They told me that people were getting weary of reform through political effort and would no longer oppose that small minority which, in spite of its own disastrous leadership in 1929, is always eager to resume its control over the Government of the United States.

Never in our lifetime has such a concerted campaign of defeatism been thrown at the heads of the President and the Senators and Congressmen as in the case of this Seventy-Fifth Congress. Never before have we had so many Copperheads among us — and you will remember that it was the Copperheads who, in the days of the Civil War, the War between the States, tried their best to make President Lincoln and his Congress give up the fight in the middle of the fight, to let the Nation remain split in two and return to peace — yes, peace at any price.

This Congress has ended on the side of the people. My faith in the American people — and their faith in themselves — have been justified. I congratulate the Congress and the leadership thereof and I congratulate the American people on their own staying power…

You will remember that from March 4, 1933 down to date, not a single week has passed without a cry from the opposition, a small opposition, a cry ‘to do something, to say something, to restore confidence.’ There is a very articulate group of people in this country, with plenty of ability to procure publicity for their views, who have consistently refused to cooperate with the mass of the people, whether things were going well or going badly, on the ground that they required more concessions to their point of view before they would admit having what they called “confidence.”

These people demanded ‘restoration of confidence’ when the banks were closed — and demanded it again when the banks were reopened.

They demanded ‘restoration of confidence’ when hungry people were thronging (the) our streets — and demanded it again now when the hungry people were fed and put to work.

They demanded ‘restoration of confidence’ when droughts hit the country — and demanded it again now when our fields are laden with bounteous yields and excessive crops.

They demanded ‘restoration of confidence’ last year when the automobile industry was running three shifts day and night, turning out more cars than the country could buy — and they are demanding it again this year when the industry is trying to get rid of an automobile surplus and has shut down its factories as a result.

But, my friends, it is my belief that many of these people who have been crying aloud for ‘confidence’ are beginning today to realize that that hand has been overplayed…”

Franklin D. Roosevelt, Fireside Chat June 24, 1937

Although they rarely mention it in the history books, it is ironic that around this time the moneyed interests and neo-cons of Roosevelt’s day were fomenting a domestic revolution, and investing heavily in European fascists whom they hoped would be obedient gangsters for crony capitalism.

 

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Iska Waran
Iska Waran

The issue isn’t wages. The issue is being worth being paid a wage. Since we already have a minimum wage, this harkening back to the halcyon days of FDR (piss be upon him) must imply that we should increase the minimum wage. Seattle is aiming for $15, LA for $13 an hour. Fine, whatever. The minimum wage probably doesn’t affect anyone here, so what do we care? Minimum wage jobs are starter jobs. Fewer people getting starter jobs will mean fewer people capable of holding any job. Obama and FDR are cut from the same cloth – fascists who want a free shit army keeping them in power. Same as the PRI in Mexico and Hugo Chavez in Venezuela. Thank God Obama is less of a fascist than Roosevelt. He hasn’t yet tried to pack the Supreme Court and at least he’s term-limited by the 22nd amendment that passed in the aftermath of Roosevelt. FDR could rail against companies’ “undistributed reserves” (the nerve of them not following government dictates), but these days money, labor and production move easily around the world. I’d take the populists’ prescriptions more seriously if they hewed carefully to a “buy American” philosophy. If you’re going to try to run an economy from the top down, it’s always best if you start off being the only industrial power left standing after a world war. It make your economic policies look smart and effective.

TE
TE

I caught a little tidbit of info that really opened my eyes to what has happened to us, the middle.

In 1966, the Beatles played their last American concert at Candlestick Park (being torn down this year).

A woman, whom attended the concert as a teenager, had framed her ticket. The cost? $4.50.

Which sent me to looking at minimum wage, in 1966 it was $1.25 an hour (it was reduced the following year, go figure).

So, the Beatles at the height of their career, needed less than 4 times a teen’s hourly wage to make millions and pay all their business costs.

Magically, it is now many, many times more to attend a concert. And that is BEFORE you add the fees and taxes that add nearly $20 a ticket in my neck of the woods.

The problem with artificially raising minimum wage is that people are not supposed to STAY at minimum wage. Those jobs were NEVER supposed to be for us middle class, middle aged, workers. But, thanks to gubment policy, regulation, and the like, our family-supporting jobs were sent offshore and there isn’t much more available.

Forcing companies to pay more will only exacerbate the non-supporting jobs problem. More automating, more offshoring and more mom & pop’s shut down.

Every single thing coming out of WDC and the various “think tanks” leads to the same place. Fewer jobs, fewer family-supporting jobs and more overhead for those trying to hang on.

Crap like this makes me wish it blows up sooner, rather than later. Even as every brain cells screams, “NO! We need more time!”

*sigh*

And, finally, ECES. Screw that pompous, fake conservative, douchewad. I hope he fucking chokes on his ill gotten gains. He is the poster boy for the ways that “our” elected officials are 100% working for the rich guys. HE is the poster boy for the Liberals to tout about SCREAMING about “big biz” and gubment, even as their own picks do the freaking same.

Screwed by all sides, in all ways, and have to fill out a fucking report for it. Our freedom tastes like shit these days.

Pirate Jo
Pirate Jo

I thought this was a good article, but his editorializing has me disagreeing with a couple of points:

“The currently imbalanced and distorted financial system is taking the lion’s share of all new growth, and continues to do so as it has been doing for the past twenty years. This cannot last.”

I disagree with the “This cannot last” part.

“At some point the long abused consumer says ‘enough’ and cuts back their purchasing to the barest of essentials.”

I disagree with this, as well. Let me tell you a story. I know a married couple, I’ll call them Jed and Judith, who work for a too-big-to-fail bank, who bought a McMansion in Arizona for something like $600K. (They both make north of $100K, and her son is grown and moved out now.) Their home was in a suburb of Phoenix that promised great future development. When the bust happened, all that future development evaporated, so they were stuck in an overpriced ball and chain that was miles away from shopping, entertainment, and their jobs. The home was in Jed’s name, so they simply walked away from the mortgage and purchased another $600K home in Judith’s name. That, naturally, required the purchase of all new furniture, because the old stuff “didn’t go with” the new house. They only drive their nice leased cars for two years at a time.

For those of us stuck in the morals of the past, they seem like irresponsible, immoral spendthrifts, but they are really just quite savvy about playing by the new rules of the new game. Nobody cares about owning anything.

I mean, me, I’m a bean counter who likes analyzing balance sheets and equity positions. I think that in 1960 if you lived in a paid-off home and drove a paid-off car and were debt-free, you had a better standard of living than if you lived in an underwater home and drove an underwater car in the year 2000. But most people don’t see it that way. They see the nicer home and the nicer car and they think their standard of living is better, regardless of whether they have any equity or not. All that matters is how nice their surroundings are. They’re house slaves, but as long as they are comfortable they don’t care. Nobody actually cares about building equity. They don’t care about leaving anything to their kids, because they only had kids as a form of entertainment.

You may look at their approach and be horrified by it, but they don’t care what you think. And if you have the idea that this status quo will end any time soon, when not only the bankers but their very slaves support it wholeheartedly, you are living in fantasyland.

Fred Hayek
Fred Hayek

I skimmed the top of the article and started reading the long quote. God, what a despicable lying heap of merde FDR was. Ignorant of economics all day long and pretentious just the same every minute of it.

gbyerley
gbyerley

I almost stopped reading post at 9th paragraph when ‘the new noe-feudal normal’ BS was cited and misspelled too. Yeah, don’t nitpick. neo. I get it. We all make typo mistakes.

The term neo-colonialism was coined by Kwame Nkrumah. He was winner of Lenin Peace Prize in 1963. ‘Nuff said. Kwame Nkrumah destroyed the economy of Ghana, but hey, at least the British weren’t there to enable a prosperous economy. Happy, happy, joy, joy.

Next, Jesse specifically criticizes neo-cons in last paragraph, after posting FDR speech. Un-frigging-believable. FDR , like Wilson, was Progressive liberal, so why the focus on despicable neo-cons, which are actually and factually Progressive too?

Pirate Jo
Pirate Jo

September 2008 came and went and the current state of affairs DID continue.

Pirate Jo
Pirate Jo

Admin,

The world is never exactly like it was a decade ago. But in retrospect, 2008 didn’t change much. People are still living the same way. The same dumbshits in the Middle East are still fighting each other, the same dumbshits in the USA are still living off welfare, and the cost of living is still going up. Yes, the stock market crashed, but who cares? Only 5% of the population has any money in it anyway. Plus it has “recovered,” so every retard with a 401K thinks things are going great.

Am I wrong here?

I know it’s raw, I hate the system as much as you do, I agree it is corrupt, but I think you are woefully optimistic in thinking a big crash is going to bring it down and set everything to rights. It’s going to last, and not because the people in power are all that smart or all that special, but because the average person is JUST as invested in the status quo as they are.

Do you see people everywhere demanding their wages be paid in gold or silver?

You’ve had a bug up your ass against me for a while now. Why is that? Lately you blow more snot at me than my pug. Clearly you think I am wrong (always eager to view my opinions as “giving up” or some such equivalent moral failing) but you never really say why you think I am wrong.

Pirate Jo
Pirate Jo

Admin, I don’t disagree with you – I *do* think there will be another stock market crash. But there have already been two in the last fifteen years and I think this is the new normal.

I had never heard of you prior to 2008, but the first article of yours I read was on ‘Seeking Alpha,’ and now I read this website but not Seeking Alpha. I saw you in ‘Generation Zero’ and enjoyed the movie.

In the grand scheme of things, yes, I agree with you there are bubbles in bonds, stocks, and housing. I agree with you those bubbles will burst. It will affect the owners of those bubbles, which is not by any stretch the majority of the population.

I, for example, have no money in stocks or bonds. I own my home and I suppose the sale price of the homes around me may go down. But I have no intention of selling my home anyway. The next crash won’t change “everything” – it will just be another jag in what has otherwise been a long, steady downward trajectory.

Yes, pensions are screwed. Social Security is screwed. This is nothing new to me and has been obvious for a few decades now. It may be upsetting for those who expect retirement, but I have never expected that. I think you are mistaken in thinking I disagree with you.

Pirate Jo
Pirate Jo

The majority of workers do NOT have a 401k invested in stocks and bonds, because the majority of workers don’t even have 401ks. The majority of the population isn’t even a “worker.”

The old folks will either keep working or see their standard of living decline, same as now. The young folk will keep living with their parents. The EBT cards won’t stop working.

How do you know it will be the next year or three? How do you know it won’t take ten or twenty?

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