Forbes’ update on the state of plutonomy or “democracy for the few”

from Edward Fullbrook

The current Forbes, the bi-weekly of The One Percent, features an update on the current state of what it, like Citigroup, calls plutonomy.  Also called by its insiders “democracy for the few”, this is the basic economic-political reality of our time, which one-percenters chat about daily and which the rest of us generally pretend doesn’t exist.  Skeptics of the analysis of plutonomy offered in “The Political Economy of Bubbles” in the current issue of RWER are encouraged to read Forbes’ plutonomy update.   Below is a taster. 

The new “us versus them” is not like the racism of colonial times. This is starkly different. It’s the 99% versus the 1%, . . .

Top .01%, Top 1%, Bottom 99%

from David Ruccio (and the New York Times) 

Plutonomy Bubble Number Three

from Edward Fullbrook

“The Political Economy of Bubbles”
http://www.paecon.net/PAEReview/issue59/Fullbrook59.pdf

“toxic and destructive” Goldman Sachs and the Obama administration

from Edward Fullbrook

As you may have heard in the news, yesterday one of the key directors of Goldman Sachs, Greg Smith, published in the New York Times his long letter of resignation.  It begins:

TODAY is my last day at Goldman Sachs. After almost 12 years at the firm — first as a summer intern while at Stanford, then in New York for 10 years, and now in London — I believe I have worked here long enough to understand the trajectory of its culture, its people and its identity. And I can honestly say that the environment now is as toxic and destructive as I have ever seen it.

Given the degree of attention that the international media is today giving this mini event, it seems appropriate to republish here a table from my RWER paper, published on Monday, “The Political Economy of Bubbles”.  The table below, which is largely based on an article by fflambeau, details 32 relationships, financial and otherwise, between Goldman Sachs people (“morally bankrupt” says Smith) and the Obama Administration.

Captain America?

from Peter Radford

The Economist’s astonishingly tone deaf editorial on Mitt Romney – “America’s next CEO?” – is partisan, wong-headed, and naive. The very title gives away the fundamental error: America does not need a CEO. The popular notion that business experience somehow makes for a more productive president is horribly misguided and displays a misunderstanding of politics that, frankly, the Economist ought to know how to avoid.

Republican tax plans to date in one convenient graphic

from David Ruccio

Kevin Drum has collected charts showing all the Republican tax plans to date in one convenient graphic.

It’s really pretty spectacular seeing them all together like this. It’s not just the amount of pandering to the super-rich that’s so breathtaking, it’s the lockstep unanimity. At all costs, every single Republican candidate knows that he has to promise the ultra-wealthy a huge tax break as the price of staying in the race. This, ladies and gentlemen, is the modern Republican Party in a nutshell. 

Chart of the day: US profit and wage shares 1970 – 2011

This graph shows that:

1. since the early 1980s the underlying trend in the United States has been for a bigger share of national income going to corporate profits and less to employees, and
2. now under Obama the rate of redistribution has reached an unprecedented level.   

Mis and mins (graph)

from David Ruccio

I have no particular objection to highlighting “the vast shift in national income toward our richest 1 percent,” even if it means focusing, for the umpteenth time, on the fate of the “middle-class” instead of on workers and the working-class.

That’s what Ian Ayres does, in utilizing the Brandeis Ratio to measure the growing gap between the average income of the richest 1 percent and median household income.

US corporate profits after tax, as a percentage of GDP

from David Ruccio

source

A tale of 30 corporations

from David Ruccio

When we look back on this period, someone will have to write a novel that begins with the following sentence: it was the best of times (for corporations), it was the worst of times (for the 99 percent).

And, of course, the best and worst of times are connected.

According to a recent report by Public Campaign [pdf, ht: sm], 30 multi-million-dollar American corporations spent more money lobbying Congress than they paid in federal income taxes between 2008 and 2010, ultimately shelling out approximately $400,000 every day—including weekends—during that three-year period to lobby lawmakers. And, in both 2008 and 2010, they paid even more than that to their top 5 executives. 

The ECB’s high wire act

from Dean Baker

At this point the sovereign debt crisis in Europe is almost getting boring. We’ve seen the same script played out over and over with country after country. The basic story is the markets begin a run on the debt of a country: Greece, Ireland, Italy, Spain etc.

The troika, the European Central Bank (ECB), the European Union (EU), and the International Monetary Fund (IMF) then demand a series of austerity measures. In addition, they sometimes demand measures unrelated to fiscal policy, such as a lower minimum wage in Ireland or weaker employment protection legislation in Italy, that are intended to weaken workers’ bargaining power. As a quid pro quo, the troika then arranges enough bond purchases or other supports to get through the immediate crisis.

Economic Conflicts with China and Class War in the United States

from Dean Baker

The Commerce Department’s release of trade figures last week showed another large deficit with China for October, albeit slightly lower than the record hit the previous month. This figure will renew the calls for stronger action against China.

Unfortunately the debate over China is often buried in confusion, leading to a situation that is not conducive to effective action. A major reason for this confusion is that there is not a common U.S. interest against China. The interests of the 99 percent differ greatly from the interests of the 1 percent.

The legitimacy of governments and of economic policies

from Grazia Ietto-Gillies

In the last few weeks there has been much concern and writing about legitimacy and democratic deficits in connection with the technocratic governments in Greece and Italy. The concern on the latter refers to the fact that the heads of these two governments and (all or most of) their ministers are not members of the respective elected parliaments. Nonetheless, the new governments and their programmes have been approved by the parliaments of the two countries.

The media concern about the democratic deficit is justified. However, it is a concern that should be extended far beyond the confines of the present governments of Greece and Italy.

United States of economic insecurity (charts)

from David Ruccio

Almost half of all Americans, or 45 percent of the U.S. population , do not earn enough to cover their basic expenses. They live in a state of economic insecurity.

A new report by Wider Opportunities for Women [pdf] documents the extent to which large numbers of Americans—including those who played by the rules and managed to find jobs, form household, and raise children—are living on the edge. They simply do not earn enough to pay ever-increasing housing, food, health care, and other expenses.

Time to Retake Politics from the One Percent in Both Political Parties

from Dean Baker

The country is still celebrating the inability of the supercommittee to cut Social Security and Medicare, but it is important to move on from this victory to retake control of the political debate from the 1 percent. As it stands, the 1 percent are insisting that the country genuflect over the non-problem of the budget deficit, at a time when tens of millions of workers are unemployed or underemployed, millions of people are facing the loss of their homes and tens of millions of baby boomers are approaching retirement with little other than their Social Security to support them.

The Supercommittee of the One Percent Goes Down in Flames

from Dean Baker

Congress gave us a wonderful Thanksgiving present when we got word that the supercommitee was hanging up its capes. While many in the media were pushing the story of a dysfunctional Congress that could not get anything done, the exact opposite was true. The supercommittee was about finding a backdoor way to cut Social Security and Medicare, and create enough cover that Congress could get away with it.

It is important to remember the basic facts about the budget and the economy. Contrary to the conventional wisdom in Washington, it is easy to show (by looking at the website of the Congressional Budget Office) that we do not have a chronic deficit problem. In 2007, prior to the collapse of the housing bubble and the resulting economic downturn, the deficit was just 1.2 percent of GDP.

Technocrats, Ethics, and Radical Economics

from Peter Radford

Right at this moment the lives of hundreds of millions of people, or at least their immediate economic prospects, are in the hands of a narrowing number of technocrats and politicians. That the technocrats have been given control in two Euro Zone countries is an affront to democracy. That the technocrats are, by and large, economists, does not bode well.

Take down letter from Citigroup

from John Schmitt

I’ve just received my second Digital Millenium Copyright Act take-down letter. As before, the letter is from the Kilpatrick Townsend, Attorneys At Law, and, as before, the letter is on behalf of their client, Citigroup.

The one percent turns class war into generational war

from Dean Baker

Major news outlets like the Washington Post and National Public Radio constantly bombard us with news pieces on the budget deficit. Invariably these stories focus on the cost of “entitlements,” which most of us know as Medicare, Medicaid and Social Security. The story pounded home in these pieces – often explicitly – is that these programs, that primarily benefit the elderly, are creating the basis for a generational war between the young and the old.

United States of corporate tax welfare

from David Ruccio

In the United States, we don’t tax corporate profits. We give corporations lots of ways of not paying taxes. The result is the effective tax rate on corporations is less—in many cases, much less—than the much-ballyhooed official corporate tax rate of 35 percent.

The Citizens for Tax Justice has just issued a new report, “Corporate Taxpayers & Corporate Tax Dodgers, 2008-2010″ [pdf]. Their conclusion: