As across-the-board federal budget cuts go into effect and the "real pain" predicted by economists and policy experts begins to creep into the lives of everyday people—namely US workers—investors on Wall Street are saying: "bring it on."
Quoted in a New York Times article on Monday that describes the current economy as a "golden age for corporate profit," Savita Subramanian, who heads the equity and quantitative strategy for Bank of America Merrill Lynch, said that despite the terrible times for working people and warnings that nearly three-quarters of a million jobs could be lost this year in the US, "the market wants more austerity."
Responding directly to Subramanian's remark that a market push for "austerity" was a good thing for the overall economy, Mark Weisbrot, co-director of the Center for Economic and Policy Research, said such a comment made "no sense at all."
And Weisbrot agrees with Klein's observation that what's being observed should be broadly seen as a robbery by profit-bloated corporations of what should be economic gains more equitably shared with working people.
Though the "sequester" cuts are predicted to cut the growth rate this year by as much as .5 or .7 percent, what economic gains are made, Weisbrot says, "will likely continue to go to the rich, as they have for the past three decades."
As the Times points out, most of the profit gains made by multinational corporations since the 2008 crash have come because of increased productivity and government-backed lending that only larger firms can leverage. Neither of these gains, however—or the profits derived from them—are being shared with workers or lower-income, struggling Americans.
According to the Times:
As a percentage of national income, corporate profits stood at 14.2 percent in the third quarter of 2012, the largest share at any time since 1950, while the portion of income that went to employees was 61.7 percent, near its lowest point since 1966.And as Travis Waldron at ThinkProgress points out:
From 2009 to 2011, 88 percent of national income growth went to corporate profits while just one percent went to workers’ wages, and hourly earnings for workers actually fell over that time. And while they aren’t investing in job growth, corporations are also paying taxes at a rate that hit a 40-year low in 2011.But what's the answer to fixing this continued trend where the gains steadily flow to the top?
According to Richard Eskow at the Campaign for America's Future, it begins with acknowledging the clear disparities and ends with actually introducing policies beneficial to working people. As he wrote recently in a piece titled the "Great Wealth Robbery":
The real “job creators” aren’t the ultra-wealthy. If they could create jobs with all their added wealth, they would have done it already. The real job creators are working people with jobs.
They don’t invest their money in hedge funds or stash it in offshore accounts. They spend it: on food, transportation, their kids’ education, maybe a night at the movies … And then other people get jobs making those things possible.
We have a working model to follow: The USA in the 35 years after World War II. As Paul Krugman says, “To the extent that people say the economics is confusing or uncertain, that’s overwhelmingly because people want it to be.” We know how to do this.
Raising the minimum wage is a start. A maximum wage would help, too, by reducing CEOs’ incentives to emphasize quarterly gains over long-term growth and leaving more to be shared with employees.
We also need a national strategy for regaining the more reasonable distribution of income this country had in the 1950s. We need to ensure that the door of opportunity, which is closing every day for millions of young people, is opened again. And we need to ask the wealthiest to really pay their fair share – at something closer to the top tax rates of the 1950’s or 1960’s. [...]
Most of all, we need to educate those around us so they understand what’s happening. That includes the well-intentioned well-to-do, who might do more to end the problem if they knew it existed. After all, you can’t stop a robbery until you know it’s happening.
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