Skip to comments.Income gap widens as American factories shut down
Posted on 06/16/2014 1:38:52 AM PDT by Olog-hai
The downfall of manufacturing in the U.S. has done more than displace workers and leave communities searching for ways to rebuild devastated economies. In Reading and other American factory towns, manufacturings decline is a key factor in the widening income gap between the rich and everyone else [ ]
A loss of manufacturing has contributed to the decline of the middle class, said Howard Wial, an economist with the Brookings Institution and the University of Illinois at Chicago. People who are displaced from high-paying manufacturing jobs spend a long time unemployed, and when they take other jobs, those jobs generally pay substantially less.
Globalization, automation and recession destroyed nearly 6 million manufacturing jobs between 2000 and 2009.
(Excerpt) Read more at hosted.ap.org ...
There will be FReepers along soon to tell us that U. S. manufacturing is producing more goods (dollar value) than before.
Yes, it’s called framing the argument. However, the most egregious example is the primary premise of the article (and title) to begin with.
The objective is to get that phrase “Income Gap” out there and blame it on someone. In reading the article, the problem of excessive government regulation, oppressive taxes, demonization and external influence on business decisions are not even discussed. It’s almost as if “income gap” begets “factory shutdown and relocation”.
Whatever business’ decisions are for shutdown and/or relocation, nothing is mentioned about liberal interference in wages, unions, government taxes, oppressive government regulations, and NOTHING is mentioned about the new goldmine of the ‘entitled’ American worker - EITC, TANF, WICs, SECTION 8, SNAP and all the rest - it takes a SUBSTANTIAL wage/salary structure to compete with the disposable income of this “new American worker.”
Funny how that’s never enough to wipe out our massive debt, close the holes in our national security, solve the unemployment problem or shrink government, is it ever?
Never mind solve the trade deficit problem too.
Did anyone note that they lost their manufacturing jobs after she bought a Mazda 3?
Right. And never mentioned is how the upper echelons of business, making millions a year, could take that money and reinvest it in the business instead of skimming off the top. They are never held responsible for the destruction of a company but are quick to take the credit (and money) when a company does well.
And please, don't give me that "they built the company" song and dance. Some did, yes. But today, most of the Board of corporation are cronies brought in to skim the top and reap the rewards.
I knew a guy who was on six boards of corporations. Never worked for them prior to being on the Board yet he would go to two meetings a year and make six figures off of each one.
It the end, it is the responsibility of the shareholders and purchasers to keep excess in check, not government.
It is because of government in the first place the upper echelons of business are bloated and over compensated. Your example of the person you knew on all those boards is not just in business. It goes throughout our system, in business, in academia, and in unions. It is usually because of influence with government for pay.
I never said anything about the govt.
As for the shareholders they get voted down all the time. The CEO's give their shares more votes per share than regular stockholders. As always, they get the upper hand.
You didn’t specifically ‘say’ government, but what is the point charging that business upper echelons are the problem with factory shutdowns and not tacitly implying that government has to do something about it?
There may be that sort of thing going on, but I don’t think it is pervasive.
Regardless, I do not subscribe to the position that business as an entity is bad and the root of our problems. That can be better traced to oppressive government in my opinion.
Not terribly up on your Adam Smith, are you?
He recognized that businessmen would steal and pillage to the extent they could, just like most people will.
He just recognized that the “invisible hand” would keep the stealing and pillaging within certain bounds. The problem with governmental interference is not that it doesn’t prevent the stealing and pillaging, it’s that it interferes with the invisible hand mechanisms.
For instance, without the government we would still have had a real estate bubble. Bubbles and irrational exuberance are part and parcel of capitalism.
But the implicit government guarantee of these loans caused the bubble to inflate a great deal more before bursting than it would have without that bubble. And then the implicit bailout was carried out, though not consistently. Which of course just encourages future bubbles to expand excessively, whereas if the government had allowed the necessary contraction, investors would be really leery of future bubbles.
“The problem with governmental interference is not that it doesnt prevent the stealing and pillaging, its that it interferes with the invisible hand mechanisms.”
It also helps no one to not prosecute the stealing and pillaging.
Now, that's a laugh. Fannie Mae, Freddie Mac backed loans pushed and shoved by the government by edicts to banks and lending institutions to loan money to people who had no business or ability to responsibly own a home by payments caused the bubble.
They virtually forced banks and credit organizations to bundle up the loans and pass the liabilities off as super mortgage packages and credit derivatives.
I guess you don't remember Barney Frank and his gal pal Maxine Waters PRAISING Franklin Raines, Jaime Gorelick and Jim Johnson for their outstanding efforts in this area, do you?
The unqualified-homeowner-turned-viable by government edict is what caused the exuberance of which you speak. Millions of people getting into houses for nothing down, no closing costs, and often loans at over 100% of value. It did not prevent buyer/seller fraud; it encouraged it in a way.
There have been multiple instances where loans were obtained for purchase, and renovation/improvement that were for 10 or more times what the property was worth. All before one nail was pounded, and in many cases they never were. The money was stolen. In short, Adam Smith never met a Barney Frank, or a Franklin Raines, Jamie Gorelick or a Jim Johnson. And he certainly never met a Maxine Waters.
You are apparently unfamiliar with the long history of bubbles prior to governments getting involved.
We had various bubbles in this country, notably including multiple land speculation bubbles and at least one railroad bubble.
The difference is without government interference the invisible hand pops the bubble much earlier, as investors start to get nervous without an explicit or implicit government guarantee.
The government leaned on banks to load money to people who were unqualified using traditional measures, that is quite true. As I understand it, the government did not force them to bundle the mortgages and then create derivatives and derivatives of derivatives. The implicit government guarantee of these instruments is what ultimately led to disaster, however.
IOW, without government involvement the bubble would have been much smaller when it burst, and the resultant damage much less.
Amazing, isn’t it?
That the “income gap” widens under the policies of those who are worried about it,
and narrows under the policies of those who know it’s not really an issue?
The bubble that mattered is the one I cited and provided the real reasons for it. Government caused it, and it did make it about as bad as it could be. It’s what they government (at least the Democrats) wanted because it gave them near dictatorial powers in the end. It’s why Obama does what he does now.
Globalization, regulations taxes debt EPA automation and recession destroyed nearly 6 million manufacturing jobs.
LAT again omits the rest of the story another case of covering Obama&Co a$$.
I know about transplants, but I don't think the 3 is one of them
Obama Bagged $18 Million In Corporate, Special Interest Cash For Second Inauguration
Obamas big money corporate donors included:
AT&T—$4.6 million Microsoft—$2.1 million Boeing—$1 million Chevron—$1 million Genentech—$750,000 Deloitte—$500,000 FedEx—$500,000 Coca Cola—$430,000 Bank of America—$300,000 Xerox—$250,000 ExxonMobil—$250,000 Northrup Grumman—$100,000 Verizon—$100,000
Obama also hauled in $250,000 checks from each of the following unions: The International Association of Fire Fighters, the International Brotherhood of Electrical Workers, the International Brotherhood of Teamsters, and the National Education Association.
party of the ‘workin’ man’ and the ‘little guy’, yep, un-huh.
Wall Street Responsible For One-Third Of Obama’s Campaign Funds (from July 22, 2011)
One-third of the Obama re-election campaign’s record-breaking second-quarter fundraising came from sources associated with the financial sector, the Washington Post reports.
That percentage is up from the 20% of donations that came from Wall Street donors in 2008, and contradicts reports that a growing Wall Street animosity towards the Obama administration may jeopardize his re-election bid.
Obama’s $86 million haul set a record for incumbent fundraising at this point in an election campaign. While the campaign has downplayed the larger donations by emphasizing that the average donation was $69, it also released a list of contributions by “bundlers;” those who can “bundle” more than $50,000 in contributions from friends, relatives and business associates.