Sunday, December 02, 2012

THE "STUPIDITY" OF THE PRIVATE SECTOR: The Left's Other Economic Straw Man

Writing at The Reformed Broker, Joshua Brown correctly dismisses the Left's incessant calls for economic "fairness", but then ensnares himself in another field of rhetorical quicksand: the "stupidity" of corporations and the private sector.

...the economy isn't fair and you can make a pretty strong case that it's gotten less fair, but that fact alone will never sway those in power...

...So instead of lamenting the lack of fairness, let's talk about the stupidity of this hollowing out of the middle class in this country, year after year, with bought and paid for legislation and preferential tax treatment.

Henry Blodget demonstrated last night how, while corporate profits have never been higher, the wages paid to workers at these same corporations have never been lower. While corporate profit margins just hit a 70-year high, have a glance at wages as a percentage of GDP:

Corporations haven't magically learned a new secret to profitability, they've just found a workaround to the need for a living wage in this country. F*** it, someone else's problem.

Yes, Joshua: corporations have all -- in concert -- decided to screw the "middle class", whoever that may be. It's not the insane, ever growing number of regulations from hundreds of government entities that grow like weeds in good times and bad. It's not takeovers of entire industries -- like health care -- with countless repercussions as diktats and fiats emanate from unelected, faceless bureaucrats. Corporations certainly couldn't be husbanding resources to prepare for the unknown, could they?

And, oh my: 54 percent of jobs are created by small businesses, not large companies. How is it that they, too, appear to have conspired to screw "the middle class"?

...the stupidity of having such an obviously unbalanced economy is the more important discussion we should be having right now. The corporations are every bit as vulnerable to the disappearance of the middle class as the middle class is itself.

They've managed around this issue thus far with an increasing emphasis on exports (now responsible for half of the S&P 500's sales and profits) as well as systemic and legally-sanctioned overseas tax evasion. Consider that Exxon Mobil made $19 billion in profits in 2009 and paid zero Federal income tax (you want to laugh, they actually got a rebate of $256 million). GE earned $14 billion in 2010 and also paid zero in Federal income tax. Microsoft and Hewlett-Packard have each set up offshore subsidiaries which they use as payment conduits so as to keep their profits shielded from the IRS.

But offshoring of profits and the export of goods and services won't sustain these corporations forever. At a certain point, native companies within the developing world will nudge our adventuring multinationals aside (China's already building its own version of Wall Street). And when that happens, Corporate America is going to turn around and be horrified by the devastation in its own backyard.

So, Joshua, why have these corporate entities set up offshore tax shelters? Could it be because they are incented to do so, thanks to populist -- and destructive -- corporate tax policies and (in the case of GE) crony capitalism?

And concerning Exxon Mobil, could it also be that we already pay an incredible rate of taxation on every gallon of gas, which -- by the way -- hits the middle class, and poor, and the rich equally?

Well, you enormous f***ing idiots, you fired all your customers. You've spent the last decade or so suppressing wage growth in the name of "creating shareholder value" and now even your shareholder base is disappearing.

You allowed wages to stagnate for a decade and made every decision you could in the service of nudging the quarterly profit higher, thinking less of the yearly profit and virtually nothing of the long-term viability of your business.

No, Joshua: you are dead wrong.

I have an Almanac from 1929. It is fascinating. As you flip the pages, you see dozens of pages of advertising representing hundreds of different companies. Perhaps one-half of one percent of these companies are still alive today.

No, Joshua: companies (and individuals) are trying to survive an out-of-control government that is leeching more and more money from every corner of the economy, issuing ever more onerous regulations, and wreaking administrative havoc with bills like Dodd-Frank and PPACA that have yet to be fully fleshed out.

Companies are terrified of a federal government that has grown like a cancer, decade after decade.

See, Joshua: we already have a structure that will work for all Americans. We have a precious and priceless framework our predecessors bequeathed to us called "The Constitution".

It attempted to limit the powers of a centralized federal government because it knew that "absolute power corrupts absolutely".

And so it is we have arrived in November of 2012: with an unconstrained central government, borrowing and printing money that will never be repaid in pursuit of a collectivist ideology that has no blueprint, no design, and no endgame that can be shared with the citizenry.

It confiscates ever more money from the private sector, recycles it through thousands of inefficient bureaucracies, and then sends the remainder to its favorite constituent groups to aid in its reelection efforts.

It micromanages our lives and regulates every aspect of the private sector. It tells us what kind of light bulbs we can buy, how much mileage our cars must get, how much water can flow through our shower heads, and how big a pond can be in our backyards before it turns into a "protected wetland".

The federal government is the world's biggest borrower, its biggest lender, its biggest health insurer, and runs the biggest retirement system. And every time it has touched any part of our economic system, it has bankrupted or destroyed it.

The system is going to collapse, just as it is collapsing in Europe today, just as it did in Argentina a decade ago, and just as it did in the Weimar Republic. And the tragedy -- the travesty -- is that we were blessed with a system of Constitutional government that was explicitly designed to prevent all of this madness.

Corporations are terrified of the federal government. And those ostensibly running things, our politicians -- with the exception of a handful of plain-spoken folks demonized as "extremists" -- have largely surrendered to the corruption endemic to an unconstitutional, centralized government that, each and every day, pushes us closer to tyranny.

That, Joshua, is the problem: the world's biggest corporation called the federal government.


Anonymous said...

They just can't conceive of what a REAL Free market would look like and how it would work

Reliapundit said...




Comrade J said...

A little side note. Joshua laments lack of fairness and then somehow manages to twist into bizarre 'Soprano-tuff-it-out' argument. [Perhaps in some way this is an excuse to say good-bye to the pretension of morality and golden rule Mr. Reformed once used profess to command].

That it is people that makes things fair or otherwise in a free market environment, never crosses his mind. Therefore, he rushes to blame corporations.

The thought that, once the dishonest and corrupt have been chased out of private sector, they join the now ever bloated government, thus gaining and wielding even more power, never enters his neatly brainwashed brain.

To paraphrase one of Dilbert's comic strips, how do you fix the Stupid, using Stupid mentality? Back to you pointy haired Josh.