I must hat-tip John M. Mason at Seeking Alpha for inspiring this post. He weaves some recent news articles into a story which I shall sharpen, with my own viewpoint and commentary.
First, consider that “Recovery in U.S. is lifting profits, but not adding jobs” (says the New York Times). As percentages of national income, corporate profits today are they highest they’ve been since the 1950s, and employee income is the lowest it’s been since the 1960s.
So what are companies doing with their profits?
- “More U.S. Profits Parked Abroad, Saving on Taxes” (says the Wall Street Journal).
- “U.S. Firms Send Record Cash Back to Investors” as dividends, share buybacks and mergers (says the Wall Street Journal).
In other words: Companies just don’t feel that they have many productive opportunities / uses for their money, in the U.S. And do feel that they face unpredictable, yet ever-growing regulation – as well as relatively high taxes. So, they don’t hire (in the U.S.). Instead, they dispose of their profits in ways that accomplish little but to reward their shareholders, thus raising the stock market.
Connect that, folks, to the market’s recent highs. But what does a rising stock market accomplish? Little but to make the wealthiest households feel wealthier.
And so, to the extent that rising consumer spending has contributed something to U.S. recovery, that spending has come more from the wealthier households. “Wealthier Households Carry the Spending Load”, says the Wall Street Journal. Meanwhile, Wal-Mart and Target, who serve less-wealthy households, have reported slower sales.
This is an economy suffering from the anti-market, anti-growth policies of the Obama administration. Not surprisingly, it is also an economy skewed to the wealthy.
I say “not surprisingly”, because I know that the two things are connected. It is precisely the middle and working classes which benefit from Small Government policies, which are pro-market and pro-growth policies (that the Left carefully propagandizes as “harsh”, “austere”, “devastating”, etc.).
And it is precisely the established elites, the American aristocracy, who benefit from the world of sluggishness and stagnation that the socialistic, Big Government policies so beloved by Obama, Paul Krugman, etc. will cause every time. It’s happening before your eyes, folks. You’re living it.
But that’s not the ironic part. The ironic – no, tragic – part is that left-liberals, who we know complain about income inequality (thanks Kurt!), are being given that inequality by the policies of the Obama administration. In other words: Their own, left-wing policies of Big Government and money-printing are causing the conditions they decry.
But they don’t see it. They don’t make the connections. They don’t understand that the Federal Reserve’s money-printing – done explicitly to make the wealthy feel wealthier, and not-so-explicitly to finance Obama’s gaping deficits – is a regressive tax, a tax that destroys opportunity for the middle and working classes even as it raises their cost of living.
So, what will lefties offer as a solution to these problems? Why, more of the poison that caused the problems, naturally. More money-printing. More government programs. More regulation. More bailouts (just maybe for a slightly different set of people). More socialism. Always, always MOAR BIG GOVERNMENT.
For example, lately we’ve seen a drumbeat of calls for (yet) higher taxes on the wealthy; taxes that Obama supporters like Warren Buffett would avoid via their accountants, but that would serve to (further) injure small business and up-and-comers, thus protecting the established positions of the elite.