24 July 2004

If cars are the measure, the standard of living of a typical American worker – 80% of the population – fell by 50%

Some insightful numbers at the Concentration of Wealth Gallery. While I don't agree the article title's premise — that "concentration of wealth" alone is responsible for a falling standard of living — the numbers indeed indicate a structural economic problem that is not being attended to. The blog author penned this piece in response to a recent NY Times article on falling hourly pay and Alan Greenspan's testimony to Congress on monetary policy.
By looking at this report from the census bureau (page 720) and this report, you can see that the median sales price of a home in 1971 was $24,800. The average annual wage in 1971 was $6,620 (see previous section). So it took 3.74 years of labor for the average worker in 1971 to buy the average home.

The median sales price of a house in 1999 was $133,300. The average annual wage in 1999 was $23,750. So it took 5.61 years of labor for the average worker in 1999 to buy the average home.

The author debunks the notion of increasing standard of living for the preponderance of Americans by looking at average wages versus cost of a home, cost of a car, and minimum wage values in years 1971 and 2000. The evidence is obvious and shatters the pollyanna naysayer counterclaims to the contrary.

However, I don't believe that an overly heavy distribution of wealth at the top is necessarily bad in itself. That's a flaw that presupposes that the amount of total wealth in the world is a constant static quanity. This is simply not true. Aggregate wealth can expand and contract, depending on environmental factors brought on by man or mother nature. Simply, there can be more cake and more pie, and efforts that attack wealth generation are not prudent measures.

Still, there is a major structural problem and it's not even being acknowledged, let alone addressed. The nature of work is changing — it takes less workers to provide the same level of productivity as in past times. Computing and robotics technology advances stifle the need for manpower. And in those enterprises where manpower is still paramount, a global economic model now moves those numbers offshore or imports workers from developing nations who lack the negotiating power and rights that citizens are entitled to. The net effect is to suppress wages and salaries for the bulk of the citizenry. A shift in our paradigm of work and compensation is most needed, yet few even are aware of this social wave and its negative ramifications.

While U.S. rapidly and carelessly opens U.S. market, Chinese government is brazenly protectionist

According to Douglas Bartlett, president of Bartlett Manufacturing Co., other countries are providing all types of subsidies and are playing under one set of rules and we're playing under another and our businesses don't stand a chance..
U.S. printed circuit board makers didn¹t suddenly forget how to compete, said Bartlett, whose company's revenues have declined from $20 million in 2000 to $9 million in 2003. Instead, Chinese companies have been able to produce comparable products at half the price due to unfair export subsidies and currency manipulation. "In high-tech industries, low-cost labor alone cannot create such price advantages," Bartlett said. "The implications are clear: China is using predatory trade practices to destroy our PCB market and because of Washington's indifference -- and sometimes encouragement -- China is succeeding."

One glaring example of the military cost of this indifference is in the production of sonabuoys, which are used to detect submarines. Bartlett Manufacturing has been making the printed circuit boards used in this military product for 15 years, but the company was told recently by its customer USSI in Ft. Wayne, Ind., that its prices were not competitive.

"My long experience in the business tells me that these prices could be established only in China or [another] similar Southeast Asian country," Bartlett told the Small Business Committee. "It should be obvious to members [of Congress] that it does not make sense to have the Chinese build products that go into the products for our national defense. The implications for national security and homeland defense should be obvious." (When adjusted for Chinese currency rates and export subsidies, Bartlett says his company¹s prices are competitive.)

But the corporatists and globalists are not interested in things like national sovereigntry or protecting domestic interests. Or even, Good Gates, the plight of hard working Americans who have been commodotized and marginalized as insignificant.

14 July 2004

Job Loss/Gain by President and Party

Look at these numbers.

Souce is US Department of Labor reporting, or so the graphic creator has captioned. I dug around at the official United States Department of Labor online home, but could not verify the factoids presented.

If true, it's an amazing graphic and contrary to the popular misconception about the parties and the American economy. And still, George W Bush is on target to become the first president since Herbert Hoover to end a presidential term with a decrease in total employment.

Employment: 131.2 million Americans on business payrolls in May, an increase of 1.4 million employed since last August but still 1.2 million below the level when President Bush took office in January 2001.

Some economists believe it's going to be a "banner year" while others contend a "housing bubble" burst may "chill the economy".

The most troublesome aspect of the price runup is that many recent buyers are squeezing into houses that they can barely afford by taking advantage of the lower rates available from adjustable-rate mortgages. That leaves them fully exposed to rising rates. In fact, the rise in one-year adjustable rates since late March has already raised annual borrowing costs for new buyers by 25%. And data from the Federal Housing Finance Board show that the most expensive markets tend to have the highest share of buyers with adjustable-rate mortgages.

1 July 2004

It’s just a gravy train

So says Marie deYoung, a former Army chaplain who worked for Halliburton, who charges her former employer with massive waste of taxpayer money, though I prefer the use of the term fraud.
DeYoung audited accounts for Halliburton’s subsidiary KBR.  She claims there was no effort to hold down costs because all costs were passed on directly to taxpayers.  She repeatedly complained to superiors of waste and fraud.  The company's response, according to deYoung was: "We can be as dumb and stupid as we want in the first year of a war, nobody’s going to care."

DeYoung produced documents detailing alleged waste even on routine services: $50,000 a month for soda, at $45 a case; $1 million a month to clean clothes — or $100 for each 15-pound bag of laundry.

"That money could have been used to take care of soldiers," she said.

DeYoung also claims people were paid to do nothing.  Mike West says he was one of them.  Paid $82,000 a year to be a labor foreman in Iraq, West claims he never had any laborers to supervise. "They said just log 12 hours a day and walk around and look busy," he said. "OK, so we did."