Dubious posted this link in another thread, but I think it's worthy of its own discussion: http://www.businessinsider.com/what-wall-street-protesters-are-so-angry-about-2011-10?op=1 It's a pretty stark look at where we've been trending over the last several decades; so this problem and this thread is meant to be independent of the current financial mess we're in. Stimulus and all that helps to fix the current problem, but it really does nothing to change the long-haul trend. And I think everyone would agree that those trends are not sustainable in a healthy country - eventually, putting all the money in the hands of the few leads to collapse of a country. Historically, we tend to just look at GDP growth as a measure of fiscal health; but if the purpose of a society is for the general welfare, then if all that growth is only going to 1-10% of the people, then is it really a good thing? So the question then is "how do you stop it?" Or, is it even possible? There are several common solutions, but I don't think any of them really hold up: Lower taxes, lower regulation, more free market, etc - This is the standard right-side response. Basically, let everyone compete and it will benefit the economy as a whole. The fundamental problem here is that this is the policy we've pursued for the past 30ish years. We can argue whether it was a cause of the problem or not, but we conclusively know that it's not doing anything to fix it. Raise taxes on the wealthy - this addresses budgetary issues, and makes the rich people have less money, so it reduces inequality. But I think the goal is to bring up the poor and middle class rather than pulling down the rich, and raising taxes does nothing in that regard . This is more of attacking the symptom rather than the disease. Go back to pre-Reagan policies as a whole - the appeal of this is that we go back to the period where there was a lot of growth opportunity for everyone. But it ignores the simple fact that the world has changed. Technology has completely changed the world's production system and mobility of labor. Globalization has created far more markets and labor forces, all of which are much more closely tied than ever before. None of that can be undone, and much of that has played a role in the changes we're seeing. So just going back to old policies doesn't fix the problem. More education - this is a common one. We need a more educated workforce, and that will lend itself to more mobility and more jobs. But education is getting increasingly more expensive, and at some point, the cost/benefit ratio no longer works. And if everyone has a college degree, then that becomes the baseline and the "educated" people will be the ones with higher degrees. Everyone can't be the most educated, so there have to be jobs at all levels to make society function effectively. Just adopt the European model - The European model has appeal because they don't have near the level of inequality we have here. But it has it's own problems, and we may be witnessing the beginning of the collapse of Europe right now anyway as they have built a lot of their equality on the backs of unsustainable debt (more so than we have). Besides, culturally as a country, we have a lot of things that make us different and less accepting of a European style system, and many of those things are responsible for the immense success we had for much of the last century. So just adopting their model seems short-sighted and not as effective as it may seem. Once we get past the current economic mess, this is going to THE critical problem the country has to address if we want to get any kind of long-term stability back. So the question is: how do we do that? What kind of policies can be pursued to change these trends?
What does that do, though? What policies would those new politicians enact to address these problems?
And Italy, Portugal, Spain, and Ireland. But those countries have dragged down the value of the Euro, which then artificially helps all the other countries like Germany and France by making their products more competitive than they would be otherwise. It's unclear how that model would be playing out if all these countries were independent, though - it could very well work for some of them.
I posted a more grim article in another thread a few months back, comparing how we got to budget surpluses and how that would be a lot more difficult now. link to thread
Stop elections. Government control resources and every big corporations. Economy is planned for the future of the nation, not for some individual's greed. free education, free housing, free health care. USA have the chance to be the best socialism ever.
There's little any single person can do for the long term economy. Really we have to hope for the next great invention so that we can spur the next big industry to replace the jobs taken away by new technology as well as meet a portion the growing population's demand for jobs.
That will never happen as long as there are a band of Republicans and Tea Party extremists willing to brainwash us with anti-socialism propaganda.
Major, Great thread BTW. I see a few issues regarding corporate income that really need to be resolved. People are compensated in business or politics or much of organizational behavior on short-term metrics and flawed data sets that are skewed to lower the bar. There needs to be dynamic bonus provisions with vesting clawback schedules based on the company's fiscal health. AIGFP was a prime example of a money making unit that got huge bonuses and then just fired when it blew up (after they were paid bonuses to keep them around as they *****ed up so they were the only one's that knew how to fix it allegedly). The real issue is public companies are bureacracies like the goverment and corporate boards all follow the same antiquated bait and swith measures for compensation and there is a lack of ownership mentality on these boards. They use compensation consultants, skew their peer groups to move pay up and then everybody pays out 60% of median, which perpetually drives up pay to people that really haven't created shareholder value. When public firms have so many shareholders, than it takes large owners to fight back and the legal world has created golden parachutes and poison pills and all to keep entrenched boards from being accountable to the shareholder. Those inefficiencies cost jobs, potential and value of our prized global businesses that pay many Americans. This is an area that I think is in need of substantial repair. It will make capital flow freely and increase efficiency and accountability, which ultimately leads to profitability and transparency.
Its such a broad topic, so there are many areas and such that can help to restore the major piece affecting us: confidence in the system. Consumers confidence in the economy to spend, banks confidence in companies and people to lend, and company's confidence to build and expand. Cleaning up corporate boards gives some levels of confidence.
I would like to see some discussion on how we can impose tarriffs or legislation that helps US companies that hire US employees. Either Tax breaks, or incentives of some sort, allowing free access to our marketplace when other countries do not do the same is a problem for me. DD
Tariff's are a bad idea and protectionism really compounded the negative effects of the great depression. Especially as our consumer is still so leveraged and is de-leveraging we need access to a growing global consumer base to purchase our goods and services in order to continue to maintain our lifestyle. Remember again that over half of our profits from our 500 largest companies come from overseas. That trend will only continue. I think reducing restrictions would be better as opposed to creating more.
I think this is a very real problem, and it's responsible for some of the CEO vs worker compensation issues. How do we go about doing this? Do we literally regulate that type of thing, or are there other ways to create an environment that doesn't lend itself to this lack of institutional control by the boards?
This is an interesting area that I mentioned a while back, but more in response to the current crisis. As a country, we incentivize behavior that we believe benefits the country as a whole - for example, tax breaks for education or home ownership. People having jobs benefits us in a similar way - is it time to look at the tax code to incentivize companies to hire in the US? For example, take two companies: Company A: $2000 in sales, $1000 in wages in the US, $1000 in profits Company B: $2000 in sales, $800 in wages out of the US, $1200 in profits Our current system incentivizes Company B - more profits thanks to lower costs. But as far as the country is concerned, Company A is more valuable to the US, because the $1000 in wages re-circulates in the US economy, while the $800 in wages in company B goes out of country. So should our tax code, in some way, reward Company A over B?
I don't think regulations work, its more a culture of indifference. People bait and switch the pay for performance metrics so much. One year they'll use a method, versus the next year they'll use another. Its a perpetually increasing cycle as everyone uses 60% of their peer group median incomes, therefore it will continually rise year after year if everyone uses it depite real wealth creation to owners. Cherry picking peer groups and stacked boards with little stock ownership is really a killer as they benefit from the company as opposed to with the company. It creates a culture of excess that cares not about excess dollars spent and ROI from these overpaid executives. I think state laws that limit the ability to take control and get active with companies along with poison pill's to dissuade owners from taking a larger position and therefore having a say. Golden parachutes are employment contracts, but not allowing people to have an active say (which increases) as % ownership increases limits accountability.
