We're in a Recession Because the Rich Are Raking in an Absurd Portion of the Wealth

[Captain Oates 911]

That all begs the question: Why do you stay? There must be something you see in us Yanks worth saving.

oh and that's the other thing

If anyone mentions anything then it's 'go home'

Like we don't want to hear it

Like you guys are so proud of free speech except when you hear something you don't like -then the constitution goes out of the window.

What more permanent way of taking away the right to free speech than trying to get the speaker out of the country at the soonest opportunity so that only Sarah can be heard

The reason that other countries have made progress is that people were prepared to stand up and criticise the status quo (you know like in 1776)

Dissent, and people saying 'this is wrong' is the way a country improves.

If the US seeks improvements, it should listen to people with different perspectives and not seek to exclude people with alternative ideas

Americans need to get away from 'LOVE' and 'HATE' as it's so simplistic and primitive

I am staying as long as I want and I will be voting too ! Heck my vote might even cancel out the vote of an extreme nationalist ....

[Captain Oates 911]

Why compare to Somalia/Afghanistan? Because that's the nature of comparative arguments. Why do people promote the idea of helmets on bicycles? So that people don't crack their heads open in the event of a bad accident. Nobody argues that people should wear them because even though you're about 99% unlikely to have an accident like that, that you should anyways. Same with cigarette warnings. They always say this may result in serious medical illness. It never says it may result in serious medical illness 50 years down the road. The best case for any argument is to provide the worst case for the alternate argument. Think of warnings about getting an electrical shock. They don't warn about pain. They warn about death.

I don't remember there being hate speech against the Kennedys. King? Probably, but you sure don't hear about it.

Work and VJ? These are private entities. Nobody is forcing you to abide by their rules. If you don't like either, you're free to post somewhere else and work somewhere else. But government laws are unavoidable.

What do you think of this concept of free speech that allows people to come to the funeral of a US soldier and shout that god killed him and god hates him ? Doing that in front of his parents.

Is it worth letting that go on for the sake of a theory ?

Who gained from that? - society ?

No other country in the 1st world allows that and non of them are the worse off for banning it.

[I AM NOT THAT GUY 5,715]

Stay, or go, your choice. I am just curious why you prefer one choice over the other.

[Captain Oates 911]

Stay, or go, your choice. I am just curious why you prefer one choice over the other.

It's because I want to contribute to the philosophical development of US society -

plus the gas is cheap, stuff is cheap, and it doesn't rain as much where I am

- actually that first point is not totally tongue in cheek.

[I AM NOT THAT GUY 5,715]

It's because I want to contribute to the philosophical development of US society -

plus the gas is cheap, stuff is cheap, and it doesn't rain as much where I am

- actually that first point is not totally tongue in cheek.

That was my hunch. I have noted that about expats. I also notice a common disdain for poms as well among most former prisoners of the crown. That is why a true Englishman is always a strange bird indeed.

Edited July 17, 2010 by ##########

[Texanadian 10]

What do you think of this concept of free speech that allows people to come to the funeral of a US soldier and shout that god killed him and god hates him ? Doing that in front of his parents.

Is it worth letting that go on for the sake of a theory ?

Who gained from that? - society ?

No other country in the 1st world allows that and non of them are the worse off for banning it.

Ahh yes. Those pesky Westboro Baptist Church people. They annoy the heck out of me.

When it comes to free speech, we have two ways we can go about it.

1) A complete free speech rule. The notion that people can speak freely about any topic, good or bad.

or

2) We can pick and choose which topics can be spoken of.

Let's take a look at choice # 2. This will always result in the majority rules aspect I spoke of earlier. People will be mostly in favour of eliminating what they perceive as bad speech by others. But it won't be a big deal to these people....Conversely, the people who have the greatest loss will be the people in the minority who have the major role in the argument at hand. The people who have the most emotional issue of free speech will always be the ones who are pushing an issue that is clamped down on......Choice # 2 can be supported (in theory) by the idea that YOUR ideas will always be good ones and that it's OTHER people's ideas that should be suppressed. But the trouble is who is the deciding person that determines if you are the one on the good side or the bad side? Is an anti-war protester trying to save people from dying? Or are they a treasonous person who should be silenced?

But if we look at choice # 1, you'll find that people are overwhelmingly for it. They feel that they have a greater chance of losing their ability to speak if given the choice of yay/nay on complete free speech. Thus people support the notion of free speech. Willing to put up with the bad apples in order to keep their own free speech.

Now getting back to the Westboro people. Personally while I wouldn't go and protest at anybody's funeral, they do have their right to do so. Fortunately we have the Patriot Guard riders who block them from getting nearby. And their future picketing spots are well known. I'm surprised that people haven't protested outside their church (which happens to be next door to where they live). Blow some air horns and vuvuzelas outside their church while they're having their service. Blow whistles and car horns while they're trying to sleep. Set off a dozen people's car alarms. Michael Moore rented a pink bus and filled it up with some "Village People" type gay men and got on the megaphone outside their church a number of years ago. It was great.

Religious freedom is arguably one of the biggest issues of free speech. I don't consider the Westboro people to be a religion. They're more of a family based cult who use religion for tax write offs. (Using the family swimming pool for baptisms = tax write off? Puh-lease) But getting back to religious freedom. In the US as well as most open countries you can go to any church you want and participate in any style of religion. In the extremist countries, you must follow the one type of religion. Anything else is either against the law or at the very least threatened. The extremists (by our definition) follow choice # 2 above. But to them, they are the majority where they live. To them, the extremists would be the ones who want religious freedom to choose another type or no type at all.

So yes, while I view the WBC people as being worse than crack dealers. I wouldn't pass a law banning their free speech.

[The Nature Boy 4,224]

Robert Reich

Wall Street's banditry was the proximate cause of the Great Recession, not its underlying cause. Even if the Street is better controlled in the future (and I have my doubts), the structural reason for the Great Recession still haunts America. That reason is America's surging inequality.

Consider: in 1928 the richest 1 percent of Americans received 23.9 percent of the nation's total income. After that, the share going to the richest 1 percent steadily declined. New Deal reforms, followed by World War II, the GI Bill and the Great Society expanded the circle of prosperity. By the late 1970s the top 1 percent raked in only 8 to 9 percent of America's total annual income. But after that, inequality began to widen again, and income reconcentrated at the top. By 2007 the richest 1 percent were back to where they were in 1928—with 23.5 percent of the total.

Each of America's two biggest economic crashes occurred in the year immediately following these twin peaks—in 1929 and 2008. This is no mere coincidence. When most of the gains from economic growth go to a small sliver of Americans at the top, the rest don't have enough purchasing power to buy what the economy is capable of producing. America's median wage, adjusted for inflation, has barely budged for decades. Between 2000 and 2007 it actually dropped. Under these circumstances the only way the middle class can boost its purchasing power is to borrow, as it did with gusto. As housing prices rose, Americans turned their homes into ATMs. But such borrowing has its limits. When the debt bubble finally burst, vast numbers of people couldn't pay their bills, and banks couldn't collect.

China, Germany and Japan have surely contributed to the problem by failing to buy as much from us as we buy from them. But to believe that our continuing economic crisis stems mainly from the trade imbalance—we buy too much and save too little, while they do the reverse—is to miss the biggest imbalance of all. The problem isn't that typical Americans have spent beyond their means. It's that their means haven't kept up with what the growing economy could and should have been able to provide them.

A second parallel links 1929 with 2008: when earnings accumulate at the top, people at the top invest their wealth in whatever assets seem most likely to attract other big investors. This causes the prices of certain assets—commodities, stocks, dot-coms or real estate—to become wildly inflated. Such speculative bubbles eventually burst, leaving behind mountains of near-worthless collateral.

The crash of 2008 didn't turn into another Great Depression because the government learned the importance of flooding the market with cash, thereby temporarily rescuing some stranded consumers and most big bankers. But the financial rescue didn't change the economy's underlying structure. Median wages are continuing their downward slide, and those at the top continue to rake in the lion's share of income. That's why the middle class still doesn't have the purchasing power it needs to reboot the economy, and why the so-called recovery will be so tepid—maybe even leading to a double dip. It's also why America will be vulnerable to even larger speculative booms and deeper busts in the years to come.

The structural problem began in the late 1970s, by which time a wave of new technologies (air cargo, container ships and terminals, satellite communications and, later, the Internet) had radically reduced the costs of outsourcing jobs abroad. Other new technologies (automated machinery, computers and ever more sophisticated software applications) took over many other jobs (remember bank tellers? telephone operators? service station attendants?). By the '80s, any job requiring that the same steps be performed repeatedly was disappearing—going over there or into software. Meanwhile, as the pay of most workers flattened or dropped, the pay of well-connected graduates of prestigious colleges and MBA programs—the so-called "talent" who reached the pinnacles of power in executive suites and on Wall Street—soared.

The puzzle is why so little was done to counteract these forces. Government could have given employees more bargaining power to get higher wages, especially in industries sheltered from global competition and requiring personal service: big-box retail stores, restaurants and hotel chains, and child- and eldercare, for instance. Safety nets could have been enlarged to compensate for increasing anxieties about job loss: unemployment insurance covering part-time work, wage insurance if pay drops, transition assistance to move to new jobs in new locations, insurance for communities that lose a major employer so they can lure other employers. With the gains from economic growth the nation could have provided Medicare for all, better schools, early childhood education, more affordable public universities, more extensive public transportation. And if more money was needed, taxes could have been raised on the rich.

Big, profitable companies could have been barred from laying off a large number of workers all at once, and could have been required to pay severance—say, a year of wages—to anyone they let go. Corporations whose research was subsidized by taxpayers could have been required to create jobs in the United States. The minimum wage could have been linked to inflation. And America's trading partners could have been pushed to establish minimum wages pegged to half their countries' median wages—thereby ensuring that all citizens shared in gains from trade and creating a new global middle class that would buy more of our exports.

But starting in the late 1970s, and with increasing fervor over the next three decades, government did just the opposite. It deregulated and privatized. It increased the cost of public higher education and cut public transportation. It shredded safety nets. It halved the top income tax rate from the range of 70–90 percent that prevailed during the 1950s and '60s to 28–40 percent; it allowed many of the nation's rich to treat their income as capital gains subject to no more than 15 percent tax and escape inheritance taxes altogether. At the same time, America boosted sales and payroll taxes, both of which have taken a bigger chunk out of the pay of the middle class and the poor than of the well-off.

Companies were allowed to slash jobs and wages, cut benefits and shift risks to employees (from you-can-count-on-it pensions to do-it-yourself 401(k)s, from good health coverage to soaring premiums and deductibles). They busted unions and threatened employees who tried to organize. The biggest companies went global with no more loyalty or connection to the United States than a GPS device. Washington deregulated Wall Street while insuring it against major losses, turning finance—which until recently had been the servant of American industry—into its master, demanding short-term profits over long-term growth and raking in an ever larger portion of the nation's profits. And nothing was done to impede CEO salaries from skyrocketing to more than 300 times that of the typical worker (from thirty times during the Great Prosperity of the 1950s and '60s), while the pay of financial executives and traders rose into the stratosphere.

It's too facile to blame Ronald Reagan and his Republican ilk. Democrats have been almost as reluctant to attack inequality or even to recognize it as the central economic and social problem of our age. (As Bill Clinton's labor secretary, I should know.) The reason is simple. As money has risen to the top, so has political power. Politicians are more dependent than ever on big money for their campaigns. Modern Washington is far removed from the Gilded Age, when, it's been said, the lackeys of robber barons literally deposited sacks of cash on the desks of friendly legislators. Today's cash comes in the form of ever increasing campaign donations from corporate executives and Wall Street, their ever bigger platoons of lobbyists and their hordes of PR flacks.

The Great Recession could have spawned another era of fundamental reform, just as the Great Depression did. But the financial rescue reduced immediate demands for broader reform. Obama might still have succeeded had he framed the challenge accurately. Yet in reassuring the public that the economy would return to normal, he missed a key opportunity to expose the longer-term scourge of widening inequality and its dangers. Containing the immediate financial crisis and then claiming the economy was on the mend left the public with a diffuse set of economic problems that seemed unrelated and inexplicable, as if a town's fire chief dealt with a conflagration by protecting the biggest office buildings but leaving smaller fires simmering all over town: housing foreclosures, job losses, lower earnings, less economic security, soaring pay on Wall Street and in executive suites.

Legislation to improve America's healthcare system illustrates the paradox. Initially, the nation was strongly supportive. But the president and Democratic leaders failed to link healthcare reform to the broader agenda of widely shared prosperity. So as unemployment rose through 2009, the public understandably focused its attention on the loss of jobs and earnings, to which healthcare appeared tangential. Consequently, the nation was not as actively supportive of reform as it needed to be in order to weaken the hold of Big Pharma and private health insurers, who demanded that any so-called reform improve their bottom line. The resulting law is fodder for the right, because it won't adequately control future costs and requires Americans to pay more for health insurance than they would have had the deals not been made.

Much the same has occurred with efforts to reform the financial system. The White House and Democratic leaders could have described the overarching goal as overhauling economic institutions that bestow outsize rewards on a relative few while imposing extraordinary costs and risks on almost everyone else. Instead, they defined the goal narrowly: reducing risks to the financial system caused by particular practices on Wall Street. The solution thereby shriveled to a set of technical fixes for how the Street should conduct its business.

Even the disaster in the Gulf of Mexico could have been put into the larger frame of how giant corporations use their influence to capture regulators and impose risks and costs on the broader public, and the central importance of public health and environmental safety to widespread prosperity. But here again, the administration and Democratic leaders failed to connect the dots. The disaster morphed into a technical question of how to plug the gusher and a policy discussion of how best to regulate deepwater drilling.

If nothing more is done, America's three-decade-long lurch toward widening inequality is an open invitation to a future demagogue who misconnects the dots, blaming immigrants, the poor, government, foreign nations, "socialists" or "intellectual elites" for the growing frustrations of the middle class. The major fault line in American politics will no longer be between Democrats and Republicans, liberals and conservatives. It will be between the "establishment" and an increasingly mad-as-hell populace determined to "take back America" from them. When they understand where this is heading, powerful interests that have so far resisted reform may come to see that the alternative is far worse.

A virtual pendulum underlies the American political economy. We swing from eras in which the benefits of economic growth concentrate in fewer hands to those in which the gains are more broadly shared, and then back again. We are approaching the end of one such cycle and the start of the next. The question is not whether the pendulum will swing back but how it will swing—whether with reforms that widen the circle of prosperity or with demagoguery that turns America away from the rest of the world, shrinks the economy and sets Americans against one another.

None of us can thrive in a nation divided between a small number of people receiving an ever larger share of the nation's income and wealth, and everyone else receiving a declining share. The lopsidedness not only diminishes economic growth but also tears at the social fabric of our society. The most fortunate among us who have reached the pinnacles of economic power and success depend on a stable economic and political system. That stability rests on the public's trust that the system operates in the interest of us all. Any loss of such trust threatens the well-being of everyone. We will choose reform, I believe, because we are a sensible nation, and reform is the only sensible option we have.

Robert B. Reich has served in three national administrations, most recently as secretary of labor under President Bill Clinton. He also served on President Obama's transition advisory board. His latest book is Supercapitalism.

How is it that in 2010 almost all economic indicators were better than 2012's but you said we were in a recession, but now we are in a great recovery ?

[Mr. Big Dog 10,747]

How is it that in 2010 almost all economic indicators were better than 2012's but you said we were in a recession, but now we are in a great recovery ?

The great recession ended in mid 2009 and we have been in a recovery since. The recovery is weak as is typical for recoveries from financial crisis recessions. Facts suck but they're still the facts.

Financial crisis

Why not to expect recovery anytime soon

Sep 3rd 2012, 16:32 by L.P. | LONDON

SIGNS of weakness in advanced economies seem to have taken some by surprise. In America, GDP growth slipped in the second quarter of 2012 to a revised figure of 1.7% after growing at a rate of 2% in the first. In Britain, the economy is contracting at 0.5% a year based on latest data, adding to an increasing sense of frustration felt towards the government for failing to ensure a faster recovery.

But perhaps we are suffering from memory lapse. To understand the effects of an economic crisis, you have to go back to its roots. A new study by Alan Taylor draws attention back to the causes of the 2008 financial crisis. Through a series of tests run on a sample of 14 advanced economies between 1870 and 2008, Mr Taylor establishes a link between the growth of private sector credit and the likelihood of financial crisis. The link between crisis and credit is stronger than between crises and growth in the broad money supply, the current account deficit, or an increase in public debt.

Over the 138-year timeframe Mr Taylor finds crisis preceded by the development of excess credit, as in Ireland and Spain today, are more common than crisis underpinned by excessive government borrowing, like in Greece. Fiscal strains in themselves do not tend to result in financial crisis.

When the boom period of credit expansion is coupled with growth in public-sector borrowing, however, the subsequent negative impact on the economy will be worse. Why? When a crash occurs, governments will not have the fiscal capacity to buffer the crisis due to their already stretched borrowing levels. Instead, they become forced to retrench and adopt austerity measures—which tend to drag on growth further, prolonging recession.

Carmen M. Reinhart and Kenneth S. Rogoff’s book "This Time Is Different" shows the fiscal balance is worsened during the crisis period by declining revenues and higher expenditures, due to bank bailout costs, higher transfer payments, and debt servicing. A recent Swedish case is illuminating. Before its 1991 banking crisis, Sweden operated a fiscal surplus of 3.8% of GDP. Afterwards, its deficit-to-GDP ratio grew to more than 15%. During the three years from peak-to-trough, loss of GDP per capita was more than five per cent.

Financial crisis recession will tend to result in a longer-term recessionary drag than a “normal” business cycle recession. When a regular recession is preceded by excess credit growth, Mr Taylor finds there tends to be a mild drag on GDP of 50 to 75 bps. By including public debt-to-GDP levels, there is no great variance in the effects. That challenges the assumption a high debt-to-GDP level alone will cause financial instability.

But a financial crisis recession tends to bring about a larger drag on the economy, of 100 to 150 bps. Add in a high level of public debt-to-GDP, near to 100%, and growth tends to drop by 400 bps.

According to Ms Reinhart and Mr Rogoff’s sweeping historical analysis of previous crises, recessions surrounding financial crisis are unusually long compared to normal recessions—which typically last less than a year. The 1929 banking crisis in America resulted in an almost 30% GDP decrease from peak-to-trough, that is over four years. Argentina’s 2001 financial crisis led to more than 20% of GDP loss over four years. Over the same timeframe, Finland’s banking crisis in 1991 shaved off close to 15% of GDP.

It seems likely the long-term recessionary scenario as described by Mr Taylor, Ms Reinhart, and Mr Rogoff is what economies in the West are now experiencing. Within developed markets, the financial sector occupies a larger proportion of the general economy than ever before. In the 1990s and 2000s, the level of private debt on bank balance sheets far outweighed that held by sovereigns, despite a simultaneous increase in sovereign debt levels. Given the greater severity of recession Taylor concludes is likely following a period of both private and public debt accumulation, the damaging effects could go on for some time.