Is America Really Broke?
By Jim Harrison, UWUA National Representative Region IV and Steve Wyatt, UAW
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Congressman Ron Paul: “America is Broke”, – November 15, 2012
Is America really broke?
Are you paying too much in taxes? If so, why?
How is wealth divided within the U.S ?
What are the main contributors to our growing national debt? Are Social Security, Medicare, Public Employee wages and benefits, and social spending really the cause of the debt?
How has democratic debate regarding economic policy changed? Why?
The next 5 issues of the UWUA E-News will examine these questions and offer an economic strategy and policy for working families to consider.
- America is not broke
- The value of all goods and services produced within the United States is almost $16 Trillion.
- We produce (and sell) almost double that of China, 2.5 x that of Japan, 8X that of India and about equal to all of the European economies combined.
- In fact, the U.S. produces about 25% of all of the world’s wealth.
- 2012 Corporate After Tax Profits totaled $$1.7 Trillion!
- Corporate Profits Have Skyrocketed Over Last Three Years.
- After dipping during the Great Recession, corporate profits have now zoomed past their pre-recession levels.
- After-tax profits and corporate profits as a share of gross domestic product (GDP) are now higher than they were in the middle of the last decade.
- Despite massive profit gains, however, corporations are adding more jobs overseas than they are in the United States and paying one of the lowest effective tax rates in the developed world.
- Corporate profits have NEVER been higher!
- SO, NO AMERICA IS NOT BROKE — NATIONAL GDP AND PRIVATE CORPORATE PROFITS ARE AT RECORD LEVELS!
- GDP and Corporate Profits are at record levels because American workers are the most productive in the world.
- American workers stay longer in the office, at the factory or on the farm than their counterparts in Europe and most other rich nations, and they produce more per person over the year.
- They also get more done per hour than everyone but the Norwegians, according to a U.N. report, which said the United States “leads the world in labor productivity.“
U.S. productivity increased twice as fast in 2009 as it had in 2008, and twice as fast again in 2010: workforce down, output up, and voilá! No wonder corporate profits are up 22 percent since 2007, according to a new report by the Economic Policy Institute.
To repeat: Up. Twenty-two. Percent.
- Hmmmm? If GDP is double that of China and even higher when compared to the rest of the world —– and American corporations are making more profit than at anytime in history, where is all of the money going?
- We know it’s not going to working families.
- A key feature of the labor market since 1973 – one that was not present in prior decades – has been a stunning disconnect between the economy’s potential for improved pay, and the reality of stunted pay growth.
- Since 2000 productivity has grown 22.8%, but real compensation has stagnated across the board.
- Average hourly earnings when adjusted for inflation haven’t increased in 30 years. In other words, YOU HAVEN’T HAD A RAISE IN 30 YEARS!
- Stagnant wage and benefit growth has not been due to poor overall economic performance; nor has it been inevitable.
- Wage and benefit growth stagnated because the economy, as structured by the rules in place, no longer ensures that workers pay rises in tandem with productivity.
Where is all of the $$$$ going ?
- CEO overcompensation hurts average Americans. It transfers wealth upward from employees and shareholders to already affluent top executives.
- The CEO of an S&P 500 Index company made, on average, 380 times the average wages of U.S. workers in 2011.
- That compares to averages of Japanese or German CEO’s 12X the average worker, U.K. 22x, or Canadian 20X.
- Why the difference in the U.S. ? We have no culture of shame about excess. In fact, there is increasing adulation for the lives of the rich and famous. Unfortunately, this disparity takes billions of dollars out of the economy.
- We’ve really seen a “tale of two economies” in the United States since the mid 1970s. CEO’s and people with lots of money invested in the stock market have done quite well. Meanwhile, average workers have to contend with stagnating wages, rising job insecurity, and burdensome debt.
- America is not broke – not by a long shot. The country is awash in wealth and cash. It’s just not in your hands. It has been transferred to a few.
- Think of how great America could be if instead of loading up the already massive wealth of a few – we could distribute more of the rising GDP and record corporate profits to working families. Consumers would be created, more products sold, therefore needing even greater production, which means creating real jobs – and creating even more consumers. THAT’S JOB SECURITY!
- Today, just 400 Americans have more wealth than the bottom 155 million combined. Let’s say that again – 400 obscenely rich people, most of whom benefited from the multi-trillion dollar taxpayer financed bailout of 2008 now have more money, stocks, and property than 155 million combined.
- Speaking of stocks; the stock market has re-bounded solidly from the 2007 meltdown. That’s good for our pension funds and the few shares of stock workers may own. It’s GREAT for the institutional investors, insurance companies, large banks, and the mega rich.
How has America changed?
- For 155 years (1820 – 1975) for every decade productivity increased. As productivity increased, so did family income. That was the “social contract”. If you work hard you shared in the increase of productivity and our nations increasing wealth.
- During the late 70s and throughout the 80s things changed.
- Productivity continues to increase, but workers wages flat-lined.
- We are the first generation in American history that isn’t creating a better quality of life for the next generation.
- The root cause of declining wages is simply – high unemployment. There are currently 23 million workers either unemployed, involuntarily working part-time, or discouraged from finding work because of long-term unemployment.
- With millions looking for work – and few employment opportunities, it’s no surprise that the cost of labor is declining.
- If we want to “live’ the American Dream we must give a real priority to creating jobs.
Our next issue will focus on examining U.S. tax policy and trends
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