tax.com: Scary New Wage Data

Scary New Wage Data

David Cay Johnston | Oct. 25, 2010 04:35 AM EDT

Now for some really scary breaking news, from the latest payroll tax data.

Every 34th wage earner in America in 2008 went all of 2009 without earning a single dollar, new data from the Social Security Administration show. Total wages, median wages, and average wages all declined, but at the very top, salaries grew more than fivefold.

Not a single news organization reported this data when it was released October 15, searches of Google and the Nexis databases show. Nor did any blog, so the citizen journalists and professional economists did no better than the newsroom pros in reporting this basic information about our economy.

The new data hold important lessons for economic growth and tax policy and take on added meaning when examined in light of tax return data back to 1950.

The story the numbers tell is one of a strengthening economic base with income growing fastest at the bottom until, in 1981, we made an abrupt change in tax and economic policy. Since then the base has fared poorly while huge economic gains piled up at the very top, along with much lower tax burdens.

A weak foundation cannot properly support a massive superstructure, as the leaning Tower of Pisa shows. The latest wage data show the disastrous results some of us warned about, although like the famous tower, the economy only lists badly and has not collapsed.

Measured in 2009 dollars, total wages fell to just above $5.9 trillion, down $215 billion from the previous year. Compared with 2007, when the economy peaked, total wages were down $313 billion or 5 percent in real terms.

The number of Americans with any wages in 2009 fell by more than 4.5 million compared with the previous year. Because the population grew by about 1 percent, the number of idle hands and minds grew by 6 million.

These figures show, far more powerfully than the official unemployment measure known as U3, how both widespread and deep the loss of jobs was in 2009. While the official unemployment rate is just under 10 percent, deeper analysis of the data by economist John Williams at http://www.shadowstats.com shows a real under- and unemployment rate of more than 22 percent.

Only 150.9 million Americans reported any wage income in 2009. That put us below 2005, when 151.6 million Americans reported wages, and only slightly ahead of 2004, when 149.4 million Americans held at least one paying job.

For those who did find work in 2009, the average wage slipped to $39,269, down $243 or 0.6 percent, compared with the previous year in 2009 dollars.

The median wage declined by the same ratio, down $159 to $26,261, meaning half of all workers made $505 a week or less. Significantly, the 2009 median wage was $37 less than in 2000.

To give this some perspective, from 1992 to 2000 the number of people earning any wages grew by 21 million, but nine years later just 2.8 million more people had any work.

These wage data, based on the Medicare flat tax on all compensation, tell us only about the number of people who earned wages and how much. They tell us nothing about whether these individuals were underemployed, had to work more than one job, earned fringe benefits, or were employed at a level commensurate with their abilities.

But they do give us a stunning picture of what’s happening at the very top of the compensation ladder in America.

The number of Americans making $50 million or more, the top income category in the data, fell from 131 in 2008 to 74 last year. But that’s only part of the story.

The average wage in this top category increased from $91.2 million in 2008 to an astonishing $518.8 million in 2009. That’s nearly $10 million in weekly pay!

You read that right. In the Great Recession year of 2009 (officially just the first half of the year), the average pay of the very highest-income Americans was more than five times their average wages and bonuses in 2008. And even though their numbers shrank by 43 percent, this group’s total compensation was 3.2 times larger in 2009 than in 2008, accounting for 0.6 percent of all pay. These 74 people made as much as the 19 million lowest-paid people in America, who constitute one in every eight workers.

Average Median Wages, 1990 to 2009 (in 2009$)

Back in 1994, when the top category the government reported on was $20 million or more of compensation, only 25 people were in that rarefied atmosphere, and their average earnings came to just under $45 million in 2009 dollars.

What does this all mean? It is the latest, and in this case quite dramatic, evidence that our economic policies in Washington are undermining the nation as a whole.We have created a tax system that changes continually as politicians manipulate it to extract campaign donations. We have enabled ‘‘free trade’’ that is nothing of the sort, but rather tax-subsidized mechanisms that encourage American manufacturers to close their domestic factories, fire workers, and then use cheap labor in China for products they send right back to the United States. This has created enormous downward pressure on wages, and not just for factory workers.

Combined with government policies that have reduced the share of private-sector workers in unions by more than two-thirds — while our competitors in Canada, Europe, and Japan continue to have highly unionized workforces — the net effect has been disastrous for the vast majority of American workers. And of course, less money earned from labor translates into less money to finance the United States of America.

This systematic destruction of the working class and middle class has come during an era notable for celebrating the super-rich just for being super-rich. From the Forbes 400 launch in 1982 and Robin Leach’s Lifestyles of the Rich and Famous in 1984 to the faux reality of the multiplying Real Housewives shows, money voyeurism has grown in tandem with stagnant to falling incomes for the vast majority. There has also been huge income growth at the top and the economic children of income inequality: budget deficits and malign neglect of our commonwealth.

This orgy of money exhibitionism has created a society in which commas — it takes three to be a billionaire — count more than character. We have gone so far down this path that we bailed out bankers, allowing them to keep the untaxed wealth in their deferral accounts and, with a few exceptions, retaining shareholder value, while wiping out investors in General Motors and Chrysler as a condition of their bailouts. And while autoworkers had to take severe pay cuts, bonus time on Wall Street is at new record levels.

The American economy in the three decades before Ronald Reagan’s election did not produce a mass audience for celebrating wealth. In that era, books that emphasized character sold better than today.

During the years from 1950 to 1980, the share of total income going to those at the top declined, and the real incomes of the vast majority grew much more quickly than did nearly all incomes at the very top.

In those years, America had the money, and vision, to invest in the future through education, research, and infrastructure.

In nearly three decades of Reaganism, however, we have become a society of mine-here-and-now. Now what we hear from Washington is about today, not tomorrow. War without sacrifice (or a congressional declaration). Savings without interest. More government services while lowering taxes.

In this era, the incomes of the vast majority have barely grown while incomes at the top have soared. Reaganism has trimmed the base of the income ladder while placing a much heavier weight on the top. Narrowing the base while adding weight to the apex does not make a stable structure. Here are some numbers that may surprise those ages 50 and under, taken from the latest analysis of tax return data by Emmanuel Saez and Thomas Piketty, who have won worldwide praise for their groundbreaking work examining changes in income distribution:

Bottom 90 Percent Income Share Changes

1950	64.44 percent
1980	65.37 percent
Change	+0.93 percentage points increase
2008 Change	51.77 percent
Since 1980	-13.59 percentage points decrease

So a three-decade era in which the bottom 90 percent increased their share of all income slightly was followed by a 28-year period at whose end income had fallen sharply. The 2009 data show that it has only gotten worse since then.

While the vast majority must get by on a much smaller share of the national income pie, the re-slicing resulted in concentrated benefits at the top. The top 10 percent enjoyed a nearly 40 percent increase in their share of the income pie. But within the top 10 percent, the re-slicing of the income pie between 1980 and 2008 was also heavily weighted to the top.

Those in the 90th to 95th percentile income category saw their income share rise by just 0.24 percentage points. The 95th to 99th income category got 2.43 percentage points more slice of the national income pie.

That means that of the 13.59 percentage points of increased pie going to the top 10 percent of Americans, the top 1 percent earned almost 11 percentage points of it. Now look at how the pie was sliced within the top 1 percent:

Income Share Gains, in Percentage Points,
in 2008 Over 1980 for Top 1% of Earners

99 to 99.5	99.5 to 99.9	99.9 to 99.99	99.99 to 100
1.21	2.73	3.23	3.76

Notice that as you move to the right, the numbers of taxpayers shrink, but the percentage points grow. The theme: more and more for fewer and fewer.

Income shares tell us about how groups are doing relative to one another. But you can’t spend income shares, so let’s look at incomes.

From 1950 to 1980, the average income of the bottom 90 percent grew tremendously. Not so since then:

1950
1980
Increase
% Increase

$17,719
$30,941
$13,222
74.6%

1980
2008
Increase
% Increase

$30,941
$31,244
$303
1%

Had income growth from 1950 to 1980 continued at the same rate for the next 28 years, the average income of the bottom 90 percent in 2008 would have been 68 percent higher, instead of just 1 percent more.

That would have meant an average income for the vast majority of $52,051, or $21,110 more than actual 2008 incomes. How different America would be today if the typical family had $406 more each week — less debt, more savings, and more consumption.

So how about the top? This is where the changes in incomes in these two eras become interesting, very interesting.

What the figures below show is that the closer you got to the top of the ladder in the era from 1950 to 1980, the smaller your relative increase in income, except for the very top, whose gains were slightly more than those of the bottom 90 percent. Since 1980, however, the bottom 90 percent of Americans have seen their incomes go nowhere, while on the highest steps of the income ladder, the further up you are, the greater your gains.

Add in today’s decreased number of jobs, and all these data add up to policies that can be described with one word: failed.

Comments (37)

Can you give a link or cite for the Social Security data you're discussing?
Thanks!

Posted by JW Mason on Oct. 25, 2010 at 03:11 PM

Not to worry. Bloomberg has a story today about how "consumer spending" will
soon take us up and out of the recession.

Posted by Chris Marquesas on Oct. 25, 2010 at 03:19 PM

Is this mostly the result of management stealing from shareholders because of
our ineffective and incestuous boards and the way board members fill each
other�s pockets? Can anyone tell me?

Posted by Lee Zehrer on Oct. 25, 2010 at 03:48 PM

What is the title of the SSA payroll tax data report released Oct. 15 2010
referenced in Scary New . . . .

Posted by Melody Specht Kelly on Oct. 25, 2010 at 03:49 PM

Thank you for a concise summary, backed by irrefutable data, of 50 years of
economic treason. Here's wishing that both parties lose in November.

Posted by Joe M. on Oct. 25, 2010 at 03:55 PM

screw the rich. may they all burn in
hell eternally. greedy bastards all of
them

Posted by nick diamond on Oct. 25, 2010 at 04:20 PM

I'd like to work up some additional statistics. Where did you get your data?

Posted by Jeremy McMillan on Oct. 25, 2010 at 04:56 PM

Evil 'Reaganism' really? It couldn't have anything to do with bringing oh one
to two billion Chinese, Indian and other workers in at the low end of the
labor scale. That 'evil' gave billions a better life free from stupid
dictators and in the process messed with the wage scale and buying power of
similarly skilled workers in the US and elsewhere. Not that there isn't
greed at the top end of the scale but don't ruin your argument and distort the
truth by ignoring other factors.

Posted by Steve adams on Oct. 25, 2010 at 08:48 PM

Columnist here:

To see the payroll data go to

ssa.gov/cgi-bin/netcomp.cgi?year=2009

change the last four digits for years back to 1990

Posted by David Cay Johnston on Oct. 25, 2010 at 09:12 PM

I have not seen either a list of 74 names (or names of Households) nor what
institutions they may be associated with. The later should be of utmost
importance.

Posted by Jim Kistner Jr on Oct. 25, 2010 at 10:13 PM

David, I love you, but your posts are TOO LONG. Could you please clean them up
a bit!

Posted by Jacob A Geller on Oct. 25, 2010 at 10:50 PM

"tax-subsidized mechanisms that encourage American manufacturers..." I'm sure
you've written about this and the remainder of that paragraph. I'm not
disbelieving but would like some details. Can you or one of the commenters
point me to a source or two? Thank you. Frank

Posted by Frank de Libero on Oct. 25, 2010 at 11:13 PM

Great scoop David. Funny that both Treasury and the Census Bureau provide less
precise data than the Social Security Administration (its like somebody forgot
to "clean up" the data over there). :o)

Of course, these numbers understate the extent of income inequality. The SSA
currently tracks only wage income, the new Unearned Income Medicare
Contribution created by the new Healthcare bill doesn't take effect until
2013. Even then, unrealized capital gains will be uncounted (and untaxed).

Posted by beo wulf on Oct. 26, 2010 at 02:17 AM

Interesting article. I am curious if you have inflation data for the same time
periods you reference.

Posted by Jim B. on Oct. 26, 2010 at 08:27 AM

Boy, where to begin....

How is wealth created? How are jobs created? And just how is the relative worth
of one's labor determined? If one unravels these enigmas, obfuscated by huge
smokescreens such as yours, one finds that there are natural forces at play.
The "base" creates jobs? Does dirt create trees?

We can no more control the natural economic forces than we can the sun's
temperature. In fact, there is a large body of economic theory which concludes
the greater the attempt to effect a certain economic outcome, the less likely
that outcome is achieved.

Thus, it is far better for workers to keep more of their earnings, not less.

Call it Reaganism, but that's really a red herring, isn't it?

One more thing: your "pie." did it get bigger or smaller.

If one is more concerned about the wealth of others, one will never be happy,
as someone will always have "more."

No, the America I was raised in taught me it was far better to develop one's
talents to achieve one's purpose in life, regardless of income.

Posted by Bubba Schwartz on Oct. 26, 2010 at 09:16 AM

Columnist here:

Jim Kistner Jr., back in the mid 1920s tax returns were public record and
newspapers wrote stories about who paid how much and how much income they
reported to the dollar. Only people with very big incomes paid income tax in
those days. Then Congress made tax returns secret.
�
The rules on pay disclosure at companies with public traded stock or bonds
apply only to specific named officers with company-wide duties. Had World War
II been a business you would not have known how much the two most important
generals, Eisenhower and MacArthur, made because they did not have war-wide
responsibilities.
�
So, sorry, no names. The only person we know by name is probably on the list is
Larry Ellison of Oracle because he was paid $84.5 million that year. But
through deferrals and techniques that let executives turn compensation into
capital gains he might not be.
�
�
Frank de Libero, this subject indeed has been thoroughly covered at tax.com, in
our subscription publications Tax Notes, Tax Notes International and (maybe)
State Tax Notes. Congress has held hearings on it. I can�t point you to one
specific article, but maybe the moderator here can.
�
�
Jim B., the Bureau of Labor Statistics has a handy inflation calculator at
http://data.bls.gov/cgi-bin/cpicalc.pl
�
The tables in my column that are in .pdf format with my column indicate the
inflation adjustments to 2009 dollars where such an adjustment is appropriate,
as in the median and average wage. I did not adjust for the 2007 to 2009 data
on top wages because the numbers are so large it is not significant.
�
The SSA tables on wages are in nominal dollars, not adjusted.
�

Bubba Schwartz,

Did you read my column? I ask because you missed my point about
character counting less than financial commas to many people today? Or about
how shifts in entertainment offerings reflect this shift, made in your last
point.

You write about �natural forces� as if they exist in a vacuum. They do
not.

Economies have rules and those rules have a huge influence on the
distribution of benefits. In my books and other columns I have shown how
specific rules raise or lower incomes, for example. There are hundreds of
thousands of pages of these rules in THE FINE PRINT, the title of my next book.
These rules distort economic outcomes. Hardly anyone but the people who get
rich off them through what economists call �rent seeking� has ever read them,
much less explained how they distort the economy.

When government makes huge interest-free loans to some, when it limits
how much the vast majority can save on a tax-favored basis but lets those at
the top save unlimited amounts, when it lets some workers defer paying their
taxes for years or decades and then applies rates lower than that of the median
income worker the outcomes are heavily influenced by government policy.

The current federal income and payroll tax burden on a single worker
who made the median wage of $26,000 in 2007 was 21.6%, but by the same measure
for the 400 highest income taxpayers, who made almost a million dollars a day,
this tax burden was just 16.6%.

Why do you think corporations spend all that money in Washington? They
did not always run huge lobbying shops. They do it to win favors that shape,
influence and in some cases rig markets, and that in turn alters how the
benefits of the economy and the burdens of government are distributed. The data
show that the tectonic shifts have taken place since the Reagan administration
began, with its new theory about wealth creation, jobs and taxes. The data show
that these policies have not worked out well for the vast majority, but they
have helped a relative few really prosper.

�

Posted by David Cay Johnston on Oct. 26, 2010 at 10:47 AM

Ditto to what Jeremy McMillian said.

Despite all the bad that came from globalization and the excesses resulting
from financial liberalization, the good that came out of it include lifting
something like 20% of humanity out of abject poverty in the 3rd world.

There isn't a skyscraper in Shanghai or a factory in Sao Paulo that wasn't
'financed' somehow.

Part of what the developed world is suffering is a long-overdue comeuppance
caused by living far beyond our means for far too many years.

Evolution and survival IS Darwinian...

IMHO

Posted by Noel Chun on Oct. 26, 2010 at 10:51 AM

Are the subsidized Chinese and Indian industries sustainable? After our next
crash, we won't be buying a lot of Chinese electronics or talking to Indian
customer service reps about our account balances. Both of those depend on the
working and middle class having some money.

I love the altruistic angle some of you commenters are pushing. Was India a
dictatorship between 1950 and 1980? Is China a free state now? Come on! Our
economy is responsible for improving quality of life in China and India since
when? If anything, we should take responsibility for the economies US
lawmakers, executives and investors have been destroying: Mexico, South and
Central America, and any African "republic" where a US oil company operates.

Posted by Jim O. on Oct. 26, 2010 at 11:31 AM

To Bubba Schwartz:

Yes, DIRT creates TREES

Posted by Sean Madden on Oct. 26, 2010 at 11:48 AM

David, PLEASE convert your tables and graphs to images rather than PDFs!

Posted by david b on Oct. 26, 2010 at 12:00 PM

I read your book "Free Lunch" and I found the information therein compelling.
Having just finished your article on Tax.com, I am wondering what it will take
for the American people to hear and understand what you are saying? I only hope
that they do so sooner rather than later, and I applaud you for publicizing
this information and attempting to inform the people about this dire situation.
Thank you, regards, Christopher G. Walker

Posted by Christopher G. Walker on Oct. 26, 2010 at 01:11 PM

One easy little act of solidarity, could resolve these problems. If we ALL
quit paying our mortgages, in sympathy for those who have, are, and will, have
their homes repossessed, the income stream sustaining our robbers would be
greatly reduced. Maybe enough to slay them.

Posted by Jane a. m. on Oct. 26, 2010 at 02:23 PM

It's a good blog post, but I don't get what you are suggesting? When an
American worker making, for example, rubber seals gets paid $13/hr, and his
Indian counterpart makes $3/day for the same product, how could you not expect
a massive stagnation of wages? Further, how could you not expect a massive
increase in pay for the guy who figured out how to manage a China supply chain?

How will noodling around with tax policy do ANYTHING to make Herr Schmidt
willing to buy his o-rings from very pricey Jamal instead of very cheap Suresh?

Posted by Jo Gourly on Oct. 26, 2010 at 04:24 PM

If you don't earn any wages, are you still counted as a wage earner? Former
wage earner? Honorary?

Posted by Richard Warnick on Oct. 26, 2010 at 05:21 PM

The America I want to live in cares more about what my neighbor doesn't have
than what I don't have.

How we treat those less fortunate than ourselves -- supply side be damned -- is
much more important than what we keep ourselves.

Posted by Richard C. in PA on Oct. 26, 2010 at 06:15 PM

To Bubba etal, I wonder if you read or understood the part of the blog
regarding destabilizing the base. How much further would you suggest income
inequality can be pushed? The point is not that we could completely control
global forces pushing down wages. But we certainly have it in our power to
control how the total wage pie in America is distributed, should we choose to
do so. Is it in our best interests as a society to have such a chasm continuing
to open between a very few and the vast majority?

Posted by Ralph S. on Oct. 26, 2010 at 07:15 PM

Columnist here again:

Noel Chun, I think the generosity of millions of American blue collar
workers who willingly and deliberately gave up their jobs so the poor in the
police state called China and in the democracy called India, as well as other
impoverished nations, can have a better economic life is the greatest untold
story of human kindness in history.

Oh, but wait, they didn�t act out of altruism. In fact, they did not
act at all. They were fired.

The trade rules, like tax rules, tend to be read by very few people and to be
shaped mostly by campaign contributions to politicians, who pass laws and
approve treaties. The subsidies for moving work offshore come from our elected
officials, who depend on those getting the subsidies for the money to get
elected.

The duty of a sovereign government is first to its own people, not to
the people of another country. Read Adam Smith on policies that benefit the
majority being by their nature good policies. What is going on here is not
Darwinian economics, but bought-and-paid for economics.

Jim O., I am sure you appreciate my satirical comments above, but you
also make an important point without quite explicitly stating it, capitalism
and freedom are not linked (see China and Singapore) nor are capitalism and
democracy (see India), no matter how much some people say they are.

David B., if it were in my power the tables would not be in pdf format
and they are not if you subscribe to Tax Notes! But with this comment I have
taken up your point with the editors, who have to figure out how to do quality
work in this nonprofit enterprise with almost no advertising to subsidize the
news. Journalism, quality journalism, is expensive, but somehow Tax Analysts
manages to run one of the bigger newsrooms in Washington and has correspondents
around the world.

Posted by David Cay Johnston on Oct. 26, 2010 at 07:57 PM

Hey Jim O...

I just worked up a Gini Coefficient for these SSA numbers. Guess what? The US
is at 0.608, right there with Africa and Central America.

http://thinkbait.aphor.net/2010/10/why-us-economy-will-be-in-toilet-for.html

Posted by Jeremy McMillan on Oct. 26, 2010 at 09:35 PM

All the talk about how globalization has magically created a magic new future
for a bunch of formerly terribly poor people overlooks David's point entirely:

The rich are getting richer in leaps and bounds.

The ultra poor are staying poor.

Those who are working in slave labor camps to feed the global beast's hunger
for cheap labor may be doing better than X years ago...but what are the costs
in environmental and social terms? Is an iPod and car any substitute for
demolished ecosystems and life in the hell of a major city?

The middle class is being emptied out, and it seems that most people side more
with the ultra rich and their globalization than with these workers.

Don't worry. Oil is about to get far more expensive. Food too. And this should
provide much more fodder for hating American workers, who organized in the 20th
century for a share of the wealth they created for their masters. How dare
they!

Posted by Wanda Wellstone on Oct. 27, 2010 at 06:34 AM

Mr. Johnston, if the human species survives, Posterity is going to build
statues to honor you. They will place them in The Hall of Heroes To Humanity.
You are a living treasure who writes gems, Sir. Can't wait to read your
upcoming book, though what I really want is for there to be no more necessity
for you to continue working so hard to enlighten sleeping humanity.

In that vein, Bubba has questions: "How is wealth created? How are jobs
created? And just how is the relative worth of one's labor determined? If one
unravels these enigmas...one finds that there are natural forces at play. The
"base" creates jobs? Does dirt create trees?"

And I have answers: Only work creates wealth. Anyone who is not yet certain
that is true, now is an excellent time for you to take a dollar bill out of
your wallet - and tell it to fix you a sandwich.

Your dollar bill will never even make you a cup of tea.

Obviously, it takes the sacrifice of an individual's time and energy to create
wealth (goods and services) - and there is no arguing against that, unless of
course you deny the natural reality of the situation humans living in physical
bodies find themselves in.

So now ask yourself: Is there any possible way any human being can possibly be
sacrificing a billion times the hours and energies to working than the average
person working average hard sacrifices?

Can anyone be sacrificing a million times the time? A thousand times the
time? A hundred times the time? A dozen times the time? Even 3 or 4 times
the time?

Do you begin to see the total irrationality and unjustness of allowing
limitless personal fortunes, when individual contribution to the pool of wealth
is inarguably limited by nature's decree??

Via the onset of division of labor, leading to the necessity to trade to remix
the specialized goods and services, reward became divorced from sacrifice: this
is humanity's biggest-ever logic-whoopsie...and the source of all our troubles.

Next clarification: Only demand creates jobs. To paraphrase Jack Metzgar: It�s
true that rich people invest in companies who hire workers and pay them a wage,
but to say these rich create jobs is like saying that the light coming from the
ceiling of my office is caused by the light switch on the wall. Without
turning the switch on, there will be no light, yes, but the ultimate creator of
that light tracks back to a power station and a national electric grid that
hooks into the wiring behind the walls of my building. In an economy, consumer
demand is the power station, the grid, and most of the wiring. If there is no
consumer demand, businesses have zero reason to hire workers�just as there is
no reason to switch on the light if nobody is using the room.

So - who would have guessed - it IS the working people who create their own
jobs! Wow, what a perspective-shifting revelation!

Next, from the Conceptual Guerilla: "Adam Smith said that once a small elite
had monopolized ownership of land and materials, they would drive wages down to
the level of subsistence. It is the "appropriation of land and stock" - Smith's
terminology - that creates the "market force" that reduces the market value of
labor.

Now, that doesn't mean that certain derivative functions - management,
distribution, and even investment - don't exist, and that labor cannot contract
for the delivery of those derivative functions. If you are the labor producing
automobiles, or any other good or service, a sales force selling those goods
and services is probably necessary. Likewise, certain organizational functions
- we call it "management" - might be useful. Even "investment" has a place,
since the goods and services needed to build and equip a shop must be paid for.

But notice that those derivative functions serve the labor that produces the
value. It is distribution, management and investment that are "costs of doing
business." Productive labor is the business that has these costs. Our
contemporary business model has stood this on its head: the "cost" is
productive labor in an arrangement where "ownership" trumps "production", and
where the owner of materials and facilities is seen as the central player.
Owners have a "natural right" to reduce their "costs" and maximize their
profits. Productive labor is not perceived as having any such right.

But once we see through the upside-down arguments it is plain that productive
labor has the same, and indeed a superior right to maximize its profit, and
that the laws and government have an entirely legitimate function in protecting
these fundamental rights of labor -- fundamental rights that have not hitherto
been recognized.

As a final observation, notice that recognition and protection of the
fundamental rights of labor is entirely consistent with a "market economy,"
where "market forces" are understood to be shaped by certain legal and
governmental constructs. The government has an absolute right and indeed
obligation to shape the fundamental rules of the market in such as way as to
guarantee labor its fundamental rights.�

Once people take to heart what these truthful things mean, we have won most of
the battle against the extreme inequality that is killing us all and this
planet.

Bottom line, the human species will either rid itself of the geno-sadistic idea
to allow unlimited personal fortunes, or we will succumb to the results of
having the next and the next and the next wealthpower giants, ad infinitum
until the violence attached to the injustice sets off the global bombs.

Murder the idea to allow the unlimited personal fortunes capitalism we have
now, and switch to fairpay justice capitalism, or you will get history on
repeat on steroids kaboom.

Posted by Xavier Onassis on Oct. 27, 2010 at 10:05 AM

By the way, my screenname is pronounced 'Save yer own -uh - keesters'.

The rich get richer while the poor get poorer means precisely this: The rich
are getting more and more for a unit of work while the poor are getting less
and less for the same unit of work. Never forget that work = an individual's
sacrifice of time and energies.

The pool of wealth is FINITE: the number of workers working is finite, the
hours they can sacrifice to working are finite, so the amount in the pool of
wealth is finite. (People who try to deny that are confusing the actual with
the potential for that number to grow or shrink.) This means that overpay has
nowhere to come from but from underpay. Overpay-underpay is legal theft. And
every theft comes with an angry person attached.

Equality breeds no strife.

James Madison: The purpose of government is justice.

E=mc2 is not a fact subject to emotive persuasion.

Add it up, humanity. Use your acorns to save your bacon. Campaign for fairpay
justice and get a golden age of sustainable global peace and plenty, or deprive
every future generation the chance to exist.

�The patience of the oppressed has always been the most inexplicable, as well
as probably the most important, fact in all history.� -Author Amos Elon from
The Pity of it All

Posted by Xavier Onassis on Oct. 27, 2010 at 10:34 AM

One more thing:

The original great American Dream of Freedom was this: The great dream of
FREEDOM FROM the TYRANNY of the European moneypowers.

It was NEVER the dream of freedom to grow limitlessly rich at the expense of
your neighbors.

Americans today have quite forgotten the very reason their founders and
ancestors created America.

Can we all say "oops"?

Posted by Xavier Onassis on Oct. 27, 2010 at 10:55 AM

One might reasonably guess that those in the upper decile are probably
deferring some of their wages in 401(k) accounts -- and at a higher rate than
lower income workers.

Xavier Onassis (and others), you might appreciate the ideas of Henry George.
There is a 39-page synopsis of
"Progress and Poverty" at
http://progpov.menaceofprivilege.com/notes_with_intro.pdf, and I commend it to
your attention.

Posted by Wyn Achenbaum on Oct. 27, 2010 at 12:31 PM

I am no economist but I question the unemployment rate at 22%. I think it is
much more than that. The difference between the current state of our nations
disaster and the "Great" depression is that during the first depression there
was no unemployment for people. If you take into account those on unemployment
and those, like myself, who were contract workers and did not pay into
unemployment (therefore don't qualify) I believe the rate is more like 45%.

Posted by Sharon D. on Oct. 27, 2010 at 02:06 PM

Just want to thank you for all your important work. I wish that it was not
necessary, though.

Posted by Kellie Brown on Oct. 27, 2010 at 02:51 PM

You go, Wyn. Funny you should mention my old pal Henry George. I learned a
lot reading him. He'll be in that Heroes Hall, too, someday. I voted early on
Monday, and good Henry G actually got a few write-in votes on my ballot.

As thanks for giving people that link, Wyn, I'll give you another one (a very
short and very little-known Mark Twain piece) just as useful for helping us all
unlearn what simply isn't true:

http://www.envisioneer.net/RainForest/

You're going to love it.

Sharon, being contracted, you're paying taxes at a higher proportional rate
than any other group, right? Seeing as how you pay double in for your Soc.
Sec.?

Posted by Xavier Onassis on Oct. 27, 2010 at 05:03 PM

Xavier Onassis, thanks for the kind words. But more, thank you for reminding us
that the Founders were concerned first and foremost with preventing tyranny,
oppression and policies that retard the human spirit.

Sharon D., the 22% figure is what John Williams calculates by taking U3 (people
who say they are workers who are out of work) and adding in people who want
full-time work but cannot find it or have given up looking for now (U-6, which
is at about 17%) plus adjustments using older standards that Williams thinks
remain valid. His 22% figure is, as I wrote, of UN- and UNDER- employment.

Reasonable people can disagree on the ShadowStats number, but I think it is
obvious we have legions of people who could be doing more and and making more.
Available labor is a terrible thing to waste.

Posted by David Cay Johnston on Oct. 27, 2010 at 07:46 PM

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