Big Lie: America Doesn’t Have #1 Richest Middle-Class in the World…We’re Ranked 27th!

AlterNet [1] / By Les Leopold [2]  June 18, 2013  |

Excerpt

America is the richest country on Earth. We have the most millionaires, the most billionaires and our wealthiest citizens have garnered more of the planet’s riches than any other group in the world. We even have hedge fund managers who make in one hour as much as the average family makes in 21 years! This opulence is supposed to trickle down to the rest of us, improving the lives of everyday Americans. At least that’s what free-market cheerleaders repeatedly promise us. Unfortunately, it’s a lie, one of the biggest ever perpetrated on the American people. Our middle class is falling further and further behind in comparison to the rest of the world. We keep hearing that America is number one. Well, when it comes to middle-class wealth, we’re number 27….Wealth is measured by the total sum of all our assets (homes, bank accounts, stocks, bonds etc.) minus our liabilities (outstanding loans and other debts). It the best indicator we have for individual and family prosperity…

Full text

America is the richest country on Earth. We have the most millionaires, the most billionaires and our wealthiest citizens have garnered more of the planet’s riches than any other group in the world. We even have hedge fund managers who make in one hour as much as the average family makes in 21 years!

This opulence is supposed to trickle down to the rest of us, improving the lives of everyday Americans. At least that’s what free-market cheerleaders repeatedly promise us.

Unfortunately, it’s a lie, one of the biggest ever perpetrated on the American people.

Our middle class is falling further and further behind in comparison to the rest of the world. We keep hearing that America is number one. Well, when it comes to middle-class wealth, we’re number 27.

The most telling comparative measurement is median wealth (per adult). It describes the amount of wealth accumulated by the person precisely in the middle of the wealth distribution—50 percent of the adult population has more wealth, while 50 percent has less. You can’t get more middle than that.

Wealth is measured by the total sum of all our assets (homes, bank accounts, stocks, bonds etc.) minus our liabilities (outstanding loans and other debts). It the best indicator we have for individual and family prosperity. While the never-ending accumulation of wealth may be wrecking the planet, wealth also provides basic security, especially in a country like ours with such skimpy social programs. Wealth allows us to survive periods of economic turmoil. Wealth allows our children to go to college without incurring crippling debts, or to get help for the down payment on their first homes. As Billie Holiday sings, “God bless the child that’s got his own.”

Well, it’s a sad song. As the chart below shows, there are 26 other countries with a median wealth higher than ours (and the relative reduction of U.S. median wealth has done nothing to make our economy more sustainable).
Why?

Here’s a starter list:

  • We don’t have real universal healthcare. We pay more and still have poorer health outcomes than all other industrialized countries. Should a serious illness strike, we also can become impoverished.
  • Weak labor laws undermine unions and give large corporations more power to keep wages and benefits down. Unions now represent less than 7 percent of all private sector workers, the lowest ever recorded.
  • Our minimum wage is pathetic, especially in comparison to other developed nations [3]. (We’re # 13.) Nobody can live decently on $7.25 an hour. Our poverty-level minimum wage puts downward pressure on the wages of all working people. And while we secure important victories for a few unpaid sick days, most other developed nations provide a month of guaranteed paid vacations as well as many paid sick days.
  • Wall Street is out of control. Once deregulation started 30 years ago, money has gushed to the top as Wall Street was free to find more and more unethical ways to fleece us.
  • Higher education puts our kids into debt. In most other countries higher education is practically tuition-free. Indebted students are not likely to accumulate wealth anytime soon.
  • It’s hard to improve your station in life if you’re in prison, often due to drug-related charges that don’t even exist in other developed nations. In fact, we have the largest prison population in the entire world, and we have the highest percentage of minorities imprisoned. “In major cities across the country, 80% of young African Americans now have criminal records” (from Michelle Alexander’s 2010 book, The New Jim Crow: Mass Incarceration in the Age of Colorblindness).
  • Our tax structures favor the rich and their corporations that no longer pay their fair share. They move money to foreign tax havens, they create and use tax loopholes, and they fight to make sure the source of most of their wealth—capital gains—is taxed at low rates. Meanwhile the rest of us are pressed to make up the difference or suffer deteriorating public services.
  • The wealthy dominate politics. Nowhere else in the developed world are the rich and their corporations able to buy elections with such impunity.
  • Big Money dominates the media. The real story about how we’re getting ripped off is hidden in a blizzard of BS that comes from all the major media outlets…brought to you by….
  • America encourages globalization of production so that workers here are in constant competition with the lower-wage workers all over the world as well as with highly automated techonologies.

Is there one cause of the middle-class collapse that rises above all others?

Yes. The International Labor organization produced a remarkable study (Global Wage Report 2012-13) [4] that sorts out the causes of why wages have remained stagnant while elite incomes have soared. The report compares key causal explanations like declining bargaining power of unions, porous social safety nets, globalization, new technologies and financialization.

Guess which one had the biggest impact on the growing split between the 1 percent and the 99 percent?

Financialization!

What is that? Economist Gerald Epstein offers us a working definition [5]:

“Financialization means the increasing role of financial motives, financial markets, financial actors and financial institutions in the operation of the domestic and international economies.”

This includes such trends as:

  • The corporate change during the 1980s to make shareholder value the ultimate goal.
  • The deregulation of Wall Street that allowed for the creation of a vast array of new financial instruments for gambling.
  • Allowing private equity firm to buy companies, load them up with debt, extract enormous returns, and then kiss them goodbye.
  • The growth of hedge funds that suck productive wealth out of the economy.
  • The myriad of barely regulated world financial markets that finance the globalization of production, combined with so-called “free trade” agreements.
  • The increased share of all corporate profits that go to the financial sector.
  • The ever increasing size of too-big-to-fail banks.
  • The fact that many of our best students rush to Wall Street instead of careers in science, medicine or education.

In short, financialization is when making money from money becomes more important that providing real goods and services. Here’s a chart that says it all. Once we unleashed Wall Street, their salaries shot up, while everyone else’s stood still.

 

Do we still know how to fight!

The carefully researched ILO study provides further proof that Occupy Wall Street was right on the money. OWS succeeded (temporarily), in large part, because it tapped into the deep reservoir of anger toward Wall Street felt by people all over the world. We all know the financiers are screwing us.

Then why didn’t OWS turn into a sustained, mass movement to take on Wall Street?

One reason it didn’t grow was that the rest of us stood back in deference to the original protestors instead of making the movement our own. As a result, we didn’t build a larger movement with the structures needed to take on our financial oligarchs. And until we figure out how to do just that, our nation’s wealth will continue to be siphoned away.

Our hope, I believe, lies in the young people who are engaged each day in fighting for the basic human rights for all manner of working people—temp workers, immigrants, unionized, non-union, gays, lesbians, transgender—as well as those who are fighting to save the planet from environmental destruction. It’s all connected.

At some point these deeply committed activists also will understand that financialization both here and abroad stands in the way of justice and puts our planet at risk. When they see the beast clearly, I am confident they will figure out how to slay it.

The sooner, the better.

See more stories tagged with:

middle class [6]


Source URL: http://www.alternet.org/economy/americas-middle-class-27th-richest

Links:
[1] http://www.alternet.org
[2] http://www.alternet.org/authors/les-leopold
[3] http://en.wikipedia.org/wiki/List_of_minimum_wages_by_country
[4] http://www.ilo.org/wcmsp5/groups/public/—dgreports/—dcomm/—publ/documents/publication/wcms_194843.pdf
[5] http://www.peri.umass.edu/fileadmin/pdf/programs/globalization/financialization/chapter1.pdf
[6] http://www.alternet.org/tags/middle-class
[7] http://www.alternet.org/%2Bnew_src%2B

 

Profits Without Production

By PAUL KRUGMAN, June 20, 2013

One lesson from recent economic troubles has been the usefulness of history. Just as the crisis was unfolding, the Harvard economists Carmen Reinhart and Kenneth Rogoff — who unfortunately became famous for their worst work — published a brilliant book with the sarcastic title “This Time Is Different.” Their point, of course, was that there is a strong family resemblance among crises. Indeed, historical parallels — not just to the 1930s, but to Japan in the 1990s, Britain in the 1920s, and more — have been vital guides to the present.

Yet economies do change over time, and sometimes in fundamental ways. So what’s really different about America in the 21st century?

The most significant answer, I’d suggest, is the growing importance of monopoly rents: profits that don’t represent returns on investment, but instead reflect the value of market dominance. Sometimes that dominance seems deserved, sometimes not; but, either way, the growing importance of rents is producing a new disconnect between profits and production and may be a factor prolonging the slump.

To see what I’m talking about, consider the differences between the iconic companies of two different eras: General Motors in the 1950s and 1960s, and Apple today.

Obviously, G.M. in its heyday had a lot of market power. Nonetheless, the company’s value came largely from its productive capacity: it owned hundreds of factories and employed around 1 percent of the total nonfarm work force.

Apple, by contrast, seems barely tethered to the material world. Depending on the vagaries of its stock price, it’s either the highest-valued or the second-highest-valued company in America, but it employs less than 0.05 percent of our workers. To some extent, that’s because it has outsourced almost all its production overseas. But the truth is that the Chinese aren’t making that much money from Apple sales either. To a large extent, the price you pay for an iWhatever is disconnected from the cost of producing the gadget. Apple simply charges what the traffic will bear, and given the strength of its market position, the traffic will bear a lot.

Again, I’m not making a moral judgment here. You can argue that Apple earned its special position — although I’m not sure how many would make a similar claim for Microsoft, which made huge profits for many years, let alone for the financial industry, which is also marked by a lot of what look like monopoly rents, and these days accounts for roughly 30 percent of total corporate profits. Anyway, whether corporations deserve their privileged status or not, the economy is affected, and not in a good way, when profits increasingly reflect market power rather than production.

Here’s an example. As many economists have lately been pointing out, these days the old story about rising inequality, in which it was driven by a growing premium on skill, has lost whatever relevance it may have had. Since around 2000, the big story has, instead, been one of a sharp shift in the distribution of income away from wages in general, and toward profits. But here’s the puzzle: Since profits are high while borrowing costs are low, why aren’t we seeing a boom in business investment? And, no, investment isn’t depressed because President Obama has hurt the feelings of business leaders or because they’re terrified by the prospect of universal health insurance.

Well, there’s no puzzle here if rising profits reflect rents, not returns on investment. A monopolist can, after all, be highly profitable yet see no good reason to expand its productive capacity. And Apple again provides a case in point: It is hugely profitable, yet it’s sitting on a giant pile of cash, which it evidently sees no need to reinvest in its business.

Or to put it differently, rising monopoly rents can and arguably have had the effect of simultaneously depressing both wages and the perceived return on investment.

You might suspect that this can’t be good for the broader economy, and you’d be right. If household income and hence household spending is held down because labor gets an ever-smaller share of national income, while corporations, despite soaring profits, have little incentive to invest, you have a recipe for persistently depressed demand. I don’t think this is the only reason our recovery has been so weak — weak recoveries are normal after financial crises — but it’s probably a contributory factor.

Just to be clear, nothing I’ve said here makes the lessons of history irrelevant. In particular, the widening disconnect between profits and production does nothing to weaken the case for expansionary monetary and fiscal policy as long as the economy stays depressed. But the economy is changing, and in future columns I’ll try to say something about what that means for policy.

http://www.nytimes.com/2013/06/21/opinion/krugman-profits-without-production.html?nl=todaysheadlines&emc=edit_th_20130621

7 Institutions That Have Grown So Monstrously Big They Threaten to Destroy America

AlterNet [1] / By Richard Eskow, June 21, 2013

Bigger isn’t always better. From the Tower of Babel to Teddy Roosevelt’s trust-busting, that principle’s been enshrined in law and legend since the dawn of history. Have we forgotten the lesson?

Corporations, databases, storehouses of personal and institutional wealth all are expanding at ever-increasing speed, threatening to engulf our economy and our lives as they do. That’s the problem with Big Things: Once they reached a certain size, they keep on getting bigger.

Here are seven ways the runaway power of Bigger in finance and in data is threatening to overwhelm us all.

1. Bigger Corporations

Americans have known about the danger of overly large corporations since the founding of the Republic. “I hope that we shall crush in its birth the aristocracy of our monied corporations,” said Thomas Jefferson, “which dare already to challenge our government to a trial of strength, and bid defiance to the laws of our country.”

“The money powers prey upon the nation in times of peace and conspire against it in times of adversity,” Abraham Lincoln observed. “The banking powers are more despotic than a monarchy, more insolent than autocracy, more selfish than bureaucracy.”

Even an unlikely populist, Grover Cleveland, said this: “As we view the achievements of aggregated capital, we discover the existence of trusts, combinations, and monopolies, while the citizen is struggling far in the rear, or is trampled beneath an iron heel. Corporations, which should be the carefully restrained creatures of the law and the servants of the people, are fast becoming the people’s masters.”

Oversized corporate power is why Congress passed the Sherman Antitrust Act of 1890. It’s why Theodore Roosevelt broke up the railroad. When businesses become so large that competition’s squeezed out, everybody suffers.

And yet today we’re confronted with the largest corporations in history, with predictable, even inevitable, results. In real dollar terms, the minimum wage is less than half what it was in 1968. One of the main reasons for that is that most minimum-wage employees work for large corporations [3] who dominate both their labor markets and the political process.

The Census Bureau [4] reported in 2008 that 33 million Americans—more than 25 percent of the total workforce—worked for corporations with 10,000 employees or more. The largest employer is Walmart, with an astonishing 1,400,000 employees, followed by the company that owns Taco Bell, Pizza Hut and KFC, and then McDonald’s.

With that kind of clout it’s easy to keep wages low while doling out record payouts to executives and shareholders. Walmart, for example, paid $11.3 billion in dividends and share buybacks [3] last year. That comes to more than $8,000 per worker. McDonald’s shareholder payouts came to nearly $7,000 per worker.

What’s more, despite their PR campaigns, there’s no evidence that shoppers benefit by paying less for their goods. Walmart aggressively forces prices downward for its suppliers, sometimes below the cost of production. But the suppliers have to make up the difference somewhere, either by over-charging other stores or underpaying their own employees and suppliers.

Either way, it comes out of the public’s pocket in the end.

Companies like Walmart don’t create jobs, either. They take them from elsewhere, and frequently pay less in wages. A Pennsylvania study [5] found a correlation between the presence of Walmart and increases in county-wide poverty, which the authors speculated might have been because “Walmart stores destroy civic capacity in the communities in which they locate by driving out local entrepreneurs and community leaders.”

They can kill leadership at the national level, too.

2. Bigger Banks

The statistics on too-big-to-fail banks and financial institutions are staggering: The largest 0.2 percent of US banks—12 of them, altogether—control 69 percent of the industry’s total assets [6], while 98.6 percent of all banks held only 12 percent of assets.

The four biggest banks still control 83 percent of the derivatives market, and only 25 commercial banks—out of a total of 8,430 FDIC-insured commercial banks in the United States—control roughly 90 percent of the market.

With the exception of struggling Bank of America, the top five banks all grew even more [7] in the first quarter of this year. Richard Fisher, president of the Dallas Federal Reserve Bank, co-authored a plan [8] to address the unfair advantage these banks receive because everybody knows the government won’t let them fail.

And while the mega-banks tell us that customers can benefit from their “economies of scale,” customers have not seen lower rates or charges as the result of their extraordinary consolidation.

These banks are holding the economy and the public hostage to their own possible failure. That’s why they—and the bankers who work for them—were publicly notified [9] by the Attorney General of the United States that they needn’t fear prosecution for their crimes. He later tried to walk that statement back, but he had only articulated a policy that had long been obvious among observers and lawmakers.

Our largest banks are becoming bigger than the law.

3. Bigger Investors

Holding companies, hedge funds, and other institutions own more and more of the private-sector economy. That includes groups like Mitt Romney’s Bain Capital, which invests in everything from pharmacies to retail chains to homes for troubled teens.

Edward Snowden’s revelations about the NSA lifted the veil of secrecy surrounding government contractors like his last employer, Booz Allen Hamilton, which is owned by a holding company called the Carlyle Group. Booz Allen brought the Carlyle Group $5.9 billion in revenue last year. In a classic example of Bigger in action, it also announced a new national security deal in February worth $11 billion.

Mega-investors like Bain Capital and the Carlyle Group aren’t like entrepreneurs or investors of the past, who put money and effort into businesses they believed in and then built them to last. They want their payouts on the shortest possible timeline, so they push executives at the companies they own to make the bottom line look as good as possible.

Sometimes that means sacrificing the long-term good of the company for a fast-buck payout to these holding companies. That may be one of the reasons why so many American corporations are giving out so much in dividends and share buybacks, rather than investing in infrastructure and employees.

When investors get Bigger, they insist on getting paid Faster.

4. Bigger Charities

It should be no surprise that all of this, along with government policies toward taxation and other matters, is creating runaway levels of individual wealth. And as a few individuals amass extraordinary wealth, even charitable giving becomes a bigger problem.

The philanthropic world is now dominated by a few players. The Bill and Melinda Gates Foundation is the mega-player, with more than $34 billion in assets. That’s more than the next three foundations combined. As of 2011 [10], the top five foundations held nearly one-third as much in assets as the top 100 foundations put together. As foundations and other philanthropies expand, charitable organizations which are outside their funding protocols are less and less likely to receive funds.

Some players get Bigger within a niche. New York’s Robin Hood Foundation, originally funded by hedge fund donors, was given a great deal of authority over small donors’ funds to aid the region’s victims of Hurricane Sandy. Like similar foundations, Robin Hood has occasionally been used as a propaganda tool [11] for arguing that government “can’t do the job.”

That’s not charity. That’s ideology.

Using aggressive sales tactics and rough elbows, the Susan G. Komen Race for the Cure came to dominate the breast cancer charity world. It became controversial after suing other charities that used some of the same phrases or symbols, even when they would have seemed to be in the public domain. (The word “cure” and the color pink were the subjects of two such lawsuits.)

The Komen group then abruptly defunded Planned Parenthood and other service groups, seemingly for political reasons. The resulting controversy helped the debate in one very real sense: it provided an object lesson in the dangers of Bigger, even in the world of charity.

5. Bigger Corporate Data

The recent NSA scandals have revealed the dangers of Bigger Data. But that phenomenon’s closely linked to Bigger’s other areas of overgrowth, especially in finance and investment. The scandal and controversy surrounding Facebook’s IPO (initial public offering) offered a glimpse into the intersection of Mega-Banks, Mega-Investors, and Mega-Data.

Every large enterprise is now pursuing bigger data. A new private study [12] suggests that there continue to be fewer corporate data centers in the United States, but that each is correspondingly larger. Highly centralized databases leave businesses, economies and societies more vulnerable to disruptions caused by accidents, natural disasters, or acts of terror.

The Big Data vendors include Twitter, Facebook and Google. But they also include niche forms of Big Data, like banking. Newly launched banking investigations involve something called “dark pools [13],” an alternative form of trading that takes place outside the normal stock markets. There is now evidence that the banks and service companies whose data platforms provide this service have been “front-running” trades, using customer information from their data systems to enrich themselves.

Even news organizations are entering the data-selling business. For $2,000 a month, Thomson Reuters offers a service called “ultra-low latency [14]” which gives subscribers access to key economic reports two seconds before they’re released to the public. As Business Insider notes, “two seconds in … trading time is an eternity.” That’s because stock markets are computerized Big Data operations, too, and transactions can occur at nearly light-speed.

Big Data corporations are typically currently valued well in excess of what its real revenues would suggest. That’s certainly true of Facebook, because the world of Bigger believes in the power of data—and Facebook has it.

Most Facebook users would probably say that its interface is hard to use. Its founders aren’t wealthy because they’re brilliant programmers. They’re not visionaries, either. They thought they were creating a relatively small set of social networks for colleges. But they stumbled onto something powerful—the power of data that users volunteered about themselves—and they exploited it aggressively before anyone else could compete with them.

That’s how the world of Bigger works. You don’t need to be the best. You need to be the first. Then you need to be aggressive in order to stay the biggest. The forces of Bigger will do the rest.

6. Bigger Government Data

Mega-data is changing our government, too. The Obama administration’s “Big Data Initiative [15]” suggests a mentality which believes Big Data is more useful than other forms of information.

Big Data has already created a national security apparatus of staggering proportions, as Dana Priest and William Arkin reported [16] for the Washington Post. Large databases can provide enormously useful information, but they can be a distraction too. As Priest and Arkin observed, “lack of focus, not lack of resources,” prevented law enforcement officials from stopping the Fort Hood shootings.

That can happen when too much data is presented without adequate screening. Reports from a smaller data initiative—perhaps even an old-fashioned warrant and search on the radical cleric with whom he was corresponding—might have been much more effective in preventing this tragedy.

We should learn from experience before assuming that the best thing to do with Big Data is make it even bigger. But that’s not the plan: Amazon, one of the corporate world’s biggest data players, has been hired to create a “private cloud” system for the CIA at a cost of $600 billion. That’s more than half a trillion dollars. For what, exactly? We don’t know. Perhaps to ensure that the same technology which keeps recommending those novels you don’t want to read guides the thinking of our intelligence community.

With Bigger Data comes greater temptation. Thanks to the Center for Media and Democracy’s review of [17] Freedom of Information Act documents, we now know that at least one national security “fusion center” strayed from its anti-terrorism mission in order to analyze data on citizens conducting peaceful protests. Why? Because Jamie Dimon, the CEO of Bigger bank JPMorgan Chase, was coming to town and didn’t want to confront protesters.

That’s how Bigger works. Money, data and influence can intersect in unexpected and harmful ways.

7. Bigger Cronyism

As institutions and databases become larger, the temptations of power become bigger too. The Carlyle Group has been able to use its money to attract government figures from both parties, including former President George H. W. Bush and several senior members of the Clinton administration.

For his part, former President Clinton dealt for years with billionaire Ron Burkle, who offered him what the New York Times described [18] as “the potential to make tens of millions of dollars without great effort and at virtually no risk.” For her part, former Secretary of State and leading presidential contender Hillary Clinton was on the board of directors of Walmart.

Big Power Often Follows Big Money

The Clinton, Bush and Obama Treasury Departments and regulatory agencies each became revolving-door operations for Wall Street. Officials and bank executives must have grown accustomed to seeing one another on the Acela train that runs from New York to Washington. The ones headed south are taking government jobs, where their friends will be well protected.

The ones headed north are cashing in.

Better

We’ve seen the spectacle of three former presidents, two Republicans and a Democrat, unable to resist the lure of big wealth. We’ve seen the 21st century’s two sitting presidents, one from each party, unable to resist the power of big data. With power increasingly corrupted by ever-bigger forces, who will speak for the individual citizens of this country?

Obama advisor Cass Sunstein attributes a wise quote to legal scholar Karl Llewellyn: “Technique without morals is a menace, but morals without technique is a mess.” But while Sunstein is presumably arguing against the latter, today’s more urgent and difficult task is to put an end to the former.

That’s why we need a new system of checks and balances. We need to recognize that Bigger needs to be tempered by fairer, that top-down control needs to be replaced with lateral decision-making, that a centralized financial, corporate, and government complex must never replace the smaller and more humane systems of democracy and small-business free enterprise.

The universe offers us a warning in the astronomical phenomenon known as a “singularity,” or “black hole.” If a star becomes too large, it begins to draw everything around it into its gravity field. Nothing can escape the hole around it, not even light. Then the star begins to collapse in upon itself, compressed by the irreversible force of its own mass growing greater and greater.

We don’t deserve Bigger, we deserve better.

See more stories tagged with:

bank of america [19],

finance [20],

nsa [21],

data [22],

Edward Snowden [23]


Source URL: http://www.alternet.org/economy/banks-america

Links:
[1] http://www.alternet.org
[2] http://www.alternet.org/authors/richard-eskow
[3] http://nelp.3cdn.net/24befb45b36b626a7a_v2m6iirxb.pdf
[4] http://www.census.gov/econ/smallbus.html
[5] http://aese.psu.edu/research/centers/cecd/publications/poverty/centers/cecd/research/wal-mart-and-county-wide-poverty/full-study/view
[6] http://thinkprogress.org/economy/2013/01/28/1502421/chart-largest-bank-assets/
[7] http://www.ffiec.gov/nicpubweb/nicweb/Top50Form.aspx
[8] http://blog.ourfuture.org/20130313/a-smart-and-principled-plan-to-end-too-big-to-fail
[9] http://www.huffingtonpost.com/2013/03/06/eric-holder-banks-too-big_n_2821741.html
[10] http://foundationcenter.org/findfunders/topfunders/top100assets.html
[11] http://www.huffingtonpost.com/rj-eskow/tick-tick-tick-do-em60-mi_b_3248975.html
[12] http://www.idc.com/getdoc.jsp?containerId=prUS23724512
[13] http://www.businessinsider.com/fbi-and-sec-to-probe-high-speed-trading-2013-3?nr_email_referer=1&utm_source=Triggermail&utm_medium=email&utm_term=Business%20Insider%20Select&utm_campaign=Business%20Insider%20Select%202013-03-05&utm_content=emailshare
[14] http://www.businessinsider.com/latency-in-trading-2013-6#ixzz2WiFCtDV4
[15] http://www.whitehouse.gov/sites/default/files/microsites/ostp/big_data_press_release_final_2.pdf
[16] http://projects.washingtonpost.com/top-secret-america/articles/a-hidden-world-growing-beyond-control/
[17] http://www.prwatch.org/news/2013/05/12122/homeland-security-apparatus-fusion-centers-data-mining-and-private-sector-partner
[18] http://www.nytimes.com/2006/04/23/nyregion/23burkle.html?_r=1&pagewanted=2
[19] http://www.alternet.org/tags/bank-america
[20] http://www.alternet.org/tags/finance-0
[21] http://www.alternet.org/tags/nsa
[22] http://www.alternet.org/tags/data
[23] http://www.alternet.org/tags/edward-snowden
[24] http://www.alternet.org/%2Bnew_src%2B

Good Consumers, Bad Citizens

by Michael Winship, Common Dreams,  May 30, 2013

A few days ago, I was listening to a radio talk show discussion of the bill passed on May 7 by the New York City Council, requiring some businesses to provide paid sick leave to employees.

The first caller was indignant. “This bill is anti-consumer!” he bellowed because, he insisted, it would raise prices. I thought, no, this bill is pro-citizen, helping out people, many of them in extremis — and just when did we stop being citizens and become merely consumers? When did access to material goods and low prices become a right more important than public health and welfare? When did our celebration of profit take precedence over fundamental fairness and justice?

I thought of this again the other night while attending the ceremony for the Hillman Prizes in Journalism, named after the late union leader Sidney Hillman, once the influential president of the Amalgamated Clothing Workers of America. One of the awards went to ABC News for its coverage of a deadly fire at a garment factory in Bangladesh where Tommy Hilfiger clothing was being manufactured. Deliberately locked in and unable to escape, 29 died.

Confronted with the evidence, Hilfiger and his parent company finally pledged over $2 million to improve fire safety at dozens of other facilities in Bangladesh, but six months later, another fire took more than 100 lives. According to the Sidney Hillman Foundation, an ABC News producer “obtained evidence that showed clearly that Wal-Mart, Sears, Disney and other retailers’ labels of clothes were being made there at the time of the fire, and written warnings from Wal-Mart’s own inspectors that the factory was not safe.” All in the name of cheap clothing made by workers in a country that has the lowest minimum wage in the world, $37 a month, while exporting $18 billion worth of apparel yearly, second only to China.

The Hillman Prize came just weeks after the April 24 collapse of the Rana Plaza factory in Bangladesh that killed 1,127 workers, and indeed another award was given by the Hillman Foundation in the name of the workers and in honor of labor activists fighting for safer factories in that country, many of whom have been intimidated, beaten and even murdered.

And yet, unlike nearly three dozen European companies, almost all American businesses refuse to sign onto a formal plan for Western retailers to fund safety upgrades at these Bangladesh factories where their clothes are manufactured. The American firms cite fears of legal liability. But as Paul Lister, director of legal services at Associated British Foods, one of whose subsidiaries has signed the agreement, told The New York Times, “It’s not a perfect document. We’ll deal with the imperfections in the document, and we have to deal urgently with the underlying issue — the moral and ethical issues of fire safety and building integrity in Bangladesh.”

Nonetheless, Matthew Shay, president of America’s National Retail Federation, claims the plan “seeks to advance a narrow agenda driven by special interests.” He means, of course, labor. Where profit is concerned, any excuse to foot drag will do and as Michigan Congressman Sander Levin pointed out to the Times, “It’s been left up to the retailers, suppliers and government all these years, and that hasn’t worked.”

When did our celebration of profit take precedence over fundamental fairness and justice?

That hasn’t worked because unless citizens shame them — in the wake of tragedy or crisis — the collusion between government and industry will continue to place the needs of corporate America first. And even a calamity will not necessarily slow it down – just look at the 2008 banking crisis and the increased size and power of the very financial institutions that got us into the mess.

Witness the JPMorgan Chase shareholders meeting in Tampa, Florida, last week. Its chairman and CEO Jamie Dimon has unparalleled authority – rivals call him “the sun god” — and yet Bloomberg Businessweek reports, “The litigation section of the bank’s quarterly filings now runs to almost 9,000 words, or 18 single-spaced pages.” The magazine listed the institution’s “year of federal investigations into whether it manipulated energy markets, inadequately guarded against money laundering, abused homeowners in foreclosure, facilitated Bernard Madoff’s Ponzi scheme, and misled the public about the ‘London Whale’ fiasco, the worst trading loss in JPMorgan’s history.” What’s more, the Office of the Comptroller of the Currency and California’s attorney general are each looking into how JPMorgan Chase has gone after credit card debt.

Despite this impressive litany of potential transgression, Dimon handily beat back an attempt by some stockholders to split his job in two, which theoretically would have added some much-needed adult supervision, regulation and corporate oversight. He did so with a concerted campaign of pressure and public relations; support from such pals as Mike Bloomberg, Rupert Murdoch and former White House chief of staff Bill Daley; threats to resign; and with this one simple statistic: record earnings of $21.3 billion last year.

Dimon delivers value and that’s all that counts — over the last year, shares have risen more than 50 percent. As New York magazine columnist Kevin Roose wrote, “No matter what happens, it seems that as long as Jamie Dimon is making money for JPMorgan, he can get away with basically anything.”

Profit will out, whether in Wall Street boardrooms or in the ashes of a south Asian sweatshop. All of which makes for ever wealthier plutocrats, consumers kept content with cheap goods, and if we do nothing about it, lousy citizens.

Michael Winship, senior writing fellow at Demos and president of the Writers Guild of America-East, is senior writer for Bill Moyers’ new weekend show Moyers & Company.

more Michael Winship


Article printed from www.CommonDreams.org

Source URL: http://www.commondreams.org/view/2013/05/30

In History Departments, It’s Up With Capitalism

By JENNIFER SCHUESSLER, New York Times, April 6, 2013

Excerpt

…a new generation of scholars is increasingly turning to what, strangely, risked becoming the most marginalized group of all: the bosses, bankers and brokers who run the economy…courses in “the history of capitalism” — as the new discipline bills itself …The events of 2008 and their long aftermath have given urgency to the scholarly realization that it really is the economy, stupid. The financial meltdown also created a serious market opportunity….

The dominant question in American politics today, scholars say, is the relationship between democracy and the capitalist economy. “…The new work marries hardheaded economic analysis with the insights of social and cultural history, integrating the bosses’-eye view with that of the office drones — and consumers — who power the system…

Harvard, which in 2008 created a full-fledged Program on the Study of U.S. CapitalismPrinceton, Brown, Georgia, the New School, the University of Wisconsin and elsewhere…While most scholars in the field reject the purely oppositional stance of earlier Marxist history, they also take a distinctly critical view of neoclassical economics, with its tidy mathematical models and crisp axioms about rational actors..The history of capitalism has also benefited from a surge of new, economically minded scholarship on slavery…

Full text

A specter is haunting university history departments: the specter of capitalism.

After decades of “history from below,” focusing on women, minorities and other marginalized people seizing their destiny, a new generation of scholars is increasingly turning to what, strangely, risked becoming the most marginalized group of all: the bosses, bankers and brokers who run the economy.

Even before the financial crisis, courses in “the history of capitalism” — as the new discipline bills itself — began proliferating on campuses, along with dissertations on once deeply unsexy topics like insurance, banking and regulation. The events of 2008 and their long aftermath have given urgency to the scholarly realization that it really is the economy, stupid.

The financial meltdown also created a serious market opportunity. Columbia University Press recently introduced a new “Studies in the History of U.S. Capitalism” book series (“This is not your father’s business history,” the proposal promised), and other top university presses have been snapping up dissertations on 19th-century insurance and early-20th-century stock speculation, with trade publishers and op-ed editors following close behind.

The dominant question in American politics today, scholars say, is the relationship between democracy and the capitalist economy. “And to understand capitalism,” said Jonathan Levy, an assistant professor of history at Princeton University and the author of “Freaks of Fortune: The Emerging World of Capitalism and Risk in America,” “you’ve got to understand capitalists.”

That doesn’t mean just looking in the executive suite and ledger books, scholars are quick to emphasize. The new work marries hardheaded economic analysis with the insights of social and cultural history, integrating the bosses’-eye view with that of the office drones — and consumers — who power the system.

“I like to call it ‘history from below, all the way to the top,’ ” said Louis Hyman, an assistant professor of labor relations, law and history at Cornell and the author of “Debtor Nation: The History of America in Red Ink.”

The new history of capitalism is less a movement than what proponents call a “cohort”: a loosely linked group of scholars who came of age after the end of the cold war cleared some ideological ground, inspired by work that came before but unbeholden to the questions — like, why didn’t socialism take root in America? — that animated previous generations of labor historians.

Instead of searching for working-class radicalism, they looked at office clerks and entrepreneurs.

“Earlier, a lot of these topics would’ve been greeted with a yawn,” said Stephen Mihm, an associate professor of history at the University of Georgia and the author of “A Nation of Counterfeiters: Capitalists, Con Men and the Making of the United States.”But then the crisis hit, and people started asking, ‘Oh my God, what has Wall Street been doing for the last 100 years?’ ”

In 1996, when the Harvard historian Sven Beckert proposed an undergraduate seminar called the History of American Capitalism — the first of its kind, he believes — colleagues were skeptical. “They thought no one would be interested,” he said.

But the seminar drew nearly 100 applicants for 15 spots and grew into one of the biggest lecture courses at Harvard, which in 2008 created a full-fledged Program on the Study of U.S. Capitalism. That initiative led to similar ones on other campuses, as courses and programs at Princeton, Brown, Georgia, the New School, the University of Wisconsin and elsewhere also began drawing crowds — sometimes with the help of canny brand management.

After Seth Rockman, an associate professor of history at Brown, changed the name of his course from Capitalism, Slavery and the Economy of Early America to simply Capitalism, students concentrating in economics and international relations started showing up alongside the student labor activists and development studies people.

“It’s become a space where you can bring together segments of the university that are not always in conversation,” Dr. Rockman said. (Next fall the course will become Brown’s introductory American history survey.)

While most scholars in the field reject the purely oppositional stance of earlier Marxist history, they also take a distinctly critical view of neoclassical economics, with its tidy mathematical models and crisp axioms about rational actors.

Markets and financial institutions “were created by people making particular choices at particular historical moments,” said Julia Ott, an assistant professor in the history of capitalism at the New School (the first person, several scholars said, to be hired under such a title).

To dramatize that point, Dr. Ott has students in her course Whose Street? Wall Street! dress up in 19th-century costume and re-enact a primal scene in financial history: the early days of the Chicago Board of Trade.

Some of her colleagues take a similarly playful approach. To promote a two-week history of capitalism “boot camp” to be inaugurated this summer at Cornell, Dr. Hyman (a former consultant at McKinsey & Company) designed “history of capitalism” T-shirts.

The camp, he explained, is aimed at getting relatively innumerate historians up to speed on the kinds of financial data and documents found in business archives. Understanding capitalism, Dr. Hyman said, requires “both Foucault and regressions.”

It also, scholars insist, requires keeping race and gender in the picture.

As examples, they point to books like Nathan Connolly’s “World More Concrete: Real Estate and the Remaking of Jim Crow South Florida,” coming next year, and Bethany Moreton’s “To Serve God and Wal-Mart: The Making of Christian Free Enterprise” (Harvard, 2009), winner of multiple prizes, which examines the role of evangelical Christian values in mobilizing the company’s largely female work force.

The history of capitalism has also benefited from a surge of new, economically minded scholarship on slavery, with scholars increasingly arguing that Northern factories and Southern plantations were not opposing economic systems, as the old narrative has it, but deeply entwined.

And that entwining, some argue, involved people far beyond the plantations and factories themselves, thanks to financial shenanigans that resonate in our own time.

In a paper called “Toxic Debt, Liar Loans and Securitized Human Beings: The Panic of 1837 and the Fate of Slavery,” Edward Baptist, a historian at Cornell, looked at the way small investors across America and Europe snapped up exotic financial instruments based on slave holdings, much as people over the past decade went wild for mortgage-backed securities and collateralized debt obligations — with a similarly disastrous outcome.

Other scholars track companies and commodities across national borders. Dr. Beckert’s “Empire of Cotton,” to be published by Alfred A. Knopf, traces the rise of global capitalism over the past 350 years through one crop. Nan Enstad’s book in progress, “The Jim Crow Cigarette: Following Tobacco Road From North Carolina to China and Back,” examines how Southern tobacco workers, and Southern racial ideology, helped build the Chinese cigarette industry in the early 20th century.

Whether scrutiny of the history of capitalism represents a genuine paradigm shift or a case of scholarly tulip mania, one thing is clear.

“The worse things are for the economy,” Dr. Beckert said wryly, “the better they are for the discipline.”

http://www.nytimes.com/2013/04/07/education/in-history-departments-its-up-with-capitalism.html?nl=todaysheadlines&emc=edit_th_20130407

The Progressive Economic Narrative in Obama’s State of the Union

by Richard Kirsch,  Senior Fellow, Roosevelt Institute; author of ‘Fighting for Our Health’, 2/13/2013

Two years ago, frustrated by a conservative resurgence in the 2010 election, a group of progressive activists, economists, communicators, and pollsters came together to write a compelling story about our view of the economy (as Mike Lux relates). Our goal was to write a story that people could easily understand, based on our beliefs about how to create an economy that delivered broadly shared prosperity — a story that could stand up against the right’s familiar recipe of free markets, limited government, and rugged individualism. The core of the story we developed in our progressive economic narrative (PEN) was: “The middle class is the engine of our economy. We build a large, prosperous middle class by decisions we make together.”

So it was a milestone in our work to hear President Obama tell our story and use our language in his State of the Union address. The key line, delivered at the top of the speech and quoted in almost every news story, was “It is our generation’s task, then, to reignite the true engine of America’s economic growth: a rising, thriving middle class.”

Taking another lesson from PEN, the president prefaced that quote with an explanation of what the economic problem is, focusing on how working families and the middle class have been crushed. In PEN we say, “American families are working harder and getting paid less, falling behind our parents’ generation. Too many Americans can’t find good jobs and too many jobs don’t pay enough to support a family. Big corporations have cut our wages and benefits and shipped our jobs overseas.” Here’s the president’s version:

But — we gather here knowing that there are millions of Americans whose hard work and dedication have not been rewarded. Our economy is adding jobs, but too many people still can’t find full-time employment. Corporate profits have skyrocketed to all-time highs, but for more than a decade, wages and incomes have barely budged. It is our generation’s task, then, to reignite the true engine of Americas economic growth: a rising, thriving middle class.

When it came to describing how we build this middle-class engine, the president again used the same ideas frame laid out in PEN: “We build a large and prosperous middle class through the decisions we make together; investing in our people, expanding opportunity and security, paving the way for business to innovate, and to do business in ways that create prosperity and economic security for Americans.” The president’s agenda was based on these same concepts:

Invest in people through education (starting at Pre-K), skills we need for today’s jobs, affordable health care, and a secure retirement.

Pave the way for businesses through research, infrastructure, and green energy.

Do business in ways that create prosperity, with a higher minimum wage and pay equity for women.

The president’s story contrasted sharply with Marco Rubio’s. Rubio also paid homage to the middle class, but he told the conservative tale:

This opportunity — to make it to the middle class or beyond no matter where you start out in life — it isn’t bestowed on us from Washington. It comes from a vibrant free economy where people can risk their own money to open a business. And when they succeed, they hire more people, who in turn invest or spend the money they make, helping others start a business and create jobs. Presidents in both parties — from John F. Kennedy to Ronald Reagan — have known that our free enterprise economy is the source of our middle class prosperity.

So the fight is joined. For too long, progressives have not taken on the conservative story with our own narrative. As a result, even when people agree with us on specific issues, they still hold fast to the right’s definition of how to move the economy forward. We have, with the simple tale told by the president and in the progressive economic narrative, a very different story, an economy driven by working families and the middle class, which we create by decisions we make together, with our government as the catalyst.

Our next task is to tell this same story over and over again in all of our communications. Repetition is key. People need to hear the story whenever we communicate on an economic issue. We give examples of how do to that on job quality, job creation, the federal fiscal mess, and health care at progressivenarrative.org.

President Obama left out one part of the progressive economic narrative in his speech. As we say in PEN, “Our political system has been captured by the rich and powerful and corrupted by big money in politics. The issue is not the size of the government, it’s who the government works for — powerful corporations and the richest few, or all of us. We have to take our democracy back to ensure that our economy will work for all of us. “

That’s a story that politicians are reluctant to tell. As always, we need to lead and the leaders will follow. It is up to us to build an America and economy that works for all us. Clearly describing our vision of how to do that is a crucial element of building power that progressives overlooked for too long. We’re much closer when the president tells that story to the nation. It’s up to us to keep telling it every day.

http://www.huffingtonpost.com/richard-kirsch/the-progressive-economic_b_2680460.html

Why don’t bad ideas ever die?

By Barry Ritholtz, Washington Post, December 15, 2012

“The purpose of studying economics is not to acquire a set of ready-made answers to economic questions, but to learn how to avoid being deceived by economists.” — Joan Robinson

This time of year is filled with retrospectives and “best of” lists. I’d prefer a more enlightened discussion about bad ideas. Or rather, zombie ideas: the memes, theories and policies that refuse to die, despite their obvious failings. Why do we embrace the terrible, fall in love with the wrong, bet money on the fictitious? Nowhere is this truer than in the fields of economics and investing. Together they have produced a long list of thoroughly debunked ideas. Despite this, many of these zombie ideas still have a vice grip on amateurs and professionals alike. What is it about us and this intellectual voodoo? We keep repeating the same mistakes over and over. It is maddening. Let’s count the ways:

1 Shareholder value: Since the early 1980s, this theory had claimed that corporate management should concentrate primarily on increasing share prices. In practice, it is fraught with problems: Short-term focus on quarterly earnings leads to a decline in long-term research and development, typically to the detriment of a company’s long-term prospects. Short-termism and stock-option compensation causes management to focus on immediate quarterly returns. It has also led to earnings “management,” accounting fraud and a raft of management scandals. Shareholders derive much less value than the name implies.

2 Homo economicus: A primary principle underlying classical economics, it states that humans are rational, self-interested actors possessing an ability to make objective, intelligent judgments about matters of investing and money. This turns out to be hilariously wrong. We are all too often irrational, frequently emotional and regularly engage in behaviors that work against our self-interest. Homo economicus? Try Nogo economicus.

3 Economics as a science: Consider how wrong the economics profession has been about, well, nearly everything: They misunderstood the risks of derivatives; economists developed models that assumed home prices would not fall (!). They misunderstood why the recovery from the 2001 recession produced so few jobs or why the current recovery was worse in so many ways. Oh, and despite myriad signs, they missed the worst recession since the Great Depression even as it was on top of them. The sooner they admit that their field is not a hard science, the better off we all will be.

4 Austerity: Conceived from the puritanical idea that we must pay a penance for our sins, the Austerians (as we like to call them) insist that a post-bubble economy can be cured with spending cuts and tax increases, producing a balanced budget. When the United States tried this in 1938, it helped send the nation back into recession. More recently, Greece was forced to adopt austerity measures as part of its financial-rescue terms. It pushed the country into a depression. Austerity measures in Britain and Ireland and Spain — indeed, everywhere they have been imposed in Europe — have all led to recessions. Despite the wealth of evidence showing that this is a terrible idea, it refuses to die.

5 Tax cuts pay for themselves (supply-side economics): Sometimes bad ideas start as good ones. When tax rates are so high as to cause all manner of tax avoidance strategies — think confiscatory rates of 75 to 90 percent — reducing them makes sense and can change investor behavior for the better. Where we run into trouble is when this concept gets extrapolated to an absurd degree. Claiming that any tax cut will pay for itself by producing greater economic activity has now reached that point. No, Virginia, cutting taxes 3 percent does not lead to more revenue. Get over it.

6 The efficient-market hypothesis: This is the mother of all academic zombie ideas. The concept is that markets are “informationally efficient.” That lots of self-interested investors hunt down every last data point about any given asset class or stock. And pricing perfectly represents all of the given information available at the time. Therefore, no one can outperform the markets for long.

Except they have. Fund managers such as Peter Lynch, Warren Buffett, Ray Dalio and Jim Simons have consistently beaten markets over such long stretches that it cannot be merely by chance. Perhaps the even bigger anomaly that this concept runs into are the all-too-regular booms and busts — the massive mispricings of assets — that economic bubbles and crashes produce.

7 Markets can self-regulate: Another example of an idea that started out reasonably enough but soon after went off the rails. After 30 years of postwar economic growth, there was a credible argument that government regulations had become too costly, time-consuming and complex. With inefficiencies holding back small businesses, paring the worst of the regulatory burden should be productive.

As so often occurs, this good idea was taken to an illogical extreme. Instead of removing onerous, expensive regulations, zealots such as then-Sen. Phil Gramm (R-Tex.) argued against all regulations. Markets can regulate themselves much better than some bureaucrat or lawyer. Besides, the self-interest of companies and the efficient market would more effectively police behavior than any government agency ever could. We know how that turned out.

8 Gurus, shamans and prognosticators: Wall Street produces market wizards at a prodigious pace. It may be NYC’s single-biggest export. We love experts to tell us what is going to happen in the future. Never mind that their track record is awful, we prefer the mysticism of the television guru to actual thought.

The data about these experts should give us pause: The more confident an expert sounds, the more likely he is to be believed by TV viewers. Unfortunately, the more self-confident an expert appears, the worse his/her track record is likely to be. And forecasters who get one single big outlier correct are more likely to underperform the rest of the time.

Why is it that we are ensnared by bad ideas? A lot of the reasons have to do with our own makeup and the structure of our society.

● Fooled by randomness (a.k.a. luck): Just because something is a bad idea does not mean it cannot, through pure chance, lead to a winning investment. (It is very difficult for people to acknowledge just how lucky they got once money is made by a bad idea).

● Greed and sloth: There is a ready supply of dupes waiting to be robbed, dreaming of enormous rewards for little or no work. Bernie Madoff was no different than Charles Ponzi, and yet people lined up to hand him money by the billions.

● Institutional mandates: In academia, whatever the dominant paradigm of the moment is tends to drive jobs, tenure, even entire careers. Publish or perish leads to a repetition of “accepted” ideas, while outside-the-box research often finds getting published to be a challenge.

● Status quo: Powerful forces are comfortable with how profitable things are, and they exert tremendous force to keep them that way. Think tanks, academia and corporate consultants create a ready constituency for old, bad ideas on their behalf.

● Narratives persuade more than data: A good story is far more persuasive than data. Zombie ideas are modern fairy tales. Comprehending a data series is challenging, requiring skill, intelligence and hard work. A compelling story, on the other hand, can be understood by a child.

● Incompetency: Skilled people have a greater understanding of their limitations for a given task; unskilled people do not. This is called the Dunning-Kruger effect, and it tells us that the worse we are at any given talent, the weaker our own meta-cognition about it is.

● Bias: Bad ideas often conform to our erroneous world views. Consider the impact of selective perception and confirmation bias — they assuage our egos and are made to fit our prejudices. Bad ideas hang around in part because we seek them out and embrace them.

●Darwinism works slowly: As a reader suggested, it often takes a while for reality to catch up with bad ideas. Consider the divine right of kings, communism and the designated hitter as bad ideas that took centuries to fall.

These zombie ideas remain a stable of academia, economics and investing. We should not be surprised at this. Recall what Max Planck — who won a Nobel Prize for physics in 1918 for originating quantum theory — famously said: “Truth never triumphs — its opponents just die out. Science advances one funeral at a time.”

Investing and economics should be so lucky . . .

Ritholtz is chief executive of FusionIQ, a quantitative research firm. He is the author of “Bailout Nation” and runs a finance blog, the Big Picture. On Twitter: @Ritholtz.

 

http://www.washingtonpost.com/business/why-dont-bad-ideas-ever-die/2012/12/13/919ded36-4475-11e2-8061-253bccfc7532_story.html?wpisrc=nl_headlines

80-year study: Democrats better at economics by Paul Bedard

The Washington Examiner, August 17, 2012

Excerpt

When it comes to which party is better for the economy, Republicans talk the talk, but it’s Democrats who deliver the goods according to an unusual 80-year study of the impact presidents have on growth, personal wealth, the stock market and even 401ks…according to Bulls, Bears and the Ballot Box [by]  financial planner Bob Deitrick… CPA and educator Lew Goldfarb.

Goldfarb blamed the conventional wisdom that Republican presidents are better economic managers on the inability of Democrats to tell their story. “Democrats stand on their message so poorly,” he said. “Republicans, on the other hand, win the salesmanship merit badge every single year.”..

 

Full text

When it comes to which party is better for the economy, Republicans talk the talk, but it’s Democrats who deliver the goods according to an unusual 80-year study of the impact presidents have on growth, personal wealth, the stock market and even 401ks.

The bottom line, according to Bulls, Bears and the Ballot Box: Of the five best economic presidents since Herbert Hoover, only one is a Republican. The paydirt finding: $100,000 invested during the 40 years Republicans had the White House would be worth $126,027. The same amount invested in the stock market during the Democrat’s 40 years would be $3,912,210.

“Our book is a myth buster,” said financial planner Bob Deitrick who co-authored Bulls, Bears with CPA and educator Lew Goldfarb.

Goldfarb blamed the conventional wisdom that Republican presidents are better economic managers on the inability of Democrats to tell their story. “Democrats stand on their message so poorly,” he said. “Republicans, on the other hand, win the salesmanship merit badge every single year.”

The duo stumbled on their conclusions while working on a different issue. Researching the impact of politics on stock market trends, Deitrick realized that in the last 80 years, Democrats and Republicans have held the White House 40 years each, minus President Obama’s term. They came up with a ranking system based on stock market returns, personal income, economic growth and business prosperity.

The best period was during the Kennedy-Johnson years, the worst Herbert Hoover, who presided over the Great Depression. In order, the rankings are: JFK/LBJ, Franklin D. Roosevelt, Bill Clinton, Dwight Eisenhower, Harry Truman, Ronald Reagan, George H.W. Bush, Jimmy Carter, Richard Nixon/Gerald Ford, George W. Bush, and Hoover. Carter was the only Democrat in the bottom half of the list.

Theirs is a non-political book that also suggests that the Democrats have been luckier than the Republicans. Just consider that George H.W. Bush had a flat economy that was starting to surge when Clinton was elected and it roared during his term. By the time George W. Bush took over, the Clinton-era internet bubble had popped and he started two wars. For example, they write, $100,000 invested in 1993 was worth $341,894 at the end of Clinton’s term. Under Bush, that $100,000 was worth $64,990 after his eight years, a difference of $277,000.

The authors omit President Obama because his four years aren’t over, but they paint a conflicted economic picture of his years in office.
http://washingtonexaminer.com/80-year-study-democrats-better-at-economics/article/2505194