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Posted by on Apr 26, 2007 in Economy | 50 comments

Wall Street Boom, Main Street Bust


To the moon, foreclosure rates, to the moon

If ever a stock market milestone is not only meaningless to many people but masks a dark economic reality, it is the Dow Jones Industrial Average hitting the 13,000 mark on Wednesday.

This is because of the enormous disconnect between the boom on Wall Street and the bust on Main Street.

Many people must wonder what the hell the ebullient talking heads on MSNBC and the evening news shows were babbling about. This is because these people are making do with less, sometimes a lot less. Home foreclosures and bankruptcies are soaring, health-care and education costs are going through the roof, and once sacrosanct pension plans are collapsing. The drop in gasoline prices from record highs late last year offered some relief, but have resumed their climb into the stratosphere.

Primarily because we’re are not in the heat of an election campaign (for which I am most thankful), there is virtually no discussion about the lousy state of what I call the kitchen table economy, which has relentlessly headed South over the last six-plus years of a presidential administration that has determinedly cosseted the rich, ignored the poor and robbed the middle class. You know, compassionate conservatism.

One pair of statistics speaks volumes about the disconnect:

The median hourly wage has risen a little less than 10 percent in the last 25 years while productivity has grown by more than 70 percent. And the less you make — if you haven’t been downsized or laid off — the bigger the disparity is.

This makes living the American dream – owning a home, sending the kids to college and having decent health-care insurance – substantially more difficult than it was a generation ago, and for the first time since forever, a majority of Americans don’t believe the next generation will be better off than they are.

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  • White Agent

    Whatever happened to, “ethical profit margin”? Now its, “take as much as the market will bear”….and if it isn’t as high as your competitor….take it out of your employees!

    The business bastards are getting away with way to much.

  • Excellent points, sir. I, to, felt something amiss with all the glee at this ‘milestone’ of 13,000 on the DJIA.

    What I get a kick out of is the way the “feel good” statistics are derived. Like Twain said, there are lies, damned lies, and statistics.

    But when inflation is measured, this “core” inflation rate looks so good. By core inflation the government leaves out those “volatile” items, like food, clothing, shelter, and energy. That, as least, is how it appear to me sometimes. Besides, energy should not longer be considered volatile..that implies it’s going to go back down; that the rise in energy prices are temporary. It wouldn’t shock me if new standards for measuring inflation were used that were more in line with our “leaders” like say, the price of yachts over 50 ft. in length, or the price of gold, or homesites in Tuscany.

    Wall Street never has, and never will care a hoot about Main Street. The government is supposed to take a glance once in a while, but it’s obvious a lot of people have gone blind when it comes to the “little people.”

  • superdestroyer

    Of course, if the Democrats call was to do anything except raise taxes, they would much more credibility on economic issues.

    Considering that the Democrats are wanting a reduction in the alternative minimum tax (a tax break to yuppie urban dwellers in deep blue, high tax states while proposing higher taxes on the middle class living in the south, they have no credibility on economic issues.

    I also wonder how the Democrats, who every single presidential candidates favors open borders, can reconcile that policy belief with wanting to help blue collar native born Americans.

    Of course, President Bush has destroyed any credibility that the Republicans could have on this issue since he also favors open borders and unlimited immigration.

  • Superdestroyer:

    I know that your knee-jerk reaction is to make everything into a partisan issue. It’s so much simpler that way, isn’t it?

    The economic mess on Main Street must be blamed on Democrats as well as Republicans. Bush inherited some long-term trends, but he exacerbated them because of his own “let them eat cake” economic policies. I did not mention that he also squandered the healthy surplus that he inherited from his predecessor.

    Finally, the laws of economic nature cannot be repealed at a president’s whim. Cutting taxes while going to war has resulted in calamities in the economy and in Iraq.

  • White Agent

    superdestroyer- Unlike popular opinion, taxes are primarily irrelevant to the economy. Historically, higher taxes and booming economies are directly proportional. It is true that a nation can tax to much, but the United States has never been anywhere near that point.

    As for illegal immigration, I agree with your opinion. The democrats want illegal Hispanics because they when they become citizens they vote Democrat. The republicans simply want them as slave labor, push down wages in the entire country.

  • This sort of disconnect started w Reagan, when his admin redefined what constituted a depression and recession. We were in a Depression when Reagan took over, but that word was anathema, so the economy’s health started being tied to meaningless corp stats, rather than the indices that affect the working class. 1987-92 was another Depression, just as the last 5 or 6 years have been. But you’d never know it w the Reaganaut Doublespeak.

  • WA- you are spot on re: high taxes = economic booms. Ike’s era is proof of that.

  • stevesturm

    WA and cosmoetica: it’s ridiculous to say that taxes are irrelevant to the economy. I challenge you to find a single economist – liberal or conservative – who will agree.

    Shaun: tell me how raising taxes during wartime would have helped all those people you profess to be sorry for. What economic theory holds that talking more money out of people’s pockets makes it easier for them to afford the necessities of life?

    Oh, I always get a kick of your labelling as partisan those who disagree with your partisan rantings. That you every now and then acknowledge that the Dems are not perfect doesn’t make you the epitome of moderateness.

  • AustinRoth

    OK, for those who have to see black clouds everywhere, lets also not forget that unemployment is currently 4.4% (extremely low) (, inflation is 2.78% (also very low) (, and average wages have gone up in nearly every sector over the past 12 months (, and so on.

    Home foreclosures are a result of the housing bubble, which was driven by the sub-prime lending market, not the general economy. That the government was lax in oversight of THAT industry is undeniable, IMO, and therefore does bear a large portion of the blame.

    But those who borrowed well beyond their means, those who speculated (similar to the tech stock boom of 97 – 00), and those companies that were obviously not following prudent fiscal responsibility and encouraging people to borrow beyond their means are the real proximate cause of this issue.

    I also blame Congress, and Bush, for the current consumer credit crisis. The chickens have come home to roost from the bankruptcy reform laws that took effect in 2005. It was a weak-willed Congress, along with the complicity of the White House, that allowed THAT travesty to be foisted on the American public.

    Bottom line is, in any economy you can find proof that it is less than perfect, and some people are not getting their ‘fair share’. Simply redefining what a ‘fair share’ is usually sufficient. But if all else fails, then fall back on reporting on the homeless.

  • White Agent

    AustinRoth-Well if unemployment is so low, then we can afford to pay the unemployed what European unemployed are paid….or more.

    The republicans have never done anything that support a growing economy except in the stingiest of reference. Corporations own the republican party and corporations make every excuse they can to screw Americans. Even though it is those screwed Americans whom send their children to die, that these corporations depend so much on just to exist.

    Bottom line: If one American does not have healthcare, if one American does not have a place to live, if one American does not have equal opportunity…….then the opposite end of the income spectrum, (including corporations), needs to TAXED to ensure EVERY American has these basic necessities of life.

    Anything less is not equality, liberty, or, morally acceptable.

  • superdestroyer

    I am surprise that no Democrat every points out that in the last six years of the Clinton Adminisration there were no new taxes, no new entitlement programs, and no new regulatory programs on business. The economy boomed and the unemployement rate went as low as it was today and the stockmarket went very high.

    It was not the Democratic commentators and pundits who saw bad things in the booming stockmarket but it was Alan Greenspan.

    Also, it is erroneous to claim that high taxes in the 1950’s helped the American economy. Having all of the other world economies physically damaged allow for a massive expansion of the economy. The government with high taxes and the unions with high wage demands were just rent seekers. It was easier to pay high taxes and high wages in the middle of the booming economy. The problem was when the rest of the world caught up to the American economy, the high taxes and high wages were still there. The perfect example being the sugar planation workers in Hawaii being the highest paid sugar workers in the world before the plantaions went out of business.

  • Man all of y’all are looking like wingnuts right now…STOP THE B.S. ALL OF YOU!

    Y’all wanna make this a democrat/republican thing


    The Haves are royally screwing the Have Nots so the Haves can hold on to their position…it’s been like that for eons.

  • AustinRoth

    Y’all wanna make this a democrat/republican thing


    Well, I most certainly said nothing about Dem vs Rep, quite on purpose.

    And ‘haves vs. have nots’, makes it sound like you want class warfare.

  • Not class warfare, but it seems like things are morphing into a caste system which is not good…feifdom even. Also, I’ve ran the whole class gamut

    Born in poverty to two teenage parents, Adopted into suburban middle class life, lived the past 3 years in the hood, and now am back into suburbia. Come around my way and I’ll show you if you want. It’s Class issue not a political one, in my opinion…i see insane fingerpointing like “it’s the right’s fault” “NO! it’s the left’s fault!” All that is a load of bull if you ask me or anyone I know.

  • Jim S


    Do you really expect anyone outside of the Republican party to buy that “…want class warfare.” BS? You cite average wages increasing like it means something. Sorry, but unless you can dig deep into those numbers it’s meaningless. Remember, when Bill Gates and Warren Buffett enter a room with 80 unemployed people on average everyone’s a billionaire.

  • shaun

    I am not an economist nor did I stay in a Holiday Inn Express last night. But from my socio-economist perspective, there is no long-term trend more grave that the enormous and growing gap between the haves and the have-nots. It’s implications are enormous and no one who could make an effort to do something about it — not Democrats, not Republicans, not Wall Street bigs — are lifting a finger.

    People talk about the moral decay of American society but they’re missing the elephant in the room. This is it.

  • casualobserver

    The premise of laissez faire is to establish the framework in which individuals may freely allocate resources, augmented by a legal framework established by government intervention to secure defense, fair trial and property rights (guaranteed process). This is in contrast to the central planning of socialism which curtails individuals’ free allocation of resources and freedom to contract in order to engineer some pre-ordained social goal. Social democrats oppose many market results which occur, but laissez faire only controls transactional process, not the decisions made by individuals which beget those results. Therefore, I remain totally unconvinced how government central planning is more “fair” than the market result from the aggregate preferences of millions of free-choosing consumers.

  • AustinRoth

    Chuck – Good for you overcoming such obstacles, and I can relate.

    I followed a different arc (simple version – started middle class, eventually degraded to living in an abandoned bus eating from garbage cans, now upper-middle class), so I know it is difficult to break out, and both the shunning of one group of ‘friends’ as you fall down, and the resentment of other ‘friends’ as you climb out are difficult to deal with. For me, the support of my in-laws was the psychological safety net that allowed me to move on.

    However, I admit to having come through my life experiences with an attitude that while certainly some are held down by circumstances beyond their control, most have self-defeating attitudes and behaviors that prevent them from taking advantage of any opportunities that come their way.

    One of the major ones I saw in the attitudes can only be called ‘fear of failure/success’. If I don;t try, then I don’t have to blame myself for failures in my life. And if I do try and succeed, then everyone I know will resent me.

    Now please, don’t talk about how simplistic an argument this is, because it is, and to do it justice would require a HUGE post. And I am talking my experiences, my observations, and my conclusions. And it is to an extent a ‘blame the victim’ attitude, with the exception as I stated earlier that it does not apply to everyone, of course, but IMHO it applies to the majority of the people I lived and interacted with during those years.

  • Jim S

    As I listened to the record numbers being reported on MarketPlace on NPR last night I know that I was struck by the continuing and apparently growing disconnect between the stock markets and the economy for the average citizen.

    One of the things that I’ve always been amazed by is how Wall Street analysts can realize that 70% of our economy depends on American consumers but these same people always cheer businesses on when they fire people. Citibank, an immensely profitable corporation, isn’t meeting what these analysts want to see. Citibank announces that they are going to fire 15,000 people (Or at least not hire replacements for some of them.) and Wall Street rewards them for reducing the income of the American consumer. They never once think of the cumulative effects when American companies overall fire thousands upon thousands of people, many of whom are going to be unemployed for months and are also largely going to make less at their new jobs than they were making previously. Then the analysts are just shocked when consumer sentiment might not be the greatest. They wonder why people are going into debt. They don’t have a clue as to what the real world outside of their insular community is like.

  • AustinRoth

    Jim S – did you even bother to follow the link provided before launching your attack on me? It provided much deeper detail, and if you had taken the time to read it you would have known that.

    Come back after you have done your homework.

    p.s. – how can all caps ‘have vs. have nots’ NOT be read as at least a veiled reference to class warfare, or at least class struggles? And Chuck actually responded rather eloquently to what was a legitimate question (in my mind at least, given it was his comments I was responding to).

    You, on the other hand, just used it as a springboard to try and denigrate me, and ALL Republicans.

  • Austin,

    Mind you most political talk is akin to a group of 12 year olds bickering.

  • domajot

    It is a caste system of haves vs. have-nots, no getting around it.
    What’s more, it’s the havs-nots’ fault. They have the wrong attitude, they don’t take personal responsibility, and they
    are too impatient to wait for the good times coming ‘in the long run’. Naturally, I’m overoversimplifying, but it’s indicative of the thinking that keeps the have-nots invisible and unheard.

    A lot of this has to do with globalization, and no president or party could prevent the inevitable. What they could do, but don’t, is to prepare for it and take steps to counteract the worst of it. Serious re-training programs would help some; the government’s involvement at this point is pitifully miniscule. Portable and universal healthcare would be another, so that those losing jobs have some kind of safety net.
    If nothing is done, the reaction could make things worse; already the anti-trade sentiment is growing, which is like trying to plug a dam with chewing gum.
    The loss of jobs is moving up the food chain, as more skilled and technical jobs are being lost.
    Every sign for trouble is in place and flashing.
    All we hear, though, is: ‘ the economy is great,” It’s true – for the haves only, and the rest don’t count, it seems.

  • DLS

    > But those who borrowed well
    > beyond their means, those
    > who speculated (similar to the
    > tech stock boom of 97 – 00),
    > and those companies that were
    > obviously not following prudent
    > fiscal responsibility and
    > encouraging people to borrow
    > beyond their means are the
    > real proximate cause of this
    > issue.

    And they deserve no sympathy.

  • Straw Man count (briefly):

    Stevesturm: ‘WA and cosmoetica: it’s ridiculous to say that taxes are irrelevant to the economy.’ I said no such thing, and WA said ‘taxes are primarily irrelevant’- an important modifier.

    ChuckPrez: ‘Y’all wanna make this a democrat/republican thing’ I did not, therefore the all is irrelevant.

    AustinRoth- you accuse Jim S of an ‘attack’ when he wrote: ‘Do you really expect anyone outside of the Republican party to buy that “…want class warfare.â€? BS? You cite average wages increasing like it means something. Sorry, but unless you can dig deep into those numbers it’s meaningless. Remember, when Bill Gates and Warren Buffett enter a room with 80 unemployed people on average everyone’s a billionaire.’

    This is a disagreement, not an attack. Why do you need to hyperbolize? To get a moral upper hand that your argument cannot provide?

  • Dialectic is best when accurate, impersonal, and laced with occasional wit.

    That trio’s lack is why so many blogs are best approached as displays of human fear, ignorance, and hostility, rather than intellect.

  • DLS

    > The democrats want illegal
    > Hispanics because they when
    > they become citizens they
    > vote Democrat.

    They don’t have to wait for citizenship. This is the Democratic Party, don’t forget.

    > It is a caste system of haves
    > vs. have-nots, no getting
    > around it.

    To the extent the middle class may be “shrinking” or even “vanishing,” you have a point and one thing that we see as wrong in Third World nations is gross inequality, don’t forget. I wouldn’t call it as rigid or divided as you might, but the seeds are there (and in the future, given functional illiteracy and underclass behaviors among those growing up currently).

    > A lot of this has to do
    > with globalization, and
    > no president or party
    > could prevent the inevitable.

    Agreed. I’ve read one really good book by a self-professed yellow-dog Democrat that describes this. Not only did we formerly have no competition (world war had destroyed it) but we have it now. We have dysfunctional families now, most notably in the underclass. And (the author also goes on to note) that what work that now can be done in the Third World will be revalued accordingly, and done here for much less or not here at all. It’s a harsh world (the author also notes accurately that many people would deal with crime with rural prison camps where people would have to grow their own food or starve, etc.).

    This is totally separate from “uneven playing field” games that other nations do to us, closing their markets to our products while dumping theirs on our market.

  • AustinRoth

    cos – the second part wasn’t an attack, but it was based on not following the link to find the deeping detail, which is there, and shows they are not ‘Buffet in the room’ numbers.

    In fact, they are clearly defined as ‘Average hourly and weekly earnings of production and nonsupervisory workers’, and provide a fairly good breakout by 12 top-level sectors, and 27 selected sub-sectors, quarterly since Mar 2006, with avg hourly wage and avg weekly earnings for all categories. That is a fair amount of detail, at least in my mind, and not skewed by ‘elephants in the room’.

    As for “Do you really expect anyone outside of the Republican party to buy that “…want class warfare.â€? BS?” being a comment meant to denigrate me and all Republicans, well, yes I think that is exactly what that was, and qualifies as an attack on me. Saying that what I believe is BS is certainly not a compliment, or even a reasoned objection to my point of view, at least by my standards.

  • domajot

    While bickering about who to blame, the job loss situation gets worse. This has far reaching consequences.

    For one, this affects the performance of the media. When the Wall St. bottom line is the focus, good investigative reporters get fired, and our news is delivered by company hacks and the less expensive regurgitators of Internet news. When the ‘public service’ portion of the media is jettisoned, we get screaming heads to pull in the attention of a gullible public. What is the lesson we learned from the Fitzgerals investigation? The press and Washingotn just pass talking points back and forth over cocktails and no one checks the facts, because that’s expensive. When Judy Miller becomes a star and can attract readers, no one asks questions about what she is reporting.
    That’s just the media. The ‘bottom line’ mentality affects every area of our lives.
    We treat Wall St. as it it was some anonymous cloud in the sky. In reality, it shapes every thread in the fabric of our lives. That fabric is unraveling, IMO, while Wall St. rubs its hands in smug satisfaction.

  • stevesturm

    cos: you’re right, I left out the ‘primarily’ in referring to WA, and I did presume you were agreeing with him based on your comment following his. I still stand by my challenge to find an economist who agrees that taxes are primarily irrelevant to the economy.

    Put me in the camp of people who aren’t bothered by some people making $20 million a year when others are getting laid off. I don’t have a problem that Bill Gates or Derek Jeter or Jeffrey Immelt make a whole lot more money than I do. If someone is good enough at what they do to have someone voluntarily want to give them tons of money, good for them. And I’m not going to lose any sleep over laid off autoworkers not being able to find comparably paying jobs that require only the limited skill set that they have to offer.

    And for all the moaning and groaning about ‘Wall Street’, setting aside the suspender-wearing brokers and bankers, remember it’s your money that makes up Wall Street. It’s your brokerage accounts, your 401ks, your pension funds (to the extent you have them). Wall Street isn’t some finite bunch of dislikeable yuppies, it is Main Street (and no, I don’t work on Wall Street).

  • domajot

    One more point about Wall Stl’s role in the gap between the haves and have-nots.

    The haves invest and their wealth grows exponentially. The have-nots spend their resources on the basics of life, and cannot invest. They cannot get on the first rung of the ladder to financial comfort.
    Also, a financial planner on a panel explained how a low-income, low-investment person could never gain enough traction on Wall St. to finance his retirement. Also, should illness or job loss strike, that person’s IRA is the only source for seeing him through, and it’s back to zero. It’s his own fault only in the sense that he was born into the wrong social class.

  • Wesley
  • DLS

    Steve Sturm said:

    > I don’t have a problem
    > that Bill Gates or Derek
    > Jeter or Jeffrey Immelt
    > make a whole lot more
    > money than I do.

    The book I mentioned earlier discusses this and uses Hollywood as an example (which remains valid even though the art of acting has disappeared in the past decades). A few are superstars, many still are waiting tables and are still dreaming. Also mentioned are writing computer software (there are large differences in productivity) and the auto workers (one bolt-tightener really isn’t that much different than another).

    > And I’m not going to
    > lose any sleep over laid
    > off autoworkers not being
    > able to find comparably
    > paying jobs that require
    > only the limited skill set
    > that they have to offer.

    Actually, they’re often retained at nearly full (overly high) pay by the US firms under the JOBS bank scheme (which the UAW pledges to insist be retained in the coming 2007 huge negotiations). Legacy costs (pension and Cadillac health benefits, given to people who retire at ridiculously young ages) are eating Ford and GM alive. (The auto plants in the South are thriving, meanwhile.)

    Your main point is obviously well taken. Some younger workers are accepting buyouts currently at Ford and GM and counting on training to improve their future prospects.
    Many employees are exposing themselves to risk by holding out, either in the expectation of remaining employed until they retire after “30 and out” (itself ridiculous), or until they get a better buyout offer. They are risking a lot, including bankruptcies of Ford and GM.

    Daimler-Chrysler is dumping Chrysler. What is its future and that of its workers? Will the sale be delayed until after the big UAW negotiations?

  • DLS

    Domajot wrote:

    > The haves invest and
    > their wealth grows
    > exponentially. The
    > have-nots spend
    > their resources on the
    > basics of life, and
    > cannot invest.

    We all need to distinguish between spending on essentials and what really is the issue here with too many people, that of lack of future orientation and a refusal to defer present gratification of desires for consumer items. Nobody needs an expensive car, large-screen teevee, cartons of beer, etc.

    > Also, should illness or job
    > loss strike, that person’s
    > IRA is the only source for
    > seeing him through

    True, and to its dimunition or loss one must add the tax penalties.

    I wonder if after 2008 the Dems might not revise the bankruptcy laws in a health-care activist manner to create a special type of bankruptcy, “medical bankruptcy,” that is much more lenient than other forms of bankruptcy. (Real bankruptcy should be as harsh as IRS garnishments and seizures, and should last on the books for 20-25 years.)

  • domajot

    Stevesh said:
    “..your brokerage accounts, your 401ks, your pension funds ..”

    This reference will not help those who have none of these. There are a growing number of people losing jobs, having to use what was invested to make ends meet. There are also the employed faced with a devastating illness.

    This is precisely the trouble. The people struggling are invisible or discounted as moral failures.

  • Entropy

    A couple of points,

    First of all, most people today are better off than they were through most of America’s history. There was not social safety net, not even income tax for the socialists here to redistribute. By any measure, the average American, even the poor ones, are better off today than through most of American history.

    Secondly, the income gap is indeed large. However, for the most part, it’s because the top 1% have gotten richer while the poor have largely remained stagnant. The income gap is a poor metric for determining how Americans are doing in general.

    Third, I agree it’s a good goal to alleviate the needs of the poorest in our society. Where I disagree with the socialists here is how to do that. History has pretty definitively shown that income-redistribution is not all that effective. Making welfare checks fatter does nothing to help the poor get out of poverty, though it certainly makes socialists feel good. I would rather see money spent to provide free education, training and other life-skills that materially improve a person’s opportunity. It goes back to the old “teach a man to fish” adage.

    Fourth, the global economy is in transition, and the US is at the forefront of that economy. Transition means change and change means disruption and disruption means people’s lives are negatively affected. There is no use pining away about pensions or the liquidity of the labor market, or the loss of high-wage, low skill manufacturing jobs. The world is a much more competitive environment and all the socialist programs in the world won’t change that. American workers are now directly competing with Indian, Chinese and Vietnamese workers. The sad fact is that workers from other countries – workers who truly know what real poverty is – are hungrier and more motivated to succeed than the average American low-wage worker. It’s one reason why immigrants are so successful here. Just read this article for a taste of why the underclass in America stays poor:

    “I became so frustrated with visiting inner-city schools that I just stopped going,” the talk-show queen says in Newsweek, on newsstands today.

    “If you ask the kids what they want or need, they will say an iPod or some sneakers. In South Africa, they don’t ask for money or toys; they ask for uniforms – so they can go to school.”

    Oprah is not exactly a raging conservative. The sad fact is that education is not valued by the underclass in America. Blame that on our materialist culture, or whatever, but it’s a problem that transcends partisan politics. People’s priorities are screwed up and so immigrants and Indians will kick the crap out of the domestic American underclass in the global economy. All the income redistribution in the world won’t address that fundamental problem. Rather, it will get us to where France is today – with high real unemployment, no liquidity in the job market, slow growth, etc.

  • domajot

    Oh, I get it. It’s the fault of the poor, so we can just ignore them.

    We can, instead, spend our money on building more prisons, higher walls for our gated communities and, private secutiry guards. Maybe we can herd them all into a fenced off area of a desert.

    Anything but trying to find ways to deal with our national problems.

  • Entropy:

    Other than the inevitable labeling (“the socialists here”) you make some very good points and allow me to reinforce one: George Bush inherited some long-term economic trends that in many cases he — or any other president and Congress — would have a difficult time checking, let alone slowing.

    But he has made matters worse, arguably far worse, and while the concept of compassionate conservatism tested well with focus groups, it has been a cruel joke.

    Finally, I am uncomfortable with your citing Oprah, who is spot on correct as far as it and she goes, without noting that non-black American kids from poor backgrounds would offer the same kind of responses.

  • AustinRoth

    Shaun – where, exactly, did Entropy say ‘black’, and therefore need to discuss non-black American kids?

    I see ‘underclass’, I see ‘the poor’, I see ‘American workers’, I see ‘inner-city’. Only you seem to see ‘black’ in his post, or Oprah’s.

    Why is that?

  • Entropy


    I agree that Bush’s “compassionate conservatism” has been a dismal failure. He has done nothing to solve the core issues and the one thing he has done – school testing, has produced mixed results at best. On the other hand, the Democrats haven’t produced or proposed much either. It’s a huge problem our political class ignores because addressing them requires difficult choices that don’t provide short-term benefit. Tough decisions with no benefit for the current election cycle is, sadly, political suicide. Yet the importance of addressing these fundamental problems is critical if America is to remain competitive with the world. Although not a perfect book, I think Tom Friedman’s “The World is Flat” makes a very compelling case of the challenges we face.

    And you’re right about Oprah – I didn’t mean to suggest the phenomenon she complains about is restricted to black kids. If there’s one demographic that gets no coverage or exposure at all, it’s probably the rural, white poor. What coverage they do get is reduced to redneck jokes that are just as despicable as many thrown toward urban blacks.


    Somehow I knew you might misinterpret what I wrote. The simple fact is that many in the American underclass do not value education. Stating that fact does not mean that the underclass is to blame, nor should it suggest that they do not hold any responsibility either. There are many factors involved ranging from the legacy of slavery to our materialist culture, to a broken education system, to teenage pregnancy among many others. Like I asked before, what is the solution? For some of the commenters here, and my socialist verbiage is aimed at those few, the solution is income redistribution. The solution is taking money from people they view as too successful and therefore greedy. I think the solution lies elsewhere, requires a multifaceted approach, and will only be successful in the long term – two-to-three generations down the line. I’m all for a safety net, but increasing the size and comfort of the net does little to help those who fall into it get out and climb back up again. The focus, in my view, should not be on making the net more comfortable, but providing incentive and material support to make getting out of the net easier.

  • AustinRoth:

    Umm . . . I didn’t say that Entropy said “black.” I noted the Oprah citation regarding inner city kids and South African kids. I dunno. Maybe Oprah was not talking about blacks, but I doubt it.

    My point was and remains that too many American kids — whether inner city, suburbia or rural — would respond similarly.

  • AustinRoth

    Shaun – I couldn’t agree more with your last comment.

    If I misread your criticism in your previous post, I am truly sorry, but based on your use of punctuation, it IS what the sentence says (Entropy should have cited non-black sources), and as you are a professional writer, I assumed it was that way on purpose.

  • AustinRoth:

    So little time, so many misunderstandings.

    I think that you, Entropy and I are in agreement that youthful slothfulness is color blind.

  • domajot

    I agree with you (wow) that we need a multifaceted approach, and I’ve advocated for years that we need to constantly go back and see which social programs are working and
    which not, instead of talking about ‘welfare’ as including every facet.
    When all is said and done, though, there will always a sector of unreachables. Then we have to decide, do we give the unworthy homeless a bed or do we let them sleep on Main St.? Sometimes, it’s a question of thinking what’s better for the community as a whole.
    In New York, all homeless are provided with basic housing of some sort, at great cost. They may not deserve it, but the city is now more attractive to tourists and businesses, which bring in the revenue and everyone benefits.
    These are tricky decisions and the results have to be watched constantly.
    It has to be a multifaceted approach not only in application, but also in the way we think about solutions.

  • This article in BusinessWeek provides some clues. It speaks of a labor shortage but the key fact seems to be not so much an actual labor shortage but an unwillingness on the part of the employers to make what is supposed to be the classic response to a shortage, which is to pay more. Some key phrases included are

    The problem in each case: not enough people who are both able and willing to do the work for the posted pay

    What’s going on here? With global growth running at a strong 5% a year since 2004, the strategies that companies developed to hold down labor costs–including offshoring work to low-wage countries–are running out of gas far sooner than many expected. The seemingly inexhaustible pools of cheap labor from China, India, and elsewhere are drying up as demand outstrips the supply of people with the needed skills. “Companies were hoping they wouldn’t have to worry about human resources at all,” says Peter Cappelli, director of the Center for Human Resources at the University of Pennsylvania’s Wharton School. “Now they do.”

    Some of the companies that are desperate to keep their worker’s salaries low have good reasons to do so. They are losing money or on the bubble. But some are like Citibank, firing people just to keep the bonuses of upper level management up there.

    I followed your link AR. The averages still don’t mean a lot to this argument because they don’t reveal the numbers of people receiving those pay scales. They don’t speak to factors such as benefits or lack of same. What is visible in those numbers? Average weekly pay for people in the Leisure and Hospitality industry are $257.80. Retail is $382.50. There are three other categories that are under $500 a week.There are four categories that pay over $900 a week, seasonally adjusted. By the time all is said and done the seasonally adjusted average for all workers is $583.76. That comes to $30355.52 a year. Not bad. It’s above poverty level. It’s also not that good. It’s not middle class. It’s also a gross amount. The increase (estimated) over one year of 4.17% isn’t bad but where did it wind up? What happened in the several years previous? Context is all.

    My call of BS is simple. Class warfare is not pointing out that millions are hurting while a relative few are extremely wealthy. Class warfare is when you set things up so that this is the way things are. It’s working hard to make certain that things stay that way. That’s class warfare.

  • AustinRoth

    Jim – you seem to be struggling real hard to admit that there was a lot of detail there, and what I said was true.

    Was it the complete picture, with every nuance of the economy, pay, benefits, inflation, taxes (state, local, federal, sales, gas, etc.), every form of government assistance factored back in, covering every sector of the entire economy, private, corporate, farming and government workers, analyzing and contrasting micro- and macro- trends in monthly, quarterly and annual time-frames over 1, 2, 5 10, and 25 years?


    And I never claimed it was. I just said it showed average wages have gone up in nearly every sector over the past 12 months.

    Would it kill you after checking the link to admit I actually made a factually correct statement?

  • Apologies, AR. Yes, according to the BLS numbers you are completely correct. I just don’t think it’s good enough given recent history to overcome other economic problems for the lower one-third to one-half (economically speaking) of our population. It will be better if it could continue for the next few years at a rate that would account for inflation.

  • AustinRoth

    Jim –


    And I agree, nothing would be better right now for the economy than a period of sustained wage growth.

    The investment market, as indicated by the DOW, has fully rebounded, and corporate profits are healthy, and top-line revenue is growing as a whole.

    There is absolutely no indication of inflation being a concern at this time, or in the foreseeable future.

    There is a looming (and occurring) consumer liquidity crunch to be worried about, that if severe enough, would threaten our overall economy, globalization or not.

    Unemployment is almost too low (not an oxymoron, as economists can tell you).

    Add it all up, I think it points to a healthy growth in real wages (for regular workers, not the just ‘elite’) over the next few years, and maybe even a closing of the gap, which while I have argued over people’s use of rhetoric surrounding the issue, I have never refuted as a real problem.

    I do not believe in caps in top-tier wages, but I do believe that lower-tier wages are overdue for significant increases.

  • Jim S

    We can both agree on all of those points, AR. Did you follow the link to the BusinessWeek article I posted? Basically in several places it pointed out how many corporations are trying to avoid paying their employees more irregardless of the health of the corporation. That’s a problem when corporate profits are as high as they are and executive compensation has increased accordingly (or even more than performance would justify in many cases).

  • AustinRoth

    Yes I did, and I have already noticed those trends myself. I believe that the past few years was their reaction to believing that outsourcing was some kind of Golden Fleece, but reality has shown wthat even for the Titans of American Industry, there is NO free lunch!

    Now, don’t get me wrong, I deal with some of those REAL Titans of Industry, and they are truly amoral in their business dealings. But by that, I mean they care only about increasing profitability and growing their business. They do not go out of their way to screw workers – they are just another line item, though.

    But, as outsourcing has not been the panacea expected, both due to quality issues and now rising costs, they are both starting to raising wages and hiring domestically gain, as they are now seeing that as the best business strategy.

    I agree it is too bad that they are not more interested in the workers as people (and to be fair, there are a few that do think of that, but they are both in the minority, and when push comes to shove, business is business in their minds).

  • The amazing thing is that they don’t realize that in fact their groupthink about employees being an expense center instead of contributing to the companies they run is damaging to their own long run good. With the economy depending so much on consumer activity and wages having stagnated for so long that debt could reach critical mass soon who do they expect to be buying their products or services? If it reaches a point where large numbers of those consumers have little to no disposable income or even barely enough to hang onto their homes and put food on the table what will it mean for them and their bonuses? Oh, yeah. Their money doesn’t depend on performance, just persuading their friends on the board to vote the right way.

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