Corporate Gauging and Rising Prices

The U.S. Federal Reserve continues to raise interest rates to slow raging inflation. The root culprit isn’t the consumer, but the greedy corporate sector, which is using inflation as cover to maximize its profit margins. We know this every time we shop and see goods priced double, or more, the rate of inflation. What’s needed immediately is a windfall profit tax.

Meantime, the average worker faces an insufferable erosion in purchasing power, and the plight of those living on fixed incomes exacts the ultimate cruelty.

Three principal parameters to assess market expense are labor costs, nonlabor inputs, and the “mark-up” of profits beyond the first two. Recent measurements (economic policy institute.org) reveal record profit margins over the former two, or plus 53.9% growth in corporate profits, as opposed to 38.3% for non-labor cost, which includes the supply chain crisis induced by the pandemic, and just 7.9% for labor costs.

Certain sectors of the economy have especially profited, averaging above 20% in profit margins such as information technology and fossil fuels. Exxon, for example, has just published a record profit of $17.9 bn for the second quarter (NYT).

Fueling inflation is the accelerating corporate buy outs, lessening competition. You’re aghast at rising meat prices? That happens because just four meat conglomerates now control the market. Since 1990, some 75% of corporations have consolidated and control as much as 80% of the market, reports the Official Monetary and Financial Forum (OMFIF).

And things may likely get worse as a looming recession makes itself felt and corporations cut expenses to stabilize profitability. Amazon has laid off 100,000 workers, even as profits bulge. Others include Twitter, Google, Netflix, Peloton, Best Buy, Tesla, Ford, General Motors and Exxon Mobil.

Corporations aren’t by nature altruistic. They exist to reap maximum profit for their CEOs and investors. They think in numbers, not individuals.

–rj

On Class Warfare in America: The Yacht Mentality Revisited

yachts3

I wanted to revisit my last post of several days ago, “The Yacht Mentality that Threatens our Economy,” with this apropos poem by William Carlos Williams, one of America’s foremost modernist poets.  As you may have surmised, it’s called “Yachts,” which I employed as my central metaphor in depicting the economic inequity rampant in our nation.

Williams, by the way, was a physician from Hoboken, NJ, who compassionately dedicated his practice to treating the poor, who were never far from his thoughts.  We see this vividly in his symbolically dense poem that comes close to being allegory in its one-to-one application, or depiction, of the tensions governing the relationship between the oligarchy of the economically privileged (shall we call them them the 1%?) and the majority, marginalized working class folk like you and me.  But first the poem, then my commentary:

Poem:

The Yachts

contend in a sea which the land partly encloses
shielding them from the too heavy blows
of an ungoverned ocean which when it chooses

tortures the biggest hulls, the best man knows
to pit against its beatings, and sinks them pitilessly.
mothlike in mists, scintillant in the minute

brilliance of cloudless days, with broad bellying sails
they glide to the wind tossing green water
from their sharp prows while over them the crew crawls

ant-like, solicitously grooming them, releasing,
making fast as they turn, lean far over and having
caught the wind again, side by side, head for the mark.

In a well guarded arena of open water surrounded by
lesser and greater craft which, sycophant, lumbering
and flittering follow them, they appear youthful, rare

as the light of a happy eye, live with the grace of all
that in the mind is fleckless, free and
naturally to be desired. Now the sea which holds them

is moody, lapping their glossy sides, as if feeling
for some slightest flaw but fails completely.
Today no race. Then the wind comes again.  The yachts

move, jockeying for a start, the signal is set and they
are off.  Now the waves strike at them but they are too
well made, they slip through, though they take in the canvas.

Arms with hands grasping seek to clutch at the prows.
Bodies thrown recklessly in the way are cut aside.
It is a sea of faces about them in agony, in despair

until the horror of the race dawns staggering the mind,
the whole sea becomes an entanglement of watery bodies
lost by the world bearing what they cannot hold.  Broken,

beaten, desolate, reaching from the dead to be taken up
they cry out, failing, failing! Their cries rising
in waves still as the skilled yachts pass over.

Commentary:

When you first get into this poem it seems to feature Man vs Nature, but by l. 13 with the specifics about the crew, which “crawls solicitously,” it dawns on you that it also takes in humans pitted against one another.

If the earlier portion of the poem (up to l. 13) gives an imaginative, blissful view of Nature in relation to Man and, in turn, of Man’s inter-relationships, the latter portion gives you the awful reality masked by the seeming tranquility, or the potential for revolt from the status quo of both Nature and Man.

Mention of a “race” sets the stage for transition into a contest for mastery, initially of yacht vs. yacht, but note how the diction changes here with sinister implications:

“Now the sea which holds them is moody”

 “As if feeling for some slightest flaw”

“Now the waves strike at them”

Note as well how the ominous turns into a personification of unleashed violence in what becomes a power struggle waged between haves and have nots, with the yachts metaphorized into repressive knife slashing entities indifferent to whom they maim:

“Bodies thrown recklessly in the way are cut aside.

“It is a sea of faces about them in agony, in despair.”

Williams’ subterranean intent now surfaces:  we have a revolt put down by the yachts, the poem’s symbol for connoting the wealthy, of the normally “solicitous,” or working classes, whose labor has made their wealth possible, though they’ve gleaned little for themselves, “bearing what they cannot hold.”

“…the horror of the race dawns staggering the mind,
the whole sea become an entanglement of watery bodies

The yachts, or impervious upper class, obviously win out on this particular day, but not without leaving in their wake their decimated victims:

“Broken,
beaten, desolate, reaching from the dead to be taken up
they cry out, failing, falling! their cries rising
in waves still as the skillful yachts pass over.

In sum, Williams has delivered a Marxist polemic of poignant genius in its thematic rendering of class struggle against inequity.  The very style of the poem adroitly reinforces this theme of worker repression by the economically removed in its run-on lines and skillful alliteration at poem end, the yachts unheeding of the crying wounded in “waves still as the skillful yachts pass over,” suggesting speed and, hence, indifference.  For Williams, this hierarchy “live(s) with the grace of all that in the mind is fleckless, free and naturally to be desired.”

In short, their narcissism of self-indulgence (materialism) mirrors behind its proffered beauty their willful escape from responsibility to the working classes on whom their wealth is built (“the crew crawls/ant-like, solicitously grooming them”).

In an America where 37% possesses half its wealth and the top 1% often pays minimal taxes, Williams’ poem reminds us that we have much work to do to render the American dream palpable for not just a few, but for the many.

–rj

The Yacht Mentality that Threatens our Economy

unemploy I turned on the TV while eating lunch yesterday to a feature called “Island Paradises,” thinking Hawaii or maybe some Caribbean gem like Dominica or St. Vincent’s.  Instead, it was about one man’s substantial investment, worth $28 million, in a plus 100 foot long yacht, sporting 3 recreational decks with pools, 7 bathrooms and 15 bedrooms, plus 3 bars and a below deck garage replete with several sleek motorized boats.  Docked in Ft. Lauderdale, it costs– Can you believe this?–$50,000 a fill-up.

I don’t know about you, but this kind of ostentatious display of wealth rankles me, not because I’m covertly envious, but because I think it represents excess and is just plain ethically wrong in a world of so many poor.  Again, I think of the 1% in my own country (USA), who own 37% of its wealth and whose income has actually increased since the economic downturn of 2008 (Pew Report, February 2013).  Meanwhile, hundreds of service food workers have staged walkouts in quest of a more sustainable minimum wage, presently $7.25 an hour. The average food service worker actually makes about $11 an hour, barely above the poverty line for a single parent with one child.

The President is compassionately urging an extension of unemployment benefits for 1.3 million presently receiving unemployment insurance.  (The total number of long term unemployed, however, stands at a stubborn 3.5 million.)  As he rightly put it in Saturday’s weekly address, “The holiday season is a time for remembering the bonds we share and our obligations to one another as human beings.”

It isn’t that the vast majority of these folks are free loaders.  It’s simply that they’ve been looking and can’t find work and that, by the way, is what the drop in unemployment to 7% really means, that thousands of despairing workers have simply given up looking for work. Unfortunately, the longer you’re out of work, the more companies shy away from you.  What’s more, in a strained economy, many companies are resorting to part-timers to circumvent having to pay benefits and to maximize profits.

What really hurts is when you’re past 50 and lose the job you’ve worked at a good many years, anticipating a reasonable retirement package just a few years up ahead.  This recently happened to a friend of ours, an engineer with a strong resumé in computer skills. Though he looked everywhere, he ended-up driving a school bus.  So even if you find work, you’re likely to find your sharply reduced wages sure to contribute to your continuing financial distress.  The situation for blacks and hispanics is even bleaker.

That yacht feature reinvests my thoughts as I write.  The obscenity of it!  The truth is, despite what conservative pundits tell you, a massive transfer of wealth is taking place in America and it’s not Robin Hood style from rich to poor.  Consider this from the Pew Report:

During the first two years of the nation’s economic recovery, the mean net worth of households in the upper 7% of the wealth distribution rose by an estimated 28%, while the mean net worth of households in the lower 93% dropped by 4%.

Think movie stars with their posh Bel-Air and Malibu compounds; instant millionaire athletes, Wall Street traders; bank CEOs.  Hey, think Walmart with its six family progeny having a bloated net worth of $144.7 billion.  Wal-Mart currently pays its “associates” $8.81 an hour.

Again, our President weighs-in:

If Members of Congress don’t act before they leave on their vacations, 1.3 million Americans will lose this lifeline. These are people we know. They’re our friends and neighbors; they sit next to us in church and volunteer in our communities; their kids play with our kids. And they include 20,000 veterans who’ve served this country with honor.

In the meantime, House Speaker John Boehner, emerging as America’s Scrooge, has served notice of his opposition to any extension of unemployment insurance, set to expire December 28.

This is America.  We can do better than a yacht mentality of self-absorption, extravagance and indifference.

–rj

Happy Days are here again: and the banks roll on

obama

If you’ve been watching the headlines on the economic front, you may have seen the news about record bank profits in the first quarter of the year to the tune of $40.3 billion, an all time high.  In fact, profits surged 15.8% over the same quarter a year ago. This marks the 14th straight quarter of bank gains. In short, the bailed out banks (you and I paid for that), are making money hand-over-fist.  Not so, mainstream America.

Meanwhile, in the past 12 months, scandal- ridden JP Morgan has garnered $24.4 billion in net profit, evidencing once again that banks could evade laws with impunity.  The precedent, after all, had been the release of the 2000 page examiner’s report on Lehman Brothers in 2010,  suggesting fraud had brought about its bankruptcy, yet nothing was done.

You’d never have expected hand-outs from the Obama administration, given their campaign pledges to look out for us po’folk and their left of center politics.  Their hand-outs, not loans, to banks and other fiscal institutions, are shockingly in the trillions, with $85 billion dished out every month from the Federal Reserve.

But then again, we can better understand the forces in play when we look at the cohorts Obama gathered about himself:  Jacob Lew, former Citigroup executive, appointed deputy secretary of state, with a cool $900,000 bonus in his pocket from Citigroup;  Mark Patterson, Goldman Sachs lobbyist, made chief of staff at the Treasury, despite a ban on lobbyists;  Timothy Geithner, who became the architect of the bailouts, appointed as Treasury secretary, even after it was discovered he hadn’t fully paid his taxes;  Larry Summers, who authored many of the pro-bank policies of the nineties, recruited as a mainstay economic advisor; and Rahm Emmanuel, appointed Chief of Staff, after gleaning $16.5 million as a Chicago investment banker in just 30 months in-between government jobs. All of them Democrats.  All of them with dirty hands.  

At the present moment, Larry Summers is being touted as the next Federal Reserve Chairman, replacing the retiring Ben Bernanke.  A long time Goldman Sachs executive and trader, he played a primary role in deregulating Wall Street in the Clinton administration.

So far, and probably never will happen, not a single bank or CEO has been brought to account for their criminal mismanagement of the people’s money, leading to the 2008 meltdown and consequent suffering for millions of Americans. Their suffering continues.

Now you would think from the President’s major address on the economy this month that happy days are here again for you and me, what with his boast of 7.2 million new jobs created in the business sector in the last four years.  But politicians do prevaricate, and it’s up to you and me to hold their feet to the fire.  Fact is, long term unemployment is at its highest level since the Great Depression, and of the newly minted jobs, most are low wage (often in the service sector), temporary, or part-time.

Curiously, nowhere did the President mention the plight of Detroit facing bankruptcy and the possible erosion of pension and health benefits for the city’s workers, including police and fire personnel.

To give him his due, he did allude to the growing income disparity between the rich and the majority of Americans:

Even though our businesses are creating new jobs and have broken record profits, nearly all the income gains of the past ten years have continued to flow to the top 1 percent. The average CEO has gotten a raise of nearly 40 percent since 2009, but the average American earns less than he or she did in 1999. And companies continue to hold back on hiring those who have been out of work for some time.

But how did this happen?  He didn’t mention government’s largesse to the wealthy through bank bail outs, corporate tax breaks, and reduced wages for autoworkers.  In the first two years of the President’s tenure, or after the downturn of 2008, the richest one percent enjoyed an 11% increase in income, unlike the rest of Americans whose incomes declined.

Again, nobody’s been minding the store.  In 2011, the Senate Permanent Subcommittee  noted Wall Street’s culpability just prior to the 2008 market collapse as “a financial snakepit rife with greed, conflicts of interest and wrongdoing.”

While it may appear that things are humming along nicely, the banks booming, the real estate market up, stocks at their peak, the reality is that more than 3 million of us can’t find work.  Those who do, work for less, often part-time.  Many, particularly those 50 and over, may never work again.  Black youth unemployment is currently at 42 %.

Several million Americans have been foreclosed upon by the banks, losing their biggest investment stake and, sometimes, a whole lot more.  Many others owe the banks for houses purchased at inflated prices, now worth considerably less.

But the banks roll on, too big to take on, as Attorney General Eric Holder recently let slip. What’s more, their lobbyist legions do their work well, busy button-holing members of Congress.  It’s a game of money, always has been, money spelling influence.  It’s America, you know.

This just  in:  The President remains committed to slashing Medicare by $400 billion and Social Security by $130 billion in his projected 2014 budget.  (In 2008, candidate Obama had pledged, reiterated by Biden in 2012, that he wouldn’t cut Social Security.)  Apparently, the bankers are a privileged class; the people, expendable to the exigencies  of  power and influence.

-rj

%d bloggers like this: