The American economy is still, by most measures, deeply depressed. But corporate profits are at a record high. How is that possible? ...Paul Krugman, NYT
We're back to the robber baron era only this particular era began with the Reagan administration and the deliberate lapse in enforcement of anti-trust laws. What's keeping the money at the top end and not paying a decent price for labor is a corporate culture which depends on the revival of its ability to act as a monopoly.
We don’t talk much about monopoly power these days; antitrust enforcement largely collapsed during the Reagan years and has never really recovered. Yet Barry Lynn and Phillip Longman of the New America Foundation argue, persuasively in my view, that increasing business concentration could be an important factor in stagnating demand for labor, as corporations use their growing monopoly power to raise prices without passing the gains on to their employees.
I don’t know how much of the devaluation of labor either technology or monopoly explains, in part because there has been so little discussion of what’s going on. I think it’s fair to say that the shift of income from labor to capital has not yet made it into our national discourse.
Yet that shift is happening — and it has major implications. For example, there is a big, lavishly financed push to reduce corporate tax rates; is this really what we want to be doing at a time when profits are surging at workers’ expense? Or what about the push to reduce or eliminate inheritance taxes; if we’re moving back to a world in which financial capital, not skill or education, determines income, do we really want to make it even easier to inherit wealth?...Krugman, NYT
I guess we've all noticed that the Republicans are fighting for a deficit resolution that avoids taking money away from the top earners while it tosses responsibility for the deficit on people who can least afford it: those who rely on social security and affordable health insurance to make up for their diminishing hold on a share of the economy. It's the real meaning of those code words, "smaller government." Democratic government is, after all, the collective bargaining system that works for all of us. What appals most of us is that even 37% of Americans could actually want this to happen, could actually fight for increasing inequality.
We forget (others) so easily. Remember the estimates telling us what the Iraq war would cost? Remember what the actual bill for the war is likely to be? The bulk of the costs of that war -- around $3 trillion when all is paid for -- will fall on the average taxpayer, not on the highest earners, if the "shift" Krugman writes about takes place. Here's economist Joseph Stiglitz in 2008 on estimates of the final cost for the average American taxpayer:
The original estimates of the costs of the Iraq War were $50 to $60 billion. By this year -- or 2008 -- we were spending that amount every three to four months up front, not including the cost of disabilities of the people coming back. 40 to 50% of our troops coming back are partially or totally disabled. It was a crime that was committed. The total cost that we've estimated -- in the book with Linda Bilmes -- is that the budgetary cost of the war will be in the order of $1.5 to $2 trillion, and the total cost to the economy in the order of magnitude of $3 trillion or more." ...PW, 12/09
That's taking into account the long term medical costs of the war.
The Center on Budget and Policy Priorities’s Richard Kogan breaks down the impact of the new spending caps:
"We estimate that, with the funds available under the caps, the federal government will fall about $350 billion short over the next ten years of delivering the same level of benefits and services for NDD programs as it did in 2012. This is because: (1) the costs of a number of key programs, especially VA medical care, are projected to grow substantially, and (2) Congress relied on certain temporary savings measures to meet the 2012 caps that it cannot repeat in the future." ...WaPo
Worse: As time goes on, the estimate of the cost of the Iraq war rises.
Let's not forget: George W. Bush made a point of telling us that we wouldn't have to worry about the cost of his war-of-choice. Instead, we should just "go shopping"...