Two charts illustrate why our economy is in such a mess.

Business insider has posted a couple of charts showing exactly why our economy is such a mess nowadays. Corporate profits (you know those guys who are whining that they will go out of business if they are taxed a couple of tics more) are at an all time historic high while we all suffer and guess what?

Wages as a percentage of the economy are at an all time low.

Coincidence, I think not.

These Two Charts Show How The Priorities Of US Companies Have Gotten Screwed Up

Business Insider

Sure, corporations did take a big hit in 2008, like the rest of us, but, unlike the rest of us, they've bounced back to soaring new profits like never before while all the rest of us have been tightening our belts. Their claims that the business climate is too uncertain to create new jobs or pay their workers a living wage are shown to be lies.

They've been milking this recession to keep the workers on edge, always fearful of losing their jobs during this period of economic uncertainty to wring every last concession from those workers to increase their profits even further.

The process of cutting workers wages weakens the economy by taking away their customer base. It used to be that this model worked because they had easy credit to make up for the workers low wages and provide them with the additional buying power to keep the economy afloat but, now with everybody tightening their belts and drowning in debt and the banks unwilling to lend, their whole greedy system is set to fall around us all.

What's wrong is that an obsession with a very narrow view of "shareholder value" has led companies to put "maximizing current earnings growth" ahead of another critical priority in a healthy economy:

The happiness and well-being of employees.

What those who obsess exclusively about profits forget is that one company's wages (costs) are other companies' revenues.

If American companies were willing to trade off some of their current earnings growth to make investments in wage increases and hiring, American workers would have more money to spend. And as American workers spent more money, the economy would begin to grow more quickly again. And the growing economy would help the companies begin to grow more quickly again. And so on.

But, instead, U.S. companies have become obsessed with generating near-term profits at the expense of paying their employees more, making capital investments, and investing in future growth.

This may help make their shareholders temporarily richer.

But it doesn't make the economy healthier.

And, ultimately, as with any ecosystem that gets out of whack, it's bad for the whole ecosystem.

The whole system of focusing solely on shareholder value has perverted our economic system and created an atmosphere where the people at the top forget what really keeps a strong economy chugging along; a strong middle class with the funds available to buy the products the corporations produce.

As the middle class is whittled away by corporate greed, the foundations of our economy are eroded away until the whole thing is on the precipice set to collapse.

I've gone on strike!

I have not worked in (i.e., supported) this corporate system for a long time now.

I do what I can finding odd jobs, working for friends, bartering my labor.

We live way below the poverty line, officially. But we don't go hungry. We have a warm, dry place to live. I drive older, used vehicles. I have no debt. If I can't pay cash for it, I don't have it.

I live within my means.

I take no gov't subsidies (food stamps, welfare, etc.), though we'd surely qualify for it.

I have simply chosen to not participate in this massive Ponzi scheme.

If enough of us said "ENOUGH!" and refused to participate, we could break the system.

Unfortunately, most people couldn't live without their consumer geegaws, nightly video diversions and drugs of choice, so I guess the parade will just keep marching on.

reply to post by FortAnthem


I agree completely, I have been talking about this for months now, but nobod seems to understand or care which ever is in greater quantity at the time.

www.abovetopsecret.com...

par·a·site [par-uh-sahyt] Show IPA noun 1. an organism that lives on or in an organism of another species, known as the host, from the body of which it obtains nutriment. 2. a person who receives support, advantage, or the like, from another or others without giving any useful or proper return, as one who lives on the hospitality of others. 3. (in ancient Greece) a person who received free meals in return for amusing or impudent conversation, flattering remarks, etc. sym·bi·o·sis (smb-ss, -b-) n. pl. sym·bi·o·ses (-sz) 1. Biology A close, prolonged association between two or more different organisms of different species that may, but does not necessarily, benefit each member. 2. A relationship of mutual benefit or dependence.

Our current economic model runs as follows.

A business takes as much as possible, as often as possible, while always giving back the least amount possible in all situations.

Which of the above definitions does this model fit?

I think a new system that ties workers pay directly to the profits of corporations, is the onl answer of saving our current system. Ideally we would just make a completely new system, but most will simply put, not listen to anything other than the current status quo.

So an adjustment to the current system by making employees pay directly tied to the profits of the business, thus the workers are always in the profits loop.

just my $.02

Think about the spending habits of you and your friends. Are you guys flipping houses and leasing cars? No? No shock, nobody is. The news orgasms when they get a 1% increase in consumer sales. Yet businesses are posting gains at a pre-2008 rate.

Welcome to inflationland! The QE program has been dumping money into business coffers and creating inflation that is enclosed within business. Thus the gains you see aren't pegged to an uptick in consumer demand. Businesses know they aren't selling merchandise. Instead they are stockpiling the cash hoping they can last until consumers begin to buy, which they won't because they aren't making money.

Unfortunately, this trend will continue: business will inflate, wages will decline. No way out.

Hey, knock it off you anti-job creator, calss-warfare inciter. Those corporations are people just like us and they worked hard for their profits. They deserve their multi-million dollar bonuses, federal subsidies, tax breaks and, if necessary, taxpayer funded bailouts. I mean, where would we be without them? I think we should cut-back unemployment benefits, foodstamps, social secutity, medicare and medicaid to help them out. They're clearly suffering at the hands of a ruthless economy and stifling government regulation.

What this insane profit-driven madness fails to take in to account is the fact that if you can't pay your employees a living wage they can longer be consumers.
There's not enough wealthy to keep these companies in business.
We'll all reap the benefits of corporate wisdom before it's all said and done.

Originally posted by Asktheanimals
What this insane profit-driven madness fails to take in to account is the fact that if you can't pay your employees a living wage they can longer be consumers.
There's not enough wealthy to keep these companies in business.
We'll all reap the benefits of corporate wisdom before it's all said and done.

Exactly. I don't know how companies can remain viable when consumers have less discretionary spending money. Exceptions to this would be large companies that sell food and energy and so on.

Perhaps companies might enjoy higher profits now, but ain't gonna last long.

reply to post by FortAnthem


Instead of blaming it on corporations, I think the main reason for this is the structure of the economy, namely, a debt economy.

Everyone is in debt now. it is like a huge ponzi scheme with people borrowing from banks and credit cards companies and nations borrowing from one another and from the public and from central banks, which print money and make it out of thin air.

In this situation, people have to keep on borrowing or the bubble will burst. but the main effect is that except for a very small strata of people who are getting richer and richer, most of the people are getting poorer and poorer and more and more in debt.

Can you imagine what will happen with the pyramid collapses?