It does not take a lot of research to find evidence of a disturbing trend in the U.S. (and probably the world, for that matter) - the increasing concentration of income and wealth in a small percentage of our population. We now have the greatest mal-distribution of income in America since the Great Depression as far as both income and wealth go. For example, 43% of the wealth in this country is owned by 1% of the people, while the bottom 60% have all of 1% of the wealth. For more details/reference, see the following awesome article (good graphics, too):
Of course, wealth gets accumulated when some net retention of income happens. That is, if more money is taken in than is spent, then the savings become wealth. Keep this trend up for a while, and wisely re-invest those savings, and the stash of money/assets convertible into money keeps getting bigger and bigger, especially if the rate of return on the savings/profits on the saved money (actually called "unearned income") exceeds the inflation rate. This is where the growth equation comes in handy:
A = A1 + A0 * Exp[rt] where A is the new value of the stash after t years, Ao is the initial stash, A1 is the amount added in in the previous year and Exp is Euler's favorite number, e (2.718...).
In theory, A can go towards infinity for a long enough time t. If r is 6.931% per year, then in 10 years the value of rt is 0.6931, and e^0.6931 = 2, thus that money doubled in value in 10 years. In 10 more years it will double again, so after a total of 20 years, the value of A would be 4 times the value of A0, even if no extra money were added (A1 = o). Nice work (or lack thereof) if you can get it....
But, since most people seem to live paycheck to paycheck, and over time, tend to have very little saved up to show for their efforts, well, that growth equation tends to just be a fantasy. In many cases, people tend to be going backwards (this happened early in the Bu$h 2 administration, where the national savings rate went NEGATIVE). When people tend to get behind on debt payments...the result is that the unpaid interest on any debt just gets added to what is owed, and in fact, the debt increases at an exponential rate. In theory, that too could go on until infinite indebtedness occurs.... But things tend to crash and burn before that occurs.
For the vast majority of people in the U.S. (that is, the non-wealthy), real incomes stopped growing around 2001, and greater indebtedness was used to maintain incomes/standards of living or probably more properly stated, standards of consumption, or in many cases, some modicum level of consumption. Unfortunately, the greed of those doing a lot of the loaning out the money became greater and greater - and they also became more clever how they went about loaning money and then extracting the desired returns - notably by Ninja Loans (No Income, No Jobs or Assets) and by those "sub-primes", followed by collateralized debt obligations (CDO's), Swaps, and then bets on loans, not to mention bets on the value of stocks, bonds, commodities (grains, oil, natural gas) and also bets on the values of bets, and pools of bets. Until the bubbles burst, there was lots of money being made as fees for setting up such bonds and debt obligations/bets, as well as lots of Ponzi schemes (Bernie Madoff (with the money)). See http://www.dailykos.com/storyonly/2010/7/19/885573/-Why-the-economy-isnt-recovering.
So, huge quantities of money were extracted from poor and middle class people, and shoved to those further up the income scale. At the same time, decent paying industrial jobs in the U.S. were being automated away or being shipped to low cost labor/psuedo-slave labor countries like China, where workers could barely afford their survival, let alone be able to purchase anything. Next went some service jobs ("tech support"), often to India. Unemployment rates kept going up and up and up, even in good times until we arrive at the present day, where real unemployment rates are more like 20%- see http://www.dailyfinance.com/story/careers/what-is-the-real-unemployment-rate/19556146/. With less and less money being earned by those who were supposed to pay off debts on cars, houses, credit cards, TV's, etc, and higher payments (especially balloon arrangements using teaser rates to get the unwitting or unlucky hooked) - something had to give. And when so many "rushed to the exits" and tried to sell off assets in 2007-2008 (like houses), the value of those also crashed (too much supply, not enough demand, and prices have to drop). There then arose various "asset stripping" behaviors, like stealing all the copper wire/pipe and then iron pipe/fixtures from old house (60,000 houses got "stripped" in one Cleveland neighborhood, as an example). Lots of people went into the "recycling biz"....
At the core of this redistribution of income and wealth lies Corporate America, and of course, the legislation and politicians that they rented and/or purchased and/or conned into believing that trickle down economics actually might not redistribute wealth equitably, not inequitably. The income (unearned in more ways than one) pouring into the upper crust and the political power that purchases for a tiny minority of well off, left most slightly, and some extremely, worse off, as seems to be typical of recessions these days. Corporations are, more or less, mostly in business to deliver profits to the owners (often shareholders), though sometimes they seem to be more intent on padding the wealth, income and influence of senior level management (who are often minor owners, but sometimes significant owners). Ownership is often clustered into funds whose managers exert significant clout. For example, there are large chunks of the ownership of Transocean via hedge funds (several billion dollars worth); for example, Marsico Capital owns 17.65 million shares of Transocean (@ $46/share = $816 million). Marsico owns $37 billion in various stocks. These hedge funds in turn were often owned by other hedge funds and companies, and eventually individuals, but in this case, Marisco is now totally owned by Bank of America. And of course, B of A is owned by all kinds of other institutions - so "ownership" gets nice and convoluted. Then there is also "corporate cash". Here are a couple of additional articles (from Bob Herbert of the NY Times and Jia Yang of the Washington Post) documenting the Stash of Cash, and how much of it was obtained by paying workers less for increased productivity, or firing workers, and also by going out of their way NOT to invest that money into long term productive uses, new products, etc.
Anyway, this all leads up to the Crux of the Biscuit. If the vast majority of the population in the U.S. gets less and less money either from no jobs or for those lucky enough to have jobs working more hours and/or working at lower real wages and benefits, they will have less money to spend as consumers of goods and services. As it turns out, expenses for MOST people are still going up (especially energy, food, local taxes). For example, check out this graph on how the percentage of total U.S. Gross Domestic Product (GDP) has been on quite the upward trend (up to 10% in 2008) during the last decade: http://www.theoildrum.com/files/United-States-Energy-Expenditures-as-a-Percent-of-GDP-1999-2008.jpg.
With domestic consumer demand for stuff clobbered due to the vast majority of the population now having less money (or no money) after all the essentials have been (or assuming they can be) procured, and a sea of excess supply provided by potential imports from psuedo-slave labor countries like China or India (so that workers in those countries can't afford to buy reciprocal items from the U.S., which would actually stimulate employment in the U.S., and thus demand by U.S. workers, too), no company with a few functioning brain cells in the management ranks would invest in extra production capacity at the present time. That would be a prime case of stupid, and "Dumb and Dumber" in practice.
So, if most companies are not going to use the $1.87 TRILLION fabulous Stash of Cash, how will people get hired? Odds are, as long as this stalemate continues, hiring won't be increased, and only firings will be increased. And neither will sales increase. Instead, companies will continue slashing the number of employees, getting higher productivity, and since higher productivity with constant output means less workers are required, more will get fired. Meanwhile profits will soar as the same amount of stuff is made with fewer people who also cost less to employ, further cementing this untenable situation into place, until Great Recession #2 comes rolling into town. And more tax breaks to Corporate America (at this time, more properly called Corporate Earth) will just deprive governments of more money via taxes, causing them to fire more people/buy less stuff, also contributing to a slack demand, and weaker prices for goods often supplied by Corporate America. It won't increase the likelihood of further investments in productive capacity, since that complete capability is not being presently utilized.
But remember, corporations and other owners of companies are not in the business of hiring people because it is the right thing to do by our country - they are in the business of making money. In general, there is a long history of hatred of labor by many companies and/or their rich owners - hired labor is generally viewed as a necessary evil, and if it can be done without (or at least American labor), so much the better. Of course, this has a glaring internal contradiction - without paid labor, there will be a dearth of customers, leading to business failures en masse. Oh well, it's not like they weren't warned.
One way to make money and avoid the messy complications of making stuff and dealing with the human beings who tend to make up the work force is to morph into "virtual corporation" mode, where maybe R & D/finance/accounting/marketing/advertising is done in the U.S., but nothing else is (Nike is a classic example of this). But, why stop there - next is to evolve into a hedge fund, venture capital (also sometimes called Vulture Capital) firms or an investment house by taking the proceded from selling all the assets/take the money and gamble it on stacks, bonds, commodities, etc. For example, see this article - http://firedoglake.com/2010/08/01/why-do-conservatives-loathe-keynes/. Here is the money quote form Mr. Keynes that seems so relevant as to why most Americans are not benefiting by today's so-called modest recovery:
“When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done.”
from "The General Theory of Employment, Interest, and Money", Prometheus Books, p. 157.
So what would increase the demand for goods and services for things in the U.S., and most especially, things made by U.S. workers, and thus increase the demand for domestic labor? Well, there would be the traditional purchase of goods and services, and the disbursement to those in need by the U.S. government via more debt (since states can't do this, since they can't go into debt much, and they are already less than broke)? Or, less could be spent buying imported crap, since that just bleeds income and wealth from this country. We could always quit wasting so much money defending our corporate empire/oil countries via a very expensive Navy and Air Force, and via military bases. Or, the U.S. government could create a demand for, say, renewable energy, via approaches like allowing states to use Feed-In Laws for renewable electricity, or else via the less effective Renewable Energy Standard (RES) approach. Or, imported oil could be taxed via tariffs to the point where supplying domestic fuels (especially biomass derived) starts to be economically viable and finally profitable without subsidies. Hey, maybe some or all of the above....
It turns out that the renewable energy approach has proved to be a successful way for many European countries (also China and India) to employ lots of people and also export less money for imported fossil fuels, get new export income from exporting these systems. In China, the production of photovoltaic panels made using psuedo-slave wage labor has provided them with another mercentilistic way to generate export income (China does not install that many PV systems, because even with psuedo-slave labor, the electricity made from them is just too expensive for them). However, with wind turbines, most of the made in China units are installed in China, because domestically made units can supply electricity (when they work) at between 6 to 8 c/kw-hr from very windy regions like Mongolia.
The U.S. has one of the the most phenomenal wind resources of any country (a capacity of something like 10 to 20 times the current US electricity production rate, depending on the price of that wind derived electricity), and a huge capability to store electricity via approaches like pumped and deferred hydroelectricity, or via compressed air (which can also be used to "co-generate cool" via the cooling that happens when compressed gasses are expanded through turbines) for those regions without the combination of water and hills. However, at the current prices for electricity made via old (and thus, fully paid for, fully depreciated) coal burning facilities and with essentially no cost for particulate or CO2 pollution, there is very little via wind resource that can be made "competitively", especially in highly populated areas. And while natural gas burning units use more expensive (and not too reliably priced) fuel, the facilities themselves are relatively cheap to build. This is why almost all new fossil fuel based facilities are natural gas users - the facilities are at least 3 times cheaper, and they can get paid off rapidly in "good times" - often in less than 2 years. Of course, if gas prices rise and electricity prices stay constant (due to old coal burners/old nukes), that can be a rapid road to bankruptcy.
But, replacing old, polluting electricity generation facilities with new non-polluting ones is a great way to stimulate an economy, via the enhancement of the manufacturing sector. And since manufacturing jobs have a very high job multiplier effect (the auto and steel industry job multiplier numbers are between 4 to 5), a massive push for wind turbine production and installation would in turn create a massive number of jobs - sort of like a new automobile industry, but one which uses many of the same skills/technologies (metalworking, materials science, construction, etc).
In fact, the job creation potential and who gets those jobs of the wind turbine manufacturing industry in the U.S. may be one of the reasons that conservatives and Republicans oppose wind turbine installations. They have been trying for decades to remove working class people from any sort of political and social relevance in this country by separting workers from money and jobs, and doing a darn fine job at it, too. And now to recreate that which has been stomped out... Talk about "de-funding the progressive movement"... after all, it's hard to lobby with no money, and the unemployed or minimally compensated can't afford lobbyists.
Of course, there are other reasons, including the fact that in many places (ESPECIALLY NY State, with it's "deregulated" electricity market system), adding wind derived electricity lowers average electricity prices via the Merit Order Effect (MOE). In effect, this deprives oligopolistic and/or monopolistic big corporations which operate paid off pollution based generation facilities of extraordinary profits whenever natural gas prices rise a bit, or when electricity demand spikes and/or peaks. They still make profits, just not extremely huge profits (when you make make electricity at a profit at 3 c/kw-hr but can sell it at 10 c/kw-hr ....whoppee, even if it is for only part of the year). See this article for a summary and link to a great New Scientist explanation of how this can happen.
So, next time some astroturfing fisherman's group, or a confab of yachters and boaters or a group of bird watchers gets a fancy website and speaks as if well coached...well, the odds are, that is cleverly and discretely paid for by some really grumpy polluters who don't like how wind power lowers average electricity prices EVEN if the wind turbine electricity cost/price paid to the wind turbine owners is greater than the average electricity price. Gotta love that MOE. Oh, this moe, too.
Fred. Olsen Windcarrier Moves to New Premises
25 minutes ago