The Catskill Chronicle

By Mort Malkin

The Occupiers say the disparity between the 1% and the 99%, today historically at record levels, is preventing any kind of recovery. Besides, it’s anti-American.

The White House says the recession is over. Just look at the stock market — over 12,000 on the Dow. Unemployment is always delayed in economic recoveries. Don’t worry. [Be happy?]

The 1% says: The bonuses paid to the executives of the investment divisions of the big banks (in the hundreds of thousands), the CEOs of colossal corporations (in the millions), and the managers of hedge funds (in the billions, but just one or two billion) — are all justified. Such salaries plus stock options bring the national average wage to a level that is the envy of the world. When the minimum wage is at $7.25 per hour and there are so many at minimum, or at least under $10 per hour, we have to do something to keep up the appearance of American prosperity. Yes, there are many people who have to work at part time jobs, but that’s so the poor employers don’t have the added cost of paying benefits. Besides, says the 1%, when we have all that disposable income, we can help the economy by shopping for high priced luxury items at Tiffany and Nieman Marcus.

President Obama had the nerve to call us “fat cats.” He claims that many corporations are sitting on record profits and not hiring, and banks are hoarding $1.7 trillion in cash and not lending it out. Lawrence Summers, the White House chief financial advisor could have done a better job educating the President. Lawrence knew that we have to hold that $1.7 trillion in case a good merger opportunity comes up or we get a hot tip in the derivatives market. Besides, we have to wait until interest rates go up a little so we can make loans at better than 5%. Then, we need more cash than usual to pay off Members of Congress with campaign donations — you’ve heard about the “Citizens United” Supreme Court decision which said corporations have free speech right just like citizens. Senators and Representatives will be expecting more than usual this year. The bottom line, as Summers knows, is next quarter’s bottom line.

Gadfly says: the economy has recovered for the 1% — corporate CEOs & CFOs, upper executives in banks with investment divisions, university presidents, and Members of Congress. Those folks have grabbed 85% of the growth in GDP. Labor — the 99% — has gotten 1 or 2%. How can this be? Easy, if you tax capital gains at 15% and working wages at 35%. Easy, if you extend the Bush tax cuts for the richest 2%. [How liberal of Bush to include the next lower 1%.] Easy, if you send decent paying jobs overseas, fire older experienced employees and hire young workers still wet behind the ears, and convince Congress to lessen state aid so state and city governments have to cut public service employees.

It’s no wonder the 99% believes here has been no recovery . The White House says the official jobless rate has been around 9% in 2011, but the real rate — including those who have given up looking for work, part timers, temps, and the ones who have had to accept minimum wage jobs — is 20% or more. Not only have the corporations outsourced jobs — principally manufacturing, professional services,  and information services — those companies still operating in the US hold the threat to move their operations overseas if workers ask for raises to reflect their increased productivity.  Business knows that suppressed wages will increase profits.

The Gadfly Revelry & Research Gang (GRR) held a general assembly and came up with a consensus. First, they questioned why Hank Paulson, the Bush-Cheney Secretary of the Treasury, had to give the Big Banks $700 billion. The banks were supposed to loan it to businesses so they, in turn could hire more workers who would have more money to buy everything from food and clothing to games & gizmos. Instead, the banks are speculating (gambling) in the derivatives market and making record profits. Why would they want to loan money at only 5%? So, the businesses aren’t hiring, and the real economy are still stuck in recession.

GRR clearly saw the answer was to cut out the middle men. The government could hire lots of people directly. Even the Tea Party knows the infrastructure of the US is falling apart in terms of structure and people: pot-holed roads, falling-into-the-river bridges, corroded water-pipes, parks filled with litter, schools devoid of art and music classes, neglected head start programs, libraries cutting back on hours, few pre-natal & well baby care programs for the poor, few if any primary preventive medicine programs for adults whatever their income … Then, the SEC that could regulate the banks and hedge funds, the EPA that should guard our environment, and the FDA that is supposed to protect our health — all need to be fully staffed with professionals. We could also use an ombudsman in every department. The number of jobs will be in the millions. These are real jobs, and permanent. When people have jobs that pay a living wage, they will have money to spend on necessities and a few niceties. Demand will increase. The government will pay out less in unemployment benefits and collect more in taxes. The high roller bankers will have a bit less income, but the government will be rolling in money and can afford a small tax cut for them — the same amount (not percentage) as the rest of us would receive. There will be a trickle down effect benefiting the private sector. Soon, the 99% will be smiling, too.

We could teach China a lesson or two about economics.