Thursday, 13 November 2014

Q: So why aren’t ordinary people earning more money? A: The dismal failure of the Keynesian Consensus

Bill Bonner

American voters don’t like the Republicans any better than they like the Democrats. But last week, Obama and the Dems were held responsible for the economy.
    They got off easy. A hanging would have been more appropriate.
    We have mentioned many times how U.S. median household income is now lower than it was when the 21st century began. The median household had $57,000 in income when the big ball came down in Times Square and closed out the 20th century. Today, it has $52,000.
    Stocks are substantially higher. So are corporate profits. So why aren’t ordinary people earning more money?
    After all, we live in the greatest economy man has ever created. More people have more money than ever before. So there’s plenty of capital to fund new enterprises.
    Also, more people have college degrees. So there’s no shortage of educated people to fill office seats. And there are more scientists and engineers busy developing new drugs, new machines and new chemicals.
    The economy should be exploding with growth, jobs and higher incomes for everyone.
    And don’t forget there are more people than ever before whose explicit role in our economy is to make things better – more government agencies, more programs and more bureaucrats…. 
    Surely the combined efforts of so many smart people have resulted in a better economy?
    Apparently not.

Instead of producing general prosperity, their combined efforts have instead concentrated it.

Since 1979, incomes of the top 1% have gone up three times. But when you get down to the average American, his income has gone down over the last 35 years. At the bottom – where you find the poorest 20% of the population – incomes have gone down an unbelievable 60%….
    For some, the frustration is unbearable. In 2001, about 16 men out of every 100,000 killed themselves. Now, the figure is 25 out of every 100,000 – a 56% increase.
“Stimulus” Claptrap
   
You’d think this kind of feedback would force economists and politicians to take notice. They might want to reconsider the policies of the last few decades…

Read more at ‘The Keynesian Consensus Has Been a Dismal Failure.’

15 comments:

  1. The most dangerous lie is the one that contains a grain of truth.

    This post is the grain of truth that drove the occupy movement. Sure, their solution to the problem was misguided, largely because of their unintegrated thinking.
    But railing against the 1%, if correctly identified, is legitimate. Capitalists hurt their own cause greatly by denying this truth, and ignorantly rising to the defence of all “rich” people regardless of how their wealth was won.

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  2. Ordinary people deserve ordinary money because they are ordinary.
    Extraordinary people deserve extraordinary money because they are extraordinary.

    What we are seeing is the death of communism in the West. From 1930 to 1985 the west was communist. The 60s were particularly bad. But we've run out of other people's money, as Thatcher put it; and we now have to compete with actually capitalist countries like China and Russia.

    The task for the West is to rid itself of the remaining vestiges of communism as quickly as possible: unions, minimum wage, welfare, national health and education services, corporate taxation, planning, environmental regulations (indeed all regulations) and finally allow those few extraordinary people to reap what they truly deserve

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  3. Lod Keynes was a bad man. He was a fraudster. His ideology was malicious and dishonest. He knew it. That he victimised those weaker than himself is well known. Look up what he did to young children to pleasure himself on his jaunts overseas from UK. He was a man of cruelty in his ideas and in their application.

    This, "At the bottom – where you find the poorest 20% of the population – incomes have gone down an unbelievable 60%…." made sobering reading.

    This, "For some, the frustration is unbearable. In 2001, about 16 men out of every 100,000 killed themselves. Now, the figure is 25 out of every 100,000 – a 56% increase." made me sad. I think of how this is the result of millions of occurances of Bastiat's unseen. Since the "economists" of this time like to discuss aggregates, that ought to make them take notice. It is an aggregate of all the various destructions their propagandisment tries to justify.

    And this, "They might want to reconsider the policies of the last few decades…" made me recall the types of overfed non-productive wastrells the economists and politicians are, how they'll reconsider nothing, make no alterations to what they do, what they are and what they cause.

    The government isn't here to help anyone. It is here to feed off you and ultimately to destroy. In the end do you really need to have someone govern you, take your stuff away from you and besmirch you for victimless activities and tell you how useless you are in the absence of their holy presence? Seriously, who among you need this?

    Needed about as much as that horrible Keynes.

    Amit


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  4. Howard Beale: I don't have to tell you things are bad. Everybody knows things are bad. It's a depression. Everybody's out of work or scared of losing their job. The dollar buys a nickel's worth, banks are going bust, shopkeepers keep a gun under the counter. Punks are running wild in the street and there's nobody anywhere who seems to know what to do, and there's no end to it. We know the air is unfit to breathe and our food is unfit to eat, and we sit watching our TV's while some local newscaster tells us that today we had fifteen homicides and sixty-three violent crimes, as if that's the way it's supposed to be. We know things are bad - worse than bad. They're crazy. It's like everything everywhere is going crazy, so we don't go out anymore. We sit in the house, and slowly the world we are living in is getting smaller, and all we say is, 'Please, at least leave us alone in our living rooms. Let me have my toaster and my TV and my steel-belted radials and I won't say anything. Just leave us alone.' Well, I'm not gonna leave you alone. I want you to get mad! I don't want you to protest. I don't want you to riot - I don't want you to write to your congressman because I wouldn't know what to tell you to write. I don't know what to do about the depression and the inflation and the Russians and the crime in the street. All I know is that first you've got to get mad. You've got to say, 'I'm a HUMAN BEING, God damn it! My life has VALUE!' So I want you to get up now. I want all of you to get up out of your chairs. I want you to get up right now and go to the window. Open it, and stick your head out, and yell, 'I'M AS MAD AS HELL, AND I'M NOT GOING TO TAKE THIS ANYMORE!' I want you to get up right now, sit up, go to your windows, open them and stick your head out and yell - 'I'm as mad as hell and I'm not going to take this anymore!' Things have got to change. But first, you've gotta get mad!... You've got to say, 'I'm as mad as hell, and I'm not going to take this anymore!' Then we'll figure out what to do about the depression and the inflation and the oil crisis. But first get up out of your chairs, open the window, stick your head out, and yell, and say it: "I'M AS MAD AS HELL, AND I'M NOT GOING TO TAKE THIS ANYMORE!"

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  5. Every village has its idiot.

    Amit

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  6. Yeah and Mark-Amit-Dolf is his name...

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  7. Jamie, you idiot! It's you!

    Amit

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  8. Clap clap mark-amit-doll...

    Good come back bro
    {Sarc}

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  9. Jamie, idiot! This was not a mere "come back". It was and is identification of reality. Your contributions have been of uniformly low standard. Take a look at what you posted. Go on. Review it. It is terrible. It demonstrates a paucity of reason or of understanding the subject at hand. Worse, there has been absolutely no effort on your part to learn about that of which you are demonstrably ignorant. Instead of addressing the topic and making relevant comment or asking pertinent questions, you plagiarise movie scripts and song lyrics, cutting and pasting up irrelevances, occasionally injecting some fragmented ramble of your own. You are out of your intellectual depth. Yours is all hopeless, disjoint stuff. Completely idiotic. And that is why you were identified as an idiot. You need to make some changes.

    Amit

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  10. Anyone have any thoughts on the actual topic? sorry to interrupt the vituperation - which has been going on for an entire week - but the comments are meant to be a way of expressing opinions on the post.

    So, do you fellows have any view as to why incomes in America have fallen for a large(ish) group at the bottom?

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  11. Mr Lineberry

    PC has done a good job on covering the reasons for this, and with the exception of a few Anons we all get that at the end of the day QE will always enrich those with first access to the new cash to a much larger extent than everyone else.

    But what do we do about it? As capitalists, I think we missed a trick by not trying to influence some of the "Occupy" type movements, because muddled as they were, they were ripe to be influenced to accept that crony capitalism is in fact not capitalism at all. In fact, they had some grain of that truth already.

    Instead we denigrated and criticized them exactly for being muddled philosophically, and thereby seemed to be in support of all "Rich" people regardless of whether they got their money by pull, or work.

    (BTW, by "we" I mean libertarians/Capitalists/Classic Liberals/ or whatever moniker you choose collectively)

    An opportunity lost, I fear.

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  12. Regarding your last question:

    The supply of unskilled or semi skilled labour has grown (in the US) while the demand fell drastically due to the growth in the manufacturing sectors in Asia, and increasing automation of manual tasks.

    There is some argument to be made for immigration from Mexico driving down wages, but that does not seem to have any great influence, looking at the statistics.

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  13. Bit rich coming from a troll pretending to be three people named mark-amit-doll

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  14. Lineberry

    You hypocrite. Since when have you cared about anyone you consider poor? Go back and read your contributions to nPC on the subject of poor people over the year. Further, you routinely use the nPC pages to boast of your self-proclaimed wealth, alleged cleverness, odd lifestyle, sexual tastes and various physical ailments. Go back and read some of your own comments from over the year. You ought to be ashamed.

    Are you really not aware of the effects experienced in a society from the depredations of an inflated money supply? Are you really not aware of how the regulations of a "modern" and "progressive" government destroy opportunity, stifle innovation and protect the interests of insiders and cronies at the expense of everyone else? There has been a lot written about how it is that inflation of the money supply destroys the wealth and reduces the personal circumstances of people on modest (and fixed) incomes and those living off savings. The poorer a person is, the more severe the effect on them. The Austrian School of Economics explains the business cycle (ABCT) and its causal agents. Austrian economists have also long since explained what is experienced by various individuals within an inflation bound economy. I draw your attention to Reisman, Rothbard, Schiff etc for clear and concise write up. Suffice to say, the newly introduced money is directed to a few key beneficiaries and they bid prices up. You ought to be able to work out what the results of that are going to be and what happens next. Monetary inflation causes a concentration of wealth by a few at the top at the direct expense of the rest. Those who can least afford this expense suffer the proportionately largest losses and reduction in personal circumstances. Go read it up.

    Amit

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  15. Amit - calm down or you will burst a gasket.

    The topic is about a drop in average incomes in America since 1979; I have no particular opinion on that subject which is why I didn't post anything....I think people should either say nothing, or else comment intelligently on the subject - not call each other idiots or quote from Network.

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