Weekend Economists Take a Shot in the Dark, September 28-30, 2012

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28. Here's The Biggest Problem In The American Economy

http://www.businessinsider.com/heres-the-problem-with-our-economy-2012-9



Several factors have come together to produce a frustratingly weak economy that has persisted in the U.S. for more than a decade:
"Globalization" has opened up a vast pool of billions of workers who work for much less than Americans. This, in turn, has resulted in companies shifting formerly middle-wage-paying jobs overseas
Technology has continued to increase productivity, allowing companies to do more with fewer employees
Average hourly earnings have been flat for ~50 years (after adjusting for inflation), as companies steer their wealth primarily to senior management and owners at the expense of average employees
Tax policies have increasingly favored investors and high wage earners over middle-class and upper-middle-class wage-earners
An obsession with "shareholder value" at the expense of other stakeholders (namely, customers and employees) has led companies to cut employee costs to the bone


***SNIP

1) Corporate profit margins are at an all-time high. Companies are making more per dollar of sales than they ever have before. (This chart, by the way, gives the lie to the common refrain that companies are suffering from "too much regulation" and "too many taxes." Small companies may be suffering, but big ones certainly aren't).


2) Fewer Americans are working than at any time in the past three decades. One reason corporations are so profitable is that they don't employ as many Americans as they used to.