Good for Investors, Bad for the Rest (Harold Meyerson)

[Nancy Waterman]

I found this to be very interesting. This is the first article I have seen that connects tax breaks for US investors in a globalized world to job creation outside the country and depressed wages here.


http://www.washingtonpost.com/wp-dyn/articles/A14515-2004Jan13.html

... if anyone thinks the Bush tax cuts have spurred economic growth, I have a low-tax investment in a bridge to Brooklyn.
<snip>

To say that reality is lagging behind the theory of investment-led growth, then, is to understate. The problem is that to invest today in stocks or mutual funds doesn't mean you're investing in job creation in the United States.

Outsourcing has turned the phrase "investment-led growth" into the grimmest of oxymorons. It means that Bush's tax policy subsidizes job growth in India and China rather than the United States. And in failing to create more employment here at home, the tax cuts have also helped depress wages. Real wages in the United States actually fell 0.7 percent in the fourth quarter of last year.

[Wwagsthedog]

1. This grim column is pertinent

http://www.iht.com/articles/124402.html

snip

The iron law of wages is also simple and logical. It says that wages will tend to stabilize at or about subsistence level. That seemed inevitable to Ricardo, since while workers are necessary, and so have to be kept alive, they have no hope of any better treatment since they are infinitely available, replaceable, and generally interchangeable.
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Ricardo's wage theory has seemed untrue. The supply of competent workers in a given place is not unlimited; neither workers nor industry are perfectly mobile, and labor demonstrated in the 19th and 20th centuries that it could mobilize and defend itself. The iron law of wages would seem to function only if the supply of labor is infinite and totally mobile.
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Unfortunately that day, for practical purposes, has now arrived, thanks to globalization.

snip
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Tribune Media Services International

[ramapo]

2. SHHH....Don't tell anyone....we're in a recovery

But the markets are up...the new bull****

[Nancy Waterman]

3. The markets will crash

as soon as interest rates start to climb. Those in the Market will flee when the foreign investment flees. The higher interest rates will be an attempt to keep capital in this country, but it will come with incresing the recessionary pressure.