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Wall Street’s moneyed elite are now feeling more confident, conspicuously opening their...
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Wednesday, November 24, 2010, 6:15 PM ETWall Street’s moneyed elite are now feeling more confident, conspicuously opening their wallets for fancy parties, cosmetic surgery and Hamptons rentals. Meanwhile, in the rest of America, unemployment nears 10%, millions of homeowners can't pay their mortgages... and small businesses are canceling Christmas.
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not create jobs.....
"an investment analyst at Goldman Sachs, was able to snag a hip-hop star"
"a well known on the New York social scene, wore a gray Hugh Hefner-esque jacket."
"Women dressed like Playmates, with feather boas and satin ears, danced behind a pink silk screen"
Yes indeed the Wall Street elite are back stealing from the masses again and spending it in high style. Funny thing though. The money they spend always seems to originate from the same place... investment accounts of people like you and me, who had to get it the old fashioned way - by earning it.
How's that?
Front running, high frequency trading, bull pit speculation, bogus analyst upgrades and the endless flow of illicit insider information... all used by the entrenched elite on Wall Street.
Not to mention: bailouts, TARP money, Fanny and Freddie backstops c/o US Treasury, QE-1, QE-2 etc, etc etc.
"...for it will be easier for a camel to pass through the eye of a needle than a rich man to enter into the kingdom of heaven"
Wall Street Bad, Main Street Good
Snowball said so. Pass it on.
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I am having a Peter Griffin moment...
"Yes I would so totally celebrate the thugs who beat up my Grandmother...I never thought of it that way. You are so correct, Sir. Well. I'm convinced by your surperior logic"
ebby. you are like a modern day Clarence Darrow. total respect.
maybe Palin should choose you as a running mate and not Glen Beck. you would be great in the debates. you would crush them.
Palin/Ebby 2012. "Ushering in the new dark age" (needs work I know - we'll get there - not gloomy or doomy enough) Maybe - "The End is Nigh" or "Save yourselves, Run for your lives" That's it.
Palin/Ebby 2012. "Save yourselves, Run for your lives"
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Some people think that there are two classes; the rich and the poor. But thats not the case any longer, now its the politically connected versus main street middle class. The political elite take from the middle class in order to buy votes from the poor all in the name of fairness. It can only last so long, then the middle class will be no more. Then it will suck for everyone.
redistribution is a non-answer and ultimately self defeating
would you have rules that limit comp? bad idea
I would propose that at the core of the disparities that we are seeing is a failure of public education. While the "education content" of higher paid and more lucrative roles and indeed almost any job is increasing the folks coming into the labor force are just not cutting it. And I am not just talking about college educated although they are also deficient - you see it across the board. Critical thinking, basic comprehension, numeracy, written and verbal communications - many high school graduates are frankly unemployable. This failure of education handicaps people from the start and puts many in a perpetual slow lane. You don't need a Phd in psychology to lead and manage people but if you cannot read or spell it is going to take you a long time to get from fry cook to manager. And that's the core of the problem.
This failure of education flows across the board - suddenly these folks are signing papers for zero down mortgages - that went well didn't it? They have low health and dental IQ's and so they don't take care of themselves and much that could be avoided - isn't.
Education is a big deal and we are failing at providing it. Forget class warfare and get educated about classrooms. Read about what Rhee did in DC before she was shamefuly run out of town by Teacher's unions. Forget about Goldman, instead get angry about Teacher's unions and other special interest groups. Goldman is nothing comapred to the damage these people are doing to the future. Go see "Waiting for Superman" it will explain a lot about the cause of disparities and what it takes to fix them.
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Aren't education and the teachers unions too narrow a focus to be the cause or solution to the wealth and income distribution issues?
All the redistributionist whining is really besides the point. The top 20% had 80.3% of the wealth in 1983 and 85.1% in 2007 -- a 6% change. Not much of a case for a "bankster takeover."
In truth, public employees are the real story. They earn 11% more than private employees for the most job descriptions. They contribute much less to GDP as a group, since they don't make anything you can export other than a wasteful foreign policy.
Class war will get nowhere in the U.S., in the longer term. Lowering the presently exorbitant cost of government and raising the game of the U.S. work force will, given time.
Right now, many corporations can replace a plurality of workers with machines and computers because those workers were doing routine jobs that require little thought. And companies are doing just that: capital is cheap, people are very expensive -- worker's comp., pension contributions, health benefits, sick days. Can't blame 'em; it's a very competitive world, as we are seeing.
Sure, there are lots of people who make more than they deserve. But even if redistributing income makes the public feel better, it won't keep the U.S. from becoming a second rate economic power.
Better education will. Streamlining government and encouraging savings will. Rebuilding essential infrastructure and limiting costly military adventures will. And regulating the financial markets so that they allocate capital in a manner that assists economic development rather than turning the capital markets into a rigged poker game would definitely help.
I love the smell of populist stupidity in the morning.
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Education is pretty fundamental. Every child goes through it. That feels like a pretty broad footprint. Right there.
The output of public education system is the fuel for the economic growth engine. If people are your most important asset and their basic training comes over that 12 year period then that feels pretty broad as well. All children for 12 years. How many of you have spent 12 years in one job or vocation?
The Jesuits (great educators - I went to a Jesuit school btw) used to say "Give me a child for his first seven years and I'll give you the man". They know a thing or two about this stuff. 400 hundred years - give or take of experience - will inform you. That also feels like a pretty big footprint.
Education is a big leverage point and a lot flows downstream from it so I am guessing it is s good place to look. When you look at it more closely you see that the system is not designed to deliver results - if results are defined as proficiency in the basic and advanced skill sets needed to function and thrive especially when you compare them to other children elsewhere.
So now you have to ask why. Who do we blame?
Are US children more stupid or distracted than others. I think we know the answer to that and it is no. Are they less motivated? Hard to tell but based on what we can deduce about human nature it is probably not likely. So we can't blame the kids.
Shall we blame the parents? Are US parents systematically less interested in their child's education versus others? I doubt it.
Does the US have less resources than other places. Doubt that too.
Nope. When you flip through the list you are left with the Teachers and the thing that governs the Teachers is the Unions, who have succeeded in running public education as a jobs program. If you judge it on that score - we do very well. But is that the point?
Anyway you decide. I am sure that the disparities that we see are due to greedy Wall Street moneyed elites or Hedge Funds or maybe sunspots. Who knows.
This is what I know. I try to hire HS graduates but if I do I need to invest moeny and time to teach them basic skills to make them useful. So much so that entry level jobs are well beyond most of them. That to me smells like a perfect recipe for creating an underclass. And if that's the goal. To create a permanent underclass of folks then this is the way to do it. Fail them in those crucial years.
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Higher Education is Higher Affirmation.
They want to be told they are special, and not be taught anything.
Education without ethics and morality is indoctrination and induction into the cult of narcissism and oppression.
Corporations don't want an educated employee, they want an employee they can take advantage of - and governments are little different; indoctrination into the corporate and/or political culture, not educated and independent thinkers.
We moved from a society of expectations and goal setting to one of moral relativism, mediocrity, and narcissism.
It doesn't matter if you have knowledge or skills, it's how you FEEL about it, and about yourself, that matters.
This is not due to any one political bent or ideology but a progression from an agricultural to industrial to service to information economy.
Everyone wants a gold star for showing up and warming the chair. Teachers teach to the test because that is the measure; no more qualitative nonsense like morals and ethics, or expectations of showing up and doing the homework.
You have to have both qualitative and quantitative measures combined with morals and ethics or it is simply making hot dogs versus bacon or ribs.
I think the point is more about the disconnect of Wall Street from Main Street. The top down bailouts rewarded bad behavior instead of allowing free market forces to punish them. This is the true problem. Instead of removing those that caused the problem, they were rewarded. Typically that doesn't solve the problem, just moves it.
Certainly it is fine for the wealthy to spend for it does impact some segments of the economy....but no where near enough.
The real problem is a lack of understanding of long term cause and effect. The government, unions, and the eduction system has forced employment offshore or to be replaced with automation.
The solution is simple, reduce the penalties for hiring people and more people will get hired. It has nothing to do with evil corporations, unless you are a liberal corporation hater or socialist.
ebworthen, otherwise I agree with your other points.
as we live in a capitalist society there will be disparities ....I just want
the jokers to spend the money even if it means the jobs are for caterers and waiters....
Surely there are a lot of causes for this but the 2 smartest guys I grew up with went to the Ivy league and then to Wall Street (I am 34)
I hear this was quite common in my generation.
Something is not right.
Why does the government insist on more taxes when they cannot find a single thing to cut?
While do government workers have pensions and 401Ks, fully paid for HC and raises?
Why does some of our tax dollars go to the presidential re election efforts?
Why do the tax payers have to have our money wasted on congressional hearing with a comedian?
While I do not agree completely with the discrepancy of CEO to worker pay, it is private business and that is mostly up to the shareholders, workers and executives.
Quite frankly, I am tired of this class warfare that Obama has embarked on; when in fact the democrats are some of the worse offenders.
The government , their actions and how they spend our money should be in fact decided by the taxpayers but it is not.
I wonder how much of our tax dollars are wasted and used to create wealthy politicians? Maybe just maybe if our government didn't work like this; more people would be in a better financial situation. Not to mention individuals taking personal responsibility for their own financial decisions.
Get an education, work hard, save your money and live with in your means- Maybe you won't be filthy rich but I truly believe you can live a nice life.
Unfortunately, we have become a society of blaming everyone else is easier.
I think it is ridiculous to have to pay for a government agency to make sure consumers are being swindled by a credit card company. Here is a simply solution - pay cash!
I have plenty of credit cards and use them often and pay them off every month.
I have taught my kids that why buy a sweater on sale if you are going to charge it and pay interest - the 50 sweater you got for 30 ends up costing you 90. It's basic stuff like that we should be teaching our kids.
Sorry for my ramble - Just tired of the Class warfare in general and paying for government to do stuff that society should take responsibility for themselves.
Would you object if the opinion expressed in your comment was characterized as 'top down class warfare'? I fundamentally disagree with much of what you have said but aren't about to hyperventilate as a reaction.
I have no problem with your effort to make your case that the current dispensation is the best of all possible worlds in the circumstances (and good luck with that). I'm just taking this opportunity to illustrate why all the talk on this thread about 'class warfare' is overblown.
If you don't give the average person a fair shake, sooner or later they will tear down the entire system and many innocents - along with the malfeasant - will die.
Naysayers - reference history.
I don't think the class warfare written here is overblown. I think to write an article based around some people are living it up and some canceling Christmas is create a class war argument.
While some income taxes have been reduced - other taxes have been increased - Have you have done the analysis of what the net is?
I think we should except more from people instead of doing the math how about educating them to do it for themselves.
It is too easy blame others.
I personally do not think you do for others in lieu of teaching them to do for themselves.
Where does personally responsibility end and government begin?
Happy Thanksgiving
Enjoy your holiday-
I just needed to vent...
Cheers
Are you going to celebrate that your masters have acquired more slaves?
What brought us to this point and what the evildoers in Wall Street and Washington are counting on is the continued passivity of the populace to ensure their further indentured servitude.
I seem to remember Moses delivering his people from slavery.
Lloyd Blanfein is not doing God's work, he's doing the Devil's.
Wealthy people deserve that money, they worked their as$es off...
I carried 50lbs of trees around my waist, digging in the mud with a cold rain soaking through the strongest raingear before going back to camp to sleep in a tent for 10 days at a stretch.
Those Wall St. fat cats wouldn't last 5 minutes in that world. You're going to tell me they deserve more money because they work harder than that? You need to give your head a shake.
Neither side gives a damn about you, they are in it for power and money.
This is about ethics and morality, not liberal or conservative or Republicrat or Demican.
The political debate is the red flag to the bull, nothing more.
Good people try to enter the fray via civil discourse in politics, however, they are slowly, steadily, and perniciously eaten by the system.
There is a point where an infection becomes gangrenous and no matter how much you love that hand you must cut it off to save the body.
We are in need of amputations, not salves and potions.
Living in British Columbia I know very well what you are saying about tree planting at low piecework rates in the remote wilderness up north and agree fully with you that lots of people work hard in tough conditions for a fraction of what some others receive working in more comfortable circumstances.
While not quite as tough as tree planting, I recall working 12 hours a day, 6 days a week, 4 months a year for less than a dollar an hour on the docks of Vancouver each summer for 8 years in the 1960s to put myself through University and Law School (cue the violins!) and can attest that, while the practice of Law had its rough moments, I never wanted to be back on the docks.
I’m not saying that differences in income levels can’t be justified but I will say that there is an unacceptable price society pays if those differences are too great and if those differences that exist can not be justified by some sound rational (i.e. luck doesn’t cut it).
Exactly.
There are lots of creditable sources for an overview of current US wealth distribution and the following is one:
en.wikipedia.org/wiki/...
From it I’ll quote the following and suggest that the disparity described has only grown since 2004.
“In 2004, the wealthiest 25% of US households owned 87% ($43.6 trillion) of the country’s wealth, while the bottom quartile held no net wealth at all.[3] The middle 50% of the country held 13% or $6.5 trillion of the total household net wealth.[3] The previous data are taken from analysis of the Survey of Consumer Finances (seekingalpha.com/symbo...) which over samples wealthy households. This over sampling more accurately represents the true wealth distribution [since most of the wealth is concentrated at the top]. This data shows that the top 25% of American society holds on average a net wealth of $1,556,801 which is 33 times more than those of the lower middle class, or the 25th-50th percentile.”
I’ll leave it to others to why the distribution indicated should be modified (and if so how this can reasonably be achieved) or why it would be inappropriate to interfere with the continuation of the trend indicated.
A very similar picture exists for the trend of US annual income distribution.
Fair wages eventually find their own level given the economic climate of the day. Unless you have (teachers!) unions and civil service workers mucking up the system and politicians handing out money to banks to invest in their own bonus'. That, of course, tilts the table a bit.
"It all evens out in the end." Or as Keynes said, "In the long run, we are all dead."
Or as Freud said “Sometimes a cigar is only a cigar”.
So far, it is not working. Although I am told in an alternative reality things are allegedly worse because Geithner gave AIG bondholders a 10% haircut.
Monetary policy and Iscal policy need to work together, so far we have an excess of monetary policy moves and zero fiscal policy.... Once the government gets on the ball and makes a move in "right" direction things should break free.
However, a great part of the value which the best take for themselves was actually produced by someone else.
I do not argue whether the best rise to the top in the US, let's assume that is the case and I will grant that those who contribute the most value through their efforts should receive the highest compensation.
But it's a question as to whether that higher compensation is commensurate with the higher value they contribute. It's not a question whether the best should receive more - it's a question of HOW MUCH more they should receive, whether they receive the right amount.
I compare A-rod to Ted Williams as an analogy. A-rod is NOT a better baseball player than Ted Williams but he is paid 100 times more than Teddy Ballgame ever collected.
Why? Because of the system we have in place is different from that under the Ted Williams era. Our system polarizes compensation out of line with the value contributed.
The same is true for corporate executives and, in particular, Wall St. finance types. They do not contribute any more value to the economy than their predecessors - in fact, due to the consequences of the increased risk they take, they contribute a lot less value.
Yet the compensation of executives and those in the FIRE economy continues to rise, wildly out of proportion with the value, if any, that they contribute to the economy.
Does this point make sense, If U Say So? Do you see where I'm coming from with this?
Gifted people whether in sports or industry will be paid as according to their perceived value in the market of that day. The availability of a comparable replacement for our skill set is what it is all about. People in midlevel management or operating on an assembly line are paid as according to their perceived market value. What changes are one's skills and/or the skills available at any prevailing wage in any specific market. In India we can find engineers earning less than 20K a year. Its the prevailing wage based upon demand and supply of that skill set in that market. If our skill set is just finding our way to work and walking through the paces of our job we can expect plenty of others with that same skill set ready and willing to take our job for the same or lesser pay. If we shine and produce as if we love our job, we may earn more or may find another employer willing and able to pay us what we believe we are worth. But it all comes down to the perception of the employer and he/she will make decisions based on the necessity of our specific skill set, the availability of that same skill set and what little they think they can pay for that same skill set. No sense crying over how people perceive our worth. Either find another employer, upgrade our skills or wake up to a reality where perception is reality.
Many Americans, as certainly evidenced by this thread, believe that the wealth of the country should be distributed fairly, that is, to each according to his need, from each according to his ability.
And most of those who believe and argue for this -- that the market is producing unfair results -- don't have the education to recognize the origin of that maxim. And therein lies the real problem, whether they know it or not.
For the, now, almost 50% of the folks, who don't pay taxes, they don't give a damn what the origin was or its implications.
You state "But it all comes down to the perception of the employer... and what little they think they can pay for that same skill set".
When I was doing my MBA we studied Michael Porter's '5 Forces' in developing business strategy. The goal was to evaluate an industry based upon the favorability of those 5 forces. You didn't just have to have a business that could produce something of value - you had to be able to monetize it.
In the workforce, we're all our own businesses. The gripe I have is that many of us, like the engineers, etc, produce value but are not able to monetize it.
Among Porter's 5 forces, from my memory, are power of buyers and power of sellers. When there are relatively few buyers and many the buyers have more negotiating power in setting terms and are able to drive down the price. Sound familiar in regards to employment? Every tried to negotiate your salary with a company that employs several thousand people?
We currently have legislation and regulation that favors large corporations and encourages industry consolidation. We end up with fewer and fewer buyers of our labor, giving more and more salary negotiating power to employers, driving down the salary of the average worker and even the average professional.
I must emphasize, this is not a result of 'free markets', this is entirely the result of legislation. Remember that a corporation does not exist in the state of nature - corporations only exist in the first place because we wrote legislation that gave them status and power.
There is nothing 'free market' about the corporate entity - we created it ourselves through legislation.
Now, I'm not against the existence of corporations. But if we're going to create them then we should at least ensure they are governed by rules that benefit our citizens, our economy and our country.
The CEO deserves their money as much as the factory worker deserves its...Liberals,instead of drinking and partying in college, you could have studied hard...Live with the consequences of your acts, don't throw the fault to successful persons....
Your logic is inverted.
You want very much to believe that the virtue of hard work will be rewarded and that this reward will be proportionate to the effort expended. You note that CEOs are richly rewarded but that for many others this is not the case. You therefore conclude that in college the future CEO must have worked hard and that all the others didn’t.
The reality is that some future CEOs worked hard in college and some did not. Some possessed other social skills or benefited after college from exceptional drive (or, in some cases, the fact they are borderline sociopaths). Some are great well rounded persons while others are monomianical monsters. Others were simply in the right place at the right time. Conversely, the non-CEOs in your psychodrama may have worked hard in college and had great drive but otherwise missed a needed break on the path to CEOhood (and as a result lead more fulfilling but quite comfortable and well rounded lives – or not).
A final thought – Having worked very hard at college, Paul Krugman must rank highly in your esteem!
There can be only 1 CEO in a company and, with the system we have in place today, he and his few top executives will take 80% while leaving the rest of us, even though we worked just as hard as he did, fighting over the scraps.
By the way, I'm not a liberal and consider the accusation an insult. I'm a die-hard fiscal conservative. I'm interested primarily in fairness and equity. I don't want to see our best and brightest under-compensated any more than I want to see them over-compensated.
Try to stretch your mind a little and consider how the ideas I've expressed could come from a true, small government conservative.
Then came the era of "big business," and "trusts" of "large" interests. And only a few CEOs, with many of them "Warren Hardings" (mediocrities glorified as front men, seldom women, while others made decisions behind their backs).
But as Teddy Roosevelt (a fellow Republican) would say: "Bust the trusts."
To regulate the salaries of NFL players or coaches is socialism. And while it may see like the fair thing to do, it makes the country fail every time. The same applies to corporate management. The socialists want you to believe companies are evil an only socialism is fair. But its never fair when a few people make all the rules and that is the definition of socialism. When you give a few people (i.e. the government) the mandate to make these types of rules then you can never stop them from making rules that you don't like and that inhibit freedom and democracy.
What if the corporate heads make all the rules, what do you call that, capitalism?
Corporate heads make 200x grunt salaries, used to be 40x, why?
Don't get me wrong, capitalism is the best way to run an economy, but, alas, we are all human, so there has to be rules! If you think capitalism can run just fine without rules, you have let your ideology blind you to the real world.
The truth is that its the politician's fault.
"Corporate heads make 200x grunt salaries, used to be 40x, why?" Who cares? The only reason this is an issue is because it distracts everyone from the real issue of government theft and corruption. Do you really know what George Washington made? No, because the records do not exist. Do you know how much the railroad barons made? No, again the records do not exist.
Well, they made a lot. After you make a certain amount it does not matter, but that is no reason to confiscate it.
I'm sure you still think that Goldman makes millions everyday no mater what the markets are doing because they are run by the government.
If I understand it correctly, you are unhappy with management and want the government to change management. To do that you have to give the government unlimited power. Once you do that, then you will have no choice, no freedom, no life. Why, because the government already can lock you up for no reason, invade your privacy for no reason, take your house for no reason, etc. The only reason it does not happen more often is because we are still allowed to own guns and we have not tipped over the edge of socialism (where more than 50% of the populous is paid by the government.)
What I meant was that companies and CEOs do not have the power to force anyone to follow their rules and therefore we are still free regardless of what they do. They do make rules for employees but not for the public in general. Also if they do totally stupid things then they are run out of office.
This attitude of punish the CEOs is exactly what is wrong with America today. We do not need to punish companies that follow the law. What we need to do today is punish the politician's that are stealing us and our children blind.
And, this is important, we need to make sure that freedom and democracy are more important than petty hate. Meaning that it is more important to create an environment for companies like HP, Dell, IBM, Google, Apple, Microsoft, etc, to thrive and proposer. If they do, then employees will be well paid and as happy as can be expected.
If you think you have it bad, then you should work in Russia, China, India, or just about any place other than the US. At our worst, we are better than any other place in the world. But lets tear that down because we are pissed that someone earns more money than we do or more then we think is fair.
Oh, I agree, he should have looked for another job eons ago. When the next wave of layoffs come, he hopes to at least be offered a transfer to India or Brazil.