Monday, December 25, 2006

Everywhere I look, Class Warfare Talk

The Houston Chronicle prints an article from the Los Angeles Times. It bemoans the fact that corporate profits are outracing wage growth.
Total earnings of the blue-chip Standard & Poor's 500 companies have risen at double-digit percentage rates for 18 consecutive quarters, an unprecedented streak.

But to many rank-and-file workers, the booming bottom line may only serve as a reminder of what has been missing from their own paychecks.
And you all, by now, know the solution: GOVERNMENT PROTECTIONIST ACTION.
The swelling earnings of business — and of many top executives — have become part of the debate about widening U.S. income disparities. When they take control of Congress next month, Democratic Party leaders will focus intently on those disparities, they say, and on trade agreements that some contend enrich multinational businesses while destroying American jobs.
Yes, what every would we do without the Democrat Party digging into those greedy capitalists. And to end the article with a bang - a quote from a liberal (that is class warfare) economist.
By contrast, total labor compensation accounted for 56.4 percent of gross domestic income in the period. That percentage has fallen from 58.4 percent in the fourth quarter of 2000 and has been in general decline since the early 1980s.

What's striking to many experts is that labor's share of the economic pie has failed to grow during the last decade even as U.S. workers have become more productive. In essence, those productivity gains have flowed to companies and their shareholders, not to the rank and file.

"We've had nine years of great productivity growth, and most workers see no gain for it," said Dean Baker, co-director of the liberal Center for Economic and Policy Research.
So, if I can do some "liberal" math:
-The pie grew at a very high rate.
-The percentage going to labor declined slightly.
-Most workers saw no gain.

I cannot see how those three can be true. That is why I call it liberal math.

The fact of the matter is that capitalism works when entrepreneurs innovate and grow the whole pie. As a result, the people who take the risks, gather capital and invest get the rewards. The expectation that labor, who does not share the risk, should get an equal percentage of the rewards is unrealistic.

Let's look at it another way. When businesses are faltering, are the same proponents of liberal economics willing to take equal pay cuts? Are they willing to put their entire livelihood at risk for the prospect of non-guaranteed profits? I guess not.

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