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Submitted -by Tyler Durden on 03/22/2016. www.zerohedge.com
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Brief Introduction
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Cheap imports, offshoring of production and the global
expansion of financial markets have driven U.S. corporate and financial profits
to unprecedented heights.
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Globalization (a.k.a. "free" trade) has become
an election issue for two reasons: many voters blame "free" trade
with China and other nations for job losses in the U.S. and rising income
inequality as globalization's "winners" in the U.S. outpace its far
more numerous "losers."
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Slapping fees on imports (which by the way is illegal in
treaties such as the WTO) will not solve the larger problems of reduced
employment, stagnant wages and rising income inequality. To make a dent
in those issues, we'll need to tackle central bank and
central-state policies that have pushed finance and speculative churn to
supremacy over the productive economy.
SEE
FOUR MORE CHARTS
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1- The Great Prosperity : 1947-1979 vs. THE
GREAT REGRESSION 1980-NOW. See image: http://www.oftwominds.com/photos2016/productivity2-16.jpg
2- The disconnect between productivity and wages. See image at: http://www.oftwominds.com/photos2016/income-inequality3-16.jpg
3- Financial Profits vs.
Debt GDP (Pct) 2015/09/30 See image at: http://www.oftwominds.com/photos2016/fin-profits3-16b.png
4- Corporate profits after
Tax (without IVA and CCaj) See image at: http://www.oftwominds.com/photos2016/corp-profits3-16b.png
Total U.S. corporate profits soared once trade with China
and the financial free-for-all of housing/debt/fraud took off. This chart makes it clear that the winners
from 2001 on were financiers and corporations exploiting two dynamics: offshoring
production to China and maintaining product costs to reap outsized profits, and
borrowing cheap money to expand overseas and skim profits from carry trades.
What do we get if we add these
charts up?
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1. Offshoring of production jobs
to China et al. undoubtedly slashed jobs for the bottom 90%, but these losses
were offset (or masked) by the rise of housing/debt/fraud bubbles that boosted
employment in the FIRE sector (finance, insurance, real estate).
2. Financialization and central
bank intervention greatly rewarded those with the skills and sociopathologies
needed to participate in the resulting debt/fraud booms.
3. U.S. corporations reaped the
gains from offshoring jobs, and these gains flowed to top management and those
who own corporate shares, i.e. the top 5%.
4. The trend of rising income
disparity started long before China's trade was significant enough to impact
the U.S. economy, and correlates with the rise of financialization and cheaper
technology tools.
5. These trends rewarded management,
finance and technology expertise, which are concentrated in the top 10% of the
work force.
6. Cheap imports, offshoring of
production and the global expansion of financial markets have driven U.S.
corporate and financial profits to unprecedented heights. Since these profits
largely flow to top management, financiers, technocrats and owners of corporate
capital--roughly speaking the top 10% or even top 5%--it's no wonder wealth and
income disparity is rising: there is no other output possible in the current
system.
Slapping fees on
imports (which by the way is illegal in treaties such as the WTO) will not
solve the larger problems of reduced employment, stagnant wages and rising
income inequality. To make a dent in those
issues, we'll need to tackle central bank and central-state policies that have
pushed finance and speculative churn to supremacy over the productive economy.
…
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