The Expendables
By Barry Ritholtz - August 28th, 2010, 4:00PM
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Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data, ability to repeat discredited memes, and lack of respect for scientific knowledge. Also, be sure to create straw men and argue against things I have neither said nor even implied. Any irrelevancies you can mention will also be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.
August 28th, 2010 at 4:12 pm
The inevitable result of government bought and paid for by corporations with no loyalty to the country and its people.
August 28th, 2010 at 4:21 pm
Well, let’s see here:
The cop, the fireman and the (I’m guessing) teacher aren’t employed by corporations, nor would they care (directly) what the amount of cash on corporate balance sheets is. They’re going to be laid off because state and local governments have unsustainable budgets.
The UAW guy on the right is now most likely working for the government, so why does he care what corporate cash on balance sheets is? The UAW never cared what the corporate balance sheet looked like, which is why two of the “Big Three” are now owned by Uncle Sugar. With car sales going from 16 million units/year to a bit over 10 million units/year as a future sustainable level, he oughta be expecting to be laid off.
So that leaves us with three out of the seven characters. The guy on the left – I have no clue what he’s supposed to represent. The construction hard-hat – well, he’s just SOL, since we’re vastly over-built for years to come. And the guy in the suit? No clue what he’s supposed to represent.
August 28th, 2010 at 4:27 pm
what really matters is how the current crop of voters/interests cannot/(will not) afford to pay for the various benefits they are demanding so the only answer is to take it from the one class with absolutely no representation at all…..today’s children. “we’ll worry about it tomorrow….come on, everyone who bets against our way of doing things is always wrong.”
August 28th, 2010 at 4:28 pm
Okay … how does “The Expendables” posting fit together with this (unless everyone’s at home wearing an ankle bracelet by court order…): http://www.ritholtz.com/blog/2010/08/defending-home-ownership/
August 28th, 2010 at 4:36 pm
Love the “R Recession” rating!
August 28th, 2010 at 4:46 pm
The cartoon needs a split-screen showing bankers enjoying the worker’s retirement money in luxury apartments, yachts, and Ferrari’s.
August 28th, 2010 at 5:18 pm
In our cost cutting balance sheet recovery unemployment will remain high. Nobody seems to address why profits are out pacing revenue growth 2 to 1 or even 3 to 1. Earnings are like the 2x and 3x EFTs. It seems they have found a way to leverage up profits and by this time the the so call recovery it has to more then just cost cutting. Could it be that the US Corporations are gambling with the money they are sitting on to increase profits? Now that Wall Street has become a big casino why shouldn’t US Corporations follow in their foot steps?
August 28th, 2010 at 5:49 pm
Somebody ought to bring up the fact that Germany has higher per-worker costs than the US, but has a thriving manufacturing sector and is a booming exporter. Why the difference? Because the German government didn’t turn economic policy over to the CEOs, like we did in this country, where business is all about those at the top getting the most they can, any way they can, and everyone else be damned. We are like the people on the ship in “Around the World in 80 Days” tearing up the decking to keep the fires in the engine room burning—you can only do that for so long, and then you sink. The lack of a rebound in consumer spending should alert someone that the ship has started to go under. The jobs are gone.
Despite BR’s opinion that betting on the demise of the US is the low probability position, there’s an awful lot of facts that point to it.
August 28th, 2010 at 5:53 pm
Um, almost all of the people in the picture just got a $26 billion bailout from the feds:
http://www.boston.com/news/nation/washington/articles/2010/08/11/obama_signs_26b_state_aid_bill_after_house_ok/
The UAW worker received a bailout in the earlier $787 billion stimulus package via the government’s stake in GM.
The older gentleman with the suit and cane is probably eligible for Social Security disability benefits.
The private sector middle class doesn’t seem to be well-represented in the picture…intentional or unintentional symbolism?
August 28th, 2010 at 6:24 pm
dsawy, I agree wholeheartedly.
Cartoon makes no sense at all. So… let’s blame corporate welfare (which I’m absolutely no fan of) for years of poor financial decisions made by state and local gov’t., along with the power, greed, and lack of compromise from the PUBLIC employee unions.
BTW, why do public employee unions exist at all??? Who do they protect their members FROM?
August 28th, 2010 at 6:26 pm
I’m going to agree with ACS. Much of our economy seems “displaced”, that is some making far better wages and benefits than others of similar background, talent and work ethic. However, I agree with the gist of the cartoon, in that corporate America has become wildly coddled by government: under regulated, under taxed and frankly deified.
The differential between the income of the average employee and the average CEO, as Barry has rightly emphasized, is enormous, and does not seem to have benefited the country. If it had, we would not be in the greatest financial crisis since the depression. Redistribution of wealth is the issue, as ghastly as it sounds to some. The wealthiest 1% of Americans pay lower tax rates than the average dentist (although the average dentist is probably a self-employed small businessman who cheats on his taxes, but that’s another story.)
I strongly doubt that raising the taxes of those with ANY income over $1 million a year will hurt American productivity or growth. OK, let’s not double tax dividends, but everything else is fair game.
August 28th, 2010 at 6:30 pm
Bottom line is wealth, like most things, is distributed in a bell shaped curve…When I hear that more money needs to be sent to education, all I can think is great, we’ll have ditch diggers with PHDs.
August 28th, 2010 at 7:19 pm
Crime in the City (Neil Young)
Well, the cop made the showdown
He was sure he was right
He had all of the lowdown
From the bank heist last night
His best friend was the robber
And his wife was a thief
All the children were killers
They couldn’t get no relief
The bungalow was surrounded
When a voice loud and clear
Said, Come on out with your hands up
Or we’ll blow you out of here.
There was a face in the window
The TV cameras rolled
Then they cut to the announcer
And the story was told.
The artist looked at the producer
The producer sat back
He said, What we have got here
Is a perfect track
But we don’t have a vocal
And we don’t have a song
If we could get these things accomplished
Nothin’ else could go wrong.
So he balanced the ashtray
As he picked up the phone
And said, Send me a songwriter
Who’s drifted far from home
And make sure that he’s hungry
Make sure he’s alone
Send me a cheeseburger
And a new Rolling Stone.
Yeah.
There’s still crime in the city,
Said the cop on the beat,
I don’t know if I can stop it
I feel like meat on the street
They paint my car like a target
I take my orders from fools
Meanwhile some kid blows my head off
Well, I play by their rules
That’s why I’m doin’ it my way
I took the law in my hands
So here I am in the alleyway
A wad of cash in my pants
I get paid by a ten year old
He says he looks up to me
There’s still crime in the city
But it’s good to be free.
Yeah.
Now I come from a family
That has a broken home
Sometimes I talk to Daddy
On the telephone
When he says that he loves me
I know that he does
But I wish I could see him
I wish I knew where he was
But that’s the way all my friends are
Except maybe one or two
Wish I could see him this weekend
Wish I could walk in his shoes
But now I’m doin’ my own thing
Sometimes I’m good, then I’m bad
Although my home has been broken
It’s the best home I ever had
Yeah.
Well, I keep gettin’ younger
My life’s been funny that way
Before I ever learned to talk
I forgot what to say
I sassed back to my mom
I sassed back to my teacher
I got thrown out of Bible school
For sassin’ back at the preacher
Then I grew up to be a fireman
Put out every fire in town
Put out anything smokin’
But when I put the hose down
The judge sent me to prison
He gave me life without parole
Wish I never put the hose down
Wish I never got old.
August 28th, 2010 at 8:05 pm
@chartist
Wealth is not some collectively owned entity that needs to be “distributed”. Wealth results from providing a good, service, skill, or talent that is in shorter supply than the demand. I don’t have any claim to someone else’s wealth. And there is no cap on how much wealth that can be created.
August 28th, 2010 at 8:12 pm
Drewburn and ACS both seem oblivious to the 80/20 rule. No matter where I have worked, what school I have attended, or non profit board have sat on; it seems that 20% of the folks end up producing 80% of the sales/high grades/simple work. Resenting those that have achieved success is not going to solve your, or the nations problems.
August 28th, 2010 at 8:13 pm
Tarkus Says: August 28th, 2010 at 4:46 pm
The cartoon needs a split-screen showing bankers enjoying the worker’s retirement money in luxury apartments, yachts, and Ferrari’s.
~~
Tarkus,
do not misconstrue, the following…
BR,
More Proof that terms, known, or not, like: “meta-cognition”, are, in fact, useful to use as ‘seed’..
August 28th, 2010 at 8:36 pm
Sorry but this gets me going on one of my constatnt themes. Globalisation has been great for all MNC’s, but in aprticular US MNC’s but not so great for the blue collar workforce. China bashing is just a diversion from the real issues:
1. Manufacturing jobs are not coming back, they are yeaterday. Rather than just paying people not to work, they should be getting paid to learn new skills or, at least, to do something. The US must re-tool its workforce and focus on the higher value-added sectors, in the IP sectors and in precision/high value added manufacturing (Think Germany).
2. Not only have US Corporations shipped jobs overseas, they have shipped most of the profits overseas too using transfer pricing through offshore affiliates, to avoid US taxes. There are very few US Corporations that pay anywhere near the stipulated Corporate Income tax rate. As unemployment remains high over a long period and so the importance of the US consumer decline, there are lots of opportunities elsewhere. And should it ever get to pitchforks, they will just move offshore whilst the Executice classes commute from the Caymans and the resident few hide in heavily protected gated communities on LI and Condos in NYC.
3.Income levels are being re-distributed globally in a re-balancing that will take decades but in which an inevitable side-effect of Globalisation, is that incomes in the East will increase whilst those in the West will fall, towards reaching a new equilibrium closer toward middle ground.
In the United Corporatocracy of America, with Congress a wholly owned subsidiary, don’t expect anything to change anytime soon. If Congree do, in response to popular demand slap a 10% import duty on goods manufactured in China, then the proceeds should be collected and used directly towards Item 1 above. Other than a Chinese response against US goods, it wouldn’t make any difference to the trade balance, the labour cost differentials are just too great ($25 an hour in the US and $25 a week in China) and little difference to China’s income because most of the value-added on China manufacturing by US Corporations is transfer-priced offshore anyway, with only essentially employment being paid in China.
August 28th, 2010 at 8:57 pm
phillipat,
don’t be, too, discouraged..
see:
T56 – Global Governance: Enhancing Trilateral Cooperation, The Trilateral Commission Seoul Plenary Meeting 2003
The Trilateral Commission (2003)
Contributions by: Roh Moo-Hyun, Hong Seok Hyun, SaKong Il, Wang Jisi, Heinrich Weiss, Wendy K. Dobson, Keizo Takemi, Yasuhisa Shiozaki, Jesus P. Estanislao, Wang Gungwu, Carla A. Hills, Peter Sutherland, Han Sung-Joo, Stephen W. Bosworth, Jacques Andréani, Thomas S. Foley, and Akihiko Tanaka.
ISBN: 0-930503-83-x
115 pages $9.00 US plus shipping and handling
Click here to order from Brookings
~~
T13 – Trade Issues and Macroeconomic Coordination Highlight Trilateral Tokyo Meeting, January 1977
The Trilateral Commission (1977)
Ed: François Sauzey
Contributions by: Marina v.N. Whitman, Thierry de Montbrial, Saburo Okita, Iichiro Hatoyama and Kiichi Miyazawa.
19 pages $5.00 US plus shipping and handling
Click here to order from The Trilateral Commission
Complete Text: Click here to download
~~
for starters, to read, their own pub.s, about ‘how to bring about ‘One’-ness–see their Logo, alone, for a different instantiation of their ‘desires’..
http://www.thefreedictionary.com/instantiation
http://www.trilateral.org/go.cfm?do=file.showdirectory&list=Trialogue-Series
~~~
also..”…When the first triennium of the Trilateral Commission was launched in 1973, the most immediate purpose was to draw together—at a time of considerable friction among governments—the highest-level unofficial group possible to look together at the key common problems facing our three areas. At a deeper level, there was a sense that the United States was no longer in such a singular leadership position as it had been in earlier post-World War II years, and that a more shared form of leadership—including Europe and Japan in particular—would be needed for the international system to navigate successfully the major challenges of the coming years.
The “growing interdependence” that so impressed the founders of the Trilateral Commission in the early 1970s has deepened into “globalization.” That interdependence also has ensured that the current financial crisis has been felt in every nation and region. It has fundamentally shaken confidence in the international system as a whole. The Commission sees in these unprecedented events a stronger need for shared thinking and leadership by the Trilateral countries, who (along with the principal international organizations) have been the primary anchors of the wider international system. Doubts about whether and how this primacy will change do not diminish, and, if anything, have intensified the need to take into account the dramatic transformation of the international system. As relations with other countries become more mature—and power more diffuse—the leadership tasks of the original Trilateral countries need to be carried out with others to an increasing extent…”
http://www.trilateral.org/go.cfm?do=Page.View&pid=5
~~~
LSS: to some, the, above, ‘Cartoon’, of the Post, is, merely, more Reason to chortle: “You gotta love it, when a Plan comes together~”
~~~
or, for sure, We can remain ‘Coincidence Theorists’ (One’s ‘milage’ may vary/orbit may perturb)
August 28th, 2010 at 9:17 pm
US workers became expendable back in 2001. the only reason any body cares about them is because they bought stuff. since that has stopped (as soon as incomes stopped being supplanted with easy credit) corporations now have a new problem. their sales haven been tanking, and they have no way to adjust to that. most of that job export business was to make wall street happy, and drive wall streets loans programs. but those have died.
and there aren’t many (ok almost none) countries that have a thriving consumer base. so companies are toast they have no way to increase profits once they have chopped to much from their customers. and none of them seem to know thats what they have been doing
August 28th, 2010 at 9:29 pm
@Chief – yea, I’d liked to know too. And asked a couple times in that thread, but there didn’t seem to be any takers.
@laddington – I might grant that “20% of the folks end up producing 80% of the sales/high grades/simple work” but that’s got nothing to do with their subsequent income.
August 28th, 2010 at 10:08 pm
There is certainly plenty of money around, just in the wrong places. There are some very obvious reasons: the acceptance of the ‘greed is good’ idea by corporate execs, the government policies of the last 25 years that have been aimed at creating greater financial class divisions in the US, the ‘bailouts’ of certain privileged groups but not others.
You simply cannot have wide income disparity and a weakening middle class and expect to continue as a consumer-based economy. This is structural change, not cyclical.
August 28th, 2010 at 11:47 pm
Where are the growth vigilantes?
What’s the excuse for US businesses to grow cash piles while EM businesses grow in a world of six billion consumers?
American managers are now getting independent board members voted on, to fire them up, or just fire them.
August 28th, 2010 at 11:58 pm
Event_horizon:
What’s your problem with public employees unions? They aren’t the problem. No one gets rich being a part of a public employee union.
August 29th, 2010 at 12:03 am
laddington:
So Stephen Schwarzman is worth billions of dollars a year in pay? What value does he add, exactly?
August 29th, 2010 at 1:49 am
Correct me if I’m wrong, but the guy in the suit is Dick Fuld, right?
It’s a recession folks. It’s taking a toll on large chunks of the labor force.
Gulf coast fisherman, UAW, public servant, construction worker, mortgage broker/banker/whatever — these are the faces of the unemployed or the soon to be out of work.
Meanwhile, corporations are flush with cash (which they raised by floating 30 year bonds at 1%, but that’s another story!).
It sure does feel that the ordinary worker with a good salary has become “expendable.”
August 29th, 2010 at 4:56 am
@willid3
I agree that nobody in Corporate America cares about the average American except that they need consumption. And like you, I used to believe that ultimately this would be self-defeating for US Corporations. But my views have changed and I think you are wrong, which is why, in my earlier post, I noted that there are lots of opportunities for US MNC’s outside the US.
I have lived in Asia for over thirty years and I wonder have you ever been here? I’m afraid that most Americams are blinfolded behind the flag. The lifestyle and economic growth out here are spectacular. We have the best airlines, airports, hotels etc in the world, where we do actuallystill get service. These economies are booming. And it’s the same in other EM’s. Believe what you will, but believe it at your own peril.
August 29th, 2010 at 7:42 am
So tell me Chicago if we need any more evidence against trickle down and for the simple truth that if you want to grow “the economy stupid” is not “the investor stupid” it is “the consumer stupid”. Most of these idiotic tax brakes to businesses were a big waste, because they don’t hire unless there are consumers to purchase their products and services. It just ends up as unproductive “dead” capital in an account.
August 29th, 2010 at 8:19 am
Calvin Jones:
Stephen Schwarzman has built a hugely successful business, that has managed to grow and prosper despite these difficult times. Why would we begrudge him his success? I really don’t get it. Do we really want to dictate appropriate levels of compensation for successful business models?
August 29th, 2010 at 10:04 am
philipat to willid3 at 4:56 am .. I hear the wisdom in that post .. every mouth to feed – dog cat human is a payday to the bottom half of the double pyramid diamond (old money) .. struggle and the play is the game that has developed over thousands of years … “Believe what you will, but believe it at your own peril” .. don’t you forget what starts wars … both foreign and domestic .. and how that can be played over hundreds of years
August 29th, 2010 at 10:30 am
Silly me, I had this apparently quaint notion that our government was supposed to adopt policies that favor 100% of its people, and more importantly, favor America over foreign countries.
August 29th, 2010 at 11:25 am
laddington:
Perhaps within the realm of Wall Street what you say may be true. However, I assure you those doing the heavy lifting in much of the world and not always those getting the credit/money. Much of business is luck, little of it is talent or hard work. And the luck is often milking the heavy lifters without really compensating fairly. Croney capitalism is very common.
August 29th, 2010 at 2:09 pm
Forget 80/20, we have a situation where 2% of the population has seized power through bought out politicians and is creating nothing but rent seeking.