“A Stash Of Riches”: Walmart Getting Ahead On The Backs Of Others
Having been raised in a small-business family and now running my own small outfit, I always find it heartwarming to see hardworking, enterprising folks get ahead.
So I was really touched when I read that, even in these hard times, one extended family with three generations active in their enterprise is hanging in there and doing well. Christy, Jim, Alice, Robbie, Ann and Nancy are their names — and with good luck and old-fashioned pluck, they have managed to build a fairly sizeable family nest egg. In fact, it totals right at $103 billion for the six of them. Yes, six people, 100-plus billion bucks. That means that these six hold more wealth than the entire bottom 40 percent of American families — a stash of riches greater than the combined wealth of some 127 million Americans.
How touching is that?
The “good luck” that each of them had is that they were either born into or married into the Walton family, which makes them heirs to the Walmart fortune. That’s where the “pluck” comes in, for the world’s biggest retailer plucks its profits from the threadbare pockets of low-wage American workers and impoverished sweatshop workers around the world.
Four of the Walton heirs rank as the 6th, 9th, 10th and 11th richest people in our country, possessing a combined net worth of $95 billion. But bear in mind that “net worth” has no relationship to worthiness — these people did nothing to earn their wealth; they just inherited it. And, as Walmart plucks more from workers, the heirs grow ever luckier. In recent years, while the wealth of the typical family plummeted by 39 percent, the Waltons saw their wealth grow by 22 percent — without having to lift a finger.
How odd then that the one-percenters (on in this case, the 1/100-of-one-percenters) are hailing themselves as our country’s “makers,” while snidely referring to workaday people as “takers.” With the Waltons, it’s the exact opposite.
Indeed, you’d think that the Bentonville billionaires would realize that their fortunes are tied directly to these disparages. Apparently, they’re unaware that America’s economic recovery cannot truly be measured in the performance of the stock market but instead should be gauged by the sock market.
Most economists, pundits and politicos see today’s boom in stocks and say: “See, the recovery is going splendidly!” But they should go to such stores as Kohl’s, Target and even the Waltons’ very own Walmart and find out what’s selling. The answer would be socks. Even in the present back-to-school season (usually the second-biggest buying spree of the year), sales are sluggish at best, with customers foregoing any spending on their kids except for socks, underwear and other essentials.
This is not only an economic indicator but also a measure of the widening inequality in America. The highly ballyhooed “recovery” has been restricted to the few at the top who own nearly all of the stocks, get paychecks of more than $100,000 a year and shop at upscale stores. But meanwhile, the many don’t have any cash to spare beyond necessities. Walmart’s chief financial officer seems puzzled by this reality. There is, as he put it last week, “a general reluctance of customers to spend on discretionary items.”
Golly, sir, why are those ingrates reluctant? Could it be because job growth in our supremely wealthy country has been both lackluster and miserly? Yes — jobs today are typically very low paying, part-time and temporary with no benefits. Mr. Walmart-man should know this, since his retail behemoth is the leading culprit in downsizing American jobs to a poverty level in order to further enrich those at the very top, including Christy, Jim, Alice, Robbie, Ann and Nancy. In recent months, corporate honchos at the Arkansas headquarters have directed Walmart managers not to hire at all or to concentrate on hiring temporary and part-time workers, while cutting the hours of many full-time employees
Since the Great Recession “ended” in 2009, Walmart has slashed 100,000 people from its U.S. workforce, even as it added some 350 stores. In addition, while the giant banked more than $4 billion in profit just in the last three months, the chieftains changed the corporate rules to make it harder and costlier for employees to get Walmart’s meager health care plan.
Yet, executives wonder why customers aren’t buying “discretionary” items. Hello — even your own workers can’t afford to buy anything in the store besides socks.
By: Jim Hightower, The National Memo, August 28, 2013
“A Very Cynical Strategy”: Having Never Tried, Republicans Want Jobs To Stay Anemic
Job-growth is sputtering. So why, exactly, do regressive Republicans continue to say “no” to every idea for boosting it — even last week’s almost absurdly modest proposal by President Obama to combine corporate tax cuts with increased in spending on roads and other public works?
It can’t be because Republicans don’t know what’s happening. The data are indisputable. July’s job growth of 162,000 jobs was the weakest in four months. The average workweek was the shortest in six months. The Bureau of Labor Statistics has also lowered its estimates of hiring during May and June.
It can’t be Republicans really believe further spending cuts will help. They’ve seen the effects of austerity economics on Europe. They know the study they relied on by Carmen Reinhart and Kenneth Rogoff has been debunked. They’re no longer even trying to make the case for austerity.
It could be they just want to continue opposing anything Obama proposes, but that’s beginning to seem like a stretch. Republican leaders and aspiring 2016 presidential candidates are warning against being the “party of ‘no.’” Public support for the GOP continues to plummet.
The real answer, I think, is they and their patrons want unemployment to remain high and job-growth to sputter. Why? Three reasons:
First, high unemployment keeps wages down. Workers who are worried about losing their jobs settle for whatever they can get — which is why hourly earnings keep dropping. The median wage is now 4 percent lower than it was at the start of the recovery. Low wages help boost corporate profits, thereby keeping the regressives’ corporate sponsors happy.
Second, high unemployment fuels the bull market on Wall Street. That’s because the Fed is committed to buying long-term bonds as long as unemployment remains high. This keeps bond yields low and pushes investors into equities — which helps boosts executive pay and Wall Street commissions, thereby keeping regressives’ financial sponsors happy.
Third, high unemployment keeps most Americans economically fearful and financially insecure. This sets them up to believe regressive lies — that their biggest worry should be that “big government” will tax away the little they have and give it to “undeserving” minorities; that they should support low taxes on corporations and wealthy “job creators;” and that new immigrants threaten their jobs.
It’s important for Obama and the Democrats to recognize this cynical strategy for what it is, and help the rest of America to see it.
And to counter with three basic truths:
First, the real job creators are consumers, and that if average people don’t have jobs or good wages this economy can’t have a vigorous recovery.
Second, the rich would do better with a smaller share of a rapidly-growing economy than their current big share of an economy that’s hardly moving.
Third, that therefore everyone would benefit from higher taxes on the wealthy to finance public investments in roads, bridges, public transit, better schools, affordable higher education, and healthcare — all of which will help the middle class and the poor, and generate more and better jobs.
By: Robert Reich, Robert Reich Blog, August 3, 2013
“The Wall Street That Cried Wolf”: Banks Complain About Onerous New Regulations While Reaping Record Profits
The headlines have been nothing short of dazzling: “Bank of America profits soar“; “Citigroup’s profits surge“; “Bank boom continues: Goldman Sachs profit doubles.” In fact, the six biggest Wall Street banks – Bank of America, Citigroup, Goldman Sachs, JP Morgan Chase, Wells Fargo and Morgan Stanley – all beat their profit expectations in the most recent quarter, according to results announced over the last week. JP Morgan Chase is even on pace to make $25 billion (yes, billion with a b) this year.
If you’re thinking that these numbers don’t at all square with the ominous warnings of bank executives and lobbyists, who have been saying non-stop that new regulations meant to safeguard the financial system and prevent a repeat of the 2008 financial crisis are going to irreparably harm their ability to do business, you’re right. But that hasn’t stopped the banks’ griping.
The latest iteration of this argument played out after regulators recently announced new rules regarding bank capital – the financial cushion banks must keep on hand to guard against a downturn. Failed presidential candidate turned bank lobbyist Tim Pawlenty, for instance, said that the new rules “will make it harder for banks to lend and keep the economic recovery going.” JP Morgan Chase CEO Jamie Dimon, who has been scaremongering for years about various regulations, warned that the new rules would put U.S. banks at a competitive disadvantage with foreign lenders.
But this same dynamic has been playing out since the Dodd-Frank financial reform law was signed by President Obama in 2010. Banks and their allies complain about onerous new regulations, while at the same time reaping record profits.
And as the New Yorker’s John Cassidy explained, those profits are due to many of the same practices that helped cause the 2008 debacle in the first place: “an emphasis on trading rather than lending, a high degree of leverage, and implicit subsidies from the taxpayer.” That would seem to make the case that new regulations, rather than going too far, have not gone far enough.
Perhaps that’s why banks haven’t been crowing about their new avalanche of profits, and Dimon is even warning about an upcoming profit squeeze. As the Financial Times’ U.S. banking editor Tom Braithwaite explains:
In the next 12 months the Fed will hit the banks with a new flurry of measures. … Those are coming, they are serious and the banks fear them. There is an outside chance that lawmakers will go even further, such as by restoring the split between investment banking and commercial banking known as Glass-Steagall. There is still plenty to play for in deciding how painful the next round of regulations will be.
But, with every earnings season, warnings of calamity look more and more hollow.
One of the major knocks against Dodd-Frank – beyond the obvious one that it left the biggest banks even bigger than they were before the financial crisis – is that it left too much discretion to regulators to write new rules. Corporations and trade organizations familiar with how the agency rule-writing process works are almost inevitably going to have the upper hand in such a system. And there are still so many rules left to be written – some 60 percent, according to the law firm Davis Polk – that Wall Street will have ample opportunity to water the law down to meaninglessness.
But it’s hard to keep saying with a straight face that new regulations will spell doom for the industry when the new rules that are in place so far, which were accompanied by similarly dire warnings, have done nothing to even dent Wall Street’s bottom line. In fact, the huge pile of profits may be the best thing that could have happened for those trying to bring a modicum of sanity back to Wall Street regulation.
By: Pat Garofalo, U. S. News and World Report, July 18, 2013
“Apocalypse Not Now”: Just About Everything Is Getting Better
As a culture, we seem to be in an apocalyptic moment. Judging from the movie trailers, it looks like the human race is basically screwed this summer in After Earth, World War Z, and This Is the End—a comedy!—while Washington (and its black president) will be besieged by cyber-terrorists in White House Down. In the real world, we’re bombarded with warnings about our debt crisis, our economic crisis, and of course our political crisis, which is to say, our government’s inability to deal with all its other crises. Republicans in particular have become perennial prophets of doom, warning that President Obama’s foreign policies will destroy our standing in the world, that Obamacare will destroy our health care system, that out-of-control spending, growth-killing taxes, and loose monetary policy will turn us into a dystopia of inflation, high interest rates and economic paralysis.
Relax!
Things are OK. And while you can’t tell from following the news—the press doesn’t like to report on planes that land safely, or seemingly obvious stuff that didn’t happen yesterday—things are getting better. The apocalypse is not nigh.
We are now in the fourth year of a slow but steady recovery. The economy is adding about 200,000 jobs a month, and has added 6.8 million private-sector jobs since the end of the Great Recession. The stock market is at an all-time high, and has almost doubled since Obama took office. The housing market is rebounding. It’s true that 7.5% unemployment is way too high, but it’s better than the double-digit unemployment we had in the wake of the financial meltdown, when the apocalypse really was nigh. The government has even turned a profit on the reviled Wall Street bailouts that ended the meltdown.
Yes, the economy would be doing even better if it weren’t being dragged down by the “sequester,” $85 billion worth of haphazard spending cuts resulting from Republican demands for government austerity. Those were misguided demands after a financial crisis, the kind of demands that have turned Europe into an economic basket case. But so far, at least, fears that the sequester could scuttle the U.S. recovery have proven to be overblown. Consumer confidence just hit a six-year high.
What about the fears that inspired the sequester and the rest of the austerity push, the fears that spiraling deficits would turn us into Greece? Well, the Congressional Budget Office now estimates the deficit at $642 billion, the lowest since the crisis; it’s been cut in half since Obama took office, the fastest reduction since World War 2. We’re not Greece. The bond markets certainly don’t think so; interest rates are at historic lows. And the runaway inflation that Paul Ryan and other loose-money critics keep predicting has yet to materialize; inflation is actually below the official Federal Reserve target of just 2 percent.
In fairness, while America’s short-term deficit is shrinking fast, our long-term deficit is still a concern, because soaring health care costs have threatened the future of Medicare and Medicaid. But there’s good news there, too. According to the nonpartisan Kaiser Foundation, health care spending is now growing at the slowest rate in five decades, which is why Medicare’s trustees just upgraded the program’s budget outlook. And there is strong evidence that Obamacare’s efforts to reorient the medical system to reward providers who keep their patients healthy instead of providers who perform more services are working. For example, Obamacare imposes financial penalties on hospitals with high rates of readmissions and central-line infections; predictably, hospitals have improved their performance in both areas. The health information technology revolution—launched by Obama’s 2009 stimulus—is also bending the cost curve, dragging a pen-and-paper system into digital age.
Meanwhile, U.S. combat forces are out of Iraq, and they’ll be out of Afghanistan next year. U.S. carbon emissions are at their lowest level in two decades, and so are U.S. oil imports. By historical standards, taxes are very low and spending is very modest. General Motors and Chrysler, wards of the state four years ago, are posting their best sales numbers in years. Gays are serving openly in the military, solar installations have increased over 1,000% in four years, a cool robot is taking cool pictures of Mars, and Tesla just paid back its government loan with interest. Things are getting better, and better is better than worse.
But the headlines are all about supposed scandals—stupid IRS agents in Cincinnati, overzealous leak investigations at the Justice Department, a dopey dispute over Benghazi talking points. These are the kind of things that politicians can obsess about when there’s no crisis on the horizon; the last time the national outlook was this bright, Republicans impeached the president for sexing up an intern. It’s unfortunate, but it’s not as if the latest wannabe-scandals are distracting official Washington from any important work it might be doing. Sure, Congress ought to do something about climate change, but as long as Republicans control the House, Congress isn’t going to do anything about climate change.
I guess that qualifies as a crisis. But one of the lessons of the Obama era, along with the general advisability of DOING STUFF regardless of the political implications, is that positive change can happen in spite of a dysfunctional system. You couldn’t build a summer movie around that—”In a world where complex legislation is implemented effectively…”—but it’s still a feel-good idea, even if it seems to have limited box-office appeal.
By: Michael Grunwald, Time Magazine, June 9, 2013
“Blocked By The GOP”: One Way To Help Close The Gender Wage Gap Is To Raise The Minimum Wage
This week, ThinkProgress’s excellent Bryce Covert wrote about a new report by the National Women’s Law Project about the relationship between the minimum wage and the gender pay gap. As the NWLP demonstrates, raising the minimum wage would help close the gender pay gap, because women are disproportionately concentrated in low-wage sectors such as food service, retail, housekeeping, and home health aides,
Raising the minimum wage is an important step in bringing economic justice to women workers. Consider the following:
— Contrary to what you might assume based on the recent mass freak-out by male Fox News anchors, we ladies are hardly the dominant sex in the workplace. In fact, we’re losing ground economically, and the gender wage gap is getting worse rather than better. Increasing the minimum wage would significantly remedy the situation.
— The NWLP points out that women of color, who suffer from racial discrimination as well as gender discrimination, make up a disproportionate number of minimum wage workers. So they, too, stand to strongly benefit from a minimum wage increase, in ways that would partially offset the effects of discrimination.
— Earlier research has shown that the declining real value of the minimum wage has substantially accelerated the trend in growing wage inequality in the U.S. generally, particularly among women. Increasing the minimum wage would help slow this trend.
— Finally, one of the chief benefits of the the minimum wage is as economic stimulus. In fact, it was originally instituted during the Great Depression not so much as a worker protection policy but as macroeconomic policy, to encourage economic growth. Low-wage workers tend to spend close to every penny they make, rather than save. The money they inject back into the economy then has a multiplier effect which revives the economy as a whole — meaning that the minimum wage benefits not just minimum wage workers, but everyone else.
So far, President Obama’s proposal to raise the minimum wage, which he made in the State of the Union address earlier this year, doesn’t seem to have gotten out of committee. It’s one of the endless list of things in this country that is excellent policy and excellent politics, but is being blocked by the G.O.P. Lather, rinse, repeat. Will this story ever end?
By: Kathleen Geier, Washington Monthly Political Animal, June 8, 2013
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