Ben Is Right Again

    We know something is wrong in this country. The facts are all around us. Most of the time I find the progressive/left rants about class war and inequality completely predictable and boring--even if I agree with the substance.

    So, I keep finding the comments by Ben Stein quite worth reading. Stein writes a regular column in the Sunday New York Times Business Section. He's an avowed capitalist and, as he points out, quite well off himself. But, he is regularly disturbed by the excesses of the system. As he was today:

A puzzle: we have all heard corporate executives say that American workers are paid too much; that our industries cannot compete with foreign makers because our labor costs are so high that if we used American union labor, we would see profits evaporate.

And yet, hourly wages in this country, adjusted for inflation, are below what they were in 1972 (when my pal, Richard Nixon, was president) by a substantial amount. But to hear corporate leaders tell it, this is still far too high to allow competition with foreign entities.

Now, you would think that if this high-priced American labor were in fact pressing corporate backs to the wall, profits would be stagnant or falling. But in fact, in the last several years — and especially the last few quarters — corporate profits as a percentage of sales were the highest they have been since 1965 — roughly 9.6 percent before tax and roughly 7.4 percent after tax.

In total, profits are by far the highest they have ever been, running at a rate of very roughly $1.38 trillion in the first quarter of 2006. As a percentage of gross domestic product, profits are also the highest they have been since the statistics began being kept in 1959 — roughly 12.7 percent.

Don’t get me wrong. I like profits, a lot. They are what the capitalist society is all about. But why are we outsourcing, why are we moving our work overseas, if our corporations are so profitable? And if our corporate world is so profitable, how come so little of the growth goes to workers’ wages? How come — as an average number — basically none of the growth goes to the ordinary worker’s wages? I am not saying this to encourage strikes. I am genuinely puzzled about it.

Could it be that just the threat of moving jobs overseas (very few have in fact actually been moved as yet) keeps labor cowed? Is the vast labor force of Asia and the Third World in fact something like “the reserve army of the unemployed” that Karl Marx described in his critique of capitalism?

    Ah, and, yes, he has some thoughts about the absurdity of the attempt to repeal the estate tax:

Next mystery: in a nation with stupendous deficits even at the peak of the business cycle, with forecast deficits of nuclear-disaster status, how can it be important to repeal the estate tax? Isn’t there enough income and wealth inequality in America? Don’t we need the revenue? How on earth can any social good come from making taxes on the rich even lower than they are? How does this bind the nation together in time of war?...

Why should the very rich not pay their fair share of the burdens of government? I could see a different argument if we were not hundreds of billions in the red, but in the real world, how can repeal or a drastic cut in the estate tax make social, moral or fiscal policy sense?

    I don't go so far as to agree with him that there would be an argument of the deficit was smaller.  But, still, it strikes me that when the Ben Steins of the world are worried, the situation is quite bad.

Comments

[D Flinchum]

Excellent article in September "The Atlantic" magazine on this issue: "The Height of Inequality" by Clive Crook.

[Scott-o]

Great blog. I watched you today on DemocracyNow.org. It shows that you have done your homework. Keep truckin' away on your campaign against the fakes of this political landscape.

[panasianbiz.com]

I don't think anyone can really dispute your claim that something is wrong in this country, but it's difficult to pinpoint how this can be corrected. The discussion of corporate profit/outsourcing was most illuminating and gave a lot of food for thought. I love Stein's column personally!