This Christmas Villgage sits in the window of one of my neighbors
So here we are again. Another Christmas Season is upon us or as some prefer to say Holiday Season. Its actually been here since Halloween. Christmas is the only holiday I can think of that horns in on other holidays like Halloween (selling Christmas decorations alongside Halloween’s) and now Thanksgiving. Remember when no one was open on Thanksgiving except for convenience stores and that was so people could buy gas to get t a relatives home to spend time with people they really don’t like that much, but felt obligated or be seen as a total jerk?
I remember spending a Thanksgiving in 1991 at a friends house (who I did like) who lived in Modesto, California…and after our mid-afterrnoon meal the host stood up and asked who wanted to go to Kmart? I was confused. Kmart? It’s Thanksgiving…they aren’t open today. Boy, was I wrong. That year Kmart opened its doors at 4 o’clock. I believe they were the first store to try this. We went and there weren’t alot of shoppers but I guess enough for Kmart to do it again the following year and the rest is…history.
1991 is the only time I was ever in a store on Thanksgiving or Black Friday…until this year. As you know, Walmart employees planned a strike this year and there were several Walmarts listed on the OUR Walmart website as possibly participating. The store in Orange was on the list for Thanksgiving Day at 8 p.m., so I decided to check it out. When I drove into the shopping center parking lot at 7:30, I entered on the Sears side and noticed a line of people waiting outside their door. I had no idea that Sears was opeing at 8 o’clock as well. I drove to where Walmart was and to my surprise people were pushing shopping carts filled with Walmart bags to their cars. I stopped one woman and asked her if Walmart had opened early and she told me this particular store never closes, except for eight hours a year! I have to admit, I was speechless. I headed to the toward the store entrance expecting to see a few picket signs but the only people I saw wore yellow vests, directing shoppers to their main entrance. I asked one of the employees if they were still having the big 8 o’oclock sales event and he told me they were, but there were still sales on smaller items to be had before then.
So I wandered inside and I have to admit…I was impressed with the stores crowd control. It was controlled chaos. There were employees all over the store directing traffic and keeping people moving. I found out later that the ones in the yellow vests were temps and probably could also fill in if any employees decided to walk out. Customers lined up in aisles that wrapped around several times, hoping to score one of the huge flatscreens when the magic hour came. Lines to the cashiers where clearly defined by managers standing and controlling whose turn it was to pay. I only saw a few shoppers get upset that the lines were too long but managers quickly came over to diffuse any possible outbursts.
I looked at my watch and it was 8:10…no sign of anyone unwrapping the flatscreens, so I wondered if there would be a loud “Bang” over the store loudspeaker lettting shoppers know that it was time for the main event…like the ones at the racetrack, but nothing happened and I couldn’t get the attention of anyone inside…they were in crowd control mode. I went back outside to see if any picketers showed up yet, but the only ones outside were shoppers, hoping to get bargains. I went back around the main entrance to go inside and by now shoppers were not allowed in. The crowd looked around 500 and a worker told me that they were not letting anyone else in until the store cleared out a bit more inside. They did not want anyone to get trampled.
I read in the newspapers that weekend that the threat of a strike did not hurt Walmart sales one bit..they actually did better than they expected. In a press release, Walmart reported, “that they saw larger crowds than last year.” I have been asking people if they shop at Walmart and how they feel about workers wanting to form a union, and the responses I got were, “At least they have a job”; “If they don’t like the pay, why did they take the job?”…or there were some who empathized with the workers but not enough to shop somewhere else. They told me all the big box stores treated their employees badly, not just Walmart…where else could people shop to buy cheap goods? Don’t even get me started when I asked them how they felt about buying goods from countires that are basically sweatshops, owned by corporations who screwed Americans, by shipping their jobs overseas…to get out of laws that required companies to have safe working conditions…all in the name of their bottom line…they really got annoyed with that question.
But what does that say about us as a society? We claim that we care about others. How many times have we heard politicians tell us how we care about those less fortunate? Judging from the sales numbers and the opinions of those individuals who shop at Walmart at least, I would say we don’t care very much. You’ve heard the saying, “Talk is cheap?”
Every year there are religious groups (Christian) who are pissed off that stores wish customers a Happy Holiday instead of Merry Christmas. Some go so far as saying there is a war on Christmas, like when a judge in Santa Monica sided with an atheist group over a nativity scene being displayed in a public park. Why aren’t these same people who tell us that “Jesus is the Reason for the Season,” equally upset that stores like Walmart are turning their beloved holiday into one endless sale-a-thon?
I don’t know why we Americans allow ourselves to be guilt-tripped into going along with this Christmas thing. People feel obligated to participate in the Secret Santa gift exchange at work which now has an average price tag of $20. Employees expect big bonuses and lavish parties at the end of the year. Others who don’t have family or close friends get depressed wondering why no one has invited them to share Christmas, although I recently discovered that the suicide rate does not increase, according to the CDC. But that does not diminish the fact that people get stressed out and tempers flare during what is supposed to be the “most wonderful time of the year.”
When did this holiday, that I thought was all about giving to others, become more about, “Gimmee! Gimmee! Gimmee!” I think it has to do with this constant barrage of advertising, whether its at the gas pump, grocery store or sides of public transportation. They all send the same message…Shop! Shop! Shop!
So how does all this talk of Walmart and Black Friday tie in with the Christmas Season? It’s all about advertsing Christmas even before we can celebrate Halloween. Its about hi-jacking now two holidays so businesses can make as much money as possible. Mark my words, next year more stores will open Thanksgiving and they will open even earlier. Why? Because consumers will show up and spend money even if it means putting their purchases on a credit card and taking all of 2014 to pay for the junk they bought in 2013.
Happy Holiday!
I’m afraid you may be right, Inge. Walmart may be the worst and most high-profile offender, but its not the only one–and none would be but for those of us who support this madness. A few years ago the LA Times ran a series story about how Walmart controls the economy of many regions in the Third World simply by threatening to take its business elsewhere if suppliers can’t meet it price targets. In reality, this means cutting workers’ wages to barely subsistence-level. My family decided not to shop at Walmart after that, but to be honest, we went back after a few months just for the convenience .
But after seeing the strikers ignored by shoppers this year, and reading about the discovery of the “secret managers’ manual” detailing how to change employees’ hours and shifts to deny them benefits, we’ve had enough. This is a case of “if you’re not with us, you’re against us.” Costco treats its employees like human beings and still manages to keep prices low and turn a profit. I’d rather pay a few cents more knowing I’m spending it on companies that treat their employees with some dignity.
Walmart won’t miss our money and there probably will always be more than enough shoppers to replace those who refuse to reinforce unethical business practices just to save a few bucks. But that does that relieve me of the duty to use my money in a morally justifiable way. Maybe the irony in this story is that Walmart may be forced to change, not because it loses shoppers, but because eventually enough of its employees will refuse to be used as pawns.
As for the crass commercialization of Christmas and its invasion of Halloween and Thanksgiving, I guess we need to fight one battle at a time. At least if we spend our money elsewhere, it may help some working stiff pay for the presents for his family!
NOCLIB: The part you left out is that those workers in Vietnam are making more in a day then thier folks did in a month. If you travel to Vietnam and ask the workingman he views his existence as a walmart supplier as a blessing. It’s all relative. What you call exploited may be fabulous riches to others.
As for Costco, They respect workers who don’t have tattoo’s or body piercings anyway.
I guess that rules out Colin Kappernick from working the checkstand!
I suggest you search the Times archive to see how the actaul workers feel about the “fabulous wealth” Walmart has brought them.
Walmart and the Liberal O.C. both have an anus for a logo. don’t know why.
Increasing secularization of Christmas => increased consumerism? Interesting.
Very good post Inge- I enjoyed reading it. Lots covered obviously.
I am not so sure that I would say that corporations have screwed Americans by off-shoring jobs as much as we have screwed ourselves by requiring the lowest possible priced products. We, the consumer, want the best products at very low prices. The businesses in turn get to sell lots of “stuff”…thereby making profit. Then, those publicly traded companies such as Walmart, get to return a portion of that profit to us, the investor. Walmart for example yields approximately 2.2% (dividends) and it also has increased in price (about 33% in the past 3 years plus the dividend). So, consumers demand low priced products. Investors demand return on investment. Business is going to do everything it can to keep both parties happy. Executives in the meantime get rich too. The everyday worker gets what they signed up for in the job. Unless the consumer, investor, and executives all agree to lower their expectations, the worker will likely continue to get the short end of the stick because there are others who may step into that persons shoes. Seems unlikely in my opinion, but hopefully there can be small steps taken.
Why are Christians not upset that stores are turning Christmas into a endless sale? I would not agree with the statement. I believe that a lot of us are quite upset about the over the top consumerism associated with Christmas. We are constantly reminding our friends about what is important during this season. It is the celebration of Jesus’ Birthday! It is not about spending money you have not even earned yet on a product that is not even needed. Will we sue a company like Walmart about it- no, they have not broken any laws. Will we picket a store for giving people what they want- probably not. Will we try to reign in spending and try to keep focused on the real celebration- we certainly try our best. Will we try to keep families and friends focused on the right celebration- yes. Will we succeed- possibly…most of us do not profess to be perfect. Should we do more- likely.
Businesses are giving consumers what they want in a controlled and molded fashion which also provides profits to the business and its employees. Unfortunately, our society also has a high motive for having everyone spend spend spend. Sales tax revenue is increased which equals more state and local revenue. Business profits are increased which equals higher income tax revenue for both state and federal government. Businesses hire seasonal employees which increase payroll taxes as well as income tax. Business cash flow is increased at certain shopping hubs which increases rents, sales prices, and then property taxes. Government tax revenue is increased due to the increased consumerism…unfortunately what is good right now, may not be good in the long run.
Often what is good for the economy right now is not good for our own family…do not spend money you do not have, do not just put it on a credit card, save up for something important and pay cash for it. Feel the pain of paying cash and then the thrill of knowing you don’t need to worry about a credit card statement showing up.
Boutwell would have us believe that it’s really us, the consumer, that has brought about this turn events by chasing ever lower prices and business has merely responded to “market forces”.
What BS, how many consumers do you know that can afford an army of lobbyists to push their desire for lower prices?
We know that Walmart employs lobbyists to push for “free trade” and anti-union legislation. They “persuade” local officials to open up their towns to them, many times at the expense of the environment, small businesses and vibrant town centers.
We know that corporate profits and executive pay are at all time highs, but for average working class people, not so much.
In the last 30 to 40 years real wages for average working people have been stagnant or even fallen due to union busting and outsourcing, forcing working class people to shop at the very stores that are keeping their wages down.
The argument “that we’re all to blame” is crap.
“In the last 30 to 40 years real wages for average working people have been stagnant or even fallen due to union busting and outsourcing, forcing working class people to shop at the very stores that are keeping their wages down.”
You sure about that?
Really? It took all of 3 seconds to verify that.
From CNN Money;
Incomes for 90% of Americans have been stuck in neutral, and it’s not just because of the Great Recession. Middle-class incomes have been stagnant for at least a generation, while the wealthiest tier has surged ahead at lighting speed.
In 1988, the income of an average American taxpayer was $33,400, adjusted for inflation. Fast forward 20 years, and not much had changed: The average income was still just $33,000 in 2008, according to IRS data.
http://money.cnn.com/2011/02/16/news/economy/middle_class/index.htm
Ryan, please check this as well;
http://thinkprogress.org/economy/2012/08/30/776201/5-charts-middle-class/
Well, it’s certainly data. It’s not the argument I would make, but I don’t deny it’s interesting.
Anonster…yes, I do believe that consumers desire for the lowest priced items have an impact on business- in this case the business tightening everywhere it can. However, as I mentioned above, it is not solely the consumer to blame. The investor/owners are demanding adequate and increasing return on their investments…they/we are also to blame for the cost controls. Remember, if you have pretty much any broadbased mutual fund whether in an IRA or 401K or taxable investment account, then you likely own a part of Walmart. If you have a defined benefit pension plan, you are also likely an owner in Walmart. The executives want to see ever increasing cash compensation as well as equity based compensation (i.e. options and stock ownership/rights) which lead to cost controls. So having said that, I would say that we are all to blame and it would be “crap” for someone to say that the consumer does not have part to play in the situation.
I am not sure that you are saying the consumer has no part in the turn of events, but it certainly sounds like you do not agree with my shared responsibility argument. If the consumer were more willing to pay more for the same, then business would have more room to keep all sides happy…they can pay workers more (wherever they are located or employed by) and still return profit to owners while still lining the pockets of executives and even paying its lobbying firms.
Obviously the lobbying done by Walmart is to try to keep prices down because they know they sell more “stuff” when they beat their competition on price. Anything that drives prices up is harmful unless they can pass that increase to the consumer and sell the same amount of “stuff”. The problem is the consumer will not buy as much “stuff” when prices are higher, so they are going to try to eliminate the cost increases in order to keep consumers happy, owners happy, and executives happy. I personally feel we all have way too much “stuff” in our lives, closets, and garages.
Boutwell,
What I find truly interesting is that we believe we can get the “best” goods at extremely low prices. Meanwhile “quality” is just as expensive as ever. There’s a very real reason a Rolls Royce has that sticker price in it’s window or why an Apple computer will never ever cost $300. We are a nation of fools.
We believe there is a “war on Christmas” while watching Christmas eat Thanksgiving and Halloween. We get all worked up because we think people are trying to prevent us from celebrating the birth of Our Lord by giving our brother a vastly over-priced sweater that was made by prison labor in China.
You are correct, I think, in that the consumer is driving the bus. The problem is the consumer no longer has a bunch of imaginary money and the companies are in full panic mode trying to lure us back into Walmart to buy crap at extremely inflated prices for what it actually cost them.
I don’t believe that I can get the best goods for the lowest prices…some certainly have believe that they can while even more want that to happen. The lowest price is rarely the best…often it is suitable though. Sometimes the higher priced product is due to inefficiency in the supply chain or due to marketing dollars of a brand name for example…something that rarely adds any actual quality to the product. Other times a product or company’s strategy is scarcity marketing- they do not want to have sell a lot of product because then ultimately it would decrease the future sales and the perceived value of the product (i.e. scarcity marketing tactics).
Meanwhile, actual stores are fighting against the new behemoth in the game- on line merchandise. So many of us stare at the portal to on-line purchases all day long so actual stores must do everything that they can to compete for the limited consumer dollars available.
On the war on Christmas, I am saddened that a celebration of the birth of baby Jesus has turned into a secular consumer holiday. Again, marketing departments are trying to win over our dollars. I am not even sure what some people are celebrating when they do not believe in Christ…they have a Christmas tree in their home and give presents to each other, yet I am not sure what they are celebrating other than “good cheer”, which is something I suppose.
Haven’t consumers ALWAYS wanted the lowest prices?
What changed?
Did we all just suddenly wake up in the eighties and say “the heck with our neighbor’s job and the town we live in, we want cheap chinese shit and we want lots of it”?
Only a fool would believe that.
This didn’t happen by chance, it happened by design.
The corporations that spend millions lobbying congress want it this way (anti-union, anti-trust, anti-fair trade, anti-environment, even anti-bribery) and they’ve been aided and abetted by a media reliant on their advertising dollars.
The american worker didn’t change, but corporate america sure did. American corporations are now multi-nationals with no loyalty to this country. Money is their only motivation.
Our corporate class does not give a damn about its workers or even if the USA has a viable middle class. It seems it doesn’t matter how productive the workers are or how huge the profits, corporate america still wants to drive down labor and if they can’t do it here they take the jobs to a “free trade” country.
It’s story’s like the following that prove my point;
Corporation Pushes Six-Year Pay Freeze On Workers While Making Record Profits, Paying CEO $17 Million
By Pat Garofalo on Jul 23, 2012
Back in June, ThinkProgress noted that the manufacturing giant Caterpillar was seeking major concessions during contract negotiations with striking workers, even as it was making billions in profits and giving its CEO a 60 percent pay boost. The New York Times’ Steven Greenhouse added more details today, noting that the company wants to implement a six-year pay freeze and a pension freeze, at a time when it is making record profits:
Despite earning a record $4.9 billion profit last year and projecting even better results for 2012, the company is insisting on a six-year wage freeze and a pension freeze for most of the 780 production workers at its factory here. Caterpillar says it needs to keep its labor costs down to ensure its future competitiveness. […]
Caterpillar, which has significantly raised its executives’ compensation because of its strong profits, defended its demands, saying many unionized workers were paid well above market rates.
“A company that earned a record $4.9 billion in 2011 and $1.586 billion in the first quarter of this year should be willing to help the workers who made those profits for them,” said Timothy O’Brien, president of Machinists Local Lodge 851. “Caterpillar believes in helping the very rich, but what they’re doing would help eliminate the middle class.” Several labor experts told the Times that Caterpillar is a pioneer in tough labor negotiations meant to drive down workers’ wages.
Last year, Caterpillar’s CEO made nearly $17 million in total compensation. At the moment in the U.S., the typical worker would have to work 244 years in order to earn what the average CEO makes in one year.
Yes, consumers have always wanted the lowest prices. What has changed is the ability of the consumer to find the same product in many different locations within a short drive and a plethora of other on-line options. In the old days, there was limited competition and choice for products. Pricing was more determined by the small business owner who also knew their customer and provided service to go along with it. Consumers started to find out that they no longer knew the store owner, the service was not all that great compared to the price paid, and they could get a product for less by going with a large company. The large company was able to push its weight around to provide the customer what they ultimately wanted…the lowest prices for the product desired. If they wanted to shop local with a small owner, they still could, but a lot do not desire to so.
It has not been an overnight revelation. It started when a second general store opened up. Then, the trains moved in delivering far away goods. Then a second dentist showed up and a third general store. Then a second rail-line started delivering goods. Then the farmers started seeing food from out of their county arriving at the general store and they had to lower the price that they charged to the store to compete with the large farms from the outside, so then that farmer asked his laborers to work more and for the same or less. Consumers were torn between loyalty and pricing…over time, pricing apparently is important for a lot of customers. It may not be everything, but it is a large part of ones shopping experience…probably even more so for those with limited income.
With the world wide economy, everything has had to change…in a similar yet different way than when that second general store showed up and a railcar delivered the first Rockefeller kerosene to the that store. The store that decided to only sell candles probably was hurt.
The American worker is part of American business. American business is part of worldwide business. I would say that in some ways the American worker certainly has changed…they have had to change. American business has definitely changed. Consumers certainly have changed (ask someone back in 1920 if they would go into debt to buy a record player, or even someone back in 1940 who would get a car loan)…maybe their spending is “good” for our economy but it sure makes one question where our motives have gone. Our debt driven consumer was likely molded by bankers’ desire to make money by lending money, but we sure did buy into it.
As far as Catepillar….not too terribly familiar with their story other than they make some big yellow machines. Obviously if they are paid “well above market rates” would it seem inappropriate to have some wage relief? From the “bosses” perspective it would seem reasonable…the investors who are risking their capital are requiring a return on their money. Part of those investors are own retirement funds (401K, pensions, IRA’s) and savings accounts. The executives want to make sure they get “theirs”- and I don’t buy into the fact that just anyone could run Cat. The buyers of the products want to make sure that they are not paying more. The worker gets squeezed.
Boutwell…Nice apology for the CEO’s making obscene amounts of money, while 98% of the country gets screwed. The workers productivity goes up while their wages go down. Corporate profits and executive wages are at an all time high.
Your echoing the don’t raise taxes on the 2%, but let’s cut help for the Vets and Grandma.
Merry Christmas!
Demo…I am not sure where I am apologizing for anyone making money. I want corporate profits to be at an all time high. I want business leaders compensation to be at all time highs. I also want workers compensation (wages not insurance) to be at all time highs.
Are you really saying that 98% of the American worker has not seen their compensation rise? I may be wrong, but I think that may be a stretch. I understand that there has been stagnation with the average of around 90% of Americans, but that also means that likely a large portion of those 90% have seen incomes rise while those in the bottom have seen drops.
Again, I want EVERYONE to make record income/profits including workers. I can tell you that everyone in my organization makes more year after year- I cannot say the same for myself, but over time it would be true (yes, I am more micro than macro…). Will owners make higher gains over time…probably so. They also have spikes to the downside occassionally.
Happy Holidays and Merry Christmas and Joyous Consumeras.
Hey Boutwell … when’s the next Boutwell column? How about something on the so-called fiscal cliff?
Vern…I would love to do a column on the looking over the edge of the cliff. Unfortunately, I am living it right now! Tax planning is quite tough which would make any column that I ultimately am able to write that much better. However, it also means limited time- I finally had dinner (well part of dinner) with the family tonight. The Cliff plus Prop 30 is making for some real fun times for us and our clients…every change is an employment act for our profession. In fact, we have already done a couple of “relocate to Nevada” projects with Prop 30 income tax increases as the straw that broke the taxpayers’ back as well as opportunities presented through Prop 39 (law of unintended consequences). Trying to figure out the Cliff and what are opposing forces (Dem vs Rep) even if tax revenues go up…maybe next week.
” would it seem inappropriate to have some wage relief”
Yes, because workers making $26 an hour are so overpaid, that’s why Caterpillar needs to replace them with $13 an hour ones.Then maybe next year they can pay their CEO 34 million instead of the measly 17 mil he got this year.
Caterpillar made record profits of 4.9 BILLION and its CEO got a 60 % PAY BOOST, but it still isn’t enough. They want to knock the workers pay from 55k to 26k because a LIVING, DECENT WAGE is above “market rate”.
That’s how you DESTROY the middle class!
Let’s see, record corporate profits, plus obscene executive pay, plus an ever expanding wealth gap, minus stagnant wages for working people … hmmm ?
You can figure it any way you want to CPA, but it still adds up to plain, old fashioned GREED.
Anonster…I only had what was originally posted as a point of reference on wages for Cat. Do you have a site for saying they want to cut wages from 26 to 13 compared to freezing wages as per the original post? Perhaps a cite for the $26 per hour average wage for a Cat worker also. I am skepticall that they are trying to cut wages in half. Yes that would be a path of harming the middle class- I am just not sure that Cat is trying to cut people’s wages in half.
Remember the greed when we complain about a drop in our 401K or pension plans having trouble funding obligations due to poor returns in the market.
I am sick and tired of people like you trotting out 401k’s out as some sort of greed equalizer. For a lot (probably most) of folks with 401k’s it is their only option for a retirement saving account through their employer (since most pension plans are gone) and I would bet the farm that the majority don’t know or understand or really even control ( picking a 1/3, 1/3, 1/3 option is not really being “in control”) where their money is invested.
401K’S were a gift to wall street, generating big fees and crappy returns. Instead of professionally managed pension plans or stock options in your own company workers retirement funds were handed over to the sharks.
Having a few bucks blindly invested in Walmart through some shitty 401k is NOT THE SAME as being on the Board of Directors a CEO or a major investor. Not even remotely comparable.
As for Caterpillar they have a 6 year wage freeze on senior employees, they’re intention is to ease them out and replace them with workers making a lot less an hour.
From the NYT’s;
Ever since negotiations began in March, Caterpillar has insisted on a wage freeze for its top-tier workers, those employed seven years or more; they average $26 an hour, or $55,000 a year before overtime. For the junior third of the workers who typically earn $12 to $19 an hour, Caterpillar has made no promises but has suggested it might raise their wages based on local market conditions.
Caterpillar has offered workers several modest, one-time payments, but is also demanding far higher health care contributions from its workers, up to $1,900 a year more, according to the union. The company had profit of $39,000 per employee last year.
Carlos Revilla, the plant’s operations manager, defended the push for a pay freeze, saying the top-tier workers were paid 34 percent above market level.
“A competitive and fair wage package is a must,” he said in a statement. “Paying wages well above market levels makes Joliet uncompetitive.”
But the union says Caterpillar, the world’s largest producer of earth-moving equipment, is in no way uncompetitive and should be sharing its prosperity with its workers.
“A company that earned a record $4.9 billion in 2011 and $1.586 billion in the first quarter of this year should be willing to help the workers who made those profits for them,” said Timothy O’Brien, president of Machinists Local Lodge 851, which represents the strikers. “Caterpillar believes in helping the very rich, but what they’re doing would help eliminate the middle class.”
He said the company wants a pay and pension freeze for longtime workers to push them into retirement and replace them with $13-an-hour workers.
Here’s another article about Caterpillar from the Guardian about why Caterpillar cuts wages … because they can.
Michael Paarlberg
guardian.co.uk, Friday 27 July 2012
[…] Few places better illustrate the uneven recovery than Joliet, Illinois, where nearly 800 factory workers are locked in a bitter, three-months-and-counting strike against their employer. Caterpillar, famous maker of yellow bulldozers, has demanded its employees accept a six-year freeze on wages and pensions; the machinists’ union says its members had no choice but to walk out.
Labour-management fights are nothing new, especially not for Caterpillar, which wears its union-busting credentials as a badge of honour. When car-workers resisted company plans to impose a two-tier wage system in 1992, Caterpillar crushed two strikes before they surrendered unconditionally. When workers at a London, Ontario locomotive factory refused a 50% wage cut last year, the company locked them out and then shut down the plant. “Few companies are as willing to take on unions, and uproot entire communities, as Caterpillar,” says author Stephen Franklin, who covered the strikes for the Chicago Tribune.
What’s surprising is how, in a still sluggish post-recession economy, Caterpillar is actually doing well. Incredibly well, in fact: last year’s total sales, $60.1bn, broke all company records. Little of this comes from the US market, which counts for less than a third of Caterpillar’s global sales. The company has been aggressively building its presence in Asia, and riding China’s construction boom. Caterpillar’s per-share profits soared 78% in 2011, from $4.2 to $7.4bn. Analysts predict profits will top $9bn by year end.
Labour costs, on the other hand, have declined. Caterpillar’s most recent annual filing with the SEC shows the share of total operating costs represented by employee salaries and benefits shrank, from 24% to 21%, in the same period.
This explains the absence of the usual “we’re broke” pronouncements from management, and the rather tortured pretexts for concessions in their place. “It’s not solely about profitability,” says Caterpillar spokesman Rusty Dunn, “but a need to be competitive in the industry.”
Given Caterpillar’s undisputed dominance of the construction equipment industry, it’s unclear who it fears falling behind. The company says it wants cuts now to be better positioned for future downturns, although these rainy day scenarios are “intentionally vague,” says Frank Larkin of the machinists’ union, and “seem to apply to anything from an increase in raw material costs to Armageddon.”
What could really drive Caterpillar to demand its workers tighten their belts in a period of unprecedented prosperity? “Greed,” might be the moralist response; “capital accumulation” the Marxist one. But a better explanation is even simpler: because they can.
The political climate in the US today is such that it’s open season on unions. The ongoing evisceration of public workers’ collective bargaining rights, solidified with governor Scott Walker’s triumph in Wisconsin’s June recall election, set the trend, one that spilled over to other states and is now spilling over to private sector workers as well. That the justification for revoking those rights – state budget shortfalls – didn’t hold up to evidence that many of the largest shortfalls were in non-union states, made no difference.
As with Caterpillar, it was never about labour costs, but opportunity. Public opinion has shifted. The rights to organise, and bargain collectively, have transformed from bedrock civil rights to vestigial luxuries; good salaries and pensions from objects of inspiration to resentment. All of this from the decades-old message drummed into us by politicians and businesses alike, that we are all on our own. Human agency consists of two choices: take it or leave it. To want more say in what you do for a living, for how much and under which conditions, and to want the same for others, is crazy.
Caterpillar understands this. Its corporate culture may be more predisposed than most to punishing uppity workers. But for it to do so without even the flimsiest appeal to economic necessity is truly a milestone. And in today’s atomised America, it isn’t just good business. It’s good politics.
See below Anonster…getting too far up to hit the reply button…
Want your holidays wrapped in more meaning — and less stuff?
An organization called A New American Dream offers the following suggestions:
“Pressures to have a glitzy, commercial holiday season seem to be everywhere we look. As though the only way to fully enjoy the holidays and show people you care… is to shop.
This year, let’s take back the holidays.
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Very good…take it back! It is good for our own family but maybe not the economy in general. I would also suggest looking at Dave Ramsey’s Financial Peace University…http://www.daveramsey.com/fpu
I opened the link to daveramsey site, but the references to God and to the Bible is a turn off for me. I will try again, and see how it compares to Rich Dad Poor Dad.
I am trying to get informed/educated on economics issues. My next book to read is “America The Possible: Manifesto For A New Economy”. This is a preface:
“Dubbed the “ultimate insider” by Time Magazine, Speth’s book draws on more than 40 years of experience including his work as White House environmental adviser to President Carter, leader of the largest UN program for international development, and energy adviser to Bill Clinton. In America the Possible, Speth takes on the big-picture issues of what is wrong with the United States, why Americans must change the system, and how to create that change.
To replace the current broken economic and political system in the US, Speth suggests a radical path forward using a specific set of transformative solutions, such as: changing the indicators by which we measure the health of a society from GDP to quality of life, changing who corporations are beholden to from shareholders to stakeholders, and changing our consumerist culture into one based on “mindful consumption.”
Speth makes the case that the current US obsession with expansion has resulted in an environment on the brink of disaster and a population crushed under policies that maximize profits at the expense of people’s quality of life. But, he still sees hope, particularly in movements like Occupy Wall Street, stating, “I think there’s still a plausible case that we haven’t lost the game, that we can build an attractive and livable future.”
Ramsey is biblicaly based for sure but the principles are solid regardless of one’s beliefs although probably too micro compared to some of the other concepts you just spoke about. Short summary- don’t go into debt, get out of debt if you are in it, pay cash, sacrifice, focus, budget, plan, give like you always wanted to, don’t keep up with your neighbors, don’t give into consumerism, make smart financial decisions…
Anonster…401K’s are not a “greed equalizer” and I did not mean that since someone has $1K in an IRA that their desire for a return on that money is equivalent to a CEO wanting to increase her wealth by $5M through increased stock returns. There are multiple components to business pricing of products and cost control. Investors’ desire for return on invested capital and risk-reward is one component of that. It seems that some may not understand the mulit-faceted components involved. Investors come in many different flavors, but most people who have a retirement plan (pension, 401K, IRA) or a mutual fund have an interest in companies maximizing profit. Many people seem to think that unless you own WMT or CAT, that they do not have an interest in the companies discussed above.
I hear it all the time when someone complains about the return that they are getting in their portfolio- regardless of the amount invested. Often, I would say that it is those with the least who are often most vocal (and also most prone to not being able to financially handle a downturn in returns). Example…I can’t believe that my IRA only returned 1%- that does not even keep up with inflation; I can’t believe my savings just lost money; I can’t believe that I only returned 7% when the broad market did 8%; why can’t I get a 15% return like the rich…
Just as I question the consumers’ propensity to pay more for products, I also question the investors’ propensity to stay the course if they do not make their desired returns on their risk capital.
With regards to people ability to invest…yes, it is a major problem. Financial illiteracy is a HUGE problem. It starts as kids, flourishes in college, magnifies with young families, and destroys as one ages. People need to know how to handle money, budget, save, and invest. Unfortunately, our education system does not teach it. Those who need it the most probably the ones who will receive the least in non-formal education on the topic (i.e. financially savvy parents will teach their kids outside of school). I have faith in people…probably too much. I think everyone should be responsible for their own retirement, which also means that one has an option to work for a company that offers a defined benefit pension plan. 401K’s are part of the solution as are IRA’s and regular old investment accounts. It should be part of the overall plan…for a lot of people a 401K is not the right vehicle for multiple reasons but I was just using the 401K as an example of reminding everyone how we are all investing in these companies and have a desire to maximize our own personal returns on savings.
I guess people like me, have a different view on things than many. I don’t mind that…I see a lot of things in our society that I don’t like, so being a little contrarian is fine by me.
Thanks for the articles on CAT. I first thought you were saying that they wanted to take someone who was making $26 and pay the same person only $13, which is not happening. They want to freeze the wages because it seems (rightfully or wrong) that the job is not worth $26 in the market. If someone who makes $13 or $19 can perform the same job, is it really wrong to have a desire to have the compensation match the market (or as most smart business people would say, just above it so you still get the best)? Obviously, the question is if it is the same job or not–just because someone has 25 years of experience does not in of itself mean that they add twice as much value per hour as someone who is just entering the position.
Your last paragraph has got to be the best example of willful stupidity that I have ever read.
Of course employers “desire” to pay as little as possible, but if we take your point to its “logical’ conclusion then why should they pay 13 bucks an hour, why not 2 dollars or even 50 cents? People should stop complaining and just be grateful to have a job, right? Learn to eat air, right?
The problem is many americans (like you) have forgotten why we need labor, immigration and trade laws, why they’re important and how they helped build our middle class.
To have you so blithely embrace Caterpillars “desire” to knock good manufacturing jobs down to the level of service jobs is a chilling reminder of how callous and short-sighted people can be.
Funny how you can empathize with the unfairness of someone making 500k a year getting hit with 15 thousand more in taxes (prior post),but are totally okay with some poor working stiff losing a third to a half of his already meager income.
Caterpillar’s workers were not overpaid, but decently paid.
And that’s what’s missing; DECENCY. Caterpillar is making record profits, but rather than be decent, they’d rather be greedy and fools like you defend them. When you defend greed, as wise business practices it becomes obvious that you either don’t know or don’t care how hard past generations had to struggle for decent pay and benefits otherwise you wouldn’t be so willing to throw it all away.
If companies like Caterpillar keep lowering wages, not to stay afloat, but just because they can, then you can kiss america’s middle class, good bye.
Oh and FYI; Caterpillar DID demand a 50% pay cut for workers;
From The Wall Street Journal
Caterpillar Inc. said Sunday it had locked union workers out of a train locomotive plant in London, Ontario, in a sign that the world’s largest maker of construction and mining equipment is prepared to get tough with workers despite a big recovery in earnings over the past two years.
Caterpillar said in a statement that workers would be barred from the Electro-Motive Canada plant until “a ratified contract is in place” for the workers, represented by the Canadian Auto Workers union. The most recent contract expired at the end of 2011, and the two sides have been unable to come to terms.
Caterpillar’s Electro-Motive Canada plant was acquired in 2010 as part of the $820 million purchase of Electro-Motive Diesel Inc., based in LaGrange, Ill.
Union officials said Caterpillar’s latest proposal would halve wages and reduce benefits. Tim Carrie, president of the union’s local branch, said the cut would mean hourly pay of $16.50 for most workers, down from $34.
*****************************************
They really wanted to shut down the plant so they could move it to a cheap labor market … the USA.
Wow, I made your #1 spot for willful stupidity…not sure if that means you have not been exposed to much or the alternative. I do thank you for really encouraging the conversation though. By the way, even if you call me names, I will refrain- just who I am. I am sure you have a lot more that you can dish out…
To answer your question about why not pay $2 per hour or 50 cents…because first, there is a minimum wage law in this great land, second because CAT knows that they would not get the worker that they need to produce the quality of product that they expect and their customers desire and pay for, third because not many people would show up for work. Your other questions are not worth answering but I do not agree with them.
I am not OK with some poor working stiff losing 1/3 to 1/2 of their income…I am totally and emphatically not OK with that. There is something wrong with that situation. If what you cite is correct in that they want to take a worker and cut that worker’s wages from $34 to $16.50 for doing the same job, I will be the first (well, the 2nd after you of course) to say that is not right- I will even pre-emptively say it now: “it is not right”. I will also probalby never buy a CAT piece of machinery ever in my life. If they were losing money and had a systemic issue than I could possibly see why, but not for a company that is quite profitable. I want to see everyone make more money…I would ultimately like to see individual American families save more money also.
If I was OK with paying people less just because one can, we would not be giving pay raises to our employees and bonuses for a job well done. We would not be contributing more to their retirement plans than we are required to. We would not reward them with other perks. I know for a fact that I can hire people who will do the job for less, but we don’t. Do I desire that for everyone…absolutely! Do I think that ever company will/can do that…no. Does CAT have the ability to keep wages at above market/decent/fair/current/increased levels (insert whatever reasonable term you want)…sure sounds like it. Do I want to make more money…yes. Do I feel that the gov’t should take 20% more of the next dollar someone makes…no. Do I feel that a worker should take home 50% less than they did the day before for the same work from a company that is not financially strapped…no.
Hopefully nothing above makes your top ten list…
“. If someone who makes $13 or $19 can perform the same job, is it really wrong to have a desire to have the compensation match the market (or as most smart business people would say, just above it so you still get the best)? Obviously, the question is if it is the same job or not–just because someone has 25 years of experience does not in of itself mean that they add twice as much value per hour as someone who is just entering the position.”
Your words, not mine and they sure sound as if you’re defending or at least, rationalizing Caterpillar’s decision.
Kudos to you for treating your employees well. Too bad Walmart and Caterpillar have chosen a different business model, one where they make their profits at the expense of their worker’s (and the country’s) well being.
Happy holidays.
See below response to Anon re the same quote.
“If someone who makes $13 or $19 can perform the same job, is it really wrong to have a desire to have the compensation match the market…”
Sometimes, a person’s true color comes shining through. That statement is nothing but Milton Friedman economics, plain and simple. Let the vagaries of the market determine the course of human events. Just get the government’s hands off the free market and the market will lead us inexorably to the glory land. Don’t try and make corporations pay a living wage. It’s Ayn Rand and Paul Ryan—it’s what these people truly believe. Markets deregulated in the 1990s? The crash of 2008 means they weren’t deregulated enough!
I am obviously not that great of a economic historian to know the guiding principles of Friedman or Rand, so I don’t know how to take anon’s statement. Obviously, statement that both Anonster and Anon have grabbed onto was a poor choice of words in communicating my thoughts. As I later clarified, I do not advocate paying someone who was making $X yesterday and asking them to receive only 50% of $X today when the business is thriving…can you guys at least agree that I have said that? The true colors are what I just said…if people can’t understand that, then I guess their own true colors shine through.
OK, so now that we know that I don’t want to cut Joe’s wages (made up name, just for clarity) from $26 to $13 for performing the same job, we can look at the context of that statement…knowing that it was bad communication on my part. The 2 sentences immediately before that indicates that CAT is not asking Joe to go from $26 to $13…just keep Joe at $26 under management’s impression that the job is not worth the $26. They want to keep Joe at $26…effectively letting the market catch up to Joe over time instead of bringing Joe down to the market. Now for new hires, they are wanting to be closer in line with the market but not decrease Joe’s wages…obviously, over a long period of time, Joe has a choice to make- keep making the same as he is now (wage freeze) and essentially getting a decrease in compensation around the rate of inflation, retirement, or leaving…if he stays he knows he is making more than his new hire co-worker next to him. OK, now as new facts from Anonster were presented about how in their Canada plant they actually did want Joe to take a 50% cut, I got more adamant about by disagreement with their tactics. I honestly could not imagine that someone would cut Joe’s wages by 50% from the amount he was making the day before…it was not really a consideration that it was a true and concrete fact.
Regardless of anything above, as I have said multiple times over, I ALWAYS maintain the right to get smarter over time. I was not at all aware of any of the business practices of CAT…the only thing I really knew about them was that I see their machines pushing dirt on worksites, my son loves watching any big machinery on Youtube and some of them are CAT, and there is a big sales or repair lot of them (Johnson Machinery if I recall is the name) as I drive from OC out to the IE that is kind of cool to see. I have previously owned a very small amount of CAT (the stock) a few years back, but that was more me chasing a stock that everyone was saying was doing well (I believe I made money initially and then lost money…risk capital)- I did not do what I say everyone should do and investigate what they are investing in (I do much better at that now, I think…?).
I think we have a had a nice back and forth and I will give both of you the last word…although if you twist my words (yes, they are my words, but as everyone knows writing thoughts sometimes things don’t come across as one intends them- especially on a blog where I am in the minority of beliefs, or at least it sure feels like it), I will do my best to clarify with a long winded response that someone will probably take the wrong way again.
This is why I try my best to teach my children to have grace and compassion for others and to have a forgiving heart.
In the interest of moving the conversation forward . . .
What’s an appropriate way for a publicly owned company to share its profits with its employees? What does a good balance between the company’s responsibility to its shareholders and the company’s responsibility to the people who run the business look like?
Boutwell,
You may not be okay with halving somebody’s income, but you were/are definitely okay with a company making record profits seeking to lower worker’s wages.
Those folks making $26 an hour probably were barely making ends meet as it was. People making $13 to $19 are most likely going to need government or family assistance and have no choice but to shop at Walmart (getting back to the original argument).
Companies like Caterpillar and Walmart could afford to pay living wages, their profit margins prove it. They pay low, unlivable wages and the rest of us end up picking up the slack through food stamps, medicaid etc.
From Truthout;
” […]Because of the “everyday low wages” that the retail giant pays its employees, our government has to step in and provide public assistance to Wal-Mart workers just so they can survive…which is why the Wal-Mart workforce represents the largest recipient of federal aid in the nation.
A Wal-Mart worker makes on average 31% less than a worker for any other large retailer, and requires 39% more in public assistance.”
http://truth-out.org/opinion/item/13127-reagans-welfare-queen-found
********************
I guess some of us feel it’s wrong for folks working full time for a company making billions in profit, to have to rely on food stamps and other forms of government assistance in order to survive. Some of us also feel these corporate practices are what’s driving the destruction of the middle class and some of us feel that the way we vote and the policies that result can actually deliver “grace and compassion”.
Sorry, I can’t resist responding especially since it is somewhat back to the original Walmart topic. Very fair statements on the Walmart workers. I personally do not shop at Walmart…I have not in quite a number of years once I saw what they did to some of their suppliers (personal experience with a client). I also do not encourage others to shop at Walmart. I know that I likely benefit from Walmart indirectly as a consumer when I am shopping though- a low price shop will depress prices all across the board which in turn requires even those merchants who want to provide for their workers the best, to make some tough choices.
$26/hr x 2080 hours = $54,080 plus any OT they get (article implied that there was some and they were full-time). I believe that they also are provided with partially paid health benefits and some retirement. Not sure what your definition of living wage is or what barely making ends meet means to you. I am sure there is a lot more to the story that I don’t know…Yes, you halve that to $27K and I do see a problem purely from a livable wage perspective, although in a lot of the country $27K is still doing all right.
Question- does the situation change if the company is not making record profits? Would a worker who is doing the same job be expected to make less if the company does not even make money or makes less than the year before?
I can deliver grace and compassion on a daily basis and not wait for a policy change to deliver it…sorry got to go deliver some year end bonus money to some awesome employees- the best is when we give it to people who are fully not expecting it.
Gosh Mr. CPA, you forgot to figure in payroll taxes, state taxes and the fact that Caterpillar was asking for almost 2k more towards their health plan, that probably takes that 54k down to 48k or a whopping 4k a month.
That is livable, especially for single people, but barely for those trying to raise a family. Remember that $26 an hour was the top rate, so most folks are probably trying to raise kids on that and I bet they struggle to make ends meet.
I don’t know anywhere in the country where 27k a year is “doing alright”. In fact I think that statement is absurd.
Your question about companies that are struggling, often they ask and employees agree to lower wages and benefits till the company gets back to being profitable, but that is not Walmart et al.
I am glad you can deliver grace and compassion to those relatively few people you come in contact with, but good policy can deliver that to thousands, if not millions.
What’s a living wage to you? What’s a fair return for an investor for that matter?
Good question Ryan…hopefully Anonster responds with some specifics.
I consider $26 an hour a livable, decent wage, I said so above, but unlike Boutwell I think folks trying to raise a family on it ARE barely able to make ends meet.
Most americans are one to two pay checks away from a financial disaster. Why is that? Profligate spending or decades of poverty level wages?
As for a fair return for an investor, I don’t know, but I do know it shouldn’t come from constantly grinding down their workforce .
And how about CEO pay, in 1980 the ratio from CEO to employee compensation was 42 to 1, now it’s 388 to 1.
In Japan it’s 11 to 1, Germany 12 to 1, France 15 to 1 Canada and Italy 20 to 1 and in the UK 22 to 1.
One country is waaay out of whack. Can you guess which one?
Did I ever say that someone making $26/hr is not barely making it? In certain parts of the country someone can do all right at lower wages…they still would be barely making it though.
Why is it that most American are so close to a financial disaster? Many reasons, but I can tell you that you take the family who is making $26/hr and have them make $30/hr, $40/hr or $50/hr and they are still likely to be about the same distance from financial disaster as they were when they made $26/hr. I see it daily and try to help. FINANCIAL ILLITERACY IS A MAJOR PROBLEM!!! (yes, I am screaming that). People do not know how to budget, spend, and save…it does not matter if they make $20K/yr, $50K/yr, $100K, or $1MM- people make choices that are not helping them have financial peace. It is a systemic problem. There are many who make $50K/yr who are financially more secure than those who make $200K/yr because they “get it”. They get how to set a budget; they get how to spend according to that budget; they get how to save according to that budget…they get how nice it feels to not have to pay for Christmas gifts after the recipient forgot about the gift received for example.
What is a livable/decent wage in Orange County if $26/hr is livable/decent where the CAT plant is (Joliett IL if I recall)?
On the CEO pay, is the 388-1 ratio for large publics? I would struggle to find more than a handful of local privately owned companies that say pays their employees on average $20/hr (for easy math) and the CEO makes $16MM per year (388 x 20 x 2080)….I could see that on large public companies but not sure if it applies as a general statement. I can’t find your 388 figure, but I can find 231X (http://www.epi.org/publication/ib331-ceo-pay-top-1-percent) for the largest 350 public companies (most of their income is stock based compensation tied to company earnings hence their selfish desires to keep profits at the corporate level as high as possible). I wonder what it would be for the private sector.
Interesting. Supply and demand for some, but not others.
If Walmart were to pay the wages you’ve listed above as fair, investors would be $100 Billion in the hole. That isn’t right either, as I’m sure you agree.
While no one is going to solve world hunger in a blog post, let’s try and remember that no one’s version of the American dream is to get off of food stamps: It’s to win big and live large. The fourth most powerful man in the world: Bill Gates. College dropout. ONLY IN AMERICA, BABY. The world’s biggest rags to riches stories are still made here. Just ask our current resident at 1600 Pennsylvania Avenue.
Life will temper that dream for almost all of us, but the dialogue on this post seems to demonize those who did make that dream a reality. While I concede that life is certainly not fair, the implied solution advocated by anonster is some legal limit on salary, as well as a statutory limit on capital investment return, in these free United States.
I don’t know about you, but I don’t want to trade the American dream for it’s Japanese, German, French, Canadian, Italian, or British counterpart.
(Also, on the cuter side, but for our lavishly paid CEOs– the CEOs in the countries you listed wouldn’t be CEOs. They’d also be speaking Russian.)
Ryan,
You’re a little behind the times. The days of the US being the best country in the world for upward mobility are over. We now lag behind Canada and Europe in that department.
http://business.time.com/2012/01/05/the-loss-of-upward-mobility-in-the-u-s/
Just saying the USA is number one doesn’t make it so.
The US is lagging behind our European and Asian counterparts in lots of areas and childish cheerleading is a poor substitute for smart economic and social policies.
Boutwell,
“Not sure what your definition of living wage is or what barely making ends meet means to you. I am sure there is a lot more to the story that I don’t know…Yes, you halve that to $27K and I do see a problem purely from a livable wage perspective, although in a lot of the country $27K is still doing all right.”
Sorry, I just assumed from that statement that you disagreed with me about people barely making it and I still do. How else would I interpret it?
While I agree with you that anyone can mismanage their money, I strongly disagree that people who make more money are as close to the financial cliff as those making less.
At 50k a year a family has zero wiggle room, any financial set back, be it a car repair or an illness can lead to disaster. Maybe I’ve just lived longer than you, but I’ve found that those closest to the edge are generally the first to fall off it.
Here’s more info on the CEO pay;
From the Daily Kos;
“The AFL-CIO has released its CEO Paywatch with 2011 data. So how do CEOs stack up against ordinary workers? Well, the average CEO of a company on the S&P 500 Index earned 380 times the average American worker’s wage, with average CEO pay having increased 13.9 percent in 2011.
The highest-paid CEO in the country was Apple’s Timothy Cook, whose total compensation was nearly $378 million. That’s more than 11,000 times the average worker’s income of $34,053. The 100th highest-paid CEO, Heinz’s W.R. Johnson, had total compensation of more than $18 million, 543 times the average worker’s income.
What we can’t know is how much CEOs make compared with the workers in their own companies; however, that’s something the Dodd-Frank Wall Street reform bill will soon require companies to disclose.”
http://www.dailykos.com/story/2012/04/19/1084681/-CEOs-at-top-companies-earned-380-times-the-average-
What are you? The king or queen of links to loaded statistics?
Your reply has nothing to do with mine. Sorry. The “childish” comment is not, at all, appropriate.
Also, kudos to your ability to duck a question. Well done.
Ryan,
I link to my sources so that you can read the material for yourself, when I don’t link, you folks demand proof of what I’ve written.
You are wrong Ryan, not the stats. Please pay special attention to the last line in this excerpt from Time, as it applies to you.
“Nor are we the world’s greatest opportunity society. The Pew Charitable Trusts’ Economic Mobility Project has found that if you were born in 1970 in the bottom one-fifth of the socioeconomic spectrum in the U.S., you had only about a 17% chance of making it into the upper two-fifths. That’s not good by international standards. A spate of new reports from groups such as Brookings, Pew and the Organisation for Economic Co-operation and Development show that it’s easier to climb the socioeconomic ladder in many parts of Europe than it is in the U.S. It’s hard to imagine a bigger hit to the American Dream than that: you’d have an easier time getting a leg up in many parts of sclerotic, debt-ridden, class-riven old Europe than you would in the U.S.A. “The simple truth,” says Sawhill, “is that we have a belief system about ourselves that no longer aligns with the facts.”
Read more: http://www.time.com/time/magazine/article/0,9171,2098584,00.html#ixzz2EQAkGpXc“
Ryan,
“ONLY IN AMERICA, BABY.”
I stand by my “childish” comment 100%.
http://www. anonster.com/story/2012/12/06/ryan’s-comments-childish/
I never said what Walmart should be paying their employees. More definitely, but there’s a difference between manufacturing and service level jobs and that has traditionally been reflected in their respective pay levels.
Anonster…see below for a new stream.
To Ryan Cantor…from a previous comment of yours:
“Inge, you have a very poor understanding of what your right to privacy really is. Your understanding of vaccinations and influenza is just ignorant. Your understanding of statistics, unfortunately, is just as sad.
Get the shot, don’t be stupid; or move to a remote island where your poor decisions and inconsistent expectations for privacy will do no one any harm.”
I think you have displayed a pattern that Anonster has accurately assessed as “childish,” and is totally appropriate.
Maybe you should travel to other parts of the world and see that the American dream has a lot of legitimate competition, and that we don’t have all of the answers, as you childishly think that we do.
D– way to chime in. I really appreciate you making a special appearance on this thread to throw some mud at me. It’s a really classy thing to do. Thanks.
Extra credit for dragging out a comment on a completely unrelated matter that I apologized for. I’ll see you in the tall grass.
A–The “ONLY IN AMERICA, BABY” is actually a fairly famous movie quote. Perhaps you don’t like my hyperbole, but that’s no excuse to act like a jackass. I asked you several direct questions, which you’ve ignored. I’m not exactly sure what I did to earn your condescending treatment, but rest assured you won’t get any more interrogatories from me.
Boutwell seems to have more tolerance for your style than I do, and clearly you don’t feel I have anything to add, so I’m happy to bow out.
Ryan,
I believe I did answer your questions. The only one I might not have addressed was the one about putting Walmart 100 million in the hole, but I assumed that was hyperbole and not a factual statement. Source your numbers and I will look into it.
I’m sorry if you feel offended by my calling your comments childish, but I really feel like your american dream comments and the conclusions that you’ve drawn are based on a simplistic and shallow thought process.
RC….I brought up your past comment from a different thread only to remind you that you show a pattern of name calling that is, in your words,” not at all, appropriate.”
As far as me “chiming in” you should remember that when you comment on a blog, you open yourself up to a wide variety of opinions and assessments of what you say, and people are going to share those thoughts with you. Just as you did with Boutwell and Anonster’s lively discussion (which has been great!).
So rather than complain about someone reminding you of your history here, why don’t you turn it around and respond to Ricardo Toro’s remark:
“I am waiting for Ryan’s comment on the links posted by Anonster on the current upward mobility opportunities. I hope that he is not ducking the question.”
That one time was a fluke with Ryan, he’s got some personal thing about the flu. In general he and Boutwell are the most polite and thoughtful conservatives wr’ve got on this blog.
You are right I did not include payroll taxes, state taxes, or the cost of the health insurance although you will notice I indicated that there is only partial insurance…just as you do the same when you are speaking of top line wages for anyone else in this discussion board unless I missed where you were talking net of tax. We have to use the same comparative figures…for example, should we include the Earned Income Tax Credit for someone that qualifies on the minimum standard (i.e. no kids)…good luck with that. I certainly can try though…
For example, that single person with no kids would net about $40K per year after Fed/IL/Payroll taxes and $2K of EE share health insurance if they were to make $54K. That same single person would net about $22K if they were to only make the $27K. If that same single person had a minor child as a dependent and made $27K, hopefully they have grandma/pa to watch the little one, as they would make about $25K. For a single wage earner who is married with 1 child, they would take home around $48K. That same family at $27K would be at about $26K (major earned income tax credit btw).
If you would like me to do a budget on how each of these families can live, I could do it, but it is going to get messy…
Did you notice how you did not mention the bonus that was paid (yes, blood money)…I presume that since you are so concerned about the state tax that they pay you would also want to disclose their bonuses…or maybe what their pensions look like also…up to you. I never thought I would learn so much about CAT btw.
Never underestimate what grace and compassion delivered to one person can do…it can be exponential and even more important, delivered daily and with the utmost expediency. Yes, I am more micro than macro as that is what I can control daily.
Boutwell,
Please feel free to wallow in the details and ignore the larger point that it would be damn hard to raise a family on 50k a year and impossible on 27k without (like I said before) government or family assistance.
Thanks for the link Anonster…makes a bit more sense. The AFL-CIO is comparing the pay of the top 500 valued companies in the US with the average pay of the American worker and not the average CEO to the average worker. In my book, that is not an equivalent comparison. Although I definitely get your point especially with the ratio expanding. I wonder what it would look like if someone were to actually be able to compare apples to apples- average CEO to average worker.
“Sorry, I just assumed from that statement that you disagreed with me about people barely making it and I still do. How else would I interpret it?” You could interpret the way I said it…in some parts of the country they are doing all right is not the same as barely making it. There are many many people who make a lot more than $27K and are barely making it but are still doing all right…I see them everyday. People make $100K and are barely making it…one accident away from calamity. They are not financially sound…they do not make good decisions, heck they often don’t even know what a good financial decision is.
Income level is not a very good indicator of financial security from my experience. Many people make good money and have tremendous problems. Many people who make less than that person will be better off. You may disagree with me and that is fine, but I see it everyday. It comes down to budgeting, spending, saving…once you have a minimum level of “offense” the “defense” is more important in acquiring minimum level of financial security (i.e. not being 1 month away from disaster). Now accumulating a lot more wealth is a different story…you either need to be good job on both or an extraordinary job on one side…the ones who are the secret millionaires who are our neighbors that we would never know their wealth are the ones who do a awesome job on both. I see $50K wage earners who are doing just fine, they have a good safety net, they are secure, they give money to others, they care for their family, and they are saving for a future without financial distress–in short (or long), if someone sets their mind to it, makes tremendously difficult decisions that most choose not to (if you do what everyone else does…you end up like everyone else), get some luck along the way, and stay healthy, it can be done and there are examples everyday that I love seeing.
Most people in this world have lived longer than I so statistically you are probably right about your age versus mine (I have no idea how old you are…even if you have stated it previously I can’t recall it). I guess I have found that the best way to avoid falling off the cliff is to not even see the edge…that takes planning from day one once someone decides to avoid the cliff all together. The distance from the cliff not only involves income production but also the defensive side (budget, spending, saving).
What do you do for a living…you know that I am CPA and from my posts you can tell that I work companies that make lots of money, some that don’t, individuals and families that make lots of money, but also individuals and families that make the type of money we are referencing above. I grew up out of state, went to college, came out with debt, started my career the 3rd day after I graduated college, and have worked ever since. I sold odd stuff throughout college to make some money. I have lived pay check to pay and am now financially well off by most standards and am thankful that I am. I can now give away much more than I made when my career started 13 years ago- like most, I remember what my income was the first year out (ironically the same as one of the figures we have been throwing around- plus $500). I cannot tell your background. My professional background obviously has shaped a lot of my perspective and I presume that your profession also has shaped yours. Do you mind sharing? I have enjoyed our conversation even if I have made your top spot for willful stupidity.
Boutwell,
Don’t know if you missed this;
“What we can’t know is how much CEOs make compared with the workers in their own companies; however, that’s something the Dodd-Frank Wall Street reform bill will soon require companies to disclose.”
Hopefully, we will soon have the answer to your question.
What I do, like your identity, is not germane to the discussion.
You have voluntarily disclosed your profession and your professional expertise has been very helpful to the discussion.
No, I did not miss it, but it only applies to public companies. It will be helpful in knowing though for those individual companies. It will not however allow for a broader comparison for the many CEO’s and workers throughout the country that are not publicly traded. Some very large companies are not public. Your original comment about the CEO to worker pay ratio was originally taken by me as a statement about all CEO’s and all workers and not just the most financially successful company CEO’s as measured by total valuation.
My profession may not be directly related but it along with my upbringing and other conditions help to shape my thoughts and feelings on the issue at hand. I was definitely not saying, I have shown you mine, so you show me yours…I am fine with your not disclosing, just was not sure if you already had and I just did not know about it (I am still relatively new to this OJ-sphere) or if you thought, as I do, it would be helpful in bridging gaps and building understanding. No worries about it.
Boutwell,
“It will not however allow for a broader comparison for the many CEO’s and workers throughout the country”
Of course it will, the more CEO/worker comparisons we have the more accurate the aggregate comparisons will be. Of course, we can’t get that information from private companies, but we will have a pretty good idea what’s trending in that arena.
As to sharing my profession, I’m not doing it to be rude, but because I think not knowing anything about our fellow bloggers allows us to judge them on the merits of their arguments.
Your being a CPA makes everyone weight your opinion accordingly, that’s only logical.
But what if I told you I was a successful actor, would you assume my opinions about wealth distribution were formed because actors make (relatively) easy money and lots of it?
Or what if I was a clerk, sorry “team member”, at a Walmart or Target would you assume I am jealous of those more successful than me?
Maybe I’m an old geezer on disability, what does that do to your assumptions?
I know your intentions are not to judge, but it is only human nature and really smart, to plug-in what we know about someone or something and proceed to form a more defined opinion.
I will say that had I not known your profession I would still respect your opinion as your intelligence and thoughtfulness is reflected in your writings. I should probably insert my apology here for the “willful stupidity” remark, I am sorry, I can get overzealous sometimes.
FYI; I am none of the above.
Thanks for the apology anonster- as my kids tell me, when someone apologizes, you need to tell them you accept it, so apology accepted.
However, in all honesty, I can deal with someone saying my statement is stupid as it is a one time statement/action and not saying I am stupid. The words that hurt the most was being called a fool (“fools like you”) from the same post- that is a characterization of the person and not the action. I will give you the benefit of the doubt and assume your apology was a blanket apology. Anyways, we had a lively debate…I sure learned a lot.
The success of Robert Gates, Steve Jobs, and other entrepeneurs is commendable. The richest man according to Forbes is Carlos Slim, from Mexico. The lowering of the quality of life for large segments of the population, not to even mention Mexico, raises legitimate questions on the economics and politics impacting us.
I am waiting for Ryan’s comment on the links posted by Anonster on the current upward mobility opportunities. I hope that he is not ducking the question.
RT– Yes, I am ducking the question (although, one wasn’t exactly asked). Anon made it clear that my shallow opinion isn’t valued or wanted, so I won’t be responding. If you have a question that pushes this conversation in a new direction or expands on a previous point, please direct it to the author, Boutwell, or anon.
D– you and I have nothing to say to each other. Let’s leave it at that, shall we?
Ryan, I value everybody’s opinion. I may not agree with all but it is important to be open minded and let our dogmas be challenged or reviewed. I am a fairly new blogger, and my point of view was very much a dislike of conservative positions. When I started to get involved in my city affairs, Anaheim, I got to know real life conservatives, populist types. I voted for them instead of extreme pro corporate democrats. Vern constantly mentioning the good republicans, also played a role in opening myself uo to different views. I do not like the name calling and telling people off for their views. However, if this happens, it is a small price to pay for the valuabe exchange of ideas and opinions.
My implied question to you was in reference to this statement :”The world’s biggest rags to riches stories are still made here. Just ask our current resident at 1600 Pennsylvania Avenue.” How do the current conditions, as described in the links, would allow the average person to reach that level of comfort?
The same type of question goes for Boutwell. I have heard Suzan Orman’s programs, read Kipplinger newsletters, read the Rich Poor Dad, and so on. I know and followed the basics of budgeting, but I am still in debt. I am not the only one. It seems that the corporate profit driven economy is creating a very uneven playing field. I will read Boutwell’s recommended link on Ramsey, if I do not learn anything new on economics, I may at least become an Unitarian.
RT– It’s not a small price to pay. It’s a significant one and can be easily avoided. This is a local blog and there’s legitimate potential to interact with one another on real issues in real life. Poisoning that for the sake of winning an argument is something that’s done on other local blogs. We don’t do it here.
The short answer to your question: It doesn’t. Your average American won’t, by definition, ascend to the top rank of their chosen field (political, military, economy, scientific, academic, whatever.) What the current climate does promote is the very miniscule small possibility that a below-average citizen may ascend to the very top levels of society.
What I’m trying to get at is this: No one watches their child take their first steps as says: “Wow, maybe someday, she will join and union and barely make ends meet.” While the myth of meritocracy and the diminished potential for our kids to do better than their parents is very much a reality– it has nothing to do with the great stories that form the foundation for continued belief and migration to our country. That link that was thrown up has very little to do with the point I was making.
There’s a struggle of vision in this country. Do we advocate for the American dream, the vision that an individual can rise above his station in life to do great things, or do we settle for something else? Do we shift to a mode where we identify with a class of people who are like us and use our collective persuasion to drag down other classes for the betterment of our own?
The words “socialist” and “class-warfare” get thrown around way too casually. We’re not having the right kind of conversation around what our shared vision should be. As much as high-profile conservatives are at fault for this, a good chunk of blame should land and those individuals who continue to exacerbate the difficulty of rationalizing the realities of a capitalist economy with disparity of wages between corporate executives and those they employ.
Stating that Walmart workers should get paid more because the CEO makes too much money is ludicrous. It’s significantly more defensible to state that Walmart workers should get paid more because they provide more value to the consumer, and thereby the stockholder, than $7.25/hr.
What I took away from the original article was an impression that Americans continue to demonstrate more of a concern with consumption and less of a concern with substance, which in my opinion, includes what I’d label “The American Dream” (thank you, Inge.) This would also include a substantial trade-in of the religious nature of the holiday for a more secular one, which forms an interesting nexus with consumerism.
So, I’ll put it back to you, RT: Which is more in line with Inge’s original post? Gimme more in my paycheck or gimme more faith in my country?
RC. My reading of Inge’s original post would be “gimmme more faith in my country”: “Walmart made $15 billion last year and paid their CEO $18 million… Walmart pays their employees such low wages that they qualify for government aide in the form of food stamps and health care”. She makes the argument that this is unacceptable and that we can do better.
In this thread the main issue is the rationale of the business model spoused by Boutwell : “consumers desire for the lowest priced items have an impact on business- The investor/owners are demanding adequate and increasing return on their investments…” Let’s assume that this model is correct. The question is whether it is longer sustainable. My knowledge of economics is very limited, so please excuse me if I quote sources like Wikkipedia : “Income inequality has increased over the last three decades with economic stagnation and unequal distribution of the wealth undermining some goals of working people.[44] It is a focal point of the Occupy Wall Street protests.[45][46][47]”. Wages and quality of life are not merely intellectual concerns. They are bread and butter issues, real ones. Questioning these disparities do not necessarily mean that one has become anti-capitalist, and no longer believe in the “American Dream”. Good old Bill Moyers has not become a radical socialist when he questions these disparities. BTW, it has been reported that the flow of unauthorized immigrants has substantially decreased, due to our economic situation.
Another relevant factor in the sustainability of this business model is the environment. The Limits to Growth, published in 1972, is coming back to the discussion as a result of the recent natural disasters: “If 1970 rates of economic growth, resource use and pollution continued unchanged, then modern civilization would face environmental and economic collapse sometime in the mid-twenty-first century.” http://www.thenation.com/article/171610/limits-growth-book-launched-movement.
The struggle of vision is a good democratic process. Elections are a measurement of that struggle, and a substantial verdict was pronounced last November: the billionaires need to contribute a fair share , so more individuals have the opportunity to arise above their station in life to do great things.
Which of course begs the question . . .
To whom should the billionaires be paying their fair share? Is philanthropy, which is about American as apple pie, just as legitimate as taxation?
What constitutes fair?
(Just out of curiosity to the data fiends out there, has Bill Gates paid more of his fair share through his foundation or in taxes? Based on that, has the foundation or his tax dollars done more to advance the American dream?
Ryan,
You say you want a serious conversation, yet you belittle “data”. That’s the problem with conservatives, it’s all about what you believe and not about what is.
Sorry, you can’t have a grown up, fact based conversation with people who dismiss “data”.
Did you just use Bill Gates as an example to support an argument for solving the ills of the US ?
Hilarious!
Recent statements from Bill Gates:
“The United States has a huge budget deficit, so taxes are going to have to go up,” the Microsoft co-founder told the BBC. “And I certainly agree that they should go up more on the rich than everyone else. That’s just justice.”
“I hope we can solve that deficit problem with a sense of shared sacrifice — where everybody would feel like they’re doing their part,” Gates went on to tell the BBC. “And right now, I don’t feel like people like myself are paying as much as we should.”
There is a long list of super wealthy philanthropists who believe that the rich should pay more in taxes. Ever heard of Warren Buffet and the Buffet Rule? You should read about it.
Open a goddamn book every once in a while!
D– Oh. My God.
This is clearly personal for you.
Go back, re-read what I said, and think about what you wrote. Afterwards, please reconsider my request that you just don’t speak to me. I have nothing of value to say to you, and clearly you have nothing of value to say to me. That’s a pretty fair and level-headed response.
A– I didn’t belittle your data. I called it irrelevant (to what I was saying. Not irrelevant as a whole. I actually conceded a point that’s supported by your data in my reply to RT.), which is very different from making fun of it. I trust you’ll concede that.
If I’m not worth talking to, don’t talk to me. If my opinions are so flimsy as to warrant an insult, assume the rest of the readership agrees to you. Pointing out the obvious, as you state, isn’t worth your time. If it is, perhaps you should work on finding something more meaningful to do.
RC- Oh. My God. I reread what you wrote, and…
“To whom should the billionaires be paying their fair share?……
….. has Bill Gates paid more of his fair share through his foundation or in taxes? Based on that, has the foundation or his tax dollars done more to advance the American dream?”
So we all know that even if Bill Gates and Warren Buffet gave all of their income to philanthropy or taxes it wouldn’t make a dent in the shortfalls of our economic situation and the ills of our society. Not every billionaire gives such massive amounts of money to charities. They know that, and that is why they advocate for ALL of the 1% to pay MORE in taxes.
They think that constitutes fair, which was the question that you asked.
Oh. My God. As far as not addressing you….. you can make that rule when you start your own blog. Now go back to your fainting couch.
D– once again, you completely missed the point. I asked what was fair. Your reply (although I didn’t ask you and you did it in a very crude way) is: The Buffet Rule. You also appear to be in favor of tax deductions for philanthropy, although I can’t be certain of that. Based on your pseudo response, I’d be curious to see how you feel about the same tax rate being applied to billionaires to those who make significantly less ($250k.) I’d also be curious to know how you feel about mandating philanthropy in a similar style as taxation . . . but really– I don’t care about anything you have to say because you’re an asshole.
You’ll note, that not once, did I advocate for any tax rate for any person or class; nor did I advocate any solution for anyone. I asked a few questions, which for some unknown reason, you felt was grounds to both mock me and drag out (yet another) quote that I apologized for.
Stop harassing me is a request. If you feel like you have an unlimited right to do so, well, you gotta do what you gotta do. I’m sorry that a simple thing like: “You go my way, I’ll go mine” is lost on you.
See you in the tall grass, sir.
Ryan,
If you think Demagogue is “harassing” you, then you are far to delicate a flower for the blogosphere.
Man up, this isn’t a parlor game or tete-a-tete in a gentleman’s club.
It’s an open forum and (Vern willing) we can comment on anything and in any matter we so choose.
My advice; stop taking everything so personally. And for the record, I’ve taken my share of criticisms and name calling, meh, who cares.
Oh. The. Drama.
What does this mean?…”“You go my way, I’ll go mine”.
And this?….”I don’t care about anything you have to say because you’re an asshole.” Very mature.
Don’t feel like you’re special because you called me a name. I’m always referred to as “Democrap” by one of the other conservative bloggers here. I take it as a term of endearment. And I can’t remember how many times I’ve been called a “Moron Mongoloid”.
When the you start the name calling, that’s usually a sign that you’re losing the thread.
Oh, and because I know that you do care…yes I am in favor of tax deductions for philanthropy, and I would love to have the same effective tax rate as Warren Buffet. So would his secretary.
RT- I have found that Ramsey’s Fin’l Peace University is probably one of the most useful all around financial resources available to the masses at a reasonable price. I have facilitated the classes (no payment rec’d, just facilitating). His whole thing can be summed up with “if you live like no one else, then later you can LIVE like no one else”. He has steps to take to get to “financial peace”. They are very tough…but deal with heavy budgeting, no credit cards- cash only!, cutting expenses until it hurts, selling “stuff”, earning extra money, throwing all cash to debt, using a debt “snowball”, negotiate for purchases (easier with cash), etc…Essentially, do everything you can to get out of debt and do it with a system.
It is Biblicaly based in that the Bible does not want us to be slave to debt and to “stuff”. However, the principles are not only for Christians and IMO, pretty much anybody can benefit from it.
It is NOT for everyone because not everyone is going to go through the long term pain that is involved with system…however, when people follow the plan, it can have great results.
Budget. Pay Cash. Do not use Credit Cards. Do not buy things on credit (even cars- mortgages he is luke warm on). Be systematic in the process. Get to financial peace and then you can live like no one else.
Christmas time is a great time to start this…no reason to pay for gifts far after the recipient has even forgot about the gift.
I could go on and on and on…but you get the point.
RT, by the way it is not about learning anything new about economics to get out of debt or having financial peace in your life, it is taking the steps to get out of debt. Just like I know what I need to do to lose weight, I just continue to make stupid choices. I can read all the books in the world and learn a bit more, but I truly know what I need to do to get there- possibly a bad analogy, but hopefully you get my point.
I get your points. My point is that no matter how well one may know about budgetting 101, in addition to the pressure of consumerism, situations llke furloughs, layoffs, catastrophic related expenses, and lack of adequate savings, is almost inevitable not to fall on debt. Thanks again for your budgeting advice.
RC. We may already have beaten the issue of this thread to death (thanks Inge..) I did not realize the importance of philanthrophy in the conservative thinking, until you mentioned it. I did some research in the subject and I came accross the following crtique in the Slate magazine :
“…About 120 years ago, when Andrew Carnegie declared in his “Gospel of Wealth” essays that he was going to give away his entire fortune and asserted that it was the duty of other rich men to give away theirs, his announcement provoked as much criticism as praise. Labor leaders condemned Carnegie for giving away money that did not rightfully belong to him. Prominent churchmen, including Methodist Bishop Hugh Price Hughes, characterized him as “an anti-Christian phenomenon, a social monstrosity, and a grave political peril.”
One doesn’t have to a Socialist—and Bishop Hughes certainly was not —to wonder whether a more equitable distribution of wealth might be better for society than the idiosyncrasies of large-scale philanthropy.
Shouldn’t we also be asking, as Carnegie’s critics did 120 years ago, about the health of a society that looks to handouts from the wealthy to alleviate poverty, cure disease, and make the schools work?
…Philanthropic foundations will certainly never accomplish what they set out to do without a greater infusion of dollars. There is, however, no evidence that such dollars are forthcoming from Buffett’s and Gates’ fellow billionaires. On the contrary, the richest Americans appear to have cut back their spending on philanthropies. In 1995, estates worth $20 million or more gave away 25.3 percent of their wealth; by 2004, that figure had dropped to 20.8 percent. At the same time, the percentage of $20 million-plus estates that gave nothing to philanthropy increased more than 5 percent, to a total of 47.7 percent. Think about it—more than half the families worth more than $20 million do not give a dime to charity of any kind…”
RT…not that I am butting into your guys’ debate, but I believe that the Slate statement “more than half the families worth more than $20 million do not give a dime to charity of any kind…” is very misleading if not even false. They are referring to the % of ESTATES that give money to charity not families. Essentially, an estate is when someone dies so they are measuring the amount that is given by instructions in the decedent’s trust/will. It is not measuring what is given away during one’s lifetime. This data is likely from IRS Form 706 estate tax return filings. So, one should not make the claim that more than half of families with estates over $20MM do not leave anything to charity. For example, if someone gives away a substantial amount of wealth prior to death instead of waiting until they die, they would be part of the 52.3% that “do not give a dime to charity of any kind…” which would be crazy to state.
I am sure that the data is out there on the current giving during ones lifetime, which a lot of people feel is more valuable than giving after they are dead (there are tax benefits to both btw- some greater than others).
The Slate magazine article I believe was from 2006…since then, there has been a substantial push for the richest (rich with a B not a M) in America to pledge to give away the majority of their wealth during one’s lifetime or as part of estate planning. It is called the “Giving Pledge”. There are a number of America’s wealthiest who have made just that pledge including Buffet, Gates, Ellison, Samueli, Bloomberg, von Furstenberg, Zuckerberg, and others. Hence, despite the article from 2006, there now does seem to be evidence of billionaires’ commitment to put their money into philanthropic causes.
Remember, when these families give away their money, they are reducing tax obligations, so in my mind the bigger question regarding charity and taxes is which organization (the charity or the gov’t) will do a better job of spending that money. Another item to remember is that charity is often what the taxpayer with substantial investment type income (15% LT cap gain and qual dividend) uses to get all of their income as low taxed income- essentially, they use charity and other deductions to offset their higher taxed ordinary income so that they are paying the lower preferred rates.
BTW, speaking of Carnegie in the Slate article, there is a series on the History channel (I think that is it) called The Men Who Built America….should be required watching especially for high-school and college students. Focuses on Vanderbilt, Carnegie, Rockefeller, JP Morgan, Ford, Edison and Tesla…incredible IMO.
You started the debate….which has been a positive one, at least for me. I am learning a lot about the conservative principles. You are right about the date of the Slate article, it was published in 2006. I will try to contact the writer and ask for an update and comment on your assesment of statements in his article being misleading if not even false. I think the critique in general is a valid one, which will continue to be an issue to be debated. I will read information on the question you posed regarding “charity and taxes is which organization (the charity or the gov’t) will do a better job of spending that money”. Although the statements of Gates and Buffet, quoted in the preceding comments by D& A, are quite telling as to what is needed now regarding taxes.
I ‘d like to know your opinion on the “Limits to Growth” debate, whenever you have the time. I have a friend, Dora, who likes your posts. She is also learning Yiddish, after reading a Vern’s article combining spanish and yiddish words…the blogsphere world can be interesting.
The Slate’s statement about billionaires not stepping up to giving away their fortune may have been true in 2006, just not now- the Giving Pledge has picked up a lot of steam in the past few years…I believe Buffet and Gates were the ones who started the push.
The statement about over 50% of the wealthiest not giving away anything to charity is false on its face…it may be true that their estates don’t give any to charity but pre-death is when most charity is done. Very misleading b/c they are talking estate (i.e. post death).
Re Buffet and Gates (or any other insanely rich person) on their thoughts about taxes- I believe that their thoughts are not all that uncommon. However, they are in a totally different league than most. There is a huge difference between a family making $500K taxable per year and someone who has accumulated the wealth of their magnitude. I don’t believe that either has come out and said that taxes should be increased at the income levels that are being pushed by the POTUS. Again, they are able to give most of their wealth away and still have more than most will ever dream of. By giving so much away, they are also minimizing personal taxes paid to the gov’t (not a judgement statement, just a fact)…especially since a lot of their wealth does not provide for current taxable income (i.e. Berkshire A does not pay a dividend so as long as Buffet does not sell shares, he does not recognize income based upon his stock ownership in Berkshire A).
I am actually very open to a Buffet rule…especially if it impacts people like Buffet. I believe he put a $1MM floor on it before kicking in. I personally would like to see it replace the AMT which truly has become a middle class and upper middle class tax (those who make more than $1MM for example are often not in it). Unfortunately, I don’t think there is enough tax on the table to make a dent with the super wealthy such as Gates and Buffet so they can say that they and other like them should pay more, but it won’t make a dent- it will make some feel better about taxing rich. POTUS and other economists know that there just is not enough income with those super rich which is why it is getting pushed down to a lower income level than Buffet has called on.
I am not up to your “limits of growth” debate…is it related to the Time article on the difficulty of stepping from the lower class a higher class? I actually read that article a while ago (I think it was the same one) and my initial thought was that I would still rather have our opportunities in America compared to other countries (not only economic opportunities but others too) even if our ability to move up the ladder is tougher in the US. Also, I also have to wonder what the classes look like in each country. For example, in the article they use the lowest class (presumably “poor”) stepping up to the 2nd highest class (presumably “upper middle class” but??). So, are those steps in the ladder equivalent? I would imagine that it would be easier to move up the ladder if the rungs are closer together…I believe in a lot of countries (no data- just my thoughts) is that the rungs are closer together than in the US. Which, may be part of the discussion as to whether that is appropriate or not (wealth disparity) but in upward mobility discussions it should be considered. The further the 1st from the 4th classes are apart, the harder it would be to move up. For example, lets say that the classes are judged by 10/20/30/40/1000 (from lowest to highest of classes- the measure does not matter) in country #1. In country #2, the classes are 10/30/50/100/1000…I have to believe that it would be tougher to go from the lowest class to the 4th class in country #2 versus country #1.
That was a lot of rambling and not sure if it made any sense or added to the conversation at all (heck, I don’t even know if that is what you meant by “limits of growth” or not). I am glad that Dora likes my comments…there are a lot of times that I am not sure if anyone does here as I am definitely in the minority on a lot of things that I like to comment on (mainly financial matters).
The Limits to Growth refers to the impact of the economic growth in the environment. I mentioned in an entry regarding your argument of business being driven by the demands of consumers.It is a book published in 1972, which is coming back to the discussion as a result of the recent natural disasters: “If 1970 rates of economic growth, resource use and pollution continued unchanged, then modern civilization would face environmental and economic collapse sometime in the mid-twenty-first century.”
See http://www.thenation.com/article/171610/limits-growth-book-launched-movement.
I am not familiar with the book…the article helped. It seems from reading the linked article, that it is presenting a scenario that business unless environmentally regulated will destroy the environment and man-kind as we know it will implode upon itself shortly (i.e. 75 to 100 years-ish from the 70’s).
Fortunately, I do believe that consumers also have a desire for environmentally conscience products/processes which along with gov’t regulation has improved our business practices in the US as it concerns the environment. I am not sure if those changes would be sufficient to change the authors hypothesis or not. Just as I started the conversation way up above, it is a balancing act where all stakeholders (consumers, investors, executives, workers, gov’t, activists) are vying for their “wants”. There is a happy medium somewhere in the mix…sometimes, gov’t needs to intervene to make sure that all interested parties are being taken care of to minimum acceptable levels, whatever that is deemed to be.
” . . . so in my mind the bigger question regarding charity and taxes is which organization (the charity or the gov’t) will do a better job of spending that money.”
Well done.
RT– I have no idea what the tax dollars paid by Carnegie, Rockefeller, Huntington, or Getty got us, but I can tell you what their philanthropy did. If it’s not part of the Conservative platform, it damn well ought to be. Talking about that, instead of the next Republican sponsored filibuster, would garner way more votes.
Both of us were thinking about the same question, almost at the same time. The historical assesment of the mentioned philanthropists is an open question, whether positive or negative will depend largerly on the philosophy of the people doing the assessment. From a pragmatic approach, the statements quoted regarding Gates and Buffet are an indication of what needs to be done in today’s circumstances.
Oh fer chrissake…are you guys HONESTLY comparing the efficiencies of a charity VS. the federal government, which serves every single person in the United States of America?
Let’s see a charity become so large it has to serve every single person in the United States in one way or another and THEN we’ll see how efficient they are.
No one is honestly comparing the efficiency of a charity vs. the federal government.
On top of all that, charities don’t exactly have a spotless reputation when it comes to handling and disbursal of funds.
Yeah, I don’t think efficiency was the debate…it was about the super wealthy leaving wealth to charity versus leaving it to the gov’t and which would do a “better” job of spending in a way that the payer wants it used.
You can take it up with Buffet, Gates, and the other Giving Pledgers. They are choosing to give money to charity which in turn means less money to the gov’t through income and estate taxes. Which is better for society? To me, it is about selecting who/what you really want to help- society in general (gov’t) or selected targets (charity).
I think that ideally, it’s not a false choice. One can do both…and I think if one is in a position to do both, it’s patriotic to do so.
One may want to do both, but in order for charitable giving by the wealthy (or pretty much anyone who itemizes) to not have a negative impact on tax revenue, one must choose to forgo claiming deductions for charity- both in terms of income tax and estate tax. Although, perhaps you were talking about “feeling” a want to do both- I want to help society in general and I want to help through charity. Unfortunately, helping one hurts the other in pure financial revenue generation terms.
I doubt even Buffet or Gates declines taking income tax deductions for their charitable giving now or through their estate planning.
Yeah, well if the motivation behind charitable giving is primarily because of tax implications, then I question just how charitable that is.
I’m sure that the motivations for many super-wealthy is out of pure concern. But I’m also pretty sure that some of them do it for the tax benefits. And they get a chance to land on the society page too.
That said, I’m more concerned with things like off-shoring money in order to avoid taxes. For me, a wealthy person who does that AND has the charitable deductions…their heart really isn’t in the right place.
Regardless of the concern, if they make a large donation (say Buffet gives away $30B of his wealth- about 90% of his current Berkshire wealth), then takes a deduction on a tax return (either income or estate), the US gov’t does not receive tax revenue (anywhere from around $6.9B to $15B for someone like Buffet). Although, I too have always said that people should not give b/c of the tax benefit- the tax reduction is a benefit of giving.
I would venture to guess that quite a bit of Buffet’s Berkshire corporate income has never been taxed in the US since they invest in quite a number of foreign business operations. Gates’ Microsoft is one of the largest Irish taxpayers as that is where most of their intellectual property is located and the US operations pays royalties overseas as well as they have a myriad of foreign business operations that pay local tax but not US tax as the profits stay oversees. I am not picking on them as I love their charitable ventures (a lot of Buffet’s giving actually goes to the Gates Foundation) and they do a tremendous amount of good across the world.