The Revolving Door Between Government and Corporate America

The chief prosecutor for the US Justice Department polished his resume at Justice by not prosecuting anyone in the financial sector for fraud.  He is returning to his old law firm which defends corporations named in lawsuits.  He will earn $4 million staunchly defending corporations in law suits.  He is clearly an expert on how to avoid criminal prosecution by the Justice Department.  (Tip of the hat to Manan Shukla for the link)

Which States In The US Enjoy The Most Freedom?

The Mercatus Center at George Mason University is funded by the Koch brothers who worship economic freedom.  It is funded by the Koch brothers to produce libertarian propaganda.  Their latest effort to increase our freedom is a report card that measures the degree of freedom in each state.  They probably got this idea from another conservative think tank that ranks nations on their degree of freedom.  This provides conservative funded "educational" institutions with an opportunity to define the meaning of freedom.  We all value freedom in the abstract.  It is a powerful propaganda weapon to define its meaning in terms that satisfy libertarians. 

What Are Corporations Doing With Their Profits?

This graph shows that corporations have been returning a lot of their profits to shareholders.  Growth in buybacks by corporations rose dramatically during the real estate bubble, and it has picked up during our recovery.  Stock buybacks remove shares from the market.  This increases the value of shares outstanding in the market.  This is what shareholder capitalism is all about.  Executive compensation is heavily weighted with stock options.  They have a powerful incentive to increase the value of their stock options.  Stock buybacks serve that purpose very well.

Paying The Bill For War's of Choice

Dick Cheney was not concerned about the cost of his administration's war in Iraq.  He argued that it would pay for itself by providing access to oil.  Since then, a lot of research has been done to determine the cost of our military operations in the mid-east.  This study claims that we have spent around $2 trillion already.  That amounts to 20% of the debt incurred by government since 2001.  This was a war that was funded by debt. Taxes were actually cut during the Iraq war. However, That is only the tip of the iceberg.  The cost of providing medical care and other benefits to veterans will range between $2-4 trillion over time.  From a pure financial perspective we got a very poor return on our investment.  One can only imagine how that money might have been invested in areas that could have had a major impact on our well-being.  We don't even want to consider the human costs of our government's decision to invade a country that was not connected to the terrorist attacks on the US.

The Sunset Of America

Dick Cheney's daughter Liz was given a platform by the Wall Street Journal to tell the world that President Obama is destroying America.  This article highlights her references to the ways in which our president is taking away our freedom and weakening our military.  Her op-ed provides valuable insights into right-wing paranoia.  It is an illness that should not be taken lightly.  Her op-ed will stoke the same kind of paranoia into Rupert Murdoch's target market.  We have to destroy our president before he destroys America.

French President Has Lots Of Problems

This article (via Manan Shukla) describes the problems faced by France's president.  He announced a 75% tax on wages over one million euros on firms.  He lost face when his 75% tax on individual incomes over one million euros was declared unconstitutional.  The new tax is intended to win back his base which has not been pleased with the pro-business policies that he has adopted to encourage business investment.  He is caught in difficult situation.  The economy is not growing and unemployment is high.  Government debt in relation to GDP has been rising.  The actions that he takes to deal with slow growth and government debt displease his base,  and his tax policies anger the wealthy.  Its no wonder his popularity has been falling.  To make matters worse his private life is under attack. 

Median Household Income Has Declined Over Decade

Median household income is 7.3% lower than in was in 2007 at the start of the Great Recession and it is 8.4% lower than it was in 2000.  This is in sharp contrast with median household income growth per decade since the end of WW ll.  Median household income growth averaged 11% per decade prior to 2000.  Curiously, corporate profits have grown rapidly since the end of the recession.  Their profits have grown faster in international markets than they have in the US.  Globalization has been good for many multinational corporations but it has not been good for wages in most industrialized nations.  Much of the growth in income has gone to households which benefit from the growth in corporate income.  That is why income inequality has been increasing since 2000.

Declining household income is not good for households during a period in which healthcare costs and the cost of higher education has been growing rapidly.  It also explains why aggregate demand has been weak.  Households have less income to spend and they can no longer compensate for declining income by borrowing.  Globalization, however has made domestic demand less important for growth in profits.  The growth opportunities have moved to emerging markets for multinational corporations.