CAPITAL, LABOR AND ECONOMIC FUTURE

Are we, or have we been, moving into a trend in which capital surpasses labor as the economic engine?
New York Times columnist and Pulitzer Prize-winning economist Paul Krugman thinks so.
From the working person’s viewpoint, the economy is still quite depressed. But economic figures are improving and corporations are making record profits. Many of these companies are holding on to their cash for dear life, fearing the investment and regulatory climate now and to come.
Krugman points out that manufacturing is moving back to the U.S. from overseas. He uses the example of manufacturing computer mother boards. They are made largely by robots, so the cheap, Asian labor is no longer needed. Perhaps that’s why we hear that China’s economy is contracting.
But let’s look at the way things are, from where you sit. Chances are, if you are still working, you have at least some fear that your job is going to go away before you want it to. Perhaps you are saving your pennies, and not spending frivolously, in anticipation of being shown the door at work. The U.S. savings rate needed a shot in the arm, for sure, but how it is getting it is quite disconcerting.
Perhaps you are out of work, and have been for a while. You scratch your head because the job you had, which you had thought, or even had been told, was vital to your company just went away. It’s not as if you had done a lousy job at it and were replaced. Your job just went away, and it’s not coming back.
Meanwhile, you hear about record profits for companies and wonder why they are not putting some of that money back into their operations, i.e. in creating new jobs. Well, they probably don’t have to. Technology has improved to the point at which machines replace people in big numbers. No matter how much money they have, companies will not create jobs they don’t think they need. Some will actually cut jobs they should maintain.
This phenomenon is detrimental to what we know as the middle class. Because those with the capital have political benefactors, they may be creating a political system that lets them get richer at others’ expense. When the successful are protected in this way, the less successful become more vulnerable. As Krugman says, we’re not talking about a gap between the educated work force and the less educated. In this milieu, EVERYONE gets paid less. When the less successful become more vulnerable, they not only get paid less for what they do. They pay more for what they need.
INHERITANCE TAXES CAN HURT
Krugman says that the rich also are fighting to eliminate inheritance taxes. He may find some disagreement here, because inheritance taxes can prevent family businesses from being given to future generations of that family. Sometimes, families have to sell their businesses to cover the tax bill, and there is something wrong with that. On the other hand, there could be large amounts of wealth being easily transferred to people who are already wealthy, without adding to the economic engine.
If this trend of forced idleness continues, it bodes ill. Look at what is happening in other countries, where young, often educated people can’t find work. Such free time among a disgruntled group can lead to all sorts of bad things.
However, in all this, there is good news. There are lots of ways out there to make money, without worrying about having a traditional job. To check out one of the best, visit www.bign.com/pbilodeau. Hear and see the stories of how average people are making above-average incomes, and helping others do the same. It also attacks the notion of paying more for what one needs.
So if you are working, think about your plan B. Savings will certainly help you, but they may not cover all your bills without a paycheck. If you are not working, don’t be discouraged. Check out one of the many opportunities there are, through which average people, regardless of education, are prospering. Sometimes, becoming successful just requires being open to looking at something different.
It has been said that the best way to help the poor is to not be one of them. The best way to fight the capital vs. labor battle that Krugman illustrates is to find ways to generate more real capital. Kurgman calls the capital guys robber barons. If you help people prosper with you, that’s makes you a benefactor.
Peter

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