In this powerful spoken word, poet Clint Smith, who is also a teacher in Washington D.C., tells the stories of some of his students. It puts names and details to the struggles of young people trying to thrive in an urban environment that is all too often indifferent to their survival.
The dominant firms in the U.S. and other major capitalist counties are happily making profits, but they aren’t interested in investing them in new plants and equipment that increase productivity and create jobs. Rather they prefer to use their earnings to acquire other firms, reward their managers and shareholders, or increase their holdings of cash and other financial assets.
The chart below, taken from a Michael Burke post in the Irish Left Review, shows trends in both U.S profits and investment .
As you can see the increase in profits (in orange) has swamped the increase in investment (in blue) over the relevant time period; in fact, investment in current dollars has actually been falling.
Looking at the ratio between these two variables helps us see even more clearly the growth in firm reluctance to channel profits into investment. The investment ratio (investment/profits) was 62% in 1971, peaked at 69% in 1979, fell to 61% in 2000 and 56% in 2008, and dropped to an even lower 46% in 2012.
According to Burke, if U.S. firms were simply to invest at the level they did in 1979, not even the peak, the increase in investment in the American economy would exceed $1.5 trillion, close to 10% of GDP.
The same dynamic is observable in the other main capitalist economies:
In 1995 the investment ratio in the Euro Area was 51.7% and by 2008 it was 53.2%. It fell to 47.1% in 2012. In Britain the investment ratio peaked at 76% in 1975 but by 2008 had fallen to 53%. In 2012 it was just 42.9% (OECD data).
So what are firms doing with their money? As Burke explains:
The uninvested portion of firms’ surplus essentially has only two destinations, either as a return to the holders of capital (both bondholders and shareholders), or is hoarded in the form of financial assets. In the case of the U.S. and other leading capitalist economies both phenomena have been observed. The nominal returns to capital have risen (even while the investment ratio has fallen) and financial assets including cash balances have also risen.
So, with firms seeing no privately profitable outlet for their funds, despite great societal needs, their owners appear content to reward themselves and sock away the rest in the financial system. In many ways this turns out to be a self-reinforcing dynamic. No wonder things are so bad for so many.
As far back as the 1970s, family researchers began noticing that… [b]oys from broken homes were more likely than their peers to get suspended and arrested… And justice experts have long known that juvenile facilities and adult jails overflow with sons from broken families. Liberals often assume that these kinds of social problems result from our stingy support system for single mothers and their children. But the link between criminality and fatherlessness holds even in countries with lavish social welfare systems.
Ah, the link between criminality and fatherlessness again. So ingrained is the assumption that crime rates always go up that conservatives making this argument do not even see the need to account for the incredible, world-historical drop in violence that has accompanied the collapse of the nuclear family. I know Kay Hymowitz knows this, because we’ve argued about it before. But if her editors and readers don’t, why should she make a big deal out of it?
I’m not arguing about whether boys living without fathers are more likely to commit crimes. I’m just saying that this is very unlikely to be the major cause of male juvenile violent crime if the trends can move so drastically in opposite directions at the same time. These aren’t little fluctuations. Even if you leave out the late-80s-early-90s spike in crime, arrests fell about 40% from 1980 to 2010 while father-absent boys increased almost 50%.
If you are going to argue for a strong association — which Hymowitz does — and use words like “tide,” you should at least acknowledge that the problem you are trumpeting is getting better while the cause you are bemoaning is getting worse.
The phrase “economic mobility” refers to the likelihood that a child will end up in the same or a different economic strata than their parent. Education is usually cited as a key to improving economic well-being intergenerationally. Conversely, but often unstated, is the idea that if a child of college graduates doesn’t attend college, than they should perhaps do worse than their parents.
What does the data say?
The figure below is from the Pew Economic Mobility Project. Along the horizontal axis is the parent’s household income quintile: economic strata broken up into fifths from the lowest (left) to highest (right). The bars represent the adult child’s income for those who didn’t graduate from college (red) and those that did (blue).
Often we focus on the left side. Does attending college help poor and working class Americans? The answer is yes. Only 10% of children born into the bottom 20% of household incomes will grow up and stay in the bottom 20%, compared to almost half of people who don’t go to college. It’s similar, if less stark, for those in the 2nd to bottom quintile.
But what about the rich kids? I want to look at the right side. Notice that a quarter of kids born into the top quintile stay there even if they don’t get a college degree. Half of non-degree earning children will stay in the top 40% of income earners.
Among the richest kids who do go to college, about 50% will remain in the top quintile. There are lots of reasons for this, but one is paternal connections. One study found that a whopping 70% of sons of the 1% had worked for the same employer as their father. I wonder how high that number would be if we added daddy’s friends?
In sum, it’s hard to go up from down below, but it’s also relatively easy to stay sitting pretty if you’re already way up there.
Compared to some European countries, the United States has a weak tradition of labor-based activism. All too often, this leads to the invisibility of labor issues. Take for example, this commercial for Simply Orange® brand orange juice. In an attempt to present their product as a natural alternative to other brands, Simply Orange juxtaposes images of natural orange growth with common phrases relating to the structure of a manufacturing organization. The tree is their “plant” (a marvelous pun), the orange blossoms are the “workers” that produce the fruit, and the sun itself becomes “upper management.”
Even though this commercial is humorously centered on the process of producing orange juice, there is not a single human being present in any of the images. It is a story about making a product in which nobody actually makes anything! This message cleverly sells the product, but it also obscures the real labor that went into growing, picking, and juicing the oranges and downplays the contributions to the process made by real people. All that productive effort is condensed into the image of an orange blossom, as if it can be assumed that such production will just naturally occur like an annual blooming.
The reality of orange juice production is much less sunny. According to statistics recently compiled by the Southern Poverty Law Center, there are roughly 20,000 undocumented workers in Florida that are subjected to harsh working conditions as growers compete with imported oranges in a “race to the bottom” for a cheaper production process. The illegal status of many of these workers makes them easily exploited for substandard wages, because they are often afraid to challenge the policies of their employers.
In a Marxist theoretical perspective, the way that these workers are rendered invisible by the public image of the commercial is a prime example of alienation: a tension in modern capitalism in which the workers in a mass-producing industry are separated from the fruits of their labor. Where at first it was merely the physical product that was taken from those who produced it to be sold in the market, now the credit for even participating in the process is being abstractly torn away.
This commercial also challenges the realities of the labor process, associating modern concepts of work organization such as “the plant” and “upper management” with images of natural growth. These associations allow the commercial to imply that their methods of labor organization are somehow rooted in a simpler way of doing things that is more harmonious with the natural order. By hearkening back to these roots, the organization is rendered harmless, as if to say the complexities of modern labor relations do not apply to the simple production of orange juice. All together, the choice to portray the associations in this commercial serves to hide the realities of agricultural production in the United States and limit the viewer’s potential curiosity about the way the process really works.
In the U.S., we tend to organize politically according to identities. For example, we have a Gay Liberation Movement, a Women’s Movement, and the Civil Rights Movement, to name three big ones. All of these are personal characteristics made political.
The cartoon below, by Miriam Dobson, does a great job of showing one of the downsides of fighting for progressive social change in this way. For one, it can make people who carry multiple marginalized identities (for example, gay black men) feel unwelcome. And, two, it makes it seem like people without the identity can’t be part of the movement.
One solution is to think about oppressions in terms of intersectionality: we are all a mix of identities that resonate with each other in complicated ways. This is a rich idea, but one lesson that it has taught us is that the strategy of divide-and-conquer has been an effective way to keep multiple groups marginalized.
Instead of emphasizing identities, we could identify issues. And if our issue is oppression, we can join-to-resist. As the graphic explains: “oppression of one affects us all.”
Earlier this week, Marty posted about the increasingly huge share of income going to the richest Americans. And as we’ve seen in the past, Americans tend to way — way — underestimate how unequal the U.S. is.
This video (via Upworthy) does a great job illustrating the distribution of wealth, and how it compares to Americans’ perceptions of both the real and ideal distribution. Even if you know all this stuff, and can recite the statistics, the visual representation of exactly what that means is still jarring.
Gwen Sharp is an associate professor of sociology at Nevada State College. You can follow her on Twitter at @gwensharpnv.
The great majority of Americans might find the post-recession expansion disappointing, but not the top earners.
The following table reveals that our economic system is operating much differently than in the recent past. The rightmost column shows that the top 1% captured 68% of all the new income generated over the period 1993 to 2012, but a full 95% of all the real income growth during the 2009-2012 recovery from the Great Recession. In contrast, the top 1% only captured 45% of the income growth during the Clinton expansion and 68% during the Bush expansion.
Of that weren’t enough, the next chart offers another perspective on how well top income earners are doing. In the words of the New York Timesarticle that included it:
…the top 10% of earners took more than half of the country’s total income in 2012, the highest level recorded since the government began collecting the relevant data a century ago… The top 1% took more than one-fifth of the income earned by Americans, one of the highest levels on record since 1913 when the government instituted an income tax.
We have a big economy. Slow growth isn’t such a big deal if you are in the top 1% and 22.5% of the total national income is yours and you can capture 95% of any increase. As for the rest of us…
One question rarely raised by those reporting on income trends: What policies are responsible for these trends?