Archive for March, 2013|Monthly archive page

Hello Dolly

Went to Fords Theater to see a production of this old war horse or classic musical by Jerry Herman. It came out in the 1960s and ran for six years, the longest running musical of its day.

Set in the 1890s, it hints at the Gilded Age and its disproportionate sharing of the wealth. The barber of the mean, wealthy man Hoarce Vandergelder, tells him, “You’ll have to sit still, Mr Vandergelder. If I cut your throat it’ll be practically unintentional.” As a musical the piece does not going into any detail about the country’s problems.

but as I watched this period piece, I heard one line that resonated with me today and would mean something to the Occupy Movement, among the other 99%. Dolly says, “Money, pardon the expression, is like manure. It’s not worth a thing unless it’s spread around, encouraging young things to grow.”

Washington, DC Basketball

My book received a nice write up in Washington Post columnist John Kelly’s piece this morning.

http://www.washingtonpost.com/local/a-full-court-press-on-the-history-of-basketball-in-dc/2013/03/13/bec23488-8bf2-11e2-9f54-f3fdd70acad2_story.html

Love the photograph he found in the newspaper’s collection of the Washington Tapers of the American Basketball League.

Parade Magazine and ts What Do People Earn: What People Think?

Parade Magazine every once in awhile shows all the readers of its Sunday magazine how much a variety of Americans earn in the US. You can deduce from that information, which Americans have the best chance of having the wealth in the country: owning stocks and bonds, real estate, etc.

But, surprise, most people in the U.S. don’t know how much wealth others have.  This chart is from a paper called “Building a Better America One Wealth Quintile at a Time” by Dan Ariely and Michael I. Norton. The first line shows the actual distribution of wealth in the US. The tops 20% hold over 85% of the land, assets, etc. Yet, folks perceptions are way off. Find your estimated income and then look at the chart to see how close your income group comes to knowing how the money is spread in the US.

Best of all, look at how the various income groups and voters think that the income ought to be distributed in the US. It is so different from the way it is, that the disconnect is not funny but pathetic.

post_full_1285695177Realvs.ImaginedWealthDistributionintheU

Show Me The Money?

Remember the slogan from the movie Jerry McGuire: Cuba Gooding’s character, a wide receiver on a championship football team, had played well so he expected to get his just due of a fair salary. Don’t we all deserve that after doing good work?

Well, this has not been the case in the United States since the 1970s. The top 1% of the country’s grabbed the lion’s share of the wealth over the 1979-2007 period. What did that mean to the rest of us? Middle-income households lost $13,042 in 2007 alone. Families in the bottom fifth lost $6,010.

Things have only gotten worse since the recession with the top 1% grabbing 125% of all growth in the last few years, leaving the rest of us with scraps that amount to much less than before.

Here’s a chart showing where the wealth is in the U.S.

financial_wealth_pie_chart

What Recovery?

Have the last few years since the Recession in 2007-2009 gotten better for you? Hear all the television news reports crowing about the growth in jobs, and unemployment dropping below 8%?

Well, here’s news, 99% of Americans lost 0.4 percent of their income since the Recovery. The top 1% have gained over 11% in their income over the same period.

See:

http://www.nytimes.com/2013/02/16/business/economy/income-gains-after-recession-went-mostly-to-top-1.html?_r=0

Compassion for Others?

With all the talk in Washington and in Wall Street about the need to cut Medicare, Medicare and Social Security, one has to wonder where is the concern fora nyone other than theirselves? The economic gains made during the last few years have gone disproportionately to these same people who want to cut the government’s benefits to others. The wealthiest 1% of Americans gained 125% of the growth. Which means the rest of the 99% got only 75% of that growth.

This is bad policy in an American economy that gets 70% of its growth from consumer spending. How do you spend when you’re unemployed, underemployed, or getting less even if you have a significant job! But ultimately, the key question to ask the one percent is: Where is the concern for others in general?

As many people know, the old days, (the 1950s through 1970s) when the company provided a pension for an employee are long gone. That was a big portion of the retirement nest egg and it was taken away from employees by companies that wanted to maximize profits so that their stock prices would go up. The stockholders would get wealthier on the back of the companies retired employees.

Columnist Harold Meyerson illuminates this point in the editorial below:

To the let’s-cut-entitlements crowd, what’s wrong with America is that seniors are living too high off the hog. With the cost of medical care still rising (though not as fast as it used to), the government is shelling out many more dollars per geezer (DPG) than it is per youngster (DPY). The solution, we’re told, is to bring down DPG so we can boost DPY.

We do indeed need to boost DPY. And we need to rein in medical costs by shifting away from the fee-for-service model of billing and paying. But as for changing the way we calculate cost-of-living adjustments for seniors to keep us from overpaying them — an idea beloved of Bowles, Simpson, Republicans and, apparently, the White House — this may not be such a hot idea, for one simple reason: An increasing number of seniors can’t afford to retire.

Nearly one in five Americans age 65 and over — 18.5 percent — were working in 2012, and that percentage has been rising steadily for nearly 30 years. In 1985, only 10.8 percent of Americans 65 and older were still on the job, and in 1995, that figure was 12.1 percent.

Both good news and bad news have contributed to this increase. The good news is that more seniors both can and want to work than in years past, as health care and medical science have extended their capabilities, and as the share of Americans in desk jobs has increased while the number on the factory floor has shrunk. A 2011 survey by the Society of Actuaries reported that 55 percent of working seniors said they had stayed employed because they wanted to stay active and involved. But the same survey showed that 51 percent were working because they needed the money.

What advocates for reducing Social Security adjustments fail to consider is that corporate America’s shift away from defined-benefit pensions to defined-contribution 401(k) plans — or to no retirement plans at all — has diminished seniors’ non-Social Security income and made the very idea of retirement a far more risky prospect. Today, more than half of U.S. workers have no workplace retirement plan. Of those who do, just 35 percent still have defined-benefit pensions. In 1975, 88 percent of workers with workplace retirement plans had defined-benefit pensions.

The shift from traditional pensions to 401(k)s is one of the main reasons most seniors aren’t able to set aside enough income to guarantee a secure retirement. A 2010 survey by the Federal Reserve found that the median amount saved through 401(k)s by households approaching retirement was $100,000 — not nearly enough to support those households through retirement years, as seniors’ life expectancy increases. And as most Americans’ wages continue to stagnate or decline, their ability to direct more of their income to 401(k)s diminishes even more.

With the eclipse of the defined-benefit pension, Social Security assumes an even greater role in the well-being of American seniors. But advocates of entitlement cuts don’t even discuss the waning of other forms of retirement security: Listening to Alan Simpson, you’d never know that America’s elderly aren’t getting the monthly pension checks their parents got.

And it’s not as if those employers are suffering. Just as U.S. businesses have been able to raise the share of corporate profits to a half-century high by reducing the share of their workers’ wages to a half-century low, so, too, their ability to reduce pension payments has contributed not just to their profits but also to the $1.7 trillion in cash on which they are currently sitting.

So here’s a modest plan to enable seniors to retire when they wish, rather than having to work into their 70s and even beyond: Require employers to put a small percentage of their revenue, and a small percentage of their workers’ wages, into a private, portable, defined-benefit pension plan. To offset the increased costs, transfer the costs of paying for workers’ health care from employers and employees to the government, and pay for the increased costs to the government with the kind of value-added tax that most European nations levy. (The tax burden is higher in Europe, but because the level of benefits is higher as well, the tax has wide public support.)

The odds of such a plan being enacted today, of course, are nil. (Then again, the odds of any bill getting through Congress these days are close to nil.) But until we compensate for, or reverse, the abdication of corporate America from any major role in providing its workers with retirement security, we should lay off monkeying with Social Security to reduce the program’s future payments. As for all those cash-drenched chief executives who proclaim that we must cut entitlements, how about they make up the difference by restoring the pensions their companies slashed?