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Wall Street Destroyed $8 for Every $1 Earned

Wall Street Destroyed $8 for Every $1 Earned

Tonight, President Barack Obama will deliver his State of the Union address. A major theme of the speech will be jobs and the economy. Let’s hope the president spares a few minutes for Wall Street reforms that might prevent a repeat of the economic collapse that we’re slowly starting to recover from.

As Kai Wright points out in ColorLines, the State of the Union is the unofficial kickoff of the 2012 election season:

The still churning foreclosures and mounding debt in black and brown neighborhoods don’t suggest a stabilized economy anywhere except Wall Street, but let’s set that familiar fight to the side for now. The point is that whether we’re talking about creating jobs or seating district court judges, the time for making policy is gone. Starting tomorrow night, it’s all talk until we vote next.

Amy Dean of Working In These Times shares Wright’s skepticism. With the Republicans in control of the House and the Democrats hanging on to the Senate, we’re looking at a legislative stalemate until the next election. Dean argues that activists should use this lull in the action to refocus their organizing at the grassroots level.

Wall Street destroyed $8 for every $1 it earned

In AlterNet, Les Leopold asks why bankers are earning such huge bonuses while the financial system is in disarray. According to standard economic theory, your compensation reflects the value of your work. Yet, according to Leopold’s back-of-the-envelope calculations, the financial sector has destroyed $8 worth of wealth for every dollar it earned over the last 5 years. His estimate includes the wealth-destroying impact of the subprime mortgage crisis and other epic Wall Street blunders.

The free market might not be as generous with bankers as the current system of government bailouts. If financial firms were allowed to fail, Leopold notes, bankers who drove their own firms out of business wouldn’t get paid. However, under the current “too big to fail” rules,    bad decisions lead to taxpayer rescues, not unemployment. So, the bonus checks keep rolling in.

Social Security switcheroo

James Ridgeway of Mother Jones predicts that Obama is gearing up to cut Social Security:

Having “retooled’” his Presidency for a more open accommodation of the center right, Obama will soon be overseeing the battle to launch a dismantling of the Social Security system. [...] Without entirely destroying the popular program, he will support cuts that go beyond anything that should rightly happen during a Democratic administration.

Ironically, Ridgeway notes, our current Democratic president is to the right of many of yesterday’s conservative Republicans. The legendary arch conservative Sen. Robert A. Taft (R-OH) was a staunch defender of Social Security. Republican President Dwight Eisenhower spearheaded the largest expansion of Social Security in the largest expansion of benefits in the history of the program.

Michelle Obama and Wal-Mart

Michelle Obama has enlisted the world’s largest corporation (and largest grocer) in her Let’s Move! campaign against childhood obesity. George Warner of Campus Progress takes a closer look at the skewed economics behind the “Nutrition Charter” signed by Wal-Mart last week. Amongst other things, Wal-Mart pledged to cut added sugar in its products by 10% by 2015; make healthy food more affordable; and develop a  ”nutrition seal” to alert shoppers to ostensibly healthier foods.

Yet, Warner notes that Wal-Mart is contributing to ill-health by employing a massive workforce at less than a living wage. Even if Wal-Mart follows through on its relatively modest pledges to promote healthy eating, it continues to put its own workforce at risk of ill health simply by paying them poverty-level wages. Studies show that for every job a new Wal-Mart store creates, it destroys three existing jobs, which paid an average of 18% more.

Poverty is one of the strongest predictors of obesity and poor diet.

Beck vs. Piven, Round 2

Last week, the Audit covered a bizarre right wing trend of demonizing 78-year-old CUNY political science prof Frances Fox Piven for an article she wrote in 1966. Glenn Beck and other leading lights of the right claim that Piven’s 45-year-old article is being used right now by liberal elites in their sinister plot to violently overthrow capitalism.

Piven is receiving death threats by email; and death threats are popping up on Glenn Beck’s website, including: “Snap her little chicken neck. This pinko filth needs a long dirt nap;” “Somebody tell Frances I have 5,000 rounds ready,” and “We should blow up Piven’s office and home.”

In actuality, Piven’s article argued that everyone who was eligible for welfare should sign up for benefits in order to expose the structural flaws in the system. Say what you will about the plan, it was non-violent. It involved a lot of paperwork. Far from overthrowing the federal government, Piven sought to usher in a federally guaranteed federal income as an alternative to the patchwork of state and local welfare agencies doling out benefits.

Matthew Rothschild reports in the Progressive that the Center for Constitutional Rights has sent a letter to Roger Ailes of Fox News asking him to reign in the anti-Piven demagoguery.

This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. 


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Photo credit: HikingArtist.com

by Lindsay Beyerstein, Media Consortium blogger

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36 comments

+ add your own
6:18AM PST on Feb 3, 2011

Organized greed is killing us. We should ALWAYS put people before profits, need before greed.

9:02PM PST on Jan 27, 2011

The Federal Reserve prints money and gives it to the banks. That's how they're supposed to get it 'out into the economy'.But since fewer have the funds to pay back loans, it's not happening. We as tax payers do not bail out the big banks. That money does not add to the national debt. The time is ripe for shifting this distribution of money from the banks to the people by starting a garenteed annual income to be given to all legal adults. I doubt that this would'destroy capitalism.It would just put the distribution process into the hands of ordinary americans who actually do the work in this country. It would end enforced working at made up jobs that are probably not producing anything truely worthwhile anyway. Left to their own ingenuity, people will find things that need doing, and create small business of their own. All the rest of this bellowing around here is old ideas based on a failed system. Taxes on income should be eliminated and replaced by a national sales tax along the lines of the Fair Tax Bill.The part about the Fed bailing out the banks by printing 'air money' to buy up their 'toxic assets' I heard on NPR {This American Life}

3:14PM PST on Jan 27, 2011

I have always said this and unfortunately it's true find me an honest
politician and I'll give you a million dollars, I know there's no problem here because just like wall-street people there is no honesty here either, they got WHAT THEY WANTED AND for lack of a better expression to He____, with the rest of you. (You can fill in the blanks I am sure.) Wall street is a club, your either in with the
who's who in Wall street for forget it. That's why it's nothing that our
entire economy should be based on, because it's controlled gambling.. controlled by the CFO's who put out false financial statements and by CEO's who can't be trusted either. By bankers
who seem to have the first line open to them when this money goes, who knows!! Look at the Bank of American, and all the rest
given millions to bail them out and NOW THEY ARE SITTING ON THE MONEY that was given to them to help the home owners from
going under. Crooks all crooked. Our whole entire system needs to be revamped!!
Oh and lets not forget those huge huge salaries for all these people
who screwed the public, has that ever gotten back to the people into the reserve??? I doublt it.
1st of call .........cut out their salaries if they don't perform and fire them. Look for someone you can count on even pay them less, they should be grateful to have a job, how many have no job now,
much less a cushy one like most of these people have had. THEY
ARE OUR PROBLEM, FIRE THEM AND SHUT THEM DOWN!

6:29AM PST on Jan 27, 2011

In Thailand,there are problems with irresponsible pregnencies especially in teenagers .Thai men are notorious about self protection when it comes to sex .Illegal abortion clinics often make headlines here and most of the customers are young and still at school.Pregnancy can be protected as well as other STD's and AIDS.

7:51PM PST on Jan 26, 2011

Steve R:

You said: "STRANGE THAT YOU BRING ABORTION INTO THIS DISCUSSION?"

No. It was totally relevant based on your comment: "I KNOW - WE CAN INTRODUCE VALUE ADDED TAX (VAT) - AND CREATE THOUSANDS OF NEW JOBS TO COLLECT MORE TAXES FROM - YOU GUESSED IT - JOE PUBLIC - TO PAY FOR THE WELFARE PROGRAMS." It’s also relevant because unplanned children and their mothers often need public assistance in order to survive.

You said: "I HAVE ALSO STATED (BUT PERHAPS YOU DON'T READ TOO WELL), THAT I THINK IT'S FAR MORE IMPORTANT TO EDUCATE THAN TO TREAT THE SYMPTOMS OF WHAT IS OBVIOUSLY A LACK OF EDUCATION."

Aside from suggesting that I can't read, what is it you‘re saying? That unplanned pregnancies only happen to ignorant women? The media has inundated the general public with information regarding how conception occurs and how to prevent it. Yet it happens all the time because not everyone was blessed with the kind of self-control you think they should have or the means to pay for reliable contraception. It's part of being human and having human frailties.

You said: "IT SHOULD NOT BE UP TO OTHER TAXPAYERS TO PAY FOR THEIR (i.e., pregnant women‘s) STUPID MISTAKES!"

NO child deserves to enter this world as nothing more than "a stupid mistake." I don’t know you and won’t presume to speak on your behalf, but your comment sounds more “anti-tax” than “pro-life."

6:48PM PST on Jan 26, 2011

The bonuses DO reflect the value of the Big Time Operators' work--to the banks. Everybody else can go hang.

Steve, get real. Those corporations left the country to get their work done on the cheap in Third World sweatshops, like the firetrap clothing factory in Bangladesh that just murdered two dozen people. Such things used to happen in the US. Look up the Triangle Shirtwaist fire in New York City. Maybe you want to go back to that; I do not.

Then there's Wal-Mart's quaint notion that people should work "off the clock." It wasn't enough that the pay was already on the edge of choosing among food, medicine, and rent; people had to be cheated out of their time entirely. Let's face some more reality: If the corporate suits want something done, they can bloody well pay enough to support the person who does it--and his or her family.

3:00PM PST on Jan 26, 2011

I wonder how many of our dollars the FEDERAL RESERVE destroys every time it prints more money out of thin air?

It's a well known fact that INCREASING the money supply, without anything of value (like gold) to back it up, DECREASES the value of dollars already in circulation.

It's a form of inflation, and it's the main reason why the international community is considering replacing the dollar as the "reserve currency".

Since 2000, the dollar has plummeted from being worth 4 Swiss Francs, to being worth less than 1 Swiss Franc today. The same applies to almost all the major currencies.

And for those that are so incensed at Wall Street, consider this....

The Federal Reserve is a PRIVATE banking cartel - NOT a federal agency.

It's main "clients"..... Wall Street bankers!

When the dollar is replaced as the "reserve currency", America will have to pay for its imports in a currency OTHER THAN the dollar, for the first time in a very long while!

Guess what that's going to do to our cost of living? Think THROUGH THE ROOF!

2:46PM PST on Jan 26, 2011

rhonda t - boy, have you been asleep, or unduly taken in by the anger against tax cuts for the rich....

Since 2001, America has lost more than 42,000 factories.

Yeah - the multinationals must just LOVE it here, don't they? Like Dell, that's just closed its last facility in NC and moved to China. Like Ford, that's closed it's last Ranger plant in keeping with its "global manufacturing policy".

It's a fact that America does have the highest corporate tax rate in the world.

http://www.taxfoundation.org/news/show/1466.html

Why do you think that when you phone for service on just about ANYTHING, you get someone in India, Pakistan, China, Mexico......

We're not talking RICH PERSON tax rates here - we're talking what your small to medium to large BUSINESSES have to pay.

The people that provide JOBS - remember?

America may have more millionaires and billionaires, but America has become the worlds biggest CONSUMER, while these days, producing VERY LITTLE by comparison to most other industrialized countries.

Do you love your cellphone? Guess what - America does not manufacture ONE SINGLE CELLPHONE!

Sorry - but our governments and their policies are responsible for the mass exodus of businesses, to the benefit of countries where those businesses can pocket more of their profits.

Right or wrong - that's the reality!

2:31PM PST on Jan 26, 2011

Susanne R - strange that you bring abortion into this discussion???

Whatever.... Where do you get the idea that I'm against abortions?

I have repeatedly stated that I do not disagree with abortion in the case of rape, incest, age, mental capacity, even contraceptive failure, etc.

I have however, stated in no uncertain terms that I AM AGAINST ABORTION as a means of contraception OR as a convenient way to correct an irresponsible mistake.

I have also stated (but perhaps you don't read too well), that I think it's far more important to EDUCATE than to treat the symptoms of what is obviously a LACK of education.

There is absolutely NO NEED for anyone to become pregnant in this day and age, if they do not want to!

And if people cannot afford to care for a child - then they should be more RESPONSIBLE, shouldn't they???

It should not be up to other taxpayers to pay for their stupid mistakes!

Finally - I sure as hell CAN be against some welfare programs, especially those that give taxpayer money to people that do not deserve it!

1:58PM PST on Jan 26, 2011

Speech already given...

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Kathleen J. Kathleen is currently the Activism Coordinator at Care2. more
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