Throughout the first decade of this century, the rich got much richer, while the rest of us saw marginal improvement at best in our incomes. Yes, we all know this. But a report yesterday by the US Bureau of Economic Analysis shows that US corporate profits are at an all-time high.
So...isn't it a tenet of Reaganomics that if you just get out of the corporations' way and let them make lots and lots of money, then they'll build lots more factories and we'll all have jobs and life will get much better for everyone? Deregulation! Cut the capital gains tax! That's it in a nutshell, pretty much.
But the rosy promises of those who supported Reaganomics didn't happen, did they? Why is it that US corporations are doing better than they ever have...but those factories are not being built and those jobs are still not being offered to Americans? Could it, might it just possibly be that Reaganomics is wrong?
Oh no, that can't be the case, because no matter how bad things get for the American people despite record profits by US corporations, we all know that conservative dogma cannot EVER be wrong and must not be questioned! Despite what the data show, the Republicans are always better for the economy than are the Democrats!
So let it be written. So let it never be questioned.
Article comments
— go to most recent comments1 - Dave Nalle
Bollocks, Glenn. There is no debate over this issue and your attempt to repaint it as something it's not doesn't change that in any way.
The fact that higher corporate profits result in more employment and other benefits throughout the economy is self-evident.
However this only applies when the profits are real and not just the result of inflationary policies which create a meaningless semblance of profits with nothing to back them up.
It also changes when you're dealing with multinationals rather than primarily domestic corporations, because multinationals can direct the benefits of their profits towards growth outside the US, which they are obviously going to do given the hostile, anti-business environment created by our current tax and regulatory policies.
We haven't been operating on Reagan's principles for 20 years, so why would we expect to enjoy their benefits?
Dave
2 - Jordan Richardson
Dave, why do you insist there's no debate over this issue when there clearly is? You also might want to be careful with your use of the word "fact," especially when what you're referencing isn't one.
3 - Dave Nalle
Jordan, I was just doing what Glenn did when he asserted that his dubious theory was established fact and immune from questioning.
Dave
4 - Glenn Contrarian
Dave -
The fact that higher corporate profits result in more employment and other benefits throughout the economy is self-evident.
Y'know, the East India Company would've loved your logic...as would the industrial barons of England's Industrial Revolution while gleefully pointing out how wonderful it was for people to have jobs in sweatshops.
It also changes when you're dealing with multinationals rather than primarily domestic corporations, because multinationals can direct the benefits of their profits towards growth outside the US, which they are obviously going to do given the hostile, anti-business environment created by our current tax and regulatory policies.
You mean the other countries where they DO pay corporate taxes as compared to here in America where corporations like Exxon and General Electric pay NO corporate taxes?
And let's not forget how the Chamber of Commerce stood strong against Obama's evil suggestion that the stimulus should not be used to buy goods and services from outside the U.S., or how the Republicans stood strong against Obama's other evil proposal to give tax BREAKS to companies for bringing jobs back to America from overseas!
Let us all marvel at the patriotism of the Chamber of Commerce and the Republican party!
5 - Glenn Contrarian
...and you really think it isn't an established fact that the rich got much richer while the rest of us saw little or no improvement as a whole during the Bush years?
I gave references showing the proof...so how about you disproving my references.
6 - Cindy
...which they are obviously going to do given the hostile, anti-business environment created by our current tax and regulatory policies.
I think Dave and his ilk have gone 'round the bend..."hostile??????"
The tax rate had been reduced by Bush. Where are the jobs? Wouldn't an improved economy have already been in evidence, if all your BS (cult-think) were to be believed?
I suppose 'friendly', as opposed to 'hostile', would have everyone here competing for under a dollar a day.
7 - Cindy
which they are obviously going to do given the hostile, anti-business environment created by our current tax and regulatory policies.
Fake profits vs real profits?????? WTF kind of make-up junk is this? Are you for real or for fake?
8 - Joseph Cotto
Glenn, as you must know, when all is said and done, the only alternative to trickle down wealth is trickle up poverty. This has been seen in every country which has instituted a command, or heavily mixed, economy. While free enterprise does not in any way guarantee that milk and honey shall flow from the springs and down the River of Life for all to enjoy on an equal basis, it does, at the very least, provide all with the chance to attain financial success. That is good enough for me, and was good enough for our ancestors as well as the hundreds of millions of other immigrants which strived to become United States citizens over the centuries. Perhaps, before you inevitably go off on your next anti-capitalist screed, the alternative to the economic system which we currently enjoy should be considered. I am confident that you will find the grass is not at all greener on the other side.
9 - Glenn Contrarian
Um...Joseph -
Look at ALL the first-world industrialized countries of the world. How many of them work on 'trickle-down' economics? Zero...unless you count America which started going down the path of Reaganomics thirty years ago.
Look at all the great economies. China doesn't count - they're largely still a third-world country (and more capitalist than we are). Every single one of the first-world industrialized countries of the world - the British Commonwealth and the EU, Japan, South Korea, and us - ALL have social safety nets not found in third-world countries wracked by poverty.
Furthermore, you'll find that of all the first-world countries to which I refer, ALL of them have a greater tax burden on their wealthiest citizens than does the U.S., and NONE of them have as great a disparity between the highest-paid and their lowest-paid in their corporations as does the U.S., and NONE of them have such a gap as we do between our richest and poorest.
But you know what? There are countries in the world that DO have as great a disparity between their richest and poorest - they're ALL third-world countries.
In other words, Mr. Cotto, you have a choice: you can go on supporting policies that are found in third-world countries but NOT in first-world countries...or you can support policies that are found in first-world countries but NOT in third-world countries.
(Clavos - time for you to trot out your false argument again)
10 - Doug Hunter
By world standards, America is the "rich" and capitalism/free trade is leveling the playing field between us and developing nations, our wealth is trickling down to China/India/etc exactly as theorized. Normally those are things leftists could be proud of, the problem is they didn't get to control the trickle, to take the money themselves and distribute it to their groups, buy their votes, and build their political power. Also, capitalist wealth tends to trickle down to the hard working, the educated, and the entrepeneurs, not the welfare class which is what many of their favorite stats measure, income inequality for example.
*In case you weren't aware the bottom quintile is made up mostly of single parents, the elderly, and others who don't work while the upper quintile is made mostly of two earner families in their 50's. When looked at over time a critical thinker would wonder if the change in family structure, the increase in single parent low earning households and the increase in dual earners at the top had anything to do with the changes over time. Non critical thinkers just look at the big shiny graph, think the world is unfair, and pull the Democrat lever. Me, I'm not sure what the exact difference in income should be between a single person not working and likely living on government benefits (that aren't counted in order to make the disparity look worse) and a successful couple both working in their prime earnings years. In fact, both measures could be the same person at different points in their life.
Otherwise, the rest of the article is the usual links to cherrypicked stats and garbage propaganda repackaged and spread by the drones (of which Glenn is a fine example) who haven't had an original thought since Marx.
11 - Glenn Contrarian
Okay, Doug -
Name a first-world industrialized country that doesn't have the kind of government-run social safety net that conservatives hate.
Just one, that's all I ask.
12 - Doug Hunter
#9
Glenn, poor nations are a pitiful analogy much like using tribes to critique socialism or communism... it's apples and oranges. You can't have social services without money, period. That fact does nothing to bolster your argument for or against capitalism in a developed country. (except of course that capitalism has the best track record of making a poor country rich so they can become part of the debate).
I associate capitalist ideas and mentality with growth and progress while socialism is focused on comfort and security. European nations have indeed built systems to make their populations more comfortable and secure in some ways, at the same time the US built systems like... computers and the internet, food production that allowed the world (including those poor countries you claim to care about) to feed it's growing population, a large share of medical technology, etc.
13 - Doug Hunter
#11
When you name me a single first world country who has contributed as much as we have to progress in technology, food production, and medicine as the US has in the last century that helps every human being on this planet.
When you come up with yours I'll come up with mine. Deal?
14 - Doug Hunter
Wow, I should really proofread before I post, #13 was horrible awkward and repetitive in it's wording. You get the point anyway.
15 - Glenn Contrarian
Doug -
You can't have social services without money, period. That fact does nothing to bolster your argument for or against capitalism in a developed country. (except of course that capitalism has the best track record of making a poor country rich so they can become part of the debate).
Ah - so the country becomes rich FIRST and THEN they start providing a social safety net. Is that what you're saying?
Let's give you the benefit of the doubt - then you should be able, then, to easily point out a modern, first-world industrialized country that became rich and stayed rich without ever providing a social safety net.
And to answer #11, that's not as telling as you may think...because America has had a good social safety net from the late 1930's until now, despite all the obvious flaws of said net. It's called 'Social Security'.
16 - Arch Conservative
Why do you guys even bother with Glenn?
17 - Dan
I want profitable corporations, I've invested much of my hard earned savings from working at the sawmill in corporate equities.
18 - Dan(Miller)
Glen,
Assume for the moment that you are the Chief Executive Officer of Amalgamated Widgets, Inc., a publicly traded top ten manufacturer of widgets and other things in the United States. Your company has been reasonably successful for the last twenty-five years and you have some profits in hand; you could spend them on new plant facilities and on hiring and training perhaps several hundred more employees. Let's further assume that you would like to do those things because you are and want to be seen as a good, socially responsible, CEO.
You are well aware of the business uncertainties presented by anticipated additional federal emissions control regulations -- your manufacturing processes and those of your suppliers emit carbon dioxide and you haven't the foggiest notion whether or to what extent they are likely to be limited further. The answers which seem to be blowing in the wind are scary. Your employee medical insurance rates and the regulatory burdens associated with health care have both increased and a waiver has yet to be granted. You are also concerned about "card check" legislation/regulations.
There are also concerns about the impact of economic problems in other countries, since about thirty percent of your widgets are exported and thirty-five percent of the supplies your company needs are imported. There are other international concerns as well: will there be increased upsets over Israel and the Palestinians? Has the Obama Administration played bait and switch in that theater? What about a mess brewing in Korea? How might these things affect Amalgamated Widgets, Inc. directly and, through her foreign suppliers and customers, indirectly? Your suppliers face similar problems and so do your customers. This is, in short, a period of substantial uncertainty.
Would you, as CEO, push boldly forward to expand your plant, buy new equipment and hire new employees as you in your heart desire in the face of these and other uncertainties? Would you expect your stockholders to accept that with glee? Or would you and they think it best to try to maintain the status quo for now and see what happens?
Dan(Miller)
19 - Doug Hunter
#15
I feel fairly confident that social services cost money and are more a feedback (which can indeed be positive as you would duly note) of wealth/advanced economic systems than the other way around. That's a subject too complex for a comment or to get into on a holiday weekend. We'll must agree to disagree.
20 - Glenn Contrarian
Y'know, I just thought of something this morning - if Democrats are so terrible for business, why is it that the best quarter for corporate profits in American history came when DEMOCRATS were in control of the House and the Senate, AFTER having taken over from a Republican administration in the throes of the worst economic crisis since the Depression (after having been handed a budget SURPLUS by the previous DEMOCRATIC administration).
So...if Dems are so terrible for business, how exactly did that happen? After all, if we Dems are so terrible for business, instead of having the best quarter EVER for business (and it comes after the Great Recession!), we SHOULD have been even further down the road to another depression, right?
So WHY didn't it happen the way you guys think it should've happened?
Oh - and one more thing - would any of you care to guess which president cut the deficit by the largest amount in American history? Here's a hint - his last name starts with "O". It wasn't by the largest percentage - he cut the deficit by 'only' eight percent - but it was the largest amount.
(When was the last time a Republican president cut the deficit by even one penny?)
21 - Dan(Miller)
Glen, am I to gather from your comment #20 that you would rather praise Democrats and chastise Republicans than consider what you, as a businessman regardless of party affiliation, would do in the current climate of uncertainty as noted in Comment #18? I had thought that your article was intended to deal with the idiocy of "trickle down" as shown by the failure of business to invest profits in ways likely to "trickle down" to the less fortunate. After all, you asked,
Why is it that US corporations are doing better than they ever have...but those factories are not being built and those jobs are still not being offered to Americans? Could it, might it just possibly be that Reaganomics is wrong?
Obviously, praising Democrats and criticizing Republicans is easier and probably more congenial than focusing on business realities, albeit somewhat less useful for analytical purposes. I must confess that I am somewhat naive and had hoped for something more illuminating.
Dan(Miller)
22 - Doug Hunter
Glenn, The snarky answer to your question is probably $trillions in government handouts to be repaid by our children later once those corporations move their headquarters overseas.
The serious answer is the chaotic nature of the businesses cycle. The private sector has a huge hand in this and although government policies influence it to a large extent I think you underestimate how long it takes these policies to work their way through the system and take effect. For instance, I believe the technology boom/dot com bubble of the 90's would have happened regardless of who became president in 1992 and with or without the Republican takeover of the house in 1994. The groundwork for that expansion had been laid by previous policies and the direction of industry. The free trade and housing policies that were settled on then had as much effect on our current situation as many of the actions of Bush, Obama, and the Democratic congress. Economies ebb and flow whether it's North Korea, Iraq, Germany, or the US. North Korea's growth exceeding the South's in 2008 had nothing to do with better governance, it had to do with chaotic business patterns, the same ones you try to deny exist. Government policies point your economy in a direction, but it's a damn wobbly drunk on it's way there and you never know which side of the road you'll find it on.
23 - Glenn Contrarian
Dan -
The general consensus among progressives is that America is still in the thrall of Reaganomics - and yes, we DO blame Democrats too, particularly Clinton for signing the repeal of Glass-Steagal (even though it was handed to him with by a veto-proof Republican majority backed by blue-dog DINOcrats).
The difference is that while the Democrats are trying to get Republicans to agree that Reaganomics does not work and that we should get back to a saner fiscal policy that worked quite well for forty years before Reagan, the Republicans frankly don't give a damn what we think...and I think you can agree with that statement.
Until the Democrats grow a pair and force America back into a saner economic system, we're still going to have this deregulated boom-bust cycle that brought us the 1982 recession, the 1987 S&L crisis, the 1990 recession, and the Great Recession. IMO of all the economic crises we've weathered since the advent of Reaganomics, only the dot-com boom is not a direct result of Reaganomics, of the idea that we can never have enough deregulation and tax cuts.
24 - Glenn Contrarian
Doug -
I typed comment #23 before I read your comment - and as you see, I agree that the dot-com bubble had little or nothing to do with Reaganomics. All the other economic crises since Reagan took over, however, certainly DID. Business cycles DO occasionally result in nationwide or even worldwide economic troubles...
...BUT it's a fatal error to assume that the government's policies don't have an overarching effect on the function of business as a whole. The easy proof of this is every single example of monetary deflation in history - businesses can't force deflation. ONLY the government can do that!
Conversely, only the government can tighten the money supply to control inflation. Only the government (or in our case, the Fed) can tighten or loosen interest rates for the banks to borrow money (see the LIBOR rate). Only the government can set tariffs to protect internal businesses and industries. Only the government can use tax incentives like cuts, breaks, and credits to encourage businesses to build or expand in a certain location. Only the government has enough money to invest to build infrastructure on a grand scale (see Eisenhower's Interstate Highway system, our military-industrial complex (with all its civilian spin-offs), our space program (with all the comms satellites that are CRUCIAL to everyday business)).
Perhaps most of all ONLY THE GOVERNMENT can keep the level of corruption down to where business can function well (see any third-world country). Yes, there's always corruption to some extent - but a country with a very high level of corruption is not nearly as capable in the business arena as a country with a low level of corruption (and China, as far as Asia goes, only surpasses the nations of S. Korea and Japan when it comes to corruption...but it's still largely a third-world country).
I could go on all day, Doug. Yes, the chaotic nature of business can and does sometimes bring us booms and busts...BUT whether you like it or not, the above examples prove beyond ANY reasonable doubt that the function of a nation's GOVERNMENT usually has far more to do a nation's economic health than the function of business therein.
Why? It's almost precisely like regulating traffic. The government doesn't provide the cars or the time and effort to get us back and forth to work...but the government DOES provide the roads and the traffic regulations that DO enable us to travel to and fro more quickly, more safely, than we can do otherwise...
...and I heartily invite you to the Philippines so you can see what traffic becomes when laws aren't enforced!
25 - Dan(Miller)
Glen, in what I had hoped might be a responsive comment, you say in Comment #23 nothing responsive to the question I had posed in my Comment #18. As noted in my Comment #21 soliciting a substantive response,
Obviously, praising Democrats and criticizing Republicans is easier and probably more congenial than focusing on business realities, albeit somewhat less useful for analytical purposes. I must confess that I am somewhat naive and had hoped for something more illuminating.
You did, after all, write the article. Should I give up? Or have you perhaps already answered that question?
Dan(Miller)