Tuesday, December 14, 2010

What is wrong with this picture?

Robert Reich, former Secretary of Labor has been speaking about two economies on his blog.

If you were to walk into a classroom and see 100 students. And let's say 98 of those students are unable to keep up, their grades falling farther and farther behind, GPA dropping, struggling to get a grip on the course work. But, 2 of those students are getting all the instructor's attention they want or need, they have the textbooks they need to excel beyond grade level. Without the burden of the other 98 students, they are completing more and more work, getting farther and farther ahead. Making it less and less likely that the lower 98 will ever catch up.

What might be your initial assessment of the the problem? It probably wouldn't be that the lower 98 are all just lazy. And, it probably wouldn't be that some kids just naturally rise to the top and the two getting all the classroom resources are just more deserving of it.

You probably would think that something was a bit out of whak. The 2 lucky top students may well have been the brightest kids in the class. Catering to them might have given the quickest rewards to the teacher. They may have been the easiest to serve and work with. Initially, there might have only been a few grade points between the upper 2 and that of the lower 98, but over time, the neglect added up, took its toll and now it seems like you have two different classrooms of different kinds of students.

That might be a strained analogy for where our economy is right now, but when you look at the details, it isn't too far off.

We have two separate economies that have grown farther and farther apart. And, you can not just attribute it to the productive and entrepreneurial members at the top just being better at what they do.

If we all were experiencing the same economy, you would expect most participants to experience a similar rise and fall of fortune. Those at the higher end may see greater spoils, those at the lower end less. But, it would generally trend in similar directions. We are not seeing that at all. The 2% at the top are seeing fantastic growth and fortune. Everyone else is sinking just a little bit closer to flunking out.

Good news?

The Commerce Department just released a report that said U.S Corporate Profits Were the Highest on Record Last Quarter. Highest ever. The highest since they began keeping records 60 years ago.

That is great! Right? U.S. Businesses are doing fantastic. You know what that means, people who work for those companies get more. Well, maybe not all of the people who work there, but the executives do. Yes, executive bonuses are up too! That's good, right? That money goes right back into the economy. A rising tide lifts all boats you know. Except that tide seems to just be lifting the stock market economy. But that is good, right? Except for some reason everybody on this side had to pull their money out of the stock market to pay their bills. But at least Wall Street is getting a boost. Wall street bonuses are expected to rise 5% this year. Your bonus went up 5% this year, right?

Have you ever heard the phrase: "We'll, I've never worked for a poor man". There are more and more poor men out there and less and less rich bosses. Maybe that is why there are more and more people without work.

Something is really out of whak here. It almost seems like the top 2 percent and the rest of us are playing by different rules. And the teacher can't be blind to this. Can she?

What is wrong with this picture?

No comments: