Inequality and its Incoherent Antecedents

Sad birthday businessman in hat

How can you be so happy when my profit margins are so puny?

For long time reader of this column (see what I did there?), this may be a bit of a repeat of earlier statements regarding the decoupling of market forces from the average impact felt by we commoners.

However, as I cast about for something new to say this week, I stumbled across two very interesting topics in my Google news feed. The first was this nugget regarding the dismal feelings of CEO’s in domestic firms regarding future developments in the economy. The second  was this piece indicating that U.S. auto sales just hit a peak that hasn’t been seen since the early 2000’s.

These articles were, at least on my feed, back-to-back… The incoherence suggested in them was starkly telling, if one knows how to read these headlines. In one, CEO’s of major corporations discuss the fear of tax increases on their corporate profits both here and abroad, while they also stare at the seemingly endless supply of news regarding slow-downs in the economies of countries around the world.

As I have mentioned before, the problem with this world view is that it has almost literally nothing to do with the experience of we plebes who eke out our existence solely in the domestic economy. Through a series of happy events, we find ourselves with a commodity price driven stimulus coupled with a stronger dollar that allows us to buy more with the money we already have. Most of us would call this an absolute good.

This is playing out on a grand scale, and motor sales are just the tip of the iceberg. Don’t believe articles, like this one, that lament the decrease in Black Friday sales… The declines noted in such articles only capture the experience of proprietors of brick-and-mortar stores. The average middle-class shopper, meanwhile – and contrary to what many a pundit seems to believe – would never drag themselves to the rushes of the holiday crowds anymore. In short, Black Friday has become a tedious free-for-all for most, which is viewed with dread rather than excitement. Most of us now utilize the series of tubes, and providers who will bring our products to us… We still get to do the value shopping, just without all the hassle or potential violence associated with it.

In today’s macroeconomic world, however (where leaders of companies often seek globalization not for the economies of scale that such efforts provide, but rather in a naked effort to avert paying for the services for which they benefit), finding out that the countries into which one has dropped untold investment dollars into were not necessarily good investments is a shocking possibility. Additionally, many companies may soon find that changes in the corporate tax code will force them to “onshore” more jobs back to the Americans from whom they were taken in the first place.

Again, this is an unadulterated good for middle income earners… If you’re one of these (and you probably are), one should look more closely to the announcements made by Fed governors, who indicate that we are almost at full employment and seeing a fairly significant rise in real wages, instead of the surveys of CEO’s who are staring into a future where they may have to hire (and pay) American workers to make products that Americans buy. While I remain more of a globalist than an isolationist, I fail to see the problem with that eventuality.

Once again, however, this divergence between the view from the top and the view from the middle illustrates the ongoing separation of the “market” from the markets. In the end, I think that this seems like a dangerous state of affairs.

About Sennoma Civitano

You can trust me. I'm a law-yuh. Oh, and I have a Master's in Public Affairs. I read books. About things.
This entry was posted in Economics, Foreign Policy, Investing, Uncategorized and tagged , , , . Bookmark the permalink.

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