Friday, July 08, 2011 6:29:29 AM
GOP demands for corporate giveaways cost schools, safety
The Rachel Maddow Show [video]
July 6, 2011
Senator Chuck Schumer, member of the Senate Committee on Finance, talks with Rachel Maddow about what Americans have to give up to be able to afford tax cuts and subsidies for corporations.
===
Corporate Cash Con
By PAUL KRUGMAN
Published: July 3, 2011
Watching the evolution of economic discussion in Washington over the past couple of years has been a disheartening experience. Month by month, the discourse has gotten more primitive; with stunning speed, the lessons of the 2008 financial crisis have been forgotten, and the very ideas that got us into the crisis — regulation is always bad, what’s good for the bankers is good for America, tax cuts are the universal elixir — have regained their hold.
And now trickle-down economics — specifically, the idea that anything that increases corporate profits is good for the economy — is making a comeback.
On the face of it, this seems bizarre. Over the last two years profits have soared while unemployment has remained disastrously high. Why should anyone believe that handing even more money to corporations, no strings attached, would lead to faster job creation?
Nonetheless, trickle-down is clearly on the ascendant — and even some Democrats are buying into it. What am I talking about? Consider first the arguments Republicans are using to defend outrageous tax loopholes. How can people simultaneously demand savage cuts in Medicare and Medicaid and defend special tax breaks favoring hedge fund managers and owners of corporate jets?
Well, here’s what a spokesman for Eric Cantor, the House majority leader, told Greg Sargent [ http://www.washingtonpost.com/blogs/plum-line/post/happy-hour-roundup/2011/03/03/AGALT6nH_blog.html ] of The Washington Post: “You can’t help the wage earner by taxing the wage payer offering a job.” He went on to imply, disingenuously, that the tax breaks at issue mainly help small businesses (they’re actually mainly for big corporations). But the basic argument was that anything that leaves more money in the hands of corporations will mean more jobs. That is, it’s pure trickle-down.
And then there’s the repatriation issue.
U.S. corporations are supposed to pay taxes on the profits of their overseas subsidiaries — but only when those profits are transferred back to the parent company. Now there’s a move afoot — driven, of course, by a major lobbying campaign — to offer an amnesty under which companies could move funds back while paying hardly any taxes. And even some Democrats are supporting this idea, claiming that it would create jobs.
As opponents of this plan point out, we’ve already seen this movie: A similar tax holiday was offered in 2004, with a similar sales pitch. And it was a total failure. Companies did indeed take advantage of the amnesty to move a lot of money back to the United States. But they used that money to pay dividends, pay down debt, buy up other companies, buy back their own stock — pretty much everything except increasing investment and creating jobs. Indeed, there’s no evidence that the 2004 tax holiday did anything at all to stimulate the economy.
What the tax holiday did do, however, was give big corporations a chance to avoid paying taxes, because they would eventually have repatriated, and paid taxes on, much of the money they brought in under the amnesty. And it also gave these companies an incentive to move even more jobs overseas, since they now know that there’s a good chance that they’ll be able to bring overseas profits home nearly tax-free under future amnesties.
Yet as I said, there’s a push for a repeat of this disastrous performance. And this time around the circumstances are even worse. Think about it: How can anyone imagine that lack of corporate cash is what’s holding back recovery in America right now? After all, it’s widely understood that corporations are already sitting on large amounts of cash that they aren’t investing in their own businesses.
In fact, that idle cash has become a major conservative talking point, with right-wingers claiming that businesses are failing to invest because of political uncertainty. That’s almost surely false: the evidence strongly says that the real reason businesses are sitting on cash is lack of consumer demand. In any case, if corporations already have plenty of cash they’re not using, why would giving them a tax break that adds to this pile of cash do anything to accelerate recovery?
It wouldn’t, of course; claims that a corporate tax holiday would create jobs, or that ending the tax break for corporate jets would destroy jobs, are nonsense.
So here’s what you should answer to anyone defending big giveaways to corporations: Lack of corporate cash is not the problem facing America. Big business already has the money it needs to expand; what it lacks is a reason to expand with consumers still on the ropes and the government slashing spending.
What our economy needs is direct job creation by the government and mortgage-debt relief for stressed consumers. What it very much does not need is a transfer of billions of dollars to corporations that have no intention of hiring anyone except more lobbyists.
© 2011 The New York Times Company
http://www.nytimes.com/2011/07/04/opinion/04krugman.html [comments at http://community.nytimes.com/comments/www.nytimes.com/2011/07/04/opinion/04krugman.html ]
===
The final nail in the supply side coffin
President Ronald Reagan smiles as he poses for photographers after delivering a speech on television, in this Dec. 11, 1987 file photo.
AP/Doug Mills
The theory of supply-side economics tells us that if you cut taxes on rich people and corporations, the newly liberated moguls and businessmen will take their windfall and invest it, creating jobs and accelerating the rate of economic growth. The benefits of a light hand on the upper class, therefore, will "trickle down" to the working man and woman.
Ever since Ronald Reagan first attempted to make supply-side economics a reality and proceeded to inaugurate an era of persistent government deficits and growing income inequality, it has become harder and harder to make the trickle-down argument with a straight face. But we've never seen anything quite like the disaster that's playing out right now.
The Wall Street Journal reported on Tuesday that corporate profits are looking quite strong [ http://online.wsj.com/article/SB10001424052702304760604576426153929429820.html ] for the second quarter of 2011. Even the Journal can't sugarcoat the basic facts:
While the U.S. economy staggers through one of its slowest recoveries since the Great Depression, American companies are poised to report strong earnings for the second quarter -- exposing a dichotomy between corporate performance and the overall health of the economy.
But that's just the tip of the nightmare. A newly released study from the Center of Labor Market Studies at Northeastern University, "The 'Jobless and Wageless' Recovery From the Great Recession of 2007- 2009 [ http://www.clms.neu.edu/publication/documents/Revised_Corporate_Report_May_27th.pdf ]," lays out some extraordinary statistics. (Hat tip: The Curious Capitalist [ http://curiouscapitalist.blogs.time.com/2011/07/05/hello-corporate-profits-goodbye-worker-pay/ ].)
In the first quarter of 2011, aggregate U.S. GDP -- the total value of all the goods and services produced in the United States -- was higher than the peak reached before the recession began in 2007. During the six quarters since the recession technically ended in the second quarter of 2009, real national income in the U.S. increased by $528 billion. But the vast majority of that income was captured as profit by corporations that failed to pass on their happy fortunes to their workers.
Over this six quarter period, corporate profits captured 88% of the growth in real national income while aggregate wages and salaries accounted for only slightly more than 1% of the growth in real national income. The extraordinarily high share of national income (88%) received by corporate profits was by far the highest in the past five recoveries from national recessions ... In the first six quarters of recovery from the 1990-91 recession, corporate profits experienced no growth whatsoever, and they generated on average only 30 per cent of national income growth during the recoveries from the 1981-82 and 1973-75 recessions.
What makes this "recovery" so different? Perhaps the simplest answer is that labor has been broken as a force that can put pressure on management, so there's little incentive for employers to turn profits into wage hikes or new jobs. Instead, employers are squeezing more out of the workers that they've got, and investing in equipment upgrades and new technology instead of human assets -- labor productivity has risen sharply since the end of the recession.
Globalization also plays a potent role -- and not just as a source of cheap labor to undermine the bargaining power of American workers. The Journal notes that many companies "are benefiting from demand from emerging markets, where they are deriving an increasing share of their sales." Job creation is probably following the sources of new demand. If the Chinese and Brazilians and Indians are the ones buying American goods and services, then it makes sense to staff up overseas. But with American consumers still shellshocked by the economic crash and dutifully obsessed with paying down their debts while trying to hold on to their homes, domestic demand is hardly a force to be catered to.
Wages are moribund, unemployment is stuck at 9 percent, and the corporate bottom line is doing just fine. You could be excused for thinking that if ever there was time to put the stake through supply-side economics, it would be now. Wall Street and big corporations are doing just fine, but absolutely nothing is trickling down. And yet Republicans are still pushing the same old song and dance, passionately holding the entire creditworthiness of the United States hostage in return for even lower taxes on corporations, adamantly refusing to countenance even the slightest revenue increase to help cushion the hard times for the Americans who are getting a raw deal out of the current recovery.
Democrats come in for their share of the blame, too. The worst economic recovery for American workers in history has happened on Obama's watch, and he appears remarkably oblivious to it. He may live to regret this oversight.
Copyright ©2011 Salon Media Group, Inc.
http://www.salon.com/technology/how_the_world_works/2011/07/06/the_final_nail_in_the_supply_side_coffin/index.html [comments at http://letters.salon.com/tech/htww/2011/07/06/the_final_nail_in_the_supply_side_coffin/view/?show=all ]
===
America’s Apple economy widens the winner-loser gap
beta.images.theglobeandmail.com/archive/01273/SIN710-APPLE_BR_1273448cl-3.jpg
CHRYSTIA FREELAND
From Friday's Globe and Mail
Published Thursday, Jun. 30, 2011 6:39PM EDT
Last updated Thursday, Jun. 30, 2011 6:41PM EDT
ASPEN, COLO.— Once upon a time, the car was the key to understanding the U.S. economy. Then it was the family home. Nowadays, it is any device created by Steve Jobs. Call it the Apple economy, and if you can figure out how it works, you will have a good handle on how technology and globalization are redistributing money and jobs around the world.
That was the epiphany of Greg Linden, Jason Dedrick and Kenneth Kraemer, a troika of scholars who have made a careful study in a pair of recent papers of how the iPod has created jobs and profits around the world. The latest paper, “Innovation and Job Creation in a Global Economy: The Case of Apple’s iPod,” was published last month in The Journal of International Commerce and Economics.
One of their findings is that in 2006, the iPod employed nearly twice as many people outside the United States as it did in the country where it was invented – 13,920 in the United States and 27,250 abroad.
You probably aren’t surprised by that result, but if you are American, you should be a little worried. That is because Apple is the quintessential example of the Yankee magic that everyone from Barack Obama to Michele Bachmann insists will pull America out of its job crisis – the remarkable ability to produce innovators and entrepreneurs. But today, those thinkers and tinkerers turn out to be more effective drivers of job growth outside the United States than they are at home.
You don’t need to read the iPod study to know that a lot of those overseas workers are in China. But, given how large China currently looms in the U.S. psyche, it is worth noting that fewer than half of the foreign iPod jobs – 12,270 – are in the Middle Kingdom. An additional 4,750 are in the Philippines, which, with a population of just 102 million compared with China’s 1.3 billion, has in relative terms been a much bigger beneficiary of Mr. Jobs’s genius.
This is a point worth underscoring, because some American pundits and politicians like to blame their country’s economic woes on China’s undervalued currency and its strategy of export-led growth. In the case of the Apple economy, that is less than half the story.
Now come what might be the surprises. The first is that even though most of the iPod jobs are outside the United States, the lion’s share of the iPod salaries are in America. Those 13,920 American workers earned nearly $750-million (U.S.). By contrast, the 27,250 non-American Apple employees took home less than $320-million.
That disparity is even more significant when you look at the composition of America’s iPod work force. More than half the U.S. jobs – 7,789 – went to retail and other non-professional workers, like office support staff and freight and distribution workers. But those workers earned just $220-million.
The big winners from Apple’s innovation were the 6,101 engineers and other professional workers in the United States who made more than $525-million. That’s more than double what the U.S. non-professionals made, and significantly more than the total earnings of all of Apple’s foreign employees.
Here in microcosm is why America is so ambivalent about globalization and the technology revolution. The populist fear that even America’s most brilliant innovations are creating more jobs abroad than they are at home is clearly true. In fact, the reality may be even grimmer than the Tea Party realizes, since more than half the American iPod jobs are relatively poorly paid and low-skilled.
But America has winners, too: the engineers and other American professionals who work for Apple, whose healthy paycheques are partly due to the bottom-line benefit the company gains from cheap foreign labour. Apple’s shareholders have done even better. In the first of their pair of iPod papers, published in 2009, Mr. Linden, Mr. Dedrick and Mr. Kraemer found that the largest share of financial value created by the iPod went to Apple. Even though the devices are made in China, the financial value added there is “very low.”
These contradictions of the Apple economy help to explain the defining paradox of the Aspen Ideas Festival this week, an annual gathering of business people, politicians and writers in the Colorado Rockies.
On one hand, the assembled cognoscenti took a rather bleak view of the U.S. economy. Justin Wolfers, an economist at the Wharton School at the University of Pennsylvania, captured the collective concern when he told me America was already halfway through a “lost decade” and warned that it was a mistake to assume that the economy would heal of its own accord.
But, in contrast with 2008, when America’s affluent were collectively terrified, the festival goers this summer are in high spirits. They should be. Keith Banks, president of U.S. Trust, the private wealth management arm of Bank of America, said that for his millionaire and billionaire clients, the recession was over.
Nor, Mr. Banks told me, were they overly worried by the lacklustre U.S. economy or Europe’s even weaker performance. That’s because the global economy over all – powered by the emerging markets – continues to grow strongly, and Mr. Banks’s American “high-net-worth individuals” are not just U.S. citizens, but global capitalists.
© Copyright 2011 The Globe and Mail Inc.
http://www.theglobeandmail.com/report-on-business/commentary/chrystia-freeland/americas-apple-economy-widens-the-winner-loser-gap/article2082436/ [comments at http://www.theglobeandmail.com/report-on-business/commentary/chrystia-freeland/americas-apple-economy-widens-the-winner-loser-gap/article2082436/comments/ ]
===
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The Rachel Maddow Show [video]
July 6, 2011
Senator Chuck Schumer, member of the Senate Committee on Finance, talks with Rachel Maddow about what Americans have to give up to be able to afford tax cuts and subsidies for corporations.
http://www.youtube.com/watch?v=lms5q3H6lfE [original at http://www.msnbc.msn.com/id/26315908/vp/43663945#43663945 ]
===
Corporate Cash Con
By PAUL KRUGMAN
Published: July 3, 2011
Watching the evolution of economic discussion in Washington over the past couple of years has been a disheartening experience. Month by month, the discourse has gotten more primitive; with stunning speed, the lessons of the 2008 financial crisis have been forgotten, and the very ideas that got us into the crisis — regulation is always bad, what’s good for the bankers is good for America, tax cuts are the universal elixir — have regained their hold.
And now trickle-down economics — specifically, the idea that anything that increases corporate profits is good for the economy — is making a comeback.
On the face of it, this seems bizarre. Over the last two years profits have soared while unemployment has remained disastrously high. Why should anyone believe that handing even more money to corporations, no strings attached, would lead to faster job creation?
Nonetheless, trickle-down is clearly on the ascendant — and even some Democrats are buying into it. What am I talking about? Consider first the arguments Republicans are using to defend outrageous tax loopholes. How can people simultaneously demand savage cuts in Medicare and Medicaid and defend special tax breaks favoring hedge fund managers and owners of corporate jets?
Well, here’s what a spokesman for Eric Cantor, the House majority leader, told Greg Sargent [ http://www.washingtonpost.com/blogs/plum-line/post/happy-hour-roundup/2011/03/03/AGALT6nH_blog.html ] of The Washington Post: “You can’t help the wage earner by taxing the wage payer offering a job.” He went on to imply, disingenuously, that the tax breaks at issue mainly help small businesses (they’re actually mainly for big corporations). But the basic argument was that anything that leaves more money in the hands of corporations will mean more jobs. That is, it’s pure trickle-down.
And then there’s the repatriation issue.
U.S. corporations are supposed to pay taxes on the profits of their overseas subsidiaries — but only when those profits are transferred back to the parent company. Now there’s a move afoot — driven, of course, by a major lobbying campaign — to offer an amnesty under which companies could move funds back while paying hardly any taxes. And even some Democrats are supporting this idea, claiming that it would create jobs.
As opponents of this plan point out, we’ve already seen this movie: A similar tax holiday was offered in 2004, with a similar sales pitch. And it was a total failure. Companies did indeed take advantage of the amnesty to move a lot of money back to the United States. But they used that money to pay dividends, pay down debt, buy up other companies, buy back their own stock — pretty much everything except increasing investment and creating jobs. Indeed, there’s no evidence that the 2004 tax holiday did anything at all to stimulate the economy.
What the tax holiday did do, however, was give big corporations a chance to avoid paying taxes, because they would eventually have repatriated, and paid taxes on, much of the money they brought in under the amnesty. And it also gave these companies an incentive to move even more jobs overseas, since they now know that there’s a good chance that they’ll be able to bring overseas profits home nearly tax-free under future amnesties.
Yet as I said, there’s a push for a repeat of this disastrous performance. And this time around the circumstances are even worse. Think about it: How can anyone imagine that lack of corporate cash is what’s holding back recovery in America right now? After all, it’s widely understood that corporations are already sitting on large amounts of cash that they aren’t investing in their own businesses.
In fact, that idle cash has become a major conservative talking point, with right-wingers claiming that businesses are failing to invest because of political uncertainty. That’s almost surely false: the evidence strongly says that the real reason businesses are sitting on cash is lack of consumer demand. In any case, if corporations already have plenty of cash they’re not using, why would giving them a tax break that adds to this pile of cash do anything to accelerate recovery?
It wouldn’t, of course; claims that a corporate tax holiday would create jobs, or that ending the tax break for corporate jets would destroy jobs, are nonsense.
So here’s what you should answer to anyone defending big giveaways to corporations: Lack of corporate cash is not the problem facing America. Big business already has the money it needs to expand; what it lacks is a reason to expand with consumers still on the ropes and the government slashing spending.
What our economy needs is direct job creation by the government and mortgage-debt relief for stressed consumers. What it very much does not need is a transfer of billions of dollars to corporations that have no intention of hiring anyone except more lobbyists.
© 2011 The New York Times Company
http://www.nytimes.com/2011/07/04/opinion/04krugman.html [comments at http://community.nytimes.com/comments/www.nytimes.com/2011/07/04/opinion/04krugman.html ]
===
The final nail in the supply side coffin
President Ronald Reagan smiles as he poses for photographers after delivering a speech on television, in this Dec. 11, 1987 file photo.
AP/Doug Mills
The theory of supply-side economics tells us that if you cut taxes on rich people and corporations, the newly liberated moguls and businessmen will take their windfall and invest it, creating jobs and accelerating the rate of economic growth. The benefits of a light hand on the upper class, therefore, will "trickle down" to the working man and woman.
Ever since Ronald Reagan first attempted to make supply-side economics a reality and proceeded to inaugurate an era of persistent government deficits and growing income inequality, it has become harder and harder to make the trickle-down argument with a straight face. But we've never seen anything quite like the disaster that's playing out right now.
The Wall Street Journal reported on Tuesday that corporate profits are looking quite strong [ http://online.wsj.com/article/SB10001424052702304760604576426153929429820.html ] for the second quarter of 2011. Even the Journal can't sugarcoat the basic facts:
While the U.S. economy staggers through one of its slowest recoveries since the Great Depression, American companies are poised to report strong earnings for the second quarter -- exposing a dichotomy between corporate performance and the overall health of the economy.
But that's just the tip of the nightmare. A newly released study from the Center of Labor Market Studies at Northeastern University, "The 'Jobless and Wageless' Recovery From the Great Recession of 2007- 2009 [ http://www.clms.neu.edu/publication/documents/Revised_Corporate_Report_May_27th.pdf ]," lays out some extraordinary statistics. (Hat tip: The Curious Capitalist [ http://curiouscapitalist.blogs.time.com/2011/07/05/hello-corporate-profits-goodbye-worker-pay/ ].)
In the first quarter of 2011, aggregate U.S. GDP -- the total value of all the goods and services produced in the United States -- was higher than the peak reached before the recession began in 2007. During the six quarters since the recession technically ended in the second quarter of 2009, real national income in the U.S. increased by $528 billion. But the vast majority of that income was captured as profit by corporations that failed to pass on their happy fortunes to their workers.
Over this six quarter period, corporate profits captured 88% of the growth in real national income while aggregate wages and salaries accounted for only slightly more than 1% of the growth in real national income. The extraordinarily high share of national income (88%) received by corporate profits was by far the highest in the past five recoveries from national recessions ... In the first six quarters of recovery from the 1990-91 recession, corporate profits experienced no growth whatsoever, and they generated on average only 30 per cent of national income growth during the recoveries from the 1981-82 and 1973-75 recessions.
What makes this "recovery" so different? Perhaps the simplest answer is that labor has been broken as a force that can put pressure on management, so there's little incentive for employers to turn profits into wage hikes or new jobs. Instead, employers are squeezing more out of the workers that they've got, and investing in equipment upgrades and new technology instead of human assets -- labor productivity has risen sharply since the end of the recession.
Globalization also plays a potent role -- and not just as a source of cheap labor to undermine the bargaining power of American workers. The Journal notes that many companies "are benefiting from demand from emerging markets, where they are deriving an increasing share of their sales." Job creation is probably following the sources of new demand. If the Chinese and Brazilians and Indians are the ones buying American goods and services, then it makes sense to staff up overseas. But with American consumers still shellshocked by the economic crash and dutifully obsessed with paying down their debts while trying to hold on to their homes, domestic demand is hardly a force to be catered to.
Wages are moribund, unemployment is stuck at 9 percent, and the corporate bottom line is doing just fine. You could be excused for thinking that if ever there was time to put the stake through supply-side economics, it would be now. Wall Street and big corporations are doing just fine, but absolutely nothing is trickling down. And yet Republicans are still pushing the same old song and dance, passionately holding the entire creditworthiness of the United States hostage in return for even lower taxes on corporations, adamantly refusing to countenance even the slightest revenue increase to help cushion the hard times for the Americans who are getting a raw deal out of the current recovery.
Democrats come in for their share of the blame, too. The worst economic recovery for American workers in history has happened on Obama's watch, and he appears remarkably oblivious to it. He may live to regret this oversight.
Copyright ©2011 Salon Media Group, Inc.
http://www.salon.com/technology/how_the_world_works/2011/07/06/the_final_nail_in_the_supply_side_coffin/index.html [comments at http://letters.salon.com/tech/htww/2011/07/06/the_final_nail_in_the_supply_side_coffin/view/?show=all ]
===
America’s Apple economy widens the winner-loser gap
beta.images.theglobeandmail.com/archive/01273/SIN710-APPLE_BR_1273448cl-3.jpg
CHRYSTIA FREELAND
From Friday's Globe and Mail
Published Thursday, Jun. 30, 2011 6:39PM EDT
Last updated Thursday, Jun. 30, 2011 6:41PM EDT
ASPEN, COLO.— Once upon a time, the car was the key to understanding the U.S. economy. Then it was the family home. Nowadays, it is any device created by Steve Jobs. Call it the Apple economy, and if you can figure out how it works, you will have a good handle on how technology and globalization are redistributing money and jobs around the world.
That was the epiphany of Greg Linden, Jason Dedrick and Kenneth Kraemer, a troika of scholars who have made a careful study in a pair of recent papers of how the iPod has created jobs and profits around the world. The latest paper, “Innovation and Job Creation in a Global Economy: The Case of Apple’s iPod,” was published last month in The Journal of International Commerce and Economics.
One of their findings is that in 2006, the iPod employed nearly twice as many people outside the United States as it did in the country where it was invented – 13,920 in the United States and 27,250 abroad.
You probably aren’t surprised by that result, but if you are American, you should be a little worried. That is because Apple is the quintessential example of the Yankee magic that everyone from Barack Obama to Michele Bachmann insists will pull America out of its job crisis – the remarkable ability to produce innovators and entrepreneurs. But today, those thinkers and tinkerers turn out to be more effective drivers of job growth outside the United States than they are at home.
You don’t need to read the iPod study to know that a lot of those overseas workers are in China. But, given how large China currently looms in the U.S. psyche, it is worth noting that fewer than half of the foreign iPod jobs – 12,270 – are in the Middle Kingdom. An additional 4,750 are in the Philippines, which, with a population of just 102 million compared with China’s 1.3 billion, has in relative terms been a much bigger beneficiary of Mr. Jobs’s genius.
This is a point worth underscoring, because some American pundits and politicians like to blame their country’s economic woes on China’s undervalued currency and its strategy of export-led growth. In the case of the Apple economy, that is less than half the story.
Now come what might be the surprises. The first is that even though most of the iPod jobs are outside the United States, the lion’s share of the iPod salaries are in America. Those 13,920 American workers earned nearly $750-million (U.S.). By contrast, the 27,250 non-American Apple employees took home less than $320-million.
That disparity is even more significant when you look at the composition of America’s iPod work force. More than half the U.S. jobs – 7,789 – went to retail and other non-professional workers, like office support staff and freight and distribution workers. But those workers earned just $220-million.
The big winners from Apple’s innovation were the 6,101 engineers and other professional workers in the United States who made more than $525-million. That’s more than double what the U.S. non-professionals made, and significantly more than the total earnings of all of Apple’s foreign employees.
Here in microcosm is why America is so ambivalent about globalization and the technology revolution. The populist fear that even America’s most brilliant innovations are creating more jobs abroad than they are at home is clearly true. In fact, the reality may be even grimmer than the Tea Party realizes, since more than half the American iPod jobs are relatively poorly paid and low-skilled.
But America has winners, too: the engineers and other American professionals who work for Apple, whose healthy paycheques are partly due to the bottom-line benefit the company gains from cheap foreign labour. Apple’s shareholders have done even better. In the first of their pair of iPod papers, published in 2009, Mr. Linden, Mr. Dedrick and Mr. Kraemer found that the largest share of financial value created by the iPod went to Apple. Even though the devices are made in China, the financial value added there is “very low.”
These contradictions of the Apple economy help to explain the defining paradox of the Aspen Ideas Festival this week, an annual gathering of business people, politicians and writers in the Colorado Rockies.
On one hand, the assembled cognoscenti took a rather bleak view of the U.S. economy. Justin Wolfers, an economist at the Wharton School at the University of Pennsylvania, captured the collective concern when he told me America was already halfway through a “lost decade” and warned that it was a mistake to assume that the economy would heal of its own accord.
But, in contrast with 2008, when America’s affluent were collectively terrified, the festival goers this summer are in high spirits. They should be. Keith Banks, president of U.S. Trust, the private wealth management arm of Bank of America, said that for his millionaire and billionaire clients, the recession was over.
Nor, Mr. Banks told me, were they overly worried by the lacklustre U.S. economy or Europe’s even weaker performance. That’s because the global economy over all – powered by the emerging markets – continues to grow strongly, and Mr. Banks’s American “high-net-worth individuals” are not just U.S. citizens, but global capitalists.
© Copyright 2011 The Globe and Mail Inc.
http://www.theglobeandmail.com/report-on-business/commentary/chrystia-freeland/americas-apple-economy-widens-the-winner-loser-gap/article2082436/ [comments at http://www.theglobeandmail.com/report-on-business/commentary/chrystia-freeland/americas-apple-economy-widens-the-winner-loser-gap/article2082436/comments/ ]
===
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Greensburg, KS - 5/4/07
"Eternal vigilance is the price of Liberty."
from John Philpot Curran, Speech
upon the Right of Election, 1790
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