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April 9, 2014

Jonathan Tobin: Why Did Kerry Lie About Israeli Blame?

Samuel G. Freedman: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Jessica Ivins: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Kim Giles: Asking for help is not weakness

Kathy Kristof and Barbara Hoch Marcus: 7 Great Growth Israeli Stocks

Matthew Mientka: How Beans, Peas, And Chickpeas Cleanse Bad Cholesterol and Lowers Risk of Heart Disease

Sabrina Bachai: 5 At-Home Treatments For Headaches

The Kosher Gourmet by Daniel Neman Have yourself a matzo ball: The secrets bubby never told you and recipes she could have never imagined

April 8, 2014

Lori Nawyn: At Your Wit's End and Back: Finding Peace

Susan B. Garland and Rachel L. Sheedy: Strategies Married Couples Can Use to Boost Benefits

David Muhlbaum: Smart Tax Deductions Non-Itemizers Can Claim

Jill Weisenberger, M.S., R.D.N., C.D.E : Before You Lose Your Mental Edge

Dana Dovey: Coffee Drinkers Rejoice! Your Cup Of Joe Can Prevent Death From Liver Disease

Chris Weller: Electric 'Thinking Cap' Puts Your Brain Power Into High Gear

The Kosher Gourmet by Marlene Parrish A gift of hazelnuts keeps giving --- for a variety of nutty recipes: Entree, side, soup, dessert

April 4, 2014

Rabbi David Gutterman: The Word for Nothing Means Everything

Charles Krauthammer: Kerry's folly, Chapter 3

Amy Peterson: A life of love: How to build lasting relationships with your children

John Ericson: Older Women: Save Your Heart, Prevent Stroke Don't Drink Diet

John Ericson: Why 50 million Americans will still have spring allergies after taking meds

Cameron Huddleston: Best and Worst Buys of April 2014

Stacy Rapacon: Great Mutual Funds for Young Investors

Sarah Boesveld: Teacher keeps promise to mail thousands of former students letters written by their past selves

The Kosher Gourmet by Sharon Thompson Anyone can make a salad, you say. But can they make a great salad? (SECRETS, TESTED TECHNIQUES + 4 RECIPES, INCLUDING DRESSINGS)

April 2, 2014

Paul Greenberg: Death and joy in the spring

Dan Barry: Should South Carolina Jews be forced to maintain this chimney built by Germans serving the Nazis?

Mayra Bitsko: Save me! An alien took over my child's personality

Frank Clayton: Get happy: 20 scientifically proven happiness activities

Susan Scutti: It's Genetic! Obesity and the 'Carb Breakdown' Gene

Lecia Bushak: Why Hand Sanitizer May Actually Harm Your Health

Stacy Rapacon: Great Funds You Can Own for $500 or Less

Cameron Huddleston: 7 Ways to Save on Home Decor

The Kosher Gourmet by Steve Petusevsky Exploring ingredients as edible-stuffed containers (TWO RECIPES + TIPS & TECHINQUES)

Jewish World Review Sept. 9, 2013 / 5 Tishrei, 5774

Making a lackluster economy self-fulfilling

By Robert J. Samuelson




http://www.JewishWorldReview.com | In the struggle between capital and labor, capital is winning -- and that's hurting the feeble economic recovery. To simplify slightly: Labor (wage-earners and consumers) can't spend; and capital (businesses and shareholders) won't spend. Without a powerful growth engine, the economy advances haltingly. I wrote about this last week from labor's perspective, but the subject deserves deeper treatment.

One way to chart the fortunes of capital and labor is to show how much of the nation's income goes to each. Labor's share is straightforward. It covers workers' wages, salaries and fringe benefits. Capital is more complicated. It includes corporate profits, the income of small businesses and professional partnerships, rents from real estate, and net interest on bank deposits, bonds and loans.

Since World War II, labor's and capital's shares of income have fluctuated within a narrow band, reports the White House Council of Economic Advisers (CEA). Prosperity boosted both groups by roughly equal proportions. In 1947, labor's share of nonfarm business income was 65 percent; in 2000, it was 63 percent. Everyone benefits when labor and capital work in tandem, not in opposition. But as I reported last week, labor's share has plunged in the past decade. In 2013, it's 57 percent. This shifts about $750 billion annually from labor to capital.

Rampant greed, howl critics. Policies favor the rich. Granted, the shift worsens economic inequality, because capital income -- dominated by profits -- is skewed toward the wealthy. But the explanation is not a simple story of unbridled greed and undue influence.

Actually, there's no universally accepted explanation. What we know is that the shift to capital is worldwide. In its study, the CEA examined 22 other advanced countries. In this group, labor's share fell from 73 percent in 1980 to 65 percent in 2011. The trend also occurs in poorer countries, including China, Turkey and Mexico, reports Timothy Taylor, managing editor of the Journal of Economic Perspectives.

"When a trend cuts across so many countries, it seems likely that the cause is something cutting across all countries, too," writes Taylor on his blog. "Looking for a 'cause' based on some policy of Republicans or Democrats in the U.S. almost certainly misses the point. The same is true of ... policies more common in Europe, or in China."

Broader theories include globalization, new technologies and weaker unions. All tend to beat down wages through intensified competition, the substitution of machines for people and the loss of bargaining power. Meanwhile, financial-market pressures have increased on companies to raise profits. Labor is getting crushed. It's not "fair," say critics.

True. But the more important effect is less visible: It dampens the recovery. Labor's shrinking share curbs consumer spending. The economy will then falter if the recipients of capital income don't offset the weakness with increased spending on buildings, equipment, research and new products. Unfortunately, this doesn't seem to be happening.

Corporate America is husbanding its profits. It invests mainly in the safest projects. From 2007 (the previous business cycle peak) to 2012, domestic corporate profits climbed 35 percent while investment in plants and equipment rose only 2.6 percent. American companies have accumulated a huge cash hoard, $1.8 trillion at the end of 2012.

A well-functioning economy is a circular process by which one person's spending becomes another person's income, which is then spent again. Today, there's a damaging disconnect between capital's rising share and its subsequent spending. So the economy sputters.

Of course, it's not literally true that labor can't spend and capital won't. In 2012, U.S. gross domestic product was $16.2 trillion; of that, $11.1 trillion was consumption spending on everything from cars to fast food. But adjusted for inflation, the increase in consumer spending was only 2.2 percent, not enough to accelerate the recovery. The economy seems stuck in a self-defeating cycle: Weak consumer spending rationalizes weak investment spending; this keeps economic growth low and unemployment high, while putting downward pressure on labor's income share.

We need to break this cycle. It's possible. The gradual reduction in unemployment and improvement in housing might tip the economy into faster growth. But August's mediocre employment report (only 169,000 jobs added) emphasized the grounds for skepticism. Consumer spending and business investment represent about 80 percent of the economy. The rest is housing investment, government spending and net exports. Each of these also faces problems. In housing, mortgage lending standards have tightened. Government grapples with long-term budget deficits. Exports suffer from sluggish growth abroad.

What would improve the odds is more exuberance from the custodians of capital. CEOs seem content to sit on their profits and invest only when the needs and the returns are indisputable. Careless capital, which fostered the financial crisis, has given way to ultra-cautious capital, which is making a lackluster economy self-fulfilling.

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Comment on Robert J. Samuelson's column by clicking here.



09/05/13: The 'war weary' myth
08/29/13: Instead of fixing 'economic disparities', the administration's moves have killed off what was left of the post-WWII jobs compact
08/29/13: Pop goes the emerging-market bubble
08/26/13: Why Obama's delaying Fed pick is continuing to damage America
08/22/13: Revealed! The one fact the administration doesn't want you to know about the economy's stubborn sluggishness
08/19/13: From bubble to bottleneck: The unintended side effects of other government policies
08/15/13: A better, brighter America? We're defining prosperity down
08/12/13: The news isn't free
08/08/13: ObamaCare has already caused health care cost growth to slow?
08/25/11: Inflation is the answer?
08/09/11: The big danger is Europe
07/27/11: Why are we in this debt fix? It's the elderly, stupid
07/25/11: Postwar Pillars Of Capitalism Are Crumbling
01/27/11: How Obama's speech muddied the budget debate
01/24/11: China's new world order demands stronger U.S. response
10/18/10: What's left in the Fed's toolbox?
10/11/10: The Age of Austerity
09/20/10: The ritual of sound-bite economics
08/09/10: America's parent trap
08/02/10: Hope for our energy future
07/29/10: Why CEOs aren't hiring
06/07/10: Duped by success
05/31/10: Why Obama's poverty rate measure misleads
05/17/10: Wake up, America
03/22/10: The maestro's misconceptions
03/15/10: Obama's illusions of cost-control
01/14/10: In the aftermath of the Great Recession
12/29/09: Democracy's demolition derby
11/30/09: Bipartisan threats against the institution that saved America from depression
09/14/09: Give It to Us Straight
09/07/09: Bad Future for Jobs?
08/24/09: A Rail Boondoggle, Moving at High
08/10/09: Championing the Status Quo
08/03/09: We'll remain in denial, prisoners of wishful thinking, until the fateful reckoning arrives in the unimagined future
07/27/09: Obama's misleading medicine
07/13/09: Americans' self-indulgence hurts us
07/06/09: Economists out to lunch
06/29/09: Panics ‘R’ Us!
06/08/09: Flirting with deflation or inflation? Now the economy might be at risk of both
05/25/09: A ‘crisis’ America needs
05/18/09: Will somebody finally say that Obama is irresponsibly mortgaging our future?
05/04/09: The Bias Against Oil And Gas
04/27/09: Environmentalists maximize the dangers of global warming while pretending we can conquer it at virtually no cost
04/20/09: Our Depression Obsession
03/23/09: Geithner treads a line between financial paralysis and populist resentment
03/23/09: American Capitalism Besieged
01/06/09: The limits of pump priming
12/29/08: Humbled By Our Ignorance
07/31/08: The homeownership obsession
07/24/08: A Depression? Hardly
07/17/08: Why isn't globalization making the interconnected world more stable?



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