Recovery- Nope Just Greed

The recovery from the aptly named Great Recession has been one of the worst recoveries in history.

Why?

American consumers, those folks who do the majority of spending in the economy are still strapped for cash. Unemployment is still high. Those who have found new job have discovered they are getting paid less. Workers are being paid less as a percentage of the economy than they have in the history of the United States.

Corporations and their owners have never had it better. Corporate profits have hit another all time high. This is in absolute dollars and as a percentage of the economy. If corporations and shareholders are making so much money why does the economy suck?

The easy answer is that the employees of one company are the customers of another. We save almost nothing, spending what we earn. Every dollar employees earn in wages gets spent on another company's products. The less companies pay their employees the less they have to spend. The less consumers have to spend the weaker the overall economy. There is no rule that says companies have to maximize profits to please their owners. The longer corporations and their shareholders take an every increasing share of the profits for themselves the longer the economy will be slow.

Corporate profit margins are at an all time high. This means that companies are making more per dollar of sales than ever in the past. The slow economy is not a result of over taxation or regulation. It is the obsession with short term profit over long term value creation.

Wages as a percentage of the economy hit another all time low. Why are profits so high? There are several reasons but one is that companies are paying employees less as a share of GPD. Porfit obsession is starving the economy and slowing the recovery.

I am not advocating wealth redistribution here. I am just saying that those who provide the labor will lift the economy up if they are paid a fair wage for their labor. It isn't what is happening now. Those who claimed that trickle down economics worked should be trying to explain how that has been effective over the last few years. Where are those job creators they were talking about? Clearly if you look at the data they have the funds. Where are the jobs?

Tomorrow we will look at a company with a completely different approach. Maybe it has a better idea about how things should be done?