[PEN-L:28317] RE: Options spin....

["Devine, James" <jdevine@xxxxxxx>]

Title: RE: Options spin....

It should be recognized that a lot of the efforts by US capitalists to cut costs by cutting wages and raising productivity did not actually end up causing higher profit rates. Some of this is because the bloated salaries of the CEOs were not counted as profits, but some of this is because of competition from capitalists elsewhere in the world, which became more intense in the late 1990s as the value of the dollar soared. So the rate of profit started falling in 1997.

The relatively low unemployment rates of the late 1990s also made it harder to cut wages, so that the bosses couldn't compensate for the increased competition. The high dollar meant cheap imports, keeping the cost of living from rising. So, for a brief shining moment, there were real wage increases and poverty decreases. BUSINESS WEEK's (i.e., Michael Mandel's) stuff about the boom benefiting workers is partly based on the dates he chose for making comparisons.

The problem is that this "good news for the workers" was based on an unsustainably high dollar, which corresponded to the current account deficit and steeply increasing US debt to the rest of the world. As the dollar falls, a lot of this is going away. The recession will make it difficult to resist wage cuts at the same time that prices will rise (as imports become more expensive and export-competition weakens so that US companies can raise prices again). Our friends in power will try to get us to pay the debt service.

Ironically, it may not help the profit rate, which will likely be kept down by unused capacity and the effects of past over-investment (as in fiber optics).

Jim Devine jdevine@xxxxxxx &  http://bellarmine.lmu.edu/~jdevine

> -----Original Message-----
> From: joanna bujes [mailto:joanna.bujes@xxxxxxxxxxxx]
> Sent: Monday, July 22, 2002 2:53 PM
> To: pen-l@xxxxxxxxxxxxxxxxxxx
> Subject: [PEN-L:28316] Re: Re: Options spin....
>
>
> At 05:36 PM 07/22/2002 -0400, you wrote:
> >business week had an article late last year (iirc) which said: now
> >that the recession is over [ha!], we can look back at some numbers
> >and some of the findings might surprise you. for instance, did you
> >know that [business week calculates] 99% of all the financial
> >benefit of the increase in productivity went to "workers"? bet you
> >didnt know that. worse, corporations suffered as they were unable
> >to realize the productivity (the fruits of which had to be offered
> >for free to attract customers), and later when investor confidence
> >turned against them. investors in turn found a lower rate of
> >return than the previous decade (80s) [i presume once again because
> >the "workers" made out like bandits].
>
> I wonder what they could be talking about?  Maybe it's the fact that
> electronics declined in price. You can get dvds and printers
> for apprx
> $100.00. Or maybe they're talking about the fact that the
> internet levelled
> some ground for judicious shopping. Or maybe they're
> referring to all those
> automated telephone answering algorithms we all enjoy so
> much. I don't
> know. Maybe they mean that if the chinese coolies weren't
> busting their
> socialist guts, no one in the U.S. could afford to buy a pair
> of jeans.
>
> I don't know what they're talking about.
>
> Are CEO's workers? Of course they are! They just work 500
> times harder than
> you. That's why they make so much money.
>
> Joanna
>