During This Job Scarce Recovery Corporations Spend Their Hoarded Cash Buying Back Stock

February 27th, 2012

Nelson D. Schwartz, of the New York Times, in a great article from November 21st, 2011, examined the strange and awful spectacle of a jobless recovery, fueled by corporations spending their mountains of hoarded cash on buying back their own stock. If even a percentage of this cash was aimed at hiring workers and committing to a variety of green industries, infrastructure construction, or a host of publicly beneficial and profitable efforts, we might be looking at unemployment numbers substantially lower than they currently appear. But that might entail some effort and risk. Why bother when unbounded greed is so easily satisfied?

Of course this would also look better for President Obama and the Democrats this election year. Since the goal of the GOP and their corporate supporters is to see anybody other than President Obama elected - this grossly greedy and socially wasteful misuse of corporate profits will continue. This of course goes hand in hand with the sudden meteroic rise in gas prices. Funny how that always seems to happen as a Democrat heads for re-election.

Carl Ginsburg, who has graciously joined our Advisory Board, writing in CounterPunch, details another fascinating angle on this topic and brings in the ridiculousness of Charles Murray's recent book on the decline of white America. Many thanks to Carl for writing this piece and letting us use it here.

"Tells the Facts and Names the Names"
Edited by Alexander Cockburn and Jeffrey St. Clair
Blaming the Poor
Yes, It's Charles Murray, Singing for his Supper
By Carl Ginsburg
There are many weapons in the public relations arsenal of the 1 per cent. An old stand-by in that stockpile is to fault "the family," a predictable verbal assault invoked to shift the debate away from the gross pocket-stuffing that defines our time. As poverty and inequality engulf America today - the greatest transfer of wealth upward in the nation's history - a new barrage of insults is aimed at those most in distress, with claims of floundering family values, failed responsibility, cultural shortcomings, and the like.
   These assaults are now being given prominent play on the battlefronts of the media. From Charles Murray, always the good soldier, ensconced in his ideological bunker at the American Enterprise Institute, arrives a new book, Coming Apart: The State of White America, 1960-2010. It describes income inequality as "more of a symptom than a cause."  Murray is quoted in the New York Times as saying, "When the economy recovers, you'll still see all these problems persisting for reasons that have nothing to do with money and everything to do with culture."  
   In the New York Times, Nicholas Kristof bemoans the "eclipse of traditional family patterns." He says that a "chunk of working-class America risks being calcified into an underclass, marked by drugs, despair, family decline, incarceration rates, and a diminishing role of jobs and education." Referring to Daniel Patrick Moynihan's incendiary 1965 report on black families, Kristof concludes, "Moynihan was right to sound the alarms."
"The situation is independent of outside influence and has to be dealt with from within," Moynihan told an interviewer in 1984, reflecting on his 1965 report. "It is beyond economics."
    Beyond economics? Cash hoarding is up. Way up. U.S. companies are now sitting on $2 trillion in cash, much of it being used in stock buybacks and executive bonuses, making the 1 per cent even richer. But you won't see those weapons - notions of failed responsibility, cultural shortcomings and moral bankruptcy - targeted at the super-elites. Instead, we are told that sitting on this essential capital derives from a failure of "confidence" in consumers - whose wages and buying power are stagnant. One more grand obfuscation in the class war. Never mind that some of that cash hoard comes from U.S. taxpayers - more than $130 billion remains to be repaid from the financial bailout, according to a report of the special inspector general.
   Turns out family values are just the cover for an assault on family assets. As more and more people lose their homes to foreclosure, the aspiring are taking financial advantage in many places, such as Atlanta, where government subsidies for landlords are now to be captured. This is expected to be the worst in recent years for families facing foreclosure. The backlog of properties to be processed, by some estimates may run as high as 10 million additional residences to come on the auction block. Properties for a song and rents for a chorus - you gotta live somewhere.   
   Much of the 1 per cent steers its growing wealth into financial instruments, seeking double-digit returns. Private equity firms, where minimum buy-ins in eight digits are common, continue to hit high returns for those very responsible investors. One company alone, Apple, holds $100 billion in reserve.  
   Marching in lockstep with the cash hoarding comes wage discipline, a well used weapon of the 1 per cent. Today, close to 45 per cent of food stamp recipients are working adults, as taxpayers continue to foot the bill for the substandard wages of business: why exactly is taxpayer money needed to supplement wages? As Les Leopold argues persuasively in The Looting of America,for the last half-century productivity increases in the workplace have gone to owners, not even shared with the workforce. Had wages kept paced with worker productivity, estimates Leopold, average worker pay would be $16 per hour higher. "Nearly all of it was snatched up by the owners of capital," he writes.
   The warriors of profit are driving forward on all fronts, "diving into a wide range of riskier assets: emerging countries' stocks and bonds; real estate; ... commodity funds; fine art; private-equity funds, which buy stakes in nonpublic companies," Leopold writes.  
In 2010, according to a Centers for Disease Control study, the percentage of American women being screened for breast and cervical cancers declined. The upshot of this offensive carried out by and for the 1 per cent meant that fewer American women had the resources to undergo cancer checks. "[T]here is good evidence," wrote the New York Times, "that ... screening for these cancers can reduce illness and save lives."  
   Even with guns to their heads, you would have trouble convincing unemployed young people, those 18-24 years old, that their plight is "beyond economics." Their employment has dropped to 54.3 per cent, the lowest level since the government began tracking this data in 1948. And for those in this age group who are employed, there has been a 6 per cent decline in median weekly earnings since 2007. The minimum wage in New York State is still $7.25 an hour in 2012. "Beyond economics"? More than one out of six children live in a household with food insecurity, which means they do not always know where they will find their next meal. According to the U.S. Department of Agriculture report, 16.2 million children under 18 in the U.S.A. live in this condition - unable to consistently access nutritious and adequate amounts of food necessary for a healthy life. Is this what constitutes "independent of outside influence"?
   "Persistent poverty is America's great moral challenge, but it's far more than that," fired off Kristof at those already riddled by poverty in his Times piece. The war on poor people soldiers on.  CP
Carl Ginsburg is on the staff of National Nurses United. You can learn more about the activities of the nurses union at www.protestintheusa.org.