The Real Grinch

Jared Bernstein rolls out an extensive Review of the Congressional Budget Office Report on Household Incomes. It basically states that 95% of the Households are losing out in the Income race against the top 5% of Households. Bernstein alleges that lower Income Households would have averaged a $3600 Income rise, rather than the $400 average (approximate) rise, if there had not been a $400 billion shift of Income to the upper 5% of Income Households. 63% of the Income Gain went to these 5% of high Income Households. Bernstein suggests this is unacceptable practice in a Democracy, a Thought which may be essentially true, but does not present a defensible value for Economists.

The Economist must start with the realization of the statistical Outcome, then question how that Outcome derived over the Period. Study outlined the Movement of the American economy from domestic production of Goods and Services, to outsourcing Product from foreign economies who possessed lower Production Costs. Households within the highest 5% of Incomes almost universally were involved in this transmission of Product, or had access to the Income and Profits generated in this transmission of Product. A great Share of the lower Income Households, on the other hand, had their economic fate tied to the previous domestic production; either as high-paying domestic production Jobs, or Income deriving from domestic production. It would seem that the general run of Households need to become involved in the transmission process of foreign Goods and Services.

Does this seem like an effective program? Well, it isn’t! This general Transmission sector is already overfilled with Employees, Investors, and Businesses. The sector is beginning to shed excess capacity by labor reductions, low Profits, and low Sales. This Discard is being helped by the weakening Dollar, which makes Imports increase in Price, cuts Profits generated in Dollars less valuable, and propels much higher Production Costs for Transport industries. The Federal policy to weaken the Dollar by shipping American debt Overseas is only the Tip of the Iceberg; the real value loss comes in the reduced Productivity of American labor in real terms, who have ceased Production for their own maintenance. The economy, luckily, is Self-Correcting, and eventually the American Dollar will weaken to the point that foreign production for the American market will not produce an effective Profit; thereafter, Americans will have to go back to provision of their own Sustenance. lgl