Piling Up the Fs

pyramid While it remains a myth that, in the United States, the period from 1945 to 1980 was marked by increasing egalitarianism, neither was it a time of sharply increasing class exploitation. Then came the Great Restoration, as the overclass decided to get tougher and to step up its political salesmanship. Making more war, jailing more criminals, privatizing everything in sight were the secondary policies. At the core, of course, was “supply-side economics,” or the assertion that providing the rich with more and more money is the key to a permanent economic boom and the best of all possible societies. The rich invest, so the richer they are, the more they’ll invest, right?

Although the corporate media are incapable of asking the question, we might do so: How is this set of claims proving out? What grade should we, the citizens, award for the ongoing experiment in letting corporate capital dictate everything to a human society?

Well, as TCT readers know, the conditions for assessment could hardly be better. The overclass has been raking in cash right throughout the past several years. And the latest results? The Associated Press reports them:

NEW YORK — So much for fears that U.S. companies might stall out in the economy’s soft patch.

Corporate profits are coming in better than expected so far in second-quarter earnings season despite concerns about the potential for trouble ahead.

“The corporate sector’s in great shape,” says Joseph LaVorgna, chief U.S. economist at Deutsche Bank.

All told, 148 companies in the Standard & Poor’s 500 index have reported earnings and 73 percent have beaten the expectations of Wall Street. That’s somewhat ahead of the typical pace of two-thirds that surpass estimates.

Companies that had reported as of Friday had $24.52 per share in operating earnings — profits before subtracting interest and tax expenses — according to S&P senior index analyst Howard Silverblatt. The record of $24.06 per share was set in the second quarter of 2007.

Coming out of the recession, corporations first reported explosive earnings growth early last year. The pace has slowed, but it’s still going. At the current rate, second-quarter earnings would be 17 percent better than a year ago.

So, on supply-side/Great Restoration theory, we are now experiencing an investment boom and full employment.

Can you say epic fail?

Purest Shit: The Ruling Ideology in 60 Seconds

John Snow With a twinkle in his eye, former neo-robber baron, safety slasher/multiple murderer, and U.S. Treasury Secretary John W. Snow tonight offered the pithiest, purest statement I’ve ever seen of the central claim of our market totalitarian overclass and its bi-partisan political puppets.

To see it, click here, navigate to the video for October 11, 2010, and view the minute from 7:40 to 8:40.

This is indeed, as Snow says, “the theory.”  It is the innermost dogma of supply-side economics, which is business investors’ unwavering self-worshiping insistence, the facts be damned.  In this context, Snow is relating it to the Federal Reserve’s policy, but “the theory” rules all spheres of economic policy in this age, the White House distinctly included.

The great point of falsity, of course, resides in the phrase “lots of people’s household wealth.”  What percentage of the population bases its spending levels on the value of stocks?  Infinitesimal, because an infinitesimal percentage owns enough stocks to matter at this level.  And the few who do?  They save and reinvest a huge share of the income gains they constantly receive.

Alas, all decrepit, outdated ruling classes have long since grown incapable of distinguishing their own circumstances and interests from those of everybody else.

Notes from the Economic Memory Hole

As this New Depression unfolds, one fascinating and important thing to watch is the degree to which our overclass believes its own bullshit, despite the many reasons — not least being what you’d think would be the most obvious lessons of not-distant history — it should know better.

The steaming heap that weighs perhaps most heavily on the Business Brain is its insistence that the rich can never be too rich, that excessive wealth accumulation by a small class of major investors can never be a problem, that workers can be over-exploited.

Michal Kelecki and John Maynard Keynes dismantled the intellectual form of this childish denial more than seven decades ago.

“Michal and John who?,” feign John Q. Sharehold III and President Hopington and his experts today.

For an excellent little piece of observation on the continuing reign of “supply-side” dogma, see Al Schumann’s excellent post on today’s SMBIVA.