Bill Totten's Weblog

Sunday, March 13, 2005

President Bush and the Gilded Age

by Yoshi Tsurumi, Professor of International Business,
Baruch College, the City University of New York

Japanese Institute of Global Communications (March 01 2004)

First published in Scarsdale Inquirer (February 26 2004)

Something really strange has happened to the US under the Bush Administration. With our ever bulging budget deficits and foreign debts, our skewed income distribution is rapidly making the US resemble Argentina or Mexico. The "jobless recovery" is not a political mirage, but a serious problem. Our GDP is increasing at an annual rate of about four percent this year. But only those Wall Street "money gamers" and self-dealing "management aristocrats" of Corporate America are dizzy with their huge bonuses, padded salaries, and self-dealt stock options. The remaining hard working Americans cannot eat "GDP". We have widening income gap between a few "haves" and many "have-nots".

During the last economic recovery period of March 1991 to April 1993, a ten percent increase in GDP increased manufacturing jobs and service jobs 3% and 5.9% respectively. However, for the present economic recovery since November 2001, a ten percent increase in GDP is increasing manufacturing and service jobs only 0.7% and 0.9% respectively. Just to keep up with our population growth, the US needs to create about 230,000 jobs a month. If we want to employ the three million unemployed workers thrown out of work under the Bush Administration, we would have to create a lot more jobs monthly. Last month, however, the US only created 115,000 jobs.

The unemployment rate of January this year was 5.6%, dipping only 0.1 percentage point. President Bush hailed it as the "unemployment declines for four months in a row". In reality, however, we have had four months of consecutive decline in the unemployment rate because so many formerly "unemployed" became too discouraged to keep seeking jobs and were
eliminated from the unemployment statistics. We have over five million part-time job holders who want full time jobs but cannot find them. In addition, we have eight million persons who have had to settle for full time jobs paying far less than their previous jobs. The "jobless recovery" and the widening income gaps are aggravated by massive migrations of good paying manufacturing and service jobs abroad. Such migrations have been accelerated by President Bush's misguided tax cuts.

At Harvard Business School, thirty years ago, George Bush was a student of mine. I still vividly remember him. In my class, he declared that "people are poor because they are lazy". He was opposed to labor unions, social security, environmental protection, medicare, and public schools. To him, the antitrust watch dog, the Federal Trade Commission, and the Security Exchange Commission were unnecessary hindrances to "free market competition". To him, Franklin Roosevelt's New Deal was "socialism". Recently, President Bush's Federal Appeal Court Nominee, California's Supreme Court Justice Janice Brown, repeated the same broadside at her Senate hearing. She knew that her pronouncement would please President Bush and Karl Rove and their Senators. President Bush and his brain, Karl Rove, are leading a radical revolution of destroying all the democratic political, social, judiciary, and economic institutions that both Democrats and moderate Republicans had built together since Roosevelt's New Deal.

In June 2003, Bill Moyers said that "Karl Rove has modeled the Bush presidency on that of William McKinley and modeled himself on Mark Hanna, the man who virtually manufactured McKinley. Mark Hanna saw to it that Washington was ruled by business, railroads, and public utility corporations." President Bush's tax cuts have given over 93% of their benefits to large corporations and well-to-do households with over 250,000 dollars of annual income (about ten percent of US households). Moreover, President Bush's tax cuts are abolishing taxes on such asset-based income as stock dividends and capital gains. He is opposed to taxing management aristocrats' self-dealt stock options (salary payment in kind). He is opposed to requiring the corporations to treat such stock options as their personnel expenses. More than anything else, management aristocrats' stock options are encouraging many corporations to abandon manufacturing-and-supply procurements at home and switching to imports from China and other lower-wage countries. He is phasing out estate taxes. All these measures are transforming the past "potbelly flower vase" shape of the US income distribution to the "bottom-heavy hour glass" shape.

This was the same kind of income distribution that the US built during the "Gilded Age" of McKinley. There was no Security Exchange Commission to check "creative accounting" and other malfeasance of corporations like Enron and WorldCom . We had poor public schools and medical care. There was no minimum wage or labor standard. Both federal and state governments and courts were hostile to labor unions and civic groups protesting the "industices" of the society. The natural environment was ravaged by railroads, mining, lumbering, and newly emerging oil and gas firms. Abortion was illegal. Women did not even have the vote. In the South Christian fundamentalists were pressuring public schools to stop teaching the evolution theories. Our democracy atrophied during the Gilded Age of McKinley. Is this what we want now for the US?

Yoshi Tsurumi
Professor of International Business
Baruch College, the City University of New York
159 Rock Creek Lane, Scarsdale, New York 10583
Telephone: 914-725-4212

Bill Totten


Post a Comment

<< Home