Low Salaries Aren't a Good Thing

Listening to the powers of the administration that actually have to solve the problems they've created is kind of encouraging. Bernanke and Paulson testified before Barney Frank's House Financial Services Committee yesterday, and yes, they know that deregulation has been a disaster.

Today E.J. Dionne wrote about the free trade mythology that contends we're getting real benefits from sending our jobs overseas, and he popped the bubble for anyone who hasn't seen through that one yet.

Since the Reagan years, free-market cliches have passed for sophisticated economic analysis. But in the current crisis, these ideas are falling, one by one, as even conservatives recognize that capitalism is ailing.

You know the talking points: Regulation is the problem and deregulation is the solution. The distribution of income and wealth doesn't matter. Providing incentives for the investors of capital to "grow the pie" is the only policy that counts. Free trade produces well-distributed economic growth, and any dissent from this orthodoxy is "protectionism."

The old script is in rewrite. "We are in a worldwide crisis now because of excessive deregulation," Rep. Barney Frank (D-Mass.), the chairman of the House Financial Services Committee, said in an interview.

He noted that in 1999 when Congress replaced the New Deal-era Glass-Steagall Act with a set of looser banking rules, "we let investment banks get into a much wider range of activities without regulation." This helped create the subprime mortgage mess and the cascading calamity in banking.
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Frank also calls for new thinking on the impact of free trade. He argues it can no longer be denied that globalization "is a contributor to the stagnation of wages and it has produced large pools of highly mobile capital." Mobile capital and the threat of moving a plant abroad give employers a huge advantage in negotiations with employees. "If you're dealing with someone and you can pick up and leave and he can't, you have the advantage."

The crisis we are in didn't happen because working people stopped buying, the 'consumer confidence' theme that the worst administration ever keeps pushing. The amount the public needs to earn to go on buying has been reduced on all fronts, by the increases in price of gas and everything that is transported using gas. The occupied White House keeps pushing their ideas, that cutting taxes on business will make us all rich. It isn't true, and never was. The profits business has been increasing because of its welfare from this cabal are not being passed on to consumers.

Free trade means that businesses can locate overseas, pay salaries that we can't live on. It doesn't mean that paying low salaries will enable consumers to buy their products.

We're all suffering from the mistakes of the present executive branch. The next one gets to correct the mistakes and pull us all out of the hole they've dug.

In the meantime, we have a candidate running on the same mistakes, pushing the same lies. McCain hasn't learned anything from the economic crisis except that you can fool some of the people all of the time. He's fooled. Pass it on.