Tuesday, October 31, 2006

Corporate Profits & Personal Savings

The economy has never been better, or so we are told. Looking at the corporate profit reports it is quickly seen that profits have never been higher. It is a great number to trot out and say, “Look how great America is doing!” But I beg to differ, the measure of how this country is doing is not in how the corporations succeed, but in how well the citizens succeed, and looked at from that perspective, this country is falling down fast.

Corporate profits rose, in the first half of 2006, by almost $200 billion. That averages out for all 300 million Americans to about $650.00 per citizen. Double that and you have the yearly total of $1300.00 per person. Figure that only 2/3 of America is really in their earning years and realize that American corporate profit ROSE by about $2000.00 out of every working persons’ pocket. Then realize that 2005 was record corporate profits, too, so whatever more was pulled out of your pocket last year went up by about $2000.00 this year. So are you still wondering why your bank account isn't quite where you think it should be?

It is reasonable to say that some of the American corporate profits came from overseas but I see that as easily cancelled out by the $500 billion trade imbalance. Hollywood might make some money showing movies in China, but China makes a great deal more selling us shiploads of goods. Those ships, by the way, often return to China filled with recyclable materials, our waste, which the Chinese then make into products and packaging and ship right back to us.

Personal savings, on the other hand, have gone negative. That doesn’t sound nearly as bad as it really is. Think of it this way – people are borrowing money just to pay for what they think they need, betting that they’ll make it up in the future. Gee, who’d they learn that from, our borrow and spend government!?!

As reported on msnbc.com and substantiated at our governments Bureau of Economic Analysis Americans have been dipping into previously saved monies, or worse borrowing anew, just to pay for current needs at a rate varying from 1/2 to 1 1/5 percent of the total of all personal income in the nation. This has been going on for over a year now, since early 2005, and that is the first case of a year without a personal savings increase in America since the Depression. Believing that the very richest Americans probably aren’t borrowing to make ends meet I am led to think that the amount being spent over income in those households so doing is a somewhat larger percentage of their yearly income. I won’t guess what that might be.

There are several factors at work here, not the least of which is personal pride, greed, and desire amongst those that are spending more than they should. Very simply, every household should be on a budget of spending less than they take in, much as our government should.

My perception is that our government protects those corporate profits at the expense of the citizens. The drug deal this past year is an excellent example – allowing pharmaceutical companies to charge the highest prices of anywhere here in America while selling it cheaper elsewhere, including Canada. Yes, there was the provision of the different plans for the elderly and poor but they were, I am certain, made intentionally difficult to make use of, especially by elderly and/or poor people that may be less computer savvy when the information is primarily available on the internet.

I’ll mention two other words that some abhor: war profiteering. What better way to help out your preferred corporation than to give it a fat contract paid straight thru from collected taxes and have little or no oversight as to how much profit is being made on it. No bids and no accountancy after the fact. As a business owner I would love to get my projects single sourced and paid at full bid (plus overages!). But that isn’t how smart businesses buy the services they need.

So, on the one hand (and this is where Christian theology first comes into this paper) I really call to anyone with ears to turn away from all the crap that is being sold to you. Sure, Starbucks is great, but do you really need to spend $1500.00 a year there? Next time you buy a car will you look back after the fact and say you were glad you got that V-8 … or V-10 or V-12 for that matter? Can you find pleasure in knowing that you bought less than you could have and realize that what you bought filled your need nicely?

Live below your means. Give some to charity. Work hard, play hard and pray hard.

Tell your elected officials that you want your government run like a smart business, that you expect it to pay it’s bills as it goes and to put some away for a rainy day. Let’s get that Pharma bill repealed. Let’s put a windfall profits tax on the oil companies, for sure, and any other that simply makes too much out of a controlled market. Let’s make it retroactive a couple of years.

And let’s take that money and pay off some of those T-bills that China has been kind enough to buy to keep us afloat.

Crazy words for a Democrat? Not since the Republicans walked away from any sense of fiscal conservancy that they may have had.


Anonymous Playtah said...

Amen and amen! It was especially frustrating several months ago when gas prices were so high, to hear that oil companies posted record profits...I don't necessarily expect companies to be overflowing with compassion and altruism, but that was just plain wrong.

It's especially frustrating that a lot of our fiscal problems in government are caused by corrupt and immoral politicians. I hope the American people will put their votes with the politicians who will not sell out their humanity for a few extra dollars.

11/01/2006 6:01 AM  

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