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Letter: Declining GDP share

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  • RedShirt USS Enterprise, UT
    May 30, 2014 8:46 a.m.

    To "GaryO" that is your opinion. Where is your evidence? I have supplied multiple articles written by Economics experts explaining how Reagan's policies worked and got the economy going. Give us the some verifiable sources that support your claims.

    The policies that Reagan put into effect have been nullified over the past 26 years. Regulations have been added, taxes levied, loopholes widened.

    The jobs are not around because of Progressive/Liberal policies that punish businesses and discourages investment in businesses. We are repeating FDR's policies that kept the US in a depression for 7 years longer than anywhere else. Until government backs off, you won't see much job growth.

  • GaryO Virginia Beach, VA
    May 30, 2014 8:05 a.m.

    Redshirt –

    “To "GaryO" actually the Reagan economic policies were very successful.”

    WRONG.

    Cheap energy was successful in stimulating the economy during Reagan’s time in office, not Reagan’s policies.

    Reagan’s policies are STILL in effect. Reaganomics has ruled the country throughout GW’s and Obama’s time in office.

    Where are the JOBS?

  • RedShirt USS Enterprise, UT
    May 29, 2014 8:28 a.m.

    To "GaryO" actually the Reagan economic policies were very successful. His policies worked during his term, and kept things going for an additional 12 years beyond his term as president. The funny thing is that Reagans policies were very similar to JFK's policies.

    Read "Do tax cuts help only the rich? No, tax cuts help the economy" in the DN.

    "A Brief Review of the Success of Tax Cuts" By John R. Hendrickson

    "John F. Kennedy on taxes" on WND.

    Those articles are written by Economists who also know something about history.

    Apparently when you get into the history with experts, the idea of supply side economics works.

  • GaryO Virginia Beach, VA
    May 28, 2014 9:29 p.m.

    Hey Wrz -

    “There's no such thing as trickle-up. It's either trickle-down or trickle-less.”

    Wrong .

    Reagan’s supply side economics (aka voodoo economics, aka trickle down economics) was supposed to jump start the economy by lowering taxes for the rich, thereby allowing them to invest in businesses and employ the masses. It failed miserably.

    After it took effect, the economy slowed down for a solid year. But then directly because of the plummeting price of world oil (which fell to 1/3 the price it had been during the Carter administration) the economy rebounded. Reagan took the credit, and the simple-minded news media declared Reaganomics successful, although it clearly was and is NOT.

    Where supply side economics reduced taxes for the highest earners, demand side economics would have dropped taxes for everybody except the rich. This works because the middle class spend the money and it goes back into the economy, while the rich tend to hoard.

    This is what Clinton did. You do remember that pre-GW robust economy and four consecutive budget surpluses, don’t you? GW went back to Reaganomics, which clearly does NOT work.

  • RedShirt USS Enterprise, UT
    May 28, 2014 4:23 p.m.

    To "Fred44" the statistics showing the huge disparities between the average worker and the CEOs that you quote and find most places do not look at all CEOs. They typically look at a small group of the S&P500 companies or just look at the top paid CEOs.

    According to the BLS, the average CEO salary is $178,400/yr. Their total compensation with bonuses is on average aroun $370,000/yr. The average US salary is about $50,000. That means the average CEO is only making 7.4 times the average worker. The disparity isn't so much when you look at the average and not the super stars.

    But I am confused. You say that you have never advocated for socialism, but then you say that you want government involved in the economy. When government is involved in the economy, that is socialism. It is the more mild form of socialism that is more commonly referred to as Fascism (government controling privately held businesses).

  • Fred44 Salt Lake City, Utah
    May 28, 2014 1:10 p.m.

    Right from the Deseret News,under the Money Tab: "Last year was the fourth straight that CEO compensation rose following a decline during the Great Recession. The median CEO pay package climbed more than 50 percent over that stretch. A chief executive now makes about 257 times the average worker's salary, up sharply from 181 times in 2009." The Median Pay for a CEO crossed 10 million dollars a year.

    The CEO pay climbed from 101 times to 257 times the amount the average worker makes in the last five years. It is no wonder everything has to be outsourced to third world countries. That kind of growth in CEO pay is unsustainable even at minimum wage salaries. We need to be paying worker less than a dollar an hour to keep this gravy train rolling.

  • Fred44 Salt Lake City, Utah
    May 28, 2014 11:08 a.m.

    Redshirt,

    I did not realize I was advocating socialism? Did I say that somewhere? I do not advocate trickle down economics that has proven to be a failure. I have never advocated socialism. I do advocate government involvement in the economy as a protection for individuals, corporations and the country. Economic policy should be set to help all not just the wealthy.

    Oh and your basketball example really doesn't wash because you include all CEO's not just those of the big companies, but you only include NBA basketball players (equivalent to CEO's of the top companies) not players who play in the D-League and other minor leagues. If you want to make a comparison lets compare NBA player salaries to owner salary for running a team. Often times the player (laborer) makes more than the owner.

  • RedShirt USS Enterprise, UT
    May 28, 2014 8:25 a.m.

    To "Fred44" but paying a player $5.5 million vs $6,000 is the same as CEO pay. The studies that show the great disparities in pay between the CEO and the average worker only look at a subset of corporations that are very large. Lets use some logic. If the average CEO compensation package (salary, healthcare, bonuses, equity, and stock) total $370,000, that means that the majority of CEOs make much less than the $1 million. Now, for the ones that make over a $1 million, aren't they similar to the NBA players in that there are few with the skills and knowledge to competently lead large corporations with tens of thousands of employees?

    The system you are advocating has failed every time it has been tried. Look at Russia, China, Cuba, North Korea, Bolivia, and Venezuela. Socialism failed them every time. They have had to adopt capitalism to grow economically.

    To "LDS Liberal" and corporations hire CEOs to direct the company so that it at least stays in business, and hopefully will prove to be profitable. Plus how can the Union be responsible for for salaries are negociated by each player's agent?

  • LDS Liberal Farmington, UT
    May 28, 2014 7:41 a.m.

    RedShirtCalTech
    Pasedena, CA

    You NBA basketball millionaire analogy is just plain wrong.
    People pay to see the NBA basketball player play basketball.

    If what you say is true,
    a more realistic analogy would be...

    The NBA Basketball Player is paid minimum wage,
    and the NBA Basketball Team OWNER gets all the proftis.

    But that isn't what's happening.
    The Team owners are rich,
    AND
    the players are rich as well.

    WHY?

    Because, guess what -- The NBA players are UNIONIZED.
    That's why!

  • wrz Phoenix, AZ
    May 28, 2014 12:12 a.m.

    GaryO:
    "As I said, Reaganomics [trickle-down] DOES not work now, and it has NEVER worked in the over thirty years it has been in effect."

    There's no such thing as trickle-up. It's either trickle-down or trickle-less.

    "Labor's steadily diminishing share of the GDP since Reagan drastically lowered taxes for high earners is direct evidence of that."

    If you could include unemployed 'wages' paid to unemployed Americans in the computation perhaps the results would be more impressive.

    Fred44:
    "Why do those on the right continue to defend the 1% destroying the economy by sending jobs to third world countries...?"

    You mean like a certain newspaper (who shall remain nameless) who exported jobs re home-delivery issues?

    "The facts are in the 1980's Corporations were given by the government all kinds of economic advantages with the belief that most of the extra money they made would flow downward."

    The money did flow downward... to the stockholders. If you'd like to get some of the action, become a stockholder.

  • Fred44 Salt Lake City, Utah
    May 27, 2014 10:14 p.m.

    RedShirt,

    If you want me to say basketball players deserve what they are currently getting paid, you are talking to the wrong guy. What does it matter what the CEO gets paid? It is a symptom of the wealth redistribution that has taken place since the 1980's. Why do those on the right continue to defend the 1% destroying the economy by sending jobs to third world countries and pulling money out of the American economy and sitting it on the sideline.

    The facts are in the 1980's Corporations were given by the government all kinds of economic advantages with the belief that most of the extra money they made would flow downward. Was it a foolhearty idea to think that the wealthy would reinvest in America, obviously. It's now time for a change in government philosophy. If you invest in America your taxes stay low. If you invest in communist China you get taxed heavily. You still have a choice. Simple solution.

  • GaryO Virginia Beach, VA
    May 27, 2014 10:12 p.m.

    wrz -

    "Wages won't trickle down if there's a glut of workers. What CEO will raise wages if he has hundreds of applicants for a couple of jobs in the business?"

    EXACTLY.

    As I said, Reaganomics DOES not work now, and it has NEVER worked in the over thirty years it has been in effect.

    Labor's steadily diminishing share of the GDP since Reagan drastically lowered taxes for high earners is direct evidence of that.

  • wrz Phoenix, AZ
    May 27, 2014 9:00 p.m.

    RedShirtCalTech
    "Could it be that part of the problem is due to the government regulations are pushing higher paying manufacturing jobs out of the US?"

    Yes, that's one aspect of the problem. The other aspect is the vast number of immigrants (illegal and otherwise) that have ballooned our workforce resulting in stagnant wages and vast unemployment numbers in the American wok force. Both of these situations (exportation of jobs and importation of cheap labor) has the net effect of pushing wages down.

    And yet another aspect is advances in technology which does a number on the availability of jobs.

    GaryO:
    This is a direct result of Reaganomics, where huge business profits are supposed to trickle down as wages and enrich everybody..."

    Wages won't trickle down if there's a glut of workers. What CEO will raise wages if he has hundreds of applicants for a couple of jobs in the business?

  • RedShirtCalTech Pasedena, CA
    May 27, 2014 3:37 p.m.

    To "Fred44" it is as just as credible as anything Roland said. Why not, we blame everything else on Global Warming, so why not blame the difference in pay on global warming.

    What does it matter how much CEOs are getting paid? Did you know that in the 1950's an NBA player earned only $6000/yr and often had to hold down a second job to make ends meet. Why has their salary inflated 91,666% in a little over 60 years. That is a lot faster than the rate of inflation, and they are doing the same thing now that they were doing in the 1950s.

    Explain why a basketball player in the NBA was only worth $6000/yr in the 1950's and is now worth $5.5 million? The ball is still bounced and put into a hoop.

    FYI, that idea of CEOs being paid 400 times the average worker is only true if you look at 350 compaines on the S&P 500, not if you look at all CEOs of all businesses. The average CEO salary is $71,000/yr, with a total compensation package of $370,000/yr, less than 8 times the average worker.

  • GaryO Virginia Beach, VA
    May 27, 2014 3:16 p.m.

    What we are dealing with here is the national income component of GDP

    National Income = Wages + Rental Income + Interest Income + Business Profit.

    As an example, if National Income is constant, and wages to labor go down, that means that one or more of the other components have gone up, and that component is Business Profit.

    This is a direct result of Reaganomics, where huge business profits are supposed to trickle down as wages and enrich everybody, but obviously that does not happen, since wages have gone down as a percentage of GDP since the 1980’s.

    And what was the decade of the Reagan administration? The 1980's.

    Reaganomics OBVIOUSLY does NOT work.

    It’s time to raise taxes for the highest earners back to Pre-Reagan levels.

    Let's do what works for a change.

    BTW, for those of you who think government should "stay out of it," think again.

    Believe it or not, the responsibility of government is to govern responsibly. We just have to make sure we have the right kind of government, and not one dominated by unthinking ideologues, like the government that decreed the Middle Class should get trickled on by the rich.

  • Fred44 Salt Lake City, Utah
    May 27, 2014 2:40 p.m.

    RedShirt,

    Record corporate profits, CEO pay now 400 times more than average worker, top 1% seeing increase in wealth while the % of the GDP is going down for everyone else. Gee golly Redshirt your right it could be global warming.

  • RedShirtCalTech Pasedena, CA
    May 27, 2014 1:00 p.m.

    What Roland is saying may be right, but what is the cause? Could it be that part of the problem is due to the government regulations are pushing higher paying manufacturing jobs out of the US? How do we know that the problem isn't due to government printing money and salaries have not been able to keep up with inflation?

    The problem with Roland's assesment is that he might as well be blaming the lower buying power on Man made Global Warming. That is about as viable explaination as anything he has said.

  • FT salt lake city, UT
    May 27, 2014 8:08 a.m.

    Facts are facts but how you interpt them is an opinion. Business is returning less to their workers and paying less in taxes than ever before.
    Corporations are the new kings. More often than not, you hear politicans on the stump for business vs. labor or citizens.

  • Open Minded Mormon Everett, 00
    May 27, 2014 7:01 a.m.

    Mike Richards --

    Government doesn't need to be involved.

    That's WHY we had Unions back then.

    FYI --
    When Unions [by the people] are busted,
    Government [by the people] is the course of last resort.

  • wrz Phoenix, AZ
    May 26, 2014 7:39 p.m.

    The Real Maverick:
    "If repubs are so anti-illegal immigration then why don't they propose throwing employers who employ illegally and thumb their noses at our laws, into prison?"

    That's Eric Holder's job... and Reno's, Ashcroft's, Gonzales's, etc., etc.

    Besides, Repubs and Demos alike are scared spit-less that they'll lose substantial Hispanic votes should the do anything untoward the illegals.

    "Why do they only propose deporting illegals (which is impossible anyway. But it gives the 'impression' that they're tough on immigration. More smoke and mirrors)."

    Well, Romney proposed that illegals deport themselves through enforcement of E-Verify... and look what it got him.

    "If we deport all the illegals today then they'll be back tomorrow."

    I guess we should let 'em stay but don't give 'em any benefits, like SS or any kind of welfare. And for sure don't let them vote... enforce voter ID.

    "wrz, if you really care about illegal immigration then why not tackle it at it's origin, employers who have bought off repubs and love cheap labor?"

    Repubs love cheap labor and Demos love the Hispanic vote.

  • Twin Lights Louisville, KY
    May 26, 2014 5:46 p.m.

    Mike Richards,

    There are plenty of businesses (even small ones) where the sacrifice and scraping was done a generation or two ago. Those running it now never sacrificed a thing. So that argument is only partly true.

    Every business is worth more as an operating entity than in a fire sale of assets. Even selling the whole business, the market value has little to do with the book value.

    True that employees do not fully share the losses. But they are definitely at risk when a business loses money. I know many who lost jobs at the tail end of a career and could never find appropriate employment (age discrimination). They certainly bore some risk for their employer.

  • marxist Salt Lake City, UT
    May 26, 2014 4:38 p.m.

    Re: Mike Richards "Every business owner that I know sacrificed to scrape together money to start a business." Very true, but it is still true that the percentage of GDP going to capital is increasing, and the percentage going to labor is decreasing. This, alas, fits Marx's model quite nicely. If capitalism can't fix this, it is done for.

  • The Real Maverick Orem, UT
    May 26, 2014 2:24 p.m.

    @ wrz

    If repubs are so anti-illegal immigration then why don't they propose throwing employers who employ illegally and thumb their noses at our laws, into prison? Why do they only propose deporting illegals (which is impossible anyway. But it gives the "impression" that they're tough on immigration. More smoke and mirrors).

    If we deport all the illegals today then they'll be back tomorrow. But if we "deport" all the illegal employees to prison today then illegal immigration will be a thing of the past tomorrow.

    wrz, if you really care about illegal immigration then why not tackle it at it's origin, employers who have bought off repubs and love cheap labor?

  • louie Cottonwood Heights, UT
    May 26, 2014 12:27 p.m.

    Very good article. It should also be noted that the tax revenue rate has not changed in that same period of time, suggesting that the lost margin for labor must be an increase in the profits of companies and corporations. Nevertheless you have people like Bob Bennett who opine that you need more wealth or profits before one we consider minimum wage or any higher taxes on the wealthy. We need republicans to look more objectively at our history and at the facts in order to solve the sagging middle class problem.

  • wrz Phoenix, AZ
    May 26, 2014 11:48 a.m.

    Well, let's see... the decline in wages started about the time illegal immigration got in full swing... about the time that Reagan gave amnesty to millions of illegals in 1986. My guess would be that US wage decline as a percentage of GDP has its origins in cheap labor (legal and otherwise) coming into this country.

    And why was illegals allowed to pour in? Lack of government enforcement of immigration laws. And that would include Administrations from Reagan to the present, Barack Hussein Obama and his right-hand law enforcement guy, Eric Holder.

    I think the author of the article is blaming the wrong cause.

  • Shaun Sandy, UT
    May 26, 2014 11:05 a.m.

    @Mike Richards. I agree with you to a certain point.

    My friend works for a trucking company. He makes $75k a year. The owner of the company makes $75k a year. During the height of the recession they needed to hire a receptionist and could of easily found one for $8 an hour. His boss told my friend to pay them $16 an hour.

    The owner provides matching 401k and healthcare. He just installed a gym at the shop and put 25k worth of workout equipment in it. He bought season tickets to the Jazz and lets the employees use them.

    I could go on but the point is, this trucking company is a small business. It is growing and thriving and I think it is because the owner values his employees. He could easily cut everybody's pay and make more money for himself.

    If more company's valued their employees there wouldn't be any talk about redistribution or the %1. If more company's valued their employees this economy would be thriving.

  • Twin Lights Louisville, KY
    May 26, 2014 10:53 a.m.

    Adam Smith?

    What does he know about free markets anyway?

  • red state pride Cottonwood Heights, UT
    May 26, 2014 10:28 a.m.

    How about the income disparity between private sector and public employees? What about the cities (and soon to be States) that are bankrupt because of public employee pensions e.g. Detroit, Mi and Stockton, CA?
    I noticed Mr Kayser didn't mention standards of living now compared to the 1980's or earlier. Like how even our poorest families have smartphones, cars, microwaves, cable television etc etc.
    But if income inequality is something you lose sleep worrying about then you can always buy stock in a public corporation e.g. Walmart, Zions Bank, Ford, McDonalds etc. Then you can go to shareholder meetings and voice your concerns. It is a free country (allegedly).

  • There You Go Again Saint George, UT
    May 26, 2014 9:27 a.m.

    "...when taxes increase, businesses fail...".

    During FDR taxes were as high as 90%.

    Reagan dropped the rate to 28%.

    Taxes have dropped from 90% to 28%.

    The only thing disappearing as a result of Reagan supply side economics is the middle class.

  • Schnee Salt Lake City, UT
    May 26, 2014 9:22 a.m.

    @Mike Richards
    "Is the decline in wages the fault of the employer or is it the fault of government? Those who advocate "sharing" the wealth must surely know that when taxes increase, businesses fail for lack of capital. There are many millionaires who have little or no cash."

    If wealth inequality isn't changing or changing only a little you could say gov't. However it's increasing rapidly.

  • Kent C. DeForrest Provo, UT
    May 26, 2014 8:41 a.m.

    As usual, Roland is right. The consequence of this shift isn't just that more Americans are struggling to make ends meet, but that the consumer classes don't have enough disposable income to buy all the products that the big corporations need to sell to stay in business and provide jobs for American workers. It's a vicious circle that does not have an up-side. So, despite denial on the Right, the supply-side ethic we've been following since Reagan is not just hammering the middle and lower classes; it is creating economic conditions in which the upper class will also soon start a rather rapid decline.

    The answer is not redistribution through progressive taxation, though that is important. The answer is to give workers a share of ownership, so that they share directly in the wealth they create.

  • ECR Burke, VA
    May 26, 2014 8:40 a.m.

    Thanks Roland, for providing imperial evidence of the facts rather than just stating your opinion. And Curmudgeon makes an excellent point about the decline in union membership. It also interesting to note the date of 1980 as the beginning of the decline. Think about the events in our country during that time.

  • Mike Richards South Jordan, Utah
    May 26, 2014 8:38 a.m.

    Is the decline in wages the fault of the employer or is it the fault of government? Those who advocate "sharing" the wealth must surely know that when taxes increase, businesses fail for lack of capital. There are many millionaires who have little or no cash.

    I have a customer whose business is valued at more than $4 million - on paper. The actual value, if he were to sell off equipment and the building would be somewhere near $100,000. That would be his "reward" for providing jobs to hundreds of people for over forty years.

    Every business owner that I know sacrificed to scrape together money to start a business. Everyone of them borrowed against their own home to pay employees during lean times. Not one of them has a retirement account outside of Social Security even though they all paid in millions to Social Security as their portion of their employees Social Security "donation".

    Too many people, who have been paid a wage, think that they are also entitled to profit sharing. Would they share the "losses" with their employers?

  • The Real Maverick Orem, UT
    May 26, 2014 7:59 a.m.

    I agree with everything but the final line, "on a global scale."

    Not true. Here are many countries who still fight for their middle-class and aren't just handing everything over to the 1 percent.

    Australia, Canada, and many European countries still maintain policies that protect their working classes. It's just unfortunate that the United States has sold it's working class out. The long term effects are devastating.

  • Tyler D Meridian, ID
    May 26, 2014 7:56 a.m.

    Thank you for your informative letter Roland.

    However, I doubt this is the result of a conspiracy (which would mean a global scale). Rather, it is simply business chasing low wage production anywhere around the world they can find it, and the laws on our books that make doing so even more beneficial.

    Adam Smith did warn against employer collusion, but he also said laws pertaining to business should generally favor the workers.

    We were an Adam Smith nation early on and for much of the past century, but over the last 40 years or so we have become an Ayn Rand nation.

  • Roland Kayser Cottonwood Heights, UT
    May 26, 2014 7:39 a.m.

    One minor correction, my letter said that labor share of GDP has dropped into the mid 50% range, which is not quite the same as the 50% range as was published.

  • Curmudgeon Salt Lake City, UT
    May 26, 2014 6:18 a.m.

    Just a hunch, but I'm guessing the decline in wages as a share of GDP is closely correlated with the decline in labor union participation and effectiveness over the same time period, beginning with the union-busting Reagan administration. Does anyone doubt that is why Republicans have been so intent on emasculating unions?

    Thanks for the letter, Roland.

  • Hamath Omaha, NE
    May 26, 2014 5:08 a.m.

    Good points brought up here. Thanks.