Friday, August 17, 2007

Free market - Part 3

As you may recall, the inflation numbers the Feds post are stripped of the "volatile" numbers of food and energy prices. You may recall the secret energy meetings that Dick Cheney chaired back in the early part of the century, from which came our domestic energy policy; another secret.

However, what isn't secret is that gas was about $1.50 a gallon when Bush took office. Not too many months ago it was $4 a gallon in some parts of the country and has since dropped. In that time of course Exxon posted huge profit numbers. What impacts the consumer though is that our gas prices alone have inflated a little less than 20% per year since Bush took office. This is one of those pocketbook numbers that they don't like to report in the official numbers, but greatly impacts any who drive themselves to work, and those who need commercial air flights to travel to work.

In an August 16 Seattle Times
article, there is a detailed report of the cost of food just in the last year. According to the labor Department, food prices rose 4.1% in the last year alone. Eggs, a nice cheap easy to fix meal, went up 33.7%. Milk 21.1%. Pasta 7%. Potatoes 5%. This is the stuff that poorer people eat, mainly because they are at the cheaper and easier to fix end of the food chain. Considering that the number of those living in poverty has grown since Bush took office, this number not only greatly impacts them, it has a less but also serious impact on those living in that area between poverty and the median wage.

Here's the upshot. Unless your wages matched inflation alone, which has been right around 6% per year when you factor in the food and gas (let's just leave out health, heat and air conditioning costs for now, you can extrapolate those numbers in mentally), you lost money for that year. To quote the article, ""...which may go a long way to explain why, despite healthy job statistics, Americans remain glum about the economy."

Healthy job statistics?

Considering that to maintain Adam Smiths ideas of capitalism, which the neo-cons embrace, wages must remain low. Hence they fight living wage legislation everywhere. It also reveals why Americans are glum. Wages during a capitalist loving administration are apt to be forced lower. That can be done by allowing illegal immigrants to cross the border, regardless of how many terrorists may cross at the same time. It can be done by out sourcing jobs to foreign lands, thereby eliminating competition for high wage manufacturing jobs. It can be done by lobbying efforts that resist minimum wage and living wage laws. So in the face of stagnant wages, inflation then has a negative impact on the wealth of most Americans. it costs too much to live, and so nothing gets saved.

I can hear the outcry already: If Americans lived less on credit cards used to buy toys, then everything would be better. And part of that is true. Yet part of the reason credit is so easily available is because the rulers that be want to separate you from as much of your money as they can. Hence they allow credit card companies to draft legislation for bankruptcies which makes rules that allow those credit companies to charge huge interest rates, make credit available to anyone(just listen to recent mortgage and re-fi ads), and then make it impossible for them to get out of it when they get in over their heads as they are encouraged to do. Remember, it was Bush that stated that the sacrifice Americans needed to make after 9.11 was to go shopping. Get in your car which uses gas, go to the mall and buy more products made overseas with cheap labor. Not even all the parts in your GM car are made in America, and increasingly the labor used to build the mall is illegal and low wage. It all works out beautifully for the wealthy owners.

And go shopping for what? Computers? Cameras, or cell phones? Yes, the prices on these things have gone down. But when you hear that, you must remember your own budget. How many cell phones do you buy every week? How many computers? Gadgets are getting cheaper as technology gets better, but they aren't your basic budget items. Food is, on a much larger percentage basis than gadgets. So is gas, and electricity for heat and air conditioning. Those pocket book items which are left out of official numbers.

So how free has our economy become? Well, if you're losing money every year because your wages aren't keeping up with true inflation, then it isn't free. If Americans were in a position where they could put aside a three to six month nest egg for emergencies, and save regularly for retirement over and above the cost of living, then we would have a good economy. One that would hum right along. Think what that would take for you to live like that. Just think what the American dream of a house, emergency fund, retirement fund, let's say one car despite the need for two salary families any more, and the necessary evils of health insurance, homeowners insurance, car insurance, and the utility bills that would go along with that house. How much per hour would you need to make? Then add kids, and future college costs....

I'll make that my next post, based on median numbers. But I think you get the picture. if it's more than you make, consider rethinking capitalism. Consider protecting the workers of America. And remember that the power is still in our hands.


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