More to economy than corporate profits

Somewhere along the line in the past 30 years our understanding of the U.S. economy has changed. An economy is a country’s wealth and resources, production, and consumption of goods and services. There had been an understanding that an economy is managed by protecting its weaknesses and promoting its strengths.

Now an entire generation has been raised on the assumption that an economy is corporate profits and that it thrives without controls. Maybe it’s time for us to consider how that is working out for us.

The Congressional Budget Office recently released a study detailing how the share of income for high-income households increased between 1979 and 2007 while the share to all other households declined. The top 1 percent saw their share of income double in this period while the middle income groups (60 percent of the population) saw a decline of 7 percent. Ironically, for the rest of the top quintile, which includes many well-paid professional people, the rise was flat. The concentration accrued only at the top 1 percent.

What have we seen in this time period? The “globalization” of manufacturing, reduced union membership and increased productivity levels — workers doing more for less. The average worker has been squeezed and consumption, the source for the demand for goods and services, has dropped.

Yes, Americans need to focus on saving and thoughtful consumption, yet the last two recessions have been effectively jobless because the benefit of spending in the recovery is going to investors, top executives and workers in other countries. Homegrown manufacturing would see those companies employing more people to meet rising demand, those workers would be spending their income, and the effect of consumer spending would be compounded. These benefits are all lost in the name of corporate profits and economic globalization.

David Troland

Arlington Heights