Thursday, January 23, 2014

PEU's Harpoon Middle Class in Global Race to the Bottom

Business Insider revealed an essential globalist truth, one repeatedly cited on PEUReport:

Google Chairman Eric Schmidt just gave a "fireside chat" in Davos, Switzerland, at the World Economic Forum.

In the context of talking about global inequality, which Schmidt thinks is partly the result of technology and is going to get worse before it gets better, Schmidt revealed a critical truth about the economy that few other successful investors and executives appear to understand (or at least admit):

The stagnation in middle-class wages is not just a middle-class problem. It's an economic problem. And it's one of the main reasons that global economic growth is so lousy.

Right now, companies are so focused on cutting wages — by paying their employees as little as possible and replacing them with technology whenever possible 
I've written many times about the global race to the lowest common denominator on employee wages and benefits, as well as taxes (another priority from the Davos crowd.)  This is from July 2011:

I have seen so many people -- particularly those in their 50s - 70s -- taken apart by what has happened in their industry as greed has hollowed out the economy. These are people took pride in their jobs and held themselves to this invisible standard that we all just took for granted, but is being wiped out. 
The Carlyle Group scares me more than anything I've ever seen on Wall Street. It seems to exist to corrupt politicians and it's hard to know who they even represent. 
I watched a video interview of (David) Rubenstein and his arrogance is really beyond tolerance. He was going on about the debt ceiling problem and how there would need to be cuts in services and higher taxes. When the reporter asked him about tax on carried interest he turned really disdainful and said that this "only" amounted to $22 billion over some number of years and this was not serious money. Boy, nothing like everybody doing their small part to save the country from oblivion!
Private equity underwriters (PEU's) like The Carlyle Group own thousands of companies.  PEU's are so focused on affiliates cutting wages, by employing as few as possible at rates as low as possible, and replacing them with technology (with public subsidies).  Take Brintons, a British carpet maker Carlyle repossessed in 2011.  Carlyle fired seventy people, threatening to move jobs to China.  This was after Carlyle cleaved the employee pension, dumping it on British taxpayers.

Carlyle's billionaires make public policy in our PEU world.  Who thought we'd made progress in the last 238 years?  

A short trip back in time had President George W. Bush and Secretary of State Condi Rice stating democracies require a rising middle class.

Davos is the new Philadelphia, but rest assured, this crew is not leading on my behalf.

Update 3-1-14:  Regional airlines are deep into the race to the lowest common denominator on employee pay.

Update 4-13-14:  Executive compensation is inverse to employee pay.  It continues to grow in super-sized fashion.

Update 8-3-14:  Heaven forbid someone has to live off safety net programs, where the holes get bigger and bigger