Great news for investors: According to Bill Gross’ latest must-read Pimco letter, the share of GDP we’ve had to pay in wages has dropped from 47% to 43% during the past decade, allowing pre-tax profits to jump from 10% to 14% of GDP. This is terrific.
(Unless you work for a living, but why is that my problem? All a worker has to do if she wants to share in the wealth is start a successful business!)
We’ve broken ACORN and the unions; slashed taxes on investment income (though we still haven’t eliminated the estate tax on billionheirs, as Republicans have long sought to do); and we should strive to pay people even less. Listen, if the economy’s bad enough, they’ll have no choice but to take the work.
The only catch I see in this otherwise bright scenario is that we’ll need to find someone to consume the goods and services we now so profitably produce, whence our dividends and capital gains flow.
Which I guess is that old Nick Hanauer problem I keep raising: that it’s not the wealthy who create jobs and grow the economy, it’s consumers. Watch his video here. “In a capitalist economy,” he explains — and Nick is nothing if not a successful capitalist — “the true job creators are middle class consumers. Taxing the rich to make investments that make the middle class grow and thrive is the single shrewdest thing we can do: for the middle class, for the poor, and for the rich.“
You know the problem with me? (There are several, but the relevant one today.) It’s that I can’t discuss this stuff without getting upset and sarcastic — and that’s exactly not the way to present one’s case to good people who just happen not yet to see things my way.
You know the great thing about Bill Gross? (There are several, but the relevant one today.) It’s that he can.
So I give you now Bill Gross. Read his letter.
You will even learn about Gini coefficents. (“Developed economies work best when inequality of incomes are at a minimum. Right now, the U.S. ranks 16th on a Gini coefficient for developed countries, barely ahead of Spain and Greece. . . .”) It seems he’s another wildly successful capitalist who agrees we should raise taxes on wealthy investors and put that revenue toward rebuilding our national infrastructure.
Quote of the Day
It turns out that advancing equal opportunity and economic empowerment is both morally right and good economics, because discrimination, poverty and ignorance restrict growth, while investments in education, infrastructure and scientific and technological research increase it, creating more good jobs and new wealth for all of us.~Bill Clinton
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