On cold morning, some serious business….
1. Oil passed $90 a barrel this morning – for the first time in over 2 years, and for only the third time in history. The first time was when it was on its way up to $147, and then on its way down from there after crashing the global economy. Oh, but I’m sure that won’t happen again. Unfortunately, it’s just in time for Christmas, meaning billions of dollars a day that won’t be spent trying to revive our consumer economy and instead will be going to oil companies and foreign nations.
2. Perusing the Wall Street Journal recently I came across some ill sounding business headlines:
a. “Big investment firms get subpoenas”
b. “FED trims outlook on growth and jobs”
c. “Central Bank’s mandate draws spotlight”
d. “Home sales fell in October, hurt by foreclosure worries”
e. “In Ireland, bailout triggers a wave of anger”
f. “Merkel sees the Euro in ‘serious situation’
g. “The Irish domino”
OH, and one little story tucked away on page A-7: “Corporate profits rise to record annual rate”
That’s right, in the midst of the worst economic turmoil in the last 75 years, US corporations found a way to make $1.66 TRILLION this year. That’s $5,354 for every man, woman, and child living the US. Or, looked at another way, that’s $39,523 for every man woman and child on food stamps (42 million people). Or, $158,095 for every family of four on food stamps. Or, assuming generously that there are only 15 million people unemployed in the US, that’s $110,666 for every person.
Hypothetically, let’s say we as the rulers of this country (citizens….dont laugh) decide to tax these record profits at a nominal rate of 10% over and above any other taxes that are paid. We’ll call it a “windfall tax” – that would net the country $166,000,000,000 (166 billion). Now, we could use that to invest in the unemployed in this country. That would generate $11,000 per unemployed person to learn new job skills, to pay down debt, to buy a new computer, to buy a new outfit.
This is just one year of profits. Hell, this could be called the “Business invests in America” program. Everybody wins. Well, actually, not everybody. The tiny fraction of this country who stand to reap enormous gains don’t win as much. Which they will call losing. Thus, alas, this will never happen.
I’m not against corporate profits. I work for a non-profit, which means we rely on the money made by others to do good work. But it sure does seem that something is out of whack. And the longer it stays that way, the harder it will be to build our new economy in order to adjust to the new energy and climate eras.
3. Oil at $90 a barrel. Unemployment at 9.8% (more likely 17%). And US profits at a record $1.66 TRILLION. Guess which number doesn’t get better in the era of expensive energy? That’s right. Corporate profits will be guarded at all costs. Thus, if costs have to be cut, it will be people costs. So wages and employment will bear the burden. Yet, at the same time, $90 a barrel oil means that everything gets more expensive. But the majority of Americans won’t have an increasing ability to pay for them. Stagflation, anyone? The worst of all possible economic situations.