Economy Surges amid Low Unemployment

I promised not to blame the Dems for the economy and they are to blame for none of the following. The Commerce Department reported that the economy grew 3.5%, compared with 3.2% last year and 3.9% in 2004. Inflation posted its biggest DROP in 52 years in 2006’s 4th quarter. Unemployment is 4.5% and real hourly wages are spiking up.

This is not the best of all possible worlds, but it is very good. Those who expected collapse this year can kick their predictions down the road again. Eventually they will be right.

The rise in real wages is one of the most interesting factors. Average hourly are up by 4.2%. Even after adjusting for inflation, wages are still up 2.5% the biggest increase since May 1998. It was not unexpected but it does run counter to the doomsday drumbeat we have been hearing. It is natural for wages to lag productivity. This happened in the late 1990s, but memories are short when stunted by partisan nostalgia (neuralgia?). This was the last of the measurements that the pessimists could cling to as a sign of a bad economy. They will need to come up with a whole new set of troubles.

The obvious place to look for bad news is the budget deficit, but even here things are looking better than expected. The revenue surge is old news but nobody seems to pay attention. Revenues are surging because tax revenues are closely related to GDP, and hardly related at all to tax rates. Federal revenues equal about 18% of GDP. This is how it has been for the last half century; it makes sense and is as it should be. Just like you and me, government must live within its means. The problem comes when the Feds start to spend too much.

In the last year of the Clinton Administration, the CBO estimated revenues and expenses and projected a surplus with revenues of $2465 billion and spending at $2140 billion in 2006. This did not happen. Last year Federal revenues were $2407 billion. This is only a little lower, and would have still resulted in a surplus of $267 billion. Unfortunately, spending grew faster. If we could get the politicians to cut back on spending, just back to the 2000 prediction level, everything would be okay. In fact, if they just do not GROW spending, the GDP will catch up with spending in a few years (good luck with that).

There are some dark clouds for these silver linings. If you want to be depressed, take a look at entitlements. The President tried to address the Social Security crisis and went down in flames. We cannot save Social Security in its present form. We need to restructure it soon, but we will not do that until the fever gets worse.

In any case, the economy is about as good as you can expect it to get. It has been good since 2003 and probably will be good for the next couple of years. If you are not happy yet, you may reconsider your frame of reference.

Presidents get too much credit or blame for the economy, but to the extent they deserve it, Bush has done very well. Maybe the Dems can share the blame next year.

Some additional sources

New Job Report Shows Wage Gains are on Track
Ten Myths About the Bush Tax Cuts

Posted by Jack at January 31, 2007 8:49 PM
Comment #206047

Sure Jack, If I run up all my credit cards and mortgage my house, I can look cash flush for awhile too. Meaning, racking up national debt while cutting taxes for everyone to get lots of consumption going will show up in good economic numbers - FOR AWHILE! Eventually, however, one must deal with the debt, just as a homeowner must pay their credit and mortgage balances off.

It is a false image. Bush and Republicans sacrificed the economic good health of tomorrow for a rosier economic picture today.

The responsible thing to have done would have been to start raising taxes 18-24 months ago, when the economy was clear of the recession. But your party continued to sacrifice our children’s economy for today’s pretty picture.

This much I guarantee, if Democrats stay out of recession, but slow the economy by raising taxes and cutting spending to end the deficits, Republicans will take the political hit for irresponsible fiscal management for decades.

Posted by: David R. Remer at January 31, 2007 9:13 PM
Comment #206052


Revenues are already at an all time high and are at a similar % of GDP as in the last 50 years. What they should have done was CUT SPENDING a couple years ago. It can still be done now. And if they do nothing to grow the size of government for the next couple years, the deficit will come in balance.

Tax rates have little to do with revenue. In any but the very short term, the growing economy is what fills the tax coffers. If the Dems slow the economy, their tax intake will drop.

As I wrote above, the revenue we are collecting today is not very different from the optimistic projections at the end of the Clinton term. We fell down on spending.

We are also heading toward that entitlement iceberg. We can address that only by restructuring and there is no political will or courage to do that in either party. When Bush tried, the Dems smashed him.

Posted by: Jack at January 31, 2007 9:45 PM
Comment #206053

Once again, I don’t understand how, on the one hand, it would be a disaster to the economy to raise taxes and cut spending to bring about a balanced budget and on the other hand, a deficit that averages @$300,000,000,000 a year and is added onto a debt of @ $8,000,000,000,000 is “no big deal” because, as a percentage of GDP, it’s not too much.

It’s got to be one or the other. which one?

Also, I agree with David. we borrow a dollar and pay 5 cents of it back in interest in the course of the year. If we were operating in some sort of closed loop where all of the money borrowed came from within our economy, I guess I could say that this deficit and debt were no big deal. But the fact is that we borrow 100’s of billions of dollars from foreign sources. The fact that foreign goods are pouring into this country but the money to pay for these goods are not leaving the country is masking a real problem and pushing macro numbers that do not reflect what is really happening in the economy.

It is really humorous to me to hear someone complaining about, say, a billion dollars going into something like a national rail system. How many hours need to pass before foreigners charge us a billion dollars for the use of their money?

Posted by: charles Ross at January 31, 2007 9:46 PM
Comment #206054


If I figured the Feds would pay off the debt and then go back down to the lower level of spending, I would not mind them raising taxes. The problem is the Feds are like many of us. They cannot control their spending w/o some discipline & their “needs” grow with the amount of money they get.

Any good government official worth his salary can easily figure out good uses for twice as much money as he has in his budget.

I also think you are conflating the budget and the trade deficit. Both are problems. Of the two, the trade deficit is probably a worse problem. We have not had a trade surplus since sometime in the 1970s.

You hear less about it because it is hard to blame it on Bush. A good explanation is here.

Posted by: Jack at January 31, 2007 10:03 PM
Comment #206057

I hope bush is right that we can produce a balanced budget without raising taxes, but the mantra that is oft repeated, “keep the economy strong” is troubling in that it suggests that he thinks that there will not be recessions in the future; recessions that have nothing to do with actions taken by the opposing party.
re: the trade deficit and the federal government deficit. Of course money is paid out to entities who sell us goods, but my point is that 100’s of billions of dollars have turned around, come back into this country a purchased our debt. There are costs to that that are not accounted for in the favorable macro economic numbers we are seeing.
We need foreign investment into our debt, particularly with a dollar that has been in a general decline the last several years. So, what do you expect now and in the future, if you are a japanese investor in our government securities and know that the currency you are buying is declining in value??
You expect high interest rates on your investment to compensate you. It is a very risky situation for the united states.

Posted by: charles Ross at January 31, 2007 10:18 PM
Comment #206059


Really. Look at the link. It covers most of these concerns. It would be best if Americans saved enough to invest, but investments increase the general level of wealth, no matter where they come from, we just have to share with the investors.

During the 1800s, European capital built much of our economy. They got richer and so did we. We got to use the railroads and the factories. American money built Europe and Japan after WWII. In fact, foreign money is building China today. China is a big net importer of captial, but the U.S. is still the most attractive place for foreign investment.

All American states and most localities seek investors. It makes sense.

Posted by: Jack at January 31, 2007 10:28 PM
Comment #206063

“If you want to be depressed, take a look at entitlements.”


Sure, as soon as you get all the ne’er do wells out in the street where they belong the country will be doing great.

Posted by: KansasDem at January 31, 2007 10:47 PM
Comment #206066

This entire article is just another big “Mission Accomplished” sign. Another Giant Lie. More plutocratic BS that stinks to high heaven. Jack thinks if he can keep telling Main Street how great Wall Street is doing, everybody will somehow believe that things are just fine and our future looks good. But they aren’t just fine and the economic future of this nation is very bleak indeed. We all know this, because we just aren’t as stupid and ignorant as these GOP plutocrats would wish.

“This much I guarantee, if Democrats stay out of recession, but slow the economy by raising taxes and cutting spending to end the deficits, Republicans will take the political hit for irresponsible fiscal management for decades.”

Let’s face it, the GOP is already going to be dead for decades — because the people of this country already know how irresponsible they’ve been, and just how horribly they’ve screwed everything up for our children’s generation. And if that isn’t enough (although it certainly is) anyone who picks up a newspaper these days can read a story such as this:
US audit finds ‘spectacular’ waste of funds in Iraq

The word “irresponsible” doesn’t even cover what the Republican Party has become economically — although “crack whore” might. Conservative? Oh, it is to laugh… And then cry at what they have done to us and our children.
Dead. Dead. Dead.

Posted by: Adrienne at January 31, 2007 11:05 PM
Comment #206068

You write these posts every other day, and we all tell you the same thing every time: You can’t judge this economy without taking into account the debt. You can’t judge the economy without taking into account the discrepency between how the very, very, very rich are doing and everyone else.

Posted by: Max at January 31, 2007 11:11 PM
Comment #206071


I’ve got me an idear. Since this economy is goin’ gangbusters why don’t we all take up collections to put the National Guard back together:

“Lt. Gen. H. Steven Blum estimated that it would take about $40 billion for the Army National Guard alone to make up for its equipment losses.”

I’ll bet Wall Street will be glad to donate the $$$$$$$$$!

Posted by: KansasDem at February 1, 2007 12:10 AM
Comment #206073
I hope bush is right that we can produce a balanced budget without raising taxes

Greenspan, Bernanke, Snow and Paulson are all on record saying it’s impossible.

Posted by: American Pundit at February 1, 2007 12:19 AM
Comment #206083

If we raised taxes by about one and a half trillion dollars a year and raised spending by about one dollar a year, we could pay off the debt in about 20 years.

Posted by: jlw at February 1, 2007 1:25 AM
Comment #206087

Jack, thank you for the link. I gave it a quick read and will have to return to it again to fully understand. It is very informative but the language it uses is somewhat tentative. As examples, some paraphrasing:

the trade deficit is big but not necessarily bad

the combined goods and services deficit is smaller than the merchadise trade deficit alone, but still is growing faster than GDP

figure 2 shows that the current account deficit is also growing much faster than GDP

the authors use the example of a family in item 7 that it may make sense for a family IN A GIVEN YEAR to borrow on assets to make investments (college, mortgage).
What if the family borrowed for 30 years? (my question).

In item 8 the question is posed whether or not these imbalances mean a lower standard of living in the future for americans; and the answer seems to be “maybe yes, maybe no”

In item 9 the authors pose the question of what happens in the event that foreign purchasers of our debt move money to non-us investments. They admit that an increase in interest rates would follow. they also admit that a reversal in these deficits is inevitable and refer to the idea that it’s “just common sense”. and in addition in regards to whether or not the transition to surplus will occur with little disruption or “rapid or painful”, they state they “don’t know”.

also if the incentives for foreign investment changes (good returns/security of investment) we would certainly have a hard landing

the authors finish up by saying that the pain felt by us workers because of imports is overstated because those workers can move on to other employment. From the stats i’ve heard the average job taken by someone who is laid of pays $9,000 less in salary and benefits than the one he or she left.
that can’t be good.

So, I guess, to return to the basic idea of your post that the economy is good, I still have to wonder. It is counter intuitive to me that, in a good economy, huge deficits are needed. We are probably in the late stages of the current expansion, just using historical number of months of average expansions. If we can’t run surplus’s in a nominally red hot economy, 4.5% unemployment, high 3’s gdp growth, %50 move in the S&P in 4 years, then how are we going to do it in the next 4 years in which we will probably have at least one mild contraction?
It seems like what is being proposed is that things will turn out fine but they all need to go just right; we NEED to have continued foreign investment, we NEED to have low interest rates, we NEED gdp growth to be in a certain range. I’m pessimistic that its all going to fall into place. And then, you put on top of that, the X factors, another homeland attack, another oil embargo (remember 74-75, that was not a soft landing!)
Anyhow thanks for the info, it was good.

Posted by: Charles Ross at February 1, 2007 2:48 AM
Comment #206097


I have been reading a very interesting book called the “Wal-Mart Factor”. It is a balanced treatment of how Wal-Mark effects the economy as a whole and the world of work. I actually find the efficiency a bit frightening. That, plus the long commutes people must make, I think are the root causes of this uneasiness. I am thinking about it now and may write something re.

I do have some trouble understanding some of the angst. Personally, I mean. It just is not part of my personality or experience. I am trying to figure it out.

Posted by: Jack at February 1, 2007 9:06 AM
Comment #206111

Jack said: “China is a big net importer of captial, but the U.S. is still the most attractive place for foreign investment.”

Have you checked on the distribution and sales of our treasuries lately Jack. Our government is running into diminished demand from overseas investors for our treasuries, and small but increasing numbers are selling them for other more lucrative investments.

This is what I have predicted to you would happen as move ahead year after year toward the boomer retirement bulge with enormous national debt. The risk factor for purchasing our treasuries increases year after year and China and India and my other nation’s are capable of offering the same competitive rate with risk perceived as dropping, not rising as in the U.S.

Posted by: David R. Remer at February 1, 2007 11:06 AM
Comment #206112

Jack said: “And if they do nothing to grow the size of government for the next couple years, the deficit will come in balance.”

That statement denies political reality of the relationship between our Representatives and their constituents in terms of reelection by incumbents who control the committees and process.

When one seeks real world solutions, one must first assess what the parameters of the real world are. Ending Soc. Sec. and Medicare would solve the problem. It is not in the realm of political reality, for example.

Posted by: David R. Remer at February 1, 2007 11:11 AM
Comment #206117

At the rate that China’s economy is growing (10.7%) in 06, soon one fourth of the Chinese consumers will have more purchasing power than all of America. The American pharmaceutical industry will run run off to Asia or Europe taking their antidepressants with them.

Posted by: jlw at February 1, 2007 11:47 AM
Comment #206135


I am talking about investment. China pulls in a lot of foreign investment. SO does the U.S. The Treasury problem is real, but it is not what it seems to be. If the Chinese decided to sell their securities, it would problaby provoke a crisis in which we would all lose money, but the Chinese are not buying the U.S.

The problem for the U.S. is our low savings rate. This has been a factor for many decades. We could emphasize policies that encourage savings, rather than consumption, but those things tend to be “regressive.” The capital gains tax cut, for example, is an excellent way to encourage investment. A tax on sales would also be useful.


If you two year old child continued to grow at the same rate he did last year, within 20 years he would be the size of a blue whale. Growth from a low base is easier. China faces many big problems, such as ecological disaster (much worse than anything in the U.S.), future labor shortages and an inefficient central government. I do not doubt they will solve these problems, but it will slow the growth rate.

The U.S., with its 3.5% growth is remarkable among developed countries.

Posted by: Jack at February 1, 2007 1:32 PM
Comment #206138

Maybe this would answer Jack’s angst question?

2006 personal savings fall to 74-yr. low

People once again spent everything they made and then some last year, pushing the personal savings rate to the lowest level since the Great Depression more than seven decades ago.
The savings rate has been negative for an entire year only four times in history — in 2005 and 2006 and in 1933 and 1932. However, the reasons for the decline in the savings rate were vastly different during the two periods.
Economists have put forward various reasons to explain the current lack of savings. These range from a feeling on the part of some people that they do not need to save because of the run-up in their investments such as homes and stock portfolios to an effort by many middle-class wage earners to maintain their current lifestyles even though their wage gains have been depressed by the effects of global competition.

I think Jack’s lack of angst has much to do with his belief in the first reason put forth in the above paragraph, while many of us believe the second.


Posted by: womanmarine at February 1, 2007 1:58 PM
Comment #206150

womanmarine, I was just going to post the same link. Jack of course, will now find some way to spin this for us. That’s what Republican plutocrats have been doing for quite a long time now. Every single bit of economic news, no matter how bad it is, will be automatically spun as though it were good news. Btw, aside from Lou Dobbs who tries to give us the truth, this view is also generally parroted by the MSM.

To give a few examples: Federal budget deficits: spun as letting taxpayers keep and spend more of their own money. Massive layoffs: spun as evidence that change is so rapid that the workforce should view this as a beautiful opportunity to upgrade their skills and re-educate themselves — constantly. Worsening of our trade deficit: oh that just equals evidence of the wonderfully fast growth of our economy. An economy growing so fantastically fast, it simply can’t meet its needs and so, must rely on imports. Declining household income: spun as good news with the excuse that its an inflation fighter which will keep mortgage interest rates low.
Like I said before, everything these neocon plutocrats say is a “Mission Accomplished” sign. Doesn’t mean a damn thing, but it all sounds lovely to anyone who isn’t actually paying attention.

Posted by: Adrienne at February 1, 2007 2:33 PM
Comment #206169

Adrienne & womanmarine

4.5% that is unemployement
Household income is up this year
Economic growth is 3.5%
Average American net worth is at an all time high.

If you spin these, you have to give them a downward spin, because they are all good news.

There are downsides. We have a persistent problem with savings. Savings rates have been declining for 50 years. The trade deficit is another long term problem we need to address.

What frightens me is the entitlement iceberg we are heading for. I can agree that we will be in trouble around 2020, but we have known this since the 1970s. Nobody can claim to be surprised.

The best thing we can do to prepare for this crunch is to have a growing and robust American economy, like the one we currently enjoy.

Posted by: Jack at February 1, 2007 3:52 PM
Comment #206176


You mean you’re not dizzy yet?

Posted by: womanmarine at February 1, 2007 4:04 PM
Comment #206184


Yes. I get very dizzy from the constant downward spin. I often wonder what is good enough. Unemployment in the U.S. rarely drops below 4.5% and never for very long. This is as good as we get. Economic growth in the U.S. rarely goes above 3.5%. How much better do we need to be? income is rising (see the link in the original post). Family net worth is high. Most Americans have never been much better off economically.

I know some people are suffering, but this is as good as it gets and as good as it has been. We hope it will be better in the future and it probably will.

There is always something going down while other things are going up. On this earth, we can never get all the good things at once (and luckily we also never get all the bad things at once).

We can always imagine a better situation, but we have rarely actually seen one.

Posted by: Jack at February 1, 2007 4:24 PM
Comment #206187

“The best thing we can do to prepare for this crunch is to have a growing and robust American economy, like the one we currently enjoy.”

Oh sure, and that oh-so-enjoyable “growing and robust economy” of ours must be why the GOP just lost the House and Senate, and why Bush’s approval rating is presently hovering between 30-35 percent.
Repeating plutocratic talking points over and over again doesn’t make them true, Jack. You guys seem to think that this is all that’s needed to convince people that you know what you’re talking about, but the past election told the real story regarding what Americans think about our current economic picture and outlook — among other things.

Posted by: Adrienne at February 1, 2007 4:36 PM
Comment #206196

“I have been reading a very interesting book called the “Wal-Mart Factor”. It is a balanced treatment of how Wal-Mark effects the economy as a whole and the world of work. I actually find the efficiency a bit frightening.”

How about Wal-mart’s evilness? You find that frightening, too? I know I do. Btw, have you read the article in the WSJ today regarding Wal-Mart saving themselves hundreds of millions in state taxes through a loophole? People need a subscription in order to read it, but most of the pertinent info can be found at this Rawstory link:
Wal-Mart pays itself rent, gets large tax breaks

Posted by: Adrienne at February 1, 2007 5:34 PM
Comment #206219


I have a simple definition of bias. Bias is simply the extent to which a measure systematically misstates actual outcomes. If you have read the media over the last five years, you have seen a systematic underestimation of the economy. At the beginning of each year, we hear the recession is coming and at the end of each year the economy has done better than projections. It will not get much better than it is now. If people are convinced or have been convinced the economy is bad now, they will never be happy with any economy. That is why I wrote that next post.

Re Wal-Mart - I do not think Wal-Mart is evil. You might want to look at the book. It is very interesting. It makes me like Wal-Mart a lot less, but I understand it a lot more.

The tax dodge you mention is not evil. It may not even be technically illegal. I think the states should close it if it is a loophole and punish Wal-Mart if it is illegal, but I do not think this rises to the level of evil.

Posted by: Jack at February 1, 2007 8:37 PM
Comment #206221

Womanmarine and Adrienne,

Oh, please enlighten me about the negative savings rate. How is it that is actually calculated???

It is a bogus number…..debunked numerous times.

I’m retired, still work, collect a modest pension and SS and

WHOA!!!!! Dip into my savings to spend. Imagine that.

This statistic is BS - it is bound to show this as our population ages and people draw down their savings to live.

Oh yeah, one other thing - my son owns a business that is doing good. He borrowed some money from the bank and went on vacation.

OOPS - that statistic misses the whole point - his net worth went WAY up last year - but no one can measure the value of his business. But yes he is a negative factor because he “spent” more than his “income”.

Take your simpleton fact and move on.

Gov’t statistics ALWAYS miss the impact of the great small businesses in this country and the “wealth” not “income” they create. And that is a beautiful thing - since my son and I get to put off taxes for a very, very, very long time with good tax and estate planning.

Negative savings rate = bunk.


Posted by: echop8triot at February 1, 2007 9:06 PM
Comment #206224

Do 90% of the people here live in an ivory tower or some “theoretical” world?

WalMart = evil?? Because of tax planning?

Get real people.

All rational businesses do this - our business essentially does the same thing (much smaller scale obviously!)

I have no obligation to pay the most taxes - I pay my lawyers to pay the least within the rules. Rules bend and can be interpreted numerous ways.

You really have to get out more….into the real world that is.

PS - WalMart is a great company! I would hate to think where our economy would be without them.

PPS - my son told me not to post with his handle thus the “2” at the end.

Posted by: echop8triot2 at February 1, 2007 9:21 PM
Comment #206225


Nice article.

The doomsdayers of course can see lots to be gloomy about. Living longer is a bad thing after all.

Yes the economy is in great shape. Bond yields are very low which means that investors have great confidence in our fiscal ship of state. It is impossible to make the case that our country is nearing bankrupsy with bond rates under 5%. (Would you loan thirty year money at under 5% to an organization you had low confidence in?)

One of the things that Dave and Dan are correct in is that the future left un checked will lead to basically a mess. High debt from entitlements etc. The problem with this view point however is that the whole world knows. It’s not a secret!! It has been know for decades that when we baby boomers age it will cost lots of money. As the “pig” goes through the “python” it’s pretty easy to watch. There is of course a margin of error, but all of the numbers are bad.

We are going to be fine however and here is why. All of the numbers have the same premise, that we are going to retire like our parents. What Dave and Dan assume is that no one is going to turn the steering wheel.

A look at history shows that when our generation does nothing like our parents. College for our parents was for the elite. College for our generation moved to the average. Our parents submitted to a draft. Our generation said no, it’ s all volunteer baby.

The good news is that baby boomers are very close to getting critical mass to address the future. We have had two baby boomer presidents. Now the federal reserve chair is a baby boomer. (born in 1953!!). What is left is the leadership in congress. The average age of house members is still in the high 50’s, the Senate is 62. However if you look at leadership, it’s old!! Congressional leaderhip doesn’t have skin in this game. Nancy Pelosi for instance is pushing 70. (67). Ted Kennedy turns 75 this month. John Conyers will be 78 this year.

There attitudes were shaped by decades of past assumtions that are not true for future generations.

So here is what is going to happen. There is going to be a “tipping point” to borrow a phrase, when those in Congress who were born after 1945 will take effective power of congress.

Watch as those with “skin in the game” start to wrestle with the age wave issues, and then watch those issues dissipate like Y2K. There are multitudes of solutions to the doomsdayers fears.

I don’t know if you have ever read some of Bernanke’s testimony. Wow is it great. If you look at it like a younger person (53) talking to leadership who are many times in their 70’s, it’s pretty facinating stuff.

So to all you doomsdayers out there, the US economy is fine, and will continue to be fine. There will always be issues, because there always have been issues. The economy should continue to grow at or near historical norms. The steering wheel will turn long before the cliff. It should be fun to watch!!


Posted by: Craig Holmes at February 1, 2007 9:23 PM
Comment #206234

Don’t worry, be happy, everything is just peachy keen. I’ll remain a doomsdayer until I see some action, especially in the area of corporate entitlements.

This magic moment when the babyboomers take over and all our problems are solved. Dream on!

Posted by: jlw at February 1, 2007 9:58 PM
Comment #206252


There have always been problems and there always will be problems. And no when baby boomers take over leadership all of the problems wont be solved. They will solve some problems and create some others just like every other group that has or will pass through congress.

This consitutional system we have allows for so much change at a time. When the age wave reaches the tipping point it will be dealt with like all of the problems in the past have.

In the mean time life will go on. Doomsday wont come.

You are missing out on a great life, and great opportunity!!


Posted by: Craig Holmes at February 1, 2007 11:41 PM
Comment #206253

Jack, you’re a smart guy. I’m sure you realize that 4.5% unemployment figure you throw around doesn’t mean that only 4.5% of Americans are unemployed.

There were a lot of two-income households in the 90’s. That number dropped significantly in the last five years as millions of well-paying jobs left this country.

Posted by: American Pundit at February 1, 2007 11:51 PM
Comment #206257

“Do 90% of the people here live in an ivory tower or some “theoretical” world?”

No. I am a business owner. But an honest, upright, liberal business owner who really cares about people, and about my country, along with making a decent profit for what I do. Unlike Wal-Mart, and many other corporations who aren’t honest, or upright, or care about anything but their profit margin.

WalMart = evil?? Because of tax planning?

Wal-Mart is evil because they cheat, break the law constantly, don’t care about the people who work for them, and have seriously harmed our country in numerous ways. Allow me to list some of them for you:

1. They drive American manufacturers out of business. Since Chinese slave labor basically works for nothing, there is practically no labor cost involved in the manufacturing of Wal-Mart goods. It is therefore, cheaper to produce them there and then import them here than it is to produce them in our own country. This has been steadily eliminating US manufacturing jobs all over America.

2. They drive American retailers out of business. Business owners who try to sell goods made in our factories cannot compete in any way with the prices of imported Wal-Mart/Chinese products, and so, they go out of business.

3. Walmart doesn’t provide decent benefits to its workers — they have the most employees of any company in this nation receiving Welfare, Section 8, medicaid and other federal and state entitlement benefits that you conservatives so dread, bad-mouth, and deeply hate.

4. Workers who used to earn decent wages at American manufacturers and retailers are now doing very poorly. Many have been forced to go on Welfare, or are forced to go to work for Wal-mart or other corporate retail equivalents. The obscene expansion of Walmart has caused an enormous net loss of American jobs, and has replaced well paying manufacturing and retail jobs in America with ones that only pay Wal-mart level wages. Let me spell it out very clearly for you here: Americans who used to make 20 to 30 dollars an hour are now being forced to work for about 7 or 8 dollars per hour. (People like Jack then like to point to the current unemployment statistics, as if that number demonstrates how well the economy is working for the average person. It doesn’t.)

5. Wal-Mart illegally fires their store employees for organizing and trying to form a union — which if they had one, would undoubtedly fight to get them better wages and benefits. The company has spent many millions violating workers basic rights in this regard. Indeed, even the National Labor Relations Board (which is actually not all that great a friend to labor), was able to see right through Wal-Mart’s shenanigans and charged them with illegal behavior.

6. Wal-Mart’s business model can not operate without the complete and eager co-operation of Communist China. There’s a guy by the name Wang Jun who is one of Wal-Mart’s main people in China who is involved in a company called Poly Technology (this is the weapons trading arm of the Peoples Liberation Army) and controls a Chinese state sponsored investment company which ensures that Wal-Mart gets whatever it wants or asks from the Communist Party. Wal-Mart loves Communist China, because there they have the steady supply of underage children and wage-slave adult workers who will produce their products for practically nothing.
Indeed, you patriotic, free-market loving conservatives should truly despise Wal-Mart, because they don’t engage in the free-market AT ALL — AND are in cahoots with the Commies!!! Additionally (although I know many of you don’t really care), their enormous profits are made by violating basic international labor standards and engaging in the artificial suppression of wages. Wal-Mart couldn’t actually operate in a REAL free market.

7.They’ve used hundreds of illegal immigrants to clean their stores, but only received a slap on the wrist and had to pay out a small settlement for breaking the law.

8. They’ve been brought up on child labor violations. As I remember, this was also a case where they had to pay an unbelievably small monetary settlement for breaking the law.

9.They’ve been brought up on the largest gender discrimination lawsuit in the history of this nation — 1.5 million women — because they consistently broke/break the most basic of laws regarding workplace equality.

10. Now, to this list we can now add this latest crime of ripping off state governments as detailed in my previous link, which clearly stated that what they were taking advantage of was: a “complicated tax loophole that the federal government discontinued years ago.” Doesn’t sound exactly legal to me. Sounds like just another Wal-Mart Crime against America.

So, for all of the reasons I’ve listed above, yes I think it’s very safe for Americans left, right and center to say that Wal-Mart is EVIL.

Posted by: Adrienne at February 2, 2007 12:13 AM
Comment #206259


No matter how you slice it, unemployment is low.

I think you are on stronger ground bringing up the inequality in the economy. The lower end of the economic scale definitely are not prospering as much as the rest.


Posted by: Craig Holmes at February 2, 2007 12:27 AM
Comment #206264


Median family income rose this year. It always lags productivity. It dropped as a result of the recessions and it is kind of unrealistic to compare it to the two best years in American history. Real income levels are around what they were in 1998, not such a bad year. Anyway, if the one wage earner is making that much, it would be a good thing.

If history is any guide, real incomes will rise again this year and be at an all time high again by the begining of 2008. We already have a record high household net worth. There are some people doing poorly, but most people are fine.


I got no dog in that Wal-Mart fight. I rarely shop there. I do suggest you read the book. It is very interesting. I admire its process in distribution. I am not enthusiastic about its relentless price cutting. Its margins are so low it is almost impossible for competitors to make money. You can list its sins if you like. I won’t fight for Wal-Mart, but I think you have to take into account its circumstances.

Wal-Mart is not only the biggest company in the world; it is the biggest firm in the history of the world. It has a million and a half employees and if you count in its suppliers it has many millions. It is not surprising you could find lots of examples of good and bad behavior.

I think that some of the dislike of Wal-Mart is based on snobbery. Wal-Mart is very popular among the working poor. Its products & layouts do not appeal so much to educated sophisticates. I think people like us do not shop at Wal-Mart because we have the money to shop at fuller service places.

Posted by: Jack at February 2, 2007 1:36 AM
Comment #206314

The Congressional budget office said that people who lose their jobs often do so for more than six months and come back to significantly lower wages.

The big mistake here is believing that what this government has set up here is truly market economics. What we’ve done, though, is to allow one of the most important parts of those economics, competition between multiple parties, go out the window.

Instead, what we have are are oversized businesses with so much market share, and inroads to a highly artificial labor market, that we get our low prices at the cost of the inability to pay even them. It looks good on Wall Street, but most of the money is going to finance industrial competitors. We need a good alternative to the current economic arrangement because this is not a story with a happy ending, especially if something happens to upset the labor market in China.

Posted by: Stephen Daugherty at February 2, 2007 11:30 AM
Comment #206380

I cannot get around that statistic about the rise in median family incomes. We can comment all we want about the quality of jobs etc, but there is that bottom line. If you are making more, you cannot be making less. Some individuals are doing worse, but obviously more are doing better. We cannot outlaw statistics.

If something happens to upset the labor market in China, we will suffer some inflation and probably see a small growth in U.S. employment. And Wal-Mart will suffer.

This story never has an ending. I have been hearing variations on this same doom theme my entire life. I am starting to believe that the economy is just too complex for us to predict or understand. Since we do not understand it, we assume it is not working.

Posted by: Jack at February 2, 2007 3:48 PM
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