Maddow: Corporate wealth is becoming disconnected from the U.S. economy

This is even more timely today, with the Dow down big, than it was when first broadcast on Wednesday.

The bottom line here: Corporate profit doesn’t equal jobs (in the US). I’ll add, corporate profit comes less and less from the US as well.

This means that the growth of a low-income workforce in huge developing markets — from Brazil to, yes, China — is in parallel with the growth of the consumer economies of these countries. Coke, for example, gets most of its profits overseas, as this prepared-in-India report shows:

Pepsi and Coca-Cola both are American company. Pepsi earn more profit from its native country where as Coca-Cola get most part of its profit from overseas.

What does this mean for us? Three things:

■ Corporations now exist to pass huge amounts of money into the executive suites via CEO-controlled, fully captured “compensation committees.” (Sorry, Virginia, that’s just a fact; it’s why CEOs are making so much and we aren’t.)

■ Corporations have decoupled their labor expenses from the U.S. work force.

■ Corporations are decoupling their profits from the U.S. consumer market.

Conclusion: The Dow can recover even if the U.S. consumer market doesn’t and the U.S. economy goes into a 10-year tailspin.

Now Rachel on all of this:

http://www.msnbc.msn.com/id/32545640
Maddow:

“It’s raining money for them; it’s rivers and lakes and oceans of money for the S&P; 500” [the profit side]

“Planned layoffs are up 2/3 from the months before” [the labor side]

“There’s a clear and painful disconnect between what’s happening for the wealth of corporations and what’s happening for the rest of the economy” [the bottom line]

In other words, I think my conclusion (above) is correct. And if so, the U.S. worker could more and more be watching the success of nominally (and only nominally) “U.S.” corporations from the outside, the way Colombian workers, or Mexican workers, or Egyptian workers do — our masters, who rule from abroad.

And if that’s the case, what does it mean for U.S. politics going forward?

(I’m not asking that question to be provocative; I’m asking because that really is the next big question; and we’re going to need answers before the actual answer hits us in the face, or elsewhere.)

GP


Gaius Publius is a professional writer living on the West Coast of the United States.

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