The standard line for political and economic elites noticing the craptastic economy is to go all Shock Doctrine on the public, which inevitably focuses on two major constituencies–children and seniors, since this is where a disproportionate amount of social spending goes (those famous “entitlements”–like retirement benefits and public education).  The case of the United States–a relatively strong economy at the moment, in that it is in “recovery” (sounds like an AA meeting, don’t it?) is illustrative.  There the attack on children’s entitlements has been spectacularly successful (probably because children don’t, you know, vote) with the collapse of teacher morale and painful cuts being administered to public education at almost every level and in almost every enclave (except those where the wealthy reside).  And, of course, it goes without saying that the young have suffered disproportionately in the great recession with fully 22 percent of children now below the poverty line (children make up nearly half of the poor, so keep in mind when you’re calling someone on food stamps a lazy sponger, those food stamps lifted half the poor children in the country out of extreme poverty into just regular sucky poverty).  The “deficit hawks” (not really deficit hawks since they’ll deficit spend to fund wars and tax breaks to billionaires) have ruthlessly targeted children in the name of their ”austerity” programs and are now even targeting the one program that keeps child hunger at bay, food stamps (to say nothing about stripping children of health care).    Note these cuts are specifically designed to save military procurement budgets, so children will literally go hungry to feed the war machine. Not “guns or butter” but “guns or Kraft Macaroni and Cheese.”

So, since this attack on the social support net for the weakest among us, children, is being explicitly forwarded by factions pressing for tax cuts for the wealthy and corporations, you’d think this “slaughter of innocents” would be laid on the heads of Herod’s men–the forces of aristocracy and privilege.  You’d be wrong.  Apparently the fault is to be laid on the second weakest demographic in the economy, oldsters.  This “greedy geezers” chant is a staple of “deficit hawks” such as Alan Simpson but it’s beginning to be mainstreamed by liberal democrats as well.  The most egregious of the recent pearl-clutching screeds (“think of the children who will inherit your debt!”) has been penned by a well-known name in democratic circles, Emmanuel (in this case Rahmbo’s brother, Ezekiel).  Now, Ezekial, a major health care advisor to Obama back in the day (by the way, nepotism much?) has been banging the drum to limit social security and medicare eligibility, in effect transforming them from government pension and insurance programs to charity, all in the name of the needs of children (you know, the same children whose programs are being gutted).  Ezekial points out the obvious well enough:

WE’RE always saying that “children are our nation’s most valuable resource.” Unfortunately, we don’t behave as if we believe it. Between 2000 and 2010, the number of children living in poverty in America increased by 41 percent, and now includes nearly one-quarter of our kids. Growing up in poverty is bad. It leads to lower graduation rates (a third of these children will not graduate from high school); lower incomes (nearly half will still be living in poverty at age 35); and lower life expectancy (by about eight years).

But rather than decrying the austerity programs his party and the opposition have foisted on the country (and which he fervently hopes be made more severe in a “grand bargain” during the unaccountable “lame duck” session after the November elections) and maybe, just maybe, collecting  some higher taxes from the wealthy (with marginal income tax rates at an historic low), he wants seniors to hand over their benefit checks to a fund to fight child poverty.  Notice the shell game here?  We, quite literally, allow children to go hungry to fund the Forever War™, but hope to guilt seniors into parting with their pension checks.  Say what?  How about asking some hedge fund managers and corporations to part with some of their profits and “capital gains”?  Maybe even a “Buffet Rule.”  Crickets.  Dr. Rahm might want to check out the charts here on the movement of the poverty rates among different age groups.  The truth is that prior to the passage of Medicare and the indexing of Social Security to the cost of living, seniors were the most, not least, impoverished age cohort in the country.  This is quite a trick–instead of worrying about the traditional recipients of charity, urchins and widows, the new political class tries to set widows against urchins.  Slick.  Geezers versus babes!   Thus, the austerians try to foster generational war to divert attention from the real war (which, one must say, is at least less odious than the Tory approach, which is to generally oversee a huge expansion of youth poverty and then blame the young!).  So what is the real war?  Class war.

Three charts from Business Insider tell us everything we need to know about why people (especially children) are poor and where the money went (h/t Fatster at Firedog Lake, who stimulated this post by placing a story about Ezekial Rahm next to this link to the Business Insider charts).   While these charts are focused on the United States, remember, the US economy is relatively stable compared to the mess in the Eurozone or China’s increasingly obvious slowdown.  The US is still the largest capitalist economy and hardly an outlier.  Here’s the first graph on corporate profits:

Corporate Profits as a Percentage of GDP (c/o The Business Insider)

Clearly, there is no general crisis of capitalism!  Corporate profits are the highest they have ever been.  And there is no sign that “business” is suffering in any way at all with corporate profits accounting for a staggering eleven percent of GDP.  Not coincidentally, businesses have achieved these gains by exploiting workers.  The following graph indicates the amount of GDP going to wages:

Percentage of Wages to GDP (c/o The Business Insider)

Clearly, wages are at an all-time low as a percentage of economic input and that, in a nutshell, is why the economy is so sluggish.  No one has enough money!  While the neoliberals out there may have their hearts all aflutter about reducing wages to such miserly levels (44%!), the GOP-ers and Tory-leaning businessmen out there might want  to remember that the other guy’s wages are your sales.  Sure enough, consumer spending is anemic.  This is almost classic Marxist dynamics on display–the social product known as economic output being diverted (can one say “expropriated”?) from workers’ wages to owners’ profits.  I’m not afraid to use the word “exploitation” for this sort of diversion, since almost none of the gains in productivity over the last generation (which have been substantial) have gone to employees’ wages as opposed to corporate revenues.  Here’s another good chart from David Ruccio at Mother Jones:

Productivity vs. Real Income, 1964-2008 (c/o Mother Jones)

Hard to see any blood, sweat and tears of the country’s workers getting a chunk of that increase, eh?  Take a look at the chart on corporate profits, again.  Any confusion where all those lost wages are going?  Of course, you can maintain the neoliberal fiction that some sort of exquisitely skilled managerial class is worthy of this largess because of their disciplined deployment of capital which, in turn, leads to higher returns on that capital.  Or you can read the newspapers and note these “Masters of the Universe” have been gaming the system, privatizing profit and socializing loss.  Bailout after bailout makes it clear that these fools, if left to the mercy of the “market” they lionize would be selling apples on street corners pretty quickly.  As Fernand Braudel pointed out long ago in his magisterial Civilization and Capitalism, capitalists have a tendency to try to lock in risky profits by moving to rent-seeking strategies, strategies that always involve the coercive power of the state to maintain the rentier class’s privleges over the plebs.  For Braudel the rise of this rent-seeking is always associated with the “financialization” of capitalist economies, which in turn led to the “wandering” of capitalist centers from Venice to Genoa to Antwerp to Amsterdam to London to New York.  It might be worth noting that some fellows with some pretty impressive hardware have noticed this “rentier” dynamic as well. (And for those wondering, Braudel thinks this rentier mode is capitalism, not a deformation of it; perhaps an expression of its “mature” or “late” form).

So, how are they pulling it off (besides a compliant state that slavishly grovels before their interests)?  Simply put, something ol’ Uncle Karl would have predicted–the reserve army of unemployed (once more from Business Insider):

Employed to Population Ratio (c/o Business Insider)

As regular readers of  The Paltry Sapien know, this is one of my favorite metrics as to why the US economy is in major crisis–it shows a precipitous decline of people with jobs and people without jobs don’t tend to agitate for better pay or, indeed, resist the intensification of exploitation (less benefits, longer hours, unpaid hours, de-unionization, etc.), which leads directly to higher corporate profits.  It’s pretty basic stuff–nobody has any damn money because “teh jobz crayatorz” you know, aren’t (creating any jobs).  But I’m sure cutting their taxes or ending pesky regulations like “you can’t poison your customers” will change all that.  Not.  And frankly, “austerity” is here a political, not economic strategy because gutting social welfare programs increases insecurity and suppresses labor demand further.

Hard to argue with Business Insider’s interpretation of these charts, “In short, our current system and philosophy is creating a country of a few million overlords and 300+ million serfs.”

BTW, since some right-wing shill or glibertarian purist will come along and troll about “well what do we do about the children! what about them paying our debts!” let me make make a pre-emptive strike or two.  Coming out of World War II America had a much higher debt-to-GDP ratio and handled it very easily with tax rates, even top marginal rates, generally falling over the post-war decades.  How was this miracle accomplished?  By growing the economy, which in turn led to people having jobs, which meant, wait for it . . ., they paid more taxes even as the rate of taxation fell.  Secondly, we don’t have to wonder how are our children are going to be screwed, since we are already screwing them (and rather overtly screwing them) so rich guys can pay lower taxes and we can still feed the Moloch of militarism.  The growth of student indebtedness as public education, especially state colleges, are starved of government revenue, has already impacted young people far worse than any future tax rates could (this will be the first generation of white collar workers, I predict, that won’t be home owners–but that’s ok!  More of people’s earnings going to the rentiers!)  Don’t blame Grandma for that, you tools.  That this is happening all over the “capitalist world” tells us something–and it ain’t that we have a crisis of capitalism.  We certainly have a crisis of democracy.  Capitalism has roared back, red in claw and fang, indifferent to the market, colonizing the state and callous to the needs of society (especially its weakest members).  One might want to see in these charts a Dickensian moment, but that would be rough on the Victorians–at least they felt badly enough about what they were doing to make A Christmas Carol a best seller.  In modern day America, we instead rely on malign fantasies such as Grandma living large while junior starves and Mr. Jamie Dimon is a super genius.  Don’t get fooled kids and oldsters–the enemy is not each other, it’s those guys pocketing everybody’s wages.