As workers seek higher wages Billionaire warns of growing class conflict in US

As workers seek higher wages

Billionaire warns of growing class conflict in US

By Jerry White

With the stock markets soaring and corporate America celebrating a massive tax cut, there are increasing warnings from some business circles that the immense level of inequality is generating deep social discontent.

In an interview published in the Wall Street Journal last week, Ray Dalio, who manages the world’s largest hedge fund, Bridgewater Associates, warned that “elevated stock valuations” had not translated into higher long-term economic growth, let alone improvements for the bottom 60 percent of the population. This layer of the population, he said, lacked any savings, suffered a higher percentage of premature deaths, and had children destined to earn less than their parents.

“His biggest worry,” the Journal declared, “is that lower corporate taxes and higher stock prices do nothing for the bottom 60% of households who own almost no assets and whose stagnant wages are the mirror image of expanding profit margins, feeding resentment and political polarization. Says Mr. Dalio: ‘If we do have an economic downturn, I worry we will be at each other’s throats.’”

Dalio, who has a net worth of $17 billion, is no social reformer. In 2004, he infamously summed up the parasitic character of the social layer of which he is part by saying, “The money that’s made from manufacturing stuff is a pittance in comparison to the amount of money made from shuffling money around.” His warnings will have no serious effect on the financial oligarchy, which is demanding austerity measures, tax cuts and deregulation.

A decade after the global financial crash, the financial aristocracy in the US and around the world is flush with cash from government bailouts and the near-zero interest rate policies of the world’s central banks. This has fueled the unprecedented stock market rise, which added $1 trillion to the personal fortunes of the world’s 500 richest billionaires in 2017.

A new survey of workers at 5,000 large employers by global advisory firm Willis Towers Watson found that two-thirds “were feeling more on edge than they did in 2015” due to stagnant wages and higher household debt. Fifty-one percent reported suffering a “significant financial event” in the past two years, including a major medical expense. Ten percent of workers reported taking a loan from their 401(k) retirement funds.

Despite supposed “full employment” in the US—with the official jobless rate at the lowest level in 17 years—wages only rose about 2.5 percent in 2017, barely above the official rate of inflation of 2.0 percent. This is well below the annual increases of between 3.3 and 3.6 percent before the Great Recession.

An analysis compiled by Bloomberg News of 665 contracts signed in late December showed first-year pay raises averaging 2.7 percent for workers overall, 2.5 percent for manufacturing workers and only 2.1 percent for government workers.

Analysts have warned that Trump’s sharp reduction in corporate taxes will encourage workers to demand significant wage improvements in 2018. Hundreds of thousands of workers in the trucking, warehouse, telecom, health care and entertainment industries have labor agreements expiring this year, according to Bloomberg……more here

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