A few months back in a Fox Business Network debate, the elitist Donald Trump argued that "wages are too high in America." The following morning he repeated this absurdity saying: "We have to become competitive with the world. Our taxes are too high, our wages are too high. Everything is too high. We have to compete with other countries."
He somnambulantly continued: "We have got to do something to compete with the rest of the world. Our country is not competitive anymore. That's why we're losing all of the manufacturers. Now, it's currency manipulation and all of those things that I talked about last night."
Well, they say ignorance is bliss! Among all but Trump's fellow plutocrats, real wages have just begun to climb again since unemployment fell below five percent after barely budging for decades. The working poor are fairing even worse. Adjusted for inflation, the federal minimum wage peaked in 1968. According to the Pew Research Center: "The Economist recently estimated that, given how rich the U.S. is and the pattern among other advanced economies in the Organization for Economic Cooperation and Development, "one would expect America...to pay a minimum wage around $12 an hour.""
Then a recent fascinating article in the Economist, (no bastion of liberalism), revealed that there is a "corrosive lack of competition" in America resulting in corporate profits which are too high. According to the article tilted "The Problem With Profits:"
"The naughty secret of American firms is that life at home is much easier: their returns on equity are 40% higher in the United States than they are abroad. Aggregate domestic profits are at near-record levels relative to GDP. America is meant to be a temple of free enterprise. It isn't."
What is wrong with too high profits? After all, aren't the Republicans always telling us we need less regulation of industry and lower corporate taxes in order for U.S. corporations to remain competitive? According to the Economist:
"High profits might be a sign of brilliant innovations or wise long-term investments, were it not for the fact that they are also suspiciously persistent. A very profitable American firm has an 80% chance of being that way ten years later. In the 1990s the odds were only about 50%. Some companies are capable of sustained excellence, but most would expect to see their profits competed away."
Again according to the article: "High profits can actually dampen demand." It seems American firms are generating $800 billion more a year beyond their investment budgets, which is 4% of GDP. All this money is sloshing around looking for a tax haven, which is usually found abroad. Society loses!
"Abnormally high profits can worsen inequality if they are the result of persistently high prices or depressed wages. Were America's firms to cut prices so that their profits were at historically normal levels, consumers' bills might be 2% lower. If steep earnings are not luring in new entrants, that may mean that firms are abusing monopoly positions, or using lobbying to stifle competition. The game may indeed be rigged."
And the rigged system is growing more intransigent with time. As industries merge and become more concentrated, firms have near monopoly powers.
"Microsoft is making double the profits it did when antitrust regulators targeted the software firm in 2000. Our analysis of census data suggests that two-thirds of the economy's 900-odd industries have become more concentrated since 1997. A tenth of the economy is at the mercy of a handful of firms--from dog food and batteries to airlines, telecoms and credit cards. A $10 trillion wave of mergers since 2008 has raised levels of concentration further. American firms involved in such deals have promised to cut costs by $150 billion or more, which would add a tenth to overall profits. Few plan to pass the gains on to consumers."
This concentration of power stifles competition even in industries with monopolistic profits. According to the Economist: "This is one reason why the rate of small-company creation in America has been running at its lowest levels since the 1970s." And small businesses account for almost two-thirds of new job creation since 1993.
The article goes on to suggest modernizing the anti-trust apparatus as one possible solution and policing behemoths of the market like Google and Facebook as another.
So Senator Bernie Sanders is much more correct when he says the system is rigged than Donald Trump's fantasy that wages are too high for the average American. It should surprise no one! Of course, tax cuts for the rich, the abolishment of the estate tax, the lowering or elimination of capital gains taxes, and other such Republican economic prescriptions will only serve to make the rich wealthier, just as they are intended to do, and to hasten our journey toward oligarchy.