10/12/2011 8:01 PM ET|
How to get even with Wall Street
Americans are downright angry -- at Wall Street and at politicians in Washington. But the best way to fight back is to get in the game and win.
People are mad.
There aren't enough high-paying jobs. Health care and education costs continue to rise. Home prices have dropped to 2003 levels and aren't moving. The stock market, which recently dropped to levels first seen in 1998, is increasingly manipulated by Wall Street insiders and their trading algorithms. Wages are stagnant. Washington is dysfunctional.
And yet corporations are booking record profits of $1.5 trillion a year as the superrich just get richer.
Americans are fed up. Both ends of the political spectrum have birthed activist groups and taken to the streets. On the right, the Tea Party is worried about government overreach and bailouts. On the left, the newer Occupy Wall Street movement rails against corporate greed and growing income inequality.
Even among moderates, sentiment is terrible. People are pulling out of stocks and corporate bonds and tucking their money in "safe" cash accounts and Treasury bonds offering about the same return as hiding it under a mattress.
The one message that seems to resonate is that we're headed for a new recession -- and there's nothing anyone can do to stop it.
But here's the thing: While there are surely deep, structural problems with the economy, hunkering down won't keep you safe. There's no rescue party coming. The driver of rising inequality has been a shift in the power balance between workers and businesses. Perhaps politics will eventually offer some remedy, such as the anti-China currency bill working its way through Congress with bipartisan support. But the root cause won't change quickly, if ever.
In the meantime, if you're not among the top 1%, the best advice is this: Act as if you are. This is particularly true if you're an investor. (And I'll have some specifics on how to do that at the end of this column.)
Return to capital
I explored the root cause of our problems in a recent column, "The real recession never ended." It boils down to the fact that job creation and wage growth have stalled as U.S. companies outsource, offshore and downsize to take advantage of cheap foreign labor.
We're still 6.6 million jobs short of our pre-recession level. And the median full-time male worker is making just $48,000 a year, the same as in 1969 in real, inflation-adjusted terms.
The fact that trading partners like China aren't playing fair, by holding down the value of their currency to make their exports artificially cheap, compounds the problem.
No wonder, then, that Nobel laureate Michael Spence finds that the some 98% of the 27 million net new jobs created in America between 1990 and 2008 were in what are termed nontradable sectors like education and health care -- areas where jobs can't easily be outsourced.
All our recent woes flow from this job and wage stagnation: the bubbles built on cheap credit; increasing debt, public and private; and the inescapable feeling the American standard of living is inexorably falling.
These reasons are also behind the rise in corporate profits and the growing gap between the superrich and the rest of us. As labor and sourcing costs have dropped, companies have seen profitability swell as they use low-cost manufacturing centers in Asia to supply high-cost goods to Europe, the United States and Japan. The top 1% benefit from this through their large investment holdings.
Now, even more jobs are threatened by this dynamic as innovators find new ways to create a single, unified global marketplace for labor. Websites like oDesk, which has doubled its business from last year, allow small businesses to benefit from virtual outsourcing by paying independent contractors around the world to complete specific tasks for as little as 10% of what they'd have to pay an employee. Workers are located mainly in the Philippines and India. There are others, including Freelancer.com and Mechanical Turk, owned by Amazon.com (AMZN, news).
What started with manufacturing jobs is now spreading to white-collar workers, including legal tasks, editing and computer programming.
Get mad, get even, turn a profit
For the typical U.S. worker, this is indeed a bleak outlook. But not all hope is lost.
The best solution is to join the ranks of business owners by creating a new product or service. I explored this topic in a column back in June ("What it takes to get really rich,") in the context of how it's becoming increasingly difficult to move up the economic and social ladder. In other words, the American Dream is harder to achieve.
The second-best option is to differentiate your "product" -- which is your labor -- as much as possible via specific, applicable training and education. Selecting the right industry helps, too. A recent report by the McKinsey Global Institute suggests that so-called "interactional" work that relies on knowledge, expertise and collaboration should continue to be safe from low-cost competition in places like India. Examples are many jobs in investment banking, health care and management consulting.
It's worth noting that while the overall unemployment rate remains north of 9%, there's a big difference tied to education. Among those with less than a high school diploma, joblessness stands at 14%; it's just 4.2% for those with a bachelor's degree or higher.
VIDEO ON MSN MONEY
As I peruse dozens of poorly reasoned arguments (on all sides), uninformed but furious opinions, shakily worded and overly simplistic utterances, and consider the rising paranoia in all classes of our society, I'd like to take a moment to offer the following methods of enriching your life and shifting your perspectives:
1) Cut your consumption of mass market entertainment by 99%. This will free up lots of time and will also minimize the deterioration of your brain cells. If something on TV, a movie, or YouTube made you think, chances are you haven't been thinking hard or often enough. Also, cutting out the media should lower your stress level in a major way--most of it is deliberately skewed toward riling or depressing people.
2) Cut your consumption of non-essentials (i.e., crap, whether low- or high-tech) to a few choice luxuries that you'll actually enjoy and use. This will allow many of you to live below your means for the first time, eliminating debt, clutter, and the need for two or more family incomes. This may then free up more jobs for those families who have none.
3) Don't go to college until you know why you're going (hint, it's not for the party scene), and can afford to make it happen. It's not really a big deal if you don't go, either, if you realize that you can facilitate your own education.
4) Don't blame other people for your misfortunes or failures, even if someone else is truly to blame. You can and should be wary of those you have betrayed your trust, but kill your grudges and move on.
5) Exercise every morning--outside if possible. Bring a friend.
6) Find someone who is truly trying hard and is still barely making ends meet (there's always someone worse off than you). Help them out: maybe you'll treat them to a meal every now and then, or give them some useful and truly compassionate counsel if they need it and are open to it--and then encourage and support them while they learn.
7) Remember that the issues and important concerns of today often look pathetically insignificant in hindsight. Don't make a mountain over a molehill--that's the media's and Hollywood's job.
8) Related to #6: study history, and not just as retold by today's popular historians, who often have axes to grind and incredibly short-sighted agendas to promote. No race or tribe or party has ever been all good or all bad, all intelligent or all idiotic. Also, there is very little new under the sun. Most of today's "issues" were issues in Ancient Rome, China, and elsewhere.
9) Get to know your neighbors. Not just next-door, but up the street, down the street, on the next street over, sitting next to you in the church pew, or in the cubicle down the hall. If you have pursued #1, your brain will probably keen enough to undertake real and interesting conversations.
10) There is meaning and logic in life and death. Each of us will experience disappointment and hurt in life, yet there are ways to endure and survive, and to emerge wiser and more resilient. Pain and suffering can be a profound teacher. Discard or at least carefully examine any belief system that says otherwise.
11) Take some time periodically to sit down and identify your passions. Focus
particularly upon those passions which intersect with the needs of humanity, and do your best to employ your physical and mental energy in that direction. If you can't earn pursue this passion as a vocation, do it on the side. If you've pursued #1 and #2, you should have adequate spare time.
I hope this helps you as it has me. Everything above has impacted me, though in many cases I stumbled onto the concepts only after making painful mistakes. I am not wealthy, I don't hate anybody in or out of power, and I have no political affiliation. My only agenda is hoping to help and encourage you, my neighbor. Better times can come if we change our perspectives.
Its good for the consumer, they said. And it was for a while...
That is until it was your job getting sent to India.
Now we all have to have the cheap China stuff because our standard of living
can now afford nothing more.
I don't blame business. They are greed mongers always have been and always will be.
I blame the politicians who have been in their pockets. Selling us out for a few pieces of silver.
- Hate banks? Use a Credit Union.
- Had your retirement deflated? Get out of stocks and put your money in a CD at a Credit Union.
- Pissed off at the politicians? Vote them out!
- Hate Big Corp? Boycott their products.
- Out of work? Educate yourself.
It's amazing. People are struggling to put food on the table, keep a roof over their heads, and keeping the lights on and this guy is telling people to put money into a corrupt system that is run by the people that got us into this situation. The world needs an enema!
office in the next election. Who wants to keep the tax breaks for the rich and who wants the rich to
pay their share of taxes. Remember when you go to vote for your congressman, senator or the President. Remember how they are voting now and get them out. We have the power and we are growing. See you at the protest in Phoenix.
He says the unemployment rate isn't bad for those with college degrees. I have a triple major with honors and multiple certifications, all in technical fields. One of the job search sites gives you stats on the other people applying for the same job you are. There are always almost a hundred applicants for each position. 70% of them have a college degree in that field with most of the rest having advanced degrees. About 50% of the applicants are unemployed.
I get a kick out of watching these movie stars and rappers get out of their Limos and Bentleys to protest the banks, millionaires and capitalism. What a joke.
Hey protesters! You want to make a statement then make one, start with Hollywood and all the stars you’re High Fiving… You’re making the rest of the U.S. look like idiots.
Greed isn't good and it is costing America a great deal. Jobs are going. going gone because greedy corporations like GE and many others left for cheaper labor elsewhere. GE isn't the only company doing this, but I just saw the clown in charge supporting Odama's jobs bill.
The best way to deal with greedy corporations like GE is to not buy their products. GE used to make their products here in America, but now most of their things like appliances are made in China. I believe all of their lights bulbs are made in China their too. I simply refuse to buy anything made by GE simply because they don't employ Americans to build them. I do the same for other American companies that don't build good here....
I have respect for some of the foreign car makers. At least they build factories here and employ Americans to build cars. That is how a global international business should behave and I see some merit there.
The government needs to reinstate tariffs on all goods made elsewhere and tell these big American corporations if they don't make products here they will pay more taxes on their profits then they already do. I don't understand why this isn't being done, but I do know the greed is in our government too. Make it illegal for corporations to fund any part of a campaign, or to lobby, or interfere in any way with Congress and the law making process. This seems to only way to get businesses out of government.
I don't even want to get started on Banks and big oil, but they need to be dealt with too.
Seems to me that the real source of these protesters' hardship is the fact that they're camping out on Wall Street instead of working and earning. I'm sure I'll get flamed for saying this, but there are jobs available. Companies like McDonald's and Wal Mart are always hiring. Don't want to flip burgers? Tough sh*t! Difficult times demand drastic measures. Think it's beneath you? Think again. Besides, anyone who is motivated and has a ounce of intelligence can easily become a shift manager or even store manager within a year and be on the way to earning a decent living. Wall Street is not the source of people's problems. In many cases, it's people's unwillingness to change and do what's necessary to get by.
Also, before you jump on me with both feet, I busted my tail in crappy jobs 50-60 hours a week for years while earning a degree at night. I sacrificed short-term for long-term benefits. Additionally, I weathered a 6 month stint of unemployment after being laid off a few years ago, so I understand. However, people have to pull themselves up and be willing to move and/or take whatever work is available instead of blaming their problems on someone else.
Was this author sober when he wrote this?
To even have a thought process that suggests to invest more into a business where corruption knows no bounds and honestly doesn't exist I would question ones motives for even saying this out loud.
Author please don't quit your real job at Starbucks.
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