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• Job Cut Reports
  • Comment 10/22/11: This is the most shocking news! It is no wonder IBM does not disclose the number of IBM employees at the Poughkeepsie plant but then we had ISO auditors last week requiring the latest information. You ready to hear? According to the ISO report, as of last week, IBM Poughkeepsie has a total of 3,200 employees. I remember we had approx. 5,000 employees not too long ago. I remember we had 12,000 employees at IBM Poughkeepsie in 1990s while we had IBM Kingston and IBM Myers Corners. Unbelievable!!!!!!!! -Shocked in Poughkeepsie-

    Alliance Reply: We have been telling IBMers for sometime, (12 years) that IBM is making a concerted effort to fire US IBM employees, and reduce the numbers of IBM employees in its IBM US locations. This should not be a shock. If you are an active employee, you need to organize your co-workers and fight this continuous abuse and firing of IBM US employees, in POK and every other IBM US location. The fact that IBM stopped reporting its US headcount should not have ever been a 'wonder' or a 'shock' to anyone. That's what corporations do when they don't want their employees to know what they are up to, specifically. IBM does things that are strictly in IBM's interest, and NOT in the interests of their employees. The employees interests can be best represented with a union contract. Then there is no "shock and awe" and nothing to "wonder" about. Click the 'Join the Alliance' links in the right column.

  • Comment 10/24/11: Why should anyone be shocked about Poughkeepsie and Kingston. I worked at Endicott and at one time, Endicott and Glendale in the 1990's had 12,000-15,000 employees. IBM only has about 300-400 IBM employees working there today. Louie Gerstner did a great job in destroying IBM Endicott. Sammy wants to destroy IBMUS. Join the Alliance to stop this corrupt company. -ANA-
  • Comment 10/25/11: Palmisano leaves, and Rometty takes over to cut more jobs. A new CEO to blame on ruining your way of living. -cannedbyblue-
  • Comment 10/26/11: Rometty made it clear she would follow the road map the company has laid out because she helped construct it. "I've been head of strategy at IBM and together with my colleagues built our five-year plan," she said. "My priorities are going to be to continue to execute on that" -Jaggua-
  • Comment 10/26/11: SWG Lotus looking to cut head count. Told to update resume and start applying to provided internal jobs at IBM..Not told of timeline of RA...first line does not know... -Soon2bRAd-
  • Comment 10/27/11: Did anyone get a note to work in another country? I work in sales so I got email from the General Manager asking people to look at Growth Markets as a place to work. I am thinking about it. I can transfer skills and gain global experience. It is probably not as stressful as it is in the US. -anon-
  • Comment 10/27/11: Re: Anon-> Growth Markets work? Is that anything like the "Project Match" that IBM tried to pass off a while back? So..do you get RA'ed first and THEN go to work for IBM in another country? Sounds like a 'one-way ticket', to me. Oh, BTW... You'll find out how stressful it is AFTER you get there, and my guess is IBM will not let you come back to IBM US, if you don't like it. If I was you, I'd do a bit more investigation before you sign up... -member-observer-
  • Comment 10/27/11: The Remote Support group in Atlanta, has been reclassified as Retail Services Division. Mandatory meetings today, essentially will result in band reductions and pay cuts up to 10% including managers. -anon-
  • Comment 10/28/11: About the offer to work in another country, if like Project Match, you become an employee of the overseas entity and get their (far less) rates and benefits. You lose any tie to IBM USA. IBM helps you get there to help you attain your new career step, but there is nothing to help you if you want to return. In effect, you will have left IBM. -anonymous-
  • Comment 10/28/11: This is somewhat diverged of the topic; however, I would like the opinions of the IBMers that come here. Do you think that when IBM says they can't find the skills here in the US and are then forced to go to India or China, etc. that instead the real reason is twofold: cheaper labor and people that will do EVERYTHING IBM tells them to do (even if it's wrong)? I think so. I also think that the IT Architects and Specialists that get RA'ed are actually being let go because they are too expensive and they know too much. IBM does not want that caliber of intellect and skill, joining a union. They want people that they can control and dictate to and keep them in fear of losing their job or they make promises to them that keep getting postponed or put on the back burner... I suppose most people that come here already know this. I've been out of IBM for some time. However, when I was there and worked in their IS group. I found that programmers that made decisions about certain software strategies, usually had to EXPLAIN things to management as though they were in grade school... Especially 1st line and 2nd line. I may be wrong, but I think IBM needs a union with IT workers that are already part of a smarter group on a smarter planet. -Skills'&'Customers-
  • Comment 10/28/11: When IBM says they can't find the skills in the USA what they leave off the end of the sentence is "For what we are willing to pay". Period. There are NO skills anywhere in the world in the IT industry that cannot be found here. When IBM and most if not all companies say that they are lying pure and simple. If there are so many great skills in the BRIC countries why has no one formed a company there and taken the US market by storm due to overpowering skillset? -Exodus2007-
  • Comment 10/29/11: Tony: Some employees might be forced to leave without a package, but typically if a US employee gets booted and has a good appraisal rating they would get 2-weeks pay per year of service capped at 26 weeks. Others, and some employees let go for performance reasons might get 1 week per year of service capped @ 13 weeks. IBM will sometimes pick up the cost of COBRA for up to a year. -Anon55-
  • Comment 10/29/11: A manager buddy implied more IGS layoffs & "announcements" are scheduled for Monday 10/31/11. Has anyone else heard similar rumblings? -Anonxx-
  • Comment 10/29/11: This just in!: SSR's in the Remote Support group of the Retail Services Division were told there would be band reductions and pay cuts up to 10%. If you have more information or want to be involved in challenging this, send email to: ibmunionalliance@gmail.com -Alliance-

News and Opinion Concerning Health Savings Accounts, Medical Costs and Health Care Reform

• HealthAffairs: Illness And Injury As Contributors To Bankruptcy. By David U. Himmelstein, Elizabeth Warren, Deborah Thorne, and Steffie Woolhandler. Abstract: In 2001, 1.458 million American families filed for bankruptcy. To investigate medical contributors to bankruptcy, we surveyed 1,771 personal bankruptcy filers in five federal courts and subsequently completed in-depth interviews with 931 of them. About half cited medical causes, which indicates that 1.9–2.2 million Americans (filers plus dependents) experienced medical bankruptcy. Among those whose illnesses led to bankruptcy, out-of-pocket costs averaged $11,854 since the start of illness; 75.7 percent had insurance at the onset of illness. Medical debtors were 42 percent more likely than other debtors to experience lapses in coverage. Even middle-class insured families often fall prey to financial catastrophe when sick.
• Employee Benefit Adviser: Are health insurers becoming monopolists? By Bill Kenealy. Excerpts: The culmination of years of consolidation among health insurers is restricting competition in four out of five metropolitan areas in the United States, new analysis from the American Medical Association finds.

  The 2011 edition of "Competition in Health Insurance: A Comprehensive Study of U.S. Markets," analyzes commercial health insurance market shares and federal concentration measures for 368 metropolitan markets and 48 states. The study finds a significant absence of health insurer competition exists in 83% of metropolitan markets studied by the AMA. Indeed, in about half of metropolitan markets, at least one health insurer had a commercial market share of 50% or more, and in 24 of the 48 states in study, the two largest health insurers had a combined commercial market share of 70% or more. In order, the 10 states with the least competitive commercial health insurance markets are: Alabama, Alaska, Delaware, Michigan, Hawaii, District of Columbia, Nebraska, North Carolina, Indiana and Maine.

  “New data presented by the AMA demonstrates the degree of anti-competitive market clout that some health insurers have gained through mergers and acquisitions,” says AMA President Peter W. Carmel, M.D. “Our new report is intended to help regulators, lawmakers, researchers and policymakers identify markets where mergers among health insurers may cause competitive harm to patients, physicians and employers.”

• Health Affairs: Without The Individual Mandate, The Affordable Care Act Would Still Cover 23 Million; Premiums Would Rise Less Than Predicted. By John F. Sheils and Randall Haught. Abstract: Many policy analysts fear that eliminating the individual health insurance mandate and penalty from the Affordable Care Act of 2010 would lead to a “premium spiral,” in which healthy people would drop coverage, premiums would soar, and the number of people with coverage would plummet. However, there are other provisions of the law that would greatly mitigate this effect. For example, the subsidies provided in the law to help people purchase coverage through health insurance exchanges would restrain a premium spiral by absorbing much of the impact of premium increases. We estimate that if the mandate were lifted, premiums in the individual market would increase by 12.6 percent—somewhat less than other estimates—with 7.8 million people losing coverage, versus other estimates for coverage loss of 16–24 million people. In sum, the Affordable Care Act would still cover 23 million people who would have been uninsured without the law. Our study suggests that although the mandate would have important effects on premiums and coverage, it might not be essential to the act’s successful implementation.

News and Opinion Concerning the "War on the Middle Class"

"But dependency on government has never been bad for the rich. The pretense of the laissez-faire people is that only the poor are dependent on government, while the rich take care of themselves. This argument manages to ignore all of modern history, which shows a consistent record of laissez-faire for the poor, but enormous government intervention for the rich." From Economic Justice: The American Class System, from the book Declarations of Independence by Howard Zinn.

• New York Times op-ed: What the Costumes Reveal. By Joe Nocera. Excerpts: On Friday, the law firm of Steven J. Baum threw a Halloween party. The firm, which is located near Buffalo, is what is commonly referred to as a “foreclosure mill” firm, meaning it represents banks and mortgage servicers as they attempt to foreclose on homeowners and evict them from their homes. Steven J. Baum is, in fact, the largest such firm in New York; it represents virtually all the giant mortgage lenders, including Citigroup, JPMorgan Chase, Bank of America and Wells Fargo.

  The party is the firm’s big annual bash. Employees wear Halloween costumes to the office, where they party until around noon, and then return to work, still in costume. I can’t tell you how people dressed for this year’s party, but I can tell you about last year’s.

  That’s because a former employee of Steven J. Baum recently sent me snapshots of last year’s party. In an e-mail, she said that she wanted me to see them because they showed an appalling lack of compassion toward the homeowners — invariably poor and down on their luck — that the Baum firm had brought foreclosure proceedings against.

  When we spoke later, she added that the snapshots are an accurate representation of the firm’s mind-set. “There is this really cavalier attitude,” she said. “It doesn’t matter that people are going to lose their homes.” Nor does the firm try to help people get mortgage modifications; the pressure, always, is to foreclose. I told her I wanted to post the photos on The Times’s Web site so that readers could see them. She agreed, but asked to remain anonymous because she said she fears retaliation.

  Let me describe a few of the photos. In one, two Baum employees are dressed like homeless people. One is holding a bottle of liquor. The other has a sign around her neck that reads: “3rd party squatter. I lost my home and I was never served.” My source said that “I was never served” is meant to mock “the typical excuse” of the homeowner trying to evade a foreclosure proceeding.

  A second picture shows a coffin with a picture of a woman whose eyes have been cut out. A sign on the coffin reads: “Rest in Peace. Crazy Susie.” The reference is to Susan Chana Lask, a lawyer who had filed a class-action suit against Steven J. Baum — and had posted a YouTube video denouncing the firm’s foreclosure practices. “She was a thorn in their side,” said my source. ...

  These pictures are hardly the first piece of evidence that the Baum firm treats homeowners shabbily — or that it uses dubious legal practices to do so. It is under investigation by the New York attorney general, Eric Schneiderman. It recently agreed to pay $2 million to resolve an investigation by the Department of Justice into whether the firm had “filed misleading pleadings, affidavits, and mortgage assignments in the state and federal courts in New York.” (In the press release announcing the settlement, Baum acknowledged only that “it occasionally made inadvertent errors.”)

• Huffington Post: Income Inequality Reaches Gilded Age Levels, Congressional Report Finds. Excerpts: America's 99 percent are not just imagining it. The gap between the incomes of the rich and poor in this new Gilded Age is strikingly broad and deep, according to an October report from Congress' data crunchers. The study by the Congressional Budget Office, released this week, found that income has become dramatically concentrated, shifting heavily toward the top earners between 1979 and 2007.

  And although incomes at all levels have risen some, they've skyrocketed for the very wealthiest of earners.

  At the other end of the scale, Americans in the bottom fifth of earners saw their incomes increase by less than 20 percent across the nearly three decades. Incomes for those in the middle 60 percent climbed by less than 40 percent over the same span.

  Things start to look especially good for the top fifth of earners, who saw their cash flow jump by 65 percent.

  But it's among the top 1 percent where the growth was breathtaking. That contingent saw their incomes spike by 275 percent. ...

  Wages for the lower and middle classes have hardly moved for the last three decades -- a phenomenon that roughly coincides with the decline in union participation, as Think Progress noted. Paul Krugman, the Nobel-winning economist and left-leaning New York Times columnist, describes this phenomenon as the "Great Divergence."

  Today, the 400 richest people in the country control more wealth than the bottom 50 percent of households, and the U.S. ranks roughly alongside countries like Uganda, Cameroon, Ecuador and Rwanda in terms of the gap between its richest and poorest citizens. ...

  For Bivens, they're the result of 30 years of conservative-leaning policies that have undermined unions, left the minimum wage lower (adjusted for inflation) than it was in the '60s, and favored financiers and corporations over laborers. A big culprit is the deregulation of the finance industry, said Bivens, noting that the CBO identified finance as a sector that saw some of the largest jumps in income. "That sector has just taken a larger and larger share of the economy, while producing a, shall we say, dubious return," Bivens said.

• Salon, courtesy of AlterNet: The $1 Trillion Student Loan Rip-Off: How an Entire Generation Was Tricked into Taking on Crushing Debt That Just Enriches Banks. By Alex Pareene. Excerpts: USA Today says that at some point this year, student loan debt will exceed $1 trillion, surpassing even credit card debt. Felix Salmon says the number is closer to $550 billion. Either way total student loan debt is rising as other debts have tailed off. Delinquency has increased, too, since the height of the financial crisis. It’s a huge mess.

  Some people have noticed that “student loan debt” comes up a lot among the Wall Street Occupiers and the members of the 99 percent movement. Often, older people, who either attended school when tuition was reasonable, or who didn’t attend college at all in an era when a high school diploma was enough of a qualification for a stable, middle-class career, tend to think this is all the entitled whining of spoiled kids. They don’t understand that these kids accepted a home mortgage worth of debt before they ever even had a regular income, based on phony promises, and that the debt is inescapable, regardless of life circumstances or ability to pay.

• New York Times: Where Do You Rank Among the 99 (or 1) Percent? By Ann Carrns. Excerpts: The persistent Occupy Wall Street movement has taken on the debate over rising income inequality, with its notion of 99 percent of the population being exploited by a wealthy 1 percent. Doesn’t that make you a little bit curious, about where your income — and tax burden — places you, in comparison to the rest of your fellow citizens?

  Kiplinger has a calculator feature that lets you enter your adjusted gross income (that’s Line 37 from your Form 1040 tax return, or Line 4 on the 1040EZ), and shows you where you fall. To find out where you rank, try the tool.

• ThinkProgress: It Wasn’t Always This Way: America’s 99 Percent Used To Have A Much Greater Share Of The Nation’s Riches. By Zaid Jilani. Excerpts: The 99 Percent Movement was born out of the fact that the country has grown incredibly unequal and millions of Americans are struggling to get by. The richest 1 percent of the country now owns more than 40 percent of the wealth and takes home nearly a quarter of national income.

  The common retort to this by the defenders of the economic status quo is that these disparities are a natural result of capitalism, and that those who complain about them are fundamentally against markets. Indeed, when the protests on Wall Street began, much of the media instantly referred to demonstrators as “anti-capitalist.”

  But the truth is that the American economy wasn’t always structured in a way that so generously rewarded the one percent while giving the 99 percent less and less. Following the Second World War, widespread unionization, higher and fairer tax rates on the wealthiest Americans, and New Deal policies helped craft an economy with widespread prosperity. In fact, if you look at income growth in period between 1947 and 1949, it was approximately equal across the board. Meanwhile, income gains between 1980 and 2007 went overwhelmingly to the richest Americans. The following chart, assembled by Connect The Dots USA using data from the Congressional Budget Office and United for a Fair Economy, demonstrates this...

• New York Times op-ed: It’s Consumer Spending, Stupid. By James Livingston. Excerpts: As an economic historian who has been studying American capitalism for 35 years, I’m going to let you in on the best-kept secret of the last century: private investment — that is, using business profits to increase productivity and output — doesn’t actually drive economic growth. Consumer debt and government spending do. Private investment isn’t even necessary to promote growth.

  This is, to put it mildly, a controversial claim. Economists will tell you that private business investment causes growth because it pays for the new plant or equipment that creates jobs, improves labor productivity and increases workers’ incomes. As a result, you’ll hear politicians insisting that more incentives for private investors — lower taxes on corporate profits — will lead to faster and better-balanced growth.

  The general public seems to agree. According to a New York Times/CBS News poll in May, a majority of Americans believe that increased corporate taxes “would discourage American companies from creating jobs.”

  But history shows that this is wrong. ...

  Consumer spending is not only the key to economic recovery in the short term; it’s also necessary for balanced growth in the long term. If our goal is to repair our damaged economy, we should bank on consumer culture — and that entails a redistribution of income away from profits toward wages, enabled by tax policy and enforced by government spending. (The increased trade deficit that might result should not deter us, since a large portion of manufactured imports come from American-owned multinational corporations that operate overseas.)

  We don’t need the traders and the C.E.O.’s and the analysts — the 1 percent — to collect and manage our savings. Instead, we consumers need to save less and spend more in the name of a better future. We don’t need to silence the ant, but we’d better start listening to the grasshopper.

• The Christian Science Monitor: A long, steep drop for Americans' standard of living. Not since at least 1960 has the US standard of living fallen so fast for so long. The average American has $1,315 less in annual disposable income now than at the onset of the Great Recession. By Ron Scherer. Excerpts: Think life is not as good as it used to be, at least in terms of your wallet? You'd be right about that. The standard of living for Americans has fallen longer and more steeply over the past three years than at any time since the US government began recording it five decades ago.

  Bottom line: The average individual now has $1,315 less in disposable income than he or she did three years ago at the onset of the Great Recession – even though the recession ended, technically speaking, in mid-2009. That means less money to spend at the spa or the movies, less for vacations, new carpeting for the house, or dinner at a restaurant. ...

  Income loss is hitting the middle class hard, especially in communities where manufacturing facilities have closed. When those jobs are gone, many workers have ended up in service-sector jobs that pay less. "Maybe it's the evolution of the economy, but it appears large segments of the workforce have moved permanently into lower-paying positions," says Joel Naroff of Naroff Economic Advisors in Holland, Pa. "The economy can't grow at 4 percent per year when the middle class becomes the lower middle class." ...

  Even people with college degrees are feeling the squeeze. On a fall day, Hunter College graduate and Brooklyn resident Paul Battis came to lower Manhattan to check out the Occupy Wall Street protest. He tells one of the protesters that America's problem is the various free-trade pacts it has approved. Mr. Battis's angst over trade is rooted in the fact that two years ago he lost his data-entry job with a Wall Street firm that decided to outsource such jobs to India.

  Reader comments concerning this article. Selected comments follow:

  • It is a sad commentary on America that now these kinds of stories are finally being written. We in the rest of the nation have been suffering long term and just now many of those in Washington and New York are beginning to see a problem.

    Mr Romney stated last night that the foreclosure process needed to be allowed to run its course so that investors could buy up the houses and rent them to the "little people." This shows how out of touch he is to the severity of the problem. I don't understand how this will help all the current and former home buyers who bought homes based on the recommendations of people like Mr. Romney, as an investment, and have now lost all of their wealth; which went into down payments and monthly payments on a devalued asset that might never regain the value it lost. ...

    We have entered another era of "robber barons," a small group of super wealthy families who control the majority of the nation's wealth. I understand the allure to the middle class of allowing these super rich to escape paying taxes, but don't think the comprehension level is there for these same folks to understand how damaging this type of economy is to a nation. The American dream that "someday I'll be rich like that," is the reasoning behind this irrational desire to not tax the super rich, but the odds of the average American ever becoming super rich are astronomical.

  • Ideas to fix the economy: -Reinstate Glass Steagall separating commercial and investment banks by law. -Promote infrastructure banks that invest in small businesses and innovation-the source of most of our job growth. (The big banks are good at creating bubbles, terrible at creating jobs). -End government loans at under 1% interest that can be invested by banks into US treasuries with 2% or more return. -At minimum return to the tax rates of the 90s. -Overturn Citizens United to help cut down on corruption in our political system. -Reform Wall Street to give the People a greater voice in determining the direction of investments for the future of America's economy (make the capitalists accountable, or just take some of that power away from them).
  • What we are seeing is the effect of free-market capitalism, accent on the free. Capitalism, as it is practiced in America, is based on the mistaken premise that anyone who works hard enough, long enough can get rich. That carrot, dangling in front of our myopic eyes, leads many of us to accept the argument that by encouraging the concentration of wealth to continue unhindered, the benefits of that concentration will trickle down to the rest of us. Unfortunately, our capitalism is not the trickle-down variety, it is the trickle up variety. Wealth is amassed by those who have figured out how to get the other 99% us to send along our nickels and dimes to them, buying their products and using their services.

    Wealth is accumulated by converting every opportunity into profit and keeping as much of the profit as possible. So if the opportunity arises to increase profit by importing cheaper goods from China, the opportunity is seized. If the opportunity arises to increase profits by hiring cheap (if illegal) labor instead of those higher paid employees currently doing the work, the opportunity is seized. If the opportunity arises to increase profits by dumping hazardous waste into a nearby river instead of dealing with it safely, the opportunity is seized. If the opportunity arises to increase profits by lying to anyone who will listen, the opportunity is seized. If the opportunity arises to increase profits by squeezing out potential competitors, the opportunity is seized. If the opportunity arises to increase profits by contributing to potentially useful legislators, the opportunity is seized.

    One of the legitimate functions of government is to assure that the opportunities are not seized too freely or recklessly. We can not perform that function adequately because there are many of us who don't want it performed, each believing that if he works hard enough and long enough, he might be the one doing the seizing.

    This is our brand of capitalism, and this is the society we get as a result.

• USA Today: Company directors see pay skyrocket By Gary Strauss. Excerpts: Directorships, already among the best-paying part-time jobs in Corporate America, are becoming even more lucrative. Fortune 500 directors could receive median pay of nearly $234,000 in 2011. That's a 10% jump from the 2010 median of $212,500, according to an analysis out Wednesday by compensation consultant Towers Watson. ...

  Directors are tasked with overseeing management, executive pay and corporate strategy. Typically, their ranks have been filled by CEOs and retired executives. Aside from a handful of board and committee meetings, directorships typically consume little time. A recent National Association of Corporate Directors study found directors averaging just 4.3 hours a week on board work.

  Critics says directors are largely overpaid and ineffective. "Far too much of their time has been for check-the-box and cover-your-behind activities rather than real monitoring of executives and providing strategic advice on behalf of shareholders," says John Gillespie, a former investment banker and co-author of Money for Nothing: How the Failure of Corporate Boards is Ruining American Business and Costing Us Trillions.

• New York Times op-ed: Crony Capitalism Comes Home. By Nicholas D. Kristof. Excerpts: I’m as passionate a believer in capitalism as anyone. My Krzysztofowicz cousins (who didn’t shorten the family name) lived in Poland, and their experience with Communism taught me that the way to raise living standards is capitalism. But, in recent years, some financiers have chosen to live in a government-backed featherbed. Their platform seems to be socialism for tycoons and capitalism for the rest of us. They’re not evil at all. But when the system allows you more than your fair share, it’s human to grab. That’s what explains featherbedding by both unions and tycoons, and both are impediments to a well-functioning market economy.

  When I lived in Asia and covered the financial crisis there in the late 1990s, American government officials spoke scathingly about “crony capitalism” in the region. As Lawrence Summers, then a deputy Treasury secretary, put it in a speech in August 1998: “In Asia, the problems related to ‘crony capitalism’ are at the heart of this crisis, and that is why structural reforms must be a major part” of the International Monetary Fund’s solution.

  The American critique of the Asian crisis was correct. The countries involved were nominally capitalist but needed major reforms to create accountability and competitive markets.

  Something similar is true today of the United States. ...

  Capitalism is so successful an economic system partly because of an internal discipline that allows for loss and even bankruptcy. It’s the possibility of failure that creates the opportunity for triumph. Yet many of America’s major banks are too big to fail, so they can privatize profits while socializing risk.

  The upshot is that financial institutions boost leverage in search of supersize profits and bonuses. Banks pretend that risk is eliminated because it’s securitized. Rating agencies accept money to issue an imprimatur that turns out to be meaningless. The system teeters, and then the taxpayer rushes in to bail bankers out. Where’s the accountability? ...

  Lawrence Katz, a Harvard economist, adds that some inequality is necessary to create incentives in a capitalist economy but that “too much inequality can harm the efficient operation of the economy.” In particular, he says, excessive inequality can have two perverse consequences: first, the very wealthy lobby for favors, contracts and bailouts that distort markets; and, second, growing inequality undermines the ability of the poorest to invest in their own education. “These factors mean that high inequality can generate further high inequality and eventually poor economic growth,” Professor Katz said. ...

  So, yes, we face a threat to our capitalist system. But it’s not coming from half-naked anarchists manning the barricades at Occupy Wall Street protests. Rather, it comes from pinstriped apologists for a financial system that glides along without enough of the discipline of failure and that produces soaring inequality, socialist bank bailouts and unaccountable executives. It’s time to take the crony out of capitalism, right here at home.

• The Smirking Chimp: A Generation of CEOs Who Don't Know How to Raise Wages. By Dean Baker. Excerpts: Those who follow the rants from our business leaders and their allies in politics and the media have been struck by a disquieting cry in recent months. We have been repeatedly told that, even though we have more than 25 million people unemployed or underemployed, businesses are unable to find qualified workers.

  For example, last week New York Times columnist Thomas Friedman took us to Illinois where Doug Oberhelman, the CEO of Caterpillar, one of the largest companies in the country, complained that he could not find qualified hourly workers for his manufacturing facilities. Oberhelman went on to complain that he also could not find engineering service technicians or even welders.

  Friedman also recounted a conversation with Chicago's new mayor, former Obama Chief of Staff, Rahm Emanuel. According to Friedman, Emanual complained about "staring right into the whites of the eyes of the skills shortage." Friedman recounts a story from Emanuel about two young CEOs in the healthcare software business who claimed that they have 50 job openings today, but can't find the people. ...

  While the experience of CEOs cited by Friedman might appear to be atypical since it is not reflected in the data, there is another aspect to the problem that is even more disconcerting. These CEOs apparently do not know how a business is supposed to respond to the inability to find qualified workers.

  According to standard economics, when businesses can't fill job openings, they are supposed to offer higher wages. If these businesses offered higher wages, then they could lure away workers from their competitors. They may also be able to attract workers from other states or even other countries. Certainly there are workers somewhere in the world who have the skills that are needed to work at Caterpillar or at software firms run by Mr. Emanuel's friends. If these CEOs raised wages high enough, then these workers would be willing to work for their companies.

  However, they have not chosen to raise wages to the market clearing level for some reason and therefore can't get the workers they want. Apparently, these CEOs do not know how to raise wages.

  This inability to raise wages is also reflected in the data. There is no major occupation group that has seen substantial increases in real wages over the last decade. Even college graduates as a group (excluding those with a post-graduate degree) have not seen an increase in real wages over the last decade. This indicates either there is no problem of skills shortages or that companies are increasingly being run by CEOs who do not know how to increase wages.

• Financial Times (United Kingdom): Take note America: the public is angry. By Moisés Naím. Excerpts: Being stuck in traffic is more bearable if the other lanes are moving. If all lanes are jammed for a long time, tempers flare. And if the police eventually arrive and let a few selected cars get out of their lanes and move through a special path, a riot is likely to ensue. This in short is the sentiment that propels the Occupy Wall St protests. We should take note.

  The traffic jam metaphor for the political consequences of economic mobility was originally proposed by Albert Hirschman, the noted economist, in 1973 to explain changes in tolerance for income in equality in poor countries. The idea was as simple as it was powerful: even a modicum of social mobility – sparked by economic growth – buys patience and political stability in developing countries. As people see their relatives and neighbours improve their lot they are willing to wait for their turn.

  This idea, which was offered to explain the tolerance for inequality in poor countries, is now in theory applicable to some of the world’s wealthiest nations – except that the Occupy Wall Street crowds, the protesters in the City of London, or the Italian and Greek protesters are getting out of their “cars”, and clashing with the police not just because they see their “traffic lane” horribly jammed. It’s also because they are moving backwards.

  They are also paying more attention to the fact that others are advancing thanks to what they perceive as tricks, special privileges and corner-cutting. This is not about hopes sparked by others doing well, but about the collective rage at an elite doing obscenely well while the rest backslides.

• New York Times op-ed: America’s Exploding Pipe Dream. By Charles M. Blow. Excerpts: We are slowly — and painfully — being forced to realize that we are no longer the America of our imaginations. Our greatness was not enshrined. Being a world leader is less about destiny than focused determination, and it is there that we have faltered.

  We sold ourselves a pipe dream that everyone could get rich and no one would get hurt — a pipe dream that exploded like a pipe bomb when the already-rich grabbed for all the gold; when they used their fortunes to influence government and gain favors and protection; when everyone else was left to scrounge around their ankles in hopes that a few coins would fall. ...

  We have not taken care of the least among us. We have allowed a revolting level of income inequality to develop. We have watched as millions of our fellow countrymen have fallen into poverty. And we have done a poor job of educating our children and now threaten to leave them a country that is a shell of its former self. We should be ashamed. Poor policies and poor choices have led to exceedingly poor outcomes. Our societal chickens have come home to roost.