Looking at today's GDP number, thru the lens of Kevin Phillips' book...

[RichM]

Today, the Commerce Department reported a surprisingly happy number for 2Q GDP. It rose at a 2.4% annual rate, rather than the 1.5% that was expected.

To be brutally & unforgiveably brief in summarizing the mass of statistical data presented by Kevin Phillips' "Wealth and Democracy": since the late 1970's, almost all of the gains in US national income have gone to the top few percent of the population. NONE of it has gone to the bottom 80% of the population. A few miserable crumbs have gone to percentiles 80 thru 90. And of the lucky top 10%, the lion's share has gone to the top one percent.

Let's add on 2 more facts, then draw the logical conclusion:
1) The main force driving today's GDP number was a startling 44% increase in military spending. This reflects an arbitrary government decision, not broad "market demand."
2) Pentagon contracts are known to be phenomenally graft-ridden. They are generally awarded on a no-bid cost-plus basis, which is why you get $750 hammers and $1200 toilet seats. The contracts go to well-connected companies, which means, to Bush's cronies or Rumsfeld's college roommates. There is no cost control or monitoring that can't be fudged or lied about.

So what does this all mean? On the surface, the "good" GDP number SOUNDS like the great elixir "economic growth." Everyone's boat rises when the economy grows, right?

Wrong. All it actually means is that the US government decided to blow a hell of a lot of money on the Pentagon. The money all went, no doubt, to companies who contribute faithfully to the GOP. There are no cost controls, so a lot of the contracts were for the kin & cousins of $1200 toilet seats. (After all, why not? The Bush administration doesn't care if it overpays, because it's not their money. It's OUR money. In fact, the precise point of the whole exercise is to overpay, to make the contractors happy.)

If they pay $2400 per toilet seat instead of "only" $1200, it makes the GDP number proportionately higher. (The size of the "contract" is bigger.) But, now recalling the point from Phillips' book, this does NO ONE any good, except for the top few percent of the population. And needless to say, the military gear itself has no social value whatever, because the goddamn military already has enough toys to last it for 5 doomsdays.

Putting the whole picture together: we achieve higher profits for Northrop-Grumman, and more impressive "growth" figures, by a corrupt process of awarding contracts to cronies, to waste society's resources on stuff the world doesn't need. Bush's friends come out ahead. No one else does.

This is the magic of crony capitalism at work. :puke: