The Empire Strikes Back

Expect to hear lots of screams about how entire industries and the economy are being destroyed by greedy strikers. This is how the writhing of the rich plays out when those who have long labored to make them rich start burning them a little in order to get a little more lucre out of their lusty hands at long last.

This week provided a scorching example of how wrong markets have been about inflation, and a lot of it centered around the Fed doing what it said it would and labor strikes. Because the Fed did exactly what the Fed had been strongly indicating it would do ever since its last FOMC meeting, the S&P 500 and Nasdaq both put in their worst week since the banking collapse back in March. We also had a fall bondfire in the Treasury market. As one economist writes today, the Treasury market didn’t just get the memo “higher for longer,” at last, but it appears someone scribbled in next to it “maybe forever!”

The best example of how inflation becomes sticky and puts in a second run back up is playing out big in the labor market. One headline today states that the present situation with labor unions could make 2023 the biggest year for labor activity in nearly four decades. That would be exactly as long as real wages have completely stagnated since the Reagan days.

Burned by the first round of inflation, workers are hot under the collar to make sure they claw back every penny they have lost to inflation since Covid. Strengthened by the enduring labor shortage, they have the power now to get it; and the situation is tilted enough in their favor in terms of real justice in the public mind, after years of absolutely obscene corporate greed in the executive suites and board rooms of America, that the leading presidential candidates from both parties are heading to Michigan to stand alongside autoworkers, according to today’s news, ostensibly to support them against the greedy take-all, let-nothing-trickle-down corporate owners whose polices assured that real wages haven’t risen since the days of Ronald Reagan, while executives and shareholders in the top tier of society have seen astronomical real increases in their income and especially in the wealth they’ve accumulated over all those years.

So, labor is fighting fiercely, and that is how a first big flame-up of inflation flares back up a second time just as the Fed and its many admirers think they are starting to win the war. Inflation becomes sticky when labor finally gets so Fed-up from monetary polices that inured only to the wealthy for decades that labor gets fierce. To the extent that the corporate bosses hand off to the consumer those higher labor costs that they will certainly end up paying, the embers of dying inflation get oxygen, and the flames rise again. The shareholders have more than enough room to end all those stock buybacks and use that surplus corporate cash to pay workers and still see attractive (but not obscene) gains for themselves, but there is not much chance of that. They are used to feeling entitled to 20% gains a year.

They will do their best to run the corporate media to maintain that the wage increases are to blame for inflation, even though a study by the Fed recently said that the tight fists of the top 1% are doing more to fuel inflation than labor is. All the money creation by banks that the Fed has fueled has gone to the benefit of the 1%. Of course, that could easily be seen all along as baked into the Fed’s plan by those who have eyes to see, but the Fed would like to blame the greed on the 1% (an abstract bunch) than blame themselves specifically for their own culpability in running a plan that clearly was never trickling down or flowing broadly to a larger bunch of people.

Janet Yellen pretended to be a caring grandmother to all, but really? How could you not know that creating all the new money inside of the reserve accounts of massively wealthy banks would result in tight eddies in the money flow that circled back only to the rich bankers, themselves, and those at the top where those rich bankers focus their business? Even if the Fed heads were truly not wise enough to figure that out from the get-go, they certainly could see it in all the data coming in over the past years! It was hidden in plain sight.

So, the 99% are fighting back, and the 1% will try to pass 100% of all the increased labor costs back to the 99% by charging more for everything the 99% buy from them, rather than taking a dent in their massive profits in the form of dividends, the huge personal salary increases, the obscene stock options plus enormous stock gains they engineered through stock buybacks that used all of that excess company cash and company credit that they have seen because of all the asset inflation from decades of Fed balance-sheet expansions Fed-directed into the asset classes utilized most by the rich, ostensibly to create a “wealth effect” that would trickle down to the rest of us.

They just didn’t emphasize from the beginning how small the trickle would be — drips of water steaming off the baking dust.

So, yes, the Fed’s worst fear — that labor would start demanding a lot more, rather than the token amounts the Fed said it wanted to see happen — is being realized in the news this week.

And, of course, in the Hollywood writers strike where we have the celebrity rich who run the production business, we have heard nothing but woeful cries about how giving actors control over what AI does with their images and giving better scale to those actors that wait tables for a living will destroy the whole industry. Those greedy actors, they say, will bring the industry down. It is hardly possible in their view that their own greedy grasp on the billions that they refuse to give to the lower-paid levels of actors make the producers the ones who are willing to bring the industry down, rather than settle for making tens of millions a year, instead of billions.

This is not a case of millionaire actors striking for more for themselves. Everything they make is by individual contract negotiation based on their financial value to the picture, and has NOTHING to do with scale wages. It is those who are just making scale. Most actors, remember, are still starving artists, not the big celebrities that command big individual contracts. The ones who are millionaire actors are striking in solidarity with their lower colleagues but especially striking for their own right to control how their own names and faces are used so as not to simply become models whose past images are reinvented by AI to do all the acting.

It is the right for their face and name and voice and mannerisms and personality to be controlled by them. If they are willing to have AI manipulate all of that to create special effects, etc., that should be their choice, they think. The producers think it should be the producers’ choice, and some producers are so greedy they think they shouldn’t even have to pay for that use. They should, in other words, virtually own you.

These are the true entitled people in society — the 1% who actually believe the 99% are destroying society if the 1% have to give any ground. The question is whose stories will you believe? The ones who own all the major story publishers in order to control the narrative as much as possible or the 99% who are now fighting back?