Something about this recession is bugging me but I’m not exactly sure what it is. I sort of feel like I’m playing with a connect the dots puzzle that’s missing some dots and possibly has some dots in the wrong place. It’s times like these I wish I’d followed my dreams to go into journalism. But, I didn’t.
So, instead of investigative journalism, you’re getting a brain dump of the things that bother me.
Is it just me or is this recession/depression full of stories of the lower and middle classes struggling, losing homes, and jobless? Where are the stories of the rich losing their fortunes?
One of the popular theories of the Great Depression was that inequality was the root cause of the depression. From Wiki: “According to this view, the root cause of the Great Depression was a global over-investment in heavy industry capacity compared to wages and earnings from independent businesses, such as farms. The solution was the government must pump money into consumers’ pockets. That is, it must redistribute purchasing power, maintain the industrial base, but re-inflate prices and wages to force as much of the inflationary increase in purchasing power into consumer spending. The economy was overbuilt, and new factories were not needed. Foster and Catchings recommended federal and state governments start large construction projects, a program followed by Hoover and Roosevelt.”
Companies are sitting on huge piles of cash. I’m not just thinking about Apple and their $76B in cash reserves. Check out this quote from a MarketWatch article: “A MarketWatch and FactSet Research review of second-quarter regulatory filings shows that as of June 30, the overall amount of cash and short-term investments for 24 of the 30 companies that make up the Dow Jones Industrial Average had surged 18% to $256 billion from a year ago.”
I literally live on the borderline of one of the affluent suburbs in Miami. Let me give you some statistics from CityData on the differences:
- Affluent Neighborhood has 94% of their homes occupied. Miami has 90%. In Affluent Neighborhood, renters make up 34% while in Miami, renters make up 65% of the population.
- In 2009, the Median Gross Rent in Affluent Neighborhood was $1,388. In Miami, it was $838.
- In 2009, 35% of households in Affluent Neighborhood had incomes of $100k and up. In Miami, it’s only 7%. As a matter of fact, in Affluent Neighborhood there were 2,616 households with incomes of $200k and up. In Miami, there were 2,661. Miami has more than ten times the number of households in Affluent Neighborhoods.
- In Miami, 21% of households are run by single parents. Only 7% of households in Affluent Neighborhood are in the same situation.
- In Affluent Neighborhood, 41% of females 25 years old and up have a Bachelors, Masters, or Doctorate. In Miami, it’s only 12%. To contrast, in Affluent Neighborhood only 37% of males 25 years old and up have a Bachelor, Masters, or Doctorate. In Miami, it’s 12.4%.
- 43.1% of residents of Affluent Neighborhood speak English at home. In Miami it’s only 25.4%. Not surprising when 59.5% of Miami’s population is Foreign-Born and of those only 41.6% are naturalized citizens. Compare that to only 37.9% of Affluent Neighborhood’s population being Foreign-Born and of those, 64.3% are naturalized citizens.
- The unemployment rate among males in Affluent Neighborhood averages 7.4% while in Miami it averages 10%.
In Affluent Neighborhood, one of the most prestigious car dealerships sits a block away from at least two more luxury vehicle dealerships. They’re not suffering. As a matter of fact, they’re expanding to include McLarens in Fall of 2011. You know—the car with a starting price tag of $229,000 for their base model with zero options. In Miami, car lots are mostly abandoned, shuttered, or demolished. Some have been converted to empty strip malls.
My newspapers are rich with stories of unions being forced to big concessions, libraries possibly being shuttered, programs being slashed or shut down, and huge payouts to local government officials among termination either via layoff, retirement, or being fired for violations not to mention six figure salaries for new hires in the top echelons.
What’s going on?