If the US power elite were "irrational" to pursue the Iraq War, their "irrational" behavior was solidly supported by an overwhelming majority of the Americans in 2003 -- 73% according to this Gallup poll: <http://www.seniorjournal.com/NEWS/Features/3-03-28GallupWar.htm>.* Living in the empire inclines many, the ruled as well as the rulers, to believe what the rest of the world, especially those in the global South, tend not to believe.
Even after guerrilla attacks against US troops and jihadist terrorism against Iraqi civilians made the occupation increasingly difficult, the Americans, including many self-identified leftists here, contended, for an excruciatingly long time, that Washington should not withdraw troops unless and until they quell the insurgency, pacify Iraq and reconstruct it, and/or have the UN, the Arab League, or another institution send substitute "peace-keepers" into Iraq to prevent civil war. Hence Bush's re-election. It's only recently that self-identified leftists finally decided that immediate US withdrawal was necessary. Liberals have yet to be convinced.
The Iraq War has been a disaster for the Iraqis, and it has had a much smaller but still negative impact on American workers, too, but it has not hurt the US ruling class _at all_: the share of their income has gone up, for instance.
<http://www.nytimes.com/2006/08/28/business/28wages.html> <http://graphics8.nytimes.com/images/2006/08/28/business/28wages_chart.jpg>
August 28, 2006 Real Wages Fail to Match a Rise in Productivity By STEVEN GREENHOUSE and DAVID LEONHARDT
With the economy beginning to slow, the current expansion has a chance to become the first sustained period of economic growth since World War II that fails to offer a prolonged increase in real wages for most workers.
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The median hourly wage for American workers has declined 2 percent since 2003, after factoring in inflation. The drop has been especially notable, economists say, because productivity -- the amount that an average worker produces in an hour and the basic wellspring of a nation's living standards -- has risen steadily over the same period.
As a result, wages and salaries now make up the lowest share of the nation's gross domestic product since the government began recording the data in 1947, while corporate profits have climbed to their highest share since the 1960's. UBS, the investment bank, recently described the current period as "the golden era of profitability."
Until the last year, stagnating wages were somewhat offset by the rising value of benefits, especially health insurance, which caused overall compensation for most Americans to continue increasing. Since last summer, however, the value of workers' benefits has also failed to keep pace with inflation, according to government data.
At the very top of the income spectrum, many workers have continued to receive raises that outpace inflation, and the gains have been large enough to keep average income and consumer spending rising.
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Trade unions are much weaker than they once were, while the buying power of the minimum wage is at a 50-year low. And health care is far more expensive than it was a decade ago, causing companies to spend more on benefits at the expense of wages.
Together, these forces have caused a growing share of the economy to go to companies instead of workers' paychecks. In the first quarter of 2006, wages and salaries represented 45 percent of gross domestic product, down from almost 50 percent in the first quarter of 2001 and a record 53.6 percent in the first quarter of 1970, according to the Commerce Department. Each percentage point now equals about $132 billion.
Total employee compensation -- wages plus benefits -- has fared a little better. Its share was briefly lower than its current level of 56.1 percent in the mid-1990's and otherwise has not been so low since 1966.
Over the last year, the value of employee benefits has risen only 3.4 percent, while inflation has exceeded 4 percent, according to the Labor Department.
In Europe and Japan, the profit share of economic output is also at or near record levels, noted Larry Hatheway, chief economist for UBS Investment Bank, who said that this highlighted the pressures of globalization on wages. Many Americans, be they apparel workers or software programmers, are facing more comptition from China and India.
In another recent report on the boom in profits, economists at Goldman Sachs wrote, "The most important contributor to higher profit margins over the past five years has been a decline in labor's share of national income." Low interest rates and the moderate cost of capital goods, like computers, have also played a role, though economists note that an economic slowdown could hurt profits in coming months.
For most of the last century, wages and productivity -- the key measure of the economy's efficiency -- have risen together, increasing rapidly through the 1950's and 60's and far more slowly in the 1970's and 80's.
But in recent years, the productivity gains have continued while the pay increases have not kept up. Worker productivity rose 16.6 percent from 2000 to 2005, while total compensation for the median worker rose 7.2 percent, according to Labor Department statistics analyzed by the Economic Policy Institute, a liberal research group. Benefits accounted for most of the increase.
"If I had to sum it up," said Jared Bernstein, a senior economist at the institute, "it comes down to bargaining power and the lack of ability of many in the work force to claim their fair share of growth."
Nominal wages have accelerated in the last year, but the spike in oil costs has eaten up the gains. Now the job market appears to be weakening, after a protracted series of interest-rate increases by the Federal Reserve.
Unless these trends reverse, the current expansion may lack even an extended period of modest wage growth like one that occurred in the mid-1980's.
The most recent recession ended in late 2001. Hourly wages continued to rise in 2002 and peaked in early 2003, largely on the lingering strength of the 1990's boom.
Average family income, adjusted for inflation, has continued to advance at a good clip, a fact Mr. Bush has cited when speaking about the economy. But these gains are a result mainly of increases at the top of the income spectrum that pull up the overall numbers. Even for workers at the 90th percentile of earners -- making about $80,000 a year -- inflation has outpaced their pay increases over the last three years, according to the Labor Department.
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In 2004, the top 1 percent of earners -- a group that includes many chief executives -- received 11.2 percent of all wage income, up from 8.7 percent a decade earlier and less than 6 percent three decades ago, according to Emmanuel Saez and Thomas Piketty, economists who analyzed the tax data.
* According to the same Gallup poll, the poorest Americans were the least enthusiastic for the invasion of Iraq, though a majority of them, too, supported it:
<http://www.seniorjournal.com/NEWS/Features/3-03-28GallupWar.htm> Opinion on U.S. War With Iraq by Demographic Group
Income less than $30,000 Favor 58 Oppose 38
Income $30,000 to less than $50,000 Favor 79 Oppose 19
Income $50,000 or greater Favor 77 Oppose 21 -- Yoshie
