US, Cuba to normalize relations  The United States and Cuba have agreed to re-establish diplomatic relations and open economic and travel ties, marking a historic shift in U.S. policy toward the communist island after a half-century of enmity dating back to the Cold War, American officials said Wednesday.

DEVELOPING NEWS

Looking at Income Inequality

Updated: Friday, May 16, 2014
Looking at Income Inequality story image
KALAMAZOO, Mich. (NEWSCHANNEL 3) - A surprise best-selling French author has stoked the fires of class warfare in the United States with the recent publication of his book "Capital in the 21st Century."

Tonight, in Tom's Corner, our Tom Van Howe says whether the book is right or wrong is irrelevant right now; its publication has people talking.

=====================

The author's name is Thomas Piketty. And his premise is this: unless governments start using heavy taxes to break up large concentrations of wealth, our economy and the world's economy will become increasingly unbalanced, with only a few people inheriting massive fortunes.

And he says the only way to penetrate that socio-economic class would be to marry into it--because good old-fashioned hard work won't get you there.

The book has been pretty much kicked to the dirt by conservatives and hailed by liberals. I'm stuck in the middle because I struggled with economics in college.

But I'm not sure you need  a dollars-and-sense degree to get a sense that things aren't going well--that somehow the game is rigged; that the fix is in.

Take a look. The pay of the typical American worker peaked in 1978 and has been dropping ever since.

Since 2000, the wages of the median male worker across all age brackets has dropped 10 percent after inflation.

Compare that to what has happened to CEO's over that same period of time. According to former Labor Secretary Robert Reich, until about 1980, CEO's were paid, on average, 30 times what their typical worker was earning.

Since then, CEO pay has skyrocketed to roughly 300 times the pay of a typical worker.

Its good to be on top--not so good for those who are not.

And I can hear you say, 'Well, let's not pick on the job creators.'

But I can't find a single economist to say they're creating that many jobs.

What those CEO's are doing instead is taking their millions and investing it. Maybe hoarding it is a better word.

Maybe--just maybe--if they increased the pay of their workers, those same  workers would have more money in their pockets to buy more of the product they're making.

Kind of like Henry Ford, who doubled the pay of his workers to five dollars a day, so they'd be able to afford their own cars.

That would seem to be a good thing for the economy.

If a company can sell more of what is has to sell, it has reason to expand and hire more people. So customers are really the job creators.

Absent that, however, what do we do to level the paying field?

The french economist Piketty says we ought to start by taxing the hell out of the wealthy and then redistribute all that money to balance the scales.

But--to be real--that doesn't seem likely.

After all, our lawmakers, who rely on the monied classes for their political survival, aren't going to start gnawing on the hands that feed them. Can't see that happening next week.

How about the return of labor unions? To sit down and negotiate wages and benefits.

Well, unions are out of vogue right now, and while we do have the right to collectively bargain in this country, why don't you try organizing a union chapter where you work and see where that gets you.

The best idea I've heard so far is in a bill coming up for consideration in California.

It called Senate Bill 1372, and would set corporate tax rates according to the ratio of CEO pay to that of a typical worker.

The higher the ratio, the higher the tax. The lower the ratio the lower the tax.

All of a sudden, board members at 'Corporation A,' who set CEO pay, would have to start answering to stock holders who'd suddenly have a different set of questions.

I don't know if the Frenchman's book about capitalism is on target or not, but it has, indeed, set people to talking.

The elephant has left the building and we're talking about class warfare in this country as if it were a real thing.

And that's good--because it is.

In this corner...I'm Tom Van Howe.

Business News

Last Update on December 17, 2014 18:36 GMT

UNITED STATES-CUBA

WASHINGTON (AP) -- President Barack Obama has announced the re-establishment of diplomatic relations and an easing in economic and travel restrictions on Cuba.

Speaking at the White House, Obama said "Isolation has not worked," and "It's time for a new approach."

Licensed American travelers to Cuba will now be able to return to the U.S. with $400 in Cuban goods, including tobacco and alcohol products worth less than $100 combined. This means the long-standing ban on importing Cuban cigars is over, although there are still limits. The U.S. is also increasing the amount of money Americans can send to Cubans from $500 to $2,000 every three months.

Obama's action marked an abrupt use of U.S. executive authority. However, he cannot unilaterally end the longstanding U.S. economic embargo on Cuba, which was passed by Congress and would require action from lawmakers to overturn.

MENINGITIS OUTBREAK

BOSTON (AP) -- Federal prosecutors say the indictment of 14 people in connection with a meningitis outbreak that killed 64 people nationwide is the largest criminal case ever brought in the U.S. over contaminated medicine.

During a news conference Wednesday to announce the indictments, prosecutors said some employees of the New England Compounding Pharmacy showed an "extreme and appalling indifference to human life."

Barry Cadden, a co-founder of the pharmacy, and Glenn Adam Chin, a pharmacist, were hit with the most serious charges in a racketeering indictment, accused of causing the deaths of patients in several states.

More than 750 people in 20 states were sickened and 64 died after they contracted meningitis and other infections from tainted steroids made by the company.

CHEMICAL SPILL-WEST VIRGINIA

CHARLESTON, W.Va. (AP) -- A grand jury has indicted four former executives of a chemical company on pollution charges in a spill that prompted a drinking water ban for 300,000 West Virginia residents.

An indictment unsealed Wednesday charges ex-Freedom Industries presidents Gary Southern and Dennis P. Farrell and two others with failing to ensure that Freedom operated the terminal that leaked in a reasonable and environmentally sound manner.

Southern also faces fraud charges related to the company's bankruptcy case. Freedom filed for bankruptcy eight days after the spill of coal-cleaning chemicals into the Elk River in Charleston.

The others charged are William E. Tis and Charles E. Herzing, who along with Farrell owned Freedom until December 2013. They sold it to Chemstream Holdings, after which Southern became president.

SONY HACK

NEW YORK (AP) -- The New York premiere of the comedy "The Interview" has been canceled following threats of violence against theaters carrying it.

The Seth Rogen and James Franco comedy is about a CIA plot to kill North Korea's Kim Jong Un, and security fears have spurred Sony to allow theater chains to cancel showings.

The New York premiere was scheduled for tomorrow night and the movie is expected to debut Christmas Day.

The Department of Homeland Security says there's "no credible intelligence to indicate an active plot against movie theaters," but it says it's still analyzing messages from a shadowy group calling itself Guardians of Peace, which has escalated its attack beyond the hacking of private Sony emails.

The group had released a trove of data files including 32,000 emails to and from Sony Entertainment CEO Michael Lynton.

SPRINT-CRAMMING LAWSUIT

WASHINGTON (AP) -- Federal regulators are accusing Sprint Corp. of illegally billing its wireless customers tens of millions of dollars in unwanted charges for text message alerts and other services.

The Consumer Financial Protection Bureau said Wednesday it has sued the telecom company over billing for unauthorized charges, a practice known as "cramming." The agency said Sprint failed to oversee third-party companies, allowing illegal charges to be put on customers' bills.

The bureau said the charges ranged from one-time fees of 99 cents to $4.99, to monthly subscriptions costing $9.99 a month. It said Sprint received up to 40 percent of the revenue from the charges.

The Wall Street Journal reported that the Federal Communications Commission is expected to fine Sprint a record $105 million for the alleged violations.

CONSUMER PRICES

WASHINGTON (AP) -- Plunging gasoline costs caused U.S. consumer prices to drop in November, muting inflation across the entire economy.

The Labor Department says the inflation reading fell 0.3 percent last month, after prices were flat in October. Gas costs plummeted 10.5 percent in November, the steepest decline in nearly six years.

Core inflation, which excludes volatile energy and food prices, rose 0.1 percent in November. For the past 12 months, overall inflation has risen 1.3 percent while core inflation has increased 1.7 percent.

Both annual gains are well below the Federal Reserve's 2 percent inflation target. This gives Fed officials who end their policy meeting Wednesday afternoon significant leeway to keep a key interest rate at near zero, which helps infuse the economy with capital to boost economic growth and hiring.

CURRENT ACCOUNT

WASHINGTON (AP) -- The U.S. current account trade deficit widened slightly in the July-September quarter, largely due to foreign institutions paying less in fines and penalties to the U.S. government.

The Commerce Department says the deficit in the current account rose to $100.3 billion in the third quarter, up 1.9 percent from the revised $98.4 billion deficit in the April-June period.

The increase occurred despite a drop in the trade deficit for goods and services, reflecting cheaper oil prices and a stronger dollar. The deficit widened because fines collected by the U.S. government fell to $27.8 billion from $40.1 billion in the previous quarter.

The current account is the broadest measure of trade, covering not only the flow of goods and services but also investment flows.

FEDERAL RESERVE

Fed meeting wraps up

Eds: Statement expected at 2 p.m. EST; Yellen news conference at 2:30 p.m. EST.

WASHINGTON (AP) -- The U.S. economy is doing better, and the Federal Reserve may be ready to acknowledge that fact.

Fed policymakers wrap up their latest meeting with a statement on interest rates this afternoon. Analysts are expecting they will drop a promise to keep rates low for a "considerable time."

Dropping that language would be viewed as a signal that the Fed is moving closer to an interest rate hike, though no immediate change in monetary policy is expected.

The Fed has said monetary policy will return to normal sometime next year following its history-making stimulus in the aftermath of the 2008 global crisis. Most economists expect it will wait at least until June to raise short-term rates.

The Fed will also update its economic forecast today, and Fed Chair Janet Yellen is scheduled to hold a news conference this afternoon.

EARNS-FEDEX

MEMPHIS, Tenn. (AP) -- FedEx's second-quarter earnings jumped 23 percent, but the package delivery company missed Wall Street forecasts and left its expectation for the full fiscal year unchanged.

FedEx said a jump in plane maintenance costs blunted gains the company reaped from managing costs, lowering its pension expense and growing its export package revenue. The company expects the increase in aircraft maintenance costs to subside starting in the fourth fiscal quarter.

Shares of the Memphis, Tennessee, company fell more than 4 percent in midday trading.

FedEx and rival UPS are heading into their busiest period of the year and hoping to avoid a repeat of last December, when an ice storm and a surge in last-minute online shopping caught them off-guard. About 2 million packages promised for delivery by Christmas Eve didn't make it. This time, FedEx planned to hire 50,000 seasonal workers and invest in its ground-shipping network to make deliveries on time.

BLACKBERRY-CLASSIC

NEW YORK (AP) -- BlackBerry is returning to its roots with a new smartphone called the Classic, featuring a traditional keyboard at a time when rival Apple and Android phones -- and most smartphone customers -- have embraced touch screens.

BlackBerry is courting its core customer, the business user. The physical keyboard is something traditional BlackBerry users prefer because they find it easier to type on than the touch screen devices. The company is also emphasizing battery life and security as a way to set its phone apart from competitors.

The company is trying to stay relevant on the hardware side of the business as it attempts to pivot toward becoming an enterprise security and consumer software company. Whether the Classic will sell enough to keep it in the hardware business is unclear.

advertisement
Washington Times
advertisement