TO COMMENT CLICK HERE
february 16, 2019
CAPITALISM REPRESENTED ITSELF AS FREEING SERFS, SLAVES, ETC. FREEDOM BECAME CAPITALISM'S SELF-CELEBRATION WHICH IT LARGELY REMAINS. YET THE REALITY OF CAPITALISM IS DIFFERENT FROM ITS CELEBRATORY SELF-IMAGE. THE MASS OF EMPLOYEES ARE NOT FREE INSIDE CAPITALIST ENTERPRISES TO PARTICIPATE IN THE DECISIONS THAT AFFECT THEIR LIVES (E.G., WHAT THE ENTERPRISE WILL PRODUCE, WHAT TECHNOLOGY IT WILL USE, WHERE PRODUCTION WILL OCCUR, AND WHAT WILL BE DONE WITH THE PROFIT WORKERS' EFFORTS HELP TO PRODUCE). IN THEIR EXCLUSION FROM SUCH DECISIONS, MODERN CAPITALISM'S EMPLOYEES RESEMBLE SLAVES AND SERFS. YES, PARLIAMENTS, UNIVERSAL SUFFRAGE, ETC. HAVE ACCOMPANIED CAPITALISM - AN ADVANCE OVER SERFDOM AND SLAVERY. YET EVEN THAT ADVANCE HAS BEEN LARGELY UNDERMINED BY THE INFLUENCE OF THE HIGHLY UNEQUALLY DISTRIBUTED WEALTH AND INCOME THAT CAPITALISM HAS EVERYWHERE GENERATED.
RICHARD D. WOLFF
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The rapacity of contemporary capitalism is enabled by the weakness,
dishonesty, and cowardice of the flaccid and collaborationist left.
Luciana Bohne
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Socialism for the Rich, Capitalism for the Poor
Noam Chomsky: Consider this: Every time there is a crisis, the taxpayer is called on to bail out the banks and the major financial institutions. If you had a real capitalist economy in place, that would not be happening. Capitalists who made risky investments and failed would be wiped out. But the rich and powerful do not want a capitalist system. They want to be able to run the nanny state so when they are in trouble the taxpayer will bail them out. The conventional phrase is "too big to fail."
The IMF did an interesting study a few years ago on profits of the big US banks. It attributed most of them to the many advantages that come from the implicit government insurance policy -- not just the featured bailouts, but access to cheap credit and much else -- including things the IMF researchers didn't consider, like the incentive to undertake risky transactions, hence highly profitable in the short term, and if anything goes wrong, there's always the taxpayer. Bloomberg Businessweek estimated the implicit taxpayer subsidy at over $80 billion per year.
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“As soon as you're born they make you feel small
By giving you no time instead of it all
'Til the pain is so big you feel nothing at all…
Keep you doped with religion, and sex, and T.V.
And you think you're so clever and classless and free
But you're still fucking peasants as far as I can see…”
— John Lennon, “Working Class Hero
The reason we have poverty is that we have no imagination. There are a great many people accumulating what they think is vast wealth, but it's only money... they don't know how to enjoy it, because they have no imagination.
alan watts
articles
*AMAZON TO PAY $0 IN FEDERAL TAXES IN 2019: REPORT
(ARTICLE BELOW)
*Jim Hightower asks how corporations keep getting away with suckering the people
(ARTICLE BELOW)
*U.S. Steel wins tax breaks from one of America's poorest cities
(ARTICLE BELOW)
*Revealed: how big dairy pushed fattier milks into US schools
(ARTICLE BELOW)
*Globalization is bad for America is the lie that all Trump's other lies are based on
(ARTICLE BELOW)
*Exclusive: Foxconn reconsidering plans to make LCD panels at Wisconsin plant
(ARTICLE BELOW)
*America's most expensive home sells for $238m to hedge fund boss
(ARTICLE BELOW)
*World's 26 richest people own as much as poorest 50%, says Oxfam
(ARTICLE BELOW)
*The big cheese mountain: America's stockpile nears record high
(ARTICLE BELOW)
*Here’s the big problem with American capitalism
(ARTICLE BELOW)
*General Motors is proof to the world that slashing wages isn't the ticket to profitability
(excerpt below)
*GM bought back $10 billion in stock since 2015, double what job cuts will save
(ARTICLE BELOW)
*Restore Higher Tax Rates for Corporations That Can’t Contain CEO Pay
(ARTICLE BELOW)
*Give 30 years of your life to a company, no severance; drive a company into the ground, get millions
(EXCERPT BELOW)
*‘Stakeholder’ and 6 other economic terms that are often used to trick people out of their money
(ARTICLE BELOW)
*Capitalism Is Not the “Market System”
(ARTICLE BELOW)
*The Normalization of Corruption
(ARTICLE BELOW)
*'Corporations Are People' Is Built on an Incredible 19th-Century Lie
(ARTICLE BELOW)
*How Big Pharma Is Corrupting the Truth About the Drugs It Sells Us
(ARTICLE BELOW)
*5 BIG MYTHS SOLD BY THE DEFENDERS OF CAPITALISM(excerpt below)
*CAPITALISM: THE NIGHTMARE(excerpt below)
*funnies and charts(below)
*THIS INFOGRAPHIC SHOWS HOW ONLY 10 COMPANIES CONTROL ALL THE WORLD’S BRANDS(ARTICLE BELOW)
The reality of capitalism
...Magical thinking is not limited to the beliefs and practices of pre-modern cultures. It defines the ideology of capitalism. Quotas and projected sales can always be met. Profits can always be raised. Growth is inevitable. The impossible is always possible. Human societies, if they bow before the dictates of the marketplace, will be ushered into capitalist paradise. It is only a question of having the right attitude and the right technique. When capitalism thrives, we are assured, we thrive. The merging of the self with the capitalist collective has robbed us of our agency, creativity, capacity for self-reflection and moral autonomy. We define our worth not by our independence or our character but by the material standards set by capitalism—personal wealth, brands, status and career advancement. We are molded into a compliant and repressed collective. This mass conformity is characteristic of totalitarian and authoritarian states. It is the Disneyfication of America, the land of eternally happy thoughts and positive attitudes. And when magical thinking does not work, we are told, and often accept, that we are the problem. We must have more faith. We must envision what we want. We must try harder. The system is never to blame. We failed it. It did not fail us...
Reign of Idiots By Chris Hedges - apr 30, 2017
fundamentals of american capitalism
*always promote patriotism and american exceptionalism so the stupid public will think you are on their side
*nothing is more important than maximizing profits
*Never pass on opportunities to defraud CUSTOMERS
*when you get caught cheating on your taxes, make sure you have bribed enough government officials to minimize damage.
*maintain lobbyists, front groups, think tanks, etc. to lie and cover-up your corporate corruption.
*develop schemes to steal employee wages
*Maximize tax avoidance strategies
*hire part-time workers and deny them benefits
*always look to outsource labor to corrupt 3rd world countries to reduce labor costs
*sell mediocre products that never perform as advertised
*once your company is caught in scandal, mount an ad campaign portraying yourself as a wholesome organiZation
*never acknowledge guilt once your company is fined or sued
*hire lobbyist to bribe local politicians
*always scheme to avoid as many government regulations as possible
*make sure to defeat union organizing
*make sure that employees bare most of the cost of benefit packages
*underfund employees' pension plans
*make sure you can steal pension fund money through bankruptcy
*re-market and re-package old products as new and raise the price
why would a city or state would give a tax break to this company???
Amazon To Pay $0 In Federal Taxes In 2019: Report
The tech giant reportedly used various tax breaks and credits to claim a $129 million rebate on $11 billion in profits last year.
By Antonia Blumberg - huff post
Amazon almost doubled its profits from $5.6 billion in 2017 to $11.2 billion in 2018, but the company isn’t expected to pay a cent in federal taxes this year, according to a new report.
The Institute on Taxation and Economic policy released its findings Wednesday after examining the company’s corporate filings. Amazon reported a $129 million federal income tax rebate for 2018, equaling a tax rate of negative 1 percent. (The federal corporate income tax rate is 21 percent.)
“The fine print of Amazon’s income tax disclosure shows that this achievement is partly due to various unspecified ‘tax credits’ as well as a tax break for executive stock options,” the report stated.
This would be the second year in a row that the company has avoided paying federal taxes, despite being valued at a whopping $1 trillion.
“When Congress in 2017 enacted the Tax Cuts and Jobs Act and substantially cut the statutory corporate tax rate from 35 percent to 21 percent, proponents claimed the rate cut would incentivize better corporate citizenship,” the report continued. “However, the tax law failed to broaden the tax base or close a slew of tax loopholes that allow profitable companies to routinely avoid paying federal and state income taxes on almost half of their profits.”
Amazon did not immediately respond to a request for comment.
Contrary to claims by President Donald Trump that Amazon is a “no-tax” company, it actually does pay some taxes. In 2017, the company paid a combined total of $412 million in federal, state, local and foreign taxes. In 2015, it paid $273 million. Amazon charges consumers sales taxes in all 45 states where such taxes exist, plus Washington, D.C.
But Amazon did appear to be on the hunt for tax breaks in 2017 and 2018 when it was shopping for a new location to house its second headquarters. City officials eager for Amazon’s attention offered up a slew of tax breaks and credits to lure the company.
When it announced last year it would split the new headquarters between New York City and Arlington, Virginia, with an additional operations center in Nashville, Tennessee, Amazon was poised to collect billions in performance-based incentives between the three cities.
Amazon on Thursday announced it was canceling plans for a New York City-based headquarters.
The Institute on Taxation and Economic policy released its findings Wednesday after examining the company’s corporate filings. Amazon reported a $129 million federal income tax rebate for 2018, equaling a tax rate of negative 1 percent. (The federal corporate income tax rate is 21 percent.)
“The fine print of Amazon’s income tax disclosure shows that this achievement is partly due to various unspecified ‘tax credits’ as well as a tax break for executive stock options,” the report stated.
This would be the second year in a row that the company has avoided paying federal taxes, despite being valued at a whopping $1 trillion.
“When Congress in 2017 enacted the Tax Cuts and Jobs Act and substantially cut the statutory corporate tax rate from 35 percent to 21 percent, proponents claimed the rate cut would incentivize better corporate citizenship,” the report continued. “However, the tax law failed to broaden the tax base or close a slew of tax loopholes that allow profitable companies to routinely avoid paying federal and state income taxes on almost half of their profits.”
Amazon did not immediately respond to a request for comment.
Contrary to claims by President Donald Trump that Amazon is a “no-tax” company, it actually does pay some taxes. In 2017, the company paid a combined total of $412 million in federal, state, local and foreign taxes. In 2015, it paid $273 million. Amazon charges consumers sales taxes in all 45 states where such taxes exist, plus Washington, D.C.
But Amazon did appear to be on the hunt for tax breaks in 2017 and 2018 when it was shopping for a new location to house its second headquarters. City officials eager for Amazon’s attention offered up a slew of tax breaks and credits to lure the company.
When it announced last year it would split the new headquarters between New York City and Arlington, Virginia, with an additional operations center in Nashville, Tennessee, Amazon was poised to collect billions in performance-based incentives between the three cities.
Amazon on Thursday announced it was canceling plans for a New York City-based headquarters.
Jim Hightower asks how corporations keep getting away with suckering the people
by Jim Hightower - alternet
February 9, 2019
A photograph ran in newspapers throughout the U.S. last June portraying three guys in suits and ties shoveling dirt.
The three were Donald Trump, Wisconsin Gov. Scott Walker and Terry Gou, the chairman of Foxconn, a Taiwanese electronics conglomerate. They were in a vacant lot in Mount Pleasant, Wisconsin, doing a PR groundbreaking of a new plant that Foxconn promised would hire thousands of blue-collar workers to make flat-screen televisions.
For Trump, the photo was proof that he was delivering on his campaign promise to ignite a made-in-the-USA manufacturing renaissance in the hard-hit upper Midwest. Actually, the renaissance was being ignited by a huge bundle of cash. Walker, who was up for re-election, was giving away a whopping $4 billion from Wisconsin’s tax fund to lure the wily Foxconn to the Badger State. But picky, picky. This was a day of celebration and self-congratulation among the three jolly guys in ties doing the PR photo-op. With typical modesty, Trump hailed the deal as “the eighth wonder of the world.”
Less than a year later, though, it was revealed that the three had been shoveling BS. Oops. In January, Foxconn quietly backed away from its promise of all those factory jobs, declaring that “the global market environment … has changed.” A top assistant to Chairman Gou conceded: “In terms of TV, we have no place in the U.S. We can’t compete (with cheap-labor Asian Corporations).” Having already pocketed much of Walker’s bribe money, Foxconn said it was downsizing its project from a mass production blue-collar factory to some sort of high-tech operation hiring an unspecified number of engineers and designers.
It turns out that the Taiwanese giant has a history of reneging on its grandiose schemes, including failing to deliver on a Pennsylvania factory it promised in 2013. Meanwhile, Foxconn is right that the environment has changed — Walker was defeated, Wisconsinites are in an uproar over both his extravagant giveaway and the corporation’s sudden back away, the new Democratic governor is asking pointed questions, and Trump’s slaphappy zigzags on tariffs has roiled the whole high-tech market.
When you see a picture of politicians shoveling the people’s tax dollars into corporate coffers, the only sure thing is that the people are being played for suckers.
The undisputed king of shoveling (aka scamming taxpayers) is the digital retail colossus of Amazon. But even the king can sometimes get a comeuppance from determined commoners, and a hardy band in New York is delivering an old-line message to the online power: Don’t count your subsidized chickens before they hatch.
For a couple of decades, CEO Jeff Bezos built Amazon’s monopolistic market might (and a $120 billion personal fortune for himself) by illegally dodging sales taxes that other retailers paid. A few years ago, though, the law was onto Bezos, so he switched from dodging local taxes to demanding that local governments subsidize his coast-to-coast expansion. His big coup was his HQ2 scheme — creating an embarrassing nationwide scramble by local and state officials to throw bundles of their taxpayers’ money at Bezos in hopes he’d choose their town as Amazon’s “second corporate headquarters.”
A “winner” in this corporate shakedown was New York, with the governor and New York City’s mayor promising to give $3 billion in taxpayer subsidies to one of the richest corporations in the world. An absurdly exultant Governor Andrew Cuomo gushed that “I’ll change my name to Amazon Cuomo if that’s what it takes.”
So that was that — except it wasn’t! A grassroots rebellion, backed by key state senators and city council leaders, has dared to talk back to the Amazonians and politicos who cut the sweetheart giveaway, citing the giant retailer’s well-documented abuse of workers. The king was mightily offended to be questioned, dispatching Brian Huseman, the company’s vice president for public policy, to declare haughtily that “we want to invest in a community that wants us.” Hello … you’re asking the community to invest in you, with no promise of fair treatment for the community. Indeed, asked if Amazon would be neutral if its New York employees chose to unionize, the lobbyist barked: “No, sir.”
Billionaire Bezos is now resorting to the last refuge of corporate scoundrels: a PR campaign to convince New Yorkers that his behemoth is a sweetheart. As proof, he’s offering to hire 30 public housing residents to be customer service agents — 30. Out of 400,000 low-income New Yorkers living in public housing.
You can say some negative things about New Yorkers, but generally speaking they’re not going to be suckers for anyone — not even Bezos.
The three were Donald Trump, Wisconsin Gov. Scott Walker and Terry Gou, the chairman of Foxconn, a Taiwanese electronics conglomerate. They were in a vacant lot in Mount Pleasant, Wisconsin, doing a PR groundbreaking of a new plant that Foxconn promised would hire thousands of blue-collar workers to make flat-screen televisions.
For Trump, the photo was proof that he was delivering on his campaign promise to ignite a made-in-the-USA manufacturing renaissance in the hard-hit upper Midwest. Actually, the renaissance was being ignited by a huge bundle of cash. Walker, who was up for re-election, was giving away a whopping $4 billion from Wisconsin’s tax fund to lure the wily Foxconn to the Badger State. But picky, picky. This was a day of celebration and self-congratulation among the three jolly guys in ties doing the PR photo-op. With typical modesty, Trump hailed the deal as “the eighth wonder of the world.”
Less than a year later, though, it was revealed that the three had been shoveling BS. Oops. In January, Foxconn quietly backed away from its promise of all those factory jobs, declaring that “the global market environment … has changed.” A top assistant to Chairman Gou conceded: “In terms of TV, we have no place in the U.S. We can’t compete (with cheap-labor Asian Corporations).” Having already pocketed much of Walker’s bribe money, Foxconn said it was downsizing its project from a mass production blue-collar factory to some sort of high-tech operation hiring an unspecified number of engineers and designers.
It turns out that the Taiwanese giant has a history of reneging on its grandiose schemes, including failing to deliver on a Pennsylvania factory it promised in 2013. Meanwhile, Foxconn is right that the environment has changed — Walker was defeated, Wisconsinites are in an uproar over both his extravagant giveaway and the corporation’s sudden back away, the new Democratic governor is asking pointed questions, and Trump’s slaphappy zigzags on tariffs has roiled the whole high-tech market.
When you see a picture of politicians shoveling the people’s tax dollars into corporate coffers, the only sure thing is that the people are being played for suckers.
The undisputed king of shoveling (aka scamming taxpayers) is the digital retail colossus of Amazon. But even the king can sometimes get a comeuppance from determined commoners, and a hardy band in New York is delivering an old-line message to the online power: Don’t count your subsidized chickens before they hatch.
For a couple of decades, CEO Jeff Bezos built Amazon’s monopolistic market might (and a $120 billion personal fortune for himself) by illegally dodging sales taxes that other retailers paid. A few years ago, though, the law was onto Bezos, so he switched from dodging local taxes to demanding that local governments subsidize his coast-to-coast expansion. His big coup was his HQ2 scheme — creating an embarrassing nationwide scramble by local and state officials to throw bundles of their taxpayers’ money at Bezos in hopes he’d choose their town as Amazon’s “second corporate headquarters.”
A “winner” in this corporate shakedown was New York, with the governor and New York City’s mayor promising to give $3 billion in taxpayer subsidies to one of the richest corporations in the world. An absurdly exultant Governor Andrew Cuomo gushed that “I’ll change my name to Amazon Cuomo if that’s what it takes.”
So that was that — except it wasn’t! A grassroots rebellion, backed by key state senators and city council leaders, has dared to talk back to the Amazonians and politicos who cut the sweetheart giveaway, citing the giant retailer’s well-documented abuse of workers. The king was mightily offended to be questioned, dispatching Brian Huseman, the company’s vice president for public policy, to declare haughtily that “we want to invest in a community that wants us.” Hello … you’re asking the community to invest in you, with no promise of fair treatment for the community. Indeed, asked if Amazon would be neutral if its New York employees chose to unionize, the lobbyist barked: “No, sir.”
Billionaire Bezos is now resorting to the last refuge of corporate scoundrels: a PR campaign to convince New Yorkers that his behemoth is a sweetheart. As proof, he’s offering to hire 30 public housing residents to be customer service agents — 30. Out of 400,000 low-income New Yorkers living in public housing.
You can say some negative things about New Yorkers, but generally speaking they’re not going to be suckers for anyone — not even Bezos.
U.S. Steel wins tax breaks from one of America's poorest cities
Rajesh Kumar Singh - reuters
FEBRUARY 8, 2019 / 4:13 AM
GARY, Indiana (Reuters) - United States Steel Corporation founded Gary, Indiana in 1906 - naming it after co-founder Elbert Henry Gary - and the city’s fortunes have been closely tied to the company ever since.
When the firm started losing business to cheap Asian imports in the 1970s, waves of layoffs followed as Gary became a haven of blight, crime and lost population.
Last year, the city harbored hopes for a revival after President Donald Trump imposed tariffs on steel imports and the company planned a $750 million investment to modernize Gary Works, its largest North American plant.
But it’s now clear those hopes will not translate into new steel jobs, even after the city and state offered the firm a $47 million tax break package.
The whole point of the investment is to make the plant more efficient, so the incentives will help finance a project that city and company officials concede could ultimately result in job losses, not gains.
Gary’s dimmed hopes for a tariff-driven renaissance underscore how the policy has so far provided a windfall for U.S. steel firms but only a marginal benefit to workers and struggling steel towns.
Gary Works once employed more than 25,000 people but now supports only about 4,000 in a city that has seen its population plummet from 175,000 in 1970 to 77,000 today.
Steel industry employment nationwide increased by 1,000 jobs to 83,400 between March, when tariffs where imposed, and November, according to the latest available data from the U.S. Bureau of Labor Statistics. (GRAPHIC: tmsnrt.rs/2t8sf4I )
In a statement to Reuters, Trump’s Commerce Department called the 1.2 percent increase a “welcome change from decades of decline and layoffs” and said “many more” jobs would be created as planned industry investments and expansions are completed, without specifying how many.
“Improving efficiency is important and was one of the goals of the tariffs,” a department spokesman said of the Gary investment. “We are glad to see the American industry is making investments that will protect their long-term viability and ensure a strong domestic supply.”
The state of Indiana’s investment of $10 million in tax credits, along with $2 million in worker training grants, comes with the condition that U.S. Steel retain at least 3,875 jobs at Gary Works. But a state spokesperson declined comment on whether the company could still collect part of the incentives if the number of jobs falls below that threshold.
The city would get no guarantees of job retention for its bigger and longer-term commitment of property tax breaks, a benefit estimated at $35 million over 25 years. The details of both deals are still being finalized, officials said.
U.S. Steel Vice President Douglas Matthews acknowledged the modernization would cut costs and reliance on manual labor. Productivity improvements would likely results in a “decreasing headcount over time,” he said.
But without the investment, “then the business is at risk, and then you put all the jobs at risk,” Matthews said in an interview.
U.S. Steel declined to comment about why it needed tax breaks to make its investment viable and declined to provide details about its negotiations with the city.
U.S. Steel's 2018 profits shot up to $1.12 billion, from $387 million the previous year. The tariff-driven windfall has allowed the company to spend $300 million buying back its own stock. (GRAPHIC: tmsnrt.rs/2Hqle9h )
Investors remain skeptical of the company’s longer-term gains from tariffs, however. Despite recent gains after strong earnings, U.S. Steel’s stock is down 51 percent since March 1, when Trump announced he would impose steel tariffs.
That’s in part because company’s underlying weaknesses remain largely unaddressed: It has among the highest production costs in the world, according to data compiled by Goldman Sachs. Its revenue per employee pales in comparison with that of rival steelmaker Nucor Corp. And domestic steel prices, after rising with tariffs, are now drifting down amid rising supplies and slowing demand.
DESPERATE FOR INVESTMENT
Gary officials say the factory investment would bring the city about $1 million in new tax revenue, even after Gary allows the company to pay only half the property taxes associated with the upgrade. That will help close a city budget deficit of $14 million, they say, while giving some assurance that company won’t abandon Gary entirely.
The harsh realities of life in Gary make it easier to understand why officials would cut whatever deal they can to keep U.S. Steel. About a third of its citizens live in poverty, and the city has long had among the nation's highest murder rates. A fifth of its homes and half of commercial properties are vacant or abandoned. (GRAPHIC: tmsnrt.rs/2S2xH7d )
For Mayor Karen Freeman-Wilson, the incentives for U.S. Steel help ensure the city can retain its largest employer and taxpayer while providing an opportunity to re-engage the company in Gary’s civic life.
“When you see an investment of this magnitude, then you see that there is a plan for a continued presence here,” she said.
When the company shut down its coke plant at Gary Works four years ago, laying off hundreds of workers, the city feared the worst for the facility. Around the same time, Gary had watched the company idle most operations at its Granite City steel plant just outside of St. Louis.
Trump’s tariffs prompted U.S. Steel to hire back about 800 of those Granite City workers last year after restarting two furnaces there. But there’s no such hiring plans for Gary.
City and union leaders here have accepted a lower headcount as a fait accompli. The company has already eliminated 140 maintenance jobs on the west side of the plant since 2015, said Mark Lash, president of United Steelworkers Local 1066, which represents about 1,400 workers at the plant.
The city has had its own layoffs of maintenance workers - shedding 128 of 150 of them between 2006 and 2011. It has been managing with 22 staffers for the past eight years. New spending and hiring are frozen, and city buildings are being sold to raise funds.
LIMITED IMPACT
Public financing of corporate investments is hardly uncommon but is more typically tied to company commitments to create new jobs that boost the local economy.
Gary’s deal with U.S. Steel is more like the 2016 deal Indiana cut with United Technologies Corp with the help of public pressure on the company from Trump. The firm agreed to retain at least 1,069 workers at its Carrier unit in Indianapolis instead of moving the jobs to Mexico, a deal that also included no new hires.
But the proposed Gary deal is much more expensive: While the state gave $7 million in tax breaks to United Technologies compared to the $47 the city and state have offered U.S. Steel.
Carrier has since laid off about 550 workers in two rounds of cuts, but has said it would maintain 1,100 workers.
Michael Hicks, a professor of Economics at Indiana’s Ball State University, has examined the impact of such tax breaks on the state’s public finances in the last decade. His study found that state incentives costing about $30,000 per job provided little benefit to Indiana’s economy or tax base.
Hicks said the tax deal with U.S. Steel is not so expensive by comparison, costing an estimated $12,129 per job retained.
But it’s not a good deal, either, especially given the limited economic impact, Hicks said.
“It is a fifty percent tax cut for U.S. Steel to stay in Gary,” Hicks said. “This deal is not going to make people move to the city. This is not going to cause a population growth and employment opportunities.”
When the firm started losing business to cheap Asian imports in the 1970s, waves of layoffs followed as Gary became a haven of blight, crime and lost population.
Last year, the city harbored hopes for a revival after President Donald Trump imposed tariffs on steel imports and the company planned a $750 million investment to modernize Gary Works, its largest North American plant.
But it’s now clear those hopes will not translate into new steel jobs, even after the city and state offered the firm a $47 million tax break package.
The whole point of the investment is to make the plant more efficient, so the incentives will help finance a project that city and company officials concede could ultimately result in job losses, not gains.
Gary’s dimmed hopes for a tariff-driven renaissance underscore how the policy has so far provided a windfall for U.S. steel firms but only a marginal benefit to workers and struggling steel towns.
Gary Works once employed more than 25,000 people but now supports only about 4,000 in a city that has seen its population plummet from 175,000 in 1970 to 77,000 today.
Steel industry employment nationwide increased by 1,000 jobs to 83,400 between March, when tariffs where imposed, and November, according to the latest available data from the U.S. Bureau of Labor Statistics. (GRAPHIC: tmsnrt.rs/2t8sf4I )
In a statement to Reuters, Trump’s Commerce Department called the 1.2 percent increase a “welcome change from decades of decline and layoffs” and said “many more” jobs would be created as planned industry investments and expansions are completed, without specifying how many.
“Improving efficiency is important and was one of the goals of the tariffs,” a department spokesman said of the Gary investment. “We are glad to see the American industry is making investments that will protect their long-term viability and ensure a strong domestic supply.”
The state of Indiana’s investment of $10 million in tax credits, along with $2 million in worker training grants, comes with the condition that U.S. Steel retain at least 3,875 jobs at Gary Works. But a state spokesperson declined comment on whether the company could still collect part of the incentives if the number of jobs falls below that threshold.
The city would get no guarantees of job retention for its bigger and longer-term commitment of property tax breaks, a benefit estimated at $35 million over 25 years. The details of both deals are still being finalized, officials said.
U.S. Steel Vice President Douglas Matthews acknowledged the modernization would cut costs and reliance on manual labor. Productivity improvements would likely results in a “decreasing headcount over time,” he said.
But without the investment, “then the business is at risk, and then you put all the jobs at risk,” Matthews said in an interview.
U.S. Steel declined to comment about why it needed tax breaks to make its investment viable and declined to provide details about its negotiations with the city.
U.S. Steel's 2018 profits shot up to $1.12 billion, from $387 million the previous year. The tariff-driven windfall has allowed the company to spend $300 million buying back its own stock. (GRAPHIC: tmsnrt.rs/2Hqle9h )
Investors remain skeptical of the company’s longer-term gains from tariffs, however. Despite recent gains after strong earnings, U.S. Steel’s stock is down 51 percent since March 1, when Trump announced he would impose steel tariffs.
That’s in part because company’s underlying weaknesses remain largely unaddressed: It has among the highest production costs in the world, according to data compiled by Goldman Sachs. Its revenue per employee pales in comparison with that of rival steelmaker Nucor Corp. And domestic steel prices, after rising with tariffs, are now drifting down amid rising supplies and slowing demand.
DESPERATE FOR INVESTMENT
Gary officials say the factory investment would bring the city about $1 million in new tax revenue, even after Gary allows the company to pay only half the property taxes associated with the upgrade. That will help close a city budget deficit of $14 million, they say, while giving some assurance that company won’t abandon Gary entirely.
The harsh realities of life in Gary make it easier to understand why officials would cut whatever deal they can to keep U.S. Steel. About a third of its citizens live in poverty, and the city has long had among the nation's highest murder rates. A fifth of its homes and half of commercial properties are vacant or abandoned. (GRAPHIC: tmsnrt.rs/2S2xH7d )
For Mayor Karen Freeman-Wilson, the incentives for U.S. Steel help ensure the city can retain its largest employer and taxpayer while providing an opportunity to re-engage the company in Gary’s civic life.
“When you see an investment of this magnitude, then you see that there is a plan for a continued presence here,” she said.
When the company shut down its coke plant at Gary Works four years ago, laying off hundreds of workers, the city feared the worst for the facility. Around the same time, Gary had watched the company idle most operations at its Granite City steel plant just outside of St. Louis.
Trump’s tariffs prompted U.S. Steel to hire back about 800 of those Granite City workers last year after restarting two furnaces there. But there’s no such hiring plans for Gary.
City and union leaders here have accepted a lower headcount as a fait accompli. The company has already eliminated 140 maintenance jobs on the west side of the plant since 2015, said Mark Lash, president of United Steelworkers Local 1066, which represents about 1,400 workers at the plant.
The city has had its own layoffs of maintenance workers - shedding 128 of 150 of them between 2006 and 2011. It has been managing with 22 staffers for the past eight years. New spending and hiring are frozen, and city buildings are being sold to raise funds.
LIMITED IMPACT
Public financing of corporate investments is hardly uncommon but is more typically tied to company commitments to create new jobs that boost the local economy.
Gary’s deal with U.S. Steel is more like the 2016 deal Indiana cut with United Technologies Corp with the help of public pressure on the company from Trump. The firm agreed to retain at least 1,069 workers at its Carrier unit in Indianapolis instead of moving the jobs to Mexico, a deal that also included no new hires.
But the proposed Gary deal is much more expensive: While the state gave $7 million in tax breaks to United Technologies compared to the $47 the city and state have offered U.S. Steel.
Carrier has since laid off about 550 workers in two rounds of cuts, but has said it would maintain 1,100 workers.
Michael Hicks, a professor of Economics at Indiana’s Ball State University, has examined the impact of such tax breaks on the state’s public finances in the last decade. His study found that state incentives costing about $30,000 per job provided little benefit to Indiana’s economy or tax base.
Hicks said the tax deal with U.S. Steel is not so expensive by comparison, costing an estimated $12,129 per job retained.
But it’s not a good deal, either, especially given the limited economic impact, Hicks said.
“It is a fifty percent tax cut for U.S. Steel to stay in Gary,” Hicks said. “This deal is not going to make people move to the city. This is not going to cause a population growth and employment opportunities.”
sell kids garbage for profit!!!
Revealed: how big dairy pushed fattier milks into US schools
The Trump administration has worked closely with the dairy lobby, allowing the drinks’ reintroduction despite opposition
Jessica Glenza in New York
the guardian
Mon 4 Feb 2019 01.00 EST
The US Department of Agriculture secretary, Sonny Perdue, raised a glass of chocolate milk to dairy lobbyists in an unannounced visit to their board of directors’ meeting in October, as the group celebrated a recent trade win.
The Trump administration’s North American Free Trade Agreement (Nafta) negotiations gave American dairy farmers more access to the Canadian market, allowing them to export an addition 50,000 metric tons of milk northward.
Just two months later, Perdue would finalize a rule allowing fattier chocolate and strawberry flavored milks to be sold to roughly 31 million kids in school cafeterias.
“He grabbed a glass of chocolate milk, and made a chocolate milk toast to our CEO and our board,” Cary Frye, the senior vice-president of regulatory affairs at the International Dairy Foods Association (IDFA), told the Guardian.
Perdue’s chocolate milk salute to the dairy lobby was just one example of how the Trump administration has worked closely with the dairy industry, at a time when the president’s trade war has hurt farmers.
At the same time, Trump’s trade war with China and Mexico has cost American dairy farmers an estimated $1.5bn in retaliatory tariffs. All the while, milk production has increased 13% over the last decade, even as sales have declined. In 2018 alone, sales dropped 6% compared with plant-based milks, which increased 9%, according to Nielsen data.
At the same time, a handful of heavyweight lobbyists were spending millions in support of the interests of milk, cheese and yogurt producers in the US. The IDFA spent $1.3m lobbying on a variety of issues, including school milk, according to Senate lobbying disclosures. It gave another $260,000 to candidates, two-thirds of whom were Republican, through its political action committee, according to the Center for Responsive Politics. The Dairy Farmers of America spent $924,000, including on school milk, according to CRP.
The same year, the Trump administration bought $50m worth of milk in August to give to food banks and schools. In September, it announced $127m in direct payments to dairy farmers. In October, American dairy farmers gained more access to the Canadian dairy market thanks to Trump’s renegotiation of Nafta. Then, in December, the new school milk rules were finalized.
“For milk processors, this was really important. They saw milk sales were declining, they continued to decline in schools,” said Frye. Getting low-fat flavored milk back in schools, she said, was one of the “top five” issues for milk processors. “We were very pleased to see this change made.”
School nutrition rollbacks allowed schools to serve low-fat flavored milk (rather than only non-fat), as well as more refined grains, and delayed sodium restrictions. Even as the USDA approved the measure, much of the public appeared to oppose it. The federal rulemaking process requires agencies to seek public comment on new policies. More than 83,000 people commented to the USDA, and 96% of the respondents were against the reintroduction of flavored milk in schools.
“Feed high quality meals to kids including fruits, veggies and nutritious protein sources. Nix the sugar and processed foods laced with chemicals,” one anonymous commenter told the USDA. “If we want healthy, informed future citizens in this country let’s start by giving them quality meals in school so they can concentrate and absorb information.”
Nevertheless, in its final decision the agency wrote: “After careful consideration of all stakeholders’ comments, USDA believes that school nutrition operators have made the case that this final rule’s targeted regulatory flexibility is practical and necessary for efficient Program operation.”
In defense of the new rules, Perdue tweeted: “Nutritious school meals don’t do anyone any good if kids just throw them into the trash.” The USDA was “empowering local schools” to serve “healthy AND appetizing food” – an argument often made by the dairy industry.
In a survey conducted by the National Dairy Council, 73% of schools said students preferred 1% flavored milk to non-fat milk. Kids drank 288 million fewer half pints between 2012 and 2015, lobbyists said.
The milk standards are part of the federal government’s subsidized meal program, which feeds more than 31 million kids each day, many of whom get meals free or at reduced prices because their families are low-income. In some cases, meals at school account for half of the daily calories kids consume.
The battle to feed them, and what to feed them, has at once again pitted dairy lobbyists against nutritionists, in what has long been a politically fraught area entangled with lobbying.
In one of the most infamous examples, Congress ruled pizza could be considered a vegetable in school lunches after lobbying from the frozen food industry. Lobbyists for the prune industry also tried to convince the government to add prunes to hamburgers during surplus of the fruit in the early 2000s.
The rules, “as weak as they were, they were trying to make schools healthier”, said Christina Hecht, an expert in sugar sweetened beverages at the Nutrition Policy Institute of the University of California. “It’s clear pandering to industry.”
Lobbyists for the milk industry fought hard against the Obama-era reforms, which restricted schools to selling only non-fat flavored milks and which the dairy industry blamed for a sharp decline in milk drinking.
In 2018 alone, the IDFA spent around $300,000 a quarter lobbying on issues including school lunches.
“Any government program is going to be a huge money maker for them and that includes schools,” said Susan Levin, a dietician for Physicians Committee for Responsible Medicine, a group which advocates for a vegan diet. “That’s where a lot of excess surplus product is dumped, it’s dumped in schools, it’s dumped in prisons.”
Part of the dairy industry’s education strategy in recent years has been to market chocolate milk as a drink for athletes, and to “inoculate consumers against emerging trends”. The declining birthrate and “child vegans” were also identified as particular challenges for the milk industry, according to MilkPEP documents.
A nutritionist for the University of California called the idea that chocolate milk could help athletes “preposterous”.
“Milk is a very healthy beverage, it’s got protein, calcium, vitamin D – there’s a reason we are mammals and grow up drinking milk,” said Lorrene Ritchie, the director of the Nutrition Policy Institute at the University of California. “There’s nothing about adding chocolate to it that’s going to help an athlete.”
RELATED: USDA secretary accused of siding with industry over science in new report
The Trump administration’s North American Free Trade Agreement (Nafta) negotiations gave American dairy farmers more access to the Canadian market, allowing them to export an addition 50,000 metric tons of milk northward.
Just two months later, Perdue would finalize a rule allowing fattier chocolate and strawberry flavored milks to be sold to roughly 31 million kids in school cafeterias.
“He grabbed a glass of chocolate milk, and made a chocolate milk toast to our CEO and our board,” Cary Frye, the senior vice-president of regulatory affairs at the International Dairy Foods Association (IDFA), told the Guardian.
Perdue’s chocolate milk salute to the dairy lobby was just one example of how the Trump administration has worked closely with the dairy industry, at a time when the president’s trade war has hurt farmers.
At the same time, Trump’s trade war with China and Mexico has cost American dairy farmers an estimated $1.5bn in retaliatory tariffs. All the while, milk production has increased 13% over the last decade, even as sales have declined. In 2018 alone, sales dropped 6% compared with plant-based milks, which increased 9%, according to Nielsen data.
At the same time, a handful of heavyweight lobbyists were spending millions in support of the interests of milk, cheese and yogurt producers in the US. The IDFA spent $1.3m lobbying on a variety of issues, including school milk, according to Senate lobbying disclosures. It gave another $260,000 to candidates, two-thirds of whom were Republican, through its political action committee, according to the Center for Responsive Politics. The Dairy Farmers of America spent $924,000, including on school milk, according to CRP.
The same year, the Trump administration bought $50m worth of milk in August to give to food banks and schools. In September, it announced $127m in direct payments to dairy farmers. In October, American dairy farmers gained more access to the Canadian dairy market thanks to Trump’s renegotiation of Nafta. Then, in December, the new school milk rules were finalized.
“For milk processors, this was really important. They saw milk sales were declining, they continued to decline in schools,” said Frye. Getting low-fat flavored milk back in schools, she said, was one of the “top five” issues for milk processors. “We were very pleased to see this change made.”
School nutrition rollbacks allowed schools to serve low-fat flavored milk (rather than only non-fat), as well as more refined grains, and delayed sodium restrictions. Even as the USDA approved the measure, much of the public appeared to oppose it. The federal rulemaking process requires agencies to seek public comment on new policies. More than 83,000 people commented to the USDA, and 96% of the respondents were against the reintroduction of flavored milk in schools.
“Feed high quality meals to kids including fruits, veggies and nutritious protein sources. Nix the sugar and processed foods laced with chemicals,” one anonymous commenter told the USDA. “If we want healthy, informed future citizens in this country let’s start by giving them quality meals in school so they can concentrate and absorb information.”
Nevertheless, in its final decision the agency wrote: “After careful consideration of all stakeholders’ comments, USDA believes that school nutrition operators have made the case that this final rule’s targeted regulatory flexibility is practical and necessary for efficient Program operation.”
In defense of the new rules, Perdue tweeted: “Nutritious school meals don’t do anyone any good if kids just throw them into the trash.” The USDA was “empowering local schools” to serve “healthy AND appetizing food” – an argument often made by the dairy industry.
In a survey conducted by the National Dairy Council, 73% of schools said students preferred 1% flavored milk to non-fat milk. Kids drank 288 million fewer half pints between 2012 and 2015, lobbyists said.
The milk standards are part of the federal government’s subsidized meal program, which feeds more than 31 million kids each day, many of whom get meals free or at reduced prices because their families are low-income. In some cases, meals at school account for half of the daily calories kids consume.
The battle to feed them, and what to feed them, has at once again pitted dairy lobbyists against nutritionists, in what has long been a politically fraught area entangled with lobbying.
In one of the most infamous examples, Congress ruled pizza could be considered a vegetable in school lunches after lobbying from the frozen food industry. Lobbyists for the prune industry also tried to convince the government to add prunes to hamburgers during surplus of the fruit in the early 2000s.
The rules, “as weak as they were, they were trying to make schools healthier”, said Christina Hecht, an expert in sugar sweetened beverages at the Nutrition Policy Institute of the University of California. “It’s clear pandering to industry.”
Lobbyists for the milk industry fought hard against the Obama-era reforms, which restricted schools to selling only non-fat flavored milks and which the dairy industry blamed for a sharp decline in milk drinking.
In 2018 alone, the IDFA spent around $300,000 a quarter lobbying on issues including school lunches.
“Any government program is going to be a huge money maker for them and that includes schools,” said Susan Levin, a dietician for Physicians Committee for Responsible Medicine, a group which advocates for a vegan diet. “That’s where a lot of excess surplus product is dumped, it’s dumped in schools, it’s dumped in prisons.”
Part of the dairy industry’s education strategy in recent years has been to market chocolate milk as a drink for athletes, and to “inoculate consumers against emerging trends”. The declining birthrate and “child vegans” were also identified as particular challenges for the milk industry, according to MilkPEP documents.
A nutritionist for the University of California called the idea that chocolate milk could help athletes “preposterous”.
“Milk is a very healthy beverage, it’s got protein, calcium, vitamin D – there’s a reason we are mammals and grow up drinking milk,” said Lorrene Ritchie, the director of the Nutrition Policy Institute at the University of California. “There’s nothing about adding chocolate to it that’s going to help an athlete.”
RELATED: USDA secretary accused of siding with industry over science in new report
Globalization is bad for America is the lie that all Trump's other lies are based on
America was—and still is—the biggest winner in the current era of globalization
EDWARD GOLDBERG - salon
FEBRUARY 2, 2019 3:00PM (UTC)
Whether it is his absurd counter`-factual justification for the wall or his made up statistics about immigrants, Donald Trump’s daily lies all evolve from a much larger lie — globalization has been extremely harmful to America.
On the whole the exact opposite is true. America was — and still is — the biggest winner in the current era of globalization. Of course, a country like China that was in abject poverty became much richer because of globalization, but America became even wealthier. In a globalized world, trade is only a zero-sum game in the negative when major economies become poorer and drag their trading partners down with them.
Take a look at what happen since 1980, when globalization first started to be a major factor. The United States at that time had a gross domestic product of $2.8 trillion dollars, while China’s was only $302 billion. By 2017 the US economy had grown to $ 19.39 trillion, and the Chinese economy grew to $12.24 trillion. The US economy grew massively during that period, even taking into account the crash of 2008. Of course, China’s rate of growth during the same time was much higher, but that is just basic common sense. If you start with very little, you need to catch up. China needed to build steel mills and highways, and to electrify their rural areas. The United States did all that a long time ago. The point is that the United States did not get poorer as China grew — quite the opposite.
Since China started at practically zero when globalization began, its winnings look much more impressive to the outside world than reality. In the aggregate of course, China has became a much wealthier country, but on a per capita basis it is still very poor compared to the United States. As an example, in 2017 China’s per capita GDP — based on purchasing power parity — was only $16,760 compared to $59,531 per capita for the U.S. Even Greece, the stick-person of Europe with a per capita income of $27,820, is wealthier than China on a per capita basis.
As China was getting richer, American consumers—and especially the middle lower class that, because of a smaller income, tend to spend more on basic goods — benefitted enormously from globalization. As an example, look at a basic item like baby and toddler clothes, on account of imports the price of these items dropped by 10 percent from 1999 to 2013. Or look at jeans the American garment staple. Levi’s jeans that retail for around $128.00 would be $348 if made in the United States. While according to the Dallas Fed, Americans saw their choice of products expand by one-third in recent decades on account of globalization. Just look at the variety of fruits and vegetables at one’s local grocery store, even during the heart of winter.
The United States is in fact a child of globalization, born during one of globalizations earlier inclinations, the European age of discovery. Globalization is part of America’s DNA. To try to separate globalization from America would be like separating a child from its mother.
Long before the current term “globalization” became popular, the United States as a country defined the word. Founded by a mixture of cultures — whether British in New England, Dutch in New York, French in New Orleans or Spanish in its west—the United States then opened its doors in the mid-to-late 19th century to massive immigration from all over the world. In the second half of the 20th century, the United States not only created the rules that allowed the current era of globalization to spread around the world, it also became the enforcer of those rules - the COP.
Politics is based on perception as much as reality and for the minority who make up Donald Trump’s base, globalization is the other, taking away jobs that actually left ten years ago. To these people, there is little difference between American jobs going overseas or, because of open borders or simplified visa requirements, immigrants coming into the United States. Either way, they feel, globalization has taken opportunities away from them.
In all honesty many of these people have been harmed by globalization as well as by technology and automation. But to make globalization the scapegoat and promise to bring back yesterday does a disservice to these people by allowing them not to face the reality of adapting to change. Just take a look at the coal miners who Donald Trump continues to support in a world where coal is both dirty and uncompetitive. He keeps on bragging about how his administration has brought a rebirth to the coal industry while in reality more U.S. coal-fired power plants were shut in President Donald Trump's first two years than were retired in the whole of Barack Obama's first term.
For the people who have been left behind, adapting to change is very hard, and it is easier for them to believe the lie than face the reality that the majority of Americans have benefited from globalization. While for Trump it is much easier to lie to these people as a way of solidifying their support than to make the budgetary and tax compromises needed to institute real programs to help them.
On the whole the exact opposite is true. America was — and still is — the biggest winner in the current era of globalization. Of course, a country like China that was in abject poverty became much richer because of globalization, but America became even wealthier. In a globalized world, trade is only a zero-sum game in the negative when major economies become poorer and drag their trading partners down with them.
Take a look at what happen since 1980, when globalization first started to be a major factor. The United States at that time had a gross domestic product of $2.8 trillion dollars, while China’s was only $302 billion. By 2017 the US economy had grown to $ 19.39 trillion, and the Chinese economy grew to $12.24 trillion. The US economy grew massively during that period, even taking into account the crash of 2008. Of course, China’s rate of growth during the same time was much higher, but that is just basic common sense. If you start with very little, you need to catch up. China needed to build steel mills and highways, and to electrify their rural areas. The United States did all that a long time ago. The point is that the United States did not get poorer as China grew — quite the opposite.
Since China started at practically zero when globalization began, its winnings look much more impressive to the outside world than reality. In the aggregate of course, China has became a much wealthier country, but on a per capita basis it is still very poor compared to the United States. As an example, in 2017 China’s per capita GDP — based on purchasing power parity — was only $16,760 compared to $59,531 per capita for the U.S. Even Greece, the stick-person of Europe with a per capita income of $27,820, is wealthier than China on a per capita basis.
As China was getting richer, American consumers—and especially the middle lower class that, because of a smaller income, tend to spend more on basic goods — benefitted enormously from globalization. As an example, look at a basic item like baby and toddler clothes, on account of imports the price of these items dropped by 10 percent from 1999 to 2013. Or look at jeans the American garment staple. Levi’s jeans that retail for around $128.00 would be $348 if made in the United States. While according to the Dallas Fed, Americans saw their choice of products expand by one-third in recent decades on account of globalization. Just look at the variety of fruits and vegetables at one’s local grocery store, even during the heart of winter.
The United States is in fact a child of globalization, born during one of globalizations earlier inclinations, the European age of discovery. Globalization is part of America’s DNA. To try to separate globalization from America would be like separating a child from its mother.
Long before the current term “globalization” became popular, the United States as a country defined the word. Founded by a mixture of cultures — whether British in New England, Dutch in New York, French in New Orleans or Spanish in its west—the United States then opened its doors in the mid-to-late 19th century to massive immigration from all over the world. In the second half of the 20th century, the United States not only created the rules that allowed the current era of globalization to spread around the world, it also became the enforcer of those rules - the COP.
Politics is based on perception as much as reality and for the minority who make up Donald Trump’s base, globalization is the other, taking away jobs that actually left ten years ago. To these people, there is little difference between American jobs going overseas or, because of open borders or simplified visa requirements, immigrants coming into the United States. Either way, they feel, globalization has taken opportunities away from them.
In all honesty many of these people have been harmed by globalization as well as by technology and automation. But to make globalization the scapegoat and promise to bring back yesterday does a disservice to these people by allowing them not to face the reality of adapting to change. Just take a look at the coal miners who Donald Trump continues to support in a world where coal is both dirty and uncompetitive. He keeps on bragging about how his administration has brought a rebirth to the coal industry while in reality more U.S. coal-fired power plants were shut in President Donald Trump's first two years than were retired in the whole of Barack Obama's first term.
For the people who have been left behind, adapting to change is very hard, and it is easier for them to believe the lie than face the reality that the majority of Americans have benefited from globalization. While for Trump it is much easier to lie to these people as a way of solidifying their support than to make the budgetary and tax compromises needed to institute real programs to help them.
SCOTT WALKER FUCKED WISCONSIN AGAIN!!!
Exclusive: Foxconn reconsidering plans to make LCD panels at Wisconsin plant
Jess Macy Yu, Karl Plume - reuters
JANUARY 29, 2019 / 10:22 PM
(Reuters) - Foxconn Technology Group is reconsidering plans to make advanced liquid crystal display panels at a $10 billion Wisconsin campus, and said it intends to hire mostly engineers and researchers rather than the manufacturing workforce the project originally promised.
Announced at a White House ceremony in 2017, the 20-million square foot campus marked the largest greenfield investment by a foreign-based company in U.S. history and was praised by President Donald Trump as proof of his ability to revive American manufacturing.
Foxconn, which received controversial state and local incentives for the project, initially planned to manufacture advanced large screen displays for TVs and other consumer and professional products at the facility, which is under construction. It later said it would build smaller LCD screens instead.
Now, those plans may be scaled back or even shelved, Louis Woo, special assistant to Foxconn Chief Executive Terry Gou, told Reuters. He said the company was still evaluating options for Wisconsin, but cited the steep cost of making advanced TV screens in the United States, where labor expenses are comparatively high.
“In terms of TV, we have no place in the U.S.,” he said in an interview. “We can’t compete.”
When it comes to manufacturing advanced screens for TVs, he added: “If a certain size of display has more supply, whether from China or Japan or Taiwan, we have to change, too.”
Rather than a focus on LCD manufacturing, Foxconn wants to create a “technology hub” in Wisconsin that would largely consist of research facilities along with packaging and assembly operations, Woo said. It would also produce specialized tech products for industrial, healthcare, and professional applications, he added.
“In Wisconsin we’re not building a factory. You can’t use a factory to view our Wisconsin investment,” Woo said.
Earlier this month, Foxconn, a major supplier to Apple Inc., reiterated its intention to create 13,000 jobs in Wisconsin, but said it had slowed its pace of hiring. The company initially said it expected to employ about 5,200 people by the end of 2020; a company source said that figure now looks likely to be closer to 1,000 workers.
It is unclear when the full 13,000 workers will be hired.(NEVER)
But Woo, in the interview, said about three-quarters of Foxconn’s eventual jobs will be in R&D and design - what he described as “knowledge” positions - rather than blue-collar manufacturing jobs. Foxconn is formally known as Hon Hai Precision Industry Co.
Rather than manufacturing LCD panels in the United States, Woo said it would be more profitable to make them in greater China and Japan, ship them to Mexico for final assembly, and import the finished product to the United States.
He said that would represent a supply chain that fits with Foxconn’s current “fluid, good business model.”
Heavily criticized in some quarters, the Foxconn project was championed by former Wisconsin Governor Scott Walker, a Republican who helped secure around $4 billion in tax breaks and other incentives before leaving office. Critics of the deal, including a number of Democrats, called it a corporate giveaway that would never result in the promised manufacturing jobs and posed serious environmental risks.
The company’s own growth projections and employment goals suggest the taxpayer investment would take at least 25 years to recoup, according to budget think tank the Wisconsin Budget Project.
Foxconn CEO Gou plans to meet with Wisconsin’s new Democratic governor, Tony Evers, a past critic of the deal, later this year to discuss modifications of the agreement, according to the source familiar with the company’s thinking.
Evers could not be reached for comment.
Currently, to qualify for the tax credits Foxconn must meet certain hiring and capital investment goals. It fell short of the employment goal in 2018 - hiring 178 full-time jobs rather than the 260 targeted - failing to earn a tax credit of up to $9.5 million.
The company may be prepared to walk away from future incentives if it is unable to meet Wisconsin’s job creation and capital investment requirements, according to the source familiar with the matter.
Announced at a White House ceremony in 2017, the 20-million square foot campus marked the largest greenfield investment by a foreign-based company in U.S. history and was praised by President Donald Trump as proof of his ability to revive American manufacturing.
Foxconn, which received controversial state and local incentives for the project, initially planned to manufacture advanced large screen displays for TVs and other consumer and professional products at the facility, which is under construction. It later said it would build smaller LCD screens instead.
Now, those plans may be scaled back or even shelved, Louis Woo, special assistant to Foxconn Chief Executive Terry Gou, told Reuters. He said the company was still evaluating options for Wisconsin, but cited the steep cost of making advanced TV screens in the United States, where labor expenses are comparatively high.
“In terms of TV, we have no place in the U.S.,” he said in an interview. “We can’t compete.”
When it comes to manufacturing advanced screens for TVs, he added: “If a certain size of display has more supply, whether from China or Japan or Taiwan, we have to change, too.”
Rather than a focus on LCD manufacturing, Foxconn wants to create a “technology hub” in Wisconsin that would largely consist of research facilities along with packaging and assembly operations, Woo said. It would also produce specialized tech products for industrial, healthcare, and professional applications, he added.
“In Wisconsin we’re not building a factory. You can’t use a factory to view our Wisconsin investment,” Woo said.
Earlier this month, Foxconn, a major supplier to Apple Inc., reiterated its intention to create 13,000 jobs in Wisconsin, but said it had slowed its pace of hiring. The company initially said it expected to employ about 5,200 people by the end of 2020; a company source said that figure now looks likely to be closer to 1,000 workers.
It is unclear when the full 13,000 workers will be hired.(NEVER)
But Woo, in the interview, said about three-quarters of Foxconn’s eventual jobs will be in R&D and design - what he described as “knowledge” positions - rather than blue-collar manufacturing jobs. Foxconn is formally known as Hon Hai Precision Industry Co.
Rather than manufacturing LCD panels in the United States, Woo said it would be more profitable to make them in greater China and Japan, ship them to Mexico for final assembly, and import the finished product to the United States.
He said that would represent a supply chain that fits with Foxconn’s current “fluid, good business model.”
Heavily criticized in some quarters, the Foxconn project was championed by former Wisconsin Governor Scott Walker, a Republican who helped secure around $4 billion in tax breaks and other incentives before leaving office. Critics of the deal, including a number of Democrats, called it a corporate giveaway that would never result in the promised manufacturing jobs and posed serious environmental risks.
The company’s own growth projections and employment goals suggest the taxpayer investment would take at least 25 years to recoup, according to budget think tank the Wisconsin Budget Project.
Foxconn CEO Gou plans to meet with Wisconsin’s new Democratic governor, Tony Evers, a past critic of the deal, later this year to discuss modifications of the agreement, according to the source familiar with the company’s thinking.
Evers could not be reached for comment.
Currently, to qualify for the tax credits Foxconn must meet certain hiring and capital investment goals. It fell short of the employment goal in 2018 - hiring 178 full-time jobs rather than the 260 targeted - failing to earn a tax credit of up to $9.5 million.
The company may be prepared to walk away from future incentives if it is unable to meet Wisconsin’s job creation and capital investment requirements, according to the source familiar with the matter.
greed is good!!!
America's most expensive home sells for $238m to hedge fund boss
Erin McCormick
the guardian
Thu 24 Jan 2019 09.37 EST
Residential buildings Central Park Tower and 220 Central Park South rise above Columbus Circle. Photograph: Gary Hershorn/Getty Images
Penthouse at 220 Central Park South is 34 times bigger than average Manhattan apartment: ‘Hope he got a lot of bathrooms,’ says homelessness advocate
The hedge fund founder Ken Griffin’s new home offers a prestigious address on New York’s Billionaire’s Row, dreamy Central Park views and 34 times the square footage of a typical Manhattan apartment.
But the new penthouse’s biggest wow factor is its price tag of roughly $238m, which has shattered all previous records to make it the most expensive home ever purchased in the US, according to the Wall Street Journal.
“New York is known for extraordinary deals, but this deal is extraordinary in every measure,” said the real estate investment expert Daniel Levy, chief executive at New York’s CityRealty. He said the previous record for the highest-priced home sale in New York City was the $100m spent by Michael Dell, founder of Dell Technologies, in a new high rise on west 57th Street. “This blows everything else away.”
“Wow, I hope he got a lot of bathrooms for that price,” said Philip Mangano, who served as the US homelessness czar under George W Bush and now heads the American Roundtable to Abolish Homelessness. (Details of the interior layout are in fact scant.)
Mangano said the new record was emblematic of the disparity between the rich and the poor in America, which has been growing for decades. When times boom, he said, the good prosperity doesn’t trickle down to the poor; it merely drives the price of housing up further and creates more homelessness. The latest homeless count for New York City found 78,676 people.
“There is a lot of housing being built for those who are making a lot of money,” said Mangano. “There is very little housing being constructed for those who earn less than 30% of the US median income.”
Griffin’s purchase of the approximately 24,000-sq-ft unit in a newly constructed, super high rise at 220 Central Park South comes days after he spent $122m on a London mansion near Buckingham Palace, Bloomberg reported.
Griffin, who founded the Chicago-based hedge fund Citadel, is said to have made a string of super-high-priced real estate purchases in the last few years, including spending hundreds of millions of dollars on properties in Chicago, Miami Beach and Palm Beach Florida.
According to the Journal, the previous US home price record was $137m, which the hedge fund manager Barry Rosenstein paid for a home in the Hamptons in 2014.
Ken DeLeon, founder of Silicon Valley’s DeLeon Realty, said he has had sales of more the $100m and expects to see record-setting trends in the west coast markets. He suggested that for top business executives, having a piece of high-priced real estate is like a “calling card to get investments in all the hottest new companies”.
“There’s a value to being No 1,” he said. “You make a statement: when you entertain, everyone says, ‘Oh, I’ve heard about this place.’
“And, surprisingly, at this high end, these properties end up being very good investments,” he said. “They hold their value much better than a Lamborghini.”
An analysis by CityRealty showed that there is a huge surge of about 2,000 newly constructed luxury apartments coming on to the market in New York City. Meanwhile, it found, the average sale price of a new condominium in the city hit $5m in 2017.
But Levy said the market for luxury apartments had softened a bit in New York in the last two years. He said the trend was driven by the increasing number of hyper-expensive units becoming available and by a slight decrease in interest among international buyers.
Whatever the case, as regards Griffin, “I’m sure he is very excited to have what will arguably be the nicest apartment in New York and, perhaps, the world,” said Levy. “I don’t imagine there’s a lot of buyer’s remorse.”
The hedge fund founder Ken Griffin’s new home offers a prestigious address on New York’s Billionaire’s Row, dreamy Central Park views and 34 times the square footage of a typical Manhattan apartment.
But the new penthouse’s biggest wow factor is its price tag of roughly $238m, which has shattered all previous records to make it the most expensive home ever purchased in the US, according to the Wall Street Journal.
“New York is known for extraordinary deals, but this deal is extraordinary in every measure,” said the real estate investment expert Daniel Levy, chief executive at New York’s CityRealty. He said the previous record for the highest-priced home sale in New York City was the $100m spent by Michael Dell, founder of Dell Technologies, in a new high rise on west 57th Street. “This blows everything else away.”
“Wow, I hope he got a lot of bathrooms for that price,” said Philip Mangano, who served as the US homelessness czar under George W Bush and now heads the American Roundtable to Abolish Homelessness. (Details of the interior layout are in fact scant.)
Mangano said the new record was emblematic of the disparity between the rich and the poor in America, which has been growing for decades. When times boom, he said, the good prosperity doesn’t trickle down to the poor; it merely drives the price of housing up further and creates more homelessness. The latest homeless count for New York City found 78,676 people.
“There is a lot of housing being built for those who are making a lot of money,” said Mangano. “There is very little housing being constructed for those who earn less than 30% of the US median income.”
Griffin’s purchase of the approximately 24,000-sq-ft unit in a newly constructed, super high rise at 220 Central Park South comes days after he spent $122m on a London mansion near Buckingham Palace, Bloomberg reported.
Griffin, who founded the Chicago-based hedge fund Citadel, is said to have made a string of super-high-priced real estate purchases in the last few years, including spending hundreds of millions of dollars on properties in Chicago, Miami Beach and Palm Beach Florida.
According to the Journal, the previous US home price record was $137m, which the hedge fund manager Barry Rosenstein paid for a home in the Hamptons in 2014.
Ken DeLeon, founder of Silicon Valley’s DeLeon Realty, said he has had sales of more the $100m and expects to see record-setting trends in the west coast markets. He suggested that for top business executives, having a piece of high-priced real estate is like a “calling card to get investments in all the hottest new companies”.
“There’s a value to being No 1,” he said. “You make a statement: when you entertain, everyone says, ‘Oh, I’ve heard about this place.’
“And, surprisingly, at this high end, these properties end up being very good investments,” he said. “They hold their value much better than a Lamborghini.”
An analysis by CityRealty showed that there is a huge surge of about 2,000 newly constructed luxury apartments coming on to the market in New York City. Meanwhile, it found, the average sale price of a new condominium in the city hit $5m in 2017.
But Levy said the market for luxury apartments had softened a bit in New York in the last two years. He said the trend was driven by the increasing number of hyper-expensive units becoming available and by a slight decrease in interest among international buyers.
Whatever the case, as regards Griffin, “I’m sure he is very excited to have what will arguably be the nicest apartment in New York and, perhaps, the world,” said Levy. “I don’t imagine there’s a lot of buyer’s remorse.”
World's 26 richest people own as much as poorest 50%, says Oxfam
Charity calls for 1% wealth tax, saying it would raise enough to educate every child not in school
Larry Elliott
the guardian
Sun 20 Jan 2019 19.01 EST
The growing concentration of the world’s wealth has been highlighted by a report showing that the 26 richest billionaires own as many assets as the 3.8 billion people who make up the poorest half of the planet’s population.
In an annual wealth check released to mark the start of the World Economic Forum in Davos, the development charity Oxfam said 2018 had been a year in which the rich had grown richer and the poor poorer.
It said the widening gap was hindering the fight against poverty, adding that a 1% wealth tax would raise an estimated $418bn (£325bn) a year – enough to educate every child not in school and provide healthcare that would prevent 3 million deaths.
Oxfam said the wealth of more than 2,200 billionaires across the globe had increased by $900bn in 2018 – or $2.5bn a day. The 12% increase in the wealth of the very richest contrasted with a fall of 11% in the wealth of the poorest half of the world’s population.
As a result, the report concluded, the number of billionaires owning as much wealth as half the world’s population fell from 43 in 2017 to 26 last year. In 2016 the number was 61.
Among the findings of the report were:
Oxfam’s director of campaigns and policy, Matthew Spencer, said: “The massive fall in the number of people living in extreme poverty is one of the greatest achievements of the past quarter of a century but rising inequality is jeopardising further progress.
“The way our economies are organised means wealth is increasingly and unfairly concentrated among a privileged few while millions of people are barely subsisting. Women are dying for lack of decent maternity care and children are being denied an education that could be their route out of poverty. No one should be condemned to an earlier grave or a life of illiteracy simply because they were born poor.
“It doesn’t have to be this way – there is enough wealth in the world to provide everyone with a fair chance in life. Governments should act to ensure that taxes raised from wealth and businesses paying their fair share are used to fund free, good-quality public services that can save and transform people’s lives.”
The report said many governments were making inequality worse by failing to invest enough in public services. It noted that about 10,000 people per day die for lack of healthcare and there were 262 million children not in school, often because their parents were unable to afford the fees, uniforms or textbooks.
Oxfam said governments needed to do more to fund high-quality, universal public services through tackling tax dodging and ensuring fairer taxation, including on corporations and the richest individuals’ wealth, which it said were often undertaxed.
A global wealth tax has been called for by the French economist Thomas Piketty, who has said action is needed to arrest the trend in inequality.
The World Inequality Report 2018 – co-authored by Piketty – showed that between 1980 and 2016 the poorest 50% of humanity only captured 12 cents in every dollar of global income growth. By contrast, the top 1% captured 27 cents of every dollar.
Oxfam said that in addition to tackling inequality at home, developed nations currently failing to meet their overseas aid commitments could raise the missing billions needed to tackle extreme poverty in the poorest countries by increasing taxes on extreme wealth.
China’s rapid growth over the past four decades has been responsible for much of the decline in extreme poverty but Oxfam said World Bank data showed the rate of poverty reduction had halved since 2013. In sub-Saharan Africa, extreme poverty was on the increase.
Oxfam said its methodology for assessing the gap between rich and poor was based on global wealth distribution data provided by the Credit Suisse global wealth data book, covering the period from June 2017 to June 2018. The wealth of billionaires was calculated using the annual Forbes billionaires list published in March 2018.
In an annual wealth check released to mark the start of the World Economic Forum in Davos, the development charity Oxfam said 2018 had been a year in which the rich had grown richer and the poor poorer.
It said the widening gap was hindering the fight against poverty, adding that a 1% wealth tax would raise an estimated $418bn (£325bn) a year – enough to educate every child not in school and provide healthcare that would prevent 3 million deaths.
Oxfam said the wealth of more than 2,200 billionaires across the globe had increased by $900bn in 2018 – or $2.5bn a day. The 12% increase in the wealth of the very richest contrasted with a fall of 11% in the wealth of the poorest half of the world’s population.
As a result, the report concluded, the number of billionaires owning as much wealth as half the world’s population fell from 43 in 2017 to 26 last year. In 2016 the number was 61.
Among the findings of the report were:
- In the 10 years since the financial crisis, the number of billionaires has nearly doubled.
- Between 2017 and 2018 a new billionaire was created every two days.
- The world’s richest man, Jeff Bezos, the owner of Amazon, saw his fortune increase to $112bn. Just 1% of his fortune is equivalent to the whole health budget for Ethiopia, a country of 105 million people.
- The poorest 10% of Britons are paying a higher effective tax rate than the richest 10% (49% compared with 34%) once taxes on consumption such as VAT are taken into account.
Oxfam’s director of campaigns and policy, Matthew Spencer, said: “The massive fall in the number of people living in extreme poverty is one of the greatest achievements of the past quarter of a century but rising inequality is jeopardising further progress.
“The way our economies are organised means wealth is increasingly and unfairly concentrated among a privileged few while millions of people are barely subsisting. Women are dying for lack of decent maternity care and children are being denied an education that could be their route out of poverty. No one should be condemned to an earlier grave or a life of illiteracy simply because they were born poor.
“It doesn’t have to be this way – there is enough wealth in the world to provide everyone with a fair chance in life. Governments should act to ensure that taxes raised from wealth and businesses paying their fair share are used to fund free, good-quality public services that can save and transform people’s lives.”
The report said many governments were making inequality worse by failing to invest enough in public services. It noted that about 10,000 people per day die for lack of healthcare and there were 262 million children not in school, often because their parents were unable to afford the fees, uniforms or textbooks.
Oxfam said governments needed to do more to fund high-quality, universal public services through tackling tax dodging and ensuring fairer taxation, including on corporations and the richest individuals’ wealth, which it said were often undertaxed.
A global wealth tax has been called for by the French economist Thomas Piketty, who has said action is needed to arrest the trend in inequality.
The World Inequality Report 2018 – co-authored by Piketty – showed that between 1980 and 2016 the poorest 50% of humanity only captured 12 cents in every dollar of global income growth. By contrast, the top 1% captured 27 cents of every dollar.
Oxfam said that in addition to tackling inequality at home, developed nations currently failing to meet their overseas aid commitments could raise the missing billions needed to tackle extreme poverty in the poorest countries by increasing taxes on extreme wealth.
China’s rapid growth over the past four decades has been responsible for much of the decline in extreme poverty but Oxfam said World Bank data showed the rate of poverty reduction had halved since 2013. In sub-Saharan Africa, extreme poverty was on the increase.
Oxfam said its methodology for assessing the gap between rich and poor was based on global wealth distribution data provided by the Credit Suisse global wealth data book, covering the period from June 2017 to June 2018. The wealth of billionaires was calculated using the annual Forbes billionaires list published in March 2018.
The big cheese mountain: America's stockpile nears record high
Demand for American cheese is falling behind supply – partly because of changing tastes but also because of Trump’s tariffs
Luke O'Neil
the guardian
Thu 10 Jan 2019 08.50 EST
Say cheese, America. No, seriously, please start saying cheese at the grocery store. The country’s dairy farmers are depending on you.
Americans eat an awful lot of cheese: almost 37lb per person, per year. Yet apparently that’s still not enough. Demand for American-made cheese is seriously falling behind supply. According to recent data from the Department of Agriculture, we’re currently experiencing a 1.4bn-pound cheese surplus.
Lucas Fuess, director of dairy market intelligence at HighGround Dairy, a consulting firm, explains that cheese is literally sitting in cold storage facilities waiting for some aspiring pizza-maker to give it a home.
“It’s normal to have some cheese in warehouses, to make sure there’s enough in the pipeline,” Fuess said. “The amount that’s in there currently is, if not a record, very close to record high.”
In part this can be linked to lower dairy consumption and the growing popularity of veganism. Plant-based products such as almond-milk have experienced rapid sales growth.
Since 2008, milk production has surged by 13%, but domestic demand for milk has dropped sharply. As demand decreases, the price of milk drops, and farmers receive less per gallon produced. This appears to have pushed farmers to produce even more milk to make up the shortfalls in their income, exacerbating the problem.
Producing American cheese helps farmers to use up milk they can’t sell and that would otherwise go off. At the end of November 2018, US cheese production had grown yet again for the 67th consecutive month.
But the problem is Americans are eating less cheese, too.
American diets are moving away from processed cheeses like Velveeta and Kraft, and many of the nation’s leading fast and casual restaurants are trying new things. Panera, like others, has replaced American cheese in their sandwiches with a four-cheese combo made up of fontina, cheddar, monteau and smoked gouda.
According to Euromonitor International, sales of processed cheese are projected to drop 1.6% this year, the fourth year in a row.
In part, that’s because many Americans now think processed cheese is gross, but also because they’re au fait with quality cheese from around the world. It’s hard to turn back to an indestructible fluorescent orange mess once you’ve tried brie de meaux.
“We’re seeing increased sales of more exotic, specialty, European-style cheeses. Some of those are made in the US; a lot of them aren’t,” Andrew Novakovic, a professor of agricultural economics at Cornell University told NPR this week. Since imported cheese costs more than domestic, a few blocks of the good stuff might not leave much left in the old cheese budget for anything else.
The cheese mountain is crushing farmers. “We’ve seen record numbers of dairy farms close because milk prices are so that low dairy farms aren’t profitable any more,” Feueff added. “This cheese that is hanging over the market is preventing prices from raising higher and it’s reaching a critical level.”
Trump’s trade policy has also played a role in the cheesepocalypse. In response to his tariffs, three top importers of US milk and cheese products – Mexico, Canada and China – have instituted retaliatory tariffs that will have a significant impact on American dairy farmers’ bottom line, according to a study from Texas A&M University.
“As long as the tariffs are still on in Mexico, it remains a challenge to move cheese out of the country and move those stocks lower,” Fuess explained.
It’s not the end of the line. Analysts have noted large buyers of cheese increasing offerings or finding new ways to use it. McDonald’s recently launched a breakfast sandwich with two slices of American cheese. “Fast-food companies are taking this opportunity with low cheese prices to increase cheese on their dishes,” says Fuess.
For now though, American dairy farmers are going to continue to look for ways to offload their cheese supplies. “I was just reading stories of cheese tea in China that have kind of gone viral,” Fuess said. “Maybe we need to look into that.”
Americans eat an awful lot of cheese: almost 37lb per person, per year. Yet apparently that’s still not enough. Demand for American-made cheese is seriously falling behind supply. According to recent data from the Department of Agriculture, we’re currently experiencing a 1.4bn-pound cheese surplus.
Lucas Fuess, director of dairy market intelligence at HighGround Dairy, a consulting firm, explains that cheese is literally sitting in cold storage facilities waiting for some aspiring pizza-maker to give it a home.
“It’s normal to have some cheese in warehouses, to make sure there’s enough in the pipeline,” Fuess said. “The amount that’s in there currently is, if not a record, very close to record high.”
In part this can be linked to lower dairy consumption and the growing popularity of veganism. Plant-based products such as almond-milk have experienced rapid sales growth.
Since 2008, milk production has surged by 13%, but domestic demand for milk has dropped sharply. As demand decreases, the price of milk drops, and farmers receive less per gallon produced. This appears to have pushed farmers to produce even more milk to make up the shortfalls in their income, exacerbating the problem.
Producing American cheese helps farmers to use up milk they can’t sell and that would otherwise go off. At the end of November 2018, US cheese production had grown yet again for the 67th consecutive month.
But the problem is Americans are eating less cheese, too.
American diets are moving away from processed cheeses like Velveeta and Kraft, and many of the nation’s leading fast and casual restaurants are trying new things. Panera, like others, has replaced American cheese in their sandwiches with a four-cheese combo made up of fontina, cheddar, monteau and smoked gouda.
According to Euromonitor International, sales of processed cheese are projected to drop 1.6% this year, the fourth year in a row.
In part, that’s because many Americans now think processed cheese is gross, but also because they’re au fait with quality cheese from around the world. It’s hard to turn back to an indestructible fluorescent orange mess once you’ve tried brie de meaux.
“We’re seeing increased sales of more exotic, specialty, European-style cheeses. Some of those are made in the US; a lot of them aren’t,” Andrew Novakovic, a professor of agricultural economics at Cornell University told NPR this week. Since imported cheese costs more than domestic, a few blocks of the good stuff might not leave much left in the old cheese budget for anything else.
The cheese mountain is crushing farmers. “We’ve seen record numbers of dairy farms close because milk prices are so that low dairy farms aren’t profitable any more,” Feueff added. “This cheese that is hanging over the market is preventing prices from raising higher and it’s reaching a critical level.”
Trump’s trade policy has also played a role in the cheesepocalypse. In response to his tariffs, three top importers of US milk and cheese products – Mexico, Canada and China – have instituted retaliatory tariffs that will have a significant impact on American dairy farmers’ bottom line, according to a study from Texas A&M University.
“As long as the tariffs are still on in Mexico, it remains a challenge to move cheese out of the country and move those stocks lower,” Fuess explained.
It’s not the end of the line. Analysts have noted large buyers of cheese increasing offerings or finding new ways to use it. McDonald’s recently launched a breakfast sandwich with two slices of American cheese. “Fast-food companies are taking this opportunity with low cheese prices to increase cheese on their dishes,” says Fuess.
For now though, American dairy farmers are going to continue to look for ways to offload their cheese supplies. “I was just reading stories of cheese tea in China that have kind of gone viral,” Fuess said. “Maybe we need to look into that.”
the fundamentals of slave-capitalism!!!
Here’s the big problem with American capitalism
MARSHALL AUERBACK, INDEPENDENT MEDIA INSTITUTE - COMMENTARY - raw story
18 DEC 2018 AT 09:14 ET
It’s part of the American experience to find yourself in an elevator, in an airplane terminal, or at home, looking at a screen with stock numbers whizzing by, and people yammering about how America is somewhere on the spectrum between wonderful or about to disintegrate because of a 5 percent swing in Boeing or Microsoft stock. How did we get to a national economic conversation that is dominated by chatter on the rise and fall of stocks, when it’s just a small part of economic life for most of the 300 million people who live in this country?
American-style shareholder capitalism, with its incessant focus on maximizing stock value, started gaining primacy over European/Japanese-style stakeholder capitalism in the 1980s. It was premised on a notion best epitomized by Milton Friedman that the only social responsibility of a corporation is to increase its profits, laying the groundwork for the idea that shareholders, being the owners and the main risk-bearing participants, ought therefore to receive the biggest rewards. Profits therefore should be generated first and foremost with a view toward maximizing the interests of shareholders, not the executives or managers who (according to the theory) were spending too much of their time, and the shareholders’ money, worrying about employees, customers, and the community at large. The economists who built on Friedman’s work, along with increasingly aggressive institutional investors, devised solutions to ensure the primacy of enhancing shareholder value, via the advocacy of hostile takeovers, the promotion of massive stock buybacks or repurchases (which increased the stock value), higher dividend payouts and, most importantly, the introduction of stock-based pay for top executives in order to align their interests to those of the shareholders. These ideas were influenced by the idea that corporate efficiency and profitability were impinged upon by archaic regulation and unionization, which, according to the theory, precluded the ability to compete globally.
While tying corporate decision-making and its performance to stock price to incentivize efficient resource allocation and productive transformations sounds superficially attractive, the champions of this theory never bothered to show how these outcomes could be achieved if shareholder capitalism was fully implemented. In fact, the historical experience has been abysmal. GM and GE, to cite two prominent examples, were once poster boys for the success of American capitalism. More recently, they are presumed to be speculative candidates for bankruptcy. They are but a symptom of the bigger problem. And there is a growing skepticism in the ability of American capitalism to deliver on its economic promise of prosperity.
In the 1980s, we were still at the embryonic stages of shareholder capitalism, and American institutional investors aggressively proselytized both domestically and abroad. During that time, when I was working as a fund manager in Japan, Toyota became a particularly prominent target, on the grounds that the company wasn’t using its substantial cash pile “productively.” The argument was made that the company’s management was maximizing their self-regarding interests over shareholder value. Holding onto the cash reserves was thought to be a mistake, lest managers be tempted to make unproductive investments. This despite that fact that by any traditional metric—profitability, market share, sales, return on investments—Toyota remained a remarkably successful company.
Backed by domestic institutions (particularly from their associated companies), Toyota’s management resisted the push of the foreign investors like myself, many of whom were leading the charge to distribute the company cash pile to shareholders. Toyota management made the seemingly anachronistic decision that the cash was best retained to invest in future lines and cope with changing market conditions, as well as retaining valuable and skilled employees, who were key to the company’s growing productivity and global sales success (even at a cost of some short-term harm to profitability). They also argued that elevating dividend payouts would derogate from needed research and development, which was required to retain the company’s edge over global competitors.
Given that Toyota has retained the ranking of most valuable car brand in the world six years running (in fact, number one in 11 of the 13 years in which the survey has been conducted), senior management’s strategy appears to have been vindicated. There is stable ownership and decision-making structure. Focus is on enterprise-specific skill development and cultivating capabilities in-house. Toyota consolidates product and its production process planning and ensures that sufficient training and equipment (pertaining to processes required for new products) are provided or developed in-house. It largely finances operations using its internal cash flow. Neither stock buybacks nor high-dividend payouts are the norm. In short, the company has developed a long-term development strategy that fuses innovation with high-quality, sustainable management practices that operate durably at scale for many millions of customers around the world.
By contrast, Professor William Lazonick’s seminal study, “Profits without Prosperity,” underscores the notion that top-level U.S. executives, whose incentives have been increasingly based on stock-based financial targets, have lost the ability to develop the innovative capabilities of an enterprise. Instead, spurred by the prospect of stock gains, the executives have channeled their focus toward “short-termist” achievement of targets (such as by giving out excessive loans to finance customers’ purchases to boost quarterly sales targets, as Detroit’s “Big Three” have done repeatedly), increasing share valuations and increasing the variable component of their compensation (by share repurchases). As a result, their enterprises have become financialized, and their balance sheets severely weakened. The shortcomings of the companies that have fallen victim to this trend have been masked by the performance of the company stock, in itself a mirage brought about by financial engineering to boost share prices, as Rana Foroohar has documented in her book, Makers and Takers.
The focus on short-termism has ultimately degraded the financial health of the corporations concerned, as well as cannibalizing future investment opportunities. As Lazonick pointed out, in many instances where U.S. executives have resorted to stock repurchases, payouts were well above the net income, and in many cases occurred even when the company wasn’t profitable; certainly, there was little correlation to company performance per se. Cash that could be deployed toward creating a better product line has instead been spent on stock buybacks, while the strategy of expanding loans to customers to purchase the underlying product effectively steals from future sales, as well as expanding corporate leverage. Another way companies catered to shareholder capitalism was by selling off capital-intensive, but cash flow-generative businesses, as Jack Welch did when he became CEO of GE and shifted the company focus away from sales of jet engines, nuclear reactors and mining equipment, instead building up GE Capital, which ultimately became another “too big to fail” financial behemoth (and has done much to contribute to GE’s deterioration).
Additionally, a deregulated labor market that allows for “costless” hiring or firing (“costless” only from the perspective of management, obviously, not labor) in reality has reinforced this short-termism and further degraded long-term corporate performance. Executives abuse the “benefits” of a largely deregulated labor market to sack workers with impunity, thereby generating the “free” cash flow that can be used instead for share repurchases, even as the company loses valuable labor expertise, which can generate future production bottlenecks.
One must also question the notion that the stock market is an efficient gauge of corporate performance, especially when management is prone to what Professor Bill Black calls “control fraud.” There is an asymmetry of information between corporate insiders and institutional shareholders, which means that putting a “price” on managerialism so as to discipline them if the management engages in unproductive investments is a fantasy. Exposed to the harsh light of reality, this is an especially absurd idea that only an economist could love, given the divergent time frames between institutional investors monitored on the basis of quarterly performance versus executives who must make investment decisions, the results of which may not be established for years. This is exacerbated by the ludicrous notion that dilettante fund managers, relatively unschooled in anything (other than MBA degrees that propagate concepts like maximizing shareholder value), could possibly be superior judges of corporate performance and allocators of capital against those who have literally learned the business from the factory floor up.
In the “downsize and distribute” regime of American shareholder capitalism, the labor force is downsized, certain operations are discontinued, and the cash retrieved from these processes is distributed rather than retaining and reinvesting in developing the productive capabilities. American executives have proven all too willing to disgorge cash annually on buybacks at the expense of identifying the investments in organization and technology that were needed to remain competitive in the industry in which they operated.
In contrast to Germany or Japan, real engineering has been replaced by financial engineering. This is what the doctrine of “shareholder value” has actually delivered: unproductive share buybacks, which manipulate short-term share price performance, even as it derogates from long-term research and development, engenders persistent short-termism in corporate decision-making, and induces value extraction, rather than value creation. All of this financial vandalism has created multiple economic crises, long recessions, growing inequality and decades of stagnant incomes for the average American worker. Shareholder value in truth has created no real value at all.
American-style shareholder capitalism, with its incessant focus on maximizing stock value, started gaining primacy over European/Japanese-style stakeholder capitalism in the 1980s. It was premised on a notion best epitomized by Milton Friedman that the only social responsibility of a corporation is to increase its profits, laying the groundwork for the idea that shareholders, being the owners and the main risk-bearing participants, ought therefore to receive the biggest rewards. Profits therefore should be generated first and foremost with a view toward maximizing the interests of shareholders, not the executives or managers who (according to the theory) were spending too much of their time, and the shareholders’ money, worrying about employees, customers, and the community at large. The economists who built on Friedman’s work, along with increasingly aggressive institutional investors, devised solutions to ensure the primacy of enhancing shareholder value, via the advocacy of hostile takeovers, the promotion of massive stock buybacks or repurchases (which increased the stock value), higher dividend payouts and, most importantly, the introduction of stock-based pay for top executives in order to align their interests to those of the shareholders. These ideas were influenced by the idea that corporate efficiency and profitability were impinged upon by archaic regulation and unionization, which, according to the theory, precluded the ability to compete globally.
While tying corporate decision-making and its performance to stock price to incentivize efficient resource allocation and productive transformations sounds superficially attractive, the champions of this theory never bothered to show how these outcomes could be achieved if shareholder capitalism was fully implemented. In fact, the historical experience has been abysmal. GM and GE, to cite two prominent examples, were once poster boys for the success of American capitalism. More recently, they are presumed to be speculative candidates for bankruptcy. They are but a symptom of the bigger problem. And there is a growing skepticism in the ability of American capitalism to deliver on its economic promise of prosperity.
In the 1980s, we were still at the embryonic stages of shareholder capitalism, and American institutional investors aggressively proselytized both domestically and abroad. During that time, when I was working as a fund manager in Japan, Toyota became a particularly prominent target, on the grounds that the company wasn’t using its substantial cash pile “productively.” The argument was made that the company’s management was maximizing their self-regarding interests over shareholder value. Holding onto the cash reserves was thought to be a mistake, lest managers be tempted to make unproductive investments. This despite that fact that by any traditional metric—profitability, market share, sales, return on investments—Toyota remained a remarkably successful company.
Backed by domestic institutions (particularly from their associated companies), Toyota’s management resisted the push of the foreign investors like myself, many of whom were leading the charge to distribute the company cash pile to shareholders. Toyota management made the seemingly anachronistic decision that the cash was best retained to invest in future lines and cope with changing market conditions, as well as retaining valuable and skilled employees, who were key to the company’s growing productivity and global sales success (even at a cost of some short-term harm to profitability). They also argued that elevating dividend payouts would derogate from needed research and development, which was required to retain the company’s edge over global competitors.
Given that Toyota has retained the ranking of most valuable car brand in the world six years running (in fact, number one in 11 of the 13 years in which the survey has been conducted), senior management’s strategy appears to have been vindicated. There is stable ownership and decision-making structure. Focus is on enterprise-specific skill development and cultivating capabilities in-house. Toyota consolidates product and its production process planning and ensures that sufficient training and equipment (pertaining to processes required for new products) are provided or developed in-house. It largely finances operations using its internal cash flow. Neither stock buybacks nor high-dividend payouts are the norm. In short, the company has developed a long-term development strategy that fuses innovation with high-quality, sustainable management practices that operate durably at scale for many millions of customers around the world.
By contrast, Professor William Lazonick’s seminal study, “Profits without Prosperity,” underscores the notion that top-level U.S. executives, whose incentives have been increasingly based on stock-based financial targets, have lost the ability to develop the innovative capabilities of an enterprise. Instead, spurred by the prospect of stock gains, the executives have channeled their focus toward “short-termist” achievement of targets (such as by giving out excessive loans to finance customers’ purchases to boost quarterly sales targets, as Detroit’s “Big Three” have done repeatedly), increasing share valuations and increasing the variable component of their compensation (by share repurchases). As a result, their enterprises have become financialized, and their balance sheets severely weakened. The shortcomings of the companies that have fallen victim to this trend have been masked by the performance of the company stock, in itself a mirage brought about by financial engineering to boost share prices, as Rana Foroohar has documented in her book, Makers and Takers.
The focus on short-termism has ultimately degraded the financial health of the corporations concerned, as well as cannibalizing future investment opportunities. As Lazonick pointed out, in many instances where U.S. executives have resorted to stock repurchases, payouts were well above the net income, and in many cases occurred even when the company wasn’t profitable; certainly, there was little correlation to company performance per se. Cash that could be deployed toward creating a better product line has instead been spent on stock buybacks, while the strategy of expanding loans to customers to purchase the underlying product effectively steals from future sales, as well as expanding corporate leverage. Another way companies catered to shareholder capitalism was by selling off capital-intensive, but cash flow-generative businesses, as Jack Welch did when he became CEO of GE and shifted the company focus away from sales of jet engines, nuclear reactors and mining equipment, instead building up GE Capital, which ultimately became another “too big to fail” financial behemoth (and has done much to contribute to GE’s deterioration).
Additionally, a deregulated labor market that allows for “costless” hiring or firing (“costless” only from the perspective of management, obviously, not labor) in reality has reinforced this short-termism and further degraded long-term corporate performance. Executives abuse the “benefits” of a largely deregulated labor market to sack workers with impunity, thereby generating the “free” cash flow that can be used instead for share repurchases, even as the company loses valuable labor expertise, which can generate future production bottlenecks.
One must also question the notion that the stock market is an efficient gauge of corporate performance, especially when management is prone to what Professor Bill Black calls “control fraud.” There is an asymmetry of information between corporate insiders and institutional shareholders, which means that putting a “price” on managerialism so as to discipline them if the management engages in unproductive investments is a fantasy. Exposed to the harsh light of reality, this is an especially absurd idea that only an economist could love, given the divergent time frames between institutional investors monitored on the basis of quarterly performance versus executives who must make investment decisions, the results of which may not be established for years. This is exacerbated by the ludicrous notion that dilettante fund managers, relatively unschooled in anything (other than MBA degrees that propagate concepts like maximizing shareholder value), could possibly be superior judges of corporate performance and allocators of capital against those who have literally learned the business from the factory floor up.
In the “downsize and distribute” regime of American shareholder capitalism, the labor force is downsized, certain operations are discontinued, and the cash retrieved from these processes is distributed rather than retaining and reinvesting in developing the productive capabilities. American executives have proven all too willing to disgorge cash annually on buybacks at the expense of identifying the investments in organization and technology that were needed to remain competitive in the industry in which they operated.
In contrast to Germany or Japan, real engineering has been replaced by financial engineering. This is what the doctrine of “shareholder value” has actually delivered: unproductive share buybacks, which manipulate short-term share price performance, even as it derogates from long-term research and development, engenders persistent short-termism in corporate decision-making, and induces value extraction, rather than value creation. All of this financial vandalism has created multiple economic crises, long recessions, growing inequality and decades of stagnant incomes for the average American worker. Shareholder value in truth has created no real value at all.
america's greed - based capitalism explained!!!
General Motors is proof to the world that slashing wages isn't the ticket to profitability
German and Japanese auto manufacturers succeed despite sticking to a high-wage model.
By Marshall Auerback / Independent Media Institute - alternet
December 4, 2018, 6:54 AM GMT
...Upon closer inspection, however, the layoffs can’t simply be dismissed as an inevitable byproduct of globalization, or the impairment of free trade. There is something else going on here, a consideration that goes to the heart of GM’s flawed business model. It is tied to financialization, notably the CEO stock market-based compensation, which induces decisions that might elevate the share price in the short term, but often to the detriment of the company’s long-term success (like GE).
Along with the financialization of GM, the decision to offshore manufacturing in relatively low-wage locations hasn’t helped much. Outsourcing manufacturing in this way has, paradoxically, exacerbated GM’s problems. The sedan market (where GM is experiencing a large proportion of its competitive difficulties these days) typifies this conundrum. The lower and middle ends are dominated by Asia, which operate in a market segment where GM can never get its labor costs low enough to compete against them; the high end is dominated by Audi, Mercedes and BMW, German manufacturers that have devoted considerable capital investment so as to shore up the top-of-the-line models. Here, GM is unable to match the German brands, having chosen the soft option of offshoring its labor, avoiding extensive investment that would have otherwise allowed them to upgrade their production.
As Seymour Melman has noted in his work Dynamic Factors in Industrial Productivity, the unremitting focus on low-cost labor, which has been a key component of business models adopted by American corporations such as GM, creates disincentives toward capital investment decisions that would otherwise drive GM’s products further up the technology curve toward higher-margin products (which in turn yield higher profits and are less prone to competitive pressures from low-end car manufacturers, thereby alleviating the need to outsource manufacturing in the first place). It is quite likely that the historic paranoia about labor organizing in the U.S. is the underlying driver for this monomania.
By contrast, the stress on high-quality domestic engineering capability is something that Germany extends to other forms of high-tech manufacturing goods and services. Economists Jesus Felipe and Utsav Kumar have conducted a study illustrating that countries such as Germany have used capital investment to move up the technology curve to all sorts of higher-end products. Hence, it has a market share of 18 percent in the total world exports of the top-100 most complex products, vs. France 3.6 percent, Italy 3.1 percent, and Spain 0.9 percent.
Germany’s manufacturing success, therefore, is not a function of lower wages. Germany’s manufacturing unit labor costs have declined in a relative sense (especially relative to its Eurozone competitors) over the past decade, but in absolute terms, Germany’s manufacturers, including the auto producers, did not resort to a strategy of nominal wage squeezes or extensive offshoring to cheap labor locales such as China. As the economist Servaas Storm has argued: “It was German engineering ingenuity, not nominal wage restraint or the Hartz ‘reforms,’ which reduced its unit labor costs.” Engineering ingenuity largely came about through well-targeted capital investment and enabled German labor productivity to increase some 8 percent relative to its European and American counterparts.
As a result, Germany has become stronger and more productive in high-value-added, higher-tech manufacturing. Although some manufacturing has been outsourced to adjoining Eastern European countries, its leading companies have preserved an industrial ecosystem, which has enabled Germany to conserve more high-end jobs domestically in aggregate.
On the flip side, American manufacturers have generally taken the soft option of outsourcing and “demodularizing” production. As a result, they degraded industrial quality, increased development lead time, and increased unit costs in the process (Boeing’s 787 “Dreamliner” being a spectacular case in point). At this point, the U.S. doesn’t have what you could call a dynamic manufacturing economy. This has led to a perverse situation described last year by business journalist Jim Harger:
“Industry experts say that cadre of talented tool and die makers is growing in short supply in Michigan just as the demand is increasing.
“‘The average tool and die maker is 56 years old,’ says Baron, president and CEO of the Center for Automotive Research (CAR).
“‘We have not been back-filling. We are running out of talent as the cadence for cars is increasing and the launch rate is increasing.’
“About 75 percent of the tool and die makers in the workforce today are expected to retire in the next five to seven years. Meanwhile, it can take up to 10 years to train a master tool and die maker.”
So Detroit was left with production bottlenecks, because of the shortage of tool and die makers, which represented an important missing gap in production.
Of course, if management’s main incentive is to manage the company’s stock price, rather than the underlying business, it tends to do things like offshoring, which helps to juice the short-term quarterly profits. The share price generally follows suit. The long-term cost (which is usually seen well after the stock options have been cashed and the executive compensation has been paid out) is a production deficiency in the future, which can’t be easily replaced, as Professors Gary P. Pisano and Willy C. Shih explained in Harvard Business Review:
“As manufacturing plants closed or scaled back, many people in those occupations moved on to other things or retired. Seeing fewer job prospects down the road, young people opted for other careers. And many community and vocational schools, starved of students, scaled back their technical programs.”
As if by clockwork, GM’s share price initially greeted the news of the plant shutdowns with a 5 percent upward spike (that is, until adverse comments/threats from President Donald Trump, which muted the rise). The initial market reaction is exactly the sort of thing that further incentivizes stock-laden management to continue to formulate strategy with a view toward goosing a share price, rather than focusing energies on the underlying business operations themselves.
Following a classic pattern we have seen since the 1980s, GM’s CEO, Mary Barra, is the highest-paid auto CEO in the world, via a combination of salary and stock awards. In general, highly paid American manufacturing CEOS have been compensated for their willingness to hollow out compensation to their labor force. For the last two years, Barra has earned over $21m annually. Clearly, she has neither suffered the consequences of her company’s defective ignition switches, nor her company’s declining market share in the sedan market (the ostensible rationale for the layoffs).
The GM layoffs should not be blithely dismissed as another inevitable casualty of globalization. Nor are they a parable illustrating the dangers of increased protectionism (even though that is the narrative that GM wants you to believe). In fact, it is part of a much broader story, particularly in the U.S., where workers continue to deal with the consequences of labor casualization (i.e., flexible “alternative work arrangements”), the outsourcing of manufacturing to other countries, and the ultimate blowback to these increasingly financialized corporations, such as GM, as they continue to embrace measures that degrade their workforce, diminishing America’s viability as a source of highly skilled, good-paying jobs as a consequence.
There are other alternatives, as Germany proves. We occasionally get glimpses of the scale of this homegrown deterioration when a big layoff announcement is made. But seldom do we truly examine the underlying causes, the consequences of which continue to be masked by a hitherto ebullient stock market, which has become a wealth recycling machine for corporate CEOs, even as it provides nothing more than the aura of a Potemkin-like economic prosperity for the rest of us.
Along with the financialization of GM, the decision to offshore manufacturing in relatively low-wage locations hasn’t helped much. Outsourcing manufacturing in this way has, paradoxically, exacerbated GM’s problems. The sedan market (where GM is experiencing a large proportion of its competitive difficulties these days) typifies this conundrum. The lower and middle ends are dominated by Asia, which operate in a market segment where GM can never get its labor costs low enough to compete against them; the high end is dominated by Audi, Mercedes and BMW, German manufacturers that have devoted considerable capital investment so as to shore up the top-of-the-line models. Here, GM is unable to match the German brands, having chosen the soft option of offshoring its labor, avoiding extensive investment that would have otherwise allowed them to upgrade their production.
As Seymour Melman has noted in his work Dynamic Factors in Industrial Productivity, the unremitting focus on low-cost labor, which has been a key component of business models adopted by American corporations such as GM, creates disincentives toward capital investment decisions that would otherwise drive GM’s products further up the technology curve toward higher-margin products (which in turn yield higher profits and are less prone to competitive pressures from low-end car manufacturers, thereby alleviating the need to outsource manufacturing in the first place). It is quite likely that the historic paranoia about labor organizing in the U.S. is the underlying driver for this monomania.
By contrast, the stress on high-quality domestic engineering capability is something that Germany extends to other forms of high-tech manufacturing goods and services. Economists Jesus Felipe and Utsav Kumar have conducted a study illustrating that countries such as Germany have used capital investment to move up the technology curve to all sorts of higher-end products. Hence, it has a market share of 18 percent in the total world exports of the top-100 most complex products, vs. France 3.6 percent, Italy 3.1 percent, and Spain 0.9 percent.
Germany’s manufacturing success, therefore, is not a function of lower wages. Germany’s manufacturing unit labor costs have declined in a relative sense (especially relative to its Eurozone competitors) over the past decade, but in absolute terms, Germany’s manufacturers, including the auto producers, did not resort to a strategy of nominal wage squeezes or extensive offshoring to cheap labor locales such as China. As the economist Servaas Storm has argued: “It was German engineering ingenuity, not nominal wage restraint or the Hartz ‘reforms,’ which reduced its unit labor costs.” Engineering ingenuity largely came about through well-targeted capital investment and enabled German labor productivity to increase some 8 percent relative to its European and American counterparts.
As a result, Germany has become stronger and more productive in high-value-added, higher-tech manufacturing. Although some manufacturing has been outsourced to adjoining Eastern European countries, its leading companies have preserved an industrial ecosystem, which has enabled Germany to conserve more high-end jobs domestically in aggregate.
On the flip side, American manufacturers have generally taken the soft option of outsourcing and “demodularizing” production. As a result, they degraded industrial quality, increased development lead time, and increased unit costs in the process (Boeing’s 787 “Dreamliner” being a spectacular case in point). At this point, the U.S. doesn’t have what you could call a dynamic manufacturing economy. This has led to a perverse situation described last year by business journalist Jim Harger:
“Industry experts say that cadre of talented tool and die makers is growing in short supply in Michigan just as the demand is increasing.
“‘The average tool and die maker is 56 years old,’ says Baron, president and CEO of the Center for Automotive Research (CAR).
“‘We have not been back-filling. We are running out of talent as the cadence for cars is increasing and the launch rate is increasing.’
“About 75 percent of the tool and die makers in the workforce today are expected to retire in the next five to seven years. Meanwhile, it can take up to 10 years to train a master tool and die maker.”
So Detroit was left with production bottlenecks, because of the shortage of tool and die makers, which represented an important missing gap in production.
Of course, if management’s main incentive is to manage the company’s stock price, rather than the underlying business, it tends to do things like offshoring, which helps to juice the short-term quarterly profits. The share price generally follows suit. The long-term cost (which is usually seen well after the stock options have been cashed and the executive compensation has been paid out) is a production deficiency in the future, which can’t be easily replaced, as Professors Gary P. Pisano and Willy C. Shih explained in Harvard Business Review:
“As manufacturing plants closed or scaled back, many people in those occupations moved on to other things or retired. Seeing fewer job prospects down the road, young people opted for other careers. And many community and vocational schools, starved of students, scaled back their technical programs.”
As if by clockwork, GM’s share price initially greeted the news of the plant shutdowns with a 5 percent upward spike (that is, until adverse comments/threats from President Donald Trump, which muted the rise). The initial market reaction is exactly the sort of thing that further incentivizes stock-laden management to continue to formulate strategy with a view toward goosing a share price, rather than focusing energies on the underlying business operations themselves.
Following a classic pattern we have seen since the 1980s, GM’s CEO, Mary Barra, is the highest-paid auto CEO in the world, via a combination of salary and stock awards. In general, highly paid American manufacturing CEOS have been compensated for their willingness to hollow out compensation to their labor force. For the last two years, Barra has earned over $21m annually. Clearly, she has neither suffered the consequences of her company’s defective ignition switches, nor her company’s declining market share in the sedan market (the ostensible rationale for the layoffs).
The GM layoffs should not be blithely dismissed as another inevitable casualty of globalization. Nor are they a parable illustrating the dangers of increased protectionism (even though that is the narrative that GM wants you to believe). In fact, it is part of a much broader story, particularly in the U.S., where workers continue to deal with the consequences of labor casualization (i.e., flexible “alternative work arrangements”), the outsourcing of manufacturing to other countries, and the ultimate blowback to these increasingly financialized corporations, such as GM, as they continue to embrace measures that degrade their workforce, diminishing America’s viability as a source of highly skilled, good-paying jobs as a consequence.
There are other alternatives, as Germany proves. We occasionally get glimpses of the scale of this homegrown deterioration when a big layoff announcement is made. But seldom do we truly examine the underlying causes, the consequences of which continue to be masked by a hitherto ebullient stock market, which has become a wealth recycling machine for corporate CEOs, even as it provides nothing more than the aura of a Potemkin-like economic prosperity for the rest of us.
GM BOUGHT BACK $10 BILLION IN STOCK SINCE 2015, DOUBLE WHAT JOB CUTS WILL SAVE
By IRINA IVANOVA MONEYWATCH - cbs news
November 27, 2018, 6:25 PM
When General Motors announced it was cutting up to 14,000 jobs and idling five automotive plants, it justified the massive cuts by citing long-term savings. The cuts would free up $6 billion in cash, for a net savings of $4.5 billion in cash by 2020.
The move will "make General Motors more agile, resilient and profitable" while the economy's still revving, CEO Mary Barra told investors Monday. Wall Street seemed to believe her, with GM's stock rising nearly 5 percent and one analyst on the call congratulating her "on getting in front of the curve here."
But GM hasn't exactly been tightfisted in recent years. The company has spent $10.6 billion since 2015 buying back its own shares, according to filings with the Securities and Exchange Commission. Stock buybacks do nothing for a company's productive capacity. But because buybacks reduce the number of shares on the market and thus make a stock more valuable, they can be popular with many investors as well as senior executives who are paid largely in stock.
GM is far from the only company to spend money goosing its stock price. This year alone, corporations have announced some $955.6 billion in buybacks, according to TrimTabs Investment Research, and the figure for the whole year could exceed $1 trillion.
But GM started its stock repurchasing program back in 2015, less than six years after a bankruptcy process that cost U.S. taxpayers $11 billion. (The United Auto Workers and a number of politicians have pointed to the bailout in a vow to fightGM's planned cuts, though it's unclear politicians can do anything to change them.)
The company announced $5 billion of buybacks in March 2015, then added another $4 billion later that year. In 2017, it re-upped and announced a further $5 billion in buybacks, $1.6 billion of which have so far taken place.
GM's stock price dipped 2 percent over that time period.
"[T]hat money could have been used in different ways, including investment in older plants. But would that be a good way to use the earnings? Mary Barra thought not," said Mary Lovely, a senior fellow at the Peterson Institute for International Economics. "She decided that the money should be taken out of the company and returned to shareholders. It's really quite a statement about where she thinks the traditional auto sector in the U.S. is headed."
Where it's headed seems to be an SUV-only road, as GM will stop producing sedans after next year. The company's inability to create a profitable small car that can compete with imports represents another missed opportunity, according to William Lazonick, professor of economics at the University of Massachusetts Lowell.
"If it was simply that 'There's global competition and we can't make cars in the U.S.,' okay." Lazonick said. "But given the extent to which money's been pouring out on things that are useless, including supporting the stock price, I don't think you can make that argument."
He cited the 2015 buybacks as "particularly egregious" because they happened when the economy was weaker and GM was returning to steady profitability. "They could have put that into the people who build their cars," he said.
A company spokesperson did not address the buyback question, but said in a statement to CBS MoneyWatch that GM was "building on the comprehensive strategy laid out in 2015" and that it would "appropriately reinvest in the business, maintain our strong investment grade balance sheet, and return all available free cash flow to our shareholders."
Where else could GM have gotten $4.5 billion? It could have dipped into $6.5 billion in overseas profits, suggested the Institute for Taxation and Economic Policy, a left-leaning research group.
Although the GOP tax law last year made such repatriation easier, Fortune 500 corporations have overwhelmingly opted since its passage to buy back their stock instead of repatriating their cash, according to public data. "This trend flies in the face of the Trump administration's promise that the corporate tax provisions — especially a tax holiday for profits stashed offshore, of which GM appears to have had as much as $6.5 billion — would spur a flood of new domestic investment," ITEP said.
The move will "make General Motors more agile, resilient and profitable" while the economy's still revving, CEO Mary Barra told investors Monday. Wall Street seemed to believe her, with GM's stock rising nearly 5 percent and one analyst on the call congratulating her "on getting in front of the curve here."
But GM hasn't exactly been tightfisted in recent years. The company has spent $10.6 billion since 2015 buying back its own shares, according to filings with the Securities and Exchange Commission. Stock buybacks do nothing for a company's productive capacity. But because buybacks reduce the number of shares on the market and thus make a stock more valuable, they can be popular with many investors as well as senior executives who are paid largely in stock.
GM is far from the only company to spend money goosing its stock price. This year alone, corporations have announced some $955.6 billion in buybacks, according to TrimTabs Investment Research, and the figure for the whole year could exceed $1 trillion.
But GM started its stock repurchasing program back in 2015, less than six years after a bankruptcy process that cost U.S. taxpayers $11 billion. (The United Auto Workers and a number of politicians have pointed to the bailout in a vow to fightGM's planned cuts, though it's unclear politicians can do anything to change them.)
The company announced $5 billion of buybacks in March 2015, then added another $4 billion later that year. In 2017, it re-upped and announced a further $5 billion in buybacks, $1.6 billion of which have so far taken place.
GM's stock price dipped 2 percent over that time period.
"[T]hat money could have been used in different ways, including investment in older plants. But would that be a good way to use the earnings? Mary Barra thought not," said Mary Lovely, a senior fellow at the Peterson Institute for International Economics. "She decided that the money should be taken out of the company and returned to shareholders. It's really quite a statement about where she thinks the traditional auto sector in the U.S. is headed."
Where it's headed seems to be an SUV-only road, as GM will stop producing sedans after next year. The company's inability to create a profitable small car that can compete with imports represents another missed opportunity, according to William Lazonick, professor of economics at the University of Massachusetts Lowell.
"If it was simply that 'There's global competition and we can't make cars in the U.S.,' okay." Lazonick said. "But given the extent to which money's been pouring out on things that are useless, including supporting the stock price, I don't think you can make that argument."
He cited the 2015 buybacks as "particularly egregious" because they happened when the economy was weaker and GM was returning to steady profitability. "They could have put that into the people who build their cars," he said.
A company spokesperson did not address the buyback question, but said in a statement to CBS MoneyWatch that GM was "building on the comprehensive strategy laid out in 2015" and that it would "appropriately reinvest in the business, maintain our strong investment grade balance sheet, and return all available free cash flow to our shareholders."
Where else could GM have gotten $4.5 billion? It could have dipped into $6.5 billion in overseas profits, suggested the Institute for Taxation and Economic Policy, a left-leaning research group.
Although the GOP tax law last year made such repatriation easier, Fortune 500 corporations have overwhelmingly opted since its passage to buy back their stock instead of repatriating their cash, according to public data. "This trend flies in the face of the Trump administration's promise that the corporate tax provisions — especially a tax holiday for profits stashed offshore, of which GM appears to have had as much as $6.5 billion — would spur a flood of new domestic investment," ITEP said.
Restore Higher Tax Rates for Corporations That Can’t Contain CEO Pay
BY
Dean Baker, Truthout
PUBLISHED
November 26, 2018
There is an argument that carries considerable currency on the right about the need to force the poor to do things that are actually good for them. This comes up frequently in the context of work requirements for people receiving benefits like Medicaid or food stamps (the Supplemental Nutrition Assistance Program).
The claim is that people will be made better off by working, since that will give them a foot into the labor market. They can eventually move up and earn enough so they no longer need these benefits. A major flaw in this argument is that the vast majority of non-disabled people who receive these benefits are already working.
While the idea of forcing people to help themselves doesn’t make much sense for these anti-poverty programs, they could make considerable sense for the governance of major US corporations. The problem is that shareholders seem to be unable to avoid paying out tens of millions of dollars to CEOs, even when these CEOs are not especially competent.
The problem is the structure of corporate governance. The people who most immediately determine the CEO’s pay are the corporation’s board of directors. These directors have incredibly cushy jobs. They typically get paid several hundred thousand dollars a year for perhaps 150 hours of work.
Members of corporate boards largely owe their jobs to the CEOs and top management. They almost never get booted out by shareholders; the reelection rate for board members running with board support is over 99 percent.
In this context, board members have no incentive to ask questions like, “Could we get someone as good as our CEO for half the pay?” There is basically no downward pressure on CEO pay and every reason to boost pay. After all, if you were sitting on some huge pot of other people’s money, wouldn’t you want to pay your friends well?
Of course, the CEO pay comes at the expense of returns to shareholders, and these have not been very good in recent years in spite of the best efforts of Trump and the Republicans to help them with tax cuts and pro-business regulation. In the last two decades, stock returns have averaged less than 4.7 percent annually above the rate of inflation. By contrast, in the long Golden Age from 1947 to 1973, real stock returns averaged 8.2 percent.
With the bulk of stock being held by the richest people in the country, there is no reason to shed tears for stockholders, but the fact is they are being ripped off by CEOs and other top management. Given the choice, we should prefer the money ends up in the hands of shareholders rather than CEOs. After all, people below the top 1 percent do own stock in their 401(k)s, as do public and private pension funds. By contrast, every dollar in additional CEO pay is going to someone in the top 0.001 percent of the income distribution.
More important than the money going to the CEOs is the impact that their outlandish pay has on pay structures in the economy more generally. When the CEO is pocketing $20 to $30 million a year, other top executives are likely earning close to $10 million and even the third-tier managers might be topping $1 million.
The pay structure in corporate America also affects the pay scales elsewhere. It is common for the top executives at major universities and charities to be getting well over $1 million a year.
Think of how different the world would look if we went back to the 1960s and 1970s when CEOs earned 20 to 30 times as much as an ordinary worker. If a successful CEO of a large company was pocketing $2-3 million a year, instead of $20 to $30 million, the ripple effect on the pay of others near the top would leave much more money for everyone else. This gives us very good reason to worry about excessive CEO pay.
If the structure of corporate governance makes it too difficult for shareholders to collectively act to limit CEO pay, threatening them with a return to the pre-Trump 35 percent tax rate might give them enough incentive to get the job done. It has always been in the interests of shareholders to pay their CEOs as little as possible, just as they want to pay as little as possible to their other employees.
If shareholders pay a CEO $20 million more than needed to get someone to run the company, it has the same impact on the bottom line as paying $2,000 extra to 10,000 workers. No company deliberately overpays their frontline workers.
So, we can help corporate America get a grip on CEO pay. They can limit the CEO’s pay to 50 times that of a typical worker or they go back to paying the pre-Trump 35 percent tax rate. If they respond to the incentive and rein in CEO pay, then we start to get the country’s pay structure back in line. If this incentive can’t motivate shareholders to do what is in their own interest, then we get lots of tax revenue to finance a big infrastructure package or other good things.
The claim is that people will be made better off by working, since that will give them a foot into the labor market. They can eventually move up and earn enough so they no longer need these benefits. A major flaw in this argument is that the vast majority of non-disabled people who receive these benefits are already working.
While the idea of forcing people to help themselves doesn’t make much sense for these anti-poverty programs, they could make considerable sense for the governance of major US corporations. The problem is that shareholders seem to be unable to avoid paying out tens of millions of dollars to CEOs, even when these CEOs are not especially competent.
The problem is the structure of corporate governance. The people who most immediately determine the CEO’s pay are the corporation’s board of directors. These directors have incredibly cushy jobs. They typically get paid several hundred thousand dollars a year for perhaps 150 hours of work.
Members of corporate boards largely owe their jobs to the CEOs and top management. They almost never get booted out by shareholders; the reelection rate for board members running with board support is over 99 percent.
In this context, board members have no incentive to ask questions like, “Could we get someone as good as our CEO for half the pay?” There is basically no downward pressure on CEO pay and every reason to boost pay. After all, if you were sitting on some huge pot of other people’s money, wouldn’t you want to pay your friends well?
Of course, the CEO pay comes at the expense of returns to shareholders, and these have not been very good in recent years in spite of the best efforts of Trump and the Republicans to help them with tax cuts and pro-business regulation. In the last two decades, stock returns have averaged less than 4.7 percent annually above the rate of inflation. By contrast, in the long Golden Age from 1947 to 1973, real stock returns averaged 8.2 percent.
With the bulk of stock being held by the richest people in the country, there is no reason to shed tears for stockholders, but the fact is they are being ripped off by CEOs and other top management. Given the choice, we should prefer the money ends up in the hands of shareholders rather than CEOs. After all, people below the top 1 percent do own stock in their 401(k)s, as do public and private pension funds. By contrast, every dollar in additional CEO pay is going to someone in the top 0.001 percent of the income distribution.
More important than the money going to the CEOs is the impact that their outlandish pay has on pay structures in the economy more generally. When the CEO is pocketing $20 to $30 million a year, other top executives are likely earning close to $10 million and even the third-tier managers might be topping $1 million.
The pay structure in corporate America also affects the pay scales elsewhere. It is common for the top executives at major universities and charities to be getting well over $1 million a year.
Think of how different the world would look if we went back to the 1960s and 1970s when CEOs earned 20 to 30 times as much as an ordinary worker. If a successful CEO of a large company was pocketing $2-3 million a year, instead of $20 to $30 million, the ripple effect on the pay of others near the top would leave much more money for everyone else. This gives us very good reason to worry about excessive CEO pay.
If the structure of corporate governance makes it too difficult for shareholders to collectively act to limit CEO pay, threatening them with a return to the pre-Trump 35 percent tax rate might give them enough incentive to get the job done. It has always been in the interests of shareholders to pay their CEOs as little as possible, just as they want to pay as little as possible to their other employees.
If shareholders pay a CEO $20 million more than needed to get someone to run the company, it has the same impact on the bottom line as paying $2,000 extra to 10,000 workers. No company deliberately overpays their frontline workers.
So, we can help corporate America get a grip on CEO pay. They can limit the CEO’s pay to 50 times that of a typical worker or they go back to paying the pre-Trump 35 percent tax rate. If they respond to the incentive and rein in CEO pay, then we start to get the country’s pay structure back in line. If this incentive can’t motivate shareholders to do what is in their own interest, then we get lots of tax revenue to finance a big infrastructure package or other good things.
Give 30 years of your life to a company, no severance; drive a company into the ground, get millions
Mark E Andersen Community - daily kos
Sunday November 25, 2018 · 10:30 AM PST
...Sears, currently going through bankruptcy, is one of those large corporations. Gross mismanagement has driven what was once the largest American retailer, the anchor of malls across America, out of business. Gone are stalwart brands like Craftsman, sold off to Stanley Black & Decker; Lands’ End, being split off into a stand-alone company; and Kenmore, being either sold off or scrapped in a last-ditch effort to raise capital.
One would think heads would roll at the executive level for this level of incompetence. In a just world, that would be the case. But in America, it seems as if there is no justice.
Sears filed two different types of bonus plans in bankruptcy court Thursday. The first is for the top 18 "key" executives, who would collectively get as much as $2.1 million per quarter up to a maximum of $8.5 million. The bonuses would only be paid in full if Sears reaches its cash-flow targets. Sears Holdings, which includes both Sears and Kmart, has been burning through cash at a rate of about $125 million a month.
A second retention bonus plan was designed to encourage 322 other unnamed executives to stay put during Sears' reorganization. They would collectively get $16.9 million over the course of a year, which works out to an average of about $52,000 annually per executive. No executive could receive more the $150,000 in bonuses for staying with the company during the bankruptcy process.
The men and women who have worked at Sears for years are at the end of the line, begging for crumbs, and they are unlikely to get even that.
The company wants to retain as many executives as it can, but Sears is laying off employees who staffed hundreds of stores it is closing. Many hourly workers claim they will not be paid severance.
Shelia Brewer, who worked for 17 years as a full-time hourly employee at a Kmart in Rockford Illinois, said the company told her she'd get eight weeks of severance. Instead, she received a letter saying that severance payments were being halted because of the bankruptcy, and she would get only the four weeks of pay she had already received.
"It hit me hard. I was already struggling as it was," she said. She said the bonus plan makes her angry.
"They say we can't get our severance because there's no money, but they're getting bonuses? It's like a slap in the face," she said.
Sears employees who were able to retire will at least have their pensions covered by the federal government.
If Sears, once the nation’s largest retailer, declares bankruptcy, it could cause one of the biggest pension defaults in U.S. history, but the government would step in to keep checks coming to more than 90,000 retirees.
The company’s long-term pension obligations, which have been underfunded by more than $1 billion for years, would be covered by the federal Pension Benefit Guaranty Corp.
Corporate welfare at its fines: Incompetent executives get millions in bonuses, and the taxpayers have to pick up the tab. Of course, this does not even take into account the Sears employees who put in multiple years at the retailer and won’t get a dime when the inevitable happens and their store is closed. Sears will survive—and those who spent their lives keeping the lights on will, too—but the latter will endure unnecessary suffering.
One would think heads would roll at the executive level for this level of incompetence. In a just world, that would be the case. But in America, it seems as if there is no justice.
Sears filed two different types of bonus plans in bankruptcy court Thursday. The first is for the top 18 "key" executives, who would collectively get as much as $2.1 million per quarter up to a maximum of $8.5 million. The bonuses would only be paid in full if Sears reaches its cash-flow targets. Sears Holdings, which includes both Sears and Kmart, has been burning through cash at a rate of about $125 million a month.
A second retention bonus plan was designed to encourage 322 other unnamed executives to stay put during Sears' reorganization. They would collectively get $16.9 million over the course of a year, which works out to an average of about $52,000 annually per executive. No executive could receive more the $150,000 in bonuses for staying with the company during the bankruptcy process.
The men and women who have worked at Sears for years are at the end of the line, begging for crumbs, and they are unlikely to get even that.
The company wants to retain as many executives as it can, but Sears is laying off employees who staffed hundreds of stores it is closing. Many hourly workers claim they will not be paid severance.
Shelia Brewer, who worked for 17 years as a full-time hourly employee at a Kmart in Rockford Illinois, said the company told her she'd get eight weeks of severance. Instead, she received a letter saying that severance payments were being halted because of the bankruptcy, and she would get only the four weeks of pay she had already received.
"It hit me hard. I was already struggling as it was," she said. She said the bonus plan makes her angry.
"They say we can't get our severance because there's no money, but they're getting bonuses? It's like a slap in the face," she said.
Sears employees who were able to retire will at least have their pensions covered by the federal government.
If Sears, once the nation’s largest retailer, declares bankruptcy, it could cause one of the biggest pension defaults in U.S. history, but the government would step in to keep checks coming to more than 90,000 retirees.
The company’s long-term pension obligations, which have been underfunded by more than $1 billion for years, would be covered by the federal Pension Benefit Guaranty Corp.
Corporate welfare at its fines: Incompetent executives get millions in bonuses, and the taxpayers have to pick up the tab. Of course, this does not even take into account the Sears employees who put in multiple years at the retailer and won’t get a dime when the inevitable happens and their store is closed. Sears will survive—and those who spent their lives keeping the lights on will, too—but the latter will endure unnecessary suffering.
‘Stakeholder’ and 6 other economic terms that are often used to trick people out of their money
Valerie Vande Panne, Independent Media Institute - raw story
20 NOV 2018 AT 05:35 ET
There are so many plans these days to “transform” an area via a “public-private partnership” that will “restore” and “fix” the local economy and lead to an economic “recovery” for the “brave” group of “stakeholders” who’ve come together to make it happen. The business leader drumming up support is often a “good friend” of the politicians in charge. To entertain another plan, the people in power warn, will “hurt” the economy.
It’s a story that might as well be contemporary Shakespeare, except it could be written by the auto-correct text on a developer’s iPhone.
No matter the project, the end result is the corporation pays little to no tax, and gives little to nothing to the community — not even the promised jobs. It is guaranteed to extract everything from captured tax dollars to fire and police resources, also paid for with tax dollars. It will likely capture education dollars and even take away employment from locals as small businesses close, and then it leaves the taxpayer with the clean-up bill. Empty, toxic real estate and a growing lower class are left behind.
In other words, these “transformational” projects drive locals into worse-off conditions while lining the pockets of the already wealthy.
It’s a tale as old as capitalism itself, and it’s being told over and over again with different players but using the same popular words.
Here are the economic development words to watch out for, and what they really mean.
1. Public-Private Partnership
Meaning: A massive tax dollar giveaway to a private company at taxpayer expense.
Taxpayers lose money on everything from schools to fire departments. Taxpayers end up footing the bill for the private company’s land, clean-up, and more. Taxpayers receive comparatively nothing in return.
Instead, communities are healthier and more sustainable when they are more economically vibrant and diverse with co-ops, small businesses, and collectives.
2. Restore
Meaning: We’ve destroyed something irreplaceable — a neighborhood, wetlands, a forest — and see a way to make even more money on what’s been destroyed.
This happens over and over again — it’s one of the cycles of capitalism. The truth is once the neighborhood is gone and its inhabitants displaced — once the habitat that took 1,000 years to create is destroyed — it cannot be restored. You cannot restore Detroit’s vibrant African American neighborhood of Black Bottom by putting in a B.B. King supper club any more than you can restore wetlands that took thousands of years to establish and flourish. What you’re doing is making money on destruction—not restoration.
Preservation is more powerful than the destroy-restore cycle.
3. Good Friend
Meaning: A favorite phrase thrown around in the Democratic Party and political circles nationwide; when someone says they are a “good friend,” what they really mean is they are stabbing that person or group in the back.
Be wary whenever someone tells you—especially in politics or development—that someone else important is a “good friend.”
Be honest about who people are, and listen for honesty when someone is trying to sell your community a development.
4. Stakeholders
Meaning: The modern-day equivalent of a dog-and-pony show, “stakeholders” is regularly used as a catch-all phrase by those who want to appear inclusive and cover their own asses.
The chosen “stakeholders” are often those with strong social media followings and the local LGBTQIA/POC community members likely to be the most friendly to the development plan. They are often offered a seat at the table because they are often those who are least likely to rock the boat. Pictures will be taken, Instagram posts made, tweets sent—inclusion looks like it feels so good.
Such stakeholder meetings are often exclusionary of those most marginalized, disenfranchised, and impacted by development plans.
5. Brave
Meaning: This one can be used for a “stakeholder” folding for the developer, or for a developer going into a depressed community.
It’s also used for a long list of virtue signaling. Brave used to be a word reserved for firemen running into burning buildings to save children and pets; self-sacrificing soldiers saving their brothers-in-arms and helpless civilians; non-violent protesters standing strong in the face of weapons, violence, and hate.
Bravery is not a self-righteous action — and definitely not meant for those selling out their community to a developer, or for a developer taking tax dollars to develop a community.
6. Fix
Meaning: Something is broken beyond repair — for example, the vast majority of public school systems. But there is a new way to make money on the broken-beyond-repair things by “fixing” them: For-profit charter schools and intensive testing, done by private corporations with state or local school system contracts paid for with tax dollars — all of which tend to break the system even more.
Developing new and locally tailored solutions to a broken system is possible — but it can mean leaving behind the broken system entirely.
7. Hurt
“We can’t do that; it’ll hurt the economy,” warns almost every politician when faced with an economically sound solution to ecological crises our society and planet are facing.
Meaning:What they mean is, it’ll hurt their own investments, their own power, and their own bottom line.
The fact is, few things hurt the economy and our environment more than the public-private partnerships, their schemes and scams, and development deals that let events like the Flint Water Crisis continue.
When someone says, “We can’t do that; it’ll hurt the economy,” ask yourself whose pocketbook it will really hurt, and chances are it’s not yours — it’s the people in power.
As George Carlin used to say, “America’s leading industry is still the manufacture, distribution, packaging and marketing of bullshit. High-quality bullshit; world-class, designer bullshit, to be sure.” These words of decades ago are still used, and they are still bullshit, just like these seven phrases are today.
It’s a story that might as well be contemporary Shakespeare, except it could be written by the auto-correct text on a developer’s iPhone.
No matter the project, the end result is the corporation pays little to no tax, and gives little to nothing to the community — not even the promised jobs. It is guaranteed to extract everything from captured tax dollars to fire and police resources, also paid for with tax dollars. It will likely capture education dollars and even take away employment from locals as small businesses close, and then it leaves the taxpayer with the clean-up bill. Empty, toxic real estate and a growing lower class are left behind.
In other words, these “transformational” projects drive locals into worse-off conditions while lining the pockets of the already wealthy.
It’s a tale as old as capitalism itself, and it’s being told over and over again with different players but using the same popular words.
Here are the economic development words to watch out for, and what they really mean.
1. Public-Private Partnership
Meaning: A massive tax dollar giveaway to a private company at taxpayer expense.
Taxpayers lose money on everything from schools to fire departments. Taxpayers end up footing the bill for the private company’s land, clean-up, and more. Taxpayers receive comparatively nothing in return.
Instead, communities are healthier and more sustainable when they are more economically vibrant and diverse with co-ops, small businesses, and collectives.
2. Restore
Meaning: We’ve destroyed something irreplaceable — a neighborhood, wetlands, a forest — and see a way to make even more money on what’s been destroyed.
This happens over and over again — it’s one of the cycles of capitalism. The truth is once the neighborhood is gone and its inhabitants displaced — once the habitat that took 1,000 years to create is destroyed — it cannot be restored. You cannot restore Detroit’s vibrant African American neighborhood of Black Bottom by putting in a B.B. King supper club any more than you can restore wetlands that took thousands of years to establish and flourish. What you’re doing is making money on destruction—not restoration.
Preservation is more powerful than the destroy-restore cycle.
3. Good Friend
Meaning: A favorite phrase thrown around in the Democratic Party and political circles nationwide; when someone says they are a “good friend,” what they really mean is they are stabbing that person or group in the back.
Be wary whenever someone tells you—especially in politics or development—that someone else important is a “good friend.”
Be honest about who people are, and listen for honesty when someone is trying to sell your community a development.
4. Stakeholders
Meaning: The modern-day equivalent of a dog-and-pony show, “stakeholders” is regularly used as a catch-all phrase by those who want to appear inclusive and cover their own asses.
The chosen “stakeholders” are often those with strong social media followings and the local LGBTQIA/POC community members likely to be the most friendly to the development plan. They are often offered a seat at the table because they are often those who are least likely to rock the boat. Pictures will be taken, Instagram posts made, tweets sent—inclusion looks like it feels so good.
Such stakeholder meetings are often exclusionary of those most marginalized, disenfranchised, and impacted by development plans.
5. Brave
Meaning: This one can be used for a “stakeholder” folding for the developer, or for a developer going into a depressed community.
It’s also used for a long list of virtue signaling. Brave used to be a word reserved for firemen running into burning buildings to save children and pets; self-sacrificing soldiers saving their brothers-in-arms and helpless civilians; non-violent protesters standing strong in the face of weapons, violence, and hate.
Bravery is not a self-righteous action — and definitely not meant for those selling out their community to a developer, or for a developer taking tax dollars to develop a community.
6. Fix
Meaning: Something is broken beyond repair — for example, the vast majority of public school systems. But there is a new way to make money on the broken-beyond-repair things by “fixing” them: For-profit charter schools and intensive testing, done by private corporations with state or local school system contracts paid for with tax dollars — all of which tend to break the system even more.
Developing new and locally tailored solutions to a broken system is possible — but it can mean leaving behind the broken system entirely.
7. Hurt
“We can’t do that; it’ll hurt the economy,” warns almost every politician when faced with an economically sound solution to ecological crises our society and planet are facing.
Meaning:What they mean is, it’ll hurt their own investments, their own power, and their own bottom line.
The fact is, few things hurt the economy and our environment more than the public-private partnerships, their schemes and scams, and development deals that let events like the Flint Water Crisis continue.
When someone says, “We can’t do that; it’ll hurt the economy,” ask yourself whose pocketbook it will really hurt, and chances are it’s not yours — it’s the people in power.
As George Carlin used to say, “America’s leading industry is still the manufacture, distribution, packaging and marketing of bullshit. High-quality bullshit; world-class, designer bullshit, to be sure.” These words of decades ago are still used, and they are still bullshit, just like these seven phrases are today.
Still Feeling Peckish
always feeing peckish
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Capitalism Is Not the “Market System”
BY
Richard D. Wolff Truthout
With the Democratic Socialists of America now counting 48,000 people within its membership and socialist candidates such as Alexandria Ocasio-Cortez pushing for free universities and Medicare for All, Americans are once again discussing capitalism versus socialism. Fortunately, they are not doing so in the old Cold War manner of uncritically celebrating one while demonizing the other. Rather, it’s a debate over the choice Americans must make now between keeping capitalism or changing the system to some form of socialism. As debates often do, this debate awakens us to problems and differences in how we understand its basic terms. For clarity and to make progress in this important debate, we need to stop conflating “capitalism” with the market. This is done far too often and on all sides of the debate.
Markets are a means of distributing resources and products, goods and services. Quid pro quo exchange defines markets: one person offers to sell to another who offers to buy at a mutually agreed ratio that may or may not be mediated by money. To say that a market exists means that such an exchange system is what accomplishes distribution. To say that a market exists says nothing about how production is accomplished or how resources are converted into products. Capitalism, on the other hand, is a description of how the production of goods and services is organized, and how the participants relate to one another in the process of production. Thus conflating “capitalism” with “the market system” loses sight of the fact that markets can exist in relation to different systems of production.
We can get at this in other words. Markets were mechanisms of distribution in societies with very different production systems. For example, in economies based on the enslavement of people, resulting in a production system involving masters and slaves, “inputs” and “outputs” — including enslaved people — were often bought and sold in markets. We might then speak of slave markets: when a slave production system coexisted with a market distribution system.
If productive enterprises remain structured around the employer-employee relationship, they remain capitalist with or without a coexisting market system.
To take another example, feudal manors were production systems that juxtaposed lords and serfs. Since serfs were not slaves, no market in serfs existed. They were distributed via other, non-market systems. However, their non-human inputs and outputs could be distributed via markets, and in European feudalism often were distributed via market exchanges. Capitalist production systems – organized around the employer-employee (rather than the master-slave or lord-serf) relationship – could likewise coexist with market systems of distribution. Under capitalism, non-human inputs, labor power (the capacity to do labor), and outputs are all often distributed via market exchanges.
Thus it is confused to refer to capitalism as a “market system.” Market distribution systems vary in their specific qualities according to the different production systems and systems of exploitation with which they co-exist. Capitalist markets differ from slave markets, and both differ from feudal markets, but they are all markets. Moreover, markets usually coexist and interact with state apparatuses. Those interactions are marked with greater or lesser degrees of state interventions: from rigid regulation of exchanges all the way over to “free” trade or markets where regulation is minimized or absent. The state apparatus can also abolish the market system and replace it with an alternative system of distribution.
In that event, however, capitalism is not abolished because the market has been abolished. If productive enterprises remain structured around the employer-employee relationship, they remain capitalist with or without a coexisting market system. For the state to replace markets with some administrative (e.g., planned) system of distribution says nothing about the production system. The resources and products of a capitalist system of production can be distributed via more or less state-regulated markets or via non-market distribution systems. The same applies to the resources and products of slave and feudal production systems.
Why does it matter to differentiate markets and other distribution systems from production systems? The answer emerges from the recognition that most economic systems combine one or more production systems with one or more distribution systems. For a long time, the observers of such combinations – both celebrants and critics – have tended to conflate the two systems combined, as if they were one. Indeed, defining capitalism as “the market” or the “free market” system is precisely such a conflation.
Karl Marx went to considerable lengths to differentiate critiques of market exchange from his critique of capitalist production. He believed that major social problems of his time – inequality, cyclical instability, etc. – emerged from the capitalist production system as much or more than from the market system. He was a critic of both, but he kept the criticisms separate for basic reasons of analytical clarity and revolutionary strategy.
From capitalism’s beginnings, reformers have sought to soften its hard edges often by means of state interventions in markets. Minimum wages, maximum interest rates, progressive taxation, and so on are among their chosen mechanisms. More generally, reformers responded to capitalism’s profit-driven distribution of wealth by having the state redistribute that wealth according to non-capitalist (non-profit) criteria.
A more extreme criticism of markets displaced them in favor of other mechanisms of distributing resources and products such as centralized or decentralized state institutions charged with distribution, private institutions similarly charged, etc. However, if and when the production system continued to juxtapose employers and employees, all the different distribution systems discussed above – “free” market, regulated market, and non-market – coexist and interact with a capitalist production system.
To the extent that capitalism’s problems – inequality, instability (cycles/crises), etc. – stem in part from its production relationships, reforms focused exclusively on regulating or supplanting markets will not succeed in solving them. For example, Keynesian monetary policies (focused on raising or lowering the quantity of money in circulation and, correspondingly, interest rates) do not touch the employer-employee relationship, however much their variations redistribute wealth, regulate markets, or displace markets in favor of state-administered investment decisions. Likewise, Keynesian fiscal policies (raising or lowering taxes and government spending) do not address the employer-employee relationship.
Keynesian policies also never ended the cyclical instability of capitalism. The New Deal and European social democracy left capitalism in place in both state and private units (enterprises) of production notwithstanding their massive reform agendas and programs. They thereby left capitalist employers facing the incentives and receiving the resources (profits) to evade, weaken and eventually dissolve most of those programs.
It is far better not to distribute wealth unequally in the first place than to re-distribute it after to undo the inequality. For example, FDR proposed in 1944 that the government establish a maximum income alongside a minimum wage; that is one among the various ways inequality could be limited and thereby redistribution avoided. Efforts to redistribute encounter evasions, oppositions, and failures that compound the effects of unequal distribution itself. Social peace and cohesion are the victims of redistribution sooner or later. Reforming markets while leaving the relations/organization of capitalist production unchanged is like redistribution. Just as redistribution schemes fail to solve the problems rooted in distribution, market-focused reforms fail to solve the problems rooted in production.
Since 2008, capitalism has showed us all yet again its deep and unsolved problems of cyclical instability, deepening inequality and the injustices they both entail. Their persistence mirrors that of the capitalist organization of production. To successfully confront and solve the problems of economic cycles, income and wealth inequality, and so on, we need to go beyond the capitalist employer-employee system of production. The democratization of enterprises – transitioning from employer-employee hierarchies to worker cooperatives – is a key way available here and now to realize the change we need.
Worker coops democratically decide the distribution of income (wages, bonuses, benefits, profit shares, etc.) among their members. No small group of owners and the boards of directors they choose would, as in capitalist corporations, make such decisions. Thus, for example, it would be far less likely that a few individuals in a worker coop would earn millions while most others could not afford to send children to college. A democratic worker coop decision on the distribution of enterprise income would be far less unequal than what typifies capitalist enterprises. A socialism for the 21st century could and should include the transition from a capitalist to a worker-coop-based economic system as central to its commitments to less inequality and less social conflict over redistribution.
Markets are a means of distributing resources and products, goods and services. Quid pro quo exchange defines markets: one person offers to sell to another who offers to buy at a mutually agreed ratio that may or may not be mediated by money. To say that a market exists means that such an exchange system is what accomplishes distribution. To say that a market exists says nothing about how production is accomplished or how resources are converted into products. Capitalism, on the other hand, is a description of how the production of goods and services is organized, and how the participants relate to one another in the process of production. Thus conflating “capitalism” with “the market system” loses sight of the fact that markets can exist in relation to different systems of production.
We can get at this in other words. Markets were mechanisms of distribution in societies with very different production systems. For example, in economies based on the enslavement of people, resulting in a production system involving masters and slaves, “inputs” and “outputs” — including enslaved people — were often bought and sold in markets. We might then speak of slave markets: when a slave production system coexisted with a market distribution system.
If productive enterprises remain structured around the employer-employee relationship, they remain capitalist with or without a coexisting market system.
To take another example, feudal manors were production systems that juxtaposed lords and serfs. Since serfs were not slaves, no market in serfs existed. They were distributed via other, non-market systems. However, their non-human inputs and outputs could be distributed via markets, and in European feudalism often were distributed via market exchanges. Capitalist production systems – organized around the employer-employee (rather than the master-slave or lord-serf) relationship – could likewise coexist with market systems of distribution. Under capitalism, non-human inputs, labor power (the capacity to do labor), and outputs are all often distributed via market exchanges.
Thus it is confused to refer to capitalism as a “market system.” Market distribution systems vary in their specific qualities according to the different production systems and systems of exploitation with which they co-exist. Capitalist markets differ from slave markets, and both differ from feudal markets, but they are all markets. Moreover, markets usually coexist and interact with state apparatuses. Those interactions are marked with greater or lesser degrees of state interventions: from rigid regulation of exchanges all the way over to “free” trade or markets where regulation is minimized or absent. The state apparatus can also abolish the market system and replace it with an alternative system of distribution.
In that event, however, capitalism is not abolished because the market has been abolished. If productive enterprises remain structured around the employer-employee relationship, they remain capitalist with or without a coexisting market system. For the state to replace markets with some administrative (e.g., planned) system of distribution says nothing about the production system. The resources and products of a capitalist system of production can be distributed via more or less state-regulated markets or via non-market distribution systems. The same applies to the resources and products of slave and feudal production systems.
Why does it matter to differentiate markets and other distribution systems from production systems? The answer emerges from the recognition that most economic systems combine one or more production systems with one or more distribution systems. For a long time, the observers of such combinations – both celebrants and critics – have tended to conflate the two systems combined, as if they were one. Indeed, defining capitalism as “the market” or the “free market” system is precisely such a conflation.
Karl Marx went to considerable lengths to differentiate critiques of market exchange from his critique of capitalist production. He believed that major social problems of his time – inequality, cyclical instability, etc. – emerged from the capitalist production system as much or more than from the market system. He was a critic of both, but he kept the criticisms separate for basic reasons of analytical clarity and revolutionary strategy.
From capitalism’s beginnings, reformers have sought to soften its hard edges often by means of state interventions in markets. Minimum wages, maximum interest rates, progressive taxation, and so on are among their chosen mechanisms. More generally, reformers responded to capitalism’s profit-driven distribution of wealth by having the state redistribute that wealth according to non-capitalist (non-profit) criteria.
A more extreme criticism of markets displaced them in favor of other mechanisms of distributing resources and products such as centralized or decentralized state institutions charged with distribution, private institutions similarly charged, etc. However, if and when the production system continued to juxtapose employers and employees, all the different distribution systems discussed above – “free” market, regulated market, and non-market – coexist and interact with a capitalist production system.
To the extent that capitalism’s problems – inequality, instability (cycles/crises), etc. – stem in part from its production relationships, reforms focused exclusively on regulating or supplanting markets will not succeed in solving them. For example, Keynesian monetary policies (focused on raising or lowering the quantity of money in circulation and, correspondingly, interest rates) do not touch the employer-employee relationship, however much their variations redistribute wealth, regulate markets, or displace markets in favor of state-administered investment decisions. Likewise, Keynesian fiscal policies (raising or lowering taxes and government spending) do not address the employer-employee relationship.
Keynesian policies also never ended the cyclical instability of capitalism. The New Deal and European social democracy left capitalism in place in both state and private units (enterprises) of production notwithstanding their massive reform agendas and programs. They thereby left capitalist employers facing the incentives and receiving the resources (profits) to evade, weaken and eventually dissolve most of those programs.
It is far better not to distribute wealth unequally in the first place than to re-distribute it after to undo the inequality. For example, FDR proposed in 1944 that the government establish a maximum income alongside a minimum wage; that is one among the various ways inequality could be limited and thereby redistribution avoided. Efforts to redistribute encounter evasions, oppositions, and failures that compound the effects of unequal distribution itself. Social peace and cohesion are the victims of redistribution sooner or later. Reforming markets while leaving the relations/organization of capitalist production unchanged is like redistribution. Just as redistribution schemes fail to solve the problems rooted in distribution, market-focused reforms fail to solve the problems rooted in production.
Since 2008, capitalism has showed us all yet again its deep and unsolved problems of cyclical instability, deepening inequality and the injustices they both entail. Their persistence mirrors that of the capitalist organization of production. To successfully confront and solve the problems of economic cycles, income and wealth inequality, and so on, we need to go beyond the capitalist employer-employee system of production. The democratization of enterprises – transitioning from employer-employee hierarchies to worker cooperatives – is a key way available here and now to realize the change we need.
Worker coops democratically decide the distribution of income (wages, bonuses, benefits, profit shares, etc.) among their members. No small group of owners and the boards of directors they choose would, as in capitalist corporations, make such decisions. Thus, for example, it would be far less likely that a few individuals in a worker coop would earn millions while most others could not afford to send children to college. A democratic worker coop decision on the distribution of enterprise income would be far less unequal than what typifies capitalist enterprises. A socialism for the 21st century could and should include the transition from a capitalist to a worker-coop-based economic system as central to its commitments to less inequality and less social conflict over redistribution.
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'Corporations Are People' Is Built on an Incredible 19th-Century Lie
How a farcical series of events in the 1880s produced an enduring and controversial legal
precedent
ADAM WINKLER - the atlantic
Somewhat unintuitively, American corporations today enjoy many of the same rights as American citizens. Both, for instance, are entitled to the freedom of speech and the freedom of religion. How exactly did corporations come to be understood as “people” bestowed with the most fundamental constitutional rights? The answer can be found in a bizarre—even farcical—series of lawsuits over 130 years ago involving a lawyer who lied to the Supreme Court, an ethically challenged justice, and one of the most powerful corporations of the day.
That corporation was the Southern Pacific Railroad Company, owned by the robber baron Leland Stanford. In 1881, after California lawmakers imposed a special tax on railroad property, Southern Pacific pushed back, making the bold argument that the law was an act of unconstitutional discrimination under the Fourteenth Amendment. Adopted after the Civil War to protect the rights of the freed slaves, that amendment guarantees to every “person” the “equal protection of the laws.” Stanford’s railroad argued that it was a person too, reasoning that just as the Constitution prohibited discrimination on the basis of racial identity, so did it bar discrimination against Southern Pacific on the basis of its corporate identity.
The head lawyer representing Southern Pacific was a man named Roscoe Conkling. A leader of the Republican Party for more than a decade, Conkling had even been nominated to the Supreme Court twice. He begged off both times, the second time after the Senate had confirmed him. (He remains the last person to turn down a Supreme Court seat after winning confirmation). More than most lawyers, Conkling was seen by the justices as a peer.
It was a trust Conkling would betray. As he spoke before the Court on Southern Pacific’s behalf, Conkling recounted an astonishing tale. In the 1860s, when he was a young congressman, Conkling had served on the drafting committee that was responsible for writing the Fourteenth Amendment. Then the last member of the committee still living, Conkling told the justices that the drafters had changed the wording of the amendment, replacing “citizens” with “persons” in order to cover corporations too. Laws referring to “persons,” he said, have “by long and constant acceptance … been held to embrace artificial persons as well as natural persons.” Conkling buttressed his account with a surprising piece of evidence: a musty old journal he claimed was a previously unpublished record of the deliberations of the drafting committee.
Years later, historians would discover that Conkling’s journal was real but his story was a fraud. The journal was in fact a record of the congressional committee’s deliberations but, upon close examination, it offered no evidence that the drafters intended to protect corporations. It showed, in fact, that the language of the equal-protection clause was never changed from “citizen” to “person.” So far as anyone can tell, the rights of corporations were not raised in the public debates over the ratification of the Fourteenth Amendment or in any of the states’ ratifying conventions. And, prior to Conkling’s appearance on behalf of Southern Pacific, no member of the drafting committee had ever suggested that corporations were covered.
There’s reason to suspect Conkling’s deception was uncovered back in his time too. The justices held onto the case for three years without ever issuing a decision, until Southern Pacific unexpectedly settled the case. Then, shortly after, another case from Southern Pacific reached the Supreme Court, raising the exact same legal question. The company had the same team of lawyers, with the exception of Conkling. Tellingly, Southern Pacific’s lawyers omitted any mention of Conkling’s drafting history or his journal. Had those lawyers believed Conkling, it would have been malpractice to leave out his story.
When the Court issued its decision on this second case, the justices expressly declined to decide if corporations were people. The dispute could be, and was, resolved on other grounds, prompting an angry rebuke from one justice, Stephen J. Field, who castigated his colleagues for failing to address “the important constitutional questions involved.” “At the present day, nearly all great enterprises are conducted by corporations,” he wrote, and they deserved to know if they had equal rights too.
Rumored to carry a gun with him at all times, the colorful Field was the only sitting justice ever arrested—and the charge was murder. He was innocent, but nonetheless guilty of serious ethical violations in the Southern Pacific cases, at least by modern standards: A confidant of Leland Stanford, Field had advised the company on which lawyers to hire for this very series of cases and thus should have recused himself from them. He refused to—and, even worse, while the first case was pending, covertly shared internal memoranda of the justices with Southern Pacific’s legal team.
The rules of judicial ethics were not well developed in the Gilded Age, however, and the self-assured Field, who feared the forces of socialism, did not hesitate to weigh in. Taxing the property of railroads differently, he said, was like allowing deductions for property “owned by white men or by old men, and not deducted if owned by black men or young men.”
So, with Field on the Court, still more twists were yet to come. The Supreme Court’s opinions are officially published in volumes edited by an administrator called the reporter of decisions. By tradition, the reporter writes up a summary of the Court’s opinion and includes it at the beginning of the opinion. The reporter in the 1880s was J.C. Bancroft Davis, whose wildly inaccurate summary of the Southern Pacific case said that the Court had ruled that “corporations are persons within … the Fourteenth Amendment.” Whether his summary was an error or something more nefarious—Davis had once been the president of the Newburgh and New York Railway Company—will likely never be known.
Field nonetheless saw Davis’s erroneous summary as an opportunity. A few years later, in an opinion in an unrelated case, Field wrote that “corporations are persons within the meaning” of the Fourteenth Amendment. “It was so held in Santa Clara County v. Southern Pacific Railroad,” explained Field, who knew very well that the Court had done no such thing.
His gambit worked. In the following years, the case would be cited over and over by courts across the nation, including the Supreme Court, for deciding that corporations had rights under the Fourteenth Amendment.
Indeed, the faux precedent in the Southern Pacific case would go on to be used by a Supreme Court that in the early 20th century became famous for striking down numerous economic regulations, including federal child-labor laws, zoning laws, and wage-and-hour laws. Meanwhile, in cases like the notorious Plessy v. Ferguson (1896), those same justices refused to read the Constitution as protecting the rights of African Americans, the real intended beneficiaries of the Fourteenth Amendment. Between 1868, when the amendment was ratified, and 1912, the Supreme Court would rule on 28 cases involving the rights of African Americans and an astonishing 312 cases on the rights of corporations.
The day back in 1882 when the Supreme Court first heard Roscoe Conkling’s argument, the New-York Daily Tribune featured a story on the case with a headline that would turn out to be prophetic: “Civil Rights of Corporations.” Indeed, in a feat of deceitful legal alchemy, Southern Pacific and its wily legal team had, with the help of an audacious Supreme Court justice, set up the Fourteenth Amendment to be more of a bulwark for the rights of businesses than the rights of minorities.
That corporation was the Southern Pacific Railroad Company, owned by the robber baron Leland Stanford. In 1881, after California lawmakers imposed a special tax on railroad property, Southern Pacific pushed back, making the bold argument that the law was an act of unconstitutional discrimination under the Fourteenth Amendment. Adopted after the Civil War to protect the rights of the freed slaves, that amendment guarantees to every “person” the “equal protection of the laws.” Stanford’s railroad argued that it was a person too, reasoning that just as the Constitution prohibited discrimination on the basis of racial identity, so did it bar discrimination against Southern Pacific on the basis of its corporate identity.
The head lawyer representing Southern Pacific was a man named Roscoe Conkling. A leader of the Republican Party for more than a decade, Conkling had even been nominated to the Supreme Court twice. He begged off both times, the second time after the Senate had confirmed him. (He remains the last person to turn down a Supreme Court seat after winning confirmation). More than most lawyers, Conkling was seen by the justices as a peer.
It was a trust Conkling would betray. As he spoke before the Court on Southern Pacific’s behalf, Conkling recounted an astonishing tale. In the 1860s, when he was a young congressman, Conkling had served on the drafting committee that was responsible for writing the Fourteenth Amendment. Then the last member of the committee still living, Conkling told the justices that the drafters had changed the wording of the amendment, replacing “citizens” with “persons” in order to cover corporations too. Laws referring to “persons,” he said, have “by long and constant acceptance … been held to embrace artificial persons as well as natural persons.” Conkling buttressed his account with a surprising piece of evidence: a musty old journal he claimed was a previously unpublished record of the deliberations of the drafting committee.
Years later, historians would discover that Conkling’s journal was real but his story was a fraud. The journal was in fact a record of the congressional committee’s deliberations but, upon close examination, it offered no evidence that the drafters intended to protect corporations. It showed, in fact, that the language of the equal-protection clause was never changed from “citizen” to “person.” So far as anyone can tell, the rights of corporations were not raised in the public debates over the ratification of the Fourteenth Amendment or in any of the states’ ratifying conventions. And, prior to Conkling’s appearance on behalf of Southern Pacific, no member of the drafting committee had ever suggested that corporations were covered.
There’s reason to suspect Conkling’s deception was uncovered back in his time too. The justices held onto the case for three years without ever issuing a decision, until Southern Pacific unexpectedly settled the case. Then, shortly after, another case from Southern Pacific reached the Supreme Court, raising the exact same legal question. The company had the same team of lawyers, with the exception of Conkling. Tellingly, Southern Pacific’s lawyers omitted any mention of Conkling’s drafting history or his journal. Had those lawyers believed Conkling, it would have been malpractice to leave out his story.
When the Court issued its decision on this second case, the justices expressly declined to decide if corporations were people. The dispute could be, and was, resolved on other grounds, prompting an angry rebuke from one justice, Stephen J. Field, who castigated his colleagues for failing to address “the important constitutional questions involved.” “At the present day, nearly all great enterprises are conducted by corporations,” he wrote, and they deserved to know if they had equal rights too.
Rumored to carry a gun with him at all times, the colorful Field was the only sitting justice ever arrested—and the charge was murder. He was innocent, but nonetheless guilty of serious ethical violations in the Southern Pacific cases, at least by modern standards: A confidant of Leland Stanford, Field had advised the company on which lawyers to hire for this very series of cases and thus should have recused himself from them. He refused to—and, even worse, while the first case was pending, covertly shared internal memoranda of the justices with Southern Pacific’s legal team.
The rules of judicial ethics were not well developed in the Gilded Age, however, and the self-assured Field, who feared the forces of socialism, did not hesitate to weigh in. Taxing the property of railroads differently, he said, was like allowing deductions for property “owned by white men or by old men, and not deducted if owned by black men or young men.”
So, with Field on the Court, still more twists were yet to come. The Supreme Court’s opinions are officially published in volumes edited by an administrator called the reporter of decisions. By tradition, the reporter writes up a summary of the Court’s opinion and includes it at the beginning of the opinion. The reporter in the 1880s was J.C. Bancroft Davis, whose wildly inaccurate summary of the Southern Pacific case said that the Court had ruled that “corporations are persons within … the Fourteenth Amendment.” Whether his summary was an error or something more nefarious—Davis had once been the president of the Newburgh and New York Railway Company—will likely never be known.
Field nonetheless saw Davis’s erroneous summary as an opportunity. A few years later, in an opinion in an unrelated case, Field wrote that “corporations are persons within the meaning” of the Fourteenth Amendment. “It was so held in Santa Clara County v. Southern Pacific Railroad,” explained Field, who knew very well that the Court had done no such thing.
His gambit worked. In the following years, the case would be cited over and over by courts across the nation, including the Supreme Court, for deciding that corporations had rights under the Fourteenth Amendment.
Indeed, the faux precedent in the Southern Pacific case would go on to be used by a Supreme Court that in the early 20th century became famous for striking down numerous economic regulations, including federal child-labor laws, zoning laws, and wage-and-hour laws. Meanwhile, in cases like the notorious Plessy v. Ferguson (1896), those same justices refused to read the Constitution as protecting the rights of African Americans, the real intended beneficiaries of the Fourteenth Amendment. Between 1868, when the amendment was ratified, and 1912, the Supreme Court would rule on 28 cases involving the rights of African Americans and an astonishing 312 cases on the rights of corporations.
The day back in 1882 when the Supreme Court first heard Roscoe Conkling’s argument, the New-York Daily Tribune featured a story on the case with a headline that would turn out to be prophetic: “Civil Rights of Corporations.” Indeed, in a feat of deceitful legal alchemy, Southern Pacific and its wily legal team had, with the help of an audacious Supreme Court justice, set up the Fourteenth Amendment to be more of a bulwark for the rights of businesses than the rights of minorities.
5 Big Myths Sold by the Defenders of Capitalism
Our dominant economic system causes too many Americans too much pain.
By Valerie Vande Panne / AlterNet December 29, 2017, 11:22 AM GMT
I’ve been writing about the economic and environmental realities of marginalized communities for some time, primarily from the perspective of positive systems that are growing to support disenfranchised people. Many of these alternative economic networks, such as barter and time trade, are born out of necessity. As I explore these economies and some of the new ways communities are fostering and investing in health and growth, I am increasingly met by the same arguments against them—and every single one of these arguments is a myth. Capitalism is, at its core, an entrenched system of addiction, whose very root is the greed of over-consumption, whether it's food, sex, money, mouse clicks, or property.
Here are five myths people continue to promote that we’ll all be better off without.
1. Myth: Jobs Will Save Us!
Permits to pollute and tax breaks are just two of the things corporations receive when they promise jobs to local populations. In a city like Detroit, which has struggled for decades with unemployment and economic decay, oil companies, real estate moguls and sports teams have all offered jobs in exchange for getting something big in return. At the end of the day, the promised jobs aren’t necessarily fulfilled. The rich get richer while the poor fund corporate projects, die from corporate pollution or end up on welfare because they never got the jobs promised in the first place.
---
2. Myth: Brand Loyalty Over Small Businesses
You know it when you see it: Nike, Adidas, Apple, Polo. People identify by the logos they wear, and they’ll pay top dollar for that logo. But why pay top dollar to advertise a company you have no connection to? Brands should pay you for your loyalty, but unless you’re Instafamous, they don't. For the hundreds you spend on a label, you could pay a local tailor or seamstress to make something tailored just for you. Retail doesn’t want you to do that, but why not give it a try? You might be surprised to find what replacing brand loyalty with real-world community loyalty can bring you.
3. Myth: Trickledown Economics Works
We’ve been talking about this issue as long as I can remember, and it still doesn’t work. Just because the rich received a special tax break that will make them exponentially richer does not mean they will spend any money on you, or contribute anything healthy or beneficial to any community other than their own. Isn’t that what "A Christmas Carol" was all about? That the only way the wealthy will ever share their wealth is if they are terrorized by ghosts? Believing in the benevolent goodness of the super-rich is one of the most perverse things we do in the U.S., and perhaps it’s rooted in the myth that you, too, can one day be wealthy.
4. Myth: Pull Yourself up by Your Bootstraps
The myth that if you just work hard enough you will one day be rich is a pervasive idea in the United States. This myth relies on the absence of inherited wealth and ignores the grievous injustices often committed in creating that wealth, and denies racism, marginalization and generational disenfranchisement. Yet people continue to preach it as gospel. The exceptions are held up as rules, without a close examination of how those folks got to where they are. No one in this world makes it to the top alone, and the lower one is on the ladder, the harder it is to get to the top—especially when the structure is the ladder of capitalism. Make the system a jungle gym, and have the community work together to navigate it, and see how much more successful and happy everyone can be.
5. Myth: Everyone Is Free in a Capitalist Society
In an age of clicks, sponsored content and fake news, it’s sometimes hard to tell capitalism from freedom. After all, capitalism is marketed to you every day as freedom, on television, social media and even NPR. But capitalism doesn’t equate freedom. Look at the prison industrial complex or the number of people going to debtors prison for unaffordable and unpaid civil infractions. Look at the nearly 20,000 households in Detroit that had their water shut off just this year as a result of unpaid water bills. Look at the homelessness created by bad mortgages from which lenders continue to profit. Capitalism in each of these cases isn’t promoting freedom, but robbing freedom from millions of Americans who could, in another time and under a humane system of economic governance, might prosper in communities they are able to contribute to and benefit from.
Capitalism is fueled by many more myths than just these. But these five might be nice places to start disassembling the dominant economic system that is causing too many Americans pain.
Here are five myths people continue to promote that we’ll all be better off without.
1. Myth: Jobs Will Save Us!
Permits to pollute and tax breaks are just two of the things corporations receive when they promise jobs to local populations. In a city like Detroit, which has struggled for decades with unemployment and economic decay, oil companies, real estate moguls and sports teams have all offered jobs in exchange for getting something big in return. At the end of the day, the promised jobs aren’t necessarily fulfilled. The rich get richer while the poor fund corporate projects, die from corporate pollution or end up on welfare because they never got the jobs promised in the first place.
---
2. Myth: Brand Loyalty Over Small Businesses
You know it when you see it: Nike, Adidas, Apple, Polo. People identify by the logos they wear, and they’ll pay top dollar for that logo. But why pay top dollar to advertise a company you have no connection to? Brands should pay you for your loyalty, but unless you’re Instafamous, they don't. For the hundreds you spend on a label, you could pay a local tailor or seamstress to make something tailored just for you. Retail doesn’t want you to do that, but why not give it a try? You might be surprised to find what replacing brand loyalty with real-world community loyalty can bring you.
3. Myth: Trickledown Economics Works
We’ve been talking about this issue as long as I can remember, and it still doesn’t work. Just because the rich received a special tax break that will make them exponentially richer does not mean they will spend any money on you, or contribute anything healthy or beneficial to any community other than their own. Isn’t that what "A Christmas Carol" was all about? That the only way the wealthy will ever share their wealth is if they are terrorized by ghosts? Believing in the benevolent goodness of the super-rich is one of the most perverse things we do in the U.S., and perhaps it’s rooted in the myth that you, too, can one day be wealthy.
4. Myth: Pull Yourself up by Your Bootstraps
The myth that if you just work hard enough you will one day be rich is a pervasive idea in the United States. This myth relies on the absence of inherited wealth and ignores the grievous injustices often committed in creating that wealth, and denies racism, marginalization and generational disenfranchisement. Yet people continue to preach it as gospel. The exceptions are held up as rules, without a close examination of how those folks got to where they are. No one in this world makes it to the top alone, and the lower one is on the ladder, the harder it is to get to the top—especially when the structure is the ladder of capitalism. Make the system a jungle gym, and have the community work together to navigate it, and see how much more successful and happy everyone can be.
5. Myth: Everyone Is Free in a Capitalist Society
In an age of clicks, sponsored content and fake news, it’s sometimes hard to tell capitalism from freedom. After all, capitalism is marketed to you every day as freedom, on television, social media and even NPR. But capitalism doesn’t equate freedom. Look at the prison industrial complex or the number of people going to debtors prison for unaffordable and unpaid civil infractions. Look at the nearly 20,000 households in Detroit that had their water shut off just this year as a result of unpaid water bills. Look at the homelessness created by bad mortgages from which lenders continue to profit. Capitalism in each of these cases isn’t promoting freedom, but robbing freedom from millions of Americans who could, in another time and under a humane system of economic governance, might prosper in communities they are able to contribute to and benefit from.
Capitalism is fueled by many more myths than just these. But these five might be nice places to start disassembling the dominant economic system that is causing too many Americans pain.
Capitalism: The Nightmare
Paul Street
From Truthdig: The neoliberal, arch-capitalist era we inhabit is chock full of statistics and stories that ought to send chills down the spines of any caring, morally sentient human. Nearly three-fourths (71 percent) of the world’s population is poor, living on $10 a day or less, and 11 percent (767 million people, including 385 million children) live in what the World Bank calls “extreme poverty” (less than a $1.90 a day). Meanwhile, Oxfam reliably reports that, surreal as it sounds, the world’s eight richest people possess among themselves as much wealth as the poorest half of the entire human race.
The United States, self-described homeland and headquarters of freedom and democracy, is no exception to the harshly unequal global reality. Six of the world’s eight most absurdly rich people are U.S. citizens: Bill Gates (whose net worth of $426 billion equals the wealth of 3.6 billion people), Warren Buffett (Berkshire Hathaway), Jeff Bezos (Amazon), Mark Zuckerberg (Facebook), Larry Ellison (Oracle) and Michael Bloomberg (former mayor of New York City). As Bernie Sanders said repeatedly on the campaign trail in 2016, the top 10th of the upper 1 percent in the U.S. has nearly as much wealth as the nation’s bottom 90 percent. Seven heirs of the Walton family’s Walmart fortune have among them a net worth equal to that of the nation’s poorest 40 percent. Half the U.S. population is poor or near-poor and half lacks any savings.
Just over a fifth of the nation’s children, including more than a third of black and Native American children, live below the federal government’s notoriously inadequate poverty level, while parasitic financers and other capitalist overlords enjoy unimaginable hyper-opulence. One in seven U.S. citizens relies on food banks in “the world’s richest country.” Many of them are in families with full-time wage-earners—a reflection of the fact that wages have stagnated even as U.S. labor productivity consistently has risen for more than four decades.
Failure by Design
These savage inequalities reflect government policy on behalf of “the 1 percent” (better, perhaps, to say “the 0.1 percent”). U.S. economic growth since the late 1970s has been unequally distributed, thanks to regressive policy choices that have served the rich and powerful at the expense of ordinary working people. As Joshua Bivens of the Economic Policy Institute showed in his important 2011 study, “Failure By Design,” the following interrelated, bipartisan and not-so-public policies across the long neoliberal era have brought us to a level of inequality that rivals the Gilded Age of the late 19th-century robber barons era. These policies include:
● Letting the value of the minimum wage be eroded by inflation.
● Slashing labor standards for overtime, safety and health.
● Tilting the laws governing union organizing and collective bargaining strongly in favor of employers.
● Weakening the social safety net.
● Privatizing public services.
● Accelerating the integration of the U.S. economy with the world economy without adequately protecting workers from global competition.
● Shredding government oversight of international trade, currency, investment and lending.
● Deregulating the financial sector and financial markets.
● Valuing low inflation over full employment and abandoning the latter as a worthy goal of fiscal and economic policy.
These policies increased poverty and suppressed wages at the bottom and concentrated wealth at the top. They culminated in the 2007-09 Great Recession, sparked by the bursting of a housing bubble that resulted from the deregulation of the financial sector and the reliance of millions of Americans on artificially inflated real estate values and soaring household debt to compensate for poor earnings.
After the crash, the government under both George W. Bush and Barack Obama bailed out the very financial predators who pushed the economy over the cliff. The Obama administration, populated by Goldman Sachs and Citigroup operatives, left the rest of us to wonder “Where’s our bailout?” as 95 percent of the nation’s new income went to the top 1 percent during his first term. (read more)
The United States, self-described homeland and headquarters of freedom and democracy, is no exception to the harshly unequal global reality. Six of the world’s eight most absurdly rich people are U.S. citizens: Bill Gates (whose net worth of $426 billion equals the wealth of 3.6 billion people), Warren Buffett (Berkshire Hathaway), Jeff Bezos (Amazon), Mark Zuckerberg (Facebook), Larry Ellison (Oracle) and Michael Bloomberg (former mayor of New York City). As Bernie Sanders said repeatedly on the campaign trail in 2016, the top 10th of the upper 1 percent in the U.S. has nearly as much wealth as the nation’s bottom 90 percent. Seven heirs of the Walton family’s Walmart fortune have among them a net worth equal to that of the nation’s poorest 40 percent. Half the U.S. population is poor or near-poor and half lacks any savings.
Just over a fifth of the nation’s children, including more than a third of black and Native American children, live below the federal government’s notoriously inadequate poverty level, while parasitic financers and other capitalist overlords enjoy unimaginable hyper-opulence. One in seven U.S. citizens relies on food banks in “the world’s richest country.” Many of them are in families with full-time wage-earners—a reflection of the fact that wages have stagnated even as U.S. labor productivity consistently has risen for more than four decades.
Failure by Design
These savage inequalities reflect government policy on behalf of “the 1 percent” (better, perhaps, to say “the 0.1 percent”). U.S. economic growth since the late 1970s has been unequally distributed, thanks to regressive policy choices that have served the rich and powerful at the expense of ordinary working people. As Joshua Bivens of the Economic Policy Institute showed in his important 2011 study, “Failure By Design,” the following interrelated, bipartisan and not-so-public policies across the long neoliberal era have brought us to a level of inequality that rivals the Gilded Age of the late 19th-century robber barons era. These policies include:
● Letting the value of the minimum wage be eroded by inflation.
● Slashing labor standards for overtime, safety and health.
● Tilting the laws governing union organizing and collective bargaining strongly in favor of employers.
● Weakening the social safety net.
● Privatizing public services.
● Accelerating the integration of the U.S. economy with the world economy without adequately protecting workers from global competition.
● Shredding government oversight of international trade, currency, investment and lending.
● Deregulating the financial sector and financial markets.
● Valuing low inflation over full employment and abandoning the latter as a worthy goal of fiscal and economic policy.
These policies increased poverty and suppressed wages at the bottom and concentrated wealth at the top. They culminated in the 2007-09 Great Recession, sparked by the bursting of a housing bubble that resulted from the deregulation of the financial sector and the reliance of millions of Americans on artificially inflated real estate values and soaring household debt to compensate for poor earnings.
After the crash, the government under both George W. Bush and Barack Obama bailed out the very financial predators who pushed the economy over the cliff. The Obama administration, populated by Goldman Sachs and Citigroup operatives, left the rest of us to wonder “Where’s our bailout?” as 95 percent of the nation’s new income went to the top 1 percent during his first term. (read more)
funnies and charts
Cartoon: Hedge fund nation
By Jen Sorensen
Tuesday Dec 19, 2017 · 5:01 AM PST
This Infographic Shows How Only 10 Companies Control All the World’s Brands
Tom Cahill | December 31, 2016
From U.S. Uncut: Almost all of the food and beverage brands we know are owned by just 10 global conglomerates, according to a blistering new report.
Oxfam’s 52-page “Behind the Brands” report goes into great detail about how just ten companies — Associated British Foods (ABF), Coca-Cola, Danone, General Mills, Kellogg, Mars, Mondelez International (previously known as Kraft), Nestle, PepsiCo, and Unilever — own basically every brand of food sold in grocery stores around the globe. The report is part of Oxfam’s GROW campaign, which seeks to provide a sustainable food supply to an estimated global population of nine billion by 2050.
The “Behind the Brands” report grades each company through a series of scorecards, gauging how attentive it is toward core issues like how it treats farm workers, women, small-scale farmers, local land and water supplies, its climate change policy, and a company’s transparency. By and large, the scorecards found that the so-called “Big 10” food companies shirk their responsibility to local populations and the environment, falling far short of where they could be given their tremendous resources and influence. In some cases, Big 10 companies actually undermine food security, natural resources, and human rights, according to Oxfam:
• Companies are overly secretive about their agricultural supply chains, making claims of ‘sustainability’ and ‘social responsibility’ difficult to verify;
• None of the Big 10 have adequate policies to protect local communities from land and water grabs along their supply chains;
• Companies are not taking sufficient steps to curb massive agricultural greenhouse gas emissions responsible for climate changes now affecting farmers;
• Most companies do not provide small-scale farmers with equal access to their supply chains and no company has made a commitment to ensure that small-scale producers are paid a fair price;
• Only a minority of the Big 10 are doing anything at all to address the exploitation of women small-scale farmers and workers in their supply chains.
In addition to those damning declarations from Oxfam, the report also found that despite the enormous financial wealth concentrated among the Big 10 companies (an estimated $872.8 billion market cap amongst all but Mars, which is privately owned), the farmers working the land owned by these companies live in abject poverty.
Globally, some 450 million men and women work in the agriculture sector, and 60 percent of those live in poverty. In a cruel ironic twist, 80 percent of the global population classified as “chronically hungry” are farmers. The “Behind the Brands” report outlined how the practices of the Big 10 companies exacerbate the global problem of chronic hunger:
“[T]he use of valuable agricultural resources for the production of snacks and sodas means less fertile land and clean water is available to grow nutritious food for local communities. And changing weather patterns due to greenhouse gas emissions – a large percentage of which come from agricultural production – continue to make these small-scale farmers increasingly vulnerable… [T]he sourcing of commodities – cocoa, sugar, potatoes, tomatoes, soy, coffee, tea and corn – is still plagued with injustice and inequity, much as it was 100 years ago.”
But these concerns aren’t just coming from one nonprofit — in conducting research for the report, Oxfam found that where food comes from and whether or not a food producer is being socially and environmentally responsible is a top concern for a wide majority consumers in developed countries. This could also produce economic blowback for companies that don’t adhere to sustainable business standards. Weber Shandwick — a New York-based public relations firm — found that 70 percent of American consumers avoid buying products from companies they don’t like....
...As far as the scorecard for the Big 10 is concerned, none of the world’s largest food producers scored in the 8-10 (“good”) range on any of the criteria used for the evaluation. While Nestle and Unilever lead their competitors in several areas, they still fall short in how they treat the land, women, and small-scale farmers. The three worst offenders — General Mills, Kellogg’s and ABF — didn’t score above a 3 out of 10 score (“poor”) except for a scant few categories. And out of a maximum score of 70, Nestle, who ranked at #1 among the Big 10, still only scored 38 (only 54 percent). If the scorecard was a college exam, Nestle would still score an F.
Oxfam’s 52-page “Behind the Brands” report goes into great detail about how just ten companies — Associated British Foods (ABF), Coca-Cola, Danone, General Mills, Kellogg, Mars, Mondelez International (previously known as Kraft), Nestle, PepsiCo, and Unilever — own basically every brand of food sold in grocery stores around the globe. The report is part of Oxfam’s GROW campaign, which seeks to provide a sustainable food supply to an estimated global population of nine billion by 2050.
The “Behind the Brands” report grades each company through a series of scorecards, gauging how attentive it is toward core issues like how it treats farm workers, women, small-scale farmers, local land and water supplies, its climate change policy, and a company’s transparency. By and large, the scorecards found that the so-called “Big 10” food companies shirk their responsibility to local populations and the environment, falling far short of where they could be given their tremendous resources and influence. In some cases, Big 10 companies actually undermine food security, natural resources, and human rights, according to Oxfam:
• Companies are overly secretive about their agricultural supply chains, making claims of ‘sustainability’ and ‘social responsibility’ difficult to verify;
• None of the Big 10 have adequate policies to protect local communities from land and water grabs along their supply chains;
• Companies are not taking sufficient steps to curb massive agricultural greenhouse gas emissions responsible for climate changes now affecting farmers;
• Most companies do not provide small-scale farmers with equal access to their supply chains and no company has made a commitment to ensure that small-scale producers are paid a fair price;
• Only a minority of the Big 10 are doing anything at all to address the exploitation of women small-scale farmers and workers in their supply chains.
In addition to those damning declarations from Oxfam, the report also found that despite the enormous financial wealth concentrated among the Big 10 companies (an estimated $872.8 billion market cap amongst all but Mars, which is privately owned), the farmers working the land owned by these companies live in abject poverty.
Globally, some 450 million men and women work in the agriculture sector, and 60 percent of those live in poverty. In a cruel ironic twist, 80 percent of the global population classified as “chronically hungry” are farmers. The “Behind the Brands” report outlined how the practices of the Big 10 companies exacerbate the global problem of chronic hunger:
“[T]he use of valuable agricultural resources for the production of snacks and sodas means less fertile land and clean water is available to grow nutritious food for local communities. And changing weather patterns due to greenhouse gas emissions – a large percentage of which come from agricultural production – continue to make these small-scale farmers increasingly vulnerable… [T]he sourcing of commodities – cocoa, sugar, potatoes, tomatoes, soy, coffee, tea and corn – is still plagued with injustice and inequity, much as it was 100 years ago.”
But these concerns aren’t just coming from one nonprofit — in conducting research for the report, Oxfam found that where food comes from and whether or not a food producer is being socially and environmentally responsible is a top concern for a wide majority consumers in developed countries. This could also produce economic blowback for companies that don’t adhere to sustainable business standards. Weber Shandwick — a New York-based public relations firm — found that 70 percent of American consumers avoid buying products from companies they don’t like....
...As far as the scorecard for the Big 10 is concerned, none of the world’s largest food producers scored in the 8-10 (“good”) range on any of the criteria used for the evaluation. While Nestle and Unilever lead their competitors in several areas, they still fall short in how they treat the land, women, and small-scale farmers. The three worst offenders — General Mills, Kellogg’s and ABF — didn’t score above a 3 out of 10 score (“poor”) except for a scant few categories. And out of a maximum score of 70, Nestle, who ranked at #1 among the Big 10, still only scored 38 (only 54 percent). If the scorecard was a college exam, Nestle would still score an F.
The "Golden Age of Capitalism" Was an Era of Racism and Secret Coups
By Emma Caterine, Truthout
From Bernie Sanders calling violently anti-Communist President Eisenhower a socialist, to a plethora of op-eds hailing the allegedly great policies the Republicans had toward labor and refugees, you have probably seen at least one liberal in your life mourn the loss of the Republicans of the so-called "Golden Age of Capitalism," the 1950s. These arguments usually rest on the achievements of that time, such as the desegregation of the military, a corporate tax rate of 50 percent, a top income tax rate of 91 percent, a rate of profit that stood above 20 percent throughout the decade and annual average Gross Domestic Product growth of 3.13 percent.
While most of these achievements are objectively true, this argument of the "once-good" Republican Party can only be sustained when one ignores the context in which these policies were created, the violent campaign against Communism domestically and abroad, and the caveats and exceptions to the policies that predominantly created wealth and welfare at the expense of people of color.
The Context
While there are disagreements as to the level of responsibility, it is generally agreed by economists and historians that the United States escaped the Great Depression, at least in part, by its engagement in World War II. There are two facets of how the war improved the economy: (1) Governmental investment and even takeover of industry created jobs and recycled stagnant fixed capital, such as factories and machinery; and (2) By bombing the post-war foreign competition out of existence, at least for a significant amount of time. The positive effect of the war on the economy was undeniable at the time, and it was a reality that the small government Republicans had to accommodate to.
But that certainly does not mean that they did not try to push for deregulation and a "free market" in the little ways that were politically feasible. President Eisenhower's election was in part due to the capitalists of the time becoming fed up with the Democrats' intervention, such as President Truman's failed attempt to seize the Youngstown Sheet & Tube Company to end strikes. President Eisenhower would employ the virtually opposite tactic during the Steel Strike of 1959 by using the "back-to-work" provision of the Taft-Harley Act. Ironically, the dispute was only settled by a politically ambitious then-Vice President Richard Nixon stepping in and telling steelmakers it was better to settle before the Democratic Congress began hearings on the strike, which would not be as supportive of the companies as Eisenhower was.
Republican US Imperialism at a Discount
With the current political debate around refugees, many liberals have pointed to the Refugee Relief Act of 1953 to shame the Republicans for their opposition to accepting more refugees. The Act did indeed result in 214,000 immigrants gaining admission to the country. But the problem is that under this Act, most -- if not all -- of the Syrian refugees would have been denied entry. The quotas for the Act were as follows: 90,000 West Germans and Austrians; 10,000 from NATO members, Turkey, Sweden, Iran and Trieste (now part of Italy); 2,000 Polish veterans; 60,000 Italians; 17,000 Greeks; 17,000 Dutch; 4,000 for those residing in US consulate districts in the "Far East;" 2,000 Chinese; and 2,000 for Jews and Palestinians of the new Israel who were part of the UN's refugee program.
These quotas show two things: (1) An obvious bias against people of color, with no quota whatsoever for North Africans who were affected by WWII and a pitifully small one for Chinese and Middle Eastern people; and (2) This Act was part of the Republican strategy against Communism abroad by rewarding NATO members and Western Europe. Iran is particularly notable because it was that same year, 1953, that Eisenhower's administration pioneered a new, cheaper version of overthrowing foreign democratic governments through a single CIA agent instigating a coup against the recently elected Prime Minister Mohammad Mosaddegh. The strategy was so successful that they did it again in Guatemala the next year, despite the previous Truman administration having aborted a similar mission in 1952 after public pressure.
Who Was Left Behind in the Golden Age?
US capitalism's "Golden Age" wasn't so golden for the people of color residing in the country. Despite the desegregation begun by President Truman and continued by President Eisenhower in the military, no effort was made to ensure that the Black veterans had equal access to the benefits of such service by either the Democrats or Republicans. President Eisenhower was the second Republican president in history get a plurality of the Southern votes during 1956, and despite his enforcement of the law at Little Rock, Arkansas (which he always maintained was not about integration, but about federal power), sympathized strongly with the Southern whites and their racist views on topics like "miscegenation."
The 83rd Republican-controlled Congress passed laws that criminalized affiliation with Communist organizations, which Attorney General Herbert Brownell, Jr., promptly used to shut down the Communist-affiliated Civil Rights Congress, which is most famous for the "We Charge Genocide" petition to the United Nations. Congress also began the privatization of the infamous Fannie Mae, ensuring that greed was prioritized over public good and setting the mortgage market down a path that has and continues to redline Black communities and systemically deprive them of wealth.
The Danger of Nostalgia
Many Bernie Sanders supporters have wondered why their candidate was not able to garner as much support from the Black community when his policy proposals were far more in favor of Black people than those proposed by Hillary Clinton. I have watched Senator Sanders' career for a long time, since I was a teenage community organizer lobbying for the Employee Free Choice Act, and I've observed him expressing the perverse kind of nostalgia that many older white leftists do for the 1950s and its middle class. Many women and people of color are justifiably skeptical about plans packaged as bringing back a "Golden Age" where they faced broad discrimination with little recourse. A political revolution against our current system would not be the return to a less megalomaniacal Republican Party, and certainly not the election of a xenophobic fascist billionaire who is an outsider in name only. The political revolution is happening every day, being carried about by the working class and the youth who know that this two-party system is a fraud. Consider this an invitation to join.
While most of these achievements are objectively true, this argument of the "once-good" Republican Party can only be sustained when one ignores the context in which these policies were created, the violent campaign against Communism domestically and abroad, and the caveats and exceptions to the policies that predominantly created wealth and welfare at the expense of people of color.
The Context
While there are disagreements as to the level of responsibility, it is generally agreed by economists and historians that the United States escaped the Great Depression, at least in part, by its engagement in World War II. There are two facets of how the war improved the economy: (1) Governmental investment and even takeover of industry created jobs and recycled stagnant fixed capital, such as factories and machinery; and (2) By bombing the post-war foreign competition out of existence, at least for a significant amount of time. The positive effect of the war on the economy was undeniable at the time, and it was a reality that the small government Republicans had to accommodate to.
But that certainly does not mean that they did not try to push for deregulation and a "free market" in the little ways that were politically feasible. President Eisenhower's election was in part due to the capitalists of the time becoming fed up with the Democrats' intervention, such as President Truman's failed attempt to seize the Youngstown Sheet & Tube Company to end strikes. President Eisenhower would employ the virtually opposite tactic during the Steel Strike of 1959 by using the "back-to-work" provision of the Taft-Harley Act. Ironically, the dispute was only settled by a politically ambitious then-Vice President Richard Nixon stepping in and telling steelmakers it was better to settle before the Democratic Congress began hearings on the strike, which would not be as supportive of the companies as Eisenhower was.
Republican US Imperialism at a Discount
With the current political debate around refugees, many liberals have pointed to the Refugee Relief Act of 1953 to shame the Republicans for their opposition to accepting more refugees. The Act did indeed result in 214,000 immigrants gaining admission to the country. But the problem is that under this Act, most -- if not all -- of the Syrian refugees would have been denied entry. The quotas for the Act were as follows: 90,000 West Germans and Austrians; 10,000 from NATO members, Turkey, Sweden, Iran and Trieste (now part of Italy); 2,000 Polish veterans; 60,000 Italians; 17,000 Greeks; 17,000 Dutch; 4,000 for those residing in US consulate districts in the "Far East;" 2,000 Chinese; and 2,000 for Jews and Palestinians of the new Israel who were part of the UN's refugee program.
These quotas show two things: (1) An obvious bias against people of color, with no quota whatsoever for North Africans who were affected by WWII and a pitifully small one for Chinese and Middle Eastern people; and (2) This Act was part of the Republican strategy against Communism abroad by rewarding NATO members and Western Europe. Iran is particularly notable because it was that same year, 1953, that Eisenhower's administration pioneered a new, cheaper version of overthrowing foreign democratic governments through a single CIA agent instigating a coup against the recently elected Prime Minister Mohammad Mosaddegh. The strategy was so successful that they did it again in Guatemala the next year, despite the previous Truman administration having aborted a similar mission in 1952 after public pressure.
Who Was Left Behind in the Golden Age?
US capitalism's "Golden Age" wasn't so golden for the people of color residing in the country. Despite the desegregation begun by President Truman and continued by President Eisenhower in the military, no effort was made to ensure that the Black veterans had equal access to the benefits of such service by either the Democrats or Republicans. President Eisenhower was the second Republican president in history get a plurality of the Southern votes during 1956, and despite his enforcement of the law at Little Rock, Arkansas (which he always maintained was not about integration, but about federal power), sympathized strongly with the Southern whites and their racist views on topics like "miscegenation."
The 83rd Republican-controlled Congress passed laws that criminalized affiliation with Communist organizations, which Attorney General Herbert Brownell, Jr., promptly used to shut down the Communist-affiliated Civil Rights Congress, which is most famous for the "We Charge Genocide" petition to the United Nations. Congress also began the privatization of the infamous Fannie Mae, ensuring that greed was prioritized over public good and setting the mortgage market down a path that has and continues to redline Black communities and systemically deprive them of wealth.
The Danger of Nostalgia
Many Bernie Sanders supporters have wondered why their candidate was not able to garner as much support from the Black community when his policy proposals were far more in favor of Black people than those proposed by Hillary Clinton. I have watched Senator Sanders' career for a long time, since I was a teenage community organizer lobbying for the Employee Free Choice Act, and I've observed him expressing the perverse kind of nostalgia that many older white leftists do for the 1950s and its middle class. Many women and people of color are justifiably skeptical about plans packaged as bringing back a "Golden Age" where they faced broad discrimination with little recourse. A political revolution against our current system would not be the return to a less megalomaniacal Republican Party, and certainly not the election of a xenophobic fascist billionaire who is an outsider in name only. The political revolution is happening every day, being carried about by the working class and the youth who know that this two-party system is a fraud. Consider this an invitation to join.
There’s No Such Thing as a ‘Free Market’
Capitalism with absolutely no government intervention is a myth — and always was.
By Jill Richardson
From Other Words: The debates leading up to the election this year will no doubt invoke the “American value” of capitalism. But what, exactly, does that mean? And what should it mean?
I’m no economist, but I took a few economics courses while earning an undergraduate business degree. Growing up in a capitalist society, I thought I understood the basic concepts underlying capitalism — free markets, competitive advantage, and so forth.
Then I actually read The Wealth of Nations by Adam Smith, the founding work that described what we call capitalism in the first place. That was a game changer.
We’re all probably familiar with Smith’s ideas at some level.
The market regulates itself, as each of us operates based on our own self-interest. Businesses try to earn profits, and consumers try to meet their needs at the best prices. The market ensures that the demand of consumers is met with supply from business.
The government’s job, the doctrinaire thinking goes, is to get the heck out of the way. It doesn’t set prices or quotas. It just lets the market function.
Adam Smith cast this arrangement in glowing terms in 1776. He was describing England during the Industrial Revolution. He thought it was amazing that millions of individual actors, each operating based on self-interest, could so efficiently revolutionize society without any central planning at all.
Only, he was wrong.
In fact, the growing British Empire was undertaking economic interventions on a colossal scale — and would do even more in the centuries to come. The British set out all over the globe, claiming colonies in the New World and later India and Africa, setting up trade policies that benefited the British at the expense of the colonized.
The British imported cotton from their colonies for their own factories, as well as wheat to feed British workers in the isles. Colonial India, meanwhile, suffered several massive famines. Even as tens of millions of Indians starved to death, record amounts of Indian wheat were exported to feed British factory workers laboring in a so-called free market.
Before the Industrial Revolution, Indian textiles reigned supreme. But British authorities kept industrial textile technologies out of India in order to capture the global textile market, impoverishing the colony further.
Other British staples — tea and sugar — were also imported from British colonies. That sugar was produced by enslaved Africans in the Caribbean.
Some invisible hand.
Smith also overlooked the utter misery textile workers lived in, even in Britain. The system “worked” at making some people rich. But the squalid and wretched lifestyles of laborers, including children — which inspired the writing of Charles Dickens — were its cost.
We in America have meddled in markets plenty in our own right — not least through historical crimes like slavery and colonialism. But we’ve also developed more benign interventions that can actually help people.
We ban child labor, for example, and enforce (admittedly inadequate) minimum wage protections. We require businesses to offer safe and healthy workplaces. We ban the sale of dangerous drugs. We try to regulate pharmaceuticals to make sure they’re safe and effective.
In other words, capitalism with absolutely no government intervention is a myth — and always was.
We can debate the pros and cons of specific regulations. But if you hear a candidate claiming that capitalism means doing away with all regulations — or that any government interference in the market equates to socialism or communism — they’re being dishonest.
I’m no economist, but I took a few economics courses while earning an undergraduate business degree. Growing up in a capitalist society, I thought I understood the basic concepts underlying capitalism — free markets, competitive advantage, and so forth.
Then I actually read The Wealth of Nations by Adam Smith, the founding work that described what we call capitalism in the first place. That was a game changer.
We’re all probably familiar with Smith’s ideas at some level.
The market regulates itself, as each of us operates based on our own self-interest. Businesses try to earn profits, and consumers try to meet their needs at the best prices. The market ensures that the demand of consumers is met with supply from business.
The government’s job, the doctrinaire thinking goes, is to get the heck out of the way. It doesn’t set prices or quotas. It just lets the market function.
Adam Smith cast this arrangement in glowing terms in 1776. He was describing England during the Industrial Revolution. He thought it was amazing that millions of individual actors, each operating based on self-interest, could so efficiently revolutionize society without any central planning at all.
Only, he was wrong.
In fact, the growing British Empire was undertaking economic interventions on a colossal scale — and would do even more in the centuries to come. The British set out all over the globe, claiming colonies in the New World and later India and Africa, setting up trade policies that benefited the British at the expense of the colonized.
The British imported cotton from their colonies for their own factories, as well as wheat to feed British workers in the isles. Colonial India, meanwhile, suffered several massive famines. Even as tens of millions of Indians starved to death, record amounts of Indian wheat were exported to feed British factory workers laboring in a so-called free market.
Before the Industrial Revolution, Indian textiles reigned supreme. But British authorities kept industrial textile technologies out of India in order to capture the global textile market, impoverishing the colony further.
Other British staples — tea and sugar — were also imported from British colonies. That sugar was produced by enslaved Africans in the Caribbean.
Some invisible hand.
Smith also overlooked the utter misery textile workers lived in, even in Britain. The system “worked” at making some people rich. But the squalid and wretched lifestyles of laborers, including children — which inspired the writing of Charles Dickens — were its cost.
We in America have meddled in markets plenty in our own right — not least through historical crimes like slavery and colonialism. But we’ve also developed more benign interventions that can actually help people.
We ban child labor, for example, and enforce (admittedly inadequate) minimum wage protections. We require businesses to offer safe and healthy workplaces. We ban the sale of dangerous drugs. We try to regulate pharmaceuticals to make sure they’re safe and effective.
In other words, capitalism with absolutely no government intervention is a myth — and always was.
We can debate the pros and cons of specific regulations. But if you hear a candidate claiming that capitalism means doing away with all regulations — or that any government interference in the market equates to socialism or communism — they’re being dishonest.
Why Tax Havens Are Political and Economic Disasters
Seeking prosperity through lax business and tax regulations leaves countries worse off
by Brooke Harrington
From The Atlantic: In the early 1990s, economists coined the term "the resource curse" to describe a paradox they observed in countries where valuable natural resources were discovered: Rather than thriving, such countries often crumbled, economically and politically. The newfound wealth, instead of raising living standards for all, generated violence, as well as accelerating the growth of inequality and corruption. Terry Karl, a Stanford political science professor, dubbed this the "paradox of plenty." The same story has played out again and again all over the world, from Venezuela (where Karl did her research on the destruction wrought by oil wealth) to Sierra Leone (home of blood diamonds) and Afghanistan (which, despite $3 trillion in mineral wealth, remains among the poorest and most corrupt countries in the world).
A similarly insidious pattern has developed in recent years among the countries serving as offshore financial centers. Many, like the countries affected by the resource curse, are former colonial states struggling to stay fiscally viable; the "resource" they discover is human capital, in the form of a population literate and numerate enough to provide financial services, such as the filing and compliance tasks linked to offshore corporations, trusts, and foundations. For these economically and politically fragile countries, the influx of cash provided by involvement in international finance seems like an unmitigated blessing, offering jobs and revenues for a relatively small investment in infrastructure, such as high-speed internet access.
But as many are finding, becoming a tax haven has unexpected costs. Precipitous economic, political, and social declines have occurred so often in such states that observers have coined a new term for it: “the finance curse.” When the "finance curse" strikes a country, there is a recurrent pattern: While its democracy, economy, and culture remain formally intact, they are increasingly oriented to and co-opted by international elites. In other words, such countries gradually become organized around the interests of people who don't even live there, to the detriment of those who do. The services produced by these countries protect cosmopolitans’ wealth, but the riches never flow to the the local producers, undermining their capacity for self-governance and social cohesion, as well as the development of infrastructure and institutions.
This has led to increasing economic fragility for offshore financial centers, along with political corruption and social decline, as evidenced by a rise in crime and violence. I experienced the latter in my own research on the global wealth-management industry: In the course of visiting 18 tax havens in every major region of the world, I encountered this social decay directly through a number of experiences, including being robbed at Pae Moana in the Cook Islands. A local fisherman I met afterwards said the rise in burglary and violent crime in the islands began with the growth of the offshore industry. Not only the wealth it brought in, but also the new value system focused on exploitation and greed, meant that “everyone calls us the ‘Crook Islands’ now.” The finance industry had begun to eat away at the nation’s democratic institutions: Referring to a recent political-corruption scandal, the fisherman said, “They’ve got our government in their pockets. I hate what they've done to my country.”
But as I learned, the workings of the finance curse have shaped not only the development of small post-colonial nations like the Cook Islands, but also that of seemingly wealthy and well-established ones. For example, recent reporting on the Channel Island of Jersey has documented the crippling of the country's economy, government, and society in one of the world's leading financial centers—a place that was once considered a "miracle of plenty" and a role model for other would-be tax havens.
The corrosion described by the finance curse has affected even some of the wealthiest financial centers, such as Luxembourg, which is the domicile of choice for $3.5 trillion worth of mutual-fund shares and over 150 banks. As a result of a robust financial-services sector that contributes 27 percent of the country’s economic production, the Grand Duchy boasts the highest per capita GDP in the Europe, far outstripping its nearest rivals, Norway and Switzerland. At first blush, Luxembourg would appear to be in terrific shape: a wealthy democracy, thriving in the center of Western Europe.
However, as the economist Gabriel Zucman has shown, Luxembourg's role as a leading tax haven has benefitted foreigners at the expense of locals, across the board. Over 60 percent of the country’s workforce is comprised of foreigners, who reap virtually all the benefits of the wealth generated by the Duchy. The society, as a result, is fracturing along expat-versus-local lines, both in economic and political terms.
As Zucman documents, inequality in the Grand Duchy has skyrocketed, with poverty doubling since 1980, and real wages for ordinary Luxembourgers stagnating for the past 20 years. Meanwhile, salaries for expat wealth managers have exploded, tripling housing prices in Luxembourg City. However, even this new wealth has not benefitted the local economy: Due to Luxembourg’s tax policies, public institutions such as the educational system are in "accelerated decline," mainly to the detriment of locals. The result, Zucman observes, is that Luxembourg has become more of a free-trade zone than a state.[...]
A similarly insidious pattern has developed in recent years among the countries serving as offshore financial centers. Many, like the countries affected by the resource curse, are former colonial states struggling to stay fiscally viable; the "resource" they discover is human capital, in the form of a population literate and numerate enough to provide financial services, such as the filing and compliance tasks linked to offshore corporations, trusts, and foundations. For these economically and politically fragile countries, the influx of cash provided by involvement in international finance seems like an unmitigated blessing, offering jobs and revenues for a relatively small investment in infrastructure, such as high-speed internet access.
But as many are finding, becoming a tax haven has unexpected costs. Precipitous economic, political, and social declines have occurred so often in such states that observers have coined a new term for it: “the finance curse.” When the "finance curse" strikes a country, there is a recurrent pattern: While its democracy, economy, and culture remain formally intact, they are increasingly oriented to and co-opted by international elites. In other words, such countries gradually become organized around the interests of people who don't even live there, to the detriment of those who do. The services produced by these countries protect cosmopolitans’ wealth, but the riches never flow to the the local producers, undermining their capacity for self-governance and social cohesion, as well as the development of infrastructure and institutions.
This has led to increasing economic fragility for offshore financial centers, along with political corruption and social decline, as evidenced by a rise in crime and violence. I experienced the latter in my own research on the global wealth-management industry: In the course of visiting 18 tax havens in every major region of the world, I encountered this social decay directly through a number of experiences, including being robbed at Pae Moana in the Cook Islands. A local fisherman I met afterwards said the rise in burglary and violent crime in the islands began with the growth of the offshore industry. Not only the wealth it brought in, but also the new value system focused on exploitation and greed, meant that “everyone calls us the ‘Crook Islands’ now.” The finance industry had begun to eat away at the nation’s democratic institutions: Referring to a recent political-corruption scandal, the fisherman said, “They’ve got our government in their pockets. I hate what they've done to my country.”
But as I learned, the workings of the finance curse have shaped not only the development of small post-colonial nations like the Cook Islands, but also that of seemingly wealthy and well-established ones. For example, recent reporting on the Channel Island of Jersey has documented the crippling of the country's economy, government, and society in one of the world's leading financial centers—a place that was once considered a "miracle of plenty" and a role model for other would-be tax havens.
The corrosion described by the finance curse has affected even some of the wealthiest financial centers, such as Luxembourg, which is the domicile of choice for $3.5 trillion worth of mutual-fund shares and over 150 banks. As a result of a robust financial-services sector that contributes 27 percent of the country’s economic production, the Grand Duchy boasts the highest per capita GDP in the Europe, far outstripping its nearest rivals, Norway and Switzerland. At first blush, Luxembourg would appear to be in terrific shape: a wealthy democracy, thriving in the center of Western Europe.
However, as the economist Gabriel Zucman has shown, Luxembourg's role as a leading tax haven has benefitted foreigners at the expense of locals, across the board. Over 60 percent of the country’s workforce is comprised of foreigners, who reap virtually all the benefits of the wealth generated by the Duchy. The society, as a result, is fracturing along expat-versus-local lines, both in economic and political terms.
As Zucman documents, inequality in the Grand Duchy has skyrocketed, with poverty doubling since 1980, and real wages for ordinary Luxembourgers stagnating for the past 20 years. Meanwhile, salaries for expat wealth managers have exploded, tripling housing prices in Luxembourg City. However, even this new wealth has not benefitted the local economy: Due to Luxembourg’s tax policies, public institutions such as the educational system are in "accelerated decline," mainly to the detriment of locals. The result, Zucman observes, is that Luxembourg has become more of a free-trade zone than a state.[...]
Reverse mortgages: The final blow killing middle class wealth
From Demo Underground: Many fellow Americans that have worked their entire lives, weathered several recessions and depressions, put their children through school, helped many in need, and faithfully paid their mortgages for decades are now being taken advantage of once again. Most have followed all the rules necessary to be considered fiscally responsible, yet because of "legal fraud" by the financial sector and policies effected by purchased politicians, their years in retirement will be compromised.
The Plutocracy, the one percent has walked away with a large percentage of their 401Ks, their SEPs, and to some extent their financial security. Because of stagnant or falling real wages, much of the working middle class have maxed out on their credit in the attempt to maintain their standard of living. For a Plutocracy that feeds on perpetual growth, from where will it feed now? An old and well-crafted financial instrument known as the reverse mortgage is being marketed on steroids to a baby boomer population.
...........//snip
Most Americans amass most of their wealth within their homes. Each generation in a responsible family is better off when the previous generation wills their assets forward. Reverse mortgages are yet another financial instrument that stunts the growth of the middle class by encouraging home owners to extract the capital out of their homes and use it as a supplement to their retirement or to simply splurge. Inasmuch as most reverse mortgages are federally regulated, their upfront costs are very high. These costs amount to free cash for the bank and mortgage insurance companies, your money transferred to them for a marginal service.
The big dirty secret is that reverse mortgages, like student loans pre-Obama, are nothing but a no-risk gift to the bankers, a wealth transfer engine from the masses to a select few. When the "owner" of the home dies, the government pays the bank any difference between the amount owed (interest plus principal) less the sale price of the home. If the heirs want to keep the home, they must pay the loan off in full. If the amount owed is more than the value of the home, the heirs must pay 95 percent of what is owed to the bank with the government paying the rest. What is the reason for the bank being in the transaction? It is there simply to extract from the government and the homeowner. They have absolutely nothing at risk for the profits they make.
Reverse mortgages mask a systemic problem that affects the American worker, a backward and inhumane retirement system. Every American worker makes a vibrant economy possible by providing 40, 50 or more years of work, taxes, and spending. It is appalling that a worker is incapable of having Social Security capable of providing a decent living. No one should have to deplete all of their assets to survive.
The Plutocracy, the one percent has walked away with a large percentage of their 401Ks, their SEPs, and to some extent their financial security. Because of stagnant or falling real wages, much of the working middle class have maxed out on their credit in the attempt to maintain their standard of living. For a Plutocracy that feeds on perpetual growth, from where will it feed now? An old and well-crafted financial instrument known as the reverse mortgage is being marketed on steroids to a baby boomer population.
...........//snip
Most Americans amass most of their wealth within their homes. Each generation in a responsible family is better off when the previous generation wills their assets forward. Reverse mortgages are yet another financial instrument that stunts the growth of the middle class by encouraging home owners to extract the capital out of their homes and use it as a supplement to their retirement or to simply splurge. Inasmuch as most reverse mortgages are federally regulated, their upfront costs are very high. These costs amount to free cash for the bank and mortgage insurance companies, your money transferred to them for a marginal service.
The big dirty secret is that reverse mortgages, like student loans pre-Obama, are nothing but a no-risk gift to the bankers, a wealth transfer engine from the masses to a select few. When the "owner" of the home dies, the government pays the bank any difference between the amount owed (interest plus principal) less the sale price of the home. If the heirs want to keep the home, they must pay the loan off in full. If the amount owed is more than the value of the home, the heirs must pay 95 percent of what is owed to the bank with the government paying the rest. What is the reason for the bank being in the transaction? It is there simply to extract from the government and the homeowner. They have absolutely nothing at risk for the profits they make.
Reverse mortgages mask a systemic problem that affects the American worker, a backward and inhumane retirement system. Every American worker makes a vibrant economy possible by providing 40, 50 or more years of work, taxes, and spending. It is appalling that a worker is incapable of having Social Security capable of providing a decent living. No one should have to deplete all of their assets to survive.
America’s Future Depends on Containing Neoliberalism
By Frank Fear ~ LA Progressive
The Rise and Evolution of Neoliberalism
The concept was born in 1930s Europe in reaction to The New Deal in America and The Nazi Movement in Germany. Both expressions were seen as totalitarian, squelching individual freedom and initiative. Over time, Neoliberalism morphed, becoming especially attractive to those who favored reducing regulatory oversight, downsizing government, and accentuating capitalism as the coin of the realm.
“The market” would take care of things—literally all things—and the market metaphor expanded to embrace a variety of domains associated with social and economic life. In Monbiot’s view, “Neoliberalism sees competition as the defining characteristic of human relations…. The market ensures that everyone gets what they deserve.”
It wasn’t until the early 1980s—with Margaret Thatcher in power in Great Britain and Ronald Reagan in the U.S.—that a neoliberal philosophy became a guiding force for national and international affairs. In famously declaring, “There is no alternative,” Thatcher showed how dedicated she was to free markets, free trade, and global capitalism. The American analogue, “Reaganomics” (aka supply-side economics), focused on redressing “an undue tax burden, excessive government regulation, and massive public spending programs that hampered growth.”
“Call it Reaganism or Thatcherism, economism, or market fundamentalism,” William Deresiewicz writes, “neoliberalism is an ideology that reduces all values to money values. The worth of a thing is the price of the thing. The worth of a person is the wealth of the person. Neoliberalism tells you that you are valuable exclusively in terms of your activity in the marketplace — or, in Wordsworth’s phrase, your ‘getting and spending’.”
Neoliberalism was no short-term political fancy, either. It persisted and expanded, promulgated by powerful advocates, to the point that it changed the way America does business. Nobel Prize-winning economist Joseph Stiglitz believes that Neoliberalism has “rewritten the rules” of the U.S. economy by privileging elites. It did so by deregulating business affairs, privatizing public and human services, cutting social services, lowering taxes, and reducing government size and scope. In exchange, elites promised “trickle down benefits” and declared “A Thousand Points of Light” would take care of human and social needs.
Impacts of Neoliberalism
Neoliberalism proceeded, undeterred, without a counterweight. In so doing, though, it created a stink in social affairs. Today, America is something different from what it was before. The unimaginable now happens. Consider three examples.
•Flint, Michigan. There was a time when what happened to Flint wouldn’t have happened in this country. Today it does, in part, because of lower taxes, corporate dependency, limited regulations, and cost-savings for public services. But “Flint,” the city, isn’t just one place. Metaphorically it’s everywhere: a racially concentrated population in socioeconomic distress with an affluent population living comfortably distant.
•Infant mortality. It’s mindboggling to conceive that 21st Century America would struggle in this domain, but it does. The Centers for Disease Control and Prevention reported recently that about 25 industrialized countries are doing better than the U.S. in keeping children alive. A recent New York Times headline was harsh and direct: The U.S. Is Failing in Infant Mortality, Starting at One Month Old.
•Income. According to a new report released by The Congressional Budget Office, American incomes increased differentially across income categories from 1975-2013. Incomes for the Top 1% increased nearly 200% during that 35-year period, but rose only 18% for those in the bottom four income quintiles. (Note: According The Economic Policy Institute, family income of about $400k per year is required in the U.S. to get into the 1% category; and the average income in that bracket is $1.2 million dollars. The average family income for everybody else is about $46k per annum). “Increased inequality is prominent,” conclude researchers at The World Bank. Stiglitz confirms that conclusion with this finding: “91% of all increases in income from 2009 to 2012 in the U.S. went to the wealthiest 1% of Americans.”
The challenge is clear: America won’t be America much longer—at least how we many of us perceive America to be—if circumstances and trends like these continue. But it won’t be easy to shift into a different gear. Neoliberalism is embedded in American psyche and culture. Around for such a long time, it has become “the way things are”—what’s “normal.”[...]