TO COMMENT CLICK HERE
april 24, 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
*Another Plan For Defense Contractors To Milk The Pentagon
(ARTICLE BELOW)
*US billionaires know capitalism is broken — and now they’re worried about a revolution
(ARTICLE BELOW)
*Amazon — and 56 other corporations — took your tax dollars
(ARTICLE BELOW)
*How capitalism captured the mindfulness industry
(ARTICLE BELOW)
*Billionaire CEO Jamie Dimon leveled for gobbling up government handouts while whining about socialism
(ARTICLE BELOW)
*REPORT: Wall Street Pressure Prompted GM Plant Closures
(ARTICLE BELOW)
*LYFT AND OTHER GIG-ECONOMY GIANTS CASH IN WITH IPOS BEFORE LABOR LAWS CATCH UP WITH THEM
(ARTICLE BELOW)
*Sears smacked down for ending retired employees’ insurance after handing executives $25 million in bonuses
(ARTICLE BELOW)
*Regulation via Litigation
(ARTICLE BELOW)
*Taxpayers may have paid $10 million to help wealthy families bribe their way into elite schools
(ARTICLE BELOW)
*JUDGE SAYS TRUMP ADMINISTRATION IMPROPERLY BLOCKED SEX, RACE PAY DATA RULE
(ARTICLE BELOW)
*ELECTRONIC ARTS AND ACTIVISION BLIZZARD CEOS AMONG MOST OVERPAID NEW REPORT REVEALS
(ARTICLE BELOW)
*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)
*Here’s the big problem with American capitalism
(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)
*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
Another Plan For Defense Contractors To Milk The Pentagon
Lockheed Martin and Boeing Push to Retain ‘Sustainment Costs’
By Sarah Okeson - dc reports
4/23/19
When you buy a new car, you aren’t stuck going back to the dealership for oil changes, but our nation’s taxpayers are stuck with billions of dollars in bills to maintain pricey weapons systems and aircraft from politically-connected firms like Lockheed Martin and Boeing after they sell them to the government.
These “sustainment costs” for the next generation of F-35 fighter jets, already the world’s most expensive weapons program, are expected to top $1 trillion over the life of the program.
“Contractors want the government to accept whatever costs or prices they offer with little review or recourse for overpricing, regardless of contract type or the level of competition involved,” said J. David Cox, the national president of the American Federation of Government Employees.
Cox was criticizing a recent government report that recommends ways to ease regulations on contractors to make it easier for our country’s military to compete with China and Russia in modernizing weapons.
“Nothing could be farther from the truth,” Cox wrote in his letter to the chairmen and ranking members of the House and Senate Armed Services Committees. “If these changes were implemented, they would compound the effects of previous misguided ‘reforms and result in large unnecessary costs.”
Will Roper, the assistant secretary of acquisition, technology and logistics for the Air Force, wants to get away from the sustainment model. He suggested paying a license fee or royalties to contractors.
The Air Force could make contracts for upgrades and repairs part of a bidding process and use software that allows different companies to design add-ons for it.
Contractors are pushing back.
“I’m more convinced than ever that would be a mistake,” said Tim Matthews, a retired rear admiral and vice president of F-35 sustainment for Lockheed Martin.
In 2016, Lockheed Martin employed 55 former Defense Department officials as board members or lobbyists, according to a report by Project on Government Oversight.
Boeing, whose KC-46 tanker aircraft were temporarily rejected by the Air Force because of trash and tools left inside, has even more former Defense Department officials on its payroll – 84 in 2016. Acting Defense Secretary Patrick Shanahanspent 31 years at Boeing.
The estimated price tag for operating and supporting the latest generation of F-35 fighter jets over more than six decades recently grew by almost $73 billion to $1.196 trillion. Our country plans to buy 2,456 of the jets: 1,763 for the Air Force, 420 for the Marines and 273 for the Navy.
These “sustainment costs” for the next generation of F-35 fighter jets, already the world’s most expensive weapons program, are expected to top $1 trillion over the life of the program.
“Contractors want the government to accept whatever costs or prices they offer with little review or recourse for overpricing, regardless of contract type or the level of competition involved,” said J. David Cox, the national president of the American Federation of Government Employees.
Cox was criticizing a recent government report that recommends ways to ease regulations on contractors to make it easier for our country’s military to compete with China and Russia in modernizing weapons.
“Nothing could be farther from the truth,” Cox wrote in his letter to the chairmen and ranking members of the House and Senate Armed Services Committees. “If these changes were implemented, they would compound the effects of previous misguided ‘reforms and result in large unnecessary costs.”
Will Roper, the assistant secretary of acquisition, technology and logistics for the Air Force, wants to get away from the sustainment model. He suggested paying a license fee or royalties to contractors.
The Air Force could make contracts for upgrades and repairs part of a bidding process and use software that allows different companies to design add-ons for it.
Contractors are pushing back.
“I’m more convinced than ever that would be a mistake,” said Tim Matthews, a retired rear admiral and vice president of F-35 sustainment for Lockheed Martin.
In 2016, Lockheed Martin employed 55 former Defense Department officials as board members or lobbyists, according to a report by Project on Government Oversight.
Boeing, whose KC-46 tanker aircraft were temporarily rejected by the Air Force because of trash and tools left inside, has even more former Defense Department officials on its payroll – 84 in 2016. Acting Defense Secretary Patrick Shanahanspent 31 years at Boeing.
The estimated price tag for operating and supporting the latest generation of F-35 fighter jets over more than six decades recently grew by almost $73 billion to $1.196 trillion. Our country plans to buy 2,456 of the jets: 1,763 for the Air Force, 420 for the Marines and 273 for the Navy.
US billionaires know capitalism is broken — and now they’re worried about a revolution
Matthew Chapman - raw story
22 APR 2019 AT 08:58 ET
The spate of far-left and far-right politicians being elected to office in the United States arguably speaks to a deep public distrust in how the political and economic system has failed average people, and focused all of its energy on the priorities and whims of a small class of billionaires.
A new deep dive by the Washington Post suggests that U.S. billionaires themselves are acutely aware of this divide — and are fearful that it could bring about the end, or at least the radical transformation, of American capitalism itself.
Tech billionaire Greg Larsen, for example, is reportedly worried that hot spots of business and investment like Silicon Valley are soaking up all the wealth. “It seems like every company in the world has to be here,” he said. “It’s just painfully obvious that the blob is getting bigger” — and he and Rep. Ro Khama (D-CA) fear this is politically unsustainable.
This sort of concentration makes American communities less livable — both communities that are being “left behind” with no jobs, and the communities like Silicon Valley that are gaining all the jobs only for the cost of living to skyrocket and become unaffordable for working people.
Nor is that the only potential issue. As technological capital increases and automation threatens huge segments of the economy, some entrepreneurs like OpenAI chairman Greg Brockman worry we may reach a point where human labor becomes unnecessary for the economy, and we may have to switch to a system where the government distributed profits directly to nonworkers through universal basic income for their survival.
Brockman compared it to the consumption of meat: “Once we have meat substitutes as good as the real thing, my expectation is that we’re going to look back at eating meat as this terrible, immoral thing,” he explained. Similarly, perhaps one day “we’ll look back and say, ‘Wow, that was so crazy and almost immoral that people were forced to go and labor in order to be able to survive.'”
All of this, however, is making billionaires like investor Seth Klarman uneasy. “I think we’re in the middle of a revolution — not a guns revolution — but a revolution where people on both extremes want to blow it up,” he suggested of politicians proposing huge transformations of the capitalist system like Sen. Elizabeth Warren (D-MA), “and good things don’t happen to the vast majority of the population in a revolution.”
A new deep dive by the Washington Post suggests that U.S. billionaires themselves are acutely aware of this divide — and are fearful that it could bring about the end, or at least the radical transformation, of American capitalism itself.
Tech billionaire Greg Larsen, for example, is reportedly worried that hot spots of business and investment like Silicon Valley are soaking up all the wealth. “It seems like every company in the world has to be here,” he said. “It’s just painfully obvious that the blob is getting bigger” — and he and Rep. Ro Khama (D-CA) fear this is politically unsustainable.
This sort of concentration makes American communities less livable — both communities that are being “left behind” with no jobs, and the communities like Silicon Valley that are gaining all the jobs only for the cost of living to skyrocket and become unaffordable for working people.
Nor is that the only potential issue. As technological capital increases and automation threatens huge segments of the economy, some entrepreneurs like OpenAI chairman Greg Brockman worry we may reach a point where human labor becomes unnecessary for the economy, and we may have to switch to a system where the government distributed profits directly to nonworkers through universal basic income for their survival.
Brockman compared it to the consumption of meat: “Once we have meat substitutes as good as the real thing, my expectation is that we’re going to look back at eating meat as this terrible, immoral thing,” he explained. Similarly, perhaps one day “we’ll look back and say, ‘Wow, that was so crazy and almost immoral that people were forced to go and labor in order to be able to survive.'”
All of this, however, is making billionaires like investor Seth Klarman uneasy. “I think we’re in the middle of a revolution — not a guns revolution — but a revolution where people on both extremes want to blow it up,” he suggested of politicians proposing huge transformations of the capitalist system like Sen. Elizabeth Warren (D-MA), “and good things don’t happen to the vast majority of the population in a revolution.”
Amazon — and 56 other corporations — took your tax dollars
LEO GERARD, INDEPENDENT MEDIA INSTITUTE - COMMENTARY - raw story
20 APR 2019 AT 07:35 ET
Yeah, yeah, yeah, Bernie Sanders, castigator of the one percent, is a millionaire now. So are Kamala Harris and Elizabeth Warren. Big whoop. There’s a crucial difference between these candidates seeking the Democratic presidential nomination and the super wealthy – particularly 60 gigantic, massively profitable U.S. corporations. The candidates faithfully pay federal taxes. The corporations don’t.
That’s right. Sixty profitable corporations paid no federal taxes in 2018, twice the number that typically paid nothing in the years before the 2017 tax breaks took effect. In fact, it’s worse than that. Fifty-seven of these corporations demanded rebates from the government – which means taxpayers like you and me paid them to exist. These are corporations on the dole. They claim to hate socialism if it means Medicare for All, but they sure as hell love socialism when it’s welfare for them.
Sanders, Harris, Warren and other candidates seeking the Democratic nomination paid their taxes because they are patriots. Most working Americans pay a fair share to support their country. True citizens pay so that their nation can thrive. They pay so that the United States can afford to educate its citizens, pave its roads, operate its courts, care for its vulnerable and sustain its military. They pay because they understand they have a duty to the country that nurtured them, that protects them and that they love.
But too many U.S. corporations, which the U.S. Supreme Court has anointed with human rights, refuse to acknowledge their concomitant obligations. Corporations and the super wealthy pushed hard for the tax breaks Republicans bestowed on them in 2017. Fat cats paid untold tens of millions to dark money groups that served as cash cows for GOP candidates who, once elected, shepherded those tax breaks.
Corporate front groups and GOP apologists such as Treasury Secretary Steven Mnuchin insisted the tax cuts would pay for themselves. Mnuchin went even further, contendingthe cuts would reduce the deficit by $1 trillion. Everything would be hunky-dory.
It was a lie then. And now the deceit is exposed for the grotesquerie it was. The U.S. Treasury reported that corporations paid $92 billion less in federal taxes in 2018 than they did in 2017, a 31 percent drop off.
To put that in perspective, the decline is the second largest since 1934, which was during the Great Depression. The only larger swoon was 55 percent at the outset of the Great Recession from 2008 to 2009.
Bad things happen when corporations shirk their obligations. One is that workers end up bearing more of the cost. Last year, individual taxpayers provided more than half of federal income tax revenue and corporations contributed only 7 percent. Just four years ago, corporations accounted for 11 percent and individual taxpayers 47 percent.
Another ill effect is that government debt balloons. The U.S. Treasury Department reported that the deficit rose $113 billion or 17 percent in the first year of the tax cuts, the largest one-year increase since 2009, which was during the worst of the Great Recession. That black hole is projected to occur every year the tax cuts remain in effect.
Republicans take those deficit figures – deficits they created by cutting taxes – and use them to demand offsetting spending cuts – that is cuts to Social Security, cuts to Medicare and Medicaid, cuts to food stamps and school lunch programs, cuts to programs that are precious to workers and the poor.
The deficits grow like this: Amazon, the online marketplace, made nearly $11 billion last year and instead of paying the current, low 21 percent corporate tax rate on that income, it demanded that taxpayers give it $129 million. Which they did. It wasn’t a rebate since Amazon paid no taxes. It was a big fat, gift withdrawn involuntarily from workers’ pockets, wrapped in a fuzzy, flocked Amazon smiley bag, and deposited directly into corporate coffers. This is perverse wealth transfer, from the poor and middle class to the rich and corporations.
And taxpayers didn’t even get Amazon Prime in exchange.
Of the 60 profitable corporations that paid no taxes, 57 got payments like this from workers. Amazon’s wasn’t even the largest. Ten companies took more, including Duke Energy, which set an infamous record for itself by grubbing the most – $647 million. On about $76 billion in pretax income, the 57 forced taxpayers to give them $4.3 billion.
If, instead of exploiting every potential loophole and dodging every conceivable requirement, these corporations had paid their taxes at the new, low 21 percent rate, the United States would have received $16.4 billion in revenue from them.
That’s money the country needs.
And it’s not like Amazon and its fellow corporate welfare recipients don’t deliver their goods on the roads that workers’ tax dollars construct, or snap up software engineers educated in public schools that workers’ tax dollars build, or argue their patent cases in courts that workers’ tax dollars maintain.
Americans overwhelmingly support repairing the nation’s crumbling roads, bridges, airports and water lines, using U.S.-made products and union workers. In 2017, the American Society of Civil Engineers gave the nation’s infrastructure a D grade and estimated that the United States must spend $4.5 trillion by 2025 to upgrade the structures on which American commerce depends.
President Donald Trump and majorities in Congress are all for infrastructure improvements too. But it never happens. And the reason is money. There is no money to do it when so many U.S. corporations use this infrastructure to make boatloads of money, pay no taxes and demand the government give them workers’ tax dollars.
Workers use those roads and bridges and pipelines too. But we pay. Yeah, Bernie Sanders and Elizabeth Warren made a lot of money by writing and selling books in the past couple of years. In 2018, Sanders and his wife, Jane, reported to the IRS an adjusted gross income of $561,293, which included $393,000 from selling books. They gave $19,000 to charities and paid a federal tax rate of 26 percent – significantly higher than the 21 percent rate charged to corporations, which don’t pay it anyway. Bernie and Jane gave the federal government $145,840.
Other Democrats seeking the party’s nomination for president released tax returns showing they paid their fair share as well. They include Kamala Harris who reported earnings of about $1.9 million and paid at an effective tax rate of 37 percent last year. Sen. Warren, with an adjusted gross income of $846,394, paid at a rate of 27 percent. Washington Gov. Jay Inslee, who had the lowest adjusted gross income of the Democrats who have released tax forms, $202,912, also, logically, paid the lowest rate, 15 percent.
Each of them paid more money and at a higher rate than billionaire Amazon.
Not all wealthy people believe it’s wise to sustain a system that does not require the 1 percent and profitable corporations to pay their fair share. A group of them, the Patriotic Millionaires as they call themselves, met in Washington, D.C., this week to discuss better ways to assess taxes and what will happen to this country if nothing changes.
They believe the government should mandate tax payments from the rich and corporations to ensure survival of the very institutions and values that helped the one percent accrue millions and billions.
The crucial difference between you and Amazon is that you paid your fair share, and Amazon took your tax dollars. So, no, the roads and bridges won’t get fixed this year either.
That’s right. Sixty profitable corporations paid no federal taxes in 2018, twice the number that typically paid nothing in the years before the 2017 tax breaks took effect. In fact, it’s worse than that. Fifty-seven of these corporations demanded rebates from the government – which means taxpayers like you and me paid them to exist. These are corporations on the dole. They claim to hate socialism if it means Medicare for All, but they sure as hell love socialism when it’s welfare for them.
Sanders, Harris, Warren and other candidates seeking the Democratic nomination paid their taxes because they are patriots. Most working Americans pay a fair share to support their country. True citizens pay so that their nation can thrive. They pay so that the United States can afford to educate its citizens, pave its roads, operate its courts, care for its vulnerable and sustain its military. They pay because they understand they have a duty to the country that nurtured them, that protects them and that they love.
But too many U.S. corporations, which the U.S. Supreme Court has anointed with human rights, refuse to acknowledge their concomitant obligations. Corporations and the super wealthy pushed hard for the tax breaks Republicans bestowed on them in 2017. Fat cats paid untold tens of millions to dark money groups that served as cash cows for GOP candidates who, once elected, shepherded those tax breaks.
Corporate front groups and GOP apologists such as Treasury Secretary Steven Mnuchin insisted the tax cuts would pay for themselves. Mnuchin went even further, contendingthe cuts would reduce the deficit by $1 trillion. Everything would be hunky-dory.
It was a lie then. And now the deceit is exposed for the grotesquerie it was. The U.S. Treasury reported that corporations paid $92 billion less in federal taxes in 2018 than they did in 2017, a 31 percent drop off.
To put that in perspective, the decline is the second largest since 1934, which was during the Great Depression. The only larger swoon was 55 percent at the outset of the Great Recession from 2008 to 2009.
Bad things happen when corporations shirk their obligations. One is that workers end up bearing more of the cost. Last year, individual taxpayers provided more than half of federal income tax revenue and corporations contributed only 7 percent. Just four years ago, corporations accounted for 11 percent and individual taxpayers 47 percent.
Another ill effect is that government debt balloons. The U.S. Treasury Department reported that the deficit rose $113 billion or 17 percent in the first year of the tax cuts, the largest one-year increase since 2009, which was during the worst of the Great Recession. That black hole is projected to occur every year the tax cuts remain in effect.
Republicans take those deficit figures – deficits they created by cutting taxes – and use them to demand offsetting spending cuts – that is cuts to Social Security, cuts to Medicare and Medicaid, cuts to food stamps and school lunch programs, cuts to programs that are precious to workers and the poor.
The deficits grow like this: Amazon, the online marketplace, made nearly $11 billion last year and instead of paying the current, low 21 percent corporate tax rate on that income, it demanded that taxpayers give it $129 million. Which they did. It wasn’t a rebate since Amazon paid no taxes. It was a big fat, gift withdrawn involuntarily from workers’ pockets, wrapped in a fuzzy, flocked Amazon smiley bag, and deposited directly into corporate coffers. This is perverse wealth transfer, from the poor and middle class to the rich and corporations.
And taxpayers didn’t even get Amazon Prime in exchange.
Of the 60 profitable corporations that paid no taxes, 57 got payments like this from workers. Amazon’s wasn’t even the largest. Ten companies took more, including Duke Energy, which set an infamous record for itself by grubbing the most – $647 million. On about $76 billion in pretax income, the 57 forced taxpayers to give them $4.3 billion.
If, instead of exploiting every potential loophole and dodging every conceivable requirement, these corporations had paid their taxes at the new, low 21 percent rate, the United States would have received $16.4 billion in revenue from them.
That’s money the country needs.
And it’s not like Amazon and its fellow corporate welfare recipients don’t deliver their goods on the roads that workers’ tax dollars construct, or snap up software engineers educated in public schools that workers’ tax dollars build, or argue their patent cases in courts that workers’ tax dollars maintain.
Americans overwhelmingly support repairing the nation’s crumbling roads, bridges, airports and water lines, using U.S.-made products and union workers. In 2017, the American Society of Civil Engineers gave the nation’s infrastructure a D grade and estimated that the United States must spend $4.5 trillion by 2025 to upgrade the structures on which American commerce depends.
President Donald Trump and majorities in Congress are all for infrastructure improvements too. But it never happens. And the reason is money. There is no money to do it when so many U.S. corporations use this infrastructure to make boatloads of money, pay no taxes and demand the government give them workers’ tax dollars.
Workers use those roads and bridges and pipelines too. But we pay. Yeah, Bernie Sanders and Elizabeth Warren made a lot of money by writing and selling books in the past couple of years. In 2018, Sanders and his wife, Jane, reported to the IRS an adjusted gross income of $561,293, which included $393,000 from selling books. They gave $19,000 to charities and paid a federal tax rate of 26 percent – significantly higher than the 21 percent rate charged to corporations, which don’t pay it anyway. Bernie and Jane gave the federal government $145,840.
Other Democrats seeking the party’s nomination for president released tax returns showing they paid their fair share as well. They include Kamala Harris who reported earnings of about $1.9 million and paid at an effective tax rate of 37 percent last year. Sen. Warren, with an adjusted gross income of $846,394, paid at a rate of 27 percent. Washington Gov. Jay Inslee, who had the lowest adjusted gross income of the Democrats who have released tax forms, $202,912, also, logically, paid the lowest rate, 15 percent.
Each of them paid more money and at a higher rate than billionaire Amazon.
Not all wealthy people believe it’s wise to sustain a system that does not require the 1 percent and profitable corporations to pay their fair share. A group of them, the Patriotic Millionaires as they call themselves, met in Washington, D.C., this week to discuss better ways to assess taxes and what will happen to this country if nothing changes.
They believe the government should mandate tax payments from the rich and corporations to ensure survival of the very institutions and values that helped the one percent accrue millions and billions.
The crucial difference between you and Amazon is that you paid your fair share, and Amazon took your tax dollars. So, no, the roads and bridges won’t get fixed this year either.
How capitalism captured the mindfulness industry
The secular technique and its relativist lack of a moral foundation has opened itself up to a host of dubious uses, called out by its critics as McMindfulness
David Forbes
the guardian
Tue 16 Apr 2019 02.00 EDT
On the internet is an image of Ronald McDonald, the McDonald’s hamburger icon, seated in a lotus position. Some Thai Buddhists see this in literal terms as disrespectful to the Buddha; others are rightly critical of the colonialist and harmful cultural appropriation of Buddhism by the west and the lack of regard for Asian Buddhism in the US and Canada.
The technical, neutral definition of mindfulness and its relativist lack of a moral foundation has opened up secular mindfulness to a host of dubious uses, now called out by its critics as McMindfulness. McMindfulness occurs when mindfulness is used, with intention or unwittingly, for self-serving and ego-enhancing purposes that run counter to both Buddhist and Abrahamic prophetic teachings to let go of ego-attachment and enact skillful compassion for everyone.
Instead of letting go of the ego, McMindfulness promotes self-aggrandizement; its therapeutic function is to comfort, numb, adjust and accommodate the self within a neoliberal, corporatized, militarized, individualistic society based on private gain.
While the term McMindfulness had been used before, Ron Purser’s and David Loy’s article, Beyond McMindfulness, published online in 2013, caused a defensive stir. The authors argued that a “stripped down, secular technique” of mindfulness originating in Buddhism not just fails to serve to awaken people and organizations from “the unwholesome roots of greed, ill will and delusion, it is usually being refashioned into a banal, therapeutic, self-help technique that can actually reinforce those roots”.
McMindfulness aims to reduce the stress of the private individual and does not admit to any interest in the social causes of stress. In corporations, “[m]indfulness training has wide appeal because it has become a trendy method for subduing employee unrest, promoting a tacit acceptance of the status quo, and as an instrumental tool for keeping attention focused on institutional goals.” Mindfulness, they argued, needs to reclaim an ethical framework that goes beyond privatized adjustment to a society based on market capitalism that contributes to stress and other sources of unhappiness.
McMindfulness practices psychologize and medicalize social problems. Rather than a way to attain awakening toward universal love, it becomes a means of self-regulation and personal control over emotions. McMindfulness is blind to the present moral, political and cultural context of neoliberalism. As a result, it does not grasp that an individualistic therapized and commodified society is itself a major generator of social suffering and distress. Instead, the best it can then do, ironically, is to offer to sell us back an individualistic, commodified “cure” – mindfulness – to reduce that distress.
Meditation apps monetize mindfulness; Headspace’s revenue is estimated at $50m a year and the company is valued at $250m. These enterprises cater to Big Business, with which it has had a long history. Silicon Valley has a ball producing profitable, hi-tech, marketable mindfulness apps as “brain hacks” for which there is no evidence they are helpful.
By negating and downplaying actual social and political contexts and focusing on the individual, or more so, the individual’s brain, McMindfulness interventions ignore seeing our inseparability from all others. They ignore seeing our inseparability from inequitable cultural patterns and social structures that affect and constitute our relations, and thereby ourselves. McMindfulness thus forfeits the moral demand that follows this insight: to challenge social inequities and enact universal compassion, service and social justice in all forms of human endeavor.
Without a critical account of the social context of neoliberal individualism, mindfulness as a practice and discourse focused on the self minimizes social critique and change and contributes to keeping existing social injustices and inequitable power structures intact. With regard to those who write about mindful politics, Jeff Wilson noted: “Most mindfulness authors pin their hopes on a mindful capitalism as sufficient to bring about the kinder, wiser society they envision.” There is nothing revolutionary about the so-called Mindful Revolution. Chris Goto-Jones says: “The revolution doesn’t require any particular change in values or economic systems … For a revolution this movement shows remarkable conservatism. The leading voices make no demands on followers. They need not become activists or participate in political struggle.”
Therapist Jeremy Safran says: “It’s the marketing of mindfulness practice as a commodity that is sold like any other commodity in our brand culture, a brand that promises to deliver … McMindfulness is the marketing of a constructed dream; an idealized lifestyle; an identity makeover.”
The technical, neutral definition of mindfulness and its relativist lack of a moral foundation has opened up secular mindfulness to a host of dubious uses, now called out by its critics as McMindfulness. McMindfulness occurs when mindfulness is used, with intention or unwittingly, for self-serving and ego-enhancing purposes that run counter to both Buddhist and Abrahamic prophetic teachings to let go of ego-attachment and enact skillful compassion for everyone.
Instead of letting go of the ego, McMindfulness promotes self-aggrandizement; its therapeutic function is to comfort, numb, adjust and accommodate the self within a neoliberal, corporatized, militarized, individualistic society based on private gain.
While the term McMindfulness had been used before, Ron Purser’s and David Loy’s article, Beyond McMindfulness, published online in 2013, caused a defensive stir. The authors argued that a “stripped down, secular technique” of mindfulness originating in Buddhism not just fails to serve to awaken people and organizations from “the unwholesome roots of greed, ill will and delusion, it is usually being refashioned into a banal, therapeutic, self-help technique that can actually reinforce those roots”.
McMindfulness aims to reduce the stress of the private individual and does not admit to any interest in the social causes of stress. In corporations, “[m]indfulness training has wide appeal because it has become a trendy method for subduing employee unrest, promoting a tacit acceptance of the status quo, and as an instrumental tool for keeping attention focused on institutional goals.” Mindfulness, they argued, needs to reclaim an ethical framework that goes beyond privatized adjustment to a society based on market capitalism that contributes to stress and other sources of unhappiness.
McMindfulness practices psychologize and medicalize social problems. Rather than a way to attain awakening toward universal love, it becomes a means of self-regulation and personal control over emotions. McMindfulness is blind to the present moral, political and cultural context of neoliberalism. As a result, it does not grasp that an individualistic therapized and commodified society is itself a major generator of social suffering and distress. Instead, the best it can then do, ironically, is to offer to sell us back an individualistic, commodified “cure” – mindfulness – to reduce that distress.
Meditation apps monetize mindfulness; Headspace’s revenue is estimated at $50m a year and the company is valued at $250m. These enterprises cater to Big Business, with which it has had a long history. Silicon Valley has a ball producing profitable, hi-tech, marketable mindfulness apps as “brain hacks” for which there is no evidence they are helpful.
By negating and downplaying actual social and political contexts and focusing on the individual, or more so, the individual’s brain, McMindfulness interventions ignore seeing our inseparability from all others. They ignore seeing our inseparability from inequitable cultural patterns and social structures that affect and constitute our relations, and thereby ourselves. McMindfulness thus forfeits the moral demand that follows this insight: to challenge social inequities and enact universal compassion, service and social justice in all forms of human endeavor.
Without a critical account of the social context of neoliberal individualism, mindfulness as a practice and discourse focused on the self minimizes social critique and change and contributes to keeping existing social injustices and inequitable power structures intact. With regard to those who write about mindful politics, Jeff Wilson noted: “Most mindfulness authors pin their hopes on a mindful capitalism as sufficient to bring about the kinder, wiser society they envision.” There is nothing revolutionary about the so-called Mindful Revolution. Chris Goto-Jones says: “The revolution doesn’t require any particular change in values or economic systems … For a revolution this movement shows remarkable conservatism. The leading voices make no demands on followers. They need not become activists or participate in political struggle.”
Therapist Jeremy Safran says: “It’s the marketing of mindfulness practice as a commodity that is sold like any other commodity in our brand culture, a brand that promises to deliver … McMindfulness is the marketing of a constructed dream; an idealized lifestyle; an identity makeover.”
Billionaire CEO Jamie Dimon leveled for gobbling up government handouts while whining about socialism
ROBERT REICH - COMMENTARY - raw story
14 APR 2019 AT 14:08 ET
In his annual letter to shareholders, distributed last week, JPMorgan Chase CEO Jamie Dimon took aim at socialism, warning it would be “a disaster for our country,” because it produces “stagnation, corruption and often worse.”
Dimon should know. He was at the helm when JPMorgan received a $25bn socialist-like bailout in 2008, after it and other Wall Street banks almost tanked because of their reckless loans.
Dimon subsequently agreed to pay the government $13bn to settle charges that the bank overstated the quality of mortgages it was selling to investors in the run-up to the crisis. According to the Justice Department, JPMorgan acknowledged it had regularly and knowingly sold mortgages that should have never been sold. (Presumably this is where the “stagnation, corruption and often worse” comes in.)
The $13bn penalty was chicken feed to the biggest bank on Wall Street, whose profits last year alone amounted to $35bn. Besides, JPMorgan was able to deduct around $11bn of the settlement costs from its taxable income.
To state it another way, Dimon and other Wall Street CEOs helped trigger the 2008 financial crisis when the dangerous and irresponsible loans their banks were peddling – on which they made big money – finally went bust. But instead of letting the market punish the banks (which is what capitalism is supposed to do) the government bailed them out and eventually levied paltry fines which the banks treated as the cost of doing business.
If this isn’t socialism, what is? Yet it’s a particular form of socialism. Millions of homeowners who owed more on their homes than the homes became worth didn’t get bailed out. Millions of workers who lost their jobs or their savings, or both, didn’t get bailed out. No major banker went to jail.
Call it socialism for rich bankers.
It’s a gift that keeps giving. Dimon took advantage of the financial crisis to acquire Bear Stearns and Washington Mutual, vastly enlarging JPMorgan. America’s five biggest banks, including Dimon’s, now control 46% of all deposits, up from 12% in the early 1990s.
And because they’re so big, Dimon’s and other big Wall Street banks are now considered “too big to fail”. This translates into a hidden subsidy of some $83bn a year, because creditors who face less risk accept lower interest on deposits and loans.
More socialism for rich bankers.
After the financial crisis and bailout, Congress enacted a milquetoast version of the Glass-Steagall Act, a banking law from the Great Depression that bankers killed off in the 1990s. The replacement was called the Dodd-Frank Act.
Ever since, Dimon has pushed to weaken Dodd-Frank.
When Obama’s regulators wanted to extend Dodd-Frank to the foreign branches and subsidiaries of Wall Street banks, Dimon warned it would harm Wall Street’s competitiveness.
This was the same Jamie Dimon who chose London as the place to make highly risky derivatives trades that lost the firm some $6bn in 2012 – proof that unless the overseas operations of Wall Street banks are covered by US regulations, giant banks like his will move more of their betting abroad, hiding their wildly-risky bets overseas so U.S. regulators can’t see them.
More recently, Trump’s bank regulators have heeded Dimon, and rolled back Dodd-Frank.
Dimon was also instrumental in getting the big Trump tax cuts through Congress. They saved JPMorgan and the other big banks $21bn last year alone.
Dimon was paid $31m last year. He is estimated by Forbes to be worth $1.3bn.
Ironically, a few weeks ago Dimon warned that income inequality is dividing America. He said that a “big chunk” of Americans have been left behind, and, announcing a $350mprogram to train workers for the jobs of the future, lamented that 40% of Americans make less than $15 an hour.
True, but $350m over five years isn’t even a drop in the ocean for the Americans left behind.
Wall Street bonuses totaled $27.5bn last year, which is more three times the combined annual earnings of all American workers employed full-time at the federal minimum wage. That’s more than 600,000 low-wage workers.
If Dimon were serious about the problem of widening inequality, he’d use his lobbying prowess to help raise the federal minimum wage. He’d also try to make it easier for workers to unionize, and to raise taxes on the super-wealthy like himself.
But, of course, Dimon isn’t really concerned about widening inequality. He’s not really concerned about socialism, either.
Dimon’s real concern is that America may end the kind of socialism he and other denizens of the Street depend on – bailouts, regulatory loopholes, and tax breaks.
These have made Dimon and his comrades a fortune, but they’ve brought the rest of America stagnation, corruption, and often worse.
Dimon should know. He was at the helm when JPMorgan received a $25bn socialist-like bailout in 2008, after it and other Wall Street banks almost tanked because of their reckless loans.
Dimon subsequently agreed to pay the government $13bn to settle charges that the bank overstated the quality of mortgages it was selling to investors in the run-up to the crisis. According to the Justice Department, JPMorgan acknowledged it had regularly and knowingly sold mortgages that should have never been sold. (Presumably this is where the “stagnation, corruption and often worse” comes in.)
The $13bn penalty was chicken feed to the biggest bank on Wall Street, whose profits last year alone amounted to $35bn. Besides, JPMorgan was able to deduct around $11bn of the settlement costs from its taxable income.
To state it another way, Dimon and other Wall Street CEOs helped trigger the 2008 financial crisis when the dangerous and irresponsible loans their banks were peddling – on which they made big money – finally went bust. But instead of letting the market punish the banks (which is what capitalism is supposed to do) the government bailed them out and eventually levied paltry fines which the banks treated as the cost of doing business.
If this isn’t socialism, what is? Yet it’s a particular form of socialism. Millions of homeowners who owed more on their homes than the homes became worth didn’t get bailed out. Millions of workers who lost their jobs or their savings, or both, didn’t get bailed out. No major banker went to jail.
Call it socialism for rich bankers.
It’s a gift that keeps giving. Dimon took advantage of the financial crisis to acquire Bear Stearns and Washington Mutual, vastly enlarging JPMorgan. America’s five biggest banks, including Dimon’s, now control 46% of all deposits, up from 12% in the early 1990s.
And because they’re so big, Dimon’s and other big Wall Street banks are now considered “too big to fail”. This translates into a hidden subsidy of some $83bn a year, because creditors who face less risk accept lower interest on deposits and loans.
More socialism for rich bankers.
After the financial crisis and bailout, Congress enacted a milquetoast version of the Glass-Steagall Act, a banking law from the Great Depression that bankers killed off in the 1990s. The replacement was called the Dodd-Frank Act.
Ever since, Dimon has pushed to weaken Dodd-Frank.
When Obama’s regulators wanted to extend Dodd-Frank to the foreign branches and subsidiaries of Wall Street banks, Dimon warned it would harm Wall Street’s competitiveness.
This was the same Jamie Dimon who chose London as the place to make highly risky derivatives trades that lost the firm some $6bn in 2012 – proof that unless the overseas operations of Wall Street banks are covered by US regulations, giant banks like his will move more of their betting abroad, hiding their wildly-risky bets overseas so U.S. regulators can’t see them.
More recently, Trump’s bank regulators have heeded Dimon, and rolled back Dodd-Frank.
Dimon was also instrumental in getting the big Trump tax cuts through Congress. They saved JPMorgan and the other big banks $21bn last year alone.
Dimon was paid $31m last year. He is estimated by Forbes to be worth $1.3bn.
Ironically, a few weeks ago Dimon warned that income inequality is dividing America. He said that a “big chunk” of Americans have been left behind, and, announcing a $350mprogram to train workers for the jobs of the future, lamented that 40% of Americans make less than $15 an hour.
True, but $350m over five years isn’t even a drop in the ocean for the Americans left behind.
Wall Street bonuses totaled $27.5bn last year, which is more three times the combined annual earnings of all American workers employed full-time at the federal minimum wage. That’s more than 600,000 low-wage workers.
If Dimon were serious about the problem of widening inequality, he’d use his lobbying prowess to help raise the federal minimum wage. He’d also try to make it easier for workers to unionize, and to raise taxes on the super-wealthy like himself.
But, of course, Dimon isn’t really concerned about widening inequality. He’s not really concerned about socialism, either.
Dimon’s real concern is that America may end the kind of socialism he and other denizens of the Street depend on – bailouts, regulatory loopholes, and tax breaks.
These have made Dimon and his comrades a fortune, but they’ve brought the rest of America stagnation, corruption, and often worse.
REPORT: Wall Street Pressure Prompted GM Plant Closures
By Filiberto Nolasco Gomez, Workday Minnesota
March 26, 2019
WASHINGTON, D.C. Wall Street pressure, particularly hedge funds and their managers, prompted the General Motors plant closures that will throw at least 14,000 United Auto Worker members – and countless other workers in GM’s supply chain – out of jobs, a new report(link is external) says.
The report, commissioned by the American Federation of Teachers(AFT), is from the non-profit Hedge Clippers campaign, an organization dedicated to investigating, exposing and reining in the hedge funders’ financial machinations.
It added the moneyed interests have been pressuring GM ever since 2013, after the “new GM” returned to profitability following the Democratic Obama administration’s rescue of GM and FiatChrysler from collapse, bankruptcy and closure due to the financier- and GOP-caused Great Recession. The UAW helped in the rescue by agreeing to wage cuts and a controverisal two-tier wage system.
The pressure has come in the form of financiers’ threatened takeovers accompanying demands that GM send profits to stockholders and stock buybacks, rather than investing to modernize its factories. The recent plant closures are just the latest symptom of company yielding to Wall Street, the report adds.
AFT commissioned the report because its members, too, will suffer from the closures. That’s because when the company closes the four plants – two in Michigan and one in Baltimore after the one in Lordstown, Ohio – tax revenues, from both personal income taxes and, more importantly, property taxes, will decline.
AFT represents Lordstown’s public school teachers. Many have relatives who were employed at the plant. “The closure could decimate the community’s tax base—Lordstown’s two schools currently receive about $800,000 a year in property tax revenue. With the plant idle, the property could be devalued, drastically affecting funding,” AFT said in a statement.
“The report exposes how GM’s decision to close Lordstown and shutter two other North American assembly plants and component factories followed a 4-year bid by hedge fund managers to squeeze company profits.” The report names the hedge funds and their five managers, who collectively raked in billions from all their deals.
“The Lordstown community has been loyal to GM for 52 years, and GM was a trusted employer and community partner. Now hedge funds have muscled their way in and are lining their pockets at the expense of the real people who worked to make GM a household name,” said AFT President Randi Weingarten.
“This report looks under the hood of the closure decision and exposes greed at its worst. Shareholder buybacks do nothing but enrich those wealthy shareholders.”
“This is not a story of a struggling corporation that cares about investing in America, American jobs and American communities. This is a story of rampant greed and structural deficiencies in the economy, which incentivize the hollowing out of our communities for short-term financial gain.”
“And this is a story about the fate of the people President Trump promised to protect. Many voted for him, but instead he’s attacked their communities and their unions while governing to protect the hedge funds that are waging war on GM.”
“The closing’s impact on students is heartbreaking. How can we expect kids to be focused on learning, when their families are deciding whether to move hundreds of miles away or stay? Some GM workers have left their families behind to take jobs, tearing families apart. This is weighing on kids and making everyday tasks so difficult,” Lordstown Teachers President Alyssa Brookbank told AFT.
The report’s details include:
The AFT-commissioned report, the 66th on hedge funds by the non-profit group, makes the case not just for reining the hedge funds in, as Sens. Chuck Schumer, D-N.Y., Tammy Baldwin, D-Wis., and Bernie Sanders, Ind-Vt., have proposed, but for outlawing them altogether.
“Our report lays out the amazing amount of damage that hedge fund speculators have done to General Motors and to the workers and communities hit hard by GM’s plans to cut jobs and close manufacturing plants.”
The GM report, and the others, “explain how hedge funds have destroyed the economy, rigged the political system, hurt families and communities, exploded inequality and supported the politics of hate and division.”
“Hedge funds are an artifact of history, an accident created by loophole in the 1940 Investment Company Act. It was massively expanded in the 1996 National Securities Market Improvement Act, when hedge funds got their hands on institutional money from pension funds and endowments. They grew 20-fold in the next seven years,” the report says.
“The entire point of the New Deal reforms was to reverse giant pools of money in unregulated vehicles that don’t comply with a staggering amount of securities rules.” Amending those two laws “to push super-speculative hedge fund managers back into limited business lines and…to limit investment from pension funds, endowments and other institutional investors could end the hedge funds’ reign of terror over the American economy, American workers and American communities,” it concludes.
RELATED: HEDGE PAPERS NO. 66: HEDGE FUNDS ATTACK GENERAL MOTORS AND AMERICAN JOBS
The report, commissioned by the American Federation of Teachers(AFT), is from the non-profit Hedge Clippers campaign, an organization dedicated to investigating, exposing and reining in the hedge funders’ financial machinations.
It added the moneyed interests have been pressuring GM ever since 2013, after the “new GM” returned to profitability following the Democratic Obama administration’s rescue of GM and FiatChrysler from collapse, bankruptcy and closure due to the financier- and GOP-caused Great Recession. The UAW helped in the rescue by agreeing to wage cuts and a controverisal two-tier wage system.
The pressure has come in the form of financiers’ threatened takeovers accompanying demands that GM send profits to stockholders and stock buybacks, rather than investing to modernize its factories. The recent plant closures are just the latest symptom of company yielding to Wall Street, the report adds.
AFT commissioned the report because its members, too, will suffer from the closures. That’s because when the company closes the four plants – two in Michigan and one in Baltimore after the one in Lordstown, Ohio – tax revenues, from both personal income taxes and, more importantly, property taxes, will decline.
AFT represents Lordstown’s public school teachers. Many have relatives who were employed at the plant. “The closure could decimate the community’s tax base—Lordstown’s two schools currently receive about $800,000 a year in property tax revenue. With the plant idle, the property could be devalued, drastically affecting funding,” AFT said in a statement.
“The report exposes how GM’s decision to close Lordstown and shutter two other North American assembly plants and component factories followed a 4-year bid by hedge fund managers to squeeze company profits.” The report names the hedge funds and their five managers, who collectively raked in billions from all their deals.
“The Lordstown community has been loyal to GM for 52 years, and GM was a trusted employer and community partner. Now hedge funds have muscled their way in and are lining their pockets at the expense of the real people who worked to make GM a household name,” said AFT President Randi Weingarten.
“This report looks under the hood of the closure decision and exposes greed at its worst. Shareholder buybacks do nothing but enrich those wealthy shareholders.”
“This is not a story of a struggling corporation that cares about investing in America, American jobs and American communities. This is a story of rampant greed and structural deficiencies in the economy, which incentivize the hollowing out of our communities for short-term financial gain.”
“And this is a story about the fate of the people President Trump promised to protect. Many voted for him, but instead he’s attacked their communities and their unions while governing to protect the hedge funds that are waging war on GM.”
“The closing’s impact on students is heartbreaking. How can we expect kids to be focused on learning, when their families are deciding whether to move hundreds of miles away or stay? Some GM workers have left their families behind to take jobs, tearing families apart. This is weighing on kids and making everyday tasks so difficult,” Lordstown Teachers President Alyssa Brookbank told AFT.
The report’s details include:
- The hedge funds demanded GM spend $25 billion on dividends and buybacks, four times as much as the company claims it will save by closing Lordstown and the other plants.
- “Hedge fund investors repeatedly launched pressure campaigns to prevent GM from reinvesting their profits anywhere but back into their own share price after the federal government bailout. Through paid agents, harassing proxy measures and public threats, funds extracted billions in buybacks, unwarranted cash payouts and ruinous job cuts.” The first buyback, of $5 billion, was in 2013, the report says.
- Ohio taxpayers are getting stuck with the bill, too. Ohio Federation of Teachers President Melissa Cropper reported the state gave GM an $82 million tax credit at the depths of the recession in 2008, to help the firm pay for a $317 million retooling of Lordstown to make the Cruze. In return, GM promised to keep the plant open for 30 years. All the financial figures come from Forbes magazine, which advertises itself as “a capitalist tool,” but which is also known for investigative reporting.
- “In 2013, GM completed the taxpayer-funded bailout that kept the company alive and saved thousands of American jobs. Billionaire hedge fund managers have been attacking the company ever since. Hedge funds aren’t interested in American jobs, or in the communities that will be hit by plant closures and job loss.”
The AFT-commissioned report, the 66th on hedge funds by the non-profit group, makes the case not just for reining the hedge funds in, as Sens. Chuck Schumer, D-N.Y., Tammy Baldwin, D-Wis., and Bernie Sanders, Ind-Vt., have proposed, but for outlawing them altogether.
“Our report lays out the amazing amount of damage that hedge fund speculators have done to General Motors and to the workers and communities hit hard by GM’s plans to cut jobs and close manufacturing plants.”
The GM report, and the others, “explain how hedge funds have destroyed the economy, rigged the political system, hurt families and communities, exploded inequality and supported the politics of hate and division.”
“Hedge funds are an artifact of history, an accident created by loophole in the 1940 Investment Company Act. It was massively expanded in the 1996 National Securities Market Improvement Act, when hedge funds got their hands on institutional money from pension funds and endowments. They grew 20-fold in the next seven years,” the report says.
“The entire point of the New Deal reforms was to reverse giant pools of money in unregulated vehicles that don’t comply with a staggering amount of securities rules.” Amending those two laws “to push super-speculative hedge fund managers back into limited business lines and…to limit investment from pension funds, endowments and other institutional investors could end the hedge funds’ reign of terror over the American economy, American workers and American communities,” it concludes.
RELATED: HEDGE PAPERS NO. 66: HEDGE FUNDS ATTACK GENERAL MOTORS AND AMERICAN JOBS
LYFT AND OTHER GIG-ECONOMY GIANTS CASH IN WITH IPOS BEFORE LABOR LAWS CATCH UP WITH THEM
Lee Fang - the intercept
April 1 2019, 11:28 a.m.
GIG-ECONOMY COMPANIES Lyft, Uber, and Postmates are racing to file IPOs this year, a mad dash replete with ever-increasing multibillion-dollar valuations. But is the rush to start trading on the public markets also a sprint to evade compliance with current labor law?
Recent financial and lobbyist filings suggest that the gig-economy giants are hoping to get ahead of a wave of enforcement actions, new legislation, regulatory requirements, and lawsuits that could force these companies to finally and formally classify full-time workers as employees.
Virtually every major gig-economy company — whether its focus is ride-sharing or grocery delivery — has fought to treat on-demand workers as independent contractors regardless of the amount of time they work. The independent contractor classification generally prevents on-demand workers from engaging in collective bargaining and unionization, and it allows the gig-economy industry to avoid paying health-care benefits and unemployment, complying with standard workplace rules guarding against harassment, or ensuring mandatory breaks.
Despite promises of high pay with flexible hours, ride-share workers have found that they often earn less than $10 an hour after vehicle expenses. Earlier this year, Lyft and Uber drivers faced new pay cuts, fueling unprecedented protests across California.
“For a lot of platform companies, profits are predicated in large part on exploiting workers, and people need to understand that,” said Maya Pinto, a senior researcher and policy analyst with the National Employment Law Project. “These companies either flout labor standards and hope they get away with it, or legally carve themselves out of those standards so they can exploit workers with impunity.”
According to some estimates, compliance with standard labor practices for full-time employees, such as paying for health-care benefits, could pose a 20 to 30 percent of cost increase for gig-economy companies, which currently are not accounted for in their business models. Requiring compliance would radically reshape and negatively impact gig-economy companies’ public valuations, and have been acknowledged by the companies as potential existential threats.
Avoiding Labor Compliance
In filings made to the Securities and Exchange Commission, many gig-economy firms concede that their business models rely on misclassifying their entire on-demand workforce as independent contractors.
In a lengthy disclosure, Lyft told regulators that classifying drivers as employees would open the company up to claims for discrimination and harassment, collective bargaining, and requirements that they meet wage and hour laws. The ride-share company wrote that such a classification could lead to an “injunction prohibiting continuance of existing business practices” and that the firm would need to revisit its “existing business model.”
Upwork, a digital platform for finding contract labor, which filed for an IPO late last year, told the SEC that an adverse worker classification determination could be costly to both the company and its clients, and could unleash lawsuits, unionization, and a requirement for the firm to pay benefits to its network of freelancers.
Grubhub, a gig-economy firm that provides food delivery services, told the SEC that classifying its drivers as employees would not only add legal liabilities and other costs, but would also make it “cost prohibitive” to deliver orders in many areas. Square, which owns food-delivery platform Caviar, has made similar disclosures.
These companies’ rush to file IPOs coincides with a flood of lawsuits from workers who say they have worked full-time jobs without the benefits afforded to full-time employees.
Just last year, the California Supreme Court handed down an unexpected ruling in a case involving the courier service Dynamex that limited the scope of companies’ abilities to classify workers as independent contractors. In the case, Dynamex had reclassified its entire workforce of drivers as independent contractors to avoid paying benefits as a cost-cutting measure.
The ruling opened the door to new legal challenges for companies such as Lyft, Uber, and Postmates, among other gig-economy giants. Lyft, in its filing to the SEC, also lists nearly a dozen punitive class-action lawsuits over worker misclassification, including four class-action cases working their way through California state courts.
“The legal positioning of these companies’ business practices are incredibly precarious,” said Veena Dubal, an associate law professor at University of California-Hastings. “In fact, I would characterize the treatment and classification of workers as independent contractors as illegal.”
Litigation Tactics
These gig-economy companies, however, are trying to get ahead of potential legal compliance with labor standards as they exist today. “The reason that — up until now — no court in the U.S. has made this determination is based largely on the legal maneuvering of these companies,” Dubal said.
Despite the setback in California, gig-economy firms won a major victory in the U.S. Supreme Court last year. In Epic Systems Corp. v. Lewis, the court decided that workers can waive their rights to class-action lawsuits when they sign arbitration agreements, contract stipulations that have become standard for gig-economy workers. Uber, for instance, swiftly cited the ruling in one of its major class-action lawsuits over misclassification of drivers last year. In October, a federal court decertified one of the class-actions brought against Uber, ruling that each of the 240,000 drivers in the suit must submit to arbitration for claims one at a time.
“They have hid behind arbitration agreements, used their significant capital to pay lobbyists, and settled cases where they are worried about getting an adverse judgment,” said Dubal.
In an apparent attempt to shed legal some liability ahead of its IPO, Uber this month paid $20 million to settle another major worker classification class-action case.
Despite their legal maneuvering, however, pressure is mounting. One arena where there has been a response to the precarious conditions faced by gig-economy workers is in state legislatures. Lawmakers in Oregon and Washington state have proposed legislation that codifies a test to determine worker classification that follows the same lines as California’s Dynamex decision. In December, New York City passed the first minimum-wage law for gig-economy drivers.
And there is renewed interest in worker classification among resurgent left-leaning national politicians. Democratic presidential contenders Sens. Kirsten Gillibrand, D-N.Y.; Kamala Harris, D-Calif.; Bernie Sanders, I-Vt.; and Elizabeth Warren, D-Mass., have sponsored legislation to narrow the terms under which workers can be classified as independent contractors.
Gig-economy companies, however, have worked hard to stay ahead of this legislative curve with an onslaught of aggressive lobbying. In a report released this week and authored by Pinto, the National Employment Law Project detailed how the gig industry financed a coast-to-coast lobbying campaign “to rewrite the rules of worker classification to carve themselves out of labor standards and to codify misclassification.” The National Employment Law Project estimated that Uber and Lyft lobbyists outnumbered lobbyists hired by Amazon, Microsoft, and Walmart combined.
In largely Republican-controlled states, gig companies have worked to get laws passed that completely carve their workforce out of consideration for employee classification. In states ruled by Democrats, they have opted for a carrot approach, offering legislation that shifts 2.5 percent of every business transaction into a general benefits fund for workers in exchange for the carve-out for drivers or delivery people to remain independent contractors.
“What is ultimately a better business decision? To try to change the law in a way that you think works for your platform, or to make sure your platform fits into the existing law?” Bradley Tusk, a political strategist guiding Uber and Handy, an online platform for contract labor, told CNNMoney.
While armies of gig-economy lobbyists have delayed action on worker classification, the future remains unclear.
Amid this uncertainty, early investors will have a chance to reap a massive windfall when these companies file their IPOs. On Friday, Lyft was finally listed as a public company, instantly enriching a small set of early investors. Once other gig firms are also listed on the stock markets, however, the public market will be left to deal with the legal uncertainty of worker classification. Public investors will have to address the aftermath of any decision on how to classify workers, while early private investors will have already reaped their rewards from the IPOs.
“To be moving forward without clarity on the issue of the status of drivers is incredibly irresponsible,” said Dubal, the law professor. The IPOs stand to enrich the early investors, such as venture capitalists, by transferring risk to retail investors. Pressure to produce profits could also translate into more wage cuts for workers.
“Many of us will be investing in the companies without even knowing it — through our pension or retirement plans,”Dubal added. “And we — very much like the workers — are going to be at significant risk.”
Recent financial and lobbyist filings suggest that the gig-economy giants are hoping to get ahead of a wave of enforcement actions, new legislation, regulatory requirements, and lawsuits that could force these companies to finally and formally classify full-time workers as employees.
Virtually every major gig-economy company — whether its focus is ride-sharing or grocery delivery — has fought to treat on-demand workers as independent contractors regardless of the amount of time they work. The independent contractor classification generally prevents on-demand workers from engaging in collective bargaining and unionization, and it allows the gig-economy industry to avoid paying health-care benefits and unemployment, complying with standard workplace rules guarding against harassment, or ensuring mandatory breaks.
Despite promises of high pay with flexible hours, ride-share workers have found that they often earn less than $10 an hour after vehicle expenses. Earlier this year, Lyft and Uber drivers faced new pay cuts, fueling unprecedented protests across California.
“For a lot of platform companies, profits are predicated in large part on exploiting workers, and people need to understand that,” said Maya Pinto, a senior researcher and policy analyst with the National Employment Law Project. “These companies either flout labor standards and hope they get away with it, or legally carve themselves out of those standards so they can exploit workers with impunity.”
According to some estimates, compliance with standard labor practices for full-time employees, such as paying for health-care benefits, could pose a 20 to 30 percent of cost increase for gig-economy companies, which currently are not accounted for in their business models. Requiring compliance would radically reshape and negatively impact gig-economy companies’ public valuations, and have been acknowledged by the companies as potential existential threats.
Avoiding Labor Compliance
In filings made to the Securities and Exchange Commission, many gig-economy firms concede that their business models rely on misclassifying their entire on-demand workforce as independent contractors.
In a lengthy disclosure, Lyft told regulators that classifying drivers as employees would open the company up to claims for discrimination and harassment, collective bargaining, and requirements that they meet wage and hour laws. The ride-share company wrote that such a classification could lead to an “injunction prohibiting continuance of existing business practices” and that the firm would need to revisit its “existing business model.”
Upwork, a digital platform for finding contract labor, which filed for an IPO late last year, told the SEC that an adverse worker classification determination could be costly to both the company and its clients, and could unleash lawsuits, unionization, and a requirement for the firm to pay benefits to its network of freelancers.
Grubhub, a gig-economy firm that provides food delivery services, told the SEC that classifying its drivers as employees would not only add legal liabilities and other costs, but would also make it “cost prohibitive” to deliver orders in many areas. Square, which owns food-delivery platform Caviar, has made similar disclosures.
These companies’ rush to file IPOs coincides with a flood of lawsuits from workers who say they have worked full-time jobs without the benefits afforded to full-time employees.
Just last year, the California Supreme Court handed down an unexpected ruling in a case involving the courier service Dynamex that limited the scope of companies’ abilities to classify workers as independent contractors. In the case, Dynamex had reclassified its entire workforce of drivers as independent contractors to avoid paying benefits as a cost-cutting measure.
The ruling opened the door to new legal challenges for companies such as Lyft, Uber, and Postmates, among other gig-economy giants. Lyft, in its filing to the SEC, also lists nearly a dozen punitive class-action lawsuits over worker misclassification, including four class-action cases working their way through California state courts.
“The legal positioning of these companies’ business practices are incredibly precarious,” said Veena Dubal, an associate law professor at University of California-Hastings. “In fact, I would characterize the treatment and classification of workers as independent contractors as illegal.”
Litigation Tactics
These gig-economy companies, however, are trying to get ahead of potential legal compliance with labor standards as they exist today. “The reason that — up until now — no court in the U.S. has made this determination is based largely on the legal maneuvering of these companies,” Dubal said.
Despite the setback in California, gig-economy firms won a major victory in the U.S. Supreme Court last year. In Epic Systems Corp. v. Lewis, the court decided that workers can waive their rights to class-action lawsuits when they sign arbitration agreements, contract stipulations that have become standard for gig-economy workers. Uber, for instance, swiftly cited the ruling in one of its major class-action lawsuits over misclassification of drivers last year. In October, a federal court decertified one of the class-actions brought against Uber, ruling that each of the 240,000 drivers in the suit must submit to arbitration for claims one at a time.
“They have hid behind arbitration agreements, used their significant capital to pay lobbyists, and settled cases where they are worried about getting an adverse judgment,” said Dubal.
In an apparent attempt to shed legal some liability ahead of its IPO, Uber this month paid $20 million to settle another major worker classification class-action case.
Despite their legal maneuvering, however, pressure is mounting. One arena where there has been a response to the precarious conditions faced by gig-economy workers is in state legislatures. Lawmakers in Oregon and Washington state have proposed legislation that codifies a test to determine worker classification that follows the same lines as California’s Dynamex decision. In December, New York City passed the first minimum-wage law for gig-economy drivers.
And there is renewed interest in worker classification among resurgent left-leaning national politicians. Democratic presidential contenders Sens. Kirsten Gillibrand, D-N.Y.; Kamala Harris, D-Calif.; Bernie Sanders, I-Vt.; and Elizabeth Warren, D-Mass., have sponsored legislation to narrow the terms under which workers can be classified as independent contractors.
Gig-economy companies, however, have worked hard to stay ahead of this legislative curve with an onslaught of aggressive lobbying. In a report released this week and authored by Pinto, the National Employment Law Project detailed how the gig industry financed a coast-to-coast lobbying campaign “to rewrite the rules of worker classification to carve themselves out of labor standards and to codify misclassification.” The National Employment Law Project estimated that Uber and Lyft lobbyists outnumbered lobbyists hired by Amazon, Microsoft, and Walmart combined.
In largely Republican-controlled states, gig companies have worked to get laws passed that completely carve their workforce out of consideration for employee classification. In states ruled by Democrats, they have opted for a carrot approach, offering legislation that shifts 2.5 percent of every business transaction into a general benefits fund for workers in exchange for the carve-out for drivers or delivery people to remain independent contractors.
“What is ultimately a better business decision? To try to change the law in a way that you think works for your platform, or to make sure your platform fits into the existing law?” Bradley Tusk, a political strategist guiding Uber and Handy, an online platform for contract labor, told CNNMoney.
While armies of gig-economy lobbyists have delayed action on worker classification, the future remains unclear.
Amid this uncertainty, early investors will have a chance to reap a massive windfall when these companies file their IPOs. On Friday, Lyft was finally listed as a public company, instantly enriching a small set of early investors. Once other gig firms are also listed on the stock markets, however, the public market will be left to deal with the legal uncertainty of worker classification. Public investors will have to address the aftermath of any decision on how to classify workers, while early private investors will have already reaped their rewards from the IPOs.
“To be moving forward without clarity on the issue of the status of drivers is incredibly irresponsible,” said Dubal, the law professor. The IPOs stand to enrich the early investors, such as venture capitalists, by transferring risk to retail investors. Pressure to produce profits could also translate into more wage cuts for workers.
“Many of us will be investing in the companies without even knowing it — through our pension or retirement plans,”Dubal added. “And we — very much like the workers — are going to be at significant risk.”
capitalism at its finest!!!
Sears smacked down for ending retired employees’ insurance after handing executives $25 million in bonuses
Jake Johnson, Common Dreams - raw story
31 MAR 2019 AT 09:12 ET
The retail giant Sears came under fire Saturday following reports that the company is ending life insurance benefits for an undisclosed number of its 90,000 retirees—just months after handing executives over $25 million in bonuses.
“It’s the last benefit that retirees had,” Ron Olbrysh, chair of the National Association of Retired Sears Employees (NARSE), told CBS News.
As CBS reported:
The unwelcome news came in a letter notifying eligible retirees that their life insurance benefit had been canceled March 15… It offered retirees the option to convert into a whole life policy all or a portion of the prior amount of their group coverage that Sears was paying for (not to exceed $10,000).
Olbrysh relayed hearing from one 91-year-old retiree—a Sears employee for 37 years—who said he had to pay more than $3,000 a year to maintain his current coverage. The NARSE chair said that premium “would not be competitive in the marketplace.”
The notices were sent to “people in their 80s that had had [life insurance coverage for] a long time,” said John Freeman, who retired from the retailer in 2002 and leads the retirees’ association chapter in upstate New York. Sears had already shaved employee benefits during its decades of financial turmoil, including major cuts to life insurance coverage in the late 1990s. But it still covered life insurance polices worth at least $5,000 for eligible retirees, with most policies ranging from $8,000 to $10,000.
Sears filed for bankruptcy last October, but earlier this year a bankruptcy court approved billionaire Sears chairman Edward Lampert’s bid to buy the company through his hedge fund.
Progressives responded with outrage to reports of Sears’ move, which fits a pattern of corporate giants rewarding top executives while average employees face benefit cuts and lay-offs.
The progressive advocacy group CREDO Mobile called Sears’ life insurance cuts “awful” in a tweet on Saturday.
“This is not ok,” said Winnie Wong, senior political adviser for Sen. Bernie Sanders’ (I-Vt.) 2020 presidential campaign.
“It’s the last benefit that retirees had,” Ron Olbrysh, chair of the National Association of Retired Sears Employees (NARSE), told CBS News.
As CBS reported:
The unwelcome news came in a letter notifying eligible retirees that their life insurance benefit had been canceled March 15… It offered retirees the option to convert into a whole life policy all or a portion of the prior amount of their group coverage that Sears was paying for (not to exceed $10,000).
Olbrysh relayed hearing from one 91-year-old retiree—a Sears employee for 37 years—who said he had to pay more than $3,000 a year to maintain his current coverage. The NARSE chair said that premium “would not be competitive in the marketplace.”
The notices were sent to “people in their 80s that had had [life insurance coverage for] a long time,” said John Freeman, who retired from the retailer in 2002 and leads the retirees’ association chapter in upstate New York. Sears had already shaved employee benefits during its decades of financial turmoil, including major cuts to life insurance coverage in the late 1990s. But it still covered life insurance polices worth at least $5,000 for eligible retirees, with most policies ranging from $8,000 to $10,000.
Sears filed for bankruptcy last October, but earlier this year a bankruptcy court approved billionaire Sears chairman Edward Lampert’s bid to buy the company through his hedge fund.
Progressives responded with outrage to reports of Sears’ move, which fits a pattern of corporate giants rewarding top executives while average employees face benefit cuts and lay-offs.
The progressive advocacy group CREDO Mobile called Sears’ life insurance cuts “awful” in a tweet on Saturday.
“This is not ok,” said Winnie Wong, senior political adviser for Sen. Bernie Sanders’ (I-Vt.) 2020 presidential campaign.
Regulation via Litigation
March 28th, 2019
by Phil Mattera - dirt diggers digest
For all the talk of populism, the Trump Administration is preoccupied with easing federal oversight of big business. It’s done this through attempts to undo regulations and by weakening enforcement of the rules that remain. Sure, there are areas in which it is politically expedient to pretend to be tough on corporate misconduct. That’s what we see with drug prices or the current Boeing scandal, but for the most part companies are getting what they want.
It’s a different story in the courts. In recent days there has been a slew of major settlements and verdicts in which large corporations will be paying out substantial sums to resolve various allegations of wrongdoing.
Purdue Pharma and the Sackler Family agreed to pay $270 million to the state of Oklahoma to resolve a lawsuit relating to the company’s role in the opioid crisis that has taken the lives of more than 200,000 people in the United States. Many more such lawsuits involving other states are expected to follow.
Johnson & Johnson and Bayer agreed to pay $775 million to settle about 25,000 lawsuits involving the blood thinner Xarelto, which they jointly sell. The suits allege that the companies failed to warn patients that the drug could trigger potentially fatal massive bleeding.
A federal jury in California ordered Monsanto to pay $80 million to a man who alleged that he developed cancer as a result of using the company’s controversial weedkiller Roundup. The jury found that Monsanto was liable because it failed to include a warning label about the cancer risk. Monsanto’s parent, the German chemical company Bayer, said it will appeal the verdict. Also under appeal is another Roundup verdict from last year in which the plaintiff was awarded $289 million (lowered by the judge to $80 million).
Many more lawsuits are in the works, in some cases threatening the survival of companies. Pacific Gas & Electric had to file for bankruptcy protection in the face of tens of billions of dollars in potential liability in connection with California wildfires believed to have been caused by its aging transmission lines. A ruling by the Connecticut Supreme Court allowing wrongful marketing claims cases against gun makers may lead to billions in settlements by the industry.
Such litigation is nothing new, but the cases are taking on increasing importance in the fight against corporate misconduct at a time when federal regulation is faltering. The danger is that lawmakers and the courts themselves may curtail the ability to bring these lawsuits.
There is not much they can do when the suits are brought by state attorneys general, but class actions may be more vulnerable.
This is already happening in the area of employment law. In 2011 the U.S. Supreme Court dismissed a nationwide gender discrimination suit against Walmart and made it more difficult to get such classes of plaintiffs certified. Last year, in the Epic Systems case, the high court made it easier for employers to use arbitration agreements to block lawsuits over issues such as wage theft.
If litigation goes the way of regulation and there are no effective controls on corporate behavior, we will be in big trouble.
It’s a different story in the courts. In recent days there has been a slew of major settlements and verdicts in which large corporations will be paying out substantial sums to resolve various allegations of wrongdoing.
Purdue Pharma and the Sackler Family agreed to pay $270 million to the state of Oklahoma to resolve a lawsuit relating to the company’s role in the opioid crisis that has taken the lives of more than 200,000 people in the United States. Many more such lawsuits involving other states are expected to follow.
Johnson & Johnson and Bayer agreed to pay $775 million to settle about 25,000 lawsuits involving the blood thinner Xarelto, which they jointly sell. The suits allege that the companies failed to warn patients that the drug could trigger potentially fatal massive bleeding.
A federal jury in California ordered Monsanto to pay $80 million to a man who alleged that he developed cancer as a result of using the company’s controversial weedkiller Roundup. The jury found that Monsanto was liable because it failed to include a warning label about the cancer risk. Monsanto’s parent, the German chemical company Bayer, said it will appeal the verdict. Also under appeal is another Roundup verdict from last year in which the plaintiff was awarded $289 million (lowered by the judge to $80 million).
Many more lawsuits are in the works, in some cases threatening the survival of companies. Pacific Gas & Electric had to file for bankruptcy protection in the face of tens of billions of dollars in potential liability in connection with California wildfires believed to have been caused by its aging transmission lines. A ruling by the Connecticut Supreme Court allowing wrongful marketing claims cases against gun makers may lead to billions in settlements by the industry.
Such litigation is nothing new, but the cases are taking on increasing importance in the fight against corporate misconduct at a time when federal regulation is faltering. The danger is that lawmakers and the courts themselves may curtail the ability to bring these lawsuits.
There is not much they can do when the suits are brought by state attorneys general, but class actions may be more vulnerable.
This is already happening in the area of employment law. In 2011 the U.S. Supreme Court dismissed a nationwide gender discrimination suit against Walmart and made it more difficult to get such classes of plaintiffs certified. Last year, in the Epic Systems case, the high court made it easier for employers to use arbitration agreements to block lawsuits over issues such as wage theft.
If litigation goes the way of regulation and there are no effective controls on corporate behavior, we will be in big trouble.
the 99% are screwed, again!!!
Taxpayers may have paid $10 million to help wealthy families bribe their way into elite schools
LESLIE ALBRECHT PERSONAL FINANCE REPORTER - marketwatch
Published: Mar 14, 2019 10:13 a.m. ET
One of the more stunning aspects of the college admissions scandal unearthed this week is that the alleged bribes to secure spots at elite schools for children of wealth were tax deductible. That means American taxpayers may have helped foot the bill for the alleged scam.
“That’s why we should care about this, other than the schadenfreude of rich people getting their due,” said Sam Brunson, a tax-law professor at Loyola University Chicago.
In a worst-case scenario, if all $25 million that the accused parents allegedly paid out was funneled through a public charity and claimed as tax deductions, as prosecutors outlined in a criminal complaint, then taxpayers chipped in as much as $10 million, said Phil Hackney, a tax-law professor at the University of Pittsburgh.
“Assuming these are all high-income individuals, they’re all paying at the highest tax rate, which presumably was about 40%, roughly,” Hackney told MarketWatch. “Assuming they were able to deduct the entirety of it, that would be 40% of the $25 million. That’s somewhere in the neighborhood of $7 [million] to $10 million, approximately, that taxpayers are footing the bill for, and that’s troubling.”
Hackney’s figures did not take into account any state-income-tax savings.
Alleged bribes were funneled through a charity
Federal prosecutors say that the parents who were arrested funneled the money to pay off coaches, exam proctors and test takers who stood in for their children through a public charity approved by the Internal Revenue Service as tax-exempt.
The wealthy parents include actresses Felicity Huffman and Lori Loughlin and financial titans Bill McGlashan of TPG Growth, a private-equity and venture-capital firm, and former Pimco PTTRX, +0.00% CEO Doug Hodge. They allegedly paid college counselor William “Rick” Singer to secure their children spots at elite schools. They made the payments in the form of donations to the Key Worldwide Foundation, a nonprofit that Singer started in 2014 in Newport Beach, Calif., according to a criminal complaint.
In phone calls recorded by investigators, parents charged in the scheme could be heard asking for receipts and other paperwork to ensure that they would be able to list the “donations” made to Key Worldwide Foundation as tax deductions, according to the criminal complaint.
“We’ll send it so that you get your [tax] write-off,” one cooperating witness said on tape. “Oh, even better!” responded the parent, who had made a $50,000 “donation” to the foundation as payment for having Singer arrange for someone else to take the ACT college entrance exam on her son’s behalf, prosecutors say.
If the IRS decides to disallow those allegedly fraudulent deductions, parents would have to pay that money back to the government, along with penalties, Hackney said.
The IRS is investigating the case, said IRS special agent Amy Hosney, a spokeswoman for the Boston field office for IRS criminal investigation. “We’re looking closely at the purported charitable donations that were made to [Key Worldwide Foundation] and the letters that were issued to the donors stating no goods or services were received for the donations,” Hosney said. “That really is the crux of it.”
Singer’s attorney has said he is cooperating with investigators and is “remorseful,” the Associated Press reported.
Hidden in plain sight
The charity behind the alleged scam operated in public view. The Key Worldwide Foundation is registered with California’s secretary of state (though the registration status is currently delinquent), it filed Form 990s (the paperwork that nonprofits are required to submit to the IRS) and it has a website with a noble-sounding mission statement about helping students “surrounded by the gang violence of the inner city.”
It’s even listed on the charity-review website Charity Navigator. Charity Navigator didn’t give the nonprofit a rating, but that’s not because of any suspicious activity, said Charity Navigator spokeswoman Ashley Post. “We want to be clear that a charity not being rated is not a positive or negative judgment on their activities,” Post said, adding that Charity Navigator has tips for donors on how to evaluate charities that are not currently rated.
Red flags in the charity’s paperworkCharity Navigator only rates nonprofits after they’ve filed seven years’ worth of paperwork with the IRS, and the Key Worldwide Foundation had only submitted tax documents for four years, Post said.
Had Charity Navigator’s reviewers examined Key Worldwide Foundation, a few red flags would have stood out immediately, she said. For one, the charity listed $3.7 million in revenue in 2016 (the last year it filed a Form 990) but said it spent nothing on fundraising costs. That’s unusual, Post said. The foundation also claimed to make grants to other nonprofits, but, despite the nearly $4 million in took in 2016, it made only one $10,000 grant to another group. That would be “concerning” to Charity Navigator, Post said.
Post cautioned against interpreting the Key Worldwide Foundation’s circumstances as a sign that nonprofits in general are prone to fraud. “This is a really tough situation, and it’s one that people will be quick to spin into a cautionary tale, but largely charities exist to do great work,” she said.
‘They saw philanthropy as a weak space’
The wealthy parents charged in the scheme seemed to assume they wouldn’t get caught as long as their payments were disguised as contributions to a charity, and that worries Hackney, the Pitt professor. It seems to indicate a perception that charities aren’t closely scrutinized, and that the wealthy can use them to do their bidding, he said.
“It tells us there’s a problematic culture developing at high-income levels in charitable giving,” Hackney said. “Something’s out of whack with our system of inequality and our philanthropic systems. Even though it wasn’t an actual charity, they saw philanthropy as a weak space, a place they could arbitrage and take advantage of.”
That’s partly based in reality, said Hackney, who worked in the office of the chief counsel of the IRS before joining the university faculty. The IRS is underfunded and short-staffed. The audit rate is, in general, “really low” and even lower for charities, observed Hackney.
And philanthropy is indeed increasingly the domain of the very wealthy. Charitable giving reached an all-time high in 2017, but that was largely due to big donations from America’s richest families. In 2018, donations of $1,000 or more increased by 2.6%, while donations in the $250 to $999 range dropped by 4%, and donations of under $250 dropped by 4.4%, according to a recent report from the Association of Fundraising Professionals.
“Giving is increasing because of larger gifts from richer donors,” said Elizabeth Boris of the Association of Fundraising Professionals. “Smaller and mid-level donors are slowly but surely disappearing — across the board, among all organizations.”
“That’s why we should care about this, other than the schadenfreude of rich people getting their due,” said Sam Brunson, a tax-law professor at Loyola University Chicago.
In a worst-case scenario, if all $25 million that the accused parents allegedly paid out was funneled through a public charity and claimed as tax deductions, as prosecutors outlined in a criminal complaint, then taxpayers chipped in as much as $10 million, said Phil Hackney, a tax-law professor at the University of Pittsburgh.
“Assuming these are all high-income individuals, they’re all paying at the highest tax rate, which presumably was about 40%, roughly,” Hackney told MarketWatch. “Assuming they were able to deduct the entirety of it, that would be 40% of the $25 million. That’s somewhere in the neighborhood of $7 [million] to $10 million, approximately, that taxpayers are footing the bill for, and that’s troubling.”
Hackney’s figures did not take into account any state-income-tax savings.
Alleged bribes were funneled through a charity
Federal prosecutors say that the parents who were arrested funneled the money to pay off coaches, exam proctors and test takers who stood in for their children through a public charity approved by the Internal Revenue Service as tax-exempt.
The wealthy parents include actresses Felicity Huffman and Lori Loughlin and financial titans Bill McGlashan of TPG Growth, a private-equity and venture-capital firm, and former Pimco PTTRX, +0.00% CEO Doug Hodge. They allegedly paid college counselor William “Rick” Singer to secure their children spots at elite schools. They made the payments in the form of donations to the Key Worldwide Foundation, a nonprofit that Singer started in 2014 in Newport Beach, Calif., according to a criminal complaint.
In phone calls recorded by investigators, parents charged in the scheme could be heard asking for receipts and other paperwork to ensure that they would be able to list the “donations” made to Key Worldwide Foundation as tax deductions, according to the criminal complaint.
“We’ll send it so that you get your [tax] write-off,” one cooperating witness said on tape. “Oh, even better!” responded the parent, who had made a $50,000 “donation” to the foundation as payment for having Singer arrange for someone else to take the ACT college entrance exam on her son’s behalf, prosecutors say.
If the IRS decides to disallow those allegedly fraudulent deductions, parents would have to pay that money back to the government, along with penalties, Hackney said.
The IRS is investigating the case, said IRS special agent Amy Hosney, a spokeswoman for the Boston field office for IRS criminal investigation. “We’re looking closely at the purported charitable donations that were made to [Key Worldwide Foundation] and the letters that were issued to the donors stating no goods or services were received for the donations,” Hosney said. “That really is the crux of it.”
Singer’s attorney has said he is cooperating with investigators and is “remorseful,” the Associated Press reported.
Hidden in plain sight
The charity behind the alleged scam operated in public view. The Key Worldwide Foundation is registered with California’s secretary of state (though the registration status is currently delinquent), it filed Form 990s (the paperwork that nonprofits are required to submit to the IRS) and it has a website with a noble-sounding mission statement about helping students “surrounded by the gang violence of the inner city.”
It’s even listed on the charity-review website Charity Navigator. Charity Navigator didn’t give the nonprofit a rating, but that’s not because of any suspicious activity, said Charity Navigator spokeswoman Ashley Post. “We want to be clear that a charity not being rated is not a positive or negative judgment on their activities,” Post said, adding that Charity Navigator has tips for donors on how to evaluate charities that are not currently rated.
Red flags in the charity’s paperworkCharity Navigator only rates nonprofits after they’ve filed seven years’ worth of paperwork with the IRS, and the Key Worldwide Foundation had only submitted tax documents for four years, Post said.
Had Charity Navigator’s reviewers examined Key Worldwide Foundation, a few red flags would have stood out immediately, she said. For one, the charity listed $3.7 million in revenue in 2016 (the last year it filed a Form 990) but said it spent nothing on fundraising costs. That’s unusual, Post said. The foundation also claimed to make grants to other nonprofits, but, despite the nearly $4 million in took in 2016, it made only one $10,000 grant to another group. That would be “concerning” to Charity Navigator, Post said.
Post cautioned against interpreting the Key Worldwide Foundation’s circumstances as a sign that nonprofits in general are prone to fraud. “This is a really tough situation, and it’s one that people will be quick to spin into a cautionary tale, but largely charities exist to do great work,” she said.
‘They saw philanthropy as a weak space’
The wealthy parents charged in the scheme seemed to assume they wouldn’t get caught as long as their payments were disguised as contributions to a charity, and that worries Hackney, the Pitt professor. It seems to indicate a perception that charities aren’t closely scrutinized, and that the wealthy can use them to do their bidding, he said.
“It tells us there’s a problematic culture developing at high-income levels in charitable giving,” Hackney said. “Something’s out of whack with our system of inequality and our philanthropic systems. Even though it wasn’t an actual charity, they saw philanthropy as a weak space, a place they could arbitrage and take advantage of.”
That’s partly based in reality, said Hackney, who worked in the office of the chief counsel of the IRS before joining the university faculty. The IRS is underfunded and short-staffed. The audit rate is, in general, “really low” and even lower for charities, observed Hackney.
And philanthropy is indeed increasingly the domain of the very wealthy. Charitable giving reached an all-time high in 2017, but that was largely due to big donations from America’s richest families. In 2018, donations of $1,000 or more increased by 2.6%, while donations in the $250 to $999 range dropped by 4%, and donations of under $250 dropped by 4.4%, according to a recent report from the Association of Fundraising Professionals.
“Giving is increasing because of larger gifts from richer donors,” said Elizabeth Boris of the Association of Fundraising Professionals. “Smaller and mid-level donors are slowly but surely disappearing — across the board, among all organizations.”
Judge says Trump administration improperly blocked sex, race pay data rule
Reuters - raw story
05 MAR 2019 AT 12:11 ET
A U.S. judge has revived an Obama-era rule that requires larger companies to report workers’ pay data broken down by gender and race, which business groups have said would be burdensome and would not address pay discrimination as intended.
U.S. District Judge Tanya Chutkan in Washington D.C. late on Monday said the White House Office of Management & Budget (OMB) failed to explain what was wrong with the rule when it blocked it from taking effect in 2017, and ordered the agency to put the requirements back in place.
The National Women’s Law Center (NWLC), which sued in 2017 to revive the rule, said Chutkan’s decision affects more than 60,000 companies that collectively employ 63 million workers.
The White House and the U.S. Department of Justice did not respond to requests for comment. The government can appeal the decision.
For decades, the U.S. Equal Employment Opportunity Commission has required companies with 100 or more employees to annually report job titles of their workers broken down by sex and race. The agency expanded the requirement in 2016 to include pay data, saying the information was necessary to identify and combat wage gaps caused by discrimination.
OMB, which reviews agency rules before they take effect, approved the rule at the time but blocked it a year later after Donald Trump became president.
The U.S. Chamber of Commerce, the nation’s largest business lobby, and other trade groups have said the rule would be costly to businesses, and that pay data without more context is meaningless.
Posting the information publicly would invite lawsuits and comparisons of employees in different jobs and with varying qualifications, they said.
Federal law allows OMB to block a regulation it has previously approved “for good cause.” In its lawsuit, the NWLC said the Trump administration failed to show any cause for blocking the pay data rule after the EEOC spent six years putting it together.
The EEOC in adopting the rule said it would take employers a few additional hours each year to gather the data, at a total cost of about $50 million. The Chamber of Commerce in 2017 said the cost would be closer to $400 million, and OMB agreed that the Obama administration’s estimates had been too low.
Chutkan on Monday said OMB did not take the proper steps under federal law to block the reporting rule, and that its decision was “arbitrary and capricious.”
The case is National Women’s Law Center v. Office of Management and Budget, U.S. District Court for the District of Columbia, No. 1:17-cv-2458.
U.S. District Judge Tanya Chutkan in Washington D.C. late on Monday said the White House Office of Management & Budget (OMB) failed to explain what was wrong with the rule when it blocked it from taking effect in 2017, and ordered the agency to put the requirements back in place.
The National Women’s Law Center (NWLC), which sued in 2017 to revive the rule, said Chutkan’s decision affects more than 60,000 companies that collectively employ 63 million workers.
The White House and the U.S. Department of Justice did not respond to requests for comment. The government can appeal the decision.
For decades, the U.S. Equal Employment Opportunity Commission has required companies with 100 or more employees to annually report job titles of their workers broken down by sex and race. The agency expanded the requirement in 2016 to include pay data, saying the information was necessary to identify and combat wage gaps caused by discrimination.
OMB, which reviews agency rules before they take effect, approved the rule at the time but blocked it a year later after Donald Trump became president.
The U.S. Chamber of Commerce, the nation’s largest business lobby, and other trade groups have said the rule would be costly to businesses, and that pay data without more context is meaningless.
Posting the information publicly would invite lawsuits and comparisons of employees in different jobs and with varying qualifications, they said.
Federal law allows OMB to block a regulation it has previously approved “for good cause.” In its lawsuit, the NWLC said the Trump administration failed to show any cause for blocking the pay data rule after the EEOC spent six years putting it together.
The EEOC in adopting the rule said it would take employers a few additional hours each year to gather the data, at a total cost of about $50 million. The Chamber of Commerce in 2017 said the cost would be closer to $400 million, and OMB agreed that the Obama administration’s estimates had been too low.
Chutkan on Monday said OMB did not take the proper steps under federal law to block the reporting rule, and that its decision was “arbitrary and capricious.”
The case is National Women’s Law Center v. Office of Management and Budget, U.S. District Court for the District of Columbia, No. 1:17-cv-2458.
incompetence rewarded!!!
ELECTRONIC ARTS AND ACTIVISION BLIZZARD CEOS AMONG MOST OVERPAID NEW REPORT REVEALS
BY ANDREW WHALEN - newsweek
ON 2/22/19 AT 6:06 PM
Amid massive layoffs, the CEOs of Electronic Arts and Activision Blizzard have been named among the 100 most overpaid CEOs by a non-profit shareholder advocacy group.
On Thursday, As You Sow released their annual “The 100 Most Overpaid CEOs” list for 2019. Included on the list are both Electronic Arts CEO Andrew Wilson, ranked at 98, and Activision Blizzard CEO Bobby Kotick, at 45. Kotick receives compensation of $28.7 million a year, while Wilson is paid $35.7 million a year. Remarkably, the report cites among its “Key Findings” that companies with overpaid CEOs “markedly underperformed” the S&P 500, though neither video game developer was cited specifically for underperformance.
Last week, Activision Blizzard laid off an estimated 800 employees after a year of record earnings. In the same press release describing the company’s realignment, a cash dividend was also announced, increasing payouts to shareholders by approximately 9 percent, according to video games business site Gamasutra.
The report additionally highlights the ratio between CEO compensation—as reported at annual shareholder meetings—and the pay of the median employee in the company. EA’s Wilson makes 371 times the median Electronic Arts employee, while Kotick makes 306 times the median Activision Blizzard employee.
Electronic Arts is the publisher of video games Anthem, The Sims and the Battlefield series. Activision Blizzard video games include the Call of Duty series, World of Warcraft and Diablo III.
The As You Sow report documents how CEO pay has soared across industries in the past decade, with the average CEO salary growing by more than $2 million from 2013 to 2017, according to Institutional Shareholder Services, while the Economic Policy Institute has found a 17.6 percent increase in average CEO salary, among the 350 largest corporations in the United States, since 2016.
While multifactorial and part of a long-term trend of the highest-income brackets capturing the vast majority of the U.S. economy’s growth, the Tax Cuts and Jobs Act signed into law by President Donald Trump at the end of 2017 has accelerated executive pay disparities by eliminating loopholes and lowering corporate tax rates, savings which have overwhelmingly flowed into executive and shareholder compensation, rather than job creation.
Also appearing on the list are the CEOs of The Walt Disney Company, Mattel, Halliburton, Comcast, Netflix, AT&T, BlackRock, Ralph Lauren, Johson & Johnson, PepsiCo, Raytheon, The Goldman Sachs Group, Walmart, Pfizer, Exxon Mobil, JPMorgan Chase and, topping the list, Fleetcor Technologies CEO Ronald F. Clarke, who makes more than $52.6 million a year for a ratio of 1517 to one compared to his workers.
On Thursday, As You Sow released their annual “The 100 Most Overpaid CEOs” list for 2019. Included on the list are both Electronic Arts CEO Andrew Wilson, ranked at 98, and Activision Blizzard CEO Bobby Kotick, at 45. Kotick receives compensation of $28.7 million a year, while Wilson is paid $35.7 million a year. Remarkably, the report cites among its “Key Findings” that companies with overpaid CEOs “markedly underperformed” the S&P 500, though neither video game developer was cited specifically for underperformance.
Last week, Activision Blizzard laid off an estimated 800 employees after a year of record earnings. In the same press release describing the company’s realignment, a cash dividend was also announced, increasing payouts to shareholders by approximately 9 percent, according to video games business site Gamasutra.
The report additionally highlights the ratio between CEO compensation—as reported at annual shareholder meetings—and the pay of the median employee in the company. EA’s Wilson makes 371 times the median Electronic Arts employee, while Kotick makes 306 times the median Activision Blizzard employee.
Electronic Arts is the publisher of video games Anthem, The Sims and the Battlefield series. Activision Blizzard video games include the Call of Duty series, World of Warcraft and Diablo III.
The As You Sow report documents how CEO pay has soared across industries in the past decade, with the average CEO salary growing by more than $2 million from 2013 to 2017, according to Institutional Shareholder Services, while the Economic Policy Institute has found a 17.6 percent increase in average CEO salary, among the 350 largest corporations in the United States, since 2016.
While multifactorial and part of a long-term trend of the highest-income brackets capturing the vast majority of the U.S. economy’s growth, the Tax Cuts and Jobs Act signed into law by President Donald Trump at the end of 2017 has accelerated executive pay disparities by eliminating loopholes and lowering corporate tax rates, savings which have overwhelmingly flowed into executive and shareholder compensation, rather than job creation.
Also appearing on the list are the CEOs of The Walt Disney Company, Mattel, Halliburton, Comcast, Netflix, AT&T, BlackRock, Ralph Lauren, Johson & Johnson, PepsiCo, Raytheon, The Goldman Sachs Group, Walmart, Pfizer, Exxon Mobil, JPMorgan Chase and, topping the list, Fleetcor Technologies CEO Ronald F. Clarke, who makes more than $52.6 million a year for a ratio of 1517 to one compared to his workers.
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.
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.
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.
'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.
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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.”[...]