plutocracy

In a Plutocracy, Only Moguls Have Megaphones

Sam Pizzigati — Sun, 05 Aug 2012 19:37:45 -0400

In today's anything-goes political fundraising world, the nation’s super rich and their favored politicos are no longer even going through the motions of maintaining 'separate and independent' campaigns.

The U.S. Supreme Court's most notorious decisions have almost always rested on preposterous claims. The 1896 ruling that okayed segregation, for instance, held that imposed racial separation violated no constitutional rights since government had the capacity to keep public services and facilities “separate but equal.”

But government officials during segregation made no effort to offer anything even remotely close to equal services — and no one ever expected they would.

The 2010 Supreme Court ruling in Citizens United — the decision that has opened the door to letting rich people essentially spend whatever they want, whenever they want, on political campaigns — rests on another preposterous claim.

All those millions the rich are injecting into politics won’t distort our democracy, the high court assures us, because we can keep these millions separate and independent from the campaigns that the candidates the rich favor are running.

No one in politics, of course, believes for a minute that anyone can actually keep the super rich and their “independent expenditures” totally separate from any particular candidate’s campaign. But everyone involved in the political games rich people play has been playing along with this convenient fiction. Until last week.

The game-changer came at the luxurious five-star St. Regis Hotel in Colorado's Aspen, the favorite mountain getaway of America’s awesomely affluent.

The occasion: a retreat hosted by the Republican Governors Association that brought together, Politico reports, “some of the biggest names in GOP politics,” including top advisers to the Romney campaign, and key “representatives of deep-pocketed political spenders” like the billionaire Koch brothers.

Also on hand: some 200 big donors themselves and the political strategists — like Karl Rove — who run the “independent” campaign groups that are masterminding how best to spend their money.

How can the rich and their hired guns spend a week rubbing shoulders with the top aides of the candidates they support and still claim they’re all operating independently? They can’t. Yet no one in federal campaign law officialdom seems to care. We have come to live in a political system where anything goes.

Big money, as Mother Jones analyst Andy Kroll notes, is now “flooding the political system like never before.”

But most Americans haven’t yet noticed. Only 25 percent of Americans say they’ve heard a lot about campaign spending so far this year, the Pew Research Center reported last week, and 39 percent say they’ve heard “nothing at all.”

Two just-released public interest group reports are making a noble effort to pierce this current campaign funding fog.

A new analysis from the Center for Responsive Politics is now estimating that total spending on the 2012 presidential and congressional elections — by presidential candidates, Senate and House candidates, political parties, and “independent” groups — will likely hit $5.8 billion, an all-time record.

A hefty share of that near $6 billion, concludes a new study from Demos and the U.S. PIRG Education Fund, is coming from America’s ultra wealthy and the “small number of organizations that aggregate” their power and voices.

One example: Of the $318 million so far raised this election cycle by super PACs — the political panels that can raise “unlimited sums from virtually any source” — over 60 percent has come from just 100 donors. These 100 averaged, calculates the Center for Responsive Politics, just under $2 million each in contributions.

The public interest groups following this election’s money chase all readily acknowledge that their numbers undercount the real cash the rich are heaving into the political fray. Outside “independent” spending has become “a wild card that makes predictions tricky,” notes the Center for Responsive Politics.

Nonprofits set up to harvest political campaign dollars from the super rich, watchdog groups explain, don’t have to report their donors, and they don’t even have to report how much they’re spending on any of their “issue ads” that run over 60 days before November's Election Day.

The top execs who run America’s biggest for-profit enterprises, meanwhile, are doing their best to keep shareholders — and consumers — in the dark about how much they've been funneling into campaigns since Citizens United gave corporations a green light to bankroll candidates.

Just a tiny fraction of this subterfuge has so far come to light. Only an inadvertent disclosure by Aetna, to give one example, has revealed that the insurance giant has plugged an over $7 million political outlay to conservative political nonprofits that don’t have to report out their donors.

These political nonprofits are in essence operating as “megaphones for moguls and millionaires,” add Demos and U.S. PIRG in their report released last week.

“The more money they pump in,” the report explains, “the louder they’re able to amplify their voices — until a relatively few wealthy individuals and interests are dominating our public square, drowning out the rest of us.”

The new Demos and PIRG study includes a list of reforms that could reduce the megaphone volume. One of these, a constitutional amendment to overturn Citizens United, picked up some support last week on Capitol Hill when a group of House Democrats introduced a “Restoring Confidence in Our Democracy Act.”

On the Senate side, an attempt to force wider campaign finance disclosure failed last month. Now senator Sheldon Whitehouse, a Rhode Island Democrat, is calling on Americans to put corporations that play in the “dark money” universe under the same sort of pressure that the anti-apartheid movement of the 1980s put on corporations that did business with South Africa’s apartheid regime.

A mass movement helped crush apartheid. We need a mass movement, stresses the new Demos and PIRG report, to blunt our latest plutocratic power grab.

“We cannot maintain a democracy of equal citizens in the face of significant economic inequality,” sums up the study, “if we allow those who are successful (or lucky) in the economic sphere to translate wealth directly into political power.”

Sam Pizzigati edits Too Much, the online weekly on excess and inequality published by the Institute for Policy Studies. Read the current issue or sign up here to receive Too Much in your email inbox.

Is there Macroeconomics?

Joseph M. Firestone — Sun, 25 Mar 2012 14:41:25 -0400

The claim of Austrian school economists that "there is no macroeconomics" because the political-economic system at the macro level is explainable in terms of the aggregated attributes and activities of political-economic agents at the micro-level of that system is false, silly, and ignores the findings of many other sciences! That's because macro-level behavior includes structural and holistic properties of these systems that are not explainable by individual level phenomena or aggregations of them.

The whole thrust of contemporary complexity and complex adaptive systems theory along with findings dominant in philosophy, in chemistry, in biology, in social sciences other than economics, and even in some parts of physics no longer supports the reductionism some Austrians defend when they say “there is no Macro”, and imply that only the individual level of economic interaction is real. So, I think they need to get over methodological individualism and move on. Maybe reading Harold Morowitz's The Emergence Of Everything, will help them do that. Or maybe Popper and Eccles The Self and Its Brain, can help them. Or perhaps John Holland's Emergence, can break the thrall that holds them. Or Alicia Juarrero's Dynamics in Action, might be the key to freeing them from the mental chains that bind their thinking. There are any number of books that can do this for them. But I'm afraid reading Mises, Rothbard, and most of Hayek will not help much.

However, later in life, Hayek came to believe in emergence, as did his friend Karl Popper, who earlier had strongly supported the philosophical position of methodological individualism. However, there's a fundamental contradiction between methodological individualism, the basis for the claim that “there is no macro”, and the notion of emergence.

Political systems with their institutions, including sometimes, formal government emerge from social interaction among human beings. Formal Governments may seem to be different because sometimes those who run them may seek to impose institutional arrangements that are inconsistent with the evolved emergent patterns of society. However, this is a separate issue from the issue of whether the macro-level political economy imposes real constraints and causal influences on individuals interacting with the higher level macro system. As soon as one recognizes that this kind of influence is a fact, the possibility of an economics dealing with the macro level, independent of its micro-level theory, becomes very real.

Once we recognize this possibility, we have to start asking questions about macro statics and macro dynamics, the tendencies of the macro system over time, and how these tendencies may be changed for good or ill by human action. We have to recognize that, contrary to the “Austrian” position, there is macroeconomics of both conservative and progressive varieties!

The conservative position is that human intervention at the macro level should be minimized because our knowledge cannot be as good as market signals in telling us how to act upon that system. That is, our knowledge can't be as good as the market's. That is the position articulated and defended by Hayek.

But the progressive position is that we can affect the macro system in a beneficial way, if we implement policies that support tendencies toward free self-organization by individuals in shaping the future. In addition, modern social dynamics has shown time again that markets are unstable because participants in them often have an interest in subverting them and undermining the level playing fields required for the market system. Markets are Promethean Complex Adaptive Systems (PCASs), in the sense that real world markets are not classical free markets, but CASs whose human and institutional agents are always trying to subvert them in order to exert their own "god-like" mechanistic control over how they work.

So, the longer term tendencies of unconstrained capitalism are away from truly free markets and democracy, and toward oligarchy, plutocracy, lemon socialism, kleptocracy, and eventually fascism. And further, our knowledge of social and political dynamics may well be good enough to stop this kind of evolution, and to use productive forces to enhance democracy, open society, and real, rather than just formal, individual liberty. But I'll leave discussion of this larger question for other posts.

(Cross-posted from Correntewire.com

The Republican Budget, Explained

Dave Johnson — Thu, 22 Mar 2012 00:39:20 -0400

The new Republican budget plan:

Smoke, smoke, smoke, smoke, smoke, smoke, smoke, smoke, smoke, smoke, smoke, smoke, smoke, smoke, smoke, smoke, smoke, smoke. Tax cuts for the 1%, cuts in the things We, the People do for each other. Smoke, smoke, smoke, smoke, smoke, smoke, smoke, smoke, smoke, smoke, smoke, smoke, smoke.

Fog, fog, fog, fog, fog, fog, fog, fog, fog, fog, fog, fog, fog, fog, fog, fog, fog, fog, fog, fog, fog, fog, fog, fog, fog, fog, fog, fog, fog, fog, fog, fog, fog, fog, fog, fog, fog. Tax cuts for the 1%, cuts in the things We, the People do for each other. Fog, fog, fog, fog, fog, fog, fog, fog, fog, fog.

Words, words, words, words, words, words, words, words, words, words, words, words, words, words, words, words, words, words, words, words, words. Tax cuts for the 1%, cuts in the things We, the People do for each other. Words, words, words, words,words, words, words,words, words, words,words, words, words,words, words, words, words, words, words,words, words, words, words, words, words, words, words, words, words, words, words, words, words, words.

Nonsense, nonsense, nonsense, nonsense, nonsense, nonsense, nonsense, nonsense, nonsense, nonsense, nonsense, nonsense, nonsense, nonsense, Tax cuts for the 1%, cuts in the things We, the People do for each other. Nonsense, nonsense, nonsense, nonsense, nonsense, nonsense, nonsense, nonsense, nonsense, nonsense, nonsense.

Propaganda, propaganda, propaganda, propaganda, propaganda, propaganda, propaganda, propaganda, propaganda, propaganda, propaganda. Tax cuts for the 1%, cuts in the things We, the People do for each other. Propaganda, propaganda, propaganda, propaganda, propaganda, propaganda, propaganda, propaganda, propaganda.

Obfuscation, obfuscation, obfuscation, obfuscation, obfuscation, obfuscation, obfuscation, obfuscation, obfuscation, obfuscation, obfuscation, obfuscation, obfuscation, obfuscation. Tax cuts for the 1%, cuts in the things We, the People do for each other. Obfuscation, obfuscation, obfuscation, obfuscation, obfuscation, obfuscation, obfuscation, obfuscation, obfuscation.

Mirrors, mirrors, mirrors, mirrors, mirrors, mirrors, mirrors, mirrors, mirrors, mirrors, mirrors, mirrors, mirrors, mirrors, mirrors, mirrors. Tax cuts for the 1%, cuts in the things We, the People do for each other. Mirrors, mirrors, mirrors, mirrors, mirrors, mirrors, mirrors, mirrors, mirrors, mirrors, mirrors, mirrors.

Stuff, stuff, stuff, stuff, stuff, stuff, stuff, stuff, stuff, stuff, stuff, stuff, stuff, stuff, stuff, stuff, stuff, stuff, stuff, stuff, stuff, stuff, stuff, stuff. Tax cuts for the 1%, cuts in the things We, the People do for each other. Stuff, stuff, stuff, stuff, stuff, stuff, stuff, stuff, stuff, stuff, stuff, stuff, stuff, stuff, stuff, stuff, stuff.

Smears, smears, smears, smears, smears, smears, smears, smears, smears, smears, smears, smears, smears, smears, smears, smears, smears, smears. Tax cuts for the 1%, cuts in the things We, the People do for each other. Smears, smears, smears, smears, smears, smears, smears, smears, smears, smears, smears.

Division, division, division, division, division, division, division, division, division, division, division, division, division, division, division, division, division, division. Tax cuts for the 1%, cuts in the things We, the People do for each other. Division, division, division, division, division, division, division, division.

Distraction, distraction, distraction, distraction, distraction, distraction, distraction, distraction, distraction, distraction, distraction, distraction, distraction, distraction. Tax cuts for the 1%, cuts in the things We, the People do for each other. Distraction, distraction, distraction, distraction, distraction, distraction, distraction, distraction, distraction.

Bamboozlement, bamboozlement, bamboozlement, bamboozlement, bamboozlement, bamboozlement, bamboozlement, bamboozlement, bamboozlement. Tax cuts for the 1%, cuts in the things We, the People do for each other. Bamboozlement, bamboozlement, bamboozlement, bamboozlement, bamboozlement, bamboozlement, bamboozlement, bamboozlement, bamboozlement.

Diversion, diversion, diversion, diversion, diversion, diversion, diversion, diversion, diversion, diversion, diversion, diversion, diversion, diversion. Tax cuts for the 1%, cuts in the things We, the People do for each other. Diversion, diversion, diversion, diversion, diversion, diversion, diversion, diversion, diversion, diversion, diversion, diversion, diversion, diversion, diversion.

Shiny Object, shiny object, shiny object, shiny object, shiny object, shiny object, shiny object, shiny object, shiny object, shiny object, shiny object, shiny object. Tax cuts for the 1%, cuts in the things We, the People do for each other. Shiny object, shiny object, shiny object, shiny object, shiny object, shiny object

And when it is all cleared away:

Tax cuts for the 1%, cuts in the things We, the People do for each other.

Update: England, too!

The Big Reagan Recovery Was Government Spending And Hiring

Dave Johnson — Mon, 05 Mar 2012 10:49:51 -0500

Conservatives like to talk about how well the economy did under Reagan, and how poorly it is doing now. Then they say that government "takes money out of the economy." But the difference in economic growth was that under Reagan the government was spending and hiring, and now it isn't.

Paul Krugman lays it out, in States of Depression,

... compare government employment and spending during the Obama-era economic expansion, which began in June 2009, with their tracks during the Reagan-era expansion, which began in November 1982.

Start with government employment (which is mainly at the state and local level, with about half the jobs in education). By this stage in the Reagan recovery, government employment had risen by 3.1 percent; this time around, it’s down by 2.7 percent.

Next, look at government purchases of goods and services (as distinct from transfers to individuals, like unemployment benefits). Adjusted for inflation, by this stage of the Reagan recovery, such purchases had risen by 11.6 percent; this time, they’re down by 2.6 percent.

And the gap persists even when you do include transfers, some of which have stayed high precisely because unemployment is still so high. Adjusted for inflation, Reagan-era spending rose 10.2 percent in the first 10 quarters of recovery, Obama-era spending only 2.6 percent.

Austerity Killing Growth

Meanwhile conservative demands for government spending cuts - "austerity" - are causing exactly the opposite of what they claim. They claim that spending cuts will cause economies to grow, while all the economies that are cutting spending are shrinking faster and faster. NY Times: Spain Adjusts Deficit-Reduction Target at European Summit,

Spain announced Friday that a deepening recession meant it would have to abandon its deficit-reduction targets for this year...

Spain’s predicament is a reminder of how, in several countries, the austerity measures that evolved from the debt crisis have eroded confidence and reduced growth, making it harder to escape a downward spiral.

Same in Greece, and elsewhere. Cuts = downward spiral.

Government Of By and For Plutocrats

Here is what is going on: Politicians dance with the ones that brung 'em. A government that is of, by and for We, the People will do things that benefit We, the People. A big part of that equation is investing in the future: good schools, infrastructure, even parks. From Free Trade Or Democracy, Can't Have Both,

When people have a say we insist on good wages, benefits, safe working conditions, and a clean environment. We even go so far as to say we want good public schools, parks and opportunities for our smaller businesses. When We, the People have a say we get so uppity and ask for the most outrageous things!

A government that is run only for 1%er plutocrats will only do things that benefit plutocrats. As the governments of the world are increasingly "captured" by the plutocrats they will increasingly cut back on doing things for regular people. It doesn't matter if this hurts or even kills their economies in the future, 1%ers don't care. Plutocrats want it now, for themselves, and take it now, for themselves, the rest be damned.

America's Plutocrats Play the Political Ponies

Sam Pizzigati — Sun, 05 Feb 2012 15:49:44 -0500

Any resemblance between democracy and U.S. Presidential politics has become, in our new super PAC era, purely coincidental. The only mystery: Why aren't billionaires placing even bigger bets?

Life sometimes imitates art. Life also sometimes imitates political cliché. The cliché in this case: the notion that tunnel-vision political reporting has reduced campaigns for American public office to nothing more than mere “horse races.”

This year, in the struggle for the Republican Presidential nomination, that “horse race” analogy has essentially become a literal reflection of reality.

The real horse racing industry follows a simple time-worn pattern: A wealthy connoisseur of horse flesh buys a thoroughbred. The wealthy connoisseur keeps racing that thoroughbred until the connoisseur loses interest.

In the current GOP Presidential “horse race,” we see the exact same pattern. Wealthy connoisseurs of political talent pick a candidate. These wealthy connoisseurs then keep that candidate racing until they lose interest.

Foster Friess, a billionaire mutual fund executive, hasn’t yet lost interest in Rick Santorum. Friess has personally bankrolled the “super PAC” that has enabled Santorum to stay in the primary hunt.

Sheldon and Miriam Adelson, the billionaire casino mogul couple, haven’t yet lost interest in Newt Gingrich. The Adelson family has single-handedly supplied $10.5 of the $12 million that has gone into the super PAC that’s keeping Gingrich in the nominating race.

Mitt Romney, meanwhile, is leading that race, but only because he has more billionaires on his side than anyone else. Four of these billionaires from the hedge fund industry — Paul Singer, Julian Robertson, Robert Mercer, and John Paulson — have each contributed $1 million to the cause of Mitt.

In all, the super PAC run by Romney cronies has collected $1 million from 10 men of immense means, $2 million from one other, and at least $100,000 each from almost 40 additional politically inclined super rich, more than enough to fund the $17 million TV ad campaign that bounced Romney into the nomination lead.

This White House horse race isn’t going to end, of course, until November. By that time, news analysts are predicting, total spending on the 2012 Presidential race will have likely reached over $2 billion, making this year’s election the most expensive in the history of the known universe.

Super PACs — quasi “independent” committees that can accept donations of unlimited size — will do the bulk of that spending. These super PACs, the Los Angeles Times noted last week, are now playing a larger role in politics than the candidates’ own personal campaigns, mainly because candidate campaign committees can accept no donation larger than $2,500.

A string of court decisions have made that $2,500 limit a dead-letter elsewhere across the political landscape. Wealthy individuals and the corporations they run can now contribute as much as they want to political committees that maintain a nominal “independence” from the campaigns of the candidates they support.

These super PACs do have to disclose their donors, and the latest disclosures came last Tuesday. But the disclosures now required leave a good chunk of the campaign finance scene in the dark. Super PACs have been setting up subsidiaries that can qualify for nonprofit status so long as less than half their money goes to politics. These “nonprofits” don't have to reveal their donors.

The bottom line: The wealthy are shoveling even more of their loot into politics than the disclosures that came out last week indicated. In effect, says Campaign Legal Center policy director Meredith McGehee, we have entered “a world of unlimited money in politics.”

In this world, she adds, “those who can marshal enormous amounts of wealth” can “drown out the voices of the average Americans.”

Those who do this marshaling, for their part, never fail to emphasize the nobility of their political engagement. Take, for instance, Harold Simmons, the Dallas billionaire who has dropped $8.6 million into super PACs backing an array of rich people-friendly candidates and causes over the last year.

"Mr. Simmons is a passionate conservative, and he has been for quite some time,” his spokesman, Chuck McDonald, told the press last week.

MacDonald went on to add that Simmons — a leveraged buyout king now worth an estimated $9.6 billion — has no specific policy agenda in mind when he’s making his contributions. He simply believes “in conservative ideology.”

This conservative ideology that has Simmons so passionately committed just coincidentally meshes up quite nicely with the huge payoffs deep pockets like Simmons can ensure themselves via victory on election day.

Just one political decision alone — the tax treatment of so-called “carried interest” — can make an annual difference of tens and even hundreds of millions of dollars for Simmons and his fellow billionaires. Consider the biggest superstar in the hedge fund firmament, Romney-backer John Paulson, a Wall Street whiz who pocketed $4.9 billion in 2010 and another $3.7 billion in 2007.

Most of Paulson's hedge fund income comes as “carried interest” subject to just a 15 percent federal capital gains tax rate, a tax rate well below the 35 percent top marginal rate on “ordinary” income.

In other words, the preferential tax treatment for carried interest all by itself saves hedge fund types like Paulson $20 million on every $100 million in carried interest income they collect.

Republicans in the Senate, with some Democratic help, have repeatedly blocked attempts to repeal this preferential treatment over recent years. But the Democratic senator who has been the most pivotally hedge fund-friendly, Chuck Schumer of New York, now says he’ll vote to repeal the carried interest loophole.

That makes the occupant of the White House all the more important to wheeler-dealers like John Paulson and his friends.

“Of course these guys are going to give a million dollars,” as U.S. senator Al Franken from Minnesota noted last week. “What a bargain — what a bargain to give that to a candidate who they know will veto a bill that makes the carried interest subject to the top” income tax rate.

All the major GOP candidates have so far pledged their fealty to the cause of keeping carried interest exempt from the ordinary top tax rate. That shouldn’t shock anyone, given last week’s super PAC campaign contribution disclosures.

What should shock? That America’s billionaires — given how much at tax time the 2012 horse race could cost them in carried interest income alone — aren’t giving super PACs even more than they already have.

Sam Pizzigati edits Too Much, the online weekly on excess and inequality published by the Washington, D.C.-based Institute for Policy Studies. Read the current issue or sign up at Inequality.Org to receive Too Much in your email inbox.

Democracy v. Plutocracy, Unions vs. Servitude

Dave Johnson — Thu, 26 Jan 2012 21:25:38 -0500

Servitude: "a condition in which one lacks liberty especially to determine one's course of action or way of life"

Democracy: "a government in which the supreme power is vested in the people and exercised by them directly or indirectly through a system of representation usually involving periodically held free elections"

Plutocracy: government by the wealthy

Labor union: an organization of workers formed for the purpose of advancing its members' interests in respect to wages, benefits, and working conditions

You may have seen the recent flurry of stories about how high-tech products are made in China. The stories focus on Apple, but it isn't just Apple. These stories of exploited Chinese workers are also the story of how and why we -- 99% of us, anyway -- are all feeling such a squeeze here, because we are suffering the disappearance of our middle class. Our choice is democracy or servitude.

Working In China

A collection of excerpts from the Charles Duhigg and David Barboza story, Human Costs Are Built Into an iPad and the Charles Duhigg and Keith Bradsher story, How the U.S. Lost Out on iPhone Work both from the NY Times:

Rousted from dorms at midnight, told to work:

Apple had redesigned the iPhone’s screen at the last minute, forcing an assembly line overhaul. New screens began arriving at the plant near midnight.

A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day.

“Work hard on the job today or work hard to find a job tomorrow.”

Banners on the walls warned the 120,000 employees: “Work hard on the job today or work hard to find a job tomorrow.”

(How close is that to the very definition of servitude?)

Long shifts, legs swollen from standing:

Shifts ran 24 hours a day, and the factory was always bright. At any moment, there were thousands of workers standing on assembly lines or sitting in backless chairs, crouching next to large machinery, or jogging between loading bays. Some workers’ legs swelled so much they waddled. “It’s hard to stand all day,” said Zhao Sheng, a plant worker.

Write confessions if late:

Mr. Lai was soon spending 12 hours a day, six days a week inside the factory, according to his paychecks. Employees who arrived late were sometimes required to write confession letters and copy quotations. There were “continuous shifts,” when workers were told to work two stretches in a row, according to interviews.

Injuries from speed-up toxics:

Investigations by news organizations revealed that over a hundred employees had been injured by n-hexane, a toxic chemical that can cause nerve damage and paralysis.

Employees said they had been ordered to use n-hexane to clean iPhone screens because it evaporated almost three times as fast as rubbing alcohol. Faster evaporation meant workers could clean more screens each minute.

American companies forcing Asian suppliers to squeeze workers:

“You can set all the rules you want, but they’re meaningless if you don’t give suppliers enough profit to treat workers well,” said one former Apple executive with firsthand knowledge of the supplier responsibility group. “If you squeeze margins, you’re forcing them to cut safety.”

The Results For The 1%

A series of recent newspaper headlines tells the story of how China's working conditions benefit the 1% here.

NYT: Apple's Profit Soars‎

CBS Moneywatch: Apple shares close at record high

SF Chronicle: Apple CEO's Stock Awards Lift Compensation to $378 Million

ZDNet: Apple: made in China, untaxed profits kept offshore. We don't even get to tax the profits from moving our jobs to China, to use for schools, roads, police, etc.

The Results For The 99%

Headlines like these show how things are going better and better for the 1%. But what happened to our middle-class prosperity? We allowed companies to move jobs and factories across the borders of democracy to places where workers are exploited, calling that "trade." This enabled the breaking of unions and the weakening of our democracy.

The threat is in the air: "Shut up and take the wage cuts or we will move your job to China." How is that threat used on us? Here is an example: We have heard the stories of Mitt Romney's company Bain Capital, and how it "earned" its millions. According to the Christian Science Monitor, this is the story of what happened when a Bain-owned company "came to town":

The new owner, American Pad & Paper, owned in turn by Bain Capital, told all 258 union workers they were fired, in a cost-cutting move. Security guards hustled them out of the building. They would be able to reapply for their jobs, at lesser wages and benefits, but not all would be rehired.

Workers in countries like China where people have no say have low wages, terrible working conditions, long hours, and are told to shut up and take it or they won[t have any job at all. They are given no choice.

Increasingly workers here have their wages, hours, benefits, dignity cut and are told to shut up and take it or their jobs will be moved to China. Because we are pitted against exploited workers in countries where people have no say, we have no choice.

The unions are weakened, the government doesn't enforce or weakly enforces labor laws and regulations, age, gender or race discrimination laws, worker safety laws, so workers are placed in a terrible squeeze. Workers who try to organize unions are isolated, moved, smeared, fired, humiliated, whatever it takes.

This quote by Steve Jobs is from How the U.S. Lost Out on iPhone Work,

Not long ago, Apple boasted that its products were made in America. Today, few are. Almost all of the 70 million iPhones, 30 million iPads and 59 million other products Apple sold last year were manufactured overseas.

Why can’t that work come home? Mr. Obama asked.

Mr. Jobs’s reply was unambiguous. “Those jobs aren’t coming back,” he said, according to another dinner guest.

Democracy Brought Us Prosperity

We used to be a democracy, where everyone used to have a say in things. Because we had a say we built up a country with good schools, good infrastructure, good courts, and we made rules that said workers had to be safe, get a minimum wage, overtime, weekends… we protected the environment, we set up Social Security. We took care of each other. This made us prosperous. A share of the prosperity for the 99% was the fruit of democracy.

China, on the other hand, is not a democracy, and workers in China don't really have a say. So they don't make much money, they don't have good working conditions, the environment isn't protected, etc.

We Used To Protect Democracy

We used to protect our democracy. We used to put a tariff on goods coming in if they were made by people who didn’t have the ability to speak up and better their condition. We’d let the goods in but we would use a tariff to strengthen our country, our infrastructure, our schools – our democracy. This brought us prosperity.

For some reason, we started letting our companies move our factories over there, forcing our workers to compete with workers who have no say. We got tricked, by people who call that "trade," and said it would be good for us. (Like cutting taxes for the wealthy "job creators" is good for us.)

We opened the borders and let the big companies move the jobs, factories and industries over the border of our democracy, to places where workers don't have a say, so they are exploited. And the result was the big corporations were able to come back and cut our pay, and get rid of our pensions, and tell us, "take it, shut up, or we will move your job, too." We made the wages and working and conditions and environmental protections prosperity that democracy brings into a cost. We turned ourselves into a cost. We made democracy a competitive disadvantage.

Plutocrats Say Shed Benefits Of Democracy

Plutocrats say we need to shed the benefits of democracy and become more like China if we want to compete. They say get rid of regulations, employee protections, environmental protections, good wages, benefits like pensions and time off, etc... They say that We, the People (government) "get in the way of doing business." They say the taxes that pay for good infrastructure and schools and police and courts and services like Social Security and care for the disabled and health care for children "take money out of the economy" but they mean these take some of the money that they have been taking from the economy.

Democracy Is The Best Economics

Look at the primary target of the corporate/conservatives: unions. That should tell you something. This is a power confrontation. This is the power of the 1% overcoming the power of the 99%.

Democracy is the power of the 99% to make the decisions, and to build structures that protect us from exploitation by the wealthy and powerful. This confrontation is the story of the origin of our country -- how We, the People confronted the power and corruption of the British aristocracy, overcame that power, and built a country of, by and for the people.

Democracy and the taxes it enabled us to ask from the wealthiest is what enabled us to build the infrastructure and schools and everything that enabled our prosperity. The regulations of democracy are what enable our smaller businesses to compete with the giants. The shared prosperity -- redistribution of wealth -- is what enabled the middle class to grow, and turned us into the most prosperous country and largest market in the world.

Unions

Unions are about building up the power of groups of people, to confront and overcome the advantages of wealth and the power wealth brings to a few. When a union is strong enough to be able to confront the power of big corporations the result is that the 99% get a share of the pie. When unions are strong we all get better wages and better working conditions and a say in how we are treated, whether we are in unions or not. The benefits flow to the rest of the economy.

It would be nice if our system worked well enough that we didn't need to organize unions on top of the structure of laws and regulations, but it is just the fact of life that the wealthy and powerful and their corporations have throughout our history been able to exert tremendous influence over legislative bodies, again and again. So to fight that working people organize and build these organized unions of people, and leverage that power of the group to demand wages and benefits and weekends and a share of the prosperity. The story of the power confrontation between unions of working people (99%) and the large corporations (1%) is the story of how we built a middle class that brought us the prosperity we enjoyed.

It is not just a coincidence that the weakening of the unions coincides with the decline of the middle class. It is not just a coincidence that the current rise of the plutocrats brings in a swarm of anti-union legislation. It is not just a coincidence that the times when our democracy is strongest we all do so much better. And now, when our demcoracy has been weakened by the money and power of the 1% and their corporations, the rest of us are so much worse off.

Not US v. China

This is not about US workers and markets vs China. Working people in all countries are at risk when their countries trade with countries where workers are exploited. China's huge trade imbalance is threatening the world's economy. The loss of manufacturing to countries that exploit workers is threatening workers in many countries.

The US market is still large, and the US can still demand that imported goods be made according to better standards for workers. The rest of the world can also demand that China's workers be brought up to international standards. And we can certainly hold companies like Apple accountable, and demand that they only buy from suppliers that treat and pay workers according to international standards, because allowing companies to cheat, exploit workers and commit fraud drives the good companies out of business.

This is not about taking jobs back from Chinese workers! This is about demanding they be paid fairly and given a say in their workplaces! This is about not exploiting people there or here!

Trade can be an upward spiral, rather than a lever for exploitation of the 99% by the 1%. If Chinese workers are given a say and paid fairly then they can buy things we make and we can keep buying things they make.

Unions = Democracy = Middle Class = Shared Prosperity

Jon Stewart explains:

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On Wall Street, Still Tis the Season to Be Jolly?

Sam Pizzigati — Sun, 04 Dec 2011 15:48:13 -0500

Financial industry insiders are grousing about a big downturn in annual bonuses. They should be thanking the rest of us — bombshell new research shows — for their continuing awesome good tidings.

Wall Street’s power suits aren’t humming along, this December, with all the holiday jingles. Bankers, traders, and law firm partners are quite frankly feeling kind of foul. End-of-year Wall Street bonuses, experts predict, are going to be down from 2010 levels — by as much, on average, as 35 percent.

Total 2011 pay for the typical bond-trading managing director at a top Wall Street securities firm will likely be off, says Options Group New York co-founder Michael Karp, nearly 40 percent.

But those typical managing directors should be able to survive the holidays quite nicely. Pay cuts will leave average high-powered bond traders with $1.8 million for their daily labors in 2011. The average U.S. worker would have to labor 43 years — an adult lifetime — to take home that same $1.8 million.

In other words, by any real-world yardstick, Wall Street’s finest are doing just fine. And they owe their good fortune, blockbuster new research makes clear, to the generosity of Uncle Sam’s one and only central bank, the Federal Reserve.

During the financial meltdown, a new analysis of 29,000 pages of previously secret documents shows, central bankers at the Fed had $1.2 trillion in dirt-cheap loans shoveled out to the nation’s financial institutions, at the crisis peak, and overall committed an incredible $7.77 trillion, as of March 2009, to the financial rescue, taking into account guarantees and lending limits.

This massive wave of subsidies, note the Bloomberg news analysts who broke the story last week, amounted to a bailout over ten times larger than the $700 billion funneled to banks via the Treasury Department’s controversial Troubled Asset Relief Program, or TARP.

Bloomberg reporters had to win a court case to access the stunning new bailout data. How stunning? The $7.77 trillion the Fed committed to the nation’s financial industry, observes Bloomberg, equaled “more than half the value of everything produced” in the entire United States during the key crisis year.

To put the bailout in more homespun terms: The Fed provided banks the equivalent of over $25,000 per American.

The nation’s six biggest banks — J.P. Morgan, Bank of America, Citibank, Wells Fargo, Goldman Sachs, and Morgan Stanley — grabbed $460 billion of the secret loans. Morgan Stanley took in $10 billion in publicly visible TARP bailout dollars and $107 billion from the hidden Fed loan program.

All the TARP dollars came with modest strings on executive pay. To end run the strings, big banks rushed to pay back their TARP bailout and then loudly proclaimed themselves healthy and stable enough to resume business as usual.

Meanwhile, at that same moment, these “healthy” banks were taking advantage of the secret Fed loans to register billions in new profits — with no executive pay strings attached.

The Fed loans came with interest rates as low as 0.01 percent. The banks lent out these loan dollars at much higher rates and made, Bloomberg estimates, at least $13 billion on these transactions. That $13 billion, notes economist Dean Baker, essentially rates as a pure “gift” from taxpayers.

But the Fed's total giving to America's biggest banks has run much higher than that $13 billion. By backstopping big banks so energeticaly, former U.S. senator Ted Kaufman from Delaware points out, the Fed has served notice that the federal government would never let the big banks fail — and that notification continues to translate into favorable borrowing rates for the big banks.

The big banks, for their part, have pooh-poohed all the hubbub about the enormous subsidies they’ve received. They’ve argued that no one should be bent out of joint, since the banks have paid their loans back.

The big banks, counters financial analyst Steve Randy Waldman, have definitely not paid back the lucrative freedom from downside risk that the Fed and Treasury Department have so graciously provided them.

In financial markets, Waldman explains, “risk-bearing” has always been “the ultimate commodity.” The Fed and Treasury underwrote this risk-bearing — for big banks — at next to nothing. Middle class Americans, by contrast, have to pay for their own risk-bearing. They pay, for instance, their fire insurance bills year in and year out, without ever expecting that the Fed is going to foot the bill.

Massive federal bailout subsidies, adds analyst Les Leopold, have had another spin-off benefit. They've “allowed banks to step up their lobbying efforts.” These lobbying efforts, in turn, have saved the banks countless billions more.

One example: Bank political pressure has forged a federal housing crisis policy that protects banks from the “downside” of the crash of the housing market.

But the generosity of top federal officials to America’s banks has gone still further. We learned last week, notes Reuters analyst Felix Salmon, that Treasury secretary Hank Paulson was “giving inside information to his old Wall Street buddies” right as the financial crisis was unfolding, insider info that helped Goldman Sachs-connected hedge fund managers score millions in easy profits.

The bottom line of all this generosity? The total assets of America’s top six banks jumped from $6.8 trillion in September 2006 to $9.5 trillion in September 2011. The trading arms of big banks and other independent firms, the Washington Post reports, have generated over $83 billion in profit over the last two and a half years, $6 billion more than they generated over the previous eight.

Returns this massive, in turn, translated last year into the biggest bank compensation haul in history. Wall Street salaries in New York averaged $361,330 in 2010, five times the city's average private-sector pay.

And average Americans? Their economic status continues to slide. A new Rutgers University study out last week documents that just 7 percent of those Americans “who lost jobs after the financial crisis have returned to or exceeded their previous financial position.” Two million construction workers have lost jobs since the housing collapse began. The industry has hired back only 47,000.

That housing collapse keeps collapsing. Over a quarter of American mortgages, 28 percent, have now sunk “underwater,” up from 23 percent last year.

Some context for these numbers: The $107 billion in Fed loans that one bank alone, Morgan Stanley, pocketed in September 2008 would have been enough, notes Bloomberg, “to pay off one-tenth of the country’s delinquent mortgages.

So what ought to be done? For starters, former New York governor Eliot Spitzer urged last week, Congress ought to require banks to use the profits they made investing their almost interest-free money from the Fed “to write down the value of mortgages of those who are underwater.”

Nassim Nicholas Taleb — a New York University risk engineer, best-selling author, and a hedge fund investor — has a longer-term solution. He wants the feds to start regulating Wall Street pay. No one at a company that would require a taxpayer-financed bailout if it failed, says Taleb, should “get a bonus, ever.”

“Consider that we trust military and homeland security personnel with our lives, yet we don’t give them lavish bonuses,” he explains. “They get promotions and the honor of a job well done if they succeed, and the severe disincentive of shame if they fail.”

For bankers, Taleb adds, the opposite holds. They get “a bonus if they make short-term profits and a bailout if they go bust.”

Reforms like these still seem, at our current political moment, sheer fantasy. New research from the Center for Responsive Politics helps us understand one reason. Nineteen current members of Congress last year held personal investments in Wall Street’s most notorious bank, Goldman Sachs. These investments averaged well over three-quarters of a million dollars.

Nine of these 18 investors just happened to sit on the congressional committees that oversee the financial industry. Two of the 18 not on one of these committees just happened to be the two most powerful leaders in the House, speaker John Boehner and majority leader Eric Cantor.

Plutocracy with a Philanthropic Face

Sam Pizzigati — Sun, 11 Sep 2011 11:12:31 -0400

Not all plutocrats scheme in the shadows like the rabidly right-wing Koch brothers. We need to learn how to recognize plutocracy's more subtle putches. The best primer? The battle over education's future.

“Plutocracy” first burst big-time into our national political consciousness in the late 19th century, and the concept still conjures up today, well over a century later, much the same images as way back then.

We envision, at any mention of “plutocrat,” some Wall Street banker, his pockets overflowing with greenbacks, or a robber baron industrialist, muttering the “public be damned” while bribing pols with one hand and busting unions with the other.

Some of our present-day plutocrats — the billionaire Koch brothers, for instance — fit this image quite nicely. Koch-like plutocrats slide in and out of the shadows, bankrolling our society’s most reactionary and repulsive politicos, all the while railing against unions and taxes and government regulation.

But plutocrats today don’t all spout crude libertarian bromides or even play footsie, as the Kochs have, with sloganeering from our segregationist past.

Indeed, many of our mega rich bear little resemblance to the brothers Koch. These more enlightened plutocrats seem to obsess over philanthropy, not profits. They do their sliding in and out of foundation board rooms, pledging their support, at one high-minded symposium after another, for initiatives sure to bring “efficiency” and “innovation” to our society’s most pressing problems.

This may be plutocracy's future face, what plutocracy, in the 21st century, really “looks like.” What will this plutocracy really do, for — and to — us? We have one clue from the ongoing high-stakes battle over reforming America's public schools.

“The hottest cause among Wall Street hedge-fund managers these days is not financial reform,” as the Toronto Globe and Mail’s chief U.S. political writer, Konrad Yakabuski, noted earlier this month. “It’s education reform.”

Billionaires, of course, have every right as citizens to advocate whatever public policy stance and vision they choose. But, in a deeply unequal America, these billionaires don’t just have rights. Their immense fortunes give them enormous power, more than enough to dominate, not just advocate.

“A few billion dollars in private foundation money, strategically invested every year for a decade, has sufficed,” notes education analyst Joanne Barkan, “to define the national debate on education.”

Three billionaire foundations set the pace for this defining, one funded out of the Microsoft fortune, one out of Wal-Mart, and one out of the AIG insurance empire. The Gates, Walton, and Broad foundations don’t agree on every single educational policy twist. But they do all follow the same basic script.

America’s public schools are failing poor kids, this script’s storyline posits, because too many ineffective teachers are staffing our classrooms. We need to test kids to identify — and replace — these ineffective teachers. We need to hire good teachers, pay them extra if they perform well, and keep subjecting students to standardized tests to make sure these good teachers keep performing.

Teacher unions, the storyline continues, will fight these reforms. But real reformers can beat back the unions — by shutting down “failing” schools, for instance, and replacing them with publicly funded, privately managed “charter schools.” Such charter schools will succeed because they don't have to worry about due process, seniority, or any other teacher union contract niceties.

This entire approach to school “reform” rests on two seldom defended assumptions. The first: that poor kids would learn just fine if only they only had better teachers. The second: that student scores on standardized tests give us all we need to identify better teachers.

But independent education researchers have repeatedly exposed the emptiness of both these assumptions. The research consensus, one recent survey relates, has concluded that teaching likely “accounts for about 15 percent of student achievement outcomes.”

Out-of-school factors — poverty dynamics that range from homelessness and hunger to home and neighborhood instability — make four times more impact.

And high-stakes standardized tests can be gamed, add researchers like Harvard’s Dan Koretz, by drilling students in “test-taking strategies that pollute testers’ ability to see what the students actually know.”

If drilling fails, the high stakes in high-stakes testing — “pay for performance” bonuses and promotions — create systemic incentives for cheating. Massive testing scandals have already surfaced in Atlanta, Baltimore, and Washington, D.C., three cities where billionaire foundations have wielded massive influence.

These scandals haven’t much slowed the billionaire education “reform” push. Nor has the distinct lack of positive results from districts like New York City and Chicago, where billionaire reformers reign supreme.

Instead, despite the dismal billionaire track record, the billionaire approach to education reform has essentially become official U.S. Department of Education policy, and states, to qualify for new pools of federal aid, are having to rewrite their laws and regs along the lines the mega rich have been promoting.

What will all this mean for schools in the future? Even some conservative analysts, like the American Enterprise Institute’s Frederich Hess, are predicting a “train wreck” ahead.

Progressive analyst Joanne Barkan, for her part, has spelled out what that wreck could bring: “an extreme degree of ‘teaching to the test,’ demoralized teachers, rampant corruption by private management companies, thousands of failed charter schools, and more low-income kids without a good education.”

Why can’t more people see the wreck coming? The billionaires and their foundations, Barkan notes, have polluted the political process. They've undermined, with their largesse, the independence of institutions that ought to be protecting the public interest.

The billionaire foundations, Barkan explains, lavish grants on research groups and think tanks to study the programs they fund. They ladle still more millions “to TV networks for programming and to news organizations for reporting.”

And plenty of major corporations have a vested financial industry in keeping the billionaire educational reform vision on course. The standardized testing regimes the billionaires demand have become a gold mine. One top education industry giant, Pearson, is collecting $500 million from one state alone, Texas, for the contract to create and administer five years worth of standardized tests.

But billionaires, the Nation magazine’s Dana Goldstein suggests, may have a deeper reason for pushing their education vision, for insisting that putting “better” teachers into America’s classrooms can “completely overcome poverty.”

“If the United States could somehow guarantee poor people a fair shot at the American dream through shifting education policies alone,” Goldstein observes, “then perhaps we wouldn’t have to feel so damn bad about inequality — about low tax rates and loopholes that benefit the super rich and prevent us from expanding access to child care and food stamps.”

“Taxpayers still fund more than 99 percent of the cost of K–12 education,” adds Joanne Barkan. “Private foundations should not be setting public policy for them.”

That's not democracy. That's plutocracy.

Yet Another Poll Shows... Plutocracy Stupid, Democracy Smart

Dave Johnson — Wed, 20 Apr 2011 12:08:13 -0400

Yet another poll is out, showing that the public wants taxes raised on the rich and on Wall Street and the giant multi-national corporations, and does not want cuts in the things We, the People do for each other. Other polls show the public wants cuts in military spending, and increases in spending on infrastructure and other job-creation, economy-growing investment. And, in fact, if we did these things the deficit problem -- caused by tax cuts for the rich and increases in military spending -- would be fixed. So why do Washington deficit-reduction plans always do the opposite?

From today's Progressive Breakfast,

Yet another poll shows strong support for raising taxes on the wealthy, opposition to Medicare and Social Security cuts. W. Post: "The Post-ABC poll finds that 78 percent oppose cutting spending on Medicare as a way to chip away at the debt ... 72 percent support raising taxes [on family income over $250,000] ... "

Meanwhile, in DC the insider story is that the "Gang of 6" is "closing in" on a "deficit deal." In all likelihood it will (they all do) end up being about cutting taxes for the rich and cutting the things We, the People (government) do for each other and cutting investment in the things that make our economy grow: infrastructure, education, science, job-creation, etc...

Serious People

Another popular DC-insider deficit plan is called "Simpson-Bowles." This plan was put together by a right-wing Republican, former Republican Senator Alan "three hundred million tits" Simpson and a Wall Streeter, Erskine Bowles, a member of the Board of Directors of Morgan Stanley. This plan (they all do) cuts taxes for the rich and cuts the things We, the People (government) do for each other. It is put together by "serious" people so it is considered "serious."

Poll after poll shows one thing, DC plan after DC plan does another. The public isn't considered "serious." Republicans and Wall Streeters are considered to be "serious." In fact, things the public wants and needs are not considered at all in today's DC. Democracy is not "serious."

Democracy vs Plutocracy

In January I wrote about this phenomenon in, Sen. Conrad Plutocracy Plan Vs. Democracy Deficit Commission. Back then the deficit plan was (they all do) to cut taxes on the rich while increasing them on everyone else, and cut Social Security, even though Social Security has nothing whatsoever to do with the deficit. I wrote,

This is what happens when Wall Street and conservative Republicans design a plan: give even more to the already-wealthy few, gut what our government does for We, the People.

Here is the real deficit commission that you would expect to see if we were a democracy instead of a plutocracy: It would have 100 members:

98 of the 100 members would make less than $250,000 a year.
50 of the members would come from households in which the total income of all wage-earners is less than $50,221.
17% of the commission members would be un- or underemployed, and would be wondering why they are on a deficit commission instead of a jobs commission.
19 people on the commission would receive some form of Social Security benefits, 12 of those as retirees. And on this deficit commission they get to talk when the ones making over $250K propose cutting Social Security.
43 of the commission members would have less than $10,000 saved up for retirement. 27 of those less than $1,000.
The commission would include the right proportion of factory and construction workers, and people who work in a kitchen, and waiting tables, and teaching, and nursing, and installing tires, and all the other things that people do except, apparently, those on DC elite commissions. (People who do manual labor get an extra vote each on what the retirement age should be.)
Include people who are on active duty in the military – the people who said they don’t need that expensive plane, but couldn’t get body armor.
60 members would not have college degrees.
13 members would be receiving food stamps.

What The Public Wants Is Smart

And guess what, when you take a poll, you are measuring what the public wants. A poll shows what would happen if the deficit plans were drawn up by regular people. And POLLS SHOW they want tax increases on the rich and cuts in military. They want jobs programs and infrastructure investment and investment in the things that grow the economy. They want a Medicare-For-All health care plan, and in fact other countries have proven this solves the long-term health care cost problem.

Plutocracy Stupid, Democracy Smart

Here's the thing: what the public wants actually would fix the borrowing. And what the plutocrats want would make it worse. The deficit is the result of tax cuts for the rich, increases in military spending, spending on the recession and long-term cost increases in health care. So fixing that means putting taxes back where they were before the deficits, realizing that the Soviet Union is gone, investing to grow the economy, and implementing a Medicare-For-All plan like the rest of the world has.

And that is what polls show the public wants to so.

So maybe the public isn't that stupid after all. Maybe democracy can work. The plutocrats plans are stupid, because the plutocrats just greedily give everything to the plutocrats, and sacrifice everyone's future, even the plutocrats'.

Plutocracy stupid, democracy smart, fire baaaad!:

Today's Plutocracy Post: GE Doesn't Pay Taxes -- Taxpayers Pay GE

Dave Johnson — Fri, 25 Mar 2011 14:23:27 -0400

In 1983 NY hotel-chain-owning billionaire Leona Helmsley said, "We don't pay taxes. Only the little people pay taxes..." As our country migrates from democracy to plutocracy, this more and more appears to be official policy. Again and again we see tax cuts for the wealthy few, tax breaks and subsidies for the big corporations that operate as fronts for those wealthy few, and budget cuts for the things We, the People (government) do to empower and protect each other. Just a few weeks ago we watched as an extension of the Bush tax cuts and a huge cut in the estate tax rate was pushed through. Now we watch as the discussion turns to cuts in Social Security and the rest of the so-called "safety net."

Another indicator of plutocracy (government of, by and for the wealthy) is impunity for those at the top. Leona Helmsley actually went to jail for tax evasion. Even as recently as the early-90s Savings and Loan Crisis our government investigated, prosecuted and jailed more than a thousand bad actors for fraud and other crimes. This time, well, ... not so much. Well ... actually not at all. Times have changed. Don't look back. Deal with it. Suck it up. Let's all get on the same team and keep this ball moving forward down the field at the end of the day. Whatever. Hey, look over there!

Today's Plutocracy Indicator

From the NY Times, G.E.’s Strategies Let It Avoid Taxes Altogether

The company reported worldwide profits of $14.2 billion, and said $5.1 billion of the total came from its operations in the United States.

Its American tax bill? None. In fact, G.E. claimed a tax benefit of $3.2 billion.

So not only did GE, the highly-profitable recipient of federal contracts and bailout money, not pay taxes, we paid them $3.2 billion!

Revolving Door Writes The Loopholes

How does GE accomplish this? By taking advantage of the "revolving door" where people move back-and-forth from government agencies to the corporations those agencies are supposed to oversee. From the NY Times story,

Its extraordinary success is based on an aggressive strategy that mixes fierce lobbying for tax breaks and innovative accounting that enables it to concentrate its profits offshore. G.E.’s giant tax department, led by a bow-tied former Treasury official named John Samuels, is often referred to as the world’s best tax law firm. Indeed, the company’s slogan “Imagination at Work” fits this department well. The team includes former officials not just from the Treasury, but also from the I.R.S. and virtually all the tax-writing committees in Congress.

While Congressional staffers they write the loopholes into the laws. Then they go to their reward at corporate headquarters for very high pay. Then they go work in the agencies to make sure the rulings go their way. They then go collect again. It is a lucrative game. They're the winners -- they call themselves "producers." We're the losers -- they call us ... "losers."

Who Really Benefits?

The use of the general term "corporations" to describe the beneficiaries of these policies is really a smokescreen that masks the fact that really a very few people are benefiting. Yesterday's post, Lobbyists Admit Corporate Tax "Holiday" Didn't Work, But Demand It Again, pointed out that it is a very few actual people that we are really talking about here,

Corporate wealth is really just personal wealth, held at arms length from the person to mask what is going on. The wealthiest 1% own 50.9% of all stocks, bonds, and mutual fund assets. The wealthiest 10 percent own more than 90 percent. The bulk of us own less than 1 percent. When you hear about "corporate" holdings, think about this chart from the Working Group on Extreme Inequality:

At The Expense Of The Rest Of Us

These benefits accrue to the wealthy few at the expense of the rest of us. What many people don't understand is that it is also at the expense of other companies. Our infrastructure and public structures - roads, education, courts, customers - are the soil in which good companies can grow. When tax dodgers are able to avoid contributing to our communities and country, the overall environment for the rest of our businesses deteriorates and our worldwide competitiveness declines. We see it all around us every day.

Ungrateful Bastards

For all the benefits huge multinational companies like GE get from We, the People -- subsidies, contracts, bailouts, tax breaks and customers, they aren't very rateful and certainly are not about to give anything back. Barry Ritholtz at The Big Picture writes,

Yet another reason why you don’t bailout companies whose inability to manage risk allowed themselves to become destroyed: They not only do not deserve to continue with the same management/shareholders/creditors who all created the insolvency in the first place, but they are ungrateful bastards as well.

Even Reagan

Even tax-cutter Ronald Reagan balked when he learned that GE (for which he had been spokesman) didn't pay its taxes. From the NY Times story,

In the mid-1980s, President Ronald Reagan overhauled the tax system after learning that G.E. — a company for which he had once worked as a commercial pitchman — was among dozens of corporations that had used accounting gamesmanship to avoid paying any taxes.

“I didn’t realize things had gotten that far out of line,” Mr. Reagan told the Treasury secretary, Donald T. Regan, according to Mr. Regan’s 1988 memoir. The president supported a change that closed loopholes and required G.E. to pay a far higher effective rate, up to 32.5 percent.

Isaiah Poole, in Rewriting Eric Cantor's Cant On Jobs,

"So let's stop the demagoguery about overtaxed corporations and have a dialogue instead about a tax code that taxes all people fairly. A tax system in which a billionaire like Warren Buffett pays taxes at a lower rate than his secretary is not fair, and an unfair tax code, one that's riddled with loopholes, perverse incentives and ways to game the system, keeps us limping and unproductive."

Terrance Heath has been writing a series on The Truth About Tax & Spend Conservatism,

... the truth about "Tax & Spend Conservatism" is that it isn't about raising or cutting taxes, but about whose taxes are raised and whose taxes are cut. It's about, as Robert Borsage put it, who gets hit with the tab for the great recession.

Resources

Public Campaign fact sheet titled, GE's Corporate Tax Dodging that begins,

General Electric spent $235.2 million in political money since 2000--paid no federal income taxes in 2008, 2009, and 2010.

and points out:

G.E. cut American jobs and exported them overseas.

The New York Times reports “[since] 2002, the company has eliminated a fifth of its work force in the United States while increasing overseas employment.”