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Category: inequality

  • So You Wanna Reduce the Debt? Tax the Wealthy Like We Used To



    The dire warnings of fiscal hawks are once again darkening the skies of official Washington, demanding that the $31 trillion federal debt be reduced and government spending curtailed (thereby giving cover to Republican efforts to hold America hostage by refusing to raise the debt ceiling).

    It’s always the same when Republicans take over a chamber of Congress or the presidency. Horrors! The debt is out of control! Federal spending must be cut!

    Not only is the story false, but it leaves out the bigger and more important story behind today’s federal debt: the switch by America’s wealthy over the last half century from paying taxes to the government to lending the government money.

    This back story needs to be told if Americans are to understand what’s really happened and what needs to be done about it. Republicans won’t tell it, so Democrats (starting with Joe Biden) must.

    A half century ago, American’s wealthy financed the federal government mainly through their tax payments. Tax rates on the wealthy were high: Under Republican President Dwight Eisenhower, they were over 90 percent. Even after all tax deductions, the wealthy typically paid half of their incomes in taxes.

    Since then — courtesy of Ronald Reagan, George W. Bush, and Donald Trump — the effective tax rate on wealthy Americans has plummeted. Even as they’ve accumulated unprecedented wealth, today’s rich are now paying a lower tax rate than middle-class Americans. (The 400 richest American families paid a tax rate of just 3.4 percent between 2014 and 2018, while the rest of us paid an average tax rate of 13.3 percent.)

    One of the biggest reasons the federal debt has exploded is that tax cuts on wealthier Americans have reduced government revenue.

    Meanwhile, America’s wealthy are financing America’s exploding debt by lending the federal government money, for which the government pays them interest.

    As the federal debt continues to mount, those interest payments are ballooning — hitting a record $475 billion in the last fiscal next year (which ran through September). The Congressional Budget Office predicts that interest payments on the federal debt will reach 3.3 percent of the GDP by 2032 and 7.2 percent by 2052.

    The biggest recipients of these interest payments are not foreigners but wealthy Americans who park their savings in treasury bonds held by mutual funds, hedge funds, pension funds, banks, insurance companies, personal trusts, and estates.

    Hence the half-century switch: The wealthy used to pay higher taxes to the government. Now the government pays the wealthy interest on their loans to finance a swelling debt that’s been caused largely by lower taxes on the wealthy.

    This means that a growing portion of your taxes are going to the wealthy in the form of interest payments, rather than paying for government services everyone needs.

    So, the real problem isn’t America’s growing federal budget deficit. It’s the decline in tax revenue from America’s wealthy combined with growing interest payments to them.

    Both are worsening America’s already horrific inequalities of income and wealth.

    What should be done? Reduce the debt by raising taxes on the wealthy.

    This back story needs to be told. Please spread the word.

    This post was originally published on Common Dreams.

  • Havana Declaration Outlines Vision for Building Just World Economy



    Delegates to the Havana Congress on the New International Economic Order—a gathering organized by the Progressive International and attended by more than 50 scholars and policymakers from 26 countries across all six inhabited continents—agreed over the weekend on a declaration that outlines a “common vision” for building an egalitarian and sustainable society out of the wreckage of five decades of neoliberal capitalism.

    “The crisis of the existing world system can either entrench inequalities,” the declaration asserts, or it can “embolden” popular movements throughout the Global South to “reclaim” their role as protagonists “in the construction of a new world order based on justice, equity, and peace.”

    Delegates resolved to focus their initial efforts on strengthening the development and dissemination of lifesaving technologies in low-income nations.

    “Delegates agreed that a key priority must be to secure science and technology sovereignty.”

    This decision comes one year after Cuban officials announced, at a press conference convened by the Progressive International (PI), their plan to deliver 200 million homegrown Covid-19 vaccine doses to impoverished countries abandoned by their wealthy counterparts and Big Pharma—along with tools to enable domestic production and expert support to improve distribution.

    It also comes as Cuba assumes the presidency of the Group of 77 (G77), a bloc of 134 developing countries in Africa, Asia, and Latin America where “the combined crises of food, energy, and environment” are escalating, PI noted.

    “What is the common vision to guide the Global South out of this crisis?” the coalition asked. “What is the plan to win it? What is the New International Economic Order for the 21st century?”

    “After two days of detailed discussions about how to transform our shared world, delegates agreed that a key priority must be to secure science and technology sovereignty,” PI general coordinator David Adler said Sunday at the conclusion of the Havana Congress. “From pharmaceuticals to green tech, from digital currencies to microchips, too much of humanity is locked out of both benefiting from scientific advances and contributing to new ones. We will, as today’s declaration calls for, work to build ‘a planetary bloc led by the South and reinforced by the solidarities of the North’ to liberate knowledge and peoples.”

    Speaking at the January 12 ceremony during which Cuba ascended to the G77 presidency, Cuban Foreign Minister Bruno Rodríguez Parrilla emphasized the need for coordinated action across the Global South on science and tech, arguing that “scientific-technical development is today monopolized by a club of countries that monopolize most of the patents, technologies, research centers, and promote the drain of talent from our countries.”

    The G77 Summit on Science, Technology, and Innovation, scheduled for September in Havana, seeks to “unite, complement each other, integrate our national capacities so as not to be relegated to future pandemics,” said Parrilla.

    During his speech on the first day of the Havana Congress, meanwhile, former Greek Finance Minister Yanis Varoufakis called for a new non-aligned movement to “end the legalized robbery of people and Earth fueling climate catastrophe.”

    Read the full Havana Declaration on the New International Economic Order:

    The Havana Congress,

    Recalling the role of the Cuban Revolution in the struggle to unite the Southern nations of the world, and the spirit of the 1966 Havana Tricontinental Conference that convened peoples from Asia, Africa, and Latin America to chart a path to collective liberation in the face of severe global crises and sustained imperial subjugation;

    Hearing the echoes of that history today, as crises of hunger, disease, and war once again overwhelm the world, compounded by a rapidly changing climate and the droughts, floods, and hurricanes that not only threaten to inflame conflicts between peoples, but also risk the extinction of humanity at large;

    Celebrating the legacy of the anti-colonial struggle, and the victories won by combining a program of sovereign development at home, solidarity for national liberation abroad, and a strong Southern bloc to force concessions to its interests, culminating in the adoption of the U.N. Declaration on the Establishment of a New International Economic Order (NIEO);

    Acknowledging that the project of decolonization remains incomplete, disrupted by concerted attacks on the unity of the South in the form of wars, coups, sanctions, structural adjustment, and the false promise that sovereign development might be won through integration into a hierarchical world system;

    Emphasizing that the result has been the sustained divergence between North and South, characterized by the same dynamics that defined the international economic order five decades prior: the extraction of natural resources, the enclosure of ‘intellectual property,’ the plunder of structural adjustment, and the exclusion of the multilateral system;

    Recognizing that despite these setbacks, the flame of Southern resistance did not die; that the pursuit of sovereign development has yielded unprecedented achievements—from mass literacy and universal healthcare to poverty alleviation and medical innovation—that enable a renewed campaign of Southern cooperation today;

    Stressing that this potential for Southern unity is perceived as a threat to Northern powers, which seek once again to preserve their position in the hierarchy of the world system through mechanisms of economic exclusion, political coercion, and military aggression;

    Seizing the opportunity of the present historical juncture, when the crisis of the existing world system can either entrench inequalities or embolden the call to reclaim Southern protagonism in the construction of a new world order based on justice, equity, and peace;

    The Havana Congress calls to:

    • Renew the Non-Aligned Movement: In the face of increasing geopolitical tensions born from a decisive shift in the global balance of power, the Congress calls to resist the siren song of the new Cold War and to renew the project of non-alignment, grounded in the principles of sovereignty, peace, and cooperation articulated at the 1955 Bandung Conference, 1961 Non-Aligned Conference, 1966 Tricontinental Conference, and beyond.

    • Renovate the NIEO: To accompany the renewed non-aligned movement, the Congress calls to renovate the vision for a New International Economic Order fit for the 21st century; a vision that must draw inspiration from the original Declaration, but also account for the key issues—from digital technology to environmental breakdown—that define the present conditions for sovereign development; and to enshrine this vision in a new U.N. Declaration on the occasion of its 50th anniversary.

    • Assert Southern Power: The Congress recognizes that economic liberation will not be granted, but must be seized. As the original call for a New International Economic Order was won through the exercise of collective power in the coordinated production of petroleum, so our vision today can only be realized through the collective action of the South and the formation of new and alternative institutions to share critical technology, tackle sovereign debt, drive development finance, face future pandemics together, as well as coordinate positions on international climate action and the protection of national sovereignty over the extraction of natural resources.

    • Accompany Cuba in the G77: The Congress recognizes the critical opportunity afforded by Cuba’s presidency of the Group of 77 plus China to lead the South out of the present crisis and channel the lessons of its Revolution toward concrete proposals and ambitious initiatives to transform the broader international system.

    • Build a Planetary Bloc: The Congress calls on all peoples and nations of the world to join in this struggle to definitively achieve the New International Economic Order; to build a planetary bloc led by the South and reinforced by the solidarities of the North, whose peoples recognize their obligation to resist the crimes committed in their names; and to bring the spirit of this Havana Congress into the communities that we call home.

    This post was originally published on Common Dreams.

  • ‘We Can Pay for What We Decide to Pay For’ – CounterSpin interview with Michael Mechanic on defunding the IRS

     

    Janine Jackson interviewed Mother Jones‘ Michael Mechanic about defunding the IRS for the January 27, 2023, episode of CounterSpin. This is a lightly edited transcript.

          CounterSpin230127Mechanic.mp3

     

    Jackpot: How the Super-Rich Really Live—and How Their Wealth Harms Us All

    Simon & Schuster (2022)

    Janine Jackson:  ”But can we afford it?” is Big Media’s core debate question—when the “it” is housing for the homeless or universal healthcare or infrastructure maintenance. We may need it, but alas we, it turns out many times, can’t afford it.

    Taxes, of course, are a core way that society pays for things, but as prevalent as is the premise that the country lacks the resources to do things that majorities cry out for—that other industrialized countries do—if anything, louder is the same corporate media’s cry that taxes are too high. And maybe that, come to think of it, is the cause of people suffering.

    Those of us who aren’t so wealthy we forget how many houses we own, or mad that people living in boxes don’t pay the state to justify their existence, those of us who think the point to living in a society is shared costs and shared benefits—well, we have a central stake in tax policy, but not so central a place in corporate media’s conversation about it.

    Michael Mechanic has been writing about tax policy and its impacts for years. He’s senior editor at Mother Jones, and author of the book Jackpot: How the Super-Rich Really Live—and How Their Wealth Harms Us All, out from Simon & Schuster.

    He joins us now by phone. Welcome to CounterSpin, Mike Mechanic.

    Michael Mechanic: Good to be here.

    ProPublica: IRS: Sorry, but It’s Just Easier and Cheaper to Audit the Poor

    ProPublica (10/2/19)

    JJ: Let’s set up the most current events with a little backstory. I’m thinking about ProPublica, in 2019, reporting that, first of all, the IRS audits the poor—people claiming the earned income tax credit, where average recipients make less than $20,000 a year—that the IRS audits them comparatively more than they do the affluent.

    MM: That’s right.

    JJ: But then, the salt for that wound is that when Congress asked the IRS why it audits the poor more than the wealthiest—”where the money is,” as Willie Sutton might say—the IRS response was that, well, it’s easy to audit the poor, and it’s really hard to audit the wealthy. And it just doesn’t have enough money or enough people to audit the wealthy, so it just isn’t going to.

    Well, their priorities are a separate matter from their budget, of course, but underfunding of the IRS is still a reality. And there was some effort to respond to that, right, in the Inflation Reduction Act. But then what happened there?

    MM: Well, the money has been approved by Congress. It’s close to $80 billion over 10 years, and that money should bring the IRS up to where it needs to be. But what happened is, the IRS had a relatively flush budget back in the ’80s, early ’90s, and starting with the Republican Revolution in 1994, with Newt Gingrich taking over the House, Republicans started a concerted attack on the IRS, and chipped away at it over the years.

    And especially after 2010, when the Republicans regained the house during the Obama years, they really went after the IRS.

    NYT: In Targeting Political Groups, I.R.S. Crossed Party Lines

    New York Times (10/5/17)

    And there were these dog and pony show hearings, drummed-up stuff about the IRS going after conservative groups, which was true, but they were sketchy groups. And also they were going after liberal groups, too—you just didn’t hear much of that at the time.

    And what they managed to do is just hack away the IRS budget. They cut it by about 20%, 25%, and they also cut the enforcement budget, more specifically. So the IRS lost a big chunk of its workforce, and most notably, it lost the experts that are required to unravel these incredibly complicated tax returns of sophisticated partnerships and businesses and corporations, and very, very wealthy individuals who have really smart lawyers on their payroll, who are all pushing the envelope of tax avoidance. There’s a lot of gray areas of what’s legal and what’s not.

    And when you don’t have the manpower, this stuff is daunting, and you really need sophisticated tax lawyers—who can get paid more, incidentally, in the private sector, right? So the IRS lost a lot of its top guns, and that left it knee-capped and unable to address these wealthy returns, and you saw this soaring of avoidance.

    JJ: Right. Like my colleague Jim Naureckas says, cheating on taxes is a luxury only the rich can afford. And that’s certainly exacerbated when the IRS and their enforcement are under-resourced.

    MM: Right. Because you have to get caught, and even if they do catch you and call you in, they bring you into this sort of special tax court, which most people have never heard of.

    It’s essentially where this very, very top tier of the richest people in America do their litigation with the IRS. And it seems to be somewhat friendly to them, because they win in a lot of cases.

    And there’s also an appeals process. If they lose in the tax court, they appeal it and appeal it. And it might cost them hundreds of thousands of dollars in legal fees, but they could save millions in the process.

    JJ: Exactly. As opposed to low-income workers who, ProPublica noted, once they were audited—which involved pulling in a lot of documentation that many folks didn’t have—once they were audited, 68% of them were less likely to claim the earned income tax credit in the future, compared to those who weren’t audited. And 14%, they were less likely to file taxes at all.

    In other words, poor people, once they go through this auditing process, which is cheaper and easier for the IRS to do, they leave money on the table out of fear.

    MM: Right. It’s absolutely true that if you look at the audit rates, it’s always higher on the very bottom, and it used to be pretty high on the very top. Under Obama, I think, 2010 was the year it peaked, and it was basically one in four people who reported adjusted income of over $5 million a year were getting audited—as they should be, because there’s just a lot of cheating that goes on at that level. So you really got to watch carefully what people do.

    But as far as the poorer people, a lot of people do claim credits that—you know, they’re not sophisticated people. They don’t have help, or some shoddy tax preparer on the corner tells them they can do this, when they can’t really.

    And so there’s also a high rate of audits there, and it’s almost automatic for the IRS. Whereas with these wealthy people, they will do this calculation: How likely are we to be able to get extra money, apart from what we put into our investigation? Which is a bad way of doing it, really, right? It’s the transactional way of thinking about it.

    But they do, as an institution, kind of have to think that way: Can our budget justify this? And if it doesn’t, they’ll say, well, let’s just let it pass. Not worth going after Donald Trump’s tax expenses.

    JJ: Right. Didn’t the Inflation Reduction Act, to bring us back, didn’t it include some effort to beef up the IRS’s capacities in this regard?

    MM: Yeah, that was the point of it. It was almost $80 billion; about $47 billion, $46 billion of that went to enforcement. And there was some footnote in one of the reports, saying that this money will allow the IRS to maintain a workforce of 87,000 people.

    Well, the Republicans picked up on that, and started saying “87,000 new IRS agents,” which was completely wrong, and they knew it. The total workforce of the IRS right now is probably around 80,000 people, and they really made it sound like they were going to double the workforce, and hire all these guys to come after middle-class taxpayers and poor taxpayers.

    And it was nonsense. What that 87,000 is, is over 10 years of attrition: people leaving their jobs, having to replace them with new people. It would support that workforce, right? But it’s not new agents. And it also included everything from IT guys to the people who answer the phone when you call and need help on your taxes, which has been a big problem.

    But see, not only is the IRS strapped with enforcement, an average taxpayer calls the place, can’t even get through when they have problems. So that’s been a real issue, and that makes people hate the IRS even more than—you know, nobody likes the IRS, nobody likes paying taxes. I think a lot of people say, “I believe that we should pay taxes and support the common good.” But personally? everybody hates it.

    ProPublica: The Secret IRS Files: Trove of Never-Before-Seen Records Reveal How the Wealthiest Avoid Income Tax

    ProPublica (6/8/21)

    JJ: Exactly. And partly because of the opacity and the disconnect between what they feel they’re paying for, and then the responsiveness that they’re seeing. And then, of course, partly because of the very obvious unfairness that folks see, in terms of very wealthy individuals and very wealthy corporations who benefit a lot from social goods. When it comes to tax time, somehow they weirdly owe and pay nothing.

    MM: Yeah, I was saying this is why the Republican Party has been basically trying to make it sound like all this funding is going against ordinary taxpayers, when, in fact, the main thrust of it was to beef up its top-notch enforcement and go after the wealthier taxpayers, from which they think they can recoup a lot more taxes already owed.

    JJ: But now we’re looking at what listeners will have heard described as the Family and Small Business Taxpayer Protection Act, which is ostensibly a response to this resourcing of the IRS that the Inflation Reduction Act was going to introduce.

    Whether or not it has a chance, we are in fact looking at it. So what might listeners have read about this Family and Small Business Taxpayer Protection Act, about what it would do, as compared to what you see it actually doing, should it come to pass?

    MM: What it does is repeal almost all of the money that was allocated for the IRS in the Inflation Reduction Act—it’s like $72 billion out of the $80 billion, it takes back—and it takes back all the enforcement funding.

    It takes back funding for oversight for the inspector general of the Treasury for taxation, that actually in 2020 came out with a report on high-income non-filers, which was, I think, embarrassing to some people, basically showing that there’s a lot of very wealthy people that just aren’t even paying. And not only that, the IRS didn’t have the capacity to even go after a lot of them.

    Essentially, they want to gut what just happened. The new funding that was given to the IRS, they want to gut it, take it back.

    But even just the name of the thing, “Taxpayer Protection Act,” it goes right with the rhetoric of, “The IRS is the bad guy that’s going to come after you.” And it’s easy for people to get riled up about this. And they do. The Republican rhetoric has led to all these crazy TikTok videos and social media posts by militia types, saying, “Yeah, I got your tax refund right here,” showing their guns, and the IRS has gotten all kinds of threats.

    Mother Jones: The IRS Finally Got Some Funding. Now Republicans Want It Back.

    Mother Jones (1/4/23)

    What this law actually does is make it easier to cheat on your taxes. It doesn’t protect taxpayers. As I put it in my piece, it protects tax cheaters. There are some middle-class people, yeah, they will be audited, but it’s a relatively small amount.

    They talk about, they’re going after small businesses. Well, small businesses in America, the way they’re defined, could be quite large. “Small” and “medium-sized” businesses, we’re talking about, in some cases, billion-dollar businesses. Businesses with 500 employees. This is all smoke and mirrors, in a way.

    It is interesting; in your intro, you talked about affordability, and that’s talked about quite a bit, but I would almost argue that affordability is beside the point, because we can pay for what we decide we want to pay for. It’s all about priorities—I mean, if you look at our military budget, etc.

    But it’s a game that the politicians play. We can afford what we decide to afford, and it all has to do with how much we ask people to pay. So if you slash taxes, of course you’re going to have a bigger deficit. And the Republicans, they’re so against running deficits and the national debt; at least when the Democrats are in power, they complain and complain about the national debt. They never complain about it when the Republicans are in power, which is just kind of interesting.

    But then they put forth proposals like this one, the Taxpayer Protection Act, that would actually make the debt worse.

    There’s a disconnect there. It’s all politics.

    JJ: Absolutely. And that is my point, is that whatever the budget, the priorities are always the bottom line. And then, big picture, I think some folks respond to this whole overarching story about tax cheating as, well, it’s all a game and it’s over my head. Or even, well, it’s OK, because someday I’ll be a billionaire, and I’ll want to hide it from the taxman too.

    But to me, it does come back to a big role that I think news media play, which is not just in exposing hidden realities of the way codes work, against who actually pays, against who pays relative to what they bring in.

    But I do think that newspapers tell folks a lot about where their interest lies, and also tell them about whether change is even possible. I wonder what you think about the role of reporting in explaining the situation to people, and maybe showing them what levers for change they have.

    MM: If you are interested in reading it, there’s actually quite a lot written on this stuff. I mean, I write about it all the time. The New York Times writes about it. ProPublica has done fabulous work on this, really great investigative work showing how people game the system.

    And I think what you said earlier, about this ethos that, well, I could get there someday and have these advantages, and so I wouldn’t want to take them away from people. That’s part of this mythical American ethos of mobility that really doesn’t exist. I mean, it’s not real for most people.

    We have always fetishized, in America, the rags to riches stories. And in my book, I cite this example where Bono from U2, who is Irish, is talking to Larry King, the former CNN interviewer, and he says, here in America, you look up at the guy in the mansion on the hill and you say, someday I could live in that mansion. And in Ireland, we look up at the guy on the hill and say, someday I’m going to get that bastard.

    So in America, we really do have a different way of viewing our wealthy people. Sure, we gripe about them, but there’s always this idea, hey, I could make it. And it’s an unrealistic fantasy.

    Mother Jones: How Our Tax Code Is Rigged Against Black Americans

    Mother Jones (3/23/21)

    JJ: Dorothy A. Brown also who teases out different impacts of tax policy on Black people, for example—which is also a distinction lost in this kind of coverage that we’re talking about.

    But she says that she gets pushback, when she talks about disparate impacts of tax policy on different people: “Well, there’s nothing in the tax code about race.” And which, to the extent that that’s true, it’s because that data isn’t collected.

    And so I think the same sort of thing can be said about reporting. If I never read about the way tax policy affects different groups differently, well, then I may never actually consider that. I might not think about that. And the idea that there’s an “us” that’s regular folks, and tax policy hits us all equally, and then there’s rich people, and we can think about the way tax policy hits them.

    I just feel that journalists, and I know you’ve cited examples, but I feel that journalism in the main could do a better job of situating the role of taxes as a societal resource, and of tax collection, as, like, who it comes from, and who is able to just scurry away from it again and again and again.

    Michael Mechanic

    Michael Mechanic: “You read very little about taxation as a good thing. It’s always the attacks on taxation, and the reporters act as stenographers.”

    MM: There’s also—you read very little about taxation as a good thing. It’s always the attacks on taxation, and the reporters act as stenographers. And I even saw the New York Times the other day, quoting 87,000 new—well, they didn’t say “agents,” but they said new “employees.” And the fact is, if you say you have a business, you have a hundred employees and 20 quit, and you hire 20 more, well, are those new employees? Technically, they’re new, but you’re just bringing your workforce up to speed, right? And that’s what this 87,000 number is.

    So whenever you call them new people, you’re kind of missing…. I was like, come on New York Times, you should know better than that.

    JJ: Yeah. And it sounds as though they’re putting in new folks to do some sort of ideological mission and that’s not really—we’re talking about a federal agency trying to do its job.

    MM: You know what’s interesting? I read about this in Michael Lewis’ book, The Fifth Risk. There are actually some federal agencies that are banned by statute from publicizing what they do, and their victories, and how they help people. The reason those laws exist is because somebody in Congress doesn’t want them to be able to tell their victories, because they want people to see government as this bad thing.

    And the government ends up playing  all sorts of crucial roles that we never even hear about because of this. I think the IRS is in that realm. I mean, I’m not sure about that, but you don’t see many positive stories about the IRS, in which you actually hear from people within it, because to most of us the IRS is this big, windowless giant, that’s kind of evil and doesn’t have real human beings in it.

    JJ: It just brings me back to a kind of misunderstanding that is allowed about the way that the IRS actually works, but then also the way that taxes actually work, and that government actually works. And I guess it brings me back to the beginning of, we have a conversation about how we as a society can’t afford certain things, we can’t pay for certain things, and that exists, that sort of scarcity, lifeboat mentality exists, alongside a situation where people understand that we have incredibly, obscenely wealthy people.

    And I look to journalists to connect that disconnect, and tax policy is one way that they could do it.

    MM: Yeah. I will admit that at some points when I’m writing, I fall victim to that same thinking, of the affordability thinking. And I’ve had people call me on it, people who are really obsessed with this issue, say, hey, you should read this and this.

    But to some degree it’s really true. When I talk about the tax code to people, I say it’s really a moral document. It’s a list of our society’s priorities, what we ask people to pay and what we give in return, and to whom. And the way it’s been structured, for quite a long time, is to give more to people who already have, to the people with passive capital.

    Say you have $20 million in excess of your house and your needs, and you put that in the stock market. That’s passive capital. And so you make a lot of money off that, you’re taxed at a much lower rate than the money you get from a paycheck, from working.

    And people try to rationalize this in various ways. And one of the things I hear people say is, well, you have to incentivize investment, blah, blah, blah. And I say, what are they going to do with that money? Are they going to keep it under their mattress if you raise the tax rates? I don’t think so.

    Biden wanted to raise the capital gains tax rate, which is what you pay on those profits from an asset you buy and then later sell. He wanted to raise it to the same rate as ordinary wages, and that would have been part of the Build Back Better thing. And of course that whole thing just didn’t fly.

    NYT: How Accounting Giants Craft Favorable Tax Rules From Inside Government

    New York Times (9/19/21)

    The New York Times actually did some great reporting on this, about the revolving door between the wealth management finance world and the Treasury Department.

    And so you have people coming in and out of that industry, and that industry lobbies heavily to keep all these tax advantages for the wealthy, and so it’s very hard to get rid of them. Then they leave government, they go back to the firms, they get rewarded for it.

    In my reporting, I’ve come across a lot of so-called progressive, extremely wealthy people, and they say, “Hey, I think we should be taxed more, and I’ll say that publicly.” And there are even some groups that exist calling for changes in policy to make the tax code fairer to everyday people, and to tax the wealthy at greater rates.

    But then, on the backside, these people are enlisting the wealth industry to manage their money. And the wealth industry is lobbying to keep those advantages. So you’re having it both ways. You get to be the good guy, and you’re helping the bad guys.

    JJ: I want to end just there, where we’re talking about human beings, because that’s actually at the front end and the back end of all of this. So we will continue this conversation going forward, but for now, I’d like to thank you very much.

    We’ve been speaking with Mike Mechanic; he’s senior editor at Mother Jones and the author of the book Jackpot: How the Super-Rich Really Live—and How Their Wealth Harms Us All. Thank you so much, Mike Mechanic, for joining us this week on CounterSpin.

    MM: I really appreciate you having me.

     

    The post ‘We Can Pay for What We Decide to Pay For’ appeared first on FAIR.

    This post was originally published on FAIR.

  • House Republicans Are Pushing to Make the US Tax Code Further Serve the Rich

    Since Donald Trump’s first presidential campaign and the GOP’s subsequent slide into utter inanity, real life has continued to so far outpace satire that The Onion is starting to seem strangely mundane. Take, for example, the House GOP’s latest lurch into bizzaro-land: Several dozen hard-right lawmakers want to replace the country’s entire progressive tax code with a sales tax of 30 percent…

    Source

    This post was originally published on Latest – Truthout.

  • Bitcoin ATM Companies Are Preying on the Poor

    There’s a laundromat in a working-class immigrant community on the outskirts of Washington, D.C. that is much more than a place to wash and dry clothes. The store offers alternative financial services — bill payment processing, money orders and check-cashing services — charging for many transactions that most banks perform for customers at no extra cost. Millions of people in the United States…

    Source

    This post was originally published on Latest – Truthout.

  • How Concentrated Wealth and Corporate Power Nurtures the Greed of Thieves



    What makes for a thieving culture? An overabundance of pickpockets? Tsunamis of burglary and shoplifting?

    Most definitely not. To truly gauge a society’s larcenous leanings, many of us would posit, we need to look beyond the nimble-fingered and focus more on the smooth-talkers, the power-suited flimflammers who thrive in any society where significant numbers of people feel a driving need to get rich quick.

    The most recent example? Federal prosecutors last month charged the crypto currency CEO phenom Sam Bankman-Fried with committing “one of the biggest financial frauds in American history.” The 30-year-old billionaire, the Securities and Exchange Commission charges in a separate filing, built an immense financial empire on a “house of cards.”

    The executive now trying to pick up those cards — the new CEO of Bankman-Fried’s FTX cryptocurrency exchange — says his predecessor simply engaged in “old-fashioned embezzlement,” not even stopping to bother with the “highly sophisticated” thieving of Enron’s fabled executive crooks a generation ago.

    Right before Bankman-Fried’s brief appearance on America’s economic stage, the nation’s face of fraud belonged to Elizabeth Holmes, the founding CEO of the health-tech company Theranos.

    Holmes raised some $900 million from a “star-studded” list of investors who ranged from media mogul Rupert Murdock to Henry Kissinger. Early in 2021, a federal jury convicted her of various frauds in what the Washington Post called “the most high-profile test of whether Silicon Valley’s “fake it until you make it” ethos could withstand legal scrutiny.”

    The hustles of our Bankman-Frieds and Elizabeth Holmeses can certainly make for entertaining reading. But Freya Berry, a veteran corporate fraud investigator, sees their scams “as not as unusual as you might think” — and not as entertaining either. With “rewards high” and “penalties higher,” she notes, corporate miscreants “go to great pains to conceal” their nefarious ways, even “making death threats to whistleblowers.”

    We need these whistleblowers. We also need to understand that our thieving culture rests on more than the outright larceny of our indicted corporate crooks. Our most accomplished corporate thieves, in fact, never fear indictment. They steal in broad daylight. They regularly steal livelihoods — from the thousands upon thousands of men and women who’ve worked ever so diligently, sometimes for many years, to make them fabulously rich.

    We’re now living through an intense stretch of this theft. Tech’s top execs are now laying off workers at a fearsome rate. Earlier this month, Microsoft announced plans to pink-slip some 10,000 workers. Amazon is cutting 18,000, Google parent Alphabet 12,000, IBM nearly 4,000. Overall, estimates Forbes, tech firms have so far this month alone given the heave-ho to 56,000 employees.

    What makes these layoffs “thefts”? Simple avarice. Investors on Wall Street “expected more growth,” explains Grid economics analyst Matthew Zeitlin, than Big Tech companies “are currently showing.” That has Big Tech share prices sinking, “and any time share prices fall, investors and executives get antsy — and workers often pay the price.”

    Meanwhile, the antsy CEOs slashing all these jobs are continuing to stuff dollars into their own personal pockets, at overall pay rates that rarely dare drop below a quarter-million dollars a week.

    This past October, Microsoft disclosed that chief exec Satya Nadella’s annual compensation had jumped 10.2 percent to just under $55 million. Nadella now makes more in one year than the typical Microsoft employee can make in 289 years. Back in 2018, the typical Microsoft worker only had to labor 154 years to earn what the company’s CEO made in just one.

    This past December brought news that Alphabet’s Sundar Pichai has a new three-year “performance” package that stands to award him $210 million.

    Execs like these set a thieving tone for our entire society. Their grand fortunes don’t just make the rest of us feel ever poorer. They leave us ever more vulnerable to the con artists who promise shortcuts to jackpots.

    And this larceny from our corporate world’s most “respected” chief execs supplies the con artists among us with rationalizations for their own scamming behaviors. The corporate big boys play their games, they tell themselves, we play ours.

    Societies that let enormous wealth concentrate in the pockets of a few make all this inevitable. They nurture greed and grasping. They always have. They always will.

    This post was originally published on Common Dreams.

  • Michael Mechanic on Underfunding the IRS

     

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    Fat cat pays pittance to Uncle Sam.This week on CounterSpin: If repeated messaging about how we “can’t afford” public goods but we should always be “cutting taxes” isn’t discordant enough, corporate media’s guiding yet unspoken theory has some corollaries—one of which is that because wealthy people pay large (if not proportionate) amounts of money in taxes, they should get policies that reward them, including those allowing them to keep, and grow, their extreme wealth and its concomitant power. That’s how we wind up with congressional Republicans’ efforts to claw back the attempts the administration made to actually help the IRS start to audit the notoriously tax-avoiding wealthy. The message from many politicians and their media amplifiers: Cheating on taxes is a luxury only the rich can, or should be able to, afford.

    We know come April there will be a swell of “news you can use” stories about how to save a dime or two on your taxes. We get a bigger picture story this week from Mother Jones senior editor Michael Mechanic, author of Jackpot: How the Super-Rich Really Live—and How Their Wealth Harms Us All.

          CounterSpin230127Mechanic.mp3

    The post Michael Mechanic on Underfunding the IRS appeared first on FAIR.

  • 2022 Was a Bad Year for Billionaires—But Not Nearly Bad Enough

    ometimes the daily news about our billionaires just doesn’t seem to make any sense.

    Last year, for instance, ended with a torrent of news stories about how poorly the world’s billionaires fared in 2022. Bloomberg tagged the 12 months that had just gone past “a year to forget,” with almost $1.5 trillion “wiped from the fortunes of the richest 500 alone.”

    All global billionaires taken together, Forbes chimed in, lost $1.9 trillion in 2022. Some 148 of the world’s 2,671 billionaires even lost their billionaire status.

    The year’s biggest billionaire losers? Some of America’s deepest pockets. Larry Page saw his Google-driven fortune drop $40 billion, Mark Zuckerberg watched $78 billion evaporate off the wealth Facebook created for him, and Amazon’s Jeff Bezos had to swallow a minus $80 billion.

    But honors for the biggest nosedive of all have to go to Elon Musk. The world’s richest man at the start of 2022, Musk ended the year losing both his top slot and some $115 billion off his personal fortune.

    So did all these losses have our billionaires shaking in their boots? Did they start tightening their belts a bit in 2022? Spend less on the world’s most fabulously expensive luxury must-haves?

    Not exactly. In fact, not all. The world’s most celebrated purveyors of pure extravagance actually registered record years in 2022. Rolls-Royce had its best-ever annual sales total, selling a record 6,021 “motor cars,” up 8 percent over 2021.

    “Our clients,” Rolls-Royce’s CEO crowed on New Year’s Day, “are now happy to pay around half a million Euros for their unique motor car,” a sum equal to about $540,000 in the United States, the company’s single largest market.

    “Our order book stretches far into 2023 for all models,” the Rolls-Royce chief added. “We haven’t seen any slowdown in orders.”

    Lamborghini had an even better 2022, with 9,233 vehicles sold, a 10-percent jump over last year. The company’s biggest market? The United States. Americans drove off Lamborghini lots with 2,771 new cars in 2022. The automaker’s most popular model runs about a quarter-million.

    Realtors who cater to the ultra-rich set had an equally boffo year in 2022. In a down overall real-estate market, the highest of high-end residences still pulled in mega sums at closing time. The year’s top ten home sales in the United States, notes the luxury-oriented Robb Report, “totaled roughly $1.165 billion, proving that, impending recession or not, luxury real estate will always be traded.”

    How can all this luxury be? How can the richest of the rich be spending fantastic sums in a year when they’re seeing fantastic falls in their personal net worths? Simple. In the realms of the super rich, losing a billion — or even many billions — off your personal fortune makes no difference whatsoever in real daily life. Net worth down a few billion? You can still afford anything your heart could possibly desire.

    No one alive today needs fortunes worth dozens of billions to live astoundingly large. A mere billion will suffice. So, truth be told, would a mere tenth of a billion. Indeed, in the neighborhoods of our super rich, the number of billions a billionaire may have holds no practical significance. The number of billions our super rich have accumulated essentially only matter as a way of keeping score in the ongoing status competition our deepest pockets so relentlessly wage.

    But we need to note one exception here, one aspect of rich-people life where the size of your fortune does make a real difference. Adding billions upon billions will never make a billionaire any more comfortable. Adding on those extra billions will make a billionaire more politically powerful.

    At the expense of the rest of us. We need more than a dip in grand concentrations of private wealth. We need a world without billionaires.

  • Activists Call for Mass Rallies on Sunday to Protest Abortion Bans

    Abortion rights activists are holding mass rallies across the country on Sunday to mark what would be the 50th anniversary of Roe v. Wade, the Supreme Courtruling that enshrined the constitutional right to abortion until right-wing justices struck it down last year. In Louisiana, one of at least 13 states that banned most abortions since the ruling, Nancy Davis will be a leader at the march in the…

    Source

    This post was originally published on Latest – Truthout.

  • A Fresh Plea for the Very Rich to Make a Truly Wise Investment for a More Just Society



    The super successful mega-investor, Warren Buffett, CEO of the giant conglomerate Berkshire Hathaway, was heard to say: There are only 535 members of Congress, why can’t 300 million Americans control them? That’s a pretty fundamental question since our senators and representatives are given their sovereign power by the people. Remember the preamble to our Constitution?

    Buffett is a generous philanthropist. Among his contributions, he has given the Gates Foundation (public health projects) about $3 billion each year for over a decade. That’s over $30 billion dollars! Just one $3 billion contribution, devoted to establishing systemic-focused Congress Watchdog locals in every congressional district, would fund such groups for more than thirty years. Their objective would be to organize up to one-half of one percent of adults to volunteer in each congressional district to make sure our elected officials do the general public’s bidding under honest election procedures. The American people and their children have far more commonly desired necessities and wants than the hyped divide-and-rule tactics imposed by the present ruling powers imply. (See, Unstoppable: The Emerging Left-Right Alliance to Dismantle the Corporate State by Ralph Nader, April 2014).

    I can hear some readers saying, “Well, if Mr. Buffett is such a public-spirited person, why don’t you ask him to do this? You’ve been writing about these groups for many years.” (See my recent columns: Think Big to Overcome Losing Big to Corporatism, January 7, 2022; Facilitating Civic and Political Energies for the Common Good, February 2, 2022; Going for Tax Reform Big Time, March 11, 2022; and Going for Big Watch on Big Budgets, March 31, 2022).

    Answer: I did once, broadly, in a written letter. No connection was made. In 2011, I wrote a fictional book, “Only the Super-Rich Can Save Us!” about a Warren Buffett recoiling from the immediate neglectful aftermath of the 2005 Hurricane Katrina disaster in New Orleans. In the book, he launched, with 16 other enlightened individuals, a just, step-by-step democratic overhauling of American politics top-down and then bottom-up.

    This realistic work of fiction caught his attention. He invited me to showcase the book at his massive annual shareholder’s meeting in Omaha, Nebraska. I went.

    At an earlier breakfast, I mused about the story becoming a Hollywood movie. He amusingly asked who would play his character. I mentioned actors like Warren Beatty or Alan Alda.

    In any event, nothing came of these interactions. My guess is that having to closely supervise over 70 managers of the sizable corporate subsidiaries of Berkshire requires an intensity of focus and time that is incompatible with the additional project of changing Congress to get good things done – popular as that would be in today’s America.

    Some knowing readers might ask why Buffett doesn’t ask his network of some 236 multi-billionaires, who have signed on to his Giving Pledge, to donate half of their wealth to “good works.”

    Answer: A condition for the Giving Pledge is that these philanthropists would not urge or ask each other to support their favored causes.

    The obvious rejoinder to that impediment might be, “Surely this reflective man, who gets his calls returned, can create the necessary institutional network and public investments to make these long-overdue changes” – again top-down then bottom-up. Probably, yes. But the problem is, neither he nor his collaborators want to be the recipients of daily vitriol and smears so easily conveyed to the world through the Internet. They want to be left to concentrate on their own business or other pursuits in retirement.

    So, what it comes down to is the perceived sense of great urgency, coupled with a belief that a group, such as described, is unique to being able to make a significant, lasting difference for the present and for posterity. That is what a civic sense of legacy, demonstrated already by the Pledgors, is – but multiplied many times over by institutional and structural reforms, backed by a critical mass of an alert citizenry, and nurtured by regular civic education for all ages.

    If any readers are in a position to have a few of these otherwise predisposed mega-donors come to a discussion about this opportunity, the generic questions to pose to them are: What if? How to? And why not? Taken together, my four books “Only the Super-Rich Can Save Us”! Unstoppable: The Emerging Left-Right Alliance to Dismantle the Corporate State, Breaking Through Power: It’s Easier Than We Think, and the Fable The Day the Rats Vetoed Congress provide detailed pathways to deep-rooted transformations of our country backed by about four-fifths of the American people.

    There are, predictably, many readers who will scoff and stereotype all very rich people with a totally dismissive brush. There are, however, enough examples in American history that expose this wave-of-the-hand as an excessive generalization. Some are not like the rest. Even some of the rest should be given the opportunity to make amends.

    Responses are invited: info@csrl.org

    This post was originally published on Common Dreams.

  • Spraying of Homeless Woman Reflects Larger Violence Against Unhoused People



    In the 14-second video now seen by millions, San Francisco gallery owner Collier Gwin stands nonchalant yet intent, his legs crossed casually, his age-folded face glaring as he pummels a Black homeless woman on the sidewalk with cold water spray.

    Yes, it’s 2023, and a wealthy White man is blasting a hose on a homeless Black woman for sitting on the sidewalk, literally as if she were trash. Power dynamics don’t get much starker than that.

    We hear of vile, violent abuses against homeless people often, but it’s rarely caught on video. Here, thanks to a concerned passerby, Gwin’s soulless, sickening assault became documented, indisputable evidence of a violent crime. He’s right there in the video, glaring at the woman, blasting cold water on her, shouting “Move! Move!”

    Unhoused people are told to “move” constantly, by vigilantes like Gwin and by city police, public works teams, and by society writ large. Just “move” away from this spot right here, where we can see you, to some other spot; out of sight, out of mind.

    In a moment, Collier Gwin became a hashtag of horrors, his gallery a window-shattered memory, a one-starred on Yelp. With rising anger came alleged death threats, and soon local television predictably changed the narrative: suddenly, the story was about Gwin’s grievances, his lost patience after supposedly trying to help the woman, and about the cascading threats. There was no talk about the homeless woman, her loss and pain, her experience surviving on these cold mean streets.

    The woman, the crime victim, was disappeared—nameless, faceless, lost entirely from view. She was described only in Gwin’s terms, as a nuisance. We can’t even “say her name,” because we don’t know it.

    The woman, the crime victim, was disappeared—nameless, faceless, lost entirely from view.

    Meanwhile Gwin, who was at first stunningly unapologetic, embarked on an apology tour of sorts, with a maddeningly compliant media aiding and abetting. He griped to local media, “Nobody can get into their stores or into their offices. And so consequently, you know, if she got wet when that was happening, it was because she was there getting wet.”

    Instead of a story of violence against a homeless woman, the narrative became about Gwin “snapping,” about ” patience wearing thin” with homelessness—and even with the term “the homeless,” as media still call “them.” Instead of a story about the larger violence and criminality of homelessness amid this city and region’s epic wealth, Gwin’s assault became contorted into a “yeah, but” tale of ultra-privileged exasperation at the unsightly, unprofitable plight in the streets.

    Lost in the hubbub about Gwin’s attack is the larger constant violence that San Francisco and other big cities wage on unhoused human beings every day. Here in this supposedly “liberal,” allegedly “tolerant” city of Saint Francis, homeless people are policed relentlessly, pushed from block to block, and “swept” from view by the city’s Department of Public Works, their tents and belongings (clothing, medication, other personal valuables) destroyed.

    Even in this cold rainy “Bomb cyclone” winter that’s been nasty enough for President Biden to declare a state of emergency, the city continues to “sweep” away homeless people and trash their belongings—in violation of both basic humanity and a court ruling ordering the city to stop its “sweeps” when it has a chronic shortage of shelter space.

    This and other daily violence against unhoused human beings is enabled and empowered by an increasingly virulent, reactionary narrative that the poorest of the poor in our society are somehow the problem, that “they” are a nuisance, that “they” are the ones to blame. This is not just a rightwing Republican talking point—it is increasingly adopted by neoliberal Democrats and so-called “moderates” and centrists who insist they are “fed up” with the crises in the streets.

    Just a day before Gwin’s hose spraying attack, one Tweeter I regrettably engaged with bellowed, “Good, sweep them all away!” Three others “liked” the comment. Another said of homeless people, “Comfortable is a state of being for them. They prefer to not work. No responsibility. No bills. Do drugs. Get free stuff/food.” Many peddle the bizarre false notion that the city “pays” homeless people hundreds of dollars a month to live on the streets. Even if someone filled out endless forms, stood on endless lines, and managed to get a host of city, county, state, and federal aid that somehow amounted to “hundreds” of dollars, it would be at best barely enough to stay alive, and nothing more.

    This increasingly predominant and insidious neoliberal view falsely (and counter-productively) blames the individual rather than the system (yes, our structural system) of extreme private wealth accumulation and a 40-year demolition of public-sector solutions that are the real root causes of this impoverishment and suffering. We can chart this back to President Reagan’s decimation of aid to poor people, and mental health and public housing supports.

    We should all be fed up with acts like Gwin’s inhumane assault and by the city’s daily violence and harassment of homeless people. We should all be fed up with the completely preventable epidemic of homelessness amid epic, obscene wealth and inequality. We should all be fed up knowing that, for all its complexities and varied contexts, homelessness can be prevented by mustering our vast financial resources (city, regional, and national) and some political humanity and courage to invest in meeting people’s basic needs.

    Gwin’s violence against this homeless woman was despicable, and he should be held accountable for his crime. It took more than a week for district attorney Brooke Jenkins to issue an arrest warrant, charging Gwin with misdemeanor battery “for the alleged intentional and unlawful spraying of water on and around a woman experiencing homelessness.” With TV crews conveniently on hand, city police picked up Gwin at his gallery.

    Meanwhile, the larger crime of homelessness amid extreme wealth goes unchecked; as does the city’s ongoing “sweeps” of unhoused people and illegal destruction of their belongings, in violation of court orders. While Gwin’s violence against a homeless woman may seem an egregious outlier, it’s indicative of a broader violence, hatred, and dehumanizing of homeless human beings. For homelessness to end, this larger violence and crime—the false, stale, and harmful blaming and scapegoating of homeless people, the perception that “they” are the problem—must end.

    This post was originally published on Common Dreams.

  • ‘We Need Medicare for All’: Record Number in US Postponed Healthcare in 2022



    Nearly 40% of people in the United States said they or a family member delayed medical care last year due to the prohibitively high cost of treatment under the nation’s for-profit healthcare model, according to a Gallup survey published Tuesday.

    As U.S. residents faced soaring prices for private insurance, the percentage of them forgoing medical services as a result of the costs climbed 12 points in one year, from 26% in 2021 to 38% in 2022. Of those who reported postponing treatment last year, 27% said they or a family member did so “for a very or somewhat serious condition,” up nine points from the previous year.

    “After health insurance companies raised prices 24% last year and made nearly $12 billion in profits last quarter, 38% of Americans now report they or a family member put off needed medical care because it was too expensive,” Sen. Bernie Sanders (I-Vt.) tweeted in response to the new findings. “We must end this corporate greed. We need Medicare for All.”

    Gallup has been collecting self-reported data on this issue since 2001. The firm’s latest annual healthcare poll, conducted from November 9 to December 2, found the highest level of cost-related delays in seeking medical care on record, topping the previous high of 33% (2019 and 2014) by five points and marking the sharpest annual increase to date. The proportion of people who said they or a family member postponed treatment for a serious condition in 2022 (27%) also surpassed the previous all-time high of 25% (2019).

    Lower-income households, young adults, and women in the U.S. are especially likely to have postponed medical care due to high costs.

    According to Gallup:

    In 2022, Americans with an annual household income under $40,000 were nearly twice as likely as those with an income of $100,000 or more to say someone in their family delayed medical care for a serious condition (34% vs. 18%, respectively). Those with an income between $40,000 and less than $100,000 were similar to those in the lowest income group when it comes to postponing care, with 29% doing so.

    Reports of putting off care for a serious condition are up 12 points among lower-income U.S. adults, up 11 points among those in the middle-income group, and up seven points among those with a higher income. The latest readings for the middle- and upper-income groups are the highest on record or tied with the highest.

    Another recent survey found that just 12% of Americans think healthcare in the U.S. is handled “extremely” or “very” well. Such data provides further evidence of the unpopularity of a profit-maximizing system that has left 43 million people inadequately insured, kicked millions off of their employer-based plans when the coronavirus caused a spike in unemployment, and contributed to the country’s startling decline in life expectancy.

    Last week, prior to the publication of Gallup’s poll, Rep. Ro Khanna (D-Calif.) wrote on social media: “If you don’t believe corporate greed has deadly consequences, take a look at the decline in American life expectancy. We need Medicare for All, and we must raise the minimum wage.”

    While the current, profit-driven U.S. healthcare system—which forces millions to skip treatments to avoid financial ruin and allows the pharmaceutical and insurance industries to rake in massive profits—is deeply inefficient and unpopular, polling has consistently shown that voters want the federal government to play a more active role in healthcare provision, with a majority expressing support for a publicly run insurance plan.

    Recent research shows that a single-payer system of the kind proposed in Medicare for All legislation introduced by Sanders and Rep. Pramila Jayapal (D-Wash.) could have prevented hundreds of thousands of Covid-19 deaths in the U.S. over the past two and a half years.

    Not only would a single-payer insurance program guarantee coverage for every person in the country, but it would also reduce overall healthcare spending nationwide by an estimated $650 billion per year.

    “Millions of Americans across this country are avoiding seeking lifesaving medical care because they’re afraid it will bankrupt them,” Khanna, a universal healthcare advocate, tweeted last week. “In many cases, their fears are well-founded. We need Medicare for All.”

    This post was originally published on Common Dreams.

  • For Every $1 Gained by a Bottom 90 Percenter Since 2020, a Billionaire Got $1.7M

    While the vast majority of people were struggling to stay alive and weather economic instability during the first two years of the pandemic, the world’s richest 1 percent were thriving as the proportion of new global wealth they were capturing soared to new heights, a report reveals. Over the past decade, the global top 1 percent has taken about half of all new wealth — an already extremely high…

    Source

    This post was originally published on Latest – Truthout.

  • If This Global Austerity Continues, So Will Angry Protest



    This week world leaders meet in Davos to discuss cooperation to address multiple crises, from COVID-19 and escalating inflation to slowing economic growth, debt distress and climate shocks.

    Only three months earlier, finance ministers had gathered in Washington DC for the same reason. The mood was grim. The need for ambitious actions could not be greater; however, there were no agreements, evidencing the fragility of multilateralism and international cooperation.

    Worse, policy makers -advised by the International Monetary Fund- are resorting to old, failed and regressive policies, such as austerity (now called “fiscal restraint” or “fiscal consolidation”), instead of much needed corporate/wealth taxation and debt reduction initiatives, to ensure an equitable recovery for all.

    A recent global report alerts of the dangers of a post-pandemic wave of austerity, far more premature and severe than the one that followed the global financial crisis a decade ago. While governments started cutting public expenditures in 2021, a tsunami of budget cuts is expected in 143 countries in 2023, which will impact more than 6.7 billion people or 85% of the world population.

    “Unless policymakers change course, we shouldn’t be surprised to see increasing waves of protests all over the world.”

    Analysis of the austerity measures considered or already implemented by governments worldwide shows their significant negative impacts on people, harming women in particular. These austerity policies are: targeting social protection, excluding vulnerable populations in need of support by cutting programs for families, the elderly and persons with disabilities (in 120 countries); cutting or capping the public sector wage bill, this is, reducing the number and salaries of civil servants, including frontline workers like teachers and health workers (in 91 countries); eliminating subsidies (in 80 countries); privatizing public services or reforming state-owned enterprises (SOEs) in areas such as public transport, energy, water; reforming hard-earned pensions by adjusting benefits and parameters, resulting in lower incomes for retirees (in 74 countries); (6) labor flexibilization reforms (in 60 countries); reducing employers’ social security contributions, making social security unsustainable (in 47 countries); and even cutting health expenditures despite COVID-19 is not over.

    Austerity and all the human suffering it causes is evitable, there are alternatives. There are at least nine financing options, available even in the poorest countries, fully endorsed by the UN and international financial institutions, from increasing progressive taxation to reducing debt. Policymakers must urgently look into these. Many countries have already implemented them.

    In recent years, citizens have protested austerity all around the world. A recent study on world protests shows that nearly 1,500 protests in the period 2006-2020 were against austerity. Citizens demand better public services, social protection, jobs with decent wages, tax and fiscal justice, equitable land distribution, and better living standards, among others. Protests against pension reforms, and high food and energy prices have also been very prevalent. Recently, the jobs and cost-of-living crises have been accentuated by the COVID-19 pandemic, resulting in more protests despite lockdowns.

    The majority of global protests against austerity and for economic justice have manifested people’s indignation at gross inequalities. The idea of the “1% versus the 99%,” that emerged a decade ago during protests over the 2008 financial crisis, has spread around the world, feeding grievances against elites and corporations manipulating public policies in their favor, while the majority of citizens continue to endure low living standards, aggravated by austerity cuts.

    Let’s remember that trillions of dollars have been used to support corporations during the pandemic and to support military spending. Now people are being asked to endure austerity cuts, at a time when they are suffering a cost-of-living crisis. The 2023 meetings in Davos are being faced with new protests and demands to tax the rich.

    Unless policymakers change course, we shouldn’t be surprised to see increasing waves of protests all over the world. Clashes in the street are likely to intensify if governments continue to fail to respond to people’s demands and persist in implementing harmful austerity policies. Governments need to listen to the demands of citizens that are legitimately protesting the denial of social, economic and civil rights. From jobs, public services and social security to tax and climate justice, the majority of protesters’ demands are in full accordance with United Nations proposals and the Universal Declaration of Human Rights. Leaders and policymakers will only generate further unrest if they fail to act on these legitimate demands.

    This post was originally published on Common Dreams.

  • New info shows the cost of living crisis hits poor people the hardest

    As the cost of living crisis continues, new research has told poor people what they already knew: that financially, they’re screwed. However, what the data does do is shine a useful light into just how bad things are.

    Cost of living crisis: dire straits

    Torsten Bell is the chief executive of think tank the Resolution Foundation. The group does a lot of research into how government policy affects the poorest people. Now, Bell’s team has crunched some more numbers. He tweeted that 65% of the poorest fifth of people have no savings at all:

    This has hardly changed since 2016-18, at a time when the poorest people who were in bad health could save even less. However, it’s no surprise that poor people can’t save any money. This is because they spend more on everyday costs than all other groups – from housing to food – and the least on “recreation”:

    weekly expenditure by decile

    Soaring inflation has hit the poorest people the hardest. So their ability to save is directly linked to income, as Office for National Statistics (ONS) data has shown:

    Median income across deciles

    Falling into arrears

    However, Bell showed another problem: that the poorest people are also often behind on their bills:

    Again, it’s no surprise that people reliant on social security are in the worst position regarding paying bills. This is because successive Tory governments have repeatedly frozen benefit rates, cutting them in real terms. Similarly, polling commissioned by the BBC found that 32% of social housing tenants had fallen behind with utility bills in the past six months during the cost of living crisis. Between 2016 and 2018, the poorest fifth of people had the highest rates of “problem debt”, despite having the least money. This is likely to be the same now. Yet as Bell pointed out, the government helps the poorest people the least when it comes to savings:

    The end result of this is financial chaos for the poorest people.

    A catastrophe

    The BBC carried out a poll, but didn’t check whether people were rich or people. The poll found that:

    Half those asked paid for at least some of their Christmas and holiday season spending on credit.

    And:

    A third of respondents to the poll who used credit to help get through Christmas and the holiday season said they were not confident about their ability to repay.

    This leads to a deterioration in people’s mental and emotional wellbeing. Search engine optimisation agency BlueArray reported that surveying showed that:

    when asked if they are worried about affording essentials such as food, clothing, housing, and travel over 84% are worried with 36% of these being extremely worried.

    It also found that:

    87% of those surveyed say financial stress is impacting their mental health with 26% of those saying it impacts them a lot.

    2023 is going to be a disaster for countless people during the continuing cost of living crisis. With no savings, little meaningful government support, and energy bills set to go up again, the poorest people are running out of places to turn. So, it will be left to communities and not-for-profit groups to pick up the pieces.

    Featured image via pixabay

    By Steve Topple

    This post was originally published on Canary.

  • Private Equity Is Turbocharging Damage of Payday Lending Industry

    Predatory lending is an easily overlooked business that has damaged communities of color and poorer people for decades. It traps borrowers in never-ending cycles of debt with high-interest loans on coercive terms. But when Wall Street private equity gets in on the predatory lending industry, it amplifies the magnitude of financial exploitation.

    Private equity, put simply, is supercharging the payday and predatory lending industries as it does in any other industry. Private equity has the money — big money — to buy control of lenders and reach more people with greater levels of abuse than they could before. That means more of the infamous debt traps that characterize predatory lending.

    Over the last decade, private equity brought additional financial resources, and in some cases, a new level of sophistication, to the subprime lenders they acquired, often enabling the payday and installment lenders they acquire to buy competitors. Only a few months ago, private equity firm Park Cities Asset Management took control of Elevate Credit.

    Elevate is a notorious predatory lender. “Elevate raked in over a half billion dollars in 2013 alone. And they showered over $210,000 of that cash on federal lobbyists to attempt to hinder regulations of the payday loan industry,” according to the website Payday Lending Facts. In August 2022, a federal judge in Virginia gave final approval to a settlement involving Elevate Credit, where the company agreed to pay $33 million to resolve litigation related to a predecessor company’s dealing with various tribes.

    Private equity firms own more than 5,000 payday lending stores in America and provide capital for several startups’ online payday loans, a 2017 report from Americans for Financial Reform showed. The predatory lender, Mariner Finance, had only 57 branches in seven states in 2013. It now has roughly 480 branches in 22 states, nearly a decade after the Wall Street private equity firm Warburg Pincus – headed by former U.S. Treasury Secretary Tim Geithner – acquired it. In addition to that financial power, private equity has access to bond markets to fuel its expansion.

    Private equity firms Diamond Castle Holdings and Golden Gate Capital merged Checksmart Financial and California Check Cashing Stores into Community Choice Financial in 2011, and over the years, acquired or rolled up other companies like CURO and Direct Financial Solutions to build what is now a network of nearly 500 locations nationwide.

    Predatory lenders owned by private equity firms create incentives for their employees to mislead consumers on loan requirements. Private equity firms often pressure employees at predatory lenders they own to sell what are known as “add-on products.” For example, a lender may insert credit insurance on auto or personal loans or try to add high service fees.

    “Mariner’s policies and business practices are set and directed by headquarters, leaving minimal discretion to branch managers and loan officers to extend loans that work best for consumers according to their needs and financial condition,” Pennsylvania Attorney General Josh Shapiro wrote in a 2022 lawsuit against Mariner Finance. “The primary directive is to sell.”

    For example, finance companies like predatory lenders often charge consumers all payments for any add-on products as a lump sum at origination. Essentially, even if a product expires years earlier during the loan term, consumers are still required to make payments on these add-ons. They often use illegal debt collection tactics to create a false sense of urgency to lure overdue borrowers into payday debt traps. Private equity-owned payday lender, ACE Cash Express, was one of the first companies in 2014 to be fined by CFPB for that business practice.

    Mariner Finance, which specializes in personal loans of $1,000 to $25,000, with interest rates of up to 36 percent that can be inflated by additional fees. Fortress Investment Group owns similar installment lender OneMain Financial, while the Blackstone Group ― founded by billionaire Stephen Schwarzman ― controls Lendmark Financial Services, which in general, charge up to 30 percent in interest rates for its loans.

    Payday loan lenders commonly charge fees of $15 for every $100 borrowed, which equals a 400 percent interest rate for a two-week loan. They prey on low-income and minority borrowers with arbitrary fees that are often more than what is permitted by their local states. “A high rate isn’t automatically a form of predatory lending—it may be higher because of your creditworthiness—but an unusually high one is definitely a red flag,” attorney Andrew Pizor with the National Consumer Law Center pointed out.

    Predatory lenders target Black borrowers specifically. In Houston, while African-Americans make up only 15.6 percent of auto title lending customers and 23 percent of payday lending customers, 34.8 percent of the photographs on these lenders’ websites depict African-Americans, per a 2021 study by Jim Hawkins and Tiffany C. Penner of the University of Texas. Black Americans make up roughly 13 percent of the total American population, but end up with 23 percent of all storefront payday loans,” Pew Trusts reported.

    Payday lending is inherently predatory and private equity is turbocharging its abuses, enlarging the burden it places on low-income individuals and borrowers of color. About 18 states across the country have a 36 percent rate cap or below to fight this problem, but many predatory lenders operate nationally. Congress must step in with a usury cap that applies nationwide. Stronger protections are the only way to stop the damage caused by predatory lenders, who now increasingly have the financial muscle of private equity behind them.

  • A reproductive justice pioneer on what the abortion debate misses

    Loretta J. Ross stands behind a podium giving a speech at the Women's Media Awards. She has one arm raised and is speaking animatedly.

    Reading Time: 5 minutes

    Loretta J. Ross is a human rights advocate and founding member of the organization SisterSong Women of Color Reproductive Justice Collective.

    Since its founding in 1997, the group has become a leading voice for the concept of reproductive justice as an alternative framework to pro-choice and anti-abortion arguments. The three tenets of the concept are: the right to have a child; the right not to have a child; and the right to raise a child in a safe and healthy environment. 

    Much of it is reflected in Ross’s life experience. Ross became pregnant at age 14, but could not have a legal abortion. She carried the child to term, declined to place him up for adoption and raised him with the help and support of her parents. 

    She became pregnant again two years later while in college and was able to have an abortion. But later on, a defective contraceptive device left her sterile.

    A longtime activist and former director of the DC Rape Crisis Center, Ross is an associate professor of women and gender studies at Smith College. She is a 2022 recipient of a MacArthur Foundation “genius grant” awarded to outstanding scholars, artists and activists.

    *Excerpts of this conversation have been edited for length and clarity. 

    In a recent conversation, Ross began with a description of the difficulty of being a parent to a child born of rape whom she would have chosen not to bear and making the decision not to place him for adoption.

    I never stayed actively in contact with my cousin, who was my son’s father, but [my son] was desperate to do so. I think all children have an idealized version of their parents, and so it was very difficult for me to permit him to have a relationship with his father when I wanted nothing to do with him… 

    My mother and father co-parented with me. Keep in mind I was 14, so I was a baby raising a baby. That would have been an impossible situation for both me and my son if my parents hadn’t agreed to raise him with me.

    I didn’t realize, until many, many years later, that I was involuntarily extending my mother’s parenting obligations, because she had had and raised eight kids. That was a tremendous sacrifice on her part… 

    Mom was still actively parenting my disabled sister, who was bedridden with polio and spinal meningitis and epilepsy. At the same time, she was taking care of an infant, my son, while I went off to college. We would have never made it if it hadn’t been for my parents.

    Two phrases in the contemporary public discourse around abortion are similar but not the same. I asked Ross to explain the difference between reproductive justice and reproductive rights. 

    One of the critiques reproductive justice offers is that both the pro-life and pro-choice movements only focus on the pregnancy. They never focus on what is happening in the person’s life before the pregnancy occurs because if the pregnant person doesn’t have economic security, a life free from domestic violence, or the right to stay in school or a bedroom to put a child in, or a whole lot of other human rights issues, all of those issues affect their reproductive decision making.

    So when facing an unplanned pregnancy, if you have good answers to those human rights concerns like job security, educational opportunities, a decent place to raise your child, to house your child, to feed your child, then many people dealing with an unplanned pregnancy may turn that unplanned pregnancy into a child. But if you have bad answers to those human rights concerns, then that increases the likelihood of turning that unplanned pregnancy into an abortion.

    So starting with the pregnancy is too late. You have to go upstream to examine what human rights violations predate the pregnancy in order to be fully supportive of the person as they make their decisions; … neither the pro-choice movement, nor the pro-life movement concerns itself sufficiently with what happens after the child is born.

    What do you make of some of the differences between the way some political analysts tend to talk about the Dobbs decision as opposed to the differences between Black women and white women on a lot of social and political issues? 

    We have an atavistic position of not being in control of our bodies as Black people. And so, when we express pro-life sentiments, we tend to say from the perspective that I wouldn’t have an abortion. But I wouldn’t want to keep someone else from controlling their life because we understand what the lack of control over your body and your life feels like because of the enslaved.

    We have a tendency to even define the pro-life position quite differently than the harsh anti-abortion position. And that’s how I distinguish between the two phrases. I use pro-life out of respect for people who still allow reproductive autonomy for people to make the decisions for themselves. I use anti-abortion to describe people who are trying to make decisions for others.

    Your life’s work has obviously shaped the reproductive justice movement; how we approach and communicate with people we disagree with; how to deprogram people in the hate movement. What’s the glue that holds all these things together? 

    I’ve always had a passion for justice, largely because I was treated so unjustly myself, not only dealing with the childhood sexual abuse, but my parents had to sue my school system for my right to return to school. It was very common to expel girls for being pregnant in the 1960s and deny us a right to an education. Even though they weren’t feminists, they recognized discrimination. The boys who made us pregnant never got expelled. It was only the girls.

    That’s the through-line that I think I have. I inherited it from my parents; that you don’t take injustices quietly. You fight them. 

    I read that you plan to use your MacArthur award to self-finance a long-term care plan. And it reminded me that there is this broader crisis among African Americans who are unable to afford elder care largely due to racial and economic inequalities. How are you thinking about your decision and your life story in relation to this broader crisis?

    I’m fortunate enough to still be working as an elder, and to get paid rather handsomely by Smith, and that’s a very privileged position to be in as a Black single woman… But that makes me part of a very small minority who is financially secure among Black women. 

    At the same time because I’m diabetic like a third of the American public, I kept getting denied insurance coverage for long-term care because the insurers only want to insure healthy people, not people with pre-existing conditions.

    I was worried about what would happen if I required long-term care, particularly since my child had died. If you have children or grandchildren, you somehow hope that they’ll participate in helping provide long-term care. But there’s no guarantee of that; and even if they would, most people don’t want to be a burden on their children or grandchildren. 

    And so, rather than use the $800,000 from MacArthur to fund a new project which I don’t need because I’ve got a lot of projects, and I think I have a pretty good legacy already, I decided to be very practical and relieved myself of the worry of being able to finance my long-term care needs. It’s not sexy to talk about long-term care, but it is very urgent for an aging population without universal health care and a pay-to-play system.

    The post A reproductive justice pioneer on what the abortion debate misses appeared first on Center for Public Integrity.

  • We’re Exceptional! And It’s Horrible to Witness



    Let me start with a confession: I no longer read all the way through newspaper stories about the war in Ukraine. After years of writing about war and torture, I’ve reached my limit. These days, I just can’t pore through the details of the ongoing nightmare there. It’s shameful, but I don’t want to know the names of the dead or examine images caught by brave photographers of half-exploded buildings, exposing details — a shoe, a chair, a doll, some half-destroyed possessions — of lives lost, while I remain safe and warm in San Francisco. Increasingly, I find that I just can’t bear it.

    And so I scan the headlines and the opening paragraphs, picking up just enough to grasp the shape of Vladimir Putin’s horrific military strategy: the bombing of civilian targets like markets and apartment buildings, the attacks on the civilian power grid, and the outright murder of the residents of cities and towns occupied by Russian troops. And these aren’t aberrations in an otherwise lawfully conducted war. No, they represent an intentional strategy of terror, designed to demoralize civilians rather than to defeat an enemy military. This means, of course, that they’re also war crimes: violations of the laws and customs of war as summarized in 2005 by the International Committee of the Red Cross (ICRC).

    The first rule of war, as laid out by the ICRC, requires combatant countries to distinguish between (permitted) military and (prohibited) civilian targets. The second states that “acts or threats of violence the primary purpose of which is to spread terror among the civilian population” — an all-too-on-target summary of Russia’s war-making these last 10 months — “are prohibited.” Violating that prohibition is a crime.

    The Great Exceptions

    How should war criminals be held accountable for their actions? At the end of World War II, the victorious Allies answered this question with trials of major German, and Japanese officials. The most famous of these were held in the German city of Nuremberg, where the first 22 defendants included former high government officials, military commanders, and propagandists of the Nazi regime, as well as the banker who built its war machine. All but three were convicted and 12 were hanged..

    The architects of those Nuremberg trials — representatives of the United States, the Soviet Union, the United Kingdom, and France — intended them as a model of accountability for future wars. The best of those men (and most of them were men) recognized their debt to the future and knew they were establishing a precedent that might someday be held against their own nations. The chief prosecutor for the United States, Robert H. Jackson, put it this way: “We must not forget that the record on which we judge the defendants today is the record on which we will be judged tomorrow.”

    Indeed, the Nuremberg jurists fully expected that the new United Nations would establish a permanent court where war criminals who couldn’t be tried in their home countries might be brought to justice. In the end, it took more than half a century to establish the International Criminal Court (ICC). Only in 1998 did 60 nations adopt the ICC’s founding document, the Rome Statute. Today, 123 countries have signed.

    Russia is a major exception, which means that its nationals can’t be tried at the ICC for war crimes in Ukraine. And that includes the crime the Nuremberg tribunal identified as the source of all the rest of the war crimes the Nazis committed: launching an aggressive, unprovoked war.

    Guess what other superpower has never signed the ICC? Here are a few hints:

    • Its 2021 military budget dwarfed that of the next nine countries combined and was 1.5 times the size of what the world’s other 144 countries with such budgets spent on defense that year.
    • Its president has just signed a $1.7 trillion spending bill for 2023, more than half of which is devoted to “defense” (and that, in turn, is only part of that country’s full national security budget).
    • It operates roughly 750 publicly acknowledged military bases in at least 80 countries.
    • In 2003, it began an aggressive, unprovoked (and disastrous) war by invading a country 6,900 miles away.

    War Crimes? No, Thank You

    Yes, the United States is that other Great Exception to the rules of war. While, in 2000, during the waning days of his presidency, Bill Clinton did sign the Rome Statute, the Senate never ratified it. Then, in 2002, as the Bush administration was ramping up its “global war on terror,” including its disastrous occupation of Afghanistan and an illegal CIA global torture program, the United States simply withdrew its signature entirely. Secretary of Defense Donald Rumsfeld then explained why this way:

    “…[T]he ICC provisions claim the authority to detain and try American citizens — U.S. soldiers, sailors, airmen and Marines, as well as current and future officials — even though the United States has not given its consent to be bound by the treaty. When the ICC treaty enters into force this summer, U.S. citizens will be exposed to the risk of prosecution by a court that is unaccountable to the American people, and that has no obligation to respect the Constitutional rights of our citizens.”

    That August, in case the U.S. stance remained unclear to anyone, Congress passed, and President George W. Bush signed, the American Servicemembers Protection Act of 2002. As Human Rights Watch reported at the time, “The new law authorizes the use of military force to liberate any American or citizen of a U.S.-allied country being held by the [International Criminal] Court, which is located in The Hague.” Hence, its nickname: the “Hague Invasion Act.” A lesser-known provision also permitted the United States to withdraw military support from any nation that participates in the ICC.

    The assumption built into Rumsfeld’s explanation was that there was something special — even exceptional — about U.S. citizens. Unlike the rest of the world, we have “Constitutional rights,” which apparently include the right to commit war crimes with impunity. Even if a citizen is convicted of such a crime in a U.S. court, he or she has a good chance of receiving a presidential pardon. And were such a person to turn out to be one of the “current and future officials” Rumsfeld mentioned, his or her chance of being hauled into court would be about the same as mine of someday being appointed secretary of defense.

    The United States is not a member of the ICC, but, as it happens, Afghanistan is. In 2018, the court’s chief prosecutor, Fatou Bensouda, formally requested that a case be opened for war crimes committed in that country. The New York Times reported that Bensouda’s “inquiry would mostly focus on large-scale crimes against civilians attributed to the Taliban and Afghan government forces.” However, it would also examine “alleged C.I.A. and American military abuse in detention centers in Afghanistan in 2003 and 2004, and at sites in Poland, Lithuania, and Romania, putting the court directly at odds with the United States.”

    Bensouda planned an evidence-gathering trip to the United States, but in April 2019, the Trump administration revoked her visa, preventing her from interviewing any witnesses here. It then followed up with financial sanctions on Bensouda and another ICC prosecutor, Phakiso Mochochoko.

    Republicans like Bush and Trump are not, however, the only presidents to resist cooperating with the ICC. Objection to its jurisdiction has become remarkably bipartisan. It’s true that, in April 2021, President Joe Biden rescinded the strictures on Bensouda and Mochochoko, but not without emphasizing this exceptional nation’s opposition to the ICC as an appropriate venue for trying Americans. The preamble to his executive order notes that

    “the United States continues to object to the International Criminal Court’s assertions of jurisdiction over personnel of such non-States Parties as the United States and its allies absent their consent or referral by the United Nations Security Council and will vigorously protect current and former United States personnel from any attempts to exercise such jurisdiction.”

    Neither Donald Rumsfeld nor Donald Trump could have said it more clearly.

    So where do those potential Afghan cases stand today? A new prosecutor, Karim Khan, took over as 2021 ended. He announced that the investigation would indeed go forward, but that acts of the U.S. and allies like the United Kingdom would not be examined. He would instead focus on actions of the Taliban and the Afghan offshoot of the Islamic State. When it comes to potential war crimes, the United States remains the Great Exception.

    In other words, although this country isn’t a member of the court, it wields more influence than many countries that are. All of which means that, in 2023, the United States is not in the best position when it comes to accusing Russia of horrifying war crimes in Ukraine.

    What the Dickens?

    I blame my seven decades of life for the way my mind can now meander. For me, “great exceptions” brings to mind Charles Dickens’s classic story Great Expectations. His novels exposed the cruel reality of life among the poor in an industrializing Great Britain, with special attention to the pain felt by children. Even folks whose only brush with Dickens was reading Oliver Twist or watching The Muppets Christmas Carol know what’s meant by the expression “Dickensian poverty.” It’s poverty with that extra twist of cruelty — the kind the American version of capitalism has so effectively perpetuated.

    When it comes to poverty among children, the United States is indeed exceptional, even among the 38 largely high-income nations of the Organization for Economic Cooperation and Development (OECD). As of 2018, the average rate of child poverty in OECD countries was 12.8%. (In Finland and Denmark, it was only 4%!) For the United States, with the world’s highest gross domestic product, however, it was 21%.

    Then, something remarkable happened. In year two of the Covid pandemic, Congress passed the American Rescue Plan, which (among other measures) expanded the child tax credit from $2,000 up to as much as $3,600 per child. The payments came in monthly installments and, unlike the Earned Income Credit, a family didn’t need to have any income to qualify. The result? An almost immediate 40% drop in child poverty. Imagine that!

    Given such success, you might think that keeping an expanded child tax credit in place would be an obvious move. Saving little children from poverty! But if so, you’ve failed to take into account the Republican Party’s remarkable commitment to maintaining its version of American exceptionalism. One of the items that the party’s congressional representatives managed to get expunged from the $1.7 trillion 2023 appropriation bill was that very expanded child tax credit. It seems that cruelty to children was the Republican party’s price for funding government operations.

    Charles Dickens would have recognized that exceptional — and gratuitous — piece of meanness.

    The same bill, by the way, also thanks to Republican negotiators, ended universal federal public-school-lunch funding, put in place during the pandemic’s worst years. And lest you think the Republican concern with (extending) poverty ended with starving children, the bill also will allow states to resume kicking people off Medicaid (federally subsidized health care for low-income people) starting in April 2023. The Kaiser Family Foundation estimates that one in five Americans will lose access to medical care as a result.

    Great expectations for 2023, indeed.

    We’re the Exception!

    There are, in fact, quite a number of other ways in which this country is also exceptional. Here are just a few of them:

    • Children killed by guns each year. In the U.S. it’s 5.6 per 100,000. That’s seven times as high as the next highest country, Canada, at 0.8 per 100,000.
    • Number of required paid days off per year. This country is exceptional here as well, with zero mandatory days off and 10 federal holidays annually. Even Mexico mandates six paid vacation days and seven holidays, for a total of 13. At the other end of the scale, Chile, France, Germany, South Korea, Spain, and the United Kingdom all require a combined total of more than 30 paid days off per year.
    • Life expectancy. According to 2019 data, the latest available from the World Health Organization for 183 countries, U.S. average life expectancy at birth for both sexes is 78.5 years. Not too shabby, right? Until you realize that there are 40 countries with higher life expectancy than ours, including Japan at number one with 84.26 years, not to mention Chile, Greece, Peru, and Turkey, among many others.
    • Economic inequality. The World Bank calculates a Gini coefficient of 41.5 for the United States in 2019. The Gini is a 0-to-100-point measure of inequality, with 0 being perfect equality. The World Bank lists the U.S. economy as more unequal than those of 142 other countries, including places as poor as Haiti and Niger. Incomes are certainly lower in those countries, but unlike the United States, the misery is spread around far more evenly.
    • Women’s rights. The United States signed the United Nations Convention on the Elimination of All Forms of Discrimination against Women in 1980, but the Senate has never ratified it (thank you again, Republicans!), so it doesn’t carry the force of law here. Last year, the right-wing Supreme Court gave the Senate a helping hand with its decision in Dobbs v. Jackson Women’s Health Organization to overturn Roe v. Wade. Since then, several state legislatures have rushed to join the handful of nations that outlaw all abortions. The good news is that voters in states from Kansas to Kentucky have ratified women’s bodily autonomy by rejecting anti-abortion ballot propositions.
    • Greenhouse gas emissions. Well, hooray! We’re no longer number one in this category. China surpassed us in 2006. Still, give us full credit; we’re a strong second and remain historically the greatest greenhouse gas emitter of all time.

    Make 2023 a (Less) Exceptional Year

    Wouldn’t it be wonderful if we were just a little less exceptional? If, for instance, in this new year, we were to transfer some of those hundreds of billions of dollars Congress and the Biden administration have just committed to enriching corporate weapons makers, while propping up an ultimately unsustainable military apparatus, to the actual needs of Americans? Wouldn’t it be wonderful if just a little of that money were put into a new child tax credit?

    Sadly, it doesn’t look very likely this year, given a Congress in which, however minimally and madly, the Republicans control the House of Representatives. Still, whatever the disappointments, I don’t hate this country of mine. I love it — or at least I love what it could be. I’ve just spent four months on the front lines of American politics in Nevada, watching some of us at our very best risk guns, dogs, and constant racial invective to get out the vote for a Democratic senator.

    I’m reminded of poet Lloyd Stone’s words that I sang as a teenager to the tune of Sibelius’s Finlandia hymn:

    “My country’s skies are bluer than the ocean
    And sunlight beams on cloverleaf and pine
    But other lands have sunlight, too, and clover,
    And skies are somewhere blue as mine.
    Oh, hear my prayer, O gods of all the nations
    A song of peace for their lands and for mine”

    So, no great expectations in 2023, but we can still hope for a few exceptions, can’t we?

    This post was originally published on Common Dreams.

  • As 7,000+ Nurses Strike in NYC, ‘Greedy Hospitals’ Told to Approve Fair Deal



    More than 7,000 unionized nurses at two of New York City’s largest hospitals began a strike on Monday morning “for fair contracts that improve patient care.”

    “Nurses don’t want to strike,” the New York State Nurses Association (NYSNA) said late Sunday in a statement. “Bosses have pushed us to strike by refusing to seriously consider our proposals to address the desperate crisis of unsafe staffing that harms our patients.”

    More than 3,600 nurses at Mount Sinai Hospital in Harlem and roughly 3,500 of their counterparts at Montefiore Medical Center in the Bronx walked off the job on Monday at 6:00 am ET after management declined to approve a new contract with increased staffing levels, improved safety measures, and better pay and healthcare benefits.

    “Hospital executives created this crisis by failing to hire, train, and retain nurses while at the same time treating themselves to extravagant compensation packages.”

    The hospitals’ overnight intransigence came after negotiations at several other New York City hospitals yielded tentative agreements prior to the strike start date.

    “It is mind-boggling that some of the city’s most prominent hospitals recognize the value and importance of our nurses, and bargained in good faith with them, while others have chosen to turn their backs on nurses and, in turn, their patients,” New York City Council Member Lynn Schulman, chair of the health committee, said Monday in a statement. “As someone who has both worked and been a patient in a hospital, I can tell you firsthand how vital nurses are to the health outcomes of those they care for.”

    Democratic New York Gov. Kathy Hochul on Sunday urged the union and hospital administrators to let an arbitrator settle the contract. Hochul also called on the state health department to enforce nurse staffing requirements, which were enshrined in a 2021 law thanks to organizing by NYSNA members but whose implementation has been delayed due to lobbying by New York City’s hospital conglomerates.

    In response, the NYSNA said: “We welcome the governor’s support in fighting for fair contracts that protect our patients, and we will not give up on our fight to ensure that our patients have enough nurses at the bedside. We call on Gov. Hochul to join us in putting patients over profits and to enforce existing nurse staffing laws. Gov. Hochul should listen to frontline Covid nurse heroes and respect our federally protected labor and collective bargaining rights.”

    Picketing is expected to take place from 7:00 am to 7:00 pm at Mount Sinai Hospital and three Montefiore locations. Elected officials and labor leaders are set to join striking nurses on the Harlem picket line for a press conference at noon.

    “The decision to go on strike is never an easy one, particularly for workers who care so deeply about the patients and communities they serve,” said Vincent Alvarez, president of the New York City Central Labor Council, AFL-CIO. “But hospital executives created this crisis by failing to hire, train, and retain nurses while at the same time treating themselves to extravagant compensation packages. Now it’s time for them to fix what they’ve broken.”

    Mario Cilento, president of the New York State AFL-CIO, stressed that “union members across the city and state, from the public sector, private sector, and building trades are united in our support of the nurses represented by NYSNA, who have been put in the unfortunate position of having no other choice than to strike.”

    “These nurses are dedicated professionals who provide quality patient care under unimaginable conditions including short staffing, which were only exacerbated by the pandemic,” said Cilento. “The hospitals’ treatment of these nurses is proof that all their words of adulation for their healthcare heroes during the pandemic were hollow. It is time for the hospitals to treat these nurses fairly, with the dignity and respect they deserve, to ensure nurses can get back to serving their communities by providing superior care to their patients.”

    The NYSNA, the largest union for registered nurses in the state with more than 42,000 members, made clear that New Yorkers should not delay getting medical care amid the strike.

    U.S. Rep. Jamaal Bowman (D-N.Y.), who joined the NYSNA and their supporters on a picket line, called on holdout executives at Mount Sinai and Montefiore to agree to a fair contract immediately.

    “If CEOs can double their pay, we can give workers a fair contract,” said Bowman. “It’s great to hear that most nurses have finally gotten their fair contract here in New York City. But we still have 7,000 as we speak without a fair contract.”

    “Montefiore, Mount Sinai, it’s time for you to step up and get this done,” the progressive lawmaker added. “Not next month. Not next week. Today. Right now.”

    ”It should be alarming to all New Yorkers that these contract negotiations have come to this,” said State Senate Labor Chair Jessica Ramos (D-13). “Rather than raising wages and ensuring hospitals have safe staffing ratios, hospital management has been granting themselves bonuses and pocketing money that could be used to strengthen our public health infrastructure. Granting these nurses a fair contact is not just a fitting way to express our gratitude, it is the best way to keep all New Yorkers safe and healthy. I stand with NYSNA, and urge management to return to the table with a fair contract.”

    Schulman echoed Ramos’ message, tweeting: “It should never have come to this. Nurses are the frontline of healthcare; they took the brunt of Covid-19 and are now taking the brunt of greedy hospitals.”

    Michael Lighty, a consultant to the National Union of Healthcare Workers who worked for 25 years with the California Nurses Association, explained last week that “decades of mergers and acquisitions have turned New York’s hospitals into profit-oriented corporations” and detailed how “nurses are fighting to change that.”

    According to Lighty:

    Nurses are overwhelmed by a “tripledemic” of Covid, flu and Respiratory Syncytial Virus Infection (RSV), but the issues animating the struggle are older, rooted in the creation of mega healthcare systems over the past decade. A 2018 New York Times report shows that the nation’s hospitals have been consolidating at an exponential rate, forming a monopolistic healthcare system. Mergers and acquisitions put market power firmly in the hands of large hospital systems, which hike up prices knowing that insurance companies will pay to keep those facilities in their networks. Insurers then pass the financial burden onto patients. The Times report found that prices for an average hospital stay have gone up between 11% and 54% because of healthcare consolidation.

    From 2015 to 2019, U.S. hospitals’ net patient revenue increased by $8.6 million per year on average. By 2022, the top 25 hospitals in New York alone averaged an annual net patient revenue of close to $2 billion. These mergers have turned independent community hospitals into “nonprofit” conglomerates—”nonprofit” in their tax status, but profit-centric in every decision that counts. “My hospital, once a humanitarian institution, now behaves like a profit-driven corporate entity,” says Judy Sheridan-Gonzalez, a past president of NYSNA and an emergency room nurse in the Bronx with 40 years of experience. Sheridan-Gonzalez’s hospital has been aggressively acquiring smaller community hospitals for years. “It cuts staff and services to the Bronx, the county with the worst health indices in the state, investing instead in real estate and lucrative endeavors.”

    Per a Crain’s New York analysis, “the consolidation strategy has given rise to increasingly flush megasystems of hospitals concentrated in whiter, wealthier areas of the city. During the past 25 years, 20 hospitals have closed across the city, amounting to a loss of about 5,800 beds.” In addition to wholesale hospital closures in poor neighborhoods, hospital managers’ newfound emphasis on increasing profits has led to other cost-cutting measures such as hiring fewer staff nurses and not buying sufficient personal protective equipment (PPE). Those decisions have created unsafe working conditions and extreme burnout. The pandemic exacerbated these issues, and even though many hospitals received Covid relief funding, this did not translate into sufficient PPE, better staffing or improved working conditions.

    Instead, the effects of a monopoly health system have continued: high executive salaries and segregated units where VIPs get concierge services and specialty care, while the majority of wards are understaffed. Managers within the conglomerated health system also began to use rising profits to fuel more acquisitions, leading to a cycle of hospitals serving the rich at the expense of local communities which had relied on them.

    “Decades of legislative activism and multiple rounds of contract bargaining have yet to create a safe hospital environment for nurses and patients, leaving NYSNA nurses with no alternative but to strike,” Lighty added. “To demand and win safe staffing and patient care practices is a vital community benefit. And as potential patients, we all have a stake in their struggle.”

    New York City Council Member Shaun Abreu, meanwhile, argued Monday that “no one does more to care for New Yorkers than our nurses, and it’s time we made sure they get taken care of, too.”

    “Our nurses have risked their lives and made countless personal sacrifices since the start of the pandemic,” said Abreu, “but hospital administrators have no right to take advantage of their willingness to make those sacrifices.”

    State Sen. Cordell Cleare (D-30), for her part, insisted that “we must always put patients before profits; this statement is doubly true as applied to our beloved nurses, who are instrumental in ensuring that patients are cared for proactively—with dignity and compassion.”

    “I support the principled movement of nurses… to stand up for themselves, their patients, and our communities,” said Cleare. “Health system bureaucrats holding up contract talks and the timely implementation of safe staffing are further exacerbating the nursing shortage that they created—and this is unacceptable! Nurses are the heart and soul of the healthcare system and we must treat them with the kindness, respect, remuneration, and support they deserve!”

    This post was originally published on Common Dreams.

  • Billions in Global South Face Looming Wave of Austerity in 2023



    The world is confronting multiple, compounding crises, from COVID-19, energy, inflation, debt, and climate shocks to unaffordable living costs and political instability. The need for ambitious action cannot be greater. However, the return of failed policies such as austerity, now called “fiscal restraint” or “fiscal consolidation,” and a lack of effective taxation and debt-reduction initiatives threaten to exacerbate the macroeconomic instability and daily hardships that billions of people are facing. Unless policymakers change course, an “austerity pandemic” will make global economic recovery even more difficult.

    As we show in a recent report, the looming wave of austerity will be even more premature and severe than the one that followed the 2008 global financial crisis. An analysis of IMF expenditure projections indicates that 143 governments will cut spending (as a share of GDP) in 2023, affecting more than 6.7 billion people – or 85% of the world population. In fact, most governments started scaling back public spending in 2021, and the number of countries slashing budgets is expected to rise through 2025. With average spending cuts of 3.5% of GDP in 2021, this contraction has already been much bigger than in earlier shocks.

    Even more worryingly, upwards of 50 countries are adopting excessive cuts, meaning their spending has fallen below their (already low) pre-pandemic levels. This cohort contains many countries – including Equatorial Guinea, Eswatini, Guyana, Liberia, Libya, Sudan, Suriname, and Yemen – with large unmet development needs.

    The austerity measures that governments are considering or already implementing will be deeply harmful to their populations, and especially to women. Governments are planning to limit social protections for vulnerable populations; cut programs for families, the elderly, and people with disabilities; slash or cap the public-sector wage bill (implying a reduction of frontline workers like teachers and health personnel); eliminate subsidies; privatize transportation, energy, and water services; cut pension benefits; reduce labor protections and employers’ social-security contributions; and decrease health expenditures.

    In parallel, many governments are adopting short-term revenue-generation strategies that will also have detrimental social effects. These include increasing consumption taxes – such as regressive sales and value-added taxes (VAT) – strengthening public-private partnerships, and increasing fees for public services.

    Just in eastern and southern Africa, UNICEF finds that Eswatini (formerly Swaziland), Kenya, Madagascar, Rwanda, and South Africa are considering or implementing three categories of austerity measures, while Lesotho is pursuing four categories, and Botswana five. Botswana, Kenya, Madagascar, Rwanda, Uganda, and Zambia are each applying four or more categories of measures to boost revenue. Including spending cuts and tax increases, Botswana, Kenya, Madagascar, Rwanda, and Zambia are each considering at least seven categories of austerity measures that are known to have adverse social impacts.

    Not only are these governments pursuing painful austerity at a time when the region is dealing with unprecedented droughts and a cost-of-living crisis. They also are showing little willingness to adopt policies – such as higher tax rates for corporations and wealthy individuals – that are critical to reducing their already-high levels of inequality.

    Unless austerity is reversed, people in developing countries will lose social protections and public services just when they are most needed. According to Oxfam, almost half of the global population is already living on less than $5.50 per day. And, lest we forget, trillions of dollars have been mobilized since the start of the pandemic to support corporations, while ordinary people have borne many of the costs of adjustment.

    The dangers of an aggressive austerity approach were made clear over the past decade. From 2010 to 2019, billions of lives were upended by cuts to pensions and social benefits; lower investments in programs for women, children, and the elderly; fewer and lower-paid teachers, health, and local civil servants; and higher prices from basic consumption taxes.

    It doesn’t have to be this way. There are alternatives to austerity. Even in the poorest countries, there are at least nine other financing options that some governments have been using for years, and that are fully endorsed by the United Nations and international financial institutions. These include progressive taxation; debt elimination or restructuring; clamping down on illicit financial flows; increasing employers’ social-security contributions and coverage by formalizing workers in the informal economy; using fiscal and foreign-exchange reserves; re-allocating public expenditures; adopting a more accommodating macroeconomic framework; securing official development assistance; and new allocations of the IMF’s reserve asset, special drawing rights.

    Since fiscal decisions affect everyone, they should be made not behind closed doors, but through inclusive and transparent national dialogues that include trade unions, employer federations, and civil-society organizations. Governments must abandon austerity measures that benefit the few at the expense of the many. Only by exploring alternative approaches can we support people and get back on track to achieve the UN Sustainable Development Goals. The world is still suffering one kind of pandemic. There is no need for another.

    This post was originally published on Common Dreams.

  • ‘Bad News for Workers’ as Wage Growth Slows Amid Fed Rate Hike Barrage



    The U.S. Labor Department released data Friday showing that wage and job growth slowed in December as the Fed explicitly targets the labor market and worker pay in its push to tamp down inflation, which has been cooling in recent months.

    According to the new figures, wages grew at a slower-than-expected rate of 0.3% last month, and November’s hourly earnings number was revised down from 0.6% to 0.4%—a trend that one observer called “bad news for workers.”

    Pointing to the “huge downward revision to November wage growth,” Dean Baker of the Center for Economic and Policy Research wrote, “Hold the rate hikes please.”

    “Hold the rate hikes please.” —Dean Baker, CEPR

    While CEO pay has continued to surge, many ordinary workers across the U.S. have seen their wages lag behind inflation as living costs have risen sharply over the past two years.

    Elise Gould, an economist at the Economic Policy Institute (EPI), said slowing wage growth is critical for Fed policymakers to consider as they mull additional interest rate hikes, which risk unnecessarily hurling the economy into recession.

    “Wage growth decelerated in December no matter how it’s measured,” Gould noted. “Annualized wage growth between November and December was 3.4%. It is decidedly not driving inflation.”

    Gould’s EPI colleague Heidi Shierholz agreed, describing recent wage growth as “completely non-inflationary.”

    “By this measure, the Fed’s work is done,” she wrote on Twitter.

    Job growth, meanwhile, remained strong in December even as it cooled compared to the torrid pace of early 2022. The Bureau of Labor Statistics said the U.S. added a better-than-anticipated 223,000 jobs in the last month of 2022, the fifth consecutive month of slowing growth.

    The new jobs data comes days after the Fed released the minutes of its mid-December meeting, after which the central bank raised interest rates to their highest level in 15 years despite growing warnings from a range of experts about the potential for a damaging recession and mass layoffs.

    According to the minutes, Fed officials are not yet satisfied with evidence showing that inflation is slowing significantly and intend to stay the course with higher rates. Central bankers also suggested they believe the labor market is still too tight and wage growth is too strong, reiterating their goal of “bringing down” the latter even as they admitted there are “few signs of adverse wage-price dynamics.”

    “You know the Fed’s priorities are warped when they suggest too many Americans have jobs,” Liz Zelnick, director of the Economic Security and Corporate Power program at the watchdog group Accountable.US, said Friday. “It seems the more Americans find work, the more the Fed embraces job-killing interest rate hikes that disproportionately hurt low-income workers and struggling mom-and-pop shops. And for what?”

    “The Fed’s single-minded strategy has done little to blunt the real driver of inflation—corporate greed,” Zelnick added. “Across industries, corporations continue to mark up prices on working families despite posting record profits and rewarding wealthy investors with billions in giveaways. Raising interest rates only hurts American families in the long run by pushing the economy toward a cliff. Recession is not inevitable, but that depends largely on deliberate decisions made by the Federal Reserve and Chairman Jerome Powell.”

    Michael Mitchell, director of policy and research at the Groundwork Collaborative, echoed that warning ahead of Friday’s jobs report, cautioning that “as workers and families are struggling with higher prices, Chair Powell is hell-bent on bringing down wages and pushing more people out of work with his aggressive interest rate hikes.”

    “If the Fed continues with its dangerous interest rate hikes,” Mitchell said, “we should brace ourselves for more hardship for working people and an unnecessarily painful recession.”

    This post was originally published on Common Dreams.

  • House GOP’s Top Priority If They Ever Get a Speaker? Protect Wealthy Tax Dodgers



    Republicans began their control of the 118th Congress Tuesday with a narrow majority that failed six times to elect a speaker but had in hand “hit-the-ground-running” plans to pass legislation that critics say will “protect wealthy and corporate tax cheats” by rescinding tens of billions of dollars in new Internal Revenue Service funding in the Inflation Reduction Act.

    On Monday, Steve Scalise (R-La.), a party leader, said that the lower chamber’s first order of business after electing a speaker will be taking up the Family and Small Business Taxpayer Protection Act.

    “This Republican bill is ill-named because what it actually does is protect tax cheaters by repealing most of the new IRS funding set forth in last year’s Inflation Reduction Act,” Mother Jones senior editor Michael Mechanic wrote.

    In a December 30 letter to House Republicans, Scalise said the legislation—along with 10 other bills and resolutions he proposed—would let GOP lawmakers “hit the ground running in our first weeks in the majority.”

    Scalise said in the letter that the Family and Small Business Taxpayer Act “rescinds tens of billions of dollars allocated to the IRS for 87,000 new IRS agents in the Inflation Reduction Act.”

    Although the “87,000 new IRS agents” claim has been widely debunked, it has nevertheless become a GOP talking point.

    Writing for The American Independent, Josh Israel noted: “It has appeared in ads run by the campaigns of Sen. Ron Johnson (R-Wis.) and North Carolina Republican Senate nominee Rep. Ted Budd; it has been used in Senate Leadership Fund attack ads in Georgia, Nevada, New Hampshire, North Carolina, and Ohio; and the right-wing Club for Growth Action and Congressional Leadership Fund have run spots lying about the number of new IRS agents. The Senate Republican conference’s official Twitter account and those of dozens of other House and Senate Republicans have also tweeted the bogus 87,000 number.”

    As Mechanic pointed out, “From 2010 to 2018, even as the IRS received 9% more tax returns, its annual budget was slashed by $2.9 billion—a 20% reduction that cost the agency more than one-fifth of its workforce.”

    “Virtually no partnerships were audited in 2018,” he continued. “By then, with [former President] Donald Trump in the Oval Office, the kneecapped IRS was scrutinizing the individual returns of just 0.03% of those $10 million—plus taxpayers, down from a peak of 23% in 2010. Audits of the $5 million—to—$10 million filers fell from just under 15% to a scant 0.04%.”

    Mechanic added:

    A fair subset of superwealthy Americans doesn’t even bother filing. The Treasury Department’s Inspector General for Tax Administration reported in 2020 that nearly 880,000 “high income” non-filers from 2014 through 2016 still owed $46 billion, and the IRS was in no condition, resource-wise, to collect. The 300 biggest delinquents owed about $33 million per head, on average. Fifteen percent of their cases had been closed without examination by IRS staffers, and another one-third weren’t even in line to be “worked.”

    “The recently enacted IRS funding—$80 billion over 10 years—was meant to remedy this shameful state of affairs,” he wrote.

    Despite the disunity evident in the speaker struggle, House Republicans appear united when it comes to slashing Social Security, gutting ethics safeguards, and pursuing policies like the IRS defunding measure that exacerbate inequality in one of the most unequal societies in the developed world.

    This post was originally published on Common Dreams.

  • We Can’t Combat Inequality Without First Valuing Care Work

    Patriarchy and capitalism are class-based systems that serve to compound inequalities of all sorts, including gender inequality. A feminist political economy not only addresses gender inequalities, but also seeks to rectify inequalities in the division of labor. Of course, there are different branches of feminism, but a strong case can be made that a socialist feminist perspective of political…

    Source

    This post was originally published on Latest – Truthout.

  • Climate Crisis Made Everyday Life More Expensive in 2022

    Inflation dominated news headlines and American psyches in 2022. Overall, consumer prices jumped an average 7.1 percent this year, with the cost of just about everything going up, from cars to coffee and gas to groceries. The trend triggered a bitter midterm election campaign, prompted a series of aggressive interest-rate hikes from the Federal Reserve, and fears about an impending recession.

    Source

    This post was originally published on Latest – Truthout.

  • ‘The System’ Is Ruining Our Present and Collective Future



    Now is a time of unprecedented opportunity for progressive change. The reason is simple: “the system” is ruining the future for young people. Any system that threatens the future of its young people cannot retain their support and therefore is ripe for basic change.

    Every morning, the daily news provides fresh evidence that “the system” is heading off a cliff—fruitless climate talks; growing nuclear threats; microplastics in food, water, breast milk and newborn babies; oceans damaged by warming, acidification, and dead zones; the military-industrial dragon preparing for war with China; Congress out of touch and deadlocked….

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    But there’s also good news: every day more young people are waking up to the facts and demanding that the system change.

    What do I mean by “the system”? Back in 1996, when he was the editor of Harper’s magazine, Lewis Lapham described it as “the permanent government.”

    Only slightly tongue-in-cheek, Lapham wrote, “The permanent government, a secular oligarchy… comprises the Fortune 500 companies and their attendant lobbyists, the big media and entertainment syndicates, the civil and military services, the larger research universities and law firms. It is this government that hires the country’s politicians and sets the terms and conditions under which the country’s citizens can exercise their right—God-given but increasingly expensive—to life, liberty, and the pursuit of happiness. Obedient to the rule of men, not laws, the permanent government oversees the production of wealth, builds cities, manufactures goods, raises capital, fixes prices, shapes the landscape, and reserves the right to assume debt, poison rivers, cheat the customers, receive the gifts of federal subsidy, and speak to the American people in the language of low motive and base emotion.”

    The permanent government is ruining the future for young people in two ways:

    (1) destroying the natural world that humans depend upon for life itself—air, water, soil, vegetation, and wildlife, and

    (2) degrading the social/economic sphere, creating a vast chasm between the megarich and everyone else, inciting anger and resentment that divide us against ourselves, which prevents us from protecting the natural world that sustains us.

    Resentment is rising as social conditions are deteriorating

    Radio host Thom Hartmann recently compared economic conditions for two groups of people of equal size in the U.S.: Baby Boomers (average age 67 today) versus Millennials (average age 33 today).

    Back when the average Boomer was 33, Boomers held 21.3 percent of the nation’s wealth; in contrast, Millennials age 33 today hold only 4.6 percent of the nation’s wealth. Prospects for Gen-Z are no better.

    Hartmann identifies seven trends that have robbed young people of their fair share of prosperity: It boils down to the so-called “Reagan Revolution,” which Republicans (along with some Democrats) have pursued since 1980.

    #1. Attack on wages

    The attack on wages has three parts: (1) a coordinated offensive against labor unions, (2) passage of “right to work”(aka “right to work for less“) laws, and (3) flooding the political system with dark money so the megarich rule and ordinary people have no say.

    Right-to-work-for-less laws prevent unions from collecting dues from workers who benefit from collective bargaining but who choose to withhold dues from the union that bargains on their behalf. This weakens unions, which reduces the incentive to join one, which weakens unions further.

    Now 27 states have enacted such laws. Hartmann writes, “In every single case, anti-worker right-to-work laws have been passed in states controlled by Republicans at the time of passage.”

    The attack on unions has succeeded. In 1983, 20 percent of workers were unionized; in 2021 it had dropped by half to 10.3 percent, even though 70 percent of Americans approve of unions.

    As a result of these trends, today working people are taking home a 10% smaller share of the nation’s economic pie (“the labor share”) than they did in 1980. Ten percent may not sound huge, but it represents a transfer of 50 trillion dollars from working families to shareholders and business owners since 1975. Fifty trillion dollars. That’s $13,000 per year taken from every single worker in the bottom 90% of the wage-scale, year after year for 40 years.

    Young people have been hit especially hard. In 1940, 90 percent of young people could expect to earn more than their parents. For children born in the 1980s, that measure of “absolute income mobility” has fallen to 50%—a major change that has degraded the future for tens of millions of young people.

    No wonder working-class parents are angry and resentful as they see themselves precariously treading water, their children falling behind. This is where Trumpism began; then some cynical, privileged Republicans fanned those embers into flames. In 2018, Reuters/Ipsos asked 1,249 Trump voters what “Make American Great Again” meant to them and 2/3rds (63 percent) responded, “A better economy.”

    #2. Restricting educational opportunity

    Republican policies have put higher education out of reach for many children of low-income families and put millions more into crippling debt.

    Professor Devin Fergus, now at the University of Missouri, has described the effects of the “Reagan revolution” on student debt. Prior to 1980, states paid 65% of student college costs, the federal government paid another 15%, leaving 20% for students to pay. Thom Hartmann has described how Mr. Reagan and his fellow “revolutionaries” set out to change all that. Students were “too liberal,”Mr. Reagan said, so “America should not subsidize intellectual curiosity.”After 40 years of defunding education, 44 million students are now saddled with $1.5 trillion in debt, making it hard or impossible for two generations of young people to create businesses, start families, or buy homes.

    #3. Raising the price of a home

    In 1950, the average price of a house was 2.2 times the median American family income. Today the median family income is $37,522 and the average house sells for ten times that amount—$374,900.

    #4. “Financializing” the economy

    As early as 2013, Bruce Bartlett, who served as an advisor to Ronald Reagan and George H.W. Bush, described how Wall Street firms have grown in proportion to the whole economy. In 1950 the financial services industry represented 2.8% of gross domestic product (GDP); in 1980 that proportion has grown to 4.9% and by 2013 it has reached 8.3 percent. In 1980, wages and salaries in financial services were comparable to other industries. But then compensation in financial services began to rise and, by 2013, people in financial services were taking home 70 percent more than their counterparts elsewhere in the economy. Thus, financialization of the economy “is a major cause of rising income inequality,” Bartlett says.

    #5. Tolerating monopolies

    Competition is supposed to be the life blood of our economic system. As the Hamilton Project explains it, “Competition is the basis of a market economy. It forces businesses to innovate to stay ahead of other firms, to keep prices as low as they can to attract customers, and to pay sufficient wages to avoid losing workers to other firms. When businesses vie for customers, prices fall and economic output increases. When businesses hire workers away from each other, wages rise and workers’ standard of living improves. And as unproductive firms are replaced by innovative firms, the economy becomes more efficient.”

    President Reagan ordered an end to anti-trust enforcement in 1983 and consolidation (contrary to U.S. law) has now affected many parts of the economy—agriculture, banking, insurance, hospitals, pharmaceuticals, internet providers, cable companies, gigantic food corporations, grocers, home mortgages, office supplies. Result: prices spiral upward, wages decline, jobs disappear.

    #6. Profiting from disease and disability

    In 1960, U.S. health care costs were 5 percent of gross domestic product (GDP); by 2020, health care had risen to 19.7 percent of GDP. People in the U.S. don’t use more health care services than people in other countries; they just pay more for them.

    According to the Kaiser Family Foundation, 9% of U.S. adults (23 million people) are carrying medical debt totaling $195 billion. According to Forbes magazine, in 2021, one-in-five households (19 percent) “could not pay for medical care when it was needed.”How do you think that made them feel?

    #7. Handouts for the megarich

    If Republicans agree on nothing else, they agree on cutting taxes for the super-rich so their vast accrued wealth can “trickle down”upon the rest of us and (as a side benefit) can starve government so it can’t regulate business or provide “socialist”amenities like schools, hospitals, and old-age insurance (social security).

    As Thom Hartmann puts it, “Reagan dropped the top income tax on the morbidly rich from 74 percent down to 27 percent and cut corporate tax rates from 50 percent to functionally nothing… The average billionaire pays an income tax of under 3 percent and the majority of the nation’s largest corporations pay nothing.”

    Recent studies show that in the 3-year period 2018-2020, 39 major corporations paid no taxes on $120 billion in profits and 73 others paid an average of only 5.3 percent during the period.

    When billionaires and wealthy corporations don’t pay their fair share of taxes, the cost of running government gets dumped onto average citizens, who feel it, resent it, and then blame government for being weak and out of touch.

    Summary

    As things stand now, many working-class parents and their children are screwed, disrespected, even mocked as “deplorables.” Naturally they are seething with anger and resentment.

    Cynical privileged Republicans have studied how to mobilize this resentment, to deflect it away from “the system”onto immigrants, gays, people Of Color, non-Christians and anyone who protests inequality or injustice (“slackers”and “hippies”). Yes, some privileged Republicans are more than just cynical; some are Nazis or Nazi sympathizers joined by dupes or dimwits or groupies—but most weren’t born that way; they have been bent by circumstance. Only 1 to 4 percent of people are born psychopaths without empathy or a conscience.

    It is not fashionable to say so, but America is in trouble mostly because it no longer has a major political party sticking up for the working class. Since the mid-1970s, the permanent government has guided both major parties to benefit the few, not the many. Until that changes, we will have white-hot resentment and privileged opportunists who will trade on that resentment, creating rancor, division, and political stalemate, which will prevent us from protecting and repairing the natural world or spreading the wealth, upon which the future of all young people depends.

    What is to be done?

    In 2020, Nick Hanauer proposed a new kind of organization. Mr. Hanauer wrote, “…Imagine an AARP for all working Americans, relentlessly dedicated to both raising wages and reducing the cost of thriving—a mass membership organization so large and so powerful that our political leaders won’t dare to look the other way. Only then, by matching power with power, can we clear a path to enacting the laws and policies necessary to ensure that that trickle-down economics never threatens our health, safety, and welfare again.”

    In 2018 the AARP had 38 million members.

    Could Mr. Hanauer’s idea be built upon by young people, with support from their elders? Could we, together, create a new organization for all working Americans and for all young people, who are now losing their future? A mass-based organization dedicated to raising wages and to reducing the costs of thriving and to guaranteeing a future for young people by protecting and repairing the natural world. Large majorities of Americans already support these ideas.

    Maybe name it simply: The Future.

    Every existing issue-focused organization, including every labor union (like mine, the National Writer’s Union) could urge its members to not only support their own particular issues but also to join and help create The Future. Make membership dues affordable for everyone: No more than $10 per year. Recruit like crazy, build, deliver results.

    Youth are already getting organized to protect their future. With youth choosing the path and leading the way, we elders could join The Future to serve as volunteer benefactors, fundraisers, cheer leaders, publicists, social-media posters, recruiters, and more. It could be big. Who knows? It might even work.

    This post was originally published on Common Dreams.

  • The US Should Follow EU’s Steps Toward Global Minimum Tax



    Where should the profits of global corporations be taxed? It is not an easy question. If a corporation has engineers in California, manufacturing centers in Asia, assembly plants in Texas, and sells to consumers across North America and Europe, there are legitimate questions about which jurisdictions they are “earning” their profits in and thus where they might owe corporate income taxes.

    One thing is clear, though: they are not earning their profits in a mailbox in the Cayman Islands, a tiny British territory in the Caribbean that politicians in London and Washington treat as an independent nation for tax purposes. Yet many American corporations tell the Internal Revenue Service that they earn their profits in this island nation where they do no actual business. One office building in the Cayman Islands—just five stories tall—is home to more than 18,000 companies. Given that the British government has provided few options for real economic development, Cayman understandably welcomes the incorporation fees this generates. But is this any way to structure an international tax system?

    With the EU and United Kingdom fully on board, it is time for Congress to follow suit and implement the plan negotiated by the administration. Doing so would improve the corporate tax system here and around the world while making the United States economy stronger and more competitive.

    Nearly every nation, from the United States to the United Kingdom to the Cayman Islands, has recently decided it is not. Over the past two years, the Biden administration has led negotiations of an international agreement with other leading economies ensuring the largest multinational corporations pay taxes in the countries where they do business. The plan would require any corporation earning more than €750 million (about $800 million) to pay at least a 15 percent corporate income tax rate on their global profits in the countries where they have economic activities.

    Last week, the European Union reached unanimous agreement to implement this global minimum tax beginning in 2024. With the EU and United Kingdom fully on board, it is time for Congress to follow suit and implement the plan negotiated by the administration. Doing so would improve the corporate tax system here and around the world while making the United States economy stronger and more competitive.

    The Current Global Tax System Favors Small Tax Havens and Large Corporations

    While the official corporate tax rate in the United States is 21 percent, corporations use many tactics to effectively pay much less. The most infamous of these tactics exploit accounting gimmicks to make corporate profits appear to be earned in tax havens like the Cayman Islands or Ireland. For example, a U.S. company could place a patent or trademark in a subsidiary incorporated in a country that will impose little or no tax on its profits, even if the company has no other business activities in that country. It will then tell the IRS that its profits are generated from that intellectual property, which in turn means that the profits are generated by the tax haven subsidiary rather than in the United States.

    Nike, for example, owns many subsidiaries sporting the names of popular product lines in countries like Bermuda and the Netherlands that impose no tax or one that is easily avoided. It does not take a genius to conclude that Nike placed the trademarks for each of its product lines in one of these tax haven subsidiaries and then told the IRS that the profits were therefore generated abroad in these jurisdictions where they will not be taxed.

    In some cases, the discrepancy between claimed profits and real economic activity is especially egregious. In 2019, U.S. corporations claimed to earn profits in five different countries that exceeded those countries’ entire economic outputs. American companies claimed to earn over $60 billion in the Cayman Islands—ten times the entire country’s gross domestic product. The year before, American corporations claimed to have earned over 13 times the GDP of Bermuda in Bermuda.

    In another demonstration of how disconnected this tax reporting is from reality, IRS data reveals these companies often have very few employees in the countries where they claim to earn their profits. If the tax filings are to be believed, then American corporations earned nearly $60 million for every employee they hired in the small British territory of Gibraltar. If multinational corporations were truly tapping that much productivity from Gibraltar’s workers, then the economic puzzle of the millennium would be how the country’s total GDP only amounts to about $60,000 per person. The real answer is obvious, however: the tax reporting does not reflect economic reality.

    Corporations are not necessarily breaking the law when they report obviously implausible profits to the IRS. Rather, they are exploiting weaknesses in the global tax and legal system. The result is a tax system that works for nobody other than rich corporate shareholders (and the financial services industry). Multinational corporations take advantage of the labor of large countries like the US and China that is developed through public education, of international shipping routes that are largely protected by the U.S. Navy, of markets that are only possible through public ports and roads, and then pay none of the taxes that support these investments.

    The New International Agreement Would Shut Down Offshore Tax Dodging by Corporations

    Recognizing the need for international cooperation on the issue, the Biden Administration began negotiating with other major economies last year to create a more fair and effective global tax system. In October 2021, 136 countries signed on to an agreement to implement a global minimum tax system (called the “GLoBE” rules, for Global Anti-Base Erosion). If implemented, the agreement would ensure that large, multinational corporations pay a minimum tax rate of at least 15 percent.

    The exact details are complicated, but the crux is that companies would have to start paying taxes according to where they are selling products and services rather than where they register a post office box. GLoBE rules would apply to corporations with more than €750 million in revenues in recent years—or about $800 million. The actual effective tax rate that these companies pay must be at least 15 percent (not including deductions for depreciation or certain tax credits).

    The GLoBE rules eliminate the incentive for countries to engage in a race to the bottom. First, the Income Inclusion Rule (IIR) allows countries implementing the minimum tax to apply a top-up tax to corporations headquartered within their borders if the corporation is paying an effective tax rate below 15 percent in another country where it operates. This means that if a corporation is based in a country that has implemented the agreement, that country can apply an additional tax on the company’s profits in a tax haven to bring the effective tax rate up to 15 percent.

    Second, the Under Taxed Payments Rule (UTPR) allows countries to apply a top-up tax to foreign companies operating within their borders if the corporation’s home country has not implemented the GLoBE rules and the company is paying an effective tax rate less than 15 percent in some other country. This means that if a country is not implementing the international agreement its own corporations could nonetheless pay a tax rate of at least 15 percent because the other countries where those companies operate are imposing a top-up tax under the UTPR. And the country failing to implement the minimum tax would be allowing foreign governments to collect this revenue.

    Although an agreement was signed last October by all major economies to implement the GLoBE rules, the actual implementation process is the most daunting step. Countries must work within their own political and legislative processes to adapt the international agreement into their tax systems. The European Union’s decision to implement the rules beginning in 2024 marks crucial momentum for the agreement, especially after the United Kingdom previously announced they would begin enforcing the rules that same year. The UK and EU combined represent about a fifth of the entire world economy.

    The United States is the Last Major Hurdle for International Implementation

    Despite negotiating the GLoBE rules, the U.S. has not yet taken the steps to fully implement them. While the U.S. does have tax rules for “global intangible low-tax income” (GILTI) that are similar to the GLoBE rules, the GILTI tax applies to a smaller portion of income and only at a rate of 10.5 percent. The U.S. also adopted a 15 percent corporate minimum tax in 2022 as part of the Inflation Reduction Act, but that tax is also not completely in line with the international agreement. For example, the IRA minimum tax considers a company’s worldwide effective tax rate rather than their per-country tax rate.

    Although the U.S. signed the agreement last October, implementation will require Congress passing legislative changes to our tax laws. The prospects of the U.S. implementing the rules by 2024 look dim, with the 117th Congress coming to an end without adopting the new rules and with Republicans who are opposed to the plan set to take over the House of Representatives next year.

    The basis of Republican opposition to the agreement is not clear, and their statements on the matter are vague and nonsensical. Rep. Vern Buchanan—who could become the chair of the House’s main tax writing committee—told reporters that “the United States will not be bullied into accepting an agreement that fails to protect American workers and businesses from discriminatory foreign taxes.” On the contrary, failure to implement the GLoBE rules could subject American businesses to foreign taxes under the previously mentioned UTPR top-up tax.

    Recently, GOP lawmakers on key tax committees sent a letter to the President claiming that the White House does not have the authority to negotiate such international tax agreements. This assertion is hard to follow, as the Constitution plainly gives the President the power to conduct diplomacy and set foreign policy objectives.

    Most astonishingly, the Republicans’ letter asserts, “We are not aware of any administration – Republican or Democrat – that has so blatantly used its role in international tax negotiations to advance its partisan political agenda.” This actually describes the Republican lawmakers’ own behavior. Earlier this year, Congressional Republicans negotiated behind the scenes with the authoritarian Hungarian government to try to kill implementation of the global minimum tax in the EU. While the tactic ultimately failed, it did present a serious hurdle to the agreement, as the EU’s rules require all member countries to consent to any tax agreement.

    Contrary to Republican claims that the GLoBE rules are anti-competitive, or that the US is being bullied into accepting some agreement that will hurt the country, the plan was negotiated by our own diplomats to make the international system work for all Americans rather than for the shareholders who are concentrated among our richest one percent and among foreign investors. Multinational corporations should not be able to skirt their taxes by “earning” all their money in a post office box while American workers dutifully pay their taxes every paycheck. The governments of the United States and Europe should stop using tiny British territories as pawns to allow corporations to avoid contributing to fund schools, roads, and public safety. Moving forward with implementation will make the United States economy stronger and more competitive, not less.

    This post was originally published on Common Dreams.

  • States Take Tax Revenue Vital for Funding Tribal Services

    This article was originally published by the Center for Public Integrity, a nonprofit investigative news organization based in Washington, D.C. This story is published in partnership between the Center for Public Integrity and ICT (formerly Indian Country Today). Osage Nation — On a crisp November morning, Teresa Bates Rutherford gazed at the construction site of her future home — her mind on her…

    Source

    This post was originally published on Latest – Truthout.

  • Industrial Policy Is Not a Remedy for Income Inequality



    The idea of industrial policy has taken on almost a mystical quality for many progressives. The idea is that it is somehow new and different from what we had been doing, and if we had been doing industrial policy for the last half-century, everything would be better.

    This has led to widespread applause on the left for aspects of President Biden’s agenda that can be considered industrial policy, like the CHIPS Act, the Inflation Reduction Act (IRA), and the infrastructure package approved last year. While these bills have considerable merit, they miss the boat in reducing income inequality in important ways.

    First, the idea that we had not been doing industrial policy before Biden, in the sense of favoring specific sectors, is wrong. We have been dishing out more than $50 billion a year to support biomedical research through the National Institutes of Health and other government agencies. If that isn’t supporting our pharmaceutical industry, what would be?

    We also have a whole set of structures in place — most obviously Fannie Mae and Freddie Mac, but also many other financial institutions — as well as tax policies to support home ownership. We also support the (bloated) financial sector through tax policy, deposit insurance, and all but explicit too-big-to-fail guarantees.

    Even the subsidies for the shift to clean energy in the IRA were not new. They hugely expanded and extended subsidies that had already been in place. This was a good policy from the standpoint of saving the planet, but it was not a sharp break from what we had previously been doing.

    The government has always favored some industries, implicitly at the expense of others, so we are not doing something new if we declare “industrial policy.” But, there is an argument for making the subsidies explicit so that they can be debated.

    For example, it might have been easier to move away from fossil fuels if we had to debate whether we would continue to subsidize the industry by not making it pay for the damage it was doing to the environment. If someone proposed subsidizing a new development by letting it dump its untreated sewage on neighboring properties, there would likely be less support than if the city let the development do the dumping without any explicit policy. So, there is an advantage to having subsidies be explicit, even if the idea of subsidizing specific industries is hardly new.

    Biden’s Industrial Policy and Income Inequality

    There are a variety of motives for the industrial policy measures Biden has pushed through. The climate ones in the Inflation Reduction Act and the infrastructure bill are both obvious and important.

    There is also the belief that these measures will hasten economic growth. There is a good case for this. Much research shows that infrastructure spending increases productivity and growth. There are certainly visible bottlenecks that can constrain the economy, which became clear with the supply chain problems during the pandemic.

    There is also a national security issue. This can be overplayed. We don’t really need to worry about being cut off from supplies of key inputs from Canada, and probably not from Western Europe, in the event of a military conflict. On the other hand, being heavily dependent on semiconductors from Taiwan, in a context where a conflict with China is, unfortunately, a possibility, is a problem. For this reason, some reorientations towards domestic production make sense.

    However, one of the main motivations for these measures is to reduce income inequality by increasing domestic manufacturing. This is not likely to be the outcome.

    Manufacturing and Inequality

    One of the great tragedies of the last four decades was the war on manufacturing, pursued by politicians of both parties, that centered on a policy of selective free trade. While we continued to protect doctors and other highly paid professionals from foreign (and domestic) competition, our trade policy was quite explicitly designed to put our manufacturing workers in direct competition with low-paid workers in the developing world.

    This competition had the predicted and actual effect of costing us millions of manufacturing jobs and putting downward pressure on the wages in the jobs that remained. Since manufacturing had historically been a source of relatively high-paying jobs for workers without college degrees, our trade policy had the effect of increasing wage inequality.

    It also decimated many towns and cities across the country that had been heavily dependent on manufacturing. There is no shortage of places, especially in the industrial Midwest, where the major employer closed up shop and left a community without a viable economy.

    It is easy to identify villains in this story – NAFTA, the high dollar policy pursued by Clinton Treasury Secretary Robert Rubin, and admitting China to the WTO all contributed in a big way to the loss of manufacturing jobs. They also placed downward pressure on wages in the jobs that remained, but that doesn’t mean that getting manufacturing jobs back will be a step toward reducing inequality.

    The problem is that the wage premium in manufacturing has largely disappeared due in large part to U.S. trade policy. The graph below shows the average hourly earnings for production and non-supervisory workers in manufacturing and the private sector as a whole.

    Source: Bureau of Labor Statistics and author’s calculations.

    As can be seen, the average hourly wage in manufacturing used to be higher than the average wage in the private sector as a whole. In 1980, it was 4.1 percent higher. They crossed in 2006 and have continued to diverge in the years since. The average hourly wage for production and non-supervisory workers in manufacturing is now 8.9 percent less than the average for the private sector as a whole.

    This is not a comprehensive measure of the wage premium since we would have to also consider benefits, which have historically been higher in manufacturing, and also specific worker characteristics, like age, education, and location, but this sort of change in relative wages almost certainly implies a large reduction in the manufacturing wage premium.[1]

    A big part of the reduction in the manufacturing wage premium is the decline of unionization in manufacturing. In 1980, close to 20 percent of the manufacturing workforce was unionized. This had fallen to just 7.7 percent by 2021, only slightly higher than the private sector average of 6.1 percent.

    Furthermore, while the Biden administration has been very supportive of unions, there is little reason to believe that the return of manufacturing jobs will mean a substantial increase in unionized manufacturing jobs. From the recession trough in 2010 to 2021, the manufacturing sector added back over 800,000 jobs. However, the number of union members in manufacturing actually dropped by 400,000 over this period.

    While there will undoubtedly be some good-paying manufacturing jobs associated with the reshoring efforts in these bills, there is no reason to think they will have a major impact on income inequality. The impact of trade on manufacturing over the last four decades is not reversible. Losing millions of jobs in the sector was terrible from the standpoint of income inequality, but getting some of these jobs back will not be of much help.

    Intellectual Property: Where the Real Money Is

    Perhaps the most disturbing aspect of these bills is the fact that there is literally no discussion of who will own intellectual property being created through government spending in these areas. For some reason, there is virtually zero interest in policy circles in discussing the impact of intellectual property on inequality, even though it has almost certainly been a huge factor.

    Just as Republicans don’t like to talk about climate change, Democratic policy types don’t like to talk about intellectual property. They are much more comfortable just making assertions like “inequality is due to technology,” rather than discussing how some people have been situated to get most of the gains from technology.

    The idea that intellectual property derived from government-supported research can lead to inequality should not sound far-fetched. The Trump administration, through Operation Warp Speed, paid Moderna over $400 million to cover the cost of developing a Covid vaccine and its initial Phase 1 and 2 trials. It then paid over $450 million to pay for the larger Phase 3 trials, in effect fully covering Moderna’s cost for developing a vaccine and bringing it through the FDA’s approval process.

    It was necessary for Moderna to do years of research so that it was in a position to quickly develop an mRNA vaccine, but even here the government played a very important role. Much of the funding for the discovery and development of mRNA technology came from the National Institutes of Health. Without its spending on the development of this technology, it is almost inconceivable that any private company would have been in a position to develop an mRNA vaccine against the coronavirus.

    In spite of this massive contribution from the public sector, Moderna has complete control over its vaccine and can charge whatever price it wants. It is likely to end up with more than $20 billion in profit from sales of its coronavirus vaccine. According to Forbes, the vaccine had made at least five Moderna billionaires by the middle of 2021, with the company’s CEO, Stephane Bancel, leading the way with an increase in his wealth of $4.3 billion. In addition, there were undoubtedly many others at Moderna who made millions or tens of millions due to this government-supported research.

    And, it is important to recognize that the money for the Moderna billionaires comes directly out of the pockets of everyone else. Its control of intellectual property associated with the vaccine allowed it to charge around $20 a shot (much more for boosters) for vaccines that would likely sell for less than $2 in a free market without intellectual property protections. Higher drug prices reduce the real wage of ordinary workers.

    The wealth of Moderna’s nouveau riche also has the effect of pushing up housing prices for the rest of us. When the rich can buy more and bigger houses, it raises house prices for everyone, effectively reducing their real wage. So, the issue of inequality is not an abstraction. More money for those on top means lower living standards for everyone else.

    If we see many more Modernas from the funding in the CHIPS Act and the other bills, it will not reduce inequality in the economy, it will make it worse. Serious people cannot pretend to not notice the huge amounts of money redistributed upward when the government pays for research and then lets private actors get property rights in the product. This is almost literally giving away the store.

    A Progressive Alternative

    There is a different route the government can follow with its research spending. It can pay private companies to do work developing technologies in important areas, but it can insist that the products be in the public domain. (Where there are security issues at stake, the government can control the technology.)

    This would allow private companies to profit from research, which would be awarded through a competitive bidding process, and it would also allow them to make profits off the manufacture of the finished products. However, there would be no profit to be made from ownership of the technology itself. That could be freely used by anyone with the capability to benefit from it.

    This path would avoid having our industrial policy make inequality even worse. It also is exactly what we should want to see with climate technologies. We should want the technologies to generate wind and solar power, as well as to store it, to be available as cheaply as possible. This will maximize the pace at which it can be adopted.

    We should also want the whole world to have access to this technology to hasten the rate at which other countries can adopt clean energy. (Ideally, we would negotiate reciprocal agreements whereby they commit to funding research in some proportion to their GDP, and also make the technology freely available.) We should go the same rate with biomedical research.

    Industrial Policy Should Not be More of the Same

    We have to recognize that the upward redistribution of the last four decades was not something that just happened, it was the outcome of deliberate policy choices. Trade and government policy on intellectual property are a huge part of that story.

    It’s great that we are finally getting some honest discussion of the role of trade in increasing inequality, but we still need to get recognition of the impact of our policies on intellectual property. If the Biden administration and members of Congress insist on ignoring its impact, their policies are virtually certain to make inequality worse. The talk about bringing back manufacturing doesn’t change the picture.

    [1] In a comprehensive analysis of the manufacturing wage premium, Mishel (2018) found a 7.8 percent straight wage premium for non-college-educated workers for the years 2010 to 2016, after controlling for age, race, gender, and other factors. That compares to a premium for non-college-educated workers of 13.1 percent in the 1980s.

    The analysis found that differences in non-wage compensation added 2.6 percentage points to the manufacturing wage premium for all workers, but the compensation differential may be less for non-college-educated workers since they are less likely to get health care coverage and retirement benefits.

    This post was originally published on Common Dreams.

  • Trump, Bankman-Fried, Musk: Monsters of American Capitalism



    If this past week presents any single lesson, it’s the social costs of greed. Capitalism is premised on greed but also on guardrails—laws and norms—that prevent greed from becoming so excessive that it threatens the system as a whole.

    Yet the guardrails can’t hold when avarice becomes the defining trait of an era, as it is now. Laws and norms are no match for the possibility of raking in billions if you’re sufficiently ruthless and unprincipled.

    Donald Trump’s tax returns, just made public, reveal that he took bogus deductions to reduce his tax liability all the way to zero in 2020. All told, he reported $60 million in losses during his presidency while continuing to pull in big money.

    Every other president since Nixon has released his tax returns. Trump told America he couldn’t because he was in the middle of an IRS audit. But we now learn that the IRS never got around to auditing Trump during his first two years in office, despite being required to do so by a law dating back to Watergate, stating that “individual tax returns for the president and the vice president are subject to mandatory review.”

    Of course, Trump is already synonymous with greed and the aggressive violation of laws and norms in pursuit of money and power. Worse yet, when a president of the United States exemplifies—even celebrates—these traits, they leach out into society like underground poison.

    Meanwhile, this past week the S.E.C. accused Sam Bankman-Fried of illicitly using customer money from FTX from the beginning to fund his crypto empire.

    From the start, contrary to what FTX investors and trading customers were told, Bankman-Fried, actively supported by Defendants, continually diverted FTX customer funds … and then used those funds to continue to grow his empire, using billions of dollars to make undisclosed private venture investments, political contributions, and real estate purchases.

    If the charge sticks, it represents one of the largest frauds in American history. Until recently, Bankman-Fried was considered a capitalist hero whose philanthropy was a model for aspiring billionaires (he and his business partner also donated generously to politicians).

    But like the IRS and Trump, the S.E.C. can’t possibly remedy the social costs that Bankman-Fried has unleashed — not just losses to customers and investors but a deepening distrust and cynicism about the system as a whole, the implicit assumption that this is just what billionaires do, that the way to make a fortune is to blatantly disregard norms and laws, and that only chumps are mindful of the common good.

    Which brings us to Elon Musk, whose slash-and-burn maneuvers at Twitter might cause even the most rabid capitalist to wince. They also raise questions about Musk’s other endeavor, Tesla. Shares in the electric vehicle maker dropped by almost 9 percent on Thursday as analysts grew increasingly concerned about its fate. Not only is Musk neglecting the carmaker but he’s appropriating executive talent from Tesla to help him at Twitter. (Tesla stock is down over 64% year-to-date.)

    Musk has never been overly concerned about laws and norms (you’ll recall that he kept Tesla’s factory in Freemont, California, going during the pandemic even when public health authorities refused him permission to do so, resulting in a surge of COVID infections among workers). For him, it’s all about imposing his gargantuan will on others.

    Trump, Bankman-Fried, and Musk are the monsters of American capitalism—as much products of this public-be-damned era as they are contributors to it. For them, and for everyone who still regards them as heroes, there is no morality in business or economics. The winnings go to the most ruthless. Principles are for sissies.

    But absent any moral code, greed is a public danger. Its poison cannot be contained by laws or accepted norms. Everyone is forced to guard against the next con (or else pull an even bigger con). Laws are broken whenever the gains from breaking them exceed the penalties (multiplied by the odds of getting caught). Social trust erodes.

    Adam Smith, the so-called father of modern capitalism, never called himself an economist. He called himself a “moral philosopher,” engaged in discovering the characteristics of a good society. He thought his best book was not The Wealth of Nations, the bible of modern capitalist apologists, but the Theory of Moral Sentiments, where he argued that the ethical basis of society lies in compassion for other human beings.

    Presumably Adam Smith would have bemoaned the growing inequalities, corruption, and cynicism spawned by modern capitalism and three of its prime exemplars—Trump, Bankman-Fried, and Musk.

    This post was originally published on Common Dreams.

  • Top US CEOs Make More in Seven Hours Than Average Workers Earn in an Entire Year: Analysis



    The typical CEO of a major U.S. corporation has to work fewer than seven hours to make the amount of money that the average worker earns in an entire year, according to a new analysis by Sarah Anderson of the Institute for Policy Studies.

    Anderson, an expert on executive compensation, wrote Friday that “if the typical CEO of a large U.S. corporation clocks in at 9:00 am on January 2, by 3:37 pm that afternoon he’ll have earned $58,260—the average annual salary for all U.S. occupations.”

    The new analysis spotlights the growing chasm between typical worker pay and CEO compensation, which has soared by nearly 1,500% since 1978. Workers’ wages, meanwhile, have lagged significantly over the past four decades, rising just 29% between 1979 to 2021.

    Anderson based her analysis on the average pay of a CEO of an S&P 500 company, which was $18.3 million—or $8,798 an hour—in 2021, the most recent data available.

    “I started by looking at the fast food workers who often toil straight through the holidays,” Anderson wrote. “Most McDonald’s restaurants are open even on Christmas Day. Average pay for this labor force is just $26,060 for the whole year. A typical CEO would bank that by noon on his first day back in the corner office suite.”

    “Then I thought of the home care aides who may be the only people around to cheer up their homebound elderly and disabled clients over the holidays,” she continued. “They earned an average of just $29,260 in 2021. The typical CEO of a big U.S. corporation would pocket that much by lunchtime on his first workday of the year. He’d have to work less than an hour more to make $36,460, the average annual pay for a pre-K teacher.”

    Anderson called the figures “disturbing” but said she is encouraged by the fact that “Americans increasingly reject the old myth that CEOs make so much money because they’re just that much smarter and harder-working than the rest of us.”

    “Public outrage over these extreme pay gaps is now so high that a majority of Americans across the political spectrum favor a cap on CEO pay relative to worker pay, regardless of company performance,” Anderson noted.

    Last year, Sen. Bernie Sanders (I-Vt.) and several Senate Democrats proposed legislation that would raise taxes on large companies that pay their CEOs over 50 times more than the median worker. The bill, formally known as the Tax Excessive CEO Pay Act, never received a vote.

    A recent analysis by the Economic Policy Institute found that, on average, top CEOs in the U.S. were paid 399 times more than typical workers last year.

    Separate research by the AFL-CIO showed that Amazon had the highest CEO-to-worker-pay ratio of all S&P 500 companies last year: 6,474 to 1.

    This post was originally published on Common Dreams.