Sam Pizzigati – Informed Comment https://www.juancole.com Thoughts on the Middle East, History and Religion Wed, 04 Jan 2023 03:44:16 +0000 en-US hourly 1 https://wordpress.org/?v=5.7.8 Southwest’s Meltdown: Stock Buybacks, High Exec Pay, and Neglected Software Upgrades https://www.juancole.com/2023/01/southwests-meltdown-neglected.html Wed, 04 Jan 2023 05:02:20 +0000 https://www.juancole.com/?p=209226 () Inequality.org) – For America’s rich and powerful, the new year is beginning in a most inauspicious fashion. Millions of Americans are once again fuming at the greed and grasping of our deepest pockets.

That fuming — from would-be passengers of Southwest Airlines and their families — filled airports throughout this past holiday week. For good reason. At the height of the travel-heavy holidays, Southwest was canceling 60 percent of the airline’s daily flights. Over 15,000 Southwest planes never lifted off.

Blame the wealthy, not the weather.

Late December’s heavy dose of stormy weather certainly did set the stage for Southwest’s holiday meltdown. But Southwest can’t put the blame for the airline’s massive melt on the cold, wind, and snow. Other airlines delivered, amid the same winter weather, far better service.

So what did Southwest in? The airline’s top execs, analysts point out, have spent years underinvesting in needed new tech. One telling example: This past November, a generation into the electronic age, Southwest officials acknowledged that the airline was still delivering weather and baggage reports to pilots and gate managers on paper.

“It almost became a running joke around the company,” says Southwest flight attendant union president Lyn Montgomery, “that we aren’t able to make certain changes because it would involve technology.”

During the holiday storm crisis, some Southwest employees phoning in for instructions from the airline found themselves on hold for over five hours. Some even went to sleep with their phones — still on hold — next to their bedsides. They awoke the next morning, reports the Dallas Morning News, to find their phones still holding.

Why didn’t Southwest invest in new tech?

“Modifications and refinements to systems,” last year’s Southwest annual report explained, “have been and are expected to continue to be expensive to implement and can divert management’s attention from other matters.”

What sort of “matters” struck Southwest execs as more important than keeping their planes on time? Keeping shareholders happy — and themselves richer in the process. Everything else could wait.

Top management has readily admitted as much. In one pre-Covid “earnings call” with stock analysts, the Washington Post noted last week, then-CEO Gary Kelly explained that the airline had been delaying the tech upgrades his operations team had been seeking.

“We have starved them a little bit over the last decade,” he explained, “because again, our focus was more on the commercial side.”

Money that should have been going into upgrading Southwest’s operations has gone instead into dividends and stock buybacks. Since 2015, the Los Angeles Times analyst Michael Hiltzik reported last week, the airline “has paid out about $1.6 billion in dividends and repurchased more than $8 billion in shares.”

Those moves have worked out exceedingly well for top Southwest execs like CEO Kelly, the airline’s chief exec until early last year. In 2020, Kelly pulled down a “record $9.2 million” at the same time the Covid outbreak had the airline $3.1 billion in the red and a quarter of the Southwest workforce taking voluntary leave. CEO Kelly then took home another $5.8 million in 2021 before retiring early in 2022.

“Southwest’s well-compensated executives could have prioritized its workers and customers by preparing for the worst, but greed trumped all as they put a small group of wealthy investors first,” charges Kyle Herrig, the president of the corporate watchdog Accountable.US. “Consumers shouldn’t be the ones stuck holding the bag for Southwest’s greedy management decisions, but here we are.”

Southwest took in a $7-billion federal bailout during the Covid crisis, then showed its appreciation to America’s taxpayers by becoming, early last month, the first Covid-subsidized airline to announce plans to resume paying out dividends to shareholders, to the tune of $428 million in 2023.

“The reinstatement of our quarterly dividend,” Bob Jordan, Southwest’s new CEO, proudly noted during this dividend announcement, “reflects our balance sheet strength and continued focus on generating consistently healthy earnings, margins, and long-term capital returns.”

Missing from that focus: the well-being of Southwest workers. Just a few weeks after announcing the upcoming new dividends, the “bomb cyclone” hit wide swatches of the United States the day before Christmas. Southwest ground workers soon found themselves working 16-to-18 hour days, with some, says  their union president Randy Barns, ending up frostbitten.

Some lawmakers in Congress are now calling for a serious overhaul of how the United States goes about its airborne business. America’s airlines have essentially been calling the shots, notes a Washington Post analysis, ever since the Airline Deregulation Act of 1978 iced state regulators out of the picture and “left airline companies accountable only” to the federal Department of Transportation, an agency that’s never prioritized consumer protection.

“Southwest simply has failed to prepare for the worst and that’s a fundamental breach of trust,” charges Connecticut U.S. Senator Richard Blumenthal, who wants to see Congress enact a passenger bill of rights. “They said to passengers, in effect, if things go south, you are the ones who will bear the burden.”

Outside the United States, in nations ranging from Argentina and Malaysia to Finland and Fiji, airlines essentially operate as a public utility, not an opportunity for big CEO paydays. Scores of nations, points out journalist Joe Mayall, currently “either own airlines outright” or hold majority-shareholder status.

The United States could join that camp, Mayall notes, if Congress chose to charter a state-owned enterprise  to start up a new national airline. Or Congress could go the nationalization route by buying up enough stock “in publicly traded airlines to acquire a controlling share.”

Could the United States afford to take that sort of nationalizing step? The four most dominant U.S. airlines — Delta, American, United, and Southwest — last summer held a combined market value of $77.5 billion, Mayall points out, just $5 billion less than the $72.6 billion in our tax dollars that funded the federal government’s airline bailouts after 9/11 and during Covid.

Via ) Inequality.org

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Inequality Kills. But We Can Stop the Killing https://www.juancole.com/2022/11/inequality-kills-killing.html Sun, 27 Nov 2022 05:06:08 +0000 https://www.juancole.com/?p=208408 ( Inequality.org ) – Over a half-century ago, back in the mid-1960s, books about poverty abounded. But publishers paid relatively little attention to wealth’s concentration. A generation earlier, Americans had obsessed about grand private fortunes. By late mid-century, that obsession no longer excited either the media or the public.

So argues a gripping new book from an activist physician who’s helped divine the keys to long and healthy life.

That would all soon change, particularly after Ronald Reagan’s 1980 election. “Rich people” would suddenly reemerge as a cultural phenomenon worthy of ample attention. In 1982, the editors at Forbes magazine even started annually profiling America’s 400 richest.

Serious books about the growing maldistribution of America’s income and wealth would, in short order, once again begin appearing. In 2014, one inequality book — Thomas Piketty’s 700-page Capital in the 21st Century — actually became Amazon’s top-selling title. Our new Gilded Age of grand fortune had created a publishing golden age for books that contemplated inequality’s impact upon us.

The books on inequality that abound today offer up important information and insights. They survey our unequal landscape, trace the drivers behind our top-heavy distribution of wealth , and propose serious solutions. Unfortunately, these important contributions to the literature on inequality haven’t had much of an impact. Our grand fortunes remain grand.

One sign of our still unequal times: As of this past September, despite a serious stock-market swoon, the net worth of our richest 1 percent still sitsafter taking inflation into account — some 527 percent above the net worth of our richest 1 percent in 1976.

Our income stats tell a similar story. Incomes in our bottom 50 percent now stand, after inflation, just under a meager 30 percent higher than their level back in 1976. American top 0.01-percent incomes have soared almost 600 percent.

Amid numbers like these, books about inequality clearly remain as necessary as ever. And that brings us to a new book about inequality that just might make the sort of difference that books about inequality have so far been unable to make.

This book’s author, Stephen Bezruchka, will already be familiar to folks active in anti-inequality circles. Bezruchka, currently a professor emeritus at the University of Washington’s School of Public Health, has spent the last quarter-century teaching and lecturing all across the nation about the incredibly high price we Americans are paying for letting our wealth concentrate

How high a price? His new book, Inequality Kills Us All, rests on a grim reality: Americans have spent recent decades dying at much higher rates than people living in our peer nations, societies that all spend significantly less on medical care than we do in the United States and yet enjoy significantly longer life expectancies.

Stephen Bezruchka

How could that be? Decades ago, Bezruchka set out on a journey to find out. As a younger physician, he had fully bought in to the standard medical profession perspective. He equated health with health care, as did all the doctors around him. People got sick. Doctors did their best to get people well. End of story.

But real life, as the young doctor began living it, had a nasty habit of poking holes in that story. Bezruchka had spent time early on in his career practicing medicine in Nepal, a nation he had earlier encountered as part of the first Canadian Mount Everest expedition. He also spent years stateside working big-city hospital emergency rooms. All these experiences, bit by bit, had Bezruchka viewing health through a much more open-minded lens. Health care, he was learning, cannot guarantee health. Inequality gets in the way. Inequality kills.

Bezruchka’s new book goes deeply — and clearly — into the how. He walks us through the work of pioneering researchers like the UK’s Richard Wilkinson and Kate Pickett and Harvard’s Ichiro Kawachi and S.V. Subramanian. Inequality, the work of these scholars helps us see, packs a devastating one-two punch.

The first punch: the “psychosocial” stress that living in deeply unequal societies inevitably creates. People in these societies can have “enough resources to provide for basic needs,” Bezruchka explains, but not enough “to support the more lavish lifestyle that they see others enjoying.” The wider the gap, the stronger the pressure to constantly compete for higher status. We envy those above us. We scorn those below. We trust in others ever less. We cooperate ever less.

Bezruchka continually interlaces this status story with his own life’s story. In Nepal, he writes, he “lived with people in remote areas who had only the basic material goods they needed.” These Nepalese didn’t know what they didn’t have: “Their moral compass directed them to share.”

In the deeply unequal United States, by contrast, that sharing seldom shows. One arresting example: Drivers of high-status cars, as researcher Paul Piff has detailed, turn out to be “more likely to cut off other vehicles at intersections and endanger pedestrians at crossings than those in more modest automobiles.”

This unrelenting everyday pressure of “psychosocial status distinctions,” other research has shown, has distinct biological consequences. Such stress changes us. The wear and tear of coping with chronic daily stress — the “allostatic load” — leaves us with elevated blood pressure and immune systems too weak to respond when a “big challenge” emerges. This avalanche of stress, relates the emerging field of epigenetics, can start impacting how our lives unfold even before we emerge from the womb.


Via Pixabay.

In societies as unequal as ours, people do the best they can to cope with the stress they face. But the most common coping mechanisms — be they drugs or high-sugar, high-fat comfort foods — take their own heavy tolls. Life in societies much less unequal than ours, meanwhile, generates significantly less stress.

So why don’t we just take steps to become a more equal society? The basic story: In deeply unequal societies, not just wealth concentrates at the top. Power does as well.

Our rich, Bezruchka points out, see no need to employ that power on behalf of those without fortune. They see no particular reason to extend a helping hand to those without their fantastically good fortune. They believe they worked hard for their success. So why should they help others who didn’t? Keep taxes low, they demand. Keep government off our backs. Let the “free market” determine how our lives shake out.

The more wealthy the wealthy become, the greater their capacity to impose these mindsets on the rest of us. And the rest of us find ourselves split. Bezruchka offers an allegory to help us understand why. He asks us to imagine a billionaire and his chauffeur pulling up to a homeless family along the side of the road. The billionaire steps out of the car and snatches a loaf of bread away from the mom. The billionaire and the silent chauffeur then drive away.

Why does the chauffeur acquiesce to this brutal billionaire behavior? Bezruchka sees “something in the way of a private moral deal between the billionaire and the chauffeur,” a deal that’s left the world “meaner but solves an emotional problem for some people who, given the way their own lives are being squeezed, find themselves with less empathy left over for others outside their social circle.”

Those the furthest outside that social circle, society’s poorest, “do not complain of deep inequality” either. Bezruchka sees them quite understandably focused on their own personal issues, everything from food and housing insecurity to lack of access to medical care. They don’t focus on the reality “the rich have too much.” Their focus remains “ downstream, related to tangible issues nearby.”

Yet Bezruchka still believes that “windows of opportunity for effective change are opening.” His final pages have us, his readers, believing that too. We can, he notes, ready ourselves to seize that opportunity. We can confront the “wealth defense industry.” We can eventually move onto the table antidotes to wealth concentration — like a “maximum wage” — that today seem far beyond the realm of possibility.

What makes Bezruchka’s final chapter so powerful? Books about inequality typically deliver critiques of our top-heavy economy and polity, then send us on our way with pro forma exhortations to get involved in efforts to help make our world less unequal.

Bezruchka’s final chapter gets far more personal and powerful. He clearly takes delight in advocacy and feels we could feel that delight as well. Toward that end, Bezruchka asks us to inventory our skills and the activities we enjoy, then offers us a wealth of options for putting those skills and interests to work. He gets specific. He gives us examples. He guides us where to go to get started.

Tips for turning haphazard conversations with strangers into substantive discussions. Ideas for using photography to tell compelling inequality stories. How-to’s on everything from revising the rules of Monopoly, the world’s best-selling game, to giving talks at retirement homes. Bezruchka’s closing chapter imaginatively covers the sorts of ground books about inequality have never before covered.

And Inequality Kills Us All couples all this useful information and background with leads that can connect readers directly to the groups — and activist resources — now helping to build a more effective struggle for a more equal world. Bezruchka believes we can overcome the public indifference our rich and powerful count on. By the end of his final What Can We Do? chapter, we believe that just as much as he does.

Social movements begin, Bezruchka reminds us, with “people working on critical, timely issues as individuals and then together with others.”

Social movements can also begin with books. Dr. Stephen Bezruchka has given us a book we desperately need.

Via Inequality.org

Content licensed under a Creative Commons 3.0 License

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Climate Emergency Caused our Scorching Summer, but Inequality meant it hit Workers Hardest https://www.juancole.com/2022/09/emergency-scorching-inequality.html Sat, 10 Sep 2022 04:06:43 +0000 https://www.juancole.com/?p=206880 ( Inequality.org ) – The heat. Never been hotter in our lifetimes. This past spring the mercury nearly hit 124 in the Pakistani city of Jacobabad, “just below,” notes science writer David Wallace-Wells, “the conventional estimate for the threshold of human survival.”

This summer’s U.S. daily high temperatures are continuing our torrid global pace. America’s media have been teeming over recent weeks with stats on heat horrors.

In Phoenix, “a sprawling urban heat island,” daily highs have averaged well over 100 all summer long. The National Weather Service in interior Northern California last month warned that record high temperatures had placed the “the entire population” at risk.

Oregon’s governor, around the same time, pointed to the “imminent threat” of wildfires the heat had created and declared a state of emergency. California, meanwhile, declared a statewide grid emergency “to cope with surging demand for power amid a blistering heat wave.” Sacramento then promptly registered 116, “its highest-ever recorded temperature.”

Widespread news coverage of records like these might well be focusing people’s attention on climate change more than any environmentalist rally ever could. But what’s alarmingly missing in most all this coverage? Any consideration of the inequality connection.

The inequality of modern American life turns out to be not just determining who’s suffering the most from all the heat. Inequality is actually driving the mercury higher, as new research out of New York is rather dramatically detailing.

A “street-level assessment of heat in New York City” — the first ever — has found that temperatures in the city’s low-income South Bronx run 8 degrees higher than temperatures a few miles away in the high-income neighborhoods of Manhattan’s Upper West and East Sides.

How does economic inequality help generate such wide temperature differentials? At a most basic level, the rich and powerful can and do use their wealth and power to shunt the most undesirable aspects of modern life onto poor neighborhoods. The undesirable consequences include higher temperatures for the neighborhoods where low-income families live.

Transportation plays a key role here. Five major highways — the notorious Cross Bronx Expressway among them — cut through and encircle the South Bronx. These high-traffic corridors spew contaminants into the air and deny South Bronx residents access to heat-relieving green and “blue” — public waterfront — spaces. In the South Bronx, these spaces barely even exist. The area has about only one park per every 60,000 residents.

In New York’s most affluent neighborhoods, streets themselves can actually become park-like when they sport plenty of tree cover. The vast majority of the South Bronx has no tree cover, and that absence — coupled with asphalt everywhere — nurtures heat pockets that compound air pollution. And the South Bronx’s old housing stock leaves residents few escapes from all this bad air and heat.

One result: The Bronx overall commands just 17 percent of New York City’s population but 95 percent of the city’s hospitalizations for asthma.

Community activists in the advocacy group South Bronx Unite are working to overturn these sorts of deadly social and environmental dynamics. They’ve proposed, for instance, a plan “to provide 100,000+ people access to a public waterfront that, for decades, has been inaccessible.”

New York’s powers-that-be, over the years, have allocated that waterfront to operations that service the city’s affluent, everything from printing presses for the Wall Street Journal to warehouses for companies like Fresh Direct, a food delivery service that sends out “approximately 1,000 daily diesel truck trips a day.”

Activists are also working to offset the incredible environmental damage that comes from the heavy daily traffic on the Cross Bronx Expressway, where the rumblings of 300 diesel trucks every hour are fouling the air and leaving the South Bronx ever hotter. They’re pushing for an ambitious project that, notes the Columbia University Millman School of Public Health, “would add a deck on top of below-grade sections of the Cross Bronx Expressway, with filtered vents to scrub exhaust.”

Atop the deck, under the project plan, would go a green park “along the lines of projects already completed in Boston, Dallas, and Seattle.”

Building out such an effort, Millman School analysts believe, would cost some $750 million. Too unreachably ambitious a price-tag?

Maybe not. New York City, Forbes reported this past spring, now boasts more billionaires “than any other city on the planet.” The city’s 107 billionaire residents have a combined net worth of $640 billion. A 1-percent annual wealth tax on that combined fortune would raise over eight times the cost of the proposed cap-the-Cross-Bronx-Expressway project in just one year.

Via Inequality.org

Content licensed under a Creative Commons 3.0 License

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Does the Future Belong to People Who Profit Off Our ‘Excessive Wealth Disorder’? https://www.juancole.com/2022/07/future-excessive-disorder.html Sun, 17 Jul 2022 04:04:27 +0000 https://www.juancole.com/?p=205821 ( Inequality.org ) – If Dustin Hoffman should ever do a remake of The Graduate, the classic 1967 film that launched his famed cinematic career, what might be the 2020s update for that film’s most iconic exchange?

A promising new national campaign is aiming to ‘TURN’ around a profoundly unequal USA

A good many of us still fondly remember that poolside party scene. A 21-year-old “Benjamin” gets pulled aside for a career pep talk from an overbearing “Mr. McGuire” who says he has just one word of wisdom for Dustin Hoffman’s newly graduated young man: “Plastics!”

One real-life young man back then, James Dyson, would end up following Mr. McGuire’s advice — and go on to fashion plastic vacuum cleaners into the first global billion-dollar fortune that rests on polymers.

But no Mr. McGuire here in the 2020s would ever be pitching boring old plastics as a sure-fire path to grand fortune. What red-hot field of business endeavor would a modern-day McGuire be hawking? A new report from Bain & Company, a global consultancy with offices in 65 cities worldwide, has a suggestion: wealth management.

And why do analysts at Bain see wealth management — the business of helping people of means grow their assets — as such a promising career path? A simple financial fact: A colossal chunk of the world’s wealth now sits in the pockets of affluents who have no clue what to do with all their good fortune. The “investable assets” of these wealthy worldwide, Bain is predicting, figure to double by 2030.

“The rich are getting richer, that’s for sure,” as Bain partner Markus Habbel, one of the authors of the financial firm’s new report, told the Financial Times earlier this week.

“If you have a wealth management capability,” agrees Goldman Sachs chief operating officer John Waldron, “you have a much more valuable business.”

The new Bain study doesn’t dive deep into any detail about our continuing maldistribution of global income and wealth. But other analysts most definitely have been subjecting that maldistribution to some increasingly sophisticated analysis. Over the past quarter-century, these researchers — many inspired by the work of the French economist Thomas Piketty — have been developing new statistical approaches to determining just who has what and how much of it.

Researchers like Emmanuel Saez and Gabriel Zucman, both at the University of California-Berkeley, have taken us well beyond the tax return data that’s traditionally driven our core inequality stats. In their just-published latest work, Saez and Zucman have joined with their UC colleague Thomas Blanchet to tackle the challenge of calculating inequality in what they call “real time.”

U.S. government stats, the three authors point out, “do not make it possible to know who benefits from economic growth in a timely manner.” Indeed, until recent years, most numbers on income and wealth distribution came from snapshots taken well before the data went public. The most recent distributional stats currently available from the Federal Reserve’s exhaustive triennial Survey of Consumer Finances, for instance, cover 2019.

In that same year, Federal Reserve analysts did inaugurate a brand-new data series with a much briefer lag time. These new distributional snapshots have been appearing quarterly ever since, and the latest, released last month, covers this year’s first three months. In 2022’s quarter one, the Fed’s “Distributional Financial Accounts” show, America’s top 1 percent held 31.8 percent of the nation’s wealth. The nation’s bottom half held 2.8 percent.

The University of California’s inequality stats team has now trimmed the data lag time even further, to help us “track the distributional impacts of government policies” on a month-to-month basis and provide critically important information to have in the middle of an economic crisis.

The Berkeley team notes that none of the timely government economic stats we’ve had up to now — on total national personal income, unemployment, and more — have come “disaggregated by income level.” Without that disaggregation, we can’t know what social groups are benefiting from current government policies and what groups aren’t. And if we don’t have that information, then government programs successfully helping people who really need help can fall politically by the wayside.

The Berkeley analysts illustrate that dynamic by applying their new “real-time inequality” statistical methodology to our Covid pandemic years. At the end of 2021, their approach shows, America’s working-class households found themselves with 20 percent more disposable income than before the pandemic, thanks to the federal government’s expanded child tax credit and expanded earned income tax credit for adults with children.

But disposable income for the nation’s working families promptly then fell in early 2022 after Congress let those aid programs expire. By June 2022, the Berkeley economists sum up, the wealth share of America’s top 0.1 percent had returned “to its pre-Covid level.”

So what do we do with all the new distributional data we now have available? Do we gaze at the new numbers and marvel at how incredibly rich our rich continue to be? Or do we battle to create a much more equal society where helping the wealthy manage their money no longer rates as our nation’s hottest career option?

A host of long-time egalitarian activists are choosing the latter. They’ve just come together to establish an Excessive Wealth Disorder Institute, and this new Institute, as its first order of business, is now teaming up with social justice advocacy groups and coalitions in a “Tax the Ultra-Rich Now” campaign to “TURN” America around.

TURN campaign activists will be initially “collaborating with grassroots organizations across five key states – Georgia, North Carolina, Nevada, Pennsylvania, and Wisconsin – with a focus on organizations centered in communities of color.”

Other campaigns will no doubt follow, on a wide variety of fronts. Those campaigns will have no shortage of tax-the-rich proposals to draw from. Among the latest, from Bob Lord and Dylan Dusseault of Patriotic Millionaires, a call for the passage of an “Oppose Limitless Inequality Growth and Restore Civil Harmony Act.” This “OLIGARCH” legislation would key new taxes on the wealth of America’s super rich to the nation’s median — most typical — household wealth.

Under the OLIGARCH Act, households holding between 1,000 and 10,000 times America’s median household wealth would pay an annual 2 percent tax on their fortunes. Those rates would escalate on households sitting on even greater stores of wealth. In the top tax bracket, for households worth over one million times our most typical household wealth, the annual tax would run at 8 percent.

Back in 1980, Lord and Dusseault note, fewer than 0.005 percent of America’s adults held over 1,000 times the nation’s median household wealth. By 2020, the ranks of that wealth cohort had quintupled. In 1983, not a single American held a fortune that equaled 100,000 times the nation’s median household wealth. In 2021, slightly over 50 Americans exceeded that threshold, and two Americans actually held over a million times the wealth of America’s most typical households.

That can all change. We all can change it.

Via Inequality.org

Content licensed under a Creative Commons 3.0 License

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Why Keeping Workers Poor Is actually Bad for Business https://www.juancole.com/2022/06/keeping-actually-business.html Mon, 20 Jun 2022 04:02:37 +0000 https://www.juancole.com/?p=205285 ( Otherwords.org) – CEOs at America’s biggest low-wage employers now take home, on average, 670 times what their typical workers make.

But we don’t just get unfairness when a boss can grab more in a year than a worker could make in over six centuries. We get bungling and inefficient businesses.

At America’s biggest low-wage employers, chief executives now pocket 670 times more than their workers.

Management science has been clear on this point for generations, ever since the days of the late Peter Drucker.

Management theorists credit Drucker, a refugee from Nazism in the 1930s, for laying down “the foundations of management as a scientific discipline.” Drucker’s classic 1946 study of General Motors established him as the nation’s foremost authority on corporate effectiveness.

That effectiveness, Drucker believed, had to rest on fairness.

Corporations that compensate their CEOs at rates far outpacing worker pay create cultures where organizational excellence can never take root. These corporations create ever bigger bureaucracies, with endless layers of management that serve only to prop up huge paychecks at the top.

Drucker argued that no executive should make more than 25 times what their workers earn. And, in the two decades after World War II, America’s leading corporate chiefs by and large accepted Drucker’s perspective.

Their companies shared the wealth when they bargained with the strong unions of the postwar years. In fact, notes the Economic Policy Institute, major U.S. corporate CEOs in 1965 were only realizing 21 times the pay their workers were pocketing.

Drucker died in 2005 at age 95. He lived long enough to see Corporate America make a mockery of his 25-to-1 standard. But research since his death has consistently reaffirmed his take on the negative impact of wide CEO-worker pay differentials.

The just-released 28th annual edition of the Institute for Policy Studies Executive Excess report explores these wide differentials in eye-opening detail. The report zeroes in on the 300 major U.S. corporations that pay their median workers the least.

At these 300 firms, average CEO pay last year jumped to $10.6 million, some 670 times their $24,000 median worker pay.

At over 100 of these firms, worker pay didn’t even keep with inflation. And at most of those companies, executives wasted millions buying back their own stock instead of giving workers a raise.

Just as Drecker predicted, this unfairness has led directly to performance issues. Many of our nation’s most unequal companies, from Amazon to federal call center contractor Maximus, have seen repeated walkouts and protests from justifiably aggrieved workers.

Lawmakers in Congress, the Institute for Policy Studies points out, could be taking concrete steps to rein in extreme pay disparities. They could, for instance, raise taxes on corporations with outrageously wide pay gaps.

But with this Congress unlikely to act, the new Institute for Policy Studies report also highlights a promising move the Biden administration could take on its own. The administration could start using executive action “to give corporations with narrow pay ratios preferential treatment in government contracting.”

That would amount to a major step forward, since 40 percent of our largest low-wage employers hold federal contracts. If the Biden administration denied lucrative government contracts to companies with pay gaps over 100 to 1, those low-wage firms would have a powerful incentive to pay workers more fairly.

Various federal programs already offer a leg up in contracting to targeted groups, typically small businesses owned by women, disabled veterans, and minorities.

“Using public procurement to address extreme disparities within large corporations,” the IPS report adds, “would be a step towards the same general objective.”

And a step in that direction, as Peter Drucker told Wall Street Journal readers back in 1977, would honor the great achievement of American business in the middle of the 20th century: “the steady narrowing of the income gap between the ‘big boss’ and the ‘working man.’”

Via Otherwords.org

Licensed under a Creative Commons Attribution-No Derivative 3.0 License.

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Let’s Go after the Ill-Gotten, Tax-Evading Gains of All Oligarchs, not just Russian Ones https://www.juancole.com/2022/03/evading-oligarchs-russian.html Sun, 06 Mar 2022 05:06:07 +0000 https://www.juancole.com/?p=203320

Ending the tax-evading ways of Russia’s rich could be a giant step toward reining in oligarchy worldwide.

( Inequality.org ) – Can we please get serious about taxing the rich? Polls show that hefty majorities of people in the United States — and around the world — believe the rich ought to be paying more at tax time. Yet our contemporary don’t-tax-the-rich era has now entered its fifth consecutive decade.

Egalitarian tax policy, you could say, has hit a rough patch.

Egalitarian tax circles need some fresh thinking, and, fortunately, we have some — from economists and political scientists who’ve been reflecting on how, why, and when do societies end up taxing the rich. Historical moments, these researchers conclude, really matter. Societies don’t tax the rich after duly deliberating about timeless questions of what makes for tax fairness. They tax the rich during moments of social convulsion, especially those that accompany conflicts between nations.

We may be in, with the war over Ukraine, one of these opportune moments. We may now have a chance — in the wake of the Russian invasion — to start shearing oligarchy worldwide down to a much more democratic dimensions.

What makes seizing this opportunity so important? In normal times, the British economist Faiza Shaheen notes, tax-the-rich-minded egalitarians face a political deck formidably stacked against them. The wealthy don’t just have mega millions to pour into the coffers of pols who tilt their way on tax policy. They can also draw from a vast reservoir of antiquated attitudes about wealth and the wealthy.

CNBC: “U.S. imposes new sanctions to tighten squeeze on Russian oligarchs”

Many of our fellow human beings, for instance, still buy into the flack-for-the-wealthy line that sheer envy is driving those who seek to tax the rich more substantially. And any one of us, still others of us without grand fortune believe, could become wealthy someday. Could we trust government to spend our tax dollars wisely? Pitchmen for the wealthy want us asking this question. They’re doing their best to sow a social distrust that translates into a knee-jerk hostility to talk about raising anybody’s taxes.

But wars, argue political scientists David Stasavage and Kenneth Scheve, can shake up these ideological dynamics. In wartime, elites need to build public confidence in government, not tear that confidence down. Wartime elites also face publics suddenly focused on equality of sacrifice. Average families with lives at risk tend to see no particular reason why the richest among us shouldn’t at least have some of their grand personal fortunes at risk.

These sorts of dynamics create — for fleeting moments — egalitarian windows of opportunity. Twice in the 20th century, first during the mass mobilizations that accompanied World War I and then during the even larger mass mobilizations around World War II, progressives seized these opportunities.

In 1942, just months after Pearl Harbor, U.S. corporate chiefs and conservatives in Congress started pushing for a 10 percent national sales tax and other assorted levies that would shield the nation’s most comfortable from the war’s enormous tax burden. President Franklin Roosevelt dubbed that sales tax proposal a “spare-the-rich tax” and proposed a far more progressive alternative: a 100 percent tax on all individual income over $25,000, the equivalent of about $430,000 in today’s dollars.

FDR wouldn’t get his 100 percent top marginal tax rate. But Congress did put in place a 94 percent tax on income over $200,000, and the nation’s top tax rate would hover around 90 percent for the next 20 years, two decades that would see the emergence — in the United States — of the first mass middle class in the history of the world.

Similar stories unfolded after World War II in other industrial nations. The world overall became a substantially more equal place. But the egalitarian momentum, alas, would not last. The sense of social solidarity the mass mobilizations of World War II fostered slowly ebbed away. Tax rates on high incomes worldwide began dipping significantly.

Will high tax rates on high incomes ever return? Some analysts don’t think so. The increasingly high-tech nature of modern warfare makes mass mobilizing less necessary, the argument goes, and elites that don’t need to mobilize vast publics don’t need to swallow significant tax hikes on their fortunes.

But other analysts see more hope for a return to a serious tax-the-rich future. They argue that convulsions of all sorts, not just wars, can create opportunities for more rigorously taxing the holders of grand fortunes. Global pandemics would certainly qualify as one of these convulsive moments.

How can we take opportunity of the openings these convulsions create? Internationally respected analysts like the University of Nairobi’s Attiya Waris, a global expert on fiscal law and policy, see “solidarity taxes” as the most viable approach. “Solidarity taxes” address emergencies on a short-term basis. Experience has shown, Waris relates in a report the NYU Center on International Cooperation helped publish last spring, that such taxes can both address emergencies and “remedy inequality simultaneously.”

Examples abound. In Czechoslovakia soon after World War I, lawmakers adopted a “capital levy on total property” to raise the funding needed to establish their new nation. The levy, originally scheduled to last three years, taxed grand fortunes at thirty times the rate imposed on small holdings.

Japan, after World War II, would adopt a solidarity tax designed to pay off the nation’s huge war debt and jumpstart its postwar recovery. The tax would fall the heaviest on the wealthy Japanese financial clique that had done so much to grease the way to war — and profit from it. Japan’s solidarity tax imposed rates, Attiya Waris details, that ranged from a modest 10 percent on property over 100,000 yen to 90 percent on property worth over 15 million yen.

This solidarity tax effort substantially reduced the concentration of wealth within the Japanese economy and left Japan with major corporate enterprises controlled by a multiplicity of small shareholders instead of a few fabulously rich families.

The coronavirus has rekindled interest in “solidarity tax” approaches. In Costa Rica, recounts Waris, lawmakers considered “a one-time solidarity wealth tax to fund efforts to reactivate the country in the face of the Covid-19 pandemic.” In 2020, Colombia and Uruguay both put pandemic solidarity tax levies into effect.

The Ukraine war adds another twist to this “solidarity tax” story: the oligarch connection.

Vladimir Putin’s Russia may be the world’s purest plutocracy. Russia’s 500 richest individuals, U.S. senator Bernie Sanders pointed out after the invasion of Ukraine began, hold more wealth than the 145 million Russians who make up their nation’s bottom 99.8 percent. The nation’s top 1 percenters have “as much wealth offshore as the rest of the Russian population holds onshore.”

The private fortunes of Russia’s oligarchic elite have been multiplying within — and corrupting — societies throughout the “democratic world.” In 2008, the oligarch Dmitry Rybolovlev paid $95 million for a Palm Beach manse Donald Trump has bought for $41 million just four years earlier. In the UK, the wife of one kleptocratic Putin minister became a British citizen and promptly started handing that nation’s Conservative Party enough in contributions to make her “one of the party’s top 10 donors.”

But oligarchy, we need to remember, exists as a worldwide phenomenon, not a mere Russian affair. The Ukraine conflict could become a jumping-off point for confronting our entire contemporary global oligarchic empire.

Oligarchs worldwide grow and shield their fortunes through a global tax avoidance web of financial consultancies and shell companies. Landmark data dumps like the Pandora Papers have given us unnerving glimpses into this secret world of high-finance manipulation, a universe where deep-pocketed tax evaders have parked, Global Witness estimates, at least $12 trillion in offshore accounts.

Governments opposing the Russia’s Ukraine invasion are now rushing to impose sanctions on the oligarchs most closely connected to the Putin regime. They’re freezing their assets and denying them entry. But these sanctions have limited utility. They leave untouched the hoards of wealth hidden in the world’s tax evasion networks.

Russia’s top 0.01 percent, as University of California-Berkeley economist Gabriel Zucman reminds us, has over half its wealth parked outside Russia.

“Shouldn’t an effective sanctions policy,” asks Zucman, “start by seizing these assets?”

Easier said than done, given the by-design opacity of global tax havens and the powerful interests within nations like the United States and the UK that have spent the last three decades enabling the oligarchs who’ve been robbing the Russian people.

“Money doesn’t just move and hide itself,” explains Spencer Woodman, an analyst with the International Consortium of Investigative Journalists. “The flight of Russia’s wealth has been supported by big banks and a global industry of professionals who specialize in providing rich clients with shell companies, trusts, and other secretive vehicles.”

We either take on these enablers or let our world’s oligarchs — from Russia and every other corner of the globe — keep building their enormous stashes of wealth. And we need to move with all due dispatch. This moment of outrage over Ukraine will pass. Our global oligarchs will close ranks, after perhaps sacrificing a handful of their Russian brethren, and seek to continue tax-evading business as usual. We can’t let them.

So where do we start our offensive against oligarchy? Woodman sees some immediate simple steps, like getting Congress to pass the “Enablers Act,” legislation pending since last October that would require all those Americans who facilitate the flow of assets into the United States, not just banks, to investigate how their foreign clients have built their fabulous fortunes.

“If we make banks report dirty money but allow law, real estate, and accounting firms to look the other way, that creates a loophole that crooks and kleptocrats can sail a yacht through,” notes Rep. Tom Malinowski (D-N.J.), a co-sponsor of the legislation.

Our eventual goal ought to be systematic transparency throughout the world’s financial system, via a cooperative effort to create what the Independent Commission for the Reform of International Corporate Taxation is calling a “global asset registry.” This GAR, the commission declares, would “prove a vital tool” against both “illicit financial flows” and attempts to avoid taxes on “legitimate income and profits.” With a global asset registry in place, governments could more effectively levy “appropriate taxation to reduce the negative consequences of inequality.”

Western political leaders haven’t yet committed themselves to such a registry. But some are leaning somewhat that way. This past Monday, officials in the UK released a “much-delayed economic crime bill” that will require anonymous foreign owners of UK land and property to reveal their identities.

President Biden, meanwhile, is talking tough.

“We are joining with our European allies to find and seize your yachts, your luxury apartments, your private jets,” he promised in his March 1 State of the Union address. “We are coming for your ill-begotten gains.”

But any seizures will likely be little more than more symbolic gestures unless, suggests journalist Edward Ongweso, we shut down the global tax haven networks that let the world’s elite conceal their fortunes in offshore hubs. And any successful shutdown move, he adds, will have to understand and overcome the political reality that elites everywhere have little interest in “establishing precedents that could come back to hurt them.”

We won’t, in other words, be able to take down Putin’s oligarchic buddies unless we directly take on global oligarchy writ large. What might that takedown entail? Imagine a crackdown on oligarchy that combines an assault on global tax havens with “solidarity tax” initiatives that redistribute wealth from oligarchs to refugees or pandemic victims or some other class of people in clear dire need.

Efforts along this line could have broad political appeal. Indeed, Rep. Malinowski has just introduced new legislation that would let the Biden administration confiscate Russian oligarch wealth and apply it toward efforts to rebuild Ukraine.

The trick to moving ahead in a wider, bolder fashion? Timing, says the UK economist Faiza Shaheen.

Our current window, she reminds us, “will only be open for a short time.”

Via Inequality.org

Content licensed under a Creative Commons 3.0 License

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Is the Gutting of Newspapers by Private Equity Firms the Nail in the Coffin of Democracy? https://www.juancole.com/2022/02/gutting-newspapers-democracy.html Sun, 27 Feb 2022 05:04:02 +0000 https://www.juancole.com/?p=203191 Profit maximizing in the newspaper industry is corroding the knowledge base that sustains government by the people.

( Inequality.org ) – Has the unthinkable, the Swedish political scientist Bo Rothstein mused earlier this month, now entered the realm of real possibility? Could democracy in the United States be disappearing?

Millions of Americans are worrying about that same question — and we have plenty of cause for worry, everything from gun-toting militias and the continuing dysfunction of an archaic constitutional order to brazen attacks on the impartiality of our election administrators.

Our overflowing list of dangers to American democracy now has another dagger: the private equity industry. New research out of the NYU Stern School of Business and CalTech vividly details how private equity greed grabs in the newspaper sector are eviscerating local news coverage, dumbing down our politics, and undermining our democratic future.

Private equity firms have emerged over recent years as a major player on America’s economic landscape. Private equity-owned companies currently employ nearly 12 million Americans. Overall, the Private Equity Stakeholder Project noted last October, private equity firms held less than $1 trillion in assets in 2004. In 2021, their assets totaled $7.5 trillion.

What exactly do private equity firms do? They typically take on debt to buy up companies and then shift responsibility for that debt to the companies they’ve acquired. That, of course, puts pressure on the acquired companies to operate “more efficiently,” private equity’s standard jargon for squeezing workers and shortchanging consumers.

That combination has helped turn private equity, observes the Private Equity Stakeholder Project, into a “billionaire factory” that’s creating “eye-popping wealth” for the executives perched at its summit.

“Between their yachts, mansions and private jets,” the Project adds, “these private equity executives live some of the lushest lives of anyone on the planet.”

Progressive lawmakers in Congress last fall introduced legislation that targets the most glaring outrages in the private equity playbook. Senator Elizabeth Warren, a sponsor of that reform legislation, gave those outrages an apt rundown.

“Private equity firms,” she related, “get rich off of stripping assets from companies, loading them up with a bunch of debt, and then leaving workers, consumers, and whole communities in the dust.”

The Warren-backed bill, the Stop Wall Street Looting Act, would put private investment fund execs “on the hook for the companies they control” and empower both workers and the pensions funds that have billions invested in private equity deals. But this legislation has next to no chance of passage in the current Congress.

And that mean more rough times ahead for the industries where private equity has already established a major presence, industries like health care where private equity’s rush to cash in has triggered “fraudulent activity” that includes pushing medically unnecessary services and filing claims for services not provided.

In a just-released new report, Private Equity’s Dirty Dozen, the Public Accountability Initiative and the Private Equity Stakeholder Project expose how private equity kingpins like the Blackstone Group’s Stephen Schwarzman are investing massively in oil pipelines, coal plants, and offshore drilling. These environmentally hazardous investments, the report points out, only add to the destruction and chaos private equity has created in the retail, restaurant, and prison industries.

But private equity’s impact on democracy writ large, suggests the new research from CalTech and the NYU business school, may be even more insidious than the profiteering on display in all these individual economic spheres.

We’re not talking here about the impact of the political contributions private equity moguls are so generously bestowing upon pliant politicians. We’re talking about a danger much more subtle: the cratering impact private equity is having on civic engagement, the lifeblood of any culture that professes to be “democratic.”

CalTech’s Michael Ewens and Arpit Gupta and Sabrina Howell from the NYU Stern School have focused their new ground-breaking research on how private equity ownership has been steadily transforming the newspaper industry. Back in 2002, private equity funds owned only about 5 percent of local newspaper dailies. By 2019, the private share had nearly quintupled, to 23 percent.

What impact has this hefty private equity presence had on America’s newspapers? Ewens, Gupta, and Howell have examined the performance of some 262 private equity-owned dailies. They’ve unearthed the same sort of cost-cutting zeal that private equity firms have inflicted upon other economic sectors.

Private equity-owned papers, for starters, have cut staff, with the number of reporters down an average 7.3 percent and the number of editors down 8.9 percent. These lost jobs, the CalTech and NYU analysts show, aren’t just stressing the families of the newly jobless. They’re stressing our democracy.

How so? With fewer reporters and editors on staff, private equity-owned newspapers are producing and publishing significantly less “local content.” They’re focusing more on content that can be “centrally produced and cross-syndicated to many newspapers within the same ownership structure.”

This reliance on canned content unrelated to the communities private equity-owned newspapers purport to cover is sapping the vitality of entire local media universes.

“Local newspaper reporting often spills over beyond the paper’s readership,” researchers Ewens, Gupta, and Howell explain, “because local TV and especially social media rely on it as a source of information about local government issues.”

In other words, the analysts add, “changes to newspaper content can affect public knowledge far beyond” an individual newspaper’s readership.

People in communities with private equity-owned newspapers, in short, have less information about local issues circulating all around them. Not surprisingly, people in this situation tend to become less engaged in the give-and-take necessary to democratically address the issues that confront their communities. The result? After private equity takeovers, the research shows, people in communities with private equity-owned newspapers vote less in elections for local political office.

Private equity buyouts also “increase the fraction of people” who have “no opinion” about their locally elected member of Congress.

Must Our Billionaires

…remain politically immortal?

These dynamics, add CalTech and NYU analysts Ewens, Gupta, and Howell, are helping to “nationalize” local politics. Work by other researchers, they note, has established that voters with less exposure to news about local candidates become “more likely” to apply national and more partisan perspectives to local elections, “even though the policies at stake — such as local infrastructure projects or school programs — have little to do with the national, partisan issues.”

Newspapers historically, the CalTech-NYU team notes, “have been essential — especially in the U.S. — for maintaining citizen engagement and policymaker accountability.” Private equity, with its “high-powered incentives to maximize profits,” has had an “unambiguously negative” impact on this historic role so “crucial for local government accountability and, ultimately, a functioning democracy.”

The best cure for the plague of profit maximization that private equity has inflicted upon the newspaper industry? That may well be the growing movement for nonprofit local journalism. In cities and counties across the United States, troubled commercial local news properties are converting to not-for-profit status, reports Jim Friedlich of the nonprofit-boosting Lenfest Institute for Journalism. Among the hopeful signs that Friedlich is tracking: the expected launch this spring of the nonprofit Baltimore Banner and the looming Chicago Public Media acquisition of the Chicago Sun-Times.

The long-term success of “nonprofit news,” Friedlich believes, will depend upon nonprofits “becoming a much larger and smarter business.”

“Enlightened new capital, business acumen, and a capacity to build at scale are required to truly rebuild — indeed, reinvent — American local news,” he argues.

But a truly democratic news media culture is going to take more than business acumen and capital from “enlightened” deep pockets. Creating a news media system truly accountable to the public is going to take public support, the same sort of support that created public education.

And where could the funds for this public support come from? How about starting with some serious new taxes on the grand fortunes of private equity moguls and their billionaire pals?

Via Inequality.org

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Two Sides, Same Coin: Suppressing Votes, Cutting Rich People’s Taxes https://www.juancole.com/2022/01/suppressing-cutting-peoples.html Mon, 24 Jan 2022 05:06:56 +0000 https://www.juancole.com/?p=202592

State lawmakers are keeping their wealthy backers wealthy

( Inequality.org) – America’s national media typically pay little attention to the moves the nation’s state lawmakers make. Not this year. State legislative battles have emerged over recent months as a top-tier national story. And deservedly so. The battling at the state level — on a tidal wave of proposed new voter-suppression laws — could well determine the course of American democracy.

But state lawmakers are threatening democracy with more than schemes for voter suppression. In one state after another, legislators have been advancing and enacting tax cuts that pump more dollars into rich people’s pockets — and fix in place more plutocratic power over the political process.

In Arizona, for instance, the tax cuts enacted last year figure to deliver 55.5 percent of their benefits to the state’s top 1 percent. Arizonans making over half a million dollars will save an average $30,000 off their tax bills. Taxpayers making between $21,000 and $40,000 will average $13 in savings.

In Arkansas, among other tax changes, lawmakers chopped the highest state income rate — on income over $37,200 — from 5.9 to 4.9 percent. The state’s overall tax changes will save the poorest 20 percent of Arkansas taxpayers an average $17 each. Households in the state’s top 1 percent will average $10,400 in tax savings.

In Kansas, a state that should know better, a similar story. A decade ago, the state’s right-wing governor gave taxpayers of means a massive tax break that cratered state revenues and, relates Wesley Sharpe of the Center on Budget and Policy Priorities, “forced schools to shift more costs on to parents and teachers” and “left millions of people without health insurance.” The Kansas economy, meanwhile, would see no sign of the “shot of adrenaline” the governor had promised the tax cut would deliver.

Now the Kansas legislature, news reports indicate, is revving up for more tax cutting. Lawmakers appear “likely to consider a bill that would take Kansas from three income tax brackets to a single rate,” a move that would destroy what remains of progressivity — the notion that higher incomes should face higher tax rates — in the state’s tax code.

Last year 14 states cut their taxes, either by enacting new rates that heap big benefits on the rich or having the cuts triggered by legislation passed in previous years. Some 20 states, the Institute for Tax and Economic Policy calculates, “are already discussing tax cuts for 2022.”

This rash of tax cutting has received precious little national attention, and — given our turbulent times — that shouldn’t surprise us. The ongoing tax cuts, after all, seem to involve mere dollars, not our national future as a democracy. But tax cuts for the rich and attacks on the integrity of our democracy go hand in hand. The same state legislatures that are pushing voter suppression are pushing “tax relief” for their state’s most affluent.

“Many of the same states — Arizona, Georgia, Iowa, and Kansas, to name a few — considering tax cuts are also making it harder for people to vote,” explains analyst Wesley Sharpe, “such as by criminalizing efforts to assist voters with disabilities.”

Statehouse cheerleaders for grand private fortune have also shown little respect for the niceties of democracy as they rush to lavish tax breaks on the already well-endowed. Arizona may be the most outrageous example. State GOP lawmakers there have been bending over backwards to undo the tax-the-rich will of the voters.

Those voters in 2020 approved a referendum that significantly raised taxes on Arizona’s rich to pay for increased funding for the state’s public schools. The voter-backed tax hike, details the Tax Foundation, “created a 3.5 percent high earners tax atop of the state’s existing 4.5 percent top marginal income tax rate, functionally yielding a new top rate of 8 percent.”

State lawmakers in Arizona would not accept the referendum result. In their 2021 session, they proceeded to rewrite the state’s basic tax-rate structure. They slashed the already existing 4.5 percent rate “to ensure” that the combined top rate Arizona’s richest face never exceeds 4.5 percent, essentially erasing the tax hike on the rich the referendum had put in place.

A “small group of politicians is helping their rich friends avoid paying their fair share to public schools,” responded Rebecca Gau, the executive director of Stand for Children Arizona. “Worst of all, they are trying to silence voters.”

Gau and other angry Arizona education advocates subsequently collected enough signatures to put onto the November 2022 ballot a referendum that would repeal the 2021 legislative session’s exceedingly rich people-friendly rate-rigging.

But Arizona’s conservative lawmakers have still another wildcard to play. They sense that state education advocates will prevail at the polls in this November’s referendum and kill the tax cut for the rich the legislature passed last year. The lawmakers’ new strategy? They’re planning to repeal the 2021 tax cut themselves in the 2022 legislative session and, as local news reports explain, “replace it with a new version, a move that would end a voter referendum that has stopped the tax cut law from taking effect.”

In the meantime, the Tax Foundation observes, no wealthy Arizonans will be facing the top 8 percent rate that voters adopted in 2020.

Taxing the World’s Richest

…would raise $2.52 trillion a year

Rich people-friendly state lawmakers are moving on other fronts as well. Kentucky friends of grand private fortune want to replace more of the state’s income tax revenue with regressive hikes in the state sales tax. Iowa has begun a phased-in repeal of its inheritance tax. In Mississippi, the governor is calling for the total elimination of the personal income tax.

How are these pals of plutocrats justifying their magnanimity toward mega-millionaire households? They’re pointing to the sizeable budget surpluses many states are currently experiencing.

But those surpluses, points out Institute on Taxation and Economic Policy analyst Neva Butkus, reflect a set of special circumstances that range from billions in federal Covid aid to changes in tax-filing deadlines during the pandemic that have left many 2020 and 2021 tax payments getting collected in the same fiscal year. Using the surpluses these special conditions have created as an excuse for permanently cutting the taxes rich people pay makes no fiscal sense.

The same legislators who were touting tax cuts for the rich as the perfect solution to our problems before the pandemic, adds ITEP’s Butkus, are now calling tax cuts for the rich the solution to our problems during the pandemic.

“Tax cuts,” she notes, “cannot be a solution to everything.”

Tac cuts carefully targeted to families struggling to get by, to be sure, can make solid policy sense. But tax cuts for wealthy households that have become wealthier during the pandemic have no redeeming social value. We shouldn’t be cutting the taxes these rich people pay. We should be raising them. And if we did that raising, the resulting revenue — and opportunities for real social progress — would be stunning.

Just how stunning? Oxfam, the Institute for Policy Studies, Patriotic Millionaires, and the Fight Inequality Alliance have just issued a new report that does the math, nation by nation and for the world as a whole.

In the United States, a nation whose billionaires now hold more wealth than the population’s poorest 60 percent, even a modest annual wealth tax — say one that started with a 2 percent levy on wealth over $5 million and topped off with a 5 percent bite on wealth over $1 billion — would raise close to $1 trillion a year, $928.4 billion to be more exact.

Oxfam is also proposing a one-time 99 percent tax on all the wealth the world’s ten richest men — a group that includes nine Americans — have gained since Covid hit. If these 10 richest men lost 99.999 percent of their combined fortunes, Oxfam goes on to note, each of them would still be richer than 99 percent of humanity.

Via Inequality.org

Content licensed under a Creative Commons 3.0 License

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How Billionaires’ Utopias could End American Democracy https://www.juancole.com/2021/10/billionaires-american-democracy.html Mon, 25 Oct 2021 04:06:19 +0000 https://www.juancole.com/?p=200819 ( Inequality.org) – Great wealth can do great damage. Grand personal fortunes, we’ve come to understand, can menace our democracy and distort our economic life. But these fortunes can also wreak a much more hidden havoc: They can mess up the minds of people who hold them. Great fortunes can leave their owners feeling supremely sure they themselves must be great.

Great enough to save the world if they put their mind to it.

True, not every fabulously rich person has visions of global do-good glory. But not every heavy smoker gets lung cancer either. We don’t treat the survival of these smokers as proof that cigarettes can be safe. And we shouldn’t treat those super rich who do manage to keep their wits about them as proof that grand personal fortunes don’t invite a swellheaded megalomania.

Our latest self-absorbed billionaire savior? That would have to be former Walmart exec Marc Lore. This 50-year-old is now creating, his PR team trumpets, “a new city in America that sets a global standard for urban living, expands human potential, and becomes a blueprint for future generations.”

Lore made his first fortune founding — and selling — Diapers.com and then repeated that get-rich two-step by founding a competitor to Amazon that he would later sell to Walmart for $3 billion in cash and stock. Lore proceeded to stick around Walmart for four years as CEO of the retail giant’s U.S. e-commerce division.

Lore’s claim to fame at Walmart? In 2016, he ended up with America’s largest individual executive pay haul. His $236.9 million windfall amounted to over $4.5 million per week, more than a Walmart worker making $11 an hour could have earned in nearly 200 years.

Lore left Walmart earlier this year to follow his utopian dreams, but where exactly his urban utopia will sit continues to be uncertain. He’s looking at sites ranging from desert land in the Mountain West to swatches of empty acreage in Appalachia. Things will move fast, Lore believes, once he has the land in hand. The first 50,000 residents of Telosa — the name for Lore’s magical city, taken from the ancient Greek for “highest purpose” — could be enjoying life in a health-conscious, totally sustainable, and architecturally avant-garde urban cultural oasis as early as 2030.

Getting Telosa’s first phase complete will take some $25 billion. The cost of completing the project will run somewhere in the vicinity of $400 billion, all raised from a combination of investors and philanthropists, backed by some expected direct government aid and subsidies.

Jeff Bezos Should Have…

…thanked U.S. taxpayers for his space ride

Lore currently has a crew of 50 full-time staff and volunteer experts working out the details for getting Telosa up to speed. But the city’s overall vision remains his. Telosa’s land will belong to the community. The residents — initially selected through an application process — will own the homes that rest on it.

“I’m not pursuing this to make money,” says Lore. “It’s not meant to be a private city. It’s meant to be a city for everyone.”

The city of the future that cryptocurrency king Jeffrey Berns wants to build has an address in Nevada, a state whose tax benefits — like no income tax — this mega-millionaire finds mighty appealing. Berns has so far laid out $300 million for land outside Reno, offices, and staff.

Like Telosa’s Lore, Berns says he has no interest in getting rich off his project, and he’s pledging to step away from his current decision-making authority. Almost all dividends the project will produce, he adds, will go to a “distributed collaborative entity” that melds residents, employees, and investors into a “blockchain” that tracks everyone’s ownership and voting status in a digital wallet.

Berns expects his new city — Painted Rock — to host some 36,000 residents and generate $4.6 billion in annual economic output. He’s been trying to get the state to enact a new local-government model that lets his city run its own show as an “innovation zone.” His ultimate goal? Berns says he’s endeavoring to create a place where government and Corporate America “can’t interfere.”

Billionaires Elon Musk and Jeff Bezos seem to see their own particular interference-free happy place in outer space. Musk’s Space-X is aiming to enable people “to live on other planets.” Bezos envisions “millions of people living and working in space.”

The Political Immortality…

…of America’s billionaire class

Our super rich, notes Guardian columnist Jessa Crispin, no longer appear content “to just sneer down at us from their private jets.” The more our real world deteriorates, she quips, the greater their interest “in telling the rest of us how to live.”

Crispin and other analysts have found in what Telosa’s Marc Lore has to tell us echoes of the ideas of the great late-19th-century reformer Henry George, perhaps the most powerful voice against the plutocracy of the original Gilded Age. Land, George believed, needed to be “common property,” and that notion runs through Lore’s plan for his urban utopia.

But George, if around today, would not likely be cheering Lore on. He’d be much more likely to be outraged that here, in the 21st century, men of great wealth are still leveraging their fortunes to privilege their own individual visions for our common future. George’s own vision for a better tomorrow had no place for concentrated wealth in any way, shape, or form.

“No person, I think, ever saw a herd of buffalo, of which a few were fat and the great majority lean,” as George once reflected. “No person ever saw a flock of birds, of which two or three were swimming in grease, and the others all skin and bone.”

Henry George would have welcomed — as an alternative to billionaire utopias that draw from his notions — the bottom-up advocacy of contemporary movements like the drive for community land trusts. These trusts typically operate by leasing land to families on a long-term, renewable basis. The family buys the house that sits on the land. The long-term lease makes the house price affordable.

Community activists and groups worldwide are now partnering with government officials to support, organize, and operate land trusts. These activists and groups, notes the three-year-old Center for Community Land Trust Innovation, “are doing the hard work of establishing transformative forms of tenure in their own communities.” They’ve so far established, in the USA, some 225 such trusts.

We actually have a word for the hard slog of forging “transformative” social change, community by community. That word: democracy, the idea that we ennoble our future and ourselves when we sit down together to discuss and debate what that future should bring. Rich people spending fortunes on promoting their own personal visions undercut this democracy — and frustrate long-time activists like Sarah Anderson at the Institute for Policy Studies.

“Instead of creating their own utopias,” she wonders, “why can’t billionaires just pay their taxes so we can have public investment in good communities?”

That public investment would be a powerful antidote to our top-heavy America, a step that could help get our tottering democracy off the ropes. Some of our billionaire utopians, for their part, do share the sense that our democracy now stands imperiled.

“I don’t believe,” says the crypto billionaire Jeffrey Berns, “we’ll have a democracy 20 years from now if we don’t do something new.”

Neither do many of the rest of us. But letting the richest among us chart out our future only qualities as “something new” in the delusional brains of the outrageously wealthy.

Via Inequality.org

—–

Bonus video added by Informed Comment:

MSNBC: “Anand Giridharadas: Billionaire Tax Avoidance Shows ‘Social Contract Built On Madness’”

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