Sam Pizzigati – Informed Comment https://www.juancole.com Thoughts on the Middle East, History and Religion Sun, 06 Mar 2022 06:24:29 +0000 en-US hourly 1 https://wordpress.org/?v=5.7.6 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

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Bonus video added by Informed Comment:

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

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Let’s Take the Profit Out of War https://www.juancole.com/2021/08/lets-take-profit.html Mon, 30 Aug 2021 04:02:01 +0000 https://www.juancole.com/?p=199775

CEOs shouldn’t have a financial stake in the murderous mass violence of modern warfare.

By Sam Pizzigati | –

( Otherwords.org) – After all, we grew up living it or hearing about it. The 20th century rates as the deadliest in human history — 75 million people died in World War II alone. Millions have died since, including a quarter-million during the 20-year U.S. war in Afghanistan.

But for our forebears, the incredible deadliness of modern warfare came as a shock.

The carnage of World War I — with its 40 million dead — left people scrambling to prevent another horror. In 1928, the world’s top nations even signed an agreement renouncing war as an instrument of national policy.

Still, by the mid-1930s the world was swimming in weapons, and people wanted to know why.

In the United States, peace-seekers followed the money to find out. Many of America’s moguls, they learned, were getting rich off prepping for war. These “merchants of death” had a vested interest in the arms races that make wars more likely.

So a campaign was launched to take the profit out of war.

On Capitol Hill, Senate Democrats set up a committee to investigate the munitions industry and named a progressive Republican, North Dakota’s Gerald Nye, to chair it. “War and preparation for war,” Nye noted in 1934, had precious little to do with “national defense.” Instead, war had become “a matter of profit for the few.”

The war in Afghanistan offers but the latest example.

We won’t know for some time the total corporate haul from the Afghan war’s 20 years. But Institute for Policy Studies analysts Brian Wakamo and Sarah Anderson have come up with some initial calculations for three of the top military contractors active in Afghanistan from 2016-2020.

They found that total compensation for the CEOs alone at these three corporate giants — Fluor, Raytheon, and Boeing — amounted to $236 million.

A modern-day, high-profile panel on war profiteering might not be a bad idea. Members could start by reviewing the 1936 conclusions of the original committee.

Munitions companies, it found, ignited and exacerbated arms races by constantly striving to “scare nations into a continued frantic expenditure for the latest improvements in devices of warfare.”

“Wars,” the Senate panel summed up, “rarely have one single cause,” but it runs “against the peace of the world for selfishly interested organizations to be left free to goad and frighten nations into military activity.”

Do these conclusions still hold water for us today? Yes — and in fact, today’s military-industrial complex dwarfs that of the early 20th century.

Military spending, Lindsay Koshgarian of the IPS National Priorities Project points out, currently “takes up more than half of the discretionary federal budget each year,” and over half that spending goes to military contractors — who use that largesse to lobby for more war spending.

In 2020, executives at the five biggest contractors spent $60 million on lobbying to keep their gravy train going. Over the past two decades, the defense industry has spent $2.5 billion on lobbying and directed another $285 million to political candidates.

How can we upset that business as usual? Reducing the size of the military budget can get us started. Reforming the contracting process will also be essential. And executive pay needs to be right at the heart of that reform. No executives dealing in military matters should have a huge personal stake in ballooning federal spending for war.

One good approach: Rep. Jan Schakowsky’s Patriotic Corporations Act.

Among other things, that proposed law would give extra points in contract bidding to firms that pay their top executives no more than 100 times what they pay their most typical workers. Few defense giants come anywhere close to that ratio.

War is complicated, but greed isn’t. Let’s take the profit out of war.

Via Otherwords.org

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Bonus Video added by Informed Comment:

WCPO 9: “Defense contractors in Afghanistan”

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Just how Bold is Biden’s Plan to Pay for Infrastructure by Making Rich Pay their Fair Share? https://www.juancole.com/2021/05/bidens-infrastructure-making.html Sun, 02 May 2021 04:01:28 +0000 https://www.juancole.com/?p=197561 ( Inequality.org) – President Joe Biden has made no secret of his admiration for Franklin D. Roosevelt. He’s even given a painted portrait of FDR the most prominent place of honor in the White House Oval Office. A bit more significantly, Biden has just announced the most ambitious gameplan — since FDR’s New Deal — for enhancing the well-being of working Americans and trimming the incomes of America’s super rich.

Has Biden, with this gameplan, definitively reached FDR-like levels on the political daring meter? Has his administration now earned something close to Rooseveltian stature? That all depends — on how we answer just one more question: Just how bold does Biden’s new tax-the-rich plan actually happen to be?

This observer’s answer: Much bolder than the numbers — at first glance — might seem to suggest.

Let’s start by going back to FDR’s last year in office, the 12 months before he passed in 1945. At that point in time, the nation’s most awesomely affluent faced a 94 percent tax on their ordinary income over $200,000, earnings that would equal a little more than $2.9 million in today’s dollars.

Tax brackets below that $200,000 back then also carried stiff rates. One example: Affluents in FDR’s last year paid a 78 percent tax on income between $50,000 and $60,000, the equivalent of between $736,000 and $883,000 today, and every income bracket between $60,000 and $200,000 sported a progressively higher tax rate.

The tax rates the Biden administration has just proposed come nowhere near those 90-plus or even 70-plus Rooseveltian rates. If Congress goes along with the Biden plan, any personal income over $400,000 from employment or the ownership of a business will just face a 39.6 percent tax, a rate only up slightly from the current 37 percent.

But what seems a huge gap between New Deal-era tax rates on high incomes and what the Biden administration is proposing starts shrinking big-time when we toss capital gains — the dollars the rich make buying and selling stocks and bonds, property, and other assets — into the picture.

In 1945, at the end of the Roosevelt administration, the nation’s deepest pockets paid a 25 percent tax on their capital gain windfalls. Today’s really rich currently face a capital gains tax that tops off at 20 percent. For households making over $1 million in annual income, the Biden plan would raise the top capital gains tax rate to 39.6 percent, the same top rate that applies to earnings from employment.

FDR knew that people do better

…when the rich don’t get fabulously richer.

In other words, the new Biden tax plans ends the most basic of our tax code’s breaks for the ultra rich: the preferential treatment they get on the income from their wheeling and dealing. And the ending of this preferential treatment would be a big deal indeed. In 2019, 75 percent of the benefits gushing in from the capital gains tax break went to America’s top 1 percent.

Dividends currently get the same preferential federal tax treatment as capital gains. Americans making over $10 million in 2018 took in over half of their total incomes — 54 percent — via capital gains and dividends. If Congress adopts the Biden tax plan, the basic federal tax on that 54 percent would just about double, from 20 to 39.6 percent.

The Biden plan also totally eliminates the federal tax code’s open invitation to dynastic family wealth: the “step up” loophole. Under this notorious tax code giveaway, any fabulously wealthy American sitting on unrealized capital gains can pass those gains onto heirs tax-free.

Suppose, say, that a billionaire passes away while still holding $100 billion worth of stock that he bought for $20 billion. That billionaire’s heirs need pay no tax on any of that $80 billion gain because, under current law, the original $20 billion value of this stock gets “stepped up” to the stock’s value at the time of the billionaire’s death.

Under the Biden plan, if the heirs in our little morality tale sell their inherited shares, they’ll pay a capital gains tax on the difference between the $20 billion originally spent to buy the shares and whatever they reap from selling them. In effect, the Biden plan short-circuits the simplest route to dynastic fortune. No more tax-free pass on inherited capital gains.

In a United States with the Biden tax plan the law of the land, new dynastic fortunes will have a much harder time taking root. Already existing dynastic fortunes, on the other hand, will still be with us. Biden — like FDR in his day — has not yet warmed to the idea of a wealth tax.

Earlier this week, Senator Elizabeth Warren led a Capitol Hill hearing that highlighted the enormous contribution that even a mere 2 percent annual tax on grand fortune could make. Among the insightful witnesses at the hearing: the 61-year-old Abigail Disney, the granddaughter of Roy Disney, the co-founder of the Disney empire with his brother Walt.

“I can tell you from personal experience,” Abigail Disney told the assembled senators, “that too much money is a morally corrosive thing — it gnaws away at your character, it narrows your focus down onto your own well-being, it warps your idea of how much you matter and rather than make you free it turns you fearful of losing what you have.”

Franklin Roosevelt understood that debilitating dynamic well enough to propose, in 1942, a 100 percent tax on annual income over what today would be about $400,000. Joe Biden hasn’t yet ventured anywhere close to that level of daring. But he’s certainly come much further down the road to tax and economic fairness than anyone could reasonably have expected. FDR must be smiling.

Via Inequality.org

Content licensed under a Creative Commons 3.0 License.

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Bonus Video added by Informed Comment:

BBC: “President Biden’s $4 trillion plan to tax the rich and invest in America – BBC News”

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Trump’s Metaphor of ‘Missing a Putt’ for Police Killings says everything about our spoiled Plutocrats https://www.juancole.com/2020/09/killings-everything-plutocrats.html Sun, 06 Sep 2020 04:02:59 +0000 https://www.juancole.com/?p=193008 (Inequality.org) – Trying to keep up with the stunningly inappropriate — and worse — remarks of Donald Trump can sometimes seem a full-time job. Just this past week, for instance, we’ve seen the president seem to encourage voters in North Carolina to vote twice, once by mail and once by person, a felony under state law.

But the week’s most outrageous comments from the president came this past Monday on Fox News. In an interview with right-wing media superstar Laura Ingraham, Trump sloughed off this year’s widely reported instances of police brutality against Black people — like the seven shots a Kenosha police officer last month fired into the back of the 29-year-old Jacob Blake — as “chokes” by officers “under siege.”

And what exactly did the president mean by “chokes”?

“They choke just like in a golf tournament,” Trump explained. “They miss a three-foot putt.”

Trump’s analogy, understandably enough, quickly provoked immediate revulsion — and some telling insights as well. By blaming police violence on simple “choking” under pressure, the Washington Post’s Philip Kennicott pointed out, the president was inviting Americans to embrace the notion that our behavior “isn’t rational, isn’t learned or practiced, and isn’t governed by norms,” but just “about always trusting your immediate impulses.”

Trump governs by this instinct, Kennicott continues, “and then projects that same style of governance on everyone else.” If we accept his perspective that impulse determines everything, “he wins the game, and we devolve from the imperfectly conceived world of Madison and Jefferson to the darkest ideas of an ungovernable state of nature.”

All points well-taken. But we can go deeper here. The president’s “three-foot putt” analogy doesn’t just reveal the sordid worldview of an impulsive man. Trump’s vile equivalence between a golf putt and police violence has so much more to tell us about the bubble of enormous wealth that has always enveloped him — and so many others of his super-rich class.

The offspring of America’s super rich like Donald Trump grow up and then take their places in a world that bears no resemblance to the world the rest of us inhabit. These super rich never face the pressures and tensions that define the daily lives that people of modest means lead. They never worry about making the monthly rent or what will happen if they lose a job. They don’t have to accept the indignities that awful bosses inflict. They do the bossing.

The rich do, to be sure, face pressures, but pressures of an entirely different sort. So Donald Trump, struggling to explain what he meant when he said that police officers can “choke,” reached for the only quick analogy he could dredge up from his own personal experience. Yes, those three-foot putts can really test a person’s character. Anyone at a plush country club bar can tell you that.

Trump’s analogy thoughtlessly trivializes the deadly violence against Jacob Blake. But his thoughtlessness should come as no surprise. The super rich may speak the same language we speak. But they see the world through a different lens.

And that creates real problems when we let these super rich gain political dominion over us, when we let them amass personal fortunes large enough to distort our elections, when we let their philanthropy narrow our public policy choices.

Donald Trump’s personal psyche fully deserves all the attention psychologists are giving it. He may well be a textbook example of a “malignant narcissist.” But “curing” Donald Trump won’t cure the toxicity in our culture that intense concentrations of income and wealth make all but inevitable. Only steps toward a significantly more equal society will.

Donald Trump won’t take any of those steps. Neither will his class. That task remains ours.

Via Inequality.org

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Bonus Video added by Informed Comment:

Inside Edition: “Trump Compares Police Shootings to Missed Golf Putts”

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Also, Defund the CEOs https://www.juancole.com/2020/06/also-defund-the-ceos.html Sun, 28 Jun 2020 04:15:26 +0000 https://www.juancole.com/?p=191781 (Inequality.org) – America’s dirtiest three-letter word may now be “CEO,” and our ongoing economic meltdown is only making that tag even dirtier. Chef executives the nation over have spent this past spring scheming to keep their pockets stuffed while their workers suffer wage cuts, layoffs, and even death by Covid-19.

Not all CEOs, of course. Flacks for Corporate America would be overjoyed if we kept our focus on top execs like the Texas Roadhouse restaurant chain’s Kent Taylor, a big-hearted boss with a gushing profile in the latest People magazine. Taylor has outfitted workers at his 600 outlets with a full complement of protective gear, avoided pay cuts and layoffs, and donated his annual pay and $5 million of his personal fortune to helping employees with their rent, mortgages, and more.

But you won’t find many Kent Taylors out across the corporate landscape. Much more typical have been execs like Kenneth Martindale, the CEO at GNC, the vitamin and nutrition store chain. GNC filed for bankruptcy June 23. Five days earlier, the company generously handed Martindale a $2.2-million cash bonus. Nearly $2 million more in cash bonuses went to other top GNC execs.

Not a bad haul for an executive team that had been borrowing big bucks to buy back GNC shares of stock on the open market, a maneuver designed to shore up sagging share prices — and pump up the value of the executives’ own stock-based compensation.

This spring, with the pandemic crashing store sales, GNC suddenly found itself unable to pay off the loans that bankrolled the share buybacks. Bankruptcy became unavoidable. The company’s execs now plan to wipe out jobs at 1,200 of its U.S. stores as they search for a new buyer of the mess they’ve created.

The GNC story is repeating all over. Workers in companies tottering on the brink of bankruptcy see pink slips and pension cuts in their future. CEOs at these same firms see a shot at making lots of high-pay hay while the sun still shines.

“Corporate boards are handing out millions to top executives before their companies seek bankruptcy protection,” sums up a New York Times analysis, “and courts can’t do much about it.”

The pre-bankruptcy bonuses involve some of America’s most familiar corporate brands. J.C. Penny’s chief exec, for instance, pocketed $4.5 million in bonus just before the company entered bankruptcy proceedings that are going to leave at least 154 stores shut down.

Top execs at companies not knocking on bankruptcy’s door are playing self-aggrandizing games of a different sort. Their challenge: grabbing the lavish “performance-based” rewards they’ve negotiated into their executive pay deals at a time when a down economy has the vast majority of corporate enterprises struggling to meet their sales and profit targets.

Most executive pay deals at major corporations reward executives with shares of stock — or options to buy stock at a below-market price — if the execs meet various “performance” benchmarks. In a growing economy, with sales and share prices swelling, execs have little problem meeting these performance benchmarks. Their resulting rewards can often swell into the tens of millions.

But these same benchmarks become unreachable when economies turn sour. Executives suddenly see their promised windfalls seeming certain to evaporate — unless the execs can get their corporate boards to exercise a little “discretion,” the corporate codeword for dumbing down performance goals so execs can reap the windfalls they expected and still feel they fully deserve.

Analysts at Willis Towers Watson, a management consulting firm, have recently released a guidance on the “implications of adjusting plan targets.” Corporate decision makers, the guidance warns, need to understand that “mid-course changes will tend to bring added scrutiny from investors, proxy advisors and the press, not all of it favorable.”

But Willis Towers Watson has found — via a “flash survey” of nearly 700 companies — that a number of firms are considering “using discretion” anyway. Reporters at Reuters have identified at least 81 companies now in that category, a list includes corporate giants like Delta air lines, Hilton, and Uber.

A Delta filing, Reuters notes, claims that its performance measures no longer suit the “current reality.” The value of executive incentive pay, Delta insists, has declined by over half since the pandemic hit.

In Corporate America today, can’t have that. “Discretion” to the rescue!

This “discretion” works — for top execs. At Sonic Automotive, a national chain of auto dealerships, a pay deal with CEO David Smith guaranteed him grants of company stock if the company met a set of specific performance targets. Those targets became unreachable after the pandemic pummeled car sales and cost about a third of the company’s workers either lost their jobs or work hours.

CEO Smith lost nothing. Sonic’s board replaced his performance-based stock awards with options to buy Sonic shares at the company’s depressed share price. Those options now have a value of $5.2 million, over four times the value of the performance-based rewards Smith grabbed last year.

Many CEOs have pay deals that do not permit discretionary moves to make “mid-course” pay incentive changes. For worried CEOs, not a problem. Companies can simply put in place new “incentives” that enable execs to recoup whatever windfalls they may have lost when they failed to reach the original incentives. In other words: Heads CEOs win, tails they don’t lose.

All this avaricious corporate boardroom behavior most certainly merits our disgust and condemnation. But does executive pay excess, amid everything else going on right now, also merit our attention?

We have, after all, seldom entered into a summer in such a tumultuous state. We have Covid-19 cases rising. We have the worst jobless rates since the 1930s. We have police brutality finally outraging the nation into a real reckoning on racial oppression.

Not to mention a presidential election that could end in chaos.

So why should we bother paying much attention to still more corporate executive greed?

We really have no choice. We can’t afford to see CEO compensation as merely a distraction from more pressing concerns. CEO pay excess — the continuing corporate executive chase after grand fortune — is fueling the calamities that confront us.

The decades of corporate outsourcing and downsizing that have hollowed out the American middle class — and created an angry constituency for racist demagogues like Donald Trump to exploit — didn’t just happen. Corporate execs plotted that outsourcing and downsizing. They profited royally from it.

The personal fortunes these execs have pocketed have corrupted our politics and turned our legislatures into dysfunctional chambers that can seldom accomplish anything that doesn’t involve enhancing the financial well-being of already wealthy people.

Wealthy execs, in their haste to become ever wealthier, are even privileging their own financial futures over our health. The factories and plants they run are forcing workers to labor without adequate protections or social distancing. The pharmaceutical firms they manage are refusing to share research clues on possible coronavirus cures for fear of losing out on incredibly lucrative patents for vaccines and treatments.

And none of this should surprise us. The outrageous rewards baked into our current executive pay systems give execs an incentive to behave outrageously. The more they exploit, the more they can pocket. We need to thrust upon Corporate America a new pay incentive structure.

One step in that direction would be quick action on legislation that leading House and Senate progressives introduced this past fall. The Tax Excessive CEO Pay Act — introduced by representatives Barbara Lee and Rashida Tlaib and senators Bernie Sanders and Elizabeth Warren — would raise the corporate tax rate on corporations that pay their top over 50 times what they pay their workers.

In 2018, 50 major U.S. corporations paid their top execs over 1,000 times what they paid their most typical workers.

We could do bolder still. We could deny government contracts and subsidies to corporations with wide gaps between executive and worker pay. Our tax dollars should not subsidize — in any way — the exploitation of working people.

Or as an excellent New York Times analysis has just put it: “For the voices of workers to be heard, the influence of the wealthy must be curbed.”

Via Inequality.org

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Bonus Video added by Informed Comment:

Robert Reich: “Robert Reich: The 5-Step CEO Pay Scam”

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Coronavirus and the ‘Shock Doctrine’: Does Even this Disaster have to Make Rich Richer and Poor Poorer? https://www.juancole.com/2020/03/coronavirus-doctrine-disaster.html Mon, 23 Mar 2020 04:02:10 +0000 https://www.juancole.com/?p=189847 By Sam Pizzigati and Sarah Anderson | –

( Otherwords.org) – Powerful interests used the Great Recession to hardwire more inequality into our system. This time, let’s do the opposite. By , | March 17, 2020

We all have to come together. We need to help each other. We don’t have time for politics as usual.

In times of crisis like the current coronavirus pandemic, these sorts of calls for cooperation become the drumbeat of our daily lives.

Unfortunately, no drumbeat ever gets everybody marching in sync. In deeply unequal societies like our own, a wealthy few can exploit such catastrophes to make themselves even wealthier.

Back in 2007, Naomi Klein explored this phenomenon brilliantly in her landmark book The Shock Doctrine. Klein showed how corporate elites worldwide have repeatedly and brutally used “the public’s disorientation following a collective shock — wars, coups, terrorist attacks, market crashes, or natural disasters — to push through radical pro-corporate measures.”

The 2008 financial collapse would vividly illustrate the dynamics Klein described. The Wall Street giants whose reckless and criminal behavior ushered in that crisis ended up even bigger and more powerful than before the crisis began.

Klein sees those same dynamics now resurfacing in the coronavirus crisis. “We are seeing,” she told Democracy Now recently, “this very predictable process that we see in the midst of every economic crisis, which is extreme corporate opportunism.”

In response to the pandemic, she said, Trump is “dusting off” the Wall Street wishlist on everything from cutting and privatizing Social Security — by undermining its payroll tax revenue stream — to enriching the fossil fuel industry with huge bailouts.

So how can we prevent a “shock doctrine” repeat?

For starters, we need to provide immediate support for those the coronavirus is hitting the hardest: the sick and those who care for them, as well as the workers who lose jobs and income.

But we can’t afford to stop there. We need, in effect, a “shock doctrine” in reverse. We need to seize the openings for change the coronavirus presents — and challenge the capacity of our rich and powerful to become ever richer and more powerful at the expense of everyone else.

One example: Within our increasingly coronavirus-ravaged economy, more and more families will be facing evictions. Progressive activists and officials are now quite rightfully calling for a coronavirus moratorium on evictions.

But we have a chance to go much further. Why not use this crisis to rewrite the eviction-enabling statutes that let corporate landlords enrich themselves at the expense of vulnerable families in the first place?

The coronavirus crisis also gives us an opportunity to use the public purse to shift our economy towards greater equity and sustainability. The core of a reverse shock doctrine ought to be a massive public investment program designed to create good jobs, with a premium on projects that better position our economy to address climate change.

But we could also use these funds to reverse some of the inequality that makes economic crises so dangerous to begin with.

Various industries are already clamoring for federal loan guarantees and other bailouts to get them past the coronavirus crisis. For immediate bailout funds, policymakers should consider attaching pro-worker strings.

We could deny, for instance, tax-dollar support to private companies that pay their CEOs over 50 or 100 times what they pay their most typical workers. Moves in that direction would give top execs an incentive to pay workers more — and exploit them less.

Back in mid-20th century America, a time of much greater equality than we have now, corporate top execs only averaged 30 times more pay than their workers. That more equal America proved resilient enough to overcome a fearsome polio epidemic and prosper.

That more equal America, let’s remember, also emerged out of the back-to-back crises of the Great Depression and world war against fascism. Progressives seized the opportunity those crises created and changed the face of American society. Why can’t we?

,

Sarah Anderson and Sam Pizzigati co-edit Inequality.org at the Institute for Policy Studies. This op-ed was adapted from Inequality.org and distributed by OtherWords.org.

Via Otherwords.org

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Bonus Video added by Informed Comment:

Democracy Now! ““Coronavirus Capitalism”: Naomi Klein’s Case for Transformative Change Amid Coronavirus Pandemic”

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