Corporate Coup d’état Coming Soon to a City Near You By Rania Khalek / April 19, 2011
In her book, The Shock Doctrine, Naomi Klein demonstrates how wealthy elites often use times of crisis and chaos to impose unpopular policies that restructure economies and political systems to further advance their interests. She calls these orchestrated raids on the public sphere in the wake of catastrophic events, combined with the treatment of disasters as exciting market opportunities, “disaster capitalism.”
Disaster capitalism is on display around the country, as legislators use the debt crisis afflicting their states as an opportunity to hollow out the public sector. In Michigan it’s being packaged as “emergency financial management” by Republican Gov. Rick Snyder, who is looking to exploit an economic crisis that has left his state with a severe budget deficit. In March, Snyder signed a law granting state-appointed emergency financial managers (EFM) the ability to fire local elected officials, break teachers’ and public workers’ contracts, seize and sell assets, and eliminate services, entire cities or school districts, all without any public input. He claims these dictatorial restructuring powers will keep Michigan communities out of bankruptcy.
Michigan currently has unelected EFM’s in charge of the schools in Detroit, as well as the cities of Pontiac, Ecorse, and Benton Harbor. In Benton Harbor, the city’s elected mayor and city commissioners were stripped of all power by unelected EFM, Joseph Harris. Harris issued an order saying the city commissioners have no power beyond calling meetings to order, approving minutes, and adjourning meetings. This decimation of local democracy is spreading. Robert Bobb, the EFM that has taken over Detroit’s public school system, sent layoff notices to all of the district’s 5,466 unionized employees. Bobb says he will exercise his power as EFM to unilaterally modify the district’s collective bargaining agreement with the Federation of Teachers starting May 17, 2011.
ACLU of Michigan Executive Director Kary Moss said the law raises concern about separation of powers, its impact on minority communities, collective-bargaining rights and privatization of services. She is absolutely correct. Faced with a deficit, emboldened EFMs can sell off public property to developers, close public schools and authorize charter schools, and void union contracts with literally no recourse for local, tax-paying residents or their elected officials to stop it.
And, it gets worse. Michigan has joined with the Turnaround Management Association (TMA) to develop a training program for prospective emergency managers. According to their website, TMA members are a professional community of turnaround and corporate renewal professionals who share a common interest in strengthening the economy through the restoration of corporate value. Michigan Treasurer Andy Dillon, while speaking about the new program during a seminar on municipal distress, said that mayors and school superintendents are essentially running big businesses that, in many cases, are more complicated than private companies. It’s no surprise then, that Wall Street investors are thrilled about the potential impacts of the EFM law.
An estimated 400 accountants, lawyers, school employees, and city workers began classes offered by the program in Lansing, Michigan this week on topics including “Dealing with the Unionized Workforce,” navigating municipal bankruptcy and negotiating contracts for sewer, water and other utilities. ”Dealing with the Unionized Workforce” is code for destroying unions and has nothing to do with balancing the budget. Gov. Scott Walker (R-WI) in an appearance before the House Oversight Committee, under questioning from Rep. Dennis Kucinich (D-OH), admitted a key provision in his state budget proposal to curb union rights had no fiscal benefit, putting to rest the notion that union-busting governors like Rick Snyder have any intention of actually solving their state’s economic woes. As for “negotiating contracts for sewer, water, and other utilities”, this is code for privatize, privatize, privatize!
This so-called financial emergency is really a democracy emergency. Local governments are NOT corporations, nor should they resemble them. The true purpose of emergency financial management is the conversion of a democratically elected government into a hierarchal business entity through economic “shock therapy”, which would be impossible if workers, elected representatives, and residents had any say. Michigan has become a laboratory for CEO Governor Rick Snyder to impose disaster capitalism onto his state. If we allow what is taking place in Michigan to continue unabated, it won’t be long before disaster capitalism finds its way to a city, town, or school district near you.
We're #1 -- Ten Depressing Ways America Is Exceptional By David Morris / April 20, 2011
America is exceptional in the advantages we’ve had over other nations, not what we’ve done with those advantages.
Recent research contradicts the fundamental tenet of American exceptionalism. A Brookings Institution report comparing economic mobility in the United States and other countries concludes, "Starting at the bottom of the earnings ladder is more of a handicap in the United States than it is in other countries."
For Republican presidential candidates the phrase American Exceptionalism has taken on almost talismanic qualities. Newt Gingrich’s new book is titled, A Nation Like No Other: Why American Exceptionalism Matters. “American the Exceptional” is the title of a chapter in Sarah Palin’s book America by Heart.
And woe be to those who take issue with the phrase. 2008 Presidential candidate Mike Huckabee declares, “To deny American exceptionalism is in essence to deny the heart and soul of this nation.” 2012 Presidential candidate Mitt Romney insists, “The reorientation away from a celebration of American exceptionalism is misguided and bankrupt.”
What is this American exceptionalism Republicans so venerate? After interviewing many Republican leaders, Washington Post Reporter Karen Tumulty concludes it is the belief that America “is inherently superior to the world’s other nations”. It is a widely held belief. Indeed, most Americans believe our superiority is not only inherent but divinely ordained. A survey by the Public Religious Research Institute and the Brookings Institution found that 58 percent of Americans agree with the statement, “God has granted America a special role in human history.”
Let me make it clear at the outset. I too believe in American exceptionalism, although I don’t think God has anything to do with it. But I suspect my perspective will find little favor among Republicans in general and Tea Party members in particular. For I believe that America is exceptional in the advantages we’ve had over other nations, not what we’ve done with those advantages.
Indeed, to me there are two American exceptionalisms. One is the exceptionally favorable circumstances the United States found itself in at its founding and over its first 200 years. The second is the exceptional way in which we have squandered those advantages, in the process creating a value system singularly antagonistic to the changes needed when those advantages disappeared.
Americans did not become rich because of our rugged individualism or entrepreneurial drive or technical inventiveness. We were born rich. Ann Richards’ famous description of George Bush Sr. as an individual is equally applicable to the United States as a whole, “He was born on third base and thinks he hit a triple.”
When asked to identify the single most important difference between the Old and New World, renowned historian Henry Steele Commager responded, in the New World your baby survived. The New World had an abundance of cheap land which meant the New World, unlike the Old World, was largely populated by self-reliant property owners. Coupled with a moderate climate and rich soil, immigrants could grow all the food needed for their families, livestock and horses. There was plenty of clean water and sufficient free or low cost wood to build and heat one’s house.
The fact that Americans could choose to live on a farm also gave them significant bargaining power with employers. As a result wages in the New World were much higher than in the Old World.
The United States also benefited enormously from tens of millions of immigrants who, through a Darwinian-like process of natural selection, were among the most driven and entrepreneurial and hardy of their native countries. And on the dark side of the immigration picture, we also benefited immensely from millions of involuntary immigrants who provided an army of unpaid labor for southern plantations.
American exceptionalism must also include our unique advantage in having two oceans separating us from potential enemies. After 1815, no foreign troops ever again set foot on American soil. Indeed, America has benefited mightily from foreign wars. Arguably, the conflict between France and England had more to do with our winning independence than our own military efforts. In the first half of the 19th century, European wars led political leaders to peacefully sell huge quantities of land to the United States for a pittance (e.g. the Louisiana purchase of 1803 doubled the size of our infant nation).
A century later foreign wars again dramatically benefited the United States. “In the twentieth century the American economy was twice left undamaged and indeed enriched by war while its potential competitors were transformed into pensioner”, notes historian Godfrey Hodgson. After World War I the United States became the world’s creditor. After World War II Europe and Japan lay in ashes while the United States accounted for a full 40 percent of the world’s economy.
The list of exceptional advantages must also include our vast reserves of fossil fuels and iron ore. For our first 200 years we were self-sufficient in oil. Today we still export coal and are largely self-sufficient in natural gas.
Making a Sow’s Ear Out of a Silk Purse: The Culture Born of American Exceptionalism
Americans became the richest people on earth not because we were endowed with inherently superior national traits nor because we are God’s chosen people, nor because we have an elegant and compact Constitution and a noble sounding Declaration of Independence. We became rich because we were exceptionally lucky.
But the myth that we became richer than other countries because of our blessedness encouraged us to develop a truly exceptionalist culture, one that has left us singularly unequipped to prosper when our luck changed, when inexpensive land and energy proved exhaustible, when the best and the brightest in the world began staying at home rather than emigrating to our shores, when wars began to burden us and enrich our economic competitors.
The central tenet of that culture is a celebration of the “me” and an aversion to the “we”. When Harris pollsters asked US citizens aged 18 and older what it means to be an American the answers surprised no one. Nearly 60 percent used the word freedom. The second most common word was patriotism. Only 4 percent mentioned the word community.
To American exceptionalists freedom means being able to do what you want unencumbered by obligations to your fellow citizens. It is a definition of freedom the rest of the world finds bewildering. Can it be, they ask, that the quintessential expression of American freedom is low or no taxes and the right to carry a loaded gun into a bar? To which a growing number of Americans, if recent elections were any indication, would respond, “You’re damn right it is.”
Strikingly, Americans are not exceptional in our attitudes toward government. In a survey of 27 countries, two thirds of the respondents on both sides of the Atlantic answered yes to the following question, “Does the government control too much of your daily life? Is it usually inefficient and wasteful?”
What makes us exceptional is our response to the next question. “It is the responsibility of the government to reduce the difference in income”. Less than a third of Americans agreed while in 26 other countries more than two thirds did.
Citizens in other countries are as critical of their governments as we are. But unlike us they do not criticize the importance of government itself or the fundamental role it plays in boosting the general welfare. They do not like to pay taxes, but they understand the necessity of taxes not only in building a public infrastructure but also in building a personal security infrastructure.
Far more than other peoples, Americans believe that skill and hard work are the keys to success and wealth is a measure of how hard you work or how skilled you are. Which leads us to believe that people should have the right to amass as much wealth as they can and view a graduated income tax as a punitive penalty on success and a sturdy social safety net an invitation to slothfulness, reduced productivity and an overall slowdown in economic growth.
The expression, “The Nanny State” is singularly American. The expression “We’re all in this together”, while rhetorically still extant in the United States, less and less describes the values that motivate our policies.
In contrast, Europeans believe luck and circumstance are more important than hard work and skill and a sturdy social safety net is needed to help those who are unlucky. Acting on this principle, they have designed most of their social benefits to be universal, as have Canada and Japan, unlike here where residents have to prostrate themselves before bureaucrats to validate their penury before they are grudgingly doled out ever-smaller and temporary amounts of assistance.
One consequence of universality is that even while they complain about taxes, Europeans can point to many aspects of their lives where they directly and personally benefit from taxes (e.g. universal health insurance). Americans cannot.
For many Americans even means tested benefits are unwelcome. The term “welfare” is a pejorative a handout given to undeserving people who will use it in unworthy ways. Ronald Reagan’s lethal phrase “welfare Queen” accurately captured that mindset.
The new influence of Tea Party conservatives has taken this anti-social attitude a step further best reflected in the speeches of Representative Paul Ryan, Chairman of the House Budget Committee and made concrete in his recent budget. Ryan believes that helping the poor represents a “collectivist” philosophy. His heroine is Ayn Rand, the God of libertarians. He requires his staffers to read Rand’s novel, Atlas Shrugged and calls Rand “the reason I got involved in public service.”
Jonathan Chait sums up Rand’s moral philosophy, “The core of the Randian worldview, as absorbed by the modern GOP, is a belief that the natural market distribution of income is inherently moral, and the central struggle of politics is to free the successful from having the fruits of their superiority redistributed by looters and moochers.”
For Ayn Rand charity is not only unwelcome; it is evil.
Do not confuse altruism with kindness, good will or respect for the rights of others…The irreducible primary of altruism, the basic absolute, is self-sacrifice—which means; self-immolation, self-abnegation, self-denial, self-destruction—which means: the self as a standard of evil, the selfless as a standard of the good. Do not hide behind such superficialities as whether you should or should not give a dime to a beggar. That is not the issue. The issue is whether you do or do not have the right to exist without giving him that dime.
That value system is made explicit in Paul Ryan’s much publicized budget which would slash taxes on the rich by almost $3 trillion while cutting spending on the needy by almost that much.
The United States is also exceptional among industrialized nations not only in having by far the world’s most unequal income distribution but in believing that this inequality benefits us all, despite mountains of evidence to the contrary.
The data is crystal clear. Since 1980, the income share of the upper 1 percent of Americans has doubled. The share going to the top 0.1 percent, those earning more than $1.2 million a year, has quadrupled. Meanwhile the average worker’s wages have declined. In 2004 a full-time worker’s wage was 11 percent lower than in 1973, adjusting for inflation, even though productivity had risen 78 percent between 1973 and 2004.
In the last decade, while the top 1 percent of Americans saw their incomes rise, on average, by more than a quarter of a million dollars each, the average income of the bottom 90 percent of all working Americans actually declined.
To Republicans, inequality is unimportant because of another aspect of American exceptionalism, the unparalleled opportunity in the United States for those with ambition and grit to move up the economic ladder. They insist, and most of us firmly believe, that America is still the land of opportunity, that the probability of a rags to riches saga is much higher here than abroad.
But recent data contradicts that fundamental tenet of American exceptionalism. A Brookings Institution report comparing economic mobility in the United States and other countries concludes, "Starting at the bottom of the earnings ladder is more of a handicap in the United States than it is in other countries." And more broadly notes, "there is growing evidence of less intergenerational economic mobility in the United States than in many other rich industrialized countries.”
Another hobbling fundamental tenet of American exceptionalism is that we have nothing to learn from other countries. Why mess with God’s perfection? Back in the late 1980s I went to producers at Minneota’s public television station, TPT and proposed a show tentatively entitled, “What We Can Learn From Others”. They wondered what in the world I was smoking.
This sense of uniqueness has most clearly been reflected in our debates on national health care reform. In 1994 both the United States and Taiwan engaged in national debates about how their health care systems might be improved. To come up with the answers, Taiwan’s leaders visited about a dozen other countries to gain insights about the wide variety of existing national health system structures and used these insights to tailor a system adapted to their own needs. US leaders visited no other countries. The debate rarely even mentioned other countries except dismissively and usually inaccurately (e.g. Canadians cannot choose their own doctors). This occurred despite the overwhelming evidence that the US medical system is the most expensive, the least accessible and by many measures, one of the least well-performing of any in the industrialized world.
The 2009 debate over health reform took place as the United States economy collapsed, unemployment soared and foreclosures mushroomed. Yet there was virtually no discussion about the relationship of health care and personal financial adversity. A study by Steffie Woolhandler and colleagues at the Harvard Medical School done in 2007 revealed a remarkable statistic: 62 percent of US bankruptcies were a result of medical expenses. Equally damning, 75 percent of the people with a medically related bankruptcy had health insurance.
How does this woeful statistic compare to other countries? It is impossible to say because in other countries such a statistic would be a sign of gross irresponsibility and perhaps a societal breakdown. On Frontline, Washington Post veteran reporter T.R. Reid examined health systems around the world. In the process he interviewed the President of the Swiss Federation. Switzerland had dramatically changed its own health system in 1994 through a national referendum.
Reid: How many people in Switzerland go bankrupt because of medical bills?
Swiss President Pascal Couchepin: Nobody. It doesn't happen. It would be a huge scandal if it happens.
Conservatives proudly point to the Declaration of Independence as the foundational source of their guiding principles. “We hold these truths to be self-evident that all men are created equal that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.”
But American exceptionalism has bred a culture and value system that have in turn embraced policies that have made the pursuit of happiness exceedingly difficult.
More and more Americans are desperately trying to hold on. In an astonishing reversal of the first 200 years of American history when we were seen as perhaps the most optimistic of all peoples, we have become one of the most personally insecure.
To make up for the decline in wages, Americans are working longer hours and taking on more debt just to make ends meet. Today Americans are at work 4-10 weeks longer than their counterparts in Europe. Forty million Americans lack health insurance and tens of millions more have health insurance with limited coverage.
As I mentioned at the beginning of this article, at the founding of the American Republic a key difference between the Old World and the New World was that in the New World a baby survived. Today, the numbers paint a different picture. The proportion of infants that survive in the United States is one of the lowest in the industrialized world.
At the founding of the nation, access to low cost land transformed the United States into the first large nation in history populated principally by property owners. Since late 2007. however, there have been more than 7 million foreclosures in the United States and some predict another 2 million in 2011.
America has been and continues to be exceptional. At first we were exceptional because of circumstances that conferred on us enormous advantages over other nations. Today we are exceptional because of our culture, a culture born of our unusually fortunate history and now perhaps the single biggest handicap to our collective survival and prosperity in the less favorable circumstances of the 21st century.
GOP Spreads Corporate Tax Disinformation, America Fights Back By Allison Kilkenny / April 17, 2011
US Uncut launched another nationwide day of protest this week involving around forty participating chapters. The activism strategies again ranged from traditional protest to more creative forms of occupations such as San Francisco’s flash mob in a Bank of America.
This latest campaign follows a busy week for the fledgling organization. US Uncut, along with the Yes Men, have been at the center of the media’s attention following their successful pranktivist duping of the AP.
The anti-corporate tax dodging movement is growing momentum during a time when GOP leaders such as Eric Cantor, Michele Bachmann, and Tim Pawlenty propagate daily the lie that corporations are already overtaxed in America. While corporations claim they’re taxed at 35 percent, their actual effective tax rate is much, much lower after deductions, credits, and write-offs.
During the 1950s, the decade in which more people joined the middle class than at any time in history - before or since - corporations paid 49 percent of their profits in taxes. Last year, it was about half that rate, a decidedly more modest 26 percent. In 2010, corporate tax collections totaled $191 billion - down 8 percent from $207 billion as recently as 2000.
Perhaps a more telling yardstick, corporate tax revenue in 2009 came to just 1 percent of gross domestic product - the lowest collection level since 1936, or three-quarters of a century ago. In 2010, it edged up to a puny 1.3 percent - the second-lowest since 1940. Even worse, the shriveled tax collections came at a time when corporations were registering an all-time high in profits. At the end of 2010, corporations posted an annualized profit of $1.65 trillion in the fourth quarter. In other words, the more they made, the less they paid.
America has a revenue problem because of a two-tier taxation system that steals from the poor and offers corporate welfare to the rich. While tax evasion has always been an American business tradition, the practice has now reached frenzied proportions where the government is no longer simply turning a blind eye to the practice, but actively facilitating it.
The Fed gave hundreds of millions of dollars in taxpayer money to hedge funds and other investors with addresses in the Cayman Islands during the bailout. The addresses belong to companies with American affiliations like Pimco, Blackstone (Pete Peterson’s company that seeks to privatize Social Security,) and Waterfall TALF Opportunity, a company owned by Christy Mack, wife of John Mack, the chairman of Morgan Stanley. The government is now actively subsidizing tax evasion by using citizen dollars to fund corporate stealing for companies like Blackstone that seek to privatize Social Security, which would rob poor Americans of one of their last great social protections.
The legend of welfare kings and queens is true, but these societal parasites don’t live in the ghettos. They live in the Hamptons and on Wall Street. Many Americans now realize this and are beginning to fight back.
Thousands turned out this week to protest Gov. Rick Snyder’s budget cuts in Michigan.
"The script Gov. Snyder has written for his Republican cronies is not the kind of Michigan we want to live in," Herb Sanders of the American Federation of State, County and Municipal Workers told the crowd. "If the politicians won't listen to us at the Capitol, then we're prepared to take the fight to them in their home districts."
Sarah Palin graced Wisconsin with her presence for the sole purpose of stating approval of Gov. Scott Walker’s decision to strip unions of the right to collectively bargain. She was enthusiastically booed by a counter-protest, a response that so flustered right-wing mouthpiece Andrew Breitbart that he rushed the podium to scream “GO TO HELL!” at the crowd before encouraging a community that had organized the event to ironically applaud the death of community organizing.
Every week, there are more teacher and students protests opposing education cuts, labor protests demanding the right to collectively bargain (not the right to higher wages or safer working conditions, but the mere right to a seat at the table,) and more citizens gather to oppose the two-tier America where the poor suffer while rich corporations raid the Treasury.
US Uncut doesn’t plan to relent with its resistance any time soon. Another larger wave of action is planned for April 18, and so far more than 100 protests have been announced.
[Allison Kilkenny is the co-host of the progressive political podcast Citizen Radio (wearecitizenradio.com) and independent journalist who blogs at allisonkilkenny.com. Her work has appeared in The American Prospect, the L.A. Times, In These Times, Truthout and the award-winning grassroots NYC newspaper The Indypendent.]
THE FAT AND THE FURIOUS The top 1 percent may have the best houses, educations, and lifestyles, says the author, but “their fate is bound up with how the other 99 percent live.” Illustration by Stephen Doyle.
Inequality: Of the 1%, by the 1%, for the 1% By Joseph E. Stiglitz / May 2011
Americans have been watching protests against oppressive regimes that concentrate massive wealth in the hands of an elite few. Yet in our own democracy, 1 percent of the people take nearly a quarter of the nation’s income—an inequality even the wealthy will come to regret.
It’s no use pretending that what has obviously happened has not in fact happened. The upper 1 percent of Americans are now taking in nearly a quarter of the nation’s income every year. In terms of wealth rather than income, the top 1 percent control 40 percent. Their lot in life has improved considerably. Twenty-five years ago, the corresponding figures were 12 percent and 33 percent. One response might be to celebrate the ingenuity and drive that brought good fortune to these people, and to contend that a rising tide lifts all boats. That response would be misguided. While the top 1 percent have seen their incomes rise 18 percent over the past decade, those in the middle have actually seen their incomes fall. For men with only high-school degrees, the decline has been precipitous—12 percent in the last quarter-century alone. All the growth in recent decades—and more—has gone to those at the top. In terms of income equality, America lags behind any country in the old, ossified Europe that President George W. Bush used to deride. Among our closest counterparts are Russia with its oligarchs and Iran. While many of the old centers of inequality in Latin America, such as Brazil, have been striving in recent years, rather successfully, to improve the plight of the poor and reduce gaps in income, America has allowed inequality to grow.
Economists long ago tried to justify the vast inequalities that seemed so troubling in the mid-19th century—inequalities that are but a pale shadow of what we are seeing in America today. The justification they came up with was called “marginal-productivity theory.” In a nutshell, this theory associated higher incomes with higher productivity and a greater contribution to society. It is a theory that has always been cherished by the rich. Evidence for its validity, however, remains thin. The corporate executives who helped bring on the recession of the past three years—whose contribution to our society, and to their own companies, has been massively negative—went on to receive large bonuses. In some cases, companies were so embarrassed about calling such rewards “performance bonuses” that they felt compelled to change the name to “retention bonuses” (even if the only thing being retained was bad performance). Those who have contributed great positive innovations to our society, from the pioneers of genetic understanding to the pioneers of the Information Age, have received a pittance compared with those responsible for the financial innovations that brought our global economy to the brink of ruin.
Some people look at income inequality and shrug their shoulders. So what if this person gains and that person loses? What matters, they argue, is not how the pie is divided but the size of the pie. That argument is fundamentally wrong. An economy in which most citizens are doing worse year after year—an economy like America’s—is not likely to do well over the long haul. There are several reasons for this.
First, growing inequality is the flip side of something else: shrinking opportunity. Whenever we diminish equality of opportunity, it means that we are not using some of our most valuable assets—our people—in the most productive way possible. Second, many of the distortions that lead to inequality—such as those associated with monopoly power and preferential tax treatment for special interests—undermine the efficiency of the economy. This new inequality goes on to create new distortions, undermining efficiency even further. To give just one example, far too many of our most talented young people, seeing the astronomical rewards, have gone into finance rather than into fields that would lead to a more productive and healthy economy.
Third, and perhaps most important, a modern economy requires “collective action”—it needs government to invest in infrastructure, education, and technology. The United States and the world have benefited greatly from government-sponsored research that led to the Internet, to advances in public health, and so on. But America has long suffered from an under-investment in infrastructure (look at the condition of our highways and bridges, our railroads and airports), in basic research, and in education at all levels. Further cutbacks in these areas lie ahead.
None of this should come as a surprise—it is simply what happens when a society’s wealth distribution becomes lopsided. The more divided a society becomes in terms of wealth, the more reluctant the wealthy become to spend money on common needs. The rich don’t need to rely on government for parks or education or medical care or personal security—they can buy all these things for themselves. In the process, they become more distant from ordinary people, losing whatever empathy they may once have had. They also worry about strong government—one that could use its powers to adjust the balance, take some of their wealth, and invest it for the common good. The top 1 percent may complain about the kind of government we have in America, but in truth they like it just fine: too gridlocked to re-distribute, too divided to do anything but lower taxes.
Economists are not sure how to fully explain the growing inequality in America. The ordinary dynamics of supply and demand have certainly played a role: laborsaving technologies have reduced the demand for many “good” middle-class, blue-collar jobs. Globalization has created a worldwide marketplace, pitting expensive unskilled workers in America against cheap unskilled workers overseas. Social changes have also played a role—for instance, the decline of unions, which once represented a third of American workers and now represent about 12 percent.
But one big part of the reason we have so much inequality is that the top 1 percent want it that way. The most obvious example involves tax policy. Lowering tax rates on capital gains, which is how the rich receive a large portion of their income, has given the wealthiest Americans close to a free ride. Monopolies and near monopolies have always been a source of economic power—from John D. Rockefeller at the beginning of the last century to Bill Gates at the end. Lax enforcement of anti-trust laws, especially during Republican administrations, has been a godsend to the top 1 percent. Much of today’s inequality is due to manipulation of the financial system, enabled by changes in the rules that have been bought and paid for by the financial industry itself—one of its best investments ever. The government lent money to financial institutions at close to 0 percent interest and provided generous bailouts on favorable terms when all else failed. Regulators turned a blind eye to a lack of transparency and to conflicts of interest.
When you look at the sheer volume of wealth controlled by the top 1 percent in this country, it’s tempting to see our growing inequality as a quintessentially American achievement—we started way behind the pack, but now we’re doing inequality on a world-class level. And it looks as if we’ll be building on this achievement for years to come, because what made it possible is self-reinforcing. Wealth begets power, which begets more wealth. During the savings-and-loan scandal of the 1980s—a scandal whose dimensions, by today’s standards, seem almost quaint—the banker Charles Keating was asked by a congressional committee whether the $1.5 million he had spread among a few key elected officials could actually buy influence. “I certainly hope so,” he replied. The Supreme Court, in its recent Citizens United case, has enshrined the right of corporations to buy government, by removing limitations on campaign spending. The personal and the political are today in perfect alignment. Virtually all U.S. senators, and most of the representatives in the House, are members of the top 1 percent when they arrive, are kept in office by money from the top 1 percent, and know that if they serve the top 1 percent well they will be rewarded by the top 1 percent when they leave office. By and large, the key executive-branch policymakers on trade and economic policy also come from the top 1 percent. When pharmaceutical companies receive a trillion-dollar gift—through legislation prohibiting the government, the largest buyer of drugs, from bargaining over price—it should not come as cause for wonder. It should not make jaws drop that a tax bill cannot emerge from Congress unless big tax cuts are put in place for the wealthy. Given the power of the top 1 percent, this is the way you would expect the system to work.
America’s inequality distorts our society in every conceivable way. There is, for one thing, a well-documented lifestyle effect—people outside the top 1 percent increasingly live beyond their means. Trickle-down economics may be a chimera, but trickle-down behaviorism is very real. Inequality massively distorts our foreign policy. The top 1 percent rarely serve in the military—the reality is that the “all-volunteer” army does not pay enough to attract their sons and daughters, and patriotism goes only so far. Plus, the wealthiest class feels no pinch from higher taxes when the nation goes to war: borrowed money will pay for all that. Foreign policy, by definition, is about the balancing of national interests and national resources. With the top 1 percent in charge, and paying no price, the notion of balance and restraint goes out the window. There is no limit to the adventures we can undertake; corporations and contractors stand only to gain. The rules of economic globalization are likewise designed to benefit the rich: they encourage competition among countries for business, which drives down taxes on corporations, weakens health and environmental protections, and undermines what used to be viewed as the “core” labor rights, which include the right to collective bargaining. Imagine what the world might look like if the rules were designed instead to encourage competition among countries for workers. Governments would compete in providing economic security, low taxes on ordinary wage earners, good education, and a clean environment—things workers care about. But the top 1 percent don’t need to care.
Or, more accurately, they think they don’t. Of all the costs imposed on our society by the top 1 percent, perhaps the greatest is this: the erosion of our sense of identity, in which fair play, equality of opportunity, and a sense of community are so important. America has long prided itself on being a fair society, where everyone has an equal chance of getting ahead, but the statistics suggest otherwise: the chances of a poor citizen, or even a middle-class citizen, making it to the top in America are smaller than in many countries of Europe. The cards are stacked against them. It is this sense of an unjust system without opportunity that has given rise to the conflagrations in the Middle East: rising food prices and growing and persistent youth unemployment simply served as kindling. With youth unemployment in America at around 20 percent (and in some locations, and among some socio-demographic groups, at twice that); with one out of six Americans desiring a full-time job not able to get one; with one out of seven Americans on food stamps (and about the same number suffering from “food insecurity”)—given all this, there is ample evidence that something has blocked the vaunted “trickling down” from the top 1 percent to everyone else. All of this is having the predictable effect of creating alienation—voter turnout among those in their 20s in the last election stood at 21 percent, comparable to the unemployment rate.
In recent weeks we have watched people taking to the streets by the millions to protest political, economic, and social conditions in the oppressive societies they inhabit. Governments have been toppled in Egypt and Tunisia. Protests have erupted in Libya, Yemen, and Bahrain. The ruling families elsewhere in the region look on nervously from their air-conditioned penthouses—will they be next? They are right to worry. These are societies where a minuscule fraction of the population—less than 1 percent—controls the lion’s share of the wealth; where wealth is a main determinant of power; where entrenched corruption of one sort or another is a way of life; and where the wealthiest often stand actively in the way of policies that would improve life for people in general.
As we gaze out at the popular fervor in the streets, one question to ask ourselves is this: When will it come to America? In important ways, our own country has become like one of these distant, troubled places.
Alexis de Tocqueville once described what he saw as a chief part of the peculiar genius of American society—something he called “self-interest properly understood.” The last two words were the key. Everyone possesses self-interest in a narrow sense: I want what’s good for me right now! Self-interest “properly understood” is different. It means appreciating that paying attention to everyone else’s self-interest—in other words, the common welfare—is in fact a precondition for one’s own ultimate well-being. Tocqueville was not suggesting that there was anything noble or idealistic about this outlook—in fact, he was suggesting the opposite. It was a mark of American pragmatism. Those canny Americans understood a basic fact: looking out for the other guy isn’t just good for the soul—it’s good for business.
The top 1 percent have the best houses, the best educations, the best doctors, and the best lifestyles, but there is one thing that money doesn’t seem to have bought: an understanding that their fate is bound up with how the other 99 percent live. Throughout history, this is something that the top 1 percent eventually do learn. Too late.
The New American Dream By William Rivers Pitt / 31 March 2011
If you are wealthy, you are living in the Golden Age of your American Dream, and it's a damned fine time to be alive. The two major political parties are working hammer and tong to bless you and keep you. The laws are being re-written - often by fiat, and in defiance of court orders - to strengthen the walls separating you and your wealth from the motley masses. Your stock portfolio, mostly made by and for oil and war, continues to swell. Your banks and Wall Street shops destroyed the economy for everyone except you, and not only did they get away with it, they were handed a vast dollop of taxpayer cash as a bonus prize.
The little people probably crack you up when you bother to think about them. Their version of the American Dream is a ragged blanket too short to cover them, but they still buy into it, and that's the secret of your strength in the end. So many of them walk into the voting booths and solemnly vote against their own best interests, and for yours, because the American Dream makes them think they, too, will be rich someday. They won't - you've made sure of that - but so long as they keep believing it, your money will continue to roll in.
The Citizens United Supreme Court decision swept away the last tattered shreds of the façade of fairness in politics and electioneering, and now you own the whole store. You can use your vast financial resources to lie on a national level now, lie with your bare face hanging out, because it works. You're not the bad guy in America. Teachers, cops, firefighters, union members and public-sector employees are the bad guys, the reason for all our economic woes. NPR and Planned Parenthood are the bad guys. You did that, and when governors like Scott Walker rampage through worker's rights on your dime, you chuckle into your sleeve and enjoy your interest rate.
We're firing teachers and missiles simultaneously, to poach a line from Jon Stewart, and the inherent disconnect fails to sink in among those serving as dray horses for your greed and ambition. They're in the traces, bellowing about what you want them to focus on thanks to your total control of the "mainstream" news media, and they plow your fields with the power of their incoherent, misdirected rage.
They pay their taxes. Isn't that a hoot? They pay their taxes dutifully and annually, and that money gets shunted right to you and your friends, thanks to the politicians who love you and the laws that favor you, not to mention the wars that sustain you. They pay their taxes when they should just pay you, right? Talk about getting rid of government waste. They should just pay you directly and cut out the middle man, because it all goes to the same place in the end. You.
You are General Electric, and you paid no taxes in 2010. You made $14.2 billion in worldwide profits, $5.1 billion of which was made in America, and your tax burden amounted to a big fat zero. In fact, you claimed a tax benefit of $3.2 billion, thanks to your anti-tax lobbying efforts in Washington and your use of offshore tax havens that protect and defend your profit margin.
You are ExxonMobil, and you paid no taxes in 2009. In fact, you got a $156 million return.
You are Bank of America, and despite receiving a massive chunk of the taxpayer-funded bailout, despite recording a profit of $4.4 billion, you paid no taxes and received a $1.9 billion rebate.
You are Chevron, and you made $10 billion in 2009. You paid no taxes, and got a $19 million refund.
You are Citigroup, and you paid no taxes despite earning more than $4 billion, and despite getting a sizeable chunk of the taxpayer-funded bailout.
Your favorite part of it all?
The part that makes you laugh out loud?
It's when you hear the politicians you own talk about "shared sacrifices" and "fiscal responsibility." Man, that's a hoot. You watch them rave and froth on Capitol Hill about shutting down the government because the country doesn't have enough money to fund "entitlement programs" the little people have been paying into for decades. The very term - "entitlement" - cracks you up; how is it an entitlement if people paid for it? Nobody asks that question, of course. Nobody asks about cutting the bloated defense budget. Nobody asks where the billions diverted to Iraq and Afghanistan actually went, or where the money for Libya is going. For damned sure, nobody demands that you pony up and pay your fair share. You made sure of that, and the show goes on.
The United States of America has undergone a powerful transformation over the course of a single generation, and you are right up there in the catbird seat, watching it all unfold. For you, the New American Dream is "I got mine, kiss my ass, work and die (if you can find work, sucker), and pay me." For everyone else, the New American Dream is about simple survival, about running as fast as they can while going inexorably backwards.
Maybe you can even see the cancer eating away at the country that has treated you so royally, but you don't really care. You are safe and comfortable behind your gilded walls.
