While many liberal blogs were celebrating what looked on the surface to be an Obama victory of raising taxes on the über wealthy, they apparently did not notice what was being slipped up their behind.
For starters, the payroll tax, which was lowered in 2011 from 6.2% down to 4.2% in an effort to breathe some life into a moribund middle class, has jumped back up by 2% to its original rate. 160 million American workers will now shell out another $35 to $180 per week depending on their income level. The payroll tax is capped for incomes greater than $113,000 at $2,274. This means that it’s a regressive tax –anyone making over $113,00 will pay less as a percentage of their income, while for everyone else the tax is a net increase of 2%.
So while the plebs are scrounging around to pay that extra tribute to the Empire, our corporate overlords have extracted more blood from the serfs:
The “fiscal cliff” legislation passed this week included $76 billion in special-interest tax credits for the likes of General Electric, Hollywood and even Captain Morgan. But these subsidies weren’t the fruit of eleventh-hour lobbying conducted on the cliff’s edge — they were crafted back in August in a Senate committee, and they sat dormant until the White House reportedly insisted on them this week…
In late July, Finance Chairman Max Baucus announced the committee would soon convene to craft a bill extending many expiring tax credits. This attracted lobbyists like a raw steak attracts wolves. …
General Electric and Citigroup, for instance, hired Breaux and Lott to extend a tax provision that allows multinational corporations to defer U.S. taxes by moving profits into offshore financial subsidiaries. This provision — known as the “active financing exception” — is the main tool GE uses to avoid nearly all U.S. corporate income tax.
Corporations also got another legalized tax avoidance here:
As part of the fiscal cliff deal, Congress also extended another little-known tax break that benefits large multinationals selling products through overseas affiliates. This “pass-through” exemption permits a U.S.-based company to set up a new corporation in a tax haven like the Cayman Islands and sell it a patent owned by the U.S. parent company. Royalties on overseas licensing of that patent would then route to the tax-sheltered firm, instead of the U.S. parent company. The Joint Committee on Taxation says the two-year cost of extending this shelter is $1.5 billion.
The financial services industry, whose leaders had earlier joined a group of other corporate executives pushing for a “fair” solution to the fiscal crisis, is one of the primary beneficiaries of special-interest tax breaks. The active-financing exception, for example, permits banks like Morgan Stanley to avoid the 35 percent U.S. corporate tax rate on interest income from money lent overseas. A handful of other U.S.-based multinational companies with financing arms, such as Ford Motor Co. and General Electric, also use that exemption to lower their tax bills…
…[T]he “active financing” exception … permits businesses earning interest on overseas lending to defer U.S. taxes on that income indefinitely…
Vampire-squid Goldman Sachs and too-crooked-to-fail Bank of America also get tax breaks for moving into the new World Trade Center that replaced the pre-9/11 one:
…This tax provision was created to help revitalize Lower Manhattan’s small businesses but instead helped out these two mega-bailed-out banks and helped to subsidize the construction of luxury apartments. Goldman Sachs alone was reported to have received $1.6 billion in tax-free financing of its new building…
There are many more corporate giveaways in the fiscal spiked dildo that was rammed into Main Street, but you get the idea. America is just one big plantation for our corporate masters to harvest from on a perpetual basis. Yves Smith has a post discussing the permanent cementing-in of a class structure composed of the ‘have all’ and ‘have nothing’:
…The newest chat, with economist James Henry, focuses on how the deal on estate taxes allows the rich to pass on wealth to their children, allowing inequality to persist across generations. And he reminds us that a lot of Congressmen are rich enough that this provision will benefit their families…
I could not have summed up the situation better than the first commenter:
In their mad dash to cling to a sinking ship’s last remaining point above water, the callus elite won’t hesitate to trample all over women and children. In a world of ‘peak everything’ and a dying biosphere, the venal nature of man will surely surface in spades.
An interesting article came to my attention via a referral from The Big Picture. The economics editor of the Sydney Morning Herald, Ross Gittins, has written an article, The four business gangs that run the US, which is a review of Jeffrey Sachs book, The Price of Civilisation. Sachs should have entitled his book ‘The Price of Capitalism’. In order to protect corporate interests, the exploiters will always use their wealth to bribe the political system (such as campaign contributions and promises of lucrative positions in the private sector after leaving government posts). We are all familiar with feedback loops in terms of climate change,but there also exists one within our socio-economic system which is extremely destructive. I refered to this feedback loop as the government-corporate-lobbyist complex in my postGuns, God, and Greenback$.Sachs describes this pernicious feedback loop, which has accelerated wealth to the top 0.001%, as follows:
Sachs says…
Corporate wealth translates into political power through campaign financing, corporate lobbying and the revolving door of jobs between government and industry; and political power translates into further wealth through tax cuts, deregulation and sweetheart contracts between government and industry. Wealth begets power, and power begets wealth.
Sachs even uses the term corporatocracy to describe the four primary U.S. business sectors which have usurped our government:
1.) Military-Industrial-Complex
Sachs says…
As [President] Eisenhower famously warned in his farewell address in January 1961, the linkage of the military and private industry created a political power so pervasive that America has been condemned to militarisation, useless wars and fiscal waste on a scale of many tens of trillions of dollars since then.
2.) Wall Street-Washington complex
This group, comprised primarily of the big financial corporations (i.e. Goldman Sachs, JP Morgan Chase, Citigroup, Morgan Stanley), systematically worked to “capture” regulation and take control of the money system which, Sachs says, “paved the way for the 2008 financial crisis and the mega-bailouts that followed, through reckless deregulation followed by an almost complete lack of oversight by government”.
3.) Big Oil-transport-military complex
Sachs says…
Since the days of John D. Rockefeller and the Standard Oil Trust a century ago, Big Oil has loomed large in American politics and foreign policy. Big Oil teamed up with the automobile industry to steer America away from mass transit and towards gas-guzzling vehicles driving on a nationally financed highway system.
Now you know why America has a rail system that even the Bulgarians would be ashamed of, as Kunstler is fond of saying. Next time you fill up your tank, think of the perpetual oil wars in the Middle East as an externalized cost of subsidizing America’s car culture. Anita Dancs calculated the cost of securing our liquid fuel addiction back in 2010:
…Put all these numbers in perspective: The price of a barrel of oil consumed in the United States would have to increase by $23.40 to offset military resources expended to secure oil. That translates to an additional 56 cents for a gallon of gas, or three times the federal gas tax that funds road construction.
If $166 billion were spent on other priorities, the Boston public transportation system, the “T,” could have its operating expenses covered, with commuters riding for free. And there would still be money left over for another 100 public transport systems across the United States. Or, we could build and install nearly 50,000 wind turbines. Take your pick.
Sachs also reminds us that “Big Oil has played a notorious role in the fight to keep climate change off the US agenda. Exxon-Mobil, Koch Industries and others in the sector have underwritten a generation of anti-scientific propaganda to confuse the American people.”
4.) Healthcare Complex
Sachs says…
The key to understanding this sector is to note that the government partners with industry to reimburse costs with little systematic oversight and control. Pharmaceutical firms set sky-high prices protected by patent rights; Medicare [for the aged] and Medicaid [for the poor] and private insurers reimburse doctors and hospitals on a cost-plus basis; and the American Medical Association restricts the supply of new doctors through the control of placements at medical schools.
‘The result of this pseudo-market system is sky-high costs, large profits for the private healthcare sector, and no political will to reform.
We are the only industrialized country on Earth without universal healthcare. We pay more than anyone else and get less for the money spent. One of every five or six GDP dollars goes to feed this beast, but our life expectancy doesn’t reflect it:
Sachs says the elite take care of their own and have no concern for the plebs down below:
There is absolutely no economic crisis in corporate America. Consider the pulse of the corporate sector as opposed to the pulse of the employees working in it: corporate profits in 2010 were at an all-time high, chief executive salaries in 2010 rebounded strongly from the financial crisis, Wall Street compensation in 2010 was at an all-time high, several Wall Street firms paid civil penalties for financial abuses, but no senior banker faced any criminal charges, and there were no adverse regulatory measures that would lead to a loss of profits in finance, health care, military supplies and energy.
Ross Gittins concludes his review of Sachs’ book by briefly summarizing the path the elite took to amass their incredible wealth:
The 30-year achievement of the corporatocracy has been the creation of America’s rich and super-rich classes, he says. And we can now see their tools of trade.
It began with globalisation, which pushed up capital income while pushing down wages. These changes were magnified by the tax cuts at the top, which left more take-home pay and the ability to accumulate greater wealth through higher net-of-tax returns to saving.’
Chief executives then helped themselves to their own slice of the corporate sector ownership through outlandish awards of stock options by friendly and often handpicked compensation committees, while the Securities and Exchange Commission looked the other way. It’s not all that hard to do when both political parties are standing in line to do your bidding, Sachs concludes.
There was a comment that Darbikrash made on another website a year ago which pertains to this subject and clearly explains the corrupting influence that money has on government. Here is an excerpt:
In 2012, I have published 163 blog posts with a few notable contributions by Darbikrash and Kramerfaust. All 163 posts are hyperlinked and listed in chronological order below. The top 10 most-viewed posts for 2012 were:
To recap 2012, I would say it was the year of catastrophic environmental changes with both poles melting, Frankenstorms and global wierding, and severe droughts. We’re following in the steps of most other civilizations through environmental overshoot and destruction of our land-base by industrialization. Climate change is not something humans will be able to adapt to since we have already set into motion a cascade of feedback loops which will raise the global temperature to levels unheard of in the history of mankind. Amazingly, a large percentage of the population still does not believe that climate change is caused by man’s industrial activities over the last couple centuries or that it’s of any consequence. Mass media propaganda has served the interests of the elite well, but to the detriment of us all.
2012 also saw the further rise of the Security and Surveillance State which has strengthened and consolidated the power of corporate rule in America. Grass-roots movements can be preemptively disbanded and discredited through covert intelligence operations that make use of America’s hi-tech monitoring system integrating all electronic communications.
The corporate state knows that the steady deterioration of the economy and the increasingly savage effects of climate change will create widespread social instability. It knows that rage will mount as the elites squander diminishing resources while the poor, as well as the working and middle classes, are driven into destitution. It wants to have the legal measures to keep us cowed, afraid and under control. It does not, I suspect, trust the police to maintain order. And this is why, contravening two centuries of domestic law, it has seized for itself the authority to place the military on city streets and citizens in military detention centers, where they cannot find redress in the courts. The shredding of our liberties is being done in the name of national security and the fight against terrorism. But the NDAA is not about protecting us. It is about protecting the state from us. That is why no one in the executive or legislative branch is going to restore our rights. The new version of the NDAA, like the old ones, provides our masters with the legal shackles to make our resistance impossible. And that is their intention.
You better believe that the financial elite who run this country do have OWS and any other social movement under 24/7 surveillance. Anything that strives to change the status quo of neoliberal capitalism will be undermined and crushed, whether through covert actions or co-optive schemes. Social justice, the environment, and the very habitability of planet earth are not on the agenda of the 1%’ers.
Now we have official confirmation that this indeed was and is the case. Surprise, surprise:
Newly obtained documents confirm that the Federal Bureau of Investigation was monitoring peaceful protesters with the Occupy Wall Street movement before the first OWS demonstrations even began…
…The list of documents, says Verheyden-Hilliard, “is a window into the nationwide scope of the FBI’s surveillance, monitoring, and reporting on peaceful protestors organizing with the Occupy movement.”
“These documents show that the FBI and the Department of Homeland Security are treating protests against the corporate and banking structure of America as potential criminal and terrorist activity,” she writes. “These documents also show these federal agencies functioning as a de facto intelligence arm of Wall Street and Corporate America.
What more proof do you need that we live under a corporatocracy? Since solving dire problems like climate change would require a complete dismantling of the current capitalist system, i.e. an economic system driven by the profit motive is incompatible with ecological sustainability, we can see why the financial and corporate elite would be hostile to a grass-roots movement which seeks social and environmental justice. Such issues don’t compute with the bottom line of corporations or our war-based economy. Interestingly, the only real attention that was given to OWS by those in power was on how their discontent could be co-opted by the status quo:
As I [Glenn Greenwald] noted several weeks ago, White House-aligned groups such as the Center for American Progress have made explicitly clear that they are going to try to convert OWS into a vote-producing arm for the Obama 2012 campaign, and that’s what “Occupy Congress” is designed to achieve.
Of course the Tea Party was never really a threat to Corporate America because it’s what is termed an astroturf group, as was first reported a few years ago by Australian filmmaker Taki Oldham:
Do you think these free-market idealogues of capitalism are going to clean up the mess left in the wake of climate chaos? Hell no. The unwashed masses are on their own. As long as the elite have the money to insulate themselves from the ravages of our fossil fuel-dependent economy, they will have no real concern for the catastrophes that lie ahead. A case in point is the recent aftermath of the Hurricane Sandy Frankenstorm:
Billionaire David Koch’s prime political organization, Americans for Prosperity (AFP), having failed in its $125 million quest to oust President Barack Obama, is now aiming at a slightly less sophisticated political target: victims of Hurricane Sandy. […]
Earlier this week, AFP, which is chaired by Koch and believed to be financed by several other plutocrats from the New York City region, released a letter warning members of Congress not to vote for the proposed federal aid package for victims of the storm that swept New Jersey, New York City and much of the surrounding area in October. An announcement on the group’s website says that the vote next week for the Sandy aid package will be a “key vote” — meaning senators who support sending money for reconstruction could face an avalanche of attack ads in their next election. Already, opposition to the bill is growing, although it passed one procedural hurdle last [Friday] night. […]
Koch’s top deputy in New Jersey, a surly gentleman named Steve Lonegan, who heads the local AFP state chapter, called the aid package a “disgrace.” “This is not a federal government responsibility,” Lonegan told reporters. “We need to suck it up and be responsible for taking care of ourselves.
‘Change’ will always be an empty campaign slogan when you have a federal government which:
…wastes resources on a multi-trillion dollar Security and Surveillance apparatus to spy on its entire citizenry, in particular OWS protestors, minorities, and government critics/whistleblowers.
…pumps more than half of every tax dollar into the military industrial complex and its war-profiteering cronies who perpetuate our war economy.
…is not alarmed that 50 million Americans are dependent on food stamps while U.S. corporations hoard $22 trillion in secret offshore bank accounts.
…thinks that tax revenues can be maintained while its manufacturing base is off-shored to exploit cheap foreign labor pools.
…uses the growth in corporate profits as the only yardstick for societal well-being.
…marginalizes and prevents the participation of third party candidates within our two-party oligopoly.
…believes that the system described above should be bailed out for its criminal excesses from the billfold of a now beaten-down middle class.
New ‘smile guards’ will soon become mandatory in the work environment of the corporate state:
As I’ve explained in the past, my peculiar work routine really makes this site a sort of biweekly affair. So in keeping with that loose schedule, I’ll be taking the next several days off and will post again in earnest after Christmas. In the meantime, I’ll be partaking in the traditional family yuletide activities such as drinking funky-tasting eggnog and cruising through the neighborhood to take in all the lit up decorations like inflatable Walmart snowmen and Santas. Notwithstanding everything I’ve blogged about here, the world’s not coming to an end, right? Putin apparently had a 4 hour news conference which included this very subject:
So all these observable facts that we’ve been documenting here are just our own personal viewpoint of the world and certainly not the perspective held by the vast majority of the population, including world dictators leaders. We should just take a ‘glass is half full’ point of view, shouldn’t we?:
1.) Peak Oil? Not a problem… We’ve got more fossil fuels to exploit as revealed by the melting Arctic. And of course we can always fall back on our seemingly endless supply of coal:
2.) Overpopulation? Not a problem. Endocrine disrupting chemicals and other stressors of industrial civilization are decimating the sperm count of the global male population:
3.) Climate Change? The top minds of science are right on top of this one. Who said you can’t put Humpty Dumpty back together again:
4.) And the most dire threat of all… The Fiscal Cliff. Are you kidding? The bankers and corporate elite already have that one solved. Three for them and none for you:
…Over 20 million Americans live in extreme poverty – with cash incomes as low as $10,000 a year for a family of four. Is it any wonder that the US has the third highest poverty rate out of 30 leading industrial nations?
The problem is exacerbated by decades of economic and political policies that have resulted in a massive shift of national wealth from working people to the corporate boardrooms and the yacht owners. One result: real wage growth for workers has stagnated for 30 years; median household income has steadily fallen since the Wall Street produced economic crash of 2008. Much of the limited job growth since then has been in the lowest wage sectors, primarily food service and retail.
Sadly, the issue remained almost as invisible on the 2012 campaign trail as it was when Harrington shocked the nation in 1962. But it is not a surprise to nurses who, every day, see the faces of poverty and the suffering of families left behind – even as corporate profits once again soar and the parties and good times are back on Wall Street…
Well, we can always take up dumpster diving in the wealthy neighborhoods. I hear they “throw a lot of good shit away.”
Have a merry Christmas and don’t let the bastards wear you down!!!
It’s actually pretty fun, you’ve got the guns with Santa and everything and you get to hold them, just a fun family event,” said Scott Daugherty after taking a family photo with Santa as well.
This is the third year the gun club has offered this “Santa and machine guns” photo opportunity.
While some people find the idea of posing with Santa and guns inappropriate, the line out the gun club’s door proves gun aficionados love it.
“We got here about an hour early to make sure because last year the line was really crazy and we decided not to stay, so we figured we better come early this year, we were about third or fourth in line and we’re off to breakfast and ready to ship these pictures off to our family,” said a woman by the name of Abby on her way out.
Such a yuletide family event by Pax Americana in its twilight years:
I had to go back and look up the definition(wikipedia) of Christmas after seeing those photos. I have to wonder if this gun culture is reinforced by a country whose economy revolves around war and the militarization of our society. Maybe a previous President had a point when he said:
“We cannot be both the world’s leading champion of peace and the world’s leading supplier of the weapons of war.
Chart of Smith & Wesson revenues:
I’m sure this year will break records for gun sales. Oh, it already did:
And you think this species has a chance at long-term survival?
I was going to post on that capitalism article I mentioned in my previous blog entry, but this video I was making on child labor took on a life of its own and demanded my entire Sunday.
Human rights organizations have documented child labor in USA. According to a 2009 petition by Human Rights Watch: “Hundreds of thousands of children are employed as farmworkers in the United States, often working 10 or more hours a day. They are often exposed to dangerous pesticides, experience high rates of injury, and suffer fatalities at five times the rate of other working youth. Their long hours contribute to alarming drop-out rates. Government statistics show that barely half ever finish high school. According to the National Safety Council, agriculture is the second most dangerous occupation in the United States. However, current US child labor laws allow child farmworkers to work longer hours, at younger ages, and under more hazardous conditions than other working youths. While children in other sectors must be 12 to be employed and cannot work more than 3 hours on a school day, in agriculture, children can work at age 12 for unlimited hours before and after school.” They would work two to three jobs depending on their age.
In this post I want to elaborate more on DK’s comment from my last entry:
…Pre-capitalist tribes had examples of both success and failure, perhaps equal measure of both. The key principle to these types of cultures succeeding is the principle of superabundance. There is strong correlation to the disappearance of superabundance and destructive tendencies…
In his essay ‘Are Wars Inevitable?‘, William T. Hathaway explains that modern research has shown that scarcity of resources acts as a trigger for social strife and that violence and war is NOT a genetic predisposition of humans:
…research, however, led to a key discovery: The chimps who invaded their neighbors were suffering from shrinking territory and food sources. They were struggling for survival. Groups with adequate resources didn’t raid other colonies. The aggression wasn’t a behavioral constant but was caused by the stress they were under. Their genes gave them the capacity for violence, but the stress factor had to be there to trigger it into combat. This new research showed that war is not inevitable but rather a function of the stress a society is under. Our biological nature doesn’t force us to war, it just gives us the potential for it. Without stress to provoke it, violence can remain one of the many unexpressed capacities our human evolution has given us. Studies by professors Douglas Fry, Frans de Waal, and Robert Sapolsky present the evidence for this.
Militarists point to history and say it’s just one war after another. But that’s the history only of our patriarchal civilization. The early matriarchal civilization of south-eastern Europe enjoyed centuries of peace. UCLA anthropologist Marija Gimbutas describes the archeological research in The Civilization of the Goddess. No trace of warfare has been found in excavations of the Minoan, Harappa, and Caral cultures. Many of the Pacific islands were pacifistic. The ancient Vedic civilization of India had meditation techniques that preserved the peace, and those are being revived today to reduce stress in society...
Now DK goes on to say that in the absence of plentiful resources, the only logical and sane option is to give up our current exploitive and pathological economic model of capitalism and replace it with something that reflects today’s reality of rampant resource depletion and environmental collapse. Modern weapons of war are infinitely more destructive and, in and of themselves, pose a danger to all of mankind and global civilization; hence the need to get rid of capitalism is even more imperative:
…When superabundance is (inevitably) rendered invalid, it must be supplanted by a means to re-appropriate surplus in a fair and equitable manner- devoid of exploitation and informed by tangible limits, such as those posed by the environment and population limits. Such a system is not compatible with profit seeking, as many in the environmental movement are now discovering- nor has it ever been put successfully into practice.
One could say that mankind’s ability or inability to successfully transition away from the self-destructive nature of capitalism will determine the fate of the whole human species. Tragedy of the commons, as I said previously, is on a global scale now. Hathaway goes on to elaborate a little on capitalism’s dog-eat-dog tendencies and the need to move away from this paradigm:
Our society, though, has a deeply entrenched assumption that stress is essential to life. Many of our social and economic structures are based on conflict. Capitalism’s need for continually expanding profits generates stress in all of us. We’ve been indoctrinated to think this is normal and natural, but it’s really pathological. It damages life in ways we can barely perceive because they’re so built into us…
…We can create a society that meets human needs and distributes the world’s resources more evenly… But that’s going to take basic changes…
These changes threaten the power holders of our society. Since capitalism is a predatory social and economic system, predatory personalities rise to power. They view the world through a lens of aggression. But it’s not merely a view. They really are surrounded by enemies. So they believe this false axiom they are propagating that wars are inevitable.
In the past their predecessors defended their power by propagating other nonsense: kings had a divine right to rule over us, Blacks were inferior to Whites, women should obey men. We’ve outgrown those humbugs, and we can outgrow this one.
Of course, as Gail of ‘Wit’s End’ pointed out, we will inevitably need to address the problem of overpopulation:
…although once upon a time some tribes (arguably) may have lived cooperatively and harmoniously (although the opposite is certainly more common) the only reason they could do so is because their numbers were so low and food was plentiful and relatively easy to obtain. Once human population outstrips resources, things get ugly no matter what social or cultural system is in place. And I don’t know of a place where human population didn’t eventually overrun the environment, with the possible exception of cultures that practiced infanticide, or had the ability to export people willing to emigrate.
It seems to me the problem is that we have filled every corner of the globe that is remotely habitable, and then some, and yet our population and levels of consumption continue to increase. There is no place left to emigrate to. It can’t last.
Resource constraints(i.e. peak oil, peak fertilizer, peak water) on our fossil fuel based agricultural system as well as environmental degradation(i.e. climate change and ocean acidification) are going to cause an epic population crash during this century before we have time, or for that matter the cooperation and agreement, to implement any sort of voluntary population reduction.
As far as implementing this egalitarian distribution model, I also agree that the odds of that happening are slim to none, as DK said:
…Such a system[egalitarian and respective of resource limits] is not compatible with profit seeking, as many in the environmental movement are now discovering – nor has it ever been put successfully into practice.
Nor is it likely to be.
Unfortunately, the world’s stockpile of thermonuclear weapons may not stay on the shelf forever, especially in a world where the Four Horsemen of Industrial Civilization are quickly converging: Climate Change, Peak Net Energy, Ocean Acidification, and Peak Water. I’m not saying we shouldn’t try everything we can to stop what seems to be our inevitable fate; I’m just saying that the prognosis is grim.
I find it interesting that we are living in a time where the average person can, with a little research every night, have a good idea of what is going on globally with the economy, the environment, and societal structures. But with that knowledge comes the realization that you are essentially powerless to change the big picture. And so it is with our slide into a truly barbaric future. Having avoided any news this past week, I slept well. Tonight, however, is a different story as I start back into reading up on the latest world events and perspectives from prominent authors. It’s a real horror show developing these days.
We know that our ‘political economy of aristocracy‘ is a major impediment in moving away from our fossil fuel-based system and creating a socially just society, but the elite will do whatever is within their power to hold onto their place in the capitalist hierarchy:
…It is in any individual’s self-interest to preserve that in which they are most invested; but the rich pose a particular danger because their self-interest often leads them to attempt to protect and preserve entire modes of economic activity that society needs to move past in order to avoid colliding with the limitations of natural resources inherent in any specific mode of technology. No more clear example can be imagined that the Koch family interest pouring hundreds of millions and billions of dollars into conservative think tanks and political lobbies that not only deny global climate change, but also actively oppose the development of clean energy technologies. But a more instructive example may be the Walton family interests, which seek to avoid the development of public understanding of how the Wal-Mart business model shifts much of its employment costs onto the government – a modern twist on the methods by which the wealthy “pauperize the multitudes” identified in the Founders’ political economy of aristocracy…
Professor David McNally has an insightful new essay spelling out the machinations of capitalism which the elite have and will continue to carry out in order to preserve the status quo and gross inequality of our political economy. Some excerpts:
…Of course it is better for businesses if there is lots of demand for their goods. But the purpose of a capitalist enterprise is not to make sales; it is to make profits. The ability of firms to accumulate, invest, grow and beat out their competitors depends on profitability. And once capitalism gets into a systemic crisis of the sort that broke out in 2008, profitability cannot be restored without enormous destruction. There are two key mechanisms by which this happens.
The first involves destroying excess or unproductive capital. If firms in one industry after another are forced into bankruptcy and/or gobbled up by the competition, those that remain will eventually restructure and reorganize themselves to produce at lower cost (and higher profits). Having bought up bankrupted assets on the cheap, and having taken over the market shares of failed companies, they will be in a position to invest again.
The second capitalist mechanism for exiting a crisis involves driving down working people’s living standards. Put simply, by devaluing human life and the costs of reproducing people – via lower wages and benefits and reduced “social wages” (the public services available by way of pensions, social assistance, health care and education) – capital reduces its costs of doing business. And it is the latter strategy, reducing the costs of reproducing people, that has dominated thus far.
The reason for this is simple. In addition to funneling trillions of dollars to bail out the financial sector, the world’s central banks, particularly those in the Global North, have lowered borrowing costs to just a hair above zero. This means that faltering companies can stay alive by borrowing money that is virtually free. That is why there has been nothing so far like the wave of corporate bankruptcies witnessed during the Great Depression or across the 1980s. And because such a wave of bankruptcies would once again rock the financial system, nothing like it should be expected in the short term.
That leaves austerity as the capitalist class’ principal strategy. Here, they have racked up considerable success. Not only have public services been drastically curtailed, so have living standards generally. In the U.S., median incomes contracted more than four percent during the “recovery” since 2010 and have now declined to where they stood in 1995. That represents the elimination of all wage gains in the past 17 years. In the U.K., meanwhile, living standards have been pushed 13 percent below their 2008 levels.[4] Now, all of this may be bad for “the economy” in the abstract: reduced incomes mean less spending and less employment. But we don’t live in an economy in the abstract. We live in a capitalist economy whose imperative is profit. And reduced incomes are highly functional for capital.
To that end, governments everywhere have embarked on programs designed to increase the precariousness of everyday life. They know that insecurity makes it harder for workers to fight back, and so they are using every weapon in their arsenal to render workers less comfortable, confident and secure. They are attacking labour rights, undermining job security, driving down wages, benefits and social entitlements, and relying heavily on migrant labourers. Indeed capital’s ideal precarious worker for the age of austerity is the migrant who enters a country bound to a single employer, with no rights to live and stay beyond the length of their employment contract. In Canada, the proportion of entrants admitted under the Temporary Foreign Worker Program is skyrocketing, and the same is true for similar programs elsewhere.
Not surprisingly, austerity and growing precariousness have done wonders for corporate profits, which have risen persistently since 2009. However, in the absence of significant destruction of capital, those profits are sitting idle rather than being invested in new means of producing wealth. By early 2012, U.S. corporations were sitting on nearly $2 trillion in cash, a record amount. European firms were doing the same, holding around two trillion euros. And that is the dilemma capital faces at the moment. Austerity has boosted profitability, but it has not made investment attractive. Moreover, the lack of a new investment boom sets limits to just how high profits can rise (indeed, by mid-2012 corporate earnings seemed once again to be faltering). Consequently, the system keeps spinning its wheels unable to acquire the traction required for a sustained recovery and expansion.
And so, the capitalist class and their governments continue to do what they know best: enforce ever-greater sacrifices on working people. Greece, of course, is the center of the austerity storm. Pensions there have been cut in half, wages slashed by a third. Homelessness is soaring and soup kitchens struggle to keep up with those in need of food. Suicide rates have risen alarmingly. Notwithstanding all that, the “troika” – the European Central Bank, the IMF and the European Commission – demand more blood. Already, the Greek government has tabled a budget for 2013 that will cut billions more from pensions, wages and social benefits, notwithstanding their own forecast that the Greek economy will contract once again by nearly five percent. The whole purpose of these cuts is to prove to international capital that Greece will abide by the discipline of financial markets and that, should it receive new “loans” from the troika, it will use this money only to pay back global banks. Perish the thought that some of these funds might find their way to teachers, nurses or pensioners. Indeed, to say the money is “loaned” to Greece is entirely false: these funds enter a special account through which they are channelled directly to banks. And for that purpose the Greek people are being bled dry.[5]…
We now see the corporate elite in America, the beneficiaries of taxpayer bailouts, off-shore tax havens, government contracts, as well as near zero Fed loans, sharpening their blades to cut the throats of the American people:
The corporate CEOs who have made a high-profile foray into deficit negotiations have themselves been substantially responsible for the size of the deficit they now want closed.
The companies represented by executives working with the Campaign To Fix The Debt have received trillions in federal war contracts, subsidies and bailouts, as well as specialized tax breaks and loopholes that virtually eliminate the companies’ tax bills.
The CEOs are part of a campaign run by the Peter Peterson-backed Center for a Responsible Federal Budget, which plans to spend at least $30 million pushing for a deficit reduction deal in the lame-duck session and beyond.
During the past few days, CEOs belonging to what the campaign calls its CEO Fiscal Leadership Council — most visibly, Goldman Sachs’ Lloyd Blankfein and Honeywell’s David Cote — have barnstormed the media, making the case that the only way to cut the deficit is to severely scale back social safety-net programs — Medicare, Medicaid, and Social Security — which would disproportionately impact the poor and the elderly.
Yet the CEOs are not offering to forgo federal money or pay a higher tax rate, on their personal income or corporate profits. Instead, council recommendations include cutting “entitlement” programs, as well as what they call “low-priority spending.”
Many of the companies recommending austerity would be out of business without the heavy federal support they get, including Goldman Sachs and JPMorgan Chase, which both received billions in direct bailout cash, plus billions more indirectly through AIG and other companies taxpayers rescued.
Just three of the companies — GE, Boeing and Honeywell — were handed nearly $28 billion last year in federal contracts alone. A spokesman for Campaign To Fix The Debt did not respond to an email from The Huffington Post over the weekend…
Now this brings me to Chris Hedges’ last essay which I just read tonight. He’s becoming more apocalyptic as time goes on. Chris knows what I know: we are headed towards a hellish future in which a tiny elite will try to hang on to their wealth and power at the expense of everyone else, including the planet. High tech weaponry and surveillance technology will be used to enslave and control the masses while maintaining capitalism’s grip on society:
…The impending collapse of the international economy, the assaults on the climate, the resulting droughts, flooding, precipitous decline in crop yields and rising food prices are creating a universe where power is divided between the narrow elites, who hold in their hands sophisticated instruments of death, and the enraged masses. The crises are fostering a class war that will dwarf anything imagined by Karl Marx. They are establishing a world where most will be hungry and live in fear, while a few will gorge themselves on delicacies in protected compounds. And more and more people will have to be sacrificed to keep this imbalance in place…
…As the world breaks down, this becomes the new paradigm—modern warlords awash in terrifying technologies and weapons murdering whole peoples. We do the same in Afghanistan, Iraq, Pakistan, Yemen and Somalia.
Market forces and the military mechanisms that protect these forces are the sole ideology that governs industrial states and humans’ relationship to the natural world. It is an ideology that results in millions of dead and millions more displaced from their homes in the developing world. And the awful algebra of this ideology means that these forces will eventually be unleashed on us, too. Those who cannot be of use to market forces are considered expendable. They have no rights and legitimacy. Their existence, whether in Gaza or blighted postindustrial cities such as Camden, N.J., is considered a drain on efficiency and progress. They are viewed as refuse. And as refuse they not only have no voice and no freedom; they can be and are extinguished or imprisoned at will. This is a world where only corporate power and profit are sacred. It is a world of barbarism…
Evil unencumbered by the slightest conscience seems to me to be what has been described above. By comparison, the droogs in ‘A Clockwork Orange’ appear quaint.
In my previous post I quoted Professor Charles Hall’s assertion that the current economic paradigm is ill-equipped to account for and address externalities such as resource depletion and environmental degradation. Peak oil as well as climate change/global warming are just two in a long list of biophysical constraints which neoclassical Keynesian economics, i.e. mainstream economics, overlooks:
…the crisis looming before us is likely to be, if anything, more terrible than the Great Depressions of 1873-93 and 1929-39. The continuing industrialization of agriculture and urbanization of population—by 2010, it is estimated, more than half the earth’s inhabitants lived in cities—has made more and more people dependent upon the market to supply them with food and other necessities of life. The existence on or over the edge of survival experienced today by the urban masses of Cairo, Dhaka, São Paulo, and Mexico City will be echoed in the capitalistically advanced nations, as unemployment and government-dictated austerity afflict more and more people, not just in the developed world’s Rust Belts but in New York, Los Angeles, London, Madrid, and Prague.
Left to its own devices, capitalism promises economic difficulties for decades to come, with increased assaults on the earnings and working conditions of those who are still lucky enough to be wage earners around the world, waves of bankruptcies and business consolidations for capitalist firms, and increasingly serious conflicts among economic entities and even nations over just who is going to pay for all this. Which automobile companies, in which countries, will survive, while others take over their assets and markets? Which financial institutions will be crushed by uncollectible debts, and which will survive to take over larger chunks of the world market for money? What struggles will develop for control of raw materials, such as oil or water for irrigation and drinking, or agricultural land?
Gloomy though such considerations are, they leave out two paradoxically related factors that promise further dire effects for the future of capitalism: the coming decline of oil—the basis of the whole industrial system at present—as a source of energy, and the global warming caused by the consumption of fossil fuels. Even if continuing stagnation should slow greenhouse gas-caused climate change, the damage already done is extremely serious. Elizabeth Kolbert, a journalist not given to exaggeration, called her soberly informative account Field Notes From a Catastrophe. The melting of glaciers threatens not only Swiss views but the drinking supplies of whole populations in such areas as Pakistan and the Andean watersheds; droughts have ravaged Australian and Chinese agriculture for years now, while floods periodically devastate the low-lying South Asian homes of tens of millions of people. The rolling parade of disasters is, unfortunately, only getting started. It will accompany a stagnant economy and only be exacerbated by the increased greenhouse-gas emissions that a return to true prosperity would bring… – essay adapted from Paul Mattick’s book ‘Business as Usual: The Economic Crisis and the Failure of Capitalism‘
The mandatory growth requirement of mainstream economics also precludes the concept of sustainability. I have not yet read the above referenced book ‘Business as Usual: The Economic Crisis and the Failure of Capitalism’, but a prominent socialist speaking of peak oil and global warming in the same paragraph is always intriguing. However, a brief critique of the book by a reader finds that Mattick does not go nearly far enough in incorporating these two realities into his analysis of our current crisis:
All mainstream institutions have subscribed to the near religious belief of the infallibility of the capitalist economy which itself is considered a self-regulating system governed by the “invisible hand” of the free market as explained by Adam Smith in The Wealth of Nations. Market ‘value’ is produced by the optimal use of capital, labor, and production. Mainstream economics operates under the assumption of a world with freely available and unlimited resources. It divides and reduces all resources into units of monetary value, not taking into consideration the value such resources hold in maintaining the ecological balance of the planet.
Isn’t it the height of hypocrisy that those wealthy nations trumpeting the superiority of the free market are also the same countries which dominate global resources and world markets by military superiority as well as the subversive and coercive tactics of their economic hitmen?
…war is integral to imperialism. Imperialism – and especially the imperialist powerhouse, the USA – needs the threat of war to sustain itself: ideologically, militarily, geo-politically and also financially. The arms and defence industry is a major part of the US economy. In 2011, the defence budget was a staggering $698 billion, or 4.8% of the US GDP (link). Add to that the cost of increased security concerns – for example, to combat the ‘terrorist threat’ within imperialist countries – and you have a major chunk of the economy being reliant on the continued existence of enemies within and without.
It’s a form of military Keynesianism to keep a faltering economy going. The further capitalism sinks into decline, the more irrational the drive to war becomes and the more ludicrous are the reasons presented by imperialism (weapons of mass destruction, nuclear capability, etc).
…a very naive view of how the world is run [is to hold the belief that] David Cameron, Barack Obama and Benjamin Netanyahu just ‘happen’ to be spending ‘too much’ on military, which on the surface seems deeply illogical at a time of official austerity. But, of course, the opposite is true: it is their way of staying in power.
Of course, we should fight against such ridiculous spending on increasingly refined machinery to exterminate humanity. But we should be clear why. – link
Moreover, America’s military has become a self-perpetuating industrial complex for profiting from war and instability.
Another problem with the world’s dominant economic system is that GDP is a misguided and inaccurate gauge for measuring the standard of living and well-being of the general populace:
…History shows that democratic forms are no proof against a slide into repressive forms. In Germany in the 1930’s, a declining standard of living contributed to the rise of the Nazi party; Hitler was democratically elected to the office of Chancellor (and then proceeded to establish himself as Fuehrer).
As America’s perpetual-growth economy faces the reality of ecological limits, as climate change imposes costs and decreased well-being on us, as food and energy and other resource prices increase because of the inexorable logic of a declining Energy Return on Energy Invested at the physical foundation of our economy, we face the prospect of a widespread decline in our standard of living. This dynamic lies at the root of this fact: Americans coming of age today are among the first generation who can’t be confident that they will be better off than their parents. By one widely used measure of well-being (the genuine progress indicator, which deducts loss of ecosystem services and other “disamenities” from the national accounts), the American standard of living has flatlined since the 1970s, despite continued strong growth in GDP.
Thus the cautionary lessons from Egypt and Tunisia. GDP is a measure of the commotion of money in an economy, not a measure of delivered well-being. If sustained or rising well-being is what is economically and politically desirable, we should measure it directly, instead of counting on GDP to do the job. And if we accept the idea of popular sovereignty—that governments rule with “the just consent of the governed,” as Jefferson put it in our Declaration of Independence—we must recognize that as the middle class goes, so goes the legitimacy of the regime in power. No system of government—despotic or democratic—fares well when the majority of its citizens experiences a declining standard of living… – link
For those who have not read Darbikrash’s last post, A Nation of Hustlers and Swindlers, it lays bare the big con game of capitalism. Similarly, the mechanic scenes in Oliver Stone’s U-Turn represent, for me, capitalism’s exploitive process of getting something for nothing:
…pumps more than half of every tax dollar into the military industrial complex and its war-profiteering cronies who perpetuate our war economy.
Collapse of Industrial Civilization 