Category: Tax Policy

Reform of Capitalism Isn’t Socialism

The Daily Escape:

Graffiti in Greece by Lotek

The NYT reported that Rep. Tom Emmer (R-MN), chairman of the National Republican Congressional Committee, said: (brackets by Wrongo)

“Socialism is the greatest vulnerability by far that the House Democrats have…He added that he had also instructed his team to spotlight “all the [Dems] extreme wild ideas on a daily basis, on an hourly basis if it’s available.”

As we said yesterday, most Democrats are not socialists. They are for reform of capitalism. The problem is that our economic system is broken; it does not meet the needs of the vast majority of our people.

Capitalism has metastasized into a financialized cancer. Its growth-at-any-cost, profit-over-purpose ideology has wreaked havoc with the lives of millions of people. From Forbes:

“One example: For more than 400 years, 12.5 million Africans were kidnapped, enslaved and sold to build wealth and power largely for white men in the US, Europe and South America. The first enslaved Africans were shipped directly to the Americas in 1518, one year after Martin Luther nailed his 95 Theses to the door of Castle Church. The centrality and largely unconstrained profit motive in capitalism has been with us since the beginning.”

Today, corporations track our every movement. Algorithms manipulate us to buy things, or to vote certain ways. We’ve put outsized power into the hands of corporations. We have to ask: What do we need from capitalism in the 21st Century? Is it more of the same, or something different?

Capitalist Reform is about re-imagining the purpose of business and redefining its success. The doctrine of shareholder primacy must be the first to go. It needs to be recognized as a form of oppression of human nature since it doesn’t value our humanity.

According to a 2019 Politico/Morning Consult survey, 76% of registered voters want the wealthiest Americans to pay more. Politico also notes that a recent poll from Fox News shows that 70% of Americans supporting increased taxes for those earning more than $10 million, and 54% of Republicans also supported it. People are contemplating not just piecemeal tax increases, but a wholesale reversal of the Reagan-era shift in tax policy. The Economist reported that in 2016, more than half of young Americans no longer support capitalism.

There is an urgent need to push back against the widening economic inequality in the US. Taxing the rich is an easy answer, because so few of us are rich.

But, step one should be increasing corporate income taxes. Corporations’ share of total taxes paid has decreased to about 9% of total US tax revenue in 2017, from about 33% in 1952. How many stories like Amazon’s failure to pay anything in taxes on $11 billion in profits should it take to begin the task of closing corporate tax loopholes and increasing corporate income taxes?

Step two is to break up corporate concentrations. Wrongo addressed this here. The primary issue with corporate concentration is that it drives up prices. The fewer sellers, the fewer choices consumers have for goods and services, and thus, there is little pressure for big competitors to hold prices down.

Step three is to help workers. The share of profits that goes to workers must increase. This shouldn’t punish capitalists. Higher wages for workers means more business for American companies.

We were founded on republicanism as a public virtue: The Constitution implies that a citizen is duty-bound to abandon self-interest when it conflicted with the General Welfare. Capitalism has usurped republicanism by insisting that abrogation of self-interest violates the doctrine of “survival of the fittest,” and it’s also an attack on individual liberty.

We need to revive the understanding of public virtue. So, some form of “mixed economy” is in our future. It’s obvious to all except right wing ideologues that socialized medical insurance is in our future. But it is doubtful that a majority want to socialize production and distribution of America’s products and companies.

The task for Congress and the next president is to figure out what activities and/or economic sectors are best guided by tax and economic policy, and which are best left to “market forces”.

We’re a country where vast wealth is rewarded with tax cuts, loopholes, and endless ways to ensure that corporate dollars earn even more dollars. While average people are bankrupted because of a health crisis, and we value semi-skilled labor at $7.25 an hour.

Today’s capitalism is anti-democratic. General welfare and public virtue derive from a desire to improve the human condition. That needs to be the goal of political action to reform capitalism, and it needs to be hammered home again and again.

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Saturday Soother – Amazon Bails on NYC Edition

The Daily Escape:

Marijuana Museum, Amsterdam, Netherlands – 2017 photo by Wrongo

When Alexandria Ocasio-Cortez and Michael Bloomberg agree on something, it’s worth taking seriously, and neither wanted the Amazon deal with NYC. And this week, Amazon scuttled its plans to build its HQ2 in Long Island City, (LIC) Queens, New York City, citing opposition by “state and local politicians.”

Amazon’s abrupt announcement to withdraw from the deal came after it was roughed up at two City Council meetings along with enduring the indignity of having to contend with anti-gentrification protestors and union leaders.

There were two big problems that Amazon faced in LIC. First, they were getting a huge tax subsidy, about $2.8 billion. The tax subsidy looked even worse when we learned this week that Amazon nearly doubled its profits to $11.2 billion in 2018 from $5.6 billion the previous year and, once again, didn’t pay a single cent of federal income taxes.

It didn’t help that the state and city announced the massive subsidies when both are also contending with large budget deficits. NYC Mayor Bill de Blasio, citing a shortfall of $1 billion in revenues, told city agencies to cut their budgets by $750 million by April. And these cuts would have to be recurring.

This helped build outrage about the nearly $3-billion corporate welfare program for Amazon.

The second problem was gentrification in the LIC neighborhood. Immediately after the announcement, real estate prices zoomed, precisely when Manhattan prices were falling. The NY real estate industry was to be one of the primary beneficiaries of the HQ2 project, but local residents would be driven out of their neighborhoods.

Amazon has a poor track record in Seattle. They had fiercely opposed a local tax on large companies to fund housing for the homeless, and got it reversed one month after it had taken effect. Microsoft, after the tax law was scuppered, pledged $500 million to fund affordable housing for the low and middle income in the Puget Sound area, and encouraged other companies to make similar efforts.

Amazon didn’t join with Microsoft.

All is not lost. Amazon says it will still be expanding employment in NYC. And LIC has been a hot real estate/development market for several years, long before Bezos started playing his urban version of the Hunger Games. If the commercial construction in LIC over the past five years was happening in a second-tier US city, it would be equivalent to an entirely new business district.

A third problem was Amazon’s sense of entitlement. They expected zero push back, and their New York City campaign was inept. Amazon seems to have thought that since it had the governor and mayor in its pocket, all it had to do was show up for photo ops. The NYT points out Amazon didn’t even hire a native to grease the wheels:

“…the company did not hire a single New Yorker as an employee to represent it in discussions with local groups. Its main representatives traveled between Washington and Manhattan, and only one had moved into an apartment to work with community members and foster support.”

Amazon’s leaving was celebrated by Rep. Alexandria Ocasio-Cortez (D-NY), who represents the district. She complained about the “creeping overreach of one of the world’s biggest corporations“, and maybe that was the final straw for Bezos.

So props to AOC, and to the local politicians for standing up to this example of corporate welfare.

It’s possible that Jeff Bezos’s sudden change of heart was that he couldn’t stomach the idea of not being able to push around NYC the way he bullied Seattle into dropping its homeless tax. In NYC, he’d have to curry favor, feign interest in the concerns of locals, and make occasional contributions to the city.

Bezos may have felt all that was too high a price. But we should assume Amazon penciled out the deal, and didn’t like the result. For Amazon, it may have been a prudent business decision, artfully dressed up as a response to the political opposition the incentive package was facing.

Maybe, it’s no longer business as usual in America. AOC and other young people may not have money, but that doesn’t mean they can’t use power.

These corporate tax subsidy deals never add up for the cities that make them. Maybe people in other cities will learn from this NYC moment, and fight against the selling of our cities and towns to the uber-wealthy.

Now, it’s time to let go of Amazon, AOC, and Trump’s National Emergency. It’s time to get some Saturday Soothing.

Start by brewing up a vente cup of Roasting Rabbi Coffee, where the company slogan is: “Releasing the Holy Spark in Each Bean!” Try their Breakfast Blend.

Now settle into your most comfy chair and listen to Valentina Lisitsa play Liszt’s Hungarian Rhapsody No. 2, recorded live in May, 2010 in Leiden, Holland:

Those who read the Wrongologist in email can view the video here.

 

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The Power of Messaging

The Daily Escape:

Buttermere Lake, Cumbria, England – photo by Matt Owen-Hughes

On Monday in El Paso TX, Trump attacked Democrats, calling them:

“The party of socialism, late-term abortion, open borders and crime…To pave the way for socialism, Democrats are calling for massive tax hikes and the complete elimination of private health care…They’re coming for your money and they’re coming for your freedom.”

Trump’s focus on “socialism” is based on the few liberal Democratic presidential candidates who have called for Medicare-for-all, or environmental proposals intended to lower carbon emissions.

He brought up the “Green New Deal”, saying it would virtually eliminate air travel and that it sounds “like a high school term paper that got a low mark.”

This is just the latest stage in the war waged by the right against the ideals and programs of the New Deal. Kim Phillips Fein, reviewing the new book “Winter War: Hoover, Roosevelt, and the First Clash Over the New Deal” by Eric Rauchway, writes: (brackets by Wrongo)

Throughout the [1932] campaign, Hoover had attacked what he considered a “social philosophy very different from the traditional philosophies of the American people,” warning that these “so-called new deals” would “destroy the very foundations” of American society. As Hoover later put it, the promise of a “New Deal” was both socialistic and fascistic; it would lead the country on a “march to Moscow.”

2020 will be all about messaging. Once again, just like 88 years ago, Republicans will run on socialism. Trump will add the threats posed by open borders and abortion to the right-wing stew.

The question is what will be the 20+ Democrats who are running for president be talking about? Michael Tomasky in The Daily Beast suggests: (emphasis by Wrongo)

I am saying, though, that Democrats should stop pretending they can unite the country. They can’t. No one can. What they can do, what they must do, is assemble a coalition of working- and middle-class voters of all races around a set of economic principles that will say clearly to those voters that things are going to be very different when they’re in the White House…

There is a power to fashioning a new political coalition around the concept of economic justice. We live in a time when politicians of both parties have followed a consistent strategy: massage the economic numbers and the media, keep the rich and powerful happy, and make sure you stay on the “fiscally conservative” side of the line.

Now, a few Democrats are pushing the party elders to re-consider economic justice as FDR did in the1930s. These Democrats intuit that most Americans are trying to reconcile the life they were told they would have with today’s reality. The gulf between what they were told, and what actually happened is wide. And it looks as if it will only get wider.

Many Americans feel that they can’t pay their bills anymore, and they are afraid. Their jobs aren’t stable, they can’t look forward to retirement. About 20% say they have more credit card debt than savings. The lives they thought they’d live are upside down, and they’re not sure they can do anything about it. Quite a few followed their preachers and a few charlatan Republicans, and can’t understand why things are so scary and bad for them.

America is divided, but maybe not in the way you are thinking. It’s the left behinds and millennials who are worried about their future. And it’s both of them against the politicians, corporations and the oligarchs. As David Crosby sang:

“There’s something happening here, what it is ain’t exactly clear”

In 2020, we’ll be fighting for not just the soul of our country, but the meaning of American life: Should the one with the most toys win?

What is more important, universal health care, or outlawing abortion? Better roads and bridges, or keeping out immigrants? A better environment, or lower taxes?

Ocasio-Sanchez’s Green New Deal (GND) can easily be dismissed, but what really is the difference between how the Green New Deal might be financed, and how the Federal Reserve spent nearly $4 Trillion on its Quantitative Easing (QE) schemes?

The big difference is who profits. QE was welfare for the banks. For the GND, society at large would benefit.

You will get to decide, and plenty of people are already fighting for your attention.

Some are worth listening to. What will you choose to do?

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It’s Time to Raise Taxes

The Daily Escape:

Autumn in Hunza Altit Valley Pakistan – 2017 photo by Nasr Rahman. This shows that beauty can exist in very difficult places.

In 1785, Thomas Jefferson called for a geometric progression in taxes on assets of property holders as a way of lessening inequality. People with more assets would pay much higher taxes. Today, we’re still in search of policies that will do the trick. From The Fiscal Times:

Democratic Sen. Elizabeth Warren and Rep. Alexandria Ocasio-Cortez have sparked intense debate this month by proposing higher taxes on the rich, with Warren calling for a wealth tax and Ocasio-Cortez proposing a 70% top marginal tax rate.

But, Senate Republicans are moving in the opposite direction. Three GOP senators reintroduced legislation to permanently repeal the federal estate tax. The 2017 GOP tax overhaul has already reduced the number of estates subject to the tax by roughly doubling the value of assets that can be excluded from the tax. For 2019, this tax will only be paid by 1,700 families, but that’s all too much for Republicans.

Axios just reported on what Americans think about taxes:

Polling has found tax increases on the wealthy to be popular. A survey earlier this month by The Hill and HarrisX found that 59% of registered voters, including 45% of Republicans, support increasing the top income tax bracket to 70%. A Fox News poll released last week found that 70% of voters favor tax increases on families making over $10 million a year and 65% favor tax hikes on incomes over $1 million annually. Paying taxes is a complicated and controversial issue. What is not controversial is the need for people to take advantage of tax services that can help ensure they pay the right tax and thus appease the ever-lurking IRS. Going to http://daveburton.nyc/tax-services-nyc/ will provide more detail on this.

Those numbers suggest that a complete repeal of the estate tax might be about as popular as the polar vortex.

This shows how vast the gulf is between Republicans and Democrats on taxes. A poll by Axios, along with SurveyMonkey, ironically presented at Davos, showed that 70% of Americans think the economic system is skewed toward the wealthy and the government should do more to fix it. It further showed respondents are ready to vote for a 2020 candidate who agrees.

  • 58% of people surveyed say that “unfairness in the economic system that favors the wealthy” is a bigger problem than “over-regulation of the free market that interferes with growth and prosperity”
  • Among 18-24 year-olds, that gap is a chasm: 76% to 21%
  • Among those 65 and older, it’s a very narrow 51% to 46%
  • 89% of Democrats agree
  • 68% of independents agree
  • But 77% of Republicans say over-regulation of the free market is a bigger problem than economic unfairness
  • A huge majority of Democrats (90%) said they would be excited to vote for a candidate who promises to reform the economic system, with 71% of independents saying the same.

(SurveyMonkey’s online poll was conducted January 16 through 18, 2019 among a national sample of 2,277 adults.)

After WWII, America had very high marginal tax rates, and one result was corporate income was reinvested in the company, rather than given to top management or shareholders. Why give 70% of every dollar to the government?

Back then corporations, in exchange for limited liability, assumed they had fiduciary duties to the public and to their employees as well as shareholders. But the Right got behind the doctrine that a corporation’s only duty was to their shareholders. CEO’s became significant shareholders through stock options.

Then, Reagan and Bush lowered taxes on corporate and personal income, and dividends.

Our basic political issue in America has become: “Does the economy exist to serve the nation, or does the nation exist to serve the economy?”

Our affirmative vote must be for the economy to serve the nation. Over the past 40 years, we have reduced taxes for high earners and corporations. We’ve added loopholes that subsidize corporations, but our need for infrastructure spending hasn’t declined, and our military spending has grown dramatically.

Over the past forty years, the share of income taxes paid by corporations has declined. It is now only 9% of US government tax revenues. It was about 24% in 1960.

We’ve financed the tax cuts for high earners and corporations with ever growing budget deficits. The golden age for these policies must end now.

We need to go back to the days of socially responsible capitalism, not the predatory capitalism we have today. High marginal income tax rates will help. In addition, taxing dividends at the same as ordinary income is a good idea.

Let’s raise the capital gains tax above its current 20% rate.

Let’s find a Constitutional way to tax wealth as Elizabeth Warren suggests. Add a very small transaction tax on sales of stock on all public markets.

It’s time to move past the politics of “What can America do about inequality without corporations and rich people actually giving anything up?”

This isn’t an anti-corporate, anti-wealth assault, it is a necessary corrective to bad tax policy from the 1970s to today.

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Monday Wake Up Call – January 28, 2019

The Daily Escape:

Bell Island, Franz Josef Land with Eira Lodge in foreground. The lodge is a remnant of Benjamin Leigh-Smith’s expedition in 1880 – 2017 photo by Ilya Timin, CC BY-SA 4.0.

The largest gathering of billionaires in the world took place last week at the World Economic Forum’s annual conference in Davos. Vanity Fair reports that they:

“…consume $55 Caesar salads and shark canapĂ©s, rub shoulders with Matt Damon, and attend parties that involve “endless streams of the finest champagne, vodka, and Russian caviar, dancing Cossacks, and beautiful Russian models…”

Bloomberg added: (emphasis by Wrongo)

“UBS and PwC Billionaires Insights reports show that global billionaire wealth has grown from $3.4 trillion in 2009 to $8.9 trillion in 2017…The fortunes of a dozen 2009 Davos attendees have soared by a combined $175 billion, even as median US household wealth has stagnated…”

And there was this report from Davos in the NYT by Kevin Roose: (emphasis by Wrongo)

“They’ll never admit it in public, but many of your bosses want machines to replace you as soon as possible. I know this because, for the past week, I’ve been mingling with corporate executives at the World Economic Forum’s annual meeting in Davos. And I’ve noticed that their answers to questions about automation depend very much on who is listening.”

Roose goes on to say: (emphasis by Wrongo)

“In public, many executives wring their hands over the negative consequences that artificial intelligence and automation could have for workers. They…talk about the need to provide a safety net for people who lose their jobs as a result of automation.

But in private settings, including meetings with the leaders of the many consulting and technology firms…these executives tell a different story: They are racing to automate their own work forces to stay ahead of the competition, with little regard for the impact on workers.”

Roose quotes Mohit Joshi, president of Infosys, an Indian technology and consulting firm: (emphasis and brackets by Wrongo)

“Earlier they [large businesses] had incremental, 5 to 10% goals in reducing their work force. Now they’re saying, ‘Why can’t we do it with 1% percent of the people we have?’”

And American executives have come up with new buzzwords and euphemisms to disguise their intent. Workers aren’t being replaced by machines, they’re being “released” from onerous, repetitive tasks.

Companies aren’t laying off workers, they’re “undergoing digital transformation.” They’re being “reskilled”.

A 2017 survey by Deloitte found that 53% of companies had already started to use machines to perform tasks previously done by humans. That figure is expected to climb to 72% by next year. As an example, Terry Gou, the chairman of Foxconn, the Taiwanese electronics manufacturer, who makes iPhones, has said his company plans to replace 80% of its workers with robots in the next five to 10 years.

And Wisconsin just gave Foxconn $4.5 Billion to build a plant and employ 13, 000 workers. Can Wisconsin’s soon-to-be laid-off workers be “re-skilled”, and find employment?

A January 2019 report by the very same World Economic Forum estimates that the 1.37 million workers who are projected to be displaced fully out of their roles in the next decade according to the US BLS, may be reskilled to new viable (similar skill set) and desirable (higher wages) jobs:

“The report shows that, in the US alone, with an overall investment of US$4.7 billion, the private sector could reskill 25% of all workers in disrupted jobs with a positive cost-benefit balance. This means that, even without taking into account any further qualitative factors or the significant indirect societal benefits of reskilling, for 25% of at-risk employees, it would be in the financial interest of a company to take on their reskilling.”

The rest presumably will need to fend for themselves. They will likely rely on your taxpayer dollars to be “reskilled”, or go on government assistance.

The real question isn’t how to stem the tide of automation, it’s inevitable. The question for capitalists and our government is how the financial gains from automation and AI will be distributed, and whether the excess profits corporations reap as a result of layoffs will go in part, to workers, or solely to bigwigs and their shareholders.

Will we create a shared prosperity, or just a greater concentration of wealth?

Time to wake up America! This Fourth Industrial Revolution is underway, and estimates are that it will impact as many as 40% of American workers.

It’s time to understand that the 21st Century American corporation isn’t our friend, as constituted and rewarded. It is the enemy of our society, as they quietly work to eliminate your jobs.

We constantly reduce their taxes. We look the other way when they pollute our environment. We allow them to disproportionately finance our elections.

It’s time for a new Capitalism.

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Pelosi is Again Speaker, Like Sam Rayburn Before Her

The Daily Escape:

Christmas time near Steamboat Springs, CO – 2018 photo by dadams2117

Nancy Pelosi became Speaker of the House yesterday for the second time. Most Democrats see this as good news, since she knows her way around counting heads and striking deals. She actually received 220 votes, 17 more than the 203 Dems who supported her at the Democratic Caucus vote on Nov. 28.

There were 15 Democrats who voted against her in the roll call vote. Some had run on a pledge not to support Pelosi as speaker should Democrats regain control of the House, saying the party needed new blood in leadership. Seth Moulton (D-MA) led the charge against Pelosi, only to turn around and vote for her today in a typical show of Congressional spinelessness.

This brings up some other interesting data:

  • Total women in the US House of Representatives in 1989:
    16 Democrats
    13 Republicans
  • Total women in the US House of Representatives, 2019:
    89 Democrats
    13 Republicans

The numbers are telling when you break them down percentage-wise:

  • Percent women in the US House of Representatives in 1989:
    2% = 16/258 Democrats
    7.3% = 13/177 Republicans
  • Percent women in the US House of Representatives, 2019:
    9% = 89/235 Democrats
    6.5% = 13/199 Republicans

Among other fun demographic Congressional facts, a record-breaking 63 members of Congress do not identify as Christian (including Mormons as Christians). And 61 of these are Democrats; only two of ~250 Republicans (in both Houses) are non-Christian. And of course the Republican caucus is roughly 99% White and male.

And their all part of a Congress that is charged with representing a nation that is decidedly not 99% white Christian Dudes. And in a final celebratory vein, let’s all take a moment to remember that the faker Paul Ryan is now just a former member of Congress.

But there are issues with how Pelosi will drive the political agenda. She’s in favor of Paygo, an obscure budget rule that requires any legislation that increases spending (like entitlement programs) or cutting taxes (therefore increasing the deficit over the next 10 years) to be offset with budget cuts to mandatory spending or tax increases. The rule can only be waived with a majority vote.

For some House Democrats, particularly those who want to pursue ambitious new ideas like a Green New Deal, or Medicare for All, requiring budget cuts or tax increases to pay for them stops those bills in their tracks.

The Establishment Democrats are saying, “Be realistic”. But we weren’t realistic in WW II. We just fully mobilized every citizen in America, every factory, every natural resource for the war effort, despite the cost. At the time, our only true constraints were available resources, not budget room.

Apparently, to Establishment Dems, deaths from lack of money or insurance for health care doesn’t warrant that kind of mobilization. Nor does climate disruption.

Will the Establishment Democrats turn out to be useless to the effort to reform capitalism, or other progressive policies? We’ll see.

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Today’s Wages Have the Same Purchasing Power as in 1978

(Email publishing of The Wrongologist should be restored as Wrongo is using a different vendor, WordPress. Apologies to those who read in email.)

The Daily Escape:

Cliff Palace, Mesa Verde National Park, Colorado, as it might have looked at night in the 12th Century lit by camp fires. Mesa Verde is unique since it is the only NP that preserves the works of man – photo by Rick Dunnahoo

This is going to be a historic year, even when compared to 2018. And it’s starting out with a bang. The government is shut down, half the cabinet is empty, the 2020 presidential race has officially started, and the Democrats are taken over the House.

And that’s without whatever Mueller shoe will drop sometime in the year, or whatever Twitter atrocities Trump decides to commit. In other words, we’re going to have our hands full.

But today, let’s talk about how bad the economy is below the surface of the headline numbers. Debt is rising, and rising debt is supposed to be matched by rising income. It shouldn’t be a surprise that more income is required in order to service more debt. But so far, in the 21st century, for the bottom 90%, debt is growing while income is stagnating.

Pew’s Fact Tank has an analysis that speaks to this problem. Average hourly earnings for non-management private-sector workers in July were $22.65, 2.7% above the average wage from a year earlier. But in the years just before the 2007-08 financial collapse, average hourly earnings often increased by around 4% year-over-year.

And during the high-inflation years of the 1970s and early 1980s, average wages commonly jumped 7%, 8% or even 9% year-over-year.

However, after adjusting for inflation, today’s average hourly wage has about the same purchasing power it did in 1978. In fact, in real terms average hourly earnings peaked more than 45 years ago: The $4.03-an-hour rate recorded in January 1973 had the same purchasing power that $23.68 would today.

Here is Pew’s chart demonstrating the problem:

Because there’s been little growth in wages, the growth in the standard of living for those below the 90th percentile has been largely fueled by additional consumer debt. The WSJ reports that consumer debt, including credit cards, auto and student loans and personal loans, is on pace to top $4 trillion in 2019, the highest in history. Debt allows you to furnish your home, pay for education, and get a car without having to save for them. In that way, it supports the growing economy.

But Pew also shows how most of the income gains went to those at the top of the food chain:

 

 

Among people in the top 10th of the distribution, real wages have risen a cumulative 15.7%, to $2,112 a week – nearly five times the usual weekly earnings of the bottom tenth ($426).

This lack of symmetrical growth in debt and income actually matters. At some point household borrowers will default in greater numbers than they do today. When those losses occur, the monetary system won’t be able to bail out debtors (or banks) this time around as handily as we did in 2008.

 

Sluggish and uneven wage growth is a key factor behind widening income inequality in the US. Another Pew Research Center report found that in 2016, Americans in the top tenth of the income distribution earned 8.7 times as much as Americans in the bottom tenth ($109,578 versus $12,523).

Compare that to 1970, when the top 10th earned 6.9 times as much as the bottom 10th ($63,512 versus $9,212).

There is no simple solution to get American workers back on the right track. At a minimum, it will take a political groundswell aimed at overturning the way the tax code favors corporations. Along the way we will have to displace the political power of our corporate oligarchs.

Government must be made to serve the public interest, not Mr. Market.

Democracy is the sole mechanism enabling our citizens to have political and economic agency. But, democracy will cease to matter in a corporate-controlled, globalized system of government influence.

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The Kids Are All Right

The Daily Escape:

Autumn in Larch Valley, Banff National Park, Alberta CN – 2008 photo by Andy Simonds

For the past few days, Wrongo has been writing about both ideas and people that could help to shape a reform of American capitalism.

We’ve talked about Bernie Sanders, Richard Murphy, Alan Curtis and Alexi Yurchak, and the Yellow Vests in France. Today, let’s focus on America’s youth, at least some of them:

More than 1,000 young people and allies flooded the Capitol Hill hallways and offices of Democratic representatives to demand that elected officials listen to their youngest constituents—as well as some of the world’s top scientists—and back the bold proposal to shift the US to a zero-carbon energy system by 2050 in order to save the planet from an irreversible climate catastrophe.

The protesters were mostly members of the youth-led Sunrise Movement, 800 of whom had attended a training on lobbying members of Congress and their staffers the previous evening. They carried signs reading, “Do Your Job,” “Back the Deal,” and “No More Excuses“. Here is a picture of them in the halls of Congress:

Before you get all crazy about the (apparently) professionally-made signs, here’s a web site where you can easily make them. More from Common Dreams:

Many also wore T-shirts emblazoned with the following message: “We have a right to good jobs and a livable future,” two key components of the Green New Deal, which would create 10 million jobs in the first decade by putting Americans to work building a green energy infrastructure…

At least 143 of the demonstrators were arrested as they lobbied in 50 congressional offices. But, they had an impact. The number of Democratic lawmakers now supporting a Select Committee on a Green New Deal has now reached 31, twelve of whom signed on this week. How it came together reveals how the Congressional Progressive Caucus (CPC), will use its growing membership.

The Caucus agreed with incumbent members who were willing to have a select committee so long as actual lawmaking authority remained in existing committees.

This wasn’t all due just to the kids. Rep.-elect Alexandria Ocasio-Cortez (D-NY) has spent the past few weeks wrangling support for the Green New Deal as well. The outcome was the result of a collaboration between the CPC leaders, Ocasio-Cortez, and the Sunrise Movement.

Wrongo doesn’t know if a Green New Deal is a good idea or not, but much of the message will resonate with voters. Who will be against “good jobs and a livable future”?

And Alexandria Ocasio-Cortez is showing that she has really good political instincts.

We should be happy that these kids are speaking from their hearts. They are practicing for when they will need the strength to fight the hard political battles of their generation. But, why aren’t we seeing a million parents fighting alongside their kids?

We also should remember how undervalued kids are in America: We under fund their schools. We are providing only low-wage service economy jobs for most of them when they grow up. We hardly care whether they are covered under a health insurance plan. We take them from their parents at the border.

No wonder they are learning to act, since we, their guardians, seem unwilling to act for them.

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Funding The Revolution

The Daily Escape:

Lake Louise, Alberta, Canada in snow – photo by Yan Gao

When the President and the incoming Speaker of the House get into a televised shouting match over whether we have enough money to fund Trump’s wall, you know that things have to change in America. They’re fighting over use of a limited resource, the US government’s funding.

We now have within our means the ability to feed, clothe, shelter, and educate everyone. But, as a country, we are unwilling to do so, because we buy into neoliberal economic theory. Never in history have we had the ability to make our species as secure as we do now, but we choose instead to make as many as insecure as possible.

Until about 1980, economic growth created a level of prosperity that earlier generations of Americans could only dream about. But, economic growth no longer makes people more economically secure. We’ve become prisoners in a system that promotes permanent growth, where wages stagnate, schools decay, and Goldman Sachs sits inside our government.

The question we should be asking is: How can our politics provide an answer to our people’s need for economic security? We know that neoliberalism has reduced many of our people to states of economic insecurity. We know that our economic and social order must change, and profoundly, or face an eventual revolution. This isn’t an option, it’s a certainty.

That means that only state funding will create the (peaceful) change we need.

Here’s a big idea from Richard Murphy, a UK tax accountant:

…To put this another way, what may be the biggest programme of change ever known in human history is required in very short order. We need new energy systems; transformation of our housing stock; new transport infrastructure; radically different approaches to food that might even require rationing if we cannot create change any other way; different ways of working and new ways of using leisure time.

Murphy goes on to say:

But this must be done in a way that increases certainty. Jobs must be created on the ground…And I mean, in every constituency….but the transport and other infrastructure must be provided in that case and that does not simply mean more roads. The social safety net must be recreated. That means a job guarantee. It also means a universal basic income. And business must be transformed. Since that process will be incredibly expensive this requires capital and if that means state investment and co-ownership, so be it.

Murphy says that if this was wartime, our government would find the money to fund radical change. He says that we can no longer just extract higher taxes from the rich to solve our funding requirements, we need to create a vision, a plan and funding to achieve the change required.

One way to fund a portion of these requirements may be to restrict funding for the military, to eliminate tax breaks and subsidies for corporations. More from Murphy:

The time for pussy-footing is over. We know what we need to do. We know the scale of the issue. We know the reasons for acting….and we know we can pay for it. This is not left or right as we know it. And any party not addressing it is part of the problem and not the solution.

He’s suggesting deficit financing for societal gain. What are the chances that revolutionary change can happen? Almost zero today. Left to our political class, we’re just going to keep on doing what we’re currently doing, that is, until we can’t.

As we said yesterday, people say, “It’s the system, we can’t change it”.

But, in the Middle Ages, the exact same thing could have been said about feudalism. That institution was deeply entrenched, it was “how things are, and were meant to be.” It was inconceivable that something like democratic government could ever succeed feudalism, yet it did.

Today, our revolutionary task is to allow democracy to express its full potential to reshape and revitalize our social and economic life.

We must begin by setting priorities, taking resources from areas that drain the economy. Then we need to devote those resources to things that will make for a healthier, more secure economy.

One example is to adjust the priority that military defense spending has in our economy. Let’s stop being the world’s policeman, nobody wants us to do it. Then, use the excess resources to build infrastructure, and renewable energy systems.

Everything else we need then will become easier to build.

It’s a matter of deciding what our priorities are, and voting for those who agree with that vision.

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