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It’s Labor vs. Capital, Stupid October 7, 2011

Posted by rogerhollander in Economic Crisis, Labor, Socialism.
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Published on Friday, October 7, 2011 by On the Commons

Now that we’re in the streets, what are we asking for?

  by  David Morris

A few months ago Nassim Taleb, author of the Black Swan, an influential book about the crucial importance of unpredictable, unforeseen events on our financial system was asked whether the hundreds of thousands taking to the streets in Greece was a Black Swan event. He replied, “No. The real Black Swan event is that people are not rioting against the banks in London and New York.”

They are now. Not rioting perhaps but vigorously protesting. Occupy Wall Street is moving into its second month. Twenty thousand strong demonstrated in New York City this week. Similar demonstrations are spreading nationwide.

 

From 1980 to 2005, more than 80 percent of the increase in personal incomes went to one percent of the population. One percent of Americans now take in more than quarter of the nation’s income every year. (photo: Massachusetts Cop Block)

In the 1976 movie, Network, anchorman Howard Beale tells his viewers,

Things have got to change. But first, you’ve gotta get mad!… You’ve got to say, ‘I’m as mad as hell, and I’m not going to take this anymore!’ Then we’ll figure out what to do about the depression and the inflation and the oil crisis. But first get up out of your chairs, open the window, stick your head out, and yell, and say it: “I’M AS MAD AS HELL, AND I’M NOT GOING TO TAKE THIS ANYMORE!”

We’re mad as hell and we’re not going to take this anymore. That is the message of the sit-ins by U.S. Uncut, the protests against Bank of America, the occupation of Freedom Plaza in Washington, D.C. to protest the war, Occupy Wall Street and the growing numbers of #Occupy demonstrations around the country.

We’re mad at the devastation wrought in the last four years by the toxic combination of unrestrained greed and concentrated wealth. Twelve to fifteen million families have received foreclosure notices. Seven to ten million more are unemployed. Median household income has fallen to its lowest level in more than a decade while the poverty rate is at a 17-year high. The number of homeless in New York City rose to an all-time high last year—higher even than during the Great Depression—with a record 113,000 men, women, and children, many of them comprising whole families, retreating night after night to municipal shelters.

We’re mad at Wall Street for taking our money and giving nothing back. This Administration has given Wall Street nearly $10 trillion in various programs, from insuring money market accounts to the Fed’s buying of troubled assets to loaning money to banks at near-zero interest rates.

Wall Street has used the bailout to enrich themselves. In 2010, it handed out $149 billion in bonuses and compensation, near an all time high. But it did not pass that largesse down. While bank profits have risen 136 percent since the financial crisis bank lending has fallen by 9 percent.

We’re mad at the 1 percent of the country who make decisions that enrich themselves while impoverishing the rest of us. From 1980 to 2005, more than 80 percent of the increase in personal incomes went to one percent of the population. One percent of Americans now take in more than quarter of the nation’s income every year. In New York City, home to Wall Street, the top 1 percent took for themselves close to 44 percent of all income in New York during 2007 (the last year for which data is available). According to the Fiscal Policy Institute the wealth of this 1 percent derived almost entirely from the financial services sector. To qualify for inclusion on the 2011 Forbes list of the richest 400 Americans you need to be worth at least $1 billion. In 2009 those 400 had average incomes of $227 million.

“We are the 99%” is a fitting slogan for the new movements.

Labor vs. Capital

We know who the enemy is. The Michigan teachers recently released a video showing CEOs marching into classrooms and literally taking desks away from children, a visualization of the impact of a $1.8 billion reduction in corporate taxes coupled with a $1 billion cut in education funding the Republican legislature enacted. Six hundred pilots marched on Wall Street to protest the refusal of the CEOs of their airlines to bargain in good faith.

We are beginning to reframe the debate, shifting from a focus on deficits to the more fundamental issue: the relationship of labor and capital.

One indication of the new mood is the willingness of opinion leaders to use heretofore impermissible language to describe the crisis. One of the nation’s leading economists, Nouriel Roubini informs the Wall Street Journal, “Karl Marx had it right. At some point, Capitalism can destroy itself. You cannot keep on shifting income from labor to Capital without having an excess capacity and a lack of aggregate demand.”

Another reflection of the new mood is the emergence of a new kind of folk hero. People like New York Attorney General Eric Schneiderman who last August rejected a proposed nationwide settlement that would have absolved the country’s biggest banks from future lawsuits in return for a paltry $20 billion. As Matt Tabbibi of Rolling Stone points out, “in 2008 alone, the state pension fund of Florida, all by itself, lost more than three times that amount ($62 billion) thanks in significant part to investments in these deadly MBS.” (mortgage-backed securities)

Mr. Schneiderman’s audacity led to his being kicked off the executive committee of state attorneys general in charge of the case. “Ever since,” the New York Times explains, “the four-member Correspondence Unit in Mr. Schneiderman’s office, in a building wedged between the New York Stock Exchange and the New York Federal Reserve Bank, has been dealing with a flood of mail. It is, by all accounts, a spontaneous and grass-roots eruption of thank-you notes.”

“I’m just doing my job,” says Schneiderman. “At heart, Americans are not cynical people. I think they want to believe that there’s one set of rules for everybody, that there are still good cops on the beat to keep things honest.”

Yes we do. Which makes us furious when Kathryn Wylde, the Fed Board member who ostensibly represents the public, tells the Times that Schneiderman should cease and desist his attacks on Wall Street. “It is of concern to the industry that instead of trying to facilitate resolving these issues, you seem to be throwing a wrench into it. Wall Street is our Main Street — love ’em or hate ’em. They are important and we have to make sure we are doing everything we can to support them unless they are doing something indefensible.”

Unless they are doing something indefensible?

The 2011 Academy Award for best documentary went to Inside Job, a searing indictment of Wall Street. Its director, Charles Ferguson told the audience, “Forgive me, I must start by pointing out that three years after our horrific financial crisis caused by financial fraud, not a single financial executive has gone to jail, and that’s wrong.”

Seven hundred Wall Street protestors were arrested in a single day. They were disrupting traffic. The CEOs of Wall Street firms disrupted the lives of hundreds of millions.

Conservatives have been remarkably successful in persuading us that government is the enemy. The 99 percenters know that is true only inasmuch as the government is captured by the 1 percenters. We are angry at government, but what makes us more angry is that in this system you get the government you pay for and 99% of us are not doing any buying.

We’re mad at government, but we haven’t given up on governance, on the right to make the rules.

Last week the General Assembly of Occupy Wall Street adopted a declaration of principles that will inform the new rules.

As we gather together in solidarity to express a feeling of mass injustice, we must not lose sight of what brought us together. We write so that all people who feel wronged by the corporate forces of the world can know that we are your allies.

As one people, united, we acknowledge the reality: that the future of the human race requires the cooperation of its members; that our system must protect our rights, and upon corruption of that system, it is up to the individuals to protect their own rights, and those of their neighbors; that a democratic government derives its just power from the people, but corporations do not seek consent to extract wealth from the people and the Earth; and that no true democracy is attainable when the process is determined by economic power. We come to you at a time when corporations, which place profit over people, self-interest over justice, and oppression over equality, run our governments. We have peaceably assembled here, as is our right, to let these facts be known.

From that declaration of principles a program will emerge. Conversations about the elements of that program have already begun. Grassroots driven fundamental change is not without precedent. We can look to the Arab spring. #Occupy Wall Street was self-consciously inspired by the occupation by Egyptians of Tahrir Square.

But we can also look to our own history. At the end of the 19th century a political movement arose to confront many of the same concerns that torment us: concentrated wealth, corporate power, the influence of money on democracy. The populist uprising led not only to the passage of state and national laws (e.g. anti trust legislation, minimum wage and maximum hour statutes) but several Constitutional amendments. In 1913 the 16th Amendment allowed an income tax; the 17th Amendment, ratified the same year required the direct election of Senators; the 19th Amendment, ratified in 1920, gave women the right to vote.

Five New Rules

The conversation about program will go on for months. To contribute to that conversation I offer five new rules: two of them Constitutional Amendments and three of them laws.

1. Corporations are not persons.

The 14th Amendment, ratified in 1868 gave blacks the constitutional right of citizenship: “All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside. No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.”

In 1886, in a case that had nothing to do with corporate personhood, the court clerk wrote a headnote to the case that contained these fateful sentences, “The court does not wish to hear argument on the question whether the provision in the Fourteenth Amendment to the Constitution, which forbids a State to deny to any person within its jurisdiction the equal protection of the laws, applies to these corporations. We are all of the opinion that it does.”

Since the case itself never addressed the question these words did not comprise a legal precedent. Nevertheless, from then on the Supreme Court has considered the question settled. Some 65 years later Justice William O. Douglas observed, “the Santa Clara case becomes one of the most momentous of all our decisions. Corporations were now armed with constitutional prerogatives.” And they made the most of these new prerogatives.

The 14th Amendment, written to protect weak and largely defenseless ex-slaves, was mostly used to protect big and powerful corporations. Of the 150 cases based on the 14th amendment the Supreme Court heard between 1886 and 1896, 15 involved blacks and 135 involved business entities.

In the next 20 years, relying on the 1886 “precedent” the Supreme Court steadily expanded the number of Constitutional rights accorded to this new type of person. The Women’s International League for Peace and Freedom (WILPF) offers a partial list: in 1893 the Court accorded corporations the right of due process under the 5th Amendment. In 1906 it extended to them the protection against search and seizure in the 4th Amendment. In 1908 it extended to corporations the 6th Amendment right to a trial by jury.

By the 1940s Justice Felix Frankfurter could accurately declare, “Artificial or not, corporations have won more rights under law than people have– rights which government has protected with armed force.”

In early 2010 the Supreme Court gave corporations the right, as persons, to spend unlimited amounts of money to influence elections.

Does it need to be said that unlike a real person, a corporation lacks a conscience. It is guided neither by ethics nor morality but rather by laws that required its Boards to elevate the maximization of profits above all other concerns. Does it need to be said that if a person makes a decision that kills or maims people he will go to jail. If a CEO makes such a decision he, at worst, receives a golden parachute.

A wonderful sign at the Occupy Wall Street protest reads, “I won’t believe corporations are people until Texas executes one.”

We need a constitutional amendment consisting of four words. Corporations are not persons.

2. Money is not speech

In 1976 the Supreme Court ruled that money is speech and therefore protected by the First Amendment. Today members of Congress now spend 25-40 percent of their time begging for money. Political scientist Thomas Ferguson observes, “Public opinion has only a weak and inconstant influence on policy. The political system is largely investor-driven, and runs on enormous quantities of money”.

When states or the federal government have tried to make elections fairer the Supreme Court says no. Vermont passed a law to cap campaign expenditures for state offices. The Court struck it down.

Congress tried to close a loophole in the campaign finance law that allowed billionaire candidates to spend an unlimited amount of their own money on their own campaigns. The Court struck down the law. Speaking for a 5-4 majority, Justice Samuel Alito told Congress that trying to “level electoral opportunities for candidates of different personal wealth” is not “a legitimate government objective.”

The Supreme Court rulings declaring money is speech and corporations are persons make for a lethal cocktail. Jamie Raskin, a Maryland state senator and law professor at American university points out that Fortune l00 corporations had profits in 2008 totaling about $600 billion. If they spent only l percent of their profits on elections, a trivial sum to protect and foster their interests, the total comes to $6 billion. That is more money than was spent for and on behalf of all congressional and presidential candidates in 2008.

We need a Constitutional Amendment consisting of four words. Money is not speech.

3. Tax Financial Transactions

In 1936, John Maynard Keynes first proposed a financial transactions tax. “The introduction of a substantial Government transfer tax on all transactions might prove the most serviceable reform available, with a view to mitigating the predominance of speculation over enterprise in the United States.”

Economist Dean Baker suggests that a modest tax (0.25 percent) could easily raise more than $100 billion a year. “A small increase in trading costs would be a very manageable burden for those who are using financial markets to support productive economic activity. However, it would impose serious costs on those who see the financial markets as a casino in which they place their bets by the day, hour or minute.”

4. Tax all income as ordinary income

Billionaire Warren Buffett has commented on the unfairness of having a lower tax rate than his secretary. That is so because most of his income derives from dividends and capital gains taxed at half the rate as income from work. (I think it altogether fitting that economists use the term “unearned income” to describe this kind of income.)

In 2007 the 400 Americans with the highest income—nearly $345 million—were taxed at less than 17 percent, less than half the ordinary income tax rate of 35 percent because most of their income was derived from investments. If we were to require that all their income be taxed at the 1999 tax rate of 39.6% this alone would generate an additional $300 billion in revenue over the next 10 years.

5. Declare a moratorium on foreclosures

Foreclosures hurt individuals, neighborhoods and the economy. Dumping millions of homes on the market depresses the overall value of all real estate, increases unemployment and disrupts lives and neighborhoods.

The most effective way to stop the tidal wave of foreclosures is through permanent, sustainable loan modifications that reduce homeowners’ mortgage principal and interest rates to market value. In a 2010 report, National Peoples Action proposed one strategy. “Across the country, some 11 million homeowners are $766 billion under water with their mortgages. Paid off over 30 years this means $73 billion a year needed to reset all underwater homeowners’ principals and interest rates would be about half of the $143 billion the top six banks alone are getting ready to pay in 2010 in bonuses and compensation. Even if the top six banks were to absorb the full cost of modifying all underwater mortgages in the country, they would still have $70 billion left for bonuses and compensation.”

The Wall Street occupiers have taken a stand against monied democracy and corporate power. We would do well to join them. Make your voices heard. And demand new rules that will honor the 99% and restore democracy to the nation.

<!–

–>

David Morris

David Morris is Vice President and director of the New Rules Project at the Institute for Local Self-Reliance, which is based in Minneapolis and Washington, D.C. focusing on local economic and social development.

Bernie Sanders on “Deficit Reduction” August 4, 2011

Posted by rogerhollander in Economic Crisis.
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Dear roger,The $2.5 trillion deficit reduction deal that was agreed
to by Senate Minority Leader Mitch McConnell, House Speaker John Boehner, and
President Obama is grotesquely unfair.  It is also bad economic policy that, in
the midst of a terrible recession, will lead to the loss of hundreds of
thousands of jobs.

At a time when the wealthiest people in this country
are doing extremely well, and when their effective tax rate is the lowest in
decades, the rich will not be asked to contribute one penny more for deficit
reduction.   When corporate profits are soaring and a number of giant
corporations are able to completely avoid federal income taxes because of
obscene loop-holes in the tax code, corporate America will not be asked to
contribute one penny more for deficit reduction.  On the other hand, working
families, children, the sick and the elderly, many of whom are already suffering
because of the recession, are being asked to shoulder 100 percent of the human
cost of lowering our deficit.

The corporate media which, by and
large, has covered this debate as if it were a baseball game with political
“winners and losers,” has neglected to tell the American people what the
implications of this deficit reduction agreement are.  Let me take this
opportunity to do that.

The first round of $917 billion in discretionary
cuts over the next 10 years will begin in the 2012 budget.  Although nobody can
predict exactly what programs will be cut and by how much because those
decisions will be made over the coming months and years by the appropriation
committees, here’s what working families can look forward to:

·
At a time when there are long waiting lists for affordable childcare
and Head Start, it is likely that these programs will be significantly
cut.

· At a time when the United States is falling
further and further behind other countries in the terms of the quality of our
education, it is likely that tens of thousands of teachers and school personnel
will be laid off.

· At a time when working class
families are finding it harder and harder to send their kids to college, it is
likely that there will be cutbacks in federal student aid programs.

· At a time when hunger among seniors and children is rising,
it is likely that there will be cutbacks in various nutrition programs.

· At a time when 50 million Americans have no health insurance
and many of them are utilizing community health centers as their medical homes,
it is likely that there will be cuts in primary healthcare.

·
At a time when states, cities and towns have already laid off over
500,000 public service employees, it is likely that there will be even more
lay-offs in police and fire protection, and large reductions in federal support
for roads, bridges, water quality, sewage and public transportation.

Further, there will likely be cuts in home heating assistance,
affordable housing, support for family based agriculture, and research in
finding cures for cancer and other diseases.

In addition, there will
likely be major staffing reductions in agencies which are trying to protect the
physical health and economic well-being of our people.  It is quite likely that
the EPA, which enforces the rules regarding clean water and clean air, will be
cut.  The SEC, which regulates against the greed and recklessness of Wall
Street, will be undermined.  It is also very possible that the Social Security
Administration, which assures that seniors and the disabled receive the benefits
to which they are entitled in a timely manner, will also be cut.

That
is just some of what will likely happen as a result of the first $900 billion in
cuts in this $2.5 trillion deficit reduction package.

The second phase
of this legislation calls for the establishment of a Super Committee composed of
3 Democrats and 3 Republicans from the House and 3 Democrats and 3 Republicans
from the Senate.  Let’s be clear.  The mandate for this 12 member Super
Committee is to look at EVERY program of the federal government and come up with
$1.5 trillion more in savings.  This means that, at a time when the
Republicans and an increased number of Democrats are calling for major cuts in
Social Security, Medicare and Medicaid, all of these programs will be on the
chopping block.

If the committee is unable to reach an
agreement with a majority vote, there will then be a “sequestration” process
which would require $500 billion in cuts to defense spending and $500 billion
more in across-the-board cuts to domestic discretionary spending.  In that
scenario, Social Security, Medicare benefits and Medicaid would be spared, but
even more draconian cuts would occur in programs that sustain working families.

Here is the great irony with regard to the deficit reduction
process that we have just gone through:

In poll after poll, the
American people have made it clear that they believe in shared sacrifice.
Instead of putting Social Security, Medicare, Medicaid, education and
environmental protection on the chopping block, the American people have said
that they believe the best way to reduce the deficit is to end tax breaks for
the wealthy, big oil, and Wall Street and take a hard look at military
spending.  Yet, the budget deal just approved does the exact opposite of what
the American people want.  The wealthy and large corporations contribute nothing
while there will be a major reduction in services for working families and the
most vulnerable people in our country.

Enough is enough!  The American
people must fight back.  We need a government which represents all the people,
not just the wealthy, campaign contributors and lobbyists.  In these tough and
discouraging times, despair is not an option.  This fight is not just for us, it
is for our children and grandchildren and for the environmental survival of the
planet.

Bernie
Senator Bernie Sanders

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Paid for by Friends of Bernie
Sanders

PO Box 391
Burlington, VT 05402

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Actually, “the Rich” Don’t “Create Jobs,” We Do May 14, 2011

Posted by rogerhollander in Economic Crisis, Labor.
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Roger’s comment: the article below correctly debunks the false notion that capital creates jobs; it is a philosophy that is aggressively promoted by … you guessed it … those who own and control capital.  Interestingly, it was not Karl Marx but rather the founder of capitalist ideology, Adam Smith, who first developed the “the labor theory of value,” that is, the notion that new value is created by human labor.  Marx built upon Smith’s work to show that capitalists who employ living labor skim off from the sale of goods and services what they call profits, what Marxists call “surplus value.”  Since all value is created by labor, this skimming off is nothing less than pure and simple theft.  But what, you ask, of the poor capitalist who takes the risk of starting a business, using his capital to employ workers?  The answer is that the capital owned by the capitalist belonged to the workers who created the value in the first place, what Marx called “dead labor.”  He explained that the present era of capitalist relations in production was ushered in by the “primitive accumulation” of capital.

 Here is how he explained it: “The discovery of gold and silver in America, the extirpation, enslavement and entombment in mines of the aboriginal population, the beginning of the conquest and looting of the East Indies, the turning of Africa into a warren for the commercial hunting of black-skins, signalled the rosy dawn of the era of capitalist production. These idyllic proceedings are the chief moments of primitive accumulation.  On their heels treads the commercial war of the European nations, with the globe for a theatre.  It begins with the revolt of the Netherlandsfrom Spain, assumes giant dimensions in England’s Anti-Jacobin War, and is still going on in the opium wars against China, &c.  The different moments of primitive accumulation distribute themselves now, more or less in chronological order, particularly over Spain, Portugal, Holland, France, and England.  In Englandat the end of the 17th century, they arrive in a systematic combination, embracing the colonies, the national debt, the modern mode of taxation, and the protectionist system.  These methods depend in part on brute force, e.g., the colonial system.  But they all employ the power of the State, the concentrated and organised force of society, to hasten, hot-house fashion, the process of transformation of the feudal mode of production into the capitalist mode, and to shorten the transition.  Force is the midwife of every old society pregnant with the new one.  It is itself an economic power.” (Karl Marx, Capital, Vol. ?,  Chapter 31). 

Adam Smith saw it differently: “In the midst of all the exactions of government, capital has been silently and gradually accumulated by the private frugality and good conduct of individuals, by their universal, continual, and uninterrupted effort to better their own condition.  It is this effort, protected by law and allowed by liberty to exert itself in the manner that is most advantageous, which has maintained the progress ofEnglandtowards opulence and improvement in almost all former times. …

It is the highest impertinence and presumption, therefore, in kings and ministers, to pretend to watch over the economy of private people, and to restrain their expense. … They are themselves always, and without any exception, the greatest spendthrifts in the society.  Let them look well after their own expense, and they may safely trust private people with theirs.  If their own extravagance does not ruin the state, that of their subjects never will.” (Adam Smith, Wealth of Nations, Book II, Chapter II [cited in Toronto Globe and Mail, April 5, 2008])

It is no wonder that the fat cat capitalists and their running dog Republican pimps love Adam Smith’s way of looking at the picture.  Unfortunately, it is pure unadulterated BS.

 

Saturday 14 May 2011
by: Dave Johnson, Campaign for America’s Future

(Photo: tom.arthur)

You hear it again and again, variation after variation on a core message: if you tax rich people it kills jobs. You hear about “job-killing tax hikes,” or that “taxing the rich hurts jobs,” “taxes kill jobs,” “taxes take money out of the economy, “if you tax the rich they won’t be able to provide jobs.” … on and on it goes. So do we really depend on “the rich” to “create” jobs? Or do jobs get created when they fill a need?

Here is a recent typical example, Obama Touts Job-Killing Tax Plan, written by a “senior fellow at the Cato Institute and chairman of the Institute for Global Economic Growth,”

Some people, in their pursuit of profit, benefit their fellow humans by creating new or better goods and services, and then by employing others. We call such people entrepreneurs and productive workers.

Others are parasites who suck the blood and energy away from the productive. Such people are most often found in government.

Perhaps the most vivid description of what happens to a society where the parasites become so numerous and powerful that they destroy their productive hosts is Ayn Rand’s classic novel “Atlas Shrugged.” …

 

Producers and Parasites

The idea that there are producers and parasites as expressed in the example above has become a core philosophy of conservatives. They claim that wealthy people “produce” and are rich because they “produce.” The rest of us are “parasites” who suck blood and energy from the productive rich, by taxing them. In this belief system, We, the People are basically just “the help” who are otherwise in the way, and taxing the producers to pay for our “entitlements.” We “take money” from the producers through taxes, which are “redistributed” to the parasites. They repeat the slogan, “Taxes are theft,” and take the “money we earned” by “force” (i.e. government.)

Republican Speaker of the House John Boehner echoes this core philosophy of “producers” and “parasites,” saying yesterday,

I believe raising taxes on the very people that we expect to reinvest in our economy and to hire people is the wrong idea,” he said. “For those people to give that money to the government…means it wont get reinvested in our economy at a time when we’re trying to create jobs.”

“The very people” who “hire people” shouldn’t have to pay taxes because that money is then taken out of the productive economy and just given to the parasites — “the help” — meaning you and me…

So is it true? Do “they” create jobs? Do we “depend on” the wealthy to “create jobs?”

Demand Creates Jobs

I used to own a business and have been in senior positions at other businesses, and I know many others who have started and operated businesses of all sizes. I can tell you from direct experience that I tried very hard to employ the right number of people. What I mean by this is that when there were lots of customers I would add people to meet the demand. And when demand slacked off I had to let people go.

If I had extra money I wouldn’t just hire people to sit around and read the paper. And if I had more customers than I could handle that — the revenue generated by meeting the additional demand from the extra customers — is what would pay for employing more people to meet the demand. It is a pretty simple equation: 

you employ the right number of people to meet the demand your business has.

If you ask around you will find that every business tries to employ the right number of people to meet the demand. Any business owner or manager will tell you that they hire based on need, not on how much they have in the bank. (Read more here, in last year’s Businesses Do Not Create Jobs.)

Taxes make absolutely no difference in the hiring equation.

 In fact, paying taxes means you are already making money, which means you have already hired the right number of people. Taxes are based on subtracting your costs from your revenue, and if you have profits after you cover your costs, then you might be taxed. You don’t even calculate your taxes until well after the hiring decision has been made. You don;t lay people off to “cover” your taxes. And even if you did lay people off to “cover’ taxes it would lower your costs and you would have more profit, which means you would have more taxes… except that laying someone off when you had demand would cause you to have less revenue, … and you see how ridiculous it is to associate taxes with hiring at all!

People coming in the door and buying things is what creates jobs.

The Rich Do Not Create Jobs

Lots of regular people having money to spend is what creates jobs and businesses. That is the basic idea of demand-side economics and it works. In a consumer-driven economy designed to serve people, regular people with money in their pockets is what keeps everything going. And the equal opportunity of democracy with its reinvestment in infrastructure and education and the other fruits of democracy is fundamental to keeping a demand-side economy functioning.

When all the money goes to a few at the top everything breaks down. Taxing the people at the top and reinvesting the money into the democratic society is fundamental to keeping things going.

Democracy Creates Jobs

This idea that a few wealthy people — the “producers” — hand everything down to the rest of us — “the parasites” — is fundamentally at odds with the concept of democracy. In a democracy we all have an equal voice and an equal stake in how our society and our economy does. We do not “depend” on the good graces of a favored few for our livelihoods. We all are supposed to have an equal opportunity, and equal rights. And there are things we are all entitled to — “entitlements” — that we get just because we were born here. But we all share in the responsibility to cover the costs of democracy — 

with the rich having a greater responsibility than the rest of us because they receive the most benefit from it.

 This is why we have “progressive taxes” where the rates are supposed to go up as the income does.

Taxes Are The Lifeblood Of Democracy And The Prosperity That Democracy Produces

 

In a democracy the rich are supposed to pay more to cover things like building and maintaining the roads and schools because these are the things that enable their wealth. They actually do use the roads and schools more because the roads enable their businesses to prosper and the schools provide educated employees. But it isn’t just that the rich use roads more, it is that everyone has a right to use roads and a right to transportation because we are a democracy and everyone has the same rights. And as a citizen in a democracy you have an obligation to pay your share for that.

A democracy is supposed have a progressive tax structure that is in proportion to the means to pay. We do this becausethose who get more from the system do so because the democratic system offers them that ability. Their wealth is because of our system and therefore they owe back to the system in proportion. (Plus, history has taught the lesson that great wealth opposes democracy, so democracy must oppose the accumulation of great, disproportional wealth. In other words, part of the contract of living in a democracy is your obligation to protect the democracy and high taxes at the top is one of those protections.)

The conservative “producer and parasite” anti-tax philosophy is fundamentally at odds with the concepts of democracy (which they proudly acknowledge – see more here, and here) and should be understood and criticized as such. Taxes do not “take money out of the economy” they enable the economy. The rich do not “create jobs, We, the People create jobs

Dave Johnson (Redwood City, CA) is a Fellow at Campaign for America’s Future, writing about American manufacturing, trade and economic/industrial policy. He is also a Senior Fellow with Renew California.

Dave has more than 20 years of technology industry experience including positions as CEO and VP of marketing. His earlier career included technical positions, including video game design at Atari and Imagic. And he was a pioneer in design and development of productivity and educational applications of personal computers. More recently he helped co-found a company developing desktop systems to validate carbon trading in the US.

Undocumented Immigrants Paid $11.2 Billion In Taxes While GE Paid Nothing April 24, 2011

Posted by rogerhollander in Economic Crisis, Immigration.
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Our guest blogger is Mike Elk, a freelance labor journalist and third generation union organizer based in Washington, D.C. You can follow him for more updates on twitter at @MikeElk.

This past month, there was much outrage over the fact that General Electric, despite making $14.2 billion in profits, paid zero U.S. taxes in 2010. General Electric actually received tax credits of $3.2 billion from American taxpayers.

At the same time that General Electric was not paying taxes, many undocumented immigrants, who are typically accused of taking advantage of the system while not contributing to it by many on the right, paid $11.2 billion in taxes. A new study by the Institute for Taxation and Economic Policy shows that undocumented immigrants paid $8.4 billion in sales taxes, $1.6 billion in property taxes, and $1.2 billion in personal income taxes last year. The study also estimates that nearly half of all undocumented immigrants pay income taxes.

ITEP bases its figures of what immigrants pay taxes based on the following factors:

  • Sales tax is automatic, so it is assumed that unauthorized residents would pay sales tax at similar rates to U.S. citizens and legal immigrants with similar income levels.
  • Similar to sales tax, property taxes are hard to avoid, and unauthorized immigrants are assumed to pay the same property taxes as others with the same income level. ITEP assumes that most unauthorized immigrants are renters, and only calculates the taxes paid by renters.
  • Income tax contributions by the unauthorized population are less comparable to other populations because many unauthorized immigrants work “off the books” and income taxes are not automatically withheld from their paychecks. ITEP conservatively estimates that 50 percent of unauthorized immigrants are paying income taxes.

While it’s impossible to estimate exactly how much in taxes undocumented immigrants paid, it is clear that undocumented immigrants are paying more taxes than General Electric, which paid absolutely nothing. This raises the question of who really is leaching off the American system: undocumented immigrants who pay their taxes and are typically too afraid of being deported to receive public assistance or corporations that pay nothing while receiving billions in credits

Ditch the Smooth Transition: The People Voted for Change November 16, 2008

Posted by rogerhollander in Economic Crisis.
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by: Naomi Klein, The Guardian UK

 

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President-elect Barack Obama’s selection of Rahm Emanuel as his Chief of Staff sends a reassuring message to Wall Street. Naomi Klein believes Obama’s selection of Emanuel is part of a “market-coddling logic” that could undo the public’s vote for change. (Photo: Getty Images)

 Instead of accepting the corrupted bail-out and reassuring Wall Street, Obama’s team must start doing the hard stuff now.

The more details emerge, the clearer it becomes that Washington’s handling of the Wall Street bail-out is not merely incompetent: it is borderline criminal.

    In a moment of high panic in September, the US treasury pushed through a radical change in how bank mergers are taxed – a change long sought by the industry. Despite the fact that this move will deprive the government of as much as $140bn in tax revenue, legislators found out only after the fact. According to the Washington Post, more than a dozen tax attorneys agree that “[the] treasury had no authority to issue the [tax change] notice.”

    Of equally dubious legality are the equity deals the treasury has negotiated with many of the banks. According to Congressman Barney Frank, one of the architects of the legislation that enables the deals: “Any use of these funds for any purpose other than lending – for bonuses, for severance pay, for dividends, for acquisitions of other institutions … is a violation of the act.” Yet this is exactly how the funds are being used.

    Then there is the nearly $2 trillion that America’s central bank, the Federal Reserve, has handed out in emergency loans. Incredibly, the Fed will not reveal which corporations have received these loans or what it has accepted as collateral. Bloomberg news service believes this secrecy violates the law and has filed a federal suit demanding full disclosure.

    Yet the Democrats are either openly defending the administration or refusing to intervene. “There is only one president at a time,” we hear from Barack Obama. That’s true. But every sweetheart deal the Bush administration makes threatens to hobble Obama’s ability to make good on his promise of change. To cite just one example, that $140bn in missing revenue is almost the same sum as Obama’s renewable energy programme. Obama owes it to the people who elected him to call this what it is: an attempt to undermine the electoral process by stealth.

    Yes, there is only one president at a time, but that president needed the support of powerful Democrats – including Obama – to get the bail-out passed. Now that it is clear the Bush administration is violating the terms to which both parties agreed, the Democrats have not just the right, but a grave responsibility, to intervene forcefully.

    I suspect the real reason the Democrats are failing to act has less to do with presidential protocol than with fear: fear that the stockmarket, which has the temperament of an over-indulged two-year-old, will throw one of its world-shaking tantrums. Disclosing the truth about who is receiving federal loans, we are told, could cause the market to bet against those banks. Question the legality of equity deals, and the same thing will happen. Challenge the $140bn tax giveaway and mergers could fail.

    More than that, the Democrats, including Obama, appear to believe that the need to soothe the market should govern all key economic decisions in the transition period. Which is why, just days after a euphoric victory for “change,” the mantra abruptly shifted to “smooth transition” and “continuity.”

    Take Obama’s choice for chief of staff. Rahm Emanuel, the House Democrat who received the most donations from the financial sector, sends an unmistakably reassuring message to Wall Street. When asked if Obama would be moving quickly to increase taxes on the wealthy, as promised, Emanuel pointedly did not answer the question.

    This same market-coddling logic should, we are told, guide Obama’s selection of treasury secretary. Fox News and MNSBC explained that Larry Summers, who held the post under Clinton, is the man “the Street would like most.” Let’s be clear why. “The Street” would cheer a Summers appointment for the same reason the rest of us should fear it: because traders will assume that this champion of deregulation will offer a transition from Henry Paulson so smooth that we will barely know it happened. On the other hand, someone like Sheila Bair, the chairman of the banks’ insurer of last resort, the Federal Deposit Insurance Corporation, would spark fear on the Street – for all the right reasons.

    One thing we know for certain is that the market will react violently to anyone likely to impose serious regulation, invest in people, and cut off the free money. In short, the markets can be relied on to vote in precisely the opposite way that Americans have just voted. (A recent poll found 60% strongly favour “stricter regulations on financial institutions,” while just 21% support aid to financial companies.)

    There is no way to reconcile the public’s vote for change with the market’s foot-stomping for more of the same. Any moves to change course will be met with market shocks. The good news is that once it is clear the new rules will be applied across the board, fairly, the market will stabilise and adjust. Furthermore, the timing for this turbulence could not be better. Over the past three months, we’ve been shocked so often that market stability would come as more of a surprise. That gives Obama a window to disregard the calls for a seamless transition and do the hard stuff first. Few will be able to blame him for a crisis that predates him, or fault him for honouring the clearly expressed wishes of the electorate. The longer he waits, however, the more memories will fade.

    When transferring power from a functional, trustworthy regime, everyone favours a smooth transition. When exiting an era marked by criminality and bankrupt ideology, a little rockiness at the start would be a very good sign.

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