Monday, December 4, 2017

Repugnants' Tax Bill

I’ve been thinking about the Republican tax bill which passed the Senate in the dead of night (or rather early Saturday morning) without anyone, including the 51 GOP Senators who voted for it, having had a chance to read it. This secrecy was purposeful, clearly, because without anyone able to say precisely what was in the bill, no one could say conclusively what was wrong with it. The public agencies charged with estimating the effects of such a bill were unable, until Sunday, to estimate its cost to the national deficit. Now the nonpartisan Joint Committee on Taxation has published its analysis of the bill’s cost, and they say it will amount to $1.45 trillion over the next ten years. That’s a trillion and a half, folks, added to the budget deficit weighing on future generations so that big corporations, already flush with cash, can have their tax rate reduced from 35% to 20%. Those cuts, by the way, are to be permanent, while piddling tax cuts for individuals (the “middle class” Republicans have insisted would benefit most from their bill) are to last only ten years. The bill would also repeal the individual mandate to buy health insurance key to Obamacare, repeal the estate tax (providing a windfall for the wealthiest .02% of Americans, including the Trump family), and would open up the Arctic National Wildlife Refuge to oil drilling (this to buy Alaska Senator Lisa Murkowski’s vote).
            It is notable that the group most ecstatic about passage of the bill (aside from the Republicans themselves, for whom this was a must-win to prevent them from being the only party in full control of the government unable to pass any significant legislation) is Wall Street. And according to CNN Money (Dec. 3, “The Real Reason Wall Street is Euphoric, over the Tax Plan”), it’s not the reason touted by Republicans and the President—i.e. that it’s going to unleash a historic jump in new job creation and higher wages for workers. No, that’s all public relations crap: CEOs have specifically avoided any promise that they’d use their tax windfall to bring jobs back to the U.S. Besides, as many economists have pointed out, American corporations are already loaded with cash, with S&P 500 companies sitting on a record $1.5 trillion in their coffers that they could easily have used to raise wages or create more jobs. No. The real reason Wall Street can enjoy a bonanza is this:

Markets are betting that companies would use their new spare cash to help investors: by purchasing boatloads of stock and beefing up their dividends.

Put more simply, the money saved from taxes will help corporations with buybacks. That is, corporations buy back loads of their own stock, and, because such buybacks reduce the number of shares available, “they make earnings per share, a key measure of profitability, instantly look better.” This means that actual profits don’t need to improve to make a company’s profitability look better to investors, who also love buybacks because they’re less risky than investments in new, untested projects. Nor is this just idle speculation. As CNN Money notes,

“Stock buybacks have been the centerpiece of the current bull market, with S&P 500 companies having repurchased an incredible $3.8 trillion of stock since the end of March 2010.”

So who’s going to get rich on the new tax plan? The already obscenely wealthy, that’s who. The owners and CEOs of major corporations, first. And the big investors on Wall Street, second, who will profit from the higher apparent profitability of the firms they invest in. That is, the already wealthy will get measurably wealthier, and the masses will get nada. Well no, not exactly nada. What the rest will get is the shaft. The individual mandate in Obamacare, for example, will be removed—and that means that insurance companies, deprived of the younger pool of healthcare buyers, will be left with mainly older and sicker people to insure, which means premiums will have to go up (those needing cancer treatment are screwed). A more hidden part of the plan is that very soon, when the deficits really start to hit home, these same Republicans will start screaming that the nation can no longer afford “entitlement programs” like Social Security and Medicare and must be trimmed, again screwing those at the bottom. Too, with drilling now allowed in the National Wildlife Refuge or ANWR, in Alaska, the planet will be treated to more burning of fossil fuels, adding more CO2 to the atmosphere to increase global warming.
            And this gets to something that we haven’t heard too much about with this tax plan, not even from the Democrats who object to it. They’ve simply accepted the Republican playing field for debate, which is a losing field for them, i.e., will the tax breaks help the middle class? will the tax breaks induce companies to bring back jobs? But an equally important, and eventually more important consideration is the effect on the environment. That is, the Trump-GOP rationale has always been that reducing taxes on corporations will allow American corporations to be more competitive, and ramp up American production and jobs by massive amounts. But, of course, that also means raising the levels of every kind of pollutant, especially when the incentives for renewable resources will take a little-noticed hit in the new tax plan. So not only are the tax plan’s ‘benefits-to-working-people’ as complete and dishonest a scam as has ever been perpetrated; they are also a surefire recipe for disaster on several other fronts. They will accelerate pollution at every level (encouraging the use of coal, and dirty oil such as that from tar sands; with pesticides and GMOs all given free rein with the eviscerating of the regulating agencies); they will accelerate global warming with all this fossil fuel; and they will exacerbate the already obscene wealth gap between the richest and poorest Americans to unprecedented levels. And that wealth gap must sooner or later lead to economic collapse or social unrest of the kind we haven’t seen in some time.
            And that leads me to a final point here. The Republicans of our time have unashamedly descended to transparent appeals to the most noxious elements of the human psyche. Forget about guns and neo-Nazi hate groups; forget about racism and sexism; think only about their appeal to sheer selfishness on every level—because who doesn’t like lower taxes? Look out only for number one. Screw those on the other side of the counter, the other side of the economic spectrum, the other side of the county, the other side of the country, the other side of the world. It’s every man for himself so grab what you can while you can get it; and for sure, build walls because we can’t afford to have refugees flooding in to take our jobs, take our women, take our space. And cut those socialistic programs, too many of which only encourage the lazy and the foreign to look for handouts. In fact, reduce all government programs, get rid of all regulations, they’re only a burden on those real Americans who produce. And reduce taxes so every person can have all or most of his/her own money to spend or manage or save as he or she sees fit. The only legitimate tax is that used to purchase arms, that used for the best weapons money can buy including nukes, the best-equipped military fit to defeat anyone who even questions our authority to rule the world. They make it clear that we trust no one but those who salute our flag and pledge allegiance to our position at the top of the global heap. In short, be proud and be loud about jingoism and selfishness of the most extreme kind (neverminding that the military sucks up more than half of those dreaded taxes).
            In sum, this is the easy kind of appeal. Why? Because it appeals to the most obvious desires (who doesn’t like a tax break?) and fears and insecurities of most people. It has been known since the Greeks began analyzing government, and before. Appeals to the worst instincts of the unthinking mob are surefire appeals for any demagogue to make. And the Republican Party has become the party of crooks and demagogues.
            There is another kind of appeal, though, a kind of appeal that’s much harder to make; which is why it so seldom gets made. It requires that people suppress their selfish and hateful motives and come to some sort of informed understanding—a difficult understanding that is at the heart of democracy and all true government. No one succeeds alone. No one individual, no one family, no one city, no one state, no one nation. In the world as we have begun to understand it, everyone and everything is connected and depends on everything and everyone else, so everyone has to contribute. Sacrifice for the common good. And the truth is that this type of global understanding is older than many of us might think. I have been reading a fascinating book recently, The Invention of Nature by Andrea Wulf, about the man who may have been the first to see ecology as a whole of mutually interacting parts. His name was Alexander von Humboldt, and in the 19th century, he may have been the most famous man, certainly the most famous explorer/scientist, on the planet. And what he saw in his explorations in the Americas, and then in Russia and elsewhere, was that everything in nature is truly connected, and that humans, acting only out of purely selfish motives in the pursuit of valuable commodities and profit, have been blindly destroying the very web of life Humboldt saw as necessary to the whole. They had done this in the old world—in Egypt and the middle east, in Italy under the Romans, in Greece. And were now busy repeating the same mistakes in the Americas, clear-cutting rainforests necessary to holding the soil to make room for plantations and cattle grazing, irrigating deserts and plains to plant crops like cotton that could not be sustained. And he appealed, in his several books like Cosmos, to humans to begin to see what they were doing, and to begin to conserve and preserve that which was the necessary web of every being on the planet.
            That is the essential appeal to be made by those who oppose the right-wing philosophy that has taken over the United States once again (it did the same in the 1920s and brought on the Depression). It needs to be a carefully and precisely-stated program that makes clear what several European nations like Denmark have seen before us: rational government can only be preserved when it is funded and animated by the concern for all the people in any political entity, and to which everyone must contribute. It cannot be controlled and subservient to exclusively moneyed interests. It cannot acquiesce in, much less encourage the pirating of wealth and planetary resources and the means of production by the rapacious few. Government, if it is to mean anything at all, must be dedicated to the type of rule-making and fund accumulation that curbs those rapacious instincts and protects those who are unable to protect themselves: the very young, the very old, the lame and/or ill who cannot work, youth who seek education, and the commons—whether that be parks within cities, or national parks and forests, or world heritage sites wherever they are on the planet. All such appeals require that the participants in any society must be educated to see that their obligation may be primarily to their own well-being and that of their families, yes, but must also include those not related by birth, or common national origin, or any other type of affiliation, and must even cross species. This is the type of appeal that in the past has mostly been limited to wartime (World War II was when the U.S. tax rate on the wealthy rose to over 90%), in response to an outside threat. Now it must succeed even absent that outside threat, or perhaps in the face of a much subtler threat, the threat of myopia, or short-sightedness, of appeals to our hyper-national and irrational and selfish fears. It must respond to the broader view, the one we’ve been treated to via our satellites: that we are all passengers on what may be the only planet that fosters life, and that furthermore the fate of each one of us is intimately and indelibly connected to the fate of all of us. If the planet heats up in the way that it is already doing, for example, it will spare none of us. True, the most vulnerable will be the first to suffer and be displaced while the privileged retreat to their armed and gated hideaways; but eventually, all of us will be heated out of existence. On a planet that overheats to the point where food plants cannot survive, and where mainly diseases and pests can thrive, the entire human species will cease to exist.
            The question is, always, how can such an appeal be made? How can such an appeal be made vivid and real and compelling enough to enough people to make it competitive? This is not easy. No society has ever been able to make it work for long, and in our time, right now, the fear-based appeal of the dishonest among us, the calculating rapists among us, has triumphed for a time—as the passage of this disgusting Republican tax bill demonstrates. But what those with longer vision must do is keep trying to make the hard arguments, the arguments that appeal not to the worst but the best in human nature (and even pre-human nature, since biologists now tell us that all primates display a keen sense of fairness). To make sure, somehow, that they reach enough people to make a difference. Because though it usually doesn’t seem like it, most people like to think of themselves as moral, and compassionate, and fair-minded and concerned for the general welfare. If enough of those people can be induced to see—not least by revealing to them their own more inclusive instincts—then perhaps there is time. Time to save the government of the people. Time to save the nation. Time to save the species. Big ifs, to be sure. But better than the grotesque alternative, which is what we are suffocating in now.  

Lawrence DiStasi

Sunday, November 26, 2017

The New Feudalism

The news about the fashion for the ultra-rich to hide their assets in offshore tax-free havens, all exposed in The Paradise Papers (13.4 million documents about secret offshore investments leaked to the German newspaper Suddeutsche Zeitung), has given rise to numerous accounts of how this works, and what it implies. The most revealing one I’ve seen is a recent interview in Reader Supported News, on November 25, that Doug Henwood conducted with Brooke Harrington, the author of Capital Without Borders: Wealth Managers and the One Percent. What the interview revealed is both infuriating and alarming for modern ‘advanced’ societies, particularly ones that claim to be democracies. The idea is simply that the current accumulation of vast wealth in fewer and fewer individual hands and families seems to indicate a coming apocalypse that the very wealthy are already preparing for. Harrington cites a recent New Yorker article describing the “boom in business for luxury underground bunkers,” and the numbers of the super-rich obtaining passports for places like New Zealand to which they can flee in their private jets when the expected civil unrest starts.
     Harrington uses a phrase that I think best describes where we’re headed: neo-feudalism. Here is how she introduces it:
…what this concentration of capital in an increasingly small group of people’s hands means is that the economic system is ossifying. It’s going backwards towards feudalism, where wealth was tied up generation after generation among a very small group of families. That’s exactly what we see happening now.
In other words, as government control is placed increasingly in the hands of politicians willing to do the bidding of their wealthy donors (witness the current Republican “tax reform” that claims to be giving huge tax breaks to corporations and the wealthy so they can invest it in production that will raise the wages of middle-class workers; yeah, right) and, in fact, directly in the hands of the wealthy themselves (the cabinet appointees of Donald Trump, himself a billionaire, are the richest in U.S. history), the flight of money out of government programs and into private hands is accelerating at a breathless pace. And with the help of the cancellation of the estate tax in the current Republican bill, the concentration of wealth in these same families can only increase.
            The question that all this hiding of increasingly concentrated wealth raises is: why? Why are the wealthy, including Queen Elizabeth of England, spending so much time and effort to get their wealth into tax-free offshore havens? And the answer is simple, according to Harrington. The ultra-wealthy refuse to see their ‘hard-earned’ (i.e. mostly inherited) money being used to help the less fortunate.  Harrington places this in historical context (though in the U.S., the hatred for the high taxes to support things like Social Security began with Roosevelt’s New Deal):

The other thing was that in the seventies, a lot of countries began to develop extensive welfare states, so taxes rose. And a lot of wealthy people didn’t want to pay those taxes.

They were especially keen not to pay them as they saw that corporations had figured out how to use offshore financial centers to insulate their capital from taxes, and said “Ah ha. If corporations can use them, I can use them, too.” So, like the corporations, they began to hire professional wealth managers to figure out the best ways to hide their growing wealth in offshore havens like the Cayman Islands. They proved what Thomas Piketty in Capitalism has recently shown beyond any doubt: wealth multiplies itself and therefore concentrates itself beyond what anyone had previously thought. The wealthy spend a good deal of their time, that is, insulating their wealth, their capital, from what they see as the depradations of the ‘welfare state’ and the vast masses it is designed to help. No no, say the wealthy. Let them eat cake. Let them earn their own wealth, the way I did (by having a wealthy father). Let them take care of their own health care, their own aging parents, their own food problems, their own homes in areas prone to flooding and sea-level rise from global warming. Not my problem.
            And so, the money that is generated in the global economy is increasingly concentrated in the hands of the ultra-wealthy few. Harrington cites an Oxfam study comparing the wealth gap as recently as 2010 with the wealth gap today, and it is astonishing. In 2010, those whose combined wealth “exceeded that of the poorest 50% of humanity,” amounted to about three-hundred people—bad enough. But in January 2017, the wealth of half the people on the planet was exceeded by the combined wealth of a mere eight (8) people! That is an indication of how fast ultra wealth is increasing in our time. And the ultra-wealthy know it and are worried about it, fearing that something catastrophic is coming, must be coming, some uprising of those vast masses who must sooner rather than later wake up and realize that they have been callously abandoned by those best equipped to contribute to the general welfare. By those who simply refuse to contribute; feel it is an ‘unfair imposition.’ That is why they are hiding more and more of their wealth. That is why they are building luxury bunkers. That is why a family like the Pritzker family, major funders of the Democratic Party (Penny Pritzker was rewarded by President Obama with a cabinet post, Secretary of Commerce) has more than 2,500 offshore trusts. That is why many are making plans to flee to safe havens like New Zealand. They know, as Harrington puts it, that “we’ve essentially re-feudalized ourselves.” And that a global reckoning is coming.
            As for me, that reckoning, whatever form it takes, can’t come soon enough. For me, the wealth that greedy bastards like the Koch Brothers and Trump and his family and Wilbur Ross and all the rest have accumulated is nothing short of obscene, just on its own. When it is used to avoid the rest of humanity, to give the finger to the plight and suffering of the rest of humanity so they can pass its obscenity on to their heirs in perpetuity, it is beyond obscene. It is a crime against humanity, against the realization that all humanity is one humanity, that all humans are equally deserving of the basics, and that any society worthy of the name must recognize that no one, no matter how clever or lucky, rises or falls alone; that all of us rise or fall together. And that the masses in a society have the right, once they perceive that that is not the case, to take whatever steps are necessary to make it be so. And it can’t come soon enough for me.
Lawrence DiStasi