Sunday, May 22, 2011

How do we restore America's middle-class? SOLVED

Corporate America, enabled by our political system, destroyed the economy for average American workers

What once made America an exceptional country was that free people with an entrepreneurial sprit were empowered to innovate and market their ideas and inventions - to engage in "free enterprise" that was guaranteed in a capitalistic "free market" economic system. But most of us don't have the talent or know-how, or are unwilling to take the risks, or can't afford the start-up costs, or aren't that ambitious...and would just prefer to labor for other entrepreneurs in exchange for a steady wage.

But as we've seen, first with the robber barons, and now with large corporations, successful entrepreneurs are either forced out of business or bought out by their competitors...even though competition was supposed to be the governing factor in a fair market place where the costs of doing business and the prices of goods were naturally and reasonable controlled by the supply-side of businesses and the demand of consumers.

Monopolies were once outlawed as one way to maintain a fair marketplace, by promoting fair competition. Yet Milton Friedman had claimed that laws against monopolies caused more harm than good, and that unnecessary monopolies should be countered by removing tariffs and other regulation that upholds monopolies. But with monopolies, especially now in a world of "free trade", multi-national corporations have become more like international cartels.

America is no longer a nation of entrepreneurs, it has become a nation of oligopolists (cartels) in which a market or industry is dominated by a small number of sellers. America lost her exceptionism, and the American worker became the victims of cartels, paying the high prices for their goods and being paid their slave wages. And if they could, corporations today would do exactly what many robber barons of the past once did: control every aspect of our lives by forcing us to live in their company housing, buying our goods at their company stores, and paying with wages that are company chits, rather than with U.S. currency.

This is why in 2011 most of us won't be on the Board of Directors of a large and powerful corporation, or be an enterprising entrepreneur...we'll either be working for depressed wages, or we'll be unemployed with an increasingly hostile attitude against the jobless.

Most of us aren't born to live out our lives with overly ambitious expectations in life. We might strive hard to become successful, but we don't usually aspire to riches beyond our wildest dreams, and then become disillusioned with ourselves and with life in general if we don't accomplish that lofty goal. We don't consider ourselves failures and become bitter and suicidal. Most of us just strive for an average middle-class life-style with reasonable creature comforts and financial security. We're not greedy, or addicted to ruthless ambition, constantly seeking an adrenaline rush in adventurous risks and conquests. Most of us just want to go to work at a fair-paying job and then relax and watch a little TV at night. Is that too much to ask when living in the richest country that the world has ever seen in human history?

Many of us might have a passion in life - be it in music, sports, etc - and some people may become extremely wealthy. But these people just became wealthy doing what they love to do. These are the truly lucky ones. And in the days of yore, if someone were to work hard, save their money, and invest in a business, they may have a honest passion and true belief in the good or service they were offering - and they would take pride in the service or product they sold. Sometimes they took responsibility too, especially if their name was on the product, as their reputation mattered to them. It wasn't always JUST about the money. But these were entrepreneurs, not corporate CEOs.

Reverse Robin Hood Economics

It began when entrepreneurs (small businesses) became limited liability corporations, when the rich began taking from the poor.

People in charge of large corporations - those massive bureaucratic machines with no single purpose other than shareholder value and company profits, don't appear to take the same pride in the good or service as a small businessman  might. And most on the board of directors take no responsibility at all, using limited liability clauses to escape blame and punishment for using cost-benefit analysis when allowing dangerous products on the market. Corporations may give campaign contributions, but they are NOT real people with feelings, and are usually not the respected community leaders working on behalf of the people's interests. Otherwise, they wouldn't need public relations offices and an army of litigation lawyers.

A CEO today appears to be driven by two things only: the value of the stock, and getting rewarded for increasing stock prices and profits. And if that means sending American middle-class jobs to China (the ones that most average Americans aspire to have), then so be it. And our elected politicians seem to agree with corporate America's philosophy, more than they do with The People's philosophy...especially the Republicans.

Take taxes as just but one example. The government is going broke on all levels, but the Republicans don't want to raise taxes on the corporations and CEOs that outsourced all the American jobs. Instead the Republicans would rather deny jobless benefits and food stamps to those that lost their jobs to outsourcing. The political-corporate packs seem to agree that American workers should NOT have ANY livelihood AT ALL. So then, what do they propose that we do with 30 million unemployed human beings...lock them all up in a FEMA camp and then process them into Soylent Green?

The GOP's argument that any increase in taxes (meaning corporate and capital gains) will do "irreparable harm to the economy by killing peoples’ incentives to work and invest". Many Republicans have actually advocated for lowering their taxes, even lower than they are now since the Bush tax cuts, the ones they've enjoyed for the past decade. And some members of the GOP have even proposed completely eliminating them all together!

The GOP has been trying to convince the American people that if I was the CEO of a large multi-national corporation, and if you lowered my taxes, I would hire more Americans; but if you raised them, I just might close my business or not hire anyone at all!

The Corporate Myth

In my example we'll use this scenario: 

I am a CEO of a large American-based multi-national corporate conglomerate with limited liability. Last year I outsourced thousands of middle-class American jobs to China for cheaper labor - to lower the cost of my company's payroll. I saved the company millions of dollars for shaving "business related" expenses, and the value of the stock went up because of this. I also hired a crack team of tax lawyers to avoid paying any corporate income taxes. I also paid lobbyists to have Republicans legislate laws favorable for my company...and as an added bonus, I even managed to get some generous government subsides. For all my hard work I was handsomely rewarded for all my cost-cutting measures and corporate welfare by receiving a large bonus in company stock-options. After a year I only had to pay 15% in taxes for long-term capital gains (minus all the deductions and tax write-offs that my expensive personal accountant will find for me). My business made 40% more in profits last year than the year before, and my base-salary went up three-fold in the last two years.

BUT...if you raise my taxes on my personal salary by 5%, or if you make me pay ANY corporate taxes at all, and if you stop giving my company free taxpayer subsidies, then I will close my business and stop hiring people in China. I will no longer enable foreign workers to be consumers of my products, and I will no longer pay foreign governments corporate taxes. I will do nothing to try to expand my business into other "emerging markets" where the people are even more poor and desperate; and I will no longer participate in "free market economies" in an attempt to generate company profits. I will lay off all my Chinese workers and close all the factory doors in China and retire.

BUT...if you LOWER my taxes even more, I promise to hire LOTS of American workers and pay them a fair "living wage".  I also promise to pay my fair share of corporate taxes to help maintain America's infrastructure. And I promise to stop begging for government hand-outs (i.e. corporate welfare, corporate entitlements, government subsidies). I also promise to pay the same income tax rate on my multi-million salary as does ordinary working Americans. And I promise to stop bribing the people's elected officials, just so I can become more rich. I promise, I promise.

Oh, I forgot...and I REALLY promise to stop funding conservative "think tanks" to spread propaganda about the unemployed, and I will stop insisting that corporations not pay unemployment benefits to the people that I either laid off or refused to hire. I also promise to no longer spread the lies that they "lack the necessary job skills" or that they "have to be more mobile". And I also promise not to call them "lazy bums" anymore either. 

OK? Now will you lower my taxes? Please, please! Do we have a deal? hack-hack-cough-cough-clear throat-cross fingers...PLEASE!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! I need "certainty in the marketplace"! But if you raise my taxes, I'll ruin the whole damn economy!

How do we restore the middle-class? SOLVED

The Great Recession began with the Republican sponsored Gramm–Leach–Bliley Act 1999, which repealed part of the Glass–Steagall Act of 1933, opening up the market among banking companies, securities companies and insurance companies. The Glass–Steagall Act had prohibited any one institution from acting as any combination of an investment bank, a commercial bank, and an insurance company. This, in conjunction to corporate monopolies and the outsourcing of millions of American jobs, has erased America's middle-class. This was allowed to happen because our elected politicians (mostly Republicans, beginning with the very likeable and witty and charming Ronald Reagan) allowed for it. And because corporations are allowed to influence our elections, it won't get any better, only worse...unless it's fixed very soon.

First, vote Democrat...the lesser of the two evils (preferably members of the Progressive Caucus). Then hold their feet to the fire to restore worker's rights. Renegotiate ALL "free trade" agreements. If we can't outlaw or nationalize corporations like BIG OIL (and the BIG BANKS that are deemed "too big too fail"), regulate them and penalize them when they break laws and/or outsource jobs. Outlaw monopolies to induce a more fair marketplace with TRUE completion. End ALL corporate subsidies to companies earning record profits. End super-PACs to eliminate corporate influence in our politics, so that THE PEOPLE are represented, not just the interests of  large American-based multi-national corporate conglomerates with limited liability. And endorse The People's Budget, so that our nation's finances better reflect the wants and needs of ordinary Americans, not just the wealthy CEOs of the Corporate States of America.

And stop watching Fox News and believing all the GOP's scare tactics...

Empowered Chinese workers will soon overtake America's middle-class

IBM’s top human relations executives discussed transferring 3 million U.S. service jobs to countries such as China by 2015. the United States lost 2.5 million manufacturing jobs since the Bush presidency beginning in 2001. The rise in the U.S. trade deficit with China between 1997 and 2006 has displaced production that could have supported 2.2 million U.S. jobs. Most of these jobs (1.8 million) have been lost since China entered the WTO in 2001. And up to 2.1 million jobs could be supported if China cracked down on rampant piracy in areas such as software and movies. 

And that's just in China...and how many more additional jobs could these lost jobs have created, had they remained in America and create more demand here? And then the recession killed off another 7.9 million jobs just in the past three years. It's increasingly likely that many  of those will never come back, even as our workforce (with only a 65% participation rate) grows by another 150,000 every single month.. 

It's nothing but a myth when American corporations complain about foreign competitors. If the jobs had stayed here, there would be very little foreign competition at all. So if U.S. corporations aren't hiring American citizens, and they refuse to pay U.S. taxes, then why do we even need them here? Tell them to move to China, but to leave their American citizenships behind.

My America, from Middle-Class to Food Stamps

Are You Middle Class?

Rich or Poor - Very Little in the Middle


  1. * Read more about political action committees and think tanks financed by large corporations in my other post today:
    "More on the Budget, Deficit, and Debt"

  2. I think you got some facts wrong. IBM outsources most of its jobs (and high paying ones at that) to India. In fact, since last year IBM has been the second largest employer in all of India. In the next couple of years, the India employee strength could cross that in the US, where it employs about 1,550,000 people.

    Nevertheless, America outsources a lot of work to China, but generally at slave wages.

    I really admire your advocacy of middle class rights. Keep up the good work.