Tuesday, July 13, 2010

the efficiency of privatization or how to cook lamb

The trade deficit jumped up more than expected in May increasing by a full 5% and this signals a lack of real recovery in the US economy. The trade deficit should have eased with the drop in the price of oil and the opposite trend dovetails with the lack of job creation to indicate that economy is headed for the double dip at full speed.

Corporations are flush with cash having a cool trillion laying around with nothing to spend it on but they have little incentive to invest. “See, Obama is keeping jobs from being created because he is anti-business”. While it’s true the multi-national companies can pump unlimited pollution into the air and water in third world countries and pay slave wages, (you know Libertarian paradise), these countries don‘t have much market for goods either so the goods come to the US and create a trade deficit. Europe’s standards for pollution are much stricter than in US and the pay and benefits for workers are much better and yet their manufacturing hasn’t disappeared.

Contrary to the propaganda coming from the right neither the Obama Administration nor the US in general is hostile to business, nor is it true they are being taxed to death (remember they aren‘t short of cash and CEO pay isn‘t suffering either). The right likes to claim there is a “high” corporate tax rate in the US but of the forty industrialized countries, the United States collects the least corporate taxes and in fact 2/3 of corporations operating in the US pay zero taxes. The corporations share of  Federal tax collections have gone from 45% in the fifties to down around 6% today.

Many corporations also gain windfalls from various levels of government for “creating” jobs (government doesn’t create jobs you know) or they get money for things like oil “depletion” (where we pay them for having used up our resources) and that makes corporations negative tax payers, but don’t call this “welfare”, that’s what poor people get.

That would be the people who work for these corporations but still need Medicaid, all sorts of other government aid and strain the food banks. Homeless shelters are seeing wintertime numbers in July this year and more than half of the homeless are families. Many of them are working but cannot make ends meet. Plus you have forty people per minute (yes, per minute) that are running out of unemployment benefits and could be looking for a cot in an already full shelter in the very near future.

The corporate wage slaves lucky enough to still have a job pay plenty of taxes though with Reagan having doubled the payroll tax and all Federal excise taxes (many of which are not disclosed but are concealed by law when you buy something). Sales taxes have doubled or even tripled since Reagan began his war on America. So have user fees and fines as cities seek to balance their budgets with red light cameras and reduced public services.

Then you have the looting of the commons as all manner of public works are being sold off for pennies on the dollar to balance local budgets (you can‘t tax the rich or they‘ll leave and take all the jobs with them). Formally public property is then leased back at ever increasing rates so the public pays to use the government infrastructure they have already paid for and they keep paying for it over and over again. The geniuses in charge of Arizona have sold the state office buildings including the capitol and then rent them from a trans-national corporation and this is going on everywhere (conservatives call this the efficiency of privatization, it makes money efficiently for the rich).

The wealth of the middle-class is evaporating too, and their children will not be better off than their parents were for the first time in American history. This is not a natural occurrence or the even the failure of the capitalist system. It is the result of the capture of the entire economic and political system by a relative handful of very rich people. The average American has fallen for the lie that capitalism is a natural system that doesn’t need rules or that the very rich should run things because they have our interests at heart. Americans are a flock of sheep who have turned their pasture over to a pack of wolves in pin stripe suits sporting flag pins.  www.prairie2.com


Anonymous said...

From what I have gathered on my own, you hit the nail on the head. What I would really appreciate is some footnotes listing the source of your statistics. Then I could send to a few friends who still believe the corporatocracy is still practicing pure capitalism, so it will all work out in the end. Thanks for your blog.

prairie2 said...

the numbers that I use aren't hard to come by. Once you know what you are looking for you should be able to use the google, Anybody that you are trying to convince is going to need to look stuff up for themselves or they just won't get it anyway.

PitchingDoc said...

Great stuff as always. And as always, it's Mike Malloy's reading of your posts that brings me back to your site.

Hearing the right refer to the Soviets (Rand Paul especially) as a failed Socialist state always irritates me just because it's in the name "USSR". Anyone who needs a clear explanation of the difference between Socialism and Communism needs to read Fromm's "To Have or To Be?"

True Socialism has never been tried because avarice always intercedes.

Is there a way you can post about Capital Gains taxes and the economy? Every time I hear Gingrich interviewed he says cutting taxes on Capital Gains is the key to economic recovery. Is this true?

Keep up the great work.

prairie2 said...

short term capital gains used to be taxed the same rate as earned income. Bush lowered it to a maximum of 15% and wanted a zero rate (wouldn't we be in great shape with that) and that's what Newt wants is zero rate taxes for the rich and it gets better. Corporate types take their pay in stock so as to be taxed at 15%. Before Reagan it would have been 71% (over 3.3 mil). Carried interest (pay for fund managers and the like) are also taxed at 15% rate even though they are really wages

PitchingDoc said...

It would be interesting to find out what % of the wealthy get most of their income from Capital Gains.

While we hear about the evils of offshore tax havens, found a NYT Op-Ed about something I've come to call "inshore" tax havens:


prairie2 said...

For 2007, according to the IRS, the top 400 incomes paid an average of 16.6%. All had incomes of more than one billion. The incomes have been going up every year and the average tax down every year.