Class Warfare Blog

January 28, 2012

Profits: Means or End?

Filed under: Economics — Steve Ruis @ 9:08 am
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On TV last night the company Element Electronics was highlighted for bringing jobs back to the U.S. Element, based in Minnesota, has been supplying stores like Target, Wal-Mart, and Costco with Chinese televisions. Now, they will begin manufacturing, servicing, and supporting televisions in Canton, Michigan. Element will start by hiring 100 workers and then add as they grow.

Element’s president, Michael Shaughnessy, spoke about growing up in Canton, Ohio amongst the shuttered factories and their impact on friends and family. He also admitted that the decision to manufacture was partly emotional because of that history. Shaughnessy believes that he can make televisions (starting with 46 inch flat screens) here in the U.S. for the same costs as making them in China.

We have stated quite a few times that the raison d’être of corporations, to make profits, should be a means to an end and not an end in itself. Toyota, the second largest manufacturer of automobiles in the world, for example, has stated as one of its goals to make well-paying jobs for its workers. Element Electronics is now doing the same.

Rapacious capitalism has run its course. What is needed now is a change of heart. Making profits off of other people’s misery is just not good enough any more. Impersonal profits are not good enough any more.

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January 26, 2012

Raising the Level of Our Discourse

Filed under: Politics — Steve Ruis @ 1:48 pm
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Mitt Romney’s supporters, and Mr. Romney himself, claim that the private equity company Romney had a hand in creating, Bain Capital, was an uber-capitalist company that did only good for the economy. Mr. Romney’s critics, though, say that Bain Capital was a rapacious leveraged buyout machine which gobbled up companies, wrung whatever funds were available out of them and then buried the husks, along the way destroying hundreds, if not thousands, of jobs.

If one could drop the hyperbole it is clear that Bain was both. It served the economy and it’s own stockholders well from time to time and on other occasions, it was embarrassingly destructive, but still serving its stockholders well. (One wag pointed out in a classic case of cognitive dissonance that Mr. Romney was a serial killer because he a) believes corporations are people and b) killed a great many corporations as an officer of Bain Capital.) I have argued that public corporations are wrong headed from the get-go: they are set up and their only reason to exist is to make profits for their shareholders. But profits for what reason? Profits should be a means to an end, not an end in themselves, otherwise they are just a mechanism to grow a crop of greed. Bain Capital was a model corporation but not a good citizen.

Profits should be a means to an end, not an end in themselves, otherwise they are just a mechanism to grow a crop of greed.

The problem I wish to address is with our discourse. I am very tired of the “They are bad, we are good!” approach our political parties take. Our politicians are unwilling to grant anything done by those on the other side as being “good.” When President Obama ended the Iraq War and removed our troops from Iraq, he was roundly criticized by Republicans (and whatever those people on Fox “News” are). But the President was simply meeting his obligations under an agreement made by President Bush with the Iraqi government. Not one Republican had a nice word for a Democratic President upholding the word of a Republican predecessor?

We need to move passed the black and white rhetoric we seemed to be locked into now and move on to one more rationally based. Could not Bain Capital receive a “score card” or “report card” on how many positive and negative behaviors it engaged in. Aren’t these a matter of public record. If the report is largely positive we would then know. If it were negative, we would know that.

Similarly, the now infamous “stimulus” of 2009. Can we not get an independent analysis of its effects and once we know what they were, politicians who claims deviate from those findings would be found to be, well, lying? Why do we settle for sound bites when reality beckons?

January 24, 2012

Until Then, Just Stop!

Filed under: Politics — Steve Ruis @ 9:55 am
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If you aren’t mad as Hell about how the rich and our financial institutions have been corrupting our democracy, I recommend you watch Moyers & Company on PBS. Bill Moyers has been interviewing people who have looked in detail at how the monied interests in this country have captured our government to serve them instead of us. The first two programs in the series can be seen on http://www.BillMoyers.com.

Most of Mr. Moyers guests have concluded that corporate political power must be curbed and it likely will involve a constitutional amendment. David Stockman, former Budget Director under Ronald Reagan, thinks that corporations should not be able to contribute any money at all to political candidates or measures.

A constitutional amendment will take time, quite a bit of it actually, and meanwhile further damage is being done to our democracy. So, in the meantime I recommend that we must exert people power to compensate for the power of corporations and billionaires to spend and spend. As a first step I strongly recommend that we:

Stop watching political advertisements.

If one comes on TV while you are watching, change the channel or go to the bathroom or go get a snack, whatever, just don’t watch. For one, these ads are very poor sources of information. They regularly contain falsehoods and outright lies. They are also a way that political money gets leveraged. For a real person, candidate or surrogate, to talk to a great many people requires a great deal of time and money. Why do all that hard work when you can reach millions with a TV ad? But, we can’t ask questions of TV ads. We can’t challenge a view of a TV ad. TV ads are poor communication and since corporations and billionaires have lots of money, but few people behind them, why let them leverage their influence by absorbing the messages of their ads.

Let them spend their money to no effect.

It is easy to do this, just click on the TV’s remote and voila, the ad is gone. They have spent their millions and gotten nothing out of it. If you like watching what passes for debates today, by all means do so. Read about the candidates and issues, watch serious discussions about candidates and issues on TV. Just make sure that the millions and millions of dollars spent for ads by big sources of political money are wasted by not watching those ads!

January 21, 2012

The System Ain’t Broke; It’s Fixed!

Filed under: Politics — Steve Ruis @ 11:19 am
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I can’t claim originality for the title of this blog entry. It seems that political discourse is a creative driving force, at least for sloganeers. (My current other favorite is: “I’ll believe a corporation is a person when Texas executes one!”)

On the two year anniversary of the Supreme Court’s Citizens United decision we are now seeing how it is playing out and even conservatives are questioning its wisdom. I feel that it is time to reconsider this decision.

Ignoring for the time being that SCOTUS picked this fight by asking those bringing the suit to ask them to address the bigger question of corporate free speech, it has been a long standing power of Congress to regulate elections, e.g.:

U.S. Constitution / Article 1, Section 4
1: The Times, Places and Manner of holding Elections for Senators and Representatives, shall be prescribed in each State by the Legislature thereof; but the Congress may at any time by Law make or alter such Regulations, except as to the Places of chusing Senators.

Plus a long history of Supreme Court decisions have backed up Congress’s ability to do so, for example:

The U.S. Supreme Court decision Buckley v. Valeo (1976) held that limitations on donations to candidates were constitutional (because of the compelling state interest in preventing corruption or the appearance of corruption), but limitations on the amount campaigns could spend (spending limits or caps) were an unconstitutional abridgment of free speech under the First Amendment.

So, we end with, two-years ago today, SCOTUS voiding nearly a century of settled law and declaring corporations “persons” for political reasons when they had been declared persons only for business reasons prior to that point. Of course, conservative icon Antonin Scalia voted in the majority on this opinion. Scalia describes himself as an originalist, which means he claims to interpret the Constitution as it would have been understood when it was adopted. When the Constitution was adopted, in 1789, modern corporations weren’t anywhere on the horizon. In fact, all of the Founding Fathers and every participant in the Revolutionary War was dead by the time the modern corporation was first conceived, albeit in a weak and feeble state at that time.

So, how does Scalia defend his decision? He does so by rejecting the argument made in a dissenting position that the Founding Fathers only thought of free speech in terms of citizens, not organizations. So, the “originalist” Justice basically stated, the Founding Fathers and citizen’s general understanding of the Constitution don’t count . . . because he says so.

This court has picked any number of fights that previous courts have generally shunned for the purpose, apparently, of empowering corporations as that is how they have ruled in every such case.

There is only one solution to this bias in the Court—amend the Constitution. Here is the rule that applies:

U.S. Constitution / Article 5 (in part)
The Congress, whenever two thirds of both Houses shall deem it necessary, shall propose Amendments to this Constitution, or, on the Application of the Legislatures of two thirds of the several States, shall call a Convention for proposing Amendments, which, in either Case, shall be valid to all Intents and Purposes, as Part of this Constitution, when ratified by the Legislatures of three fourths of the several States, or by Conventions in three fourths thereof, as the one or the other Mode of Ratification may be proposed by the Congress.

Since there is a snowball’s chance in Hell that Congress will do such a thing, I suggest we try something novel. In at least two-thirds of the state legislatures, pass a Constitutional amendment bill (something like “Corporations are not people” but more careful considered to have the needed effect of curbing corporate political power). Then Congress would have a decision to make. Since it takes only two-thirds of the state legislatures to call for a Constitutional Convention, a zoo all would probably like to avoid, the only other option would be to pass the appropriate bills triggering the ratification process, ratification being almost a foregone conclusion.

Of course, Congress would have the option of invoking it’s favorite strategy, doing nothing, so political pressure would have to be applied continuously throughout (those reluctant to do the right thing being branded corporate lackeys, etc.).

January 19, 2012

Tax Mumbo Jumbo

Too many progressives and liberals go along with the argument that capital gains taxes should not be raised because “when capital gains taxes go up, there is less capital and that hurts the economy.” This is hokum. I have no way of telling that “as capital gains taxes go up, investing goes down” but for the sake of argument, let’s go along with it and let’s see if this is a “bad thing” or a “good thing.”

If this argument is correct, then taxes on wages should not be raised because “if taxes on wages go up, working will go down.” This sounds like a crazy argument, right? Why does this argument sound crazy while the other does not? The reason is wage earners, like you and me, don’t have the option of not working. If we don’t work, we don’t eat. So, if taxes go up, we are just stuck. But, rich people investing is another matter. If capital gains go up, they have the option of not investing in capital markets. But if they put their money in saving accounts, their interest is ordinary income so, that doesn’t work. And . . . , well, just what will they do with their money? If they just sit on it they make no return. Take it overseas? Maybe. But I think people will just go on investing as they have, possible with slightly more tax paid but still making a return on their investments.

Other say that this is a “risk v. reward” thing. Investors are taking the risks, they should get the rewards. Another bogus argument. The tax is only on gains, meaning their risks paid off. If they take losses, those are deductable and no tax is paid. The tax is on rewards, not risks.

What people don’t talk about is whether there is sufficient capital available. Businesses are currently sitting on over $2 trillion of cash reserves. Banks have money but they are not lending it. And recently we had a huge spike in gasoline prices because there was a glut of capital in the capital markets and they took to bidding up the price of petroleum futures. Too much capital can be as big a problem as too little, so how can we manage how much capital is available? No, not Satan, Church Lady! Tax policy, maybe?

The only real argument is this: should gains made by investing one’s money be taxed at a different rate from gains made by one’s labor? This is the real debate: labor vs. capital—which one should be favored? The answer: neither. Taxing capital gains at lower rates than on ordinary income is insulting to working people and antidemocratic besides. It allows wealthy people to not work and increase their wealth and power over time. (Hey, SCOTUS said that political money is free speech, so the more money you have for political purposes, the more free speech you have.) We have seen the effect of the tax rate drops on the wealthy in the recent obscene wealth disparity developing in this country. And we are seeing currently what the free speech money from rich people is doing to our electoral processes.

In the 1960’s, the marginal federal income tax rate on the very highest amounts of income was near 100%, consequently the wealthiest people in the country had a de facto cap on their earnings, so they deferred their income, that is they locked it up for long periods of time so they wouldn’t have to pay taxes on it right now. Currently, the Mitt Romneys of the U.S. get the benefits only rich people have in deferring income, and also the ability to stash money in tax havens (offshore funds that aren’t currently taxable), while claiming only that income that is taxed at the very lowest rate. While those of us who work for a living can’t do that. We need the money we make to pay the rent, the car payment, and buy food.

The “flat taxers” have got it wrong, too. They are right in that everybody should be paying the same rates. Everybody should pay nothing on the first $20,000, then a slightly higher percentage up to $50,000, a slightly greater percentage up to $100,000, a even slightly higher percentage up to $1,000,000 and an even higher rate above that. This is called a progressive income tax and is a cornerstone of our tax system. Everybody, but the poorest, pays something and the more you make, the more you pay at ever increasing rates. Unlike now where the richest pay at rates lower than the middle class because, well, they are so fracking special.

Capital gains are not special, tax them as ordinary income and stop insulting us.

January 8, 2012

Cultural Conservatives and the Age of Enlightenment

Filed under: Politics,Religion — Steve Ruis @ 10:25 am
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Republican presidential hopeful Rick Santorum has risen into the spotlight as a frontrunner based upon support of Republican cultural conservatives, mainly in the State of Iowa. Just what do these “cultural” conservatives want? What do they stand for?

According to Santorum’s rhetoric, these people decry the disintegration of our society due to Godlessness and the secular culture. Only a return to traditional marriage, church, and family will heal what ails the country.

So, are these people right? Let’s look at secular culture. Prior to the second half of the 18th Century, there was little to speak of in the way of secular culture in our Western tradition. The Churches reserved the right to punish anyone breaking their laws, church member or not, and the way this was enforced was through what was called the “Sacred Circle,” basically monarchs invoked the “divine rights of kings” and the Church backed them up. In return the kings backed up what ever the Churches wished to do. This, of course, led to much confusion and even more bloodshed as, for example, in England Catholics and Protestants vied for rule. Monarch after monarch outlawed first Catholicism, then Protestantism, with the people caught trying to figure out what to do, with dying often being the only option.

Along come the likes of Voltaire, Spinoza, Newton, Rousseau, Montesquieu, and John Locke who proposed that reason must be applied above all and that strict adherence to the dictates of people professing a direct pipeline to a deity was anathema. And, voila, secular culture was born and has been making strides ever since. The culture of the Enlightenment places individual freedom, democracy, and reason as the central values of society.

Benjamin Franklin and Thomas Jefferson, both advocates of reason, were devotees of John Locke and incorporated many of his ideas, such as the separation of church and state, a principle many cultural conservatives are campaigning to undermine by having the U.S. declared a “Christian Nation,” for example, or by decrying the prohibition of prayer in schools. By the way, prayer in schools is prohibited nowhere in the U.S. The Constitution prohibits public schools (run by governments) from sponsoring or scheduling or authorizing any prayers, that is, it forbids state-sponsored prayers. This is what those cultural conservatives want, not “prayer in schools,” but “Government-led prayer in schools.” One wag stated it as “anyone who thinks there is no prayer in schools has never witnessed an algebra test.”

So, Cultural Conservatives decry what secular culture has done to the U.S. So, what have the effects been as secular culture slowly grinds away against religious righteousness? Well, let see, Mississippi, the state with the highest regular church attendance, according to a Gallup poll, also has the highest murder rate. Hmm. The least religious states in that same poll, New Hampshire and Vermont have the second and first lowest murder rates. Hmmm. Actually, if you go into what the data are and don’t just pick stories out of the news as the cultural conservatives do, you will find that most of the indicators of “Christian values” so beloved by Santorum and his ilk correlate exactly the opposite with what they claim the solution is. The more religious folks are, the less likely they are to conform with their values, not the other way around.

  Basically, overt religiosity in this country correlates well with ignorance.

Basically, overt religiosity in this country correlates well with ignorance. The higher the educational attainment of a region’s citizens, the lower the overt religiosity they exhibit, and the more moral the behavior of that group becomes and vice-versa.

I think most cultural conservatives missed out on the Age of Enlightenment and had they not, they would not ask people to look seriously at their claims as the evidence all points positively to the civilizing features of secular culture and negatively at religious culture.

And maybe it is a very good thing, and it is for very good reasons, that New Hampshire has the reputation for picking presidents and Iowa does not.

January 4, 2012

Iowa Speaks! (Or Did It?)

Filed under: Politics — Steve Ruis @ 8:15 am
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Last night the 2011 Iowa Presidential Caucuses were held and we learned what Iowa thinks of the Republican candidates for President . . . or did we? Consider the case of Newt Gingrich. Gingrich was leading the polls in Iowa three weeks ago, then a veritable rock slide of negative ads produced by Restore Our Future, a super PAC aligned with Mitt Romney, knocked him down to fourth in the polling. So, did we learn what Iowans think or did we learn what the monied interests in the country want us to believe that Iowans think?

The candidates offer this solution to the problem of “outside money:” get the PACs out and let the candidates handle all of the money. Right. A surprise there—people vying for power want more power. But I don’t think that solves much of anything. If it does it solves too little for the cost.

What do you think the results would have been if the rules had been, as I have suggested, that candidates can only control monies raised from inside the political boundary, in this case the State of Iowa? Since the Supreme Court has declared political money to be a form of free speech, we would get to hear from Iowa fully and Iowa alone. We would find which candidates could get Iowans to speak with their checkbooks and which could not. Candidates would have to build a fundraising structure in the state and we would be able to see their organization skills deployed. Instead we got tens of millions of dollars of political advertizing, which is the shallowest form of communication employed, most of it from outside sources.

Under the rules I suggest all political ads paid for with funds from the outside, outside Iowa in this case, would clearly be labeled “Paid for by Outsiders.” Making sure that the communication they provide is clearly indicated as “something outsiders want you to know,” as opposed to discourse between and among Iowans.

Possibly under such rules the voices of Iowans would not be drowned out by the noise from the tides of money rolling over the state.

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