We Don’t Need Regulators, Corporations Would Never Do Anything to Harm Their Reputations

The Big Lie is a lie so obviously untrue that people would not accept it unless it became “common knowledge” which it does if the BL is repeated over and over and over.

We have been told by the “De-Regulators” that all of these regulations and regulators are unnecessary, that “The Market™” will take care of all of the bad actors. And, certainly major corporations would never, ever do anything to harm their reputations.

How many times do we need to see this is not only not true, but very, very false?

Read this!

Capitalism gone wrong: how big pharma created America’s opioid carnage

The biggest drug epidemic in the U.S. created not by human weaknesses but by the profit motive. (Read this sentence again!)

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The Absurdity of Maximizing Shareholder Value as a Business Goal

I have written about this before, but this post over at Naked Capitalism drives the nails home into the coffin of this very, very bad idea. (Being a Zombie idea will make this turkey very hard to kill.)

Rebel Economist Breaks Through to Washington on How Shareholder Value Theory Rewards the Undeserving

 

What, The Huge Trump Tax Cut Didn’t Prevent This?

In the category of we all have short memories (and much of that is taken up by bullshit comments by our current POTUS):

Ford Begins Final Round of US Layoffs

Ian Thibodeau, The Detroit News on May 21, 2019

DETROIT — The first of 500 U.S. Ford Motor Co. salaried employees are expected to be notified in meetings Tuesday that they’re being let go.

. . .

CEO Jim Hackett notified employees in an email Monday that Ford was nearing the end of its months-long bout of white-collar layoffs that would eliminate 7,000 jobs globally, roughly 10% of the automaker’s global salaried workforce. When the U.S. layoffs wrap by June, Ford would have cut around 800 jobs in addition to 1,500 buyouts that occurred late last year, or around 7% of its U.S. salaried workforce.

The layoffs come months after General Motors Co. cut 15% of its global salaried workforce. Both sets of layoffs are largely a result of a slowing auto market and looming economic recession. Ford’s layoffs are part of a $25.5 billion pool of cost cuts expected to roll out over the next few years.

* * *

Gee, I thought those huge … permanent … business tax cuts were going to allow them to hire more workers and raise their wages? Hunh! Since that tax cut didn’t work, expect the Trump administration to ram through another tax cut for these poor, suffering corporations.

Trump’s Business Losses

The New York Times is reporting that IRS records show Donald Trump’s businesses lost approximately $1.15 billion dollars during the decade from 1985 to 1994. That sounds like a lot of money and was. But it is not in current terms. I picked the year 1990 at the center of this period as a form of averaging and used an inflation calculator to convert those dollars into what they would be today.

In today’s dollars, Trump’s losses would be . . . wait for it . . . wait for it . . .

$2,240,000,000.

This raises schadenfreude to whole new levels!

The Rich, They Are Not Like Us

The Republicans like to frame the rich as “job creators.” Well, one of the very rich, Alice Walton, reclaimed the crown as the richest woman in the world, as her fortune leapt from $33.8 billion to $46 billion over the past year. In September 2016, she was reported to own over US $11 billion in WalMart shares alone.

So, did she earn that money? Did she make that money? What did she contribute to society that so much money came to her? Is she creating jobs?

Owning stocks and investing in stocks has been shown to be the sham it really is. We are taught in school that selling stock is a way for businesses to finance their growth. This is clearly poppycock. Stocks are purely speculative instruments. The Apple corporation acquired $95 million in its initial stock offering. It hasn’t issued stock or gotten money from a new sale since. It has paid out billions to its stock holders in dividends. Imagine a bank load for $95 million that required billions of dollars to be paid back and the loan is still out!

Alice’s father, Sam Walton (founder of WalMart) made the money, she has simply played money games to expand the quantity.

The Founding Fathers comment often and long, as have many other prominent Americans since, that allowing accumulated wealth to accumulate by inheritance is un-American and counter to democratic principles. Yet, our inheritance taxes have been reduced to pure vapor under the guidance of bribes from rich people to Republican and Democrat politicians. This is what the rich like to call a “good investment.” They offer bribes of a few hundred thousand dollars here and there and they benefit by the many millions, if not billions.

Did you notice that Alice Walton’s net worth went up $12.2 billion in just one year? The Republican tax cuts played a big part in that. And, in case you are wondering, to spend that additional $12,200,000,000 in one year, she would have to spend $6,500,000 every hour of every work day of the year! How much money is enough? Apparently in a capitalist system there is no upper limit.

Artificial Intelligence—The Promise

I am a big fan of digital technology and someone who is hopeful of the future. It is harder and harder for me to maintain that stance, however.

Currently there seems to be a widespread debate regarding the development of Artificial Intelligence (AI). Since we know so little the positions staked out are quite broad. At one end is a new future where machines take over dangerous and boring jobs and human beings have more leisure. At the other end, autonomous drones are the first step toward Skynet (the “bad guy” in the Terminator movies) and the extermination of human beings by intelligent killing machines.

There seems also to be many opinions in between the two extremes.

Something I do know is that it will not be the machines that determine the outcome. In every case of new technology impactful enough to change the course of history, the tech has been used to coerce and oppress the labor of the masses to serve the interests of the elites.

Consider the following photograph.

This is an Amazon warehouse. Amazon is a tech company. So, how do those who work in Amazon’s warehouses fare? Amazon uses personal monitoring algorithms to make sure that its employees do not waste time taking short breaks to catch their breath or go to the bathroom. They are to stay on task as long as Amazon wants them to … or else.

Jeff Bezos, creator of Amazon, makes huge profits by paying his warehouse employees wages that are so inadequate that many of them need public assistance just to get by. Thousands of Amazon workers are forced to rely on food stamps, Medicaid, and public housing because they can’t survive on the wages they receive. Meanwhile, Jeff Bezos is now worth $158 billion, and his wealth increases by leaps and bounds. (And who pays for the public assistance subsidizing Mr. Bezos’ wealth? You and I do, of course.)

If you think back to the first powered looms to make cloth, it was the workers who had to get along with the machinery, not the other way around. Same was true with the assembly line to make automobiles, etc.

I do not argue that there were no benefits from technology that actually accrue to ordinary people. Henry Ford, no friend of workers, paid more than anyone else as a daily wage to pursue his dominance of the auto market. But that was then and now, wage suppression is the favorite tool of the captains of industry. Much of the advanced tech of today is not available to us because, well it is very simple, we cannot afford to pay for it. We don’t make enough money.

As much as people will squander $1000 on a new iPhone, the really impactful tech, such as a liver transplant, is not available to you … unless you can afford to pay for health insurance and many, many people cannot.

So, AI in and of itself will not necessary oppress ordinary people, coercing our labor for the benefit of the elites, but if rich people have any say in the future, my bet is that a sizable amount of AI will be used for just that purpose. (Jeff Bezos has already begun the application.)

CEO Pay Growing Faster than Yours … Still

A recent report of CEO pay shows that the gulf between CEO pay and the pay of average workers in their companies has grown wider. I am shocked, shocked I tell you!

Articles are asking “How could this have happened?” As I have said over and over, this did not “just happen,” it was managed by the CEO’s. These people sit on each others boards of trustees to make sure that their pay increases will never be threatened. They have lobbied Congress and state houses to get tax cuts and tax provisions that favor them. We call such tax regulations “loopholes,” but loopholes are laws meant for one purpose that are used for another. These laws were passed for the purpose of increasing CEO power and wealth, period.

Take for example, Bill Clinton’s legislation to rein in the growth of “executive pay.” The situation was CEOs, through “golden parachutes” and other nonsense, were getting extravagant compensation for lackluster, even terrible, performances. So, the Clinton administration decided that CEO pay should be tied to CEO performance, an idea not so bad. But instead of tying CEO pay to some standard measure of business performance (income, profit, 5-year profit average, average wages in the company, customer satisfaction, etc.), they tied it to the value of the company’s stock, and therefore to the stock market. CEO’s rapidly took advantage of this and began getting more and more of their compensation in the form of stock options. They also started manipulating their own company’s stock price for their own gain. (I’m shocked, shocked I tell you!)

The most recent iteration of this practice is having the company borrowing money to “buy back” stock in the company. This has the effect of raising the price of the stock that remains and burdening the company with debt. The only people who benefit are stockholders and, oh, CEOs and other execs. This practice (stock buy backs) used to be illegal but as part of the package deal, it was made legal in the same era that started this binge of stock manipulation.

Who in a company is better positioned to manipulate the price of the company’s stock? Gosh, I believe it would be the CEO.

Can you spell insider trading, boys and girls? And it is legal. And it is making CEOs rich beyond their wildest dreams. And that wealth is being applied to our legislative and court processes to make them even wealthier and more powerful.

And, it all “just happened.” If you believe that, I have some lovely prime building land in Florida you may be interested in … but you might have to drain the swamp first.

We Can Trust Corporations … Right?

I often heard the trope from the Republihooligans that “we can trust the corporations, that they wouldn’t do anything illegal or immoral as that would affect their reputation which would ultimately hurt profits.”

I haven’t heard that line repeated much lately, especially since there has been a conga-line of disclosures of corporate wrong doing and illegality that has been unending before, during, and after that line was fed to us.

The latest example of corporate abuse involves a court case lost by Johnson & Johnson over one of their flagship products: baby powder. Surely J & J would never include a chemical in any of their products that would knowingly harm its customers (baby customers!), why that might damage their reputation. So would a $4.7 billion dollar award against them.

“Thursday’s massive verdict was handed down in the Circuit Court of the City of St. Louis. It was comprised of $550 million in compensatory damages and $4.14 billion in punitive damages.

“The women and their families said decades-long use of baby powder and other cosmetic talc products caused their diseases. They allege the company knew its talc was contaminated with asbestos since at least the 1970s but failed to warn consumers about the risks.”

OMG, do you think corporations could do such things?

Asbestos. Gosh, we all have know that asbestos is a health hazard for decades now. We have watched TV shows where house remodelers have to call in hazardous waste disposal teams to remove asbestos products before they can remodel their homes. Our public buildings have had to have “asbestos abatement” services in to make expensive extractions of the stuff.

Gosh, could J & J have not known? The judge who issued the $4,700,000,000 award thought not.

And what about the “we can trust the corporations” bullshit purveyors? I say, identify them and get them out of office and out of power, if for no other reason than gross stupidity but more likely because of political and moral corruption.

Donald Trump, Our Lame Ass Wheeler-Dealer

Our President, Donald Trump, is currently meeting with Russia’s Vladimir Putin, a real wheeler-dealer. Mr. Trump insisted all through his campaign that he would “Make America Great Again” because he was such a good negotiator, that he would negotiate much better “deals” for the U.S. and reverse the trend of “bad deals” we had been making. So far it seems that the deals he is capable of making are pulling out of negotiated agreements with a “so sue me” shrug (the Paris Climate Agreement, the Iran Nuclear Agreement, NAFTA, no embassy in Jerusalem agreement, etc.).

His evidence for his expertise was lodged primarily in the fact that he wrote a book with the title “The Art of the Deal.”

Now that you have seen his writing ability via his Twitter tweets, you can see that he did not really write that book, a ghostwriter did, a gentleman by the name of Tony Schwartz. If you are unfamiliar with ghostwriting, a ghostwriter is a writer for hire. A person provides information in the form of written notes and memorabilia or whatever or does oral interviews and then the ghostwriter bangs out a book that can be claimed to have been written by that person, “the author.” Easy peasy.

So, what kind of deal did Mr. Trump cut with his ghostwriter? Easily it is the worst ghostwriting deal ever made. It is simultaneously the best ghostwriting deal made … for the ghostwriter.

First, Mr. Trump got a $500,000 advance for the book. Schwartz was given half of that. Half! (Unheard of.) Trump also gave Schwartz half of the royalties … half! (Unheard of.) And then when you look at the cover, Schwartz’s name is on the same line as the author’s and is the same size! (Unheard of!)

Here’s a cover of a random book on Amazon.com that was ghostwritten. The ghostwriter is usually listed appended to the author’s name in smaller, less prominent print, in this case it is “Jason Turbow with Michael Duca.” I had to struggle to actually read the ghostwriter’s name as it doesn’t exactly jump out at you. Now look at Trump’s book cover again.

So, the Supreme Commander of Deal Making made the world’s worst deal with the ghostwriter of his book. If you offered the same deal (without details) to any current ghostwriter now and ask them if they would take it ($250,000 advance, half the royalties, equal billing) they would say “Yes, … hell yes! If you went on and asked “Do you care what the book is about?” the answer would be “No, why?”

And this idiot is sitting down to “make deals” with Vladimir Putin, former KGB officer, master politician, etc. Can you spell Manchurian Candidate, boys and girls?

PS If you want the gory details on the book deal, The New Yorker did the long form piece on it. You should be able to find it.

It Figures

When the Trump tax cuts were imposed (you remember don’t you: the small temporary tax cuts for us and the large permanent tax cuts for corporations and the wealthy) it was claimed by the Repubs that the money saved by the corporations would end up spurring growth, even result in raises for workers. (Right, those results were to be delivered via unicorn, I believe.)

It was pointed out that the last time such a tax cut was implemented, corporations spent the bulk of the savings in buying back shares of their own companies. Well, surprise, surprise, the same thing happened this time. (Who’d have known it could be this complicated?) In a post on the Naked Capitalism web site (Michael Olenick: Update Confirms That Share Buybacks Are Still Corporate Suicide) extensive studies on the effects of such buybacks show that “not only do buybacks not lead to growth in a company’s market value, they are strongly correlated to a declining market value.”

In other words, the effect of their behaviors is not to “grow” the companies but actually to “shrink” them! To quote from the piece:

“Corporate executives and directors are apparently bereft of ideas and the confidence to make long-term investments. Rather than using record profits, and record amounts of borrowed money, to invest in new plants and equipment, develop new products, improve service, lower prices or raise the wages and skills of their employees, they are “returning” that money to shareholders. Corporate America, in effect, has transformed itself into one giant leveraged buyout….”

And since “everyone” is doing it …

“The most significant and troubling aspect of this buyback boom, however, is that despite record corporate profits and cash flow, at least a third of the shares are being repurchased with borrowed money, bringing the corporate debt to an all-time high, not only in an absolute sense but also in relation to profits, assets and the overall size of the economy.”

This not only burdens those corporations, but also drags down the entire economy.

So, if these buybacks are not what anyone might call the best use of those tax savings, why are they being done?

Okay, boys and girls, whenever anything political happens what are we supposed to do? (Follow the money!) That’s right! So, who benefits from these buybacks the most? It turns out that … wait for it … it is the corporation executives who actually benefit the most. You see the buybacks inflate the prices for the corporation’s stock. CEO’s and their ilk are now being remunerated largely via stock options. And, corporation executives constitute the largest segment of the 0.1% of “earners.” And that class of “earners” is the one making the bulk of political contributions currently. Does the picture now come together for you?

Think of the corporation executives as sort of modern pirates. (Can you see the eye patches and hear the “aaaarghs”?) These executives started out as treasure ship captains but, well the temptation was too great, and they stole their own ships. Well what is the government’s politicians to do? When they sailed into action to recapture the ill gotten gains, they received handsome “gifts” from the pirates to the extent that they have become dependent upon those “gifts” and now seek to facilitate the pirate’s behaviors. The government stopped pursuing the pirates for taxes and actually invited them to submit their ideas on how the government could be run better.

And all of the rich assholes lived happily ever after.

When are we going to wake up? Stock buybacks should be illegal or strictly regulated (as they used to be). They are tools to manipulate the stock market by insiders, for Pete’s sake! But when we ask our politicians what the intend to do all we get is “Arrgh!” and a wink from under an uplifted eye patch.