A Pandemic Rude Awakening?

The GOP and to some extent the Democrats have been suppressing wages of working people for decades now. Worshiping at the altar of profits, the route to greater and greater profits has been to lower taxes on businesses (in essence transferring them onto individuals) and reducing the cost of production, which is dominated by wages paid to workers. So, wage suppression has become a fine art in corporate circles.

A consequence of this approach is that people, aka “consumers,” have less and less disposable income to buy the output of American businesses. American companies have taken the strategy to the max. Many jobs that could be kept here have been exported to “low wage” countries, which now turn out to be not so low wage because the wages in those countries have been rising (It’s the demand, idiot!) and transportation costs, obviously, went up a great deal, management, too.

The Pandemic Recession, looking to morphing into the Pandemic Depression, is showing the short-sidedness of the short-term pursuit of profits, profits, profits. Here is an excerpt from a Naked Capitalism post on small businesses:

“It’s depressing, but not exactly surprising, to see a major New York Times story about one-third of the small businesses in the city have died or expected to shutter. Needless to say, it’s not just restaurants.” How’s Your Economy, Small Businesses Death Watch Edition

Small businesses in NY City, it is reported, constitute 98% of the employers and account for 3 million jobs in the city. The businesses close, the employees are without jobs, and while jobless, they will be having trouble paying their bills. This will crater other small businesses and away we go . . . spiraling down the economic toilet.

So, I am told (by Dwight Eisenhower, no less) that one shouldn’t criticize unless one has a better alternative. (It is far too easy to tear something down and much harder to build something up. Take that you “creative destruction” purveyors.) So, what is the alternative? Easy peasy. Be patriotic. Keep jobs here, pay higher wages, make less profits.

What was that? I just saw a Republican running past me with his hair on fire, sputtering “Higher wages . . . less profits . . . Arggghhh!” Please do realize that many believe that in our “pay as you go culture,” a business must make a profit to continue to exist. But even this dictum is soft. I had a fellow professor leave teaching to set up his own business. His first major mistake was he didn’t pay himself enough. At the end of his first year, he had profits, which he paid business taxes on, which he then paid to himself, which he then paid income taxes on and thus got double taxed on what he had made. He learned to pay himself everything that might be considered to be a business profit, and paid income taxes on those sums but no business taxes. His business happily perked along make no profits to speak of . . . but I digress.

The titans of commerce have taken the “We have to make a profit,” an acceptable dictum, to “we have to maximize our profits over every other consideration we can conceive of.” This is dubious at best. There is no limit to how much profit can be extracted from a business (as a percentage, not in absolute terms) consequently using “we have to maximize profits” as a motivation is an incentive without any boundaries whatsoever. This is a fatal flaw of capitalism: there is no limitation on greed.

What if corporations considered one of their “products” to be “reliably good jobs for people in our community,” or “creating healthy lives for our employees,” or even “creating happiness for our employees.” Don’t laugh, all of these have been stated by corporations as goals in the past (or their equivalents).

No one begrudges companies or corporations reasonable profits. Everyone should begrudge corporations who make obscene profits by grinding their employees under their heels to make them.

The Class War is Over

The Class War is over. What we have left are crumbs tossed our way in a system ruled by savage class-rule capitalism.

Let me ask you this—here is a passage from the gospel we call “Luke” (in Chapter 4):”

And he came to Nazareth, where he had been brought up: and he entered, as his custom was, into the synagogue on the sabbath day, and stood up to read. And there was delivered unto him the book of the prophet Isaiah. And he opened the book, and found the place where it was written, The Spirit of the Lord is upon me, Because he anointed me to preach good tidings to the poor: He hath sent me to proclaim release to the captives, And recovering of sight to the blind, To set at liberty them that are bruised, to proclaim the acceptable Year of the Lord. And he closed the book, and gave it back to the attendant, and sat down: and the eyes of all in the synagogue were fastened on him. And he began to say unto them, Today hath this scripture been fulfilled in your ears.

Do, you know what the Year of the Lord refers to? Isn’t every year a Year of the Lord? (As a child I saw many, many documents dated as such and such a date “in the year of our Lord XXXX.”)

Do, you know what this was?

It was what is often referred to now as a Jubilee year and Jesus just proclaimed this to be one (along with all of the other succor) promised but Jubilee years were usually only proclaimed by kings, often at the beginning of their reign. In the story, this proclamation supports the argument that Jesus thought of himself as a king, which the Romans preferred to exterminate, rather than work with.

In a Jubilee year, all public debts were canceled. This practice came about, not through any largess by the elites but for a practical reason. If private debt was allowed to continue without limit, compound interest, even ordinary interest would result in many people defaulting on their debts. If that debt were held by a private person, the person defaulting was obligated to pay of the debt with their land, and then their labor. well, and the labor of their wives in the bedroom of the debt holder, you know what I mean. But people in debt bondage didn’t pay taxes and they were available to be drafted for public works projects. The elites recognized that the primary debt holder almost everywhere in the region was the central government and the debt was because of unpaid taxes. A crop failure meant someone couldn’t simultaneously feed their family and pay their taxes, so. . . .

So, rulers would start their rule with a debt jubilee, thus making themselves popular and making their economy viable. It was not unusual to need one of these every so often. The Bible even speaks to debt forgiveness.

Now the Pharisees tended to be from the more prosperous segments of Hebrew society, so if Jesus had his way and a debt jubilee were proclaimed, how do you think they would respond? Hmm?

My main point is what Albert Einstein referred to when he was asked what the most powerful force in the universe was and he answered “compound interest.” Our system, however is no longer an autocracy, but an oligarchy. the debt holders are running the country. Do you think for one minute they would sit still for any kind of debt jubilee, even if just for college education debts? Do, you know understand why Bernie Sanders presidential campaign was deep-sixed by the powers that be in favor of a barely comprehendable Joe Biden? (If they would take it from Jesus, Bernie had no chance.)

These idiot oligarchs are acting out the parable of the Goose that Laid the Golden Egg and are smiling through the entire thing, reflecting on their own cleverness.

 

If You Needed a Reason Why a For Profit Healthcare System Doesn’t Cut the Mustard, Here’s One

From The Guardian:

The frontline in the battle against coronavirus has shifted a couple of hundred yards down the main road through the Kansas city of Wellington.

Two weeks ago, as the virus crept closer and people in other parts of the state started dying, the owners of the city’s only hospital thought it a good time to close down with just a few hours’ notice on the grounds the facility was losing money.

“We lost our hospital abruptly and without warning,” said Dr Lacie Gregory, a family practitioner in Wellington. “Even as the healthcare providers here in town, we did not hear that it was closing until it was a done deal. We received a text message from the director of nursing saying as of now there’s no hospital. So really, really unfortunate timing.”

That has left Gregory and a small group of other doctors and nurse practitioners at the city’s Family Care Center at the forefront of preparing for the coming pandemic with little guidance and not much equipment.

The physicians had assumed the 63-bed Sumner community hospital’s emergency department would deal with people contracting coronavirus while they went on treating more routine conditions of cuts, broken bones and high blood pressure, and that the two would remain safely at a distance. But now the Family Care Center is the first line of defence for the city of 8,000 people.

 

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!)

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.