Class Warfare Blog

January 19, 2018

Bollocks, A Steaming Load In Fact

Filed under: Economics,Education — Steve Ruis @ 1:06 pm
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Maryville University, of St. Louis, Missouri, USA, has been running a television commercial touting its services. Up front they say “Maryville University has been disrupting Higher Education by putting students first.” Whoa, this must be some place.

I wonder when this began. Maybe it was in 1921 when it converted from a secondary school to a junior college. Or maybe in 1923 when it became a four year college. Huh, two years of experience as a college of only freshmen and sophomores and they learned how to serve juniors and seniors as well. Now, that’s creative disruption.

But then maybe it was in 1961 when it became a liberal arts college, or 1968 when it became co-ed. No, it was 1991 when it became a university, surely that’s when it began.

This university could not have a more mundane history, jumping through hoops, moving up the academic hierarchy, playing by all of the rules.

The commercial says that “the higher education system is broken.” Really? Maybe it is due to all of that creative disruption on Maryville’s part.

I have been a vocal critic of higher education for at least the last 50 years, but the system is far from broken. Most of the countries around the world would die to have such a system in their country (China foremost on the list). But, costs to students have been spiraling out of control for quite some time and I do not see anything, including market forces, doing anything to curb these. Maryville is a private university that has tuition, I am sure. Let’s see … “Tuition for Maryville University of Saint Louis is $25,558 for the 2015/2016 academic year. This is 5% cheaper than the national average private non-profit four year college tuition of $26,851. The cost is 57% more expensive than the average Missouri tuition of $16,299 for 4 year colleges (my emphases).” Gee, I wonder if this is what they mean by “putting students first?”

Really, what does “putting students first” mean? First in line at the cafeteria? Certainly first in line at the Bursar’s Office to pay their tuition (57% higher than the average Missouri tuition).

And the whole idea of “creative disruption” was bogus from the get go. No such phenomenon seems to exist except in the minds of business consultants.

So, this TV advert is just another load of bollocks to get people to pony up four times $25,558 (that’s $102,232 … if you can finish in four years (most cannot)) for a four-year education. We can only hope it was written by an intern in one of their communications programs.

Listen, I was either a student or a professor in colleges from 1964-2006, that’s … 42 years … yeah, that’s right, and I never even heard of a college or university that didn’t believe that their primary mission was to serve … society … by serving students. Students do not come first, but they were and are the focus of everything done. Students do not set the standards, they do not determine the curriculum, they certainly don’t determine times, dates, places, costs, etc.

But they are the main focus of everything done.

Please do not misunderstand me. I had colleagues more interested in their careers than their students. They do exist! (They are … out there!) But they are not the norm, nowhere near it. Most teachers are good hearted people who want to do a better job than they did before. The staff and administrators were very much the same. The Boards of Trustees were focussed on students, too, even though they were about as removed from the process as you can be and still be a part of it.

But students are the main focus of everything done … everywhere in U.S. Higher Ed.

Well, except when it comes to big-time college athletics … allow me to … <grumble, grumble, grumble …>

 

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January 12, 2018

Three Billion = Not Enough

Today, Carrier, the profitable heating/ventilation/air conditioning company, owned by United Technologies Corporation, a federal contractor whose climate, controls, and security division, of which Carrier is a part, reported three billion dollars in operating profit in 2016—is letting go of more than two hundred employees in its second and final wave of Indiana-based layoffs, which began last July. In total, the company will be laying off more than five hundred employees as it moves manufacturing jobs to Monterrey, Mexico. Many of those employees voted for Donald Trump, who made saving Carrier’s “big, beautiful plant” one of his most repeated campaign promises. It was part of his broader pre-election claim that “A Trump Administration will stop the jobs from leaving America.”

Do realize that careful analyses of such moves often show the savings are minimal. Because the jobs are no longer near the U.S.-based managers, another level of managers has to be hired. Then there is transportation costs, and…. One thing you can be sure will be affected is their stock price. “Shareholders” love these moves, why no one knows. I suspect it is the choir praising the minister as both managers and shareholders belong to the same church, the Church of Greed.

Three billion dollars in profits in just one year and a sterling reputation for quality and … oh, we have to move to save the company? WTF?

January 5, 2018

Our Current Crop of Economists” Wrong, Wronger, or Wrongest?

Filed under: Economics — Steve Ruis @ 8:30 am
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If you want a completely different take on what economics could be, showing us why the current path we are on is one to oblivion, this is a must read. And it makes a lot more sense than the gibberish we are currently being fed.

More Power to the Workers: Seymour Melman on Extraction by the Military, Managers, and Finance

If you want to understand the modern world, the Naked Capitalism site is an absolute help.

December 30, 2017

The Only Way to Less Inequality?

Here is a devastating assessment of the actual cost of the GOP’s recent tax bill. It is by Bill Honig, who I have met and consider to be a smart and honorable man.

http://www.buildingbetterschools.com/2017/12/26/faq-for-gop-trump-tax-bill/

Much of the GOP tax bill has been labeled as “bad news,” so I do not think you will be surprised to find out the news is worse that we thought. I bring this up because a new book has come out that addresses the history of inequality and the only forces that seem to reverse it for even small periods of time. The book is “The Great Leveler” by Walter Scheidel. Here is part of the description of that book (from Amazon.com):

How only violence and catastrophes have consistently reduced inequality throughout world history
Are mass violence and catastrophes the only forces that can seriously decrease economic inequality? To judge by thousands of years of history, the answer is yes. Tracing the global history of inequality from the Stone Age to today, Walter Scheidel shows that inequality never dies peacefully. Inequality declines when carnage and disaster strike and increases when peace and stability return. The Great Leveler is the first book to chart the crucial role of violent shocks in reducing inequality over the full sweep of human history around the world.

Ever since humans began to farm, herd livestock, and pass on their assets to future generations, economic inequality has been a defining feature of civilization. Over thousands of years, only violent events have significantly lessened inequality. The “Four Horsemen” of leveling—mass-mobilization warfare, transformative revolutions, state collapse, and catastrophic plagues—have repeatedly destroyed the fortunes of the rich. Scheidel identifies and examines these processes, from the crises of the earliest civilizations to the cataclysmic world wars and communist revolutions of the twentieth century. Today, the violence that reduced inequality in the past seems to have diminished, and that is a good thing. But it casts serious doubt on the prospects for a more equal future.

This book supports my view that the fundamental purpose of civilization is to create inequality of income, wealth, and opportunity, for the benefit of the elites, both secular and religious, with the costs to be born by everyone else. And I have advocated, sometimes tongue in cheek, that it was time to get out the pitchforks and torches, but if this author is correct only “mass-mobilization warfare, transformative revolutions, state collapse, and catastrophic plagues—have repeatedly destroyed the fortunes of the rich” we are in quite dire straights. We have been making war on other countries for over 200 years of our existence, and it is a very rare occasion for war to intrude on our shores, and a “mass mobilization” for war means the war has to be very, very large indeed. That is a path, in this age of nuclear weapons, I do not wish to take. State collapse and catastrophic plagues aren’t appealing, so that leaves “transformative revolutions” to us. Such revolutions can be non-violent (rare) or violent and considering the polarization of the U.S. and our massive personal stockpiles of weaponry, it looks like a peaceful revolution will be a very good trick to pull off, indeed.

I do note, however, that the only way to avoid the toxic effects of wealth is to make sure great amounts of it either do not occur or are reduced when they occur. This means that a major function of a democracy is to … wait for it … wait … redistribute wealth away from the wealthy. Unfortunately, our governments have been captured by the wealthy who have been busy redistributing wealth to the wealthy for the past 40 years.

My only hope to avoid large scale violence is that the GOP’s paymasters will so overplay their hand that there will be a quasi-socialist revolution that will give power back to the people and defang the wealthy elites now running the show. My preference is for new political parties (two at least) as the ones we have have failed miserably and have too much baggage to carry into the future.

December 20, 2017

The Difference Between Corporate Taxes and Personal Taxes

Filed under: Economics,Politics — Steve Ruis @ 11:35 am
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There seems to be a cottage industry in glossing over the differences between corporate taxes, aka business taxes, and personal taxes. I have to assume that this is motivated primarily by ignorance but I suspect some willful “muddying of the waters” also.

Corporations/businesses are taxed only on their “profits”’ (or “operating surplus” or “earnings”) which are the businesses gross income minus the costs of doing business. For example, and as I have mentioned, in 2016 Walmart had earnings of about $126 billion but only about one fifth of that was taxable, on which they paid about $6 billion in taxes. Walmart claims that represents a 20+% tax rate and it does, based upon how taxes are calculated for businesses.

Consider what your personal income taxes would be if you were a corporation (consider it as an option; you’d still be able to vote, make political donations, etc.). Your total earnings for the year is in the form of salaries and interest on savings, etc. This is your “Total Income” on your IRA 1040. You get to make various “adjustments” to this by law and to come up with the famous “Adjusted Gross Income.” Last year I was able to knock off $105 from my total income this way. Then you are allowed “personal deductions” involving various and sundry things and voila, you end up with your “Taxable Income.” Last year, my taxable income was just under 83% of my adjusted gross income. For Walmart, their process reduced their income by roughly 80% while mine was reduced by less than 20%. And then tax was applied.

Personal tax rates top out at 39.5%, business tax rates top out at 35% (until the Repubs are done with their current exercise in “democracy,” when this will be reduced to 20% or so). So, there is some commonality there, but the difference is what those rates apply to that makes the comparison stupid.

If you were treated like a business, before your taxes were applied, you would deduct all of the expenses incurred in acquiring your income. So, the cost of your car/truck and its maintenance, and the gas you burn in it to get back and forth to work would be deducted, as would a portion of the cost of your house to store said vehicle, aka the garage. Then you would deduct most of the cost of your house as it is needed to maintain your person so you would be fit to work, that would be deducted. (Some allowance would need to be made for recreational use of the facilities, but the bulk could be “written off.”) All of the cost of the maintenance of your house could be written off as necessary maintenance of facilities. All you spend on utilities could be written off. A percentage of the cost of your food could be written off. And, any investments made to improve the facilities or your vehicle are allowed deductions.

Think about it … what would your tax bill be like if your taxable income were just 20% of your adjusted gross income? Obviously, if this were the case, adjustments to the tax system would need to be made and they have! The adjustments, though, have favored business over and over for the last forty years or so. The biggest change has been in the amount of “payroll tax” paid by wage earners. It now exceeds income taxes for many citizens. (Ronald Reagan got the ball rolling by giving everyone a tax cut, but just slipped a larger payroll tax on top of those, so no one was better off in the end … except, well, the corporations.)

So, when people compare tax rates, realize that before corporate taxes kick in, the bulk of their income has been declared “non-taxable” first. Which of these is not like the other? Personal income taxes and business taxes on profits are not at all alike or even comparable.

And, if corporations are people for political purposes, why are they treated differently from the rest of us? Why are they favored in the tax system?

December 17, 2017

Oh, Boy, Oh, Boy … We’re Number One!

Filed under: Economics,Politics — Steve Ruis @ 10:21 am
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The U.S. is demonstrating our exceptionalism to the rest of the wold not only by making war around the globe, but also now we are number one in income and wealth inequality.

Since 1980, when western Europe and the U.S. showed similar levels of inequality, the gap between the richest and the rest has surged in the U.S., while in western Europe it has increased only moderately.

In both regions, the top 1% of adults earned about 10% of national income in 1980. Today that cohort’s share has risen modestly to 12% in western Europe, but dramatically to 20% of all income in the US. The good times have been especially good for those at the very top in the U.S., with annual income booming by 205% since 1980 for the top 1%, and by 636% for the top 0.001%.

The American population … has it benefited from this wealth trickling down? Nope, the average annual wage of the bottom 50% has stagnated since 1980 at about US$16,000 per adult (after adjusting for inflation and before taking into account taxes and transfers). The idea of trickle down economics was a scam and still is a scam, perpetrated by the elites on the masses. It’s as it this is a tale of two countries: the top half has been growing at roughly the same rate as China, while for the 117 million American adults in the bottom 50%, income growth has been nonexistent for a generation. In western Europe, by contrast, incomes of the bottom half have matched overall economic growth over the last quarter of a century.

The takeway is very simple. For any of the sniveling, GOP dollar sucking economists who try to explain this away as due to “globalization,” or “automation,” or any other phenomenon, their arguments are bogus, because if those arguments were true, the effect on the U.S. and, say, Canada, or western Europe would be roughly similiar … and they are not. They may be having an effect, but they cannot explain the large increase in wealth and income inequality being experienced.

The real reason is class war. The wealthy have captured the mechanisms of government and have used them to benefit the wealthy above and beyond anyone else. If you desire any proof exaimne the Trump administration’s actions. Exhibit No. 1 is the tax bill currently being rammed through Congress. At least 40% of the benefits will go to the top 1%. If you look at the actions taken since its inception, the adminstration has done everything to advantage corporations and rich people and nothing to help the poor or middle class.

And they only call it “class warfare” when we fight back. When will we begin to fight? Or will we just be ground into dust as has happened so often in the history of civilization?

December 5, 2017

The Big Lie, Latest Version (Film at 11!)

The current GOP tax bills (there are two that have to be merged into one and voted on again) address the issue of corporations holding money “offshore” to avoid U.S. corporate taxation of the money.

I understand why the government would want those earnings to “come ashore” and be taxed, but why would the corporations?

During the Bush administration, a deal was offered on the repatriation of such funds, and there was a flood, er, well, actually a trickle of funds that wound their way “home.” So, what’s the deal?

It is simple, really. The money is not “off shore.” There is no Scrooge McDuckesque money bin in the Bahamas filled with American cash. The money is mostly in New York, invested in stocks and bonds, even Treasury bonds (tax free or at least minimally taxed profits on earnings).

These corporations are making record profits and have been making record profits for years and are sitting on small mountains of cash. By the last count, there is something of the order of $2.5 trillion in cash in corporate coffers that could be spent at the drop of a hat, should those corporations desire to expand capacity, add workers, or whatever. They are not doing this. They did not do that during the Bush experiment in repatriation of offshore funds. Why would they, they are making huge amounts of money now, why pay more tax than they need to? Why hire more workers when there is no demand for their products? And, they do not need cash, they have plenty, thank you. This is why they arranged to have those funds “earned” overseas (by various accounting tricks as well as by shifting corporate activities overseas) in the first place.

So, this offshore funds repatriation effort in the GOP tax bills will not have any effect, just as the last effort had almost no effect.

The only reason they are doing it I can think of is they never met a tax cut they didn’t like. If I were even more cynical, I would suggest they might be trying to create the appearance of acquiring tax revenues that the government is reasonable owed by these corporations, but I do not think they are that smart.

The whole system needs to be dynamited. Corporations should be taxed on the amount of business they do inside the U.S., just like sales taxes are “point of sale.” Who cares where the corporate offices are? Apparently nobody because some of these corporate offices exists in a hypothetical mail slot in an small office building in the Bahamas. (I say hypothetical as there is not enough room in the building for each corporation claiming to have its headquarters there to have even a small mail box.) So, if people want to move their production capacities overseas to take advantage of lower wages, they shouldn’t get to claim their income was made in those other countries when the sales take place here. They should be able to deduct their business expenses that occur in the U.S. and pay taxes on the money made in the U.S. … period. Their business expenses in that foreign country can be deducted off of their taxes in that country on the money made in that foreign country. Easy peasey.

December 4, 2017

Read It and Weep (GOP Tax Legislation Reality)

Now I come to the crux of the matter. Corporate profits are currently at an all-time high, in absolute terms. Most market watchers expect to see even higher corporate profits next year, even without the proposed tax cut. Of course the economy has grown, too, but as a fraction of GDP, corporate profits after taxes (red) have increased from 4.5% of GDP in 2001 to more than 9% of GDP in 2017. Meanwhile salaries and wages (blue) have declined as a fraction of GDP, from about 47 % of GDP in 1994 to 43% of GDP in 2017. The relationship is not perfectly symmetric over long periods, but since 2001 most of the dollars added to corporate profits have almost literally come out of the pockets of employees. The notion that future increases in corporate profits will simultaneously add to employee paychecks is contrary to both experience and logic.” Robert Ayers

If one were to look at the data, one could conclude that we need a corporate tax increase and a middle class tax decrease to bring the economy back to some sort of balance.

So, just why are we doing the exact reverse?

November 21, 2017

We’re No. 1 … We’re No. 21! Wait … WTF?

The new 2017 Credit Suisse Global Wealth Report helpfully calculates median net worths of countries. Switzerland and Australia top the global list. (Reminder: a median is the value in the middle, not an arithmetic average.) The median Swiss adult has a net worth of $229,000. The typical Australian, $195,400. And the typical American? A mere $55,876. Twenty nations in all have higher median adult net worths than the United States. So, we are No. 21.

Wait, we’re the richest country in the world, how come we are 21st in median wealth?

The really rich, those with at least $50 million in net worth, have multiplied five-fold since the year 2000 globally. About half of these, 49 percent, reside today in the United States. Credit Suisse counts 72,000 of these ultra-rich Americans. In context: China, the host to the world’s second-highest collection of $50 million-and-up personal fortunes, has only 18,100. The United States hosts more ultra-rich individual fortunes than the nations with next nine highest ultra-rich totals combined.

So, here in the U.S. the rich are getting richer, but the rest of us are falling very far behind.

Let’s consider the Australians, as we have a bit in common.

Australians used to see their nation as a relatively equal society. They don’t anymore. Rising inequality has become a major Australian political issue. But Australia remains far more equal a society than the United States. The top 1 percent in Australia only holds an estimated 15 percent of the nation’s wealth. (In the US, it is 38.6%.) So we are the wealthiest country in the world but we don’t have the wealthiest citizens as most of the wealth has flown into the pockets of a very few people.

And this is not a matter of that they are wealthy, it is what they do with the wealth they have accumulated. Basically, they don’t spend it. Poor people spend all of their money. Middle class people spend almost all of their money. That money goes to buying things from companies who provide jobs for people. The rich don’t spend anywhere near as much of their income. If they buy anything, it is investments which increase their wealth even more. None of that activity positively affects the economy.

November 20, 2017

New Resource for Social Justice Found

It has been recently noted that most Americans do not own a gun, nor is there a gun in their household, rather there are many guns in the hands of a few. Apparently “… America’s gun super-owners, have amassed huge collections. Just 3% of American adults own a collective 133,000,000 firearms – half of America’s total gun stock. These owners have collections that range from eight to 140 guns, the 2015 study found. Their average collection: 17 guns each.

Really I think we need to start considering these people a national resource. Since they reject the idea that the Second Amendment to the Constitution refers only to militias, maybe each of these super gun owners could be tab as a militia of one, to help defend the country, you know, when the liberals attack.

Maybe we could have these militias patrol the streets of our most dangerous cities, where all of them mynoritees is.

Maybe we could have them fight ISIS. I would be willing to buy a one-way ticket for one of these guys, but we would have to get some sort of dispensation to allow them to take their own crate of guns and ammo with them.

Apparently the Second Amendment is not about allowing individual citizens to own a gun, but about a very small minority to own their own armories.

I wonder what happens to the NRA when these gun nuts run out of room to store their hoards and stop buying guns. Are they going to sponsor the building of secure, high tech, gun range and armory combinations on the lot next to their houses? Gotta find a way to keep those “collectors” buying.

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