Class Warfare Blog

March 22, 2020

Killed by Greed

I was looking up the career stats of baseball immortal (at least in Japan if not here) Ichiro Suzuki. (Don’t ask.) And baseball-reference.com provided something unexpected, Ichiro’s cumulative salaries. Now Ichiro played in Japan and didn’t come to MLB until he was 27 and still had a Hall of Fame career. He was a spectacular four tool player, who will end up in the Hall of Fame, I am sure.

So, even playing in Japan until he was 27, in his 19 seasons in American professional baseball, Ichiro accumulated $167,181,483 in salary. These are contract numbers and not corrected for inflation, so if they were that number would even be greater.

Even though that is a mind-boggling amount of money, it is not extreme. Alex Rodriguez, then of the Texas Rangers, had a single contract (for 10 years which as very long then and very, very long now) for $252 million. Of course you cannot just settle for old money so he had a later contract for $275 million. The top MLB contract, so far, is a 13-year $325 million contract of Giancarlo Stanton, an oft injured “star.”

Now, in comparison, I was a college professor and I totaled up my salaries over a roughly 40 year career and it came to around $2 million dollars. If adjusted for inflation, it is about $4 million. Now, Ichiro played in 2653 MLB games, so he made $6302 per game. So, he made as much as I did in my entire career in 317 games, or a just a little under two seasons.

All of this is just chump change, of course.

As I have mentioned before dozens of people have reported more than one billion dollars in earnings for a single tax year, some over two billion in a single year. And as I have also mentioned before, if you assume eight hour workdays, two weeks of paid vacation, and the normal federal holidays, those making one billion dollars per year were making $532,000 per hour. Those making two billion dollars per year made $1,064,000 per hour. These people “made” as much as my career earnings in one afternoon of “work.” And they made as much as Ichiro in his MLB career in about 157 hours or 20 work days, basically in a little less than one month.

Now, I don’t think of being a college professor is in any way an exalted job, but it wasn’t a shabby one either. These comparisons show there is something seriously out of whack in our capitalist economy. I am sure the capitalism defenders will rush to say, but they earned that money legitimately! And, I agree that that is true, but what is “legitimate” is determined by the system. Is it legitimate that the hedge fund manager making that two billion dollars in a single year paid a lower tax rate than I did? Why was that? I will tell you. It is because the “system” is rigged by the people benefiting the most from the system. So what is legitimate or legal isn’t really a justification.

The problem with capitalism is that greed has no controls over it. The countries currently making capitalism work better for their entire populations are social democratic countries with high taxes and large benefits associated with those taxes. We had a similar system for a short period after World War II. Taxes were sufficiently high that CEOs, movie stars, athletes, and the like were dissuaded from making obscene amounts of money. And, still, there were still plenty of rich people walking around. Rich working people had to settle for perks (aka perquisites) to show off their value to their employers (large offices, corner offices for lawyers working in skyscrapers, large desks, artwork in the waiting rooms, corporate cars, etc.). Now, status is determined by earnings, earnings, earnings and little else. In fact, the system now encourages greed.

So, if you were wondering why it costs over $200 for two of you to attend a MLB baseball game, now you know. To create large pools of wealth, “small” amounts from the many must be funneled to the few. And there is, of course, a limit to how many want an entertainment product, so the “how much” each of the many has to transfer to the few keeps going up, reducing the number of the many who can or are willing to afford those purchases. (I have stopped attending my beloved baseball games, for example.) A number of sports in the US are finding those limits: baseball for sure and surprisingly NFL football, too.

Our current electoral process seems hell bent in excluding any candidate for high office who would challenge the legitimacy of our economic system, which is quite predictable. Our plutocrats went to a lot of work and paid a lot of money to create a system to their liking, so why should they even consider any candidate who might upset their apple cart.

Why indeed?

We seem to have democracy only in being able to select from a small set of candidates acceptable to the plutocrats actually running the country. The American Experiment in democracy is definitely past its peak and now heading downhill. On its gravestone, its epitaph will surely include the phrase “killed by greed.”

Now if we only had a goose that laid golden eggs to use as a moral focus of a story. . . .

November 17, 2019

Are “Young People Ignorant of Socialism”?

In a recent column on the ArcaMax network . . . well, here it is: Young people ignorant of socialism “From the Right” by Walter Williams on Nov 13, 2019
“A recent survey conducted by the Victims of Communism and polled by YouGov, a research and data firm, found that 70% of millennials are likely to vote socialist and that one in three millennials saw communism as ‘favorable.’”

As you might expect, the columnist decries the ignorance of young people with regard to history that they have never seen nor been taught, but . . . he also misses the point by a mile. To him, socialism and communism are bad, bad, failed ideologies, etc. And that young people do not recognize this indicates their ignorance. What he is missing is that these young people, in spite of all of the positive propaganda in its favor, are disenchanted with capitalism.

What he is missing is that these young people, in spite of all of the positive propaganda in its favor, are disenchanted with capitalism.

Hell, I am disenchanted with capitalism, because of all of the bullshit that was claimed for it that turned out not to be true. In addition, there has never been a “pure” socialist, communist, or capitalist state (or any other economic system) in the history of mankind. One look around the world shows this to be the case. Take Finland, often held up to be a “socialist” state (or democratic socialist). It is neither. Socialist activities account for a little over one fifth of Finland’s GDP. The rest is capitalist. Take the U.S. (Please!): the military is socialist, as are parts of the postal service, and any other government-owned enterprise (as the government represents “the People”). And then there is Medicare, Social Security, etc. The U.S. is not a “pure” capitalist country. It is part socialist, so what is being debated is actually just how much of each should there be?

The U.S. is not a “pure” capitalist country. It is part socialist, so what is being debated is actually just how much of each should there be?

And, really, the right wing of this country has been claiming that any collective approach to problem solving is “Socialism!” for centuries now, and now they are blaming young people for not understanding what socialism is. Another case of blind “blame the victim” politics.

Is it really shocking that young people are against the current status quo, being that they are one of the first generations in a very long time to have prospects dimmer than their parents’?

And, it is not just the young who are disenchanted. Consider that this very racist country elected a Black president . . . twice . . . in a “well, we haven’t tried this yet” manner. In each case, the opposing candidate was much more of a representative of the status quo. Then we had the election of the current president. Which of the two candidates represented the status quo more: Trump or Clinton? And which one got elected?

It is not just the young who are fed up with the status quo. The bottom 95% of us socioeconomically are, too.

September 11, 2019

Socialism Bad, Capitalism Good

I am not going to state anything novel here but will reinforce things already said. Currently there is an aspect of our political discourse that is summed up by the title of this post. It is, of course, false. What the “defenders of capitalism” are arguing for is the status quo in which we have a quasi-capitalist system, but one that protects the rich and screws the poor.

Think back on the Great Recession of 2008. If you are a pure capitalist, then a great many financiers, bankers, investors, and brokers should have lost all their money (everything but the bare minimums allowed in bankruptcy proceedings). Through greed they backed the wrong horses.

But the word “bailout” then comes to mind. To coin a phrase “there are no bailouts in capitalism” just as “there is no crying in baseball.” If you have taken college-level courses in capitalism, nowhere will you find governmental bailouts as a structural part of capitalism. These sweet deals are brokered by rich people with the people who serve them to protect their wealth.

It was argued that “we couldn’t let such-and-such a bank or insurance company fail.” Wha? Failures is what capitalists brag about. It is what keeps them sharp. It is the leading edge of “competition.” Without failure, just what is capitalism? All of those people should have failed and learned from the experience . . . or not. So, what did they learn instead? A sucker is born every minute?

So, when you hear anti-socialist rhetoric realize that it is from the wealthy, or paid for by the wealthy, to protect the good deal they have going, nothing more and nothing less. And this is actually rebounding upon the rich. Younger Americans hear the anti-socialism rhetoric and they think “Ah, this is what we need to counter those greedy ass hats.” The young are embracing socialism more and more as the rhetoric against it is ramped up. And the harder the rich squeeze the poor and middle class, the more these younger Americans are embracing some form of democratic socialism.

They also aren’t stupid. They see countries like Sweden which are capitalist, just not capitalist as we are. They have a form of democratic socialism, in which the inherent negatives associated with capitalism are suppressed. The government acts on behalf of the people and offers basic services that seem to be the norm in civilized countries. They recognize, as do all thinking people except captured economists and bought politicians, that capitalism is self-destructive unless it is controlled significantly. In this country, the wealthy have turned phrases such as “government regulation” and “unearned income” into either non-terms or epithets. Why would they want there to be no controls on capitalism? Because in this country, when things go well, they profit enormously, and when the crashes inevitably happen, their paid-for politicians step in and the “public” bails them out. This heads I win, tails you lose system benefits only the wealthy, so their support of it is no surprise. The actual surprise is the support existing in the general population for this robber baron mentality.

August 13, 2019

Have You Ever Heard of Unearned Income?

How do you describe “pure” socialism? For most people it is “the government” (aka “We The People” in the US) owns the “means of production.” So, the government owns all of the businesses, factories, etc. and we all work together to benefit one another. Unfortunately, this ideal too often became totalitarian socialism, in which a political elite took over the system and it served the elite much more than it served the people as a whole. In some modern countries, the idea of democratic socialism seems to be working better.

What brought this to mind is I was reading an interview of an author on the Naked Capitalism website and the interviewer, John Siman, stated and asked the following:

John Siman: You have got me thinking about what economics—political economy—was originally supposed to be: a liberation from feudalism, from greedy rentiers and so the freedom for the common man to enjoy the fruits of his own labor and for the enterprising man to undertake great business projects. We should tax only unearned income!—that’s what the classical economists taught, right? So my deep worry: Are our academic neoclassical economists really latter-day medieval theologians, using arcane learning to uphold the privileges—specifically, to protect the unearned income—of a corrupt elite? After two or three centuries is the Enlightenment over as we enter a new feudalism? (It seems to me that we are already in a new Gilded Age.)

To unpack this (there is a lot going on) you need to know a few things. For one “rentiers” are not “renters” or even landlords per se, they are “people living on income from property or investments.” A good example of such are shareholders in a corporation. They receive dividends or profit on sales from that stock and that money was, for a very long time, referred to as “unearned income,” money earned by means other than the “sweat of one’s brow.” And, “political economy” was the original name for the study of economics, politics referring to interactions of people and economy being “involving money.”

You probably learned about feudalism in school. This was a system whereby “royals” owned the land and, basically, the people who worked it (serfs). They didn’t claim absolute ownership, but serfs were not free to pack up and leave, they were “tied to the land.” And even if they did pack up and leave, there were no “jobs” to be had in nearby locations. It strikes me that feudalism was a form of socialism. “The government” absolutely owned the means of production (including the serfs). This was not benign socialism, this was totalitarian socialism. (Not that the “rulers” didn’t ever do anything for the “ruled.” There were limits to what the “rentiers” could extract. Abuse your serfs/slaves too much, e.g. starve them by confiscating too much of the crops they raised, and they wouldn’t be able to work. And, please, do not try to convince me that having a local “central committee,” as in modern socialism, is substantially different from having a local earl or duke, the “government” in feudal times. “Remote and autocratic” describes both.)

So, as feudalism broke down, capitalism was created. And so was “economics” whose first fruits, apparently, were to craft a “liberation from feudalism, from greedy rentiers and so the freedom for the common man to enjoy the fruits of his own labor and for the enterprising man to undertake great business projects.” (Merchants were the first members of the “middle class,” that is between rich and poor, and widely despised by the elites.) And one of their first ideas was that “We should tax only unearned income!”

This practice balances the playing field, economically, between the rentiers and people who worked for a living. Selling one’s labor is a fine idea, but there is a limit: you only have so much labor to sell. But rentiers are unlimited in the amount of property or investments they can accrue. The well-to-do can become wealthy, the wealthy can become rich, millionaires can become billionaires and I assume we will soon see billionaires become trillionaires. Since wealth can be converted into political power, the scales of politics are tilted heavily in favor of the wealthy. To balance the scales, the early “political economists” established the idea of only taxing that rentier income and not taxing honest labor.

I have written recently (at least I think it was recently) on the disappearance of the term “unearned income” from public economics discourses. (Economists may still use it privately; I don’t know.) The term has basically vanished. And, out of sight, out of mind. The term is obviously connected to the core idea of those early economists, to only tax unearned income, and it flies in the face of the narrative of the wealthy that “they built it,” that they earned everything they have. My favorite example of this thinking was Mitt Romney, who claimed to have earned everything he owns, while at the same time his rich and powerful father (George Romney: chairman and president of American Motors Corporation from 1954 to 1962, the 43rd Governor of Michigan from 1963 to 1969, and the United States Secretary of Housing and Urban Development from 1969 to 1973, etc.) gave him two $2,000,000 “to get started” and access to his influential and wealthy colleagues. (I remember this figure because during my almost 40 years of work as a teacher, I earned about $2,000,000 (both numbers are uncorrected for inflation). If I had been given $2,000,000 to “get started” I would not have had the gall to make the claim Romney does.)

The disappearance of the term “unearned income” from public discourse was no accident. And, if you use the term now, most people will be confused by it. The elites have scammed the system so well, that they have managed to get earned income taxed at a higher rate than unearned income (through the capital gains tax and others)!

So, capitalism was created to protect us from “feudal socialism.” What now can we get to protect us from capitalism and its captive economists? (Economists aren’t evil people, but their field has been captured by the rich. Oppose the rich strongly enough and you will no longer have either a reputation or a college professorship. Economists do know which side of the bread the butter is on.)

May 8, 2019

The Bullshit Scam that Are FICO Scores

We have all been told that FICO credit assessment scores are important. There are even services that will help you improve your FICO score, so you will have more credit opportunities.

It is all bullshit and a scam on the public.

I am a responsible person (IMHO of course). I pay my bills on time with rare exceptions, usually based upon forgetfulness. In any case, I have run up quite a bit of credit card debt, not unlike many Americans. But I was paying them down assiduously. I paid off one card and closed the account, a sign of a good faith borrower, I thought . . . and then my FICO score went . . . down. WTF? I still have plenty of accounts, but if I close one I am less credit worthy? WTF? How does that make sense?

I then paid off a car loan! Woo hoo, I paid off my car and I owned it free and clear . . . and my FICO score went . . . down! Again, WTF?

All of the signs of being an honorable borrower cause my credit score to be decreased?! So, I kept my head down and just paid down what I owed. I paid more than the minimum payment on my credit cards every month, and my FICO score climbed up to 700 and beyond! I was so proud!

But, I wasn’t making enough progress on reducing my credit card dept, so I applied to my Savings and Loan for a signature loan (that had a lower interest rate than my credit cards) and paid off my all of my credit cards (Balance = $0)! Note that I replaced my CC debt with an unsecured loan debt of the exact same amount in this process, so my indebtedness did not change even $1. So what happened?

My FICO score soared from ca. 700 to ca. 800! I was now much more credit worthy than I was before, even though my indebtedness was exactly the same! Also, I did not prove my ability to pay off loaned funds at all! But, now I was an “excellent” credit risk where before I was only a “good” credit risk.

Ironically, my S&L checked my FICO score to assess whether I was worthy of the signature loan (aka no collateral loan) when they processed my loan application.

So, what do I conclude from all of this?

I conclude we have been conned. FICO scores (created by a private credit scoring concern . . . I wonder what their corporate values are?) are part of an institutional effort to make sure we are indebted to the system to the max. They are designed to make sure that we can borrow much more than we are prepared to repay in any one year or even one decade. They are a tool of the lending institutions and the financial elites who are now running the whole fucking show!

That Donald Trump is one of their minions doesn’t help one fucking bit. I feel I want to go around the world apologizing to people in all of the countries of the planet for electing the abomination who is Donald Trump and for supporting an American system that oppresses so many people, including our own.

 

April 11, 2019

Is Capitalism Given Too Much Credit?

Filed under: Economics,History — Steve Ruis @ 8:27 am
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Over at Ian Welsh’s website, Mr. Welsh has posted yet another brilliant takedown of our common knowledge/wisdom, aka “everybody knows.” he points out that many of the benefits claimed for capitalism were actually a result of industrialization, something that allowed the nascent Soviet Union to outgrow most other countries for quite some time.

Don’t Confuse Capitalism with Industrialization

Here’s a taste:

“We need to stop being nodes in a shitty resource allocation algorithm, and we need to start actually making sane decisions based on group autonomy and welfare.

“And capitalism, capitalism doesn’t do that.”

A very important perspective.

This is typical of what people do. If they like something they attribute positive properties to it whether or not they are possessed by that thing. I recall a teaching colleague who regularly received high marks for her sense of humor in her mathematics classroom. She points this out because she used no humor whatsoever in her teaching. But she was a very good teacher and was also kind and understanding as the teacher of a topic some find quite difficult, so she received high marks for everything surveyed.

Have we done the same for capitalism? I believe so. In addition to this normal tendency, there are people who have much to gain who propagandize the topic. These people often claim that “capitalism is the greatest economic system ever invented,” but if you query them on their knowledge of other economic systems, they are woefully ignorant. How can one claim A is better than B when they have no real idea what B is?

Read the piece, highly recommended . . . and it is short!

October 28, 2018

How Do We Know Drugs are Overpriced in the U.S.?

Hundreds of millions of dollars flow to lobbyists and politicians on Capitol Hill each year to shape laws and policies that keep drug company profits growing. The pharmaceutical industry, which has about two lobbyists for every member of Congress, spent $152m on influencing legislation in 2016, according to the Center for Responsive Politics. Drug companies also contributed more than $20m directly to political campaigns last year. About 60% went to Republicans. Paul Ryan, the speaker of the House of Representatives, was the single largest beneficiary, with donations from the industry totaling $228,670.” (Source: How Big Pharma’s Money – And Its Politicians – Feed The US Opioid Crisis by Chris McGreal in The Guardian)

Drugmakers have poured close to $2.5bn into lobbying and funding members of Congress over the past decade.” (Source: same article)

Obviously the pharmaceutical corporations don’t need those dollars for profits or running their businesses, they represent just the cost of maintaining a system in which drugs are always more expensive for Americans than they are anywhere else in the world (you will find the same drugs, with the same licenses, but with lower prices everywhere else). The return on that $2,500,000,000 investment in U.S. politicians is quite healthy. We are obviously being charged that two and a half billion, over ten years, more than is necessary and since they are unlikely to spend that amount only to make that amount more than they would otherwise, I think it is safe to say that the amount we are being overcharged is far more than that.

October 15, 2018

Defining Conservatives

Filed under: History,Politics — Steve Ruis @ 11:24 am
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A self-defined conservative laid out a number of points why he finds conservatism attractive. These are not all of his points, just some and I respond to these. Here is my truncation of his list, mostly without the supporting commentary:

  1. Conservatives are in favor of less government.
  2. Conservatives are in favor of following the law.
  3. Conservatives seem to support lower taxes. Government can’t really do anything right, companies are much better at getting the right products to the right people at the right time. The higher taxes go, the less well they can do that and the more government will step in and screw things up even further.
  4. Conservatives want people to reach their full potential. They want people to enjoy life and be the most that they can be – without interference from anyone else or from the government – especially from the government.
  5. Conservatives are pro-immigration … but they want legal immigration, not illegal immigration.
  6. Conservatives value life.
  7. Conservatives believe in helping out people who have less than they do. Did you know that 80% of charity money comes from conservatives?
  8. Conservatives believe in the Constitution and that the Constitution is the paramount law of the land. They believe the government should follow the Constitution and the law and not butt into people’s private affairs.
  9. Conservatives will fight for your right to say whatever you please even if they disagree with it.
  10. If you’re poor, a conservative will give you a chance at a job, they will try to help you get an education and a place to live, food and clothing if you need it. But they also expect you to take responsibility for your own life.
  11. The way I see it, is that conservatives want things – like in politics – to work.
  12. Conservatives favor capitalism over socialism because they know that capitalism works better.
  13. Conservatives believe in a strong defense because every country that has dropped their defense has been attacked by some other country.

I don’t know how far I will go with these, but here are some of my responses.

Conservatives are in favor of less government. Well, yes and no. The federal government has expanded under all Democrats and Republican presidents in my lifetime, so no matter what is said, we have gotten more government and not less. The claim that conservatives are in favor of less government is ideological support for their attempts to cut parts of the government they do not like. They tend to follow actions in this vein, for example, with irrational demands to expand military spending (often as a way to support military-industrial corporations, which donate heavily to their political coffers e.g. ordering new tanks when many of the tanks we have are being scrapped because they are unneeded). They seem to be in favor of what they like and not in favor of what they do not. So, there is no position here, just ideological support for “smaller government” in the areas they do not like and larger government in the areas they do.

Conservatives value life. Uh, again, yes and no. Conservatives are frequently anti-abortion. Once you are born, however, you are on your own. And if you make a really big mistake, like breaking the law while black or brown, they are staunchly in favor of the death penalty. So, again, this is a statement meant to portray conservatives in a good light, but really, who doesn’t value life, especially their own? Everyone values life. But being “pro-life” is just ideological cover for what they want to do, like banning abortion, which is a huge government intrusion into people’s private lives. So, here again, their desire for smaller government doesn’t extend to government restrictions on abortion. They want more government regulations in this area, but less in business.

Conservatives believe in helping out people who have less than they do. They just do not want the government involved. They prefer a situation in which the poor know who is giving them a handout. They prefer “charity” as the mode in which we help out our fellow citizens who are struggling. Clearly studies show that “charity” is not up to the task, but still the government, which is really the collective “we” as in “we the people,” should not be involved, say critics. Examples of other countries which have effectively figured out how to provide their citizens with basic supports (healthcare, education, etc.) we cannot copy because well, it would make government effective and the last thing conservatives want is a perception of the government being effective. The government is the only power in play that can rein in uncontrolled capitalism and the richest conservatives do not want that. Government has to be perceived as being inefficient and incompetent … except in the areas they like, such as the military.

Conservatives want things – like in politics – to work. Uh, like everybody else? Actually, they seem to want politics to work the way they want it to and, if it does not, they set about changing how politics works. They recently have been gung ho for voter suppression when historically they have been in favor of the act of voting for everyone. It was just that they began to lose too many elections because the wrong kind of voters were voting.

Conservatives believe in the Constitution and that the Constitution is the paramount law of the land. Well, who doesn’t? It is interesting, however, that whenever the conservatives discover the Constitution doesn’t say what they want, they set about changing it. For example, the Second Amendment right to bear arms was viewed since its writing as a collective right for Americans to bear arms in support of militias. But that wasn’t good enough, so centuries old settled law was changed so that bearing a firearm became an individual right. (With regard to the NRA’s campaign to change the “normal” interpretation of the constitution, Chief Justice Warren Burger publicly characterized the N.R.A. as perpetrating “one of the greatest pieces of fraud, I repeat the word fraud, on the American public by special interest groups that I have ever seen in my lifetime.”) More recently, the Supreme Court’s conservatives have given corporations free speech rights as well as the right to donate as much political money as they want, as if those “powers” of corporations were not just manifestations of their executive officers, giving them super powers as citizens.

Basically, I guess I am arguing that we need to stop using broad descriptive generalizations and, actually, I intend to stop talking about conservatives as people. A responder on Quora who was asked “can conservatives say anything nice about liberals?” responded that he had many nice things to say about people who claim to be liberals but what constitutes a liberal is way too broad for generalizations (epithets yes, generalizations no) so that there was nothing he could say which applied to all liberals. I think the same thing can be said to apply to conservatives.

So, I will try mightily to not talk about conservatives … but conservative ideas and ideology, well, I think there is an open season on those.

September 20, 2018

Our Great Response to the Great Recession

Note The title I wanted and could not create is “Our Great Awful Response to the Great Recession” (mostly due to all of the recent “pat on the back” looks back at our response to the financial collapse).

On the Naked Capitalism website there is a great interview of Michael Hudson in which he simply and clearly points out that our economy is currently still in the tank because of decisions made to bail out political donors and screw average Americans, mostly by President Obama (a corporate Democrat), which were unnecessary and counter to what has worked in the past.

Check it out:

Michael Hudson: 10 Years Since Lehman Brothers Bankruptcy – Did the Economy Really Recover?

 

August 20, 2018

CEO Pay Growing Faster than Yours … Still

Filed under: Business,Economics,Politics — Steve Ruis @ 12:14 pm
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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.

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