Posted by OlympicBrian in General Discussion (1/22-2007 thru 12/14/2010)
Wed Nov 24th 2010, 01:17 PM
US Ivory Towers are Built on Foundations - Which are Cracking
- A Functional Description of Our System
(original 10/29/2010, Dan, Seattle; updated 11/24/2010 to include various debt commission plans.)
"US corporatocracy" - the system of government that serves the interests of, and is essentially run by, corporations. The term describes neoliberalism in its US operational context, with all its components. It primarily seeks to further ties between government and business--where corporations, multinational corporations, conglomerates, and private parties including political organizations and highly-paid corporate executives are the primary controls, and are the elite, who reside in "ivory towers." Areas of control rely on direction and governance often tied to contrived (sometimes fearsome) mass-media visages of issues, ideas, and persons within the nation. Within the corporatocracy, objective news reporting is hard to find. The system depends on highly-paid "pundits" for dissemination of major themes--these themes are often repetitive and divisive. Moreover, pundits distract the public from the critical issues, facts, and figures they should be focusing on. Often times these pundits--such as Glenn Beck, with basically a high school education--flat out misrepresent or lie...and millions of Americans are taken in. Thus, the shady activities of the corporatocracy go largely unnoticed.
There is a revolving door between the components of the corporatocracy, including those formally in government and those in business. The system retains the superficial appearance of being a democratic republic, by relying on long-standing faith in the democratic voting, legislative, judicial, and executive processes--but below the surface, it is a system of government without true representation of the people. Make no mistake, it's government serving corporations and money for the elite. Big money.
Major activities of the corporatocracy include carrying out economic planning notwithstanding the "free market" label. Because the major interests served in the system are corporate-related, the general welfare of the nation suffers--the benefits of productivity do not appropriately proliferate. Compensation stagnates, and as share of national income it falls. Taxes "invert" from an original progressive intent, placing a greater burden on everyone but the rich and the ultra-rich. Some ultra-rich individuals and corporations pay relatively low taxes--yet ironically, it is this elite group who are the most highly represented in the corporatocracy.
As a result of the massive disparity in distribution of wealth within the consumer-driven economy of the corporatocracy, demand necessarily relies on easy credit, and/or economic boom/bust cycles. The US Federal Reserve is intimately involved in creating these cycles, but in doing so, has recently run up against a fundamental math barrier (near-zero interest rates); as a response to this, the Federal Reserve has resorted to dangerous, inflation- and bubble- creating measures. Recently, such bubbles have created tensions with the nation's trading partners.
The US Treasury is used as a source of income for the elite, through a series of complex transactions and events which obfuscate where the money is going--but ultimately leave the taxpayer and our children bearing the cost. The corporatocracy distorts basic sciences such as economics; it even presents production of other nations as its own. No objective, macro-economic studies of the impact of major trends such as job offshoring are referenced by the policy makers. Indeed, if any such reports were written, they would be sponsored by the elite. So the corporatocracy protects itself.
As an example of such a self-protecting report--recently, a US "Debt Commission Report" draft plan (the Bowles–Simpson) has been announced. While it does seek to cut some waste, this is "political bait" to reel in unwary Americans. It proposes cutbacks on social welfare programs, but it leans heavily upon on the backs of the middle-class, cutting back on popular tax deductions such as the mortgage interest deduction, and increasing the tax on gasoline. Instead of simply nixing the cap on Social Security taxes, to shore up the system--which is largely solvent anyway--it proposes Social Security cutbacks. It also proposes major cuts in government and military spending that will lead to slower growth, particularly since the US has such a high component of military spending; this will not help the economy--it will lower GDP, and lead to higher unemployment.
The corporatocracy makes its influence clear in the Debt Commission plan; it soaks the middle class, but is a windfall for the ultra-rich. While claiming to be a plan to balance the budget, it is nothing of the sort--and the provisions of the plan provide all the clues. The plan actually reduces taxes on the rich and ultra-rich--instead of obvious and painless revenue-generating measures which would help balance the budget. Specifically, the plan does not include reasonable and fair revenue-generating measures, such as increasing the number of upper-end marginal federal income tax brackets, to reflect an ever-widening US income disparity (a measure which would have no negative side effects.) Astoundingly, the plan does not include a financial transactions tax. Such a tax would not only zero-in on the richest stock market gamblers--but it would also help to discourage stock market meltdowns. Stock market meltdowns are costly and devastating! Why is a helpful transactions tax missing from the plan?
Incredibly, besides proposing yet another large corporate tax cut (corporate taxes have already been cut by 11 percent over the last 25 years), the plan also includes a provision to "stop taxing overseas profits of US multinationals," thereby encouraging corporations to focus efforts and capital offshore versus doing the same in the US--this can only hurt US jobs. Yes, you read that right--zero taxes for overseas corporate profits. Taxing profits at a rate of zero percent amounts to pretending a huge tax revenue source doesn't exist, sending the ultra-rich yet another lavish windfall. US Corporations recently recorded record profits. Taxes should be increased on overseas multionational profits, not decreased--this is a high-growth area. A clear and comprehensive capital gains taxation schedule is also not in the plan (see ** below.) All of these perks are built in for the elite--while you lose your mortgage interest deduction, and Social Security. According to one analysis, adding this all up, only a tiny 6.4 percent of savings in the plan are due to increased general revenue over ten years--despite the fact that there is an obvious huge, wealthy tax base left almost entirely untapped. Another example of serving the elite.
Americans should be outraged--these tax proposals represent a further re-distribution of wealth from Mom and Pop to the ultra-rich and corporate multinationals. The plan is in fact the most egregious joke on the American people in decades. But some might say, the corportocracy itself has been building itself up for decades, and this is just business as usual, from its perspective. Clearly, there is an underlying bias in the plan--towards further enriching the ultra-rich. Remarkably, this bias at the expense of achieving a balanced budget--obviously then, the plan is at utter odds with what its claimed purpose was. This should alarm anyone reading this. (Note 11/21--two more plans have been produced, the Domenici-Rivlin plan, which isn't much better than the first, and another by Rep. Jan Schakowsky, which shows promise, http://www.opednews.com/populum/linkframe.... .)
The corporatocracy relies on US and foreign financial influences, channeled anonymously through political organizations. It ensnares the US judicial branch within its overall goals. In fact, the judicial system enhances the finances of the system and protects the corporatocracy, as if it had the same--if not more--rights than the individual, via the Citizens United decision. It does so against the will of 80 percent of the people (a reputable poll was taken.) "Unlimited, anonymous funds" allowable through corporate donations to political organizations result in a huge "multiplier effect" on political speech, given the nature of high-tech, mass-media, and broadcasting--a fact not accounted for in the Citizens United decision.
Communist China provides the underpinnings of cheap production, labor, and credit for the corporatocracy; the US nurtures China via offshoring and investment, without the slightest consideration of the long-term consequences. China is about to surpass the US in industrial production, and they are projected to surpass the US in the area of innovation by 2012. They are moving ahead quickly in the area of advanced manufactured products relative to the US. China has the worlds largest and most advanced high-speed rail system. They are making far larger strategic investments in Africa than the US. China recently announced the worlds fastest supercomputer. Ironically, while China is relied on so heavily by US multinational corporations, the US is on the brink of a trade war with them--one part of the corporatocracy is fighting another (this can't be good.) China is also demonstrating pronounced inflation as an effect of being a primary (though unbalanced) mechanism of the corporatocracy. Finally, while we share our technology secrets with China, they do not hold them in confidence. Yes, our corporations sell out our secrets to communist China.
At the heart of the corporatocracy is a non-elected body, the US Chamber of Commerce. This powerful group, known mainly for its political attack ads, is extremely well-financed through mostly anonymous, sometimes foreign entities. It acts as a major focal point for corporations, with a distinct emphasis on the biggest. The Chamber is growing, becoming increasingly dominant in the corporate, media, political, election, legislative, and judicial spheres. It prefers foreign interests over US citizens, carrying an agenda aimed at offshoring US jobs--and tax breaks to corporations which do so. The Chamber also recently kicked off a campaign to change a law which prevents foreign corrupt practices. Congress acts in lockstep with the Chamber...the President has limited powers...and the US Judicial Branch has been swayed to serve the Chamber (the Chamber brags about its judicial victories.) So the Chamber has a lock-down on the three branches of government. In summary--the big money, influence, and decisions flow through the Chamber and its biggest corporate constituents, while the three branches of US government are merely tools.
Not surprisingly, in the corporatocracy, unemployment is high even during boom periods where corporate profits are rich and the stock market is high, because of a reliance on offshoring and offshore investment. The corporations always seek out what's known in economic terms as "absolute advantage," which in lay terms means "utter selfishness and disregard for the rest of the US." The corporatocracy cares less about retaining jobs than foreign counterparts, largely due to the influence of the US Chamber of Commerce. The US tax base is eroded as a consequence--those that profit the most in the corporatocracy aren't taxed--and the federal debt climbs quickly, since the US budget system relies heavily on non-corporate federal income tax receipts. In short--no jobs means no balanced budget. And yet the Chamber persists in its anti-US-job agenda--and America lets it. Are people protesting the Chamber in the streets, and demanding they desist? I haven't seen them.
As part of its operating model, the corporatocracy generates an increasing number of offshore holding companies, which route US direct investment abroad ("DIA"), first through the EU, and then through yet other entities...finally allowing the widespread propagation of offshored business into low-wage countries like China, India, and Brazil--with low US tax consequences. In addition, the US also offers tax incentives for offshoring--destroying its own tax base. But as for the DIA, up to and throughout the current recession, the rate of growth of DIA in EU holding companies has been brisk. This DIA activity means foreign investment and offshoring has become the "new bubble"--as an alternative to US job creation. It's a bubble because it has disconnected the economic model of capitalism from the welfare and fiscal sustainability of the US.
Through the US Chamber of Commerce's comprehensive approach, the corporatocracy achieves an unprecedented fusion of formerly separate powers not only nationally, but on a world-wide basis--against the fundamental principles of separation of powers upon which America was founded. As scary as this reality is, the Chamber goes much further--not only does the Chamber create attack ads up until elections, but it also spends huge (and now anonymous and unlimited) money after elections. This money goes towards little-publicized, yet important legal cases, and towards spoon-feeding the text of self-benefiting US laws, via the Chamber's lobbying activities. And here, not only is it the biggest influence in the world by far, but foreigners can contribute and influence laws without disclosure. Congress--while elected--is handed many of the critical details of US laws by the non-elected Chamber. Make no mistake, it's government serving corporations and money for the elite. Big money.
Given, this "perfect" system for the elite, the future looks bright, right? Wrong. Some millionaires and billionaires sense trouble ahead, and are recommending progressive federal taxation: http://news.yahoo.com/s/yblog_theticket/20...
and http://www.huffingtonpost.com/2010/11/21/w... .
This comes as US bond rating agency Moody's warns, "extending the Bush tax cuts would be bad for the US credit rating."
http://www.marketwatch.com/story/treasurys... . The US credit rating is paramount--so we are at a tipping point. And this fact, along with massive, longstanding unemployment and the federal deficit, shows there are cracks forming in the foundations of the elite's ivory towers--and that is what the corporatocracy neglects at its own risk.
Shows how much the US Chamber of Commerce spends to write your laws:
"The selfish spirit of commerce knows no country, and feels no passion or principle but that of gain."
- Thomas Jefferson to Larkin Smith, 1809.
"Economic theory assumes that capitalists pursuing their individual interests are led to benefit the general welfare of their society by an indivisible hand. But offshoring, or the pursuit of absolute advantage, breaks the connection between the profit motive and the general welfare. The beneficiaries of offshoring are the corporations' shareholders and top executives and the foreign country, the GDP of which rises when its labor is substituted for the corporations' home labor. Every time a corporation offshores its production, it converts domestic GDP into imports. The home economy loses GDP to the foreign country that gains it."
- Paul Craig Roberts, Economist, former Assistant Secretary of the Treasury, former editor and columnnist Wall Street Journal, Businessweek
** Under the tax reform Option 1 in the Debt Commission Report "Bowles–Simpson" draft plan (page 24) it states:
"*Note: All options set aside $80 billion for deficit reduction and treat capital gains and dividends as ordinary income."
However, I don't know for sure if they mean "options" on that page (page 24), or tax reform options in the draft! (Notice multiple asterisks on page 24.)
Treating capital gains and dividends as ordinary income is an implicit capital gains taxation schedule. So, I am partially off-base, though literally correct when I state "A clear and comprehensive capital gains taxation schedule is also not in the plan."
My first take is this tax treatment does not apply to tax reform Option 2 nor Option 3, but only to "options" on page 24. Yet another way to read it is they mean tax reform Option 2 and Option 3 DO treat capital gains and dividends as ordinary income, just like Option 1 (and a third source I consulted with believes this.) But if that were the case, I would have thought they would spell this out explicitly for Option 2 and Option 3--instead of hiding this important fact in the Option 1 table (bad writing).
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