Category Archives: 9. Corporate Power is Protected

The Problem With the Laffer Curve

The Laffer Curve – the idea that by lowering taxes on the rich they’ll suddenly make tons of jobs instead of hoarding wealth instead of realizing that primarily middle-class consumers drive demand, employment and GDP – has been a disaster for decades now. Commenter on Metafilter:

“The biggest problem with the Laffer Curve is that it singularly focused people’s attention on taxes as a way to raise revenue. It completely diverted people away from the concept of taxes to shape the economy.

The top tax rate in 1960 was 92%. No sane person would pay 92 cents of a dollar earned to the government. Instead of the 92% rate raising revenue, it served to channel income in the economy away from the wealthiest individuals and toward workers. It served as a way to take the harsh, ruthless edge off of capitalism.

The result was more employment – if you had to choose between taking $1 in profit but paying 92 cents to the government, or hiring a window washer for your home office, you would take clean windows over the 8 cents in your pocket. Or maybe you would hire a guy to do research and development. Or maybe you would have a groundskeeper picking up trash.

And maybe, just maybe, when the opportunity arose to close your factory and send the work to Mexico to earn another $1 million per year, you would say “but I would actually only pocket $80,000 of that money, so it is not worth it”.

Laffer caused us to forget about that. Sure, it is common sense that you can raise more revenue with a 22% tax than a 92% tax – but taxes aren’t only about raising revenue.

Full discussion http://www.metafilter.com/145670/Laffers-Napkin#5871315

Image from Huffington Post.

Companies Don’t Want to Hire

“The crisis in confidence is that capital quite enjoys the largess of the system it’s created… yet that system doesn’t serve anyone outside of that system. However, by lumping the problems of capital in with the problems of labour, the assertion is made that everyone is at risk. When actually, most non-financial companies are doing just fine… and indeed could do much better if they weren’t strangle-held by the problems of financial companies. Thus, the problem of unemployment. Nobody wants to hire because they have to protect their financial numbers. If indeed there is a finite amount of capital, the net result of this is that in order for capital to maintain it’s huge percentage of net worth and overall national wealth, the unemployed can’t have any of it. Indeed, the reason for high unemployment is that to make those people economically active requires paying them. That money has to come from somewhere, and it has to come right out of the either personal or corporate balance sheets of those that already have it. That is why companies cannot find employees. Because they don’t want them. Rupert may blow a good ring of smoke in the air and talk about missing apprenticeships and all the rest, however the problem with that argument is that basically, none of the problems or solutions verge outside a fundamental concept — capital transferring wealth to labour. …  You cannot address fundamental problems if you are not willing to deal with the actual problem. And the actual problem of companies finding the right employees has little to do with a lack of qualified people and all to do with the fact those people require a salary, when it’s nearly free to work your current people dogshit into the ground.”

Commenter on MetaFilter

Unsavvy People

“[A]fter three years in which Very Serious People refused to hold the financial industry accountable, there’s a real grass-roots uprising against the Masters of the Universe. There will, of course, be the usual attempts to dismiss the whole thing based on trivialities. Look at the oddly dressed people acting out! So? Is it better when exquisitely tailored bankers whose gambles brought the world economy to its knees — and who were bailed out by taxpayers — whine that President Obama is saying slightly mean things about them? Or, why don’t they try to work within the system? Well, how’s that been going for those who did indeed try? When palace intrigue undermined the likes of Elizabeth Warren even within the Obama administration, and Republicans have thrown their full backing behind the malefactors of great wealth, why shouldn’t protesters go outside the usual channels?”

Paul Krugman, Unsavvy People – NYTimes.com.

The Tea Party, the Debt Ceiling, and White Southern Extremism

“Contradicting the mainstream media narrative that the Tea Party is a new populist movement that formed spontaneously in reaction to government bailouts or the Obama administration, the facts show that the Tea Party in Congress is merely the familiar old neo-Confederate Southern right under a new label. The threat of Southern Tea Party representatives and their sidekicks from the Midwest and elsewhere to destroy America’s credit rating unless the federal government agrees to enact Dixie’s economic agenda of preserving defense spending while slashing entitlements is simply the latest act of aggression by the Solid South. In light of this recent history, it is clear that the origins of the debt ceiling crisis are to be sought, not in generic American conservatism, but in idiosyncratic Southern conservatism. The goal, the methods and the passion of the Tea Party in the House are all characteristic of the radical Southern right. From the earliest years of the American republic, white Southern conservatives when they have lost elections and found themselves in the political minority have sought to extort concession from national majorities by paralyzing or threatening to destroy the United States. As white Southerners, upset with the Democratic Party’s racial and social liberalism, migrated into the post-Goldwater GOP, they brought their Dixiecrat attitudes into the party of Lincoln. The Kemp-Roth tax bill of 1981, which inaugurated the policy of creating permanent deficits by slashing taxes without cutting spending, had its strongest support among Southern and Western members of Congress and the least support in the fiscally conservative Northeast. The debt ceiling crisis is the latest case in which the radical right in the South has held America hostage until its demands are met. Presidents Andrew Jackson and Abraham Lincoln refused to appease the Southern fanatics. Unfortunately, President Obama and the Democrats in Congress chose not to follow their example and instead gave in. In doing so, they have encouraged the neo-Confederate minority in Congress to find yet another opportunity in the near future to extort concessions from America’s majority by sabotaging America’s government.”

The Tea Party, the debt ceiling, and white Southern extremism – War Room – Salon.com.

Standard & Poor’s Drives the Knife

“In other words, Standard & Poor’s is threatening that if the ten-year budget deficit isn’t cut by $4 trillion in a credible and bipartisan way, you’ll pay more – even if the debt ceiling is lifted next week. … Who is Standard & Poor’s to tell America how much debt it has to shed in order to keep its credit rating? Standard & Poor’s didn’t exactly distinguish itself prior to Wall Street’s financial meltdown in 2007. Until the eve of the collapse it gave triple-A ratings to some of the Street’s riskiest packages of mortgage-backed securities and collateralized debt obligations. Standard & Poor’s (along with Moody’s and Fitch) bear much of the responsibility for what happened next. Had they done their job and warned investors how much risk Wall Street was taking on, the housing and debt bubbles wouldn’t have become so large – and their bursts wouldn’t have brought down much of the economy.”

Robert Reich

Left in the Gutter

“My stepmother never complained to us, always tried to keep us busy. I know she slept with some men in a sugar daddy arrangement so we would have at least some toys, and I remember the day my father came home being so furious with her. She lied, she was a cheater, and my little sister and I had to keep it a secret forever. Which we have done; I haven’t mentioned this to anyone until this moment. I found out later that she only allowed herself to cry in the shower, except for the two times she lost patience with us and spanked us and told us that she hated us. … Poor people aren’t worried about antioxidants and a balanced diet. They’re worried about having water and electricity and heat in the winter. They are worried about how to miraculously make it through another week without losing their minds, or their children, or deciding to just give up the good fight, and spend their lives on welfare on the front porch with their neighbors, watching their kids give up too. Even the few who make it out with any kind of success have to claim that it was easy and anybody could do it. They have to blame laziness, or morality, or drugs, because the other choice is admitting that their society left them in the gutter without much of a chance of making it out.”

Commenter on a discussions about food and poverty on MetaFilter

Wielding Power

“The only rational thought is that he’s gotten what he wants. That he wanted to protect the torturers. That he wanted to protect the banksters. That he wanted to solidify and increase the powers of an Imperial Presidency. That he wanted Health Care Reform that amounts to little more than a giveaway to the megacorporations and no public option. That he wanted to put Social Security up on the chopping block.

“None of those are comforting thoughts but they don’t require us to imagine that Obama, a man of demonstrated intelligence, is an moron.

“And I’ll still (pointlessly since I live in Texas) be casting my vote for the lousy, backstabbing, villain in 2012 because even given all that he’s still a better choice than any Republican.

“Though, at this point, I’m pretty sure that’s entirely due to the Supreme Court.

  • Am I worried that the next Republican president will shit all over the Constitution and start a new and obscenely costly foreign war without even pretending to care about separation of powers? Nope, Obama (the Constitutional scholar!) already did that.
  • Am I worried that the next Republican president will slash social spending to the bone while increasing military spending? Nope, Obama already did that.
  • Am I worried that the next Republican president will decide that he has the power to imprison (forever and without even the possibility of charges and trials) any American citizen they declare to be a terrorist? Nope, Obama already did that.
  • Am I worried that the next Republican president will decide that they can order the CIA to assassinate American citizens merely on the presidential declaration that those citizens are terrorists? Nope, Obama already did that.
  • Am I worried that the next Republican president will attack whistleblowers while ignoring the crimes those whistleblowers report? Nope, Obama already did that.
  • Am I worried that the next Republican president will severely restrict abortion via executive order and legislation? Nope, Obama already did that.
  • Am I worried that the next Republican president will offer retroactive immunity to corporations which cooperate with blatantly illegal civil rights abuses? Nope, Obama alread did that.
  • The only thing I can see that differentiates Obama from Romney is who they’ll appoint to the Supreme Court.
  • I can’t be scared with dire threats that if Obama loses we’ll be plunged into war, the economy will be fucked, civil rights will be trampled, and the safety net will be shredded. Obama’s already done all that.

“The single, solitary, only thing I see that makes Obama better than any Republican up to and including Palin, is the Supreme Court.

“And on that basis I’ll vote for him. It will hurt. It will make me depressed and wretched for weeks after. I’ll hate myself for doing it, but I will because the Supreme Court is important.

“But I can’t keep pretending that the problem is that Obama just isn’t good at wielding power. He’s great at wielding power, and everything that has happened since he came into office is exactly what he wanted.

Commenter on MetaFilter