Category Archives: Corporations

Where will our jobs come from?

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As economists talk about the prospects for an economic recovery, they often mention that it may well be a “jobless recovery.”  Is anyone really surprised by that?  After all, in the interest of “globalization” we’ve exported most of our jobs to other nations.

When large corporations began selling the notion of globalization in the 1980s, they promised American workers access to new markets for American-made products in places like China and India.  The reality is much different.  Once so-called Fair Trade rules were established, American corporations began relocating manufacturing to nations with cheaper labor.  One American manufacturing industry after another was closed…steel, textiles, shoes, electronics, furniture, tools…the list is extensive.

Soon after, much of our agricultural production was exported to Mexico, Central and South America. 

We were told that none of this would harm the U.S.  In fact, the corporations and politicians said that this would benefit Americans with more diverse and lower-priced products.  Moreover, we could easily replace “dirty” low-paying manufacturing jobs with “cleaner” technology, service and information jobs. 

The next step was to move corporate call centers to Mexico, India and the Philippines.  (After all, that kind of work is much too mundane and boring for American workers.)   

Next, the corporations began hiring illegal immigrants for restaurant, landscaping, meat processing and construction jobs.  We were told that these were jobs Americans citizens were unwilling to do.  (The corporations neglected to mention that the real reason American citizens didn’t want these jobs were reduced salaries and benefits.)

More recently, corporations have exported the creation of software to India.  At the same time, they’ve requested special green cards for Indian engineers.  The corporations claim that too few Americans are as well-educated and trained. 

Even our military has gotten into the act by hiring mercenaries from other nations to provide security for American diplomats in Iraq and Afghanistan.

Is it any wonder that our health care system now represents 1/6th of our economy?  And we’re already hiring nurses and doctors from other nations to meet “shortages”.

So what will unemployed American citizens do?  The most promising opportunity is for the invention and manufacture of so-called green products such as wind turbines, photovoltaic solar panels and higher mileage vehicles…if politicians and corporations don’t export these jobs first.

Taking back our country.

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No, I didn’t suddenly become a pitchfork wielding right-wing lunatic.  I don’t own a handgun or an assault rifle.  And I have no doubts that President Obama was born in Hawaii.  But I do believe our nation is in jeopardy. 

However, we don’t need violence to address the issues.  All we need is legislation.  And it’s not even new legislation.  Just return the U.S. to the tax structure and regulations that existed in the U.S. prior to Ronald Reagan. 

Want to prevent another financial crash like the one that happened in 2008?  Simply eliminate the Gramm-Leach-Bliley Act of 1994.  That legislation, sponsored by a Republican-controlled Congress and signed into law by President Clinton, permitted bank holding companies to co-mingle financial institutions of deposit, investment and insurance which contributed to the collapse of our financial system last year.  You might also fire those in the Federal Reserve who failed to exercise the oversight that’s already within its power.

Want to eliminate the predatory tactics of the banks which issue credit cards?  Simply nationalize usury laws which limit interest rates in many states.  These laws were allowed to be circumvented in the 1980s by large bank holding companies. 

Want to reduce our national debt?  Simply return the highest marginal income tax to pre-Bush rates.   

Want to rebuild the nation’s failing infrastructure?  Return the highest marginal income tax to Eisenhower administration rates of the 1950s.  After all, that was the last era when our nation made significant investments in infrastructure.

Want to bring back manufacturing jobs and diminish unemployment?  Undo the relaxation of tariff laws that enabled “globalization” by our large corporations.  In reality, “globalization” is just another term for exporting jobs, undermining worker benefits and wages, increasing profits and avoiding corporate taxes.  (How many U.S. corporations have created a mailing address in the Bahamas or the Caymans to avoid U.S. taxes?)

Want to calm the angry rhetoric on radio and TV?  Reinstate the Fairness Doctrine which existed prior to 1987.  That doctrine, enforced by the FCC, required the holders of broadcast licenses to present controversial issues of public importance, and to do so in a manner that was honest, equitable and balanced.  (Wouldn’t you like to see Rush Limbaugh, Glenn Beck, Fox News Network and Focus on the Family try to justify their existence under those rules?)The point is most of the problems in this country aren’t new.  We’ve addressed them all before.  We can do it again.

Show us the money.

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When the housing market crashed bringing down the financial industry along with it (or was it the other way around?), trillions of dollars vanished.   The question is where did the money go?

The Federal Reserve along with the Bush administration started propping up the financial industry and the economy beginning in 2007.  Mostly this was done quietly with little to no media attention.  By the time President Obama was sworn in, taxpayers had already shelled out more than $3.46 trillion and the world economy was on the verge of collapse. 

Since Obama’s inauguration, the federal government has committed another $3.77 trillion in loans, bailout funds and stimulus spending to stave off what most economists concluded would be a 2nd Great Depression.   

And people are outraged!  Not at the ones who created this mess and originally hid it from the public.  But at the administration who inherited it.  That kind of logic could only be demonstrated by the likes of Glenn Beck, Rush Limbaugh and Dick Armey.   Where are their “Teabagger” demonstrations against CitiGroup, Bank of America, and Wells Fargo?  Where’s the right-wing fury for AIG?  Where are the posters calling Bush and Cheney Socialists and Communists for having allowed (or encouraged) this to happen?   

More important, where’s the money?

Of the $7.244 trillion total, $168 billion was mailed to taxpayers in the form of stimulus checks.  $787 billion is dedicated to stimulus spending on infrastructure and new jobs.  $275 billion is targeted at foreclosure relief.  And $15 billion is aimed at supporting small businesses. 

The rest of the money ($6.167 trillion) went to prop up the very institutions that created the mess.  For example, $234 billion went to CitiGroup, $137.5 billion to AIG, $118 billion to Bank of America and $29 billion went to Bear Stearns.   Another $700 billion was dedicated to the Troubled Asset Relief Program.  $1 trillion was set aside for the Term-Asset-Backed Securities Loan Facility to make it less risky for banks to lend money to businesses and consumers.  $720 billion was set aside to help banks remove toxic assets from their balance sheets.   Indeed, almost all the rest of the money has been allocated to help our banks recover from their own risky behavior.

And it has worked really well…for the banks.  Thanks to government aid, the CEOs, fund managers, and other financial executives are still able to afford new vacation homes, yachts and other “necessities” with their bonuses.  They’ve been able to raise fees on checking accounts and interest rates on credit cards.  And they’ve been able to return to the risky behavior that led to this mess in the first place.

Best of all, thanks to their lobbying efforts, paid for in large part by taxpayers’ money, they’ve so far been able to fend off serious regulation.   

Bush League Economy

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In baseball, bush league refers to the lowest level – a metaphor that perfectly fits the economic performance of the George W. Bush administration.  It’s even more appropriate given that Bush made millions by gaming the City of Arlington and its citizens as “Managing Partner” of the Texas Rangers baseball team.

In short, the people of Arlington got screwed.  Not entirely unlike what Bush did to the people of the United States as our 43rd President.

This is no longer just opinion.  It’s fact.

According to a recent report by the Census Bureau, the median household income in the U.S. declined 4.2 percent during Bush’s two terms.  At the same time, the number of Americans living in poverty increased 1.9 percent to 39.8 million (the most since 1960).  More disturbing is the number of children now living in poverty:  When Bush entered office 11.6 million children were living in poverty.  When Bush left office, that number had swollen to nearly 14.1 million.  That’s an astonishing increase of more than 21 percent!  Under Bush, job growth was a dismal .28 percent – the worst performance since World War II.  The number of Americans employed in manufacturing dropped beneath 10 percent for the first time in history.  And the number of Americans without health insurance increased to 15.4 percent.

On every major measurement, the economic condition of American people declined during the Bush administration!  The housing industry crashed, the financial industry collapsed under the weight of its own risky gambles, stock markets crashed and two out of the Big Three U.S. auto makers faced bankruptcy.   About the only people who didn’t suffer under Bush’s watch were oil executives, military contractors, hedge fund managers and the extremely wealthy.

Predictably, the Republicans are now trying to reassign the economic blame to President Obama.  They accuse him of increasing the size of government, increasing the size of the federal debt, and taking over private businesses.  Let’s look at the facts:

The government, the deficit and the national debt all grew under President Bush.  The Department of Homeland Security represented a huge growth in government.  But the growth of government under Bush wasn’t confined to just the one department.  (In the first 3 months of 2008 alone, the federal government added 13,800 jobs under Bush.)  The deficit and debt under Bush increased in large part as the result of Bush’s misadventures in Iraq.  The real cost of that war is estimated at anywhere from $2-3 trillion, and some estimate that the cost of the Afghan war will overtake the Iraq war in 2010. 

The bailout of financial institutions is estimated at $3 trillion.  Approximately one-half of that was approved by the Bush administration.  And none of the money would have been necessary if not for the Republican’s aversion to regulation of financial institutions.

Finally, you can’t blame President Obama for the takeover of the U.S. auto industry.  Indeed, we all should thank him for it.  Had the Bush administration not allowed wild speculation of commodities, oil would not have spiked as they did in 2008.  Had that artificial spike not been followed by the collapse of our financial institutions, the auto industry would never have experience such severe problems.  And had the Obama administration not stepped in to help, the economy may well have fallen into another depression.

The other side of Reaganomics:

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In a previous post, I stated my belief that Reaganomics was an utter failure.  That’s not entirely true.  It was a huge success for the wealthy.  It also successfully eroded the power of organized labor. 

When Reagan fired the striking air traffic controllers who were members of PATCO, I believe he inspired his followers to launch an attack on all labor unions.  Since that time, there has been a steady outsourcing of American manufacturing jobs to places like China, India, Indonesia and Mexico.   This has forced unions to make concessions with regard to wages and benefits.  The recent troubles of GM and Chrysler are good cases in point. 

During the debate over auto industry bail-outs, the discussion seemed to revolve around the wages and benefits of United Auto Workers.  Never mind the decades of questionable decisions by the company executives, along with their inflated salaries.  In the minds of many, the real problem is that UAW workers were paid more than their counterparts at Honda, Toyota, Nissan and other import brands.  The claims were that while the workers for foreign brands were paid approximately $45/hr, UAW workers were paid $70/hr or more.  Outrageous!  Right? 

Well, hold on a moment.  My UAW friends tell me that the figure of $70/hr not only included wages and benefits such as health care.  It also included the cost of benefits for recent retirees, plus all costs associated with workers – overtime costs, Social Security, Medicare, etc.  It even includes the cost of tools used by the workers!  Take away all of those costs and the actual average hourly wage was $29.78. 

But it’s not just lower wages the Reaganites are after.   What they really want to do is to rid corporations of the obligation for health and retirement benefits.  And what better way to accomplish than to crush organized labor? 

It took a couple of wars, the Great Depression and many bloody management/labor clashes for conditions to improve for American workers.  I fear that Reaganomics combined with globalization and the greed of CEOs may be leading us back to labor conditions similar to those under the robber Barons of the early 1900s when work was more like servitude.

Democrats can’t compare to Republicans.

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The continuing revelations of unethical, illegal and unconstitutional actions by the George W. Bush administration caused me to revisit the scandals of previous administrations during my lifetime.  I’m not talking about prurient sexual affairs.  I’m talking about the abuse of power by the Executive Branch and attempts to subvert our Constitution.

Let’s examine the record.  President Richard Nixon was forced out of office when it was discovered that he ordered his operatives to break into the Watergate offices of the Democratic National Committee.  He also authorized illegal wiretaps, improper tax audits, campaign fraud, and a variety of dirty tricks.  Then, when the actions of his operatives became public, he authorized an illegal slush fund to buy the operatives’ silence. 

In other words, Nixon not only tried to subvert our electoral process.  He obstructed justice.

Lost in the Watergate scandal is the fact that Nixon’s Vice-President, Spiro Agnew, pleaded no contest to charges of tax evasion and money-laundering.  His replacement, Gerald Ford, assumed the office of the Presidency after Nixon’s resignation in 1974 and became embroiled in controversy when he pardoned Nixon. 

Under President Ronald Reagan, the administration sold weapons to the Iranian government in order to finance Nicaraguan rebels (Contras) in violation of U.S. law.  The entire affair was kept secret from Congressional oversight committees, and when the affair was investigated, it was found that large volumes of documents had been destroyed by administration officials.  Although it was never proven that Reagan was directly involved in the scandal, it’s difficult to believe that he had no knowledge of the program.   

President George H.W. Bush not only pardoned most of those involved in the Iran-Contra affair.  On his watch, Savings & Loan institutions collapsed as the result of deregulation and overzealous lending as part of the real estate boom.  (Can it be possible that a near identical collapse of financial institutions during his son’s administration is just some sort of an eerie coincidence?)

Under President George W. Bush, the scandals were so numerous that Wikipedia has been forced to divide them into nine subcategories.  And Wikipedia doesn’t even list what may be the biggest failing of his presidency – ignoring clear warning of 9/11.  It has been well-documented that Bush ignored an August 2001 memo titled “Bin Laden determined to strike in the U.S.”  It even mentioned the possibility of hijackings.

Neither does Wikipedia list Tom Ridge’s assertions that Bush officials asked him to raise the terrorist alert levels to help manipulate voters leading up to the 2004 election. 

Wikipedia does, however, list the abuses at Abu Grahib, the false statements made during the run-up to the invasion of Iraq, false claims of weapons of mass destruction in Iraq, the outing of a CIA operative as payback for her husband exposing one of the claims used to sell the Iraq invasion, the politicization of the Justice Department through the dismissal of U.S. Attorneys for political reasons, the extraordinary renditions (read torture) of political prisoners, possible war crimes in Afghanistan, the imprisonment of detainees in Guantanamo without trial and without the right to know the charges against them, and the use of recess appointments to circumvent the Senate’s confirmation process.

Of course, there were also the no-bid contracts in Iraq for Halliburton and others, the out-sourcing of many of our military ops to Blackwater (aka Xe), the secret “hit squad” created by the CIA and Blackwater, the supposed legal foundation for torture, and many other issues which would be considered scandalous in more respectable administrations.

I can think of no equivalent scandals for Democratic administrations.  No attempts to subvert the Constitution.  No shadow governments.  No wars of convenience. 

Yet one of the true ironies of our current political climate is that conservatives have the unmitigated gall to accuse President Obama of perverting the Constitution by trying to rescue our economy and attempting to provide health care for all U.S. citizens.  They want to manufacture a scandal out of his birth certificate.  And they want to compare him to Hitler. 

Are conservatives so angry they lost the election that they can’t see the utter nonsense of their statements?  Or are they simply so gullible they’ll repeat anything Fox Noise, Rush Limbaugh and the NRA tell them to?  Whatever their reasons, the real question is this:  Given past performance, why would anyone vote for a Republican President ever again?

The end of voodoo economics?

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I was never a big fan of President George H.W. Bush although, compared to his son, he was a fabulous president.  And he did get one thing right – his description of Reagan’s theory of trickle-down economics.  That’s right.  It was George, the elder, who first appropriately labeled it “Voodoo” economics. 

The idea that cutting taxes for the wealthy would somehow benefit the rest of us never really made any sense.  It was clear to me that the wealthy would simply spend the extra money on themselves or invest it in the stock markets.  I couldn’t see how the theory would result in more jobs or increased living standards for everyone else.

What did make sense to me was the idea of cutting taxes on companies that created jobs, and Reaganomics did do that.  Unfortunately, the Reaganists relaxed or eliminated many of the regulations and safeguards that controlled corporations.  The result was tax cuts and tax credits for large corporations that took their manufacturing jobs overseas.  And due to the lack of regulation, many corporations created phony “headquarters” in the Bahamas and the Caymans to avoid paying taxes altogether.  Amazingly, Republicans refused to even consider banning these off-shore companies from receiving U.S. government contracts. 

How on Earth were U.S. citizens, other than corporate officers, supposed to benefit from that?

The short answer is that we didn’t.

In an op-ed column for The New York Times, Nobel Prize-winning economist Paul Krugman summarized the real effect of Reaganomics.  “…real incomes of the top .01 percent of Americans rose sevenfold between 1980 and 2007.  But the real income of the median family rose only 22 percent, less than a third its growth over the previous 27 years“.  Krugman also points out that “most of whatever gains ordinary Americans achieved came during the Clinton years “, and that President George W. Bush “…had the distinction of presiding over the first administration since Herbert Hoover in which the typical family failed to see any significant income gains”.

Of course, Krugman’s statistics don’t include the fiascos of 2008 in which the Fed started bailing out banks long before the public noticed; when gasoline prices hovered around $4 per gallon; when foreclosures dragged down the entire economy; and when the Bush and Obama administrations had to bail out Wall Street.  All of these issues are likely to make the final cost of Reaganomics look even worse.

Yet despite all evidence to the contrary and despite the near-disastrous collapse of our entire financial system under their leadership, Republicans still cling to the notion that the failed economic policy of their former leader and idol can cure our present-day problems.  “Make the Bush tax cuts permanent,” they say, “that will bring our economy back.” 

If Republicans should somehow regain control of Congress during the 2010 mid-term elections, be afraid, my friends.  Be very afraid.  Like other apparitions of black magic, voodoo economics may be more difficult to kill than you think.