Velvet Banana, Part Two: The Era of Good Stealings
by Jack Rabbit
One: The Coup d'etat of 2000
Three: An Attack on Freedom
Four: The Velvet Dictator
Every since the first man stepped out of a cave and declared
himself leader, there has been corruption. Apart from government
being something necessary for national defense and the construction
of public projects like roads and canals, it is also a great
business opportunity. Government must consume goods and services,
like everyone else. In order to purchase the necessary goods
and service to maintain the army and build the roads, government
needs money and therefore collects taxes. Government also
has police power to enforce contracts.
One may argue all day long about the virtues of having "a
government of laws, not men," but the fact of the matter is
we must still depend on men to make, enforce and interpret
those laws, and sometimes they do that in ways consistent
with personal rather than public interest.
That happens, it always has happened, it always will happen.
We run into problems when those who are expected to enforce
the law think of themselves as a law unto themselves, able
to do whatever they want for themselves and their allies.
A banana republic - a third world nations governed by petty
military strongmen and juntas whose power derives from tanks
and rigged elections - is often referred to as a kleptocracy,
meaning government by thieves. The banana republic dictator
uses his police power to seize somebody else's wealth - imprisons
the property holder on trumped up charges, for example - and
then either keeps it for himself or gives it as a gift to
a political ally. Often, this redistribution of wealth from
a legitimate property owner to a political ally is called
In countries where government has to keep masses of people
satisfied - not just the military and wealthy - government
designs economic policy to keep people working in the long
run. The idea is that employed, prosperous people vote for
the party in power. Government has the power to redistribute
wealth up or down through tax policy.
Liberals and progressives favor tax policy where government
taxes wealth progressively - the more one has, the higher
percentage is paid - and redistributes towards the poor and
middle class. The idea is to generate economic activity by
giving cash to people who will spend it, creating demand for
goods and services and thus create jobs (and votes for the
party in power).
Conservatives favor a tax policy where the tax burden falls
on the middle class; the poor by definition have no money
with which to pay taxes and the wealthy should have the money
to stimulate investment in new business growth and thus create
jobs (and votes for the party in power). This last theory
is the one favored by the Bush administration. It was the
centerpiece of his election campaign last year.
However, the Bush administration came to power by stealing
the election. Bush owes the voters nothing. Indeed, the voters
rejected Bush's tax proposals. A combined 51 percent of the
voters cast ballots for either Al Gore or Ralph Nader, the
two candidates who most explicitly condemned Bush's tax package.
On the other hand, Bush rejected federal matching campaign
funds in order to raise unlimited amounts of money from wealthy
donors, particularly from oil companies, power generating
companies and the new, global manufacturers whose interest
is trade liberalization. He may owe the voters nothing, but
he owes his rich friends quite a bit. They expect a return
on their investment.
And they are getting it.
The goal of the Bush team was to pass the tax package, no
matter what it meant. During the election campaign, the Bush
team argued that times were good and the federal government
could therefore afford to give back some of the budget surplus.
After the election, with the American economy losing steam
and slipping slowly into recession, the same people argued
the tax package was needed as an economic stimulus. Although
tax laws are usually complicated, it shouldn't take a Harvard
economist to tell that a tax plan spread out over ten years
is not a stimulus, which is a short-term matter.
The Bush tax plan passed Congress. The total tax package
cut taxes by $1.35 trillion. According to the Citizens
for Tax Justice, the benefits of the tax package broke
down as a $600 saving on average to those at the median income
level and a $53,000 on average saving to those at the top
of the income scale. The Republican argument that the rich
will save more because they pay more has some merit on the
surface, but this kind of discrepancy should ring alarm bells.
Following the September 11 attacks, Bush again used the occasion
to ask for a new economic stimulus. It started with an airline
bailout that did nothing for laid off airline employees. An
interesting story in the Village Voice tells of an airline
stewardess who got $744 in severance pay after losing her
$22,000-a-year job, while her airline's CEO, largely credited
with running the company into the ground, also lost his $900,000-a-year
job and was given a $3.2 million severance package. That tells
us how the airlines are distributing their bailout bonanza.
The House passed the main part of the new economic stimulus
package last month, but as yet the Senate has taken no action.
A feature of this bill is the repeal of the alternative minimum
tax, a tax imposed on the wealthy so that they will not gain
by placing all of their income in tax shelters. Not only does
the new economic stimulus abolish the tax, but does so retroactively
to 1986. The largest corporations will get a fat check from
the government to the tune of $25
billion. According the Citizens for Tax Justice, over
40 percent of the proposed tax savings in this new stimulus
package will go to the wealthiest
1 percent of the population.
The budget surplus that was to be used for paying down the
debt is now gone. Republicans assert that it's the people's
money and that they trust the people to do the right thing
with it. However, when the people voted for Gore or Nader
rather than Bush, they were telling the politicians what they
wanted done with it. That has been ignored. Besides, the people
aren't getting a lot of this money. Most of it is going to
the wealthiest 1% and to large corporations.
This is a velvet form of crony capitalism. Bush has his accomplices
in Congress to pass tax laws, so it isn't stealing. As for
what the rich save on their tax bills, some of it will be
invested, some of it will be used to buy new toys and some
of it will go to Republican campaign coffers.
Bush has benefited his corporate friends in other ways. Last
winter, power generating companies - many located in Texas
and all of which contributed to Bush's election campaign -
took advantage of California's ill-conceived deregulation
of gas and power. California ratepayers may have been overcharged
as much as $9 billion. Although Bush's Federal Energy Regulatory
Commission appointees ruled that the market was dysfunctional,
but they balked at granting California and other western states
regulatory relief for weeks while rates remained high. One
of the energy companies which made out best in this fiasco
is the Enron Corporation, whose CEO, Kenneth Lay, is a personal
friend of Mr. Bush and one of his most generous campaign contributors.
Enron's star has since fallen; so has its stock price. It
is now under investigation by the Securities and Exchange
Even Bush's foreign policy is designed to favor wealthy corporations
over any other consideration. One of Bush's first and greatest
outrages after assuming office was the abrogation of the Kyoto
Protocol on Global Warming. Perhaps no multinational corporation
will benefit more from this than Exxon-Mobil, the world's
largest private corporation and another major source ($1.2
million) of Bush campaign money. The official position of
Exxon-Mobil is that it is not proven that burning of fossil
fuels causing global warming. In rejecting the Kyoto, Bush
adopted a similar argument.
This argument is phony. While not everything is known about
global warming, it is known that the burning of fossil fuels
is a major contributor. The Exxon/Bush position is the very
same kind of obfuscation in which the tobacco industry engaged
for decades in denying the linkage between cigarette smoking
and heart and lung disease. This may not be theft, but it
isn't honest, either. The reader is referred to an April 17
article in the London
Guardian, "How the high priests of capitalism run roughshod
over fears of planet."
What can be done to remedy this situation? The problem is
that what belongs to the people has been taken from the people
without the consent of the people. Indeed, since Bush received
than Gore and Nader (or Gore alone, for that matter), it has
been taken from the people in spite of their express disapproval.
First of all, the Senate should reject any economic stimulus
package even resembling the one passed by the House last month.
No package at all would be better than that bill. In fact,
Congress should begin to consider repealing part of the tax
cuts passed earlier this year. No bill that does not directly
benefit working people should be considered.
Let's get the power suppliers off our backs. In California,
we know what untrustworthy business partners they make. They
were able to do to California and the west what they did because
there is no effective market. Since there is no effective
market, there is no to hold to any platitudes about the virtues
of private enterprise. Support public power. Ratepayers should
own the power that comes to their homes and offices.
Finally, boycott Exxon. This is being done in Britain, why
not elsewhere? We could perhaps put a little goal on such
a boycott, such as a boycott with the end of getting Exxon
to stop obfuscating about global warming, admit that obfuscating
is what it has been and support Kyoto Protocol.
to Part Three: An Attack on Freedom