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Wed Oct 7, 2015, 01:52 PM

Proposed Constitutional Amendment, No Special Treatment for Wealthy Elites

Also at http://proposednewconstitution.blogspot.com/ and http://www.dailykos.com/user/Al%20Carroll.

Article 13-No Special Treatment for Wealthy Elites

“1. Government assistance only goes to those in need and corporate welfare is forbidden. No person or corporation, nor any trust or legal entity used by a person or corporation, shall receive government assistance or funding unless they make less than double the median national income and possess less than double the median national wealth.”

Quite a few wealthy elites, and quite a few with passionate hatred for the working class, argue that poor people receiving government assistance suffer from dependency, laziness, and a lack of a moral code. The most hateful depict those in poverty as leeches, bums, and bloated off of a few hundred dollars a month in aid to live. Yet seemingly none or at least few of the same people make the same argument about wealthy elites, especially corporations. If welfare supposedly is morally harmful to a single mother, what about CEOs? Bankers? What about entire corporations dependent on government? How is that not far more offensive, obscene, counterproductive, and useless?

Such an argument must be turned on its head: Those with the wealth to already support themselves get no government aid, ever. Only those in need do. The Green Party platform has long included a variation on this proposal: No corporate welfare, period. But their proposal does not prevent wealthy or well off individuals from receiving such welfare. It also prevents small business loans, which provide far more jobs than the giant corporations. Blocking all corporate welfare would also include loans or tax holidays to infant industries, where innovation most often begins.

Government should not be used to redistribute wealth upwards, from the middle and working classes to the already wealthiest elites and others who are at least well off. There should be means testing, and the simplest test is that aid only goes to those in need, best measured by wealth and income. It's best, though, to err on the side of caution. Thus the proposed standard, double the median (not average) income and median wealth as well. Since wealth and income in America are both distributed very unevenly, using the average would skew the numbers high.

Sports stadiums, built at public expense that benefit already wealthy team owners, would be barred in the future unless the team owners pay for them entirely. Current team owners would have to repay every penny of public money spent for stadiums on their behalf. Agribusiness subsidies to not grow food come to an immediate end, unless they were part of the shrinking number of small family farms. The auto industry loans, both the entire US industry in 2009 and of Chrysler in 1979, would also have been barred.

Incompetently run industries should be allowed to fail, or the government buy them out very cheaply at market rates and then either sell them off in pieces, or make them publicly owned and run for public purposes, not for profit. (For example, the US auto industry could have been put to researching and making cheaper autos run solely on alternatives to fossil fuels.) If the failure of an industry or large corporation will cause huge job losses, obviously the best option would be for the government to sell them off in pieces, but make a condition of their sale that as many of the employees as possible keep their jobs or receive pensions or generous severance. Any government assistance should go to helping workers hold onto their jobs, or finding other work or being retrained, not to rewarding wealthy elites for failure.

British history shows us many examples of the failures of “lemon socialism.” There the state took over failing industries, and it usually only benefited incompetent elites by bailing them out no differently than welfare for capitalists. Workers at industries like coal and railroads were not helped much. Huge cutbacks were still made, only with government now being blamed and public ownership discredited.

The failed bailout of the banks in the 2000s (failed in the sense that the public was not helped, only the banks), and the successful bailouts of the savings and loans in the 1980s (successful in the sense of greatly lowering the cost of the bailout), would both have been barred with this proposed article. The two options to save the banks and savings and loans, as in other cases, would be to either seize them and make them publicly owned, or seize them and break them up and sell them off. A third option also exists, one better for the average non-wealthy depositor, turn the banks into credit unions.

What happened instead was that the banks received an obscene secret bailout of over $7 trillion (on top of the public bailout of $700 billion), equal to half the value of the whole US economy. Obama and his administration, made up of executives from the likes of Goldman Sachs, naively imagined banks would lend out their new government money. Instead, much of it was lent back to the federal government. These banks received an insanely low interest rate of 0.01%, then loaned the federal government's own money back to the government at 5% interest, making tens of billions. The economy recovered unevenly, no thanks to either federal or wealthy elite practices.

One more area of assistance needs to be changed, aid to the elderly. Social Security and Medicare must be means tested, much like Medicaid is now. Those with more than double the median income or wealth do not deserve it.

“2. All government loans or tax deferrals or holidays or other benefits to corporations or business must be repaid, with interest at market rates. All facilities built even partly to benefit or profit private businesses or individuals must be paid for by those businesses or individuals equal to the benefits or profits received.”

Facilities includes not just stadiums and sports complexes, but anything that benefits in large part private businesses, from highways to the internet to airports to the maintenance and regulation of public airwaves to state subsidized education to train workers for private industries, e.g. the nuclear power industry receiving most of its trained workforce from the US military. Externalities, as pro capitalist economists are fond of calling them, come to an end. For the layman, an externality is anything whose cost can be passed along to the public or the government, and the business avoids paying for it. The practice comes down to “private profits, public losses.” It is reverse Robin Hood at its worst.

For a safer environment for us all, ending externalities will be a godsend. Mining and some chemical industries have as standard practice to pollute without consequence, declare bankruptcy, and expect the cleanup to be done by the government and paid for by the public. This is a government benefit by any reasonable standard. Now companies will be required to pay for their pollution, or better yet, avoid it in advance as cheaper than paying for cleanup later.

The huge giveaways to corporations come to an end. Amazon has benefited from no sales tax far beyond reason. Ideally it should have ended as soon as the company turned a profit, back in the 1990s, and began paying sales taxes either to the states where the items were bought, or the home of their shipping centers. Trucking and shipping companies should be paying all of their part for the upkeep of the public highways. Broadcast networks should pay for the market value of the public airwaves, on top of the cost of regulation, as cable companies should pay for the entire market value of the use of public bandwidth and cost of regulation.

Benefits also clearly includes government research that private industries profit from. Companies would now have to pay back the government for the cost of research. Intellectual property laws should also be severely curtailed, though not ended entirely. A form of means testing would keep the laws in place for artists such as independent filmmakers, musicians, and authors, or those just starting out, but end such protection for individuals once they attain a certain level of wealth, and for all corporations. Thus while the struggling artist remains protected, Hollywood and the recording industry are not.

Drug companies would also lose their patents once they earn back the cost of research. Industries with de facto or legally enforced monopolies, such as cable networks and the football and baseball leagues, lose such protections. For the consumer, prices will drop sharply. But the biggest benefit to the public will be longer lives, since medical treatment and prescription prices will be greatly reduced. For the entire US public, the next biggest benefit will be a far more thriving and representative democracy since elites will no longer be using government to enrich themselves at everyone else's expense.

Al Carroll is Assistant Professor of History at Northern Virginia Community College and the author of numerous articles and books, among them Presidents' Body Counts and the forthcoming A Proposed New Constitution.

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