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Even Ivory Towers are Built on Foundations - what the US Corporatocracy Forgot

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OlympicBrian Donating Member (456 posts) Send PM | Profile | Ignore Mon Nov-15-10 02:53 AM
Original message
Even Ivory Towers are Built on Foundations - what the US Corporatocracy Forgot
Edited on Mon Nov-15-10 03:02 AM by OlympicBrian
This is an update to a previous article. Revisions are highlighted.

Even Ivory Towers are Built on Foundations - what the US Corporatocracy Forgot
- New "offshoring bubble" is forming
(original 10/29/2010, Dan, Seattle; updated 11/14/2010 to include "Debt Commission Report" and corrections.)

"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. 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--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 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. A progressive capital gains taxation schedule is also not in the plan. All of these perks are built in for the elite--while you lose your mortgage interest deduction, and Social Security. 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. Thus, the elite are protected--the corporatocracy gains a firmer foothold.

Americans should be outraged--these provisions represent a 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.

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. Yep, 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.

But ultimately, the day of reckoning will come. Even ivory towers are built on foundations (perhaps economic ones?), and that is what the corporatocracy forgot.

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

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Sirveri Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Nov-15-10 04:23 AM
Response to Original message
1. Where is the provision to "stop taxing overseas profits of US multinationals,"
Is it Item 36. Charge beneficiaries for the cost of the International Trade Administrations trade promotion activities.
Or is it 28. Eliminate the Overseas Private Investment Corporation.

Where is everyone sourcing their material from? Why aren't they telling us what they base their opinions on?
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OlympicBrian Donating Member (456 posts) Send PM | Profile | Ignore Mon Nov-15-10 01:26 PM
Response to Reply #1
2. Sourced here, will try to tie to exact provision
Edited on Mon Nov-15-10 01:59 PM by OlympicBrian
I don't possibly have the time to cite all the references for the piece above, but I have a lot of web "favorites" bookmarked. If you have any questions, just ask me. If you can tie the cut in overseas taxes to a specific Debt Commission item, it would be helpful (but the wording of the items is kind of tricky, being tied to existing law.)

"TAXES: Eliminate popular tax credits and deductions such as the child tax credit and the mortgage interest deduction; reduce top income-tax rate to 23 percent from 35 percent; reduce the corporate income-tax rate to 26 percent from 35 percent, and stop taxing the overseas profits; increase the gasoline tax by 15 cents a gallon."

The two references I found to corporate overseas taxes in the Commission Report draft were:
"International tax reform including a territorial system" (no details)
"Make America the Best Place in the World to Start and Grow a Business" (no details)

So apparently the details are being fleshed out elsewhere.
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Sirveri Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Nov-15-10 08:59 PM
Response to Reply #2
8. This is my problem with a lot of the reporting about this cochair report.
I've downloaded the report (as have you by the look of your quotes). The zero sum plan #1 is a garbage plan, I think we can both agree on that. But everyone seems to want to focus in on that option while ignoring "Option 2: Wyden-Gregg Style Reform". Then they put stuff in quotes that isn't in the public material and I'm suddenly left wondering where the heck these quotes come from. There is some acceptable stuff in these plans, it's also a draft. Tweak the Bush tax cuts out of option 2 and it suddenly gets a lot more interesting. I dunno... I'm just getting sick of all these doomer predictions, I guess I'd rather see people take the more progressive elements out of it and then tweak the bill ahead. Probably the most upsetting thing I saw in there for myself was the gutting of the CPB (to defund NPR), but nobody wants to talk about that one I guess...
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OlympicBrian Donating Member (456 posts) Send PM | Profile | Ignore Mon Nov-15-10 10:13 PM
Response to Reply #8
9. Comments on report
The CPB de-funding isn't worth worrying about. I understand the publicly-funded part of CPB is only a few percent.

I agree there are public quotes out there which I can't find in the draft report, but I assume there was some discourse between the Committee members and the press. Unless there are some documents not open to the public...
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OlympicBrian Donating Member (456 posts) Send PM | Profile | Ignore Mon Nov-15-10 01:41 PM
Response to Original message
3. Link to full Debt Commission Report draft
The above piece was NOT intended to be primarily about the Debt Commmission Report draft, but here is the link:
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Greyhound Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Nov-15-10 01:42 PM
Response to Original message
4. K&R. The (American) foundation is unnecessary to their strategy.
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OlympicBrian Donating Member (456 posts) Send PM | Profile | Ignore Mon Nov-15-10 01:58 PM
Response to Reply #4
5. Ya but their plan looks like something that will induce a Depression
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Greyhound Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Nov-15-10 02:34 PM
Response to Reply #5
6. You say that as if it were a bad thing.
Stealing the nation's wealth is not enough because we still have the capacity of sustaining ourselves and re-building. They have to destroy the very concepts that the USA is/was built on.

There is no place in the world they are making for a people with the idea that they are free, so what better way to destroy it than to impose a totalitarian authority on this nation under the guise of order and safety?

Look around here, a somewhat left-leaning sample, at all those that are happy to sacrifice everybody else on the alter of authoritarianism.

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OlympicBrian Donating Member (456 posts) Send PM | Profile | Ignore Mon Nov-15-10 04:24 PM
Response to Original message
7. "Crack" Appears in Economic Foundation of Ivory Towers
Edited on Mon Nov-15-10 04:25 PM by OlympicBrian
NEW YORK (MarketWatch) Treasury prices deepened their decline in afternoon trading on Monday, pushing 10-year yields towards the highest level in three months, following a report that a Moodys Investors Service analyst said extending the Bush tax cuts would be bad for the U.S. credit rating.
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OlympicBrian Donating Member (456 posts) Send PM | Profile | Ignore Mon Nov-15-10 10:37 PM
Response to Original message
10. IMPORTANT ERRATUM in my piece
Edited on Mon Nov-15-10 11:11 PM by OlympicBrian
Under the tax reform Option 1 in the Debt Commission Report draft (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 if they mean options on that page (page 24), or tax reform options! (Notice multiple asterisks on page 24.)

But, treating capital gains and dividends as ordinary income is an implicit capital gains taxation schedule, so I am technically wrong, though literally correct when I said "A progressive 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...

Therefore, the sentence "A progressive capital gains taxation schedule is also not in the plan." might read "A progressive capital gains taxation schedule is also not in the plan for tax reform Option 2 nor Option 3."

Or, that is at least the way I read it, the second time! Still 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. But if that were the case, I would have thought they would spell that out explicitly for Option 2 and Option 3 instead of hiding it in the Option 1 table. In which case, I remove my sentence "A progressive capital gains taxation schedule is also not in the plan."


Badly written Debt Commission Report draft.

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OlympicBrian Donating Member (456 posts) Send PM | Profile | Ignore Tue Nov-16-10 01:44 PM
Response to Original message
11. kick
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