corporations

How To Choose? So Many Constitutional Amendments....

Greg Colvin — Mon, 19 Dec 2011 09:43:53 -0500

There is a growing movement of people fed up with corporations-as-persons, money-as-speech, elections-for-sale in America. They are ready to amend the US Constitution as the only sure way to reverse the Supreme Court’s decisions in Citizens United v. FEC and Buckley v. Valeo. But what’s the best amendment? Sanders/Deutch or Udall/Sutton? Move To Amend or Free Speech for People?

Here are twelve questions to put the choice of language in an analytical framework. Every drafter should be able to answer them.

1. What is the main purpose? Is it to drive the big money, from all sources, out of elections? Or is it to abolish corporate personhood?

2. If none of the rights extended to corporations are still protected by the Constitution, what would the consequences be -- outside of the realm of elections?

3. What would happen the day after the amendment was adopted? Would corporate and business spending in elections stop immediately or would legislation and litigation be required?

4. What kinds of legal entities does the amendment apply to?

a. business corporations
b. nonprofit corporations
c. labor unions
d. other forms of organization (associations, trusts, LLCs, partnerships)
e. all of the above

5. How should the campaign spending of individuals (including candidates) be regulated?

a. no limits on personal spending
b. authorize Congress and the states to set limits
c. set dollar limits in the Constitution
d. prohibit completely

6. Should all campaign contributions and expenditures be publicly disclosed? Or should Congress and the states allow small donations to be anonymous? In view of all that secret money that flows through nonprofit groups for political “issue ads,” how do we force them to disclose their sources?

7. Should public financing of campaigns be required, permitted, or prohibited?

8. Does the amendment cover both candidate elections and public votes on ballot measures?

9. Are all levels of government covered: federal, state, city, town, and county?

10. Is any special wording needed to protect freedom of the press?

11. Should other subjects be covered in the amendment, such as making election day a holiday, shortening the campaign season, simplifying voter registration, requiring paper ballots, addressing voter disenfranchisement?

12. Should there be two or more amendments to carry different aspects of these issues, or one unified proposal?

…and of course, is the language as brief and clear as it can be?

My answers would be:

1. Drive big money out of elections.
2. Takes a lot of legal study to be sure about this.
3. Immediate effect.
4. e. - although the business entities are the biggest danger.
5. b. – use legislation to set limits.
6. Legislatively, force disclosure of all large donors whose money is used for politics.
7. Permit.
8. Both.
9. All.
10. No.
11. No.
12. One, though some days I think abolishing corporate personhood should be separate.

This is the sixth piece I’ve written this year on this subject. In January I proposed a simple version: only citizens can vote, only citizens should finance campaigns. In April I compared the main alternatives offered at that time. In November I pointed out the problems with a single focus on corporate personhood, followed by two blogs praising Deutch and then Sanders for what they introduced -- as the best so far. (Click on my name above to access them.)

But what I really think we need is for all the proponents to get their ideas out on the table, have a big summit conference, test each approach using criteria such as these twelve, and forge a unified amendment.

Bernie Sanders Introduces Powerful Constitutional Amendment in Senate to Undo Citizens United and Buckley

Greg Colvin — Mon, 12 Dec 2011 02:43:25 -0500

On Thursday, December 8th, Senator Bernie Sanders (I-VT) introduced a constitutional amendment to drive big money out of politics for good. He was not alone. Senator Mark Begich of Alaska joined him. Sanders’ amendment is called “Saving American Democracy” http://sanders.senate.gov/newsroom/news/?id=d4a61731-be04-4b9a-95b9-7fdb... but the language is identical to the “OCCUPIED” amendment offered in the House by Rep. Ted Deutch (D-FL), inspired by the Occupy Wall Street movement and beginning to attract co-sponsors.

On November 18th, I posted a blog here applauding the Deutch amendment as the strongest one introduced so far to redress the imbalance of power between the global corporations and the people in our democracy. See “Finally, a Constitutional Amendment for the 99%” http://www.ourfuture.org/blog-entry/2011114618/finally-constitutional-am... for my analysis of how this amendment compares to others introduced this year. Truly, the Sanders/Deutch amendment is a blend of the best ideas.

In the time since the Deutch amendment was announced, several important issues have emerged:

1. IMMEDIATE EFFECT.

Immediately upon adoption, this amendment would prohibit business corporations and their associations from using money or other resources to influence voting on candidates or ballot measures everywhere in America—at the federal, state, and local levels. The other proposals introduced in Congress do not do that.

Under the amendment introduced by Sen. Tom Udall (D-NM) and several other Senators, we would have to wait for Congress and each state to pass laws regulating campaign financing, which may or may not include a ban on corporate spending. The version offered by Rep. Jim McGovern declares that corporations, LLCs, and other corporate entities are not entitled to the constitutional rights of natural persons, but it is doubtful that simply saying that will automatically stop corporations from spending on elections. To implement that clause, either Citizens United and other cases will have to be re-litigated under the pre-existing McCain-Feingold and FEC laws, or Congress and each state would need to pass new laws that would be tested in court under the new amendment. Years would pass.

2. BANNING BUSINESS CORPORATIONS’ FREE SPEECH.

Already, the Heritage Foundation and other conservative voices are complaining about the loss of “free speech” that they claim corporations and business associations would suffer under the Sanders/Deutch amendment. Well, get used to the idea, guys. For over 50 years, nonprofit 501(c)(3) charitable organizations have been prohibited by the tax code from participating in the campaigns of candidates for public office. That’s over a million public interest voices, from the American Cancer Society to your local Little League team, not allowed to endorse candidates, pay for broadcast ads, or make campaign contributions. They have been sidelined to protect the nonpartisan integrity of the charitable sector. The business sector needs to be sidelined from American elections to protect the integrity of our democracy.

By the way, the business corporations would function economically just fine under Sanders/Deutch. Their ability to own property, sell stock, make contracts, sue and be sued, all that is a matter of state law, not the federal constitution. They resort to claiming constitutional rights mainly when they don’t like laws passed to stop them from harming or exploiting people..

3. UNIONS AND NONPROFITS.

I could argue this one either way. The original constitutional amendment I drafted in January 2011, http://www.ourfuture.org/blog-entry/2011010320/only-people-can-vote-only... states that because only people can vote, only individual citizens should finance campaigns (along with public financing). No kinds of private organizations, except political committees comprised of individuals subject to public disclosure, could spend to influence our elections.

However, Sanders/Deutch valiantly attempts to draw a line between the business corporations and their associations, and the rest of us – sometimes called “civil society” – neither government nor commercial enterprises, but nonprofit organizations that represent the interests of human beings.

Labor spends far less than big business does on elections, and most of what unions spend is not from their general treasuries but from union members’ dues, subject to a voluntary check-off system. Sure, the variety of nonprofit groups that get involved on election issues, from tax reform to health care to the environment to gun control to civil rights to war and peace, are “special interests” but the Sanders/Deutch amendment would allow them to spend on elections so long as they were not fronting for the economic interests of the business sector. And of course, Congress and the states would be authorized to fully regulate their expenditures with dollar limits and disclosure, because Sanders/Deutch would also overturn the 1976 Buckley v. Valeo decision equating money with speech.

If you like the Sanders/Deutch amendment, visit the website and sign the petition http://sanders.senate.gov/petition/?uid=f1c2660f-54b9-4193-86a4-ec2c3934.... Forty thousand people did just that within the first 24 hours.

Finally, a Constitutional Amendment for the 99%

Greg Colvin — Fri, 18 Nov 2011 15:36:20 -0500

Today, Congressman Ted Deutch (D-FL) offered the strongest constitutional amendment introduced in either House of Congress so far to rectify the imbalance of power between the corporations and the people in our democracy.

As the struggle in the streets intensifies, and Occupy Wall Street refuses to remain silent, it’s good to know there are champions in Congress who have stepped up to the challenge of amending the US Constitution. It’s called OCCUPIED: Outlawing Corporate Cash Undermining the Public Interest in our Elections and Democracy, here.

The Supreme Court, in the 5-4 Citizens United decision of January 2010, declared that corporations have free speech rights like human beings and invalidated the ban on corporate election spending that Congress had enacted. Since then, a grassroots movement has emerged to generate popular support for a constitutional amendment to reverse that decision, including months of work by Move to Amend, Free Speech For People, Public Citizen, People For The American Way, Common Cause, and the Center for Media and Democracy.

Rep. Deutch’s amendment is a blend of the best ideas.

1. The rights protected by the Constitution belong to human beings (natural persons).
2. Constitutional rights do not extend to for-profit corporations or other business entities, nor do they extend to chambers of commerce that promote business interests.
3. The constitutional rights of other non-profit corporations, such as charities, churches, schools, hospitals, clubs, unions, and environmental groups remain in place.
4. Immediately upon adoption, this amendment would prohibit business corporations and their associations from using money or other resources to influence voting on candidates or ballot measures anywhere in America—at the federal, state, and local levels.
5. Counteracting the 2010 Citizens United case and the 1976 Buckley v. Valeo case, Congress and the states would once again have the authority to regulate and set limits on all election contributions and expenditures, by any group or person.
6. This would empower Congress and the states to control election spending by CEOs and other wealthy individuals, including those rich enough to pay for their own campaigns.

Comparing the OCCUPIED amendment to some of the others proposed:

Unlike the amendment offered by Rep. Jim McGovern (D-MA), the Deutch amendment does more than remove constitutional rights from corporations, LLCs, and other corporate entities. It reaches all forms of business enterprise, but without the unintended consequence of stripping constitutional rights from unions and nonprofit public interest corporations, such as the Sierra Club, NAACP, Planned Parenthood, and your local community center. The McGovern amendment would not automatically prohibit corporate election spending and would not enable Congress and the states to set limits on election spending by the wealthy. The Deutch amendment does both.

Unlike the companion amendments introduced by Sen. Tom Udall (D-NM) in the Senate and Rep. Betty Sutton (D-OH) in the House, the Deutch amendment goes beyond simply authorizing Congress and the states to regulate campaign financing. It removes the shield of constitutional rights from business corporations and their associations, and imposes an immediate, nationwide ban on corporate election spending.

Unlike the ideas floated by TV commentator Dylan Ratigan and Professor Larry Lessig, the Deutch amendment would not use the Constitution to prevent citizens from donating to the candidates of their choice, or to chisel a dollar limit on individual donations into constitutional stone. Wisely, the Deutch amendment protects and does not diminish individual rights, and leaves the matter of setting contribution and expenditure limits to the people through the federal, state, and local legislative processes.

Rep. Donna Edwards (D-MD) and a number of co-sponsors in the House bravely introduced the first attempt at drafting an amendment in Congress some months back. Hopefully, she and her colleagues will recognize that the spirit in the streets and around kitchen tables and the level of legal craftsmanship have progressed to the point where a stronger amendment like Rep. Deutch’s deserves their support.

Personally, I proposed a simple amendment in January 2011, that would limit campaign financing to the donations of individual citizens only. I still think that’s a good idea, but I have to recognize the value of combining everyone’s best thinking into a comprehensive reform amendment. Rep. Deutch has done that with OCCUPIED. Let’s join him.

Dean Baker: Employer-Side Payroll Tax Cut Won't Increase Hiring

Daniel Marans — Thu, 23 Jun 2011 18:03:31 -0400

Giving companies money does not mean they'll hire.

Especially when they have record amounts of cash, like they do now, companies are more likely to use additional capital to re-invest in assets, re-purchase stock, and do other non-hiring-type activities.

That's what Jared Bernstein said in a really convincing takedown of tax repatriation holiday that would temporarily let corporations pay a 5 percent tax rate if they brought offshore assets back to the United States. There's just no guarantee that these companies would take advantage of the tax cut to invest in expansion and hiring, and plenty of reasons to think they would not.

Shouldn't the same logic hold true for the employer-side payroll tax cut? While CBO estimates that an employer-side payroll tax cut would get stimulus bang for its buck, there's no guarantee that it will spur hiring.

Dean Baker, Co-director of the Center for Economic Policy and Research, confirmed my hunch:

My guess is that [companies] do almost no hiring in response to a payroll tax cut. There is a considerable amount of research showing that increasing the minimum wage by about 15 percent has no noticeable effect on employment. If raising the cost of hiring by 15 percent has no measurable effect on labor demand, then we can't think that lowering the cost by 6.2 percent will have a noticeable effect. In short, the evidence suggests that demand is not very responsive to limited changes in the wage.

In short, just as raising the minimum wage a significant amount, which deprives employers of cash, wouldn't put a damper on hiring, so too, giving employers a much smaller percentage of cash through the payroll tax cut, wouldn't spur hiring.

Baker also said that employer gains would probably not go to higher wages for companies' current workers:

On the question of whether they give the money back to workers in higher wages, my guess is that very little will be passed on. The tax cut is temporary. Few employers are going to want to give higher wages in 2012 and then cut wages back to their prior level when the tax ends at the end of the year.

It's too temporary to meaningfully affect wages.

Now, the analogy between the employer-side payroll tax cut and the corporate tax repatriation holiday isn't perfect. For one thing, there is a version of the employer-side payroll tax cut that rewards employers more for actually hiring people. So it's at least a little better than the corporate tax repatriation holiday.

But the bottom line remains: uncertain employment gains from an employer-side payroll tax cut; certain damage to the integrity of Social Security, at a time when the program is already under major attack. That is not a good trade-off.

Views expressed are those of the author, and in no way reflect the views of Social Security Works or the Strengthen Social Security Campaign.

Corporations Don't Do Bad Things, People Do!

Dave Johnson — Mon, 20 Dec 2010 20:54:57 -0500

Are there "good" companies and "bad" companies? No, there are just companies, and companies don't have moral characteristics any more than a chair does. Here is something to understand about the things companies "do." If we LET a company "do" something, all companies HAVE TO do it. The misunderstanding of deregulation is that anything that CAN be done WILL be done. Anything.

E. J. Dionne Jr., in Even progressives need CEOs writes that it is,

... important to recognize that there is no single business class or corporate model. Obama doesn't need to coddle CEOs so they will say warm things about him at parties in the Hamptons. He should figure out which parts of the private sector share an interest in reducing the dreadful inequalities that have metastasized over nearly four decades and in creating an economy that produces well-paying jobs.

[. . .] Government policies, no matter how often we use the words "free enterprise," through design or inadvertence, inevitably affect the private economy. Why not choose policies that specifically encourage sectors that create good jobs for Americans?

The piece is well-worth reading because it points out that there are plenty of great business leaders who want to help the country address our problems and do better for our people. Mostly we hear today about the worst kind of self-interested, greed-driven business leaders because those seem to be the ones calling the shots for our economy and our political system. This is because we let the them get away with being the worst, so they rise to the top.

We need strong regulations and tough laws so the good CEOs can do the right thing, and still remain competitive.

Corporations Are A Good Idea

Last year in Why I Am Pro-Corporate, I wrote about why corporations are a good thing

The things that the corporate legal structure enables people to do are good for society. This is why We, the People decided to enact the laws that created corporations. If we want to be able to accomplish things on a large scale, like build a railroad or airports and airplanes or skyscrapers – or solar power plants to replace coal power plants – we want to enable people to more easily raise the necessary capital and amass the resources needed to get the job done. The legal structure of the corporate form of a business accomplishes this.

Corporations are just an idea. They are just a bundle of contracts. They don't do things, people do.

Do Companies "Do"? Do They "Want"?

It is the business leaders, not the companies, who make decisions and want things and do things. Companies are just things that don't "want" any more than they "do." They don't "think." They don't "decide." They don't "respond." Sentient entities want and do. It is the people who make decisions want and do things. Companies are not sentient entities any more than chairs are. And how we think about this affects the conclusions we reach.

One reason we apply these characteristics to companies is because they want us to. ("They want." There I go do it, too.) When the people who do marketing for companies (is that better?) try to make us think about companies this way, it is called "branding." They try to make us believe that a company is somehow a sentient entity because then we can think they "are good or bad" and therefore form emotional attachments that cause us to be influenced into buying their products. This is really just a manipulation and a distraction but it affects our brains. It is so important to realize that we are dealing with individual people who run companies because then we can think clearly about how to deal with the problems that they cause.

We have to understand the system, and what we are dealing with. We are dealing with people who run companies, not with companies. You can't be "pro-business" or "anti-business" because business just is. But you can require that people do the right thing.

We Need Very Strong Regulations And Tough Laws

When we complain about Wal-Mart "doing" something we are misunderstanding the system. The people who run Wal-Mart will do what we don’t stop them from doing. They have to. They don't necessarily want to. (Though some do.) That is what the system is. We set down rules, and they follow the rules. If something is not against a rule, then they don't just do whatever it is, they have to. And if they do something that is against the rules but we let them get away with it, then they will continue and others will start doing that, too.

Here is why: If Wal-Mart doesn’t then (the executives who run) Target or KMart or another company will, and then Target or KMart will have a competitive advantage, and after a while we’ll all be complaining about Target or KMart instead because Wal-Mart won’t be in the picture. They have to do everything we let them do. That is how the system works, and that is why we have to have strong regulations and tough law.

Instead of complaining about the things the business leaders do, we have to make strong regulations and tough laws to stop them and we have to enforce them. Period. We, the People have to use government “interference” and use force and that is our job and our responsibility to each other and to all of the business leaders who want to do the right thing.

It Is Not Fair To The Good, Responsible Leaders Not To

Let's say you are running Wal-Mart and you want to pay people more and want to provide good benefits. But the law does not require you to. If you do these things anyway, and your competitor doesn't, you are putting your company at a disadvantage, and you are risking the livelihood of everyone in the company. Think about the conflict and pressure that creates in good people who want to do good things. They can't do good things unless we make all the businesses do good things.

Companies are forced by competitive pressure to do the things other companies do, whether they "want" to or not. There isn’t really a middle ground. Our system of competition forces companies to do everything they can get away with, and they will do that, and the only thing that will stop them is We, the People actually stopping them.

So don't complain about things companies are doing, and certainly don't blame the companies. What do you have to do is change the rules. It just isn't fair to good people who want to do good things to do anything else. We have been letting good people down by listening to and doing the bidding of the likes of the Chamber of Commerce and the others who are fronts for the worst among the business community, who are working to corrupt our business environment and our politics.

Most Business Leaders Are Good People

Almost all corporate leaders are good, responsible and well-intentioned. For this reason they want and need clear rules that let them operate their companies responsibly. This is why listening to the greedheads who are always complaining about government and regulations is such a mistake. Most business leaders want to do the right thing and good, strong regulations and laws that are enforced let them do that. The deregulation and lack of enforcement that we see all around us today forces them to do wrong things in the name of staying competitive.

When you initially deregulate, good corporate leaders will try to be responsible and they will have every intent of doing so. They will live up to their promises. But along will come other corporate leaders who just want to make money for their companies,and more to the point, for themselves. They will do whatever we let them do to accomplish that. They will push up to and a bit beyond the exact wording of what they think they can get away with. The “good” CEOs will be at a disadvantage and will be forced to do the same.

Clear And Strong Regulations

When I ran a company I had a rule for agreements – get everything on paper and signed because the people talking about things today on both sides might get in a car wreck, or move to another company or forget or whatever and all that is left is the agreement and not the intent of the agreement. Similarly, we need to clearly lay out every little part of what can and cannot be done because that is what people will do in the end.

Business leaders want and need a clear playing field with rules that are strong enough to enable them to do the right thing and remain competitive. Let's help them out.

Tea Party Betrayed: Earmarks

Dave Johnson — Tue, 09 Nov 2010 20:32:56 -0500

I have been writing about the Tea Party, and asking what they will do if/when the DC Republicans betray them. CAF has set up a page for the Tea Party Getting Played series. This is the latest in the series.

The Tea Party candidates vowed they would be different, would stick to basic principles and not waver, and not back down.

It is safe to say that Kentucky Senator-elect Rand Paul is one of the leaders of the Tea Party movement. Here is what was on his campaign website, and I want tp put the whole thing here so there is no mistaking what voters were led to believe:

Rand Paul has made a ban on wasteful earmark spending in Washington D.C. one of the key points of his campaign. He has supported Sen. Jim DeMint’s vocal support for an earmark ban and he supports news that House Democrats are even coming around on the idea of a partial ban.

“The Tea Party movement is an effort to get government under control,” Rand said. “I’m running to represent Kentuckians and to dismantle the culture of professional politicians in Washington. Leadership isn’t photo-ops with oversized fake cardboard checks. That kind of thinking is bankrupting our nation. Senator DeMint understands that and has taken action to stop it.”

Rand’s emphasis on reform has ruffled a lot of establishment feathers, but it is clear that the more regular citizens are getting the message every day as his campaign continues to grow.

That's a pretty solid, unequivocal statement, isn't it? That was what Tea Party supports and voters were told. Unequivocal.

Now he is elected. And how is this for equivocating? Rand Paul Suggests He'll Fight For Earmarks He Earlier Promised To Ban:

Less than a week after his election, Kentucky's Senator-elect Rand Paul already appears to be making a rapid departure away from one of his campaign promises: an earmark ban that stood as a conservative cornerstone, a position Paul touted to indicate he was serious about tackling the reckless spending practices of Washington.

Here's what Paul told the Wall Street Journal over the weekend:

In a bigger shift from his campaign pledge to end earmarks, he tells me that they are a bad "symbol" of easy spending but that he will fight for Kentucky's share of earmarks and federal pork, as long as it's doled out transparently at the committee level and not parachuted in in the dead of night. "I will advocate for Kentucky's interests," he says.

So, here's the record. While campaigning the new Senator from Kentucky took the Tea Party position against earmarks. But one week after the election he says he will fight for Kentucky's share of earmarks and federal pork. From Tea Party hero to DC Insider in a week! What are the Tea Party supports going to do about it?

And that is the question I have been asking: What will Tea Party members do when their politicians betray them? For decades the game on the conservative side was to campaign against abortion, gays and other "culture war" issues, or appeal to raw fear, but then once in office to ignore those issues and always, always reward the big corporations -- and, oh, yeah, more tax cuts for the rich. Now it looks like the same thing is happening to the Tea Party supporters as well. So what are they going to do about it?

And on the "liberal" side we've seen campaign after campaign promising to do things for the middle class and for labor and for the elderly and for the poor but then once in office reward the big corporations instead. This is a serious question for democracy: what are we going to do about it?

Take a look at the growing list of posts here in the Tea Party Getting Played series.

Tax Tricks - Do Corporations Pass Taxes On To Customers?

Dave Johnson — Sat, 17 Apr 2010 12:34:24 -0400

Here is a tax trick you hear all the time: we shouldn't tax corporations because they just "pass the taxes along to customers." Go to any of the usual anti-tax, anti-government sites and you'll see them trying to trick people with this.

First of all, if companies really did "pass taxes along to customers," so what? Is that a reason not to pay for the roads, bridges, schools, courts etc., that enable the company to be profitable enough to pay taxes? But actually they don't -- because they can't.

This tax trick is based on a popular assumption that businesses can just raise prices whenever they want to. But a well-run business is already charging what they should charge for their product or service. If they have room to raise prices they should already have done so. But of course doing so this will cause them to lose sales to competitors.

Taxes are on profits, and profits are calculated at the end of a tax year by adding up all the revenue and subtracting all the costs. When a product or service is sold the company doesn't really know yet how much profit, if any, it will have at the end of the year, so it doesn't know what the tax will be, so how can it adjust prices? But if a company was able to just raise prices based on anticipation of profits, then the result would be that profits would be higher because of the higher price charged, which means taxes would be even higher, so the company should have raised prices even more, but that means the profit would be even higher, so they have to go back and charge more, but then ... I think you are starting to see how silly this idea of raising prices to cover taxes can get.

About those competitors - if one company is doing well and therefore making a profit, and another company is not doing so well, and therefore not making as much profit, and the first company raises prices to cover the taxes on the profit, then the second company has a price advantage so the first company loses sales and isn't going to have a profit after all so they really should put the prices back down, but then the other company's price advantage goes away and they are making a profit again so they should raise prices but ... Hey, this just gets silly, too!

Companies do not pass on taxes to their customers. So don't fall for this tax trick, it's just silly.

Danger: Falling Middle Class

Tula Connell — Fri, 05 Feb 2010 09:06:52 -0500

Jack Cafferty at CNN this week asked viewers one of his seemingly routine questions. But the responses to: "How has definition of 'middle-class American' changed?" reveal a cataclysmic shift in our nation's economic identity.

Gary from El Centro, Calif., summed up the vast majority of the nearly 200 responses when he replied:

You should ask this question of the three or four people in the country still remaining in the middle class.

The comments reflect more than the run-of-the-mill griping about taxes or middle-aged discontent. They demonstrate a visceral understanding of the deep forces underlying the dramatic change that in recent decades has eroded the solid financial footing of America's working families—America's middle class.

In short, the American public knows what most lawmakers in Washington and policymakers around the country have yet to figure out: The nation is losing its middle-class backbone and bifurcating into a have/have not country.

As Karen from Idaho Falls writes on Cafferty's site:

In my world, there is no middle class–only the very rich, the rich, the poor, and the very poor. Most of us are hanging on to being "poor" by our fingernails and hoping that we won't join the ever growing "very poor" class. Somewhere along the line, "middle class" disappeared.

The not-so-Great Recession is just the latest and loudest part of the long decline of the middle class. From the end of World War II to the early 1970s, wages grew along with productivity. But since then, wages have been stagnant or declining—while productivity skyrocketed. The decline in a family's earning power was offset by the entrance of vast numbers of women in the labor market—and then by wage-earners holding multiple jobs. By the late 1990s, debt—from second mortgages or credit cards—kept the middle class afloat. And now what is revealed is a middle class held together by nothing more than string.

One of the most consequential but least recognized aspects of the current economic disaster is the growing length of time workers are without jobs. In December, the average jobless worker had been unemployed for 29.1 weeks. In contrast, when the recession began in 2007, the average unemployed person had been out of work for 16.5 weeks.

At Economix blog, Catherine Rampell points out in an tellingly titled post, "A Growing Underclass," that the longer unemployed workers stay out of work, the less likely they may be to find work.

First, their skills may deteriorate or become obsolete—especially if they are in a dynamically changing industry like high technology.

Second, the stigma—both internal and external—of their unemployment grows. Studies have linked job loss to declines in self-worth and self-esteem, meaning these people will probably make less compelling job candidates.

So, even if there were jobs available—there are now more than six unemployed workers for every one job—getting one becomes harder and harder the longer you're out of work. Jobs are so few, in fact, even a weekly columnist at Forbes had this to say:

For many, many Americans there are no jobs and few prospects. For them the Great Recession is not a cute aphorism but a major cataclysm.

Long-term joblessness is one more nail in the middle class coffin. As Working-Class Perspectives describes it:

Unlike in past business cycles, the middle class has not been able to recover so far, despite increases in productivity and stock prices. In “America Without a Middle Class,” Elizabeth Warren documents how the de facto unemployment rate, credit debt, “underwater” mortgages, increased use of food stamps, personal bankruptcies, and the loss of pensions and health care have all dramatically increased. Middle-class households have depleted their savings and are increasingly accruing debt to pay for college, health care, and other expenses.

Some experts believe that the decline in jobs will only continue. For example, Alexandra Levit predicts significant losses in a number of key industries between 2008 and 2018: semiconductor manufacturing (33.7 percent), apparel manufacturing (57 percent), newspaper publishers (24.8 percent)….Corporations are moving many of these jobs offshore or replacing them with technology rather than paying middle-class wages and benefits. The economists are right that new jobs are being created in place of these. But as Jack Metzgar discussed last week, most of the new jobs offer even lower wages and benefits and require less education.

Jobs are offshored while the jobs that remain in the United States are low-wage, with little affordable health care or retirement options. Meanwhile, the smooth of face and soft of hand financial wizards who turn their noses up at the industrial manufacturing sector fail to realize that when the United States loses its ability to make things, it also loses the research and development power that fueled the nation to greatness. And it loses something a lot more. Louis Uchitelle interviews Sen. Sherrod Brown (D-Ohio) about the humiliation of building a new World Trade Center with no glass made in the United States:

“Imagine China,” he said in an interview, “building a huge structure intended to be an important national symbol and importing glass from the United States to build it. There is no way the Chinese would do that.”

And a low-wage job nation fuels income inequality. This from a stunning report by economist John Schmit at the Center for Economic and Policy Research:

From a peak just before the 1929 stock market crash through the early 1950s, wage and income inequality, broadly measured, were declining. From the early 1950s through the late 1970s, inequality was flat, or even falling slightly. Since the late 1970s, however, inequality has skyrocketed, climbing back to levels last seen in the 1920s. In 1979, for example, the top one percent of all U.S. taxpayers received about 8 percent of national income; by 2007, the top one percent received over 18 percent. If we include income from capital gains in the calculation, the increase in inequality is even sharper, with the top one percent capturing 10 percent of all income in 1979, but over 23 percent in 2007.

Back at Cafferty's site, Chad from Los Angeles knows why:

The middle class has turned into the "peasant class." We have been taken over by a few wealthy people who control our politicians and government. We have become an Aristocracy. Except the ones in control are not royalty, they are businessmen hiding behind a cloak of deception that is Corporate America.

In the short term, critical steps must be taken for immediate relief. The first is getting the Senate to extend unemployment insurance (UI) for the long-term unemployed. As usual, the House already has acted, extending UI in December, while senators dither. (Click here to tell your lawmakers it’s time to act.) Extending UI is part of the jobs initiative the AFL-CIO is pushing for immediate relief for jobless workers.

But before the current crisis fades, the nation must begin to reverse the more than 40-year trend in which the gap widens between rich and poor and the middle class falls out of the bottom.

Silas from Boston—a city not unfamiliar with fomenting revolutions—offers an intriguing insight:

We've allowed the "upper" class to become too big to fail. As a result, the middle class is an endangered species which has to bail out the class that got us into this mess to begin with. This is how the French Revolution started.

This is a cross-post from the Firedoglake blog.

Why I Am Pro-Corporate

Dave Johnson — Tue, 28 Jul 2009 09:00:00 -0400

I am pro-corporate. I’ll go a step further with that and proclaim that I believe that there are no bad corporations, and that I haven’t seen any corporations do anything wrong.

I see the way you are looking at me. I’d better explain.

The reason I say there are no “bad” corporations is because corporations are not sentient beings that can “do” things or that can be good or bad. They can’t make decisions. Corporations are just a bundle of contracts that allow groups of people to more easily raise capital and amass resources. Corporations are things, like chairs, and things do not make decisions, any more than a chair does. Corporations are tools and tools are neither good nor bad.

When I say I am pro-corporate, this is what I mean: The things that the corporate legal structure enables people to do are good for society. This is why We, the People decided to enact the laws that created corporations. If we want to be able to accomplish things on a large scale, like build a railroad or airports and airplanes or skyscrapers – or solar power plants to replace coal power plants – we want to enable people to more easily raise the necessary capital and amass the resources needed to get the job done. The legal structure of the corporate form of a business accomplishes this.

Corporations, a bundle of contracts, don’t “do” anything, people do. And that is why this discussion is important right now. We are looking here at how to restructure our economy, but before we can do that, we have to correctly identify what went wrong. We have to understand who the good and bad actors were.

So what are some of the things that companies have been doing that we as progressives think should change? Let’s use the highly-publicized example of Wal-Mart and their low wages and benefits and Chinese imports. Wal-Mart always complained about being cast as the bad-actor. They said that if Wal-Mart raised wages and benefits and their competitor Target didn’t, then they would be at a competitive disadvantage and Target would take over the business. And, by extension, any company that tries to “do the right thing” is immediately at a disadvantage to a company that does not.

Looked at this way, if we make Wal-Mart raise wages and Target doesn’t, then not only is Wal-Mart in trouble as a company but now we’re starting all over again trying to get Target to raise wages. And if THEY do so, then along comes K-Mart or Costco or a new company X-Co to pay the low wages, charge lower prices and take away the business. This feels like it is going around in a circle, trying to fix a problem in one place and the pressures of the system immediately make the problem appear somewhere else.

I think blaming companies for the things they "do" also places a lot of stress on people inside of them who might agree with us, and even can alienate them from otherwise supporting progressives. People in the corporate world often feel trapped because the rules of the game require them to engage in what we think of as bad behavior. These are good people who would be very helpful to us in making the correct changes but they feel forced by the system to do the things they do. They are pulled two ways. Executives at Wal-Mart on the one hand can be want to raise wages, and on the other hand have a responsibility to compete with Target.

So what am I getting at here? The companies are not the problem, the rules we set up for them are. Companies operate on a playing field on which the rules of the game are supposed to be decided by US. We, the People are supposed to set up the ground rules and then the companies are supposed to follow those rules. Wal-Mart followed those rules. If we didn’t like the wages and benefits that companies pay, why don’t we change the rules and tell them they all have to pay higher wages and provide better benefits?

Now we’re getting somewhere. Many progressives have been trying to get companies to "behave" in better ways, and haven't been getting much done -- I think due to not correctly identifying the problem. The real problem is that we haven’t set up the rules of the playing field to require these companies – all of them – to provide good wages and benefits, etc. It is our job to regulate what these corporations do. So why didn’t we, through our government, change the rules for all the companies, so they all had a level playing field and clear rules? Identifying why we have not fixed the rules is the path to fixing the larger problem.

What has been happening is that a few people in the bigger companies have been using the resources of those big corporations to influence our system and set the rules of that playing field to give an edge to their companies. They do this so they can personally gain.

This is where we need to focus to fix the corporate system. There should be no way for people in companies to have any say whatsoever in how the playing field on which they operate is set up. How to accomplish this is a subject for future posts.

As I said above, corporations are just a tool, like a hammer. But a hammer can do a lot of damage if a person hits you upside the head with it. That is what we have to stop: a few people using corporate resources and hitting us upside the head.

Oh, and for the record, I am pro-chair, too, though my wife will probably insist I am a pro-couch partisan.

Only 1/3 of Corporations Pay Federal Income Tax

Armand Biroonak — Wed, 03 Sep 2008 00:00:00 -0400

Two-thirds of American corporations and foreign corporations doing business in the United States pay absolutely no federal income taxes—despite taking in $2.5 trillion in sales.