The Union of Soviet Socialist Multinationals

The Union of Soviet Socialist Multinationals

Amazon, the e-commerce giant helmed by the world’s richest man, paid no federal taxes on profit of $11.2 billion last year, according to an analysis of the company’s corporate filings by the Institute for Taxation and Economic Policy (ITEP), a progressive think tank.

Thanks to a variety of tax credits and a significant tax break available on pay handed out in the form of company stock, Amazon actually received a federal tax rebate of $129 million last year, giving it an effective federal tax rate of roughly -1 percent.

It is the second year in a row the company has enjoyed a negative federal tax rate on a multibillion dollar profit. That would place the company’s effective federal tax rate below the rate paid by the poorest 20 percent of American households, which had an effective federal tax rate of 1.5 percent in 2015, according to the Tax Policy Center.

Amazon paid no federal taxes on $11.2 billion in profits last year – Washington Post

By J.M. Hamilton (2-23-2019)

The City of New York received a three billion dollar – Valentines’ Day – gift card from Amazon, when the company announced it would not accept the city’s welfare, and would not be setting up an alternative headquarters w/in the city’s boroughs. 

It’s just the latest example of the corporate relo welfare that has run amuck w/in these United States.  Relo welfare is characterized, whereby local muni and state politicians, throughout the country, bid against one another in the hopes of bringing in an ever-shrinking pool of well paying jobs to their hometown.  The prizes for the multinationals are often free tax breaks, possibly land, infrastructural improvement, and preferential treatment by the local establishment; the prizes for politicians maybe an assortment of campaign contributions, endorsements, PAC money, political advertising, perhaps philanthropic contributions to foundations - used for political purposes, and possibly, dark money. 

During that same Valentines’ week, another news story broke, reporting that Amazon made $11.2 billion in profits, and would be paying no taxes on any of it… and in fact, due to a rigged tax code, would actually be receiving money, or a tax rebate, back from the government.

And politicians - allegedly the nation’s leaders - wonder why all the well paying jobs are drying up, and the country is bust w/ national debt at 22 trillion dollars and counting. 

Tax cuts for the rich (aka billionaires & multinationals); the plutocracy’s capture of federal & state governments; the political class’ abdication of the responsibility to regulate markets, and protect consumers, citizens & labor from the ravages of cartel, monopoly, & monopsony powers; the billions gifted to Wall Street banks, shadow banking, and multinationals daily, via the Federal Reserve…  all have left politicians, of the weaker mindset, w/ limited leverage, and little recourse, but to throw additional welfare at multi-billionaire dollar organizations in the hopes of bringing in jobs. 

Otherwise, an angry multinational might pick up their toys, like Amazon did, and run to a less meddlesome locale.

There are a handful of politicians, of the stronger mindset, however, who actually give a damn, and care about ordinary Americans.  Senator Sanders was exceptionally successful in launching a populist campaign that caused Mr. Bezos to raise Amazon’s minimum wage to fifteen dollars an hour.  This, in lieu of Amazon engaging in another form of corporate welfare, practiced daily w/in the US, where multi-billion dollar corporations pay their employees a nonliving wage, and let the taxpayer foot the bill for the balance necessary to keep those underpaid workers alive.  This is nothing less than a direct subsidy to the multinational’s bottom line. 

And perhaps, all this entered into Amazon’s calculus, when it abandoned NY.  The world's richest man - going through a messy divorce, w/ alleged “dick pics” at the National Enquirer; lambasted by Senator Sanders over minimum wages & government subsidies; and a nasty battle brewing w/in the country’s greatest metro area, NYC, over corporate relo welfare…. 

No wonder Amazon bailed.

Mr. Trump and the GOP are said to be salivating about tarring the 2020 Democratic nominee as a socialist.  However, the true welfare queens (a trope exploited at its apogee, by candidate Reagan) are US multinationals, who never miss a trick w/in our rigged system to profit, by stealing from the government & the taxpayer.  Despite all the Ayn Randian chest-thumping about rugged individualism, with monopolies, always remember, what is theirs is theirs - unless there are losses, and then, they are socialized - and what is yours is theirs, too.  The government exploitation angles are too numerous to count.  That’s why they hire, McKinsey & Co.

Google, another multi-billion dollar tech behemoth, also plays the relo game.  Google comes to cities, states, and towns –  w/ agreements of sworn secrecy (like Amazon, there can be no transparency), and wearing the mask of some derivative LLC or made up corporate name –  seeking welfare and tax subsidies, too.  Except Google is really quite shrewd.  In that, taking a page directly from the military industrial complex’ playbook, Google is spreading themselves around the country and throughout the globe's nations.  Per the WashingtonPost, Google now has a geographic footprint that includes seventy offices worldwide, including “15 data centers on three continents.”  Alphabet Inc. (aka Google) knows that if they can provide a sprinkling of jobs to as many states as possible - spread the wealth, so to speak - fewer politicians will have the courage, or temerity, to challenge Google on: privacy; the plundering of personal data; its monopoly; and a tech industry/company that has jumped into bed w/ the Deep State and the MIC, itself. 

Meanwhile, the disenfranchised, the poor, the middle class, mothers and children… are told to enjoy a nice steaming bowl of austerity, because the government has maxed out the country’s credit line on the true welfare queens: US multinationals, Wall Street banks, and MIC contractors.

Socialism & welfare for billionaires & multinationals, and austerity & bootstraps for our children and the poor: no wonder the US birthrate – in certain states, particularly among Trump voters – is lower than the death rate.  Meanwhile, relo welfare rarely, if ever, pays the purported dividends/results back to the muni or state, in terms of increased jobs or an expanded tax stream (just ask Wisconsin’s former governor, Walker, about Foxconn).

Союз Советских Социалистических Транснациональных Корпораций

JMH has written extensively about holding corporate leadership accountable for our crony economy & government.  But perhaps, simultaneously, it’s time to hold our owned politicians accountable as well.

As there are clawback provisions written into some C-Suite contracts - whereby in the event of accounting irregularities, or fraud, the offending executive forfeits bonus and pay - perhaps it's time to have similar provisions w/in politician pay?  (Note, the proposed politician clawbacks are not a substitute for campaign finance reform, term limits, nor caps on the duration of the campaign season, and a whole host of other democratic & lobbying reforms.)

What better way to restore the public trust in Congress, and state and local legislative bodies & counsels?  Start with written accountability, performance, and transparency standards, deduct 20 to 25% of the political class’ pay and campaign contributions, and hold it in escrow for ten years.   At the end of ten years, if there’s no accountability, performance, or transparency violations, said politician receives the pay/campaign contributions that were set aside ten years prior.  Otherwise, if there’s a deviant malfunction, or some other sordid scandal, then said contributions/pay becomes forfeit, and the taxpayer’s property (or perhaps a victims fund is financed from forfeit pay).

Some might argue this is civil forfeiture in reverse (which SCOTUS took a hammer to just this week); but if a law has been broken, or fraud committed, then arguably, due process has occurred.

In short, if we are going to clean up our basket case of a democracy, and the crony –economy, we need to hold both camps responsible:  not only our elected politicians, but the billionaire, C-Suite & multinational class, as well.

It seems that when it comes to doing backroom deals, the Union of Soviet Socialist Multinationals, and our elected politicians, just can’t help themselves, enough.

Copyright JM Hamilton Publishing 2019

Billionaires & the Rise of Socialism

Billionaires & the Rise of Socialism

Surveys are showing overwhelming support for raising taxes on top earners, including a new POLITICO/Morning Consult poll released Monday that found 76 percent of registered voters believe the wealthiest Americans should pay more in taxes. A recent Fox News survey showed that 70 percent of Americans favor raising taxes on those earning over $10 million — including 54 percent of Republicans.

-       Soak the rich? Americans say go for it,  Politico

By JM Hamilton (2-9-2019)

Wow, the times are changing, and rapidly. 

There was a time in America when the middle class, and even in some cases the poor, cheered the boy or girl who made good; but now, when a billionaire pulls themselves up by their bootstraps, Americans increasingly ask who said plutocrat killed or stole from?  And fortunately or unfortunately, depending upon one’s perspective, Americans are coming to realize that is they who are the victims of the billionaire class… it is the 99% who have been robbed, or, all too often, had their lives cut short, by the very system the plutocracy have built.

Horatio Alger – and the American Dream – are dead now.  Mr. Alger was strangled to death by a rapacious billionaire class, as well as, Wall Street analysts and mavens, who place accelerated & quick profits before the economic, fiscal, moral, and political health of the nation.  (In fact, it is these very same analysts & mavens, who often confuse Walls Street’s general health, w/ Main Street’s health; when in the modern era, the two street’s interests have – in most instances – become diametrically opposed.  In short, what is good for Wall Street – layoffs, downsizing, consolidation, the offshoring of labor, and financial engineering, that is loading companies up with debt – is not good for Main Street.) 

Despite the GOPs politics of division, fear, and hatred, Americans – rapidly – are waking up to the realization that it is not one another we have to fear, but the billionaire class. 

We saw last week story after story of how Americans – the clear majority of Americans – want to see the super-wealthy taxed in a more progressive manner, whether it be by estate, income, or wealth (or better yet, if we ever are going to level the playing field, and contain & mitigate the growing threat the robber baron class presents to the 99% and representative democracy… why not the trifecta?).

Of course, the powerful and the rich reacted as they always do. 

Ø Trump played the “socialist” card during his State of the Union address. 

Ø More than one plutocrat said that higher taxes upon the super-wealthy would cause the United States to end up like Venezuela.

Ø While Kevin Hassett, who chairs POTUS Trump’s Counsel of Economic Advisors, called Demo plans to tax the kleptocracy, “economically illiterate.”  (This from a man who predicted the Dow would hit 36,000, back in the '90s.)

Clearly, the billionaire class is running scared and in the process failing to ask the key questions: Why now?  Why are a majority of Americans increasingly warming up to the idea of higher taxation upon the exceptionally wealthy, and the transfer of wealth to those in need?

The problem for the Davos elite is that POTUS Trump campaigned upon the fact that the economy, the government, and the nation are rigged, as did a leading 2016 Democratic candidate, Senator Sanders (Mr. Sanders not only campaigned upon the argument, but then, illustrated it first hand, when the Clinton campaign & its proxy, the DNC, stuck the proverbial knife in the Senator’s back throughout the primary process).

In short, most American’s aren’t buying the plutocracy’s amateurish sales job, which is largely premised upon fear.  That is to say, most Americans are well aware that the financial elite are engaged in their own special brand of socialism & the raiding of the government, courtesy of campaign contributions, Gucci Gulch lobbyist, and a US government that is owned.

This is not good.  Capitalism – not crony capitalism – but the capitalism that provides excellent customer service, innovative products & services, well paying jobs, and rising opportunity has a future (particularly when coupled w/ healthy social programs provided by the state, that support the least among us, or those left behind by a predatory elite).  In short, a capitalism that is defined by many competing entrants into the market place is what is needed.

What doesn’t have a future is an American economy where: a few billionaires rule our country; wages stagnate for decades; monopolies & cartels control the majority of sectors w/in the macro economy; companies are bankrupted & pension funds looted for grandiose profits; and any prospects of upward mobility are about as slim as winning the lottery. 

Fear doesn’t have a future for American labor.  When forty percent of Americans live a hand to mouth existence, and one in five children live in poverty…  socialism – particularly, the highly successful brand seen in Western Europe, Scandinavian countries, and Canada – seems like an outstanding alternative.

At the end of the day, Americans are keenly aware that socialism works, just as capitalism works.  They also know that socialism, like capitalism, in the hands of a dangerous dictator, or thug politician, can be manipulated – by corruption or fraud – to benefit an elite few and turned against the many.

In fact, America is full of excellent examples of socialism that does work:  Social Security, Medicare, the DOD (when it's not engaged in failed nation building), the local fire department… and w/in the private sector, the NFL, Wall Street banks (bailed out during the 2008 crisis), and insurance companies are all outstanding examples of a socialism that works (in some instances for the few, and in other instances for the many).

Which brings us to what is socialism?  Socialism, in its purest form, is the pooling of risk by a group of citizens or a society, and collectively ceding power to a private collective or governmental body to manage said risk.  Socialism subverts the ego and id, and dethrones individualism, and forms a community that comes together – bands together – to mitigate risk (or an existential threat) at a micro or macro level.  (Many people probably don’t know this but the State of Israel was pioneered by socialists, European & Russian emigres – fleeing pogroms & racism – to scratch out a living on communal farms in a desert, called Palestine. To survive a hostile environment, the founders of the State of Israel, Zionist, lived on communal farms, called a kibbutz.  Many of these communes are alive and well, w/in Israel, to this very day.  Who knew America's number one ally in the Middle East was, & remains, to some degree – gasp – socialist?)

Insurance, a classic example, is the pooling of risk at a micro – economic level.  So that if, by way of example, a business or property owner suffers an unforeseen event or loss, said owner doesn’t have to pay for the loss in its entirety, like a rugged-individualist would – by themselves.  Number crunchers, actuaries, know the probability that so many buildings – w/in a pool of risk - will catch fire in a given year.  Armed with this data, the underwriter, if they do their job correctly, prices the risk or premium, so that no single policyholder or participant w/in the pool suffers a catastrophic loss (which could harm said business owner’s earnings, if not land the business, itself, in bankruptcy).

Socialism requires risk and sacrifice however, not unlike capitalism.   When someone pays into social security all their lives – basically another example of the pooling of risk or socialism – they run into the possibility they could die at an early age, whereby they never see payout.  Likewise, any participant in a capitalist, or socialist, project runs the risk of lost labor, time, or wages (versus engaging in alternative endeavors, also known as opportunity costs).

If we are honest with ourselves, aren’t American workers – in an increasingly consolidated American crony-capitalist economy – facing a similar set of downside risks?  By adopting the crony-capitalist model - w/ increasingly diminished employment opportunities or options, and very little say in the economy or government - isn’t American labor incurring the opportunity costs of an alternative system, that potentially is far more rewarding?  Whether that system is a more compassionate form of capitalism, an enhanced mixed economy, or outright socialism?

Workers at an Israeli kibbutz

When both systems – capitalism and socialism – work in harmony, it’s the best of both worlds.  However, when the financial elite prey upon the tremendous resources of the US government for their personal enrichment, while paying at tax rates significantly below the middle and upper middle class (that is if they bother to pay any taxes at all), it tends to upset a great many Americans.  When the financial elite throw verbal Molotov cocktails at anybody who decries, or threatens, the rigged system they have built for themselves, the people eventually catch on to the con.  And when this same billionaire class, run up the debt to pay for their own 2008 bailout, and then use this same debt as an excuse to enforce government austerity upon the people, it’s bound to incite political rebellion.

Therefore, the overthrow of establishment/centrist political parties – who represent the billionaire class’ interests – throughout the West.  Hence, Brexit… and the arrival of populist parties that would have been considered extreme and inconceivable before the 2008 financial crash.  Republicans, and establishment Dems, who have handed out a byzantine tax code the size of telephone directories for the wealthy, and well healed tax attorneys & accountants, but don’t have the courage to offset trillion dollar tax cuts w/ offsetting cuts in government spending…  in effect, financing tax cuts for the wealthy…  are running up huge deficits, and robbing this & future generations, to coddle an ultra-wealthy donor class, today.

For the fifty to sixty percent of Americans who are making it and live a comfortable existence, today, these can be challenging and frightening times.  Fate and the economy have smiled upon you, seemingly, and the middle & upper-middle class don’t want change.  As the system is rigged against all forms of labor – via collusion w/in industries, not to hire from one another; non-compete agreements; monopoly & monopsony powers w/in the industrial & service economy – yes, change is highly disconcerting for those who are doing well.  AI, globalization, and tech have only added to labor’s uncertainty, whether you’re making it or just getting by.

But change is inevitable, and the US has more than a few industries, like Big Coal, that should go the way of the buggy whip.   One way to insure yours and your family's survival – during these challenging times - is to support candidates & politicians willing to challenge, and break up the power base of an elite few.  And that base of power is vast and unseemly wealth, as well as, the source of that wealth (as often as not, rent seeking cartels and monopolies).

The elimination of concentrated wealth better insures the stability of our democracy, the economy, labor markets, and our government.  As it stands, the kleptocracy can, indeed, turn this nation into Venezuela, so concentrated is their power and so dominant is their sway over the economy.  

It is no idle threat.  

The super-wealthy, and Wall Street banks in particular, can manipulate the US economy… just ask Fed Chairman Powell about taper-tantrums.

Americans used to view the prospect of wealth, as a ticket away from the cares and worries of this world; and that’s why citizens, perhaps naively at times, had bought into the American dream: that anybody can make it big; that anybody can become wealthy.  But increasingly, the dream has vanished, (and billionaires have played no small role in making that aspiration disappear) all the more so for those of limited education and means.  We are also seeing a younger generation come up in America, who are not entirely enthralled by materialism.

As such, socialism, and heightened government regulation of business activities, increasingly, is seen as a means to mitigate the risk of a crony-capitalist system that benefits a privileged few at the expense of many.  (Examine the GI Bill as yet another outstanding socialist program that made America great, and rewarded US soldiers, who risked their lives for a grateful nation & world.) 

Government intervention & redistributive policies, in favor of the people, are seen as a means to provide freedom from the cares and worries of a world turning particularly violent - economically & politically - against, nearly, the majority of Americans w/ limited, or no, resources.

As for our billionaire friends, they’d probably do well to remember that the catalyst for both the American & French revolutions were excessive taxation foisted upon the mercantile, middle, and lower tiers of society (while royalty, aristocracy, and nobles often escaped taxation, altogether).  Interestingly, some of the taxes issued by the English monarch against the American colonies were used to pay for – what was increasingly viewed as  - an occupying British military force.  These taxes not only were issued directly by the state, England, but also, indirectly by monopolies – empowered by the state (aka the British East India Company) – in the form of attempted monopolistic taxation/profit taking, against the American colonies.

Some may recall the famous dumping of the tea, in a then, colonial backwater, Boston Harbor.  

And hence, the rumbling of the tumbrels to the Place de la Concorde within Paris, relatively, a few short years later.

Given their colossal power, both w/in the private & public spheres, w/ no checks or balances against same, Americans have every right to ask if their current rulers – the billionaire class -  should even be allowed to exist?

P.S.  For those who say the wealthy contribute to charities & foundations, my response would be that the detrimental impact the ultra-wealthy have upon the economy & government far outweigh the good.  For those who say taxing the ultra-wealthy will not pay down the national debt, JMH would remind those individuals that tax policies also serve a social role (to control and contain bad behaviors & outcomes, while also, encouraging behaviors society deems favorable).  And finally, to those who say the Green New Deal & social spending are unaffordable, given the national debt, JMH responds that the Federal Reserve, via monetary policy, can make good things happen.  If the Fed can print trillions to bailout billionaires, banks, finance credit card wars, and provide tax cuts for the ultra-wealthy, surely the Fed can expand its balance sheet - or even write down Federal debt - to pay for social spending for the nation and the 99%.

Copyright JM Hamilton Publishing 2019