November 30, 2011

Some ways to occupy the future. . .and our economic system

Sam Smith

Challenge the corporate myth

The right has successfully convinced people that multinational corporations operate in the same way as your friendly neighborhood druggist. In fact, it is hard to find examples where the former even slightly replicate the latter. Yet this myth is perpetuated not only by politicians but by the media.

In fact, large corporations repeatedly drive smaller firms out of business.

Large corporations don’t treat customers as fellow members of their communities but merely as a market to exploit.

Large corporations, unlike small businesses, are run on the lifeless model described by John McKnight: “The structure of institutions is a design established to create control of people. On the other hand, the structure of associations is the result of people acting through consent. . . You will know that you are in a community if you often hear laughter and singing. You will know you are in an institution, corporation, or bureaucracy if you hear the silence of long halls and reasoned meetings.”

Large corporations, unlike small businesses, do not constrain their ambitions in order to maintain respect and honor within a community.

Large corporations are not the major job creators; small businesses are. As the Small Business Admininstration noted in a 2010 report, “While small and large firms provide roughly equivalent shares of jobs, the major part of job generation and destruction takes place in the small firm sector, and small firms provide the greater share of net new jobs.”

Large corporations are, in fact, the nation’s major job exporters, not to mention all the money they launder overseas while avoiding domestic taxes. Yes Magazine recently put it this way: “Between 2000 and 2009, U.S. transnational corporations, which employ roughly 20 percent of all U.S. workers, slashed their U.S. employment by 2.9 million even as they increased their overseas workforce by 2.4 million. . .A series of Kauffman Foundation studies find that nearly all job growth in the United States comes from entrepreneurial startups, which by their nature are products of Main Street. It is equally significant that more than 90 percent of the entrepreneurs responsible for job growth come from middle-class or the top end of lower-class backgrounds. Less than 1 percent of America’s job-creating entrepreneurs come from extremely rich or extremely poor backgrounds.”


The carefully concealed truth is that Wall Street and corporate America hate free markets. That's why these welfare fathers keep tens of thousands of lobbyists in Washington -- to protect them from the random effects of the competition they so frequently extoll. That's why they invented welfare programs for multinationals such as GATT and NAFTA, and why they have their own branch of government -- the Federal Reserve -- to keep the economy working the way they want it.

The least free of all markets is to be found at the Pentagon, where defense contractors have become so dependent on their single customer -- the military -- that more than a few simply wouldn't know how to survive in normal business competition.

Generally speaking, the smaller the business the more it resembles the great myths of capitalism. If you want to find out what free enterprise is really about talk to a street vendor and not a Fortune 500 executive.

Typically, members of the 1% are not there because they are smarter or more creative than those in small business. As C. Wright Mills noted:

“If we took the one hundred most powerful men in America, the one hundred wealthiest, and the one hundred most celebrated away from the institutional positions they now occupy, away from their resources of men and women and money, away from the media of mass communication . . . then they would be powerless and poor and uncelebrated. For power is not of a man. Wealth does not center in the person of the wealthy. Celebrity is not inherent in any personality. To be celebrated, to be wealthy, to have power, requires access to major institutions, for the institutional positions men occupy determine in large part their chances to have and to hold these valued experiences.”

Most free workers in this country were self-employed well into the 19th century. Further, until the last decades of the 19th century, Americans believed in a degree of fair distribution of wealth that would shock many today. James L. Huston wrote in the American Historical Review:

"Americans believed that if property were concentrated in the hands of a few in a republic, those few would use their wealth to control other citizens, seize political power, and warp the republic into an oligarchy. Thus to avoid descent into despotism or oligarchy, republics had to possess an equitable distribution of wealth."

Such a distribution, in theory at least, came from enjoying the "fruits of one's labor" but no more. Businesses that sprung up didn't flourish on competition because there generally wasn't any and, besides, cooperation worked better. You didn't need two banks or two drug stores in the average town. Prices and business ethics were not regulated by the marketplace but by a complicated cultural code and the fact that the banker went to church with his depositors.

Although the practice was centuries old, the term capitalism -- and thus the religion -- didn't even exist until the middle of the 19th century.

Americans were intensely commercial, but this spirit was propelled not by Reaganesque fantasies about competition but by the freedom that engaging in business provided from the hierarchical social and economic system of the monarchy. Business, including the exchange as well as the making of goods, was seen as a natural state allowing a community and individuals to get ahead and to prosper without the blessing of nobility.

In the beginning, if you wanted to form a corporation you needed a state charter and had to prove it was in the public interest, convenience and necessity. During the entire colonial period only about a half-dozen business corporations were chartered; between the end of the Revolution and 1795 this rose to about a 150. Jefferson to the end opposed liberal grants of corporate charters and argued that states should be allowed to intervene in corporate matters or take back a charter if necessary. With the pressure for more commerce and indications that corporate grants were becoming a form of patronage, states began passing free incorporation laws and before long Massachusetts had thirty times as many corporations as there were in all of Europe.

Still it wasn't until after the Civil War that economic conditions turned sharply in favor of the large corporation.

These corporations, says Huston, "killed the republican theory of the distribution of wealth.”

Concludes Huston:

"The rise of big business generated the most important transformation of American life that North America has ever experienced."

Support small business

One good way to draw sharply the contrast between large corporate practices and those of the kind of commercial activities that Americans admire is to support small business. Strangely, neither major political party does and therefore many issues get ignored. For example, the number of laws in this country have more than doubled in the last few decades and many of these have meant more headaches for small business. For a corporation with a staff of 10,000, doing the extra legal and paper work is not a problem, but for a business with a staff of six it can be a significant new headache. Here’s just one example, described by Ehow Money:

|||| Starting January 1, 2012, the number of Form 1099s that will be processed will be required to increase. The Patient Protection and Affordable Care Act, commonly referred to as Obamacare, set new requirements for issuing IRS Form 1099s to taxpayers. Under the old regulations, certain financial transactions were excluded from Form 1099 and federal tax reporting. Under the new law, any vendor accumulating $600 over the year, regardless of the source of income, will require a Form 1099 if the income is not IRS Form W-2 reportable.

A CPA will be required to generate additional Form 1099s to be distributed to vendors. Current software programs will need improvements to perform Form 1099 production under the new regulations. Small business owners may require a full-time certified public accountant to handle the new reporting and recording procedures. Every Form 1099 received that has a value greater than zero dollars will be reported on the tax return for the filing period. ||||

Unfortunately, many well intended laws – often the product of grad school liberals lacking any small business experience – produce substantial new problems for small businesses that helps their owners to think, albeit wrongly, that the Republicans are their solution.

Politicians of both parties also tend to favor larger firms with various forms of subsidies such as tax relief, while showing little interest in helping smaller ones.

Liberals and progressives need to learn much more from small business operators, find out about their problems, and respond to them in a sensible way. The potential payoff is major.

Get people talking about facts, not theories

Political theories not based on empirical evidence are, in the words of John Nance Garner, not worth a bucket of warm piss. Yet politicians, academics and the media keeping talking about capitalism and socialism as though they actually exist in some truly definable way.

But if Glenn Beck’s house catches on fire, does he really want the only response to be from engines provided by his insurance company as was the case in the America in the 18th century?: Or is a socialist fire department okay?

And who would run the restaurants in the ideal Marxist state?

As Madison WI mayor Paul Soglin notes, “There are tens of thousands of public golf courses in the United States. Except for a group of Milton Friedman economists, I doubt that the millions of right-wing Republicans who play them consider that to be socialism.”

Part of a better future is helping the public deal with facts, not easily distorted theories.

Support the middle class

A decade before the current financial crisis, a study of fourteen industrialized countries found that America had the smallest middle class relative to the whole population. The biggest middle class was found in that den of socialist iniquity, Sweden. On the other hand, the US had the second largest upper class relative to total population (next to Ireland) and the largest low and modest income class. Said economist Lester Thurow, "Probably no country has ever had as large a shift in the distribution of earnings without having gone through a revolution or losing a major war."
But, as with small business, the plight of the middle class has been largely off the liberal and progressive tables, with a consequent loss of votes easily obtainable with a little more decency and attention.

Put economic issues at the top of the list

The major reason the right gets away with making abortion and gay marriage significant issues is because liberals and progressives have largely abandoned the issues that really matter: economic ones. To get a sense of how times have changed consider just one member of the New Deal, Frances Perkins, and some of the issues she championed, as reported by Wikipedia:

||| During her term as Secretary of Labor, Perkins championed many aspects of the New Deal, including the Civilian Conservation Corps, the Public Works Administration and its successor the Federal Works Agency, and the labor portion of the National Industrial Recovery Act. With The Social Security Act she established unemployment benefits, pensions for the many uncovered elderly Americans, and welfare for the poorest Americans. She pushed to reduce workplace accidents and helped craft laws against child labor. Through the Fair Labor Standards Act, she established the first minimum wage and overtime laws for American workers, and defined the standard 40-hour work week. She formed governmental policy for working with labor unions and helped to alleviate strikes by way of the United States Conciliation Service.||||

Name any leading Democrat in the past thirty years who can come close that.

The heart of the Democrats success in the 1930s and 1960s was making economic reform the top item on their agenda. It needs to happen again.

For starters, stop talking so much about the deficit and start talking about joblessness and foreclosures.

Go after the Reagan myth

In the fifteen years prior to the Reagan era, family income rose 16% for the poorest fifth of the nation and 23% for the richest fifth, so everyone came out ahead. In the fifteen years after Reagan's inauguration, the poorest fifth saw their family income decline 13% while the income of the richest went up 17%

Here’s a chart the Progressive Review ran in the 1980s:


Steve Kornacki of Salon wrote: By the summer of 1992, just 24 percent of Americans said their country was better off because of the Reagan years, while 40 percent said it was worse off.

Reagan's policies led to the greatest financial scandal in American history up to that time: the Savings & Loan debacle which cost taxpayers billions of dollars.

During the Reagan administration the number of families living below the poverty line increased by one-third.

After a major tax cut, there was a long recession and unemployment that hit ten percent.

And, wrote Glenn Kessler of the Washington Post, “Reagan's spending cuts barely nicked the fastest-growing parts of government, his tax cuts reduced revenue so much that later in his tenure taxes had to be raised repeatedly, his regulatory approach was criticized for leading to the savings and loan crisis and his unbalanced budgets to a near-tripling of the federal debt in eight years.”

But it does no good to have facts like these, if liberals are too afraid of criticizing Reagan to use them.

Get an agenda that people can understand

One has to go back to the Great Society to find a time when Democrats knew what they were doing and how to describe it. The Greens have an agenda, but it is complex and undifferentiated. Meanwhile, the GOP has happily gone about oversimplifying life to God and gays, abortion and Al Qaeda, and the left still can't figure out why it's losing.

Quick: describe the progressive agenda in a few sentences.

If we can't do it, how the hell is the media and the public meant to know?

Here are a few suggestions, just involving economic issues:

- Get our military out of the rest of the world and out of stupid wars and back into this country, where its expenditures will have a better economic multiplier effect (even Donald Trump’s helicopter is more economically useful than ones used to bomb Afghan homes and then blown up).

- Better yet, great reduce our military and use the funding for economically productive projects such as expanded conventional rail, new schools, water supply renovations and so forth.

- Fight to end corporate personhood.

- Reverse the high end tax cuts of recent years.

- Create single player health insurance

- Bring credit card interest rates down to single digit levels of the 1980s

- Create a variety of real program to help those threatened with foreclosure, such as modified interest rates and partial government purchases of mortgages.

- Create state banks.

- Grow credit unions, cooperatives and local currencies

- Find ways to help local businesses.

- Restore the Glass-Steigall bank regulation act

Speak United States

Scrap the phrase infrastructure and go back to one that everyone understands: public works. Then fund public works in a dramatically grander fashion than at present. To understand how pitiful the recent stimulus efforts have been, check out this Wikipedia description of the New Deal’s Works Progress Administration:

“The Works Progress Administration employed 8.5 million people in its seven-year history, working on 1.4 million projects, including the building or repair of 103 golf courses, 1,000 airports, 2,500 hospitals, 2,500 sports stadiums, 3,900 schools, 8,192 parks, 12,800 playgrounds, 124,031 bridges, 125,110 public buildings, and 651,087 of highways and roads.”

In the end, we should seek to occupy the future with a cooperative commonwealth based on decency before profit, liberty before sterile order, justice before efficiency, happiness before uniformity, families before systems, communities before corporations, and people before institutions.

3 comments:

Capt America said...

Why should corporations be allowed to own copyrights? They create no art or music, that is all done by people and that will continue to be so forever as long as the definition of art requires it, which it should.
The US gov't is not allowed copyrights, why should corporations have such rights?
It's wrong and corrupt to allow corporations copyrights.

Mickey Mouse should revert to Walt Disney, and when the 50-70 years after his death are up, Mickey should be public domain. If no creator of corporation-copyrighted material can be identified, corporations should simply be stripped of all of their copyrights immediately. They should never have had any in the first place.

Anonymous said...

"But it does no good to have facts like these, if liberals are too afraid of criticizing Reagan to use them. "

Perhaps the reason that liberals do not mention these facts is not that they are afraid of criticizing Reagan but rather because they were just as responsible, if not more so, for what happened during the 80s. The fact that the Democrats (liberals) had solid control of the House for all 12 years of Reagan-Bush I, and control of the Senate for the last 6 years, seems to have been erased from history by liberal propagandists. But the reality is that it is Congress and specifically the House that it is responsible for the budget, and it was a solidly Democratic House that created those deficits, passed those tax cuts, and is pretty much responsible for everything that has happened. It is a liberal myth that there has been some sort of Republican wave during the past 30 years, and that the Democrats have been some sort of victims. The reality is that at no point in the past 30 years have the Republicans held anywhere near the votes necessary to put through the agenda, and that at each and every point the liberals could have easily blocked everything the Repubs tried to do. Easily. They did not do so because they benefited from those policies themselves. The real story of the 80s isn't a Republican takeover, but rather the transformation of the Democratic party and liberals in general into corporate right-wingers. I was a liberal for decades, but now consider them to be infinitely more corporate than the Repubs. It's time for people to wake up to their endless propaganda.

Anonymous said...

As Michael Hudson points out, the business of the U.S. is indebtedness. Same in Capra's Bedford Falls where the Bailey- operated savings and loan provided protection from Potter's bank.