Futurism: Misanalysis of the Recent Tax Bill Exposed
Economics is one area in which Americans don’t need Russians to infiltrate and sow dissent and confusion. We have plenty of dissent and confusion without the Russians. I’ll build my case by attacking a strain of thought that has invaded my Facebook feed ever since the tax bill passed. I’ll call it Pollyanna leftishness. The arguments sound reasonable on the surface, but they omit a lot of history and jump to the conclusion that if only we go back to very high taxes on corporations and rich folks, all of our problems will be solved.
The argument starts with the 1950s. Eisenhower Republicanism. 90% top tax rates. So what did the corporations do? They didn’t want to give all their money to the government, so they invested in capital equipment and built their companies. They invested in pension plans because that took a lot of income off the books. What they didn’t do is pay their executives the sky-high, obscene salaries currently earned by Goldman-Sachs management and their ilk. And since they were paying 90% taxes, they demanded services that supported business. Roads, bridges, public schools—you name it—if it benefitted General Motors, the government was willing to do it. And that Nazi sympathizer, err, sorry, captain of industry, Henry Ford showed us that if you pay a decent wage to workers, they can afford to buy your product. So in the 1950s, all was hunky-dory for the only folks that mattered—white, heterosexual, Christian men.
But then the evil Supreme Court in 1978 threw out the usury laws. Heavens, why build a business and earn 5% return on your capital when you can make credit cards and charge 29% interest on the dolts who don’t pay them off every month? Why employ American workers when you can just steal from, err, sorry, extend credit to, them? And when corporate America discovered the section of the tax code numbered 401K could apply to individuals, why give them a pension? Let them invest money themselves. You know, trust those worthless fools, err, intelligent folks that we of industry can now avoid responsibility for, err, sorry, can now empower to guide their own financial futures. And then if we have legacy pension obligations, we’ll just go bankrupt! Lax bankruptcy laws allowed the holders of capital to reorganize, reconstitute, run away with the money, and leave those American workers, err, freeloaders, high and dry.
What’s more, let’s throw out as much regulation as we can, because we don’t want to in any way restrict the pirates, err, captains of industry. So we got junk bonds, investment bankers galore, savings and loan corruption, near collapse of the economy, government bailout and recession.
So far, so good. Now our Pollyanna leftishness advocates make their logical leap: because tax rates went back up under Bush I/Clinton and the economy “recovered,” high tax rates on rich folks and corporations must be the key to repairing the economy. In my eyes, they are missing one key detail: competition. In the 1950s, American companies were making American products to sell to Americans. In the 1980s, when the US should have collapsed from overspending on the military (as did the Soviet Union), instead, the US rebuilt, because competition was still low. China was nowhere near the economic powerhouse it is today. Europe was in the midst of the chaos surrounding the early years of a unification plan that nobody knew would work. France and Germany cooperating? Not at war? Whodathunk that would work?
The Clintonite solution was neoliberalism: NAFTA and GATT. Free trade allowing our capitalists to make money worldwide by going where labor is cheapest and shipping inferior crap back to America where the shopping class would max out their credit cards buying it. It should have failed. But, we were at peace, so we could reduce the military budget to some extent and even pay down the debt. And in the late 90s, we had the rise of Internet-based businesses. Surplus capital needed to go somewhere, so it invested in the market itself. Why build a business when you could just be a parasite? If you buy a stock, the workers don’t get a nickel of it, nor do the owners—it goes to other speculators, other parasites. Sure, there were IPOs in the tech boom, and the companies did get that money, and they got a lot more of the money when bigger companies bought their companies. Raising the stock prices still more! Thus, the longest bull market in world history, stretching from the mid-80s all the way through the dot.com bust.
So, the emperor has no clothes. Business is bust, and stocks are sinking. What do you do? Invest in real estate! Glass-Steagall and other regulations thrown out, money gets plowed into buying land and buildings. And then when those aren’t really of the value for which they were sold, the bankers bundled the mortgages and other paper into more and more complicated derivatives that few understood but many bought.
And then that all fell apart and plunged the country into a deep recession. And lo and behold, Bush II couldn’t fix it. Because to fix it, you needed to be a Keynesian. In comes sort of one, one who says he admired Reagan and believed in free markets—but he was Black so of course nobody listened to him and instead assumed he was a liberal, and, guess what, the Black guy was telling the truth, he was a Reaganite—and this guy does indeed spend craploads of money, but he does it by handing it to big banks, car companies, and, through the process of quantitative easing—buying back government bonds—to the entire investor class. Well, you give the rich lots and lots of money, and at least some of it will be spent, inefficiently, true, but efficient enough to bring the US economy out of free fall and give the illusion that things are working again.
But lots of folks are still out of work. And wages are low for those who do have work, and for many, it’s work without benefits, work without secure hours, work on which you can’t support a family. So what’s to be done? The hard right says just cut taxes and the wealthy/corporations will invest and create jobs. They won’t reward their shareholders—no, not them. They won’t pay big bonuses to their executives—not those salt of the earth types with the nice suits!
Horse manure says even the Congressional Research Service. So, the Pollyanna leftishness advocates argue to do the opposite. Soak the corporations and soak the rich. Then we’ll go back to the 1950s, they’ll be forced to invest rather than pay those taxes, and jobs will be created.
Also horse puckey, I say. It worked under Bush II and Clinton only because there was no effective competition. China is now the leading economic power in the world. Despite Brexit, Europe is doing terrific. And Japan has positioned itself, with a new free trade agreement with the European Union and soon to be a trans-Pacific Partnership without the US, as the one nation positioned to trade with everyone. The US manufacturing sector can’t produce enough goods with old school manufacturing at a price low enough to compete with cheap imports, so it can’t employ in the way that it did in the 1950s. And high-tech often means low employment. A company that is in essence on sidebar on Facebook may be worth a few hundred million dollars and employ three workers.
Politically, it is also impossible at present. Indeed, corporate, personal and estate taxes are headed downward with the new tax bill. And phase II looks like it will consist of raiding Medicare and Social Security to pay for those tax cuts (and for increases in military spending).
So why the hell is the working class going along with this insanity? The right owns the media. The right owns the standardized testing companies that have dumbed down the public schools. And yet, the message of let us wealthy keep all your money still doesn’t resonate by itself. Even the division, the hatred between races and ethnicities and groupings of all kinds that the Russian saboteurs so love wouldn’t get the right elected by itself. There had to be a wedge issue, one on which an intelligent, working class person can say, sure, I don’t buy all this trickle-down stuff, and I’m not crazy about the wars my kids are dying in, and I don’t like it that my health care has been gutted and I don’t get a pension, and I don’t really buy into all this hatred—I don’t have a problem with gay people, and I don’t want the cops shooting Black people, and I don’t think deporting every Hispanic worker is a great idea. But abortion is murder, isn’t it? And if the liberal/left/Democrat/whatever-they-ares support murder, then I’m going to vote for the conservatives.
So that’s it. A lot of lying in the media, a lot of obfuscation, and a lot of putting abortion front and center as the only issue you true Americans should care about, and the kleptocrats get to keep stealing from the economy until it completely collapses. And just reigning in the wealthy with taxes wouldn’t fix that anyway, because then they’d just move their money overseas. As they’ve already been doing.
I titled this post futurism. That’s one possible future for the US: a slow and steady economic decline, combined with increased militarism and increased authoritarianism. A second possible future is revolution. The poor could rise up, go terrorist, and set off bombs in the country clubs, Republican Party conventions, etc. I’m not betting on it. The propaganda is working too well. As John Steinbeck put it, in America, “…the poor see themselves not as an exploited proletariat but as temporarily embarrassed millionaires."
The alternative is to look to other countries where things are working better. What do Germany and Japan have that we don’t? Well, good public transportation, universal healthcare, cheap/free higher education, high rates of literacy and reading, high levels of investment in research… Yeah, not the stuff a particular politician emphasizes when he speaks of making American great again.
The only high-employment future for the wealthy nations of the world is one tied to innovation, but our laws make this future impossible. Biotech promises high-end products—medicines, environmentally friendly crops and agricultural chemicals, industrial enzymes tailored to specialty manufacturing—but the laws governing them stem from the era of the Model T Ford. These companies spend their money on lawyers who work the vagaries of patent law to finagle protection for near-identical knockoffs of moneymaking products rather than innovating. And with the slashing of research spending that began in the Bush II era and the subsequent concentration of research in a very small number of high-end universities and research centers, the innovation climate and highly trained domestic labor force that had emerged in the 80s and 90s is no longer nearly what it was. A cadre of high-end lawyers have appeared, who along with executives in the banks and those in charge of some of the healthcare sector make up the part of the upper echelons of the one percent who did anything at all for their wealth, the rest being inherited from the crimes of previous generations.
It may indeed be important to reduce the power of these ultra-wealthy by taxing away some of their wealth, but I’d argue it’s more important to focus on what the government spends its tax revenue doing.
Could the US elect politicians willing to invest in green technology, alternative energy, high-end artificial intelligence and robotics, but also world class education that is free all the way through university level, decent healthcare for all, high-speed broadband for all, standardized test-free and well funded K-12 education, and all the social workers and psychologists needed to get those beaten down by the current near-collapsed state of this country back to the point of productivity? Citizens who would seek out media not controlled by the kleptocrats? People who would think critically and participate democratically? Could these same folks elect leaders willing to overhaul the patent system so it supports rather than stifles the innovation economy?
I doubt it. Slow collapse seems more likely. Especially when compounded by the ecological collapse that is coming because of our unwillingness to deal with carbon dioxide and other pollution.
The one novel argument I will make here—everything else has been said elsewhere—is that the key issue to solve in order to produce a movement ready to tackle all other issues is abortion. Sides have dug in. Democrats are pro-choice, Republicans are anti-abortion. To one side, it is autonomy for women—are they forever the slaves of men, forced to bear children against their will, or are they free? Paradoxically, that was the position of Ayn Rand, who considered abortion rights the single most important issue for which libertarians must fight. But that was in the 1950s, before the fundamentalist vote was so important to the economic conservatives. Or is abortion murder? Are those who oppose it preventing a Holocaust? These are the terms in which this issue is argued, and as such, raising it above all other issues, you have the current political situation, in which many of those most hurt by right-wing policies vote right.
I don’t see how to resolve that political impasse. As such, I foresee slow societal collapse lasting until the time of ecological catastrophe. Indeed, that’s where my novel-in-progress, which hopefully will be completed in 2018, starts, in the last days of a Second Civil War. The United States has fragmented along religious/regional lines. The country that emerges still calling itself the US—Pennsylvania, Delaware, and all states further north—is a highly militarized, economically stratified, authoritarian state, largely following the dictates of the Chinese. The Christian Republic has evicted anyone who is not white and Christian, and it too follows the dictates of the Chinese. Each is the bogeyman for the other, keeping the populace in line out of fear. (There are other regions, but they aren’t relevant to the discussion at hand.)
Please prove me wrong. I’d like the young people with whom I interact to have a future less bleak than the one I imagined.