The Real Welfare Queens

America’s most generous welfare system is one in which the rich get richer, and the rest of us pay the bills.

Both Axios and American Progress have reported on the taxes paid–or more accurately, avoided– by members of the Fortune 500. This was at a time when corporate profits were more than healthy, and in the view of many, a time when corporate greed has contributed to the inflation that is eroding wage gains.

The table at the link shows 2021 federal income tax expenses, pre-tax earnings, and effective corporate income tax rates for 19 companies in the Fortune 100. Four of them show a negative tax rate, or zero taxes owed that year and for some, entitlement to a refund.

I’ve pared down the following list to the name of the corporation, its pre-tax earnings after allowable deductions and credits, and the effective tax rate. There are many more companies that fall into this category, but this will give you a (bitter) taste…

Amazon.com Inc.
$35.1 B
6.1%

Exxon Mobil Corp.
$9.3 B
2.8%

AT&T Inc.
$29.6 B
−4.1%

Microsoft Corp.
$33.7 B
9.7%

JPMorgan Chase & Co.
$48.2 B
5.9%

Verizon Communications
$27.2 B
6.9%

Ford Motor Co.
$10 B
1.0%

General Motors Co.
$9.4 B
0.2%

Chevron Corp.
$9.5 B
1.8%

Bank of America Corp.
$30.6 B
3.5%

United Parcel Service
$14 B
9.9%

FedEx Corp.
$4.7 B
4.2%

MetLife Inc.
$4.8 B
1.3%

Charter Communications Inc.
$6 B
−0.2%

Merck & Co. Inc.
$1.9 B
4.0%

American International Group Inc.
$9.8 B
−2.2%

Dow Inc.
$1.5 B
−3.1%

Nike Inc.
$5.6 B
5.9%

A recent Guardian analysis of top corporations’ earnings shows most of them are enjoying significant profit increases while they continue to pass higher costs on to customers. And despite record profits and minimal or even negative taxes generating big refunds, several of these companies–Amazon is notable–are frantically opposing the unionization of their workforces.

If you wonder why the gap between the rich and the rest continues to grow…

A recent article from Time Magazine traced the history and effect of unionization.

Unions became popular in the U.S. starting in the 1930s, with membership rising from just over 10% of the eligible working population in 1936 to about a third by the mid-1950s, according to 2021 research published in the Quarterly Journal of Economics. That remained the case until the mid-1980s, when they fell out of favor, thanks to a culture in which companies refocused on maximizing shareholder value and minimizing worker benefits, as well as a court-backed emphasis on the value of private property and private profit. “Those years turned out to be basically a blip in what otherwise has been not only a very contentious, but many times a very violent interaction between workers and employers in this country,” Devault says of the mid-20th century.

During unions’ heyday in the U.S., however, the income gap between the richest and poorest Americans shrunk considerably. “The only time that the bottom tenth of the population and the top tenth of the population have come closer together has been during those years, when unions were operating in the largest corporations in this country,” Devault says. As unionization declined in the 1970s and 80s, that income gap grew once more. Today, it is at an all-time high since tracking began over 50 years ago, based on Census Bureau data. Research shows that as much as $50 trillion has migrated into the coffers of the top 1% of income earners in the U.S., an upward redistribution of wealth that has squeezed out the middle class.

Business schools are finally recognizing that shareholders aren’t the only stakeholders who matter to the success of a business enterprise. Employee morale is ultimately as important to the bottom line as tax avoidance. For that matter, a prosperous middle class consisting of people with disposable income is critical to sustained business success.

America’s tax system is an abomination. You need not be anti-capitalist to insist that the rich pay their fair share to the country that provides them with the wherewithal to make those fortunes.

I’d be willing to bet that the “captains of industry” who manage those tax-avoiding businesses don’t resent paying the dues charged by fancy country clubs; they know it takes money to maintain glitzy clubhouses and immaculate golf courses. It also takes money to maintain the roads and bridges over which manufacturers ship their goods. It takes money to pay the police and firefighters who provide businesses with security and public safety, and it takes money to compensate the judges and other personnel who administer the legal system all businesses depend upon.

Etcetera.

During one of the 2016 Presidential debates, Trump responded to Hillary Clinton’s charge that he’d played fast and loose with his taxes by sneering that his tax avoidance meant he was smart. Too many executives agree with that sentiment, and they are all wrong.

The truth is, they are the “welfare queens” that they like to disparage.

Comments

It’s More Complicated Than That!

When I was teaching, my introductory lecture always included something along these lines:  Welcome. We’ll be studying several issues about which Americans disagree, often passionately.  I may or may not share my own perspective on some of those issues, but if I do, let me assure you that your grade will not be affected by whether you agree with me.

That said, there’s one insight I do intend to inculcate and do want you to incorporate in your world-views. I want everyone who leaves this class to use two phrases far more frequently than they did before enrolling: it depends and it’s more complicated than that.

Most issues–in and out of academic life–are less straightforward than politicians and pundits like to insist, and helping students recognize that fact is essential to effective instruction.A recent book written by Yascha Mounk underlines that complexity.

Mounk was addressing the common perception that the United States will soon be “Majority minority,” a perception based upon demographic projections that have been widely publicized. (I’ll admit to accepting those projections at face value.)

For the foreseeable future, the implication goes, America will be characterized by a clash between two mutually hostile blocks—and because of its shrinking size, the group that has traditionally dominated the country will soon lose much of its power.

That very simplified belief has cheered progressives, who believe more people of color will translate into stronger civil rights and a more robust social safety net. It has  triggered a frantic backlash by White Supremicists, seen in the chants of alt-right activists insisting “We shall not be replaced,” and in the overt racism displayed by people who believe that social dominance is a zero-sum calculation.

As Mounk points out, demographic reality is more complicated than that.

But the set of assumptions which underwrites both these hopes and these fears is mistaken. Most developed democracies will never become “majority minority” in any meaningful sense. It is highly premature to assume that the politics of the future will neatly pit “whites” against “people of color.” And anybody who wants diverse democracies like the United States to succeed actually has reason to celebrate the fact that demography, despite the belief that so many parts of both left and right now share, is not destiny.

When the United States Census Bureau projected that the country would become majority minority sometime in the 2040s, its demographic model was presented as an exercise in science, giving the prediction an air of unassailable fact. But this conceals the extent to which the categories used by the Census Bureau to classify Americans as white or non-white rely on highly questionable assumptions about how they identify now—and even more questionable ones about how they will do so in future.

Does the child of two white immigrants from Spain count as white or Hispanic? (According to the United States Census Bureau, the answer is: Hispanic.) Will the child of a white father and a Chinese mother identify as white or Asian? (Asian.) And is someone who has seven white great-grandparents and one black great-grandparent white or black? (Black.) Seemingly scientific, the projections of the Census Bureau assume that all Americans who have either a drop of non-white blood or some distant cultural heritage connecting them to a Spanish-speaking country will be “people of color.”

It isn’t simply that the census bureau’s categories are questionable.  We’ve come a long way from the time when a majority of Americans opposed racial “intermingling” via dating  or intermarriage. The data confirms that change; according to Mounk, in 1980,” fewer than one in thirty newborns in the United States had a mother and a father from different ethnic groups.” Today, not only is the number of people who oppose interracial marriage relatively small, by the late  2010s, one out of every seven children born in the United States was mixed-race.

That’s an astonishing turnaround–and it further complicates those simplified “majority/minority” projections. For one thing, according to newspapers and demographers, every single one of the babies born to these couples is classified as a “person of color.”

That classification is at odds with the self-perception of mixed-race children, many of whom see themselves as White. Similarly, a majority of children with roots in Spain or Latin America who are neither black nor indigenous consider themselves ethnically white rather than Hispanic.

Bottom line: we need to resist the urge to “slice and dice” our fellow Americans into opposing ethnic enclaves. As Mounk reminds us, Americans once feared the conflicts posed by Irish and Italian immigrants, yet today, the “distinction between Americans who hail from Sussex and those who hail from Sicily seems quaint.”

Ethnicity isn’t destiny, political or otherwise. It’s more complicated than that.

Comments

Can I Rail Against American Rail?

Logic and American public policy all too often have zero connection to one other. The distance between what government ought to be doing, especially about infrastructure–and what government is, or more accurately, isn’t doing–is especially obvious when it comes to rail.

Trains.

Anyone who has ventured onto the nation’s highways can appreciate the benefits of shifting freight delivery to rail from the huge number of long-haul trucks that clog those highways. But those benefits aren’t limited to safer and easier driving for motorists, or even to less wear and tear on roadways that taxpayers must maintain at significant cost. Trains pose far less threat to the environment:

In absolute terms, the picture is clear. Worldwide, road users account for about 71% of transport CO2 emissions, with railway companies making up less than 1.8%, next to 12.3% for aviation and 14.3% for shipping, according to the International Energy Agency and International Union of Railways.

When it comes to passenger travel, the picture is cloudier because the United States simply does not prioritize travel by rail, and a traveler’s ability to make an informed choice–to decide how to get from point A to point B–is thwarted by the fact that all too often, no trains run between those points. Even when passenger trains are available, they are often old and the tracks poorly maintained, thanks to years of underfunding Amtrak. (To the extent that there is an exception, it is in the heavily populated Northeast Corridor, where the Acela is extremely popular.)

My husband is a train buff who follows news about Amtrack; he recently shared an item that illustrates America’s neglect of the country’s rail infrastructure.

When Amtrak was last reauthorized by Congress, the criteria for the board of directors was changed to bring a broader swath of members to the board from outside of the Northeast Corridor.

Today’s board members, all appointees from the Obama administration, are all continuing service after the expiration of their appointed terms. Amtrak’s by-laws allows board members to continue to serve until a new board member has been nominated by the White House and confirmed by the United States Senate.

At this moment, every board position from the chairman down to the most recent appointee are all out-of-term and waiting to leave when their successor has been confirmed by the senate.

As of now, the Biden White House has not nominated any new members to the board after being in office for 15 months.

Given Joe Biden’s long support for– and personal use of– train travel, this is especially annoying.

My husband and I have traveled extensively on trains in Europe and Asia. They are plentiful and up-to-date (bathroom facilities in each sleeper car, excellent dining options. wifi, etc.). In Europe, destinations are closer to each other, but in China, we were on trains that took days transversing lengthy, often unpopulated, landscapes.

Our last train trip in the U.S. was from San Francisco to Chicago (Indiana has refused to participate financially in rail, so options from Chicago to Indianapolis are scant. That leg required MegaBus…)

We had booked the best sleeper on the train. To say it was a disappointment would be a distinct understatement. The cars were at least 40 years old, and tired. When the seats in the compartment were turned down to make beds, you couldn’t open the door to the bathroom. Needless to say, there was no Wifi. Thanks to delayed maintenance of tracks, we hit a place where they’d washed out (I no longer remember where). We sat for several hours while Amtrak figured out how to re-route us onto tracks owned by carriers operating freight trains. Ultimately, we were 19 hours late getting into Chicago.

That trip was a nightmare, but we were on vacation–we didn’t have to be anywhere at any particular time, so we were annoyed, but not terribly inconvenienced. Obviously, however, “service” like that will never generate the sort of robust business and personal travel we routinely saw in  Europe, where businesspeople filled one train–with Wifi, and various other amenities–that ran every twenty minutes from Madrid to a city in southern Spain, roughly the distance between Indianapolis and Pittsburgh.

Multiple studies show that rail travel is environmentally superior to both air and automobile travel. It is indisputably more pleasant–and frequently takes less time than air travel when going through security and travel to and from the airport is factored in.

We won’t have the benefits that rail travel can provide so long as Amtrak is underfunded and its board consists entirely of holdovers. Rail needs to be a much higher priority.

Comments

On The Other Hand…

Sometimes, this blog focuses so much on the crazy, the hateful, and the depressing that the whole human landscape seems bleak. I’m not going to apologize for pointing to the problems we face, because they’re real and we need to think long and hard about solutions. But an unremitting focus on the “dark side” can be misleading.

There are also bright spots in that landscape.

I’ve been subscribing to a Substack newsletter called Persuasion. A recent one consisted of an interview with Yascha Mounk. Mounk is a professor at Johns Hopkins University’s School of Advanced International Studies, a contributing writer at The Atlantic, and the founder of Persuasion. He recently published a book titled “The Great Experiment: Why Diverse Democracies Fall Apart and How They Can Endure,” and it was the focus of an interview conducted by Ravi Gupta.

Mounk readily concedes that diversity makes democratic government difficult. The very human proclivity to prefer those with whom we share an identity makes civic equality a “really difficult thing to get right.” But then he says

I also want to make people a little bit more optimistic, because I think when you look at the injustices today, and you don’t have that perspective, you might think, “What’s wrong with us? Why are we so terrible?” But then when you compare it to other times and other places, you realize this is just a really, really hard thing we’re trying to do. Yes, we’re failing in certain respects, but we’re succeeding in other respects. We’re doing much better today than we did fifty years ago. We’re doing vastly better today than we did a hundred years ago. That, I think, can give you the hope to build a vision for the kind of society you want to live in, and to make sure that our society doesn’t fall apart, but actually thrives and succeeds.

At the conclusion of the interview, he returns to that optimism.

When I look at what’s actually going on in society, I don’t despair. America has become much more tolerant in the last decades. We have really rapid socioeconomic progress of minority and immigrant groups, in a way that’s rarely appreciated by either the left or the right. The best study suggests that immigrants from Central or South America, for example, are rising up the socio-economic ranks as rapidly as Irish and Italian Americans did a century ago. This shows that the far-right is wrong in believing that there’s something somehow inferior about them. But it also shows that parts of the left are wrong in thinking that our countries are so racist and so discriminatory that nonwhite people don’t have opportunity. Thankfully, actually, people have opportunity. We see that in the way in which their children or grandchildren in particular are rising up very rapidly. Now, there are also all kinds of sensible things we can do in terms of how we think about our country, the education we engage in, the kind of patriotism we embrace, the kinds of policies and acts of Congress that we should pass—and that’s important, too. But fundamentally, my optimism comes from the developments that I already see happening in society.

Mounk rests his argument on verifiable data; my own (occasional) optimism is more anecdotal and scattered. Just a few of my observations, in no particular order:

When I was still teaching, the university students who filled my classes were overwhelmingly inclusive and committed to their communities, the common good, and the rule of law.

The massive demonstrations in the wake of George Floyd’s murder were multi-racial–the first time I have witnessed widespread diversity in racial protests.

Someone recently reminded me that eighty million Americans came out during a pandemic to vote against Donald Trump.

There’s constant progress on efforts to combat climate change– like recent development of a new, thinner and more efficient solar panel. 

Increasing numbers of out LGBTQ people are being elected to political office, and not just in blue parts of the U.S.

Ketanji Brown Jackson will join the Supreme Court.

For the past week, my husband and I have been on a cruise (we’re headed for Amsterdam to visit our middle son). We have taken previous cruises, and virtually all the couples we met on those trips were devotees of Fox News. I still recall some of the dismissive comments (and worse) leveled by these financially comfortable travelers about poorer (and darker) Americans. I am very happy to report that everyone we’ve had an opportunity to converse with on this trip has at some point indicated strong disapproval of what the GOP has become. Several–like yours truly–identify as “refugees” from the Republican Party.

It’s anecdotal, true…but encouraging.

Comments

The Cult Is Armed

Last week, Politico ran an interview with a scholar of autocracy.You really–really–need to click through and read it in its entirety, because I lack the space and ability to offer a coherent synopsis.

The scholar, Ruth Ben-Ghiat, had made accurate predictions about Trump’s likely refusal to concede his 2020 defeat, and she made them well in advance of the election. During the course of the interview, she made several other penetrating observations. Among them: the likely permanence of the changes Trump has effected to the GOP. She says that his sway over the party has permanently transformed its political culture, changing it to an authoritarian party in which you don’t only go after external enemies, but also after internal ones. Authoritarian parties don’t allow dissent

When somebody like Trump comes on the scene and holds office, it’s really like an earthquake or a volcano, and it shakes up the whole system by gathering in this big tent all the extremists, all the far-right people, and giving them legitimation. The GOP was already going away from a democratic political culture, but he accelerated it and normalized extremism and normalized lawlessness. And so the GOP over these years has truly, in my estimation, become an authoritarian far-right party. And the other big story is that his agenda and his methods are being continued at the state level. Some of these things were on the agenda way before he came in, like getting rid of abortion rights and stuff like that. But these states are really laboratories of autocracy now, like Florida, Texas.

Ben-Ghiat made a particularly important point about a favorite Republican talking point that she noted is a time-honored strategy of right-wing authoritarianism. Authoritarians like to label democratic systems as tyrannical. (Psychiatrists might call that projection.) According to Ben-Ghiat, Mussolini was the first to make the accusation that democracies are tyrannical, democracies are the problem. That introduced a whole century’s worth of the strategy of calling sitting Democrats dictators. “Biden as a social dictator, [is] a phony talking point. It has so many articulations from “They’re forcing us to wear masks.”

Her observations about the “Big Lie” were equally interesting, especially for those of us who have read psychological profiles of Trump.

The genius of the “big lie” was not only that it sparked a movement that ended up with January 6 to physically allow him to stay in office. But psychologically the “big lie” was very important because it prevented his propagandized followers from having to reckon with the fact that he lost. And it maintains him as their hero, as their winner, as the invincible Trump, but also as the wronged Trump, the victim. Victimhood is extremely important for all autocrats. They always have to be the biggest victim.

There are several other points in the interview worth pondering, especially her acute observations about Ron DeSantis, but the one that really struck home with me was her response to the question whether the U.S. faces a civil war. She began by saying that she thought it unlikely.

But then she made a point I’d not previously considered.

I think that it’s not out of the realm of possibility, because if the Republicans tried to impeach Biden and impeach Harris, there would be protests. Whether that becomes a civil war is very different because it’s predominantly only one side which is armed, first of all….

The wild card is guns. No other country in peace time has 400 million guns in private hands. And no other country in peacetime has militias allowed to populate, has sovereign sheriffs, has so many extremists in the military, and that matters because of these other things. And in fact, if January 6 didn’t bring out a massive protest, what is going to bring out a massive protest? Because that showed that groups of people who were there were people unaffiliated with any Proud Boys or any radical group. And Robert Pape, who studied them, called them middle-aged, middle class, but they were all armed. Some of them had private arsenals and they showed up at January 6. So that’s the wild card. That’s one thing that’s extremely American, that violence, that the population believes it has the right to rebel against tyrannical government. Like Matt Gaetz says: The Second Amendment is not just about hunting. And here we go back to the idea of Biden as a dictator. And that only works if your citizenry is armed and ours is to a degree that no other country is in the entire world.

The insanity of America’s gun culture has been evident for a long time. What hasn’t been evident is the fact that “only one side is armed.”

Read the whole interview.

Comments