“By employing a plethora of tax-dodging techniques, 30 multi-million dollar American corporations expended more money lobbying Congress than they paid in federal income taxes between 2008 and 2010, ultimately spending approximately $400,000 every day — including weekends — during that three-year period to lobby lawmakers and influence political elections, according to a new report from the non-partisan Public Campaign.
Despite a growing federal deficit and the widespread economic stability that has swept the U.S since 2008, the companies in question managed to accumulate profits of $164 billion between 2008 and 2010, while receiving combined tax rebates totaling almost $11 billion. Moreover, Public Campaign reports these companies spent about $476 million during the same period to lobby the U.S. Congress, as well as another $22 million on federal campaigns, while in some instances laying off employees and increasing executive compensation.”
To put these numbers in perspective, these corporations spent three times as much lobbying for preferential treatment as they paid in taxes.
I was filing some papers the other day, when I came across my somewhat dog-eared copy of Richard Hofstadter’s classic article, The Paranoid Style in American Politics. It was written for Harper’s Magazine in 1964–but it sounded as if it could have been written for our own toxic times. Hofstadter explained his terminology thusly:
“American politics has often been an arena for angry minds….I call it the paranoid style simply because no other word adequately evokes the sense of heated exaggeration, suspiciousness and conspiratorial fantasy I have in mind.”
The article used historical examples–the anti-Masonic movement, the nativist and anti-Catholic movement and others–to give the reader a flavor of the “paranoid” mindset to which he was referring. The anti-Masonic hysteria he described just seems quaint today, when the few Masons still around have an average age of 103 or so, but the anti-Catholic rhetoric has uncomfortable resonance. “A great tide of immigration, hostile to free institutions, was sweeping in upon the country, subsidized and sent by the ‘potentates of Europe,’ multiplying tumult and violence, filling jails, crowding poorhouses, quadrupling taxation and sending increasing thousands of of voters to ‘lay their inexperienced hand upon the helm of our power.'”
As Hofstadter memorable put it, “Anti-Catholicism has always been the pornography of the Puritan.”
He also made an observation that seems particularly salient today–that the difference between the spokesmen for these historical movements and today’s right wing is that previous hysterics felt they were fending off threats to a way of life they still possessed, while today’s culture warriors feel dispossessed. They believe America has largely been taken away from them and their kind. And he quotes another author’s observation that there may be a “persistent psychic complex” made up of “preoccupations and fantasies” that characterize the paranoid style: a megalomaniacal view of oneself as Elect, wholly good, persecuted, yet assured of ultimate triumph; the attribution of great power to the adversary of the moment…It’s hard to read that without thinking of the contemporary insistence that “bible-believing” Christians are “victims,” that gays are a rich bloc pursuing a nefarious “agenda” and that all Muslims are well-funded and powerful terrorists.
I don’t know whether to be comforted or disturbed by the similarities between today’s “paranoids” and those described in the article. On the one hand, America survived those past eruptions–the know-nothings, the nativists, and the other ugly and regrettable episodes of our history did become footnotes of our larger story.
On the other hand, we waste an enormous amount of time and energy trying to solve not only the real problems we face, but the problems such people create.
These may not be the times that try men’s souls, but they sure are times that confound economic policymakers.
We have one set of economists telling countries to implement austerity measures, and another group insisting that for now, stimulus is the answer. For those of us who are not trained in the “dismal science,” it’s increasingly difficult to distinguish between medicine and snake oil. Prescriptions sounding eminently reasonable to those of us unschooled in economic arcana turn out to be counter-productive in practice—case in point: research showing that so-called “right to work” legislation just depresses wages without generating the promised economic growth.
So where should we look for advice?
An October paper for the New America Foundation, by Daniel Alpert, Robert Hockett and Nouriel Roubini (not-so-affectionately dubbed “Dr. Doom” after he predicted the mortgage meltdown) proposes a way forward, and the logic seems—at least to this non-economist—pretty compelling.
The authors spend considerable space analyzing “how we got here,” and they note that digging out of the present crisis will be particularly difficult because, thanks to the entry into the world economy of “successive waves of new export-oriented economies,” and the concurrent, dramatic rise in productivity gains “rooted in new information technologies and the globalization of corporate supply chains,” the world economy now has excess supplies of labor, capital and productive capacity relative to global demand. Furthermore, the integration of new economies with competitive workforces has shifted the balance between capital and labor, resulting in income inequality as bad as—if not worse than—the gilded age.
The bottom line, as they see it: it will be difficult to sustain even current levels of consumption without improved wages and incomes, but such increases are unlikely due to the gluts of both labor and capital. In such a situation, austerity simply leads to a vicious downward cycle of weaker demand, weaker investment and more unemployment.
What to do? The authors lay out a three-part prescription: first, a “substantial” five to seven year public investment program to repair America’s crumbling infrastructure; second, a “comprehensive” debt restructuring plan; and third, global reforms to offset diminished demand in the developed world and correct the current imbalance in supply and demand.
The paper is long and quite detailed, and the descriptions of each proposal deserve to be read in their entirety, but I was particularly struck by the logic of the infrastructure recommendations.
Fixing infrastructure now would take advantage of a “historically unique opportunity” to put idle capital and labor to work rebuilding at an extremely low cost and with potentially high returns. Capital costs are now at historic lows, and labor is in abundant supply. It will never be less expensive to fix our decaying infrastructure than it is now.
The American Society of Civil Engineers estimates we need 2.2 trillion to meet even the most basic infrastructure needs. Less than half of that is currently budgeted.
Every billion dollars invested in infrastructure generates 23,000 well-paying jobs. Over the course of five years, such a program would create over 5.52 million jobs.
The CBO estimates that every dollar of infrastructure spending generates a 1.6 dollar increase in GDP.
Fixing our infrastructure is also essential to restoring American competitiveness. China invests 9% of GDP annually in infrastructure—we spend less than 3%. Public infrastructure investment lowers the costs of transportation, electricity and other core business expenses.
Even if these economists are overstating the case, what’s the worst that would happen if we took their advice? Our bridges might stop falling down? Pollution levels would abate? Workers with jobs might have money to spend?
A friend of mine used to have a saying to the effect that he’d rather be lucky than smart. While I think President Obama is pretty darn smart, if current trends continue, he may also prove to be very, very lucky.
Conventional wisdom–which is conventional because it tends to be right fairly often–is that Presidents presiding over poor economies have a hard time getting re-elected. Ordinarily, then, even a President who didn’t have a lot of people who already hated him for the color of his skin would be in trouble in 2012. But the Republicans, bless them, are helping him out.
The GOP field–filled with embarrassingly retrograde candidates–is one thing. These are mostly people who would have trouble running for City Council in normal times, and they have even some reliable Republican voters wincing. Those voters may not switch in November–but they also may not vote.
But if Obama is REALLY lucky, here’s the scenario: Gingrich wins the nomination, and Ron Paul runs as an independent. As conservative columnist Kathleen Parker has pointed out, no one thinks Gingrich can win the general election. He’s an unstable megalomaniac, without the discipline to run a sustained campaign. And Ron Paul–who will not run again for his House seat–has sent signals that suggest he’s contemplating a third-party run. He’s done it before, and he has the donors and volunteers to sustain such a candidacy. None other but George Will speculated that Paul would pull 80% of his votes from the eventual GOP candidate.
Paul could be a spoiler if the candidate is Mitt. If the candidate is Gingrich, Obama will have quite a mandate.
Hard to believe that anyone could be THAT lucky, but you never know.
A cousin sent me an updated version of the old “A man has two cows” explanation of capitalism, socialism, fascism and nazism (and yes, ranting radio people and Faux News anchors, there is indeed a difference between them–they aren’t just interchangeable insult words). I don’t usually pass on Internet humor, but this new version really does capture the crazy that is our global economic life. (Look especially at the “Venture Capitalist” explanation…)
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Subject: how the world REALLY works….made simple
*A Cow based Economics Lesson;
SOCIALISM
You have 2 cows.
You give one to your neighbor.
COMMUNISM
You have 2 cows.
The State takes both and gives you some milk.
FASCISM
You have 2 cows.
The State takes both and sells you some milk.
NAZISM
You have 2 cows.
The State takes both and shoots you.
BUREAUCRATISM
You have 2 cows.
The State takes both, shoots one, milks the other, and then throws the milk away.
TRADITIONAL CAPITALISM
You have two cows.
You sell one and buy a bull.
Your herd multiplies, and the economy grows.
You sell them and retire on the income.
VENTURE CAPITALISM
You have two cows.
You sell three of them to your publicly listed company, using letters of credit opened by your brother-in-law at the bank, then execute a debt/equity swap with an associated general offer so that you get all four cows back, with a tax exemption for five cows.
The milk rights of the six cows are transferred via an intermediary to a Cayman Island Company secretly owned by the majority shareholder who sells the rights to all seven cows back to your listed company.
The annual report says the company owns eight cows, with an option on one more.
You sell one cow to buy a new president of the United States , leaving you with nine cows.
No balance sheet provided with the release.
The public then buys your bull.
SURREALISM
You have two giraffes.
The government requires you to take harmonica lessons.
AN AMERICAN CORPORATION
You have two cows.
You sell one, and force the other to produce the milk of four cows.
Later, you hire a consultant to analyze why the cow has dropped dead.
A FRENCH CORPORATION
You have two cows.
You go on strike, organize a riot, and block the roads, because you
want three cows.
A JAPANESE CORPORATION
You have two cows.
You redesign them so they are one-tenth the size of an ordinary cow and produce twenty times the milk.
You then create a clever cow cartoon image called a Cowkimona and market it worldwide.
AN ITALIAN CORPORATION
You have two cows, but you don’t know where they are.
You decide to have lunch.
A SWISS CORPORATION
You have 5000 cows. None of them belong to you.
You charge the owners for storing them.
A CHINESE CORPORATION
You have two cows.
You have 300 people milking them.
You claim that you have full employment, and high bovine productivity.
You arrest the newsman who reported the real situation.
AN INDIAN CORPORATION
You have two cows.
You worship them.
A BRITISH CORPORATION
You have two cows.
Both are mad.
AN IRAQI CORPORATION
Everyone thinks you have lots of cows.
You tell them that you have none.
No-one believes you, so they bomb the ** out of you and invade your country.
You still have no cows, but at least you are now a Democracy.
AN AUSTRALIAN CORPORATION
You have two cows.
Business seems pretty good.
You close the office and go for a few beers to celebrate.
A NEW ZEALAND CORPORATION
You have two cows.
The one on the left looks very attractive.
