Freeland painted a depressing picture of America's future, with the wealth of Wall Street increasingly being used to paper the nests of the elite, with nothing remaining for investment in American infrastructure. Yet somehow she wrote this entire article without mentioning outsourcing.
In the old days, a recession would occur. Factories would lay-off workers, but people would continue to purchase widgets. Eventually warehouses would run out of widgets and factories would start hiring again, ending the recession. Today the same scenario occurs, but all of the hiring is done in Chinese and Indian factories. This is why there has been no relief for the millions of unemployed Americans -- and why there will be no relief.
This is also the reason why the Republican quest to cut taxes stems from ignorance and/or corruption. The WSJ already proved that tax cuts do not create jobs because Bush the Younger's job creation rate was the worst since WWII. Tax cuts may indeed motivate corporations to add employees, but only overseas.
Worse yet, American employers are rediscovering their inner Scrooge and refusing to hire anyone who is unemployed. The Huffington Post is only one of many news outlets which reported that Sony Ericsson has placed ads reading "NO UNEMPLOYED CANDIDATES WILL BE CONSIDERED AT ALL." Merry Christmas to all, and to all a good blight!
Freeland commented that Madison Avenue is discovering that the age of the American mass consumer may be drawing to an end. She quoted Robert C. Doll, chief equity strategist at BlackRock, the largest money manager in the world, as having said that "The U.S. stock market and the U.S. economy are increasingly different animals." He said that over the next five years, 70% of the incremental earnings of S&P 500 companies would come from outside the USA.
If Wall Street and American corporations are not going to contribute to this country, then we should tax them as foreign entities.
Freeland noted that there are more than three times as many stories on the subject of deficit reduction as compared to job creation. This is because Republicans have been successful at characterizing the debate as a zero-sum game, i.e. jobs (and healthcare) will only be created on the backs of hard-working Americans, the ones who still believe in the twin myths that tax cuts create jobs and that Republicans have always been concerned with deficits.
The larger issue concerns our country itself: just what kind of country should we be building? Is this to be a country by the people, for the people -- or is it to be a country by the oligarchs, for the oligarchs? Are we going to allow democracy to perish from the face of the American earth?
The Tea Party has proposed that renters be denied the vote. If we take this data point along with the current housing market, where millions of homes are being foreclosed and sold to capitalists with money to pay cash, only one conclusion can be drawn. We are hurtling towards a future where a small minority of elites completely control the destiny of all 300+ million of us, in other words, we are creating a plutocracy. Or to consider it a different way, we are returning to the past when factory owners and other officially recognized important people are allowed many more votes than the man in the street, perhaps thousands more votes. The Supreme Court is in lockstep with this brave new vision given their decision on Citizens United, where corporations were deemed to have the same, if not greater rights, than actual humans.
The Tea Party and most Republicans often claim that they merely want us to follow the Constitution, but they seem to have conveniently forgotten that pesky phrase about all men being created equal. They often decry socialism because the government is allowed to tell people how to live their lives, but it is quite happy with a situation where a small minority of oligarchs is allowed to do the same thing.
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The National Post's Conrad Black, in his article Why America is suffering, noted many of the same things as Freeland, yet he also realized that outsourcing is a major part of the problem.
In contrast to the usual diatribe against illegal Mexican workers, Conrad sympathetically noted that illegal immigrants are used to "roll the tennis courts of the Hollywood limousine left (below the minimum wage, of course)." He could have added that many Americans, of all political persuasions, decry the invasion of Mexicans all the while employing them as maids, housekeepers, cooks, landscapers, and roofers, at a substantial discount from what an American or European would charge.
But Black's most potent literary ammunition was on the subject of frittered-away money and opportunities. He noted:
The U.S. economy in 2008 had reached $1-trillion in legal fees, $1-trillion in consulting fees, and over $2-trillion in financial transactional and facilitation fees. The United States, like the West generally, is paying a heavy price for having too many people who don’t actually produce added value. All these activities are effectively taxations on wealth production.Why doesn't the Tea Party decry this taxation?
The aforementioned $4+ trillion is not being used to build infrastructure or factories. It is being used to line the pockets of parasites. Rounding this amount to an even $4 trillion, we can make ourselves ill by realizing that it is 27% of our entire GDP of $14.66 trillion.
Black wrote about many subjects, including the USA's self-destructive dependence on foreign oil. One thing he did not mention is the motivation for assisting Libya rebels, while not assisting the other members of the Arab Spring. The answer is simple: oil. Libya is the 14th largest oil exporter (ignoring the EU). Iraq is #10 and Iran is #4. Syria at #55, Egypt at #67, and Tunisia at #68, simply do not count.
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The solutions will not be easy to implement.
The first part is proportional taxation for corporations. For instance, a company's tax rate should be set depending on the proportion of American citizens it employs on American soil. A company should be free to build all of its factories overseas, but when it considers its actual tax rate, it might be motivated to move those jobs back to the USA. Foreign corporations, or those American ones that act like them, provide no value to the USA and should be taxed as such.
The second part involves the regulation of Wall Street casinos, the business Warren Buffet aptly labeled as financial weapons of mass destruction. The value of the entire OTC derivatives market has hovered around $600 trillion for the past few years. As a comparison, the GDP of the top 20 countries combined (ignoring the EU as an entity) is slightly less than $60 trillion.
All OTC derivatives must be traded via a transparent, public clearing-house; as Gretchen Morgenson reported, Dodd-Frank contains a typical Washington DC loophole, via which the Treasury secretary can exempt foreign-exchange swaps from the regulation. If we do not allow the ordinary Joe to place trillion dollar bets with some shady horse bookie, then private betting parlors for the jet set are equally unacceptable.
And casinos must be separated from commercial banks, i.e. reinstate Glass-Steagall.
The third part is the return to 1980 with respect to Wall Street, when bankers made a good wage but not an obscene one. This must be done with a mix of taxes and regulation, starting with the reduction of the Too Big To Fail banks. Politicians and bankers will decry this move, whining that many banking jobs will simply move overseas, but this is an empty threat.
In the movie Frost/Nixon, the David Frost character said that he longed to eat at a certain restaurant in NYC. If his interview with Nixon was successful, he would be able to eat there anytime he wished; that was his definition of heavenly luxury. The same motivation applies to Wall Street bankers and this is why they will not simply leave New York and move to Shanghai. Bankers love living in one of the top two most luxurious cities in the world for people with money, with London being the other one. It is not a coincidence that both cities are the world hubs of investment activity.
They want their cake and expect us to pay for it, too. Call their bluff.
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