Reports from the Economic Front

a blog by Marty Hart-Landsberg

Monthly Archives: February 2010

Working Life In The U.S.

Its the Onion–but it still could be real.

Watch autoworkers compete to keep their jobs in this video:

[flv]http://videos.theonion.com/onion_video/2009/04/28/FORD_PLANTS.flv[/flv]

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Obama–The People’s President?

Here is a link to a recent Business Week interview with President Obama.

Some highlights:

BW: Every American President in the last 30 years has had a major CEO as a member of the Cabinet in the inner circle. You don’t so far. Why is that?

It just has to do with who the particular individuals who were needed at a time of crisis. I thought it was very important to have Larry Summers and Tim Geithner as two of my key economic advisers early on because they had gone through significant global economic crises before.

But I think it is a legitimate point to say that we want and need more input from the corporate community, if nothing else, just so that we can communicate to the corporate community and to the business community the fact that, if you look at our actual policies, as opposed to the speculation around our policies, they have been fundamentally business-friendly.

BW: Let’s talk bonuses for a minute. Lloyd Blankfein: $9 million. Jamie Dimon: $17 million. Now, those were in stock and less than what some had expected. But are those numbers O.K.?

First of all, I know both those guys. They are very savvy businessmen. And I, like most of the American people, don’t begrudge people success or wealth. That is part of the free-market system.

I do think that the compensation packages that we have seen over the last decade, at least, have not matched up always to performance. I think that shareholders oftentimes have not had any significant say in the pay structures for CEOs.


BW: Seventeen million is a lot for Main Street to stomach.

Listen. $17 million is an extraordinary amount of money. Of course, there are some baseball players who are making more than that and don’t get to the World Series either, so I am shocked by that as well.

. . .

The last point I want to make with respect to just our policies on business, generally, and this goes to your first question about the perception of us being anti-business: This year I will sign legislation that will cut corporate taxes by about $70 billion— their tax obligations will be reduced by about 10% because of bonus depreciation and some other steps that we intend to take. This notion, somehow, that we have been putting this enormous tax burden on business is just not true. It is not supported by the facts.

And even some of the more controversial proposals that we have put forward, like health care, if you actually analyzed what’s on the table there, certainly small businesses are a net winner, one of the biggest winners. Because it would provide significant subsidies to them to provide insurance for their workers and allow them to pool with other small businesses and individuals to get a better rate. Large businesses who are already providing health insurance to their employees would end up benefiting from significant changes in delivery systems that would promise to lower costs over the long term.

You would be hard-pressed to identify a piece of legislation that we have proposed out there that, net, is not good for businesses.

The U.S. Economy And China

I get many questions about the Chinese economy and the consequences of its export-led growth strategy for the U.S. economy.   Therefore, I thought I would share a recently published article of mine that takes up this topic.    It is a bit long but hopefully clear and useful.

The U.S. Economy and China: Capitalism, Class, and Crisis

by Martin Hart-Landsberg

The U.S. economy is in bad shape and people are understandably seeking solutions.

Many, encouraged by mainstream media and politicians, believe that China’s trade policies bear primary responsibility for the structural decay of our economy and that recovery will require, above all, pressuring the Chinese government to implement “market-freeing” policy changes that will bring the U.S.-China trade relationship into balance.

Despite its popularity, this nation-state approach to understanding the dynamics of the U.S.-China relationship is seriously flawed.

It encourages people to see U.S. industrial problems, falsely, as the outcome of a contest between China and the United States, in which the Chinese government has boosted the well-being of its citizens at U.S. expense, through “unfair” practices. As a consequence, it leads to counterproductive policy recommendations.

In this paper, I offer an alternative approach to understanding the U.S.-China trade relationship; one that relies on a class-based analysis of (global) capitalist dynamics.

It leads, not surprisingly, to very different economic insights and political challenges.

For example, it reveals that the threat to U.S.-based manufacturing activity comes not from China, but from the operation of a transnational, corporate-shaped, regional production system, in which China serves as the region’s final assembly platform.

It also reveals that, while both transnational capital and elites in China have greatly benefited from the operation of this system, Chinese workers have paid a high cost; in fact, Chinese workers experience many of the same negative consequences from its operation as do workers in the United States.

It also explains why both the Chinese and the U.S. governments have responded to the current world crisis with strategies designed to maintain the status quo, despite the negative effects of this decision on working people.

In short, my analysis reveals that it is capitalism—not competition between China and the United States—that is the source of our economic problems.

Our challenge, then, which I briefly address in the conclusion, is to draw on the above insights to develop a strategy capable of both illuminating and contesting capitalism’s destructive logic—a task that puts U.S. workers in solidarity, rather than competition, with workers in China. . . .

Continue reading the entire article (which was published by Monthly Review in February 2010) HERE.

As with all posts, the comments section is open!

Some Facts About Taxes And The Rich

To hear the rich and their representatives talk you would think that they are facing an ever increasing, unprecedented, and unfair tax burden.  Quite the opposite is true.  Income inequality has soared, the tax burden on those at the top has plummeted, and majority working and living conditions have steadily deteriorated.

The website visualizingeconomics.com offers the following picture of trends in top federal marginal tax rates.   As one can see, the top tax rate has fallen substantially.  And it will remain quite low by historical standards even if President Obama allows the Bush-era tax cuts to expire in 2011.

tax_rate-chart550.gif

To be clear: we are looking here at the top marginal federal tax rate.  In other words it is the federal tax rate applied to income that exceeds the top bracket (we currently have six tax brackets, each with higher tax rates).  Currently the top bracket begins at $373,650.  Thus, the top tax rate is the rate at which income above $337,650 is taxed.

You can see a history of US tax rates and brackets here.

Corporate Personhood–Getting Rid of “The Middle Man”

The Supreme Court has further extended the rights of personhood to corporations in its recent ruling which declared that a corporation, being a person, has the right to spend as much of its own corporate wealth as it wants on campaigning to elect those candidates that it thinks will best serve its interests.

It sort of leaves you speechless, doesn’t it?  Actually, it is easy to forget that we created corporations—in fact we initially made them pay for a charter which limited their lifetime and set the terms within which they could do business—for example they were normally chartered for only one activity, making it impossible for them to become large conglomerates with interests in many different markets.  We have come a long way since then.

How long?  Well, the public relations firm Murray Hill, Inc. has decided to test the limits of this corporate personhood trend.  It has decided to run for Congress in the Republican primary in Maryland’s 8th congressional district.  To be clear, it is doing this to protest the Supreme Court’s decision.

The firm says that it wants to “eliminate the middle man” and run for Congress directly, saving time and money.  According to its web site statement:

Until now,” Murray Hill Inc. said in a statement, “corporate interests had to rely on campaign contributions and influence peddling to achieve their goals in Washington. But thanks to an enlightened Supreme Court, now we can eliminate the middle-man and run for office ourselves.”

“The strength of America,” Murray Hill Inc. says, “is in the boardrooms, country clubs and Lear jets of America’s great corporations. We’re saying to Wal-Mart, AIG and Pfizer, if not you, who? If not now, when?”

Murray Hill Inc. plans on spending “top dollar” to protect its investment. “It’s our democracy,” Murray Hill Inc. says, “We bought it, we paid for it, and we’re going to keep it.”

The campaign’s designated human, Eric Hensal, will help the corporation conform to antiquated “human only” procedures and sign the necessary voter registration and candidacy paperwork. Hensal is excited by this new opportunity. “We want to get in on the ground floor of the democracy market before the whole store is bought by China.”

Campaign Manager William Klein promises an aggressive, historic campaign that “puts people second” or even third.

You have to watch its campaign video–here

For more on corporate personhood visit the Reclaim Democracy website