Posts Tagged ‘democracy’

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April 25, 2016

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No, that’s not the democratic socialist candidate for the Democratic nomination. It was actually Al Capone who once said that “Capitalism is the legitimate racket of the ruling class.”*

That racket—and, with it, challenges to the legitimacy of capitalism—was evident in a wide variety of news stories yesterday.

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First, there was the issue of health. Once again, we’re learning that the capitalist racket is affecting health. In particular, the gap in life span between rich and poor is widening. The top 1 percent among American men live 15 years longer than the poorest 1 percent; for women, the gap is 10 years. These rich men and women have gained three years of longevity just in this century.

And for some groups—especially white working-class men and women—death rates are actually rising.**

Public health experts say the rising white death rate reflects a broader health crisis, one that has made the United States the least healthy affluent nation in the world over the past 20 years. The reason these early deaths are so conspicuous among white women, these experts say, is because in the past the members of this comparatively privileged group have been unlikely to die prematurely. . .

[Anne] Case said that the whites who are dying are not America’s elites.

“They may be privileged by the color of their skin,” she said, “but that is the only way in their lives they’ve ever been privileged.”

Second, consider the problem of international trade. Michael Riordan challenged Carrier Corporation’s recent decision to transfer its Indianapolis plant’s manufacturing operations and about 1,400 jobs to Monterrey, Mexico.

The transfers of domestic manufacturing jobs to Mexico and Asia have benefited Americans by bringing cheaper consumer goods to our shores and stores. But when the victims of these moves can find only lower-wage jobs at Target or Walmart, and residents of these blighted cities have much less money to spend, is that a fair distribution of the savings and costs?

Recognizing this complex phenomenon, I can begin to understand the great upwelling of working-class support for Bernie Sanders and Donald J. Trump — especially for the latter in regions of postindustrial America left behind by these jarring economic dislocations.

And as a United Technologies shareholder, I have to admit to a gnawing sense of guilt in unwittingly helping to foster this job exodus. In pursuing returns, are shareholders putting pressure on executives to slash costs by exporting good-paying jobs to developing nations?

Even Lawrence Summers, desperate (like most mainstream economists) to maintain free international trade and global integration, had to admit that the globalization agenda has been a racket by and for those at the very top:

The core of the revolt against global integration, though, is not ignorance. It is a sense — unfortunately not wholly unwarranted — that it is a project being carried out by elites for elites, with little consideration for the interests of ordinary people. They see the globalization agenda as being set by large companies that successfully play one country against another. They read the revelations in the Panama Papers and conclude that globalization offers a fortunate few opportunities to avoid taxes and regulations that are not available to everyone else. And they see the kind of disintegration that accompanies global integration as local communities suffer when major employers lose out to foreign competitors.

Finally, when coupled with the revelations in the Panama Papers, there’s the growing suspicion that the 1 percent are both abandoning the rest of society (by hiding their money and avoiding taxes) and remaking the rules of the game (by using their money to influence elections and legislation). As Aditya Chakrabortty explains,

the Panama Papers confirm that the super-rich have effectively exited the economic system the rest of us have to live in. Thirty years of runaway incomes for those at the top, and the full armoury of expensive financial sophistication, mean they no longer play by the same rules the rest of us have to follow. Tax havens are simply one reflection of that reality. Discussion of offshore centres can get bogged down in technicalities, but the best definition I’ve found comes from expert Nicholas Shaxson who sums them up as: “You take your money elsewhere, to another country, in order to escape the rules and laws of the society in which you operate.” In so doing, you rob your own society of cash for hospitals, schools, roads…

But those who exited our societies are now also exercising their voice to set the rules by which the rest of us live. The 1% are buying political influence as never before. Think of the billionaire Koch brothers, whose fortunes will shape this year’s US presidential elections. In Britain, remember the hedge fund and private equity barons, who in 2010 contributed half of all the Conservative party’s election funds – and so effectively bought the Tories their first taste of government in 18 years.

Capitalism, of course, has always been a racket of the ruling class. Now, it seems—with revelations about unequal health and life spans, the costs of globalization, the ability of a tiny group at the top to exercise both exit and voice, and much more—its legitimacy is being called into question.

 

*Chicago’s most famous gangster was no anticapitalist radical. On the contrary:

“Listen,” he said, “don’t get the idea I’m one of those goddam radicals. Don’t get the idea I’m knocking the American system. The American system…” As though an invisible chairman had called upon him for a few words, he broke into an oration upon the theme. He praised freedom, enterprise and the pioneers. He spoke of “our heritage”. He referred with contempuous [sic] disgust to Socialism and Anarchism. “My rackets,” he repeated several times, “are run on strictly American lines and they’re going to stay that way”…his vision of the American system began to excite him profoundly and now he was on his feet again, leaning across the desk like the chairman of a board meeting, his fingers plunged in the rose bowls.

“This American system of ours,” he shouted, “call it Americanism, call it Capitalism, call it what you like, gives to each and every one of us a great opportunity if we only seize it with both hands and make the most of it.” He held out his hand towards me, the fingers dripping a little, and stared at me sternly for a few seconds before reseating himself.

**Consider this extraordinary statistic:

Compared with a scenario in which mortality rates for whites continued to fall steadily after 1998, roughly 650,000 people have died prematurely since 1999 — around 450,000 men and nearly 200,000 women.

That number nearly equals the death toll of the American Civil War.

Tom Toles Editorial Cartoon - tt_c_c160212.tif

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Only in America

Posted: 2 December 2015 in Uncategorized
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Today, we were greeted with the announcement that Mark Zuckerberg, the cofounder and chief executive of Facebook, and his wife would give 99 percent of their Facebook shares “during our lives”—holdings currently worth more than $45 billion—to their nonprofit foundation, the Chan Zuckerberg Initiative.

Perhaps we should pause before we are swamped by all the gushing admiration for this grand philanthropic gesture.

As Jeff Guo explains,

The private foundation is an especially American style of charitable giving. Non-profits in the United States play a disproportionately large role in public life, in part because American tax laws make it attractive for the rich to donate. Much of their wealth could otherwise be captured by capital gains and estate taxes.

Private spending on social welfare in the United States is four times the average in advanced economies, according to the Organization for Economic Cooperation and Development. The wealthiest countries, like France and Germany, are far more likely to use government resources to promote social good, and far less likely to use private resources.

This gap in national philosophies helps explain why the Giving Pledge has been popular with American billionaires, yet not quite as popular abroad. German shipping magnate Peter Krämer is one of the most vocal detractors of the pledge, and the American tradition of government-sponsored charity. Here’s an excerpt from a 2010 interview with the German paper Der Spiegel, which asked him for his reaction to the plan.

Krämer: I find the US initiative highly problematic. You can write donations off in your taxes to a large degree in the USA. So the rich make a choice: Would I rather donate or pay taxes? The donors are taking the place of the state. That’s unacceptable.

SPIEGEL: But doesn’t the money that is donated serve the common good?

Krämer: It is all just a bad transfer of power from the state to billionaires. So it’s not the state that determines what is good for the people, but rather the rich want to decide. That’s a development that I find really bad. What legitimacy do these people have to decide where massive sums of money will flow?

SPIEGEL: It is their money at the end of the day.

Krämer: In this case, 40 superwealthy people want to decide what their money will be used for. That runs counter to the democratically legitimate state. In the end the billionaires are indulging in hobbies that might be in the common good, but are very personal.

In the United States, Zuckerberg and other billionaires get to decide, privately and without any public deliberation, what to do with their wealth—how much or how little they will donate to charity, and what pet projects to sponsor with the amount they decide to give.

One alternative, as Krämer explains, is to let the state decide. Another, of course, is to let those who have produced Zuckerberg’s wealth decide—the people who work for his company (in which, even after his “gift,” he will retain a controlling interest) and the rest of us who are forced to have the freedom to use Facebook to stay in touch with our friends.

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