Golden State sets the standard for resistance to Trump agenda

California’s big pushback:

Attorney General Xavier Becerra and progressive legislators are fighting back against the Trump agenda

California's big pushback: Golden State sets the standard for resistance to Trump agenda
Donald Trump; Xavier Becerra (Credit: AP/Alex Brandon/Marcio Jose Sanchez)

After Donald Trump’s shocking meltdown on Tuesday afternoon, it’s even clearer that progressives need effective strategies to blunt the effect of having a conspiracy-theory-driven, racist authoritarian in the Oval Office, backed by a congressional majority that is still too afraid to offer meaningful checks on his worst behavior. The good news is that some of the nation’s biggest cities and states remain controlled by Democrats. Activists and politicians in those states are looking for meaningful ways to throw wrenches in the Trump agenda.

At the top of that list is California, which not only has the largest population of any state but is controlled by progressive Democrats (relatively speaking) who seem ready and eager to fight Trump, especially on the issues of climate change and immigration. (New York is the next biggest state controlled by Democrats, but intra-party warfare has crippled the ability of progressives to get much done.)

California fired a significant shot across the bow at Trump on Monday, when state Attorney General Xavier Becerra declared that the state would sue the Trump administration over threats to withdraw law enforcement grants if the local and state police refuse to cooperate with federal efforts to deport immigrants. The lawsuit will be joined with an earlier one filed by the city of San Francisco.

“It’s a low blow to our men and women who wear the badge, for the federal government to threaten their crime-fighting resources in order to force them to do the work of the federal government when it comes to immigration enforcement,” Becerra said during a press conference announcing the suit. California received $28 million in law enforcement grants from the federal government this year, money it could lose if the police prioritize actual crime-fighting over federal demands that they focus their resources on deporting people.

“The government’s plan for deporting millions of people in this country is to coerce local law enforcement to be their force-multipliers,” explained Jennie Pasquarella, director of immigrants’ rights for the ACLU of California.

Pasquarella noted that most deportations currently occur because of an encounter with local law enforcement. By resisting pressure to step up efforts to persecute undocumented immigrants, she said, California can make it safe for people to “access basic services that are vital to our state and communities without fear of deportation, like schools and hospitals and libraries and health clinics.”

Some Democrats in the state are trying to take this idea even further, backing SB 54, titled the California Values Act. According to The Los Angeles Times, the bill would prohibit “state and local law enforcement agencies, including school police and security departments, from using resources to investigate, interrogate, detain, detect or arrest people for immigration enforcement purposes.”

While SB 54 is still being worked over in the legislature, California has already made progress in resisting the Trump administration’s efforts to repeal Obama-era actions to fight climate change. In July, Gov. Jerry Brown signed a bill extending a cap-and-trade program to reduce carbon emissions until 2030. The bill passed by a two-thirds majority in both the State Assembly and Senate.

Many environmentalist groups have come out against the bill, arguing that it doesn’t go far enough. Still, compared to the federal government’s evident retreat, it’s progress in the right direction. California has the largest state economy in the country, and demonstrating that climate action does not have to undermine economic growth could go a long way towards convincing other states to take similar action. This, in turn, could help the country meet the goals set by the Paris Accords, defying Trump’s efforts to pull the United States out of the historic climate change agreement.

This strategy to resist right-wing policies and protect California residents predates Trump, to be clear. While much of the country was experiencing an unprecedented rollback of reproductive rights — with numerous red states passing alarming new abortion restrictions while anti-choice activists fought insurance coverage of contraception in the courts — California moved to make birth control and abortion easier and safer to get.

In 2013, responding to research showing that abortions provided by nurse practitioners and midwives are safe, Brown signed a law giving those groups authority to offer abortion services. Brown has also signed off on three provisions to make it easier for women to get birth control: Letting pharmacists dispense it without a doctor’s prescription, requiring that health care plans cover contraception without a co-pay, and allowing women to get a full year’s worth of birth-control pills at a time.

These policies were already in place before Trump’s election, but they are all the more necessary now that the president is backing conservative efforts to make contraception more expensive and harder to get. It has also helped create a model for progressive cities and states to resist reactionary policies pushed by the federal government, which is already inspiring Democrats in other states. Chicago, for instance, is also suing the federal government over the threat to sanctuary cities.

There’s a deep philosophical irony here, because for decades now conservatives have claimed they wanted to reduce the power of the federal government and hand more decision-making authority to the states. That was always a disingenuous pose, of course. This conservative “principle” was largely invented to justify state resistance to Supreme Court decisions and federal legislation legalizing abortion, desegregating schools and protecting voting rights.

Still, it’s nice to see states like California calling the Republican bluff and showing that their supposed devotion to “small government” dries up the second states and cities move to protect human rights, instead of to attack them. Trump’s attorney general, Jeff Sessions, has always held himself out to be a small-government conservative, for instance. But his reaction to state and local officials who claim the power to set law enforcement priorities for themselves has been to accuse those officials of being law-breakers. This hypocrisy is already obvious, and it may soon be exposed in court.

Amanda Marcotte is a politics writer for Salon. She’s on Twitter @AmandaMarcotte

Here’s how the Trump administration has been handing over government to businesses

The first six months of the Trump administration have seen a decrease in the effectiveness of regulations

Here's how the Trump administration has been handing over government to businesses
(Credit: AP Photo/Mark Lennihan, File)

President Donald Trump’s assault on regulations designed to keep Wall Street in check is going quite well, as a check on the first quarter of his presidency has found that fines levied by government regulators has decreased substantially.

The U.S. has cut the amount of fines against institutions issued by two-thirds, compared to last year. As the Wall Street Journal reported Monday, that would put it on track for a low not seen in seven years:

Penalties levied against firms and individuals by the Securities and Exchange Commission, the Commodity Futures Trading Commission and the Financial Industry Regulatory Authority in the first half of 2017 were down nearly two-thirds compared with the first half of 2016—putting regulators on track for the lowest annual level of fines since at least 2010, the Journal found. Fines of $489 million in the first half of 2017 compared with $1.4 billion in the 2016 period.

The SEC levied some $318 million in penalties during the first half of 2017, a search of federal court documents and all publicly available records on the agency’s website and data provided by Andrew N. Vollmer, a professor at the University of Virginia School of Law, showed. Last year, agency actions yielded $750 million in penalties during the same period, an agency spokesman said. The SEC declined to disclose its own tally of 2017 penalties; the agency didn’t dispute that the total value of penalties fell in the first half of 2017 compared with the same term in 2016.

Agency officials were quick to point out that a six-month sample shouldn’t be considered indicative of the government’s regulatory mechanisms — the WSJ pointed to large payouts in two major cases that accounted for a large portion of the $1.4 billion mark in 2016.

Wall Street lobbyists have also been pushing the administration to “lower the size of financial penalties,” the Journal said. And as regulators expect Trump to continue with a “business-friendly” approach, increased oversight doesn’t look likely in the future.

If being lax about enforcing the laws isn’t enough, the administration has been pushing for businesses to be writing them, too. According to McClatchy, business executives have been working in secret “advisory groups” that haven’t been disclosing what they’ve been working on.

Can’t enforce the laws if there are no laws to enforce.

Why are there so many billionaires leading money-losing companies?

Uber lost $708 million in 6 months, but its CEO/founder is worth billions. Is Silicon Valley a pyramid scheme?

Why are there so many billionaires leading money-losing companies?
(Credit: Getty/Ronstik)

In a financial report released last week, ride-hailing app company Uber reported a staggering $708 million loss for the first three months of the year. Since the company was founded eight years ago, it’s burned through almost half of the $15 billion in private venture capital that it has raised.

But despite the mounting losses, the departure of more than a dozen company executives over the past year and a string of controversies that would send the typical company plunging into an irreversible death spiral, Uber CEO and co-founder Travis Kalanick’s net worth is immense.

According to Forbes, Kalanick is worth $6.3 billion, making him the world’s 226th wealthiest billionaire and the 35th richest magnate of the global tech industry. That makes him richer than Wal-Mart heiress Christy Walton and Liu Qiandong, founder and head of Chinese e-commerce and retail giant JD.com, which recently reported $11 billion in quarterly sales and its first profit as a publicly traded company.

Kalanick’s bounty seems largely immune (so far) to Uber’s string of mishaps, including allegations of about its workplace being hostile to women, a bitter legal fight with Google over allegedly stolen self-driving car technology, scrutiny over the company’s attempt to deceive government officials, and other controversies concerning its treatment of drivers.

So how does a 40-year-old computer programmer heading a beleaguered and unprofitable company have a net worth greater than the gross domestic product of Barbados?

The short answer is: hopes, dreams and aspirations. Specifically, those of the Uber’s financial backers, who believe in the gospel that Uber is on its way to killing the global taxi industry.

Under normal startup circumstances, a business faces intense pressure to attain profitability within a short period of time. According to the U.S. Small Business Administration, 1 in 5 new businesses goes under in the first year while nearly half fail within the fifth year. According to a 2015 study from Babson and Baruch Colleges, the typical entrepreneur provides nearly 60 percent of the funding needed for his or her business.

But in the world of Silicon Valley, profitability takes a back seat as deep-pocketed investors throw money at long-term aspirations. For years private investors have assigned sky-high valuations to tech industry startups in a bid to find the next Amazon or Google nestled in some Northern California office building or garage. Billionaire investors, private equity firms and sovereign wealth fund managers are willing to take considerable risks that mushroom the wealth of founders and CEOs to astronomical levels.

Kalanick is a billionaire because private investors have assigned a value to Uber based on its future potential; that’s where the hopey-dreamy stuff comes in. The company is currently valued at a sky-high $68 billion according to CBInsights, more than half the value of global aerospace behemoth Boeing. Because Kalanick is a primary shareholder of Uber, his net worth is boosted by this potentially irrational valuation, making him a “paper” billionaire.

Though what he does with his equity is not publicly known, Kalanick can potentially leverage this net worth to grow his personal fortune by using his stake in Uber to engage in other business endeavors, like buying real estate or investing in securities, all based on what private investors think his startup is worth.

In the typical scenario, an executive at private equity firm considering an investment in a private startup might compare the numbers offered in a business plan with those of a comparable publicly traded company and examine operating costs, profit margins and overall capital structure. If the startup has a prospectus with targets that seem viable compared with those of an existing competitor, investors will have some degree of confidence that they’ll wind up with a windfall of profit once the company is acquired or it files an initial public offering.

But because of the strange nature of the tech industry, there often isn’t a comparable company upon which investors can base their assessments. When Amazon was raising money in the early 1990s, there was no existing competitor with a similar business model, so early investors had to make estimates and assumptions to base their hopes on. It is interesting that very few individuals invested in Amazon prior to its initial public offering.

In retrospect, offering seed money to Amazon was a no brainer. Internet commerce was growing by a staggering 2,300 percent a year in 1994, and Jeff Bezos saw that light early and famously drew up a business plan during a road trip to Seattle. Venture capital firm Kleiner Perkins Caufield & Byers was one of a few private investors that gave Bezos money early on, and it reaped a fortune after Amazon filed its initial public offering in 1997 just as the dot-com bubble peaked.

But the success of tech companies like Amazon.com and Google are few and far between. Often the decision by private investors whether to invest in a technology startup is based on assumptions, best estimates and industrywide averages of publicly traded companies in the same sector.

While private equity firms have special access to review a startup’s books, CEO- founders have much more latitude in selling their plans and manipulating their numbers than the heads of established publicly traded companies, who face more regulatory scrutiny.

Once startups make their way to the public markets through initial public offerings, founder-CEOs can continue to reap billions from their company’s valuations without the companies making a dime in profit. Tesla CEO Elon Musk, who’s worth an estimated $16 billion, the head of Snap, Evan Spiegel ($4.7 billion) and Twitter’s Jack Dorsey ($1.8 billion) are notable examples of rich CEOs who head unprofitable companies.

These founder-CEOs can spend good portions of their lives as billionaire heads of money-losing companies as long as investors keep believing that these companies may someday strike it rich. But there’s always a make-or-break point, and paper billionaire are always at risk of sinking their fortunes with investors losing their shirts. One thing is almost certain: Even if Uber crashes and burns, Kalanick would likely walk away from the wreckage a very wealthy computer programmer.

 

Study shows massive growth of political abstention in 2016 US election

By Eric London
3 June 2017

A study released Thursday by the Pew Research Center revealed that “dislike of the candidates or campaign issues” was the most frequent motive registered voters gave for not voting in the 2016 election. Twenty five percent of registered voters who abstained listed this as their primary reason, double the figure from 2012.

The growth of opposition to both candidates was ubiquitous across all racial, age and education groups.

Among African-American registered voters, the percentage of those citing dislike of the candidates as the main reason for abstaining rose from 3 percent in 2012 to 19 percent in 2016. Among Hispanics, the figure also grew by 16 percent—from 9 to 25 percent.

This 16 percent jump was the largest among racial groups, but dissatisfaction rose among all races. Among white registered voters who abstained, 26 percent listed dissatisfaction with the candidates as their main reason, up nine points from 15 percent in 2012. The figure also grew among Asian registered voters, by 14 points, from 8 to 21 percent.

Dissatisfaction rose among all age groups. Among millennial registered voters (those born in the 1980s or 1990s), 24 percent said opposition to both candidates was their primary reason for abstaining in 2016, up from 11 percent in 2012. The highest rise in opposition was among Generation X (those born in the 1960s and 1970s), growing from 12 to 27 percent from 2012 to 2016. Opposition grew by about 10 points among older voters as well.

Among US-born registered voters who abstained, 25 percent listed dissatisfaction with both candidates as their primary reason, up from 13 percent in 2012. Among foreign-born registered voters, the figure grew from 8 percent of registered abstainers to 22 percent in 2016.

These figures once again explode the lie, advanced by the Democratic Party, the pseudo-left and the Democratic Party-affiliated media, who claim that Donald Trump won the 2016 election because of the racism of the white working class. In reality, voting statistics demonstrate conclusively that Hillary Clinton lost because of a sharp downturn in turnout for the Democrats among all races, particularly among young people. According to the Pew report, racial minorities made up 34 percent of registered abstainers, up 9 points from 25 percent in 2012.

Clinton herself has attributed to her unexpected loss to supposed interference by the Russian government, combined with white racism and misogyny and the intervention of then-FBI Director James Comey. Speaking Wednesday in California, she again blamed Russia for her electoral defeat and broadly hinted at collusion by the Donald Trump election campaign.

She said: “The Russians in my opinion, and based on the intel and counterintel people I’ve talked to, could not have known how best to weaponize that information unless they had been guided by Americans and guided by people who had polling and data information.”

She also blamed misogyny among working class voters: “And at some point it sort of bleeds into misogyny. And let’s just be honest, you know, people who have a set of expectations about who should be president and what a president looks like, you know, they’re going to be much more skeptical and critical of somebody who doesn’t look like and talk like and sound like everybody else who’s been president.”

While psychologists could keep themselves busy analyzing Clinton’s delusions, socialists understand the objective significance of the gap that separates the Democratic Party’s own understanding of the election and reality, which reflects the material chasm separating the ruling class and upper-middle class from the rest of the population.

Clinton did not lose because of unsupported claims of Russian collusion with Trump, but because she appealed only to the most affluent voters, ignoring altogether the concerns of working class voters and denouncing as “deplorables” the less educated, mostly white voters who supported Trump.

The fact that political abstention grew especially among African-American and Hispanic voters shows that Clinton’s campaign strategy—based on appealing to voters on questions of racial and gender identity—turned working class minority and white voters away from the Democratic Party. The orientation to questions of individual identity is aimed primarily at appealing to wealthier voters of all racial categories.

Clinton’s orientation to more affluent voters produced a dramatic shift in the landscape of American two-party politics in 2016. According to data from the American National Election Survey (ANES), the Democratic Party won a majority of votes from the wealthiest 5 percent of the white population for the first time since ANES began collecting data in 1948. Not only did the Clinton campaign win amongst the wealthiest 5 percent of whites, she won by an overwhelming margin, slightly greater than 10 percent. The Democrats won by wide margins among wealthier sections of all racial groups.

On the other side, the poorest two-thirds of white voters supported the Republican candidate, also for the first time in the ANES poll’s 70-year history. The chart below shows the shift, with the Republican margin of victory appearing higher on the Y-axis and the income percentile groups listed from left to right on the X-axis, with the wealthiest 5 percent listed on the right of each graph. The fact that the chart for 2016 has a downward trajectory highlights the degree to which the Democratic Party has become the primary party of the affluent upper-middle class.

Income and the White Presidential Vote, 1948-2016

As the WSWS has previously noted, the wealthy of all races are now more likely to support the Democratic Party because it has proven itself a worthy custodian of the affairs of the financial oligarchy, promoting its wars, bank bailouts, domestic spying operations, deportations, tax windfalls and cuts to social programs, all under the foil of identity politics.

The growth in American National Election Survey (ANES) also shows that Clinton was not the victim of “apathy.” To the contrary, each new poll confirms that the working class in the US is moving to the left, coming into conflict with the political establishment and registering its opposition with varying levels of political clarity.

 

http://www.wsws.org/en/articles/2017/06/03/poll-j03.html

Is America (Really) Collapsing?

umair haque

We’ll come to an answer shortly. First, let’s set the bar. What does it mean for a nation to collapse? A cursory glance at history reveals three truths.

First, societies collapse “from” something “to” something. Collapse doesn’t just mean “anarchy”. It means, for example, that societies collapse from democracies to tyrannies. From prosperous economies to stagnant ones. From vibrant public spheres rich with art and science to closed and dull and dead ones, rigid with ideology and unreality. Collapse is a process of going from function through dysfunction to malfunction.

Second, collapse doesn’t mean that a society falls overnight, goes from a shining city on a hill today to Mad Max tomorrow. Rather, it means that a society degenerates slowly, as vicious feedback cycles begin to bite. The bigger the nation, the longer the fall. It took ancient Rome centuries to collapse, and it is taking modern day Turkey, Russia, and Venezuela decades. So collapse is gradual, not sudden.

And collapse is also multidimensional. A society can break in many ways, and when it is evidently breaking in most of those ways, then we can reasonably say: it’s collapsing.

Now that we have a tiny mental framework, let’s answer the question: is America (really) collapsing?

I think that we can say American is collapsing in four very real ways: going from something to something else. I’ll italicize these so they’re crystal clear.

Political collapse. America is visibly collapsing from a democracy to an autocracy, just like Rome. Again, before you cry hyperbole, let’s examine a glaring fact. 70% of American support public goods: public healthcare, higher education, transport. And yet, both parties fail to represent what a supermajority of what people want. That is a visible and telling example of political collapse. The American polity no longer represents the preferences of people. Who does it represent? It used to represent powerful lobbies. And now increasingly it represents hostile foreign states. So America is quite clearly visibly politically collapsing.

Social collapse. What does it mean for a nation to collapse socially? The most basic element of a society is trust. Social cohesion if you like. The point isn’t that trust “makes” a society…anything. Productive, efficient, and so on. Simply that to be a society, there must be the bonds of trust. That is what the definition of society is, at its most minimal. But trust has undergone a stunning collapse in America. Every kind of trust. There is trust in institutions. There is trust between people. There is “social capital”, or the quality of relationships. All of them have collapsed over the last few decades. Plummeting levels of trust are reflected in daily life: mass shootings, skyrocketing incarceration rates, soft segregation, legitimized hate, and so on. So in this way, we can visibly say that America is collapsing as a society — going from being rich in trust to being impoverished of it.

Economic collapse. We don’t need to say too much about this dimension of collapse. I’ve written hundreds of articles about it. The facts are very clear. The American economy began stagnating almost precisely when segregation ended — which implies that it was never built on a social contract able to provide genuine prosperity in the first place. Now incomes have been stagnant for nearly half a century. Yet the costs of living have risen dramatically. College didn’t cost hundreds of thousands in the 1970s. So in the simplest economic way, too, we can say that America is collapsing: going from prosperity to stagnation.

These three dimensions bring us to my fourth, which is by far and away the most important.

Eudaimonic collapse. You can simply think of this as personal collapse, if you like. It just means that people’s quality of life collapses. What’s the most basic indicator of quality of life? It’s life itself, no? But life expectancy is falling in America now — unprecedented in the history of rich nations. On nearly every other indicator of quality of life, too, American life is getting meaner, nastier, harder. Here’s just a smattering. Maternal mortality is rising, leisure time has fallen, there is little social mobility, 20% of Americans are barely functionally literate, the average person experiences profound and constant and severe, insecurity and instability, and there is an epidemic of opioid abuse as people try to self medicate the despair of it all away. America is going from a eudaimonic society, one with a rising quality of life, to one where it is falling.

Eudaimonic collapse, of course, is reflected in the fact that most Americans think their kids will have worse lives — and there is nothing that they can about it.

They are right, and also wrong.

Collapse is a poor metaphor in one sense. When we say a thing is collapsing, we also think that it is unstoppable. Like a star collapsing into a black hole or a snowpacked mountain collapsing into an avalanche.

But that is not the case with societies. Societies are human creations. And while collapse can’t always be prevented, it can always be mitigated, shrunk, and resolved.

But to do so means to think clearly and analytically about collapse. Whether it is really happening, along what dimensions, and to what degree. In America’s case, now that we have seen it is indeed collapsing politically, socially, economically, an agenda can be made to reverse precisely those three kinds of collapse.

The question, as always, is whether we see it, and then live it.

Umair
May 2017

View story at Medium.com

Did America Ever Really Work?

Slavery, Segregation, and Stagnation

Rather than looking at America through the lens of the present — “oh my god, what did he do today!! “— I want to ask the question: has American society ever worked?

By “worked”, you can think that I mean two economic criteria. First, according to its own standards of life, liberty, and happiness. Second, a little more formally, whether its economy has ever really been capable of delivering rising living standards broadly.

I think this is an interesting question, because most of us believe in the myth of a golden age past. The American Dream, we suppose, is something that came and went. But if we look at history carefully, I think we will see that it never really existed at all.

We can divide American economic history into three periods.

The first, which we sadly don’t need to say much about, is slavery. Obviously, society wasn’t working in the senses above during this period. Whatever gains there were were largely realized at the expense of great and immoral human suffering.

The second was segregation. Segregation was of course immoral as well, in the most basic terms of equality. Economically, it was a way to preserve many of the toxic economic “benefits” of slavery, while making repression palatable and righteous. It created a low cost labor pool, abrogated those costly things called human rights, and so on.

The third period, which we are in now, is stagnation. Note the interesting fact. Segregation ended in 1964. Stagnation began in 1971. That is when wages flatlined.

There was no intervening middle era, no golden age so to speak of. The American economy went directly from segregation to stagnation.

That tells us a few interesting things.

First, it implies that the social contract of America never really worked at all. That it depended on the exploitation (aka, the coercion, if you like) of entire groups to produce benefits for others. That is not a working society in the modern sense, only in the pre modern, the feudal, one.

Second, it implies that the roots of stagnation are deeper than we think. Stagnation has many factors that caused it to continue. The implosion of unions, the evisceration of public sector employment, a tilted playing against labour and towards capital, and so on. But the cause of stagnation cannot be all those, because they simply did not exist yet. The true cause of stagnation is simpler: without a group of people to exploit, the American economy simply began to fail, because it was predicated still on that exploitation to begin with. Except now, it is more or less everyone being exploited, in perhaps softer and less visible ways.

Now, you might object here. All this goes against what you have been taught, if you subscribe to orthodox American history, doesn’t it? So think about carefully. Go ahead and see if you can poke any holes in it. Slavery, then segregation, then stagnation. No intervening grace period. If you clear your mind of ideology, and think clearly about a working society, what does it tell you?

Third, all the above tells us the American Dream never was at all. It’s a truism to say that the American Dream came with hidden costs. Pollution, NIMBYism, and so on. But there’s a deeper truth there. Costs are only one side of the equation. What about benefits? The simple fact all the above tells us is the American economy was never able to generate enough real social benefits to be broadly shared, without exploitation, forced labour, and so on. Remember, it fell it into stagnation as soon as segregation ended, and that implies that it was dysfunctional in terms of its fundamental ability to create value to begin with.

So what going directly from segregation to stagnation tells us, in the end, is this. The faces, the people, the groups involved, changed — but the pattern didn’t. The economy remained predicated, founded on exploitation, only now it was less able to do so effectively, less viciously, less visibly. Hence, stagnation. Today, the economy is still a predatory machine — only it is so for everyone, not just specific ethnic or racial groups. That is the true historic price of the toxic legacy of hate America carries.

I’m often accused of saying “we’re doomed!”. And yet I never do, do I? So the conclusion of all the above isn’t that. Rather, it’s this.

If we are able to see clearly that the American economy, the social contract, was never functional in a genuine substantive sense at all, then perhaps now we can have a more truer discussion about how to make it so. Instead of harkening back to a mythical Golden Age that never existed at all, which is what I call Vox’n’Fox thinking converges to.

Now we can ask the wiser question. What makes societies “work”? What didn’t America develop, by going straight from segregation to stagnation?

We don’t have to look very far or think very hard. What makes Canada, Sweden, etc, work, in the sense that produce shared, enduring prosperity, is public goods. They developed those in the 1950s and 60s. America went straight from segregation to stagnation because it never had public healthcare, transport, higher education, and so on. It simply started exploiting people in a different way — but faces changed, but the pattern didn’t.

Today, it still doesn’t have public goods. And it’s because it failed to develop at precisely the time it should have that it remains stuck today — stuck in the trap of exploitation, which it never really broke to begin with.

To think clearly is to see what has been with an open mind. America is not the historic success that we, educated into the annals of exceptionalism. think. That does not mean that we should feel guilty, ashamed, bad, weak. It simply means that have the opportunity to make it one. There are two choices ahead of us. The third period, stagnation, can go on, into collapse. Or there can be a fourth period, of renewal.

Umair
May 2017

Medium

Apple’s $257 billion cash hoard and parasitic accumulation

By Nick Beams
5 May 2017

The most striking feature of Apple’s financial results for the first quarter, released earlier this week, was the growth of its enormous cash holdings.

The US tech giant now holds more than $257 billion in cash reserves, a figure which has doubled in the past four and a half years. Some 93 percent of this more than a quarter of a trillion dollar cash pile is held outside the country in the form of short- and long-term securities in order to escape paying US corporate taxes.

In the last quarter of 2016, it is estimated that Apple was accumulating cash at the rate of $3.6 million per hour.

The cash reserve means that Apple now has on hand more money than the market value of both American retail giants Wal-Mart and Procter & Gamble and holds more than the combined foreign currency reserves of the UK and Canada.

The company increased its returns to shareholders by $50 billion and reported earnings per share grew by 10 percent in the three months of the year.

There is considerable conjecture about what the company intends to do with its vast holdings. But one thing can be definitely said at the outset: they will not be devoted to productive activities but rather to financial operations aimed at increasing profits still further.

Apple has indicated that if the Trump administration introduces legislation either waiving or at least significantly reducing tax payments on any money returned to the US then it could repatriate some of its money.

Trump has raised the possibility of tax breaks on overseas cashing holdings with the claim that this will bring jobs back to America.

But if Apple does bring back its cash it will not be used for increased investment, leading to the creating of more jobs, but will be deployed on essentially parasitic activities.

This could include the purchase of other companies, including content providers—the live streaming channel Netflix has been mentioned as a possible target—or to finance further share buybacks in order to boost the value of the company’s stock.

Some of the money could also be used in increased dividends, with one of the world’s richest individuals, Warren Buffett a major beneficiary following the decision by his company, Berkshire Hathaway, to double its holding in Apple last January.

Buffett’s move could well have been made in anticipation of a decision by the Trump administration to change the tax regime to encourage Apple and others to return cash to the US.

Whatever Apple decides to do it will be of an essentially parasitic character.

These operations are not an aberration but express the essential characteristics of the profit accumulation process of Apple and other high-tech corporations, which have more in common with financial firms than the industrial corporations of the past.

Unlike those corporations, which once dominated the American economic landscape, Apple does not essentially accumulate profit through the extraction of surplus value from the employment of a large industrial workforce but through the appropriation of surplus value extracted elsewhere. That is, its massive profits are essentially a form of rent.

The economic category, rent, first emerged in relation to land ownership.

Under the capitalist mode of production, competition between different sections of capital effects the formation of a general or average rate of profit. The overall mass of surplus value extracted from the working class as a whole is distributed among the different sections of capital, Marx explained, according to the proportion of the total capital of society they contribute.

They function as shareholders in the common plunder. But, like everything else in the profit system, this distribution does not take place through a conscious plan but through competition in the market which drives the movement of capital.

If profit in one sector of the economy is higher than the average, the capital investment flows into that sector, increasing the supply of commodities it produces, thereby lowering their price and reducing the profit level until it reaches the average. It is this divergence, above and below the average, which drives the continuous movement of capital.

However, in the case of agriculture there is a barrier to the movement of capital in the form of land ownership.

This enables the formation of higher prices than would otherwise apply had capital been able to freely move into that sector. The price divergence results in higher profits than would otherwise apply, a portion of which is appropriated by the landowner in the form of rent.

This rent is not the result of the extraction of additional surplus value but rather the appropriation of surplus value produced elsewhere by the monopoly ownership of an economic resource, in this case land.

While it takes a very different form, the profit accumulation of Apple and other such firms is essentially the same. In this case the monopoly is not of land but of knowledge protected, as is the land, by a series of laws, in this case intellectual property rights. These rights are jealously protected, to which a series of hard-fought court cases attests, because they are key to profit accumulation.

Apple does not manufacture the iPhones and other products it sells. They are put together in giant industrial concerns employing hundreds of thousands of workers, such as Foxconn in China, under conditions of intense exploitation, from components made elsewhere.

It has been estimated that the cost of an iPhone, retailing for around $650 to $700, is made up of $220 for the components and $5 for the labour of assembly.

The selling price of nearly three times the production cost means that Apple is able to secure a far higher rate of return on its capital outlay than is obtainable elsewhere—the average or general rate of profit.

What prevents the movement of capital to push down the price is the monopoly, enshrined in the intellectual property rights which Apple has over the software. Of course, other firms compete and put out rival operating systems. But their mode of accumulation is the same—it is based on a monopoly of knowledge, which, if it were freely available, would result in a massive fall in prices across the board.

Of course, like the landowners of the past, Apple and the other high-tech giants claim entitlement to this higher rate of return of return because of the outlay on hiring those who develop the new software programs and operating systems.

But these claims are no more justified than the claims of the landlords who, by means of their ownership of a natural resource, claimed a portion of wealth.

In the case of Apple and the other high-tech giants, money power is used to exploit a social resource, in the form of knowledge and science, in order to appropriate private profit.

Apple spends millions of dollars each year buying up the best brains from around the world to develop their new programs and devices. It is a cutthroat struggle in which failure to remain one step ahead runs the risk of becoming the next Nokia or Blackberry, bypassed in the sweep of technological change. This is one of the reasons why the high-tech firms have voiced opposition to Trump’s immigration restrictions, fearing that if barriers are set in place talent will go elsewhere.

But for all the money Apple and others lay out, they essentially obtain these services for next to nothing. This is because the capacities of the mathematics, engineering and computer programming graduates they hire are a pittance compared to the outlays by society as a whole, on schools, universities and other educational facilities, without which these undoubtedly talented and gifted individuals could not have developed their expertise.

In short, Apple’s mode of profit accumulation, expressed most graphically in its vast cash pile, is based on pressing science, which develops socially, into the service of capital for private profit, leading to the further accumulation of wealth on the heights of society, flowing into the coffers of figures such as Warren Buffett, at the expense of the population as a whole.

http://www.wsws.org/en/articles/2017/05/05/appl-m05.html