The Trump tax plan: More money for the oligarchs

28 April 2017

In presenting the administration’s tax plan at a White House press briefing on Wednesday, Trump’s top economic advisers, Gary Cohn (net worth $610 million) and Steven Mnuchin ($500 million), both former Goldman Sachs bankers, could barely contain their glee over the prospect of a massive transfer of wealth to themselves and their fellow oligarchs.

Cohn, the director of Trump’s National Economic Council, set the tone, gushing: “This is quite an historic day for us and one that we’ve been looking forward to for a long time… We have a once-in-a-generation opportunity to do something really big.”

The “really big something,” as the one-page handout to reporters made clear, is a plundering operation that will shift trillions of dollars from the federal Treasury to the bank accounts of the rich and the super-rich. The aim, besides adding to the obscene wealth of the financial aristocracy, is to starve and eventually eliminate basic social programs such as Medicare and Social Security.

The proposals outlined by Cohn and Mnuchin include:

• Abolishing taxes that impact only the rich, such as the estate tax, the alternative minimum tax and a capital gains surcharge for Obamacare;

• Cutting the corporate tax rate as well as the rate for business profits taken as personal income from 35 percent to 15 percent; and

• Reducing the top income tax rate from 39.6 percent to 35 percent.

The administration is also proposing to eliminate the taxation of profits made by US-based corporations outside the country, along with a one-time tax incentive for corporations to repatriate trillions of dollars in profits held in offshore accounts.

The list of demands totaled a mere 200 words. In reality, the agenda could have been summed up in just four: “We want more money!”

The corporate-financial elite is particularly fixated on abolishing the estate tax. This is because it wants to nail down for its great grandkids everything it has stolen in the past. This tax on inherited wealth, established in 1916, has been repeatedly watered down, but the billionaire parasites want it wiped off the books to establish themselves as an American royalty.

Trump and his Goldman Sachs advisers are resorting to shameless lying to promote the tax scheme. Mnuchin, who appeared on the three network morning news programs on Thursday, insisted that the tax plan will benefit working and middle-class people, not the rich. “This isn’t about a dramatic tax cut for the wealthy,” he asserted. “It’s a middle class income tax cut to create American jobs. Jobs, jobs, jobs.”

He also repeated the ridiculous claim that the multitrillion-dollar cost of the plan will not increase the federal debt because it will pay for itself through increased economic growth. An independent analysis of Trump’s campaign tax plan, similar to the proposal presented Wednesday, estimated that it would raise the federal debt by an additional $7 trillion in the first decade and $21 trillion by 2036.

The massive transfer of wealth will not go to investment, but to acquiring bigger diamonds; more luxurious mansions, yachts and private jets; new private islands; more security guards and better-protected gated communities to segregate the financial nobility from the masses whom they despise and fear.

A portion of the money stolen from the working class will be used to buy more politicians and reporters to keep the democratic façade going.

The official “debate” on the tax scheme will be nothing more than a smokescreen for implementing virtually all the tax proposals. The Democrats are no less the lackeys of Wall Street than Trump and the Republicans. The Obama White House proposed a cut in the corporate tax rate to 28 percent and repeatedly granted tax breaks to big business as the centerpiece of its phony “jobs” programs.

Even as the Trump administration was rolling out its tax plan, it was reported that Obama, following in the footsteps of the Clintons, had agreed to speak at a Wall Street event in return for $400,000 fee. Payment for services rendered.

It is nearly half a century since the Democratic Party abandoned any policy of social reform, which it adopted under the pressure of mass struggles of the working class. The increasing concentration of wealth in the hands of the rich, abetted by changes in the tax structure, has been underway for decades, carried out by Democratic-controlled Congresses and Democratic as well as Republican administrations.

As a result, the corporate tax accounted for just 10.6 percent of the federal government’s revenue in 2015, down from a third in the 1950s. Today, two-thirds of active corporations pay no corporate tax. Large profitable corporations pay an average rate of 14 percent, and some of the biggest companies pay nothing.

The Trump administration marks the emergence of government of, by and for the oligarchy in the purest form. But Trump is no aberration and he did not emerge from outer space. He is the noxious outcome of decades of social counterrevolution.

Obama handed to Trump a country in which the annual income of the top 1 percent ($1.3 million) is more than three times what it was in the 1980s, while the pre-tax income of the bottom 50 percent ($16,000) has not changed in real terms. The share of national income going to the top 1 percent rose from 12 percent to 20 percent over that period, while that of the bottom 50 percent fell from 20 percent to 12 percent.

In human terms, this translates into a society wracked by social crisis and vast suffering, with tens of millions unemployed or consigned to poverty-wage, part-time jobs, life expectancy declining, and drug abuse and suicide rates soaring. Entire generations of young people are condemned to lives of economic insecurity, forced to live with their parents and postpone getting married or having children. The elderly face the destruction of their health and retirement benefits.

And all of this to sustain the meaningless and corrupt lives of a small elite of financial parasites!

With the people of America and the world facing ever worsening social conditions and the looming threat of world war, the top priority of the political establishment is to hand over trillions more to the wealthy elite. This shows that no social problem can be tackled without directly confronting the oligarchy, breaking its power and seizing its wealth so that it can be used to meet social needs.

The American oligarchy, steeped in criminality and parasitism, can produce only a government of war, social reaction and repression. In its blind avarice, it is creating the conditions for unprecedented social upheavals. It is hurtling toward its own revolutionary demise at the hands of the working class.

Barry Grey

http://www.wsws.org/en/articles/2017/04/28/pers-a28.html

Robert Reich: 5 Reasons Why Trump’s Corporate Tax Cut Is Totally Moronic

NEWS & POLITICS
A huge windfall for corporations and a huge burden on ordinary Americans.

Photo Credit: ATIS547 / Flickr

Trump wants to cut the corporate tax rate from 35 percent to 15 percent, in order to “make the United States more competitive.”

This is truly dumb, for 5 reasons:

1. The White House says the United States has one of the highest corporate tax rates in the world. Baloney. After corporate deductions and tax credits, the typical corporation pays an effective tax rate of 27.9 percent, only a tad higher than the average of 27.7 percent among advanced nations.

2. Trump’s corporate tax cut will bust the federal budget. According to the Congress’s own Join Committee on Taxation, it will reduce federal revenue by $2 trillion over 10 years. This will either require huge cuts in programs for the poor, or additional tax revenues from the rest of us.

3. The White House says the tax cuts will create a jump in economic growth that will generate enough new revenue to wipe out any increase in the budget deficit. This is supply-side nonsense. The Congressional Research Service reviewed tax cuts since 1945 and found no evidence they generate economic growth. Ronald Reagan and George W. Bush both cut taxes, and both ended their presidencies with huge budget deficits. Bill Clinton raised taxes, and the economy created more jobs than it did under Bush or Reagan.

4. American corporations don’t need a tax cut. They’re already hugely competitive as measured by their profits—which are at near record highs.

5. The White House says corporations will use the extra profits they get from the tax cut to invest in more capacity and jobs. Rubbish. They’re now using a large portion of their profits to buy back their shares of stock and to buy other companies, in order to raise their stock prices. There’s no reason to suppose they’ll do any different with even more profits.

Don’t fall for Trump’s corporate tax giveaway. It will be a huge windfall for corporations and a huge burden on ordinary Americans.

 

Robert B. Reich has served in three national administrations, most recently as secretary of labor under President Bill Clinton. His latest book is “Saving Capitalism: For the Many, Not the Few.” His website is www.robertreich.org.

America Is Regressing into a Developing Nation for Most People

BOOKS
A new book reveals that the U.S. is becoming two distinct countries, with separate economies, politics and opportunities.

Photo Credit: Shutterstock

This post originally appeared on the blog of the Institute for New Economic Thinking.

You’ve probably heard the news that the celebrated post-WW II beating heart of America known as the middle class has gone from “burdened,” to “squeezed” to “dying.” But you might have heard less about what exactly is emerging in its place.

In a new book, The Vanishing Middle Class: Prejudice and Power in a Dual Economy, Peter Temin, professor emeritus of economics at MIT, draws a portrait of the new reality in a way that is frighteningly, indelibly clear: America is not one country anymore. It is becoming two, each with vastly different resources, expectations and fates.

Two roads diverged

In one of these countries live members of what Temin calls the “FTE sector” (named for finance, technology and electronics, the industries that largely support its growth). These are the 20 percent of Americans who enjoy college educations, have good jobs and sleep soundly knowing that they have not only enough money to meet life’s challenges, but also social networks to bolster their success. They grow up with parents who read books to them, tutors to help with homework and plenty of stimulating things to do and places to go. They travel in planes and drive new cars. The citizens of this country see economic growth all around them and exciting possibilities for the future. They make plans, influence policies and count themselves lucky to be Americans.

The FTE citizens rarely visit the country where the other 80 percent of Americans live: the low-wage sector. Here, the world of possibility is shrinking, often dramatically. People are burdened with debt and anxious about their insecure jobs if they have a job at all. Many of them are getting sicker and dying younger than they used to. They get around by crumbling public transport and cars they have trouble paying for. Family life is uncertain here; people often don’t partner for the long-term even when they have children. If they go to college, they finance it by going heavily into debt. They are not thinking about the future; they are focused on surviving the present. The world in which they reside is very different from the one they were taught to believe in. While members of the first country act, these people are acted upon.

The two sectors, notes Temin, have entirely distinct financial systems, residential situations and educational opportunities. Quite different things happen when they get sick or when they interact with the law. They move independently of each other. Only one path exists by which the citizens of the low-wage country can enter the affluent one, and that path is fraught with obstacles. Most have no way out.

The richest large economy in the world, says Temin, is coming to have an economic and political structure more like a developing nation. We have entered a phase of regression and one of the easiest ways to see it is in our infrastructure: our roads and bridges look more like those in Thailand or Venezuela than the Netherlands or Japan. But it goes far deeper than that, which is why Temin uses a famous economic model created to understand developing nations to describe how far inequality has progressed in the United States. The model is the work of West Indian economist W. Arthur Lewis, the only person of African descent to win a Nobel Prize in economics. For the first time, this model is applied with systematic precision to the U.S.

The result is profoundly disturbing.

In the Lewis model of a dual economy, much of the low-wage sector has little influence over public policy. Check. The high-income sector will keep wages down in the other sector to provide cheap labor for its businesses. Check. Social control is used to keep the low-wage sector from challenging the policies favored by the high-income sector. Mass incarceration: check. The primary goal of the richest members of the high-income sector is to lower taxes. Check. Social and economic mobility is low. Check.

In the developing countries Lewis studied, people try to move from the low-wage sector to the affluent sector by transplanting from rural areas to the city to get a job. Occasionally it works; often it doesn’t. Temin says that today in the U.S., the ticket out is education, which is difficult for two reasons: you have to spend money over a long period of time, and the FTE sector is making those expenditures more and more costly by defunding public schools and making policies that increase student debt burdens.

Getting a good education, Temin observes, isn’t just about a college degree. It has to begin in early childhood, and you need parents who can afford to spend time and resources all along the long journey. If you aspire to college and your family can’t make transfers of money to you on the way, well, good luck to you. Even with a diploma, you will likely find that high-paying jobs come from networks of peers and relatives. Social capital, as well as economic capital, is critical, but because of America’s long history of racism and the obstacles it has created for accumulating both kinds of capital, black graduates often can only find jobs in education, social work, and government instead of higher-paying professional jobs like technology or finance— something most white people are not really aware of. Women are also held back by a long history of sexism and the burdens — made increasingly heavy — of making greater contributions to the unpaid care economy and lack of access to crucial healthcare.

How did we get this way?

What happened to America’s middle class, which rose triumphantly in the post-World War II years, buoyed by the GI bill, the victories of labor unions and programs that gave the great mass of workers and their families health and pension benefits that provided security?

The dual economy didn’t happen overnight, says Temin. The story started just a couple of years after the ’67 Summer of Love. Around 1970, the productivity of workers began to get divided from their wages. Corporate attorney and later Supreme Court Justice Lewis Powell galvanized the business community to lobby vigorously for its interests. Johnson’s war on poverty was replaced by Nixon’s war on drugs, which sectioned off many members of the low-wage sector, disproportionately black, into prisons. Politicians increasingly influenced by the FTE sector turned from public-spirited universalism to free-market individualism. As money-driven politics accelerated (a phenomenon explained by the Investment Theory of Politics), leaders of the FTE sector became increasingly emboldened to ignore the needs of members of the low-wage sector, or even to actively work against them.

America’s underlying racism has a continuing distorting impact. A majority of the low-wage sector is white, with blacks and Latinos making up the other part, but politicians learned to talk as if the low-wage sector is mostly black because it allowed them to appeal to racial prejudice, which is useful in maintaining support for the structure of the dual economy — and hurting everyone in the low-wage sector. Temin notes that “the desire to preserve the inferior status of blacks has motivated policies against all members of the low-wage sector.”

Temin points out that the presidential race of 2016 both revealed and amplified the anger of the low-wage sector at this increasing imbalance. Low-wage whites who had been largely invisible in public policy until recently came out of their quiet despair to be heard. Unfortunately, present trends are not only continuing, but also accelerating their problems, freezing the dual economy into place.

What can we do?

We’ve been digging ourselves into a hole for over 40 years, but Temin says we know how to stop digging. If we spent more on domestic rather than military activities, then the middle class would not vanish as quickly. The effects of technological change and globalization could be altered by political actions. We could restore and expand education, shifting resources from policies like mass incarceration to improving the human and social capital of all Americans. We could upgrade infrastructure, forgive mortgage and educational debt in the low-wage sector, reject the notion that private entities should replace democratic government in directing society, and focus on embracing an integrated American population. We could tax not only the income of the rich, but also their capital.

The cost of not doing these things, Temin warns, is incalculably high, and even the rich will end up paying for it.

“Look at the movie Hidden Figures,” he says. “It recounts a very dramatic story about three African-American women condemned to have a life of not being paid very well teaching in black colleges, and yet their fates changed when they were tapped by NASA to contribute to space exploration. Today we are losing the ability to find people like that. We have a structure that predetermines winners and losers. We are not getting the benefits of all the people who could contribute to the growth of the economy, to advances in medicine or science which could improve the quality of life for everyone — including some of the rich people.”

Along with Thomas Piketty, whose Capital in the Twenty-First Century examines historical and modern inequality, Temin’s book has provided a giant red flag, illustrating a trajectory that will continue to accelerate as long as the 20 percent in the FTE sector are permitted to operate a country within America’s borders solely for themselves at the expense of the majority. Without a robust middle class, America is not only reverting to developing-country status, it is increasingly ripe for serious social turmoil that has not been seen in generations.

A dual economy has separated America from the idea of what most of us thought the country was meant to be.

Lynn Parramore is contributing editor at AlterNet. She is cofounder of Recessionwire, founding editor of New Deal 2.0, and author of “Reading the Sphinx: Ancient Egypt in Nineteenth-Century Literary Culture.” She received her Ph.D. in English and cultural theory from NYU, and she serves on the editorial board of Lapham’s Quarterly. Follow her on Twitter @LynnParramore. 

http://www.alternet.org/books/america-regressing-developing-nation-most-people?akid=15455.265072.jP3WSU&rd=1&src=newsletter1075889&t=8

Blaming the Boomers for Growing Poverty in America Is Just a Media Distraction in Service of the 1%

ECONOMY
It’s alternative facts day at the Boston Globe.

mini college graduation cap on cash
Photo Credit: zimmytws

The main economic story of the last four decades is the massive upward redistribution of income that has taken place. The top 1 percent’s share of national income has more than doubled over this period, from roughly 10 percent in the late 1970s to over 20 percent today. And this is primarily a before-tax income story: The rich have used their control over the levers of economic power to ensure that an ever-larger share of the country’s wealth goes into their pockets. (Yes, this is the topic of my book, Rigged.) (It’s free.)

Anyhow, the rich don’t want people paying attention to these policies (hey, they might try to change them), so they endlessly push out nonsense stories to try to divert the public’s attention from how they structured the rules to advance their interests. And, since the rich own the newspapers, they can make sure that we hear these stories.

This meant that last week the New York Times (3/28/17) gave us the story of how robots are taking all the jobs and driving down wages. Never mind that productivity growth is at its slowest pace in the last seven decades (Beat the Press3/19/17). Facts and data don’t matter in the alternative world, where we try to divert folks’ attention from things like the Federal Reserve Board (who are not robots, last I checked) raising interest rates to make sure that we don’t have too many jobs.

One of the other big alternative facts for the diverters is the generational story. This is the one where we tell folks to ignore all those incredibly rich people with vast amounts of money—the reason most people are not seeing rising living standards is the damn Baby Boomers who expect to get Social Security and Medicare, just because they paid for it. The Boston Globe (2/26/17) gave us this story with a piece by Bruce Cannon Gibney, conveniently titled “How the Baby Boomers Destroyed Everything.” (Full disclosure: I am one of those Baby Boomers.)

There is not much confusion about the nature of the argument, only its substance. Gibney complains about

the unusual prevalence of sociopathy in an unusually large generation. How does that disorder manifest? Improvidence is reflected in low levels of savings and high levels of bankruptcy. Deceit shows up as a distaste for facts, a subject on display in everything from Enron’s quarterly reports to daily press briefings. Interpersonal failures and unbridled hostility appeared in unusually high levels of divorce and crime from the 1970s to early 1990s.

Starting with the bankruptcy story, the piece to which Gibney helpfully linked noted a doubling of bankruptcy rates for those over 65 since 1991. It reported:

Expensive healthcare costs from a serious illness before a patient received Medicare and the inability to work during and after a serious illness are the prime contributors to financial crises among those 55 and older.

Yes, we have clear evidence of a moral failing here.

The correlation between lead exposure and violent crime. (source: Mother Jones)

The crime rate story is interesting. We had a surge in crime beginning in the 1960s and running through the 1980s, with a sharp fall beginning in the 1990s. Gibney would apparently tie this one to the youth and peak crime years of the Baby Boomers. There is an alternative hypothesis for which there is considerable evidence: exposure to lead. While the case is far from conclusive, it is likely that lead exposure was an important factor. More importantly, the point is that crime was a story of what was done to Baby Boomers, not just kids acting badly.

I really like the complaint about the low level of savings among Baby Boomers. I guess Gibney is the Boston Globe‘s Rip Van Winkle who missed the housing bubble collapse and resulting recession. A main complaint among economic policy types in the last decade has been that people were not spending enough. The argument was that people were being too cautious in the wake of the crash, and not spending the sort of money needed to bring the economy back to full employment.

But Gibney wants to blame Baby Boomers for spending too much. Oh well, it’s alternative facts day at the Boston Globe!

The rest of the piece is in the same vein. Boomers are blamed for “unaddressed climate change.” Well, Boomers also were the force behind the modern environmental movement. Many of us Boomers might look more to folks like ExxonMobil and the Koch brothers who have used their vast wealth to try to stifle efforts to combat climate change—but hey, why focus on rich people acting badly when we can blame a whole generation?

Gibney blames Boomers for every bad policy of the last four decades, including the war on crime, which took off in the late 1970s, when many of the Boomers had not even reached voting age. We even get blamed for the repeal of Glass-Steagall, another great generational cause.

The amount of confusion in this piece is impressive. We get this one:

From 1989 to 2013, wealth gaps between older and younger households grew in the same way as those between the top 5 percent and the bottom 95 percent. Today’s seniors (Boomers) are much wealthier relative to the present young than the seniors of the 1980s were to then-young boomers. All those tax breaks, bailouts, easy money, deregulation, and the bubbles they spawned supported that Boomer wealth accumulation while shifting the true costs to the future, to the young.

Wealth is a virtually meaningless measure for the young. Gibney is crying for the Harvard Business school grad with $150,000 in debt. Young people do have too much debt, but the bigger issue is the horrible labor market they face (partly the result of Boomers saving too much money). Furthermore, while the ratio of Boomer wealth to wealth of the young has risen (because of college debt), the typical Boomer reaching retirement actually has less wealth than their parents.

It’s also important to remember in these comparisons that Boomer parents likely had a traditional pension (an income stream that does not get included in most wealth measures). If Boomers are to have any non–Social Security income in retirement, it will likely be in the form of a 401(k) that does count as wealth.

And, of course, we get the completely meaningless national debt horror story:

Still, no amount of tax reallocation could keep the government together and goodies flowing, so Boomers tolerated astounding debt expansion while chopping other parts of the budget. Gross national debt, 35 percent of GDP when the Boomers came of age, is now 105 percent, a peacetime record, expanding 3 percent annually, forever.

Economics fans would note that interest on the debt (net of money refunded by the Federal Reserve Board) is around 0.8 percent of GDP, near a post-war low.

They would also point out that formal borrowing is just one way in which the government can create obligations for the future. The government also pays for things like innovation and creative work with patent and copyright monopolies. These monopolies effectively allow their owners to impose taxes on consumers. Due to these monopolies, we will pay $440 billion on prescription drugs this year for drugs that would likely sell for less than $80 billion in a free market. The difference of $360 billion is more than twice the net interest burden of the debt that Gibney wants us to worry about. And this is just patent protection for prescription drugs; the costs for the full range and patent and copyright monopolies throughout the economy would almost certainly be two or three times as large.

Of course, Gibney could also blame the commitment of these monopoly rents on Baby Boomers (after all, people elected by Baby Boomers were the ones who made these monopolies stronger and longer), but that might be a bit hard to sell. It would look pretty obvious that the story is one  of a massive upward redistribution to the rich—some of whom happen to be Baby Boomers—and that would undermine the whole effort at distraction in which Gibney and the Globe is engaged.

 

Dean Baker is a macroeconomist and co-director of the Center for Economic and Policy Research in Washington, DC. He previously worked as a senior economist at the Economic Policy Institute and an assistant professor at Bucknell University.

http://www.alternet.org/economy/alternative-facts-baby-boomers-boston-globe?akid=15399.265072.WFWbn4&rd=1&src=newsletter1075250&t=20

Is Brexit the beginning of the end for international cooperation?

We may be witnessing the twilight of the multilateral era

Is Brexit the beginning of the end for international cooperation?
(Credit: AP Photo/Michael Probst)

This article was originally published on The Conversation.

 

It’s official: Britain is done with Europe. The Conversation

Prime Minister Theresa May has formally triggered the process for withdrawing from the European Union, ensuring that the United Kingdom, one of the largest and most prosperous countries in the EU, will soon leave the 28-member bloc.

While the process could drag on for two years or more, the Brexit decision serves as a historic and stinging rebuke to proponents of a unified Europe. Perhaps more importantly, it calls into question the very future of the EU.

Pro-Europe commentators, on both sides of the Atlantic, have argued that Brexit is a historical blip, a rash decision made by an uninformed electorate after a vicious and one-sided campaign. But to dismiss Britain’s decision as an anomaly is to ignore the facts. We may be witnessing the twilight of the multilateral era.

A not-so-perpetual peace

The history of civilization has been one of peoples coming together in larger and larger collectives — from villages to city-states, from city-states to nations and from nations to international organizations. Today, we live in an era typified by the proliferation of global bodies like the United Nations, the World Trade Organization and the European Union.

People have created these greater communities for a number of reasons, but the overriding one has always been the most basic: security. As German philosopher Immanuel Kant wrote in 1795 in his essay “Perpetual Peace,” the only means for nations to emerge from a state of constant war was to “give up their savage, lawless freedom… and, by accommodating themselves to the constraints of common law, establish a nation of peoples that (continually growing) will finally include all the people of the earth.”

The European Union is arguably the greatest example of this ideal. An organization forged from the desolation of two world wars, the EU brought the states of Europe together in a continent-wide commitment to cooperation and integration. Its ultimate aim was to draw nations together so closely that war would become unimaginable.

An impeccable aspiration, to be sure. But Britain’s vote last year to leave the EU illustrates the costs associated with that aspiration, and with multilateralism more generally. Governments have become increasingly detached from the people they govern. Local communities have surrendered control over an ever-growing array of matters to distant bureaucrats. And people increasingly perceive that their own groups and beliefs are under siege by outsiders.

This sentiment is not isolated to the United Kingdom. Disillusionment with multilateral agreements is widespread today. Just look at President Donald Trump.

During and after the presidential campaign, Trump has repeatedly denounced America’s international agreements. The targets of his ire have ranged from free trade deals (think NAFTA and the Trans-Pacific Partnership) to defense pacts (e.g., NATO) to environmental accords (see the Paris climate deal). In January, The New York Times even reported that the Trump administration was preparing an executive order entitled “Auditing and Reducing U.S. Funding of International Organizations.” This rhetoric has struck a chord with many Americans who fear that international agreements have destroyed American industry and cost Americans jobs.

But to say that we are disillusioned with multilateralism does not provide an answer to the more difficult question: If not multilateralism, then what?

Going it alone

The answer, it appears, is aggressive unilateralism. Instead of working through multilateral institutions to solve their problems, countries are increasingly going it alone.

The United States, for example, has responded to the failure of international negotiations on a range of topics by imposing its domestic laws abroad. The U.S. forces foreign banks to abide by its financial regulations, foreign businesses to comply with its corruption laws and foreign producers to adopt its climate change-related emissions standards. All of these laws were made and enforced without international agreement.

In many ways, the rise of unilateralism may be a great boon for societies. The outpouring of activism and political engagement in the U.K. both before and after the Brexit vote signals a certain optimism about the ability of Britons to govern themselves. With any luck, this optimism will lead to a rejuvenation of democracy in the country, a welcome contrast to the deep cynicism more typical of politics today. Similarly, U.S. action to regulate foreign companies may help provide solutions to problems that have been stubbornly resistant to global agreement and treaty-making.

But the disillusionment with multilateralism also comes with a dark side. It is one thing when countries like the U.S. and Britain decide to start taking action in the face of stalled negotiations over climate change and corruption. It is another when countries with very different concepts of the rule of law and democratic processes start imposing their own rules, unilaterally, on American companies.

Just look at Russia’s recent prosecution of Google for anti-trust violations or China’s injunction against the sale of iPhones as examples.

Multilateralism has been a great engine of peace over the course of human civilization, and we should tread carefully in rejecting it. As Kant warned, the alternative is for us to “find perpetual peace in the vast grave that swallows both atrocities and their perpetrators.”

William Magnuson, Associate Professor of Law, Texas A&M University

http://www.salon.com/2017/03/31/is-brexit-the-beginning-of-the-end-for-international-cooperation_partner/?source=newsletter

The UAW’s corporatist alliance with Trump

17 March 2017

On Wednesday, United Auto Workers (UAW) President Dennis Williams joined with President Donald Trump and the CEOs of the Big Three US automakers to promote a reactionary program of extreme economic nationalism, corporatism and war.

The event was a campaign-style speech by Trump before UAW bureaucrats and a section of workers bused in by the auto bosses to the decommissioned Willow Run auto plant in Ypsilanti, a suburb of Detroit.

Trump reprised the fascistic themes of his inaugural address, with a heavy emphasis on the unity of workers, employers and the state in defense of the “national interest” and in opposition to foreigners. “That is how we will succeed and grow together—American workers and American industry side by side,” the president declared. “Nobody can beat us, folks. Nobody can beat us. Because whether we are rich or poor, young or old, black or brown or white, we all bleed the same red blood of patriots.”

Trump, Dennis Williams and Ford CEO Mark Fields [Credit: Reuters]

As a matter of fact, during the Vietnam years, Trump was able to take advantage of the political connections of his millionaire father to stay out of the military and make sure that none of his “red blood” was spilled in an imperialist war that cost the lives of 58,000 Americans—mostly poor and working class—and upwards of 3 million Vietnamese.

Trump made explicit the warmongering essence of his corporatist ideology, which fraudulently claims that the corporations, the capitalist state and the working class have identical interests. He hailed as the model for today the united effort of the auto companies, the UAW and the state in producing the B-24 bomber at the now-closed plant during World War II.

“At peak production,” Trump said, “listen to this—it’s not the country that we’ve been watching over the last 20 years—they were building one B-24 every single hour. We don’t hear that. We don’t hear that anymore, do we?”

Alluding ominously to his plans for a massive military buildup, he continued, “We’ll be back. We’ll be back soon.”

The head of the UAW signaled his support for these policies by appearing on a panel with Trump and the auto bosses prior to the president’s speech. Williams was tellingly seated between the ultra-right-wing billionaire Trump and Ford CEO Mark Fields.

The UAW president declared his support for Trump’s trade war agenda against China and Mexico last month and announced that the UAW was reviving its “Buy American” campaign. “He’s the first president that has addressed this issue,” Williams said. “I have to give him kudos for that.”

AFL-CIO President Richard Trumka, who sits on Trump’s Manufacturing Jobs Initiative panel, promised to partner with Trump in promoting economic nationalism and attacking immigrant workers.

The UAW’s last “Buy American” campaign in the 1980s and 1990s included union officials banning Japanese- and European-built cars from union parking lots, bashing in the windshields of foreign-made cars, and whipping up such hatred that Vincent Chin, a Chinese-American worker in Detroit, was murdered by a Chrysler foreman.

The results of the UAW’s previous efforts to promote American nationalism can be seen in the closed factories and devastated former auto-producing cities across the Midwest. Under the corporatist banner of union-management “partnership,” the union collaborated with the companies in imposing plant closures, mass layoffs and wage cuts so as to promote the competitiveness of American automakers against their overseas competitors.

Wednesday’s event underscored a basic reality: The ultra-right-wing nationalist ideology of Trump and his chief strategist, ex-Breitbart News chief Stephen Bannon, is the ideology of the UAW, AFL-CIO and official unions as a whole. They are all seeking to divert the social anger of workers over deindustrialization, inequality and the ravaging of their living standards along the lines of xenophobia and militarism.

The unions, in lockstep with Bannon, insist on the necessity for national unity, so that American business can dominate its foreign rivals. This requires the suppression of the class struggle. The union leadership misdirects workers by promoting the lie that their problems are caused not by capitalism, but by immigrant workers and the theft of American wealth by foreign powers (and workers) benefiting from unfair trade policies.

This UAW’s embrace of corporatism is not a new development. It is the outcome of a protracted process that has extended over the course of many decades.

Leon Trotsky warned of the danger of the incorporation of the unions into the state at the very outset of the CIO in the late 1930s and early 1940s, just as the antisocialist bureaucratic leadership was tying the new industrial unions to President Franklin Roosevelt and the Democratic Party.

“The intensification of class contradictions within each country, the intensification of antagonisms between one country and another, produce a situation in which imperialist capitalism can tolerate (i.e., up to a certain time) a reformist bureaucracy only if the latter serves directly as a petty but active stockholder of its imperialist enterprises, of its plans and programs within the country as well as on the world arena,” Trotsky wrote in 1940.

During and after World War II, UAW President Walter Reuther played a particularly reactionary role in the anticommunist evolution of the union. He promoted and signed a no-strike pledge and guaranteed the union’s collaboration with the war effort in return for the dues checkoff and the institutionalization of the unions by the state. After the war, the union bureaucracy carried out a vicious purge of left-wing union militants while actively supporting US imperialism and the Cold War. The CIO’s merger with the AFL in 1955 established the defense of capitalism and imperialism as the official policy of the union.

The development of union corporatism accelerated along with the decline in the global economic position of American capitalism and the rise of European and Asian rivals to the Big Three auto companies. The establishment of a host of joint union-management bodies, along with various slush funds, was part of an effort to obliterate class consciousness and totally subordinate workers to the demands of the corporations and the government.

During the 1980s, every form of resistance was crushed with the collaboration of the unions. A major turning point was Ronald Reagan’s firing and blacklisting of the PATCO air traffic controllers in 1981, whose bitter strike was broken with the assistance of the AFL-CIO and UAW bureaucracies. PATCO was followed by a series of bitter and often violent strikes, including Phelps Dodge, Continental Airlines, Greyhound, Hormel and AT Massey Coal, all of which were isolated and betrayed by the union leadership. The bureaucrats argued that strikes and work actions had to be suppressed in an era of globalization in order to ensure the profitability of American corporations.

Analyzing the 1984 UAW-GM contract, which established the legal and technical foundations for the direct collaboration of the union bureaucracy with the corporations and the state, the Workers League, the forerunner of the Socialist Equality Party in the US, wrote: “The practice of anti-communism is a corporatist alliance with the auto bosses against the auto workers, the abandonment of any defense of the gains made by the union in the past 50 years, the surrender of jobs, wages, benefits and work rules. It is a total sellout and betrayal of the independent interests of the working class, in order to defend the capitalist system.”

Staffed and run by right-wing bureaucrats, the unions are today a savage industrial police force that works with the government and corporations to suppress the class struggle. They are the direct enforcers of cuts in wages, pensions and health benefits. The income of the top bureaucrats and their aides, which can reach well into six figures, is entirely dependent on this parasitic arrangement.

The UAW has not called a single national strike in nearly 40 years. Once considered a fact of daily life, strikes and walkouts have all but disappeared from the scene. Limited and deliberately isolated strikes are called on occasion to divide the working class and wear down and starve militant workers into submitting to company demands. Not surprisingly, a drastic decline in union membership has accompanied the unions’ ever more direct and open collaboration with the corporations to cut living standards and shut down factories.

Williams’ appearance with Trump is only the latest confirmation of the far-sighted analysis of the trade unions made by the Socialist Equality Party.

The reality is that workers are totally without any form of representation in their fight for decent wages and working conditions. The unions’ role as an industrial police force and their open alignment with the fascistic policies of the Trump administration raise sharply the need for the building in every workplace of democratic rank-and-file committees, which can take the struggle in defense of jobs and living standards out of the hands of the bureaucracy and place the initiative back in the hands of the working class.

This industrial fight must be combined with an independent political strategy, based on a break with the two-party system of American big business and the building of a mass socialist movement of the working class.

Niles Niemuth

 

Noam Chomsky Makes a Prediction for the U.S. Economy No One Can Afford to Dismiss

ECONOMY
The legendary linguist and philosopher warns the Trump bump won’t last.

Photo Credit: Jeremy Danger/Flickr

Legendary linguist Noam Chomsky has a warning for Donald Trump’s supporters; the Trump bump in the market is waning.

“Anti-establishment is kind of a joke,” Chomsky concluded. “Take a look at Trump and take a look at who’s appointed for the cabinet.”

Treasury Secretary Steve Mnuchin, for example, “comes from Goldman Sachs, a major investment firm where he was for almost 20 years,” Chomsky observed.

“What’s anti-establishment?” he asked. “This [cabinet] is drawing from the billionaire class, largely financial institutions, and military and so on; in fact, take a look at the stock market, that tells you how anti-establishment he is.”

“As soon as Trump was elected, and since, stock values in financial institutions escalated to the sky,” he said. Investors are “delighted he’s going to eliminate regulations, let them make more profit; of course, it’ll lead to another crash, but that’s somebody else’s problem. The taxpayers will take care of that.”

Chomsky is not the only one predicting a market crash. Even the right-leaning Wall Street Journal reported Thursday that “a revival in fortunes for hedge funds that trade across global assets, sparked by Donald Trump’s election victory, has hit trouble.”

“Wall Street hailed Trump’s triumph on November 8 as the dawn of a pro-business, growth-spurring revolution,” Shawn Tully, Fortune Magazine’s senior editor-at-large, explained earlier this week.

Vowing to roll back regulations, slash taxes and invest big in infrastructure, Trump created a rare post-election bull market.

However, Tully also warned that “given the high levels where stock prices stood pre-election, and the astounding run-up since then, investors have raised the bar for corporate performance so outrageously high that even if Trump does deliver on what he has promised, rich returns may still be out of reach.”

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