Sarah van Gelder: “10 Most Hopeful Stories of 2010”

Published in Yes! December 22, 2010. Reprinted with permission.

There was plenty of disappointment and hardship this year. But the year also brought opportunities for transformation.

by Sarah van Gelder

It was a tough year. The economy continued its so-called jobless recovery with Wall Street anticipating another year of record bonuses while most Americans struggle to get work and hold on to their homes. The wars in Iraq and Afghanistan continued, and spilled over into Pakistan and Yemen, and more American soldiers died by suicide than fighting in Afghanistan. And it was a year of big disasters, some of them indicators of the growing climate crisis.

World leaders, under the sway of powerful corporations and banks, have been unable to confront our most pressing challenges, and one crisis follows another.

Nonetheless, events from 2010 also contain the seeds of transformation. None of the following stories is enough on its own to change the momentum. But if we the people build and strengthen social movements, each of of these stories points to a piece of the solution.

1. Climate Crisis Response Takes a New Direction. After the failure of Copenhagen, Bolivia hosted a gathering of indigenous people, climate activists, and grassroots leaders from the global South—those left out of the UN-sponsored talks. Their solution to the climate crisis is based on a new recognition of the rights of Mother Earth. Gone are notions of trading the right to pollute (which gives a whole new meaning to the term “toxic assets”). Instead, life has rights, and we can learn ways to live a good life that doesn’t require degrading our home.

The official climate agreement that came out of Cancún was weak and disappointing, although it did represent a continued commitment to work to address the challenge. But the peoples’ mobilizations, and the solutions born in Cochabamba, continue to energize thousands.

Meanwhile, Californians voted to uphold their ambitious climate law, despite millions spent by oil companies to rescind the measure in November’s election. And cities—Seattle, for one—are moving ahead with their own plans to reduce, and even zero-out, their climate emissions.

2. Wikileaks Lifts the Veil. The release of secret documents by Wikileaks has lifted the veil on U.S. government actions around the world. While the insights themselves don’t change anything, they do offer grist for a national dialogue on our role in the world—especially at a time when our federal budget crisis may require scaling back on our hundreds of foreign military bases, our protracted overseas wars, and our budget-busting weapons programs. Likewise, the traumas inflicted on civilian populations and on our own military are spurring fresh thinking. We now have data points for a bracing, reality-based conversation on the future of war—the kind of conversation that makes democracy a living reality.

3. Momentum is Building for the Abolition of Nuclear Weapons. The ratification of the START Treaty is an important step in the right direction. And the National Council of Churches, the U.S. Conference of Catholic Bishops, the U.S. Conference of Mayors, and others from across the political spectrum have joined UN Secretary-General Ban Ki-moon in calling for an even more ambitious goal: the end of nuclear weapons.

4. Resilience is the New Watchword. As familiar sources of security erode, people are rebuilding their communities to be green and resilient. Detroit, a city abandoned by industry and many of its former residents, now has over 1,000 community gardens, a six-block-long public market with some 250 independent vendors, and a growing support network among small businesses. Around the country, faith groups and others are forming Common Security Clubs to help members weather the recession and consider more life-sustaining economic models. Communities are becoming Transition Towns as a means to prepare for breakdowns in society that may result from any combination of the triple crises of climate change, an end to cheap fossil fuels, and an economy on the skids.

5. Health Care—Still in Play. The passage of the Obama health care package seemed to lock us into a reform package that maintains the expensive and bureaucratic role of private insurance and props up the mega-profits of the pharmaceuticals industry. But the story is not over. The decision by U.S. District Judge Henry Hudson to strike down the individual mandate in the health care reform may begin unraveling the new health care system.

As insurance premiums continue their steep climb, some are advocating expansion of Medicare to cover more people—or everyone. Thom Hartmann points out this could be done with a simple majority vote in Congress—expanding Medicare to everyone was what its founders had in mind in the first place, he says.

Vermont is exploring instituting a statewide single-payer healthcare system. The United States may wind up following Canada’s path to universal coverage, which began when the province of Saskatchewan made the switch to single-payer health care, and the rest of Canada, seeing the many benefits, followed suit.

6. Corporate Power Challenged. Small businesses are distancing themselves from the Chamber of Commerce, which promotes the interests of mega-corporations over Main Street businesses. And there are more direct confrontations to corporate power. The citizens of Pittsburgh, Penn., passed a law prohibiting natural gas “fracking,” and declaring that the rights of people and nature supersede the rights of corporations. Other towns and cities are adopting similar laws. The biggest challenge will be undoing the damage of the Citizens United decision, which opened the floodgates to wealthy special interests to spend what they like on elections. Groups around the country are gearing up to take on the issue, with a constitutional amendment just one of the potential fixes.

7. A local economy movement is taking off as it becomes clear that the corporate economy is a net drain on our well-being, the environment, communities, and even jobs. A “Move Your Money” campaign inspired thousands to close their accounts with predatory big banks, and instead, to open accounts at credit unions and locally owned banks. Schools, hospitals, local retailers, and families are increasingly demanding local food. Farmers markets are spreading. Independent, local stores have huge cachet as people look local for a sense of community. And the experience of one state with a budget surplus and very low unemployment is capturing the imagination of other states—North Dakota’s state bank is creating a buzz.

8. Cooperatives Make a Comeback. A new model for local, just, and green job creation is gaining national attention. Leaders in Cleveland, Ohio, created worker-owned cooperatives with some of the strongest, local institutions (a hospital and university) promising to be their customers. The result: formerly low-income workers now own shares in their workplace and earn family-supporting wages. They can plan for their families’ futures, knowing that their jobs can be counted on not to flee the country. The model is spreading, and people now talk about how to bring “the Cleveland model” to their cities.

9. A Turn Away from Homophobia. The revoking of Don’t Ask, Don’t Tell is just the most dramatic sign that the country has turned away from homophobia. A widespread anti-bullying campaign sparked by the suicide of Rutgers freshman Tyler Clementi led to an “It Gets Better” campaign with videos created by celebrities and others.

10. Social Movements Still Our Best Hope. Thousands gathered in Detroit in June for the second US Social Forum, an event that galvanized grassroots social movements from across the United States. In Toronto, the meeting of the G20 was greeted by thousands of protesters, many of whom were subjected to police beatings and gassing. The Cancún climate talks brought caravans of farmer/activists and global justice activists as well as greens to press for a meaningful response to the climate crisis. Social movements are alive and well, even though they are disparaged or ignored by the corporate media, which choose to instead shower attention on the well-funded Tea Party. And movement leaders are connecting the dots between Wall Street’s plunder, growing poverty, and the climate crisis, and setting priorities instead for people and the planet.

The turbulence of our lives is increasing, spurred by the crises in the economy and the environment, growing inequality and debt, military overreach, deferred peacetime investments, and species extinctions. Turbulent times are also times when rigid belief systems and institutions are shaken, and change is more possible. Not automatic, and definitely not easy, but possible. The question of our time is how we use these openings to work for a better world for all life.

This work is licensed under a Creative Commons License Creative Commons License

Sarah van Gelder is co-founder and executive editor of YES! Magazine, a national, independent media organization that fuses powerful ideas with practical actions for a just and sustainable world. Sarah is executive editor of YES!

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Molly Fisk: “Hunter’s Moon”

American Life in Poetry: Column 300
BY TED KOOSER, U.S. POET LAUREATE, 2004-2006
This is our 300th column, and we thank you for continuing to support us. I realized a while back that there have been over 850 moons that have gone through their phases since I arrived on the earth, and I haven’t taken the time to look at nearly enough of them. Here Molly Fisk, a California poet, gives us one of those many moons that you and I may have failed to observe.
Hunter’s Moon
Early December, dusk, and the sky
slips down the rungs of its blue ladder
into indigo. A late-quarter moon hangs
in the air above the ridge like a broken plate
and shines on us all, on the new deputy
almost asleep in his four-by-four,
lulled by the crackling song of the dispatcher,
on the bartender, slowly wiping a glass
and racking it, one eye checking the game.
It shines down on the fox’s red and grey life,
as he stills, a shadow beside someone’s gate,
listening to winter. Its pale gaze caresses
the lovers, curled together under a quilt,
dreaming alone, and shines on the scattered
ashes of terrible fires, on the owl’s black flight,
on the whelks, on the murmuring kelp,
on the whale that washed up six weeks ago
at the base of the dunes, and it shines
on the backhoe that buried her.

Paul Krugman: “Zombie Economics”

Paul Krugman, in his most recent column, asks why failed conservative economic theories, which should now be thoroughly discredited, continue to dominate politics.

And why does Obama open the door to these zombie ideas?

“When you do that,” Krugman says, “the zombies end up eating your brain — and quite possibly your economy too.”

Krugman calls these failed ideas “zombie economics” (John Quiggin, author of a new book on the same subject, may have borrowed Krugman’s term for his title).

Krugman explains:

“When historians look back at 2008-10, what will puzzle them most, I believe, is the strange triumph of failed ideas. Free-market fundamentalists have been wrong about everything — yet they now dominate the political scene more thoroughly than ever.

“How did that happen? How, after runaway banks brought the economy to its knees, did we end up with Ron Paul, who says “I don’t think we need regulators,” about to take over a key House panel overseeing the Fed? How, after the experiences of the Clinton and Bush administrations — the first raised taxes and presided over spectacular job growth; the second cut taxes and presided over anemic growth even before the crisis — did we end up with bipartisan agreement on even more tax cuts?

“The answer from the right is that the economic failures of the Obama administration show that big-government policies don’t work. But the response should be, what big-government policies?

“For the fact is that the Obama stimulus — which itself was almost 40 percent tax cuts — was far too cautious to turn the economy around. And that’s not 20-20 hindsight: many economists, myself included, warned from the beginning that the plan was grossly inadequate. Put it this way: A policy under which government employment actually fell, under which government spending on goods and services grew more slowly than during the Bush years, hardly constitutes a test of Keynesian economics.

“Now, maybe it wasn’t possible for President Obama to get more in the face of Congressional skepticism about government. But even if that’s true, it only demonstrates the continuing hold of a failed doctrine over our politics.”

Krugman raises the question, “Why do these failed ideas continue to dominate?” But he doesn’t answer it.

Here’s my answer: concentrated corporate media are very effective manufacturers of opinion.

Despite the fact that sane and sensible people mock Fox News, for instance, the truth is that Fox News is very successful, not in making money, which is not their prime goal, but in promoting radical conservative (GOP) propaganda, which includes all of zombie economics.

Read Krugman’s full article.

Nice Kitty

For more about Kevin Richardson, see his webpage.

Article in The Union Reads Like an Emgold Press Release

A day or so after Jeff Ackerman published his recent Union op-ed bemoaning the regulatory hurdles Emgold must overcome in order to get permits to re-open the Idaho-Maryland mine, an article appeared in The Union (“Mine plan pushes forward“) that contains the same kind of biases and  inaccuracies found in a typical Emgold press release. This similarity is most likely due to the fact that the only source for the article — aside from Chauncey Poston, who is quoted briefly — is David Watkinson, president and CEO of Emgold, who is quoted copiously.

Here are a few examples of biases and inaccuracies from the article, followed in each case by my commentary.

FROM THE ARTICLE: “A draft environmental review document has been on hold and the application withdrawn since mid-2009.”

THE FACT: Not true. If the application had been formally withdrawn, Emgold would be obliged to start over from the beginning with a new (not revised) DEIR, as Joe Heckel said in his interview with Paul Emery on KVMR on Nov. 23rd. If the application is withdrawn, Heckel said, Emgold would have to “refile their application and re-initiate the process.” If Emgold fails to meet its April 2011 deadline, by the way, the application will be considered withdrawn.

ARTICLE: The DEIR would have to be ” … re-circulated for public review because of the time passed.”

FACT: The DEIR has to be revised and recirculated because it is inadequate. Examples of issues not properly addressed — or not addressed at all — include acid mine drainage (AMD), air quality impacts from asbestos and silica dust, cyanide transport risks, etc. The DEIR would have to be recirculated even if no time had passed, although the passage of so much time adds urgency to the requirement for sound business reasons.

ARTICLE: “Since the last time the project went before the public, plans have been revisited to treat any water discharged into Wolf Creek, bringing it to drinking-water standards, Watkinson said.”

SUGGESTION: Talk to Citizens Looking at the Impact of Mining in Grass Valley (CLAIM-GV) and to the Wolf Creek Community Alliance (WCCA) to get a sense of how credible Watkinson’s claim is on this issue. Why have we been waiting more than a year to see those revised plans?

ARTICLE: “Air quality will also be addressed, using cleanest diesel engines and replacing combustion engines with electrical or pneumatic where possible, Watkinson added.”

FACT: The DEIR termed the air quality problem “unmitigatable.” See other impacts on air quality besides diesel (e.g., asbestos and silica dust). See http://claim-gv.org/brochure.html#references.

ARTICLE: “Watkinson said the ceramic tile-making portion of the operation could outstrip the gold mining operation in revenue.”

EXTRMELY UNLIKELY: So why bother with the gold mine here? Why not build a tile factory in Nevada? CLAIM has done an excellent financial analysis of the dubious tile factory business plan.

CONTACT INFO FOR CLAIM:
email: info@claim-gv.org
mailing address: PO Box 2096, Grass Valley, CA 95945
voicemail: (530) 264-6058

CONTACT INFO FOR WOLF CREEK ALLIANCE: Phone 530.272.2347

I sent most of the information above to the author of the Union article, with a recommendation to consult additional sources when writing about Emgold in the future. So far, I have not received a reply.

Apparently Emgold is relying substantially on The Union — with some success — for a major portion of its PR campaign with the city.

Michael Lind: “Can liberalism save capitalism from conservatism?”

Excerpted from  Salon (published NOV 9, 2010).

The resurgence of conservatism in American politics makes the question more urgent than ever.

by Michael Lind

Conservatives have long succeeded in persuading business that they are its friends and liberals are its enemies. In reality, the reverse is true. Liberalism saved American capitalism during the depression, and if American capitalism is to be saved from the Great Recession, liberals will have to rescue it.

Modern conservatives claim to be pro-business. But economic conservatism is not based on any empirical study of the actual economic requirements of successful modern industrial and service corporations in a modern mixed economy. The economic right combines an anachronistic tradition with a crackpot ideology.

The anachronistic tradition is Jeffersonian small-producer populism. Defending the rights of small farmers and small businesses was progressive in the 18th and early 19th centuries, when the enemies of freedom were aristocratic landlords who owned slaves and serfs and monopolies with royal charters. Although the industrial revolution rendered small-government Jeffersonianism obsolete by the mid-19th century, American conservatives continue successfully to appeal to Jeffersonian sentiments a century and a half later.

The crackpot ideology of the economic right is libertarianism. Libertarianism and communism are equally crazy in opposite ways. Libertarians believe that it is possible to privatize everything without anarchy, while communists believe that it is possible to socialize everything without tyranny.

Neither Jeffersonian populists nor libertarian ideologues have the slightest clue about how to run a complex technological society in the 21st century. Why should they? Jeffersonianism is a program for a primitive society of small farmers of a kind that no longer exists anywhere. At least, once upon a time, there were genuine Jeffersonian agrarian societies in the real world. There has never been a libertarian country and there never will be, because the maximum of government authority allowed by libertarian theory is well below the minimum required by a functioning community.

The true friends of business in America and the world have long been liberals, not conservatives. The propaganda of the right to the contrary, liberal thinkers like John Maynard Keynes and liberal politicians like Franklin Delano Roosevelt have never been socialists or collectivists. With the kindred classical liberals of the 19th century they have shared a commitment to individual rights, private property and limited government. However, they have believed that it was necessary to sacrifice some aspects of classical liberalism, in order to save as much as possible of the rest. Liberals have believed that limited doses of socialism would inoculate liberal society against totalitarian socialism as well as fascism and other illiberal systems. Indeed, Marxist radicals have often denounced American liberals and European social democrats for seeking to rescue and reform market society rather than replace it.

Read Full Article

James K. Galbraith: “Whose Side is the White House On?”

Cross-posted from the Roosevelt Institute’s New Deal 2.0 blog. Published December 6, 2010. Reprinted with permission.

by James . Galbraith

In a speech given on November 20, 2010 at the ADA Education Fund’s Post-election Conference at the Harvard Kennedy School, Galbraith asks who Obama is really working for, and demands that progressives seek leaders who will fight the good fight.

I want to raise a hard question — a question on which Americans are divided. It seems to me, though, we will get nowhere unless we realize where we are, what has actually happened, and what the future most likely holds.

Recovery begins with realism and there is nothing to be gained by kidding ourselves. On the topics that I know most about, the administration is beyond being a disappointment. It’s beyond inept, unprepared, weak, and ineffective. Four and again two years ago, the people demanded change. As a candidate, the President promised change. In foreign policy and the core economic policies, he delivered continuity instead. That was true on Afghanistan and it was and is true in economic policy, especially in respect to the banks. What we got was George W. Bush’s policies without Bush’s toughness, without his in-your-face refusal to compromise prematurely. Without what he himself calls his understanding that you do not negotiate with yourself.

It’s a measure of where we are, I think, that at a meeting of Americans for Democratic Action, you find me comparing President Obama unfavorably to President George W. Bush.

In economic policy it was said earlier we have a lack of narrative. This afternoon, Gregory King asked why the people didn’t know that the Republican Party is uniformly and massively opposed to job programs, to state and local assistance, and to every legislative measure that might aid and promote economic recovery from the worst crisis and recession in modern times. Why is that that they didn’t know? Could it have anything to do with the fact that the White House didn’t tell them?

And why was that?

The president deprived himself of any chance to develop a narrative from the beginning by surrounding himself with holdover appointments from the Bush and even the Clinton administrations: Secretary Geithner, Chairman Bernanke, and, since we’re here at Harvard, I’ll call him by his highest title, President Summers. These men have no commitment to the base, no commitment to the Democratic Party as a whole, no particular commitment to Barack Obama, and none to the broad objective of national economic recovery that can be detected from their actions.

With this team the President also chose to cover up economic crime. Not only has the greatest wave of financial fraud in our history gone largely uninvestigated and unpunished, the government and this administration with its stress tests (which were fakes), its relaxation of accounting standards which permitted banks to hold toxic assets on their books at far higher prices than any investor would pay, with its failure to make criminal referrals where these were clearly warranted, with its continuation in office — sometimes in acting capacities — of some of the leading non-regulators of the earlier era, has continued an ongoing active complicity in financial fraud. And the perpetrators, of course, prospered as never before: reporting profits that they would not have been able to report under honest accounting standards and converting tax payer support into bonuses; while at the same time cutting back savagely on loans to businesses and individuals, and ramping up foreclosures, much of that accomplished with forged documents and perjured affidavits.

Could the President and his administration have done something? Yes, they could have. Where was the Federal Deposit Insurance Corporation? Why did they choose not to implement the law — the Prompt Corrective Action law — which requires the federal government to take into receivership financial institutions when there is a significant risk of large taxpayer losses to the insurance fund? Where were the FBI and the Department of Justice? Did the President do anything? No. Is he doing anything now? No. Why not? The most likely answer is that he did not want to. My understanding, in fact, is that there was one meeting where this issue was raised, and the President stated that his economic team had assured him they had the situation under control.

On the larger economic policy front, the White House gave away the game from the beginning. How? First by guessing at the scale of the disaster. When leading economic advisers (I believe, in fact, it was President Summers) announced that the unemployment rate would peak at 8%, they not only guessed wrong, but gave away the right to assign responsibility to the previous administration when things got worse. This was either elementary bad politics or deliberate self-sabotage. But it gets worse. The optimistic forecast helped to justify a weak program. Useful things were done, but not nearly enough to convey the impression of a forceful policy to the broader public. Then once the banks were taken care of and the stock market took off again, it seems clear that the team at the White House didn’t care anymore.

Again, could they have done differently? Of course. The President could have told the truth, which is that we faced a historic meltdown, a collapse of the core financial institutions of our economy, and that we had really no way of knowing how bad economic conditions might get or how long this would endure and that therefore the situation would require a full mobilization: all resources, all hands on deck, major departures of policy, no holding back, and the responsibility for trouble and failure falling plainly on those who would obstruct the course. None of the people he chose to advise him on economic policy was remotely capable of thinking in those terms.

We’ve learned from Vic Fingerhut and Mike Lux that the administration went down in public esteem when people realized it was working for the banks and not for them. Why did they think this? Why did they go from “blaming Bush and Wall Street to blaming Obama and Wall Street”? Because plainly they could see what was in front of their faces. Except in manner, President Bush never really pretended to be a President for ordinary folks; President Obama did. Bush was who he was; Obama held out, fostered, and promoted vast hopes, mobilizing the American population behind his leadership on that basis. And he disappointed those hopes — to use a very harsh word, one could say he has betrayed those hopes. How can one therefore blame the voters for acting as they have acted?

What happens next? Let’s again not kid ourselves, we have lost a great many seats in the House of Representatives and the House of Representatives isn’t coming back into a Democratic majority in the near future. Simply because of the balance of exposures — the larger numbers of Democratic Senators exposed to reelection in the next cycle, the greatest likelihood is that the Senate will also go Republican in two years time. President Obama has set his course. He has surrounded himself with the advisers of his choice and as he moves to replace President Summers we hear from the press that the priority is to “repair the rift with his investors on Wall Street.” What does that tell you? It tells me that he does not have President Clinton’s fighting and survival instincts. I’ve not heard one good reason all day to believe that we are going to see from this White House the fight that we want, that he could win in two years, or any reason we should be backing him now.

The Democratic Party has become too associated with Wall Street. This is a fact. It is a structural problem. It seems to me that we as progressives need — this is my personal position — we need to draw a line and decide that we would be better off with an under-funded, fighting progressive minority party than a party marked by obvious duplicity and constant losses on every policy front as a result of the reversals in our own leadership.

What is at stake in the long run? Two things, mainly, in my view. First, it seems to me that we as progressives need to make an honorable defense of the great legacies of the New Deal and Great Society — programs and institutions that brought America out of the Great Depression and bought us through the Second World War, brought us to our period of greatest prosperity, and the greatest advances in social justice. Social Security, Medicare, housing finance — the front-line right now is the foreclosure crisis, the crisis, I should say, of foreclosure fraud — the progressive tax code, anti-poverty policy, public investment, public safety, and human and civil rights. We are going to lose these battles– get used to it. But we need to make an honorable fight, to state clearly what our principles are and to lay down a record which is trustworthy for the future.

Beyond this, bold proposals are what we should be advancing now; even when they lose, they have their value. We can talk about job programs; we can talk about an infrastructure bank; we can talk about Juliet Schor’s idea of a four-day work week; we can talk about my idea of expanding Social Security and creating an early retirement option so that people who are older and unemployed or anxious to get out of the labor force can leave on comfortable terms, and so create job openings for younger people who, as we’ve heard today, are facing very long periods of extremely aggravating and frustrating unemployment; we can talk about establishing a systematic program of general revenue sharing to support state and local governments, we can talk about the financial restructuring we so desperately need and that we’ll have to have if we are going to have a country which has a viable private credit system and in which large financial power is not constantly dictating the terms of every political maneuver.

We are not going to get these things, but we should have a clearly defined program so that people know what they are. And then, frankly, as was said earlier today, said most elegantly by Jeff Madrick, in the long run we need to recognize that the fate of the entire country is at stake. Its governance can’t be entrusted indefinitely to incompetents, hacks, and lobbyists. Large countries can and do fail, they have done so in our own time. And the consequences are very grave: drastic declines in services, in living standards, in life expectancies, huge increases in social tension, in repression, and in violence. These are the consequences of following through with crackpot ideas such as those embodied in the Bowles-Simpson deficit commission, as Jeff Madrick again outlined, such notions as putting arbitrary limits on the scale of government, or arbitrary limits on the top tax rate affecting the wealthiest Americans.

This isn’t a parlor game. The outcome isn’t destined to be alright. It will not necessarily end in progress whatever happens. What we do, how we proceed, and how we effectively resist what is plainly about to happen, matters very greatly for the future of our country, of our children, and of another generation to come. We need to lose our fear, our hesitation, and our unwillingness to face the facts. If we thereby lose some of our hopes, let’s remember the dictum of William of Orange that “it is not necessary to hope in order to persevere.”

The President should know that, as Lincoln said to the Congress in the dark winter of 1862, he “cannot escape history.” And we are heading now into a very dark time, so let’s face it with eyes open. And if we must, let’s seek leadership that shares our values, fights for our principles, and deserves our trust.

James K. Galbraith is a Vice President of Americans for Democratic Action. He is General Editor of “Galbraith: The Affluent Society and Other Writings, 1952-1967,” just published by Library of America. He teaches at the University of Texas at Austin.

“So You Want to Be a Journalist?”

Larry Beinhart: “Tax Cuts Simply Do Not Create Jobs”

Published in Alternet.org December 14, 2010. Reprinted with permission.

by Larry Beinhart

We already have low taxes, and all it means is that profits for the wealthy are up.

All Republican politicians, and many Democratic ones as well, make the claim that tax increases will prevent small business people from hiring. Indeed, it may force them to fire people.

Alright, we expect politicians to say loony things.

But we have a right to expect reporters to break out in hysterical laughter, economists to call their nearest media outlet to say how ridiculous that is, and competing politicians to explain why they’re wrong.

That doesn’t happen. And that’s the weird part. Because it’s pretty simple.

Let’s do some basic economics. Real basic.

Taxes are not paid on revenue.

Taxes are paid on profits.

Profits are revenues minus costs.

Labor is a cost.

Let’s imagine a small business.

For the sake of simplicity, let’s say it’s a personal business, not a corporation.

It has gross revenues of $10,000,000 a year.

It has one hundred employees. They each make about the median income, about $35,000 a year. So they have a payroll of $3,500,000.

All it’s other expenses come to $5,000,000 a year. This includes all the things it buys to make whatever it sells, rent, utilities, shipping, legal, accounting, etc., etc., and so forth.

That leaves a profit of $1,500,000 a year.

Let’s look at a very high tax situation.

Taxes on everything over a million dollars a years is 90%. (The rate from WWII until 1964)

So, on the final half million of my profits, I have to give the government $450,000, leaving just $50,000.

If I add ten employees at $35,000 each, that costs me $350,000. Those are costs, deducted from revenues, decreasing profits.

Do I want to do that?

I would only have kept $35,000 of that $350,000 anyway.

You bet I want to do it. I get to add ten employees at a cost – to me – of just $35,000. Or $3,500 per employee.

I get more production, more territories, more sales. My business grows.

Indeed, the whole community benefits.

Let’s look at a much lower tax situation.

Say 30% (just 1% lower than what we have now.)

We’ll assume the same business, same employees, same costs and profits.

Let’s say I’m approached by a factory in China. For simplicity’s sake, let’s say that even with shipping and other ancillary costs, I can cut fifty jobs and walk away with half their salaries as profits.

Fifty employees cost me $1,750,000. Half of that is $875,000. After taxes (30%), I keep $612,000. That’s worth doing.

I’m a bit tired of Chinese villains.

Let’s say that by increasing hours, decreasing benefits, firing older workers, hiring new workers at a lower pay scale and a variety of other maneuvers, I can decrease my costs by the equivalent of ten employees. That’s $350,000. At a 90% tax rate I only keep $35,000. Not chump change. But balanced against continuity, happiness, and efficiency in my company and the likelihood that it will grow my business, I’m likely to keep my people. At a 30% tax rate I keep $245,000. I’ll jump on it.

In any debate on taxes and their effect on business, keep in mind that taxes are only paid on profits. Costs are counted against profits. High taxes are, therefore, an inducement to invest (create deductible costs). Labor is a cost. High taxes are, therefore, an inducement to hire people. Not, of course, at random, but people who will grow the business and increase the value of the business.

Low taxes are an inducement to reduce costs – at whatever cost – and take profits. We currently have low taxes. If the theoretical model above is correct, the result should be high unemployment and high corporate profits. Moreover, profits that are retained. That are not reinvested. Except to purchase other companies. Which is exactly what we have.

Larry Beinhart is the author of “Wag the Dog,” “The Librarian,” and “Fog Facts: Searching for Truth in the Land of Spin.” His latest book is Salvation Boulevard. Responses can be sent to beinhart@earthlink.net.

Sour Grapes in Whine Country

Jeff Ackerman, editor/publisher of The Union, today gave us another of his signature anti-government rants (“Mining? Just fuhgeddaboudit“), this time in the form of an entertainingly peevish complaint about the likely failure of Emgold to get permission to re-open the old Idaho-Maryland Mine in the heart of downtown Grass Valley. He quotes and agrees with Mike Miller, manager of the Original Sixteen To One Mine, in blaming the “Bureau of Environmentalists,” which Miller said replaced the Bureau of Mines.

Here’s how Ackerman, again borrowing from Miller, complains about government regulations:

I remember Mike telling me that the only reason there is a United States Post Office in the town of Alleghany — population of roughly 70 — is to handle the piles of paperwork required by the state regulators.

I got curious about this silly hyperbole and called the postal clerk at the Alleghany Post Office today, with predictable results:

“Someone in our local paper this morning claimed that most of your mail is government mail,” I told her.

“That’s not true,” she said.

Obviously!

One of Ackerman’s readers this morning did a good job of deconstructing his implicit assumption that the Idaho-Maryland Mine re-opening deserves approval:

By no means is this project DOA just because of state mining laws. The entire proposition to even consider a large scale industrial mining and “ceramics plant” in the middle of an area populated with homes and businesses was quite insane. In a city and area that is trying to upgrade and attract modern business and tourism. A Sierras struggling to come to grips with the environmental catastrophe that was CA mining.

I’m damn thankful we have the laws we do here in CA. Its why many of us prefer to live in CA.

Its past time to move on and stop wasting time and suckers money on this thing.

So much for Ackerman’s implicit assumption that Emgold’s Idaho-Maryland project deserves approval.

What interests me most, though, is the resentful style of Ackerman’s writing, a style that has often caused his readers to refer to The Union as the “Tea Party Gazette.”

This whining and resentful style reminds me of the old Marshall McLuhan adage, “The medium is the message.”

When resentment against government is the persistent underlying message in all situations, as it clearly is for the right, then it becomes the “medium,” a sort of functional brand, which can be used in a lazy and simple-minded way, as Ackerman used it today. It’s a one-size-fits-all-intellects argument (AKA “ideology”).

The comment from his astute reader clearly shows that there is more nuance to the Idaho-Maryland issue than Ackerman is willing to understand. It’s an issue that doesn’t fit all intellects, but — damn! — requires study.

The anti-government and anti-environmental-regulation rant in this case also glosses over the true reason Emgold will fail: because it’s a junior mining company with no proven reserves at Idaho-Maryland, and no track-record of actually mining gold, and for these reasons the investors are fleeing, and the community is waking up to the fact that this project is going nowhere.

In addition to conserving intellectual effort, the government-resentment brand also serves a tribal purpose, binding large groups of sometimes justifiably-angry people into a community of whiners.

And finally, whether justified or not, whether innocent or calculated, the whining and resentful style serves the purpose of directing anger away from its proper object (corporate power) and toward a substitute object (government), and in so doing, undermines our belief that government can and should be an expression of our collective will.

The far right carries this reasoning to its ultimate extreme, and wants, as Grover Norquist said, to “shrink government down to the size where we can drown it in a bathtub.” As silly as this sounds, it is the essential sensibility animating the long-term conservative project of undoing FDR’s New Deal. That project may now be enabled by Obama’s tax cut deal with the GOP, particularly the provision that reduces the payroll tax, which will accelerate the erosion of Social Security funding.

In the end, resentment of government is an expression of powerlessness, unless it evolves into righteous citizen anger and the will to act, as it has with some members of the Tea Party this year.

But if it doesn’t go beyond mere passive resentment and peevishness, it short-circuits the will to act against the true source of the problem.

Jeff Ackerman’s Op-Ed today, like most of his Op-Eds lately, is an expression of this fundamentally powerless one-size-fits-all-intellects style of peevish thought.

I do agree, though, with his confident prediction that Emgold will fail in its effort to re-open the Idaho-Maryland Mine.

It’s interesting how people on all sides of the Idaho-Maryland issue in our community are beginning to converge on this same conclusion.

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