Posts from Paul Buchheit

Facts That Privileged Americans Don't Want Us to Know

Paul Buchheit

Paul Buchheit Author, editor, expert on income inequality

Many of us are ill-informed about certain critical economic and social issues. The following facts should have been reported by the mainstream media, but unfortunately most of that media is controlled by the very people who have reason to hide the facts. 

Tax Haven Cheating is Much Costlier than the Annual Safety Net—But the IRS Keeps Getting CUT 

Offshore hoarding of private American wealth is estimated to be $3.3 trillion (4% of U.S. $82 trillion financial wealth). 

The safety net costs about $400 billion per year, or, including Medicaid, about $900 billion per year. 

Taking on the tax cheaters seems like an obvious response, instead of cutting the safety net. But the IRS budget itself has been steadily cut. Amazingly, and perversely, the Internal Revenue Service, which could be recovering much of our hidden money, has seen its staff and budget slashed 14 to 18 percent since the recession.

Our Own Country is the World's Second Biggest Tax Haven 

While the privileged American tax cheaters are taking money from their own country, they're not shy about taking from the rest of the world. According to the Financial Secrecy Index of the Tax Justice Network, the U.S. is second only to Switzerland as a tax haven. Their report states: "Financial secrecy provided by the U.S. has caused untold harm to the ordinary citizens of foreign countries, whose elites have used the United States as a bolt-hole for looted wealth." 

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An Arena Full of the Richest Americans Would Own as Much Wealth as 70% of the World

Paul Buchheit

Paul Buchheit Author, editor, expert on income inequality

That's 25,000 American adults, about the number of people in a large basketball stadium. That's the richest .01% of America. Together they own nearly $10 trillion, which is approximately the total wealth owned by the 3.5 billion adults who make up 70% of the entire adult world. 

Data is taken from various current sources: the Credit Suisse 2018 Global Wealth Databook (GWD), the Forbes 400 rankings, and Business Insider's reporting on the world's billionaires. A summary of the calculations can be found here.

But Only India has a Greater Percentage of its People in the World's Poorest 10% 

Inequality in America is out of control. A careful look at the GWD (Table 3-4) makes that clear. While our nation has by far the greatest percentage of its people in the world's richest 10%, it is second only to India in the percentage of its people in the world's poorest 10%. This is almost certainly due to the number of Americans mired in unmanageable debt. 

To put it another way, one out of seven American adults is among the world's least wealthy 10%. 

To put it yet another way, while 100 million American adults are among the world's richest 10%, 34 million American adults are among the world's poorest 10%.

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The Capitalist Manifesto: Let Poor People Die

Paul Buchheit

Paul Buchheit Author, editor, expert on income inequality

The original Capitalist Manifesto was a 1958 book by economist Louis O. Kelso and philosopher Mortimer J. Adler. In their view of a properly conducted democratic capitalist society, a sort of modern-day Homestead Act was envisioned, in which all Americans would participate in the "capitalist revolution" of growing stock portfolios. This would be possible because of great technologies (energy in the 1950s, AI now) that would allow all of us, in Aristotelian and Jeffersonian property-owning ways, to become 'free' to pursue the arts & sciences and to enjoy more leisure time. Today, this form of democratic capitalism could be realized through the Employee Stock Ownership Plan promoted by the "Just Third Way" movement. 

Just one problem. Apparently, in 1958, economists and philosophers were not able to foresee the unlimited greed of the relatively few people with the power to manipulate the strings of the capitalist state. They thought the newly productive post-war capitalists were being cheated by workers who depended on socialist strategies to even the score. But the opposite has happened. Average Americans have been cheated out of the gains from technological productivity. Just in the past ten years in our world of big business, over $30 trillion -- nearly a third of our nation's TOTAL current wealth -- has gone to the richest 10% of Americans. Yet market-happy illusionists like the Wall Street Journal keep spouting nonsense about a healthy economy built on today's capitalism. 

The root of the problem is the condemnation of anything 'social' as un-American, which has helped modern-day capitalists to justify their belief in individual gain by any means. Wealthy conservatives know that social responsibility might take away some of their riches by providing opportunities and jobs and a decent standard of living for all Americans. In their minds, the poor have only themselves to blame for being poor, and for dying. But it is capitalism that is killing them. The Capitalist Manifesto has been twisted into an assault on poor people.

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A Grim Update for 2018: More Evidence That Half of Americans Are In or Near Poverty

Paul Buchheit

Paul Buchheit Author, editor, expert on income inequality

Deniers like Nikki Haley refuse to admit that mass poverty exists in their prosperous nation. That would reflect poorly on their capitalist beliefs. But if the skeptics would look at the half of America they don't care to see, the stark display of destitution might shock them. At least until they invent an excuse to remove it all from their minds. 

The U.S. poverty rate in 2016 was between 12.7 and 14.0 percent. But the poverty threshold is based on an outmoded formula from the 1960s. According to the Congressional Research Service (CRS), the threshold should be THREE TIMES HIGHER today. And it could be even higher if the true nature of poverty is considered.

Poverty is Not Just a Dollar Figure 

There is poverty in the diminishing quality of life for Americans who are unable to pay for medical treatment during years of declining health, and instead turn to life-threatening opioid painkillers, readily available in a nation with less than 5 percent of the world's population and 30 percent of the world's opioid consumption. Poverty is the lack of community support in a winner-take-all society; the stress of overwhelming debt; the steady decline of jobs that pay enough to support a family; the inability to afford a move to a desired neighborhood; the deadening impact of inequality on physical and mental well-being. The United Nations describes America as a nation near the bottom of the developed world in safety net support and economic mobility, with the highest infant mortality rate in the developed world, the world’s highest incarceration rate, and the highest obesity levels. Low-income Americans are often surrounded by food deserts, with insufficient access to clean water and sanitation, and with the pollutionlevels of third-world countries. The poorest among us are even susceptible -- unbelievably -- to rare tropical diseases and once-eradicated scourges like hookworm. 

Part of the definition of poverty is "the state of being inferior in quality." The extreme level of inequality in the U.S. is battering the poor with a sense of inferiority. It's ripping apart once-interdependent communities, and it's triggering a surge in drug and alcohol and suicide "deaths of despair."

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The "Jobs for Everyone" Fantasy

Paul Buchheit

Paul Buchheit Author, editor, expert on income inequality

"The more robots we add to our fulfillment centers, the more jobs we are creating." —Tye Brady, Amazon's Chief Technologist 

That's just one outlandish example of the job-related hyperbole we've been subjected to. We keep hearing about the low unemployment rate and the "booming" economy. "Economic news has been staggeringly good," said Jared Whitley, associate director in the White House under George W. Bush. More hype comes from CNN Money, which talks about "opportunities for almost everyone"; and the windy Wall Street Journal, which claims that "Americans traditionally left behind...are reaping the benefits.." 

The super-capitalists want us to believe that they know what they're talking about. Part of their strategy, based on a neoliberal disdain for any government efforts to provide opportunities for average people, is to perpetuate the myth, as Milton Friedman said, that "the free market system distributes the fruits of economic progress among all people." Part of this myth is a job for everyone, or "full employment," which many economists believe we have attained with an unemployment rate under 4 percent. 

But "jobs for all" is a fantasy, if we're talking about family-sustaining, living-wage jobs, as we should. The facts make that clear.

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The kindly 87-year-old man who took all the school kids’ lunch money

Paul Buchheit

Paul Buchheit Author, editor, expert on income inequality

He seems to stand out as the one beloved billionaire among us, a man who admitted he doesn’t need a tax cut and promised much of his fortune to charity.

But Warren Buffett’s company, Berkshire Hathaway, hasn’t paid much in real taxes over the years, choosing to defer $77 billion through the end of 2016. And now the company has taken advantage of the Trump tax law to claim a $23 billion 2017 federal tax benefit, ironically the same amount as the cost of the Child Nutrition Programs, which provide school lunches and other nutritional needs for millions of America’s children.

Paying hypothetical taxes until the tax bill expires

Berkshire Hathaway has declared nearly $200 billion in U.S. income over the past ten years, but including the 2017 writeoff has paid only $16 billion in current (non-deferred) taxes. The company’s annual tax obligation has been announced to shareholders as satisfied by a “hypothetical” tax payment. Now, suddenly, with Trump’s corporate tax break, $23 billion of its deferred tax liability just fades away, never to be paid, never to be used for the vital public services that are dependent on tax revenue.

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Extreme Poverty Cut in Half? Only in the Minds of the Capitalists

Paul Buchheit

Paul Buchheit Author, editor, expert on income inequality

"Take a bow, capitalism." That's from the Economist, a business-happy publication that has every reason to perpetuate the myth that a world run by free enterprise is improving people's lives. Its story continues with an astounding claim: "The world now knows how to reduce poverty." Perhaps by presenting questionable data that seems to support what the business community wants us to believe. 

Other super-capitalists are similarly exuding hyperbole in defense of their shaky beliefs. Said a spokesman for the American Enterprise Institute: "It was the American free-enterprise system that started to spread around the world. They looked at you and said, 'I want to have their life, their freedom, and their stuff, and they threw off their chains of poverty and tyranny.'" But it's clear, when the facts are checked, that the chains of poverty are being wrapped around more and more human beings. 

Extreme Poverty Has Increased, in Terms of Wealth 

According to the Credit Suisse Global Wealth Databook 2016, the median wealth of the world's adults is $2,222, down from $3,248 at the end of 2007. While the rich people of the world have taken more than their share of the $35 trillion wealth gain since the recession, the world median has dropped by over $1,000!

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Now Five Men Own Almost as Much Wealth as Half the World's Population

Paul Buchheit

Paul Buchheit Author, editor, expert on income inequality

Last year it was eight men, then down to six, and now almost five.

While Americans fixate on Trump, the super-rich are absconding with our wealth, and the plague of inequality continues to grow. An analysis of 2016 data found that the poorest five deciles of the world population own about $410 billion in total wealth. As of June 8, 2017, the world's richest five men owned over $400 billion in wealth. Thus, on average, each man owns nearly as much as 750 million people.

Why Do We Let a Few People Shift Great Portions of the World's Wealth to Themselves?

Most of the super-super-rich are Americans. We the American people created the internet, developed and funded artificial intelligence, and built a massive transportation infrastructure, yet we let just a few individuals take almost all the credit, along with hundreds of billions of dollars.

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Unsure About Socialism? Here's More Evidence That Capitalism Is Killing the US

Paul Buchheit

Paul Buchheit Author, editor, expert on income inequality

A recent Gallup poll found that less people would vote for a socialist than for an atheist, a Muslim, or an evangelical Christian. Media-numbed Americans still believe that "government is the problem." Yet evidence keeps pouring in that free-market capitalism treats public safety as a profit-killer, dismisses environmental issues as irrelevant to business, and eliminates jobs to please investors.

Reports from the past six months show that the ongoing record of capitalist greed and irresponsibility has plunged to new lows.

1. Mocking Public Health and Safety

It's disturbing enough that Volkswagen and Ford and General Motors and other auto companies rigged emissions tests and took safety shortcuts to save money; and that the Southern California Gas Co. lied about its poisonous sulfur levels; and that Exxon was found to be hiding its own climate change research for four decades; and that tens of thousands of government-subsidized abandoned mines have been left to pollute our waterways.

But Monsanto, which proclaims "We are committed to long-term environmental protection," sued the State of California for trying to protect its citizens from the company's toxic materials.

2. Showing Contempt for Workers

The sharing economy has created companies that promote worker 'independence' while denying them health and retirement benefits, sick pay, overtime pay, and vacation pay. It's not a new capitalist idea. Merck and Out Magazine are among the companies that have "outsourced" employee positions to independent contractor positions, either by a mass layoff or by selling part of the company, after which former employees could be hired back at lower pay and without benefits.

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5 Reasons the Top Tax Rate Should Be 80 Percent

Paul Buchheit

Paul Buchheit Author, editor, expert on income inequality

It came up in the Republican debate again, the curious notion that striving for less inequality is somehow a form of "class warfare." The implication is that the richest people earned everything they have through their own initiative and hard work. But most of them have exploited an American financial system that has facilitated the transfer of our national wealth to the people who manage that wealth.

Informed Americans understand that an economic war has been waged against the middle and lower classes. As a result, there are at least five good reasons why the tax rate on the upper classes should be MUCH higher.

1. Massive Redistribution Has Occurred. Upward.

Total U.S. wealth increased by a stunning 60 percent since 2009, from $54 trillion to $86 trillion, but 3/4 of that massive increase went to the richest 10% of Americans. According to the New York Times, the wealthiest Americans have formed an "income defense industry" to shelter their riches, with, "a high-priced phalanx of lawyers, estate planners, lobbyists and anti-tax activists who exploit and defend a dizzying array of tax maneuvers, virtually none of them available to taxpayers of more modest means." From 2003 to 2012 the average income tax rate paid by the richest 1% went down, while for the 99% it went up.

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Union Matters

What's Wrong with GM?

Corporations’ stranglehold on our economy was put on further display last week, when General Motors announced it was laying off up to 14,000 workers across North America.

On a special episode of “State of the Unions,” co-host Tim Schlittner talked with AFL-CIO Industrial Union Council Executive Director Brad Markell, a lifelong UAW member, about what the layoffs say about the state of the economy as a whole:

Tim Schlittner: “Reading the CEO’s statement, Mary Barra, where she says this is about making GM agile, resilient and profitable, then thinking about all the stock buybacks, thinking about some of the incentives they got in the tax law that just passed. Mary Barra made about $22 million last year—that’s 295 times more than the GM median employee—my feeling is like this is crap. That’s just a crap excuse for hoarding more at the top, at the expense of the workers that make GM go. Am I wrong to say that?”

Brad Markell: “I think there are a couple issues there from my point of view. Mary Barra makes a lot of money and executive pay is out of control in this country. Part of what’s the problem with executive pay is how is it incentivized? It’s not that Mary Barra making $22 million is going to kill the company. It’s what does she do to get there, right? What does she do to make those cuts and—and those things that Wall Street wants to see because so much of it’s stock options—so instead of playing to the real economy, you’re playing to Wall Street. That’s a problem.”

Tim Schlittner: “And the stock went up that day. So Wall Street saw this decision to close these plants and basically took that as a positive sign, which shows to me an economy that is completely out of whack.”

Take a listen to the full episode here.

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Who Really Pays for Tax Cuts?

Who Really Pays for Tax Cuts?