Source – counterpunch.org
– The Political Consequences of the Tax Strike by the Rich:
You reap what you sow. The Republican Party – pushed along by large segments of the “Third Way” Democrats – crafted policies that allowed the American rich to go on tax strike, that allowed them to deindustrialize the United States and that allowed their banks to control the destiny of people from the redwood forest to the gulf stream waters.
This land is their land. Democracy is the mask of the 1 percent.
The detritus of those policies created under-employment and endemic social crises. Between the prison industrial complex and the opioid crisis lies the fault line of race: otherwise these are identical. Wages plummeted, but debt-fueled consumption allowed the American Dream to remain alive. The Great Recession of 2007 awoke sections of the country from its credit card somnolence. For the first time in decades, the American Dream seemed unrealistic. The lives of American children would most certainly be economically more fragile than those of their parents.
Race stayed the hand of unity. The Tea Party movement covered itself in the old rags of racism to blame migrants and minorities for the degradation of their country. Egged on by the Republican elites, this movement took the hatred of government and of outsiders to the limit. Out of it came Ted Cruz and Marco Rubio, with fire against Washington as their ammunition. It is fitting that the old Gadsden flag was taken up by the Tea Party – with its rattlesnake above the sign, “Don’t Tread on Me.”
To associate oneself with the rattlesnake is a curious gesture. This is venom incarnate.
The Great Recession hit black and Latino families hardest, but there was no room for them in the Tea Party consensus. It was Obama’s presidential campaign that became their ark. That Obama did little to constrain the banks and force the rich to pay tax was disappointing, but not sufficient for disillusionment. What choice has there been? It was organizations such as Stand Up United, Black Lives Matter, Dream Defenders, Defend the Dream, Stand Up/Don’t Shoot and Black Youth Project that drew in the more critical segments – spurred on by Ferguson.
They are the antithesis of the Tea Party, although survivors of a similar dynamic set in motion by the American rich’s tax strike.
Many of these young people have now taken refuge in the Sanders’ campaign. Hillary Clinton was part of the “Third Way” Democrats that allowed Wall Street its excesses. She does not have the compass to bring in this segment. It is fitting that the wife of Eric Garner (killed by the New York police department) supports Clinton, while their daughter – Erica Garner – who is an activist in these movements supports Sanders.
Donald Trump and Ted Cruz are the end-points of Republican policy. They are what emerge when the rich don’t pay their fair share of taxes and the working poor cannot any longer dream of a better life. But they are particularly the salvation of the white working poor. Theirs is a populism narrowed by racism and misogyny.
Stop Trump, goes the slogan. But replace him with what? Ted Cruz, who is not only as bellicose as Trump (bomb the desert to “make it glow”), but is also a zealot? These men are mirror reflections of each other. They are Crump.
Both Trump and Sanders attract the white workers who had been battered by the trade agreements of the 1 percent. Trump’s rhetoric is familiar to the American right, which heard it from Pat Buchanan in an earlier era. Sanders comes from a long line of Democratic barnstormers who opposed these recent trade deals – whether Tom Harkin or Sherrod Brown and most recently the Sanders’ supporter Keith Ellison. These are Mid-western politicians who know how the trade deals eviscerated the working class of their heartland.
In this skepticism of the 1 percent’s trade deals there is the potential of great unity, but again race is the obstacle. Buchanan’s fulminations on the “end of White America” are far from Harkin’s 1992 objections to NAFTA on the grounds that the U.S. protects “everything that deals with capital and property but we cannot deal with protecting basic human rights.”
Exit from this current nightmare is not evident. Until the American Rich give up their tax strike, there is little hope for necessary social investments. Unity is impossible as long as the toxicity of racism diminishes social life. Trump and Cruz offer bluster, empty slogans that reduce the potential of people. Clinton and Rubio have little to offer beyond the prattle of the Beltway, which is continued adherence to Wall Street’s failed dogmas and belief in the Security establishment’s failed imagination for the world.
The Republican elite wants to sow fear of Trump in order to sneak in Cruz. Under both shells sit rotten peas.
It is better to pick neither.
Editor’s Comment: Despite the rhetoric, “free trade” has been nothing more than a looting by corporations and agenda driven NGOs. With a deepening of these policies looming under the ominous Trans-Pacific Partnership, America is swiftly becoming an economically destroyed third world country, for some time now ruled over by a banana republic.
As Paul Craig Roberts points out, the “scarcity of jobs and the low pay are direct consequences of jobs offshoring,” meaning that the America’s decline has been an engineered one to bring the former middle class and prosperous American mainstream down to the level of other regions who are still struggling to develop at all. Until that changes, things will only worsen. While billionaire tycoons shape the world, Americans will be passing around worthless dollars, and standing in bread lines at FEMA camps, long since past looking for jobs.
The time to get prepared for the worst has long since approached. Get ready for what is coming.
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US On Road To Third World by Paul Craig Roberts On January 6, 2004, Senator Charles Schumer and I challenged the erroneous idea that jobs offshoring was free trade in a New York Times op-ed. Our article so astounded economists that within a few days Schumer and I were summoned to a Brookings Institution conference in Washington, DC, to explain our heresy. In the nationally televised conference, I declared that the consequence of jobs offshoring would be that the US would be a Third World country in 20 years. That was 11 years ago, and the US is on course to descend to Third World status before the remaining nine years of my prediction have expired. The evidence is everywhere. In September the US Bureau of the Census released its report on US household income by quintile. Every quintile, as well as the top 5%, has experienced a decline in real household income since their peaks. The bottom quintile (lower 20 percent) has had a 17.1% decline in real income from the 1999 peak (from $14,092 to $11,676). The 4th quintile has had a 10.8% fall in real income since 2000 (from $34,863 to $31,087). The middle quintile has had a 6.9% decline in real income since 2000 (from $58,058 to $54,041). The 2nd quintile has had a 2.8% fall in real income since 2007 (from $90,331 to $87,834). The top quintile has had a decline in real income since 2006 of 1.7% (from $197,466 to $194,053). The top 5% has experienced a 4.8% reduction in real income since 2006 (from $349,215 to $332,347). Only the top One Percent or less (mainly the 0.1%) has experienced growth in income and wealth. The Census Bureau uses official measures of inflation to arrive at real income. These measures are understated. If more accurate measures of inflation are used (such as those available from shadowstats.com), the declines in real household income are larger and have been declining for a longer period. Some measures show real median annual household income below levels of the late 1960s and early 1970s. Note that these declines have occurred during an alleged six-year economic recovery from 2009 to the current time, and during a period when the labor force was shrinking due to a sustained decline in the labor force participation rate. On April 3, 2015 the US Bureau of Labor Statistics announced that 93,175,000 Americans of working age are not in the work force, a historical record. Normally, an economic recovery is marked by a rise in the labor force participation rate. John Williams reports that when discouraged workers are included among the measure of the unemployed, the US unemployment rate is currently 23%, not the 5.2% reported figure. In a recently released report, the Social Security Administration provides annual income data on an individual basis. Are you ready for this? In 2014 38% of all American workers made less than $20,000; 51% made less than $30,000; 63% made less than $40,000; and 72% made less than $50,000. The scarcity of jobs and the low pay are direct consequences of jobs offshoring. Under pressure from “shareholder advocates” (Wall Street) and large retailers, US manufacturing companies moved their manufacturing abroad to countries where the rock bottom price of labor results in a rise in corporate profits, executive “performance bonuses,” and stock prices. The departure of well-paid US manufacturing jobs was soon followed by the departure of software engineering, IT, and other professional service jobs. Incompetent economic studies by careless economists, such as Michael Porter at Harvard and Matthew Slaughter at Dartmouth, concluded that the gift of vast numbers of US high productivity, high value-added jobs to foreign countries was a great benefit to the US economy. In articles and books I challenged this absurd conclusion, and all of the economic evidence proves that I am correct. The promised better jobs that the “New Economy” would create to replace the jobs gifted to foreigners have never appeared. Instead, the economy creates lowly-paid part-time jobs, such as waitresses, bartenders, retail clerks, and ambulatory health care services, while full-time jobs with benefits continue to shrink as a percentage of total jobs. These part-time jobs do not provide enough income to form a household. Consequently, as a Federal Reserve study reports, “Nationally, nearly half of 25-year-olds lived with their parents in 2012-2013, up from just over 25% in 1999.” When half of 25-year olds cannot form households, the market for houses and home furnishings collapses. Finance is the only sector of the US economy that is growing. The financial industry’s share of GDP has risen from less than 4% in 1960 to about 8% today. As Michael Hudson has shown, finance is not a productive activity. It is a looting activity (Killing The Host). Moreover, extraordinary financial concentration and reckless risk and debt leverage have made the financial sector a grave threat to the economy. The absence of growth in real consumer income means that there is no growth in aggregate demand to drive the economy. Consumer indebtedness limits the ability of consumers to expand their spending with credit. These spending limits on consumers mean that new investment has limited appeal to businesses. The economy simply cannot go anywhere, except down as businesses continue to lower their costs by substituting part-time jobs for full-time jobs and by substituting foreign for domestic workers. Government at every level is over-indebted, and quantitative easing has over-supplied the US currency. This is not the end of the story. When manufacturing jobs depart, research, development, design, and innovation follow. An economy that doesn’t make things does not innovate. The entire economy is lost, not merely the supply chains. The economic and social infrastructure is collapsing, including the family itself, the rule of law, and the accountability of government. When college graduates can’t find employment because their jobs have been offshored or given to foreigners on work visas, the demand for college education declines. To become indebted only to find employment that cannot service student loans becomes a bad economic decision. We already have the situation where college and university administrations spend 75% of the university’s budget on themselves, hiring adjuncts to teach the classes for a few thousand dollars. The demand for full time faculty with a career before them has collapsed. When the consequences of putting short-term corporate profits before jobs for Americans fully hit, the demand for university education will collapse and with it American science and technology. The collapse of the Soviet Union was the worst thing that ever happened to the United States. The two main consequences of the Soviet collapse have been devastating. One consequence was the rise of the neoconservative hubris of US world hegemony, which has resulted in 14 years of wars that have cost $6 trillion. The other consequence was a change of mind in socialist India and communist China, large countries that responded to “the end of history” by opening their vast under-utilized labor forces to Western capital, which resulted in the American economic decline that this article describes, leaving a struggling economy to bear the enormous war debt. It is a reasonable conclusion that a social-political-economic system so incompetently run already is a Third World country. References: http://www.advisorperspectives.com/dshort/updates/Household-Income-Distribution.php http://www.census.gov/hhes/www/income/income.html |
RIELPOLITIK 
On the Tax Strike issue it should be made manifest that a sovereign government does not rely on any tax in order to fund its expenditure. In a nutshell, tax is money destroyed, a cost to business and the economy, a reduction in spending power, a blow to GDP.
The 1% don’t know this [most likely] but wouldn’t care if they did. The rest of the population clings to the nostrum about tax as a regulator of the economy. In reality what regulates the economy is the real resources available to be used productively.
So any tax strike should just be ignored. Government taxation could fall to naught yet the government’s ability to pay its bills is not affected 1%!