Monday, February 4, 2013 by Common Dreams
by Paul Buchheit
Free market idealists argue that capitalism works for anyone with a little initiative and a willingness to work hard. That might be true if job opportunities were available to everyone. But the facts reveal a lack of opportunity, largely because the very system of capitalism that's supposed to work for everyone is betraying its most productive members.
It's a step-by-step process of hypocrisy disguised as free enterprise:
1. Let the public pay for the research.
Since World War 2 our federal government has played the dominant role in the research of new technologies, with an emphasis on the long-term basic research that painstakingly perfects design while not yet producing revenue. Corporate R&D, on the other hand, is heavy on the profit-making late stages of development.
Government has contributed significantly to the development of today's most modern technologies. Business has taken full advantage. Even during the frenetic growth of the 1990s, industry funding for computer research declined dramatically while government research funding continued to climb. As of 2009 universities were still receiving ten times more science & engineering funding from government than from industry.
2. Use the publicly-funded technologies to double profits in 8 years.
From 2003 to 2011 total corporate profits more than doubled from $900 billion to almost $2 trillion.
A big part of that is the financial industry, which has adapted the (nationally built) Internet to fashion trillion-dollar trading schemes. Up until 1985 financial firms never earned more than 16 percent of domestic corporate profits. Their share recently reached 41 percent.
3. Use the recession as an excuse to cut taxes in half.
For the twenty years prior to the 2008 recession, corporations paid an average annual rate of 22.5% in federal taxes. Since then the average has been 10%.
4. Quietly hoard all the excess money.
Anywhere from $2.2 trillion to $3.4 trillion in cash is being held by non-financial corporations, who have chosen to fatten stockholders rather than invest in new production facilities and the employees needed to make them profitable.
Once again, the financial industry leads the way. Just 12 large banks hold 69 percent of industry assets, close to $8 trillion. But they're not making their money available to consumers or small businesses. According to the Federal Reserve Bank of Dallas, community banks, which hold less than one-fifth of industry assets, provide over half of all small business loans.
5. Pay existing workers what they earned in 1970.
Less, actually. Average real wages were $17.42 in 2007, down from $19.34 in 1972 (based on 2007 dollars). Wages as a percentage of the economy, at 44% of GDP, are at an all-time low.
Jobs that remain are increasingly low-wage positions. Apple is a good example of the race to the bottom for wages, with an estimated $420,000 profit per employee and a $12 per hour pay rate for its store workers.
6. Eliminate all the other people who helped increase productivity.
Not only are "job creators" failing to create jobs with their cash hoards, but they're also cutting jobs in order to 'streamline' their operations. Evidence comes from The Nation, Market Watch, and Business Insider.
Other leading job-cutters:
7. Ignore the facts.
And do nothing to address the mistreatment of American workers. CEOs, Congress, and the media are all skilled at this final step of betrayal.
It's a step-by-step process of hypocrisy disguised as free enterprise:
1. Let the public pay for the research.
Since World War 2 our federal government has played the dominant role in the research of new technologies, with an emphasis on the long-term basic research that painstakingly perfects design while not yet producing revenue. Corporate R&D, on the other hand, is heavy on the profit-making late stages of development.
Government has contributed significantly to the development of today's most modern technologies. Business has taken full advantage. Even during the frenetic growth of the 1990s, industry funding for computer research declined dramatically while government research funding continued to climb. As of 2009 universities were still receiving ten times more science & engineering funding from government than from industry.
2. Use the publicly-funded technologies to double profits in 8 years.
From 2003 to 2011 total corporate profits more than doubled from $900 billion to almost $2 trillion.
A big part of that is the financial industry, which has adapted the (nationally built) Internet to fashion trillion-dollar trading schemes. Up until 1985 financial firms never earned more than 16 percent of domestic corporate profits. Their share recently reached 41 percent.
3. Use the recession as an excuse to cut taxes in half.
For the twenty years prior to the 2008 recession, corporations paid an average annual rate of 22.5% in federal taxes. Since then the average has been 10%.
4. Quietly hoard all the excess money.
Anywhere from $2.2 trillion to $3.4 trillion in cash is being held by non-financial corporations, who have chosen to fatten stockholders rather than invest in new production facilities and the employees needed to make them profitable.
Once again, the financial industry leads the way. Just 12 large banks hold 69 percent of industry assets, close to $8 trillion. But they're not making their money available to consumers or small businesses. According to the Federal Reserve Bank of Dallas, community banks, which hold less than one-fifth of industry assets, provide over half of all small business loans.
5. Pay existing workers what they earned in 1970.
Less, actually. Average real wages were $17.42 in 2007, down from $19.34 in 1972 (based on 2007 dollars). Wages as a percentage of the economy, at 44% of GDP, are at an all-time low.
Jobs that remain are increasingly low-wage positions. Apple is a good example of the race to the bottom for wages, with an estimated $420,000 profit per employee and a $12 per hour pay rate for its store workers.
6. Eliminate all the other people who helped increase productivity.
Not only are "job creators" failing to create jobs with their cash hoards, but they're also cutting jobs in order to 'streamline' their operations. Evidence comes from The Nation, Market Watch, and Business Insider.
-- Verizon, which made $38 billion in 2008-11 and paid no tax, cut 41,100 jobs.
-- AT&T, which made $9 billion in 20011 and paid no tax, cut 54,000 jobs.
-- Merck, which made $34 billion in 2008-11 and paid a 7% tax, cut 13,000 jobs.
Other leading job-cutters:
-- Citigroup, which made a $28 billion profit in 2010-11 and paid no tax.
-- Boeing, which made $15 billion in profits in 2008-11 and paid no tax.
-- IBM, which made $75 billion in profits in 2008-11 and paid less than 2% in taxes.
-- HP, which $40 billion in profits in 2008-11 and paid an 11% tax.
-- Pepsico, which made a $10 billion profit in 2011 and paid a 6.3% tax.
-- Proctor & Gamble, which made almost $60 billion in profits in 2008-11 and paid 11% in taxes.
-- Google, which avoided about $2 billion in 2011 taxes by shifting revenue to a Bermuda tax haven.
7. Ignore the facts.
And do nothing to address the mistreatment of American workers. CEOs, Congress, and the media are all skilled at this final step of betrayal.
