Robert Reich: The Limits Of Corporate Citizenship

Dozens of big U.S. corporations are considering leaving the United States in order to reduce their tax bills. But they’ll be leaving the country only on paper. They’ll still do as much business in the U.S. as they were doing before. The only difference is they’ll no longer be “American,” and won’t have to pay U.S. taxes on the profits they make. Okay. But if they’re no longer American citizens, they should no longer be able to spend a penny influencing American politics. Some background: We’ve been hearing for years from CEOs that American corporations are suffering under a larger tax burden than their foreign competitors. This is mostly rubbish. It’s true that the official corporate tax rate of 39.1 percent, including state and local taxes, is the highest among members of the Organization for Economic Cooperation and Development. But the effective rate – what corporations actually pay after all deductions, tax credits, and other maneuvers – is far lower.

http://goo.gl/WrMTGV

vikaryan wrote on Jul 10^th, 2014 at 5:24pm:


Spending for the 2014 World Cup has far surpassed $11 billion, with many reports putting it closer to the $14 billion mark. A large portion went to building and refurbishing 12 stadiums (four more than required by FIFA), and construction costs skyrocketed to more than three times the initial budget of $1.1 billion. Despite that fact that Brazilian officials promised private funding, the money came directly out of the public purse.

In comparison, South Africa spent $6 billion in 2010, completely demolishing their proposed budget of $650 million. Germany (2006) reportedly spent $12 billion. France (1998) and the US (1994) both managed to spend well under $1 billion for their respective events, relying heavily on preexisting infrastructure to save money. Japan and South Korea jointly spent $7.5 billion on the tournament in 2002.

Brazil is hosting one of the most expensive World Cup events of all time. At this point, even if they do win the World Cup, will it be worth it?

Despite having the strongest economy in South America, Brazil still struggles with poverty, sanitation (50 percent of the rural population doesn’t have access to basic services), and drugs (it’s the second-largest consumer of cocaine in the world). Understandably, when the government drops billions of tax dollars on a single sporting event, not everyone is thrilled about it.

So, besides the glory, why did Brazil bid for the World Cup in the first place? The obvious answer is to benefit from the massive economic boom that accompanies a world-class event. It takes money to make money, right?

It’s not hard to see how countries are seduced into coughing up the dough when, according to Brazilian Minister of Sports Aldo Rebelo, the tournament could pump $90 billion dollars into the economy over the next 10 years. FIFA adds their two cents, saying, “It is not unusual for [pro] clubs to find that the provision of a bright, new, clean and comfortable stadium brings with it a dramatic increase in attendance levels.”

But both statements, according to experts, are totally bogus.

German economist Markus Kurscheidt estimates the 15-year economic impact of the 2006 World Cup to be just under $5 billion. The US Bid Committee (who tried for the 2018 or 2022 World Cup) came up with the same quote for their proposed event. But it’s likely that the number is highly inflated (and many American economists were relieved when FIFA gave the events to Russia and Qatar instead). Leading up to 2010, South Africa anticipated revenues of $900 million. The actual number was closer to $513 million. It’s unclear where Rebelo’s $90 billion figure came from, but Brazil continues to spend with the reckless abandon of a teen with a credit card.

What’s worse, after studying the financial impacts of mega-events, economists Dennis Coates and Bran Humphreys concluded that there is “no substantial evidence of increased jobs, incomes, or tax revenues” in locations that host large-scale events such as the World Cup. Even new sports facilities, long thought to add value to communities, don’t have “a measurable impact on the economy.”

That’s bad news, especially for Brazilian cities such as Manaus with its brand spanking new $325 million stadium. Arena da Amazonia has room for over 40,000 spectators and will house a division-four soccer team. But the average Nacional Futebol Clube match draws around 1,500 fans. Beyond the incurred debt, it’s unclear who will cover the $250,000 monthly maintenance fees if the government can’t find a corporate buyer.

http://www.sportsnet.ca/soccer/world-cup-2014/2014-fifa-world-cup-brazil-cost-poverty-drugs-public-spending-money/

http://www.theguardian.com/business/2014/jul/09/australia-american-path-to-inequality

For better or worse, economic-policy debates in the United States are often echoed elsewhere, regardless of whether they are relevant. Australian Prime Minister Tony Abbott's recently elected government provides a case in point.

As in many other countries, conservative governments are arguing for cutbacks in government spending, on the grounds that fiscal deficits imperil their future. In the case of Australia, however, such assertions ring particularly hollow - though that has not stopped Abbott's government from trafficking in them.

Even if one accepts the claim of the Harvard economists Carmen Reinhart and Kenneth Rogoff that very high public debt levels mean lower growth - a view that they never really established and that has subsequently been discredited - Australia is nowhere near that threshold. Its debt/GDP ratio is only a fraction of that of the US, and one of the lowest among the OECD countries.

What matters more for long-term growth are investments in the future - including crucial public investments in education, technology, and infrastructure. Such investments ensure that all citizens, no matter how poor their parents, can live up to their potential.

There is something deeply ironic about Abbott's reverence for the American model in defending many of his government's proposed "reforms." After all, America's economic model has not been working for most Americans. Median income in the US is lower today than it was a quarter-century ago - not because productivity has been stagnating, but because wages have.

The Australian model has performed far better. Indeed, Australia is one of the few commodity-based economies that has not suffered from the natural-resource curse. Prosperity has been relatively widely shared. Median household income has grown at an average annual rate above 3% in the last decades - almost twice the OECD average.

To be sure, given its abundance of natural resources, Australia should have far greater equality than it does. After all, a country's natural resources should belong to all of its people, and the "rents" that they generate provide a source of revenue that could be used to reduce inequality. And taxing natural-resource rents at high rates does not cause the adverse consequences that follow from taxing savings or work (reserves of iron ore and natural gas cannot move to another country to avoid taxation). But Australia's Gini coefficient, a standard measure of inequality, is one-third higher than that of Norway, a resource-rich country that has done a particularly good job of managing its wealth for the benefit of all citizens.

One wonders whether Abbott and his government really understand what has happened in the US? Does he realize that since the era of deregulation and liberalization began in the late 1970s, GDP growth has slowed markedly, and that what growth has occurred has primarily benefited those at the top? Does he know that prior to these "reforms," the US had not had a financial crisis - now a regular occurrence around the world - for a half-century, and that deregulation led to a bloated financial sector that attracted many talented young people who otherwise might have devoted their careers to more productive activities? Their financial innovations made them extremely rich but brought America and the global economy to the brink of ruin.

Australia's public services are the envy of the world. Its health-care system delivers better outcomes than the US, at a fraction of the cost. It has an income-contingent education-loan program that permits borrowers to spread their repayments over more years if necessary, and in which, if their income turns out to be particularly low (perhaps because they chose important but low-paying jobs, say, in education or religion), the government forgives some of the debt.

The contrast with the US is striking. In the US, student debt, now in excess of $1.2 trillion (more than all credit-card debt), is becoming a burden for graduates and the economy. America's failed financial model for higher education is one of the reasons that, among the advanced countries, America now has the least equality of opportunity, with the life prospects of a young American more dependent on his or her parents' income and education than in other advanced countries.

Abbott's notions about higher education also suggest that he clearly does not understand why America's best universities succeed. It is not price competition or the drive for profit that has made Harvard, Yale, or Stanford great. None of America's great universities are for-profit-institutions. They are all not-for-profit institutions, either public or supported by large endowments, contributed largely by alumni and foundations.

There is competition, but of a different sort. They strive for inclusiveness and diversity. They compete for government research grants. America's under-regulated for-profit universities excel in two dimensions: the ability to exploit young people from poor backgrounds, charging them high fees without delivering anything of value, and the ability to lobby for government money without regulation and to continue t

http://personalliberty.com/immorality-paper-money/

One of today’s most common economic fallacies is that the soaring stock market is evidence of economic recovery. Nothing could be further from the truth.

Stocks have almost tripled since the 2008 collapse, but that stock growth stems from Federal Reserve money printing (inflation) and near zero interest rates. The Fed’s balance sheet has grown more than fourfold since 2008 — to $4.3 trillion — and was used to prop up the “too big to fails.” That money had to go somewhere.

It has found its way into the stock market because U.S. Treasuries are paying less than the rate of inflation; and corporate bonds, certificates of deposit and other fixed-income products pay even less. This and price inflation (currency devaluation) is fueling the rise, not positive economic growth or common sense.

Stocks are being bought by the banksters and large corporations. Average people aren’t buying them. A study by the Pew Research Center found fewer than half of all Americans (45 percent) own stocks. The number is down from 65 percent in 2002. Individual investors are cashing in their retirement funds just to survive.

Government printing press money distorts economic reality, dilutes morality and is the true source of “income inequality.” Financial speculation rises with the increase in paper money and the general work ethic deteriorates. The something-for-nothing mentality pervades society.

Paper money promotes the “quick buck” syndrome like narcotics peddling and hookers on the streets. Hookers, incidentally, were widespread in the Weimar Republic in Germany in 1923 because the women had to sell their bodies for food for themselves and their families.

In a paper money society, the social order visibly deteriorates. The morality of the stable gold standard gradually changes to the amorality of fiat. Few people see the cause and effect, and the politicians try to legislate human behavior. They always fail, as the system is overrun with jails and prisons.

Fiat promotes an illusory reality where non-substance like financial speculation and gambling replaces the substance of industrial production and long-term value. When consumption surpasses income, as the government and the politicians promote, distorted human emotions replace stable behavior. Social breakdown increases, and real values are forgotten.

Prices of labor and craftsmen escalate beyond all reason when there is never enough money. Service repairmen charge fees like medical doctors.

When labor and supplies are valued in fiat, everything becomes distorted. In the final stages of hyperinflation, there is no anchor to sanity and common sense.

Paper money expands consumption way beyond income. This eventually guarantees debt collapse and social breakdown. The foundation of the household collapses and the middle class is destroyed. Paper money is an illusion because it is non-substance and can be created by the government to infinity. When the people accept numbers on green strips of paper or computer symbols for money, they accept illusion for reality. They accept non-substance for substance. Real money (gold and silver) comes from the earth and human production. It is no illusion.

As paper currencies come to their end, governments greatly step up suppression of the people. They start foreign wars. They attack their own population with high-sounding hypocrisy. Government makes criminals out of honest men–“in the public interest,” of course.

What follows? Default of the United States? Not formally, but by stealth depreciation of the currency (inflation). Will the U.S. world system hold? Yes, as long as world fear factor dominates as a result of superior military power. But that fear factor seems to be slipping as the elites behind the scenes use Russia and China to create a system outside the dollar.

Sober people (there are a few) understand monetary realism — to wit, that fiat implies stealth (slow) default. No payment is ever intended and is impossible even if intended. The main feature or attribute of sovereign debt default is gradualism.The public cannot grasp gradualism even as they are impoverished. The debt propaganda — that the U.S. owes debt — is a cover for the fiat regime. It’s a hoax! How can the U.S. owe a “debt” when it can print money to infinity?

A fiat paper money regime always becomes autocratic or fascist toward the last days of its existence. This is the time when the state makes war on its own people. Most never know it because it is not announced, but hidden in propaganda within such terms as “for the common good.”

An unlimited supply of paper money buys sophisticated arms that create fear and the propaganda to manipulate the people against their personal freedom and best interest. Fiat paper money is tyranny or becomes tyranny. It guarantees criminal government.

Paper money, personal freedom and privacy are incompatible. Paper money centralizes power to the state and diminishes the individual. This is the first cause of all you see happening.  All modern wars are paper money wars. Paper money pays the politicians their lavish profligacy, and they keep their mouths shut about the fiat system.