Global Capital and the Nation State
As global capital becomes ever more powerful, giant corporations are holding governments and citizens up for ransom — eliciting subsidies and tax breaks from countries concerned about their nation’s “competitiveness” — while sheltering their profits in the lowest-tax jurisdictions they can find. Major advanced countries — and their citizens — need a comprehensive tax agreement that won’t allow global corporations to get away with this.
Google, Amazon, Starbucks, every other major corporation, and every big Wall Street bank, are sheltering as much of their U.S. profits abroad as they can, while telling Washington that lower corporate taxes are necessary in order to keep the U.S. “competitive.”
Baloney. The fact is, global corporations have no allegiance to any country; their only objective is to make as much money as possible — and play off one country against another to keep their taxes down and subsidies up, thereby shifting more of the tax burden to ordinary people whose wages are already shrinking because companies are playing workers off against each other.
I’m in London for a few days, and all the talk here is about how Goldman Sachs just negotiated a sweetheart deal to settle a tax dispute with the British government; Google is manipulating its British sales to pay almost no taxes here by using its low-tax Ireland subsidiary (the chair of the Parliamentary committee investigating this has just called the do-no-evil firm “devious, calculating, and unethical”); Amazon has been found to route its British sales through a subsidiary in low-tax Luxembourg, and now receives more in subsidies from the British government than it pays here in taxes; Starbucks’ tax-avoidance strategy was so blatant British consumers began boycotting the firm until it reversed course.
Meanwhile, At a time when you’d expect nations to band together to gain bargaining power against global capital, the opposite is occurring: Xenophobia is breaking out all over.
Here in Britain, the UK Independence Party — which wants to get out of the European Union — is rapidly gaining ground, becoming the third most popular party in the country, according to a new poll for The Independent on Sunday. Almost one in five people plan to vote for it in the next general election. Ukip’s overall ratings have risen four points to 19 per cent in the past month, despite Prime Minister David Cameron’s efforts to wrest back control of the crucial debate over Britain’s relationship with the European Union.
Right-wing nationalist parties are gaining ground elsewhere in Europe as well. In the U.S., not only are Republicans sounding more nationalistic of late (anti-immigrant, anti-trade), but they continue to push “states rights” — as states increasingly battle against one another to give global companies ever larger tax breaks and subsidies.
Nothing could strengthen the hand of global capital more than such breakups.
“The reality is this: There is no correlation at all between raising taxes on the rich and slowing the economy. In fact, if anything, it's the reverse.”—
Former Labor Secretary and Berkeley public policy professor Robert Reich.
He cites the period between World War II and 1981, when taxes were higher and the economy grew, as well as the economy’s growth under President Clinton, who raised taxes on the wealthy.
Of the Wall Street CEOs who are lobbying Congress to lower corporate taxes, Reich comments: “The idea that somehow they need more cash is absurd.” Watch Reich lay down some knowledge on rich people here, and watch “Viewpoint with Eliot Spitzer” weekdays at 8E/5P.
Pyromaniacs on the Potomac: The Problem With Obama's Second Term
Six months into a second term and the Obama White House is on the defensive and floundering: Benghazi, the IRS’s investigations of right-wing groups, the Justice Department’s snooping into journalists’ phone records, Obamacare behind schedule, the Administration’s push for gun control ending in failure.
Should the blame fall mainly on congressional Republicans and their allies in the right-wing media, whose vitriolic attacks on Obama are unceasing?
After all, the only thing the GOP stands for – the sole mission that unites its warring factions — is an unwaivering determination to block anything the Administration seeks while distracting public attention from any larger issue.
But surely some of the seeming disarray is due to the President, whose insularity and aloofness make him an easy target, and whose eagerness to compromise and lack of focus continuously blurs his core message.
Is the central goal of his second term to achieve a grand bargain on the budget deficit? Or progress on gun control? Or restore jobs? Or reform the immigration laws? It is difficult to tell.
Vulnerabilities come with any Administration’s second term — when officials are exhausted, public support has worn thin, “A” teams have departed, the media are disenchanted, and all of the low-hanging fruit in a president’s agenda has already been picked.
I painfully recall Bill Clinton’s second term (I left before Monica). George W. Bush’s second term was marred by Iraq and a colossal failure on Social Security. Ronald Reagan’s, by the Iran-Contra scandal. Even FDR got mired in a so-called “court-packing” scheme that lost him public and congressional support.
Which is why it’s so important for a second-term White House to define itself — to give the public a clear sense of what it stands for, and how it intends to tackle the largest challenges facing the nation. And then to work hard on this core agenda without becoming overly distracted by the inevitable fires that have to be extinguished along the way.
Even if a president fails to achieve this larger objective, he will at least have established a predicate for the future, and given the public a larger goal around which to mobilize and organize.
Barack Obama is allowing the fires to dominate because he has not defined his core agenda. During the 2012 campaign it appeared to be restoring jobs, rebuilding the middle class, and reversing the scourge of widening inequality. Since then, though, the core has evaporated – leaving him and his administration vulnerable to every pyromaniac on the Potomac.
Great Short Man of the Day!Robert Reich
Robert Bernard Reich (
/ˈraɪʃ/; born June 24, 1946) is an American political economist, professor, author, and political commentator. He served in the administrations of Presidents Gerald Ford and Jimmy Carter and was Secretary of Labor under President Bill Clinton from 1993 to 1997.
Reich is currently Chancellor’s Professor of Public Policy at the Goldman School of Public Policy at the University of California, Berkeley. He was formerly a professor at Harvard University’s John F. Kennedy School of Government and professor of social and economic policy at the Heller School for Social Policy and Management of Brandeis University. He has also been a contributing editor of The New Republic, The American Prospect (also chairman and founding editor), Harvard Business Review, The Atlantic, New York Times, and The Wall Street Journal.
Reich is a political commentator on programs including Hardball with Chris Matthews, This Week with George Stephanopoulos, CNBC’s Kudlow & Company, and APM’s Marketplace. In 2008, Time Magazine named him one of the Ten Best Cabinet Members of the century, and The Wall Street Journal in 2008 placed him sixth on its list of the “Most Influential Business Thinkers”. He was appointed a member of President-elect Barack Obama’s economic transition advisory board.
He has published 13 books, including the best-sellers, The Work of Nations, Reason, Supercapitalism, and, most recently, Aftershock: The Next Economy and America’s Future. He is also chairman of Common Cause and writes his own blog about the political economy at robertreich.org.