Newsletter: The Corruption Of Money
This week, the discussion about money in politics and the reality that the US is an oligarchy has been elevated in the midst of presidential primaries. Many political leaders are stating what is obvious and is symbolized by protesters in the “We are the 99%” meme. Former President Jimmy Carter said the US political system:
“Now it’s just an oligarchy, with unlimited political bribery being the essence of getting the nominations for president or to elect the president. And the same thing applies to governors and U.S. senators and congress members. So now we’ve just seen a complete subversion of our political system as a payoff to major contributors, who want and expect and sometimes get favors for themselves after the election’s over. … The incumbents, Democrats and Republicans, look upon this unlimited money as a great benefit to themselves. Somebody’s who’s already in Congress has a lot more to sell to an avid contributor than somebody who’s just a challenger.”
As tax day approaches, there will be numerous reports about how US oligarchs – wealthy individuals and major corporations – do not pay their fair share in taxes. A GAO report released this week found “at least two-thirds of active U.S. corporations paid zero federal income taxes between 2006 and 2012. The report also found that large, profitable corporations only paid 14% of their profits in federal income taxes on average from 2008 through 2012, while approximately one-fifth of them paid nothing at all.”
This is not only due to tax laws that provide corporations with a wide array of loopholes to lower their taxes, but is also due to the intentional hiding of money off-shore. A 2015 report found that nearly 75% of Fortune 500 companies tucked away $2.1 trillion in accumulated profits offshore to avoid paying US income taxes. In 2014, at least 358 of these massive corporations maintained 7,622 tax haven subsidiaries throughout Panama, Bermuda, Ireland, Luxembourg, the Netherlands, Switzerland, and other havens. This costs the US Treasury over $600 billion in tax revenue each year.
Oxfam recently reported that 50 corporations hide 1.4 trillion off-shore, and avoid $100 billion in taxes. To add insult to this theft, these same corporations receive numerous tax benefits from the US government. According to Oxfam, those benefits came in the form of “a staggering $11 trillion in federal loans, loan guarantees, and bailout assistance from 2008 to 2014.” Rather than prosecuting companies for tax evasion, the oligarchic government rewards them with federal dollars.
These corporations also avoid criminal prosecution for their crimes. Just this week Goldman Sachs agreed to pay $5.1 billion to settle a US probe into allegations that it misled mortgage bond investors during the financial crisis. We were not told how much profit they gained from that fraud, but in 2013, the firm made $29 billion in revenue. Their billionaire CEO Lloyd Blankfein will not face criminal prosecution. Others who have settled and not been prosecuted include JPMorgan Chase with a $13 billion settlement in November, 2013; Citi’s $7 billion settlement in July, 2014; an almost $17 billion settlement reached with Bank of America in August, 2014; and a $3.2 billion settlement with Morgan Stanley earlier this year. Crime is rife on Wall Street, but no one is held accountable for it.
While the Panama Papers leak is getting a lot of attention, the reality of the US role in tax evasion is also being exposed; see, for example, Beyond Panama: What World Really Needs Is #DelawarePapers. The US is ranked third in the world for being a tax haven, above the Cayman Islands; Panama is ranked thirteenth. The three states that are the main culprits are Delaware, Nevada and Wyoming.
And even Panama as a tax haven has its roots in the United States. The US stole the province of Panama from Colombia after a faux revolution aided by the US. When the Panama Canal began being built by Teddy Roosevelt, the US made JP Morgan the fiscal agent for millions of US dollars spent to build the canal. Panama was created to serve the wealthy of that era. Oil companies registered their ships there to avoid taxes and US laws; and tax havens were born.
The US continues to conduct regime change in Latin America and around the world, although the 21st century version is more sophisticated than the previous century. Now the main players are the US Agency for International Development (USAID) and the National Endowment for Democracy (NED), along with some lesser known offshoots. Of course, the CIA is still involved and regime change is backed by the US military. A key focus of regime change today is stopping the BRICS bank organized by Brazil, Russia, India, China and South Africa. US antagonism to Russia and China is well-known, while USAID and NED operations are less obvious in South Africa and Brazil. The US does not want BRICS challenging banks like the IMF and World Bank that serve western oligarchic interests.
John Perkins, the author of “Confessions of an Economic Hit Man”, describes this as a “global economy that is based on legalized crimes.” Isn’t that what an oligarchy does, writes laws for itself? He summarizes the global impact: “It’s a system in which 62 individuals have as much wealth as half the world’s population, and a handful of the super-rich control governments around the globe. Big corporations benefit from infrastructure and social services without having to foot the bill. Instead, average U.S. citizens pay for it with their hard-earned tax dollars, while the very rich and their corporations shelter their incomes in tax havens like Panama.”
The People Are Sick and Tired of Oligarchic Corruption
People around the world, including in the United States, have been showing their anger at the corrupt oligarchic economy and at the government their money has corrupted. This sentiment has been building for years. In the US, there was a mass, nationwide revolt against the 1% economy and government during the Occupy Movement. Since then, there have been protests against foreclosures, corporate-rigged trade agreements, student debt, the minimum wage, money in politics and a host of other issues.
This week, people risked arrest in Washington, DC over the influence of money in politics. On the first day, more than 400 people were arrested. The protests were joined by Black Lives Matter because racism is evident in the oligarchic economy. Elders joined to make sure they leave a better nation for their children and grandchildren. The corporate mass media did its best to ignore these mass protests with cable news devoting tiny amounts of time on them. The media knows that the more attention they give to the protests, the larger they will grow.
This week, the Fight For $15 continued to build power and momentum. The movement continued its ongoing campaign of confronting presidential candidates and held their biggest-ever global day of strikes and protests in more than 300 cities. The issue has gained popular support with New York and California both passing $15 an hour wage laws. Hillary Clinton, in the New York debate, tried a “victorious retreat” by saying she supported $15 an hour, but Sanders pointed out that she has only recently jointed the nationwide chorus now that three quarters of people in the US favor a steep rise in the minimum wage. Other workers are also speaking out, such as teachers in Chicago and Detroit who protested cuts to the school system and the 40,000 CWA members who went on strike against Verizon. And workers are realizing that they must work with other movement fronts, such as joining the anti-racist struggle.
Robert Wiessman, the director of Public Citizen, points out that there is broad popular support for transforming the economy and government. He writes: “. . . more Americans believe in witches and ghosts than support Citizens United . . . There is three-to-one support for a constitutional amendment to overturn Citizens United.” Some other key areas of national consensus:
– 83% agree that “the rules of the economy matter and the top 1 percent have used their influence to shape the rules of the economy to their advantage;
– Over 90% agree that it is important to regulate financial services and products to make sure they are fair for consumers;
– Four-fifths say Wall Street financial companies should be held accountable with tougher rules and enforcement for the practices that caused the financial crisis;
– By a three-to-one margin, the public supports closing tax loopholes that allow speculators and people who make money from short-term trades to pay less taxes on profits than full time workers pay on their income or wages.
– About two-thirds oppose corporate trade deals like the Trans-Pacific Partnership and 75% believe such deals destroy more jobs than they create.
These are just a few examples that show near unanimity on issues where the government – answering to the oligarchs – does the opposite of what the public wants and needs.
Recognizing Oligarchy Is the Beginning of Ending It
In his article about Nuit Debout, the protests that have been developing all across Europe, David Graeber, an anthropologist who played an important role in Occupy, provides a broader view of what is going on, including in the US:
“What we have been seeing in the news, this week, with the juxtaposition of the Panama paper revelations, and the emergence of Nuit Debout in the streets of Paris and other French cities, is the struggle between two different forms of solidarity, two global cultures—the first, all too developed, the second, still in the process of being born.
“The first is the solidarity of the wealthy and powerful, or, more precisely, those whose wealth is founded on their power; the other, is the emergence of new forms of revolutionary democracy that are taking, increasingly, planetary form.”
The conflict, in short, is oligarchy vs. people power. Graeber describes the movement as a “new insurgent civilization, planetary in its scope and ambitions.” There are experiments in direct democracy, such as community assemblies and new forms of governance, around the world. Graeber emphasizes that this is a global revolt against oligarchy. The uprisings around the world are de-legitimizing the existing global power structures and the corrupt governance they create.
We are just beginning to organize a mass mobilization this November after the elections to stop the Trans-Pacific Partnership (TPP). The President is planning to try to ratify the TPP during the Lame Duck session of Congress. To prevent that, we are organizing the #NoLameDuck Uprising. Click here for more information.
Graeber, like Popular Resistance and so many others, recognizes that we are in a transformational moment in world history that requires us to think anew and act with creativity and conscience. Henry Giroux writes:
“The struggle is not over specific institutions such as higher education or so-called democratic procedures such as elections but over what it means to get to the root of the problems facing the United States and to draw more people into subversive actions modeled after both historical struggles from the days of the underground railroad and contemporary movements for economic, social and environmental justice.”
He calls on “educators, artists, workers, young people and others to push forward a new form of politics in which public values, trust and compassion trump neoliberalism’s celebration of self-interest, the ruthless accumulation of capital, the survival-of-the-fittest ethos and the financialization and market-driven corruption of the political system.”
Together we can see the possibilities, share our visions, and create the organizations and systems necessary to make them a reality. We can end oligarchy and create the type of world we want to see.