Corporate (Ir)Responsibility: The Slow but Deliberate March to Oligarchy.

Well, Unf*ckers. It was bound to happen at some point. We’ve got ourselves our very first two-parter on our hands. The fuckery is so thick and layered here, it was simply too much to ingest in one sitting.

Even still, today’s rundown is pretty packed. We’ll start by discussing the political and economic philosophy that has guided the nation for the past 50 years and created a scenario where corporations reign supreme and workers have been villainized. We’ll talk about how wealth is accumulated and examine taxes from a few different angles, including how and why our corporations park money offshore.

We’ll also expose the false logic behind our corporate tax system as a whole and disabuse a few popular notions around innovation as it relates to taxes and regulation. We’re going to shoot for a quick turnaround to Part Two, where we’ll investigate how corporations have misused their ill-gotten gains to fuck over the American public and suggest a few ways we can right the ship.

“The natural order”

The natural order is the concept that Enlightenment philosophers were kicking around in the 18th Century. Many of the greats that we alluded to the Mass Incarceration and Capitalism essays built their ideas of efficiency and inequality around what should be considered the natural order of things in the world; concepts that included punishment in the carceral sphere, the flow of goods in the burgeoning global market, the distribution of wealth, food and welfare.

For many of these thinkers, the New World was the proving ground for new concepts that broke from the feudal political and economic systems that governed human life for centuries. The challenge was to create a pure and natural system that melded human tendencies to the natural world in a manner that would produce equity.

As you can imagine, given my obsession with the man, we have an upcoming essay dedicated entirely to the Chicago school of economics and its patron saint, Milton Friedman. I’m bringing him into the conversation now because Friedman, along with other giants of the time like George Stigler and Gary Becker, gained prominence in economic and political circles by building on these Enlightenment theories and taking the concept of natural order to an extreme that hearkened back to the physiocrats of yesteryear. We’ll talk more about them another time.

Here’s where the intersectionality of our prior essays really comes to bear and elucidates the power of today’s corporate structure, which has been building over the past 50 years.

So it was around the 1970s when a quiet revolution of sorts really began to take hold in corporate America. You’ve got the “Chicago Boys” like Stigler and Friedman committing to the idea that government really has no place in business and trade and that taxes and regulation of almost any kind were artificial impediments to the so-called natural order. Recall in our capitalism and incarceration essays how these men essentially cherry picked certain ideas from Cesare Beccaria, Jeremy Bentham and Adam Smith to formulate the concept that government can only serve purposes related to punishment. Punishing criminals and punishing other countries in the defense of its interests. A bastardization of nearly every philosophers’ ideals, except Le Mercier.

These ideas found their way into policy through the likes of Ayn Rand devotees such as Alan Greenspan. The natural order of economic policy made perfect sense to objectivists who believed that man—using man specifically, as Rand herself loathed feminism—should be free to do as he pleases and that bureaucracy and collectivism were evil.

And for the trifecta from our essay on privatization, we have the Powell Memo, which has come to represent the beginning of corporate intervention into our political system. Put it all together, and you have the birth of neoliberalism, the theory that has dominated the American political system for the better part of the past 50 years.

Right. So the economists teamed up with the politicians who teamed up with corporate American to fight back against…Well, to fight back against us.

Boom and Bust

I know what you must be thinking: “Max. Aren’t you reading a bit too much into this? These are just theories and policies. Our capitalist system produces jobs and innovation. Sure, some people are left behind, but it’s better than living in the Soviet Union, isn’t it?”

We know what the arguments sound like, and the fact that this shit is complicated and layered is precisely what they’re banking on. You got a smartphone and internet access? Then shut the fuck up. At least you’re not in Russia.

Well, there’s nothing like a pandemic to really show how fragile things are for the American people. It’s exposed so much new information about the way our political system works and how corporations are fucking us in the collective bunghole.

Actually, there’s nothing like a pandemic or a financial crisis and housing collapse, that is. Rare events that expose the flaws in our system.

Or a pandemic, financial crisis and housing collapse, terrorist act, and dot com meltdown. Just rare events that fuck us in the ass and prevent tens of millions of people from ever escaping poverty.

Okay, so a pandemic, financial crisis and housing collapse, terrorist act, dot com meltdown, global recession, stock market crash, savings and loan crisis, oil crisis and a different global recession, but that’s it.

All so rare. So fucking rare. Except that they happen once every eight to ten years. That kind of rare.

Here’s the thing. These events aren’t natural at all. They’re the furthest thing from the so-called natural order of things.

Unf*ckers know the numbers by heart. All of the wealth gains over the past 50 years have gone to the very top. Real wages for 90% of the country haven’t moved. Moving out of poverty is a statistical anomaly in this country, but anyone that does is put on a pedestal and displayed as the example of the American dream. It’s the best public relations scheme of the past 100 years.

When these so-called “rare” events that happen like clockwork every ten years wipe out the wealth for a majority of households in America, we’re not really living the American dream. In reality, everyone is pretty much stuck in their birth situation, and much of that is determined by race and geography.

Wealth transfer

One of the ways we transfer wealth, not just in the U.S., but globally, is through inheritance.

Couple of key points here, before we talk more about the mechanisms of wealth accumulation and the effect of taxes. The last great study commission by the Bureau of Labor Statistics revealed some interesting statistics. First off, over about a 20 year period, 21% of American households at a given point of time received a wealth transfer, and these accounted for 23% of their net worth. As you might imagine, the proportion of wealth transfer is double in white households to non-white households, and of the non-white households, these wealth transfers tended to make up a much larger share of net worth. Fairly obvious stuff, though how you spin it really matters. Back to that in a second.

Let’s talk about the “1%” for a moment. Turns out, for the top tiers of wealthy people, wealth transfers as a share of their net worth fell during this same period. The report then draws this conclusion:

“It is therefore reasonable to conclude that inheritances and other wealth transfers have become less important for the rich as a source of wealth accumulation over these years.”

Unf*ckers, this is where you have to read between the lines a bit. A good chunk of the country receives a transfer of wealth. Historically, this is how people lived up to the adage of doing better than your parents. Of course, that only applied to people who actually had money to begin with. It also explains how property ownership, insurance payouts and retirement funds have kept wealth among white Americans for so long—mechanisms of privilege for generations. Proportionately, wealth transfer occurs twice as often in white households as non-white households, even today, due to the historical significance of these facts.

Now, at the top, the transfers aren’t as meaningful as they used to be. But among non-whites, wealth transfers are far more meaningful as a percent of net worth.

Here’s the translation:

When people die, they leave money behind to their heirs. In absolute and proportional figures, white people have more money than non-white people and therefore are able to leave more behind. The wealthiest among us receive inheritances, but it doesn’t mean as much as a percentage of net worth anymore. So what does that mean? If the top 1% is still getting money from their dead parents and grandparents, but it doesn’t mean as much to them as it used to, it means they’re killing it in other places, considering they’ve taken in 90% of the wealth gains since the 1970s.

Let’s find out where they’re killing it and how.

The structure of money

Now that we’ve gone through a quick primer on wealth accumulation, let’s get to the real meat of the essay, which is to talk about corporate America and its role in widening the wealth gap among Americans. Let’s start by identifying the bogeyman here, because Corporate America is a little broad.

There are four main types of corporations, and you might very well work for one of them. You’ve got C Corps, S Corps, limited liability corporations and non-profit. There are others for entities like partnerships and sole proprietors, and a growing movement toward something called benefit corporations and, in some states, low profit companies that are designed for a social benefit but don’t really qualify as a true charitable organization.

The difference between corporate structures relates primarily to two things: personal liability and tax consequences. Just putting that out there to level set on how we’re defining corporations in this essay.

For our purposes, we’re going to focus on the “C” Corporation, which is what most public companies are. We’ll drift a bit in our conscious capitalism section to talk about the growth of B Corps, low profit entities and co-ops, but the most dominant type of company in the United States deserving of our love and attention is the class C Corporation.

C Corps truly control what we would define as wealth in this country. For our purposes today, consider every public company traded on the major exchanges: C Corps, as that’s where we’ll focus our attention. One quick note related to the decline of alternative weeklies and local journalism, even though we’re examining the larger class of corporations; the fact is that small companies employ the vast majority of Americans and there is precious little oversight on them now that local newsrooms have shuttered and consolidated. That, too, for another day.

So we’re talking about the big guys. And there’s a tendency to focus on the billionaire class, and it’s fair to say that many of them have developed from controlling interests in these types of corporations, but billionaires are really a class of their own. We like to keep track of people like Jeff Bezos, Elon Musk and Bill Gates because of their preposterous net worth, but it’s not like they actually have a trillion dollars in gold coins sitting in a vault like Scrooge McDuck.

Recall in the privatization essay how Milton Friedman popularized the false concept that corporations exist solely to maximize profits. In truth, corporations exist to sell a good or service within the legal framework of trade, and the corporate structure exists to shield shareholders from liabilities and provide taxes to the governing entities that help facilitate the movement of said goods and services. That’s it. Corporations aren’t mythical creatures that exist for a higher purpose, but we treat them as such.

When we talk about taxing the rich, I think we need to start shifting the conversation toward a more holistic approach.

It’s not about taxing the rich as individuals. It’s about controlling the ecosystem of wealth creation more tightly to prevent the massive leakage that occurs to places that circumvent the socioeconomic system that the nation is built upon. Individual rates, capital gains, carried interest tax loopholes, offshore tax havens, estate taxes are all part of the equation, but it’s the individual rate that gets all of the shine from politicians and the media. This is partly because it’s the easiest and most relatable thing to focus on.

But it’s really the superstructure that matters most. Think about the wealth that exists in the financial world. Remember when candidate Trump talked about closing the carried interest tax loophole? Then remember when President Trump didn’t? This provision allows money managers to have their investment gains taxed as capital gains and not income, which is more than 15% less than it should be.

This is fucking insanity, and should be one of the easiest fixes possible, because it will force investors to steer clear of short-term schemes to pump up stock values and be more deliberate in their investment decisions.

Money on the sidelines

If you watch corporate business media, you’ll hear euphemisms like “money on the sidelines,” or “dry powder” to describe the amount of cash that companies are hoarding on their balance sheets. Let’s dig into this a bit to understand the rationale behind this.

First off, it’s rare to hear any of these same pundits talk about how this money is often parked offshore. Once again, candidate Trump made a big deal about this, though he blamed the corporate tax structure in America and promised that he would take care of corporations by offering them a “tax holiday” to repatriate these funds back into the United States. And he actually delivered on this promise, which I suppose is one way to go about this.

Indeed, Trump’s tax cut and repatriation holiday brought home just north of a billion dollars, which is like pissing in the ocean to warm it up.

What I find fucking ludicrous is that we would have to offer an incentive of any kind to repatriate money that was held offshore through loopholes—albeit legal ones—that stole from the American people. Everything always has to be in the favor of corporate America. Can you imagine Teddy Roosevelt pleading with corporations to bring back stolen money by offering them incentives? He would have marched into their boardrooms and beaten the CEO to death.

It begs the question as to why a corporation would hold money offshore anyway. Can’t spend it. There’s only so many fucking helicopters and jets you can buy with it when we’re talking trillions, right? What’s the fucking point? Like, if you’re a wealthy individual, you can just buy shit in other countries like wine, homes, diamonds, cars, boats, whatever. So that makes sense. But why would a public company work so hard to keep cash in a place they can’t really put it to use?

(Drum roll) The answer is share price.

Cash on a balance sheet, no matter where you hold it, shows strength and contributes to the value of your company. That’s where the real money is. Building up shareholder value. Executives in the modern era have made an art of enriching themselves personally through value, not actual productivity.

Since the 2000s, there has been a huge trend toward paying executives through stock options for a couple of reasons. One is optics. Since the financial crisis in particular, it’s considered poor form to literally pay people tens or hundreds of millions of dollars. Just looks bad. It’s so much easier and trickier to pay them a rational salary then give them enough options to buy a fucking island. Plus...when they exercise those options, as we talked about before, selling them is considered a capital gain and not income, so they’re taxed less.

So, the more cash you have on a balance sheet by storing it offshore and keeping it from being taxed, the more you can inflate the value of a company and increase the share price. The greater the share price, the greater the value of executive stock options. The more your income consists of exercising these options, the less likely you are to be taxed at a normal rate. Win, win, win.

David Carden, a lawyer who served under Obama, recently wrote a piece in Foreign Policy about the great tragedy of this phenomenon, particularly during the pandemic. He estimates there is somewhere in the neighborhood of around, “$36 trillion in cash, gold and securities, not including tangible assets such as real estate, art and jewels.” (For comparison, U.S. federal tax revenues are a little over $3 trillion a year.) He goes on to quote the Tax Justice Network, which ranks “the United States as the second-most complicit country after the Cayman Islands in helping individuals to hide their assets.”

But $36 trillion is a global figure. When trying to determine the amount being sheltered by U.S. corporations, the network estimates it’s around 10% of our wealth, which could be in the neighborhood of $10 trillion.

Harvard Business Review estimates that, “U.S. non-financial corporations are sitting on just over $4 trillion dollars in cash, according to the latest Flow of Funds estimates, up from $2.7 trillion a decade ago and just $1.6 trillion in 2000.”

So, if we put it together, and we’re to believe their methodology for non-financial firms, then the $10 trillion estimate in total might be pretty accurate.

Ten trillion.

The article points out the absurdity behind lowering corporate taxes in the U.S. to 21% because most of the countries where our corporations are parking money are way below that threshold. So Trump’s tax repatriation plan and theory that companies will be tripping over themselves to bring money back to the U.S. from offshore was never the case. It was all window dressing and explains why only $1 billion of an estimated $10 trillion was repatriated.

Unf*ckers, we’ve been had again.

What a con. It’s really a thing of beauty. Especially because corporate America has been so effective at blaming the working class. Think about it. Who’s destroying American wealth according to what you hear, see and read? Unions. The fight for minimum wage. Taxing the rich, which burdens the so-called job creators. $10 trillion in cash parked offshore versus the fight for a living wage, and we’re actually losing the messaging battle.

The fact that so many of us have fallen for this line of bullshit is a testament to the massive coordination of messaging by corporate America to shift the blame from their thievery.

Can we get it back?

Of course, it’s not as easy as just raising taxes on corporations here in the United States. Corporations who, by the way, also received a windfall under Trump when he cut the effective corporate tax rate to 21%, just a hair above capital gains. It’s a global world, right? That’s why giants like Apple and Google are located here and traded on American exchanges, but domiciled in other countries. They’ll do anything to avoid paying taxes to the country that founded them. And it’s perfectly legal.

It’s one of the reasons Treasury Secretary Janet Yellen recently argued for a global minimum tax to prevent companies from sheltering cash in offshore havens. She wants to level the playing field across the world to take away the incentive to hide and prevent what she calls the “race to the bottom.” Apart from this being a good and fair idea, the real reason behind it is because uncle Joe has made a host of promises that he can’t pay for, and Republicans, as we have covered before, will once again make deficits an issue even though they really don’t give a flying fuck about them.

Of course, I’m not all that optimistic about Yellen’s ability to get this done. I imagine her call for a global corporate tax rate will be met with snickers from other countries that make a living on being havens for American money. And it’s easier today to move the domicile of a company without sacrificing the exchange that it’s traded on. It is more difficult for companies on the lower end of the public spectrum to pull off this kind of financial engineering, but the big guys can afford to just keep fucking moving around the world. Plus Yellen’s proposal will also likely be met with a hearty “go fuck yourself” by other countries who are used to the U.S. inventing its own advantages.

But what if they leave?

Let’s dispense with the arguments you hear from pundits on the right about keeping taxes low.

First, there’s the argument that high corporate taxes will drive companies out of the United States. Well, according to the Tax Foundation, currently corporations in the U.S. pay federal income tax of 21%, plus a range of state taxes that result in a combined average top tax rate of 25.8%. Know where that puts us? Smack dab in the middle. If you take the Caribbean and corrupt Eastern European countries out of the equation, we’re on the lower end of the average.

So it’s not like we’re going to lose to another industrialized country. We’re only talking about corrupt countries or islands that exist as tax havens specifically to hide money. There’s nothing “competitive” about this argument.

And to quote Robert Reich, “the U.S. collects less corporate taxes as a percentage of economic output than any other industrialized country” on the planet.

One of most overplayed tropes is the idea that taxes kill job creation. So let’s get that bullshit out of the way too. It’s one of those fucking concepts that lingers and feels too hard to explain why it’s bullshit. So here you go. Over a 30 year period between 1950 and 1980, the average corporate tax rate was about 50%. Over this same period, unemployment ranged from a low of 2.5% in the ’50s, to a brief spike of 9% during the oil and inflation crisis, but the trend line hovered around an average of about 5%. In other words, zero statistical correlation between corporate tax rates and employment. Let’s close the fucking door on this already.

We also consistently hear the argument that corporations should barely be taxed because it frees them to reinvest into themselves, and a low tax environment has led to American ingenuity and innovation. Sounds good. But it’s actually the opposite. If you tax corporations at a higher rate and cut off their ability to park money offshore, it forces them to pay people more and to put more money into research and development. That’s a fucking fact. Otherwise, what’s the point of accumulating cash just to hand it over to the government?

In fact, I would argue that we should leave personal income taxes much lower and increase them on corporations exactly because it would encourage larger salaries. Not only does this make income more trackable, but it puts more money back into programs like Medicare and Social Security.

I’ll go a step further and say that the way to sell this to the American people is to reduce the Social Security deduction but lift the cap on it—meaning that you pay into it no matter how much you earn. Revisit our essay on essay on Reagan to review how Greenspan really fucked us over on that one. If you package this with a reversal on the carried interest loophole and punitive measures for hiding money offshore, you can strangle corporations into keeping their money here and paying their fair share. Make executives go back to overpaying themselves with monster salaries and let them wrestle with the optics of that, all the while we’ll actually collect our fair share on the funds the working class generates.

But how will we continue to innovate?

We need to force corporations to stop thinking in terms of building wealth through the markets and think about building it through people. With respect to innovation, I’ll go even further out on a limb and tell you there isn’t a single fucking innovation corporate America can point to that was created since the late 1970s.

Yet another bold Unf*cking statement!

Let’s examine the post-World War Two era for a moment. The greatest innovations were birthed during a time when the top marginal tax rates were 70%. How can I make this case? Because of Moore’s Law of exponential growth. Moore's law is the observation that the number of transistors in a dense integrated circuit doubles about every two years, but you can apply it to nearly every so-called innovation corporate America takes credit for these days. Almost every innovation since the 1950s has doubled in efficiency and output every year, tracking exactly on point with Moore’s Law.

We’re living through a period of extraordinary innovation today because of the seeds that were planted in the ’50s, ’60s and ’70s. There are no new innovations that didn’t take root during this time. We’ve improved upon them, but didn’t create anything new.

“Max, how can you say that? Look at all of the amazing technology we have today. Artificial intelligence. The internet of things. Electric vehicles. You name it.“

I’ll tell you.

You know when the first journal of artificial intelligence was published? 1980. Because it was already a maturing discipline. Facebook, Google, Amazon. They all rely on the internet. They didn’t invent the internet. The government did. In the ’60s. And the first supercomputers were invented then as well, financed by the government and higher education.

“How about the green revolution?”

Photovoltaic technology was invented in 1954.

“Electric vehicles?”

Go watch Who Killed the Electric Car.

You name an innovation, and I’ll point you right back to the period when the government subsidized it, corporate taxes were higher than 50% and nobody had a fucking problem with it.

Corporations don’t innovate. People do.

Fuck Milton Friedman. Offshoring is unpatriotic. Unf*ckers rule.

Here endeth the (first part) of the lesson.

In Part One, we began by talking about the concept of natural order, an Enlightenment theory of how economic and political systems could work and how the Chicago school of economics tweaked and bastardized these theories in the ’60s and ’70s to concoct a perverted view of socioeconomic policy that essentially said corporations should be free to do whatever the fuck they pleased.

We went on to explain how they teamed up with politicians to make socialism and communist Russia the scapegoat for all things terrible in the world while they busied themselves with undoing the regulatory and tax framework in the United States that previously allowed for social mobility, innovation and expansion.

We reviewed how corporations worked, blew up Milton Friedman’s myth that corporations are magical creatures that exist only to maximize shareholder value and covered how wealth is transferred from generation to generation. It’s a pretty wild story about how corporations pulled off a remarkable con job to sell the American people that it’s somehow okay to hide money in offshore accounts. We also did the math to show that corporate America is actually holding somewhere in the neighborhood of $10 trillion offshore to avoid paying the piper back home!

Part One concluded with the assertion that we should be paying less attention to individual tax rates and more to corporations, which is the nightmare scenario and conversation the monied class really doesn’t want us to be having.

There. You’re caught up.

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Okay kids. It’s time. Time to hear from the man himself.

In the audio essay, we open with a clip of Milton Friedman standing next to a monument of Jefferson. What Friedman does in this clip in a really folksy way is try to show the government as a nag and impediment because GM’s Corvair model was under attack for being unsafe at high speeds. To illustrate his point, just prior to him speaking, there’s footage of a driver crushing a racetrack in a Corvair as if to say, “Hey, if a professional race car driver in a helmet on an empty track can drive this thing safely, what’s your fucking problem?”

Milton then invokes the great Thomas Jefferson, saying he would be disappointed in all this hoo-hah over protecting people. We should just be able to do whatever the fuck we want. Here’s Friedman:

“Since the attack on the Corvair, government has been spending more and more money in the name of protecting the consumer. This is hardly what the third President of the United States, Thomas Jefferson, whose monument this is, had in mind when he devised a wise and frugal government as, ‘on which restrains men from injuring each other and leaves them otherwise free to regulate their own pursuits of industry and improvement.’ Ever since the Corvair affair, government has increasingly been muscling in between buyer and seller in the marketplaces of America. By Thomas Jefferson’s standards, what we have today is not a wise and frugal government but a spendthrift and snooping government.”

Just an aw shucks, free market loving Jeffersonian trying to protect the regular American from things like seatbelts and airbags. This is a pivotal moment in U.S. history and in our story today.

What he’s responding to here is Ralph Nader’s activism on behalf of the consumer. For those who aren’t really familiar with Nader, it’s difficult to explain the impact he had on American society in the ’70s. Nader is the standard bearer of consumer advocacy, and his brand of advocacy goes way beyond products and safety.

The nadir of Nader—see what I did there—was a controversy surrounding GM’s Corvair model, which was the subject of Nader’s first chapter of his landmark book, Unsafe at Any Speed. In it, he argued that the rear axle suspension made the Corvair unsafe the faster one traveled. Much later, even automotive media such as Road & Track would uphold this theory, though at the time, Nader was demonized. GM even went so far as to launch a smear campaign against him that included trying to trap him with sex workers and illegally tapping his phone.

Nader would become the poster boy for consumer protection and the most hated man in corporate America for decades as a result of this book and subsequent activism, which even included a run for President of the United States. His efforts didn’t go unnoticed in Chi-town, where Milton Friedman and his merry band of shit sniffers held Nader up as the pinnacle of government intervention and anti-capitalism.

Remember when we covered the Powell Memo? Powell was also responding to the rise of consumer advocates like Nader and encouraging corporate America to get into politics and start fighting fire with fire.

At some point, we’ll talk about the libertarian strain of the Chicago school philosophy and how they amplified certain aspects of Jefferson’s themes. Forget the fact Jefferson was a slave owner, didn’t think we needed a fucking national bank and went back on his own word so many times as President, it’s hard to even keep track. What Friedman and others have mastered is the art of cherry picking the Founding Fucker mindset and inserting it into modern day situations, as if any of these slave owning, syphilis carrying, wife cheating (but really smart) cock knockers would have had an opinion on airbags in cars.

Unfortunately, Nader is really one of the last great examples of citizen advocates who were successful in calling out corporate injustice because of corporate America’s coordinated attack against regulations. Up to this point, some of the most notable reforms in our nation’s history came from journalists and citizens like Nader who put a human face on the everyday tragedies of the capitalist system. From Jacob Riis’ photos of tenements leading to housing reform, Upton Sinclair’s descriptions of slaughterhouses in The Jungle leading to food safety reform and, as we promoted recently, Steinbeck’s portrayal of the forgotten farmers of the Dust Bowl in the Grapes of Wrath that sparked congressional discussions on wage reform.

But by the 1970s, corporate America had just about had it with all of these pesky do-gooders poking around in their business, and indeed they fought back.

The Empire Strikes Back

Here’s where we can draw on some prior themes, Unf*ckers. Think back to our American propaganda essay where we spoke about the rise of the think tank in the United States, backed by corporate money and how the media began consuming their literature as fact-based evidence because it was supposedly “independent.”

Over the next couple of decades, the number of (mostly conservative) think tanks backed by corporate dollars doubled and doubled again, all espousing the wonders of free market ideology and evils of regulation. At the same time, they were pouring an enormous amount of resources into doubling down on the need for tax cuts in order to preserve capital for global competitiveness and innovation, which we discussed in Part One.

Many of the economic assumptions in these materials were being pumped out by none other than the Chicago school. The underlying theory was that market efficiency was far more effective in protecting the consumer than government regulation could ever be. In theory, that makes a lot of sense, right?

In theory, a company that hurts, maims, kills, sickens or lies to its customers or employees wouldn’t be in business for very long. Right? Ehhhh: ExxonMobil, Monsanto, J&J, Koch Industries, McDonald’s, Nestlé, Tyson Foods, News Corp, Amazon, BP, Chevron...

The intersection of tax cuts, deregulation and free market propaganda is important. The tax cuts had the effect of turning big corporations into absolute juggernauts that could afford to paper over their misdeeds with fines, advertising and PR.

First of all, we’re still dealing with the fallout of the environmental calamities created by large industries. Remember that things were so bad that even the Nixon administration, which was considered pretty conservative at the time, helped pass legislation to reform the environmental practices of industry in the United States. Remember when conserve was part of the word conservative? Dig this from Nixon:

“Each of us all across this great land has a stake in maintaining and improving environmental quality. Clean air and clean water. The wise use of our land, the protection of wildlife and natural beauty. Parks for all to enjoy. These are part of the birthright of every American.”

So for a while, it looked like we were actually making some progress. Investigative journalism was arguably at its peak in the late ’60s and ’70s, environmental reforms were being passed in a bipartisan manner because we were listening to scientists—what a fucking concept—and the planet and the worker were taking center stage against the backdrop of the Civil Rights and gender equity movements. So we had progress like, hey you can’t dump tungsten in the waterways, lead pipes are really bad for you, hydrochlorofluorocarbons are contributing to global warming, solar power actually works so we should incentivize it, etc.

Then, as you’ll recall in the Reagan essay, the double whammy of the oil shock and inflation spike caused the first real disruption to our pocketbooks and really fucked the economy in the late 1970s. In a matter of just a few short years, there was a team locked and loaded with a shiny playbook that promised to right the ship and restore pride in America.

Needless to say, the other team was not prepared for this at all.

Perhaps the most surprising aspect of this entire period is just how organized the opposition was and how prepared they were to undo all of the social, environmental and consumer protection movements that had recently taken root. The swiftness and totality of it all is blinding. They hit it all, and the United States went on a deregulatory frenzy, the likes of which we had never seen before.

Between 1980–2000, environmental regulations were shattered. The mass incarceration movement went into overdrive. Worker protections and unions were crushed. Corporate taxes were slashed. And the coup de grâce at the close of the century was the repeal of Glass-Steagall, which let loose a torrent of financial fuckery that haunts us to this day.

I don’t mean to be patronizing here by condensing a well-worn story most Unf*ckers are aware of, but I felt it was worth recapping because deregulation and tax cuts really did go hand-in-hand to blow up the capitalist, Chicago school, natural order, neoliberal philosophy which is that markets self-regulate better than government. They don’t.

At a certain size, you don’t have to worry about breaking the rules as long as you can afford to pay the penalty.

Violations

There’s an amazing site called GoodJobsFirst.org that is truly doing the lord’s work by tracking corporation violations. The user experience is a little challenging, but it’s a treasure trove of data that will make you either angry or a little excited if you’re a fellow masochist.

I’m just going to give you a couple of highlights to drive home the point that most companies don’t give a fuck about breaking rules that endanger public health, because our tax structure has made them so fucking wealthy it’s easier to pay fines than follow rules.

Since 2000, the Environmental Protection Agency, which has seen its budget and resources continually slashed, especially during the Trump years, levied over $61 billion dollars in fines for more than 17,000 corporate violations. The EPA is here to protect us. Our water. Our air. Land. Natural resources of all kinds. And even with a dwindling budget and staff, they wrote 17,000 violations.

At the top of the list is none other than Koch Industries, parent company owned by chucklehead brothers Charles and David Koch—one of them is dead, doesn’t matter which—who are arguably the biggest fucking turds corporate America has ever squeezed out.

Koch Industries, one of the largest anti-regulation lobbying champions in America, have racked up almost $1 billion in fines spread over more than 400 violations. You see, they just don’t care. Cheaper to pay than to play.

We’re already fast approaching a time, however, when this kind shit will look like child’s play compared to the likes of Amazon. This, my dear Unf*ckers, is a whole other class of criminal.

The difference is companies like Koch Industries are the guy behind the guy. Half of the time, you don’t even know who they are, what they own or what they’re polluting. Amazon, on the other hand, owns the consumer supply chain. We pay them for media. For next day delivery. Their boxes have happy little smiley faces that release endorphins in your brain when you get a brown box on your doorstep. More than a third of the world’s websites exist on Amazon Web Services (AWS). Now they’re in the food business.

We’re addicted to Amazon, and they know it.

The pandemic was particularly good to the giant online retailer, with 2020 revenue closing near $400 billion and profits increasing from $11.5 billion in 2019 to $21 billion in 2020. Compared to peers like Google and Microsoft, their bottom line numbers are actually low, but they’re gaining ground quickly. Walmart is still a larger company, but Amazon blows their profit margin away. We know by share price that Amazon is valuable, but in real top line and bottom line dollars, at this trajectory it’s conceivable they could gross a trillion dollars within the decade, perhaps sooner.

And yet we’ve given Amazon subsidies in the U.S. in various forms totaling $2.9 billion dollars, and they’re one of the biggest tax cheats in the country. How big? Over the past three years, Amazon has paid an effective tax rate of 4.3%.

Remember when the subject of our second Unf*cking Quickie, Alexandria Ocasio-Cortez was raked over the coals for killing the Amazon warehouse deal in her district?

Let’s look at this more closely.

Amazon looks to locate these hubs near wealthy areas so they can service their Prime customers that can afford to pay Prime fees. But they don’t drop fulfillment centers in the middle of a swanky neighborhood. They go to the closest nearby low-income community with higher Black and Latino populations. Then they have the gall to ask for tax breaks and subsidies for “blessing” these areas with new jobs that have higher injuries and a pay scale no greater than what currently exists, especially in an area like New York.

What her district needs isn’t another marginal paying warehouse facility that is subsidized to come there. It needs affordable housing. Furthermore, when you give tax breaks to a company (especially one as big as Amazon), you rob the local school district and municipality of sorely needed revenue. You actually take buildings off the tax roll to accommodate a brand spanking new warehouse that creates menial jobs, a massive amount of pollution and congestion and wear and tear on the local roads and infrastructure, with basically nothing in return.

So net, net, these deals are corrosive. But AOC was taken to task for being a job killer. 

Prior to the pandemic, the jobless rate in Queens was less than 3% like the rest of the country. Welp, that answers that.

Maybe she won the primary with 74% of the Democratic vote and won the general election with 71% vote because she actually understands what her district needs.

Creating Accountability

What I appreciate about the GOP is that they’re not hiding their intentions. Theirs is less ideology and more theology. There is a real, hardened belief that corporations are superior to all things political and social and that we need to protect them with the utmost fervor. Democrats are far more disingenuous when it comes to playing this game. They have their hands out as much as the Republicans do, but talk out of both sides of their mouths. Just look at Schumer’s donations if you need confirmation of just how in the tank Democratic leadership is with big business.

If you’re following David Sirota’s The Lever—and if you’re not, you need to—then you’ve likely seen him pick apart corporate dems like Manchin and even shill progressives like Sinema. One of the most wild things on the table right now is the proposed increase for corporate taxes as part of Biden’s infrastructure agenda. But all they’re pressing for is to increase corporate taxes to 28%, which is only halfway to where it was when Trump cut it. It’s preposterous, and hopefully we did a good enough job in Part One to illustrate why they can afford to pay more and how everyone actually benefits when they do. Even the top tier of income earners—not the billionaire class, that’s a different animal—would be insulated from harm under this scenario because it would incentivize corporations to pay people more across the board.

Of course, this can’t happen in a silo. In order to make this effective, you would have to simultaneously tighten the noose around corporate America’s wallet to prevent them from parking money offshore or using loopholes to evade taxes. The maddening part of this is actually how surprisingly easy it would be if the appetite existed in Congress.

Here are a few suggestions from our friends at GoodJobsFirst to get us started.

• Subject accountants, lawyers and bankers to criminal prosecution for aiding and abetting tax evasion.

• Deny offshore financial centers (OFCs) or shadow banks, the ability to clear dollar denominated transactions in New York, which would deny them access to the international banking system.

• Deny aid to all countries that house OFCs.

• Here’s an obvious one: Just pass a law to make tax structures designed to evade taxes illegal, with mandatory jail time for both the convicted tax cheat and their enablers.

There are dozens of other arcane suggestions that would effectively shut down this practice, and as we discussed in Part One, the vast majority of these companies would be unable to move their corporate domicile and could even risk their listing on U.S. exchanges.

Final Word

The comprehensive takeaway, my dear Unf*ckers, is that corporations have had it their way entirely since 1980. Deregulation has gone their way. Taxes have gone their way. They’re hiding $10 trillion dollars—that’s our fucking money—offshore to pump up the value of their shares by compounding cash gains and inflating their balance sheets. Compensation packages have been so absurdly enlarged that the fastest growing segment of the U.S. population are new millionaires, while the middle class shrinks and the poor continue to be left behind.

As we heard in our propaganda essay, they’re even writing state and federal laws directly. Any illusion of a firewall between corporate America and Washington DC has evaporated because no one really cares. Every day, these companies carry out the heist of a lifetime and no one bats an eyelash.

So why do we let them? Why do we cower to their might and fawn all over the wealthy executive? I’ll leave that final word to the great acerbic columnist and satirist of yesteryear, H.L. Mencken. I know he was problematic at times, but on some stuff…his shit holds up:

“Perhaps the most valuable of all human possessions, next to an aloof and sniffish air, is the reputation of being well-to-do. Nothing else so neatly eases one’s way through life. There is in 90% of all men—and in 99% of all Marxists, who value money far beyond its worth, and are always thinking of it and itching for it—an irresistible impulse to crook the knee to wealth, to defer to the power that it carries with it, to see all sorts of superiorities in the man who has it, or is said to have it. True enough, envy goes with the craven neck, but it is envy somehow purged of menace: the inferior man, at bottom, is afraid to do evil to the man with money; he is even afraid to think evil of him—that is, in any patent and offensive way. What stays his natural hatred of his superior, I daresay, is the snaking hope that he may get some of the money by being polite—that it will pay him better to caress than to strike.”

We have related essays coming up, including one on Conscious Capitalism and a really deep dive into the Chicago school. Our next one is a departure, but an important one. That’s all I can say. In the meantime: Conscious Capitalism is an oxymoron, Amazon is Skynet, and #FMF.

Here endeth the lesson.

Resources

• HBR: Why Are Companies Sitting on So Much Cash?
• The Atlantic: When the Top U.S. Tax Rate was 70 Percent—or Higher
• Bloomberg Tax: 10 Steps States Should Take to End Corporate Giveaways
• Politico: Actually, it was Democrats who killed the 70 percent tax
• Foreign Policy: To Pay for the Pandemic, Dry Out the Tax Havens
• Tax Policy Center: What is the TCJA repatriation tax and how does it work
• OCCRP: Giant Leak of Offshore Financial Records Exposes Global Array of Crime and Corruption
• Tax Foundation: How Much Revenue Would a 70% Top Tax Rate Raise? An Initial Analysis
• FRED: Unemployment Rate
• Trading Economics: Corporate Tax Rate in the United States remained unchanged at 21 percent in 2021 from 21 percent in 2020
• BLS: Inheritances and the Distribution of Wealth, Or Whatever Happened to the Great Inheritance Boom?
• Tax Foundation: Corporate Tax Rates around the World, 2020
• Road & Track: Yes, The Chevrolet Corvair Really Was a Handful to Drive
  
• GoodJobsFirst.Org

Book Love

• Matt Taibbi: Griftopia: A Story of Bankers, Politicians, and the Most Audacious Power Grab in American History
• Jane Mayer: Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right
• Zachary D. Carter: The Price of Peace: Money, Democracy, and the Life of John Maynard Keynes

Pod Love

• Useful Idiots: David Sirota on the SALT Tax Cap, Plus: Is Biden Really the new FDR?
• Best of The Left: #1414 Go Home and Go Big (Infrastructure Investment, Jobs and Climate Mitigation)