The Invisible Hand Wants More Hand Outs

The New York Times published an article on December 1 titled As Companies Seek Tax Deals, Governments Pay High Price.

It ought to disturb everyone who isn't in the 1%. To begin with, it should have been "Citizens" instead of "Government" as we're the ones who pay the price.

We should all be disturbed by the amount of public money being extorted by companies from all levels of government. They can do this, in my opinion, because we let them.

How do we let them? I think it begins with the fact that too many of our fellow citizens are quaffing copious amounts the Randian Kool-Aid-turned-Tea-Party-tea that's being served up so generously by the high priests and priestesses who worship The Invisible Hand from inside the GOP, from within their broadcasting company, Fox, their newspaper publisher, The Wall Street Journal, and from all the their faithful followers.

It seems clear to me that big money, politics, and business have combined into a force the likes of which none of us has seen in our lifetimes. The level of concentrated wealth and power is all but incomprehensible (who among us really understands what a trillion dollars is?), and we and our progeny will be the ones who pay the tab when The Invisible Hand brings it to our table for all the blind, willful, and excessive drinking we're doing now.

I do believe there's something we can do about it.

I think it starts by voting for progressive people who will truly represent ordinary citizens and then demanding real representation and leadership from those elected officials; from city councils on up through the president.

I also think we citizens need to present calm, rational, and most of all, vocal objection about the imbalance, inequity, and unfairness to each other and to our elected officials. They do, after all, work for us. It's incumbent on us as citizens to hold them accountable. They need to know that we're not going to tolerate - or vote for them - if they continue to offer sweetheart deals to so-called "job creators" who don't create jobs and who, in the end, only bankrupt us and our governments.

Could it be that part of the reason governments at all levels can't balance budgets includes expenditures like the $80 billion (yes, billion with a 'b', as in bull****) a year that's being given away in incentives? If these incentives are so effective, shouldn't we be asking corporations (and mostly the big ones) where are the jobs?

(Let me hasten to say at this point that I have nothing against corporations, profits, or wealth. I don't begrudge anyone their hard-earned and honestly-achieved wealth. I'm not a socialist (ok, maybe I am just a little), and I'm certainly not a fascist or a communist. I'm registered non-partisan, have never held elected office, and have never been in a union. As of today, I'm an unemployed sales and marketing executive who wants to work and who cares enough about how this impacts his family, his neighbors, our society to take time from job searching to post this.)

Make no mistake. Politicians are just as culpable as corporations in this mess.

As this NYT article points out, politicians tend to be weak negotiators who have the unenviable task of having to convince us in the simplest terms and most expeditious way possible every few years to reelect them back into their jobs. Some (and for the more jaded among us, maybe most) politicians seem to behave in such a way most of the time as to convince us that they'll say and do just about anything to win their jobs back.

Is it any wonder that they will do a deal - even bad deals - with a corporation just to stake the claim to have brought jobs to their constituents? It is worth wondering about only if we don't pay attention to the deals they're cutting and then don't hold them accountable to what we value in addition to a job.

And therein rest their defense for their actions. We don't pay attention, we stay silent, and we seem willing to accept any condition so long as there's the promise of employment.

Politicians know that we seem, on the whole, to not pay very much attention. They know lots of us can be pretty easily duped into believing almost anything. What other explanation is there for the viewership of Fox News and movements like the Tea Party, birtherism, and climate science deniers?

Politicians can remain confident that we'll be too distracted by The Walking Dead, Dancing With The Stars, and the latest South Korean music video on YouTube to pay attention to what they're doing. They know most of us will keep getting our information from the talking heads screeching the loudest at us from inside our self-imposed information bubbles. (Yes, I'm looking at you, Fox News viewers.)

Most of us can be counted on to look at the so-called collaboration between government and corporations through a short-term lens, and to then heap praise (and votes) upon our elected officials for ostensibly working in partnership with the private sector to create new jobs.

The irony is this.

The Invisible Hand of the free market isn't concerned with real partnership. It's about winners and losers. That cannot be what's best in these "partnerships" between private companies and the public sector. Just consider these factors:
1. There are no contractual and legally binding obligations on the part of the corporation, and there's no recourse to recover our "investments" should the venture fail
2. There's no assurance as to if and when those jobs will actually materialize
3. There are no promises that any job will actually pay a living wage or how long it will last
4. There appears to be little scrutiny of the corporation's past behaviors or results in these matters
5. No one seems to be examining or considering if the facts and evidence show whether or not those jobs would have been created without the incentive

And, since when did The Invisible Hand need incentives from government?

To compound the challenges and as the New York Times article points out, elected officials are ill-equipped to negotiate. They are basically held hostage by corporations. We go on about our lives oblivious to the tabs our politicians are running up for us and what could have been done with those corporate welfare funds.

               "The practical consequences can be easily seen. The Manhattan Institute for Policy Research, a conservative group, found that the amount New York spends on film credits every year equals the cost of hiring 5,000 public-school teachers."


I understand and, yes, even appreciate and applaud the basic tenants of capitalism. I understand that corporations have an obligation to shareholders first and foremost. I don't deny nor argue that they ought not to consider and pursue the deals that are best for them and their shareholders. The problem I have is when those decisions about how best to maximize profit are made without concern for the moral, ethical, and economic consequences to us as citizens and to society at large. Profit cannot and should not be the only consideration by people who run companies. We're all in this together.

Again, it's not only corporations at fault. They have a duplicitous partner in this dance.

Ill-equipped and out-matched government officials not only are manipulated by corporations they are actually competing with one another to see who can give away the most money to attract the corporations.

Think about that. Our elected officials are negotiating against each other to see who can "win the business" with corporations by giving away the most money - our money - while they get nothing that's legally binding in return.

               A group of taxpayers in Michigan and Ohio went as far as suing DaimlerChrysler after Ohio and the City of Toledo awarded the automaker $280 million in the late 1990s. The suit argued that it was unfair for one taxpayer to be given a break at the expense of all others.


              The suit made its way to the Supreme Court, and G.M. and Ford signed on to briefs supporting Daimler, as did local governments. The National Governors Association warned the court that prohibiting incentives could lead to jobs moving overseas. “This is the economic reality,” the association said in a brief.

              The governors offered no hard evidence of the effectiveness of tax credits, but the Supreme Court did not consider whether they worked anyway. In 2006, the court concluded that the taxpayers did not have the legal standing to challenge Ohio’s tax actions in federal court.


         
There's only one way this can go under current circumstances. Unchecked and unchanged, the bidding will be won by whatever community is willing to give away the most with almost nothing assured in return. And, whose money is it? Yours and mine.

I don't claim to understand every detail and all the nuance. What I clearly don't understand is all the anger and rancor coming from anyone outside the 1% in America about the role of government. They seem intent on allowing themselves to be guided by what they perceive to be the benefits of The Invisible Hand and all that will trickle down to them. Is there another explanation for why some of us appear to have elevated corporations to some pretty lofty status while simultaneously vilifying government at all levels?

It makes wonder how it is that so many people who claim to want smaller government and cuts to social programs seem to be the very same people who....

...Rail against today's tax rates - which are at historic lows - but don't complain about their tax dollars subsidizing corporations

...Complain about their tax dollars being spent on social programs that benefit the so-called "takers" at a time when unemployment is still too high, the wealth gap is at levels not seen since the Gilded Age of the robber barons, corporations are enjoying record profits while they get more and more government handouts, and yet those magnanimous "job creators" don't seem to be creating many jobs

...Despite corporate welfare, believe that government interferes too much with business despite the fact that regulatory bogeymen like the SEC and EPA have been progressively stripped of their oversight authority


Why isn't there more outrage about corporate welfare from the people who so strongly believe in free market forces and less government?

And, why aren't all citizens demanding that our elected officials work on and pass legislation to simplify THOSE tax codes first so that corporations pay their fair share like the rest of us?

After all, aren't corporations and the people who work for them part of the society in which we all live?

Don't employees, managers, stakeholders, customers, and suppliers all benefit from a government that educates our children, is responsible for public safety, infrastructure, and the like?

(And by the way, no, you corporations did NOT build public education, infrastructure, police forces, fire stations, etc. Good thing, too.)

So, the over-arching question I'm asking is this. What's with all this requirement (extortion, really) for tax breaks and incentives to be given to corporations in order for them to compete?

Isn't The Invisible Hand enough.....or can't they make it without hand outs?

Food as Fuel - A Very Bad Idea

....$11B a year in corn subsidies.

I wonder where the Libertarian, tea party, and GOP outrage over this government subsidy of private enterprise is? Perhaps they just don't have the strength and the energy to be simultaneously outraged over that and....oh....I don't know.....the social programs that benefit poor women like Planned Parenthood at the same time. Maybe they consider PP's $70million in annual funding and the $293 million they get through Medicare reimbursements (1), Senator Kyl's NITBAFS lies about abortions notwithstanding, to be a bigger budgetary problem than corn subsidies.

If so, perhaps some remedial math will help. PP's $363million is only 3.3% the size of the corn subsidies, and PP's funding is still only 0.0104% of the 3.5trillion fed budget.


..."Eating up just a tenth of the corn crop as recently as 2004, ethanol was turbocharged by legislation in 2005 and 2007 that set specific requirements for its use in gasoline, mandating steep rises from year to year. Yet another government bureaucracy was born to enforce the quotas."

Perhaps someone can remind me who controlled both houses of Congress and the White House in 2005?

I know. Dems are the ones always being accused by tea-baggers, Randians, and GOPpers of bloating government, but even they must admit in this case that when, "...another government bureaucracy was born to enforce the quotas" that that birth could reasonably be assumed to have happened in 2005 and not 2007, right? Maybe someone will be interested enough to look that one up.

I don't suppose there's much point in reminding anyone about the truth of the Reagan, HW and Wjr years and GOP Congresses when it comes to bloated bureaucracies and budget deficits, either, is there?


Besides all the downsides of treating foodstuffs as fuels that this article brings to light, here are a few final related food facts I also thought worth sharing....
....The average American family wastes $1,200 - or about 500 pounds - of food each year. Add in restaurants and farms, and the total comes to $155billion (with a 'b') worth of food going into landfills every year (2)
....925 million people are hungry. Every day, almost 16,000 children die from hunger-related causes. That's one child every five seconds(3).

In the time it took you to read this far, 30 kids died from hunger.

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Sources
(1): http://abcnews.go.com/Politics/planned-parenthood-center-budget-shutdown-threat/story?id=13328750

(2): http://www.cbsnews.com/stories/2008/07/23/earlyshow/contributors/susankoeppen/main4285083.shtml#ixzz1QPOW0xhL

(3): http://www.bread.org/hunger/global/

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FEELING the need for an example of government policy run amok? Look no further than the box of cornflakes on your kitchen shelf. In its myriad corn-related interventions, Washington has managed simultaneously to help drive up food prices and add tens of billions of dollars to the deficit, while arguably increasing energy use and harming the environment.
Related
· Times Topic: Corn

Even in a crowd of rising food and commodity costs, corn stands out, its price having doubled in less than a year to a record $7.87 per bushel in early June. Booming global demand has overtaken stagnant supply.

But rather than ameliorate the problem, the government has exacerbated it, reducing food supply to a hungry world. Thanks to Washington, 4 of every 10 ears of corn grown in America — the source of 40 percent of the world’s production — are shunted into ethanol, a gasoline substitute that imperceptibly nicks our energy problem. Larded onto that are $11 billion a year of government subsidies to the corn complex.

Corn is hardly some minor agricultural product for breakfast cereal. It’s America’s largest crop, dwarfing wheat and soybeans. A small portion of production goes for human consumption; about 40 percent feeds cows, pigs, turkeys and chickens. Diverting 40 percent to ethanol has disagreeable consequences for food. In just a year, the price of bacon has soared by 24 percent.

To some, the contours of the ethanol story may be familiar. Almost since Iowa — our biggest corn-producing state — grabbed the lead position in the presidential sweepstakes four decades ago, support for the biofuel has been nearly a prerequisite for politicians seeking the presidency.

Those hopefuls have seen no need for a foolish consistency. John McCain and John Kerry were against ethanol subsidies, then as candidates were for them. Having lost the presidency, Mr. McCain is now against them again. Al Gore was for ethanol before he was against it. This time, one hopeful is experimenting with counter-programming: as governor of corn-producing Minnesota, Tim Pawlenty pushed for subsidies before he embraced a “straight talk” strategy.

Eating up just a tenth of the corn crop as recently as 2004, ethanol was turbocharged by legislation in 2005 and 2007 that set specific requirements for its use in gasoline, mandating steep rises from year to year. Yet another government bureaucracy was born to enforce the quotas.

To ease the pain, Congress threw in a 45-cents-a-gallon subsidy ($6 billion a year); to add another layer of protection, it imposed a tariff on imported ethanol of 54 cents a gallon. That successfully shut off cheap imports, produced more efficiently from sugar cane, principally from Brazil.

Here is perhaps the most incredible part: Because of the subsidy, ethanol became cheaper than gasoline, and so we sent 397 million gallons of ethanol overseas last year. America is simultaneously importing costly foreign oil and subsidizing the export of its equivalent.

That’s not all. Ethanol packs less punch than gasoline and uses considerable energy in its production process. All told, each gallon of gasoline that is displaced costs the Treasury $1.78 in subsidies and lost tax revenue.

Nor does ethanol live up to its environmental promises. The Congressional Budget Office found that reducing carbon dioxide emissions by using ethanol costs at least $750 per ton of carbon dioxide, wildly more than other methods. What is more, making corn ethanol consumes vast quantities of water and increases smog.

Then there’s energy efficiency. Studies reach widely varying conclusions on that issue. While some show a small saving in fossil fuels, others calculate that ethanol consumes more energy than it produces.

Corn growers and other farmers have long exercised outsize influence, thanks in part to the Senate’s structural tilt toward rural states. The ethanol giveaway represents a 21st-century add-on to a dizzying patchwork of programs for farmers. Under one, corn growers receive “direct payments” — $1.75 billion in 2010 — whether they grow corn or not. Washington also subsidizes crop insurance, at a cost of another $1.75 billion last year. That may have made sense when low corn prices made farming a marginal business, but no longer.

At long last, the enormity of the nation’s budget deficit has added momentum to the forces of reason. While only a symbolic move, the Senate recently voted 73 to 27 to end ethanol subsidies. That alone helped push corn prices down to $7 per bushel. Incredibly, the White House criticized the action — could key farm states have been on the minds of the president’s advisers?

Even farm advocates like former Agriculture Secretary Dan Glickman agree that the situation must be fixed. Reports filtering out of the budget talks currently under way suggest that agriculture subsidies sit prominently on the chopping block. The time is ripe.

Steven Rattner was formerly counselor to the secretary of the Treasury and lead auto adviser. He has spent nearly 30 years on Wall Street as an investor and investment banker and is a contributing writer to Op-Ed.