Our Retirement System Is Broken And It’s Time For Reform

On February 28, 2016, Senator Jeft Merkley writes:

The retirement crisis is staring us in the face. Most Americans don’t have nearly enough saved for retirement. Many have nothing at all.

Today, I’m introducing a proposal in the U.S. Senate to make sure every American worker can have a nest egg. Under our plan, workers who don’t have access to an employer-sponsored retirement savings program would have voluntary, automatic access to a top-notch savings system modeled on the plan available to federal employees.

Here is how it would work: The money comes right out of your paycheck before taxes and can be invested in a small number of highly diversified funds at very low cost. You even have the option of picking a fund that automatically adjusts based on your age so that your money has a chance to grow faster when you’re young, while rolling into safer investments as you near retirement.

If you switch jobs, or work multiple jobs, your account will follow you.  And you could change the amount you save, or choose not to save, at any time. If employers wanted to match their employees’ savings, as many currently do, they would have that option. Or they could offer their own retirement benefit under current law.

Modernizing our retirement system means strengthening and expanding Social Security, replacing the cost of living formula with one that reflects the true costs facing seniors, and making sure every worker has automatic access to a high quality, low-cost, user-friendly retirement savings plan. Our plan takes us in the right direction.


I’ve said it before and I’ll say it again: It’s great to be unemployed and retired if you can afford it!

So far the attempts to address the fact that Americans are not saving enough for retirement do not address the REAL cause. And the proposals put forth fall far shot by “trillions” of dollars.

The plain truth is that more than four in five older Americans expect to keep working during their latter years, a sign that traditional retirement is out of reach for vast swaths of society. According to a new survey poll conducted by the Associated Press-NORC Center for Public Affairs Research, among Americans ages 50 and older who currently have jobs, 82 percent expect to work in some form during retirement.

In other words, “retirement” is increasingly becoming a misnomer.

For those who have been dependent on employment and/or welfare, the problem is that financially sustainable retirement is and will no longer be a reality. Even with Social Security, which is funded through payroll taxes called the Federal Insurance Contributions Act tax (FICA) and/or Self Employed Contributions Act Tax, (SECA), one must have had a job to be eligible for the entitlement––and the amount of Social Security is based on the income level generated from one’s employment record of payroll tax contributions.

Employer-provided pensions continue to decrease and personal savings is not the norm among the vast majority of American households who must spend virtually every earned dollar on living expenses, and incur consumer debt to secure automobiles and housing, as well as other consumption. While increasingly individuals are finding it necessary to continue working in retirement to supplement their income, most older Americans discontinue full-time career work and struggle to meet obligations with minimum-pay part- and full-time jobs. A proportion of retirees also receive income from welfare programs, such as Supplemental Security Income and other life-support services funded through tax extraction and government debt.

This perspective should serve as the “reality” from which to explore prospects for effectively dealing with eroding retirement security.

Proposals that have received national media attention offer lifetime income security funded out of current savings, meaning further reductions in consumption out of already inadequate incomes. They also aggregates everything into a “private sector” institution that is custom designed to be “too big too fail.”

Such proposals will not succeed in providing any real, substantial retirement security for the majority of Americans whose jobs do not earn more than substance week-to-week and month-to-month wages. The proposals are designed to encourage Americans to save for retirement and require personal savings and denial of consumption. This is unrealistic given that the Americans with the least opportunity must reduce what is inadequate consumption income in order to accumulate savings for retirement, which for most Americans will be inadequate.

Does anyone really believe that the interest rate to be paid under the proposed programs advocated will be sufficient and able to avert the decline in the value of the money as the government continues to flood the economy with increasingly non-asset-based debt?

The proposals rely on the requirement to reduce consumption in the economy at a time when what is needed is expansion of the economy supported by increased consumption.

As my colleague Michael Greaney at the Center for Economic and Social Justice (www.cesj.org) states, “under the prevailing Keynesian paradigm, of course, ‘saving’ is always defined as the excess of income over consumption. If you want to save, then, the iron assumption of Keynesian economics is that you must consume less.”

The American consumer is being put into an impossible situation of being asked to consume more to drive the economy and reduce saving, and at the same time are being told they must reduce consumption dramatically in order to accumulate sufficient savings for retirement.

Of course, the whole problem would go away if we financed both retirement and wealth-creating, income-producing physical productive capital needs out of “future savings,” thereby increasing the capacity to consume and support the economy while simultaneously building financial security for every American citizen.

A far better and productive approach would be to create a new way for working and non-working Americans to start their own retirement savings: MyCHA. CHA stands for Capital Homestead Account. It would be a super-IRA or asset tax shelter for citizens. The Treasury should start creating an asset-backed currency that will enable every child, woman and man to establish a CHA at their local bank to acquire a growing dividend-bearing stock portfolio comprised of newly-issued stock representative of viable American growth corporations to supplement their incomes from work and all other sources of income.

We can create new asset-backed money for investment through the existing but dormant Section 13(2) rediscount mechanism of each of the 12 regional Federal Reserve banks that would be backed by “future savings” (that is, future profits from higher levels of marketable goods, products, and services).

The CHA would function as a savings and income account that effectively would build a nest egg over time, using interest-free, insured capital credit loans. A CHA would be offered to EVERY American, whether employed or not. Of course, those employed may also have additional opportunities to acquire personal ownership in their companies using an Employee Stock Ownership Plan (ESOP) trust financial mechanism.

The CHA would process an equal allocation of productive credit to EVERY citizen exclusively for purchasing full-dividend payout shares in companies needing funds for growing the economy and private sector jobs for local, national and global markets. The shares would be purchased on credit wholly backed by projected “future savings” in the form of new productive capital assets as well as the future marketable products and services produced by the newly added technology, renewable energy systems, plant, rentable space and infrastructure added to the economy. Risk of default on each stock acquisition interest-free loan would be covered by private sector capital credit risk insurance and reinsurance, but would not require citizens to reduce their funds for consumption to purchase shares. There would be no prerequisite requirement to qualify for an annual set capital credit loan other than American citizenship.

This idea to stimulate economic growth and provide retirement security for EVERY American is based on the premise that what is needed is for the system to facilitate spreading the ownership of productive capital more broadly as the economy grows with full payout of dividend earnings, without taking anything away from the 1 to 10 percent who now own 50 to 90 percent of the corporate productive capital wealth assets. In doing so, the ownership pie would desirably get much bigger and their percentage of the total ownership would decrease, as ownership gets broader and broader.

This would benefit the traditionally disenfranchised poor and working and middle class, who are propertyless in terms of owning productive capital assets. It would also result is tremendous economic growth, which would benefit everyone including the already wealthy ownership class, and create opportunities for real jobs, not make-work as an expanded economy is built that can support general affluence for EVERY American citizen. Thus, as productive capital income is distributed more broadly and the demand for products and services is distributed more broadly from the earnings of capital, the result would be the sustentation of consumer demand, which will promote economic growth. That also means that over time, EVERY child, woman and man could accumulate a diversified portfolio of wealth-creating, income-producing productive capital assets to provide economic security in retirement and not be dependent on having to work during retirement or rely on government-assisted welfare.

One might ask how we failed to grasp the significance of productive capital’s input and the necessity for broad private sector individual ownership? Unfortunately, ever since the 1946 passage of the Full Employment Act, economists and politicians formulating national economic policy have beguiled us into believing that economic power is democratically distributed if we have full employment––thus the political focus on job creation and redistribution of wealth rather than on full production and broader productive capital ownership accumulation. This is manifested in the belief that labor work is the ONLY way to participate in production and earn income. Yet, the wealthy ownership class knows that this notion is idiotic.

In real productive terms, productivity gains are the result of tectonic shifts in the technologies of production, which consequently eliminates the need for human labor, destroys jobs, and devalues the worth of labor.

One should ask what form would the structural reforms take. Employment in this new enlightened age would start at the time one enters the economic world as a labor worker, to become increasingly a productive capital owner, and at some point to retire as a labor worker and continue to participate in production and to earn income as a productive capital asset owner until the day you die. As a substitute for inheritance and gift taxes, a transfer tax would be imposed on the recipients whose asset holdings exceeded $1 million. This would encourage those owning concentrations of productive capital assets (effectively the 1 to 10 percent) to spread out their monopoly-sized estates to all members of their family, friends, servants and workers who helped create their fortunes, teachers, health workers, police, other public servants, military veterans, artists, the poor and the disabled.

Other stipulations for the structural reform would entail tax policy reform to incentivize corporations to pay out all profits to their owners as taxable personal incomes to avoid paying stiff corporate income taxes and to finance their growth by issuing new full-dividend payout shares for broad-based individualized employee and citizen ownership with full-voting rights.

We need to encourage the insurance industry to expand their product lines to market Capital Credit Insurance to cover the risk of default for banks making loans to Capital Homesteaders under the proposed Capital Homestead Act. Under the provisions of the Act, risk of default on each stock acquisition loan would be covered by private sector capital credit risk insurance and reinsurance issued by a new government agency (ala the Federal Housing Administration concept), but would not require citizens to reduce their funds for consumption to purchase shares.

The end result is that ALL American citizens would become empowered as owners to meet their own consumption needs and government would become more dependent on economically independent citizens, thus reversing our country’s trend where all citizens are becoming more dependent for their economic well-being on the “state,” our only legitimate social monopoly.

Implementing the Capital Homestead Act would significantly empower ALL Americans to accumulate over time a viable, diversified ownership portfolio in our nation’s growth companies and create a truly unique, global-leading just and environmentally responsible Ownership Society that fosters personalism, creativity and innovation. Embarking on a new path to prosperity, opportunity and economic justice will expand growth of our market economy in ways that democratize future ownership opportunities, while building a future economy that can support general affluence for EVERY American.

In conclusion, the conventional savings required––denial-of-consumption––programs would be completely unnecessary if we had Capital Homesteading. President Obama and other elected representatives should instead advocate for the passage of the Capital Homestead Act.

See two references to the proposed Capital Homestead Act at http://www.cesj.org/homestead/index.htm and http://www.cesj.org/homestead/summary-cha.htm.

For more on how to accomplish such structural reform, see  “Financing Economic Growth With ‘FUTURE SAVINGS’: Solutions To Protect America From Economic Decline” at NationOfChange.org http://www.nationofchange.org/financing-future-economic-growth-future-savings-solutions-protect-america-economic-decline-137450624 and “The Income Solution To Slow Private Sector Job Growth” at http://www.nationofchange.org/income-solution-slow-private-sector-job-growth-1378041490

Capitalism Will Eat Democracy – Unless We Speak Up

Have you wondered why politicians aren’t what they used to be, why governments seem unable to solve real problems? Economist Yanis Varoufakis, the former Minister of Finance for Greece, says that it’s because you can be in politics today but not be in power — because real power now belongs to those who control the economy. He believes that the mega-rich and corporations are cannibalizing the political sphere, causing financial crisis. In this talk, hear his dream for a world in which capital and labor no longer struggle against each other, “one that is simultaneously libertarian, Marxist and Keynesian.”

What Yanis Varoufakis envisions is a world in which the economic-political system is reformed so that the end result is that citizens would become empowered as owners of non-human physical productive capital to meet their own consumption needs and government would become more dependent on economically independent citizens, thus reversing current global trends where all citizens will eventually become dependent for their economic well-being on the State and whatever elite controls the coercive powers of government. This is what the agenda of the JUST Third Way is all about. See the Agenda of The Just Third Way Movement at http://foreconomicjustice.org/?p=5797, http://www.cesj.org/resources/articles-index/the-just-third-way-basic-principles-of-economic-and-social-justice-by-norman-g-kurland/, http://www.cesj.org/wp-content/uploads/2014/02/jtw-graphicoverview-2013.pdf and http://www.cesj.org/resources/articles-index/the-just-third-way-a-new-vision-for-providing-hope-justice-and-economic-empowerment/.

The Trans-Pacific Partnership Fraud

The TPP, offering modest quantifiable benefits from trade liberalization, is really the thin edge of a wedge package which will fundamentally undermine the public interest.

On January 27, 2016, Jomo Kwame Sundaram writes on Nation Of Change:

The Trans Pacific Partnership Agreement (TPPA), negotiated in Atlanta in October 2015 and to be signed in Auckland in February 2016, privileges foreign investors while imposing substantial costs on partner countries. Touted as a ‘gold standard’ 21st-century trade deal, it is critical to ascertain what gains can really be expected and whether these exceed costs.

Modest trade gains
Mainly using methodologically-moot computable general equilibrium (CGE) models, all studies so far project modest direct economic growth gains from TPP trade liberalization. Actual net gains may be even more modest, if not negative, as many assumptions in projection exercises are not in the final trade deal.

To make the case for the TPP, some studies looked for benefits elsewhere, mainly from supposedly projected investment boosts, while ignoring costs or presenting them as benefits. The most widely cited study was issued in 2014 by the well-known US globalization cheerleader, the Peterson Institute of International Economics.

Wide-ranging expected TPP provisions were fed into the economic models as simple cost reductions, with no consideration given to downside risks and costs, e.g. due to reductions in national regulatory autonomy resulting from the TPP. As such, costs are not included, they do not provide a real cost-benefit assessment.

By excluding crucial costs, TPP advocates exaggerate projected trade benefits by claiming dubious gains. For example, they view provisions to extend intellectual property rights (IPRs) as cost reductions that will increase the trade in services.

Provisions allowing foreign investors to sue governments in private tribunals or undermining national bank regulation, are seen as trade-promoting cost reductions, ignoring the costs and risks of side-lining national regulation.

The study claimed huge benefits by assuming that the TPP will catalyse large exports by lowering the fixed costs of entering foreign markets. Although the huge gains claimed to have no analytical basis, it assumed that half the impact of the TPP would be from cutting fixed trading costs.

If the modelling used conventional methods for estimating gains from trade, the results would have been much more modest, as per the only US government study of TPP impacts.

Fantastic foreign investment effects
The remaining benefits projected by the Peterson Institute study are mainly from a foreign direct investment (FDI) boom. It arbitrarily assumed that every dollar of FDI within the TPP bloc would generate additional annual income of 33 cents, divided equally between source and host countries without any economic theory, modelling procedure or empirical evidence for this supposition.

Paltry gains
Thus, the study greatly overstates the benefits to be derived from the TPP. While most of its claims lack justification, the only quantified benefits consistent with mainstream economic theory and evidence, are tariff-related benefits that make up an unknown but very small share of the projected gains.

The gains are much smaller than claimed by the TTP governments citing them. Less than a quarter of overall gains claimed can be considered seriously. Even these need to be compared against costs conveniently ignored by the study as well as actual details of the final deal. Needless to say, ostensible country gains calculated similarly need to be discounted for the same reason.

Even unadjusted, the gains are small relative to the GDPs of TPP partner economies. Also, while projected trade benefits will take a decade to realize, the major risks and costs will be more immediate. They represent one-time gains, and have no recurring annual benefit, i.e. they do not raise the economies’ growth rates.

The distribution of benefits has not been sufficiently analysed in these exercises; if they mainly go to a few big businesses, with losses borne by others, the TPP would exacerbate inequality.

Net gain or loss?
The TPP goes much further into how governments operate than needed to facilitate trade. Such ‘disciplines’ significantly constrain the policy space needed for countries to accelerate economic development and to protect the public interest.

The modest benefits projected make it crucial to consider the nature and scale of costs currently ignored by all available modelling exercises. The TPP will impose direct costs, e.g. by extending IPRs and by blocking or delaying generic production and imports.

The TPPA’s investor-state dispute settlement (ISDS) provisions will enable foreign investors to sue a government in an offshore tribunal if they claim that new regulations reduce their expected future profits, even when such regulations are in the public interest. As private insurance is already available for this purpose, ISDS provisions are completely unnecessary.

Jagdish Bhagwati, a leading advocate of free trade and trade liberalization, along with others, have sharply criticized the inclusion of such non-trade provisions in ostensible free trade agreements. Instead of being the regional free trade agreement it is often portrayed as, the TPP seems to be “a managed trade regime that puts corporate interests first”.

The TPP, offering modest quantifiable benefits from trade liberalization, is really the thin edge of a wedge package which will fundamentally undermine the public interest. Net gains for TPP partners seem doubtful at this stage.

Only a complete and proper accounting based on the full text can settle this key question. The TPP has, in fact already been used to try to kill the Doha ‘Development’ Round of multilateral trade talks, but may well also undermine multilateralism more broadly in the near future.


Switzerland Needs More Robots To Keep Costs Down, ABB CEO Says

On January 27, 2016, Alice Baghdjian writes on Bloomberg News:

Faced with some of the highest labor costs in the world in its home market, Switzerland’s ABB Ltd. expects companies to increasingly invest in automation and robots.

The engineering company based in Zurich is betting on growing demand for digital technology that can improve production efficiency. Swiss manufacturers in particular are struggling with higher costs due to a strengthening of the local currency over the past year after the Swiss National Bank removed a cap on the franc.

“The only way for Switzerland to stay competitive in the global market in the long-term is to invest significantly in automation, to make sure we have a high level of productivity despite high labor costs,” ABB Chief Executive Officer Ulrich Spiesshofer said in a telephone interview. “The removal of the cap on the Swiss franc by the central bank has also triggered more interest from Swiss companies in automation and robotics.”

ABB, Japan’s Fanuc Corp. and Germany’s Kuka AG are the biggest robot makers in the world and would stand to benefit from what is being called the fourth industrial revolution, or Industry 4.0, when factories are further automated. The market for industrial robots and services was worth about $32 billion in 2014 with sales expanding by about 15 percent annually, according to the International Federation of Robotics.

ABB is developing machines that do everything from reducing maintenance by monitoring their own health to industrial robots programmed by moving their arms rather than by coding, executives said.

The company’s two-armed YuMi robot, which costs about $40,000, is aimed at electronics manufacturers and can be used to assemble small components in watches and tablets. ABB expects users will soon not only be setting annual productivity goals for human employees, but also for their robots.

“With people, we assume their productivity should increase every year and soon the same will apply to robots as well,” Chief Technology Officer Bazmi Husain said in a separate interview last week in Davos. “Intelligence within a machine will lead to more productivity gains.”

ABB’s spending on research and development was at an all time high of four percent of revenue last year compared with 3.4 percent five years earlier. The company also has a goal of expanding its venture capital arm to invest in cutting edge technology.

“We are close to 4 percent of turnover and that’s about right,” Spiesshofer said. The company is aiming to save $1 billion in administration costs by the end of 2017 and some of the proceeds will go into R&D, he said.

To contact the reporter on this story: Alice Baghdjian in Zurich at abaghdjian@bloomberg.net To contact the editors responsible for this story: Tara Patel at tpatel2@bloomberg.net John Bowker


Just 62 People Now Own The Same Wealth As Half The World's Population, Research Finds

Colombia had the highest level of income inequalitySlums in Colombia, one of the world’s most unequal countries Rex features

On January 17, 2016, Jon Stone writes on the Independent:

Wealth inequality has grown to the stage where 62 of the world’s richest people own as much as the poorest half of humanity combined, according to a new report.

The research, conducted by the charity Oxfam, found that the wealth of the poorest half of the world’s population – 3.6 billion people – has fallen by 41 per cent, or a trillion US dollars, since 2010.

While this group has become poorer, the wealth of the richest 62 people on the planet has increased by more than half a trillion dollars to $1.76 trillion.

The report, “An Economy for the 1%”, says the gap between the global richest and the global poorest has widened in just the last 12 months.

In 2011 388 people had the same wealth as the poorest half of humanity. In 2011 this fell to 177. The number has continued to fall each year to 80 in 2014 and 62 in 2015.

The research was released days ahead of the annual gathering of the world’s elite in Davos for the World Economic Forum 2016.

Oxfam GB chief executive Mark Goldring said a crackdown on global tax havens was a necessary step towards ending the rampant global inequality.

“It is simply unacceptable that the poorest half of the world population owns no more than a small group of the global super-rich – so few, you could fit them all on a single coach,” he said.


“World leaders’ concern about the escalating inequality crisis has so far not translated into concrete action to ensure that those at the bottom get their fair share of economic growth. In a world where one in nine people go to bed hungry every night we cannot afford to carry on giving the richest an ever bigger slice of the cake.

“We need to end the era of tax havens which has allowed rich individuals and multinational companies to avoid their responsibilities to society by hiding ever increasing amounts of money offshore.

“Tackling the veil of secrecy surrounding the UK’s network of tax havens would be a big step towards ending extreme inequality. Three years after he made his promise to make tax dodgers ‘wake up and smell the coffee’, it is time for David Cameron to deliver.”

In November the Public Accounts Committee of MPs warned that HMRC had made “little or no progress” on measures to reveal the scale of aggressive tax avoidance happening in Britain.


In addition, last year the Office for Budget Responsibility announced that George Osborne’s tax avoidance crackdown had missed its target by hundreds of millions of pounds.

But the report’s authors say the situation could be even worse in the world’s poorest countries. The researchers estimate that as much as 30 per cent of African financial wealth is held offshore, costing the governments of countries in the region $14 billion US dollars each year.

That money, if collected, might otherwise be destined for the world’s poorest.


$250,000 A Year Is Not Middle Class

On December 28, 2015, Bryce Covert writes in The New York Times:

HILLARY CLINTON has vowed not to raise taxes on the middle class.

It’s a pledge that has worked well for others on the campaign trail before her, a resonant assurance to voters who saw themselves as middle class or aspired to be. But it’s a bad promise.

Mrs. Clinton is using a definition of middle class that has long been popular among Democratic policy makers, from her husband to Barack Obama when he was a candidate: any household that makes $250,000 or less a year. Yet this definition is completely out of touch with reality. It also boxes her in.

The most recent Census Bureau data showed that median household income — what people in the exact middle of the American spectrum earn — is $53,657.

Those families who make $250,000 a year, on the other hand, belong to an elite group: Americans who earn enough to be in the highest 5 percent of the income distribution. That top stratum captures anyone who makes $206,568 or more — not everyone in the so-called middle class that Mrs. Clinton says she is dedicated to protecting, but too large a chunk of it.


People waited in line at the post office to file their taxes before the April 15 deadline.CreditSpencer Platt/Getty Images

This doesn’t matter just because the math is so off. In an era of deepening income inequality, those people in the top 5 percent who are being classified as middle class are pulling further away from the rest of us. Americans at the bottom or in the middle have experienced five years of falling or stagnating income; those in the top 5 percent have generally seen their incomes increase. Between 1967 and 2014, median household income went up by $9,400 while those 5 percenters are now making $88,800 more, all adjusted for inflation.

A policy response should give those who are sliding backward a hand up, most likely funded by the people who are doing so well. But under Mrs. Clinton’s pledge, some of the well off won’t be called on to help out, and are in fact lumped in for receiving a boost. (I should note that my spouse works on the technology team for the Clinton campaign, but is not involved in policy.)

Mrs. Clinton’s pledge also blocks her from backing policies that would almost certainly benefit middle-class Americans, even if it raised their taxes slightly.

Take paid family leave. As things stand, Americans are not legally guaranteed any pay when they take time away from work for the arrival of a new baby or to care for a sick family member. According to a 2012 survey, about a third of people who get no or partial pay when they take time off for a new child end up doing things like borrowing money, dipping into savings or putting off paying bills. Fifteen percent enroll in public benefits.

Senator Bernie Sanders also wants to help the middle class, but he wants to do it in a way that could mean raising its taxes, even if he promises that most of an increased burden will fall on the wealthy. This has made him a target of the Clinton camp, which is telling voters that Mrs. Clinton is the only candidate pledging to shield the middle class.

Mr. Sanders, as well as Martin O’Malley, who is also running for the Democratic nomination, have avoided any pledge against middle-class tax increases. The paid family leave program both support is designed as social insurance much like Social Security, funded by a 0.2 percent payroll tax increase.

Bernie Sanders’ Election Would Mean The End Of ‘Too Big To Fail’ On Wall Street

Bernie Sanders at New York Town Hall, January 5.

Bernie Sanders at New York Town Hall, January 5.

On January 18, 2016, Larry Cohen writes on Progressive Democrats of America:

Why have the power players of the Democratic Party allowed this to continue?

On January 5 at Town Hall in New York City, Bernie Sanders delivered a major policy speech in which he declared that he will “break up any banks that are too big to fail and that big bankers will not be too big to jail.”

His speech and the audience reaction almost seemed like an alternate ending to Adam McKay’s new blockbuster film on the 2007-08 financial meltdown, The Big Short. After watching the movie’s portrayal of how Wall Street’s greed and recklessness led to our economy’s collapse, it’s hard to argue against Sanders’ demands to increase taxes on the billionaires and break up the banks, and use the revenue to fund better health care and education.

Sanders advocates a modern Glass-Steagall Act (the first one was repealed by President Bill Clinton, who in 1999 called the act “no longer appropriate”) that would separate commercial and investment banking, and thereby separate home mortgage banking from speculation involving derivatives of those same mortgages. When you add in Sanders’ demands to end Super PAC campaign funding and his own refusal to accept Wall Street funds in the current campaign, we are presented with a sharp contrast to Hillary Clinton, who opposes reinstating Glass-Steagall and has taken upwards of $6 million from Wall Street supporters.

In the last 50 years the financial sector’s share of our GDP has almost quadrupled. The Big Short illustrates how Wall Street keeps up that growth with little increase in real value but lots of high salaries and high living for bankers. As the film concludes, viewers realize we haven’t done much to change the financial sector’s rules since the crisis. Once Fed chair Ben Bernanke and Treasury let Bear Stearns fail and Lehman Brothers go bankrupt, they bailed out the rest and the culture of self-interested high living returned. Whether the next financial bubble is around housing or something else, the result is likely to be the same as in 2008.

Why have the power players of the Democratic Party allowed this to continue? Why have establishment Democrats proven so enamored with free markets and addicted to the political contributions from financial high rollers that they rushed to embrace Hillary Clinton with no real demands for progressive positions on finance or much of anything else?

We learned in 2008 that the words uttered during a primary campaign bear little resemblance to presidential policies. For example, candidate Barack Obama’s promises to rewrite NAFTA never came to fruition, leading instead to the Trans-Pacific Partnership, that if adopted would do little for workers rights in any nation, U.S. jobs or living standards, or to provide environmental standards beyond improved fishing practices. Today, we get words from the Clinton campaign but no clarity on breaking up the banks that are too big to fail or real separation of commercial and investment banking.

Laying out the destructive consequences of deregulated finance, The Big Short implicitly encourages the audience to support major reforms of our financial structures—the kind of reforms Sanders argues for. Viewers identify with the working-class family that loses its home, despite having diligently paid the rent each month, because the landlord fell behind when his adjustable rate mortgage shot up. We even identify with those who foresaw the system’s collapse, bet against the investment banks and sold their leveraged mortgage debt “short.” Those investors profited hugely from widespread misery, but at least they acknowledged it.

The answer to such financial disaster is not a repeat of a Bill Clinton presidency, all but guaranteed to produce a new crop of short sellers who profit once again and bankers riding the bubble. The answer is a “political revolution,” as Bernie calls it—not just for a political democracy with voting rights in and money out, but also a financial revolution that breaks up the banks, separates commercial, consumer and investment banking, and slams shut the revolving door between Wall Street, government regulators and White House officials.

As Bernie says, “Enough is enough.” We can still dream of an America where making things and providing real services is at the heart of what we do. We can dream of an America where Wall Street’s easy money doesn’t lure away young college graduates from teaching or healthcare.

As we begin 2016, let’s commit to real change. Bernie Sanders has challenged us to join him in a political revolution that goes far beyond the presidency. Let’s take him up on it. After all, if we won’t, who will?



A World Divided – Elites Descend On Swiss Alps Amid Rising Inequality

The Swiss mountain resort of Davos is seen in this January 16, 2012 file photo. REUTERS/Arnd Wiegmann/Files
The Swiss mountain resort of Davos is seen in this January 16, 2012 file photo. REUTERS/Arnd Wiegmann/Files

On January 18, 2016, Ben Hirschler and Noah Barkin write on Reuters International:

Politicians and business leaders gathering in the Swiss Alps this week face an increasingly divided world, with the poor falling further behind the super-rich and political fissures in the United States, Europe and the Middle East running deeper than at any time in decades.

Just 62 people, 53 of them men, own as much wealth as the poorest half of the entire world population and the richest 1 percent own more than the other 99 percent put together, anti-poverty charity Oxfam said on Monday.

Significantly, the wealth gap is widening faster than anyone anticipated, with the 1 percent overtaking the rest one year earlier than Oxfam had predicted only a year ago.

Rising inequality and a widening trust gap between people and their political leaders are big challenges for the global elite as they converge on Davos for the annual World Economic Forum, which runs from Jan. 20 to 23.

But the divisions go far beyond those that exist between the haves and have-nots. In the Middle East, the divide between Shi’ites and Sunnis has reached crisis point, with Iran and Saudi Arabia jostling openly for influence in a region reeling from war and the barbarism of Islamic extremists.

The conflicts there have spilled over into Europe, causing deep ideological rifts over how to handle the worst refugee crisis since World War Two and – with Britain threatening to leave the European Union – raising doubts about the future of Europe’s six-decade push towards ever closer integration.

The shock emergence of Donald Trump as the front-runner for the Republican presidential nomination has exposed a gaping political divide in the United States, stirring anxiety among Washington’s allies at a time of global turmoil.

Among the key figures in Davos, will be U.S. Vice President Joe Biden, Secretary of State John Kerry, Israeli Prime Minister Benjamin Netanyahu and the foreign ministers of both Iran and Saudi Arabia.

Canada’s new Prime Minister Justin Trudeau will be on hand, as will Britain’s David Cameron and Mario Draghi at a time when a new transatlantic monetary policy divide is opening up between his loosening European Central Bank and a tightening U.S. Federal Reserve.

Celebrities will also be out in force, including film stars Leonardo Di Caprio and Kevin Spacey.


Edelman’s annual “Trust Barometer” survey shows a record gap this year in trust between the informed publics and mass populations in many countries, driven by income inequality and divergent expectations of the future. The gap is the largest in the United States, followed by the UK, France and India.

“The consequence of this is populism – exemplified by Trump and Le Pen,” Richard Edelman, president and CEO of Edelman, told Reuters, referring to French far-right leader Marine Le Pen, whose National Front has surged ahead of traditional parties in opinion polls.

The next wave of technological innovation, dubbed the fourth industrial revolution and a focus of the Davos meeting, threatens further social upheaval as many traditional jobs are lost to robots.

The Oxfam report suggests that global inequality has reached levels not seen in over a century.

Last year, the organisation has calculated, 62 individuals had the same wealth as 3.5 billion people, or the bottom half of humanity. The wealth of those 62 people has risen 44 percent, or more than half a trillion dollars, over the past five years, while the wealth of the bottom half has fallen by over a trillion.

“Far from trickling down, income and wealth are instead being sucked upwards at an alarming rate,” the report says.

It points to a “global spider’s web” of tax havens that ensures wealth stays out of reach of ordinary citizens and governments, citing a recent estimate that $7.6 trillion of individual wealth – more than the combined economies of Germany and the UK – is currently held offshore.

“It’s a major wake-up call,” said Jyrki Raina, general secretary of IndustriALL Global Union, which represents 50 million workers in 140 countries in the mining, energy and manufacturing sectors. “Inequality is one of the biggest threats to economic well-being and it needs to be addressed.”

U.S. President Barack Obama touched on the issue in his recent State of the Union address, noting that technological change was reshaping the planet.

“It’s change that can broaden opportunity, or widen inequality. And whether we like it or not, the pace of this change will only accelerate,” he said.

“Companies in a global economy can locate anywhere, and face tougher competition…As a result, workers have less leverage for a raise. Companies have less loyalty to their communities. And more and more wealth and income is concentrated at the very top.”


The key operative word to understanding the problem is OWN. With just “62” individuals OWING as much wealth as the poorest half of the entire world population and the richest 1 percent OWNING more than the other 99 percent put together. Wealth in this context is the productive capital assets that form any economy’s non-human physical capabilities to produce products and services.

Real Tax Reform Policies That Sen. Sanders Has Proposed

From the Bernie Sanders Campaign, January 2016:

At a time of massive wealth and income inequality, we need a progressive tax system in this country that is based on the ability to pay. It is unacceptable that major corporations have paid nothing in federal income taxes, and that corporate CEOs in this country often enjoy an effective tax rate that is lower than their secretaries.

Real tax reform means Wall Street, the wealthy and large corporation pay their fair share.

Today, we lose over $100 billion a year in revenue because the wealthy stash their cash in offshore tax havens around the world. That is unacceptable.

If we are serious about reforming the tax code and rebuilding the middle class, we have got to demand that the wealthiest Americans and largest corporations pay their fair share in taxes.

Sen. Sanders’ tax reform plan accomplishes that goal by closing loopholes that benefit the wealthy and well connected, making the tax code more progressive, and establishing a tax on Wall Street speculators whose greed, recklessness and illegal behavior nearly destroyed the economy seven years ago.


In 2010, the effective tax rate of large, profitable corporations in the U.S. was only 12.6 percent, not the 35 percent nominal tax Republicans and corporate tax lobbyists complain about.

In 1953, the corporate income tax accounted for 32 percent of all federal revenue. Today, despite record-breaking profits, corporate income taxes only bring in 11 percent of total federal revenue.

Even worse, several large corporations in recent years have exploited so many loopholes in the tax code that they have paid nothing in federal income taxes and have actually received tax rebates from the IRS.

For example, if you add up all of the taxes that General Electric, Boeing, and Verizon paid from 2008-2013 it adds up to less than zero. Amazingly, these three corporations actually received a tax rebate from the IRS of more than $4.1 billion over this six-year period, even though they made a combined profit of more than $102 billion. If your total federal income taxes over this period totaled more than $1, you paid more income taxes than three of the most profitable corporations in the U.S.

One of the major reasons for this tax avoidance is that corporations have been setting up thousands of shell corporations in the Cayman Islands and other offshore tax havens to avoid paying taxes in the U.S.

A recent report by the Congressional Research Service shows that each and every year, large corporations are avoiding $100 billion in U.S. taxes by stashing their profits in offshore tax havens.

This situation has become so absurd that one five-story office building in the Cayman Islands is the “home” to more than 18,000 corporations.

Click here to read an op-ed from Sen. Sanders on corporate tax dodging:


  • End the rule allowing American corporations to defer paying federal income taxes on profits of offshore subsidiaries.Under current law, U.S. corporations are allowed to defer or delay U.S. income taxes on overseas profits until this money is brought back into the United States. U.S. corporations are also provided foreign tax credits to offset the amount of taxes paid to other countries.

    This offshore tax scheme has provided two perverse incentives for American corporations. First, it motivates large companies to shift as much of their profits as possible overseas by setting up subsidiaries in the Cayman Islands and other tax haven countries. Second, it allows corporations to receive huge tax breaks for establishing manufacturing facilities in countries with very low or no corporate tax rates. Closing these tax loopholes would reduce the deficit and create jobs that millions of Americans need.

    Sen. Sanders would end these loopholes by requiring U.S. companies to pay taxes on all of their income by ending the deferral of foreign source income.

    Under Sanders’ plan, corporations would pay U.S. taxes on their offshore profits as they are earned. This legislation takes away the tax incentives for corporations to move jobs offshore or to shift profits offshore because the U.S. would tax their profits no matter where they are generated.

  • Prevent corporations from avoiding U.S. taxes by claiming to be a foreign company through the establishment of a post office box in a tax haven country.Sen. Sanders would prevent corporations that are American for all practical purposes from avoiding U.S. taxes by claiming to be a foreign company through the establishment of a post office box in a tax haven country.

    Specifically, a corporation could not claim to be from another country if their management and control operations are primarily located in the U.S.

  • Eliminate tax breaks for big oil, gas, and coal companies.Sen. Sanders would repeal dozens of loopholes and tax subsidies throughout the federal tax code that benefit oil, natural gas, and coal special interests, saving more than $130 billion over the next decade.
  • Prevent American companies from avoiding U.S. taxes by corporate inversions.Another way American companies avoid U.S. taxes is through corporate inversions. Under this practice, an American company acquires or merges with a much smaller foreign business and then claims that the newly merged company is a foreign one for tax purposes — even though the majority of the ownership is unchanged and little or no personnel or operations have actually moved offshore.

    Sen. Sanders would end this tax scam by treating corporations as American corporations for tax purposes when it is still majority owned by U.S. interests.

  • Close loopholes that allow U.S. corporations to artificially inflate or accelerate foreign tax credits.When U.S. corporations earn profits overseas, taxes paid to the foreign country are credited against U.S. tax liabilities. Under current rules and tax planning strategies, corporations are allowed to claim foreign tax credits for taxes paid on foreign income that is not subject to current U.S. tax. As a result, companies are able to use such credits to pay lower taxes on their U.S. taxable income than they would if it was all from U.S. sources – providing them with a competitive advantage over companies that invest in the United States.

    Sen. Sanders would reform current law to limit foreign tax credits to offset income only from the country in which it is earned.


The founders of our country declared their independence from what they viewed as a tyrannical aristocracy in England. More than two centuries later, today’s tyrannical aristocracy is no longer a foreign power. It’s an American billionaire class that has unprecedented economic and political influence over all of our lives.

Unless we reduce skyrocketing wealth and income inequality, the United States will be well on its way toward becoming an oligarchic form of society where almost all power rests with the billionaire class.

More than a century ago, President Theodore Roosevelt recognized the danger of massive wealth and income inequality and what it meant to the economic and political well-being of the country. In addition to busting up the big trusts of his time, he fought for the creation of a progressive estate tax to reduce the enormous concentration of wealth that existed during the Gilded Age.

“The absence of effective state, and, especially, national, restraint upon unfair money-getting has tended to create a small class of enormously wealthy and economically powerful men, whose chief object is to hold and increase their power,” the Republican president said. “The really big fortune, the swollen fortune, by the mere fact of its size acquires qualities which differentiate it in kind as well as in degree from what is passed by men of relatively small means. Therefore, I believe in … a graduated inheritance tax on big fortunes, properly safeguarded against evasion and increasing rapidly in amount with the size of the estate.”

Roosevelt spoke those words on Aug. 31, 1910. They are even more relevant today.

A progressive estate tax on multi-millionaires and billionaires is the fairest way to reduce wealth inequality, lower our $18 trillion national debt and raise the resources we need for investments in infrastructure, education and other neglected national priorities.


  • Make sure that the super-wealthy pay their fair share of taxes.The tax rate for the value of an estate above $3.5 million and below $10 million would be 40 percent. The tax rate on the value of estates above $10 million and below $50 million would be 50 percent, and the tax rate on the value of estates above $50 million would be 55 percent.
  • Include a billionaire’s surtax of 10 percent.This surtax on the value of estates worth more than $1 billion would currently apply to fewer than 550 of the wealthiest families in America worth more than $2.3 trillion.
  • Close estate tax loopholes that have allowed the wealthy to avoid billions in estate taxes.Some of the wealthiest Americans in this country have exploited loopholes in the tax code to avoid paying an estimated $100 billion in estate taxes since 2000.
  • Exempt the first $3.5 million of an estate from federal taxation ($7 million for couples), the same exemption that existed in 2009.Under this plan, 99.75 percent of Americans would not pay a penny in estate taxes.

    I agree with former Labor Secretary Robert Reich who wrote, in support of this legislation, that America “is creating an aristocracy of wealth populated by heirs who don’t have to work for a living yet have great influence over how the nation’s productive assets are deployed.” He is right in calling the proposal that I’ve laid out “a welcome step toward reversing this trend.”


One of the major reasons why the middle class is collapsing and the gap between the rich and everyone else is growing wider and wider is because of the greed, recklessness, and illegal behavior on Wall Street. Millions of Americans lost their homes, life savings, and ability to pay for college because Wall Street gamblers crashed the economy in 2008.

During the financial crisis, the taxpayers of this country provided Wall Street with the largest bailout in the history of this world — $700 billion from the Treasury Department and $16 trillion in total financial assistance from the Federal Reserve.

While Wall Street has fully recovered from the recession and, in many cases has never had it so good, the typical middle class family is earning less income today than it did 26 years ago and students are drowning in debt. It is time for Wall Street to pay society back for the tremendous damage it did to the middle class of this country.

As President, Sen. Sanders will fight for the creation of a tax on Wall Street to significantly reduce speculation and high frequency trading which nearly destroyed the economy seven years ago. Importantly, this initiative would also raise the revenue necessary to make public colleges and universities tuition free, create jobs, rebuild our crumbling infrastructure, protect our environment, and make other investments in our future.

This proposal would not tax investors, retirees, or parents saving to send their kids to college. Instead, it would impose a tax on Wall Street investment houses, hedge funds, and other speculators. If those Wall Street investment houses chose to pass the tax along to investors, this plan would provide a tax credit to individuals making under $50,000 and couples making under $75,000 to ensure that they would not be impacted.

Under the proposal, trades would be taxed at a rate of 0.5 percent for stocks, 0.1 percent for bonds, and 0.005 percent for derivatives. This means, for example, that a trade of $1,000 in stocks would be subject to a tax of $5. A trade of $1,000 in swaps or other derivatives would be subject to a tax of five cents.

Even at such low rates, the tax can provide a huge benefit by reducing one particular type of trading that does not benefit our economy: high-frequency trading that rewards technological schemes rather than investing in productive businesses. For example, some traders have focused their energy on obtaining information about trades a fraction of a second before others, sometimes by locating their computers physically closer to where trades are happening. These computers then rush to buy or sell before others can respond, turning what would otherwise be a ripple in the market into a tidal wave that destabilizes the financial system.

This Is Not a Radical Idea. There is considerable precedence for this. The U.S had a Wall Street speculation fee from 1914 to 1966. And, today some 40 countries throughout the world have imposed a financial transactions tax including Britain, Germany, France, Switzerland, China, India, South Korea, Hong Kong, Singapore, Taiwan, and Brazil.

More than 1,000 economists have endorsed a tax on financial speculation and 11 European countries have committed to enacting a financial transaction tax by January 2016. The idea is also supported by more than 170 organizations in the U.S., including the AFL-CIO, National Nurses United, the National Organization for Women, NETWORK, Oxfam America, Public Citizen, the Sierra Club and many others.


Right now, someone who earns $118,500 a year pays the same amount of money in Social Security taxes as a billionaire.  This makes no sense.

As President, Sen. Sanders will apply the Social Security payroll tax on all income above $250,000 to expand Social Security benefits and to ensure that Social Security remains solvent for the next 50 years. This plan would only impact the wealthiest 1.5 percent of wage earners; 98.5 percent of wage earners in the United States would not see their taxes go up by one dime under this plan.



A New Era Of Global Protest Begins


On January 15, 2016, Rajesh Makwana writes on Nation Of Change:

In line with the steady rise in social unrest over the past decade, it’s likely that we will witness an unprecedented escalation in large-scale citizen protests across the globe in 2016 and beyond.

Research by Dr. David Bailey provides empirical evidence for what many activists and campaigners have long suspected: that we have entered a prolonged period of dissent characterised by an escalation in the magnitude and diversity of public protest. The UK-based data clearly indicates that the catalyst for this upsurge in social unrest was the financial crisis of 2008, which continues to have a detrimental impact on economic security for the vast majority of citizens – even while the combined wealth of the richest 1% continues to soar.

“A revolutionary change is taking place in the global political landscape.”

Although many would regard 2011 as the year that mass civil disobedience peaked across the world (as exemplified by the emergence of Occupy and the Arab Spring, or ‘The Protestor’ being named person of the year by Time magazine) Dr. Bailey’s calculations show that 2015 was in fact the year that public mobilisations in the UK hit a record high. It’s not hard to see why protest activity is on an ascending trajectory, especially in light of government policies that continue to redistribute wealth upwards to an affluent minority. As opposition leader Jeremy Corbyn pointed out in response to the current direction of policymaking in the UK, “[this government is] slashing public services, especially at local level, for those who rely on them for security and a decent life. It is driving the NHS and social care into crisis, while accelerating the privatisation and break up of our health and education services.”

Unsurprisingly, most of the protests reviewed in Dr. Bailey’s research were austerity-related and convened in response to concerns around pay and working conditions in the public sector, cuts to social services, the privatization of essential services or the lack of affordable housing. More recent catalysts include climate change and the refugee crisis – pressing international issues that remain wholly unresolved and likely to cause further mobilisations in the period ahead. Indeed, with continuing economic stagnation, more austerity measures and growing levels of hunger and poverty anticipated in the coming months, there is every reason to believe that the scale of public disaffection and dissent in the UK will continue to escalate in 2016 and beyond.

Rising protest as a global trend

The evidence from the UK tallies closely with the situation in other countries, as well as the general perception that social discontent is on the rise across the globe. A spate of studies and meta-analysis in recent years depict how large-scale citizen mobilisations have been intensifying for more than a decade, reaching a new peak in the past five years. According to the conclusion of an extensive study examining the complexities of global protests, “The current surge of protests is more global than the wave that occurred during the late 1980s and early 1990s, reaches every region of the world, and affects the full range of political systems—authoritarian, semiauthoritarian, and democratic alike.”

“The peoples’ voice is likely to strengthen dramatically during 2016.”

But it’s not just the magnitude of protest that has been multiplying; the number of people engaged in public rallies is also rising. A study analysing 843 protests that occurred between 2006-13 in 87 countries concluded that 37 mobilisations attracted one million or more participants. For example, in 2013 around 100 million people marched against inequality and dire living standards in India, and 17 million citizens mobilised in Tahrir Square to oust Egypt’s President Morsi – possibly two of the largest demonstrations in history. Commentators also acknowledge the instrumental role that the internet and social media have played in engaging the population during Occupy-style campaigns, and that global communication networks have even facilitated the spread of protests across national borders. In terms of motivation, the evidence suggests that most protests take place in response to pressing socio-economic concerns, the violation of basic human rights or a lack of democratic governance. Put simply, the majority of protests constitute a demand for wealth and political power to be shared more equitably among citizens.

Skeptics might argue that citizen protests are unnecessarily disruptive and do more harm than good, or that they are ineffective at changing laws and regulations. However, the research demonstrates that this is not the case. Although some 63% of stipulations made by protestors between 2006-2013 were not met by their governments, many of these were for systemic reforms which can only be implemented progressively over time. Moreover, the influence that large-scale demonstrations have on public consciousness should not be underestimated – a point well-articulated in the film ‘We are Many’, which details how the anti-war marches that took place prior to the invasion of Iraq influenced Egyptian activists during the Arab Spring almost a decade later.

A new expression of democracy

It’s reasonable to conclude from a simple analysis of these trends that a revolutionary change is taking place in the global political landscape. As policymaking becomes increasingly subverted by powerful vested interests, the resulting democratic deficit is being filled by concerned citizens who are demanding that governments take heed of their collective demands. This signifies a fundamental shift in the relationship between citizens and the State, and heralds a new expression of democracy that is still in its infancy but already capable of shaping public opinion, influencing policy discussions and even toppling governments.

The peoples’ voice is likely to strengthen dramatically during 2016, especially in response to a deteriorating geopolitical, socio-economic and environmental situation that necessitates a far more effective form of intergovernmental cooperation than has yet been achieved. In response to this epochal challenge, perhaps citizens campaigning on separate issues or based in different countries will also begin to coalesce their activities more concretely around a common set of principles and global priorities, such as a united demand for governments to finally secure basic human rights universally. Without such expressions of international unity and solidarity among both policymakers and protesters, it is difficult to imagine how today’s converging crises can be addressed in a way that upholds the global common good.

The only certainty is that government ministers will invite further social unrest if they fail to act on the rising demand for real democracy and justice that is at the heart of the current wave of popular unrest. The way forward has long been clear to global activists and engaged citizens: curtail the power of elites and corporations, and ensure that governance systems truly serve the people and protect the biosphere. As a minimum – and in line with the growing demands of a disaffected majority – this necessitates a radical decentralisation of power and the redistribution of wealth and resources across the world as a whole.


President Obama stated: “What’s at stake is whether this will be a country where working people can earn enough to raise a family, build a modest savings, own a home, and secure their retirement.” As long as working people are limited by earning income solely through their labor worker wages, they will be left behind by the continued gravitation of economic bounty toward the top 1 percent of the people that the system is rigged to benefit. Working people and the middle class will continue to stagnate, resulting in a stagnated consumer economy. More troubling is that this continued stagnation will further dim the economic hopes of America’s youth, no matter what their education level. The result will have profound long-term consequences for the nation’s economic health and further limit equal earning opportunity and spread income inequality. As the need for labor decreases and the power and leverage of productive capital increases, the gap between labor workers and capital owners will increase, which will result in turmoil and upheaval, if not revolution. If we fail to reform the system to provide inclusive prosperity, inclusive opportunity and inclusive economic justice, as well as social justice, the result will be a society that may destroy itself through fear, hate and anger and the suffering that ensues.