Posts Tagged ‘Money Power’

People vs. money: the playing field is tilted

June 9, 2014

A labor union is a group of working people working together for a common purpose.   A corporation is a pool of money which has been combined for a common purpose.

In American history, going back to when Thomas Jefferson was Secretary of State and Alexander Hamilton was Secretary of the Treasury in George Washington’s cabinet. there have been two sources of power—people and money.

People power is irresistible when it has been mobilized, but people are prone to be apathetic and short-sighted.   Money power is constant.   It never is bored and never is blind to its own interests.  It is able to tilt the playing field.

Public opinion polls show that a majority of Americans want policies that are the opposite of what millionaires want, yet Washington officials and pundits accept the corporate agenda and treat those who represent public opinion as a lunatic fringe.

minimum_wage_onpageGovernment strictly regulates the internal workings of labor unions to make sure that they are operated honestly and democratically.   No such regulation applies to corporations.

Attorney-General Eric Holder has admitted that the Obama administration has not investigated financial fraud in the biggest banks and Wall Street investment firms because they are too important to the economy.   Imagine someone in the Kennedy administration saying this of Jimmy Hoffa and the Teamsters!

Right now a battle is going on for the rights of low-wage workers who frequently are, among other things, victims of wage theft.  Owners of fast-food restaurants commonly withhold pay for hours worked.  This is illegal.  Progressives are trying to put a stop to it.   Corporate executives are trying to change the laws to make it more difficult to sue.

The big problem for organized workers is that their immediate employer is not always the source of the problem.  Fast-food franchisees operate on extremely narrow profit margins, because of the conditions set by the franchising companies, and (arguably – I don’t really know) may not be able to afford to pay more than they do.  But the battle of the unions is with the franchisees, not with the real decision-maker.

Contract manufacturers in Asia operate under the same conditions.  Their profit margins, as set by their customers in North America and Europe, are so small that (arguably – I don’t really know) they may not be able to pay more than they do.   This is another way that the playing field is tilted against workers and their unions.

Another corporate abuse is the use of private equity to loot corporations at the expense of workers.  The basic idea of private equity is that investors buy out a company’s stockholders and operate it themselves.  In principle, there is nothing wrong with this, if they think they can manage the company better than the previous owners.   Sometimes they succeed in doing this, which is fine.

In practice, private equity investors frequently are looters.  The investors have the company pay themselves or their other companies big fees for management services, consulting services and other fees.  Typically they buy the company with borrowed money, so their own cost is small.  They sell off assets for a quick profit, lay off employees and pocket quick profits while leaving the company a mere shell.   Jimmy Hoffa would never have been allowed to get away with stuff like this.


What needs to be redistributed?

May 28, 2013

Norman-Rockwell-Freedom-of-Speech-1943The people in the upper 1 percent income bracket are getting richer, and most of the rest are falling behind or barely keeping even.  But I don’t think wealth or income as such need to be redistributed.  What this country needs is a redistribution of political and economic power.

I would like to see a world in which labor unions, producer cooperatives and consumer cooperatives are equal in power and status to business corporations, and labor unions, consumer and environmental associations and community organizations are equal in power to business assocaitions.

Then it would be possible to deal with issues of corporate governance, monopoly power, labor relations, election laws, government transparency, conflicts of interest and all the other systemic means by which a tiny elite can milk the system for their own benefit.

As Justice Oliver Wendell Holmes Jr. supposedly said, there can be no freedom of contract without equality of bargaining power.  If power is widely distributed, the distribution of wealth and income will take care of itself.

The political one percent of the one percent

February 18, 2012

Double click to enlarge.

Only about 1/100th of 1 percent of the U.S. population make political contributions of $10,000 or more in any election campaign, according to the Sunlight Foundation, but they account for nearly a quarter of the total.   The largest share of that came from FIRE (finance, insurance, real estate) sector.  FIRE contributions of $10,000 or more are up 700 percent since 1990.

The average contribution by a member of the 1 percent of the 1 percent was $28,913 in 2010, the Sunlight Foundation reported; that was more than the average American’s total income, which was $26,364.

These wealthy contributors are gatekeepers of the American political process.  Their contributions to political parties rose from 18 percent of all contributions in 1990 to 32 percent in 2010, with Democrats getting a slightly higher share than Republicans.   An increasing number of federal candidates get more than half their funds from the 1 percent of the 1 percent.

About 55 percent of the 1 percent of the 1 percent are affiliated with corporations, with Goldman Sachs leading the rest.   The Sunlight Foundation found another 16 percent affiliated with law firms and lobbyists, and 18 percent “ideological” contributors, who gave to organizations such as Emily’s List, the Club for Growth and Act Blue.

The 1 percent of the 1 percent comprises just under 27,000 people.  Within that group, there is an elite of 252 who contributed between $100,000 and $500,000 toward the 2010 elections, and 15 who contributed more than $500,000.

This elite group accounted for a majority of the contributions to Republican Presidential candidates’ PACS— Mitt Romney’s Restore Our Future, Rick Perry’s Make Us Great Again, Jon Huntsman’s Our Destiny PAC, Newt Gingrich’s Winning Our Future, Ron Paul’s Embrace Liberty and Rick Santorum’s Red, White and Blue Fund.

Click on The Political One Percent of the One Percent for the Sunlight Foundation’s full report.

Click on How the Finance, Insurance and Real Estate Sector Drove the Growth of the One Percent of the One Percent for the Sunlight Foundation’s follow-up report.

Click on Presidential Super PACS almost entirely funded by six-figure contributions for a report on the 2012 Republican candidates by Talking Points Memo.

Money power and people power

October 22, 2010

The big new factor in the current election is not the Tea Party rebellion from below.  It is the corporate money revolution from above.

The game of politics has long been stacked to the advantage of corporations and multi-millionaires, but their advantage has been raised to a new level. The right-wing majority on the U.S. Supreme Court in its Citizens United decision earlier this year unleashed corporations to spend money without limit and in secret.  They lost no time in taking advantage of this ruling.

The Washington Post reported earlier this month on how the flood of corporate money is affecting the 2010 election campaign:

Interest groups are spending five times as much on the 2010 congressional elections as they did on the last midterms, and they are more secretive than ever about where that money is coming from.

The $80 million spent so far by groups outside the Democratic and Republican parties dwarfs the $16 million spent at this point for the 2006 midterms. In that election, the vast majority of money – more than 90 percent – was disclosed along with donors’ identities. This year, that figure has fallen to less than half of the total …

The trends amount to a spending frenzy conducted largely in the shadows.  The bulk of the money is being spent by conservatives, who have swamped their Democratic-aligned competition by 7 to 1 in recent weeks. …

Conservative groups such as Americans for Job Security and Crossroads GPS, an arm of the American Crossroads group, co-founded by former George W. Bush administration adviser Karl Rove, are organized as nonprofits and don’t have to disclose who is giving them money. Some liberal groups, such as the League of Conservation Voters, an environmental group, are also nonprofits but raise money on a much smaller scale.

One major player this year is the 60 Plus Association, an Alexandria-based group that bills itself as the conservative alternative to the AARP seniors group. In 2008, the group reported less than $2 million in revenue, most of it from direct-mail contributions.

This year the group has spent $7 million on election-related ads, according to its FEC reports. It also funded a $9 million campaign against Obama’s health-care overhaul in 2009.

Click on Washington Post for the full article.