Saturday, May 29, 2021

The New "Red Scare": Big Business Cashes In

SHORT TAKES: The Phony Border Crisis; "Red Scare" Part II--The Immorality of the Cuba Blockade; Who Knew? The Tax System Is Racist

Jonathan Tasini

May 27

LONG TAKE

These days, you can’t go through a single day without reading some traditional media new tidbit that fans the flames of the new “Red Scare” menace: China.

One day it’s the economic competition from China. The next day it’s the military threat China poses. And, then, we have the most recent kerfuffle pinning the eruption of COVID-19 on an escaped virus from a lab in China.

This is dangerous stuff, people. The world lost countless lives and mountains of money that could have been used for human needs because of the mindless decades-long Red Care-generated Cold War (and I write this on the birthday of one of the long-time promoters of the Red Scare, one of the great war criminals of the 20th Century, Henry Kissinger). Here we go again. And this time with the added heavy dose of racism thrown into the cauldron.

It’s helpful to understand all of this by, if possible, shedding oneself of—or, at least, putting aside—some mistaken fealty to “American Exceptionalism”, the notion that somehow all that is good bubbles up from the U.S. and all that is evil hails from somewhere else, in this case, China.

A better way to understand the dynamics comes down to…money. And, specifically, how global business interests are playing the visible diplomatic/economic drama to simply fatten the bottom line.

So, here are a few nuggets that paint the picture.

Back in 2004, Oded Shenkar published, “The Chinese Century: The Rising Chinese Economy and Its Impact on the Global Economy, the Balance of Power, and Your Job”. The main point I was left when first reading the book back then was simple: Shenkar pointed out that while, at the time, China was the main global producer of toys (70 percent of the world’s output), bicycles (60 percent), half its shoes and one-third of its luggage, China wasn’t simply focused on low-wage, labor intensive industries—it wanted to conquer highly-skilled industrial production, up and down the skills ladder, from jet engines to biotech. And it had a very clear plan, directed by the government, to get there. “China’s goal, and that of its government is not merely to catch up with the major industrialized powers but to overpass them. No other developing country has sets its sights so high, and none has laid such a detailed road map to take it there,” he wrote.

In other words, China had, and still has, a clear government-directed industrial policy—something that has been entirely missing from the U.S. for at least four decades. Of course, implementing an industrial policy in an authoritarian, one-party state is a lot more straightforward and easy. But, that’s no excuse for the utter failure to do the same thing here—China builds dozens of new airports every year, including the world’s largest single-terminal airport covering an area of over 1.4 million square metres, while, for example, the redesign and overhaul of JFK, an interntional hub, is a $13 billion (and rising) slog. And there are thousands of other examples.

So, lesson number one in adult behavior (not in big supply among the country’s leaders, alas): if you’ve been an abject failure at something (in this case, industrial policy), take some responsibility rather than blame someone else for your failures and don’t try to deflect your failure in the eyes of your voters by ginning up the specter of some evil, dark menace.

Second, China has a huge challenge—how to lift hundreds of millions of people out of rural extreme poverty, defined as living on less than $5.50 a day. As you can see in the graph below, right around the time of Shenkar’s book, those efforts accelerated and bore fruit:

Now, let’s be clear—I am not sugar-coating how this went down. A lot of that reduction in poverty happened because large numbers of people were forced to leave rural areas to take up work closer to cities or big industrial parks. And it often left workers laboring in slave-like conditions, trapped in very difficult circumstances and having to travel long distances to get to work or, worse, left them so far from their families that they simply could not afford the travel back home.

Ah…and here we come to a central point: you would also be wise to note that the decline in extreme poverty rates came right about when China was admitted to the World Trade Organization in 2001…effectively at the behest of large global corporations (Bill Clinton was a cheerleader for China’s WTO membership, by the way, because the Clintons are champions at shilling for big corporations). Because these global corporations were salivating at the prospect of a vast sea of low-wage workers who could be the engines of huge profits—you couldn’t ask for a better set-up for Wal-Mart and the like…an authoritarian regime controlling workers in slave-like conditions. And, trust me, no one gave a hoot in the CEO suites if China still called itself “communist” as long as capitalists could make a killing.

So, it’s worth thinking of the picture of economic competition as simply global corporations pitting each country against the other—not some high-minded fight over values a la “communism versus democracy”. Nonsense—each country is trying to do the bidding of the owners of the global supply chain. In the U.S., workers are paid poverty level wages (which is what the federal minimum wage is) and that’s celebrated as “market forces working”. In China, the government forces Uyghurs into labor camps to produce mountains of products for global brands.

Speaking of capitalists—never let an opportunity go to waste has to be their motto when dealing with the lunkheads in Congress. To wit: you’ve probably read about the U.S. Innovation and Competition Act—that would be the bill to allocate $100 billion for a variety of programs to compete with China, including a $52 billion fund (your taxes, brothers and sisters) to give to the U.S. semi-conductor industry.

I mean, those folks have big stones, seriously. The worldwide semiconductor market was up 6.8 percent in 2020, and is expected to show a double-digit growth of 10.9 percent in 2021, according to World Semiconductor Trade Statistics. Investors Business Daily tell us that “Many top semiconductor companies delivered beat-and-raise March-quarter reports” including Advanced Micro Devices, Analog Devices, Microchip Technology, Qorvo, Qualcomm and Texas Instruments. To be sure, there has been a COVID-related chip shortage (because supply chains were shut down or paralyzed). But, these folks are not hurting for cash.

It certainly isn’t hurting CEO pay: Intel’s CEO Robert Swan earned $66.9 million in 2019; AMD’s CEO Lisa Su pocketed $58.5 million; and Qualcomm’s Steven Mollenkopf cashed $23 million.

So, why the fuck give them a dime? Answer: lobbyists. Turn a “red scare” into free cash, why not? They aren’t stupid—like the big banks during the mortgage-ignited Great Recession who lined up for essentially interest-free loans from the Federal Reserve Bank even when the money wasn’t needed, companies are happy to take taxpayer largesse.

At least Bernie Sanders has had the guts to say if taxpayers are giving out U.S. Treasury money to private corporations, then, the people should be able to own a piece of the company, or at least make money from the profits these companies will ring up. I’d add—if these companies all need cash to compete, every CEO has to cut their pay in proportion to every taxpayer dollar given to a company, and earn no more than the highest paid rank-and-file worker. That would stop that handout, right? (“Uh, sorry, we ran the numbers again and, ahem, actually we see we have plenty of cash so…”)

The other global corporate pigs-at-the-public-trough are, of course, defense contractors. Two weeks ago, I wrote about the Pentagon’s disgusting, monumental waste of money—a waste of money that is driven (as I explained) by the relentless push by defense company lobbyists (many of who worked for the government before) to keep the large slush fund going that appropriates hundreds of billions of dollars for astonishingly expensive weapons that often don’t work and aren’t needed (I am here just skipping over the immorality of how much money goes to war).

This new “Red Scare” comes at the right time—just as people have started, a bit, to take a longer look at why we waste so much money on the Pentagon.

So, you can read pieces like this one (“China Watcher) that are now common—whipping up the military threats posed by China as a way to simply get more weapons approved and more money to stream into the endless pit at the Pentagon. In fact, that whole long piece is written and hosted by—get this?—Jacqueline Deal, senior fellow of the Foreign Policy Research Institute, co-founder of the American Academy for Strategic Education and president of LTSG, a defense consultancy. I mean, this is akin to asking Hannibal Lecter to edit a newsletter focusing on the threats posed by those who would put a stop to cannibalism.

And about the renewed interest in the COVID-escaped-from-a-Chinese-lab theory. I dunno, maybe it happened. And that might have been a major fuckup China is trying to cover up since it has been less than forthcoming about answering questions. But, in the context of the demonization of China, I would suggest thinking of this in two ways:

Imagine if that had happened at a U.S. lab. Rightly, it would be considered a serious calamity and heads would need to roll. But, how would the U.S. demand that the outside world view such a screw-up? As a screw-up…not some event that deserves racist denunciations or global ex-communication.
More important, the real problem of the pandemic had very little to do with its origin. It was the complete failure to *respond* to the pandemic—which partly had to do with the country’s horrendous social safety network. The pandemic would have been over in the U.S. in 30 days if political leaders had shut down the country for a month, paid everyone their full wages and mandated wearing masks—and it would not have killed as many people if we had, like all advanced countries, paid sick leave (so people who felt ill could stay home and not sicken their co-workers), decent wages and housing (so people earned enough money so people would not be crammed into places where the virus could spread rapidly) and a health care system that encouraged people to seek care, not one that bankrupts people. And that doesn’t even just finger alone the mentally ill president who denied the pandemic was a thing. That is a deep, deep hole in this country.

Be very wary of this ideological targeting—and question who benefits.

It’s hard to pick just one policy area where rhetoric obscures facts but, hey, today, I’ll choose immigration for $1,000. I had this to say to The Hill in the context of the phony border “crisis” (actually, I had a lot more to say but this is what made it in):
“The duty of progressives is not simply to push for change on the details of the policy. It is to really articulate a different message and different vision of who immigrants are,” said progressive strategist Jonathan Tasini. “Progressives should believe in open borders. Immigrants have never been the threat that politicians want to portray them as. They have been used as a cover for bad economic policies that have nothing to do with immigration.”
There is no border crisis—if by “crisis” you mean a threat to people living in the United States. There never has been a crisis at the border—other than the threat to people who leave their homes for economic or political reasons and risk their lives trying to come to the U.S.
It’s always been a made-up political crisis. My point in the last sentence of the quote is very simple: generally speaking, people do not *willingly* leave their homes and their communities (where they have long-standing ties, families, relationships). They are forced to. And a huge reason for movement of people to the borders of the U.S., especially to the southern border with Mexico, is the combination of U.S. economic and foreign policy. Bad trade deals (in the NAFTA model), negotiated on behalf of global corporations, hurt small farmers (many of whom grow their own food for survival) and small businesses; with no options, folks are forced off their land, or from their villages and towns, and head north. And when the U.S. prosecutes a foreign policy—at the behest of corporations, especially defense contractors—that arms repressive regimes (historically speaking, done in the name of “democracy” and to “stop communism”) who kill and imprison their own citizens, then, it should not be a shock when people flee countries.
Perhaps obvious: the very same bad policies hurt plenty of people here. It’s the job of progressives to connect the dots and make clear that immigrants are not a threat and “solving immigration” starts with seeing the whole picture of the corrosive policies that bring people to the U.S.—and ending those policies.
Speaking of the toll of the “Red Scare”, one of the enduring corrosive legacies of that period continues to be the blockade of Cuba. Things improved a bit during the Obama Administration—I made my second trip to Cuba under those new regulations, which meant mostly a direct flight to Havana as opposed to a round-about way of getting there.
There’s a bit of renewed pressure on Biden to normalize ties with Cuba, starting with returning to the very modest steps taken by Obama that were reversed by the lunatics in the Trump circle. This “Right To Live Without A Blockade” report comes from Oxfam:
Oxfam urges the Biden administration to take all actions within its power and without delay to normalize relations between the US and Cuba. Among the first steps, we encourage the administration to:
- Return to the path laid out by the Presidential Policy Directive of October 2016 for “United States–Cuba Normalization” as a starting point to rebuild the relationship between the two countries, and follow through on statements made in this regard during the 2020 presidential campaign;
- Remove Cuba from the list of State Sponsors of Terrorism and suspend the application of Title III of the Helms-Burton Act;
- Repeal the National Security Presidential Memorandum on strengthening the policy of the US toward Cuba of 2017;
- Remove the restrictions on remittances and travel imposed by the Trump administration in order to help Cuban families, the emerging non-state sector, and the national economy; and
- Reestablish diplomatic services, enabling staffing levels needed in both embassies to facilitate consular services and a bilateral dialogue on topics of mutual interest
Share
It would not be shocking to read that the tax system has deeply embedded racist elements, things most folks would instantly understand but don’t float at the top of the mind. The folks at the Institute for Taxation and Economic Policy dug into this and here are key takeaways, though by all means read the whole report [the BOLDED PARTS below are my additions]:
Revenues raised through taxes are vital to funding public investments in education, health, and the safety net, all of which can help combat inequality. But some state tax systems exacerbate racial income inequality by taxing low-income people, a disproportionate share of whom are people of color, at higher rates than other families. Such regressive tax structures can make racial income inequality worse as incomes become more unequal after state and local taxes. A progressive system for raising revenue, however, can narrow racial income gaps by asking more of families with the highest incomes, who are predominately white. When state policymakers leave immense racial and ethnic income inequality unaddressed in state tax codes, they solidify that inequality.
…Consumption taxes, most notably general sales taxes, are the most regressive type of taxes relied on by state and local governments and the most significant drivers of racial inequity in state and local tax codes. Low- and middle-income families pay a larger share of their incomes in consumption taxes than the rich. While most low-income taxpayers are white because they remain a majority of the U.S. population, a disproportionate share of Black, Hispanic, Indigenous and other households of color are in lower-income groups due to the legacy of racist public policies and ongoing discrimination. So, policies that disadvantage low-income individuals and families—like heavy reliance on sales and excise taxes—have a disproportionately negative effect on people of color. Wealthier white families, who enjoy systemic advantages that have positioned them to save and build their wealth, tend to pay lower sales and excise tax rates since the portion of income set aside into savings is only taxed after a lengthy delay, if at all.
…The effect of real estate property taxes across race and ethnicity is nuanced and complex. Vast differences in intergenerational wealth and a long history of racist housing policy have allowed white households to achieve homeownership rates far beyond those in communities of color. Those forces, together with white homebuyers’ aversion to living in areas with large nonwhite populations, have also led to significantly higher market values for white-owned homes relative to those owned by people of color. These factors can lead to higher property tax payments and, as a result, better-funded schools in majority white areas. But renters, a disproportionate share of whom are people of color, also pay the property tax indirectly through their rent payments. Compounding the challenges in property tax payments, housing segregation and assessment discrimination can result in higher tax bills for people of color relative to what white homeowners in similarly valued homes pay.