A new report by Good Jobs First shows how the very wealthy in America have benefited from government subsidies as one element in building their fortunes. According to the study, the 11 richest Americans, and 23 of the 25 richest, all have significant ownership in companies that have received at least $1 million in investment incentives.
The study compares the most recent Forbes 400 ranking of wealthiest Americans with the Good Jobs First Subsidy Tracker database. Not only do Bill Gates, Warren Buffett, Larry Ellison, the Koch Brothers, the Waltons, Michael Bloomberg, and Mark Zuckerberg own companies that have received millions or even billions in taxpayer funds, 99 of the 258 companies connected with the Forbes 400 have such subsidies.
As I argued theoretically in Competing for Capital, the new report points out that subsidies for investment increase inequality as average taxpayers subsidize wealthy corporate owners. Location incentives directly put money into their pockets, which then has to be offset by higher taxes on others, reduced government services, or higher levels of government debt. Moreover, as the study notes, despite the huge amount of these subsidies given in the name of economic development, there has not been enough payback to raise real wages even back to their 1970s peak. In other words, if economic development has created so many new jobs, why haven't wages risen?
Of course, subsidies don't account for the biggest part of inequality. Read Thomas Piketty for the big picture on the subject. But the new report shows that large numbers of America's wealthiest (or not so wealthy, like Mitt Romney) have benefited handily from government subsidies.
Cross-posted at Angry Bear.
These are the consequences of giving such power to the government in the first place.
ReplyDeleteThere are several reasons wages have not risen. First, more women have joined the work force. (More workers competing for jobs means lower wages.) Second, the influx of unskilled illegal immigrants has kept wages down. Third, the workers themselves have done nothing to increase their productivity, so they have no claim the benefits of the productivity gains, except in the prices they pay for the things produced. (If a farmer buys a new tractor that plows twice as much in the same amount of time, should his plowman expect a raise?)
If the plowman has to learn new skills to use the new tractor then yes she/he should get a raise.
DeleteOnly if those new skills are harder to learn, and so there is more demand for those skills relative to the supply of people who have them or can learn them.
DeleteThanks for the post. Found you through Mark Thomas's site and have you now in favorites. Can't help to comment, though, on the "jack" response only because it contains the usual unrelated non-sequiturs found in libertarian and right wing talking points. First, I could insert "corporations" for government in the first statement and it would be more logically coherent. There are all kinds of "government." The purpose of your post is to change the practice and not undermine the authority of the government to (what?) pass legislation or regulate interstate commerce? The consequence of such power is that it is open to abuse. Our form of government allows citizens to check abuse, which without governance has no check. Finally, to skip down to the statement about productivity. Hmmm. To use his own example, so I guess the tractor can run itself. This, of course, is nonsense. Without the labor, inventiveness, and intellectual property, and purchasing power, (and apparently the subsidies) of others capital cannot exist. One need not invoke some inappropriate agricultural analogy to understand this basic principle.
ReplyDeleteNo you're the one with the non-sequiturs. If the government does not have the power to give out subsidies, it would not matter how much power corporations had, because they could not get non-existent subsidies. Such subsidies have nothing at all to do with regulating (i.e., making regular) commerce between the States.
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ReplyDelete(If a farmer buys a new tractor that plows twice as much in the same amount of time, should his plowman expect a raise?)
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So the plowman can only expect a raise in a system where workers own the means of production.
Good to know.
Yes, that is pretty much correct.
DeleteThere is really only one way to do that, which is to buy the means of production; i.e., they can purchase stock in the company they work for and thus receive dividends and capital gains, or they can start their own businesses.
In general, you earn what you are worth. If you think your labor is worth more, then try to get another job. If you can get more, great. If you can't, then your labor is NOT worth more.
excellent idea!
Deleteso like our roads, municipal water supply, etc., people, through their elected government, should own the means of production so everyone garners the benefits of ownership
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DeleteIn general, you earn what you are worth.
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So Leona Helmsley's dogs earned $12 million.
Fascinating.
Speaking as an old farm boy, if the plowman now has to pay more attention and be more skilled at handling the accompanying tech, which would be the case as you would know if you had ever plowed, then yes. There really aren't that many magic machines that increase productivity without some changes needing to be made by the worker.
ReplyDeleteSteve