Michael Hudson: A New Bipolar World. US finance capitalism vs. China's mixed public/ private economy

'The Big Myth' exposes the costs of blind faith in free markets

 black321 wrote:

People who didn’t own slaves, in a state that didn’t condone slavery, paying money to people who weren’t slaves.
Folks who even start a thought like this do so much damage to our culture by stoking the embers of intolerance and anger and fear.

Tis the season?


SAN FRANCISCO (AP) — A controversial draft reparations proposal that includes a $5 million lump-sum payment for each eligible Black person could make San Francisco the first major U.S. city to fund reparations, though it faces steep financial headwinds and blistering criticism from conservatives.


https://www.yahoo.com/news/san...

President Biden proposed a $6.9 trillion budget that calls for reducing deficits and raising taxes on wealthy people and large corporations, detailing a policy vision that isn’t expected to gain momentum in Congress, but is an opening salvo in spending talks with Republicans.

Mr. Biden’s fiscal year 2024 budget plan, released Thursday, calls for an increase over the roughly $6.4 trillion that the White House expects the federal government to spend this fiscal year.

Though it is unlikely to be enacted, Mr. Biden’s budget blueprint lays out the president’s policy priorities for the second half of his term.

The budget outlines more than $4.5 trillion in tax increases, including higher tax rates on corporations and high-income individuals, expanded Medicare taxes on top earners and higher taxes on U.S. companies’ foreign income.

If lawmakers take raising taxes and cutting Medicare, Social Security, defense and veterans programs off the table, Congress would need to cut 85% of spending in all other categories to balance the budget in 10 years, according to the Committee for a Responsible Federal Budget, a nonpartisan group that advocates for reducing federal deficits.

While the White House budget broadly aims to rein in the deficit over time, it shows the deficit widening from roughly $1.4 trillion last fiscal year to nearly $1.6 trillion this year and $1.8 trillion next year. The amount of debt held by the public will rise to roughly 110% of gross domestic product in 2033 from roughly 98% this year.

Biden proposed raising the top individual tax rate to 39.6% from 37%, raising the corporate tax rate to 28% from 21%, taxing top earners’ capital gains at higher rates and increasing taxes on U.S. companies’ foreign profits to 21 percent from 10.5 percent. He also said he wants to extend tax cuts that are set to expire after 2025—but only for households making under $400,000. 

The White House said it has not yet determined exactly how to pay for it, and the cost of extending those tax cuts isn’t accounted for in the budget.

Who’s Winning and Losing the Economic War Over Ukraine?

 R_P wrote:
The increased cost of used vehicles is a spurious argument.  Vehicles are a capital item and purchase can be delayed.

Rural people will and do shop locally but will often drive an hour or more to load up on food and household supplies in the nearest urban area.

AFAIK, all 52 states are surveyed for the prices of consumer baskets.   If there was a big difference, it would show up in state-level data.  And lo and behold, it does according to Republican committee using Bureau of Economic Analysis data:

State Inflation Tracker October 2022

JEC REPUBLICANS | NOVEMBER 10, 2022

Rural folks tend to rely on home production.  This is from out-of-the-window observation; I am not aware of hard data.  More home production will tend to offset the impact of unexpected, runaway inflation.

The real story is the impact of inflation on the poor and low-income workers whether they live in rural or urban areas.  They may fare well compared to many in poor countries but are likely to proportionately suffer more than other citizens.     Congress should delete the Fed's employment mandate.  US policy elites should think hard about this tradition of using massive monetary stimulus to offset/paper over blowback from questionable US foreign policy decisions.  

Rural Americans Aren’t Included in Inflation Figures – and for Them, the Cost of Living May Be Rising Faster

 kurtster wrote:

Well said!

/s

 kurtster wrote:
Making it a complete bailout was an idiotic idea. How would you NOT get pushback from the loan companies? They should've presented forgiveness of student loan interest and that might've gotten through without such a fuss.

 kurtster wrote:
Skimming, I thought this was another Trump topic with the Trump Organization convicted of skirting taxes by providing for themselves in illegal ways. Guess that teaches me to not read closely. Carry on.

 kurtster wrote:
Appeasement!

 islander wrote: 
Really ?  Neither of these two that you mention as well as most other big box outfits do not have unionized workers.

Former Teamster here.  Remember Jimmy Hoffa ?  The Central States Pension Fund based here in Cleveburg (Jackie Presser ?), or it used to be, was used as a slush fund for all kinds of activities including funding organized crime.  The Teamsters hierarchy over the years has done more for themselves than the rank and file.

This bailout will only encourage more bad behaviour as others have mentioned.

This bailout is also just as bad as the student loan bailout, which is currently being fought out in the courts.

 islander wrote:

I can see it two ways.
One,  you increase the funding requirements, or two, you improve the disclosure requirements.
The accounting is there, you can track it easily each year, though this is beyond the understanding of most employees. I would argue for better disclosure to employees so they understand the risks to their pensions...but under no situation should the public be held accountable for their failure.  It's the same political fumble as the student loan forgiveness. 

Outside of private/gov employment and public unions, pension or defined benefit plans virtually don't exist.  

As for the rest, I certainly support an extremely progressive estate state, once you get above a certain threshold of $x million. Put the $ back in the pot. 

 black321 wrote:
There's the bingo square right there ^^^^^^

too bad there is little apatite for government regulation/oversight.   But again, we are all for privatizing profits when things are good and socializing losses when it comes to PPP loans and other politically connected bailouts (again, disclosure: I got a small PPP loan and it was eventually forgiven - it covered about 30% of the salaries of my employees when there was no work being done and they weren't let go). 

With people living much longer, we really need to look at the way we structure work and retirement funding. There are some serious crisis items looming for the current and future generations.   We have the resource to fix this, but we have to be smarter and stop worshipping billionaires. If someone has accumulated a billion dollars, then you've benefitted greatly from our system and you owe something back to it. If you've accumulated 10 billion, you've probably exploited our system and or people and you really owe something back. 

 Lazy8 wrote:

Well, there's a whole problem in how our retirement systems are set up and where the responsibility/accountability (or lack thereof) is, but that's not what my comment was about.  A lot of people who are relying on a pension are likely to be disappointed and left with little recourse or resource. So yeah, that is one of the places where I think it is appropriate for government to step up and help their citizens.  Should also come with reform of the pension systems and retirement systems as well, but I can't tell how far into fantasy land we want to go so I'll stop at 'try to minimize human suffering'.

While the companies I mentioned don't have unionized work forces, they do rely on a lot of unionized labor - longshoremen who handle goods at import, teamsters (mentioned directly in the article) for distribution/warehousing/etc. Walmart also famously relies on various strategies to indirectly get government subsidies as well (underpaying people so they get public assistance).  These companies and their owners (yes, I'm an owner too, I hold both WMTt and AMZ) make a lot of profit and are happy to collect subsidies and anything else they can get in their favor. So when things go bad I have no problem asking them to kick in. Again, unlikely. The .gov will just tag this to the ongoing tab and we'll all wind up paying for it it drips and drabs. 

The political affiliation isn't the part that bothers me. It's the raw hypocrisy of people who say "no socialism" and  "I got by with no help from anyone else" who then are the first one with their hand out with the slightest crisis.  These people never care about an issue until it affects them personally. And yes, this tends to be one side politically much more than the other.  I would hesitate to call the democrats my ally, but if that's the choice I have to make to support the little guy over the giant corporations (who have already had their share of bailouts), then sure put me down for less human suffering.

To Islander - the PBGC is not intended to be an insurer, but a safety net to provide some protection when plans fail (companies go bankrupt).
To Lazy - I'm not 100% certain, but I don't think it was the union that did the contributing/investing, but a multiemployer plan, where various cos with union workers contribute to the same plan...until the plan fails. 

Larger issue is it's was bad policy to allow these private pension schemes to be so drastically underfunded, and then have the public fund it when it fails. 

 islander wrote:
So...a union invested poorly and wound up with an underfunded pension fund, and that's all the fault of companies that (in general) had nothing whatsoever to do with the problem:

1. Don't have unionized workforces
2. Don't have pensions—they use defined contribution (401K) retirement plans rather than defined benefit (pension) plans

...and the part that bothers you about the bailout is that the beneficiaries are no longer political allies?

 black321 wrote:

If the PBGC were sufficient this wouldn't be a 36 billion dollar issue.  

Not all union workers, but I'd bet a substantial portion that are teamsters are.  

https://www.npr.org/2016/03/07... 

 islander wrote:

Disagree. 
Pensions are backstopped by PBGC, which is funded with "insurance" payments by those paying into pensions, but it's not 100%. 
The rules that allow these pensions to become so massively underfunded were allowed because cos lobbied for them, and now taxpayers pick up the tab...in the so called inflation reduction act.
and not like the last admin was any better...which also subsidized underfunded plans, and allowed the can to be kicked further down the road. 

p.s., are you implying most union workers are conservative/republicans?