The Rot Within, Part III: Our Political Order Is Defined by Favoritism and Extortion

What’s the difference between the U.S. Congress and corrupt petty officials taking bribes at a Third-World border crossing? Only one of scale.” C H Smith

CharlesHughSmithCorruption ceases to be corruption when it becomes the Status Quo; what was once recognized as corruption is seen as just another cost of doing business. Our political order is structurally corrupt: the key dynamic in every level of governance is favoritism and extortion.

Favors must be bought: those foolish enough not to spend freely on lobbyists and campaign contributions find their competitors have gained the upper hand by buying favors such as tax breaks, federal subsidies, no-bid contracts, cost-plus contracts, backroom deals, regulations that exclude competition and so on.

Politicos must extort campaign contributions from the maximum number of supplicants seeking favors to maintain their perquisites and power.

Here’s how the system works.

There was much mainstream media hand-wringing and outrage in response to corporations moving their place of business offshore to lower their taxes. This outrage is completely misplaced–and indeed, seems designed to misdirect attention away from the systemic corruption that is the beating heart of the American political order.

Let me explain how favoritism becomes the Status Quo. There are two key dynamics at work.

1. Onerous, uncompetitive taxes and/or regulations. The U.S. corporate tax rate is 35%, the highest in the world, and various observers estimate the average state corporate tax tacks on another 4.1% for a total corporate tax rate of 39.1%. Continue reading

Corporate Taxes in America

SteveLendmansBlog January 7 2013

steveLendmanRaising them should be a national imperative. Corporations should pay their fair share. Not according to Laurence Kotlikoff.

He’s a right-wing economist. He’s a corporatist writ large. He claims abolishing corporate taxes will create jobs.

Doing so requires dropping money on Main Street. Get it in people’s pockets directly. Do it by cutting their taxes.

Guarantee a living wage. Support worker-friendly legislation. Restore their bargaining power with management.

Return money creation power to public hands where it belongs. Initiate government jobs creation programs.

New Deal ones put millions back to work. Doing so reinvigorated the national spirit.

Unemployment was measurably cut. It dropped from 25% in 1933 to 11% in 1937. Doing the right things work.

In 1961, corporate tax cuts were linked to job creation. Business had to prove they added jobs to qualify.

No longer. Corporate tax cuts and credits are handed out freely. They’re not linked to job creation. They’re standard practice. More are planned this year.

Under Bush and Obama, corporations get tax cuts for overseas investments. Domestic job reductions accompany them. Offshoring is rewarded.

Multiple Bush tax cuts handed corporations around $3.4 trillion. Doing so was hailed as a way to create jobs.

Post-recession jobs creation during the early 2000s was the weakest on record. It took 46 months to recover those lost.

It’ll take over a decade now. The so-called 2007 – 2009 Great Recession continues to take an enormous toll on ordinary Americans. Main Street Great Depression conditions persist unabated.

Continue reading