The taxpayers of America are unknowing victims of corporate extortion, effectively subsidizing big companies at the rate of billions of dollars each year for corporate relocations. The subsidies are often in the form of tax benefits, but may even be cash payments to companies threatening to move from their existing location—or to companies willing to move if the bribe is sufficient.
Consider moves from California and Texas alone. According to an April 2014 editorial in the Dallas Morning News, more than 250 companies have relocated from California to Texas in recent years. Corporate and Texas officials claim that the moves are motivated by Texas’ almost nonexistent regulatory environment, low wage costs, and lack of a state personal income tax. Not surprisingly, officials rarely mention what the news refers to as “a handsome dowry”, including outright cash payments, subsidization of relocation costs, and years of property tax abatements.
It is not just Texas and California where a battle for incentives occur, and the companies with their hands out include the largest, most profitable corporations in the world. Since the 1970s, there have been more than 240 mega-deals across the continental United States, each with subsidies of $75 million or more. According to the Walmart Subsidy Watch, Walmart – the largest company in America, with earnings in excess of $16.5 billion in 2014 – has benefited from more than $1.2 billion in “tax breaks, free land, infrastructure assistance, low-cost financing, and outright grants from state and local governments.”
In an era of state and local government budget shortfalls, requiring cut-backs in education and infrastructure spending, academic studies report that state and local governments offer more than $50 billion annually in incentives either trying to keep businesses or to lure them from other U.S. locations. According to University of Iowa Professors Alan Peters and Peter Fisher, after decades of policy experimentation and hundreds of scholarly studies, there is little evidence that incentives work.
Thomas Peterson of the Goldwater Institute is more blunt, saying, “They just don’t work…You have average citizens and taxpayers subsidizing wealthy corporations.” Some critics note that relocations are a zero-sum game since, according to CityLab, few new jobs are created, but are simply moved from one locale to another.
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Regulation vs. Responsibility: A Wall Street Story
The tensions between Wall Street and the Federal Government and the cries to rein in bankers and level the playing field for the average worker existed long before ‘Flash Boys.’
In response, the Dodd-Frank Wall Street Reform and Consumer Protection Act was passed in 2010 with the hope that it might bring about much-needed reform of the financial services industry. Predictably, the industry resisted any attempt to curb its immense power, flooding the halls of Congress with lobbyists and the campaign coffers of legislators willing to roll back parts of the 2010 bill. As a result, many regulations are still not in place, and the Securities and Exchange Commission and CFTC budgets have been slashed, limiting their ability to investigate wrongdoing.
What Is Responsible Regulation?
Critics of Dodd-Frank assert that it does not address institutions deemed too big to fail since it explicitly permits bailouts via a “resolution authority” provision to be initiated at the discretion of government authorities. Many people – including Sandy Weill, John Reed, and Richard Parsons (all former Citigroup chairmen) – argue that banks are, in fact, too big. Federal Reserve Governors Tarullo, Fisher, Stein, Plosser, and Bullard argue that the only solution is to break up the mega-banks.
However, others would simply require that banks raise their capital ratio to 10% or more of their assets, and require more cash reserves. They note that during the Great Depression, large New York banks maintained more than 15% of their assets in equity and cash reserves in excess of 25% – and none of these banks failed.
Cam Fine, CEO of the 7,000-member-strong Independent Community Bankers of America, bluntly claims, “Too-big-to-fail firms should be downsized and split up.” Rather than reducing the risk that mega-banks pose, the Dodd-Frank Act has aggrandized the advantage of large banks over smaller competitors, imposing such a burden on the latter that “they will simply have to sell out to larger institutions that have the staff to deal with the massive volume of new reports and rules,” according to American Bankers Association President Ed Yingling.
The provisions of Dodd-Frank extend well beyond bankers to other segments of the financial industry. While unpopular, many players have reluctantly prepared for its new rules and discovered that the situation is not quite as dire as initially projected. According to Wulf Kaal, a University of St. Thomas professor who surveyed 94 private equity, venture capital, real estate, and hedge fund advisers, 7 of 10 say that the new laws haven’t affected their investors’ rates of return, nor do they plan to alter their investment style. In other words, the regulations have been diluted and defanged to the extent that no real change is required.
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Is America the New Rome?
The example of the first great republic in recorded history (509 B.C. to 29 B.C.) was omnipresent in the minds of America’s founders as they created a new republic centuries later. As a consequence of their deliberations and, perhaps, the “protection of divine providence” as written in the Declaration of Independence, the United States of America, in the mind of many of the founders, was intended to be the modern equivalent of the Roman Republic. The Roman Republic ended with the infamous assassination of Julius Caesar in 27 B.C..
After a protracted civil war, Octavian became the first “Imperator Caesar,” or Roman emperor. The subsequent period – post-republic – of Roman dominance is known in history as the “Roman Empire.” While Rome enjoyed an additional 500 years of world dominance and internal conflict under the Caesars, history reports its disintegration in the fifth century A.D. (476 A.D.) following the successful invasion of the barbarian Germanic tribes.
Common Influences on the Founding of Each Society
While the facts of the founding of the Italian city Rome are shrouded in myth, the Roman Republic was established in 509 B.C. by the overthrow of the last Roman king (Lucius Tarquinius Superbus) and expulsion of the Etruscan theocratic government by the Latins, one of the three Italic tribes in central and southern Italy. Similarly, the “Republic for the United States of America” was birthed in a bloody revolution against the British King George more than 2,000 years later.
According to historian Carl J. Richard in “Greeks & Romans Bearing Gifts: How the Ancients Inspired the Founding Fathers,” the earlier Roman Republic heavily influenced the founders of America who shared many common fears and hopes of the earlier architects of that Republic. These included the following:
Fear of Centralized Authority
Having learned the lessons of despots and emperors, both societies attempted to establish checks and balances to avoid abuse of unchecked government power. The Romans replaced their king who served for life with a system of two consuls elected by citizens for an annual term. America’s founders created the executive, legislative, and judicial branches to diffuse potential power and abuse.
Open Societies
Rome welcomed other people – particularly its vanquished enemies – into Roman citizenship, even accepting the gods of the newcomers. Likewise, America has long been recognized as a “melting pot.”
Selfless Leadership
Rooted in agrarian societies, commitment to family and mutual citizen interdependence were basic in each society. Cincinnatus, a Roman farmer, saved the republic from invading Aequi tribes in 458 B.C. and again in 439 B.C. when a conspiracy threatened the government. In both cases, he was named dictator, but shortly thereafter resigned his commission to return to farming. George Washington, a Virginia farmer who led the fight against the British, resigned after his second term as president to return to his Virginia estate. Both men are examples of leaders who put the needs of their country before their personal interests.
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What Is Global Warming and Climate Change – Facts & Effects
Climate change – specifically global warming – is one of the more controversial issues mankind is facing. Consensus about climate change’s definition, effects, and causes, especially the role that humans play in the acceleration of climate change, is virtually impossible to reach. The controversy is particularly clear in the energy industry, where many assert that there is no scientific agreement about the causes of global warming or its potential problems.
Differing Opinions on the Effects of Climate Change
James Taylor, senior fellow for environment policy at the Heartland Institute, claimed in a 2013 Forbes Magazine article that the majority of scientists “believe that nature is the primary cause of recent global warming and/or that future global warming will not be a very serious problem.” His conclusion was based on what Taylor stated was a “peer-reviewed survey” appearing in Organization Studies.
Further fact-checking reveals that the scientists surveyed for the Organization Studies paper were not considered experts in climatology. And despite the claim of Mr. Taylor, the study wasn’t designed to to gauge scientific belief in global warming. In fact, the study group consisted of 1,077 professional petroleum engineers and geoscientists in Alberta, Canada, and its purpose was to understand the bias and rationale of those who consistently deny a link between global warming and human activity. As such, the scientists were specifically chosen because they worked for the oil industry.
The difficulty of sourcing impartial and accurate information about global warming and its possible causes in the midst of aggressive campaigning by both sides (environmentalists and energy advocates), dilutes the importance of the issue and confuses the average citizen. And interestingly, concern about global warming and its existence is split along partisan political lines according to a Pew Research Poll released January 27, 2014. It found that:
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