Many workers have worked at a company that has been bought out.  What are buyouts, do they tend to be profitable and why do they continue?

Buyouts can be classified legally as mergers and acquisitions.  Mergers, according to Wikipedia, are “a legal consolidation of two entities into one entity”.  Acquisitions, according to Wikipedia occur when “one entity takes ownership of another entity’s stock, equity interests or assets”. (1)  We all know about mergers and acquisitions.  They are buyouts that can cause people to lose their job.

According to Wikipedia, there have been seven waves of mergers in the U.S. since 1893.  The Fourth wave happened between 1974-1989 and involved “Co-generic mergers, Hostile takeovers and Corporate Raiding”.  The Fifth wave happened from 1993-2000 and it involved “Cross-border mergers, and mega-mergers.”  The Sixth wave happened from 2003-2008 and it involved “Globalization, Shareholder Activism, Private Equity and LBO’s (leveraged buyouts)”.  The Seventh wave since 2014 involved “generic/balanced buyouts, horizontal mergers of Western companies acquiring emerging market resource producers.”  Mergers and acquisitions continue across the American business landscape.  They can cause enterprise liquidation. According to the U.S. Chamber of Commerce speech, “2018 State of American Business Address,” there are now half as many public companies as there were in 1996. (4)

Many of these buyouts used borrowed money.  American tax law taxes profits more than debt and this tax policy encourages indebtedness and buyouts that use borrowed money.  Also companies can buy out a company with debts and use those debts to cancel out taxable profits.  And firm to firm transfers of goods under the same corporate umbrella aren’t taxed so that’s another potential tax savings.  Current American tax policies support mergers and acquisitions.  In fact tax policy may deserve the lion’s share of credit for why mergers and acquisitions happen at all.

According to Richard E. Caves, “Effects of Mergers and Acquisitions on the Economy: An Industrial Organization Perspective,” there’s little evidence that buyers earn much when they buy out another company.  Often they lose money. (3)  And the company being bought will sometimes experience a transient gain in stock value but it tends to be short-lived.  Synergy is a term that describes what everyone hopes for in a merger.  It is the hope that there will be a beneficial effect so that combining two companies will create a greater level of efficiency.  But synergy is hard to actually achieve in a buyout. (3)

Years ago American jobs lasted longer than they do now.  People could work at the same job for decades just a few generations ago.  That isn’t true for most workers today.  The Bureau of Labor Statistics (BLS) compiled some job tenure numbers using the Current Population Survey.  These are short tenures.  According to the BLS, in 2016, workers in management occupations had a median tenure of 6.3 years, architecture and engineering had a tenure of 5.5 years and legal occupations a tenure of 5.5 years.  Service occupations only lasted a median of 2.9 years.  Workers in the public sector “had more than double the median tenure of private sector employees”. (2)  This may be true because public sector jobs aren’t as vulnerable to the effects of M&As as are private sector jobs.  And workers don’t have any confidence that they can maintain their previous salary after a buyout.  They sometimes have to start over with a smaller salary.

Another way that M&As may affect us all is by devaluing education.  University enrolments have been falling for many years now and the trouble started after the Great Recession.  After the Great Recession,  there was an enormous inflation in tuition.  With that cost inflation, the price of a degree today may not seem worth it for a brief job opportunity.  Think of the difficulty of acquiring expertise in almost any profession only to discover that job tenure is shorter than the training period.  This may be why private firms are now having more difficulty finding qualified candidates.  Can the skills gap in the United States be due to mergers and acquisitions that lead to overall shorter job tenures?  Could shorter spans of employment lead to less expertise?  According to the article by Richard E. Caves, “technical efficiency decreases significantly as the extent of corporate diversification increases.” (3)  And with prices for cars and houses so high, the American worker is also less mobile than in the past.  It just isn’t worth relocating for a five-year employment opportunity.

When you look at mergers and acquisitions, they are mostly about moving large sums of money around.  Globalization, financialization and neoliberalism are all about mobile capital.  But what about the health and welfare of American families?  Poverty has increased since the Subprime Mortgage Crisis and M&As have continued on apace.  M&As harm job security, may devalue education and undermine skilled employment in America.  In order to restore and protect American job security, it seems obvious that tax policy should no longer encourage debt and M&As.  Buy a copy of Political Catsup with Economy Fries at Amazon.com to learn more about financialization, globalization, and American political ideologies.

(1) “Mergers and Acquistions,” Wikipedia, https://en.wikipedia.org/ wiki/Mergers_and_acquisitions, accessed 07 Mar 2018.

(2) “Economic News Release, Employee Tenure Summary,” https://www.bls.gov/news.release/tenure.nr0.htm, accessed 14 Mar 2018.

(3) Richard E. Caves, “Effects of Mergers and Acquistions on the Economy:  An Industrial Organization Perspective,” https://www.bostonfed.org/-/media/Documents-03-07-18/converence/31/conf31f.pdf, accessed 07 Mar 2018; In the Merger Boom, Ed by Lynne Browne and Eric Rosengreen, 1987.

(4)  “2018 State of American Business Address”, http://www.uschamber.com/speech/2018-state-american-business-address, accessed 22 Feb 2018.

 

According to press reports this week, in Feb 2018, there’s an emergency in our public schools.  People are dying there in mass shootings.  What would happen if the emergency of school shootings were taken seriously?  What would happen if there were a National Public School Holiday and all public schools were closed?

FDR (President Franklin Delano Roosevelt) once closed all the banks in a Bank Holiday until plans were laid to reorganize banks by instituting Glass Steagall, by adding the SEC and FDIC insurance.  There were both winners and losers when FDR did that.  FDR made gold illegal to own and confiscated it.  People who owned gold lost out.  And before the banks were closed, there were bank failures where people lost their money.  There was terrible anxiety during the Bank Holiday all across America.   There was suffering.  And discomfort.  People weren’t happy that American banking would change because they couldn’t see whether it would work out for them.  After the dust settled though, American banking grew more solvent and stable and that was a win for everyone.

Isn’t the death of so many defenseless people in public schools more important than bank failures?  Students and teachers are losing their lives.  Isn’t that worse than having banks fail because they are insolvent?  Doesn’t the death of these children and teachers indicate a kind of public school insolvency?

Right away, I can imagine the terrible fear and trouble that closing America’s public schools would cause.  We can begin with public school employment.  Right away, teachers would worry that their jobs would go away.  Administrators also would worry that their jobs would go away.  Janitors jobs, cafeteria personnel, gardeners, special education trainers and maintenance people’s jobs might come to an end.  Maybe these people should be paid for a period of time while public schools are changed.  Perhaps for a transitional period paying them would help to depoliticize part of the change.

Parents would worry if public schools closed about how they would educate their children.  They would worry also about how to keep them safe without public school teachers to watch over them.  But closing public schools might be like having a long summer vacation.  Parents deal with alternatives for their kids during summer vacation and Christmas vacation.  A School Holiday might be like the other ones that parents are used to but it might lead to some changes after the Holiday was over.

How can we change public schools?   What criteria matters in our public schools to determine if they are good?  Can children get an education without public schools?  How can we make schools safe and effective?  Should we consider decentralizing them or making them smaller or home-schooling by computer?  Although the jobs that people enjoy as part of our public school system are important, they aren’t important enough to keep the schools open in the context of serial killings.

I once had a conversation with a retired teacher that affected me a lot when she said that the only reason that poor kids even have a chance at getting an education in America is because of the public school system.  That retired teacher didn’t want schools to become privatized because she was afraid that they would become too expensive for poorer kids to attend.  However, public schools as they are now are expensive too and families with school age kids count on taxes to fund them.  What if families got paid directly for an education alternative with their kids out of public schools?

How can kids get a better education?  How can a child’s education in America get accomplished in a way that offers meaningful skills and learning?  Some say that public schools are failing to provide a good education to a majority of students.  And people have noticed that providing more money to American public schools isn’t solving our schools’ problems.

Under neoliberalism, almost everything in America has become regulated into a state of permanent disaster and various stakeholders are more than willing to block change.  Stakeholders want to stop changes that could disrupt whatever advantages they already have.  In the case of the public school system that has become undeniably true.

American public schools have become a mixture of concentrated problems.  The Great Recession increased poverty and homelessness among America’s children.  That has affected our schools by bringing more disadvantaged people in.  Poverty has put pressure on teachers because of increased absences and social suffering.  Algorithms to monitor teacher’s performance have gotten some good teachers fired.  That’s one of the problems that lies at the root of public school teacher shortages.  Many American kids are being medicated with psychoactive drugs and some of those drugs may cause mass shooting as a side effect in some students (1).  Despite warnings on some prescribed drugs that they may cause suicidal ideation, some parents want to continue using them and these drugs provide a big profit for pharmaceutical companies.  Can we do without them?  Some people want to regulate guns differently while others think that regulating guns differently won’t reduce mass shootings. (2) Our dysfunctional schools call on us to bring more money and hire more administrators and buy more drugs and test more teachers and test more students and extract more money from tax payers.  But beneficial change in public schools has seemed impossible.

Think of all the fighting among teachers and teacher’s unions, beween various kinds of administrators, between teachers and administrators, among people who design basic skills testing and algorithms for evaluating teacher and student performance and drug companies that want to defend their profits, between federal oversight and local oversight of schools.  Think of conflicts between those who want public tax money to go to public schools and those who want it to go to private schools.  Think of strife breaking out during School Board meetings.  Think of how many problems meet and clash in our schools.  Now think of how little public schools have changed for the better over the last 30 years.  It’s well past time to stop picking sides in the debates about public schools.  Let’s not argue anymore.

Our public schools may have reached a state of emergency.  What would happen if American public schools took a long Holiday?  At the very least, there would be no mass shootings at public schools over that period.  And without vested interests blocking change, people with fresh ideas might have a chance to present those fresh ideas as new opportunities .  Maybe a variety of new options could be tried in different regions of our nation.  Give the kids some homework away from public schools.  Pay school personnel to stay away from school for the transition period.  Close the public schools.  In the context of mass shootings, they aren’t safe.  And they aren’t good at educating students for today’s workforce.  Find a solution that’s different from what we have now.

If you would like to learn more about three American political ideologies including classical liberalism, modern liberalism and neoliberalism buy a copy of Political Catsup with Economy Fries at Amazon.com available now.

(1) Jon Rappoport, “Mass Shootings and Psychiatric Drugs: The Connection,”  Feb 22, 2018, https://jonrappoport.wordpress.com/2018/02/22/mass-shootings-and-psychiatric-drugs-the-connection/.

(2) The Anchorage Daily Planet, “Gun Hysteria,” http://www.anchoragedailyplanet.com/110446/gun hysteria; printed in the editorial section, and posted by the editor.  It says that the number of school shootings has been misrepresented and far fewer mass shootings have occurred than the popular press has been claiming.

The kind of information that I want to find in any news source allows me to learn about the world that I live in.  Today, I found an article in Forbes that discussed the workplace in 2018.  The article was written by Dan Schawbel, on Nov 1st, 2017 and the title is “10 Workplace Trends You’ll See In 2018.” (1)  The author makes predictions every year, based on conversations that he has with people in the workforce and also based on surveys conducted by other researchers.  You can read this year’s predictions and probably even go back to look at past years.

In the first paragraph, Schawbel states that he is writing to benefit organizations (instead of individuals) with this analysis.  His article has the Forbes optimism about business but it isn’t only optimistic.  Some workplace problems are cautiously noted in the piece.  I’m using his article to summarize some of his main points that I think you will be interested in.  I’m also going to add some points of my own.  I’ll tell you “Schawbel says or notes or writes,” when it’s his point of view.

In his first numbered trend, Schawbel notes the importance of human conversations and contrasts them with e-mail interactions.  He says that one in-person conversation carries as much weight as 34 e-mails.  One of the changes in our work-world has involved computer mediated and networked communities.  Schawbel cited research conducted by Mahdi Roghanizad and Vanessa K. Bohns. that shows that people prefer the face-to-face interaction instead of computer e-mail back-and-forth.  Instead of e-mail improving productivity, it has now become clear that face to face conversations are more productive.  Some companies have brought their telecommuters back to the work-site to facilitate the face-to-face interaction.

Another trend is a new recognition in the corporate environment that in-company training and retraining to adapt employees to a changing workplace matters more.  In fact it’s now needed because new employees can’t always be found quickly to do what a company needs doing.  It is costing companies money when they can’t fill an open position with a qualified candidate.  Workplace environments are changing so fast that old skills are quickly outdated.  That means that new skills training has to become an ongoing company investment.

Also new skills are coming onto the workplace all the time.  No one’s ready for that new skill and universities can’t keep up with new skills training.  That makes constant training an essential ingredient to a functioning workplace, so that workplace openings to do new things can be filled quickly– even if it is with long-established but retrained workers.  In a later point, Schawbel notes disruption in education.  Inflation has been one problem in education but so has lackluster and unavailable employment opportunities to degree holders.  Without a good return on a university investment, fewer young people are motivated to pay for one.  Many young workers are seeking training off-campus now.  Some students seeking an untraditional road to an education for in-demand skills go on-line or buy training materials to study at home.  An in-house education of in-house personnel will help educate workers for exactly the job that is needed by the corporation–one that is tailored to suit the corporation’s needs.  It was once expected that people would pay for their training and that an employer could hire a fully qualified worker.  But if the workforce shortage of qualified applicants continues, I think that it may become necessary for corporations to train people after they hire them.

Many people are eager to see what happens in the workplace as algorithms come closer to simulating human interactions.  Schawbel wrote about chatbots which are computer programs that gather and report on certain kinds of data that can help managers to be more informed in the workplace.  He gave an example where a chatbot could report to a manager when an employee calls in sick.  Of course, a chatbot interaction won’t be the same as a human interaction, though the ability of such a program will probably continue to grow and the availability of programing that can do trend reporting may put some people out of a job.  In his last point, Schawbel mentioned workplace stress.

With shifting workplace environments, educational debt, financial insecurity, uncertain changes constantly washing over them in their job role, workers according to Schawbel, are stressed-out and unhappy.  Some companies are providing assistance to pay off tuition debt and others are becoming more proactive about supporting employee mental health.  Will this make a difference and will the changes washing over everyone in the workplace lead to successful companies in the future?  Are these changes worth it?  Will people continue to choose to work in these environments and for how long will their careers last?  Will AI algorithms achieve more automation and will people want that in the workplace or will it become less effective over time as e-mail has proven to be?

James Tobin (1918-2002), the Nobel prize-winning economist, once noted that Information Technologies make money only for people and companies that manufacture the technology.  The companies that use IT in the work environment constantly must invest money in order to buy it,  and then continue to invest to retrain people to use it and replace it as it continues to evolve.  With the stock market being so highly valued at this time in history, IT companies have gotten a huge financial boost and IT has really taken a leadership position in trends that affect companies across America.  But can IT earn a continued hegemony at the end of QE, when the stock market changes back to more authentic market conditions?  Only time will tell.  If you want to learn more about the history of political ideologies and their impact on technological changes that have happened across America, buy a copy of Political Catsup with Economy Fries at Amazon.com.  

(1) Schawbel, Dan, “10 Workplace Trends You’ll See In 2018,” Forbes, Nov 1, 2017, https://www.forbes.com/sites/danschawbel/2017,11/01/10-workplace-trends-youll-see-in-2018/#4aa494604bf2, accessed 9 Jan 2018.

another resource for learning more about information technologies and the history of Silicon Valley is:

(2) Jaron Lanier, Dawn of the New Everything: Encounters with Reality and Virtual Reality, Henry Holt and Company, New York, 2017.

 

The Tax and Jobs Act was renamed because of the Byrd rule to a Bill: “To provide reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018.”(1)  This is not the surprising part of the bill, but I had to mention it because in the ensuing discussion I will use the shorter name and I don’t want you to think that I’m misleading you about the true name.

What surprises me the most about the Tax and Jobs Act is that its territorial tax design was discussed during the Obama administration, even though our former president didn’t try to change the tax structure as President Trump has done.  According to an article from 2012 titled, “A Global Perspective on Territorial Taxation,” (2) by Phillip Dittmer, “every independent U.S. advisory board working group, and federal agency tasked with exploring tax reform has recommended that the U.S. pivot toward a territorial system.”

Advocates for a territorial tax plan, Dittmer wrote, included President Obama’s Economic Recovery Advisory Board, the Council on Jobs and Competitiveness and the Commission on Fiscal Responsibility and Reform.  Even the House Committee on Ways and Means in 2011 recommended territorial taxation.  What occurs to me when I consider the widespread Obama administration support for a territorial system is to wonder why the democrats voted against Trump’s plan.

What I learned from Dittmer’s article is that developed economies like the UK and Japan have been moving from a worldwide tax system like the one we had before the Tax and Jobs Act was passed to a territorial system.  His article explains that the worldwide system has had fewer advantages in a global context than the new territorial system has.  I would say that the main purpose of the new tax structure is to support global businesses without causing as much damage to our domestic business operations.  When President Trump says that it will bring jobs back to the U.S., he may be right because with a lower corporate tax rate, the U.S. becomes a more attractive base for corporate and small business operations.  More foreign owned businesses may also set up here.  The lesser tax rate for bringing already earned overseas profits back to the U.S. may also encourage capital to go to work by being invested in the United States.

I was surprised to learn that the worldwide tax system was designed to support globalized business operations and so also is the territorial tax system.  I didn’t really expect that they would have the same goal of supporting globalization.  They just do it in different ways.  It may be the case that during the early period of globalization, the worldwide tax system was better.  Now that globalization has evolved and there are more developing economies than the world once had, the territorial system is better.  It will help global companies operating abroad to take advantage of markets there, and it will help Americans to have a more profitable business tax structure at home.

There are several ways that a territorial tax system may make doing business abroad easier and tax collection at home easier, too.  Under a territorial system, foreign companies headquartered in the U.S. won’t be taxed for the profits that they earn abroad.  That makes it easier for American companies to do business abroad.  They don’t have to consider the influence of tax subsidies paid to offset foreign taxes (which made high tax nations more attractive) or deferred taxation that kept money out of the U.S. Treasury.  And transnational companies may choose to invest more here in the U.S. because of the lesser tax rate and the convenience of operations at home.

It remains to be seen what this new Tax and Jobs Act will accomplish for the United States.  Will it bring capital back that will be invested in the U.S. economy?  Will it encourage healthier small businesses that compete more effectively with large corporations (that often didn’t pay any tax under the worldwide tax system)?  Will it allow the U.S. government to collect more taxes from corporate businesses at home (because of more investment here instead of abroad)?  Will it encourage more jobs here at home and a more competitive pricing on American made goods and services?  Let’s wait and see.

Finally, this is a long bill and I haven’t read it yet.  To help us all to understand some of the tax provisions that will affect average Americans, I’m including a reference to an article by Julia Horowitz titled, “34 Things you need to know about the incoming tax law,” that may help you to understand some of the details that will affect you in the bill. (3)  Once again we see neoliberalism in the efforts of American politicians to support globalization.  If you would like to learn more about globalization and neoliberalism, buy a copy of Political Catsup with Economy Fries, available at Amazon.com.

(1)  Eli Watkins, “Senate rules force Republicans to go with lengthy name for tax plan,” Dec 19, 2017, http://www.cnn.com/2017/12/19/politics/tax-bill-name-delay/index.html, accessed Dec 22, 2017.

(2) Phillip Dittmer, “A Global Perspective on Territorial Taxation, Aug 10, 2012, https://taxfoundation.org/global-perspective-territorial-taxation, accessed Dec 21, 2017.

(3) Julia Horowitz, “34 Things you need to know about the incoming tax law, ” CNN, Your Money, Your America, http://money.cnn.com /2017/12/20/news/economy/republican-tax-reform-everything-you-need-to-know/index.html, accessed Dec 21, 2017.

Congress is bickering again.  If you are wondering why Congress would parley away their best power-plays in legislative design so that they can argue endlessly and accomplish very little, you can find the explanation in American history.  This infighting has been a side effect of greater governmental influence in the economy which got started during the modern liberal period.

Our courts allowed Congress to expand its use of the Commerce Clause during the Age of Railroads.  Congress started performing economic interventionism with ghastly results such as the Dust Bowl which happened because of a WWI government farming subsidy to produce more wheat to win the war.  The Dust Bowl happened because too much prairie had been put under the plow during WWI.

Economic interventionism and deal making has worsened under neoliberalism.  When our government’s legislature has more power to affect the economy, more economic players seek the favoritism of someone in Congress.  And the nation as a whole can’t get legislation considered that would undertake a larger goal of helping more of us through sounder policies.  Since legislation is tailor-made to help a set of specific interests, legislators never seem to repeal bad legislation.  They don’t look at legislation in a broad context.

People in government argue more now because each elected official argues for their own self-interest or that of a small constituency instead of arguing for the best legislation that would help more Americans.  Each Congress member has special interests to please and big campaign contributors to please.  They can’t be bothered to think long-term about what would be best for our nation as a whole.  As they ignore past mistakes or bad legislation that should be repealed they carry on intervening just as they have for a while now.  They are trading influence.  Legislation that could be designed for a longer-term view has become eclipsed by deals where elected officials have a personal stake.  That’s why legislators can’t agree, or act for the benefit of the nation.  They have lost their common interests in undertaking better lawmaking and traded it for “Lets Make a Deal” opportunities and viewpoints that benefit themselves.

In order to change this habit of self-interest in lawmaking, we should recognize the folly of Congress’s power to influence the economy by picking winners and losers.  Congress’s power expansion has now gone too far.  Congress’s short-sightedness and self-interested policies have hurt our nation’s prosperity.  Congress keeps making the economy worse because they can’t run a marketplace and write reasonable legislation at the same time.   They now work within a system that is inherently conflicted.  And they have endless hubris about believing that they can steer the nation in the right direction through supporting monopolies and underwriting the stock market with the power to print more money.  It’s time to change the way Congress does business.

When I write “neoliberalism” and also write about Congress, it’s because both liberals and conservatives, both Democrats and Republicans operate under neoliberal principles, nowadays.  American’s old habit of contrasting the policies of Democrats and Republicans is old-fashioned because it comes from the time before neoliberalism made mincemeat of the legislative process.

In addition to the court’s expansion of the Commerce Clause during the modern liberal period, there’s another more recent historical perspective that shows why it isn’t surprising that our nation is full of neoliberal legislators that are fighting all the time and getting so little accomplished.  Philip Mirowski and Dieter Plehwe wrote a book, The Road from Mont Pelerin, that described how neoliberalism got started between WWI and WWII.  According to them, even from the beginning, neoliberals could never agree about what exactly the political goals of neoliberalism should be.  Groups vied for neoliberalism to be what their group wanted and neoliberals never agreed upon a single goal.  Even today, neoliberals in the legislature bicker instead of cooperate.

If you’d like to learn more about American political ideologies and about U.S. neoliberalism, read Political Catsup with Economy Fries available at Amazon.com.

reference:

Philip Mirowski. Dieter Plewe, The Road From Mont Pelerin: The Making of the Neoliberal Thought Collective, Harvard University Press, Cambridge Massachusetts, 2009.

Neoliberalism isn’t like the other two American (and to some extent, global) political ideologies that were active earlier in our history.  The first ideology, classical liberalism had outspoken activists and so did modern liberalism.  Neoliberals don’t proclaim their political or economic interests in public dialogue the way that Thomas Paine did during the classical liberal period or that Walter Lippmann did during the modern liberal period.  Instead of pursuing political activism through public rhetoric, they engage in the remodeling of our political system through lengthy drafts of new rules that benefit themselves and externalize problems to others.  They do this by buying influence in Washington D.C..

If you want to understand neoliberalism, you can’t ask a neoliberal.  Instead of doing that, you have to examine winners and losers as new legislation rolls out of the halls of Congress.  Ask yourself, when the legislation passes, will you be better off?  Who will pay for the consequences of the legislation?  Will it cause your taxes to increase?  Will it cause your opportunities to diminish?  What negative outcomes will come your way after the legislation passes?  How many persons will benefit who are like you?  How long is the legislation as it is written?  Modern laws can be hundreds of pages long and full of favors   for influential political donors.

In Washington, today, debate continues about HR 1, the Tax Cuts & Jobs Act.  When I first heard about this bill, I read that it would simplify the nation’s tax plan.  And that simplification would save people money.  Lately, I’ve been disappointed to hear that it probably won’t simplify the nation’s tax structure.

At first, I heard that it would even the playing field between small businesses and large corporations.  Small businesses have paid a high U.S. tax rate that large transnational corporations have mostly avoided. That rate varies from 15% to 35%.  Often we read that large transnational corporations don’t pay any taxes because of tax loopholes of which they can take advantage.  Yesterday, I read that the Tax Cuts and Jobs Act as it is drafted doesn’t give the same tax breaks to small businesses that it gives to large transnational corporations.  Too bad about that.

Keeping that tax differential in place would give transnational corporations a perpetual advantage over small businesses in America.  The tax differential between what small businesses pay and what transnational corporations pay has destroyed many small businesses in our country since 2007’s economic crash (during the sub-prime mortgage crisis and the bank bail-outs).  Small businesses couldn’t compete with large corporations in a recessionary environment because they had fewer tax advantages and less capital.  As I look at the development of this tax bill, I guess that the bigger fish want the biggest tax advantages just for themselves.  But I don’t think that’s been good for America, so far.

As the Tax Cuts and Jobs Act gets debated in Congress, I hope that more Americans are watching the debate and asking themselves what good government is about.  I think that it isn’t only about keeping the big fish happy.  What do you think?  And what do you want this bill to accomplish for you after the debate is finally over?  Will it get passed and will it help ordinary Americans without costing them a lot of money in order to help big transnational corporations?

If you’d like to learn about our nation’s ideological leanings across the arc of American history, get a copy of Political Catsup with Economy Fries at Amazon.com.  You can learn about classical liberalism, modern liberalism and neoliberalism.  You can find out how they differ and what motivated the political and economic changes that can be observed in the evolution of American policies.

additional sources that you may want to read:

Jacob S. Hacker, Paul Pierson, Winner Take All Politics: How Washington Made the Rich Richer–and Turned Its Back on the Middle Class, Simon and Schuster Paperbacks, New York, 2010.

Charles H. Ferguson, Predator Nation: Corporate Criminals, Political Corruption, and the Hijacking of America, Crown Business, New York, 2012.

Janet Yellen’s term as head of the Federal Reserve Board will soon end and President Trump will select a new leader.  There are six other Federal Reserve Board positions that President Trump may have an opportunity to appoint, according to an article by John Mauldin writing for Forbes.  Mauldin seems to think that Trump would prefer a less dovish Fed.  I would wish for a bigger change than that.

Bank deregulation got going during the Carter Administration and continued until Glass Steagall was repealed during the Clinton Era.  Deregulation has led to innovations like derivatives and financialization that benefit large capital holders.  Meanwhile the rest of the economy continues to decline in prosperity.  Many small businesses have gone under.  Hopelessness abounds and is shown by the opioid crisis and mass shootings.

I would like President Trump to shrink the size of banks.  He should also increase their solvency by requiring them to hold more capital in reserve.  Since the Greenspan Put, the Federal Reserve has promised to shore up banks with tax payer monies in the case of a collapse like the Sub Prime Mortgage Crisis.   Greenspan’s promise became a subsidy for bank failure and it should end.  Glass Steagall was part of the FDIC era and separation of investment banking and commercial banking was another crucial part of it.  According to Dodd Frank, Americans savings can now be used to bail in failing banks (those Americans would lose their savings).  So much for FDIC insurance.  Glass Steagall should be reinstated with meaningful depositor insurance.

The amount of uncertainty that all Americans now are exposed to continues to harm everyday people.  Ninety five million people are out of work in the U.S..  Isn’t it time to realize that deregulation in most areas of our economy has created new harms?  Isn’t it time to stop white-collar fraud in banking and money laundering?  Isn’t it time to stop monopoly banking and Too Big to Fail Banks?  Isn’t it time to use new appointments on the Federal Reserve Board to institute widespread banking regulatory changes that would recapture economic opportunities for more Americans that hold small amounts of capital that they use to raise their families and prepare for retirement?

I heard someone on the radio blaming Americans for the state of the nation.  He thought that people who don’t care about political outcomes cause bad outcomes.  But most Americans aren’t charged with oversight of American Banking the way that the federal government is.  Because of that, I don’t blame everyday people for our economic woes.  I blame Congress’s penchant for deregulation.  I’m calling for a change of seas in federal banking regulation that would restore security to American banking.

If you’d like to learn about neoliberalism and how it affects American politics today including the state of our economy, buy a copy of Political Catsup with Economy Fries at Amazon.com.  It will explain our banking woes and the nature of derivatives and financialization.  Those are essential topics for all Americans.

sources:

John Mauldin, “Trump Could Get Seven Appointments to the Fed,” Forbes, Dec 22, 2016,  http://www.forbes.com/sites/johnmauldin/2016/12/22/trump-could-get-seven-appointments-to-the-fed/#29cc79f339d7, accessed 8 Nov 2017.

Anat Admati and Martin Hellwig, The Bankers New Clothes: What’s Wrong with Banking and What to Do About It,” Princeton University Press, New Jersey, 2013.

Here we are.  The day before Halloween.  And Congress has played us a few tricks.  The ACA hasn’t provided better care even though it has vastly increased healthcare insurance costs across the nation.  It served to signal Congressional concern for the nation’s health.  And political rhetoric opposing the repeal of the ACA continues to harp on about how much Congress cares.  But instead of improving our healthcare opportunities, the ACA has been a way to centralize healthcare operations which has created more healthcare monopoly.  It has also increased taxes.  It has decreased the availability of doctors who are leaving medicine altogether and increased the cost of people’s doctor visits by encouraging more billable testing without helping people to have better health outcomes.  Costs for health insurance and pharmaceuticals have continued to rise.  People’s average life expectancy is falling across the United States.  When the housing bubble happened, after the Federal Reserve and Congress removed Glass Steagall regulatory protections, a lot of people lost their mortgage investment as they were turned out of their homes.  The cost of health insurance is now about the same as the cost that a mortgage used to be.  In fact this high healthcare cost is keeping people out of housing.  I call that a ghoulish policy outcome for the subprime mortgage crisis and the ACA.

Congress and the Federal Reserve also continue to monkey around with the monetary system and our federal budget.  How can people in Congress imagine that more than 20 trillion in debt is good for our nation?  In fact, why do they need to tax Americans at all since they never reduce government debt or government spending?  If they plan to overspend forever in these astronomical amounts, why do they need to tax us–since our taxes do no good?  Hear the wails of suffering in America and contrast them with the public’s forbearance to allow the nation’s budget malfeasance to continue.  Hear those wails and consider them with the amount of our indebtedness that continues to go without payment because Congress so often refuses to shrink federal spending.  Think of suffering moans when you hear empty political rhetoric about guaranteed wages for no work, free universal healthcare, and a free university education and ask yourself where the money to pay for those programs would come from.  It would have to come from taxpayers.  Congress isn’t benevolent and it clearly has pursued policies that diminish our nation’s prosperity.  If you look at Congress’s policies, and you look at the lack of overall prosperity, you should recognize that Congress has finagled terrible economic outcomes that are hurting almost everyone.  Reality can be more scary than Halloween fiction.  It is scarier than Dracula or Freddy Krueger or a werewolf.  Congress is the scariest of all.  Is there a ghost of a chance that our economy can improve in the short-term?

Major news agencies continue to hammer on with a barrage of nasty comments about the Trump presidency.  In fact, all news outlets have been so empty of rational or real content that I only listen now to hear whoppers that everyday convince me that there’s nothing of value in our news.  Instead of telling us something useful or interesting, news has become a way to whip up hysteria.  As economic interventionism by Congress has run its course, the market economy has continued to decline.  In history, U.S. media gained in influence after the Civil War during the age of railroads.  It was strengthened by improvements in transportation and communication that stimulated the second wave of the industrial revolution.  It was borne along and empowered by our once strong market economy.  But as our market economy has failed under the government’s fiat money system and economic interventionism, malinvestment has wasted economic resources and undermined the public’s interest in news feeds that aren’t remotely connected with “news people can use.”  Our economy is a ghost of its once vibrant self.

Zero interest rate policy undermines savers and especially elderly people who have aged out of the labor market.  Because ZIRP has gone on so long and because the ACA provides a way to support elderly people who need care but who can no longer pay for their care, I think that the combination of ZIRP and the ACA are another ghoulish policy combination.  They suck the remaining life out of the financial assets of old Americans and show us the lengths to which our government will go to take away assets and money from people who can’t defend themselves from government maladaptations and government malfeasance.  Growing poverty and helplessness among the American elderly are another policy outcome that will continue to haunt us.

If you want to learn more about how Neoliberalism came to prominence and influence in the United States, read Political Catsup with Economy Fries at Amazon.com.

There weren’t any school shootings when I went to elementary, middle school and high school.  Nobody’s kid shot up their school.  And school suicide rates were a lot lower then.  I was thinking about that and I remembered that when I went to school, kids weren’t medicated like they are being medicated now.  A lot of today’s kids are now put on ritalin and antidepressants.  Can these drugs cause some kids to become violent?  Can they encourage suicide in some?

An article that I pulled from the internet over the weekend, “New Study Confirms What CCHR Has Said for Decades–Antidepressants Cause Violence,” cited several sources that make the claim “that antidepressants can cause violent behavior.”(1)  PLOS Medicine  found that “young adults between the ages of 15-24, were nearly fifty percent more likely to be convicted of a homicide, assault, robbery, arson, kidnapping, sexual offense, or other violent crime when taking the antidepressant than when they weren’t taking the psychiatric drug.”  I mention this age group because my community recently had a school shooting that resulted in a fatality.  It happened just a few weeks ago.  Many people were eager to blame the shooter, but what if he brought those guns to school because he was under the influence of a psychoactive drug?  What if it wasn’t his fault?  What if the fault for this mishap doesn’t belong to him at all?

According to a Wikipedia article (2) that I read over the weekend, “Development and Discovery of SSRI Drugs,” SSRI’s “are recommended by the National Institute of Health and Clinical Excellence (NICE) as a first-line treatment of depression.” and yet Kirstie Alley, the actress famed for her role on “Cheers,” tweeted on Oct 2nd, 2017, that one additional common denominator of “shooters” is psychiatric drugs that have side effects including violence and suicide.  And I think that she meant that those side effects would be found among many age groups, not just among people between 15-24 years of age.  She was, of course, referring to the recent shooting in Las Vegas on the first of October (3).

Many pointless questions and comments are being made about mass shootings and many of them refer either to the guilty mind of the perpetrator or gun rights that American citizens enjoy.  I think that exploring these topics will not help us to stop the problem of mass shootings in America no matter how much we talk about them.  Instead we should focus on pharmaceuticals, their side effects and the profits that pharmaceutical companies are making from psychoactive drugs.  We should notice that mass shootings might be the consequence to society of trying to medicate America into a better state of mind.

We can already see how the profit motive has affected the sale of opiates in the United States.  Many Americans are now dying of opiate addiction and overdose.  But opiates aren’t the only drug that’s being sold for profit instead of to benefit the people for whom it is prescribed.  Antidepressants may be a similar example where large profits have led to a reckless number of unnecessary and harmful prescriptions.  And we should realize further (in the case of antidepressants) that we are observing the externalization of risk to all of us (by exposing us to shooters that are obsessed with violence because of antidepressants) for the sake of making huge amounts of money in the sale of antidepressants by pharmaceutical companies.  According to an article, “Mother’s Little Anti-Psychotic Is Worth $6.9 Billion A Year,” (4) Abilify made almost $6.9 billion dollars for Otsuka America between 2013-2014.  That’s only one of the many drugs that are available from a variety of drug manufacturers.

According to an article titled, “Antidepressants Are A Prescription For Mass Shootings,” there’s now a FDA black box warning for all antidepressants that states “there is an increased risk of suicidal thoughts and behavior by taking the drug.”  Does this warning go far enough?  What if mass shooters are being medicated into violence?  The warning doesn’t say that an antidepressant can make you buy 27 guns and thousands of rounds of ammunition.  It doesn’t say that you might kill a lot of people who you know or don’t know.  According to Dr Peter Breggin, a psychiatrist, “depression rarely leads to violence and it’s only since the SSRI’s came on the market that… mass shootings have taken place.” (5)  The article lists some famous mass shooters and links them with antidepressants.

Regulatory capture happens when perverse incentives encourage regulatory companies to ignore the risk and harm that they are supposed to prevent by stopping the sale of something that can cause harm.  Regulatory capture is happening when NICE makes risky drugs the first line of defense against depression.  Joseph Stieglitz said that “neoliberalism privatizes the profits and socializes the losses,” by externalizing consequences to the public.  Here the terrible consequences are to both young and old Americans that are caught up in pointless violence that has likely been caused by a prescription.  Instead of blaming perpetrators, who take these drugs on the advice of their psychiatrist, it’s time to look at where the money went when the risk was externalized to all of us.

Isn’t it time to pull back on the number of new antidepressant prescriptions?  And isn’t it time for a moratorium on SSRI prescription to people between the age of 15-24?  According to the Wikipedia article mentioned above, withdrawal from anti-depressants has to be gradual and careful, but weaning Big Pharma off the flow of money may be even harder than tapering some patients off antidepressants.

If you would like to learn more about neoliberalism, its political goals and effects on society, read Political Catsup with Economy Fries; copies available on Amazon.com.

Sources:

(1) Patricia O’Meara, “New Study Confirms What CCHR Has Said for Decades–Antidepressants Cause Violence,” September 22, 2015, http://www.cchrint.org/2015/09/22/new-study-confirs-cchr-antidepressants-cause-violence/, accessed 7, Oct 2017.

(2) “Development and Discovery of SSRI Drugs,” http://www.en.wikipedia.org/wiki/Development_and_discovery_of_SSRI_drugs, accessed 7, Oct 2017.

(3) “Las Vegas Strip Shooter Prescribed Anti-Anxiety Drug in June”, https://www.reviewjournal.com/local/the-strip/las-vegas-strip-shooter-prescribed-anti-anxiety-drug-in-june, accessed 7, Oct 2017.

(4)  Jay Michaelson, “Mother’s Little Anti-Psychotic Is Worth $6.9 Billion A Year,” http://www.thedailybeast.com/mother’s-little-anti-psychotic-is-worth-dollar69-billion-a-year, 9, Nov 2014, accessed 7, Oct 2017.

(5) “Antidepressants Are a Prescription for Mass Shootings,” http://www.cchrflorida.org/antidepressants-are-a-prescription-for-mass-shootings/, accessed 7,Oct 2017.

(6) Ali Le Vere, GreenMedInfo.com, “Mass Shootings: The New Manifestation of an Ancient Phenomenon and their Link to Psychiatric Drugs,” http://Kellybroganmd.com/Author/Ali-Le-Vere-Greenmedinfo-Com/, accessed 10, Oct 2017.

Remember school report cards under a grading system?  Teachers would give scores for tests and tally up your total and then declare your grade.  Careful students would already know their grade because they would have paid attention to what they were doing.  What is Congress doing?  Is Congress paying attention?

How do you think that they are performing as legislators?  What are the consequences of their policies?  Did Congress try to get outcomes that would create prosperity for most Americans?  Aren’t there more people on the margins of society now–people, for example, who can’t find a job?  Do you think that Congress is maybe just trying to save people at the margins from some of the economic disasters that Congress has been causing with deregulation, globalization, financialization, and greater economic centralization?  Does Congress even have a plan in mind for overall prosperity?  Some members of Congress sound like they’re telling themselves that the ACA is for saving people at the margins, but just look at the people who are not saved, and look at high inflation in healthcare.  And look at cyber-insecurity that extends to those new digitized healthcare accounts.

Congress doesn’t seem to look out for the long-term consequences of their decisions, from globalization, to financialization to war.  Lately, since so much of our economy is going digital, I’ve wondered what would happen if our satellites were destroyed or taken over by a foreign power.  Should we rely so much economically upon digital technologies?  If you were Congress’s teacher, wouldn’t you remind them that long-term outcomes matter to our society and to individuals?  Would you instruct Congress to look not just at tomorrow but at many years worth of tomorrows?

I wish that members of Congress would give their own policies a grade.  I would like them to remember what they were trying to accomplish with globalization or financialization or adopting digital technologies or many of their other big change policies that have established the “new normal”.  Then I would like Congress to evaluate their policies based on their original goals.  Did they achieve their goals?  Then they could also evaluate the unintended consequences of their policies.  Give the policy a grade.  Should Congress keep that policy or change it based on the outcomes that it has caused?

As Congress has continued practicing economic interventionism, their effectiveness as legislators has declined.  But Congress continues on a path of economic interventions.  How can we stop Congress from making even more economic mistakes?  How can we restore Congress to a more effective legislative body?  What changes are necessary?  How can we become a strong nation again based on improved economic performance and improving prosperity?  Read Political Catsup with Economy Fries to discover answers to these questions and others, available on Amazon.com.