How Billionaires Become Billionaires & Destroying the Mixed Economy in the US, France and Brazil
THE JAMES PETRAS DOSSIER
Part One: How Billionaires Become Billionaires
How the Billionaires become Billionaires
One of the most likely sources of billionaire wealth is through tax evasion in all of its guises and forms.
Contrary to the propaganda pushed by the business press, between 67% and 72% percent of corporations had zero tax liabilities after credits and exemptions ... while their workers and employees paid between 25 – 30% in taxes. The rate for the minority of corporations, which paid any tax, was 14%.
Th eight richest people in 2017: Bloomberg, Zuckerberg, Bezos, Slim, Ellison, Buffet, Salinas, Gates. This certainly leaves out other major players in the global plutocracy whose fortunes are not easily quantified but which may dwarf this gallery of moguls, people like the Saudi king (the Saud clan literally owns Saudi Arabia), other Gulf royals, the Queen of England, and similar personages.
According to the US Internal Revenue Service, billionaire tax evasion amounts to $458 billion dollars in lost public revenues every year - almost a trillion dollars every two years by this conservative estimate.
The largest US corporations sheltered over $2.5 trillion dollars in overseas tax havens where they paid no taxes or single digit tax rates. Meanwhile US corporations in crisis received over $14.4 trillion dollars (Bloomberg claimed 12.8 trillion) in public bailout money, split between the US Treasury and the Federal Reserve, mostly from US tax payers, who are overwhelmingly workers, employees and pensioners.
The recipient bankers invested their interest-free or low interest US bailout funds and earned billions in profits, most resulting from mortgage foreclosures of working class households.
Through favorable legal rulings and illegal foreclosures, the bankers evicted 9.3 million families. Over 20 million individuals lost their properties, often due to illegal or fraudulent debts.
A small number of the financial swindlers, including executives from Wall Street’s leading banks (Goldman Sachs, J. P. Morgan etc), paid fines - but no one went to prison for the gargantuan fraud that drove millions of Americans into misery.
There are other swindler bankers, like the current Secretary of Treasury Steve Mnuchin, who enriched themselves by illegally foreclosing on thousands of homeowners in California. Some were tried; all were exonerated, thanks to the influence of Democratic political leaders during the Obama years.
Silicon Valley and its innovative billionaires have found novel way to avoid taxes using overseas tax havens and domestic tax write-offs. They increase their wealth and corporate profits by paying their local manual and service workers poverty level wages. Silicon Valley executives ‘earn’ a thousand times more than their production workers..
Class inequalities are further reinforced by ethnic divisions. White, Chinese and Indian multi-millionaires exploit Afro-American, Latin American, Vietnamese and Filipino workers.
Billionaires in the commercial conglomerates, like Walmart, exploit workers by paying poverty wages and providing few, if any, benefits. Walmart earns $16 billion dollar a year in profits by paying its workers between $10 and $13 an hour and relying on state and federal assistance to provide services to the families of its impoverished workers through Medicaid and food stamps. Amazon plutocrat Jeff Bezos exploits workers by paying $12.50 an hour while he has accumulated over $80 billion dollars in profits. UPS CEO David Albany takes $11 million a year by exploiting workers at $11 an hour. Federal Express CEO, Fred Smith gets $16 million and pays workers $11 an hour.
Inequality is not a result of ‘technology’ and ‘education’- contemporary euphemisms for the ruling class cult of superiority - as liberals and conservative economists and journalists like to claim. Inequalities are a result of low wages, based on big profits, financial swindles, multi-trillion dollar public handouts and multi-billion- dollar tax evasion. The ruling class has mastered the ‘technology’ of exploiting the state, through its pillage of the treasury, and the working class. Capitalist exploitation of low paid production workers provides additional billions for the ‘philanthropic’ billionaire family foundations to polish their public image – using another tax avoidance gimmick – self-glorifying ‘donations’.
Workers pay disproportional taxes for education, health, social and public services and subsidies for billionaires.
Billionaires in the arms industry and security/mercenary conglomerates receive over $700 billion dollars from the federal budget, while over 100 million US workers lack adequate health care and their children are warehoused in deteriorating schools.
Workers and Bosses: Mortality Rates
[dropcap]B[/dropcap]illionaires and multi-millionaires and their families enjoy longer and healthier lives than their workers. They have no need for health insurance policies or public hospitals. CEO’s live on average ten years longer than a worker and enjoy twenty years more of healthy and pain-free lives.
Private, exclusive clinics and top medical care include the most advanced treatment and safe and proven medication which allow billionaires and their family members to live longer and healthier lives. The quality of their medical care and the qualifications of their medical providers present a stark contrast to the health care apartheid that characterizes the rest of the United States.
Workers are treated and mistreated by the health system: They have inadequate and often incompetent medical treatment, cursory examinations by inexperienced medical assistants and end up victims of the widespread over-prescription of highly addictive narcotics and other medications. Over-prescription of narcotics by incompetent ‘providers’ has significantly contributed to the rise in premature deaths among workers, spiraling cases of opiate overdose, disability due to addiction and descent into poverty and homelessness. These irresponsible practices have made additional billions of dollars in profits for the insurance corporate elite, who can cut their pensions and health care liabilities as injured, disabled and addicted workers drop out of the system or die.
The shortened life expectancy for workers and their family members is celebrated on Wall Street and in the financial press. Over 560,000 workers were killed by opioids between 1999-2015 contributing to the decline in life expectancy for working age wage and salary earners and reduced pension liabilities for Wall Street and the Social Security Administration.
Inequalities are cumulative, inter-generational and multi-sectorial.
[dropcap]B[/dropcap]illionaire families, their children and grandchildren, inherit and invest billions. They have privileged access to the most prestigious schools and medical facilities, and conveniently fall in love to equally privileged, well-connected mates to join their fortunes and form even greater financial empires. Their wealth buys favorable, even fawning, mass media coverage and the services of the most influential lawyers and accountants to cover their swindles and tax evasion.
Billionaires hire innovators and sweat shop MBA managers to devise more ways to slash wages, increase productivity and ensure that inequalities widen even further.
Billionaires do not have to be the brightest or most innovative people: Such individuals can simply be bought or imported on the ‘free market’ and discarded at will.
Billionaires have bought out or formed joint ventures with each other, creating interlocking directorates. Banks, IT, factories, warehouses, food and appliance, pharmaceuticals and hospitals are linked directly to political elites who slither through doors of rotating appointments within the IMF, the World Bank, Treasury, Wall Street banks and prestigious law firms.
Consequences of Inequalities
[dropcap]F[/dropcap]irst and foremost, billionaires and their political, legal and corporate associates dominate the political parties. They designate the leaders and key appointees, thus ensuring that budgets and policies will increase their profits, erode social benefits for the masses and weaken the political power of popular organizations.
Secondly, the burden of the economic crisis is shifted on to the workers who are fired and later re-hired as part-time, contingent labor. Public bailouts, provided by the taxpayer, are channeled to the billionaires under the doctrine that Wall Street banks are too big to fail and workers are too weak to defend their wages, jobs and living standards.
Billionaires buy political elites, who appoint the World Bank and IMF officials tasked with instituting policies to freeze or reduce wages, slash corporate and public health care obligations and increase profits by privatizing public enterprises and facilitating corporate relocation to low wage, low tax countries.
As a result, wage and salary workers are less organized and less influential; they work longer and for less pay, suffer greater workplace insecurity and injuries – physical and mental - fall into decline and disability, drop out of the system, die earlier and poorer, and, in the process, provide unimaginable profits for the billionaire class. Even their addiction and deaths provide opportunities for huge profit - as the Sackler Family, manufacturers of Oxycontin, can attest.
The billionaires and their political acolytes argue that deeper regressive taxation would increase investments and jobs. The data speaks otherwise. The bulk of repatriated profits are directed to buy back stock to increase dividends for investors; they are not invested in the productive economy. Lower taxes and greater profits for conglomerates means more buy-outs and greater outflows to low wage countries. In real terms taxes are already less than half the headline rate and are a major factor heightening the concentration of income and power – both cause and effect.
Corporate elites, the billionaires in the Silicon Valley-Wall Street global complex are relatively satisfied that their cherished inequalities are guaranteed and expanding under the Demo-Republican Presidents- as the ‘good times’ roll on.
Away from the ‘billionaire elite’, the ‘outsiders’ – domestic capitalists – clamor for greater public investment in infrastructure to expand the domestic economy, lower taxes to increase profits, and state subsidies to increase the training of the labor force while reducing funds for health care and public education. They are oblivious to the contradiction.
In other words, the capitalist class as a whole, globalist and domestic alike, pursues the same regressive policies, promoting inequalities while struggling over shares of the profits.
One hundred and fifty million wage and salaried taxpayers are excluded from the political and social decisions that directly affect their income, employment, rates of taxation, and political representation.
They understand, or at least experience, how the class system works. Most workers know about the injustice of the fake ‘free trade’ agreements and regressive tax regime, which weighs heavy on the majority of wage and salary earners.
However, worker hostility and despair is directed against ‘immigrants’ and against the ‘liberals’ who have backed the import of cheap skilled and semi-skilled labor under the guise of ‘freedom’. This ‘politically correct’ image of imported labor covers up a policy, which has served to lower wages, benefits and living standards for American workers, whether they are in technology, construction or production. Rich conservatives, on the other hand, oppose immigration under the guise of ‘law and order’ and to lower social expenditures – despite that fact that they all use imported nannies, tutors, nurses, doctors and gardeners to service their families. Their servants can always be deported when convenient.
The pro and anti-immigrant issue avoids the root cause for the economic exploitation and social degradation of the working class – the billionaire owners operating in alliance with the political elite.
In order to reverse the regressive tax practices and tax evasion, the low wage cycle and the spiraling death rates resulting from narcotics and other preventable causes, which profit insurance companies and pharmaceutical billionaires, class alliances need to be forged linking workers, consumers, pensioners, students, the disabled, the foreclosed homeowners, evicted tenants, debtors, the under-employed and immigrants as a unified political force.
Sooner said than done, but never tried! Everything and everyone is at stake: life, health and happiness.
Part Two
The Fall Offensive: the US, France and Brazil James Petras
[dropcap]T[/dropcap]he fall of 2017 will witness the most brutal assault on working and middle class living standards since the end of World War II. Three presidents and their congressional allies will ‘revise’ labor legislation, progressive income tax laws and regulations and effectively end the mixed economy in France, the US and Brazil.
Throughout the summer, public opinion has been diverted by US threats to launch new overseas wars, France’s rhetoric about forming a post-Brexit, Berlin-Paris pact, which will remake the European Union, and Brazil’s President Michel Temer’s corruption and crime scandals.
These superficial controversies will be overwhelmed by fundamental class conflicts, which promise to alter the present and future structural relations within Western capitalism.
President Trump’s Fall Offensive: Profits, Wars and Epidemics
[dropcap]P[/dropcap]resident Trump proposes to enrich capitalists and intensify class inequalities via his radical transformation of the tax system. Corporate taxes will be cut in half; overseas corporate taxes will be abolished; and wage and salaried workers will pay more for fewer social benefits.
Trump can count on the support of the Republican leadership, business and banking elite and sectors of the Democratic Party in his plans to roll out a massive tax giveaway for the billionaires.
Trump’s cabinet, led by the Goldman Sachs trio and his troika of generals will ensure that the budget will include slashing the funds for education and health in order to increase military spending, expand wars and cut taxes for the rich.
Even more aggressive threats against North Korea, Russia, Iran, Venezuela and China, greater overseas war spending and troop levels in Afghanistan and the overt militarization of policing, immigration control and domestic intelligence will result in drastic cutbacks on federal programs for the poor and working classes. Declining access to quality health care for workers and deterioration in workplace safety conditions will fuel the opioid addiction epidemic leading to hundreds of thousands more premature worker deaths by overdose, injury and inadequate, incompetent care.
President Emmanuel Macron: The Capitalist Offensive in France
In France, the workers and middle class face the most comprehensive attack on their employment rights and progressive social legislation in modern history.
President Emmanuel Macron has declared his goal of completely transferring socio-economic power from French workers to capital by gutting all pro-labor laws and protections. Employees will have to negotiate with their bosses, one plant and one office at a time, thereby undermining the collective bargaining power of a united working class. Employers will be free to hire and fire workers with virtually no restrictions or consequences. Temporary and short-term ‘garbage’ contracts will proliferate, destroying long-term worker stability. Macron will eliminate the jobs of over 100,000 public employees while slashing corporate taxes by over $50 billion euros.
In contrast to massive tax cuts for the bourgeoisie, Macron proposes to increase taxes on French pensioners, hitting millions of retirees. Once in place, Macron’s legislative agenda will concentrate power, profits and wealth of capital while increasing inequalities and class polarization. Responding to the economic interests of the bankers, Macron promises to lower the deficit to 3% of GDP through massive cuts in health and education.
Under the pretext of ‘reducing unemployment’, Macron will promote part-time and temporary employment for French youth and immigrant workers, stripping all French workers of their hard-fought gains in job security and labor rights. Macron justifies his assault on labor by dismissing workers as ‘lazy’.
Brazil: The Great Fire Sale
Temer
Michel Temer, Brazil’s ‘unelected’ President plans to privatize 57 public enterprises – the crown jewels of Brazil’s economy. This will amount to the biggest capitalist asset grab in two centuries!
Included in the sell-off are: oil fields, energy transmission lines, highways, airports, as well as Brazil’s mint and lottery. Electrobas, Latin America’s biggest electricity generator, is up for grabs. In addition, Temer plans to raise interest rates charged by the state-owned development bank BNDES to increase the private bankers’ share of lending and profits.
This naked grab of profitable state enterprises by private domestic and foreign investors will lead to the loss of hundreds of thousands of jobs and the lowering of wages, salaries and pension payments. Temer started to slash state pension liabilities by increasing the age of retirement by several years. Wages and social benefits have been frozen for the foreseeable future. Presidential decrees, which dictate the terms of labor contracts, threaten collective bargaining.
The Capitalist Offensive: Results and Perspectives
These presidents have declared their intention to launch full-scale ‘class war from above’ – the consequences of which remain to be seen. The presidents, who rule by fiat, are treading fragile terrain. Each is facing major political, economic and social challenges.
All three presidents have lost public support since taking power, especially among their lower middle and working class-class voters.
Macron’s approval dropped from 65% to 40%; Trump from 49% to 35%; and Temer (who was not elected) barely retains 5% (and falling) public approval.
Brazil: Facing the Abyss
Despite uncertainties over the regime’s stability and future, foreign investors and the financial press supports Temer.
President Temer’s isolation from Brazil’s voting public has weakened his power in the Congress, and among the domestic banking elite and oil and power corporations. However, if the trade unions call for widespread militant strikes by manufacturing workers, public employees and the landless rural workers’ movement (MST) is effective and paralyzes the economy, Temer may be forced to resign before his program is implemented. Meanwhile, President Temer faces numerous judicial investigations for corruption.
Strategically, Temer can count on international support, especially from the US State Department, Treasury, Pentagon and the European Union. The neo-liberal regimes in Argentina, Uruguay, Chile, Paraguay, Peru, Colombia and Mexico have voiced strong support for Temer, especially since they have also received bribes from the same Brazilian corporate oligarchs! Under Temer, the Brazilian economy has declined by over 5% since he took power in a ‘legislative coup d’état’. His budget deficit exceeds 9% and unemployment has doubled to over 11%.
Despite support from foreign and domestic elite, Temer’s presidency will not survive. Under mass pressure and with looming elections, Brazil’s Congress may decide to allow the courts to prosecute Temer and block his proposed sellout of public assets.
Credit rating agencies are going to downgrade the Brazil’s economy to ‘junk’ status, undercutting new investments. With new elections on the horizon in 2018, it is clear that Temer will not even run for the presidency and his proposals to privatize Brazil’s major firms may not succeed. The economic recession has sharply reduced tax revenues and the possibility of receiving any significant boost from privatization is dubious. Even Temer’s initial regressive measure - the slashing of public pensions- has bogged down in bureaucratic infighting. However, the opposition to Temer’s capitalist offensive has yet to strike a decisive, organized blow.
The Congressional opposition, led by the center-left Workers Party (PT), is a distinct minority with many of its leaders facing their own corruption trials. The PT is incapable of blocking, let alone ousting, Temer. The rightwing opposition in Congress is divided between those who back Temer - based on party patronage - and those who want to replace Temer while pushing for his anti-labor agenda. The trade unions, led by the CUT, have mounted sporadic protests and made rhetorical gestures, while the MST (the landless rural workers) and associated ecological and homeless movements, which lack militant mass urban support, would be unable to topple Temer.
Ex-President Lula Da Silva has regained some degree of mass voter support but faces corruption charges, which may ban him from political office – unless there is a major mass mobilization.
In sum, the rightwing, pro-capitalist offensive in Brazil is comprehensive -- offering public assets and private profits-- but weak in institutional support and economic fundamentals.
A big-push from the Left could undermine the political base for Temer’s economic team, however, it is not clear which party or leaders would replace him.
France: Bonaparte in the Palace, Workers on the Streets
[dropcap]W[/dropcap]hen President Emmanuel Macron was elected President of the Fifth Republic, he carried a mass electoral base as well as the support of France’s leading business and banking organizations. However, in the run-up to the launching of his capitalist offensive the mass base has evaporated. Voter disapproval is rising rapidly. The militant wing of the trade unions (CGT) prepares to launch general strike. His regressive tax agenda has alienated wide sectors of the petit bourgeois, especially public-sector employees.
Macron’s concentration of executive power (his Bonapartist complex) has turned his allies on the right against him.
The outcome of Macron’s offensive is both likely and uncertain.
For one thing Macron enjoys a majority in the French Congress. The economy is growing and investors are exuberant. Tax-conscious small business groups are happy. Labor is divided with the class collaborationist CFDT and FO refusing to join with the trade union opposition.
The European Union is united, up to a point, in its support for Macron. Equally important, Macron is determined to crush street protests and sporadic, partial strikes with demagogic appeals through the corporate mass media, coercion and outright state repression.
The political party opposition, led by the left socialists and the nationalists, is divided. The Socialist Party barely exists. Pensioners and students are opposed to Macron, but have not taken to the streets. Few among the professional class and liberal academia retain any illusions about the ‘new centrist President’ but few are willing to actively confront the ‘the new Bonaparte’.
Macron has fashioned a formidable alliance between the state apparatus and the business ruling class to crush worker opposition. But popular opposition is growing and is furious at his agenda and insults: ‘They (French workers) have had it too good...’ To defeat Macron, they must unite the opposition and build a strategy of prolonged class warfare.
Macron will not give in to transitory strikes. If Macron’s capitalist offensive succeeds, it will have enormous implications for the French working class, especially the rights of workers and salaried employees to organize and struggle. A victory for Macron will profoundly undermine the structure and membership of popular organizations, now and in the future. Moreover, a defeat for French workers will reverberate throughout the EU and beyond. Conversely, a victory for labor could trigger mass struggles across Europe.
The United States
[dropcap]A [/dropcap]powerful opposition could confront President Trump’s capitalist offensive, but it will not be led by the highly bureaucratized trade unions representing less than 8% of the private sector labor force. Trump’s enemies among the Democratic and Republican Party elite have dismissed Trump’s ‘working class’ supporters as ‘white supremacist and neo-Nazis’. American workers’ concerns have been trivialized and marginalized by the divisive politics of ‘identity’, so blatantly used by both parties. Trump’s capitalist offensive in favor of a regressive pro-corporate tax cuts and the gutting of social welfare (health, education, housing, environment and worker safety) has failed to provoke sustained, unified social opposition. In the US, the pro-business elites dominate and dictate the agendas of both the incumbent Trump regime and the ‘elite opposition forces’.
The official ‘anti-Trump opposition’, which terms itself a ‘resistance’, promotes ‘identity’ interests linked to elite political representation. It works hard to undermine any possibility of working class unity based on common socio-economic interests by focusing on marginal and divisive issues. In the midst of mass poverty, declining life expectancy and an epidemic of suicide and drug overdose deaths, the ‘resistance’ forces of the elite opposition concentrate on manufactured foreign (‘Russia-gate’) conspiracies and life style issues (trans-genders in the US Special Forces) to overthrow the Trump regime. They have no intention to forge any class alliances that might threaten Trump’s regressive capitalist agenda.
The struggle this fall in the US will not be between labor and capital: It will spotlight the contradiction between what remains of Trump’s business protectionist agenda and the Democrats’ neo-liberal free trade policies. The capitalist offensive against labor in the USA was already determined by default. US trade union officials are marginal and inconsequential actors, incapable and unwilling to politicize, educate and mobilize workers.
Trump’s capitalist offensive appeals to investors and boosts the stock market. The majority of his economic team is tied to Wall Street bankers against so-called economic nationalists. Trump’s mindless chauvinist rhetoric to the populace is openly dismissed by the plutocrats within his own cabinet, who complain they have been targeted by ‘fascists and anti-Semites’ (meaning Trump’s deplorable and angry voter base).
The United States is the only country in the industrial world launching a massive, sustained capitalist offensive without an anti-capitalist opposition. The American working class is openly ‘deplored’ by the major elements of the elite opposition and blatantly manipulated by its fake ‘champion’, Trump.
The consequences are pre-determined. The capitalist offensive cannot lose; both capitalist sides ‘win’. Under the Businessman-President Trump, multi-national corporations will secure lower taxes and degrade working class living standards and social benefits. Bi-partisan agreements will ensure that banks are completely deregulated. The elite anti-Trump opposition will ensure that ‘their’ capitalists get favorable neo-liberal trade agreements, guaranteeing their access to cheap immigrant labor and a non-unionized workforce denied workplace safety and environmental regulations.
While France and Brazil face real class war, the ‘classless’ US slouches toward nuclear war. Macron confronts militant trade unions, Temer faces the fury of broad social alliances, and Donald Trump marches after ‘his Generals’ to nuclear conflagration. He invades Russian diplomatic properties; points nuclear weapons at Moscow and Beijing; holds massive offensive exercises and stations THAAD missiles on the border of North Korea; and escalates US air and ground force operations in a 16-year losing war in Afghanistan.
Workers in Europe and Latin America choose to fight capitalists in defense of their class interests, while US workers have become passive spectators to the looming possibility of nuclear war, when they are not in a prescription-induced opioid stupor. Defeating the capitalist offensive in France and Brazil can advance the cause of social justice and ensure concrete benefits for workers and masses of people; Trump’s unopposed capitalist military offensive will send clouds of nuclear ashes across the world.
James Petras is a world-renowned public intellectual. He is a retired Bartle Professor of Sociology at Binghamton University in Binghamton, New York and adjunct professor at Saint Mary's University, Halifax, Nova Scotia, Canada who has published extensively on Latin American and Middle Eastern political issues.
JAMES PETRAS—Trump’s capitalist offensive appeals to investors and boosts the stock market. The majority of his economic team is tied to Wall Street bankers against so-called economic nationalists. Trump’s mindless chauvinist rhetoric to the populace is openly dismissed by the plutocrats within his own cabinet, who complain they have been targeted by ‘fascists and anti-Semites’ (meaning Trump’s deplorable and angry voter base). The United States is the only country in the industrial world launching a massive, sustained capitalist offensive without an anti-capitalist opposition.
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