On October 24th, a week and a world ago, Temma Kaplan and I hosted a teach-in on the steps of Brower Commons, the old student union at Rutgers-New Brunswick. We thought we’d bring some Occupy Wall Street press team folks out to New Jersey and let them talk about the movement, then open up the microphone to whoever wanted to vent.
We had a list of speakers, including ourselves, but we didn’t have an order, and one of the people on our “official” list, Jessica Lingel, I met an hour before the event through Richard Moser, the AAUP rep at Rutgers. About half of the 20 or so speakers did impromptu riffs, and two of them were freshmen who decided on the spot to say something! It lasted for over two hours. Not a lot of people, maybe 80 at the most crowded moment, but a lot of energy. A good vibe, a good time. We’ll continue!
Later today I’ll post the poem that Senia Barraegan, an OWS press team member, started with. Meanwhile I’ll revisit two of the touching moments Jessica spoke of. One was the morning of the scheduled “clean-up,” when at 6:00 AM the streets around Zuccotti Park were suddenly teeming with people who came to shield the Occupation from invasion by the cops and the sanitation workers (compare the interview with Justin Cox/Kray La Soul @ Occupy Wall Street VIII below).
The other was a proposal of marriage voiced, echoed, amplified, and completed by the human mic—that call and response—in Zucchotti Park. The way Jessica explained it was, these two realized they wanted to spend the rest of their lives in the state of commitment enabled by this community. It was a beautiful moment, then and then again.
I wrote up my remarks for the occasion because they occurred to me in a strange flurry of unconscious connections. I’d been pondering the mantra of the 1% paying 40% of the taxes, offered by Ross Douthat and David Brooks at the New York Times as well as more reputable Republican sites, and I finally realized that what is missing from all the discussion of tax policy is corporations. Since when do we speak only of personal income taxes? Since the supply-side revolution sealed the deal on the cause-effect relation between private investment and economic growth. Thereafter, the bipartisan consensus became “Hands Off Corporate Profits.”
But the elephant in the cloak room was always “outsourcing”—that is, the ability of American-based multinational corporations to locate their manufacturing sites offshore and export their finished products back to the United States (so that around half of all “imports” in the so-called trade deficit are not exactly “foreign”). The tax incentives since World War II have encouraged this relocation, as a means of exporting surplus capital and, yes, making it available to less-developed parts of the world. If we raise corporate taxes here, won’t they just relocate more of their operations—production, marketing, finance, whatever—overseas? Isn’t it obvious that if we go after corporate income, more good jobs get exported, real wages decline again, and consumer spending is impaired even more?
Well, OK. What if we treat those American-owned offshore platforms as what they actually are, US corporations subject to domestic tax policy? Or how about this, if corporations are persons, as per Citizens United and its late-19th century precedents, let’s tax them as such and forget about revising the code that applies to the multinationals? Then a flat tax on personal incomes over whatever lifts an individual or a family out of officially defined poverty might begin to make sense.
Anyway, here’s the talk, and believe me, what I said had a perverse relation to these written words.
Talk for Teach-Out, October 24th, 2011
I’m here to talk about the sources and solutions of our economic crisis, which has become a global political crisis—and maybe an opportunity as well.
The source of this crisis is simple: surplus capital, too much money in the wrong hands—the bankers, who put it into bubbles as fast as they could collect it. Why? There was no place else to put it.
And where were they collecting all that money from? Not consumers, who stopped saving fifteen years ago. No, the banks got bloated with too much money because the corporations increased their profits at the expense of working peoples’ wages.
When wages stagnated, household savings disappeared. Consumers couldn’t spend enough out of their wages and salaries to keep the economy growing, so they borrowed what they could against their houses and maxed out on their credit cards. Meanwhile the corporations and the banks stopped investing, except of course in dot.com IPOs and the housing bubble. They now sit on trillions of dollars of retained earnings—idle profits.
You want to stop the boom-bust cycle of the last 30 years? You want to solve this crisis? Then reduce corporate profits by raising wages—that’s right, by redistributing income, and raising taxes on the rich.
We’ve heard from the 1% and their lackeys that they pay 40% of the personal income taxes. Who cares? Raise their rates! They’ll stay rich, believe me, and meanwhile the rest of us will receive better public educations, among other services.
Warren Buffett is a nice man, but he misses the point when he complains that his personal income tax rate is lower than his secretary’s. The key here is not personal income taxes—it’s that corporate income taxes have been falling fast since the 1960s, as a proportion of federal revenue and as a matter of marginal rates. Raise those rates, make them effective, and you solve the so-called budget deficit problem.
We have been told that the downside of these radical changes in the tax code is less investment by corporations, thus less job creation and slower growth. There is no such downside. Here’s why.
First, the corporations and the banks have been sitting on a huge pile of retained earnings since 2001. They’re not investing anyway.
Second, and much more important, is the best kept secret of the 20th century: net private investment for profit has been steadily declining as a share of GDP for 100 years. Spending by consumers—“investment” in their residential mortgages—and spending by government—“investment” in public goods like education, health, welfare, and social services—these have taken up the slack, driving real economic growth since 1933.
What follows? Cutting taxes on corporate profits is a way of starving one of the two crucial sources of productive investment and job creation in the postwar world—government spending.
So we don’t need to reward the 1% by cutting their taxes some more and pretending that they’re the “job creators” who will solve this economic crisis. In fact, we don’t need them at all because we don’t need their investments to create jobs and promote growth! We need more consumer spending and more government spending.
And that’s a way of saying we don’t need the profit motive, what John Maynard Keynes called a “somewhat disgusting morbidity,” to determine the future. We’ve got other motives, other purposes—like social justice, at home and abroad.
We solve this economic crisis by acting on those other motives and purposes. That’s what Occupy Wall Street is all about.
I know what some of you are thinking. If we threaten corporate profitability with a tax code that rewards consumer spending, aren’t we indulging the insane excesses of consumer culture—yo, Snooki!—and meanwhile begging big companies to move their operations overseas?
I’m on record in favor of consumer culture—not necessarily “Jersey Shore”—so I’ll bracket that question for now, and address the more pressing one.
Yes, corporations have long used tax breaks and lower wages elsewhere to pry new privileges from local governments and employees. If we raise domestic tax rates on corporate profits, won’t they figure out ways to move their money overseas, thus draining more jobs from the US.? Well, yes they will, unless we change the tax code so that they’re not rewarded for doing so.
But as long as we’re raising taxes on corporate profits at home, we might as well raise them on profits earned overseas, so that the powerful incentive to export surplus capital is erased. Then we’ll have to decide how to manage that surplus in the interests of the 99%.
To do that, we’ll have to socialize the banking system—not nationalize it. In fact, we already have socialized it, because we, the people, guarantee each other’s deposits with our tax dollars. So there’s no good reason to keep our money under the private control of the bankers. We might as well admit that we, the people, can and should take responsibility for our own money.
We can leave the experts in charge at the banks, of course. But meanwhile we change their motives and purposes, from higher profits and bigger bonuses to, say, better and greener jobs, a more perfect, democratic union based on both liberty and equality. We turn the Masters of the Universe into public servants.
We turn the world upside down.