Featured Quote

In 1913, Henry Ford wrote the following as the directors had been reaping the rewards of profits - "The wages we pay are too small in comparison with our profits. I think we should raise our minimum pay rate".

Friday, March 18, 2011

More on Ethical Capitalism

While I thought I came to this idea pretty much on my own, it seems that I am following in the footsteps of a U.K. heroine! Noreena Hertz is a visionary and talks about exactly what I've been talking about for a while now. She has been at it from as far back as 2004!
With inequality surging, resources diminishing rapidly, and the earth's very future in question, capitalism-at-all-costs is no longer an option, she insists: "I have problems with this very extreme form of capitalism where the pendulum has swung so far in one direction, where the focus is completely on the short term, and no one is thinking about the consequences."
The largest financial crisis since the Great Depression confirmed Hertz's long-standing conviction that there would be dire consequences if unregulated markets were rewarded for success but not penalized for failure.
Hertz's last piece of advice was to the CEO himself. She told him if the company maintained its CEO-centric culture, in which voices from below couldn't make themselves heard, it would continue to operate with blinders on. "Companies have a choice at this moment as to which side of the fence they're on," says Hertz.
Co-op capitalism: co-ops work within a market-economy framework and are profit oriented, but because workers all own shares in the companies they work for, a long-term focus and a desire for collective success are built into the system.
Hertz points out that a country's "health" most often correlates with its levels of inequality, now at an all-time high in the United States.
Books to Read : The Silent Takeover and The Debt Threat
Google More about Noreena Hertz.

This Article goes a lot further than my idea of Ethical Capitalism.  The article seems to suggest taking the leap off the cliff, but I am suggesting we take the steps one at a time to get there.

This author also cites Henry Ford as inspiration.
The most serious, the most large-scale, and undoubtedly the most immoral of these scandals does not, however, fall into these categories, because it is legal. Salaries, plus stock options, plus various benefits - the compensation of presidents and the two or three highest officers of today's big multinational companies - have gone from roughly forty to fifty times their employees' average salary (Henry Ford's ratio of decency) thirty years ago to some three hundred fifty or four hundred times that average salary today.
Movie : Inside Job (but donate and get it from TruthOut!)

Policy Innovations calls for us to be ethical in business and fully consider the consequences of one's actions.
I asked United Nations Special Representative John Ruggie whether ethical capitalism is possible. "Well, sure," he said with a grimace. "But it won't occur unless policies and regulations provide the right incentives," he continued. "The role of ethics is in shaping those regulatory regimes."
This is what I would like to avoid.  Government Regulations are a Last Resort.  Companies have the ability to self regulate - and its only when they refuse that government has to step in.

Book : The Promise of American Life (published in 1909) (Kindle edition is free!)

My blog at Politico.com introducing "ECSUS" - a concept I hope takes off.

The Right's Attack on Democracy

The Right's Attack on Democracy / the Middle Class

Voter Suppression tactics :
Attack Acorn to stop voter registration.
Attack to suppress the will of the voter.

Citizens United - To empower Corporations to buy elections :
The Full Opinion
Wikipedia entry on the decision.

Union Busting - To destroy opposition power in elections
I rallied to support Wisconsin.
Sneaky - and probably illegal - methods used to strip bargaining rights.
Wisconsin governor wins his battle with unions on collective bargaining.
Americans oppose republican attack on unions.
Union attacks are supposed to hurt Democratic campaigns.

Attacking Education - to create an uneducated working class for cheap labor to corporations.
Business Week
Huffington Post
Barack Obama dot com
The Young Turks

End Non-biased Media - To eliminate honest coverage
Attacks on NPR to silence Knowledge

Tax Retirees??  I thought they abhored raising taxes?? I guess they just hate old people a lot more.

Citizens United decision is apparently not enough, now they want to totally open financial floodgates to allow them to buy elections - even by foreign corporations!!

Roll back regulations preventing financial abuses by Whaaa Street that caused the Great Recession of 2008-whenever we recover

Cut Funding to just about everything reasonable and rational - favoring the wealthy while stepping on the poor.
Tsunami warning and relief
National Security
People are protesting!
Cuts called "indiscriminate"
...and there is a big list of them!

Thursday, March 17, 2011

A Look into my Research

Hold on, its a wild ride... my research notes :





http://www.aft.org/pdfs/pubemps/pecompsurvey0910.pdf (page 76)

Good Health article : http://www.politico.com/news/stories/0311/51204

economic research links



Mississippi Tax Rates: (corporate and personal)
$0 - 4999 3%
$5000 - 10000 4%
$10000 + 5%
Std Deduction 2,000 / 4,000
Pers Exemption 1,500 / 300 per dependent

Corporate Collections per capita - $131 (averaged per corporation or per taxpaying entity?)
Individual collections per capita - $482 (averaged per natural person or per taxpaying entity?)

Mississippi taxpayers receive more federal funding per dollar of federal taxes paid compared to the average state. Per dollar of federal tax collected in 2004, Mississippi citizens received approximately $2.02 in the way of federal spending. This ranks the state 2nd highest nationally, and represents a increase from 1995, when Mississippi received $1.54 per dollar of taxes in federal spending and was 3rd highest nationally. Neighboring states and the amount of federal spending they received per dollar of federal taxes paid were: Louisiana ($1.78), Arkansas ($1.41), Tennessee ($1.27), and Alabama ($1.66).

http://www.sig.msstate.edu/modules/cms/images/thumb/244.pdf intersting read

65,009 Corporate Taxpayers
$382.5 million in taxes paid after tax credits
$109.4 million (29%) of tax after tax credit paid by in-state Corporations;
$273.1 million (71%) of tax after tax credit paid by out-of-state
$64.3 million in tax credits
40,123 Corporate Taxpayers located within the state
24,886 Corporate Taxpayers located out-of-state
$48.1 million in tax credits claimed by out-of-state Corporate Taxpayers
$16.3 million in tax credits claimed by in-state Corporate Taxpayers

1,287,518 persons paying Personal Income Tax
$32.5 billion Net Taxable Income
$25,549.85 Per capita Net Taxable Income for In-State taxpayers

I would like to find Gross Corporate Income from Mississippi and Gross Personal Income to Mississippians.





Still no comparison of real income (All income before deductions, tax breaks, credits, exemptions, etc) to taxes paid.  Also no comparison of Accumulated Wealth to taxes paid and share of taxes.

Effective tax rate links :
http://www.bloomberg.com/news/2010-10-21/google-2-4-rate-shows-how-60-billion-u-s-revenue-lost-to-tax-loopholes.html - dang it!! Google is a tax dodger!! #*(*#$(*(*@#$#$)^
http://www.darwinsfinance.com/my-effective-tax-rate/ - makes my point... but probably not what his goal was???  The higher your income the more tax breaks you actually qualify for... or actually, the more tax breaks you can afford to take advantage of.  I would have loved to have taken advantage of the tax credits for improving home insulation, new windows, etc, but I couldn't afford to.  You could only afford to get the credit if you didn't need it.
http://www.quickanded.com/2010/02/effective-tax-rates-of-the-richest-400-americans.html - AHA! an analysis that points out the rich keep paying less and less percentage... ?? Hmm....
"One less-noticed finding in the report is that the super rich have been paying smaller and smaller portions of their incomes to taxes*."
Also, the article has a good description of Marginal vs. Effective tax rates :
"we generally end up talking about marginal tax rates. The word “marginal” in this context means you don’t actually pay the full rate of the bracket you fall in. So, for example, a single person earning $50,000 in 2009 would technically be in the 25 percent bracket. But they would actually pay 10 percent on their first $8,350 in earnings (the lowest bracket), 15 percent on every dollar between $8,351 and $33,950 (the second bracket), and 25 percent on every dollar between $33,951 and $50,000 (their salary). This works out so that the hypothetical person would actually only pay 17.4 percent of their income in taxes."
( I commented on the article )

I don't really agree with this one... something is fishy in the numbers, but I don't know what exactly.

So...  think we're "Taxed Enough Already" - at historical lows???

Regarding Unemployment:
Long article - but the "Key factors affecting Job Growth" is interesting.  Brings up uncertainty of Demand, so companies will not hire if they are not going to have demand to necessitate hiring.
"But surges in productivity without corresponding increases in consumption yield surplus labor."
Again cites "uncertain demand" as a major factor in not hiring and missing profit goals.
Tax credit for job creation idea, BUT :
"For one, a tax credit is yet another approach that gooses the supply side of the economy when the problem is primarily one of demand. There's no point in widget makers hiring another employee, even if it's cheap for them to do so, if they can't sell the widgets they're already making."
"I keep hearing about how policy uncertainty is holding us back, I still haven't heard, or been able to generate, any compelling data to support that argument."
and comments on that article are intersting too.
can the marginal revenue that results from the marginal worker's product exceed the worker's cost? that's the only relevant question any entrepreneur asks, and the answer today, due to demand insufficiency, is, by and large, "no."

Wednesday, March 16, 2011

My Speech delivered yesterday

My name is Bobby Kearan.  I am a Citizen of the United States of America. My politics follow Thomas Jefferson. I am a Capitalist in the tradition of Henry Ford.  I grew up in Lobutcha, Mississippi – the Hinze community.

The current model of large business activity in this country is destroying our economy.  No, its not the Public School Teacher that is bankrupting us.  I am here to speak about Taxes and Ethical Capitalism.

Once upon a time, there was this Big Corporation.  A small rival was cutting into their profits by offering a cheaper product that was just as good.  The corporation lobbied the government saying that in order to protect it's profits and stay loyal to the country, it needed special tax breaks.  The government agreed and gave the corporation the tax breaks, but then, the government was out a lot of income.  The government could not have such a thing, so it decided to put an extra tax on the company's product when a select group of average citizens purchased it.  To everyone's surprise, the small group said that was unfair and they were not going to pay the extra tax! So they threw the company's tea into the water!

This country has been battling corporations since the Boston Tea Party – yes, The Boston Tea Party was a direct action by colonists in Boston, against the British government and the monopolistic East India Company that controlled all the tea coming into the colonies.   Let me say that again – the Tea Party was also against the East India Company.  Look it up.  England gave tax breaks to the East India Company and levied taxes on the tea sold to the colonies to make up for it.  So, the United States was formed by people resisting money for tax breaks to big companies being taken from the hands of the People.  The same thing that is happening now.  Government is giving tax breaks to corporations and billionaires, then turning to take it from teachers, unions, the poor and the elderly.  It did not turn out so good for England and it will not work now.

Kelley McDaniel of Portland, a part-time librarian, said it best - "It's not economically sound. It's not morally sound. And I think you know that," she said. "I would be embarrassed to support something so ludicrous -- taking from the poor to give to the rich.”

It is not economically sound.  Henry Ford was not a friend of Unions, but he was a great business man.  His was the first company to pay a five dollar minimum wage and he had the first forty hour workweek.  He said, “Business is the exchange of goods. Goods are bought only as they meet needs. Needs are filled only as they are felt. They make themselves felt largely in leisure hours. The man who worked fifteen and sixteen hours a day desired only a corner to be in and a hunk of food. He had no time to cultivate new needs. No industry could ever be built up by filling his needs, because he had none but the most primitive.”  In other words, it takes a prosperous worker, a prosperous middle class with some leisure time to create the Demand for things Business can Supply.

What Henry Ford knew that business today has forgotten, what business fails to understand – is that Profit can not be sustained without providing workers with the means to be consumers. Profit can not be sustained without providing workers with the means and opportunity to be consumers.  You can pay your workers well, give them time off and sustain your profits – or you can exploit your workers, make a greedy killing and then go under – like Bernie Ebbers and Worldcom.

Ford Motor company instituted profit sharing with employees.

"It is our belief," said Treasurer James Couzens, "that social justice begins at home. We want those who have helped us to produce this great institution and are helping to maintain it to share our prosperity. We want them to have present profits and future prospects.” 

Ford added : “We believe in making twenty thousand men prosperous and contented rather than follow the plan of making a few slave drivers in our establishment millionaires.”

That is the Heart and Soul of Ethical Capitalism.  We believe in making twenty thousand men prosperous rather than a few executives millionaires.  That will create a healthy economy!
Since 1979, businesses have forgotten this successful business model.  They have consistently decreased the effective wages of workers and increased the rewards to the Executives and CEOs – often rewards for cutting jobs and cutting corners.  This has dried up the consumer base.  We are trying only to survive, seeking just a corner to be in and a hunk of food.  Blueprint Mississippi says sixty two percent of Mississippians believe our children will have to leave the state to find a good paying job!

The top one fifth acquires more income than the bottom four fifths.  The Bush tax cuts only made it worse.  So, now the top few have turned us on each other – laughing as we fight amongst ourselves for less and less available income.  Effective personal income tax was maxed at 25% in 2003, Effective corporate income tax in the same year – 3.4% and those are the TOP numbers.

It is NOT a question of being jealous of those who are wealthier than I am.  Good for them.  IF they earned it.  I am not jealous of teachers because they have great retirement benefits.  It is about what is good for the country! It is a simple fact that Capitalism will only work for so long as there is a good and steady circular flow of income.  It is not flowing in a circle.  It is all flowing in a slow but steady pace up and up and staying there.

We want successful companies, we want profitable businesses – and that can only be sustained with a successful and prosperous middle class!  The American Dream can only be sustained with a prosperous workforce!  Government can not give tax breaks to corporations and take the lost income from the hands of the Citizens.  Ethical companies do not evade their share of taxes!

Wake up and Stand up! We have Truth on our side! We have History on our side! From the Boston Tea Party to Henry Ford! Spread the Truth! No unfair tax breaks for corporations, no taking money from the hands of Citizens, Ethical Capitalism! Tell your friends, tell your family, have discussions! Then get everybody to Go Vote out the politicians – Everyone Vote in a Government by the People!  

Wake up and Stand Up!

Refrences :

"If you think you are too small to make an impact, try sleeping in a room with a few mosquitoes. " --West African proverb

Articles about the rally : 

Previous rally :

Politifact :
Corporations pay no taxes
400 people have more that 50% of US Citizens ( 400 have more wealth than 50 million put together!)

Class Warfare :
Rich vs. Everyone Else - the Tax Breaks

And some other quotes I find may apply to the whole idea :

Thomas Jefferson said of the rising power of corporations in the new Republic :
“I hope we shall crush in its birth the aristocracy of our moneyed corporations, which dare already to challenge our government to a trial of strength and bid defiance to the laws of our country.” Thomas Jefferson, 1812

and it was Jefferson who also said, “Take not from the mouth of labor the bread it has earned.”

“The end of democracy and the defeat of the American revolution will occur when government falls into the hands of the lending institutions and moneyed incorporations.” Thomas Jefferson speaking on the first attempt to establish a central bank in America

"Big business is not dangerous because it is big, but because its bigness is an unwholesome inflation created by privileges and exemptions which it ought not to enjoy." -- Woodrow Wilson, 1912

"He that would make his own liberty secure must guard even his enemy from oppression; for if he violates this duty he establishes a precedent that will reach to himself." -- Thomas Paine

"Only a fool would try to deprive working men and working women of their right to join the union of their choice."
--President Dwight Eisenhower

“And it would be fair. Everyone will pay the same tax and it will eliminate tax cheaters and corporate shenanigans.” Steve Forbes

I wrote (and cut from the speech):

Public Roads, Public Clean Water, Public Transit, Public Parks, Public Recreation, Public Education, Teachers, Law Enforcement, Fire Fighters and our Military – everyone in this state and this nation benefits from these services provided by our government.  Everyone who benefits should be expected to contribute their fair share to help fund these services – and that includes businesses!
Social security IS an entitlement.  I am entitled to all the benefits I have been promised and that I have paid in to all my working life! As is everyone who has paid in.  Unemployment Insurance and Disability Insurance are the same way!

ECSUS (pronounced Ek-Sus) - Ethical Capitalism can Save U.S.

Tuesday, March 15, 2011

Ethical Capitalism

We need to start having conversations about Ethical Capitalism.  It is the most logical, most effective and most Free-Market solution to our economic woes.

To understand the solution, we must first understand the problem.  The statutory corporate tax rate in the United States is 35%.  With write-offs, tax breaks and loopholes, the most profitable companies in the United States pay an effective rate of 3.4% - three point four percent.  They also use tag-dodging methods that would land any citizen in prison - such as using offshore tax havens, reporting losses in the U.S. and reporting profits in offshore, low-tax areas.  To add insult to injury, they lobby for even more tax breaks and "incentives" to do business here in the United States.  They pay a few people very large amounts of money to figure out ways to cut costs and dodge taxes while reaping huge profits.  It is a very short-term oriented method of generating profits.

Their "Business Model" has several effects.  It decreases the amount the company contributes to sustaining the environment in which it profits - our society.  It decreases the purchasing power of the very consumer base that it seeks to exploit for it's profits.  It increases the income gap and the wealth gap.  It shrinks the number of 'wealthy' and increases the number of  'poor' citizens.  Eventually, the top-heavy economy will collapse due to the eroded consumer base.  This is what most extremist Republicans are wanting the country to run headlong at top speed toward - in fact, we are already heading swiftly toward another total collapse.

So what is the Solution? What is Ethical Capitalism? Well, there are sites out there that call Ethical Capitalism being 'green' and environment conscious.  There are some that use the term "Sustainable Capitalism" to mean pretty much the same thing - business environmental consciousness.  While those things are important, I am more focused on purely economic ethics and sustainability.  (Some come very close.)  Our current model is profiting a select few and draining money out of the economy at a staggering rate.  Leading, inescapably, to economic collapse as the consumers who drive the economy have less and less to spend.

The Ford Motor Company - under the direction of Henry Ford - was a prime example of Ethical Capitalism. When I started working in the 1990s, the minimum wage was $3.75 an hour.  Ford said, "The wages we pay are too small in comparison with our profits. I think we should raise our minimum pay rate".  One year later, in 1914, Ford set his company's minimum wage at $5 per hour.  Even the janitors got $5 an hour.  Turnover fell from 370% to 16%, Productivity rose between 40% to 70% and profits increased 20% within a year.
Ford instituted employee profit sharing - and are still doing it today!  He told a newspaper, "We believe in making 20,000 men prosperous and contented rather than follow the plan of making a few slave drivers in our establishment multi-millionaires." (blog worth a look)

Today, we have turned away from Ford's very successful business model and have chosen to make a few executives millionaires and leave our workforce struggling to survive.  I feel strongly that this has led to our current economic woes.  We need to take a look back on our economic history and see what worked and what did not.  There are things that created economic bubbles - only to be taken to excess and burst.  I do not believe that extreme measures on either side of the scale are the answer.  Only Moderation can set us on a long-term sustainable path.

Once again, the wages we pay are too small in comparison with our profits.  Instead of grossly over-rewarding a few, we should more adequately compensate a larger portion of our workforce.  If I have my tax code right, paying workers more with the excessive profits would also greatly reduce the taxable income and lend to less tax-dodging.  Not only is such a thing reasonable, rational, ethical and moral, but I am sure that right now, it is necessary.

If we can get government to close the loopholes, eliminate the subsidies, end the tax breaks and put an end to the tax-dodging using offshore tax havens, then there will be more incentive to pay workers a living wage.  We could then lower the statutory corporate tax rate while raising the effective tax rate.

I believe that Ethical Capitalism is the answer.

(and we are not the only country having this issue!)  ( a Myth-debunking about the Boston Tea Party??? )

Look at the minimum wage chart again. You see how the constant dollars minimum wage topped out in 1968 and has been falling ever since?  A job that made an effective $7.21 in 1968 would make an effective $4.41 in 2007.  It may be slightly less or slightly more now, but I'd wager on slightly less.

Corporate Taxes :
The idea that businesses pass on taxes to the consumer is absurd.  Corporate taxes are on profits, so if they pass on the tax to consumers by increasing price, it would increase their profit, increasing the tax and creating an infinite loop of cause and effect.  There are many of ways for a business to decrease their tax burden - pay workers more, lower prices on products, pay more for parts or shipping or storage, increase research and development.

Monday, March 14, 2011

Really Wrong Article

No, its not even Fox News.  In fact, the really wrong article is on CNBC.

My comments on the article - including extra commentary due to limited comment length - are below:

I would just like to point out that Social Security is not in any way a handout.  I pay quite a bit of money into the program each and every paycheck.  Yes, I am entitled to get my money back when I retire.  It is MY money, with some interest, that I would be getting - how do you call that a handout?  Is your 401k a handout?  How about a Certificate of Deposit or Annuity?

Unemployment insurance is also not in any way a handout.  My employer pays into it and it is only used when needed, just like any other insurance.  Its not a handout.

I pay in to Medicare.

None of the items that you have called out are actually "welfare."

I agree that they are abused in some cases.  We definitely need to go after the people who abuse the programs, people who take money from the programs to pay for other things (like congress).  People who work for under a year, 'have an accident' or 'get fired' and draw unemployment or disability for as long as possible, go back to work and repeat the process over and over again, should be dealt with - barred from the program for life on the third time.

How about we get wages and salaries to increase?  How about we get companies to pay their fair share of taxes instead of the top rate of 3.4% they might pay now? (look up "effective tax rate")

Why are Republicans looking to cut benefits that people have already paid for?  Poor management of the funds is no excuse to deny payment of what was agreed upon.

It is time we stop giving big handouts to business in the form of tax breaks and loopholes and stop trying to make up the income difference by taking it away from the workers, the poor and the elderly.

Stay tuned for a big post coming some time Wednesday.

I would also like to share a comment on the article here :

GenerationX | Mar 8, 2011 04:10 PM  ET
After World War II, the Greatest Generation instated the 70-94% upper-income tax brackets to pay off the staggering national debt, which was at 109% of GDP at that time. It worked! This country had the most wide scale prosperity in its history while these tax brackets were in effect because corporations put their excess profits back into the wages & benefits of workers rather than funnel them to top executives like they do now. These top tax brackets will create jobs and stimulate the economy, just like they did from the 1940's-60's while they were in effect. There is no other solution.

and a few unrelated links for you to check out :
"The Republican governor's budget plan would open the state up to a corporate asset-grab not seen since robber baron capitalism"

"A basic educational challenge is not that teachers are raking it in, but that they are underpaid."