The Hoax Of Equal Opportunity And Equitable Prosperity |
Television series like Father Knows Best and Leave It To Beaver, among others, slowly but surely etched apple pie concepts of America into the nation's psyche. Individually and collectively, Americans began to expect and demand world recognition as the flagship of prosperity and democratic freedom. National pride became the country's chief export.
To put it mildly, times have changed.
Escalating real estate prices and high rents have forced most families to require two incomes just to get by, and the concept of home ownership has been transformed from an expectation to little more than a pipe dream for this generation's youth, who have very little money left over after paying their rent.
With the advent of two working parents, the quality and nature of home life progressively deteriorated to the extent that few children now enjoy the luxury of growing up with only one set of parents. Broken homes and single parents on welfare have become part of the norm.
In the workplace, computers, improved communications, and automated
manufacturing techniques have dramatically increased efficiency
and productivity; but unless you count yourself among the richest
10%, your economic group has been relatively losing ground steadily
since the 50's despite all the technological breakthroughs. More
recently, across the board cuts in social programs have significantly
decreased the standard of living for the employed and unemployed
alike. Moreover, the widespread proliferation of street beggars,
soup kitchens, grocery handout centers, and flop houses for the
homeless bears witness to the fact that an American reality is
shaping up that can no longer be ignored.
Educational opportunities are not being equitably shared.
Health resources are not being equitably shared.
Access to justice is not being equitably shared
National resources are not being equitably shared.
In fact, the inequities increase with each passing decade.
The hallowed buildings of the nation's capitol, that once echoed with the visions of the original Founding Fathers, now bear witness to a continuous parade of high level government officials forced to resign for various abuses of public trust. The Founding Fathers would no doubt be horrified to learn the extent to which drugs, violence and organized crime have come to be an integral aspect of the American way of life. So much so, that the deterioration of life in America is epitomized by Washington DC itself. Not only has the nation's capital had to resort to imposing a night-time curfew on all Washingtonians under 18, its mayor is currently facing drug charges, and the city has also become the murder capital of America!! {B1}
Legislative and constitutional changes favoring the most wealthy are rapidly running the country into bankruptcy. In 1988 alone, 200 American banks, and 226 Savings and Loan thrift institutions (S&Ls) failed, and hundreds more are about to fail. The banking industry is on the verge of collapse. Losses involving the S&L thrift institutions alone could eventually cost the taxpayer up to 500 billion dollars. In addition, the major U.S. banks are being secretly bailed out from their defaulting 3rd World loans.
Continuing cuts in the standard of living for America's unborn loom ominously. As a result, Americans are now beginning to reluctantly acknowledge that the expectations of prosperity fueled by the American Dream are no longer probable. The optimism of the 50's has been replaced by widespread uncertainty concerning future economic well-being, and rightly so.
Clearly, America of the 80's is radically different from America
of the 50's, yet most Americans still cling to concepts of wealth
distribution, democracy, and freedom of the press that echo the
ideals the American Dream of the 50's even though many of the
concepts can no longer be substantiated by present-day social
realities. Socio-economic changes occurring behind the scenes
have drastically altered the nation's destiny. A covert social
order is in place and there is a 90% chance that you are one of
the chosen losers. Those who remain ignorant of what is happening
behind the scenes, will have to take it lying down. If you know
what is going on, you can fight back. Knowledge is power. Let's
begin by examining the hidden social order within America. The
facts will probably shock you.
Because the American media claims to be the freest in the world, few have reason to suspect that their mass media information is being very carefully controlled and colored. The shocking truth is that the American public is being purposely kept in the dark about many vital realities. For example are you aware that:
THE RICHEST 1 (ONE) PERCENT OF AMERICANS possess more wealth than
THE COMBINED WEALTH OF THE BOTTOM 90 (NINETY) PERCENT. {B2}
Despite how incorrect that statistic may first appear, there is definitely no error or misprint involved. Not only that, the full significance of the above statement is rather difficult to instantly appreciate, so we'll take a moment more to consider its implications.
Because the richest 1% prefer to associate almost exclusively with members of their own social and economic standing, few members of the bottom 90% of Americans have ever even met a millionaire let alone a billionaire.
Consequently if you belong to the bottom 90%, you can think of
the wealth of the richest 1% as :
more wealth than the combined assets of every American you have
ever met, plus all the assets of every American you would be likely
to meet on a trip that took you through every single city and
town in the nation!!
If you haven't been thinking of the rich and their wealth in quite that light, I suggest you begin to, because that information is only the tip of the iceberg of information being actively suppressed by the so-called freest media on the planet. Many references will be made throughout the book to the bottom 90%, so it is appropriate that we try to define the group a little more precisely.
Since the average person in the West considers himself or herself
a member of the middle class, logic as well as popular opinion
would suggest that half or more of the population fits into it.
Initially then, let's arbitrarily consider that American society
is comprised of 60% middle class, 20% lower class, and 20% upper
class. Because the combined middle and lower economic classes
only account for 80% of the population, the bottom 90% of society
must also include half of the so-called upper class as well!
This means that the bottom 90% is comprised of:
1) Every member of the middle class
2) Every member of the lower class
3) Half the members of the wealthy upper class
So now our original statistics can be interpreted to mean that:
1) ALL of the wealth of ALL of the MIDDLE class
COMBINED WITH
2) ALL of the wealth of ALL of the LOWER class
AND ADDED TO
3) ALL of the wealth of the bottom HALF of the UPPER class
If you are surprised or shocked, don't feel bad. The elite have
gone out of their way to ensure that you didn't know it. Nevertheless,
my initial choice of (20%, 60%, and 20%) to represent the upper,
middle, and lower class population percentages was arbitrary,
so if you think the arbitrary percentage breakdown of society
was at fault, I welcome you to run your own idea of the class
percentages through the preceding model. No matter what figures
you choose, the bottom 90% of society would still have to include
ALL of the lower class, plus ALL of the so called middle class,
plus a portion of the upper class. The staggering significance
of the wealth of the richest 1% will not alter. Go ahead and try
it.
THE NEXT RICHEST 9 (NINE) PERCENT also possess more wealth than THE COMBINED WEALTH OF THE BOTTOM 90(NINETY)PERCENT
As unbelievable as it sounds, there are two minority groups, not
just one, that own more assets than the bottom 90%. These two
statistics alone should leave little doubt that the bulk of the
wealth in America is owned by a very small minority of super rich
individuals. This reality contrasts so drastically with the "equal
opportunity", "equal prosperity" concepts fed to
the bottom 90% and the world at large, that statistics such as
these have had to be suppressed. Again, there is no misprint.
The only deceit involved is that the bottom 90% have been purposely
kept in the dark about wealth distribution realities.
Those working in a restaurant for minimum wage sometimes get to
take home some of the leftovers, but if they make beds and empty
urinals in a hospital, they probably couldn't afford to catch
anything from the people they work around. Why? Because they would
have to work for at least three weeks to pay for a single day's
hospitalization. Medicare costs have risen an average of 8.5%
per year since 1984. {B10} By 1987, more than 11 million children
had no health insurance. {B11} What makes the situation even more
shameful is that of the 37 million Americans who entered the 1990's
with no medical coverage, the majority were employed! {B12} The fact
that health care is becoming an unaffordable luxury in America
is made more evident when one becomes aware that America ranks
20th in infant mortality behind Spain and Singapore. The shocking
truth is that almost 40,000 of the 3.8 million children born in
America in 1986 died before their first birthday!! {B13}
Moreover, on any given night in America, there are approximately
100,000 homeless children. {B14} This figure may be seriously understated because a group of San Francisco lawyers known as "Public
Advocates" estimate that in the San Francisco area alone
there are 48,000 homeless and that more than 10,000 of that number
are children. Why so many homeless? Simply because Capitalism
practically demands homelessness. The self-regulating market forces
of supply and demand, that America so proudly markets to the world,
dictate that builders have little or no incentive to build housing
for people with little or no money, but plenty of incentive to
build more office space for wealthy corporations despite the fact
that 100,000 homeless American children are growing up
socially and economically deprived in a country which has had
a nationwide office space vacancy rate of 18% for the last five
years!!! In Manhattan for example, 8.9 million additional square
feet of newly completed office space came on-line last year, but
only 2.5 million square feet of it was rented. {B15} Another cause
of the homelessness can be traced back to unemployment.
The prosperity of the 50's that generated and fueled the American Dream, occurred because American corporations were employing American workers. Now, they hire the 3rd World.
Because the American economy was booming at that time, and much money was being made, organized labor began to demand a fairer share of the prosperity. American corporations reacted by shutting down their American plants, and building their non-military related factories and manufacturing installations in Second and Third World countries. Tax legislation allowed the elite to write off the costs of building their factories abroad. In effect, taxpayers have paid for virtually all the American owned factories abroad! By doing so, the corporations were not only robbing North America of much needed employment opportunities, but were simultaneously exploiting the cheap labor and natural resources of poorer nations in the latest version of colonial exploitation. American corporations still help white South Africans to exploit and repress the blacks.
Moreover, the success of the anti-apartheid movement, since the 50's, displeased many of the corporate elite because they knew that eventually even the blacks would belong to organized labor groups, and that the days of cheap black labor were obviously numbered. This development greatly accelerated the practice of shutting down factories and industries in America and rebuilding them in Third World countries to take advantage of the remaining pools of cheap unorganized labor. The industrial exodus caused such a shortage of jobs for unskilled and semi-skilled men, that more and more women were obliged to enter the work force to enable families to cope economically. On average, women have been paid from 65%-70% of what men earn for the same job. {B16} Today, employers are still trying to discriminate against women, with regard to salary equality and career opportunities, in an effort to keep women as a cheaper source of labor than men.
Newsweek pointed out in its March 13 1989 issue, there are now about 140 million Americans between the ages of 20 to 64, and a staggering 30 million of these individuals are unemployed! {B17} But, just as the government hides much of its deficit "off budget", so it has ways of excluding many of the unemployed from its official figures. Those who have quite literally given up looking for work don't even get included in the government's seasonally adjusted unemployment figures, so the true picture of reality remains hidden. For political expediency, unemployment figures can be deceivingly and artificially reduced when required, at taxpayer expense again, through "make work" programs. Nevertheless, jobs are being constantly exported. According to Department of Labor statistics, the blue-collar factory work force decreased by 11% in the last decade alone. {B18}
General Motors provides an excellent example of a corporation which deserted the American work force for cheap labor abroad. The current movie "Roger and Me", which deals with the after effects of General Motors laying off over 32,000 employees in Flint Michigan, should help to draw attention to the problem. {B19}
The American textile industry is currently in the process of relocating to places like South Korea where the cost of skilled garment industry workers is about $2.50 per hour, which is less than the American minimum wage.
General Electric too is preparing a deal to buy 50% (plus one share) of Tungsram, an Hungarian manufacturer of light bulbs. With Hungary's average wage at 81 cents per hour, G.E.'s loyalty to the American work force will pan out to be just another of the illusions that Americans must shed. Chicago-based Schwinn Bicycle Co., and Guardian Industries, a Michigan-based glassmaker have already taken the plunge.
With the widespread demand in Eastern European countries like Poland, Hungary, and Czechoslovakia for a taste of capitalism, it won't be long before we begin importing name brand bicycles, fridges, etc., instead of employing Americans to make them. The rush to do so will most likely intensify before the unification of Western Europe takes place in 1992. In Poland, the cost of labor is even cheaper, a mere $40 per month. {B20} However, Americans should keep in mind that where wages are low, cost of living is usually correspondingly lower. In other words, Poles don't have to fork out $300-$500 per month in rent.
In 1988 alone, spending by overseas subsidiaries of American firms increased by 23% to $42.3 billion. {B21}
Not only were the taxpayers footing the bill, lower labor rates gave them higher profits. On top of that, the elite were often able to negotiate tax advantages with the foreign countries, so all in all, it has been a case of "to hell with the American work force".
The economic elite have such a strong control over public opinion and government in the West, that they knew they could virtually abandon their own populations, and allow the standard of living to deteriorate because the desirability of Communism and even Socialism has already been virtually purged out of the psyche of the Western mind. However, the elite know they will have to put up with a growing amount of grumbling. But because they control the government and the media, they will safely be able to allow the standard of living in America to gradually drop to the point that it approaches the rising standard of living among the developing nations.
Another method the elite have been using to maintain a downward pressure on American wages has been to make sure that almost all immigrants coming to America come from the cheap labor countries. Even though practically all the immigrants now coming to America fit this description, there is a push on to accelerate this process.
Despite the existence of 30 million eligible unemployed Americans, the Deputy Editor in chief of Forbes magazine, M.S. Forbes Jr., editorialized in the Jan 8 1990 edition that the nation was actually suffering from a "People shortage". He went on to add that, "There are not enough young people entering the labor force. We badly need to revamp our immigration laws so that many more hardworking foreigners from Europe and elsewhere can come here."{B22} Not surprisingly, an article also appeared in the Jan 29 1990 issue of Fortune magazine entitled "Let's change the immigration law - now". The article started out by saying "Millions of Eastern Europeans and Soviets - educated and talented for the most part - are likely to try to start fresh lives in the West..." The latter article also clearly pointed out that in the last decade, the greatest number of immigrants to America have been ...Mexicans, then Asians, and then immigrants from Central and South America. These people enter the country desperate for jobs and willing to take minimum wage payment for ever increasing levels of skilled work. Of course they are not to be blamed for driving down the cost of labor nation-wide, it is the elite who are purposely pushing to change the existing laws to be able to flood the American labor market with even cheaper labor from Romania, Hungary, etc. (who by the way have received better education on average than their equivalents in America). {B23}
Where do all the homeless come from? At least part of the 30 million unemployed and disillusioned Americans between the ages of 20 and 64 would probably sooner be unemployed than work for a humiliating and disgraceful minimum wage, while the white collared elite drive the streets in their Rolls Royces having milked the economy of hundred of millions and even billions in a single year!!!
Despite this, on June 13 1989, George Bush hastily vetoed Congress's bill to raise the minimum wage from $3.35 to $4.55 over a three year period. {B24} Mrs. Dole, Bush's labor secretary, argued on behalf of the elite that doing so would result in 650,000 fewer jobs. This obviously implies that spoiled employers would sooner fire 650,000 employees than pay them a minimum wage of $4.55 per hour. To compensate for this, she is also trying to introduce a compulsory six-month "training period" during which the "new hire" would receive sub-minimum wage!! However, this would only provide incentive for employers to dismiss their minimum wage workers and use wherever possible the sub-minimum wage "new hires in training". Some employers would retire long before they kept a candidate longer than six months. {B25}
In future, semi-skilled and skilled factory work will be done
increasingly by robots, by cheaper labor abroad, or by importing
cheap labor from abroad. As long as corporate America continues
it's industrial expansion abroad while reducing it's industrial
base at home, unemployment will only get worse. With a shortage
of jobs, and an over-abundance of labor, employers will continue
to hire unorganized labor who are willing to work for substandard
wages. Should anyone wonder why so many youths have given up on
the system and turned to pushing drugs to survive?
No doubt the elite would wish to have all the new immigrants enrolled
immediately in sub-minimum wage training programs. Notch one up for the "Feudalists in pinstripes".
Incentive for corporate America to purchase American labor will
probably only resume again when the price of American labor drops
to the point that it competes favorably with the cost of the cheapest
foreign or imported labor.
In a similar way, the black to white ratios involved with unemployment figures reveal as much about the truth concerning our whitewashed reality. Only 44 of the 752 Federal judges are black. The number would be abysmally lower if Jimmy Carter had not nominated 37 of them himself. {B27} More importantly, blacks account for 11% of America's voters, but only one and a half percent of its elected officials are black. {B28}
Meanwhile, David Duke, the former Imperial Wizard of the Ku Klux Klan, who also dabbles in neo-Nazi white supremacy movements, not only ran in February 1989 as a Republican candidate in New Orleans, Louisiana; he won!! His goal now is to become a Louisiana senator. {B29}
But hey, it's not all doom and gloom. American blacks have definitely made progress over their counterparts in South Africa, whose lot seems to have remained on a par with that of English feudal serfs. Mind you, they are still confined to the servants' quarters, which are now called "homelands".
"Homelands", per se, don't exist in America, but many who live in the black ghettoes found in most American cities, would probably wish to hotly debate that issue. In any case, since the 50's, much of the discrimination practiced against the blacks has disappeared. Nevertheless, feudal slave tactics still persist within the United States, but are largely overlooked because the American psyche has been conditioned to acknowledge slavery only when it comes in black.
Industries in Texas and Southern California have been paying slave wages for decades to Mexicans who had entered the country illegally. The garment industry in Southern California was still thriving in the 1980's by running sweat shops which used this labor pool. These Mexicans have been completely at the mercy of their modern Feudal lords who could totally abuse them, fire them, or have them deported if they dared to protest about their wages or working conditions.
Everyone knew about the sweat shops but little was done about them, because all the right palms had been greased. Everyone was turning a blind eye until the 60 Minutes TV show brought their plight to the nation's awareness. The government was no longer able to turn a blind eye, so it provided the next best concession for the sweat shop owners, it offered conditional amnesty to the Mexicans who were already living in the States, so that the affected industries would not be put out of business by the sudden loss of its sizable work force.
Of course this meant that sweat shop owners would have to pay the newly legalized Mexicans the minimum wage, and it certainly defused the issue nationally, but it probably won't prevent them from hiring future illegal Mexicans at the old rates. In fact a few days after George Bush had returned the Republicans to office, legislation was passed to allow garment industry workers in the South West to work at home. This practice, which will throw open the slavery floodgates once more, had been outlawed for the last 40 years.
Ever since the serf gained the right to be called a free man,
the wealthiest 1 percent have been using the time to regain ground
initially lost. They seem more determined than ever to maintain
the old order. One way of doing this is to purposely maintain
a poorly educated work force.
The minority of white South Africans, who dominate, not only prevent the blacks from forming effective opposition groups, they keep them poorly educated and deny them the right to vote. As a result, South African unskilled labor has historically remained cheap. Capitalists in other countries have also gone out of their way to maintain an ignorant working class. For example, there was an understood, unwritten agreement among early American feudal lords, not to teach their black servants, (slaves) to read or write; in South Africa there have even been laws to enforce the policy. Nowadays, survey after survey exposes that American schools are graduating functional illiterates. Because the level of education is rising in many less developed countries, corporate America is finding that it can relocate even more sophisticated levels of non-military related industrialization into Second and Third World countries to take advantage of the world's remaining slave labor pools. Consequently the elite have less need of educating the American work force, and have stepped up their lobbying pressure to divert tax dollars away from education, and into other areas that benefit themselves more, namely Star Wars military spending, and corporate welfare. Unlike the defense budget, federal spending on education has been reduced from 9% in 1980, to 6% now. Mr. Bush intends to spend some $200 million less on education than did Mr. Reagan. {B30} After all, educated people expect a better standard of living, and will be vocal if denied their due. In short, they are not as easy to manage or to hoodwink.
Is it an accident that the American education system is graduating functional illiterates, and that much needed money for education is being diverted to benefit the super-rich? I think not.
Before the nation is forced to declare evening curfews (for youths
18 and under) in cities other than Washington DC, two
facts should be widely acknowledged. First that two-thirds of
U.S. prison inmates are high school dropouts, and secondly, that
it costs $5000 per year to send a child through public school,
and $14,000 a year to keep a prisoner in jail. {B31}
Even though most of us are richer than serfs of some other countries,
we are still serfs within our own society.
For the most part they are comprised of the majority shareholders who serve on the board of directors of large corporations. The mega-rich can serve as board members on numerous corporate boards simultaneously, thereby creating interlocking relationships and interests among the corporations. This low profile elitist community maintains a highly efficient, interconnected, local and international network of communications and control that, for all intents and purposes, completely avoids public scrutiny. Corporate America meets behind closed doors to cut secret deals and formulate powerful chess-like strategies that affect the daily lives of everyone in society.
Moreover, they have seen to it that a range of special privileges
exists, not only for their own benefit, but as a means of winning
political support from all those who envy their lop-sided share
of the nation's wealth. Such privileges, (memberships in exclusive
country clubs, unlimited travel, vehicles, planes, business subsidies
and loans, tariff protection, price guarantees, etc. etc.) are
all made accessible in addition to tax avoidance methods, and
tax shelters, that the bottom 90% don't even make enough money
to use.
In response to a wave of independence movements which swept the globe in the late 40's, the great colonial powers were forced to withdraw many of their political representatives as well as their military occupation forces. Because this occurred, historians and the media were quick to announce that the colonial era had ended.
However, the more determined colonialists simply installed puppet governments in the 3rd World countries which gladly signed defense treaties which allowed the colonialists to re-install their military occupation forces. Despite the superficial changes, both Feudalism and Colonialism are very much alive and well today.
However, colonial exploitation did, at least for a time, decline. This decline triggered off a decline in the standard of living in the West for a couple of reasons. First of all, as the level of colonial exploitation was reduced globally, the spillover benefits of colonialism were reduced for all Western citizens. Even more importantly, the colonialists (i.e. the Feudalists) increasingly redirected the focus of their exploitation toward their own populations in an effort to make up for lost colonial revenue! Not only is exploitation in the 3rd World now worse than in the 40's, it's worse in the 1st World too!!
Since the 50s, the planet has in effect, been enduring an era of social regression caused by the widespread proliferation of the new and more subtle forms of both Feudalism and Colonialism.
It is also extremely important to keep in mind that the conditions
referred to throughout the book pertain not just to America, but
to virtually all the capitalist democracies, ...England, Canada,
Israel, Scotland, West Germany, South Africa, Ireland, India,
Australia, New Zealand, Japan, etc., as well as to all the other
countries ruled by economically elite minorities. They are all
functioning like separate Feudal empires.
The distribution patterns of the 60's and 70's have been chosen to provide a valuable yardstick with which to begin an evaluation of our present condition. The statistics will show how things were in the 60's and 70's, and then by knowing what has happened in the last decade, it will be perfectly clear not only where America is headed, but why immediate action is so necessary.
When the comparative study was carried out in 1979, the information gathered was the latest available from each country. The studies have traditionally been carried out infrequently probably to avoid any unnecessary risk of the information becoming part of the public awareness, and hence a topic of popular concern.
During the 60's and 70's, the richest 1% owned an average of 25% of the total national wealth; the richest 5% about 45% of the wealth; and the richest 10% about 60% of the wealth; ...in virtually each of the Western nations.
Although statistics were not available for larger percentages of the population for each country in the study, another even more startling picture emerged from the data that was available. That data is shown below.
The shocking truth is that the poorest 50% of the citizens of
Western societies share little more than the elite's table scraps,
with the evidence pointing to often even less than 5% of the total
wealth.
The New York Times reported that a recent study found the top 1% have increased their share to about 35%, whereas the share of wealth COLLECTIVELY belonging to the bottom 90 % had dropped to about 34%!!
However, a similar study carried out by the University of Michigan estimated the richest 1% now own 50%, and the bottom 90% get to share only a meager 16% of the nation's total wealth!!
This latter study translates into the fact that the top 1% may now own three times as much as the bottom 90% own collectively!!
To make things worse, the rate at which the rich are getting richer and the poor get poorer, ...is accelerating.
To help the reader appreciate that the economic problems
discussed are by no means unique to America, we will briefly refer
to Canada instead of America to continue the study. Canada provides
a dramatic example of profit disappearing into the woodwork, or
more accurately into the bank accounts of the richest one percent.
Instead, the prospect of owning a home is growing steadily more remote for many young people. You'd wonder why, because there exists such an abundance of forests. The truth of the matter is that Canadians have to pay world prices for the timber products. Not only that, the best timber is exported (to enrich the wealthy few), so the wood used inside Canadian homes is more often than not the dregs of the industry. Some young families with two incomes are even battling to afford an apartment. Many don't even own their own cars, and some have serious debts. Like gas stations, the local Macdonald's fast food outlets are never very far away. But very few Canadians are even aware that with 1100 charity food banks nationwide, Canada has twice as many food banks as Macdonalds fast food outlets!!
Plenty of people line up each week at special grocery handout centers that are often conveniently located off the main streets, where the long lineups won't interfere with pedestrians or traffic, and where this shameful show of wealth distribution won't be too readily observed. In the large cities there are plenty of people who sleep in doorways and parks, and can be seen pushing around their life's possessions in supermarket buggies. How is this possible? What has happened to the past profits generated in our Western countries?
Fortune magazine's 1988 list of the world's top 10 billionaires indicates that three of the 10 richest families in the world are Canadians. Furthermore, it indicates that Toronto's Reichmann family alone increased their wealth in the preceding year from 5 billion to 6.3 billion dollars, a staggering increase of 1.3 billion, which represents a 26 percent increase in assets during that one year period. {B33}
When the Queen of England, the world's richest female billionaire who has also derived wealth from Canada, is taken into consideration, then the number of the world's top ten billionaires who have directly exploited Canada's resources for their personal benefit increases to 4 out of 10.
And last but not least, we ought to give mention as well to another billionaire Sir James Goldsmith, of London England, who owns 2.5 million acres of North American timberland, which is just a half million acres less than the 3 million acres owned by the Canadian billionaire Kenneth Colin Irving. {B34} {B35}
Globally, the speed at which wealth and power is being concentrated in the hands of a very small minority of economic elite has intensified at an alarming rate. Does anyone need to hire a financial analyst to see a correlation between the wealth accumulated by billionaires, and the grocery handout centers and soup kitchens?
Keep in mind that the same story is being played out in all the other countries dominated by an economic elite. The bottom 90 percent are being systematically milked, and the cream is being skimmed off by the folks at the top. We need to take steps to homogenize the economic classes.
The inequities in wealth distribution that originally prompted
the formation of trade unions are now being overlooked in the
rush to say unions today have gotten too powerful and are demanding
too much. Don't forget, it would still have taken 433,000 so called
"greedy unionists" to have been able to save
$3,000 each in 1987, to have collectively benefited as much as
the Reichmann family.
SINCE 1979, Reagan's pro-elite administration increased the inequities dramatically. The top 20% of the population increased their income by approximately 10%, while the bottom 20 % of the population saw their income decline by approximately 22%!!
The reality suggested by these statistics is so alarming, that it may for some even appear untrue. Because of this, some previously mentioned facts deserve being retold.
But despite all this, Mrs. Dole, Bush's Labor Secretary, is trying to introduce a compulsory six-month "training period" during which a "new hire" would receive a sub-minimum wage!! {B41}
Tax laws, more than any other factor, determine the socioeconomic
nature of a society. They determine the economic hierarchy of
wealth and power just as surely as chess rules govern what occurs
in a game of chess. A king always wins in a game of chess, and
in Western society, the top 1% always own more assets than the
bottom 90%. Tax laws ensure that Western society remains securely
locked into a social structure based on wealth distribution inequities
that have changed little since the Middle Ages. Presidents now
avoid the nation's scorn by raising payroll taxes instead of income
taxes. By 1990, payroll taxes will have risen by 30% since 1978,
and the majority of the country will be paying more in payroll
taxes than they do in income taxes. Of course, the bottom 90%
as usual are hit the hardest, but they are generally not yet wise
to the switch that has taken place, so the deceit continues at
full bore. {B42}
With regard to the previously mentioned exodus of industry from America to 2nd and 3rd World countries, the fact that American corporations choose to carry on modern day colonial exploitation is not even the issue. The real issue is that corporate America built, and continues to build its foreign factories with the help of corporate tax deduction laws, ...at the American taxpayers expense, and to the detriment of the taxpayer's standard of living.
To add insult to injury, the head offices of many business entities are located in playboy tax havens such as the Bahamas to avoid taxation, thereby depriving the American taxpayer of getting any benefit from having initially paid for the foreign factories. The fact that so many oil tankers owned by the elite are registered in Liberia and not in America (to avoid taxation) should be a topic of concern to those who are being forced to take pay cuts and tighten their belts, ...but it isn't. Americans have been desensitized to this issue and countless others like it.
However, to get an idea of the quantity and nature of tax avoidance loopholes that exist in America today, one has only to read a few issues of Forbes, a magazine which caters to the needs and interests of the nation's economic elite.
Incidentally, every year Forbes magazine compiles a list of the world's richest people, as well as a list of the 400 richest Americans. In its July 24th 1989 issue, the magazine clarified some of the methods it used in determining the wealth of those who qualified to be included in its listings. Part of the explanation it provided is worth quoting:
"Since wealth abroad is sometimes held in complicated ways designed to retain control or bypass various taxing authorities, we count property owned if it is involved in obvious devices for ownership, like family holding companies, or cross-ownership, and sometimes less obvious ones, like certain foundations designed merely for tax avoidance." {B43}
In practically every issue, Forbes "exposes", or at any rate acquaints the reader with, one or more additional schemes devised by clever tax accountants or investment managers to avoid taxation. No doubt each issue must send the super rich scurrying off to call their accountants to ensure that they are not missing out on the very latest loopholes.
One would expect that reading about tax avoidance loopholes for the privileged class could very well upset or anger the average American who for the most part doesn't make enough money to take advantage of the loopholes discussed. But there is little danger of that. Editors in charge of mass media information sources like newspapers and TV news shows very rarely devote any attention at all to this type of material. In contrast, Forbes editors obviously feel free to flaunt it because the magazine is read almost exclusively by the economic elite, and those who aspire to join their ranks. It is alleged that the average worth of Forbes readers is 1.4 million dollars, and that at least 250,000 of its 750,000 subscribers are millionaires. {B44}
It is beyond the scope and intent of this book to launch into a detailed discussion of the tax loopholes currently available, but as was mentioned above, even a subscription to Forbes magazine would serve as an introductory primer. One need only read the article "The bad news about estate taxes", on page 238 of the June 26 1989, or the article "Tax strategy" on page 186 of the Sept 4 1989 issue to see why the magazine is so popular among America's economic elite. {B45} {B46} Due to the extremely complicated nature of tax laws, tax avoidance will remain the exclusive and somewhat secret domain of those who earn enough money to hire the services of a tax specialist. This book will attempt, however, to make the reader acutely aware that tax avoidance privileges enjoyed by the rich, are the root cause of the nation's economic inequities.
A perfect example of class oriented tax legislation, that exacerbated the wealth distribution inequities, occurred during the Reagan administration. With inspiration lifted straight from Sherwood forest, REAGAN HOOD (the well known American folk bandit who can't normally see the forest for the trees) took it on himself to take from the poor and give to the rich. In 1981, he instituted new taxation legislation which dramatically decreased corporate taxes and transferred the burden to the bottom 90 percent. (salary and wage earners)
It is not as important to discuss what the tax changes were, so much as pointing out that the changes were part of a continuing policy to free the rich from corporate taxation.
Statistics taken from the Historical Tables of the Budget of the United States Government, Fiscal Year 1986, table 2.1 indicate that the proportion of Federal Income tax derived from Corporate income tax declined steadily from 32% in 1952; to 23% in 1960; to 17% in 1970; to a low of 9% in 1985.{B47}
It should come as no great surprise then that George Bush has openly voiced his intention to continue adding to corporate welfare legislation by reducing the capital gains tax by more than 50%. The Joint Committee on Taxation said that the capital gains tax proposal passed by the House on Sept 28 1989 would cost $35 billion dollars in lost revenue over the next 10 years. This largesse would go almost exclusively to the richest 10%. {B48}
Both the graph and the previous statement ought to give you a chilling appreciation for the continuing success of the super rich, in their drive toward total immunity from taxation.
On General Motors' 1987 Income Statement, a footnote indicated that the federal tax for 1987 was minus $1.3 billion, thus intimating that the automobile giant may have received a tax rebate for that amount. Citizens for Tax Justice had figured that GM would end up getting a tax rebate for $742 million. In any case, it should be a little clearer just where the money comes from that enables car manufacturers to offer such huge cash rebate incentives for new car buyers. {B49}
Citizens for Tax Justice (a group backed by Ralph Nader, which monitors tax abuses and lobbies the government for fairer taxation) pointed out that the average reader paid more tax last year than AT&T, Du Pont, Boeing, Merrill Lynch, Dow Chemical, and Walt Disney paid collectively from 1982 through 1985!!
Do yourself a favor and reread the above paragraph.
In fact, of the 250 companies that they were monitoring, 108 of
them had an average tax rate of 1.6%. {B50}
Neither government nor economic smooth talkers are now able to mask the social effects of taxation changes favoring the richest 1% introduced during the Reagan administration. As a result of fiscal policy initiated by Paul Volcker and James Baker, the number of billionaires began skyrocketing. From a relatively stable 13, their numbers all of a sudden doubled in 1986, quadrupled by 1987, and have (since 1987) increased an additional 50 to their present level of 99. This unethical shift of wealth from the poorest to the richest 1% simultaneously caused shelters for the homeless and grocery handout centers to spring up in practically every city in the nation. The more the reader appreciates the tremendous scale of corporate welfare, the less apt he or she will be to blame the deficit on the increasing numbers who are forced to collect unemployment or welfare. The crime and drug abuse epidemics are additional visible manifestations of the anger and desperation felt by the policy's victims.
In case you had noticed that the Reagan administration seemed virtually unconcerned with the huge national debt. Here's why:
The ballooning deficit, which can only be paid back through taxation, will continue to translate into a declining standard of living for "those who pay the taxes", and most for those who are hit hardest by taxation.
Contrary to their continued displays of concern over the increasing deficit, the elite and their functionaries in congress will in reality become less and less
concerned about the growing deficit because their share of
the tax burden diminishes with every new tax reform!! In future,
billionaires and multimillionaires will accumulate ownership
of the national wealth at an even faster rate than at present.
For those who pay little or no taxes, the growing national
debt is scarcely a concern!
The elite are not at all affected by cuts to social welfare programs.
The only social welfare that affects them is corporate welfare
and it has been increasing non-stop since the 50's. However, for
the so-called working middle class and their children,
the ballooning deficit will translate into a significant loss
of social benefits, poorer education and health facilities, etc.,
in short, a continuing drop in standard of living.
If the corporations and wealthy elite don't pay their share of taxes, why should the working class?
The three trillion dollar Star Wars military expansion program is being funded directly out of the taxpayer's pocket. There is simply no rationale for the so-called middle class taxpayer to pay the bulk of the defense bill, when the majority of the wealth and property being defended belongs to the economic elite, who take every opportunity to excuse themselves from sharing the tax burden.
In case you have wondered why the deficit is ballooning so rapidly,
here's at least one atrocious reason.
The RJR Nabisco corporation was purchased for a sum of about 25 billion dollars. Prior to its takeover, Nabisco made an annual profit of about $2.5 billion dollars, on which they pay about $700 million in taxes. {B51} As a result of the buyout, the new owners will most likely pay NO TAXES. Not only that, they will probably claim billions of dollars back (from the government, i.e. the taxpayers) in tax rebates! Surely this is not possible, you might be saying to yourself. As unbelievable as this sounds, it is true. START GETTING CONCERNED. The new owners will still produce their shredded wheat and cigarettes, etc., at the same prices and with the same manufacturing costs. Right? ...Right! So their profits should be expected to remain around 2 and a half billion dollars. Right? ...Wrong! The new owners are now eligible for tax deductions that the former owners did not have. The new owners borrowed most of the $25 billion dollars to purchase Nabisco. Why? ...because the interest (that they pay on the money they borrowed to buy the giant) qualifies as a tax deduction! (Thanks to Section 163 of the Internal Revenue Code)
Tax avoidance rears it's ugly head. The cost of borrowing the $25 billion could quite conceivably be around $3 billion dollars per year, but the operating profits, as before, would be only 2 and a half billion.
Are you sitting down?
As a result of a leveraged buyout, a firm like Nabisco can be transformed from a profitable company making 2.5 billion dollars profit, and contributing $700 million annually to Federal and state tax revenues, ...to a firm which could draw billions out of the Federal tax pot because it would be "technically" operating with an annual loss of a half billion dollars due to the tax write-off for money borrowed to purchase the giant.
With no taxable income, the new owners would pay no taxes!!!
There's $700 million a year that won't get used to repair the roadways they buckle when delivering their goods. There's also $700 million per year that won't help to clean up the rivers and lakes corporate America has polluted, and continues to pollute.
Taxpayers must come to appreciate that their standard of living will progressively worsen as unemployment rises, and corporations contribute less tax in future than they have in the past. Even though the taxpayer has been secretly robbed (thanks to the gagging of the press), the corporate raider has just begun his assault.
As unbelievable as it may be (that elected congressmen would allow corporations to stop contributing taxes), they even allow the taxation avoidance to be retroactive! Here's how.
Tax losses can be carried back 3 years, and forward 15 years. In other words, corporate raiders who make their new companies run in the red are able to claim back as a tax refund the legitimate taxes previously paid in the previous three years by the former owners. In a case like Nabisco's, this could amount to billions. The LBO tax avoidance loophole must be the single most significant cause of reduced Federal and State tax revenue from corporations for at least the last decade.
Because it is so important for the average person to fully understand LBOs and their destructive social consequences, and because many readers may be unfamiliar with the world of stock trading and Wall Street jargon, a more in-depth explanation is in order.
First of all, a leveraged buyout refers to the transaction that takes place when an individual or group of investors (outside a corporation) manages to take over the decision making function of a corporation by buying up enough shares of the company to assume controlling interest. The term "leveraged" refers to the fact that most of money used to purchase the corporation is borrowed or on credit. In all LBOs, the purchasers borrow as much as they can from banks, by using as collateral the equity of the corporation to be purchased. The remainder of the money required is normally raised through the sale of "junk bonds", which are issued by the purchasers (the corporate raiders), and promoted and sold (underwritten) by certain brokerage houses or investment banks which specialize in corporate takeovers. Junk bonds can attract investors because they normally offer a significantly higher rate of interest than other bonds and normal bank interest. Usually the part of the operating profits that formerly went to pay taxes, are now freed up to pay the interest on these junk bonds, so the junk bond holders can feel relatively safe.
For example, in a case like RJR Nabisco's, the $700 million that normally would have gone to pay taxes is now capable of paying the interest on about $5 billion dollars worth of borrowed money. The real significance is that the taxpayer is effectively footing the bill for $5 billion of the purchase price!
Combine that initial subsidy of $5 billion with the $2 billion they can receive in tax rebates, and the loss of tax revenue could effectively amount to about $7 billion on that single takeover.
In case you think this is not typical of what is happening, consider Safeway which went from paying $122 million in taxes, to being a tax rebate recipient of over $10 million. Macy's collected a $32 million rebate instead of paying a normal tax bill of over $200 million. Before its leveraged buyout, Unocal paid over $500 million in taxes. After the leveraged buyout its tax bill dropped to $68 million. But the above is unfortunately only half of the picture. {B52}
So far we have only discussed how LBOs have caused a drastic reduction in taxes paid by corporations. Next we will look at how and why the corporate raiders use LBOs to skim hundreds of millions of dollars out of the national economy without contributing one iota to the nation's productivity.
Why do LBOs occur in the first place?
To explain this, I will resort to an analogy.
A car wrecker will often buy a fully functional (but old) vehicle,
and simply junk it, because to the wrecker, the vehicle is worth
more as spare parts than it is as a fully functional car.
This is precisely the way corporate raiders look at a corporation!
(as a conglomerate of companies than can be broken apart and sold
separately as independent companies)
Incidentally, those who take over another corporation forcibly
are known as "corporate raiders". When the takeover
results from the acceptance of a buyout offer, the purchase is
simply referred to as a leveraged buyout. Raiders buy corporations
for the purpose of selling off the component companies separately
for more money than what they paid for the fully functioning corporation.
In other words, the raider attacks corporations whose spare part
value is greater than their stock market share value.
To illustrate the point, let's say that a corporation has 100
million shares that are trading on the stock exchange for $1 each.
Theoretically, the market place puts a value on the corporation
of $100 million dollars. However, if a corporate raider determined
that he could sell the various companies comprising the corporation
separately for $150 million, he could theoretically make a quick
unearned $50 million by buying the stock market shares for $100
million, and then individually selling off the components of the
corporation for $150 million.
In other words, the takeover operators secretly have reason to believe that the one million shares are therefore in reality worth $1.50 a share, so they will approach the corporation and offer to buy enough shares to get controlling interest. Acquiring controlling interest is necessary to be able to initiate the "sell off" of corporate assets. In order to be able to buy enough shares to gain controlling interests, the takeover purchasers might try to lure the shareholders into selling their shares by offering a premium of say 10 cents per share over the going share market price. So in our example, the raiders could offer to pay $1.10 per share, instead of the going rate of $1.00 per share. If enough shareholders agree to sell their shares at this premium, the raiders could assume controlling interest in the corporation. The corporation would effectively be bought out. The new owners would then proceed to sell off whatever of the corporation's companies they wished. Often, just enough companies are sold off to cover the cost of the purchase, while the remainder, which represent the profit of the deal, are kept. Usually the better companies, known as the "cash cows", are kept as sources of positive cash flow to fund further takeovers.
If, as another alternative, they choose to sell off all the companies (i.e. even the cash cows), and succeeded in doing so for $150 million, they could make a relatively instant $40 million profit, involving no productivity whatsoever.
When corporate managers try to prevent corporate raiders from buying up enough stock to hold a controlling interest of their corporations, directors are usually forced to borrow heavily, or to sell off some of their companies' assets, in a desperate move to get cash to purchase their own common stock at the abnormally inflated stock prices offered to their shareholders by the takeover operators.
The other alternative is for the existing directors to virtually pay the corporate raiders what amounts to a ransom to leave the corporation alone. This ransom, which usually involves a "buy back" of whatever shares the raiders have managed to buy up, is known in the industry as "greenmail", a euphemistic term for the technically legal blackmail that takes place, and which the justice system blatantly ignores.
If the corporation gets bought out, or, if it is forced to pay greenmail, the end result is similar; the equity of the corporation gets replaced by debt, which lowers it's tax liability, reduces its cash flow, and makes it increasingly vulnerable to financial problems.
Basically, raiders act as "corporation wreckers", functioning much the same as "car wreckers". If, as a result of selling off the component companies, the corporation's primary product stops getting produced, well tough luck! Raiders are interested only in quick profits.
Stripped bare, corporate takeovers are, in essence, non-productive, economically debilitating real estate flips.
Those wishing to have a clearer appreciation of the debilitating effects suffered by companies which try to fight off takeover bids are encouraged to read the article entitled "Invasion of the company snatchers" in the Dec 12 1988 issue of Forbes. {B53} On the other hand, the article on page 102 of the Sept 4 1989 issue entitled "Don't blame me", details some of the debilitating problems suffered by businesses that have been taken over and reorganized according to the whims of new owner/speculators. {B54} Similarly, the article "One man's poison" on page 38 of the Oct 16 1989 issue leaves little doubt that businesses burdened with LBO debt are, from a competitor's point of view, often less able to compete.
In addition, "tax loss credits" that are generated by LBOs later encourage MERGERS with other profitable companies who use the tax loss credits to avoid paying taxes on their own profits. A brief discussion of this additional tax avoidance rip-off will follow later under the topic: Mergers (Monopolies and Tax Avoidance).
Can those taking part in a corporate raid get rich milking the
economy like this?
To partially answer that question, let me quote from the July
11 1989 edition of Financial World which had an article
on Wall Street's one hundred highest paid earners.
"In general, most of the top 100 earners have two things in common ...they are principles in their firms, and they are deeply involved in takeovers." {B55}
The answer, therefore, is that you most certainly can, and in
two distinct ways. The most profitable way is to be the corporate
raider.
Example: According to Forbes magazine, which does a yearly assessment
of the wealth of the richest 400 Americans, Ronald Owen Perelman,
(a leveraged buyout specialist) increased his personal wealth
by $750,000,000 (Seven hundred and fifty million dollars) in the
period between their 1988 survey, and their 1989 survey. Start
getting concerned!! He was not alone. {B56}
The second most profitable way is to help provide the funding for the corporate raider. For this service, the banks and the junk bond salesmen earn handsome commissions.
How much can a junk bond commissioned salesman make, who assists
the corporate raiders?
Example: Michael Robert Milken. Forbes indicates that Mr. Milken
increased his own personal wealth from 800 million in the 1988
survey, to one billion, two hundred and seventy million in the
1989 survey. His 470 million increase in one year, like Ronald
Perelman's seven hundred and fifty million dollar increase didn't
materialize out of nowhere.
One way or another the cost of his commissions will be passed along to the consumer. {B57} The article "Who's really picking up the tab?" in the Oct 30 1989 issue of Forbes provides enough facts and figures to make anybody steam under the collar. {B58}
LBOs continue at great cost to society, and with far ranging social and economic repercussions, despite the economic elite's rhetoric to the contrary. The numerous social side effects of LBOs are even more ethically scandalous than the flip profits or the drastic reduction to taxes paid. The various component companies which formerly worked together smoothly may now be convulsing under new inexperienced managers. In fact, many managers who spend a lifetime working their way up through the ranks are often let go, suddenly depriving them of well earned pensions, and forcing them quite abruptly into competition with much younger men for a diminishing number of managerial jobs. Management, however, are not usually the only ones who face unemployment hardships as a result of "mergers and acquisitions" (M&As), as they are jointly referred to.
Companies or divisions of companies which manufacture items that can be manufactured more cheaply using 3rd World slave labor, are often shut down and relocated overseas. A recent survey of several thousand American takeovers which took place between 1977 and 1982 has shown that firms which had been taken over employed about 12% fewer staff in 1982 than they had in 1977, while firms which had not been taken over had, on average, increased their staff by about 4%. Overall, wages and benefits fell by about 12% for the staff of firms taken over. {B59} Often a drop in product output, and/or a drop in product quality follows on the heels of cost cutting measures introduced by new profit conscious owners. Effectively, Americans are being fleeced, cheated, and unemployed simultaneously.
Meanwhile, the bulls continue to run as the stock market continues to climb from LBO buying pressure, and consequently the share prices are once again unrealistically high. The LBO frenzy has also driven up the cost of corporate real estate, and in the process, residential real estate as well, to the point that buying a home seems beyond the reach of many hard working productive Americans.
Market speculators will begin 1990 once again nervously poised to dump their stock portfolios at the very first sign of a market sell-out, and that is precisely what the October 1989 crash was all about. The stability of the economy as a whole has already been seriously undermined.
A recession, or worse yet, a depression, could easily cause these leveraged to the hilt corporations to go bankrupt due to a loss of cash flow which could occur during a normal recession. {B60} They could begin defaulting on their enormous bank loans and usher in a catastrophic collapse of the banking system!
So don't let politicians convince you that a corporation based on debt (with no reserves left to survive even minor disruptions to its cash flow), is now better equipped to compete internationally. Remember instead the old maxim that the bigger they are, the harder they fall. Besides, politicians are usually the first to defend legislative gifts to the rich because they too can take advantage of the loopholes. In the case of LBOs, William E. Simon, a former Treasury Secretary was one of the very first to jump on the LBO gravy train. In 1981 he took over Gibson Greetings Inc. for $330,000 and within two years made $70 million. {B61}
And just how shaky, artificial, and ridiculous have leveraged
buyouts gotten?
Well, Forbes magazine pointed out that "...Duff and Phelps,
the Chicago-based bond-rating service, underwent a management
buyout early this year and issued its own junk bonds. When the
deal closed, long-term debt ballooned to $112 million from $34
million. Net worth fell to minus $10.8 million from positive
$3.6 million. Fees and expenses in connection with the buyout
ran almost $13 million, which was more than the equity contribution
of the management investors." {B62}
Who stands to lose money if these "leveraged to the hilt"
corporations collapse in a recession, or a depression brought
on by another stock market crash?
Two entities will bear the brunt of banks going bankrupt if and
when the cash poor leveraged corporations default on their payments
to the banks. If the banks get bailed out by the government, taxpayers
as a whole will end up paying for the economic elite's gambling
spree. If the impending economic collapse is severe enough to
make widespread bank bailouts impractical or impossible, YOU and
the little old lady who put her life savings on deposit will lose
your shirts. That's who! So when you hear that a huge corporation
is running at a loss, don't be too eager to get out your hankie
unless you are crying over the havoc caused by corporation wreckers
who have, in the process of milking the nation, driven it to the
brink of bankruptcy.
Lest we forget:
The proportion of Federal Income tax (derived from Corporate income
tax) has already declined from 32% in 1952; to 23% in 1960; to
17% in 1970; to a low of 9% in 1985.
To make things even worse, the bulk of the leveraged buyouts
which ushered in a horrendous wave of tax avoidance, have occurred
since 1985. In 1988 there were 3,500 public deals worth some $300
billion. {B63} The four firms previously mentioned on 1-36, alone
represent a potential annual legal tax avoidance in excess
of $2.2 billion.
Furthermore, Mr. Bush has been fighting for some time to have the capital gains tax reduced even further, this time by half. However, in the face of some congressional opposition, he has suggested and will probably succeed in passing a supposed compromise to his original demands. His compromise involves a significant reduction of the capital gains tax for a two year period only. This compromise would nevertheless effectively give all the profit takers a golden opportunity to remove from the system whatever windfall profits they have been sheltering from the tax department over recent years. Few concessions to the rich have been as blatant as this impending tax scam.
The excuse has always been given that "Reducing corporate taxation stimulates the economy." It does no such thing. On the contrary, the proposed corporate tax reductions will free up enormous amounts of capital for investment abroad!
In banking circles, this whole process of exchanging debt for equity is known as the "monetization" of private wealth. It is estimated that 40% of the $311 billion value of deals carried out in 1988 alone went into private hands. {B64} In other words, the elite have been exchanging their industrial equity for cash which can now be used to buy up cheap industries overseas in order to take advantage of the remaining pools of cheap unorganized labor.
As a result of the exodus of American industry previously described, America's capital stock (industrial machinery, etc.) fell from 70% of GDP in the mid-1970's, to 56% in the mid-80's. {B65} And of course less industry means more unemployment which in turn tempts more employers to cut wages back as close as possible to the minimum wage.
In addition, much industrial machinery is old and outdated due
to the reluctance of corporations to consider anything beyond
the next quarter's earnings. Consequently, the elite have begun
to pressure employees into buying outdated plants and machinery
(through employee stock ownership plans) with threats of plant
closures.
Obviously, if corporations are eager to get on the ESOP bandwagon, and they most certainly are, logic if nothing else should suggest that despite the lies being fed to employees all around the country, employee stock-ownership plans benefit employers more than they benefit the employees. And they do. Here's how.
As the ESOPs are phased in, a company's existing pension plan gets phased out. For an increasing number of people, their retirement income will then be tied to the fluctuating price of the company's stock. This means that in a recession, or worse yet a depression, neither their stocks nor the dividends from the stocks will be worth a damn. For companies that go bankrupt, in good times or in bad times, the pensions for all current and retired workers will simply cease to exist!!
Because post-retirement medical coverage gets phased out as well, employees will have the option of withdrawing equity from their stock accounts to pay for their own medical coverage. If medical costs skyrocket in later years, and they will, employees and particularly the retired ones will feel the pinch of reduced pension income. If stock dividends plummet in a recession, which they most certainly would, pension income would be reduced accordingly. Not so with the cost of medical care. With little or no income during a recession, sickness may cause many to borrow against whatever equity is left in their homes.
In recessions and depressions, workers who have not retired yet will be faced with the option of allowing their company to go bankrupt, and in the process losing both their jobs and their pensions, or they could keep the company going, at any and all costs, by working for wages that would at last compete with 3rd World labor costs!!
In bad times many workers would be forced to sell off their company stock for additional income. However in bad times, dividends from the stocks would most likely cease as well. If many people are forced to desperately dump their shares on the market for survival income, the stock market could once again easily collapse.
The prospect of getting rid of existing pension liability is so lucrative to the elite that the current administration is providing no end of tax incentives to corporations to get them to participate in ESOPs. Even the banks and Insurance companies are being given irresistible tax incentives to provide corporations with loans to set up their ESOPs. They only have to pay tax on 50% of the interest revenue from ESOPs!! Next, the corporations can write off not only the interest they pay on these loans, but also the principal! In addition they can write off the dividend payments on the stock. The tax incentives alone are so lucrative that last year over $18 billion was borrowed by corporations to set up ESOPs. In short ESOPs are simply another vehicle designed for the economic elite to reduce worker benefits, and withdraw their money completely by selling the country's debt laden industrial carcass to gullible workers. On the other hand, the mega-rich minority would be fewer and richer than ever. Many have already taken their wealth out of America and invested it in 3rd World countries. During recessions and depressions, their wealth will, relatively speaking, escape the losses suffered by capital invested in the 1st and 2nd World countries. {B66}
What makes the whole ESOP scheme transparent and laughable is that, almost without exception, when companies are 100% owned by the employees, the employees have little or no representation on the company's board, and subsequently little or no influence over supposedly their own company's policy.
Studies carried out by Michael Conte at the University of Baltimore,
by Jan Svejnar of the University of Pittsburgh, and by the General
Accounting Office (GOA) itself, have all reached the same conclusion.
ESOPs do not improve either profits or productivity. They have
however reduced Federal tax revenues by billions, and suckered
many workers into jeopardizing not only their present well-being,
but their retirement security as well. {B67}
Let's assume that Nabisco operates with an operating loss of $500 million per year. Theoretically, this operating loss can be prorated out to each of the companies forming the corporation, all of which can begin accumulating tax loss credits. This means that an outside company which is running with a profit of $100 million per year could approach Nabisco and arrange a deal to buy up a portion of Nabisco's companies that account for a loss of $100 million per year.
After the merger, the new hybrid company would now theoretically pay no taxes either, because their previous $100 million profits would be offset by the $100 million tax loss of the newly acquired companies from Nabisco. And so another $100 million dollars in taxes would not get paid in taxes. In this way, unsold companies that run in the red can accumulate their tax losses for 15 years, thus becoming even more lucrative to the diminishing number of companies that have not yet jumped onto the tax avoidance bandwagon.
Congress goes through the motions of "preventing the trafficking of tax loss credits", however, loopholes are left to effectively get around the weak legislation. I could elaborate on the loopholes, but enough has been said about the topic of tax avoidance already. Those wishing to know how, can read "Guess which shell has the loss" on page 215 of the Nov 14 1988 issue of Forbes.; "It's the right thing to do", on page 104 of the April 17 1989 issue.; or "ESOP fable" on page 98 of the June 26 1989 issue.
In general, Congress defends its "hands off" policy with regard to mergers and acquisitions on the grounds that bigger corporations are necessary to compete internationally. This would have been an acceptable argument back in the old days when mergers used to occur between companies which produced components of a finished product. However, it is precisely these massive corporations that are being bought up by the takeover raiders and broken up to be sold off in bits and chunks to the highest bidders!
In any event, the fact that some genuine mergers are producing virtual monopolies is being casually overlooked amidst the circus of ongoing business abuses currently taking place. Reagan began taking the heat off of big business monopolies by cutting the government's anti-trust staff by about 60%.
An additional generous loophole was provided in 1984 with the
introduction of the National Co-operative Research Act which provided
exemptions from anti-trust lawsuits for companies engaged in joint
R&D projects. Those most concerned with antitrust suits are
now involved in joint R&D projects at least in a token way! {B68}
Regrettably, the message being broadcast by the yuppies and the super rich is that putting in an honest day's work for an honest day's pay is reserved for suckers and those afraid to take risks. Accordingly, the fever to get rich quick, without really working, is causing countless lower class entrepreneurs to choose drug trafficking as an elevator to their financial success, just as stock market and real estate speculation is chosen by the upper class entrepreneurs. To put it mildly, Wall Street scandals are becoming commonplace, and stock markets seem more and more to be the playing field for inside traders and stock price manipulators. Legitimate balance sheet acrobatics makes it increasingly unwise for all but seasoned market professionals to invest in America's potential. The article on page 46 in the Jan 9 1989 issue of Forbes, entitled "Never, but never, give a sucker an even break", exposes just how easily the unwary can be parted from their money.
Although the stock market has always had a casino-like atmosphere attached to it, the contagious "get rich quick" fever, now seems to have pervaded virtually every aspect of legitimate business. Corporations are spending more time and effort on making profits through balance sheet maneuvers than through anything even remotely related to efficiency or productivity.
The investment departments of corporations have usually preferred to gamble on the stock market, and banks on real estate. But in reality they each gamble in both speculation games simultaneously, converting assets back and forth from real estate to stocks whenever they think one or the other of the speculation games is ready to crumble.
The October 1987 stock market crash was to the stock market speculation game, the equivalent of a national run on the banks in the real estate market speculation game. Stocks across the board had been traded back and forth until they were hopelessly overvalued, at which time the gamblers who did not get out in time, took their losses, and passed them on to their customers in the guise of price inflation. Of course there were the usual bailouts, but some of the brokerage houses still went bankrupt.
The key, to understanding why the public at large should be concerned
about market and bank failures, centers around the fact that speculators
rarely gamble with their own money. They normally borrow the money
from someone else. To appreciate the magnitude of this problem,
let's examine why so many banks and savings and loan thrift institutions
have gone bankrupt.
And in a nutshell, this is precisely why hundreds of banks and S&L thrift institutions have recently declared bankruptcy.
A knowledge of the root causes of S&L failures is so fundamental to an overall appreciation of society today, that a synoptic description of the scam behind the failures will now be outlined.
Most important is the fact that banks and S&Ls were, and still are today, vehicles for acquiring money to gamble with. Most depositors who deposit their money in a savings account, or on fixed term deposit, tend to think of banks as giant vaults in which their money can safely reside free from the ravages of fire, theft, and accidental loss. Even the massive amounts of money that flow into banks from pension funds are put on deposit basically for safekeeping. Decades ago, when interest rates, and property values were relatively stable and comparatively fixed, the image of banks as vaults was not that far off the mark. Most institutions made their money from the spread in interest rates between what they paid to their depositors, and what they received from those who borrowed from the bank. Times have changed.
With speculation profits as the lure, S&L thrift owners have been using depositors' money as their personal gambling stakes to engage in real estate speculation. They bought up plenty of actual properties, and also issued mortgages on others. Some of these mortgages were assigned, at preferred interest rates, to friends, relatives, and business partners, etc. In this way, a network of chosen insiders could also use depositors' money to engage in real estate speculation!!
As prices continued to rise, the speculators were free to sell their properties for profits. The mortgages could be paid out or passed on to the new real estate buyers, in which case, new properties could be purchased and new mortgages taken out. The profits for many were enormous. Prior to the real estate slump, prices had skyrocketed. Although much of the speculation involved commercial real estate, the price of residential real estate was also inflated in the process. Meanwhile, the innocent bank depositors were still only being paid their measly fixed low interest. The profit difference, which for some has been instant millions or hundreds of millions, was pure profit involving absolutely no productivity whatsoever, and for that matter, little or no risk either. Why little or no risk?
Well, when the real estate market inevitably collapsed, the banking and corporate gamblers start dumping their real estate holdings on the declining market. Almost instantly, there were no buyers in sight. The gambling bankers were left with overvalued properties, and overvalued mortgages whose holders predictably chose to default on. Hundreds of bank and thrift owners knew the party was over, and that they were on the road to bankruptcy.
Were the speculators now going to lose all the profits they had made on the way up? Not a chance. They were all capable of walking away from their institutions relatively unscathed, and here's how.
Between the time the gamblers know they have lost, and before a bank or thrift actually declares bankruptcy, the insiders purposely maintain appearances and keep the institution afloat as long as possible to buy time to carry out some or all of the following remaining steps of this much used scenario.
The present and future taxpayers, whose standard of living will be reduced in the process of paying back the two to three hundred billion dollars in S&L bailout money, are simply paying for all the profits taken out by the speculators who now pose as the nation's most successful entrepreneurs, and respected community leaders!!
It should be noted that the same sort of scam can be carried out in a period when the real estate market is relatively stable. Properties can be purposely sold back and forth between corporations or individuals in an effort to leave a plausible but totally artificial inflationary sales track record for the property. For example, Individual # 1 can sell a piece of real estate with a current market value of $10 million to Individual # 2 for $20 million. Individual # 2 then sells the same piece of property to Individual # 3 for $30 million.
Then after the value of the property has been sufficiently pumped up through artificial sales, the S&L owner or bank manager, who is also in on the scam, either buys the property or issues a mortgage on the property as if the property were worth $30 million. So now the bank depositors in effect own the unrealistically overvalued property! After all, it is the mortgage payments that are used as money to pay the depositors' interest, and it is the sale of the overvalued properties that is used to pay back the depositors' principal. Needless to say, the true market value is still only $10 million! The $20 million difference is then split amongst the S&L owner and his associates. When the S&L has been milked sufficiently using this or other scams involving leveraged buyouts and junk bonds, it is cast aside for the taxpayers to bailout the exploited depositors.
Don't be fooled into thinking your money is automatically safe, just because it is in the bank. The phrase "safe as a bank" is an anachronism.
In 1937 a record number of banks went bankrupt, and that record number lasted as an unbroken record for almost a half century until 1984! The number of bank failures since then is as follows: 79 in 1984, 120 in 1985, 138 in 1986, 184 in 1987 and finally 200 in 1988!!! Furthermore, the Federal Deposit Insurance Corporation disclosed that in 1986 there were 1484 banks around the country which it officially listed as "problem banks". In 1988 this number had declined by 69 to 1415. Normally this news would be good news providing one doesn't take into account the number of banks that failed in the same period. {B69}
And don't forget, these figures are for banks only! The figures for "problem" and "failed" Savings and Loan thrift institutions are even much worse.
You also ought to be aware that, thanks to Emergency Banking Regulations, your bank deposits can be frozen and dribbled back to you on a fixed limit per month if your bank's doors get locked some day for a liquidation party. Don't assume you will automatically have access to your safety deposit box, because you probably won't, not unless you are wealthy enough to pull the right strings.
The reason that owners of banks and thrifts can afford to gamble in this way and risk having their own bank go bankrupt, is that they only have to cover the depositors money by 4%, and 3% respectively of their own capital; and that money itself could no doubt have been borrowed for the investment, and this can be debt equity.
So what did the thrift owners lose? Practically nothing. As paltry as the 4% and 3% amounts may seem for the privilege of gambling with depositors' money, much owner equity was in the form of business "goodwill"!! The balance sheet intangible called "Goodwill" is being used increasingly as just another tax avoidance loophole. Because goodwill has to be amortized over thirty years, earnings, (i.e. profits) can be artificially reduced to zero with a sufficiently large "goodwill". When Philip Morris bought out Kraft foods, $11.6 billion, or 90% of the purchase price of $12.9 billion was "goodwill". In the process, Kraft passed on the valuable profit-reducing "goodwill" to Philip Morris. Although theoretically its profits and therefore its taxes will be reduced substantially, (it may even run at a loss) its dividends paid to stockholders may not be affected at all. The mania for mergers and acquisitions is fueled by tax avoidance opportunities. In other words, some bank and thrift owners risked practically none of their own money. {B70} The abuse of depositor's savings could virtually be eliminated if banks could only take in deposits equal to say twice the value of their own shareholders' participatory equity, not just a ridiculous 4 percent. The safety and value of all bank depositors' money has been seriously undermined.
Not only have the life savings of many unsuspecting bank depositors provided gamblers with their gambling capital, to add insult to injury, in the process the real estate values for the whole community have been artificially pumped up to the extent that, for an increasingly large number of modern day workers, the prospect of owning a home is becoming only a pipe dream. Many young couples now have difficulty even saving the 10 percent down payment necessary to qualify for a lifetime of mortgage payments.
But the consolidation of real estate ownership is not a new phenomenon,
it has been going on relentlessly since the 50's. Mr. Joseph Minarik
of the Urban Institute shed plenty of light on the issue. He pointed
out that a typical 30 year-old purchasing the median-price home
under typical mortgage terms would have incurred carrying costs
equal to 14% of his pretax income in 1949, 15% in 1959, 21% in
1973, and 44% in 1983. {B71} Needless to say, this trend has worsened
significantly since the start of the 80's. In fact, the Joint
Center for Housing Studies at Harvard University have disclosed
that between 1980 and 1987, there has been close to an 8% decrease
in home ownership for the 25-34 age group. {B72}
While the effects of the S&L bailout will certainly be felt by the bottom 90%, neither the President nor the Congress is keen on the topic being too visible to Americans or the rest of the world for that matter, so the initial 50 billion of bailout money will not even be part of the government's budget. Instead, the Gramm-Rudman deficit cutting law will be purposely avoided by taking $20 billion from this year's already budgeted and allocated money, and by having the remaining $30 billion borrowed not "on budget" by the Treasury, but "off-budget" by a newly formed government agency called Refcorp which will sell bonds which pay higher rates of interest than normal treasury bonds. Because the revenue from the sale of Refcorp bonds are treated as budgetary receipts, the S&L bail-out will appear to actually generate revenue this year!
As Charles Bowsher, the Comptroller-General of the United States put it,
"By conventional wisdom, the U.S. federal budget deficit in 1990 will meet the Gramm-Rudman-Hollings target of $100 billion. Why, then, will the federal debt rise during the same year by about $280 billion? Because the federal government has cooked the books. The American public is being led to believe that the deficit is falling when it is actually rising"
Mr. Bowsher also pointed out that Bush's S&L plan will cost the taxpayer tens of billions in extra, unnecessary interest, just to hide the S&L losses "off budget". {B73} This practice of hiding deficits "off budget" is done strictly for political public relations, and therefore is blatantly meant to deceive and manipulate the public.
Just as the bailout of the Federal Savings & Loan Insurance Corp. (FSLIC) will cost the taxpayer nearly $300 billion, so the following organizations are potential bombs that have the autonomy to borrow money without government approval, but whose debt does not get added into the Federal Budget deficit, and whose debt is not therefore subject to Gramm-Rudman constraints: The Farm Credit System; The Federal Home Loan Mortgage Corp.; the Federal National Mortgage Assn.; and the Student Loan Marketing Assn. {B74}
While the government's formally recognized debt amounts to $2.6 trillion dollars, the "off budget" hidden deficits such as government credit, insurance and loan-guarantee commitments have grown in the last 20 years from $400 billion to more than $5 trillion - nearly twice the national debt, and five times the annual level of federal spending! {B75} The general public has been successfully kept in the dark regarding the future hardships that these off-budget deficits will cause. {B76}
Congress is responsible for going along with this type of deceit.
Says Lee Hamilton (D-Ind.), Chairman of the Joint Economic Committee,
"We have developed considerable skill and sophistication
in meeting deficit-reducing targets ...without reducing the
deficit.
Don't be fooled into thinking that when a corporation fails, some big player has lost a fortune. In the corporate version of the S&L scam previously described, corporations, which more often than not are holding companies, can purposely set up a separate subsidiary investment company to go bankrupt if the gamble fails.
Insurance companies too have speculated in real estate with their policy holders' funds, in the same way that S&L thrift owners and the investment departments of corporations have speculated.
Similarly, many insurance companies have suffered massive losses
through real estate speculation and through extensive investment
in junk bonds. However, accounting conventions in the insurance
industry have allowed the losses to go largely unnoticed and unreported.
Consequently the significance of losses incurred by this industry
have not received the media attention that they so justly deserve.
No doubt the insurance industry lobbyists have assisted in preventing
the information from being publicized too widely mainly because
(unlike the S&L thrift industry) the insurance industry
is not backed up by government guarantees!! In addition, clever
accountants in this industry too have found methods of bypassing
legislation put in place to ensure there is always enough capital
surplus to pay out claims as they come due. {B77} The industry's deteriorating
capital base is being disguised in part through reinsuring part
of their liabilities with offshore insurers in places like the
Bahamas which do not require the same level of controls or safeguards. {B78}
Since eight out of ten Americans own life insurance, a recession
causing junk bond defaults or widespread business and bank bankruptcies
would almost certainly cause a related general collapse of insurance
corporations on a scale that is perhaps under present circumstances
difficult to imagine. {B79}
Not surprisingly they were left with little alternative but to default on their loan repayments unless they received additional loans to be able to repay even the interest portion of the debt. Just be aware that the 3rd World debt is now over $1,200,000,000 and the repayments have almost stopped. {B80}
The country has yet to suffer a national run on the banks like what happened in 1929, but the writing is on the wall. Many have gone bankrupt already and the government has arranged for hundreds of billions of taxpayer dollars in bailout money. But that's only the tip of the iceberg; there are hundreds of banks waiting in the wings. In 1986, the FDIC listed over 1,500 U.S. banks on its problem list, up from a little over 600 three years earlier. Their losses are very conservatively estimated to be well above $200 billion dollars. Those closest to the facts put the figure over $300 billion.
To put it mildly, debtor nations can barely repay the interest,
much less their loan principal. Logically, these facts should
spell big trouble to the shareholders of the major banks (many
of whom belong to the economic elite). That might ordinarily be
the case if they were not the ones who pull government strings,
...but they are.
Taken together, the various methods provided what amounted to free banking insurance for the bankers.
To begin with, a piece of legislation was passed through Congress in 1980 that the public didn't even really get to hear about. It was called the Depository Institution Deregulation And Monetary Control Act and it gave the Federal Reserve the right to purchase any bad debt. The sentence doesn't sound all that menacing, until you realize how that power can be used to perpetrate one of the great superscams.
The government has already indicated that there are certain major banks that it would not allow to go bankrupt, in the national interest. How might the Fed prevent the bankruptcy of major banks who have literally hundreds of billions of dollars of foreign bad debt that they would otherwise be forced to write off? ...simply by buying or "guaranteeing" the foreign bad debts from the banks.
What is currently happening?
America's Treasury Secretary, Nicholas Brady, is encouraging the
major banks to give new loans to the debtor nations in order to
keep the interest payments flowing. How could the banks possibly
be enticed to supposedly throw more good money after bad? Well,
when the original loans come up for renewal, the government is
offering to "federally guarantee" the new loans (with
your hard earned tax dollars), provided they are channeled through
the International Monetary Fund. The government's excuse is that
it can afford to risk taxpayer money because of the stipulations
and provisions (imposed by the International Monetary Fund) that
a debtor nation must agree to, as a requirement for getting the
new money. Interest on these bonds is now guaranteed by the US
Treasury, and the principal is covered by zero-coupon Treasury
bonds. {B81}
The reality of the matter is that one by one, the shaky defaulting loans, which the banks are liable for, are slowly being replaced by new loans in the form of bonds which the taxpayer is now indirectly liable for. Increasingly, YOU own "the pieces of paper" from the 3rd world country that says that it owes you 100 million dollars.
In other words, taxpayers are being covertly and periodically fleeced of billions of dollars instantly, and without a consultation!! The banks and their shareholders who incurred the original debt will end up with crisp new bills to start off another exciting and lucrative round of real estate inflation, just for a change of pace. Although there is now slightly more chance of the principal being repaid, the likelihood of this happening is still remote.
On the other hand, the economic elite are, through the IMF and World Bank, able to maintain and exercise political and economic influence, if not domination, over the 2nd and 3rd world debtor nations by making the loans conditional to their agreeing to all sorts of fiscal policies such as "privatization of national resources" which consolidates political and economic power into the hands of a wealthy few who are eager to make future deals with the Western elite to increase their wealth and power. By accepting these conditions, the 3rd World economies are kept vulnerable to exploitation by the Western superpowers. (i.e. ...political and economic slavery, as opposed to physical slavery)
For example, in exchange for a recent $500 million loan, the World Bank bargained with Brazil to allow American banks like Citicorp to engage in buying Brazilian real estate. Just as America's manufacturing base left America for cheaper labor abroad, American banks are eyeing the virgin lands of the 2nd and 3rd World as the next real estate speculation arenas!! Brazil got the loan all right, but has so far reneged on the new banking arrangements. Lucky Brazil! The vultures are circling. {B82}
So far, the government has "guaranteed" more than $30 billion of the World Bank's 3rd World debt, but IMF board members have begun lobbying to have the IMF funds increased by 80%. Chances are they will be successful. Additional debt for America's unborn. {B83}
But that's not all.
Besides the new loan "guarantees", there are the additional billions written off by the banks as bad debts. These "write-downs" are business expenses which reduce their profits and hence their taxable income. In 1988, Latin debt was written down by about $17 billion.
The above-mentioned measures, and others, were used to insure that the interest payments kept flowing. This after all is primarily what the bankers are interested in. Interest payments are the source of their profits. Most bankers couldn't give a damn about the security of the money in their banks. Mind you, even though only 3% or 4% of the banks' assets belong to the bankers themselves, they are still not eager to see a national run on the banks because bankrupting the banks would ultimately cut off the source of their income. Consequently bankers have lobbied to have the bottom 90% encouraged to save, and thus get workers to inject some equity into the banks to help keep some of them from going bankrupt due to their gambling losses.
Not surprisingly, the Bush administration is about to launch an extensive campaign to get the working class to start placing more of their money into banks. Why? Like the corporations who are trying to sell corporate debt through ESOPs, bankers want to bail out the banks by selling their 3rd World debt to unsuspecting depositors. In addition, the banks want a fresh injection of money to gamble with. Don't forget that bankers had little or no qualms about using depositors' hard earned cash, in addition to workers' pension fund money to finance leveraged buyouts. To them, the money is there to gamble and invest with.
Note well that much of the corporate debt owed by the "leveraged
to the hilt" corporations is currently held by banks, and
it is the bank depositors who will stand to lose their money if
the corporations collapse en masse in a depression.
Although both the stock market and real estate speculation games are basically gambling, which involves and risks someone else's capital, fleecing the Social Security and Pension Funds is barely distinguishable from outright theft.
Over time, pension funds have a way of increasing in value substantially, and many private companies hold vast sums of worker's pension fund money which they invest, and collect interest on. One reason that pension funds have increased in value so quickly is due to the fact that their investment income is non-taxable.
However, when one company buys up or takes over another company, the resultant merger allows the management of the purchasing company to form a new hybrid company and restructure or reorganize many aspects of both of the original companies to form the new hybrid firm. The problem is that the owners of the hybrid firms are allowed to create a "new" pension fund and in the process, strip off all surplus value that had accumulated over the years. This siphoning off of surpluses is known in the industry as "pension reversions". It's probably a moot point whether the "reversion" refers to the wealth of the pension plan, or to social progress itself. In any event, money that theoretically belonged to the workers, has easily been skimmed off to create instant billions for the hybrid firms' owners. This type of merger leaves in it's wake, a trail of brand new "virtually poor" pension funds.
Even under normal circumstances, when an insured employee dies, a corporation is free to pocket the surplus that has accumulated tax free over the life of the policy. {B84} Here again, value that should have been paid to the policy holder in compensation for the loss of value through inflation gets swiftly pocketed by the corporations.
In the last decade alone, huge corporations like Exxon Corp., United Air Lines, TWA, Union Carbide, and close to 1900 other companies have stripped off about $20 billion in pension fund surpluses. Exxon siphoned off $1.6 billion from its employees' $5.6 billion pension fund. {B85} Currently there is a backlog of over 600 companies waiting for government approval to do exactly the same thing. {B86}
Under current legislation, if a pension plan is closed down prematurely,
the new owners are only obliged to pay workers what they have
accrued up to that point in time. The normal pension arrangement
of "retiring with a percentage of your salary at retirement
time" has been robbed from countless workers who had served
decades of loyal service.
According to a Federal body called the
Pension Benefit Guarantee Corporation which currently underwrites
America's pension commitments, over half of the reversions that
have taken place have been replaced with either vastly inferior
pensions, or else the pension plan has been discontinued entirely!!
In 1988 alone, one third of the 230 pension plans which were closed
down, were not replaced! {B87}
These pension plan closures always leave their victims stunned because few workers can predict who will be next. The majority of workers do not even anticipate the possibility because the tragedy is seldom if ever given any attention in the media. This media silence is of course not accidental.
Most workers expect to retire with pensions, but very few are aware that no more than 1 in 6 end up collecting them. Too often workers have retired and submitted a claim for pension benefits only to discover that for one reason or another, they have been disqualified from receiving pension benefits by some minor technicality. Many have become victims to commonly occurring events such as changing union locals; temporary interruptions to service caused by an industrial accidents or work shortage layoffs; company bankruptcies; and pension plan terminations.
In fact, the pension problem is so ludicrous that a government
official once put it in these words, "In all too many cases
the pension promises shrink to this:
"If you remain in good health and stay with the same company until you are sixty-five, and if the company is still in business, and if your department has not been abolished, and if you haven't been laid off for too long a period, and if there's enough money in the fund, and if that money has been prudently managed, you will get a pension!"
What protection does the Federal government provide for workers'
private corporate pension funds?
For starters, the government
is by its actions encouraging corporations to eliminate private
pensions plans! The $1.6 trillion dollars of pension funds still
theoretically insured by the Federal government's Pension Benefit
Guarantee Corporation, is being reduced at an alarming rate by
pension plan terminations. Incidentally, the term "theoretically
insured" was used because the PBGC is already carrying on
in the red, with a deficit of $1.5 billion! {B88}
Mr Charles Bowsher, the comptroller-general at the government's General Accounting Office (GAO) estimates (probably quite conservatively) that losses in the private pension fund area alone may amount to from $100 billion - $150 billion! {B89} Even if PBGC were not running in the red, it would not help those folks whose companies closed down their pension plans and paid out their employees with annuities. First of all, annuities are not by nature indexed to inflation, but worst of all, the PBGC does not provide insurance for annuities. If an insurance firm responsible for the management of the annuities goes bankrupt, and there are plenty of likely candidates, pensioners would be left completely out in the cold!
Perhaps you are confident that the Federal government's Social
Security system will come to your rescue?
Well, there is ominous
news even there. As with private pension schemes, tax-free interest
generated from the invested pension payroll deductions generates
substantial surpluses each year. The surplus for 1989, which should
be used to index the social security to inflation, amounted to
about $56 billion dollars. Although this trust fund is theoretically
"off-budget", the Treasury not only counts the "surplus"
as "on budget" for the purposes of Gramm-Rudman jiggery-pokery,
but spends the surplus and hands back to the social security trust
fund some Treasury securities (i.e.IOUs) which don't increase
the nation's acknowledged budget deficit, even though when it
comes time to pay the money out to pensioners there will be IOUs
and not money. {B90} As recently as May 1989, the House Rules Committee
rejected a resolution submitted by Marty Russo (D-Ill) to correct
this very deceit. {B91}
Will there be pension money left for the retiring baby boomers
10-15 years from now?
Probably not, if the bottom 90% continue
to allow the economic elite to milk the economy dry. Pension funds
will have been literally skimmed off or terminated to make countless
millions for existing multimillionaires (and of course billionaires).
Keep in mind too, that much of the pension fund money held by
corporations on behalf of their employees is invested with banks.
Also be aware that this pension money is precisely the money that
was extracted by the elite through their "debt for equity"
swaps.
Have we been fleeced in any other major way?
Sure. The travesties to economic justice previously discussed
have merely been the ones which seemed most relevant. There are
many others. We will however look at one more. Monetary devaluation.
Let's start out by saying that everything has a trading value. Since ancient times, people have traded their labor and possessions for other people's labor and possessions. Cars, ball-point pens, even old shoes, you name it, practically any object can be taken anywhere else on the planet and exchanged for something that the other trader considers to be of equivalent value. Most things have an obvious value due to their usefulness, like tools, furniture, real estate, watches, or tractors. Other objects, like paintings can be valued almost entirely for their beauty. Gold bars on the other hand are neither functional nor beautiful in the strictest sense of the terms.
But because gold has always been looked upon as a precious commodity by practically every social community on the planet, it has been used as a trading medium for millennia. In fact the longest lived form of tradable and transportable wealth has been gold in the form of coins. Unlike livestock and other perishable goods, gold has an intrinsic value because it does not decay or corrode, and because it has always been a somewhat scarce commodity. Over time, gold became a symbol for permanent value. Gold coins "became money" simply because the gold that formed the coins was valued practically everywhere. Not surprisingly, gold became popular as a means of transferring large sums of wealth from one country to another.
In fact, until relatively recently, the value of all coins was based on the intrinsic value of the precious metals from which they were made. In other words, coppers had the value of the copper from which they were made, nickels were worth the value of the nickel they were made of, and dimes, quarters, and dollars for the silver. Theoretically the quarter should have weighed two and a half times as much as the dime, and a silver dollar should have weighed four times as much as a silver quarter. Because pure gold is a relatively soft metal, people used to bite their gold coins to see that they were not counterfeits. Slowly but surely, people came to trust coins as a form of tradable wealth because the governments guaranteed that coins had a real value based on the value of the precious metal they were made of.
Now, what about paper money?
Paper money supposedly had value because the governments (those
in power, the elite) gave their guarantee that at any time the
paper could be converted into real wealth. Citizens could exchange
a dollar bill into coins which supposedly contained real wealth
in
the form of actual silver, nickel, and copper. It was solely
this guarantee that supposedly prevented the elite from running
the paper money presses in the middle of the night to print as
much money as they needed to pay for wars or imported goods. On
some American money you will read the words "In God we trust",
but it is not God in whom we trust to maintain the value of the
money, it is the elite who are in charge of printing the bills
and minting the coins.
On July 1 1944, as part of what became known as the Bretton Woods Agreement, the American government gave its word to the American people and to the world that in exchange for $35 US paper dollars, the American government would hand over an ounce of real gold. That was the promise that gave the American paper dollar its value!! In fact, the vast warehouse of gold stored at Fort Knox came to be acknowledged and accepted as the tangible proof of that promise. The American people have had to trust ever since, that the government would not print any more paper money than there was real wealth to redeem the bills. That is the understanding and the promise upon which the value of American paper money has been based. {B92}
However, neither the government (the elite), nor the media (the elite) saw fit to make it clear to the American people that the real wealth and value (upon which the American paper money was based), was systematically being removed!
Here's how.
As long as a gold coin is made of gold, it can theoretically be taken to any other country in the world and melted down for the value of the gold it contains. However, while the US government has exercised exclusive control over the minting of coins, they have slowly devalued the currency by minting coins which looked somewhat the same, but which contained less of the precious metal than they were supposed to contain. Now the majority of coins in America have scrap metal value only. The dimes, for example, are no longer made of silver, the quarters are now made of sandwiched alloys. In other words, over time, the real value of coins has been stolen!! In case you are wondering, the gold and silver that used to be in the coins has not disappeared or corroded, it's weighing down the Swiss vaults like never before.
During the Vietnam war, there were over 500,000 military personnel that had to be fed, housed, paid, hospitalized and entertained while they weren't busy dropping expensive bombs, and chemicals on a barefoot peasant population. This was indeed a very costly war. But the American elite simply spent, and spent and spent. Of course the elite knew that the American people would have cut off funds for the war if they had been given an opportunity to do so. Instead, the elite used the treasury's printing presses to pay for the Vietnam War. The American government secretly printed as much paper money as it wanted or needed to carry on the War. Eventually, foreign bankers, who suspected this might have been going on (i.e. that paper money was being printed without actually creating the real wealth to redeem it), called America's bluff by demanding to redeem their American paper dollars for actual gold.
Finally, on August 15 1971, Richard Nixon refused to redeem 35 American paper dollars for an ounce of real gold!! The deceit had at last been exposed.
Immediately, the price of gold skyrocketed. Most Americans went to bed that night knowing that the price of gold had skyrocketed but few knew why. In reality, it was not the value of gold that rose that fateful day, it was the value of the American dollar that had taken a nose dive to adjust to what the world considered the paper dollar was really worth in relation to an ounce of gold.
The fact that the American government had prevented its citizens from buying and holding stocks of gold had been no accident, it had wished to prevent its citizens from ultimately demanding to exchange their own paper dollars for the gold in Fort Knox. Americans have been purposely kept in the dark about the systematic devaluation of their money.
The move quickly ushered in a decrease to the American standard of living second only to that caused by the great market crash of 1929. And yet few still appreciate what actually happened that day.
It did not take long for the cost of living in America to begin escalating because Americans had an insatiable appetite for imported goods, the prices of which had been raised (like the price of gold) to compensate for the now publicly acknowledged devalued dollar.
Incidentally, insiders who knew that the government was going to abandon the gold standard (i.e. refuse to sell its gold for $35 dollars an ounce) made instant fortunes by secretly buying gold abroad before it happened, and then buying back American dollars once the dollar had been devalued. And this could very well have been what finally tipped off the foreign banks to start redeeming their U.S. paper dollars for the real wealth of gold. The prohibition on buying gold in America prevented a run on American gold by forcing the insiders (who wished to capitalize on the inevitable devaluation) to purchase their gold from foreign countries. In fact, the America elite had for some time been effectively cheating 2nd and 3rd world nations, by knowingly buying their raw materials and foreign products with devaluing money.
Americans were already feeling the pinch of expensive European imports by the time the OPEC nations raised the price of oil. Ironically, this came as a welcome relief to the American elite, not only because it made oil in America, both above and below ground, worth billions more for the oil barons, but because the elite now had a scapegoat on which to focus blame for the dropping standard of living. Even the higher cost of goods from abroad could now be totally blamed on the increased cost of Arab oil.
Moreover, because the American people remain virtually blind to this style of thievery, it has continued unchecked. In the last two years, the American dollar has been devalued more than 40% against the Japanese yen and most other foreign currencies!!!
Just remember at all times that the majority of politicians are actively cooperating to deceive the American people on this and countless other issues. It is no wonder that the rich don't wish to hold their wealth in banks where the dollars can be devalued, Instead, they buy real estate, and real gold, that can't be devalued in this way. Or else they have their money salted abroad where economies are growing and where devaluations are most unlikely.
Should anyone be surprised that Mr Bush is about to encourage the bottom 90% with tax advantages (that only come collectible when withdrawn upon retirement), to invest their money in banks via Investment Retirement Accounts (IRAs), and other similar savings instruments such as the "Family Savings Account" that will lock their money in for the next devaluation theft. {B93}
Before leaving the topic of economic travesties altogether, the
reader should realize that with the exception of monetary devaluation,
the techniques mentioned in the book have all involved taxation
avoidance perks and incentives. Although the book has described
their disastrous effects within America, the reader should be
at least be partially aware that some of the effects are also
felt around the globe, and especially by the poor in the 3rd World
nations.
More importantly, because the economic elite running the 3rd World nations realize they cannot milk too much more wealth out of their bankrupt economies, and because they fear for the safety of the wealth they have already accumulated, vast quantities of cash have been sent out of these nations for safe keeping in Swiss and American banks. Astoundingly, the $300 billion flight capital from Latin America has already exceeded the total Latin American debt of $257 billion!
Without too much imagination required, one can speculate that much of the money loaned to the elite went straight into the hands and bank accounts of the very people who have shipped money out of the country for safe keeping. While the rich ride out the economic turbulence on their yachts, much of Latin America has been thrown violently into poverty and hunger. Argentina's inflation rate, for example, is over 1000%. No wonder the frustrated workers in 3rd World countries are so quick to loot from the wealthy when opportunities arise. {B94} In fact, looting occurs in America with increasing regularity, and probably because poor Americans too watch helplessly with frustration and anger as the rich get richer and the poor get poorer.
Just as the American elite are causing hunger and poverty in the 3rd World nations, the selfish behavior of the economic elite in some 3rd World nations affects Americans in no less a fashion, and not surprisingly, due to their taxation avoidance laws.
The destruction of the Brazilian rain forest is a very important case in point. Tax laws favoring the Brazilian economic elite are affecting the air the planet breathes, and here's how simply it is happening. The Brazilian government has for all intents and purposes exempted agriculture from taxation. This has led businessmen who have little or no interest in farming to buy as much farm land as they could from farmers, in order to be able to falsely declare their non-farm income as farm income to avoid taxation. Needless to say much of the best agricultural land, that was formerly used to grow food for Brazil, is now lying fallow. The displaced farmers then had to compete with businessmen for a share of the remaining rain forest land, which incidentally, is practically unusable for growing crops. However, because there is a tax on unimproved land (i.e. land with forest on it), the trees are being chopped down to avoid taxation. Additional tax credit schemes favoring the cattle ranchers are further speeding up the process. A handful get rich while the planet's air supply is jeopardized. {B95}
Yet another planetary rip-off for the feudalists in pinstripes!
With all the capital gains recently made from the current wave of "debt for equity swaps", an immediate need has arisen for the elite to be able to temporarily bypass taxation on capital gains.
As the ultimate insult, George Bush and his friends are trying to pass legislation that would drastically reduce the Capital Gains Tax for a brief two year period. If they succeed, it will allow the super-rich to take their quick and dirty profits out of the system, and ultimately out of the country and into the 3rd World to inflict the same exploitive tricks and measures on less sophisticated victims. Economically rape a country, and then head off for virgin territory to do it all over again.
Do the elite care who follows in their wake to buy up the bankrupt banks and corporations?
Not really, their allegiance is not to any country, but to profits.
And at this stage of the game, they can make more profit abroad,
especially because the American taxpayer has already paid for
their existing foreign factories.
On September 14 1989, the House Ways and Means committee voted to approve a temporary cut in the capital gains tax. {B96} The potential cost to taxpayers in lost tax revenues will be horrendous. In the wake of a decade of leveraged buyouts, George Bush's intention of drastically reducing the capital gains tax for a two year period is somewhat equivalent to his saying "...let's show some goodwill to society's thieves by leaving the prison gates half open for about five minutes". {B97}
The bottom 90% have been fleeced and will continue to be fleeced in any and every way the elite feel they can get away with, without provoking an out and out popular revolt.
Sooner or later, wage earners must learn to equate the dollars they pay into the tax kitty, with dollars that the banks and corporations don't pay into the same kitty. A dollar is a dollar! Every billion dollars not paid in taxes by the corporations or banks will have to be made up by the wage earners, ...or else additional health benefits, education benefits, or retirement benefits will get axed!!
And that's the bottom line!!!!
What can be done? Plenty. The following ideas are provided as
a springboard for discussions or reforms.
Just 4 of the 300 companies involved in leverage buyouts and takeovers (Safeway, Macy's, Unocal, and RJR/Nabisco), represent a potential annual loss of Federal and State tax revenues amounting to roughly $2.2 billion dollars. Additionally, they represent billions more in scandalous tax rebates.
The possible tax avoidance from these 4 companies alone is equivalent to 400,000 taxpayers, each with $25,000 in "after deductions" taxable income, ceasing to pay their taxes. Can you imagine the media storm and congressional outrage that would ensue if 400,000 taxpayers refused to pay their taxes!!
We must no longer allow the government to simply go through the motions of trying to keep one step ahead of the corporate tax lawyers and economic opportunists. Only RADICAL TAX REFORMS will now put an end to economic bondage.
Safeway, Unocal, Macy's, RJR Nabisco, and hundreds of other corporations,
and innumerable wealthy individuals as well, have displayed all
too clearly the absurdity of basing tax revenues on taxable income.
Logically, all citizens share an equal interest in defending life and limb. However, for the economic elite, defense spending is an insurance premium spent to safeguard their physical property. This includes all the nation's factories and manufacturing plants, all the nation's towering office blocks, and of course the majority of the nation's residential real estate which is owned as much or more by wealthy landowners and banks, as by those who actually occupy the mortgaged dwellings. The cost of the insurance should logically be paid proportionately by those who own the equity of the property. Why should an individual, who owns little or no property or wealth, be forced to risk his or her life on the battlefield, or even to pay the insurance premium (i.e. the defense bill) to protect assets belonging to an economic elite who are otherwise indifferent to his or her well-being or suffering. This is especially relevant in light of the fact that, like Vice-president Quayle, the elite rarely risk their own lives on the front lines. They're the ones who end up in the hidden fortified strategy bunkers, if they choose to participate at all.
Defense is, however, just one of the nation's costs that should
logically be prorated based on wealth distribution. If the top
1 percent own 50% of the nation's wealth (as a study by the University
of Michigan has shown), then let them pay 50% of the 3 trillion
dollar defense bill. Perhaps they may not be so hawkish if they
had to pay their proper share of the defense bill. In short, if
you own little or nothing of the nation's wealth, you pay little
or nothing of the nation's tax bill. Simple, fair, and effective.
Taxing the nation's wealth would yield another benefit that would,
by itself, justify the policy:
The government would simply figure out, as per normal, how much money it required to operate for the next fiscal year. The treasury would then take the amount required, and figure out how much prorated tax would be owed "for each $100,000 of equity owned", in order to collect the "exact" amount required. The principal is not new, many municipal governments assess school taxes based on property value assessments.
One's "Taxable Assets" would be based on one's total assets, especially including those assets "invested abroad" to take advantage of the remaining slave labor pools, or currently held abroad in tax havens. Very heavy fines and penalties could be devised to adequately discourage those hiding wealth at home or abroad. (undeclared wealth) Americans could at last begin to benefit from all the industries they paid to have built abroad.
There would be no more advantage to giving your company or yacht to your dog Spot, or to your one day old child, because whomever or whatever legal entity owned the equity would be taxed.
In Financial World's July 11 1989 survey of Wall Street's "100 best paid", George Baker, who finished in 71st spot still earned an average of $3,846.00 per hour. {B98} In Forbes's October 16 1989 issue, attention was given to America's highest paid lawyers. Their list of 63 trial lawyers earned $750 million collectively. Based on a 40 hour work week and 52 working weeks per year, this represents an average compensation of $5,723.44 per hour!!
Should anyone be respected who vetoes a raise in the minimum wage to $4.55 per hour, or should someone who gets run off their feet serving fast foods for the minimum wage feel content that this group of lawyers earn on average seventeen hundred (1700) times as much per hour? In a similar way, Michael Milken, who made his money from selling LBO junk bonds, did so at the staggering rate of $213,346.00 per hour.
This wage control approach would at last put reins on members of our society such as the legal profession, who seem content to make their services too expensive for the bottom 90% of society to afford, while taking full advantage of the services of citizens who are, relatively speaking, being paid as slaves. (on $3.35 per hour minimum wage, or even $10 or $15 dollars per hour)
Egyptian slave labor built pyramids, whereas American slave labor builds tall rectangular skyscrapers. The alternate perspective is to view the pyramid builders not as slaves, but simply as workers who derived less benefit from their labor than the pharaohs.
We should not forget for one moment either, that when a corporation is forced to pay a court settlement, the losses (which include the lawyers fees) simply get passed along to the consumer, one way or another.
Even if strict "progressive" taxation on earnings in
excess of say 20 times the minimum wage were introduced, the approach
would still be susceptible to tax evasion because it would be
based on Taxable Income. Safeway, Boeing or Walt Disney could
still end up paying less taxes than a pensioner forced to supplement
a meager income by fetching your french fries!!
If the SEC findings are to be believed, one would have to accept that corporations are valued less for their capacity to provide products and services, than for their artificial value as profit vehicles for speculators.
In any case, Congressman Dorgan's bill, even in its present watered
down form, would serve to discourage the continuing wave of takeovers.
Unfortunately by now (two years later), most of the takeovers
have already occurred, but better late than never.{B99}The very least that should be done is to invalidate the tax deductibility
of interest payments on indebtedness which exceeds the owner equity. {B100}
Both are essentially concessions to the economic elite, and have already cost the bottom 90% of Western societies an incredible loss of benefits. Each affects the working man's standard of living in no less a fashion than the bailout of banks and S&Ls, or the loss of tax revenue following LBOs. Neither topic was dealt with adequately because each merited more coverage than I was prepared to devote in this book. The media has largely avoided discussing either topic objectively or in depth, mainly because both yield benefits to the economic elite by the removal of benefits from the rest of the country.
Privatization amounts to a politically motivated, quid pro quo distribution of previously developed national wealth to the richest 10%.
Deregulation
gives the unscrupulous a freer hand to sacrifice
standards and service for profit maximization. Just as deregulation
in the banking industry caused the taxpayer a $300 billion S&L
mop-up headache, deregulation in other industries has had similar
drastic repercussions.
Deregulation of the airline industry, for instance, allowed for profit oriented reductions to maintenance programs. Within no time at all, planes were breaking up in mid air, cracked fuselages were being sent up till the doors blew off and the sky was visible from the passenger section, etc.. Competition was drastically reduced as the industry was reduced through mergers and acquisitions to six mega-carriers which fly about 90% of all passengers. To add to the problems, foreign airlines funded some of the industry takeovers. But worst of all, the cost of financing the LBOs was passed directly on to the passengers in the form of ticket price rises. {B101}
Other sectors of our economy have been given the opportunity to
set their own standards, with similar benefits to the general
public. The reader should, out of self defense, become more concerned
and informed regarding these two additional issues. However, discussion of the rip-offs must of necessity terminate to get on with other equally important issues.
Let's now turn our attention to the democratic process itself
to expose just how and why politicians elected by the bottom 90%
continue to churn out legislation that does not serve the best
interests of the majority whom they supposedly represent. As we shall see, gaining control over the writing of the tax avoidance
legislation may not be as simple a task as those who trust in
their democracy may think. Don't forget that the politicians voted
in by the bottom 90%, are the very same politicians who pass the
tax avoidance legislation favoring the elite!!
The next chapter is therefore devoted to showing that just as the nation has been manipulated and victimized economically, it has been manipulated and victimized with respect to democracy. In America, democracy is as much a hoax as equal opportunity and equitable prosperity. Does that sound unreasonable or even impossible? Then read on.
{B1.} "A city seized by panic" The Economist (Mar 25 1989): p28
{B2.} Dr. Ravi Batra, The Great Depression of 1990(New York:Dell Publishing, 1988), p.151
{B3} "The World's Billionaires" Forbes (Jul 23 1990): p121
{B4} "Billionaires" Forbes (Oct 23 1989): p164, p152
{B5} "Drug Money Soils Clean Hands" Insight (Aug 21 1989): p14
{B6} "In poverty's hard clutch, little chance to escape" Insight (Apr 3 1989): p9
{B7} "How we can win the war on poverty" Fortune (Apr 10 1989): p128
{B8} "Why the nickel and diming over the minimum wage" BusinessWeek (Mar 27 1989): p35
{B9} "America's income gap: the closer you look the worse it gets" BusinessWeek (Apr 17 1989): p79
{B10} "Fixing the deficit: where there's no will, there no way" BusinessWeek (Oct 2 1989): p31
{B11} "How we can win the war on poverty" Fortune (Apr 10 1989): p127
{B12} "There's nothing universal about plans for universal health care" BusinessWeek (Jan 22 1990): p39
{B13} "How we can win the war on poverty" Fortune (Apr 10 1989): p127
{B14} "Rich land, poor kids" The Economist (Jan 7 1989): p25
{B15}"A slump that's built to last" BusinessWeek (Jan 8 1990): p122
{B16}"What's dragging productivity down? Women's low wages" BusinessWeek (Nov 27 1989): p171
{B17}"Plenty of workers are waiting in the wings" BusinessWeek (Mar 13 1989): p98
{B18}"White-collar bloat" Forbes (Oct 17 1988): p34
{B19}"The real villain in "Roger & Me"? "Big Business" BusinessWeek (Jan 8 1990): P42
{B20}"These countries are up for sale" Forbes (Dec 25 1989): p130
{B21}"Croesus Incorporated" The Economist (Feb 18 1989): p67
{B22} "Fact and Comment" Forbes (Jan 8 1990): p27
{B23} "Let's change the immigration law -- Now" Fortune (Jan 29 1990): p12
{B24} "Now, where were we" The Economist (June 17 1989): p32
{B25} "Wages of politics" The Economist (Mar 18 1989): p25
{B26} "Asking for more": The Economist (Aug 19 1989): p20
{B27} "Not so color blind" The Economist (Oct 28 1989): p28
{B28} "Black on white" The Economist (Nov 11 1989): P14
{B29} "Ex-Wizard tries to turn back the clock on voters' attitudes" Insight (Jan 15 1990): p20
{B30} "Doing without money" The Economist (Feb 25 1989): p25
{B31} "How to help America's schools" Fortune (Apr 12 1989): p138
{B32} Harrison, Alan. The Distribution of Wealth in 10 Countries (London: H.M Stationery Office, 1979)
{B33}"The Billionaires" Fortune (Sep 12 1988): p71
{B34}"The Billionaires" Fortune (Sep 12 1988): p98
{B35}"A wealth of billionaires" Forbes (Jul 24 1989): p126
{B36}"Plenty of workers are waiting in the wings" BusinessWeek (Mar 13 1989): p98
{B37}"White-collar bloat" Forbes (Oct 17 1988): p34
{B38}"Croesus Incorporated" The Economist (Feb 18 1989): p67
{B39}"In poverty's hard clutch, little chance to escape" Insight (Apr 3 1989): p9
{B40}"How we can win the war on poverty" Fortune (Apr 10 1989): p128
{B41}"Wages of politics" The Economist" (Mar 18 1989): p25
{B48} "Why Bush's trickle-up theory is sailing through Congress" BusinessWeek (Oct 16 1989): p47
{B49} "Who got reformed?" Forbes (Jan 9 1989): p298
{B50} "Some big companies did a strange thing in '87: They paid taxes" BusinessWeek (Dec 26 1988): p40
{B51} "How the government subsidizes leveraged buyouts" Forbes (Nov 28 1988): p194
{B52} "How the government subsidizes leveraged buyouts" Forbes (Nov 28 1988): p194
{B53} "Invasion of the company snatchers" Forbes (Dec 12 1988): p106
{B54} "Don't blame me" Forbes (Sep 4 1989): p102
{B55} "Wall Street 100" Financial World (Jul 11 1989): p34
{B56} "Billionaires" Forbes (Oct 23 1989): p154
{B57} "Billionaires" Forbes (Oct 23 1989): p178
{B58} "Who's really picking up the tab?" Forbes (Oct 30 1989): p38
{B59} "Takeover and makeover" The Economist (Aug 12 1989): p66
{B60} "Postelection blues" Forbes (Dec 12 1989): p290
{B61} "The bills are coming due" BusinessWeek (Sep 11 1989): p86
{B62} "Michael Milken meet Sewell Avery" Forbes (Oct 23 1989): p61
{B63} "Morning in America" The Economist (Jun 24 1989): p5 of Banking Survey
{B64} "Morning in America" The Economist (Jun 24 1989): p5 of Banking Survey
{B65} "Debt: The zero option" The Economist (Feb 22 1989): p61
{B66} "ESOPs: Are they good for you?" BusinessWeek (May 15 1989): p118
{B67} "ESOPs aren't the magic key to anything" BusinessWeek (Oct 23 1989): p20
{B68} "Trust the trust, or bust the trust?" The Economist (Sep 2 1989): p63
{B69} "FDIC believes tide has turned after record number of failures" American Banker (Jan 5 1989): p
{B70} "Spent thrifts, contd" The Economist (Jun 17 1989): p15
{B71} "You can't buy a house anymore..." Financial World (Dec 13 1988): p42
{B72} "Priced out of house and home" Insight (Mar 13 1989): p10
{B73} From article by Mr Bowsher for the Los Angeles Times
{B74} "Burned" BusinessWeek (Oct 9 1989): p57
{B75} "Unsheltered" The Economist (Jan 6 1990): p31
{B76} "The junkification of American T-Bonds" The Economist (May 27 1989): p77
{B77} "Surplus loophole" Forbes (Sep 4 1989): p44
{B78} "Liabilities dangereuses" Forbes (Sep 18 1989): p106
{B79} "You bet your life" Forbes (Jul 10 1989): p38
{B80} "Jockeying for power at the IMF" BusinessWeek (Oct 3 1988): p109
{B81} "Brady's Mexican hat trick" The Economist (Jul 29 1989): p61
{B82} "Shutters down" The Economist (May 27 1989): p80
{B83} "Will the U.S. be left holding the bag on third World debt?" BusinessWeek (Oct 16 1989): p24
{B84} "A price on your head" Forbes (Sep 4 1989): p80
{B85} "The power of the pension funds" BusinessWeek (Nov 6 1989): p154
{B86} "The fury over pension funds" BusinessWeek (Jul 3 1989): p31
{B87} "The power of the pension funds" BusinessWeek (Nov 6 1989): p155
{B88} "Hidden bombs" The Economist (Oct 7 1989): p26
{B89} "Unsheltered" The Economist (Jan 6 1990): p32
{B90} "The folly of raiding the piggy bank" The Economist (Apr 8 1989): p27
{B91} "Capital Comment" Financial World (Jun 27 1989): p112
{B92} "A brief history of funny money The Economist (Jan 6 1990): p21
{B93} "This plan won't end America's savings drought" BusinessWeek (Jan 15 1990): p24
{B94} "A Latin debt that might work" Fortune (Apr 24 1989): p212
{B95} "Croesus unlimited" The Economist (Mar 18 1989): p69
{B96} "Capital fiddling" The Economist (Sep 23 1989): p26
{B97} "Tax tips for trying times" Fortune (Special fall edition Vol 120, No 10): p201
{B98} "Wall Street 100" Financial World (Jul 11 1989): p33
{B99} "Trigger-pulling on hostile takeovers" Insight (Jun 19 1989): p44
{B100} "Washington's war against LBO debt" Fortune (Feb 13 1989): p92
{B101} "Memo to the airlines: Deregulation days are numbered" BusinessWeek (Nov 13 1989): p59