The Retreat From America
Much is being said about an American recovery. On both the Republican side with the various candidates arguing about jobs and tax cuts to promote recovery, and on the Democratic side with a number of people, including the President painting rosy pictures of how we can again become an economic giant. The sad truth is that this scenario is a romantic illusion. One only has to glance at the chart in the Financial Times article on Saturday, "Apple listens to the factory floor in China" to realize that manufacturing jobs, and service jobs will not return any time soon to America. The chart shows China as 100% as related to salaries in other countries. Sri Lanka is at about 75% of salary parity with China, Vietnam at 55%, Indonesia 50%, Pakistan 49%, India at 40%, Bangladesh at 35% and Cambodia at 30%. The past 40 years has seen a concerted effort by American investors to off-shore industry to undermine unions and Middle Class resistance to wealth inequality in the USA.
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Support for Eisenhower rates of tax on the upper incomes in the 1950s by Middle Class and union voters, may have kept the American family at some of the highest incomes in the world as well as build a lifestyle that was the envy of most, it also was a model of redistribution. Fears by the wealthiest Americans, made manifest by the rantings of people like William F. Buckley during the Kennedy and LBJ administrations, that redistribution would continue and be used to change the social structure of the nation by making educational opportunity available for all, led to an organized retreat from America. The right, religious and wealthy and white, has manufactured a simple plan to destroy unions, education and industry in America. Infrastructure has been allowed to deteriorate, not just stagnate and innovations are being financed abroad in off-shored multi-national laboratories and institutes.
Since 1970 American workers and Middle Class incomes have stagnated as jobs have been exported. Americans were able to maintain their lifestyles by borrowing, credit cards and home equity loans allowed this. Instead of inflation we got debt. Now that debt has been assumed by the Federal Government leaving American families, local governments, state governments and the Federal government all bankrupt. The money has gone abroad to tax shelters, foreign headquarters of banks and into the shadow banking industry. Everything to rob America of its treasure, much of which was destroyed in two wars as distractions so Americans would not notice what was happening.
We could have protected our industry with tariffs to prevent destruction of our small industries and have used our economic power to enforce international tax regimes to stop tax avoidance.
But, now in a decade or so, the American worker will have no union movement, or Middle Class to hold down the oligarchy and at that point Americans may be able to compete for jobs with people in Cambodia and Pakistan. So set your clocks for 2022 and hope for the best. That is, unless we can mobilize Americans to educate themselves and organize to stop the process. We could:
1. return to Eisenhower tax rates
2. put tariffs into place to punish countries like China that have dumped cheap products here to undermine our industry and who refuse to recognize copyright law.
3.we still might be able to enforce international tax regimes to stop tax avoidance and destroy the shadow banking industry by using the very tools we have already given Homeland Security to fight terrorists. The real terrorists destroying America do not use bombs and are not Muslims, they are the 1% who have abandoned America.
4. investigate family non-profit trusts to make sure they are engaged in charitable ends, most states have abandoned this by defunding state watchdog agencies. It means nothing for Buffet and Steve Gates to put their money in non-profit trusts since these vehicles have been used since before Teddy Roosevelt realized they were just family tax protected income.