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kuhla

"An Economy for the 99%"

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There is definitely an agenda being pushed with this and I think some of the statistics presented are with a bias but I still feel there is some value in looking at some of it.

report - https://www.oxfam.org/sites/www.oxfam.org/files/file_attachments/bp-economy-for-99-percent-160117-en.pdf
reddit thread - https://www.reddit.com/r/news/comments/5o7xrx/stark_inequality_oxfam_says_8_men_as_rich_as_half/

One user summerized some of the points which I appreciated and will copy paste below.

source - https://www.reddit.com/r/news/comments/5o7xrx/stark_inequality_oxfam_says_8_men_as_rich_as_half/dchjli6/

 

[–] warb17 180 points 11 hours ago

 

There's so much more to this than just the headline though. The full report is staggering, and gives a fantastic critique of neoliberal policy. Some of the additional statistics incude:

  • Over the next 20 years, 500 people will hand over $2.1 trillion to their heirs – a sum larger than the GDP of India, a country of 1.3 billion people

  • The incomes of the poorest 10% of people increased by less than $3 a year between 1988 and 2011, while the incomes of the richest 1% increased 182 times as much.

  • one in nine people still go to bed hungry. Had growth been pro- poor between 1990 and 2010, 700 million more people, most of them women, would not be living in poverty today.

  • three-quarters of extreme poverty could in fact be eliminated now using existing resources, by increasing taxation and cutting down on military and other regressive spending.

  • over the last 25 years, the top 1% have gained more income than the bottom 50% put together.

  • Big businesses did well in 2015/16: profits are high and the world‟s 10 biggest corporations together have revenue greater than that of the government revenue of 180 countries combined.

  • In the 1980s, cocoa farmers received 18% of the value of a chocolate bar – today they get just 6%.

  • The International Labour Organization estimates that 21 million people are forced labourers, generating an estimated $150bn in profits each year.

  • The world‟s largest garment companies have all been linked to cotton-spinning mills in India, which routinely use the forced labour of girls.

  • Apple allegedly paid 0.005% of tax on its European profits in 2014.

  • Kenya is losing $1.1bn every year in tax exemptions for corporations, nearly twice its budget for health – this in a country where women have a 1 in 40 chance of dying childbirth.

  • In the UK, 10% of profits were returned to shareholders in 1970; this figure is now 70%.

  • Thirty years ago, pension funds owned 30% of shares in the UK; now they own only 3%.

  • The world‟s third richest man, Carlos Slim, controls approximately 70% of all mobile phone services and 65% of fixed lines in Mexico, costing 2% of GDP.

  • The 1,810 billionaires on the 2016 Forbes list, 89% of whom are men, own $6.5 trillion – as much wealth as the bottom 70% of humanity.

  • one-third of the world‟s billionaire wealth is derived from inherited wealth, while 43% can be linked to cronyism.

  • the wealth held by the super- rich since 2009 has increased by an average of 11% per year. If billionaires continue to secure these returns, we could see the world‟s first trillionaire in 25 years.

  • The fortune of Bill Gates has risen 50% or $25bn since he left Microsoft in 2006, despite his commendable efforts to give much of it away.

  • Countries compete to attract the super-rich, selling their sovereignty. For an investment of at least £2m, you can buy the right to live, work and buy property in the UK and benefit from generous tax breaks. In Malta, a major tax haven, you can buy full citizenship for $650,000.

  • $7.6 trillion of wealth is hidden offshore.

  • Africa alone loses $14bn in tax revenues due to the super-rich using tax havens – Oxfam has calculated this would be enough to pay for the healthcare that could save the lives of four million children and to employ enough teachers to get every African child into school.

  • In the US, the top rate of income tax was 70% as recently as 1980; it is now 40%.43 In the developing world, taxation on the rich is lower still: Oxfam‟s research shows that the average top rate is 30% on incomes, and the majority is never collected.

That's from just the first 5 pages (out of 48), and I still skipped things. In addition to sharing information, the report labels several key economic assumptions as false. The myths that markets are fair, that GDP growth is an appropriate goal, that the economy is gender-neutral, and that excessive individual wealth is benign & a sign of success; all are addressed. The report was horrifying to read but also a wonderful refutation of neoliberalism.

 

Definitely a lot of bullet points that support the economic inequality narrative.

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Ideally regulation and government intervention would be able to lessen some of these issues.

The income disparity between CEOs and average workers has become more extreme over time. But what legislation should be passed to curtail that? Worse yet, people who make that kind of money clearly have an advantage of bribing donating to politicians allowing them to push for more lenient rules and regulations.

 

As far as some of the tax haven nonsense, many of those countries would gladly have Apple pay less than 1% tax in their own country rather than pay 10-15% tax in a completely separate country. The competition among sovereign nations isn't an easy issue to fix, and for small nations there's no incentive to play "fair" with larger more prosperous ones.

Repatriation of money is another issue, ideally it should be reasonably taxed so that corporations consider it a cost of doing business. Currently many corporations are holding off repatriating funds because they feel that the cost of transferring the money is too high and they're aggressively lobbying for lower rates or an exemption.

Maybe you could try to create a trade agreement which would split certain corporate tax revenue and divide this by region. Ex: Any revenue generated in the EU that exceeds a certain threshold would be subject to a reasonable tax rate and be split up among EU member states. I don't know if this would stop companies from sheltering everything, but it might make things like Irish tax inversions less common.

 

The ultra ultra rich and their heirs isn't an issue you can easily fix either. These individuals wealth is spread across stock, bonds, real estate, and other investments. Their armies of lawyers and tax accountants make a living trying to minimize the client's taxable income. If you try and pass large estate taxes (taxing when their fortunes are passed on to their children) you just drive much of their assets outside of your country. Without completely restructuring tax laws there's very little you can do to prevent Warren Buffet from paying a lower effective tax rate than his secretary. I do think millionaire (and multi-millionaire) taxes should be assessed, I've heard many of the ultra wealthy even support those measures.

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https://www.forbes.com/sites/aalsin/2017/07/10/qa-nick-hanauer-believes-stock-buybacks-are-the-root-of-american-inequality/

Quote

We realize that 55% of corporate profits, now, are devoted to stock buybacks. In a world in which you had told yourself that profits were essential for growth and that the more profits companies made, the more they invested, and all this other stuff -- and then you realize that when you add stock buybacks and dividends together, you're left with 8-9% to invest.

Quote

What happens is you're basically extorted by Wall Street. You get these calls from dealers, or the guys who own your stock, and they're like -- you know, your stock's a little undervalued.
You're like -- 'I don't know; is it?'
And they're like -- 'Yes, if you bought ten gazillion shares with the cash you have on your balance sheet, then... Then it would be fairly valued.'
And you're like -- 'I thought the cash on our balance sheet was for our investments and . . .'
And they're like -- 'No, no no. The only purpose of stock on your balance sheet is to juice the shares, so I can earn a bigger commission.' [laughs]
And -- 'Hint, hint, nudge, nudge, if you don't buy your own shares, I'll sell your stock.'

Quote

Stock buybacks are very nefarious things. They are a practice that creates no social or economic utility, other than enriching the super rich.

Quote

The nation now spends on the order of twice as much on stock buybacks as it does on all R&D.

You can not build the kind of high-growth economy that we deserve, if you're pissing away 4%... You're basically burning 4% of GDP on stock buybacks, in this giant shell game. This sort of financial merry-go-round benefiting a few owners, a few corporate executives, and Wall Street.

It's among the most corrosive and corrupt practices in an already pretty corrosive and corrupt economy.

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That first quote...... ugh

 

Quote

Alsin: Why do you think you’re so passionate about these endeavors?

Because I'm quite sure that the sort of crony capitalism, late capitalism thing that we've ended up with in the United States is not the true and best form of capitalism. It essentially is eating itself. If we want to have a thriving economy and a stable democracy, we need to do things a bit differently.

Economic inequality, I think is one of the core problems the country faces. Because ultimately, concentrations of income and wealth lead to essentially a death spiral of falling demand. Because if nobody is paid any money, then who will buy the stuff? It's pretty simple.

The most important dynamic in a market economy is the feedback loop between consumers and businesses. The more consumers are paid, the more stuff they buy, and that's what makes the world go round.

 

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I want to hate on him for basically saying "we need lower and middle income people to make money so our consumption driven economy doesn't fail" but at the same time... He's at least trying to point out the problems and correct them. 

I'd like to point out that no companies are immune to this pressure.  Apple is sitting on mountains of cash (in Ireland) and was pressured into taking out $100 BILLION in debt to make stock buybacks and dividends increase. 
I'd blame that on the ineffective leadership of Tim Cook.  Without sounding like a Steve Jobs fanboy, I doubt he would have approved that corporate policy. 

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