Tuesday, October 25, 2011

A "Occupy" Policy Proposal

If there is one overriding fact that the "Occupy" movement demonstrates, there is an ample reservoir of sympathy for dealing with corporate greed, the widening gap between rich and poor. While the movement lacks form, there is base inspiration that is generally well supported, all evidence shows people think we need change, just not much in the way of concrete proposals to get behind. On the political front, we are already seeing certain attempts to tap into this angst, I would submit Brian Topp's clumsy proposals as timely, not by accident.

I think most would agree that many of the arguments behind corporate tax cuts haven't panned out as advertised, despite certain revisionism's from economists. The theory hasn't worked in practice, leaving proponents scrambling to find new rationalizations or simply dismissing the empirical evidence that shows companies HOARDING the new found cash, rather than reinvesting as promised. Here we sit today, with unemployment somewhat stubborn, the economy supposedly stagnant and day after day big corporations are reporting huge profits, "beating the street", simply AWASH in cash. If you look at history, I would submit the disparity between corporate profits and general economic health has NEVER been so pointed.

What is occurring, companies are simply redistributing their profits amongst themselves, the promised general economic benefits harder to ascertain. It may be time for a party to advocate a FREEZE, perhaps a claw back on dividends companies pay to shareholders. It does appear that the fall in corporate taxes has increased profits and those profits are being redirected to shareholders of the companies in the form of increasing dividends. Given that these dividends favour wealthy investors, as well as high ranking employees of said corporations, rising dividends only contributes to the growing gap between rich and poor. In reality, by cutting corporate taxes, we have created a pipeline to further pad the pockets of the wealthy class. Of sure, people can argue that dividends go to all investors, including granny and grandpa, but as the link highlights, the CHIEF benefactors are ONCE again the wealthiest, the big players, the executives of the very companies getting a break. Rather than reinvest, create jobs, maintain corporate health, as corporate taxes were sold, the created mountains of cash are being doled out disproportionately, amplifying disparity, rather than benefiting the economy as a whole, as previously argued. What you have now, the money that used to go into public coffers, no goes into the pockets of powerful interests and top tier employees with their attractive portfolios and options. A political party might be wise to advocate not only a corporate tax cut rise, but take a serious look at the rise of dividends as another "gap" contributor.


Jerry Prager said...

7 billion people in the world, one billion belong to cooperatives. There are more than 17 million credit and cooperative members in Canada alone. We also have 900 credit unions with $300 billion in estimated assets.

We don't need to recreate the wheel, we just need to use a sustainable wheel, dump corporatism, it is a failed political economic system that has a built-in flaw (corporations can't sight affidavits in court because they have no conscience to bind them.)Greed is a consequence of that. A PMO without ethics and that operates as a Chief Executive office rather than as a representative of the commons, is likewise a consequence.
What business does government most resemble ? A credit union. Go that way liberals.

Even insurance companies used to be called mutual benefit societies

Dame said...

THE CORPORATE MATRIX, as reported by BOINGBOING's Cory Doctorow, consolidates wealth and wealth control to a disturbing degree, in an article, "Densely-linked cluster of 147 companies control 40% of world's total wealth":

sharonapple88 said...

A good step would be to tax dividend income at the same rate as a salary at the very least.

Want to get depressed, then read the Retirement Heist.