Six on History: "our" Economy
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"As many of the world’s wealthiest people wrap up virtual talks today at the World Economic Forum based in Davos, Switzerland, Oxfam reports the incomes of 99% of the world’s population dropped during the pandemic while the world’s 10 richest men saw their wealth double. Meanwhile, vaccine profits have minted at least nine new billionaires at Moderna, BioNTech and China’s CanSino, amassing a combined new wealth of over $19 billion. To discuss the rise of billionaires and the policies that got us here, we speak with New York Times global correspondent Peter Goodman, author of the new book “Davos Man: How the Billionaires Devoured the World.” Goodman says billionaires’ championing of “stakeholder capitalism” is ruining U.S. democracy, and attributes the Omicron variant to “our unwillingness to challenge patents.”
AMY GOODMAN: The World Economic Forum is wrapping up today. Many of the world’s wealthiest people and world leaders have been gathering virtually this week for the annual event that normally takes place in Davos, Switzerland. The forum was held online for the second consecutive year due to the pandemic. Earlier this week, Dr. Michael Ryan of the World Health Organization warned participants of the growing vaccine inequity crisis.
DR. MICHAEL RYAN: If we look at the population of the world in total, over half of the world’s population has received two doses of vaccine. But if we look at in Africa, our African regional office states only 7%. So the reality is that the world is moving towards a 70% goal; the problem is we are leaving huge swathes of the world behind.
AMY GOODMAN: John Nkengasong, the director of the Africa Centers for Disease Control and Prevention, also spoke at the virtual World Economic Forum.
JOHN NKENGASONG: So, what we have seen over the last two years is really total collapse of global cooperation and solidarity, period. I think there is absolutely, absolutely no reason why the continent of Africa should be lagging behind and having 7% of the population fully immunized, a continent of 1.2 billion people. It’s totally unacceptable.
AMY GOODMAN: This comes as Oxfam reports the world’s 10 richest men saw their wealth double during the pandemic, from $700 billion to $1.5 trillion, while the incomes of 99% of the world’s population dropped. Oxfam declared, “Widening economic, gender, and racial inequalities — as well as the inequality that exists between countries — are tearing our world apart,” unquote. This has led to growing calls for a wealth tax on the world’s billionaires.
Talk about what inspired this book, Peter. And talk about who was in Davos and the effect that they have on the world.
"Hundreds of teachers across Puerto Rico left their classrooms and took to the streets on Friday to demand higher wages, improved working conditions, and better pensions amid an economic crisis.
Several schools were completely void of teachers as protesters gathered in the capital of San Juan and other cities including Mayaguez and Aguada and marched, clapped, and banged on pots while supporters honked their horns as they drove past.
“We are tired, tired of not being recognized,” said Joalice Santiago, a 34-year-old who teaches Spanish and science to fourth and fifth graders. “It’s about time that teachers rise up and explain to the world the value of their profession.”
She said she tutors after school to boost her salary and that many teachers in Puerto Rico are forced to work two or three jobs to make ends meet as the cost of food, power and water increases as the island struggles to emerge from bankruptcy and tries to recover from Hurricane Maria and a spate of strong earthquakes.
Puerto Rico's Association of Teachers rejected the move, saying it only increases base salaries to $2,220 a month instead of the $3,500 it is requesting.
Governor Pedro Pierluisi said his administration respects the right to freedom of expression and promised that his administration is still working to secure even higher increases for all public servants.
“This fight has not ended,” he said, but warned that certain responsibilities cannot be ignored. “Our students more than ever need the guarantee of adequate face-to-face education, and for this, they need their teachers in the classroom.”
Santiago said teachers at her school earlier this week protested before the school bell would ring, but that on Friday, all of them closed their classrooms to join the protest with the director's backing. She noted that many teachers across the island also are forced to paint their own classrooms or buy fans because the government does not provide sufficient resources.
“It’s hard,” she said. “The governor has a lot to think about...a lot to do.”
"Real charity doesn’t come with a tax deduction.
That’s what I told a gathering of generous Wall Street and business luminaries this month about the increasing paradox of even some of the most well-intentioned philanthropy.
All too often, charitable gifts are used not only to help those who can’t help themselves but to make up for the failure of companies to pay people a living wage and treat their workers with dignity.
This is a time of year that should be defined by giving. For many business leaders, it may be a time of year to rethink their role in giving, too.
But the real opportunity for generosity is more likely inside the workplace.
Do you know who goes to the food banks that so many support? It is not just the homeless and unemployed. It is, many times, the people we all work with: The janitors and support staff who help offices run smoothly and keep them clean. The Uber drivers and people who work at the checkout counter and deliver groceries. The nannies and caregivers.
According to Feeding America, 43 percent of people who visit a food bank have at least one family member who is working full time but still doesn’t earn enough to cover bills. A researcher for the Urban Institute estimated that a quarter of adults in homeless shelters work.
If business leaders genuinely care about eradicating poverty, paying people a living wage matters.
In New York City, the poverty threshold for a family of four is $32,402. Do the math. If only one member of a family is working 35 hours a week, with 10 days of vacation including national holidays, and is paid anything less than $18 an hour — which is higher than the minimum wage in New York and much higher than the national average — then that family more than qualifies for help from a food bank that charity often supports.
“This is why I like being in business, because I can create change — that business must be the greatest platform for change. And if it isn’t, then what is?” he said.
Mr. Benioff wrote in his book “Trailblazer” that change shouldn’t be left only to a company’s leadership.
“Just as C.E.O.s can’t look away when social issues clash with their values, employees can’t pretend that whatever its leadership decides to do is above their pay grade,” he wrote. “If leadership won’t act on a company’s values, employees at every level need to hold them accountable.”
This past year, Brian Moynihan, the chief executive at Bank of America, raised the firm’s minimum wage to $20 an hour. Walmart’s chief executive, Doug McMillon, who lifted his company’s starting wage, has called on Congress to raise the federal minimum. Mark Bertolini, a former chief executive of Aetna, raised the minimum wage at his company to $16 an hour — in 2015. All three companies have benefited — and their stock went up.
Jeff Bezos, the Amazon founder, this year raised hourly wages to $15 an hour nationally. Is it enough? No. But Mr. Bezos was onto something when he challenged his rivals: “Better yet, go to $16 and throw the gauntlet back at us. It’s a kind of competition that will benefit everyone,” he wrote.
At the gathering of business leaders that I spoke to — organized by the UJA Federation of New York, which supports the poor and elderly in New York and in Israel — I shared what I had learned about the idea of charity. I grew up thinking that the Hebrew word tzedakah means charity, which is its modern definition. But I later learned its original meaning was much more profound: It meant “justice” and “fairness.”
So when it comes to giving, the goal shouldn’t be to simply donate more money, as laudable as that is. The aim should be to create a society where we don’t need places like food banks in the first place. To put it in Wall Street terms, we should be trying to put the food banks out of business.
I ran into Darren Walker, the chief executive of the Ford Foundation, a little over a week ago, and he reminded me of a poignant quote from the Rev. Dr. Martin Luther King Jr.: “Philanthropy is commendable, but it must not cause the philanthropist to overlook the circumstances of economic injustice which make philanthropy necessary.”
According to the Institute on Taxation and Economic Policy (ITEP), the tech behemoth reported record profits last year, raking in $35 billion – 75 percent more than they made in 2020, which was also a record year for the company.
Since 2018, the company has only paid an average effective tax rate of 5.1 percent. In 2018 and 2019, Amazon’s tax dodging was especially egregious; in 2019, the company paid 1.2 percent in federal income taxes. The year before, the company paid a negative 1.2 percent tax rate, meaning that it received more money from the government than it paid in taxes.
“It has been well documented for decades that Amazon’s strategy for retail dominance rests on two tactics: avoiding taxes and using the savings to finance a slow strangulation of its retail competition,” the authors of the ITEP report wrote. “First at the state and local level, then federally and internationally, Amazon has bullied lawmakers into bending tax laws to its advantage and made that the source of its competitive advantage over small businesses in the retail space.”
In their calculations, the report’s authors took into account tax credits, excess stock option deductions, and other tax breaks. Congress has the power to end these tax breaks as long as lawmakers can summon the political will, they pointed out.
Corporate tax dodging runs rampant among large corporations. Last week, ITEP reported that Netflix also dodged a huge amount of federal income taxes last year. Though it made record profits in 2021 – nearly doubling its profits over 2020 – the company paid only $58 million in taxes, or a 1.1 percent rate. This means that the company dodged over $1 billion in taxes last year.
In response to the report, Sen. Bernie Sanders (I-Vermont) reiterated the progressive call to tax the rich. “Corporate greed is Netflix making a record-breaking $5.1 billion profit, giving its CEO $43 million in total compensation, avoiding over $1 billion in taxes and paying a 1.1 percent effective federal income tax rate – a lower tax rate than a nurse, teacher or truck driver,” he said.
As the authors of the ITEP report noted, Congress can implement simple reforms like the extremely popular corporate minimum tax rate to make it much harder for large corporations to dodge taxes to this degree in the future. The corporate minimum tax would create a minimum tax rate of 15 percent for profits over $1 billion. It would also levy the tax on book profits – the profits that the company reports to shareholders – rather than the deflated profits that the company reports to the government.
Although Democrats were considering including the corporate minimum tax in the Build Back Better Act, the corporate-backed Sen. Joe Manchin (D-West Virginia) has declared that the bill is now dead.
