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      in US Politics

      Youngstown’s hopes for reinvention fade as electric truck firm sputters

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      It’s less than a year since Lordstown Motors was touted as the future for the Youngstown, Ohio, the once thriving steel and manufacturing city that has struggled to reinvent itself in the post-industrial age.The company and its Endurance all-electric pickup truck were seen as saviors for Youngstown after General Motors pulled the plug on its nearby Lordstown plant. “It’s booming now. It’s absolutely booming,” said Donald Trump in September, during an unveiling of the Endurance truck at the White House.Now those hopes are fading as Lordstown Motors faces financial difficulties that have locals worried, once again, about the region’s financial future.“It’s a very sad moment in the history of Youngstown. It seems every five years that hope is just over the horizon and somebody just closes it up and it disappears,” said Bob Hagan, who represented the Youngstown area for nearly three decades in the Ohio state legislature as an assembly representative and state senator.General Motors announced plans to shut down five factories in North America in November 2018, including its plant in Lordstown, which employed 1,600 workers and had operated for 52 years. The number of employees had steeply declined since the early 1990s, when more than 10,000 workers were employed at the plant.In March 2019, the last Chevy Cruze rolled off the assembly line as the plant ceased operations, leaving hundreds of workers forced to retire, transfer to a different GM plant elsewhere in the US, or find other work.The closure was devastating for residents in Ohio’s Mahoning Valley, as the area has steadily declined from outsourcing and plant closures over the past few decades in the automotive, manufacturing, and steel industries.General Motors sold the plant to Lordstown Motors for $20m in 2019, and loaned the company $40m.But hope for a bright electric future soon faded. Since its purchase of the plant, Lordstown Motors has experienced financial and developmental difficulties. The company recently gave a tour of the facility to reporters, analysts and other visitors amid a turmoil of conflicting statements on its outlook, the resignations of its CEO and CFO, and a statement to securities regulators that the company did not have enough funds to start production.Hagan said these travails are just the latest setback for an area that has taken many hard knocks. Over the past several decades, steel mills and manufacturing plants have shuttered amid broken promises. He fears Lordstown Motors may prove another corporation that came into the area with high hopes and lofty promises – only to let the community down.“They’re rearranging the chairs on the Titanic,” he said.The Securities and Exchange Commission (SEC) has opened an inquiry into Lordstown Motors over statements it has made about orders in the wake of a report from short-seller Hindenburg Research that accused Lordstown Motors of misrepresenting orders to raise capital. Five Lordstown Motors executives sold more than $8m in stocks in February 2021, ahead of the company’s financial reporting results and before the company’s financial problems were publicly disclosed.“If you talk to the vast majority of us, we are not surprised by all the issues with Lordstown Motors,” said Timothy O’Hara, former president of United Auto Workers local 1112, the union which represented GM Lordstown employees. He worked at the plant for 41 years before retiring.“Lordstown Motors has been a shaky situation from the beginning. For the economy of the Mahoning Valley I hope it succeeds – but I’m not holding my breath.”The Lordstown Motors plant currently has about 600 employees, and production is projected to begin at the end of September. But it faces some huge hurdles. In a statement filed with the SEC, the company said its success hinges on “its ability to complete the development of its electric vehicles, obtain regulatory approval, begin commercial scale production and launch the sale of such vehicles” – all as it seeks additional financing before it’s projected to run out of funds by May next year.Elected officials have bet heavily on the success of Lordstown Motors in the area. In December, the Ohio Tax Credit Authority approved a state tax credit for the company estimated to save $20m in payroll taxes, based on its promise to create 1,570 full-time jobs. Ohio’s private economic development agency, JobsOhio, has pledged $4.5m in grants to Lordstown Motors. In April last year, the company received more than $1m through a federal pandemic loan to retain 42 jobs.But Hagan believes the money may not be enough and, once again, it will be the people of Youngstown who pay the price.“Tax dollars are being used to lure people into our community. We have to have elected officials be more vigilant on how organizations are taking money and make sure they deliver,” he said. More

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      in UK Politics

      Relax post-Brexit immigration rules to address staff shortages, CBI urges government

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      The UK’s post-Brexit immigration system is a “barrier” to hiring overseas workers and should be relaxed in order to tackle wide-scale staff shortages reported across the country, Britain’s biggest business group has said.Lord Bilimoria, president of the Confederation of British Industry (CBI), warned Brexit and Covid had triggered a “perfect storm” with firms struggling to recruit in many sectors of the economy.The CBI called on the government to “immediately update the shortage occupations lists” for roles including butchers, bricklayers and welders.The list identifies occupations for which there are not enough UK workers with the correct skills. If an occupation is on the list, employers can fill vacancies by recruiting staff from abroad more easily. For occupations that are not on the list, employers must show that they have gone through procedures to prove that UK nationals and resident workers have been given enough opportunity to apply before the job is offered to overseas candidates. Visa fees are also higher.Many businesses – including those in hospitality and retail – have reported a shortage of workers blamed in part on workers leaving the UK during the pandemic.But the end to freedom of movement after Brexit has also severed the flow of new European workers who often took low-paid roles, which businesses are now struggling to fill. NHS leaders have previously warned that the government’s post-Brexit points-based immigration system risks creating an “alarming” shortfall in social care workers in the coming years.In a speech to the Recruitment and Employment Confederation’s (REC) annual conference, Lord Bilimoria – founder of Cobra Beer – said: “We’ve got a perfect storm of factors coalescing. During the pandemic, many workers from overseas left the UK to return home – hitting the UK’s hospitality, logistics, and food processing industries particularly hard.“The UK’s immigration system is also a barrier to hiring people from overseas to replace those who may have left.”He added: “We need government to immediately update the ‘Shortage Occupation List’.“Last year – in September 2020 – the Migration Advisory Committee recommended that we add certain roles to that list. Butchers, bricklayers, and welders for example. “Today, almost a year on, we worry those are exactly the same sectors facing shortages now. “Businesses would also welcome a commitment to review the list annually, to keep it responsive to the ebb and flow of skill demands across the whole of the UK’s economy“Where there are clear, evidenced labour shortages, businesses should be able to hire from overseas. An evolving Shortage Occupations List could help.”A report by jobs site Indeed earlier this month suggested the number of EU citizens searching for work in the UK had slumped by 36 per cent since Brexit, with interest in low-paid roles in hospitality and retail falling the most, by 41 per cent from 2019 levels.In total, 1.3 million non-UK workers have left the country since late 2019. More

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      in US Politics

      How the Small Business Administration’s new chief plans to make the agency known

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      Isabella Guzman is the new administrator of the Small Business Administration (SBA). And she’s got a long-term problem.No, it’s not about pandemic loans or the bottleneck in disbursing grants under other stimulus initiatives. It’s not even about catching fraudsters or approving applications. She has these problems of course. But that’s not the long-term problem.Guzman’s long-term problem has to do with awareness.“The SBA has always been the best kept secret in government, and we don’t want to be that,” she told me in a recent podcast interview. “We want to be known.”Right now most small business owners I know are only aware of the SBA because of the media attention received – both positive and negative – by being the middleman for various stimulus programs. But those programs are going to end this year. So what happens after that? What’s next for the SBA?For years, the department has struggled to get the word out about its services. And there’s no question that the SBA has many services to offer small businesses well and beyond dolling out loans and grants.“We know that government can be hard to navigate, and we’re trying to simplify our processes,” Guzman says. “Our customers are small businesses owners who have to wear so many hats and have so many responsibilities and need a team behind them.”What kind of team? There are the Small Business Development Centers, a network of free consulting agencies generally tied to colleges and universities which use professors and grad students as resources to help small businesses create business plans, do market research and evaluate technology. Or there’s Score, a long time, SBA-linked association of “retired” small business experts and owners who provide wisdom and advice at no charge. The SBA also has a myriad of educational programs and customer assistance resources that can help small businesses get government contracts or just better manage cash flow.Then there are the many guaranteed loan programs the agency offers through its lender network that can provide millions of dollars of working capital and other financing opportunities to buy property and equipment for small businesses who otherwise would not be able to fulfill normal banking requirements.And yet, when I ask my clients – who are mostly established firms – about the SBA I usually get blank stares. These clients aren’t aware of these options. They don’t realize they can get free consulting from university professors and retired CEOs or bank loans from lenders that wouldn’t ordinarily lend to them. Even the business owners I know operating in low- to moderate-income areas aren’t aware of the special services and funding available specifically for them. Or the more than a hundred women’s business centers throughout the country specifically devoted to the needs of female entrepreneurs.Why not? It’s awareness. The SBA has an opportunity to leverage the enormous PR it received during the pandemic and use it to make more businesses aware of all that it does. So how does administrator Guzman plan to do this?“We’re going to be looking at all of our programs completely and trying to apply a customer-first and technology forward approach as well as an equitable approach,” she says. “We intend to make sure that we’re meeting businesses where they’re at in their current situations and providing products and services that can best help them grow.”Specifically, that means hiring better and brighter people for her organization (“like Nasa” she says), increasing their partnering outreach to government departments, local organizations and chambers of commerce, and focusing on issues that are top of mind for many business owners, such as exit strategies.“Our small business development centers in particular are training up on ESOPs (Employee Stock Ownership Plans) and other types of alternatives for exit strategies,” Guzman says. “We know that it’s a big challenge to sell or hand down a business and we don’t want those businesses to disappear.”Finally, Guzman plans a greater reach out to communities of color and other areas where discrimination and lack of education is holding back on their opportunities. Her goal is to prevent “barriers from limiting entrepreneurship” and “to make sure that every type of entrepreneur from all backgrounds have the opportunity to pursue their dream of small business ownership”.Will the SBA be able to leverage its notoriety from the pandemic into a message that enables more small business owners to take advantage of all the resources it provides? Other administrators have tried this in the past, with mediocre outcomes. But Guzman has a chance right now to increase capitalize on what her agency has done in the past and make more business owners aware of the services it can provide in the future. Let’s hope she succeeds. More

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      in US Politics

      ‘When is this going to end?’: US factory town devastated by jobs moving overseas

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      “Disbelief. Distraught and traumatized.”Just some of the words United Steelworkers Local 8-957 president Joe Gouzd used to describe how he and hundreds of other workers felt after their 56-year-old pharmaceutical plant in West Virginia was shut down, sending between 1,500 to 2,000 jobs to India and Australia.The Viatris plant at Chestnut Ridge, just outside Morgantown, has been in operation since 1965, providing well paid jobs in one of America’s poorer states. And the timing of the closure has workers furious.“This is the last generic pharmaceutical manufacturing giant in the US, and executives are offshoring our jobs to India for more profits. What is this going to do to us if we have another pandemic?” said Gouzd.It is also causing a political row, with Congress accused of inaction and workers denouncing profits before people.“When is this going to end, losing American jobs? Every politician you hear, part of their political platform is: jobs, domestic jobs, domestic manufacturing, bringing jobs and manufacturing back to America,” said Gouzd.The offshoring of jobs has taken on new political weight since Donald Trump was elected. But his record in office was just as poor as his predecessors’.While the US does not track all jobs lost to offshoring, the labor department does count the number of workers who petition for help under a federal law designed to aid those harmed by trade.According to Reuters, during the four years of Trump, those petitions covered 202,151 workers whose jobs moved overseas, only slightly less than the 209,735 workers covered under Obama.Biden has proposed taxing companies that offshore jobs, but it remains to be seen whether he will be successful. Viatris may prove his first big test.The union is fighting to prevent the plant closure, asking elected officials to repurpose the plant via the Defense Production Act of 1950. It also criticized elected officials in Congress from ignoring their pleas for assistance “for no other reason than stakeholder return on investment dollars,” said Gouzd, who has also worked at the plant for 22 years.The local union branch represents about 900 workers. “Families are going to be forced to relocate, probably sell their homes, and relocate from West Virginia. Here we’re going to rid ourselves of 2,000 high-paying jobs in north central West Virginia, taking out $150m to $200m out of the local economy from lost income.”Less than a month after Mylan merged with Pfizer’s Upjohn to form Viatris, the company informed the union of its plans to shut down the plant and send the work abroad, as part of a $1bn cost-cutting restructuring plan. Mylan reported $3.9bn in profits in 2019, and over $1bn in quarterly profits before the merger. The plant is scheduled to end manufacturing on 31 July when the majority of the workforce will be laid off, with closure operations planned to end by 31 March next year.Carla Shultz, 60, worked at the plant for 13 years and is worried about not being ready to retire, but too old to return to college or be able to find another job with comparable wages and benefits.Through her job, Shultz was able to receive chemotherapy tablets for her mother; the same medicine would have cost her family $7,000 a month without benefits for her job. During the pandemic, her mother caught coronavirus and is currently hospitalized, on oxygen, and requiring round-the-clock care.“It added a lot more stress to our already stressful situation caring for family. I also take care of my three grandchildren, two of whom are school-age. But they’ve been home a lot while schools were closed because of Covid,” said Shultz.“My sister and I take turns caring for my mom. I help in the daytime after I get off work catching a nap when I can and then keeping my midnight shift schedule. It’s not easy keeping up, but we do what we have to do for our families.”Chad McCormick, recording secretary of USW Local 8-957, has worked at the plant since 2001, but now expects to be forced to find a much lower paying job to remain in the area, where his family has lived for decades.“I’ve been here for over 20 years. I’ve since gotten married, had three children, and built a house,” said McCormick. “It’s just devastating, and a lot more people than I expected are now looking into relocating.”The West Virginia legislature passed a bill calling on governor Jim Justice and Joe Biden to save the jobs. Senators Elizabeth Warren and Marco Rubio introduced the Pharmaceutical Supply Chain Review Act to conduct a study on the American over-reliance on foreign countries in pharmaceutical industry, but neither West Virginia senator has sponsored the bill.According to Gouzd, Republican senator Shelley Moore Capito has ignored pleas to work with Biden officials to save the plant, and Democrat Joe Manchin, whose daughter served as Mylan’s chief executive until she retired in 2020, has also ignored their requests to get involved and help.Viatris cited the plant closure as part of a global restructuring initiative, and said it is exploring alternatives outside the company network.“The phasing out of manufacturing operations in Morgantown was a decision the company did not take lightly and in no way reflects upon our genuine appreciation for the commitment and work ethic of the employees at Chestnut Ridge,” it said. More

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      in US Politics

      Is Biden’s appointment of a pioneering young lawyer bad news for big tech? | John Naughton

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      A flashback: it’s Wednesday 29 July 2020. I’m sitting glued to the US TV network C-Span, which is relaying – live – a hearing of the House of Representatives subcommittee on antitrust, commercial and administrative law. The hearing is being held following the publication of a sprawling report of a year-long investigation into the market dominance of Amazon, Apple, Facebook and Google.Arrayed on big screens before the members of the subcommittee are the four bosses of the aforementioned tech giants: Amazon’s Jeff Bezos, then midway through his Star Trek makeover; Tim Cook of Apple, looking like the clean-living lad who never understood the locker-room jokes; Facebook’s Mark Zuckerberg, wearing his trademark glued-on hairdo; and the Google boss, Sundar Pichai, every inch the scholarship boy who can’t understand why he’s been arrested by the Feds. And on the vast mahogany bench towering above these screened moguls sits David Cicilline, subcommittee chairman and the politician who has overseen the investigation.To be honest, I was watching out of duty and with low expectations. All the previous congressional interrogations of Zuckerberg and co had alternated between political grandstanding and farce. I expected much the same from this encounter. And then I noticed a young woman wearing a black mask standing behind Cicilline. She looked vaguely familiar, but it took me a few moments before I twigged that she was Lina Khan. At which point I sat up and started taking notes.I had been following her for years, ever since a paper she had published as a graduate student in the Yale Law Journal in January 2017. The title of the paper – Amazon’s Antitrust Paradox – signalled that there was something radical coming up, because since the mid-1970s US antitrust philosophy had been shaped by a landmark book by another lawyer, Robert Bork. Its title was The Antitrust Paradox and it argued that the prime focus of action against monopolies should not be corporate power, per se, but consumer harm as measured by unreasonably high prices. And since many of the products and services offered by the tech giants were “free” to their users they could hardly be accused of this; their wielding of monopoly power should not therefore be penalised by the state, for doing so would be tantamount to “penalising excellence”. Thus was shaped the legal doctrine that allowed a small number of tech companies to acquire immense power without being unduly troubled by legislators.This was the doctrine that Khan set out to demolish in her paper. She argued that Amazon was a dangerous monopoly that charged unsustainably low prices because the company knew that its shareholders would allow it to lose money for longer than its competitors. And it was also able to operate a “marketplace” that competed with the businesses that relied on it to reach customers, while amassing data on them that further entrenched its advantages. In other words, it wielded significant power for which there was no real redress.Khan’s paper lit a fuse that’s been fizzing ever since. It informed the Cicilline investigation and the subsequent report. And it’s what underpinned four of the five new bills that were unveiled last week, each one co-sponsored by Republican as well as Democratic politicians and each one targeted at monopolistic abuses identified in the report. The “Cicilline Salvo” is how the incomparable tech analyst Ben Thompson summarises them. The American innovation and choice online bill forbids platforms from giving advantages to their own products and services on marketplaces that they operate. The platform competition and opportunity bill outlaws pre-emptive acquisitions by tech giants of startups that might threaten their dominance (such as Facebook acquiring Instagram and WhatsApp, for instance). The ending platform monopolies bill bans platforms from owning any product or service that rests on top of its platform and competes with third parties in any way. And the augmenting compatibility and competition by enabling service switching bill requires tech platforms to make it easy for users to switch platforms (and take their data and social graph with them); in other words, it imposes on platforms what many jurisdictions now enforce on mobile phone operators, energy companies and other businesses.Of course, there’s many a slip ’twixt drafting and the statute book, but these are very significant pieces of legislation that go some way towards bringing tech companies under democratic control. And, to cap it all, last week also saw the announcement that Khan was to become chair of the Federal Trade Commission, the agency that, along with the US Department of Justice, has the legal muscle to enforce compliance with whatever these new laws stipulate.Which leaves us with two reflections. One is, as David Runciman pointed out in The Confidence Trap, his landmark study of the recent history of democracy, that while democracies can take a long time to awaken from their slumbers, once aroused they can be very effective. The other is a confirmation of the power of ideas, even those of a young graduate student, to change history.What I’ve been readingSituation vacant On Algorithmic Communism is a long, thoughtful review by Ian Lorrie in the LA Review of Books of Nick Srnicek’s and Alex Williams’s book, Inventing the Future, about a world without work.What’s in a phrase?There Is Nothing so Deep as the Gleaming Surface of the Aphorism is a nice – aphoristic – essay by Noreen Masud.Net costsThe Cost of Cloud: A Trillion-Dollar Paradox is a perceptive piece by Sarah Wang and Martin Casado on the expensive technology on which our networked world now depends. More

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      in UK Politics

      Australia trade deal will deliver minimal benefit to UK economy and poses risks for farmers, say experts

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      A trade deal between the UK and Australia will deliver minimal benefit to the UK economy while posing significant risks to UK farmers, industry leaders and trade experts have warned.The government announced an agreement in principal on a pact with Australia on Tuesday. Boris Johnson said that the UK’s first major post-Brexit trade agreement would create “fantastic opportunities” for the UK. However, many of the details have yet to be finalised and farmers fear that the terms mean they will be undercut by cheap imports.Animal welfare campaigners also said the deal would allow low-welfare products such as beef treated with hormones into the UK.The deal will also allow greater freedom for UK nationals aged under 35 to travel freely in Australia.Impact on the economyDavid Henig, UK director of European Centre For International Political Economy, said the deal might not even deliver the 0.02 per cent boost to GDP that the government has estimated and that the true impact could be closer to zero.The government’s forecast is based on “heroic assumptions” which previous trade deals have not come close to achieving, he tweeted, adding that the details announced on Tuesday contain nothing we didn’t already know.”There had to be an announcement as the Australian PM was here. But it doesn’t feel like negotiations are in fact complete.”He also suggested that the UK may have played its hand poorly in negotiations: “Australia got their top asks from the UK – agriculture. The UK didn’t have a top ask of Australia, hence why none is being flagged. If we find one in the future, too late, we already gave them what they wanted.”Sam Lowe, senior research fellow at the Centre for European Reform, tweeted that “trade deals don’t do very much for aggregate GDP either positively or negatively” because the main benefits come from reducing tariffs, which are already quite low.’Significant harms’Angus Brendan MacNeil, chair of the Commons International Trade Committee, expressed concerns that the government had ceded too much ground to Australia.“In its rush to reach an initial agreement, I fear the government could sign up to something which brings significant harms as well as benefits. “The views of the entire farming sector especially are no secret now, including those in the devolved nations, who are particularly concerned about being undercut by cheaper meat and dairy produce from ‘down under’.”The government says British farmers will be protected by a cap on tariff-free imports for 15 years, using measures including tariff rate quotas.National Farmers’ Union president Minette Batters called for more information about any provisions on animal welfare and the environment “to ensure our high standards of production are not undermined by the terms of this deal”.She added: “The ultimate test of this trade deal will be whether it contributes to moving farming across the world onto a more sustainable footing, or whether it instead undermines UK farming and merely exports the environmental and animal welfare impact of the food we eat.”Joe Spencer, partner at accountancy firm MHA MacIntyre Hudson described the deal as “unfavourable”.“UK farmers are increasingly being asked to offer protection for the environment, while the government is withdrawing support to them at the same time,” Mr Spencer said.”Unfavourable trade deals – such as this latest one in negotiation with Australia – will only add more pressure to the sector which is working hard to move in one direction while, one might suggest, having the rug pulled out from under it at the same time.“Farmers are right to be wary. Trade deals of the sort the government has negotiated with Australia offer few advantages to the sector and maybe only small benefits to consumers (in terms of lower prices). The sector (and the general public) will be paying close attention to the way these trade deals ensure food safety and livestock welfare standards.”Consumer pricesDowning Street claims the removal of tariffs under the deal says will mean cheaper Australian wine, swimwear and confectionery, “boosting choice for British consumers and saving households up to £34m a year”.Scotch whiskyThe Scotch whisky industry has been touted as one that would see benefits from the trade deal because it will now have tariff-free access into the Australian market.Kate Betts, chief executive of the Scotch Whisky Association welcomed the removal of a 5 per cent tariff.”This will help Scotch Whisky distillers continue to expand exports to Australia, which have almost doubled over the last decade, making Australia our eighth largest market by value,” Ms Bettes said. “It’s also important to us that trade with Australia is now tariff-free for Scotch Whisky – our preference is always for tariff-free trade, which enables Scotch Whisky to compete on a level playing field and on the strength of our reputation for quality.”The association is calling for “greater legal protection and tax fairness” for Scotch whisky, which it said would deliver a boost for the industry.Wine and spiritsThe Wine and Spirit Trade Association (WSTA) said removing import tariffs will save UK wine businesses £16m and support thousands of jobs.The UK exported £27m worth of British gin to Australia last year, which was one of the few markets to continue growing during a year in which exports were heavily hit by the pandemic.UK distillers are expecting to see those exports continue to grow, with an agreement likely to remove the 5 per cent tariff Australia levies on the spirit, WSTA said.Parliamentary scrutinyMPs from all major parties demanded an opportunity to properly scrutinise the deal. In a letter coordinated by campaign group Best for Britain, the MPs warn that “no one wants to see our farming communities in Wales, Scotland, England and Northern Ireland undermined for the sake of a politically expedient trade deal”.The letter calls for Parliament to be given the ability scrutinise the finalised text of the agreement before it is signed and ratified, warning that “the deal must command the support of all four nations of the UK.” It also demands that detailed impact assessments are carried out looking at how the deal will affect regions and nations of the UK and sectors such as farming. More

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      in World Politics

      Should Billionaires Be Taxed Differently?

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      As a columnist for The Washington Post, Megan McArdle works for the Post’s owner, a man named Jeff Bezos. Over the past two decades, McArdle has had numerous other prestigious bosses. She boasts a solid career in high-level journalism, having worked for The Atlantic, Newsweek, The Economist and Bloomberg, among others. Bloomberg View’s executive editor, David Shipley, once called her “an extraordinary writer and thinker.”

      Early on, in 2001, McArdle broke onto the scene as the author of a blog, “Live from the WTC,” at a time when most people were not yet addicted to the internet and few even knew what the word blog meant. Making her mark as a blogger required one of two talents: the ability to come up regularly with remarkable scoops and cutting insights, or developing a shrill, brutally opiniated voice capable of irritating the right class of adversaries and resonating with a crowd of equally opinionated followers. McArdle long ago branded herself a libertarian. That quite naturally helped to define her as the second type of celebrated blogger. She has consistently lived up to that billing, even as an opinion writer for the revered Washington Post.

      ProPublica Reveals the US Is a Tax Haven

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      McArdle has now weighed in on ProPublica’s blockbuster scoop last week concerning the tax returns of the 25 richest Americans. New York Times editor Spencer Bokat-Lindell prudently commented: “Depending on your point of view, it was either one of the most important stories of the year or an invented scandal.” The Times author exposes the significant complications when wishing to address the issue of taxing the super-rich. He coyly conceals his own point of view. 

      In her column in The Washington Post bearing the title, “Think Twice Before Changing the Tax Rules to Soak Billionaires,” McArdle doesn’t hesitate to trumpet her point of view urbi et orbi. “Think twice” of course means: Read my article and stop complaining. She suggests that taxing the rich more would be undemocratic because it would mean treating them differently from other citizens. That would be an injustice. Her jibe, “soak billionaires,” suggests that taxing them would be torture similar to waterboarding.

      Then McArdle offers this: “We talk a lot about rich people ‘paying their fair share,’ but we’re rarely clear on what exactly we mean by that.”

      Today’s Daily Devil’s Dictionary definition:

      Fair share:

      An amount corresponding to the implicit rules of equitability that apply in any society that values solidarity, meaning that no such amount can be determined in a society with an ideological bias against solidarity

      Contextual Note

      McArdle may have been inspired by former UK Prime Minister Margaret Thatcher who, to the rhetorical question, “Who is society?” gave this response: “There is no such thing! There are individual men and women.” That means fairness is in the eye of the beholder. It also means all’s fair in love and war… and tax avoidance. In any case, the two ladies appear to share a similar train of thought. In the idea of “fair share,” it isn’t the concept of “fair” that upsets either of the ladies. It’s the idea of “share.” In McArdle’s mind, the noun “share” simply designates a unit of ownership in a corporation’s stock. Society, in this sense, is hardly different from a community of shareholders, some owning many more shares than others.

      The columnist speculates about what it would mean if the wealthy were taxed on the added value of the stocks they own. She imagines a melodramatic scenario in which “they might be forced to sell off stock of a business they spent decades building.” Shares cannot be shared, so they must be sold. That would be downright tragic because the builders might just stop building and then where would society be? But having made her melodramatic point, she doesn’t even try to imagine how such things would play out in the real world. Like Kurtz in Conrad’s “Heart of Darkness,” she simply invokes “The horror! The horror!”

      McArdle’s shock at the idea of entrepreneurs losing their life’s work makes no sense for two fairly obvious reasons. The first is theoretical, the second pragmatic. In theory, a wealthy person could be forced to sell stock to pay a percentage of capital gains. That person’s share of the company would be correspondingly diminished, but in almost all cases only slightly, since the tax would only represent a percentage of the gain in value. Owning 10% of a company valued at $1.5 billion is better than owning 12% of a company valued at $1 billion. In the long term, having to sell those more shares could end up reducing the person’s future wealth. It would not reduce their current wealth.

      Embed from Getty Images

      But because real billionaires tend to be well advised and own portfolios that allow them a wide range of options, they never make such sacrifices. Whether it is to buy a yacht or pay taxes, they rarely if ever liquefy any assets. They borrow against those assets, which has the added value of reducing their declared income on which they would normally pay taxes.

      For most people, income represents the money they must earn to survive or maintain a lifestyle. Because wealthy owners of businesses decide on their own remuneration, they avoid having a substantial taxable income by living lavishly off money they borrow from a bank and pay back with interest. The interest is the only “penalty” they pay for their prodigality. It is nowhere near what they would pay in taxes. It’s an ideal solution. Banks love lending money to the rich because there is zero risk. The wealthy avoid taxes. Their tax lawyers and accounts earn a decent fee. The society of ordinary taxpayers reaps no benefit other than whatever trickles down from the high profit margins of those who sell yachts and luxury goods.

      McArdle doesn’t want to know about such systemic truth. Instead, she returns to her imaginary vision of a system obsessed by its envy of the rich and intent on invoking the idea of fairness to constrain their freedom. She confesses that, “given a choice between letting billionaires spend fortunes reaching for the stars, or destroying those fortunes so that the rest of us don’t have to look at them, then personally, I’ll take the rockets.”

      Historical Note

      The rockets that Megan McArdle refers to are those that her boss, Jeff Bezos, is building thanks to his astronomic fortune, some of which he has invested in his space venture, Blue Origin. Is it a coincidence that she works for Bezos’ newspaper and that she uncritically assesses his personal indulgences?

      Her previous column, with the title “Why Aren’t We Talking More About UFOs?” clearly advances the interests of Blue Origin. The more concerned Americans are about alien invasions — whether from outer space, China or Russia — the more public money (provided by ordinary taxpayers) will be available to support Blue Origin, a company that is about to receive a gift offered by Congress of $10 billion to colonize the moon, even after losing out in a public bid to fellow billionaire Elon Musk’s venture, SpaceX. 

      McArdle probably thinks of Blue Origin as yet another example “of a business [Jeff Bezos] spent decades building.” His lobbyists have convinced the government to spend billions on it, while Bezos himself skirts his tax obligation. She complains that the argument demanding “‘taxes on untaxed capital gains’ is what you come up with if you just don’t think anyone should have enough money to be able to shoot themselves into space.” The “you” she refers to is ProPublica, which dared to make that case, and anyone else equally feeble-minded enough to begrudge billionaires their private pleasures. 

      Bezos’ ownership of the Post is paying off. When making the decision to buy the paper in 2013, he reasoned: “The Washington Post has an incredibly important role to play in this democracy. There’s no doubt in my mind about that.” Had he waited a year to consider the findings of a Princeton study published in 2014 with the title, “Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens,” he might have more accurately explained: The Washington Post has an incredibly important role to play in this plutocracy.

      *[In the age of Oscar Wilde and Mark Twain, another American wit, the journalist Ambrose Bierce, produced a series of satirical definitions of commonly used terms, throwing light on their hidden meanings in real discourse. Bierce eventually collected and published them as a book, The Devil’s Dictionary, in 1911. We have shamelessly appropriated his title in the interest of continuing his wholesome pedagogical effort to enlighten generations of readers of the news. Read more of The Daily Devil’s Dictionary on Fair Observer.]

      The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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      in US Politics

      25 corporations marking Pride donated over $10m to anti-LGBTQ+ politicians – study

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      June is Pride month, and many US corporations are advertising their support for the LGBTQ+ community. A new study, however, has found that 25 companies otherwise eager to wave the rainbow flag have donated more than $10m to anti-LGBTQ+ federal and state politicians over the past two years.The study, released on Monday by the Popular Information newsletter, found that alongside pronouncements of LGBTQ+ support, corporations including CVS, AT&T, Walmart and Comcast have supported candidates who seek to block or otherwise restrict equal rights based on gender or sexual orientation.Many of the corporations have 100% ratings on the Human Rights Campaign (HRC) 2020 Corporate Equality Index, which measures workplace policies and “public commitment to the LGBTQ community”. The index does not take political donations into account.The study found that CVS, while receiving a perfect HRC score and announcing on Twitter it was “proud to join more than 100 companies that have signed HRC’s Business Statement Opposing Anti-LGBTQ State Legislation”, also supported sponsors of anti-trans legislation in Texas, North Carolina and Tennessee, through its corporate political action committee.In Texas, CVS backed Republican state senators Dawn Buckingham and Bryan Hughes, co-sponsors of SB1646, a bill that would “change the state’s child abuse law” to make it a crime for parents to allow children to receive gender-affirming medical care.The company also backed North Carolina state senator Ralph Hise, primary sponsor of S514, which would ban anyone under 21 receiving gender-affirming treatment and which the Advocate, an LGBTQ+ outlet, called “the most repressive anti-transgender healthcare bill in the nation”.CVS’s $1,000 donation to Hise in August 2020 came four years after huge controversy over an anti-trans “bathroom bill” the senator argued was necessary “to protect the citizens of the state of North Carolina”.CVS has donated $259,000 to 54 members of Congress who received a HRC rating of zero, largely through voting against the Equality Act, over the last two years.Others named in the study include cable giant Comcast, which has donated more than $1m to anti-LGBTQ+ politicians since 2019.A Comcast subsidiary, Xfinity, recently tweeted: “Pride is the love we share. And with Xfinity, it’s Pride all year.” Comcast itself has created “a virtual ‘Pride World’, where we will feature events, Pride floats, Pride flags, and even a Pronoun Guide for employees”.But according to the study by Popular Information, Comcast has also donated more than $1.1m to anti-LGBTQ+ politicians since 2019, including $30,000 to the sponsors of anti-trans legislation in Florida and Texas and $1,095,500 to 149 members of Congress marked zero by HRC.AT&T, which recently said “We can #TURNUPTHELOVE for LGBTQ youth together”, also signed a HRC letter opposing anti-LGBTQ state legislation. But it has also supported sponsors of anti-trans legislation in Arkansas ($12,950), Tennessee ($4,000), North Carolina ($5,000), Texas ($22,500), and Florida ($17,500).Walmart – whose website features a “Pride & Joy” section – has donated at least $442,000 to 121 politicians who received a zero from HRC, according to campaign finance reports.Others mentioned in the study for promoting a perfect score on the Corporate Equality Index and publicising support for LGBTQ+ rights while donating to anti-LGBTQ+ lawmakers include United Health, Deloitte and Wells Fargo, which made a $1,000 donation to the North Carolina state senator Joyce Krawiec, who has shared anti-trans articles on social media.Wells Fargo is a corporate supporter of Heritage of Pride, the non-profit that plans and produces New York City’s Pride events. The group has also been supported by Comcast.Michael Bullock of Weekly Senator, a crowdfunding group that channels donations to Senate candidates supporting progressive causes, said LGBTQ+ organisations supported by corporations that donate to anti-LGBTQ+ politicians should be boycotted.Bullock claimed Heritage of Pride “has over time created a parade in which the main goal is to pimp out queer people and queer culture to corporations to make as much money as possible. It’s crazy that this even needs to be said, but all LGBTQ people should boycott the Heritage of Pride until they make sure none of the sponsors fund anti-gay legislation.”Dan Dimant, a spokesperson for Heritage of Pride, told the Guardian the group makes efforts to prevent “pink-washing”, including guidelines on its website, and “takes great pains to ensure that partnerships meet strict criteria and that all partners are working to further the mission of the organization”.“There is a vetting process, so we make our best effort to avoid some of these conflicts of interest but that said it’s a moving target because companies change over time,” Dimant said.While many companies named in the Popular Information study did not comment, many reaffirmed their commitment to LGBTQ+ rights.General Motors said its political contributions “do not represent an endorsement of the candidate or support for all the issues the candidate supports [and] we will continue to clearly communicate with policymakers GM’s commitment to diversity, equity and inclusion”.Ford said “contributions by our employee Pac are bipartisan and take into consideration many issues that are important to meeting the needs of our customers, our team and our company”.Google defended its record on supporting “the rights of all LGBTQ people” and said a contribution to a candidate “doesn’t mean that Google agrees with that candidate on every issue. In fact, we may disagree strongly on some issues.” Amazon took a similar position. More