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      in US Politics

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

      by

      “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 World Politics

      How the G7 Intends to Build the World Back Better

      by

      The US Senate recently demonstrated that the only adhesive capable of uniting the two parties is a good, old-fashioned enemy. Although the Democrats and Republicans continue to bicker over the Biden administration’s infrastructure legislation, they achieved rare accord in passing a major technology bill that directs investment into key sectors of the economy.

      Why the sudden bipartisanship? China. The $250 billion investment into semiconductor production, scientific research, space exploration and the like is intended to decrease dependency on inputs from China and maintain a US lead in critical technologies.

      Does the World Need to Contain China?

      READ MORE

      The Biden administration is now eager to replicate that experience on the global level. At last week’s G7 summit in the UK, the United States again used China as a threat to forge transnational solidarity around a global infrastructure deal. Despite some misgivings from Germany and Italy, President Joe Biden managed to steer the group toward something called the Build Back Better World (B3W) initiative, which incidentally sounds a lot like Biden’s 2020 campaign slogan. But that slogan itself echoed a catchphrase adopted by the UN in 2015 to characterize its response to humanitarian disasters. So, B3W can sound both authentically multilateral and distinctively Bidenesque at the same time.

      In the face of the global tragedies of the COVID-19 pandemic and climate change — not to mention the sustained attacks by Donald Trump and other right-wing populists on the global order — it was entirely appropriate for the G7 to come up with a bold approach to addressing global economic inequities in a sustainable manner. Alas, B3W raises as many questions as it addresses.

      For instance, is B3W more than just a fancy name attached to already committed financing and existing institutions like the Blue Dot Network? Isn’t the World Bank supposed to be closing the infrastructure gap between the have-lots and the have-littles? And shouldn’t China be a collaborator in this effort rather than its chief antagonist?

      Improving Upon Belt and Road?

      China launched its Belt and Road Initiative (BRI) in 2013. Its aim has been thoroughly Keynesian: to pump money into the economies on China’s borders — as well as some further away — in order to sustain China’s own economic growth. The more these economies are dependent on Chinese financing, Chinese inputs and Chinese know-how, the more they will ultimately contribute to China’s global economic dominance.

      Is China creating some kind of global alternative to capitalism like the Soviet Union’s old Comecon? No, Beijing is thoroughly capitalist in its orientation, though it pushes a version that rubs many laissez-faire purists the wrong way.

      Embed from Getty Images

      Is China determined to use BRI to consolidate an anti-democratic bloc of nations? Although Beijing may well prefer to deal with more predictable partners — and democracies can elect some pretty outrageous wildcards — it is ultimately agnostic about the political governance of its BRI collaborators. There are 140 nations participating in the BRI, including 18 countries in the European Union. For every Belarus and Cuba, there’s an Estonia and a Chile.

      Well, then, isn’t China using BRI to build a kind of covert military bloc? Critics, for instance, have pointed to the deal China negotiated with Sri Lanka around the port it helped to finance in Hambantota. Struggling with loan repayments in 2017, Sri Lanka signed a 99-year lease arrangement with a Chinese firm. Couldn’t Beijing now turn this port into a military base?

      In fact, Sri Lanka continues to own the facility, though the Chinese commercial firm operates much of the port and thus gets much of the profit. Despite US government claims, China is not and doesn’t seem to have any intention of conducting military business at Hambantota. Two Chinese subs entered the port before the 2017 deal, and Sri Lanka has barred such visits ever since.

      The Sri Lankan example has often been used as exhibit A in the case of China’s use of the “debt trap” to advance its global objectives. According to this scenario, Beijing extends loans through BRI, the target country defaults, and China grabs the assets. It sounds plausible. Except that there’s no evidence that China actually operates that way, including in the Sri Lankan case.

      The Belt and Road Initiative has many flaws, to be sure. It has facilitated large-scale corruption, for instance, in Malaysia. It has promoted dirty energy, including 240 coal projects and billions of dollars in oil and gas investments.

      But it’s not as if China is the only country with dirty hands. Corruption is endemic in infrastructure projects, accounting for as much as 45% of construction costs. And when it comes to fossil fuels, the US was the largest oil exporter in the world last year as well as the fourth-largest exporter of coal.

      So, why did the G7 think it was so important to come up with an alternative to China’s Belt and Road rather than work with Beijing to build back better together?

      Beat ‘em Rather than Join ‘em?

      The United States likes being number one. The success of Trump’s political campaign and his various hyperbolic slogans testify to the endurance of American exceptionalism. The stridency of these exceptionalist claims, however, introduces a measure of doubt. Front-runners who are anxious about their status generally compensate by raising their voices and thumping their chests harder. In this way, we betray our simian origins.

      China has challenged the US status by growing what is now, measured by purchasing power parity, the world’s largest economy. Thanks to its performance in 2020 during the pandemic, China will likely become the world’s undisputed number one economy sometime around 2026.

      But China is also challenging the global economy by establishing its own institutions parallel to the World Bank and the International Monetary Fund (IMF), like the Asian Infrastructure Investment Bank. The BRI, by encompassing so much of the world, is just the kind of grand initiative that number-one economies set up to maintain their dominance.

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      The United States is not so enthusiastic about relinquishing its top status. Ditto all the countries that have hitched themselves to the US economic locomotive. With Trump out of the White House, Washington has eschewed machismo in favor of multilateral and moral arguments against the Belt and Road Initiative: China is throwing developing countries into debt dependency; China is bolstering the power of authoritarian leaders; China is fostering unacceptable work environments including forced labor.

      Those criticisms ring hollow. The developing world is already in debt dependency to the G7 and its financial institutions. The World Bank and IMF worked closely with dictators for decades. Western corporations long turned a blind eye to horrifying working conditions in the countries where they set up operations.

      And the $40 trillion infrastructure gap between have-lots and have-littles that B3W is supposed to bridge? It’s because of this gap that China was so successful in reaching out to the Global South in the first place. In charge of the global economy since 1945, the richest countries failed miserably to achieve a modicum of global economic equity — because that was never really their goal.

      But Can It Help?

      For the sake of argument, let’s put all this history aside. Regardless of the mixed intentions of its backers, can B3W actually help countries that want to catch up to the rest of the world in a way that doesn’t further accelerate the climate crisis?

      The experience of the Blue Dot Network is not encouraging. Established by Japan, Australia and the US in 2019 — after a series of failed infrastructure initiatives like the Asia-Africa Growth Corridor and the Trilateral Partnership — the Blue Dot Network essentially establishes a Good Housekeeping seal of approval for infrastructure deals that meet more stringent requirements around governance, finance, labor conditions and the like. But here’s the problem: The Blue Dot Network doesn’t actually provide credit-hungry countries with access to any new pots of money.

      B3W looks like it might be a similar example of grand rhetoric and few resources. It is articulating the same kind of criteria for investments as the Blue Dot Network. As for the financing, the G7 has promised to mobilize private sector funding — in other words, they aren’t ponying up any money of their own. This is no surprise. The Biden administration is hard-pressed to pass its own domestic infrastructure bill. Fat chance it can get Republicans on board to send similarly earmarked funds abroad, even under the rubric of challenging China.

      Nevertheless, the White House is talking big: “B3W will collectively catalyze hundreds of billions of dollars of infrastructure investment for low- and middle-income countries in the coming years.” The word “catalyze” sounds very dynamic, but frankly, it’s just a fancy way of saying: We will beg and wheedle and maybe twist an arm or two, but frankly we can’t promise much of anything. As Reuters wryly concluded in its article on the initiative, “It was not immediately clear how exactly the plan would work or how much capital it would ultimately allocate.”

      The bottom line is that the world desperately needs a green B3W. It needs to find a way to close the infrastructure gap by providing the funds and financing for the developing world to leapfrog into a clean energy future. At the moment, the Belt and Road Initiative does not do that. And neither does B3W.

      So, how about it, Washington and Beijing? Why not get together to see if you can turn two wrongs into a right and collaborate on a global Green New Deal?

      *[This article was originally published by FPIF.]

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

    • 63 Shares149 Views

      in World Politics

      Should Billionaires Be Taxed Differently?

      by

      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

      READ MORE

      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

    • 100 Shares189 Views

      in World Politics

      ProPublica Reveals the US Is a Tax Haven

      by

      This week, ProPublica published a long, detailed article that blew the roof off two burning and intimately related questions currently in the news: wealth inequality and taxation. In the wake of the 2008 financial crisis, Thomas Piketty, Branko Milanovic and numerous pundits in the media have written reams on the topic. Politicians like Bernie Sanders and Elizabeth Warren have highlighted the issue and made proposals to address the problem. When Sanders suggested during the Democratic presidential primary that “billionaires shouldn’t exist,” the Democratic Party turned to one of the richest billionaires, Michael Bloomberg, counting on his financial clout to prevent the Vermont senator from winning the party’s nomination.

      In the US, people are more easily impressed by wealth itself than by the serious problem that wealth inequality has created. ProPublica’s article may help to change the public’s focus.

      They Are Coming for Us

      READ MORE

      ProPublica exposes the brutal fact that, contrary to the tenets of conservative Republican orthodoxy, the wealthy are the “takers” and people who work for a living, the “makers.” Worse, the taking they do no longer requires much effort. The tax system delivers everything they take away from others directly to their doorstep. Between 2014 and 2018, the 25 richest Americans “paid a total of $13.6 billion in federal income taxes.” The article calls it “a staggering sum, but it amounts to a true tax rate of only 3.4%.”

      Among the many details, ProPublica highlights the case of Warren Buffett, signaling “his public stance as an advocate of higher taxes for the rich.” Between 2014 and 2018, “Buffett reported paying $23.7 million in taxes.” But given the increase in his wealth over that period, that impressive sum “works out to a true tax rate of 0.1%, or less than 10 cents for every $100 he added to his wealth.” Who wouldn’t be happy paying taxes at that rate? And for Buffett, it isn’t even on earnings, which for most people permit survival, but on the absolute growth of his net worth.

      The article also cites the case of George Soros, the man who single-handedly broke the Bank of England. “Between 2016 and 2018,” according to a spokesman for the billionaire, “George Soros lost money on his investments, therefore he did not owe federal income taxes in those years.” The same spokesman, ProPublica reports, is quoted as affirming that “Mr. Soros has long supported higher taxes for wealthy Americans.”

      Today’s Daily Devil’s Dictionary definition:

      Support:

      To sit on the sidelines and verbally encourage other people to do things one is disinclined to do or incapable of doing on one’s own

      Contextual Note

      ProPublica has provided the world with a truly enlightening trove of information that sends a clear message. And this is only the beginning. The publication promises in the coming months to “explore how the nation’s wealthiest people — roughly the .001% — exploit the structure of our tax code to avoid the tax burdens borne by ordinary citizens.” Its reporting will certainly serve to clarify a debate that, for many, may have seemed too abstract and too polemical to try to take on board.

      Embed from Getty Images

      The numbers demonstrate the extreme, hyperreal nature of wealth distribution today. When the public learns that, in 2011, Jeff Bezos — who is, on and off, the richest man in the world — “claimed and received a $4,000 tax credit for his children” and that his true tax rate over time is less than 1%, they may begin to take the measure of how the tax system works and to whose benefit.

      The figures, nevertheless, show that between 2006 and 2018, Bezos paid out $1.4 billion, a staggering amount for any ordinary wage-earner to even try to comprehend. But his personal fortune over that time ballooned to reach close to $200 billion today. Has he earned it through his hard work? No, it earns itself. That’s what money does. And thanks to his ability to hire tax advisers and clever accountants, all but crumbs of his wealth stay in his hands, never to pollute (or contribute to improving) the public sphere.

      Historical Note

      ProPublica went to great lengths to gather, verify and publish these carefully guarded tax secrets. Its editors were not surprised when, as Forbes reports, IRS Commissioner Charles Rettig “told lawmakers that internal and external investigators are working to determine whether the data ProPublica used was illegally obtained.” In the land that enshrined free speech as a right (First Amendment) apparently even more fundamental than the right to own an AR-15 (Second Amendment), all speech is legitimate except when it is blown through a whistle.

      This simply means that the act of reporting certain types of scandalous abuse in the public interest is now deemed to violate the republic’s interest. We can expect the US government to spare no expense in its pursuit of the anonymous whistleblower who provided ProPublica with the tax returns it has put on display, whose secrecy is protected by the law.

      This is not a great time for whistleblowers. The cases of Edward Snowden, Julian Assange and Chelsea Manning have made headlines over the past decade. They all did something that could be interpreted as technically illegal, especially when laws such as the Espionage Act happen to be on the books. But they clearly exposed essential information about how a democracy functions that purports to be “of the people, by the people and for the people.” Thomas Drake, John Kiriakou and Jeffrey Sterling and Reality Winner are among others who were prosecuted by the Obama and Trump administrations for making significant contributions to our understanding of how government manages and sometimes mismanages people’s lives, fortunes and deaths.

      Last week, Natalie Mayflower Sours Edwards, who worked as a senior adviser at the US Treasury Department’s Financial Crimes Enforcement Network, was sentenced to six months in prison for revealing to BuzzFeed News what the International Consortium of Investigative Journalists qualifies as “financial corruption on a global scale.” She was arrested in 2018. Her crime consisted of sharing confidential bank documents with a journalist, an act that sparked “a global investigation into illicit money flows,” which, had she not acted, the public would never have known about.

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      BuzzFeed’s spokesman, Matt Mittenthal, helpfully explained that the resulting “investigation has helped to inspire major reform and legal action in the United States, the E.U., and countries around the world.” In other words, sometimes it is necessary to break the law to make it stronger and more equitable.

      Ben Smith, a New York Times columnist, summed up Edwards’ plight in a tweet: “This woman is going to prison for six months for her role in revealing systemic global financial corruption, and inspiring legal changes all over the world.” The law did not go after BuzzFeed in this case. Nor did it end up going after ProPublica in a 2012 case concerning tax filings for Karl Rove’s nonprofit, Crossroads GPS, in which the IRS initially told BuzzFeed “that it would consider [the] publication of them to be criminal.”

      In the eyes of the IRS, ProPublica has once again committed the crime of letting the truth out of the bag. It may well escape any punishment. The pattern is always to prosecute the whistleblower, but that requires identifying that person. If, as in the case of Edwards, the government does succeed in prosecuting and sentencing the whistleblower, that will not serve to put the truth back in the bag. That is why the government will be relentless in seeking the whistleblower and why the public should be grateful both to that person and to ProPublica.

      The government’s aim is not to repair the damage already done, but to instill fear in any other courageous individual in the position to reveal the inner workings of a system designed for the financial elite and managed by the political elite. In Edwards’ case, US District Judge Gregory H. Woods made this point clear when he “said that it was necessary to impose a ’substantial meaningful sentence’ in order to discourage others from committing similar crimes.”

      Publishing substantial meaningful truth will always provoke the call for a substantial meaningful sentence.

      *[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

      US Senate approves $50bn boost for computer chip and AI technology to counter China

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      The US Senate has overwhelmingly approved a bill to boost American semiconductor production and the development of artificial intelligence and other technology in the face of growing international competition, most notably from China.The 68-32 vote for the bill on Tuesday demonstrates how confronting China economically is an issue that unites both parties in Congress. It is a rare unifying issue in an era of division as pressure grows on Democrats to change Senate rules to push past Republican opposition and gridlock.The centerpiece of the bill is a $50bn emergency allotment to the US commerce department to boost semiconductor development and manufacturing through research and incentive programs previously authorised by Congress. Overall, the bill would increase spending by about $250bn, with most of the spending occurring in the first five years.The bill now heads to the House of Representatives, which earlier passed a different version. The two will have to be reconciled into a single bill before it is sent to the White House for the president’s signature.Joe Biden said he was “encouraged” by the Senate’s passage of the United States Innovation and Competition Act.“We are in a competition to win the 21st century, and the starting gun has gone off,” Biden said.“As other countries continue to invest in their own research and development, we cannot risk falling behind. America must maintain its position as the most innovative and productive nation on Earth.”Supporters described the bill as the biggest investment in scientific research that the country has seen in decades. It comes as the nation’s share of semiconductor manufacturing globally has steadily eroded from 37% in 1990 to about 12% now, and as a chip shortage has exposed vulnerabilities in the US supply chain.“The premise is simple, if we want American workers and American companies to keep leading the world, the federal government must invest in science, basic research and innovation, just as we did decades after the second world war,” said Senate majority leader, Chuck Schumer.“Whoever wins the race to the technologies of the future is going to be the global economic leader, with profound consequences for foreign policy and national security as well.“If we do nothing, our days as the dominant superpower may be ending. We don’t mean to let those days end on our watch. We don’t mean to see America become a middling nation in this century.”The bill has a number of other China-related provisions, including prohibiting the social media app TikTok from being downloaded on government devices, and would block the purchase of drones manufactured and sold by companies backed by the Chinese government.It would also allow diplomats and Taiwanese military to display their flag and wear their uniforms while in the US on official businesses, and creates broad new mandatory sanctions on Chinese entities engaged in US cyberattacks or theft of US intellectual property from US firms. It provides for a review of export controls on items that could be used to support human rights abuses.The Senate minority leader, Mitch McConnell, backed the bill but said it was incomplete because it did not incorporate more Republican-sponsored amendments.“Needless to say, final passage of this legislation cannot be the Senate’s final word on our competition with China,” he said. “It certainly won’t be mine.”Senators slogged through days of debates and amendments leading up to Tuesday’s final vote. Schumer’s office said 18 Republican amendments will have received votes as part of passage of the bill. It also said the Senate this year has already held as many roll call votes on amendments than it did in the last Congress, when the Senate was under Republican control.While the bill enjoys bipartisan support, a core group of Republican senators has reservations about its costs.One of the bill’s provisions would create a new directorate focused on artificial intelligence and quantum science with the National Science Foundation. The bill would authorize up to $29bn over five years for the new branch within the foundation, with an additional $52bn for its programs.Rand Paul, a Republican senator for Kentucky, said Congress should be cutting the foundation’s budget, not increasing it. He called the agency “the king of wasteful spending”. The agency finances about a quarter of all federally supported research conducted by America’s colleges and universities.The lead Republican on the committee also weighed in to support the bill.“This is an opportunity for the United States to strike a blow on behalf of answering the unfair competition that we are seeing from communist China,” said Roger Wicker.Senators have tried to strike a balance when calling attention to China’s growing influence. They want to avoid fanning divisive anti-Asian rhetoric when hate crimes against Asian Americans have spiked during the coronavirus pandemic.Senators added provisions that reflect shifting attitudes toward China’s handling of the Covid-19 outbreak. One would prevent federal money for the Wuhan Institute of Virology as fresh investigations proceed into the origins of the virus and possible connections to the lab’s research. The city registered some of the first coronavirus cases. More

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      in US Politics

      US adds 559,000 jobs in May as fears of hiring slowdown fade

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      The US added 559,000 jobs in May as the coronavirus pandemic receded, shaking off fears of a substantial slowdown in hiring after April’s disappointing monthly report.The Bureau of Labor Statistics said on Friday that the unemployment rate had fallen to 5.8% from 6.1% in April, still significantly higher than the 3.8% unemployment rate recorded in February 2020 before Covid 19 hit the US but less than half its 14.8% peak in April last year.The news comes one month after the labor department shocked economists by announcing the US had added just 266,000 new jobs in April – far below the 1m gain that had been expected. May’s gains were less than economists had predicted and with the level of employment still 7.6m jobs below its pre-pandemic peak, the Capital Economics group calculates it would take more than 12 months at the current pace to fully eradicate the shortfall.April’s report led to sparring between the Biden administration and Republicans who claimed higher levels of unemployment benefits were keeping people from returning to work and this month’s lukewarm report is unlikely to end that row.But there are signs of a strong rebound across the US economy. Worker filings for unemployment benefits have dropped by 35% since late April and fell to a pandemic low of 385,000 last week, the labor department said on Thursday.Private sector employment increased by 978,000 jobs in May, according to ADP, the US’s largest payroll supplier. The figure was the strongest gain since the early days of the recovery. “Companies of all sizes experienced an uptick in job growth, reflecting the improving nature of the pandemic and economy,” said Nela Richardson, chief economist at ADP.More than half of adult Americans are now fully vaccinated and business is booming in many sectors as state and local governments ease restrictions. But employers across the country are reporting worker shortages as the recovery strengthens. The US Chamber of Commerce said this week that labor shortages now represent “the most critical and widespread challenge” to US businesses. Nearly half of small-business owners had unfilled job openings in May, according to a survey from the National Federation of Independent Business.Alongside evidence of strong growth, some economists are warning about the return of inflation. Prices on a broad range of goods from lumber to chicken have soared as demand has outstripped supply. In April a key inflation indicator – the personal consumption expenditures (PCE) price index – rose to 3.1% compared to last year, its highest level in 13 years. More

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      in US Politics

      Biden proposes $6tn budget to boost infrastructure, education and climate

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      Joe Biden set out a $6tn budget proposal on Friday that, if passed, would fund a sweeping overhaul of US infrastructure and pour money into education and climate action, while driving government spending to its highest sustained levels since the second world war.The president’s first budget is largely a political document, and faces months of difficult negotiations in Congress where Republicans are already balking at the scale of his spending plans. But it clearly sets out Biden’s ambition to remake the US after the coronavirus pandemic.“Now is the time to build on the foundation that we’ve laid, to make bold investments in our families, in our communities, in our nation,” Biden told a crowd in Cleveland on Thursday. “We know from history that these kinds of investments raise both the floor and the ceiling of an economy for everybody.”Republicans immediately attacked the plan. Senator Mitch McConnell said it would “drown American families in debt, deficits, and inflation.”The White House has set out a two-part plan to overhaul the US economy by upgrading its infrastructure and expanding its social safety net. The costs of the programmes would lead to the US running annual deficits of over $1.3tn over the next decade and debt rising to 117% of the value of economic output by 2031.Alongside rebuilding bridges, roads, airports and other infrastructure, Biden has proposed a $13bn federal investment to roll out broadband internet access. Democrats are also pushing to expand and reform the US’s social programmes with government money for paid family leave and universal pre-school.In part the plan would be funded by tax increases on corporations and the very wealthy. Biden has already proposed increasing US corporation taxes to 28% from 21%, a plan opposed by all Republicans and some Democrats.Biden has said he is willing to negotiate with his political opponents on the shape and size of his proposals, but he will struggle to find Republican support for his agenda. No Republicans voted for his $1.9tn Covid stimulus bill and he has already been forced to scale back his infrastructure bill to $1.7tn from the originally proposed $2.2tn effort.The economy has improved markedly since Biden took office and the pandemic began to wane in the US. More than half of the country is now fully vaccinated and hiring has picked up as the economy has reopened.But the Biden administration believes the pandemic highlighted many structural issues with the US economy that need to be addressed by federal spending.Unemployment rates for Black and Latino Americans remain disproportionately high and women were hit particularly hard by the pandemic recession – in many cases because a lack of affordable childcare prevented them from working.A huge increase in government spending has fueled concerns about rising inflation. Prices on goods including lumber, cars and chicken have soared in recent months, and the commerce department said on Friday that the personal consumption expenditures index, a key measure of inflation, increased by 3.1% in April from a year ago, its highest level since 1992.On Thursday the treasury secretary, Janet Yellen, said the budget would push US debt above the size of the US economy, but said the proposed plan was responsible and would not contribute to inflationary pressures.“I believe it is a fiscally responsible program,” Yellen told a House appropriations subcommittee. More

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      in World Politics

      India Is Slowly Evolving Into a Market Economy

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      India has come a long way since its independence from colonial rule in 1947. It started as a mixed economy where elements of both capitalism and socialism coexisted uneasily. Jawaharlal Nehru, India’s first prime minister, was a self-declared Fabian socialist who admired the Soviet Union. His daughter, Indira Gandhi, amended the constitution in 1976 and declared India to be a socialist country. She nationalized banks, insurance companies, mines and more. 

      Gandhi tied Indian industry in chains. She imposed capacity constraints, price controls, foreign exchange control and red tape. India’s colonial-era bureaucracy now ran the commanding heights of the economy. Such measures stifled the Indian economy, created a black market and increased bureaucratic corruption. The Soviet-inspired Bureau of Industrial Costs and Prices remains infamous to this day.

      Expect an Uneven Rebound in MENA and Central Asia

      READ MORE

      India also adopted the Soviet five-year plans. A centralized economy emerged with the state controlling the media and telecom, financial, infrastructure and energy sectors. Even in seemingly private sectors such as consumer and industrial, the state handled too many aspects of investment, production and resource allocation.

      Opening Up the Economy

      In the 1980s, India took gentle strides toward a market economy and opened many sectors to private competition. In 1991, the Gulf War led to a spike in oil prices, causing a balance-of-payments crisis. In response, India rolled back the state and liberalized its economy. The collapse of the Soviet Union that year pushed India toward a more market-oriented economy. 

      Over the years, state-run monopolies have been decimated by private companies in industries such as aviation and telecoms. However, India still retains a strong legacy of socialism. The government remains a major participant in sectors such as energy and financial services.

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      After years of piecemeal reforms, the Indian government is again unleashing bolder measures. These involve the opening up of several state monopolies to private competition. They are diluting state ownership of public sector units. In some cases, they are selling these units to domestic or foreign buyers. In due course, professionals, not bureaucrats, will be running this sector.

      The government’s bold move to privatization is because of two reasons. First, India’s public sector has proved notoriously inefficient and been a burden on the taxpayer. Second, the COVID-19 pandemic has made the economy shrink and caused a shortfall in tax revenue. Privatization is a way for the government to balance its books.

      As Shwweta Punj, Anilesh S. Mahajan and M.G. Arun rightly point out in India Today, the country “will have to rethink how it sells” its public sector units for privatization to be a success. India’s track record is poor. The banana peels of political opposition, bureaucratic incompetence and judicial proceedings lie in waiting.

      Potential Benefits of Privatization

      Yet privatization, if managed well, could lead to several benefits. It will lead to more efficiently managed businesses and a more vibrant economy. Once a state-controlled firm is privatized, it could either be turned around by its new owner or perish. In case the company fails, it would create space for better players. Importantly, privatization could strengthen the government’s fiscal position, giving it greater freedom to invest in sectors like health care and education where the Indian government has historically underinvested. Furthermore, privatization could increase investable opportunities in both public and private markets.

      Given India’s fractious nature and labyrinthine institutions, privatization is likely to lead to mixed results and uneven progress. One thing is certain, though. Privatization is inevitable and cannot be rolled back. Sectors in which market forces reign supreme and shareholder interests are aligned are likely to do well. State-controlled companies that prioritize policy goals over shareholder value are unlikely to do so. Similarly, sectors that have experienced frequent policy changes are unlikely to thrive. 

      There is a reason why savvy investors are constructing portfolios weighted toward consumer and technology sectors. So far, companies in these sectors have operated largely free of state intervention. They have had the liberty to grow and function autonomously. Unsurprisingly, they have delivered good returns.

      The state-dominated financial services sector also offers promise. Well-managed private companies have a long runway to speed up on. Among large economies, India’s financial services sector offers unique promise. In the capitalist US, the state has limited presence and private players dominate. This mature market offers few prospects of high growth. In communist China, state-controlled firms dominate financial services, leaving little space for the private sector. With the Indian government planning to reduce its stake in a state-controlled life insurance company, as well as sell two state-owned banks and one general insurance company, the financial services sector arguably offers a uniquely important opportunity for investors.

      Just as India did well after its 1991 balance-of-payments crisis, the country may bounce back after the COVID-19 pandemic. The taxpayer may no longer need to subsidize underperforming state-owned companies holding the country back. Instead, market competition may attract investment, create jobs and increase growth.

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