Maurice looks at the ‘breathtaking’ tax bill passed by the US Senate, and sees in it the essence of the crank economy.
There’s plenty happening on this side of the Atlantic, and indeed on the island of Ireland, what with the Brexit negotiations reaching crunch point over the border, but what has just happened in America is breathtaking.
Not the noxious Tweets, allowing us to say literally that the President of the US shares the views of quasi-fascist extremists Britain First. Not even the fast moving Russian probe. But the shocking tax bill that has just been cleared by Senate. Given that the House has its own, not dissimilar bill on the go, it seems almost certain that a variation or combination of these is likely to be signed into US law pretty soon. Here’s why I think this would be disastrous.
The plan is basically the crank economy in stark form.
It contains huge tax cuts for corporations and the wealthy; smallish cuts for some middle earning Americans; and actual increases in taxation for other middle and lower earners. And even the small tax breaks for the middle earners will disappear in a decade, leaving the corporations the only clear winners.
Thus very wealthy Americans – who own those corporations – are by far the biggest gainers. It is estimated that the wealthiest 1 percent will reap 80 percent of the tax benefits in this package.
Companies will use tax breaks to ‘reward’ owners like Mr Trump and his family; already high-income managers (who are likely also to be owners) will share in the bounty. Some rewards, of course, may go to ordinary workers, should the corporate owners decide to invest in creating jobs; but the track record suggests they will, rather, reward themselves still further, in the form of extra shares and dividends.
And because these rich people’s tax breaks will massively push up the deficit, a republican no-no, it won’t be long before the less well off and the very poorest Americans will face cuts in public services and a squeeze on welfare payments.
They will lose health care coverage into the bargain: one of the last minute additions to the bill removed the guts of President Obama’s Affordable Care Act.
And the environment will suffer: another minute change permits oil exploration in the Arctic National Wildlife Refuge in Alaska.
The Grand Old Party, in short, wants to turn the oil-fuelled crank in the economy faster than it has ever been turned before. They say it’s to make the economy more ‘dynamic’, and to create jobs, as well as the wealth that you need if you are to be able to afford to redistribute it in the first place.
Here’s the problem: it is the turning of the crank that is creating the crisis it purports to solve.
All or most of the forces in the crank economy are geared vertically as I argued in a previous post. The crank economy pushes power and wealth to the top. But it gets the ‘purchase’ to do so by putting downward pressure at the bottom – whether by cutting public spending in order to free up money for tax breaks, or by dismantling hard-won gains in power made by workers and other groups marginalised by the political economy, or by dumping toxins into the environment.
(As an aside, once you start looking it is easy to spot examples of the way our thinking is governed by ‘vertical’ models. The career ladder, the housing ladder, even the idea of ‘top’ earners. I confess I have often used the phrase ‘those at the bottom’ to describe people without much money or power. I resolve to change that, and shake off the tyranny of the vertical, by the end of this article.)
It’s worth noting that some ordinary, not particularly well-off Americans may support this “behemoth piece of legislation” as the NYT has it, “that could widen American economic inequality while diminishing the power of local communities to marshal relief for vulnerable people — especially in high-tax states like California and New York, which, not coincidentally, tend to vote Democratic”.
Some will do this because, let’s not shy away from it, they have had it tough over the last few years, and even decades; and they have been told, by President Trump and others, that the problem is this: big (liberal) government keeps taking your hard earned money, in the shape of taxes, and handing it to lazy people living it up on welfare. Many of them (the usually unstated implication goes) people of a ‘different’ race.
“Welfare reform, I see it, and I’ve talked to people. I know people that work three jobs and they live next to somebody who doesn’t work at all. And the person who is not working at all and has no intention of working at all is making more money and doing better than the person that’s working his and her ass off. And it’s not going to happen. Not going to happen.”
This, by the way, in the same breath in which he claimed that wealthy people like himself and his friends would end up paying more because of the tax bill – one of many patent falsehoods he continues to get away with among his supporters.
So not only will this tax bill crank up inequalities in wealth, but it is likely to be accompanied by yet further deepening of divisions between Americans along social and ethnic lines – divisions that, whether designed to do so or not, will tend to deter those at the wrong end of the crank economy from connecting and combining against it.
This narrative is not confined to the US, of course. Some conservative proponents of the crank economy over here also claim to champion the working class against the unjust depredations of those even worse off than them. Working class versus underclass. Especially ‘foreign’ (in one way for another) underclasses. Deserving poor versus ‘undeserving’ poor. Their answer? Cut support for the underclasses. Reward the ‘wealth creators’. Turn the crank faster. (News breaking as I post this: Theresa May’s Social Mobility team have just quit en masse because there is ‘no hope’ of a fairer society under the current set of policies).
Those who gain power through the crank economy use that power to maintain the system: they buy up the media and push their line to millions every day (and note how much of this line is about ethnicity or religion or nationality); they make large donations, some of them secretive, to the political parties that will deliver their demands; they fund ‘think tanks’ that recommend we solve the problems caused by the crank by turning it faster.
If the Republicans in the US get their way (they still have to work out a compromise with the House, and there’s the rapidly moving Russian investigation to contend with), the wealth and power gap between ‘bottom’ and ‘top’ in America will be cranked up, teetering, to unprecedented proportions. This cannot end well. It will be worth watching developments in the US closely.
So what can be done over here?
Where the forces of the political economy are arranged vertically, we must find or invent ways to inject a new dynamic, and redirect the gearing horizontally, and such that it cycles and recycles wealth and power until it is distributed across the whole common, democratic plain.
To democratise the economy is to democratise power distribution – be this electricity generation or political power. We must redirect the flows to create a socially and environmentally (you can’t have one without the other) sustainable political economy, one that observes the limits of what Kate Raworth calls the ‘doughnut’.
How? Put pressure on your representatives in local and national politics to ensure funds are injected and can cycle in local economies. Find out about and join in with your local commons, cooperatives, trade unions. Lobby to get workers on boards, especially remuneration committees; lobby to overturn the TU Act; press for participatory democracy and participatory budget setting; visit your local council and work out ways to bring democratic pressure to bear. Connect your issues to those of others who are struggling for sustainable grassroots democracy, and combine forces.
Shift the forces of the political economy to the horizontal; end the tyranny of the vertical.
There may be ‘top’ earners, and there may be ‘low’ earners, but democracy demands broad equality in power, – that is, equal political status as commoners for all, and a democratically agreed (not plutocratically imposed) distribution of power.
In today’s context, democracy demands that we turn away from the Trumpist model, the crank economy, and, as commoners, hold our common ground.
3 December 2017