Inflation Is A Myth

Capitalism and the capitalist media, even education, teaches us that inflation is a fact of life. That’s not true. This is where you should be asking questions.

Labor cost. One myth we are told is that the cost of labor drives up the cost of goods and services. This raises the question of why workers need pay increases. Of course, the answer is the increasing price of goods and services, often just for basic survival. If prices did not keep increasing, workers would not need increases to their pay.

Automation. One method businesses use to decrease the cost of labor is automation and technological advances. While it comes at an initial cost for capital outlay, the entire reason companies do this is because it saves money on wages and worker benefits in the long term. Technology increases productivity, meaning each worker can make more products, serve more customers. This means the company needs fewer workers. Pay remains the same, the cost of benefits stays the same or keeps costing the worker more each year. Automation often completely eliminates jobs. Do prices go down commensurate with the decreased labor cost? No but company profits keep going up, prices keep going up and corporate profits keep going up.

Raw materials. We hear the argument that the cost of raw materials keeps increasing. Typically, this is not true. Corporate mega-farms use more machines than labor. While labor costs have increased, go back to the second paragraph of this article. Many raw materials are imported because of lower cost. Like steel. China isn’t “dumping” unwanted steel on corporations. The American corporations are buying that steel. This goes back years, when corporations began buying steel from China because they did not want to pay for the cost of American labor. Which caused the near collapse of the US Steel industry. Consumer prices never decreased but corporate profits kept increasing. Pick any raw material that is imported yet available domestically and the same rule applies.

Lawsuits. One claim is that lawsuits drive up the cost of goods and services. You would have to look more closely by specific industry and company but lawsuits account for less than 1% of the cost of business in this country, overall. Even when faced with lawsuits, the damages are minor and still make the abuses which led to the lawsuits worth the price, leaving corporations with massive profits. The worst thing that happens is that their stock price dips for a few days. Who pays the cost of the lawsuits in reality? Consumers.

Tariffs. Numerous companies have laid workers off or exported jobs while citing tariffs as a rationale. This is disingenuous at best, a complete fabrication at worst. I’ll go back to steel as an example. If the cost of imported steel increases, it does not increase for only one company, it increases for all companies that utilize imported steel. So the cost of products increases across an entire industry, like vehicles. The consumer pays the price. The corporation preserves their profit margin. While sales may decrease, that is more of a function of stagnant wages than increased cost. Consumers either cannot afford or are hesitant to pay the higher prices.

Taxpayer subsidies. The ultimate fact of the matter is that while media rages about a “free market”, we do not have a free market. We truly have no idea how much we pay in subsidies to corporations. Lots of estimates but real numbers are elusive. From milk to corn to oil to gas to soybeans and on and on. One big problem is that subsidies are not always direct. When corporations pay wages so low that employees qualify for public assistance, we foot the bill. That’s subsidizing that corporation. When a company offers free shipping but the government offers subsidies and tax deductions for that company, that’s a subsidy. When US troops provide security for poppy fields in Afghanistan or navy ships protective escorts to oil tankers, those are subsidies. The entire military industrial complex is nothing but subsidies. So are superfund sites. The purchase of vehicles and fuel by small local governments all the way up to the US military are subsidies to vehicle manufacturers and oil companies. So, we pay the subsidies, then we pay the price at the pump, in the grocery store, on our utility bills… Socialism for the rich and corporations, capitalism for the rest of us.

Real inflation control. If we even discussed real inflation controls, it would implement such mechanisms as corporate profit caps by percentage of gross income, not allowing for stock repurchases or executive bonuses. It would look like implementing a maximum income. It may include price controls without subsidies. It would include stringent penalties for consumer abuse and price gouging. It would enforce anti-trust laws and practices. It would penalize every job eliminated or reduced while maintaining or expanding production levels. It would make stock repurchases illegal.

No going back. The point to be made here is that there is no going back on inflation. Not within our current system. Yet there is no valid rationale that bread is not 25¢ a loaf. Or that gas costs as much as it does. There is no valid rationale for oil being a top export and top import.That does not increase our energy security, does not help the environment, does not control cost or inflation.

Inflation is a myth. Like I began, inflation is a myth. A story we are told and just accept as fact. We have lived our lives without really questioning why prices increase while wages do not. We recognize the need to increase wages without asking why we need to do so just for survival. Schools teach inflation, media preaches inflation, corporations profit from inflation while causing most of that inflation for their own bottom line. Politicians promise to control inflation, then offer subsidies we pay for in order to maintain the profits of the corporate structure that causes inflation, in effect rewarding those same corporations.

Stop accepting the idea that inflation is a fact of life. It’s not. It is not a consequence or complication of capitalism. It is a core feature of capitalism.

How Increased Taxes On The Rich Creates Jobs

Always the strangled, desperate cries from the oligarchy echoing from the mansions on the hills that increasing taxes on the wealthy will destroy the economy and reduce employment.

Bullshit.

Increasing taxes on the wealthy absolutely creates jobs. If done properly, of course. It is less a matter of the numbers than how those numbers are applied. Which would require other measures which are desperately needed to restore income equity in this country.

Here are a few of those measures. The thing to note most of all is that many of these measures are not new. They actually existed in our legislative code during the most profitable years for the general population in this country. Those regulations have been gradually eliminated ever since Reagan.

Investments. One of the most important measures which should be enacted is eliminating the allowance of stock purchases as business expenses. The single exception may be stock purchases as an expense for businesses that are focused entirely on stock trading. Not allowed for banks or any other business where stock trading is not their only business function.

The result. The nature of business is that businesses hate taxes. That makes sense. They don’t want to pay money for which they perceive nothing directly in return. So to pay less in taxes because of deductions for business expenses, they would have to spend money. That money would be spent on capital investments, such as equipment upgrades, new equipment and other investments to expand business, creating jobs. It would even, dare I say, be spent on higher wages and benefits for employees.

Slowed automation. It would also slow the pace of automation which eliminates jobs. Automation is invested in because it increases profits. If those increased profits are simply subjected to higher taxation rates, the benefit would be lost. It would not stop automation, just slow it down.

Higher taxes for foreign investment profits. Investors and corporations invest in foreign manufacturing for lower labor costs. If taxes were increased to equal or (preferably) higher than domestic production costs, this would negate any labor cost difference from exporting jobs to other countries.

Higher taxes for offshore headquarters. A number of corporations have changed the official registration of their corporate headquarters to other countries to avoid US taxes. This could be nullified by charging equal or higher taxes for any corporation that has done this. Simply apply taxes for all profits made from domestic sales to these entities. Most of the time, the actual operating headquarters are still located inside the US and the offshore “headquarters” amounts to nothing but an office or even a PO box.

Equity investors. Equity investors can be one of the most problematic for this country. By equity investors, that means real estate investors that own rental properties, from malls to warehouses to apartments to single houses. Obviously taxes on equity investors should be adapted to scale, so landlords/ladies who own 1 or 2 rental properties are not taxed as harshly as large property management companies. For the large companies, increased taxes would force them to spend more money on property improvement.

This must be balanced with rent controls at local levels. Otherwise, the result would be gentrification, which we have already seen run rampant across the country. Companies use property improvements as tax deductions, then use the improvements as justification for jacking rent sky high, forcing out existing lower income residents. It often also results in increasing property values, causing nearby home and business owners to be forced out because of property tax increases.

However, property improvements creates jobs for construction and does stand to attract business to areas which are in decline. Or encourages nearby existing businesses to also improve. Increased property taxes for already improved properties results in more revenue for municipal improvements, such as street repairs. If the municipality is not too corrupt. That’s a completely different issue which requires activism at the local level.

Remove the Social Security cap. Right now and for many years, there has been a cap on the amount a person pays into Social Security. At present, the cap on income for which Social Security is collected is $132,900, for which a maximum $8,240 is collected for Social Security. It does not matter how much you earn above that income level, you will not pay another penny toward Social Security.

The claim is that a person above that income level will not benefit from Social Security and so should not be subjected to the tax. However, this is not true. They do benefit, if indirectly. Most of those whose income is above that cap gain their income from methods which mean they gain income from those of us that pay in and the consumers on Social Security. Meaning business owners, whether retail or financial services. So they should absolutely be subjected to the tax which only serves to maintain their profit margin in the first place.

More jobs. Higher taxes for high income “earners” (sic) and corporations results in more jobs, even if civilian contractors are used. The biggest issue is not the taxes but how they are spent.

If civilian contractors are used for infrastructure improvements, nobody decries their right to make profits. Yet if those profits reach the level of the highest tax brackets, the tax revenue collected goes back into the system cycle of: government spending-infrastructure improvement-profit-taxes-government spending-infrastructure improvement… That cycle is broken when a corporation collects profits and pockets every penny. Then the cycle goes: government spending-infrastructure improvement-profit. Period. There is no cycle. At that point, for further improvement, the cost is entirely on the middle class taxpayer.

More bridges, fewer bombs. In spite of the government and media fear mongering screaming how we need more money for “defense” against countries which are no threat to us and extremist groups that have no aircraft to get here, our military and intelligence budget is killing us more than any potential enemy. Anyone sane does not approve of how much this country is spending on warfare with no end in sight.

Weapons do not create jobs. Building weapons may create a few jobs but most weapons production jobs are automated. We create more jobs when we spend money on infrastructure improvement, education, healthcare and even food stamps than we create from weapons sales or corporate subsidies for oil companies. When we create those jobs, they are not limited to specific geographic areas, where weapons manufacturing remains fixed in specific locations. The money spent on these functions goes into salaries and activities which benefit local communities. Those jobs mean more consumer spending, meaning more local tax revenue for more municipal improvements. They support home purchases, vehicle purchases and general consumer spending. Once again, those jobs mean more taxpayers paying taxes which go back in the system, perpetuating a cycle. These activities improve lives rather than destroying them.

So let’s close our ears to the mournful wail coming from private jets and penthouses, private estates, exclusive resorts and corporate boardrooms filled with those who already have more money than they could spend in 10 lifetimes. Let’s start thinking about ourselves and our neighbors. Let’s take steps that create real jobs for real people. I don’t know about you but my ears hurt from listening to their pitiful crying.

Math Of Rich Versus Poor

Too many people in this country defend the profits of the rich. They claim it would not be right to limit their profits. Really?

This is an indication that they truly have no concept of numbers. Just what it really means to be a billionaire and how far removed billionaires are from real life.

So here it is in real terms.

$1 million is noted as $1,000,000.

Hence, if you make $50,000 a year you would have to work 20 years to make $1 million.

By contrast, $1 billion is noted as $1,000,000,000. Because $1 billion is $1 million times one thousand.

Hence, if you make $50,000 a year then you would have to work 20,000 years to make $1 billion. This is not a typo. You would have to work twenty thousand years to make $1 billion.

Jeff Bezos has $150 billion. So, if you make $50,000 a year, to make the same amount of money that he has at this moment, you would have to work 3,000,000 years. Yes, that is three million years.

I feel pretty secure in my statement that he could part with some of his wealth and not feel any pain.

Just as I feel secure in stating that he is not creating any jobs. I’m serious. He does not create a single job at all. Neither does Walmart. Because retail jobs existed before Amazon or Walmart. Production, warehousing and shipping jobs existed before these companies and would continue to exist if these companies (or those like them) did not exist at all. Because people have to eat, have to buy clothes, household goods, etc.

These companies diverted jobs to their own companies. They drove much of their competition out of business.

They did not innovate or create online shopping. It was already there. Online payment systems were developed and perfected by the porn industry. In other words, porn has actually created more jobs than Amazon and Walmart combined.

Recently, Amazon made announcements to build headquarters in NY and VA. However, those locations are not creating new jobs. They merely displace jobs that are being moved from WA state. Net job creation? Zero. If you want more of the controversy surrounding that, it’s all over. It’s a tragedy, not a triumph.

It is an illusion to claim that rich people create jobs. This is the story shoved down your throat by corporate media. Who pays for advertising on corporate media? Take a wild guess. C’mon, give it a try. Before these mega-corporations came along, we had small and local businesses that served our needs. There were chains but they were not nearly as large. Grocery, clothing, furniture, lighting, auto parts and many other stores. They employed morepeople and had more owners. They were part of our communities. If we lost, they lost. If we won, they won.

Was there corruption? Of course there was. Where there is business and politics you will find corruption. Yet it was easier to expose and fight against. They did not have entire buildings full of the highest paid lawyers in the country to fight their battles and pay off all the politicians in our communities and states.

Back then we had choices, options. Local businesses carried products made by local producers. Carried produce from local farms, meat from local ranches and milk from local dairies. Now if local producers exist they are basically forced to contract with major corporations or cease to exist. Those contracts are written entirely by the corporations. While much of what we buy comes from other countries.

I admit, prices have come down in total dollars over the years. However, when compared to wages, prices have increased dramatically. That’s because these corporations have the power to limit wage growth on much larger scales. If we protested a local business and shopped the their competition, they felt it. Now there is little competition.

The scale of the issue has changed. The scale of wealth, the scale of legal power, the scale of production, the scale of corruption.

We once had a Justice Department that broke up companies that were too large. Some of us remember the breakup of the Bells. The browser wars. None of that happens now. Because the scales have tipped against we, the people.

It’s time for that balance to shift back. It’s time for us to shift it back. It’s time to stop defending the rich and recognize the scale of the problem.

Nobody is too big to fail. Nobody.