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Robert Reich on Corporations
Former Secretary of Labor; Democratic Challenger MA Governor
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Hedge-funds receive $1B each in tax loopholes
The latest tax-reform bills are far from perfect--they leave open a number of loopholes and would only recoup a very small fraction of the $100 billion that corporations and wealthy individuals are siphoning off the U.S. Treasury.
But the bills would end one more egregious example of the tax policy double standard, finally forcing hedge-fund managers to pay taxes at the same rate as everybody else.
As the law stands now, their income is considered "carried interest" and is accordingly taxed at the capital gain rate of 15 percent.According to former labor secretary Robert Reich, in 2009 "the 25 most successful hedge-fund managers earned a billion
dollars each." The top earner clocked in at $4 billion. Closing this outrageous loophole would bring in close to $20 billion in revenue--money desperately needed at a time when teachers and nurses and firemen are being laid off all around the country.
Source: Third World America, by Arianna Huffington, p. 58-59
, Sep 2, 2010
Stop companies from pursuing profits that hurt public
Government must be free to stop companies from pursuing profits in ways that harm the public. Big companies that use their political muscle to prevent government from policing this line are, in effect, setting themselves up for much more intrusive forms
of public vigilance. Enron is a case in point. But here's the good news--and it lies at the opposite extreme from Enron: There's growing evidence that good corporate citizenship enhances long-term profits.
Source: I'll Be Short, by Robert Reich, p. 38
, May 2, 2002
Post-9-11: Help out-of-work staff instead of airline bailout
The airline bailout was notable not only for its size (its price tag exceeded the combined market value of United, American, Delta, Northwest, US Airways, America West, and Continental), but also the speed and near unanimity with which it was granted.
The sharp drop in business in the wake of September 11 surely imperiled airline balance sheets. But whatever might have happened to airline COMPANIES,
America's aviation SYSTEM--aircraft, telecom equipment, pilots, and crews--wasn't about to disappear. If some companies went bankrupt, other companies would buy their equipment and hire their employees.
Public funds could be put to better use helping airline employees find new jobs outside the industry, get retrained, and relocate themselves and their families.
Source: I'll Be Short, by Robert Reich, p. 31-32
, May 2, 2002
Under Clinton, executive pay ratio rose from 40:1 to 400:1
Increasingly, executive "compensation packages" are linked to share prices through generous stock options and rich bonuses if targets are met. My colleagues and I in the Clinton administration inadvertently contributed to this trend. Clinton pledged
that no company should be able to deduct from its corporate income taxes executive compensation in excess of $1 million, unless the extra inducement was linked to "performance"--that is, an increase in the company's share price. Stock options and bonuses
thereafter exploded. Raising the share price became paramount, whatever that required. In 1980, the typical chief executive of a large American company took home about 40 times the annual earnings of a typical worker; in 1990, the ratio rose to about
85 times. By the end of the century, total executive compensation rose from an average of $1.8 million to an average of $12 million--resulting in compensation packages that averaged 419 times the earnings of a typical production worker.
Source: The Future of Success, by Robert Reich, p. 74-75
, Jan 9, 2001
CIA "found" communist plots to help 1950s corporations
Under a World Bank controlled by Americans, development assistance could be focused precisely where America's core corporations saw the greatest opportunity. And so long as the recipients of America's foreign aid used it to buy American exports,
core corporations could venture into global trade confident of receptive markets.Nor was it mere coincidence that the CIA discovered communist plots where America's core corporations possessed, or wished to possess, substantial holdings of
natural resources. When, in 1953, an anticolonial Iranian nationalist movement led by Mohammed Mossadegh challenged the power of the shah and seized the Anglo-Iranian Oil Company, the CIA secretly channeled millions of dollars to army officers
dedicated to returning the shah to power; once their objective had been fulfilled, generous access to Iranian oil was granted to Gulf, Texaco, Mobil, and Standard Oil of NJ.
Source: The Work of Nations, by Robert Reich, p. 64
, Feb 4, 1992
Protectionism benefits corporations, not consumers
By the late 1960s, America's core corporations could no longer set their prices. They were now subject to fierce foreign competition. What to do? One strategy was to do precisely what they had done 100 years before: try to keep cheap foreign products out
of the American market.The protectionist strategy failed. Protectionist walls ceded the rest of the rest of the world's markets to foreign producers, who could gain vast scale efficiencies by selling their goods everywhere but the US.
Nor, finally,
did protection enhance the standard of living of most Americans. To the contrary, it caused them to pay extra for what they purchased. The "voluntary" export restraints on Japanese cars that temporarily helped the Big Three automakers maintain their
profits (but not their work forces) through the 1980s cost American consumers about $1 billion a year more than they would have paid for cars had the American market been open.
Source: The Work of Nations, by Robert Reich, p. 70 & 71-73
, Feb 4, 1992
US corporations push for "voluntary quotas" by competitors
[Besides American corporations arguing against "dumping"], it was argued that foreign producers were being subsidized by their governments, hardly a stinging accusation in light of all the unrestrained largess--research grants, defense contracts,
outright bailouts--flowing from the US government to American corporations.Rarely did such alleged "unfairness" prompt the US to erect unilateral quotas or tariffs, which, after all, would have violated the General Agreement on Tariffs and Trade.
The more common tendency was for the foreign perpetrators to agree "voluntarily" to limit their exports to the US--voluntarily, that is, in the narrow sense that they acquiesced in the full knowledge that they would suffer a worse
fate--a more severe quota, directed only at them--were they to refuse to do so.
Source: The Work of Nations, by Robert Reich, p. 71
, Feb 4, 1992
Page last updated: Apr 27, 2013
