United we stand

By Patrick Chapatte 

Trump and Musk have launched a new class war

(Source: The Pros and Cons of Oligarchy)

By George Monbiot at The Guardian.

Seldom in recent history has class war been waged so blatantly. Generally, billionaires and hectomillionaires employ concierges to attack the poor on their behalf. But now, freed from shame and embarrassment, they no longer hide their involvement. In the US, the world’s richest man, Elon Musk, will lead the federal assault on the middle and working classes: seeking to slash public spending and the public protections defending people from predatory capital.

He shares responsibility for the Department of Government Efficiency with another billionaire, Vivek Ramaswamy. They have been recruiting further billionaires to oversee cuts across government. These plutocrats will not be paid. They will wage their class war pro bono, out of the goodness of their hearts.

Musk, with a fortune of more than $400bn (£330bn), has warned: “We have to reduce spending to live within our means.” But he doesn’t mean “we”, he means you. Trump and Musk want to cut the federal budget so they can slash taxes for the ultra-rich. This benighted class needs all the help it can get. Since 2020, the wealth of the 12 richest men in the US has risen by a mere 193%. Collectively, the poor dears now own only $2tn.

Musk’s stated aims may be impossible to realise. When he took the role, he claimed he would cut the $6.75tn in federal spending by $2tn, which is actually more than the entire discretionary budget. But the intention is clear: a contraction whose consequences would be devastating for most Americans. Trump’s election was a response to the cruel failures of neoliberalism, but it will also be their ultimate expression. It was a response to the corruption of the political system by private money. And it will be the system’s ultimate corruption.

If Musk’s programme succeeds, we hardly have to imagine its impacts on human life and the living world, because for the past year a similar plan has been enacted in Argentina. There, Javier Milei has been waging his class war on behalf of international capital. The results include a horrifying surge in poverty; a collapse in the number of people with health insurance, coupled with critical underfunding of the public health system; proliferating hate crimes; a coordinated assault on science and environmental protection; and a free-for-all for the foreign corporations hoping to seize the country’s minerals, land and labour.

In the US, the motherfrackers will be released to do as they please. Trump’s nominated energy secretary, Chris Wright, runs a fracking services company and claims: “There is no climate crisis.” Already, banks and corporations are gleefully tearing up their environmental commitments.

The massive programme of cuts and deregulation that Musk and Ramaswamy seek extends the sadomasochistic politics now ascendant on both sides of the Atlantic. Demagogues have found that it doesn’t matter how much their followers suffer, as long as their designated enemies are suffering more. If you can keep ramping up the pain for scapegoats (primarily immigrants), voters will thank you for it, regardless of their own pain. This is the great discovery of the conflict entrepreneurs, led by Musk himself: what counts in politics is not how well people are doing, but how well they are doing in relation to designated out-groups.

There are plenty of willing executioners. One of the convicted ringleaders of the Southport riots in the UK, which were encouraged by Elon Musk, was described after his sentencing as “a man so consumed with hate and violence that he could find little satisfaction in activities that did not immediately quench his desire for harming others”. MAGA fanatics, whipped up by the frenzy of hatred on X and other pro-Trump media, might gain nothing from Trump’s presidency except the satisfaction of inflicting pain. But this small prize is sufficient to ensure their absolute loyalty. It will induce them to commit any atrocity Trump demands.

Why has the class war been unleashed now, not just in the US, but in much of the rest of the world? Because the democratising, distributive effects of two world wars have worn off. We fondly imagine that the semi-democratic era (exemplified in rich nations by the years 1945–1975) is the normal state of politics. But it was highly atypical, and made possible only by the wars’ erosion of the power of the ruling classes. The default state of centralised societies, to which nations are now reverting, is oligarchy.

In the 20th century, we called this reversion fascism. Fascism possessed some grotesque and peculiar features of its own. It used new tools and modes of organisation. But in key respects it represented a revival of the pre-democratic order: a world in which absolute power was vested in kings and emperors and their courts. We can endlessly debate whether or not Trump and his acolytes are fascists, as if that somehow solves the problem. It is more useful to recognise them as representatives of a much longer tradition, of which fascism was just one iteration. The emperors are back.

Because Trump and Musk are such volatile characters, it’s tempting to imagine that their grip on power will be chaotic and contingent. But the billionaire class will move swiftly to consolidate the oligarchy, and will meet almost no resistance. US institutions, the established media and foreign governments are completely unprepared. Despite copious warnings over many years, they know only how to appease oligarchic power, not how to resist it.

I started using the term “anticipatory compliance” in 2008 to describe the media’s kowtowing to undemocratic forces. The man who coined the phrase, Bruce Dover, explained to me that “an emperor who inspires fear in his followers need not raise a hand against them”. Now, wherever in institutional life we might hope to find resistance, we see obedience, even before Trump has taken power. Almost everyone instinctively accommodates the new dispensation.

In nations that have not yet fully succumbed to oligarchy we need to recognise, and recognise fast, that democratic politics do not emerge spontaneously. Our systems achieve a quasi-democratic character only with an active citizenry, whose engagement is largely defined by protest, and an independent media. But, at the direct behest of capital, governments are criminalising peaceful protest, while many independent media, such as the BBC, shut out dissenting voices.

If governments like the UK’s are to invest in their own survival, they must free their citizens to rebuild democracy, and we must seize every opportunity to do so. There is no demilitarised zone in this class war. We must all decide where we stand.

Indeed.  

He thinks he's steering!

 By Mike Luckovich

The great share buyback scam

From The Hartmann Report

My radio/TV program and my daily Substack newsletter, Hartmann Report, together are a small business. The only way I can increase my income from that business is by increasing the advertising revenue to the show, getting more people signed up for the newsletter, or both.

Build the business, in other words. Do the hard work every day. Keep my “customers” informed and thus happy: add value through research and share what I learn along the way.

It used to be that way with big business as well — companies grew in value because of good management and continual reinvestment in people, facilities, and product — until Ronald Reagan adopted neoliberalism and rewrote the rules of business.

Southwest Airlines passengers, for example, are today lamenting lost time with loved ones, lost luggage, and lost money spent on hotels, airline reroutes, and rental cars.

They missed weddings and funerals, spending time with family, and some confronted life-threatening situations as luggage-packed medications went missing and dialysis appointments had to be skipped.

All, apparently, so senior executives at Southwest and their morbidly rich investor cronies could get billions richer.

Here’s how it works.

If you’re the CEO of Southwest Airlines, or most any publicly traded corporation, there are two main ways you can increase your own compensation. They are:

1. Build the company: Invest in workers and technology. Open new routes. Provide better service to passengers. Upgrade your planes so people will want to fly with you. Pay your people better to build employee retention.

2. Use company profits to buy back and retire Southwest stock.

According to corporate watchdog Accountable.US, most of the evidence suggests the immediate predecessor to Southwest’s new CEO chose door number two as often as possible.

But how and why does it happen that CEOs and senior executives make a pile of money when they direct their own corporation to buy back its stock out of the marketplace?

And how did this manipulation of stock prices ever get decriminalized after being illegal for a half-century?

Imagine you’re the CEO of Acme Airlines, a company valued at $10 billion. The company has issued a billion shares of stock that are currently trading at $10 a share ($10 x 1 billion shares = $10 billion).

As the CEO, you’re not only paid a salary, you also have the two typical forms of “stock incentives” modern corporations give their senior executives.

The first is “performance compensation,” meaning as the price of the stock goes up you get bonuses and/or an increase in your pay. The second is that you’re partly compensated with stock or stock options (the right to buy stock at a predetermined typically low price).

If you can increase the share price of Acme Airline’s stock, you not only get a big bonus for hitting your “performance” target, but the stock you hold or can buy at a fixed (lower) price also increases in value. You get rich(er)!

But let’s also say that you’re not interested in building Acme as a way of increasing the stock price: that’s a lot of work and takes years. You want big bucks fast.

So, you simply direct your company to go into the marketplace, to the stock exchange where Acme is traded, and buy up, say, a hundred million shares.

The company is still worth $10 billion, the value of all the planes, landing slots, goodwill, corporate buildings, and assets: none of that has changed.

You haven’t added a single customer or paid a single flight attendant, mechanic, gate agent, or pilot an extra penny. You haven’t improved service or widened the seats in the planes to get in new customers. All you’ve done is use $1 billion in company profits to buy a hundred million shares at $10 each and “retire” them.

But now that the company has bought and retired a hundred million shares, instead of there being a billion shares in circulation there are only 900 million, even though the company is still worth just $10 billion.

As a result of your directing Acme to do that “share buyback,” every share that still exists is worth roughly 10% more because there are 10% fewer of them.

Which means the piles of shares you’ve gotten in compensation are now worth 10% more, too. And because the stock price went up, you’ll be getting a nice “performance” bonus at the year’s end.

This used to be a crime called “stock price manipulation” and was one of President Franklin D. Roosevelt’s and Congress’ early targets when they went after the Wall Street crooks who brought us the Republican Great Depression of the 1930s.

Congress created the Securities and Exchange Commission (SEC) in 1934 and FDR put Joe Kennedy (JFK’s father) in charge of it; Kennedy ironically told my old friend the late Gloria Swanson that he was chosen because, she told me, FDR had wisecracked that, “It takes a crook to catch a crook.”

Kennedy, knowing how the game worked, outlawed stock buybacks as one of his first official acts.

But in 1982 President Reagan endorsed this very form of corporate corruption as part of his new neoliberal Reaganomics agenda, decriminalizing it for the first time in almost a half-century.

Lest you think it improbable that modern CEOs would do this, as it’s so obviously corrupt and harmful to the company itself, consider this headline from the corporate watchdog group Accountable.US:

“Southwest Cancellation Crisis Follows Execs’ Choice to Reward $5.6B to Shareholders Instead of Investing in Infrastructure”

As their press release lays out:

“Government watchdog Accountable.US called the airline’s cancellation crisis a problem of its own making after slashing its workforce by over 1,400 in 2021 and choosing to spend $5.6 billion on stock buybacks in the 3 years leading up to the pandemic rather than making investments in infrastructure to be better prepared for extreme weather events like this week…”

This Reaganomics neoliberalism scam has made America’s corporate CEOs and stock speculators among the wealthiest people in the world, while keeping down wages and benefits for everybody else. It’s hurt the competitiveness of American business.

It started with Reagan’s putting John Shad— the Vice Chairman of the monster investment house E.F. Hutton — in charge of the SEC, which regulates monster investment houses.

Shad wasted no time in deregulating stock buybacks, instituting in 1982 what’s now known as “Rule 10b-18” that made stock buybacks explicitly legal for the first time since 1934.

Since then, share buybacks have become the most personally profitable business scam CEOs and senior executives can run against their own employees, companies, and communities.

When Reagan and Shad made this change in 1982, the average compensation of CEOs was around 30 times that of their average employee. CEO’s often lived in the same communities as their workers, or in a just slightly more upscale part of town.

Today CEO compensation is between 254 and 1000 times the average employee, depending on the industry, and CEOs live in palatial estates with servants’ quarters, yachts, and private jets; much of that increase in their annual income is the result of their companies’ repeatedly executing stock buybacks over the past 40 years.

Corporate CEOs call this “maximizing shareholder value” and claim it’s how capitalism is supposed to work.

As more and more CEOs got in on the scam since Reagan legalized it in the 1980s, it’s come to account for much of the 40-year explosion in the price of publicly traded stocks.

Investors don’t complain because they’re making out well, too (and 84 percent of all stock in America is owned by the top 10 percent).

It’s also why so much of America’s corporate infrastructure is rotting, from leaking methane from oil rigs to toxic spills from chemical factories to industrial waste being discharged into our environment instead of being cleaned up.

After all, why spend money on improving the company — or even on routine maintenance and safety — when you can personally cash in just as effectively by simply using your company’s revenues to engineer a stock buyback scheme every year?

As William Lazonick wrote for The Hill in 2018:

“Most recently, from 2007 through 2016, stock repurchases by 461 companies listed on the S&P 500 totaled $4 trillion, equal to 54 percent of profits. ... Indeed, top corporate executives are often willing to incur debt, lay off employees, cut wages, sell assets, and eat into cash reserves to ‘maximize shareholder value.’”

You’d think that if a company’s stock was going up in value that would indicate it is doing well and could even pay its employees better.

In fact, the CEOs of companies need cash to do these buybacks, and to get that cash they often lay off workers and even cut back on their main business just to enrich themselves and their senior executives.

As Emily Stewart wrote that same year for Vox:

“The thing is, when companies are investing in stock buybacks and dividends, they’re spending money they could use on something else.

“The Roosevelt Institute in May released a report estimating that Walmart, for example, could boost hourly wages to more than $15 an hour with the $20 billion it was using for a buyback. A separate study from the Roosevelt Institute released in July found that companies spent nearly 60 percent of net profits on buybacks from 2015 to 2017.

“It estimated that with the money allocated to buybacks, companies such as Lowes, CVS, and Home Depot could give each of their workers a raise of at least $18,000 a year [on top of their current income!].

“Harley-Davidson in February announced a nearly $700 million stock buyback plan just days after saying it would close a plant in Kansas City. Wells Fargo is spending $25 billion on buybacks and is at the same time laying off workers in multiple states.”

Share buybacks have replaced growing a business as the main way CEOs jack up their compensation to buy a new mega-yacht or ski chalet in Switzerland. And its just as much of a scam today, and just as destructive to working people and our nation, as it was in 1929 when it helped crash the market.

Senators Bernie Sanders and Elizabeth Warren have been shouting about this from the rooftops for decades. Hillary Clinton brought it up in her 2016 campaign for president, something that no doubt cost her some CEO support.

At the time, Financial Times US National Editor Ed Luce wrote, in an article titled Hillary’s War on Quarterly Capitalism:

“The case for reforming shareholder capitalism is strong. The level of US investment [in actual business activity] is at its lowest since 1947. Last year, according to Goldman Sachs, S&P 500 companies spent more than $500bn on share buybacks. This year it is expected to hit $600bn.”

That was in 2015. Just so far this year:

Macys bought back 28.9% of their shares spending $2 billion they could have otherwise used to expand the business or raise workers’ pay.

Chesapeake Energy bought back 20.6% using $2 billion.

Diamondback Energy spent $4 billion to buy back 17.9 percent of their own shares.

For Morgan Stanley it was 14.8% of shares at a cost to the company of $20 billion.

The entire list — hundreds of billions in share buybacks just this year — is on this Marketbeat site.

When the biggest oil companies in America reported record profits this year, ripping off American drivers with sky-high gas prices, Reuters reported on April 29:

“Exxon earlier this year more than doubled its projected buyback program to $30 billion through 2022 and 2023. Shell said it would buy back $6 billion in shares in the current quarter, while Chevron boosted its annual buyback plans to a range of $10 billion to $15 billion, up from $5 billion to $10 billion.

“Exxon shares rose 4.6% to $96.93. Chevron shares rose almost 9%, closing at $163.78.”

CNBC reports:

“Apple started to pay quarterly dividends and repurchase its shares in March 2012. Since then and through last summer, Apple has spent over $467 billion on buybacks, according to S&P Global Market Intelligence, which calls the iPhone maker the ‘poster child’ for share buybacks.”

Facebook, which apparently doesn’t have enough cash to hire people to keep Nazis off their platform, has made its top stockholder, Mark Zuckerberg, the richest millennial in America in part through share buybacks, announcing in their third quarter 2021 earnings report:

“We repurchased $14.37 billion of our Class A common stock in the third quarter and had $7.97 billion remaining on our prior share repurchase authorization as of September 30, 2021. We also announced today a $50 billion increase in our share repurchase authorization.”

Democratic politicians have been working for years to try to end this corrosive practice. Senator Tammy Baldwin wrote in a 2015 letter to the SEC’s chair:

“Stock buybacks use profits to purchase a company’s own stock instead of investing in the worker training, research, or innovation necessary to promote long-term growth. ... In the past, this money went to productive investments in the form of higher wages, research and development, training, or new equipment. Today, cash is being extracted from companies and placed on the sidelines. Buybacks are now undermining the stock market’s role in capital formation.”

Senator Elizabeth Warren noted:

“Buybacks create a sugar high for the corporations. It boosts prices in the short run, but the real way to boost the value of a corporation is to invest in the future, and they are not doing that.”

In 2019, Senators Bernie Sanders and Chuck Schumer co-authored an article for The New York Times in which they told America:

“Between 2008 and 2017, 466 of the S&P 500 companies spent around $4 trillion on stock buybacks, equal to 53 percent of profits. An additional 40 percent of corporate profits went to dividends. When more than 90 percent of corporate profits go to buybacks and dividends, there is reason to be concerned.

“First, stock buybacks don’t benefit the vast majority of Americans. That’s because large stockholders tend to be wealthier. Nearly 85 percent of all stocks owned by Americans belong to the wealthiest 10 percent of households. Of course, many corporate executives are compensated through stock-based pay. So when a company buys back its stock, boosting its value, the benefits go overwhelmingly to shareholders and executives, not workers.”

Pointing out that share buybacks inflate the wealth of the top 10% of Americans who own most of this nation’s stocks — increasing inequality — while generally screwing the people who work for those companies, they added:

“[W]hen corporations direct resources to buy back shares on this scale, they restrain their capacity to reinvest profits more meaningfully in the company in terms of R&D, equipment, higher wages, paid medical leave, retirement benefits and worker retraining.”

Small businesses like mine and millions of others across this nation can’t engage in this sort of manipulation to seemingly pull money out of thin air. Large businesses shouldn’t be able to, either.

It’s time to declare the 42-year Reagan Revolution’s neoliberal experiment a failure, and outlaw the share buybacks that are one of its most visible markers. Joe Kennedy knew what he was talking about when he criminalized them, even if he was a crook.

A first step toward restoring vitality to America’s business sector and providing much-needed funds to return America to our position as the world’s innovator — with the world’s most prosperous middle class, as we were before Reagan’s introduction of neoliberalism — is to once again outlaw stock buybacks.

Source: CEO pay has skyrocketed 1,460% since 1978

Why are people surprised that the young are turning away from capitalism to socialism?  Why the astonishment when politicians like Trump get elected, when Brexit gets voted for, when extreme Right politicians do so well?  If we want to save our democracies, we must rein in capitalism.

The collapse of neo-liberalism in the USA & Russia

Drawing by Wolfgang Ammer, an Austrian cartoonist

From the Hartmann Report

There’s a reckoning coming. The kind of oligarchy that neoliberalism has brought to both America and Russia is so unstable it will not hold. Both nations are thus confronting dramatic transitions over the next few years.As Russia has suffered substantial defeats in Ukraine, Vladimir Putin may be looking at the end of his reign. There’s similar tough stuff facing Donald Trump, Steve Bannon, and their GOP buddies.

As the world watches its 40-year-old experiment with neoliberalism collapse, Republicans in the US and Putin in Russia are facing a crisis they once thought would be an opportunity.

Neoliberalism was brought to America in 1981 by Ronald Reagan with his “Reagan Revolution,” and brought to Russia in the 90s by the IMF.

It’s an economic and political system where regulation of the economy of a nation is largely taken away from government and handed to the largest, wealthiest, and most powerful economic actors, be they billionaires, corporations, or both.

It accomplishes this by:

*Diminishing government’s role in protecting consumers, communities, and small business (deregulation);

*Gutting the power of labor (destroying union movements and letting corporations go anywhere in the world to find the cheapest labor available, aka “free trade”);

*Allowing virtually unlimited acquisition of wealth by the top 1% (massive tax cuts);

*Privatizing the essential functions of government, handing them off to private corporations (for example, fully half of Medicare is now privatized through George W. Bush’s Medicare Advantage scam, and half the electric systems of America have been privatized); and

*Promoting the formation of monopolies and oligopolies by refusing to enforce anti-trust and other anti-predation laws (as Reagan did in 1983).

Neoliberalism has now been tried, in a big way, in Chile, Russia, Iraq, and the United States, as I document in The Hidden History of Neoliberalism: How Reaganism Gutted America.

In each case, the result was a total or near-total shift to oligarchy or rule by a small handful of the morbidly rich and their corporations.

The problem with oligarchy, as I lay out in The Hidden History of American Oligarchy: Reclaiming Our Democracy from the Ruling Class, is that it’s an inherently unstable and essentially transitional form of government.

Rarely lasting more than a generation or two, oligarchies typically dissolve into either strongman fascism on the right or, are broken by popular democratic uprisings on the left. This is the essence of the reckoning facing both Russia and the United States.

In Chile, when Pinochet was deposed, the people reclaimed democracy, although the legacy of Pinochet and his neoliberal constitution have left political, social, and economic landmines in democrats’ path that are currently being hashed out in efforts to rewrite their constitution.

In Iraq, the oligarchy imposed by Bush/Cheney/Rumsfeld dissolved into the current corrupt strongman neofascist government that today rules that country, particularly since Nouri al-Maliki has consolidated most of the nation’s political and economic power into his own hands and those of his close circle.

In the United States, Reagan imposed neoliberalism with the so-called Reagan Revolution in 1981. Since then, five Republicans on the Supreme Court forced on America the neoliberal theory that big money should control politics, legalizing political bribery with their corrupt Citizens United decision and its predecessors.

The result has been oligarchy here for the past 30 or so years, with great wealth determining most of our political decisions. Even programs that could get passed, like Biden’s Bipartisan Infrastructure Bill and Inflation Reduction Act, had significant neoliberal elements (demanded by Joe Manchin) requiring virtually all of the money they distribute to run through the hands of generally for-profit corporations.

Since the Reagan Revolution, American oligarchs have demanded massive tax cuts for themselves, largely free access to the nation’s mineral and fossil fuel wealth, and an end to laws and rules protecting consumers, the environment, and small businesses.

For four decades, American government has largely complied, gutting the middle class and paralyzing the ability of Congress to pass meaningful legislation that might reverse our neoliberal experiment.

Thus, American oligarchy is now at a crisis stage, on the verge of flipping toward the fascist state envisioned by Donald Trump, Steve Bannon, and the current leadership of the GOP, or returning to a pre-Reagan democratic state as promoted by President Biden and progressives within the Democratic Party.

Trump’s failure to gain re-election was a huge blow to his vision of a strongman fascist America, which is why he continues to claim he didn’t actually lose.

The fascist movement within the GOP, what President Biden identified as the “semi-fascist” “MAGA Republicans,” has shrunk the party (because of Trump’s loss) but radicalized the authoritarians in its base, leading to the possibility of increased domestic violence.

In Russia, when Gorbachev let communism collapse he envisioned the new Russia becoming a fully modern democratic socialist state modeled after, as Gorbachev himself said, Sweden and the other Nordic nations.

George HW Bush, Bill Clinton, and the IMF, however, had other ideas, and demanded neoliberal “shock therapy” in exchange for IMF loans. Gorbachev and Yeltsin complied, concentrating that nation’s wealth in the hands of a few hundred oligarchs and setting the stage for the rise of uber-oligarch Vladimir Putin.

Putin has tried to impose a Mussolini-style fascist regime on Russia, but for fascism to work the government and its leadership must be perceived by the people as, essentially, all-powerful. Fascism requires fear.

“Strength” and infallibility, or at least the appearance of same, are essential to fascism. Russia’s partial defeat this past week at the hands of Ukrainians has led to Russian politicians now doing the previously unthinkable: calling for Putin to step aside.

Fascist leaders never survive defeat, and only rarely do their systems survive, lacking a clear and coherent transition of power from one strongman to another. This is thus a moment of maximum danger for President Putin.

Whether he will do something terrible and dramatic like trying to start a nuclear war to hang onto power, or is arrested/deposed, or steps down with the promise of a golden parachute is still unknown.

The way he leaves may well determine whether a new strongman leader emerges who can flip Russia fully into fascism, or whether the people — particularly the Russian generation coming up now that’s wired into the world — will again try Gorbachev’s idea of democracy.

The fathers of neoliberalism, Mises, Hayek, and Friedman, have all passed on to that great marketplace in the sky; their legacy is a weakened and oligarchic America, an empowered China (which rejected neoliberalism and instead adopted Alexander Hamilton’s “American Plan”), and a badly destabilized Russia that could trigger World War III.

And now, there’s a reckoning coming.

The next few years, amidst worldwide crises of climate change and economic instability, will determine the future course of governance worldwide. And the failures of neoliberalism are hitting both Russia and the United States particularly hard.

It’s an extraordinary time to be alive, and a vital time to become an activist on behalf of democracy, wherever you may live.

Rupert Murdoch & Brexit