Corporate power and the quality of life

by Kevin Danaher

Corporate Welfare

Despite the failure of corporations to carry their fair share of the tax load, they get generous corporate welfare totaling more than $167 billion per year-more than three times what we spend on all programs usually described as 'welfare' such as housing assistance, food stamps and Aid to Families with Dependent Children. " Corporate welfare comes in many forms.

1. Tax reform: According to the Congressional Budget Office, special business-tax provisions cost the federal government nearly $70 billion per year. Just one tax law, the 1986 Tax Reform Act, by 1994 had cost the taxpayers some $200 billion in tax cuts for the wealthiest one-fifth of one percent of the U.S. population.

2. The Pentagon: By purchasing weapons, food and many other products, the Pentagon's $265 billion annual budget is a huge subsidy to corporations. How much less profitable would our electronics industry and our nuclear power industry be without large military expenditures?

3. Agribusiness: Every year tens of billions of tax dollars go to agribusiness. Because the payments are based on size of output, the top 1 percent of producers get as much as the bottom 80 percent. Plus, large corporations get federal money to push exports: Pillsbury got $2.9 million to promote its pies and muffins abroad; Sunkist got $10 million to push its oranges; Cargill, with a net worth of $3.6 billion, has received $1.29 billion in subsidies since 1985.

4. Timber industry: In 1994, Washington spent $ 140 million building roads in national forests, mainly to help timber companies harvest our trees.

The hypocrisy of the welfare debate was summarized this way by Business Week: "A GOP that believes social welfare breeds personal dependency can't go on pretending that corporate welfare builds a strong economy."

Is the U.S. Becoming a Third World Country?

Where will these main features of globalization-U.S. companies moving jobs abroad, thousands of workers being replaced by technology, the weakening of the U.S. trade union movement, changes in tax legislation to favor wealthier taxpayers-lead us? Business Week reports: "The gap between high- and low-income families has widened steadily since about 1980, hitting a new high every year since 1985."

Despite what politicians say, 'growth' is making things worse, not better. "Between 1977 and 1989 the one percent of families with incomes over $350,000 received 72 percent of the country's income gains while the bottom 60 percent lost ground."

A key reason for the decline in the majority's income share has been the steady fall in real wages. In 1992, average weekly earnings in the private, non-agricultural part of the U.S. economy were 19 percent below their peak in the early 1970s. Nearly one fourth of the U.S. workforce now earns less in real terms than the 1968 minimum wage! Add another 5 - l 0 percent of the population who have no jobs at all, and you've got a significant portion of the population living in poverty. Hence, Newsweek's conclusion that "millions of Americans believe they're being screwed by corporate America and Wall Street."

Corporate profits and the salaries of top management have soared. Corporate profits are up 40 percent since 1993, and, as Business Week reported, the average pay of Chief Executive Officers at the 362 largest companies in the U.S. jumped 30 percent during 1995 to an average of $3,746,392.

The sharp growth in inequality caused U.S. Secretary of Labor Robert Reich to warn: "We have the most unequal distribution of income of any industrial nation in the world ... we can't be a prosperous or stable society with a huge gap between the very rich and everyone else."

But data on income is not the best indicator of inequality. Wealth measured by ownership-stocks, bonds, savings accounts, real estate-is a far better measure of real power in society. The ownership of property such as stocks, bonds and real estate in the United States is extremely unequal. Yes, millions of Americans own some stock, but the overwhelming majority of the stock (81.2%) is held by just ten percent of the population.

A 1995 study by the Twentieth Century Fund shows that since the late 1970s wealth inequality in the U.S. has been increasing. By the 1990s, the richest one percent of Americans owned twice as much wealth as the poorest 80 percent!

Contrary to what the Republicans have been preaching, it is not big government that is undermining Mainstreet, USA. Rather, mainstreet is being undermined by the fact that our government is dominated by monied interests-and those monied interests are increasingly global, owing no allegiance to any particular country.

exerpted from the book

edited by Kevin Danaher

Common Courage Press
Box 702
Monroe, Maine 04951
phone - 207-525-0900
fax - 207-525-3068

Controlling Corporations

Corporations Gonna Get Mama

Corporate watch

Transnational Corporations & the Third World