Friday, October 10, 2014

Corporate welfare carrots


Toyota can afford $1000/hour lawyers from Debevoise & Plimpton, Skadden, Bowman & Brooke, and on and on, the best law firms in every country.  Obviously this is because the company can pay them from its profits.

As many have noted, corporations take publicly owned mineral and other resources, and they take tax breaks that are negotiated behind closed doors, and in the case of automakers, their product triggers enormous taxs to build roads so the cars can be driven, and so forth...the wealth of nations flows into the corporate coffers unimpeded by any popular opposition.

And then they use their accumulated profits to hire these lawyers to protect their interests against the very people they have ripped off.

Here are some excerpts from an interesting and relevant paper on multinational corporations.

Multinational Corporations (MNCs): Beyond The Profit Motive 
3rd October 2006
by Rajesh Makwana
"Corporate Welfare

Corporate profit is exaggerated by what is effectively publicly funded corporate welfare. The package of corporate welfare begins with governments who offer incentives to corporations in order to attract their business, increase their GDP and compete with other nations. National resources that rightfully belong to the public are the first carrots on the stick, and are offered at highly discounted prices to corporations without public consent. Governments even give away valuable common assets at no cost to corporations, such as oil and mineral rights, saving corporations billions of dollars in costs.  
In addition, corporations pay much less tax than ordinary people, often registering their headquarters in tax havens. According to the Centre for American Progress "At a time of rising corporate profits, the US Government Accountability Office (GAO) reports that 95 percent of corporations paid less than 5 percent of their income in taxes, and 6 in 10 paid nothing at all in federal taxes from 1996 through to 2000". The corporate share of taxes paid fell from 33 percent in the 1940's to 15 percent in the 1990's. The individual's share of taxes has risen from 44 to 73 percent. 
When governments give away public resources, subsidize the largest industries and provide tax incentives to corporations, it usually occurs without the public's knowledge and proves detrimental to their local communities. The price we pay for goods does not include the cost we have already paid through our taxes, the cost to the poorest producers around the world, or the cost to the environment.
Specific Changes to Commercial Activity

For all its influence and power, a corporation is little more than an economic entity, whose right to ‘life' is granted by the public, through their governments. The private rights of the corporations that governments protect and strengthen only exist in the first place because they have been granted by governments. These rights must be transformed by these same governments as it is now clear that in their current incarnation, corporations no longer serve the wider public interest."

....more to follow on the specific changes recommended by the author.