Wednesday, 22 September 2010

What About Corporate Dole?

There is talk of deficit reduction and austerity measures, on both sides of the Atlantic, a lot of the "debate" is geared towards dismantling the welfare state which FDR constructed. In the US the Obama administration is looking to pursue greater spending initiatives for now, but it is spending cuts which we will see at a later date. In Britain, on the other hand, a series of deep spending cuts are about to be rammed through by the Con-Dem Coalition. These programmes of austerity will hit the poor hardest and function like an increase in taxes on working-class people everywhere. The impact is regressive, as it removes or severely undermines services which millions of people depend upon and have done for decades. The cuts will increase the amount of money that ordinary people will have to spend to get by on a day-to-day basis. The disposable income of the wealthy will be unscathed as they are the less reliant on institutions of the welfare state, like the NHS.

Typically the welfare state, particularly benefits, are a target of these cuts. The aim being to destroy a corrosive "culture of dependency". Even though in the US the trillion-dollar deficit is mostly due to the enormous costs entailed by a dysfunctional health-care system and a bloated military budget. Offense spending, not defense spending, has increased to $1.5 trillion in recent years and Obama has increased the military budget even further. Today 50% of military spending in the world is just the US offense expenditure, it is higher than the military budgets of the rest of the world combined. Though it should be noted that a great deal of this spending is funneled into the economy, to fund research and development of technology for high-tech industry. Along with enormous subsidies and protectionist measures, 'Corporate America' benefits enormously from government intervention in the economy.

This is nothing new, the US government from it's origins in revolution and war to the present has reflected the interests of the wealthy class of white men. In fact if the US economy had been truly laissez-faire from the beginning the country would have remained an appendage of the British Empire for much longer. In the 1850s, the railroads received 20 million acres of land free from the US government and during the Civil War this amount increased to around 100 million acres of free land. This land had been "cleared" of Native American tribes, not by the free-market, but by the state so that rich white people could become the owners of it. Today it is corporations, like Lockheed and Microsoft, which are the primary beneficiaries of supply-side economics dressed up as free-market economics. The US is no different to other first world countries in that development and economic growth was a result of state-intervention in the economy.

The free-market rhetoric of the Tea Parties and the right-wing ideologists spurring them on is absurd. The Tea Parties are for a free-market, small government, family values and a strong defence. Notice that a strong defence and a free-market are specifically in opposition with one another as the offence budget is used to subsidise high-tech industry. The ideologists of the movement are not free-marketeers, Newt Gingrich is a cynical reactionary seeking to manipulate people with legitimate grievances to support a narrow right-wing agenda. We can see this just by looking at Gingrich's record of supporting a welfare state for the rich. For over 20 years, Newt Gingrich represented the 6th district of Georgia and a leading recipient of federal subsidies in the country - namely Cobb County, Georgia. There Lockheed produces F22s at a subsidised rate which exceeded $70 billion a year under Gingrich.

Accumulation by dispossession comes to mind, the opulent minority accumulate wealthy and property at the expense of the poor majority. As for the Con-Dem Coalition, David Cameron has a proposal for job creation that will supposedly provide the "unworthy poor" (benefit cheats and single-mums etc) with work. The proposal is the cut in national insurance, which Cameron described repeatedly as a "jobs tax" during the campaign. The policy of "job creation" could be summed up as subsidies to firms who hire the unemployed at the minimum wage. It's likely that this policy could drive down the wages of other workers and it has the potential to undermine trade unions. A cut in "jobs tax" doesn't sound as wonderful when described in these terms. Especially if you consider the massive spending cuts as a form of taxation, decimating the ability of many people to live comfortable lives.

It's interesting that we think of the welfare state as a safety-net providing health-care and education, as well as financial assistance, to the poor. We do not think of the bailouts, tax-cuts and subsidies as falling under welfare. Even though a regressive tax-system funnels money into the pockets of the uber-rich. Naturally, the reactionary press have a problem with the poor living off of the "dole" and regularly accuse them of living parasitically on the hard-work of the "deserving poor". The assumption being that tax-cuts which benefit the wealthy, and spending cuts that harm the poor, reward the worthy and punish the unworthy. It is not the case that individuals thrive according to their own merits in this world. The self-made man is mostly a myth, as almost all "self-made men" are a product of centuries of affirmative action for rich-white-men and the dole queue of fat cats.


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