Category Archives: Economy

Plunder Capitalism

I deplore the tax cut that has passed Congress.  It is not an economic policy tax cut, and it has nothing whatsoever to do with supply-side economics.  The entire purpose is to raise equity prices by providing equity owners with more capital gains and dividends. In other words, it is legislation that makes equity owners richer, thus further polarizing society into a vast arena of poverty and near-poverty and the One Percent, or more precisely a fraction of the One Percent wallowing in billions of dollars.  Unless our rulers can continue to control the explanations, the tax cut edges us closer to revolution resulting from complete distrust of government.

The current tax legislation drops the corporate tax rate to 20%.  This means that global corporations registered in the US will be taxed at a lower income tax rate than a licensed practical nurse making $50,000 per year.  The nurse, if single, faces in 2017 a 25% marginal tax rate on all income over $37,950.

A single person is taxed at a rate of 33% on all income above $191,651.  33% was the top tax rate extracted from medieval serfs, and approaches the tax rate on US 19th century slaves. Such an upper middle class income as $191,651 sounds extraordinary to most Americans, but it is so far from the multi-million dollar annual incomes of the rich as to be invisible.  In America, it is the shrinking middle and upper middle class incomes that bear the burden of income taxation.  The rich with their capital gains from their equity holdings are taxed at 15%.

Even single individuals who earn between $1 and $9,325 are taxed at 10% on their pittance.

The neoliberal economists who are the shills for the rich, Wall Street, and the Banks-Too-Big-Too-Fail claim, erroneously, that by cutting the corporate income tax rate to 20% all sorts of offshored profits will be brought back to the US and lead to a booming economy and higher wages.  This is absolute total nonsense.  The money won’t come back, because it is invested abroad where labor costs are lower, if invested at all instead of buying back the corporation’s stock or buying other existing companies.  After 20 years of offshoring US manufacturing and professional tradable skills and the incomes associated with the jobs, who is going to invest in America?  The American population has no income with which to purchase the goods and services from new investment, and the American population’s credit cards are maxed out.

All that is going to happen is that Wall Street will calculate the lower tax rate  into a higher equity price.  Wall Street can do this without any of the offshored earnings coming home.  Suddenly, everyone who owns equities will experience a boost in wealth, or the boost has already occurred in anticipation of the handout.

The deficit-conscious Republicans have put into the Bill for Enhancement of the Rich’s Wealth, cuts in social services in order to “save workers from higher interest rates from budget deficits.”  This is more dishonesty.  If the Fed lets real interest rates rise to any meaningful amount, derivatives will unwind, and the Fed will have to create trillions more in new dollars to keep its Ponzi scheme in place. The deficit that results from the tax cut will be covered by the Fed purchasing the Treasuries, not by a rise in interest rates.

What we are witnessing in the US and indeed throughout the western world is the total failure of capitalism.  Capitalism is now merely a looting machine. The financial sector no longer supplies capital for production.  What the financial sector does is to turn discretionary consumer income into interest and fee payments to banks.  Aggregate demand can only grow through debt expansion, and the consumers reach a point where they cannot expand their debt.

Capitalism, hiding behind “globalism,” which is misrepresented as a good thing when it is death itself, locates production where labor is cheapest, thus depriving First World labor of good wages and work opportunities and putting First World countries  on the path to becoming Third World countries.  Short-term profits and executive and board bonuses and stock options are maximized at the cost of the destruction of the domestic consumer market.

Plunder Capitalism also privatizes as much of the public sector, such as the military, as possible, thus driving up the cost of the Pentagon’s budget.  Jobs that the soldiers themselves formerly did are given to politically-connected firms.  What was once KP (kitchen patrol) is now provided by an ouside private service. Private mercenaries hired by the Pentagon collect as much in a month as troops in the line of fire earn in a year.  I don’t know that the army any longer has  a supply organization other than the private business that has the contract.

Medicare and Medicaid are the next to be privatized, along with Social Security.  The tax cut will result in deficit and high interest rate hype, and these lies will be used to save the workers from high interest rates on their mortgage, credit card, and student loan debt by scaling back or privatizing Medicare, Medicaid, and Social Security.

The environment and public lands will be sacrificed to the private profits of timber, mining, and energy companies.  Grizzly bears and wolves are losing their protection under the endangered species act so that states can sell trophy hunting licenses to men who have to prove their manhood by killing an animal with a high-powerful rifle at a safe distance.

What we are witnessing is the complete looting of America and the entirety of the West.  While the Western World collapses, the insouciant, submissive people sit there sucking their thumbs while they are being ruined.

Nothing is left of the West except looters at work.

This tax bill is an abomination, an act of brutal plunder.  Its sponsors should be tarred and feathered and ridden out of town on a rail, if not hung from a lamp post.

by PAUL CRAIG ROBERTS/CounterPunch

Posted by The NON-Conformist

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Zimbabwe’s Mugabe Is Gone: Now What?

In the early 2000s, I visited Zimbabwe and met with the leadership of the Zimbabwe Congress of Trade Unions, the association that joins together the country’s major labor unions. I was asked to give a speech to the leadership body. I received a cool, though polite response, leaving me a bit puzzled until I received my first question.

A tall, slim man in his 50s stood up and looked at me. “How is it,” he began, “that African Americans can believe in President Mugabe? Don’t they understand what is going on here?”

I had no longer been a supporter of Robert Mugabe at the time of the question. I attempted to provide an answer, offering some context about how Mugabe and the Zimbabwean national liberation struggle had been perceived by much of black America; the sense many people had that Western imperialism aimed to destroy an African effort at sovereignty. Yet I could tell it was not enough or not satisfactory. The questioner just looked at me. I received a polite applause at the end of the event.

I found myself thinking about that incident when the Zimbabwean military moved into Harare carrying out a de facto coup, and when, finally, President Mugabe stepped down. Mugabe’s political demise cannot be understood only by looking at the events of November 2017 or even the events of 2017 as a whole. Rather it is better to understand the Zimbabwean crisis as a manifestation of thieves falling out.

The challenge for many of us in the USA who have supported the Zimbabwean revolution is that we were prepared to see Zimbabwe under Mugabe the way we wanted to believe it should be unfolding, rather than what was actually taking place.

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Mugabe’s political party, the Zimbabwe African National Union (ZANU), was one of two main national liberation organizations that fought against imperialist-backed white minority rule in what was then known as Rhodesia. Though referred to as a political party, ZANU more resembled a national liberation front with an array of political tendencies. During the period of the Cold War and the Sino/Soviet split in the international communist movement, ZANU came to be seen as leaning toward Maoism and independent of outside control. Over time, it was able to successfully rally popular support leading, after the Lancaster House settlement of the national liberation war, to the election of Robert Mugabe as president of Zimbabwe.

The Mugabe administration introduced important reforms in health care and education, while at the same time began a process of internal repression of dissent. In 1982, Zimbabwean Army troops repressed dissidents found among the minority Ndebele population; specifically militants associated with the Zimbabwe African People’s Union, or ZAPU, which had been a rival of ZANU’s in the national liberation war. Estimates of the numbers killed have generally hovered around 20,000. Tensions lasted nearly the entire decade until ZANU and ZAPU merged and the ZANU (Patriotic Front) was consolidated.

For many of us in the US, particularly but not exclusively in the black freedom movement, this repression was, in effect, a non-event. It was either not known or not discussed, or worse, it was explained away. The brutality of the repression ran counter to the narrative that we wanted to believe because, after all, Robert Mugabe and his regime were viewed as the legitimate leaders of a glorious national liberation movement and had taken on white minority rule and Western imperialism.

As years passed, the Mugabe regime undertook further questionable courses of action. Despite radical socialist rhetoric, the Mugabe regime adopted structural adjustment policies that set the economy on a course toward greater demands upon the working class and farmers and what we have come to know as “austerity.”

Land reform moved very slowly in part because of Mugabe’s good relationship with the white farmers and in part as a result of Mugabe’s legitimate understanding that the US and Britain were going to foot the bill for the purchase of the land from the white farmers. When the US and Britain reneged, pressure from war veterans for land redistribution—which had largely been ignored by the Mugabe regime—led to a change of heart by Mugabe in which he became an advocate for forceful land redistribution. By coincidence this also took place at a moment when popular opposition to Mugabe’s structural adjustment policies was emerging and Zimbabwe seemed to be on the verge of the formation of a new opposition party, specifically, a party of labor.

The main center for opposition, the Movement for Democratic Change, did not coalesce as a labor party, however, instead taking very curious positions, including distancing itself from the left and articulating an ambiguous position on land redistribution. In that setting, Mugabe wrapped himself in the flag of Zimbabwean nationalism and proceeded to implement repressive policies and practices against the broader opposition (not just the MDC) that ultimately involved questionable elections; arrests and torture of opposition figures; ignoring the demands for land by African agricultural workers in favor of land to allies of the Mugabe clique; and the expulsion of communities of the poor and homeless from Harare in 2015.

During one of the waves of repression I was informed that some friends of mine in the Zimbabwean trade union movement had been arrested and tortured by the Mugabe regime. I had been outspoken against Mugabe’s repression from early in my tenure as president of the African American foreign policy advocacy organization, TransAfrica Forum. As a result there were many black leftists who condemned me and others as allegedly standing against the Zimbabwean people. Yet, what I realized is that we seemed to know different “people.” Many of those I knew, or knew about, were progressive activists on the ground in Zimbabwe who were fighting on behalf of Zimbabwean workers and farmers. They were paying a very dear price as a result.

When I spoke to those who defended the Mugabe regime regarding torture, I was largely ignored. I explained that I was not using the word torture loosely, nor was I using the term based on hearsay. There were people I knew who were being tortured.

The response I received was one of silence; a silence followed by, once again, the upholding of Mugabe and his regime as allegedly legitimate advocates of African liberation.

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The military challenge to President Mugabe came as a surprise. The military has been complicit in not only internal repression but also the rape of the Democratic Republic of the Congo, where Zimbabwean troops were supposedly deployed to block Uganda and Rwanda. Yet, like many other militaries involved in Africa’s “first world war” in the DRC, they have repeatedly been reported participating in the theft of wealth from one of the most naturally rich countries on the planet.

As noted, the de facto military coup has every characteristic of a falling out among thieves.  The Zimbabwean elite, grouped around Mugabe, weakened legitimate opposition and created a situation where political life, to the extent to which it existed, was contained largely within the ZANU (Patriotic Front). Yet the unity that appeared to exist within the ZANU was superficial. By the time of the de facto coup, there were two main contending forces within the party that were represented by vice president (now president) Emmerson Mnanagagwa, on the one hand, and Grace Mugabe (the president’s wife) on the other.

There has been much speculation as to the political objectives of the contending factions. Mnanagagwa, who in many respects reminds one of Levrenti Beria, the head of the NKVD (Soviet secret police) under Joseph Stalin who attempted to rise to leadership upon the death of his sponsor, may have created a coalition to reunite Zimbabwe with global capitalism. His speech on November 22 gives only a hint of his overall plans. If we are to unpack his reference to Zimbabwe being open for business, that may very well represent efforts to solidify a coalition that advances both a re-accommodation with the dispossessed white farmers and agreements with the World Bank and International Monetary Fund. His inauguration speech places a heavy emphasis on reassuring foreign investors as well as a subtle reference to the repaying of the white farmers for their expropriated land. Though Mnanagagwa and his military allies used the rhetoric of the victimization of the war veterans to justify their moves against the Mugabes, what is probably at stake is much more a fight over how to get Zimbabwe out of the economic and political crisis in which it finds itself.

The politics of Grace Mugabe are less clear. She is as feared as Mnanagagwa, but has little base and less popular sympathy. Her power seems to be surrogate power in light of her marriage to Mugabe, though she has been associated with a faction known as the G40. Yet the politics of Grace Mugabe’s faction appear obscure.

The military intervention, though illegal, has galvanized dramatic levels of public support. With the ousting of Mugabe there are many who see the possibility for restoring democracy. One is reminded, however, of the 2013 coup in Egypt that overthrew President Morsi. The popular outrage with the dictatorial steps taken by Morsi’s administration blinded masses of people to the danger inherent in the reintroduction of the Egyptian military into the political sphere. No sooner was Morsi ousted than the military, under General Sisi, began a widespread suppression of any and all expressions of popular dissent.

This fate must be considered in the midst of the excitement over the exodus of President Mugabe. The characters moving to the front of the stage have not been known as champions of democracy and tolerance. They have no reputations as fighters against corruption, despite their current rhetoric. Though there are reports of outreach to opposition formations, there is no clear indication that this will result in the sort of transition to democratic rule that Zimbabwe desperately needs. What is also unclear is the internal situation within ZANU (PF) below the level of the main faction fight, i.e., are there to be efforts at renovation of the party?

What makes the future especially worrisome is that there could be the consolidation of a “unity bloc” within the country’s leadership that achieves a rapprochement with the World Bank and IMF, thereby appeasing Western elites, and then proceeds to repress popular movements in Zimbabwe. Following such a course could very likely take place with either silence or muted opposition from so-called mainstream circles in the West once Mugabe is fully out of the picture and Zimbabwe is more consistently reintegrated into the global capitalist system.

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The people of Zimbabwe will have to settle their own accounts with those who oppose popular democracy. It is incumbent upon those of us in other lands who are friends of democracy and sovereignty in Zimbabwe to offer the support that we can toward those efforts. But taking this course necessitates that we look at the situation as it is rather than as we might wish for it to be.

Many of us in the US left are taken with radical rhetoric and assertions. One sees this, for instance, in the case of Syria where an entire segment of the US left wishes to believe that the Assad regime is anti-imperialist and anti-jihadist, despite their documented record, and indeed, despite barrel bombs.

In the case of Zimbabwe, too many of us wanted to believe Mugabe and his clique were the champions of African liberation. His history in the national liberation movement had been heroic and his language has been eloquent. And, of course, when he was condemned by Britain, the US, the IMF and the World Bank during the land seizures, that was enough for many of us to believe that Mugabe was, at a minimum, standing tall against imperialism.

Instead of a concrete analysis we started with our hopes and ideals. As a result all too many of us refused to let the facts get in the way of our opinions. With masses of people demonstrating with glee over the ouster of President Mugabe, I keep wondering what those who disregarded my reports about the torture of Zimbabwean dissidents are reflecting upon. Maybe they are thinking, to borrow from Bertolt Brecht, that the leaders have chosen the wrong people?

By Bill Fletcher, Jr/Alternet

Posted by The NON-Conformist

The Noble, Misguided Plan to Turn Coal Miners Into Coders Expensive high-speed internet and job training won’t transform Appalachia into “Silicon Holler.”

Even in coal’s heyday, Appalachia was still relatively poor and backward. At the time, policy makers blamed its lack of economic development on mountainous inaccessibility. Their solution: End the region’s isolation with massive infrastructure projects, most notably a network of four-lane highways that would connect the region to the rest of the country.

So in 1965, President Lyndon Johnson signed the Appalachian Regional Development Act, creating the Appalachian Regional Commission (ARC). Over the subsequent five decades, ARC has spent $27 billion (in 2015 dollars) to build nearly 3,000 miles of the Appalachian Development Highway System that is threaded throughout the mountains.

The highways, constructed along officially designated “Corridors,” are splendidly engineered—and largely empty. They utterly failed to spark an economic renaissance. Despite tens of billions in federal money, the “region’s performance relative to the national average is similar to its position in the 1960s,” reported economists Carl Kitchens and Taylor Jaworski in a 2016 study published by the National Bureau of Economic Research. They calculate that the gigantic transportation investment boosted incomes in the region by just $586 per capita.

Far from being discouraged by this result, policy makers are at it again. This time, they want to drag Appalachia into the 21st century over newly installed information superhighways, known—God help us—as “eCorridors.”

Here’s the plan: First lace the mountains with high-speed broadband fiber-optic networks to connect the region to opportunities in the outside world. Then train unemployed miners in the art of computer coding. The first step aims to generate new jobs by luring companies to the area; the second is supposed to let people stay put and work.

I grew up as a hillbilly in central Appalachia, on a dairy farm in Washington County, Virginia. Like many folks, I left to seek an education and better opportunities beyond the confines of the Mountain Empire. I returned for a week in June to cruise the mountainous Corridors and meet with some of the people in Eastern Kentucky and Southwestern Virginia who are trying to jumpstart a hillbilly tech revolution. But instead of a burgeoning tech sector fed by glorious new fiber-optic cables, I found pure deja vu: Underutilized, debt-saddled infrastructure projects and an ever-growing number of Appalachians being expensively trained for jobs that are unlikely to show up.

Hope or Hype?

“Silicon Holler: How workforce retraining is bringing tech jobs to Appalachia,” blares the headline in TechRepublic. “Can an Appalachian ‘Silicon Holler’ rise in coal’s shadow?” asks Reuters. The Guardian informs us that the fiber-optic cables being built across Kentucky could transform coal country into “a new place on the map the hopeful call ‘Silicon Holler.'”

The hype began as far back as 1999, with a project launched by Bristol Virginia Utilities (BVU), the city agency in charge of providing water, sewer, and electricity services to the 17,000 residents of Bristol, Virginia. That year, the utility proposed and the City Council approved a fiber-optic network to connect its eight electric substations and all city offices, including City Hall, public schools, libraries, and the police and fire departments.

That might have been seen as a logical extension for a utility company. But mission creep was inevitable, and in 2002, BVU began deploying a fiber-to-the-home network for residential customers. At the same time, it started to expand its OptiNet broadband network into Southwestern Virginia using revenue bonds, plus grants from the federal and state governments and tobacco settlement money—for a total of $132 million spent. In the end, OptiNet managed to pick up 13,000 customers and get spun off into an independent authority with its own board of directors.

“Everyone knew that broadband would help the economy in the future, but nobody knew how.”

Cash inflows from successive government grants enabled OptiNet to function like a Ponzi scheme, masking the fiscal rot at the heart of the enterprise. Eventually in 2013, an audit found extensive misuse of funds—personal trips, bribes, and kickbacks—by board members, officers, and contractors. In 2016, nine people associated with the BVU Authority, including its CEO, chief financial officer, and board chairman, were sent to prison for conspiracy and fraud. The state government’s 2016 final report noted that the OptiNet division was operating at a net loss, that this was expected to continue, and that therefore it was unlikely to generate enough cash to pay both the principal and interest owed on $45.5 million in bonds it issued in 2010.

The audit also found that the BVU Authority used an improper methodology to account for and cancel debt when it became an independent entity, and as a consequence it now owes the Bristol city utility division nearly $14 million. The auditors’ blunt assessment: “These conditions raise substantial doubt about OptiNet’s ability to continue as a going concern.”

Fiber-Optic Funeral Home

“If you don’t have broadband, you can’t compete,” says Paul Elswick. Elswick’s office is located in a repurposed funeral home in an office park in Duffield, Virginia—a setting that would be a little too on-the-nose in a work of fiction. His company, the thematically named Sunset Digital Communications, provides fiber-optic broadband service in the mountain counties of Southwestern Virginia and Eastern Tennessee.

As the BVU Authority’s problems mounted, Elswick and Sunset Digital, backed by a Miami-based private equity firm, swooped in and made an unsolicited bid of $50 million for OptiNet in February 2016. No strangers to working within the Appalachian aid-industrial complex, Elswick and his son Ryan have already deployed broadband networks in Southwestern Virginia and Northeastern Tennessee for regional development agencies funded by government grants and loans. In 2010, Sunset applied for federal stimulus funding and received $24.5 million—90 percent grants and 10 percent loans—to construct 279 miles of fiber-optic broadband in Claiborne and Hancock Counties in mountainous Northeastern Tennessee. “Everyone knew that broadband would help the economy in the future, but nobody knew how,” says Elswick.

Since there are many local and regional government stakeholders in BVU OptiNet, the process has taken nearly two years to negotiate, but Sunset apparently cleared the final hurdle when the Virginia Coalfield Coalition voted to approve the purchase in August. If the deal holds, Sunset will have bought assets that cost various government agencies $132 million to build for only $50 million—less than 40 cents on the dollar.

This was a smart move for Elswick: Since the public networks have been purchased so cheaply relative to their construction costs, it is highly likely that the new private proprietors will be able to operate them at a profit. In the meantime, any outstanding bond payments will be borne by hapless taxpayers.

‘Will Your Bill Go Up?’

A similar story has been playing out in nearby Dickenson County, where the board of supervisors created the Dickenson County Wireless Integrated Network (DCWIN) authority in 2004 as a way to connect businesses, government agencies, and residents to the internet. “Without wireless communications services the county will grow further isolated from the industrial and technical advances” in the rest of the country, the supervisors warned. This, they promised, would “be an outstanding investment for the future of Dickenson County and its citizens.”

In 2005, the Board of Supervisors authorized a bond issue of $1.5 million to finance DCWIN’s system of 10 high-speed cell towers. The minutes from that public meeting show county resident Gary Harless objecting, arguing that the bond issue would in effect “be mortgaging everyone’s property for 15 years.” He pointed out that DCWIN at the time had only 150 customers and would need to expand to 1,500 in order to earn the cash to pay off the bonds.

David DoranDavid DoranHarless’ observations proved prescient. Five years later, the Board of Supervisors dissolved the authority and assumed its debts. A review of DCWIN’s budgets since 2009 finds that expenditures always exceeded revenues. In July 2017, the county finally offloaded the wireless network to a local company, Hillcom Inc., for $227,000.

The minutes from a previous Board of Supervisors meeting show that Hillcom founder Brandon Hill had tangled with DCWIN a decade earlier. He’d heard rumors that the authority was trying to put him out of business after he set up high-speed connections to 20 of his neighbors, and he was worried. Looks like he’ll have the last laugh.

The Hillcom site minces no words: “Will your bill go up? Well, there was a reason DCWIN was sold. It was not profitable. $39.95 is an extremely low price for internet.” The new owner plans to upgrade the service, offering 40–100 megabits per second (mbps) download and 15–60 mbps upload speeds for $100 per month. The company hopes to have 500 customers eventually using its refurbished wireless network. That’ll keep it profitable, thanks to the enterprise’s ability to grab wireless infrastructure at fire sale rates.

If You Build It

Despite this well-established track record of failure, publicly funded internet infrastructure improvement projects in Appalachia keep getting bigger and more ambitious.

In 2013, Kentucky announced plans to get middle-mile broadband into every one of the state’s 102 counties—3,400 miles of fiber by January 2017. The KentuckyWired network was supposed to be finished in the Appalachian counties by April 2016. After $30 million from the state budget, $23.5 million in federal ARC grants, and $232 million in bonds, all the project has to show for itself are 129 miles of not-yet-lighted fiber. In July, Kentucky Communications Network Authority director Phillip Brown flatly declined to set a firm completion date for the entire network.

What’s worse, the network threatens to push out private development. Before it began, the state had an agreement with AT&T to bring broadband to Kentucky’s 173 public school districts. Democratic Gov. Steve Beshear promised to break that deal to guarantee anchor clients for the network and make the math work to put KentuckyWired in the black—which would also mean the state’s taxpayers would foot most of the bill for paying off the bonds. After AT&T threatened to defend its contract in court, the matter was quietly dropped.

This is common. A 2016 analysis from the State Government Leadership Foundation notes that such subsidized broadband networks first remove a major anchor tenant (the government) from private networks, thereby weakening the economic case for private investment. Second, the subsidized networks seek to capture market share from already established private-sector providers. And third, the mere threat of government broadband tends to reduce private-sector investment. Thus, government-subsidized broadband likely impedes rather than speeds up the delivery of broadband service to customers in relatively remote areas.

In 2013, Kentucky announced plans to install 3,400 miles of fiber-optic cable by January 2017. Almost $300 million later, all the project has to show for itself are 129 miles of not-yet-lighted fiber.

“Our big problem with these public-private partnerships is that they never have the private-sector companies carrying most of the risk,” says Jim Waters, head of the Lexington-based pro-market Bluegrass Institute. He’s right. Macquarie Capital—which holds the contract to build, maintain, and operate the system over a 30-year period—and other private partners are being reimbursed through a fixed set of availability payments over the life of the agreement, regardless of any revenues earned. Kentucky’s taxpayers bear the entire risk of revenue shortfalls with respect to the network.

Alarmed by the delays and escalating costs, Republican Kentucky state Sen. Chris McDaniel said at a July hearing, “I want a shutdown plan, with financial costs to shut it down, stop work. What’s it going to cost us to get out of this?” McDaniel is right to be concerned. The private partner in a very similar project in Massachusetts, MassBroadband123, filed for bankruptcy earlier this year.

Waters agrees that the state should cut its losses now. “The way things are going, it might take $700 million, $800 million, or even $1 billion to complete the project,” he says. Waters also makes the salient point that progress and advancement could make this decadeslong enterprise obsolete. “What about technological change?” he asks. “How do we know that this is the type of infrastructure we will need in 30 years?”

Even as officials were concocting KentuckyWired, access to broadband networks was steadily expanding throughout the state, rising from 85 percent in 2014 to nearly 94 percent in 2016. Waters argues that the bigger problem in Appalachia is not lack of access but the failure to adopt broadband when it’s available. This notion is backed up by a 2014 study in The Annals of Regional Science by the Oklahoma State University economist Brian Whitacre and his colleagues. They found that increases in broadband adoption between 2008 and 2011 in non-metro counties did bring increases in income and the creation of new businesses. But “simply obtaining increases in broadband availability (not adoption) has no statistical impact on either jobs or income.” If you build it and they don’t come, there’s little benefit.

Instead of spending hundreds of millions on KentuckyWired, Waters argues, a public information campaign explaining how broadband services can help businesses in Appalachia would be more effective at boosting employment and economic growth.

Coal Miners to Coders

If it’s wishful to think you can spark growth with a policy of “if you build it, they will come,” it sounds even more fanciful to form a strategy around “if you build it, they will stay.” Yet the government has embraced exactly that idea.

The feds think subsidized high-speed internet connections could support newly trained digital workers. In 2015, the Eastern Kentucky Concentrated Employment Program Inc. (EKCEP)—which was still pushing training for coal jobs as recently as 2006—began dispensing federal grants to train mountain folk in the art of computer coding.

The Corridor G highway leading into Pikeville is impeccable. Thanks to the presence of a university and a regional medical center, its downtown, unlike that of many other fading Eastern Kentucky communities, remains relatively vibrant. The electronic sign outside the courthouse proudly declares that Pike County is “America’s Energy Capital.” In 2016, Fortune listed Bit Source, which is headquartered there, as one of “7 World-Changing Companies to Watch,” and in 2017 Fast Company declared its president “one of the most creative people in business.”

The outfit is the brainchild of local entrepreneurs Charles “Rusty” Justice and M. Lynn Parrish, who developed the idea in 2014 after a fact-finding trip to a computer-coding incubator in Lexington. Fueled by $150,000 in National Emergency Grant funds from the U.S. Department of Labor, Bit Source selected 10 former coal industry workers out of 900 applicants to be interns. Ranging in age from 33 to 48, they were paid $15 per hour during a 22-week crash course in HTML, CSS, Javascript, and Drupal. All 10 of the selected applicants made it through the training—funded by another $166,000 federal grant—and are still working for the company. Bit Source’s software developers now earn from $21 to $23 per hour.

James Johnson, 47, grew up about 8 miles outside of Pikeville. He worked for years selling heavy equipment to coal mining companies for Brandeis Machinery; as the mines shut down, Brandeis downsized and Johnson lost his job. When I meet him at Bit Source’s headquarters in a refurbished Coca-Cola bottling plant, I ask why he didn’t leave to seek employment elsewhere. “My wife has a good job at the local hospital and my two sons were in school,” he replies.

He applied for a lot of jobs at lower wages than he had been earning, but he couldn’t get hired. Then Johnson heard about Bit Source and dutifully put in an application without much hope. “By that time, I was so heartbroken and filled with a sense of failure that I didn’t think that there was much of a chance that I would be accepted,” he recalls. The training was intensive but he found that he could handle it. Did he like coding? “My old job was very routine, very comfort zone.” He smiles. “This job is a lot more exciting. You never know what new thing you’ve got to learn. You sit at your computer and make things out of nothing.”

Johnson is convinced that his fellow Appalachians can compete with coders in India, Europe, and South America. “We just need a fast-flowing internet,” he says. “We are hoping real hard for the KentuckyWired fiber.”

Bit Source Creative Director Payton May, a 29-year-old native of the area, spent two years in architecture graduate school at the University of Virginia studying urban and environmental design. “At 18, I never thought I would be back here,” he says. “I now see the value that the area really has. It’s home and it’s family.” One interesting tidbit from May: He says the company’s connection to the internet has 15–50 mbps download and 15 mbps upload speeds, well within the parameters of the formal definition of broadband.

The next day, I drove up another congestion-free highway to Paintsville, Kentucky, to talk with several people in a computer training program at the downtown campus of Big Sandy Community and Technical College. The program was being run by Interapt, a Louisville-based software development company that specializes in mobile applications and wearables.

Unlike Pikeville, Paintsville had clearly seen much better days. The main street was mostly deserted and lined with empty storefronts, although a Pokémon Go charging station was attached to a lamppost downtown. Some of the yards sported “Friends of Coal” signs urging people to “Support Kentucky Jobs!”

Interapt’s TechHire Eastern Kentucky (TEKY) program involves 16 weeks of intensive training followed by a 16-week apprenticeship at the company. The TEKY program was funded with $2.75 million in grants from ARC, the U.S. Department of Commerce, and the U.S. Department of Labor. Fifty participants were selected from a pool of 850 applicants. None of the Interapt coding trainees had previously been coal miners.

The participants were paid $10 an hour during the training period. “You can’t expect people to learn something hard if they are worried about how to feed their families,” says Interapt founder and CEO Ankur Gopal. If all 50 completed the program, that would have amounted to $320,000. According to Gopal, between eight and 15 of the company’s engineers and designers were typically on site at TEKY. Those staffers charged less per hour than they would for regular client services. Only 33 of the initial 50 students made it through to the apprenticeship phase.

Alex Hughes, 43, grew up in nearby Prestonsburg. He worked for 15 years as a self-employed videographer, often for local law firms. As with much else, the collapse of the coal industry caused that source of work to dry up. He stayed in Eastern Kentucky because “that’s where my family is.”

Melissa Anderson, 40, grew up in Vergie, near Pikeville. She had worked in administrative positions at a local law firm and then at Big Sandy Community College. Budget cuts at the school resulted in her being laid off in January 2016. She and her fiancé went to Florida for two months looking for jobs, but came back when he could not find steady construction work. She found the TEKY program a “little strenuous” and didn’t think she’d make it through to the apprenticeship program. So, taking her business background into account, managers at Interapt offered her a position starting in May as a marketing analyst.

As with the highway construction project before it, the internet infrastructure push has not created a detectable boom. Population in the counties covered by various government-subsidized broadband networks continues to fall.

Lucas Lell, in his early 20s, was the youngest TEKY graduate in the group. Reared in the town of Stopover, he was warned as a boy not to go to work in the coal fields. “You’d be broken by your 40s,” his parents told him. Lell had just finished his associate’s degree in science at Big Sandy. He was thinking of attending Morehead State, just an hour and a half from Paintsville, when he heard about the Interapt TEKY program. “I’ve always had a passion for computers,” he says. At the end of the apprenticeship program, Interapt offered him a full-time job as a quality assurance analyst. “I do want to stay around here,” says Lell. “I’m already far away from my true home, Stopover.”

Ultimately, Interapt hired 15 of the TEKY program participants, most of whom work remotely from locations in Eastern Kentucky. Their salaries range from $37,000 to $42,000 a year. Some other participants found tech jobs in the area, but many are still searching. One way to look at the TEKY computer coding program is that it subsidized the training of Interapt’s new employees at the rate of $180,000 per hire. Bit Source managed to train folks for considerably less: about $31,000 per employee.

By comparison, the nonprofit Eleven Fifty Academy across the Ohio River in Indiana offers a highly regarded 12-week coding boot camp for $13,500. Students at Big Sandy Community and Technical College can take a year’s worth of computer programming classes toward an associate’s degree for under $15,000, including tuition, books, room, and board. In July, Gopal suggested that the company would relaunch its TEKY program this fall, but EKCEP has announced that it will not use Interapt in its job training programs in the future.

A Future for the Holler?

I loved meeting the folks in Southwest Virginia and Eastern Kentucky, and I was impressed by Sunset CEO Paul Elswick’s business savvy and determination to provide new opportunities to people who live in the region he loves. The drive, enthusiasm, and optimism of the newly minted coders at Bit Source and Interapt was likewise invigorating. Nevertheless, it is hard to see the seeds that are supposed to someday sprout and grow into a nascent Silicon Holler.

It’s difficult to tell how many employers, if any, have decided to relocate to Southwestern Virginia due to better access to high speed data networks. As with the highway construction project before it, the internet infrastructure push has not created a detectable boom. Population in the counties covered by various government-subsidized broadband networks continues to fall, dropping from 334,000 in 2000 to 324,000 now. Between 1980 and 2000, by contrast—without any high-speed internet to speak of and with the highways uncompleted—the area’s population dropped by a smaller amount, from 336,000 to 334,000.

For more than 50 years, the feds have poured billions in job training and infrastructure funds into central Appalachia with the goal of spurring economic growth and reducing endemic poverty. There is very little to show for all that effort.

In September, I contacted Dickenson County resident Gary Harless, the brave citizen who spoke up at that Board of Supervisors meeting 12 years ago to warn that poorly conceived infrastructure investment would end up “mortgaging everyone’s property.” I asked him what he thought now. “Looking back, I just feel sorry for the county,” Harless told me. “I don’t feel smart; I feel like it was just basic economics. Government has never been good at management.”

Photo Credit: David Doran

By Ronald Bailey/Reason

Posted by The NON-Conformist

With Few Watching, Republicans Have Put in Place New Poll Tax to Disenfranchise Voters

Preventing people from voting because they owe legal fees or court fines muzzle low-income Americans at a time in our nation’s history when the rich have more political power than ever.

More from Robert Reich at Common Dreams

Posted by Libergirl

China’s Technology Ambitions Could Upset the Global Trade Order

BEIJING — When President Trump arrives in Beijing on Wednesday, he will most likely complain about traditional areas of dispute like steel and cars. But Washington officials and major global companies increasingly worry about a new generation of deals that could give China a firmer grip on the technology of tomorrow.

Under an ambitious plan unveiled two years ago called Made in China 2025, Beijing has designs to dominate cutting-edge technologies like advanced microchips, artificial intelligence and electric cars, among many others, in a decade. And China is enlisting some of the world’s biggest technology players in its push.

Sometimes it demands partnerships or intellectual property as the price of admission to the world’s second-largest economy. Sometimes it woos foreign giants with money and market access in ways that elude American and global trade rules.

When concerned officials in Washington began blocking China’s ability to buy high-end technology last year, one American company found a way to help its Chinese partner around those limits. The company, Advanced Micro Devices, avoided scrutiny by licensing its exclusive microchip designs, rather than selling them.

The Chinese partner got access to the technology to make its own products. Advanced Micro Devices got a big payout.

The rules of global commerce are changing — and China and the United States are racing to create a future that aligns with their own distinct visions. The result could be an overhaul of 20th-century trade rules for a 21st-century global economic order, in which money, ideas and influence could become as closely watched and tightly regulated as hard goods packed on a ship and sent abroad.

Even before the Communist Revolution, China obsessed about absorbing foreign technology as a way to end a century of humiliation and restore its national strength. But Made in China 2025 is more ambitious than anything the government has ever attempted, a national industrial policy that aims to project a new type of global might and influence.

China is directing billions of dollars to invest in research at home as well as to acquire innovative technology from abroad. A Beijing-directed semiconductor fund is thought to have more than $100 billion at its disposal, while another plan aims to grow China’s artificial intelligence companies into a $150 billion industry by 2030.

Such efforts have some American government officials and business leaders calling for a rethinking of how the United States approaches trade. Lawmakers are pushing for tougher rules on technology purchases, which do not usually cover the types of deals that China increasingly prefers. Officials are also investigating whether China is stealing intellectual property.

“There are a few U.S. companies that have been leaning too far about sharing technology with countries that are potential enemies of ours,” said Wilbur L. Ross Jr., the United States secretary of commerce, in September remarks regarding information technology that were widely seen as referring to China.

“I don’t think that’s a very good idea. I think it’s the ultimate short-termism to give up very valuable I.T. in order to get a few quarters or a few years of improved sales.”

Robots and Rice Cookers

China looks to the West for much of its technology. Even some of its most sensitive systems that run government computers, banks and laboratories use chips from Intel and Qualcomm and software from Microsoft or Oracle, a dependence it sees as a long-term vulnerability.

The government hopes to change that. It is backing the effort with money: $45 billion in cheap loans for its companies, $3 billion for advanced manufacturing efforts and billions more in other financial support, according to the Mercator Institute for China Studies, a German think tank.

Made in China 2025 “is going to have substantial resources and focus devoted to it, especially at the local government level,” said Kai-Fu Lee, a prominent venture capitalist in Beijing.

The goal is not simply to beat the United States. China is preparing for a day when cheap manufacturing no longer keeps its economy humming. It wants to embrace industries offering skilled jobs that do not blacken its skies and cloud its rivers.

The plan itself has specific targets and quotas. By 2025 it envisions China meeting nearly three-quarters of its own demand for industrial robots and more than a third of its demand for smartphone chips. Other targets cover new-energy cars, like electric cars, and high-performance medical devices.

The template for Made in China 2025 was cribbed from a German government plan called Industrie 4.0, which calls for greater automation and the growing use of “smart factories” doing sophisticated work with fewer people. And the deal that woke up the world to China’s plan was a German one.

Last year, a Chinese appliance maker called Midea struck a surprise $3.9 billion deal to acquire Kuka, an advanced robotics company in Germany. The deal made Midea — best known for its refrigerators and rice cookers — a major player in automation.

“Our partnership with Kuka is actually about whole factory solutions,” said Irene Chen, a spokeswoman for Midea.

Where technology cannot be purchased, the government wants Chinese companies to extract it from foreign firms through deals or tough new laws.

China will soon require foreign auto companies to make electric cars there if they want to continue selling gasoline-powered vehicles in what is now the world’s largest car market. General Motors, Volkswagen and others have been scrambling to form joint ventures with Chinese partners to do so.

Cybersecurity laws enacted this summer give the Ministry of State Security the power to conduct security reviews of technology sold or used in China, said James A. Lewis, senior vice president of the Center for Strategic and International Studies. Such a step could require companies to expose some of their most valuable secrets.

At some companies, Chinese security officials conduct the inspections in corporate “clean rooms” in the United States, with the Chinese officials traveling on business visas, Mr. Lewis said. The companies argue that the access takes place under controlled circumstances that limit what Chinese officials might learn.

“If American companies have a big market in China, they say to the Ministry of State Security, ‘Come in,’” Mr. Lewis said. “Everyone fears retaliation. No one wants to lose the China market.”

Old Rules, New Products

Wary of the push, the United States has used existing rules to stop Chinese purchases of foreign businesses in areas important to national security.

But many of those tools do not apply to today’s deals, as A.M.D.’s Chinese pact shows.

A.M.D.’s joint venture with its Chinese partner can be found in a gleaming industrial area of the city of Chengdu called Tianfu Software Park.

The park represents Beijing’s vision of the future. Trees and sidewalks jammed with ride-sharing bikes sit beneath a vast strip of office towers, hotels and apartment complexes. Offices of China’s most innovative companies, like Huawei and Tencent, sit next to outposts of their foreign analogues, like SAP and Accenture.

Inside one of its glass towers, A.M.D. works with its Chinese partner, a company called Sugon, to produce new chips.

Under the nearly $300 million deal, A.M.D. agreed to license chip technology to a Chinese joint venture with Sugon to make chips for servers. Because A.M.D. controls that joint venture, the technology is considered to remain in American hands.

But A.M.D. struck a second partnership that the Chinese company controls. That joint venture works on applications such as integrating the chips with servers. The two ventures are on the 11th and 12th floors of the same building.

Experts say the dual partnerships could help China develop a new generation of powerful supercomputers. China already makes the world’s fastest computers, but they run on homegrown chips that cannot read commonly available software for supercomputers. With A.M.D.’s help, experts say, Sugon could develop chips that could make China’s supercomputers more versatile and adaptable and replace those from foreign firms.

“We have worked closely with and been very clear with U.S. government officials on the strategy and specifics of the technology, which is classified as permitted for export,” an A.M.D. spokesman said in an emailed statement. He added that the processors are also lower performing than other options that A.M.D. sells in America.

Executives in Chengdu said there was a firewall between the two joint ventures, and the one outside of A.M.D.’s control was not involved in chip development.

Yet in an interview with the Chinese state news media, Zhang Yunquan, a top government researcher and head of the National Supercomputing Center in Jinan, China, said that Sugon could use the work of the joint venture to make supercomputer microchips. Such a supercomputer would be crucial in designing next-generation weapons systems, according to experts.

“When they first announced the partnership I was shocked,” said Stacy Rasgon, a semiconductor analyst with Sanford Bernstein.

“You would think intellectual property and joint ventures would belong under Cfius review,” Mr. Rasgon said, referring to the Committee on Foreign Investment in the United States, which reviews foreign deals. “It should. It’s surprising it isn’t.”

New Rules for a New Era?

For some in the Trump administration, an 18-year-old book by two Chinese Air Force colonels has become required reading.

Called “Unrestricted Warfare,” the book argues that China does not need to match the United States militarily. Instead China can take advantage of the global economy and the internet to take down its main rival.

Some American officials see in it a guide to China’s plan. Some United States lawmakers are proposing to toughen American takeover laws to evaluate deals on an economic as well as a national security basis. They are also pressing for reviews of licensing agreements and joint ventures. The United States trade representative has also launched an investigation into whether Chinese companies are stealing intellectual property.

“There’s concern that U.S. firms are transacting away their competitive advantages,” said Greg Levesque, managing director of Pointe Bello, a research firm in Washington, and a former executive at the US-China Business Council.

Such changes could ripple through the tech world. Chinese investment often means more money with fewer strings attached. Some tech companies say that is good for innovation. China’s spending on science and research is also growing at a time when the United States government and others are cutting back.

Still, many American companies fear the deck is stacked against them. The United States long believed bringing China into the World Trade Organization, which oversees global trade disputes, would ensure it would follow the rules. But the W.T.O. has proved ineffective when it comes to tech issues.

At a recent dinner event in Washington, an American technology executive held up a dinner plate to illustrate the size of the China market, said a person who was there who asked not to be identified because the event was not public. Then the American executive held up a wine coaster that represented the size of his firm’s business.

The message was clear: American companies are at risk of being muscled out of the market.

“Made in China 2025 seems to reject all notions of comparative advantage and future opportunities for high-value-added manufactured exports from the rest of the world to China,” said Jeremie Waterman, president of the China Center at the U.S. Chamber of Commerce.

“If Made in China 2025 achieves its goals,” he said, “the U.S. and other countries would likely become just commodity exporters to China — selling oil, gas, beef and soybeans.”

By Jane Perlez/NYTimes

Posted by The NON-Conformist

Donald Trump vowed to revive the coal industry but figures show its future is as bleak as ever Long-term growth and hiring prospects remain weak despite administration’s policy changes to make energy sector more competitive at expense of environmental concerns

us-coal.jpgEarth moving equipment sits by a coal pile at the Century Mine in Beallsville, Ohio Joshua Roberts/Reuters

A year after Donald Trump was elected President on a promise to revive the ailing US coal industry, the sector’s long-term prospects for growth and hiring remain as bleak as ever.

A Reuters review of mining data shows an industry that has seen only modest gains in jobs and production this year – much of it from a temporary up-tick in foreign demand for US coal rather than presidential policy changes.

US utilities are shutting coal-fired power plants at a rapid pace and shifting to cheap natural gas, along with wind and solar power. And domestic demand makes up about 90 percent of the market for US coal.

”We’re not planning to build any additional coal facilities,“ said Melissa McHenry, a spokeswoman for American Electric Power (AEP), one of the largest US utilities. “The future for coal is dictated by economics… and you can’t make those kinds of investments based on one administration’s politics.”

Coal plants now make up 47 percent of AEP’s capacity for power generation, a figure it plans to shrink to 33 percent by 2030.

The situation highlights the limitations of presidential policy on major industries and global economic trends. As some energy experts have said all along, the forces that will make or break mining are well beyond the powers of the Oval Office.

A White House official did not respond to a request for comment.

Trump has likely done all he can do to help the industry, said Luke Popovich, a spokesman for the National Mining Association, which represents major US coal companies.

“The government is no longer against us,“ he said. ”We now only have market forces to contend with.”

Trump has taken action on many promises he made to coal interests in states that helped him win the election.

The President started the process of killing former President Barack Obama’s Clean Power Plan, meant to reduce carbon emissions from power plants; ended an Obama-era moratorium on coal leasing on federal lands; ditched limits on dumping coal waste into streams; and started withdrawing the United States from the Paris Climate Agreement.

Now Trump’s Energy Secretary, Rick Perry, is attempting to push a rule through the independent Federal Energy Regulatory Commission that would subsidise power plants that store at least a 90-day supply of coal on site. The goal is to extend the life of some coal burning power plants, a move Perry says will make the electric grid more reliable.

While the full impact of Trump’s coal policy could take years to understand, the changes so far are unlikely to boost domestic demand, energy analysts and utility officials said.

Trump has cast the coal industry as a victim of burdensome regulation.

The industry has lost more than 40 percent of its work force in less than a decade and seen production drop to its lowest levels since 1978. Its share of the power market has fallen to less than a third from about half in 2003.

“We’re going to bring the coal industry back 100 percent,” Trump said at a rally in Virginia in August of 2016.

So far, progress has been limited.

US coal production is on track to rise more than 8 percent in 2017 over the previous year, to 790 million tonnes, according to the Energy Information Administration (EIA). But 2018 output is expected to decline.

The number of coal miners has also risen slightly to 51,900 in October, up about 2,200 since November 2016 – but down about 70 percent from a 1985 peak, according to the Labour Department.

On 1 November, Trump cited the modest production increases in a Tweet, saying, “It is finally happening for our great clean coal miners!”

But these increases are largely attributable to demand for US coal from Asian steel mills after temporary outages from their usual suppliers in Australia, according to James Stevenson, a coal analyst at IHS Markit.

During the first six months of 2017, Asian countries took in 7.5 million short tonnes of US coal, up 97 percent over the same period in 2016, according to the EIA.

That demand will soon fade, Stevenson said.

“We are not going to get a repeat of 2017,” he said of the spike in exports.

Forecasts from utilities and the US government reveal little reason for hope of a sustained coal rebound.

Utilities are expected to shut down more than 13,600 megawatts of coal plant capacity in 2018. That follows a loss of nearly 8,000 MW this year and 13,000 MW in 2016, according to EIA and Thomson Reuters data.

By 2025, coal-fired power plant capacity will dip to 226,380 MW, down about 30 percent from 2011, according to EIA.

Three Texas coal plants owned by Vistra Energy subsidiary Luminant are among the latest to close, bringing the number of plants that shut, or plan to, to 265 since 2010 – a figure higher than the 258 plants that remain, according to the Sierra Club, which has campaigned against coal.

Vistra said the closures were forced by lower prices for natural gas and renewable power – and not by environmental regulations.

Duke Energy, one of the country’s largest utilities, has shut down more than 5,400 MW of coal capacity since 2011 and plans to shed another 2,000 MW by 2024.

Over the next decade, Duke plans to invest $11 billion in new natural gas and renewable power – and nothing in new coal-fired generation, said spokesman Rick Rhodes.

A 2 November report by the Federal Reserve Bank of St. Louis – which has two of the largest coal producers in its district, Peabody Energy and Arch Coal – said coal-fired power plants “may eventually become obsolete.”

Coal companies believe they can survive despite the troubling market outlook.

Peabody expects a “modest number” of coal power plant retirements in the coming years, with some of that lost capacity shifting to remaining plants that will increase output, spokesman Vic Svec said. Arch spokeswoman Logan Bonacorsi offered a similar forecast.

Robert Murray, the chief executive of privately-held Murray Energy – one of America’s biggest underground miners – said Trump could do more for the industry. The administration, Murray said, should end tax breaks for wind and solar power and reverse an EPA finding that carbon emissions endanger human health.

But Trump’s tax bill last week preserved most solar incentives, which have bi-partisan backing. And the EPA has so far steered clear of the so-called “endangerment finding” on emissions that is the basis of many fossil-fuel regulations, given the breadth of scientific evidence that would be needed to reverse it.

Murray Energy, meanwhile, announced on 31 October it will buy a 30.5 percent stake in a coal-mining partnership in Utah called Canyon Consolidated Resources.

The deal might help the companies cut costs, but it’s unlikely to help workers: Murray said about 200 of 1,000 jobs in Utah could be lost.

By Timothy Gardner/Reuters

Posted by The NON-Conformist

The ‘Paradise Papers’ expose Trump’s fake populism

President Trump entered the White House on a platform of populist rage. He channeled ire against the perceived perfidy and corruption of a shadowy world of cosmopolitan elites. He labeled his opponent Hillary Clinton a “globalist” — an establishment apparatchik supposedly motivated more by her ties to wealthy concerns elsewhere than by true patriotic sentiment.

“We will no longer surrender this country, or its people, to the false song of globalism,” Trump declared in a campaign speech in 2016, setting the stage for his “America First” agenda. The message was effective, winning over voters who felt they had lost out in an age defined by globalization, free trade and powerful multinational corporations.

Fast-forward a year, though, and it’s worth asking whether Trump — a scion of metropolitan privilege and a jet-setting tycoon who has long basked in his private world of gilded excess — ever seriously believed any of his own populist screeds. Little he has done since coming to power suggests a meaningful interest in uplifting the working class or addressing widening social inequities. Indeed, much of the legislation that he and his Republican allies are seeking to push through suggests the exact opposite.

Now there’s even more evidence underscoring his administration’s flimsy commitment to the rhetoric that brought it to power. This week, we’ve been confronted by a steady drip of revelations contained in the leaked trove of documents known as the “Paradise Papers.” These are about 13.4 million files obtained in part from a Bermuda-based law firm that helped corporations and wealthy individuals set up offshore companies and accounts. In many cases, the moves allowed the firm’s clients to avoid paying taxes at home. A similarly mammoth leak last year, dubbed the “Panama Papers,” prompted, among other things, the resignations of leaders in Pakistan and Iceland.

Hundreds of journalists from 96 media organizations around the world are  sifting through the documents and following up on what leads they provide (The Washington Post is not among the publications to have reviewed these documents). That’s because the list of prominent figures implicated in these dealings is vast, ranging from the Queen of England to Irish pop-legend-turned-philanthropist Bono to a string of Russian oligarchs. They cast light on the offshore schemes of the chief financier behind the election campaign of Canada’s liberal prime minister, a big donor to Britain’s Conservatives and huge U.S. corporations such as Nike and Apple.

And, significantly, they include figures intimately connected to Trump. The most startling revelation involved Commerce Secretary Wilbur Ross, who maintained his stake in a shipping firm called Navigator Holdings after assuming public office — and even as a Russian natural gas firm called Sibur increased its business dealings with Navigator. Sibur happens to be closely connected to Russian President Vladimir Putin: Both his son-in-law and favored judo partner are owners of the company.

“The latest document leaks raise more questions about business ties between Russia and some of the most prominent members of Trump’s Cabinet,” my colleague Carol Morello noted. “The New York Times reported that the documents include references to offshore holdings by Gary Cohn, the chief economic adviser, and Secretary of State Rex Tillerson. There is, however, no evidence that any of the holdings were illegal.”

“I’m not embarrassed at all,” Cohn told CNBC on Tuesday. Cohn was named in the papers as an officer of 22 business entities in Bermuda, dating back to when he was a senior Goldman Sachs executive. “This is the way that the world works.”

That is certainly true. As my colleague Rick Noack noted, the Paradise Papers may generate a media-led uproar, but the loopholes revealed in them still exist and are, in most cases, legal.

So, why does this all matter? Consider the argument of a more genuine economic populist, Sen. Bernie Sanders (I-Vt.): “The major issue of our time is the rapid movement toward international oligarchy in which a handful of billionaires own and control a significant part of the global economy,” Sanders said in a statement this week. “The Paradise Papers shows how these billionaires and multinational corporations get richer by hiding their wealth and profits and avoid paying their fair share of taxes.”

That’s something the populist, antiglobalist Trump would, in theory, be upset about. But Trump has not said or tweeted a word about the leaks. The Republican tax changes being unfurled under his watch specifically benefit corporations and the superwealthy. New York Times columnist (and Nobel Prize-winning economist) Paul Krugman calculated that, if enacted, the Trump tax cuts would even yield a $700 billion windfall to wealthy foreigners who own U.S. equities.

And perhaps the greatest irony revealed in the documents is that Trump’s campaign attacks on his “globalist” opponent were themselves partially sponsored by offshore cash. According to the Guardian, the billionaire Mercer family — which funds alt-right website Breitbart and is closely linked to ultranationalist ideologue Stephen K. Bannon — “built a $60m war chest for conservative causes inside their family foundation by using an offshore investment vehicle to avoid U.S. tax.”

Hillary says things can’t change. I say they have to change. It’s a choice between Americanism and her corrupt globalism.

 

It’s not surprising, then, that Trump parrots Bannon’s divisive blood-and-soil ethno-nationalism while coming up short on his economic promises.

“Taxes are, as a noted American jurist put it, the price we pay for civilization,” noted an editorial in the Guardian, which is one of the publications scrutinizing the documents. “Voters tax themselves, among other things, for schools, roads, a health service, for welfare provision, to pay their soldiers and build a diplomatic corps. When a group at the top of society secedes and forms a globally mobile republic, able to choose which jurisdiction they wish to operate under, the public is right to ask why we allow this to happen. Why should taxes just be for the little people?”

Trump campaigned for the “forgotten people.” But he seems increasingly bound up with the “globally mobile republic” he so vehemently decried.

By Ishaan Tharoor/WashingtonPost

Posted by The NON-Conformist

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