31 August 2011

Why Socialism?

By Albert Einstein
Albert Einstein is the world-famous physicist. This article was originally published in the first issue of Monthly Review (May 1949). It was subsequently published in May 1998 to commemorate the first issue of MR‘s fiftieth year.
—The Editors of Monthly Review

Is it advisable for one who is not an expert on economic and social issues to express views on the subject of socialism? I believe for a number of reasons that it is.

Let us first consider the question from the point of view of scientific knowledge. It might appear that there are no essential methodological differences between astronomy and economics: scientists in both fields attempt to discover laws of general acceptability for a circumscribed group of phenomena in order to make the interconnection of these phenomena as clearly understandable as possible. But in reality such methodological differences do exist. The discovery of general laws in the field of economics is made difficult by the circumstance that observed economic phenomena are often affected by many factors which are very hard to evaluate separately. In addition, the experience which has accumulated since the beginning of the so-called civilized period of human history has—as is well known—been largely influenced and limited by causes which are by no means exclusively economic in nature. For example, most of the major states of history owed their existence to conquest. The conquering peoples established themselves, legally and economically, as the privileged class of the conquered country. They seized for themselves a monopoly of the land ownership and appointed a priesthood from among their own ranks. The priests, in control of education, made the class division of society into a permanent institution and created a system of values by which the people were thenceforth, to a large extent unconsciously, guided in their social behavior.

But historic tradition is, so to speak, of yesterday; nowhere have we really overcome what Thorstein Veblen called “the predatory phase” of human development. The observable economic facts belong to that phase and even such laws as we can derive from them are not applicable to other phases. Since the real purpose of socialism is precisely to overcome and advance beyond the predatory phase of human development, economic science in its present state can throw little light on the socialist society of the future.

Second, socialism is directed towards a social-ethical end. Science, however, cannot create ends and, even less, instill them in human beings; science, at most, can supply the means by which to attain certain ends. But the ends themselves are conceived by personalities with lofty ethical ideals and—if these ends are not stillborn, but vital and vigorous—are adopted and carried forward by those many human beings who, half unconsciously, determine the slow evolution of society.

For these reasons, we should be on our guard not to overestimate science and scientific methods when it is a question of human problems; and we should not assume that experts are the only ones who have a right to express themselves on questions affecting the organization of society.

Innumerable voices have been asserting for some time now that human society is passing through a crisis, that its stability has been gravely shattered. It is characteristic of such a situation that individuals feel indifferent or even hostile toward the group, small or large, to which they belong. In order to illustrate my meaning, let me record here a personal experience. I recently discussed with an intelligent and well-disposed man the threat of another war, which in my opinion would seriously endanger the existence of mankind, and I remarked that only a supra-national organization would offer protection from that danger. Thereupon my visitor, very calmly and coolly, said to me: “Why are you so deeply opposed to the disappearance of the human race?”

I am sure that as little as a century ago no one would have so lightly made a statement of this kind. It is the statement of a man who has striven in vain to attain an equilibrium within himself and has more or less lost hope of succeeding. It is the expression of a painful solitude and isolation from which so many people are suffering in these days. What is the cause? Is there a way out?

It is easy to raise such questions, but difficult to answer them with any degree of assurance. I must try, however, as best I can, although I am very conscious of the fact that our feelings and strivings are often contradictory and obscure and that they cannot be expressed in easy and simple formulas.

Man is, at one and the same time, a solitary being and a social being. As a solitary being, he attempts to protect his own existence and that of those who are closest to him, to satisfy his personal desires, and to develop his innate abilities. As a social being, he seeks to gain the recognition and affection of his fellow human beings, to share in their pleasures, to comfort them in their sorrows, and to improve their conditions of life. Only the existence of these varied, frequently conflicting, strivings accounts for the special character of a man, and their specific combination determines the extent to which an individual can achieve an inner equilibrium and can contribute to the well-being of society. It is quite possible that the relative strength of these two drives is, in the main, fixed by inheritance. But the personality that finally emerges is largely formed by the environment in which a man happens to find himself during his development, by the structure of the society in which he grows up, by the tradition of that society, and by its appraisal of particular types of behavior. The abstract concept “society” means to the individual human being the sum total of his direct and indirect relations to his contemporaries and to all the people of earlier generations. The individual is able to think, feel, strive, and work by himself; but he depends so much upon society—in his physical, intellectual, and emotional existence—that it is impossible to think of him, or to understand him, outside the framework of society. It is “society” which provides man with food, clothing, a home, the tools of work, language, the forms of thought, and most of the content of thought; his life is made possible through the labor and the accomplishments of the many millions past and present who are all hidden behind the small word “society.”

It is evident, therefore, that the dependence of the individual upon society is a fact of nature which cannot be abolished—just as in the case of ants and bees. However, while the whole life process of ants and bees is fixed down to the smallest detail by rigid, hereditary instincts, the social pattern and interrelationships of human beings are very variable and susceptible to change. Memory, the capacity to make new combinations, the gift of oral communication have made possible developments among human being which are not dictated by biological necessities. Such developments manifest themselves in traditions, institutions, and organizations; in literature; in scientific and engineering accomplishments; in works of art. This explains how it happens that, in a certain sense, man can influence his life through his own conduct, and that in this process conscious thinking and wanting can play a part.

Man acquires at birth, through heredity, a biological constitution which we must consider fixed and unalterable, including the natural urges which are characteristic of the human species. In addition, during his lifetime, he acquires a cultural constitution which he adopts from society through communication and through many other types of influences. It is this cultural constitution which, with the passage of time, is subject to change and which determines to a very large extent the relationship between the individual and society. Modern anthropology has taught us, through comparative investigation of so-called primitive cultures, that the social behavior of human beings may differ greatly, depending upon prevailing cultural patterns and the types of organization which predominate in society. It is on this that those who are striving to improve the lot of man may ground their hopes: human beings are not condemned, because of their biological constitution, to annihilate each other or to be at the mercy of a cruel, self-inflicted fate.

If we ask ourselves how the structure of society and the cultural attitude of man should be changed in order to make human life as satisfying as possible, we should constantly be conscious of the fact that there are certain conditions which we are unable to modify. As mentioned before, the biological nature of man is, for all practical purposes, not subject to change. Furthermore, technological and demographic developments of the last few centuries have created conditions which are here to stay. In relatively densely settled populations with the goods which are indispensable to their continued existence, an extreme division of labor and a highly-centralized productive apparatus are absolutely necessary. The time—which, looking back, seems so idyllic—is gone forever when individuals or relatively small groups could be completely self-sufficient. It is only a slight exaggeration to say that mankind constitutes even now a planetary community of production and consumption.

I have now reached the point where I may indicate briefly what to me constitutes the essence of the crisis of our time. It concerns the relationship of the individual to society. The individual has become more conscious than ever of his dependence upon society. But he does not experience this dependence as a positive asset, as an organic tie, as a protective force, but rather as a threat to his natural rights, or even to his economic existence. Moreover, his position in society is such that the egotistical drives of his make-up are constantly being accentuated, while his social drives, which are by nature weaker, progressively deteriorate. All human beings, whatever their position in society, are suffering from this process of deterioration. Unknowingly prisoners of their own egotism, they feel insecure, lonely, and deprived of the naive, simple, and unsophisticated enjoyment of life. Man can find meaning in life, short and perilous as it is, only through devoting himself to society.

The economic anarchy of capitalist society as it exists today is, in my opinion, the real source of the evil. We see before us a huge community of producers the members of which are unceasingly striving to deprive each other of the fruits of their collective labor—not by force, but on the whole in faithful compliance with legally established rules. In this respect, it is important to realize that the means of production—that is to say, the entire productive capacity that is needed for producing consumer goods as well as additional capital goods—may legally be, and for the most part are, the private property of individuals.

For the sake of simplicity, in the discussion that follows I shall call “workers” all those who do not share in the ownership of the means of production—although this does not quite correspond to the customary use of the term. The owner of the means of production is in a position to purchase the labor power of the worker. By using the means of production, the worker produces new goods which become the property of the capitalist. The essential point about this process is the relation between what the worker produces and what he is paid, both measured in terms of real value. Insofar as the labor contract is “free,” what the worker receives is determined not by the real value of the goods he produces, but by his minimum needs and by the capitalists’ requirements for labor power in relation to the number of workers competing for jobs. It is important to understand that even in theory the payment of the worker is not determined by the value of his product.

Private capital tends to become concentrated in few hands, partly because of competition among the capitalists, and partly because technological development and the increasing division of labor encourage the formation of larger units of production at the expense of smaller ones. The result of these developments is an oligarchy of private capital the enormous power of which cannot be effectively checked even by a democratically organized political society. This is true since the members of legislative bodies are selected by political parties, largely financed or otherwise influenced by private capitalists who, for all practical purposes, separate the electorate from the legislature. The consequence is that the representatives of the people do not in fact sufficiently protect the interests of the underprivileged sections of the population. Moreover, under existing conditions, private capitalists inevitably control, directly or indirectly, the main sources of information (press, radio, education). It is thus extremely difficult, and indeed in most cases quite impossible, for the individual citizen to come to objective conclusions and to make intelligent use of his political rights.

The situation prevailing in an economy based on the private ownership of capital is thus characterized by two main principles: first, means of production (capital) are privately owned and the owners dispose of them as they see fit; second, the labor contract is free. Of course, there is no such thing as a pure capitalist society in this sense. In particular, it should be noted that the workers, through long and bitter political struggles, have succeeded in securing a somewhat improved form of the “free labor contract” for certain categories of workers. But taken as a whole, the present day economy does not differ much from “pure” capitalism.

Production is carried on for profit, not for use. There is no provision that all those able and willing to work will always be in a position to find employment; an “army of unemployed” almost always exists. The worker is constantly in fear of losing his job. Since unemployed and poorly paid workers do not provide a profitable market, the production of consumers’ goods is restricted, and great hardship is the consequence. Technological progress frequently results in more unemployment rather than in an easing of the burden of work for all. The profit motive, in conjunction with competition among capitalists, is responsible for an instability in the accumulation and utilization of capital which leads to increasingly severe depressions. Unlimited competition leads to a huge waste of labor, and to that crippling of the social consciousness of individuals which I mentioned before.

This crippling of individuals I consider the worst evil of capitalism. Our whole educational system suffers from this evil. An exaggerated competitive attitude is inculcated into the student, who is trained to worship acquisitive success as a preparation for his future career.

I am convinced there is only one way to eliminate these grave evils, namely through the establishment of a socialist economy, accompanied by an educational system which would be oriented toward social goals. In such an economy, the means of production are owned by society itself and are utilized in a planned fashion. A planned economy, which adjusts production to the needs of the community, would distribute the work to be done among all those able to work and would guarantee a livelihood to every man, woman, and child. The education of the individual, in addition to promoting his own innate abilities, would attempt to develop in him a sense of responsibility for his fellow men in place of the glorification of power and success in our present society.

Nevertheless, it is necessary to remember that a planned economy is not yet socialism. A planned economy as such may be accompanied by the complete enslavement of the individual. The achievement of socialism requires the solution of some extremely difficult socio-political problems: how is it possible, in view of the far-reaching centralization of political and economic power, to prevent bureaucracy from becoming all-powerful and overweening? How can the rights of the individual be protected and therewith a democratic counterweight to the power of bureaucracy be assured?

Clarity about the aims and problems of socialism is of greatest significance in our age of transition. Since, under present circumstances, free and unhindered discussion of these problems has come under a powerful taboo, I consider the foundation of this magazine to be an important public service.


A realistic economics professor schools her naive, idealistic pupil on how awesome capitalism is compared to participatory socialism.

Income Inequality and Who Represents Whom?

"Your health is precious. You are rich, respected, admired, beloved; you are happy as once I was. You are a man to be missed. For me it is no matter."
- E.A. Poe, Cask of Amontillado

There is one complicated and diverse idea expressed in two simple words that people should be deeply concerned about and debating at much greater length in this country: income inequality. It is at the heart of nearly every issue the American people face.  The wealthiest 5% have no real stake in job creation; they have no real concerns for someone who has no health insurance.  The wealthiest among us are not even among us.  They meander the halls of the Hermitage and vacation at Necker Island; they hold banquets and fund raisers; they serve as board members and they hold seats in Congress. The newest members of the 112th Congress are among the wealthiest elected in recent years.

In contrast there is you.  You're taking night classes, studying hard, working during the day, raising kids, and hoping that a job will be waiting for you when you graduate with a degree.  You see yourself working hard at that job and advancing in your career.  You may see yourself rising out of the life you currently lead and finding more material wealth - your own home, a new car, health insurance, a never ending expense account, biannual dentist visits.

Unfortunately the likelihood of any of that happening, or of any of us moving up to the east side, is dwindling with each passing year that our elected officials continue to work for the wealthy.  What once was the American dream is quickly becoming a nightmare and the Tea Party ain't helping nobody.  The reason social mobility is becoming less reliable is that more and more of the income (wealth) is being controlled by fewer people. The repercussions and consequences of this bunching up at the top can be felt through increases in a variety of societal problems.

Western Europe exhibits far greater income equality and far greater social mobility.  They are also recovering for the global session far more rapidly than the U.S.

Anyone running for office preaching the greatness of the American society, harping on how anyone can become someone in America, and how all of us our equal, is purporting to believe in a myth.  If you haven't honed your skills of sniffing out a con just remember one simple truth: Life is pain. Anyone who says differently is selling something.  The pain in America's arse is that there simply has never been equality in this country and there is nothing like it today.  America is a country run and operating for the benefit of the wealthy. 

All of our domestic policies, foreign policies, and strategic policies are based on the interests of the wealthy.  And there's no end in sight.

As a result of the disparity in income, the populace is less represented.  Additionally, the larger the income inequality, the more other sectors of society suffer.

The most commonly used method of measuring income disparity is the Gini index.  The Gini index measures the degree of inequality in the distribution of family income in a country.  The higher the number, the greater the level of income disparity.  On this scale the U.S. ranks 39th of 136 countries with a Gini index of 45 (2007).  Sweden has the lowest, 23, while Namibia has the highest, ~70.  America has the highest Gini index of any other OECD country.  Ever heard any effectual or effective discussion on how to best address the income inequality in America by today's politicians?  Likely not, nor is it likely to occur any time soon.  Here's a snapshot of what happened in congress today.

Who represents the wealthy?  Who represents the poor?  Who represents the people?

Republicans are counting on citizens to vote against their own interests and elect Conservatives to ensure that cuts in spending are made.  And they count on some of the wealthiest for donations.  For example, Ron Johnson collected over $25,000 from Koch Industries.  Fundraising personifies who Ron Johnson represents.  Can anyone reasonably think that Sen. Johnson represents the people of Wisconsin?

At a time when people are struggling to find jobs, finding themselves kicked out of their homes, our elected officials are raking in millions of bucks in donations.  But Republicans aren't the only ones reaping the monetary harvest.  Among the 25 wealthiest congress members, 13 are Democrats.

While John Kerry's net worth is around $230 million, he's collected over $9 million in donations, $76,000 alone from Bain Capital, a private equity, venture capital group based in Boston.   Just who the hell are all these people who can donate tens of thousands of dollars to bloody politicians?  It's a freaking sickness, holy shmit.

So, if you're looking for millionaires, don't bother with Monaco or the Caribbean, just go to Washington.  There's hundreds of 'em there and we the people sent 'em there.  Who do you suppose they represent?

The congressional millionaires' club: By the numbers

How rich is Congress? Well, the class of freshmen members is alone worth more than $500 million
Sen. Richard Blumenthal (D-Conn.) has an estimated personal wealth of $95 million, making him the wealthiest Senate freshman in the 112th Congress.
Sen. Richard Blumenthal (D-Conn.) has an estimated
personal wealth of $95 million, making him the
wealthiest Senate freshman in the 112th Congress.
Photo: Getty SEE ALL 13 PHOTOS
Although this year's House freshmen are sharply divided by ideology, they are united by one striking measure: Many of them are filthy rich. The Center for Responsive Politics found that 60 percent of Senate freshmen and 40 percent of House freshmen were worth $1 million or more. The statistics prove that Congress is populated "overwhelmingly with millionaires and near-millionaires who often own multiple homes," says Dan Eggen at The Washington Post. Here, a look at the numbers behind the congressional millionaires' club:

Number of new House members in the 112th Congress

40 percent
Approximate share of House freshmen who are millionaires
Number of new senators in the 112th Congress

60 percent
Share of Senate freshmen who are millionaires

1 percent
Approximate share of ordinary Americans who are millionaires

$3.96 million
Median estimated wealth of a Senate freshman

Median estimated wealth of a House freshman

Median estimated wealth of an American over the age of 18 (2005)

$533.1 million
The estimated combined worth of the full freshman class of the 112th Congress

$95 million
Estimated personal wealth of Sen. Richard Blumenthal (D-Conn.), the richest freshman. His wealth comes mainly from his wife's family, whose real estate holdings reportedly include the Empire State Building.

Estimated net worth of the poorest freshman lawmaker, Rep. Joe Walsh (R-Ill.). Walsh, who lost his condo to foreclosure in 2009, is the only freshman in the red. He calls this a "badge of honor."

Number of freshmen who own stock in General Electric. Eleven invest in Bank of America, while 9 freshmen each invested in AT&T, Cisco, Johnson & Johnson, Microsoft, and Procter & Gamble.

Between $1 million and $5 million
Amount of money collectively invested in Citibank by freshman lawmakers

Number of millionaires in the last Congress, out of a total of 535 members

Median wealth of all members in the last Congress

$303.5 million
Estimated wealth of the richest member of Congress, Rep. Darrell Issa (R-Calif.), in 2009

Sources: OpenSecrets.org (2), Washington Post, CNBC, Politico, U.S. Census






Gini index: https://www.cia.gov/library/publications/the-world-factbook/rankorder/2172rank.html


Social Mobility and Education solutions: http://www.economist.com/node/15911314


Social Mobility myth: http://www.economist.com/node/15908469

30 August 2011

How the Billionaires Broke the System

August 1, 2011
The US deficit reduction plan makes no sense – until you remember who’s behind the Tea Party movement.
By George Monbiot. Published in the Guardian 1st August 2011

Who are the most ruthless capitalists in the western world? Whose monopolistic practices make Walmart look like a corner shop and Rupert Murdoch a socialist? You won't guess the answer in a month of Sundays. While there are plenty of candidates, my vote goes not to the banks, the oil companies or the health insurers, but – wait for it – to academic publishers. Theirs might sound like a fusty and insignificant sector. It is anything but. Of all corporate scams, the racket they run is most urgently in need of referral to the competition authorities.

Everyone claims to agree that people should be encouraged to understand science and other academic research. Without current knowledge, we cannot make coherent democratic decisions. But the publishers have slapped a padlock and a "keep out" sign on the gates.

You might resent Murdoch's paywall policy, in which he charges £1 for 24 hours of access to the Times and Sunday Times. But at least in that period you can read and download as many articles as you like. Reading a single article published by one of Elsevier's journals will cost you $31.50. Springer charges €34.95, Wiley-Blackwell, $42. Read 10 and you pay 10 times. And the journals retain perpetual copyright. You want to read a letter printed in 1981? That'll be $31.50.

Of course, you could go into the library (if it still exists). But they too have been hit by cosmic fees. The average cost of an annual subscription to a chemistry journal is $3,792. Some journals cost $10,000 a year or more to stock. The most expensive I've seen, Elsevier's Biochimica et Biophysica Acta, is $20,930. Though academic libraries have been frantically cutting subscriptions to make ends meet, journals now consume 65% of their budgets, which means they have had to reduce the number of books they buy. Journal fees account for a significant component of universities' costs, which are being passed to their students.

Murdoch pays his journalists and editors, and his companies generate much of the content they use. But the academic publishers get their articles, their peer reviewing (vetting by other researchers) and even much of their editing for free. The material they publish was commissioned and funded not by them but by us, through government research grants and academic stipends. But to see it, we must pay again, and through the nose.

The returns are astronomical: in the past financial year, for example, Elsevier's operating profit margin was 36% (£724m on revenues of £2bn). They result from a stranglehold on the market. Elsevier, Springer and Wiley, who have bought up many of their competitors, now publish 42% of journal articles.

More importantly, universities are locked into buying their products. Academic papers are published in only one place, and they have to be read by researchers trying to keep up with their subject. Demand is inelastic and competition non-existent, because different journals can't publish the same material. In many cases the publishers oblige the libraries to buy a large package of journals, whether or not they want them all. Perhaps it's not surprising that one of the biggest crooks ever to have preyed upon the people of this country – Robert Maxwell – made much of his money through academic publishing.

The publishers claim that they have to charge these fees as a result of the costs of production and distribution, and that they add value (in Springer's words) because they "develop journal brands and maintain and improve the digital infrastructure which has revolutionised scientific communication in the past 15 years". But an analysis by Deutsche Bank reaches different conclusions. "We believe the publisher adds relatively little value to the publishing process … if the process really were as complex, costly and value-added as the publishers protest that it is, 40% margins wouldn't be available." Far from assisting the dissemination of research, the big publishers impede it, as their long turnaround times can delay the release of findings by a year or more.

What we see here is pure rentier capitalism: monopolising a public resource then charging exorbitant fees to use it. Another term for it is economic parasitism. To obtain the knowledge for which we have already paid, we must surrender our feu to the lairds of learning.

It's bad enough for academics, it's worse for the laity. I refer readers to peer-reviewed papers, on the principle that claims should be followed to their sources. The readers tell me that they can't afford to judge for themselves whether or not I have represented the research fairly. Independent researchers who try to inform themselves about important scientific issues have to fork out thousands. This is a tax on education, a stifling of the public mind. It appears to contravene the universal declaration of human rights, which says that "everyone has the right freely to … share in scientific advancement and its benefits".
Open-access publishing, despite its promise, and some excellent resources such as the Public Library of Science and the physics database arxiv.org, has failed to displace the monopolists. In 1998 the Economist, surveying the opportunities offered by electronic publishing, predicted that "the days of 40% profit margins may soon be as dead as Robert Maxwell". But in 2010 Elsevier's operating profit margins were the same (36%) as they were in 1998.

The reason is that the big publishers have rounded up the journals with the highest academic impact factors, in which publication is essential for researchers trying to secure grants and advance their careers. You can start reading open-access journals, but you can't stop reading the closed ones.

Government bodies, with a few exceptions, have failed to confront them. The National Institutes of Health in the US oblige anyone taking their grants to put their papers in an open-access archive. But Research Councils UK, whose statement on public access is a masterpiece of meaningless waffle, relies on "the assumption that publishers will maintain the spirit of their current policies". You bet they will.

In the short term, governments should refer the academic publishers to their competition watchdogs, and insist that all papers arising from publicly funded research are placed in a free public database. In the longer term, they should work with researchers to cut out the middleman altogether, creating – along the lines proposed by Björn Brembs of Berlin's Freie Universität – a single global archive of academic literature and data. Peer-review would be overseen by an independent body. It could be funded by the library budgets which are currently being diverted into the hands of privateers.

The knowledge monopoly is as unwarranted and anachronistic as the corn laws. Let's throw off these parasitic overlords and liberate the research that belongs to us.

Follow George Monbiot on Twitter: @GeorgeMonbiot.

1. http://www.whitehouse.gov/the-press-office/2011/04/13/remarks-president-fiscal-policy
2. http://www.vanityfair.com/society/features/2011/05/top-one-percent-201105
3. http://www.guardian.co.uk/world/2011/jul/31/us-debt-crisis-washington-poverty
4. http://www.nytimes.com/2011/08/01/opinion/the-president-surrenders-on-debt-ceiling.html
5. http://www.guardian.co.uk/world/2011/jul/31/us-debt-congress-tea-party
6. http://www.cnbc.com/id/29283701/Rick_Santelli_s_Shout_Heard_Round_the_World
7. http://astroturfwars.org/
8. http://www.newyorker.com/reporting/2010/08/30/100830fa_fact_mayer?currentPage=all
9. http://www.portfolio.com/executives/features/2008/10/15/Profile-of-Billionaire-David-Koch/index3.html
10. http://www.forbes.com/wealth/forbes-400
11. Tony Carrk, April 2011. The Koch Brothers: What You Need to Know About the Financiers of the Radical Right. Center for American Progress Action Fund. http://www.americanprogressaction.org/issues/2011/04/pdf/koch_brothers.pdf
12. As above.
13. http://astroturfwars.org/

26 August 2011

Do Republicans Really Want to Cut Taxes on the Wealthy and Raise Them on Everyone Else?

Of all the curious rhetoric floating around both Washington and the campaign trail, the strangest may be the demand of many Republicans that Congress raise taxes for low-income working households even as it cuts taxes for the wealthy.  The left has, not surprisingly, gleefully leapt on the issue. And, honestly, it seems like terrible politics for the GOP.

But this idea is hardly new. It is a key element of various forms of consumption taxes such as the National Retail Sales Tax (including the wildly misnamed FAIR tax). It is also favored among those on the right who want to close “loopholes” to force  low- and moderate-income households to pay some income tax even as they cut rates across the board—a design almost certain to favor high-income taxpayers.

Texas governor and GOP presidential hopeful Rick Perry supports the FAIR tax (or at least did last year when he wrote his manifesto Fed Up). This levy would repeal nearly all federal taxes (including the income tax and the payroll tax) and replace them with a single-rate national sales tax on the purchase of all goods and services. FAIR tax backers set this rate at 23 percent but the Tax Policy Center’s Bill Gale and others have concluded that the rate would have to exceed 30 percent if the scheme is to raise as much money as current law.

To try to get a sense of what such a levy would do to the tax burden across incomes, the Tax Policy Center analyzed a generic consumption tax designed to replace most federal taxes. In, um, fairness, it is important to note that TPC did not review the actual FAIR tax but rather a stylized Value Added Tax –type consumption tax. But any broad-based consumption tax will generate roughly the same pattern.

Still, the results are dramatic. On average, such a levy would raise the share of taxes paid for all but the highest-income households, who would pay far less than they do today.  A consumption tax without any rebate to protect low-income people (the red bar in the graph) would be extremely regressive. In other words, the more you make, the lower your tax burden, and the less you make, the higher–a mirror image of today’s moderately progressive tax system.

The reason is simple: A consumption levy would not tax income from savings, and low- and moderate-income people save a lot less than the rich. Thus, if Congress taxes consumption, those down the economic food chain will inevitably pay more in taxes. One way Congress can address the problem is with a rebate—effectively exempting thousands of dollars of spending from tax (the exact amount is tied to the poverty level so it rises as income falls).
As the blue bars in the graph show, such a rebate would not completely fix the problem. Low- and moderate-income families would still pay more on average than they do today. But they’d pay a much smaller share than if there was no rebate.

There is a funny thing about the rebate, though (called a prebate in the FAIR tax). It would end up exempting a lot of low-income households from tax—recreating exactly the problem Perry and others complain about. And even with a rebate, the highest income 5 percent of households would still enjoy a major tax cut even as others pay more.  Such a consumption tax would reduce the tax burden for the top 1 percent (who make an average of $1.6 million per year) by a stunning 40 percent.

Of course, tax systems are about more than fairness. Efficiency and the effect on the overall economy matter. But I’m not sure I’d want to run for president on a promise to cut the tax burden on millionaires by 40 percent even as I’d raise taxes for nearly everybody else.  Forget class warfare. This is more like the charge of the Light Brigade.

Wall Street rating agencies' corrupt system

Friday, August 19, 2011
By Al Franken

"Let's hope we are all wealthy and retired by the time this house of cards falters."

This quote, taken from an e-mail sent by a Standard & Poor's official in 2006, says it all.

Just two years after it was written, the house of cards that S&P helped build collapsed and roiled the global economy. And while I welcome the news that the Justice Department has launched an investigation into S&P, I imagine it will conclude what a lot of us have long known: S&P made record profits by knowingly handing out sterling credit ratings to complete junk.

It was the incompetence and corruption by S&P and its peers, Fitch and Moody's, that played a pivotal role in our financial meltdown that cost Americans $3.4 trillion in retirement savings, triggered the Great Recession with its massive business failure and job losses, and consequently caused the explosion of our national debt.

The root of this corruption? The flawed "issuer pays" model on which the entire credit rating industry is based.

The Big Three rating agencies were paid a fortune by Wall Street to hand out pristine AAA ratings to the subprime mortgage-backed securities the banks issued -- securities that turned out to be junk. No AAA rating? The issuer would take its business -- and its hefty fees -- elsewhere.

And then when Wall Street ran out of subprime mortgages to securitize, it created another market by securitizing bets on those securities, which the Big Three also obediently gave their top rating. The rest is history.

Sell-off goes global
The rating agencies' complicity bred the kind of incompetence that was on full display the day S&P downgraded our government's credit rating this month. Within minutes, Treasury Department analysts identified a $2 trillion dollar error in S&P's calculations. But instead of admitting its error, S&P simply came up with other reasons to justify its downgrade.

Why? Well, the rating agencies have an enormous stake in intimidating the federal government. As Jeffrey Manns, associate professor of law at George Washington University, recently wrote in The New York Times:
"The credit rating agencies are taking advantage of the country's financial problems to increase their own political power. ... The Dodd-Frank Wall Street reform law, enacted a year ago but not fully implemented yet, threatened to introduce unprecedented oversight and regulation."

The greatest such threat is the bipartisan Franken/Wicker provision (introduced with Sen. Roger Wicker, R-Mississippi) in the Dodd-Frank Wall Street reform bill. If our provision is implemented in full, it would end the credit rating agencies' gravy train by rooting out the conflicts of interest from the "issuer pays" model.

Our provision directs the Securities and Exchange Commission to create an independent self-regulatory organization that would assign the initial credit ratings of securities to one agency. The assignments could be based on agencies' capacity, expertise, and, after time, their track record.

Our approach would incentivize and reward excellence. The current pay-for-play model -- with its inherent conflict of interest -- would be replaced by a pay-for-performance model. This improved market would finally allow smaller ratings agencies to break the Big Three's oligopoly.

The independent board would be comprised mainly of institutional investors, who have the greatest stake in the reliability of credit ratings, along with representatives from the credit rating and banking industries.

Lest you think that this is some kind of big government regulation of the free market, please understand that my colleague, Wicker of Mississippi, is one of the Senate's most conservative members. And it passed the Senate with a large majority, including 11 Republican votes, because it's not a progressive or a conservative idea -- it's a commonsense idea.

Our proposal encountered resistance from the Big Three rating agencies at every step. They defeated a similar provision in the House of Representatives, lobbied against it during the Senate debate on the bill and ultimately succeeded in "downgrading" the provision to a study in the final legislation. Still, the final language requires that the SEC implement our provision, or a similar alternative, if its study reveals that the conflicts of interest continue to put investors and the public at risk.

The Big Three are well aware that their fates rest, in part, on the outcome of this SEC study, due out next year. And the S&P's recent downgrade may well have been the industry's shot across the bow, an attempt to intimidate SEC regulators. It appears that the rating agencies have essentially gone from being recipients of bribery to the perpetrators of extortion.

When the Big Three's house of cards finally collapsed, the rest of America paid the price. Until we rein in the corruption of the credit rating agency industry, we are just asking for it to happen all over again.

Statement by Sen. Bernie Sanders on Social Security

August 25, 2011

Sometimes we all tend to take things for granted and we forget that Social Security is the most successful government program in our nation's history.  Let's be clear.  For more than 75 years, Social Security has, in good times and bad, paid out every nickel owed to every eligible American.  Social Security has succeeded in keeping millions of senior citizens, widows and orphans and the disabled out of extreme poverty.  Before Social Security was developed, about half of our seniors lived in poverty.  Today, fewer than 10 percent live in poverty and all of that is done with minimum administrative costs.  In America right now more than 53 million Americans, including over 120,000 Vermonters, receive Social Security benefits.  In our state Social Security benefits total over $1.5 billion per year, an amount equivalent to 6 percent of the state's annual GDP.

Today, Social Security is facing an unprecedented attack from those who either want to privatize it completely or who want to make substantial cuts.   In the coming months, a so-called super-committee in Congress made up of 6 Republicans and 6 Democrats will be making decisions to cut the national debt by some $1.5 trillion over the next decade.  Social Security is on the table and could be cut by that committee.

The argument being used to cut Social Security is that because we have a significant deficit problem and a $14 trillion national debt, we just can't afford to maintain Social Security benefits.  This argument is false.  Social Security, because it is funded by the payroll tax, not the U.S. Treasury, has not contributed on nickel to our deficit.  In fact, according to a very recent study by the Congressional Budget Office ( CBO) Social Security has a $2.5 trillion dollar surplus and can pay out every penny owed to every eligible American for the next 27 years until 2038.  At that point it has enough money to pay over 80% of promised benefits.

Unfortunately, Republicans in Congress and too many Democrats, have been discussing harmful cuts to Social Security as part of an overall scheme to balance the budget on the backs of the elderly, the sick, the children, and working families.  That is wrong, it is unconscionable, and it must not happen!

John Boehner, the Speaker of the House, and the President's Fiscal commission have both recommended raising the retirement age to 69 or 70.  That, for obvious reasons, would be a disaster.  Recently, the attack most discussed would be to reduce the cost of living adjustments (COLA) for Social Security recipients by coming up with a new formulation for COLAs called a "chained CPI."

What would these proposed cuts to COLAs mean in the real world?  For average 65 year olds living on about $16,000 a year, it would mean receiving $560 less each and every year when they turn 75 and $1,000 less a year when they reach 85.  Imagine that.  Taking $1,000 a year away from a frail and sick 85 year old woman who is living on $16,000 a year.  In my view that is not what this country is supposed to be about.
At a time when seniors, veterans, and persons with disabilities haven't received a COLA in the last two years, and at a time when the price of prescription drugs and medical care has skyrocketed, Republicans and too many Democrats believe that the formula for calculating COLAs is too generous.  That is absurd!
Instead of cutting Social Security COLAs or raising the retirement age, there is a much fairer way to make Social Security solvent for the next 75 years.

Right now, an American who makes $106,800 a year pays the same amount of money into the Social Security system as a millionaire or a billionaire.  That is because today, all income above $106,800 is exempt from the Social Security payroll tax.  As a result, 94% of Americans pay Social Security tax on all of their income, but the wealthiest 6% do not.  That is wrong and that has got to change.

That's why I will be introducing the Keeping Social Security Promises Act as soon as the Senate gets back into session.

This legislation will strengthen Social Security for the next 75 years by asking the wealthiest Americans to pay their fair share into Social Security.

Specifically, my legislation would apply all income over $250,000 a year to the Social Security payroll tax.
The Chief Actuary of the Social Security Administration has projected that doing this will ensure that Social Security can pay out all benefits for at least the next 75 years.

In fairness, I can't take credit for this legislation.  It is exactly what Barack Obama proposed to do when he campaigned for President back in 2008.

During the presidential campaign, candidate Barack Obama said: "What we need to do is to raise the cap on the payroll tax so that wealthy individuals are paying a little bit more into the system.  Right now, somebody like Warren Buffet pays a fraction of 1 percent of his income in payroll tax, whereas the majority . . . pays payroll tax on 100 percent of their income. I've said that was not fair."  The President's specific campaign proposal was to apply Social Security payroll taxes to all income above $250,000.  In other words, the proposal I will be introducing is exactly what the President campaigned on. 

Social Security is a promise to Vermonters and all Americans that when they get old, if they become disabled, or if they lose their parents, they will not live in abject poverty.  Social Security is a promise that we cannot break.  We have got to keep our word.  And, that's exactly what this legislation would do.  

'Why Should We Care?'—What to Do About Declining Student Empathy

Source: The Chronicle

'Why Should We Care?'—What to Do About Declining Student Empathy 1
Mark Shaver for The Chronicle

Picture a college student appealing for a higher grade in his professor's office. The student admits to a mixed performance during the semester, but he still doesn't understand why the professor gave him such a low grade.

"Can't my worst grades just be dropped, including those zeros on the missed quizzes?" the student asks. "That way, my final grade would represent my best work in the class."

"But," the professor counters, "think of the students who worked hard all semester to read, take notes, and study, and who sacrificed time from other important activities to earn good grades. Don't we need to take them into account and be fair to everyone?"

The student may agree that he doesn't want to be unfair, but he remains convinced that he deserves a higher grade. Depending on the student's persistence and command of available arguments, this chipping away at the instructor's resistance could go on for some time. And now the professor is thinking, Goodness, this really is the student's most committed performance all term.

Many who teach experience versions of this conversation regularly and attempt to reason with wheedling students using arguments that rely on a principle of basic fairness. But asking students to respect others' perspectives can be the wrong approach if they don't understand how to empathize in the first place.

Imaginatively taking on another person's thoughts and identifying with their emotions are two habits at the core of empathy. In fact, empathy is not a fixed trait like having brown eyes or long fingers. Empathy is instead a delicate cocktail blending assorted elements of inborn aptitude, social conditioning, personal history, and practice and motivation.

The ability to empathize is like a muscle capable of growth, atrophy, disability, and even regeneration (think Scrooge). People have different innate capacities for building certain muscles, just as we have different incentives for being empathetic and experiences in honing our skills to empathize. For some people, empathy comes easily and naturally; for others, concerted effort is required to stretch our imaginations beyond ourselves.

The troubling conclusion of a recent study by a team of social psychologists (including one of us, Sara Konrath) is that American college students have been scoring lower and lower on a standardized empathy test over the past three decades. In fact, a research paper published in May in Personality and Social Psychology Review shows that since 1980 scores have dropped 34 percent on "perspective taking" (the ability to imagine others' points of view) and 48 percent on "empathic concern" (the tendency to feel and respond to others' emotions). The standardized empathy questionnaire included questions like, "I often have tender, concerned feelings for people less fortunate than me," or "I sometimes try to understand my friends better by imagining how things look from their perspective."

The apparent decline of empathy among college students has led to open season for speculation about possible causes. The study's findings also amount to a perfect Rorschach test for those who consider empathy a virtue worth cultivating. Those who lean left politically might reflexively focus on a rising tide of libertarian individualism, market fundamentalism, and the celebration of the "virtue of selfishness" by Ayn Rand, Milton Friedman, and their think-tank popularizers. Those who lean right might blame other forms of individualism, including feminism, social liberalism, and rights-based social movements since the 1960s. But a general concern over the empathy deficit seems to be one thing that people from both political parties share, although they may remain worlds apart when considering the problem's causes and how to fix it.

Educators less keen to blame politics for the decrease in student empathy might look to changes in the college-going population's relationship to work, family, and higher education. For example, many students plan to attend graduate or professional school, making their college years more of an extended adolescence than an emergence into early adulthood, and pushing forward the traditional markers of that transition—getting married and having children—by several years. Cultural trends also play a role. The popularization of reality TV shows and the narcissistic exhibitionists who star in them; the focus of primary education on the problem of low self-esteem rather than low empathy; and the relative decline of face-to-face interaction and emotional communication due to increased online socializing may all contribute to the decline of empathy among college students.

The good news: A person's ability to empathize can improve. We know that people can be trained to become more empathetic through a variety of programs and methods, including some for college students and their professors. Studies have shown that empathy can increase when students are trained to improve their interpersonal skills or ability to recognize others' emotions. It can also improve after role-playing exercises involving another person's feelings or situation, after observing the misfortunes of others, and after exposure to highly empathetic role models.

Educators concerned about declining empathy should think about how to include some of these techniques in their classrooms. Besides the obvious social benefits, research also links empathy in students with better academic outcomes. Just as empathetic doctors and therapists have patients with better outcomes, empathetic instructors get better results from their students, even on objective measures such as multiple-choice tests.
Those who are most critical of the recent study's findings may be college students, who take them as an older generation's predictable complaints about "kids these days." It's true that such studies deal with averages distilled from very large numbers. Luckily, there are many highly empathetic young people who undertake projects like volunteering for altruistic reasons rather than for résumé-padding.

Instructors who wish to impart lessons about the nature of fairness, and its emotional and cognitive roots, must not forget that students are also taking mental notes as we, too, use or set aside our empathy muscles in our relationships with students. After all, it's hardest to empathize with those who don't reciprocate.

If empathy is truly on the decline among college students, then professors who care may be seen as both potential suckers, ripe for manipulation, or as potential sources of emotional connection—sometimes by the very same student. Students should be warned: Empathy doesn't make a person an easy target. When used with skill, empathy can guide us to balance the needs of ourselves, our students, and our larger social contexts with judicious care.

Paul Anderson is an associate professor of American culture and African-American studies. Sara Konrath is an assistant research professor at the Institute for Social Research, and an adjunct assistant professor of social psychology. Both teach at the University of Michigan.

24 August 2011

The Vegetarian Lesson

The Vegetarian Lesson 1
Jamie McDonald, Getty Images
Battery hens in Suffolk, England

I teach a class on the philosophy and politics of food. Taking off from the dictum "You are what you eat," the class examines how our relationship to food—mediated by politics, economics, ethics, and aesthetics—influences who we are as a species and as individuals. We examine what it means to cultivate and digest other living things and how that experience of conquest helps form ideas about identity and power.

Given that food is implicated in those relations of power regardless of what one eats, a primary aim of the class is to get students to think about why we tend to talk about food as an issue of individual choice. In an age in which politics and consumerism are often conflated with exhortations to "vote with your dollar," the class strives to develop a vocabulary for food politics that is not reducible to consumer choice.

Nevertheless, after having taught this class five times, I have come to realize that students will invariably settle down for a confessional discussion about their own personal food choices. Typically, that happens when we read about vegetarianism and animal welfare. More than any other issue, perhaps because of the moralistic tone of so much vegetarian writing, this is the one that students seem to feel requires them to explain themselves. And without fail, during this discussion, students ask if I am a vegetarian. (Maybe that is predictable, but for the record, in my 10 years of teaching, I don't remember any student ever asking me if I was a fascist, a feminist, or an environmentalist, although I have taught each of those issues more frequently than I teach vegetarianism.)

By some definitions, I am a vegetarian, and have been for some 20 years. My spouse is not, never has been. And it seems likely that when our first child is born—any day now—he will not be, either. I would prefer that my child be born into a world in which the default option is a diet free of the cruelty to both animals and workers endemic to feedlots, slaughterhouses, and fast-food outlets. I would also prefer a world filled with organic and sweatshop-free clothing, clean energy, and universal health care.

But that world does not exist. Today, if parents don't devote a significant amount of time and energy to finding and preparing vegetarian meals, children born in the United States will consume meat along with their fossil fuels and pharmaceuticals. In other words, to borrow from Cass Sunstein, for Americans the nudge is toward meat. This is not a slight, soft nudge: The relative affordability of animal protein, the USDA guidelines for school cafeterias, and the ubiquity of fast-food advertising surely explain why perhaps 90 percent of Americans regularly eat meat, despite what appears to be widespread anxiety about the ethical and environmental costs of producing it.

In this context, most people respond with disbelief when I avow that I do not see being a vegetarian as a political position. When I stopped eating meat, in the mid-1990s, I usually was asked if I did so for ethical, environmental, or health reasons. (That familiar trinity organizes Diet for a New America, John Robbins's 1987 manifesto that probably did more than any other book to shape current American approaches to vegetarianism.) But I haven't been confronted with that question in years. Instead, acquaintances and hosts now seem to assume that I am a vegetarian for "political" reasons. Whether that is because I am a political scientist who studies food, or because popular discourse has elevated animal welfare and environmental degradation from boutique hippie concerns to full-fledged, mainstream political issues, or because food writers like Michael Pollan consistently characterize consumer choice as political action, I cannot say.

Regardless of the reasons, large numbers of people now see vegetarianism as a political position.

But is vegetarianism political? Even though my abstinence from meat is motivated by a set of core principles about the treatment of animals, workers, and the environment, it does not necessarily follow that abstaining from meat constitutes a political position. Indeed, the decision not to eat meat does not necessarily enter the terrain of politics (often defined as the decisions over who gets what, when, and how), nor does it engage significantly with the question of power. I would hesitate to call abstaining from meat political until or unless that abstention is somehow connected to a struggle for power and resources. As yet another consumer choice, being a vegetarian seems hardly more political than, say, seeing an independent film or adopting a pet.

By my own standards, even as I reject the false choice posited by the Robbins trinity (which suggests that environmental concerns are not grounded in ethics), my vegetarianism is precisely an ethical position, defined generally as a determination of how to treat other living things, and more specifically—by Michel Foucault—as a way of fashioning myself in the world.

I abstain from eating meat because I find the operations of the meat industry indefensible, and being a vegetarian is the most direct route to washing my hands of the enterprise (to borrow a phrase from Thoreau). But I have no illusions that my decision will change anything about the American food system. So, though my assessment of the industrial trade in animal flesh is clearly animated by my political orientation—specifically, my concerns about human and animal welfare, access to vital resources, and the sustainability of industrial ranching—this does not elevate my consumer choice to a political act.

One can imagine a properly political vegetarianism—one that, for instance, pursues institutional protections of the various creatures so abused in the industrial meat complex; or one that seeks to criminalize the trade in animal flesh (as we have criminalized the trade in human flesh). Such pursuits, however, are exceedingly rare. Vegetarian literature, almost without fail, ends with appeals to enlightened consumers to stop eating meat.

Both Jacques Derrida, the focus of so much attention in recent years for his late, anguished reflections on human-animal relations, and Peter Singer, surely the most visible vegetarian theorist on the planet since his publication of Animal Liberation nearly 40 years ago, are comfortable comparing the meat industry to genocide, but neither offers anything like an institutional or regulatory response. Singer invokes a "moral obligation" to boycott the meat industry, while Derrida prescribes cultivating a "responsibility to otherness" on an individual level. Both reduce politics—indeed, the paramount instance of politics, genocide—to ethics.

Compare that with the position of Tom Regan, author of The Case for Animal Rights. In a section of the book titled "Vegetarianism Is Obligatory," Regan claims that the current situation "obviously" requires more than becoming a vegetarian. The task, he argues, is "to help to educate those who presently support the animal industry to the implications of their support; to help to forge the opinion that this industry ... violates the rights of farm animals; and to work to bring the force of law, if necessary, to bear on this industry to effect the necessary changes." But even here, why does Regan stipulate "if necessary"? If vegetarianism is obligatory, and if animals have rights, why is invoking "the force of law" such a radical idea, if consciousness-raising does not work?

If the industrial killing of animals is as bad as these writers say it is—"a crime of stupefying proportions," in the words of the Nobel laureate J.M. Coetzee—why does vegetarian literature rely almost exclusively on appeals to individual choice and invoke only tentatively political factors like power, law, and the state?

Given that thinkers and writers as committed, thoughtful, and divergent as Coetzee, Singer, and Derrida persist in reducing the killing of animals to a question of individual choice, I should probably forgive my students for doing the same. But that does not assuage my concern that this is the wrong vocabulary for understanding our relationship to meat. Nor does it help me understand how to respond when my students ask, as they surely will again next semester, when we read Singer and Derrida, whether (or why) I am a vegetarian. The very question—inquiring about the values that guide my consumer choices—seems biased against a political response, predicated as it is on the assumption that how or what we eat is primarily an issue of individual choice.

Imagine the alternative, rarely posed, question: "Why are most Americans not vegetarian?" One would have to be an ideologue of the highest order to hear that as a question about dietary choice. Surely that question invites a discussion of agricultural subsidies, USDA regulations, public-school financing, and corporate lobbying.

Today, I can imagine two responsible replies to my students, and each comes with its own tragic irony. The first answer is partly a protest against having my personal life dragged into the arena of classroom spectacle, but more fundamentally a refusal to engage in a discourse that so readily slides from a consideration of the political economy of meat into one of individual dietary choice. The irony of this answer—something on the order of "That's none of your business" or "Figure it out for yourself"—is that in order to resist having opposition to the slaughter of animals reduced to a solitary ethical position, I invoke a zone of privacy or an ideal of self-reliance that is literally immune to politics. In other words, in pursuit of a political vocabulary for vegetarianism, I refuse to participate in politics.

The second answer, the one I prefer (at least right now), betrays a deep cynicism about the very possibility of politics in this consumerist age. The answer reflects a resignation to the sense that what passes for politics today is really just the sum total of consumer choices, and to the fact that ethical reasoning is inadequate for confronting such institutionally entrenched cultural norms as the torture of animals or the squandering of fossil fuels.

It is this answer, however, that gestures toward the lesson of the class: that a vibrant food politics would focus less on what we choose to eat and more on how the production, distribution, and consumption of food affords us—as individuals, societies, and a species—both power and privilege over others.

Why am I a vegetarian? It doesn't matter.

Chad Lavin is an assistant professor of political science and in the interdisciplinary Ph.D. program Aspect, the Alliance for Social, Political, Ethical, and Cultural Thought, at Virginia Tech.

Corporations pushing for job-creation tax breaks shield U.S.-vs.-abroad hiring data

Source: Washington Post
By Jia Lynn Yang
August 22, 2011

Some of the country's best-known multi­national corporations closely guard a number they don't want anyone to know: the breakdown between their jobs here and abroad.

So secretive are these companies that they hand the figure over to government statisticians on the condition that officials will release only an aggregate number. The latest data show that multinationals cut 2.9 million jobs in the United States and added 2.4 million overseas between 2000 and 2009.

Some of the same companies that do not report their jobs breakdown, including Apple and Pfizer, are pushing lawmakers to cut their tax bills in the name of job creation in the United States.

But experts say that without details on which companies are contributing to job growth and which are not, policymakers risk flying blind as they try to jump-start the hiring of American workers.

"It's an important piece of information that the American people should have," said Ron Hira, an associate professor of public policy at the Rochester Institute of Technology. "Should you listen to the kind of advice these companies have about how to grow the economy when their record and their model indicates they've cut jobs? . . . Or should we talk to people who actually do create jobs in the United States?"

As the country faces an unemployment crisis, President Obama, lawmakers and business lobbyists have all touted the country's biggest companies as critical to creating jobs.

The head of Obama's jobs councilGeneral Electric chief executive Jeff Immelt, said during a tour of a company plant in Greensboro, S.C., that firms should be ready to answer questions from the public.

"If you want to be an admired company, you better know, you better have accountability, and you better think through where the jobs are," he said.

GE breaks out its employment numbers in company filings to the Securities and Exchange Commission. In 2010, about 46 percent of GE's 287,000 employees worked in the United States, compared with 54 percent in 2000.

But many firms, including some whose executives have counseled Obama on the economy, do not put their number of U.S. workers in their annual reports.

IBM chief executive Sam Palmisano has met a number of times with the president, most recently in July at a lunch with other executives to talk about jobs and the economy. IBM stopped giving its U.S. head count in 2009.

"We just made a policy that we would only break out global head count," said company spokesman Doug Shelton.

Data from before 2009 showed IBM rapidly shifting workers to India. Dave Finegold, dean of the Rutgers School of Management and Labor Relations, estimates that 2009, when the company stopped sharing its U.S. employment figure, also marked the first time the company had more employees in India than the United States. Finegold based his number on reports from the media, third-party groups and former employees who have tried to track the number.

"IBM can do as it wishes, and the rest of us have to guess," said Lee Conrad, national coordinator for Alliance@IBM, a group trying to unionize IBM workers.

You won't find Procter & Gamble's U.S. head count in its filings, either. When initially asked for the number, company spokesman Paul Fox wrote in an e-mail: "We do not track nor report U.S.-specific jobs numbers vs. jobs overseas." After it was pointed out that P&G's chief executive, Bob McDonald, had cited such figures in a Cincinnati Enquirer op-ed piece, Fox acknowledged the company did track that data. The number of U.S. employees is 35,000 out of 127,000 total, or 28 percent.

Other companies that do not reveal their job breakdowns include Hewlett-PackardAT&T, Apple and Pfizer, which stopped reporting the number in its SEC filings in 2000.

The latter two are part of a coalition of companies pushing for Congress to give them a tax break on money they have parked overseas, saying that any money brought back to this country would spur hiring.

There is no law requiring companies to reveal publicly where their employees are based. Companies can choose to include the breakdown of jobs here and abroad in their SEC filings for the benefit of shareholders. But they are required by law to report the numbers to the Commerce Department, which compiles a yearly report on total employment by U.S. multinationals.

Ray Mataloni, a staff researcher at the U.S. Bureau of Economic Analysis, said the government gets the numbers only with the agreement that it will not disclose firm-level data. "I don't think it's a question of companies feeling like they're hiding dirty laundry by not giving this information out," Mataloni said. "I don't think they really have anything to hide, but I don't really know the logic of why that's something they don't just put in their annual report."

A few companies expressed worry about their competitors knowing too much about their operations.
Scott N. Paul, executive director of the Alliance for American Manufacturing, said it's because of the politics. "Outsourcing has become a lightning rod, and the media coverage they're likely to get is unfavorable," Paul said.

For chief executives of multinational companies who are used to answering only to their shareholders, the country's jobs crisis has uncomfortably switched the political spotlight onto their decisions about who they employ and where. It has also thrown into relief the fact that when U.S. multinationals chase profits and hire workers anywhere in the world, they become less tied to any one country, including this one.

Immelt acknowledged last month that the health of a company such as GE is now less connected to the U.S. economy, but he added that companies including GE "got carried away" with outsourcing. "I'm a GE leader first and foremost," he said. "At the same time . . . I work for an American company."