How Much Does Xi Make a Year? The Surprising Answer

By Rachel Lu 
Source: Tea Leaf Nation

On March 5 at the National People’s Congress, an annual meeting of China’s legislature, Beijing announced it plans to spend $2.45 trillion in 2014. While it’s unknown how much of that goes to salaries (the budget is broken down by industries), the amount for top officials is likely surprisingly low.

Based on available information, if Chinese President Xi Jinping were to decide to buy a 100-square-meter (about 1,080-square-foot) two-bedroom apartment in central Beijing, it would set him back almost $1 million at current prices. That means Xi, who by all appearances draws a nominal annual salary of about $20,000, would have to toil for 50 years as China’s top leader to afford this modest property — assuming, that is, that he and his family didn’t pay for any other living expenses during that time. By contrast, if U.S. President Barack Obama were to do the same in the swankiest bits of Washington, D.C., he would have to pay about the same sum, but one amounting to a little over twice his annual salary of $400,000.

Of course, Xi would never need to worry about purchasing an apartment on his salary alone. He and his family live in the sprawling Zhongnanhai compound in the heart of Beijing. As a high-ranking official in China, his food, transport, and medical care are also covered by the state. And a Jan. 21 report by the International Consortium of Investigative Journalists shows Xi’s relatives have held corporate entities offshore in the Cook Islands or British Virgin Islands. That’s not illegal, but it’s a move that the entities’ owners often make to store or protect assets. Xi’s family is not exactly hurting.

The salaries of China’s top leaders are not public information, so details about them reaches the public in unintentional dribs and inferred drabs. In June 2011, while speaking to university students at a public event, Yu Zhengsheng, a member of China’s ultra-powerful Politburo, made the rare disclosure that his basic salary was approximately $1,700 a month based on salary standards for Politburo members, and he claimed that he had to “pay for his own cigarettes” and “buy clothes at market prices.” Since Xi is also a Politburo member, Yu’s statement is a good baseline to gauge Xi’s salary. In April 2013, state-owned weekly magazine China Newsweek reached a similar number through deduction, calculating that the basic salary for China’s top leader was likely around $1,600 a month by examining the salary slips of ordinary civil servants and noting the incremental increase at each promotion.

If that’s correct, and Xi had to survive in Beijing on his basic salary — approximately twice the average salary of $850 per month in the city — he would not only be unable to afford an apartment, but he’d have to scrimp just to make ends meet. A popular infographic that made the rounds in October 2013 on Sina Weibo, China’s popular microblogging platform, calculates that someone living in Beijing on a salary just shy of Xi’s would be left with savings of $50 each month after deducting reasonable expenses, including approximately $500 a month for rent and $250 a month for food.

On March 5, 2014, China’s ambassador to the United States, Cui Tiankai, reportedly said at a public forum that newcomers filling slots in the foreign ministry — one of the most coveted jobs for new graduates in China — could not afford to rent an apartment in Beijing. But luckily for them, Chinese civil servants have long benefited from generous government subsidies to supplement their modest official incomes, and can sometimes count on gray income or even outright bribery. That’s one reason that over the past 10 years, the number of young Chinese college graduates taking the civil service exam has surged from approximately 120,000 in 2003 to more than 1.5 million in 2013, roughly an elevenfold increase. As housing prices in China’s major cities rose drastically in the first decade of the millennium, graduates and their parents began to favor the housing subsidies, retirement benefits, and other tangible perks that come with a civil servant position over nominally high salaries in the private sector that lack the same safety net. This preference has become controversial: Economist and Nobel laureate Edmund Phelps reportedly slammed the “frenzy” of competition for Chinese government posts as a “waste of talent.”

The fever may now be cooling a little. As part of a crackdown on corruption, endemic in party ranks, Xi introduced the so-called “Eight Point Regulation” in December 2012 to rein in perks and gray income for civil servants. According to domestic media reports, junior civil servants were disproportionately affected, while their seniors largely carried on as before. The results of an anonymous survey of public servants by liberal outlet Beijing News, released Jan. 9, showed that 92 percent of participants reported that their “income from outside of work” had fallen over the past year. In 2014, wealthy Zhejiang province counted 25 percent fewer applicants to its civil service positions than in an analogous period the year before.

Top leaders like Xi will never have to worry about paying the bills, even as they spearhead crackdowns on nonessential perks. But civil servants in China, who likely make far less than the president, may want to start looking into more modest homes in Beijing’s vast suburbs.

President Barack Obama Weekly Address March 8, 2014 (Video/Trascript )

 
President Barack Obama

Weekly Address

The White House

March 8, 2014

Hi, everybody.  This week, I traveled to New England, where I was joined by four governors who are working to raise the minimum wage in each of their states.  And they’ve also joined me in calling on Congress to raise the minimum wage from $7.25 to $10.10 an hour.  Because it would give nearly 800,000 Americans in their states a raise – and lift wages for about 28 million across the country.

So these governors aren’t waiting for Congress to make up its mind.  And in my State of the Union Address, I asked America’s business leaders to go ahead and do what they could to raise their employees’ wages, too.  And increasingly, it’s not just large companies like Costco or the Gap that choose to pay their employees higher starting wages. 

It’s smaller businesses like Jaxson’s, a family-owned ice cream parlor in South Florida.  They answered the call and raised their wages so that more than 70 employees would earn at least $10.10 an hour, without cutting back on hiring.

And two weeks ago, an Atlanta small business owner named Darien Southerland [SUTH-er-lind] wrote me to share a lesson his grandmother taught him – that if you treat your employees right, they’ll treat you right.  And Vice President Biden paid him a visit this week.

I agree with these business owners, which is why I issued an executive order requiring federal contractors to pay their employees a fair wage of at least $10.10 an hour.  It’s good for our bottom line.  And working Americans have struggled through stagnant wages for far too long.

A clear majority of Americans support raising the minimum wage, because we believe that nobody who works full-time should have to live in poverty.  About half of all Republicans support raising the minimum wage, too.  It’s just too bad they don’t serve in Congress.  Because the Republicans who do serve in Congress don’t want to vote on the minimum wage at all.  Some even want to get rid of it completely.  Seriously.

That’s why what business leaders and everyday Americans are doing to raise wages is so important.  Because change doesn’t come from Washington – change comes to Washington.  I’ve always believed that, and it’s true in this case, too.  Outside Washington, Americans are ready to put aside old political arguments and move this country forward.  The American people are way ahead of Congress on this issue, and we’ve just got to let Congress know that.  It’s time for “ten-ten.”  It’s time to give America a raise.  And it’s time to restore opportunity for all.

Thanks, and have a great weekend.

Beginner’s guide to improving online security

By Margot Williams

 Source: ICIJ

Investigative journalists like the members of ICIJ are facing growing concerns about security. Our members often work with leaks or other materials requiring protection of sources, collaborate across borders with colleagues at risk for their physical safety, and communicate with devices and services open to surveillance or attack.

 

 And that’s not to mention the growing revelations of surveillance and hacking by the U.S. National Security Agency and its allies – such as efforts to infiltrate and destroy the reputations of “hacktivists” and other targets unrelated to counterterrorism. 

  For journalists, the ease and low cost of communicating and sharing via e-mail, instant messaging, file sharing tools and cell phones have weighed  in favor of convenience versus security.  But if your reporting puts you at risk, and you need to protect your data, your sources and your stories, you can take steps to gain security savvy and reduce vulnerability.

Last week at a conference in Baltimore that broke attendance records for the National Institute for Computer Assisted Reporting (NICAR), questions about digital security sent me to sessions on surveillance, safety, privacy and anonymity and between-session conversations on security threats and solutions.

Speakers at NICAR included Jonathan Stray and Susan McGregor (Columbia Journalism School), Jennifer Valentino-DeVries (Wall Street Journal), Josh Meyer (Medill National Security Journalism Initiative) Chris Doten (National Democratic Institute), Kelley Misata (Tor Project)  and Gary Price (infoDocket.com).
Here are some of the basics I learned from the experts at NICAR. 

• Protect your identity and data with better and safer passwords or 2-step verification – you log in with password and then confirm with a verification number sent to your phone. 

• Phishing – tricking a user to visit a site to enter personal information and passwords or download malware – is the most common attack. So check any link you receive in e-mail: read the URL and underlying html, don’t click on it!

• Spear phishing – Personalized message targeting attempted by researching your information or impersonating your friends or colleagues – is growing. You may think you know the sender but it can be a hoax.

• The weakest link: everyone in your newsroom or collaboration must use safe practices to prevent phishing attacks on others in a trusted group.

• Encrypt everything. Make it a habit. If you use encryption all the time for communications and data, and encourage or demand it from colleagues and sources, then content will be protected and encryption can become normal behavior for journalists and the industry.

• PGP is encryption for e-mail. OTR is Off The Record encryption for messaging, which is used by chat programs like Pidgin (PC), Adium (Mac) and CryptoCat (web based). Google “off the record” chat is NOT Off The Record (OTR).

• Encryption is not anonymity.  Encryption protects content but not the identity of the sender and recipient. To anonymize communication traffic and web browsing, go to the Tor Project, learn about the Tor network and download Tor software.

• Having the Tor software on your computer indicates you are using anonymous communications. If this puts you at risk, you can instead use Tails – Tor on a USB stick, which leaves no trace. Find out at https://www.torproject.org.

• Protect your data on physical devices. What if your laptop is stolen? Your USB drive? Your cell phone?  What about your address book? Encrypt everything. Secure your passwords.

• Your cell phone is a location device. It holds all your contacts. Think about security.  Know where your data is and take steps to protect it.

If you want to learn more about enhancing your security online, you can get Jonathan Stray’s complete presentation “Threat modeling: Security for your story” with audio here.  The Journalist Security Guide from the Committee to Protect Journalists also offers useful tips on protecting your online activities in its section on information security.

Nuclear’s Role Still Uncertain in Japan.

Voters send mixed signals on the value of cheap power. 
The New YorkTimes International Weekly.
 By Martin Fackler

Several industrialized countries have turned their backs on nuclear power as a result if the Fukushima nuclear disaster, including one that has already begun permanently shutting functioning plants.

“Germany chose to get of nuclear power because of Fukushima, while the United States is still in favor, but what about Japan, where the accident took place”, said Jun Tateno, who has written several books about the fundamental question: Do we want nuclear power’s low-cost electricity for growth, or do we want a safer, nuclear-free society?”

Many analysts had hoped that a recent vote to choose the next governor of Tokyo would provide just such a forum. But the results of the contest – which included unsuccessful by two antinuclear candidates - were unclear.

The current Prime Minister Shinzo Abe, appeared emboldened, saying a day after the election that he would soon release a “realistic and balanced” energy strategy, which analysts took as meaning one that would call for restarting at least some idled nuclear plants. But some analysts warned that Mr. Abe could still face a public backlash if he is seen as rushing to return Japan to its pre-accident status quo.

The election appears to encapsulate the indecisiveness that has kept Japan paralyzed for nearly three years, since the triple meltdowns. After decades of marching forward in the belief that the cheap nuclear power to compete economically, Japan is no longer able to muster a new national consensus on it.

Voters continue to send mixed signals, electing Mr. Abe, who has called nuclear power a vital part of his popular Abenomics strategy to revive growth even as polls continue to show an ambivalence about atomic energy. Voters have chosen Mr. Abe’s pro-nuclear governing party in national elections, but then opposed a restart of the plants in opinion polls. That has left this consensus-driven country without a way forward, even as its trade surplus has turned to a deficit, with soaring bills for fossil fuels to make up for the lost nuclear power.

“People cannot feel the economic damage now because of the overall lift from Abenomics,” said Koji Nomura, an economics professor at Keio University in Tokyo. “But this is a bill that will come due.”

The prime minister and his allies in the business community have argued as much, saying that the idling of nation’s 48 operable reactors threatens Abenomics by forcing Japan to import an extra $36 billion worth of fuel every year. But even Mr. Abe has been unwilling to force the point by turning the plants on.

While the candidate from the governing pro-nuclear power party prevailed, analysts say he did so in part by distancing himself from its stance with vague expressions of support for gradual phaseout if nuclear energy. The two candidates who called for immediate scrapping all atomic power plants also fared better that the result seemed to suggest, winning a combined 1.9 million votes, just 200,000 shy of the victor’s tally. And the only avowedly pro-nuclear candidate of any stature placed a distant fourth. At the same time, analysts said, Tokyo’s voters proved unconvinced by the lofty vision articulated by the high-profile antinuclear candidate, former Prime Minister Morihiro Hosokawa.

Some analysts say that in the end, they expect Japan to go back to the compromise position of a previous government that Mr. Abe scrapped when he took power: allowing the restart of the newest plants in exchange for promise that Japan will eventually shed nuclear power as realistic alternatives are developed.

“Neither Abe nor Hosokawa is at the center of public opinion,” said Takeo Kikkawa, an expert on the energy industry at Tokyo’s Hitotsubashi University. “A gradual phaseout remains the best answer for solving the nuclear problem while preserving growth.”

President Barack Obama Weekly Address March 1, 2014 (Video/Trascript )

President Barack Obama
Weekly Address
The White House
March 1, 2014

Hi everybody.  In my State of the Union Address, I said that the best measure of opportunity is access to a good job.  And after the worst recession of our lifetimes, our businesses have created eight and a half million new jobs in the last four years.
But we need to do more to make America a magnet for good jobs for the future.  And in this year of action, where Congress won’t do that, I will do whatever I can to expand opportunity for more Americans.  This week, I took two actions to attract new jobs to America – jobs in American manufacturing, and jobs rebuilding America’s infrastructure.

Here’s why this is important.  In the 2000s alone, we lost more than one-third of all American manufacturing jobs.  One in three.  And when the housing bubble burst, workers in the construction industry were hit harder than just about anybody.  The good news is, today, our manufacturers have added more than 620,000 jobs over the last four years – the first sustained growth in manufacturing jobs since the 1990s.
Still, the economy has changed.  If we want to attract more good manufacturing jobs to America, we’ve got to make sure we’re on the cutting edge of new manufacturing technologies and techniques.  And in today’s global economy, first-class jobs gravitate to first-class infrastructure.

That’s why, on Tuesday, I launched two new high-tech manufacturing hubs – places where businesses and universities will partner to turn groundbreaking research into real-world goods Made in America.  So far, we’ve launched four of these hubs, where our workers can master 3-D printing, energy-efficient electronics, lightweight metals, and digital manufacturing – all technologies that can help ensure a steady stream of good jobs well into the 21st century.

Then on Wednesday, I launched a new competition to build 21st century infrastructure – roads and bridges, mass transit, more efficient ports, and faster passenger rail.  Rebuilding America won’t just attract new businesses; it will create good construction jobs that can’t be shipped overseas.

Of course, Congress could make an even bigger difference in both areas.  Thanks to the leadership of a bipartisan group of lawmakers, there’s a bill in Congress right now that would create an entire network of high-tech manufacturing hubs all across the country.  And next week, I’ll send Congress a budget that will rebuild our transportation systems and support millions of jobs nationwide.

There’s a lot we can do if we work together.  And while Congress decides what it’s going to do, I’m going to keep doing everything in my power to rebuild an economy where everyone who works hard has the chance to get ahead – where we’re restoring our founding vision of opportunity for all.

Thanks, everybody, and have a great weekend. 

“Shameful”: Up to a third of the world’s food is wasted

We produce enough food to end hunger. Why isn't it ending up on more people's plates?

 Lindsay Abrams 

Source: Salon

The difference between an adequate diet and malnutrition, for many countries throughout the world, can be found in a landfill. A new report from the World Bank confirms that anywhere from a quarter to a third of the food produced globally is wasted, an amount that Jim Yong Kim, the organization’s president, calls “shameful.”

In places like the U.S., the losses are higher because we have more to waste: The report found that about 61 percent of losses in North America occur during the consumption stage — when we bring food home and then leave it to rot (or throw it out under the mistaken assumption that it’s rotten). That calculates to about $1,600 a year being spent on uneaten food. In Sub-Saharan Africa, as a contrast, such behavior accounts for only 5 percent of losses — there, a full 87 percent of food is wasted during production, storage and transport, before it ever reaches the consumer.


And as the report points out, the estimated 4 billion tons of wasted food is only the end of it. When crops end up wasted, the excess amounts of water, for example, that go into irrigating them ends up wasted as well.
We produce enough food to provide every person on Earth with 2,700 calories per day. Yet 842 million people still go to bed hungry. This is only the latest indication that the system is seriously broken:

Oligarchy and Democracy

Jeffrey A. Winters

Democratic institutions aren't sufficient in themselves to keep the wealthy few from concentrating political power.

It is a confounding moment in American political history. On the one hand, evidence of democratic possibilities is undeniable. In 2008, millions of Americans helped catapult a man of half-African descent into the White House long before observers thought the nation was “ready.” Democratic movements have won major victories in recent decades, spreading civil rights, improving the status of women and ending unpopular wars. This is the continuation of a trend with deep roots in American history, reaching back at least to the Jacksonian era, of extending the equality principle into American culture at large.

On the other hand, democracy appears chronically dysfunctional when it comes to policies that impinge on the rich. Despite polls consistently showing that large majorities favor increasing taxes on the wealthiest Americans, policy has been moving for decades in the opposite direction. Reduced taxes on the ultra-rich and the corporations and banks they dominate have shifted fiscal burdens downward even as they have strained the government’s capacity to maintain infrastructure, provide relief to children and the poor, and assist the elderly.

Everyone is by now aware of the staggering shift in fortunes upward favoring the wealthy. Less well understood is that this rising inequality is not the result of something economically rational, such as a surge in productivity or value-added contributions from financiers and hedge-fund CEOs, but is rather a direct reflection of redistributive policies that have helped the richest get richer.

Such outcomes are inexplicable on standard, commonly understood democratic grounds. The tiny proportion of wealthy actors among eligible voters cannot account for the immense political firepower needed to keep winning these policy victories. While motivated and mobilized minorities—those organized over issues like gay marriage, for example—can sometimes win legislative victories despite broad opposition from the electorate, America’s ultra-rich all together could barely fill a large sports stadium. They never assemble for rallies or marches, sign petitions, or mount Facebook or Twitter campaigns. So how do they so consistently get their way?

One increasingly popular answer is that America is an oligarchy rather than a democracy.¹ The complex truth, however, is that the American political economy is both an oligarchy and a democracy; the challenge is to understand how these two political forms can coexist in a single system. Sorting out this duality begins with a recognition of the different kinds of power involved in each realm. Oligarchy rests on the concentration of material power, democracy on the dispersion of non-material power. The American system, like many others, pits a few with money power against the many with participation power. The chronic problem is not just that electoral democracy provides few constraints on the power of oligarchs in general, but that American democracy is by design particularly responsive to the power of money (a point Adam Garfinkle makes clear in his introduction to The American Interest’s January/February 2011 issue on Plutocracy and Democracy).²

Oligarchy within Democracy


When democracy combines with oligarchy, the result is a distinctive fusion of equality and inequality. This is what sets the current debate about oligarchs and the power of the rich apart from the debate that erupted in the 1950s over “power elites.” The claim then was that the United States was dominated by a tiny segment of the population that commanded major institutions across society and shared privileges of status, education, access and comfortable living standards. Elite theorists like C. Wright Mills devoted great energy to mapping how the power elite were densely networked, and thus politically suspect.

Pluralists led by Robert Dahl at Yale responded by granting that American democracy had plenty of inequality built into it. Some actors and institutions were unusually powerful, but always in ways that were competitive and crosscutting. Pluralists argued that the linkages mapped by elite theorists did not amount to cohesion. Although various strands of elites constituted influential minorities, no pernicious or consensual political thread could be shown to run through them. There were powerful Republicans with the expected laissez faire proclivities, but there were also influential Democrats who paid homage to or were even evangelizers for the latter-day social gospel agenda.
The conclusion was that American democracy had elites, but no coherent elite agenda.

The current focus on oligarchs is different. Unlike elites, who are empowered in diverse ways and are oriented toward diverse ends, oligarchs are defined more uniformly by the power of money. Concentrated wealth serves as both the source of oligarchic power and the motivation to exercise it. Unlike any other power resource, wealth unites oligarchs politically around a core set of shared interests because, throughout human civilization, great riches have always attracted threats. Whatever their political disagreements, oligarchs in America, as elsewhere, are motivated and connected by the desire to deflect threats to their fortunes. Being networked certainly augments the influence of oligarchs, but coordination is not the primary source of their political power.



Oligarchy should be understood as the politics of wealth defense, which has evolved in important ways throughout human civilization. For most of history, this has meant oligarchs were focused on defending their claims to property. They did so by arming themselves or by ruling directly and jointly over armed forces they assembled and funded. Every great increase in wealth required oligarchs to spend additional resources on armaments, castles, militias and other means of defense. The greatest transformation in the politics of wealth defense and thus of oligarchy came with the rise of the modern state. Through its impersonal system of laws, the armed modern state converted individual oligarchic property claims into secure societal property rights. In exchange, oligarchs disarmed and submitted to the same protective legal infrastructure that applied to all citizens (in theory if not always in practice). Property rights offered reliable safeguards not only against potential antagonists without property, but also, no less important, against other oligarchs and the armed state itself that administered the entire arrangement.

This new formula for political economy had several major consequences. One was that it created the mistaken impression that there were no longer any oligarchs, only wealthy people with no shared political motivation; yet this illusion is proved false every time states in the modern era fail to protect property and wealthy people re-arm or hire private militias once again to do the oligarchic job themselves. Another consequence is that the transformation shifted rather than fully solved the broader problem of wealth defense for contemporary oligarchs. The legal state made property inviolable, but in many cases it also aggressively targeted income and, occasionally, wealth via taxation. This was “taking” of a different kind.

Indeed, progressive taxation is the unique challenge to oligarchs in democratic states. Heavier tax burdens on those most able to pay can theoretically retard the pace at which the rich enlarge their estates, and in extreme cases could even redistribute wealth downward. The story of oligarchy in America has unfolded as a titanic battle over wealth defense as oligarchs have sought to deflect tax burdens onto others in society. With tens of billions of dollars at stake annually, the struggle is politically charged for a small number of ultra-wealthy Americans. While its intensity has ebbed and flowed throughout American history, it is a battle oligarchs have been winning handily for the past several decades. Again, the question is why.

Money and Power


There tends to be considerable ideological tension in the United States when the discussion turns to money and power. The “class anonymous” packaging of liberal democracy has been so prevalent that many Americans balk at the mention of oligarchy and the anti-democratic power wielded exclusively by the ultra-rich.³ The regrettable detour into power-elite theory only muddled the debate further. Yet the basic understanding that concentrated wealth confers concentrated power, whether in dictatorships or democracies, has a pedigree stretching back at least to ancient Greece. James Harrington observed in the 1650s that “where there is inequality of estates, there must be inequality of power.” Much influenced by Harrington, John Adams wrote in 1776 that “the balance of power in a society, accompanies the balance of property in land.”

Riches have always been a source of power, and nothing about modern societies or institutions fundamentally changes that reality. Neither the shift in wealth away from landed estates nor the achievement of universal suffrage has disrupted the fundamental nexus between money and power. The essence of oligarchy within democracy rests on the near-veto power oligarchs retain on threats to concentrated wealth. On all other issues, oligarchs’ views and positions are as disunited and democratically contested as those held by everyone else across the society. Thus, there is no oligarchic stance on abortion, immigration or the rights of women.

A full appreciation of oligarchy in America must begin with an estimate of how much material power is concentrated in the hands of a tiny minority. I call this a Material Power Index (MPI), which can be approximated using both income and wealth data. The MPI assigns a base value of one to the average material power position of Americans across the bottom 90 percent of the population. The MPI of the richest strata in society are a multiple of this base value. The accompanying tables provide a snapshot of MPIs for the United States based on recent income and wealth data.

Measured by income, oligarchs at the very top of American society have an MPI just over 10,000, which happens to approximate the MPI of Roman senators relative to their society of slaves and farmers. When measured by wealth, the MPI for the richest Americans is 30,000 (it jumps to 50,000 if home equity is excluded). The weakest American oligarchs have between 125 and 200 times the material power of an average citizen.

Beyond a certain level, the political meaning of these concentrations of material power becomes too enormous to fathom, for there is no precise algorithm for translating financial power into political power. An oligarch with $1 million to deploy politically for wealth and income defense is dramatically more powerful than someone who has only $100. But an oligarch with a spare $1 billion to deploy may not be a thousand times more powerful than one with $1 million. He may be more or less powerful depending on a host of other contextual factors. It is clear, however, that oligarchs in America, who constitute only a fraction of 1 percent of the population, have at their disposal material “voting” power that is hundreds, and in some cases tens of thousands, of times that of the average citizen. Such inequalities of power do not comport with garden-variety notions of pluralism and democratic representation.

One might counter that despite these yawning asymmetries at the individual level, average citizens with a modest MPI of one can still muster the overwhelming power of their numbers in a democracy if they band together and pool their material resources, say, to vote for candidates favoring large social welfare programs. But poverty by itself neither motivates nor provides a core set of common interests for the poor the way wealth does for the rich. The presence of wealth focuses the political attention of the rich on wealth defense; its absence has no parallel effect on the poor or those of middling or lower than middling income. Wealth is inherently empowering and motivating; poverty is neither.

Thus, for the many to exercise their collective material power in a manner oligarchs can while operating solo, they must first be actively networked and coordinated and then remain in this state of mobilization over extended periods. This inverts the common argument that oligarchs are only potent politically if they form associations or conspire. In fact, the reverse is true. The vast majority of citizens exert very little concerted material power in politics. But a small number of individuals each have at their disposal the resources it would take tens of thousands of their fellow Americans acting in sustained coordination to match.

A final and daunting aspect of wealth’s power is that it buys armies of skilled professionals, not least lawyers and accountants, to pursue the core political and social interests of the rich. These intermediaries render the political engagement of oligarchs more indirect, obscure their power from view, and shield them from scrutiny and accountability. In democracies no less than in dictatorships, oligarchs experience virtually no disruption of their daily lives as they employ and deploy the best wealth defense money can buy. The duration and intensity of this oligarchic power is limited mainly by the scale of resources the richest Americans have at their disposal.

The Great American Inversion


How has this power been expressed in the United States over the past century? The best window on oligarchy in America is the battle over taxes, which for oligarchs means the politics of income defense. Not surprisingly, this battle has also affected American income inequality writ large.

Over the course of the 20^th century, two wrenching things happened within American democracy and oligarchy that together constitute the Great American Inversion. First, early in the century, steep new income taxes were imposed exclusively on the rich. By the end of the century, these same tax burdens had been shifted from the richest Americans to the various strata below them.

Second and related, there was a sharp reversal of economic momentum for average Americans and the rich. The average income of working-class Americans around 1920 doubled in real terms by 1955 and tripled by 1970. A growing American middle class was taking an ever-larger share of an expanding economic pie. Although the chasm separating the rich from the rest remained huge, ordinary citizens were closing the gap at a remarkable pace. But then this process stopped. In the four decades since 1970, there has been almost no improvement on average for the lower 90 percent of American households. Although the U.S. economy continued to grow, income stopped growing for average citizens. Adjusted for inflation, average household incomes in 2010 were almost exactly what they had been forty years earlier. They peaked and stopped in 1970 at “triple 1920.” Growth America became stagnation America.

The story was much different for America’s oligarchs. At first their wealth shot up significantly during the 1920s. They were also busy in that decade trying to roll back or deflect the new taxes aimed at them. But then the Crash of 1929 hit them in the solar plexus. It is not that oligarchs went to the poorhouse like almost everyone else. The rich still enjoyed very luxurious lives, but their real gains across the next several decades were very modest. One instructive thing about this period of history is that oligarchic influence was weaker during deep political-economic crises and wars than it was during the “politics of the ordinary” between crises. It took decades after 1945 to reverse the relative leveling effects of the Crash, the New Deal and the embryonic welfare state of the Great Society.
During the long arc from 1920 to 1970, the top 1 percent of American families moved up at barely half the pace of the average household. The very richest families (the top 0.1 percent and 0.01 percent) were having a hard time grabbing a larger share of the growing income pie for themselves. By 1955, the real incomes of these two top strata were actually 20 percent lower than their 1915-–20 level. It was not until 1970 that the ultra-rich were earning roughly the same real incomes they had enjoyed half a century earlier.

And then, as suddenly as the improvements had come for mainstream society, the new bonanza for the ultra-rich commenced. The decade from 1970–80 was the turning point in the Great American Inversion. This is when the boom for the average household turned to bust and the rich soared after decades of treading water. It is as if a big pause button had been hit in 1970 for the bottom 90 percent at the same moment the fast-forward button clicked on for oligarchs. The cumulative effect was breathtaking. By 1990, real incomes for the top 1 percent exceeded the 1920 level threefold and continued to rise thereafter, while those of the majority did not budge. Reversing the pattern of previous decades, the richer you were, the faster gains accrued. It did not matter if Democrats or Republicans were in charge of the White House or Congress. By 2007, the top 1 percent of households had almost five times the real income they had in 1920; the top 0.1 percent had around six times, and the top 0.01 percent were awash in nearly ten times the real income they had enjoyed nine decades earlier. The tables had turned.

Many analysts have pointed out the role of globalization, higher international capital mobility and the related decline of unions in causing this reversal of fortunes. What has gone largely unnoticed is the compounding effect on these trends due to the increasingly aggressive strategies of wealth defense on the part of oligarchs. As the United States was becoming a tiger economy exclusively for the rich, tax burdens on American oligarchs grew lighter by the decade. Meanwhile, tax burdens on the strata below grew more regressive as average Americans went from seeing rapid gains to being mired in economic molasses and rising debt.

Before the Inversion
I
t is impossible to make sense of these transformations without understanding how oligarchic power operates within American democracy. A crucial part of the inversion story starts at the end of the 19^th century. In an unprecedented blow to an emerging stratum of American industrial oligarchs, Congress passed a new Federal income tax law in 1894 aimed narrowly at the richest fraction of taxpayers. All but 0.1 percent of citizens earning below a threshold of $100,000 in today’s dollars were exempt. Alarmed oligarchs quickly hired teams of lawyers, who took the law to the Supreme Court, which struck it down in a 5-4 decision that referred to the tax as a “communistic threat.” Although oligarchs won this round, the law confirmed their fears about extending democratic voting rights to those too far down the national wealth pyramid.

The high court protected oligarchs for the next 18 years until the Sixteenth Amendment was passed in 1913, after which a Federal income tax was again imposed exclusively on the top 1 percent of earners. Oligarchs immediately began to explore new modes of income defense, particularly after World War I, which caused the highest rate to leap from 7 percent in 1915 to 77 percent in 1918 (the number of brackets went from seven to 56 over the same period). They fought on two fronts.

First, oligarchs pressured legislators to meet the Federal government’s demand for revenue by reducing the number of brackets, lowering the rate of the highest bracket and shifting the entire structure downward to capture more revenue from the merely well-off and less from the ultra-rich. Although the “mass affluent” had much larger numbers (which ought to count for something in a democracy), individually they lacked the financial firepower oligarchs possessed to influence policy outcomes. Unable to band together, the mass affluent saw their tax burdens rise in tandem with tax relief for the very richest Americans.

The second front was a bold tax strike on the part of oligarchs through tax avoidance and outright evasion. Although there were not that many oligarchs for tax collectors to pursue, they each had formidable resources to hire lawyers and other professionals to mount a vigorous defense. If the government wanted their money, they were going to make it costly and politically risky to get it. Between 1916 and 1925, tax filings by the rich dropped by an average of 50 percent. In the worst year, 1921, tax filings plunged to an average of 19 percent of their 1916 level. The richer the oligarch, the lower the compliance rate. Americans making more than $1 million per year in 1921 filed at just 10 percent of the rate they did in 1916. This resistance by the ultra-rich was so pervasive that it prompted Congressman Ogden Mills (R-NY) to complain, “We collected as much at [a tax rate on the rich of] 10 percent in 1916 as we did at 65 percent in 1921.” By contrast, taxpayers in the “mass affluent” category lacked the resources and nerve to defy the Federal government. Cowed into paying, their filing rate actually increased by 32 percent between 1916 and 1925.

The government faced a difficult choice. Basically, it could either beef up law enforcement against oligarchs and design better systems to track and tax their incomes to force them into compliance, or abandon the effort and instead squeeze the same resources from citizens with far less material clout to fight back. Despite the daunting complexities of taxing wider swaths of the population (and the risks of doing so at election time), the government capitulated to the wealthy few. Beginning with deep tax cuts on oligarchs enacted in 1921, 1924 and 1926, the single most progressive economic policy ever enacted in U.S. history—an income tax exclusively on the rich—was slowly inverted into a mass tax that burdens oligarchs at the same effective rate as their office staff and landscapers.

Pleased with how well their exercise of power had worked, oligarchs rewarded the Federal government for the tax cuts by once again agreeing to file tax returns. One analysis of the period notes that the effect of lower taxes on the willingness of the rich to file returns was “more dramatic the higher the net-income tax class.”⁴

It is noteworthy that from 1913 until 1939 the battle over this new income tax unfolded exclusively among the different components of the rich. It was a narrowly oligarchic tax only during the first four years. On average, across these decades the tax fell on just 10 percent of income earners. In no year before 1940 did it ever involve more than 17.3 percent.

This point matters in debates about who gets what in democracy, and whether there are significant forms of power affecting outcomes that have little to do with democratic equality, representation and voting. One key argument about why the bottom strata of American society, despite their large numbers, fare so badly in economic policy struggles is that the poor lack resources, education and political skills. This reasoning, however, collapses when applied to the pitched battle over who would shoulder the Federal income tax burdens between the two world wars. A tiny number of powerful oligarchs succeeded in convincing legislators to shift tax burdens to the affluent strata immediately below them, a group a hundred times as numerous and hardly lacking in education and political skills. Democratic participation theory cannot explain oligarchic success in this case.

A far better explanation lies in the realm of material power. It is the difference in their MPIs that allows a small number of oligarchs to defeat a much larger number of citizens below them. As we’ve seen, Americans just above the 90^th income percentile have MPIs ranging from four to seven. Oligarchs in the top 0.1 percent have MPIs starting at 125 and going as high as 10,300. The intensity of this material power amplified oligarchs’ complaints, made them more intimidating politically, and enabled their tax defiance in 1921. Oligarchs succeeded in getting their taxes reduced from the 70 percent range to just 25 percent. The top bracket held at this level until 1931, when a series of crises weakened oligarchs and increased the government’s need for resources. The 1929 Crash, the Great Depression and World War II combined to increase the top bracket to 63 percent in 1932, 81 percent in 1941 and a peak of 94 percent in 1944. Income taxes on the richest Americans remained above 90 percent until 1964—and that includes the two terms of the Republican Eisenhower Administration—and above 70 percent thereafter until 1981.

Although the Depression (thanks to the advent of Social Security and the new infrastructure for collecting payroll taxes) and especially World War II caused Federal income taxes to be imposed at the mass level for the first time, the rising tax rates on oligarchs and the strength of unions combined to help double and then triple average real incomes for the bottom 90 percent of the population, while the richest saw no gains at all. High taxes on what today are often self-interestedly called the “job creators” did not prevent jobs from being created. But they did retard the rate at which the richest could get even richer.

The Income Defense Industry


This account of the first half of the 20^th century prompts an important question: If oligarchic power works especially well behind the scenes during the “politics of the ordinary”, while crises like war and financial collapses tend to undercut this power, why have oligarchs been able to maintain the Bush tax cuts (which reduced the top rate to 35 percent) and win other battles despite the devastating economic crisis of recent years?

The answer lies in a major innovation in how oligarchs flexed their wealth muscle starting in the 1960s and 1970s. This was when the income defense industry arose in America to fight against taxes and other policies that restrained the ability of oligarchs to increase their share of national income and wealth. This industry is similar to the legal apparatus oligarchs deployed in 1895 to reverse the income tax, and the tax evasion methods employed to get the 1920s tax cuts, but it is now greatly amplified.
The income defense industry is comprised of lawyers, accountants, wealth management consultants, revolving-door lobbyists, think-tank debate framers and even key segments of the insurance industry whose sole purpose is income defense for America’s oligarchs. The industry is wholly funded by oligarchs, and it would simply not exist if oligarchs did not have massive fortunes to defend. There is no parallel (much less countervailing) industry serving the material interests of the mass affluent, the middle class or the poor. The activities of the income defense industry extend far beyond mere “interest group” lobbying over policies. Its salaried specialists assist oligarchs in exerting a form of power that is unique to the ultra-rich: the defensive redeployment of their money and income across a global geography of jurisdictions, banks and offshore havens through the use of tailor-made tax instruments, evasive trusts and shell corporations.

The industry operates almost exclusively by referral and serves only high net-worth individuals who have at least $2 million in investable financial assets, and especially ultra high net-worth individuals with holdings of $30 million or more. The industry is global in its spread and integration. Top-tier players like Whithers, Clifford Chance, Linklaters, White & Case, Milbank Tweed Hadley and McCloy, Weil Gotshal and Manges, and Freeman Freeman and Smiley are known in the trade as “magic circle” firms. They help coordinate relationships with accounting firms and other weapons in the wealth defense arsenal.

The most strategic theater is taxes, with combat conducted on two fronts. The first is the effort to lower the published top tax rate as much as possible and also to set the income threshold for the top bracket low enough that large numbers of relatively modest income earners feel the oligarchs’ pain. The second front is making the spread between the published tax rate and actual (or “effective”) taxes paid as wide as possible. This is one of the most important and costly fights the income defense industry wages on behalf of its oligarchic patrons. In the 1970s, oligarchs paid an average effective tax rate of about 55 percent, which was almost 80 percent of the top published rate. By 2007, the top 400 income earners in America paid an effective tax rate of 16.5 percent, which was barely 50 percent of the top published rate. Thus, the industry delivered lower tax rates on which oligarchs paid a lower proportion. The richer the client, the wider the income defense spread achieved.⁵

The income defense industry’s capacities improved throughout the 1970s and 1980s. As it grew stronger, the results the industry achieved for the ultra-rich were spectacular. Navigating through the almost 72,000 incomprehensible pages of tax code they had helped draft, industry specialists today structure complex partnerships and tax shelters that few IRS auditors can disentangle, or in some cases even fully understand. The richest Americans pay fees ranging from $300,000 to $3 million for lawyers to sort through the tax code and produce “tax opinion” letters (an instrument only those who can afford to buy them have ever heard of). Their purpose is to justify enormous non-payments of taxes that straddle the murky (and therefore costly to enforce) line between tax avoidance and tax evasion. These letters are among the most important weapons for pushing down the effective tax rate and increasing the income defense spread.

The U.S. Senate estimates that the income defense industry helps America’s oligarchs avoid paying about $70 billion in taxes a year through what the IRS calls “abusive offshore tax avoidance schemes” alone.⁶ This is a sum equal to the boon the Bush tax cuts give to the entire top 2 percent of income earners (a group twenty times as numerous as America’s oligarchs), and it does not include losses from similar schemes employed by corporations.

The income defense industry, attached symbiotically to the nation’s richest citizens, has fortified the material power and influence of oligarchs. It has enabled them to fight much more tenaciously even in the face of deep crises that, in earlier decades, delivered serious setbacks to their broader wealth defense agenda. Although oligarchs still operate mostly atomistically, their common deployment of a highly networked and organized industry lends their actions  an unprecedented degree of unity. Combined with weakened unions and considerably less political unity among average citizens, America’s oligarchs are arguably more powerful today than during the robber baron era at the turn of the 19^th century.

“A
merica does not have oligarchs, it has rich people”, declared one of my seminar students at Northwestern University. This could only be true if wealth were somehow stripped of its inherent political potency. Whatever else American democracy has achieved, it has not managed this. Rather, oligarchy and democracy operate within a single system, and American politics is a daily display of their interplay. Indeed, it is a misreading of oligarchic theory dating back to Aristotle to view oligarchy and democracy as mutually exclusive, or to suggest that democracy is a sham if oligarchs exist and exercise their power routinely and effectively. Aristotle called for an ideal political system, the polity, that combines oligarchy and democracy so deftly that “there should appear to be both elements and yet neither.”

Universal suffrage and liberal freedoms empower all citizens in a radically equal manner. But the one-person/one-vote principle does little to prevent oligarchs from exercising the power of money in a manner that is profoundly unequal. Formal juridical equality is essential to human freedom. But full political equality, even in the most liberal democracy, is impossible as long as concentrated wealth places grossly unequal political influence in the hands of a few citizens. Democracy fused with oligarchy is certainly better than no democracy at all. But there should be no illusions that it is anything other than a partial step toward full political equality and representation.


¹Simon Johnson, former chief economist of the International Monetary Fund, wrote of the “the reemergence of an American financial oligarchy” in “The Quiet Coup”, The Atlantic (May 2009); Columbia University historian Simon Schama, in Scribble, Scribble, Scribble: Writing on Politics, Ice Cream, Churchill, and My Mother (Ecco, 2011), suggests that “the United States Inc. is currently being run by an oligarchy, conducting its affairs with a plutocratic effrontery which in comparison makes the age of the robber barons . . . seem a model of capitalist rectitude.”

²In the same issue, Francis Fukuyama suggests that the pathology of a democracy can be measured by elites’ success in using their power to shift the burdens of public expenditure onto the rest of society.

³This term is from John P. McCormick’s book Machiavellian Democracy (Cambridge University Press, 2011). “Class anonymous” democracy ignores the highly distorting power of the ultra-wealthy. He argues that electoral democracy alone cannot safeguard the economic interests of the many against America’s oligarchs. In reaching this conclusion he echoes, of all people, William Graham Sumner (on this see Garfinkle’s discussion in The American Interest, January/February 2011).

⁴Gene Smiley and Richard H. Keehn, “Federal Personal Income Tax Policy in the 1920s”, Journal of Economic History (June 1995).

5See Winters, Oligarchy, figure 5.5, p. 246. 

⁶“Tax Haven Banks and U.S. Tax Compliance”, Staff Report, Permanent Subcommittee on Investigations, United States Senate, July 17, 2008. Also see “Closing Tax Loopholes”, levin.senate.gov (2010). 

Jeffrey A. Winters is professor of political science at Northwestern University and author of Oligarchy, published by Cambridge University Press in 2011.

 

Oligarchy or Democracy ?

Is the world moving more and more towards governments which resemble less a democracy but rather that of Oligarchy? Oligarchy which comes from the Greek word ὀλιγαρχία (oligarkhía) and the word ὀλίγος (olígos) meaning "few", as well as the word ἄρχω (arkho) meaning "to rule or to command".

 In other words, it’s is a form of power structure in which power effectively rests with a small number of people, thus in the hands of those who have the most money.

 Looking at our current governments, we notice that the industry as well as financial institutions are more and more pressuring lawmakers to changes laws to the benefit of their business dealings. How else is it possible that the 1% of the world's population holds 90 % of the world’s wealth? How else is it possible that the DOW is up to an all-time high of 16,272.65 in such a short time after the 2008 finical crisis which was caused by those financial institutions who are now more prosperous that prior to the crisis?

 Democracy has been under thread for a long time, but now it’s more imminent than ever before. The Ukraine has been and probably will be again another example of this trend towards Oligarchy!

Beware of your government and protect your true democracy which should be the rule of all people regardless of their wealth, social standings, ethnicity, gender or religion.

Terrorism: Used or Abused?

The US justifies pursuing potential targets around the world on the pretext of 'terrorism' but has the word been abused?

 

Source:Al Jazeera
For over a decade now, the United States has used the word ‘terrorism’ to wage wars beyond its borders and the same word has been used within its borders to spy on Americans.

The latest case was in New York. A federal judge has ruled that the city's police department's surveillance of Muslims in New Jersey was a legal effort to prevent terrorism, not a civil rights violation.

And the US is not alone. Several countries across the globe have used the pretense of 'terrorism’ to crackdown on opponents, through various anti-terror laws.
So, has this word been exploited?

Presenter: Shihab Rattansi

Guests: William Potter: an award-winning journalist and author of 'Green Is The New Red: An Insider’s Account of a Social Movement Under Siege'

Laura Beth Nielsen: a research professor at the American Bar Foundation and director of the Legal Studies Program at Northwestern University

Shiraz Maher: a fellow at the International Centre for the Study of Radicalisation at King’s College London; who is currently leading a research team looking into the flow of foreign fighters going to Syria

Collect it all: America's surveillance state

Source:Al Jazeera

Fault Lines investigates the fallout over the NSA's surveillance programme in the US and abroad.

Some of the US' best secrets are out since former National Security Agency (NSA) contractor Edward Snowden released thousands of classified documents about government surveillance in one of the most significant leaks in US history. He has been charged with espionage and has been living in Russia under temporary asylum.

What does it mean to live in a surveillance state? Fault Lines investigates the fallout over the NSA's mass data collection programmes by speaking to the people at the centre of the story, including journalist Glenn Greenwald and NSA director Keith Alexander.

The NSA's goal really is the elimination of privacy globally; it is literally a system to monitor all forms of human behaviour in the United States - which is the ultimate surveillance state.

Glen Greenwald, journalist

Greenwald tells Fault Lines how he got the Snowden documents, what the main revelations are, and why people should care. He lives in Brazil and has not returned to the US since he broke the story about the NSA surveillance programmes.
We also speak with William Binney, an NSA whistleblower who tells us the main turning point was 9/11, when the NSA vastly expanded its programmes and began collecting the data of Americans, not just foreigners as they had been before.

After the 9/11 attacks, surveillance also became more pervasive at the local level. We decided to speak to a group of people who definitely know their being spied on.
The New York Police Department (NYPD) began a programme with the help of two former CIA officials, to surveil Muslim life at all levels: mosques, cafes, infiltrating organisations and student groups.

We speak to a young Muslim student who talks about what it feels like to be under constant surveillance, and also meet Linda Sarsour, the executive director of a local community organisation called the Arab American Association of NY (AAANY).

The NYPD had a plan to infiltrate the board of AAANY, a centre that caters to immigrant women, children. She tells us what the implications of the programme is for the local Muslim community and discusses the effects.

We also speak to law professor Ramzi Kassem who analyses these policies as well as a psychologist who discusses the psychological effects of mass surveillance.

Finally, we come to Washington DC, where the NSA programme is being debated in the halls of Congress. We attend hearings on the hill, where General Keith Alexander and director James Clapper are being questioned; we hear from members of Congress from across the political spectrum about it; and we even get a chance to ask General Alexander questions ourselves.

House Republican unveils sweeping tax reform with focus on Wall Street

Plan introduces tough Wall Street levies and aims to simplify personal income tax code in overhaul that could divide parties
 
Dan Roberts
Source: The Guardian

A Republican tax reformer in Congress has proposed sweeping new levies on Wall Street as part of an unexpectedly radical plan for overhauling the US tax code that could divide both parties.

Under draft legislation unveiled on Tuesday by Dave Camp, a Michigan Republican who chairs the House ways and means committee, larger banks would have to pay a penalty for receiving government bailouts, and would face a new tax on their worldwide assets.
Wall Street’s private equity barons would also be hit hard by a proposal to end the controversial ‘carried interest’ rule which lets them avoid income tax by paying themselves through profits treated as capital gains and taxed under lower rates than those to which income is typically subject.

Together with new taxes on insurers, Camp said the increased revenue from Wall Street would help pay for a cut in US corporate tax rates, from 35% to 25%, and would ensure that the overall package of personal and business taxes he announced was revenue neutral.

His explicit attack on bailed-out banks has more in common with recent criticism of the Dodd-Frank bank reforms levelled by left-wing Democrats such as senator Elizabeth Warren than traditional thinking by either Republican or Democratic leadership, which have both shied away from confronting Wall Street in such ways.

“By declaring Systemically Important Financial Institutions to be ‘too big to fail’, Dodd-Frank allows these big banks and financial institutions to pay lower borrowing costs, with the difference left to be made up by the American taxpayer,” said an explanatory report by Camp’s committee staff.

“While tax reform cannot undo Dodd-Frank, it can and should ensure that Wall Street reimburses the American taxpayer for a portion of the subsidy it receives.”

The proposal has alarmed Washington business lobbyists, which may complicate the already difficult task of moving the legislation through Congress.

House speaker John Boehner and Senate minority leader Mitch McConnell, both Republicans, have indicated that their party may wish to wait until after November’s mid-term elections before attempting tax reform, while many Democrats are big recipients of campaign contributions from Wall Street. Camp’s aides pointed out, however, that the White House has in the past supported the idea of reforming corporate taxes.

If passed, Camp’s package of proposals would be the first major simplification of the tax code since 1986.

Under Camp’s plan, the number of personal income tax brackets would be slashed from the current seven to just two, 10% and 25%, though there would also be a 10% surtax on most people with incomes over about $450,000. Two-hundred and twenty-eight tax breaks would also be repealed.

Camp said the changes would not change the overall distribution of personal tax burdens, and claimed that the overall boost to the economy from the simplification measures would eventually total $3.4tn and create 2 million new jobs over the next decade.

Despite the lack of high-profile Democratic support following the departure of Camp’s Senate partner Max Baucus, who left office to become ambassador to China, Camp insisted in a press conference that his plan retained bipartisan backing.

“This legislation does not reflect ideas solely advanced by Democrats or by Republicans, nor is it limited to the halls of Congress,” he said.

“Instead this is a comprehensive plan that reflects input and ideas championed by Congress, the administration and most importantly the American people.”

Privately, Republican opponents of the bill said it stood little chance of making progress through the House given that many of its measures would give Democrats a chance to make political attacks on the GOP.

“Why would we give Democrats a list of pay-fors to use against us over the next 10 months?” asked one House staffer.

Sugar is killing us, and it doesn’t take much

The World Health Organization may cut recommended sugar intake to five teaspoons. Americans eat three times that

Jill Richardson, AlterNet

Nicolette Hahn Niman, author of Righteous Porkchop, just coined a new catchphrase that ought to go viral: “Sugar is NOT just an empty calorie.”

Her statement contradicts the notion we’ve had for years that the worst thing about sugar is its lack of nutrients. Either you’re eating sugar in addition to all of the calories you need to stay healthy, or you’re eating it instead of them. In the former case, you’re getting too many calories; in the latter, you’re getting too few nutrients. This idea is so dominant it was recently cited in an anti-sugar op-ed in the Guardian.

Even if that was the case, we’re eating too much sugar. Or, more specifically, too much added sugar. Sugars that are naturally present in whole foods like fruit are okay; it’s the sugar added to whole foods that we must worry about. Previously, the World Health Organization said we should limit consumption of added sugars to 10 percent of calories. Even then, more than seven in 10 Americans ate too much sugar. On average, about 15 percent of our calories came from added sugars.

But now WHO is considering cutting its recommendation in half. That means limiting sugar consumption to five teaspoons, the amount found in half a can of soda. 

The American Heart Association has long recommended that women limit added sugars to six teaspoons and men stick with nine or less. (For those looking for a loophole, this means all added sugars, including so-called healthier sweeteners like maple syrup, agave, honey, or even fruit juice.)

Niman was examining the health impacts of sugar at the same time as WHO. In researching and writing her latest book, she dug into studies that found evidence sugar does more than just lack nutrients. “The sugar is going to actually damage your body. It’s not just that you’re not going to get the nutrients,” she said.

The link between sugar and disease is not a new one. Decades ago, nutrition professor John Yudkin wrote a book called Pure, White, and Deadly in which he posited that sugar was the culprit behind heart disease and type 2 diabetes. The food industry fought back. This was the era of lowfat, not low sugar. (In his book, Yudkin even quotes a sugar industry advertisement claiming that sugar makes you thin. Go figure that out.)

The general term “sugar” can mean any number of things. Table sugar, or sucrose, is composed of a glucose molecule bonded to a fructose molecule. Glucose is what plants make during photosynthesis and it’s half as sweet as table sugar. Fructose, naturally found in honey and many fruits, is 70 percent sweeter than table sugar.

On your tongue, you taste a difference in sweetness between glucose and fructose. Once in your body, the difference continues. Glucose is metabolized by every cell in your body. After you eat, your blood glucose levels rise, and your body releases insulin. The insulin helps your muscles, fat and liver absorb the glucose, decreasing your blood sugar. 

Levels of another hormone, leptin, also rise. Leptin regulates your appetite; once you’ve eaten and your body has plenty of fuel to keep going, leptin tells you to stop. Another hormone, ghrelin, decreases. Ghrelin stimulates your appetite, and after you’ve eaten, it’s already done its job.

Fructose, on the other hand, is only metabolized by your liver. The title of a 2004 study says it all: “Dietary fructose reduces circulating insulin and leptin, attenuates postprandial suppression of ghrelin, and increases triglycerides in women.” In other words, after you eat fructose, your body never gets the message, “You’ve eaten enough, now stop.” As for those increased triglycerides, well… another word for triglyceride is “fat.”

In scientist-speak, “Compared with glucose, the hepatic metabolism of fructose favors lipogenesis, which may contribute to hyperlipidemia and obesity.” Translated, that says when fructose is metabolized in your liver, it is often converted to fat.

These facts about fructose are often cited in arguments against high-fructose corn syrup, but remember that sucrose, honey and even apple juice contain lots of fructose too.

One consequence of overdoing it on sweets is called “metabolic syndrome.” That’s a medical term for a number of risk factors for heart disease, diabetes and stroke: a large waistline, bad cholesterol, high blood pressure, and high fasting blood sugar. In fact, fructose and sucrose are such reliable causes of metabolic syndrome that scientific papers often use the terms “fructose-induced metabolic syndrome” or “sucrose-induced metabolic syndrome.”

Some scientists add other evils to the list, including kidney disease and stroke. A 2010 study found that “Fructose feeding has now been shown to alter gene expression patterns… alter satiety factors in the brain, increase inflammation… and induce leptin resistance.”

If that sounds so bad that you decide to switch your sweetener to pure glucose (sold under the name corn syrup, and not the high-fructose variety), keep in mind that an influx of glucose into your body spikes your blood sugar, followed by a crash. This is especially true when the sugar comes in liquid form. Your body also breaks down complex carbohydrates like whole grains into glucose, but then the glucose is released more slowly into your bloodstream. In 2013, scientists found that lower blood sugar may even improve memory.

All in all, one report estimates “30%-40% of healthcare expenditures in the USA go to help address issues that are closely tied to the excess consumption of sugar.”

The sad truth is that there’s no free lunch. Even when you eat “sugar-free” cake sweetened with honey or fruit juice, it’s all sugar to your body. (However, raw unprocessed honey provides some health benefits, whereas refined sugars do not.) For an experiment, go a day with only six teaspoons of sugar (25g) if you’re a woman, or nine teaspoons (38g) if you’re a man. Don’t forget to check foods you wouldn’t expect for hidden sugars, like bread, salad dressing, pasta sauce, and ketchup. Suddenly, the amount of sugar we eat in our normal diets becomes staggering.

Longer term, if a complete sugar makeover sounds unimaginable to you, start by cutting out sugary drinks, including fruit juice. You might want to skip the diet sodas too, since research shows they can be even worse than the “real thing.”

If your heart is palpitating with dread at the very thought of giving up sugar, you’ve arrived at one of the reasons why we eat so darn much of it. Some say it’s addictive, and a 2007 study found it gives your brain a reward even greater than that of cocaine.

In his book The End of Overeating: Taking Control of the Insatiable American Appetite, former FDA commissioner David Kessler examined what drives wanting in food. “Liking is pleasure but wanting is an urge to it,” he explains. “I need it, I need it to make me feel better. We looked in animals to see what was the most reinforcing. Was it the sweetness? Was it the fat? Was it the flavor? We found that sweetness drives wanting more than anything else. It drives—if you look at animals or people—how much effort they’ll expend for it. How hard they will work for it.”

You’ve heard the old adage, “A moment on your lips, a lifetime on your hips.” The pleasure gained from food is so fleeting. If I eat a cookie now, I will experience a few moments of pleasure, and then no more. I can extend that pleasure briefly by eating a second cookie. And then it’s gone. To keep feeling that pleasure, I would have to keep eating cookies—at least until I feel sick from eating too many. Yet many of us are more than willing to continue jamming cookies down our throats even if we want to be healthy and we know that cookies are not health food, for the ephemeral bliss they provide.

“We know that sweetness can increase the pleasure centers of the brain, the opioid centers,” Kessler continues. “We know it can serve as a mild pain relief… I’m eating something that is sweet—it can change how I feel. So it’s salient. It is powerful. It’s directly hard-wired from our sensory receptors in our mouth to our brain. You don’t even have to go through the bloodstream. It’s a very powerful molecule because it’s directly wired to our brain. And it can drive want.”

He adds that, “Sweetness isn’t the only driver of wanting. Add fat to that, it becomes more powerful. Add color, add texture, add temperature, add mouthfeel. Kids’ candies are just very simple, but as you get older you want more levels of stimulation. But at the core of most foods that are hard to resist there is sweetness. Now a lot of that has to do with past learning and past memory. It’s not always sweetness, depending on your past learning—but there’s no doubt that sweetness is driving.”

Kessler goes into even greater detail in his book. He looks at the impact of priming, when a single taste of a food triggers what he calls “conditioned hypereating.” He points out how the food industry taunts us, “Bet you can’t eat just one.” Sadly, that is probably true. Even if you’re not particularly hungry, after a friend convinces you to have “just a taste” of ice cream, you’re more likely to order an entire cone. Why do you think Whole Foods is so generous at giving you free samples of its cakes and gelato?

Kessler, and later Michael Moss (in his book Salt Sugar Fat) examine how the food industry capitalizes on our hardwired drive for sugar (and salt and fat). Moss details food manufacturers’ efforts to improve their products nutritionally without sacrificing flavor (or sales) or increasing price. Sometimes, a healthier but higher priced substitute, like an herb, could compensate for salt, sugar and fat. More often, when the manufacturers reduce one of those three elements, they compensate by boosting one or both of the other two.

In response to her research, Nicolette Hahn Niman almost entirely gave up sugar. She limits herself to a few squares of dark chocolate each day, and she reports that she’s kicked her sugar habit, and the cravings that would make her fall back to it.

Eschewing sugar is not impossible, particularly after the initial cravings go away, but it can be difficult in our society unless you cook all of your own food. Even then, it can come off as socially gauche when you’re dining with friends or co-workers and you’re the only one who isn’t gushing over the triple chocolate mousse cake someone brought to the party.

That said, there are other flavors out there, including salty, bitter, spicy, sour, and umami. Perhaps we Americans would do well to explore them.

The shocking numbers behind corporate welfare

by David Cay Johnston @DavidCayJ
Boeing and its stockholders fly high on tax dollars
Source:Al Jazeera America

State and local governments have awarded at least $110 billion in taxpayer subsidies to business, with 3 of every 4 dollars going to fewer than 1,000 big corporations, the most thorough analysis to date of corporate welfare revealed today.

Boeing ranks first, with 137 subsidies totaling $13.2 billion, followed by Alcoa at $5.6 billion, Intel at $3.9 billion, General Motors at $3.5 billion and Ford Motor at $2.5 billion, the new report by the nonprofit research organization Good Jobs First shows.

Dow Chemical had the most subsidies, 410 totaling $1.4 billion, followed by Warren Buffett’s Berkshire-Hathaway holding company, with 310 valued at $1.1 billion.
The figures were compiled from disclosures made by state and local government agencies that subsidize companies in all sorts of ways, including cash giveaways, building and land transfers, tax abatements and steep discounts on electric and water bills.

In fact, the numbers significantly understate the true value of taxpayer subsidies to businesses, for reasons explained below.

A fight for transparency

On a shoestring budget — roughly $1 million a year — Good Jobs First has for years dug through disclosure statements in all 50 states to compile reports on subsidies. Many of these subsidies exist despite strong provisions in many state constitutions prohibiting corporate welfare. New York state, for example, gets around this because its highest court ruled in 2011 that while the state may not give gifts directly, it can create an agency and let it give the gifts.
Good Jobs First does not oppose all subsidies. Rather, it favors transparency in the hope, executive director Greg LeRoy said, that any subsidies will be used wisely to expand the economy and not just prop up inefficient enterprises.

The data on welfare paid to companies come from Good Jobs First’s Subsidy Tracker 2.0, an improved Web tool that examines subsidies by linking subsidiaries to parent companies. The older version of the tool obscured the benefits to brand name corporate parents such as Apple, Google, Toyota and Walt Disney.

The size and range of the subsidies the tool has uncovered helps explain the burdens taxpayers must bear because so many major corporations rely on welfare for much or all of their profits rather than earning them.

Such burdens are especially hard on the poor. The bottom fifth of households in all but one state pay a larger share of their income in state and local taxes than the top 1 percent of earners. This means that corporate welfare effectively redistributes from the poor to those rich enough to own corporate stock.

Many forms of subsidies to business are excluded from Subsidy Tracker 2.0. For example, Good Jobs First does not count federal subsidies. It also leaves out indirect subsidies like perpetual monopoly rights of way for pipelines as well as rules that limit competition in pharmaceuticals, telecommunications and a host of other industries.
Phil Mattera, the organization’s research director, starts with publicly announced subsidies. With his small staff, he then gathers whatever records state and local governments make public or disclose through various Freedom of Information Act–type laws.

We know far too little about taxpayer support for business because of the ways governments do and do not collect data.

Boeing’s $13.2 billion in state and local subsidies is more than its pretax profits for the last two years. 

 

Federal, state and local governments publish exhaustively detailed statistical reports on welfare to the poor, disabled, sick, elderly and other individuals who cannot support themselves. The cost of subsidized food, housing and medical care are all documented at government expense, with the statistics posted on government websites.
But corporate welfare is not the subject of any comprehensive reporting at the federal level. Disclosures by state and local governments vary greatly, from substantial to nearly nonexistent.

Good Jobs First has prodded some states to expand disclosures. In many cases, though, the amounts and terms of corporate welfare are unknown because state and local governments assert that the information is confidential.

The best estimate of total state and local subsidies comes from Professor Kenneth Thomas, a political scientist at the University of Missouri at St. Louis. In 2010 he calculated the annual cost at $70 billion. No serious challenge has been made to this conservatively calculated figure, which in 2014 dollars comes to $75 billion. That is about $240 per person — nearly $1,000 annually for a family of four. That amounts to more than a week’s take-home pay for a median-income family with two parents and two children.

Few people realize the cost, however, because it is not represented by a deduction on their paychecks. What appears, rather, are burdens they bear in the form of taxes and Social Security.

Too big to fly on their own

Good Jobs First found that just 965 companies collected 75 percent of the value from 25,000 subsidy deals identified in Subsidy Tracker 2.0.

Boeing’s $13.2 billion is a bit more than its pretax profits for the last two years. It is also equals a stunning 70 percent of the $18.2 billion of equity owned by Boeing shareholders.

Measured against the number of commercial jetliners sold — 648 last year, at an average of nearly $79 million per plane — these subsidies come to more than $20 million per aircraft.

While the subsidies did not go just to commercial jets and were not for one year, those figures give some perspective to the huge amount of money that taxpayers lavish on Boeing.

Boeing declined to comment.

Second on the subsidy list is Alcoa, the old Aluminum Co. of America, which benefits from 91 subsidies totaling $5.6 billion. On the basis of its pretax income for last four years, that amounts to all the pretax profits Alcoa shareholders can expect for the next 189 years.

Alcoa operates in 35 countries, so I also calculated its state and local subsidies against its share of U.S. business for the last three profitable years. Measured this way, the subsidies equal 17 years of pretax U.S. profits.

These facts may surprise Alcoa shareholders, since the company makes virtually no mention of these gifts from taxpayers in its annual 10-K disclosure report. The only mention of subsidy is in terms of how Medicare drug benefits for retirees will lower annual pension costs, explaining about a nickel on each dollar of subsidy that Alcoa collects from American taxpayers.

In response to the findings, Alcoa said that, due to complexities in electricity pricing and to closing part of its New York smelting operation, the value of the subsidy was significantly less than Subsidy Tracker showed.

Taxpayers who want to understand the full dimension of their burdens should demand that Congress require and pay for detailed annual statistical reports showing every federal, state and local subsidy received by corporations, including the value of indirect subsidies like those perpetual rights of way to pipelines and other legal monopolies.
Without that information, we have no idea of the true cost of welfare or the cost of propping up companies that, evidently, cannot make their way on their own.

David Cay Johnston, an investigative reporter who won a Pulitzer Prize while at The New York Times, is a best-selling author who teaches the business, tax and property law of the ancient world at Syracuse University College of Law.