Friday, July 18, 2014

Former patriot of the year puts money ahead of country—but isn’t that the American way?

It turns out that Heather Bresch is as much a patriot as she was a student.

Ms. Bresch is chief executive officer of Mylan, Inc., a large maker of generic prescription drugs which recently announced that it is buying Abbott Labs for the purpose of moving to the Netherlands and enjoying lower taxes.

As Andrew Ross Sorkin detailed in a New York Times article titled Reluctantly, Patriot Flees Home,” Ms. Bresch was recipient of a “Patriot of the Year” award by Esquire Magazine, one of the literally thousands of bogus awards given by nonprofit organizations and the news media to corporate executives every year. Bresch won the Patriot Award not for acts of valor or self-sacrifice—but for having the connections to lobby for the Food and Drug Administration Safety and Innovation Act of 2012, which gives the FDA the authority to collect user fees for the drug and equipment reviews it conducts. 

Let’s grant Ms. Bresch the benefit of the doubt and assume that unlike virtually every other instance of an industry initiative to regulate itself, Bresch’ proposal was not a watered down version of what should have passed if Congress truly had in mind the best interests of the public.  But even making the incredulous assumption that she acted altruistically, Ms. Bresch has certainly not behaved as a patriot in her massive tax avoidance scheme.

A true patriot pays taxes—when represented, as Bresch so ably is, in part by her father, a Democratic Senator and former Governor of West Virginia.

A true patriot looks at the state of our roads, the state of our education system, the diminishing sums for medical and other research, the high price of college, the staggering poverty in the land of plenty and then does what he or she—or it if in the case of corporations—can do to help.  Instead Ms, Bresch and her company, like Pfizer, Abbvie, Tyco, Walgreens, Medtronic, Chiquita and dozens of other companies, decided to buy a smaller foreign competitor and renounce American citizenship to take advantage of a gaping loophole in the U.S. tax code.

Ms. Bresch is old hat at not being what she seems.  For years her resume said she earned a Masters of Business Administration from West Virginia University. In 2007, the Pittsburgh Post-Gazette called WVU on a routine fact check after seeing a news release announcing Bresch’ appointment as Mylan’s chief operating officer only to learn that Ms. Bresch did not in fact have a degree. What happened next bordered on low slapstick: WVU said Bresch had not earned her MBA, then called back days later to change its mind. In the interim, the university awarded Bresch a post facto MBA even though she was some 22 credits short of a degree that requires 48 credits. To do so, higher ups gave her grades for courses in which she had received “incompletes” and added six additional courses to her academic record.  The Post-Gazette had a field day reporting WVU cooking the academic books to award a bogus degree and the university’s subsequent weak attempts to cover it up. Heads rolled throughout the university.  

Forgotten in the academic scandal that dominated the news media in West Virginia and western Pennsylvania for months were two things:
1.      There must have been enormous political pressure on WVU for so many of its administrators to behave so unethically. It is unclear from where that pressure came, given that the Governor at the time was Heather’s daddy and the chairman of Mylan at the time was WVU’s largest donor.
2.      Bresch lied about having earned an MBA and continued to lie even after the Post-Gazette called her on it.  (Denying the truth may the modus operandi at Mylan. About two years later, then CEO Robert Coury insisted that an FDA investigation had ended even after the FDA said it was ongoing.) 

Sorkin, who neglects to mention Bresch’s past brush with resume-padding, expresses surprise that the “patriot” acted so unpatriotically, but it makes perfect sense to me.  In the United States, we learn that the most patriotic thing to do is to open or run a business. We also learn that a business is supposed to maximize profit for it shareholders in a legal manner, no matter how ethically repugnant it may seem. Lay off thousands of workers so that profit margins increase. Leave communities to chase cheaper labor and laxer environmental regulations. Suspend manufacture of needed pharmaceuticals because the profit margins are too narrow. Buy smaller foreign companies and move abroad to avoid taxes. All of it is ”just business,” in the words of fictional businessman Michael Corleone.

The syllogism is perfect:
·         Running a successful business is patriotic
·         Business rewards amoral if legal conduct, as long as it produces a profit
·         Abandoning the U.S. and denying its government of millions of dollars that could be used for safety, education, infrastructure investment, protection of the weak and security is good business.
·         Abandoning the U.S. is patriotic

Those who think I’m just joking haven’t followed the past 35 years of the federal government facilitating the globalization of large American businesses to the detriment of U.S. workers and communities. It’s this record that makes me doubt that Congress will hear the cries of “unfair” that many are making and change the law so that any country that makes money in the United States has to pay the U.S. tax rate no matter how the business structures itself or where it locates its headquarters.  

If you want to sell to U.S. consumers, you should have to pay U.S. taxes and at the same rate as domestic companies. That’s only fair, but fairness has nothing to do with business, nor, in the age of the politics of selfishness, does it have anything to do with either governance or tax policy.

Wednesday, July 16, 2014

Anti-tax sentiment in the 17th century was anti-war; today, it’s pro the wealthy

By Marc Jampole

Reading about the 17th century in Geoffrey Parker’s Global Crisis really helps one understand our current challenges. Parker’s thesis is that the extreme weather conditions across the world in the 17th century tipped what would otherwise be normal political disruptions into rapid social, economic and political decay. The Fronde revolt in France, the 30 Years War in Germany, the Great Revolution that led to the temporarily overthrow of royalty in England, the Time of Trouble in Russia, the violent end of the Ming Dynasty and establishment of the Qing in China—these are just some of the major revolutions and wars that seemed to cluster around the middle of the 17th century, leading to serious population losses virtually everywhere.

Parker makes a compelling but not airtight case that the famines and extreme weather caused by what historians call “The Little Ice Age” did affect human societies enough to worsen all social and economic tensions and push many situations beyond the point of cataclysmic upheaval.

But even if we discount or reject Parker’s climate change theses, we can still learn a great deal from Global Crisis that applies to today’s world.

Take the topic of taxes, for example.  Parker shows that throughout the world in the 17th century rulers and their administrators collected and raised taxes for two purposes:
1.      To fund the extravagant lifestyles of royalty
2.      To fight wars of territorial conquest

No wonder there were literally hundreds of major and minor tax revolts throughout the entire world, and especially in Europe, during the middle war-torn decades of the 17th century! Who would want to pay for useless wars and the high life of the nobility?

Tax revolts have a storied and honorable history during the long and bloody era of royalty, including our own revolt against the British. Keep in mind though, that the American colonies were not opposed to taxes, merely to be being taxed without representation.

Fast forward to today and our far more complex post-industrial society.  In light of the strong historical connection between anti-tax revolts and warfare, isn’t it truly bizarre that the only budget item that none of our advocates for lowering tax rates want to cut is the military? In fact, virtually everyone who wants to lower taxes is also in favor of increased military spending.  They will gladly cut back spending on education, unemployment insurance, the space program, medical research, safety inspections, IRS audits and everything else the government does, but not on guns, bombs and ammo.

In the 17th century, tax protestors and rioters were mostly outsiders—peasants, merchants and minor nobles who objected to paying for foreign wars. By contrast, since the ascent of Reaganism and the politics of selfishness, most of those in favor of lowering taxes and against raising them to meet pressing needs are members of the establishment—rich folk like Pete Peterson, the Koch brothers and executives of large corporations plus their congressional factotums. And while they talk about lowering taxes as a general mantra, when you take a look at their tax proposals, they always only call for lowering taxes on two groups: the wealthy and corporations.

The rich control the news media, the multitude of think tanks that advise elected officials and the political process, which explains that the idea that taxes are bad is now so engrained in the public consciousness. Anti-tax fever has gotten so bad that Congress cannot even pass an adequate law to fund the repair and upkeep of our highways. Members of Congress either are afraid to pass a higher gas tax or are so adamantly against any tax that they just don’t care how much our roads deteriorate.

No one likes driving through potholes or over bridges that need structural work. Providing adequate permanent funding for our highways creates jobs and will lead to faster and more energy-efficient travel. To the degree that the tax would discourage driving, it may also help clean up the atmosphere. 

Yet no one—not even President Obama—will come out in favor of raising the gas tax or raising other taxes to fund highway repair and maintenance. Every elected official is as afraid of anti-tax frenzy as they are of the National Rifle Association.

Some may point out that a gas tax assesses everyone and goes against my basic premise that anti-taxers are really just interested in lowering taxes for the wealthy. Let me explain: the incessant call to lower taxes, which has dominated economic discussions since about 1980, has created an atmosphere in which the default position is to hate all taxes—new, old, general or earmarked. The debate in the marketplace is about all taxes, but the bills that are passed to typically give all or a large part of the tax breaks to the wealthy and corporations. We could make a new gas tax progressive by giving poor people gas rebates on income taxes, of course, but first we have to pass a new gas tax. And that’s nearly impossible in the current anti-tax environment. Meanwhile, we keep funding our senseless, goalless wars by borrowing money from the wealthy.

Let me close with a sarcastic shout-out to the New York Time which found room in its shrinking print pages for an extensive story on a scientist who denies that climate change is occurring. I’m guessing that it’s part of a series of personality pieces on climatologists and that the series will reflect current scientific opinion, so that in each of the next 200 editions, the Times will do in-depth studies of scientists who support the reality of global warming. 200 for and 1 against will just about represent the true balance of opinion among scientists.

Or maybe today’s article is the first in a series on scientists who speak against the overwhelming flood of facts on issues that were decided years ago: Next week, the Times might feature someone who doesn’t thinks the sun revolves around the Earth; and then move on to someone who believes in spontaneous regeneration, someone who still thinks phlogiston causes things to burn, someone who believes that vaccines cause autism and someone who thinks that only gays can get AIDS.

I’m fairly confident though that today’s feature about one of the small number of anti-climate change scientists is not the start off a special series but rather a continuation of the Times and the mass media’s decades long pandering to those advertisers who gain by postponing the changes we as a society will have to make to steer a peaceful and bloodless transition to the much warmer world of the future. 

Monday, July 14, 2014

Racism reborn as theories on Western superiority

By Marc Jampole
We’re seeing more theories exploring the reasons why the West dominates the world order or why the West has developed a more advanced culture. A few years back, a scientist tried to show that geography determined when and which cultures would dominate the globe at any given time.  In 1997’s Guns, Germs and Steel, Jared Diamond blamed the fact that “the literate societies with metal tools have conquered or exterminated the other societies” on the three items in the title of his book.  Several scholars like Bernard Lewis have made a living touting the superiority of Western culture and telling us why. A recent Economist took a reverse gambit, dedicating a long article on why the Arab culture has failed—failure of course measured as an inability to move towards a Western political and economic model.
Most of these theories define or assume that following traits define Western superiority:
  • A free market system
  • Free trade across borders, with restraint of labor
  • A representative democracy
  • An industrialized, and now post-industrialized economy
  • A consumer society built on cars, cell phones and disposable clothing
The latest to proclaim and then explain Western superiority is Nicholas Wade, in his Troubled Inheritance, which describes research that found minor differences in the genetic makeup of Asians, Caucasians, sub-Saharan Africans, Native Americans and the original inhabitants of Australia and Papua New Guinea. He assumes without any proof or explanation that these differences explain the differences in culture of these peoples and the superiority of white ways.
Too bad that the premise of Wade and of all of these writers—that the West has forged a superior way of life—is false.
One argument against the assumption of Western superiority is to point out the ills caused by Western ways: an epidemic of obesity and diabetes, resource shortages, the mass extinction of species, and human-made global warming.
But I prefer to do the numbers.
We have to start with a measurable standard. I know a lot of readers are going to go for standard of living or gross domestic product per person, but consider this: The only goal in the broadest of all unfolding histories—evolution—is survival. I’m going to assert that the best measurement of surviving is the size of the population.
And the Chinese win, hands down. When population historians analyze every extant population survey of different cultures, countries, continents and parts of the world, they find that at every point in the recorded history of humankind there have been more Han Chinese than any other race, culture and/or nationality. That’s 10,000 years of continual Chinese demographic superiority, even when they seemed to be under the paw of Western Europe militarily and economically.
As obnoxious as the idea of Western superiority is the very notion that we are in some kind of world competition that is culturally or racially based.
The very assumption of Western superiority is inherently racist, as is the sometimes frenzied search for proof that the races are different. It’s true that today the West seems to dominate the world and its cultural aspirations, as Greece and Rome once did for the Mediterranean world and Persia once did among the myriad cultures of the Asian subcontinent. But Asia, the Middle East, the subcontinent and Europe/America have all taken turns being the dominant economic and cultural power over recorded history. To take one moment and call it the end game of all history didn’t work when Marx tried it and it didn’t work when Francis Fukiyama tried it. And it doesn’t work when social thinkers say the West is superior just because it may have dominated and forcibly led much of the rest of the world for much of the last 300 years. This phase will pass as surely as did the Tang Dynasty, Ghengis Khan’s empire and the Moghul empire in India.