CommentsACCORDING TO LIZ - In the fable about the three little pigs, the big bad wolf huffed and puffed and blew down the house made of straw and the house made of wood, but when his hot air made no impact on the solidly built brick house of the third pig, he tried to sneak down the chimney and ended up in the soup pot.
Today the question is how do we build a strong enough house to protect humanity, and entice greedy corporations to divest from their evil ways so that the rest of us don’t end up cooked in the soup pot?
Big Pharma
Early this year, Moderna stock was up 937% from profiting mightily off American tax dollars rushed to help it develop a Covid-19 vaccine. And now it’s suing BioNTech/Pfizer for patent infringement.
Since when did Covid become a story about corporate profits and not people’s lives?
Johnson & Johnson was successfully sued by cancer patients who claimed its talc was contaminated with asbestos. Furthermore, it created a separate subsidiary to handle all cosmetic talc claims which filed for bankruptcy, ostensibly to ensure equitable claims but, almost certainly, to protect its investors and executives.
And while the company stopped using the ingredient in North America in 2020, it is continuing to sell its carcinogenic products overseas until 2023. How’s that for corporate greed?
Amazon
Amazon was functionally granted a license to mint money with so many millions of Americans either in lockdown, or choosing to quarantine during the pandemic. Furthermore, Amazon continues to stiff its employees and shirk on customer service to further enhance its profits.
Stock buybacks, conjoined with solicitations of more and more stock options – a Wall Street scam that increases CEO pay at the expense of investments in workers, innovation, and workplace safety – are omnipresent.
Companies focus all too much on the quarterly Wall Street price, on the dividends they can pay their shareholders (further plumping executive take-home pay since our labyrinthine tax code encourages the subterfuge of paying excessive pay this way to make it tax-deductible), and on stock buybacks.
And all the drama about inflation? Is it driven by costs? Or by profiteering?
Big Ag
According to the World Food Program, 345 million people around the world are experiencing acute food insecurity compared with 135 million before the pandemic. An increase of 255%.
Food prices have surged more than 20% this year according to the UN Food and Agriculture Organization. More and more Americans are using plastic, taking on debt just to buy groceries.
Four companies – the Archer-Daniels-Midland Company, Bunge, Cargill and Louis Dreyfus – control an estimated 70-90% of the global grain trade and are seeing record profits from people’s suffering. These four conglomerates are deliberately increasing prices leveraging the fact that demand is predicted to exceed supply for at least the next couple of years.
While they certainly have increased expenses due to supply chain problems, increases in energy costs due to Russia’s invasion of Ukraine and other political machinations, not to mention the ongoing climate catastrophes, are 25% jumps in profit alone justifiable at a time when consumers everywhere are suffering?
Or is it greed? The greed of companies that face little if any competition.
Speculation in the global food markets, pushing prices and windfall profits higher and higher will only continue if governments do not take strong steps to hold these companies accountable for this unethical behavior.
Big Tech
On the same day that the CHIPS and Science Act was signed into law to give microchip manufacturers $24 billion in investment tax credits along with $52 billion in taxpayer subsidies to expand domestic production, Intel announced it will cut manufacturing plant buildouts and other investments by $4 billion in the coming months while increasing its dividend payouts to shareholders to $1.5 billion, 5% over the previous year.
Last month, Intel's chief financial officer averred that "We… remain committed to growing the dividend over time." A dividend to benefit whom?
Intel had threatened to move more of its operations outside the U.S. if the subsidies bill wasn't approved. How fair is this to taxpayers?
To echo Bernie, given the five biggest semiconductor companies, those most likely to benefit from our largesse as taxpayers, made $70 billion in profit last year, does it really sound as if these companies need more corporate welfare?
Big Oil
Global oil producer Saudi Aramco reported net income of almost $50 billion last quarter almost twice what it made a year ago, profiting handsomely from both increased demand worldwide and the surge in crude prices following the Russian invasion of Ukraine.
Last month Exxon-Mobil reported estimated second quarter profits of $17.9 billion, almost four times its earnings in the same period last year.
Big Oil is not producing a product that is twice as good as it was in 2021. It’s not delivering a product that costs them four times more than what they paid a year ago.
Big Oil is profiteering off media coverage of war and scarcity, pumping up prices to record highs so they can deliver huge dividends to their shareholders.
Ordinary Americans are paying dollars more per gallon – both directly, and through the spiraling cost of everyday goods – and up to 65% more for home heating oil to provide such porcine profits.
President Biden has wrung his hands over the net earnings many companies are generating on the backs of ordinary Americans but, unlike some other governments around the world, his administration has failed to act.
And the Federal Reserve’s raising of interest rates is only aggravating the situation for the general public who gets stuck with not only subsidizing corporate welfare through their taxes but also with paying more interest on the debt that they incur to cover increased costs as both engorged energy prices and vendors’ loan interest gets passed down the financial food chain.
The real way to stop Big Oil’s price gouging is to impose significant windfall profits taxes to disincentivize such behaviors. Some of such income can then be targeted directly at impacted Americans to cushion cost-of-living increases.
In July, Great Britain enacted a 25% tax on oil and gas profits on companies operating in the UK and surrounding waters. Wisely they do not allow it to be considered an expense – one of the major tax dodges used by American corporations.
However, the costs of decommissioning oilfields, a needed step in moving away from fossil fuels is exempted from the tax, an escape hatch oil companies operating in North Sea have used far too effectively in the past to avoid paying any tax at all.
From the projected $5 billion in receipts in its first year, every household is supposed to receive a £400 ($480) discount on their energy bills, with an additional £650 ($780) cost-of-living grant for the poorest households.
This won’t be enough for the coming winter in a country where heating fuel is supposed to double for the coming winter while the cap on utility bills is only going up 60%.
But it’s a heckuva deal compared to the situation of many Americans, especially along the northern tier of states where global warming patterns have led to more frequent incursions by Arctic air masses.
Big Business
The US tax system is already heavily rigged in favor of major corporations, a fact exacerbated by Trump’s “reforms” that subsidized corporate profits out of taxes paid by middle and lower class Americans.
Meanwhile, prices for goods continue to spiral up while costs have started to drop for many companies. Instead of looking to the future economic health of their customers, most corporations are still focused on investor returns and share value.
While they deny, deny, deny to Congress and the public, companies tout further price increases to shareholders and investors.
In a virtual meeting, Kimberly-Clark’s CFO expounded to investors that "based on what we know today, we will continue to expand margins."
And a senior Kraft Heinz executive, explained that the softening of inflation could "put us in a better position for us to continue to recover the margin" implying that the company would be leveraging prices to further increase profits.
A windfall tax would take some of those billions in pure profit away from the market and give them back to the people.
Does Jeff Bezos need another billion or should the poor people in the northeast be able to afford heating?
Does Kimberly-Clark need to see its stock hit new heights or should families in Appalachia and the rural south and inner cities be able to feed their children?
Big Problems
People need to stop worrying about their stock portfolios; Wall Street needs to stop worrying about the next quarter’s profits. And we all need to start worrying more about where the world will be in 10 or 20 years for our children.
We need to work together to push the government to rewrite the tax code to encourage real investment in workers, in infrastructure, in communities, in our health and our future. To enact policies to drastically narrow the wealth gap, and ensure the public participates in profits when a company benefits from taxpayer subsidies.
(Liz Amsden is a contributor to CityWatch and an activist from Northeast Los Angeles with opinions on much of what goes on in our lives. She has written extensively on the City's budget and services as well as her many other interests and passions. In her real life she works on budgets for film and television where fiction can rarely be as strange as the truth of living in today's world.)
