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informed, alert, thinking, active.
This is a not for profit site created and funded by unpaid volunteers.
Best viewed
with text size set to medium.
Because this is a book length posting additional chapters will be added in the coming months. This month features the introduction and first chapter.
Feb.
2003
Edition
42
[ Click here for Jan 2003 post ]
This is where we hope to keep you thinking. The site does not focus on diversionary minutia. You get enough of that incessant spin coming from mainstream media.
Feudalism ...alias American Capitalism
This important online book invites the reader to look behind America's
facade to see how Western Democracy really works!
The cornerstones of American Society
...Social Equality, Democracy, Justice, and Freedom of the Press
are all reexamined closely to expose
what is real, and what is carefully fabricated illusion!Reasons to Read the Book
Unless you are aware of just how and why the richest 1% in America are directly responsible for the nation's declining quality of life, ...you will probably benefit greatly from the facts and analytical perspectives offered in this book
Some issues covered in the book
are listed below:
why the number of American billionaires suddenly doubled in 1986, quadrupled by 1987, and by 1990 was nearly eight-fold!!...while at the same time, the number of soup kitchens and street beggars increased dramatically throughout the country
why Wall Street has been preoccupied with leveraged buyouts and mergers, and how they are fleecing the country
The items above are just a sample; there is much much more.
Note: This book was written to present plenty of carefully researched facts and insights, it wasn't written to impress the reader with a show of linguistic dexterity.
Introduction and Overview
The aim of the book is to provide enough shocking facts about the manipulative practices of America's power elite, that readers will be motivated (i.e., made angry enough) to take part in efforts to bring the richest 1% under control, ...before they impoverish the planet and destroy the biosphere.
The book presents overwhelming evidence that masquerading behind a democratic facade, an economic elite comprising less than 1% of the population is quietly and cunningly ruling America. Their immense wealth and power enable them to exercise so much control over the governmental process, that they effectively operate the country as a Feudal oligarchy. The book will leave little doubt that Government has been serving as a tool to subsidize and legitimize their exploitation of national and international resources, while legislative tax changes have left the nation with a Feudal wealth distribution system.
Presenting the evidence to substantiate this argument is not the main reason the book was written. Documenting the methods used by the elite to manipulate, control and exploit those with less money or power is the real purpose. At least 80% of the book is devoted to documenting their very effective methodology.
While it is evident that most people are somewhat aware that government appears to cater to corporations and influential lobby groups, the average taxpayer is practically oblivious to the extent to which the wealthiest 1% directly and purposely control and manipulate the lives and destinies of everyone else on the planet.
For those who have been brought up on a steady diet of the American Dream, but notice that today's reality and the American Dream seem to be growing further and further apart, it may be worth keeping in mind that if a frog is placed in a pan full of cold water, and the heat is turned up gradually enough, the frog will fail to sense the danger, and instead of jumping to safety, it could quite unknowingly allow itself to be cooked. In a similar fashion, the media continues to be used to desensitize and/or misinform the general public into repeatedly accepting domestic and foreign policies that are very often diametrically opposed to the best interest of the majority.
While the average American does have "a vague idea" that corporations (as well as the economic elite) use plenty of techniques for avoiding taxation; how many know that the proportion of Federal Income tax derived from Corporate income tax declined steadily from 32% in 1952; to 23% in 1960; to 17% in 1970; to a low of 9% in 1985? Without vital knowledge such as this, the public will remain in the dark as to what is really causing the decline in most Americans' standard of living.
Although the growing deficit and the near trillion dollar banking industry losses will inevitably lead to continuing cuts in the standard of living for present and future generations, most Americans feel powerless to alter their deteriorating economic conditions, and simply take consolation in the belief that everyone else is also feeling the pinch.
Nothing could be further from the truth !
Statistics taken from Forbes magazine's annual July survey of America's billionaires expose the true reality. In 1982 there were 13 billionaires, in 1983...15; in 1984...12; in 1985...13; in 1986...26; in 1987...49
In other words, the number of American billionaires had for many years hovered around 13, then the Reagan administration drastically altered the wealth distribution patterns by introducing tax changes favoring the super rich. In 1986 the number of billionaires DOUBLED, and by 1987 the number of billionaires had QUADRUPLED!! By 1988 there were 68 individuals or families that each had net wealth in excess of $1,000,000,000. By 1989, the number had risen precipitously to 82. And by 1990, the Forbes survey reported the staggering total of 99!!
This explosion of wealth taking place at the top has occurred and will continue to occur while waves of beggars flood onto the streets, and thousands of farmers lose their farms. It is neither fate nor coincidence that these events are occurring simultaneously. Tremendous profits continue to flow into the bank accounts of the super rich even during supposedly poor economic periods.
Unless facts such as these become "common knowledge", economic Feudalism will continue to be an integral aspect of the status quo.
Why isn't the general public aware of these facts ?
Simply because the richest 1% own virtually all of the media, and have little difficulty controlling the content and coloration of television and newspaper information reaching the public. The superficial and often distorted picture of reality offered by newspapers and television's 30 second sound bites has traditionally contributed little to the exposure of America's hidden reality. In no less a fashion, the major publishing houses have, like a circle of protective elephants, provided a wall of defense around the existing status quo and the elite who profit from it. In short, Americans are being deceived and seduced into clinging to unrealistic concepts served up through the mass media by the very people who are exploiting the nation.
Facts that would have exposed the true nature of present day America rarely get presented through newspapers or television. Instead, they surface in magazines such as the Economist, Forbes, Fortune, Insight, and The Wall Street Journal which are read almost exclusively by the economic elite and their sympathizers. Moreover, the specialized economic jargon and ever changing "buzzwords" used throughout these publications poses yet another barrier preventing the published facts from becoming widely appreciated.
Consequently, this book has been written to present the reader with a comprehensive but seemingly radical perspective of America's hidden reality, based on and supported by facts extracted almost exclusively from the conservative, pro-establishment publications just mentioned. This was done purposely to avoid arguments regarding the truth, accuracy or bias of facts used throughout the book. Additionally, the author attempted wherever possible to present both the perspectives and the supporting facts in plain uncomplicated English so as to be accessible to a broader spectrum of the general public.
The book could easily have been entitled "The Hoax of Democracy and Equality in Western Society", because the world's economic elite have taken control not only in America, but in virtually all the capitalist democracies, England, Canada, Scotland, Ireland, West Germany, Israel, South Africa, India, Australia, New Zealand, Japan, etc., as well as all the other countries ruled by economically elite minorities.
However, because America chooses to be the flagship for democratic capitalism, so she automatically deserves to be the focus of criticism as well. Moreover, it has been the American elite who have pioneered many of the social and constitutional controls that the economic elite of other countries have imitated. Consequently, incidents were chosen from American society to provide references and examples, although each of the other countries could have served the purpose as well.
It is therefore the author's hope that the book will serve as a catalyst to arouse true democratic power not only in America, but throughout the so-called Western democracies, simply by outlining many of the methods which the elite purposely use to manipulate society in order to maintain their wealth and power (i.e., a Feudal society).
If and when Western citizens come to know even some of the facts contained in this book, the outcry could be deafening. The shift of power from the wealthy elite to the majority could come just as surprisingly and as quickly as the shift of power away from the Communist elite occurred in Russia.
The demand for true democracy, and a more equitable distribution of wealth could dramatically alter humanity's destiny. A "New World Order" could really take place.
As Victor Hugo once put it, "No army can withstand the strength of an idea whose time has come", and the time has come.
Important additional note!!
The author would like to remind the reader that although most of the incidents referred to in the book occurred in the late 80s and early 90s (because that's when the book was originally written), it would be no problem at all to choose a comparable set of incidents taken from today's current events. In short, we are always being manipulated and exploited with basically the same methodology, so providing incidents (i.e., examples of a particular exploitation method), at any point in time, to support the basic arguments in the book would be relatively easy. It would simply entail a repeat of the time and effort taken to collect the currently provided set of supporting bibliographic references.
I have little doubt that readers will be able to supply their own current references, ...and all too easily.
This type of expose of the elite's methodology needs to be written only once.
Chapter 1
The Hoax Of Equal Opportunity And Equitable Prosperity
(Part 1)
The Hidden Social Order - The Society We Can See
In the 50's, the United States appeared to hold the formula for prosperity. Her love affair with the automobile soon caused homes to sprout two and three car garages, while her industrial automation produced such a profusion of affordable consumer goods that the growing prosperity enjoyed by the predominantly one income families of America could best be described as an era of rampant consumerism.
Television series like Father Knows Best and Leave It To Beaver, among others, slowly but surely etched apple pie concepts of America into the nation's psyche. Individually and collectively, Americans began to expect and demand world recognition as the flagship of prosperity and democratic freedom. National pride became the country's chief export.
To put it mildly, times have changed .
Escalating real estate prices and high rents have forced most families to require two incomes just to get by, and the concept of home ownership has been transformed from an expectation to little more than a pipe dream for this generation's youth, who have very little money left over after paying their rent.
With the advent of two working parents, the quality and nature of home life progressively deteriorated to the extent that few children now enjoy the luxury of growing up with only one set of parents. Broken homes and single parents on welfare have become part of the norm.
In the workplace, computers, improved communications, and automated manufacturing techniques have dramatically increased efficiency and productivity; but unless you count yourself among the richest 10%, your economic group has been relatively losing ground steadily since the 50's despite all the technological breakthroughs. More recently, across the board cuts in social programs have significantly decreased the standard of living for the employed and unemployed alike. Moreover, the widespread proliferation of street beggars, soup kitchens, grocery handout centers, and flop houses for the homeless bears witness to the fact that an American reality is shaping up that can no longer be ignored.
The hallowed buildings of the nation's capitol, that once echoed with the visions of the original Founding Fathers, now bear witness to a continuous parade of high level government officials forced to resign for various abuses of public trust. The Founding Fathers would no doubt be horrified to learn the extent to which drugs, violence and organized crime have come to be an integral aspect of the American way of life. So much so, that the deterioration of life in America is epitomized by Washington DC itself. Not only has the nation's capital had to resort to imposing a night-time curfew on all Washingtonians under 18, its mayor is currently facing drug charges, and the city has also become the murder capital of America!! {B1}
Legislative and constitutional changes favoring the most wealthy are rapidly running the country into bankruptcy. In 1988 alone, 200 American banks, and 226 Savings and Loan thrift institutions (S&Ls) failed, and hundreds more are about to fail. The banking industry is on the verge of collapse. Losses involving the S&L thrift institutions alone could eventually cost the taxpayer up to 500 billion dollars. In addition, the major U.S. banks are being secretly bailed out from their defaulting 3rd World loans.
Continuing cuts in the standard of living for America's unborn loom ominously. As a result, Americans are now beginning to reluctantly acknowledge that the expectations of prosperity fueled by the American Dream are no longer probable. The optimism of the 50's has been replaced by widespread uncertainty concerning future economic well-being, and rightly so.
Clearly, America of the 80's is radically different from America of the 50's, yet most Americans still cling to concepts of wealth distribution, democracy, and freedom of the press that echo the ideals the American Dream of the 50's even though many of the concepts can no longer be substantiated by present-day social realities. Socio-economic changes occurring behind the scenes have drastically altered the nation's destiny. A covert social order is in place and there is a 90% chance that you are one of the chosen losers. Those who remain ignorant of what is happening behind the scenes, will have to take it lying down. If you know what is going on, you can fight back. Knowledge is power. Let's begin by examining the hidden social order within America. The facts will probably shock you.
(Part 2)
The Hidden Wealth of the Richest 1%
Including or excluding the so called "couch potatoes", Americans take in more information than they ever have. Newscasters such as Ted Koppel, Dan Rather, Tom Brokaw, Robert McNeil, and Jim Lehrer are as well known to this generation as Walter Cronkite was to previous generations. Not only do people watch their favorite newscasters regularly, they read mountains of newspapers and magazines as well.
Because the American media claims to be the freest in the world, few have reason to suspect that their mass media information is being very carefully controlled and colored. The shocking truth is that the American public is being purposely kept in the dark about many vital realities. For example are you aware that:
THE RICHEST 1 (ONE) PERCENT OF AMERICANS possess more wealth than
THE COMBINED WEALTH OF THE BOTTOM 90 (NINETY) PERCENT. {B2}Despite how incorrect that statistic may first appear, there is definitely no error or misprint involved. Not only that, the full significance of the above statement is rather difficult to instantly appreciate, so we'll take a moment more to consider its implications.
Because the richest 1% prefer to associate almost exclusively with members of their own social and economic standing, few members of the bottom 90% of Americans have ever even met a millionaire let alone a billionaire.
Consequently if you belong to the bottom 90%, you can think of the wealth of the richest 1% as :
more wealth than the combined assets of every American you have ever met, plus all the assets of every American you would be likely to meet on a trip that took you through every single city and town in the nation!!If you haven't been thinking of the rich and their wealth in quite that light, I suggest you begin to, because that information is only the tip of the iceberg of information being actively suppressed by the so-called freest media on the planet. Many references will be made throughout the book to the bottom 90%, so it is appropriate that we try to define the group a little more precisely.
Since the average person in the West considers himself or herself a member of the middle class, logic as well as popular opinion would suggest that half or more of the population fits into it. Initially then, let's arbitrarily consider that American society is comprised of 60% middle class, 20% lower class, and 20% upper class. Because the combined middle and lower economic classes only account for 80% of the population, the bottom 90% of society must also include half of the so-called upper class as well!
This means that the bottom 90% is comprised of:1) Every member of the middle class
2) Every member of the lower class
3) Half the members of the wealthy upper class
So now our original statistics can be interpreted to mean that:
THE RICHEST 1 (ONE) PERCENT of Americans own more wealth than:
1) ALL of the wealth of ALL of the MIDDLE class
COMBINED WITH
2) ALL of the wealth of ALL of the LOWER class
AND ADDED TO
3) ALL of the wealth of the bottom HALF of the UPPER classIf you are surprised or shocked, don't feel bad. The elite have gone out of their way to ensure that you didn't know it. Nevertheless, my initial choice of (20%, 60%, and 20%) to represent the upper, middle, and lower class population percentages was arbitrary, so if you think the arbitrary percentage breakdown of society was at fault, I welcome you to run your own idea of the class percentages through the preceding model. No matter what figures you choose, the bottom 90% of society would still have to include ALL of the lower class, plus ALL of the so called middle class, plus a portion of the upper class. The staggering significance of the wealth of the richest 1% will not alter. Go ahead and try it.
(Part 3)
The Hidden Wealth of the Next Richest 9%
Up to this point, we have referred only to the richest 1% and the bottom 90%. However, sandwiched in between those two groups is another wealthy minority, "the next richest 9%". Let's now find out how that group fares economically. You may be stunned to learn that:
THE NEXT RICHEST 9 (NINE) PERCENT also possess more wealth than THE COMBINED WEALTH OF THE BOTTOM 90(NINETY)PERCENT
As unbelievable as it sounds, there are two minority groups, not just one, that own more assets than the bottom 90%. These two statistics alone should leave little doubt that the bulk of the wealth in America is owned by a very small minority of super rich individuals. This reality contrasts so drastically with the "equal opportunity", "equal prosperity" concepts fed to the bottom 90% and the world at large, that statistics such as these have had to be suppressed. Again, there is no misprint. The only deceit involved is that the bottom 90% have been purposely kept in the dark about wealth distribution realities.
(Part 4)
Hidden Permanent Prosperity For The Rich
If you were unaware of the severity of wealth distribution inequities, then you are probably in for an even bigger surprise to learn that the rate, at which the economic elite are getting richer, is simply astounding.
Statistics published in Forbes magazine's annual survey of America's billionaires expose this little known but shocking reality.In 1982 there were 13 billionaires; in 1983....15; in 1984....12; in 1985....13; in 1986....26; in 1987....49. Note carefully that prior to 1986 the number of American billionaires had averaged around 13. Then the Reagan administration drastically altered the wealth distribution patterns by introducing new tax legislation favoring the top 1%. In 1986 the number of billionaires DOUBLED, and by 1987 the number of billionaires had virtually QUADRUPLED to 49!! By 1988, there were 68 individuals or families that each had net wealth in excess of $1,000,000,000. By 1989, the number had risen precipitously to 82. And by 1990, the Forbes survey reported the staggering total of 99!! {B3} With favorable tax laws in place, the super rich can enjoy bonanza years even during recessions!! The tax laws that allowed this to happen are still in place, and will remain in place till enough people get sufficiently concerned to insist that they be changed. What should cause the American people to sit up and take notice, once and for all, is the fact that this explosion of wealth took place during a period when:
1. The stock market crashed harder than in 1929.
2. Hundreds of American banks and Savings and Loan thrift institutions declared bankruptcy and saddled the taxpayer with a debt to pay that may ultimately exceed $500 billion dollars.
3. Thousands of farmers lost farms that had been in the their families for generations.
4. Millions lost their jobs.
5. Wage earners were having to take massive pay cuts and reductions to their benefits.
6. Social programs and health and education programs were being drastically cut back or terminated.
7. Waves of pan-handlers were flooding onto the streets.
8. Shelters for the homeless, and grocery handout centers were springing up like mushrooms in practically every city throughout the nation.
It should not take an Einstein to observe that equal opportunity, and equitable prosperity is an outright hoax for all but a small minority. Unlike Britain, France, and Germany which can point to their Feudal pasts to explain their existing wealth distribution inequities, America can point to no such excuse! The American economic elite have established Feudal wealth distribution inequities equal to, and even surpassing their European counterparts (the monarchs and the landed aristocracy), in just 200 years!!
We have been brainwashed into believing that the super rich are so few in number that they and their wealth can be safely ignored. In reality, they directly and significantly affect everyone else's standard of living, and will continue to do so as long as their power and influence remain unrecognized, and unchallenged. This explosion of wealth for America's super rich has immense significance not only for society as a whole, but especially for the bottom 90%.
Many of those in the bottom 90% who accepted pay cuts and decreases to their employment benefits, did so because they had been led to believe that everyone else was also feeling the pinch. Nothing could be further from the truth.
What is being successfully hidden from public awareness is the fact that the widening gap between the haves and the have-nots is an ongoing process, and one which is running even now at full throttle. The extent to which the bottom 90% are being successfully deceived can be made more obvious by noting just how the current economic bad times are affecting American billionaires.
A good example, but not necessarily a typical one, is Sam Walton and family, who increased their wealth by $2,300,000,000 (from $6.7 billion to approximately $9 billion), in a twelve month period, from the time Fortune magazine took their 1988 survey, to the time they took their 1989 survey. For those who believe that the rich pay high taxes, Sam's pre-tax profits had to have been considerably higher than $2.3 billion. Even a 25% tax rate would put his pre-tax profits in excess of $3,000,000,000 for a 12 month period!!!
If you think that movie theater prices are exorbitant, or feel that "pay TV" prices are unreasonable, then perhaps you ought to have a word with Mr. Sumner Murray Redstone whose fortune increased by $1,480,000,000 (from $1.4 billion to a hair under $3 billion) in the same twelve month period. His name surfaces attached to entities like Twentieth Century Fox, Columbia Pictures, MGM/United Artists, or "pay TV" entities such as Showtime, The Movie Channel, and MTV. Fortune magazine's own comment was: "That's a compound annual rate of return of about 132%".
Or perhaps you would liked to have purchased a cellular telephone, but found them too expensive? Try talking Mr. John Werner Kluge into taking less profit. After all, his wealth increased by a cool $2,000,000,000 ($2 Billion) just last year.{B4}
For those unused to thinking in terms of hundreds of millions, not to speak of billions, let's take a moment to digest the significance of this magnitude of wealth.
To begin with, a simple 10 percent interest on just one billion dollars amounts to $100,000,000 (one hundred million dollars) in interest alone per year. From a working person's perspective, it would take 100 lifetimes, (of 40 working years each), for a person earning $25,000 per year to earn the amount of income each of our billionaires can earn in interest, per billion, per year. (without lifting a finger) Who pays for these previously mentioned profits? You of course, through an unnecessarily high cost of living (high cost of goods and services, high bank interest rates and inflated real estate prices, etc.).
It is worth keeping in mind that before families like the Carnegies, Rockefellers, Morgans, Vanderbilts, and others of similar ilk used PR campaigns and some supposedly philanthropic donations to help convince Americans of their social nobility, they were commonly known as "robber barons".
Consequently, it should come as no surprise that in recognition of the widespread use of tax-deductible methods of purchasing civic respectability, Ralph Waldo Emerson defined a philanthropist as a man who gives away what he should be giving back.
In short, fantastic wealth is being generated virtually all the time, but the bulk of it is being skimmed off by the wealthy while the working class are kept on a relatively minimum standard of living to help fuel the illusion of ongoing hard-times.
To avoid showing the rest of the nation the amount of money they have managed to amass, and to further avoid paying taxes, some of their corporations are registered in out of the way playboy tax havens like the Bahamas. In addition, they keep much of their money in specially numbered secret bank accounts (no questions asked, no information given), in countries such as the Bahamas, Switzerland, or Liechtenstein, whose banking communities have grown fat by obligingly taking on the role of laundering and safely storing secret treasures for some of the world's wealthiest thieves and criminals. In fact, the August 21 1989 issue of Insight magazine fully exposed just how cheaply and easily a money laundering network can be set up.{B5} People who work from nine to five everyday don't have the time to waste thinking about the activities of these jet setters and playboys. Because of economic segregation, most nine to fivers have never even met such a person. Quite often the elite have their own jets, and seek obscurity behind tinted limousine windows. For the most part, the elite who rule America from behind the scenes, purposely go out of their way to maintain extremely low profiles. Why? Because neither their fortunes nor their business transactions would stand up well to public scrutiny.
Media owners, who belong to the richest echelons of our society, cooperate with their peers to ensure that their profiles remain as low as they wish. Laws that were supposedly enacted to protect the privacy of individuals, have certainly served the purpose of keeping the general public largely ignorant of the shocking realities of wealth distribution inequities. In effect, the economic elite are effectively making fools of 90% of society's so-called equals. Not surprisingly, their lobbying power has ensured that inheritance laws allow fortunes to remain virtually intact from generation to generation.
(Part 5)
Subsistence for the Working Class
The old Feudal system based on economic and social class discrimination, which was supposedly left behind centuries ago, has in fact not gone away. It has only been made to appear as if it had. For example, from poor humble beginnings in servile poverty, the feudal serf rose phoenix-like to a minimum wage which now allows him to afford a standard of living just under the poverty level. American society has plenty of them, and their numbers are growing all the time. The Census Bureau acknowledges not only that 32.5 million Americans are living below the poverty level, but that less than a third receive welfare assistance! {B6} Perhaps the most tragic aspect of all is that in 1986, two million adults who lived below the poverty level held full-time jobs!! {B7} Can any ethical government expect its citizens to spend 40 hours a week working to earn a living BELOW the poverty level? Surely, this is an insult to human dignity. Back in 1981, a full 36% of workers paid on an hourly basis received the minimum wage, or within a dollar of the minimum wage!! {B8} The hardest hit are America's youth. Since 1973, the poverty rate for the under-30 group has nearly doubled to 22%. {B9}
Those working in a restaurant for minimum wage sometimes get to take home some of the leftovers, but if they make beds and empty urinals in a hospital, they probably couldn't afford to catch anything from the people they work around. Why? Because they would have to work for at least three weeks to pay for a single day's hospitalization. Medicare costs have risen an average of 8.5% per year since 1984. {B10} By 1987, more than 11 million children had no health insurance. {B11} What makes the situation even more shameful is that of the 37 million Americans who entered the 1990's with no medical coverage, the majority were employed! {B12} The fact that health care is becoming an unaffordable luxury in America is made more evident when one becomes aware that America ranks 20th in infant mortality behind Spain and Singapore. The shocking truth is that almost 40,000 of the 3.8 million children born in America in 1986 died before their first birthday!! {B13} Moreover, on any given night in America, there are approximately 100,000 homeless children. {B14} This figure may be seriously understated because a group of San Francisco lawyers known as "Public Advocates" estimate that in the San Francisco area alone there are 48,000 homeless and that more than 10,000 of that number are children. Why so many homeless? Simply because Capitalism practically demands homelessness. The self-regulating market forces of supply and demand, that America so proudly markets to the world, dictate that builders have little or no incentive to build housing for people with little or no money, but plenty of incentive to build more office space for wealthy corporations despite the fact that 100,000 homeless American children are growing up socially and economically deprived in a country which has had a nationwide office space vacancy rate of 18% for the last five years!!! In Manhattan for example, 8.9 million additional square feet of newly completed office space came on-line last year, but only 2.5 million square feet of it was rented. {B15} Another cause of the homelessness can be traced back to unemployment.
Unemployment (Exported Jobs, Imported Cheap Labor)
The root causes are extremely important, and to appreciate them let's think back to the 50's once more. Back then prosperity seemed within everyone's reach. Homes were beginning to sprout two car garages, and practically everyone's standard of living was on the rise. Here's what changed all that.
The prosperity of the 50's that generated and fueled the American Dream, occurred because American corporations were employing American workers. Now, they hire the 3rd World.
Because the American economy was booming at that time, and much money was being made, organized labor began to demand a fairer share of the prosperity. American corporations reacted by shutting down their American plants, and building their non-military related factories and manufacturing installations in Second and Third World countries. Tax legislation allowed the elite to write off the costs of building their factories abroad. In effect, taxpayers have paid for virtually all the American owned factories abroad! By doing so, the corporations were not only robbing North America of much needed employment opportunities, but were simultaneously exploiting the cheap labor and natural resources of poorer nations in the latest version of colonial exploitation. American corporations still help white South Africans to exploit and repress the blacks.
Moreover, the success of the anti-apartheid movement, since the 50's, displeased many of the corporate elite because they knew that eventually even the blacks would belong to organized labor groups, and that the days of cheap black labor were obviously numbered. This development greatly accelerated the practice of shutting down factories and industries in America and rebuilding them in Third World countries to take advantage of the remaining pools of cheap unorganized labor. The industrial exodus caused such a shortage of jobs for unskilled and semi-skilled men, that more and more women were obliged to enter the work force to enable families to cope economically. On average, women have been paid from 65%-70% of what men earn for the same job. {B16} Today, employers are still trying to discriminate against women, with regard to salary equality and career opportunities, in an effort to keep women as a cheaper source of labor than men.
Newsweek pointed out in its March 13 1989 issue, there are now about 140 million Americans between the ages of 20 to 64, and a staggering 30 million of these individuals are unemployed! {B17} But, just as the government hides much of its deficit "off budget", so it has ways of excluding many of the unemployed from its official figures. Those who have quite literally given up looking for work don't even get included in the government's seasonally adjusted unemployment figures, so the true picture of reality remains hidden. For political expediency, unemployment figures can be deceivingly and artificially reduced when required, at taxpayer expense again, through "make work" programs. Nevertheless, jobs are being constantly exported. According to Department of Labor statistics, the blue-collar factory work force decreased by 11% in the last decade alone. {B18}
With the widespread demand in Eastern European countries like Poland, Hungary, and Czechoslovakia for a taste of capitalism, it won't be long before we begin importing name brand bicycles, fridges, etc., instead of employing Americans to make them . The rush to do so will most likely intensify before the unification of Western Europe takes place in 1992. In Poland, the cost of labor is even cheaper, a mere $40 per month. {B20} However, Americans should keep in mind that where wages are low, cost of living is usually correspondingly lower. In other words, Poles don't have to fork out $300-$500 per month in rent.
In 1988 alone, spending by overseas subsidiaries of American firms increased by 23% to $42.3 billion. {B21}
Not only were the taxpayers footing the bill, lower labor rates gave them higher profits. On top of that, the elite were often able to negotiate tax advantages with the foreign countries, so all in all, it has been a case of "to hell with the American work force".
The economic elite have such a strong control over public opinion and government in the West, that they knew they could virtually abandon their own populations, and allow the standard of living to deteriorate because the desirability of Communism and even Socialism has already been virtually purged out of the psyche of the Western mind. However, the elite know they will have to put up with a growing amount of grumbling. But because they control the government and the media, they will safely be able to allow the standard of living in America to gradually drop to the point that it approaches the rising standard of living among the developing nations.
Another method the elite have been using to maintain a downward pressure on American wages has been to make sure that almost all immigrants coming to America come from the cheap labor countries. Even though practically all the immigrants now coming to America fit this description, there is a push on to accelerate this process.
Despite the existence of 30 million eligible unemployed Americans, the Deputy Editor in chief of Forbes magazine, M.S. Forbes Jr., editorialized in the Jan 8 1990 edition that the nation was actually suffering from a "People shortage". He went on to add that, "There are not enough young people entering the labor force. We badly need to revamp our immigration laws so that many more hardworking foreigners from Europe and elsewhere can come here."{B22} Not surprisingly, an article also appeared in the Jan 29 1990 issue of Fortune magazine entitled "Let's change the immigration law - now ". The article started out by saying "Millions of Eastern Europeans and Soviets - educated and talented for the most part - are likely to try to start fresh lives in the West..." The latter article also clearly pointed out that in the last decade, the greatest number of immigrants to America have been ...Mexicans, then Asians, and then immigrants from Central and South America. These people enter the country desperate for jobs and willing to take minimum wage payment for ever increasing levels of skilled work. Of course they are not to be blamed for driving down the cost of labor nation-wide, it is the elite who are purposely pushing to change the existing laws to be able to flood the American labor market with even cheaper labor from Romania, Hungary, etc. (who by the way have received better education on average than their equivalents in America). {B23}
Where do all the homeless come from? At least part of the 30 million unemployed and disillusioned Americans between the ages of 20 and 64 would probably sooner be unemployed than work for a humiliating and disgraceful minimum wage, while the white collared elite drive the streets in their Rolls Royces having milked the economy of hundred of millions and even billions in a single year!!!
Despite this, on June 13 1989, George Bush hastily vetoed Congress's bill to raise the minimum wage from $3.35 to $4.55 over a three year period. {B24} Mrs. Dole, Bush's labor secretary, argued on behalf of the elite that doing so would result in 650,000 fewer jobs. This obviously implies that spoiled employers would sooner fire 650,000 employees than pay them a minimum wage of $4.55 per hour. To compensate for this, she is also trying to introduce a compulsory six-month "training period" during which the "new hire" would receive sub-minimum wage!! However, this would only provide incentive for employers to dismiss their minimum wage workers and use wherever possible the sub-minimum wage "new hires in training". Some employers would retire long before they kept a candidate longer than six months. {B25}
In future, semi-skilled and skilled factory work will be done increasingly by robots, by cheaper labor abroad, or by importing cheap labor from abroad. As long as corporate America continues it's industrial expansion abroad while reducing it's industrial base at home, unemployment will only get worse. With a shortage of jobs, and an over-abundance of labor, employers will continue to hire unorganized labor who are willing to work for substandard wages. Should anyone wonder why so many youths have given up on the system and turned to pushing drugs to survive?
No doubt the elite would wish to have all the new immigrants enrolled immediately in sub-minimum wage training programs. Notch one up for the "Feudalists in pinstripes".
Incentive for corporate America to purchase American labor will probably only resume again when the price of American labor drops to the point that it competes favorably with the cost of the cheapest foreign or imported labor.
American Slavery in the 1990's
The exploitation of blacks in America is still evident from the fact that there was a higher ratio of blacks to whites in military service in Vietnam, than the normal ratio of blacks to whites in the population. In many states the infant mortality rate for non-whites is often double the rate for white infants. {B26}
In a similar way, the black to white ratios involved with unemployment figures reveal as much about the truth concerning our whitewashed reality. Only 44 of the 752 Federal judges are black. The number would be abysmally lower if Jimmy Carter had not nominated 37 of them himself. {B27} More importantly, blacks account for 11% of America's voters, but only one and a half percent of its elected officials are black. {B28}
Meanwhile, David Duke , the former Imperial Wizard of the Ku Klux Klan, who also dabbles in neo-Nazi white supremacy movements, not only ran in February 1989 as a Republican candidate in New Orleans, Louisiana; he won!! His goal now is to become a Louisiana senator. {B29}
But hey, it's not all doom and gloom. American blacks have definitely made progress over their counterparts in South Africa, whose lot seems to have remained on a par with that of English feudal serfs. Mind you, they are still confined to the servants' quarters, which are now called "homelands".
"Homelands", per se, don't exist in America, but many who live in the black ghettoes found in most American cities, would probably wish to hotly debate that issue. In any case, since the 50's, much of the discrimination practiced against the blacks has disappeared. Nevertheless, feudal slave tactics still persist within the United States, but are largely overlooked because the American psyche has been conditioned to acknowledge slavery only when it comes in black.
Industries in Texas and Southern California have been paying slave wages for decades to Mexicans who had entered the country illegally. The garment industry in Southern California was still thriving in the 1980's by running sweat shops which used this labor pool. These Mexicans have been completely at the mercy of their modern Feudal lords who could totally abuse them, fire them, or have them deported if they dared to protest about their wages or working conditions.
Everyone knew about the sweat shops but little was done about them, because all the right palms had been greased. Everyone was turning a blind eye until the 60 Minutes TV show brought their plight to the nation's awareness. The government was no longer able to turn a blind eye, so it provided the next best concession for the sweat shop owners, it offered conditional amnesty to the Mexicans who were already living in the States, so that the affected industries would not be put out of business by the sudden loss of its sizable work force.
Of course this meant that sweat shop owners would have to pay the newly legalized Mexicans the minimum wage, and it certainly defused the issue nationally, but it probably won't prevent them from hiring future illegal Mexicans at the old rates. In fact a few days after George Bush had returned the Republicans to office, legislation was passed to allow garment industry workers in the South West to work at home. This practice, which will throw open the slavery floodgates once more, had been outlawed for the last 40 years.
Ever since the serf gained the right to be called a free man, the wealthiest 1 percent have been using the time to regain ground initially lost. They seem more determined than ever to maintain the old order. One way of doing this is to purposely maintain a poorly educated work force .
Maintaining a Poorly Educated Work Force
It has been argued that if all the wealth of our billionaires were equally redistributed among the poorer classes, ...within a short time, the wealth would again be concentrated within the hands of the few. I would even tend to agree with that hypothesis. However, if the money were used to provide free education for all students, to the limits of their mental abilities, I would be reluctant to jump to the same conclusion. The scenario parallels the futility of providing only food to the starving 3rd world peoples, as opposed to providing them with the education and means to provide their own food.
EDUCATION BRINGS WITH IT FREEDOM AND POWER.
The minority of white South Africans, who dominate, not only prevent the blacks from forming effective opposition groups, they keep them poorly educated and deny them the right to vote. As a result, South African unskilled labor has historically remained cheap. Capitalists in other countries have also gone out of their way to maintain an ignorant working class. For example, there was an understood, unwritten agreement among early American feudal lords, not to teach their black servants, (slaves) to read or write; in South Africa there have even been laws to enforce the policy. Nowadays, survey after survey exposes that American schools are graduating functional illiterates. Because the level of education is rising in many less developed countries, corporate America is finding that it can relocate even more sophisticated levels of non-military related industrialization into Second and Third World countries to take advantage of the world's remaining slave labor pools. Consequently the elite have less need of educating the American work force, and have stepped up their lobbying pressure to divert tax dollars away from education, and into other areas that benefit themselves more, namely Star Wars military spending, and corporate welfare. Unlike the defense budget, federal spending on education has been reduced from 9% in 1980, to 6% now. Mr. Bush intends to spend some $200 million less on education than did Mr. Reagan. {B30} After all, educated people expect a better standard of living, and will be vocal if denied their due. In short, they are not as easy to manage or to hoodwink.
Is it an accident that the American education system is graduating functional illiterates, and that much needed money for education is being diverted to benefit the super-rich? I think not.
Before the nation is forced to declare evening curfews (for youths 18 and under) in cities other than Washington DC, two facts should be widely acknowledged. First that two-thirds of U.S. prison inmates are high school dropouts, and secondly, that it costs $5000 per year to send a child through public school, and $14,000 a year to keep a prisoner in jail. {B31}
The Reality Underlying the Myth of Equality
The previously mentioned socially regressive behavior involving physical and economic slavery in its various forms only persists because there are some among us who cannot accept the concept of equality and brotherhood. Instead they choose to take as much of the nation's wealth as they can possibly get away with, even though other peoples' basic needs are not being met.
Even though most of us are richer than serfs of some other countries, we are still serfs within our own society.
The bottom 90% have been sold, and continue to be sold a severely distorted image of America through the media. The image of themselves as a huge middle class simply does not concur with reality.
To assist in the illusion, the bottom 90% have been encouraged to believe that doctors, dentists, engineers, etc., comprise the "upper class". Not surprisingly, working professionals have also been encouraged to think of themselves as the upper class. The fact of the matter is that these working professionals statistically fall into the bottom 90% of society. They may be, relatively speaking, upper class compared to the non-professionals, but in the overall wealth distribution picture, they are still "working class" when compared to the "real upper economic class". The average person who belongs to the bottom 90%, professional and non-professional alike, needn't blame himself or herself for missing the boat, because the economic elite of former generations used their power and influence to set up a complex system whereby just enough wealth is doled out using tax laws and tax shelters to produce just enough YUPPIES and comfortably off people (like many of our "so-called upper class" doctors, engineers, etc.,), to keep alive the totally erroneous notion that these individuals constitute the upper economic class.
The secret, completely understood by the elite, is that by providing a fairly comfortable living for the educated professional, they could completely remove the threat of widespread dissension, by appeasing the class of citizens most able to spearhead a movement to upset Feudal conditions. ...Throw the family dog a steak, and you can rob the house in peace.
Recognizing the Feudal Aspects of Capitalism
For the most part, the non-professional's income just meets the cost of a basic standard of living. Taxes, interest rates, wages, and the cost of living are all monitored and juggled very carefully so that government can tax away the bulk of income which exceeds the cost of living. Non-professionals who form the bulk of the bottom 90% are kept in check by the illusion that the upper class is in view, but just out of reach.
The shocking truth is that American society is based on a FEUDAL wealth distribution system, wherein the richest one percent are equivalent to the Feudal monarchs, the next nine percent are equivalent to the land owning aristocracy of Feudal times, and the bottom 90% are still being exploited as serfs to supply cheap labor so that the wealthy can exploit the nation's resources for their own personal benefit. What's worse is that the bottom 90% have been successfully and cunningly kept ignorant of that situation.
So many aspects of modern Western society trace directly back to Feudal society, that an appreciation of our problems would be incomplete with briefly reviewing how and why Feudalism arose.
The Origins and Nature of Feudalisim
From the dawn of time, the strongest animal or animals within an animal group have spearheaded the group's defense. Normally this service is acknowledged by the rest of the group's members, and rightly so.
But, while we can acknowledge indebtedness to our ancestors whose success at "dominating" made possible our survival as a species into the 21st century, it is important to keep in mind the distinction between "domination" and "leadership". By domination, I refer to the case where those in power abuse their power to exploit those with less power than themselves.
Even back in our cave dwelling days, the need to cooperate for survival sake probably kept domination within a group to a minimum. Cave dwelling leaders almost certainly acted to protect their family groups, and heads of family groups no doubt bonded together to defend whole communities. However, as the danger posed by other species gradually tapered off, the survival of the fittest quality of "domination" should have tapered off as well. Unfortunately, the trait persisted in the absence of predators.
Feudal monarchs provide an excellent example of this type of domination. They certainly assumed absolute authority for the defense of their empires. But as Lord Acton pointed out, power corrupts, and absolute power corrupts absolutely.
Somewhere along the way, the power and responsibilities of the role were abused to the extent that society's defenders took it on themselves to extend their dominance to include ownership of all communal assets.
At that point ... ECONOMIC FEUDALISM WAS BORN
From defenders, they became rulers who personally claimed all the communal property except that which they chose to give away to buy loyalty. In effect they dominated their subjects in much the same way as dictators do today. In order to maintain their position of dominance, the monarchs divided their kingdoms into feudal states and gave away large tracts of land within each of these areas to relatives and trusted friends to gain their loyalty and military support when needed.
To defend their new domains, these wealthy landowners assembled armies, and built fortified castles, over which they ruled like MINOR KINGS in their own right. Needless to say, the monarchs only gave away as much land and delegated authority to the degree they thought was necessary to ensure their own dominance.
In a similar way but to a lesser extent, the landed aristocracy had to do the same within their own castles to also ensure their continued domination over the subjects under their control. Throughout the country, the social order was based rigidly on class differences. Within the landowners' castle walls lived the landowners, their relatives, and their most valuable subjects. (the law enforcers, the merchants and the craftsmen) However, the landless peasants were forced to live outside the walls where they served as watchdogs in case of sneak attacks by the landlords' enemies.
Authority from the king allowed the aristocracy to exploit the serfs by putting them all to work and then taxing away the fruit of their labor. By making the landless peasants conform to a rigid pattern of subservience, the aristocracy could use them to perform any and every function that might enhance their own well-being, while only minimally meeting the serfs' basic needs. In other words, they used them in much the same way as their other beasts of burden. After taxes, many subjects like the peasant farmers, were left with only a minimum of food and provisions to carry on their lives of servitude. The horses and cows usually ended up with a greater share of the harvest than these poor clods. Dust unto dust seemed to more accurately describe their fate. So, if you belonged to the top 5 percent of feudal society, chances are you had gold pouring out of your ears. If you didn't, it was the equivalent of being dropped on your head at birth.As the landed aristocracy grew stronger, the power of the monarchs diminished, but both the monarchs and the aristocracy continued to act as social parasites by taxing the serfs to the brink of poverty, thus keeping peasants basically powerless and subservient.
Eventually though, to avoid a revolt such as the French monarchs experienced, the ruling class had to introduce laws that appeared to recognize some rights of the peasants. But despite the introduction of democracy, the monarchs and aristocracy exerted their power and influence in parliament to have legislation passed that ensured their fortunes remained intact, which in turn kept most of their power intact.Interestingly enough, there still seem to be quite a few class conscious, and very wealthy Kings and Queens hanging on, who are actually the direct descendants of the monarchs of feudal days, and who seem to have kept their fortunes relatively intact. Queens still reign in Britain, Denmark, and Holland, while Kings still reign in Belgium, Spain, Norway, and Sweden. Although most look on modern day monarchs as figureheads, their wealth and influence must not be underestimated. Queen Elizabeth is still the richest woman in the world. The South Africans and the Irish are both actively trying to cast off the burden of Feudal overlords.
From English Feudalism to American Feudalism
America on the other hand chose not a monarch but a President who can veto the will of a popularly elected Congress. Ironically or not, George Bush is nevertheless the 13th cousin (twice removed) of Queen Elizabeth.
In Western society today, billionaire power wielders determine both the domestic and foreign policies, but they do so from behind the scenes, and of course like the kings before them, they feel justified in claiming as much of the communal wealth as they wish. As far as the economic elite are concerned, national wealth is not treated as communal wealth.
Many are the descendants of the great landowners of old, and of the super wealthy merchant class. The distinction between these two groups has largely disappeared, and we seem to be left with a hybrid group which embraces international commerce, while holding vast fortunes in real estate.
For the most part they are comprised of the majority shareholders who serve on the board of directors of large corporations. The mega-rich can serve as board members on numerous corporate boards simultaneously, thereby creating interlocking relationships and interests among the corporations. This low profile elitist community maintains a highly efficient, interconnected, local and international network of communications and control that, for all intents and purposes, completely avoids public scrutiny. Corporate America meets behind closed doors to cut secret deals and formulate powerful chess-like strategies that affect the daily lives of everyone in society.
Moreover, they have seen to it that a range of special privileges exists, not only for their own benefit, but as a means of winning political support from all those who envy their lop-sided share of the nation's wealth. Such privileges, (memberships in exclusive country clubs, unlimited travel, vehicles, planes, business subsidies and loans, tariff protection, price guarantees, etc. etc.) are all made accessible in addition to tax avoidance methods, and tax shelters, that the bottom 90% don't even make enough money to use.
Neocolonialism
If a country's wealth is divided amongst its citizens along Feudal wealth distribution lines, then that country functions as a Feudal domain, whether or not it attempts to conceal the fact with a democratic veneer, or any other veneer for that matter.
Colonialism is really only Feudalism practiced abroad.
In response to a wave of independence movements which swept the globe in the late 40's, the great colonial powers were forced to withdraw many of their political representatives as well as their military occupation forces. Because this occurred, historians and the media were quick to announce that the colonial era had ended.
However, the more determined colonialists simply installed puppet governments in the 3rd World countries which gladly signed defense treaties which allowed the colonialists to re-install their military occupation forces. Despite the superficial changes, both Feudalism and Colonialism are very much alive and well today.
However, colonial exploitation did, at least for a time, decline. This decline triggered off a decline in the standard of living in the West for a couple of reasons. First of all, as the level of colonial exploitation was reduced globally, the spillover benefits of colonialism were reduced for all Western citizens. Even more importantly, the colonialists (i.e. the Feudalists) increasingly redirected the focus of their exploitation toward their own populations in an effort to make up for lost colonial revenue! Not only is exploitation in the 3rd World now worse than in the 40's, it's worse in the 1st World too!!
Since the 50s, the planet has in effect, been enduring an era of social regression caused by the widespread proliferation of the new and more subtle forms of both Feudalism and Colonialism.
It is also extremely important to keep in mind that the conditions referred to throughout the book pertain not just to America, but to virtually all the capitalist democracies, ...England, Canada, Israel, Scotland, West Germany, South Africa, Ireland, India, Australia, New Zealand, Japan, etc., as well as to all the other countries ruled by economically elite minorities. They are all functioning like separate Feudal empires.
A Look At 10 Western Nations
To show how widespread feudal wealth distribution conditions are, we will compare the wealth distribution statistics for ten (10) Western nations. The data was extracted from data submitted to the Royal Commission on the Distribution of Income and Wealth prepared in 1979 for the British Monarchy.{B32}
The distribution patterns of the 60's and 70's have been chosen to provide a valuable yardstick with which to begin an evaluation of our present condition. The statistics will show how things were in the 60's and 70's, and then by knowing what has happened in the last decade, it will be perfectly clear not only where America is headed, but why immediate action is so necessary.
When the comparative study was carried out in 1979, the information gathered was the latest available from each country. The studies have traditionally been carried out infrequently probably to avoid any unnecessary risk of the information becoming part of the public awareness, and hence a topic of popular concern.
During the 60's and 70's, the richest 1% owned an average of 25% of the total national wealth; the richest 5% about 45% of the wealth; and the richest 10% about 60% of the wealth; ...in virtually each of the Western nations.
Although statistics were not available for larger percentages of the population for each country in the study, another even more startling picture emerged from the data that was available. That data is shown below.
The shocking truth is that the poorest 50% of the citizens of Western societies share little more than the elite's table scraps, with the evidence pointing to often even less than 5% of the total wealth.
The New York Times reported that a recent study found the top 1% have increased their share to about 35%, whereas the share of wealth COLLECTIVELY belonging to the bottom 90 % had dropped to about 34%!! However, a similar study carried out by the University of Michigan estimated the richest 1% now own 50%, and the bottom 90% get to share only a meager 16% of the nation's total wealth!! This latter study translates into the fact that the top 1% may now own three times as much as the bottom 90% own collectively!!To make things worse, the rate at which the rich are getting richer and the poor get poorer, ...is accelerating.
To help the reader appreciate that the economic problems discussed are by no means unique to America, we will briefly refer to Canada instead of America to continue the study. Canada provides a dramatic example of profit disappearing into the woodwork, or more accurately into the bank accounts of the richest one percent.Canada (Another Typical Feudal Economy)
Being the largest country in the world, Canada has an enormous amount of natural resources. Her vast reserves of forests have been logged repeatedly. Her uranium resources have been tapped for nearly half a century. Much of her mineral resources have been extracted already, not to mention the Alberta oil wealth and the prairie wheat, and of course the untold fortunes of fish hauled off her East and West coasts. The country has an abundance of hydroelectric power, and exports nuclear technology. She has a thriving industrial base, and her resource of fresh water should soon become an unexpected gold mine. Incidentally, Canada has plenty of excellent gold mines, and untold amounts of nickel have been extracted as well. I could go on but it should be clear by now that Canada's vast resources have already been well exploited. A person from any 2nd or 3rd world country would expect our streets to be paved with gold, because Canada's population is only 25 million!
Instead, the prospect of owning a home is growing steadily more remote for many young people. You'd wonder why, because there exists such an abundance of forests. The truth of the matter is that Canadians have to pay world prices for the timber products. Not only that, the best timber is exported (to enrich the wealthy few), so the wood used inside Canadian homes is more often than not the dregs of the industry. Some young families with two incomes are even battling to afford an apartment. Many don't even own their own cars, and some have serious debts. Like gas stations, the local Macdonald's fast food outlets are never very far away. But very few Canadians are even aware that with 1100 charity food banks nationwide, Canada has twice as many food banks as Macdonalds fast food outlets!!
Plenty of people line up each week at special grocery handout centers that are often conveniently located off the main streets, where the long lineups won't interfere with pedestrians or traffic, and where this shameful show of wealth distribution won't be too readily observed. In the large cities there are plenty of people who sleep in doorways and parks, and can be seen pushing around their life's possessions in supermarket buggies. How is this possible? What has happened to the past profits generated in our Western countries?
Fortune magazine's 1988 list of the world's top 10 billionaires indicates that three of the 10 richest families in the world are Canadians. Furthermore, it indicates that Toronto's Reichmann family alone increased their wealth in the preceding year from 5 billion to 6.3 billion dollars, a staggering increase of 1.3 billion, which represents a 26 percent increase in assets during that one year period. {B33}
When the Queen of England, the world's richest female billionaire who has also derived wealth from Canada, is taken into consideration, then the number of the world's top ten billionaires who have directly exploited Canada's resources for their personal benefit increases to 4 out of 10.
And last but not least, we ought to give mention as well to another billionaire Sir James Goldsmith, of London England, who owns 2.5 million acres of North American timberland, which is just a half million acres less than the 3 million acres owned by the Canadian billionaire Kenneth Colin Irving. {B34} {B35}
Globally, the speed at which wealth and power is being concentrated in the hands of a very small minority of economic elite has intensified at an alarming rate. Does anyone need to hire a financial analyst to see a correlation between the wealth accumulated by billionaires, and the grocery handout centers and soup kitchens?
Keep in mind that the same story is being played out in all the other countries dominated by an economic elite. The bottom 90 percent are being systematically milked, and the cream is being skimmed off by the folks at the top. We need to take steps to homogenize the economic classes.
The inequities in wealth distribution that originally prompted the formation of trade unions are now being overlooked in the rush to say unions today have gotten too powerful and are demanding too much. Don't forget, it would still have taken 433,000 so called "greedy unionists" to have been able to save $3,000 each in 1987, to have collectively benefited as much as the Reichmann family.
Feudalism ...A Progress Report
In case there are any readers left who doubt that the rich are getting richer while the poor are getting poorer, information from the US Census Bureau should remove any doubt whatsoever. The following statistics bear mute witness to the feudal realities that have taken place during the 80's.
How The Elite Exploit The Nation
Techniques such as exporting America's manufacturing base, and importing labor willing to work for the minimum wage or less, are but the tip of the iceberg of methods used by the elite to make themselves richer while at the same time actively keeping America's bottom 90% unorganized, subservient, and basically poor. Let's begin by discussing by far the most important method used ...that of controlling the laws affecting taxation.
Tax Laws - The Key to Wealth and Power
To the degree one would wish to help improve the quality of life within Western society, one must acknowledge the role played by the existing laws, and in particular the tax laws.
Tax laws, more than any other factor, determine the socioeconomic nature of a society. They determine the economic hierarchy of wealth and power just as surely as chess rules govern what occurs in a game of chess. A king always wins in a game of chess, and in Western society, the top 1% always own more assets than the bottom 90%. Tax laws ensure that Western society remains securely locked into a social structure based on wealth distribution inequities that have changed little since the Middle Ages. Presidents now avoid the nation's scorn by raising payroll taxes instead of income taxes. By 1990, payroll taxes will have risen by 30% since 1978, and the majority of the country will be paying more in payroll taxes than they do in income taxes. Of course, the bottom 90% as usual are hit the hardest, but they are generally not yet wise to the switch that has taken place, so the deceit continues at full bore. {B42}
Robbing The Poor by Not Taxing The Rich
In Feudal society, the most successful of the feudal merchants went outside of their lord's territory to secretly hide a portion of their profits in foreign lands, mainly to avoid taxation. They were clever enough, however, to leave store front businesses running at home to keep up appearances. Our present day corporation owners do exactly the same thing. It takes little imagination to realize that the same methods to avoid taxation have gone on without interruption from Feudal times.
With regard to the previously mentioned exodus of industry from America to 2nd and 3rd World countries, the fact that American corporations choose to carry on modern day colonial exploitation is not even the issue. The real issue is that corporate America built, and continues to build its foreign factories with the help of corporate tax deduction laws, ...at the American taxpayers expense, and to the detriment of the taxpayer's standard of living.
To add insult to injury, the head offices of many business entities are located in playboy tax havens such as the Bahamas to avoid taxation, thereby depriving the American taxpayer of getting any benefit from having initially paid for the foreign factories. The fact that so many oil tankers owned by the elite are registered in Liberia and not in America (to avoid taxation) should be a topic of concern to those who are being forced to take pay cuts and tighten their belts, ...but it isn't. Americans have been desensitized to this issue and countless others like it.
However, to get an idea of the quantity and nature of tax avoidance loopholes that exist in America today, one has only to read a few issues of Forbes, a magazine which caters to the needs and interests of the nation's economic elite.
Incidentally, every year Forbes magazine compiles a list of the world's richest people, as well as a list of the 400 richest Americans. In its July 24th 1989 issue, the magazine clarified some of the methods it used in determining the wealth of those who qualified to be included in its listings. Part of the explanation it provided is worth quoting:
***
"Since wealth abroad is sometimes held in complicated ways designed to retain control or bypass various taxing authorities, we count property owned if it is involved in obvious devices for ownership, like family holding companies, or cross-ownership, and sometimes less obvious ones, like certain foundations designed merely for tax avoidance." {B43}
***
In practically every issue, Forbes "exposes", or at any rate acquaints the reader with, one or more additional schemes devised by clever tax accountants or investment managers to avoid taxation. No doubt each issue must send the super rich scurrying off to call their accountants to ensure that they are not missing out on the very latest loopholes.
One would expect that reading about tax avoidance loopholes for the privileged class could very well upset or anger the average American who for the most part doesn't make enough money to take advantage of the loopholes discussed. But there is little danger of that. Editors in charge of mass media information sources like newspapers and TV news shows very rarely devote any attention at all to this type of material. In contrast, Forbes editors obviously feel free to flaunt it because the magazine is read almost exclusively by the economic elite, and those who aspire to join their ranks. It is alleged that the average worth of Forbes readers is 1.4 million dollars, and that at least 250,000 of its 750,000 subscribers are millionaires. {B44}
It is beyond the scope and intent of this book to launch into a detailed discussion of the tax loopholes currently available, but as was mentioned above, even a subscription to Forbes magazine would serve as an introductory primer. One need only read the article "The bad news about estate taxes", on page 238 of the June 26 1989, or the article "Tax strategy" on page 186 of the Sept 4 1989 issue to see why the magazine is so popular among America's economic elite. {B45} {B46} Due to the extremely complicated nature of tax laws, tax avoidance will remain the exclusive and somewhat secret domain of those who earn enough money to hire the services of a tax specialist. This book will attempt, however, to make the reader acutely aware that tax avoidance privileges enjoyed by the rich, are the root cause of the nation's economic inequities.
A perfect example of class oriented tax legislation, that exacerbated the wealth distribution inequities, occurred during the Reagan administration. With inspiration lifted straight from Sherwood forest, REAGAN HOOD (the well known American folk bandit who can't normally see the forest for the trees) took it on himself to take from the poor and give to the rich. In 1981, he instituted new taxation legislation which dramatically decreased corporate taxes and transferred the burden to the bottom 90 percent. (salary and wage earners)
It is not as important to discuss what the tax changes were, so much as pointing out that the changes were part of a continuing policy to free the rich from corporate taxation.
Statistics taken from the Historical Tables of the Budget of the United States Government, Fiscal Year 1986, table 2.1 indicate that the proportion of Federal Income tax derived from Corporate income tax declined steadily from 32% in 1952; to 23% in 1960; to 17% in 1970; to a low of 9% in 1985.{B47}
It should come as no great surprise then that George Bush has openly voiced his intention to continue adding to corporate welfare legislation by reducing the capital gains tax by more than 50%. The Joint Committee on Taxation said that the capital gains tax proposal passed by the House on Sept 28 1989 would cost $35 billion dollars in lost revenue over the next 10 years. This largesse would go almost exclusively to the richest 10%. {B48}
Both the graph and the previous statement ought to give you a chilling appreciation for the continuing success of the super rich, in their drive toward total immunity from taxation.
On General Motors' 1987 Income Statement, a footnote indicated that the federal tax for 1987 was minus $1.3 billion, thus intimating that the automobile giant may have received a tax rebate for that amount. Citizens for Tax Justice had figured that GM would end up getting a tax rebate for $742 million. In any case, it should be a little clearer just where the money comes from that enables car manufacturers to offer such huge cash rebate incentives for new car buyers. {B49}
Citizens for Tax Justice (a group backed by Ralph Nader, which monitors tax abuses and lobbies the government for fairer taxation) pointed out that the average reader paid more tax last year than AT&T, Du Pont, Boeing, Merrill Lynch, Dow Chemical, and Walt Disney paid collectively from 1982 through 1985!!
Do yourself a favor and reread the above paragraph. '
In fact, of the 250 companies that they were monitoring, 108 of them had an average tax rate of 1.6%. {B50}
Neither government nor economic smooth talkers are now able to mask the social effects of taxation changes favoring the richest 1% introduced during the Reagan administration. As a result of fiscal policy initiated by Paul Volcker and James Baker, the number of billionaires began skyrocketing. From a relatively stable 13, their numbers all of a sudden doubled in 1986, quadrupled by 1987, and have (since 1987) increased an additional 50 to their present level of 99. This unethical shift of wealth from the poorest to the richest 1% simultaneously caused shelters for the homeless and grocery handout centers to spring up in practically every city in the nation. The more the reader appreciates the tremendous scale of corporate welfare, the less apt he or she will be to blame the deficit on the increasing numbers who are forced to collect unemployment or welfare. The crime and drug abuse epidemics are additional visible manifestations of the anger and desperation felt by the policy's victims.
In case you had noticed that the Reagan administration seemed virtually unconcerned with the huge national debt. Here's why:
The ballooning deficit, which can only be paid back through taxation, will continue to translate into a declining standard of living for "those who pay the taxes", and most for those who are hit hardest by taxation.
Contrary to their continued displays of concern over the increasing deficit, the elite and their functionaries in congress will in reality become less and less concerned about the growing deficit because their share of the tax burden diminishes with every new tax reform!! In future, billionaires and multimillionaires will accumulate ownership of the national wealth at an even faster rate than at present.
For those who pay little or no taxes, the growing national debt is scarcely a concern!
The elite are not at all affected by cuts to social welfare programs. The only social welfare that affects them is corporate welfare and it has been increasing non-stop since the 50's. However, for the so-called working middle class and their children, the ballooning deficit will translate into a significant loss of social benefits, poorer education and health facilities, etc., in short, a continuing drop in standard of living.
If the corporations and wealthy elite don't pay their share of taxes, why should the working class?
The three trillion dollar Star Wars military expansion program is being funded directly out of the taxpayer's pocket. There is simply no rationale for the so-called middle class taxpayer to pay the bulk of the defense bill, when the majority of the wealth and property being defended belongs to the economic elite, who take every opportunity to excuse themselves from sharing the tax burden.
In case you have wondered why the deficit is ballooning so rapidly, here's at least one atrocious reason.
Undermining America with Leveraged Buyouts
One of the most scandalous causes of lost tax revenue (from corporations) is currently sweeping the nation, and is referred to as the leveraged buyout, also known in the industry as an LBO. During the 80's, LBOs have been the focus of Wall Street activity. To understand how they work, let us begin by considering a recent LBO.
The RJR Nabisco corporation was purchased for a sum of about 25 billion dollars. Prior to its takeover, Nabisco made an annual profit of about $2.5 billion dollars, on which they pay about $700 million in taxes. {B51} As a result of the buyout, the new owners will most likely pay NO TAXES. Not only that, they will probably claim billions of dollars back (from the government, i.e. the taxpayers) in tax rebates! Surely this is not possible, you might be saying to yourself. As unbelievable as this sounds, it is true. START GETTING CONCERNED. The new owners will still produce their shredded wheat and cigarettes, etc., at the same prices and with the same manufacturing costs. Right? ...Right! So their profits should be expected to remain around 2 and a half billion dollars. Right? ...Wrong! The new owners are now eligible for tax deductions that the former owners did not have. The new owners borrowed most of the $25 billion dollars to purchase Nabisco. Why? ...because the interest (that they pay on the money they borrowed to buy the giant) qualifies as a tax deduction! (Thanks to Section 163 of the Internal Revenue Code)
Tax avoidance rears it's ugly head. The cost of borrowing the $25 billion could quite conceivably be around $3 billion dollars per year, but the operating profits, as before, would be only 2 and a half billion.
Are you sitting down?
As a result of a leveraged buyout, a firm like Nabisco can be transformed from a profitable company making 2.5 billion dollars profit, and contributing $700 million annually to Federal and state tax revenues, ...to a firm which could draw billions out of the Federal tax pot because it would be "technically" operating with an annual loss of a half billion dollars due to the tax write-off for money borrowed to purchase the giant.
With no taxable income, the new owners would pay no taxes!!!
There's $700 million a year that won't get used to repair the roadways they buckle when delivering their goods. There's also $700 million per year that won't help to clean up the rivers and lakes corporate America has polluted, and continues to pollute.
Taxpayers must come to appreciate that their standard of living will progressively worsen as unemployment rises, and corporations contribute less tax in future than they have in the past. Even though the taxpayer has been secretly robbed (thanks to the gagging of the press), the corporate raider has just begun his assault.
As unbelievable as it may be (that elected congressmen would allow corporations to stop contributing taxes), they even allow the taxation avoidance to be retroactive!
Here's how.
Tax losses can be carried back 3 years, and forward 15 years. In other words, corporate raiders who make their new companies run in the red are able to claim back as a tax refund the legitimate taxes previously paid in the previous three years by the former owners. In a case like Nabisco's, this could amount to billions. The LBO tax avoidance loophole must be the single most significant cause of reduced Federal and State tax revenue from corporations for at least the last decade.
Because it is so important for the average person to fully understand LBOs and their destructive social consequences, and because many readers may be unfamiliar with the world of stock trading and Wall Street jargon, a more in-depth explanation is in order.
***
First of all, a leveraged buyout refers to the transaction that takes place when an individual or group of investors (outside a corporation) manages to take over the decision making function of a corporation by buying up enough shares of the company to assume controlling interest. The term "leveraged" refers to the fact that most of money used to purchase the corporation is borrowed or on credit. In all LBOs, the purchasers borrow as much as they can from banks, by using as collateral the equity of the corporation to be purchased. The remainder of the money required is normally raised through the sale of "junk bonds", which are issued by the purchasers (the corporate raiders), and promoted and sold (underwritten) by certain brokerage houses or investment banks which specialize in corporate takeovers. Junk bonds can attract investors because they normally offer a significantly higher rate of interest than other bonds and normal bank interest. Usually the part of the operating profits that formerly went to pay taxes, are now freed up to pay the interest on these junk bonds, so the junk bond holders can feel relatively safe.
***
For example, in a case like RJR Nabisco's, the $700 million that normally would have gone to pay taxes is now capable of paying the interest on about $5 billion dollars worth of borrowed money. The real significance is that the taxpayer is effectively footing the bill for $5 billion of the purchase price!
Combine that initial subsidy of $5 billion with the $2 billion they can receive in tax rebates, and the loss of tax revenue could effectively amount to about $7 billion on that single takeover.
In case you think this is not typical of what is happening, consider Safeway which went from paying $122 million in taxes, to being a tax rebate recipient of over $10 million. Macy's collected a $32 million rebate instead of paying a normal tax bill of over $200 million. Before its leveraged buyout, Unocal paid over $500 million in taxes. After the leveraged buyout its tax bill dropped to $68 million. But the above is unfortunately only half of the picture. {B52}
So far we have only discussed how LBOs have caused a drastic reduction in taxes paid by corporations. Next we will look at how and why the corporate raiders use LBOs to skim hundreds of millions of dollars out of the national economy without contributing one iota to the nation's productivity.
Why do LBOs occur in the first place?
To explain this, I will resort to an analogy. A car wrecker will often buy a fully functional (but old) vehicle, and simply junk it, because to the wrecker, the vehicle is worth more as spare parts than it is as a fully functional car. This is precisely the way corporate raiders look at a corporation! (as a conglomerate of companies than can be broken apart and sold separately as independent companies).
Incidentally, those who take over another corporation forcibly are known as "corporate raiders". When the takeover results from the acceptance of a buyout offer, the purchase is simply referred to as a leveraged buyout. Raiders buy corporations for the purpose of selling off the component companies separately for more money than what they paid for the fully functioning corporation. In other words, the raider attacks corporations whose spare part value is greater than their stock market share value.
To illustrate the point, let's say that a corporation has 100 million shares that are trading on the stock exchange for $1 each. Theoretically, the market place puts a value on the corporation of $100 million dollars. However, if a corporate raider determined that he could sell the various companies comprising the corporation separately for $150 million, he could theoretically make a quick unearned $50 million by buying the stock market shares for $100 million, and then individually selling off the components of the corporation for $150 million.
In other words, the takeover operators secretly have reaso
