Saturday, November 29, 2008

Urban Policy and Corporate Dominance

In his last book, Where Do We Go from Here: Chaos or Community? Dr. Martin Luther King Jr. wrote: “Most people are totally unaware of the darkness of the cave in which the Negro is forced to live. A few individuals can break out, but the vast majority remains its prisoners. Our cities have constructed elaborate expressways and elevated skyways, and white Americans speed from suburb to inner city through vast pockets of black deprivation without ever getting a glimpse of the suffering and misery in their midst.”

American urban ghettos are even more devastated today than they were 40 years ago when Dr. King wrote those words. What is the reason for this?

By way of explanation, by the early 1970s, America’s central cities started to crumble under the weight of globalization and deindustrialization. Manufacturing jobs were being exported en masse. At the same time, there was no place for the masses of unskilled and semi-skilled laborers in the new technology sector that sprung up to replace the industries that once provided countless Americans, regardless of their race, with a chance for economic mobility. Unemployment, violence, and desolation are far too common features of America’s major cities today.

Given that urban issues were rarely talked about by President-elect Barack Obama or any of his rivals for the presidency, it was a pleasant surprise to me to hear that he plans to establish a White House Office of Urban Policy to better coordinate federal efforts to help cities nationwide.

"He's going to have a White House chief of urban policy," Valerie Jarrett, co-chairman of the Obama transition team, told the Trotter Group, an organization of black columnists.

The deeply embedded, systemic, and institutionalized problems that plague American cities will require thoughtful analysis and a genuine commitment to long-term solutions. Most importantly, to be challenged is the deeply entrenched neoconservative orthodoxy of free and unfettered capital and trickle-down economics, which has shaped American economic (and domestic) policy for the last several decades.

Corporate dominance and the neoconservative orthodoxy, which has provided the ideological cover for business decisions that undermined the economic vitality of America’s central cities (and the kind of rampant greed that helped produce the Wall Street meltdown that led to the current financial crisis the country faces) must be challenged at its core, requiring more than simply closing tax-loopholes and marginally raising the corporate tax rate.

Sacred cows must fall.

One sacrosanct issue is the tax rate corporations are supposed to pay. In reality, the corporate tax rate is really a joke. According to a July 2008 report by the non-partisan Government Accounting Office (GAO), between 1998 and 2005, about two thirds of all corporations that operated in the US paid no taxes.

The corporations that did pay taxes, after all the loopholes and exemptions, paid at a rate far below the 35 percent they are supposed to contribute to the nation’s coffers – averaging only about 24 percent.

Raising the corporate tax rate is essential. In other words, corporations (and the excessively salaried CEO’s that run them) must pay their fair share.

Putting an end to corporate welfare, however, will not be easy. Although he does not go far enough, President-elect Obama is on the right track, proposing, for example, to eliminate tax breaks for companies that move jobs and production abroad and providing incentives to companies that create jobs in America.

If President-elect Obama really intends to usher in a new era of change in Washington, then, challenging corporate dominance is a necessary and much needed step.

1 comment:

Peter G said...

Here in Connecticut, though the state does receive significant revenues from the income tax, everyone is taxed at the same rate. So if you are struggling to make ends meet in this economy but are lucky enough to have a decent job, you pay at the same rate as the owners of the suburban MacMansions that populate sections of West Hartford, Avon, Glastonbury, etc.

In spite of a severe economic crisis that could profoundly increase unemployment and poverty in Hartford and other Connecticut cities, Gov. Rell has already announced that she will not even discuss creating a graduated income tax where the wealthy pay at a higher rate. And Democratic Party politicians do not seem inclined to challenge her on that in any kind of serious way.

With a flat rate income tax, every discussion about money to be spent on social services, jobs, health care, education - and especially with respect to the urban areas - is immediately recharacterized as a struggle between "hardworking Americans" in the suburbs and "those people" in the cities. Because the bulk of public funding really does come from taxes on working people. Shifting the tax burden to the wealthy and the corporations in Connecticut would permit that discussion to change and for urban and suburban working people and poor people to consider their common interest in rebuilding the urban infrastructure and maintaining and expanding funding for human needs.