Democracy: February 2008 Archives

Who should decide whether our communities have museums, concert and dance facilities, parks and other cultural programs? Who should decide on priorities for funding for disaster assistance or research into cures for diseases?

Should the public make the bulk of these decisions, through the transparent and accountable systems of our democracy? Or should a few individuals who control vast wealth and resources make these decisions for the people?

Because of dwindling tax revenues many communities have come to rely on "corporate philanthropy" for assistance with cultural programs, or to supplement their schools, or for other community benefits.

The people who run corporations are in a position to decide to donate the corporation’s money to various causes. Many of these are things that the people, through our government, no longer have the resources to support. For example, the executives and Board of a corporation might decide to donate to build a museum. They might decide to fund a school.

And they might decide not to do these things.

So look at what is happening -- as discussed in the Feb. 26 post, Reflecting on Corporations, we have corporations using their resources to influence the public and government to change the rules of the playing field on which corporations operate - deregulating, lowering taxes, etc. As this corporate influence brings cuts in corporate taxes (as well as cuts in taxes paid by the owners of the corporations), our society is left with fewer public resources for building museums, conducting research, etc.

And then we have corporations stepping in, using some of their earnings to provide those benefits, with their executives deciding where to direct the resources. For which the public is supposed to be grateful, and feel more favorable to the corporations, and perhaps grant them further benefits.

These are functions that the public once prioritized and controlled. But today the balance of control of the country's resources continues to shift more and more to fewer private individuals. This massing of assets and resources into corporate hands takes away the people's ability to decide to build museums and fund schools. It puts more and more power to make decisions that affect the public into the hands of corporate executives. Is this compatible with our understanding of democracy?

And a related question: Should corporate earnings be diverted from the shareholders? Is it the proper function of corporations to make decisions about funding museums, etc?

Perhaps there should be controls that guarantee that corporate funds and resources are used solely for the benefit of the shareholders and broader pubic interest. Perhaps corporations should be prohibited from engaging in any activities that influence our government or lawmaking or public opinion. Perhaps they should operate on the playing field that We, the People lay out for them -- and not be able to influence that playing field for the benefit of a few individuals who control the corporation. Perhaps.

How is it that corporations have the rights that individuals do, but not the responsibilities?

Let's reflect on what a corporation is. A business is formed by a few people. The business asks the government for a corporate charter, pays a fee, and is then this special entity called a corporation with special rights granted by the government.

Under our laws, corporations are fictional persons with certain rights. They can own assets, employ agents and engage in contracts just like people. But unlike you or me they have special benefits including limited liability and unlimited life.

Corporations enjoy limited liability -- if you or I commit a crime, injure someone, go bankrupt or get sued we're in big trouble and have to suffer the consequences. But this is not what happens to the owners of corporations. Their liability is limited and if their corporation is involved in any of these things they can just fly away in their private jets. In some jurisdictions corporate officers and directors are even shielded from liability for criminal acts the corporation commits.

Corporations have unlimited life -- which means the entity continues beyond any individual. The assets owned by a corporation can stay and grow in that corporation, and be controlled by its owners perpetually. So the corporation is able to amass significant assets and resources.

A corporation is not taxed the same as individuals. In most case they pay much lower taxes, the dividends they pay their owners are taxed at lower rates, as are the capital gains. In fact there are many circumstances where corporations do not have to pay taxes at all! So the burden of paying for the roads and schools (and wars) falls on the rest of us.

Corporations are able to compel large numbers of people -- employees, contractors, other corporations and other paid entities -- to do certain things. They can even tell people what to wear, how to wear their hair, even to wear makeup or not.

These special rights help corporations build up tremendous resources and power far beyond the ability of any individual in our society. So individuals finding themselves up against corporations face tremendous disadvantages. Many of the mechanisms for mitigating this disparity, including unions, the right to sue, taxes, even government regulation, have been reduced as a result of corporate-funded lobbying, ballot initiatives or other efforts. The ability to amass tremendous assets and power enables the people at the top of corporations to have great influence over our government and the laws it makes -- even to the point of granting them ever greater rights and benefits and tax cuts -- helping them to amass even greater assets, resources and power.

Corporations make decisions in ways that are very different from how We, the People of America and California make our community decisions through our governments. In our government all decisions and spending are participatory and transparent, meaning all of us can vote for representatives and can watch or otherwise look at how decisions are made and understand where all money is spent. In California it is even illegal for a city council committee to meet in secret. This is certainly not how things are done with corporations. (By the way, this is why some people say corporations are "more efficient"-- they do not have the procedures for the degree of transparency and accountability that governments and other public entities require.)

Question -- are these differences between public and corporate accountability and transparency compatible with our understanding of democracy? What about the ability of corporations to influence how our government regulates corporations? Keep in mind that corporations are nothing more than the creation of our laws. So discussing questions like these is essential to the maintenance of that democracy.

Of course there is a value to society from corporations and what they offer, or We, the People would not have set up this system. But some people think that today's giant, multi-national behemoths have taken enormous advantage of the system. What do you think?

Do you know about the California yacht tax loophole? Here is how it works: Regular people like you and me have to pay sales taxes on the things we buy, even on big items like cars. We even have to pay these taxes if we buy outside of the state. (Technically that is called a "use" tax.)

But California has a special tax loophole just for the things rich people buy. That's right, if you buy a big yacht, airplane or "luxury recreation vehicle," you don't have to pay sales tax. The way this loophole works is, you buy it outside the state, hold it there for three months, and then you have a sales-tax-free yacht.

Summary: Regular people pay sales taxes, rich people don't have to.

Last week there was a budget battle in Sacramento that resulted in a number of cuts that will have a big impact on regular Californians. But the Republicans held firm and blocked attempts to do away with the tax loophole that lets rich people get out of paying the taxes that the rest of us have to pay.

From Saturday's San Jose Mercury News, ,

"… lawmakers Friday chopped more than $2 billion from state programs, with schools, social services and health care providers that serve the poor taking the biggest hits."

At California Progress Report, Frank Russo explains, "The California Senate passed a repeal of a loophole that allows the multimillionaire purchasers of yachts and private planes from paying a sales or use tax." But the Assembly failed to pass this because of "the opposition of most elected Republicans."

Just to short-circuit the usual arguments about taxes, Frank Russo notes that the Legislative Analyst's Office looked into this and found no change in yacht and plane sales from times when the tax is collected to times when it is not.

As Russo explains, the fight over closing this loophole occurred just after "… medical, dental services, and other programs for children were cut and cost of living increases delayed for the blind, aged, and disabled poor who qualify for Social Security."

Here is what I want to know: Why in the world are the Republicans so confident that they can get away with this?

It is generally understood that the average citizen has been fed enough unanswered anti-tax and anti-government propaganda that they reflexively oppose taxes. (The operative word there is "unanswered.") But this is a very different thing. This is a special exclusion, just for rich people, that one way or another has to be made up for by the rest of us! Why aren't the people of California more upset about this?

The only conclusion I can reach is that the Republicans understand that regular people are not going to find out about this! And they may well be correct. Yes, the story was in a few newspapers, but really, who reads newspapers? This is not how large numbers of regular people get their information about politics in California. They get some of it from TV news, but I really fear that most people in California get their information about the issues facing the state from ads that run during prime-time television shows. And I think that conservatives understand this, while progressives/liberals do not quite "get it."

For example, if regular people were accurately informed about California issue, then people would understand that most of the factors that were used as justifications for recalling Governor Gray Davis are today almost the same with Governor Schwarzenegger. One big difference I see is that the energy companies are not running an ad campaign blaming Governor Schwarzenegger for anything, they way they ran ads blaming Governor Davis for the energy-company-created energy shortage back then.

So, in summary, again, this is about regular people having to pay sales taxes that rich people don't have to. And it is about Republicans being confident that the public isn't going to find out.

What can we do about this? Leave a comment.

Earlier this week I wrote about how "conventional wisdom" says that politicians acknowledging reality and offering solutions that could actually fix the state's problems is considered "political suicide."

Here is something else that is considered political suicide: Acknowledging that undocumented residents live and work here and are members of our communities. But it is a fact. A lot of people have come across the country's borders and settled in California, especially across the southern border.

Economic conditions have forced people to come here to try to find work. This is something that each of us would do if the situation were reversed. Heck, if the financial crisis that we are reading about in the news continues we might be doing just that very soon.

It is especially dangerous for a candidate to acknowledge that undocumented residents drive on the state's roads and suggest that while we work out solutions to the documentation problem, we test and license them so they can be insured. And so instead there are lots of unlicensed and therefore untrained, untested and uninsured people driving. This endangers all of us. But woe to the politician who actually tries to suggest realistic and workable ways to fix this.

Second to this on the political suicide scale is acknowledging that these undocumented residents are human beings, just like the rest of us.

The challenge here is to find solutions that fit our progressive value system. As progressives, we recognize and celebrate the humanity of every person. We don't ignore reality and we don't condone lawbreaking. We must look for practical, humane, innovative, equitable and democratic approaches to resolving these difficulties. We must always look for progress.

It's primary election day in California. Don't let yourself forget to vote, and check our voter guide to help you figure out what those initiatives are about.

Here is a scary thought: People who are just old enough to vote for the first time in this election were ten years old when the 2000 election brought George Bush to the White House, and likely don't remember much from before that.

They certainly don't remember California before Proposition 13 cut taxes, back when we had great roads and schools and colleges. They don't remember that there was a debate over whether the people should be allowed to decide how much to tax ourselves. Instead we now have a requirement that 2/3 of voters approve taxes - a level that can almost never be met.

They don't remember California before term limits. Proposition 93 is just a tweaking of the term limits rules, and there is no discussion over the merits of term limits generally. Young people don't know that there was a debate over the idea that people should be allowed to decide for themselves if they want to return their own representatives to office.

Last week I was caught in traffic so I couldn't get home in time to watch the Clinton-Obama debate. I scanned the radio and not one single AM or FM station was carrying it. (Oddly one station was carrying an older Republican Presidential candidate debate.) FM was a sea of really bad commercial music, ads, and a few good Spanish music stations. AM was a sea of right-wing opinion, and ads. And then more ads.

I remember when it was considered a duty of a broadcaster to inform and serve the public. It was unimaginable that a candidate debate was not available. In exchange for licenses to use OUR radio spectrum for commercial purposes the broadcast companies agreed to serve the public interest. They would limit the number of ads and devote a large percentage of programming to documentaries, news and other information that served democracy. It was understood that WE owned the resource, and WE set the terms for commercialization of that resource. Imagine!

Yes, We, the People used to set the terms for licenses to commercialize the public resources. Now it's the other way around - the corporations give us credit ratings.

It seems like such an old debate over ideas like these. But younger people they have never heard these debates and likely don't even know there even was debate over these ideas. They don't know about a time when the people were considered to be the owners of the state's and country's resources.

If they ever did get an opportunity to hear about these debates they might even think it is a good idea for the public to make decisions. (Hint.)

Here's a good thing - young people today clearly don't remember a time when most people were apathetic and didn't vote. All indications say that today we will see the largest turnout of voters in decades.