(Image via Unsplash)
Given that this blog is crossposted to LinkedIn, I’m imagining that the title might be provocative. It should be, of course, but I don’t think it’s wrong.
Lots and lots of people hate paying taxes, because they think as consumers. The money we pay in taxes doesn’t immediately reflect itself in goods and services obtained. (Actually, a surprising amount does, if we benefit from research or education or highways or the Internet or a defended nation or a river that doesn’t catch fire or whatever. They’re just not a) fun or b) visible as purchased goods.)
The proportion of our purchases that goes to the profit for the businesses that provide goods and services doesn’t benefit us, either. When gas was five bucks a gallon in early COVID, the oil companies made absolutely astonishing profits; the costs for raw and refined products didn’t actually change all that much. It was just that BP and Exxon and Shell knew they could take advantage of crisis and confusion. But even at the smaller and more honest scale, let’s say you have a driveway poured. You pay X for that service, which actually includes a ton of sub-components: materials, equipment, labor. But part of that—let’s say five percent of the price you pay—goes to the profit of the concrete business. You’ll never benefit from that, nor will the workers. It’s not even the owner’s salary; that’s part of the expenses. The profit is the owner’s tax on the transaction.
That concrete business had material delivered from a concrete plant, which made a profit. They drove to the job site in a mixer truck; the manufacturer of that truck, and the shop that maintains it, both made a profit. The contractor has a couple of pickup trucks; Ford or GMC made a profit. They hauled forms to the site on a boom truck; the truck manufacturer and the boom manufacturer both made a profit. Every step along the way, the owners—not the managers, not the workers—skimmed a little off the top. The homeowner probably paid a 25-40% collective tribute to all the owners in the chain. That $20,000 driveway could have been fifteen or less, except for all the ownership surcharges.
Workers don’t make a profit. Consumers don’t make a profit. We pay the ownership surcharges, which flow only upward. I don’t know about you, but I’d rather pay taxes for drug rehab and homeless shelters and public libraries. I don’t get to make that choice, of course, because someone entirely unaccountable to the public skims their sliver and never has to justify, or even disclose, what they’ve done with it.
I read a great commentary today by the economist Kathryn Anne Edwards. She talks about the foolishness of trying to revive the manufacturing economy, but I want to quote a slightly different part of her talk:
If you really wanted to have good middle-class jobs in the U.S., you would identify the jobs that can’t be exported and replaced by a machine, and you would ensure that those jobs are high quality and well-paid. What made a manufacturing job good is that they were high-paying, had health, and had retirement. That’s not special to manufacturing. That’s just special to labor economic policy. The jobs that can’t be exported that need people like are teachers, nurses, doctors, childcare workers, a lot of these pink-collar jobs that have never had the type of economic leverage to demand higher quality. Not to mention the retail sector—people who work in kitchens, people who bring you food, people who take your bag up to your room when you check into a hotel. We have a massive sprawling low-wage service sector. You could make that into the middle class if you really wanted to, but I don’t think we want to.
No. I don’t think we want to. Unions bad. Government bad. Invisible hand always help. Ugg.
Let me throw another quote out here, this time from Finian O’Toole’s review in the New Yorker of a new book by the historian Padraic X. Scanlan, called “Rot: An Imperial History of the Irish Famine.“
It was obvious to outsiders that the root of Ireland’s misery was what de Beaumont characterized as a “bad aristocracy”—the monopolization of land by a small élite that had no cultural or religious affinity with its tenantry and little sense of obligation to develop sustainable agriculture. But an English ruling class in which many leading politicians were themselves owners of vast estates in Ireland was unable to acknowledge this inconvenient truth. Who, if not the landlord system, could be to blame? It must be the Irish poor themselves. As Scanlan puts it, “Intensive monoculture made Irish potatoes vulnerable to blight. The solutions proposed to mitigate famine were themselves the product of a kind of intellectual and political monoculture. Solutions were unimaginable outside the market that fuelled the crisis to begin with.”
In a neatly circular argument, the conditions that had been forced on the laboring class became proof of its moral backwardness. It was relatively easy to plant and harvest potatoes—therefore, those who did so had clearly chosen the easy life. “Ireland, through this lens,” Scanlan writes, “was a kind of living fossil within the United Kingdom, a country where the majority of the poor were inert and indolent, unwilling and unable to exert themselves for wages and content to rely on potatoes for subsistence.”
This is about as good a summary of capital extraction as one could imagine. It’s always been easy to blame the poor for being poor, but the tentacles of profit drain us all dry.
More tomorrow.
Herb Childress 