At the insistence of Nike and Intel, the Oregon state legislature chose last week to devise a bill which in substance absolves these two multinational behemoths from paying their taxes. In exchange for these astounding indulgences, the two corporations promised to create new jobs and contribute a lump sum to the state – paltry offerings for what amounted to an unmerited government hand-out.
The decision of state lawmakers to genuflect to these economic leviathans is deeply disturbing but, unfortunately, not at all surprising. It reflects two underlying economic currents that have characterized United States economic policy since its nascence: one, an unhealthy deferment to the wishes of business elites and, two, a general fealty to the ideological tenets of corporate capitalism.
That state representatives are kow-towing to these heavyweights out of a sense of impotence and almost filial piety for Knight, Otellini, and their top acolytes is explicit. This deference has simply been made more palatable for public consumption – and perhaps to assuage the reservations of legislators’ themselves – by framing the decision as one made to ensure the continued “competitive-edge” of these companies in the face of airy “market imperatives” or the demands of “globalization”. Yet if these two multinational corporations – which are the world leaders in their respective fields – are not able to pay their taxes because they will somehow “lose” their competitive-edge or otherwise languish into obsolescence, then what company can be expected to pay their taxes without succumbing to these same ill-defined evils (or shall we say chimeras?).
Indeed, Republican co-speaker of the Oregon House, Bruce Hanna, provides us with an inadvertent but telling glimpse into the mindset of these policymakers when he notes that the “special session wasn’t only about keeping Nike from leaving” – ironically admitting that while the bill is not “only” about preventing Nike from leaving, it is – uh, well – about keeping Nike from leaving. To put it more bluntly, Nike and Intel have successfully managed to hold for ransom the livelihoods of thousands of Oregonians in order to extract monumental concessions for their shareholders and executives. As ‘The Oregonian’ admitted in a moment of surprising candor, “The Legislature wrote last week’s surprise bill at Nike’s behest. Then lawmakers rewrote it at Intel’s behest.”
As for the second point, that there is an unhealthy consensus amongst policymakers and economists in support of the ideological tenets of corporate capitalism, this episode has made the prevalence of this previously latent faith all too clear. Oregon House co-speaker Hanna’s defense of the bill typifies this uncritical devotion to the mythos of corporate capitalism, or as the great social-commentator Thomas Bell once termed it, “mumbo jumbo”. Hanna avers that these tax cuts will ensure these corporations continued prosperity (I am sure they will, but for whom in the corporation?) by stimulating capital accumulation and job creation. He further asserts that it is the duty of the government to “update our regulatory policies to ensure that businesses aren’t strangled by red tape”.
Encouraging job-creation through corporate tax-breaks sounds very reasonable except for the fact that it has no basis in empirical data. Or, to frame this in another way, it does not work in the real world. Most proponents of tax-cuts for the purpose of stimulating job creation and innovation cite Reagan’s unprecedented corporate tax-breaks of the 1980s as the textbook case for success. However, if one actually examines the data from this period one finds that capital accumulation actually decreased after these tax-breaks. Instead, corporate executives just pocketed the extra money.
Carter and Reagan’s concurrent moves to eviscerate regulation governing business practices in the financial sector and for big corporations (Hanna’s “red tape”), was even more counterproductive. By gutting these regulations Savings and Loan institutions were for the first time allowed to engage in new high-risk activities that eventually resulted in the near-extinction of these institutions and an acute economic recession.
It is also worth noting that the assumptions themselves that constitute the tax-break argument are pretty farcical once put under the microscope. Chief amongst them is the notion that by taxing corporations they will be less disposed to innovate or plow back profits since they will be ever wary of the “coercive” powers of the state and – gulp – social responsibility! In reality, tax-breaks do not prevent corporations from pursuing dynamism and job creation but, if anything, encourage stasis and complacency. No matter how you try to frame it, the notion that taxing corporations will somehow make them suddenly averse to making profits and engaging in – well – business, is pure casuistry. It is not without reason that necessity has been termed the mother of invention.
And one last point must be made. Absolving corporations from giving back to the society that enables them to work in a climate of security; fosters them with billions of dollars for Research and Development; and provides them with the workforce that actually designs, creates, and markets their goods, is not only ridiculous but fundamentally unjust. The businesses that do not benefit from this bill are the small businesses of Oregon, which virtually all economists and policymakers alike recognize to be the biggest employers and innovators in not only the state, but national economy. As Hanna says, it is the “small businesses that form the economic backbone of our state.”
That those who employ the majority of Oregonians and contribute the most to the state in both social and economic terms should be left out is perhaps the most disturbing admission of the bill’s moral bankruptcy and thinly-veneered elitism.
In conclusion, while it is true (and self-evidently so) that Oregon is currently in the midst of economic straits, attempts to address these problems should most definitely not entail enabling the avaricious and asocial behavior of multinational corporations. Threats to outsource labor should not be met with tax-breaks but, instead, serious attempts to remedy what are ultimately systemic problems: an economic system that not only tolerates greed but valorizes it; an unbalanced relationship between labor and capital that empowers corporate executives to deny workers a living wage simply by mouthing the dubious justification of “market forces”; and, a government that deludes itself into believing the interests of those who exploit are synonymous with those who are exploited. Jesus denounced such sophistry, Martin Luther King Jr. denounced such sophistry, and it is about time that our elected officials did the same.
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