From our fields to our forks, huge corporations have an overwhelming amount of power over our food supply every step of the way. Right now there are more than 313 million people living in the United States, and the job of feeding all of those people is almost entirely in the hands of just a few dozen monolithic companies. If you do not like how our food is produced or you don’t believe that it is healthy enough, it isn’t very hard to figure out who is to blame. These mammoth corporations are not in business to look out for the best interests of the American people. Rather, the purpose of these corporations is to maximize wealth for their shareholders. So the American people end up eating billions of pounds of extremely unhealthy food that is loaded with chemicals and additives each year, and we just keep getting sicker and sicker as a society. But these big corporations are raking in big profits, so they don’t really care.
If we did actually have a capitalist system in this country, we would have a high level of competition in the food industry. But instead, the U.S. food industry has become increasingly concentrated with each passing year. Just consider the following numbers about the U.S. agricultural sector…
The U.S. agricultural sector suffers from abnormally high levels of concentration. Most economic sectors have concentration ratios around 40%, meaning that the top four firms in the industry control 40% of the market. If the concentration ratio is above 40%, experts believe competition can be threatened and market abuses are more likely to occur: the higher the number, the bigger the threat.
The concentration ratios in the agricultural sector are shocking.
-Four companies own 83.5% of the beef market.
-The top four firms own 66% of the hog industry.
-The top four firms control 58.5% of the broiler chicken industry.
-In the seed industry, four companies control 50% of the proprietary seed market and 43% of the commercial seed market worldwide.
-When it comes to genetically engineered (GE) crops, just one company, Monsanto, boasts control of over 85% of U.S. corn acreage and 91% of U.S. soybean acreage.
When so much power is concentrated in so few hands, it creates some tremendous dangers.
And many of these giant corporations (such as Monsanto) are extremely ruthless. Small farmers all over America are being wiped out and forced out of the business by the predatory business practices of these huge companies…
Because farmers rely on both buyers and sellers for their business, concentrated markets squeeze them at both ends. Sellers with high market power can inflate the prices of machinery, seeds, fertilizers and other goods that farmers need for their farms, while powerful buyers, such as processors, suppress the prices farmers are paid. The razor-thin profit margins on which farmers are forced to operate often push them to “get big or get out”—expanding into mega-operations or exiting the business altogether.
Of course the control that big corporations have over our food supply does not end at the farms.
The distribution of our food is also very highly concentrated. The graphic shared below was created by Oxfam International, and it shows how just 10 gigantic corporations control almost everything that we buy at the grocery store…
And these food distributors are often not very good citizens either.
For example, it was recently reported that Nestle is running a massive bottled water operation on a drought-stricken Indian reservation in California…
Among the windmills and creosote bushes of San Gorgonio Pass, a nondescript beige building stands flanked by water tanks. A sign at the entrance displays the logo of Arrowhead 100% Mountain Spring Water, with water flowing from a snowy mountain. Semi-trucks rumble in and out through the gates, carrying load after load of bottled water.
The plant, located on the Morongo Band of Mission Indians’ reservation, has been drawing water from wells alongside a spring in Millard Canyon for more than a decade. But as California’s drought deepens, some people in the area question how much water the plant is bottling and whether it’s right to sell water for profit in a desert region where springs are rare and underground aquifers have been declining.
Nestle doesn’t stop to ask whether it is right or wrong to bottle water in the middle of the worst drought in the recorded history of the state of California.
They have the legal right to do it and they are making large profits doing it, and so they are just going to keep on doing it.
Perhaps you are thinking that you can avoid all of these corporations by eating organic and by shopping at natural food stores.
Well, it isn’t necessarily that easy.
According to author Wenonah Hauter, the “health food industry” is also extremely concentrated…
Over the past 20 years, Whole Foods Market has acquired its competition, including Wellspring Grocery, Bread of Life, Bread & Circus, Food for Thought, Fresh Fields, Wild Oats Markets and others. Today the chain dominates the market because it has no national competitor. Over the past five years its gross sales have increased by half (47 percent) to $11.7 billion, and its net profit quadrupled to $465.6 million. One of the ways it has achieved this profitability is by selling conventional foods under the false illusion that they are better than products sold at a regular grocery store. Consumers falsely conclude that these products have been screened and are better, and they are willing to pay a higher price.
The distribution of organic foods is also extremely concentrated. A little-known company, United Natural Foods, Inc. (UNFI) now controls the distribution of organic and natural products. Publically traded, the company has a contract with Whole Foods and it is the major source of these products for the remaining independent natural food stores. This relationship has resulted in increasingly high prices for these foods. Small manufacturers are dependent on contracts with UNFI to get their products to market and conversely, small retailers often have to pay a premium price for products because of their dependence on this major distributor. Over the past five years, UNFI’s net sales increased by more than half (55.6 percent) $5.2. billion. Its net profit margin increased by 88 percent to $91 million.
Everywhere you look, the corporations are in control.
And this is especially true when you look at big food retailers such as Wal-Mart.
Right now, grocery sales account for about half of all business at Wal-Mart, and approximately one out of every three dollars spent on groceries in the United States is spent at Wal-Mart.
That is absolutely astounding, and it obviously gives Wal-Mart an immense amount of power.
In fact, if you can believe it, Wal-Mart actually purchases a billion pounds of beef every single year.
So the next time someone asks you where the beef is, you can tell them that it is at Wal-Mart.
On the restaurant side, the ten largest fast food corporations account for 47 percent of all fast food sales, and the love affair that Americans have with fast food does not appear to be in danger of ending any time soon.
Personally, if you do not like how these corporate giants are behaving, you can always complain.
But you are just one person among 313 million, and most of these big corporations are not going to consider the ramblings of one person to be of any significance whatsoever.
Collectively, however, we have great power. And the way that we are going to get these big corporations to change is by voting with our wallets.
Unfortunately, the vast majority of Americans seem quite satisfied with the status quo. So the population as a whole is likely going to continue to get sicker, fatter and less healthy with each passing year, and the big food corporations are going to keep becoming even more powerful.
The percentage of Americans that are working for themselves has never been lower in the history of the United States. Once upon a time, the United States was a paradise for entrepreneurs and small businesses, but now the control freak bureaucrats that dominate our society have created a system that absolutely eviscerates them. This is very unfortunate, because by murdering small business, the bureaucrats are destroying the primary engine of job growth in this country. One of the big reasons why there are not enough jobs in America today is because small business creation is way down. As I mentioned yesterday, entrepreneurs and small businesses are being absolutely devastated by rules, regulations, red tape and by oppressive levels of taxation. If anyone doubts that small business in the United States is dying, just look at the charts below. Sadly, this is what the bureaucrats that run things want. They don’t want us to be independent of the system. Instead, they are much more comfortable when as many of us as possible are heavily dependent on the system in one way or another. If all of us have to go running to the government or to one of the big corporations for a job, then we are much easier to control. But as the control freaks continue to construct their bureaucratic utopia, they are also killing off what once made the U.S. economy so great.
The other day I came across the following two charts in an article by Charles Hugh Smith, and I was absolutely stunned by what I saw. This first chart shows that the number of unincorporated self-employed Americans has dropped back to levels that we have not seen since the mid-1980s even though our population has increased by tens of millions of people since that time…
As you can see, from 1970 to the mid-1990s the number of unincorporated self-employed Americans rose steadily. But in the mid-1990s it began to level off and now it is falling rapidly.
This next chart shows the percentage of self-employed Americans as a share of non-farm employment. In other words, those that work on farms are excluded from this chart. The percentage of self-employed Americans was fairly stable between 1970 and 1990, but since 1990 it has been steadily eroding and it has now reached a level never seen before…
At this point, only about 7 percent of non-farm workers are self-employed. That is depressingly low. That means that an overwhelming majority of those that are employed in America are working for the system in one capacity or another.
But isn’t that what we pound into the heads of our children these days? We teach them to work hard in school so that they can “get a good job” when they grow up. From a very early age we train our children to plug themselves into the system.
Not that working for someone else is wrong. Of course not. It is just that we are not fostering a spirit of entrepreneurship in America today. In fact, we seem to be doing everything that we can to kill it off.
In a previous article, I detailed how the number of new businesses (and the number of jobs those businesses create) has been steadily declining. In particular, this decline has accelerated dramatically under the Obama administration. According to an analysis of U.S. Department of Labor data performed by economist Tim Kane, the following is how the decline in the number of startup jobs per 1000 Americans breaks down by presidential administration…
Bush Sr.: 11.3
Bush Jr.: 10.8
Is that a good trend or a bad trend?
It doesn’t take an advanced degree in economics to figure out where things are going.
Kane speculated about why we are witnessing such a decline in his paper…
There is anecdotal evidence that the U.S. policy environment has become inadvertently hostile to entrepreneurial employment. At the federal level, high taxes and higher uncertainty about taxes are undoubtedly inhibiting entrepreneurship, but to what degree is unknown. The dominant factor may be new regulations on labor. The passage of the Affordable Care Act is creating a sweeping alteration of the regulatory environment that directly changes how employers engage their workforces, and it will be some time until those changes are understood by employers or scholars. Separately, there has been a federal crackdown since 2009 by the Internal Revenue Service on U.S. employers that hire U.S. workers as independent contractors rather than employees, raising the question of mandatory benefits. New firms tend to use part-time and contract staffing rather than full-time employees during the startup stage. According to Labor Department data, the typical American today only takes home 70 percent of compensation as pay, while the rest is absorbed by the spiraling cost of benefits (e.g., health insurance). The dilemma for U.S. policy is that an American entrepreneur has zero tax or regulatory burden when hiring a consultant/contractor who resides abroad. But that same employer is subject to paperwork, taxation, and possible IRS harassment if employing U.S.-based contractors. Finally, there has been a steady barrier erected to entrepreneurs at the local policy level. Brink Lindsey points out in his book Human Capitalism that the rise of occupational licensing is destroying startup opportunities for poor and middle class Americans.
In my previous article, I also pointed out some of the other statistics that show that small business in America is dying…
-According to the U.S. Census Bureau, the U.S. economy lost more than 220,000 small businesses during the last recession.
-As a share of the population, the percentage of Americans that are self-employed fell by more than 20 percent between 1991 and 2010.
-As a share of the population, the percentage of “new entrepreneurs and business owners” dropped by a staggering 53 percent between 1977 and 2010.
Unfortunately, this is a crisis that has taken decades to develop and that there are not any easy solutions for. But there are certain factors that should be addressed immediately. The following are some of the things that are contributing to the murder of self-employment and small business in America…
#1 Taxes: The IRS seems to especially enjoy tormenting entrepreneurs and small businesses. In fact, things have gotten so bad that even late night talk show hosts are joking about it. Recently, NBC Tonight Show host Jay Leno joked that if Barack Obama really wanted to close down Guantanamo Bay, he should “do what he always does: declare it a small business and tax it out of existence”
#2 Ridiculous Regulations: If you have ever tried to start a small business, you probably know how frustrating it can be dealing with government red tape. In particular, the federal government has burdened our small businesses with gigantic mountains of rules and regulations and it gets worse with each passing day.
#3 State Governments That Are Openly Hostile To Business: A perfect example of this is the state of California. In 2011, the state of California ranked 50th out of all 50 states in new business creation, and yet they just continue to pass more legislation that hurts small businesses.
#4 Obamacare: Our broken healthcare system is a tremendous burden on small businesses, and Obamacare is going to make things much worse.
#5 The One World Trade Agenda: In many industries, U.S. small businesses simply cannot compete against products made by workers that are being paid slave labor wages on the other side of the globe.
#6 Predator Corporations: Time after time we have seen corporate giants extract huge tax breaks and other enormous concessions from local officials which give them an overwhelming advantage. But once the corporate giant moves into town, many of the existing small businesses find that they cannot compete and are forced to shut down.
#7 Our Corrupt Political System: On the national level, elections are almost always won by the politician that raises the most money. Our politicians know that their careers depend on raising money, so they tend to be very good to those that they get big money from. There is a reason why big corporations spend billions of dollars on campaign contributions and lobbying. They do it because it works. Over the decades, the big corporations have been able to shift the rules of the game massively in their favor, and this has been to the detriment of entrepreneurs and small businesses.
Can you think of any other factors that you would add to this list? Please feel free to share your opinion by leaving a comment below…
The federal income tax is a bad joke and it needs to be abolished. All over the nation, hard working American families are being absolutely crushed by oppressive levels of taxation, and our politicians are constantly coming up with new ways to extract money from all of us every single year. Meanwhile, many ultra-wealthy Americans and many of the most profitable corporations in the country pay little to nothing in taxes. In fact, as you will see below, there are dozens of very prominent corporations that make billions of dollars in profits and yet don’t pay a dime in taxes. Tax avoidance has become a multi-billion dollar industry in the United States. Those that have the resources to “play the game” use shell companies, offshore tax havens and the thousands of loopholes in our tax code to minimize their tax burdens as much as possible. Meanwhile, the rest of us get absolutely hammered. This is fundamentally unfair. The federal income tax system is irreversibly broken at this point, and it is time to abolish it. If you think that the federal income tax system can be “fixed”, then you probably have never studied it. Our tax code is nearly 4 million words long and it is absolutely riddled with thousands of loopholes that favor big corporations and the ultra-wealthy. We should come up with a better, fairer way to fund the government. The United States once prospered greatly without a federal income tax, and it could do so again.
Many people simply do not believe that it is possible for corporations inside the United States to make billions of dollars in profits each year and not pay a dime in income taxes.
Well, according to a report put out by Public Campaign, that is exactly what is happening. Posted below are numbers that come directly from their report. 30 large corporations are listed, and 29 of them had a tax burden for 2008 through 2010 that was less than zero even though they all made enormous profits. And all 30 of them spent more on lobbying than they did on taxes.
The numbers that you are about to see are for 2008, 2009 and 2010 combined. For “taxes paid”, please note that for 29 of the corporations a negative number is given. That means that the net tax liability for 2008 through 2010 was actually less than zero.
After seeing these numbers, is there anyone out there that is still willing to claim that our tax system is “fair”?…
U.S. Profits: $10,460,000,000
Taxes Paid: ‐$4,737,000,000
U.S. Profits: $4,855,000,000
Taxes Paid: ‐$1,027,000,000
U.S. Profits: $32,518,000,000
Taxes Paid: ‐$951,000,000
U.S. Profits: $49,370,000,000
Taxes Paid: ‐$681,000,000
American Electric Power
U.S. Profits: $5,899,000,000
Taxes Paid: ‐$545,000,000
U.S. Profits: $882,000,000
Taxes Paid: ‐$508,000,000
U.S. Profits: $1,666,000,000
Taxes Paid: ‐$305,000,000
U.S. Profits: $1,931,000,000
Taxes Paid: ‐$284,000,000
U.S. Profits: $1,385,000,000
Taxes Paid: ‐$227,000,000
U.S. Profits: $5,475,000,000
Taxes Paid: ‐$216,000,000
U.S. Profits: $9,735,000,000
Taxes Paid: ‐$178,000,000
U.S. Profits: $6,403,000,000
Taxes Paid: ‐$139,000,000
U.S. Profits: $4,263,000,000
Taxes Paid: ‐$127,000,000
U.S. Profits: $365,000,000
Taxes Paid: ‐$112,000,000
Integrys Energy Group
U.S. Profits: $818,000,000
Taxes Paid: ‐$92,000,000
U.S. Profits: $1,725,000,000
Taxes Paid: ‐$85,000,000
U.S. Profits: $2,124,000,000
Taxes Paid: ‐$72,000,000
U.S. Profits: $926,000,000
Taxes Paid: ‐$66,000,000
U.S. Profits: $415,000,000
Taxes Paid: ‐$48,000,000
U.S. Profits: $627,000,000
Taxes Paid: ‐$46,000,000
U.S. Profits: $4,105,000,000
Taxes Paid: ‐$41,000,000
U.S. Profits: $4,903,000,000
Taxes Paid: ‐$34,000,000
U.S. Profits: $1,292,000,000
Taxes Paid: ‐$29,000,000
U.S. Profits: $286,000,000
Taxes Paid: ‐$26,000,000
U.S. Profits: $896,000,000
Taxes Paid: ‐$18,000,000
U.S. Profits: $2,551,000,000
Taxes Paid: ‐$17,000,000
U.S. Profits: $571,000,000
Taxes Paid: ‐$15,000,000
U.S. Profits: $1,020,000,000
Taxes Paid: ‐$9,000,000
U.S. Profits: $1,977,000,000
Taxes Paid: ‐$4,000,000
U.S. Profits: $4,247,000,000
Taxes Paid: $37,000,000 (a rate of less than 1%)
U.S. Profits: $163,691,000,000
Taxes Paid: ‐$10,602,000,000
Just look at that combined total again.
Those 30 companies had combined profits of more than 163 billion dollars during those three years, and yet the combined net tax liability of those companies was negative 10.6 billion dollars.
I wish I could make my taxes look like that.
Another company that is making headlines because of their taxes these days is Facebook.
It turns out that Facebook made more than a billion dollars in 2012 but did not pay a single dime in federal or state income taxes. The following is from a report that was just released by Citizens for Tax Justice…
Earlier this month, the Facebook Inc. released its first “10-K” annual financial report since going public last year. Hidden in the report’s footnotes is an amazing admission: despite $1.1 billion in U.S. profits in 2012, Facebook did not pay even a dime in federal and state income taxes.
Instead, Facebook says it will receive net tax refunds totaling $429 million.
According to Businessweek, Facebook has an additional 2 billion dollars in tax credits that it will be able to use in future years…
Facebook says that it anticipates reducing its tax liability in the future by an additional $2.17 billion by using further net operating loss carry-forwards that it has banked.
And of course when it comes to abusing the tax system, the big Wall Street banks are some of the worst offenders. The following is an excerpt from a report put out by the office of U.S. Senator Bernie Sanders…
Here are just a few examples of how the corporations and Wall Street banks these CEOs work for have significantly harmed our economy and the federal budget:
1. Bank of America CEO Brian Moynihan
Number of Offshore Tax Havens in 2010? 371.
In 2010, Bank of America operated 371 subsidiaries incorporated in offshore tax havens. 204 of these subsidiaries are incorporated in the Cayman Islands, which has a corporate tax rate of 0%.
Amount of federal income taxes Bank of America would have owed if offshore tax havens were eliminated? $2.5 billion.
Bank of America has stashed $18.5 billion in offshore tax havens to avoid paying U.S. income taxes. Bank of America would owe an estimated $2.5 billion in federal income taxes if its use of offshore tax avoidance was eliminated.
Amount of federal income taxes paid in 2010? Zero. $1.9 billion tax refund.
Bank of America received a $1.9 billion tax refund from the IRS in 2010, even though it made $4.4 billion in profits.
Taxpayer Bailout from the Federal Reserve and the Treasury Department? Over $1.3 trillion.
During the financial crisis, Bank of America received a total of more than $1.3 trillion in virtually zero interest loans from the Federal Reserve and a $45 billion bailout from the Treasury Department.
2. JP Morgan Chase CEO James Dimon
Number of Offshore Tax Havens in 2010? 83.
In 2010, JP Morgan Chase operated 83 subsidiaries incorporated in offshore tax havens.
Amount of federal income taxes JP Morgan Chase would have owed if offshore tax havens were eliminated? $4.9 billion
JP Morgan Chase has stashed $21.8 billion in offshore tax haven countries to avoid payng income taxes. If this practice was outlawed, it would have paid $4.9 billion in federal income taxes.
Taxpayer Bailout from the Federal Reserve and the Treasury Department? $416 billion
During the financial crisis, JP Morgan Chase received a total of more than $391 billion in virtually zero interest loans from the Federal Reserve and a $25 billion bailout from the Treasury Department, while Jamie DImon served as a director of the New York Federal Reserve.
3. Goldman Sachs CEO Lloyd Blankfein
Amount of federal income taxes paid in 2008? Zero. $278 million tax refund.
In 2008, Goldman Sachs received a $278 million refund from the IRS, even though it earned a profit of $2.3 billion that year.
Number of offshore tax havens in 2010? 39.
In 2010, Goldman Sachs operated 39 subsidiaries in offshore tax haven countries.
Amount of federal income taxes Goldman Sachs would have owed if offshore tax havens were eliminated? $3.32 billion.
Goldman Sachs has stashed $20.63 billion in offshore tax haven countries to avoid paying income taxes. If this practice was outlawed, it would have paid $3.32 billion in federal income taxes.
Taxpayer Bailout from the Federal Reserve and the Treasury Department? $824 billion.
During the financial crisis, Goldman Sachs received a total of $814 billion in virtually zero interest loans from the Federal Reserve and a $10 billion bailout from the Treasury Department.
Are you starting to get the picture?
The big banks and the big corporations make billions, but they pay nothing or next to nothing.
The rest of us bust our rear ends to try to get ahead, and we get gouged by dozens of different taxes.
Over time, the percentage of the overall tax burden shouldered by corporations has gotten smaller and smaller.
Back in 1950, corporate taxes accounted for about 30 percent of all federal revenue. In 2012, corporate taxes accounted for less than 7 percent of all federal revenue.
These days, large corporations have become absolute masters at avoiding taxes. In fact, there are many international tax havens that are doing a booming business in setting up sham headquarters for U.S. corporations. For example, the city of Zug, Switzerland only has a population of 26,000 people but it is the headquarters for 30,000 companies.
But corporations are not the only ones doing this kind of thing.
The ultra-wealthy have also mastered the art of legally not paying taxes.
As I mentioned in a previous article, it has been reported that the global elite have up to 32 TRILLION dollars stashed in offshore banks around the globe.
With that amount of money, you could pay off the entire U.S. national debt and still have enough money left over to buy every product and service produced in the United States during an entire year.
It is time to admit that our tax system is broken.
Congress has had decades to fix it, and yet the abuses just keep getting worse.
What we are doing is not working.
We need to abolish the income tax.
If you are still not convinced that the federal income tax is an abomination and that we need to abolish it, here are some more shocking facts about our tax system from one of my previous articles about taxes…
1 – The U.S. tax code is now 3.8 million words long. If you took all of William Shakespeare’s works and collected them together, the entire collection would only be about 900,000 words long.
2 – According to the National Taxpayers Union, U.S. taxpayers spend more than 7.6 billion hours complying with federal tax requirements. Imagine what our society would look like if all that time was spent on more economically profitable activities.
3 – 75 years ago, the instructions for Form 1040 were two pages long. Today, they are 189 pages long.
4 – There have been 4,428 changes to the tax code over the last decade. It is incredibly costly to change tax software, tax manuals and tax instruction booklets for all of those changes.
5 – According to the National Taxpayers Union, the IRS currently has 1,999 different publications, forms, and instruction sheets that you can download from the IRS website.
6 – Our tax system has become so complicated that it is almost impossible to file your taxes correctly. For example, back in 1998 Money Magazine had 46 different tax professionals complete a tax return for a hypothetical household. All 46 of them came up with a different result.
7 – In 2009, PC World had five of the most popular tax preparation software websites prepare a tax return for a hypothetical household. All five of them came up with a different result.
8 – The IRS spends $2.45 for every $100 that it collects in taxes.
9 – According to The Tax Foundation, the average American has to work until April 17th just to pay federal, state, and local taxes. Back in 1900, “Tax Freedom Day” came on January 22nd.
10 – When the U.S. government first implemented a personal income tax back in 1913, the vast majority of the population paid a rate of just 1 percent, and the highest marginal tax rate was just 7 percent.
11 – Residents of New Jersey pay $1.64 in taxes for every $1.00 of federal spending that they get back.
12 – The United States is the only nation on the planet that tries to tax citizens on what they earn in foreign countries.
13 – According to Forbes, the 400 highest earning Americans pay an average federal income tax rate of just 18 percent.
14 – Warren Buffett had an effective tax rate of just 17.4 percent for 2010.
15 – The top 20 percent of all income earners in the United States pay approximately 86 percent of all federal income taxes.
16 – Sadly, as Bill Whittle has shown, you could take every single penny that every American earns above $250,000 and it would only fund about 38 percent of the federal budget.
Please share this article with as many people as you can. We have now entered a time of the year when tens of millions of Americans will be filling out their tax returns, and the pain of going through that process will make people even more receptive than normal to the truth about how broken our system is.
So what do you think?
Do you think that it is fair for the ultra-wealthy and hugely profitable corporations to get away with paying zero taxes while you get hammered?
Do you believe that it is time to abolish the income tax?
Please feel free to post a comment with your thoughts below…
When most people think of “Big Brother”, they think of the FBI, the CIA, the NSA, the Department of Homeland Security and other shadowy government agencies. Yes, they are definitely watching you, but so are many big corporations. In fact, there are some companies that are making tens of millions of dollars by gathering every shred of information about all of us that they can and selling it for profit to anyone willing to pay the price. It is called “data mining”, and these data miners want to keep track of literally everything that you do. Most people know that basically everything that we do on the Internet is tracked, but data mining goes far beyond that. When you use a customer rewards card at the supermarket, the data miners know about it. When you pay for a purchase with a credit card or a debit card, the data miners know about it. Every time you buy a prescription drug, that information is sold to someone. Every time you apply for a loan, a whole host of organizations is notified. Information has become an extremely valuable commodity, and thanks to computers and the Internet it is easier to gather information than ever before. But that also means that our personal information is no longer “private”, and this trend is only going to get worse in the years ahead.
You have probably never even heard of many of these companies that are making millions of dollars selling your personal information. Acxiom and Epsilon are two of the biggest names in the industry, and most of the time they are selling your information to companies that want to sell you stuff.
Almost every single day, very personal information about you is being bought and sold without your permission and it is all perfectly legal.
A recent article in The Week says the following about Acxiom….
An Arkansas company you’ve probably never heard of knows more about you than some of your friends, Google, and even the FBI — and it’s selling your data
The scale of the information gathering that Acxiom does is absolutely mind blowing. If you can believe it, Acxiom actually keeps track of more than 190 million people inside the United States….
The company fits into a category called database marketing. It started in 1969 as an outfit called Demographics Inc., using phone books and other notably low-tech tools, as well as one computer, to amass information on voters and consumers for direct marketing. Almost 40 years later, Acxiom has detailed entries for more than 190 million people and 126 million households in the U.S., and about 500 million active consumers worldwide. More than 23,000 servers in Conway, just north of Little Rock, collect and analyze more than 50 trillion data ‘transactions’ a year.
So what does Acxiom want to know about you?
The following is from a recent New York Times article about Acxiom….
IT knows who you are. It knows where you live. It knows what you do.
It peers deeper into American life than the F.B.I. or the I.R.S., or those prying digital eyes at Facebook and Google. If you are an American adult, the odds are that it knows things like your age, race, sex, weight, height, marital status, education level, politics, buying habits, household health worries, vacation dreams — and on and on.
Companies such as Acxiom literally want every shred of information about you that they can possibly get.
Once they gather all that data, Acxiom analyzes it, packages it and sells it to large corporations such as Wells Fargo, HSBC, Toyota, Ford and Macy’s.
And being in the “Big Brother business” is very, very profitable.
Acxiom made more than 77 million dollars in profits during their latest fiscal year.
Some members of Congress are very alarmed by all of this. According to U.S. Senator John Kerry, this industry is virtually unregulated….
“There’s no code of conduct. There’s no standard. There’s nothing that safeguards privacy and establishes rules of the road.”
So what do big corporations do with all of this data after they purchase it from companies like Acxiom?
Well, for one thing, they use it to try to predict how you will behave. A Daily Beast article gave some examples of how this works….
Predicting people’s behavior is becoming big business—and increasingly feasible in an era defined by accessible information. Data crunching by Canadian Tire, for instance, recently enabled the retailer’s credit card business to create psychological profiles of its cardholders that were built upon alarmingly precise correlations. Their findings: Cardholders who purchased carbon-monoxide detectors, premium birdseed, and felt pads for the bottoms of their chair legs rarely missed a payment. On the other hand, those who bought cheap motor oil and visited a Montreal pool bar called “Sharx” were a higher risk. “If you show us what you buy, we can tell you who you are, maybe even better than you know yourself,” a former Canadian Tire exec said.
I don’t know about you, but I find that a bit creepy.
Later on in that same article, how some U.S. companies are using this kind of information was explained….
Other industries have bolstered their bottom lines by predicting how consumers will behave, according to Super Crunchers. UPS predicts when customers are at risk of fleeing to one of its competitors, and then tries to prevent the loss with a telephone call from a salesperson. And with its “Total Rewards” card, Harrah’s casinos track everything that players win and lose, in real time, and then analyze their demographic information to calculate their “pain point”—the maximum amount of money they’re likely to be willing to lose and still come back to the casino in the future. Players who get too close to their pain point are likely to be offered a free dinner that gets them off the casino floor.
So is all of this data gathering harmless?
Does it simply make our economy more efficient?
Or is there a greater danger here?
At some point could all of our personal information be used for more insidious purposes?
One thing is for sure – this is a trend that is not going away any time soon.
As our society becomes even more integrated through the Internet, data gathering is going to become even more comprehensive.
Eventually these complicated computer algorithms will be able to make very detailed predictions about your future behavior with a very, very high degree of accuracy.
When you add government snooping into the equation, it becomes easy to see why privacy advocates are going crazy these days.
Our society is literally being transformed into a technological monitoring grid. Virtually everything we do is monitored, tracked and recorded in some way.
If we are not very careful, eventually we could end up living in a society that is much more oppressive than anything George Orwell ever dreamed of.
So what do you think of all of this snooping, spying and data mining?
Do you believe that it is harmless or do you believe that it represents a significant threat?
Feel free to post a comment with your thoughts below….
The middle class in America is being systematically wiped out, and most people don’t even realize what is happening. Every single year, millions more Americans fall out of the middle class and become dependent on the government. The United States once had the largest and most vibrant middle class in the history of the world, but now the middle class is rapidly shrinking and government dependence is at an all-time high. So why is this happening? Well, America is becoming a poorer nation at the same time that wealth is becoming extremely concentrated at the very top. At this point, our economic system is designed to funnel as much money and power to the federal government and to the big corporations as possible. Individuals and small businesses have a really hard time thriving in this environment. To most big corporations these days, workers are viewed as financial liabilities. Most corporations want to reduce their payrolls as much as possible. You see, the truth is that most corporations want to be just like Apple. If you can believe it, Apple makes $400,000 in profit per employee. Big corporations don’t care that you need to pay the mortgage and provide for your family. Their goal is to make as much money as possible. And most of the control freaks that run our bloated federal government don’t care much about middle class families either. To many politicians and federal bureaucrats, middle class families are “useless eaters” that are constantly damaging the environment with their “excessive” lifestyles. In this day and age, neither the federal government nor the big corporations really have much use for middle class Americans, and that is really, really bad news for the the future of the middle class family in America.
There are three key factors that are constantly chipping away at the middle class….
Labor has become a global commodity, and American workers are often 10 to 20 times as expensive as workers on the other side of the world are. Middle class jobs (such as manufacturing, etc.) have been leaving this country at an astounding pace. Competition for the jobs that remain has become extremely fierce, and this has driven wages down. The following is from a recent article in the New York Times….
But in the last two decades, something more fundamental has changed, economists say. Midwage jobs started disappearing. Particularly among Americans without college degrees, today’s new jobs are disproportionately in service occupations — at restaurants or call centers, or as hospital attendants or temporary workers — that offer fewer opportunities for reaching the middle class.
As paychecks have stagnated, the cost of living has continued to escalate. Middle class families are finding that their paychecks simply do not go nearly as far as they did before. This is creating a tremendous amount of financial stress in households all over America.
Meanwhile, our politicians are taxing the middle class like crazy. Most people only focus on federal and state income taxes, but that is only a small part of the story. As I detailed the other day, our politicians are taxing us in literally dozens of different ways and it is almost always the middle class that ends up getting hit the hardest.
If America wants to be great again, it is going to need a thriving middle class. But right now the federal government and the big corporations are gobbling up all of the power and all of the money and the middle class is shrinking rapidly.
If current trends continue, eventually there will not be much of a middle class left.
The following are 25 signs that middle class families have been targeted for extinction….
#1 Over the past several decades, millions upon millions of middle class Americans have been systematically turned into government dependents. Back in 1960, social welfare benefits made up approximately 10 percent of all salaries and wages. In the year 2000, social welfare benefits made up approximately 21 percent of all salaries and wages. Today, social welfare benefits make up approximately 35 percent of all salaries and wages.
#2 Unemployment is at epidemic levels and the vast majority of the new jobs that have been “created” in recent years have been low paying jobs. Of those Americans that do have a job at this point, one out of every four works a job that pays $10 an hour or less.
#3 The “working poor” is a group that is rapidly growing in this country. If you can believe it, the United States actually has a higher percentage of workers doing low wage work than any other major industrialized nation does.
#4 Over the past several decades, the percentage of low income jobs has steadily increased. Back in 1980, less than 30% of all jobs in the United States were low income jobs. Today, more than 40% of all jobs in the United States are low income jobs.
#5 The way that our economic system is structured today, almost all of the economic rewards go to the very top of the food chain. The following is how income gains in the United States were distributed during 2010….
-37 percent of all income gains went to the top 0.01 percent of all income earners
-56 percent of all income gains went to the rest of the top 1 percent
-7 percent of all income gains went to the bottom 99 percent
#6 Several decades ago, there was a much more even distribution of income in this country. Back in the 1970s, the top 1 percent of all income earners brought in about 8 percent of all income. Today, they bring in about 21 percent of all income.
#7 As the middle class shrinks, the number of “low income” and “poor” Americans is rapidly rising. Today, approximately 48 percent of all Americans are currently either considered to be “low income” or are living in poverty.
#8 Manufacturing jobs once enabled huge numbers of Americans to enjoy a middle class lifestyle. Unfortunately, those jobs are leaving this country at a breathtaking pace. Back in 1940, 23.4% of all American workers had manufacturing jobs. Today, only 10.4% of all American workers have manufacturing jobs.
#9 In the old days, any man that was willing to work hard and wanted a job could get one. Today, there are millions of American men sitting on their couches at home wondering why nobody will hire them. Back in 1950, more than 80 percent of all men in the United States had jobs. Today, less than 65 percent of all men in the United States have jobs.
#10 The middle class is shrinking at the same time that America is getting poorer as a nation. In the middle of the last century, the United States was #1 in the world in GDP per capita. Today, the United States is #13 in GDP per capita.
#11 Every year now, we see millions of Americans fall out of the middle class. In 2010, 2.6 million more Americans descended into poverty. That was the largest increase that we have seen since the U.S. government began keeping statistics on this back in 1959.
#12 The shrinking middle class is having a disproportionate impact on children. At this point, approximately 22 percent of all American children are living in poverty.
#13 In the old days, most Americans grew up in middle class neighborhoods. Sadly, this is no longer true. In 1970, 65 percent of all Americans lived in “middle class neighborhoods”. By 2007, only 44 percent of all Americans lived in “middle class neighborhoods”.
#14 The concentration of wealth at the very top of the food chain is astounding. Right now, over 50 percent of all stocks and bonds are owned by just 1 percent of the U.S. population.
#15 When you concentrate too much power in the hands of the federal government and the big corporations, it is inevitable that massive amounts of wealth will become concentrated in just a few hands. In the United States today, the wealthiest one percent of all Americans have a greater net worth than the bottom 90 percent combined.
#16 There is nothing wrong with making money, but there is something wrong with a game where individuals and small businesses cannot compete fairly. According to Forbes, the 400 wealthiest Americans now have more wealth than the bottom 150 million Americans combined.
#17 When the number of poor people rapidly expands in a society, that is a recipe for social unrest. At this point, the poorest 50 percent of all Americans collectively own just 2.5% of all the wealth in the United States.
#18 The hidden tax of inflation is absolutely devastating middle class families all over America. Since 1970, the U.S. dollar has lost more than 83 percent of its value. Any dollars that middle class families try to save are constantly losing a little bit more value every single day.
#19 American workers that try to play by the rules find that they are constantly fighting a losing battle. According to one study, between 1969 and 2009 the median wages earned by American men between the ages of 30 and 50 dropped by 27 percent after you account for inflation.
#20 In recent years, many middle class families have seen their paychecks get smaller. Median household income in the United States has fallen 7.8 percent since December 2007 after adjusting for inflation.
#21 In recent years, many middle class families have seen many of their basic expenses absolutely soar. For example, health insurance costs have risen by 23 percent since Barack Obama became president.
#22 Just turning on the lights and heating their homes has become a major burden for many middle class families. Electricity bills in the United States have risen faster than the overall rate of inflation for five years in a row.
#23 Just putting gas in the car has become a major financial ordeal for millions of hard working Americans. The average price of a gallon of gasoline in the United States has increased by more than 100 percent since Barack Obama became president.
#24 Sadly, government dependence is now at an all-time high, and that is the way that many among the elite like it. When Barack Obama took office, there were 32 million Americans on food stamps. Now, there are more than 46 million Americans on food stamps. In particular, an astounding number of children are on food stamps right now. At this point, approximately one-fourth of all American children are enrolled in the food stamp program.
#25 Many middle class families will not be in the middle class for too much longer. According to a shocking new study from the National Bureau of Economic Research, 200,000 U.S. households will use the money from their tax refunds this year “to pay for bankruptcy filing and legal fees“.
Unless major changes are made on a national level, the middle class is going to continue to disappear.
If you are playing the game the way that the system tells you to play it and you expect to live a middle class lifestyle for many years to come there is a good chance that you will be deeply disappointed at some point.
Millions upon millions of Americans have done everything that the system told them to do and the system has still failed them. They got good grades all the way through school, they went to college, they worked really hard, they stayed out of trouble and they gave everything they could to their employers. In spite of all that, millions of hard working families have still lost their jobs and their homes in recent years.
Do not trust that the system will take care of you, and you should not trust that the government will take care of you either.
We don’t need the federal government to hand out more money to everyone. Government handouts are already at record levels and the government is not even coming close to paying for all of this reckless spending.
More government spending is not going to solve any of our problems.
Instead, what we need is an environment where the size and power of the federal government is limited and the size and the power of the big corporations is limited. We need an environment where individuals and small businesses can thrive and compete fairly.
Unfortunately, neither major political party is going to move us in that direction, so there is not much hope for solutions on the national level any time soon.
On an individual level, we can all learn how to prepare for the very difficult years that are coming. It is imperative that we all work to become more independent of the system, because the system could fail at any time.
If you have blind faith that your job will always be there and that the federal government will rescue you if the economy crashes then you are likely to be bitterly disappointed at some point.
The truth is that our economy is slowly dying and the great American middle class is being systematically wiped out.
Many of the things that worked in the past are not going to work any longer.
You can choose to adapt or you can suffer the consequences.
Our world is rapidly changing, and we all need to prepare for what is coming.
Today, there are protests all over America that are targeting “the one percent” and all of the wealth and power that they have accumulated. Unfortunately, many of the solutions that these protesters are advocating simply will not work and will not lead to less wealth inequality. To understand this, you have to understand how we got to this point. Over the past several decades, our federal government has exploded in size and our large corporations have exploded in size. In fact, we have seen this pattern happen pretty much all over the world. Governments and corporations all over the globe are getting much bigger. Whenever you have very, very large concentrations of money and power like that, it is going to lead to massive wealth inequality. The Occupy Wall Street protesters would like to frame this debate as “socialism vs. capitalism”, but the truth is that wherever you find big government you will almost always find big corporations, and wherever you find big corporations you will almost always find big government. Sure, they spar once in a while, but the reality is that big government and big corporations work in tandem most of the time. Sometimes big government has the upper hand and sometimes big corporations have the upper hand, but they are both collectivist institutions. Wherever you find collectivism in the world, you will find an elite that receives most of the benefits while the rest of the population suffers. In the United States today, our gigantic government is thriving and our gigantic corporations are thriving and the middle class is rapidly shrinking. The solution to this is not to replace one form of collectivism with another form of collectivism. Rather, what we need is to go back to what our founding fathers intended. They were extremely suspicious of large concentrations of wealth and power, and they intended for us to live in a capitalist system where individuals and small businesses had the freedom to compete and thrive.
Today, Democrats tell us that we need an even bigger government and that we need to redistribute even more wealth to the poor. But the bigger the government gets, the more poor people we seem to have. As you will see below, the only people that seem to be thriving from big government are the bureaucrats.
Republicans tell us that we need to make life better for the big corporations. But the reality is that the bigger our giant corporations get, the faster the middle class shrinks. The big corporations are shipping millions of our jobs out of the country, and they are magnets for wealth and power. If you are not aware of how overwhelmingly dominant corporations have become in our society, just read this article.
Democrats should not be defending big government, and Republicans should not be defending the abuses of the big corporations.
Whenever big government and big corporations work together there is going to be massive income inequality, and massive income inequality is not a good thing.
Yes, there are always going to be some people that do much better than others (and there is nothing wrong with that), but we should not have a system which is designed to funnel almost all of the wealth and almost all of the power to a very small minority.
In essence, this article is arguing the following….
Gigantic government = bad.
Gigantic corporations = bad.
This was the view of our founding fathers, and this is what we need to get back to.
Let’s take a look at some of the results of our current system. Let’s start with income inequality caused by big government.
Today, the Washington D.C. region has the highest median household income in the entire nation. According to the most recent numbers, median household income in the D.C. area is $84,523.
So what is the cause of this?
Well, it is not because Washington D.C. is a great center of industry or finance. Rather, it is because the federal government is spending over 3 trillion dollars a year and is showering huge piles of cash on hordes of bureaucrats.
In a recent article, I noted some of the mind blowing statistics that show how bureaucrats in Washington D.C. are living the high life at our expense….
*When you total up all compensation (including health care and benefits), the average income for a federal worker in the Washington D.C. area last year was $126,369.
*In 2005, 7420 federal workers were making $150,000 or more per year. In 2010, a whopping 82,034 federal workers were making $150,000 or more per year. That is more than a tenfold increase in just five years.
*In 2005, the U.S. Department of Defense had just nine civilians earning $170,000 or more. When Barack Obama took office, the U.S. Department of Defense had 214 civilians earning $170,000 or more. In June 2010, the U.S. Department of Defense had 994 civilians earning $170,000 or more.
*Last year, federal employees “earned” approximately 447 billion dollars in total compensation.
As I have written about previously, our gigantic federal government also empowers the big corporations to continue to accumulate staggering amounts of wealth and power. This is one reason why the big corporations contribute so much money to political campaigns. The big corporations (and the elite that own and run them) have much more influence over the political process than we do. They have spent decades buying politicians and getting laws passed that tilt the rules of the game radically in their favor.
This is something that our founding fathers did not want to happen. In a 2010 article, Rick Ungar noted that there were very significant restrictions on corporations in the early days of America….
After the nation’s founding, corporations were, as they are today, the result of charters granted by the state. However, unlike today, they were limited in how long they were permitted to exist (typically 20 or 30 years), only permitted to deal in one commodity, they could not own shares in other corporations, and their property holdings were expressly limited to what they needed to accomplish their corporate business goals.
There was a lot of wisdom to that approach. Our founding fathers knew that corporations would become giant magnets for wealth and power if they were allowed to grow unchecked.
Today, multinational corporations completely and totally dominate the global economy. The following comes from a recent article I posted on The American Dream….
Corporations not only completely dominate the U.S. economy, they also completely dominate the global economy as well. A newly released University of Zurich study examined more than 43,000 major multinational corporations. The study discovered a vast web of interlocking ownerships that is controlled by a “core” of 1,318 giant corporations. But that “core” itself is controlled by a “super-entity” of 147 monolithic corporations that are very, very tightly knit. As a recent article in NewScientist noted, these 147 corporations control approximately 40 percent of all the wealth in the entire network
These giant corporations are so dominant that it is nearly impossible to compete with them. The number of small businesses in America is shrinking fast.
According to the Bureau of Labor Statistics, 16.6 million Americans were self-employed back in December 2006. Today, that number has shrunk to 14.5 million.
This is exactly what we would expect to see under “corporatism“, but under true capitalism we would expect to see the exact opposite.
As the federal government and the big corporations continue to grow, the middle class is being wiped out. If you doubt that the middle class is shrinking, just read this article.
Yes, there is a limited role for the federal government to play and there is a limited role for corporations to play. But right now things are radically, radically out of balance.
This is creating a tremendous amount of income inequality in the United States. The middle class is being systematically destroyed, and the growth of the gap between the one percent and the rest of us just continues to accelerate.
This was certainly illustrated by numbers that were recently released by the Congressional Budget Office. The very wealthy have done extremely well over the last 30 years. For the rest of us, things have not been so great. The following figures come from a recent blog post by the director of the Congressional Budget Office….
CBO finds that between 1979 and 2007:
- For the 1 percent of the population with the highest income, average real after-tax household income grew by 275 percent (see figure below).
- For others in the 20 percent of the population with the highest income, average real after-tax household income grew by 65 percent.
- For the 60 percent of the population in the middle of the income scale, the growth in average real after-tax household income was just under 40 percent.
- For the 20 percent of the population with the lowest income, the growth in average real after-tax household income was about 18 percent.
Meanwhile, as a recent USA Today article noted, the middle class continues to falter in the majority of the communities around the United States….
A USA TODAY analysis of Census data found the Reno area was among 150 nationwide where the share of income going to the middle class — generally made up of households that make $20,700 to $99,900 a year — shrank from 2006 to 2010. Metro areas where the middle class’ share of income dropped outnumbered those where it grew by more than 2-to-1.
So just how well is the top one percent doing compared to the rest of us?
The following statistics should be a wake up call for all of us….
*According to the Congressional Budget Office, the top one percent is the only group that saw its share of our national income increase between 1979 and 2007.
*According to a joint House and Senate report entitled “Income Inequality and the Great Recession“, the top one percent of all income earners in the United States brought in a total of 10.0 percent of all income income in 1980, but by the time 2008 had rolled around that figure had skyrocketed to 21.0 percent.
*Between 1979 and and 2007, the average household income of the top one percent of all Americans soared from $346,600 to $1.3 million.
*In the United States today, the wealthiest one percent of all Americans have a greater net worth than the bottom 90 percent combined.
*As the “one percent” thrives, the share of the pie being enjoyed by the middle class is shrinking. According to Heidi Shierholz, an economist with the Economic Policy Institute, about 53 percent of all income went to the middle class back in the 1970s, but today only about 46 percent of all income does.
*According to Harvard Magazine, 66% of the income growth between 2001 and 2007 went to the top one percent of all Americans.
*The wealthiest one percent of all Americans now own more than a third of all the wealth in the United States while the poorest 50 percent of all Americans collectively own just 2.5% of all the wealth in the United States.
*The wealthiest one percent of all Americans own over 50% of all the stocks and bonds.
*The top 0.01% of Americans make an average of $27,342,212. The bottom 90% make an average of $31,244.
*This is all happening at a time when the United States as a whole is slipping. Ten years ago, the United States was ranked number one in average wealth per adult. In 2010, the United States fell to seventh.
*Income inequality is not just growing in the United States. Today, the wealthiest one percent of the earth’s population controls 39% of the wealth.
There is certainly nothing wrong with being wealthy. If you and your family work really hard and provide great value to the community around you then you should greatly benefit.
But a system that is designed to systematically drain wealth from the general population and transfer it into the hands of an ultra-wealthy elite is not what our founding fathers ever hand in mind. At the time of our founding, England was dominated by big government (the monarchy) and by big business (the East India Company, for example). Our founders warned us over and over about the potential abuses that can happen when very large concentrations of wealth and power are allowed to dominate a society.
Unfortunately, the Occupy Wall Street movement has it all wrong. They recognize the overwhelming wealth and power accumulated by the one percent, but most of them are advocating even more collectivism as the answer.
Some of them even say that they want to “end capitalism” altogether. Michael Moore says that he is not part of the one percent and that he wants to “end capitalism”, even though he has made millions upon millions of dollars from his various projects.
But socialism and communism never bring equality. Like other forms of collectivism, socialism and communism almost always bring more tyranny and they almost always funnel most of the financial rewards to a very small elite.
Others simply wish to see the U.S. government transfer more wealth from the hands of the rich to the hands of the poor.
Helping the poor is certainly a noble goal, and handouts can certainly ease suffering at least temporarily. But handouts are never a permanent solution and they can cause large numbers of people to end up becoming completely and totally dependent on the government.
Back in 1980, government transfer payments accounted for just 11.7% of all income. Today, government transfer payments account for 18.4% of all income.
So has the plight of the poor gotten better?
No, we now have more than 45 million Americans on food stamps, last year we had the largest increase in the number of Americans living in poverty in U.S. history and the middle class continues to shrink rapidly.
The truth is that what poor and middle class Americans really need are opportunities. Handouts will keep people alive, but they will not give people hope and a future.
What Americans really need is an environment where they can find jobs or start small businesses. Unfortunately, the environment for small businesses in this country is incredibly toxic and millions of our good jobs have been shipped overseas. The big corporations have discovered that they can make even bigger profits by sending jobs to countries where it is legal to pay slave labor wages. To say that we need big corporations because they are the ones that “create jobs” is simply not true anymore.
So now we have tens of millions of Americans that we have to take care of every single month. There is nothing wrong with helping them survive, but giving them even more handouts is not going to permanently solve anything.
We need to have a population that is empowered to work hard, produce wealth and create a bright future for their families.
Instead, what we have is a system that greatly rewards the top one percent and that is pushing all of the rest of us toward poverty.
Gigantic government plus gigantic corporations is always going to equal massive wealth inequality.
The bigger we allow government to grow and the bigger we allow corporations to grow, the worse it is going to get.
So is any of this going to change any time soon?
Well, considering the fact that the vast majority of our politicians are in the pockets of the big corporations, I would not be getting your hopes up.