The Supreme Court
The Supreme Court has not helped the U.S. economy.For example, in the 1970s Japan was subsidizing televisions and electronics exported to the United States.U.S. law required the imposition of "countervailing tariffs" to level the playing field. Zenith, then the largest U.S. television manufacturer, sued to get tariffs imposed. In 1978, the Supreme Court ruled against the tariffs and this decision led to the devastation of the U.S. electronics industry. Zenith was the last well-known American-made television brand until it sold off shares to LG, a Korean company in 1995. LG laid off 1,200 workers at Zenith's Melrose Park facility in Illinois.
The Supreme Court also refused to review the constitutionality of NAFTA, even though it failed to meet the constitutional requirement of two-thirds Senate approval for a treaty. NAFTA is responsible for a loss of two million U.S. manufacturing jobs.
The Federal Trade Commission and the Justice Department
The Federal Trade Commission and the Justice Department are charged with enforcing the anti-trust laws of the United States. Neither lifted a finger when the two of the largest ceiling fan manufactures, Hunter and Casablanca, merged. Hunter immediately closed Casablanca's U.S. factories and sent production overseas. Another example of FTC/Justice Department inaction that hurt American workers is Nike's acquisition of Converse. Nike took Converse offshore and closed its Lumberton, N.C. factory where 2,400 workers previously made Chuck Taylor All-Stars and Jack Purcell tennis shoes.
Income Inequality
In September, 2019, the Census Bureau reported that income inequality in the United States had reached its highest level in 50 years. Larry Summers, President Clinton's director of the National Economic Counsel, said, "If the United States had the same income distribution it had in 1979, the bottom 80 percent of the population would have $1 trillion or $11,000 per family more."
Ineffective labor unions, weakened by globalization and automation, account for one-third to more than one-half of the rise of inequality. While wages have stagnated for blue-collar workers, they have soared for CEOs. The average pay for a CEO at the top 350 firms in 2018 was $17.2 million, 278 times the pay for the average worker at these firms. This compensation ratio has increased dramatically from 20-1 in 1965 to 58 to one in 1989. However, the U.S. stands alone: CEOs in the UK are paid only 22 times what their workers make. In France the ratio is 15-1, while in Germany, the CEO-worker wage ratio is only 12 to one.
Greedy Retailers
The Gap started in 1969 and imported most of its clothing. It was not happy with the traditional "keystone" pricing where retailers would double the amount they paid for goods. The Gap would buy a T-shirt for $3 and sell it for $20. Back in 1969 most clothing sold in the U.S.A. was made in the U.S.A. Nordstrom sold mostly American-made clothing in the 1960s, 1970s and 1980s. Its Nordstrom brand was made in the U.S. Now it is difficult to find anything made in the U.S.A. at Nordstrom, Macys or at Bloomingdales. And how are these brilliant retailers doing now? Not well because online stores are eating their lunch.
What Can We Do About It?
Voters are angry. That is why Donald Trump was elected President. But his tax law changes have only made income inequality worse. His tariff policies have not worked. We need a total overhaul of the tax system. For example, nearly every U.S. pharmaceutical company has moved to Ireland because Ireland has a 12.5% corporate tax. Trump's 21% corporate tax will not bring them back.
A recent study by the Institute on Taxation and Economic Policyinvestigated 379 companies from the Fortune 500 that were profitable in 2018. The Institute found that 91 of the wealthiest companies, about one in four, paid no federal income taxes. Those tax-dodging companies are a "whose-who" of American business: Amazon, Chevron, Delta Air Lines, DowDuPont, Eli Lilly, General Motors, Hartford, Honeywell, IBM, Levi Strauss, Occidental Petroleum, Starbucksand Whirlpool. A few of these are Dow Jones stocks: IBM, DowDupont and Chevron, three of the richest, best-known companies in the world.
We can increase the taxes paid by all corporations while giving tax breaks to those who create manufacturing jobs.
Concerning student loans, we should forgive student loans for those who join the military, Peace Corps, serve as medical personnel in rural areas, teach at schools, or join AmeriCorp.
We should restrict foreign ownership of residential properties. Many foreign countries restrict foreigners from owning homes. American housing is in crisis now, and we should take all steps possible to lower housing costs.
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