The Profits Over People Problem
A new economic gospel has infected America.
Today, Big Business matters more than the wellbeing and livelihood of our workers and greater society.
Today, our leaders care more about corporate profits than the wellbeing of the people.
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Corporate profits and CEO pay have reached historical highs while workers wages are at historical lows.
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Corporations are contributing less in taxes than ever, reflecting a half-century of aggressive corporate tax cuts that "ultimately flow to the top-1% of households, not ordinary workers."
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Per the House Committee on Oversight & Reform, "excessive corporate price hikes are hurting consumers and fueling inflation."
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60% of Americans are living paycheck to paycheck, while the wealth of our business elites has _______.
This obsession with profits over all else didn't come from nowhere.
It's the product of a toxic economic philosophy that's guided Republican tax policies since Reagan. The root of the problem can be traced back to the 1980s, with the introduction of a new economic doctrine for America: the Shareholder Theory. The idea came from a man named Milton Friedman, Reagan's top economist who has been described as "the most influential economist of our time." His idea was that corporations should focus solely on enriching their rich shareholders, in the form of boosting profits, without any other concern for their workers or greater society.
To be clear: the basis of this philosophy was nonsense...
Friedman justified his theory by claiming that shareholders were employees of the company they own stock in, and thus the company has a responsibility to them first. But shareholders are not employees. They don't fill out timesheets, receive wages, or file employee taxes. Even if we pretended that shareholders are employees, what about the company's responsibility to their other employees – their workers? As Steve Dennings writes in a great article, The Origin of the World’s Dumbest Idea:
"The success of Friedman's article was not because the arguments were sound, but because people desperately wanted to believe. At the time, [businesses] were feeling the first pressures of global competition and executives were looking for ways to increase returns. The idea of focusing totally on making money, and forgetting about any concerns for workers, customers or society seemed like a promising avenue worth exploring, regardless of the argumentation."
... and has driven policies that hurt working Americans and our overall economy.
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It inspired decades of excessive corporate tax cuts, allowing Big Business to "hoard the fruits of economic growth" while the rest of us pay our share, driving economic inequality.
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It normalized suppressing workers' wages in order to cut costs and boost profits. Working class incomes have steadily dropped (as a share of our economy) for a half-century.
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It encouraged corporations to use shady profit-seeking practices (like stock buybacks) to artificially inflate their profits and transfer wealth from workers to their rich shareholders.
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It encouraged corporations to pollute our environment recklessly, because it's cheaper to cut corners than to operate in an environmentally responsible way.
The result: everyday Americans can't afford the things they need while corporations and their rich execs sit on piles of money.
Corporations need to pay their share like we everyday Americans do. We need economic policies that prioritize human dignity and happiness over shareholder returns. That begins with raising the minimum wage, restoring historical corporate tax rates, closing
tax-dodging loopholes, ending price-gouging, and most of all, rejecting the cultural mindset that profits matter more than people.