David Cay Johnston: Ridiculous Corporate Subsidies Creating Middle Class 'Wealth Destruction' (VIDEO)

Pulitzer Prize-winning journalist David Cay Johnston says it's no accident that the middle class has been shrinking.

In fact, in a recent conversation with Aaron Task and Daniel Gross on Yahoo's Tech Ticker, Johnston argues that the middle class is a direct result of a maze of subsidies and sweetheart deals that states and cities have doled out to big companies. (Johnston is the author of "Free Lunch: How The Wealthiest Americans Enrich Themselves At Government Expense (And Stick You With The Bill.")

"We've changed the government rule book in tremendous ways this enormous growth of incomes at the top is not the result of market forces," Johnston says, "it's the result of all these rules nobody knows about."

Among the questionable benefits that Johnston identifies are the deals received by teams in America's biggest four sports which, he says, get subsidies that are worth more than their combined profit. Cabelas, a sporting goods store, got $1.37 in subsidies for every dollar of profit it brought in, he notes.

States are spending approximately $70 billion on these type of corporate subsidies, but that may be understating the case. "Is that capitalism?," Johnston argues. "Go compete in a competitive arena. Don't go to Washington and say 'Give me money' either by saying 'I don't have to pay taxes' or forcing other people to pay taxes that go to me. Go earn your money in the marketplace."

He added: "Every community is doing this Every state is doing this... the net effect is wealth destruction and concentrating money in the hands of those who are politically connected."

WATCH the interview -- and check out Yahoo Tech Ticker for more information:

Comments

[Gronkie]

11:19 PM on 11/23/2010

I find it interesting that he touches on the subsidies that go to sports in this country, one of the biggest wastes of taxpayer money possible. Sports mean absolutely nothing in the grand scheme of things, yet people spend an enormous amount of time on it. When one considers how much time is spent watching a game, then reading about the game in the morning paper, discussing the game around the water cooler, listening to sports talk radio about the game, it comes to several hours a day. If one is a fan of multiple sports, then it is possible for a person fill the bulk of their day with something that is totally meaningless. How much more productive would people be if they replaced sports with a second job, or the planning of a new business? How much better would political discourse be in this country if people spent the same amount of time studying and debating real political policy instead of meaningless sports statistics? How much could a city improve if the billions spent on building sports stadiums for billionaires, who will charge unbelievable amounts of money for tickets, and collect obscene amounts of cable TV proceeds, were spent on schools or roads or attracting new business?

Sports is the biggest waste of time and money in this country but politicians support it because of the "bread and circuses" concept.

[Josh Wade]

09:35 AM on 11/23/2010

The elimination of corporate welfare in the form of subsidies is one of the issues libertarians. And progressives should be of one mind on.

[Gronkie]

02:31 PM on 11/23/2010

That is why I am an independent. I often see things from both sides of the spectrum that I agree with.

[MarilynOliva]

11:01 PM on 11/22/2010

So what do we do about this? How do we get the messege accross to politicians? How do we cahnge the system?

[UnknownSolider]

03:18 PM on 11/22/2010

Maybe instead of calling the food stamp program "food stamps" it should be reclassified as individual food subsidies........ that should end all apprehension to the program and probably lead to an expansion of it........
 
subsidy sounds much better than WELFARE

[mbo2]

03:22 PM on 11/22/2010

how about "dependency donuts"?

closer to what it does to businesses and individuals

[mbo2]

03:02 PM on 11/22/2010

Gee, I would think any COPORATION that gets its own products for sale to the public massively subsidized by taxpayer dollars would kinda gather in the bar after work and chuckle when someone suggests it's not "CORPORATE SUBSIDIES."






on-point.... electric cars




.

[land2341]

10:54 AM on 11/22/2010

2006 Study showing clearly that this type of corporate welfare is NOT successful at creating wealth in the communities in which the companies move.

http://cber.iweb.bsu.edu/propertytax/9-Hicks-and-LaFaive.pdf

[mbo2]

08:39 AM on 11/22/2010

Gee, but I guess the massive multi-billion-dollar bailouts of Chrysler and GM were not corporate subsidies.

Funny hiow that works.

[Marcus1]

09:16 AM on 11/22/2010

Actually they were real investments that saved the auto industry. Now actually turning a profit. Saved 1.5 million jobs. A real success story.

[mbo2]

02:59 PM on 11/22/2010

I see, so some corporate cash cow is good? Hmmm, so complex, so complex.

[land2341]

10:54 AM on 11/22/2010

No, he said they were, BUT that there were significant consequences to those in charge and the money had major pay it back strings attached. The bailouts did not, and corporate welfare in the form of tax cuts do not.

[MarkInIrvine]

01:16 AM on 11/22/2010

"... concentrating money in the hands of those who are politically connected."

this is what Republicans (all politicians, actually) do ...

[barrada nicto]

01:09 AM on 11/22/2010

Please send a copy of this article to all your local legislators.

[UnknownSolider]

03:23 PM on 11/22/2010

yes, I agree 100%
 
A transcript should be printed out also and it should be take with you to your local town hall and city council meetings.......... give a copy to your local elected officials
 
 

[FoonTheElder]

08:01 PM on 11/21/2010

It is not only big corporate welfare that destroys American jobs, but 30 years of a lack of enforcement of anti-trust that has allowed most industries to be directed by big oligopolies who control the markets.  This not only creates job losses at big corporations, but small ones as well.
 
"It is now widely accepted among scholars that small businesses are responsible for most of the net job creation in the United States. It is also widely agreed that small businesses tend to be more inventive, producing more patents per employee, for example, than do larger firms. Less well established is what role concentration plays in suppressing new business formation and the expansion of existing businesses, along with the jobs and innovation that go with such growth.
 
Evidence is growing, however, that the radical, wide-ranging consolidation of recent years has reduced job creation at both big and small firms simultaneously. At one extreme, ever more dominant Goliaths increasingly lack any real incentive to create new jobs; after all, many can increase their earnings merely by using their power to charge customers more or pay suppliers less.
 
At the other extreme, the people who run our small enterprises enjoy fewer opportunities than in the past to grow their businesses. The Goliaths of today are so big and so adept at protecting their turf that they leave few niches open to exploit."
http://www.washingtonmonthly.com/features/2010/1003.lynn-longman.html

[efmo]

08:30 PM on 11/21/2010

Barry C. Lynn's book, "Cornered:The New Monopoly Capitalism and the Economics of Destruction" is very good about this subject.

[phread]

09:20 PM on 11/21/2010

looks like a good book...

Others call it fascism or a reasonable facsimile with elements including:

* the despotic union of corporate and state power — aka corporatism;
* rampant corruption;
* the disdain for human rights, civil liberties, and ordinary workers;
* the dominance of militarism, belligerency, and permanent wars;
* fraudulent elections;
* an obsession with national security;
* the control of public information; and
* the omnipotence of corporate giants, taking full advantage to pillage and profiteer.

Lynn’s book tells why, beginning in his preface titled, “Of Rule and Ruin,” saying he warned about monopolization dangers because:

“our political economy is run by a compact elite that is able to fuse the power of our public government with the power of private corporate governments in ways that enable members of the elite (to freely decide) who wins, who loses, and who pays.”

http://dissidentvoice.org/2010/03/barry-c-lynns-cornered-the-new-monopoly-capitalism-and-the-economics-of-destruction/

[UnknownSolider]

04:21 PM on 11/22/2010

The essay is absolutely what needs to be discussed in our homes, neighborhoods and politics
 
good stuff, keep it coming
 
fanned

[ThBigD]

05:31 PM on 11/21/2010

This man is a genius.

[Puzzlr]

05:10 PM on 11/21/2010

Well duh?!! We voted down the baseball stadium here in Houston, but the legislature did an end around and built the dang thing anyway.

[rickthepainter]

03:27 PM on 11/21/2010

The Free Market Economy?HAHAHAHAHAHAHAHAHAHAHA we're screwed.open transparent government is the only answer.lobbyist should pay 100 million dollars to register and all discussions be video taped and played on public TV and radio along with all congressional voting records.

[FoonTheElder]

08:03 PM on 11/21/2010

The big corporations only want the free market when they can cut costs from suppliers and wages.  When it is to their disadvantage, like when they should be keeping markets open instead of closing them, they become instant socialists and expect government to protect them.

[OleLadySquawking]

03:10 PM on 11/21/2010

The landscape where I live is dotted with "Industrial Parks". Land and buildings built to a company's preference and then given huge tax breaks for a number of years. And now years later the first one is all but empty, the companies moved on to new parks. Those companies reaped nothing but profits without penalty while the local tax payers have been left holding the bag. The American people have been robbed in more ways than a con artist could ever dream up in a lifetime.

[efmo]

04:19 PM on 11/21/2010

Too true and too sad. Walmart is known for doing this a lot, too.

[Puzzlr]

05:12 PM on 11/21/2010

Remember the documentary (I think it was Micheal Moore), where the Walmart moved down the street when their taxes on the old building expired? The old building was just sitting there vacant, while they continued to do business in their brand new building.

[Marcus1]

09:20 AM on 11/22/2010

You would have a hard time convincing a teabagger with a sign that reads "we want freedom"

[Phil Waste]

01:02 PM on 11/21/2010

Don't look for relief from Washington. Everyone in Washington is owned by the Plutocrats and look to their bank accounts and not their voters to make decisions for our country.

If you want to make a difference you will have to stand up and be counted in person and only by showing up in Washington by the millions can we bring this Plutocrat juggernaut to a standstill. I'm not advocating violence but an in your face confrontation to remind these bureaucrats who they work for.

This confrontation will have to be next spring because winter in now setting in and not a good time to be in the streets. How about April 1st 2011.

[Elizabeth Gattra]

12:39 AM on 11/22/2010

Not a bad idea, but doing it on April Fool's day.....Who's the Fool?

[efmo]

10:43 PM on 11/23/2010

Regarding April Fool - what was the date in V for Vendetta? :>] (winking in case the NSA is watching)