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Saturday, March 19, 2016

Bernie's not-so-impossible funding shuffle

In an ongoing series we will consider a number of revenue generating proposals based on cutting funding for current failing projects and foreign policies. Turns out there are plenty of options for funding the "unrealistic" investments in the public good proposed by Democratic Presidential Candidate Bernie Sanders.

While not getting too bogged down in detail we will examine a few choice examples of revenue generators he may have missed.

1) Intellectual property

Henry Ford didn't invent the internal combustion engine. Nor did he invent the assembly line. He took that cue from the meatpacking industries in Chicago.What he did do was take two existing technologies, each the result of a thousand independent discoveries revealed through individual investments of time talent and treasure over centuries.

Let us not forget Defense Dept. R&D - your tax dollars at work - has given us not only the atomic bomb and nuclear technology but penicillin, air travel, microwaves, GPS, computers, the Internet and on and on.
The Berkley Roundtable on the International Economy co-director Michael Borrus cites a 1988 Department of Commerce study showing that "five of the top six fastest growing U.S. industries from 1972 to 1988 were sponsored or sustained, directly or indirectly, by federal investment," the only exception being lithographic services. "The winners" in earlier years, he writes, "computers, biotechnology, jet engines, and airframes were each the by-product of public spending for national defense and public health." The record goes back to the earliest days; "defense" and "public health" are the familiar Newspeak disguises, perhaps a shade less deceptive than "free market neoliberalism."
Excerpt from The Pentagon System by Noam Chomsky and published by Z Magazine, February 1993
Say you are a substantial investor in a startup. After endless delays and cost overruns and bankruptcies, you finally get your product to market. It is a hit and the stock goes through the proverbial roof. When you go to cash out, the broker looks at your shares and starts to laugh like a shopkeep presented with monopoly money by a child.

That's the reaction you get when you broach the topic of back payment for tech that has made millionaires of many. But at every turn - cloaked in terms of national defense - it has been the taxpayer who has funded the essential technologies to get these companies off the ground. Unfortunately the Social Network got it wrong. It wasn't Zuckerberg's idea all along. Without a somewhat secure viable public Internet, and the infrastructure to run it, Facebook would be a filthy boardgame at an unseemly cocktail party.

To say nothing of Amazon and other Internet wholesalers that have grown exclusively thanks in part to a taxpayer subsidized infrastructure and core technologies. To add insult to injury these corporations then pay far less than the declared 35% corporate tax rate if they pay anything at all.

Imagine having a founding majority stock ownership in Apple, Microsoft or IBM not to mention, Google, Facebook and Twitter? Because you see, these companies rely on the pioneering technology, the billions upon billions in public $ coffers poured into the DOD over the past 100 years.
"The Pentagon system was considered ideal for these purposes. It imposes on the public a large burden of the costs (research and development, R&D) and provides a guaranteed market for excess production, a useful cushion for management decisions. Furthermore, this form of industrial policy does not have the undesirable side-effects of social spending directed to human needs...The defects of social spending do not taint the military Keynesian alternative, which had the added advantage that it was well-adapted to the needs of advanced industry: computers and electronics generally, aviation, and a wide range of related technologies and enterprises.
Lots of tech.

Billions in wealth.

In fact there's practically nothing in Apple's iPhone that wasn't a result of taxpayer funded DOD research. A 2014 International Business Times article seems positively bemused by the way Apple loads its coffers while governments go broke.
"The world's biggest company may have more cash on hand than many actual governments. But the technological breakthroughs behind its iconic iPods, iPhones, and iPads were funded almost exclusively by government agencies — and by one particular segment of one particular country's government."

Meanwhile this $700 billion to $1 trillion company pays approximately 9% to 13% on a declared 35% corporate tax rate in the US. This is due to profits held overseas and not returned to the US. While the frequent business sector refrain is that the rate is simply too high and burdensome, few corporations, let alone the most profitable, ever pay close to that rate, if they pay taxes at all.

What does all this taxpayer funded innovative technology research land the average US citizen? Austerity. Cuts to social programs. War on "entitlements". That is to say there is a zero net gain to the primary investor - the US taxpayer - save the warm fuzzy feeling that the corporate sector is being sufficiently juiced to produce maximum profit and concentration of wealth, Save the privilege of paying again and again to have the "newest" "latest" and "fastest" gizmo, this corporate gang rape must end.

Tech surcharge? Public investment tax?

Long overdue and it could be used to promote real public aims in sectors long overlooked or disdained such as the department of transportation, energy costs and the social safety net.

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