by Jake Johnson
An analysis released July 6th shows that 722 of the world’s top corporations made combined windfall profits of $1 trillion per year in 2021 and 2022 as people across the planet struggled to meet basic needs due to the price hikes that businesses have used to pad their bottom lines.
The humanitarian groups Oxfam and ActionAid found that the companies raked in $1.09 trillion in windfall profits—defined as profits significantly above a given corporation’s average—in 2021 and $1.1 trillion last year.
That’s an 89 percent increase in total profits compared to the average between 2017 and 2020, according to Oxfam and ActionAid’s analysis of Forbes’ “Global 2000” ranking of the world’s largest companies—a major windfall during a period in which extreme poverty and global hunger surged.
The two groups found that “45 energy corporations made on average $237 billion a year in windfall profits in 2021 and 2022” while “food and beverage corporations, banks, Big Pharma, and major retailers also cashed in on the cost-of-living crisis that has seen more than a quarter of a billion people in 58 countries hit by acute food insecurity in 2022.”
The windfall profits of leading food and beverage companies in 2021 and 2022 would be “enough to cover the $6.4 billion funding gap needed to deliver life-saving food assistance in East Africa more than twice over,” Oxfam and ActionAid noted.
“People are sick and tired of corporate greed,” Amitabh Behar, Oxfam’s interim executive director, said in a statement. “It’s obscene that corporations have raked in billions of dollars in extraordinary windfall profits while people everywhere are struggling to afford enough food or basics like medicine and heating.”
“Big business is gaslighting us all—they’re hiking prices to make monster profits, plundering people under the cover of a polycrisis,” Behar added.
“Government policy should not allow mega-corporations and billionaires to profiteer from people’s pain.”
Even the International Monetary Fund (IMF) recently conceded that corporate profiteering has been a major contributor to price increases that have fueled cost-of-living crises worldwide. Last month, IMF economists estimated that “rising corporate profits account for almost half the increase in Europe’s inflation over the past two years as companies increased prices by more than spiking costs of imported energy.”
Oxfam and ActionAid argued that governments should “claw back gains driven by profiteering” by imposing a 50-90 percent windfall tax on the profits of major corporations.
The groups said such a tax would generate hundreds of billions of dollars a year in revenue that could be used to lift people out of poverty, reduce hunger, slash energy bills, and support Global South nations on the frontlines of the climate crisis.
“Enough is enough,” said Arthur Larok, secretary-general of ActionAid. “Government policy should not allow mega-corporations and billionaires to profiteer from people’s pain. Governments must tax windfall profits of corporations across all sectors—and invest that money back in helping people and deterring future profiteering. They must put the interests of their great majorities ahead of the greed of a privileged few.”
Jake Johnson is a staff writer for Common Dreams. This work is licensed under Creative Commons (CC BY-NC-ND 3.0). Feel free to republish and share widely.
It’s summertime—more or less, the weather being what it is—and the living is complicated by hordes of people attending the usual plethora of events. Our grumpy old Wandering Photographer had to smile, though, upon seeing Megan Stelzer, of Stelzer Metalworks fame, at the recent Great New England Craft & Artisan Show at Strawbery Banke.
Wall Street’s Favorite Scheme:
What Is A Stock Buyback?
by Kojo Acheampong
Corporations are buying… themselves?
Companies are buying back their stocks at an eye-popping rate. They recently set a new record with over $1 trillion spent on these “stock buybacks” in 2022. Chevron, Exxon, and Meta have each announced plans to massively increase their buyback plans this year by tens of billions of dollars. But what exactly do these buybacks do? What purpose do they serve?
Stock buybacks are a strategy that corporations use in order to artificially increase the value of their stock. When a company buys its own shares, it reduces the amount of shares available to the public while the value of the company itself remains the same. Because there are fewer shares on the market, the value per share increases. Not only this, but the shareholders’ stake in the company necessarily increases with fewer shares available.
This benefits both the company itself and those who own large shares in a company—which just so happen to be executives and ultra-rich investors. In other words, the rich and powerful are the only ones who benefit from this scheme; 84 percent of all stock shares are held by the richest 10 percent of the population. Executives, unlike workers, often are paid in shares of the company—52.3 percent of CEO compensation in 2022 at the biggest companies was in the form of stock.
But just how much money is being used for these stock buybacks? Between 2003 and 2012, companies used 54 percent of their total profits to buy back their stocks. This amounts to about $2.4 trillion. Companies are using a majority of the wealth they squeeze out of our labor in order to create more money for themselves. In most cases, this money remains untaxed as well!
This is money that could be going to us—used to increase our wages, or invested for the benefit of society in things like better housing, schools, roads, &c. These same corporations are constantly exclaiming that they must freeze or lower wages in order to survive, yet they never seem to run out of money for their stock buyback schemes. During the most severe period of the pandemic, a time when most people in society were struggling just to get by, corporations spent $521 billion on their own stock. Yet during this time, employers laid off over 100,000 workers. This is a key example of how inequality under capitalism continues to grow more and more rampant.
It is important to note the role that the government played in sanctioning this. Prior to 1982, stock buybacks were illegal in most cases, correctly identified as market manipulation. But then, the Securities and Exchange Commission issued a new rule allowing that practice. The effect of this change in policy was massive. Before 1982, only two percent of corporations’ profits were spent on buybacks.
The officials in Washington write the rules for the benefit of the rich and powerful. These record stock buybacks—and the very existence of this outrageous practice in the first place—are another reminder of this fact.
Which is more relentless? Entropy, the gradual, universal decline of all matter into chaos and disorder, as seen here, fraying the fly end of a flag on State Street? Or the Flag Police, resolutely pursuing cases of flag desecration by neglect? The smart money is on entropy, of course. The Flag Police are merely striving for a respectable second place.
Protecting Our “Opportunity” to Remain Plutocratic
by Sam Pizzigati
In our United States today, all of us do not have an “equal opportunity” to become rich—or even comfortable. Rich people like things that way. Grand fortunes only grow grander when the richest among us have plenty of exploitable people around to exploit.
To keep things that way, rich people have gone out of their way over the past half-century to make sure all of us do not have “equal opportunity” to a quality education. This week, with the Supreme Court’s stunning ruling that strikes down affirmative action in higher ed admissions, the most fervent advocates of plutocratic privilege have now completed their squashing of the world’s most ambitious attempt to create a system of public education that can truly guarantee all kids a quality education.
That ambitious effort began all the way back in 1787 when our new nation’s earliest lawmakers, in the Northwest Ordinance, required towns in future states to reserve prime real estate for public schools. Their goal: to ensure that “the means of education shall forever be encouraged.”
“Without education, the founders feared democracy would devolve into mob rule and open doors to unscrupulous politicians and hucksters,” the University of South Carolina Law School’s Derek Black has pointed out. “Our democratic experiment might very well just fail.”
Realizing the founders’ goal of “forever” encouraging public education would end up taking almost forever. Not until the years after World War II would the United States have anything remotely close to a public school system that extended equal opportunity to young people of all colors and classes, to children with and without disabilities. In the 1960s, federal tax dollars finally began helping every community offer all children a quality educational experience.
Those dollars came via progressive tax rates that actually had most of America’s richest contributing something close to their fair tax share.
In those same mid-20th-century decades, we overhauled American higher education. We created networks of public community colleges, all with free or low-cost tuition. We created student grant and loan programs that enabled millions of young people to earn four-year and postgraduate degrees without building up debts that would take them lifetimes to pay off.
Americans who wanted to opt out of this ambitious new world of public education remained free to do so. The rich could still send their kids to private academies. Any families that so chose could send their kids to religious schools—but not on the public dime. Public tax dollars went to fund public education. Those dollars, we believed, were building democracy, teaching people of all backgrounds how to work with and learn from each other.
These noble goals would, of course, regularly go unmet. But the goals themselves—the rhetoric of “equal educational opportunity”—did really matter. Parents and communities, armed with this rhetoric, ventured forth and did noble battle against the still formidable barriers to equal opportunity. They even won many of those battles. We were moving, as a nation, in the right direction.
And then rich people said stop. These rich felt like saps. High taxes on their “hard-earned” incomes were bankrolling the education of other people’s children. Their alma maters, our wealthiest fretted, might even start cutting back on the “legacy admissions” that guaranteed their offspring easy entry into the nation’s most prestigious colleges and universities.
The “indignities” these wealthy endured went well beyond the “disrespect” they felt. They saw the source of their fortunes, their “right” to run Corporate America as they saw fit, under direct threat as the United States entered into the 1970s. The federal government—under a Republican president no less—seemed to be hobbling business at every turn.
At the end of 1970, Richard Nixon had signed into law legislation that created a new federal agency to protect workers from injury and illness. Just a few weeks earlier, the first administrator of another new federal office, the Environmental Protection Agency, had announced his intention to give business polluters no quarter. As an independent agency, William Ruckelshaus pronounced, the EPA had “only the critical obligation to protect and enhance the environment.”
Things were clearly getting out of hand. Business seemed to be taking a shellacking from every direction. New federal agencies. A restless labor movement. Campuses full of profs and students who felt free to ridicule business values. Corporate America clearly had to respond. But how? The U.S. Chamber of Commerce would put that question to Lewis Powell, a leading corporate attorney.
Powell’s answer would come in a confidential 1971 memo, just two months before his nomination to the U.S. Supreme Court. The time had come, Powell declared, “for the wisdom, ingenuity, and resources of American business to be marshalled against those who would destroy it.”
Business confronts, Powell would contend, critics “seeking insidiously” to “sabotage” free enterprise. “Extremists on the left,” he insisted, have become “far more numerous, better financed, and increasingly are more welcomed and encouraged by other elements of society, than ever before.”
Corporate America, Powell would exhort, must show more “stomach for hard-nose” combat. Yet individual corporate leaders, Powell understood, can only do so much. Real strength, he would go on to explain, lies “in careful long-range planning” and “consistency of action over an indefinite period of years.” Real strength demands a “scale of financing available only through joint effort” and “the political power available only through united action and national organizations.”
Powell’s 1971 musings, notes historian Kim Phillips-Fein, “crystallized a set of concerns shared by business conservatives in the early 1970s”—and gave “inspiration” to corporate leaders who would later become familiar names and powerful forces, men like arch Colorado right-winger Joseph Coors.
Together, these newly energized corporate leaders would unleash upon America what political scientists Jacob Hacker and Paul Pierson have called “a domestic version of Shock and Awe.” The number of corporate public affairs offices in Washington, D.C. would quintuple between 1968 and 1978, from 100 to over 500. In 1971, only 175 U.S. corporations had registered lobbyists in Washington. The 1982 total: almost 2,500.
Corporate leaders also bankrolled a series of new militantly “free market” think tanks and action centers: the Heritage Foundation and American Legislative Exchange Council in 1973, the Cato Institute in 1977, the Manhattan Institute in 1978, among many others. The U.S. Chamber of Commerce, for its part, would double its membership between 1974 and 1980 and triple its budget.
Complementing this new ideological infrastructure: a torrent of campaign contributions to rich people-friendly pols. In the mid-1970s, U.S. senators were depending on labor for almost half their campaign funding. By the mid-1980s, senators were getting less than a fifth of their funding from union PACs.
By the early 2000s, adds Jacob Hacker, the Republican Party had solidified its intimacy with “very, very, very rich billionaire donors” and corporate groups. The GOP now marched in total sync with the policy priorities of America’s most fortunate: more regressive tax cuts, more deregulation, and more extreme conservatives on the nation’s judicial benches.
The personal payoff from this synchronization would be huge for America’s deepest pockets. Between 1995 and 2007, sinking effective income tax rates saved America’s 400 richest households an average $46 million per year. The “flip side” of this “aggressive pursuit of lower taxes by the rich”? Hacker and fellow analyst Nathan Loewentheil have the consequential answer: chronic government budget deficits and insufficient funds for public goods like public education.
The predictable result? Everything from overcrowded elementary school classrooms to tuition rates that make higher education unaffordable for vast numbers of American households.
George Washington would not approve. In 1796, in his annual presidential address to Congress, Washington opined that our nation’s lawmakers had no duty “more pressing” than “the common education of a portion of our youth from every quarter.”
We are failing that youth. We are coddling our rich instead.
National Non-Profit Buys Maine Papers
By Dan Kennedy
The news about the news doesn’t get much better than this: The National Trust for Local News will acquire Maine’s Portland Press Herald and its affiliated four daily newspapers and 17 weeklies. The deal was announced earlier today. Although not all details of the sale are known, early indications are that the papers will remain for-profit entities under nonprofit ownership. The papers, known collectively as Masthead Maine, will continue to be managed by chief executive officer Lisa DeSisto.
According to Rachel Ohm of the Press Herald, the National Trust emerged as the buyer after the recently formed Maine Journalism Foundation, or MaineJF, fell short in its efforts to raise enough money to buy the papers on its own. MaineJF, also a nonprofit, then started working with the National Trust. Elizabeth Hansen Shapiro, the co-founder and CEO of the National Trust, told the Press Herald that the two organizations are continuing to work together, although it was unclear what ongoing role the foundation might have. The foundation, by the way, would have reorganized the papers as nonprofits; based on Ohm’s story, it sounds like that’s no longer on the table.
The papers were purchased in 2018 by Reade Brower, a printer who acquired them from billionaire owner Donald Sussman. Brower built a reputation as a solid steward who nevertheless was not averse to making cuts in order to stave off losses. Hansen Shapiro would not disclose what the National Trust paid, but it’s likely that Brower could have gotten more from a corporate chain looking to swoop in, gut newsrooms and squeeze out revenues. If that’s the case, then Brower deserves credit for putting his legacy above making every possible dollar.
The independently owned Bangor Daily News remains the only daily in the state that isn’t part of Masthead Maine.
The governance structure of the new ownership has yet to be announced, and maybe even the principals don’t quite know what it will look like yet. The National Trust is best known for rescuing a group of weekly and monthly papers in suburban Denver back in 2021, and now owns them in conjunction with The Colorado Sun, a well-regarded for-profit digital startup.