Big business in America has evolved over the last 40 years from an engine of growth and prosperity to a wealth concentrating and environment destroying force that writes its own rules and will do almost anything to ensure its survival. Can we recapture the potential of business to create a sustainable and equitable future? Hollender will discuss these questions and more at his lecture at NYU Reynolds on February 7, 2012. This event is free and open to the public.
By Jeffrey Hollender
I can't repeat these sad facts often enough:
- Just 1% of Americans own 40-50% of the wealth. Annual income for the wealthiest soared from $4 million in 1974 to $35 million on average in 2007.
- The richest 400 Americans average $270 million in income and pay only 18% in federal taxes. In 1955, the country's most affluent made far less money and paid 51 percent of their income in taxes.
- Inequality in America is worse than Egypt, Tunisia or Yemen.
- Tax rates on executive pay, have been cut in half since 1970.
Don't be fooled by declining unemployment numbers, strong automobile sales, or the fact that luxury brands like Tiffany's and Louis Vuitton Moet Hennessy (LVMH) are making money hand over fist - our economy is still in a terrible mess. And we need to act NOW to fix it
The reason America's financial house is in such disorder is four-fold:
- First, we simply lack a credible strategy for creating a sustainable and equitable economy.
- Second, and related to point number one, we have allowed our largest corporations to sit on gigantic piles of cash (accumulated by some as a result of paying little or no income tax) rather than invest in the research and product innovation that is essential if we are ever going to hire more workers and maintain our global position of economic leadership.
- Third, our economy is being held hostage by the U.S. Chamber of Commerce's old economy industries - from oil, gas and coal to banks and brokerage firms - which evade corporate income taxes and live on government subsidies.
- Fourth, as a nation, we are consistently failing to do what citizens in places like Egypt and Tunisia have done and exercise our democratic right to fight against this unacceptable state of affairs.
Last year, I wrote about the loss of the nation's third largest manufacturer of solar technology: Evergreen, based in Devens, Massachusetts, shut down its brand new plant, laid off 800 workers and left for China. And there's the real truth: the erosion of much of the manufacturing foundation of our economy continues unabated.
New jobs are appearing, but in all the wrong places. The Bureau of Labor projects that in the next decade we'll create 394,000 new food service and preparation jobs earning an average of $16,430. Lowe's Home Improvement stores announced not long ago that it was adding 8,000-10,000 jobs for weekend sales associates and "assistant" store managers while firing 1,700 store managers.
While it's unquestionably true America will never be able to compete when it comes to many sectors of manufacturing, a low-wage, service-based economy that specializes in flipping hamburgers rather than building solar panels, imports its food from China and manages health care costs by having X-rays read in India rather than investing in preventative and alternative health care providers is an economy I wouldn't want to risk my financial future on. To paraphrase Bloomberg Business, who would invest in an economy that lost $2 trillion last year and has a negative net-worth of $44 trillion?
And we keep making matters worse.
As 2012 came to a close, so did two federal tax incentives for the solar and wind energy industries that have powered their explosive growth. The expiration of the incentive tax credit - used primarily by solar - and the production tax credit for wind will cost tens of thousands of jobs and slow the nation's transition to carbon-free power.
The Solar Energy Industries Association estimates that 37,000 jobs will not be created in 2012 as a result of the cash grant program expiring. The American Wind Energy Association, predicted that an extension of the production tax credit, or PTC, would create 54,000 jobs over the next four years.
So what's the solution? Here's a 10-point plan to get us back on the right track:
- End all corporate financial subsidies. The renewable energy industry will do just fine if we stop subsidizing oil and gas with billions and billions of subsidies.
- Institute a corporate flat tax with no exceptions.
- Close the door on offshore corporate tax shelters.
- Provide $5 billion of capital for start-up businesses, small businesses and worker-owned companies that provide livable wages and offers sustainable products or services.
- Reduce payroll taxes permanently. Offset this with a tax increase for the wealthiest 1% of Americans and an elimination of the tax deduction on second homes.
- Decrease the defense budget by 25% over the next 10 years and invest 100% of those funds in education, research and infrastructure.
- Target three industries in which America can assume global leadership and align our federal investment in education and R&D in support of those industries.
- Institute a tax on carbon and increase the gasoline tax to fund our federal investment in the three chosen industries.
- Mandate over the next three years women make up 50% of the directors of all public and private companies.
- Publicly fund all elections, allow online voting, get rid of the electoral college and let the public directly cast their vote for their chosen candidate.
About Jeffrey Hollender
Jeffrey Hollender is the founder of Jeffrey Hollender Partners, a business strategy consulting firm and the co-founder and former CEO of Seventh Generation, which he built into a leading brand known for its authenticity, transparency, and progressive business practices. For more than 25 years, he has helped millions of Americans make green and ethical product choices, beginning with his bestselling book, How to Make the World a Better Place, a Beginner's Guide. He went on to author five additional books, including The Responsibility Revolution and Planet Home. He is the Board Chair of the Greenpeace Fund US and a board member of Verite as well as the co-founder and Board Chair of the American Sustainable Business Council. Please visit www.jeffreyhollender.com to learn more and visit Jeffrey's blog. He can also be found on Twitter (@jeffhollender) and on Facebook.