California Free Press

Off the Top of My Head

Russia Stands to Profit From Global Warming

by John Lawrence

With half the Arctic coastline, Russia is in a position to dominate the Arctic region as sea ice disappears. Ships will soon be able to sail directly across the top of the world, bringing new commercial, political, and economic opportunities for the Arctic region, while substantially reducing transit times between Asia and Europe by up to a third compared with taking the Suez Canal. Also there is $1 trillion worth of precious metals and minerals under the ice, along with the biggest area of untapped petroleum deposits left on the planet. While the rest of the world suffers from global warming, Russia will profit from the opening of the Northern route across the Arctic region and a wealth of natural resources that it will be possible to extract. Siberia could become the world’s next breadbasket. Time magazine reports:

"The Russian government is already positioning itself as a net beneficiary of global warming, writing in its 2020 Arctic Strategy that “climate change contributes to the emergence of new economic opportunities.” With half the Arctic coastline under its control, it’s not hard to see why. Led by Rosatom, a state-owned nuclear technology and infrastructure enterprise, the country has invested approximately $10 billion to develop ports and other facilities along a 3,000 nautical-mile-long shipping lane that stretches from Murmansk, near the Finnish border, to the Bering Strait. The Northern Sea Route offers the shortest passage between Europe and Asia, shaving nearly two weeks off a journey around India, while saving fuel, limiting vessel wear and tear, and reducing emissions. The investments are already paying dividends. In 2010 international cargo shippers made only one full Northern Sea Route transit. In 2021 there were 71, according to Norway’s Nord University’s Centre for High North Logistics.

"Russia is building up its existing 40-strong icebreaking fleet by commissioning at least half a dozen nuclear-powered heavy icebreakers at a cost of $400 million each. When the first of the newest batch—the world’s biggest and most powerful, according to Russian officials—launched its maiden voyage in 2020, Russia hailed it as the start of a new era of Arctic dominance. In 2021, commercial tankers, equipped with special ice-hardened hulls, started transporting natural gas between Russia’s Arctic coast oil installations and Chinese ports in the middle of winter—a strategic advance that results in a timely lifeline for Moscow if European nations follow through on threats to cut off purchases of Russian gas because of the conflict in Ukraine. “The creation of a modern nuclear icebreaker fleet capable of ensuring regular year-round and safe navigation through the entire Northern Sea Route is a strategic task for our country,” said Vyacheslav Ruksha, head of Rosatom’s Northern Sea Route Directorate, in a statement."

The war in Ukraine may pale in significance compared to the climate change issues which Russia is in a position to exploit. While the rest of the world is trying to slow down climate change, Russia just may be trying to accelerate it. The more climate change the better according to them because it will make for an ice free Arctic, an ice free passage across the Arctic via the Northern Sea Route connecting Europe with Asia and the ability to extract trillions of dollars of natural resources. Part of the route goes very close to Nome, Alaska which could bring the US and Russia into direct military contact.

Because of the changes brought about by global warming, It makes it even more important to not make Russia a pariah nation but to bring it into the community of nations. The Northern Sea Route will bring Russia and China even closer together as China also profits from shorter shipping routes to Europe. Rather than helping to get the world off of fossil fuels, Russia will profit immensely from their continued use. They certainly will not look kindly on supplications to limit the exploitation of fossil fuels if the western world considers them to be a pariah nation. The lack of cooperation among major world powers or even major blocs of power would be enough to doom the earth to greenhouse gas oblivion which eventually would destroy Russia and China too although Russia would probably be the last nation to succumb.

'This Is Robbery': Chevron Profits Quadruple and Exxon's Double Amid Ukraine Crisis

A price sign is seen at a Chevron gas station in West Linn, Oregon on March 11, 2022. (Photo: Getty Images)

 

"Big Oil is intentionally profiteering off the war in Ukraine," said one campaigner. "We need a Big Oil windfall profits tax."

 

Jake Johnson

April 29, 2022, from Common Dreams

Chevron and ExxonMobil announced Friday that their profits surged during the first quarter of 2022, prompting fresh calls for a windfall tax as the U.S.-based oil giants continue to exploit Russia's war on Ukraine to hike prices at the pump and lobby for more drilling.

"Letting polluters rake in obscene profits at the expense of consumers and the climate is simply unconscionable."

"This is robbery," Jamie Henn, director of Fossil Free Media, said in response to the new profit figures. "Big Oil is intentionally profiteering off the war in Ukraine—a crisis they helped create by working with Putin for decades to expand Russian oil and gas production."

"We need a Big Oil windfall profits tax," Henn added.

The first three months of 2022 marked a banner quarter for Chevron and Exxon, which respectively saw their profits quadruple and double compared to the previous year even as the U.S. economy contracted.

Chevron's profits soared to $6.3 billion—their highest level in a decade—as the company reaped benefits from the global energy market chaos spurred by Russia's invasion of Ukraine, which has sparked a "fossil fuel war" between Moscow and the West.

Exxon's profits, meanwhile, jumped to $5.5 billion, a number that would have been significantly higher had the company not shut down operations in Russia in response to the Ukraine war. Exxon announced that it would use the windfall to reward shareholders by tripling its stock buyback program to $30 billion.

"Consumers should not get punched in the face so that Big Oil can stuff its overflowing coffers," said Robert Weissman, the president of Public Citizen. "There's no secret as to why their profits are soaring: Big Oil has fixed costs of production while the market price of oil is skyrocketing, thanks to Russia's invasion of Ukraine and other reasons. This is a classic situation of windfall profits."

The earnings reports came as U.S. oil giants faced mounting scrutiny from Democratic members of Congress, New York's attorney general, and climate campaigners for price-gouging consumers in an effort to extract as much profit as possible from Russia's devastating assault on Ukraine.

"Just imagining Exxon's and Chevron's executives toasting their record profits and laughing at how they've duped so many people into blaming climate action for high prices, when that's the only long-term solution to stop Big Oil gouging us at the pump," Henn wrote in a Twitter post on Friday.

To combat Big Oil's war profiteering, Democratic lawmakers introduced legislation in March that would impose "a per-barrel tax equal to 50% of the difference between the current price of a barrel of oil and the pre-pandemic average price per barrel between 2015 and 2019." Revenue from the tax would be paid out to U.S. consumers as a quarterly rebate.

Survey data released last month showed that the proposal is overwhelmingly popular, with 80% of U.S. voters—including 73% of Republicans—expressing support.

"If Congress bothered to tax windfall profits, these two companies would face a combined bill of $5.4 billion for just three months of war profiteering and price gouging," Lukas Ross, program manager at Friends of the Earth, said in a statement. "Letting polluters rake in obscene profits at the expense of consumers and the climate is simply unconscionable. It's time to send Big Oil an invoice."

Mitch Jones, managing director of policy at Food & Water Watch, sent a similar message, condemning oil giants for "cashing in on the global energy crunch, pinching American families, and sending excess profits back to shareholders and Wall Street speculators."

"This demands a policy response—namely, a windfall profits tax like the one introduced by Rep. Ro Khanna and Senator Sheldon Whitehouse, that would recover much of these ill-gotten gains and return them to struggling households," said Jones. "Lawmakers who complain about corporate concentration and inflation should do something about it—like tackling the damage being caused by polluting profiteers."

"Speaker Pelosi and Majority Leader Schumer should bring this legislation forward for a vote," Jones added.

This story has been updated to include new comments from Public Citizen and Food & Water Watch.

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Off the Top of My Head

US Weapons Manufacturers Profiting From War in Ukraine

by John Lawrence

So far the US has spent $13.6 billion on the war in Ukraine. The money includes weapons, military supplies and one of the largest infusions of U.S. foreign aid in the last decade. But it also covers the deployment of U.S. troops to Europe and money for domestic agencies to enforce sanctions. Stock prices for Lockheed-Martin, Northrop Grumman and Raytheon are up. They are making money from all the Javelins and Stinger missiles they are selling to the US government which is giving them to Ukraine free of charge. Raytheon Technologies and Lockheed Martin Corp jointly produce Javelins, while Raytheon makes Stingers. EU countries are buying even more US weaponry from the US military-industrial complex. Germany even wants F-35 aircraft from Lockheed Martin. U.S. weapons exports rose 2.8% to $175 billion in fiscal 2020. The Ukraine war is a field day for the weapons industry. As far as they're concerned, the more arms shipments to Ukraine the better. They are bullish. CEOs will probably get a substantial increase in pay, and the weapons contractors will be able to buy back more of their own stock boosting stock values even more. The US policy so far is no boots on the ground, but plenty of taxpayer money going up in smoke, money that could have been spent on bettering the lot of the American people.

The is always money available for war, but when it comes to Biden's Build Back Better package, Congress gets very stingy. So a localized war is more important than the fate of the whole planet due to global warming. Or it's more important than affordable health care. Or it's more important than imposing a tax on multi-billionaires who, by the way, are not paying for the war because they pay no taxes. If they have defense contractors in their portfolio, they are profiting from the war. Politico reported:

More than 25 nations have joined in purchasing and delivering weapons to support Ukraine’s war effort. The U.S. has sent billions of dollars in missiles, ammunition and other items to the front. The EU signed off on a €500 million ($551 million USD) package — a first for the 27-country European bloc — to help arm Ukraine. And both Finland and Germany have rewritten long-standing policy that barred exporting weapons into war zones.

At the same time, there are tens of thousands of troops being activated and deployed by NATO countries in Eastern Europe.

Using a resource guide retrieved from the Forum on the Arms Trade that mostly relies on official government statements and reports in the media — and backfilled with our own independent research — POLITICO has worked to track and compile weapons and materials that have been announced or directed to Ukraine by various countries since January.

This non-exhaustive list focuses on lethal weapons and some non-lethal material. It does not count humanitarian and developmental aid that has been sent to Ukraine in the same period. Arms trade research organizations have noted the timeline and official receipt of equipment is hard to confirm due to security concerns. In some cases, such as with France and Turkey, an official tally has not been made public.

While US taxpayers are paying for the war in Ukraine and for the delivery of weapons to Europe, Saudi Arabia and other places in the world, billionaires are paying nothing. Congress will not even pass a tax on billionaires so that they would be forced to pay, as Biden says, "their fair share." Their fair share is zero, zip according to Congress which is basically on the side of the billionaires. So planet earth diminishes in importance, as far as global warming is concerned, because fighting and paying for war is so much more important. In fact not only is war more important than peace, which doesn't move the stock market, it's more important than renewable energy. All of a sudden there is a need for more oil, more fossil fuel, all of which produces more greenhouse gasses. The attitude is if we need to destroy planet earth in order to win this war, then that is the price we'll have to pay.

Off the Top of My Head

Facebook Put Profits Over People: What Else Is New?

by John Lawrence

Putting profits over the welfare of the public is the M.O. of American capitalism, baby. Congress crying crocodile tears over this is hypocritical to say the least. In fact if Facebook didn't put profits over people, they could be sued by their shareholders. A corporation's highest responsibility is to maximize profits for their shareholders. That's the way the American version of capitalism works. It's no huge surprise. Every publicly traded corporation puts profits over the welfare of the public. That's what their shareholders want. That's what Wall Street wants. That's what corporations have always done. That's what the law requires. Fast food franchises advertise their wares knowing that the American public is suffering from an epidemic of obesity and diabetes, diseases that their products contribute to. Even movies promote the consumption of cigarettes, alcohol and guns knowing that none of these items are good for you. But not to worry. After you become angry, depressed, overweight or suffering from various diseases of the mind and body, the American pharmaceutical corporations will sell you a plethora of products to deal with all these ailments at premium prices after they lobby Congress not to let Medicare negotiate with them for lower prices.

It keeps the economy humming right along even if some or most Americans have to suffer because they are easily persuaded to consume products which either aren't good for them or have no identifiable beneficial effects as far as curing them. The best cure is to adopt a healthy lifestyle which means resisting the implorations of advertising especially on TV and social media. Yet advertising is a billion dollar industry. In fact it spent $38 billion in 2019 up from $66 billion in 2004 more than double what it spent just 15 years ago. Combine this with the $3.5 billion corporations spend on lobbying and you have a powerful 1-2 punch to get consumers to buy products which aren't good for them and to spend considerable money doing it. Without all this spending the economy might collapse. GDP would decrease. There might even be a recession unless the government stepped in and put people to work solving the real problems of society and the earth like global warming and cleaning up the environment.

Should Facebook change its algorithms to become a kinder, gentler Facebook, impervious to the misinformation and conspiracy theories which have made it rich? Of course, but this would require government censorship. I say bring it on. Facebook is too powerful in the scheme of things influencing elections and social movements all over the world - even genocide. The New York Times reported:

"They posed as fans of pop stars and national heroes as they flooded Facebook with their hatred. One said Islam was a global threat to Buddhism. Another shared a false story about the rape of a Buddhist woman by a Muslim man.

"The Facebook posts were not from everyday internet users. Instead, they were from Myanmar military personnel who turned the social network into a tool for ethnic cleansing, according to former military officials, researchers and civilian officials in the country.

"Members of the Myanmar military were the prime operatives behind a systematic campaign on Facebook that stretched back half a decade and that targeted the country’s mostly Muslim Rohingya minority group, the people said. The military exploited Facebook’s wide reach in Myanmar, where it is so broadly used that many of the country’s 18 million internet users confuse the Silicon Valley social media platform with the internet. Human rights groups blame the anti-Rohingya propaganda for inciting murders, rapes and the largest forced human migration in recent history."

This is another reason China is pulling ahead of the US. It doesn't let social media contribute to the decline of its society. Free speech needs to be limited because it has become toxic. There can be too much of a good thing, and Facebook is leading the way in creating a toxic environment not only in the US but in the world in general which is threatening democracy itself. But not to worry, Facebook. Probably right after the Congressional hearings, many of the hypocritical Senators met with Facebook lobbyists and reassured them that Congress would not stand in the way of Facebook maximizing its profits. After all that's the American way.

Off the Top of My Head

Wouldn't It Be Great If This Level of Arousal Was Mustered for Global Warming?

by John Lawrence, March 14, 2020

The coronavirus is a world wide event affecting us all everywhere on planet earth. The other thing that affects us all on planet earth is global warming which, if nothing much is done about it, will result in the deaths of far more people. In fact it could be the entire human and mammal population. The coronavirus is a clear and present danger whereas global warming is a fuzzier and somewhere off in the future danger which, if not acted on now, will creep up on us until it's too late. The danger signs are all around us, but some of them are so far away that they are "out of sight, out of mind." Take sea ice for example.

The most recent Arctic report card from the U.S. government’s leading ocean scientists documents the precipitous loss of multiyear sea ice. When they began measurements in 1985, government scientists calculated that multiyear ice made up 16% of the total. This year, that had dropped to only 1% of Arctic sea ice—a 95% reduction in multiyear ice over the last 33 years. A comprehensive review of satellite data acquired at both poles is unequivocal in its assessment of accelerating trends, say scientists. Between them, Greenland and Antarctica lost 6.4 trillion tons of ice in the period from 1992 to 2017. This was sufficient to push up global sea-levels by 17.8 mm.

While people are perhaps overly concerned about the coronavirus, not much concern is being generated about antibiotic resistant germs. According to the CDC's report, "Antibiotic Resistance Threats in the United States, 2019", more than 2.8 million antibiotic-resistant infections occur in the U.S. each year, and more than 35,000 people die as a result. In addition, 223,900 cases of Clostridioides difficile occurred in 2017 and at least 12,800 people died. Actually this is something to be more concerned about than the coronavirus. Farmers have been feeding antibiotics to farm animals to get them to grow bigger and fatter sooner with the result that antibiotics have become more ineffective in humans. Shortly they won't be effective at all and people will die from all sorts of bacterial infections. Yet the free enterprise system has let farmers maximize their profits by getting farm animals to market sooner by the use of antibiotics.

In addition pharmaceutical companies are getting out of the business of developing new antibiotics because it's unprofitable. Business Insider reported in an article entitled, Pharmaceutical companies are backing away from a growing threat that could kill 10 million people a year by 2050:

Just two years after Novartis announced it would embrace the challenge of searching for cures for life-threatening infections known as superbugs, the drugmaker said last week it would exit antibacterial and antiviral research.

Novartis' retreat follows a growing trend of big pharmaceutical companies — including AstraZeneca, Sanofi, and Allergan — that are exiting from this type of research because of a lack of profit.

That leaves Merck, Roche, GlaxoSmithKline, and Pfizer as the remaining pharmaceutical companies with active antibiotic programs, according to Nature Biotechnology. Only 12 antibiotics have been approved since 2000.

Isn't this starting to sound like a broken record? There are no antibiotics being developed because it's not profitable. Farmers are allowed to feed farm animals antibiotics because it's more profitable. Green house gasses are spewed into the atmosphere because it's more profitable than rapidly developing renewable energy forms of transportation. One of the positive aspects of the coronavirus is that greenhouse gas emissions are down because of decline in automobile travel (commuting to work and events), air travel and cruise ship travel. In fact the economy would basically have to shut down to address global warming unless rapid investment in renewable energy infrastructure was ramped up simultaneously which would take up the slack from cutting down the oil based economy. In that respect alone the Green New Deal represents a far reaching and super intelligent understanding of just what is at stake. Global warming must be addressed while substituting an oil based economy for a renewable energy economy. If those two things don't happen at the same time, either the economy will go down the tubes or the planet earth will go down the tubes.

But America, due to its conservative economic attitude that diminishes the role of government in the economy and exalts the unregulated free market based economy, is powerless to do anything about those things that the free market system finds to be unprofitable. China, with its more authoritarian government, didn't hesitate to take drastic steps in dealing with the coronavirus with the result that the pandemic is all but over with in China. Meanwhile, it rages in other parts of the world particularly since the US has offshored all its pharmaceutical production to China thus maximizing profits for the pharmaceutical industry which charges average Americans enormous prices and produces prodigious profits.

All-Time Highs for Stock Buybacks and Bank Profits as Workers Languish in Trump's America

Published on Tuesday, May 22, 2018 by Common Dreams

"We've got to repeal the outrageous corporate welfare of this tax plan and pass real tax reform that actually helps working families—not the one percent," said Sen. Bernie Sanders

by Jake Johnson, staff writer

 

8 Comments

For years, armies of bank lobbyists and executives have groaned about how financial rules are hurting them. But there's a big problem with their story—banks are making record profits," Sen. Elizabeth Warren (D-Mass.) concluded in a tweet on Tuesday. (Photo: Alex Proimos/Flickr/cc)

As America's largest corporations continue their unprecedented stock buyback spree in the wake of President Donald Trump's $1.5 trillion tax cut, new government data published on Tuesday showed that U.S. banks are also smashing records thanks to the GOP tax law, raking in $56 billion in net profits during the first quarter of 2018—an all-time high.

"The Trump/Republican tax plan has been nothing but a giant gift to corporations so that executives and shareholders can get richer."
—Sen. Bernie Sanders (I-Vt.)

 

The new data, released by the Federal Deposit Insurance Corporation (FDIC), comes as the House of Representatives is gearing up to pass a bipartisan deregulatory measure that would reward massive Wall Street banks like JPMorgan Chase and Citigroup while dramatically increasing the risk of another financial crisis.

As Common Dreams reported, the Senate easily passed the bill in March with the help of 16 Democrats.

The banking industry's record-shattering profits fit with an entirely predictable pattern that has emerged following the passage of the GOP tax bill last December: America's most profitable corporations are posting obscene profits and using that cash to reward wealthy shareholders through stock buybacks while investing little to nothing in workers, despite their lofty promises.

"For years, armies of bank lobbyists and executives have groaned about how financial rules are hurting them. But there's a big problem with their story—banks are making record profits."
—Sen. Elizabeth Warren (D-Mass.)

 

According to a CNN analysis published on Sunday, "S&P 500 companies showered Wall Street with at least $178 billion of stock buybacks during the first three months of 2018." As Common Dreams reported earlier this month, major corporations are on track to send $1 trillion to rich investors through buybacks and dividend increases by the end of the year.

Most Americans, meanwhile, have said they are seeing very few noticeable benefits from the massive tax cuts and—according to a new study by United Way—nearly half of the U.S. population is still struggling to afford basic necessities like food, housing, and healthcare.

"The Trump/Republican tax plan has been nothing but a giant gift to corporations so that executives and shareholders can get richer," Sen. Bernie Sanders (I-Vt.) wrote in a Facebook post on Tuesday. "We've got to repeal the outrageous corporate welfare of this tax plan and pass real tax reform that actually helps working families—not the one percent."

How corporations are spending their tax breaks:

✅ Stock buybacks for their wealthy investors

❌ Long-term investments in their workershttps://t.co/sR1x3OYzoq

— Tax March (@taxmarch) May 22, 2018

Instead of addressing the deep-seated financial struggles much of the American public is facing even as the stock market continues to soar and as Trump boasts of an economic boom, Congress is preparing to provide an even greater windfall to wealthy bankers on Tuesday by gutting crucial post-crisis regulations and putting taxpayers on the hook for yet another bailout.

This morning, it was announced that America’s banking sector hit a new record high of $56 billion in net income in the first quarter of 2018.

This afternoon, the House is set to pass the #BankLobbyistAct to supposedly "provide relief" to the banking sector. What a shameful day. pic.twitter.com/OYNUc7FQf6

— Public Citizen (@Public_Citizen) May 22, 2018

"For years, armies of bank lobbyists and executives have groaned about how financial rules are hurting them. But there's a big problem with their story—banks are making record profits," Sen. Elizabeth Warren (D-Mass.) concluded in a tweet on Tuesday. "Congress has done enough favors for big banks—the House should reject the Bank Lobbyist Act."

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A Greedy Capitalist Gets His Comeuppance

by John Lawrence from the San Diego Free Press

Price Gouger Martin Shkreli Becomes Known as 'Most Hated Man in America'

Turing Pharmaceuticals chief Martin Shkreli will face new competition for Daraprim, the drug he recently hiked 5,000 percent in price, after competitor Imprimis Pharmaceuticals said it would market a similar drug for just $1 a tablet. Daraprim is used mainly to treat toxoplasmosis, a parasitic infection that’s common in AIDS and HIV patients, as well as cancer sufferers.

Greedy buttwipe Martin Shkreli, the hedge fund guy that bought the drug Dariprim and then raised the price from $13.50 to $750. a pill will actually lose his ass on this venture. At these prices the estimated  annual cost of treatment for toxoplasmosis, for the pyrimethamine component alone, would be $336,000 for patients who weigh less than 132 pounds, and $634,500 for those who weigh more than that. Daraprim is given for at least six weeks to knock out the infection, and then often for a year or even indefinitely to help the immune-compromised patient keep the parasite at bay.

The problem for Shkreli, that he didn't take account of in his lust for speedy profits, is that Dariprim is actually a generic. It's been around for 62 years. That means that anybody can manufacture it. That's exactly what one San Diego drug company did. Moreover, Imprimis intends to come up with cheap versions of other drugs that some businesses sell for far above their manufacturing costs. The trick for Imprimis was to combine pyrimethamine with another generic drug, leucovorin, thus giving it the right to operate as a compounding pharmacy and to avoid a lengthy approval process by the US Food and Drug Administration.

There goes Shkreli's profits right out the window. Adios you greedy bastard. You and your company Turing Pharmaceuticals are going to lose your shirts. In particular you're going to lose all the money you paid for Dariprim. Turing Pharmaceuticals acquired the drug from Impax Laboratories in August 2015 for $55 million. Shkreli can kiss that $55 million good-bye.

Imprimis CEO Mark Baum said he hopes his company's action provides a market based answer to exorbitant drug pricing. Yeah, go get him Mark! I love it when the market slays another marketer in the interests of the shell shocked public of whom the weak and vulnerable are being price gouged out of existence. Who but the rich could afford $750. a pill for a life saving drug?

Shkreli: 'I Believe Drugs Should Be Priced Relative to the Value They Confer'

From Alternet:

Shkreli expressed regret that he had been a “flippant jackass” instead of carefully explaining the price increase, although he told another Reddit user he didn’t understand how raising the price to $20, for example, might have been more reasonable than a 5,500 percent hike.

“I believe drugs should be priced relative to the value they confer,” he said.

Of course, if somebody sticks a gun to your head and says "Your money or your life," you're going to give him all your money because the value that that confers is sparing your life. Shkreli operates in accordance with the same principal: if you want to go on living and you have a terrible disease for which you need a drug that only Shkreli can supply you with, you're going to give him all your money. There's no difference from the situation in which a gun is put to your head. And that, my friends, is the ethics of capitalism.

But there was one flaw in Shkreli's plan to bilk sick people out of their money. And that is that the drug is a generic. Shkreli has no patent rights over it. But he probably figured that any other company that wanted to market the drug would have to undergo a lengthy approval process with the FDA. The decision to sharply increase the price for an old, generic drug — in other words, a drug that any other pharmaceutical company could also manufacture — is based on a gamble that no other company will be nimble enough to immediately get FDA approval for a generic competitor for Daraprim. That would give Shkreli time enough to make a killing before the other drug came on the market.

There is one other angle that Shkreli is fully prepared to use. He was gearing up to bilk not only individual customers but Medicare itself. The 2003 Medicare Prescription Drug, Improvement, and Modernization Act contains legislation that forbids Medicare from negotiating drug prices. That legislation, signed into law by George W Bush, introduced a market opportunity for scumbags like Shkreli. Medicare is forced to pay whatever Shkreli decides the price should be for Dariprim since Medicare Part D is required to cover approved cancer drugs. So even though Shkreli has graciously (no, not really) offered to give the drug away free to certain individuals, he intended to have Medicare pay the full freight thus ultimately putting taxpayers on the hook.

Pharmaceutical costs are a top reason that health insurance companies justify raising their policy rates, and society at large ends up paying for it with more expensive insurance plans, or by contributing a bigger percentage of their paychecks to cover health care costs. And I guess his plan now is to have doctors prescribe his pill, Dariprim, instead of the generic version that Imprimis is making. I hope no doctor falls for this. And Medicare should be on full alert not to pay for Dariprim at $750. when a generic from Imprimis is available for $1.

The best laid plans of mice and men often go awry. Shkreli didn't figure on Imprimis being able to avoid the lengthy FDA process by setting up a branch that could be a compounding pharmacy and start marketing the drug immediately. Both Hillary Clinton and Bernie Sanders have spoken out on the ridiculousness of a market system that lets some whippersnapper like Martin Shkreli price gouge needy and vulnerable people. He's become known as "the most hated man in America." Hillary tweeted: "Price gouging like this in the specialty drug market is outrageous. Tomorrow I'll lay out a plan to take it on."

Other vulture pharmaceutical companies have pulled the same scam as Shkreli. Daraprim is not the only fairly old drug that’s seen astronomical price increases recently. The price for cycloserine, a medicine used to treat drug-resistant tuberculosis, increased to $10,800 for 30 pills from $500 in August. Two heart drugs owned by Valeant Pharmaceuticals, Isuprel and Nitropress, saw their prices increase by 525% and 212% respectively this year. Even everyday drugs like antibiotic doxycycline have been affected, with its price rising to $1,849 a bottle in April 2014 from $20 a bottle in October 2013, according to a Congressional report.

A new cholesterol drug on the market from Regeneron, for those for whom statins don't suffice, costs more than $14,000 a year. The drug's name is Praluent. Regeneron CEO Dr Leonard Schleifer, another scumbag, gives the same old  "they need the money to do research" crap. It's BS. They sell the same drugs in foreign countries for half what they sell them to Americans for. They're just banking on the Republican 2003 legislation that requires Medicare to cover drugs but forbids Medicare from negotiating a lower price. I wonder whose lobbyists got that legislation passed. Not the lobbyists for We the People. That's for sure.

Wall Street Loves Greedy Profit Maximizing Bastards

Wall Street loves Valeant with its shares hitting an all time high last August. Valeant is something of a role model for Shkreli. They created a network of "phantom pharmacies" to steer potential customers toward their more expensive drugs instead of lower priced alternatives. Valeant bought smaller drug developers and then hiked prices on the medicines developed by those companies. It's profits skyrocketed as it slashed research into new drugs. They and Shkreli justify their price hikes by saying that they need the money to "do research." The truth is they have no intention of doing research. The only approval they are looking for is from Wall Street which will facilitate their stock prices soaring. Money is the only criterion here even if it means price gouging the sick and vulnerable.

The name Turing Pharmaceuticals was no doubt taken from the name of the great mathematician and cryptologist Alan Turing who most famously broke the Nazi codes during the Second World War. Turing's name has been unfortunately besmirched by being taken for the company name of a scam artist and profiteer. He's probably rolling over in his grave.

I hope jackass Shkreli loses his shirt on these machinations. And I hope the stupid idiots in Congress will allow Medicare to negotiate drug prices with the companies that provide them. Otherwise, the Shkrelis, Valeants and Schleifers of the world will seek to profit by raising prices for life saving drugs. Either we as individuals, if we are unfortunate enough as to have one of these life threatening diseases, will pay their outrageous prices or we will pay through increased health insurance costs and increased taxes to cover Medicare's skyrocketing costs which pay for these price gougers' arbitrarily set prices. But they will be laughing all the way to the Wall Street banks. They and Wall Street could care less about people's misfortunes. They only care about money. Greedy bastards!

But a shout out to Imprimis Pharmaceuticals, the company that's going to eat Shkreli's lunch by supplying the equivalent of Dariprim for $1. a pill. I like to give credit where credit is due. See, I'm not totally anti-corporation; just those who are Wall Street toadies who only care about money and not a whit about alleviating the suffering of the unfortunate. Good guys like Imprimis CEO Mark Baum deserve a pat on the back. Hats off to ya, Mark.

Apple Corporation Sitting on a Pile of Cash It Has No Use For

by John Lawrence

Apple Corporation is sitting on $178 billion in cash, and it literally doesn't know what to do with it. But it knows one thing: it doesn't want to give any of it to Uncle Sam or any other taxing jurisdictions around the world. That much is clear. If it divided that money up, Apple could give $550 to every man, woman and child in the US. It's enough money to buy Ford, General Motors and Tesla combined and still have $41 billion left over. They could even buy a couple of small countries, but it doesn't want to do that. Why bother? It's literally an embarrassment of riches.

Apple sold an amazing 74.5 million iPhones in the last quarter of 2014, (the first fiscal quarter of 2015). This was an average of 34,000 iPhones an hour for every hour of the quarter! It brought in over $74 billion in revenue for the quarter. This was higher in quarterly revenue than Microsoft and Google combined, the largest quarterly revenue ever to be recorded by a publicly traded company. Profits for the quarter were over a quarter billion dollars a day.

Investors, the supposed "owners" of the company, want that money given back to them, but it's not happening. They could give all their employees a raise, but that's not happening either. They could buy back their stock thus raising the price of it, and they have done some of that. The problem is most of that $178 billion is sitting outside the country, so rather than "repatriate" the money which would cost them a hefty amount of taxes, they borrow money instead to do their meager stock buy backs in order to get investors off their backs, AND they lobby Congress for a "tax holiday" which would let them bring the money home without paying tax on it.

They could reduce the prices on their iPhones, or build a factory and set up a production line in the US. This would create American production jobs instead of all those kind of jobs being created in China. Of course, it would cut into their profit margins slightly so it is out of the question. Besides you can't wake up American workers at one o'clock in the morning and put them on the production line for 12 hours like their production company in China, Foxconn, does on Apple's behalf.

Apple is in business to make money even if they have no other use for it than to sit atop a shitpile of it. This kind of massive anal-retentiveness which hoards money rather than utilizing it for life sustaining and enriching purposes amounts to the worship of "filthy lucre." Norman O Brown, author of the book, Life Against Death, has said, "... money is seen to be nothing other than deodorized, dehydrated shit that has been made to shine." Meanwhile, millions of homeless people around the world go hungry.

With so much money at their disposal that they don't know what to do with, the question is begged, "Why not pay the taxes on it and help out their fellow Americans and their country?" But that's not the way corporations work. They assiduously seek out every possible tax break their lawyers can dream up. When asked why this is necessary, given that they don't even need the money, CEO Tim Cook replies words to the effect that paying taxes on this money would give his competitors an unfair advantage.

Well, it might do that if it meant that Apple would not be able to invest in new plants or equipment, but that is surely not the case. Apple is lacking for absolutely nothing so it is hogwash that not spending or giving back money it doesn't need is putting them at a disadvantage with respect to their competitors. In fact it is building a new headquarters in Cupertino, CA that will cost $5 billion and feature 40-foot panes of curved glass from Germany that will form the exterior. They plan to move in in 2016. It is nothing less than an over the top display of ostentatious wealth and conspicuous consumption.

In the fourth quarter of 2014 Apple made $18 billion in profits, the most money an American corporation has ever made in one quarter. By comparison Exxon corporation made slightly more than half of that - $9.45 billion; Chevron made $7.25 billion. Campbell Soup Corporation, which has been a fixture in American households for over 100 years, made a paltry in comparison $8.3 billion in total revenues in 2014 and out of that only $800 million in profits for the whole year. That figures out to be a profit margin of 9.6%. Apple's quarterly profits were 22.5 times bigger than Campbell Soup's yearly profits. For Apple’s full fiscal year of 2014, profit was $39.5 billion on revenue of $182.8 billion.

Most of this came from the tremendous sales of the iPhone 6. In a conference call with financial analysts, CEO Tim Cook, said that demand for iPhones was "staggering". For every iPhone Apple sells, it makes a phenomenal 40% in profit. That's an impressive profit margin. But lowering prices or creating American jobs which would entail accepting a more modest profit margin is not in Apple's DNA or for that matter in any other red blooded American corporation's DNA.

Apple goes to elaborate lengths to avoid not only Federal taxes but California state taxes as well. Most of its intellectual work is done in California, but for accounting purposes it has moved much of its financial operations to a subsidiary in Nevada called Braeburn Capital where there is a zero tax rate. With a small number of employees in Reno, Apple has avoided millions of dollars in taxes in California and 20 other states. California's tax rate is 8.84% while Nevada's is zero. By having an office 200 miles east of its Cupertino, California headquarters to collect and invest its profits, Apple avoids millions of dollars in California taxes.

Apple also saves billions by setting up offices in low tax jurisdictions throughout the world such as Ireland and the Netherlands. Apple implemented an accounting technique known as the "Double Irish With a Dutch Sandwich," which reduces taxes by routing profits through Irish subsidiaries and the Netherlands and then to the Caribbean. Apple's creativity and innovativeness in avoiding taxes has been replicated by other corporations which have gone to great lengths to avoid taxes too. They look up to Apple as their teacher in tax avoidance.

If it weren't for such tactics, Uncle Sam would have collected about $2.5 billion more from Apple last year. This means that average Joes, who do not have the benefits of overseas low tax jurisdictions and an army of accountants and lawyers to help them figure their taxes, have to make up the difference. Last year Apple paid a tax rate of less than 10% considering taxes paid around the world. By comparison, Wal-Mart last year paid worldwide cash taxes of $5.9 billion on profits of $24.4 billion, a tax rate of 24 percent, which is about average for non-tech companies.

De Anza College is located a mile and a half from Apple's Cupertino headquarters. It is struggling to keep its head above water:

[De Anza is] a community college that Steve Wozniak, one of Apple’s founders, attended from 1969 to 1974. Because of California’s state budget crisis, De Anza has cut more than a thousand courses and 8 percent of its faculty since 2008.       

Now, De Anza faces a budget gap so large that it is confronting a “death spiral,” the school’s president, Brian Murphy, wrote to the faculty in January. Apple, of course, is not responsible for the state’s financial shortfall, which has numerous causes. But the company’s tax policies are seen by officials like Mr. Murphy as symptomatic of why the crisis exists.       

“I just don’t understand it,” he said in an interview. “I’ll bet every person at Apple has a connection to De Anza. Their kids swim in our pool. Their cousins take classes here. They drive past it every day, for Pete’s sake.

“But then they do everything they can to pay as few taxes as possible.”

You'd think that Apple would take De Anza under its wing and keep it alive with some of that pile of cash it's sitting on. But there is an additional complication: most of that $178 billion shitpile is sitting in overseas banks. Having paid little in taxes on it so far, Apple is reluctant to bring it back to the good ole US because by so doing it would have to pay the US corporate rate of 30% minus whatever taxes it has already paid. With so much money at its disposal, going ahead and paying US taxes on it is merely the right thing to do. Then it could turn around and help out De Anza College.

But these guys could care less. It's a point of pride to pay as little in taxes as possible no matter what hoops it has to jump through in order to do it including even the Double Irish and Dutch Sandwich. It could help out De Anza with a portion of the money it has made by locating Braeburn Capital in Nevada. If Braeburn were located in Cupertino, where Apple’s top executives work, a portion of the $2.5 billion in interest and dividend income that has been processed by Braeburn would be taxed at California’s 8.84 percent corporate income tax rate instead of Nevada's zero percent rate.

Braeburn is only one method that Apple uses to avoid taxes. Every time someone downloads a song from iTunes, Apple avoids paying taxes on the profit from that download. Since it costs no more to download the same tune one time or a million times, those profits are pretty high. So the clever people at Apple, who can locate the server from which iTunes songs are downloaded, anywhere in the world, have decided to locate it in Luxembourg where they pay no taxes on the profits.

“We set up in Luxembourg because of the favorable taxes,” said Robert Hatta, who helped oversee Apple’s iTunes retail marketing and sales for European markets. “Downloads are different from tractors or steel because there’s nothing you can touch, so it doesn’t matter if your computer is in France or England. If you’re buying from Luxembourg, it’s a relationship with Luxembourg.” Consequently, tax payments are denied to Britain, France and other countries as long as everything is routed through Luxembourg.

About 70% of Apple's profits are earned abroad while only 30% are earned in the US, and that's by design in order to escape paying US corporate taxes. But all of the design and the intellectual heavy lifting is done in the US. Former Treasury Department economist, Martin A. Sullivan said that “given that all of the marketing and products are designed here, and the patents were created in California, that [percentage of profits earned in the US]  should probably be at least 50 percent.”

“Apple, like many other multinationals, is using perfectly legal methods to keep a significant portion of their profits out of the hands of the I.R.S.,” Mr. Sullivan said. “And when America’s most profitable companies pay less, the general public has to pay more.”

Other tax experts, like Edward D. Kleinbard, former chief of staff of the Congressional Joint Committee on Taxation, have reached similar conclusions. “This tax avoidance strategy used by Apple and other multinationals doesn’t just minimize the companies’ U.S. taxes,” said Mr. Kleinbard, now a professor of tax law at the University of Southern California. “It’s German tax and French tax and tax in the U.K. and elsewhere.”

Suffice it to say that Apple has not yet found a viable strategy for investing its $178 billion shitpile of cash whether in terms of building new plants, paying more taxes or in doing good deeds in the US or elsewhere in the world. Whether or not its gargantuan profits are considered obscene, I leave to the eyes of the beholder. One thing is for sure though: Apple's 1984 Superbowl commercial, in which IBM was dramatized as taking over the world, is now more aptly interpreted with Apple in the role of IBM. In the same quarter in which Apple posted $18 billion in profits, IBM's total revenue fell nearly 12 percent to $24.11 billion. Revenue from hardware fell 39 percent to $2.41 billion. IBM's revenues may have declined for 11 consecutive quarters and its stock price has fallen, but its CEO, Virginia Rometty, is taking home a performance bonus of $3.5 million. Oh how the mighty have fallen!

Education With a Debt Sentence

For-Profit Colleges as American Dream Crushers and Factories of Debt

By Astra Taylor and Hannah Appel from Nation of Change published September 22, 2014

Imagine corporations that intentionally target low-income single  mothers as ideal customers. Imagine that these same companies claim to  sell tickets to the American dream -- gainful employment, the chance for  a middle class life. Imagine that the fine print on these tickets, once  purchased, reveals them to be little more than debt contracts,  profitable to the corporation’s investors, but disastrous for its  customers. And imagine that these corporations receive tens of billions  of dollars in taxpayer subsidies to do this dirty work. Now, know that  these corporations actually exist and are universities.

Over the last three decades, the price of a year of college has increased by more than 1,200%.  In the past, American higher education has always been associated with  upward mobility, but with student loan debt quadrupling between 2003 and  2013, it’s time to ask whether education alone can really move people  up the class ladder. This is a question of obvious relevance for  low-income students and students of color.

As Cornell professor Noliwe Rooks and journalist Kai Wright have reported, black college enrollment has increased at nearly twice the rate of white enrollment in recent years, but a disproportionate number of those African-American students end up at for-profit schools. In 2011, two of those institutions, the University of Phoenix (with physical campuses in 39 states and massive online programs) and the online-only Ashford University, produced more black graduates than any other institutes of higher education in the country. Unfortunately, a recent survey by economist Rajeev Darolia shows that for-profit graduates fare little better on the job market than job seekers with high school degrees; their diplomas, that is, are a net loss, offering essentially the same grim job prospects as if they had never gone to college, plus a lifetime debt sentence.

Much of the American public does not understand the difference between for-profit, public, and private non-profit institutions of higher learning. All three are concerned with generating revenue, but only the for-profit model exists primarily to enrich its owners. The largest of these institutions are often publicly traded, nationally franchised corporations legally beholden to maximize profit for their shareholders before maximizing education for their students. While commercial vocational programs have existed since the nineteenth century, for-profit colleges in their current form are a relatively new phenomenon that began to boom with a series of initial public offerings in the 1990s, followed quickly by deregulation of the sector as the millennium approached. Bush administration legislation then weakened government oversight of such schools, while expanding their access to federal financial aid, making the industry irresistible to Wall Street investors.

While the for-profit business model has generally served investors well, it has failed students. Retention rates are abysmal and tuitions sky-high. For-profit colleges can be up to twice as expensive as Ivy League universities, and routinely cost five or six times the price of a community college education. The Medical Assistant program at for-profit Heald College in Fresno, California, costs $22,275. A comparable program at Fresno City College costs $1,650. An associate degree in paralegal studies at Everest College in Ontario, California, costs $41,149, compared to $2,392 for the same degree at Santa Ana College, a mere 30-minute drive away.

Exorbitant tuition means students, who tend to come from poor backgrounds, have to borrow from both the government and private sources, including Sallie Mae (the country's largest originator, servicer, and collector of student loans) and banks like Chase and Wells Fargo. A whopping 96% of students who manage to graduate from for-profits leave owing money, and they typically carry twice the debt load of students from more traditional schools.

Public funds in the form of federal student loans has been called the “lifeblood” of the for-profit system, providing on average 86% of revenues. Such schools now enroll around 10% of America’s college students, but take in more than a quarter of all federal financial aid -- as much as $33 billion in a single year. By some estimates it would cost less than half that amount to directly fund free higher education at all currently existing two- and four-year public colleges. In other words, for-profit schools represent not a “market solution” to increasing demand for the college experience, but the equivalent of a taxpayer-subsidized subprime education.

Pushing the Hot Button, Poking the Pain

The mantra is everywhere: a college education is the only way to climb out of poverty and create a better life. For-profit schools allow Wall Street investors and corporate executives to cash in on this faith.

Publicly traded schools have been shown to have profit margins, on average, of nearly 20%. A significant portion of these taxpayer-sourced proceeds are spent on Washington lobbyists to keep regulations weak and federal money pouring in. Meanwhile, these debt factories pay their chief executive officers $7.3 million in average yearly compensation. John Sperling, architect of the for-profit model and founder of the University of Phoenix, which serves more students than the entire University of California system or all the Ivy Leagues combined, died a billionaire in August.

Graduates of for-profit schools generally do not fare well. Indeed, they rarely find themselves in the kind of work they were promised when they enrolled, the kind of work that might enable them to repay their debts, let alone purchase the commodity-cornerstones of the American dream like a car or a home.

In the documentary "College Inc.," produced by PBS’s investigative series Frontline, three young women recount how they enrolled in a nursing program at Everest College on the promise of $25-$35 an hour jobs on graduation. Course work, however, turned out to consist of visits to the Museum of Scientology to study “psychiatrics” and visits to a daycare center for their “pediatrics rotation.” They each paid nearly $30,000 for a 12-month program, only to find themselves unemployable because they had been taught nearly nothing about their chosen field.

In 2010, an undercover investigation by the Government Accountability Office tested 15 for-profit colleges and found that every one of them “made deceptive or otherwise questionable statements” to undercover applicants. These recruiting practices are now under increasing scrutiny from 20 state attorneys general, Senate investigators, and the Consumer Financial Protection Bureau (CFPB), amid allegations that many of these schools manipulate the job placement statistics of their graduates in the most cynical of ways.

The Iraq and Afghanistan Veterans of America, an organization that offers support in health, education, employment, and community-building to new veterans, put it this way in August 2013: "Using high-pressure sales tactics and false promises, these institutions lure veterans into enrolling into expensive programs, drain their post-9/11 GI Bill education benefits, and sign up for tens of thousands of dollars in loans. The for-profits take in the money but leave the students with a substandard education, heavy student loan debt, non-transferable credits, worthless degrees, or no degrees at all.”

Even President Obama has spoken out against instances where for-profit colleges preyed upon troops with brain damage: “These Marines had injuries so severe some of them couldn’t recall what courses the recruiter had signed them up for.”

As it happens, recruiters for such schools are manipulating more than statistics. They are mining the intersections of class, race, gender, inequality, insecurity, and shame to hook students. "Create a sense of urgency. Push their hot button. Don't let the student off the phone. Dial, dial, dial," a director of admissions at Argosy University, which operates in 23 states and online, told his enrollment counselors in an internal email.

A training manual for recruiters at ITT Tech, another multi-state and virtual behemoth, instructed its employees to "poke the pain a bit and remind them who else is depending on them and their commitment to a better future.”  It even included a "pain funnel" -- that is, a visual guide to help recruiters exploit prospective students’ vulnerabilities. Pain was similarly a theme at Ashford University, where enrollment advisors were told by their superiors to “dig deep” into students’ suffering to “convince them that a college degree is going to solve all their problems.”

An internal document from Corinthian Colleges, Inc. (owner of Everest, Heald, and Wyotech colleges) specified that its target demographic is “isolated,” “impatient” individuals with “low self-esteem.”  They should have “few people in their lives who care about them and be stuck in their lives, unable to imagine a future or plan well.”

These recruiting strategies are as well funded as they are abhorrent. When an institution of higher learning is driven primarily by the needs of its shareholders, not its students, the drive to get “asses in classes” guarantees that marketing budgets will dwarf whatever is spent on faculty and instruction. According to David Halperin, author of Stealing America’s Future: How For-Profit Colleges Scam Taxpayers and Ruin Student’s Lives, “The University of Phoenix has spent as much as $600 million a year on advertising; it has regularly been Google’s largest advertiser, spending $200,000 a day.” 

At some schools, the money put into the actual education of a single student has been as low as $700 per year. The Senate’s Health, Education, Labor, and Pensions Committee revealed that 30 of the for-profit industry’s biggest players spent $4.2 billion -- or 22.7% of their revenue -- on recruiting and marketing in 2010.

Chargemaster: Hospitals' Killer App for Sucking Your Financial Blood Dry - Part 1

by John Lawrence from San Diego Free Press

A recent exhaustive article in Time magazine details the exhorbitant charges that hospitals are imposing on the American people, charges that have nothing to do with the actual costs of services provided. A woman in Stamford, Connecticut suffering from chest pains called 911. She was taken by ambulance to the emergency room at Stamford Hospital, a non-profit institution, four miles away. After a few hours of tests she was told that she just had a case of indigestion; her heart was fine. So she went home. Her bill: $21,000 - for a false alarm. That breaks down to $995. for the ambulance ride, $3000. for the doctors and $17,000. for the hospital. Unfortunately, she had no insurance because she had been out of work for a year.

The American medical marketplace is such that those least able to pay are charged the most money. Their prices are determined by what is called a Chargemaster, a massive computer file thousands of items long. Every hospital has one. The prices for medical services detailed in the Chargemaster have nothing to do with reality but are arrived at totally arbitrarily because there is no competition in the medical marketplace. And if you ever tried to find out in advance what the cost of some medical service was, you'd most likely be given the brushoff and told that it would be illegal for the hospital to tell you.

I had an experience like this myself. A few years ago, my family doctor advised me to get a colonoscopy and referred me to a gastroenterologist. Let's call him Dr. Goldfacher (not his real name). On the initial appointment, his receptionist presented me with a sheaf of papers to sign basically holding Dr. Goldfacher blameless no matter how badly he botched up the procedure. I told her that, before I signed those papers, I wanted to know the total cost of the procedure including pre-op and post-op office visits, the doctor's charge, the hospital's charge etc. Of course, she didn't know, but after some back and forth she said someone else would be sent out to help me. After a while a young man appeared, gave me a long spiel as to why the information I wanted to know was irrelevant, and, by way of a punch line, told me that it would be illegal for Dr. Goldfacher to tell me how much all of this would cost. I walked out of the office without signing away my rights. Last year under Obamacare I got a "free" colonoscopy with another doctor. However, although the colonoscopy was free there were numerous ancillary charges involved so that in the final analysis one could say it wasn't exactly free, but it was reasonable.

The woman from Stamford who thought she was having a heart attack was 64 years old, not yet eligible for Medicare. If she had been on Medicare, her bill would have been a small fraction of what she was actually charged by the Chargemaster and most of it would have been paid by Medicare. Medicare Part A covers 100% of hospital costs, and Medicare Part B, for which the recipient pays approximately $100. a month usually taken out of the recipient's social security check, pays 80% of doctors'  fees. The Medicare enrollee can buy what is known as Medicare supplementary insurance from a private insurance company to cover the other 20%. Medicare mandates that hospitals charge it according to their actual costs ^i.e. not the Chargemaster rates! The theory is that, since virtually all of these hospitals are set up as non-profits, each fee for service should reflect the actual costs sans profit. For example the woman in Stamford was charged $199.50 each for three troponin tests. Medicare would have paid the Stamford Hospital $13.94 each. She was charged $157.61 for a CBC test. Medicare would have paid $11.02.

The author of the study, Steven Brill, asserts that, for all the complaints about Medicare as "entitlement spending", Medicare is the only rational system that is holding down the cost of medical care in the USA. Without it medical costs, as dictated by the completely arbitrary and divorced from reality Chargemaster, would skyrocket. He goes as far as to maintain that far from restricting Medicare or raising the age that Medicare becomes available, the age for Medicare eligibility should actually be lowered. This would do more for keeping medical costs down than anything else. Thom Hartmann has called for Medicare Part E - Medicare available for anyone that wants to use it. But the medical-industrial complex has serious lobbying efforts going on to maintain the status quo. All of these non-profit hospitals like making exhorbitant profits. They just use the money to pay their administrators extravagant salaries so that the organization as a whole doesn't make a profit. Or they embark on huge building projects to soak up all that loose cash. What they don't do is to lower their prices.

According to a study by the consulting firm, McKinsey & Co., 2900 nonprofit hospitals across the country, which are exempt from income taxes, have higher profit margins than the 1000 for-profit hospitals that they studied after income tax obligations were deducted. Take the case of Mercy Hospital which is owned by an organization under the umbrella of the Catholic Church called Sisters of Mercy. As a tax-exempt charity it is dedicated "to carry out the healing ministry of Jesus by promoting health and wellness." Sisters of Mercy has a chain of hospitals across the midwest. According to income tax returns Mercy paid its top executive, president and CEO Lynn Britton, $1,930,000. in 2011 and an executive vice president, Myra Aubuchon, $3.7 million. (Why a vice president was paid more than the president, the article does not say.) All in all seven Mercy Health executives were paid more than $1 million each. At the same time, this charitable institution provided 3.2% of revenues for charity care based on Chargemaster prices. Based on Mercy's actual costs it probably provided about three-tenths of 1% of its revenues for charitable purposes.

The US spends more on health care than the next 10 big spenders combined: Japan, Germany, France, China, UK, Italy, Canada, Brazil, Spain and Australia. The price tag for Hurricane Sandy was $60 billion, part of which may not now be paid due to the sequester, but we spend almost $60 billion every week on health care. We spend more on artificial knees and hips every year than Hollywood collects at the box office. We spend two or three times that amount on canes and wheelchairs because the medical-industrial complex lobbies Congress and forces Medicare to pay as much as 75% more for this equipment than it would cost at Walmart. One hospital charged $1.50 for one 325-mg acetaminophen tablet, more than what Walmart charges for a hundred of them!

And lets not forget one of the biggest cost drivers of Medicare: George W Bush's prescription drug benefit which forced Medicare to pay Chargemaster like prices for drugs instead of negotiating those prices down like the Veterans' Administration does. You want to bring down the spending on Medicare which is miniscule compared to Chargemaster prices? Congress needs only to change the prescription drug benefit law and allow Medicare to negotiate with the drug companies.

 

 

Why Neither Stimulus Nor Austerity Will Work to Revive Western Economies But Redistribution Will.

by John Lawrence

Think back a couple hundred years ago - before industrialization when economic life was much simpler. Let's assume that when a good or service was purchased, that the person who received the money spent it all - no savings. Therefore, money was circulated just like water can be circulated in a closed pipe. If the pipe makes a circle, then all that is needed to keep water flowing through the pipe is a pump. Similarly, when the blacksmith received $10. for shoeing a horse, we can assume that he took that money and spent it at the grocery. The grocer then took that same $10. and spent it with the farmer. The farmer took the money and spent it at the haberdasher's and so on. So the same $10. gets passed around from person to person until it lands back up at the blacksmith's again and the process repeats itself over and over. As long as all the yeoman in any given village have a good or service they can sell and as long as the money flows through the hands of each person in the village, that same $10. is used over and over; it is circulated round and round just like the water in the pipe. As long as the money flows fast enough, everyone can purchase what they need and business is good. GDP is a measure of how many transactions occur in any given year. The faster the money flows through the system, the greater is GDP.

Now what happens when one of the participants saves some of the money instead of spending it all? Then there is less money to flow through the system and economic activity and hence GDP will be lower. The more money that is saved, the more economic activity will decrease until the money supply is inadequate to meet people's needs. It is a well known fact that, when consumers spend more and save less, economic activity and GDP increase. That's why George W Bush sent everybody a check and told them to go out and spend it. When economic activity decreases enough, a recession or a depression occurs. In the US consumer spending accounts for 70% of GDP so, if consumer spending decreases, economic activity decreases. This would happen in the simple economy described above if, instead of the blacksmith spending his money at the grocer's, he saved it instead. So saving decreases economic activity and GDP. There is one caveat to that and that is, if instead of the blacksmith saving the money, he invested it by expanding his business and created a couple of additional jobs. Then those additional workers would also go out and spend their paycheck adding to economic activity.

When the economy goes into recession two things happen. Government revenues from taxes decline and consumers spend less because they have less money to spend. Keynsianism is a philosophy that says that the government should borrow money in a recession and spend it into the economy thus creating jobs and increasing economic activity or at least preventing starvation and dire need. The other way that economic activity can be expanded is for the central bank to loan money to banks which then loan it to businesses who want to expand their businesses thus creating jobs. So money is injected into the economy either by the government borrowing money or by the central bank printing money in the form of a loan. In either case debt is created and the economy becomes a debt based economy.

If we think of money circulating similar to water circulating in a network of pipes, if a business or an individual saves a portion of the money instead of spending it, there is a continual need for money creation to keep up the same level of economic activity. That's why capitalism has to be a growth based economy. When there was one blacksmith for every village, saving money was not a problem since the income from blacksmithing over the economy as a whole was dispersed to many blacksmiths who all spent most of it keeping it in circulation. If one blacksmith captured most of the business - let's say he called his business Blacksmiths Are Us - and franchised it throughout the whole economy, then all the profits would flow to one person - more or less - and money would be continually taken out of circulation necessitating growth and debt based money creation by the government or private businesses just to provide enough jobs to keep money circulating to all people with economic needs. Money saved and not spent is similar to water in a system of pipes entering a cul de sac or black hole from which it never emerges or to being siphoned off never to return to mainstream circulation.

In today's economy money is continually siphoned off by the major corporations who have not only nationalized but who have internationalized. It's as if Blacksmiths Are Us has gone global. That money which is taken out of the real economy goes into the financial economy which is a black hole from which money never emerges again into the real world economy. So there is a continual need for either the central bank to print money (increase the money supply) or for the government to prime the pump with debt based stimulus money (the fiscal method).

In a western capitalist economy there is a continual need for money to be created either by government borrowing and the provision of fiscal stimulus or by means of the central bank loaning money into the banking system. The only problem is that today, when the Federal Reserve (the central bank) loans money to other banks, the money goes not into the real economy where jobs are created but into the financial or casino economy. In other words it goes to rich people like Jamey Dimon of JP Morgan Chase or Lloyd Blankfein of Goldman Sachs who don't spend it in the real economy but who gamble it in the casino economy so it doesn't do too much good for the creation of jobs which provides for the distribution of money to all who need it. A job is seen as the only legitimate means for an economic unit to acquire the money it needs to meet its needs. Of couse, just giving the money to all who need it would increase economic activity and GDP, but that isn't seen as legitimate. Similarly, when the government borrows and spends, the money also does not circulate much since it is soon siphoned off by the Wal-Marts, the Exxon Mobils - the modern day versions of Blacksmiths Are Us - where it ends up in the financial economy. There is no very good way to keep the money circulating in the real economy since large corporations are siphoning it off at every turn which means that either the central bank has to keep printing money or the government has to keep borrowing and spending money, the Keynesian approach.

Therefore, neither the method of giving money to rich people through zero interest loans nor fiscal stimulus requiring more government debt will work in today's economy. Paul Krugman, who advocates fiscal stimulus and more government borrowing, is wrong and the Republican supply siders who advocate giving more money to the rich are also wrong. Obviously, the central bank cannot go on indefinitely printing money because of the devaluation of the currency and subsequent inflation and the government can not go on indefinitely borrowing money because interest on the debt eventually consumes all expenditures so what is the solution? Giving more tax breaks to the rich only compounds the problem of money being siphoned off from the real economy, taken out of circulation and placed in the financial or casino economy where it circulates only among the financial elite. The Republican solution is to speed up the process of redistributing money from the poor and middle class to the rich even more.

The only viable solution is to redistribute the money from rich to poor. The money that has been siphoned off and taken out of circulation by the Wal-Marts and Exxon Mobils of the world needs to be siphoned back into the real economy where it can continue to circulate. Too much money is ending up in the cul de sacs where it never reenters the real economy but instead circulates endlessly in the casino economy among very rich people. 300 years ago when the economy was much simpler and consisted of a yeomenry who provided a good or service and spent all the money they took in, money circulated endlessly in the real economy. Today, Wal-Mart and Exxon Mobil take most of the money out of the real economy in the form of profits. That money leaves the real economy and enters the financial economy which is a big black hole as far as the real economy is concerned. In order not to increase the money supply endlessly or to require the proliferation of new products and services, which provide a temporary increase in economic activity, new jobs and circulation of money to a wider distribution of individuals and families, money has to be recirculated and redistributed into the local real economy. And in order for the Federal Government not to have to borrow money endlessly, it needs to siphon money from the rich who won't spend it and redistribute it to the poor and middle class who will. In this manner the economy needs not to be based so much on debt based growth but can become more of a steady state, balanced economy. Money siphoned off by Blacksmiths Are Us is siphoned back again and redistributed to the local blacksmiths where it can circulate in the real economy again.

Another way the economy can grow without creating debt or increasing the money supply endlessly, which means just fueling the casino economy, is to take Ellen Brown's suggestios from her book Web of Debt, and that is for the central bank to not loan money into the economy with zero interest loans to the big banks, but instead to spend the money into the economy for infrastructure projects and the like. Thus the money supply is increased as needed without the creation of debt. This is the method Abraham Lincoln used to fight the Civil War and to build the transcontinental railroad. It is estimated he saved the nation $4 billion in interest by spending the money into the economy with greenbacks instead of loaning it into the economy at interest.

Taxing the rich amounts to siphoning back money which has been siphoned off from the real economy in the first place and putting it back into circulation amongst a wider distribution of people. The Blacksmith Are Us franchisees supply a uniform blacksmithing experience for weary travelers regardless of which village they happen to be in. As such they take business from the Mom and Pop blacksmiths and concentrate wealth at the central headquarters of Blacksmiths Are Us. We imagine that no matter which village George Washington or Thomas Jefferson was in, they could count on the fact that their blacksmithing needs were met with satisfaction when they shopped at Blacksmiths Are Us. However, this would diminish the amount of money in the real local economy due to the fact that the business of the local blacksmith would diminish since the profits would be shipped elsewhere.

A final note: with all the economic turmoil in Europoe over the eventual default by Greece on its loans and the fact that this could create economic chaos, instead it could be seen as an opportunity for Greece to set up its economy as non-debt based by having its central bank spend fiat money into the economy thus creating jobs and distributing income until the economy picks up steam of its own accord. Thus Greece could drop out of the eurozone with it's western debt based economic methods and align itself more with the non-western world to create a non-debt based society instead of one drowining in debt as it is presently constituted.

The Bipartisan Force Behind the For-Profit College Scam: Big Money

Wednesday 7 March 2012

by: Zaid Jilani, Republic Report | Report

As we head into an election year, we’re going to increasingly hear that Democrats and Republicans fight like cats and dogs, that there is a civil war in Washington. This describes the state of play on some issues, but on others there is bipartisan agreement to do the wrong thing: Both parties do what the money tells them to do. How this works is subtle and often kept secret, done in rooms meant to shield policy-making while the public is distracted with electoral hoopla. Fortunately for Republic Report readers, I got access to one of these rooms, and I can explain how the money guides policy-making.

It starts with high level party functionaries paid by a rich industry, which uses the talents and connections of those party functionaries to extract government concessions. In this case, it’s the for-profit college industry, which perpetually leaves students with astronomical debt while providing poor quality education. The functionaries were former Bill Clinton advisor Doug Sosnik and Republican consultant Sara Fagen. Rather than fighting like cats and dogs, these two showed a keen sense of bipartisanship as they told leaders of these for-profit education companies how they can use their power to manipulate Congress into handing them more money.

The for-profit colleges, multi-billion dollar companies that rely on federal grants, have collected themselves into the super-boring sounding association known as the Association for Private Sector Colleges and Universities (APSCU). Today, they held a closed-to-the-public but open-to-the-media meeting in Washington, D.C. to plot how to keep Congress from approving stricter regulations on the billions of taxpayer dollars that their corporations receive through federal student loans and grants.

The first session of the day featured a presentation by Democratic consultant Sosnik and Republican consultant Fagen. Before Sosnik and Fagen spoke, an ASPCU representative noted that Sosnik most recently worked for the Motion Pictures Association of America (MPAA) on its legislative campaigns. The MPAA was last seen trying to undermine freedom on the internet through similar political connections and campaign contributions.

Both Sosnik and Fagen delivered PowerPoint presentations where they laid out national polling, explaining to the audience the chances of President Obama getting re-elected. I imagine that they each care about their party winning, since it impacts the fee they can extract from corporations seeking influence. After their polling presentations were completed, the audience had a chance to ask questions. One audience member asked how the for-profit college industry can best impact Congress and the various congressional campaigns that are currently underway.

Fagen laid out a strategy for an astroturf (which means fake grassroots) campaign, saying that it’s “much better to get in front of a candidate running for office before he or she is actually in office.” She referenced the “card check issue,” the Employee Free Choice Act, a controversial bill to strengthen labor unions. Fagen noted that the retail industry engaged in anti-union astroturf operations in swing districts and that when key Democrats were elected, “they were in our corner.” She went on to note that the for-profit college industry should be on the ground in Wisconsin to get candidates for the open U.S. Senate seat to commit to being for or against their legislative agenda.Sosnik then took to the microphone and — despite being a long-time Democrat and close advisor and friend of President Clinton — praised Fagen’s anti-union strategy, noting that she was one of the people who ran the campaign against the Employee Free Choice Act and “she was totally right about that.”  Sosnik is not elected, and neither is Fagen – but their opinion matters to policy-makers.  And as you’ll see, Sosnik’s cynicism about democracy is fascinating.

“Members of Congress are not always great leaders,” said Sosnik. “They are terrific at seeing when a line has formed and going and getting in front of the line. There’s nothing that politicians are more interested in than themselves and keeping their jobs.” He advised the industry to take its “assets on the ground in Wisconsin” and leverage them against the candidates. Above all else, Sosnik stressed that the industry had to maintain a strong presence on the ground in the districts of key candidates for office (earlier in the presentation, he noted that the MPAA was “roadkill” in its fight for the Stop Online Piracy Act, which he apparently helped spearhead, because it failed to engage the grassroots).

Watch Sosnik and Fagen advise a for-profit college industry that seeks to avoid accountability to students and taxpayers:

:

Presumably Sosnik and Fagen were paid, and paid well, for their appearances.  The joint presence of a senior Clinton advisor like Sosnik and a veteran of the Bush White House like Fagen echoes the bipartisan nature of the lobbying effort the for-profits continue to wage to avoid accountability for waste, fraud, and abuse with federal dollars and students’ futures. Democrats and Republican lobbyists can put aside their partisan feelings to come together to assist the for-profit college industry. These lobbyists appear to have one goal that they put before ideology: the money that the for-profit colleges are paying them to ensure that the government continues to hand them as much cash as possible with as few strings attached as possible.

Zaid Jilani

ZAID JILANI is a reporter/blogger for ThinkProgress.org at the Center for American Progress Action Fund. Zaid grew up in Kennesaw, GA, and holds a B.A. in International Affairs with a minor in Arabic from the University of Georgia. Prior to joining ThinkProgress, Zaid interned for Just Foreign Policy and was a weekly columnist at The Red & Black, the University of Georgia’s official student newspaper. He is a co-editor at the Georgia-based blog Georgia Liberal and a regular on RT America's The Alyona Show and The Thom Hartmann Show. He is also an occassional contributor to the op-ed pages of The Atlanta Journal-Constitution. His Twitter handle is @zaidjilani. 

 

A Quest for Hybrid Companies That Profit, but Can Tap Charity

By STEPHANIE STROM

Published: October 12, 2011 by the New York Times

A new type of company intended to put social goals ahead of making profits is taking root around the country, as more states adopt laws to bridge the divide between nonprofits and businesses.

California is the latest state to adopt a statute permitting what is called flexible-purpose corporations, new companies that are part social benefit and part low-profit entities. The companies are now allowed under laws in more than a dozen states and two Indian tribes.

States like New York and Massachusetts are weighing comparable legislation — sometimes also known as low-profit limited liability or benefit corporations — and efforts are afoot to get federal legislation passed that would lower hurdles to the creation of such companies, including a quiet push to get preferential tax treatment for them.

Many of the companies adopting the new structures provide services to nonprofits or are food purveyors that, for example, might employ the disabled. Perhaps the best known is MOO Milk of Vermont, a group of small dairy farmers.

Unlike a straight nonprofit group, these businesses can tap into conventional capital markets as well as philanthropy.

And unlike a for-profit corporation, the structure allows investors to emphasize the social mission over making money, and to be supported by money from foundations.

“Directors of many companies want to do the right thing, but they’re so busy looking at how not to get sued for failing to maximize profits that they don’t think more aspirationally about creating a great company that helps the planet and people and also makes money,” said R. Todd Johnson, a lawyer who is among the leaders of the movement to get states to create new legal structures.

Not surprisingly, the trend concerns some executives in charge of charities, who fear increased competition for philanthropic dollars fueled by the enthusiasm for the new formats among foundations, many of which have been lobbying hard for new laws to foster this type of business.

Many corporate lawyers and regulators also are wary. The California Department of Corporation and the business law section of the corporations committee of the state bar association opposed the law, as have similar organizations in other states. They argue that the new structure holds an inherent conflict of interest and that it will lower standards of fiduciary duty.

“There’s a marketing job that’s being done that somehow these are special,” said William Callison, a lawyer in Colorado whose opposition helped defeat efforts to pass the hybrid incorporation law in his state. “I think they’re anything but special.”

But proponents, like Jed Emerson, a pioneer in developing what he calls “blended value investing,” contend that many of the new organizations do not fit neatly into what have been the accepted models. “Over the last 10 to 20 years, there’s been a host of organization managers and financial investors saying the traditional approach to investing in this bifurcated framework of for-profit and nonprofit doesn’t capture what they’re really trying to achieve,” Mr. Emerson said. “Alternative structures like this allow investors and entrepreneurs to pursue social and environmental impact together with various levels of financial performance.”

One such company, ardentCause, was about to become a traditional limited liability company, or L.L.C., when Michigan began allowing businesses to incorporate as low-profit, limited liability companies, or L3C’s.

The company, founded by three veterans of the automotive industry, develops database software to help nonprofits manage and share information. “It was perfect for us because we believe businesses and nonprofits alike should run sustainably and profitably, but the main motive for us was the mission,” Rosemary Bayer, ardentCause’s chief executive, said of the L3C structure.

Its first product was introduced last fall with support from the First Step Fund, a pool of venture capital drawn from Detroit foundations as part of a broader effort to reinvigorate the city’s economy. Ms. Baer said ardentCause was currently negotiating with another foundation for investment.

Critics like Mr. Callison wonder why a new category of businesses is necessary at all, given that foundations can make investments in standard forms of business. A foundation may, for example, offer a business a loan at a below-market interest rate to spur it to build a factory in an economically blighted neighborhood.

Also, more and more companies are incorporating socially beneficial activities into their core business strategies without abandoning their primary goal of making profits. Hewson Baltzell, who oversees product development for MSCI, a data and research firm known for its global indexes, said that while the number of financial investors deploying what were known as “environmental, social and governance” screens to assess investments, “most investors are still not into the double-bottom line.”

“Do you need it? No, not necessarily,” Mr. Baltzell said. “The argument for it is probably that when push comes to shove over certain issues, if a social mission was baked into the bylaws, it would be legitimate for a board to allow, in certain cases, that mission to trump shareholder value.”

But charities seeking ways to reduce their reliance on donated dollars are increasingly developing programs that could be mistaken for businesses, and for them, such a structure solves a number of headaches. It gives them access to the capital markets, allows them to pay higher compensation levels and provides potential exit strategies, all unavailable to nonprofits.

“It expands the tool kit social enterprises can use to scale and increase the good they do,” said Matt Bannick, managing partner of the Omidyar Network, the organization managing the eBay founder Pierre Omidyar’s commercial and nonprofit investments, which pushed for the new California law.

One of the nonprofits it has supported, Global Integrity, is likely to spin off a project called Foglamp, which it started, into a flexible-purpose company. Foglamp has a worldwide network of 1,200 people that provide research, for example, on a country’s political stability. Hedge funds, institutional investors and global companies pay market rates for the information.

Nathaniel Heller, Global Integrity’s managing director, said that on at least two occasions recently, it had to turn away venture capitalists wanting to invest in Foglamp. “As a nonprofit, we have no equity to offer them,” Mr. Heller said.

That means, he said, that Foglamp can only grow “arithmetically, not geometrically.” He added, “As a nonprofit, we don’t have extra cash sitting around that would allow us to hire five more employees for Foglamp.”

Frontline SMS took another route and organized as a community interest company, or C.I.C.’s, the British corporate designation that has inspired many of the new hybrid in corporation laws passed in the United States. C.I.C.’s are required to have a social purpose like health care and their assets are locked, limiting what can be distributed to shareholders, employees and others.

Frontline was spun out of Kiwanja.net, a California nonprofit whose mission is to develop technology to help nonprofit groups deliver services. “The value proposition is inherently defined in terms of social benefit,” said Sean Martin McDonald, executive director of Frontline. “That reduces a lot of concerns you might normally have from traditional financial investors by making it clear that your mission is primarily social, not primarily about making profits.”

Since 2009, 88 Percent Of Income Growth Went To Corporate Profits, Just One Percent Went To Wages

By Guest Blogger on Jun 30, 2011 at 3:15 pm

from ThinkProgress

After the longest recession since WWII, many Americans are still struggling while S&P 500 corporations are sitting on $800 billion in cash and making massive profits. Now, economists from Northeastern University have released a study that finds our sluggish economic recovery has almost solely benefited corporations. According to the study:

“Between the second quarter of 2009 and the fourth quarter of 2010, real national income in the U.S. increased by $528 billion. Pre-tax corporate profits by themselves had increased by $464 billion while aggregate real wages and salaries rose by only $7 billion or only .1%. Over this six quarter period, corporate profits captured 88% of the growth in real national income while aggregate wages and salaries accounted for only slightly more than 1% of the growth in real national income. …The absence of any positive share of national income growth due to wages and salaries received by American workers during the current economic recovery is historically unprecedented.”

The New York Times adds, “According to the Bureau of Labor Statistics, average real hourly earnings for all employees actually declined by 1.1 percent from June 2009, when the recovery began, to May 2011, the month for which the most recent earnings numbers are available.”

So as average wages fall, and nearly 14 million people remain unemployed, America’s economic recovery has almost entirely benefited corporations. This development adds another chapter to the decline of the middle class, whose incomes are shrinking and wages are stagnating. Last year, top executives’ salaries increased 27 percent, while workers’ salaries increased only 2 percent. At the moment, income inequality in America is the worst it’s been since the 1920s, as the richest 1 percent make nearly 25 percent of the country’s income.

–Sean Savett