This Week:

News flash! Rich people don't like to pay taxes

"Little Urgency" about poverty

Greetings,

Taxes and poverty. How rich people get what they want. Etc. Next week I'll talk a little bit about the Governor and his right-wing friends. I know I promised to talk this week about my little meeting with the editor of the Star Tribune (Newspaper of the Twin Cities!), but I don't have time; I've gotta go to a demo against the war in Yugoslavia. I'll get to it one of these weeks.

So little time, so much to write! Just imagine if I could get paid to do this. I could write a daily column!

The subscription list keeps growing, so welcome to this week's new subscribers. You know who you are.

See ya next week,

Nygaard

News flash! Rich people don't like to pay taxes

Every year, around April 15th, the newspapers publish a small flurry of stories about taxes. Who's paying what, how's the IRS doing, and so on. This year was no different. Two articles in particular caught my eye.

Article Number 1:

The first article appeared on April 12th in the New York Times, and was reprinted the same day in the Star Tribune (Newspaper of the Twin Cities!). "Highest earners under less scrutiny from IRS," read the headline. The lead paragraph sums it up as follows: "Tax returns from Americans earning more than $100,000 a year and from the biggest corporations increasingly are escaping the scrutiny of the Internal Revenue Service, new agency figures show."

Some readers may remember hearing reports of hearings in the Congress over the past few years (especially last spring) in which taxpayers have been brought in to testify about the abuses they have suffered under the IRS. Horror stories of confiscations, invasive questioning, and so on were reported in all the major media, painting a picture of the IRS as an agency "out of control," a symbol of "big government" intruding on our lives. The hearings, arranged by the Republican leadership in the Congress, provided the impetus for large cuts the IRS enforcement budget and a reorientation of the agency toward something called "customer service." The result, as the article puts it, is that "reporting by many of the richest taxpayers is now effectively on an honor system, inviting abuses." Rich customers, cheap service. Ya can't beat that.

Article Number 2:

Two days after the above article appeared in the Star Trib (Newspaper of the Twin Cities!), a 5-paragraph article appeared in the "National News Briefs" section of the NY Times, with the headline "Review of IRS Finds No Extensive Violations." It seems that an independent investigation of the IRS, led by former FBI and CIA director William Webster, found that "instances in which taxpayer rights had been violated were 'isolated and individual,' despite some horror stories."

This is often the pattern in American politics. Powerful people get upset about something, in this case paying taxes. Powerful institutions make their case through the media, through Congressional hearings, through their think tanks, and the numerous other place where they can make their case. The problem thus gets "on the agenda." Laws get changed. Much later, we learn that the "facts" upon which the earlier debate was based were not really facts at all.

P.S. A week later, (April 21) the Star Tribune (Newspaper of the Twin Cities!) carried on the opinion page an article by Robert Reno of Newsday, and he made some great points about this. But the real editorializing occurs on the news pages, in the decisions about what to include and when, and in what to exclude. So, thank you, Robert Reno. Can you call our news editors and talk to them?

"Little Urgency" about poverty

Another example of how two articles that appeared separately make a whole lot more sense when you put them together.

Article Number 1:

In the New York Times of April 24th there appeared an article on the second page of the business section about an upcoming meeting of the so-called "Group of Seven" industrialized countries. The headline read "Debt-relief Plan is Flawed, 5 Nations Say." (The Group of Seven is seven of the richest countries in the world - the U.S., Canada, France, Germany, Britain, Japan, and Italy - who get together periodically to decide how best to preserve and increase their wealth. I don't really know why Italy, a relatively poor country, is in there. Post-war politics, I think...)

There is some talk of trying to get rid of some of the ridiculous debt that the poor countries owe the rich countries, basically because everyone knows that many of these countries can't pay their debts as currently scheduled. The rich countries realize that if they keep trying to squeeze blood from these poor stones, they risk making some of these economies collapse entirely (see Brazil, Korea, Thailand, Indonesia, etc etc etc). And that would mean that rich bondholders would lose a lot of money. This is a serious problem, so three years ago the International Monetary Fund and the World Bank came up with a plan to lower or cancel some of the most-unsupportable Third World debt, in an attempt to cut their losses.

The April 24th article is based on a "confidential report" in which the rich countries' bankers admit that their plan "is not working well." As evidence, the president of the World Bank, James Wolfensohn, points out that "the number of people living on less than $1 a day has risen from 1 billion a few years ago to about 1.3 billion today and will probably reach 1.5 billion by the year 2000." This amounts to roughly one quarter of the human population of the earth. This is a problem because if there are too many poor people in a country no bank will want to loan them money. It's pretty hard to cover the interest payments when your population is only making 90 cents a day.

Article Number 2:

Two days later, on page 8 of the news section of the NY Times, we see the headline "Little Urgency on the Eve Of World Bankers' Meeting." As usual, "world bankers" means bankers from the wealthy countries only. Six months ago, when these bankers last met, Bill Clinton was heard to say that the he and his pals were facing "the biggest financial challenge in a half-century." Now, as the article puts it, "...millions of people are still suffering, national incomes are still shrinking, but the crisis seems oddly abated."

What's so odd about that? Brazil has just issued new bonds, and the stock markets in Thailand and South Korea are "rocketing back" to financial health. Why should a billion and a half dark-skinned people starving to death in the Third World be a problem for the rich countries, as long as those countries can service their debt? The "biggest challenge" is trying to get these people to pay off their loans, and a former Clinton Administration official who is now a professor at Harvard reminds us of why governments need feel "little urgency" about how to do that: "We should leave a lot of this to the market."