Bernie Sanders and Jeffrey Immelt had a bit of a dustup over the past couple of days. For the details, links, and some really trenchant analysis, see Jeff Spross here. Basically, Sanders went after GE as a bad corporate actor, a serial tax avoider, and an outsourcer. He said something about the firm eroding “the moral fabric of America.”
That last bit is pretty heated, and Immelt punched back, as you’d expect. He made reasonable points–I don’t blame GE for rips in the moral fabric–though as Spross notes, Immelt’s response lacks context and fails to deal with the dual problems of their outsourcing and tax avoidance.
Most of GE’s workforce–about 60 percent, I believe–is in other countries at this point. Spross notes that their net job creation in the US has been about zero since 2008. And, according to the tax analysts at CTJ, they paid about 1% in federal taxes in 2014 and -1.2% in state taxes.
Here’s the problem: there was a time when the goals of GE and those of the American middle class were mutually reinforcing. But globalization, financialization, and the ability of large, powerful firms to lobby for favorable tax treatment have altered that symbioses such that you can no longer assume that what’s good for GE is good for the middle class.
That doesn’t mean that what’s bad for GE is good for our workforce, either. As Immelt claims, they do some impressive things, and they do some of them here, including in Vermont. Moreover, it’s perfectly legal to avoid taxes (avoidance, yes; evasion, no) and offshore work.
What, then, is the responsibility of policymakers in the midst of this fundamental divergence of goals, where GE’s success fails to reach our workforce the way it once did? Clearly, it’s not to facilitate tax avoidance, ignore the loopholes that allow them to pay such low effective rates, grant them further tax breaks, or to turn a blind eye to unfair trade practices like currency manipulation by trading partners.
Nor is it to assail their morality.
It’s to implement policies that will shift more bargaining power and thus a more balanced share of the economy’s growth from multinational corporations to the majority on the wrong side of the inequality divide upon which GE’s riding so high. Which policies are those? Read the book!