It’s as if they didn’t learn a thing from the 2012 elections. Republicans are on the same suicide mission as before - - trying to block immigration reform (if they can’t scuttle it in the Senate, they’re ready to in the House), roll back the clock on abortion rights (they’re pushing federal and state legislation to ban abortions in the first 22 weeks), and stop gay marriage wherever possible. 

As almost everyone knows by now, this puts them the wrong side of history. America is becoming more ethnically diverse, women are gaining economic and political power, and young people are more socially libertarian than ever before.

Why can’t Republicans learn? 

It’s no answer to say their “base” — ever older, whiter, more rural and male — won’t budge. The Democratic Party of the 1990s simply ignored its old base and became New Democrats, spearheading a North American Free Trade Act (to the chagrin of organized labor), performance standards in classrooms (resisted by teachers’ unions) and welfare reform and crime control (upsetting traditional liberals). 

The real answer is the Republican base is far more entrenched, institutionally, than was the old Democratic base. And its power is concentrated in certain states — most of the old Confederacy plus Arizona, Alaska, Indiana, and Wisconsin — which together exert more of a choke-hold on the Republican national party machinery than the old Democrats, spread widely but thinly over many states, exerted on the Democratic Party. 

These Republican states are more homogenous and conspicuously less like the rest of America than the urbanized regions of the country that are growing more rapidly. Senators and representatives from these states naturally reflect the dominant views of their constituents — on immigration, abortion, and gay marriage, as well as guns, marijuana, race, and dozens of other salient issues. But these views are increasingly out of step with where most of the nation is heading. 

This state-centered, relatively homogenous GOP structure effectively prevents the Party from changing its stripes. Despite all the post-election rhetoric about the necessity for change emanating from GOP leaders who aspire to the national stage, the national stage isn’t really what the GOP is most interested in or attuned to. It’s directed inward rather than outward, to its state constituents rather than to the nation. 

This structure also blocks any would-be “New Republicans” such as Chris Christie from gaining the kind of power inside the party that a New Democrat like Bill Clinton received in 1992. The only way they’d be able to attract a following inside the Party would be to commit themselves to policies they’d have to abandon immediately upon getting nominated, as Mitt Romney did with disastrous results. 

It’s true that by 1992 Democrats were far more desperate to win the presidency — having been in the wilderness for twelve years — than today’s GOP appears to be. Nonetheless it’s doubtful the GOP will be willing to eschew its old base even if it loses the presidency again in 2016, because without its collection of relatively homogenous states, there just isn’t much of a GOP. 

The greater likelihood is a steady eclipse of the Republican Party at the national level, even as it becomes more entrenched in particular states. Those states can be expected to become regressive islands of backwardness within a nation growing steadily more progressive. 

The GOP’s national role will be primarily negative  — seeking to block, delay, and filibuster measures that will eventually become the law of the land in any event, while simultaneously preaching “states’ rights” and praying for conservative majorities on the Supreme Court. 

In other words, more of the same. 

There are two great centers of unaccountable power in the American political-economic system today — places where decisions that significantly affect large numbers of Americans are made in secret, and are unchecked either by effective democratic oversight or by market competition.

One goes by the name of the “intelligence community” and its epicenter is the National Security Agency within the Defense Department. If we trusted that it reasonably balanced its snooping on Americans with our nation’s security needs, and that our elected representatives effectively oversaw that balance, there would be little cause for concern. We would not worry that the information so gathered might be misused to harass individuals, thereby chilling free speech or democratic debate, or that some future government might use it to intimidate critics and opponents. We would feel confident, in other words, that despite the scale and secrecy of the operation, our privacy, civil liberties, and democracy were nonetheless adequately protected.

But the NSA has so much power, and oversight of it is so thin, that we have every reason to be concerned. The fact that its technological reach is vast, its resources almost limitless, and its operations are shrouded in secrecy, make it difficult for a handful of elected representatives to effectively monitor even a tiny fraction of what it does. And every new revelation of its clandestine “requests” for companies to hand over information about our personal lives and communications further undermines our trust. To the contrary, the NSA seems to be literally out of control.

The second center of unaccountable power goes by the name of Wall Street and is centered in the largest banks there. If we trusted that market forces kept them in check and that they did not exercise inordinate influence over Congress and the executive branch, we would have no basis for concern. We wouldn’t worry that the Street’s financial power would be misused to fix markets, profit from insider information, or make irresponsible bets that imperiled the rest of us. We could be confident that despite the size and scope of the giant banks, our economy and everyone who depends on it were nonetheless adequately protected. 

But those banks are now so large (much larger than they were when they almost melted down five years ago), have such a monopolistic grip on our financial system, and exercise so much power over Washington, that we have cause for concern. The fact that not a single Wall Street executive has been held legally accountable for the excesses that almost brought the economy to its knees five years ago and continues to burden millions of Americans, that even the Attorney General confesses the biggest banks are “too big to jail,” that the big banks continue to make irresponsible bets (such as those resulting in JP Morgan Chase’s $6 billion “London Whale” loss), and that the Street has effectively eviscerated much of the Dodd-Frank legislation intended to rein in its excesses and avoid another meltdown and bailout, all offer evidence that the Street is still dangerously out of control. 

It is rare in these harshly partisan times for the political left and right to agree on much of anything. But the reason, I think, both are worried about the encroachments of the NSA on the privacy and civil liberties of Americans, as well as the depredations of “too big to fail or jail” Wall Street banks on our economy, is fundamentally the same: It is this toxic combination of inordinate power and lack of accountability that renders both of them dangerous, threatening our basic values and institutions. 

That neither Republicans nor Democrats have done much of anything to effectively rein in these two centers of unaccountable power suggests that, if there is ever to be a viable third party in America, it will may borne of the ill-fated consequences. 

Jobs are returning with depressing slowness, and most of the new jobs pay less than the jobs that were lost in the Great Recession.

Economic determinists — fatalists, really — assume that globalization and technological change must now condemn a large portion of the American workforce to under-unemployment and stagnant wages, while rewarding those with the best eductions and connections with ever higher wages and wealth. And therefore that the only way to get good jobs back and avoid widening inequality is to withdraw from the global economy and become neo-Luddites, destroying the new labor-saving technologies.

That’s dead wrong. Economic isolationism and neo-Ludditism would reduce everyone’s living standards. Most importantly, there are many ways to create good jobs and reduce inequality.

Other nations are doing it. Germany was generating higher real median wages until recently, before it was dragged down by austerity it imposed the European Union. Singapore and South Korea continue to do so. Chinese workers have been on a rapidly-rising tide of higher real wages for several decades. These nations are implementing national economic strategies to build good jobs and widespread prosperity. The United States is not. 

Any why not? Both because we don’t have the political will to implement them, and we’re trapped in an ideological straightjacket that refuses to acknowledge the importance of such a strategy. The irony is we already have a national economic strategy but it’s been dictated largely by powerful global corporations and Wall Street. And, not surprisingly, rather than increase the jobs and wages of most Americans, that strategy has been increasing the global profits and stock prices of these giant corporations and Wall Street banks.  

If we had a strategy designed to increase jobs and wages, what would it look like? For starters, it would focus on raising the productivity of all Americans through better education — including early-childhood education and near-free higher education. That would require a revolution in how we finance public education. It’s insane that half of K-12 budgets still come from local property taxes, for example, especially given that we’re segregating geographically by income. And it makes no sense to pay for the higher education of young people from middle and lower-income families through student debt; that’s resulted in a mountain of debt that can’t or won’t be paid off, and it assumes that higher education is a private investment rather than a public good.

It would also require greater accountability by all schools and universities for better outcomes — but not just better test results. The only sure thing standardized tests measure is the ability to take standardized tests. Yet the new economy demands problem-solving and original thinking, not standardized answers. 

Better education would just be a start. We would also unionize low-wage service workers in order to give them bargaining power to get better wages. Such workers — mostly in big-box retailers, fast-food chains, hospitals, and hotel chains — aren’t exposed to global competition or endangered by labor-substituting technologies, yet their wages and working conditions are among the worst in the nation. And they represent among the fastest-growing of all job categories. 

We would raise the minimum wage to half the median wage and expand the Earned Income Tax Credit. We’d also eliminate payroll taxes on the first $15,000 of income, making up the shortfall in Social Security by raising the cap on income subject to the payroll tax. 

We’d also restructure the relationships between management and labor. We would require, for example, that companies give their workers shares of stock, and more voice in corporate decision making. And that companies spend at least 2% of their earnings upgrading the skills of their lower-wage workers.

We’d also condition government largesse to corporations on their agreement to help create more and better jobs. For example, we’d require that companies receiving government R&D funding do their R&D in the U.S.

We would prohibit companies from deducting the cost of executive compensation in excess of more than 100 times the median compensation of their employees or the employees of their contractors. And bar them from providing tax-free benefits to executives without providing such benefits to all their employees. 

And we would turn the financial system back into a means for investing the nation’s savings rather than a casino for placing huge and risky bets that, when they go wrong, impose huge costs on everyone else.

There’s no magic bullet for regaining good jobs and no precise contours to what such a national economic strategy might be, but at the very least we should be having a robust discussion about it. Instead, economic determinists seem to have joined up with the free-market ideologues in preventing such a conversation from even beginning.  

Conservative Republicans in our nation’s capital have managed to accomplish something they only dreamed of when Tea Partiers streamed into Congress at the start of 2011: They’ve basically shut Congress down. Their refusal to compromise is working just as they hoped: No jobs agenda. No budget. No grand bargain on the deficit. No background checks on guns. Nothing on climate change. No tax reform. No hike in the minimum wage. Nothing so far on immigration reform.

It’s as if an entire branch of the federal  government — the branch that’s supposed to deal directly with the nation’s problems, not just execute the law or interpret the law but make the law — has gone out of business, leaving behind only a so-called “sequester” that’s cutting deeper and deeper into education, infrastructure, programs for the nation’s poor, and national defense.

The window of opportunity for the President to get anything done is closing rapidly. Even in less partisan times, new initiatives rarely occur after the first year of a second term, when a president inexorably slides toward lame duck status.

But the nation’s work doesn’t stop even if Washington does. By default, more and more of it is shifting to the states, which are far less gridlocked than Washington. Last November’s elections resulted in one-party control of both the legislatures and governor’s offices in all but 13 states — the most single-party dominance in decades.

This means many blue states are moving further left, while red states are heading rightward. In effect, America is splitting apart without going through all the trouble of a civil war.

Minnesota’s Democratic-Farmer-Labor Party, for example, now controls both legislative chambers and the governor’s office for the first time in more than two decades. The legislative session that ended a few weeks ago resulted in a hike in the top income tax rate to 9.85%, an increased cigarette tax, and the elimination of several corporate tax loopholes. The added revenues will be used to expand early-childhood education, freeze tuitions at state universities, fund jobs and economic development, and reduce the state budget deficit. Along the way, Minnesota also legalized same-sex marriage and expanded the power of trade unions to organize.

California and Maryland passed similar tax hikes on top earners last year. The governor of Colorado has just signed legislation boosting taxes by $925 million for early-childhood education and K-12 (the tax hike will go into effect only if residents agree, in a vote is likely in November).

On the other hand, the biggest controversy in Kansas is between Governor Sam Brownback, who wants to shift taxes away from the wealthy and onto the middle class and poor by repealing the state’s income tax and substituting an increase in the sales tax, and Kansas legislators who want to cut the sales tax as well, thereby reducing the state’s already paltry spending for basic services. Kansas recently cut its budget for higher education by almost 5 percent.

Other rightward-moving states are heading in the same direction. North Carolina millionaires are on the verge of saving $12,500 a year, on average, from a pending income-tax cut even as sales taxes are raised on the electricity and services that lower-income depend residents depend on. Missouri’s transportation budget is half what it was five years ago, but lawmakers refuse to raise taxes to pay for improvements.

The states are splitting as dramatically on social issues. Gay marriages are now recognized in twelve states and the District of Columbia. Colorado and Washington state permit the sale of marijuana, even for non-medical uses. California is expanding a pilot program to allow nurse practitioners to perform abortions.

Meanwhile, other states are enacting laws restricting access to abortions so tightly as to arguably violate the Supreme Court’s 1973 decision in Roe v. Wade. In Alabama, the mandated waiting period for an abortion is longer than it is for buying a gun.

Speaking of which, gun laws are moving in opposite directions as well. Connecticut, California, and New York are making it harder to buy guns. Yet if you want to use a gun to kill someone who’s, say, spray-painting a highway underpass at night, you might want to go to Texas, where it’s legal to shoot someone who’s committing a “public nuisance” under the cover of dark. Or you might want to live in Kansas, which recently enacted a law allowing anyone to carry a concealed firearm onto a college campus.

The states are diverging sharply on almost every issue you can imagine. If you’re an undocumented young person, you’re eligible for in-state tuition at public universities in fourteen states (including Texas). But you might want to avoid driving in Arizona, where state police are allowed to investigate the immigration status of anyone they suspect is here illegally.
And if you’re poor and lack health insurance you might want to avoid a state like Wisconsin that’s refusing to expand Medicaid under the Affordable Care Act, even though the federal government will be picking up almost the entire tab.

Federalism is as old as the Republic, but not since the real Civil War have we witnessed such a clear divide between the states on central issues affecting Americans.

Some might say this is a good thing. It allows more of us to live under governments and laws we approve of. And it permits experimentation: Better to learn that a policy doesn’t work at the state level, where it’s affected only a fraction of the population, than after it’s harmed the entire nation. As the jurist Louis Brandies once said, our states are “laboratories of democracy.”

But the trend raises three troubling issues.

First, it leads to a race to bottom. Over time, middle-class citizens of states with more generous safety nets and higher taxes on the wealthy will become disproportionately burdened as the wealthy move out and the poor move in, forcing such states to reverse course. If the idea of “one nation” means anything, it stands for us widely sharing the burdens and responsibilities of citizenship.

Second, it doesn’t take account of spillovers — positive as well as negative. Semi-automatic pistols purchased without background checks in one state can easily find their way easily to another state where gun purchases are restricted. By the same token, a young person who receives an excellent public education courtesy of the citizens of one states is likely to move to another state where job opportunity are better. We are interdependent. No single state can easily contain or limit the benefits or problems it creates for other states.

Finally, it can reduce the power of minorities. For more than a century “states rights” has been a euphemism for the efforts of some whites to repress or deny the votes of black Americans. Now that minorities are gaining substantial political strength nationally, devolution of government to the states could play into the hands of modern-day white supremacists. 

A great nation requires a great, or at least functional, national government. The Tea Partiers and other government-haters who have caused Washington to all but close because they refuse to compromise are threatening all that we aspire to be together.

Economic forecasters exist to make astrologers look good. But the recent jubilance is enough to make even weather forecasters blush. “Just look at the bull market! Look at home prices! Look at consumer confidence!”

Please.

I can understand the jubilation in the narrow sense that we’ve been down so long everything looks up. Plus, professional economists tend to cheerlead because they believe that if consumers and businesses think the future will be great, they’ll buy and invest more – leading to a self-fulfilling prophesy.

But prophesies can’t be self-fulfilling if they’re based on wishful thinking.

The reality is we’re still in the doldrums, and the most recent data gives cause for serious worry.

Almost all the forward movement in the economy is now coming from consumers —  whose spending is 70 percent of economic activity. But wages are still going nowhere, which means consumer spending will slow because consumers just don’t have the money to spend. 

On Thursday the Commerce Department reported that consumer spending rose 3.4 percent in the first quarter of this year. But the personal savings rate dropped to 2.3 percent — from 5.3 percent in the last quarter of 2012. That’s the lowest level of savings since before the Great Recession. You don’t have to be an economic forecaster, or an astrologer, to see this can’t go on.

Yes, home prices are rising. The problem is, they’re beginning to rise above their long-run historical average. (Before the housing crash they were were way, way above the long-run average.) So watch your wallets. We’ve been here before: The Fed is keeping interest rates artificially low, allowing consumers to get low home-equity loans and to borrow against the rising values of their homes. Needless to say, this trend, too, is unsustainable.

What about the stock market? It’s time we stopped assuming that a rising stock market leads to widespread prosperity. Over 90 percent of the value of the stock market — including 401(k)s and IRAs — is held by the wealthiest 10 percent of the population.

Moreover, the main reason stock prices have risen is corporate profits have soared. But that’s largely because corporations have slashed their payrolls and keep them low. Which brings us full circle, back to the fundamental fact that wages that are going nowhere for most people.

Not even fat corporate profits are sustainable if American consumers don’t have enough money in their pockets. Exports can’t make up for the shortfall, given the rotten shape Europe is in and the slowdown in Asia.

So don’t expect those profits to continue. In fact, the new Commerce Department report shows that corporate profits shrank in the first quarter, reversing some of the gains in the second half of 2012.

And, by the way, the full effect of the cuts in government spending hasn’t even been felt yet. The sequester is going to be a large fiscal drag starting next month.  

Look, I don’t want to rain on the parade. But any self-respecting weather forecaster would warn you to zipper up and take an umbrella. Don’t be swayed by all the sunny talk. There are too many storm clouds ahead. 

REFRAMING THE DEBATE: NOT THAT MOST AMERICANS HAVE BEEN LIVING BEYOND OUR MEANS, BUT OUR MEANS HAVEN’T KEPT UP BECAUSE OF WIDENING INEQUALITY.

Even as the economy slowly recovers from the worst downturn since the Great Depression, government-haters and deficit-hawks are sticking to their same story: Americans have lived beyond their means and must now learn to live within them. 

The reality is quite different: The means of most Americans haven’t kept up with what the economy could and should provide. The economy is twice as large as it was three decades ago, and yet the typical American is earning about the same, adjusted for inflation. All the gains have been going to the top.

The notion that we can’t afford to invest in the education of our young, or rebuild our crumbling infrastructure, or continue to provide Social Security and Medicare and Medicaid, or expand health insurance is absurd.

If the median wage had kept up with the overall economy, it would be over $90,000 today — and tax revenues would be more than adequate to cover all our needs. If the wealthy were paying the same marginal tax rate they were paying up to 1981, tax revenues would be far more.

Get it? The problem isn’t that most Americans have been living too well. The problem is we haven’t been living nearly as well as our growing economy should have allowed us to live.

Widening inequality is the culprit. If President Obama is looking for a central theme for his second term, this is it.

Don’t be sidetracked today with the news of Michelle Bachmann’s decision not to run again. That’s small potatoes relative to the biggest political and economic issue — and showdown — emerging in Congress.

Some background: The Court of Appeals for the D.C. Circuit isn’t just the main feeder into the Supreme Court (four of the current nine justices served there before ascending to the Supremes) but, even more critically, is the court that reviews most major federal regulations — those emerging under Obamacare, Dodd-Frank, the Environmental Protection Agency, and hundreds of other laws and agencies.

Four of its current judges were appointed by Republican presidents; three by Democrats. It has three vacancies. Senate Republicans want to keep the current ratio of four to three, and have no interest in giving Obama a majority on this important court. They’ve held up almost all of Obama’s court appointments, sometimes for years, effectively preventing him from putting his picks in the federal court system as elsewhere.

Now the President is nominating judges to fill all three of these crucial D.C. court of appeals vacancies at once. He’s also looking ahead at the strong probability that at least one Supreme Court justice, most likely Ruth Bader Ginsburg, will retire within the next two years, and he’ll need to get a replacement through the Senate.

Senate Republicans under the cynical direction of Mitch McConnell have abused the filibuster system, preventing votes on almost everything the President has wanted.

Harry Reid punted on changing the filibuster rules, but he could — and in my view now should — propose changing them for judicial appointments, which he can accomplish with the votes of 51 senators.

A president’s court picks shouldn’t require 60 Senate votes. The Constitution is quite specific about when “super-majorities” are needed, and makes no mention of super-majorities for court appointments.

Reid is not known for his strong backbone, but here’s an instance where he owes his backbone to posterity. You might even write to him and tell him so.

Unable or unwilling to respond to my argument that large global corporations are now playing nations off against one another in a race to the bottom over taxes, subsidies, and regulations – and that large nations (and national groups like the European Union) should gain countervailing bargaining power by conditioning access to their markets on responsible corporate behavior – Forbes chooses instead to distort what I originally wrote.

Its columnist seeks to calculate the so-called “consumer surplus” from the sale of Apple goods in the U.S. — ignoring any social costs inherent in tax avoidance and the tax-avoidance industry that’s grown up around it, including the incentives generated by Apple for every other major global firm to decide for itself how much tax it is going to pay in the U.S. and elsewhere — and then concludes that “Professor Reich’s argument is that we should wipe out, by banning the sale of Apple’s goods in the US, that $1 trillion of consumer surplus in order to overcome that social harm of the $10 billion not paid in tax.”

Reductio ad absurdum.

Forbes Magazine likes to call itself a “capitalist tool,” and routinely offers tool-like justifications for whatever it is that profit-seeking corporations want to do. Recently it has deployed its small army of corporate defenders and apologists in the multi-billion dollar fight to keep the effective tax rates of global corporations low.

One of its contributors, Tim Worstall, recently took me to task for suggesting that a way for citizens to gain some countervailing power over large global corporations is for governments to threaten denial of market access unless corporations act responsibly.

He argues that the benefits to consumers of global corporations are so large that denial of market access would hurt citizens more than it would help them. The “value to U.S. consumers of Apple is they can buy Apple products,” Worstall writes. “Why would you want to punish U.S. consumers, by banning them from buying Apple products, just because Apple obeys the current tax laws?”

Wortstall thereby begs the central question. If global corporations obeyed all national laws — the spirit of the laws as well as the letter of them – and didn’t use their inordinate power to dictate the laws in the first place by otherwise threatening to take their jobs and investments elsewhere, there’d be no issue.

It’s the fact of their power to manipulate laws by playing nations off against one another – determining how much they pay in taxes, as well as how much they get in corporate welfare subsidies, how much regulation they’re subject to, and so on – that raises the question of how citizens can countermand this power.

Consumer benefits may sometimes exceed such costs. But, as we’ve painfully learned over the years (the Wall Street meltdown, the BP oil spill in the Gulf, consumer injuries and deaths from unsafe products, worker injuries and deaths from unsafe working conditions, climate change brought on by carbon dioxide emissions, and, yes, manipulation of the tax laws – need I go on?), the social costs may also exceed consumer benefits.

Why would an economics writer for a seemingly sophisticated national publication such as Forbes deny the existence of corporate power to circumvent or create favorable laws, or dismiss the social costs that corporations bent solely on maximizing profits routinely disregard? I’ll get back to this in a moment. 

Worstall then goes on to criticize me for suggesting that governments also condition market access on receiving some of the social benefits that corporations now wield to play countries off against one another, such as good jobs or investments in research and development. In his eyes, I’m committing the mortal sin of denying the economics of comparative advantage.

On what planet have Forbes’ capitalist tools been living? Many of the world’s most successful economies – among them, China and Singapore – owe their successes in part to their conditioning market access on certain kinds of jobs and investments, including research and development. That’s the way they have come to use global corporations, rather than be used by them. It’s the same approach Alexander Hamilton advocated more than two centuries ago in proposing how the United States develop its manufacturing industries. 

Comparative advantage is nice in theory, but in a world where powerful global corporations are using every strategy imaginable to maximize their profits and powerful governments are strategically employing market access to develop their economies, it’s just theory.

Economics writers like those affiliated with Forbes Magazine surely are sophisticated enough to know this as well. So why are they so eager to trot out such economic nonsense?

Perhaps because so much profit is at stake that those who pay their salaries – and who have also put many academic economists on retainers – prefer that they mislead the public with simplistic economic theory that appears to justify these profits rather than to tell the truth.

My modest suggestion that governments become the agents of their citizens in bargaining with global capital should hardly raise an eyebrow. But the capitalist tools at Forbes, and elsewhere, must be worried that average citizens may be starting to see what’s really going on, and might therefore take such a suggestion seriously.

A Senate report criticises Apple for shifting billions of dollars in profits into Irish affiliates where its tax rate is less than 2%, yet a growing chorus of senators and representatives call for lower corporate taxes in order to make the US more competitive. The American public wants to close tax loopholes and shelters used by the wealthy to avoid paying taxes, yet the loopholes and shelters remain in place.

The same disconnect is breaking out all over the world. The chairman of a British parliamentary committee investigating Google for tax avoidance calls the firm “devious, calculating, and unethical,” yet British officials court the firm’s CEO as if he were royalty.

Prime Minister David Cameron urges tax havens to mend their ways and vows to crack down on tax cheats, yet argues taxes must be low in the UK because “we’ve got to encourage investment, we’ve got to encourage jobs and I want Britain to be a winner in the global race”.

These apparent contradictions are rooted in the same reality: global capital, in the form of multinational corporations as well as very wealthy individuals, is gaining enormous bargaining power over nation states.

Global companies are not interested in raising living standards in a particular country or improving any nation’s competitiveness. Their singular goal is to maximise returns to their investors. “We don’t have an obligation to solve America’s problems,” said an Apple executive last year. “Our only obligation is making the best product possible” (he might have added “in order to make as much money as possible”). Likewise, the wealth of rich individuals flows all over the world in search of the highest returns and lowest taxes.

Such single-mindedness is abetted by a new wave of technologies, represented by the likes of Google, Apple, Amazon and other new tech behemoths: advanced software applications combined with enormous computing power, all available on the internet in such a way as to enable users to shift resources almost anywhere on earth at the speed of an electronic impulse.

Not only does money move immediately to wherever it can summon the highest return and be subject to the least tax, but jobs can be dispatched almost as quickly to wherever workers get the lowest wages for the most output.

Yet such technologies are simultaneously making nations ever more dependent on global capital, as “brick and mortar” investments in plant and equipment (requiring commitment to a particular geographic location) are replaced by intellectual capital and portfolio investments that are essentially rootless.

These technologies are also displacing workers from assembly-line and routine service jobs (bank tellers, telephone operators, petrol station attendants), as well as any skilled jobs that can be replicated by software (brokers, accountants, insurance claims adjusters). They’re even starting to threaten higher-level professionals (how long before doctors are replaced by diagnostic software and professors by online lectures?).

All this, in turn, is putting increasing pressure on politicians to produce more investments and jobs. Because citizens don’t like it when global corporations or wealthy individuals are found to avoid taxes, such practices elicit indignant reports, hearings and warnings from political leaders. But little or nothing is done to end these practices because nations are too dependent on those corporations and individuals.

Nations are in a fierce “global race” for investments and jobs, as Cameron says. But it’s rapidly turning into a race to the bottom. Effective tax rates on global companies and wealthy individuals are declining almost everywhere; regulations are being dismantled (not even the worst financial disaster since the 1930s has produced much by way of new financial rules); government subsidies to corporations are growing; and real wages are dropping.

In the US, the UK and other rich nations, the percentage of gross domestic product going to wages continues to decline while the percentage going to profits steadily increases. Almost all the economic gains in the US since the Great Recession have gone to the wealthiest 1%, who own the lion’s share of financial assets, while the bottom 90% has become poorer.

Individual states in the US have embarked on their own races to the bottom, seeking to lure investments and jobs – often from neighbouring states – with lower taxes, higher subsidies, reduced regulation and lower real wages. Here again, the new generation of information technologies is intensifying the race.

But these trends are not inevitable. One way for nations (as well as individual states or provinces) to regain some bargaining leverage over global capital would be to stop racing against one another and join together to set terms for access to their markets.

After all, global capital depends on consumers, and access to large consumer markets such as the US and the EU is essential if global capital is to earn a healthy return. Why should Apple have access to US consumers, for example, if Apple refuses to pay its fair share of taxes to finance the infrastructure and education that Americans need to improve their living standards? Americans could buy from one of Apple’s competitors instead.

Likewise, it makes no sense for regions or provinces in any nation to compete against one other for jobs and investment; such races only further strengthen the hand of global capital and reduce the bargaining power of the nation. These contests don’t produce net new jobs or investment but only move the jobs and investments from one locale to another and should be prohibited by federal law.

Similarly, the EU could be a bargaining agent for its citizens if it were to condition access to its hugely valuable market on paying taxes in proportion to a global corporation’s EU earnings, as well as making investments (including research and development, and jobs) in similar proportion. As a member of the EU, Britain would have more bargaining leverage than it would if it bargained separately. Hence, an important reason for Britain to remain in the EU: rather than a race to the bottom, the UK would thereby join in a race to the top.

Any move toward enhancing the power of nations or groups of nations relative to global corporations and wealthy individuals would surely provoke fierce resistance. Corporate-financed lobbyists, lawyers, political operatives, media empires, campaign donations, thinktanks and the potential lures of lucrative jobs and directorships awaiting high government officials will all be deployed in opposition.

This doesn’t make the goal of countervailing the power of global capital any less important. It just makes it difficult to achieve.