Fear Defining U.S., The Inversion Threat, and the Friedrichs Case Threatt

I. Fear Defining the U.S. 
As Stephen Kinzer recently wrote in the Boston Globe, "Fear is becoming part of our daily lives. Yet it is not justified by reality. The true terror threat inside the United States is a fraction of what many Americans want to believe."  We are rapidly becoming, in Kinzer's words, "the United States of Panic!"

"The brain ;is capable of detecting a threat, processing it, and initiating a response without our ever becoming consciously aware of the grizzly bear lurking just beyond the trees." "The feeling of fear  occurs when a threat detected by our non-conscious systems and rises to the level of consciousness." "Fear, as an emotion, is considerably less useful to an organism's survival than the system that identifies and responds to threats in the first place." [1]

The relevance of what has been written above is that fear of an outside threat is responsible for  a large share of our national government budget being spent on building and maintaining our national security state, with the Pentagon getting the lion's share of that spending. On the domestic front, an inordinate amount of state and local spending is devoted to dealing with our fear of crime and the attendant  high cost of incarceration.      

I. The Inversion Threat
Inversion is the practice of U.S.-chartered corporations fleeing the United States to establish their headquarters in other countries to take advantage of lower corporate taxes. Inversion, at one time, was exceeding rare, as according to the Congressional Research Service, there was just one in the nineteen eighties, whereas there have been more than fifty in the past decade.

Two features of  U.S. tax policy make inversion attractive: a relatively high corporate tax rate and what's called a worldwide global tax system -- U.S. corporations have to pay that tax in all their global income. U.S. corporations are estimated to be holding more than $2 trillion abroad. "Since so much of what comprises earned income remains abroad and untaxable, we raise only a small amount of revenue from our global system. At the same time, the fact that these foreign earnings are in exile encourages inversions, so companies can get access to all that locked-up cash and a lower tax rate thereafter." "Investing abroad is more attractive and easier than ever before, and capital is more mobile." [2]

The drug giant Pfizer is the most recent example of a U.S. corporation in the process of establishing its headquarters overseas -- in Ireland in this case. More than 60 percent of Pfizer's income comes from abroad and most of its employees work abroad as well. [3] 

There is a crucial fallacy in the general assumption that US.-based  corporation pay a higher corporate income tax than corporations chartered in the rest of the countries defined as developed. The reason for this is that U.S. corporations get many tax breaks that are not given to corporations based in the rest of the developed world. 

III. The Friedrichs Case Threat
The 1997 Abood v. Detroit Board of Education  Supreme Court ruling provided the bedrock constitutional analysis and recommended structure for public sector unionism for nearly 40 years. Its reversal would trigger an earthquake in the U.S. labor relations. If the Friedrichs case now before the U.S. Supreme Court were to exempt workers who don't want to join a union from any obligation to pay union dues or fees, it would create a massive free-rider problem for unions that would kill their capacity to represent their union members. Why pay for something when you can get its services for free?  Such a ruling would unravel tens of thousands of contracts governing public sector unions. 

U.S. labor law already requires that any union certified as the collective bargaining representative of a group of workers must equally represent and service all of those workers -- dues-paying members and non-paying non-members alike. This compromise, which places an obligation on unions to represent all workers in the unionized company but allows the union to deduct fees form the paychecks of non-members, has served the nation satisfactory for a good long time, may be overturned by a Supreme Court often characterized by ruling on  ideological considerations.  

The Abood ruling has been upheld in at least five subsequent rulings, although in the last ruling, Justice Samuel Alito expressed a wish to revisit Abood. 

Footnotes
[1] Simon Wolfe Taylor, "Fear Itself," The Nation, January 11/18, 2016.

[2] James Surwiecki, "Why Firms Are Fleeing," The New Yorker, January 11, 2016.

[3] Ibid.

[4] The Friedrichs Threat," The Nation, January 25/February 1, 2016.