Congress will soon put final touches on the Chips Act, which will provide more than $52bn to companies that design and make semiconductor chips. The subsidy is demanded by the biggest chipmakers as a condition for making more chips in America.

It’s pure extortion.

The world’s biggest chipmaker (in terms of sales) is already an American corporation – Intel, based in Santa Clara, California.

Intel hardly needs the money. Its revenue rose to $79bn last year. Its chief executive, Pat Gelsinger, got a total compensation package of $179m (which was 1,711 times larger than the average Intel employee).

Intel designs, assembles, and tests its chips in China, Israel, Ireland, Malaysia, Costa Rica, and Vietnam, as well as in the US.

The problem for the US is Intel is not helping America cope with its current shortage of chips by giving preference to producers in the United States. And it’s not keeping America on the cutting edge of new chip technologies.

Obviously, Intel would like some of the $52bn Congress is about to throw at the semiconductor chip industry. But why exactly should Intel get the money?

Among the other likely beneficiaries of the Chips Act will be GlobalFoundries, which currently makes chips in New York and Vermont – but in many other places around the world as well.

GlobalFoundries isn’t even an American corporation. It’s a majority-owned subsidiary of Mubadala Investment Co, the sovereign wealth fund of the United Arab Emirates.

The nation where a chipmaker (or any other high-tech global corporation) is headquartered has less and less to do with where it designs and makes things.

Which explains why every industry that can possibly be considered “critical” is now lobbying governments for subsidies, tax cuts, and regulatory exemptions, in return for designing and making stuff in that country.

It’s a giant global shakedown.

India, Japan and South Korea have all recently passed tax credits, subsidies and other incentives amounting to tens of billions of dollars for the semiconductor industry. The European Union is finalizing its own chips act with $30bn to $50bn in subsidies.

Even China has extended tax and tariff exemptions and other measures aimed at upgrading chip design and production there.

“Other countries around the globe … are making major investment in innovation and chip production,” says Senate majority leader Chuck Schumer. “If we don’t act quickly, we could lose tens of thousands of good-paying jobs to Europe.”

But who is “we,” senator?

John Neuffer, the chief executive of the Semiconductor Industry Association (the Washington lobbying arm of the semiconductor industry) warns that chipmaking facilities are often 25 to 50% cheaper to build in foreign countries than in the United States.

Why is that? As he admits, it’s largely because of the incentives foreign countries have offered.

As capital becomes ever more global and footloose, it’s easy for global corporations to play nations off against each other. As the then-chief executive of US-based ExxonMobil unabashedly stated: “I’m not a US company and I don’t make decisions based on what’s good for the US”

People, by contrast, are rooted within nations, which gives them far less bargaining power.

This asymmetry helps explain why Congress is ready to hand over $52bn to a highly profitable global industry but can’t come up with even $22.5bn the Biden administration says is necessary to cope with the ongoing public health crisis of Covid.

If they are publicly owned, corporations must be loyal to their shareholders by maximizing the value of their shares. But over 40% of the shareholder value of American-based companies is owned by non-Americans.

Besides, there’s no reason to suppose a company’s American owners will be happy to sacrifice investment returns for the good of the nation.

The real question is what conditions the United States (or any other nation that subsidizes chipmakers) should place on receipt of such subsidies.

It can’t be enough that chipmakers agree to produce more chips in the nation that’s subsidizing them, because chipmakers sell their chips to the highest bidders around the world regardless of where the chips are produced.

If the US is going to subsidize them, it should demand chipmakers give highest priority to their American-based customers that use the chips in products made in the United States, by American workers.

And Congress should demand they produce the highest value-added chipmaking in the US – design, design engineering, and high precision manufacturing – so Americans gain that technological expertise.

What happens if every nation subsidizing chipmakers demands these for itself?

Chipmakers will then have to choose. The extortion will then end.

With inflation at a forty year high, the former secretary of state shares why economist Larry Summer’s proposed fix for inflation — rising unemployment — is wrong.

Jeffrey Sachs at the UN Food Systems Pre-Summit, speaking about food systems transformation, colonialism, the CIA, the Republicans, the UN budget, and taxing the rich.

Policymakers and the media are paying too much attention to how quickly the U.S. economy will emerge from the pandemic-induced recession, and not nearly enough to the nation’s deeper structural problem – the increasing imbalance of wealth that could enfeeble the economy for years.

Seventy percent of the US economy depends on consumer spending. But wealthy people, who now own more of the economy than at any time since the 1920s, spend only a small percentage of their incomes. Lower-income people, who were in trouble even before the pandemic, spend whatever they have – which has become very little.

In a very practical sense, the U.S. economy depends on the spending of most Americans who don’t have much to spend. That spells trouble ahead.

It’s not simply a matter of an adequate “stimulus.” The $2,000 checks contained in the American Rescue Plan have already been distributed and extra unemployment benefits will soon expire. Consumer spending will be propped up as employers add to their payrolls. Biden’s spending plans, if enacted, will also help keep consumers afloat for a time.

But the underlying imbalance will remain. Most peoples’ wages will still be too low and too much of the economy’s gains will continue to accumulate at the top, for total consumer demand to be adequate.

Years ago, Marriner Eccles, chairman of the Federal Reserve from 1934 to 1948, explained that the Great Depression occurred because the buying power of Americans fell far short of what the economy could produce. He blamed the increasing concentration of wealth at the top. In his words:

“A giant suction pump had by 1929-1930 drawn into a few hands an increasing portion of currently produced wealth. As in a poker game where the chips were concentrated in fewer and fewer hands, the other fellows could stay in the game only by borrowing. When their credit ran out, the game stopped.”

The wealthy of the 1920s didn’t know what to do with all their money, while most Americans could maintain their standard of living only by going into debt. When that debt bubble burst, the economy sunk.

History is repeating itself. The typical Americans’ wages have hardly increased for decades, adjusted for inflation. Most economic gains have gone to the top, just as Eccles’s “giant suction pump” drew an increasing portion of the nation’s wealth into a few hands before the Great Depression.

The result has been consumer spending financed by borrowing, creating chronic fragility. After the housing and financial bubbles burst in 2008, we avoided another Great Depression only because the government pumped enough money into the system to maintain demand, and the Fed kept interest rates near zero. Then came the pandemic.

The wealth imbalance is now more extreme than it’s been in over a century. There’s so much wealth at the top that the prices of luxury items of all kinds are soaring; so-called “non-fungible tokens,” ranging from art and music to tacos and toilet paper, are selling like 17th-century exotic Dutch tulips; cryptocurrencies have taken off; and stock market values have continued to rise even through the pandemic.

Corporations don’t know what to do with all their cash. Trillions of dollars are sitting idle on their balance sheets. The biggest firms have been feasting off the Fed’s corporate welfare, as the central bank obligingly holds corporate bonds that the firms issued before the recession in order finance stock buybacks.

But most people have few if any assets. Even by 2018, when the economy appeared strong, 40% of Americans had negative net incomes and were borrowing money to pay for basic household needs.

The heart of the imbalance is America’s wealthy and the corporations they own have huge bargaining power – both market power in the form of monopolies, and political power in the form of lobbyists and campaign contributions.

Most workers have little or no bargaining power – neither inside their firms because of the near-disappearance of labor unions, nor in politics because political parties have devolved from giant membership organizations to fundraising machines.

Biden’s “stimulus” programs are fine but temporary. The most important economic reform would be to correct this structural imbalance by reducing monopoly power, strengthening unions, and getting big money out of politics.

Until the structural imbalance is remedied, the American economy will remain perilously fragile. It will also be vulnerable to the next demagogue wielding anger and resentment as substitutes for real reform.