“The Corporate Predator State”: This Isn’t The Free Market, It’s A Rigged Market
Bipartisan agreement in Washington usually means citizens should hold on to their wallets or get ready for another threat to peace. In today’s politics, the bipartisan center usually applauds when entrenched interests and big money speak. Beneath all the partisan bickering, bipartisan majorities are solid for a trade policy run by and for multinationals, a health-care system serving insurance and drug companies, an energy policy for Big Oil and King Coal, and finance favoring banks that are too big to fail.
Economist James Galbraith calls this the “predator state,” one in which large corporate interests rig the rules to protect their subsidies, tax dodges and monopolies. This isn’t the free market; it’s a rigged market.
Wall Street is a classic example. The attorney general announces that some banks are too big to prosecute. Despite what the FBI called an “epidemic of fraud,” not one head of a big bank has gone to jail or paid a major personal fine. Bloomberg News estimated that the subsidy they are provided by being too big to fail adds up to an estimated $83 billion a year.
Corporate welfare is, of course, offensive to progressives. The Nation and other media expose the endless outrages — drug companies getting Congress to ban Medicare negotiating bulk discounts on prices, Big Oil protecting billions in subsidies, multinationals hoarding a couple of trillion dollars abroad to avoid paying taxes, and much more.
But true conservatives are — or should be — offended by corporate welfare as well. Conservative economists Raghuram Rajan and Luigi Zingales argue that it is time to “save capitalism from the capitalists,” urging conservatives to support strong measures to break up monopolies, cartels and the predatory use of political power to distort competition.
Here is where left and right meet, not in a bipartisan big-money fix, but in an odd bedfellows campaign to clean out Washington.
For that to happen, small businesses and community banks will have to develop an independent voice in our politics. Today, they are too often abused as cover for multinational corporations and banks. The Chamber of Commerce exemplifies the scam. It pretends to represent the interests of millions of small businesses, but its issue and electoral campaigns are defined and paid for by big-money interests working to keep the game rigged.
An authentic small-business lobby has finally started to emerge, as William Greider reports in the most recent issue of the Nation. The American Sustainable Business Council, along with the Main Street Alliance and the Small Business Majority, are enlisting small business owners to speak for themselves — and challenging the corporate financed propaganda groups such as the Chamber and the National Federation of Independent Business. Their positions often align with those of progressives. They loathe the big banks and multinationals that work to undermine competition.
Greider reports on the antipathy these small business owners have for the big guys. Camille Moran, president and chief executive of Caramor Industries and Four Seasons Christmas Tree Farm in Natchitoches, La., rails against the “Wall Street wheelers and dealers.” They knew, she argues, that they “ would get no sympathy saying that ending the high-income Bush tax cuts would hurt them, so instead they pretend it would hurt Main Street small business and employment. Don’t fall for it. . . . That’s a trillion dollars less we would have for education, roads, security, small business assistance and all of the other things that actually help our communities.”
ReShonda Young, operations manager of Alpha Express, a family-owned delivery service in Waterloo, Iowa: “We’re not afraid to compete with the biggest delivery companies out here, but it needs to be a fair fight, not one in which big corporations use loopholes to avoid their taxes, stick our business with the tab.”
Polls show these aren’t isolated views. The ASBC, the Main Street Alliance and the Small Business Majority sponsored a poll by Lake Research of small business owners. Ninety percent believe “big corporations use loopholes to avoid taxes that small businesses have to pay,” and three-fourths said their own businesses suffer because of it.
The ASBC and its allies have the potential to become what Jamie Raskin, a Maryland state senator, dubbed a “Chamber of Progress,” a small-business voice that is willing to take on the big guys that tilt the playing field.
The possibilities are endless. Wall Street argues for rolling back financial regulation on the grounds that it hurts community and small banks. What if community and small bankers joined the call of conservative Dallas Federal Reserve President Richard Fisher to break up the big banks?
Multinational executives have just launched the “LIFT America” Coalition to push for a territorial tax system that would exempt from U.S. taxes all profits reported abroad. ASBC and its allies could rally small businesses to demand closing down overseas tax havens and imposing a minimum tax on profits sitting abroad, so that they didn’t face a higher tax burden that their global competitors.
In today’s Washington, powerful corporate interests stymie progress on areas vital to our future. Can a right/left, small-business/worker odd bedfellows alliance emerge to counter the predatory interests? We can only hope so.
By: Katrina vanden Heuvel, Opinion Writer, The Washington Post, March 26, 2013
“Freedom For The Few”: Corporations, Miniature Governments With Their Own Undemocratic Governance Structures And Election Systems
We should be done by now with the idea that a corporation is a single thing. Corporations contain a multitude of conflicting interests and are much more like miniature governments with their own governance structures and election systems than is commonly recognized. While these structures are far more hierarchical and undemocratic than we require of our public institutions, Americans should not be resigned that this is the best or the only way the private sector can be structured.
The debate over corporate disclosure currently going on at the SEC exposes some important fissures within the modern American corporation. On the one hand, corporate managers and their allies have argued that corporations should be able to engage in political activities without having to disclose how much they spent or who that money went to. But there is a subtle slight-of-hand to this argument. It conflates the overall interests of the corporation with the desires of management and directors. What proponents of this view really mean is that management and directors should be able to make political expenditures without getting any input from shareholders or other constituencies within the corporation.
On the other side of the debate, shareholders and shareholder advocacy groups have been calling for greater disclosure regarding how corporate money is spent in politics. Shareholders have pointed out, rightly, that management’s political activities are not necessarily good for business. The money spent on political activity is money that shareholders might otherwise see reinvested in the company or have paid out in dividends, and it is money they have residual legal claims to. And, importantly, it often expresses political views that shareholders have no interest in supporting.
Shareholders have been introducing and voting on proposals to improve disclosure. But even when these measures pass, they are merely advisory and do not bind managers. It’s simply not the case that corporate political spending reflects the views of all the people who make up a business. Under existing corporate law, these intra-business disputes already tend to be resolved in management’s favor. And right now it is only management and directors whose views are reflected in political activity. It’s also noteworthy that employees’ interests aren’t even a part of this picture.
In spite of all that, management continues to push back against shareholders. Likely emboldened by Citizens United, proponents of management-dominated corporate speech have begun to claim First Amendment freedoms against their own shareholders. Consider this rather surprising statement from former SEC Commissioner Paul Atkins:
shareholder activists, including unions, state pension funds, and ‘socially responsible investors,’ have increasingly turned to shareholder proposals to selectively burden American businesses exercising their First Amendment rights.
Leaving aside the fact that nobody has First Amendment rights against other private actors, this is an extremely bold assertion. This is tantamount to saying that the interests of management should trump all others and that neither private nor public actors should be permitted to interfere.
Frighteningly, recent developments have begun to enshrine this pro-boss, pro-management bias elsewhere in the law as well. This trend can be seen in a number of settings. During the last election cycle, a number of journalists were reporting that employers were asserting a First Amendment right to trample on the voting rights of their employees. In the ongoing fights over the Affordable Care Act, a number of employers have asserted a constitutional right not to pay for employees’ access to birth control and reproductive health services. (And in the religious non-profit setting, the Obama administration appears prepared to give them the exemption they were seeking.)
Corporations are a “they,” not an “it.” And it’s vitally important that this “they” doesn’t only mean corporate management. More democratic private sector institutions would be an important start. But we need a new constitutional framework for understanding people’s positive rights in the private sector as well. Freedom under the First Amendment doesn’t simply mean, as Paul Atkins might like, protecting bosses from public and private accountability. It means empowering a variety of people, shareholders, workers, communities, and the broader public, to shape the political conditions they live in.
By: Anthony Kammer, The American Prospect, February 6, 2013
“Who’s Behind “Fix The Debt”?: Just Another Corporate Fraud Using A Collection Of Former Congress Members
Look out… the “fixers” are coming.
Top corporate chieftains and Wall Street gamblers want to tell Washington how to fix our national debt, so they’ve created a front group called “Fix the Debt” to push their agenda. Unfortunately, they’re using “fix” in the same way your veterinarian uses it — their core demand is for Washington to spay Social Security, castrate Medicare and geld Medicaid.
Who’s behind this piece of crude surgery on the retirement and health programs that most Americans count on? Pete Peterson, for one. For years, this Wall Street billionaire, who amassed his fortune as honcho of a private equity outfit named Blackstone, has run a political sideshow demanding that the federal budget be balanced on the backs of the middle class and the poor. Fix the Debt is just his latest war whoop, organized by a corporate “think tank” he funds.
This time, Peterson rallied some 95 CEOs to his plutocratic crusade, including the likes of General Electric boss Jeffrey Immelt and Honeywell chief David Cote. (Note: Both Immelt and Cote, while cheering for cuts to programs that we working Americans pay into, are themselves taking money hand over fist from taxpayers in terms of military contracts and corporate subsidies for their corporations. But they aren’t concerned about defense spending and ending subsidies that benefit their bottom line.)
All of them are not merely “One Percenters,” but the top one-tenth of One Percenters. Of course, a group of pampered, narcissistic billionaires would not make a credible sales argument for this dirty work. Having elites piously preach austerity to the masses would be as ineffective as having Col. Sanders invite a flock of chickens to Sunday dinner.
Presented with this image problem, Fix the Debt needed to give their campaign a more benign image, and Peterson and Co. followed a tried-and-true formula of political deceit. As described by Mary Bottari of the Center for Media and Democracy, the trick is to “gather a bipartisan group of ‘serious’ men, hire a PR firm to place them on TV shows, blanket the media with talk of a looming crisis and pretend to have grassroots support.”
In this case, a collection of former member of Congress, each of whom had a reputation for being moderate to the extreme, were recruited to give the campaign a sheen of high public purpose. Backed by a $40 million budget put up by the corporate interests, these “elder statesmen” are now the face of Fix the Debt, doing dozens of TV interviews, hosting breakfast sessions with members of Congress, making speeches about “mutual sacrifice” and generally going all-out to sell the financial elite’s snake oil.
But wait — being an elder does not automatically mean you’re a statesman. Let’s peek at the résumés of these so-called public-spirited fixers of the debt. Start with Jim McCrery, a former GOP lawmaker from Louisiana. While urging Congress to cut people’s programs, he’s also a top-paid lobbyist pushing Congress to give more tax subsidies to America’s richest people and to such multinational corporations as General Electric.
Former Democratic senator Sam Nunn is a fixer, too — but he’s also paid $300,000 a year to be on the board of directors for General Electric. Likewise, Democrat Erskine Bowles, a co-founder of the fixers’ front group, is on the board of Morgan Stanley, drawing $345,000 a year. And former GOP senator Judd Gregg takes about a million bucks a year as advisor to and board member for such giants as Goldman Sachs and Honeywell.
Fix the Debt is nothing but another corporate fraud. I wouldn’t let this gang of fixers touch my dog, much less my Social Security!
By: Jim Hightower, The National Memo, January 16, 2013
“Enough Already”: Big Oil Lobbyist Lies About Industry Not Getting Subsidies
Just when you think you’ve heard it all from the fossil fuel industry, along comes American Petroleum Institute (API) chief executive Jack Gerard actually claiming on Tuesday that “the oil and gas industry gets no subsidies, zero, nothing.”
Gerard went on to argue that “we get cost-recovery benefits, much like other industries. You can go down the road of allowing economic activity, generating hundreds of billions to the government, or you can take the alternative route by trying to extract new revenue from industry by increasing their cost to do business. We not only pay our fair share, we pay more than our fair share.”
President Obama has proposed eliminating the $4 billion a year in subsidies and tax breaks to an industry that exceeded $100 billion in profits last year. These tax breaks for the oil and gas industry go all the way back to the 1920s and many argue should not be given to such a mature industry, and instead should be redirected to clean energy technologies of the future.
In addition to the $4 billion annual tax breaks, ThinkProgress reports that ExxonMobil, Chevron, and ConocoPhillips pay well below the corporate tax rate of 35 percent, with ExxonMobil paying only a 13 percent tax rate in 2011.
Washington, D.C.-based API is the the largest U.S. trade association for the oil and gas industry and claims to represent 400 companies. API spent $8.6 million on lobbying in 2011 and in last year’s election cycle spent heavily on funding groups running political ads against Democrats and in support of Republicans.
Gerard, who is close to fellow Mormon Mitt Romney and would have wielded enormous influence in a Romney administration, epitomizes the Republican “drill, baby, drill” attitude that ignores the environmental, public health and climate consequences of pumping all that carbon into the atmosphere. With his latest comments, he is ignoring America’s long history of subsidizing Big Oil.
While Gerard, whose salary was $6.4 million in 2010, disengenously states that Big Oil doesn’t receive subsidies, API actually ran ads two years ago against the Obama administration’s proposal to end tax subsidies for the oil and gas industry.
By: Josh Marks, The National Memo, January 10, 2013
“A Transparent Public Relations Ploy”: Don’t Be Fooled, Walmart Hasn’t Changed Anything
In this week’s issue, we describe how Walmart has expanded gun sales—including military-style assault weapons—to half of its stores nationwide, and is the country’s biggest retailer of guns and ammunition in the country.
As our story was about to be published, Walmart removed a Bushmaster AR-15 style assault rifle, the same gun Adam Lanza used to carry out his attack on the Sandy Hook Elementary School, from its website. All of the other assault weapons remain. (See other examples here).
This is one of the most transparent public relations moves in relation to a dangerous product that I can recall—it was literally the least Walmart could do. To be clear, the store never actually sold the guns online. Rather, you can peruse Walmart’s gun inventory on its website, read customer reviews and product specifications and then find a Walmart near you that carries the item.
All Walmart did was remove that one gun, the one most likely to create a public relations problem, from a website where you couldn’t buy it anyway. But the Bushmaster remains on Walmart shelves—something the retail giant confirmed to MSNBC this afternoon, saying there is “no change” to its firearm sales.
Other retail chains, however, are making changes—though only slightly more substantial than Walmart’s URL adjustment. Dick’s Sporting Goods is “suspending” sales of some rifles in stores nationwide during “this time of national mourning,” and taking all guns out of stores located near Newtown, Connecticut. Cabela’s will stop selling AR-15s in Connecticut only.
If Walmart were to curtail weapons sales, however, it wouldn’t just hurt their bottom line. Freedom Group, one of the largest gun manufacturers in the country with $237.9 million in annual sales, said in its most recent financial statement that Walmart accounts for 13 percent of those sales alone, and warned investors of trouble should Walmart ever change its policy:
Our sales to Wal-Mart are generally not governed by a written long-term contract between the parties. In the event that Wal-Mart were to significantly reduce or terminate its purchases of firearms, ammunition and/or other products from us, our financial condition or results of operations and cash flows could be adversely affected.
Freedom Group was dumped today by its private equity owner, Cerberus Capital, following investor pressure. They’re in for more trouble if Walmart stops selling guns—but don’t look for that to happen anytime soon, based on how the retail giant has responded so far.
By: George Zornick, The Nation, December 18, 2012
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