Yes, we all know what is wrong. Business lobbying is today engaged in the
practical application of treason. At no
point is a course of action promoted as best for the common weal unless that
can be used as a cover. That has even
become a rare circumstance.
Yet we can be harsh all day and night and all we
discover is that the two elective bodies are bought body and soul through a
substantive majority of its members. An
extraordinary president does have the power to overcome this but even he is limited
to picking his fights like Ronald Reagan changing the Tax regime. Even that got slowly adjusted into nonsense
beginning with George W. Bush.
That is why I strongly suggested charging every
signatory to a failed AAA bond with treason in 2008. There has to be a real price on a bond rating.
I am not so sure that it will not take
international intervention to bring the USA to its collective senses. That could well be the price paid.
Business of America : requiem
The
business of America is business, declared Calvin Coolidge. If Coolidge
were alive today he would probably want to distance himself from that
assertion. The business of America is not business anymore. It’s
politics.
Anybody who still thinks corporations are benign
actors that play by the rules and don’t need regulation probably didn’t peruse
the business section of Friday’s New
York Times. Two samples: “Halliburton Pleads Guilty of
Destroying Evidence After Gulf Spill”and “SAC Capital Advisors Is Indicted,
Called Magnet for Cheating”. And let’s not forget the Golden Sachs aluminum caper that
reportedly netted this TBTF behemoth more than a quarter of a billion dollars,
thanks to financial deregulation that allows commercial banks to operate in the
metals markets while making big bets in the commodities futures markets at the
same time.
“In recent years, big banks like Goldman Sachs,
Morgan Stanley and JPMorgan Chase have aggressively pushed into the commodity
business by buying up warehouses, oil refineries, power plants and other
physical infrastructure. They have been able to do so because American
lawmakers and regulators have removed many of the barriers that
historically separated banking and commerce…. [This] is a cause for concern
because banks might be able to take unfair advantage…[of access to inside
information] when they trade commodities in financial markets.“
Okay,
so corporations are not above lying and cheating. So what’s new?
Remember Enron? Read anything recently about Monsanto? How about JP
Morgan Chase?
Obviously,
megabanks and multinational corporations need to be regulated in the public
interest. Obviously, the White House, the Justice Department, the SEC,
the EPA, and other federal agencies charged with monitoring and regulating
business have failed us miserably in recent years. Obviously those
responsible for running rogue companies need to be punished when they break the
law.
Obviously,
the punishment needs to be commensurate with the crime – otherwise the old
adage that crime doesn’t pay isn’t true (spoiler alert: it isn’t) if you
happen to be Steven A. Cohen (SAC) or Jamie Dimon (JP Morgan Chase) or Lloyd
Blankenfein (Golden Sachs). (Former VP Dick Cheney, chairman and CEO of
Halliburton from 1995-2000, is one of these guys, too. Of course,
Cheney’s works in the private sector pale in comparison to his role in
engineering our embroilment in Afghanistan and the US-led invasion of Iraq in
2003.)
Here’s
a sadly revealing fact from the aforementioned New York Times article about the insider trading scandal
involving SAC Capital Advisors: “Mr. Cohen, 57, was not charged (!), but
the 41-page indictment is a stinging attack on him nonetheless, declaring that
he ‘fostered a culture that focused on not discussing inside information too
openly, rather than not seeking or trading on such information in the first
place.’” Eight others have been charged, but not the guy at the
top. Sound familiar?
Of
course, none of the foregoing will surprise regular readers of this
publication. The argument here is of a different order and it’s one that
needs to be repeated until it becomes a self-evident truth: corporations
are not what they appear or claim to be; they are not “endowed with unalienable
rights” or mentioned anywhere in the US Constitution; they do not care about
abstractions like the common good or the national interest; and, finally, they
neither need nor /deserve special favors from government.
That
corporations are not people is clear to any sober observer. That they are
not business enterprises in any traditional sense of the word is less obvious
but no less crucial to an understanding of where we are and how we got here.
Corporations
don’t operate the way ordinary businesses do – on an even playing field in the
absence of tax preferences and other favors at odds with the fictional “free
market” they love to rhapsodize. Never mind what they say they are
doing. Never mind that they talk about job creation and technological
innovation, that they claim to be the vanguard of the entrepreneurial middle
class, the engine of prosperity, the defender of all things sacred – private
property, personal liberties, and a system that rewards hard work and individual
merit. That’s just propaganda.
What is business? If you go to Dictionary.com, you’ll find bland,
everyday definitions such as “an occupation, profession, or trade” and this
example: “His business is poultry farming“ or “the purchase and sale of goods
in an attempt to make a profit” or “a person, partnership, or
corporation engaged in commerce, manufacturing, or a service;
profit-seeking enterprise or concern.”
Personally,
I like the last two suggested meanings best: “ volume of trade; patronage: Most
of the store's business comes from local families“ and “a building or site
where commercial work is carried on, as a factory, store, or office; place of
work: His business is on the corner of /Broadway and Elm Street.”
A
few basic principles from Economics 101 will suffice to illustrate my
point. Start with a hypothetical economy. The key groups of
participants are producers and consumers. Producers create goods and
services (products) to sell; consumers (“rational actors”) buy the best
products at the lowest prices offered. The profit motive drives
entrepreneurs to produce; competition forces them to pay close attention to
quality, price, and reliability, to innovate, and to keep costs as low as
possible. The market – not the government and not politics – determines
winners and losers. That’s how it works in a competitive free-enterprise
economy – or at least that’s how it works in theory.
In
practice, the concept of free market economy is at best a useful fiction.
All modern economies operate within the framework of laws and
policies – dos and don’ts – set by governments. Introduce tariffs, taxes,
licenses, and subsidies and it’s becomes quite clear that the idea of an
unregulated modern economy is a chimera.
When
politicians and propagandists talk about the free market, however, it’s almost
always a smokescreen for the exact opposite: a business model and that
relies on cold cash, legions of lobbyists, and political arm-twisting to
succeed. In this model old-fashioned concepts like comparative advantage,
competition, and efficiency are largely irrelevant. Today’s megabanks,
multinational companies, and private equity firms disdain market forces:
the “leveraged buyout” economy is a euphemism for monopolistic capitalism.
Competition is the enemy. Political power
is the name of the game, the key to committing all sorts of crimes – bribery,
extortion, fraud, and insider trading, to name but a few – without fear of
criminal prosecution. It’s also the key to massive multi-billion-dollar
federal tax subsidies (banks, utilities, telecommunications, the oil and gas
industry are the biggest beneficiaries) and tax loopholes tailored to the
advantage of corporations and the wealthy
Note:
innovation, efficiency, customer service, product development, quality and
reliability, and brand-name recognition all still matter as does wise
investment in all these areas, but in the post Reagan, post Citizens United economy no other
form of investment can promise anywhere near the kind of monetary returns for
corporations as investment in politics. The same is manifestly not true
of people who can afford to invest only relatively small sums in politics and
who too often discover that they backed a candidate who went to Washington and
turned into a money-grubbing weasel – yet another proof that corporations and
people are fundamentally different.
In
the nation’s capital, the word “influence” has become a euphemism for bribery
and extortion, and it’s all perfectly legal. Money, not moral conviction,
explains virtually everything that happens – or doesn’t happen – in Washington
these days. Corporations get the gold mine; “the people” get the shaft.
Social justice and the national interest are secondary considerations, at
best.
Last year alone, lobbies spent $3.30
billion “influencing” a corrupted and gridlocked
US Congress, more than twice the amount spent in 2000, when there were over
12,500 registered lobbyists in Washington (roughly the same number as in
2012). Conservative “non-profit” advocacy groups like Karl Rove’s
Crossroads GPS spent $263 million keeping House Republicans in control of
Congress last year. These are absurd numbers that demand a radical
solution. Here is mine:
1.
Shorten political campaigns to no more than six weeks, require all FCC licensed
radio and TV outlets to run political ads at no cost to the candidates during
this time, abolish PACS (“advocacy groups”), 527s, 501(c)(4) groups, and all
other political money pots; make full disclosure of all campaign contributions
and spending a universal rule. 527s are tax-exempt organizations (PACs)
that engage in political activities but do not fall under FEC rules; they have
the right to spend unlimited amounts of “soft money” to sway the
electorate. 501(c)(4s) – so-called Super PACs like Crossroads GPS –
claiming to be “social welfare” groups can also spend unlimited amounts but do
not have to disclose the names of donors.
2.
Ban lobbying and lobbyists. Criminalize collusion between Congress
(members and staffs) and officers or representatives of corporations; require
full disclosure of any and all contacts and communications between employees of
the US Congress and corporations, labor unions, professional associations, and
other special interest groups.
3. Overturn
Citizens United by a simple act of Congress. Ignore the Supreme Court’s
ruling in this and other instances where its decisions violate or stretch the
meaning of the Constitution or subvert majority rule. There is no mention of judicial review in
the US Constitution; giving 11 unelected judges with life tenure the right to
overturn acts of Congress is preposterous.
One special interest group has recently reached
a milestone in
American politics. Guess which one. If you guessed the U.S. Chamber
of Commerce, go right to the head of the class:
“The
U.S. Chamber of Commerce has spent more than $1 billion lobbying members of
Congress and other officials since 1998 – by far a greater amount than any
other organization over the period. The Chamber has no rivals in terms of raw
resources devoted to lobbying – and may also have little competition when it
comes to overall influence on the Hill.”
How big is the return on corporate dollars spent
lobbying? That’s a difficult question not least because there’s too
little transparency in Washington or on Wall Street. As NPR’s Planet Money explains:
“It's a messy, secretive system so it was always hard to study. But in 2004,
economists found a bill so simple, so lucrative, that they could finally track
the return on lobbying investment.”
The
bill in question was The American Jobs Creation Act, a bill that “benefited
hundreds of multinational corporations with a huge, one-time tax break. Without
the law, companies that brought profits earned abroad back to the U.S. had to
pay a tax rate of 35 percent. With the law, that rate dropped to just over 5
percent. It saved those companies billions of dollars.”
Two
researchers, Raquel Alexander and Susan Scholz, calculated how much the
corporations saved under the lower tax rate, comparing that sum to amount the
firms spent lobbying for the law. They found that for every dollar spent on
lobbying the companies got $220 dollars in tax benefits.
Imagine
investing $10,000 in the stock market and walking away with $2.2 million.
People can’t do that; only corporations can. That’s because corporations
aren’t people and don’t play by the same rules people do.
When
the economy is sluggish but Wall Street is racing ahead, when middle-class
family incomes are stagnant but pay packages of corporate executives keep
getting bigger and bigger, when bailed-out TBTF banks that caused the 2008
financial crash are reporting record earnings while paying savings depositors next
to nothing – something is seriously wrong with the system.
Meanwhile,
Washington remains in a state of gridlock. The obvious conclusion:
federal agencies that don’t regulate and a Congress that doesn’t legislate are
bad for the country but good for the corporations and fat cats that feed the
political machine.
We
need a separation of business and politics, no less than a separation of church
and state. We need to punish plutocrats who bribe politicians and we need
to turn politicians who accept bribes out of office. We need to stop
coddling corporations, stop treating them as admirable, benign institutions
that deserve tax breaks and other forms of political favoritism.
Today’s
corporations – giants like Monsanto, Exxon Mobile, and Goldman Sachs – are not
benign. They are not businesses in the traditional sense of the
word. They are too big to be compatible with a healthy, competitive
economy. As we have witnessed repeatedly in recent years, they are too
often immune from the legal and financial consequences of their own
actions. Corporate America has conjured up a new economic order wherein
commerce is secondary to politics and profit is a euphemism for profiteering.
Multinational
corporations are not people
and, less obvious but no less critical to an understanding of our decline as a
nation, they are not engaged in business if by that term we mean commercial
enterprise dependent on market forces. Real businesses seek profits
through productivity, not politics. It’s the opposite for Wall Street’s
major players. Business is what happens on Main Street while Wall Street
is busy creating phony “products” and picking “the peoples’” pockets
We
won’t (and can’t) fix what wrong with our economy, society, and political
system until we fix the way we think and talk about business. And
get Big Business out of national, state, and local politics. The place to
start is the swamp on the Potomac.
ABOUT THOMAS MAGSTADT
Tom Magstadt earned his
Ph.D. at The Johns Hopkins University School of International Studies. He is
the author of "An Empire If You Can Keep It: Power and Principle in
American Foreign Policy," "Understanding Politics: Ideas,
Institutions and Issues," and "Nations and Governments: Comparative
Politics in Regional Perspective." He was a regular contributor to the
Prague Post in 1998-99 and has published widely in newspapers, magazines and
journals in the United States. He was a Fulbright Scholar in the Czech Republic
in the mid-1990s and a visiting professor at the Air War College in 1990-92. He
has taught at several universities, chaired two political science departments,
and also did a stint as an intelligence analyst at the CIA. He is a member of
the board of the International Relations Council of Kansas City. Now working
mainly as a free-lance writer, he lives in Westwood Hills, Kansas.
No comments:
Post a Comment