Relevant and even prescient commentary on news, politics and the economy.

The Evils of Corporatism

by Linda Beale
(op-ed)

The Evils of Corporatism

I have often written in these pages about “corporatism”, an approach that pervades our economy and many government agencies and does not align with the interests of the majority of Americans.

Corporatism runs rampant today in states’ treatment of their public universities, treasures of the American educational system that have been central in continuing basic research into ideas that transform our lives and our understanding of ourselves.  Today, many states are cutting back more and more on funding for state universities, and demanding that the universities turn themselves into contract researchers for private corporations (where the corporations, not the universities, enjoy the commercial fruits of the research).  This is just another form of subsidy for Big Business at the expense of ordinary people. 

In addition, many states–including regressive Michigan under regressive governor Rick Snyder–are cutting funding for state universities in order to provide even more tax cuts to their corporate Big Business buddies.  And they tend to cut funding to those that need it most to serve the neediest populations that find equality of opportunity a meaningless promise in today’s casino capitalist economy–the poor and the disadvantaged. 

In Michigan, for example Wayne State’s paltry increase doesn’t keep pace with inflation, but Wayne serves the region and the region’s population in ways that other institutions in Michigan do not.  Corporatism, of course, also runs rampant in the universities themselves.  Wayne’s current president, who is paid $410,000 for being here only a few days a week and has a “deputy president” paid another $400,000, was a chief corporate officer at Ford and came to the university with very little understanding of academics.  It has shown, as he has run the place like a corporation, with his “never say no to the boss” cabinet of vice presidents and associate vice presidents (ranging around 23-25 these days) operating on a “flatter your boss brings rewards” system.

Corporatism exists all across governments, where Big Business spends billions to win influence on legislators and agency heads, and goes to every length to present a “PR” picture of the world as they want us to believe it exists to ordinary Americans.

Take one example–the Bureau of Land Management.  The BLM is basically a government toady for the wealthy and influential cattlemen and other industries that want to use public lands for private enrichment.  Perhaps the most glaring (but certainly not the only) example of this is the BLM’s treatment of the native American wild mustangs on public lands.  In spite of legislation charging the BLM to protect and preserve these American treasures on public lands, it has engaged in activities that are decimating the population, herding them up and selling them at $25 a head to buyers who take them to inhumane slaughterhouses in Mexico to be butchered while still conscious.  BLM is a toady for big ranchers, not a protector of public treasures.  And it should be stopped.

There is a non-profit organization that works hard on this issue–the Wild Horse Freedom Federation.  Earlier, it presented petitions to President Obama urging him to rein in the BLM and stop its use of tax dollars to wipe America’s wild horses off public lands to which they are legally entitled under the legislation passed in the mid 1970s.

Are you listening, President Obama?  Or is the only tune you hear the one played by Wall Street, Big Business, and corporate wealth?  If the latter, corporatism will continue to expand to cover every aspect of our lives, and the freedom that we pretend to cherish as Americans will disappear as surely as the wild mustangs will vanish from their “protected” public lands.

cross posted with ataxingmatter

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An Editorial on Robert Bork and his Legacy

On Wednesday, December 19, 2012 Robert Heron Bork died at age 85I did not mourn.

Bork first became infamous in 1973 for his role in the “Saturday night massacre” when as Solicitor General, the number three position in the Justice Department, he carried out, under President Nixon’s orders, the firing of Watergate Special Prosecutor Archibald Cox.  Bork inherited this task when both Attorney General Elliot Richardson and Deputy Attorney General William Ruckelshaus resigned in protest.  This much is well known.  What sometimes gets left out of the discussion, though, is that due to the manner in which Cox’s position was created and defined, he could not be removed except for cause.  Doing a good job of tracking down evidence relevant to the case he was pursuing does not qualify as cause.  This was a defining moment in Bork’s career, in which he conveniently chose power over principle.

Most recently he was the senior judicial adviser to Mitt Romney’s unsuccessful presidential campaign, but he is best known for being rejected as a Supreme Court justice when nominated for that position in 1987 by Ronald Reagan.  After his nomination was defeated by a 58-42 vote in the Senate, his name was verberized into a neologism that was [and occasionally still is] used almost exclusively in the passive voice.

To be “borked,” as his supporters would have it, is to be subjected to unfair criticisms based on distortions of your words, actions, and beliefs.  But his radically reactionary views on equal protection and sex discrimination were typical of his extreme and perverse positions. The mere fact that he was able to speak out in favor of a poll tax speaks volumes.  In reality, the borking of Bork consisted of subjecting him to valid criticism based on the precise meanings of his words, actions and beliefs.  Jeffrey Toobin explains.

Bork was “borked” simply by being confronted with his own views—which would have undone many of the great constitutional landmarks in recent American history. As Senator Edward Kennedy put it in a famous speech on the Senate floor, “Robert Bork’s America is a land in which women would be forced into back-alley abortions, blacks would sit at segregated lunch counters, rogue police could break down citizens’ doors in midnight raids, schoolchildren could not be taught about evolution, [and] writers and artists would be censored at the whim of government.”

Was Kennedy too harsh? He was not—as Bork himself demonstrated in the series of intemperate books he wrote after losing the Supreme Court fight and quitting the bench, in 1987. The titles alone were revealing: ”The Tempting of America,” “Slouching Towards Gomorrah: Modern Liberalism and American Decline,” and “Coercing Virtue: The Worldwide Rule of Judges.” One of his last books may have summed up his views best. Thanks in part to decisions of the Supreme Court—decisions that, for the most part, Bork abhorred—the United States became a more tolerant and inclusive place, with greater freedom of expression and freedom from discrimination than any society in history. Bork called the book, accurately, “A Country I Do Not Recognize.”

Indeed, Bork’s words and actions were consistently anti-gay, anti-female, anti-minority, always favoring government intrusion over citizen’s rights, businesses over people, big business over small, and corporations over government.  His supporters would argue that these conclusions are based on principled positions, and that the outcomes, however repugnant to idealists, are therefore legitimate.  I argue instead that policies that consistently result in the contraction rather than the expansion of basic human rights, and that continually disadvantage definable target groups are corrupt at their core, and that the negative results are inherent and predictable.

After his defeat, Robert Bork gradually faded away from the public consciousness.  I can tell you, in the intervening 25 years, I gave him virtually no thought at all.

But Bork had enormous, possibly even dominant influence on the modern interpretation of anti-trust law, perhaps single-handedly redefining the scope and purpose of anti-trust legislation.  Basically, Bork was pro-efficiency and anti-anti-trust.  He had swallowed whole the bait-bucket of Chicago-economic-school ideas of market efficiency, and built the entire framework of his pro-trust belief system on that invalid foundation.

It seems fair to say that it is in some part because of Bork’s influence that we now have trans-national mega-corporations with huge oligopolies and near-monopolies.  These corporations have no inherent loyalty to anyone nor anything.  In my view, the oligarchs that run them do not even have a general sense of loyalty to stock-holders, let alone the broader universe of stake-holders, who mainly exist to be exploited.

Efficiency, in and of itself is a good thing.  But it cannot be achieved in a vacuum – frequently there are externalities that are largely negative.  For one thing, the efficiencies are mainly internalized and do not necessarily represent a more broadly efficient society.  Second, as a market gets concentrated, competition decreases and the pressure to improve, or even maintain status-quo efficiency slowly erodes.  This ultimately leads to a situation where big, lumbering and inefficient but extremely powerful entities control the economic and political landscape.  Yes, Big Oil, Big Pharma, Big Insurance, Big Finance, I am looking at you.

Perhaps worse, though, is the power asymmetry that results from size and influence.  Suppliers, customers, and the public at large are overwhelmed by the sheer might of these institutions, leading to even greater concentrations of power and wealth.

The end game is some version of economic collapse.  It happened in the 1930’s, and – due largely to neoclassical Chicago-style economic thinking that has over the last 40 years willfully unlearned the lessons of that time – it happened again in 2008.

Most of the time, evil doesn’t manifest as some cackling cartoon villain, mad-man on a murderous rampage, or even an unjust war waged on false pretenses.  It results instead, in a far more banal but far-reaching way, from the highly refined ideas of men like Robert Bork who value abstract concepts such as efficiency over the effects the programs they institute have on the lives of real human beings.

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The Corporations That Occupy Congress

The Corporations That Occupy Congress

 by David Cay Johnston via taxprofblog and Reuters

Some of the biggest companies in the United States have been firing workers and in some cases lobbying for rules that depress wages at the very time that jobs are needed, pay is low, and the federal budget suffers from a lack of revenue.
Last month Citizens for Tax Justice and an affiliate issued Corporate Taxpayers and Corporate Tax Dodgers 2008-10. It showed that 30 brand-name companies paid a federal income tax rate of minus 6.7% on $160 billion of profit from 2008 through 2010 compared to a going corporate tax rate of 35%. All but one of those 30 companies reported lobbying expenses in Washington. Another report, by Public Campaign, shows that 29 of those companies spent nearly half a billion dollars over those three years lobbying in Washington for laws and rules that favor their interests. … The report – “For Hire: Lobbyists or the 99 percent” – says that while shedding jobs, the 30 companies are “spending millions of dollars on Washington lobbyists to stave off higher taxes or regulations.”
….
Company reports to shareholders show that among the 30 companies in the Public Campaign report, the 10 firms that spent the most on lobbying during the same three-year period fired more than 93,000 American workers. …

Worth reading the whole piece.

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Madoff and Mankiw and Inequality–the corporatist ideology at work

by Linda Beale

  Madoff and Mankiw and Inequality–the corporatist ideology at work

There are two letters to the editor in the Times today that are worth noting–as usual, the ‘real’ analysis is hidden in the interior pages, positioned next to a huge ad (for an investment adviser, no less).
Chris Cannon from San Francisco notes that treating Madoff as the iconic symbol of the financial disruption caused by the credit bubble is problematic.

“Everyone agrees that Mr. Madoff broke the rules.  But the damage done by those acting as allowed by our ineffective rules cost the public much more.  ‘Our troubled financial times’ are the product of a bubble economy fueled by cheap money, an abject failure by rating agencies, regulatory agencies that have been hamstrung by regulations written by financial lobbyists, and a laserlike focus by some bank leaders on yearly bonuses.”  Letters, New York Times, Dec. 18, 2011, at BU 7.

Steven Conn, Yellow Springs Ohio, notes that Greg Mankiw (economic adviser to Republicans, and specifically to Mitt Romney) misses the boat on understanding the way that economics is burdened with ideology.

“He seems not to understand that economists aren’t really objective and dispassionate scientists.  Economics is merely a set of tools with which we build the kind of society we want to live in.  Defining what that means is, of course, an ideological proposition, and thus all economic ‘theory’ is freighted with ideological baggage.”  Letters, New York Times, Dec. 18, 2011, at BU 7.

These two ideas are related.

 One of the reasons that someone like Madoff could get away with a long-term, enormous economic scam is that the reigning economic ideology from 1980 to 2010 has been the neoliberal belief in unfettered markets, taking power with ‘reaganomics’ and the acceptance of ‘greed is good’ corporatism that took hold in 1980, in which those that are sleazy, fraudulent or just intent on having things work out a certain way can take enormous means to achieve their petty ends–like hiring just-out-of-Congress people to panhandle for them in the halls of Congress and to hobnob with regulators, drafting the rules that govern the industry.  It is the enormous expansion of this corporatist perspective that permits money to buy the rules that caused the financial crisis and that continues to pervade the policy solutions that can get through a Congress that is behoven to lobbyists and Big Money in various industries.
As long as we leave tax policy fundamentally to the corporatist moneybags and ideological economists, we can expect regulations to fall short of what they ought to do to protect ordinary Americans; corporations to make money out of failing to do what they ought to do to protect their workers, their customers, and their communities; tax laws that fail to exact a reasonable share of the fiscal burden from the very wealthy (such as the current trend towards decimation of the estate tax, often the only way that some extraordinarily wealthy families pay much of anything, because most of their income is in the favored form of capital gains and income on capital); and the passage of stupid laws that take away our most precious Constitutional rights–like the legislation under consideration that will permit the MILITARY TO DETAIN US CITIZENS WITHOUT DUE PROCESS.
And the result of these tax and economic policies will be a continuation of the trend towards a two-class society of the very rich and the rest of us that has been aided and abetted by reaganomics.  See Allegretto, the few, the proud, and the very rich, Berkeley Blog, Dec. 2011.

The share of wealth held by the top fifth is about 87.2 percent while the bottom four-fifths share the remaining 12.8 percent of wealth—so the Occupiers are correct in their assessment. And, the riches of those in the top 1 percent are about 225 times greater than that held by the typical family—it was 125 times in 1962—so, Grandma was correct too.
***
In 2007 (the most recent SCF) the cumulative wealth of the Forbes 400 was $1.54 trillion or roughly the same amount of wealth held by the entire bottom fifty percent of American families….Upon closer inspection, the Forbes list reveals that six Waltons—all children (one daughter-in-law) of Sam or James “Bud” Walton the founders of Wal-Mart—were on the list. The combined worth of the Walton six was $69.7 billion in 2007—which equated to the total wealth of the entire bottom thirty percent!  Id.

originally published at http://ataxingmatter.blogs.com/tax/2011/12/madoff-and-mankiw-.html

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Tenneco CEO’s Wall St. Journal on "American Capitalism"

by Linda Beale
crossposted with Ataxingmatter

Tenneco CEO’s Wall St. Journal on “American Capitalism”

Gregg Sherrill, the CEO of Tenneco, Inc., seems to think that Capitol Hill and the White House are “bashing” the “entire free enterprise system”–saying that the business world has “taken a pounding on Capitol Hill and at the White House” but except for the copmanies that were part of the “easy credit and disguised risk that so spectacularly collapsed”, American business “has nothing whatsoever to apologize for.” Speaking up for American Capitalism, Wall. St. Journal Op-Ed, Jul. 15, 2010, at A17.

But the op-ed is a straw man argument tilting at windmills.

First, Sherrill notes a study cited by The Economist that finds that most Americans “prefer the free enterprise system to any collectivist alternative.” Reading that, you’d think that there was a major debate in this country about switching from capitalism to socialism. But there’s no such thing going on. Nobody is pushing a socialist agenda, in which the government would permanently take over means of production. Many politicians are reluctant to speak out strongly for the traditional American values of a market that is regulated for the common good rather than allowing corporate titans (and their wealthy elite shareholders) set the laws to suit themselves. In fact, the push for the last four decades (dating from Reagan’s swearing in) has been the opposite–to change America’s system of tempered capitalism to one of no-holds-barred “free markets” along the lines espoused by the Chicago School’s Milt Friedman, who didn’t care much about democracy but did care a lot about starving government and letting capital have a free reign no matter what the detriment to ordinary folks.

Second, Sherrill himself explicitly acknowledges that business cannot function “without the appropriate regulation and incentives government can provide.” That is what tempered capitalism is all about–encouraging people to establish and run businesses but restraining the more harmful aspects of rent-seeking profitmaking. Key to decent democratic government is the role of government in protecting consumers from overweening corporate power and the public interest from the kind of reckless private greed that can lead to the “socialization of losses, privatization of gains” that we have seen in the causes of our Great Recession. Forty years of Reaganomics bred negative attitudes towards government regulation fostered within government itself and gave brutal, greed-is-good capitalism a chance to wreak havoc on the economy and on the lives of vulnerable Americans not in the elite upper quintile.

But most of the rhetoric in the piece is straight from the “starve the beast”, free marketarian guidebook of the Cato Institute and other think tanks pushing the Chicago School version of “free enterprise.” It uses the rhetoric of “the moral case for free people and free markets.” It argues against enlarging government “in a way that would fundamentally shift its level of involvement in our overall economy.” Yet Sherrill knows that there is no such thing as “free” enterprise–since without contracts and social networks and societal restraints, his corporation would be nothing but a local business, involved in a dog-eat-dog world with everybody enabled to act like the Mafia and exact whatever “protection payments” brute force permitted. He also knows that “free market” is not synonymous with “free people”–in fact, there is a good deal of tension between the two terms, since a people is only free when the democratic freedoms that underlie our way of life are not subordinated to the power of megalithic market enterprises. Unrestrained markets with monopoly players are antagonistic to genuine human freedom: labor is treated as quasi-property (remember Lochner) and wealth is treated as quasi-god.

And finally, he knows that there is no consideration in the offing for an enlargement of government in a way that would “fundamentally shift its involvement in the economy.” First, government is inherently “involved in the economy”, since government must make decisions about revenues, expenses, programs and public interest every day, and every decision about taxing, spending, punishing, rewarding and encouraging behavior has economic consequences. second, corporations like Tenneco push avidly for government to fundamentall shift its involvement in the economy with every lobbying dollar spent, which is intended to influence government to enact business and corporate-favorable programs. Subsidies of the oil industry that exist right now–that’s government involvement in the economy. And the oil companies are fighting to retain all of them. Implicit and explicit guarantees of the financial system–that’s an incredible involvement in the economy, providing cheap funding for banks. And investment banks clamored to be eligible for the largesse, even as their version of casino capitalism spun out of control. So while the rhetoric warns about government involvement, the reality cozies up to government subsidies and merely frowns when government involvement means acting to balance the relationship between business and consumer, as in the fight against the consumer protection agency provisions of the financial reform legislation and the intensive lobbying by the auto dealer industry for an exemption (i.e., for permission to go on ripping off auto consumers as they have frequently been doing).

But the most pernicious part of Sherrill’s op-ed is his warning that “people will buy into the false perception that government can fix our current crisis, which will lead to policies making our economic recovery more difficult.” Business can’t fix the crisis alone, because business as usual has become too short-sighted and too intent on rentier profits. However, government, with economic stimuli targeted to those at the bottom who are hurt the most, can do much to avert the harm of the Great Recession for its people and to provide a path for a sustainable economy out of the recession. But this blather about fearing that people will depend too much on government covers an agenda on the right to make sure that government isn’t there to make a difference for the people, so that Big Business can continue its self-interested focus without the kinds of restraints that make democracy and the economy sustainable.

Buyer beware. Much that comes in the guise of setting the record straight about American capitalism is just more of the same attempt to mislead Americans into distrust of their government and reliance on Big Business instead.

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