Tag Archives: corporations

Earning Impunity

Goldman Sachs had revenues of $13.4 billion last year not including the $10 billion in bailout money. Without admitting wrong doing for helping former Treasury Secretary now hedge-fund billionaire Hank Paulson bilk investors by packaging and selling toxic mortgages designed to fail, Goldman has agreed to settle civil fraud charges for an amount equal to about two week’s revenue, $550 million, plus $1.3 million for lobbying and politicians. Were Goldman Sachs the first and last name of a person, they would be in jail and pennyless. As a corporation, their stock went up over $3 billion after the announcement.

BP takes in $240 billion a year. It might spend a month’s revenue to hire Ogilvy PR, cap, clean up, and pay lawyers to settle the lawsuits related to 11 wrongful deaths, hundreds of thousands of toxic exposures, destroyed business and ruined lives. BP will get most of their fix, clean up and settlement money back in US tax breaks and subsidies – payback for spending $3.5 million lobbying and bribing US politicians. Were BP a person instead of a corporation, the business would be shuttered and they would be in jail on an oil and water diet awaiting trial.

GlaxoSmithKline’s Avandia drug makes them a lot of money – $3 billion in 2006, but down to just $1.6 billion since everyone learned what GSK always knew, but wouldn’t say – that Avandia treats diabetes by causing heart attacks and killing people. Of course, Avandia is just a drop in the $100 billion GSK annual revenue bucket. Potential total liability for payouts to those GSK killed or maimed: $1.1 billion. Annual bribes to politicians to keep being able to sell this deadly crap: $7 million. Were GSK a person instead of a corporation they would be awaiting death by lethal injection of one of their products.

Toyota makes automobiles which work so well, some just wouldn’t stop. The company knew it, didn’t fix it, resulting in the death of at least 37 people. Toyota, which has annual revenues of over $200 billion, finally got caught. It will cost Toyota shareholders a few billion for the recalls and to settle the lawsuits. Annual lobby and political bribe budget: about $5 million. Were he not hidden behind corporate immunity, Mr. Toyota would have fallen on his sword. Instead, sales went up 48%.

Bayer has revenues of over $49 billion and makes a heart surgery drug called Trasylol. Trasylol has caused the kidney failure and agonizing death of an estimated 22,000 people since 2007. So far, Bayer has spent about $97 million to settle, plus $1.4 million purchasing political protection from our elected leaders. Corporate or not, Bayer’s history of human experiments dating back to those it conducted at Auschwitz, suggests it will not be held accountable.

Massey Energy mines and sells coal for $2.2 billion a year. Since 2005, they have been cited for safety violations over 1,300 times, culminating in April with the death of 29 miners in West Virginia. The law suits are expected to cost them almost half their income, plus less than $20,000 to make sure they don’t have to actually operate safe mines or pay fines. Were Massey owned by Don Blankenship rather than run by him, he’d be buried in coal by now.

Whether your company is making pesticides in Bhopal, an insurance company denying claims, an airline wishing to cut maintenance costs, bilking the Pentagon out of billions during wartime, or just the world’s largest bank wishing to screw us all, you are special. Just buy a politician and say, “jobs.”

It is legal in our society for a corporation to kill thousands of people. If a country did it, the leader would be called before the Hague. If a person did it, they’d be called a terrorist and killed by a drone. It is better to be a CEO.

Is it just me, or do we sell our politicians too cheaply? Of course, keeping the price of our politicians down is good for corporations. Just not people.

To see who is buying whom, at what price, go to OpenSecrets.org

In the Public Trust

Great Depression

Debates rage in Congress, State Houses and on Cable News over government intrusion on business. Talk of bailouts, nationalizing banks, regulating hedge funds, limiting power companies’ pollution, charging fair grazing fees and mining rights on public lands, direct loans to corporations, pseudo-government corporate ownership, government-sponsored investment funds, companies too-big-to-fail, corporate campaign contributions, limiting offshore tax havens, unfair government competition with cable and telephone suppliers over opening up the broadcast spectrum to free wireless internet to everyone, and unfair government competition with private insurers over universal medical coverage (to name more than a few), has brought labels of socialism, big government and anti-business back to the forefront of popular Google searches. So, what is the role of business vis-a-vis government?

Before there were corporations, there was government. Before government, there were people. Corporations are allowed to exist only because government gives them the standing. Likewise, at least in the US, government is only allowed to exist because of a special pact – a contract, if you will, with the people. We refer to it most often as the Constitution. It is the people, who have inalienable rights. Not government. And certainly not business.

While individuals have the right to “life, liberty, and the pursuit of happiness,” corporations do not. For much of US history, to create what we now call a corporation, required an act of a state legislature and those charters were closely regulated to protect the public interest (the federal government can only create corporate entities from the powers derived from the Constitution – for instance, Federal Banks). Things changed dramatically in late 20th century as states wishing to attract more “bizness,” loosened regulations (Delaware and Nevada are the most notorious for lack of regulation and where the largest corporations who have not yet gone offshore to escape almost any regulation or taxes, are most likely chartered).

Corporations, when combined with inexhaustible supplies of capital; limited stockholder representation in management; competition between states who would look the other way on regulation in exchange for the hope of jobs and campaign contributions; an inexhaustible supply of workers – legal or otherwise; new manufacturing and distribution methods; the expansion of the patent laws; the proliferation of lobbyists and their perks; the lack of transparency of what they were doing before it was too late; their unlimited budget for lawyers; and the opportunity for profit, lead quickly, of course, to monopolies, aka: cartels (and predatory pricing, price gouging, manipulation of markets by limiting supplies, collusion, discriminatory trade, tort reform, inability to organize workers, fraud, bribery, dangerous products, pollution, more lobbying, George W. Bush, etc.). Nefarious monopolies were first outlawed around 50BC, and in the US in 1894, but the laws are largely ignored here except during times when the majority of the Supreme Court was appointed by Democrats. There are some exceptions to the monopoly law. Most notable are professional sports and public utilities which are supposed to maintain infrastructure for a public service and be closely regulated, but the power to corrupt will always trump good intentions.

By now, your thoughts must be screaming, “when will you get to the point?” How ‘bout I skip the rest of the civics lesson and offer it now? Our government need not protect an industry or corporation’s ability to profit when it is contrary to the public trust. Government needs to do what’s good for the people. Practical examples:

• We’ve gone to digital television to open up the underutilized television broadcast spectrum. Our so-called public utilities (cable, satellite providers, wired and wireless phone companies and power companies – okay, not all in this list are still public utilities) want to own this spectrum so they can continue to do what they do best: provide as little service as possible while charging us as much as possible. Problem is, this bandwidth (and about a billion dollars or so, some cooperation/mergers and some maintenance) could provide internet access for everyone and the enhanced internet could be used to replace all cell and television service saving the people hundreds of billions every year. What is in the public good?

• US employers need to be more globally competitive, yet the cost of providing employee heath insurance is among their greatest expense. The number of uninsured in the US is about 50 million and rising. As a society, we pay for care anyway through indigent care expenses, lost productive and taxed wages, and early death of the uninsured. The problem is that we have the health insurance industry and they have lobbyists. Ditto the unions. Ditto big-pharma. Now ask yourself, what’s in the public good? Maintaining a vibrant health insurance industry, helping executives and union members have extravagant health plans and allowing the drug companies to overcharge? Or, making business more competitive and everyone more healthy at a lower cost?

• Admittedly, any regulation of hedge funds would make them less competitive with the criminals in other countries and it may mean that some of these imaginary deals will end up being made offshore, but since they do absolutely nothing to positively improve the human condition short of enriching the schemers themselves, is it really in the public good that they should do whatever they want and answer to no one when the result of this practice so far, has led to financial ruin of hundreds of millions? Ask yourself if government would be acting in the public trust to keep this unregulated (which they are now) or even under-regulated, which any lobbyist-inspired Congressional compromise would surely render?

• Admittedly, the financial industry funds more campaign contributions and lobbyists than any other group; likewise, community giving, and we’d miss that for a while. But clearly history has shown us that the FDIC can take over, fix and re-privatize a bank without anyone suffering, other than the executives and shareholders who took the failed risks and should be responsible. What is in the public good of doing otherwise?

• In your wildest dreams, does anyone believe that power companies with investments in dirty coal (Georgia Power comes to mind) will ever reduce their pollution unless forced to or incented to? Yes, it would cost their customers some money through increased rates. Money that companies in states with public regulation have long ago paid. But just to top it off, please note that Georgia Power’s lobbyist just bribed the legislature to pass an increase in rates for a fictitious nuclear reactor they pretend they are going to build 10 years from now even though no reactor has been licensed in the US in more than 20 years. Scandalous, for sure. In the public interest? Not.

Government must be for the people. Not for the corporations.

“We hold these truths to be self-evident, that all men are created equal; that they are endowed by their Creator with inherent and inalienable rights; that among these, are life, liberty, and the pursuit of happiness; that to secure these rights, governments are instituted among men, deriving their just powers from the consent of the governed; that whenever any form of government becomes destructive of these ends, it is the right of the people to alter or abolish it, and to institute new government, laying its foundation on such principles, and organizing its powers in such form, as to them shall seem most likely to effect their safety and happiness.” –Declaration of Independence as originally written by Thomas Jefferson, 1776. ME 1:29, Papers 1:315