Corporate Power

Corporate Overkill

There is so much corporate misbehavior taking place around us that it is possible to lose one’s sense of outrage. But every so often a company comes along that is so brazen in its misdeeds that it quickly restores our indignation.

Massey Energy is one of those companies. Evidence is piling up suggesting that corporate negligence and an obsession with productivity above all else were responsible for the horrendous explosion at the Upper Big Branch mine in West Virginia that killed at least 25 workers.

This is not the first time Massey has been accused of such behavior. In 2008 a Massey subsidiary had to pay a record $4.2 million to settle federal criminal and civil charges of willful violation of mandatory safety standards in connection with a 2006 mine fire that caused the deaths of two workers in West Virginia.

Lax safety standards are far from Massey’s only sin. The unsafe conditions are made possible in part by the fact that Massey has managed to deprive nearly all its miners of union representation. That includes the workers at Upper Big Branch, who were pressured by management to vote against the United Mine Workers of America (UMWA) during organizing drives in 1995 and 1997. As of the end of 2009, only 76 out of the company’s 5,851 employees were members of the UMWA.

Massey CEO Don Blankenship (photo) flaunts his anti-union animus. It’s how he made his corporate bones. Back in 1984 Blankenship, then the head of a Massey subsidiary, convinced top management to end its practice of adhering to the industry-wide collective bargaining agreements that the major coal operators negotiated with the UMWA. After the union called a strike, the company prolonged the dispute by employing harsh tactics. The walkout, marked by violence on both sides, lasted 15 months.

In the years that followed, Massey phased out its unionized operations, got rid of union members when it took over new mines and fought hard against UMWA organizing drives. Without union work rules, Massey has had an easier time cutting corners on safety.

Massey has shown a similar disregard for the well-being of the communities in which it operates. The company’s environmental record is abysmal. In 2000 a poorly designed waste dam at a Massey facility in Martin County, Kentucky collapsed, releasing some 250 million gallons of toxic sludge. The spill, larger than the infamous Buffalo Creek flood of 1972, contaminated 100 miles of rivers and streams and forced the governor to declare a 10-county state of emergency.

This and a series of smaller spills in 2001 caused such resentment that the UMWA and environmental groups—not normally the closest of allies—came together to denounce the company. In 2002 UMWA President Cecil Roberts was arrested at a demonstration protesting the spills.

In 2008 Massey had to pay a record $20 million civil penalty to resolve federal charges that its operations in West Virginia and Kentucky had violated the Clean Water Act more than 4,000 times.

And to top it off, Blankenship is a global warming denier.

Massey is one of those corporations that has apparently concluded that it is far more profitable to defy the law and pay the price. What it gains from flouting safety standards, labor protections and environmental safeguards far outweighs even those record penalties that have been imposed. At the same time, Massey’s track record is so bad that it seems to be impervious to additional public disgrace.

Faced with an outlaw company such as Massey, perhaps it is time for us to resurrect the idea of a corporate death penalty, otherwise known as charter revocation. If corporations are to have rights, they should also have responsibilities—and should face serious consequences when they violate those responsibilities in an egregious way.

Kowtowing to the Corporate Elite

Two national political figures recently made statements about the pay practices of the big banks that did so much to create the current economic crisis. Can you tell which one was made by Barack Obama and which came from the mouth of Sarah Palin at the recent Tea Party convention?

Comment A: “While people on main street look for jobs, people on Wall Street, they’re collecting billions and billions in your bailout bonuses. Among the top 17 companies that received your bailout money, 92 percent of the senior officers and directors, they still have their good jobs. And everyday Americans are wondering, where are the consequences for them helping to get us into this worst economic situation since the great depression? Where are the consequences?”

Comment B (responding to a question about the $9 million in compensation received by Lloyd Blankfein of Goldman Sachs and the $17 million received by Jamie Dimon of JPMorgan Chase): “I know both those guys. They are very savvy businessmen. And I, like most of the American people, don’t begrudge people success or wealth. That is part of the free-market system…$17 million is an extraordinary amount of money. Of course, there are some baseball players who are making more than that and don’t get to the World Series either, so I am shocked by that as well… I guess the main principle we want to promote is…that shareholders have a chance to actually scrutinize what CEOs are getting paid, and I think that serves as a restraint and helps align performance with pay.”

Sad to say, the lame second statement, which sounds like something composed by a not particularly imaginative flack for the financial industry, was made by President Obama in an interview with Bloomberg BusinessWeek. His comments caused such an initial uproar that the Administration’s Deputy Communications Director Jen Psaki felt compelled to put up a post on the White House blog to try to clear up any “confusion” about what the standard bearer of the Democratic Party was saying.

If Psaki’s aim was to repair Obama’s progressive bona fides, she actually made matters worse by reiterating her boss’s previous comments about the glories of the free market and the wonders of individual wealth.

What is going on here? At a time when the public is outraged at the behavior of Big Finance — and when even a dunce such as Palin realizes she must condemn Wall Street greed — Obama decides to soft-pedal his criticism. Rather than acknowledging the damage done by the likes of Blankfein, he treats the matter as an intellectual exercise of fine-tuning pay to match performance. Wall Street pay is well-aligned with performance. The problem is that what’s been performed – the bad loans and toxic assets in the period leading up to the crisis and the stingy lending and bailout abuses in its aftermath – is good for the banks but disastrous for the economy as a whole.

Much of the Obama interview is an embarrassing obeisance to corporate power. The President seems to be apologizing for giving even the slightest the impression that he is anti-business. “Everything we have done over the last year,” he said, “and everything we intend to do over the next several years, I think is going to put American business on a stronger footing.” Asked why he does not have a “major CEO” in his cabinet, Obama replies: “We want and need more input from the corporate community.”

And he gushes over CEOs he admires. He lauds Fred Smith of FedEx as “thoughtful” and says that “sitting down and talking to him was incredibly productive and helps inform how we shape policy.” Hopefully, that does not include labor policy, given FedEx’s resistance to unionization and its abuse of the independent contractor classification. According to BusinessWeek, Obama had a staffer send a follow-up e-mail with a list of his other favorite CEOs, including Ivan Seidenberg of Verizon, another foe of unions.

A generous interpretation of Obama’s BusinessWeek interview is that he is simply trying to counteract overheated right-wing rhetoric depicting him as some kind of socialist. Yet he doesn’t seem to feel the same discomfort about the fact that, as Obama admits in the interview: “On the left we are perceived as being in the pockets of Big Business.”

He seems to regard that image, based on his mostly timorous approach to matters such as healthcare and financial reform, as a political benefit. During normal times in laissez-faire America, that might be the case. Yet this is an era in which an endless series of scandals and misbehavior have left the legitimacy of big business in tatters. Kowtowing to the corporate elite is bad politics and bad policy.

A Corporate Full-Body Scan

The one redeeming feature of the abominable Supreme Court ruling on corporate electoral expenditures is the majority’s retention of the rules on disclaimers and disclosure. While opening the floodgates to unlimited business political spending, the Court at least recognizes that the public has a right to know when a corporation is responsible for a particular message and a right to information on a corporation’s overall spending.

Writing for the majority, Justice Kennedy states: “The First Amendment protects political speech; and disclosure permits citizens and shareholders to react to the speech of corporate entities in a proper way. This transparency enables the electorate to make informed decisions and give proper weight to different speakers and messages.”

There’s no question that steps must be taken to mitigate the Citizens United ruling, whether through changes in corporation law, shareholder pressure, enhanced public financing of elections, or even a Constitutional amendment.

Yet while these efforts progress, it is also worth taking advantage of the Court’s affirmation of the principle of transparency and push for even greater disclosure than what we have now. Groups such as the Sunlight Foundation are already moving in this direction.

The effort could begin with pressing the Federal Election Commission to tighten the existing reporting rules on what are known as “electioneering communications” and to enforce them more diligently. But that’s not enough.

In the wake of Citizens United, we’ve got to demand more information on the many ways corporations exercise undue influence not only on elections but also on legislation, policymaking and public discourse in general. Now that Big Business is a much bigger threat to popular democracy, we have to subject corporations to intensive full-body scans to find all their hidden weapons of persuasion. The following are some of the areas to consider.

Lobbying. In his State of the Union Address, President Obama said that lobbyists should be required to disclose every contact with the executive branch or Congress. That’s fine, but why stop there? Many corporations do their lobbying indirectly, through trade associations which disclose little about their sources of funding. How about rules that require those associations to disclose the fees paid by each of their members and require publicly traded companies to disclose exactly how much they pay to belong to each of their various associations?

Front Groups. Corporations also indirectly seek to influence legislation and public opinion by bankrolling purportedly independent non-profit advocacy groups. Such front groups—such as those taking money from fossil-fuel energy producers to deny the reality of the climate crisis—do not have to publicly disclose their contributor lists. Why not require publicly traded companies, at least, to reveal all of their payments to such organizations?

Union-Busting. Encouragement of collective bargaining is still, in theory, official federal policy. Yet many companies violate the principle—and the rights of their workers—by using corporate funds to undermine union organizing campaigns. The existing rules on the disclosure of expenditures on anti-union “consultants” are too narrow and not vigorously enforced. That should change.

These are only a few of the ways that undue political influence and other forms of anti-social corporate behavior could be addressed through better disclosure. Yet, as we’ve seen, transparency by itself does not counteract corporate power unless something is done with the information.

This came to mind in reading the last portion of the Citizens United ruling. Not all five Justices in the majority went along with the idea of maintaining the disclaimer and disclosure rules. Parting with Kennedy, Roberts, Scalia and Alito, Justice Thomas argued not only that corporate independent expenditures should be unrestricted, but also that they should be allowed to take place under a veil of secrecy.

He bases his argument not on legal precedent, but rather on dubious anecdotal evidence that some supporters of California’s anti-gay-marriage Proposition 8 were subjected to threats of violence after their names appeared on public donor lists. Thomas thus suggests that corporations should be able to make their political expenditures anonymously to avoid retaliation.

While I am in no way advocating violence, I think activists need to use the information that becomes public as the result of expanded disclosure to make corporations pay a price for any attempts to buy our political system. If we can get them to worry about (non-violent) retaliation to the point that they limit their expenditures, then we will have gone a long way toward neutralizing the pernicious effects of the Citizens United ruling.

Back to the Barricades?

The news that Byron Dorgan and Christopher Dodd will not run for reelection has Democrats fretting that they will lose their 60-vote supermajority in the Senate and will no longer be able to get anything accomplished.

But what have we got to show, with regard to checking corporate abuses, for the past 12 months of Democratic control over the legislative branch as well as the White House? Last year this time, excitement over Obama’s election and the Democratic gains in Congress persuaded many activists that great things could once again happen in Washington. The big business agenda would supposedly no longer reign supreme, and progressives anticipated major legislative gains regarding healthcare coverage, financial regulation, the climate crisis and union organizing.

Now those expectations seem hopelessly naïve. Rather than radical changes, we’ve ended up with a disappointing series of half-measures, quarter-measures, and stalemates.

The biggest frustration is in the healthcare arena. We seem to be on the verge of getting a new system that will expand coverage and curb some of the most egregious insurance industry abuses, but these improvements come at a high cost. The final bill will likely have a strict individual mandate compelling those without coverage to become customers of a bunch of blood-suckers yet a weak employer mandate allowing many companies to avoid providing decent coverage to their workers. It will not seriously regulate insurance rates yet may end up penalizing union workers who gave up wage increases to get more generous benefits. The bill that squeaked through the Senate and is expected to form the basis of the final legislation is so compromised that veteran reformers such as Physicians for a National Health Program have called for its defeat.

After crippling the economy through reckless investments and forcing millions of homeowners into foreclosure, the big banks have largely been treated with deference by Congressional Democrats and the Obama Administration. Nothing has been done to break up institutions deemed too big to fail and thus able to extort massive taxpayer-funded bailouts. Despite loud complaints from bankers used to sumptuous pay packages, the federal government’s restrictions on executive compensation have been pretty indulgent. The bill that passed the House in December creates a new consumer protection agency for financial services, but it is unclear how much power it will have. And the bill lacks aggressive regulation of the exotic financial instruments that helped bring about the crisis. Separate legislation on credit cards that was enacted curbs some of the industry’s most outrageous practices but does nothing about usurious interest rates.

The climate bill passed by the House in June not only shunned strict emission limits in favor of the dubious cap-and-trade system, but it would allow many major polluters to avoid paying for their emission allowances for up to 20 years. And the overall emission reductions the bill envisions are far below the level needed to make a substantial dent in global warming.

And then there’s the Employee Free Choice Act, the key priority of the labor movement, which did so much to get Obama and many Democrats elected. The legislation has been in suspended animation for many months as Senate leaders apparently cannot muster enough votes to overcome intransigent opposition not only from Republicans but also from some Dems. EFCA remained stalled even after the AFL-CIO signaled it was open to compromise on the key issue of card-check organizing.

Overall, corporate interests have been remarkably successful over the past year in avoiding serious restraints on their freedom of action. Much of what the Democrats are accomplishing amounts to the appearance of reform. It gives the impression that corporate misbehavior is being addressed but is actually inoculating business against more stringent regulation. In the case of healthcare, the situation is even worse: by turning millions into captive customers, Congress is granting unprecedented power and legitimacy to a discredited industry.

There are plenty of obvious explanations for this dismal performance. It is easy to point to the corrupting effect of corporate campaign contributions and lobbying by former Congressional staffers as well as the pernicious role of conservative Democrats and egomaniacs like Joe Lieberman.

But the progressive movement also deserves some of the blame. The euphoria following the 2008 election gave rise to another bout of the delusion that serious change requires nothing more putting in office a certain number of people with the preferred party designation.

During the 1930s FDR is supposed to have told activists in a private meeting: “I agree with you, I want to do it, now make me do it.” Although that quote has showed up in several blogs over the past year, the underlying message seems to have been lost on many of today’s activists. With the absence of substantial popular pressure, it has been easier for Congressional Democrats to succumb to the siren song of the corporate interests.

Ironically, it has been the woefully ignorant and confused tea party movement—serving as a witting or unwitting stalking horse for the corporate elite—that has lately shown the power of grassroots mobilization. Their positions make no sense, but the tea baggers have made sure that Congressional Republicans maintain a hard-right stance on everything.

Perhaps we will accomplish more if we return to our own barricades.

A Truly Captive Market

parasites The House of Representatives, in a rare embrace of de-privatization, has just passed legislation that would put an industry out of business. If approved by the Senate, the Student Aid and Fiscal Responsibility Act will eliminate the heavily subsidized business of bank origination of federal student loans. Students would get their loans directly from the federal government and would see a huge increase in the Pell Grant program, thanks to the tens of billions of dollars saved by eliminating the subsidies.

Unfortunately, the impulse to abolish a parasitic form of private enterprise has been missing from the official debate on healthcare reform ever since Democratic leaders and the Obama Administration shunned the idea of expanding Medicare eligibility to non-seniors. Now, given the uncertain prospects for a public insurance option (a weak substitute for single payer), we are faced with the possibility that the parasites of the private health insurance industry will not only survive but will be empowered as never before.

While support for the public option has waned, the powers that be in both major parties have never wavered from their endorsement of the individual mandate—the bizarre idea that the solution to the problem of the uninsured is to force them purchase insurance. This implies that being without insurance is a personal shortcoming rather than a social problem. It makes as much sense as saying that the way to help the homeless is to compel them to buy a house.

It is true that the proposals for an individual mandate come with provisions for subsidies, yet as the plan just issued by Senate Finance Committee Chairman Max Baucus illustrates, those subsidies would not extend to many middle-income families, who might find themselves in the absurd position of having to pay penalties to the federal government for failing to buy coverage they cannot afford.

What’s wrong with the imposition of an individual mandate without a public option is more than that of inadequate subsidies. It would amount to an unprecedented move by government to compel residents to become customers of a particular set of corporations. States currently require drivers to obtain insurance for their vehicles from private carriers, but automobile ownership is not compulsory. Adoption of an individual mandate sans public option would make it a condition of being alive for the uninsured to start paying premiums to a private insurance company.

What next? Will the federal government allow the likes of WellPoint and Cigna to put private bill collectors to work harassing “deadbeats” who don’t make their mandatory payments? Since the carriers could not drop these non-paying customers, would the companies be allowed to lock them up in healthcare debtor prisons until a relative takes care of the bill?

Maybe not. But there’s a strong possibility that the furor over unaffordable mandatory coverage would prompt Congress to bring down rates by allowing insurers to offer lower-quality plans. If the public option is jettisoned along with single payer, “reform” may turn out to be nothing more than a way of making millions of Americans pay for the dubious privilege of shifting from the ranks of the uninsured into a captive market of the woefully underinsured.