Dirt Diggers Digest

Removing the Burden of Student Loans

Undeterred by its eviction from public parks in numerous cities, the Occupy movement is looking to other venues, among them college campuses.

Occupying universities is not just a matter of finding new encampment sites. It is also a means of asserting the connection between the current protests and the student activism of the 1960s, which in many ways paved the way for the current upheaval.

Those historical links have been in full view in Berkeley, where Occupy forces have been struggling to maintain an encampment at the University of California on the very spot where the Free Speech Movement was born nearly a half century ago. The call by that movement’s leader, Mario Savio, for students to throw their “bodies upon the gears” of the capitalist/military machine is echoed in the speeches in today’s Occupy general assemblies.

Berkeley also serves as a reminder that the universities are not that far removed from Wall Street. A 1998 agreement by UC-Berkeley to put its biotechnology research under the control of drug company Novartis (later Syngenta) was a key event in the corporatization of academia and was prominently featured in Jennifer Washburn’s 2005 book University Inc.: The Corporate Corruption of Higher Education.

But perhaps the most compelling reason for Occupy efforts on college campuses is that they are the scene of the crime for the abuse that perhaps more than any other animates the current movement: the burden of student debt.

For many young Occupiers, who have never had a chance to take out a home mortgage on which to be foreclosed, their main relationship to Wall Street is through what they owe banks on the loans they amassed for their education. It is thus no surprise that some of the more common Occupy protest signs are those that say something like: “I have $80,000 in student loan debt. How can I ever pay that back?”

Occupiers are starting to move from simply bemoaning their student loans to rejecting the idea that those obligations have to be met. We’re seeing the emergence of a movement for student loan debt abolition.

To put this movement in context, it’s helpful to recall the modern history of higher education in the United States. Once the province of the upper class, colleges were transformed in the post-World War II era into a system for preparing a workforce that was becoming increasingly white-collar. The GI Bill and later the candidly named National Defense Student Loans were not social programs as much as they were indirect training subsidies for the private sector. The Basic Educational Opportunity Grants (later renamed Pell Grants) created in the 1970s brought young people from the country’s poorest families into the training system.

It was precisely this sense that they were being processed for an industrial machine that motivated many of the student protesters of the 1960s. As with many of today’s Occupiers, they ended up questioning the entire way of life that had been programmed for them.

Those challenges eventually ebbed, and the powers that be then pulled a cruel trick on young people. Once a college education had become all but essential for survival in society, students were forced to start shouldering much more of its cost. During the 1980s, the Reagan Administration slashed federal grant programs, compelling students to make up the difference through borrowing. As early as 1986, a Congressional report was warning that student loans were “overburdening a generation.”

Over the past 25 years, that burden has become increasingly onerous. Both Republican and Democratic Administrations exacerbated the problem by cracking down on borrowers who could not keep up with their payments, while at the same time giving the profit-maximizing private sector greater control over the system. That control was intensified by the privatization of the Student Loan Marketing Association (Sallie Mae) in the late 1990s and by the refusal of Congress for years to heed calls to get private banks out of the student loan business.

It was not until March 2010 that Congress, at the urging of the Obama Administration, eliminated the private parasites and converted billions in bank subsidies into funds for the expansion of the Pell Grant program. This was a remarkable step that will reduce future debt burdens, but by the time it occurred a great deal of damage had already been done.

During the past two decades, student loan debt has skyrocketed. Last year new loans surpassed $100 billion for the first time, and total loans outstanding are soon expected to exceed $1 trillion. According to the College Board, the typical recipient of a bachelor’s degree now owes $22,000 upon graduation. These numbers are all the more daunting in light of the dismal job prospects for graduates, millions of whom are unemployed or underemployed.

Given this history, young people are justified in viewing their student debts as akin to the unsustainable mortgages foisted on low-income home buyers by predatory lenders. President Obama recently announced some administrative adjustments to student loan obligations, but that will make only a small dent in the problem.

Even before the Occupy movement began, there was talk of a student loan debt abolition movement. Much of this talk was inspired by the writings of George Caffentzis, including a widely circulated article in the journal Reclamations. Caffentzis acknowledges the challenges to such a movement stemming from the fact that student loans are not repayable while borrowers are still in school: “Student loans are time bombs, constructed to detonate when the debtor is away from campus and the collectivity college provides is left behind.”

The advent of the Occupy movement is creating a new collectivity and a new way of thinking that addresses the call by Caffentzis for a “political house cleaning to dispel the smell of sanctity and rationality surrounding debt repayment regardless of the conditions in which it has been contracted and the ability of the debtor to do so.” Occupiers are also apt to be more receptive to Caffentzis’s argument that student debt should be seen not as consumer debt but in the context of education as an adjunct to the labor market.

A decade ago, many U.S. activists were building a Jubilee campaign for third world debt cancellation. We now need a similar effort here at home to liberate young people from the consequences of an educational financing system that has gone terribly wrong.

Making Corporations Disappear

From the 11-year prison term and $92 million fine imposed on convicted insider trader Raj Rajaratnam to the apparent misappropriation of hundreds of millions of dollars in client funds at failed brokerage firm MF Global to the admission by Japan’s Olympus Corp. that it has been cooking the books for years, the news is full of reminders about the criminality that pervades the corporate world.

At the same time, the ongoing Occupy movement has been bringing renewed attention to the disastrous consequences of the Supreme Court’s Citizens United ruling that enshrined corporate personhood. One of the more popular protest messages seen at Occupy encampments is: “I will believe that corporations are people when Texas executes one of them.”

As Russell Mokhiber of Corporate Crime Reporter points out, the idea is not so far-fetched. For the past two decades there has been a small but persistent campaign to promote the idea that the state-granted charters of rogue corporations could be challenged, thereby putting them out of business. The movement was pioneered by Richard Grossman, who co-authored a well-circulated 1993 pamphlet entitled Taking Care of Business, which outlined legal and historical justifications for charter revocations.

Grossman’s evangelism helped create the Community Environmental Legal Defense Fund, which helps communities fight corporate intrusions at the local level, and the Program on Corporations, Law and Democracy, which publishes materials that “contest the authority of corporations to govern.”

These groups and others were challenging corporate personhood even before Citizens United, and groups inspired by these ideas launched campaigns to challenge the charters of outlaw corporations such as Union Carbide (largely because of its role in the Bhopal disaster) and Unocal (because of its role in oil spills, frequent workplace safety and health violations, and human rights violations in its relations with repressive governments).

The idea began to catch on. In 1998, Eliot Spitzer, then a candidate for New York Attorney General, said he would not hesitate to push for the dissolution of corporations found guilty of criminal offenses. In the early 2000s, groups in California pushed for a corporate three strikes law to deal with recidivist business offenders such as Tenet Healthcare.

The charter revocation concept waned for a while but had a resurgence last year in response to the outrageous behavior of BP in the Gulf oil spill and that of Massey Energy in creating the conditions that led to the Upper Big Branch mine disaster in West Virginia. Massey ended up being taken over by another company, but BP remains in business despite the fact that its misconduct in the Gulf occurred while it was on probation for earlier federal offenses relating to a 2005 refinery explosion in Texas and 2006 oil spills in Alaska.

The Occupy movement sets the stage for a new assault on corporate recidivists. There is no shortage of offenders. For instance, the New York Times just showed that numerous investment banks have committed repeated violations of Securities and Exchange Commission anti-fraud rules. Mokhiber suggests that potential candidates for the corporate death penalty include health insurers, nuclear power plant operators, giant banks and firms engaged in hydraulic fracking.

The real challenge is to figure out what it would mean to execute a giant corporation. There are few precedents for doing so. Nearly all the major companies that have gone out of existence have done so as the result of takeovers by other large firms. In a limited number of cases such as Enron and Lehman Brothers, companies were forced to liquidate, but by the time this happened the firms were effectively worthless.

Unanswered is the question of what would happen if a large and healthy corporation had to cease operations because of a charter revocation. Selling off the company piece by piece in fire sales to other large corporations would have the undesirable effect of increasing concentration in the industry.

While it may be morally satisfying to say that such a firm should simply vanish, that would be unfair to the workers and other stakeholders who may have played no role in the criminal behavior that brought on the revocation. Besides, this too could result in higher industry concentration as other firms capture the disappearing company’s market share.

What’s needed is a set of protocols for a just transition of a de-chartered company to a new corporate form based on principles such as trust busting (splitting up business behemoths into smaller entities), worker ownership, environmental responsibility and community oversight.

A distinction would have to be made between disappearing companies in those industries that serve a legitimate need and those which need to be phased out for reasons aside from the behavior of individual firms (coal, tobacco, for-profit health insurance, etc.).

Figuring out how to dismantle large companies will be a huge and complicated task, but it is an essential undertaking if we are ever to escape from the era of corporate domination.

Tax Dodging Inc.

Given that big business provides the bulk of the money pouring into the political system, it is no surprise that members of Congress and presidential contenders alike tend to espouse the idea that large corporations are overtaxed. This myth gets repeated despite all the evidence that blue chip companies find endless ways to pay much less than the statutory rate.

It is now more difficult for the tax avoidance deniers to spread their snake oil. Citizens for Tax Justice and the Institute on Taxation and Economic Policy have just come out with a compelling study called Corporate Taxpayers & Corporate Tax Dodgers that examines the fine print of the financial statements of the country’s largest corporations and identifies scores of firms that fail to pay their fair share of the cost of government.

Looking at a universe of 280 companies, CTJ and ITEP find that over the past three years, 40 percent of them paid less than half of the statutory rate of 35 percent. Most of those paid what the study calls “ultra-low” rates of less than 10 percent. Thirty of the firms actually had negative tax rates, meaning that Uncle Sam was paying them for doing business. In dollar terms, the biggest recipients of tax subsidies over the three-year period were Wells Fargo ($18 billion), AT&T ($14.5 billion), Verizon Communications ($12.3 billion) and General Electric ($8.4 billion). The freeloaders had rates as low as minus 57.6 percent. You should read the study for yourself to get all the juicy details.

CTJ and ITEP have been putting out these bombshell reports periodically over the past three decades. The ones from the early 1980s drove the Reagan Administration crazy and paved the way for the Tax Reform Act of 1986, which reversed many of the corporate giveaways of the initial Reagan years.

It is tempting to think that this new report will subvert the current corporate tax relief movement, but that is a tall order. Part of the reason is that corporations, having bought much of the policymaking apparatus, have become much more brazen in their self-serving behavior.

Let’s take the case of Nabors Industries, the world’s largest oil and gas land drilling contractor. Nabors was not eligible to be considered for the CTJ/ITEP study because it is headquartered in Bermuda. The company is not really Bermudan. Its principal offices are in Houston, but it re-incorporated itself in the island nation a decade ago for one simple reason: to escape paying U.S. federal income taxes (Bermuda imposes no such levies on corporations). It was part of a wave of companies that in the early 2000s underwent what were euphemistically called corporate inversions.

Critics called the moves “unpatriotic” or even “akin to treason,” but Nabors went ahead with its plan. There was an effort later in Congress to collect retroactive taxes from Nabors and a handful of other firms that had carried out inversions, but the move was blocked by New York Rep. Charles Rangel after Nabors CEO Eugene Isenberg made a $1 million contribution to a help build the Charles B. Rangel School of Public Service at the City College of New York. Rangel was subsequently charged with an ethics violation in connection with the contribution.

Nabors and Isenberg have been in the news again recently in connection with another scandal. Nabors announced that it was paying Isenberg, now 81 years old, $100 million to give up his post as chief executive. Although the payment is linked to a severance agreement, Isenberg is remaining with the company as chairman of the board. The situation was remarkable enough to merit a front-page story in the Wall Street Journal, which is normally blasé about bloated executive pay.

Isenberg’s bonanza is the culmination of a series of outsized pay packages. In 2005, for instance, he received total compensation of more than $200 million. In 2008 his bonus alone was more than $58 million. In a non-binding vote earlier this year, a majority of Nabors shareholders disapproved the company’s executive pay policies.

It used to be that executive compensation was high in relation to worker pay rates put still a relatively small amount compared to revenue and profits in large companies. That has been changing. The payouts to Isenberg have a significant impact on the firm’s bottom line. The $100 million being collected by Isenberg to give up his CEO job more than wipes out the $74 million in profits Nabors posted for the most recent quarter. Nabors, by the way, has disclosed that it has been investigated by the Justice Department for making foreign bribes.

As the Institute for Policy Studies showed in a report a couple of months ago, it is not unusual for major companies to pay their chief executives more than they send to the Treasury in taxes. Add to that the CTJ/ITEP findings and the behavior of firms like Nabors, and it is difficult to avoid the conclusion that in many large corporations the dominant motivation is to enrich their principals, even if that means sidestepping obligations to shareholders, government and workers. In other words, big business is increasingly acting as little more than a vehicle for expanding the wealth of the 1%.

Clawing Back from the 1%

Rick Perry has admitted that his recent attempt to revive controversy over President Obama’s birth certificate was done for “fun.” This came after Herman Cain said that his call for an electrified fence to protect the U.S. border with Mexico was meant as a joke.

The question, then, is whether their economic plans should also been seen as pranks. It is indeed difficult to take the proposals of the two men and the other presidential contenders seriously. Do they really believe that the solution to the country’s job crisis lies in massive tax reductions for the wealthy and large corporations along with a rollback of federal regulations on banks, health insurance companies and polluters? These ideas sound as if they were cooked up as part of a Yes Men parody to make the 1% look ridiculous in the face of the growing Occupy movement.

One sign that the candidates are not putting forth legitimate policy prescriptions is that their plans contain no accountability provisions. Perry’s just released “Cut, Balance and Grow” scheme, for instance, has repeated references to the wave of job creation that will supposedly be generated by overhauling the tax and regulatory systems, but nowhere does it say what will happen to those companies that, in spite of being freed from federal shackles, still fail to hire significant numbers of new workers.

When it comes to foreign policy, conservatives love Ronald Reagan’s dictum of “trust, but verify.” But in the realm of domestic economic policy their approach is “take it on faith” – giving the 1% everything they want and doing nothing to make sure that the purported benefits to the economy ever materialize. Actually, it is not only conservatives who adopt this posture. Many pro-corporate Democrats are also willing to give away the store to big business without imposing any real safeguards. This can be seen, for instance, in the bi-partisan campaign to slash taxes on repatriated foreign profits without ensuring that those savings actually result in job creation.

Presidential candidates and federal policymakers have something to learn in this regard from the states, including Perry’s Texas. Together, the states spend tens of billions of dollars each year on tax credits, grants, low-cost loans and other forms of financial assistance to corporations in an attempt to stimulate job creation and economic development.

More and more of these subsidy programs attach strings to the government largesse. Corporate recipients must commit to creating a specific number of jobs, which are often subject to wage and benefit requirements. When companies fail to live up to those obligations, the state may recoup all or some of the subsidies (or restrict future benefits) through devices known as clawbacks. These provisions vary widely in stringency from state to state and sometimes within states.

My colleagues and I at Good Jobs First are currently studying the job creation, job quality and clawback practices of the major state subsidy programs around the country. Our report will not be issued until later this year, but I can say now that among the programs that contain clawback provisions are two that are closely controlled by Perry: the Texas Enterprise Fund and the state’s Emerging Technology Fund. These funds have been criticized for cronyism and other abuses, but at least there are some mechanisms for holding recipients accountable on their commitments.

The same cannot be said at the federal level. If Perry and others proposing national solutions to the jobs crisis were serious, they would be recommending that any tax reductions or regulatory relief be contingent on the creation of significant numbers of jobs—and quality ones at that.

I don’t expect this to happen any time soon. Both branches of the national political elite have bought into the idea that large corporations and the wealthy have to be, in effect, bribed to make job-creating investments in the U.S. economy and that there is no recourse when they fail to carry out what they were paid off to do.

Even before the current crop of pro-corporate economic plans, large companies and the wealthy have, of course, benefitted from a skewed tax system, special subsidies for selected industries, lucrative federal contracts, weak regulation, one-sided labor laws, and a justice system that is soft on business crime. And we have little to show for it in the way of decent jobs and economic security.

Rather than showering even more advantages on the 1 percenters, we should be demanding that they give something back. The Occupy movement can be seen as a big clawback effort whose goal is to recoup not just a tax break here or there but control over the future of the entire U.S. economy.

Subsidizing the 1%

Seeking to counter the criticisms raised by the growing Occupy movement, Herman Cain and other apologists for the super-wealthy insist that those who get rich do so only by dint of their own hard work and risk-taking.

This is ridiculous, of course. Accumulating a great fortune requires, among other things, a legal system oriented to property rights, a tax system biased in favor of investment income, and government spending on infrastructure ranging from interstate highways to the internet.

The 1% do not only benefit from the general social and economic framework: in many cases they also receive financial assistance directly from taxpayers. This can be seen most clearly in the economic development subsidies that corporations receive from state and local governments. These are usually awarded in the name of job creation, but often few or no good jobs are created, making the subsidies little different than a handout to powerful business entities.

The closest approximation we have to a roster of the 1% is the Forbes 400 list of the wealthiest Americans. The companies used by those individuals as the vehicles for amassing billions have in many cases been on the receiving end of taxpayer subsidies. Here are some examples drawn from the data my colleagues and I at Good Jobs First have compiled for our Subsidy Tracker database and other sources:

Bill Gates: No. 1 on the Forbes 400 with a net worth of $59 billion

When Microsoft, the source of Gates’ wealth, builds giant server farms to meet its growing data needs it looks for locations that can provide dirt-cheap electricity. Yet the huge company also seeks special tax breaks from state and local governments. In 2010 the company took the lead in pressuring the legislature in its home state of Washington to enact a special sales tax exemption on equipment purchased for rural data centers. After deciding in 2007 to build a $550 million data center in Bexar County, Texas near San Antonio, Microsoft pushed for a subsidy package that turned out to be worth more than $32 million, including $27 million in city and county property tax abatements. State officials in Iowa agreed to provide a $3.4 million grant to pay for infrastructure improvements around a Microsoft data center being built in West Des Moines. These data centers provide tiny numbers of jobs.

Warren Buffett: No. 2 with $39 billion

When General Re, an insurance firm owned by Buffett’s Berkshire Hathaway holding company, decided in 2009 that it was no longer satisfied with its headquarters in Stamford, Connecticut, it gave the impression that it might move out of state. Panicked state officials put together a subsidy package that included a $19.5 million tax credit and a $9 million low-cost loan to subsidize the company’s move to another location within Stamford. No new jobs were to be created.

Larry Ellison: No. 3 with $33 billion

In 2008 Ellison’s software company Oracle obtained $15 million in state tax credits to subsidize the cost of a $300 million data center in Utah that was expected to create only about 100 full-time jobs. In addition, the city of West Jordan agreed to divert $11.8 million in property taxes over ten years to pay for infrastructure costs.

Charles Koch and David Koch: No. 4 with $25 billion

Although the Koch Brothers are rabid proponents of “free” market policies, their Koch Industries has taken more than $10 million in subsidies under Oklahoma’s Investment/New Jobs Tax Credit program.

Christy Walton & family: No. 6 with $24.5 billion (and three other Waltons worth more than $20 billion)

The descendants of Wal-Mart founder Sam Walton are the richest group of relatives in the country. In addition to lousy wages and cheap imports, Wal-Mart’s growth has been funded by taxpayers. At Good Jobs First we have documented more than $1.2 billion in state and local economic development subsidies that have gone to Wal-Mart stores and distribution centers around the country.

Jeff Bezos: No. 13 with $19.1 billion

Bezos built Amazon.com into an online retailing powerhouse by exploiting what amounts to an unofficial subsidy. The company’s resistance to collecting sales taxes on customer purchases gives it a competitive advantage over brick-and-mortar rivals. Amazon also plays the conventional subsidy game. When it opened fulfillment centers in Kentucky about a decade ago it obtained more than $27 million in financial assistance from the state.

Mark Zuckerberg: No. 14 with $17.5 billion

Zuckerberg’s Facebook also rides the data center subsidy gravy train. In 2010 the company chose to locate a server farm in an enterprise zone in Prineville, Oregon, enabling it to enjoy property tax breaks that could be worth more than $40 million over the next 15 years. Facebook also applied for a 10-year waiver of all income and excise taxes under the Oregon Investment Advantage program. The facility opened in April with a total staff (including security guards) of 40 people. In 2010 Facebook also got a $1.4 million grant from Texas Gov. Rick Perry’s Texas Enterprise Fund to help pay for the creation of a sales office in Austin.

Sergey Brin and Larry Page: No. 15 with $16.7 billion

Founded by Brin and Page, Google is yet another tech darling in the data center racket. In 2007 the company announced it would build one of those facilities in the western North Carolina town of Lenoir after pressuring state and local officials to come up with a subsidy package that turned out to be worth $260 million. In 2008 Google turned down a small portion of the subsidy package – $4.7 million from the Job Development Investment Grant program – apparently because it did not expect to reach its original goal of creating 210 jobs within four years. Google also got about $49 million in subsidies for a data center it opened in Iowa in 2009.

Michael Dell: No. 18 with $15 billion

At one time, the founder of computer company Dell was one of the few members of the Forbes 400 whose firm was creating manufacturing jobs in the United States. On that basis, Dell got officials in North Carolina to put together a $242 million subsidy package in 2004 for a PC assembly plant in Winston-Salem. The facility opened in 2005 with 350 workers and grew to about 1,100 before cutting back to about 900. State and local officials were stunned in 2009 when Dell announced plans to shut the operation (and others in the U.S.) and outsource the work to contract plants in Mexico and other countries. Officials pressed Dell to return the subsidies it had received. The company agreed to give back about $26 million of the local subsidies but balked at repaying state tax credits it had claimed.

These subsidies, by themselves, did not ensure the success of the companies or propel the members of the Forbes 400 into the realm of ten-figure net worths. Yet the amounts of money involved are not insignificant—especially to the governments that had to forgo the revenues. In the aggregate, state and local subsidies take about $60 billion a year out of the funding for education, healthcare, fire protection and other public services.

Such subsidies are also a prime example of how this country caters to wealthy individuals and large corporations, and how they in turn demand to be compensated by taxpayers for what they should be doing at their own expense. It’s time for the 1% to do less taking and more giving back.

A Rogues Gallery of the One Percent

For the past 30 years, Forbes magazine has used its annual list of the 400 richest Americans as a platform for celebrating the wealthy. This year, amid the persistent jobs crisis and the growing challenge posed by the Occupy movement, the Forbes list has to be viewed in a different light. Rather than a scorecard of success, it comes across as a rogues gallery of the 1 Percent who have hijacked the U.S. economy.

Start with the overall numbers. Combined, the 400 are worth an estimated $1.5 trillion, up 12 percent from the year before. This at a time when both the net worth and annual income of the typical American household have been sinking. When the first Forbes list was published in 1982 there were only about a dozen billionaires. Today, every single member of the 400 has a ten-figure fortune. Their average net worth is $3.8 billion.

And where did this wealth come from? Forbes tries to justify the skyrocketing assets of the 400 by saying that “an alltime-high 70% are self-made…This is the working elite.” New riches may indeed be better than inherited wealth, but how did this “elite” climb the ladder of success?

The question is all the more pertinent, given the current inclination of conservatives to refer to the wealthy as “job-creators” as a way of rebuffing efforts to get the plutocrats to pay their fair share of taxes.

How much job creation can be attributed to the Forbes 400? In a chart on Sources of Wealth, the magazine notes that the largest single “industry” is investments, accounting for the fortunes of 96 of the 400. By contrast, manufacturing, which is more labor intensive, is listed as the source for only 17 of the tycoons.

Within the investments category, about one-sixth of the people in the top 100 made their fortunes from hedge funds, private equity and leveraged buyouts—activities that are more likely to result in the destruction than the creation of jobs. For example, Sam Zell (net worth: $4.7 billion) was ruthless in laying off workers after his takeover of the Tribune newspaper company.

Forbes no doubt would respond by pointing to the 48 people on the list who got fabulously wealthy from the technology sector. Yet many of these companies create very few jobs: Facebook, which made Mark Zuckerberg worth $17.5 billion, has only about 2,000 employees. Or, like Apple, which gave the late Steve Jobs a $7 billion fortune, they create most of their jobs abroad in low-wage countries such as China rather than manufacturing their gadgets in the United States. The same is now true for Dell—source of Michael Dell’s $15 billion fortune—which has closed most of its U.S. assembly operations.

The few people on the list who are associated with large-scale job creation in the United States got rich from a company known for paying lousy wages and fighting unions. Christy Walton and her immediate family enjoy a net worth of more than $24 billion deriving from the notorious Wal-Mart retail empire (other Waltons are worth billions more). The Koch Brothers ($25 billion) are bankrolling the effort to weaken collective bargaining rights and thereby depress wage levels, while satellite TV pioneer Stanley Hubbard ($1.9 billion) has been an outspoken critic of labor unions and was an aggressive campaigner against the Employee Free Choice Act.

Poor job creation performance and anti-union animus are not the only sins of the 400 and their companies. Some of them have a checkered record when it comes to other aspects of accountability and good corporate behavior.

Start at the top of the list. Bill Gates, whose $59 billion net worth makes him the richest individual in the United States, is known today mainly for his philanthropic activities. Yet it was not long ago that Gates was viewed as a modern-day robber baron and Microsoft was being prosecuted by the European Commission, the U.S. Justice Department and some 20 states for anti-competitive practices. In the 1990s there were widespread calls for the company to be broken up, but Microsoft reached a controversial settlement with the Bush Administration that kept it largely intact.

Today it is Google, whose founders Sergey Brin and Larry Page are estimated by Forbes to be worth $16.7 billion, that is at the center of accusations of monopolistic practices.

Amazon.com, headed by Jeff Bezos ($19.1 billion), has fought against the efforts of a variety of state governments to get the online retailer to collect sales taxes from its customers. By failing to collect taxes on most transactions, Amazon gains an advantage over its brick-and-mortar competitors but deprives states of billions of dollars in badly needed revenue.

Cleaning products giant S.C. Johnson & Son, the source of the combined $11.5 billion fortune of the Johnson family, recently admitted that it has used aggressive tax avoidance practices to the extent that it pays no corporate income taxes at all in its home state of Wisconsin. Forbes ignores this issue, but instead describes in detail the criminal sexual molestation charges that have been filed against one member of the family.

And then there are the environmental offenders, such as Ira Rennert ($5.9 billion.) His Renco Group was for years one of the country’s biggest polluters, and the Peruvian lead smelter of his Doe Run operation is one of the most hazardous sites in the world.

This is only a small sampling of the transgressions of the 400 and their companies. Rather than being hailed as job creators, they should be made to answer for their job destruction, their tax avoidance, their anti-competitive practices, their environmental violations and much more. Rather than celebration, the Forbes 400 and the rest of the 1 Percent are in need of investigation.

The Ghostbusters of Liberty Plaza

libertyplaza2 — Protesting near the haunted One Liberty Plaza building

Occupy Wall Street’s decision to use Liberty Plaza in lower Manhattan as its base camp is meant to evoke comparisons to Cairo’s Tahrir (Liberation) Square, the focal point of the popular uprising in Egypt earlier this year.

Yet the concrete plaza (also known as Zuccotti Park) turns out to be a fitting symbol of the big business debacles that the new Occupy movement is condemning.

Looming over the space is a hulking 54-story office building known as One Liberty Plaza, which is part of the real estate portfolio of Brookfield Office Properties, also owner of the plaza itself. The skyscraper, completed in 1972, was originally the New York City headquarters of U.S. Steel.

By the time U.S. Steel moved into the building, the company had begun to lose market share and was embarking on an ill-fated diversification process. Within it few years it liquidated more than a dozen mills and spent more than $6 billion on the acquisition of Marathon Oil. It continued to shed mills, and in 1986 it purchased another oil company and changed its name to USX to reflect its retreat from the steel business.

After fighting off a takeover bid by corporate raider Carl Icahn, USX underwent more restructuring and finally decided to spin off its oil operations and reclaim the U.S. Steel name. After 9/11 it unsuccessfully tried to engineer a merger of all the U.S. integrated steel companies into something that would have resembled the steel trust assembled by J.P. Morgan at the beginning of the 20^th Century. Today U.S. Steel is far overshadowed by foreign competitors, especially ArcelorMittal.

In 1980 U.S. Steel had sold One Liberty Plaza to Merrill Lynch, which was then riding high atop the stock brokerage business. A year after the sale, Merrill’s chief, Donald Regan, went to Washington to serve as Secretary of the Treasury in the Reagan Administration. Regan had initiated a process of diversification into international banking, real estate, insurance and other financial services.

Merrill, which had always prided itself on serving the individual investor, became increasingly involved in wheeling and dealing. In the early 2000s Merrill’s reputation was seriously tarnished by its close ties to the corrupt Enron Corporation and by allegations that its analysts were strongly touting dubious internet stocks for which Merrill was providing investment banking services.

In 2007 Merrill’s CEO Stan O’Neal was ousted after the firm was forced to take an $8.4 billion write-down linked to sinking securities backed by subprime mortgages. Amid the meltdown of Wall Street in September 2008, Merrill Lynch avoided following Lehman Brothers into oblivion only by agreeing to be taken over by Bank of America. There was later a furor when it came to light that Merrill rushed through some $3 billion in bonuses before the merger took effect.

In 1984 Merrill Lynch had agreed to sell One Liberty Plaza to the real estate firm Olympia & York (O&Y) and move its headquarters to the World Financial Center development that O&Y was building a few blocks away in Battery Park City.

O&Y, under the control of the Reichmann Family, first amassed holdings in Canada and then made a splash in the New York City real estate world with an aggressive series of purchases. By the mid-1980s it had become the largest real estate company in the world while also investing heavily in natural resources companies such as Gulf Canada. Its dizzying growth came to an end in 1992, when it could no longer handle its $18 billion in debt and was forced to file for bankruptcy.

The man who ran O&Y’s U.S. real estate operations was former New York deputy mayor John Zuccotti—the guy the park is named after. He stayed on after the bankruptcy filing, oversaw the sale of O&Y’s portfolio to Brookfield Properties and was kept in place by Brookfield. He is currently on the board of directors of what is now known as Brookfield Office Properties. So far, Brookfield has avoided any fiascoes of its own.

Yet the previous owners of One Liberty Plaza—U.S. Steel, Merrill Lynch and Olympia & York—haunt the office building and Zuccotti Park. Their track record of foolhardy restructurings, reckless borrowing and unscrupulous investment practices are emblematic of the misdeeds of large corporations over the past few decades. Those practices have enfeebled the U.S. economy and diminished the living standards of all but a narrow slice of the population.

The Occupy Wall Street movement is, in effect, trying to exorcise these demons. And the ranks of the ghostbusters in Liberty Plaza and elsewhere seem to be growing every day.

The Price Fix Is Still In

Free market ideologues love to quote Adam Smith, but one passage from The Wealth of Nations that they tend to downplay is Smith’s observation that “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”

Americans today tend to think of price-fixing as a characteristic of the age of the Robber Barons and something that was dealt with by the Progressive movement. It is true that many anti-competitive practices were outlawed by the 1890 Sherman Act and the 1914 Clayton Act, but those laws did not put an end to attempts by corporations and their executives to keep prices artificially high.

Subsequent decades saw major revelations about price-fixing cartels, such as the big electrical equipment industry conspiracy of the 1950s and early 1960s in which companies such as General Electric were implicated. The 1990s saw, for example, the revelation of a conspiracy by companies such as Archer Daniels Midland to fix the price of the animal feed additive lysine. Unfortunately, what many people may recall of that case has now been colored by the comic way it was depicted in Steven Soderbergh’s 2009 film The Informant!

A spate of recent cases shows that, even at a time of purported hyper-competition, price-fixing conspiracies are still with us:

Furukawa Electric Co. Ltd. just agreed to plead guilty and pay a $200 million fine to the Justice Department for its role in a criminal price-fixing and bid-rigging conspiracy involving the sale of parts to automobile manufacturers. Three Furukawa executives, who are Japanese nationals, agreed to plead guilty and serve prison time in the United States ranging from one year to 18 months.

Former executives from Panasonic, Whirlpool and Tecumseh Products were recently indicted in federal court on charges that they conspired to fix the prices of refrigerant compressors. Earlier, Panasonic and a Whirlpool subsidiary pleaded guilty to related charges and were sentenced to pay a combined fine of $140 million.

Another Japanese company, Bridgestone, agreed recently to plead guilty and pay a $28 million criminal fine to the Justice Department for its role in conspiracies to rig bids and to make corrupt payments to foreign government officials in Latin America related to the sale of marine hose and other products.

More than a dozen carriers, including Singapore Airlines, have been caught up in an investigation of a conspiracy to fix air freight prices for shipments going to and from the United States.

Although Asian companies seem to have predilection for price-fixing, U.S. firms are not immune. During recent months the Justice Department has obtained guilty pleas from domestic firms such as aftermarket automobile light distributors in California and ready-mix concrete companies in Iowa.

As in the refrigerant compressor case cited above and the 1990s lysine case, U.S. firms often join with their foreign “competitors” in the conspiracies. The big European paraffin cartel that came to light in 2008 involved secret meetings at a moat-ringed French chateau with representatives of ExxonMobil, Royal Dutch Shell, Repsol of Spain and Sasol of South Africa. European antitrust officials fined Procter & Gamble along with Unilever earlier this year for fixing prices of laundry detergent.

At a time of modest inflation, including falling prices for some popular electronic products, it may be tempting to brush aside price-fixing as an insignificant problem. The fact that the conspiracies often involve industrial components means that consumers do not readily see the effects of anti-competitive practices.

Price-fixing does have an impact. A survey by John M. Connor of Purdue University found that over the long run price-fixing cartels result in overcharges of more than 20 percent.

The fact that price-fixing is still a frequent occurrence is yet another rebuttal to those libertarian and laissez-faire types who insist that government regulation of business is unnecessary and counter-productive. We can’t forget the lesson learned by the Progressive movement more than a century ago: Left to their own devices, large corporations will not act in the public interest and will even undermine the very principle of competition on which capitalism is supposed to be based.

Solyndra’s Fossil Fuel Cousins

Republicans show no signs of relenting in their effort to exploit the bankruptcy filing of federally-backed solar equipment company Solyndra to delegitimize not only the Obama Administration’s renewable energy policies but the very concept of green jobs.

A key element of the campaign is the depiction of Obama as having a hippie-like preoccupation with wind and solar energy. What the Republicans conveniently ignore is that Obama hedged his bets. While running for the presidency and after taking office he also promoted non-flower-power forms of energy such as nuclear and coal. Much to the chagrin of his supporters in the environmental movement, Obama embraced the industry-contrived idea of “clean coal,” otherwise known as carbon capture and storage (CCS).

It is widely forgotten that the 2009 Recovery Act (ARRA), now being vilified for appropriating funds for the loan guarantees given to Solyndra and other solar firms, also included a provision for subsidizing CCS projects. ARRA provided $3.4 billion for the Department of Energy’s Fossil Energy R&D Program. Of that amount, $1.52 billion was to support large-scale demonstration projects involving the capture of carbon emissions from industrial sources. “Stimulus Money Puts Clean Coal Projects on a Faster Track” was the headline of a March 2009 article in the New York Times.

The brave new era of CCS did not begin auspiciously. In August 2009 it was revealed that consultants working for an industry front group called the American Coalition for Clean Coal Electricity had forged letters from non-profit groups to members of Congress expressing opposition to a climate bill that was being considered at the time.

In October 2009 the Energy Department announced a set of modest-sized CCS grants to companies such as Archer Daniels Midland, ConocoPhillips and Shell Chemical. Two months later, DOE handed out a set of much larger grants totaling $979 million to American Electric Power Company, Southern Company and Summit Texas Clean Energy.

And in August 2010 the Energy Department awarded $1 billion in ARRA funds to a large CCS project operated by several companies under the name FutureGen Alliance. In a previous incarnation, FutureGen had been funded by the Bush Administration—largely to justify inaction on greenhouse gas emissions—but that money was cut off as the result of a cost study that later turned out to have a major math error.

So how has all this turned out? In July, the CCS movement was dealt a severe blow when American Electric Power announced that, despite the federal aid it was receiving, it would suspend work on its flagship Mountaineer carbon capture project in West Virginia. AEP said it based the decision on the weak economy and the uncertain status of climate policy.

Later that month, Bloomberg BusinessWeek published a report called “What’s Killing Carbon Capture,” which pointed out that the Mountaineer suspension was only one of a series of recent cancellations or postponements of CCS projects in the United States and other countries. Meanwhile, FutureGen 2.0 is years away from operation and may never justify the federal government’s huge investment.

In other words, renewables are not the only kind of energy alternatives that are in trouble. If Republicans want to use the Solyndra case to argue the failure of green job creation, they have to acknowledge that clean coal initiatives promoted by the fossil fuel sector are also going nowhere.

And if they really want to be honest, they would admit that the reasons for setbacks in wind and solar as well as in carbon capture go far beyond the handling of ARRA grants by the Obama Administration. The feeble economy presents a formidable obstacle for any new industry. A dysfunctional policy environment made even more toxic by the rise of climate change denialism creates even more turmoil for energy industry innovators, whether in the renewable or the CCS camp. It may also be the case that those innovators just don’t have a viable business plan.

Of course, the Administration’s critics are not going to concede any of this. Anti-green job demagoguery will be with us for some time to come.

Green Accountability

Obamacare, abortion, gay marriage and taxes are apparently not enough to complain about. Conservative politicians have a new whipping boy: green jobs. Republican members of Congress and GOP Presidential hopefuls seem to think these days that the greatest sin of the Obama Administration is its effort to encourage employment growth in the renewable energy sector.

Mitt Romney’s recently released economic plan accuses Obama of having “an unhealthy ‘green’ jobs obsession.” In her response to the President’s jobs speech, Michele Bachmann charged that the Administration is imitating the green-jobs policies of Spain, which she bizarrely suggested were responsible for that country’s astronomical rates of unemployment. Rick Perry’s attacks on the reality of climate change imply that green jobs are unnecessary.

At the same time, Republicans in Congress are trying to turn the bankruptcy of solar company Solyndra, which leaves the federal government on the hook for $535 million in loan guarantees, into a morality tale not only about supposed cronyism but also about the folly of government support for green jobs.

As usual, there is a high dose of hypocrisy among those making the criticisms. As USA Today points out, while he was governor of Massachusetts, Romney supported the use of public funds to support renewable energy businesses. What the paper did not mention was that one of the recipients of those funds was Evergreen Solar, which got a $2.5 million state grant in 2003 and went on to receive $44 million more from Romney’s successor Deval Patrick. Earlier this year, Evergreen announced plans to shift its production to China and later filed for bankruptcy.

In 2008 the Texas Enterprise Fund, a subsidy program overseen by Gov. Perry, gave $1 million to the solar company HelioVolt. The company has also struggled and earlier this year put itself up for sale. A report by Texans for Public Justice noted that the fund had relaxed HelioVolt’s job-creation requirement. Perry’s fund also gave $2.5 million to SunPower Corp.

Romney and Perry are far from the only Republic governors who have overseen the use of taxpayer funds to invest in renewable energy companies. Under the leadership of Gov. Jan Brewer, Arizona has been offering a Renewable Energy Tax Incentive. In her State of the State speech last year, Brewer said she was “proud to announce the arrival of Suntech Power Holdings. It’s the first solar company to come to Arizona because of the renewable energy tax incentive program I signed into law in June.”

Recently, Mississippi Gov. Haley Barbour, who flirted with a run for the Republican Presidential nomination earlier this year, supported and then signed legislation that will provide a whopping $75 million subsidy for Calisolar, a California company that plans to produce solar cells in the Magnolia State. The law also includes $100 million in financial assistance for biomass energy company HCL CleanTech.

The fact that Republicans are disingenuous in their criticism of the Obama Administration’s renewable energy efforts does not mean that green subsidies at the federal or state level are necessarily a good thing. While the need to develop alternative energy systems is an urgent task for the nation, it does not make sense to repeat the mistakes of conventional economic development policy in helping the green sector.

That means, for one thing, not simply throwing money (including tax breaks and loan guarantees) at companies simply because they are making green promises. In many cases it may make more sense to let the private sector finance new renewable energy ventures and save public funds for energy infrastructure investments and for worker training in green occupations. Adopting aggressive renewable portfolio standards is also a key role for government to play.

In cases where some direct government assistance makes sense, public officials need to perform due diligence on the recipient company and impose strong safeguards, including job quality standards and clawbacks if the firm does not live up to its job-creation obligations.

As the Solyndra and Evergreen episodes show, the fact that corporations are focused on renewable energy does not make them angels. They may still be incompetent or engage in the same types of corporate misconduct seen among their conventional counterparts. Green business must also be accountable business.