Dirt Diggers Digest

Corporate Environmental Opportunism

“There is too much regulation and this is acting as a depressant on the economy.”

This statement could have been made by any one of the current Republican presidential contenders, but the words come from a press conference held by Ronald Reagan shortly after taking office in 1981.

Reagan used the event to announce the launch of his effort to weaken federal rules in areas such as environmental protection and occupational safety and health—moves that were supposed to encourage job creation.

Little has changed over the past three decades in the thinking of conservatives about the purportedly harmful effects of government oversight of industry and the magic of deregulation. After all, they have gotten a lot of political mileage out of Reagan’s aphorism that “government is the problem.”

What’s more interesting is the changing posture of business, the constituency on whose behalf the assault on regulation is said to be mounted. Three decades ago, there was no question that large corporations were ardent foes of agencies such as EPA and OSHA, and they promoted the idea that aggressive regulation destroyed jobs and curtailed economic growth. They also acted on those beliefs.

Richard Kazis and Richard Grossman opened their 1982 book Fear at Work: Job Blackmail, Labor and the Environment by recounting the announcement in 1980 by Anaconda Copper (then owned by the oil company Atlantic Richfield) that it was shutting down its smelter and refinery operations in Montana because they could not be retrofitted to satisfy environmental standards. The move eliminated 1,500 jobs.

Critics pointed out that Anaconda could have received a multiyear extension of its Clean Air Act compliance deadlines but had chosen not to apply for one, suggesting that it had other reasons for the shutdown. Nonetheless, Anaconda’s action served to generate hostility not toward the company but toward the EPA and environmental activists. Other large companies also stoked anti-regulation sentiments.

With the exception of a few diehards such as Koch Industries, today’s major corporations do not espouse Neanderthal views on environmental regulation. Almost all of them purport to have enlightened stances on issues such as air and water quality, climate change and recycling as part of overall company policies on corporate sustainability and responsibility (CSR).

BP, which purchased Atlantic Richfield in 2000, took a hit to its image during the Gulf of Mexico oil spill last year, but before that it had acknowledged that global warming was a problem and claimed to be going “beyond petroleum” by investing (modestly) in renewable energy sources. BP’s competitor Chevron also became a proponent of environmental protection and launched an ad campaign with the tagline “Will You Join Us” that was apparently meant to convey the idea that the oil giant is in the vanguard of efforts to save the earth.

Such positions are not limited to the petroleum sector. Retailing behemoth Wal-Mart has taken high-profile steps to reduce its carbon footprint and has pressured its suppliers to do the same. Toyota, General Motors and other auto giants have put increasing emphasis on hybrids and electric cars. Goldman Sachs, a CSR pioneer in the investment banking world, was the first Wall Street firm to adopt a comprehensive environmental policy (after being pressured by groups such as Rainforest Action Network). Ceres, a non-profit that focuses on sustainability issues, has several dozen Fortune 500 companies in its coalition.

Given all this high-minded corporate thinking on the environment, how can Republican candidates continue to portray regulatory rollbacks as the pro-business position? Or even, in cases such as Newt Gingrich and Michele Bachman, get away with calling for the abolition of the EPA?

A key reason is that big business, despite its claim to have embraced sustainability, is not willing to apply that principle in the public policy arena. CEOs are not speaking out against the EPA bashers or denying them PAC contributions.

This gets to the heart of what is wrong with CSR. It is a system of voluntary and selective actions that companies adopt, largely for public relations purposes—not mandated and enforceable directives imposed by democratic institutions. CSR cannot take the place of the EPA.

The absence of progressive corporate voices on environmental issues makes it easier for the likes of Gingrich and Bachman to make outlandish statements on regulatory matters. To make matters worse, President Obama implicitly endorsed the wrongheaded notion that environmental regulations stand in the way of job creation in his recent decision to prevent the EPA from implementing a long-planned stricter air quality standard for ground-level ozone emissions.

What more could Corporate America ask for? It gets to portray itself as environmentally friendly while reaping the advantages of regulatory rollbacks being promoted across the political spectrum. That’s opportunism on a grand scale.

Green Jobs Blues

President Obama’s grand plan for job creation has not yet been released but it is already struggling. The capitulation to Speaker John Boehner on the scheduling of Obama’s speech to Congress about the plan is a sign of things to come.

Yet perhaps even more troubling is the announcement by a company that served as a showcase for the administration’s campaign to promote jobs in renewable energy that it is shutting down, sticking taxpayers with the bill for $535 million in federal loan guarantees. Solar panel maker Solyndra’s decision to close its manufacturing plant in California and file for bankruptcy will put more than 1,100 people out of work.

Conservatives are having a field day arguing that Solyndra’s demise illustrates the folly of government involvement in the market. It is hilarious to hear many of the same lawmakers who refuse to end subsidies to the ethanol industry and tax breaks for Big Oil get indignant about assistance to wind and solar companies.

It is also amusing to see Republicans try to turn the Solyndra debacle into a story about Obama Administration stimulus cronyism. Solyndra was approved for loan guarantees in 2007 by the Bush Energy Department based on the Energy Policy Act passed by Congress in 2005, though funding for the program was not appropriated until the 2009 Recovery Act.

The real issue is why Solyndra, even with the loan guarantees, was not able to succeed in a market that is supposed to be the wave of the future. And it’s not just an issue of this one company. Evergreen Solar, which received more than $40 million in state government subsidies in Massachusetts, filed for bankruptcy recently. Other U.S. renewable energy firms are also facing difficulties.

Rather than simply debating this country’s half-hearted industrial policy, more attention should be paid to the failures of the companies themselves. U.S. solar panel producers, for instance, were slow to get started and allowed foreign competitors to gain a strong foothold in the international market.

It is customary for firms such as Solyndra and Evergreen to cite low-cost producers in China as a key reason for their plight. What the U.S. renewable energy manufacturers fail to mention is that some of them helped develop the Chinese solar industry by locating some of their own facilities in that country. At the same time, companies like First Solar and SunPower Corporation have intensified global cost competition by building plants in other cheap-labor havens such as Malaysia and the Philippines.

Some European companies have shown it is possible to compete without depending on low wages offshore. Germany’s SolarWorld, which is in the top tier of global producers, does most of its manufacturing in its home country and in the United States (including a plant in Oregon that has received state subsidies). In June it sold off its share in a joint venture in South Korea, saying that it had “decided in favor of production at locations with the highest quality, environmental and social standards.” Imagine a major U.S. corporation saying that.

The fact that many U.S. companies—green or otherwise—cannot or will not compete by adopting a high-road approach does not bode well for the country’s future. As long as wages remain low or stagnant, the buying power of American workers will remain weak, and this in turn will keep the economy in a funk.

Compounding the problem is that, apart from a few tech sectors, innovation in American business seems to be limited to finding new ways to lower tax bills and increase executive compensation. A new report by the Institute for Policy Studies does a good job of linking the two, showing that numerous large corporations are now remunerating their CEOs more each year than the firms are paying in federal income taxes. Many of these same companies are not hiring in the U.S., preferring to rely instead on those offshore labor havens and extracting more work out of their existing domestic employees.

This is the dilemma facing the job proposals of the Obama Administration and state governments: they all ultimately rely on action by corporations whose outlook these days is dominated by executive self-enrichment, tax dodging and labor exploitation—not the creation of quality jobs. Happy Labor Day.

A Not-So-Slow Boat to China

While U.S. political figures are wringing their hands about lackluster job creation, transnational corporations are desperately trying to hide their dirty secret: they are expanding their payrolls — just not in the United States.

The Washington Post recently published a front-page story about the fact that fewer and fewer companies are providing a geographic breakdown of their workforce in their annual financial statements, making it more difficult to track their hiring patterns.

They can get away with this because the Securities and Exchange Commission does not require this key bit of information in the mountain of data that publicly traded companies must include in filings such as their 10-K annual reports. Many companies that had chosen to report the breakdown voluntarily in the past are now deciding that the numbers are too sensitive to publish.

As the Post points out, quite a few of the non-reporters are companies that have been lobbying heavily for a special tax break on profits that they have been holding abroad for tax dodging purposes. A corporate front group called WinAmerica is arguing that a repatriation tax holiday would lead to an employment boon in the United States, even though a similar move in 2005 had no such effect.

What the Post article did not mention is that, while companies don’t have to disclose how many of their workers are based overseas, they do have to report how much of their non-financial “long-lived” assets are located abroad. This requirement stems from segment reporting rules established by the Financial Accounting Standards Board. The information is usually buried in the notes to the company’s financial statement.

Assets are a reasonable proxy for headcount in assessing the extent to which large U.S. corporations are placing more of their bets on foreign countries such as China and India rather than the US of A.

For a quick case study of asset exporting, I took a look at the financial statements of the publicly traded companies included on the list of supporters on the WinAmerica website. I examined the domestic/foreign split for assets in 2010 and compared it to that of a decade earlier.

Take the five big tech companies on the list: Apple, Cisco, Google, Microsoft and Oracle. From 2005 to 2010 their combined foreign assets grew by 329 percent, a rate more than one-fifth faster than the increase in their domestic assets. The most remarkable increase in foreign assets occurred at Google—a more than tenfold jump to $2.3 billion. Apple’s overseas properties increased fourfold to $710 million.

At some companies the portion of total long-lived assets held abroad is soaring. At Oracle, for instance, the figure last year reached 39 percent, up from 21 percent five years earlier.

High foreign assets levels are not limited to this group of tech giants. Pfizer has 43 percent of its assets outside the United States, Hewlett-Packard 45 percent and IBM has just over half. Even more remarkable is the case of General Electric: its foreign assets total $48.6 billion — nearly three times the $17.6 billion held at home.

GE is one of the dwindling numbers of large companies that provide a geographic breakdown of their workforce. Last year 54 percent of the company’s headcount was foreign-based — up from 42 percent a decade ago. During the ten-year period, GE added 62,000 employees abroad and only 2,000 at home.

Both in terms of their investment practices and their hiring patterns, companies such as GE have to a great extent given up on the United States even as they continue to cook up new schemes for tax breaks that will supposedly spur domestic hiring.

The trend has been long in the making. As early as the 1980s, GE made it clear it viewed itself as a global company not tethered to the U.S. In fact, the CEO at the time, Jack Welch, liked to say that, ideally, factories would be built on barges that could easily be moved from one country to another in quest of the lowest wages and weakest regulation. These days companies like GE don’t even consider docking their barges in the United States.

What the Shell?

ogoniland — United Nations Environment Program photo of oil contamination in Nigeria.

It seems that the multinational oil giants are taking turns having spills. After BP’s big mess in the Gulf of Mexico last year and Exxon Mobil’s accident in Montana this year, it is now Royal Dutch Shell that is spewing oil where it should not be going.

More than 50,000 gallons have leaked from a Shell pipeline off the coast of Scotland in the worst North Sea oil spill in more than a decade. Shell has had difficulty locating the source of the leak and identifying its cause.

Just as the Exxon Mobil accident could be seen as a warning about the perils of the giant Keystone XL pipeline project extending from Canada to Texas, so can the Shell accident be viewed as a reminder about the dangers of another petroleum initiative: the proposal by Royal Dutch Shell’s U.S. subsidiary, Shell Oil, to begin drilling exploratory wells in the Chukchi Sea off the northern coast of Alaska. The North Sea accident occurred only days after the U.S. Interior Department gave Shell conditional approval for the Alaska project.

The gods seem to strike back each time the Obama Administration decides to give a green light to offshore oil activity. BP’s gulf disaster happened only days after Obama opened vast coastal areas to new drilling.

There are countless environmental reasons why Shell’s Alaska initiative is a bad idea. It should also be blocked for another reason: Shell cannot be trusted.

For the past three decades or more, Shell has been involved in a long series of accidents, spills and other mishaps at many of its offshore and onshore facilities around the world. It also has a checkered history with regard to human rights and was implicated in a scandal about false reporting about its oil reserves. Here are some of the more notorious features of the company’s track record, which I compiled for a profile on the Crocodyl wiki:

A 1988 explosion at a Shell refinery in Louisiana killed seven workers, whose families sued the company and collected more than $40 million in damages.
In 1989 Shell paid $19 million to settle federal charges relating to a spill at its refinery in Martinez, California that the company did not disclose for four weeks.
In 1995 Shell agreed to pay $3 million to settle a lawsuit brought by the California Public Interest Research Group charging that the company had dumped illegal amounts of selenium into San Francisco Bay and the Sacramento-San Joaquin River Delta.
In 1995 Royal Dutch Shell was also the target of a boycott and other protests in Europe over a plan by the company and its joint venture partner Exxon to sink an obsolete offshore oil storage facility known as Brent Spar in the North Sea rather than dismantling it. Environmental groups, led by Greenpeace, warned that the structure, which contained oil sludge, heavy metals and some low-grade radioactive waste, could damage the food chain for fish in the area. The company gave in the pressure and brought the Brent Spar to shore.
In 1998 Shell Oil agreed to pay $1.5 million to settle federal charges that its refinery in Roxanna, Illinois was responsible for illegal discharges of pollutants into the Mississippi River.
In 2001 Shell Oil and three other major petroleum companies settled a lawsuit filed in California by agreeing to clean up some 700 sites in the state that had been contaminated by the gasoline additive MTBE.
In 2005 Shell was fined £900,000 in connection with the 2003 deaths of two workers on a North Sea oil platform as the result of a major gas leak.
In the late 2000s, Royal Dutch Shell found itself facing increasing criticism for its huge liquefied natural gas project on the island of Sakhalin in the Russian Far East. Pacific Environment, a San Francisco-based advocacy group, collaborated with Russian activists to form Sakhalin Environment Watch, which challenged the offshore Sakhalin project because it threatened the survival of the world’s most endangered species of whales—Western Pacific Grays. In 2008 the British newspaper The Observer reported that it had obtained dozens of internal e-mails showing that Shell officials in London sought to influence the conclusions of a purportedly independent environmental review of the Sakhalin project.
Shell has also been heavily involved in the environmentally disastrous tar sands industry in Canada.

Shell’s tarnished human rights record dates back to the 1980s, when it was targeted for its investments in apartheid-era South Africa. In the early 1990s Shell began to face protests over its oil operations in Nigeria. In 1994 the Movement for the Survival of the Ogoni People, then led by Ken Saro-Wiwa, began blockading contractors working on Shell’s facilities to bring attention to the large number of pipeline ruptures, gas flaring and other forms of contamination that were occurring in the Ogoniland region. The group described Shell’s operations as “environmental terrorism.”

The Nigerian government, a partner with Shell in the operations, responded to the protests with a wave of repression, including the arrest of Saro-Wiwa, who was hanged in 1995. Shell denied it was involved, but critics pointed to the role played by the company in supporting the military dictatorship. A lawsuit charging Royal Dutch Shell with human rights violations in Nigeria was later filed in U.S. federal court under the Alien Tort Claims Act. In 2009, just before a trial was set to begin, the company announced that as a “humanitarian gesture” it would pay $15.5 million to the plaintiffs to settle the case.

A report recently released by the United Nations Environment Program estimates that a clean-up of oil industry contamination in Ogoniland will cost at least $1 billion and take up to 30 years.

On its corporate website, Shell insists that “we are qualified to do the job right — to explore for offshore oil and gas in Alaska in a very safe and careful way.” On the Other Earth, perhaps. But not on this one.

Striking Back at Verizon

As the U.S. economy teeters, most politicians and mainstream analysts have nothing to offer but the usual counter-productive agenda of reduced public spending, corporate tax cuts and weakening of government regulation of business.

Some of the only helpful initiatives are coming from an institution that much of the American public has been taught to despise: labor unions, especially aggressive ones like the Communications Workers of America.

The strike recently launched by CWA and the International Brotherhood of Electrical Workers against telecom giant Verizon Communications has significance that goes far beyond the terms of their contract negotiations. It is one of the only arenas in which an effort is being made to shore up rather than erode the living standards of American workers—living standards that are supposed to be the backbone of an economy that we are constantly told is based on consumer spending. Also adding to the importance of the walkout is that it is targeting an employer that is emblematic of much that is wrong with corporate America today.

That starts with the evolution of the company. Verizon started out as Bell Atlantic, one of the regional operating companies, or Baby Bells, that resulted from the 1984 dismantling of the old AT&T monopoly. Taking apart Ma Bell was supposed to beget a new era of competition in the telephone business, but instead, some of the stronger Baby Bells focused on acquiring their rivals. Bell Atlantic took over NYNEX in 1997, and a few years later it bought the large non-Bell local phone company GTE. Seeking to downplay its origins, the combined corporation adopted the portmanteau name Verizon, a combination of “veritas,” the Latin word for truth, and “horizon.”

Verizon is now one of two firms that dominate traditional phone service in the United States. The other is the new AT&T, the name taken by the other voracious former Baby Bell, SBC Communications, in 2005. In the end, the dismantling of Ma Bell simply replaced a monopoly with a duopoly.

This concentration of ownership has carried over into the wireless realm, which in the U.S. is now largely controlled by subsidiaries of Verizon and AT&T (Verizon Wireless is a joint venture with Britain’s Vodafone, which owns 45 percent).

Verizon has compounded the negative effects of its bloated market share by fighting the extension of union rights to its wireless operation. From the end of the Second World War to its break-up, the Bell System was strongly unionized, and phone company jobs were among the most secure and best-paying blue-collar positions in the private sector. Things became more contentious after the creation of the Baby Bells—there were widespread strikes in 1989 over company attempts to curtail healthcare benefits—but workers in the core wireline business retained their union protections.

Workers at Verizon Wireless, on the other hand, have been struggling for the past decade to achieve such protections. The company has employed all the usual dirty tricks of union-busting, including surveillance, misinformation and intimidation of activists. As American Rights at Work noted in a 2007 report, Verizon also shut down call centers where organizing was taking place and moved the operations to states with anti-union “right-to-work” laws. The National Labor Relations Board found the company guilty of violating federal labor law for disciplining a worker for union organizing.

Rather than improving working conditions at Verizon Wireless, Verizon seems intent on lowering those in its wireline business. The current strike was prompted by management demands for a long list of major contract concessions concerning pensions, sick leave, healthcare and job security. Verizon also wants to tie wages more closely to individual job performance, an arrangement that is typical of non-union workplaces. CWA and IBEW are accurately charging the company with trying to undo half a century of advances in worker rights.

Verizon’s position should be seen as an assault not only on its 45,000 unionized employees but on the entire economy. If management gets its way, some people will find themselves transferring from Verizon’s payroll to the unemployment rolls, and those who remain would have less disposable income.

Its labor practices are not the only way Verizon harms the economy. As Citizens for Tax Justice points out, Verizon is among those large companies that find ways to avoid paying their fair share of taxes. For the past two years, its federal tax rate has been negative, meaning that it is getting rebates from the Treasury—totaling more than $1 billion—despite enjoying profits of more than $10 billion in each of those years.

Verizon also plays the tax avoidance game at the state and local level. For example, it has received tens of millions in subsidies in New Jersey, and last year it pressured authorities in New York to award it more than $500 million in property tax abatements and other tax breaks for a data center it was planning to build near Niagara Falls. This was on top of $96 million in electricity subsidies. The company cancelled the plan after a lawsuit was filed by a local resident.

In addition to mistreating workers and taxpayers, Verizon has apparently found time to cheat its customers. Last year, Verizon Wireless had to pay a record $25 million to settle Federal Communications Commission charges that it charged 15 million cell phone customers unauthorized fees. The company also agreed to provide $52 million in refunds.

A sign seen on a picket line reads: VERIZON IS KILLING MIDDLE CLASS AMERICA. If this strike is successful, it will send a strong message to all corporate assassins that U.S. workers will not roll over and die.

Does the Debt Deal Make You Sick?

Sinking stock markets are not the only sign that the eleventh-hour debt ceiling deal was the wrong solution to the wrong problem.

The announcement by Cargill that it is recalling an astounding 36 million pounds of salmonella-tainted ground turkey products is a perfect symbol of the hazards of shrinking government.

During the debt ceiling debate, Democrats frequently portrayed themselves as defenders of social insurance programs such as Medicare and Social Security. That’s all well and good, but their willingness to go along with substantial cuts to the budgets of federal agencies can also have serious consequences.

Among those agencies are the Food and Drug Administration, and the Food Safety and Inspection Service (FSIS) of the Department of Agriculture. FSIS is responsible for protecting the public from illness caused by tainted meat, poultry and egg products. FDA oversees safety issues for other food groups.

These agencies should be sacred cows, so to speak, but many of the anti-government yahoos now in Congress seem to view food safety regulations as an encroachment on the free market and personal liberty. Even before the new debt deal, this function was being targeted.

Last year, in the wake of incidents involving widespread contamination of eggs, peanut butter and spinach, Congress tightened food safety regulation and gave more authority to the FDA. The agency was finally given the power to issue mandatory recalls rather than depending on producers to withdraw dangerous products voluntarily. As soon as the law passed, rightwingers were moving to undermine it.

In December, Rep. Jack Kingston of Georgia, then the ranking member and now the chair of the appropriations committee overseeing the FDA, said that the number of food-borne illnesses in the country did not justify the cost of the new law. Kingston, whose website bio brags that he has “fought to lower taxes, balance the budget, and reduce government interference in our lives,” criticized the legislation as “overreach” and vowed to cut food safety spending to make it difficult to implement the new rules.

Kingston and his colleagues made good on that threat in June, when the Republican majority in the House voted to cut $87 million from the FDA budget and $35 million from FSIS.

The rightwing effort to eviscerate federal food regulation is justified with the assumption that corporate food producers are willing and able to monitor themselves. This assumption perseveres despite the dismal track record of the industry.

Take Cargill. Its current turkey problem is far from an anomaly for the company. Over the past decade or so, it has been involved in a series of recalls in its meat and poultry operations such as the following:

August 2010: recalled 8,500 pounds of ground beef after an outbreak of a rare strain of E.coli bacteria was traced to a company plant in Pennsylvania.
December 2009: subsidiary Beef Packers Inc. recalled 22,000 pounds of ground beef after an investigation of salmonella was traced to a company distribution center in Arizona.
October 2009: recalled 5,500 pounds of beef tongues because the tonsils may not have been completely removed, leaving in tissue that raises the risk of “mad cow” disease.
November 2007: recalled more than 1 million pounds of ground beef suspected of being tainted with E.coli.
April 2004: subsidiary Excel recalled 45,000 pounds of ground beef suspected of being tainted with E.coli.
October 2002: recalled 2.8 million pounds of ground beef suspected of being tainted with E.coli.
December 2000: recalled more than 16 million pounds of packaged poultry linked to an outbreak of listeria.

And this is the dismal record of an industry leader with more than $100 billion in annual revenues, not a fly-by-night operator without the resources to maintain decent standards in its operations.

Rep. Kingston likes to declare that the U.S. food supply is “99.99 percent safe.” That apparently fabricated figure does not change the fact that, according to the Centers for Disease Control, 48 million Americans are sickened by tainted food each year, of whom 128,000 are hospitalized and 3,000 die.

Debates over the proper levels of federal spending and regulation are typically framed in abstractions, but they can become a matter of survival. When Patrick Henry said “give me liberty or give me death,” I doubt he meant he would give his life for the right of a giant corporation to sell contaminated food without government interference.

Unsuitable Saviors

If you go by the agenda of Koch Industries and the U.S. Chamber of Commerce, big business is obsessed with cutting taxes, weakening regulation and denying the existence of global warming.

The truth is more complicated. For more than a decade, most large U.S. corporations—including the likes of Wal-Mart, Chevron and Goldman Sachs—have been ardent proponents of the principles of corporate social responsibility, or CSR. Like many of their European and Japanese counterparts, they profess to be leaders in a global movement to address the climate crisis, raise the living standards of the planet’s poorest and otherwise make the world a better place.

As London-based CSR evangelist Wayne Visser argues in his new book The Age of Responsibility, that movement is in crisis. The hypocrisy of espousing enlightened views while letting trade associations such as the Chamber lobby for Neanderthal ones is the least of it.

Despite the enormous resources and influence of the companies pushing it, CSR has done little to alleviate the larger problems it has taken on. As Visser puts it: ”At the macro level, almost every indicator of our social, environmental and ethical health is in decline.” He continues:

At worst, CSR in its most primitive form may be a smokescreen covering up systematically irresponsible behavior. At best, even the most evolved CSR practices might just be a band-aid applied to a gaping wound that is hemorrhaging the lifeblood of the economy, society and the planet.

As a long-time critic of CSR, my response to this diagnosis is: amen. However, I quickly part ways with Visser when it comes to a prescription for what to do next.

Visser spends much of his 366-page text arguing, essentially, that the antidote to failed CSR is more CSR. He never puts it quite that simply. Visser is a management consultant, after all, and he has to dress up his analysis with endless bullet points and matrices (many parts of the book read like powerpoint presentations).

At the center of all the jargon is the thesis that the world needs a new version of corporate social responsibility (actually, he prefers the phrase corporate sustainability and responsibility) which he dubs CSR 2.0.

This new approach is said to be based on five principles: Creativity, Scalability, Responsiveness, Glocality and Circularity.

Visser devotes a chapter to each of these, and the result is exasperating. His exegesis is full of platitudes and buzz words: “thinking outside the box,” “setting audacious goals,” “cross-sector partnerships,” “think global, act local,” “cradle to cradle” (rather than just cradle-to-grave) assessments of the environmental impact of products, etc.

What’s also bewildering is that Visser points to numerous companies that, he maintains, have already been putting into practice his principles that are supposedly the wave of the future. Among them are many of the usual CSR suspects: Google, Wal-Mart, The Body Shop, Nike, Patagonia and the mining giants BHP-Billiton and Anglo American.

What, then, is really new about CSR 2.0? The only thing that strikes me as novel is Visser’s call for making CSR “systemic” or “holistic”—yet this is where the entire concept of CSR, it seems to me, breaks down.

It is understandable to want to attack problems in a more comprehensive way, but it is not clear, to me at least, that large corporations are the appropriate primary vehicle for addressing the climate crisis, air and water pollution, global poverty, diseases such as AIDS/HIV, child labor and sweatshops.

For one thing, transnational corporations have played a significant role in creating or at least exacerbating some of these crises—and they may have a vested interest in perpetuating them. Even where this is not the case, why would we want to give a leadership role to institutions that are inherently undemocratic and exist primarily to enrich a small portion of the population? Corporations should certainly clean up their own act, but there is no reason to put them in charge of everything.

Much of CSR can be seen as an attempt to replace rigorous government regulation with limited voluntary initiatives that companies also use for public relations purposes. The answer is not a more ambitious form of CSR, as Visser suggests. We need less emphasis on corporate responsibility and more on corporate accountability—on corporations being held to account by government and organizations representing all of society. That’s a 2.0 that would truly make a difference.

The Forgotten Legacy of the Excess Profits Tax

Behind all the ideological posturing going on in Washington over the debt ceiling, there is a surprising amount of consensus on the wrongheaded proposition that corporations need more tax relief.

The bipartisan Gang of Six plan that has recently been at the center of attention provides for the reduction of the statutory corporate tax rate from 35 percent down to as low as 23 percent. It also calls for moving to a “competitive territorial tax system,” which, as Citizens for Tax Justice points out, would make it even easier for companies to exploit offshore tax havens. A reported new plan being discussed by President Obama and Speaker Boehner as this is being written would probably include something similar.

Corporate domination of our political discourse makes it all but impossible for national leaders to suggest that large companies, which have been enjoying abundant profits while much of the country suffers from high unemployment and other forms of economic distress, should be paying more, not less to keep the USA afloat. Behind many of the protestations against special tax breaks for the oil industry and ethanol producers are agendas that call for lowering the statutory corporate rate for all companies.

It wasn’t always this way. The United States has a history, now largely forgotten, of imposing higher taxes on corporations during times of national emergencies. Excess profits taxes were imposed at various times to put a check on profiteering during wartime.

The first excess profits tax was enacted in 1917, less than a decade after the basic corporate income tax came into being. It remained in place through the World War I, and in 1919 President Wilson recommended that it be made part of the permanent tax system. Congress demurred, but the tax was not eliminated until 1921, well after the end of the war.

Interest in an excess profits tax was revived in the 1930s.The National Industrial Recovery Act of 1933 used a form of excess profits tax to prevent evasion of the declared-value capital stock tax. Later in the decade, as war seemed imminent, a broader based excess profits tax began to be discussed. In 1940 President Roosevelt, insisting that government should ensure that “a few do not gain from the sacrifices of many,” sent a message to Congress calling for a “steeply graduated excess-profits tax.”

There was little disagreement on the need for such a tax. The debate centered, instead, on how the levy would be calculated—especially the question of what base would be used to determine the excess. The tax remained in effect through 1945. Only five years later, Congress returned to an excess profits tax to help pay for the Korean War.

Writing in the Journal of Political Economy in 1951, economist George Lent wrote that the tax had “been accepted as an essential part of a broad system for the equitable distribution of the cost of defense.” Unfortunately, that acceptance turned out to be short-lived. The excess profits tax enacted in 1950 was terminated in 1953, and despite an ongoing Cold War and then large-scale intervention in Vietnam, corporations were no longer expected to shoulder a significant portion of U.S. military costs.

During the past decade the situation has grown even worse. Despite the existence of two expensive wars and a trend toward privatization of military functions that makes the conflicts extremely profitable to the private sector, no one talks of higher corporate taxes. On the contrary, the demand for lowering those taxes has been relentless.

The justification for excess profits taxation need not be linked only to military costs and the profits of Pentagon contractors. Today we are seeing excessiveness of another kind in relation to corporate profits. Most large companies are enjoying bloated bottom lines by refusing to return their workforce back to pre-recession levels. They can do this because unemployment is high, unions are weak and those with jobs find it difficult to resist demands for intensified workloads.

Along with the wars in Iraq and Afghanistan, there is a war at home—a war against workers that amounts to a form of profiteering. If the leaders of this country were not in thrall to corporations, we would be talking about an excess profits tax focused on employers that keep their staffing levels artificially low.

It could very well turn out that higher, not lower taxes are what would induce companies to begin hiring again. Those companies which resist would at least be helping reduce the national deficit rather than further enriching the investor class.

Statehouse Inc.

State legislatures, once hailed by Supreme Court Justice Louis Brandeis as “laboratories of democracy” because of their progressive innovations, have for the past couple of decades often been hotbeds of plutocracy instead. The blame for this rests in no small part with a shadowy organization called the American Legislative Exchange Council (ALEC).

Thanks to a WikiLeaks-like initiative by the Center for Media and Democracy (CMD), we now know a lot more about the way that ALEC operates. CMD obtained and has just made public for the first time the full texts of more than 800 model bills and resolutions secretly approved by ALEC’s corporate and legislative members. These positions are often introduced—in many cases word-for-word—by rightwing state legislators and all too frequently become the law of the land. The trove of documents is available at a website called ALEC Exposed.

ALEC was created in 1973 by the far-sighted conservative strategist Paul Weyrich, who was also involved in the establishment of the Heritage Foundation and other institutions of the Right. Though it never became a household name, ALEC was playing an influential role in the direction of state policymaking as early as the 1980s. A 1984 article in The National Journal, noting that its leaders got “the red carpet treatment from the Reagan White House” when they met in Washington, called ALEC “the New Right group that has done the most to set the conservative agenda at the state level.”

That agenda is the same one being pushed more than a quarter-century later by the greatly expanded cohort of ALEC allies generated by the Republican landslide in last November’s elections: tax limitation, cuts in social spending, restrictions on public employee collective bargaining rights, privatization, reduced regulation of business, school vouchers, and much more.

Corporate critics first began to pay serious attention to ALEC about a decade ago. In 2002 two environmental groups—Defenders of Wildlife and the Natural Resources Defense Council—issued a report entitled Corporate America’s Trojan Horse in the States that debunked ALEC’s claim of being a non-partisan good government group and showed how it was dominated by and promoted the interests of large companies such as Chevron, Philip Morris and Enron. The legislators who made up the purported membership of ALEC were simply a conduit for policy prescriptions devised by corporate lobbyists and trade associations.

Progressive organizations set up a website called ALEC Watch to monitor the group’s activities and launched a counterpart entity called ALICE (American Legislative Issues Campaign Exchange). The latter was not a great success, but it helped give rise to today’s Progressive States Network.

Additional investigative reporting—including accounts by progressive infiltrators at ALEC events—and analyses such as a May 2010 report by the American Association for Justice called ALEC: Ghostwriting the Law for Corporate America—have revealed more about the group’s modus operandi.

What remained largely secret were the details of the proposed legislative language prepared by ALEC’s corporate members. Now that has changed with the arrival of ALEC Exposed.

The scope of the issues covered by ALEC’s model bills is extraordinary. CMD divides them into seven major categories ranging from worker/consumer rights to tax loopholes/budgets, each of which contains dozens of items on very specific issues.

Within the model bills on worker and consumer rights are, of course, the notorious Paycheck Protection Act (which seeks to weaken union participation in the political process) and the Prevailing Wage Repeal Act. But there’s also a bill that allows gives employers the option to pay workers with prepaid debit cards rather than cash.

There’s a model bill on “class action improvements” (designed to make it harder to certify classes), but also one on “admissibility in civil actions of nonuse of a seat belt.” In the health area, there’s a “model resolution on disease management of chronic obstructive pulmonary disease” as well as one on “taxation of moist smokeless tobacco.”

Browsing through the inventory of bills, one comes away with the unsettling feeling that Corporate America is asserting its interest in every single aspect of public policy. Given that corporations and their executives supply legislators not only with model bills but also campaign cash, those interests too often prevail.

Justice Brandeis is also known for having said: “We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can’t have both.” ALEC is helping to ensure we make the “Right” choice.

Perilous Pipelines

exxonpapertowels — ExxonMobil's paper towel mobilization

At the height of the controversy last year over the BP oil spill in the Gulf of Mexico, top executives from four competing oil giants appeared before Congress and distanced themselves from their British rival.

“We would not have drilled the well the way they did,” smugly stated ExxonMobil CEO Rex Tillerson. “It certainly appears that not all the standards that we would recommend or that we would employ were in place,” chimed in Chevron chairman John Watson.

Now that ExxonMobil is at the center of an oil pipeline spill into Montana’s flooded Yellowstone River, Tillerson should be feeling somewhat less self-satisfied. And the rest of us have another reminder that poor safety practices in the petroleum industry are far from an anomaly.

It is also a reminder that companies professing concern about the environment can end up being major offenders. In 2008 the ExxonMobil refinery in Billings served by the Silvertip pipeline that just burst received certification from the Wildlife Habit Council for its efforts to conserve ecosystems and protect wildlife in and around company operations. Some of that wildlife is now covered in crude oil.

When people hear about oil spills, they tend to think of the large offshore incidents such as the BP mess in the gulf and ExxonMobil’s 1989 disaster in Alaska’s Prince William Sound. Equally dismal is the history of onshore spills caused by ruptures in the vast network of pipelines that carry crude oil from drilling sites to refineries.

A year ago this time, the news media were transmitting images very similar the ones now coming out of Montana. In July 2010 a burst pipeline released more than 800,000 gallons of oil into the Kalamazoo River in southern Michigan.

The company involved in the Michigan accident–Enbridge Inc., operator of the world’s largest crude oil pipeline system–had been warned by federal regulators that it was not properly monitoring corrosion on the pipeline. Over the past decade, Enbridge’s pipelines have been involved in a long list of ruptures and leaks in places such as Minnesota, North Dakota, Wisconsin and Alberta.

Enbridge, which is based in Canada, has annual revenues of more than $15 billion, has not felt much pain from the fines imposed by the U.S. regulators at the Pipeline and Hazardous Materials Safety Administration, which are often below $100,000. However, in response to a November 2007 explosion in Clearbrook, Minnesota that took two lives, Enbridge was fined $2.4 million.

What’s even more troubling than Enbridge’s past record is that the company is seeking to greatly expand its network, with a special focus on the environmentally disastrous tar sand fields of northern Alberta. Bringing the filthy oil output of the tar sands down to the United States is also the objective of the huge Keystone XL pipeline that would pass through eastern Montana (and the Yellowstone River) on its way to Texas.

Moreover, it would traverse the Ogallala Aquifer, which, NRDC points out, serves as the primary source of drinking water for millions of Americans and provides 30 percent of the nation’s ground water used for irrigation. Keystone XL, an expansion of an existing pipeline that opened last year, is awaiting federal approval. Earlier this year the existing pipeline was shut down for about a week after a series of a dozen leaks at pumping stations.

For companies such as TransCanada, Enbridge and ExxonMobil, the sky’s the limit when it comes to what they are willing to spend on projects such as Keystone XL (its price tag is $7 billion). Yet when it comes to cleaning up their messes, things suddenly become austere. The main tools that ExxonMobil’s crews in Montana seem to be employing are glorified paper towels. If the fines for violations were more substantial, the pipeline companies might take safety more seriously.