'When a private citizen steals just as candybar from a business, it buys him 16 years in prison. When businesses steal millions from private citizens , they get a slap on the wrist.'
MoJo reporters Russell Mokibar and Robert Weisman were comparing the Texas sentencing of 29 year old Kenneth Payne a 'habitual offender' for stealing a king-sized Snickers bar to that of white collar crimes. Specifically;
'Compare Kenneth Payne's plight to those of a group of while -collar and corporate criminals who also were sentenced this month.
Hoffman LaRoche Ltd. pled guilty for their roles in an international conspiracy
to suppress and eliminate competition in the vitamin industry-what the Justice
department calls perhaps the largest criminal antitrust conspiracy in history.
The prison terms: four months, three and one-half months , three months. (The
four executives were also fined anywhere from $75,000 to $350,000.)
Also this month, three cruise line employees were sentenced for their
role in dumping pollution into the Alaskan Inland Passage for a Holland
American cruise ship. The three employees were each sentenced to two years
unsupervised probation and fined $10,000.'
Speaking further on crime Mokibar and Weissman for Essential Information. 'The Corporate Crime Explosion' December 16, 1997 said:
'Every year, the Federal Bureau of Investigation (FBI) issues its Crime in the United States report which documents murder, robbery, assault, burglary and other street crimes. The report ignores corporate and white-collar crimes such as pollution, procurement fraud, financial fraud, public corruption and occupational homicide. The FBI does not issue a yearly Corporate Crimes in the United States report, despite strong evidence indicating that corporate crime and violence inflicts far more damage on society than all the street crime put together. Much corporate crime and violence goes undetected or unprosecuted for two reasons. First, unlike most other criminal groups in the United States, major corporations have enough power to define the laws under which they live. Second, corporations have enough power to influence prosecutors not to bring criminal charges. The result: less than half of one percent (250) of the criminal indictments (51,253) brought by the Department of Justice in 1994 involved in environmental crimes, occupational safety and health crimes, and crimes involving product and consumer safety issues, according to David Burnham, the author of the book, Above the Law:Secret Deals, Political Fixes and Other Misadventures of the U.S. Department of Justice ... This is a prescription for societal rot. As poor Americans are driven to prison in record numbers for minor drug crimes and petit burglary, wealthy Americans and their corporations elude justice for major criminal acts like pollution, corruption, selling defective and deadly products and ripping off the government.'
AGENCIES/ WHO DO THEY REPRESENT?/ARE THEY ACTING IN WE THE PEOPLE'S BEST INTEREST? Contributing to the quagmire of corporate welfare are various agencies which are often government funded and/or provide research to the government. Previously we cited the Cato Institute, which questioned the validity and purpose of various government agencies that appeared more to be serving business more than government. Who and what is the intent and purpose of these agencies: Mother Jones's Paul Sweeny, in 'The Domino's Effect', April 15, 2000 noted:
'The International Finance Corporation-a little-known arm of the World Bank-is supposed to fight global poverty, but instead is pouring millions into luxury hotels and Domino's Pizza franchises.' Essential Information, in 'Focus on the Corporation," the Corporate Takeover of A consumer Group"', April 1, 1998, points out how savvy and even bold corporations have become in promoting their efforts:
"It used to be that you could tell where big corporations were coming from because they would speak through aptly named lobbying groups. But then, about twenty years ago, corporations wised up and realized that no citizen was going to take seriously the proclamations of the Tobacco Institute or the Business Roundtable. So, big corporations decided to try new ways to delude the public. They set up or helped fund think tanks (American Enterprise Institute, Hudson Institute), they set up front groups (Citizens Against Lawsuit Abuse, Electric Consumers Association), and they funded public interest organizations (World Wildlife Federation, Environmental Defense Fund). But never has corporate America been so bold as to take over an existing consumer group. Until now. The National Consumers League, founded by labor and consumer activists at the turn of the century, calls itself 'America's pioneer consumer advocacy organization.' While the League does some good work on child labor issues, it has been saturated in recent years with financial contributions from major U.S. corporations to the point where it can no longer be considered a legitimate independent consumer or public interest group.'
Cancer crusader Dr. Sam Epstein in 'The Cancer Prevention Coalition Charges National Academy of Sciences With Proposing Secret World Science Court', PR Newswire Chicago May 11, 2000 raises some serious concerns about an institution which is suppose to be acting in the people's interest:
"Through its huge think tank, the National Research Council (NRC) chaired by Alberts with a full-time staff of 1000 and a $200 million budget, the NAS conducts studies and prepares about 200 reports annually, largely under contract to federal agencies. However, in flagrant violation of governmental openness rules (the 1972 Federal Advisory Committee Act) which Alberts still vehemently opposes, NRC committees and panels meet secretly in closed sessions, fail to disclose their minutes and conflict of interest statements, and fail to require that their membership reflects balanced representation of divergent interests and viewpoints. Illustrative is the conduct of the NRC committee on 'Comparative Toxicity of Occurring Carcinogens' which issued the 1996 report on 'Carcinogens and Anticarcinogens in the Human Diet.' This report trivialized concerns on cancer risks to infants and children from food contaminated with carcinogenic pesticides, as these were alleged to 'occur at levels far too low to have any adverse effects on health'. Acting on behalf of an ad hoc coalition of about 100 leading independent experts in public health and cancer prevention, and representatives of 100 leading independent experts in public health and cancer prevention, and representatives of a wide range of labor and citizen groups, one of us (SSE) warned Alberts that this committee was grossly unbalanced and 'disproportionately weighted with industry consultants'; it should be further noted that no pediatrician was invited to serve."
ENVIRONENTAL COSTS: Corporate welfare affects the environment in many ways. Green Scissors identified '77 environmentally wasteful programs that if cut, could save taxpayers nearly $50 billion', 'Green Scissors Tally for 1999', Green Scissors, January 20, 2000. When corporations get away with polluting the environment and are not required to pay for it, it becomes corporate welfare. Ralph Estes called such costs 'social costs'; the costs corporations place upon us, but do not pay for. Ralph Estes estimated such costs to be $2,618.1 trillion dollars in 1994 (The Public Costs of Private Corporations(see below)).
The Public Costs of Private Corporations ( 1994,Annual Costs in billions: Adjusted to 1991 dollars, source pg. 177 Tyranny of the Bottom Line, Ralph Estes)
Costs to Workers Discrimination$ 165.1 Workplace injuries and accidents 141.6 Deaths from workplace cancer 274.7 Other workplace illness and disease ? Other workplace costs (sexual harassment, abuse, etc.) Costs to workers: over $581.4 Costs to customers Cost of price-fixing conspiracies, monopolies deceptive Advertising $1,166.1 Cost of unsafe vehicles 135.8 Cost of cigarettes 53.9 Other product injuries 18.4 Health/injury costs of personal, health, and food products Costs to customers: over$1,374.2 Costs to communities Stationary sources of air pollution Health costs $225.9 Architectural damage 13.3 Household soiling 17.3 Vegetation damage from acid rain 5.9 Mobile source air pollution Health costs 1.7 Crop losses 3.1 Corrosion and other material damage 1.1 Additional impairment in property values 2.6 Water pollution Impairment of recreational activities (fishing, boating, Swimming, and water fowl hunting) 10.9 Loss to commercial fisheries 2.4 Damage to health (morbidity and mortality) 1.1 Damage to fixtures and appliances 2.2 Hazardous waste Cleaning up existing sites 20.3 Cost of waste currently ? Noise pollution ? Aesthetic pollution Costs to nation: over$ 165.0 Total (1991 dollars) $2,428.4
Total of costs estimated (adjusted to 1994 dollars) in excess of$2,618.1
PROBLEMS CREATED BY CORPORATE WELFARE
We have talked about the hidden costs associated with corporate welfare. But there are other, less obvious, factors that further complicate the picture. Some of those are:
1) Gives unfair advantage to those corporations, which are the benefactors of corporate welfare.
2) Corporate welfare emphasizes politics over merit.
a) Creates special interests and spawns unwanted industries, which thrive and need a political rather than meritorious system in order to survive. These industries as we begin to see begin to grow and need to be continuously fed. As was noted previously Common Cause found that between 1995 and 1999 soft money tripled to $160 million.
b) Can encourage unethical and illegal behavior
c) Encourages politics rather than innovative risk taking.
d) Creates a self rewarding system that feeds on itself.
3) Creates a moral hazard, which encourages imprudent speculation (see 'It's Time We Kicked the Rich off the Dole'). 'As moral hazard grows you get a market so skewed by the expectation of bailouts that vital signs about genuine risk no longer get through. Eventually, the danger turns into one of systemic collapse.' ('Decade of Moral Hazard', Review and Outlook, Wall Street Journal, September 25, 1998). In other words, like the boy that cried wolf, the fear of economic collapse encourages bailouts, which encourages more imprudent risk taking, which...
4) Can create smoke screens and unwanted behavior. For example, Ralph Nader argues that PNGV (Partnership for a New Generation of Vehicles) served as smokescreen for the big three automakers to circumvent pollution laws. The idea behind PNGV was to strengthen American corporations by developing technologies for a new generation of vehicles. Develop a supercar. To quote Nader: The PNGV program is clouded by secrecy, with negotiations over these and other important issues undertaken in secret, with no public comment.'
The structure of the PNGV program creates special anti-competitive problems. The program gives participants an effective exemption from antitrust laws, even though competition in research and development is more likely to yield innovation than bureaucratized collaborative arrangements such as the PNGV initiative.
5)We are allowed to be held hostage by large corporations claiming that if we don't help them jobs will be lost. But as Time Magazine noted )'SPECIAL REPORT/CORPORATE WELFARE NOVEMBER 9, 1998 VOL. 152 NO. 19') the tradeoff for jobs saved versus the amount spent on corporate welfare is poor; And as Time noted, may actually lead to job losses. It is outrageous to think that corporations can hold communities hostage and demand ransom as a kidnapper would! It is criminal!
6)Corporate Welfare is a huge drain on government finances-We loose out! because corporations fail to pay their fair share.
7)Corporate Welfare circumvents the efficient allocation of capital and hides the true costs of things. David Korten in his book The Post-Corporate World: Life After Capitalism points out (page 46):
'Accurate Prices: Full costs Versus Public Subsidies
Another major difference between a capitalist economy and an efficient market economy lies in the way they deal with subsidies and other externalized costs. Market theory explicitly states that for the market to allocate resources efficiently, the costs of a product must be borne fully by its producer and passed forward in the price charged to the consumer. Similarly, investors must bear the risks of their investments. Any subsidy, direct or indirect, distorts the incentives of the markets self-regulating pricing mechanisms and reduces the social efficiency of resource allocation.'
By not properly reflecting costs, corporate welfare undermines the efficiency of the capitalist system.
8) Corporate Welfare undermines democracy. It creates a political environment, which reduces the representative and participatory nature of our American system. It lowers the confidence we have in government and creates a sense of hopelessness. This hopelessness is reflected in low voter turn out and the appeal of third party candidates and/or those candidates, who stand against special interests or advocate campaign, finance reform. It should be noted that low voter turnaround was evident in the 1920's and the gilded age of the late nineteenth century-both periods when corporations ruled! Polls and surveys capture the voter apathy and hopelessness. The New York Times ('Poll Finds Voters Skeptical About Role in Nominations, Most Say Party Leaders and Donors Decide', Adam Clymer, May 20, 2000) found;
'64 percent of those surveyed said that people like themselves had "not much" to say about what government does...The dismay came through in some follow-up interviews. Jane Marawar, a homemaker in Austin, Tex., said, "It's important to vote, but money seems to be running the election process."'
9) Corporate Welfare has the government selecting winners and losers. By subsidizing certain companies and industries the government is acting like the Old Russian central planning committee by deciding the direction of business. To quote Michael Gough Ph.D. Cato Institute before the Subcommittee on Technology House Committee on Science April 10, 1997:
'Central Planning Mischief
I worry when I hear words such as 'a sophisticated array of technology policies' strung together. They suggest all kinds of central planning mischief.'
"The Evil Empire. We say that communism fell because it was doomed for failure. But was it communism, or the graft and politicking, at the top from which it succumbed. My cousin who grew up behind the iron curtain once told me that, ' A communist without friends, is like a capitalist without capital". Given the level of corporate welfare in this country I would say 'A capitalist without friends, is like a communist without ideals." Have we allowed our political system to become a similar set of spoils?
10)The government cuts a bad deal. Throughout this text we have pointed out example after example (Network Solutions and the Internet domain name give away, Government Research and Development, etc.) of how government fails to negotiate a fair price for its efforts. Instead of cutting a fair deal, as would any business person/ venture capitalist/ investor, the U. S. government whether it wants to or not gives things away!
11)Corporate Welfare is UNAMERICAN and against the law! From TESTIMONY of Dr. Edward L. Hudgins, Director of Regulatory Studies, Cato Institute before the U.S. Senate, Committee on Commerce, Science and Transportation "The Future of the Commerce Department" August 1, 1995:
'The U.S. Constitution does not allow for government subsidies of private commercial endeavors. I realize that to bring up the U.S. Constitution in the U.S. Congress is a bit of an anachronism. But I believe that if we are to reestablish a republic of limited government in this country, we must refer to the law upon which it was and should be based. Article I, section 8, [3] of the Constitution gives Congress the power "To regulate Commerce ... among the several States..." This was meant to allow the federal government to remove trade barriers between states. In this century the federal government has used--I should say misused--this power to regulate the way entrepreneurs actually run their enterprises. But it is an unreasonable stretch to maintain that this paragraph implies that the government regulates by passing out taxpayer dollars to favorite industries. And Article I, section 8, gives Congress the power "To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries." This quite clearly refers to protection of intellectual property rights, not to passing out checks to favored industries.'
12) CONCLUSION: HAVE WE LOST: Our biggest fear is that we have already lost the war against corporate welfare. That, 'de facto' we the people live a life under the umbrella of a company store. Not one company store, but a collective, bombarding us with advertisements telling us to buy. 'Shut up and shop' is their mantra. In Orwellian fashion talking heads spew propaganda by telling us we have it made.
Throughout this text we have pointed out how corporate welfare undermines the principals governing free and open markets. If the price we pay for something is not its true price, what truth is there in a market economy where the market dictates everything based upon price. The only conclusion is that there is no truth. The sad fact is that ' we the people ' have lost our political control
Time Magazine 'How the Little Guy Gets Crunched', February 7, 2000 argues that we have created a two-class world of those with friends and money to give them and those that don't, to quote Time: 'In essence, campaign spending in America has divided us into two groups: first - and second - class citizens. This is what happens if you are in the latter group:
You pick up a disproportionate share of America's tax bill.
You pay higher prices for a broad range of products, from peanuts to prescription drugs.
You pay taxes that others in a similar situation have been excused from paying.
You are compelled to abide by laws while others are granted immunity from them.
You must pay debts that you incur while others do not.
You are barred from writing off your tax return some of the money spent on necessities while others deduct the cost of their entertainment.
You must run your business by one set of rules while the government creates another set for your competitors.
In contrast, first-class citizens-the fortunate few who contribute to the right politicians and hire the right lobbyists-enjoy all the benefits of their special status. Among them:
If they make a bad business decision, the government bails them out.
If they want to hire workers at below-market wage rates, the government provides them the means to do so.
If they want more time to pay off their debts, the government gives them an extension.
If they want immunity from certain laws, the government gives it.
If they want to ignore rules their competitors must comply with, the government gives its approval.
If they want to kill legislation that is intended for the public good, its get killed.
Call it government for the few at the expense of the many.'
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