Drawing the Line: Private Versus Public Goods
Over the last century and a half, the corporation has sought and gained rights to exploit most of the world's natural resources and almost all areas of human endeavor.
—JOEL BAKAN, The Corporation
READ THAT AGAIN. Corporations have gotten the rights to seek profit from “the world's natural resources” and from “almost all areas of human endeavor.”[1] This means that our governments have participated: Rights are legal provisions and protections. They are created and enforced by governments—by executive, legislative, judiciary, and law-enforcement provisions. Did We the People mean for this to happen? Did we vote to give corporations the same rights as individual human beings, in addition to the special protections that only they have? Did we hold a referendum on giving them the protections of the Bill of Rights? Did we agree in a town meeting that the constitutional right to freedom of speech meant corporations could use the money they get from us, as consumers and taxpayers, to influence elections?
The Expansion of Private Control
We could have seen it coming; many did. Almost seventy-five years ago, Adolf Berle and Gardiner Means wrote this in their book, The Modern Corporation and Private Property:
Following the lead of the railroads, in the last part of the nineteenth century and the early years of the twentieth, one aspect of economic life after another has come under corporate sway.… In field after field, the corporation has entered, grown, and become wholly or partially dominant.… On the basis of its development in the past we may look forward to a time when practically all economic activity will be carried on under the corporate form.[2]
That was 1932. In 2004, Joel Bakan writes, “That time has come. Today practically all economic activity is carried out under the corporate form.”
But then he says, “One large barrier remains, however, to corporations being in control of everything: the public sphere.” That one large barrier is now directly, purposefully, and increasingly effectively under ideological, political, and financial attack.
The main tool of attack: privatization. Public life and public goods, established, enabled, and protected by public laws, regulations, and government, are being undercut, sold off, handed over to profit-seekers. We want to say, “The British are coming, the British are coming”—but of course it isn't the British this time. And the truly weird thing is that quite so many people have let themselves be convinced that it is our government that is attacking us, while the corporations that are tearing off hunks of public life and the public good in their privatization feeding frenzy are portrayed as the good guys.
“Lockheed Martin doesn't run the United States. But it does help run a breathtakingly big part of it.” So began the article on the front page of the business section of the Sunday New York Times that we quoted earlier (right under the Declaration of Independence and the Constitution). The report quotes Danielle Brian: “The fox isn't guarding the henhouse. He lives there.”[3]
Brian, who is with the Project on Government Oversight, isn't just referring to Lockheed Martin's role as the nation's largest military contractor. This corporation does much more than negotiate lucrative contracts to make the expensive and profitable tools of contemporary warfare and welfare. It has “built a formidable information-technology empire that now stretches from the Pentagon to the post office. It sorts your mail and totals your taxes. It cuts Social Security checks and counts the United States census. It runs space flights and monitors air traffic.” And to do all this, it “writes more computer code than Microsoft.”[4]
Lockheed Martin—and by no means this corporation alone—is no longer just making a nice profit from, let us remember, our tax dollars. The defense of our country, as well as the other social services for which this corporation has contracts, is now dependent on “the contractor's expertise,” as the New York Times put it. This means that Lockheed Martin is now involved in making, not just benefiting from, public policy and the decisions of our government. Robert J. Stevens, the CEO of Lockheed Martin, said, apparently with no sense at all that this should not be happening, that his company is involved in “thinking through the policy dimensions of national security as well as technological dimensions.”[5]
Most of us would call this a conflict of interest: You don't let the people who will profit from a policy set the policy. You don't set the fox to guard the chickens, and you surely don't let it move right in.
The New York Times goes on to report that “nearly 80 percent of [Lockheed Martin's] revenue comes from the United States government.” And of the remaining 20 percent, most “comes from foreign military sales, many financed with tax dollars.” Oh, great: So you and I are also financing the military strength of other countries. Remember, many of the weapons now being used against our military personnel in Iraq and Afghanistan were originally purchased from U.S.–based corporations.
These huge sales of arms and technology profit “private” corporations, doing “private” business, and making huge profits from our tax dollars. At the same time, these corporations are increasingly involved in the thinking and planning that shape our country's policy decisions, which have the potential to lead to ever larger profits—and to a more dangerous world, armed to the teeth with weapons bought from corporations competing to sell ever more arms to whatever country or group anywhere in the world that can get the money to buy them. More wars result—including wars claimed to be needed to control “rogue” countries that bought their deadly arms, or the materials they need for them, on that (more or less legal and open) lucrative international market.
Arms, of course, can be turned against former supporters as well as the enemies they were originally purchased to combat. The U.S. supported Saddam Hussein's Iraq in its war against Iran, you should remember—and guess to whom both of these countries are causing a great deal of trouble now? In the Falkland War between Great Britain and Argentina, the British lost two ships and thirty-four sailors to French-built Exocet missiles the Argentineans had purchased. Did the French corporations that manufactured those missiles send notes to the families of the British sailors who died, expressing their condolences and saying they hoped this wouldn't cause stress in the relationship of two countries that, while rivals for centuries, were now partners in the European Economic Union?
Our military personnel in Iraq must feel a special appreciation to Lockheed Martin for helping arm the forces that are now attacking them.
Lockheed Martin, grown rich on war and its instruments, is also making a profit from the welfare system here at home.
Just in case your reaction to the preceding statement is, “Say what?” here's one bit of what has happened as Lockheed Martin has gone into the welfare business. In 1996, when George W. Bush was governor of Texas, he approved a deal under which that company would take over the entire state welfare system. Lockheed Martin was to pay Texas some astronomical figure, in effect to “purchase” the system, and then get annual payments for running it. There was tremendous organized opposition, not least from all the social workers and other public employees who were going to lose their jobs, to be replaced by minimum-wage workers. In the end, President Clinton vetoed the total takeover, which he was able to do only because there was federal money involved.[6] However, privatizing corporations are still able to pick off parts of the system and are indeed running them for profit.
If the idea of the world's largest military contractor making sure that the children of unemployed single parents get fed doesn't strike you as, say, odd, ask yourself if it's right for a corporation of this size to be making a killer profit from services for which our tax dollars pay? Yes, you may say, as long as that company delivers the services at the same or less cost than government employees would.
But how is that possible, when government is run not to make a profit but, rather, to do various specific jobs and tasks? Of course, it's theoretically possible if the costs of the contracting corporation are held down, below those of a governmental agency. The corporation has to cut its own costs (but not necessarily those to the government) in order to make a profit. Profit, after all, means the money above and beyond what it costs to make a product or deliver a service. So the corporation needs to give its employees significantly less in wages and benefits than they would receive if they worked in the public sector—or it needs to pay them the same but increase their “productivity” (read, force them to work harder and faster, whatever that does to them or the people they serve). This also means the corporation needs to fight off unions that would demand that their employees have reasonable work hours and workloads, be paid fairly, have health insurance for themselves and their families, earn pensions, be paid overtime when they work it (even though a certain amount of overtime pay is required by law, it often takes pressure from a union to make sure employees receive it), and otherwise be treated and compensated fairly.
Privatizing thus leads not to decreasing but to increasing the number of lousy jobs in this wealthy, supposedly equality-loving country in which “all people have a chance” to “better themselves.”
And remember that for-profit corporations are increasingly involved, as Lockheed Martin is, in making governmental decisions, and that it is our tax money that is to provide profits above and beyond reasonable expenses for those companies.
It does seem ironic, and troubling, does it not?
That's what privatization looks like in the real world. It is not a private matter; it does not mean that we'll have less bother from government, more freedom to enjoy a real private life. It means that ever more of our private lives will be affected, shaped, dominated by the corporate powers that are no longer stopped by public laws and protections. If we do not have a public life protected by a democratic government, we also do not have protections for our private lives. Ask “illegal aliens” who are not citizens, who have no right to the protection of our government, if they have rich and full and free private lives. Ask women who know what it was like before women had public rights and the vote what it was like when getting married meant belonging to the male “head of the household.” Ask African Americans what it was like when they were denied the right to vote, to a free and equal public life protected by law. Ask sexual minorities what it is like to be denied the protection of law for private life and loves.
That's what privatization looks like in the real world.
That such reports worry us greatly does not mean that we—or the New York Times business section—are paranoid alarmists. As someone said, “Just because you're paranoid doesn't mean they aren't out to get you.” Or, from the great African-American baseball pitcher Satchel Paige, “Don't look back—something might be gaining on you.”
Having Lockheed Martin run a large part of our government is not what the creators of our democratic republic had in mind when they oh, so carefully crafted the remarkable system of checks and balances that has well served the people of the United States through so many other dramatic changes.
As alert as the founders were to differing kinds of overconcentrated power, of tyranny, they did not adequately guard against the kind of concentrated economic power today exercised by privatizing corporations with budgets that exceed those of most whole countries. They did, though, see and rebel against such power in their times. James Madison wrote, “There is an evil which ought to be guarded against.… The power of all corporations ought to be limited.… The growing wealth acquired by them never fails to be a source of abuse.”[7] But that warning was not well heeded; it did not adequately make its way into the U.S. Constitution or system of governance.
Today, just under half (49 percent) of the one hundred largest economic units in the world are countries. The other 51 percent are corporations.[8]
A note to the nations of the world: “Don't look back—some corporation is gaining on you.”
Meanwhile, governments are ever more dependent on these corporate giants to do what needs to be done, which makes the corporations ever more able to insist on more privatization as the price of their cooperation.
If the corporation you turn any of these systems over to does a terrible job, or demands much more money than originally agreed on when the contract comes up for renewal, what do you do? The corporation (unlike public safety employees) can, in effect, go on strike. It can unilaterally decide to stop doing the work it agreed to tomorrow. We cannot pick it up the day after; they have us over a barrel.
Schools, prisons, welfare, Social Security, water and sewer systems, buses, trains, subways, highways, waterways, sanitation systems are not exactly the kinds of things you start up overnight. And you can't just build an army, navy, air force, or coast guard when you suddenly discover you need one. Look at the experience in Iraq, where what is arguably one of the best-trained militaries in the world couldn't get the new Iraqi armed forces it desperately wanted and needed off the ground fast enough. So it turned to more “contractors,” more employees of those terrifying private military firms that will train people to fight for anyone who will pay them—and like all corporations, can decide to switch sides should there be more profits to be made that way.
To get their first contract, they may come in with what's called a lowball bid, doing the classic bait and switch. In other words, they deliberately bid not only less than it was costing us to do those things through our government with public employees, but less than they know it will cost them to do the job. Once they get the contract, or the first time the contract comes up for renewal, they announce they can't do it for that price. If that's the case now, imagine how much worse it will be if corporations have a monopoly and the public sector no longer has the capacity.
The corporations already have power over our economic life through their bought influence inside government, because they can threaten to leave a community that has become dependent on them, and because, being the major economic players, their troubles really can become ours in all sorts of ways. It's not “What's good for General Motors is good for the USA.” It's “What's bad for General Motors is bad for the USA.” Or, “When GM sneezes, the economy gets pneumonia.”
Take Wal-Mart, the largest retail corporation in the United States. You may assume that it is so successful because its prices are so low that other stores can't compete. That's not all there is to it. Have you also heard that the profits it makes despite such low prices are subsidized by your tax dollars?
“Wal-Mart stores collected well over $ 1 billion in state and local government subsidies during its decades-long expansion from a regional discount chain to the world's largest retailer,” reports the national monitoring organization Good Jobs First.[9] Subsidies is an innocent-sounding word for taking our public tax dollars and moving them into the pockets of a profit-making private corporation. This is not unusual in today's corporation-dominated world, nor is it illegal. But it surely does raise questions about what is private anymore.
Here is what the New York Times had to say about this corporate boondoggle:
A survey by Georgia officials found that more than 10,000 children of Wal-Mart employees were in the state's health program for children at an annual cost of nearly $10 million to taxpayers. A North Carolina hospital found that 31 percent of 1,900 patients who described themselves as Wal-Mart employees were on Medicaid, while an additional 16 percent had no insurance at all. And backers of a measure that will be on California's ballot tomorrow, which would force big employers like Wal-Mart to either provide affordable health insurance to their workers or pay into a state insurance pool, say Wal-Mart employees without company insurance are costing California's state health care programs an estimated $32 million a year.[10]
Did you hear that? Some $32 million a year is going to subsidize Wal-Mart's profits by holding down its costs. And that's just the cost in one state out of fifty.
The article continues: “Although Wal-Mart officials flatly deny it, some Wal-Mart employees say they are encouraged to turn to public health care assistance. When Wal-Mart hired Samantha Caizza, a single mother of three, as a cashier at its Chehalis, Washington, store, she says she was told by a personnel manager ‘to get ahold of the state’ for coverage for her children.”
Samantha Caizza isn't ripping off the taxpayers: Wal-Mart is. She's just doing a job and trying to take care of her children. But she and other single mothers are all too often the ones blamed by outraged taxpayers and conservatives, who like to rail against being forced to support “people who won't take care of their own.” How about the world's largest retail store? Shouldn't it take care of its own employees, rather than expect the rest of us to pick up the tab for their health care through our taxes?
Again: Are Wal-Mart's profits really private if public money underwrites them, makes them possible? Is it a private matter when public health care benefits are exploited by Wal-Mart so that the children of the corporation's founder—who are ranked numbers four, five, six, seven, and eight on the Forbes list of the four hundred richest Americans, at $18 billion each—don't have to lose a bit of profit to pay them?
And all this time you thought you were saving money with those cheaper prices. When you add on the tax bite you didn't vote for, they're not quite so low.
A Free Ride for Wal-Mart?
Think of it like this. You, like most people in this country, probably think you're paying way too much in taxes. But public taxation is taking money from all of us to support public services such as Medicaid. Wal-Mart, by forcing you to subsidize the Medicaid costs of its employees, is really increasing the taxes you pay and decreasing its own costs. Although you may not immediately think of this as a form of privatization, that's exactly what's going on. Your taxes are being funneled through the public structure of government into the private pockets of a corporation.
Did you vote to have your tax dollars support corporations that exploit their employees, drive down wages in their competitors' shops, cause small local businesses to fail and close, add to traffic messes, and otherwise drastically change the communities into which they choose to move, often over the opposition of the people of those communities? Reminds us of one of the bumper sticker slogans that appeared after a horrifying oil spill: “We don't care. We don't have to. We're Exxon.” And we worry about nonrespon-siveness from the public sector?
Do you want to be supporting corporations that drive employers who care about the people who work for them out of business? “Socially, we're engaged in a race to the bottom,” said one such beleaguered employer, Craig Cole, the chief executive of Brown & Cole Stores. Brown & Cole is a supermarket chain that employs some two thousand workers in Washington and adjoining states. Its stores reportedly provide health insurance coverage for about 95 percent of their employees.
“‘Do we want to allow competition based on exploitation of the workforce?’ Mr. Cole asked.”[11] That's a political and a moral question, and it is coming from people inside as well as outside the corporate world.
Some corporate leaders believe that exploiting workers in order to lower costs, and so increase profits, is right and fair—or just the way free competition goes in the free market. They wouldn't call it exploiting their employees, of course; more likely they'd call it paying people market value for their work. They oppose unions because they “force companies to raise wages when they can't afford it,” and are pleased that today a lower percentage of the U.S. workforce is unionized than in the past. This is a mindset that takes making the maximum possible profit to be justification for anything that is a means to that one end.
Let's say it was really legal to do anything that was considered necessary to make the highest profit possible. What do you think some corporations might do? Sell untested drugs without consumer warnings? Manufacture cars that are “unsafe at any speed”? Hire children to work twelve to fourteen hours a day for below-minimum wages? Send people into conditions from dangerous to deadly in workplaces ranging from coal mines to chemical plants? Cut down every tree a company can sell or use for its products? Strip-mine every mountain that has coal? Pollute streams, rivers, and lakes with heavy metals and PCBs?
Strip every mountain
Poison every stream
Pollute every rainbow
Til you find your dream
Corporations have done every one of these things in the past. In many countries around the world—and more often than you might think in the United States—they're still doing them. Do you think the only reason they don't do them as openly anymore in the United States is because of the goodness of their corporate hearts? No, they don't do them because our government has passed laws limiting these appalling practices or making them illegal, because public law enforcement employees do still sometimes track down violators, and because public courts do still sometimes hold them accountable.
Making the highest profit possible is not, or surely should not be, the most important purpose of our lives. But whatever the other purposes and values held by corporate officers—and there is no doubt that some of them as individuals hold values and wish to serve purposes that any of us would admire—it is their ability to bring in a profit that marks their success or their failure in their own sphere.
Imagine picking up the Wall Street Journal and finding a frontpage article with this headline: “CEO Cuts Profits to Increase Employee Pay.”
The board of directors of the Wall Street investment bank Swenson, Swenson, Swenson and Swenson today gave a standing ovation to CEO Walter Swenson for achieving his long-held goal of cutting corporate profits by 50 percent in order to double the pay of the firm's janitors, secretaries, and receptionists.
“For God's sake,” said Swenson, “all of us corporate officers are already filthy rich. We can buy and sell most small countries. Why do we need more? What are we going to do, purchase Tuvalu? I mean, what's another $100 million in your checking account compared to the chance to make sure hundreds of our employees' children will go to college?”
News of the achievement pushed the investment bank's stock (NYSE: SWE) up 8? points to close at 52?.
Here's what the Wall Street Journal actually thinks: “If there is any place where Wal-Mart's labor costs find support, it is Wall Street, where Costco has taken a drubbing from analysts who say its labor costs are too high. Costco's pretax profit margin is only 2.7 percent of revenue, less than half Wal-Mart's margin of 5.5 percent.”[12] There we have it: Costco has a lower pretax profit margin than Wal-Mart, so Wal-Mart is rewarded not only by pocketing those larger profits but on Wall Street and by major investors who otherwise have nothing at all to do with the company.
This was not an aberration. Wall Street analysts have also spoken threateningly to Timken, a corporation that makes roller bearings. What was Wall Street's problem? Timken had made a commitment to produce high-quality goods no matter what and to stay in its hometown, which it had done for one hundred years. Wrong decision, apparently. It is quite literally not your business, Wall Street firmly reminded the good folks at Timken, to do anything other than make profits and grow.
Wal-Mart, we should say, continues to deny what reporters keep telling us. And they are working hard to undo all this bad press. Not by providing their employees with health care insurance, mind you—they say they can't afford to do that. No, they're spending millions of dollars on a public relations campaign to clean up their image. That, apparently, they can afford. The corporation and public relations folks get richer; workers and their children, and taxpayers, lose again. Actually, we've now seen several of the Wal-Mart public relations ads. Very touching.
There are other issues here that are your concern, and all of ours. “The larger issue of whether companies can and should absorb the soaring cost of health care is a national issue,” said Susan Chambers, the executive vice president who oversees benefits at Wal-Mart. “You can't solve it for the 1.2 million associates if you can't solve it for the country.”[13] “Associates” is what Wal-Mart calls its employees. Maybe it makes them feel better about being on Med-icaid instead of a decent corporation-paid health insurance plan.
Chambers is quite clear: Wal-Mart is so big, and it employs so many people, that how it does its business necessarily becomes a national issue. We can probably count on it that she and other corporate officers do not mean by its being a national issue that the federal government should step in and tell Wal-Mart to provide its employees with health insurance instead of passing those costs on to the taxpaying public. However, we can absolutely count on their wanting to step in to tell the federal government what it should do.
There's been a lot of talk about the importance of communities and states and the federal government being “business-friendly” (notice that it is put this way, rather than “corporation-friendly,” which probably wouldn't go far as a popular slogan). “Business bashing”—raising questions, investigating, publicizing, acting against business interests, criticizing corporations that destroy the environment—is in disfavor these days. But did you know how often being business-friendly means providing welfare payments for corporations, while welfare payments are slashed for under-trained, undereducated single parents—and profits from administering welfare are made by other corporations?
Which is the real scandal? Paying an unemployed parent a below-minimum monthly supplement so she or he can keep the children fed, clothed, and housed? Or paying gigantic Lockheed Martin (or another corporation that bought its most profitable subsidiary—hard to keep up with these guys and their lucrative deals) billions of dollars in corporate welfare?
The interests and purposes of some corporations may be good purposes in their arenas, and the people who serve those purposes may be good people, individuals with compassion and commitments to justice and equality. Still, however you cut it, corporations' purposes are not the same purposes as those of government, as those of the public sector, as those of We the People. Where they differ, it is their own purposes and interests that the corporations will pursue. As privatization increases, that means that government is rife with conflicts of interest.
President George W Bush's number two, Dick Cheney, could not have remained head of Halliburton while vice president because, as a public employee (really hard to call Dick Cheney a “public servant,” which is what he should be while we're paying his salary), he is not allowed to. Conflict of interest: We know the interest of the public and the interest of corporations are not the same, and the line between them must be held firm. But Halliburton has in fact made out like a bandit from the war against Iraq, which is what happens when privatizing corporations are awarded major contracts without full, fair, open competitive bidding.[14]
At one point, Halliburton was caught red-handed billing the government for $74 million in gasoline that it hadn't delivered. This was in Iraq, mind you, in the middle of a war. Imagine if two Wall Street Journal reporters were in an armored vehicle that ran out of gas in the middle of a firefight:
“Wow, I think we just ran out of gas.”
“Well, of course. You didn't really think Halliburton would deliver all the gas the government contracted for at the low price they bid, did you? Not with a third-quarter earnings statement coming up.”
“All of the other military vehicles are leaving us.”
“You can't really expect a major corporation like Halliburton to jump just because some petty government bureaucrat waves the contract they signed at them. They have a responsibility to the bottom line, to their shareholders. If these directors don't manage for a profit, they could be sued for malfeasance. You know that as well as I do.”
“I think we're the only Americans left here.”
“You have to understand the imperatives of the marketplace. Quite possibly the price of gasoline took a sudden jump on the spot market and Halliburton was flexible enough to divert these shipments somewhere else.”
“Is that a shoulder-fired missile that guy is aiming at us?”
注释：
[1]Joel Bakan, The Corporation: The Pathological Pursuit of Power (New York: Free Press, 2004), 112.
[2]Bakan, The Corporation, 112.
[3]Tim Weiner, “Lockheed and the Future of Warfare,” New York Times, Nov. 28, 2004, B1.
[4]Weiner, “Lockheed and the Future of Warfare,” B1.
[5]Weiner, “Lockheed and the Future of Warfare,” B1.
[6]See, for example, Polly Ross Hughes, “Texas Blazing Welfare Trail: Stakes Are High as State Rushes to Privatize System,” Houston Chronicle, Nov. 19, 1996, 1.
[7]James Madison, “Monopolies, Perpetuities, Corporations, Ecclesiastical Endowments” (unpublished essay), cited in Charles Derber, Regime Change Begins at Home: Freeing America from Corporate Rule (San Francisco: Berrett-Koehler, 2004), 6.
[8]Jim Yong Kim, Joyce V. Millen, Alec Irwin, and John Gershman (eds.), Dying for Growth: Global Inequality and the Health of the Poor (Monroe, Maine: Common Courage Press, 2000), 36.
[9]Barnaby J. Feder, “Wal-Mart's Expansion Aided by Many Taxpayer Subsidies,” New York Times, May 24, 2004.
[10]Reed Abelson, “States Are Battling Against Wal-Mart Over Health Care,” New York Times, Nov. 1, 2004, 2.
[11]Abelson, “States Are Battling,” 3.
[12]Abelson, “States Are Battling,” 5.
[13]Abelson, “States Are Battling,” 2.
[14]Singer, Corporate Warriors.
