Corporate (Ir)Responsibility: Part Two.

In Part One, we began by talking about the concept of natural order, an Enlightenment theory of how economic and political systems could work and how the Chicago school of economics tweaked and bastardized these theories in the ’60s and ’70s to concoct a perverted view of socioeconomic policy that essentially said corporations should be free to do whatever the fuck they pleased. We went on to explain how they teamed up with politicians to make socialism and communist Russia the scapegoat for all things terrible in the world while they busied themselves with undoing the regulatory and tax framework in the United States that previously allowed for social mobility, innovation and expansion.

We reviewed how corporations worked, blew up Milton Friedman’s myth that corporations are magical creatures that exist only to maximize shareholder value and covered how wealth is transferred from generation to generation. It’s a pretty wild story about how corporations pulled off a remarkable con job to sell the American people that it’s somehow okay to hide money in offshore accounts. We also did the math to show that corporate America is actually holding somewhere in the neighborhood of $10 trillion offshore to avoid paying the piper back home!

Part One concluded with the assertion that we should be paying less attention to individual tax rates and more to corporations, which is the nightmare scenario and conversation the monied class really doesn’t want us to be having.

There. You’re caught up.

Okay kids. It’s time. Time to hear from the man himself.

In the audio essay, we open with a clip of Milton Friedman standing next to a monument of Jefferson. What Friedman does in this clip in a really folksy way is try to show the government as a nag and impediment because GM’s Corvair model was under attack for being unsafe at high speeds. To illustrate his point, just prior to him speaking, there’s footage of a driver crushing a racetrack in a Corvair as if to say, “Hey, if a professional race car driver in a helmet on an empty track can drive this thing safely, what’s your fucking problem?”

Milton then invokes the great Thomas Jefferson, saying he would be disappointed in all this hoo-hah over protecting people. We should just be able to do whatever the fuck we want. Here’s Friedman:

“Since the attack on the Corvair, government has been spending more and more money in the name of protecting the consumer. This is hardly what the third President of the United States, Thomas Jefferson, whose monument this is, had in mind when he devised a wise and frugal government as, ‘on which restrains men from injuring each other and leaves them otherwise free to regulate their own pursuits of industry and improvement.’ Ever since the Corvair affair, government has increasingly been muscling in between buyer and seller in the marketplaces of America. By Thomas Jefferson’s standards, what we have today is not a wise and frugal government but a spendthrift and snooping government.”

Just an aw shucks, free market loving Jeffersonian trying to protect the regular American from things like seatbelts and airbags. This is a pivotal moment in U.S. history and in our story today.

What he’s responding to here is Ralph Nader’s activism on behalf of the consumer. For those who aren’t really familiar with Nader, it’s difficult to explain the impact he had on American society in the ’70s. Nader is the standard bearer of consumer advocacy, and his brand of advocacy goes way beyond products and safety.

The nadir of Nader—see what I did there—was a controversy surrounding GM’s Corvair model, which was the subject of Nader’s first chapter of his landmark book, Unsafe at Any Speed. In it, he argued that the rear axle suspension made the Corvair unsafe the faster one traveled. Much later, even automotive media such as Road & Track would uphold this theory, though at the time, Nader was demonized. GM even went so far as to launch a smear campaign against him that included trying to trap him with sex workers and illegally tapping his phone.

Nader would become the poster boy for consumer protection and the most hated man in corporate America for decades as a result of this book and subsequent activism, which even included a run for President of the United States. His efforts didn’t go unnoticed in Chi-town, where Milton Friedman and his merry band of shit sniffers held Nader up as the pinnacle of government intervention and anti-capitalism.

Remember when we covered the Powell Memo? Powell was also responding to the rise of consumer advocates like Nader and encouraging corporate America to get into politics and start fighting fire with fire.

At some point, we’ll talk about the libertarian strain of the Chicago school philosophy and how they amplified certain aspects of Jefferson’s themes. Forget the fact Jefferson was a slave owner, didn’t think we needed a fucking national bank and went back on his own word so many times as President, it’s hard to even keep track. What Friedman and others have mastered is the art of cherry picking the Founding Fucker mindset and inserting it into modern day situations, as if any of these slave owning, syphilis carrying, wife cheating (but really smart) cock knockers would have had an opinion on airbags in cars.

Unfortunately, Nader is really one of the last great examples of citizen advocates who were successful in calling out corporate injustice because of corporate America’s coordinated attack against regulations. Up to this point, some of the most notable reforms in our nation’s history came from journalists and citizens like Nader who put a human face on the everyday tragedies of the capitalist system. From Jacob Riis’ photos of tenements leading to housing reform, Upton Sinclair’s descriptions of slaughterhouses in The Jungle leading to food safety reform and, as we promoted recently, Steinbeck’s portrayal of the forgotten farmers of the Dust Bowl in the Grapes of Wrath that sparked congressional discussions on wage reform.

But by the 1970s, corporate America had just about had it with all of these pesky do-gooders poking around in their business, and indeed they fought back.

The Empire Strikes Back

Here’s where we can draw on some prior themes, Unf*ckers. Think back to our American propaganda essay where we spoke about the rise of the think tank in the United States, backed by corporate money and how the media began consuming their literature as fact-based evidence because it was supposedly “independent.”

Over the next couple of decades, the number of (mostly conservative) think tanks backed by corporate dollars doubled and doubled again, all espousing the wonders of free market ideology and evils of regulation. At the same time, they were pouring an enormous amount of resources into doubling down on the need for tax cuts in order to preserve capital for global competitiveness and innovation, which we discussed in Part One.

Many of the economic assumptions in these materials were being pumped out by none other than the Chicago school. The underlying theory was that market efficiency was far more effective in protecting the consumer than government regulation could ever be. In theory, that makes a lot of sense, right?

In theory, a company that hurts, maims, kills, sickens or lies to its customers or employees wouldn’t be in business for very long. Right? Ehhhh: ExxonMobil, Monsanto, J&J, Koch Industries, McDonald’s, Nestlé, Tyson Foods, News Corp, Amazon, BP, Chevron...

The intersection of tax cuts, deregulation and free market propaganda is important. The tax cuts had the effect of turning big corporations into absolute juggernauts that could afford to paper over their misdeeds with fines, advertising and PR.

First of all, we’re still dealing with the fallout of the environmental calamities created by large industries. Remember that things were so bad that even the Nixon administration, which was considered pretty conservative at the time, helped pass legislation to reform the environmental practices of industry in the United States. Remember when conserve was part of the word conservative? Dig this from Nixon:

“Each of us all across this great land has a stake in maintaining and improving environmental quality. Clean air and clean water. The wise use of our land, the protection of wildlife and natural beauty. Parks for all to enjoy. These are part of the birthright of every American.”

So for a while, it looked like we were actually making some progress. Investigative journalism was arguably at its peak in the late ’60s and ’70s, environmental reforms were being passed in a bipartisan manner because we were listening to scientists—what a fucking concept—and the planet and the worker were taking center stage against the backdrop of the Civil Rights and gender equity movements. So we had progress like, hey you can’t dump tungsten in the waterways, lead pipes are really bad for you, hydrochlorofluorocarbons are contributing to global warming, solar power actually works so we should incentivize it, etc.

Then, as you’ll recall in the Reagan essay, the double whammy of the oil shock and inflation spike caused the first real disruption to our pocketbooks and really fucked the economy in the late 1970s. In a matter of just a few short years, there was a team locked and loaded with a shiny playbook that promised to right the ship and restore pride in America.

Needless to say, the other team was not prepared for this at all.

Perhaps the most surprising aspect of this entire period is just how organized the opposition was and how prepared they were to undo all of the social, environmental and consumer protection movements that had recently taken root. The swiftness and totality of it all is blinding. They hit it all, and the United States went on a deregulatory frenzy, the likes of which we had never seen before.

Between 1980–2000, environmental regulations were shattered. The mass incarceration movement went into overdrive. Worker protections and unions were crushed. Corporate taxes were slashed. And the coup de grâce at the close of the century was the repeal of Glass-Steagall, which let loose a torrent of financial fuckery that haunts us to this day.

I don’t mean to be patronizing here by condensing a well-worn story most Unf*ckers are aware of, but I felt it was worth recapping because deregulation and tax cuts really did go hand-in-hand to blow up the capitalist, Chicago school, natural order, neoliberal philosophy which is that markets self-regulate better than government. They don’t.

At a certain size, you don’t have to worry about breaking the rules as long as you can afford to pay the penalty.

Violations

There’s an amazing site called GoodJobsFirst.org that is truly doing the lord’s work by tracking corporation violations. The user experience is a little challenging, but it’s a treasure trove of data that will make you either angry or a little excited if you’re a fellow masochist.

I’m just going to give you a couple of highlights to drive home the point that most companies don’t give a fuck about breaking rules that endanger public health, because our tax structure has made them so fucking wealthy it’s easier to pay fines than follow rules.

Since 2000, the Environmental Protection Agency, which has seen its budget and resources continually slashed, especially during the Trump years, levied over $61 billion dollars in fines for more than 17,000 corporate violations. The EPA is here to protect us. Our water. Our air. Land. Natural resources of all kinds. And even with a dwindling budget and staff, they wrote 17,000 violations.

At the top of the list is none other than Koch Industries, parent company owned by chucklehead brothers Charles and David Koch—one of them is dead, doesn’t matter which—who are arguably the biggest fucking turds corporate America has ever squeezed out.

Koch Industries, one of the largest anti-regulation lobbying champions in America, have racked up almost $1 billion in fines spread over more than 400 violations. You see, they just don’t care. Cheaper to pay than to play.

We’re already fast approaching a time, however, when this kind shit will look like child’s play compared to the likes of Amazon. This, my dear Unf*ckers, is a whole other class of criminal.

The difference is companies like Koch Industries are the guy behind the guy. Half of the time, you don’t even know who they are, what they own or what they’re polluting. Amazon, on the other hand, owns the consumer supply chain. We pay them for media. For next day delivery. Their boxes have happy little smiley faces that release endorphins in your brain when you get a brown box on your doorstep. More than a third of the world’s websites exist on Amazon Web Services (AWS). Now they’re in the food business.

We’re addicted to Amazon, and they know it.

The pandemic was particularly good to the giant online retailer, with 2020 revenue closing near $400 billion and profits increasing from $11.5 billion in 2019 to $21 billion in 2020. Compared to peers like Google and Microsoft, their bottom line numbers are actually low, but they’re gaining ground quickly. Walmart is still a larger company, but Amazon blows their profit margin away. We know by share price that Amazon is valuable, but in real top line and bottom line dollars, at this trajectory it’s conceivable they could gross a trillion dollars within the decade, perhaps sooner.

And yet we’ve given Amazon subsidies in the U.S. in various forms totaling $2.9 billion dollars, and they’re one of the biggest tax cheats in the country. How big? Over the past three years, Amazon has paid an effective tax rate of 4.3%.

Remember when the subject of our second Unf*cking Quickie, Alexandria Ocasio-Cortez was raked over the coals for killing the Amazon warehouse deal in her district?

Let’s look at this more closely.

Amazon looks to locate these hubs near wealthy areas so they can service their Prime customers that can afford to pay Prime fees. But they don’t drop fulfillment centers in the middle of a swanky neighborhood. They go to the closest nearby low-income community with higher Black and Latino populations. Then they have the gall to ask for tax breaks and subsidies for “blessing” these areas with new jobs that have higher injuries and a pay scale no greater than what currently exists, especially in an area like New York.

What her district needs isn’t another marginal paying warehouse facility that is subsidized to come there. It needs affordable housing. Furthermore, when you give tax breaks to a company (especially one as big as Amazon), you rob the local school district and municipality of sorely needed revenue. You actually take buildings off the tax roll to accommodate a brand spanking new warehouse that creates menial jobs, a massive amount of pollution and congestion and wear and tear on the local roads and infrastructure, with basically nothing in return.

So net, net, these deals are corrosive. But AOC was taken to task for being a job killer. 

Prior to the pandemic, the jobless rate in Queens was less than 3% like the rest of the country. Welp, that answers that.

Maybe she won the primary with 74% of the Democratic vote and won the general election with 71% vote because she actually understands what her district needs.

Creating Accountability

What I appreciate about the GOP is that they’re not hiding their intentions. Theirs is less ideology and more theology. There is a real, hardened belief that corporations are superior to all things political and social and that we need to protect them with the utmost fervor. Democrats are far more disingenuous when it comes to playing this game. They have their hands out as much as the Republicans do, but talk out of both sides of their mouths. Just look at Schumer’s donations if you need confirmation of just how in the tank Democratic leadership is with big business.

If you’re following David Sirota’s The Lever—and if you’re not, you need to—then you’ve likely seen him pick apart corporate dems like Manchin and even shill progressives like Sinema. One of the most wild things on the table right now is the proposed increase for corporate taxes as part of Biden’s infrastructure agenda. But all they’re pressing for is to increase corporate taxes to 28%, which is only halfway to where it was when Trump cut it. It’s preposterous, and hopefully we did a good enough job in Part One to illustrate why they can afford to pay more and how everyone actually benefits when they do. Even the top tier of income earners—not the billionaire class, that’s a different animal—would be insulated from harm under this scenario because it would incentivize corporations to pay people more across the board.

Of course, this can’t happen in a silo. In order to make this effective, you would have to simultaneously tighten the noose around corporate America’s wallet to prevent them from parking money offshore or using loopholes to evade taxes. The maddening part of this is actually how surprisingly easy it would be if the appetite existed in Congress.

Here are a few suggestions from our friends at GoodJobsFirst to get us started.

• Subject accountants, lawyers and bankers to criminal prosecution for aiding and abetting tax evasion.

• Deny offshore financial centers (OFCs) or shadow banks, the ability to clear dollar denominated transactions in New York, which would deny them access to the international banking system.

• Deny aid to all countries that house OFCs.

• Here’s an obvious one: Just pass a law to make tax structures designed to evade taxes illegal, with mandatory jail time for both the convicted tax cheat and their enablers.

There are dozens of other arcane suggestions that would effectively shut down this practice, and as we discussed in Part One, the vast majority of these companies would be unable to move their corporate domicile and could even risk their listing on U.S. exchanges.

Final Word

The comprehensive takeaway, my dear Unf*ckers, is that corporations have had it their way entirely since 1980. Deregulation has gone their way. Taxes have gone their way. They’re hiding $10 trillion dollars—that’s our fucking money—offshore to pump up the value of their shares by compounding cash gains and inflating their balance sheets. Compensation packages have been so absurdly enlarged that the fastest growing segment of the U.S. population are new millionaires, while the middle class shrinks and the poor continue to be left behind.

As we heard in our propaganda essay, they’re even writing state and federal laws directly. Any illusion of a firewall between corporate America and Washington DC has evaporated because no one really cares. Every day, these companies carry out the heist of a lifetime and no one bats an eyelash.

So why do we let them? Why do we cower to their might and fawn all over the wealthy executive? I’ll leave that final word to the great acerbic columnist and satirist of yesteryear, H.L. Mencken. I know he was problematic at times, but on some stuff…his shit holds up:

“Perhaps the most valuable of all human possessions, next to an aloof and sniffish air, is the reputation of being well-to-do. Nothing else so neatly eases one’s way through life. There is in 90% of all men—and in 99% of all Marxists, who value money far beyond its worth, and are always thinking of it and itching for it—an irresistible impulse to crook the knee to wealth, to defer to the power that it carries with it, to see all sorts of superiorities in the man who has it, or is said to have it. True enough, envy goes with the craven neck, but it is envy somehow purged of menace: the inferior man, at bottom, is afraid to do evil to the man with money; he is even afraid to think evil of him—that is, in any patent and offensive way. What stays his natural hatred of his superior, I daresay, is the snaking hope that he may get some of the money by being polite—that it will pay him better to caress than to strike.”

We have related essays coming up, including one on Conscious Capitalism and a really deep dive into the Chicago school. Our next one is a departure, but an important one. That’s all I can say. In the meantime: Conscious Capitalism is an oxymoron, Amazon is Skynet, and #FMF.

Here endeth the lesson.