Wed Jun 19 2013

The Coddling of the Corporate Rich and the Big Corporations
by Bob Sheak
October 9, 2012

Romney would like to deal with the jobs’ problem by rewarding the corporate rich, often way up there in the top of the 1 percent of income and wealth distributions, with further tax cuts for themselves and others like them and for their corporations, coupled with corporate-friendly regulation, and government spending that favors the interests of their corporations. The Romney/Republican approach to jobs is based on a trickle-down, neoliberal, free market economics that assume that only the rich, particularly the corporate rich, can bring the U.S. prosperity and robust economic growth that will make everything just fine for the majority of Americans.

It's the kind of philosophy that led to Wall Street speculation in arcane derivative investments, over-priced housing, and reckless mortgaging practices that culminated in the 2007-2009 epic recession, from which workers, homeowners, students, and local and state governments have yet to recover. It led to a government bailout of too-big-to fail banks and AIG. The Federal Reserve channeled trillions of dollars to banks in the form of buying up their toxic assets and giving them cheap and guaranteed loans, all outside of public or government scrutiny and none of it showing up on the federal government's budget or the country's national debt. The underlying attitude that seems to permeate corporate culture through all of this is captured by Mitt Romney's statement - later he called a misstatement - that 47 percent of the population see themselves as victims, don't pay any federal income tax, and are increasingly dependent on government. They won't vote for me, he said, and therefore I won't bother to worry about them.

Who are these rich people, this topmost fraction of 1 percent? How did they acquire their income and wealth? Some were born rich, like the Koch brothers. Most negotiated their way up the corporate ladder to become high-level executives in this or that large corporation. Along the way, they demonstrated their unstinting loyalty to the corporation's interests. When they reached the higher executive slots in one of the 500 to 1,000 biggest corporations, they and their boards bestowed on them high 6- or 7-figure salaries, lush benefits, extraordinary bonuses, and stock options designed always to yield big gains, along with golden parachutes when they leave the corporation or million dollar pensions when they retire. There also are those like Mitt Romney, who cofounded and helped run Bain Equity Capital, where he acquired his fortune of tens of millions of dollars. Bain operated by buying up controlling shares in corporations, dictating their policies, sometimes selling off parts of an the acquired company, other times closing it down, and in many case leaving some or all workers without jobs, and communities left in the lurch. Whether the acquired companies failed or survived the name of the game was making money for the owners.

There are varied and overlapping paths to reaching or staying at the top. But it has to do with only one kind of intelligence, creativity, and morality. The winners in this system are the ones who remain micro-focused on the the profits of their corporation and the personal quest for income, wealth, and power. They benefit when their costs are relatively low, especially labor costs, when taxes are low, when there are fewer regulations, when they sometimes steal from employee pension funds, and when they cook the books. Those who are best at it, or some parts of it, become heroes to their shareholders and the media. Hendrick Smith provides a telling example in his new book, Who Stole the American Dream, that suggests something less flattering but revealing about one of the preeminent contemporary corporate heroes.

"Apple's longtime CEO, Steve Jobs [now deceased], won praise for creating jobs in America from Republican leaders like Indiana governor Mitch Daniels, but in fact, Apple under Steve Jobs had only forty-three thousand employees in the United States, while it indirectly employed seven hundred thousand at its overseas suppliers, mainly in China....Apple overlooked sweatshop conditions and fatal explosions at supplier plants in China, not just because Chinese labor was cheap, but because state-subsidized Chinese suppliers jumped to meet Apple's tight deadlines by rousting workers out of bed at midnight and reportedly working them fifteen hours a day. With a competitive advantage from these labor practices...Foxcomm, Apple's biggest supplier in China of iPads and iPhones could undercut and beat out American rivals" (p. 259).

I’m not convinced as a citizen that we can solve the problems of corporate power, executive excesses, or the huge lack of decent jobs, the mind-boggling inequalities, the debt- ridden society and government, and the increase in climate disruptions. However, I am convinced that coddling the corporate rich and assuming that the corporate-dominated economy is sacrosanct only exacerbates the problem. Obama and the majority of Democrats should be given a pat on the back for being less coddling of the corporate sector than Romney and the Republicans. Obama and the Democrats have at least put their sights on raising taxes on the rich, some expansion of health care, possibly some modest reductions in weapons' contracts, unprecedented but insufficient support of green energy, some attention to the rising cost of higher education, support for women's reproductive choices and opportunities in the job market. Given the alternative, many progressives will vote for Obama and other Democratic candidates, hoping that the administration is more willing next time to support real reforms of Wall Street and the corporate system.