Hostile Takeover -The Corporate Control Of Society

Hostile Takeover -The Corporate Control Of Society

Le 5 juin 06 ŕ 08:40, Laurence a écr

Hostile Takeover -The Corporate Control Of Society

Tuesday, April 25th, 2006

by Stephen Lendman

Large transnational corporations are clearly the dominant institution of our

time. They’re preeminent throughout the world but especially in the Global

North and its epicenter in the US. They control or greatly influence what we

eat and drink, where we live, what we wear, how we get most of our essential

services like health care and even what we’re taught in schools up to the

highest levels. They create and control our sources of information and

greatly influence how we think and our view of the world and them. They even

now own patents on our genetic code, the most basic elements of human life,

and are likely planning to manipulate and control them as just another

commodity to exploit for profit in their brave new world that should concern

everyone. They also carefully craft their image and use catchy slogans to

convince us of their benefit to society and the world, like: “better things

for better living through chemistry” (if you don’t mind toxic air, water and

soil), “we bring good things to life” (for them, not us), and “all the news

that’s fit to print” (only if you love state and corporate friendly

disinformation and Propaganda). The slogans are clever, but the truth is


Corporations also decide who will govern and how. We may think we do, but

it’s not so and never was. Those national elections, especially the last

two, only looked legitimate to most people, but not to those who know and

understand how the system works. Here’s how it really works. The “power

elite” or privileged class C. Wright Mills wrote about 50 years ago in his

classic book by that title are the real king and decision makers. He wrote

how corporate, government and military elites formed a trinity of power

after WW II and that the “power elite” were those “who decide whatever is

decided” of importance. The holy trinity Mills wrote about still exists but

today in the shape of a triangle with the transnational giants clearly on

top and government, the military and all other institutions of importance

there to serve their interests. These corporations have become so large and

dominant they run our lives and the world, and in a zero sum world and the

chips that count most in their stack, they do it for their continuing gain

and at our increasing expense. Something is way out of whack, and in this

essay I’ll try to explain what it is and why we better understand it.

The Power of Transnational Corporations and the Harm They Cause

As corporations have grown in size they’ve gained in power and influence.

And so has the harm they cause - to communities, nations, the great majority

of the public and the planet. Today corporate giants decide who governs and

how, who serves on our courts, what laws are enacted and even whether and

when wars are fought, against whom and for what purpose or gain. It’s for

their gain, who else’s, certainly not ours. Once we start one, they can even

make profit projections from it like on any other business venture. For

them, that’s all it is - another way to make a buck, lots of them.

The central thesis of this essay is that giant transnational corporations

today have become so dominant they now control our lives and the world, and

they exploit both fully and ruthlessly. While they claim to be serving us

and bringing us the fruits of the so-called “free market,” in fact, they

just use us for their gain. They’ve deceived us and highjacked the

government to serve them as subservient proxies in their unending pursuit to

dominate the world’s markets, resources, cheap labor abroad and our own

right here. And they’ve done it much like what happens in the marketplace

when a predator company attempts to take control of another one that prefers

to remain independent. They launch a hostile takeover, going around or over

the heads of the target’s management, their employees and the communities

they operate in. They go right to the target’s shareholders and promise them

a better deal, meaning a premium price on the stock they hold.

They do this, as in a friendly merger, for a variety of financial and

strategic reasons, but essentially it’s to achieve any possible immediate

gain as well as over the longer term greater market dominance that will

build future profits. But what happens in the wake of a takeover. Assets get

stripped, spun-off and/or sold-off. Plants are closed. Jobs are lost. And

all this is done for the primary bottom line goal - “the bottom line,”

higher profits, whatever the cost to people, communities or society.

Think of it this way. Large corporations today everywhere, but especially

the largest ones in the Global North, are a destructive force, hostile to

people, societies and the environment. They’re nothing less than legal

private tyrannies operating freely with virtually no restraint. Everything

for them, animal, vegetable or mineral, is viewed as a production input to

be commodified and consumed for profit and then discarded when no longer of

use. And to achieve maximum profits, costs must be rigidly controlled. That

means the lowest prices paid for goods and services, the lowest wages paid

to workers (below privileged higher management who reward themselves

richly), as little as possible spent on essential benefits like health care

and pensions, and increasingly little or no concern about the long-term cost

of exploiting, plundering or even destroying the natural environment and the

future ability of the planet to sustain life. These issues, however

recognized and grave, are for someone else to deal with later.

For now all that matters is today, the next quarter’s earnings and keeping

the stockholders and Wall Street happy. They only understand numbers on

financial statements and are blind, unconcerned and even hostile to human

and societal welfare or a safe environment that will protect and sustain all

life forms. They call it “free market capitalism.” It’s really the law of

the jungle. They’re the predators, we’re the prey, and every day they eat us


Does all this make sense? And do corporate chieftains who live in a

community, love their wives and children, contribute to charities, attend

church and believe in its teachings really go to work every day and think - “who and what can I exploit today?” They sure do because they have no other

choice. No more so than breathing in and breathing out.

How the Law Affects Corporate Behavior

Publicly owned corporations are mandated by law to serve only the interests

of their shareholders and do it by working to maximize the value of their

equity holdings by increasing profits. That’s it. Case closed. Think of

these businesses as gated communities of owners (large and small), the

welfare of whom is all that matters and the world outside the gates is to be

used and exploited for that one purpose only. Forget about any social

responsibility or safeguarding the environment. The idea is to grow sales,

keep costs low, increase profits, and if you do it well, shareholder value

will rise, the owners and Wall Street will be happy, and you as a CEO or

senior executive will probably get a raise, good bonus and keep your job.

Try being worker-friendly, a nice guy, a good citizen or a friend of the

earth and fail to achieve the above objectives and you’ll likely face

dismissal and even possible shareholder lawsuit for not pursuing your

fiduciary responsibility. Anyone choosing this line of work has no other

choice. To do the job well, you have to think only of the care and feeding

of your shareholders and the investment community, ignore the law if that’s

what it takes to do it, and obey the only law that counts - the one that

helps you grow the “bottom line.”

There’s nothing in the Constitution, which is public law, that gives

corporations the rights they’ve gotten. It never mattered to them. They just

crafted their own private law, piece by piece, over many years with the help

of corporate-friendly lawyers, legislators and the courts. And today it’s

easier than ever with both major parties strongly pro-business and the

courts stacked with business-friendly judges ready to do their bidding. The

result is big business is now the paymaster, or puppetmaster, with

government and the halls of justice their faithful servants. There’s no

government of, for and by the people, no public sovereignty, no democratic

rights or any choices but to accept their authority and bow to their will.

It’s a democracy for the few alone - the privileged elite. Our only choice

is to go along to get along or get out of their way.

A Profile of the World’s Largest 200 Transnational Corporations

In December, 2000 The Institute for Policy Studies released a report called

“The Rise of Corporate Global Power.” It was a profile of the 200 largest

transnationals that showed just how dominant they are. A summary of their

findings is listed below.

1. Of the world’s 100 largest economies, 51 are corporations.

2. The combined sales of these 200 corporations (called “The Group” below)

in 1999 equalled 27.5% of world Gross Domestic Product (GDP) and are growing

faster than overall global economic activity.

3. The Group’s combined sales exceed the total combined economies of all

nations in the world except the largest 10.

4. The Group’s combined sales are 18 times the income of the bottom one

fourth of the world’s population (1.2 billion people) living in “severe”


5. Despite their combined size and percentage of world economic activity,

The Group employs only 0.78% of the world’s workforce.

6. From 1983 to 1999 The Group’s workforce grew only 14.4% while their

profits increased by 362.4% or about 25 times as much.

7. The largest employer in the world, Walmart, employed 1,140,000 in 1999

(1.6 million in 2005) or 5% of The Group’s total employment. It’s also a

model (and increasingly a target) for corporate union-busting, widespread

use of part-time workers and a practice of avoiding giving its workers

needed benefits like health insurance.

8. 82 US corporations are in The Group, twice as many as Japan with 41, the

next highest contributing country.

9. 44 of the US corporations in The Group didn’t pay the full 35% federal

tax rate from 1996 - 1998. 7 of them paid no tax in 1998 and also got tax

rebates, including Enron and Worldcom now exposed as corporate criminals.

10. The percent of The Group’s sales from the service sector (not

manufacturing) grew from 33.8% in 1983 to 46.7% in 1999. In the US, the

service sector comprised 79% of the total economy in 2004.

How Corporate Behavior Affects the Public Interest

Big corporations have almost always thrived in the US. But a crucial,

defining moment happened in 1886 when the Supreme Court granted corporations

the legal status of personhood in Santa Clara County v. Southern Pacific

Railway - a simple tax dispute case unrelated to the issue of corporate

personhood. Incredibly it wasn’t the Justices who decided corporations are

persons, but the Court’s reporter (J.C. Bancroft Davis) who after the

decision was rendered wrote it in his “headnotes.” The Court did nothing to

refute them, likely by intent, and the result was corporations got what they

had long coveted.

That decision granted corporations the same constitutional rights as people,

but because of their limited liability status, protected shareholders from

the obligations of their debts, other obligations, and many of the

responsibilities individuals legally have. Armed with this new legal status

corporations were able to win many additional favorable court decisions up

to the present. They also gained much regulatory relief and favorable

legislation while, at the same time, being protected by their limited

liability status. As a result, corporations have been able to increase their

power and grow to their present size and dominance.

Although corporations aren’t human, they can live forever, change their

identity, reside in many places simultaneously in many countries, can’t be

imprisoned for wrongdoing and can change themselves into new persons at will

for any reason. They have the same rights and protections as people under

the Bill of Rights but not the responsibilities. From that right,

corporations became unbound, free to grow and gain immense power and be able

to become the dominant institution that now runs the country, the world and

all our lives. Most important, they got an unwritten license from all three

branches of the government to operate freely for their own benefit and

others of their privileged class and do it at the public expense everywhere.

They’ve exploited it fully as they’re grown in size and dominance, and the

result has been lives destroyed, the environment harmed and needless wars

fought on their behalf because they open markets and grow profits. It’s no

exaggeration to say these institutions today are real “weapons of mass


In the early days of the republic it all might have been different had

Thomas Jefferson and James Madison prevailed over Federalists John Adams and

Alexander Hamilton. Jefferson and Madison believed the Bill of Rights should

include “freedom from monopolies in commerce” (what are now giant

corporations) and “freedom from a permanent military” or standing armies.

Adams and Hamilton felt otherwise, and the final compromise was the first 10

Bill of Rights amendments that are now the law but not the other two

Jefferson and Madison wanted included. Try to imagine what this country

might be like today had we gotten them all.

We didn’t, of course, so the result, as they say, is history. It allowed

small corporations to grow into giants and so-called “free market

capitalism” to become the dominant state religion of this country and the

West. We may say it’s free, but it only is for those own and control it, and

notice we never hear the system called “fair.” That’s because in most key

industries a handful of corporate giants dominate and now work in

cartel-like alliance with their “friendly” competitors here and abroad to

control (read: exploit) the markets they serve. They’re also able to co-opt

the leaders and business elites of countries in the developing world, or

work in partnership with them in the larger ones like China, India and

Brazil, to allow them market entry. As an inducement, they offer to invest

their capital and offer their technology in return for a business-friendly

climate and access to the host country’s cheap labor. It’s an alliance based

on pure exploitation for profit at the expense of people who are used,

abused and discarded when they have no further value.

This essay is mainly about how these same corporate giants dominate and

exploit here in the US. They can’t get away with the flagrant abuses

commonplace in sweatshop labor countries, but they’re moving in that

direction. It’s no longer like the past in this country when I was young and

beginning my working life (a distant memory of better times) when

manufacturing was strong, jobs paid well and had good benefits, and workers

were protected by strong unions that served their interests even while

partnering with management and willing to do the bidding of government.

I still remember well an incident early in my working life when as a newly

minted MBA I worked as a marketing research analyst for several large

corporations prior to joining a small family business. At one of those

companies in the early 60s, my boss called me into his office on my first

day on the job. He jokingly told me he was so happy with my work he was

giving me a raise. We both chuckled, and he then explained on that day

everyone in the company got an inflation-based increase. It was automatic

from the lowliest worker to top management because the unions (then strong)

got it written into their labor contract. In that company, everyone got the

same benefits as union members. Try finding anything like that today even

for union members alone. It’s almost unheard of.

Today, the country is primarily dominated by service industries many of

which require little formal education, only pay low wages and few if any

benefits, and offer few chances for advancement. The US Department of Labor

projects that job categories with the greatest expected future growth are

cashiers, waiters and waitresses, janitors and retail clerks. These and

other low wage, low benefit jobs are what many young people entering the

workforce can look forward to today. You don’t need a Harvard degree for

them or even one from a junior college - and for the ones listed above, no

degree is needed, not even a high school one.

The continuing decline of good job opportunities is a key reason why the

quality of education in urban schools has deteriorated so much in recent

years and school dropout rates are so high. In my city of Chicago, half of

all students entering high school never graduate and of those who do 74% of

them must take remedial English and 94% remedial math at the Chicago City

Colleges according to a report published in the Chicago Sun Times. The

situation isn’t much better in inner cities throughout the country, nor is

the level of racial segregation that’s grown to levels last seen in the

1960s according to Jonathan Kozol in his new book The Shame of the Nation.

Again in Chicago, a shocking 87% of public school enrollment was black or

Hispanic, and the situation is about as bad or even worse in most other big


The lack of good job opportunities for a growing population of ill-prepared

young people is also a major reason for the growth of our prison population

that now exceeds 2.1 million, is the largest in the world even ahead of

China with over four times our population, and is incarcerating about 900

new prisoners every week. I wrote a recent heavily documented article about

this called The US Gulag Prison System.

The US Has Always Been the Unthinkable and Unmentionable - A Rigid Class


The US has always been what the “power elite” never admit or discuss - a

rigid class society. But once there was a thriving middle class along with a

small minority of rich and well-off and a large segment of low paid workers

and the poor. That majority in the middle could afford their own homes, send

their kids to college and afford many amenities like new cars, some travel,

convenience appliances and decent health care. I can still remember buying a

health insurance plan while finishing my graduate work in 1959 that cost

about $100 and change total for respectable coverage for a full year.

Honest, I’m not kidding.

Fewer people each year can afford these “luxuries” now, including decent

health care coverage, because of the hollowing out of the economy, stagnant

wage growth (to be discussed below) and skyrocketing costs of essentials

like health insurance, prescription drugs and college tuition for those

wanting a higher education. Services now account for nearly 80% of all

business while manufacturing has declined to about 14%, and total

manufacturing employment is half the percentage of total employment it was

40 years ago and falling. Also, financial services of all types now comprise

the largest single sector of the economy at 21% of it. But most of it

involves investment and speculation running into the hundreds of trillions

of dollars annually worldwide (and the US is the epicenter of it all) just

for transactions involving currencies and so-called over-the-counter and

exchange-traded financial derivatives. It’s not the purpose of this essay to

explain the nuts and bolts of this kind of trading except to say they

produce nothing anyone can go in a store and buy or that enhance the

well-being of the majority public that doesn’t even know, let alone

understand, that this kind of activity goes on or what the inherent dangers

from it may be.

The dismantling of our manufacturing base, however, is a subject that should

make daily headlines but is seldom discussed in the mainstream. It’s

crucially important because one has to wonder how any nation can avoid

eventual decline when it allows its manufacturing to be done abroad, reduces

its need for a highly trained work force and ends up destroying its middle

class that made it prosper in the first place. There are distinguished

thinkers who believe as I do that the US has seen its better days and is now

in a downward trajectory economically. Unless a way is found to reverse this

destructive trend, the US will be Number One only in military spending and

waging wars. And no nation in history based on militarism and conquest has

ever not failed ultimately to destroy itself.

I’d like to quote two distinguished thinkers who’ve addressed the issue of

growing inequality in the US. On most social matters they’d likely disagree,

but not on this one. One was former liberal Supreme Court Justice Louis D.

Brandeis who explained: “We can have democracy in this country, or we can

have great wealth concentrated in the hands of the few, but we can’t have

both.” The other was distinguished “free market” economist and Nobel

laureate Milton Friedman. In his view: “The greatest problem facing our

country is the breaking down into two classes, those who have and those who

have not. The growing differences between the incomes of the skilled and the

less skilled, the educated and the uneducated, pose a very real danger. If

that widening rift continues, we’re going to be in terrible trouble…..We

cannot remain a democratic, open society that is divided into two classes.”

The Downward Trajectory of American Workers

Over the past generation working people have seen an unprecedented fall in

their standard of living. In the past (except for periods of economic

downturn), workers saw their wages and benefits grow each year and their

living standards improve. Today it’s just the opposite. Adjusted for

inflation, the average working person in the US earns less than 30 years

ago, and even with modest annual increases is not keeping up with inflation.

In addition, the federal minimum wage is a paltry $5.15 an hour and was last

increased in 1997. That rate is now at the lowest point it’s been relative

to average wages since 1949. It’s incentivized individual states to raise

their own which they have the right to do, and, as of mid-year 2005, 17 of

them and the District of Columbia have done it covering nearly half the US

population. That helps, but not enough.

Some of the world data is especially shocking, appalling and indicative of

the economic trend in the US. According to the UN 2002 Human Development

Report, the richest 1% in 1999-2000 received as much income as the bottom

57% combined, over 45% of the world’s population lived then on less than $2

a day, about 40% had no sanitation services and about 840 million people

were malnourished. In addition, 1 in 6 grade school children were not in

school, and half the global nonagricultural labor force was either

unemployed or underemployed. Most shocking and disturbing of all is that

many millions (likely tens of millions) of people in the less developed

world die each year from starvation and treatable diseases because of abuse

and/or neglect by rich nations that could prevent it. And these numbers

reflect the state of things at the end of a decade of overall impressive

economic growth. But it shows how those gains went mainly to a privileged

upper class who got them at the expense of the majority below them,

especially the most desperate and needy.

The same trend is evident in the US although not as stark as in the less

developed world. Except for the mild recession in 2001-2002, overall US

economic growth for the past 15 years has been strong and worker

productivity high. But the gains from it went to the privileged at the top

and were gotten at the expense of working people who saw their wages fail to

keep up with inflation and their essential benefits decline. In 2004 the

average CEO earned 431 times the income of the average working person. That

was up from 85 times in 1990 and 42 times in 1980. It’s hard to believe and

even harder with the real life example below.

I’d like to nominate a “poster executive” who for me symbolizes classic

gross corporate excess and greed. He’s the chairman and CEO of Capital One

Financial, the giant credit card company that’s awaiting the finalizing of

its acquisition of North Fork Bancorp. At completion of this deal, the Wall

Street Journal reported on March 24 this lucky fellow will realize a gain of

$249.3 million from stock options he exercised last year. That’s in addition

to the $56 million he earned in 2004. What on earth will he spend it on, and

how many less fortunate ones will have to ante up to pay for this in the de

rigueur job cuts that always follow big acquisitions.

And what will all those other lucky CEOs and top executives spend theirs on

as well. If you’re not already gagging, let me make you choke. According to

a study just released by two Ivy League academics based on interviews with

CEOs and top managers of the largest 1,500 public US companies, the top five

executives collectively at those companies pocketed $122 billion in

compensation from 1999-2003 plus at least $60 billion more in supplemental

benefits from SERPs (Supplemental Executive Retirement Plans). Also, other

data show average annual CEO pay rose from about $1 million a year in 1980

to an estimated $14.4 million in 2001 and rising - plus all those juicy

benefits. I repeat - what on earth can they spend it on. They could never

even count it.

Reasons for This Unabated Downward Trajectory

The reasons for this decline were as follows:

The shift away from manufacturing to services.

The growth of so-called “globalization” sending many jobs abroad including

high-paying ones.

The decline of unions to levels last seen before the mass unionization

struggles of the 1930s because of government and corporate antipathy toward

them and corporations using the threat to close plants and move jobs

offshore to force workers to take pay cuts and accept lower benefits. And

then they still move jobs abroad.

Deregulation of key industries including transportation, communications and

finance, which opened these industries to low cost competition that put

pressure on unions and forced workers to accept lower pay and benefits to

keep their jobs.

The growth of high technology allowing machines (mainly computers) to do the

work of people, thus reducing the need for them.

The effects of racism and sexism (in a society with deep-rooted racism,

sexism and classism) as seen in the data showing 30% of black workers and

40% of Latino workers earning poverty wages with women in both categories

most affected. And the average black family owns only 14% as much as the

average white family.

The unabated downward trajectory of workers’ real income already discussed.

The only family income gains have come from two income households, in many

cases because wives were forced to enter the workforce out of necessity.

Statistics Documenting the Decline

Hot off the press from the latest US Federal Reserve triennial survey (and

most comprehensive one of all) of household wealth published in late

February, 2006:

–Median American family income grew a paltry 1.5% after inflation between

2001 and 2004, but there was a widening gap between upper and lower income


–While the richest 10% rose an inflation adjusted 6.5%, the bottom 25% fell


–Stephen Brobeck, Executive Director of the Consumer Federation of America,

explained - “While the typical American household basically ran in place,

less affluent households actually lost ground.”

Even hotter off the press, the US Department of Labor and Congressional

Budget Office reported in late March that in the last 5 years ending

year-end 2005, inflation adjusted GDP per person rose 8.4% but the average

weekly wage fell 0.3%. Following a long-term trend since the 1970s, those in

the upper income percentiles gained the most while those in the lower half

of them lost the most. And the income gap between rich and poor continued to


–The racial disparity was especially dramatic. The median white family’s net

worth in 2004 was $140,700 compared with $24,800 for the typical nonwhite


According to the 2005 Federal Poverty Guidelines, 12.7%, or 37 million

people, lived in poverty in 2004. However, because of an acknowledged flawed

model to measure poverty, the true number is far higher - at least many

millions more and increasing even in times of prosperity.

In December, 2004 the New York Times reported the US ranked 49th in world

literacy, and the US Department of Labor estimates over 20% of the

population is functionally illiterate (compared to about 1% in Venezuela and

Cuba, two of the countries we demonize the most). It’s also true, as

discussed above briefly, that the quality of public education has been in

decline in urban schools for many years. In addition (also mentioned), the

extent of racial segregation is now as great as in the 1960s, despite

supposed but unrealized gains from the civil rights legislation of that

time. Further, state and local education budgets aren’t keeping up with a

growing need or are being cut. It’s also no better for those needing college

aid as federal Pell grants have been frozen or cut for three straight years,

and it was just reported in late March by public college finance officials

that state higher education funding has fallen sharply from $7,121 per

student in 2001 to $5,833 in 2005. It means a growing number of lower income

students are now deprived of a chance for higher education - and it’s

getting steadily worse.

The World Health Organization ranked the US 37th in the world in “overall

health performance” and 54th in the fairness of health care. And in 2004

about 46 million people had no health insurance and millions more were

underinsured. These appalling numbers are in spite of the fact that the US

spends far more on health care per capita than any other country. And all

developed countries in the world, except the US and South Africa, provide

free health care for all its citizens paid for through taxes.

The European Dream reported US childhood poverty ranked 22nd or second to

last among developed nations.

The US ranked last among the world’s 20 most developed nations in its worker

compensation growth rate in the 1980s with conditions only slightly better

in the 1990s.

The New York Times reported 12 million American families, over 10% of all

households, struggle to feed themselves.

The NYT also reported the US ranks 41st in world infant mortality.

All this and many more depressing statistics are happening in the richest

country in the world with a 2005 Gross Domestic Product of $12.5 trillion.

The dramatic effects of social inequality in the US are seen in the Economic

Policy Institute’s 2004 report on the State of Working America.” It shows

the top 1% controls more than one-third of the nation’s wealth while the

bottom 80% have 16%. Even worse, the top 20% holds 84% of all wealth while

the poorest 20% are in debt and owe more than they own.

Corporate Gain Has Come at the Cost of Worker Loss

Not coincidentally, as workers have seen their living standards decline,

transnational corporations have experienced unprecedented growth and

dominance. And that trend continues unabated. How and why is this happening?

Begin with the most business-friendly governments the country has had over

the last 25 years since the “roaring” 1920s when President Calvin Coolidge

explained that “the business of America is business.” He, and two other

Republican presidents then did everything they could to help their business

friends. But they were small-timers compared to today, and the size,

dominance and global reach of big business then was a small fraction of what

it is now. And back then, job “outsourcing”, GATT and WTO type trade

agreements, and the concept of globalization weren’t in the vocabulary. Now

they’re central to the problem as they’ve put working people in corporate

straightjackets and created a severe class divide in the country (not to

mention the developing world where it’s far worse) that keeps widening.

How World Trade Agreements Destroy Good Jobs and the American Dream

World trade between nations is nothing new, and the General Agreement on

Tariffs and Trade (GATT) has been around since it was formed in Havana, Cuba

in 1948. But with the signing of NAFTA that went into effect on January 1,

1994, the notion of so-called globalization emerged big time. NAFTA brought

Mexico into the 1989 Canada-US Free Trade Agreement as part of a radical

experiment to merge three disparate economies into a binding

one-size-fits-all set of rules all three had to abide by regardless of the

effect on their people. To sell it to each country’s legislators and people,

NAFTA’s backers made lofty pie-in-the-sky predictions of new jobs that “free

trade” would create. They never were nor was this a plan to do it. It was a

scam to outsource jobs and thus eliminate many others, enrich the

transnationals and make working people pick up the tab and take the pain.

NAFTA was just the beginning. It was planned as a stalking horse and

template for the World Trade Organization (WTO), that replaced the GATT one

year after NAFTA went into effect. The WTO along with an alphabet soup of

trade agreements (passed and wished for) like GATS (covering all kinds of

services), TRIPS (for intellectual property), MAI (on investments and most

all-encompassisng and dangerous one of all if it ever passes even in

separate pieces) and all the regional agreements like CAFTA and FTAA are

intended to establish a supranational economic “constitution.” It’s to be

based on the rules of trade the Global North nations want to craft that

would override the sovereignty of all WTO member nations. In other words,

the plan was and still is for the US primarily, along with the EU, Japan and

other dominant Global North countries to establish a binding set of trade

rules (a global constitution) they would write for their benefit for an

integrated world economy and then force all other nations to abide by them.

NAFTA, and what was to follow, were and are not intended to create jobs and

raise living standards in the participating countries, despite all the hype

saying they would and will. These agreements are solely plans to benefit big

corporations, legally allowing them the right to dominate world markets,

override national sovereignty to do it, and exploit people everywhere for

their gain. Bottom line - these “agreements” mean big corporations win and

people everywhere lose.

So far the jury is very much out on whether the grand plan will succeed as

key countries in the Global South have caught on to the scam and aren’t

buying it - Brazil, India, Venezuela, Argentina, Bolivia and others. And

China is big enough to be a club member, agree to the rules, and then bend

them at times to protect its own interests.

But if NAFTA was a template to disguise a WTO attempted world “hostile

takeover,” look at all the carnage it’s created so far. Instead of creating

jobs in all three countries, it destroyed hundreds of thousands of them. In

the US alone it’s responsible for the loss each year of many thousands of

high paying, good benefit manufacturing jobs now exported to low wage

countries like Mexico, China, India and many others. And most of the workers

losing them only are able to find lower paying ones with fewer or no

benefits if they can find any job at all. This is an ongoing problem in good

as well as poor economic times and gets worse every year. It’s also led many

older workers, who wish to work but can’t find jobs, to drop out of the work

force or take lower paying part-time ones when they can find full-time ones.

The result has been a huge shift upward in income, wealth and power in the

US (and in Canada, Mexico and all other WTO member countries) benefitting

the business elites and corrupted politicians. And it’s cost working people

billions of dollars, many thousands of good jobs and a permanent drop in the

average American worker’s standard of living. It’s also created an enormous

migration problem all over the world comprised of desperate people looking

for work because there’s none at home. I wrote at length about this in the

US in my recent article called The War on Immigrants. The problem gets worse

every year including in the US. And here a low unemployment rate hides the

fact that many workers have dropped out of the work force or must take

whatever part-time jobs they can find because they can’t get full-time ones

as mentioned above.

I’m now working on a new article in which I discuss the view of some US

economists who explain that if the unemployment rate today was calculated

the same way it was during The Great Depression when it rose to a peak of

25% of the working population, the true current figure would be about 12%

instead of the reported 4.7%. The current calculation method includes

part-time workers who work as little as one hour during the reporting

period. It also excludes discouraged workers who wish to work but who’ve

stopped looking because they can’t find jobs.

One might logically wonder why big US corporations run by smart people

wouldn’t be trying to ameliorate this problem to build rather than weaken

the purchasing power of people in their home country - the ones they need to

buy their products and services. It’s not just for their obvious need to

control or reduce costs to enhance profits. It’s because these companies are

only nominally US ones. They may be headquartered here, but they could as

easily be home based anywhere. The US may be their biggest market and most

important source of revenue and profit, but their operations and markets

span the globe. If they desired, they could pick up and leave and set up

shop in Timbuktu or Kathmandu. That’s why they’re called “transnationals.”

Once Our Government Protected Working People

At one time US governments had a social contract with its citizens,

imperfect as it was. Most governments in Western Europe still do, although

they’re being weakened. But since the 1980s and especially after the

election of George W. Bush, that contract here is being dissmantled, program

by program, year after year with the ultimate goal of making every one

self-sufficient with little or no safety net for protection. The most

vulnerable poor are hurt most and their numbers grow each year, but the

middle class is suffering too as those in it are declining as a percent of

the total population. And the very definition of a middle class is changing

as the wealth gap keeps widening between top and bottom along with the

hollowing out of the middle.

Bush and his cabal of acolytes are so intent on destroying the US social

contract with its citizens that their motto might as well be: you can have

anything you want - as long as you can afford to pay for it. If not, you’re

on your own.

The Balance Sheet Documenting Corporate Gains

Worker loss has been corporations’ gain - big time. In 2004 the world’s

largest 500 corporations posted their highest ever revenues and profits - an

astonishing $14.9 trillion in revenue and $731.2 billion in profits. And top

corporate officials, mainly in the US, are raking it in, rewarding

themselves with obscene amounts of salaries, bonuses in the multi-millions

and lucrative stock options worth even more for many of them. That level of

largesse is only possible at the expense of working people here and

everywhere. Oliver Stone may have been thinking of them when he made his

1980s film, Wall Street. In it was the memorable line spoken by the

character portraying the manipulative investor/deal-maker when he explained

that “greed is good.”

Except for two brief and mild recessions, corporations in the US have

prospered since the 1980s in a very business-friendly environment under both

Democrats and Republicans. The result has been rising profits to record

levels, enhanced even more by generous corporate tax cuts (and personal ones

as well mostly for the rich), especially after the election of George Bush.

Under this president, one of their own in the White House, US corporations

have never had it better. It’s been so good that 82 of the largest 275

companies paid no federal income tax in at least one year from 2001-2003 or

got a refund; 28 of them got tax rebates in all 3 of those years even though

their combined profits totaled $44.9 billion; 46 of them, earning $42.6

billion in profits, paid no tax in 2003 and got $4.9 billion back in tax

rebates. And the average CEO pay for these 46 companies in 2004 was $12.6


Along with big tax cuts and generous rebates, big corporations are on the

government dole big time in the form of subsidies, otherwise known as

“corporate welfare.” It’s also known as socialism for the rich (and

capitalism for the rest of us). In 1997 the Fortune 500 companies got $75

billion in “public aid” even though they earned record profits of $325

billion. They got it in many forms - grants, contracts, loans and loan

guarantees and lots more. Today there are about 125 business subsidy

programs in the federal budget benefitting all major areas of business.

Some examples of this government largesse include:

Selling the rights to billions of dollars of oil, gas, coal and other

mineral reserves at a small fraction of their market value.

The giveaway of the entire broadcast spectrum to the corporate Media, valued

at $37 billion in 1989 dollars.

Charging mostly corporate ranchers (including big oil and insurance

companies) dirt cheap grazing rates on over 20 million acres of public land.

Spending many billions of dollars on R & D and handing over the results to

corporations free of charge. “Big Pharma” is notorious for letting

government do their expensive research and then cashing in on the results by

soaking us with sky-high prices and rigging the game with through WTO rules

that get them exclusive patent rights for 20 years or longer when they’re

able to extend them through the courts.

Giving the nuclear industry over $100 billion in handouts since its

inception and guaranteeing government protection to pick up the cost in case

of any serious accidents that otherwise might cost the company affected

billions and possibly bankrupt it.

Giving corporate agribusiness producers many billions in annual subsidies.

You and I, the individual taxpayers, pay the bill for this generosity. But

we actually pay these corporations twice - first through our taxes and then

for the cost of their products and services. And they don’t even thank us.

The Biggest Recipient of Government Handouts

In the old game of “guns vs. butter”, guess who wins? Clue - they have

shareholders, and their chiefs are called CEOs. Guess who loses? You know

that answer chapter and verse by now.

The Wall Street film character who explained that greed is good might have

added War is even better. Call it greed made easy or without even trying.

Since WW II the Pentagon and military-industrial complex have always been at

the head of the handout queue to get their king-sized pound of flesh in

appropriations. The amounts gotten varied in times of War and peace or with

the whims or chutzpah of a sitting president, but they’re always big. The

Pentagon, defense contractors and all the other many and varied thousands of

parasitical corporations servicing the defense industry are umbilically

linked. All these corporations profit handsomely in our

military-industrialized society that takes our tax dollars and hands them

over to them by the hundreds of billions annually. Their gain is the public’s

loss. If the process were audible we’d be able to hear a “giant sucking

sound” of public resources wooshing from our pockets to theirs. It’s also

the sound of our lifeblood being sucked away as we have to pick up the tab

and give up our social benefits as well.

Once the cold War ended after the Berlin wall came down and the Soviet Union

became 15 independent republics, there was some hope for a peace dividend - meaning less for the military and more social spending. That wasn’t what the

first Bush administration and Pentagon had in mind as they frantically

searched for and easily found new potential enemies as a way to make the

case for continued militarized state capitalism. Our language manipulation

experts came up with and sold to the Congress and public the threat of

“growing technological sophistication of Third World conflicts” which “will

place serious demands on our forces” and “continue to threaten US

interests,” even without “the backdrop of superpower competition.” Our

defense strategy would thus be based on maintaining global “stability” (more

code language meaning assuring obedience to US dominance).

In the 1990 National Security Strategy, the Pentagon presented its defense

budget to the Congress using the above stated pretext to justify what they

wanted. It called for strengthening “the defense industrial base” (code

language for the high-tech industry in all its forms) through generous

subsidies as incentives “to invest in new facilities and equipment as well

as in research and development.” They got what they wanted, and it set off

the high tech stock market boom that lasted until the speculative bubble

burst in March, 2000 when the economy slowed and slipped into recession.

Three years later in a post 9/11 environment, the economy was again growing

as was annual defense spending, and the stock market began another ascent

that’s so far continuing.

The many corporations now benefitting from Pentagon largesse are so addicted

to it that they become the main promoters of and cheerleaders for conflicts

or preparations for them because they guarantee bigger handouts that are so

good for business. It’s a dirty business, but isn’t that the fundamental

predatory nature of large-scale capitalism that relies on a state policy of

imperialism to thrive and prosper. Senator Henry Cabot Lodge explained it in

1895, in an unguarded moment, when he said “commerce follows the flag.” He

might have added that the flag also follows commerce. The great political

economist Harry Magdoff, who died this year on New Year’s day, also

explained it well in his 1969 book The Age of Imperialism when he wrote:

“Imperialism is not a matter of choice for a capitalist society; it is the

way of life of such a society.” And historian Henry Steele Commager wrote

about how a national security police state and its bureaucracy lends its

great talents and resources “not to devising ways of reducing tensions and

avoiding War, but to ways of exacerbating tensions and preparing for War.” I

guess the conclusion is that in a capitalist society dominated by big

business this “bad seed” must be in our DNA and we can’t help ourselves as a

result. In another article I’m working on I refer to our addiction to War.

So far we haven’t found an effective antidote.

The reason, of course, is because War is so good for business. In the last 6

years alone, and especially since 9/11, along with all their other largesse

and waste, the Pentagon outsourced on average $150 billion a year in work to

corporations. Almost half of it was in no-bid contracts and three fourths of

that was to the five largest defense contractors headed by Lockheed Martin

and Boing. L-M is the undisputed king of contractors. They literally run the

enterprise of empire from the inside and out. They’re not only its biggest

beneficiary, they also help shape the policy guaranteeing it - to the tune

of $65 million every day (from our pockets into theirs). And they collect

their loot even when their killing machines don’t work right.

Then, of course, there’s Halliburton and Bechtel. They’re always big time

winners in the handout sweepstakes. These two well-connected companies have

been at the head of the queue in the looting of Iraq and the US Treasury.

They’ve gotten huge no-bid contracts worth many billions which they then

freely supplemented with gross (read: criminal) overcharges and gotten away

with most of it. And we can’t ignore the notorious Carlyle Group, the

nation’s largest privately held defense contractor with the tightest of ties

right to the Oval Office. They practically sit in the traditional Kittinger

chair there, or whatever other brand George Bush may prefer. His father, and

former president, of course, is on their team (and payroll), and they use

him as needed as their main “door-opener” and “wheel-greaser” (especially in

the lucrative Middle East). And the old man reportedly earns a hefty half

million dollars for every speech he makes on behalf of his generous

employer. At that pay scale he must be hard-pressed to keep his mouth shut.

Guess How Big Funding National Defense Really Is

The Center for Defense Information reported that since 1945 over $21

trillion in constant dollars has been spent on the military. And it’s been

done largely to benefit US corporations even though the country had no real

enemies all through those years - except for the ones we attacked with no

provocation or invented to scare the public so they’d buy into the scam that

we needed industrial strength military spending for national security.

Ronald Reagan was very adept at scare tactics and duping the public. He

fathered the Contra wars in the 80s in Nicaragua and scared half the public

into believing the ruling Sandinista government was a threat to invade Texas

and threaten the whole country. He tried and failed to get Mexican president

Miguel de la Madrid to go along with him. The Mexican president said if he

did 70 million Mexicans would die laughing. It’s hard to believe the US

public could ever fall for a threat about as great as I’d be (all 120 lbs.

of me) in the ring against Mike Tyson in his prime. But although there was

none and the nation was at peace during his tenure, Reagan expanded the

military budget by 43% over what it was at the height of the Vietnam War

(and ran up huge budget deficits doing it). The public suffered for it with

the loss of social benefits, but business loved it and him, and the stock

market took off on an 18 year bull run.

But after the 9/11 attack, the floodgates really opened wide. In fiscal year

2000 the military budget was $289 billion, but up it went steadily after

that reaching $442 billion in 2006 and currently is requested to increase to

$463 or higher in 2007. Add to that over $41 billion for Homeland Security

in 2006 (another public rip-off as part of a move toward a full-blown

national security police state) and annual multi-billions in funding off the

books for the Iraq and Afghanistan wars that in fiscal 2006 alone amounts to

about $120 billion now and may increase. Add it up and the current budget

for the military, 2 wars off the books and Homeland Security, and it comes

to over $600 billion this year. That kind of spending, with billions more

available at the drop of an add-on presidential emergency request gives a

whole new meaning to the term “War profiteer.” And while the big defense

contractors reap the biggest benefits, many thousands of US corporations are

in on the take as the Pentagon is a big buyer of everything from expensive R

& D and high tech weapons to breakfast cereals and toilet paper. Using the

false Bush slogan about leaving no child behind for his failed education

program, the Pentagon for sure leaves no corporation behind in its

generosity. Corporations wanting a piece of the action need only remember

and abide by the scriptural message from John 16:24: “ask and you shall

receive.” And probably a lot as the Pentagon is notorious about being

sloppy, “spilling” more than many good sized corporations earn.

Here’s the 2 key questions to ask. Does anyone feel safer, and who’ll pick

up the tab? If you hadn’t noticed, you, the average worker, didn’t share in

those big tax cuts, your income is losing the War to inflation, your

benefits are eroding, and someone some day has to pay that $8.275 trillion

national debt that keeps rising $2.2 billion every day. And along with that

burden, we’ve never been less safe, and we, the public, have to pay the bill

because corporate America never does. They’re in another queue for more tax

cuts, and we’ll see more social benefits cut to pay for them too. In the

political game of musical chairs, corporations get them all every time, and

John Q. Public is always left standing (out in the cold).

How Did We Get Into this Mess, and How Can We Get Out of It

I’ve already explained what happened. As to how, it’s because we let them.

They delivered the message, and we bought it like lambs led to the slaughter

or believing the “foxes” were really “guarding” us. Back in school we all

learned and sang those lovely lyrics that began “Oh beautiful for spacious

skies, For amber waves of grain.” We believed it and most of us in our

stupor still do. It’s long past time we realized it was just a song intended

to lull us into complacency to accept the message and go along with it. It

was a false message, although there is an America the Beautiful, but only

for the privileged few and no one else. And every year it gets worse - a

race to the bottom with no end in sight until we either get there or wake up

in time and do something about it. Unless we act to cauterize our collective

wounds we’ll never begin the healing process; in fact, we’ll bleed to death.

We have to find a way to reclaim the democracy we’re always being reminded

we have, but don’t. If we really had it, they’d never have to remind us

about it.

People Power Is How We Get Out of It

It’s not too late to turn it around - yet. And it’s simple to know what we

need to do but always hard knowing how to go about it - take to the streets,

throw the bums out (we’ve tried that one before and only put in new bums).

Anyone have some good suggestions? I don’t have sure-fire ones, but I’ve got

a piece of good wisdom based on the past and the present. History shows that

when things get bad enough people first stir and then react. If nothing

changes and the pain gets bad enough, then at some point down go the

barricades, and people power steps into the breach. The many always win out

over the few when they’re fully committed to do it. I”ve quoted famed

Chicago community activist Sol Linowitz before who understood it and once

said “the way to beat organized money is with organized people.” Three

recent and current examples make the point and show us how.

All over France for two months up until April, millions of angry young

people and union members mainly engaged in strikes, sit-ins and mass street

protests to demand the revocation of the new First Employment Contract (CPE)

for workers under 26 years of age. French youth refused to become what they

called “a Kleenex generation” - to be used and thrown away at the whim of

employers who want the “flexibility” to do it. The law was based on the

insane notion that indiscriminate firing was a way to create more jobs and

reduce unemployment. If it had gone into affect, it would have given

employers the right to hire young workers on a two year trial basis and fire

them at will at any time during that period. The protesters understood the

sham and how it would hurt them and stayed out long enough to get the Chirac

government to back down and effectively cancel this outrageous law.

A second example is now happening on the streets in Nepal as many thousands

of people from all walks of life including professionals have been

protesting since early April in a mass civil uprising against King Gyanendra

demanding an end to autocratic monarchal rule and the restoration of

democracy. At this writing they still don’t have it, but the king had to go

on national television and promise to meet their demands. The protests

continued after his first public statement forcing the king to go further

and agree to the major demands of the main seven-party alliance including

reinstating the lower house of parliament and giving power back to elected

officials. Doing that would then clear the way to create a new constitution,

hopefully a more democratic process and an end to the mass protests. At this

writing it remains to be seen whether resolution has now been reached, but

it appears a major step has been taken toward it.

The third example has been happening here in the US as millions of

immigrants and working people of all races have taken to the streets in

cities all over the country. They’ve seen their rights denied or threatened,

their jobs exported, unions weakened or destroyed, wages stagnated and

essential benefits reduced, lost or never gotten. Their protests are

continuing, and they demand equity and justice. Congress has already taken

note and softened some of their hostile anti-immigrant rhetoric. But it

remains to be seen how this will turn out. The Congress will resume its

immigration legislation debate in its post Easter break session with a final

resolution now unclear. What is clear is that if a final bill emerges it

will be less harsh than the original House version that passed and the

Senate one still being debated prior to and during the mass protests.

The lesson is clear. Mass people actions, if large and strong enough, get

results. Lots of great thinkers through the years knew this and said it many

different ways. I quote some of them often for inspiration, and I’ll end by

doing it again - 2 jewels from one of my favorites - the Mahatma. Ghandi

wisely observed that “even the most powerful cannot rule without the

cooperation of the ruled.” He proved it. He also famously said - “First they

ignore you, then they laugh at you, then they fight you, then you win.” He

proved that too.

Anyone ready for a fight? I hope you are, and if so, you and we too can win.

And just in case I need to remind you what you’re fighting for, it’s for

your future, the kind your parents hopefully had, the kind you want for your

children, the kind where you know you live in a country with a real

democratically elected government that works for all the people and one

where there’s equity and justice for everyone, not just for the privileged

the way it is today. It’s also to save the republic and reverse the present

course we’re now on that may destroy it. Think about it, and start fighting

for it. Your future depends on it.

Stephen Lendman lives in Chicago and can be reached at

lendmanstephen@sbcglobal.net. Also visit his blog address at


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