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The Danger of Invisible Corporate Power: It may take several election cycles to scrub corporate influence and control from our political system.
June 10, 2010, 2:24 pm
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By John Steel

http://www.otherwords.org/articles/the_danger_of_invisible_corporate_power

Let’s face it: Large corporations have our country, and us, in a death grip. Some of their bad behavior makes big headlines: the BP oil disaster, Goldman Sachs’ financial shenanigans, Enron’s book-cooking. However, equally dangerous corporate activity happens every day, far from public view.

Corporations have seeped almost invisibly into nearly every government agency and too many congressional offices. And they’re as poisonous as carbon monoxide. In the last 20 years, protective legislation and regulation, carefully constructed from the days of President Coolidge and vastly strengthened due to the Depression, have seriously deteriorated.

There’s nothing inherently evil, or even bad, about corporations. Indeed, the combination of capital and management under one roof is efficient and essential in a global, competitive world. So much of our standard of living and our worldwide leadership are directly traceable to our corporate and entrepreneurial culture. But even good things, when they get out of control, turn destructive. Cancer, after all, is just growth gone wild.

There has always been tension between good government and free enterprise. It hurts the bottom line to scrub emissions from coal-burning power generators, ensure meat is sanitary, clean up toxic waste, and disclose the full risks of financial products. But once corporations realized that instead of fighting government they could actually buy it through lobbying and political contributions, the base of our democracy eroded. Their “invisible power” got a grip. The stealthy hunt for corporate profits metastasized from the marketplace and entered the halls of Congress and the executive branch.

The fight over reforming Wall Street is just the latest example. The need for regulation is hardly theoretical here. We’re still reeling from a crisis caused by the absence of it. Congress doesn’t even need to reinvent the wheel, a favorite task. There were laws and regulations that had worked for so long, such as those to keep banks and investment brokers separate; require diligent lending; prohibit betting against your own borrowers; require full disclosure to borrowers; and, above all, keep the risk with the lenders to insure they make prudent loans.

So why has the debate on reform dragged on for nearly a year? The public wants Wall Street reined in. So why would any legislator, much less an entire political party, get in the way of financial reform? It can’t just be a coincidence that the financial sector happens to be the biggest contributor to 2010 congressional campaigns, with more than $129 million doled out already. Financial firms have also spent well over a half a billion dollars on lobbying since early 2009.

To reverse this situation we must change who gets elected to Congress. And that is the one thing we can do, and perhaps the only thing, to neutralize corporate control of our government. Only real people have the vote; corporations don’t.

To regain our democracy, we must:

  • Identify and make public those elected representatives who owe their jobs to corporate largesse and cast their votes accordingly.
  • Insulate the election process from corporate funding. Bills in both the Senate and House that would forbid campaign spending by contractors who receive more than $50,000 in taxpayer funds would be a good start.
  • Prohibit lawmakers and lobbyists from interacting with each other, except to exchange ideas on legislation, and require them to publish a record of their contacts.

It may take several election cycles to scrub corporate influence and control from our political system, but once it starts it will gain momentum. And once we’ve accomplished this feat, appropriate regulation and control will follow. The horse will be before the cart, and the driver will be a human person.

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Wall Street’s War: Congress looked serious about finance reform – until America’s biggest banks unleashed an army of 2,000 paid lobbyists
May 26, 2010 9:15 AM EDT

Illustration by Victor Juhasz

This article originally appeared in RS 1106 from June 10, 2010.

It’s early May in Washington, and something very weird is in the air. As Chris Dodd, Harry Reid and the rest of the compulsive dealmakers in the Senate barrel toward the finish line of the Restoring American Financial Stability Act – the massive, year-in-the-making effort to clean up the Wall Street crime swamp – word starts to spread on Capitol Hill that somebody forgot to kill the important reforms in the bill. As of the first week in May, the legislation still contains aggressive measures that could cost once-
indomitable behemoths like Goldman Sachs and JP Morgan Chase tens of billions of dollars. Somehow, the bill has escaped the usual Senate-whorehouse orgy of mutual back-scratching, fine-print compromises and freeway-wide loopholes that screw any chance of meaningful change.

The real shocker is a thing known among Senate insiders as “716.” This section of an amendment would force America’s banking giants to either forgo their access to the public teat they receive through the Federal Reserve’s discount window, or give up the insanely risky, casino-style bets they’ve been making on derivatives. That means no more pawning off predatory interest-rate swaps on suckers in Greece, no more gathering balls of subprime shit into incomprehensible debt deals, no more getting idiot bookies like AIG to wrap the crappy mortgages in phony insurance. In short, 716 would take a chain saw to one of Wall Street’s most lucrative profit centers: Five of America’s biggest banks (Goldman, JP Morgan, Bank of America, Morgan Stanley and Citigroup) raked in some $30 billion in over-the-counter derivatives last year. By some estimates, more than half of JP Morgan’s trading revenue between 2006 and 2008 came from such derivatives. If 716 goes through, it would be a veritable Hiroshima to the era of greed.

Get more Matt Taibbi on the Taibblog.

“When I first heard about 716, I thought, ‘This is never gonna fly,'” says Adam White, a derivatives expert who has been among the most vocal advocates for reform. When I speak to him early in May, he sounds slightly befuddled, like he can’t believe his good fortune. “It’s funny,” he says. “We keep waiting for the watering-down to take place – but we keep getting to the next hurdle, and it’s still staying strong.”

In the weeks leading up to the vote on the reform bill, I hear one variation or another on this same theme from Senate insiders: that the usual process of chipping away at key legislation is not taking place with its customary dispatch, despite a full-court press by Wall Street. The financial-services industry has reportedly flooded the Capitol with more than 2,000 paid lobbyists; even veteran members are stunned by the intensity of the blitz. “They’re trying everything,” says Sen. Sherrod Brown, a Democrat from Ohio. Wall Street’s army is especially imposing given that the main (really, the only) progressive coalition working the other side of the aisle, Americans for Financial Reform, has been in existence less than a year – and has just 60 unpaid “volunteer” lobbyists working the Senate halls.

Read Taibbi’s original scathing Wall Street investigation, “The Great Bubble Machine.”

The companies with the most at stake are particularly well-connected. The lobbying campaign for Goldman Sachs, for instance, is being headed up by a former top staffer for Rep. Barney Frank, Michael Paese, who is coordinating some 14 different lobbying firms to fight on Goldman’s behalf. The bank is also represented by Capitol Hill heavyweights like former House majority leader Dick Gephardt and former Reagan chief of staff Ken Duberstein. All told, there are at least 40 ex-staffers of the Senate Banking Committee – and even one former senator, Trent Lott – lobbying on behalf of Wall Street. Until the final weeks of the reform debate, however, it seemed that all these insiders were facing the prospect of a rare defeat – and they weren’t pleased. One lobbyist even complained to The Washington Post that the bill was being debated out in the open, on the Senate floor, instead of in a smoky backroom. “They’ve got to get this thing off the floor and into a reasonable, behind-the-scenes” discussion, he groused. “Let’s have a few wise fathers sit around the table in some quiet room” to work it out.

As it neared the finish line, the Restoring American Financial Stability Act was almost unprecedentedly broad in scope, in some ways surpassing even the health care bill in size and societal impact. It would rein in $600 trillion in derivatives, create a giant new federal agency to protect financial consumers, open up the books of the Federal Reserve for the first time in history and perhaps even break up the so-called “Too Big to Fail” giants on Wall Street. The recent history of the U.S. Congress suggests that it was almost a given that they would fuck up this one real shot at slaying the dragon of corruption that has been slowly devouring not just our economy but our whole way of life over the past 20 years. Yet with just weeks left in the nearly year-long process at hammering out this huge new law, the bad guys were still on the run. Even the senators themselves seemed surprised at what assholes they weren’t being. This new baby of theirs, finance reform, was going to be that one rare kid who made it out of the filth and the crime of the hood for everybody to be proud of.

Then reality set in.

Picture the Restoring American Financial Stability Act as a vast conflict being fought on multiple fronts, with the tiny but enormously influential Wall Street lobby on one side and pretty much everyone else on the planet on the other. To be precise, think World War II – with some battles won by long marches and brutal campaigns of attrition, others by blitzkrieg attacks, still more decided by espionage and clandestine movements. Time after time, at the last moment, the Wall Street axis has turned seemingly lost positions into surprise victories or, at worst, bitterly fought stalemates. The only way to accurately convey the scale of Wall Street’s ingenious comeback is to sketch out all the crazy, last-minute shifts on each of the war’s four major fronts.



Chris Hedges: The Greeks know what to do when corporations pillage and loot their country
Written by Chris Hedges
Monday, 24 May 2010
Source: Truthdig

ImageHere’s to the Greeks. They know what to do when corporations pillage and loot their country. They know what to do when Goldman Sachs and international bankers collude with their power elite to falsify economic data and then make billions betting that the Greek economy will collapse. They know what to do when they are told their pensions, benefits and jobs have to be cut to pay corporate banks, which screwed them in the first place. Call a general strike. Riot. Shut down the city centers. Toss the bastards out. Do not be afraid of the language of class warfare—the rich versus the poor, the oligarchs versus the citizens, the capitalists versus the proletariat. The Greeks, unlike most of us, get it.

The former right-wing government of Greece lied about the size of the country’s budget deficit. It was not 3.7 percent of gross domestic product but 13.6 percent. And it now looks like the economies of Spain, Ireland, Italy and Portugal are as bad as Greece’s, which is why the euro has lost 20 percent of its value in the last few months. The few hundred billion in bailouts for other faltering European states, like our own bailouts, have only forestalled disaster. This is why the U.S. stock exchange is in free fall and gold is rocketing upward. American banks do not have heavy exposure in Greece, but Greece, as most economists concede, is only the start. Wall Street is deeply invested in other European states, and when the unraveling begins the foundations of our own economy will rumble and crack as loudly as the collapse in Athens. The corporate overlords will demand that we too impose draconian controls and cuts or see credit evaporate. They have the money and the power to hurt us. There will be more unemployment, more personal and commercial bankruptcies, more foreclosures and more human misery. And the corporate state, despite this suffering, will continue to plunge us deeper into debt to make war. It will use fear to keep us passive. We are being consumed from the inside out. Our economy is as rotten as the economy in Greece. We too borrow billions a day to stay afloat. We too have staggering deficits, which can never be repaid. Heed the dire rhetoric of European leaders.

“The euro is in danger,” German Chancellor Angela Merkel told lawmakers last week as she called on them to approve Germany’s portion of the bailout plan. “If we do not avert this danger, then the consequences for Europe are incalculable, and then the consequences beyond Europe are incalculable.”

Beyond Europe means us. The right-wing government of Kostas Karamanlis, which preceded the current government of George Papandreou, did what the Republicans did under George W. Bush. They looted taxpayer funds to enrich their corporate masters and bankrupt the country. They stole hundreds of millions of dollars from individual retirement and pension accounts slowly built up over years by citizens who had been honest and industrious. They used mass propaganda to make the population afraid of terrorists and surrender civil liberties, including habeas corpus. And while Bush and Karamanlis, along with the corporate criminal class they abetted, live in unparalleled luxury, ordinary working men and women are told they must endure even more pain and suffering to make amends. It is feudal rape. And there has to be a point when even the American public—which still believes the fairy tale that personal will power and positive thinking will lead to success—will realize it has been had.

We have seen these austerity measures before. Latin Americans, like the Russians, were forced by the International Monetary Fund and the World Bank to gut social services, end subsidies on basic goods and food, and decimate the income levels of the middle class—the foundation of democracy—in the name of fiscal responsibility. Small entrepreneurs, especially farmers, were wiped out. State industries were sold off by corrupt government officials to capitalists for a fraction of their value. Utilities and state services were privatized.

What is happening in Greece, what will happen in Spain and Portugal, what is starting to happen here in states such as California, is the work of a global, white-collar criminal class. No government, including our own, will defy them. It is up to us. Barack Obama is simply the latest face that masks the corporate state. His administration serves corporate interests, not ours. Obama, like Goldman Sachs or Citibank, does not want the public to see how the Federal Reserve Bank acts as a private account and ATM machine for Wall Street at our expense. He, too, has helped orchestrate the largest transference of wealth upward in American history. He serves our imperial wars, refuses to restore civil liberties, and has not tamed our crippling deficits. His administration gutted regulatory agencies that permitted BP to turn the Gulf of Mexico into a toxic swamp. The refusal of Obama to intervene in a meaningful way to save the gulf’s ecosystem and curtail the abuses of the natural gas and oil corporations is not an accident. He knows where power lies. BP and its employees handed more than $3.5 million to federal candidates over the past 20 years, with the largest chunk of their money going to Obama, according to the Center for Responsive Politics.

We are facing the collapse of the world’s financial system. It is the end of globalization. And in these final moments the rich are trying to get all they can while there is still time. The fusion of corporatism, militarism and internal and external intelligence agencies—much of their work done by private contractors—has given these corporations terrifying mechanisms of control. Think of it, as the Greeks do, as a species of foreign occupation. Think of the Greek riots as a struggle for liberation.

Dwight Macdonald laid out the consequences of a culture such as ours, where the waging of war was “the normal mode of existence.” The concept of perpetual war, which eluded the theorists behind the 19th and early 20th century reform and social movements, including Karl Marx, has left social reformers unable to deal with this effective mechanism of mass control. The old reformists had limited their focus to internal class struggle and, as Macdonald noted, never worked out “an adequate theory of the political significance of war.” Until that gap is filled, Macdonald warned, “modern socialism will continue to have a somewhat academic flavor.”

Macdonald detailed in his 1946 essay “The Root Is Man” the marriage between capitalism and permanent war. He despaired of an effective resistance until the permanent war economy, and the mentality that went with it, was defeated. Macdonald, who was an anarchist, saw that the Marxists and the liberal class in Western democracies had both mistakenly placed their faith for human progress in the goodness of the state. This faith, he noted, was a huge error. The state, whether in the capitalist United States or the communist Soviet Union, eventually devoured its children. And it did this by using the organs of mass propaganda to keep its populations afraid and in a state of endless war. It did this by insisting that human beings be sacrificed before the sacred idol of the market or the utopian worker’s paradise. The war state provides a constant stream of enemies, whether the German Hun, the Bolshevik, the Nazi, the Soviet agent or the Islamic terrorist. Fear and war, Macdonald understood, was the mechanism that let oligarchs pillage in the name of national security.

“Modern totalitarianism can integrate the masses so completely into the political structure, through terror and propaganda, that they become the architects of their own enslavement,” he wrote. “This does not make the slavery less, but on the contrary more— a paradox there is no space to unravel here. Bureaucratic collectivism, not capitalism, is the most dangerous future enemy of socialism.”

Macdonald argued that democratic states had to dismantle the permanent war economy and the propaganda that came with it. They had to act and govern according to the non-historical and more esoteric values of truth, justice, equality and empathy. Our liberal class, from the church and the university to the press and the Democratic Party, by paying homage to the practical dictates required by hollow statecraft and legislation, has lost its moral voice. Liberals serve false gods. The belief in progress through war, science, technology and consumption has been used to justify the trampling of these non-historical values. And the blind acceptance of the dictates of globalization, the tragic and false belief that globalization is a form of inevitable progress, is perhaps the quintessential illustration of Macdonald’s point. The choice is not between the needs of the market and human beings. There should be no choice. And until we break free from serving the fiction of human progress, whether that comes in the form of corporate capitalism or any other utopian vision, we will continue to emasculate ourselves and perpetuate needless human misery. As the crowds of strikers in Athens understand, it is not the banks that are important but the people who raise children, build communities and sustain life. And when a government forgets whom it serves and why it exists, it must be replaced.

“The Progressive makes History the center of his ideology,” Macdonald wrote in “The Root Is Man.” “The Radical puts Man there. The Progressive’s attitude is optimistic both about human nature (which he thinks is good, hence all that is needed is to change institutions so as to give this goodness a chance to work) and about the possibility of understanding history through scientific method. The Radical is, if not exactly pessimistic, at least more sensitive to the dual nature; he is skeptical about the ability of science to explain things beyond a certain point; he is aware of the tragic element in man’s fate not only today but in any collective terms (the interests of Society or the Working Class); the Radical stresses the individual conscience and sensibility. The Progressive starts off from what is actually happening; the Radical starts off from what he wants to happen. The former must have the feeling that History is ‘on his side.’ The latter goes along the road pointed out by his own individual conscience; if History is going his way, too, he is pleased; but he is quite stubborn about following ‘what ought to be’ rather than ‘what is.’ ”

For more writing by Chris Hedges, see: http://www.truthdig.com/chris_hedges