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America's Debate > Archive > Assorted Issues Archive > [A] Economy and Business
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Hero
Im currently reading Arianna Huffington's "Pigs At the Trough" which is a very horrifying and informative book about the power of wealth and politics. I am wholly convinced that washington is owned by major corporations. There is something like 38 corporate lobbyists for every one member of congress.

We live in a system where the most corrupt people are rewarded for failing. Dennis Kozlowski, former CEO of Tyco, in May of 02 charged for avoiding $1 million worth of sales tax, and fleeced his company for more than $11 million dollars in loans to buy furniture! In his last three years at Tyco Kozlowski recieved $466.7 million in salary, bonuses and perks. He was doing so great that in the summer of 01 Tyco closed or consolidated 300 plants and laid off 11,000 workers.

Sam Waksal, former CEO of ImClone, was convicted of bank and securities fraud, conspiracy to obstruct justice, and perjury.

In the last three years, the stock of SBC communications (a company that provides the dialtone for one in three americans) has dropped 27%. Meanwhile, SBC's CEO, Edward Whitacre has seen his compensation rise. In 01, the third year in a row that the value of SBC declined, Whitacre recieved his largest windfall ever: $82 million at present values.

In April '02 The Wall Street Journal reported that Oracle CEO Larry Ellison made $706.1 million in total compensation in 2001. Shareholder return for that year was negative 57%!

James McDonald CEO of Scientific-Atlanta, Inc. nade $86.6 million that same year, his shareholders got a return of negative 45%

Since the beginning of this century over 570 public companies- including most famously Enron, Global Crossing, Adelphia, WorldCom and Kmart- have declared bankruptcy, causing 2.7 million americans to lost jobs, and a loss of nearly $9 trillion in market value on Wall Street. Corporate corruption is real, and if necessary I have MANY more examples from Huffington's book to give. The most sickening and startling part is the power that these corporate elites have over Washington. In short, heres the top five corporate lobbyists:

1) Philip Morris (suprise) whom is responsible for making a product that kills 400,000 Americans every year, spent $54,216,000 on lobbying congress alone. Since 1995 PhilMorr has given over $13.5 million in campaign contributions to nicotene stained congressman.
2) Verizons Predecessor Bell Atlantic spent a whoppign $41.9 million on lobbying anti-trust issues, as well as contributed over $7.5 million in for pro monopoly congerssional races.
3)Exxon Mobil gets a good spot with $34.1 million worth of lobbying services between 97 and 99. Exxon and Mobil (later ExxonMobil) have given a combined $4 million in campaign contributions, and you could say that they got a bargain since thte government okayed their controversial, competition cooling merger in 1999
4) Ford Motors hsa lobbyed a total of $29.5 million and given over $2.5 million in campaign contributions since 96. Most of this lobbying was aimed at saving them from tough fuel economy standards. Currently treated as light trucks, SUV's get less miles to the gallon than the ORIGINAL MODEL T's! Thats some successful lobbying.

FInally for one more example, in case you not convinced, there are quite a few family ties between Congress and the lobbying business.
Lobbyist__________Politician (and position)
Chet Lott, son of Sen. Trent Lott (R-Miss.) the senate Minority leader
Linda Daschle, wife of Sen. Tom Daschle (D-S. Dak) the senate Majority Leader
Joshua Hastert son of Rep. Dennis Haster (R-Ill) Speaker of the House
Scott Hatch son of Sen. Orrin Hatch (R-Utah)
Phyllis Landrieu the aunt of Sen. Mary Landrieu(D-La.)
John Breaux, Jr. son of Sen. John Breaux Sr. (D-Nev)
Anne Bingaman wife of Sen Jeff Bingaman (D-N, Mex)

For some great data on who gives campaign contributions to who, go to www.opensecrets.org

Thats enough... now the questions:

1)CEO's today make over 280 times the pay of their workers. Meanwhile, many CEO's break the law as readily as any petty criminal. The examples above are only a few extreme examples of the few that get caught. Why should we, the 99% accept this behavior from the people that benefit so lavishly from our consumer instncts?

[B]2)Democracy is representative government, ruled by majority decision. Plutocracy is rule by the rich. Is America slipping further towards becoming a plutocratic republic?


3) For you non-Americans on the site, has this corruption of business since the 90's boom happened globally? Or is it strictly a rich-white-american thing?
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SWM28WDC
For an interesting visual, check out the L-curve. It shows you why we need a progressive income tax.

If you believe that those in the top 1/2% of income earners really are 400x more productive than the average guy, I guess this sits easy with you. I believe such a drastic peak is caused by market failures, namely asymetric information, monopolistic competition, as well as the fact that many of these super-income people are largely compensated with stocks & stock options that are drastically overvalued by speculative trading on the stock market.

The distance that these people are from the regular folks (like, I assume, everyone on AD) isn't comprehended by most. This lack of comprehension allows ideas like a flat-tax, or a national retail sales tax, to germinate. While I still believe that such taxes are improvements over our current system, they fail to capture income from, what I feel, are market failures, allowing most, but not all, of these super-earners to take advantage of the system. Evidence that this is a systemic problem is shown by the long-term decrease in real wages vs. the increase in super-earners earnings, despite advances in productivity.

In an ideal world, national fiscal policy would provide for an income distribution chart that ramped gradually from left to right, with a wider, shorter peak at the top end of the scale. Until then, we need a progressive income tax to correct for market failings. Last night, as a lark, I went over the 2005 OMB expected receipts: we could replace personal and corporate income taxes with taxes on natural resource use, speculation, and an 18% tax on income over $300,000.

Why should we, the 99% accept this behavior from the people that benefit so lavishly from our consumer instncts?
We shouldn't, it's just not obvious that we support these people every time we buy a product, due to the diversified holdings of many of these companies. Likewise, we should insist on election reform, with the idea that proportional representation gives more people a vote that counts, vs. low-competition elections where money donated counts more.

2)Democracy is representative government, ruled by majority decision. Plutocracy is rule by the rich. Is America slipping further towards becoming a plutocratic republic? For 99% of the issues, including monetary & fiscal policy, foreign trade, and most government expenditures, it has.

I'm not so sure that this business has been booming since only the 90's.
Hero
Great Reply SWM28WDC, uh you're right about the nineties. I was just reffering to the CEO-Rockstar era that really picked up in the nineties.
stlsophistry
Here's an interesting note - Phyllis Landrieu (one of the lobbyists you note) just got elected to the School Board in my district. I didn't vote for her (I was unconvinced of her qualifications) but 70% of the other voters did. My guess - the Landrieu's have great name recognition in Louisiana (the first of the dynasty was Moon Landrieu, mayor of New Orleans and wildly popular perpetuator of our famously well oiled patronage system; Phyllis is also the aunt of U.S. Senator Mary Landrieu and uncle of Louisiana Lt. Governor Mitch Landrieu). The Landrieus come from the wine and cheese upper crust of New Orleans society and have a very liberal reputation, but have always made a point to protect the interests of big business.

If you believe that those in the top 1/2% of income earners really are 400x more productive than the average guy,

I donít think they are that much more productive in terms of quantitative output, but perhaps in the value of their output they are that productive. On the other hand, maybe what gives them so much income is the inability of workers to lobby effectively for their own rights. If all the workers at all the Wal-Marts in America (as well as 90% of the store management) got together and unionized, they could get a hefty chunk of the billions that flow into Americaís number 1 corporation. Is the corporate structure corrupt? It is hard to say. Public or private companies are all beholden to their stock holders, and it is really they who stand to lose by over paying CEOs. Otherwise, it is unfortunate that people will lose their stock and livelihoods in the event of a corporate collapse, but it isnít my or the governments business (unless actual fraud is committed, in which case those hurt directly can sort out damages in the courts).
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