Ames: 'Libertarianism' started by Big Business lobbyists

This one's worth re-posting in full, since libertarianism -- or somebody's naive understanding of it -- is making something of a comeback lately.  

At the heart of libertarianism is a disdain for democracy and an abiding belief in the right of corporations to rule the nation.  

Think what Ames revealed history is telling us: in 1946, 11 years before Ayn Rand's Atlas Shrugged, the real-life titans of corporate America were already pooling their funds and lobbying the hell out of the U.S. Congress in the guise of a "think tank."  And their pseudo-intellectual front for corporate lobbying has grown tremendously in size and influence since then.

So either Big Business has been "under siege" for the past 65 years... or else they've been in control all along, outspending and out lobbying everybody else, to their benefit.  It can't be both.  If you're not sure what's true, just remember this quote from a Congressional Committee looking into libertarian lobbying in 1946:  "It is ... difficult to imagine that the nation’s largest corporations would subsidize the entire [think tank] venture if they did not anticipate that it would pay solid, long-range legislative dividends."

When Congress Busted Milton Friedman (And Libertarianism Was Created By Big Business Business Lobbyists)

By Mark Ames

November 16, 2012 | NSFW Corporation

Last Friday, November 9, saw the big “Milton Friedman Centennial” celebration at the University of Chicago’s Becker Friedman Institute for Research in Economics. It was a big day for fans of one of the Founding Fathers of neoliberal/libertarian free-market ideology, and those fans are legion on both sides of the narrow Establishment divide —as Obama’s economy czar Larry Summers wrote in 2006, “Any honest Democrat will admit that we are all Friedmanites now.”

One episode in Milton Friedman’s career not celebrated (or even acknowledged) at last week’s centennial took place in 1946, the same year Friedman began peddling his pro-business “free market economics” ideology.

According to Congressional hearings on illegal lobbying activities '46 was the year that Milton Friedman and his U Chicago cohort George Stigler arranged an under-the-table deal with a Washington lobbying executive to pump out covert propaganda for the national real estate lobby in exchange for a hefty payout, the terms of which were never meant to be released to the public.

The arrangement between Friedman and Stigler with the Washington real estate lobbyist was finally revealed during he Buchanan Committee hearings on illegal lobbying activities in 1950. But then it was almost entirely forgotten, including apparently by those celebrating the “Milton Friedman Centennial” last week in Chicago.

I only came across the revelations about Friedman’s sordid beginnings in the footnotes of an old book on the history of lobbying by former Newsweek book editor Karl Schriftgiesser, published in 1951, shortly after the Buchanan Committee hearings ended. The actual details of Milton Friedman’s PR deal are sordid and familiar, with tentacles reaching into our ideologically rotted-out era.

It starts just after the end of World War Two, when America’s industrial and financial giants, fattened up from war profits, established a new lobbying front group called the Foundation for Economic Education (FEE) that focused on promoting a new pro-business ideology—which it called “libertarianism”— to supplement other business lobbying groups which focused on specific policies and legislation.

The FEE is generally regarded as “the first libertarian think-tank” as Reason’s Brian Doherty calls it in his book “Radicals For Capitalism: A Freewheeling History of the Modern Libertarian Movement” (2007). As the Buchanan Committee discovered, the Foundation for Economic Education was the best-funded conservative lobbying outfit ever known up to that time, sponsored by a Who’s Who of US industry in 1946.

A partial list of FEE’s original donors in its first four years includes: The Big Three auto makers GM, Chrysler and Ford; top oil majors including Gulf Oil, Standard Oil, and Sun Oil; major steel producers US Steel, National Steel, Republic Steel; major retailers including Montgomery Ward, Marshall Field and Sears; chemicals majors Monsanto and DuPont; and other Fortune 500 corporations including General Electric, Merrill Lynch, Eli Lilly, BF Goodrich, ConEd, and more.

The FEE was set up by a longtime US Chamber of Commerce executive named Leonard Read, together with Donaldson Brown, a director in the National Association of Manufacturers lobby group and board member at DuPont and General Motors.

That is how libertarianism started: As an arm of big business lobbying.

Before bringing back Milton Friedman into the picture, this needs to be repeated again: “Libertarianism” was a project of the corporate lobby world, launched as a big business “ideology” in 1946 by The US Chamber of Commerce and the National Association of Manufacturers. The FEE’s board included the future founder of the John Birch Society, Robert Welch; the most powerful figure in the Mormon church at that time, J Reuben Clark, a frothing racist and anti-Semite after whom BYU named its law school; and United Fruit director Herb Cornuelle.

The purpose of the FEE — and libertarianism, as it was originally created — was to supplement big business lobbying with a pseudo-intellectual, pseudo-economics rationale to back up its policy and legislative attacks on labor and government regulations.

This background is important in the Milton Friedman story because Friedman is a founder of libertarianism, and because the corrupt lobbying deal he was busted playing a part in was arranged through the Foundation for Economic Education.

False, whitewashed history is as much a part of the Milton Friedman mythology as it is the libertarian movement’s own airbrushed history about its origins; the 1950 Buchanan Committee hearings expose both as creations of big business lobby groups whose purpose is to deceive and defraud the public and legislators in order to advance the cause of corporate America.

The story starts like this: In 1946, Herbert Nelson was the chief lobbyist and executive vice president for the National Association of Real Estate Boards, and one of the highest paid lobbyists in the nation. Mr. Nelson’s real estate constituency was unhappy with rent control laws that Truman kept in effect after the war ended. Nelson and his real estate lobby led what investigators discovered was the most formidable and best-funded opposition to President Truman in the post-war years, amassing some $5,000,000 for their lobby efforts—that’s $5 million in 1946 dollars, or roughly $60 million in 2012 dollars.

So Herbert Nelson contracted out the PR services of the Foundation for Economic Education to concoct propaganda designed to shore up the National Real Estate lobby’s legislative drive — and the propagandists who took on the job were Milton Friedman and his U Chicago cohort, George Stigler.

To understand the sort of person Herbert Nelson was, here is a letter he wrote in 1949 that Congressional investigators discovered and recorded:

"I do not believe in democracy. I think it stinks. I don’t think anybody except direct taxpayers should be allowed to vote. I don’t believe women should be allowed to vote at all. Ever since they started, our public affairs have been in a worse mess than ever."

It’s an old libertarian mantra, libertarianism versus democracy, libertarianism versus women’s suffrage; a position most recently repeated by billionaire libertarian Peter Thiel —Ron Paul’s main campaign funder.

So in 1946, this same Herbert Nelson turned to the Foundation for Economic Education to manufacture some propaganda to help the National Association of Real Estate Boards fight rent control laws. Nelson knew that the founder of the first libertarian think-tank agreed with him on many key points. Such as their contempt and disdain for the American public.

Leonard Read, the legendary (among libertarians) founder/head of the FEE, argued that the public should not be allowed to know which corporations donated to his libertarian front-group because, he argued, the public could not be trusted to make “sound judgments” with disclosed information:

"The public reporting would present a single fact—the amount of a contributor’s donation—to casual readers, persons having only a cursory interest in the matter at issue, persons who would not and perhaps could not possess all the facts.

These folks of the so-called public thus receive only oversimplifications or half-truths from which only erroneous conclusions are almost certain to be drawn. If there is a public interest in the rightness or wrongness of corporate or personal donations to charitable, religious or education institutions, and I am not at all ready to concede that there is, then that interest should be guarded by some such agency as the Bureau of Internal Revenue, an agency that is in a position to obtain all the facts, not by Mr. John Public who lacks relevant information for the forming of sound judgments...Public reporting of a half-truth is indeed a significant provocation."

So in May 1946, Herbert Nelson of the Real Estate lobby, looking for backup in his drive to abolish federal rent control laws, contacted libertarian founder Leonard Read of the FEE with an order for a PR pamphlet “with some such title as ‘The Case against Federal Real Estate Control’,” according to Schriftgiesser’s book The Lobbyists.

What happened next, I’ll quote from Schriftgiesser:

"They were now busily co-operating on the new project which the foundation had engaged Milton Friedman and George J. Stigler to write. It was to be called Roofs and Ceilings and it was to be an outright attack on rent controls.

When Nelson received a copy of the manuscript he wrote Read to say, “The pamphlet...is a dandy. It is just what I wanted."

The National Association of Real Estate Boards was so pleased with Milton Friedman’s made-to-order propaganda that they ordered up 500,000 pamphlets from the FEE, and distributed them throughout the real estate lobby’s vast local network of real estate brokers and agents.

In libertarianism’s own airbrushed history about itself, the Foundation for Economic Education was a brave, quixotic bastion of libertarian “true believers” doomed to defeat at the all-powerful hands of the liberal Keynsian Leviathan. Here is how Brian Doherty describes the FEE and its chief lobbyist Leonard Read:

"[Read] would never explicitly scrape for funds... He never directly asked anyone to give anything, he proudly insisted, and while FEE would sell literature to all comers, it was also free to anyone who asked. His attitude toward money was Zen, sometimes hilariously so. When asked how FEE was doing financially, his favorite reply was, “Just perfectly.”... Read wanted no endowments and frowned on any donation meant to be held in reserve for some future need."

And here is what the committee’s own findings reported—findings lost in history:

"It is difficult to avoid the conclusion that the Foundation for Economic Education exerts, or at least expects to exert, a considerable influence on national legislative policy....It is equally difficult to imagine that the nation’s largest corporations would subsidize the entire venture if they did not anticipate that it would pay solid, long-range legislative dividends."

Or in the words of Rep. Carl Albert (D-OK): "Every bit of this literature is along propaganda lines."

The manufactured history about libertarian’s origins, or its purpose, parallels the manufactured myths about one of big business’s key propaganda tools, Milton Friedman. As the author of The Lobbyists, not knowing who Milton Friedman was at the time, wrote of Friedman’s collaborative effort with Stigler:

“Certainly [the FEE’s] booklet, Roofs or Ceilings, was definitely propaganda and sought to influence legislation....This booklet was printed in bulk by the foundation and half a million copies were sold at cost to the National Association of Real Estate Boards, which had them widely distributed throughout the country by its far-flung network of local member boards.”

Which brings me back to last Friday’s “Milton Friedman Centennial” celebration at the University of Chicago’s Becker Friedman Institute, featuring a distinguished panel of economists from Stanford, Princeton and of course U Chicago, among them two Nobel Prize winners — James Heckman and Robert Lucas —all gathered together to “explore both aspects of Friedman's legacy: the impact of his policy insights and his enduring scholarship”...

Like everything involving modern economics and libertarianism, it was a kind of giant meta-sham, shams celebrating a sham. Even the Nobel Prizes in economics awarded to people like Milton Friedman, George Stigler, or Friedman’s contemporary fans Heckman and Lucas, are fake Nobel Prizes — in fact, there is no such thing as a Nobel Prize in economics; its real name is the “Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel” and it was first launched in 1969 by the Swedish Central Bank and has since been denounced by Alfred Nobel’s heirs.

And yet — in the words of Larry Summers, "Any honest Democrat will admit we are all Friedmanites now." Of course, there are no honest Democrats. And there are no honest economists. And these are the people who are framing our politics, the people who have told Greece and Spain they have no choice, and the people who today are making sure that the number one item on Obama’s and Congress’s agenda is cutting Social Security and cutting Medicare and cutting "entitlements" — and the only thing that divides the elites in charge of this mess is “how much of these moochers’ lifelines can we cut?”

#Occupy Adam Smith

Gee whiz, Adam Smith sounds like the intellectual father of the global Occupy movements.  (Maybe he liked to defecate in public too, who knows?....)

Economic policy in the hands of the few serves those few – just ask Adam Smith

By David Wearing

July 30, 2012 | Guardian

Free market economics has taken such a battering of late that one might almost begin to feel sorry for it. In 2008, a cataclysmic meltdown in the barely regulated financial industry plunged the world into an economic crisis from which it has yet to emerge. For Nobel laureate economist Joseph Stiglitz, "market fundamentalism" was as discredited by this experience as communism was by the fall of the Berlin Wall. Recent scandals at Barclays and HSBC have merely served to underline the point.

Meanwhile the Conservative party, which derives half its funding from big finance, has set about making the public pay for the bankers' crisis, with disastrous results. "Market fundamentalism" told George Osborne that, as the dead weight of the public sector was cut away, the thrusting dynamism of private enterprise, hitherto crowded out by the state, would be unleashed to create jobs and propel growth. Instead, austerity destroyed demand, wiped out the recovery and plunged Britain into a new recession. "Expansionary fiscal contraction" proved to be exactly as oxymoronic as it sounds, breaking the reputation of the chancellor barely two years after he entered Downing Street.

So all in all, there's never been a better time to quote Adam Smith, especially if you're a socialist. Counterintuitive perhaps, but true nonetheless.

Smith, the 18th century Scottish philosopher, is of course best known for advocating the liberalisation of markets (arguably necessary at a time when the punishment for illegal livestock export was to have one's hand cut off and nailed up in the local marketplace, for a first offence, and the penalty for a second offence was death). However, what is less well known is that Smith shared some of the key concerns of today's critics of neoliberalism. His most famous work, The Wealth of Nations, offered a powerful political critique of the "one per cent" of his day, to borrow the terminology of the Occupy movement. In what he himself described as a "very violent attack" on an unjust status quo, Smith repeatedly emphasised the role of power, influence and class in distorting economic policy to serve the interests of a narrow elite.

Smith noted that the "English legislature has been peculiarly attentive to the interests of commerce" because policymakers were continually "imposed upon by the sophistry of merchants". The vested interests "like an overgrown standing army … have become formidable to the government, and upon many occasions intimidate the legislature". They argue their case "with all the passionate confidence of interested falsehood", predicting national ruin if their demands are not met. Of course, all this has a very familiar ring.

The politician who serves the one per cent, Smith noted, "is sure to acquire not only the reputation of understanding trade, but great popularity and influence with an order of men whose numbers and wealth render them of great importance.  If he opposes them [he is subjected to] the most infamous abuse and detraction". One thinks here of the hysteria elicited by Ed Miliband's mild suggestion in his last party conference speech that some parts of the capitalist system were working a little less well than others.

Smith observed that "all for ourselves and nothing for other people, seems, in every age of the world, to have been the vile maxim of the masters of mankind". The class power of wealth and big business makes the elite the "principal architects" of policy, "an order of men, whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it". Smith repeatedly stresses that while the mercantile system does not serve the public interest, it does benefit the "principal architects" of policy, which is no less true of today's hyper-financialised, neoliberal capitalism.

This is not to argue that Smith should be automatically deferred to simply because he is a renowned intellectual figure, but rather that it can be useful to return to his writings in light of historical experience.  We have learned that it is possible for deregulated markets to fail the public disastrously. But the larger point is that when power and influence over policymaking is heavily concentrated within an economic elite, policy will be designed to serve that elite, often at the public's expense. What Smith can teach us today is that the question of who decides, and in whose interest, is crucial to our understanding of how economic policy is made.

Cheaters DO prosper, that's why kids imitate them

In the U.S., cheating is normal, and it's contagious.  That's what we now know for certain. 

It's too bad our holier-than-thou conservatives don't talk about rampant cheating and corruption in business and higher education, especially in business schools where future conservative leaders are ostensibly bred.

It seems that to them all the immoral acts in America go on in bedrooms, not boardrooms or classrooms.

P.S. - Add bullies to the list of bad people who excel in adult life.  

Kids Cheat Just Like Their Business Role Models Do

By Susan Antilla

July 13, 2012 | Huffington Post

URL:  http://huff.to/MrrXqs

July 4th, unions, and immigrant labor

According to Mr. Wikipedia, the 4th of July was not even a federal paid holiday until 1938.  John Adams predicted to his wife that July 2 would go down in history as "the great anniversary festival."  He died on July 4, just like Tom Jefferson and James Monroe, making it 3 POTUSes in a row.

Anyway, in light of our nation's birthday, Yves Smith at Naked Capitalism makes an interesting discussion of Big Business's support of immigration from 1890 to 1920 as a counterweight to pernicious unionization.

She suggest that instead we celebrate March 1, 1781, the signing date of the Articles of Confederation, or better yet, March 4, 1789, the signing date of the Constitution.

Nowadays, big business very quietly (and sometimes not so quietly) advocates for illegal immigration, or at least gaming the system of the U.S. temporary visa program, to employ cheap, no-benefits foreign labor.

It's funny how things change, and how they stay the same.

Why Don't Americans Take More Vacations? Blame it on Independence Day

By Yves Smith

July  , 2012 | Naked Capitalism

URL:  http://www.nakedcapitalism.com/2012/06/why-dont-americans-take-more-vacations-blame-it-on-independence-day.html

Memo to Obama: Help the small biz little guy

Large companies are sitting on $ billions in cash, and how much of that is thanks to extending their payment terms from 30 days to 60, 90, or even 120 days to their small-business suppliers?

Big businesses are tying up small business's cash because they can, and its hurting job creation.

Jeffrey Leonard, CEO of the Global Environment Fund and chairman of the Washington Monthly, has a simple solution:

"[President Obama] can take a simple but meaningful unilateral action: issue an executive order mandating that all companies with federal contracts pay their suppliers within thirty days of invoice. Net 30 has long been the policy of the federal government itself in paying contractors. Virtually all major corporations today are in some way federal contractors, and they should be held to the same terms that they enjoy in their dealings with the federal government. Such an order would cost the government no money. But it would make cash flow faster down the value chain to small business suppliers across the economy, and this could free up more capital for job creation. And the symbolism of a president willing to stand up for the little guy being squeezed by big corporate America would be worth its weight in political gold!"

Memo to Obama: Do small business a simple favor

By Jeffrey Leonard

January-February 2011 | Washington Monthly

URL: http://www.washingtonmonthly.com/features/2011/1101.leonard.html

Politico: Corporate profits rose faster under Obama than any Prez. since 1920s

"Profits have surged 62 percent from the start of 2009 to mid-2010, according to the Commerce Department. That is faster than any other year and a half in the Fabulous '50s, the Go-Go '60s or the booms under Presidents Ronald Reagan and Bill Clinton."

Just a coinkydink, I'm sure.

Corporate profits' big climb

By John Maggs

October 28, 2010 | Politico

URL: http://www.politico.com/news/stories/1010/44268.html

Bloomberg BW: Business feels unloved by Obama

Obama Wants a Detente with Business

Once the midterm elections are over, the President plans to make up with business

By Julianna Goldman, Hans Nichols, Mark Drajem and Lizzie O'Leary

September 6, 2010 | Bloomberg Businessweek

[...]

Business vs. the Democrats

By many objective measures, most businesses are thriving and should have little to complain about. Corporate profits rose to a record $1.38 trillion in the second quarter, according to the St. Louis Federal Reserve. The Dow Jones industrial average is up more than 38 percent since Obama took office.

So why the criticism? "There is a venerable tradition of business being antagonistic to Democrats, even in instances when the policies are advantageous to them," says Fred I. Greenstein, a professor emeritus at Princeton University and author of books on Presidential leadership. The strain between the Administration and business "was similar for FDR, which was the period of the last great reregulation of the economy," says Bruce Buchanan, a professor of government at the University of Texas at Austin, referring to Franklin D. Roosevelt's New Deal. "And there is an element of hurt feelings to it as well, which surprises me." Despite numerous meals with business leaders, the President seems to approach the relationship in a detached fashion, as if he were checking off a box, say executives who requested anonymity in order to speak freely.

[They want to feel the love! They're like sulky adolescents. What a sentimental bunch! - J]

BP spill is a teachable moment

Despite the fact that Obama has not been forceful or swift enough in pressuring BP, this spill nevertheless demonstrates why we need Big Guvmint. No matter how wimpy Obama has been, if it weren't for him, the situation would be much worse.

Just imagine if Rand Paul were getting his way right now, and the federal gov't was being all laissez-faire and relying on BP's good conscience and victim's legal claims to resolve the spill. Imagine if Obama had let "the market" solve the worst environmental disaster in U.S. history, i.e. imagine he had done nothing.

Horrific.

This is a teachable moment, folks. We're seeing that, left unto themselves, big corporations have no interest in the public interest. They are simply not set up that way. There is no mechanism or incentive for them to think that way; that's not their job. That's government's job.

Ironically, Obama's pressuring BP to set up a $20 billion fund for victims of its spill has helped BP's stock. Investors hate uncertainty, and now the future of BP looks more certain. It never would have occurred to BP to set up this fund on its own, if it could have done the "smart" thing and dragged this case out in court for years or even decades and delayed any hit to its corporate bottom line.

Obama Making BP Pay Is Good Government, and That's Why Republicans and the Corporate Media Are Freaking Out

Obama's hardline move on BP is exactly what government is supposed to do; whatever it can, within the limits of the law, to protect its citizens' interests.

By Joshua Holland

June 25, 2010 | AlterNet

GOP votes for price controls

But they stuck their stick in the spokes of the free market for a good reason: to help "small businesses" like Coca-Cola and Home Depot.

Debit Fee Cut Is a Rare Loss for Big Banks

By Binyamin Appelbaum

May 14, 2010 | New York Times

URL: http://www.nytimes.com/2010/05/15/business/15credit.html?src=me&ref=business

IRS audits of big corporations down since '05

Even though "on an hour-by-hour basis, IRS audits of all corporations show that misreported tax dollars among the giants came to $9,354 per auditor hour," the big scary IRS has cut back on audits of big corporations (w. assets of $250 M or more) by 33 percent since FY 2005.

Meanwhile, "audit hours for the small companies (less than $10 million in assets) jumped by 30 percent and the hours devoted to examining mid-size companies (assets of $10 million to less than $250 million) increased by 13 percent."

This is not how you win friends, influence people, and fill federal coffers with unpaid taxes. You can call me a class warrior for saying this, but it makes sense both fiscally and morally to spend resources auditing the big fish in our economy first.

The authors attribute this discrepancy to perverse incentives in the IRS to do more, quicker audits, which they can accomplish by focusing on small and medium-sized businesses. A more cynical explanation is that bigger corporations have more political pull that they can use to avoid IRS audits.

Despite Rising Deficits, IRS Audits of the Largest and Richest Corporations Decline

TRAC IRS

URL: http://trac.syr.edu/tracirs/newfindings/v15/

Shareholder value maximization (SVM) & the financial crisis

How Business Schools Lost Their Way

If business school were a church, shareholder value maximization would be its religion. Two INSEAD professors say it's time to find a new one

By N. Craig Smith and Luk Van Wassenhove

January 11, 2010 | BusinessWeek

Business schools have been blamed for the economic crisis. Their MBA students are said to be responsible for wreaking the havoc in the financial markets we are all now suffering from and business schools are chastised for not training them better, not least in failing to instill a clear sense of right and wrong.

Are they to blame? To the extent that MBA graduates have been closely associated with many of the spectacular failures of financial institutions witnessed over the last 18 months, they may justifiably be criticized for the mispricing of risk in relation to specific financial products and an underestimation of systemic risk more generally. They may also be criticized for failing adequately to question the assumptions of the financial models being used and, with hindsight at least, for following the crowd and gambling that they could continue to dance, to borrow the unfortunate phrase of Citibank's (C) Chuck Prince (not an MBA), when it was way past time to be off the dance floor.

In some cases, where perverse incentives of compensation systems were at work, the criticism also seems warranted that these individuals focused solely on serving their own self-interest and gave scant regard to their obligations to others, even shareholders. Much like a dodgy second-hand car salesman, it seems, they knowingly sold flawed products—such as the mortgage-backed securities they knew would blow up because of unsound origination processes. Worryingly, these practices were evident in the financial institutions that have survived—and some that have prospered—in the crisis, as well as those that failed.

INDIRECT ROLE

It would be a mistake to say that business schools are directly to blame, even when their graduates were closely involved; there are more basic drivers. But business schools have played a role indirectly, due fundamentally to their adherence to and perpetuation of an ideology that has contributed significantly to the crisis, albeit unintentionally. That is the ideology of Shareholder Value Maximization (SVM). In most business schools, SVM is the leitmotif of finance teaching and implicit throughout the rest of the curriculum.

Ideologies often appear to be serving society as a whole while advancing the interests of particular sectors. So it is with SVM. The economic theory of the corporation holds that SVM results in the best social outcome: societal wealth maximization. But at the same time it serves the interests of shareholders and the managers who are its adherents and its beneficiaries, at least when their compensation is pegged to shareholder returns. This criticism of SVM is not to suggest shareholders are unimportant; they warrant a return on the capital they provide that reflects the financial risk incurred. However, this is not the same as maximizing shareholder value.

A theory advanced in business schools to justify SVM says shareholders are the "residual claimants." Shareholders, the theory goes, should be uppermost in the minds of management, because they receive their returns only after the claims of other stakeholders have been met. This is evident in companies meeting their contractual and legal obligations to stakeholders such as employees, but it is also evident in companies meeting noncontractual obligations determined by economic factors. For example, these might be obligations beyond legal or statutory requirements to a local community affected by a plant closure, where the company identifies that its reputation might be harmed and it might suffer an economic loss if the obligations are left unattended. As this example might suggest, however, not all ethical obligations would be reflected in a potential economic loss, even in the long term. Consider a management practice of engaging in bribery when one can get away with it. This might be consistent with shareholder value maximization, but not advancing societal welfare.

FAULTY ASSUMPTIONS

The theory also relies on assumptions amply demonstrated as lacking in recent months. For example, it assumes effective government regulation to ensure everybody plays by the rules and to manage externalities (outcomes not readily susceptible to market sanctions, such as pollution). It also presumes effective corporate governance such that shareholders hold management to account. More technically, it relies on various economic assumptions, such as the efficient market hypothesis (that share prices reflect all relevant information on the stock).

Aside from the assumptions required in subscribing to the SVM model and the potential ethical issues left unaddressed, there are major practical considerations in the teaching and application of the SVM ideology. While professors might explain in detail how the underlying theory of SVM treats shareholders as residual claimants, what matters is the message students take away. That message is shareholder primacy—that their purpose in business is to make decisions that put the interests of shareholders above all others.

When they go into their jobs—in finance and elsewhere—they find an environment that marches to the same tune and is incentivized to do so. The theory of SVM generally translates into practice through the mechanism of the share price. This flawed and often easily manipulated measure of long-term company value is then used as a basis for business decision-making. This has huge potential consequences for the individuals involved (rich bonuses they may not deserve) and their organizations (short-term decisions that harm long-term viability), as well as society.

DIFFERENCES IN THE DEVELOPING WORLD

If SVM is problematic from a developed world perspective, it can be disastrous from the perspective of the developing economies where global business and MBAs increasingly are to be found—as well as most of the 1 billion people going hungry in the world. Many large companies today operate in countries with little or no government and a huge potential for corruption, and, given such technologies as the Internet and mobile phones, how they operate can be instantly broadcast worldwide. Today's global business environment is not the simple U.S.-centric world of free-market economist Milton Friedman. It is far more complicated.

What should business schools do? While late in the day, perhaps, Jack Welch was right when he described SVM as "a dumb idea." Business schools need to stop worshipping at the altar of SVM and teach it with greater intellectual honesty and with attention to its many deficiencies, both theoretical and practical. They also need to do a better job of developing its most plausible contending framework: stakeholder theory. This is a more complex but current and realistic view of management, one that recognizes that the task of managers is to serve multiple stakeholders—giving shareholders their due, but not to the exclusion of others with legitimate claims.

Finally, business schools should give more attention to their input as well as output. With starting salaries for MBA graduates often well in excess of $100,000, business schools need to be careful not to attract narrow-minded, self-centered people who might see a way to get rich quickly by eagerly and unquestioningly embracing an ideology that serves that end. Business schools should look to attract and properly train people to be responsible leaders who are well-rounded and have the capable minds and the courage to ask the critical questions that went unasked for too long.

N. Craig Smith is a professor of ethics and social responsibility at INSEAD. Luk Van Wassenhove is a professor of operations management and academic director of the Social Innovation Centre at INSEAD.

Rush: 'Freedom is coming out of its coma'

Let me ask you: do you feel freer after this Supreme Court decision? Do you feel, like Rush said, "that the muzzle is off the American people now?" Do you seriously feel, like he does, that "freedom is coming out of its coma" thanks to this ruling? Does anybody seriously believe, as the SC majority argued, that the American people are going to make better informed political decisions now that the cap on corporate campaign spending has been ripped off? Is there some vital information we have been lacking about the candidates that corporations are just dying to tell us, but couldn't because 100 years of legal precedent and statutory law have kept them muzzled? We'll soon find out. (Lord save us.)

Corporations have been free to make issue ads; they have been free to inform the public to their heart's content. But they weren't allowed to make the connection between issues and candidates. They were not allowed, under statutory law, to advocate for political candidates without spending and time restrictions. So this ruling is not about free speech; it is about political influence. And now, thanks to Justices Kennedy, Roberts, et al, we have less influence and rich corporations have more.

You know, the right likes to say our Founding Fathers were all geniuses and masters of the English language, so if they had meant for money = speech, why didn't they just say so? If they had meant for corporations = people with all the same rights, why didn't they say so? (Modern limited liability corporations didn't exist in the 18th century, but their forebears, called charter companies, did.)

Even arch-conservative former Chief Justice William H. Rehnquist once warned that treating corporate spending as the First Amendment equivalent of individual free speech is "to confuse metaphor with reality."

This is not to mention that corporations are global; they do not have U.S. "citizenship" like you and I do. Foreign ownership of U.S. corporations more than doubled between 1996 and 2005. So now Islamist oil sheiks and Chinese billionaires will be free to play the ponies and place their bets on their favorite U.S. political candidates. (And you siwwy Wepubwicans thought Charlie Trie, Johnny Chung, Huang and Riady were a threat to our national security!)

What's more, as Justice Stevens in the minority noted, "corporations have no consciences, no beliefs, no feelings, no thoughts, no desires" like real human beings do; and "they are not themselves members of 'We the People' by whom and for whom our Constitution was established."

Anyway, it's no surprise Rush is ecstatic about this decision, because it's a fact that corporations donate more to Republicans. Contributions from unions and not-for-profits are a drop in the bucket. We're all screwed.

Freedom Awakens from Coma
January 21, 2010 | Rush Limbaugh

RUSH: Freedom is awaking from its coma today because of a huge, huge, huge Supreme Court decision -- huge. I cannot tell you how big this is. It's a 5-4 decision. The decision was written by Justice Kennedy. And what it does, it removes limits on independent expenditures that are not coordinated with candidate's campaigns. Meaning corporations and not-for-profits can spend any amount of money they want running ads and there's no limit as to when those ads can be run.

So McCain-Feingold takes a huge hit today. Now, the question of campaign contributions directly to candidates was not part of this decision because it was not before the court. So the issue was issue advocacy ads by nonprofit corporations, the Citizens United in this case, but it covers all nonprofits and all for-profit corporations. I'm going to go through it here pretty much line by line just to show you how profound this decision is.

BREAK TRANSCRIPT

RUSH: Now, I want you to hear this from Jeff Toobin. He is the legal analyst at CNN. The left is just agog, they are beside themselves that freedom is coming out of its coma today, is awakening from its coma with this Supreme Court decision, which I'm going to get into after the break. But I want to show you how upset that Toobin is and the left really are. Toobin is in crisis here.

TOOBIN: It's really not just the 20-year-old ruling from 1990, it's more like a hundred years of regulation of the way corporations are prohibited from being involved in the political process. It's really bigger than 20 years, it's more like a hundred years of precedent being overturned. It basically says money is speech and corporations are people, both of which are debatable propositions but both of which seem to be, you know, popular at the Supreme Court at the moment.

RUSH: What's debatable about corporations are people and money is speech? Those two things are inarguable, that's what the court said by 5-4 with Kennedy, who is the swing vote. He wrote the opinion here. That is significant. He's right, by the way. This turns over 100 years of precedent. You know how anti-corporatist the left is; you know how they hate corporations. This, folks, is causing ulcers. I can't tell you what this decision is doing today to these leftists who just a year ago, they had such high hopes that they're going to have every CEO in jail and every soldier in jail and it's just in one year, because the people of this country are not socialists. The people of this country still have roots to freedom and entrepreneurism and liberty, and nothing -- the left, Obama -- nothing can snuff that out.

BREAK TRANSCRIPT

RUSH: The Supreme Court decision is a defeat. I'll tell you, it's a defeat, ladies and gentlemen, for the fascists, the statists who seek to control our property, our bodies, and our speech. It is a defeat for Senator McCain. The muzzle is off the American people now because they, in fact, can spend the money on advocacy ads prior to the general and primary elections. It is a 100-year-old precedent that has been overturned. It is solid in that respect.

Citizens United produced an advocacy commercial about Hillary Clinton, which they wanted to run before the primaries. The question was whether it violated McCain-Feingold's ban as some kind of a political commercial. The Supreme Court said such advocacy by Citizens United and other groups is protected constitutional speech, but the opinion addresses more than that. The court says, "The law provides an outright ban backed by criminal and civil sanctions, including nonprofit corporations to either expressly advocate the election or defeat of candidates or to broadcast electioneering communications within 30 days of a primary, 60 days of a general election." These would be felonies and the court struck these down. The court struck down all the limits on where you can advertise, when you can advertise, and how much you can spend on this advertisement.

BREAK TRANSCRIPT

[...]

You gotta understand, folks. See, I know liberals -- I know these cockroaches -- and I'm telling you, this just has them boiling today. You add the fact that everything's falling apart and going wrong for Obama. I mean, you go back one year ago almost to the day. Hell, it is one year ago to the day. No, it's one year plus a day. Nevertheless, they thought they were in power in perpetuity. Forever. They had their messiah and it was going to change this country forever -- and now the American people have said: No way. They've learned what this was all about and they're saying: No way. This court decision has these people fuming. "The government may not impose restrictions on certain disfavored speakers based on the wealth or lack thereof of speakers. The public has the right..." The court said, "The public has the right to obtain all kinds of information from the widest number of sources."

[...]

Liberalism itself has just been struck down, this whole notion of "fairness" based on who has more than somebody else or who has less than somebody else, who's bigger than somebody else. There is no precedent for advantaging certain corporations and disadvantaging others respecting speech. Speech is speech. There's the First Amendment. It doesn't matter how much money you have or how big you are, there is no restriction permitted on it. They are really hammering away here, folks. This is pretty sweeping. This is landmark, I would call it. "The law's purpose and effect is to prevent small and large corporations, for profit and not-for-profit, from presenting facts and opinions to the public. There is no constitutional support for this." Struck down. "The law's purpose..." This is McCain-Feingold they're talking about.

McCain-Feingold's "purpose and effect as to prevent small and large corporations, for profit and not-for-profit, from presenting facts and opinions to the public. There is no constitutional support for this." You know, I think back. One of the things that Senator McCain always said was, "You know, money corrupts the system. These good people come to Washington and money corrupts them." We have perhaps the most corrupt presidential administration I've seen in a long time. What does money have to do with it? Is it not their ideas? Is it not their desires that are corrupting them? Is it not who they are that's corrupt? By the way, another reason you know this is a great, great piece of Supreme Court reasoning is that Chuck-U Schumer is livid. Chuck-U is beside himself over this. Chuck-U doesn't like the Constitution. Only his endless speeches are worthy of protection.

[...]

There's a lot more to this, ladies and gentlemen. But the important thing here is it's a 5-4 decision, and Anthony Kennedy wrote the opinion for the majority, which is significant. It's as good a decision as anybody could have hoped for. It's sweeping, and it is landmark.

BREAK TRANSCRIPT

RUSH: You gotta hear this. Chuck-U Schumer is livid, livid over the Supreme Court decision which takes away all the bans on whatever amount of money corporations want to spend on advertising in political campaigns. He just hates it.

SCHUMER: The Supreme Court has just predetermined the winners of next November's elections. It won't be Republicans; it won't be Democrats. It will be corporate America. Our system of government's the best in the world due to the ability of average citizens to participate and engage their elected officials without the belief that there are corrupting influences at play. I have not seen a decision that more undermines campaign finance and is probably one of the three or four decisions in the history of the Supreme Court that most undermines democracy. We will regret the day that this decision has been issued.

RUSH: Quite the contrary, Chuck-U. Freedom is awakening from its coma today. This does not "undermine democracy." It strengthens it.

Supreme Court decided 5-4 to destory U.S. democracy

Gee, do you think conservatives will bitch about "judicial activism" and "legislating from the bench" after this decision, which will overturn McCain-Feingold and 100 years of legal precedent and statutory law?

Methinks not.

Get ready for an all new America. Kinda like the old America, only more of the same, and worse -- where your views aren't worth two s**ts wrapped in a one-dollar bill.

Rep. Alan Grayson, just about the only Democrat with balls in Washington, has pre-emptively introduced 5 bills in anticipation of Dubya's Supreme Court opening the gates of hell to overrun our democracy. Check it out, and write your Congressmen to get on board, or we're all f***ed.

(Meanwhile, Obama has promised a "forceful response" to the SC decision. Uh-oh. Somehow Wall Street is going to get a few $ billion out of this, I just know it.)

Supreme Court Rips Up Campaign Finance Laws

By Deborah Tedford
January 21, 2009 | NPR

URL: http://www.npr.org/templates/story/story.php?storyId=122805666

Grayson's pre-emptive strike against SC campaign finance ruling

You know that I believe that all campaigns should be publicly financed. If the SC removes all restrictions on corporate to political campaigns, then we'll have a completely bought-and-paid-for political system. You and I won't matter at all.

Alan Grayson Introduces Bills To Fight Corporate Money In Politics

By Arthur Delaney

January 14, 2009 | Huffington Post

Anticipating a Supreme Court decision that could free corporations to spend unlimited amounts of money on political campaigns, Rep. Alan Grayson (D-Fla.) introduced five bills on Wednesday to choke off the expected flood of corporate cash.

"We are facing a potential threat to our democracy," Grayson said in an interview with HuffPost. "Unlimited corporate spending on campaigns means the government is up for sale and that the law itself will be bought and sold. It would be political bribery on the largest scale imaginable."

At issue in the Supreme Court case is whether the government can limit corporate spending during presidential and congressional campaigns. The case is pitting Citizens United, a conservative group, against the Federal Election Commission. The FEC banned ads for Citizens United's film bashing Hillary Clinton during the 2008 election season.

Grayson introduced a handful of bills on Wednesday -- the Business Should Mind Its Own Business Act, the Corporate Propaganda Sunshine Act, the End Political Kickbacks Act, and two other measures.

The Business Should Mind Its Own Business Act would impose a 500 percent excise tax on corporate contributions to political committees and on corporate expenditures on political advocacy campaigns. The Corporate Propaganda Sunshine Act would require public companies to report what they spend to influence public opinion on any matter other than the promotion of their goods and services. The End Political Kickbacks Act would restrict political contributions by government contractors.

The other measures would apply antitrust regulations to political committees and bar corporations from securities exchanges unless the corporation is certified in compliance with election law.

"This case is basically about an effort to get around that. Citizens United took corporate money and tried to influence an election," said Lisa Gilbert of the U.S. Public Interest Research Group. "These are all pieces of good policy. I hope they draw attention to the potential frightening implications of Citizens United."

ABCNews reported on Wednesday that Democratic leadership is hard at work on a legislative response to the Supreme Court's expected ruling. Grayson told HuffPost that he had consulted with leadership before launching his preemptive strike.

Jeff Patch, a spokesman for the Center for Competitive Politics, an organization that advocates for lifting campaign finance restrictions, said Grayson's bills were too focused on corporate spending. "These are totally targeted at corporations, but Citizens United is widely believed to affect corporations and unions and nonprofits equally."

Grayson disagreed. "One year's profit for Exxon is greater than the entire political expenditure of all unions put together," he said.

Grayson added that he wanted to send the message that people are paying attention to the Supreme Court.

"This issue transcends the usual political arguments. I don't think the teabaggers would be very happy if our government was bought and paid for by a huge national corporation," he said.

The Supreme Court's ruling, which has been expected for months, could come as soon as Jan. 20.

Bearded climate scientists? No, it's Siemens

This is from Siemen's web site, a document called "The Company 2010:"

Megatrends that shape our future

Climate Change

• The average global surface temperature has increased by 0.76 degrees C compared to the 18th century.
• 11 of the 12 years between 1994 and 2005 rank among the 12 warmest since weather observations began.
• Greenhouse gas emissions have risen dramatically since industrialization. Today we face the highest CO2 concentration in the atmosphere for the past 350,000 years.

This is a multi-billion dollar mutli-national corporation saying this. And they're making big-money bets with shareholders' money that these facts mean something.

Far-right Koch billionaires bankroll Heritage, Tea Party, CATO, the list goes on and on....

While all you naive conservatives are out there following the corrupt money trail of academic research grants to poor scientists, let me remind you where the REAL money is at: being a callous, war-mongering, profit-maximizing, burn-the-Earth, right-wing SOB. If you're willing to sell your soul for that, you'll always have a cushy well-paid job.


The Billionaires Behind the Hate
By Faiz Shakir, Amanda Terkel, Matt Corley, Benjamin Armbruster, Zaid Jilani, Lee Fang, and Alex Seitz-Wald
December 8, 2009 | Think Progress

URL: http://pr.thinkprogress.org/2009/12/pr20091208/

Carbon Disclosure Project

The Carbon Disclosure Project (CDP) is a registered charity set up by 385 institutional investors managing more than $50 trillion in assets. In 2008, 1,550 companies from the S&P 500, Global 500, and FTSE 350 voluntarily reported to the CDP their CO2 emissions accounting, and emission-reduction strategies.

Why are they volunteering this information? According to PricewaterhouseCoopers: "Increasingly, [industry] analysts are placing a premium on information provided about environmental, social, and governance issues, expecting greater visibility into the performance of supply chains."

Moreover, smart companies are not waiting for gov't regulation on CO2 emissions. They are getting out ahead of regulation and their competition. They are measuring their emissions (and their suppliers' emissions) and finding ways to reduce them, and then reporting this data voluntarily to investors and other stakeholders. Emissions of any kind, after all, are wastes, which represent inefficiencies and hence opportunities to cut costs and/or increase productivity. Smart companies realize that belching gases into the air and spewing toxic liquids into our soil and waterways create hidden costs for society, which we are increasingly less willing to tolerate; but companies also recognize that these wastes represent direct costs to the company. Thanks to the "lean" movement in manufacturing and supply chains, we know that any kind of waste is a drain on profit.

Thus, when we do a proper accounting of costs and lost opportunities, we see that there is very little opposition between environmentalists who lobby for reduced emissions, and businessmen who strive for bigger profits. But if an industry is inherently, hopelessly inefficient, it will be overtaken by competitors using more more efficient processes and technologies.

Secret memo: Obama sold us out to Big Pharma

See? Obama's Harvard education (paid for by Islamic terrorists!?) among blue-bloods and future captains of industry has done its work: Obama sold us out to Big Pharma, just like U.S. presidents are supposed to do. All you used Teabaggers who were terrified you might get access to affordable health care can relax now.

Apparently, Obama's true calling wasn't as a community organizer, it was being the best damn collector of corporate campaign donats in history. 'Course, to get you gotta give a little.

Tough break, America. Better luck next messianic minority Democratic president! (By that time, if I'm still alive, I'll qualify for Medicare, aka socialized medicine, so it won't matter to me.)

Internal Memo Confirms Big Giveaways In White House Deal With Big Pharma

By Ryan Grim

August 13, 2009 | Huffington Post

URL: http://www.huffingtonpost.com/2009/08/13/internal-memo-confirms-bi_n_258285.html

Taibbi: Real anger, fake populism

Stop Whining About Populist Anger!
By Matt Taibbi
May 6, 2009 | SmirkingChimp.com

"Is there any business in the United States more vilified than credit card lending?

The card companies stand accused by Congress and the Federal Reserve of gouging customers with impenetrable fees, enticing innocents to borrow themselves into bankruptcy, and blowing off cardholders who try to correct errors in their accounts.

Attacking these firms is a crowd-pleasing sport for lawmakers, in part because every constituent has a story about being mulcted by a card issuer. Last week the House of Representatives easily passed a credit card holders' bill of rights. The Senate will take up a similar measure soon. President Obama has signaled his approval.

Someone has to stand up for these companies. I guess it'll have to be me...

...The real scandal, according to the common refrain, is that issuers such as American Express, Citigroup and Bank of America have received billions of bailout dollars from taxpayers. How dare they repay the favor by putting the squeeze on us?

This is where populism shades into demagoguery. Critics who argue that it's inappropriate for bailed-out banks to tighten credit terms on taxpayers have it exactly wrong: If we're footing the bill, we should praise these banks for being stingy with credit, not hammer them for it. It won't be any easier for them to pay us back if we hector them into maintaining the loose standards that produced this mess."

-- Michael Hiltzik, Credit card companies as evil villains? It's not that simple, Los Angeles Times.

"Someone needs to stand up" for the credit card companies? Did I hear that right, Michael Hiltzik?

Apparently it is not enough that the credit card companies have spent $15.5 million on lobbying fees in the first quarter of 2009 alone (this according to CREW, the Citizens for Responsibility and Ethics in Washington), while employees of credit card companies spent an additional $14.5 million last year, and credit PACs spent $8.6 million more. It's not enough that when the President even considered making a change to the credit laws, 14 top-ranking credit card company officials got to meet with Obama to plead their case in person; conveniently, none of the 14 was a registered lobbyist, which made them exempt from laws banning lobbyists from influencing officials with responsibility for distribution of stimulus/recovery funds. Apparently despite all that the credit card companies are voiceless yet, and still need Michael Hiltzik of the LA Times to champion their cause.

Of all the truly revolting political developments of the financial crisis age -- and there have been a lot of them -- probably nothing is more disgusting than the weirdly intense media backlash against "populist anger," anger that is inevitably described by media sages like Hiltzik as irrational, unfounded, and pointedly unhelpful. The public is depicted as a great dumb beast lashing out wildly at shadows and hallucinations, with the poor diligent hardworking members of the financial class (slaving away to pump much-needed capital into the bloodstream of international commerce) suffering the collateral damage. And while commentators are always careful to note that much of the anger "may" or "could" be justified, rhetorically these lines always lead to a but clause. Rick Perlstein of Newsweek, for instance, noted that some populist anger is useful, but it can very easily transform into the " 'bad' kind of populism -- the hateful kind; the violent kind; the demagogic kind." Author Robert Frank talked about the public anger over the AIG bonuses being reasonable up to a point, but "if we're not careful, we could end up shooting ourselves in the foot," as "any broader effort to cap executive salaries would do more harm than good."

This is another of the typical features of the anti-populism argument, the false dichotomy. We are constantly being told that we have to stem this populist anger or we'll have communism, hard caps on executive salaries, lynch mobs, pitchforks, etc. Except that in reality the consequences of "populist" anger in this country are somewhat, uh, less severe. Think about it: when in American history has populist outrage ever led to serious punitive measures directed at rich people?

When the financial class nearly destroyed the American economy via the Savings and Loan crisis in the eighties, what was the punishment? Answer: we gave the people who did the fucking up $124 billion in taxpayer money. When currency speculators overbet the peso in 1994, what did we do? We bailed them out, with about $50 billion. Long Term Capital's punishment? A bailout. Emerging-markets speculators who went in the tank in the late eighties? They got bailed out in front and in back, through a variety of bailout programs.

How about the insane exuberance for the internet bubble economy? The same politicians and central bankers who felt that intervention was necessary to correct the market's irrational decision to wipe out Long Term and all those speculators in the economies of Southeast Asia and Russia -- the same people who felt that government intervention was needed to correct "irrational" declines in investment value -- saw no problem at all with the obviously overvalued, far more irrationally exuberant tech market. And when it all blew up, wiping out billions in value, Wall Street was "punished" with sweeping tax cuts, further deregulation, and massive cuts in the staff budgets of enforcement agencies like the SEC and the OTS (which saw its already-miniscule staff of 1200 slashed by 25% between the years 2001 and 2004).

Even after Enron and WorldCom and Tyco and a rash of similar accounting scandals that clearly indicated a widespread, endemic problem, the would-be dreaded response was the Sarbanes-Oxley Act, an incremental step toward greater financial disclosure so unfrightening to Wall Street that even Alan Greenspan loved it. Sarbanes-Oxley was supposed to inspire corporate responsibility, transparency, and stricter bookkeeping, but half a decade after its inception what Wall Street actually made of it was perhaps the most ineffectual and lax accounting environment the civilized world has ever seen, with one giganto-firm after another capsizing and sinking to the ocean floor under the weight of spiralling debts that often came as a complete surprise to shareholders, regulators, and sometimes even senior management as well.

We simply do not have a real functioning mechanism in American politics for converting public anger into tough government policy. The closest thing we have in that regard is the relationship between elected officials and the media: when TV news decides to flip out about something like the AIG bonuses for more than a day or two, we might sometimes see public officials do something about... something like the AIG bonuses. But that's about it. In point of fact the only significant "reforms" to date, even in the face of this most extreme financial crisis, have been moves instituted to restrict short-selling and a relaxation of mark-to-market accounting rules, both measures on the deregulatory wish list of the big firms.

More significantly, there has been almost nothing in the way of punishment of the major figures responsible for this crisis. If there were a real correlation between public anger and government policy, we'd have seen at least something in that area. Maybe there wouldn't have been public floggings, but there would have been some serious frog-marching of unscrupulous assholes to prison.

And this isn't about vengeance, it's about policy: if the "consequence" for blowing a $4 trillion hole in the economy is seeing masses of government officials line up to hurl billions of taxpayer dollars at you, that doesn't provide much of an incentive to fix your behavior. This is one area where there should have been a seamless melding of public outrage and government policy: we should have swooped in, rounded up 200 of the most guilty executives, hauled them before congress in a public trial, and packed them all off to a Supermax in Florence, Colorado to do real time with murderers, rapists and terrorists. Reality shows should have been quickly greenlighted to track their progress in the hole (can you imagine the ratings for a show called Project D-Block starring John Thain, Angelo Mozilo and Dick Fuld?).

All joking aside, this would have been an incredibly healthy step for our society to take -- just as it would have been healthy (and still might be) for someone to go to jail for torture during the Bush years, or for contracting fraud in Iraq, or for any of the other countless crimes committed this past decade that will almost certainly go unpunished. The social contract has to be considered broken when some dumb schmuck can go to jail for five real years for selling a bag of weed while a guy who went to Harvard and Wharton and had all possible advantages gets nothing but a bailout and a temporarily lowered bonus regime for destroying billions of dollars of public wealth.

As for the credit card companies, f--k them. The biggest of them are engaged in one of the all-time great scams right now, gorging themselves on cheap money lent to them by the Fed or the government via bailout programs and then turning right around and further widening their spread by increasing prices to the ordinary consumer.  Imagine an oil company that got to buy government crude from the Strategic Petroleum Reserve at a discount during the Katrina crisis and then turned around and gouged consumers during the shortage.

Think there would be public anger then? Maybe. This is close to the same thing, and let's not forget who these motherf----rs are: they are the people who spent most of the last decade and a half showering congressmen with cash in order to get the Bankruptcy Bill passed. That bill made it significantly harder for people to declare bankruptcy to get out from credit card debt so that they could keep their homes. A study by the New York Federal Reserve last year concluded that there are roughly 32,000 more foreclosures per quarter because of this bill than there would have been had the old bankruptcy laws remained in place. The study estimated that the bill resulted in about 400,000 additional foreclosures total since its inception.

Gee, you think that played a role in the financial crisis at all? Forgetting all the predatory practices that these people are known for, they were a major accomplice in the financial disaster -- and now they're fighting tooth and nail to keep Congress from forcing them to stop arbitrarily jacking up fees on consumers. In other words the same banks (like Citi, for instance) that got a hot sexy multi-billion-dollar massage from the Fed and TARP when they pushed their debt-to-equity ratios to insane levels, borrowing 30 and 40 dollars for every dollar they had and investing them in the housing casino and the derivatives market, now are arguing that ordinary losers like you and me who might have $5,000 or $10,000 in revolving credit card debt shouldn't get a break on their fees just because times are tough (or because they're too stupid to hire a $500-an-hour lawyer to decipher their insane consumer contracts). In other words, when you borrow $500 billion against $20 billion and blow all of it at the roulette table, you should get a bailout; but when you take out a $10,000 credit card to pay for gas and groceries, you should pay whatever freight the company deems fit.

I'm tired of hearing about how dangerous it is when the public gets angry about this stuff. You know what? Let's let it be dangerous, and see what happens. It'd be a nice change.

'You got your peanut butter in my rat poop!' 'No, you got your rat poop in my peanut butter!'

-->

"I'm not surprised this happened," [ex-employee] James said. "I just hate that people died."

Every 4-8 years we elect a Republican to "cut bureaucratic red tape" and "reduce anti-business regulation," and then, 4-8 years later, chagrined and horrified by the results, we elect a Democrat to protect our food, water, air and markets again.

Why don't we insist that government consistently commits enough resources to the FDA, SEC, IRS, and other federal agencies all the time, no matter who is President, so that they can do their jobs, and so we don't have to go through these stupid death-renewal cycles anymore?  After all, hating salmonella in your peanut butter, or insider trading and pyradmid schemes, is not a "liberal" thing.

Inside 'nasty' nut processor

By Dahleen Glanton

February 3, 2009 | Chicago Tribune

David James recalled opening a tote of peanuts at the processing plant in this small Georgia town and seeing baby mice in it. "It was filthy and nasty all around the place," said James, who used to work in shipping at the plant.

Terry Jones, a janitor, remembered the peanut oil left to soak into the floor and the unrepaired roof that constantly leaked rain.

And James Griffin, a cook at the plant, recounted how his observations led to this simple rule: "I never ate the peanut butter, and I wouldn't allow my kids to eat it."

In interviews, these three men and a woman who worked at the now-closed plant provided an inside glimpse into the day-to-day sanitation lapses there.

The Peanut Corp. of America plant is now the target of a federal criminal investigation over salmonella-contaminated products that sickened more than 500 people in 43 states and killed eight. In Illinois, six cases have been reported, none fatal.

Items processed at the plant have reached deep into the U.S. food chain. By Tuesday, the federal government had announced more than 100 recalls covering more than 1,000 products, from ice cream and candy bars to frozen Thai dinners and dog snacks.

Several Illinois companies have recalled products, according to Food and Drug Administration records. For example, Sara Lee North American Foodservice of Downers Grove recalled Chef Pierre Chocolate Peanut Butter Silk Pie, while Walgreens of Deerfield recalled four kinds of Walgreens-brand candy and four types of Cafe W-brand trail mix.

Major national brands of jarred peanut butter, however, were not tainted.

The peanut case is emblematic of the FDA's troubles in protecting the nation's food supply. Understaffed and spread thin, the agency routinely has turned food inspections over to the states. But watchdog groups say the states often are ill-equipped to monitor facilities where food products are stored, processed or manufactured.

In coming days, President Barack Obama plans to announce a new FDA commissioner and other officials who will implement a "stricter regulatory structure" to improve oversight in food-safety inspections, a White House spokesman said.

The American Peanut Council, a trade association representing all segments of the nation's peanut industry, issued a statement responding to an FDA report that the company knowingly released a product with potential salmonella contamination into the food supply.

"This is a clear and unconscionable act by one manufacturer," the council stated. "This act is not by any means representative of the excellent food safety practices and procedures of the U.S. peanut industry."

[You know you've been bad when the America Peanut Council throws you under the bus.  – J]

Peanut Corp. said last week it did not agree with all the FDA findings and has taken corrective measures that would be submitted to the agency in writing. A spokeswoman said she could not respond to specific allegations of workers who talked to the Tribune.

According to news reports, Georgia state inspectors found repeated cleanliness problems at the plant from 2006 to 2008, including grease and food buildup and gaps in doors that could allow rodents to enter.

Then late last year, several states reported mysterious cases of salmonella.

When Minnesota officials tested a jar of peanut butter from a nursing home on Jan. 9, results showed salmonella. The jar was traced to Peanut Corp., prompting FDA inspectors to investigate the Georgia plant. FDA officials said that by invoking anti-terrorism laws, they obtained internal company records that Georgia inspectors could not. These included lab tests that found salmonella on 12 occasions in the past two years.

The FDA said Peanut Corp. sent contaminated samples to various labs until it got a negative result, then shipped the product to vendors.

"This plant was running tests for their own information but ignoring all the positive test results," said Caroline Smith DeWaal, director of food safety for the Center for Science in the Public Interest, a nutrition advocacy group. "They ignored anything they did not like."

The stories of former workers at the Blakely plant illustrate what can happen when the state and federal regulatory system breaks down. The workers said problems at the plant were obvious and long-running, raising questions about why it took so long for inspectors to fully uncover them.

According to the workers, not a day went by that they didn't see roaches or rats scurrying about. And after a heavy rain, workers said, they had to step over puddles of water inside the building.

"It was pretty filthy around there," said Jones, 50, who said he worked in the sanitation department for eight months before he was laid off. "Whenever it rained back in the [peanut] butter part, it was like it was raining inside. It was coming in through the roof and the vents, but that didn't stop them from making the paste," he said.

Jones said he earned $6.55 an hour and was happy to have the job, which included mopping up water and setting rat traps that sometimes caught three or four rodents a day.

A recent FDA inspection report did not note specific signs of rodents. But it did cite large openings along the sides and tops of the trailers that contained totes of raw or roasted peanuts. It also noted roaches; mold on the walls and ceiling and in the storage cooler; dirty utensils and equipment used in food preparation; and open gaps in the roof, allowing for wet conditions that could cause salmonella contamination.

The former workers said they saw many such problems and more. Griffin, 27, who was responsible for operating roasting machines, said he made sure he cleaned them every two weeks, and he said the plant was not as dirty as it has been portrayed by some. It was not always as clean in the area where peanut butter and paste were produced, he said.

Teresa Spencer, 30, who said she worked at the plant for two years before she was laid off in 2007, complained that employees on the peanut line—not professional cleaners—were often required to clean the plant and did it inefficiently.

"They needed to hire a cleanup crew because you can't do your job and clean up too," said Spencer, who worked as a quality sorter, picking rocks, sticks and bad peanuts from the conveyor line.

Another former employee, James, 36, said he worked in the shipping area for eight months before leaving last year. During that time, James said he "saw them put new stickers on buckets of peanut paste that were out-of-date. There were roaches, rats and everything out there.

"Some of the bags of nuts had holes in them, and you could tell rats had eaten through them. And they would put tape on them or sew them up and send them out," James said. "Sometimes there would be mold on them, and they told us to pick out the good nuts and put them in another bag."

He said the employees often talked among themselves about the conditions, but he said most workers did not complain to management because they wanted to keep their jobs.

"I'm not surprised this happened," James said. "I just hate that people died."

Tribune reporter Sam Roe contributed to this report.