I have to admit that it’s getting tough to face the news these days. I am having one of the years where everything I own has decided to break down. It started last Labor Day with the AC unit outside and has moved on to my computer, me, two of my pets, the vacuum cleaner, my car’s brakes, and the refrigerator.
I’m having a really difficult time paying for all of these as well as dealing with the usual grief of running around trying to get it all fixed. Most of this stuff is not the sort of thing that can wait which is the most depressing news. Is it just me or is everything designed to completely break down within a fairly short time?
I’ve ranted quite a few times here about the consolidation of all kinds of industries in this country from banking to media to anything having to do with natural resources. There’s a new book out from Barry Lynn called “Cornered: The New Monopoly Capitalism and the Economics of Destruction” that provides some fairly good information on the consequences of market consolidation.
Lynn Parramore: What are some of the telltale signs of monopolies?
Barry Lynn: Well, monopoly doesn’t mean that a company controls 100 percent of the marketplace. What monopoly means is that a company has sufficient control of the market to shape the outcomes of that market to its own advantage — to shape pricing, to determine who is making deals of with whom.
So what we have in America is that there are actually very few marketplaces in which you have a single company that has complete, 100 percent control. But what you do have is many marketplaces, thousands of markets, in which you have a dominant player that really controls commerce in that activity.
A really good sign, the thing you’ll actually tend to see in a newspaper or on TV is the merger, a big deal, two companies coming together. And most of the time, the press will cover it as, well, here’s an opportunity to invest. Or here’s a company that you should be looking at in the future. But what you’re actually seeing in many cases is the creation of power or the increasing power of a particular corporation over a particular marketplace.
LP: For the average person, how do monopolies affect our lives, prevent us from getting and doing the things we need?
BL: Monopolies affect us in innumerable ways. The most obvious way, the way that people always talked about, is that monopolies usually have the power to raise the price in some activity, for some good, for some service. We see that, say, with Comcast and cable services. But monopolists also have the capacity to reduce our liberties.
As workers, one of the things you prize is an open market where you can sell your work to many potential buyers, many potential employers. If there’s a lot of consolidation nationally in your industry, or even your town, you may find yourself with really only one or two buyers for your work. That means that you have less ability to negotiate higher wages. It also means that you have less real freedom: you can’t just pick up and leave if you get a bad boss.
I watched a program about a new movie starring Meryl Streep and Jeff Bridges based on the book “The Giver” this weekend. It’s yet another take on a dystopian future but it sounds quite interesting and the casting is super. Here’s a piece in The Atlantic over the movie and the idea of equality/inequality which is central to the theme of the book and movie.
The world is an increasingly unequal and unfair place, economists tell us. Every year, it becomes a little harder to picture what equal opportunity and egalitarianism even look like. As the rich attract capital like Jupiter attracts space debris and the poor fail to make any substantial gains, the gap between them comes to seem to us less surmountable, more of a force of nature than something for which we can even imagine a reasonable counterfactual.
Fortunately, we have literature to help us out with that.
Specifically, we have young adult literature, and its fascination with the way that the world is made, unmade, and remade.
If you grew up in the 1980s or 1990s and were of a bookish turn, you either readThe Giver or had it read to you, despite the numerous times that moral hawks tried to keep it out of your hands. (Naturally, this only made it more attractive.) The book, and numerous others that followed it, imagined worlds where economic conditions dictate the facts of human life, as of course they have a tendency to do.
* * *
In The Giver, society has “solved” inequality by dramatically reducing personal property and having the state distribute what’s left. (This is not the sort of solution that might be recommended by a moderate market skeptic, like Capital in the Twenty-First Century’s author Thomas Piketty. His proposal—raising the income tax or making it more progressive—wouldn’t make for the most exciting subject, especially for young-adult page turners.) Such a solution like The Giver‘s has a stellar literary pedigree: It harkens back to thinkers like Thomas More, who in 1516 invented the egalitarian no-place (“utopia”), and to the socialist philosophers of the 19th century, especially Friedrich Engels.
Engels saw the institutions of family and private property as deeply entwined. Part of Engels’ objection to the institution of the family was that it involved a “progressive narrowing of the circle, originally embracing the whole tribe, within which the two sexes have a common conjugal relation.” Marxism’s benevolent tendencies are swallowed up by concern and preference for one’s immediate family, which becomes the unit of basic inequality.
Like Engels and Marx, Piketty and his contemporaries worry about “patrimonial capitalism,” or the tendency for certain families to only become richer, because the rate of return on capital exceeds the ordinary rate of growth. Have more capital, get more growth, have more capital, get more growth, and so on.
But there’s another kind of patrimony, as everyone who has ever ended up doing the same thing as her parents knows. There is a real danger that inequality is not just related to literal capital accumulation, but to equality of opportunity and the accumulation of cultural capital. This might include things like what kind of education your family can afford to give you, but also could be as simple as what you see in front of you every day and the way that it either expands or limits your opportunities, your very knowledge of to what you can reasonably aspire.
Anyway, it seems worth viewing if only for the cast. Streep plays the villain btw.
If there’s ever been an example of a post capitalist dream turned dystopia on earth, it has to be the city of Detroit. It was once the center of our premier industry. We haven’t mentioned the most recent development there. The city is shutting off water service to many people. That’s basically turning lives over to a less than third world living situation and it sets up a potential Health Crisis. Thousands of families–including infants and the elderly– no longer have running water.
A new mass rally in Detroit is planned for Friday, August 29, the day the state-enforced city bankruptcy trial begins. Democracy activists throughout the Midwest are again urged to come demonstrate against the water shut-offs and the hostile takeover of Detroit’s assets.
In this period of mass despair over rampant political corruption and economic injustice in America, many people ask, “Does protest really make a difference?” The answer is yes, and it is being proven right now in Detroit, the frontline battleground in the growing resistance movement against the hostile corporate takeover and looting of American cities nationwide.
Detroit is the model for a nascent democracy mass movement. On July 18, thousands of demonstrators from around the country linked arms and marched in downtown Detroit, past the City Emergency Manager’s office and the JP Morgan Chase Bank, in a show of solidarity against the ongoing corporate-led assault on city worker’s pensions and most recently, the indiscriminate shut-off of water, without notice, to more than 15,000 families, mostly African American.
While businesses, large corporations and banks – 55 percent of which were in arrears on water bills – were exempted from the shut-offs, service to 40,000 homes was reportedly on the chopping block. Thousands had already been left without clean water, with no concern shown for infants and children, pregnant women, the sick, elderly or handicapped. Many Detroit activists and civic leaders, including Congressman John Conyers, attended the rally at Hart Plaza and decried the water shut-offs as a human rights violation and a public health crisis.
As one prominent sign at the front of the rally stated, “WHERE DO YOU EXPECT US TO SH*T?”
On the same morning that the protest rally exploded, civil disobedience was used to block private company trucks performing the shut-offs from leaving their garage. Nine activists were arrested, including three clergy members and Baxter Jones, an activist with a disability who uses a wheelchair for mobility. Pastor Bill Wylie-Kellermann stated after his arrest: “Detroit is under assault by lawless and illegitimate authority. It’s a moral issue. As religious leaders and allies, we are upping the ante, spiritually and politically, by putting our bodies in the way. We pray to intensify the struggle with civil disobedience, even as it is broadened with mass action and legal challenge. As one of our fallen mentors Charity Hicks urged, we are seeking to ‘wage love’ in the face of death. Such deeds can sometimes break the dreadful silence of our occupied corporate media.”
The protest actions, following an admonition from the United Nations that Detroit’s water shut-off was indeed a human rights violation, embarrassed both Governor Rick Snyder and his appointed “Emergency Manager,” Kevin Orr. Within three days, Orr announced a 15-day moratorium of the shut-offs; a respite later extended to August 24. Soon after, Orr relinquished administration of the Water Department to the city.
The demonstrations may ultimately serve to deter a planned privatization of the city’s water system: a Detroit asset estimated to be worth many billions of dollars that sits adjacent to 21 percent of the world’s freshwater supply in the Great Lakes.
Also clearly irritated by the attention on the shut-offs was Federal Bankruptcy Judge Steven Rhodes, who demanded an explanation from the city, stating that the water issue was hurting Detroit’s reputation in the world community. The mass actions turned a powerful national spotlight on Detroit’s controversial bankruptcy, including full coverage of the resulting water war on major TV and cable networks, and in printed press ranging from the Detroit Free Press to the Wall Street Journal and The New York Times.
Detroit activists “felt the love” as the media and internet were lit up and news of the protests went viral; thousands of blogs and social media communications spread the word, and within days, perhaps millions became aware of Detroit’s crisis. The coverage illuminated the role of criminal banks and real estate moguls, as well as the attacks on pension funds and attempted privatization of the water system.
Overnight, this local crisis emerged as an example of the national “shock doctrine” strategy being spread like a plague by the Tea Party and ALEC; exposing their “emergency management” laws as facilitating a strategy to undermine democracy and pave the path for surreptitious privatization of public assets.
The rally shed light on the complicity of the major Wall Street banks in Detroit’s economic spiral, banks whose investors continue to thrive while Main Street takes the brunt of the financial losses they caused. “Detroit is just the canary in the mine” was a refrain often repeated by the rally speakers.
So, this is turning into quite the serious post. But, like I said, this just seems to be one of those moon or solar phases, I guess. Amnesty International is on the ground in Ferguson. It’s the first time they’ve ever deployed in the USA.
Amnesty International has taken “unprecedented” action to deal with the situation in Ferguson, Missouri, by sending resources the human rights group has never deployed inside the United States.
The organization has been on the ground in Ferguson since Thursday, sending a 13-person human rights delegation to the city in the wake of the Aug. 9 police shooting death of Michael Brown.
Jasmine Heiss, a senior campaigner with Amnesty who is a part of the team in Ferguson, said the use of the “cross-functional team” — which she said included community trainers, researchers, and human rights observers — was “unprecedented” within the United States for the group.
On Saturday, after Missouri Gov. Jay Nixon declared a state of emergency and put a curfew in place in Ferguson, Amnesty International USA’s executive director, Steven W. Hawkins, issued a scathing statement.
“We criticize dictators for quelling dissent and silencing protestors with tactics like curfews, we’ll certainly speak out when it’s happening in our own backyard,” he said. “The people of Ferguson have the right to protest peacefully the lack of accountability for Michael Brown’s shooting.”
I’m ending with the results of Michael Brown’s private autopsy which was released last evening. Brown was shot at least 6 times and twice in the head which is interesting given that he was 6’4″. Eric Holder has ordered an autopsy as part of the Federal investigation. Governor Nixon held court in the Sunday Shows. I have to admit that I left the TV off all day. There’s only so much one old lady can take.
Nixon called St. Louis County Prosecuting Attorney Robert McCulloch, an “experienced prosecutor.” Nixon said he had no timetable for the investigation.
Nixon also told ABC’s “This Week With George Stephanopoulos” that his office was unaware that Ferguson Police Chief Thomas Jackson was going to release on Friday a videotape showing what is alleged to be Brown, 18, in what police have called a “strong-armed” robbery of cigars in a convenience store shortly before he was killed.
“Rest assured we have had very serious discussions about that action” and its effect on Brown’s family, Nixon told NBC’s “Meet the Press.” — Chuck Raasch, 10:30 a.m. Sunday
So, the Governor has no problem with the prosecutor. That’s interesting too.
So, I’m going to end it here. What’s on your reading and blogging list today?
Snow began falling here before 7AM, and there is already a coating over everything. Of course we already had a around a foot of the stuff on the ground, so whatever we get will pile on top of that. Depending on where the rain/snow line falls, everything may be coated with ice by tonight.
Once again the South has been hit hard with winter weather. The Washington Post reports: Winter storm headed toward D.C. knocks out power across the Southeast U.S.
A powerful winter storm dropped a coat of snow and freezing rain across the Southeast on Wednesday, leaving almost 300,000 customers without power, forcing the cancellation ofmore than 3,600 flights, and creating gridlock on roadways in North Carolina.
In Atlanta, where another recent snowstorm had caused massive traffic jams, people seemed to have learned their lesson. Schools were closed. Workers stayed home. The city turned into a kind of wintry ghost town.
But in North Carolina, drivers didn’t seem to have learned the lesson at all.
In both Charlotte and Raleigh, news outlets reported that people headed out onto ice-covered roads in mid-afternoon. The result was the same it had been in Atlanta two weeks ago: creeping traffic, abandoned cars and folks offering stranded motorists a place to stay the night….
As Wednesday went on, the storm swept from Alabama, across Georgia and up into the Carolinas on its way toward Virginia and the Washington area.
Georgia Department of Transportation officials said they are expecting road conditions to remain treacherous into Thursday morning as sleet and freezing rain is expected to continue. GDOT is urging the public to avoid all but emergency travel until at least mid-day Thursday
Forecasters at the National Weather Service said they are expecting falling pieces of melting ice to pose threats to drivers and pedestrians near overpasses and tall structures on Thursday.
Forecasters are also anticipating wet roads to refreeze Thursday night, which could lead to patches of black ice.
Several inches of snow could accumulate in North Georgia while the area across the state between a line just north of Columbus, Macon, Warner Robins and Statesboro and extending northward to above Interstate Highway 20 are experiencing icing roadways, power lines and trees. Moreover, winds gusting to as much as 30 m.p.h. could cause limbs and trees to fall on power lines and roads. A State of Emergency remains in effect for 91 counties in this region.
They knew it was coming. But drivers in North Carolina still fell prey to the winter storm that the National Weather Service predicted would be “potentially crippling” to the area. Even those who left just after noon have been trapped by the heavy snow that arrived today.
“Snow arrives in the Triangle as expected but causes gridlock anyway,” reads the headline in the Raleigh News Observer, referring to the Research Triangle of the cities Raleigh, Durham and Chapel Hill. The intense traffic came one day after Gov. Pat McCrory declared a state of emergency ahead of the winter storm.
From what we’re seeing, people are blaming the problem on two factors: The snow came on fast and immediately stuck to roads; and most commuters who worked Wednesday tried to leave at the same time, adding to the gridlock.
The worst of the conditions may be yet to come, as officials expect freezing rain and sleet to hit the area as the storm moves out.
From NBC News: ‘Very Rough Commute’ Looms as Snow Blankets Much of Northeast.
The winter storm that tore through the American South, knocking out power to a half-million people, has marched up the East Coast to terrorize the morning commute Thursday.
More than 150 million people remain under a winter storm warning or advisory as snow falls in some Northeast cities at a rate of 1-2 inches per hour.
“The rate of snowfall will be hard to deal with,” said Kevin Roth, a forecaster with the The Weather Channel. “It will be a very rough commute. The may have enough plows to deal with normal storms but with two inches an hour the they drive by and the snow just builds back up. This will affect any roadways or airport runways in the region.”
It could be a very long weekend for many parents. Since Monday is a holiday, schools may just decide to close tomorrow as well as closing or letting out early today.
Down in New Orleans, it was a bad day for former Mayor Ray Nagin and former St.Tammany coroner Peter Galvin, but a good day for a city that has endured more than it’s share of political corruption. From Nola.com’s James Varney: Ray Nagin convicted, Peter Galvan sentenced – a good day for Louisiana.
Wednesday was a very good day at U.S. District Court in New Orleans for those who favor good government in Louisiana. Or maybe simply for justice.
Either way, when a former mayor of New Orleans gets convicted on 20 of 21 corruption counts in one federal courtroom, and a crooked coroner is sentenced to two years in another, it at least means the bad guys don’t always get away with it.
Who knows what Ray Nagin, New Orleans’ mayor during its darkest hour of Katrina, will be sentenced to? He faces up to 20 years in prison, and I’m hard pressed to come up with many reasons he should get much less….
Meanwhile, disgraced former St. Tammany coroner Peter Galvan, who managed to make himself the highest paid official in the state and sweeten his pension pot while also raking in undeserved sick pay and other goodies, got off with a 2-year sentence when he could have gotten five.
From the Christian Science Monitor summarizes the evidence against Nagin:
The case against the former mayor was towering. In the nine-day trial, prosecutors summoned many co-conspirators to the stand who testified to the pay-to-play schemes Nagin orchestrated, plus the bribes worth hundreds of thousands of dollars that he sought and then redirected to Stone Age, a granite countertop business operated by custom countertops seattle wa, who were not charged.
In addition to the witnesses, prosecutors presented jurors with a mountain of evidence – e-mail correspondence, business contracts, credit card and bank statements, and more – that they said proved the mayor was a willing participant in wielding power for personal profit.
Nagin was convicted on five counts of bribery, nine counts of wire fraud, one count of money laundering conspiracy, four counts of filing false tax returns, and one overarching count of conspiracy. Jurors acquitted Nagin of a single charge of bribery related to a $10,000 bribe that prosecutors said he accepted through the family business.
“The physical evidence was so overwhelming that for Ray Nagin to have successfully defended this case, he would have had, in some way, to refute these documents and use his credibility,” says Michael Sherman, a political scientist at Tulane University in New Orleans and a former legal adviser to current mayor Mitch Landrieu.
Now if we could just get the Federal government to stop letting corporations to get away with murder. My jaw dropped when I saw this headline at Reuters: Comcast to buy Time Warner Cable for $45.2 billion.
Comcast Corp said on Thursday it would buy Time Warner Cable Inc for $45.2 billion in an all-stock deal that combines the two largest U.S. cable operators.
The friendly takeover comes as a surprise after months of public pursuit of Time Warner Cable by smaller rival Charter Communications Inc, and immediately raised questions as to whether it would pass regulatory scrutiny.
Comcast will pay $158.82 per share, which is roughly what Time Warner Cable demanded from Charter.
The combined company would divest 3 million subscribers, about a quarter of Time Warner’s 12 million customers. Together with Comcast’s 22 million video subscribers, the roughly 30 million total would represent just under 30 percent of the U.S. pay television video market.
The new cable giant would tower over its closest video competitor, DirecTV, which has about 20 million video customers.
WTF?! Comcast already owns broadcast giant NBC, and now they will essential control the distribution of TV and internet cable? If the feds let this go through, it will be another huge step backward to the Robber Baron days. Whatever happened to the Sherman AntiTrust Act, anyway?
This news out of Kentucky is just unbelievable: Sinkhole ‘erupts’ inside National Corvette Museum. From the Autoblog:
A 40-foot sinkhole (see photo at left) developed inside the National Corvette Museum overnight in Bowling Green, KY, swallowing up eight vehicles, including two Corvette models on loan from General Motors. No one was in the museum at the time of the incident, which happened early this morning.
According to the NCM, motion sensors were set off at 5:44 AM, leading museum authorities to discover a 25 to 30-foot deep chasm, that Executive Director Wendell Strode called “pretty significant.” The sinkhole developed in the museum’s Skydome, although it can’t be seen on any of the museum’s webcams (the Enthusiast cam is the closest look we can get to what’s going on).
The Louisville Courier-Journal reports emergency personnel remain on the scene, and have only allowed museum employees to remove a single vehicle – the only remaining 1983 Corvette, which was part of a mere 44-vehicle run.
The two cars on loan from GM were a 1993 ZR-1 Spyder and a 2009 ZR1 “Blue Devil,” while the damanged museum-owned cars included a 1962 Corvette, the millionth Vette ever built (a 1992), a 2001 Mallett Hammer Z06 and the 1.5 millionth car produced. None of the damaged vehicles were on loan from private individuals. The extent of the damage to these vehicles remains unclear at this time.
Finally, some science news: Scientists at Lawrence Livermore National Laboratory claim to have achieved nuclear fusion. From the LA Times: Nuclear fusion reactions mark a ‘milestone’
It took 192 lasers and a building big enough to contain three football fields, but physicists have finally produced a pair of nuclear fusion reactions that created more energy than was in the fuel to start with.
The reactions lasted less than a billionth of a second, and they released only a few thousand joules — enough to power a 100-watt light bulb for less than three minutes. But it marks the first time scientists have been able to harness the power of stars here on Earth.
“This is really an important milestone,” said Warren Mori, a plasma physicist at UCLA who was not involved in the effort.
The experiment, conducted at Lawrence Livermore National Laboratory in the Bay Area, is still a very long way from “ignition,” the point at which the reaction generates more energy than was required to kick it off with lasers. Scientists agree that significant hurdles remain before that goal can be reached.
But the tests, described Wednesday in the journal Nature, give researchers a promising sign that they’re finally on the right path to reaching this goal — one that could ultimately lead to cleaner nuclear energy, safer weapons arsenals and a more profound understanding of astrophysics.
So . . . what stories are you following today? As always, please post your recommended links in the comment thread and stay safe and warm where ever you are!
We continue to experience fallout from the banking crisis and see that many of the problems were caused by captured regulators. Problems with Fannie Mae were ignored by Barney Frank and the House committee appointed to oversea the mortgage giant’s activities. The NY Fed under Timothy Geithner appears to have been closer to Goldman Sachs and other large banks that its regulatory charter demands. We’ve seen this at the SEC also, as investment banks were able to convince the agency and the senators and congressmen who oversee its activities that deregulating risky activity was a good thing that wouldn’t led to market meltdowns as it had in the past.
We’re still seeing the fall out from continued rent-seeking activity by huge megalocorporations and their captured regulatory agencies and politicians. It’s in more industries than just the financial ones. Since the Reagan years, we’ve seen ongoing defunding of agencies and capture of agencies by the regulated who find ways to buy politicians through lobbyist activities. All of this had led to huge messes in nearly every sector.
Bloomberg.com has further examples of this public-welfare destroying behavior in Regulators Hired by Toyota Helped Halt Investigations. We learn in this piece that many lives were lost because Toyota insiders at the National Highway Traffic Safety headed off “at least four U.S. investigations of unintended acceleration by company vehicles in the last decade, warding off possible recalls, court and government records show.”
Christopher Tinto, vice president of regulatory affairs in Toyota’s Washington office, and Christopher Santucci, who works for Tinto, helped persuade the National Highway Traffic Safety Administration to end probes including those of 2002-2003 Toyota Camrys and Solaras, court documents show. Both men joined Toyota directly from NHTSA, Tinto in 1994 and Santucci in 2003.
While all automakers have employees who handle NHTSA issues, Toyota may be alone among the major companies in employing former agency staffers to do so. Spokesmen for General Motors Co., Ford Motor Co., Chrysler Group LLC and Honda Motor Co. all say their companies have no ex-NHTSA people who deal with the agency on defects.
Possible links between Toyota and NHTSA may fuel mounting criticism of their handling of defects in Toyota and Lexus models tied to 19 deaths between 2004 and 2009. Three congressional committees have scheduled hearings on the recalls.
“Toyota bamboozled NHTSA or NHTSA was bamboozled by itself,” said Joan Claybrook, an auto safety advocate and former NHTSA administrator in the Jimmy Carter administration. “I think there is going to be a lot of heat on NHTSA over this.”
Another corporate whistle-blower is showing how corporate negligence may cost cities and states millions of dollars to replace exploding and cracking PVC pipes. This is from the NY Times. It’s typical corporate behavior. The certification agency here was not ‘informed’ of the changes used to increase production, decrease costs, and of course, feed the bonus class kitty.
JM Eagle was created in 1982, after the bankruptcy of Johns Manville, the first major corporation to seek protection from asbestos claims by filing for bankruptcy. The elder Mr. Wang bought the pipe division out of bankruptcy that year, renamed it JM Manufacturing and added it to his empire. (The company became JM Eagle after acquiring PW Eagle in 2007.)
PVC pipe had been just a small part of Johns Manville’s business, but Mr. Wang made his acquisition at a time when the plastic was fast catching on among cities replacing their older, decaying water systems. For several years, managers stayed on at the company and participated in the development of new standards for plastic pipes.
Mr. Hendrix said in his complaint that after Walter Wang became chief executive in 1990, many of the longtimers resigned or retired, and people who had minimal backgrounds in engineering or failure analysis replaced them.
JM Eagle also put a premium on cutting costs, Mr. Hendrix said, hiring people like him straight out of college. It even maintained a boarding house near Livingston for Taiwanese employees who could not afford suburban New York housing on their modest salaries.
One of his first jobs was to field customer complaints, which he said came in at the rate of at least one a day. He said he was trained to look for ways to attribute leaks and ruptures to the governments and contractors who installed and maintained the pipes.
Only when he was assigned to oversee certain tests did Mr. Hendrix begin to think the complaints stemmed from the company’s own cost-cutting measures. He said he realized JM Eagle had started buying a lower grade of raw materials from Formosa and had speeded up its production lines without reporting the changes to the certification agencies as required.
Republicans continue to label these instances of corporate malfeasance as pending “junk lawsuits” while lives and taxpayer monies indicate they are anything but nuisance. Who is going to pay for these faulty pipe systems? (These are problems economists study and we find the costs of “externalties” usually go to the taxpayer.) Will it be the same folks that are paying for the financial industry meltdown; the U.S. taxpayer? It most certainly will not be the C.E.O. whose short-sightedness and cost reducing behaviors are firmly rooted in bonuses present and past. They cannot be held legally accountable with either their personal network or their freedom because, the corporation is a legal entity all to itself. The worst we can do is watch them go bankrupt and then re-organize to avoid the financial penalties. You can’t put Toyota in Jail. You can see that JM Eagle was a corporation that formed out of the ashes of an earlier corporation that folded to avoid lawsuits from asbestos deaths. They are not unique at all in that behavior. It’s been going on since the courts decided that corporations get limited liability treatment.
One of the stories that I use for my economics class to illustrate these problems is the Radium Dial painting women whose jobs were basically to paint the luminous paint on watch and clock hands back in the 1920s. The original paint contained incredible levels of radioactivity. I saw the documentary about them and the horrible cancers that killed them in a documentary released in the mid 1980s. Many of them died so full of tumors and so full of radio-activity from licking the tips of the brushes or decorating themselves with the radioactive paint–because they were never told of the dangers–that the government has had to go back to their graves and encase them in led boxes because they emit high levels of radioactivity. The company folded to avoid all the costs of clean-up and the survivor lawsuits. The sites of the old factories continue to be problems in places where the factories were located. The most famous was located in Ottawa, Il. Many of our regulatory agencies were formed to avoid situations just like this. There’s a book that you may want to read if this interests you also. Here’s a quote from the link provided above.
It isn’t clear how well known the dangers of radium were in 1917 but no warning was given to the workers. The radium companies denied the dangers of imbibing radium despite the consensus of opinion among most medical experts and government officials that it was dangerous. The dialpainters were such a minority and lacked any financial resources to have any clout in dealing with industry. The battle for recognition of this health hazard to these women went on for many years.
A book titled “Radium Girls: Women and Industrial health reform, 1910-1935” by Claudia Clark was published by The University of North Carolina press, Chapel Hill and London in 1997 (ISBN 0-8078-2331-7 cloth and ISBN 0-8078-4640-6 paperback.) This is an excellent source of information on the subject. It is well documented with many references and an extensive bibliography.
A 1-3/4 hour film titled “Radium City” was made in 1986 about the aftereffects of two radium dial painting companies based in Ottawa, Illinois. The city of Ottawa, IL is about 80 miles southwest of Chicago. The Radium Dial Company (RDC ) moved from the East Coast to Ottawa in 1922. Joseph Kelly was president. The first problems of radiation exposure occurred with the young women who applied the radium paint to the dials. According to the film, RDC went out of business in 1934 after being faced by many lawsuits. Luminous Process Incorporated (LPI) started soon after also headed by Kelly. It operated from 1932 to 1978 when the NRC shut it down. Both factories were demolished, RDC in 1969 and LPI in1984 and much of the material was used as land fill. As a result there are 13 areas today with above normal radiation in Ottawa. The major contaminant is radium-226 and the by-product, radon-222. For more information see the Petitioned Public Health Assessment, Ottawa Radiation Areas, Ottawa, Lasalle County, Illinois
It isn’t known if the radium dials used by Jefferson starting in 1949 were painted by their employees or even done by Jefferson at all. They may have been sent out to be painted. In any case, working conditions were improved by that time but use of the paint was eventually banned.
This is the primary problem with granting corporations their own legal status. Investment bankers used to be mostly be professional partnerships. Recently, they switched to the corporate structure and many are saying that the limited liability (in other words if you screw up they can’t come after your net worth) is one of the reasons they took on so much risk. They no longer have “any skin in the game”.
There is, however, a better solution: expose players in the financial game to greater personal loss if their risk-taking fails. When you worry that a mistake will cause you to lose your second home, your stocks and bonds and your club memberships, then you’re less likely to take the kinds of risks that expose the rest of society to your failures.
A simple mechanism exists to achieve this purpose: the private partnership. Partners face liability that extends to their personal assets. They aren’t protected by the corporate shield that limits losses to what the corporation itself owns (as well as the value of the stocks and bonds the corporation has issued). Unfortunately, the partnership is a legal form of business organization that was largely abandoned by banks over the past quarter-century. Our advice is to bring it back. In other words, don’t nationalize; partnerize.
Even John Gutfreund — the man who kicked off the dramatic change in investment-banking culture and structure when he took Salomon Brothers, a longtime partnership, public in 1981 — confirms our thesis. Michael Lewis wrote in the December issue of Condé Nast Portfolio that Mr. Gutfreund now believes “that the main effect of turning a partnership into a corporation was to transfer financial risk to the shareholders. ‘When things go wrong, it’s their problem,'” said Mr. Gutfreund.
But when the personal wealth of executives is put at risk, as it is in a partnership, their behavior changes. Risk aversion increases. Few partnerships would leverage themselves to the hilt to load up on risky subprime loans.
Not only do these corporations give their management cover for bad decisions, they can raise tons of money in public markets and then use that money to buy political influence and now, after the supreme court decision, to buy ads to further influence elections. These giant corporations whom we give too-big-to-fail status, will in fact place themselves into bankruptcy or collapse to avoid the costs of their externalities. One of the biggest costs is the overproduction of products and services because they don’t reflect the true costs of doing business until it’s usually too late for any one to do something about it. This is exacerbated by neutered or captured regulators. Something that buying the political class achieves.
We need to take a serious look at what many folks are peddling out there as free market capitalism because it’s not free market capitalism. Regulations are there to protect us from bullies just like laws are supposed to do. Third party payers and huge megalocorporations in highly concentrated markets with huge market powers and the ability to influence the market are not what Adam Smith had in mind when he spoke of the invisible hand. Regulation exists to even the playing field when these power players exist,to ensure that markets function under proper conditions, and to hold entities responsible for the costs they create when they make messes.
Since the Reagan years, we’ve gotten one mess after another in one market after another from not realizing and acting on corporate malfeasance. Yes, they create jobs and products but those are by-products of their real purpose which is to maximize profits. They may run ads about loving fuzzy animals, but that is to create an image to help them further their profits. We need major changes in laws that recognize that not all byproducts of economic enterprise by businesses are positive. Most of the good stuff does not come from the huge bully boys. It’s time to evaluate and change the laws surrounding incorporation and to enforce the Sherman Antitrust law again. If we can’t lock them up in jail for doing harmful things to people, then they shouldn’t be granted the same status in the courts as people.