As we gape at Trump’s sideshow, corporations are picking our pockets
12 min read
The great corporations . . . are the creatures of the State, and the State has not only the right to control them, but it is duty-bound to control them wherever the need of control is shown. –Pres. Theodore Roosevelt, 1902
As America rapidly urbanized in the 1920s and ’30s, nearly every burgeoning city gave rise to a jumbled, boisterous side of town that lay somewhere between exciting and dangerous. One such place in my state, known as “Deep Ellum,” was a stretch of Elm Street in East Dallas. A predominantly African-American community, it also hosted a freewheeling mix of immigrant laborers, rural migrants, musicians, saloonkeepers, preachers, fortune tellers, and assorted hustlers. It was both bedazzling and dicey–the sort of place where the blues lay in wait for innocents. As a popular song of the day warned:
If you go down in Deep Ellum,
Keep your money in your shoes
Or you’ll go home
With the Deep Ellum blues.
Oh, sweet mama,
Your daddy’s got them Deep Ellum blues.
A 1937 article in a black weekly described it as a rollicking scene “where business, religion, hoodooism, gambling, and stealing goes on at the same time without friction.” The writer told about seeing a Bible-thumping street preacher mesmerize a crowd by prophesizing that “Jesus Christ would come to Dallas in person in 1939.” As the evangelizer grew louder, “a pickpocket was lifting a week’s wages from another guy’s pocket, who stood with open mouth to hear the prophecy.”
Some 80 years later, our whole country is living through a reign of pure flimflam–one without any of Deep Ellum’s sketchy charms. Our media, politics, government, public discourse, and civic focus have been captured by the mesmerizing sideshow of AllThingsTrump–from the Putin bromance to the Saudi bone-saw horror, from constant Cabinet chaos to the caravan bugaboo, from his vanishing middle-class tax cut to his illusory wall, from peep-show vulgarity to full-monty corruption … and to the nonstop spectacles emanating from this White House. As we gape 24/7 at the amazing ridiculousness of The Donald, however, our pockets are being picked, not by scammers who are barely getting by themselves, but by wildly rich, greedy, and powerful corporations.
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While the corporate elite in America profess dismay at Trump’s ignorance, arrogance, and all-around awfulness, they’re delighted to exploit his power of distraction, which helps them grab more power and wealth at the expense of you and me. They’ve known all along that Trump’s “drain the swamp” campaign pledge was a cynical political slogan. After all, he is the scion of a New York real estate con artist who followed Daddy into the mucky gurgles of deep financial rot. Sure enough, far from draining Washington’s pay-to-play swamp, Trump promptly re-packaged it as a luxury hot-tub resort, selling off parcels to eager corporate buyers.
And lo, in practically no time, the slick ooze of Trump’s swamp (including tax breaks, regulatory repeals, monopoly promotion, and labor suppression) has lubricated the way for the biggest, richest, and greediest of corporate powers to broaden and deepen their control over consumers, workers, suppliers, competitors, technology, and government itself.
The dominance of these profiteering interests did not, of course, begin with Trump. For the past half century, they and their acolytes have steadily spread the pernicious legalistic fiction that a corporation’s sole obligation is to generate as much profit as possible for its shareholders (see The Lowdown, February 2016). Every administration since (Nixon, Carter, Reagan, Bush I, Clinton, Bush II, and Obama) has essentially accepted this ridiculous fairy tale as fact–and, to one degree or another, each has taken steps that have incrementally advanced the supremacy of corporate interests over all others.
But when Trump Inc. crashed into Washington–KABLOOIE!–incrementalism exploded into a government of agencies almost wholly owned and run by Wall Street bankers, CEOs, industry lobbyists, and corporate lackeys often plucked from the ranks of former congresscritters. Rather than seeking favors from government officials, corporate interests have now largely become the government. And while we gawk at the president’s monkeyshines, these gluttons are looting the people’s treasury and fast locking in a permanent American oligarchy.
Let’s look at a couple of their power grabs.
Where the money is
Famed bank robber Willie Sutton once explained that he busted into banks because “that’s where the money is.” What a small timer! Corporate thieves (including the biggest banks) know that the big scores are in the tax code and federal budget. So, seeing the Trumpsters as their inside enablers, America’s superrich establishment–from the Koch brothers to Fortune 500 CEOs–set aside their personal revulsion at our crude charlatan-in-chief to kiss-up, wooing him and his fanatical constituency to back their agenda of plutocratic plunder.
It’s working. The single legislative accomplishment of the guy who claimed to be a working-class hero is his 2017 Christmastime signing of the Tax Cut and Jobs Act (TCJA). As most Americans now realize, the tax cut was not for them, but instead was a disgrace- ful trillion-dollar-a-year giveaway to corporate giants and their wealthiest shareholders. The Koch brothers alone invested $20 million on political ads and lobbying to pressure GOP lawmakers to unilaterally slash the corporate tax from 35 to 21 percent.
And why wouldn’t the Koch boys spend big on this bill? As calculated by Americans for Tax Fairness, the billionaire duo and their private corporation will pocket about $1.4 billion each year from this dodge. Likewise, hundreds of TCJA’s corporate backers are already making a killing. In just the first three quarters of 2018, big business quietly pocketed stunning tax savings they would have (and should have) paid to support America’s public needs:
Apple: $4.5 billion
AT&T: $2.2 billion
Bank of America: $2.4 billion
Verizon: $1.75 billion
Walmart: $1.6 billion
And what about the “jobs” part of the act? Its core promise was that CEOs would devote their huge tax gift to new jobs and pay raises for working stiffs. Indeed, in 2017, about three dozen brand-name giants funded a lobbying front, deceptively named Reforming America’s Taxes Equitably (RATE), to promote the notion that a tax break would “boost job creation.”
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“Based on last year’s irresponsible tax cut, Patagonia will owe [$10 million] less in taxes this year. …We’re … committing all $10 million to groups … finding solutions to the climate crisis.” –Rose Marcario, CEO of outdoor clothing company Patagonia, November 2018
While the piggiest corporations gorge themselves at the public trough, a growing number of their corporate cousins have stood up for a better way of doing business: B Corporations. The “B” stands for benefit and refers to their pledge to benefit workers, the community, and the environment. Patagonia (with almost $1 billion in annual sales) is a B Corp.
B Corps must have a legally binding, built-into-their charter commitment to sustainability and treating workers well. Every two years each B Corp must publicly report on its social and environmental impact to receive certification from non-profit B Lab. The B Corp community works toward lower levels of poverty and inequality, a healthier environment, stronger communities, and high-quality jobs with dignity. For more details and a list of B Corps, go to: bcorporation.net.
By looking for the B Corp label–and, of course, patronizing the local businesses in your home town–you can cast votes every day for a better system, even between elections.
But ThinkProgress.org found that in 2018 RATE members–including AT&T, Capital One, CSX, Ford, General Dynamics, Intel, Kimberly-Clark, Lockheed Martin, Macy’s, Northrop-Grumman, T-Mobile, Verizon, Viacom, and Walmart–have instead eliminated more than 100,000 US jobs. Verizon, for instance, promptly offered a “voluntary severance package” to 44,000 employees and offshored thousands of its US jobs to India. It was “an opportunity to find more efficiencies,” the CEO told workers, “and help expedite … an innovative operating model for our future.” Or to put it more simply: It was greed.
Ah … there you have it: Forget America’s fundamental values of justice and opportunity for all, and don’t expect even a modicum of honesty from rich shareholders and top executives. For example, Kevin Hassett, a far-right corporate ideologue chosen by Trump to head the White House Council of Economic Advisors, flat-out lied that the corporate gifts would spark “an immediate jump in wage growth” averaging as high as $9,000 a year.
Got yours yet?
So where did the money go? To the top. After all, only the tax giveaways were mandated–not a dime in obligations (not even thank-you notes) was written into law. With no strings attached and union voices largely hushed or marginalized, top executives and board members were free to allocate their corporations’ multibillion-dollar windfalls as they pleased. And–surprise!–it pleased them to spend it on themselves and their big investors, hiding their grubby motives behind “stock buybacks,” an accounting gimmick that hikes the pay of bosses who do nothing to earn it. The three-step fraud: (1) Humongous Incorporated gets a $1 billion tax gift from Uncle Sam. (2) HI quickly spends the booty to buy its own stock, which inflates the shares’ value. (3) Since HI top executives are awarded big chunks of company stock–abracadabra!–they can reap huge gains by selling that stock at the inflated price.
[Hidden Tidbit: As economist Paul Krugman notes, since foreigners own 35% of US corporate stocks, roughly a third of the tax cut supposed to “Make America Great Again” flowed abroad. Shhhhh … Trump and his fat-cat backers want to keep this secret.]
Workers, who mostly own no stock, gain little or nothing from these buyback scams. They’re another financial maneuver that cynically widens inequality, deepens the federal deficit, and weakens America’s economic potential. But today’s corporate ethic (shamelessly practiced by the president) is clear: Take the money and run. Buybacks in 2018, the highest number on record, were expected to top $1 trillion, effectively gobbling up all the first year Trump/GOP Jobs Act money. So, at the same time as workers’ real wages fall, CEO pay skyrockets. For example, as Politico reported last July:
Two weeks after AbbVie, a pharmaceutical giant, announced a $10 billion buyback in February, its stock price soared and eight top execs cashed in $27 million in stock.
Eight days after cigarette-maker Altria announced a $1 billion buyback, its CEO cashed in nearly $1 million in stock.
The day after T.J. Maxx stock price was boosted by a February buyback, a top executive sold $11 million in shares.
After Mastercard’s $4 billion stock buyback, its CEO cashed in for a personal payday of $44 million.
After Oracle jacked up its stock price with a $12 billion buyback, its co-CEO cashed in a whopping $250 million in shares.
Playing Monopoly for reals
Shouting “Down with big government,” today’s tea party Trumpateers claim to be tax rebels–direct descendants of the Boston bunch who boarded three British ships in 1773 and heaved their cargo of tea chests into the harbor. But, wait! That historic tea party wasn’t actually a tax protest. The audacious colonists were rebelling against the British East India Company’s tea monopoly that excluded local importers.
What the gutsy rebels were actually tossing was monopolistic corporate power. Get your heave-ho muscles in shape, for the monopolists are back, and they’re going for more than our tea; they’re rapidly locking up major economic sectors. The louder Trump touts his commitment to competition and free markets, the faster his corporate operatives, lobbyists, and congressional henchmen scheme to create cartels and combines. His justice department, regulatory agencies, monetary policies, tax rules, judicial appointees (especially Brett Kavanaugh and Neil Gorsuch), and other inside players are all at work greasing the skids for the monopolization of America.
Wall Street wins
Remember candidate Trump berating Wall Street bankers as money-grubbing profiteers? “I’m not going to let Wall Street get away with murder. …We’re going to tax Wall Street,” he declared during the 2016 race, promising to put those banks in their place—which turned out to be looting our economy!
According to an analysis by the Associated Press, before the Trump tax cuts, the Big Six paid 28-31% of their annual income in corporate taxes. But in the first quarter of results after the cuts, the reported tax rate of JPMorgan Chase was just 18.3%; Goldman Sachs, 17.2%; and Citigroup, 23.7%. Trump’s tax cuts saved the Big Six banks a combined $3.6 billion dollars in the first quarter of 2018 alone and boosted their net profits by an equivalent amount. According to the FDIC, the cuts enriched the banking sector as a whole by $6.6 billion.
Imagine what Trump would do for these giant banksters if he didn’t hate them!
This era’s corporate dominance did not, of course, begin with Trump. The merger wave swelled in the Reagan years, but since his Federal Trade Commission stopped collecting industry consolidation data in 1981, its full extent is hidden. But we do know, thanks to public interest watchdogs, that a tsunami of monopoly power now threatens our economy at the very time Trump Inc. is dismantling consumer protections and facilitating the rise of dominating behemoths in airlines, banks, computer tech, pharmacies, groceries, hospitals, meatpacking, media, oil, online sales, pharmaceuticals, railroads, software, telecom services, and other essential industries. While Americans are told to worship the magic of the free market, real markets are being hogtied by a handful of crony capitalist oligarchs.
High tech Two giants, Verizon and AT&T, control 69% of US cellphone service last year. Two others, Facebook and YouTube (owned by Google) have 64% of social network visits, and another two, Android (launched by Google) and Apple, control 99% of smartphone operating systems.
Five Wall Street mega-powers now control nearly half of all US financial assets; 20 years ago, the top five controlled only about 20%.
In recent years six of the largest US airlines merged into three, which now control 50% of US flights.
Three decades ago, 50 conglomerates owned 90% of media outlets; today, just 6 mega-monopolists control 90% of the market. America’s two largest newspaper owners are not even media chains, but Gatehouse Media and Digital First Media Wall Street hedge funds that now own some 670 papers, including dailies in Augusta, Austin, Baltimore, Boston, Denver, Phoenix, and St. Paul. And Digital First is now attempting to take over the Gannett chain of 100 more papers.
As of August 2018, Apple’s stock value was greater than that of Bank of America, Boeing, Ford, Volkswagen, Walt Disney, and 20 other colossal corporations–combined. In 2015, just 30 super-sized corporations grabbed half the profits generated by all corporations listed on the stock market.
The two largest truck and bus manufacturers now control 62% of the market; the two largest drug store chains, shipbuilders, and mattress makers have over 60% of those markets, and the two largest home improvement chains control about 80% of the market.
The real target
“We may have democracy, or we may have wealth concentrated in the hands of a few, but we can’t have both.”
— Louis Brandeis, Supreme Court justice, 1916-39
Periodically throughout American history the tension between democracy and plutocracy has reached a breaking point, and people have risen up in great confrontations with elites who assert that their property rights and wealth must reign supreme over the majority’s interests and our nation’s common good.
And here we are again. A handful of corporate consolidators and property rights supremacists is dictating pay and conditions to America’s workers, crushing unions, jacking up prices, squeezing out independent businesses, controlling the media, suppressing the vote and public dissent, literally running our government … and becoming even bigger, richer, and more powerful. That’s our real fight. We’re not merely up against the Little Tweeter Man in the White House–but against the unfathomable greed and oligarchic ambitions of the moneyed powers who are using him.