OVERVIEW: “I’m from the government and I’m here to help.” These are the nine words Ronald Reagan called “terrifying.” Just another brick in the wall of disdain and deflection politicians use to get elected to the government they hate so much. Cascading structural failures in the system appears to give credence to claims of government incompetence but how much of it is actually by design? This week we unfuck the corporate attack on the system and break down the inherent evils of privatization and deregulation, the dreaded sisters of oligarchy.
Recent news is illustrative of just how intertwined corporations are with the business of the republic. President Biden ordered a targeted strike in Syria to avenge a wounded soldier and fallen contractor. In Texas, the private grid gave out during a severe cold snap causing hardship throughout much of the state and forcing Ted Cruz to flee to Mexico. And, of course, we passed the tragic milestone of a half-a-million dead Americans due to COVID-19.
We hold the government accountable for societal ills but somehow the real power brokers, complicit in our failures, go largely unseen and unpunished. We employ private mercenaries in our war efforts, and they operate under the same rules of engagement as our military. We have a patchwork energy system in the country in the hands of for-profit entities that value shareholders over customers. And our embarrassing response to a pandemic is a painful reminder of the failings of a healthcare system in private hands.
If you’re frustrated and defeated, you have every right to be. It’s not supposed to be this way. But the fact of the matter is we no longer trust the government to deliver the most basic of services. And even when things go wrong in private hands, we still tend to blame the government.
So we put our faith in private institutions under the almost universally held belief that the public sector simply cannot operate on par with the private sector. This simple premise, upon which our modern military, economy and society are built, is simply not true. So why do we believe so wholeheartedly in corporate America?
Buckle up Unfuckers as we audit America Incorporated.
Corporations have taken the place of government in setting the moral and ethical standards for how we operate as a nation. They undermine public policy through lobbying efforts, directly author legislation that favors their business models, either alter the tax structure to their benefit or cheat the system entirely, and their executives move freely between public and private life to protect what they have built. And then they take to the airwaves that they largely control to pacify us with messaging about meeting in the fucking middle, and praising the same heroes they refuse to compensate with a living wage. Sorry Bruce, but old Tom Joad would take steaming shit on the hood of that Jeep.
The hostile takeover of America wasn’t an accident of history. The decline has been steady, coordinated and deliberate. Corporations have wrapped themselves in the flag and used democracy and American symbolism to ironically undermine faith in the American system. Large companies have used privatization and deregulation, the dreaded sisters of oligarchy, to chip away at public trust with the promise of prosperity for all.
We’ve touched on corporate influence in a handful of episodes already from the ubiquitous presence in our daily lives to the flood of cash directing policy in our politics and in some cases, yes, literally writing legislation. It’s all so normalized that it’s hard to comprehend why it’s also just so wrong. We have a tendency also to mythologize corporate America. Not a new phenomenon mind you. We’ve always engaged in hero worship of the monied class.
Morgan, Carnegie, Rockefeller, Edison. These men captured the imaginations of the public and oftentimes ran parallel to the U.S. government in driving policy. Like Bezos, Musk, Zuckerberg and Dimon today, these titans of industry ran roughshod over workers and created their own regulatory reality. But in the past there were also public sector giants that wielded tremendous influence and stood as a check to corporate power.
Teddy Roosevelt was a profound and worthy adversary to the giants at the turn of the 20th Century earning him the title of Trustbuster. His younger cousin Franklin would be called a “traitor to his class” for his Keynesian approach to economic recovery. And of course, LBJ’s Great Society was what some refer to as a “regulatory outburst” that likely began to sew the seeds of discord among the corporate class that struggled to keep up with the slew of changes to the status quo. Even Tricky Dick, for all his issues, bucked the corporate class by establishing the EPA and signing the Consumer Protection Act.
In fact, it was around this time that corporate America decided to fight back in a coordinated effort to undermine what big business viewed as anti-competitive and socialist-style intervention.
One of the most prominent and oft-quoted documents of this time is what’s known as the Powell Memo. While it’s a stretch to attribute any movement of this scale to a single memorandum, it is an appropriate touchstone that captures the zeitgeist of the corporate movement.
Lewis Powell Jr. was a high profile and successful private practice attorney who authored a memo to the head of the US Chamber of Commerce in 1971. Powell was dismayed by what he saw as an attack on the private sector from multiple fronts. First, like many Americans at the time, he was a fierce critic of communism and socialism. Not unusual. Of particular annoyance to him was the rise of consumer advocate Ralph Nader, whom he viewed as a destructive force in American politics.
So he wrote this now infamous memo. Here are some highlighted quotes:
National television networks should be monitored in the same way textbooks should be kept under constant surveillance
Business must learn the lesson that political power is necessary and should be assiduously cultivated and used aggressively and with determination.
There should be no hesitation to attack the Naders, the Marcuses and others who openly seek destruction of the system.
Okay, so Powell was a cranky old corporate lawyer whose clients were likely impacted by government regulations. And maybe the memo wouldn’t be such a big fucking deal if Powell wasn’t shortly thereafter appointed as a Supreme Court Justice, a position that even he reportedly thought he wasn’t qualified to fill.
Much like his successor, Justice Anthony Kennedy, Powell was often in the middle of prominent issues. He had famously liberal decisions and opinions on social issues and some not so enlightened stances on issues around sexuality. But on business issues, he was resolutely and predictably on the side of corporations.
What makes Powell’s memo so important wasn’t the text itself. As I said, it’s a bit of a stretch to credit a confidential memorandum to the head of the Chambers of Commerce as the beginning of a revolution. Rather it was his ascendance into a position of power to codify corporate interests in the spirit of the memorandum that makes this an important historical note.
The most significant of cases, for which Powell broke the tie and wrote the majority opinion, was the First National Bank of Boston versus Bellotti, which applied the logic of the First Amendment to corporate financial contributions. If this sounds familiar, it should. This decision was once o f the precedents the court relied upon for the Citizens United decision, which we covered in our last episode, Unfucking Congress and the Fucking Fuckers Who Fucked Us.
Simultaneous to Powell’s ascendance to the Supreme Court was the emergence of the Chicago School of Economics theories on corporate power. The figure most associated with the Chicago School is a man Unfuckers know by now as one of my favorite people to shit on: Milton Friedman.
Friedman wasn’t the only one behind the neoliberal doctrine, but he was the most successful in spreading the gospel of unregulated capitalism and the idea that corporations should direct domestic and foreign policy by using the levers of power in the financial markets.
Friedman is also known for his theory of shareholder value. A horrific myth that has been inculcated into nearly every media pundit, economist, corporate leader and average American. The idea is that corporations exist to - say it with me - “maximize shareholder value.” We’ve heard it a thousand times and like other successful lies, it persists because it has been accepted and repeated so often we no longer think about what this means.
It’s not a legal principle. It’s a terrifying principle that when extrapolated to the furthest reaches of one’s imagination essentially means corporations are immune from criticism, regulation or prosecution so long as they can maintain their actions were intended solely to maximize profits for shareholders. In recent years, if they run afoul of some regulation they just lobby to have that shit rewritten.
Nice system if you can buy it.
Let’s unpack some of the most notable areas of our corporate economy to demonstrate how deep the corporate invasion of our lives has been. We’ll look at education, energy, the prison system, water, wastewater, healthcare and the military. To my fellow leftists, don’t expect this to be a wholesale indictment of private industry as there are arguments to support both sides. This is an exercise to understand how complete the corporate infiltration of previously public services has been and the clear and present danger that exists when the scales tip too far.
Okay Unfuckers, who’s ready to play …
TAX ME, FUCK ME, KILL ME!
Our contestants today are Corporate America and Public Infrastructure.
Education. Education is a fucker of a peccadillo for sure. The United States has been lagging in education rankings for decades, which makes it an easy target for proponents of privatization. Thus the rise in charter schools in the United States. But here’s the problem. More than 80% of public school funding comes from local property taxes, which means there will be a vast discrepancy between wealthy districts and poor districts. So the system itself is built on a pretty flawed concept.
Charter schools operate on the concept of choice, meaning you can apply to a publicly funded school outside of your district. Pretty compelling argument if you live in a poorly funded area. Especially when you look at the effects of redlining in urban and suburban areas. But the publicly funded nature of charter schools, which differs from state-to-state, means that the funds are being drawn from the same pool of taxes. And with so many states implementing property tax cap measures, the funding squeeze is real.
Much to the dismay of charter school advocates, now that we have several years of data, the outcomes are only marginally better across the board and in some cases, not at all. This is so indicative of how we approach problems in America. Schools are fucked up. So let’s create new ones. Instead of looking at the root cause of the issue, we just jump to the end of the discussion. If we increased federal funding to support lower income districts and help them close the gaps created by property tax disparity from district to district we could even the playing field. But then a whole new cottage industry of charter schools with private boards and little transparency wouldn’t exist.
Corporate America - 1
Public infrastructure - 0
Energy. Thank you Texas for proving the whole point here recently. Now, in fairness, according to the World Bank the United States is well above the median average of “quality of electrical supply.” So that’s great. Of course that’s a global figure. Sadly, we’re below the United Kingdom, Denmark, Sweden, France, Canada, United Arab Emirates, Israel, Saudi Arabia and a host of other countries. So there’s that. Now, the World Bank does have data that suggests there is no difference between reliability and access of public versus private when it comes to energy. But where I think we can land here is that if you’re in the utility sector, there should be more regulated and adopted standards of efficiency, durability, access and reliability.
Utility providers in Texas, for example, shouldn’t be able to simply decide to ignore science and fail to weatherize critical infrastructure. So we’ll give one point to corporate America and half credit to public infrastructure.
Corporate America - 2
Public infrastructure - .5
Prisons. The biggest fear of the private prison industry is the state-by-state repeal of onerous drug laws that were a boon to the industry. Here’s the problem. That we have a fucking private prison industry to begin with. And what do you do if the laws that made you are in danger of going away? Find new areas to break into like, I don’t know, immigration detention centers.
According to the Sentencing Project, from 2000 to 2016 the number of people housed in private prisons increased five times faster than the total prison population. Over a similar timeframe, the proportion of people detained in private immigration facilities increased by 442 percent. Sometimes you gotta make your own rain. Know what I mean?
The largest private prison company in America is CoreCivic - formerly known as Corrections Corporation of America or CCA and their logo is adorable. It’s red, white and blue - of course - and it’s a big box that looks like prison bars are flipped so their horizontal, you know, just like our flag. That’s what I’m talking about when corporations attack the government then wrap themselves in American symbolism to sell their services as some sort of patriotic and cost effective system.
This one should be fairly fucking clear though. Carceral and corporate incentives are completely misaligned. As a society we want intervention to prevent incarceration and in the cases where this doesn’t work we want to lower recidivism. But these corporations possess exactly the opposite incentives. In their SEC filings, CCA even says as much. They cite their biggest threat as being the reduction of potential clients due to drug laws disappearing.
It’s fucking beyond comprehension that this system exists in private hands at all, but here we are. Full point to corporations. Half point to the system for beginning to repeal drug laws that led to mass incarceration.
Corporate America - 3
Public infrastructure - 1
Water. This is a fun one. Here again, the largest US private water company is called American Water. Seems rather innocuous. I’ve seen presentations from them and the other big guys like Suez and Veolia. They make so… much… sense. Except that they don’t. Just ask the residents of Flint, Michigan and Pittsburgh, PA. In both cases problems existed prior to Veolia’s involvement but in both cases the situation worsened after they came in. In fairness, there is a lot of blame to go around in these extreme situations. But the underlying premise remains the same. Federal funding for water infrastructure has dropped more than 75% since 1977.
So as the public infrastructure gets older and requires more funding and attention, the money is drying up because of our aversion to infrastructure spending unless it’s in a city in some remote country that we’ve almost blown off the map in pursuit of oil. Most municipalities that sell their rights to water companies do so because the cost to fix and maintain them is too high. They take the one shot, balance their budgets and lose control of their water system. And what happens every single fucking time? After a couple of years of price controls, residential water bills start to increase. Basically a new tax but paid to a private company. And there’s nothing you can do about it.
Again, misaligned incentives. Clean, running water that doesn’t light on fire or give you cancer should kind of be a first world expectation, no? Full point award to corporate America.
Corporate America - 4
Public infrastructure - 1
Wastewater. Okay, so there’s the water we drink. So how about the water we flush? Guess what? Same fucking guys. Ding ding ding. For municipalities that control wastewater it’s also the same fucking lousy equation. If you’ve never visited a wastewater treatment facility (and why would you?) these plants are truly engineering wonders. But they are fuckers to run and, as you can imagine, they take a tremendous amount of upkeep. I want you to think about all of the things you’ve flushed down the toilet for a second and just meditate on that.
Many of the homes in the country have cesspools and that’s fucked up enough. But most of the larger urban areas where the majority of the population resides, have massive wastewater facilities that remove your poop, remove your tampons and rags, kids’ toys, whatever. The hope is that the byproduct is cleaned enough to be pumped back into the environment without killing every living thing.
A failing wastewater treatment plant is a fucking nightmare, but once again, we’re creating an opportunity for private industries to come in and blame underfunded authorities for improper maintenance instead of just letting them fucking do their jobs. And do you know who they wind up hiring when they take over? The same municipal employees because the government and authority employees actually know what the fuck they’re doing. You just have to give them the proper funding to do their fucking jobs.
And, yes. The misaligned incentive structure holds true here as well. These companies come in with a massive capital investment to bring facilities up to operational standards, keep rates the same for a couple of years, then like clockwork pass the cost of their improvements along in pilot programs that taxpayers wind up paying for.
Corporate America - 5
Public infrastructure - 1
Healthcare. Goodness. Well, it’s certainly a well known fact that we spend more on healthcare than nearly every other industrialized nation and yet, in many comparisons the US has a lower overall life expectancy. On the whole, we have the same or worse outcomes than other nations that are far more efficient in the way they fund and distribute healthcare.
So why can’t universal healthcare get traction in this country despite its popularity in polls and relative success in other countries? Well, one reason is that almost 15% of the workforce is tied to healthcare in some way. Healthcare is another episode. Personally I land in the universal healthcare camp but the employment transition is overlooked. What we need to come to grips with is that, beyond the humanitarian aspect and general welfare of the population, our metrics are fucked.
Efficiency, cost, access and outcomes. That’s what matters. And on these measures, we’re failing. But we’re not failing as badly as some proponents of abolishing the private system like to say. For example, as lousy as the vaccine rollout in the US has been, we’re actually leading the way thanks to - God I hate to even say the fucking words - operation Warp Speed.
We have a long way to go but we did actually put our wealth to work in securing vaccines from the providers. The bottom line when it comes to healthcare, and I know this is a sweeping generalization of one of the most critical and complicated issues possible, is that we have great care in this county. Just not for everyone. Costs are too high, access is too limited. It’s simply not equitable care. I’m granting even points here even though my heart doesn’t want to.
Corporate America - 6
Public infrastructure - 2
Lastly, the military. Let’s dig back into the archives for a moment. One of our first episodes was titled Priorities: War, Wealth and Welfare. In it I made the case for funding most of the things we just talked about by taking funds away from our military apparatus that accounts for 57% of discretionary funding in the budget. Not rehashing that now so you’ll have to go back and listen if you want to fight with me on this.
Beyond the moral consequences of having the largest military budget over the next dozen countries combined, almost all of which are allies by the way, and maintaining more than 850 bases throughout the globe to “promote peace” unironically, it’s the most fiscally irresponsible way to spend half of one's budget.
Beyond the massively lucrative defense contracts that are awarded with less oversight than what we print in a child’s textbooks the most troubling trend is the outsourcing of mercenaries to do our dirty work. If we already have the greatest military in the world and the largest budget in history, why the fuck would we outsource operations to upwards of 200,000 military contractors loosely defined as “armed and unarmed” with 50,000 of them working directly for US Central Command?
By the way, not all of these contractors are US citizens. So on top of the fact that they skirt freedom of information requests and hide under the umbrella of military liability, some aren’t necessarily citizens of the U.S. Does anyone else see the inherent conflict of human fucking interest here? We only go to war in countries that promote our corporate neoliberal interests. Defense contractors have been minted over the past couple of decades. And now we’re literally paying non-military personnel to do who knows what.
Double points and a slow clap standing ovation awarded to corporate America on this one.
Final Score: 8 to fucking 2 - Corporate America.
Thanks for playing.
This brings us to where we need to land. You can’t have it both ways. You can’t have a completely unregulated market where regional monopolies can develop and operators can create their own environmental standards or throttle access to key services based upon ability to pay. That is the definition of inequity. We need a healthy mix of regulations backed by government incentives that reward efficiency and promote innovation.
We also have to move past this argument that private industry can do it more cost effectively and more efficiently. Those are the wrong measures. Plus, it’s easy to make these arguments when you defund government efforts to manufacture the outcome you need to justify privatization.
Corporate America likes to complain about being over regulated and overburdened. But hop in your DeLorean and head back to the pre-EPA days and let me know if you want to return to that place for good. I’m old enough to remember how the 70’s smelled, so no thanks.
Corporations have made record profits in recent decades and they’ve largely been able to shelter these gains on the sidelines and in shareholder pockets. They’ve done as they have pleased and beaten back regulators every step of the way while worker protections suffered, income for the majority of Americans stalled and the rest of the world moved beyond us in the areas that should matter the most.
So at your next local council meeting when a corporate representative for some huge company shows us with a flag pin in his or her lapel and a promise to improve the quality of life in your community in return for the right to pour your tap water, clean your shit water, stick a finger in your ass and give you an aspirin, power your homes and teach your kids, tell them to unfuck themselves and have a great day.
Here endeth the lesson.