Musk vs. Trump: American Business and Government at Loggerheads?

When the wealthiest person in the world and the President of the United States cross swords, people are bound to notice. Such a very public clash between billionaires, one of whom is the most politically powerful person in the U.S., should not lead the rest of us to infer that the interests of large corporations and the U.S. Government, including the respective executives and elected representatives, typically conflict. Corporate and individual mega-donations to political campaigns, the proverbial “revolving door” between working in government and at a corporation, the reliance of regulatory agencies on information from the regulated companies invite the exploit of conflicts of interest such that legislation and regulations are even written by corporate lawyers for their respective companies’ financial interest. Furthermore, that many very large American-based corporations have interlocking boards of directors gives corporate America considerable unified force in seeing to it that Congress and the federal president remain friendly to business interests. That both benefit from the status quo and have de jure or de facto vetoes of reform proposals reinforces the staying power of the club. Even as U.S. Senator Bernie Sanders enjoyed considerable media attention and crowds in his speaking tour against oligopoly (i.e., consolidation within an industry such that companies can set prices at will and can thus extract extra profit beyond that which would accrue in a competitive market), it would be wildly optimistic to hope for an onslaught of anti-trust enforcement from a Republican or Democratic administration.

The complete essay is at "Musk vs. Trump."

The 2012 U.S. Presidential Election: Fueled by Leadership or Money?

The 2012 U.S. presidential election was the first in which neither of the major-party candidates participated in the campaign-matching system that imposes campaign spending limits in return for federal financing. It was also the first presidential election since the Citizens United case in 2010. That U.S. Supreme Court ruling was a significant factor in the election because corporations and unions could dip into their respective treasuries directly, rather than only through employee or member contributions, spend an unlimited amount on political ads by making donations to “social welfare” organizations. Without disclosing their donor lists, these non-profit organizations could create political ads that in turn could favor or criticize a particular candidate, albeit with no formal approval from the favored candidate. Faced with formidable super PACs pumping some $800 million or more in favor of Mitt Romney, Obama’s money-machine went into high-gear in a sort of “rich man’s” arms-race. Some rich donors had spent millions of dollars to push the massive ship of state a discernible distance in their direction. Hardly anyone expected that the contending high monies would virtually cancel each other out. Hardly anyone thought the Obama campaign’s scientifically-based “ground game” oriented to getting new voters registered would trump Romney’s financial advantage. To be sure, Wall Street was also behind Obama; Goldman Sachs had donated $1 million in 2008, and Obama in turn gave the big banks federal money (TARP) without strings, including on bonuses (which the bankers abused).

The full essay is at "A U.S. Presidential Election: Leadership or Money?"

Citizens United: A U.S. Supreme Court Ruling Ensconced in the Status Quo?

According to Rodell Molineau, executive director of the Democratic super PAC American Bridge in 2012, "The meta-lesson from [the 2012] election cycle is that showing up and participating in the process is key, which is something that we didn't do in 2010. I think a lot of Democrats ceded the field on super PACs because most people in progressive circles didn't believe in the Citizens United ruling."[1] The U.S. Supreme Court’s Citizen’s United ruling on January 21, 2010 opened up unlimited corporate and union spending on political campaigns. The fact is, sometimes you have to play by rules you don’t agree with in order to compete. The obvious danger is that one gets coopted by those rules in the process, even having a financial disincentive to push for a repeal of the problematic ruling. In other words, the ruling accrues the benefit of being the status quo and thus becomes extremely difficult to dislodge.

The full essay is at "Citizens United."

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1. Paul Blumenthal, “Democratic Super PACs Trim Conservative Advantage in Congressional Races,” The Huffington Post, November 10, 2012.

CEO Compensation: How Much Is Too Much?

From the previous year, the medium value of salaries, bonuses and long-term-incentive awards for the CEOs of 350 major American companies increased by 11% in 2010 to $9.3 million, according to the Hay Group.  Corporate net income increased by a medium of 17% and shareholders medium returns, including dividends, increased by 18 percent. Share prices also increased more than the CEO compensation. However, bonuses increased 19.7%, which is just barely more than the percentage increases in corporate profit and shareholder returns.

The full essay is at "CEO Compensation."

Constricting Debate in the Public Square: The Case of Gun Control

The managements of large corporations attempt and, I submit, often succeed at keeping the most financially threatening alternatives in public policy off the public’s radar by pressuring media and using public relations campaigns. As U.S. president Obama’s health-insurance proposal was being debated in Congress, health insurance companies deftly either kept the single-payer proposal off the media’s discussion or relegated the policy as radical. This term, if stuck to a proposed policy, is the kiss of death in a society of incremental change. Such change, if the only game in town, can unfortunately come to be viewed as constituting major change. The gun-control debate in February, 2018 after the shooting of 17 people at a high school in Parkland, Florida is a case in point.

The full essay is at "The Constricted Debate on Gun Control."

Earmarks and Congressional Campaign Fundraising: A Structural Conflict of Interest

In 2009, Congress appropriated $16 billion in earmarks. In March of the following year, the U.S. House of Representatives eliminated earmarks to for-profit companies. However, enterprising managers soon found a way to get around the new obstacle by creating related non-profits. As long as companies can make political contributions to Congressional campaigns, there will be a structural conflict of interest in the legislators legislating on earmarks.

The full essay is at Institutional Conflicts of Interest, available in print and as an ebook at Amazon.

Banning Corporate Earmarks: Too Broad?

In March 2010, the U.S. House Appropriations Committee banned earmarks to for-profit companies. Had such a ban been in place in 2009, it would have meant the elimination of about 1,000 awards worth a total of about $1.7 billion. Many of those earmarks went to military contractors for projects in lawmakers’ home districts. The committee seemingly meant to end a practice that has steered billions of dollars in no-bid contracts to companies and set off corruption scandals. However, it is also possible that the vote was a “dog and pony show” not meant to result in any eventual law. Such a show would give the American public the illusion of Congressional effort to reduce the impact of business on the elected representatives.

The full essay is at "Banning Corporate Earmarks."

 Source:

 Eric Lichtblau, “Leaders in House Block Earmarks to Corporations,” The New York Times, March 10, 2010.

The E.U. Goes After Google: Where Was the U.S.?

In fining Google a record 2.4 billion euros (2.7 billion dollars) in June, 2017, for unfairly favoring its advertisers in its online shopping service, E.U. officials went “significantly further than their American counterparts.”[1] At the time, Google held more than 90 percent of the online search market in the E.U. Why would the E.U. go further than the U.S. in pressing anti-trust violations against a technology company that could be expected to gain monopoly profits? Presumably Google was favoring its advertisers on searches in the U.S. as well. Americans would mind too when an advertiser’s higher-price product comes up rather than a comparable product at a better deal. Was the E.U. more interested in protecting consumers and less concerned about pleasing a large company? The company’s sordid, self-serving practice nullifies any contending claim that the government’s motive was to go after a foreign company. I submit that the E.U. government’s action unwittingly points to a pro-business bias in the corresponding American government. 

The full essay is at "E.U. Goes After Google."

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1. Mark Scott, “Google Fined Record $2.7 Billion in E.U. Antitrust Ruling,” The New York Times, June 27, 2017.

Corporate Money in Politics: Undue Influence and Conflicts of Interest

Indications of “the pervasive influence of corporate cash in the democratic process, and the extraordinary lengths to which politicians, lobbyists and even judges go to solicit money” can be seen in sealed but leaked court documents in Wisconsin.[1] This glimpse in to the real money-game in business and government shows just how much corporate money is in play. “The files open a window on a world that is very rarely glimpsed by the public, in which millions of dollars are secretly donated by major corporations and super-wealthy individuals to third-party groups in an attempt to sway elections.”[2] In addition, the files show just how easy it is for public officials to deny having been subject to conflicts of interest. The combination of a lot of money and the ability to get away with exploiting a conflict of interest is toxic to a viable representative democracy (i.e., a republic).

The full essay is at "Corporate Money in Politics."

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[1] Ed Pilkington, “Leaded Documents Reveal Secretive Influence of Corporate Cash on Politics,” The Guardian, September 14, 2016.

[2] Ibid.

Fewer Blue-Collar Lawmakers in Maine’s Legislature: Public Financing Cut by the U.S. Supreme Court on Free Speech Grounds

In 1996, Maine became the first American state to enact a public financing system for statewide elections. Voters passed a referendum by which the government provides money to candidates who meet a threshold of fundraising in $5 increments from voters in their districts. Before 2011, candidates got matching funds from the government if an opponent was funding his or her campaign with their own money, or if an outside group was spending money on the race over a certain amount.[i] The reason for the discontinuance of the matching funds and the subsequent impact on the number of blue-collar people running for office and being in the legislature demonstrate that the public financing of political campaigns can have a huge impact on both political campaigns and representation in a legislative chamber.

The complete essay is at "Blue-Collar Lawmakers in Maine."

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1. Paul Blumenthal, “Maine Voters Hope to Restore Their Revolutionary Election System,” The Huffington Post, September 4, 2015.

Leadership Funds: A Congressional Conflict of Interest

Congressional leadership funds constitute a loop-hole by which members of Congress can more easily use donations for personal expenses including vacations. To count on those very same members to turn off the sugar-water that they themselves enjoy is perhaps the epitome of naivety. A solution to a systemic conflict of interest cannot come out of the parties themselves, but must be from an exogenous or outside force. In this essay, I depict the conflict of interest and suggest places we might look to eliminate the conflict of interest.

The full essay is at Institutional Conflicts of Interest, available in print and as an ebook at Amazon.

The U.S. Sues Bank of America: A Spanking or Slap-on-the-Wrist?

In late October 2012, federal prosecutors in New York formally accused Bank of America of “carrying out a scheme, started by its Countrywide Financial unit, that defrauded government-backed mortgage agencies by churning out loans at a rapid pace without proper controls. In a civil suit, prosecutors seek to collect at least $1 billion in penalties from the bank as compensation for the behavior that they say forced taxpayers to guarantee billions in bad loans.” The guarantee can be considered a moral hazard, in that Bank of America (or Countrywide) was not the party on the hook. In other words, the mortgage service company had an artificial incentive to produce mortgages riskier than would otherwise be the case because they would be guaranteed by another party (i.e., American taxpayers).

The full essay is at "U.S. Government Sues Bank of America."