Pigs at the Trough: How Corporate Greed and Political Corruption Are Undermining America by Arianna Huffington
Rating: ••• (Recommended)
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I was prepared to dislike Arianna Huffington’s new book, Pigs at the Trough: How Corporate Greed and Political Corruption Are Undermining America. After a few pages of settling into her witty and irreverent writing style, I came to enjoy turning the pages of this outspoken, often tiresome, book. She has a way of turning a phrase that led me to plow through to the very end. Here’s a great sentence, (p. 135) “That giant sucking sound you hear is the public good being slurped up by voracious corporate interests.”
Huffington makes the following suggestions for corporate reform:
Treat stock options as the expenses that they are.
Make bridging the Chinese wall between research analysts and investment bankers illegal.
Prohibit accounting firms from providing any consulting services while auditing a company’s books.
Outlaw offshore tax havens, and, in the meantime, bar companies that move their headquarters overseas from competing for government contracts.
Regulate the special-purpose entities used for the complex, off-balance sheet transactions that were at the heart of the Enron debacle.
Strengthen whistle-blower protection and ensure that it shields all workers equally.
Begin to address the question of restitution by repealing the provision in the Private Securities Litigation Reform Act of 1995 that makes it extremely hard for investors to recover losses sustained through corporate fraud.
Strengthen the independence of corporate boards.
Drastically overhaul current accounting standards.
Outlaw accounting gimmicks – like “Monthly Income Preferred Shares” – that make it impossible for the public to have an accurate picture of a company’s financial health.
Institute real pension reform.
Institute some basic lobbying reform.
Repeal the Financial Modernization Act.
Stop the Bankruptcy Reform Act from becoming law.
End the ability of mutual funds to both own huge amounts of stock and administer 401(k) plans and other employee-benefit services for the companies in which they hold substantial positions.
Here are two excerpts to savor her writing style. The first is from early in the book (pp. 16-20
In the course of selling us on buying, the market worshippers shredded the modern social contract, the hard-fought consensus that had emerged since the New Deal, which ordered our political priorities, and expressed both our communal concern for the most vulnerable and our disapproval of huge inequalities. We were now supposed to believe that all that could be left up to the soulless, self-correcting calculus of supply and demand. The free market had become the Peoples Market and would, of course, take care of the people.
On June 26, 1995, President Clinton, speaking at the World Economic Forum in Davos, Switzerland, described the job of our generation: "to persuade people that democracy and free markets can give all people the opportunity to live out their dreams." Almost imperceptibly "free markets" had come to mean unregulated markets. As for democracy, well, it was a nice rhetorical flourish. But in reality, the fact that half of our citizens do not vote in presidential elections, while two-thirds don't bother to turn up for midterm elections did not seem to concern our political leaders.
Once the province of Republican supply-siders, this all-encompassing faith was warmly embraced in the nineties by New Democrats. And some old Democrats, too. Even Jesse Jackson rang the opening bell at the New York Stock Exchange and created a Wall Street Project.
The media dutifully did their part, hyping stories that made it seem like everyone was making money investing. Who can forget the Beardstown Ladies, those best-selling, stock-pickin' grannies from Illinois who were supposedly making a 23% return in the market? Or all those Millionaires Next Door—like Anne Scheiber, the lowly government auditor who, by patiently investing in stocks, turned $5,000 into a $22 million fortune?
Stressed out about retirement? Your kids' college tuition? A family health emergency? Not to worry! The market would take care of all that. Even being downsized could be made fun and profitable. After AT&T laid off 40,000 workers in January 1996, hedge-fund manager Jim Cramer wrote a cover story for the New Republic entitled "Let Them Eat Stocks." In it he proposed a simple solution. "Just give the laid-off employees stock options," he exulted, "let them participate in the stock appreciation that their firings caused." And why not toss in a years worth of Turtle Wax while you're at it, Jim? So all social ills would be redressed by the market while the onward march of democracy would be guaranteed by the democratization of capital. "One dollar, one vote." The new evangelists had seen the future and it worked. Even when it was out of work.
The future that Wall Street had dreamt of for decades—free of snooping politicians, pesky regulators and profit-sapping social activists—had finally arrived in a golden, irrationally exuberant dawn. Just as communists had promised a Utopia in which the state would wither away, the free-market ideologues in control in the nineties promised us that we would reach Nirvana when all government intervention would, well, just wither away.
We would then find ourselves in a glorious Brave New World. Marxists and MSNBC stock analysts together at last, holding hands and feverishly chanting: "From each according to his culpability, to each according to his greed."
I was lucky that I got my degree in economics at Cambridge, where I inhaled a healthy skepticism of the power of the free market to bring about the good society. After all, Cambridge was the home of John Maynard Keynes. I well remember a lecture in my freshman year in which free-market guru Milton Friedman was dismissed in one sentence as someone who did not understand Keynesian economics.
My first speech at the Cambridge Union was on the motion, 'This House Believes That the Market Is a Snare and an Illusion." I was speaking on J. K. Galbraith’s side against William F. Buckley. In 1978 I published a book. The Other Revolution, in which I marveled at the attempt of free-market ideologues to ascribe all public good to the invisible hand of the market. It took a while—and the fall of Ken Lay, Bemie Ebbers, Sam Waksal, et al.—before the invisible hand was exposed as a pickpocket. But even during my Republican interregnum in the early nineties I never believed that we could trust trickle-down economics to solve social problems. I've actually always agreed with Mark Russell, who defined trickle-down as, "something that benefits David Rockefeller now and Jay Rockefeller later." Or, to be a bit more current, George Herbert Walker Bush then, and George Walker Bush now.
But evidence can never, by itself, trump ideology. Forget the inconvenient fact that deregulation hasn't worked—that its given us an airline industry on the verge of collapse, higher electric and cable bills, a savings and loan disaster, to say nothing of Enron, WorldCom, Adelphia, Xerox, and Merrill Lynch—the invisible hand is still the magical answer to all our woes. So even after the free-market parade had to be called off on account not of rain, but of fraud, we have begun to hear the trickle-down marching bands warming up in the distance, ready to play their familiar siren songs.
Like a lung-cancer patient reaching for a pack of smokes, the Bush administration has again and again greeted gloomy economic news with a nerve-settling puff of its favorite brand of economic relief: tax cuts for the rich. And considering the imprudence of that idea, maybe Team Bush is smoking something a little stronger than Mariboros.
What makes the free market ideology stronger than ever is that it is now powered by the nexus of money and politics that dominates our political process.
"No more easy money for corporate criminals, just hard time," President Bush said when he signed the corporate reform bill in July 2002. It was supposed to usher in the new era of corporate responsibility, but the new era message is nothing but a Madison Avenue gimmick—a "new and improved" label slapped on the same old package of deceit.
Watching the president smile for the cameras as he signed a reform bill he had never supported, I couldn't help but wonder if the glint in his eye was because he knew something the rest of us didn't. That for all his get-tough promises, the bill would actually do very little to reduce the level of corporate influence over our government.
It made me think of the time a friend took a family trip on a cruise ship. Her 10-year-old son kept pestering every crewmember he encountered, begging for a chance to drive the massive ocean liner. The captain finally invited the family up to the bridge, whereupon the boy grabbed hold of the wheel and began vigorously turning it. My friend panicked—until the captain leaned over and told her not to worry, that the ship was on autopilot, and that her sons antic maneuvers would have no effect.
Its the same with our leaders. They stand on the bridge making theatrical gestures they claim will steer us in a new direction while, down in the control room, the autopilot, programmed by politicians in the pocket of special interests, continues to guide the ship of state along its predetermined course. And you can bet that corporate America—with its Energizer Bunny lobbyists and wide-open checkbooks—will now be working overtime to further its own interests.
Although the corporate reform law was presented as a big win for the public interest, corporate lobbyists actually succeeded in fighting off a whole slew of potential reforms: stock options still don't have to be treated as a corporate expense, offshore tax havens continue to flourish, and there's been no pension fund reform.
The following excerpt is from pp. 78-79, and I loved the comparison of corporations to teenagers:
Because corporations are such generous campaign donors and such demanding patrons, they have been coddled and cuddled and humored by lawmakers until little remained of a regulatory regime dating back to the last great era of capitalism run amok, the 1920s. Like teenagers insisting they are mature enough to look after themselves, the corporate pigs whined furiously about laws and regulations they viewed as onerous - laws and regulations we had already learned the hard way were essential to control the forces of greed. But they didn't just whine, they put their money—and their considerable political muscle—where their mouths were.
Once corporate America got the keys to the car, Mom’s credit card, and the free run of the house, it threw a drunken pool party the likes of which even Hugh Hefner has never seen. With government regulators forced to butt out, a wave of what Kevin Phillips, author of Wealth and Democracy, calls "financialization" swept the economy. *The processes of money movement, securities management, corporate reorganization, securitizattion of assets, derivatives trading, and other forms of financial packaging are steadily replacing the act of making, growing, and transporting things," Phillips wrote. In this financializationion fun house, real profits aren't necessary; you can simply make them up. Financial shenanigans are so much easier than actually making a company work.
Corporations get their way in Washington by traveling a long-established highway of corruption—with well-stocked gift shops at every exit. Lobbying in America has become a $1.55 billion business. There are 38 lobbyists for each and every member of Congress. Lobbyists from just one industry alone, the hyperactive pharmaceutical business, outnumber actual members of Congress by 623 to 535. Get those guys a dose of Ritalin.
This is the nexus of corporate corruption; the source of all the swill. The unseemly link between money and political influence is the dark side of capitalism. It was this link that prompted a full-court-press by key members of Congress against crucial reforms proposed by ex-SEC chairman Arthur Levitt in the nineties, reforms that might have prevented some of the bloodletting of the last year.
It was also this link that gave Enron and Kenneth Lay their aura of power, and made Lay a principal shaper of the administrations energy policy and an intimate FOG (Friend Of George). This aura didn't come cheap. Enron and its executives doled out $2.4 million to federal candidates in the 2000 election and were among George Ws biggest donors. Lay and his wife alone have donated $793,110 to the GOP since Ws dad was in office. Enron has also spent big bucks lobbying Congress and the White House: $4 million in 1999 and 2000 alone. The money had bought the company a bipartisan who’s who of Washington insiders—including James Baker, Mack McLarty and Gore 2000 fundraising director Johnny Hayes—to help push its corporate agenda.
In exchange for his unwavering support, "Kenny Boy' was given unprecedented input into the makeup of the Federal Energy Regulatory Commission (FERC), the agency charged with regulating Enron’ core business. Lay bragged to one potential nominee about his "friends at the White House." He also personally put the screws to FERC chair Curtis Hebert in an effort to change his views on electricity deregulation. Hebert didn't oblige, and was soon the former chairman of FERC, replaced by Enron ally Pat Wood. Wood actually insisted that the collapse of Enron "doesn't seem to be tied too much to deregulated energy markets." You know that something is rotten in Washington when the top energy industry regulator is so unabashedly anti-regulation.
Read Pigs at the Trough for pleasure, if you can, and be glad that Huffington doesn’t have your organization in her sights.
Steve Hopkins, March 25, 2003
ã 2003 Hopkins and Company, LLC
The recommendation rating for this book appeared in the April 2003 issue of Executive Times
URL for this review: http://www.hopkinsandcompany.com/Books/Pigs at the Trough.htm
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