Stop Corporate Welfare

by Ralph Nader


What are poverty welfare programmes (e.g. a $300 monthly cheque given a welfare mother), says well-known consumer advocate Ralph Nader, compared to the corporate welfare programmes that shovel huge amounts of taxpayer money to corporations through inflated government contracts, subsidies, loan guarantees, etc?

The issue of concentration of power and the growing conflict between the civil society and the corporate society is not a conflict that you read about or see on television. So unfortunately, most of us grow up corporate; we don't grow up civic.

If I utter the following words, what images come to mind: crime, violence, welfare and addictors? What comes to mind is street crime; people lining up to get their welfare cheques; violence in the streets; and drug dealers - the addictors.

And yet, by any yardstick, there is far more crime, and far more violence, and far more welfare disbursement (and there are far more addictors) in the corporate world than in the impoverished street arena.

The federal government's corporate welfare programmes number over 120. They are so varied and embedded that we actually grow up thinking that the government interferes with the free enterprise system, rather than subsidising it.

It's hard to find a major industry today whose principal investments were not first made by the government - in aerospace, telecommunications, biotechnology and agribusiness. Government research and development money funds the drug and pharmaceutical industry. Government research and development funds are given freely to corporations, but they don't announce it in ads the next day.

Corporate welfare has never been viewed as debilitating. Nobody talks about imposing workfare requirements on corporate welfare recipients or putting them on a programme of 'two years and you're out'. Nobody talks about aid to dependent corporations. It's all talked about in terms of 'incentives'.

At the local community level, in cities that can't even refurbish their crumbling schools - where children are without enough desks or books - local governments are anteing up three, four, five hundred million dollars to lure very profitable baseball, football and basketball sports moguls who don't want to share the profits. Corporate sports are being subsidised by cities.

Corporations have perfected socialising their losses while they capitalise on their profits. There was the savings-and-loan debacle - and you'll be paying for that until the year 2020. In terms of principal and interest, it was a half-trillion-dollar bailout of 1,000 savings-and-loans banks. Their executives looted, speculated and defrauded people of their savings - and then turned to Washington for a bailout.

Foreign and domestic corporations can go on our land out West. If they discover gold, they can buy the acreage over the gold for no more than $5 an acre. That's been the going rate since the Mining Act of 1872 was enacted. That is taking inflation-fighting too far.

There's a new drug called Taxol to fight ovarian cancer. That drug was produced by a grant of $31 million of taxpayer money through the National Institutes of Health, right through the clinical testing process. The formula was then given away to the Bristol-Myers Squibb company. No royalties were paid to the taxpayer. There was no restraint on the price. Charges now run $10,000 to $15,000 per patient for a series of treatments. If the patients can't pay, they go on Medicaid, and the taxpayer pays at the other end of the cycle, too.

Yet what is the big issue in this country and in Washington when the word 'welfare' is spoken? It is the $300 monthly cheque given a welfare mother, most of which is spent immediately in the consumer economy. But federal corporate welfare is far bigger in dollars. At the federal, state and local levels there is no comparison between the corporate welfare and poverty welfare programmes.

We have 179 law schools and probably only 15 of them (and only recently) offer a single course or seminar on corporate crime. You think that's an accident? Law school curricula are pretty much shaped by the job market, and if the job market has slots in commercial law, bankruptcy law, securities and exchange law, tax law or estate planning law, the law schools will oblige with courses and seminars.

One professor studying corporate crime believes that it costs the country $200 billion a year. And yet you don't see many congressional hearings on corporate crime. You see very few newspapers focusing on corporate crime.

Yet 50,000 lives a year are lost due to air pollution, 100,000 are lost due to toxics and trauma in the workplace, and 420,000 lives are lost due to tobacco smoking. The corporate addictor has a very important role here, since it has been shown in recent months that the tobacco companies try to hook youngsters into a lifetime of smoking from age 10 to 15.

When you grow up corporate, you don't learn about the reality of corporate welfare. The programmes that shovel huge amounts of taxpayer dollars to corporations through inflated government contracts via the Pentagon, or through subsidies, loan guarantees, giveaways and a variety of clever transfers of taxpayer assets get very little attention.

Knowing What's Ours

We grow up never learning what we own together, as a commonwealth. If somebody asks you what you and your parents own, you'd say homes, cars and artifacts. Most of you would not say that you are owners of the one-third of America that is public land or that you are part-owners of the public airwaves.

When you ask students today who owns the public airwaves you get the same reply - 'the networks', or maybe 'the government'. We own the public airwaves and the Federal Communications Commission is our real estate agent. The radio and TV stations are the tenants who are given licences to dominate their part of the spectrum 24 hours a day, and for four hours a day they decide who says what.

You pay more for your auto licence than the biggest TV station pays for its broadcast licence. But if you, the landlord, want in on its property, the radio and TV stations say, 'Sorry, you're not going to come in.' These companies say they've got to air trash TV - sensual TV, home shopping and rerun movies.

We have the greatest communications system in the world and we have the most demeaning subject matter and the most curtailed airing of public voices (known in the trade as 'sound bite'). The sound bite is down to about five seconds now.

You and your parents also may be part-owners of $4 trillion in pension funds invested in corporations. The reason this doesn't get much attention is that although we own it, corporations control it. Corporations, banks and insurance companies invest our pension money. Workers have no voting mechanism regarding this money. If they did, they'd have a tremendous influence over corporations that have major pension trust investments.

Not controlling what we own should be a public issue, because if we begin to develop control of what we own, we will marshal vast existing assets that are legally ours for the betterment of our society. That will not happen unless we talk about why people don't control what they own.

All of the reforms require a rearrangement of how we spend our time. The women who launched the women's right-to-vote movement decided to spend time - in the face of incredible opposition. The people who fought to abolish slavery also decided to spend time. The workers who formed the unions gave time.

The Power of Civic Action

Historically, how have we curbed corporate power? By child labour prohibition, by occupational health and safety rules, by motor vehicle standards and food and drug safety standards. But the regulatory agencies in these areas are now on their knees. Their budgets are very small - far less than 1% of the federal budget.

Their job is to put the federal cop on the corporate beat against the illegal dumping of toxics. But these laws do not get high compliance by corporations, and the application of regulatory law and order against corporate crime, fraud, abuse and violence is at its lowest ebb. I've never seen some of these agencies as weak as they are now. President Ronald Reagan started it and President George Bush extended it. And now we have 'George Ronald Clinton' making the transition very easy.

The dismantling of democracy is perhaps now the most urgent aspect of the corporatisation of our society. And notice, if you will, two pillars of our legal system - tort law and contract law.

The principle of tort law is that if you are wrongfully injured, you have a remedy against the perpetrator. That's well over 200 years old. And now, in state legislatures and in Congress, laws have been passed, or are about to be passed, that protect the perpetrators, the harm-doers - that immunise them from their liability.

When the physicians at the Harvard School of Public Health testify that about 80,000 people die in hospitals every year from medical malpractice - a total larger than the combined fatalities in motor vehicle accidents, homicides and death by fire each year in the US - it raises the issue of why our elected representatives are vigorously trying to make it more difficult for victims of medical malpractice to have their day in court. [Note:President Clinton vetoed one such far-reaching tort reform bill.]

As in the Middle Ages, 1% of the richest people in this country own 90% of the wealth. The unemployment rate doesn't take into account the people who looked for a job for six months and gave up, and it doesn't take into account the underemployed who work 20 hours a week. Part of growing up corporate is that we let corporations develop the yardsticks by which we measure the economy's progress.

Democracy is the best mechanism ever devised to solve problems. That means the more we refine it - the more people practise it, the more people use its tools - the more likely it is we will not only solve our problems or at least diminish them, we also will foresee and forestall risk levels. When you see corporations dismantling democracy, you have to to take it very seriously and turn it into a public political issue.

Among the five roles that we play, one is voter-citizen, another is taxpayer, another is worker, another is consumer and another is shareholder through worker pension trusts. These are critical roles in our political economy. Yet they have become weaker and weaker as the concentration of corporate power over our political and cultural and economic institutions has increased year by year.

We're supposed to have a government of, by and for the people. Instead we have a government of the Exxons, by the General Motors and for the DuPonts. We have a government that recognises the rights and liabilities and privileges of corporations, which are artificial entities created by state charters, against the rights and privileges of ordinary people.

Jefferson warned us that the purpose of representative government is to counteract 'the excesses of the monied interests' - then the merchant class; now the corporations. Beware of the government that doesn't do that.

This essay is excerpted from a speech Nader delivered at Pennsylvania's Haverford College. This article first appeared in Earth Island Journal ('It's Time to End Corporate Welfare As We Know It', Fall 1996).

Controlling Corporations

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