Who Will Tell the People: The Betrayal of American Democracy

"Science," the Greek word for knowledge, when appended to the word "political," creates what seems like an oxymoron. For who could claim to know politics? More complicated than any game, most people who play it become addicts and die without understanding what they were addicted to. The rest of us suffer under their malpractice as our "leaders." A truer case of the blind leading the blind could not be found. Plumb the depths of confusion here.


Postby admin » Thu Oct 31, 2013 12:52 am



In the long-ago American past, politics was itself a principal form of entertainment, and people would travel many miles to hear the oratory and share in the spectacle of popular rallies. In the modern culture of mass-media communications, politics has been overwhelmed by entertainment. The many new channels of communication created by broadcasting and other technologies ought to have enriched democracy. In practice, the rise of mass media as the dominant venue for political dialogue completed the alienation of citizens from politics.

People are now lost in a bewildering display of sound and light, from the random anger of talk radio to the manipulative images of television commercials, from the celebrity culture fostered by mass media to the emotional directness of instant TV news. It is not that people are isolated from public affairs and utterly ignorant, as earlier generations of Americans were. Their problem is that they are inundated with messages -- a raging river of information that is fake or true or alluring distraction. As a result, people are reduced to the role of sullen spectators, listening and watching without necessarily believing what they are told.

The paradox of modern media, as almost everyone senses, envelops contemporary politics and is central to the democratic problem. Television and other new technologies connect with people powerfully through vivid immediacy. Yet, because they are centrally controlled, one-way channels of communication, they are also distancing. The media can be liberating for ordinary people, carrying them into distant realms. Yet they also destroy the old social connections that once held people together in community. Broadcasting is inescapably populist in its quick accessibility yet also elitist in its organizational structure. The sound and light are exciting but, strangely enough, foster a benumbed passivity in the general audience.

The mass-media culture has created one other paradox for democracy that is seldom noted: It divided Americans into two distinct nations, two tribes of citizens who see the world quite differently. They are the young and the old. There are the people under forty-five years old who grew up entirely in the age of television and were largely educated according to its definitions of reality. Then there are the rest of us, the older citizens whose perceptions of politics and everything else were shaped in childhood by more abstract sources of information, books and newspapers and magazines.

This dividing lined defines another central dislocation in American democracy. The conventional view, usually expressed by the elders, describes television as a mindlessly destructive force. The contrary view, which I share, is that the new technologies of communication have truth-telling capacities that, in time, can help restore democratic sensibilities to the political culture.

Has the mass-media culture destroyed any possibility for genuine democracy? Or is it perhaps a key to salvaging democracy's future? How one answers that question may determine whether one believes that democracy has a future at all.


The formless anger and disconnectedness of mass media are played out every afternoon in the darkened studio of KFI 640 radio in Los Angeles. Tom Leykis stands under a single overhead spotlight, rocking on his heels, pacing back and forth before the console, while he fumes at the city and stokes the anger of its citizens.

"We're talking about the Department of Water and Power's ridiculous attempts to get us to conserve water. While private industry is wasting water all over Southern California! While Mayor Bradley wants to send the secret water police around to see if we're washing the dog! What's going on? It's ridiculous!"

Under the spotlight, Leykis looked like a solitary vaudevillian, performing forlornly before an imaginary audience. Young and plump, with billowy long hair floating on his shoulders, he was wearing dark glasses and a black satin Kings jacket. His dramatic pauses and well- punctuated exclamations are familiar to legions of Los Angeles commuters. Leykis is KFI radio's drive-time voice of populist outrage.

"Am I supposed to let my yard go brown while Dodger Stadium has a green outfield? What about Caltrans watering the freeways? Even when it's raining! It's a perfect example of how the little guy gets crushed while special interests and big business get more and more and more. The little guy gets to conserve and the big guys get whatever the hell they want."

Larry from La Mirada was on the line, objecting. Water conservation is important, Larry said, and people should cooperate. Leykis listened for a moment, then blew him off with a tart put-down.

David from Rialto jumped in: "It's just like the war on drugs, like the malathion they're spraying on us for the medfly. It's putting more and more regulations on the little guy and getting us used to more and more control over our lives."

Craig, a first-time caller from Ventura, came on to argue for civic responsibility. "Why don't you go down to your City Hall and demand that they pass laws that make big business conserve water too?" Craig asked. Leykis pounced.

"Are you registered to vote, Craig? Are you?" Craig said he wasn't. "How did I guess?" Leykis sneered. "You don't give a crap. You don't even vote."

"I'm an artist," Craig said meekly. ''I'm not up on all the issues."

"Mister artiste," Leykis crooned. "Isn't that wonderful. You hypocrite! Thank you, Craig, for making my point."

Then there were Kevin from Corona and Richard from Ontario and Jim from Valencia and Chris on a car phone from Vista. All of them picked up the beat of Tom Leykis's accusation and amplified the outrage with personal anecdotes-industries they had observed wasting water flagrantly, while citizens like Richard got a ticket for washing his car.

"I tell you what I told the municipal guy who gave me the ticket," Richard said. "You can take that ticket and stick it where the sun doesn't shine-unless you're willing to shut down those car-wash businesses too."

"Good for you, good for you," Leykis said. "What I'd like to see is more people flipping these guys the bird."

When the broadcast concluded, Leykis was still bouncing around with nervous energy, his adrenaline pumped up by two hours of needling, exhorting and instructing the faceless voices who are his daily listeners. His mood level dropped precipitously, however, as he talked about these citizens.

"It's real easy for somebody to call in and whine," Leykis explained. "But do they ever get off their ass and do something? They love the idea of punching on the touch tone and calling in and getting back at everybody. They get this vicarious thrill. But that's it. The people who call talk shows actually think they're doing something, but it's not the same as voting or going out and passing petitions. Then when things go bad and the air is brown, people call in and say, 'This is awful. How did this happen?' Then they say: 'Tom, you ought to do a campaign.' Great. Call Tom. It's like calling Domino's Pizza."

Talk radio, it was supposed a few years ago, was becoming a new channel for democratic dialogue -- a place where unorganized citizens could come together and speak directly to power. In the media age it might even be a device for assembling citizens in collective action. When dozens of talk radio hosts across the nation joined Ralph Nader in attacking the congressional pay raises in 1989, the resonating chorus of public anger traumatized Washington, at least briefly. In the end, Congress got its pay raise anyway.

As Leykis pointed out, several of the radio personalities who led that pay-raise crusade were subsequently fired, not for offending politicians, but because their ratings were down. "Some of the talk radio hosts are passionately political," he said, "and a lot of them are naive and believe that, just by going on the radio, they can make people care about an issue. Baloney. And some are just blatant opportunists looking for their next big gig."

The electronic media -- radio and television and, in the emerging future, personal computer networks -- produce such contradictions. By their nature, these media empower ordinary citizens -- providing access and information that did not previously exist for them, connecting them with distant events and authorities. But it is not clear, as yet, whether the new culture created by modern communications will someday lead to a revitalized democracy or simply debase the imperfect politics that already existed.

Tom Leykis engages the paradox every afternoon, from a liberal-libertarian perspective. In the mornings, KFI broadcasts the nation's most popular talk-radio host, Rush Limbaugh, who is a voice of populist outrage coming from the right. Despite their differences, Leykis and Limbaugh are essentially delivering the same message -- flipping the bird at power -- and they are speaking to the same audience, the vast sea of disaffected and impotent citizens.

"The one thing talk radio does that is positive," Leykis said, "is that it finds the rage bubbling underneath the surface and allows people to see that they're not the only ones who feel that way."

Leykis is more idealistic than his corrosive opinions suggest and, on occasion, he has tried to mobilize his listeners in collective political action. When the California Department of Agriculture conducted aerial pesticide spraying of suburban L.A. neighborhoods to eradicate the medfly, Leykis rallied the protest movement. One evening, he broadcast from a parking lot in Irwindale, a community that was regularly sprayed with malathion. "We told people to bring surgical masks, we handed out umbrellas, we warned the department we were going to be there," he said. "But eight hundred listeners showed up in this parking lot, even though there was a risk they'd get sprayed. And they were. We were sprayed -- live -- on the air."

The pesticide spraying was halted eventually, but Leykis did not claim victory. "It was public relations," he said. "They disarmed the entire protest movement with the announcement they were going to stop -- then they went on spraying until they were finished with the job."

Tom Leykis holds a darkly pessimistic opinion of the electronic media's influence on democracy -- the view that is widely shared in conventional politics. Broadcasting will not reinvigorate politics, he said, because it has fostered the very culture of shallowness and passive privacy that subverts political action.

"That pay raise issue was easy -- a guy listens to the radio and hears that congressmen want a $35,000 raise," he said. ''The savings and loan campaign on talk radio was a dismal failure,. too complicated for the average person. We have a society that now, because of pop culture, the MTV-Sesame Street culture, has a short attention span. If you can't say it in twenty-five words or less, people don't want to be bothered. So everyone stays home, playing Nintendo.

"That's the essence of this country -- convenience. As long as you've got the color TV and the VCR and the video games, why vote? It will take a crisis -- a war, a great depression -- to get people to vote. That's the only time we can get political movement in this country. The air is brown two or three days a week and apparently that's not a crisis. If there was a political movement that went into people's living rooms and dragged off their color TVs, then you'd see them voting."


Virtually all children in America, regardless of their family station, learn the same dispiriting lesson from television, and at a very early age. They discover that the television set sometimes lies to them. Typically, they learn this from the toy commercials. On screen, the robot performs miraculous feats or the little radio-controlled race car zooms around the track like the real thing or the doll baby coos and cries with lifelike charm. Every American child remembers the shock of recognition when the toy comes home from the store. It is just a toy, a piece of sculpted plastic and metal. Even if it works, the object delivers none of the magic qualities promised on television.

Every parent, likewise, remembers the awkward moment of having to deal with a child's disappointment. What does this experience teach small children about life? Does it make them wary of appearances and more astute? Or simply cynical and inured to deceitful manipulation? Parents feel helpless, sensing that they have lost control of their own children's education to this powerful teacher called television.

The medium makes children grow up faster, for discoveries and disillusionments that one used to first encounter in the adolescent years are now visited upon four-year-olds. When I asked my own daughter, who is now an adult, how she analyzed television's impact on her generation's political behavior, her first insight was about the toy commercials.

Everyone has some personal sense of the paradoxes of television but no one, including the experts, has a definite understanding of what the medium has done for the society and done to it. Parents and children, voters and politicians, church and state and business enterprise -- everyone is still learning to live with it.

Some critics argue that the seductive culture spawned by television and related communications technologies has already obliterated, beyond repair, the very premises of democratic promise. Its directness disintegrated the old lines of loyalty and accountability and control in politics, from party organizations to representative newspapers. Its alluring images enabled politicians to manipulate the public with deceptive persuasion, an art form that each election season becomes more effective, more elusive. Its attractive surfaces destroyed the deeper content of political discourse.

This pessimistic view is widely shared, especially among older people, and supported by abundant evidence from everyday reality. Citizens, especially younger citizens, do seem dumber about politics. The people and political institutions trying to build strands of common interests among citizens are undercut by the competing glow of the tube. To critics, television seems like a primitive beast stumbling through the village and aimlessly wrecking political relations, education, values. [1]

On the other side, optimists are able to see the modern communications revolution as a great democratic leveler. They acknowledge that people and societies are still adjusting to its disorienting qualities, but the potential for democratic empowerment is enormous. Jacques Cousteau, the French marine biologist who, thanks to television, is known and loved by school children around the world, described the revolutionary implications of the medium:

"When people were illiterate, they had to elect the lawyer or the doctor or whoever had access to information and knowledge to represent them in government. But today the peasant has more information than the politicians, who lose their time in sterile partisan fighting. This kind of democracy is out of date." [2]

Cousteau, somewhat airily, imagines a politics without politicians. Citizens of the world, including peasants and school children, inform themselves and develop the consensus for public action, in spite of governments, in spite of vested political interests. This sense of media's power does not seem far-fetched when one considers the popular upheavals that destroyed the dictatorial regimes in eastern Europe. Radio and television from the western democracies seeped through the closed borders and delivered their subversive messages; the revolutionary music in Czechoslovakia, East Germany and elsewhere was American rock 'n roll. Coming back the other way leading politicians in western Europe grumbled that on French and British television Gorbachev got more air time than they did. In a free society, they are powerless to prevent it.

As readers might guess, I place myself among the optimists in this argument. My own impression, as a reporter who has traveled widely in the country, is that Americans everywhere -- especially in provincial backwaters -- are now more richly informed about public affairs because of television. The polls and studies, I know, document an opposite conclusion, but I am regularly struck by how much Americans know -- how even people in the most remote places seem to be talking about the same important items that preoccupy the people at more exalted levels.

Television, at the very least, has unified the American population in new ways, even if it also debased the content of the political dialogue. This unity has been reflected in the outcomes of most of the presidential elections during the last twenty years. Despite the elaborate electoral-vote strategies based on America's regional differences, the nation is more or less voting in unison, responding to the same themes and issues.

Still, in the absence of more intimate venues for communications, politics is captured and confined by omnipresent television. Given the nature of TV news, every important question is reduced to the "Dan Rather rule" of tax politics. If it can't be explained in ten seconds, the public won't find out. That trap, however, is created by the failure of other mediating institutions at least as much as it can be blamed on TV.

My own optimism, in any case, rests partly on faith. If the pessimists (like Tom Leykis) are right, then most of what I have explored in this book is beside the point. If the mass-media culture has permanently robbed people of their democratic capacities, then the deeper governing problems -- or their remedies -- will have no meaning to ordinary citizens. If people have been rendered hopelessly inert, then these complicated questions will be left to the governing circles that already control most outcomes. Obviously, I do not accept such a fatalistic prognosis, about either the technology or the human spirit.


For a disconcerting glimpse of the contemporary culture, spend an evening watching MTV and its marvelously facile storytelling. Or even watch for fifteen minutes. The music-video channel is so fast moving -- and essentially repetitious -- that even a brief encounter conveys its content: a promise of high production values and trivial intellectual stimulus. The rock videos often play out dramas with simple story lines, many with surprisingly wholesome messages (don't use drugs, don't cheat on your girlfriend), but the real appeal is their visual-aural display. A few introduce strikingly original imagery, moody high-tech fantasies of light and color. Most of them borrow familiar visual cliches from movies and television.

The essence of MTV is expressed by one of its video logos -- a high-speed flash of obscure images that are propelled at the viewer like a frenzied sight gag, too quick to understand. A butterfly dissolves into a pyramid, a human eye, a rush of disorganized color, a face like John Lennon's, an exploding flower that turns into what? Maybe it wasn't a flower, but an exploding butterfly that turned into John Lennon. It is all too quick -- and pointless -- for the mind to record.

For anyone who is older, anyone who grew up on books and newspapers before there was television, MTV is a disturbing experience. Is this what the minds of American youth are consuming? One envisions a nation of college dormitories nodding off on MTV's brainless trivia. One imagines decline and fall. Worst of all, one senses that there is a hip joke in these lightning images that old folks are not in on. The founder of MTV once said its programming is designed to drive everyone over fifty crazy.

The American electorate is astride an inescapable faultline that divides those who grew up on TV, fully acculturated by it, and those who didn'1. Neither side fully understands the other or speaks the same language or sees quite the same reality in their perceptions of the world. The older half still generally controls things, including politics and government and the most important private institutions. But the younger half is inexorably replacing them, as the children raised by the TV culture grow older and the oldest of them now approach middle age themselves. The future of democracy -- if it has a future -- inevitably belongs to those who can watch MTV without feeling crazy.

The younger half learned to read from Sesame Street, a program widely applauded for its imaginative use of video for educational purposes. But what else did Sesame Street teach? That intellectual exercises are primarily visual and tactile experiences, rather than processes of abstraction. "Sesame Street is insidious because it implies that you can't learn your letters and numbers without colors and sounds," writer Linda Greider has observed. "Seeing the images for a minute and a half makes you feel like you've dealt with it. It makes you think: Now I know my letters. But what you really know are the marching colors. It's not reading anymore -- it's TV."

Between MTV and Sesame Street and video games, the TV generation "knows" many things that older people do not know, but the accumulating evidence (mostly accumulated by the older people) emphasizes what is lost on them -- the hard facts of political life and the daily action that is the important "news" to older citizens. Younger people know less about public affairs and they seem to care less. The children of TV, now the adults from eighteen to roughly forty-five years old, have more years of schooling than previous generations, a demographic fact that used to predict greater political involvement, but no longer does. Most citizens under forty-five have withdrawn from politics and, indeed, never entered that realm of American life.

They are the dropouts who are pulling down the formal meaning of electoral politics. It is their voting participation that has fallen most drastically during the last twenty years, not that of the people who are older than forty-five years. From 1972 to 1988, the voting level declined by more than one fourth among those who are eighteen to twenty-four years old. By 1988, only 36 percent of these young adults were voting. But voting has also declined among those who are twenty-five to forty-four years old. In 1972, 63 percent of them voted; by 1988, only 54 percent did.

Meanwhile, voting participation among older citizens held roughly constant -- fluctuating around 70 percent. This divergence is explained by more than a question of settled maturity. The older voters were taught about democracy and the meaning of elections in the age before television; the younger people learned their civics from TV.

These statistics predict that the deterioration of electoral politics and voting participation is going to continue as the older citizens who still participate in elections die off and are replaced by the tuned-out citizens coming along behind them. [3]

The same divergence is visible in the "news" of public affairs that younger people tune out. The most memorable news event in the decade of the 1980s was the explosion of the Challenger space shuttle in 1986. Second was the San Francisco earthquake, third was the little girl in Texas who was rescued from a well. All were TV stories with terrific footage -- riveting human dramas that appealed to everyone but especially to younger people. In contrast, the historic political upheavals of eastern Europe never absorbed the attention of more than 42 percent of people under thirty, even at the highly videogenic climax in the fall of 1989 when the Berlin Wall fell.

Only 11 percent of people under thirty followed President Bush's summit meeting with Gorbachev very closely. Only 9 percent were interested in the Japanese purchase of Rockefeller Center. Only 5 percent cared about the scandal that brought down Representative Jim Wright, the Speaker of the House of Representatives. They know Corazon Aquino (53 percent) because she plays a compelling role in a continuing TV soap opera about the Philippine government. They do not know House Speaker Thomas Foley (only 8 percent do) because he is merely the nice-looking man who sits in the background, next to Dan Quayle, when George Bush gives important speeches on TV.

These data are drawn from studies made by the Times Mirror Company's Center for The People & The Press, which monitors the attention span of news consumers. In a 1990 study, "The Age of Indifference," the center charted the gaps between the generations in attention and knowledge and concluded gloomily: "The ultimate irony ... is that the Information Age has spawned such an uninformed and uninvolved population.'"

By comparing Gallup Poll opinion surveys over five decades, the study identified a break- way point in the mid-1970s when the attention level of younger adults began to diminish -- diverging from what the rest of the country knew and considered important. From the 1940s to the 1970s, the polls had found that young people knew as much about public affairs as their elders (and sometimes more) and that they followed major news events with approximately the same intensity. Starting in the years following the Watergate scandal and the war in Vietnam, the news attention of young people fell away sharply; so did their factual knowledge of political issues and personalities; so did their voting participation.

That decline could be attributed to the disillusionment fostered by those events, the cynicism bred by an era of political failures, except for this: The trend persisted throughout the 1980s, a time when Ronald Reagan restored political success to the presidency and was especially admired among the younger citizens. They liked Ronald Reagan, but his popularity did not persuade them to pay more attention or to vote.

A more likely explanation for the divergence is that in the 1970s, for the first time, the age group from eighteen to thirty consisted entirely of children who had been raised on TV. Those same people are now in their late thirties or early forties and, though they became somewhat more attentive and knowledgeable as they grew older, the age group from thirty to forty-five also now displays a deteriorating interest in the standard facts and events of politics.

Older people read Time or Newsweek to catch up on the week's news. Younger people, even well-educated ones, read People magazine as their idea of "hard news." Older citizens watch 60 Minutes for its familiar format of methodical exposes of wrongdoing. Younger people watch A Current Affair or Geraldo or Oprah for their edgy sense of personal melodrama -- an unabashed emotionalism that is not unlike the old working-class tabloids. Traditionalists shudder at the implications. Is television gradually producing a brain-dead citizenry, making it impossible to imagine a functioning democracy?

Or is it perhaps the opposite -- that these younger viewers are able to see things through television that are not really visible to their elders? Possibly, they know something about politics that the rest of us were not taught when we were growing up, a reality that contradicts the comfortable civic faith instilled in us. Clearly, the system of political communication is malfunctioning when so many millions of citizens turn away from the continuing story of politics. But it may be the story itself or the storytelling system -- not the audience -- that is maladjusted.

What is it that the young and disaffected see in politics that leads them to switch channels? For one thing, they see a dispiriting sameness. It is not just the "talking heads" that, as every TV producer knows, make for boring television, but generally it is the same "talking heads" over and over again. Given the quickness that television values, a viewer will be bombarded with a succession of quick flashes-unfamiliar faces with tightly cropped opinions- that provide no context for understanding who is on which side or why they are being presented as glib authorities or what led them to their quickie opinions.

If one watches the evening news without much background understanding of public affairs, without regularly reading a daily newspaper (as most young people do not), much of the content is unfathomable, random sound bites and a boring blur that seems aimed at some other audience. For these sensibilities, the evening news may look as quick and mindless as MTV. Television politics -- like Sesame Street -- is experienced, not learned in an abstract mode. If the facts seem inconsistent with the images, the images will overwhelm the facts and refute them.

At least the rock videos tell a recognizable human story, however simpleminded. Many provide a vague sense of narrative -- responding to the ancient human yearning for a story with a beginning, a middle and an ending -- and deliver a passionate message that invites an emotional response (if not an intellectual one) from the audience. MTV invites its viewers to identify with its content. For that matter, so does Sesame Street.

Politics and political news, on the other hand, is a story about someone else, told in a not very coherent fashion. Politics on TV is a recurring blip of details about a fairly small group of people (mostly older people and some who seem ancient) who are off somewhere else doing important things. Without context, their words and actions will seem remote and meaningless to ordinary young viewers. The political events seem to be following a logic that is not revealed in the broadcast. People whom TV taught to be hip and wary and impatient naturally lose interest in what seems opaque and distant. The remoteness makes them feel passive, impotent.

The hottest public-affairs shows -- frequently denounced as sleaze television -- at least deliver a human drama (including even the possibility of a fistfight) and opinionmongers who seem recognizable since they are usually not politicians talking in the distant language of officialisms. Jim Bellows, former editor of the defunct Washington Star and now a television consultant, thinks shows like A Current Affair prosper because they deliver "a sense of outrage and passion.... The newspapers are much more dispassionate.... You don't have the alternative voices there that you used to have. Now, television, all of a sudden, is doing that. In some respects, the stuff is terrible, all that sleaze, but people want some kind of different voices and higher and lower emotional levels.

TV portrays politics largely in the orthodox formats of "news," emulating the factuality and story lines originally fashioned for print, yet the sound and pictures frequently convey something else. Politicians frequently look like the salesmen who peddle kitchen gadgets on late-night TV. Their rhetorical exaggerations may remind one of deceptive toy commercials. If the words are not confirmed by the aural-visual imagery, the words lose their veracity. If the political story goes on and on repetitively, without any subsequent resolution or connection to real life, then it is just another TV concoction and not a very compelling one.

Beyond these questions of technique, there is a deeper explanation for why television deadens politics among the young: In its own way, television tells them the truth about politics, almost in spite of itself. For the generation that is fully attuned to the evocative contours of TV images, the medium delivers a most subversive message: The civic mythologies about politics and democracy that your parents believe are nonsense, since any viewer can see that the pictures tell a different story. The civic faith is not borne out by the political story told on television and, in fact, is regularly contradicted by it.

This truth-telling quality is partly the curse of intimacy that television inescapably promotes. When one can see the senator up close and personally witness his performance rather than read about it the next day in the newspaper, the senator inevitably becomes a less exalted figure, less magisterial and less mystifying, especially if he is yapping incoherently in a fifteen-second sound bite. Congress seemed a more noble deliberative body when people only read about it. Actually "experiencing" politics with the physical immediacy of TV makes it much harder to believe in the received truths about democracy that older people routinely accepted.

Now we can see democracy -- live and in color -- and it does not look much like what the civics textbooks taught. For older people, schooled to accept the civics abstractions, it is thrilling to watch the televised proceedings of the U.S. Senate on C-Span. For most younger people, the same broadcast simply seems boring and bizarre. After all, the U.S. Senate looks like an empty chamber lined with antique desks and a pretend "debate" to which no one seems to be listening.

"Television makes the events transparent, regardless of what it says about them," said Jann Wenner, editor and publisher of Rolling Stone, a mass-circulation magazine whose readers span the TV generation. "There is no real debate in politics. That's what younger people see on television and they're right. TV communicates that politics is controlled by a very few people and for everyone else it's meaningless. That's the message from TV and people got it. How many presidential elections do you have to watch before you conclude that the results don't make much difference? Things will go on the same. Why bother? That's an accurate message and TV conveys that message.

"Television is so unvarnished in the way it communicated -- even aside from the manipulation in campaigns -- that it has told the truth about government and politics so much better than ever before. That's why everyone is so dispirited about politics. They understand."

The question then is: Who sees the truth about American politics more clearly, the old or the young? Like Wenner and Jacques Cousteau, I would vote for the young. Like every generation, they are bound by their own illusions and vulnerable to deception and evasion in their own peculiar ways. But their basic perceptions, however shallow and out-of-focus, are not wrong. The democratic challenge, among its other aspects, lies in convincing the children of TV not only that politics matters, but that they matter in politics.
Site Admin
Posts: 33187
Joined: Thu Aug 01, 2013 5:21 am


Postby admin » Thu Oct 31, 2013 12:52 am

PART 2 OF 2 (CH. 14 CONT'D.)

If television were to reinvent its storytelling techniques, it might be able to convey a more positive and supple sense of political action, bringing diverse human energies and aspirations into the story, breaking out of the claustrophobic definitions of "news" that TV inherited from print. But the underlying mood of disaffection is not likely to change much so long as the nature of politics does not change itself.

The lost generation of active citizens, in other words, may reasonably be blamed on the maladjusted communications engendered by the media revolution. But it should also be understood as the most threatening indictment of the American political system: American democracy is so deformed that it cannot convince its own young people that it's real.

What would bring them back? What would persuade these TV kids with their hip, laconic sense of things that political action is alive and meaningful, that it ought to engage their energies? Possibly, nothing. That is, nothing short of continuing revolution and upheaval in the way the American society communicates with itself. The late Lee Atwater expressed the view that the deep resentment and alienation that permeate modern American politics are connected to the communications revolution and he expected them to continue until the disorientations of communications work themselves out of the society.

If politics does not find a credible voice soon, then the next generation will be lost too. In the style of the video age, most younger people are more inward-looking in their lives, concentrating on the well-being of family and friends and themselves, convinced that nothing they do can have much effect on the larger problems, especially in politics. This is often denounced as self-centered and cynical, but the behavior also demonstrates a practical response to the political reality of impotent citizens.

In the meantime, until things change profoundly, there are still some old-fashioned political commodities that sell with young people: hope and idealism. Their responses to political life, however blurred and uninformed, consistently gravitate toward those people and events that convey those up lifting qualities. They followed Corazon Aquino attentively because she was an idealistic heroine and Nelson Mandela's struggle in South Africa for the same reason.

After twenty years of witnessing scandals and other sodden political events, young people recognized hope and idealism in Ronald Reagan -- his uncomplicated sense of optimism about America, his rocklike faith in the country's virtue. One may argue (as I would) that they were deeply deceived by Reagan's sunny images (and by his mastery of video techniques), but that is hardly a new risk for self-government, since citizens were misled by skillful politicians long before television. Despite his advanced age, Reagan's hopeful politics resonated directly with the aspirations of the TV children (though it did not alter their declining participation in politics).

In 1988, when Rolling Stone magazine commissioned a broad opinion survey of people in the TV generation and their diverse opinions and attitudes, the most striking result was the choice of their most admired leaders. Contemporary politicians scored poorly. It was Martin Luther King, Jr., who led the list, followed by Robert F. Kennedy. Both men had been killed twenty years before, when many of these young people were infants or even before some of them were born.

King and Kennedy, however, both stand out in common memory for courageous statements of idealism and hope -- a willingness to put themselves at risk on behalf of change, to make things better for people. It was a dreadful commentary on American politics: For younger citizens, the political heroes are dead and they do not see much on TV to remind them of what was lost. [6]


If politicians and corporate interests can steer public opinion through the art of mass-media images, why can't citizens? Since mass communication has become the dominant mode of civic discourse in America, some citizens have discovered how to use it too, even to address complex issues of government that are normally dominated by entrenched power. Even when the citizens win, however, the results may be less than fulfilling for democracy.

On February 26, 1989, CBS's 60 Minutes broke the alarming story of Alar, a pesticide established as carcinogenic yet still authorized by EPA for agricultural use and sprayed on the apples that children eat every day. An EPA official admitted during the broadcast that, if Alar were a newly developed chemical submitted for regulatory approval, EPA would reject it. But since Alar was an old chemical already in use, EPA did not act to ban it.

The next day, actress Meryl Streep held a press conference in Washington, joined by the national president of the PTA and other distinguished citizens, and announced the formation of a new organization called "Mothers and Others for Pesticide Limits." They released a devastating research report from the Natural Resources Defense Council, describing the dangers to children in the food system caused by agricultural chemicals and EPA's weak efforts to regulate them. Streep also previewed a television commercial in which she appears, standing in a sunny kitchen while lunch is being prepared for the children, and warns other mothers of these risks.

Cover stories on Alar followed in Time and Newsweek, as well as feature stories in Family Circle, Redbook, Woman's Day and People magazine. The Phil Donahue Show took up the issue and so did all three of the TV networks' morning shows. Cast members from L.A. Law and thirtysomething came forward to reiterate Meryl Streep's concerns.

The entire thunderstorm of media attention, including 60 Minutes, was cleverly orchestrated by a public-relations firm on behalf of the environmentalists -- and Alar lost. The media techniques employed by the environmentalists were actually identical to those that major corporations and political parties routinely use to influence public opinion -- the calculated repetition of an emotionally powerful message and the use of a trusted celebrity to deliver it.

The Washington Post and The Wall Street Journal countered the first Alar stories by reporting industry. claims that Alar posed no significant risk to children, but the issue was already decided. Major school systems around the country began withdrawing apples from their lunchrooms and supermarkets cut back their normal orders. Apple sales plummeted, as the controversy stayed in the news day after day. A few weeks later, the manufacturer, Uniroyal, capitulated and Alar was withdrawn from the market.

Hill & Knowlton, the Washington public-relations firm hired by the apple growers, countered the onslaught of alarming stories by dispatching voluminous statistical data to the news media on the risk assessments of pesticide residues on apples. But to no avail. "On the first day," Frank Mankiewicz, the Hill & Knowlton account executive, recalled, "I said to myself: 'We're going to make a lot of money and we're going to lose. God, are we going to lose.' We got rolled in three days. The reason was that Meryl Streep sneaked on TV and said, 'This stuff will make your kids sick.'"

The apple growers and the chemical industry, seconded by EPA, insisted this wasn't quite so, but their complicated rebuttals entirely missed the point to consume, only that the chances of one child consuming enough Alar on apples to contract cancer were remote. The public ignored these assurances, and for good reason: This was not an experiment parents were likely to undertake with their own children. [7]

Nor did the public believe EPA. The agency had itself prepared to take Alar off the market back in 1985, but backed off when its panel of scientific advisors objected. Seven of the eight EPA advisors, it was later revealed, had worked as consultants to the chemical industry, including one scientist who served on the EPA advisory panel on pesticides, then went to work for Uniroyal a few months later-representing it on the Alar issue. Such conflicts of interest are commonplace on government advisory boards, another reason for the public to distrust the government's science. [8]

"You could say the public banned Alar directly through the media," said David Fenton, whose public-relations firm designed the Alar campaign for the NRDC. "It was a case of direct self-government -- no legislation involved, no government at all."

Fenton's adroit manipulation of the news media enraged the apple growers and the chemical industry as well as their conservative defenders in the press, but his strategy simply followed the basic principles of mass communications developed by business itself. "The corporate world is much more sophisticated about communications than public- interest groups and Republicans are much more sophisticated than Democrats," Fenton said. "Most of the big environmental groups have no budget for this sort of thing. Their idea of successful media is that an article appears in The New York Times and their peers see it. They have no sense of mass communications."

Fenton Communications, a firm that mostly represents left-liberal political causes, is used to operating on meager budgets (its Alar fee was $30,000 while Hill & Knowlton's was $200,000), so the Alar campaign relied almost entirely on orchestrating "free" space in the media -- most of it arranged well before Alar became "news." Even the Meryl Streep TV commercials were slightly bogus since NRDC lacked the funds for television advertising. "This was a guerrilla action," Fenton said. "We made three TV spots but all we had for media time buying was $3,000, which wouldn't buy anything. We made the commercial and released it at a press conference and hoped the TV news shows would use it for free and they did. Then we bought ten spots on WJLA in Washington at very cheap hours, just so we could say that we did put it on the air."

Modern politics, Fenton argues, "is really a battle between lawyers and marketeers. Most of the environmentalists at the NRDC are lawyers and lawyers think issues will be settled by facts and arguments. Marketeers know this country doesn't work that way anymore, if it ever did.

"The media is setting the agenda for policymakers, but the media din is such noise that, if a story only appears for one day, it disappears. The government knows that a one-day story is on the air and then it's gone. People don't remember it, don't act on it. If a story appears a second day, they take notice. If it's in a third day, the government gets nervous. If the story goes any further, they appoint a task force.

"I recognized that, in order to get through the din, I would have to create repetition, so that this thing would hit with a bang and then keep appearing day after day for weeks. But that requires manipulation, doesn't it? Everybody who does PR in Washington understands that."

Thus, on one level, the Alar episode opened new vistas for irregular citizen politics. It became a case study of how sophisticated public relations (and a rather small investment) could dramatically alter the political context for even a complex subject like federal pesticide regulation. The American public, almost overnight, was shocked and scared; the mass response overwhelmed the industry's influence on the government regulators.

George Bush used the image of Willie Horton, the black convict and rapist, to become president. The environmentalists used poisoned apples to banish Alar. Both are manipulating the mass media, but ultimately, they are also manipulating the mass audience. [9]

In a sense, it wasn't the people who banned Alar. It was Meryl Streep -- because she was more believable than EPA and industry scientists. Frank Mankiewicz, whose PR firm represented the apple growers, remarked drolly on the use of celebrities to decide public- health policy:

"I was trying to make the point to reporters that Meryl Streep hasn't even played a nutritionist. At least when Robert Young talks about coffee on TV, we know we can believe him because Robert Young used to play a doctor."


The dimensions of the modern media culture were aptly defined when Publishers Weekly issued its list of the twenty-five biggest best-selling books of the 1980s. People tend to buy books, like everything else, by brand names, only the brand names are those of celebrities who became famous for doing something other than writing books. The decade's nonfiction list was a hit parade of the household names made familiar by television or movies. Bill Cosby, Lee Iacocca and "Frugal Gourmet" Jeff Smith each had two books on it. Others hits were by or about Jane Fonda, Chuck Yeager, Donald Trump, Frank Sinatra, Elvis Presley. Even some of the most serious books on the list had the aura of celebrity: Carl Sagan and Stephen W. Hawking are about as famous as living scientists get. The rest of the bestsellers were mostly by famous diet and self-help experts. [10]

Celebrity itself is not a new phenomenon, of course, but the media age has pumped up the role of celebrity enormously (and further democratized access to that privileged realm). In the nineteenth century, Americans chose famous generals to be president and, since early in the twentieth century, movie stars have always seemed more interesting to people than most politicians. Movie stars who go into politics are especially interesting.

What is also different about contemporary celebrities is their power to assemble floating "communities" of like-minded followers -- an identity that people can attach to and call their own. Celebrities are trusted, celebrities stand for certain things, the ideas and values to which followers can express political allegiance. In a fragmented society where people drift in isolation, this seems a weak (and sometimes pathetic) substitute for a genuine community, but people do the best they can with what they've got.

The TV preachers have been most successful and most methodical in assembling constituencies with multimedia technologies, then leading their adherents into the public arena. Their conservative political message eventually produced its own backlash (and scandal defrocked several of the pastors), but their imaginative enterprises are a model for how celebrity and television can organize a political presence for people who had none before.

James Dobson's daily radio program, Focus on the Family, airs on 1,250 stations (second only to Paul Harvey) and his California-based organization of the same name distributes books, films and pamphlets to millions. It is a ministry aimed at restoring conservative family values and influencing the political decisions on social questions. In early 1988, Focus on the Family flooded the congressional switchboards with a half million phone calls in a single day, all protesting the pending civil rights bill as "an incredible intrusion into religious liberties." [11]

On a somewhat different plane, rock 'n roll also recruits and educates citizens for political action. Sting, U2, Peter Gabriel, Bruce Springsteen and others have made "human rights" a household phrase among their young followers and around the world. They led the Amnesty International world concert tour in 1988 that played eighteen countries, including the Soviet bloc nations of eastern Europe, and a U.S. tour in 1986. Drawn by the music, fans went home with copies of the Universal Declaration of Human Rights (a document that was still suppressed in some of the countries). Some of the fans went home to organize their own Amnesty chapters and began writing letters on behalf of political prisoners.

"We played in front of a million real people and maybe a billion saw the movie, which is the concert with some politics," said John Healy, Amnesty's executive director. "Stars attract the people in, then we try to get them to do something actively. We have over two thousand high schools with organizations and teachers tell us that the most exciting thing in their schools is Amnesty. It turns out that the dictators don't know whether the letters are written by young people. All they know is they're getting lots of mail about political prisoners."

Furthermore, if one searched for an opposition critique to the conservative Republican regime of the 1980s, it was not to be found in the news media or the Democratic party, but in entertainment -- the music and film celebrities who were willing to express themselves on large public issues, from the war against Nicaragua to environmental degradation to the maldistribution of wealth and incomes.

People evidently listened to them too. The opinion polling on how attentively young people follow the news found that eighteen-to thirty-year-olds were more interested than their elders in the news of Nelson Mandela's release from prison in South Africa. The rock stars had educated them on the subject.

But do the celebrities evoke a real political response or are the kids just coming out for a good concert that will include some righteous political rhetoric? Perhaps a bit of both. "Stars do it and they don't do it," Healy said. "The whole question is whether there's an edge in what they're saying. You take Bruce Springsteen, who says there is 'economic apartheid' in this country, which he said on the tour and in the movie. That's got an edge. That's different from some celebrity telling people to save the environment -- build a house with old tires."

The debilitating political effects of the celebrity culture were brilliantly evoked in Michael Moore's film Roger and Me, a satirical journey through the devastation of Moore's hometown, Flint, Michigan, when General Motors collapsed its U.S. production in the early 1980s. Moore filmed a surreal parade of fading "stars" (Pat Boone, Anita Bryant, Bob Eubanks) who come to Flint to boost local spirits while the town itself sinks deeper into a kind of crazed denial of reality. [12]

But the most devastating element in the film is its mocking portrayal of Flint's passive victims. It invites the audience to laugh at the bizarre behavior of the unemployed auto workers -- because the victims are laughing at themselves. No one gets angry because they are spectators too. They are watching their own demise and reacting as though it was a television game 'show, featuring Pat Boone, Anita Bryant and Bob Eubanks. When the last truck rolls off the line at the assembly plant, the workers cheer for the camera. "What are we cheering about?" one of them asks. "We just lost our jobs."

What Moore has captured is the fact that television creates an independent reality that people defer to and that separates them from the real political life where decisions are made. On camera, they become performers themselves, mimicking the idiomatic words and gestures they have seen and absorbed from the "stars." Off camera, they are sullen and passive, unable to imagine the connection that Moore illustrates between the indifference of General Motors executives and the destruction of their town.

The basic weakness in media-centered politics is that, whatever energy and presence it creates, it does not overcome these distancing qualities embedded in the medium itself. A rock star may exhort and educate, but it is still a one-way communication, floating in time and space, detached from any permanent place or institutional responsibility. The TV preachers develop an audience of citizens (and collect lots of money from them) but the fate of their political agenda hangs on the preacher, not the congregation. People feel empowered, but the effect is shallow and sometimes false. People become adherents, but they are still mainly spectators.

Ernie Cortes of the Texas IAF network, whose community organizations rely on the old- fashioned face-to-face dialogues, described what is missing from television politics:

"Television allows politicians to go directly to people and go into their living rooms. They go beyond the mediating institutions and make a mass appeal that doesn't differentiate about its audience. The TV preachers do the same. They are preachers who don't need churches. They communicate directly, but there is no permanent relationship being built."

This is the media problem that no one has yet solved; How might the power of this technology be adapted to developing genuine political relationships without also overwhelming them? The solution perhaps lies somewhere between the intimate interpersonal approach that the IAF groups rigorously pursue at the grassroots level and the glamorous mass appeals made by rock stars and TV preachers. One creates genuine connections among people, but cannot speak to the larger audience of citizens who are mainly listening to mass media. The other approach communicates high-volume messages to a vast audience but does not leave much behind in terms of human relationships.

Sooner or later, the optimists would say, someone somewhere will discover the media methods for doing both-developing and sustaining conversation with the listeners, activating the capacities of citizens without making them bit players in someone else's drama. The continuing emergence of wondrous new technologies -- from desktop publishing to telecomputers -- argues that human imagination will eventually find the links that can restore a sense of democratic vitality.

It requires invention, but it will also require a new sense of the institutional relationships. The media are not likely to bring people back into democracy so long as people have no control whatsoever over the media.


America's Funniest Home Videos may be dismissed as the kind of daffy (and irresistible) fluff that network television serves up, except for its revolutionary implications. The show is mostly devoted to ridiculous moments in everyday life -- spontaneous, backyard sight gags captured by ordinary people with their own video cameras. But now and then the homemade videotapes reveal something more. Folks not only have their own TV cameras now, but many have learned the higher production values of television -- the dramatic arts of staging and editing and narration that make the medium so effective. Given their store- bought equipment, these amateurs are now making quite skillful parodies of the professionals.

It is possible, in other words, to watch Funniest Home Videos and imagine America, someday soon, as a nation of TV producers. Citizens making their messages for broadcast -- that's power. Citizens everywhere covering the news for themselves -- that's power too, as the Los Angeles policemen discovered when a home video recorded their brutal beating of a black motorist.

Possibly, some enterprising TV syndicate will eventually move beyond the sight gags and invite citizens to tell other kinds of stories about themselves -- to send in videotapes that record deeper dramas from their lives or, who knows, even stories that express their own political ideas and aspirations. I can envision an entertaining and meaningful low-budget program that simply airs the most provocative works of America's TV guerrillas -- citizen filmmakers who harness the outrage of talk radio to more purposeful content and with less manipulation by the on-air personality.

This sort of possibility is just the beginning of the next liberating revolution -- and the new grounds for optimism about democratic possibilities. New technologies are coming into the marketplace that will give individuals more control over the nature of electronic communications. Once the means of creating the message are widely distributed in many hands, invention is sure to follow. The truly original ideas for using video-the techniques for adapting its power to democratic relationships -- will not come from the corporate conglomerates that now control broadcasting and publishing. But they might come from someone's backyard.

George Gilder has sketched a most ambitious vision of democratic optimism, based on the emerging developments in microelectronics. Communications grids that decentralize the originating controls, telecomputers. and personal data resources that will shift power away from institutions and to individuals -- these technologies and others promise to empower citizens, Gilder explained. As this happens, people will be able to liberate themselves from mindless anonymity in the mass audience.

"The force of microelectronics will blow apart all of the monopolies, hierarchies, pyramids and power grids of established industrial society," Gilder declared. "It will undermine all totalitarian regimes. Police states cannot endure under the advance of the computer because it increases the powers of the people far faster than the powers of surveillance. All hierarchies will tend to become 'heterarchies' -- systems in which each individual rules his own domain." [13]

Meanwhile, however, in the here-and-now, the pace of change is largely controlled by those corporations that own the equipment and existing franchises -- and most of them, for obvious reasons, have a compelling interest in resisting change and preserving the status quo. Like George Gilder, one may assume that profound technological change sooner or later sweeps away the old order, regardless of its political power to resist. But the actual shape of the future still depends crucially on which economic and political forces get to design it.

The unmentionable political issue is who owns the media -- unmentionable because neither media nor politicians will bring it up. Ben H. Bagdikian, former dean of journalism at the University of California at Berkeley, bravely explored the question and reached a frightening conclusion:

"The United States, along with other major democracies, is moving swiftly toward media control by a handful of gigantic multi-national corporations. The trend is unmistakable. Leaders in the trend are quite candid: they predict that in a few years a half-dozen corporations will control most of the public information available to Americans." [14]

If that sounds like an extreme forecast, consider the results of Bagdikian's research. When his book, The Media Monopoly, was first published in 1983, he counted fifty organizations that controlled most of the business in all major media -- radio, television and its derivatives, newspapers, magazines and books. Five years later, when the second edition was published, he found the fifty organizations had shrunk to twenty-nine.

As Bagdikian demonstrated, the great promise of new communications technologies has been thwarted in the past by the commercial self-interest of those who owned them. Cable television, for instance, was heralded twenty years ago as the great liberating innovation that would foster diversity in broadcasting and reinvigorate the public dialogue -- simply because cable grossly multiplied the number of available channels. On the whole, the promise has not been fulfilled. With rare exceptions, cable TV does not stray from the narrow commercial objectives of its owners -- owners who are mostly the same companies that own newspapers, magazines, radio and television stations.

David Fenton, who orchestrated the Alar campaign, sees the problems of democracy rooted in the power of the media to set the agenda for public debate, however randomly they do so. "I agree with the right wing," Fenton said. "Here we have this powerful instrument for political opinion and solving social problems that is completely unaccountable and unwilling to examine itself and against letting itself be used to attack social problems. Citing the First Amendment is not an answer. Nobody wants to appoint politically corrupt bureaucrats to run the media, but maybe it's not so good to leave the media entirely in the hands of people who are only interested in private profit. If we want an environmentally sound economy, that little box can make it happen. Or do we have to leave it to little guerrilla operations like ours?"

The democratic imperative, therefore, is to develop new political and legal doctrine that will challenge the concentrated ownership of communications on behalf of democracy. As individual citizens develop their own communications skills and organize their own computer networks, they will be able to go around the mass media and talk to one another. But they will still be shut out of the mass-audience debate if the owners refuse them access. The proposals to allot free air time for political candidates in campaigns, for instance, are a useful but inadequate reform. The problem is also providing air time for citizens, not just for elections, but in every season.

To produce genuine change, media companies might, for instance, be prohibited from cross-ownership in different sectors of media or limited to some modest share of the overall national marketplace, as Bagdikian has suggested. Media owners usually hide behind the First Amendment when such questions are raised, but the practical effect of media concentration is actually to restrict the "free speech" of everyone else, the voiceless citizenry. Who gets to enter the debate? The choice belongs to reporters and editors and producers and, really, to the' companies they work for. Sooner or later, this arbitrary restriction on democracy must be confronted.

Michael Kinsley of The New Republic has suggested, for instance, that companies that use their media ownership to promote their own products or political interests might find themselves restricted to the more limited First Amendment privileges accorded to "commercial speech." When NBC broadcasts an account of the success of the nuclear- power industry in France, is it informing the public or selling a product made by NBC's owner, General Electric? In 1990, the NBC Nightly News ran three segments, totaling fourteen minutes, on a new device to detect breast cancer without finding time to mention that the machine is manufactured by NBC's parent corporation. As the control of the major news media becomes still more concentrated, their supposed neutrality, in both commerce and politics, will become more and more suspect. [15]

To take another example of reform, cable franchises, originally envisioned as public utilities, could be broken up into multiple ownerships -- commercial and noncommercial, political and nonpolitical. Public-access channels are available for free and inventive expression, but they have no institutional base from which to develop coherent programming and quality. Given the redundancies that now exist in the content of TV broadcasting, nothing would be lost if some channels or blocs of air time were assigned to responsible community institutions (churches or labor unions or even political parties) that are motivated, not by profit maximization, but by the desire to foster social connections.

Public accountability would require a diversity of voices and a rough sense of balance among the competing interests that are given control of the access. Ralph Nader has proposed, for example, an "audience network" in which citizens' groups, depending on their size, could be awarded an hour or so of air time to broadcast programming that originates with the public, not the media corporations. "Given the immense concentration of power and uniformity that characterizes the broadcasting industry," Nader wrote, "leaving the dissemination and content of new information technology to myopic profit formulas runs counter to community sense and historical precedent." [16]

At the very least, while we await the liberating possibilities of the next communications revolution, some new rules of equity need to be developed -- rules that spread the costs of political speech among many in order to democratize its availability for everyone. Most individuals cannot undertake this for themselves. Without new institutional arrangements in communications, control of access inevitably will be held by the few.

The media corporations are busy concentrating their market shares and acquiring rivals. The politicians dare not challenge the structure of media ownership, for that would provoke severe retribution from press and television and their corporate owners. The power of corporate politics, as the next chapter makes clear, is the centerpiece in the institutional arrangements that dominate politics.

The debate about media power, therefore, has to come from the people -- from the TV guerrillas who want to reach a larger audience with their original messages, from ordinary citizens who are able to envision a more robust democracy. If the people do not raise these questions, they will not be raised at all.
Site Admin
Posts: 33187
Joined: Thu Aug 01, 2013 5:21 am


Postby admin » Thu Oct 31, 2013 12:57 am



Corporations, by their nature, do not function as democratic organizations, yet it is they who have seized the political ground left vacant by citizens, the political parties and other mediating institutions. Business and finance stepped into the vacuum created by failed political institutions and took up the daily work of politics. Their tremendous financial resources, the diversity of their interests, the squads of talented professionals -- all these assets and some others are now relentlessly focused on the politics of governing.

This new institutional reality is the centerpiece in the breakdown of contemporary democracy. Corporations exist to pursue their own profit maximization, not the collective aspirations of the society. They are commanded by a hierarchy of managers, not by democratic deliberation. Yet the modern corporation presumes to act like a mediating institution -- speaking on behalf of others and for the larger public good. It is corporations that have taken the place of political parties, to the extent anyone has.

With varying degrees of sophistication and intensity, hundreds of these large corporate political organizations are now astride the democratic landscape, organizing the ideas and agendas, financing electoral politics and overwhelming the competing voices of other, less well-endowed organizations and citizens. They portray themselves as "good citizens," doing their part for public affairs.

For obvious reasons, this institutional arrangement is bound to disappoint democratic expectations. The contest of politics becomes mainly an indistinct competition among rival behemoths. The political space that once belonged to parties and other mediating institutions is usurped by narrow-minded economic interests. Citizens at large vaguely perceive that government is being steered by these forces and they naturally resent it.

The transformation occurred partly by default and partly by design. Corporate political organizations set out to seize the high ground, but they also simply learned how to do politics in the modern setting more inventively than anyone else. By necessity, they have adapted effectively to the new conditions of mass-media politics and the diffusion of government authority, while citizens and rival organizations have not.

Corporations, however, enjoy an anomalous status not available to anyone else: In the lawless government, corporate "citizens" are the leading outlaws. They may regularly violate the law without surrendering their political rights -- committing felonious acts that would send people to prison and strip them of their citizenship. This contradiction is crucial to what has deformed democracy; the power relationships of politics cannot be brought into a more equitable balance until citizens confront the privileged legal status accorded to these political organizations.

In order to understand the power of corporations, it is not necessary to track the myriad political activities of hundreds of companies. The reality can be adequately demonstrated by describing the politics of one outstanding example among the many -- an especially skillful and energetic political organization known as the General Electric Company. Like others, "Citizen GE" energetically promotes its own civic reputation while it tenaciously pursues its interests across an extraordinary range of matters. Like many other major companies, "Citizen GE" does its everyday politics despite its anomalous status as an ex-convict.


At forty-three, Benjamin Heineman, Jr., had the sort of political resume that marked him as a future Cabinet officer, if the Democrats ever again won the White House. The son of a politically prominent Chicago industrialist, Heineman studied at Harvard, Yale and Oxford and became known in Washington for his quick and serious intelligence. He served as assistant secretary for planning at HEW in the Carter administration, then became managing partner in the Washington office of Sidley & Austin, one of Chicago's leading law firms. To some, it seemed a diversion from destiny when Heineman left the capital in 1987 to become general counsel of the General Electric Company in Fairfield, Connecticut.

Not at all, he explained to an interviewer. General Electric offered him the opportunity to influence public policy, across an extraordinary front of governing issues, from the tax code to defense spending, from broadcasting to environmental regulation, from banking law to international trade, from Head Start to Star Wars. "GE is a mirror of the world economy," Heineman told the American Lawyer. "You have an opportunity to see everything."

Philip A. Lacovara, a former Watergate prosecutor and the top litigator in another Washington law firm, joined GE for the same attraction -- the chance, he said, to be "involved in major policy and issues." As GE's chief of litigation, Lacovara expected to write friend-of-the-court briefs on such diverse matters as the First Amendment and securities law, government contracts and corporate responsibility.

"American industry has been reticent," he explained. "GE recognizes that as a major economic entity it has the stature and responsibility to form opinions."

One of Lacovara's first projects at GE was to try to head off the new corporate-sentencing guidelines being prepared for the federal courts, guidelines intended to stiffen the consequences for corporations that break the law. General Electric has more than a theoretical interest in this policy question since the company itself has been convicted of a series of crimes in recent years, including defrauding the federal government. The legal standards for corporate criminality, Lacovara argued, "should be narrowed substantially."

Companies cannot be held responsible for the transgressions of far-flung employees, Lacovara explained in comments he filed with the U.S. Sentencing Commission. Instead of stiffer penalties for corporate Violators, Lacovara suggested that federal prosecutors ought to offer special rewards to companies that cooperate with them -- lenient fines and forgiveness -- in order to encourage what he called the "good corporate citizen."

When the Justice Department endorsed a draft of the more severe sentencing guidelines in the spring of 1989, the GE lawyers took their complaints to the White House. An associate of Lacovara's warned the president's counsel that the proposed guidelines were "a corporate death sentence." George Bush's lawyer made some phone calls. The Justice Department backed off and withdrew its endorsement. [2]

As the episode suggested, there are no longer any distinct boundary lines between law, politics and corporate management. In the modern milieu of governing, these are all the same subject. General Electric recognizes this reality more astutely than most and, as Ben Heineman explained to the American Lawyer, was beefing up its legal department to take "an aggressive, offensive look at the problems of the company." GE's lawyers, he said, would track not just litigation, but also new legislation and regulation, alongside the company's lobbyists. "Preventing litigation is one thing," Heineman said. "But how do you calculate [the benefit] if you change a regulation or work something out with Congress?"

One of Heineman's new hires was a former colleague from Sidley & Austin, Stephen D. Ramsey, who had previously served as assistant attorney general for environmental enforcement in the Reagan administration. At the Justice Department, Ramsey had developed the liability rules for enforcing the Superfund law, the law that requires corporations to pay their share for cleaning up the thousands of dangerous toxic-waste dumps they created around the nation. At Sidley & Austin, Ramsey worked on how to stymie the Superfund law.

A legal memorandum prepared by Ramsey in 1986 provided a playbook for how corporate lawyers could confound the government's efforts to collect the billions owed by polluters. His Superfund memo was widely circulated among the law firms that defend corporations against Superfund claims be cause it spelled out the step-by-step tactics for hanging up the liability process in the tangle of court challenges. Ramsey, for example, advised fellow lawyers:

"Bear in mind that district courts, unlike courts of appeals, are generally unfamiliar with record review. This suggests opportunities to expand the record.... Use Freedom of Information Act, broadly and often, and challenge withholding of relevant documents.... There is an added appearance of arbitrariness and procedural sloppiness if the government refuses.... Artful use of the Book-of-the-Month-Club response ('If we do not hear from you, we assume you agree with us').... Take full advantage of every opportunity to comment. . . . Force the government to respond to your comments.... And, document when they do not, to lay foundation for later challenge." [3]

EPA's chief of enforcement was sufficiently alarmed by Ramsey's memorandum that he issued an in-house warning to EPA legal and technical staff, urging them to "be prepared to handle challenges suggested by it."

General Electric is much in need of Stephen Ramsey's legal specialty. GE has been listed as a "potentially responsible party" at forty-seven Superfund sites -- more than any other U.S. corporation. The forty-seven toxic-waste dumps are on EPA's priority cleanup list, sites where GE either was the operator or contributed significantly to the chemical wastes. Ramsey became the company's vice-president for corporate environmental programs. ''I'll be ensuring that GE at a corporate and business level is doing everything they can to comply with existing laws and government regulations and to go beyond that," he declared. [4]

Heineman's imaginative recruiting spun the "revolving door" in other fields as well. A former Treasury Department legislative counsel from the Carter administration was hired to be GE's chief lawyer for tax planning and policy. A former energy counsel from the Ford administration was hired to be the top lawyer for GE's appliance division.

But Ben Heineman was simply applying to the legal department the same sophisticated political sensibilities that GE management has demonstrated for many years. The former chairman of the Joint Chiefs of Staff, retired Air Force General David C. Jones, is on GE's board of directors. So was Ronald Reagan's former attorney general, the late William French Smith.

But critics who focus on the career-ladder aspects of this phenomenon generally miss the larger meaning. The "revolving door" is not about personal opportunism, but about the organizational reality in American politics. A company naturally wishes to hire the best people to do its political work, since its bottom line depends directly on the political outcomes -- not just now and then, but continuously every day, every year.

General Electric, like every other major corporation, is thoroughly engaged in the politics of governing -- more intimately and extensively than any individual citizen would ever feel the need to participate, more aggressively than even hyperactive political activists could imagine. The company's practical politics is a function of economic necessity, not the ideology or civic sensibilities of its managers.

General Electric's wingspan is almost as broad as the government's. While it is too large and diverse to be considered typical, GE is an outstanding prototype of the modern corporation doing politics, since its product lines and corporate interests intersect with practically every dimension of the federal government's decision making. GE makes the things that government buys but also the things that government regulates and licenses: light bulbs and locomotives, jet engines and nuclear bombs, TV broadcasting and nuclear-power plants and financial services.

GE is the second-largest plastics manufacturer and, therefore, keenly interested in environmental law enforcement. But then it also manufactures pollution-control systems. Its medical-diagnostic equipment leads the world market -- as do GE circuit breakers, industrial turbines, electric motors, aircraft engines. The company is intensely engaged in trade policy and the emerging global economy.

GE is a stockbroker, since it owns the Kidder Peabody brokerage. GE is also a major bank, since its financial subsidiary, GE Capital, has $91 billion in assets-equivalent in size to America's fourth-largest commercial bank. General Electric is also a media giant, since it owns the NBC network and NBC's seven local TV stations as well as footholds in television broadcasting in three other countries. It purchased Financial News Network and closed it down in order to eliminate competition for its own cable venture, the Consumer News/Business Channel. [5]

For all these reasons, General Electric is a conglomerate that, in addition to its productive, profit-making activities, also functions as a ubiquitous political organization. With great sophistication and tenacity, GE represents its own interests in the political arena, as one would expect. But that is not what makes it so influential.

General Electric also tries to act like a mediating institution -- speaking on behalf of others. GE, like many other companies, assumes the burden of representing various groups of other citizens in politics -- workers, consumers, shareholders, even other businesses and the well-being of Americans at large. GE has the resources to develop and promote new political ideas and to organize public opinion around its political agenda. It has the capacity to advise and intervene and sometimes veto. It has the power to punish political opponents. It also has the sophistication to lend its good name to worthy causes, such as the Urban League, only remotely related to the company's profits.

The permissive culture of the grand bazaar is especially well suited to the corporate style of politics. Corporations have both the money and the economic incentive to play politics on both levels -- bargaining outcomes in obscure places that manipulate laws and mobilizing ideas and opinions to influence the visible public contest. To negotiate successfully in the grand bazaar, a political interest must have lots of lawyers, preferably with Washington connections. To influence the broad public debate, a political organization needs the status of "good corporate citizen," and GE has acquired that reputation too.

Other governing elites, including most elected politicians and the media, have found the corporate mode of politics congenial to their own interests. At least they have come to accept the corporate presence as the prevailing constant in how democracy now functions. Given the failure of other institutions to adapt and revitalize themselves, corporate politics has become the organizational core of the political process -- the main connective tissue linking people to their government.


General Electric is a deeply Republican institution for obvious historical reasons. As the inheritor of inventor Thomas A. Edison, the company was one of the brilliant pioneers in the rise of America's industrial corporations early in the twentieth century and has always naturally aligned itself with the party of business. In the 1950s, it sponsored Ronald Reagan's TV career and launched him on the lecture circuit as a crusader against big government.

But the company's upper management is also now sprinkled with "country club Democrats" like Ben Heineman and, since New Deal days, the corporation has been active in designing social programs usually associated with liberal Democrats. For years, GE has been a faithful contributor to mainline civil rights organizations and to education projects for racial minorities.

General Electric's political director, so to speak, is Frank P. Doyle, an executive who bears the stylishly contemporary title of senior vice-president for "relations." A Democrat, Doyle ranks just below GE's CEO, John F. Welch, Jr., and alongside the senior vice-presidents for finance, research and development, executive management and legal counsel. Though he seldom appears as a public witness for company policy, Doyle is in and out of Washington regularly on myriad matters and he also spends a lot of time in Brussels, the capital of the European economic community.

His attention, it is said, is roughly divided between developing broader social issues such as education and' job training, the consolidation of GE's position in Europe's emerging common market and the hardball politics of pursuing GE's specific lobbying agenda, from fighter planes to taxes. [6]

"Jack Welch has a sophisticated, modern vision of the corporate social role," said a congressional aide who has dealt frequently with GE on a spectrum of issues. "In politics, they are heavy-handed, big-stick players on their own issues, but they're not Dow Chemical. GE spends much more time on education, for instance, than other corporations. No one else is close, And they reap enormous benefits when they come around to collect their own nickels."

General Electric's political capacities depend upon an impressive infrastructure of different components-an elaborate team of lawyers and lobbyists, continuing financial investments in both charity and politics and programs of education and propaganda. These elements work together in both obvious and subtle ways as the institutional predicate for GE's political power.

In Washington, GE has a permanent team of two dozen lobbyists with a large support staff but, as the need arises, it regularly hires outside lawyers and lobbyists for targeted assignments.

Like other companies, GE finances the politicians in both parties. During the 1988 election cycle, GE PACs contributed $595,000 to congressional campaigns. One year, the company also paid $47,000 directly to senators and representatives to listen to them give speeches (the speakers, it turns out, were mostly members of the armed services and defense appropriations committees). The second-ranking lobbyist in GE's Washington office, Robert W. Barrie, is a leading "money guy" for congressional Democrats and always willing to get on the phone and canvass the lobbying community for money. [7]

GE is also a social philanthropist. Its tax-exempt foundations gave away $18.8 million in 1989, mostly to colleges and school systems, including major commitments to scholarships for the poor and racial minorities. Like any other good citizen, GE donates to United Way and other local community projects. Alongside the company's 1989 earnings of $3.9 billion, GE's sense of charity does not seem immoderate.

But the corporation's philanthropy also serves its own political objectives in direct ways. GE's tax-exempt contributions went, for instance, to lobbyist Charls Walker's American Council for Capital Formation (an "educational" front group that campaigns against the corporate income tax and for a national sales tax), the Institute for International Economics (a think tank that promotes the multinational corporate line on trade and economic policy), and Americans for Generational Equity (an issues front that campaigns for cuts in such entitlement programs as Social Security). GE gives substantially to the major policy think tanks that promote the conservative business perspective -- Brookings and AEI-though not to zealously right-wing outfits, such as the Heritage Foundation.

GE is also directly active in political education and propaganda. It sponsors the McLaughlin Group, a right-wing TV talk show that is popular among political devotees for its quick, abusive style of discourse. GE is a leading member in the Business Roundtable, which disseminates the political agenda of Fortune 500 corporations. GE also enters dozens of trade associations and a continuous galaxy of temporary joint ventures like the Superfund Coalition formed to prepare public opinion for business objectives.

The Committee on the Present Danger, founded with defense-industry financing in 1976, created the propaganda base for the huge defense buildup of the 1980s. The Center for Economic Progress and Employment, despite its public-spirited title, is a front group formed by GE, Union Carbide, Ford and other manufacturers to weaken the product- liability laws. The center financed a lengthy study attacking liability lawsuits and, for added authority, arranged to have the Brookings Institution publish it. [8]

General Electric also fosters a positive political image directly through its own advertising -- soft-focused TV spots that portray GE as an admirable citizen. According to INFACT, the Boston group leading a boycott of GE products, the company tripled its image advertising to $26.8 million a year after it came under attack in the mid-1980s as a producer of nuclear weapons. The increased self-promotion also coincided, however, with GE's embarrassing criminal indictment for cheating the government on defense contracts.

General Electric's commercials are more tasteful and entertaining than the hard-sell "issue" ads sponsored by some other companies. The TV spots usually tell compelling stories from GE's inventive past -- the pioneering of jet engines, the development of lighting that ushered in night baseball. However, the contemporary GE is better known not for inventing new products, but for its hard-nosed corporate restructurings, buying and selling and taking apart whole companies.

One of GE's loveliest commercials depicts its role in helping to bring freedom to the people of Hungary. It is a gorgeous montage of Hungarian citizens joyously celebrating their liberation from communism, mixed with images of GE managers completing the purchase of Hungary's state-owned Tungsram Company, eastern Europe's major manufacturer of light bulbs. Like all effective propaganda, the commercial amplifies something that is true but strips away complicating facts that would conflict with the heartwarming message.

While GE was buying Tungsram for $150 million in late 1989, a flying squad of GE lawyers and lobbyists was blitzing the governments in Washington, Brussels and Budapest -- wiring the deal against political risks. The U.S. Justice Department was quickly persuaded to waive antitrust questions, though GE was already the world's second-largest maker of light bulbs. The Overseas Private Investment Corporation, the federal insurance program for corporate overseas investments, was lobbied to insure the venture against political upheaval -- the largest policy in the agency's history and its first in eastern Europe. GE used a former general counsel of OPIC to sell the deal. Simultaneously, GE lobbyists managed to defeat a crippling legislative amendment on the Senate floor.

Accomplished under tight deadlines, the multifront lobbying was a splendid example of GE's ambidextrous political capabilities. But GE's assistance to Hungarian freedom, as depicted in the TV commercial, might seem less noble and daring if the audience knew that the GE lobbyists had beforehand secured political protection for the venture. [9]

Anyone who watches television regularly knows that, in recent years, major corporations have significantly increased the millions they spend on both soft and hard propaganda -- commercials designed to promote corporate images and political attitudes, not to sell specific products. According to annual surveys by Public Relations Journal, the volume of corporate-image advertising reached $941 million a year by 1987 in broadcasting and print media -- enough money to finance four or five presidential campaigns. [10]

Americans are saturated in "feel good" messages about the largest business corporations. Dow Chemical, notwithstanding its notorious reputation as a polluter, portrays itself as an old friend of nature. AT&T saves eagles. IBM teaches children in the ghetto. Northrop, facing trial in Los Angeles for criminally defrauding the Air Force, began broadcasting commercials on Los Angeles TV that featured legendary test pilot Chuck Yeager extolling the high quality of Northrop's aircraft. The presiding federal judge was so upset he banned the ads on the grounds that Northrop was trying to influence potential jurors for its trial. [11]

What difference does all this propaganda make in terms of political action? Market research suggests that, while corporate propaganda may not do much to reduce the public's collective distrust of business, individual companies can significantly dilute the hostility toward themselves.

In California, for instance, Chevron targeted messages in its "People Do" ad campaign at the most hostile segment of citizens -- the so-called "inner-directed" people with strong environmental values, who expressed heightened opposition to offshore oil drilling and low regard for Chevron. Two years later, the research director proudly reported, these people felt much better about Chevron and ranked it first among oil companies they trusted to protect the environment. They even bought more Chevron gasoline. They were still not, however, in favor of offshore drilling. [12]

General Electric's politics depends on all these various elements in its political infrastructure, but they are only preconditions for influencing political outcomes. In the public arena, what best advances GE's position is that, implicitly or explicitly, it is speaking on behalf of others.

GE accumulates power by pretending to serve as a mediating institution. The company lobbies expertly to enhance its own sales and profit, but General Electric routinely invokes millions of other citizens as the ultimate beneficiaries of its politics. When GE is threatened in Washington, it claims to be defending broader constituencies from injury. But when GE defines its policy objectives, it does not bother to consult the people it ostensibly represents. GE is a mediating institution that accepts no obligation to those for whom it claims to be speaking.

General Electric has 177 plants in the United States (plus 103 others in twenty-three foreign countries), which automatically provides a broad and varied platform of economic interests, including workers, whom it can plausibly represent. Some 243,000 Americans make their living working for GE. Approximately 506,000 Americans are stockholders. About 300 retailers, from Montgomery Ward to Levitz furniture, use credit-card systems run by GE Capital. The NBC network has 200 affiliate stations. GE's jet-engine assembly plants in Evendale, Ohio, and Lynn, Massachusetts, make the engines for two dozen different kinds of military aircraft.

In other words, the potential span of political interests that a corporation presumes to represent can be made to look much larger than the company itself. GE's political voice multiplies itself and intersects with millions of others -- people who mayor may not actually agree with its political objectives. GE mobilizes allies and its local cadres -- workers, managers, customers, suppliers -- when they do agree. If they don't, it simply invokes their names.

Frank Doyle, for instance, once protested to the Senate Foreign Relations Committee that, despite appearances, the Export-Import Bank's trade subsidies for such major corporations as GE and Boeing really help the little guys too, despite, as Doyle acknowledged, "a lingering perception that the bank is a big-company benefit." The smaller companies benefit, he insisted, because "they participate through us as sub-contractors." [13]

Defense issues, argued out in public on the esoteric plane of grand military strategy or weapons technology, are lobbied in private on an earthier stratum: How many jobs. in my district or state are attached to this bomber or tank? Though the Massachusetts delegation is as dovish as any in Congress, one congressional aide from the state said with only mild exaggeration: "Basically, the GE guy comes around and tells us which aircraft we are voting for because Lynn will make the engines for them."

Liberal members of Congress may be hostile to the bloated defense budget, but they love defense workers. "Yeah," Representative Barney Frank of Massachusetts acknowledged, "I guess I voted for the F-18 a couple of times because it has GE from Lynn. I'm sure I wouldn't have voted for it if the GE plant had been in Cleveland."

When General Electric speaks for its shareholders' interest in maximized profits, its approach necessarily becomes more oblique, since politicians are not likely to be terribly excited by the narrow goal of boosting stock values. The company's profit objective is, therefore, reformulated as a question of broad national economic policy -- how to stimulate the economic growth from which the multitudes will presumably benefit.

According to GE, this goal can be achieved by cutting its taxes. Reginald H. Jones, Welch's predecessor as CEO, was a much more visible political player in Washington, relentlessly selling his arguments for corporate tax relief. Jones "seemed to spend his life at the Senate Finance Committee, lobbying for tall breaks and with some success," said Robert McIntyre of Citizens for Tax Justice. "Jones was literally at every single Finance Committee hearing I ever went to. His line was the same old bullshit about how we have to increase American competitiveness and all you need to do to increase American competitiveness is reduce GE's taxes."

Phillips S. Peter, head of GE's Washington office, was simultaneously acting as a principal in the Carlton Group, the permanent caucus of corporate tax lobbyists who basically wrote the business provisions for the watershed tax-cutting legislation of 1981. As is now well known, the companies were well rewarded for their political energies. Hundreds of them -- including General Electric -- wound up paying no taxes at all for several years.

On such matters, economic blackmail is a standard tactic of corporate politics. On the eve of the 1981 tax vote, members of Congress were inundated with telegrams and personal visits from corporate CEOs, warning them in the most explicit terms that their districts would lose jobs if the business tax reductions failed to pass. Even a politician who dismissed these threats as specious was forewarned that his next opponent could accuse him of voting against jobs -- a charge that would be corroborated by the Fortune 500.

As it turned out, General Electric was possibly the biggest single winner in Ronald Reagan's celebrated tax cuts. It had corporate profits of $6.5 billion during 1981-1983 and, astonishingly, received a tax rebate of $283 million from the federal government. Its tax burden went from $330 million a year to minus $90 million a year -- money the government now owed GE. By rough estimate, the 1981 tax legislation yielded as much as $1.3 billion for General Electric over several years and probably much more in the long run.

GE's windfall did not, however, create any new jobs for Americans. On the contrary, the company was in the process of drastically shrinking its U. S. workforce -- eliminating nearly fifty thousand people from its payroll through layoffs, attrition and the sell-off of subsidiaries. The tax windfall, however, did help GE finance its aggressive campaign of corporate acquisitions, as it bought such important companies as Utah Construction, RCA and NBC. [14]

The same pattern was general in American business. After the generous tax cuts of 1981, capital investment by American corporations accelerated, but not in the United States. The new investments were primarily made in foreign countries. American taxpayers, in other words, were unwittingly subsidizing the globalization of their own industrial structure. [15]

As Congress struggled in subsequent years to recover some of the lost tax revenue from 1981, GE sometimes went its own way -- splitting from the corporate coalition on some crucial tax questions and skillfully protecting its own balance sheet. One of the most egregious loopholes created in 1981 effectively allowed companies to swap tax shelters with each other by leasing equipment instead of purchasing it. Since GE Capital was already a major leasing enterprise, this provision helped the parent corporation erase tens of millions in taxes. But, given all the new competition that the loophole was attracting into the leasing business, GE decided it would be better off with repeal.

On this issue, GE sang with the reformers and against its former political allies in business. Winning on its own terms, however, required the adroit use of GE's political connections. At the final hour in the 1982 debate, Bob Barrie, the GE lobbyist who is a valued fundraiser for Democrats, called in his chits with the House Democratic leaders. As Thomas B. Edsall of The Washington Post described the episode, Barrie made a nifty end run around the phalanx of corporate lobbyists who were on the other side of the tax- leasing issue.

"Barrie was able to get with Rostenkowski, with the Speaker, with the entire Democratic leadership to explain what was a horribly complex issue," an allied lobbyist told Edsall. "And he got them on board. From GE's point of view, it was quite a coup." [16]

General Electric does not always win, however, and eventually it was compelled to start paying taxes again. CEO John Welch bitterly opposed the 1986 tax reform measure, which set a minimum corporate tax and repealed the investment tax credit, but corporations lost in the end. Wealthy taxpayers, on the other hand, won with drastic reductions in individual tax rates.

By 1989, GE was paying $1.1 billion in federal taxes -- an effective tax rate of about 23 percent, still well below the statutory rate of 34 percent. GE, meanwhile, carries on its books $3.5 billion in legally deferred tax liabilities -- money it owes the government but, thanks to various loopholes provided for defense contractors, doesn't have to pay until sometime in the future. Overall, corporate tax revenue has consistently fallen $20 billion to $30 billion a year below what the 1986 reforms had predicted. [17]


Beyond their individual objectives, GE and the other corporate organizations also act in concert as important gatekeepers for the political debate -- guarding the public agenda with more purpose and consistency than the news media. When consensus develops among the major players of business and banking; ideas that were thought to be dormant or impossible suddenly turn into active issues in the political arena.

Universal health-care reform is the latest example. For decades, the American public expressed its support for national health insurance and such groups as organized labor actively campaigned for it. Nothing happened. Now major corporate leaders -- the CEOs of Chrysler, American Airlines, Ford and many others -- have declared support for basic reform for their own purposes, because the soaring cost of the private health-insurance system is devouring corporate balance sheets too.

The political community, therefore, is at last stirring on the subject. A goal that was routinely dismissed as "socialist" or too expensive has abruptly found a place on the agenda. High-level negotiations are underway between labor and the major corporations (including General Electric) on how to define the health-care solution. When the political solutions are proposed, they may be shaped as much by the cost-saving imperatives of major corporations as by the popular distress expressed by citizens. [18]

The distinctive quality in General Electric's politics is not, however, its behind-the-scenes deal making or the skillful ways in which it amplifies its own interests by invoking the interests of workers, small business or consumers. These are the standard approaches employed by corporate political organizations of every kind.

What sets GE apart from most other companies is the seriousness with which it represents people in the society whose lives are not connected to the fate of General Electric -- especially society's losers. These include children and poor people, disadvantaged racial minorities and even ex-workers, the tens of thousands who lost their jobs at General Electric during the 1980s. In various ways, as GE's leaders have figured out, this is good for the company.

Frank Doyle has testified eloquently, for instance, on behalf of greater federal funding for Head Start and early childhood education programs, invoking an economic rationale for the company's social concern. "A competitive America -- let alone a compassionate America -- will need every trained mind and every pair of skilled hands," Doyle declared. "But the appalling fact is that one in five of our teenage children and younger live in poverty." [19]

GE cares about these children, Doyle explained, because if they are not trained for high- skill work in the global economy, they will become future costs to the society in terms of welfare and crime. The company has also been an ardent advocate of government job- training and retraining programs for the workers displaced by economic change. With grants from the Labor Department, GE operates such programs for its own former employees.

"When the GEs and GMs and AT&Ts and USXs of America no longer have low-skill, low- value-added jobs -- because they have adjusted to a high-skill, high-value-added global competitive world -- those left out will be locked out of the great American middle class," Doyle warned. "And every time that happens, it is a tragedy for America."

While the rhetoric sounds public-spirited and compassionate -- even dangerously bleeding- heart for tough-minded businessmen -- General Electric's social concern serves its own long- term political interests. It provides a shield against hostile political action and deflects political attention from the company's own controversial behavior in the American economy. Above all, it defines the economic debate in the terms that are most congenial to GE's own future.

Like other major multinational corporations, GE wants maximum freedom to do as it chooses in the global economy -- shifting production and jobs wherever seems most efficient. And it wants minimal responsibility for the economic consequences that follow for the U.S. workforce -- the steady loss of high-wage industrial jobs. The company's "social concern" is, thus, quite shallow: It cares about educating little children, but accepts no responsibility for what economic dislocation does to adult workers and their communities.

GE and other important corporate voices, including the Business Roundtable, instead promote the argument that the remedy for job losses and the downward mobility of industrial workers is simply more education and better training. This analysis conveniently shifts the blame from corporations to the educational system and the workers themselves. But it requires the corporations to make a highly dubious claim: that America is facing a shortage of skilled workers.

"Our industrial economy," Doyle asserted, "is generating more jobs than we have people with skills to fill them." Many recent college graduates learned otherwise when they went out to begin their careers and were compelled to take work below their educational levels. The shortage they encountered was not one of well-trained workers, but of good jobs.

Labor economists from the Economic Policy Institute examined the corporate claim of an impending "skills shortage" and declared it a hoax. The corporate political objective, they concluded, is to divert attention from the real wage problems -- the proliferation of low-wage jobs and the declining value of industrial wages generally. [20]

Doyle's assertion of skilled-labor shortages, in fact, comes from a company that abandoned fifty American plants and shrank its overall workforce, foreign and domestic, by roughly one fourth during the last decade. The forty-six thousand American workers let go by GE since 1981 were not mainly janitors or unskilled general laborers or low-level clerks. They were people with premium wages -- machinists and electricians, engineers and white-collar managers.

Union leaders bitterly dubbed GE's CEO "Neutron Jack" because, like the so-called neutron bomb, Jack Welch eliminates the people and leaves the buildings standing. During the 1980s, GE bought more than three hundred businesses and sold off more than two hundred others, searching for the right mix of domestic and foreign products to lead in world markets. GE transformed itself from a company that was two thirds manufacturing and one third services to one that is the reverse.

Welch's strategy, widely admired in business and financial circles, is to create what he calls "a boundaryless company" -- a corporation that "will recognize no distinctions between 'domestic' and 'foreign' operations." In practice, his restructurings compelled GE unions to negotiate wage contracts that were really job-shrinking agreements with provisions for severance pay and early retirement.

For white-collar management, Welch also virtually eliminated the old, unwritten assurances of mutual loyalty and trust that used to prevail in companies like GE. "Loyalty to a company, it's nonsense," Jack Welch told The Wall Street Journal. Frank Doyle told Business Week: "We now want to create an environment where employees are 'ready to go and eager to stay.'" Business Week concluded that at General Electric the old social contract between employer and employees has been nullified. [21]

Throughout this transformation, however, Doyle and other GE spokesmen have reiterated their sympathy for the losers -- and encouraged them to improve their skills while they look for other jobs. "I'm not advocating a crude, vote-with-our-feet ethic or asking displaced workers and their families to crisscross the country reading the want ads," Doyle told the Congressional Competitiveness Caucus. "What I am advocating is the basic premise that people will change jobs, upgrade skills and switch industries, not once but several times in their careers." [22]

What Doyle and General Electric never adequately explained is where all these new, high- skilled jobs are going to come from -- when major companies like GE are busy eliminating them. It requires a mighty leap of faith to imagine that everyone will somehow climb up the "skill ladder," as Doyle called it, and become computer technicians. For the last twenty years, the American experience with industrial globalization has produced the opposite result for American workers.

The deterioration of wages and incomes and the structure of the job market is the central economic question facing American families, but corporate political organizations have succeeded in deflecting the issue from serious scrutiny. GE favors federal aid for the unemployed, but it is opposed to any political measure aimed at the behavior of employers in the global economy (the subject explored directly in Chapter Seventeen). Politicians debate trade policy and bash Japan, but they do not scrutinize the loyalty of America's own global companies. Frank Doyle's most impressive political achievement is the debate that never occurs on the nature of the multinational corporations.

The politicians who attempt to stand and defend workers against these forces are ridiculed by elite opinion -- labeled irresponsible and reactionary or perhaps punished in other ways as well. "Let's be certain," Doyle warned the congressional caucus, "that those who should provide positive leadership don't seek retrogressive, fear-driven solutions."

Thus, the underlying political tension lies in the question of who really speaks for the best interests of Americans and their future. GE's rhetoric stresses "we" -- the warm-spirited Americanism of its TV commercials -- but its vision of itself as a "boundaryless" company does not really depend upon the general well-being of Americans, any more than it depends on loyalty to its own employees. In fundamental ways, GE's own long-term political interests are in conflict with the interests of many of the people it presumes to speak for-workers and communities and poor people, but also the general prosperity. Corporate politics, though it may intimidate politicians, cannot be expected to function as a trustworthy mediator for others. This connective strand only runs one way.

Given its girth and skill and other attributes, a politically active corporation like General Electric acts like a modern version of the "political machine," with some of the same qualities of the old political machines that used to dominate American cities. In form and behavior, the modern corporation has the same cohesion and sustaining purpose that made the old urban organizations so influential in politics. Its stubborn permanence is a force that others must contend with. Its supple sense of strategy permits temporary alliances with old enemies and occasional betrayal of friends. Except, of course, there is not just one corporate "machine" operating in American politics, but hundreds of them.

Like the old big-city organizations, the corporate "machines" can be maddeningly parochial but also occasionally farsighted. Fiercely loyal to its own interests and civic values, a corporation may be arrogantly dismissive of larger public concerns. And, like the old urban machines, the corporate political organizations often display a tolerance for corrupt behavior, so long as the corruption enhances the organizations' own well-being.

Unlike a party organization, however, a company like GE does not develop its political agenda by consulting its cadres or the constituencies for whom it speaks, not even the shareholders. Most of the old local party organizations, notwithstanding their negative qualities, did give ordinary people a connecting point to government and sometimes a genuine venue for speaking to power. Political decisions are closely held in the corporate machine, not unlike the worst of the big-city bosses. The dependent constituencies are reduced to a passive role resembling that of ward heelers, with not much choice except to follow the dictates of the organization.

The corporation has acquired many of the same political skills that party organizations are supposed to have -- it teaches and organizes, it agitates and leads. But it has no need to listen to its adherents or assume responsibility for them. For these political machines, there are no elections.

This organizational reality is a central element in what deforms and confuses modern democracy. The new political machines, like the old ones, dot the political landscape like free-floating baronies, independent and self-sustaining and unaccountable. They have similar interests and frequently merge their power in coordinated strategies, just as the big- city machines used to do. But they are also often in conflict with one another and it is those contests among competing client groups that usually define the largest issues and frequently stalemate them. If the government in Washington is unable to govern, it is stymied, not by reckless public opinion, but by the conflicting demands of the corporate machines.

The implications of this structure of power are obviously antidemocratic. Yet, as a political system, it "works." That is, it works in the narrow sense that it takes care of the everyday chores of politics. The corporations, together and separately, finance the parties and politicians. They sponsor the public-policy development needed to shape the governing debate. They mobilize public opinion around political agendas. In their own self-interested manner, they even hold elected officials accountable for failure to perform.

Above all, the formidable, ubiquitous presence of corporate political organizations persuades many citizens to retreat from the contest. That may be the gravest damage of all. Faced with this assembled power, many people accept their own impotence arid defer. They assume that the hard work of democracy -- debating public issues, contesting elections, helping to organize their own lives -- is work that belongs to others.

The price for this default is enormous in terms of what the government decides. When the corporate perspective defines the outlines of debate, it shrinks the nation's political values to the amoral arithmetic of the bottom line. The rich and complicated fabric of American life -- and the infinite political imagination of its citizens -- is reduced to sterile calculations of cost-benefit analysis. Competing political aspirations, whether for equitable taxation or environmental protection or affordable housing, are judged according to a narrow question: Is it good for the machine?
Site Admin
Posts: 33187
Joined: Thu Aug 01, 2013 5:21 am


Postby admin » Thu Oct 31, 2013 12:58 am

PART 2 OF 2 (CH. 15 CONT'D.)


All these facts add up to a daunting challenge for democracy -- how to come to terms with the institutional reality of corporate power without disrupting anyone's elementary rights. The guarantees of free speech and open debate, after all, extend to agents of concentrated economic power as much as to anyone else. The solution does not lie in curtailing democratic rights for certain parties. It involves applying the obligations of citizenship to corporations as forcefully as they are applied to individuals.

The great project of corporate lawyers, extending over generations, has been to establish full citizenship for their business organizations. They argue that their companies are entitled to the same political rights, save voting, that the Constitution guarantees to people. In 1886 the Supreme Court declared, without hearing arguments, that corporations would henceforth be considered "persons" for purposes of the Fourteenth Amendment -- the "due process" amendment that was established to protect the newly emancipated black slaves after the Civil War. Fifty years later, Justice Hugo Black reviewed the Supreme Court's many decisions applying the Fourteenth Amendment and observed that less than one half of one percent invoked it in protection of the Negro race, and more than 50 percent asked that its benefits be extended to corporations.

In the New Deal era, the Supreme Court finally curtailed the corporations' use of "due process" to thwart state and federal governments in the regulation of business. But, during the last twenty years, the corporate lawyers have staged a comeback. In the modern era of regulation, they are invoking the Bill of Rights to protect their organizations from federal laws. Professor Carl J. Mayer of Hofstra University described their victories:

"Consider, for example, the following recent Supreme Court decisions: a textile corporation successfully invoked the Fifth Amendment double-jeopardy clause to avoid retrial in a criminal anti-trust action. A consortium of major corporations, including the First National Bank of Boston, joined in a First Amendment lawsuit that overturned state restrictions on corporate spending for political referendums. An electrical and plumbing concern invoked the Fourth Amendment to thwart federal inspections conducted under OSHA. A California public utility relied on the First Amendment to overturn state regulations designed to lower utility rates. Twenty years ago, the corporation had not deployed any of these Bill of Rights provisions successfully." [23]

Corporations, in other words, claim to be "citizens" of the Republic, not simply for propaganda or good public relations, but in the actual legal sense of claiming constitutional rights and protections. Whatever the Supreme Court may say on the matter, everyone knows a corporation is a legal-financial artifice, not a living person. Whatever legal theories may eventually develop around this question, the political implications are profound. If corporations are citizens, then other citizens -- the living, breathing kind -- necessarily become less important to the processes of self-government.

A corporation, because it is an "artificial legal person," has inherent capacities that mortal citizens do not possess. For one thing, it can live forever. For another, a corporation, unlike people, can exist in many places at once. Or it can alter its identity -- chop off its arms or legs and transform itself into an utterly different "person." Or it can sell itself to new owners, including owners who are not themselves Americans. Are these foreigners now empowered as U.S. "citizens" by virtue of owning an "American corporation"?

Above all, a corporation by its nature possesses political resources that very few individual citizens can ever hope to accumulate -- the wealth and motivation to influence political outcomes directly and continuously. Thus, if corporations are to be regarded as citizens, they are equipped to hold the front rank in American politics and nearly everyone else will inevitably become citizens of the second class.

But the corporate claim to citizenship raises a crucial contradiction: When corporations commit crimes, they do not wish to be treated as people, but as "artificial legal entities" that cannot be held personally accountable for their misdeeds. If an individual citizen is convicted of a felony, he automatically loses his political rights -- the right to vote, the right to hold office -- and sometimes his personal freedom as well. More broadly, ex- convicts are not normally invited to testify before congressional hearings or to advise the White House on important policies.

When corporations are convicted of crimes, they lose none of their diverse abilities to act in politics. Corporations are "citizens" who regularly offend the law -- both in the criminal sense and in the civil terms of flouting regulatory statutes. Yet their formidable influence on political decisions goes forward undiminished, as well as the substantial financial rewards they harvest from government.

This contradiction is not a narrow complaint against a handful of corporate rogues. It applies generally to many (though not all) of the nation's leading corporations -- Fortune 500 names that are regularly listed as "defendants" for criminal activity or civil complaints. Reforming the permissiveness and non-enforcement of modern laws cannot possibly be accomplished without addressing the ambiguous terms by which corporations presume to be citizens.

General Electric, for instance, is certainly not the worst "corporate citizen" in the land, but the company has accumulated an impressive rap sheet in recent years. GE, understandably, does not depict this side of its character in the engaging corporate-image commercials.

After a fourteen-week trial in 1990, a jury in Philadelphia convicted GE of criminal fraud for cheating the Army on a $254 million contract for battlefield computers. Rather than appeal, GE paid $16.1 million in criminal and civil fines, including $11.7 million to settle government complaints that it had padded its bids on two hundred other military and space contracts. In Cincinnati, GE agreed to pay the government $3.5 million to settle five civil lawsuits alleging contractor fraud at the Evendale, Ohio, jet-engine plant. A machinist at Evendale had come forward to accuse the company managers of altering nine thousand daily labor vouchers to inflate its Pentagon billings for military jet engines.

GE paid $900,000 to settle allegations that it overcharged the Army for electronic adapters used in the M-l tank and Bradley fighting vehicles. It settled a similar complaint for cheating the Navy on components for guided missile frigates. It pleaded guilty to 108 charges of making false claims to the Air Force on a contract for the Minuteman intercontinental missile. In that case, the chief engineer of GE's space systems division was convicted of perjury; the company paid a fine of $1 million. [24]

Given this record, one begins to grasp why GE wants the best lawyers it can find, especially lawyers familiar with Washington. It has cheated the Army, Navy and Air Force. A defense contractor like GE is sometimes "suspended" from doing business with the Pentagon but, in GE's case, the disbarment is always lifted in time for the next round of contracts.

GE has offended the law in other areas as well. It was convicted in 1981 on charges of creating a $1.25 million slush fund with which to bribe a Puerto Rican official on a $92 million power-plant contract. Three GE executives went to prison in that case. Kidder Peabody, GE's stock brokerage, paid $25.3 million to settle the Securities and Exchange Commission's complaint of insider trading. GE Capital paid $275,000 in civil penalties in 1989 for discriminating against low-income consumers, the largest fine collected under the Equal Credit Opportunity Act. The corporation itself settled an employment discrimination complaint in 1978 for $32 million in compensation to women and minorities. About the same time, GE's Canadian subsidiary was being convicted (with Westinghouse and other companies) of conspiracy to fix prices on light bulbs. And so on. [25]

GE's corporate headquarters typically expresses surprise when the wrongdoing is revealed and protests its own innocence. These incidents, it explains, are the transgressions of individual employees, not of company policy. Sometimes it fires the employees, other times it pays for their defense attorneys. Philip Lacovara compared a corporation's employees to the population of a midsized city and no city, he observed, is free of crime. "It is entirely unrealistic to attribute every act of a miscreant employee to the corporation's directors and officers on the theory that they 'should have known' what was happening," Lacovara told the U.S. Sentencing Commission.

This line of defense seems especially disingenuous for a corporation that, during the last decade, introduced the high-pressure management culture of "Neutron Jack" Welch. GE first turns up the heat on its line managers by creating a climate of purposeful insecurity -- everyone's job is at risk if his or her division's profit performance lags. Then, when division managers in the field are caught in false billings and other forms of profiteering, GE piously disavows them as "miscreant employees."

To reassure the public after its Pentagon fraud cases, General Electric announced a companywide "initiative" to teach ethics to its workforce. The training was evidently insufficient because, in August 1991, GE was again accused of defrauding the federal government -- this time for $30 million. The Justice Department filed civil fraud charges that accused the company of collaborating with Israeli military officials on false billings between 1985 and 1988 for jet engines built at Evendale for Israel but paid for by the Pentagon. GE's top management once again expressed its innocence and fired the international sales manager. [26]

If one sets aside the contentious issues of corporate criminality, the character of Citizen GE is still delineated clearly enough in more routine matters of noncriminal offenses, especially its offenses against the environment. The economists' narrow conception of "efficiency" encourages such behavior. By saving money for itself, a corporation throws off huge costs on somebody else, usually the general public.

General Electric is implicated in a harrowing list of places ruined by pollution. Four of GE's factories were on EPA's list of the most dangerous industrial sources of toxic air pollution. The company has been identified as responsible for contributing to the damage at forty-seven Superfund sites.

For nearly twenty years, ending in 1964, GE was the principal operator at the government's Hanford nuclear reservation in Washington -- the bomb-making plant that is now notorious for the epic contamination of surrounding land and ground water with both radioactive and toxic substances. Restoration, if it is possible at all, will cost billions; GE is being sued and has made no comment on its responsibility for the devastation.

For thirty-four years, GE has also operated the Pinellas plant near St. Petersburg, Florida, where it makes the nuclear "trigger" for the hydrogen bomb. Toxic and radioactive wastes have been discovered in the Pinellas County sewage system and nearby Boca Ciega Bay. The plant was described by the St. Petersburg Times as an "environmental mess." GE announced in 1991 that it was getting out of Pinellas because new contracting rules from the Department of Energy "would have exposed the company to increased legal and financial risks." [27]

In Alabama, General Electric (and Monsanto) settled out of court when the state sued it for dumping PCBs in the Coosa River. In New York, a forty-mile stretch of the Hudson River above Albany was polluted in the same way; GE has been arguing with state officials for fifteen years over the multimillion-dollar cleanup for the river. Meanwhile, GE agreed with New York authorities to spend $20 million restoring the ground water at its Waterford, New York, plant contaminated with benzene, trichloroethylene, vinyl chloride and other toxics. In New Hampshire and Massachusetts, GE and forty-eight other companies settled for $33. I million for illegally dumping toxics at four sites. In Ohio, GE was part of a $13.5 million cleanup agreement for a chemical dump site in the Cincinnati suburbs. And so on. [28]

In fairness to General Electric, its antisocial profile is distinctive in part because of the company's size and diversity. But its behavior is not unusual. Anyone who reads The Wall Street Journal faithfully can collect a similar assortment of florid headlines about other famous American corporations. Indeed, the story of corporate crime or coverups is so routine, it is losing its shock value.

Mobil Oil: A federal jury awards $1.4 million to a former Mobil employee who said he was fired for refusing to conceal environmental problems. Northrop: Caught bribing foreign governments in the 1970s, the company is caught again in 1990, accused of funneling $6.2 million in illegal payments to South Korea. Waste Management: The nation's largest waste- disposal company has paid more than $50 million in fines and settlements for environmental violations, including disconnecting the monitoring devices at its waste- disposal sites. Eastern Airlines: The company was indicted with nine of its managers for falsifying airplane maintenance records. Hughes Aircraft: The fifth-largest defense contractor and a General Motors subsidiary, Hughes pleads guilty to obtaining bootleg copies of classified Pentagon documents, a plot that involved four other major defense contractors. [29]

Professor Amitai Etzioni of George Washington University found that 62 percent of the Fortune 500 corporations were involved in one or more "significant illegalities" in the decade from 1975 to 1984. Nearly half of them -- 42 percent -- were identified in two or more episodes of corrupt behavior. Fifteen percent of them -- seventy-five major corporations-were involved in five or more cases. [30]

The basic question is: What exactly produces this repetition of injurious or illegal behavior by corporations? It is not properly blamed on the ethical failings of company managers, who, as a group, are presumably as moral as anyone else in the society. The core cause is the corporation's own values -- an ethic of efficiency that creates the cost-cutting imperative driving every manager's behavior. A plant manager can never escape from this imperative, regardless of his personal values or the ethics courses that business schools offer to MBA students.

The power of this cost-cutting imperative was dramatically illustrated in a case in which General Electric was accused of concealing design flaws in a giant nuclear-containment vessel it sold to the Washington Public Power Supply Systems. WPPSS was forced to spend hundreds of millions on repairs to make the plant safe and it sued GE for contract fraud. The presiding judge described the testimony by GE personnel as "forced, sometimes forlorn and sometimes incredible."

In particular, the judge cited internal company documents that made it clear GE had identified the potential dangers early on, but chose to do nothing. "General Electric knew these problems should be examined but decided to adopt only an analytical approach," Judge Alan A. McDonald declared, "because the full-scale tests required . . . would be -- I am quoting from the documents -- 'very expensive.'" [31]

General Electric's own lawyer, Philip Lacovara, obliquely acknowledged the connection between a company's bottom line and its attitude toward the law in his comments to the U.S. Sentencing Commission. "In the absence of substantial credit for voluntary disclosure, it is not in the organization's economic self-interest to search for and disclose offenses that management has been unable to prevent," Lacovara wrote. " ... The economic disadvantages of voluntarily disclosing suspected misconduct may well discourage corporations from reporting their suspicions or assessments to agency regulators and law- enforcement personnel." [32]

Concealing the truth in order to save money is not, of course, peculiar to General Electric. When the Conference Board, a business-sponsored research center, surveyed three hundred corporate managers on business ethics, it asked what they would do if they were told about public-health risks caused by their companies' toxic emissions. One in five said they would do nothing -- even though a responsible company official brought the danger to their attention. If the employee alerted the public anyway, half of the three hundred managers would fire him. Another fourth of them would reassign him to a different job. Only 6 percent of the managers said the company should immediately change its manufacturing process to reduce the dangerous emissions. [33]

How might American corporations be compelled to accept their obligations to law and society in a more reliable manner? And why is it that corporations, while regularly abusing public law and trust, are allowed to continue functioning as the preeminent citizens in American politics? For ordinary citizens, the law has elaborated thorough answers to those questions -- people who are criminals are barred from formal politics. For corporate criminals, the law is more forgiving.

The two questions could be answered together if meaningful sanctions and penalties are developed that will punish lawless corporations in the only language that an "artificial legal person" understands: profit and loss. The corporation must know that repeatedly offending the law puts it at risk of losing real value -- the financial privileges of government contracts or tax preferences, but also the political privileges of appearing in the public arena as an advocate for itself and others.

The new sentencing guidelines being prepared for the federal courts are a modest step toward this kind of discipline, though not a fundamental departure from the status quo. Fines and other penalties will be stiffened. In extreme circumstances, courts may be able to impose terms of probation on corporate managements, a kind of conservatorship that monitors corrective action. California, likewise, has enacted tough new standards for corporate criminal liability, partly in frustration with the federal government's weak enforcement against industrial violators of environmental and occupational safety laws. [34]

Criminal prosecution of companies, though somewhat increased in recent years, is still quite rare -- especially for major corporations that have the legal capacity to negotiate away their troubles with the law. In 1988, for instance, there were only 475 federal criminal cases brought against companies -- and 85 percent of those involved very small businesses, with fewer than fifty employees and sales of less than $1 million. Criminal prosecution of individuals can be therapeutic, especially in pollution cases, but sending the managers to jail will not necessarily change the behavior of a recidivist corporation. [35]

In the interest of equity, law and legal doctrine must fashion methods for altering corporate behavior: sanctions that reverse the incentives inside corporations by raising the bottom line cost of lawlessness. Any company, to be sure, may on rare occasions be unwittingly implicated in an offense. For the repeat offender, however, a system of graduated penalties ought to extract real losses. Because it is not a real person, a corporation cannot be sent to prison, but its freedom as an enterprise could be restricted in other ways.

A recidivist, as Ralph Nader has proposed, should be barred for a specified time from selling things to the government -- banishment prescribed in law, not at the Pentagon's discretion. To avoid economic disruption, a company could be required to divest a subsidiary that has a record of defrauding the government or committing other offenses. The forced sale of a division would cost the offending company dearly, but the factories and jobs would continue to operate under new ownership. Like ordinary criminals, a corporation with a well-documented rap sheet ought to be ineligible to hold government licenses for television stations or other lucrative franchises. GE's growing media empire, for instance, would be put at risk by its continued cheating at the Pentagon.

Corporations might also forfeit their political rights, just as citizens do. Lawful standards could establish a felonious status for "corporate citizens" that bars a lawless company from political activity for a fixed period of time. A convicted company, for instance, would be prohibited from financing political candidates or lobbying Congress directly or appearing before regulatory hearings or pressuring the regulators in private. The suspension of corporate political rights would be equivalent to what happens to people when they are convicted felons. The corporate ex-convicts would have to learn how to live for a time without their Washington lobbyists.

This basic principle of accountability could be incorporated in many different kinds of statutes -- especially the tax code -- with evidentiary thresholds that are less demanding than criminal law. A company that accumulates repeated civil offenses against the environment or public health could be treated in law as an antisocial organization that has lost its usual privileges. The tax code, for instance, provides a long list of allowances, exceptions and preferences that feed tens of billions into corporate balance sheets. When Congress enacts such tax benefits, it could stipulate that no corporation will be eligible for the money if it has violated laws and regulations during the preceding years.

This would be harsh medicine indeed, guaranteed to make corporate executives concentrate on the "miscreant" behavior within their own organizations. But why should law-abiding taxpayers subsidize the lawless ones? The ethical choices facing business managers would be set in a new framework that makes it easier for them to do the right thing -- protecting the company's profits by obeying the law.

Addressing the legal obligations of corporations leads to broader questions about their social obligations. Why, for example, should companies receive tax credits for their research and development when they are simultaneously shrinking their U.S. employment? Why should government pick up the tab for cleaning up social problems that were generated by private employers who failed to observe minimal social obligations to their workers and communities? The questions lead in the direction of establishing in law a social context for corporations -- legal obligations like parental leave and other worker benefits that involve using the government's authority rather than spending the taxpayers' money. As it stands now, in the name of fostering prosperity, Americans are helping to finance enterprises that do not reciprocate the loyalty.
Site Admin
Posts: 33187
Joined: Thu Aug 01, 2013 5:21 am


Postby admin » Thu Oct 31, 2013 1:00 am



The end of the Cold War represents a rare opening for democratic possibilities; but it is also the source of new political crisis. This new epoch suddenly revives questions about the nature of American self-government that have been successfully evaded for two generations. Ready or not, American politics must change, for the world has changed around it.

The country has reached a satisfying end to a struggle that for four decades dominated our national priorities and permeated every corner of the political culture. The Cold War was the central engine driving the government's management of the economy. Fear was the political idea that unified national life for two generations. Now it is abruptly over. America has won; the Soviet Union has disintegrated as a global power.

Yet American politics has also been destabilized by the victory. The mobilizing fear has evaporated, but the institutional structure of government and politics remains on a permanent war footing. Massive armaments and American troops are deployed around the globe; $30 billion a year is devoted to spying and other intelligence activities. The industrial base is still propped up by defense spending; the routines of secrecy and political control developed by the national-security state are still the operating norm. It will not be easy to find a new purpose in the world that justifies these abnormalities as efficiently as communism did.

Nor will it be so easy to rationalize the grave damage the Cold War has done to democracy. The permanent mobilization has altered the democratic relationships profoundly, concentrating power in remote and unaccountable places, institutionalizing secrecy, fostering gross public deception and hypocrisy. It violated law in ways that have become habitual. It assigned great questions of national purpose to a militarized policy elite. It centralized political power in the presidency at the expense of every other democratic institution. The question is: Now that the enemy has vanished, is it possible that democratic order can be restored?

In addition to all the daunting obstacles and deformities enumerated in this book, the democratic problem is now compounded by these large questions about America's place in the world. The post-Cold War reality is actually eclipsed by an even larger force threatening national well-being -- the global economy. While governing elites struggled Obsessively against communism, the world changed in other ways that now threaten the nation with continuing economic loss and political impotence. The system of globalized enterprise, as the next chapter explains, directly undermines the widely shared prosperity that has been a prerequisite for America's political stability. But the global economy also steadily erodes the nation's sovereign control over its destiny.

Ready or not, Americans are now confronted with some unprecedented questions about self-government and whether the concept will continue to have meaning in the world.


Hardly anyone took note when Senator Daniel Patrick Moynihan introduced his grandly titled legislation -- the End of the Cold War Act of 1991 -- because six days earlier the United States had gone to war again. The senator proposed to abolish the Central Intelligence Agency, the institutional agent and symbol of the Cold War, and fold the CIA's secret activities into the State Department and the Pentagon, where they might be more accountable to political oversight. His legislation set out to prohibit various irregular practices tolerated in government for four decades and to restore a sense of lawful legitimacy to foreign policy.

"The law of nations," Moynihan intoned. "Somewhere that got lost in the fog of the Cold War. It just got lost. We have become a national-security state, a country mobilized for war on a permanent basis, and we got into the business of saying everything is secret. Can we recover the memory of what we were before we became what we are now? Can we rediscover a sense of proportion in the national-security state? The task of purging the Cold War from our institutions is enormous. It will require a sustained and determined effort." [1]

The senator's timing was oblivious to the national mood. At that very moment, the nation was gathered before its TV sets, watching night flashes from the American bombing of Baghdad and the gunsight footage of "smart bombs" finding their Iraqi targets. Six weeks later, America was celebrating victory -- a splendid little war in which only a few hundred Americans died. The nation's military prowess was demonstrated for the world; its virtuous intentions were confirmed in the scenes from Kuwait of liberation and homecoming.

In that context, Senator Moynihan's questions seemed eccentric. The Cold War might be over, but now suddenly there was a new struggle to replace it. America is committed, the president announced unilaterally, to establishing and defending a "New World Order." The concept was scarcely defined, but popular support for the American military surged, as did popular support for the president.

Moynihan's questions, however, will return to haunt the country. Saddam Hussein, notwithstanding the barbarity of his regime, proved to be an inadequate substitute for the Cold War. When the Iraqi dictator seized neighboring Kuwait, George Bush invoked the specter of Hitler, a metaphor that resonated with the start of the Cold War forty years earlier. World War II was America's finest moment in world affairs and nostalgic memories of it powered the long struggle against Soviet communism on countless fronts. Now, President Bush explained, a new dictator was threatening the integrity of nations and must be confronted in the same spirit.

Events, however, failed to sustain the metaphor. For one thing, Hussein was defeated much too quickly and easily. He was also allowed to remain in power, an outcome impossible to reconcile with the president's histrionic rhetoric on the march to war. If Saddam was Hitler, why was he not killed or conquered and put on trial for crimes against humanity?

Other complicating facts developed in the aftermath: The Kuwaiti ruling family, whom we had fought to rescue, demonstrated again that it was itself a despotic feudal regime, contemptuous of the individual rights associated with democracy. The defeat of Iraq produced internal rebellions that eventually mired the United States in the awkward role of a neocolonial warden.

Above all, the war produced this contradiction: In the first year of the post-Cold War era, while the Soviet military apparatus was being withdrawn and dismantled, U.S. defense spending actually increased. The bloated defense budget would shrink eventually, as even the Pentagon leaders accepted, but not while the country was waging another war?

Furthermore, neither the end of the Cold War nor U.S. victory in the Persian Gulf could obscure the nation's deteriorating financial strength. The defense buildup of the 1980s had been financed largely on deficit spending -- money the federal government borrowed from the allied nations (Japan and Germany, principally) that the United States was defending, more or less for free. If America was now the world's only superpower, it was stuck in a most anomalous predicament. Wall Street financier George Soros described the contradiction: "There are many examples in history where military power was sustained by exacting tributes, but there is no precedent for maintaining military hegemony on borrowed money." [3]

The excitement of an occasional war is, in fact, one of the few remaining opportunities for alienated citizens to feel connected again with their nation's higher politics. So long as the wars are relatively quick and painless, they provide a rallying point for ordinary citizens, a momentary illusion of shared national purpose. The war making offers a fantasy of power for those who are, in fact, powerless. When the euphoria dissipates, as it always does, people resume their distance and disenchantment.

In the aftermath of the Gulf War, Americans did not rally around the "New World Order" proposed by the president. Nor did public opinion embrace the notion that U.S. firepower must police the world. On the contrary, people overwhelmingly expressed the opinion (85 percent to 11 percent in one survey) that military initiatives against global disorders should be led by the United Nations rather than the United States. Their own government, Americans said, should turn its attention to the problems at home. The national-security threat that most troubled ordinary citizens was America's deteriorating position in the global economy. [4]


In the 1950s, when the Cold War temperament was enveloping the thought and language of American politics, the sociologist C. Wright Mills derided what he called "the crackpot realism of the higher authorities and opinion-makers." Absurdities were cloaked in technocratic jargon and passed off to the public as brilliant insight or the fruits of sophisticated intelligence.

The ability of national-security experts to describe reality in arcane ways that ordinary citizens could not easily test for themselves, much less challenge, was a central element of power in the Cold War era and one of its most debilitating influences on democracy. "Crackpot realism" consumed trillions of dollars and built enough nuclear bombs to destroy life on the planet.

Huge, secret bureaucracies were created in government to discover the hidden "facts" about the dangerous world around us, especially the machinations of the Soviet empire, and to shape national-security policy accordingly. Much of this knowledge was considered too sensitive to share with the public, but provocative details were regularly communicated in the form of warnings about new' 'threats" that had emerged -- deadly new missiles pointed at America or revolutionary stirrings in Third World countries said to be inspired by Moscow. The history of the Cold War is a series of such alarums, based on espionage and classified documentation, and of the subsequent events that refuted them.

Given the insular nature of American society,. most citizens had little real knowledge of distant nations and no independent way to evaluate the government's description of reality, In the absence of clear contradictory evidence, people generally were prisoners of what the government authorities told them about the world. They accepted what the spies and analysts had discovered about the enemy, at least until the war in Vietnam devastated the government's authority. The alternative -- questioning the president while the nation was at war-seemed unpatriotic.

"Crackpot realism" has flourished right up to the present time and the Central Intelligence Agency was a principal source for it. As late as 1989, as Moynihan observed, the CIA reported that the economy of communist East Germany was slightly larger than the economy of West Germany -- an intelligence estimate ludicrously debunked a few months later when the East German regime collapsed and its citizens streamed westward in search of jobs, consumer goods and food. The following year, the CIA corrected the record by abruptly shrinking the threatening dimensions of East Germany by more than one third.

The same gross exaggeration was repeated, year after year, when the CIA made its estimates of the Soviet Union's awesome capabilities. The 1989 analysis claimed that the growth rate of the Soviet bloc exceeded western Europe's. But then the CIA had solemnly reported for four decades that the Soviet economy was growing faster than the U.S. economy -- almost half again faster. The result, it said, was a formidable industrial power -- second-largest in the world and much larger than Japan, according to the CIA.

If that were true, this nation was an adversary rightly to be feared, since it had the economic capacity, not only to match the U.S. arsenal, weapon for weapon, but to achieve something the experts called "superiority." Hundreds of billions of America's dollars, even trillions, were devoted to forestalling that dread possibility. [5]

Of course, it was not true. It was not true in the 1950s and it was especially not true in the late 1970s and early 1980s when America launched another massive arms buildup. Some journalists and scholars had been making this point about the Soviet economy for many years, pointing out the decay and malfunctioning that was visible despite the Soviet censors. But U.S. official authority and propaganda always succeeded in maintaining the enemy's strength.

When Gorbachev opened the Soviet society to full inspection, what western experts saw more nearly resembled a Third World country than a major industrial power. Its economy was a crude joke compared to the high-tech industrial systems of Japan, West Germany and the United States. The Soviet Union, aside from its size, was not second strongest in the world or third, probably not even fourth or fifth.

Americans, in other words, were propagandized by their own government for forty years. Were citizens deliberately deceived or were the CIA spies so befogged by their own ideological biases that they missed the reality themselves? This is one of the questions that a post-Cold War debate might take up for closer examination.

Senator Moynihan, though he raised the embarrassing facts, preferred to believe that everyone had acted in good faith. The senator had served himself as vice-chairman of the Senate Intelligence Committee and, like most politicians, had believed fully in the Soviet threat right until the end. He had been a consistent and eloquent champion of the Cold War arms buildup and had disparaged anyone who questioned the need to keep enlarging the U.S. arsenal. Now, Moynihan disparaged the CIA, with the sharpness of one whose trusting nature has been betrayed.

"It would be pretty obvious," the senator said, "to cut their budget in half so they wouldn't pass around these silly reports."

The government's persistent inflation of the enemy made plausible many other versions of "crackpot realism" that emanated from intelligence experts and somberly ruled the political debate on national defense. A "missile gap" discovered by these experts in 1960 was eventually acknowledged to be illusory, but only after the Kennedy administration had launched a program to double America's nuclear missile force. A theoretical "window of vulnerability" that defense authorities identified in the late 1970s became the pretext for the trillion-dollar defense modernization of the Reagan presidency. Yet the Reagan administration's cornucopia of new weaponry never attempted to close the supposedly dangerous "window."

In the early 1980s, American intelligence discovered Cubans constructing a large airport on the Caribbean island of Grenada and concluded that it was to be a future launching pad for Soviet bombers aimed at America. After the U.S. invasion and conquest of that tiny country, the American government finished building the airport so it could be used for jumbo-jet tourist traffic, the purpose Grenada had always claimed for it. The most enthusiastic advocates of the U.S. surrogate war against Nicaragua, including President Reagan, described a "domino theory" of nations in which Nicaragua, Honduras, Guatemala and Mexico would one by one fall to the Communists. If America did not defeat the Sandinistas, the Red armies would someday be massed on the border, poised to attack Harlingen, Texas.

For four decades, NATO defense policy was premised on a latter-day version of blitzkrieg -- a vision of the Soviet armies launching a surprise attack that sweeps across the plains of central Europe and swiftly arrives at the English Channel, just like Hitler. The allied generals earnestly prepared to fight World War II in Europe all over again, a burden that consumed nearly half of the U.S. defense budget.

Of course, the scenario was absurd, as the U.S. intelligence community itself belatedly acknowledged in November 1989 when the "threat" analysis was abruptly changed. Half of the Soviet divisions poised to strike from eastern Europe, it turns out, were actually manned at token levels -- 5 percent to 25 percent of their fighting strength. In order to attack the West, the Soviets would have had to transport 150,000 troops from the Soviet Union and activate 800,000 reservists in the Warsaw Pact nations. Nevertheless, President Bush was still insisting on the scenario (and proposing new and highly dangerous battlefield nuclear weapons for western Europe) only a few months before the Berlin Wall fell. [6]

The point of reciting such examples of exaggeration is not to reargue the Cold War, now that it is over, but to demonstrate what an overpowering idea the Cold War was. People believed and accepted the most threatening possibilities and the government acted on them. It was not that the dubious alarums were never questioned. But the concept of vigilance against an awesome enemy swept away critical opposition and, often, rationality.

American politics created a mythology and then was ruled by it. A senator or representative might safely challenge the Cold War on subordinate issues -- does America really need more aircraft carriers? -- but any politician would be vulnerable to defeat if his argument was not safely couched in the context of mortal struggle against a malevolent adversary. Political contests deteriorated into manly arguments over who was "hard" and who was "soft" toward this enemy. Mere citizens were mostly excluded from the dense technical esoterica of the defense debate, except on those crude terms. Most citizens, not surprisingly, preferred political leaders who seemed "hard."

From the beginning, the Cold War put citizens in the same weak defensive posture that characterized their position on large domestic issues. But the people did sometimes block the government's most outrageous plans. When the Reagan regime prepared for another war of intervention against Nicaragua, public opposition stood in the way and the government was compelled to mount a surrogate war, which it quaintly referred to as a "covert operation." Preventing a U.S. invasion constituted a victory of sorts for the citizens.

Still, as in Nicaragua, the Cold War's institutional apparatus produced an inevitable series of extralegal activities in the government, offending both domestic and international law. This was not simply the occasional misadventures of "rogue" intelligence officers who "went too far," as authorities always explained when the CIA was implicated in assassination plots or other covert actions that violated law and morality. In many ways, the institutional arrangements were created in order to allow the president to operate outside the law.

Some conservative Republicans recognized this danger at the outset and they were principled opponents to the legislation that in 1947 created the CIA (designed and promoted by liberal Democrats). In congressional debate, a handful of conservatives argued that the CIA, with its secret budget and cloaked activities, would give the chief executive enormous new powers to make foreign policy in secret -- and indeed to wage secret wars -- without submitting his decisions to the due processes of open political debate, authorization and appropriate and formal declarations by Congress.

The conservatives were right, of course, but then that was the idea of the CIA -- to empower the president by circumventing democratic processes. Conservatives have since embraced the all-powerful chief executive as the ideal, while many liberals have learned to question it, especially after the liberal debacle in Vietnam.

The illegal consequences of creating a secret government did not remain very secret, despite the popular lore of spies and their stealthful routines. The CIA helped engineer changes of government, sometimes violently, in Iran, Guatemala, Brazil, Chile and a long list of other nations. It was implicated in the counterrevolutionary massacres in Indonesia and the successful assassinations of at least three foreign leaders as well as other murder plots that failed. It managed a secret army in Laos and its agents laid the groundwork for the war in Vietnam, where, among other functions, the CIA supervised an infamous program of targeting and killing suspect citizens, without benefit of trial. The CIA ran the not-so-covert war against Nicaragua. It assembled an army and invaded Cuba with disastrous results.

At home, the CIA penetrated universities, private business corporations and other government agencies, especially the State Department, partly to obtain cover for its intelligence officers, partly to gather proprietary information and partly to compromise others. When asked to by various presidents, the agency spied on American citizens who were political dissidents, in the name of protecting the nation against subversion. It created scores of dummy corporate organizations to transact its business, so as to conceal the fact that an agency of government was illegally laundering money or transporting arms to overseas conflicts or doing deals with the Mafia. It infiltrated domestic political associations and tax-exempt foundations in order to advance the propaganda war against communism.

Abuses by the national-security state have continued right up to the present. In 1982, the FBI conducted a secret subversion investigation of Physicians for Social Responsibility because the group opposed Reagan's nuclear. weapons policy. PSR and its worldwide affiliates later won the Nobel Peace Prize. In 1986, the FBI fired an agent who refused to conduct a "domestic security/terrorism" investigation of two citizen groups opposing Reagan's policy in Central America. During the 19808, the FBI delivered data from its investigations of domestic political opposition to the White House. [7]

These are a sampling of the scandalous matters that are known and documented; some would insist there is a far darker portrait of the CIA to be drawn from outlaw behavior that is less well authenticated. The point of reciting the history, in any case, is to demonstrate the fundamental irregularity of this institution and its capabilities. When the nation is at war, unlawful measures are often accepted as necessary to national survival. Lincoln suspended habeas corpus during the Civil War; Roosevelt interned Japanese-American citizens in World War II. In the Cold War, however, it was the irregular institutional arrangement itself that committed the offenses, while it functioned to keep the nation at war.

Despite recurring scandals (always followed by appropriate "reforms"), the Central Intelligence Agency and allied components remain intact outside the normal structure of democratic accountability. It is available to any president who feels the need for extralegal activities of almost any kind. The president need only issue a secret executive order authorizing the venture; a handful of congressional leaders will be informed, but only upon their agreement to keep the facts from the public.

As president, Ronald Reagan issued 298 National Security Decision Directives -- secret edicts that are accorded the force of law. By private writ, the president is able to mobilize government resources for subversion or order surveillance of private citizens or launch aggressive wars against other nations, all without public debate or even public knowledge. [8]

The fundamental conflict is not about the need for intelligence gathering, but about respect for law, both domestic and international law. And the problem is not rooted in the CIA's peculiar charter, but in the White House and the nature of modern executive power. In the end, it was the presidents who authorized the lawlessness and who benefited politically from the corruption of regular democratic process. If the "New World Order" means the U.S. government is going to use its power around the globe to uphold law and promote democracy, it might usefully start at home.

If Iraq violated the "law of nations," as it did, then so has the United States. The invasion of Grenada, for example, "was the clearest possible violation of Article 18 of the Charter of the Organization of American States, a document as much of our drafting as was the Charter of the United Nations," Senator Moynihan wrote. "It was a violation of the latter also." [9]

American officials always claimed virtuous motives for their invasions of foreign countries and argued that there were justifying provocations, but the American interventions were always made unilaterally, decided by the chief executive alone, oblivious to the formal procedures by which such actions are sanctioned under international law or by the U. S. Constitution. When presidents authorized a covert aggression against another nation, the government did not even bother with public justifications, but pretended instead, with a broad wink, to official innocence.

American citizens cannot escape the consequences of a government that ignores the law. Twice in the last decade alone, the U.S. president was caught out in engagements that demonstrably violated either international law or U.S. law or both. Each event caused a political stir, but the president remained aloof.

In 1983, during the covert war against Nicaragua, CIA agents mined the harbors of that country, an action that is defined in international law as a direct act of aggression against a sovereign state. Clearly prohibited by international treaties, the mining also raised the constitutional question of who in the American government had authorized an act of war. When distressed senators complained, the CIA blandly promised not to do it again.

When Nicaragua prepared to take a formal complaint to the International Court of Justice in The Hague, the Reagan administration announced peremptorily that it would no longer accept the World Court's jurisdiction over "disputes with any Central American state or arising out of or related to events in Central America." The United States thus set aside temporarily a treaty obligation it had accepted, by Senate ratification, in 1946.

The World Court heard Nicaragua's case, nonetheless, and ruled in 1986 that the United States had violated "general principles of humanitarian law" in numerous ways -- mining harbors, bombing oil installations, arming the Contras and distributing guerrilla-warfare manuals that encouraged the violent intimidation of Nicaraguan citizens. This was the first time in American history, Senator Moynihan noted, that an international tribunal had ever found the United States in violation of law. Yet the World Court's decision received only brief, passing notice within the United States.

The other episode of presidential lawlessness was more celebrated -- the Iran-Contra affair in which the Reagan White House ignored the legislative prohibition against providing further aid to the Contra army it had created in Nicaragua. Among the many complicated illegalities generated by the White House in that matter, one pointed unambiguously at the president's own failure to faithfully execute the law. Reagan personally authorized Cabinet officers to raise funds from foreign governments for the war, despite the congressional prohibition of U. S. involvement. "The plain fact," Moynihan wrote, "is that the president did invite and almost certainly deserved impeachment."

Actually, a resolution of impeachment was filed against President Reagan by Representative Henry Gonzalez, the Texas Democrat who compares the unbridled power of modern American presidents to that of the Roman Caesars. Americans, Gonzalez said, no longer have a republic in the original meaning; presidential power has trampled it beyond recognition. Gonzalez's complaint was ignored. Ronald Reagan continued in office and retired with honor, an affable Caesar who was much loved by the people.

When President Bush went to war in the Persian Gulf, Gonzalez filed another impeachment resolution against him. Gonzalez charged that Bush had violated law and constitutional process, first by unilaterally committing five hundred thousand troops to a foreign combat zone in violation of the terms of the War Powers Act, then by bribing foreign nations to accede to his strategy. A $7 billion loan to Egypt was forgiven without congressional approval. Zaire was promised military aid and partial debt forgiveness. Turkey was given a larger import quota for its textiles. China was assured of favorable trade terms if it did not veto the U.S. initiative in the UN Security Council. The Soviet Union was promised billions in aid so it would cooperate too. In the glow of victory, everyone assumed the president had the power to do these things -- that he is free to do whatever he wants in wartime. [10]

This overbearing nature of the modern presidency is what has most crippled democracy. But the permanent Cold War mobilization made the accumulation of power seem "normal," and over two generations the public memory of a presidency accountable to the Constitution has been nearly lost. The idea that democracy ought to function in any other way now seems eccentric.

The Cold War president became a mythological figure -- a warrior president surrounded by warriors, preoccupied with questions of global conflict above all others. As the Cold War cliche goes, "all our lives are in his hands," and, in those circumstances, people assigned mystical qualities to the warriors who were running things. Military officers became commonplace in the uppermost reaches of government. A general served as secretary of state, an admiral led the CIA. A CIA director became president.

The office of the president has many valuable qualities -- particularly the ability to educate and unify the nation -- but the institution cannot possibly carry the full burdens of democracy. It is too narrow and singular and, above all, too private in its actions, notwithstanding the TV images of presidential comings and goings that are provided daily. The centralized political power has encouraged the evasion and hollowness that permeate the domestic dimensions of government.

The White House has become a" convenient "safe house" for governing without any of the messy obligations required by a genuine democracy -- a sanctuary where things finally get decided privately and without public debate. This retreat encourages others in the political community to avoid hard decisions by passing on the toughest questions to the White House where the president can settle them in the protected reserve of the Oval Office.

The rich diversity of democratic dialogue has been collapsed into a single, opaque institution. Self-government has been reduced to a single mind and heartbeat. Dismantling the Cold War, restoring a democratic order, means cutting the presidency down to appropriate size.


From the beginning, the Cold War fulfilled an ironic purpose in domestic politics: It allowed all patriots to embrace a twisted, back-door version of socialism. The federal government claimed a rationale for intervening massively in the private economy, but without the usual debate over free enterprise and limited government. Washington stimulated economic demand with contracts and subsidies; it directed private investment through industrial planning and capital allocation. It created millions of jobs for workers. It built and owned scores of factories for private enterprises to operate.

Conservatives could ride along free on this arrangement without blemishing their ideological purity and, in time, conservatives became its most enthusiastic advocates. No one had to justify government-owned industrial plants and vast research laboratories and government-financed industrial development (including the occasional bailout of failing companies). It was all done in the name of defending the nation.

If the Cold War has truly ended and no great unifying cause can be found to replace it, then conservatives have lost their cover and the government has lost its rationale for steering the private economy through the federal budget. This economic reality will likely lead to a continuing political crisis, as many Americans discover how much their own economic well-being was dependent on the permanent mobilization and as political leaders search for saleable substitutes.

The modern defense budget, it is true, now consumes less than 5 percent of the gross national product, so it is often argued that even a major shrinkage in defense spending can be absorbed by the overall economy without great pain. That assumption misunderstands the socialist relationship.

For better or worse, the Pentagon is like a big rock propping up American manufacturing. Roughly one fifth of U.S. manufacturing output is purchased by the federal government via defense contracts. In 1985, for instance, the military spent $165 billion buying goods from a broad spectrum of 215 industries -- 21 percent of the manufacturing gross national product. Defense-related work employs one in ten of America's manufacturing workers.

The military allocates $38 billion a year for research and development and supports at least one in every four U.S. scientists. Defense pays for roughly 50 percent of the university research on computer science and electrical engineering. It provides 96 percent of the income for American shipbuilding. It accounts for about one fifth of the nation's modernizing capital investment. [11]

In other words, a forty-year addiction to socialist-style intervention is now threatened by cold-turkey therapy. If the defense budget shrinks drastically, it is going to leave a big hole in the American economy -- especially in the crucial realm of long-term development and investment. Who will buy the state-of-the-art machine tools? Who will pay for the basic science? The government will have to invent other rationales and methods for force- feeding private research and investment or else retreat to laissez-faire principle and hope that private enterprise somehow makes up the difference.

That is one dimension of the crisis that demobilization is bound to engender. Another dimension is the fierce politics of lost contracts and employment. Depending on how rapidly the defense budget shrinks, the shutdown of weapons production could eliminate more than five hundred thousand jobs for both skilled industrial workers and the technical professions.

These are the "good jobs" in the American economy -- premium-wage manufacturing jobs held by machinists, electricians, engineers and others. These workers will not easily find comparable positions in an economy in which heavy industry has been shrinking its employment base for the past decade. The overall effect could resemble another round of the deindustrialization and downward mobility that workers in steel, autos and other sectors have already experienced.

Given these harsh facts, the political response has largely been like an unreformed alcoholic's -- denial and avoidance. The president traveled now and then to defense plants where he congratulated the defense workers on the high quality of their work and assured them he personally wanted to keep buying their tanks or airplanes. This put him on the smart side of the short-run politics: When the defense contracts were canceled and the factories closed, George Bush would be able to say it was not his idea.

In Congress, roughly the same political strategy played out much more messily -- state by state, district by district -- as liberals and conservatives alike fought to keep open their factories and their military bases at the expense of someone else's. Long Island mobilized to keep alive Grumman's F-14, while the Pentagon kept trying to kill it. St. Louis mourned the loss of McDonnell Douglas's A-12. Newport News, Virginia, sued the Navy to save Tenneco's Seawolf submarine contract. General Dynamics announced, for obvious political effect, that nearly one third of its ninety thousand workers would be laid off, perhaps forever.

These dislocations and others were just the beginning, and the next round promised to be more severe. The Defense Department was planning a modest five-year reduction in the Cold War mobilization -- a 25 percent cut in the uniformed forces and a $15 billion decline in its budget authority. But that would still leave the defense budget around $280 billion -- still gigantic for a nation in debt, unable to finance a long list of competing domestic priorities and unable to identify a credible enemy beyond a few tinpot dictators. If the U.S. defense budget were cut in half, it would still be four or five times larger than that of the next-strongest nation. [12]

The dramatic cancellations of weapons systems occasionally reported in the news were mostly projects the country couldn't afford in the first place, even when the Cold War was flourishing. As defense budgets soared during the 1980s, each of the three services signed up for a dizzying wish list of new toys -- commitments so ambitious that, as one defense expert said, the Pentagon was trying to buy $400 billion worth of firepower on a $300 billion budget. This dilemma was well understood by defense experts (and politicians) for years and they responded to it by ordering procurement stretchouts -- buying fewer of each weapon every year so they would not have to cancel anybody's favorite. This approach naturally raised the per-unit cost of procurement and made defense production even more inefficient.

The Bush administration belatedly struggled to eliminate this "bubble" of false expectations from defense-budget projections. The next round of demobilization would be for real: bringing home troops that had been stationed abroad since the 1950s, closing scores of domestic military bases, shuttering more factories.

Aside from the president's vague talk about the "New World Order," neither political party offered a coherent strategy for how the nation might cope with this economic transformation. A few liberals introduced "conversion" bills that did little more than encourage communities and industries to plan for their post-Cold War future. Conservative thinkers concentrated, meanwhile, on trying to devise substitute "threats" -- Third World terrorism or nuclear proliferation -- that might justify continuing the nation's permanent war footing.

The Pentagon, ironically, was one of the few places where arguments over the economic implications had hesitantly begun, perhaps because the military itself would suffer the consequences first and most severely. As the defense budget shrinks, companies will fail or get out of the weapons business and the defense industrial base will shrink too. Thus, the unit cost of acquiring new weapons -- already grossly inflated -- is expected to spiral still higher. Without much hyperbole, the military planners envision a juncture where they will be buying fewer and fewer tanks and airplanes for higher and higher prices -- unable to maintain their force levels, even if their global mission is defined in less grandiose terms.

The transformation of high-technology production in the global economy, meanwhile, promises to make the United States more dependent on foreign producers for crucial weapons components, especially in the advanced technologies. If nothing else changes, one can predict a not-distant future when the world's only superpower is borrowing money from its allies to buy the high-tech weapons components they manufacture -- so the supposed superpower will be able to protect these allies from worldly harm. In a minor way, this was already the case.

The American public, if it ever caught on, would not be terribly enthusiastic about arming America with made-in-Japan electronics. Indeed, anxious members of Congress were already calling for a "Buy America" doctrine in defense procurement. Pentagon officials had to explain that "Buy America" would mean tanks or airplanes that were missing key parts.

For all these reasons, as well as their obvious self-interest, some of the conservative leaders of the defense community were beginning to flirt with a radically different economic doctrine -- government engagement in the private economy that would merge defense-production requirements with the broader objective of improving America's competitive position in commercial markets. Even Defense Secretary Richard Cheney, a conservative ideologue in most other matters, made an implicit pitch for some sort of industrial policy. "The United States," Cheney declared, "cannot persist in its current laissez-faire approach to the competition in advanced technologies without incurring major economic and security. problems of its own in the future." [13]

Jacques S. Gansler, an authority on the defense industry and chairman of the Defense Science Board's study on the advanced technology crisis, has argued for a radical restructuring in which defense manufacture and commercial production are fully integrated with each other -- both to preserve the defense industrial base and to foster the modernization of U.S. manufacturing.

Essentially what Gansler and others have proposed is that the government set aside some of the notorious fictions of the Cold War era and frankly acknowledge that it manipulates the private economy through defense spending but that it has been doing so in ways that are wasteful and ineffective, partly because the money was spent without regard to the nation's overall economic condition.

Some of the cold warriors of the Pentagon, a few at least, are hesitantly beginning to recognize that, while they were devoting the nation's capital to Cold War weaponry, another, more ominous threat to the national security was emerging from America's loss of economic power. [14] Pentagon reform -- harnessing defense procurement to economic competitiveness -- would at least lead to a more honest version of socialism or, more politely, a deliberate "industrial policy" that is more like those of Japan and the other allies who are America's global competitors.

But this approach contains large perils for democracy and for ordinary citizens -- the possibility of corporate socialism for entrenched economic interests. Given the deformed structure of political power that now exists, an industrial policy of any kind, especially one supervised by the Pentagon, might swiftly deteriorate into an extravagant program for taking care of the same old crowd, in the name of "competitiveness." In the global economy, furthermore, there is the more complicated question of which companies are really "American. " Why should American taxpayers underwrite the development of advanced technologies for multinational corporations if those companies are free to transfer the processes to their foreign plants and low-wage foreign workers?

An American industrial policy, in other words, is not a plausible solution in democratic terms unless politics has also confronted the questions about corporate loyalty. If American companies are not made to accept a stronger sense of national obligation -- the kind of commitment that Japanese or German companies routinely accept in their societies -- a new industrial policy might simply subsidize the continuing erosion of the American wage structure, using taxpayer dollars to finance corporate globalization.

The post-Cold War political question is: How can the nation begin to restore a peaceable economic balance and evolve toward a society that is not so relentlessly organized around the machinery of war? To put it another way, how might America begin to domesticate its military-industrial complex?

One way to accomplish the transition might be to encourage civic action by the military -- the assignment of domestic functions that could provide a practical justification for maintaining so many men and women in uniform, but would also take advantage of the military's natural assets. The armed services, aside from war-making capabilities, have many valuable qualities, including skills and experience and organizational cohesion that could be effectively applied to political problems at home.

The U.S. military, for one thing, is probably the nation's largest educational institution and its training methodologies are well tested and reliable. The military manages vast real estate at home and abroad. It knows how to build things, from roads and dams to hospitals and housing, on a mass-production scale. It knows how to take raw recruits, often ill- ducated young men and women, and prepare them to perform complicated tasks in a disciplined manner. It is the nation's most successful equal-opportunity employer and a crucial ladder of upward mobility for children of poverty.

These are assets that might all be usefully mobilized on the home front. The armed services, for instance, might be assigned a leading role in job training or drug therapy or as a manager of emergency employment. It could operate a civic-action corps that builds useful structures while it upgrades the skills and disciplines of recruits. It might, for instance, oversee a workforce, in or out of uniform, that tackles the massive backlog of damaged sites that need environmental cleanup, including the sites the military itself polluted.

If the nation does decide to change its priorities, there is much work to be done. The armed services have functioning infrastructures that already exist and might even reduce the costs of undertaking these new priorities. The military, likewise, enjoys political standing that might make it easier to sell these domestic undertakings. In turn, the military would benefit from a positive role in solving large, unattended public problems.

This approach, of course, has its obvious perils too. Commanders who are trained to fight wars regard civic action as a diversion from their real mission. Domestic political interests, meanwhile, fear the military as unwanted com- petition or, worse than that, an enveloping influence that might militarize peacetime endeavors. These are real risks, certainly, but so is the national dilemma of this moment in history. The dimensions of that dilemma are so profound that prevailing political prejudices may have to be set aside before the country can think clearly about its future.

The military institution exists, a huge and expensive reality that permeates the national political life. After four decades in place, the national-security state is not going to go away any time soon. The daunting question is how its components might be reintegrated -- in productive ways -- with the concerns and institutions of a regular democratic order.

Otherwise, if nothing much changes, there will be a continuing political imperative to seek out new conflicts that justify the existence of the national-security state. The CIA, if it remains independent and secretive, will keep churning out its inflated assessments of new "threats." The armed services, if not restructured and reduced in size, will inevitably be dispatched to fight again on dubious battlefields. The presidency, if its warrior prerogatives are not rescinded, will be free to continue the Cold War under some other name.


The triumph of World War II created a dynamic and satisfying parable for Americans, a story that described the nation as both strong and good. America was, therefore, obliged to take action on behalf of others, just as it had done against Hitler. The parable became the central vision behind the Cold War and motivated political action across two generations. It was shared by nearly everyone in the society, from top to bottom, and still dominates political imagination.

But the old parable, comforting as it was, is breaking up in visible ways, as other complications press in. It no longer resonates accurately with surrounding realities, as people are beginning to sense. Since early 1988, opinion polls have found that the American public now identifies Japan as the principal threat to the United States. The Soviet Union was far down the list of public anxieties-long before the Berlin Wall fell and long before political leaders were willing to adjust their thinking.

In the Cold War, while the United States was preoccupied with military power and spent its treasure on the defense of allies, the allies were tending to other business -- the development of modernized industrial economies. Indeed, the old adversaries of World War II are now the leading challengers to American hegemony in the world. They are also the leading lenders propping up American indebtedness. The parable has led the United States into a dangerous cul de sac.

Yet political elites were so successful adhering to the old story line, they are reluctant to abandon it. They are as yet unable to imagine a new parable for America that would match the new realities in the world. The transient euphoria generated by occasional war and parades does not change the fact that the United States has drifted into a dependent and vulnerable condition. With bad luck, this new condition is going to teach Americans some harsh lessons about economics and the real nature of global power in the post-Cold War world.

The stakes have thus been raised for American democracy, partly by events beyond anyone's control, partly by the long period of evasion when the economic realities were masked by Cold War propaganda. The nation's margin of error is now much smaller, its general abundance less secure. In addition to all the other burdens enumerated for conscientious citizens in this book, the task of restoring a vital democracy starts now from much greater disadvantages.

The spirit of the American parable -- a country that is at once great and good and active in the world -- can be carried forward in powerful new terms, but only if people recognize the full outlines of the democratic problem. It is not only the decay of domestic political institutions, the permissive legal culture, the privileges of concentrated power and the other pathologies that have subverted democracy.

In inexorable ways, as the next chapter reveals, American democracy is gradually being dismantled by the dynamics of global economics now astride the world at large. To salvage democracy at home, Americans must begin to think of themselves in much larger terms. They must learn how to act like democratic citizens of the world.
Site Admin
Posts: 33187
Joined: Thu Aug 01, 2013 5:21 am


Postby admin » Thu Oct 31, 2013 1:05 am



The ultimate democratic dilemma that confronts contemporary citizens is unlike any other in the nation's past, for it lies beyond the nation's borders. If Americans wish to repair their own decayed democracy, they must also make themselves into large-minded citizens of the world. To protect their own economic interests, they will have to develop an interest in the economic conditions of people elsewhere. To defend the sovereignty of American law, citizens will have to confront political power that is global.

With the end of the Cold War burdens, Americans were understandably inclined to turn inward and attend to the many neglected priorities at home. But American democracy is now imprisoned by new circumstances -- the dynamics of the global economy -- and this has produced a daunting paradox: Restoring the domestic political order will require a new version of internationalism.

The rise of transnational enterprises and production systems, the easy mobility of capital investment and jobs from one country to another, has obvious benefits as a modernizing influence on the world. It searches out lower costs and cheaper prices. But its exploitative effects on both rich and poor nations remain unchecked.

As a political system, the global economy is running downhill -- a system that searches the world for the lowest common denominator in terms of national standards for wages, taxes and corporate obligations to health, the environment and stable communities. Left unchallenged, the global system will continue to undermine America's widely shared prosperity, but it also subverts the nation's ability to set its own political standards, the laws that uphold the shared values of society.

The economic consequences of globalized production have already been experienced by the millions of U.S. industrial workers who, during the last two decades, were displaced when their high-wage jobs were transferred to cheaper labor in foreign countries. This transformation, more than anything else, is what has led to the declining real wages in the United States and the weakening manufacturing base. The deleterious impact on American wages is likely to continue for at least another generation.

But the economic effects are inseparable from the political consequences. The global competition for cost advantage effectively weakens the sovereignty of every nation by promoting a fierce contest among countries for lower public standards. If one nation's environmental laws are too strict or its taxes seem too burdensome, the factory will be closed and the jobs moved elsewhere -- to some other nation whose standards are lax, whose government is more compliant.

This reality constitutes the largest challenge confronting American democracy, one that underlies every other aspect of the democratic problem. The global economy has the practical power to check almost every effort Americans may undertake to reform their own political system -- unless people learn how to confront the global system too. Elite political opinion holds that such resistance is undesirable and, in any case, impossible.

For ordinary Americans, traditionally independent and insular, the challenge requires them to think anew their place in the world. The only plausible way that citizens can defend themselves and their nation against the forces of globalization is to link their own interests cooperatively with the interests of other peoples in other nations -- that is, with the foreigners who are competitors for the jobs and production but who are also victimized by the system. Americans will have to create new democratic alliances across national borders with the less prosperous people caught in the same dilemma. Together, they have to impose new political standards on multinational enterprises and on their own governments.

The challenge, in other words, involves taking the meaning of democracy to a higher plane -- a plateau of political consciousness the world has never before reached. This awesome task does not begin by examining Americans' own complaints about the global system. It begins by grasping what happens to the people at the other end -- the foreigners who inherit the American jobs.

* * *

On the outskirts of Ciudad Juarez, across the river from El Paso, Texas, the sere hillsides are a vast spectacle of human congestion. A canopy of crude huts and cabins, made from industrial scraps, is spread across the landscape, jammed together like a junkyard for abandoned shipping crates. The houses are not much more than large boxes, with walls of cardboard and floors made from factory pallets or Styrofoam packing cases. The tarpaper roofs are held in place by loose bricks; an old blanket or sheet of blue plastic is wrapped around the outhouse in the yard. Very few homes have running water and many lack electricity. Streets are unpaved and gullied. There are no sewer systems. For mile after mile, these dwellings are visible across the countryside -- dusty, treeless subdivisions of industrial poverty.

The colonias of Ciudad Juarez are like a demented caricature of suburban life in America, because the people who live in Lucio Blanco or Zarogoza or the other squatter villages actually work for some of America's premier companies -- General Electric, Ford, GM, GTE Sylvania, RCA, Westinghouse, Honeywell and many others. They are paid as little as fifty-five cents an hour. No one can live on such wages, not even in Mexico. With the noblesse oblige of the feudal padrone, some U.S. companies dole out occasional despensa for their struggling employees -- rations of flour, beans, rice, oil, sugar, salt -- in lieu of a living wage.

In addition to the cheap labor, the U.S. companies who have moved production facilities to the Mexican border's maquiladora zone enjoy the privilege of paying no property taxes on their factories. As a result, Ciudad Juarez has been overwhelmed by a burgeoning population and is unable to keep up with the need for new roads, water and sewer lines and housing. The migrants who came from the Mexican interior in search of "American" jobs become resourceful squatters, scavenging materials to build shelters on the fast-developing hillsides. In time, some of these disappointed workers decide to slip across the border in the hope of becoming real Americans.

"A family cannot depend on the maquila wage," explained Professor Gueramina Valdes- Villalva of the Colegio de la Frontera Norte in Juarez, an experienced critic who aided workers at the Center for Working Women. "If you evaluate what these wages translate into in purchasing power, you see a steady deterioration in what those wages provide. They can't buy housing because there is a housing shortage. When they go into the squatter situation, they can't invest in public services. We have a shortage of water, sewers, electricity, streets. The city is pressed heavily by the two sectors who do not pay taxes -- the maquiladora companies and the minimum-wage workers.

"The saddest thing about it is, not only does the city become unbearably unlivable, but then the city becomes unproductive too. As the city deteriorates, it becomes more expensive for companies to locate here. For the first time last year, we had negative growth in Juarez. Some of the employers are leaving. We can see the companies looking at their other options. Eastern Europe has become very attractive to them.

"The companies are periodically confronted with these complaints and they usually deny that there is any negative effect. At the same time, their answer is that this is a worldwide process and they cannot do anything to change it." [1]

If Americans wish to visualize the abstraction called the global economy, they need only drive across the U.S. border into Mexico and see the human consequences for themselves, from Matamoros and Juarez to Nogales and Tijuana. A vast industrial belt of thirteen hundred plants has grown up along the border during the last twenty years, encouraged by special duty-free provisions but fueled primarily by low wages and the neglect of corporate social obligations.

By moving jobs to Mexico, companies not only escape higher industrial wages, but also U.S. laws and taxes, the legal standards for business conduct on health and safety and social commitments that were established through many years of political reform in America. Mexico has such laws but it dare not enforce them too energetically, for fear of driving the companies elsewhere.

The maquiladora factories, notwithstanding their handsome stucco facades and landscaped. parking lots, are the modern equivalent of the "sweatshops" that once scandalized American cities. The employers are driven by the same economic incentives and the Mexican workers in Ciudad Juarez are just as defenseless. The Juarez slums reminded me of the squalid "coal camps" I saw years before in the mountains of Eastern Kentucky. Those still-lingering "pockets of poverty" were first created in the late nineteenth century by the coal and steel industries and they employed the very same industrial practices -- low wages, neglect of public investment, dangerous working conditions, degradation of the surrounding environment, the use of child labor.

The well-being of Americans is intertwined with this new exploitation, not simply for moral reasons or because most of the Mexican plants are owned by American companies, but because this is the other end of the transmission belt eroding the structure of work and incomes in the United States. Jobs that paid ten dollars or eleven dollars an hour in Ohio or Illinois will cost companies less than a tenth of that in Ciudad Juarez. The assembly work turns out TV sets, seatbelt harnesses, electrical switches and transformers, computer keyboards, disposable surgical garments, luggage locks, battery packs and a long list of other products.

There are more than 240 maquila plants in Juarez (second most after Tijuana), employing one hundred thousand people. Most of the workers are very young -- teenagers -- and the majority are girls.

Juarez, of course, is but a snapshot of the much larger reality around the world. Corporate apologists often point out that if the American jobs did not migrate to Mexico, they would go somewhere else -- Singapore or Brazil, Thailand or now perhaps eastern Europe -- where the consequences would be less easily observed by Americans. This is true. The easy mobility of capital is the core element in the modern global economy. It is made possible by invention, brilliant planning and the new technologies that connect corporate managers with far-flung factories and markets and allow them to relocate production almost anywhere in the world.

Given the fierce price competition generated by global production, any single manufacturing company is vulnerable if it does not respond to the trend of seeking out lower labor costs and tax-free havens. In the long run, it is not only Japan and Germany that threaten American prosperity, but the cheap labor of China and Indonesia and Thailand, even Sri Lanka and Bangladesh.

To confront the effects of the global system, Americans must educate themselves about the world -- to understand not only their own losses but also what is happening to others. Ciudad Juarez (or any other border city) is an excellent place to start, mainly because it starkly refutes so many of the common assumptions surrounding globalization. Aside from profit, the justifying and widely accepted rationale for global dispersion of production is the benefit to the poor, struggling masses. Their economies, it is said, will move up to a higher stage of development and incomes will rise accordingly. The auto workers in Ohio will lose, certainly, but the new auto workers in Juarez will become middle-class consumers who can afford to buy other products made in America. Thus, in time, everyone is supposed to benefit.

On the streets of Juarez, the workers tell a different story: Their incomes are not rising, not in terms of purchasing power. They have been falling drastically for years. These workers cannot buy American cars or computers. They can barely buy the basic necessities of life.

Fernando Rosales had just quit his job at Chrysler, where he assembled safety harnesses, because it paid the peso equivalent of only $4.20 a day. While he builds a squatter house in Lucio Blanco, Rosales searches for work as an auto mechanic, away from the maquila plants.

"I came here six years ago, thinking I would better myself, but I won't be able to do that," Rosales said. "It's been very difficult. The only benefits I had were transportation -- they sent a bus for us -- and one meal a day. Maybe for the government, it's okay. But for the people it really is shameful that American companies pay such low wages."

"The wages are very low, that's just the way it is," said Daniel Fortino Maltos, twenty-one years old and married with a baby. He works for General Electric at a plant making capacitors, as does his wife. "Young people generally leave after a few months or a year because the salary is so low, they can't make it," he explained.

Outside Productos Electricos Internacionales, another GE plant, a group of teenage workers on their lunch break described the same conditions. "The turnover is roughly every three months," said Fernando Rubio. "They just bring new ones in. There is such a big demand for workers, people can leave and go elsewhere." General Electric operated eight plants in Juarez, more than any other company.

Many of the workers blame the Mexican government for their condition, not the American employers. An older woman, Laura Chavez, who just quit her job at Delmex, a General Motors plant, expected to find another easily because of the extraordinarily high turnover in the maquila factories. "Look, it's not enough," she said. "If you're going to be living off that salary, it's not enough. I don't blame the companies. I blame the Mexican government because the wages are whatever the government requires."

In Mexico, the federal government does periodically raise the legal minimum-wage level but, for the last decade, the increases have lagged further and further behind the rising cost of living -- thus providing cheaper and cheaper labor for the American employers.

Indeed, the maquiladora industry boasts of this attraction in the glossy publication it distributes to prospective companies. In 1981, the industry association reported, the labor cost for a maquila worker was $1.12 an hour. By the end of 1989, the real cost had fallen to 56 cents an hour. [2]

What these workers have surmised is correct: Their own government is exploiting them too. Mired in debt to American banks since the early 1980s, Mexico has been desperate to raise more foreign-currency income to keep up with its foreign-debt payments. Aside from oil, the maquiladora industry provides the country with its largest influx of U.S. dollars, and the Mexican government has attracted more U.S. enterprise by steadily depressing the wages of the workers. If it had not, Mexico might have lost the jobs to its principal low-wage competitors (Singapore or Taiwan or South Korea) and lost the precious foreign-currency income it needed to pay its bankers.

Wages for workers are, thus, falling on both ends of this global transmission belt. The people who lost their premium manufacturing jobs in the United States are compelled to settle for lower incomes. But so are the Mexican peasants who inherited the jobs. On both sides of the border, workers are caught in a vicious competition with one another that richly benefits the employers.

Most labor unions in Mexico did not try to stand in the way of the wage exploitation and those that did were easily brushed aside. In Matamoros, militant unions initially attempted to organize the maquiladora workers but, for fifteen years, the companies simply ignored Matamoros and located their plants in other border cities -- until the Matamoros labor organization relented. In the United States, of course, industrial unions were drastically weakened as well, as they struggled against the shrinking employment and falling wages imposed by the global system.

The wage depression in Mexico is an extreme case, but not at all unique in the world. In many of the other countries attracting global production, similar exchanges occur that victimize workers and their communities and often benefit the country's established oligopoly of wealth and political power. The CEO of an American clothing company was asked if his company's imported goods from China might, in fact, have been manufactured with slave labor. "Everybody is a slave laborer," he replied. "The wage is so cheap." [3]

Most impoverished nations are understandably desperate to participate in this development. The denial of basic human rights is accepted as a temporary blemish; the long-term vision is that someday, when their people have become experienced industrial workers, they will become the next South Korea or Taiwan.

Mexico bought that vision twenty-five years ago when the duty-free rules for the maquiladora zone were first established, but the present reality of Ciudad Juarez and the other border cities denies the promise. The factories exist, it is true, but the capital investments are still easily portable, if attractive options appear elsewhere, and that threat hovers over every maquiladora factory. Meanwhile, the border cities deteriorate further and any attempt to improve them through higher taxes elicits rebukes from the companies.

"The government of Mexico in 1988 suggested a 5 percent tax on salaries that would be dedicated to urban infrastructure," Professor Valdes-Villalva recalled. "The suggestion was up in the air for about ten days before it was knocked down by the companies. The companies were saying they will have to leave if the tax is imposed. The association that represents them shot it down. The government dropped the idea."

Instead of an experienced workforce, the maquiladora zone has created a bewildering stream of young people tumbling randomly from one job to another.

"We have begun to see more fourteen-year-olds in the plants -- children fourteen to sixteen years old," Valdes-Villalva said. "The maquila workers are very young on the whole, we're talking sixteen to twenty-one years old. Usually, the companies are careful to see that the youngest girls and boys get permission slips from their parents.

"Workers do not age in this industry -- they leave. Because of the intensive work it entails, there's constant burnout. If they've been there three or four years, workers lose efficiency. They begin to have problems with eyesight. They begin to have allergies and kidney problems. They are less productive."

By maintaining a young and impermanent workforce, the companies are able to cut down on their labor costs because, under Mexican law, a worker who is fired gets severance pay and is compensated for every year of seniority. If a company plans to leave someday, it does not want a large experienced workforce that will be entitled to severance when the plant is moved to some other country.

The workers themselves matter-of-factly describe the reality of children who have left school for these jobs. "Quite a lot say they are sixteen but I know they are probably thirteen or fourteen or fifteen years old," said Sylvia Facoln at the GE plant. "I know of people who are less than fourteen years old and I myself brought one of them to work here. It's very common in all the maquilas."

The scandal of major American corporations employing adolescent children to do the industrial work that once belonged to American adults has been documented in many settings, yet it provokes no political response in either Washington or Mexico City. The Arizona Republic of Phoenix ran a prizewinning series on the maquiladora across from Nogales, Arizona, where, among other things, the reporter found thirteen-year-old Miriam Borquez working the night shift for General Electric (the same company that cares deeply about educating disadvantaged minorities at home).

The girl quit school to take the job, she explained, because her family needed the money. They were living in a nine-by-sixteen tin hut. The Arizona Republic's conservative editorial page lamented: "Has greed so consumed some businessmen that human lives in Mexico are less valuable than the next saxophone shipped to the U.S. from Sonora?" [4]

Maquiladora officials always protest their innocence in this matter. Mexican labor law permits them to hire fourteen-year-olds if their parents grant permission. These laws are faithfully observed, the officials explain, but companies cannot always verify the true age of young job applicants and children sometimes forge permission slips from parents or use someone else's documents. This is sometimes true, according to Ignacio Escandon, an El Paso businessman familiar with the Juarez labor market, but the excuse hardly relieves the corporations of their moral burden. "The companies don't ask many questions," Escandon said. "The demand for labor is constant."

There is a general lack of political scrutiny. Beyond anecdotes, no one knows the real dimensions of the exploitation. The use of child labor is one of the many aspects of the Mexican maquiladora that has never been authoritatively investigated, since neither government has much interest in exposing the truth.

Environmental damage from the maquiladora plants, likewise, has never been squarely examined by federal authorities though gross violations have been cited in numerous reports and accusations from private citizens and some state agencies. The National Toxics Campaign described the U.S.-Mexican border as already so polluted with dangerous chemicals that it may become a two-thousand-mile Love Canal."

From twenty-three tests, the grassroots environmental organization found seventeen maquiladora sites with significant discharges of toxics in groundwater or streams and eight sites with severe pollution. A University of Texas study found heightened levels of gall bladder and liver cancer in thirty-three Texas counties along the Rio Grande. In Nogales, where the streams (and sewage) flow north into Arizona, Arizona state officials detected a chemical plume of tetrachloroethylene that had crossed the border too. This is but a sampling of the evidence. [5]

In Ciudad Juarez, an official of the maquiladora industry association actually admitted to the El Paso Times that 40 percent or more of the hazardous wastes generated by the Juarez plants was probably dumped illegally. "Now I can't say for sure those maquiladoras are dumping their toxic wastes in the city's sewer system or landfill," Lino Morales told the newspaper, "but where else would they be disposing of it?" [6]

For years, Professor Valdes-Villalva and her associates have tried to track down what the companies do with the toxic chemicals that are brought into the Mexican plants. Mexican law requires that imported hazardous materials must be shipped back to the United States but the researchers could only find customs documents covering less than 5 percent of the volume. They suspect -- but can't prove -- that the bulk is trucked to illegal dumps in the interior, future Superfund sites waiting to be discovered by Mexican authorities.

"For ten years," Valdes-Villalva said, "they told us they handled no toxic wastes. I was attacked by the plants as an alarmist. Now, they are beginning to admit that they do handle toxic wastes but, unless we can find out what they do with the wastes, there's no way to stop them."

The health consequences that frightened American citizens when they first encountered the casual disposal of toxic wastes in their own communities now worry Mexican citizens too. Like the Americans before them, the concerned Mexicans are confronted by official denial and a lack of reliable information to confirm or refute their fears.

"What most concerns me is the health within the plants," Valdes-Villalva said. "This is where we are lacking. We have no money for research, but we hear these complaints from workers. We find high levels of lead in blood samples. We have situations in which we find a tremendous amount of manic depressives, which does not follow the usual amount in the population. So what I'm beginning to think is that this is a central nervous system disorder, physical not psychological. It could be solvents. It's heavily concentrated in the electronics industry. There's also a tremendous number of Down's syndrome children. Other disorders you find in high incidence are cleft palates and other deformities."

Her description of working conditions is echoed in sidewalk conversations with young workers. The group outside the GE electrical assembly plant talked about the skin problems that some coworkers develop from working with fibers -- sometimes severe enough to send them to the hospital. Daniel Fortino described similar problems. "I use zinc and the only protection I've been given are glasses," he said. "Among some of the workers, I know they get all kinds of rashes on their arms and they've been told it's the materials they are using."

Like the American citizens who have formed thousands of grassroots political organizations to combat industrial pollution, Mexican citizens who summon the courage to protest are utterly on their own -- aligned against both industry and government, without the resources to challenge the official explanations or the political influence to force the government to act. But, of course, the Mexican citizens are in a much weaker position to undertake such political struggles. Their communities are impoverished. Their national economy depends crucially on these factories. Their own democratic institutions are weak and underdeveloped or corrupted.

The situation seems overwhelming, but not entirely hopeless. Along the border and elsewhere, some people of both nationalities are beginning to grasp the fact that citizens of neither nation can hope to change their own conditions without the support of the other. Mexicans cannot hope to stand up to General Motors or GE from the colonias of Ciudad Juarez. Nor can Americans expect to defend their own jobs or their own social standards without addressing the hopes and prospects and afflictions of their impoverished neighbors.

Genuine reform will require a new and unprecedented form of cross-border politics in which citizens develop continuing dialogues across national boundaries and learn to speak for their common values. Only by acting together can they hope to end the exploitation, not just in Mexico but elsewhere across the global production system.

This kind of sophisticated internationalism has not been characteristic among Americans, to put it mildly. It raises the stakes enormously for anyone who envisions a revitalized democracy for it means that, in addition to everything else, the restoration of American democracy will depend upon Americans thinking and acting with a larger perspective on the world. Most Americans, aside from what they are told about the Cold War rivalry and occasional military conflicts, have been educated into ignorance about the world at large.

That is the daunting nature of the global political dilemma. People like Valdes-Villalva have already seen it clearly and so do some Americans. A Coalition for Justice in the Maquiladoras was formed in 1991 by more than sixty American environmental, religious, community and labor organizations, including the AFL-CIO, in order to speak out against the injustices and confront the multinational corporations with demands for civilized conduct. Leaders from the Mexican maquiladora communities are being brought to the United States to spread the word to Americans on the true nature of the global economic system. [7]

"Moral behavior knows no borders," Sister Susan Mika, president of the coalition, declared. "What would be wrong in the United States is wrong in Mexico too."

Valdes-Villalva described the new democratic imperative:

"In order for workers to protect themselves, they have to see that they are tied to workers worldwide," she said. "It is the transnational economy that is undermining labor. A new union has to emerge that crosses national borders and makes a closer relationship among workers -- a new kind of union that cooperates worldwide. Companies can make agreements among themselves about markets and production. The only competition in the global economy is between the workers."


Wolfgang Sachs, the German social critic, offered a mordant metaphor to describe the antidemocratic qualities of the global economy. The global marketplace, he said, has become the world's new "closet dictator."

"The fear of falling behind in international competition has become the predominant organizing principle of politics, North and South, East and West," Sachs wrote. "Both enterprises and entire states see themselves trapped in a situation of relentless competition, where each participant is dependent on the decisions of all other players. What falls by the wayside in this hurly-burly is the possibility for self-determination." [8]

Others have expressed similar perceptions, albeit less dramatically. Jacques Attali, the French economist, noted: "We already know they [the global economic changes] demand that politicians and statesmen accept the unpopular abandonment of sovereignty." W. Michael Blumenthal, chairman of Unisys: "I wouldn't say the nation-state is dead, but the sovereignty has been greatly circumscribed ... even for a country as large as the U.S." [9]

For Americans, this is a new experience, profoundly at odds with national history and democratic legacy. We are now, suddenly, a nation whose citizens can no longer decide their own destiny. The implications offend the optimism and self-reliance of the American character, eclipsing our typical disregard for the rest of the world. Citizens of most foreign nations-smaller, less powerful and more dependent on others -- have had considerable practical experience with the limitations and frustrations of global interdependency. Americans have not. They are just beginning to discover what global economics means for their own politics.

ACORN, the grassroots citizens' organization, discovered, for instance, that the prospect for financing low-income housing -- a major priority for its members -- had been seriously damaged by a new banking regulation that assigns an extremely high risk rating to bank lending for multifamily housing projects. "This will be a disaster for poor people unless Congress intervenes immediately," Jane Uebelhoer of ACORN testified. "This is outright government red-lining and it will be the end of low-income home ownership in Detroit, in Chicago, in New York and elsewhere." [10]

But the new credit regulation did not flow out of any legislation enacted by Congress and the president. It was a small detail in an international agreement forged among the central bankers from a dozen industrial countries, including the United States. The central bankers met periodically in Basel, Switzerland, for several years as the Committee on Banking Regulations and Supervisory Practices, trying to reconcile the different banking laws of competing nations and create a "level playing field" that would standardize the capital requirements for banks.

America's representative (and the leading promoter of the agreement) was the Federal Reserve, the nonelected central bank that enjoys formal insulation from political accountability. While America's most important multinational banks were consulted beforehand, no consumer representatives were included in the Federal Reserve's deliberations nor were any of the groups that speak for low-income home buyers. [11]

By the time ACORN and other community organizations saw the implications, the Federal Reserve had already issued the implementing regulations. Unfavorable terms were thus set for low-income housing and decided in an obscure venue far distant from the affected citizens or even from their elected representatives. Community housing advocates pleaded with Congress (to no avail) to undo the deal fashioned in Switzerland. They asked the Federal Reserve and other bank regulatory agencies to reconsider (also to no avail).

"When we talk to the federal regulators," Chris Lewis, an ACORN lobbyist, complained, "they say to us: 'Oh, that's an international treaty, we can't possibly do anything about that.' So now we have housing policy determined by central bankers with no accountability whatsoever."

American politics, in other words, is moving offshore. The nature of the global economy pushes every important political debate in that direction -- further and further away from the citizens. As companies become multinational, able to coordinate production from many places and unify markets across national boundaries, they are taking the governing issues with them. From arcane regulatory provisions to large questions of national priorities, the corporations, not governments, become the connecting strand in offshore politics, since they are the only organizations active in every place and coping with all the world's many differences.

Arguments that were once decided, up or down, in the public forums of democratic debate are now floating off into the murk of international diplomacy and deal making, They are to be decided in settings where neither American citizens nor their elected representatives can be heard, where no institutional rules exist to guarantee democratic access and accountability.

Environmental activists discovered, for instance, that U.S. proposals for the current round of international trade negotiations would effectively vitiate domestic laws on food safety by assigning the question of standards to an obscure UN-sponsored commission in Rome. If the nation (or a state government) enacts laws on pesticides or food additives that exceed the health standards set by the Codex Alimentarius Commission in Rome, then other nations can declare that the environmental standards are artificial "trade barriers" designed to block foreign products and, therefore, subject to penalties or retaliation.

The goal proclaimed by Bush's trade negotiators is to "harmonize" environmental laws across the boundaries of individual nations to encourage freer trade. But that objective, inevitably, means lowering U.S. standards. Indeed, that is the objective for major components of American agribusiness, including the multinational chemical manufacturers who are enthusiastic supporters of what is blandly called "harmonization."

Agriculture Secretary Clayton Yeutter (later named national Republican chairman) declared: "If the rest of the world can agree what the standard ought to be on a given product, maybe the U.S. or the European Community will have to admit they are wrong when their standards differ." [12]

Thus, laws and regulation that go beyond the status-quo consensus of the global economy are depicted as obstacles to prosperity. When California voters ratified their strict new food-labeling law by referendum in 1986, Yeutter accused California of "going off on a tangent" by writing its own rules. "How can we get international harmonization when we can't get it here at home?" he complained. When the European Community proposed a ban on imported beef treated with artificial growth hormones (that is, U.S. beef), Yeutter objected that the European regulation would "contravene our mutual objective of achieving international harmonization in this sensitive area of food safety."

Yeutter's real target, as his remarks made clear, was the domestic political opposition from American environmentalists who are themselves pushing for more stringent food regulations. The European ban, he complained, will simply "add fuel to the fires for those who wish to have public policy decisions made on the basis of emotion and political pressure." [13]

The scientific experts whom Yeutter claims will make rational decisions, free of "emotion and political pressure," are not free of corporate influence, however. The Codex is an obscure agency utterly unknown to ordinary citizens, but the multinational companies that help devise its standards are well aware of its significance. At a recent session of the commission, the American delegation included executives from three major chemical companies -- Du Pont, Monsanto and Hercules -- serving alongside U.S. government officials. Among other things, the Codex standard permits DDT residues on fruit and vegetables that are thirty-three to fifty times higher than U.S. law allows. [14]

As environmentalists and some allied farm groups have argued, the current round of high- level treaty negotiations known as GATT (for General Agreement on Tariffs and Trade) is actually aimed at fostering a new generation of deregulation for business -- without the inconvenience of domestic political debate.

"The U.S. proposals (for GATT) represent a radical attempt to preempt the authority of its own citizens and the citizenry of other countries to regulate commerce in the pursuit of environmental and social ends," David Morris of the Institute for Local Self-Reliance in St. Paul, Minnesota, declared. "It is an attempt to impose a laissez-faire philosophy on a worldwide basis, to allow the global corporations unfettered ability to transfer capital, goods, services and raw materials across national boundaries."

Other citizen groups and interests, from sugar growers to insurance companies to state governments, have also discovered that global politics is encroaching on their domains. Japan protests that state-set limits on U.S. timber harvesting constitute a GATT violation. European trade officials complain that the state of Maine's new law on throwaway bottles is an artificial trade barrier that the federal government should preempt in accordance with the international trade agreement.

The centrifugal diversity of the American federalist system, in which states can legislate and experiment independent of the national government, is thus headed for collision with the leveling, homogenizing force of the global marketplace. One or the other will have to yield power and prerogatives. [15]
Site Admin
Posts: 33187
Joined: Thu Aug 01, 2013 5:21 am


Postby admin » Thu Oct 31, 2013 1:05 am

PART 2 OF 2 (CH. 17 CONT'D.)

American democracy is ill equipped to cope with offshore politics, both in its institutional arrangements and in its customary responses to foreign affairs. Treaty making and diplomacy belong traditionally to the presidency, even though the U.S. Senate must ratify the results, and there is a time-honored tendency to defer to the chief executive in negotiating foreign relations so that the nation may speak with one voice.

Congress, for instance, has ceded its lawmaking authority to the president across vast areas by authorizing the so-called "fast track" status for trade negotiations like GATT or the proposed trade agreement with Mexico. "Fast track" means that, when the agreement is completed, Congress will take only a single up-or-down vote on approving the entire package, with no chance to amend or reject particular sections. Naturally, this strengthens the president's bargaining position in the international arena, but it also cuts out the democratic process.

Since the trade agreements will repeal or alter numerous sections of existing domestic law, the members of Congress have put themselves in a very weak position to legislate. The only way to resist these changes in law will be to vote "no" on the finished trade agreement and thus undercut the president in global affairs. This would also incur the wrath of corporate interests and the other sectors who are beneficiaries.

The "fast track" approach is another form of political cover for cowardly legislators -- a way for them to accomplish unpopular results while pleading that their hands are tied by the president. In 1991, both organized labor and a broad front of environmental groups joined forces to mount an energetic campaign against the "fast track" status for the Mexican trade negotiations. They cited the maquiladora experience as evidence of what will follow in terms of lost jobs, environmental damage and exploitation of Mexican workers. They lost -- a measure of how strongly the corporate political organizations (and conventional wisdom) are pulling in the opposite direction. [16]

The overall political effect of globalization is to further enhance the power of the presidency -- just as the Cold War did -- at the expense of representative forums, public debate and accountability. Once an issue has become part of high-level diplomatic exchanges, all of the details naturally become murkier, since negotiators do not wish to talk too freely about their negotiating strategies. The discussions often literally move offshore and behind closed doors -- more irregular deal making that will have the force of law.

When international deals are being struck, it mailers enormously who is doing the bargaining and who is in the room offering expert advice. The so-called G-7, for instance, meets regularly to "coordinate" economic policies among the major industrial nations (including fiscal policy, a realm the Constitution assigns to Congress). Yet there is no visible procedure -- much less legislated agenda -- by which the Treasury secretary or the Federal Reserve chairman is empowered to make international economic policy for the nation. Those two officers, by their nature, represent a very narrow spectrum of American interests-mainly banks and the financial system -- and they cannot be expected to reflect the full, rich diversity of American perspectives on economic issues. Bankers are well represented, but who speaks for the home builders or the auto industry or machine tools or the farmers?

Substantial institutional reforms are needed, obviously, to prevent global politics from gradually eclipsing the substance of democratic debate and action. At the very least, that would mean democratizing reforms to ventilate the U.S. negotiating routines in a systematic way so that everyone can follow the action. It might also require refusal to participate in any international forum or agency that lacks democratic access to the information and decision making. If the chemical companies can lobby the Codex in Rome for weaker health standards, then surely any other American citizen should be able to sit at the table too. When central bankers meet in Basel to decide U.S. housing policy, then housing advocates should also be in the room.

The first, overriding imperative, however, is to defend the nation's power to govern its own affairs. If democracy is to retain any meaning, Americans will need to draw a hard line in defense of their own national sovereignty. This is not just about protecting American jobs, but also about protecting the very core of self-government -- laws that are fashioned in open debate by representatives who are directly accountable to the people. Among other things, this challenge requires Congress to confront the presidency and restrain it -- to refuse to grant the chief executive the power to bargain away American laws in the name of free trade or competitiveness or any other slogan.

Offshore politics threatens the ability of free people to decide the terms of their own social relations; it allows the closet dictator to decide things according to the narrow interest of "efficiency." The "harmonizing" process begins with the regulatory laws that business interests consider meddlesome and too expensive, but the attack will lead eventually to the nation's largest social guarantees, welfare or Social Security or health, since those programs also add to the cost of production and thus interfere with the free-flowing commerce among boundaryless companies.

Who will decide what is equitable and just for American society? A closed meeting of finance ministers in Geneva? An obscure group of experts in Rome coached by corporate lobbyists? Such questions have already penetrated the fabric of self-government. Americans, in addition to their other democratic burdens, need to get educated on the answers.

Other nations, with more experience at global interdependence, are caught in the same pressures, but many of them understand, much better than Americans do, how to protect their own social values and institutions against the closet dictator's hand. Japan is the leading example of a nation that espouses free trade but ignores the principle whenever it needs to defend its domestic institutions against foreign intrusion. Japan does not do this only for economic advantage, as Americans suppose, but often to satisfy domestic political values. Japan shelters its rice growers from cheap imports (that is, American rice) because the island nation feels strongly about self-sufficient food production. It protects small retail outlets against the intrusion of giant retailing corporations because the tradition of small shops and shop owners is valued.

Japan breaks the "rules" in countless ways when its own prerogatives are threatened by global economics, but so do many others. The nations of western Europe have resisted more successfully than the American government has, even as they move toward an integrated European economic community. For that matter, many developing nations impose protective rules as the entry price for foreign investment, rules the multinational companies cheerfully accept. Some countries, such as South Korea, virtually seal their borders to foreign products that might undermine domestic development. Only in America are these governmental actions regarded as forbidden. [17]

The political problem this issue poses in America, aside from the ignorance and powerlessness of citizens, is that the elite groups that govern are mobilized on the other side. The elites of media, business, academia and politics have already made up their minds on these questions. They are committed to promoting the global economic system -- and to defending it against the occasional attacks from angry, injured citizens.

To speak for national sovereignty, to speak on behalf of American jobs or political values, is to be labeled reactionary by the dominant political culture. The corporate political organizations, with their overwhelming resources, are able to depict any dissenting voice as a backward protectionist, standing in the way of modernizing enterprise. The gross injustices of global commerce are concealed behind the high-minded platitudes about free trade.

The governing elites face one large impediment, however, in their campaign for unfettered globalization: The American public, on the whole, doesn't buy it. As virtually every opinion poll demonstrates, the public wants the national government to defend American jobs and economic independence more aggressively, especially against trading partners like Japan or West Germany. The public envisions the U.S. government leading the world toward stronger public standards on the environment and other issues, not promoting the leveling process that pul1s American laws down to the lowest common denominator. Americans, it is true, may be unfamiliar with the complexities of global politics, but their gut suspicion -- that valuable assets are being lost -- is not misguided.

The tension on this subject between the people at large and the powerful interests that dominate politics and government is emerging as the most serious, fundamental conflict in the decayed American democracy. The politics of the global economy, more profoundly than any other issue, puts the self-interest of the governing elites in conflict with the common ambitions of the governed. The governing elites have the power to advance their own narrow interests. For the public at large, however, their actions carry disturbing implications of disloyalty and betrayal.


The concept of the "boundaryless company" has now become commonplace among executives of major multinational corporations. They are American companies -- sort of but not really, only now and then when it suits them. IBM, the flagship of American industrial enterprise, is composed of 40 percent foreign employees. Whirlpool is mostly not Americans. GE puts its logo on microwaves made by Samsung in South Korea. [18] Chrysler buys cars from Mitsubishi and sells them as its own. America's most important banks operate legally authorized "foreign facilities" right in Manhattan for the benefit of depositors who wish to keep their money "offshore."

The question of what is foreign and what is American has become wildly scrambled by global commerce. The multinational enterprises, unlike Americans generally, are already securing alliances in this fierce world of global competition-networks of joint ventures, coproduction and shared ownership with their ostensible rivals in the world, including state-owned enterprises in foreign nations. Every U.S. auto company has become partners one way or another with its competitors, the Japanese car companies. Producers of electronic equipment, computers, even aircraft have melded their American citizenship in similar arrangements.

Multinational executives work to enhance the company, not the country. The president of NCR Corporation told The New York Times: "I was asked the other day about United States competitiveness and I replied that I don't think about it at all." A vice-president of Colgate-Palmolive observed: "The United States does not have an automatic call on our resources. There is no mindset that puts this country first." And the head of GE Taiwan, where so many U.S. industrial jobs have migrated, explained: "The U.S. trade deficit is not the most important thing in my life ... running an effective business is." [19]

John Reed, CEO of Citibank, America's largest troubled bank, has said he is actively scouting options for moving the corporation headquarters to a foreign country in order to escape U.S. banking laws. "The United States is the wrong country for an international bank to be based," Reed declared. Meanwhile, his bank's deposits are protected by the U.S. taxpayers and his lobbyists in Washington actively promote a multi-billion-dollar government bailout to save large commercial banks like Citibank from insolvency. [20]

These men are merely expressing the prevailing values of the "stateless corporation," as Business Week called it. This creature operates most successfully when it discards sentimental attachments like patriotism and analyzes global opportunities with a cold, clear eye. Some of these same corporations, it is true, wave the flag vigorously when bidding for defense contracts or beseeching the U.S. government for tax subsidies, but their exuberant Americanism dissipates rapidly when the subject is wages or the burden of supporting public institutions.

Their weak national loyalty has profound implications for the nation's politics because these men, on the whole, are also influential voices in shaping the outlines (and often the close details) of national economic policy -- not just for trade policy, but for taxation and government spending priorities. Politicians in both parties (especially the Republican party) defer to their worldly .experience. Most economists and political commentators have embraced their argument that America's future prosperity will be best served by a laissez- faire regime in which governments get out of the way and let the marketplace develop its global structure.

But here is the blunt question: Can these people really be trusted to speak for the rest of us? How can they faithfully define America's best interest when their own business strategies are designed to escape the bounds of national loyalty? What is good for IBM or General Electric mayor may not be reliable advice for the country as a whole and for most of its citizens.


The impressive fact about ordinary Americans is that, despite years of education and propaganda, they still cling stubbornly to their skepticism about the global economy. With the usual condescension, elite commentators dismiss the popular expressions of concern as uninformed and nativist, the misplaced fears of people ill equipped to grasp the larger dimensions of economics.

Ordinary citizens generally form their economic opinions and perceptions, not from distant abstractions or even from the endless tides of propaganda, but from their own commonsense values and their own firsthand experiences. What they have seen of the global economy in the last two decades tells them to be wary and even hostile. In a functioning democracy, these popular insights, though not derived from sophisticated techniques of analysis, would be respected as the baseline for political debate and decision making.

Common sense tells people that it cannot be good for America's long-term prosperity to lose millions of high-wage manufacturing jobs. Even if this hasn't affected their own employment, it means that middle-class families are losing the wherewithal to be viable consumers, and sooner or later, that has to hurt the overall economy. Workers know this; so do merchants.

While most citizens do not sit down and try to calculate exactly what "declining real wages" have meant to their own incomes, they do know something bad is happening to them. They are working longer hours, but their paychecks don't seem to buy the same things they used to buy. When they go to look for a new car or a home, they discover that their idea of where they stood financially was mistaken -- their expectations are now beyond the reach of their incomes. This widely shared anxiety is expressed in opinion polls as a preoccupation with the "cost of living" and, when analyzed by political elites, is interpreted as a complaint about rising prices and inflation.

Actually, as pollster Stanley Greenberg discovered in his focus groups with voters, the personal fears about the "cost of living" are really grounded in shrinking wages. The common perceptions are quite accurate. In 1979, for instance, an American worker earning average wages had to work twenty-three weeks to earn enough to buy an average-priced car. A decade later, he or she had to work thirty-two weeks to buy the same car. As the president of Chrysler put it: "We're looking at the pooring of America."

At this stage, people are not much beyond a general quandary about why this is happening to them. If pressed for explanations, they will blame various things, from welfare and affirmative action to crooked politicians. But the principal explanation expressed in public opinion is foreign competition. Industrial workers, who have now had two decades of close experience with the global marketplace, are more knowledgeable than others. They can explain the effects of internationalized labor and pricing in rich, detailed analysis based on the circumstances in their own workplaces. Americans are gradually being educated about the world through their own painful encounters with it.

People generally do not have coherent ideas about how the wage deterioration might be reversed -- except that the government ought to be fighting aggressively on that front. Virtually no one in the top ranks of American politics -- with the exception of the Reverend Jesse Jackson -- speaks for this unorthodox point of view. To take it seriously would require politicians to debate the nature of the "stateless corporations" and entertain legislation aimed at their unfettered conduct.

The erosion of U.S. wages has proceeded unevenly since the early 1970s and will not soon be reversed. An average weekly paycheck worth $270 in 1981, if measured in constant purchasing power, declined to $254 by 1991 and is heading still lower. This average loss was, of course, not spread uniformly through the society, since some gained enormously while many others lost much more than the average. [21]

In fact, many orthodox economists routinely assume that the American wage decline must continue for at least another generation. The subject came up occasionally during interviews I conducted with various economists at Wall Street brokerages in the mid-1980s and the Wall Street economists, without exception, predicted further erosion for the next twenty to twenty-five years. Unfortunate but inevitable, they said. The trend is driven, they explained, by the deep and ineluctable process in which worldwide wage patterns are moving toward equilibrium -- a "harmonization" of labor costs among nations, just as some officials wish to "harmonize" the environmental laws.

American workers will not descend to the poverty levels of Indonesia or Bangladesh, the economists assured me, but their standard of living must decline further until the relative costs and advantages of production locations in the world system have found a balancing point. American workers, once the best paid in the world, have naturally suffered the consequences first but, over time, others will feel it too. U.S. industrial wages have already fallen behind those of Germany and some other European nations, even though American productivity remains the highest in the world.

Apostles of the global economy constantly preach to American workers that, if they want to maintain their incomes, they must increase their productivity. But the evidence of the 1980s contradicts those sermons. The productivity of U. S. workers overall increased cumulatively by more than 12 percent during the decade, while their hourly wage rates increased by only 2 percent. For manufacturing workers, the disparity was much greater: Their output per hour increased most dramatically during the industrial realignments of the 1980s, but they were not compensated for it. [22]

The dismal forecast for American wages is a predicate for explosive politics in America, but the Wall Street economists did not anticipate any great rebellion. Wages have been falling for nearly two decades, they noted, and so far the American people have accepted it with patience and maturity. Indeed, American voters keep electing conservative governments that are committed to unfettered globalization.

The trend, however, has a flavor of betrayal that could ignite political upheaval, as it becomes clearer to people. The globalization process is generating great prosperity for the upper stratum of the society, the best-educated and least vulnerable citizens. Roughly speaking, if one is securely connected to one of the emerging global enterprises, whether American or foreign-owned, the future looks bright. Indeed, the last decade has been an extraordinary time of expanding incomes and wealth for those who are managers or professionals or investors attached to the international commerce.

The fissuring of common interests -- and the power relationship behind it -- is expressed most vividly in what has happened to executive compensation. The people at the top are literally leaving everyone else behind. Between 1977 and 1990, the period when average wages were stagnating, compensation for top corporate executives rose by 220 percent (this was, of course, also when the people in the top income brackets were winning their dramatic tax cuts). In 1960, the average pay for chief executives at the largest American corporations, after taxes, was twelve times greater than the average wage for factory workers. By 1990, it was seventy times greater. [23]

In fact, the upper stratum of citizens and their global enterprises benefit enormously from the very things that injure the other classes of workers -- the depression of wages and the dismantling of national sovereignty. National interest is fracturing into two distinct and opposing poles. The new global elites are gradually "seceding" from their responsibilities to the general well-being of the nation, as Robert B. Reich has put it. The process could accurately be described in harsher terms -- as betrayal -- except that probably no one sets out deliberately to accomplish that. It is simply a matter of the people with power taking care of themselves, while leaving the nation mired in an awesome backlog of economic and social problems.

The diverging political interest explains much of what has happened in government in recent years and it shows up regularly in different forms on the governing agenda. The Bush administration's bank reform proposal, for instance, was based on the German and Japanese model of concentrated banking power and designed to create a handful of U.S. global banks, freed of regulatory restriction and able to dominate American industry as well as finance (though still sheltered from loss by the "full faith and credit" of the American taxpayers).

In education, the so-called "school choice" issue is also an effort of elites to separate themselves from the mass. Stripped of reformer rhetoric, "school choice" is really a scheme to divert taxpayer financing to private schools and thus foster a two-tiered educational system -- an elite, selective school system that trains the professional talent needed by global enterprise and an underfinanced public school system for everyone else. The Business Roundtable and leading multinational companies are promoting the cause as their own -- in the name of competitiveness.

The elites' abandonment of national loyalty is also reflected in the political commerce of Washington. It is now commonplace for top operatives in both parties to use the skills and influence they acquired from government service on behalf of foreign interests. The Center for Public Integrity checked the career paths of fifty-three senior officials who had left the office of U.S. trade representative over fifteen years and found that 47 percent of them went to work for the other side -- registered as foreign agents.

"Japan is running an ongoing political campaign in America as if it were a third major political party, " economist Pat Choate wrote in his book Agents of Influence, which described the awesome dimensions of how the Japanese interests manipulate U.S. policy through their hired American agents. [24]

Focusing on the influential Americans who work as Japanese agents misses the fundamental point, however, and wrongly demonizes that country. The Japanese are simply emulating -- albeit with lots of money -- the methodology of American corporate politics, They have adapted efficiently to Washington's techniques for mock democracy: Hire squads of well-connected lobbyists and lawyers from both political parties, contribute generously to think tanks and other ostensibly civic organizations, finance research and propaganda on behalf of your position. "A big part of the problem," said Karel van Wolferen, the Dutch journalist who is an authority on Japanese politics, "is that Americans can be bought so easily."

The more fundamental point, however, is that the Japanese line in American politics is not essentially different from the line of America's own multinational corporations and banks. The two interests even merge in such places as the Institute for International Economics, where they speak as one voice. Japanese and American multinationals compete with one another for market shares in global commerce, but both want roughly the same things from the U.S. government -- the same policies on trade, on taxes, on managing the American economy.

The unpleasant truth is that, on the largest political issues, the views of America's global corporations are much closer to those of their Japanese economic rivals than they are to those of the majority of American citizens. For that matter, the managers and technicians active everywhere in global commerce are closer to their counterparts in other nations than to their fellow citizens. They have a common political perspective, regardless of their citizenship, which they promote in the politics of Europe, Asia and the United States. In America, a bewildered and intimidated political system can no longer even figure out what the "American position" is.


The majority of Americans are not wrong in their unsophisticated skepticism. The new reality of global competition generates a vicious economic trap for worldwide prosperity: a permanent condition of overcapacity in production that insures destructive economic consequences. Simply put, the world's existing structure of manufacturing facilities, constantly being expanded on cheap labor and new technologies, can now turn out far more goods than the world's consumers can afford to buy. That is, more cars, computers, aircraft, appliances, steel and so forth are made than the marketplace can possibly absorb.

The auto industry is an uncomplicated example: Auto factories worldwide have the capacity to produce 45 million cars annually for a market that, in the best years, will buy no more than 35 million cars. "We have too many cars chasing too few drivers," a Chrysler executive remarked. The economic consequences are obvious: Somebody has to close his auto factory and stop producing. This marketplace imbalance in supply and demand is the larger reality that underlies the fierce competition for advantage among companies and among nations -- the awesome force driving everyone toward the lowest common denominator.

Whose factory must be closed to bring the worldwide supply into balance with the worldwide demand? Whose workers will be laid off? The older, less modern factories are closed first, of course, but also the plants that pay the highest wages and the ones where government provides less generous tax subsidies to the employer. American workers in steel and autos and other industries have had a lot of experience watching this process at work -- seeing factories they knew were viable and productive suddenly declared obsolete. But so will workers in the less abundant nations. This process closed Ohio factories and someday it will close Mexico's. So long as global productive capacity exceeds global demand by such extravagant margins, somebody somewhere in the world has to keep closing factories, old and new.

The companies have no choice. They must keep moving their production, keep seeking the lowest possible costs and most favorable political conditions, in order to defend their market shares. Eventually, as economist Jeff Faux has written, South Korea will be losing jobs to cheap labor in Thailand and even China may someday lose factories to Bangladesh. The popular notion among struggling nations that they can someday become the next South Korea -- as the reward for a generation or so of the degradation of their workers -- is fatally at odds with the logic of permanent overcapacity. The Mexican maquiladora cities thought they were going to become the next South Korea, but instead they may be the next Detroit. [25]

In fundamental economic terms, the globalization process produces three interlocking economic consequences that together are deleterious to everyone's well-being. First, it destroys capital on a large scale by rendering productive investments useless to the marketplace. That is the meaning of closing viable factories that can no longer meet the price competition: The invested capital is lost, the idle factories are written off as tax losses. Modernizing production with new technologies always produces this destruction, of course, but the global dispersion of production lives on it -- like a game of checkers in which advantage goes to the player who made the last jump.

Second, the overcapacity permanently depresses wage levels worldwide, since no workers anywhere can organize and bargain very successfully against the threat of a closed factory, whether they are well-paid Americans or impoverished peasants working somewhere in the Third World.

Finally, these two effects -- the instability of capital investment and the depression of wages -- combine to guarantee that global demand can never catch up with global supply. New consumers for the world's output, to be sure, emerge with new development, but other existing consumers are lost, as their jobs are lost or their wages decline in real terms. So long as the process is allowed to run its course, the flight will continue downhill -- too many factories making too many goods for a marketplace where too many families lack the wherewithal to buy them.

The way out of this economic trap is a grand political strategy for growth that focuses on workers and wages worldwide. The global economy can proceed to develop, without the destructive qualities, if an economic order of accelerated global growth is designed to generate rising incomes for ordinary citizens and, thus, greater consumer capacity for what the world is able to produce. A strategy that fosters higher wage levels would gradually unwind the condition of enormous overcapacity, while it also discourages the desperate edge of capital flight.

This approach would require, of course, a great reversal in the conservative economic doctrines that now dominate most governments in the industrial world. It would also require convincing guarantees to the citizens of impoverished nations who long for jobs -- guarantees that they will not be shut out of the rising prosperity. The economic policies for accomplishing such a strategy are plausible enough. What is not plausible at this moment in history is the politics. [26]

* * *

It does not require great political imagination to see that the world system is heading toward a further dispersion of governing power so the closet dictator of the marketplace can command things more efficiently, from everywhere and nowhere. The historic paradox is breathtaking: At the very moment when western democracies and capitalism have triumphed over the communist alternative, their own systems of self-government are being gradually unraveled by the market system.

To cope with this complicated new world, every government naturally seeks to centralize its command of policy and thus become more hierarchical, less democratic. Societies like Japan have a natural advantage because they already practice a feudal form of state- administered capitalism, dominated by a one-party monopoly in politics, managed through government-assisted cartels and insulated from popular resistance. Some elites in the United States, though they do not say so directly, would like to emulate the efficiency of the Japanese political structure -- equipping the chief executive with even more authority and putting citizens at even greater distance from government.

For many years, a wishful presumption has existed that, in time, the hegemony of global corporations would lead the way to the construction of a new international political order - world institutions that have the representative capacity to govern equitably across national borders. That prospect is not at hand in our time.

On the contrary, what is emerging for now is a power system that more nearly resembles a kind of global feudalism -- a system in which the private economic enterprises function like rival dukes and barons, warring for territories across the world and oblivious to local interests, since none of the local centers are strong enough to govern them. Like feudal lords, the stateless corporations will make alliances with one another or launch raids against one another's stake. They will play weakening national governments off against each other and select obscure offshore meeting places to decide the terms of law governing their competition. National armies, including especially America's, will exist mainly to keep the contest free of interference.

In that event, the vast throngs of citizens are reduced to a political position resembling that of the serfs or small landholders who followed church or nobility in the feudal system. They will be utterly dependent on the fortunes of the corporate regimes, the dukes and barons flying their national flag. But citizens will have nothing much to say about the governing of these global institutions, for those questions will have moved beyond their own government. If national laws are rendered impotent, then so are a nation's citizens.

A different vision of the future requires great political imagination -- a new democratic sensibility in which people in many places manage simultaneously to overcome their sense of helplessness. Americans, given their heritage, are as well positioned as anyone in the world to take up the challenge and begin to develop a different script, one that is grounded in democratic principle and action. As its starting point, ironically, this requires a wise, purposeful kind of nationalism -- in which Americans confront the global system and defend their own political values against it.

A single nation is not helpless before these forces, despite what conventional wisdom teaches, and the United States especially is not helpless. Citizens have enormous potential leverage over the global economy if they decide to use it through their own national governing system. A corporation's behavior abroad is not separable from its home country because it enjoys so many special benefits at home.

In the United States, a multinational corporation that wishes to be treated as an American citizen for the purposes of the law and government benefits can be made to play by America's rules, just as Japan's are, or else surrender all the tax subsidies, government contracts and other considerations, including national defense, that American taxpayers provide.

Why should Americans, for instance, provide research and development tax subsidies for corporations that intend to export their new production and to violate common standards of decency by exploiting the weak? Why should American military forces be deployed to protect companies that do not reciprocate the national loyalty?

These are among the many contradictions created by the global system that only nationalism can reconcile. American law cannot police the world and need not try, but it can police what is American. To take the starkest example, no U.S. company should be treated as a lawful entity, entitled to all the usual privileges, if its production is found to exploit child labor in other countries. The same approach applies across the range of corporate behavior, from environmental degradation to ignoring tax laws.

The American political system also has enormous leverage over the behavior of foreign-owned multinational enterprises -- access to the largest, richest marketplace in the world. Because of that asset, the United States could lead the way to new international standards of conduct by first asserting its own values unilaterally. If trade depends upon price advantages derived mainly from poverty wages for children or defenseless workers prohibited from organizing their own unions or factories that cause great environmental destruction, this trade cannot truly be called free.

The purpose of asserting America's political power through its own marketplace would be to create the incentive for a new international system of global standards, one which all the trading nations would negotiate and accept. For a start, the United States ought to reject any new trade agreements that do not include a meaningful social contract -- rules that establish baseline standards for health, labor law, working conditions, the environment, wages. The U.S. government might also prohibit the familiar tax-dodging practices of companies that exploit communities as the price for new jobs. Indeed, companies ought to post community bonds when they relocate -- guaranteeing that they will not run away from their obligations to develop roads and schools and the other public investments. [27]

Fundamentally, it is not just the exploited workers in the United States who need a higher minimum-wage law. The world economy needs a global minimum-wage law -- one that establishes a rising floor under the most impoverished workers in industrial employment. A global minimum-wage law would recognize, of course, the wide gaps that exist between rich and poor, but it could establish flexible ratios aimed at gradually reducing the differences and prohibiting raw exploitation like that in the maquiladora zone in Mexico. No one imagines that world incomes will be equalized, not in our time certainly. But, as nations move toward equilibrium, they ought to be governed by a global economic system that pushes the bottom up rather than pulling the top down.

The democratic imperative is nothing less than that: to refashion the global economy so that it runs uphill for everyone, so that it enhances democracy rather than crippling it, so that the economic returns are distributed widely among all classes instead of narrowly at the top. This is the daunting outline of the next frontier for citizens who still believe in the idea of democracy. It will be as difficult as any barrier to democracy that Americans have faced previously in their history.

Despite our insularity, Americans are equipped in special ways to lead the next march toward democracy. After all, we have come from almost everywhere else in the world. Many of us still speak the languages of home countries and still know the cultures and political contexts of other places. Furthermore, the American popular culture travels before us everywhere in the world, expressing the nation's joyful sense of invention and optimism and individualism -- the American qualities others wish to share.

The American people, however, also have a peculiar handicap to overcome. It is their own source of shame. While the American system is the world's beacon, speaking to the universal thirst for democratic possibilities, the reality of democracy is quite different at home, as Americans know. However brave and resourceful they may be, Americans cannot teach democracy to the world until they restore their own.
Site Admin
Posts: 33187
Joined: Thu Aug 01, 2013 5:21 am


Postby admin » Thu Oct 31, 2013 1:07 am

Conclusion: The American Moment

My earliest political memory was the death of Lincoln when I cried inconsolably. I was four or five years old at the time and my mother read to me from one of those picture books with exemplary messages. The story of Lincoln's life unfolded in simple black-and-white etchings, from the humble origins in a frontier cabin to the White House. Young Abe learning to read by the light of the hearth, honest Abe the store clerk who walked many miles to return a customer's change, President Lincoln who freed the slaves and preserved the Union. Then, at the moment of triumph, the cruel assassination. The pictures ended in black bunting, a tragedy I found inexplicable.

My mother, who has romantic sensibilities, did not attempt to explain away the contradiction. Life is strange, life is wonderful, she often mused. The best and the worst, she meant, are frequently side by side in human experience. I came away, I suppose, with her melodramatic sense of things.

Lincoln, I believed as a child, was the actual fulfillment of America's democratic faith. He embodied the possibility that sovereign citizens, regardless of birth or status, could collectively decide their own destiny and somehow become greater than themselves. Yet the potential for tragic disappointment was also always present.

As an adult, I read deeper histories and learned the mature facts about Lincoln, the devious politician, the elusive and uncertain commander, but none of this contradicted what I had learned as a child. In fact, the full portrait made Lincoln seem even larger because, fully human and fallible, he could encompass every paradox about the nation's character -- the crass and cunning side alongside its virtuous principles, the blind willfulness and also America's capacity to defy history.

He was still Lincoln. He still stood for an idea of democracy that I think is now widely dismissed as mystical -- the belief that only from the many can this nation fulfill its larger qualities. My impression is that many Americans, perhaps most of them, no longer really believe this. Or they are sullenly resigned to the assumption that, given modern complexities, a genuine, full-throated democracy is no longer practical in America. Given the realities of power, it no longer seems plausible to them. Possibly, they are correct. If so, America will come to be identified, like other nations before it, by its grosser parts -- mere geography defined by muscle and appetites and national eccentricities.

I choose to believe otherwise: The American saga always was and still remains a difficult search for democratic meaning. This nation, more than most, is driven by a transcendental imperative, an idea never fully realized, often blunted and even suppressed, but central to the society's energies. Genuine democracy, as Vaclav Havel has said, is like a distant horizon that no human society has yet reached or perhaps ever will reach. But that does not end the story and, in some ways, the search in America may be only just beginning.

At this moment of history, Americans are in the awkward position of receiving congratulations from around the world for upholding the democratic example when they know, if they are honest, that this adulation is directed at a political system that is not functioning in good faith with its own ideals and principles. No one can contemplate American democracy in the late twentieth century without experiencing the dissonance between the idea and the reality. Some citizens, the energetic minority who still believe, struggle to resolve these contradictions.

In a cynical era, a childhood reverie on Lincoln may seem ludicrously romantic. Reflections on democratic faith are dismissed as "unrealistic," like the tired boilerplate of campaign speeches. My conviction, however, is that an active faith in democratic possibilities dwells at the very center of the American experience. The first step toward renewal is to free ourselves of the cynical expectations of these times and to reassert that faith without hesitation or apology -- to declare stubbornly that what we were all taught in childhood is still true, or can be true, if we decide to make it so.

The burden of this book has been critical, an attempt to explain the antidemocratic conditions that deform American politics. A clear-eyed understanding of these circumstances may be necessary in order to change things, but it is not a guarantee that things will change. Certainly, history provides abundant evidence of human societies that were well aware of their own contradictions and simply chose to evade them. Americans have the capacity for evasion too, as the nation's history amply demonstrates.

But the United States is still quite young as nations go and still a country capable of new departures, with the potential to surprise the world and even surprise itself. In the nature of things, this capacity is mainly a matter of faith.


After thirty years of working as a reporter, I am steeped in disappointing facts about self-government. Having observed politics from the small-town courthouse to the loftiest reaches of the federal establishment, I know quite a lot about duplicitous politicians and feckless bureaucracies, about gullible voters and citizens who are mean-spirited cranks. These experiences, strangely enough, have not undermined my childhood faith in democratic possibilities, but rather tended to confirm it.

Reporting for newspapers (or magazines or broadcasting) is not a reflective occupation, but the work has one wonderful, redeeming quality to it. Reporters have a license to go almost everywhere in the society and talk to almost anyone, from U.S. senators and corporate managers to bus drivers and schoolteachers and poor people on welfare. In a random, roving manner, a reporter may experience this country firsthand -- from top to bottom -- with a variety of encounters not accessible to most other citizens. What I learned about America deepened my faith in the democratic possibilities.

Among other things, I have seen up close the frailties of power. At the pinnacles of political command, whenever I have been able to peer behind the veil of platitudes, I have usually glimpsed a scene of confusion and often chaos -- the trial and error, folly and misapprehensions of people in charge trying to decide what to do. The randomness of human endeavor exists at the top too; history confirms that this is nearly always the reality of power.

For several generations, however, Americans have been systematically taught to defer to authority and expertise in a complicated world. The modern political culture, transmitted by schools and universities and the news media, teaches implicitly that those chosen to hold power have access to special knowledge and intelligence not available to others and, therefore, their deliberations and actions are supposedly grounded in a firmer reality. My own experience, on the contrary, has corroborated again and again the native American skepticism of elites. I believe that, if the real inside story were known, every statesman and politician would prove to be as recklessly human as the rest of us.

This fallibility should not be held against them; the same qualities exist in authority figures of every kind, from corporate executives to church prelates. There is a "reassuring anarchy," as I once called it, in the most exalted realms of power and this encourages my conviction that rigid arrangements of power are much more vulnerable to intrusion and change than the experts and authorities wish people to believe. If citizens could grasp, sympathetically, the human dimension of the political failures that are periodically revealed in high places, they might recognize a greater capacity in themselves for influencing and even commanding the larger outcomes of the society.

The people who are running things are especially prone to error when they are isolated from the shared ideas and instincts of the larger community. Indeed, that is the pragmatic argument for democracy: A governing system that is well grounded in the common reality of the society at large is likely to produce sounder decisions, connected to real facts and conditions. The hard work of democracy involves constructing and sustaining those connections.

My encounters as a reporter with ordinary citizens have also led to optimism about the potential for democratic renewal. America has its full quota of fools and scoundrels, but this is a nation of people who are mostly smart and capable and, on the whole, generously disposed. If one is open to it, the wild variety of American life is endlessly strange and entrancing. As one gets to know these different people in their own peculiar circumstances, it seems extraordinary that we are all Americans, living in the same vast nation and with more or less the same civic values, and yet we are.

As a younger reporter, I spent many years getting on airplanes, flying around the country and dropping down into the lives of strangers, often at their worst moments, when a local crisis or conflict had become newsworthy. Nearly always, I came away refreshed by these encounters and even awed by the people and their stories, their openness and level-headed sense of things, the raw eloquence and inventive humor and sometimes their courage. Some of those citizens have appeared in this book.

Even in the most benighted comers of this country, in burned-out slums or on desolate Indian reservations, I have always met some whose forceful intelligence shone through the barriers of language and education and class. I frequently came away thinking to myself: Those people would be running things if they had been born with a bit more luck. If they spoke in formal English and dressed in blue pinstripes, they could pass for U.S. senators or bank presidents. I recognized, of course, that my insubstantial sympathies did not answer their complaints. Their anger would be satisfied only when it could speak for itself.

This is difficult, I know, for the well born and well educated to believe about the ordinary run of Americans (and perhaps threatening to some) for it suggests there is a vast pool of unrealized ability dwelling in the American population -- people with important things to say who are not heard. America, it is true, would be a very different place if all of those unheard ideas and aspirations were given a full voice in politics. Democracy disrupts power.

Ordinary people, as this book has illustrated, do assert themselves despite the obstacles. Indeed, if there is one constant in all my years of observing politics, it is the single, shocking fact that the most far-reaching developments in my memory did not emanate from Washington or anywhere else in the elected structure of politics but came instead from obscure, unpredictable places where unanointed citizens found a way to express themselves. The civil rights movement is, of course, the most compelling example. It changed the fabric of American life more profoundly than anything else in my lifetime, save World War II.

I remember, in particular, interviewing the aging black leaders of Summerton, South Carolina, nearly two decades after they had filed one of the initial lawsuits that led to the Supreme Court's historic school-desegregation decision. These were yeoman farmers and laborers, a school principal, a minister, a cafe owner. Many of them had paid a terrible personal price for challenging the status quo. Men and women were fired from jobs, small businesses were ruined. Some had been driven out of the county permanently.

Looking back, they spoke with the pride of people who knew they had helped to move the national history but also with self-conscious precision, like witnesses wanting to set down the true facts, not inflated afterthoughts. Their struggle had begun over a pitifully small matter, they explained, when they asked the white school board to supply coal to heat the black children's one-room country schoolhouse. When the school board refused, their anger deepened. Some of these men had just come home from World War II and the contradictions of the racial caste system mocked their patriotic sacrifice.

So they raised their demands further. They also wanted school buses for the black kids and no more hand-me-down textbooks, and decent buildings with indoor plumbing. Politics failed and the dispute became a lawsuit. When the civil rights lawyer came down from New York (he was Thurgood Marshall, later a Supreme Court justice), he told them that, since they were in this fight, they might as well go all the way and challenge the caste system itself. The idea was frightening and some hesitated. These people were already enduring reprisals and the intimate hostilities that are part of life in a small town. They agreed to go forward, however. Their legal cause was expanded to challenge the law of racial segregation itself and eventually their suit became a companion in the decision known as Brown v. Board of Education.

Long years later, I am still awed by their elemental courage. "Courage" is another word not often used now in politics, along with "loyalty" and "trust," but these humble citizens were pulling themselves at risk in terms much more stark than losing an election and for a far larger public purpose.

They did not presume to reach for power for themselves and certainly not to change the social order. They embarked on a quite modest plea for justice and, improbably, found themselves perfecting its meaning. Years later, in fact, the underlying social order of Summerton itself had not changed that much, even though their struggle had helped to change the nation. Life is strange, as my mother said. These people balanced their political disappointments with the intangible rewards of self-realization. In addition to changing America, they discovered that they had also changed themselves and this achievement was permanent.

If there is a mystical chord in democracy, it probably revolves around that notion -- that unexpected music can resonate from politics when people are pursuing questions larger than self. As a reporter, I have seen that ennobling effect in people many, many times -- expressed by those who found themselves engaged in genuine acts of democratic expression, who claimed their right to help define the larger destiny of their community, their nation. Power can accumulate in mysterious ways, if citizens believe they possess this right. Their power atrophies when they no longer believe in it. This book is for the believers.


Rehabilitating democracy will require citizens to devote themselves first to challenging the status quo, disrupting the existing contours of power and opening the way for renewal. The ultimate task, however, is even more difficult than that: building something new that creates the institutional basis for politics as a shared enterprise. The search for democratic meaning is necessarily a path of hard conflict, but the distant horizon is reconciliation. Americans coming to terms with themselves -- that is the high purpose politics was meant to serve.

This renewal, if it occurs, will not come from books. A democratic insurgency does not begin with ideas, as intellectuals presume, or even with great political leaders who seize the moment. It originates among the ordinary people who find the will to engage themselves with their surrounding reality and to question the conflict between what they are told and what they see and experience. My modest ambition for this book is that it will assist some citizens to enter into "democratic conversations" with one another, asking the questions that may lead them to action. [1]

The random anger visibly accumulating in so many sectors of the society can be therapeutic, but only in a limited sense. The democratic problem requires hard work from citizens who have been taught to be passive consumers in politics. It means people must learn once again to come together and develop their own understanding of events, free of the slogans and propaganda. It requires them to take the daring step of assuming some personal responsibility for self-government.

The task of learning is naturally intimidating. This book has set out many of the complicated conditions that history has dealt to the present -- the political circumstances that confine citizens to cramped roles and warp the lines of accountability and control. I have also suggested various new ways that people might think about how to reform the political order. But there are no easy and simple ways around these barriers. In my estimate, the status quo is much more vulnerable to purposeful challenges organized by citizens than conventional wisdom supposes. But I do not presume to know exactly how or where the insurgency begins.

Democratic solutions will emerge only from the trial-and-error of active citizens who learn for themselves how to do politics, who discover the methods and principles that work because people have tried and occasionally failed. It requires of people the patience to accumulate social understandings that they have tested against reality and then to pass on their knowledge freely to others.

Strange as it may seem to an era governed by mass-market politics, democracy begins in human conversation. The simplest, least threatening investment any citizen may make in democratic renewal is to begin talking with other people about these questions, as though the answers matter to them. Harmless talk around a kitchen table or in a church basement will not affect anyone but themselves, unless they decide that it ought to. When the circle is enlarged to include others, they will be embarking on the fertile terrain of politics that now seems so barren.

A democratic conversation does not require elaborate rules of procedure or utopian notions of perfect consensus. What it does require is a spirit of mutual respect -- people conversing critically with one another in an atmosphere of honesty and shared regard. Those with specialized expertise serve as teachers, not commanders, and will learn themselves from listening to the experience of others. The respect must extend even to hostile adversaries, since the democratic objective is not to destroy them but to reach eventual understanding. At its core, the idea of democracy is as simple as that -- a society based on mutual respect.

This obvious human quality, seemingly available to all, is what's missing from American politics, drenched as it is in mass manipulation and deception and sour resentments. Indeed, mutual respect, above and beyond the usual social and economic distinctions, is missing from the general fabric of American life. A society that regularly proclaims democratic pieties also devotes extraordinary energy and wealth to establishing the symbols and trappings of hierarchy, the material markings that delineate who is better than whom.

The search for honest conversation, like other aspects of the democratic experience, can be its own reward, whether or not it leads to the fulfillment of power. It opens a path to self-realization grounded in social relationships -- knowing others on terms that are reliable and enduring. Americans are already searching for "relationships," almost frantically it seems, on a close personal level. What many of them fail to grasp is that politics, in its original sense, also offers a practical means for mending the damaged social relations that afflict American life.

Building a politics grounded in intimate human terms seems so remote from the present that many will regard it as an impossible task. The organizational barriers are obvious and formidable, reflecting the inequalities of private status and the fractured nature of the society itself. Certainly, it is work for years or decades, not seasons.

But ordinary citizens, as this book has demonstrated, have their own inherent advantages in this enterprise, including their ability to see the reality more clearly sometimes than those who hold power. In some scattered places, the democratic ideal is already in motion, often among humble citizens who lack any personal advantages. These are people who still believe, as the Ohio auto worker said, that "the ultimate power is in their hands." They regularly find their faith confirmed in actual experiences.

When incumbent officeholders begin to perceive a real threat developing to their power, that is the moment when electoral politics can begin to become serious and interesting again. A genuine democratic dialogue can follow, one that promises accountability and also trust between the governed and their government. When the organized presence of citizens can deprive others of power, all the deeper power relationships surrounding government will be put at risk too.

The cynical cannot grasp this possibility, but the believers know that it is the actual history of American democracy. At the most creative moments in the American past, the nation found its true source of political energy and ideas among those citizens in unexpected quarters who took it upon themselves to renew the search.


As a nation, Americans are coming to the hard part of the saga, I believe, the time when things become less easy and the true character of the nation is revealed. In my romantic optimism, I have come to imagine that this may be the moment of testing that history was preparing for us all along. After two hundred years of fabulous invention, adventure and abundance, we are on new ground: awesomely powerful yet insecure and dependent, a democratic beacon for others yet profoundly troubled in our own social reality.

Americans are about to learn whether the American experiment was truly unique -- capable of defying history -- or simply another chapter in the rise and fall of muscular nation-states. Until now, the national experience seemed to unfold without boundaries, either geographical or material or psychological. The transcendental expectations were regularly fulfilled and the promise of future fulfillment was kept alive for almost everyone. But the space of that promise has shrunk visibly and the nation is bumping up against some harsh new obstacles to its power. National reputation and the military might of empire do not necessarily prevail over the new economic forces at work in the world. Citizens are told to temper their ambitions and appetites; the new realities are said to be beyond our control.

If the idea of America as specially positioned in history was nothing more than legend, then the future seems fairly clear and is commonly described as decline. Nothing in history guarantees, after all, that the richest, most energetic and inventive place on earth will remain so forever. The usual story of great powers is that sooner or later, when the glory faded, they sank into social decay and bitterness. That is the usual ending for a political system that persistently ignores reality, and for a people who become alienated from their own values.

My own optimism insists that this new crucible can yield a different outcome. But this is the hard part: The only way I can imagine this may happen is through the restoration of the civic faith. The American moment cannot be about accumulating more wealth or weaponry or territory; the facts will not allow it. It must involve a more difficult and introspective search for social invention -- politics that takes the democratic idea to its next plateau in human history.

The present generation and the next, in other words, must find tangible ways to reinvigorate the social faith in the promise of democracy. The nation's sense of its own continuing search for something better is endangered and, without that civic faith, this nation is in deep trouble. If democratic character is lost, America has the potential to deteriorate into a rather brutish place, ruled by naked power and random social aggression. Innocent faith is what makes America work.

That faith does not imply impossible notions of perfection, but it does require convincing forward motion toward a social contract that most everyone will understand and accept -- mutual understandings that promise equitable and shared objectives. To achieve this in the contemporary circumstances, the present generation of Americans may have to face some of the Republic's oldest contradictions, contradictions that were always successfully evaded in the past.

Boundless prosperity and adventure, throwing off new wealth and dispersing it widely, allowed the political system to avoid confronting questions of hierarchy and class and race, the inequalities of poverty and plenty, the privileges embedded in the political order. Endless expansion ignored the accumulating damage to the natural environment. General abundance made it easier to accept a political system that had become steadily more distant from popular control. Now we are up against those questions again.

These matters have been evaded for good reason; they are the most difficult to resolve and no society anywhere that calls itself a democracy has succeeded in facing them. Americans, however, have much more at stake because this nation depends crucially upon sustaining the idea of a democratic society. It is the essential strand that binds diverse peoples together and enables the society to see itself as a functioning whole.

Americans need a new parable for themselves -- a story of national purpose that faces the present realities maturely but does not sacrifice the country's youthful idealism and inventiveness and self-confidence. If Americans set out to rehabilitate their own democracy, they may discover new democratic vistas for others. It is a chance to organize the future -- to lead the world to ground where no one has ever been before.

Despite the centuries of struggle and advance, democracy is still a radical proposition. "This is an unsanctioned idea," historian Lawrence Goodwyn observed, "but this is the democratic idea: that the people will participate in the process by which their lives are organized."

New possibilities are opened for any society that takes that idea seriously. The oldest questions of human existence remain unanswered by modern societies, despite the gloss of technology and wealth. The complexities of modern life have ensnared people in new forms of subservience. Why do millions still starve when the world is awash in surplus food? How can the modern economic system be transformed so that growth and prosperity do not depend so centrally on waste and despoliation? What are the outlines of a democratic system in which workers and owners and communities would truly share a voice in organizing their own lives? None of these matters remains unresolved because of physical constraints. They are political questions, waiting on democratic answers.

Americans should not suppose that they are the only people who need to ask such questions or are equipped to find the answers. While American democracy has decayed, people in the most unlikely nations have become the new inventors of democratic possibilities -- toppling the most rigid forms of power with the force of organized people.

Their experiments, even their failures, have provided a tonic for small-d democrats everywhere in the world. They have restored, above all, honest language-the capacity to speak about democracy with clarity and sincerity, as if the idea of self-governing people is fresh and alive and still practical. They have further restored an understanding that, as Vaclav Havel said, democracy is the unfinished story of human aspirations.

"Man must in some way come to his senses," Havel wrote from his prison cell. "He must extricate himself from this terrible involvement in both the obvious and hidden mechanisms of totality, from consumption to repression, from advertising to manipulation through television. He must rebel against his role as a helpless cog in the gigantic and enormous machinery hurtling God knows where. He must discover again, within himself, a deeper sense of responsibility toward the world, which means responsibility toward something higher than himself." [2]

The American beacon helped to teach people everywhere to aspire to self-realization and to rebel against powerlessness. Now, it seems, the former students must re-educate Americans in the meaning of their own faith. Perhaps that is when the American moment will begin: when Americans find the courage to speak honestly again in the language of democracy.
Site Admin
Posts: 33187
Joined: Thu Aug 01, 2013 5:21 am


Postby admin » Thu Oct 31, 2013 1:15 am



INTRODUCTION: Mutual Contempt

1. The human yearning for democracy is profound and universal, as the upheavals in Communist nations have most recently confirmed. It is driven fundamentally by the impulse for individual self-realization, a desire to discover and establish one's one worth in the collective context of the surrounding world. The struggle to achieve this is so difficult that the search has proceeded fitfully even in the most congenial settings, such as the United States.

The history of nations has reflected this search over the last four or five hundred years as different societies sought to discover democratic meaning and establish its terms. Some places have advanced not at all; some created the forms of democracy but without the substance. Other places -- most notably the United States -- embraced the idea in their national character and have worked fairly steadily toward improving upon it. Democracy is a presumption, not that the majority of the voters will always be right, but that real choices will be put before them.

2. Alexander Hamilton defined the paternalistic skepticism of popular rule that is still reflected in the modern elites of both political parties. Quoted in John F. Manley, "The American Dream," Nature, Society and Thought, Fall 1988.

3. The New York Times published a four-part series in March 1990, called "The Trouble with Politics, Running vs. Governing," which concluded: "Politicians in both parties say government is being crippled by a new superstructure of politics that makes ideas harder to discuss and exalts public opinion over leadership."

4. Ernesto Cortes, Jr., "Powerlessness also corrupts," Speech to Farm Crisis Workers Conference, published in Texas Observer, July 11, 1986.

5. The voting decline of 20 percent was calculated by Curtis Gans of the Committee for the Study of the American Electorate. Dissatisfaction with the 1990 elections was described in "The People, the Press & Politics 1990," Times Mirror Company, November 16, 1990.

6. The poll was taken by Stanley Greenberg and Celinda Lake and reported in The Commonwealth Report, April 1989.

7. Polls on public perceptions of who controls government have shown increasing alienation for nearly thirty years with a brief reversal in the early 1980s when Ronald Reagan took office. Data from the Center for Political Studies, University of Michigan, were cited, for instance, by Herbert Gans, Middle American Individualism: The Future of Liberal Democracy, Free Press, 1988.

8. Lewis H. Lapham, "Inspectors General," Harper's, July 1989.

9. Senator D'Amato was quoted in The Wall Street Journal, January 30, 1990.

10. Inventories of the powerful are generally compiled by eccentric scholars of the left and right and their work often inspires a kind of brittle paranoia -- the image of a few influentials meeting somewhere in some dark room. Power in American politics is too diffuse -- and sometimes chaotic -- for such facile definitions. The sociologist C. Wright Mills came much closer a generation ago when he defined the "power elite" as five generic subcategories: the upper classes and wealthy; corporate executives and owners; the political directorate at the top of government, including lawyer-statesmen; the military managers and their industrial partners; and that vague status system known as celebrity. See C. Wright Mills, The Power Elite, Oxford University Press, 1956.

ONE: Mock Democracy

1. An analysis by Common Cause determined that 239 practitioners of leveraged buyouts, their wives and children contributed $3.5 million, including $1.2 million in so-called "soft money" for George Bush. Washington Post, October 22, 1989.

2. The internal details of how the Superfund Coalition was organized were provided in memorandums made public by the Natural Resources Defense Council and other protesting environmental organizations.

3. I have no evidence to indicate that the New York Times story by Peter Passell on September 1, 1991, was directly linked to the Superfund Coalition, but it relied prominently on experts from General Electric and Clean Sites, an industry-sponsored organization that deals with toxic cleanup projects.

The major polluters were also active on the legal front in their efforts to stymie Superfund enforcement and force Congress to rewrite the law. The corporations launched a flurry of liability lawsuits against municipalities and small businesses -- even pizza parlors -- arguing that these enterprises had also contributed toxic wastes and should share in the cleanup costs, even if their liability was minuscule compared to that of the large manufacturers and insurance companies. This effort was designed to stimulate a political backlash against Superfund and persuade Congress to back off the original legislation. See Wall Street Journal, April 2, 1991.

4. Tommy Boggs was quoted in the National Journal, June 13, 1990.

5. The sampling of AEI's corporate patrons is from 1987, reported by James T. Bennett, Patterns of Corporate Philanthropy: Ideas, Advocacy and the Corporation, Capital Research Center, 1989.

6. Some details on how business set out to mobilize in Washington are drawn from David Vogel, Fluctuating Fortunes: The Political Power of Business in America, Basic Books, 1989.

7. The Commerce Department per-capita income rankings are for 1987, Washington Post, March 1, 1990.

8. The rise of high incomes and the decline of low-income families in the Washington area are from Market Trends, Greater Washington Research Center, November 1988.

9. Business's growing share of interest organizations is from Michael D. Reagan, Regulation: The Politics of Policy, Little, Brown, 1987. The Senate Government Affairs Committee study of citizen participation was done in 1979 in an effort to rally support for government grants to citizen representation groups, a brief experiment that had its own flaws but, in any case, was killed during the Reagan years. The data were cited in Gary C. Bryner, Bureaucratic Discretion: Law and Policy in Federal Regulatory Agencies, Pergamon Press, 1987.

10. Anthony Downs, an economist at the Brookings Institution, is better known in contemporary Washington as an authority on real estate and urban development. His thesis in political philosophy challenged the civic smugness promoted by the mainstream political scientists extolling the virtues of pluralism. Anthony Downs, An Economic Theory of Democracy, Harper & Row, 1957.

11. Politicians in tax-exempt activities, National Journal, December 9, 1989.

12. The New York Academy of Sciences reported, for instance, that the cancer death rate among men, excluding lung cancer, which is often attributable to smoking, has increased by 9 percent since 1950 in industrial nations. The report, compiled by twenty-six scientists in thirteen countries, adjusted for such factors as aging populations -- the explanation often offered for the rising cancer rates. Washington Post, December 10, 1990; also the Natural Resources Defense Council's report in Cancer Statistics Review, 1973-1986, National Cancer Institute, May 1989.

13. The study of scientific bias was cited by Gary C. Bryner in Bureaucratic Discretion, previously cited.

14. An exhaustive academic literature exists on the vagaries of cost-benefit analysis, most of it written by policy thinkers who deplore the weaknesses and inconsistencies. but still regard it as a useful tool for decisions of resource allocation. They do not, by and large, acknowledge the broader moral context in which they are operating and they seem unaware that public decisions made by government rely on a different kind of authority than the cost-benefit decisions made by private business.

The examples of life value arguments are drawn from several sources: Michael D. Reagan, Regulation, previously cited; V. Kerry Smith, editor, Environmental Policy under Reagan's Executive Order: The Role of Benefit-Cost Analysis, University of North Carolina Press, 1984; Martin J. Bailey, Reducing Risks to Life: Measurements of the Benefits, American Enterprise Institute, 1980; and an interview with David Vladeck of Public Citizen.

15. Charles E. Lindblom described democracy as "imprisoned" by markets. See "The Market as Prison," in Thomas Ferguson and Joel Rogers, editors, The Political Economy: Readings in the Politics and Economics of American Public Policy, M.. E. Sharpe, 1984. Lindblom's argument was elaborated more fully in his own book, Politics and Markets: The World's Political-Economic Systems, Basic Books, 1977.

Two: Well-Kept Secrets

1. The frayed principles of liberals on the House Banking Committee were displayed in raw form when some of them in late 1989 tried to depose Henry Gonzalez as chairman. Their complaint was that he had failed to consult them on committee business and was insufficiently partisan. The reality is that Gonzalez is an independent-minded critic of the cozy relations between banking and the federal regulatory apparatus. Gonzalez, furthermore, had embarrassed his own party by holding a series of investigative hearings on Charles Keating and other S&L moguls who had manipulated various Democratic politicians with campaign money. For years, the liberals were silent when their committee was chaired by a corrupt finagler. When an honest politician became chairman, they rebelled. In any case, Gonzalez prevailed, by a vote of 163-89, in the House Democratic caucus.

2. I described the financial and economic consequences of the 1980 financial deregulation in Secrets of the Temple: How the Federal Reserve Runs the Country, Simon & Schuster, 1987, and also in The Trouble with Money, Whittle Direct Books, 1989. The most deft description of how deregulation doomed the savings and loan industry came from Albert M. Wojnilower, chief economist of First Boston Corporation. "Freeing the thrift and mortgage markets from government subsidy and guarantee, " he wrote, "is like freeing the family pets by abandoning them in the jungle."

3. Senators Garn and Proxmire were quoted by the Associated Press, July 26, 1985. The Treasury secretary's testimony was before a Senate banking subcommittee on June 13, 1985.

4. Alan Greenspan, as private consultant, wrote to federal regulators and asked them to give Lincoln Savings and Loan an exemption from the regulation limiting direct real-estate investment. He described Lincoln's management as "seasoned and expert in making direct investments" -- the very opposite of what subsequent events proved about Charles Keating's management. The Federal Reserve chairman, when asked later about his intervention in behalf of Keating, replied, "Of course I'm embarrassed." New York Times, November 20, 1989.

5. See my article, "The Growing Crisis in Our S&L Industry," Rolling Stone, August 11, 1988, which quoted Robert Dugger and other bank lobbyists on how they intended to do the taxpayer bailout right after the election.

6. The separation of electoral politics from governing politics is deeply ingrained in the culture that shapes and limits corporate journalism. After the 1988 election, with some embarrassment, political reporters recognized that they had missed the savings and loan story, but they pursued it in the same narrow terms -- which party might suffer more from this scandal at the next election? Political reporters are averse to the "substance" of such issues and often quite ignorant about them. In general, despite their embarrassment with the savings and loan debacle, the media repeated the same opacity as the crisis of failing commercial banks grew larger.

7. Theodore J. Lowi, a Cornell political scientist, wrote: "The people are shut out at the most creative phase of policy making -- where the problem is defined. " See "The New Public Philosophy: Interest-Group Liberalism," in Thomas Ferguson and Joel Rogers, editors, The Political Economy: Readings in the Politics and Economics of American Public Policy, M. E. Sharpe, 1984.

8. General Electric purchased the apartment complexes with a promise that one third of the units would be available to low-income families. Robert Bass, the wealthy Texas investor, was among others who acquired defaulted properties under the program that reformers had enacted. See Leslie Wayne in The New York Times, June 27, 1991.

9. As one who participated in discussions of the Financial Democracy Campaign's proposals, I witnessed up close the dilemma of citizen groups that try to penetrate the special-interest circle surrounding legislative issues. At meeting after meeting, the participants in the coalition fen into the same argument among themselves: whether to push genuinely fundamental reforms that went far beyond the conventional terms of debate or to advance modest proposals on the margins that had at least some chance of acceptance.

Generally, the old hands from Washington-based groups tended to favor the moderate strategy since they had considerable experience in the frustrating task of lobbying for large ideas that no one in Congress would listen to. People who have spent years establishing working relationships with a handful of sympathetic members of Congress are not anxious to sacrifice their connections by pushing them to sponsor ideas bound to lose.

The other side, including myself, argued that nothing fundamental was likely to happen in Washington anyway until the general public became aroused and much better educated about their stake in the contest. The process of political education could only begin if the reformers pushed the larger ideas, regardless of whether Congress was ready to listen.

In the end, the campaign did a bit of both but its legislative efforts inevitably gravitated toward the narrower focus of modest amendments that seemed doable, given existing political realities. In this manner, even groups that wish to change the political agenda are co-opted by the status quo.

THREE: Bait and Switch

1. The shift in tax burdens was described in "The Decline in Progressivity and the Decline in Revenue," Citizens for Tax Justice, February 23, 1990.

2. Kevin P. Phillips described the shift of tax burdens with brilliant documentation in The Politics of Rich and Poor, Random House, 1990. But Phillips concluded by predicting that old cycles of American politics would correct the injustices -- Democrats would rediscover the working class and return to power to make things right. My argument is that the cyclical swings in which Phillips puts his faith are another of the self-correcting mechanisms that no longer seem to work. Democrats were principal coauthors of the vast shift in taxation and, unless there is a dramatic turnover within that party, Democrats will be reluctant to undo what they helped to create.

3. The imbalance of financial wealth was reported in the Federal Reserve Board's "Survey of Consumer Finances, 1983," Federal Reserve Bulletin, September and December 1984.

4. For more details on how elite opinion rallied around an austerity agenda during the presidential campaign, see my articles in Rolling Stone, "The Shadow Debate on the American Economy" and "The Real Election in America This Year," July 14 and August 25, 1988.

5. Alan Greenspan's statement on the need to curtail domestic consumption was in response to a written question submitted by Senator William Proxmire at a Senate Banking Committee hearing, February 24, 1988.

6. "Opinion leaders respond very differently from the general public when asked about potential new revenue sources to cut the deficit," the Gallup survey reported. "While much of the public would support a new tax on gasoline only as a last resort, opinion leaders overwhelmingly favor (74 percent) such a tax.... A majority of corporate leaders (54 percent) and about half of financial leaders (48 percent) favor the establishment of a national sales tax.... Slightly over half of the financial leaders surveyed (52 percent) favor taxing Social Security at the same rate as ordinary income." See "The Press, People & Economics," Times Mirror Company, May 1989.

7. The Gallup and IRS surveys as well as much other data on the public's opposition to the regressive trend in taxation are described by Barry Sussman in What Americans Really Think: And Why Our Politicians Pay No Attention, Pantheon, 1988.

8. Details on tax collection can be found in "Income Tax Compliance Research, Gross Tax Gap Estimates and Projections for 1973-1992," IRS; statement of Representative J. J. Pickle, oversight chairman, House Ways and Means Committee, February 20, 1990; speech by Charles A. Bowsher, comptroller general, "An Emergency Crisis: The Disinvestment of Government," December 2, 1988; and "Facts on the Federal Income Tax System-1989," National Treasury Employees Union.

9. The shifting income shares were described by Joseph A. Pechman of the Brookings Institution in "The Future of the Income Tax," a paper distributed December 22, 1990.

10. Darman was referring approvingly to the 1986 tax legislation that sharply reduced tax rates for the upper-income brackets, Washington Post, February 26, 1989.

11. Anthony Downs, in An Economic Theory of Democracy, described democracy's theoretical inclination to favor the many over the few. "The equality of franchise in a democratic society," Downs wrote, "creates a tendency for government action to equalize incomes by redistributing them from a few wealthy persons to many less wealthy ones."

12. Mellon's celebrated dictum was quoted in "Less Taxing Alternatives," Democracy Project Reports, March 1984. For an authoritative account of the intellectual combat surrounding the progressive income tax, see Ronald Frederick Key, "From Redistributive to Hegemonic Logic: The Transformation of American Tax Politics, 1894-1963," Policy & Society, 1983.

13. "Put the jam on the lower shelf" has been attributed to Ralph Yarborough by those who heard him campaign in the 1950s. I first heard the slogan in Kentucky politics in the early 1960s, employed by a Republican state senator from a rural district.

14. Darman's remarks were in a speech at the National Press Club, July 20, 1989.

15. Thomas B. Edsall, The New Politics of Inequality, W. W. Norton, 1984.

16. David Stockman was quoted by the author in The Education of David Stockman and Other Americans, New American Library, 1986.

17. The Wall Street Journal poll found that people with incomes over $50,000 favor a higher tax rate on unearned income, 61 percent to 19 percent. Wall Street Journal, October 26, 1990.

18. John D. Raffaelli was quoted in "Zap! You're Taxed," National Journal, February 3, 1990.

19. The White House argument that persuaded Reagan to endorse the Social Security tax increase was related by Richard E. Neustadt and Ernest R. May, Thinking in Time: The Uses of History for Decision-Makers, The Free Press, 1986.

20. Survey data on the 1983 Social Security legislation are from Barry Sussman, What Americans Really Think. Neustadt and May, professors at Harvard's Kennedy School, offered the Social Security episode as one of several case studies of wise political management in their book, Thinking in Time.

21. The statistics on the revenue shifts are from a statement by Senator Daniel Patrick Moynihan, January 14, 1991.

22. See Barry Sussman, What Americans Really Think, for an insightful discussion of the public's skepticism toward tax reform. Bums Roper testified before the Joint Economic Committee, quoted in my article, "Break Dancing," Rolling Stone, October 1986. The windfall tax cuts in the 1986 legislation are drawn from data from the Joint Committee on Taxation. Other wealthy individuals were, of course, forced to pay more taxes since they were losing the benefit of various loopholes. Overall, however, all people with incomes above $200,000 enjoyed an average tax cut of $2,856 each-compared to a $200 tax cut for middle-income families. Sponsors argued the income-tax legislation was marginally progressive, but that claim was meaningless since it left out the rising burden imposed on most families by Social Security taxes.

23. Rostenkowski disparaged Moynihan's proposal in a speech before the Futures Industry Association convention in Boca Raton, Florida, March 9, 1990, where he promised to protect the brokers against federal taxes on their transactions. The evasion of Representative Richard Gephardt, House majority leader, was described by Fred Barnes, "Leaders to Follow," New Republic, May 14, 1990.

24. See The Wall Street Journal, March 14, 1990, and Washington Post, March 11, 1990, for details of Rostenkowski's plan.

25. For an insightful discussion of the Democrats' collaboration with Republicans on taxes and other matters, see Robert Kuttner, "Congress Without Cohabitation," American Prospect, Winter 1991.

26. The Wall Street Journal, because it rigorously and unsentimentally covers business's interface with government, is the best available source for news of the governing politics that I have described in this book. Journal reporters usually go right to the bottom line: Who won and who lost and how much? Three of its reporters, Jeffrey H. Birnbaum, David Wessel and Jackie Calmes, undoubtedly contributed to the 1990 rank-and-file revolt in Congress by describing the implications of the bipartisan budget agreement with such inescapable clarity. Wall Street Journal, October 2 and 3, 1990.

27. Reporters Donald L. Bartlett and James B. Steele found that a provision limiting personal exemptions for the well-to-do, which was billed as raising $10.8 billion from the wealthy, would actually yield no more than $2 billion or $3 billion-and that money would come from upper-middle-income families, not the rich. The same measure was proffered by congressional tax writers as proof of their even-handedness back in 1986 when it was first enacted. See Philadelphia Inquirer, November 4, 1990.

28. The Lipsey-Kravis study also challenged the conventional argument that the U.S. saving and investment rate lags far below its competitors' and that this explains disappointing economic growth. The different savings rates, they concluded, are really in large part differences in economic definitions of what counts as capital formation and in the cultural preferences of different nations. Robert E. Lipsey and Irving B. Kravis, Saving and Economic Growth: Is the United States Really Falling Behind? The Conference Board, 1987.

FOUR: The Grand Bazaar

1. Robert B. Reich's regulatory community included 12,000 lawyers in law firms representing business before courts and agencies, 9,000 lobbyists in firms specializing in lobbying, 42,000 trade association lobbyists and employees, 9,300 public-relations and public-affairs specialists, 1,200 trade journalists, 3,500 consultants advising government agencies and 15,500 lawyers and lobbyists from large corporations and federal agencies. Reich, "Regulation by Confrontation or Negotiation," Harvard Business Review, May-June 1981, cited by Bryner in Bureaucratic Discretion.

2. I can testify from personal experience on the enormous difficulty of covering regulatory politics in a manner that matches the demands of a daily newspaper. As assistant managing editor for national news at The Washington Post, I made several attempts to do so and all failed. In 1981, under my supervision, the Post initiated the "Federal Page," devoted each day to large and small stories from the regulatory government. For a year or so, the expanded coverage of regulation seemed engaging and occasionally significant, hut in time the effort lost its energy and focus.

To cover the full range of complex regulatory battles with any depth would require a substantial number of reasonably sophisticated reporters and lots of patience -- an investment of resources that very few news organizations are able or willing to make. As a result, the coverage of regulatory issues is almost totally dependent on the sporadic alarums sounded by interested parties. A news story may be generated, for instance, by an environmental organization that exposes malign behavior in an agency's decisions. But otherwise reporters keep their distance from the process and are usually quite ignorant of who is winning or losing.

3. The growth of regulatory laws was cited by Bryner, Bureaucratic Discretion.

4. The unifying effect of modern regulation on business political action is described by Carl J. Mayer in "Personalizing the Impersonal: Corporations and the Bill of Rights," Hastings Law Journal, March 1990.

5. Theodore J. Lowi is the most penetrating critic of the governing system he calls "interest-group liberalism." See The End of Liberalism: The Second Republic of the United States, W. W. Norton, 1979.

6. The environmentalists' record of winning 68 percent of those challenges to EPA that were decided by judges was between 1970 and 1980, cited in Bryner, Bureaucratic Discretion.

7. The "grand bazaar" metaphor I am using in this chapter is borrowed from an essay I wrote on the same subject fifteen years ago on the eve of Jimmy Carter's inauguration. This ought to establish at least that my own analysis of lawless government did not result from the scandals in the Reagan years. See Washington Post, January 20, 1977.

8. The Nixon-Ford-Iacocca dialogue lasted only thirty-five minutes on the morning of April 27, 1971. The ill-focused quality of their conversation is a jarring contrast with the conventional claim that regulatory matters of health and safety should be decided with scientific precision. The tangled history of airbag regulation was recounted by Joan Claybrook, president of Public Citizen and highway-safety administrator under Jimmy Carter, in a speech, "Influencing Agency Decision-Making," August 1, 1983.

9. The delayed enforcement of the ban on red dyes was reported by Bryner, Bureaucratic Discretion.

10. Nuclear accidents and fines were analyzed by Ken Bossong, leader of Critical Mass, Ralph Nader's watchdog organization on nuclear power.

11. The fraud cases involving defense manufacturers covered seven years before 1990, New York Times, November 12, 1990.

12. On EPA's lax enforcement, see Michael Reagan, Regulation: The Politics of Policy, Little, Brown, 1987, and the testimony of John C. Martin, EPA inspector general, before Senator John Glenn of Ohio in "Serious Management Problems in the U.S. Government," Senate Government Affairs Committee, September 28, 1989.

13. Frederick Malek's manual on how to politicize the civil service was revealed during the Watergate investigations into the Nixon administration. The text was published in Federal Times, December 18, 1974. Malek himself became campaign manager for George Bush's 1992 re-election campaign.

14. Data on federal regulatory personnel are from Michael Reagan, Regulation: The Politics of Policy. Details on how the Reagan administration cut back enforcement are from David Vogel, Fluctuating Fortunes.

15. Gregg Easterbrook, "Radio Free Watkins and the Crisis at Energy," Washington Post Magazine, February 18, 1990.

16. Senator Pryor was quoted by Kirk Victor, "Farming It Out," National Journal, December 16, 1989.

17. Elite leaders, led by Lloyd Cutler and fanner Federal Reserve Chairman Paul Volcker, began a campaign in the late 1980s to reverse the decline of government management. The National Commission on the Public Service, chaired by Volcker, warned of a "quiet crisis" in the senior ranks of the civil service. The campaign produced some progress on salaries for senior executives, but it also collided with the antigovernment attitudes that conservative business interests had spent two decades encouraging. It seemed out of character for a think tank like the American Enterprise Institute to begin worrying about the quality of government employees, when AEI had devoted so much scholarship over the years to demeaning their efforts.

18. The New York Times's dramatic and repetitious coverage of this scandal actually drew some reproach from other news organizations, which seemed to consider it untoward for a major newspaper to "crusade" on public matters. In an earlier time, repetition and dramatic emphasis were the standard techniques that newspapers used to force political attention to neglected issues. See Washington Post, January 8, 1989.

19. Exhaustive congressional hearings as well as press investigations have focused on pollution by federal agencies, particularly the Energy and Defense departments. These few examples are from among scores cited in the following sources: "Review of Hazardous Waste Disposal Practices at Federal Facilities," August 15, 1983, and "Hazardous Waste Problems at Department of Defense Facilities," November 5, 1987, House Government Operations Committee; "Environmental Compliance by Federal Agencies," April 28, 1987, and "Cleanup at Federal Facilities," March 3, I988, House Commerce Committee. See also: Howard Kahn, "America's Worst Polluter," Rolling Stone, May 3, 1990.

20. The issues surrounding EPA's ability to enforce the law against other federal departments were explored in "Environmental Compliance by Federal Agencies," House Commerce Committee, April 28, 1987.

21. Data on OSHA prosecutions is from Raymond Maria, Labor Department inspector general, in "Serious Management Problems in the U.S. Government," Senate Government Affairs Committee, September 28, 1989. The National Safe Workplace Institute in Chicago has published a series of shocking reports on OSHA's weak enforcement, including "Unintended Consequences: The Failure of OSHA's Megafine Strategy," June 25, 1989.

22. Construction industry data are from "Construction: The Most Hazardous Industry in the Nation," Laborers' National Health and Safety Fund, 1990.

23. EPA also responded to the Lordstown workers' complaints and fined General Motors $1.5 million for toxic air pollution from the plant. Union and company officials again dismissed the action, claiming that GM had already complied with the law. Youngstown Vindicator, March 7, 1991.

FIVE: Hollow Laws

1. Mary Johnson's account of the Americans with Disabilities Act, Nation, October 23, 1989.

2. The academic studies on the failure of modern regulation, some of which have been cited here, generally focus on the managerial questions, not the larger democratic principles enunciated by Theodore Lowi. Many critical scholars start from a conservative probusiness position that assumes these laws were ill advised in the first place and attempted to deliver impossible goals that would not truly benefit the society. Others tend to focus on the techniques by which the laws are frustrated and propose various managerial reforms, but without examining the larger framework of power.

3. The EPA data on high-risk industrial facilities were released by Representative Henry Waxman, chairman of the House subcommittee on health and the environment, January 12, 1990. EPA placed a cautionary disclaimer on the data, which, it said, were calculated for purposes of relative comparisons and rankings of pollution sources but could not be relied upon as a plant-by-plant measure of health risks. Waxman acknowledged that the ratings were based on simplified assumptions but should nevertheless "raise a red warning flag in communities where these facilities are locating -- and spur prompt action to investigate the plants further."

4. Senator Moynihan sarcastically announced his own more modest goal for the year 2000- hat by then the nation would at least understand that the political system is not serious about improving education. See his speech, "Goals for the Year 2000," March 12, 1990.

5. The surveys of public opinion on environmental trade-offs were reported in The Wall Street Journal. April 20, 1990, and The New York Times, April 17, 1990.

6. Robert W. Crandell, "The Political Economy of Clean Air: Practical Constraints on White House Review." in V. Kerry Smith, editor, Environmental Policy Under Reagan's Executive Order, University of North Carolina Press, 1984. Some environmentalists predict that the modest progress on clean air will be reversed during the I 990s as the number of vehicles continues to multiply without offsetting improvements in emission controls.

7. The leisurely development of RCRA regulations in the Carter administration was described by Marc K. Landy, Marc J. Roberts and Stephen R. Thomas, The Environmental Protection Agency: Asking the Wrong Questions. Oxford University Press, 1990. The frustrations that led to development of the "hammer" provisions in the 1984 legislation are recounted by Richard C. Fortuna and David J. Lennett, Hazardous Waste Regulation: The New Era, McGraw-Hill, 1987.

8. The corporate intention to abandon deep-well injection in favor of higher treatment was reported in Pollution Prevention News, published by EPA, August 1990.

9. The intense discussions between EPA and industry lobbyists conducted between the proposed rule and the final rule are partially revealed in the administrative record-meeting notes that agency officials are required to maintain on their contacts with regulated industries. This record does not disclose, however, any of the informal political conversations at the White House or EPA that may have accompanied the decision making.

SIX: The Fixers

1. Many details on the Bush task force are from my article, "When Big Business Needs a Favor, George Bush Gets the Call," Rolling Stone, April 12, 1984.

2. Invoking global competition as an argument against sterner environmental regulation is particularly specious because the main industrial competitors in Europe and Japan have much better performance in this area. The leading foreign producers generate 50 percent to 80 percent less industrial waste than American companies -- efficiency that gives them a significant cost advantage in their production. See Warren Brookes, Washington Times, January 9, 1990. Vice-President Quayle's intervention was disclosed in The Washington Post, December 20, 1990.

3. When regulators, members of Congress and public-interest advocates became increasingly alarmed at Quayle's tampering in behalf of business, OMB Watch and Public Citizen's Congress Watch issued a joint report, "All the Vice President's Men: How the Quayle Council on Competitiveness Secretly Undermines Health, Safety and Environmental Programs," September 1991.

4. In 1986, Congress threatened to rein in OMB's powers by cutting off funding for the Office of Information and Regulatory Affairs, but settled for an informal letter of agreement by which OMB promised to make public after the fact its communications with agencies and private interests. In practice, the reporting requirement has produced a grossly inadequate record of what transpired. The studies on OMB's impact on regulation in the Reagan and Bush terms were reported in the OMB Watch newsletter, OMB Watcher, September 30, 1990, and in testimony by Gary D. Bass before the Senate Governmental Affairs Committee, February 21, 1990.

5. Douglas Costle is quoted in Landy, Roberts and Thomas, The Environmental Protection Agency: Asking the Wrong Questions.

6. The analysis of desk officers at OMB's Office of Information and Regulatory Affairs was reported in "Playing the Numbers: OMB and Paperwork Reduction," OMB Watch, October 1989.

7. The anonymous policy analyst is quoted in Landy, Roberts and Thomas, The Environmental Protection Agency: Asking the Wrong Questions.

8. The examples of inconsistency in Regulatory Impact Analyses are from W. Norton Grubb, Dale Whittington and Michael Humphries, "The Ambiguities of Benefit-Cost Analysis: An Evaluation of Regulatory Impact Analysis under Executive Order 12291," in Environmental Policy Under Reagan's Executive Order. V. Kerry Smith, editor.

9. The examples of OMB intervention are from OMB Watcher. the newsletter of OMB Watch, and congressional testimony from Gary D. Bass, executive director of OMB Watch.

10. Patricia M. Wald, "The Sizzling Sleeper: The Use of Legislative History in Construing Statutes in the 1988-89 Term of the U.S. Supreme Court," American University Law Review. Winter 1990.

11. Robert Bork's complaint was in a review of Jeremy Rabkin's book Judicial Compulsions: How Public Law Distorts Public Policy, which makes similar arguments, Wall Street Journal, October 13, 1989.

12. Judge Laurence H. Silberman, "Chevron -- The Intersection of Law and Policy," George Washington Law Review, 1990.

13. For a parallel argument about democracy and the confusion over government authority, see James A. Morone, The Democratic Wish: Popular Participation and the Limits of American Government, Basic Books, 1990.

14. Data on what the poor receive in federal assistance are from "Receipt of Selected Non- ash Benefits: 1987," Bureau of the Census. Among 11.9 million designated as poor, 7.6 million received no cash stipends from welfare or Social Security. And 4.6 million received neither cash nor noncash benefits. The nonrecipients are typically screened out by the complex eligibility requirements of different programs, but the Reagan administration also conducted a visible campaign to drive poor people out of programs by challenging their applications and tightening the rules. The lives of the poor were one of the few areas of government activity that Reagan conservatives did not try to deregulate.

15. For further discussion of preventative protection for the environment, see Bruce Piasecki and Peter Asmus, In Search of Environmental Excellence: Moving Beyond Blame, Touchstone, 1990, and Barry Commoner, Making Peace with the Planer, Pantheon, 1990. How the tax code favors exploitation of virgin materials is described in "Facing America's Trash: What Next for Municipal Solid Waste?" Office of Technology Assessment, Congress, 1989.

16. Examples of state initiatives are from Margaret E. Kriz, "Ahead of the Feds," National Journal, December 9, 1989, and "Building an Environmentally Sustainable Economy," Center for Policy Alternatives, December 15, 1990.

SEVEN: The Politics of "Rude and Crude"

1. The Citizen's Clearinghouse estimate of seven thousand grassroots environmental groups seems excessive on its face, since it would mean an average of 140 such organizations in each of the fifty states. On the other hand, some states where environmental degradation has become a principal public issue have several hundred of these community organizations. Because the groups come and go or merge with others, it is difficult to find a precise answer to the question of their number.

2. The examples of successful protest tactics are taken from Everyone's Backyard, December 1990, monthly newsletter of the Citizen's Clearinghouse for Hazardous Wastes. Literally hundreds, perhaps thousands of such encounters occur every year and provoke local controversy but seldom rise to the level of national news events.

3. The Union Carbide memo was written by C. E. Greenert, director of corporate contributions, public issues and administration, November 24, 1989. A letter of apology from Ronald S. Wishart, Union Carbide's vice-president for public affairs, said: "I'm sorry that Mr. Greenert's (purloined) internal memorandum implies that the founder of CCHW has communist leanings, which was his short hand for a concern about the political directions some environmental activism seems to be taking."

4. EPA research, reported in the Archives of Environmental Health, March 1989, found excessive deaths from various kinds of cancers in Superfund counties in different regions of the country compared with counties that had no major hazardous-waste dumps. The patterns of increased disease, the EPA researchers noted, might be attributable to other causes, such as direct pollution from local industries, not exactly a comforting explanation for local citizens. A summary of the findings was reported in Rachel's Hazardous Waste News, May 2, 1989.

5. William Ruckelshaus was named CEO of Browning-Ferris Industries in 1988 to improve the company's environmental image, but BFI's hazardous-waste division, a small part of its overall operations, continued to face expensive controversies. New York State rejected its application for a new hazardous-waste site in Niagara Falls. In Ohio, BFI paid $3.5 million in fines and civil damages for past pollution at a dump outside Cincinnati. In Louisiana, it paid $1.5 million to settle allegations of violating hazardous-waste rules. Wall Street Journal, April 6, 1990.

6. The survey on political sophistication was cited by Herbert J. Gans, Middle American Individualism: The Future of Liberal Democracy, The Free Press, 1988. For an insightful essay on the strengths and weaknesses of citizen activism, see Karen Paget, "Citizen Organizing: Many Movements, No Majority," The American Prospect, Summer 1990.

7. The Washington Post's 1983 survey on environmental issues was cited by Barry Sussman, What Americans Really Think. Next to environmentalists, people most trusted local governments (55 percent favorable; 30 percent unfavorable), then the EPA (46 percent to 36 percent). President Reagan scored almost as poorly as business leaders (36 percent favorable; 45 percent unfavorable).

8. The StarKist boycott and others were described in The Wall Street Journal, "Facing a Boycott, Many Companies Bend," November 8, 1990.

9. Gillette, Dow Chemical, Sara Lee, and Sears Roebuck are among the companies that modified products in order to comply with California's "Prop 65" requirement of warning labels. In the political debates, of course, this is the sort of remedial action that corporations usually insist is impossible. See "California Spurs Reformulated Products," Wall Street Journal, November 1, 1990.

10. The Los Angeles survey was cited by Ken Hoover, "On the Take," Golden State Report, March 1990.

11. Tax-cutting measures were rejected in Massachusetts, Colorado, Nebraska and Utah, among other places, in 1990. California entertainment celebrities campaigned for "Big Green," the omnibus environmental initiative, but the chemical and agriculture industries countered with a trustworthy celebrity of their own, former Surgeon General C. Everett Koop, who advised voters that the proposed bans on carcinogenic chemicals would not benefit the health of children. For a survey of initiatives, see The Wall Street Journal, November 8, 1990.

12. Mervin Field's analysis of referendum voters was in "Falling Turnout -- A Nonvoting Majority," Public Affairs Report, Institute of Governmental Studies, University of California at Berkeley, March 1990.

13. The plastics industry's alarm and Larry Thomas's letter were reported in Everyone's Backyard, Citizen's Clearinghouse for Hazardous Wastes, March 1990.

14. Robert O. Aders's remarks to Produce Marketing Association are from an unpublished text, October 17, 1989.

15. I am indebted to the National Journal for its excellent coverage of regulatory politics and, in particular, its continuing reports on the power struggles between the states and the federal government and the cross-pressures generated by business interests and citizen reform groups. See, for instance, W. John Moore, "Stopping the States," July 21, 1990; Margaret E. Kriz, "Ahead of the Feds," December 9, 1989; and Julie Kosterlitz, "The Food Lobby's Menu," September 29, 1990.

16. The industry petition to the Federal Trade Commission was reported in The New York Times, February 15, 1991. 17. The Advocacy Institute and Congress Watch declaration was cited by W. John Moore, "Stopping the States," National Journal.

18. Enactment of federal preemptions for business regulation and health and safety laws increased from 65 in the 1970s to 72 in the 1980s. The data from the Advisory Commission on Intergovernmental Relations were reported by W. John Moore in "Stopping the States," National Journal. The agency counted a total of 350 federal preemptions, 127 for business regulation and 134 for health and safety regulations. In two other areas, civil rights and financial regulation, the number of new preemptions declined during the decade.

EIGHT: Political Orphans

1. The leaflet was quoted by Jon Cohen, "Down and Dirty," City Paper, May 19, 1989.

2. AEI's complete catalog of books, Fall 1989, lists the minimum-wage literature it has sponsored.

3. Richard Thompson was quoted in City Paper, May 19, 1989.

4. Details on the NLRB are from David Vogel, Fluctuating Fortunes: The Political Power of Business in America, Basic Books, 1989.

5. For a compelling account of how law has helped to collapse the labor movement, see Thomas Geoghegan, Which Side Are You On? Trying to Be for Labor When It's Flat on Its Back, Farrar Straus Giroux, 1991.

6. Michael Merrill, "Why There Will Be a Labor Party by the Year 2000," Social Policy, Spring 1990. See also my article, "Down but Not Out: Labor Struggles to Find Its Voice," Rolling Stone, October 17, 1991.

7. The D.C. minimum wage, like that of many states, was higher than the level set by federal law and would have been pushed upward if Congress had enacted a sufficiently large increase. The D.C. wage board subsequently adopted a $7.25 minimum for clerical workers (though not janitors), but the city council reduced this to $5.25 under pressure from local businesses.

8. The Progressive Policy Institute's report was entitled "Work and Poverty: A Progressive View of the Minimum Wage and the Earned Income Tax Credit," June 1989.

9. The survival "cheating" on federal benefits by the working poor is described by Christopher Jencks and Kathryn Edin in "The Real Welfare Problem," American Prospect, Spring 1990.

10. The late Joseph A. Pechman of the Brookings Institution, leading expert on tax equity, described the perverse effect of improving welfare benefits when the income-tax structure was no longer progressive: "The tax system has been getting less progressive in the last two decades, while the ratio of transfers to income has been increasing. In other words, the recent increases in transfer payments in the United States have been financed by the low and middle-income groups, while the rich have been getting tax cuts." Pechman, "The Future of the Income Tax," Brookings, December 22, 1989.

11. The charity event was a fund-raising gala for the Jewish Community Center of metropolitan Washington, and the Charles E. Smith Company changed its labor policies after several rabbis in the Washington area expressed their support for the demands made by "Justice for Janitors." Jewish Week, the community newspaper, also published a sympathetic account of why the janitors had staged their demonstration at the community center's banquet.
Site Admin
Posts: 33187
Joined: Thu Aug 01, 2013 5:21 am


Postby admin » Thu Oct 31, 2013 1:16 am


NINE: Class Conflict

1. For an enthralling history of Martin Luther King, Jr., and the politics of the civil rights movement, see Taylor Branch, Parting the Waters, Simon & Schuster, 1988.

2. This insight was elaborated by J. Hunter O'Dell in his essay, "Notes on the Movement, Then, Now and Tomorrow," Southern Exposure, Spring 1981.

3. Michael Waldman is director of Public Citizen's Congress Watch. See his book, Who Robbed America? A Citizen's Guide to the Savings & Loan Scandal, Random House, 1990.

4. The contours of "political avoidance" are described by Herbert J. Gans, Middle American Individualism, The Free Press, 1988.

5. Outside magazine, September 1990. The magazine's lowest regard -- Milquetoast"-was for the National Wildlife Federation and the Nature Conservancy.

6. Lois Gibbs's remark on poor people is from Ana Radelat, "Avenging Angel," Public Citizen, September 1990.

7. The community leaders were invited to subsequent conferences at the behest of Tufts University, a cosponsor, according to a letter from Lois Gibbs to Nancy Newman, league president, October 21, 1986.

8. Grassroots activists dubbed the private meeting between Reilly, Waste Management's Dean Buntrock and Jay Hair, president of the Wildlife Federation, "Reillygate." Details are from the EPA investigative record into charges that Reilly's meeting was in violation of agency rules. The administrator was cleared and the controversy never achieved visibility in the national press but was covered aggressively by some local newspapers where citizen groups are aroused on toxic-waste issues. See the Winston-Salem Journal, April 21, 1989.

9. Samuel P. Huntington was among the academics who originally expressed alarm at the upsurge of citizen politics, fearing that reformers were immobilizing government. In the 1970s, he described these challenges as "an excess of democracy" but moderated his views subsequently when it became clear that neither government nor business interests were in danger of losing their power. Samuel P. Huntington, American Politics: The Promise of Disharmony, Harvard University Press, 1981.

10. My account of class conflicts in the environmental movement has been enriched by Eric Mann, "Environmentalism in the Corporate Climate," and Robert Gottlieb, "Earth Day Revisited," both in Tikkun, March 1990. Penny Newman was quoted in Mann's essay.

11. Details on corporate gifts to environmental groups are from Everyone's Backyard, October 1990.

12. The study of philanthropists was based mainly on individuals, and the portrait is less apt for some of the larger, long-established foundations such as Ford or Carnegie or Mellon that are now distant from the family wealth that created them. On the other hand, the new generation of corporate foundations provides grants that are usually intimately connected to the political self-interest of the companies that provided the money. See Teresa Odendahl, Charity Begins at Home: Generosity and Self-Interest Among the Philanthropic Elite, Basic Books, 1990.

TEN: Democratic Promise

1. Father Leo J. Penta, "Organizing and Public Philosophy: Fifty Years of the Industrial Areas Foundation," IAF Reflects, August 1990.

2. The story of Alinsky's career and political philosophy is told by Sanford D. Horwitt, Let Them Call Me Rebel: Saul Alinsky, His Life and Legacy, Alfred A. Knopf, 1989.

3. Edward Chambers was quoted by Geoffrey Rips, "A Democratic Conversation," Texas Observer, November 22, 1990. The Observer issue included two other valuable articles on IAF: Mary Beth Rogers, "Gospel Values and Secular Politics," excerpted from her book, Cold Anger: A Story of Faith and Power Politics, University of North Texas Press, and Linda Rocawich, "Interview: Ernesto Cortes Jr."

4. Cortes's remark about the "conjugal" nature of power and love is from his speech to the Farm Crisis Workers Conference, Texas Observer, July 11, 1986.

5. The IAF Texas network conducts a running series of seminars for its organizers and senior community leaders on a vast range of subjects. As the author of a book about the Federal Reserve and the money and credit system, I was invited to teach at one of these sessions and was deeply impressed by their seriousness.

6. Andres Sarabia's remark on anger was in the San Antonio Light, November 26, 1990.

7. Cortes's remark on "bullying" is from Linda Rocawich, "Interview: Ernesto Cortes Jr.," Texas Observer.

8. Alinsky's acknowledgment is from Sanford D. Horwitt, Let Them Call Me Rebel: Saul Alinsky, His Life and Legacy.

ELEVEN: Who Owns the Democrats?

1. Thomas Jefferson's letter to President Washington is a wonderfully evocative political document, even if it does not quite say what modern Democrats suppose. Jefferson described the political divisions -- North and South, agrarian and rural -- developing around Washington. He lamented that the Federalist financial interests, led by his rival Alexander Hamilton, were steadily corrupting the Congress. Once they succeeded in seizing control, Jefferson warned, they would install a monarchial form of government centered in the presidency and the people's right to govern themselves would be effectively extinguished. His letter is found in The Papers of Thomas Jefferson, Volume 23, Charles T. Cullen, editor, Princeton University Press, 1990.

2. Michael McCurry, a former aide to Senator Daniel Patrick Moynihan and Arizona Governor Bruce Babbitt during his brief campaign for president, left his DNC post in late 1990 to work in a political public-relations firm. His candid remarks on the party's condition were made to me, however, while he was still working for the DNC.

3. The National Association of Manufacturers, like other business groups, lobbied to defeat the toxics-labeling legislation, but Eizenstat says he merely addressed its "significant flaws." Among other things, he urged Congress to give certain employers immunity from damage suits and to keep the identity of notified workers confidential so they could not be readily recruited for lawsuits. Daily Labor Report, Bureau of National Affairs, February 16, 1988.

4. When PSI Holdings, Inc., added Eizenstat to its board, it also added Kenneth M. Duberstein, a Republican lobbyist who had served as chief of staff in Ronald Reagan's White House. Indianapolis Business Journal, January 29, 1990.

5. Tommy Boggs was quoted in the National Journal, January 13, 1990.

6. Williams and Jensen's lobbying for Pittston was reported in Legal Times, October 16, 1989. Its role in financing a study by the Employee Benefit Research Institute was reported in Pensions & Investment Age, April 2, 1990. Williams's jocular remark on arguing the "merits" was quoted in Legal Times, May 23, 1988.

7. Details on O'Connor and Hannan's work for ARENA and the Minneapolis City Council's reaction are from the Bulletin of Municipal Foreign Policy, Winter 1989-1990.

8. Among other tax-issue clients, Akin, Gump represented the Distilled Spirits Council of the United States and the Mutual Fairness Taxation Association, formed by mutual insurance companies. The lobbying of the NEC by his firm's clients was described in Legal Times, November 7, 1988.

9. Akin, Gump's Fujitsu account was reported in the Financial Times, February 19, 1990. The lobbying on trade by prominent Democrats was described by John B. Judis, "K Street's Rise to Power of Special Interest to U.S.," In These Times, November 1, 1989. Judis wrote: "The denizens of K Street constitute a new mandarin class in America. Unlike the Chinese bureaucrats of old, however, the lawyer-lobbyist-pollsters of K Street are beholden not to a higher wisdom but to the highest bidder."

10. Frank Lorenzo's assembling of influential Democrats to represent him was described in Legal Times, May 16, 1988, and the American Lawyer, July 1988. The $12.7 million in legal bills for the bankrupt airline was described in The Wall Street Journal, May 21, 1990.

11. The Legal Times estimate of law firms with PACs was •reported in the National Journal, December 16, 1989. The Common Cause estimate is from The New York Times, December 29, 1989. Charles Babcock provided a systematic analysis of campaign money in The Washington Post, September 30, 1991.

12. Kirk O'Donnell was quoted in Legal Times, June 26, 1989.

13. The DLC's corporate sponsors were described in The Washington Post, March 29, 1990. See also Robert Kuttner, "What's the Beef'?" The New Republic, April 2, 1990.

TWELVE: Rancid Populism

I. Karen Olshan and Paula Drillman were quoted by Bernice Kanner of New York magazine in "Mind Games," Best of Business Quarterly, Winter 1990.

2. Lee Atwater was quoted in The New York Times, March 19, 1990, and Douglas Bailey in The Washington Post, April 20, 1990.

3. Douglas Bailey spoke at a seminar on the Republican presidential coalition sponsored by the Progressive Policy Institute, February 26, 1990.

4. The data on advertising costs and proliferation are from The Wall Street Journal, March 22, 1991.

5. The New York Times/CBS poll was cited by William A. Galston, "Rebuilding a Presidential Majority," unpublished paper, March 1989.

6. Lee Atwater's description of the "populist swing vote" is from my interview, Rolling Stone, January 12, 1989. "Power is evil" is from Marjorie Williams, "The New Lee Atwater Lies Low," Washington Post Magazine, November 19, 1989.

7. If readers wish to glimpse the outlines of a genuine democratic experience in American history, they will find it in the powerful narrative of the original Populist movement, recounted by Lawrence Goodwyn, The Populist Movement: A Short History of the Agrarian Revolt in America, Oxford University Press, 1978.

8. Representative Newt Gingrich was quoted in The Washington Post, February 26, 1989, and The Wall Street Journal, May 20, 1988.

9. An example of social conservatives trying to develop a broader perspective that would let them address economic issues is an essay published by an affiliate of the Free Congress Foundation. See William S. Lind and William H. Marshner, Cultural Conservatism: Toward a New National Agenda, Institute for Cultural Conservatism, 1987.

10. Lee Atwater's account of his illness and self-discovery was entitled "Lee Atwater's Last Campaign," Life, February 1991.

11. David Stockman's remark is from my book, The Education of David Stockman and Other Americans.

12. For an exposition of Thomas Ferguson's theory, see "Party Realignment and American Industrial Structure: The Investment Theory of Political Parties in Historical Perspective," Research in Political Economy, Volume 6, JAI Press, 1983.

13. For a more precise version of Thomas Ferguson's analysis of the Republican party, see his article, "Who Bought Bush, and Why," International Economy, January 1989. His analysis of the major investors dominating the Democratic party-investment banking, major real-estate developers, high-tech manufacturers and others-was reported in "Private Money and Public Policy," International Economy, September 1988.

THIRTEEN: Angle of Vision

1. Jean G. Padioleau spent some months in the Post newsroom as part of a comparative organizational study in which he concluded that The Washington Post, notwithstanding its corporate hierarchy, had elements of freedom and innovation that were stronger than those at Le Monde, a newspaper ostensibly controlled by its own staff members. The insights quoted here are from an unpublished essay Padioleau prepared on the Post's newsroom management. See also Jean G. Padioleau, Le Monde et le Washington Post, Presses Universitaires de France, 1985.

2. The Washington Post's monopoly was complicated slightly by the founding of the Washington Times. a staunchly conservative daily financed by the Unification Church. The Times produces a lively contrast to the Post, but is utterly unthreatening to it, as an alternative for either readers or advertisers. Despite many millions invested by its right-wing sponsors, the Washington Times remains small and unprofitable.

3. The studies of Nightline and MacNeil/Lehrer were reported in FAIR's newsletter, Extra!, Winter 1990.

4. David Ignatius described think tanks in "Fishing for a Few Good Ideas," Washington Post, March 11, 1990.

5. Burt Solomon's reflections were in "Bush Cultivates the Press Corps ... Hoping for a Harvest of Goodwill," National Journal, May 5, 1990.

6. The social intimacies between the media and government are so commonplace that dozens of other examples could be cited. The participants are utterly oblivious to the implications and indeed offended by the suggestion that their closeness to power has compromised their rugged independence. Some of these details have been drawn from the National Journal, May 5, 1990; Washington Post, January 20, 1989; and The Wall Street Journal, December 28, 1989.

7. Barry Sussman discusses public criticism of the media in What Americans Really Think: And Why Our Politicians Pay No Attention, Pantheon, 1988.

8. For an excellent academic analysis of how the media fail democracy, see Robert M. Entman, Democracy Without Citizens: Media and the Decay of American Politics, Oxford University Press, 1989.

9. The Times Mirror Company, publisher of the Los Angeles Times, Newsday and other high-quality newspapers, has at least begun to explore this terrain -- the distance between orthodox news and the public -- by commissioning a series of polls that measure the interest levels and inattention of readers to the stories that editors and reporters regard as important. Thus far, however, the focus of these studies has been on the readers' responses, not on the production values of the news media.

FOURTEEN: The Lost Generation

1. Among the critics, one of the most insightful pessimists is Neil Postman, a professor of communications at New York University and author of many books. See, for instance, Conscientious Objections, Alfred A. Knopf, 1988.

2. Jacques Cousteau was quoted by columnist Jim Hoagland as Hoagland pondered the political implications of his own young daughter and her school friends' taking responsibility for protecting the global environment. See Washington Post, July 10, 1990.

3. The voting data are based on surveys by the U.S. Census Bureau in which people are asked whether they voted in the last election. This approach usually inflates the numbers slightly, since some people are always reluctant to admit they did not vote. In the census data, voting participation fel1 from 50 percent to 36 percent among eighteen- to twenty- four-year-olds, from 1972 to 1988. It fell from 63 percent to 54 percent among those who are twenty-five to forty-four years old during the same period. Voting levels were virtual1y unchanged among those forty-five to sixty-four years old (68 percent in 1988) and actual1y increased modestly among those who are sixty-five and older (69 percent in 1988, up from 64 percent in 1972). See "The Age of Indifference: A Study of Young Americans and How They View the News," Times Mirror Center for The People & The Press, June 28, 1990.

4. The Times Mirror Center has taken month-by-month surveys of what in the news captures the most interest of the audience. See especially "The Age of Indifference," among its other periodic reports.

5. Jim Bellows was quoted in The Washington Post, January 9, 1989.

6. The Rolling Stone survey, conducted by Peter Hart, covered a broad group of people, ranging in age from eighteen to forty-four, and demonstrated that, notwithstanding al1 the generalizations about younger people, they are as diverse in their attitudes as any other generation of Americans. My discussion in this chapter of political behavior and perspectives has relied substantial1y on the findings. See my article, "The Rolling Stone Survey," Rolling Stone, April 7, 1988.

7. The scientific dispute over Alar centered on samplings that tested how much residue was found on apples in the marketplace and whether that constituted a risk to humans. The NRDC research argued that government standards were too lax because they did not take into account the smaller body weight of young children and the large amount of fruit that they consume.

8. The details on EPA's advisory panel on pesticides are from The Washington Post, May 26, 1989.

9. The apple growers subsequently sued the NRDC for damages, but Alar remained off the market and the NRDC had performed a public service by exposing EPA's lack of enforcement. The product was first linked to cancer in 1973 and nothing had happened for more than fifteen years, according to Adrian de Wind, NRDC chairman. The NRDC report found that Alar in apple products created cancer risks at least 240 times greater than EPA said were safe. See New York Times. July 9, 1991, and a letter from de Wind, New York Times, July 30, 1991.

10. The Publishers Weekly list was printed in The Wall Street Journal, January 16, 1990.

11. James Dobson's "profamily" politics and organization were described in The Wall Street Journal, October 17, 1988.

12. I am indebted to Frank Mankiewicz for this insight about the deeper content of Michael Moore's film, which, Mankiewicz said, "captures the strange new terms in which the victims are laughing at themselves. Everyone is standing at the center of the debate, watching the show. There's nobody saying; those bastards."

13. George Gilder describes his vision of the coming revolution in Life After Television: The Coming Transformation of Media and American Life, Whittle Direct Books, 1990.

14. See Ben H. Bagdikian, The Media Monopoly, Beacon Press, 1983.

15. Michael Kinsley wrote; "Media companies in the U.S. enjoy the First Amendment rights of all American citizens. But like other major corporations they are 'artificial persons,' legal fictions; and if they begin to abuse their editorial prerogatives through systematic in-house cross-promotions, government may restrict them to a more limited set of First Amendment privileges." See New Republic, May 7, 1990. The NBC stories promoting GE products were reported by FAIR in its newsletter, Extra!, January 1991.

16. Among his many projects, Ralph Nader has created the Audience Network Coalition in Washington in an attempt to generate support for fundamental reform of the federal communications laws.


1. This account of why Benjamin Heineman, Jr., and other Washington lawyers joined General Electric relies mainly on reporting in the American Lawyer, September 1989, and D. M. Osborne, "The Sidley-Heineman Connection," May 1990, as well as the National Journal, April 7, 1990.

2. Philip Lacovara filed "Preliminary Comments of General Electric Company on the U.S. Sentencing Commission's Proposed Organizational Sanctions," September 11, 1989. The brief was cosigned by Victoria Toensing, a former deputy assistant attorney general in the Reagan administration who as a Washington lawyer was hired by GE to fight the corporate-crime sentencing guidelines. It was Toensing who lobbied the White House and persuaded the president's counsel, C. Boyden Gray, to intervene at the Justice Department. She was representing GE, Martin Marietta, ITT and other firms, according to The Washington Post, April 28, 1990.

3. The Sidley & Austin memorandum on Superfund litigation was circulated by Stephen Ramsey at an American Bar Association teleconference on hazardous waste, according to David T. Buente, chief of EPA's environmental enforcement section. Buente in turn distributed it to EPA lawyers with a warning memo on June 4, 1986.

4. The description of General Electric's potential Superfund liability is from "Nuclear Power Development and Related Energy Issues: General Electric Co.," Proxy Issues Report, Investor Responsibility Research Center, March 30, 1990. Ramsey was quoted in the American Lawyer, May 1990.

5. Details on GE's scope are drawn from the company's 1989 Annual Report and the 1989 GE Foundations Annual Report; Stratford P. Sherman, "The Mind of Jack Welch, " Fortune, March 27, 1989; Russell Mitchell and Judith H. Dobrzynski, "Jack Welch Reinvents GE," Business Week, December 14, 1987; and Doug Henwood, "NBC: The GE Broadcasting Co.," Extra!, May 1989.

6. General Electric, as bespeaks its power, declined to cooperate with my examination of its political operations. Frank P. Doyle turned down my request for an interview. The public-affairs officer for GE's Washington office acknowledged that there is a company named General Electric, but declined to provide additional details.

7. Common Cause, which calculated GE's political contributions, filed a shareholder's resolution challenging the practice, Wall Street Journal, January 9, 1989. The GE honoraria were for 1985 and reported in "INFACT Brights GE to Light," INFACT, 1988. Robert W. Barrie's role in raising money for Democrats was described by Thomas B. Edsall, "Bringing Good Things to GE," Washington Post, April 13, 1985.

8. The corporate lobbying on product-liability legislation was described by Gary Lee in The Washington Post, July 29, 1991.

9. GE's lobbying blitz to protect its venture in Hungary against what it called "the inherent uncertainties" was described by the National Journal, February 10, 1990.

10. Obviously, corporate-image advertising is often intended to produce a commercial benefit as well as political protection, but the propaganda effect is the same, regardless of intent. In the survey of nonproduct corporate advertising for 1987, General Electric was the ninth-largest spender. Dow Chemical was the fourth-largest spender with the commercials attempting to overcome its reputation as a polluter. See Amy J. Barnes, "Top Heavy: The 17th Annual Review of Corporate Advertising Expenditures," Public Relations Journal, September 1988.

11. The Northrop episode was reported in The Wall Street Journal, February 20, 1990.

12. The Chevron campaign was reported by its director of research in public affairs, Lewis C. Winters, "Does It Pay to Advertise to Hostile Audiences with Corporate Advertising?" Journal of Advertising Research, June 1988.

13. Frank Doyle testified before the Senate Foreign Relations Committee subcommittee on European affairs, March 28, 1990.

14. Details on the taxation of GE and other corporations are drawn from Citizens for Tax Justice's "Annual Survey of Corporate Taxpayers and Corporate Freeloaders," October 1989.

15. In 1990, for instance, overseas investment by American companies grew by 16 percent while capital spending in the United States increased by a tepid 6.7 percent. See Robert B. Reich, The Work of Nations: Preparing Ourselves for 21st Century Capitalism, Alfred A. Knopf, 1991.

16. Bob Barrie's lobbying on tax leasing was described by Thomas Edsall in "Bringing Good Things to GE," Washington Post, April 13, 1985.

17. GE's 1989 tax rate was calculated from its Annual Report. Details on the shortfall in corporate tax revenue are from The Wall Street Journal, February 8, 1990, and The New York Times, March 6, 1990.

18. Though the process has received little attention from the press, the real political action on universal health care is located in the high-level negotiations that have been convened as the "National Leadership Coalition for Health Care Reform." The discussions include an extraordinary list of major corporations and labor unions and a few health groups, but not the hospitals, doctors and insurance companies that are the main supporters of the status quo. See Frank Swoboda, "Devising a Cure for High Costs of Health Care," Washington Post, February 12, 1991.

19. Frank Doyle testified for increased Head Start funding before the Senate Labor Committee, March 1, 1990.

20. The so-called "skills shortage" was refuted by Lawrence Mishel and Ruy A. Teixeira, "The Myth of the Coming Labor Shortage: Jobs, Skills, and Incomes of America's Workforce 2000," Economic Policy Institute, July 1991.

21. John Welch was quoted on loyalty in The Wall Street Journal. August 4, 1988, and Frank Doyle on "ready to go" employees in Business Week, December 14, 1987. The loss of loyalty evidently extends fairly high up the management ladder. According to the Journal ""count, top-level managers transferred to GE's consumer electronics division, based on Welch's expressed interest in revitalizing it. They were stunned when Welch sold the entire product line a few months later.

22. Frank Doyle described GE's global premises for the company and for America before the Congressional Economic Leadership Institute with the Congressional Competitiveness Caucus, July 30, 1987.

23. The history and legal arguments surrounding corporate use of constitutional rights are recounted by Carl Mayer in their political context: Corporations had to invent new strategies for countering the more intrusive noneconomic regulation for the environment or health and safety that developed in the modern era. See Carl J. Mayer, "Personalizing the Impersonal: Corporations and the Bill of Rights," Hastings Law Journal, March 1990.

24. The facts on GE's legal offenses are all drawn from regular news accounts. The company's dossier is rarely, if ever, examined in full by the news media, so each new episode of corporate misbehavior is reported as if it were a shocking aberration. See these dispatches: Army battlefield computers, Associated Press, Philadelphia, February 3,1990, and The New York Times, July 27, 1990; military jet engines, AP, Cincinnati, February 24, 1989; Army M-I tanks, Wall Street Journal, October 13, 1989; Navy missile frigates, Wall Street Journal, February 10, 1988; and Air Force Minuteman, AP, March 24 and July 26, 1985.

25. For the assortment of GE offenses, see these news reports: Puerto Rican bribery, Associated Press, Trenton, February 11 and June 23, 1981; Kidder Peabody insider trading, AP, New York, June 4, 1987; GE Capital consumer discrimination, AP, Washington, October 3, 1989; GE job discrimination, AP, Washington, June 15, 1978; and price-fixing in Canada, Wall Street Journal, April 14, 1977.

26. General Electric's latest case of fraud was reported in The New York Times, August 15, 1991.

27. General Electric's role in nuclear-bomb manufacture and attendant environmental problems are described in "INFACT Brings GE to Light," INFACT, 1988. GE's plan to discontinue its management of the Pinellas nuclear plant, confirmed by the company, was reported in Everyone's Backyard, Citizen's Clearinghouse for Hazardous Wastes, February 1991.

28. For GE pollution cases, see these news reports: Coosa River pollution, Associated Press, Birmingham, November 14, 1979; Hudson River contamination, Christian Science Monitor, June 12, 1990; Waterford, New York, settlement, AP, Albany, September 3, 1987; New Hampshire and Massachusetts toxic dumping, AP, Boston, August 4, 1988; and Ohio dump settlement, AP, Washington, December 20, 1989.

29. A General Electric subsidiary, RCA, was also involved in the defense-industry scandal of companies' obtaining classified Pentagon documents to enhance their bidding on contracts. However, the criminal events occurred before RCA was acquired by GE (which later sold off the company, except NBC). RCA pleaded guilty and paid a $2.5 million fine, Associated Press, Fairfield, Connecticut, February 5, 1990. For other corporate cases, see these news reports: Mobil Oil, Washington Post, November 22, 1990; Northrop, Wall Street Journal, September 20, 1990; Waste Management, Wall Street Journal, May I, 1991; Eastern Air, lines, New York Times, July 26, 1990; and Hughes Aircraft, Wall Street Journal, July 6, 1990.

30. Professor Amitai Etzioni's findings were reported to the U.S. Sentencing Commission. See also his book Capital Corruption: The New Attack on American Democracy, Transaction Books, 1988.

31. The judge's criticism of GE was reported in The Wall Street Journal, September 27, 1990.

32. Philip Lacovara proposed "substantial mitigation" for companies that cooperate in disclosing criminal conduct. He suggested that prosecutors regard corporate managements as "partners" and reward them with "an explicit, corresponding adjustment in any penal sanction." Even so, he added, "it is important to recognize that corporations cannot necessarily cooperate to the extent prosecutors would prefer." See "Preliminary Comments of General Electric Company," U.S. Sentencing Commission, September 11, 1989.

33. The survey of corporate managers on ethical dilemmas was conducted in the late 1980s and reported in "Corporate Ethics," the Conference Board, Research Report No. 900, undated.

34. In 1990, the California legislature passed a tough new law called the Corporate Criminal Liability Act, which, among other things, puts companies and their managers at risk of criminal prosecution if they fail to report internal health-and-safety dangers promptly. Another new measure, setting up five-year probation status for environmental offenders, was enacted by the California legislature but vetoed by the governor. See Jaye Scholl, "Giving Business the Business," Barron's, March 25, 1991.

35. The statistics on 1988 prosecutions are from a study done for the U.S. Sentencing Commission by Mark A. Cohen, "Corporate Crime and Punishment: An Update on Sentencing Practice in the Federal Courts, 1988-90."

SIXTEEN: Crackpot Realism

1. Senator Moynihan's argument for restoring respect for international law in American foreign policy is elaborated in his book, On the Law of Nations: A Historical and Personal Account of the Role of International Law in Foreign Policy, Harvard University Press, 1990.

2. The costs of the Persian Gulf War were shared by allied contributions but, even so, the U.S. share offset the modest reduction in defense spending that had been in place for 1991. See Robert L. Borosage, "How Bush Kept the Guns from Turning into Butter," Rolling Stone, February 21, 1991.

3. George Soros, "A Great Light in the East?" Geopolitique, No. 26, 1989.

4. The postwar opinion survey was conducted jointly by Market Strategies, a firm that specializes in research for Republicans, and Greenberg/Lake, a Democratic firm. See "Americans Talk Issues," Survey No. 15, April 1991.

5. Details on the CIA's exaggeration of Soviet power are drawn from an interview with Senator Moynihan as well as his book, On the Law of Nations, and his article in The Washington Post, July 11, 1990.

6. The revised' 'threat" assessment in Europe was made jointly by the CIA, the Defense Intelligence Agency and the Joint Chiefs of Staff and reported by Patrick Tyler in The Washington Post, November 29, 1989.

7. A full account of the government's actions against domestic political opponents in the 1980s was produced by Jonathan Dann of the Center for Investigative Reporting in San Francisco and published in the Los Angeles Reader, June 10, 1988.

8. All but about 50 of Reagan's 298 national-security directives remained secret. The outlines of the secret "lawmaking" process at the National Security Council were described by Angus Mackenzie and Eve Pell of the Freedom of Information Project at the Center for Investigative Reporting, Albuquerque Journal, October 16, 1988.

9. Moynihan's statement is from his book, On the Law of Nations.

10. The foreign minister of Iraq, surveying the nations allied against his country, observed: "A lot of money, billions of dollars, was spent to create that coalition." The full facts of the Bush administration's actions are not known, of course. Representative Henry Gonzalez outlined his accusations in the Congressional Record, January 16, 1991. See also The Wall Street Journal, January 14, 1991.

11. The defense share of manufacturing is from "Bolstering Defense Industrial Competitiveness," Report of the Under Secretary of Defense for Acquisition, July 1988. Other estimates of defense-driven spending and investment are from Jacques S. Gansler, a former deputy assistant secretary of defense and chairman of Defense Science Board's 1990 study on technology and the defense industry.

12. For detailed accounts of the defense-budget politics, see David C. Morrison, "End of the Line," National Journal, June 8, 1991, and "Schizophrenic Budget," National Journal, February 9, 1991.

13. Secretary Cheney's declaration is from the 1989 edition of "Soviet Military Power," quoted by Jacques S. Gansler in testimony before the Senate Banking Committee, March 1, 1990.

14. Jacques S. Gansler's argument for integration of defense and commercial manufacturing was made in his testimony before the Senate Banking Committee, March 1, 1990.

SEVENTEEN: The Closet Dictator

1. Professor Gueramina Valdes-Villalva, whom I interviewed in July 1990, worked for many years to aid the exploited maquiladora workers and to challenge the practices of the companies. She died in a plane crash in Texas on February 13, 1991.
My guides and translators in Ciudad Juarez were two Americans, Sister Maribeth Larkin, an organizer with EPISO, the IAF organization in El Paso, and Ignacio Escandon, a businessman who is active in EPISO.

2. The statistics on falling labor costs are from Twin Plant News: The Magazine of the Maquiladora Industry, May 1990.

3. The "slave labor" remark was quoted by Lane Kirkland, president of the AFL-CIO, speech to the American International Club of Geneva, June 24, 1991.

4. The Arizona Republic and reporters Jerry Kammer and Sandy Tolan of Desert West News Service won the Robert F. Kennedy journalism award for their series on the Nogales industries, published in April 1989. The Wall Street Journal published a harrowing account of a twelve-year-old working in a Mexican shoe factory and described child labor as general throughout the country -- exploiting five to ten million underage workers. See Matt Moffett, "Working Children: Underage Laborers Fill Mexican Factories," Wall Street Journal, April 8, 1991.

5. This is a small sample of the complaints about environmental damage from the maquiladora. Details were reported in In These Times, May 22, 1991, and "Border Trouble: Rivers in Peril," National Toxics Campaign, May 1991, as well as the Arizona Republic series.

6. The Juarez official was quoted by Guadalupe Silva, "Twin Plant Toxics May Reach Water Table," El Paso Times, May 21, 1989.

7. Formation of the Coalition for Justice in the Maquiladoras was reported in the newsletter of the Federation for Industrial Retention and Renewal, Spring 1991. Coalition members include FIRR, the National Toxics Campaign, the Interfaith Center for Corporate Responsibility, the AFL-CIO and a variety of others.

Some major labor unions such as the food and commercial workers' are beginning to develop their own strategies for cross-border politics with similar unions in Europe, Asia and Latin America, having discovered that they are up against the same companies and similar labor practices, regardless of their own nation.

8. Wolfgang Sachs, of the Essen Institute for Advanced Studies, wrote in New Perspectives Quarterly, Spring 1990.

9. Jacques Attali, former advisor to President Mitterrand, wrote in the New Perspectives Quarterly, Spring 1990. W. Michael Blumenthal was quoted in "The Stateless Corporation," Business Week. May 14, 1990.

10. Jane Uebelhoer of ACORN testified before the Senate Banking Committee, April 4, 1990.

11. The international agreement signed by the Federal Reserve and other central banks created a system of risk-based capital ratios for banking-capital requirements geared to the level of risk in each bank's portfolio. Housing suffered because the Federal Reserve assigned a 100 percent risk ratio for multifamily projects -- a rating identical to the most speculative business loans-which would raise the cost of such lending for banks. The central bank, in effect, had promulgated a credit-allocation policy that would discourage investment in low-income housing-when the nation faced an obvious shortage. Federal regulators claimed that they were bound by international agreement, but the fact is that other nations' central banks were prepared to assign a more favorable risk rating to housing than was the Federal Reserve.

12. Clayton Yeutter was quoted by Mark Ritchie, "Trading Away Our Environment: GATT and Global Harmonization," Journal of Pesticide Reform, Fall 1990.

13. Clayton Yeutter's remarks on California's "Prop 65" food-safety law were quoted by David Morris, "Trading Our Future: Talking Back to GAIT," Institute for Local Self- Reliance, St. Paul, Minnesota, undated. His comments on the European ban of beef growth hormones are from Mark Ritchie, "Trading Away Our Environment."

14. Details on Codex standards and the influence of American chemical companies are from Eric Christensen, "Food Fight: How GATT Undermines Food Safety Regulations," Multinational Monitor, November 1990. The GAIT negotiations reached an impasse in early 1991 on other economic issues but presumably will resume.

15. Examples of GATT objections to U.S. state laws were recounted by Bruce Stokes, "State Rules and World Business," National Journal, October 27, 1990.

16. The Bush administration, responding to attacks on the "fast track" approach, issued various promises to address the problems of environmental damage and working conditions in the trade negotiations with Mexico, but these were no more than expressions of good intent. The overall effect of the agreement will be to extend the maquiladora preferences to all of Mexico-and thus set off another round of U.S. job losses as well as other consequences. In economic terms, the Mexican government expects to gain the U.S. currency income to deal with its foreign debt -- a powerful incentive to ignore the ancillary effects on its citizens. In the end, the flight of U.S. jobs to Mexico will directly benefit the U.S. banks -- the major banks that loaned tens of billions to Mexico in the first place and would now have some chance of being paid back. Given the timing, the Mexican agreement will probably not reach completion and political debate until sometime after the 1992 election.

17. The mythologies of "free trade" and national sovereignty are examined in a devastating critique by David Morris, "Free Trade: The Great Destroyer," Institute for Local Self- Reliance, January 16, 1988.

In western Europe, where organized labor has a much stronger political position, unions are encountering the same threatening effects of multinational politics that undermined American labor and many of its hard-won protections. In response, European unions have proposed a "social charter" for the European Economic Community that would establish minimum legal requirements on Working conditions, social guarantees and other matters for the entire community of nations. The effort has been weakened, however, by political deadlock led by Britain's conservative government, and the new social charter mayor may not become a reality.

18. Details on IBM, Whirlpool and GE microwaves are from Robert B. Reich, The Work of Nations: Preparing Ourselves for 21st Century Capitalism, Alfred A. Knopf, 1991.

19. The three corporate executives from NCR, Colgate-Palmolive and GE were quoted by David Morris, "Trading Our Future."

20. John Reed's efforts to relocate Citicorp in a foreign country were described as his "pet project" by The Wall Street Journal, August 9, 1991. Lloyd Cutler, whose Washington law firm represents Citibank, has proposed a vast recapitalization of commercial banks by the Federal Reserve.

21. The weekly wage average is from Economic Indicators, Joint Economics Committee, May 1991. Many families, it is true, manage to make up for the shortfall in various ways, usually by someone else in the family going to work. This exchange of time for money may maintain their financial status for a time, but it also erodes family life.

22. The productivity-wage gap for all employees in business is from Economic Indicators, May 1991, Joint Economics Committee. Conservative columnist Warren Brookes has described a much starker disparity for manufacturing workers. Their productivity increased more than 35 percent during the 1980s but their real wages rose only 2.7 percent. This is in contrast to the 1960s, when manufacturing productivity increased by 32 percent and wages rose by 22 percent. See Warren Brookes, Washington Times, March 20, 1991.

23. The compensation data are from Robert B. Reich, The Work of Nations: Preparing Ourselves for 21st Century Capitalism. Reich described global webs of what he calls "symbolic analysts" linked in common enterprise.

24. The office of U.S. trade representative as a trade school for foreign lobbyists is described in "America's Frontline Trade Officials," Center for Public Integrity, December 1990. Pat Choate detailed Japanese influence in Agents of Influence: How Japan's Lobbyists in the United States Manipulate America's Political and Economic System, Alfred A. Knopf, 1990. Karel van Wolferen is quoted by Choate.

25. The contours of the global process were described by the Economic Policy Institute's director, Jeff Faux, "Labor in the New Global Economy," Dissent, Summer 1990.

26. The outlines of a global growth strategy based on rising wages and incomes have been described in many places, including my own book, Secrets of the Temple. Walter Russell Mead's book, Mortal Splendor, and his various essays in the World Policy Journal provide perhaps the most comprehensive and plausible description of the new economic order that the world needs.

27. Lane Kirkland, president of the AFL-CIO, spoke for this idea in terms of labor rights: "A trade policy that encourages or tolerates the spectacle of corporations roaming the world in search of the cheapest and most repressed labor is more perversely protectionist than any tariff or quota, and serves in the last analysis to restrict and undermine markets and lower standards the world over. In the interest of basic fairness and the continued elevation of the human condition, the denial of workers' rights should be clearly defined internationally as the unfair trading practice it is, through the incorporation of a social clause in the General Agreement on Tariffs and Trade." Speech to American International Club of Geneva, June 24, 1991.

CONCLUSION: The American Moment

1. The origin of political movements and the painstaking effort they require of people are explained by Lawrence Goodwyn in his authoritative history of the Populist movement and also in Breaking the Barrier: The Rise of Solidarity in Poland, Oxford University Press, 1991. The kind of political development that produces fundamental change requires many years, even decades, to achieve power and is so difficult that throughout history it has regularly failed. For a portrait of contemporary Americans trying to recreate their own politics, see also Harry C. Boyte, Commonwealth: A Return to Citizen Politics, The Free Press, 1989.

2. The statement is from Vaclav Havel, Disturbing the Peace, Alfred A. Knopf, 1990.
Site Admin
Posts: 33187
Joined: Thu Aug 01, 2013 5:21 am


Return to Political Science

Who is online

Users browsing this forum: No registered users and 1 guest