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The Scandal is Somewhere Else
August 21, 2002
By David Swanson

Even Ralph Nader is saying that the current rash of corporate accounting scandals is uncovering more than he expected. There's not just feigned and willful shock and surprise out there - some honest and intelligent commentators are dumbfounded. Why?

Household International, the biggest high-cost lending company in the country, revealed (just prior to the SEC deadline for CEO's to swear their books were straight) that it had overstated its profits by $386 million. This story showed up in dozens and dozens of news outlets. But why is it news? Household is a company whose routine procedures involve preying on some of the least powerful members of our society and robbing people of their homes. (See profile titled "Home Wrecker" in the Sept. 2, 2002, Forbes at www.forbes.com.) The company has no scruples, and cooking the books is easy. Of course they've done it.

Were the government to do something about it, that would be news.

Perhaps I'm just a cynic and always expect the worst and sometimes end up being right. Or perhaps my reasoning is oversimplifying. But I am not surprised by the recent revelations of corporate lies to investors and tax collectors. In fact, I would have been shocked if someone proved this sort of thing wasn't going on. I would be shocked if good evidence were produced that all the "bad apples" have now been picked out of the bushel.

My reasoning centers around three points. First, many American corporations routinely engage in such cruel and open abuses of human rights that we can be certain that having to engage in a little deception wouldn't stop them from trying to reach their goals. Second, their goals, as openly and noisily expressed, are all about profit and not at all about civic responsibility. Third, our government has loosened regulations and failed to enforce existing law, and is led by elected officials whose own greed, deceit, and political prostitution clearly encourage corruption.

While I could easily focus on abuses of consumers, it may be even more important to consider American corporations' routine violation of workers' rights. One effective tactic they use is firing anyone who starts to talk union. They also hold mandatory anti-union meetings and close down shops that do manage to unionize. They violate the internationally recognized right of workers to organize, and do so with the assistance of a government that dramatically fails to enforce labor laws, with the exception of the so-called right-to-work laws, which deprive workers of the right to create stronger unions.

American corporations routinely subject workers to unsafe working conditions, and in great numbers to death and serious injury. Many more people have died of workplace injuries since September 11 than died in those attacks. And our government has been loosening safety and health standards and enforcement almost to the point of nonexistence, and doing so in the name of facilitating good business.

American corporations routinely pay workers too little for them to live on. Congress has decreased the minimum wage from over $8 in today's money 30 years ago to $5.15 today. Of course, Congress has done this through inaction by refraining from "raising" the minimum wage, but Congress members treat their own annual salary increases as a matter of routine unworthy even of discussion. Working for $5.15 per hour and no benefits means having to work almost two fulltime jobs just to reach the federal poverty line for a family of four. And few will pretend that the poverty line comes close to an actual living wage. The poverty line is calculated as what is costs for basic nutrition multiplied by three. But people are more likely to spend 10 percent of their income on food than 33 percent. The problem is in finding affordable housing, which many can afford only by cutting back on food, medicine, and childcare. If the anti-family implications of poverty wage policies aren't clear to Congress members, then they're simply refusing to look.

A national living wage policy would not be bad for the economy. It would put more money in circulation than those tax rebates did. It would give businesses lower turnover and higher productivity. It would give families and communities greater stability. But there are businesses that prefer to take the low road toward quick profits, regardless of costs to society or workers, and regardless of possible long-term costs to the businesses. A corporate executive who will choose to produce tires that kill drivers, use machinery that kills workers, pay wages that break up families, and bust the unions that could give substance to our alleged freedom of association is not going to think twice about lying to investors. Are you kidding? And certainly one who will lie about $1 thousand is going to lie about $10 million. These acts are not seen as crimes, but as positive steps in the mission for profits at all cost. The bigger the scam, the more admirable!

The public is now questioning the value of this ethic of greed. We need also to question both our national system of corporate welfare and the widespread system of corporate welfare and sprawl-promotion under which cities and counties hand out millions of public dollars in subsidies and tax breaks to persuade businesses to locate there rather than in the next town.

The living wage movement has begun to address this problem and the problem of poverty wages. In 86 cities and counties, laws have been passed setting decent minimum wage levels (indexed to automatically increase with the cost of living) for workers at companies benefiting from government subsidies, workers on government contracts, and direct government employees.

In this way, taxpayers are able to ensure that at least public dollars are not creating poverty jobs. The evidence thus far finds that living wage laws lift workers out of poverty while accomplishing all of the following: decreasing government spending on food stamps and earned-income tax credits, boosting local economies by putting money in circulation, converting business owners into supporters after they benefit from higher productivity, and introducing some accountability into the sprawl-promotion trough all without any significant job loss. In fact, as better paid workers drop their second and third jobs, opportunities open up for others.

It is ironic that the American people are going to have to save corporations from themselves and impose on them the lower turnover and higher productivity that come with living wages. Certain corporations have long promoted the idea that they were saving popular movements from themselves by blocking wage standards and fair labor laws. Community and labor activists were, according to this baseless theory, unwittingly driving up unemployment by insisting on earning a living wage.

Even economists who long opposed the living wage movement are changing their minds. Court rulings on challenges to living wage laws are dismissing claims that they cause unemployment as biased speculation. (See the district court ruling on New Orleans' first-in-the-country city-wide minimum-wage increase, which the corporate cretins have appealed to the Louisiana Supreme Court.)

Eleven states and D.C. have now set higher minimum wage levels than the federal. It is time for Congress to open its eyes to the biggest business scandal of all, which is hiding right out in the open. Is lying to investors and "moving" the company to the Caribbean bad? Of course it's bad, but it pales beside the crimes we've legalized. Just as bribery of politicians is now done through legal channels, exploitation of workers is open and admitted. That makes it no less evil and no less obvious that someone who would do it would also cook the company accounts.


Visit David Swanson's website, www.davidswanson.org

 
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