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.
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
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
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
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
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
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
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