Why Corporations Matter, Part I

The Antikythera clockwork was a mechanical device, made of bronze and iron gears, that was manufactured by the ancient Greeks in the second century B.C. It was lost in a shipwreck around 150 B.C., and recovered from the bottom of the Mediterranean in 1900. But it was only in the last couple of decades, with the help of sophisticated imaging equipment, that scientists have realized what the rusted hunk of metal actually is:

The Antikythera clockwork is a computer. And a very sophisticated and exact one at that.

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Is the U.S. a Fascist Police-State?

I lived in Chile during the Pinochet dictatorship—I can spot a fascist police-state when I see one.

The United States is a fascist police-state.

Harsh words—incendiary, even. And none too clever of me, to use such language: Time was, the crazies and reactionaries wearing tin-foil hats who flung around such a characterization of the United States were disqualified by sensible people as being hysterical nutters—rightfully so.

But with yesterday’s Holder v. Humanitarian Law Project decision (No. 08-1498, also 09-89) of the Supreme Court, coupled with last week’s Arar v. Ashcroft denial of certiorari (No. 09-923), the case for claiming that the U.S. is a fascist police-state just got a whole lot stronger.

First of all, what is a “fascist police-state”?

A police-state uses the law as a mechanism to control any challenges to its power by the citizenry, rather than as a mechanism to insure a civil society among the individuals. The state decides the laws, is the sole arbiter of the law, and can selectively (and capriciously) decide to enforce the law to the benefit or detriment of one individual or group or another.

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Corporate Entities as Modern-Day Street Gangs

Update I below.

This past Monday, June 14, 2010, the Unites States Supreme Court let stand without comment or dissent the Second Circuit Appeals Court decision to dismiss Maher Arar's suit against the U.S. Government. (Arar v. Ashcroft, No. 09-923)

Mr. Arar was illegally detained by U.S. officials while in transit back to his home in Canada, and then handed over to Syrian intelligence officials using “extraordinary rendition”. The Syrians kept Arar for ten months, interrogating him using torture, and finally releasing him when they concluded that Mr. Arar was neither a terrorist, nor in possession of any relevant intelligence.

Once free, Mr. Arar sued both the Canadian government (which peripherally assisted in his kidnapping and torture) and the U.S. government. The Canadian government issued him an unequivocal apology, and $10 million Canadian in compensation.

Mr. Arar did not get any similar justice from the U.S. government, though. The Second Circuit Appeals Court quashed his suit by stating that Congress had not authorized such suits as Mr. Arar’s. (!)

By letting stand the Appeals Court decision to quash the suit Mr. Arar brought against the U.S. Government, the Supreme Court effectively ruled that the Government cannot be held accountable by private citizens for its actions. The Government can do as it pleases to any individual—including assassinating one of its own citizens—and there is no legal remedy.

Now let's compare how the U.S. Government dealt with BP, regarding the oil spill disaster in the Gulf of Mexico: President Obama met with BP officials, and as a product of that meeting, BP promised to set up a “compensation fund” of $20 billion over the next two years.

Note how this was agreed to outside of the ordinary judicial process. There was no suit. Neither did this agreement follow the law. It was simply a deal the White House made with BP. A Republican politician is receiving a lot of grief over having characterised the meeting and subsequent deal as a “shake down” of BP by the Government. This politician is being censured because apparently he sided with BP, the party responsible for the oil spill disaster—clearly the guy is an idiot.

Be that as it may, the politician’s characterization is in fact accurate: The Government did “shake down” BP for the money, in a manner no different from a street gang shaking down a neighborhood grocery store.

In the Arar case, one of the Government’s arguments in favor of quashing the case was that the suit would bring under scrutiny “the motives and sincerity of the United States officials who concluded that petitioner [Mr. Arar] could be removed to Syria.” In other words, the Government was deploying its full weight and power to protect the individuals who had actually ordered Mr. Arar’s detention and deportation to Syria.

Similarly, in the “compensation agreement” whereby BP acquiesced to pay $20 billion, the company as a whole was acting to protect the executives and personnel responsible for the oil spill disaster. (I have yet to read the actual deal memo, but I wouldn't be surprised to learn that, as part of the deal, the Government agrees not to prosecute any BP executive or personnel, either in criminal or civil court. This is pure supposition on my part—but it ought to be the first thing scrutinized once the actual deal memo comes out.)

As a third example, during the financial crisis, when AIG, Fannie Mae and Freddie Mac were all bailed out, none of the executives actually responsible for the firms being in the position that they were in were indicted or punished in any way. The corporations assumed the responsibility of the individuals who had made the bad decisions.

As a fourth example, the unions, in both the public sector and the private. GM’s unions forced the company to assume pension and health care liabilities which any actuarian would have realized would eventually bring about GM’s bankruptcy—which of course is exactly what happened. Teacher's unions across the U.S. refuse to implement basic competency tests on their members, threatening to strike if such tests are imposed, even going so far as to protect not merely incompetent teachers, but pedophiles—and these are the people who are supposed to be educating America’s youth.

A fifth example: The U.S. military. Soldiers routinely violate human rights of Iraqis and Afghans, in the most despicable, egregious manner imaginable. Yet they get away with it, the military going out of its way to protect its soldiers, under the rationale that to prosecute gross human rights violations would “erode the morale of the troops”. In the Abu Ghraib torture scandal, a half-dozen non-commissioned officers were jailed—but apart from a lone Lieutenant Colonel being tried and acquitted of a couple of minor charges, no officer was tried, and none jailed.

All of this underscores the same problems we are having throughout our society in the Industrialized West: Corporate entities, be they corporations, unions, the military, or the government, act lawlessly—anarchically—trampling the individual without hesitation, yet coming to accomodations between one corporate entity and another.

In other words, our society has become a neighborhood where street-gangs—corporate entitites—battle one another for position. Even the Government is just another street gang.

People allied with a particular corporate entity have rights and the full protection of the corporate entity to which they belong, much as street gangs are fiercely loyal to their individual members. The higher up in the corporate entities’ hierarchy—CEO, General, President—the more untouchable he or she is.

However, unaffiliated members—such as Mr. Arar, such as myself—have no such protection. Neither do they have recourse to the courts, as the Arar case proves. Courts and the so-called “justice system” are busy policing individuals. Individuals’ rights are more curtailed and restricted than ever before. But corporate entities are freer than ever before.

In such a lawless neighborhood, what can an individual do? Obvious: Join a gang—any gang. To remain unaffiliated is to be begging to be set upon by members of one gang or another, be it the various gangs that make up the government (TSA, IRS, ICE, Homeland Security, etc.), or the various corporations who have made sure that unaffiliated individuals are fleeced in health care, insurance, financial services, etc. (As an individual, health insurance is prohibitive in the U.S.—but as a corporate cog of a big corporation? That’s another story. How often do we hear of corporate employees kowtowing to their corporate masters in order to hang on to their health-care coverage?)

But what happens to a neighborhood where gangs dominate? Why, that’s quite simple: The neighborhood is destroyed. The gangs don’t disappear, as the neighborhood is slowly ruined. The gangs stay put, feeding off the corpse of the neighborhood, until it's nothing but a husk—kind of like digger wasps.

This is what's happening to the “Free World”—our world. Fun, ain’t it?

Update I: An article in the New York Times, about a Cameroonian man married since 2005 to an American woman who was about to be wrongly deported, gives another example of this street-gang style of protection: The man would have been deported, had not the ICE been pressed by the NY Times. The Times pressed the ICE because the woman happened to work for an advertising company which presumably did business with the Times. After being contacted by the Times, not only was the man not deported, he was released with promises to have his case “taken care of”.

What do BP and the Banks Have In Common? The Era of Corporate Anarchy

(Update: I've cut material which I cannot support with convincing, unequivocal evidence regarding BP's actions immediately following the disaster of the Deepwater Horizon. These edits do not change or detract from the points about corporate anarchy that I am trying to make. Additionally, at the end of this piece, I provide a short discussion of BP share prices in NYSE and FTSE.)

On the occasion of the BP oil spill disaster, President Obama's delivered an Oval Office speech last night—a masterpiece of milquetoast faux-outrage. The speech was all about "clean energy" and "ending our dependence on fossil fuels". Faced with the BP oil spill—likely the most severe environmental disaster ever—this was President Obama's response: Polite outrage, and vague plans to "get tough", "set aside just compensation" and "do something".

President Obama missed what the BP oil spill disaster is really about. Though unquestionably an environmental disaster, the BP oil spill is much much more.

The BP oil spill is part of the same problem as the financial crisis: They are two examples of the era we are living in, the era of corporate anarchy.

In a nutshell, in this era of corporate anarchy, corporations do not have to abide by any rules—none at all. Legal, moral, ethical, even financial rules are irrelevant. They have all been rescinded in the pursuit of profit—literally nothing else matters.

As a result, corporations currently exist in a state of almost pure anarchy—but an anarchy directly related to their size: The larger the corporation, the greater its absolute freedom to do and act as it pleases. That's why so many medium-sized corporations are hell-bent on growth over profits: The biggest of them all, like BP and Goldman Sachs, live in a positively Hobbesian State of Nature, free to do as they please, with nary a consequence.

The added bonus to this, though, is that the largest corporations have convinced the governments and the people of the "Too Big To Fail" fallacy—they have convinced the world that if they cease to exist, the sky will fall atop our collective heads. So if they fail, they must be saved—without argument, without penalty, and without reform.

Let's take BP: British Petroleum caused the Deepwater Horizon oil spill in the Gulf of Mexico. There were various Federal Government agencies charged with supervising their operations—but all of those agencies deferred to BP, before the accident. As a large corporation—one of the largest oil companies in the world—BP operated more or less without any Government supervision. As is emerging, because of this lax and toothless supervision, safety rules and procedures were ignored. Insane risks were taken. No safety contingency plans were drawn up.

From what some memos are saying, disaster was inevitable.

Once the accident happened, BP controlled the information it released concerning the disaster. BP unilaterally decided not to inform the general public, or allow independent scientists to see the raw data or take independent measurements. In the initial stages of the disaster—before it had become a political maelstorm—the decisions and course of action in dealing with the oil spill were determined solely by BP, while the general public and the U.S. government were pretty much left in the dark. This is akin to someone whose apartment has caught fire, but who decides to put out the fire himself with his own garden-hose, and refuses to either inform the other tenants of the building of the extent of the fire, or allow the authorities to provide assistance or supervision.

Where was Authority? Where was Someone In Charge? The fact was, there was no one in charge. There was no one supervising—or at any rate, the ones who were supposed to be supervising had had their teeth yanked. And BP knew it—so they did whatever they wanted, regardless of the risks, or the costs.

Worst of all, BP realizes that, if it finally cannot get a handle on the oil spill disaster, they can simply fob it off on the U.S. Government—in other words, the people of the United States will wind up cleaning BP's mess. BP knows that no one will hold it accountable—BP knows that it will get away with it.

No one was holding the banks accountable either. It's no accident that American and European banks nearly went broke, but banks here in Chile sailed along smoothly: That's because banks here are regulated up the wazoo. They literally can't fart without an independent banking inspector supervising them, and then getting a stamped form in triplicate. When Chile's banks went bust in the crisis of 1980, it put paid to any illusions that the banks knew what they were doing—the government bailed out the banks then, but kept them under glass ever after.

But in Europe and America, the story was the Greenspan Put. Easy Al was so convinced that the banks would "self-regulate" that he pulled the teeth of the Fed, the banks regulatory agency, and let the "free market" have its way.

With this free pass, what do you think the banks did? They went anarchic—they invented all sorts of clever "financial products" that exponentially increased risk, rather than mitigating it. We all saw how that movie ended. When Lehman busted and the credit markets froze, a slap-dash improvised "rescue package" was drawn up, then the $700 billion TARP, then Quantitative Easing, all of these efforts lubed up with a lot of talk to "strengthening the regulatory environment" and "protecting the financial markets".

The upshot? The banks did whatever they pleased—with no supervision. And when their recklessness led inevitably to the catastrophe in the Fall of '08, the banks got bailed out—with no repercussions. The biggest ones even managed to turn a profit off the tax payer-funded bail-outs!

Even after the worst of the crisis—when the effects of no regulation and no supervision were clearly understood—nothing happened. The zero-regulation, zero-supervision regime continued.

This isn't the case for people, for individuals: People are regulated, people are controlled. Individuals are supervised and limited in what they can do and say—and no one complains. On the contrary—everyone is relieved, because it protects us all from the unreasonable behavior of an individual.

As an individual, I am limited in countless ways, from the trivial, like jaywalking, to the severe, like murder. I can't even speak up and yell "Fire!" in a crowded theater—I would be arrested for inciting a panic, the general good of avoiding a potentially lethal stampede overriding my need to express myself by yelling "Fire!" when there is none.

Curiously, individuals—ordinary people—are being supervised and regulated more and more stringently. Yet at the same time, corporations are becoming more and more free to do as they please. No one notices how strange this is—we have even lost the social framework to even talkabout regulating and supervising corporations, because too many foolish pundits equate supervision and regulation with Socialism. Yet curiously, personal freedom is being chipped away, day by day, without a peep from these self-same "freedom-loving" pundits.

Meanwhile, the banks run amok.

Meanwhile, BP runs amok.

We can look at other industries—Big Pharma, for one—but there's no real need: Big Pharma will fit the same pattern as BP and the banks. Get so big that you can do whatever you want, and no one will challenge you, not even the government. Carry out practices that will inevitably create a crisis—like unsafe drilling, like toxic bonds—and be confident that you will be bailed out.

Bailed out, and allowed to continue, unfettered. "Allowed" to continue, unfettered? I'm sorry, I mis-spoke: Encouraged to continue, unfettered. After all, the banks continued with their practices, and added some predatory new ones for good measure. And though there was talk of a moratorium on deep-water off-shore drilling, more drilling seems to be apace ("Drill, baby! Drill!!").

This era of corporate anarchy is reaching a crisis point—we can all sense it. Yet the leadership in the United States and Europe is making no effort to solve the root problem. Perhaps they don't see the problem. Perhaps they are beholden to corporate masters. Whatever the case, in his speech, President Obama made ridiculous references to "clean energy" while ignoring the cause of the BP oil spill disaster, the cause of the financial crisis, the cause of the spiralling health-care costs—the corporate anarchy that underlines them all.

This era of corporate anarchy is wrecking the world—literally, if you've been tuning in to images of the oil billowing out a mile down in the Gulf of Mexico.

I think we are at the fork in the road: One path leads to revolutionary change, if not outright revolution. The other, appeasement and stasis, as the corporations grind the country down.

My own sense is, there will be no revolutionary change. The corporations won. They won when they convinced the best and brightest—of which I used to be—that the only path to success was through a corporate career. No necessarily through for-profit corporations—Lefties never seem to quite get how pernicious and corporatist the non-profits really are; or perhaps they do know, but are clever enough not to criticize them, since those non-profits and NGO's pay for their meals.

Obama is a corporatist—he's one of Them. So there'll be more bullshit talk about "clean energy" and "energy independence", while the root cause—corporate anarchy—is left undisturbed.

Once again: Thank God I no longer live in America. It's too sad a thing, to watch while a great nation slowly goes down the tubes.

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Parenthetically, regarding BP’s share price:

Between April 20, the date of the disaster, and May 12, the release of the video feed of the broken pipe which we all know so well, the price of BP shares (NYSE) slid in a very slow, very controlled manner, from 60 to 48.5—that is, just shy of 20% in three weeks. The volume of shares spiked to 157 million on May 3 (share price 50), following a run-up in volume on the previous three trading days; before that, volume had fluctuated between 5 and 10 million shares a day. Then, after the release of the live video feed on May 12, which only happened after severe congressional pressure, the stock plummeted to 29 by June 9—an additional 40% in four weeks, on volume roughly averaging 25 million shares per day, with spikes recently as high as 200 million shares.

In London’s FTSE, the initial spike in share volume was slightly earlier—April 30, there were 165 million shares traded at 576 pc. To compare, on April 21, the share price was 651 pc, on volume of 23 million shares; before the disaster, volume was between 15 and 30 million shares daily.

Without question, senior BP execs and the mutual funds with large BP positions would have known the true extent of the disaster almost immediately after the Deepwater Horizon went down. Presumably, while the true extent of the disaster was withheld from the general public, these corporate players would have had time to get out of BP stock. This is a reasonable inference—or else why keep the video feed under wraps for close to a month? Why prohibit independent scientists from measuring the flow-rate of the leak?