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Related Categories: U.S. | Environment & Forest Defense
The Dictatorship of Corporations
by Thilo Bode
Monday Sep 17th, 2018 3:49 AM
Why do the majority of politicians often make decisions against the public interest in favor of industry? A new quality of lobbyism arose on account of the dramatically stronger market- and financial power of companies. The power relations in our society are shifting endangering democracy, the market economy, our self-determination, and our freedom.
THE DICTATORSHIP OF CORPORATIONS


How global businesses harm us and destroy democracy


By Thilo Bode


[This reading sample of the 2018 book is translated abridged from the German on the Internet, fischerverlage.de. Thilo Bode is a former director of Greenpeace.]


Foreword


One question has haunted me as an activist for environmental protection and consumer rights: Why do the majority of politicians so often make decisions against the public interest and in favor of industry? Is it ignorance? Is it lack of will? Or is it a hidden self-interest? To me, this question raises a core problem of our democratic society.


Take climate policy as an example. The more certain the knowledge that global warming is man-made; the weaker were the international climate protection agreements – from Kyoto 1997 to Paris 2016. Today, we stand before a failed climate policy. In the meantime, there is only negotiation about limiting the damage of global warming to a tolerable measure. This goal is also contested. Humanity can only avert this disaster against the embittered resistance of the coal-, oil-, power- and auto-corporations, I am deeply convinced.


Everyday, we can be convinced of the destructive power of the companies. Speechless and bewildered, we see how politics allows VW and Daimler & Co to enrich themselves at the expense of their customers and the health of citizens. Banks and the financial markets pretend the financial crisis never happened. The companies appear so self-righteous when they make disinformation, untruths and fraud into their business model.


The common explanation that only the political will to regulate is lacking is not convincing to me. Rather, there is a political will not to act against the businesses, I am convinced. My thesis (chapters 1 and 2) is that a new quality of lobbyism arose on account of the dramatically stronger market- and financial-power of the companies. This market- and financial-power has become a political power. An industrial-political complex has formed where companies and politics become an instrumental community for mutual benefit that never decides against the companies. This has devastating effects on democracy and causes enormous harm.


In this book, I describe this process from four sectors: energy- and car-companies, banks, the food industry and digital companies (chapter 3). This is only a selection. The conclusions can be transferred to other areas like the chemical industry, Big Chem or Big Pharma.


In chapter 4, I explain that corporations can act because they don’t have to fear being held liable for the damages they cause. Their destructive business models are mostly legal. But corporations must be held liable for unlawful conduct. “Diesel-gate” proved this impressively.


Although this book appears in the year of Karl Marx’s 200th birthday, it is not a book against businesses, against the market economy or against corporations. We need corporations. CEOs are not immoral per se and NGOs and their heads are not automatically the “good.” CEOs work in an economic and legal context that defines their conduct and gives them hardly any possibilities for different conduct. They are obliged to do everything to bring the greatest possible profit for their shareholders. The drama is that this context allows decisions with disastrous effects for the whole world – entirely legally. Their only alternative is to chuck their job.


I call it a tragedy for humanity that corporations use their tremendous technological potential to the harm and not the well-being of the public. Fantastic progress was made in reducing gas-guzzling SUVs…


Bourgeois businesses are the core of our economy. However, they are mercilessly disadvantaged in relation to corporations. The bourgeois actor is responsible for what he does or omits. He cannot make himself an icon out of dust like so many CEOs.


Critical voices on this book will say lobbyism has always existed. That is true. This book is not a polemic against lobbyism. Lobbyism is indispensable for balancing interests in liberal democracies. But we are confronted with a new quality of lobbyism guiding the corporations’ assumption of power and no longer with conventional lobbyism.


I sound the alarm. The power relations in our society are shifting to an extent endangering democracy, the market economy, our self-determination and our freedom – insidiously but before our eyes.


We citizens must resist.

1.
The New Power


Corporations out of control


When Amazon, the world’s largest online retailer, announced its search for a second North American corporate headquarters in late summer 2017, a week-long search began between 238 cities, regions, states and territories in the US, Canada and Puerto Rico. Amazon let the competitors know an “economically-friendly environment” was sought. The offered “incentives”- meaning tax favors, fee discounts and more – would play an important role in the decision over the bids. Since 2000, the corporation pocketed $1.4 billion in state subsidies from cities, districts and states for locating its distribution- and data-centers with them and not elsewhere, according to the estimate of Good Jobs First. [1] This is the model this time: investments and jobs only for luxuriant state assistance. US News & World Report announced “Amazon sells its new headquarters to the highest bidder” and warns politicians: “If you do not play Amazon’s tax-saving game, the Internet giant will play off the rivals against each other.” [2] Some cities refuse but many participate. The state of New Jersey and its large city Newark, for example, promise Amazon tax advantages up to seven billion dollars over the next twenty years. The offer of a small city to rename part of the city “Amazon City” and to appoint the CEO Jeff Bezos, the richest man of the world, mayor for life is rather comical – and says volumes in its obsequiousness. The mayor’s office is for sale…


Unfortunately, people get used to politicians who set corporate interest above citizen- and consumer-interests. Illuminating the backgrounds where politics and the economy are dangerously mixed up becomes all the more important…


Amazon, VW and Lufthansa are three examples from recent times that supply evidence for the development described in this book. Mammoth transnational corporations are always better able to instrumentalize and transform their growing market power into political power. They are always more successful at enforcing their own interests against the claims of society. This alarming discovery demands closer investigation.


For example, international trade- and investment agreements grant transnational businesses the special right to sue governments of host countries before private tribunals for compensatory damages. In this way, they keep the state from regulations for the common good as in the failed TTIP free trade agreement and realized in the CETA-agreement between the EU and Canada. The threat of compensatory damages alone forces governments or local communities to give way and desist from regulations. In a 2016 study [11], two Canadian researchers documented “mammoth” businesses (annual sales over $10 billion) and “large” businesses (sales between $1 billion and $10 billion) received compensations of $7.5 billion and “super-rich” individuals around $1.1 billion in 214 analyzed investor-state lawsuits. In contrast, firms and individual persons of lesser size “only” received compensations of $600 million. The argument that the very dubious private tribunals ensure legal security for smaller firms is always made. The list in the study actually reads like a “Who’s Who” of big international conglomerates: Occidental Petroleum (US) against Ecuador ($2.4 billion compensation plus interests), Mobil (Netherlands) against Venezuela ($2.1 billion), EDF (Belgium, France) against Argentina ($205 million), Siemens against Argentina ($278 million), Cargill (US) against Mexico ($86 million) and Deutsche Bank against Sri Lanka ($70 million)…


Setting self-interests over the claims of society is also known from the financial branch. What is involved is undoubtedly a power in the state that lives out this power – financial crisis or no financial crisis. In the fall of 2017, the financial sector celebrated a great success that was hardly noticed. The European Commission withdrew its draft for a separate banking law “secretly and bashfully,” the Handelsblatt economic paper reported. This would have compelled the great financial centers to separate risky maneuvers in the securities trade from classical banking with deposits and credits. A lesson should be learned from the 2018. Fraudulent banks were bailed out with many tax billions with the argument they were “too big to fail,” too big and too “system relevant.”[12] At the same time, the financial branch in the US cheered this time because collective class action was disallowed against banks and credit-card companies. Since then, their customers had to negotiate in conflict before private tribunals instead of in regular courts. “A great setback for every customer in this land. Wall Street won; normal persons are losers,” admitted the departing head of the US Consumer Protection Agency [13].

NOTES

Die neue Macht
1 https://www.goodjobsfirst.org/amazon-tracker (27. 4. 18)
2 https://www.usnews.com/opinion/thomas-jefferson-street/articles/
2017-09-08/dont-give-amazon-tax-breaks-for-its-new-headquarters
(13. 11. 17)
3 https://www.reuters.com/article/us-amazon-com-headquarters/
billions-in-tax-breaks-offered-to-amazon-for-second-headquartersidUSKBN1CO1IP
(13. 11. 17); https://www.nytimes.com/2017/10/23/
technology/amazon-headquarters.html (13. 11. 17); http://money.cnn.
com/2017/10/04/technology/amazon-second-headquarters-cityproposals/
index.html (13. 11. 17); http://www.spiegel.de/wirtschaft/
unternehmen/amazon-238-staedte-buhlen-um-neue-zentrale-des-kon
zerns-a-1174584.html (13. 11. 17)
4 http://www.zeit.de/politik/deutschland/2017-08/niedersachsenstephan-
weil-volkswagen?page=2#comments (14. 11. 17); http://www.
spiegel.de/politik/deutschland/stephan-weil-und-volkswagenschrieb-
vw-eine-regierungserklaerung-um-a-1161565.html (14. 11. 17);
http://www.spiegel.de/politik/deutschland/stephan-weil-ministerpraesident-
legte-vw-kritische-rede-dem-konzern-vor-a-1161539.html
(14. 11. 17)
5 http://www.spiegel.de/politik/deutschland/niedersachsen-vw-absprachenlaut-
medien-auch-mit-cdu-und-fdp-a-1162162.html (14. 11. 17)
6 http://www.zeit.de/wirtschaft/unternehmen/2017-11/kohlenstoffdioxideuropaeische-
kommission-quote-elektroautos (14. 11. 17)
7 https://www.politico.eu/wp-content/uploads/2017/11/Gabriel-an-Arias-
Canete.pdf?utm_source=POLITICO.EU&utm_campaign=4fdcf9ba1f-
EMAIL_CAMPAIGN_2017_11_08&utm_medium=email&utm_term=
0_10959edeb5-4fdcf9ba1f-189695405 (14. 11. 17)
8 https://www.zdf.de/politik/frontal-21/zdfcheck17-dieselabgase-100.html
(14. 11. 17)
9 http://www.spiegel.de/wirtschaft/unternehmen/air-berlin-erhielt-kredit
zusage-ohne-fertiges-gutachten-a-1199691.html#ref=rss (8. 5. 18); http://
190
http://www.airliners.de/air-berlin-kredit-regierung-gutachten/44203
(8. 5. 18)
10 http://www.deutschlandfunk.de/geplante-uebernahme-von-air-berlinbedenkliche-
naehe-der.694.de.html?dram:article_id=394029 (20. 11. 17)
11 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2713876 (16. 11. 17)
12 http://www.handelsblatt.com/finanzen/banken-versicherungen/finanz
branche-eu-zieht-entwurf-fuer-trennbanken-gesetz-zurueck/20498838.
html (14. 11. 17); http://www.sueddeutsche.de/wirtschaft/europaeischeunion-
barniers-trennbanken-baby-13378486 (14. 11. 17); https://lostineu.
eu/die-lehren-aus-dem-bankencrash-sind-vergessen/ (14. 11. 17); http://
http://www.sueddeutsche.de/wirtschaft/bankenregulierung-zurueck-in-diezukunft-
13378482 (14. 11. 17); http://www.taz.de/!5458226/ (14. 11. 17)
13 http://www.spiegel.de/wirtschaft/soziales/usa-senat-macht-sammelklagegegen-
banken-unmoeglich-a-1174567.html (20. 11. 17); https://www.
nytimes.com/2017/11/24/us/politics/consumer-financial-protection-bu
reau-cordray-leader-trump-mulvaney.html?emc=edit_th_20171125&nl=
todaysheadlines&nlid=48308383 (25. 11. 17); https://www.nytimes.
com/2017/11/27/us/politics/cfpb-leandra-english-mulvaney.html?emc=
edit_th_20171128&nl=todaysheadlines&nlid=48308383 (28. 11. 17);
https://www.nytimes.com/2017/12/05/business/cfpb-mick-mulvaney.
html?emc=edit_th_20171206&nl=todaysheadlines&nlid=48308383
(6. 12. 17); https://www.nytimes.com/2017/12/06/health/consumer-safetybuerkle-
gop.html?emc=edit_th_20171207&nl=todaysheadlines&nlid=
48308383&mtrref=undefined
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