The Corporate State and the Subversion of Democracy

Posted on May 31, 2008

By Chris Hedges

(Page 2)

The growing desperation across the United States is unleashing not simply a recession—we have been in a recession for some time now—but the possibility of a depression unlike anything we have seen since the 1930s.  This desperation has provided a pool of broken people willing to work for low wages and without unions or benefits.  This is good news if you are a corporation.  It is very bad news if you work for a living.  For the bottom 90 percent of Americans, annual income has been on a slow, steady decline for three decades.  The majority’s income peaked at $ 33,000 in 1973.  By 2005, according to New York Times reporter David Cay Johnston in his book “Free Lunch,” it had fallen to a bit more than $29,000, this despite three decades of economic expansion.  And where did that money go?  Ask ExxonMobil, the biggest U.S. oil and gas company, which made a $10.9-billion profit in the first quarter of this year, leaving us to pay close to $4 a gallon to fill up our cars.  Or better yet, ask Exxon Mobil Corp Chief Executive Rex Tillerson, whose compensation rose nearly 18 percent to $21.7 million in 2007, when the oil company pulled in the largest profit ever for a U.S. company.  His take-home pay package included $1.75 million in salary, a $3.36-million bonus, and $16.1 million of stock and option awards, according to a company filing with the U.S. Securities and Exchange Commission. He also received nearly $430,000 of other compensation, including $229,331 for personal security and $41,122 for use of the company aircraft.  In addition to his pay package, Tillerson, 56, received more than $7.6 million from exercising options and stock awards during the year.  Exxon Mobil earned $40.61 billion in 2007, up 3 percent from the previous year.  But Tillerson’s 2007 pay was not even the highest mark for the U.S. oil and gas industry. Occidental Petroleum Corp. CEO Ray Irani made $33.6 million and Anadarko Petroleum Corp. chief James Hackett took in $26.7 million over the same period. 

For each dollar earned in 2005, the top 10 percent got 48.5 cents.  That was the top 10th’s greatest share of the income pie, Johnston writes, since 1929, just before the Roaring ‘20s collapsed in the Great Depression.  And within the top 10 percent, those who made more than $100,000, nearly all the gains went to the top 10th of 1 percent, people like Tillerson, or Irani or Hackett, who made at least $1.7 million that year.  And until we have real election reform, until we make it possible to run for national office without candidates kissing the rings of Tillersons, Iranis and Hacketts to get hundreds of millions of dollars, this rape of America will continue.

While the Democrats have been very bad, George W. Bush has been even worse. Let’s set aside Iraq—the worst foreign policy blunder in American history.  George Bush has also done more to dismantle our Constitution, ignore or revoke our statutes and reverse regulations that protected American citizens from corporate abuse than any other president in recent American history.  The president, as the Boston Globe reported, has claimed the authority, through “signing statements,” to disobey more than 750 laws enacted since he took office, asserting that he has the power to set aside any statute passed by Congress when it conflicts with his interpretation of the Constitution.  Among the laws Bush said he can ignore are military rules and regulations, affirmative-action provisions, requirements that Congress be told about immigration services problems, ‘‘whistle-blower” protections for nuclear regulatory officials, and safeguards against political interference in federally funded research.  The Constitution is clear in assigning to Congress the power to write the laws and to the president a duty ‘‘to take care that the laws be faithfully executed.” George Bush, however, has repeatedly declared that he does not need to ‘‘execute” a law he believes is unconstitutional.  The Bush administration has gutted environmental, food and product safety, and workplace safety standards along with their enforcement. And this is why coal mines collapse, the housing bubble has blown up in our face and we are sold lead-contaminated toys imported from China.  Bush has done more than any president to hand our government directly over to corporations, which now get 40 percent of federal discretionary spending.  Over 800,000 jobs once handled by government employees have been outsourced to corporations, a move that has not only further empowered our shadow corporate government but helped destroy federal workforce unions.  Everything from federal prisons, the management of regulatory and scientific reviews, the processing or denial of Freedom of Information requests, interrogating prisoners and running the world’s largest mercenary army in Iraq has become corporate.  And these corporations, in a perverse arrangement, make their money off of the American citizen.  Halliburton in 2003 was given a no-bid and non-compete $7-billion contract to repair Iraq’s oil fields, as well as the power to oversee and control Iraq’s entire oil production.  This has now become $130 billion in contract awards to Halliburton.  And flush with taxpayer dollars, what has Haliburton done?  It has made sure only 36 of its 143 subsidiaries are incorporated in the United States and 107 subsidiaries (or 75 percent) are incorporated in 30 different countries.  Halliburton is able through this arrangement to lower its tax liability on foreign income by establishing a “controlled foreign corporation” and subsidiaries inside low-tax, or no-tax, countries known as a “tax havens.”  They take our money.  They squander it.  And our corporate government not only funds them but protects them.  Halliburton—and Halliburton is just one example—is the engine of our new, rogue corporate state, serviced by people like George Bush and Dick Cheney, once the company’s CEO. 

The disparity between our oligarchy and the working class has created a new global serfdom.  Credit Suisse analysts estimates that the number of subprime foreclosures in the United States over the next two years will total 1,390,000 and that by the end of 2012, 12.7 percent of all residential borrowers in the United States will be forced out of their homes.  The corporate state, which as an idea is an abstraction to many Americans, is very real when the pieces are carefully put together and linked to a system of corporate power that has made this poverty, the denial of our constitutional rights and a state of permanent war inevitable.  The assault on the American working class—an assault that has devastated members of my own family— is nearly complete.  The U.S. economy has 3.2 million fewer jobs today than it did when George Bush took office, including 2.5 million fewer manufacturing jobs.  In the past three years, nearly one in five U.S. workers was laid off.  Among workers laid off from full-time work, roughly one-fourth were earning less than $40,000 annually.  A total of 15 million U.S. workers are unemployed, underemployed or too discouraged to job hunt, according to the Labor Department.  There are whole sections of the United States which now resemble the developing world.  There has been a Weimarization of the American working class.  And the assault on the middle class is now under way.  Anything that can be put on software—from finance to architecture to engineering—can and is being outsourced to workers in countries such as India or China who accept a fraction of the pay and work without benefits.  And both the Republican and Democratic parties, beholden to corporations for money and power, allow this to happen.

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