CHAPTER 43


Who Are Today’s Economic Hit Men?

Back in the 1970s, economically developing countries were looked upon as nests of corruption. People like me plied our trade quietly, but just about everyone assumed that Latin American, African, and Asian government officials thrived on bribes. The image of the banana republic politician accepting an envelope stuffed with dollars in exchange for favors granted was ingrained in the press and in Hollywood. The United States, on the other hand, was considered to be — and for the most part was — above such massive corruption.

That has totally changed. Drastically. Activities that would have been viewed as immoral, unacceptable, and illegal in the United States in my EHM days are now standard practice. They may be covered in a patina of oblique rhetoric, but beneath that surface, the same old tools — including a combination of threats, bribes, falsified reports, extortion, sex, and sometimes violence — are applied at the highest levels of business and government. EHMs are ubiquitous. They stroll from the corridors of the White House through the US Congress, along Wall Street, and into the boardrooms of every major company. Corruption at the top has become legitimized because corporate EHMs draft the laws and finance the politicians who pass them.

The last time I saw Howard Zinn, I asked him where he’d turn to learn more about the modern EHM. “Study politicians like Daschle and Dodd,” he advised.

I didn’t get around to following that advice until after Howard’s death, when I started writing this book. Then I discovered that, once again, he had known exactly where to look.

Tom Daschle and Chris Dodd have a lot in common. Both served as distinguished, long-term members of the US Senate — Daschle from 1987 to 2005, Dodd from 1981 to 2011. Both were rising stars in the Democratic Party. Daschle was Senate majority leader. Dodd was general chairman of the Democratic National Committee and chairman of the Senate Banking Committee, as well as a presidential candidate. Both were powerful men with access to the president of the United States and the leaders of countries and corporations around the planet.

Daschle and Dodd portrayed themselves as men of the people rather than Washington insiders. Daschle’s early campaigns showed him driving a beat-up Pontiac. Dodd promised he would never succumb to the greedy opportunism of lobbyists. Eventually, however, both Daschle and Dodd betrayed their images and the promises they had made to their constituents. They represent a new, powerful, and very dangerous group of people, the contemporary club of EHMs.

After leaving the Senate, Daschle joined a law firm that nets millions of dollars through political lobbying for health-care and other corporations; his salary plus bonuses was reported to be over $2 million, in addition to income from a private equity firm. Adopting ambiguous sobriquets such as “political adviser,” he tried to avoid the classification of “lobbyist,” although his job was exactly that — to lobby for lucrative deals that benefited his clients.

One telling example happened after a garment factory in Bangladesh collapsed in 2013, killing more than 1,100 people. Although there is no indication that Daschle himself was involved, his law firm, DLA Piper, fought the implementation of a Bangladesh plan for legally binding safety reforms aimed at protecting low-income workers. Instead, DLA Piper lobbied for legislation that would drastically limit the liability of wealthy US retailers. Joined by retired Democratic senator George Mitchell and former Senate aide Charlie Scheeler, DLA Piper sought to protect the avaricious interests of its clients, including one of the retailers identified with the factory collapse (Gap), at the expense of the people and economy of Bangladesh.¹

Like Daschle, Senator Dodd worked hard to project the aura of a politician with deep integrity. He insisted that he would not sell out to corporate America and would never join the club of fellow politicians who had become lobbyists. Yet, when he ran for president of the United States, his campaign accepted funding from the financial services industry — the very businesses that were regulated by the Senate Banking Committee that he chaired. This apparent conflict of interest was surpassed by what he did after he retired from the Senate, in 2010. Despite his repeated promises never to be a lobbyist, in 2011 he replaced Dan Glickman as chairman and chief lobbyist for the Motion Picture Association of America.²

Howard had set me on a path. As I followed it, I found that such conversions are by no means limited to Democrats. Among the better-known Republicans who’ve jumped from the Senate into the lobbyist club are John Ashcroft, Bob Dole, Newt Gingrich, Phil Gramm, Chuck Hagel, Trent Lott, Warren Rudman . . . The list of both Democrats and Republicans seems endless. And there are still more, from the US House of Representatives, who have transformed themselves into EHMs.³

Most of these politicians, along with thousands of other men and women who pass through the “revolving door,” don’t call themselves lobbyists. They work for law firms and go by euphemistic titles such as “counselor,” “consultant,” or “adviser in government affairs” — just as I officially was “chief economist” for a highly regarded consulting firm. However, their real job, as mine was, is to con governments and the public into submitting to policies that make the rich richer and the poor poorer. They are EHMs, paid to support the corporatocracy, expand the corporate empire, and spread the tentacles of the death economy across the planet. They hide in the shadows, yet their influence is immeasurable.

It is significant that the American League of Lobbyists — a professional association for the industry — changed its name to the Association of Government Relations Professionals, in 2013. Although the number of registered lobbyists dropped to its lowest level in more than a decade during that same year, its ranks still numbered 12,281 — a whopping twenty-three lobbyists for every member of the US Senate and House of Representatives, many times the number of EHMs during my time. Yet, even this shocking number is highly understated. Research by American University professor James Thurber, an expert in lobbying for more than three decades, suggests that the true number of working lobbyists is closer to one hundred thousand. Official figures indicate that annual spending to support lobbyist campaigns was more than $3 billion in 2013, but Thurber estimates that it was closer to $9 billion.⁴

The lack of transparency, the secrecy surrounding the influence peddling of lobbyists, makes it impossible to accurately measure the full impact of such activities. However, each of the biggest companies doing business in the United States today has upward of one hundred lobbyists. These corporations and their associations spend more than thirty dollars for every dollar invested by all the labor unions and public interest groups that represent “we the people” in activities that promote workers’ rights, the environment, health care, education, and other social services.⁵

Officials charged with enforcing the laws are afraid to challenge the lobbyists and the corporations they represent. This passage from Common Dreams addresses the arms industry, but the statement is representative of global corporations in general:

Out of the top ten international arms producers, eight are American. The arms industry spends millions lobbying Congress and state legislatures, and it defends its turf with an efficiency and vigor that its products don’t always emulate on the battlefield. The F-35 fighter-bomber, for example — the most expensive weapons system in US history — will cost $1.5 trillion and doesn’t work. It’s over budget, dangerous to fly, and riddled with defects. And yet few lawmakers dare challenge the powerful corporations who have shoved this lemon down our throats.⁶

One of these arms producers, Boeing, made big news in the state where I live. Washington’s largest employer, with more than eighty thousand employees, it ranks among the three largest defense contractors in the world (the other two, Lockheed Martin and Northrop Grumman, are likewise based in the United States).⁷ Boeing lobbyists worked night and day to convince Washington State officials to give the company huge tax breaks, and the company threatened to move production facilities for the 777X plane to another state if the politicians did not deliver.

I heard stories about “legal” bribes that were all too familiar: consultant retainers and jobs offered to relatives and friends of government officials; entrapment into compromising situations involving sex or drugs. Although such allegations were never proven, the mere existence of the stories had an impact. People with marital problems or who had tried an illicit drug — or felt they could be framed — bowed to the pressures of anyone they feared might expose them.

In the end, the Washington State legislature passed a law that activated the largest corporate tax break in any state’s history, with an estimated lifetime value to Boeing of $8.7 billion. That law ensured the aerospace giant’s position as the United States’ number one corporate recipient of state and local subsidies.⁸ It was a spectacular victory for Boeing’s EHMs, and a huge loss for Washington State taxpayers such as me — and for democracy in general.

The way Boeing manipulated Washington State officials illustrates the methods used by a special class of EHMs known as “site location consultants.” Although they technically could be classified as lobbyists, they are highly specialized. For years, they have been involved in the economically developing countries. However, today, as the Boeing case shows, they are a major factor in the United States.

Business schools and planners may claim that corporate decisions about locating their job-creating facilities are based on rational analyses of such objective factors as proximity to suppliers and customers, labor markets, existing infrastructure conditions of transportation networks, and the price of energy, but the greatest determinant in many cases has become the deal made with local governments. Site location consultants play to fears that communities will be rejected unless they offer the most lenient environmental and social regulations, the lowest tax rates, and other incentives. Although public officials are usually eager to arrange such deals, they overlook the long-term consequences — deteriorating schools, roads, recreational facilities, and natural resources — even though, ironically, such community assets benefit the entire community, including the corporation’s own employees.⁹

One further aspect of site location consultants is that they often are paid by the community and, in the end, may also receive a commission as high as 30 percent on the subsidies they manage to negotiate — their payment from the corporation.

The Boeing deal was reminiscent of things I’d done in Argentina, Colombia, Ecuador, Egypt, Indonesia, and Panama. The main difference is that, instead of World Bank loans, modern EHMs in the United States use tax policy and subsidies. These stratagems are even more effective than loans. Corporations avoid the need to register the money or to sign contracts that force them to set up systems to ensure that the debtor actually pays. In this US version, no one has to put up the funds. Instead, the money is simply removed from the tax base and handed to the corporation; in essence, the money is stolen from the US taxpayer. Funds that had been earmarked for health care, education, and other social services are diverted to the coffers of greedy corporations — gifts from the lobbyist EHMs and corrupt politicians.

My research took me to Good Jobs First, a national policy center that reviews the grants, loans, and other subsidies distributed by the federal government since 2000. According to its reports, over the course of the past fifteen years, the federal government has distributed $68 billion in grants and special tax credits to businesses. Two-thirds of that money was transferred to large corporations.

Good Jobs First identified the major companies whose lobbyists have been most successful at obtaining subsidies. These include Dow Chemical, Ford Motor Company, General Electric, General Motors, Goldman Sachs, JPMorgan Chase, Lockheed Martin, United Technologies, and almost half of the one hundred most profitable federal contractors. All told, a shocking 298 corporations each received subsidies of $60 million or more.¹⁰ These companies reap benefits from ports, airports, highways, utilities, schools, fire departments, and other services, and make billions of dollars in profits, yet they do not pay their fair share toward supporting the institutions that serve them and their employees.

I was not surprised to learn that the fossil fuels industry is highly subsidized. However, the magnitude of such subsidies is far greater than I’d anticipated. A recent investigation by the Guardian reveals that “coal, oil, and gas industries benefited from subsidies of $550 billion, four times [the amount] given to renewable energy.” Typical were three projects that, due to the efforts of EHMs, had been granted subsidies by politicians whose campaigns received large contributions from the fossil fuels industry:

A proposed Shell petrochemical refinery in Pennsylvania will receive $1.6 billion (£1 billion) in state subsidy, according to a deal struck in 2012, when the company made an annual profit of $26.8 billion.

ExxonMobil’s upgrades to its Baton Rouge refinery in Louisiana are benefiting from $119 million of state subsidy, with the support starting in 2011, when the company made a $41 billion profit.

A jobs subsidy scheme worth $78 million to Marathon Petroleum in Ohio began in 2011, when the company made $2.4 billion in profit.¹¹

The EHMs of agribusiness are perhaps the most famous — or infamous — of all. Just one example was the passage of HR 1599 by the US House of Representatives in July 2015. Known officially as the Safe and Accurate Food Labeling Act of 2015, but called the Deny Americans the Right to Know (DARK) Act by its opponents, the law is intended to block states from requiring the labeling of products containing genetically modified organisms, or GMOs. The Grocery Manufacturers Association and Monsanto EHMs poured millions of dollars into making this bill happen. According to the Guardian:

“Passage of this bill is an attempt by Monsanto and its agribusiness cronies to crush the democratic decision making of tens of millions of Americans. Corporate influence has won and the voice of the people has been ignored,” stated Andrew Kimbrell, executive director of Center for Food Safety.

Environmental Working Group (EWG) was also opposed to the bill, and cited widespread public support for labeling GMOs.

“It’s outrageous that some House lawmakers voted to ignore the wishes of nine out of ten Americans,” said Scott Faber, senior vice president of government affairs for EWG.¹²

These steal-from-the-poor, give-to-the-rich programs are by no means restricted to arms, energy, and agriculture businesses. They are pervasive across the economic spectrum. One example is Walmart.

A Shuar friend who recently visited the United States asked to see this “most famous store,” Walmart. I told him that I don’t shop there but I’d be happy to take him on a tour. Before we went, I shared with him information published by Americans for Tax Fairness. It shocked us both.

That report described the ways in which Walmart has siphoned billions of dollars from US taxpayers. Among their various tools is a vast network of overseas tax havens, with assets valued at more than $76 billion. According to the report:

[Walmart] has established at least 78 subsidiaries in 15 offshore tax havens, none of them publicly reported before. . . .

The analysis, titled The Walmart Web: How the World’s Biggest Corporation Uses Tax Havens to Dodge Taxes, shows that Walmart has no fewer than 22 shell companies in Luxembourg — 20 established since 2009 and five in 2015 alone. According to the study, Walmart has transferred ownership of more than $45 billion in assets to those subsidiaries since 2011, but reported paying less than 1 percent in tax to Luxembourg on $1.3 billion in profits from 2010 through 2013.¹³

As we strolled down the seemingly endless aisles of merchandise, my Shuar friend pointed out that no one was talking to anyone else. “In my country,” he said, “markets are places where we learn what’s going on with our friends and neighbors — and the world. Here, people ignore each other. They just shop.” He was also amazed at the number of different items of essentially the same product. “How do you decide,” he asked, “whether to buy soap in the blue box, the red box, or the yellow box?”

One of the most disturbing reports estimated that Walmart workers are subsidized by US taxpayers to the tune of more than $6 billion a year, in public nutrition, health care, and housing assistance programs. The owners of this mega cash cow, the members of the Walton family, are listed among the wealthiest billionaires on the planet. They, like so many of their cohorts, may criticize social programs for everyone else, but they are beneficiaries of the biggest socialized programs in history.¹⁴

Vulture funds are one more example of how this EHM cancer has metastasized. After a country has defaulted and fallen into a state of economic chaos, these funds purchase that country’s debt for a few cents on the dollar. Then, when the country’s economy begins to recover, the funds demand payment of the debt, plus interest, often tacking on additional fees. Many take this a step further by suing businesses that try to work with the target country, thus compounding the damage by scaring off potential investors.

The twenty-six largest vultures have collected $1 billion from the world’s poorest countries, and still have another $1.3 billion earmarked for collection. That $1 billion is more than twice the budget of the International Committee of the Red Cross for all of Africa in 2011; it could finance the entire UN appeal for the famine in Somalia.¹⁵

Vulture funds have gone after Argentina, Brazil, Congo-Brazzaville, Ecuador, Greece, Iceland, and Ireland, and they have their sights set on just about every other country with debt and economic problems, including Italy and other European countries. Although there are many examples, Peru’s is a typical case.

Peru was caught in a downward spiral of economic and social turmoil in 1983. This was exacerbated by terrorist activities and unmanageable external loans. After long negotiations, its debts were restructured in 1996. Elliott Associates, a hedge fund run by Paul Singer, a major supporter of political campaigns, purchased around $20 million of the defaulted Peruvian loans for about $11 million and then sued the country and its central bank for the original amount, plus interest, in a New York court. Elliott won a $58 million settlement and cleared $47 million in profit — a more than 400 percent rate of return on its investment. This windfall profit came at a huge cost to environmental and social programs in Peru.¹⁶

The last global recession and the ensuing crises across most of the world resulted in increased exploitation by vulture funds. In addition to countries such as Peru, or European countries with “developed” economies, more than a third of the thirty-nine countries that qualify for debt relief under the World Bank’s Heavily Indebted Poor Countries programs (mostly located in Africa) have been targeted.¹⁷

In Confessions of an Economic Hit Man, I portrayed the World Bank and its affiliates as organizations that use debt to enslave nations. That certainly was and is correct. Since then, however, the vulture funds have elevated debt-as-slavery to new levels.

Like so many activities promoted by EHMs, vulture funds not only devastate their target countries but also destabilize the global economy. According to Joseph Stiglitz, a Nobel laureate in economics and former senior vice president and chief economist at the World Bank:

In Argentina, the authorities’ battles with a small number of “investors” (so-called vulture funds) jeopardised an entire debt restructuring agreed to — voluntarily — by an overwhelming majority of the country’s creditors. In Greece . . . the country is forced into austerity policies that have contributed mightily to a 25 percent decline in GDP and have left its population worse off. In Ukraine, the potential political ramifications of sovereign-debt distress are enormous.¹⁸

As I look back over the decades and compare what was happening in the 1970s with what is happening today among EHMs and their corporatocracy bosses, perhaps the most frightening observation is that the nefarious activities today are so much more pervasive than they were then, and that they are widely accepted by the executives who manage our most powerful corporations, by educators who set the standards in our business schools, and by the general public.

A handful of robber barons and their henchmen, the modern EHMs, have conspired to convince the rest of us that they have the right to do anything they deem necessary to support the debt-and-fear dogma. Citing US Supreme Court decisions and euphemisms about the virtues of their very narrow version of capitalism, they’ve persuaded us to give them license to make themselves fabulously wealthy. And they’ve done this, with our tacit approval, at our expense. One percent of Americans received 95 percent of all the wealth created since the depression was officially pronounced as ended in 2009, while 90 percent of us became poorer. For every $1 billion of wealth created, the average US citizen gets one dollar. Globally, eighty-five individuals own more resources than half of the world’s population.¹⁹

The examples provided here are only a few drops in the bucket of impact that today’s corporate EHMs have on US and global economics, politics, environmental issues, and society. They illustrate the extent to which EHMs have transformed themselves and have taken over the world since my days in those ranks.

Something equally appalling has happened among the jackals.