Multinational Monitor

NOV 2001
VOL 22 No. 11


Pentagon Spending Spree: The Wartime Opportunists on High Alert
by William Hartung

Too Cheap to Deter: The Nuclear Power Industy Pushes Ahead Post 9-11
by Charlie Cray

Fear of Flying: The Political Economy of Airport Security
by Todd Paglia


The Great Game: Oil and Afghanistan
an interview with
Ahmed Rashid

A Resource War
an interview with
Michael Klare

A Corporate Tax Break Feeding Frenzy
an interview with
Nancy Watzman

The Corporate Attack on Electronic Privacy
an interview with
Chris Hoofnagle

Insuring a Fair Deal
an interview with
Robert Hunter


Behind the Lines

The Corporate State and the Public Interest

The Front
The Cipro Rip-Off

The Lawrence Summers Memorial Award

Names In the News



The Corporate State and the Public Interest

The tragedy of September 11 has put to an end to the ridiculous notion, popular especially in the United States, that the best government is the least government.

Public sector fire fighters, police and health workers responded heroically to the violence of September 11. The anthrax spread took the lives of several public sector postal workers. The privatized carry-on bag screening process is widely acknowledged to be a disaster. With the economy rapidly unraveling, virtually everyone is looking to the government for a “stimulus package.” Industries from airlines to hotels to insurance are looking for government bailouts and props. And, of course, the military is part of the public sector.

September 11 and its aftermath has made clear that there are some functions that uniquely belong in the public sector; that private sector profit motives may lead to shoddier performance than that of the public sector; and that the government has a vital role in managing and directing the economy.

The debate now is not over whether there should be government, or whether it should intervene in the economy, but how, on what terms, and for what purpose. For now, the wartime opportunists are winning this debate, funneling government resources to narrow corporate and elite interests.

The first obligation is for government intervention to be egalitarian in nature. When performing services, extracting obligations or conferring benefits, government should work to ensure benefits and burdens are distributed evenly across the citizenry, with a bias to favor lower-income groups.

The House of Representatives’ so-called economic stimulus package is an exact contradiction of this most fundamental of principles. Rather than a carefully calibrated spur to the economy, it is a handout to the rich and powerful. Three quarters of the 2002 tax cuts in the package would go to the richest 10 percent of taxpayers, according to Citizens for Tax Justice, with only 7 percent going to the bottom three fifths of taxpayers. The package showers tax breaks and even rebates on corporations including IBM, General Motors and General Electric.

Little of this will work to stimulate the economy and counteract recessionary pressures. More sensible measures would deliver benefits (like increased and extended unemployment benefits) and tax breaks to lower-income groups, who are more likely to spend than the rich; and would involve government spending on vital public infrastructure — like railways and schools — to create demand in the economy (as well as provide needed public services).

A second principle that should control government intervention in the economy is the principle of reciprocity. If the government is going to bail out and provide supports to private businesses, then it should get something in return. Partly, this reciprocity should be measured financially — with corporations paying back loans when they can, or paying for ongoing government services.

Reciprocity should also be demanded in policy terms. By way of counterexample, the recent U.S. government airline bailout required nothing of the airlines. There were no conditions attached on how the airlines should treat employees. There was no obligation for the airlines to facilitate the formation of independent passenger groups.

Third, and especially because the private market on its own is unable to factor in such considerations, the government must consciously direct the economy toward ecological sustainability.

No area is more important in this regard than energy. If the U.S. government had invested even modestly 20 years ago in solar and renewables, or created modest incentives for private sector investment, the world might be a very different place. It didn’t, and the United States remains oil and fossil fuel dependent.

Given the persistent threat of war due to U.S. oil dependence and the now-obvious terrorist threat to nuclear power plants, not to mention the genuine international security threat posed by global warming, it is now past time for a major government commitment to solar energy. Unfortunately, the Bush-Cheney plan envisions ongoing reliance on fossil fuels and nuclear, and the oil barons have sought to use September 11 as an excuse to open the Arctic National Wildlife Refuge for drilling.

Finally, the principle that government has a vital and significant role to play in both directing and participating in the economy must be applied equally to developing countries. While the United States is responding to September 11 and its aftermath with everything from renationalization of airport baggage screening (though final agreement on the proposal remains logjammed at press time) to abandonment of previous budget limits, the old rules still apply to poor countries. The International Monetary Fund (IMF) and World Bank are continuing to sing their one-note song about the virtues of scaling back government and relying on markets, and continuing to impose their unreconstructed market fundamentalism on poor countries. That must change.

The public-minded spirit of the day has evinced a political climate hospitable to pushing forward with public interest agendas in many areas. But, so far, it has been the corporate lobby shops and their allies that have responded most effectively to the political moment, with narrow interests looting the treasury and working people and the long-term environmental concerns ignored.

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