The Enron "outrage," AFL-CIO president John Sweeney told a rapt crowd of several hundred workers at Milwaukee's Serb Memorial Hall, is "not the story of one corporation's abuses, but sadly it's an example of business as usual in boardrooms and executive suites all across the country." Over the coming months, at a series of town-hall meetings around America, the AFL-CIO will warn workers that they, too, could be "Enroned," and it will call for "no more business as usual."
In an unprecedented way, argues AFL-CIO corporate affairs director Ron Blackwell, the Enron scandal "opens up a channel of public discourse on issues of retirement security and corporate accountability." In the booming nineties nobody wanted to hear why corporations and capital markets had to be better regulated, and reformers were left pleading for corporations to be "socially responsible." But today, "new economy" job-hoppers as much as steelworkers have good reasons to listen to union warnings about deeply flawed 401(k) plans and Social Security privatization.
The labor movement helped win millions in severance pay for laid-off Enron workers, provided legal counsel for workers battling Enron's creditors, sued Enron executives (through union-affiliated Amalgamated Bank) on behalf of pension funds that lost hundreds of millions of dollars in Enron's collapse and helped ex-Enron workers--both union and nonunion--tell Congress and the public how they were misused. The AFL-CIO requested new Securities and Exchange Commission rules and forced four Enron directors to withdraw from renomination at other corporate and public boards. Now labor is challenging Enron director Frank Savage's renomination to Lockheed Martin's board, sending the message that independent directors have a public trust.
Besides supporting auditor reform, the AFL-CIO is promoting legislation to strengthen the rights of workers in 401(k) plans--to a point. Senator Jon Corzine, backed by the Pension Rights Center, initially proposed prohibiting employees from holding more than 20 percent of their employer's stock in their plans. But after complaints from unions representing some workers who had bet big with their employers' stock, like pilots and GE employees, the AFL-CIO backed Senator Ted Kennedy's legislation, which places a less stringent limit on the employees' 401(k) holdings of their employers' stock but which, quite importantly, would require equal worker and employer representation in governing the plans. Enron worker Dary Ebright, who lost $300,000 from his 401(k), argues that limits make sense. "If that had been in place," he said in Milwaukee, "I wouldn't be here today."
Sweeney hopes that unions can use votes on Enron-related reforms to draw lines in this year's elections showing what candidates put first--corporations or workers. The AFL-CIO attacked Republican Representative John Boehner's legislation, passed in April, for "wip[ing] out existing retirement protections for workers under the guise of responding to" Enron. The House bill would permit investment firms to advise workers about financial products, like mutual funds, from which those firms profit--precisely the kind of 1990s conflict of interest that is under investigation at several Wall Street brokerages. While providing limited protections for workers and preserving executive privileges, the House bill would also make it easier for corporations to exclude most employees from retirement plans. Labor's advocacy for Enron workers and retirement security could also strengthen organizing, including efforts among white-collar workers, by sparking a more "enlightened" view of a collective voice at work, as it did with former Enron vice president Dennis Vegas, now a union enthusiast.
But a budding labor scandal threatens the movement's credibility on corporate accountability. It appears that a few labor leaders, sitting on the board of ULLICO, parent of Union Labor Life Insurance Company, personally profited from privileged deals in the Enronlike boom and bust of telecommunications upstart Global Crossing, while their unions' pension funds were denied the same opportunity. Robert Georgine, president of ULLICO and former president of the AFL-CIO's building and construction trades department, former Iron Workers president Jake West, Plumbers president Martin Maddaloni and Carpenters president Douglas McCarron are among those who got windfalls of several hundred thousand dollars. In March Sweeney, who did not take part in the deal, called on ULLICO, like Enron, to appoint an independent committee and counsel to investigate, but in mid-April Georgine said he would take a "somewhat different" approach. "We're not going to ask Enron to live by one set of standards and ULLICO to live by another," Sweeney insisted. Many union officials say they were shocked and disgusted by the news, a reminder that "no more business as usual" is a widely applicable slogan, even within union ranks.
Corzine: You set the right context.
The rise and fall of the house of Enron should trigger comprehensive investigations--civil, criminal and Congressional. The full scope of relations between Enron and its cronies in the Bush Administration must be dragged out into the sunlight. Miscreants should be prosecuted, and fundamental reforms enacted to bring corporations back to public accountability.
Desperately trying to put a lid on the cascading scandals, White House spokesmen have insisted that since Bush officials did nothing when Enron chairman Ken Lay warned them about its impending collapse, there is no political scandal, only a financial one. Don't fall for that.
The largest scandal, as Robert Borosage suggests on page 4, is not just what was done illegally but what was done legally--for example, the failure of Bush Cabinet members to warn small investors and employees that Enron was going down and that its executives were bailing out. Or the slick way Enron gouged billions from Western energy consumers while its planted head of the Federal Energy Regulatory Commission, Pat Wood, ignored the pleas of Western governors for price controls. Or Treasury Secretary Paul O'Neill's torpedoing of the Clinton Administration's attempt to regulate offshore tax havens, a direct benefit to Enron, among others. Or Enron officials' six meetings with Vice President Cheney to help shape Bush's energy plan. What is Cheney hiding by refusing to reveal the names of those FERC met with?
Clearly, the full range of Administration contacts with Enron should be probed. This will reveal how crony capitalism works and what must be done to curb it. Congress must begin the hard task of rebuilding the legal framework for corporate accountability. As William Greider writes on page 11, Enron's demise reveals that all the supposed checks on executive plunder--accountants, stock analysts, independent board members, regulatory agencies--were either short-circuited or inactive. We need bold reform now. And Congress should take a close look at pensions, boosting defined-benefit plans and returning 401(k) plans to the supplement they were intended to be. And of course Enron once again illustrates the corrosive corruption of big-money politics.
With the House and the White House in Republican hands, Democrats in the Senate, sadly, will have to take the lead in ferreting out the facts and defining the necessary reforms. "Sadly" because too many Senate Democrats mirror Republicans in pocketing corporate bucks and parroting the deregulation/privatization line that comes with them. The chairman of the Governmental Affairs Committee, Joseph Lieberman, was leader of the corporate-funded Democratic Leadership Council and a founder of New Democrat Network, the proud recipient of Enron contributions. Last year Lieberman blew off the probe of Enron's connections to the California energy crisis. He now has another chance to show if he stands with his voters or his contributors.
Enron's bankruptcy is the largest in US history, but it is not unique. It is a product of the conservative offensive to unfetter corporations by dismantling hard-won public protections. Given that freedom, Enron's executives--and their brethren--gouged consumers, fleeced investors, even betrayed their own employees. It's time for Congress and the people to put an end to Enronomics and call corporate marauders to account.
There are more Enrons out there; the rot is systemic.
Last spring Richard Pollak asked in these pages, "Is GE Mightier Than the Hudson?" (May 28, 2001). Given the Environmental Protection Agency's December 4 decision to dredge the PCB-contaminated river, it is tempting to ring in the new year with a resounding No. Despite the company's multimillion-dollar blitz of lawyering, lobbying and PR, the Bush Administration, in the person of its EPA Administrator, Christine Todd Whitman, has come down squarely on the side of those in New York's historic Hudson River Valley who have been agitating for years to make GE clean up the lethal mess it created by dumping more than a million pounds of polychlorinated biphenyls in the river from the 1940s into the 1970s. This pollution has turned 200 miles of the Hudson, from just above Albany south to New York Harbor, into the biggest Superfund site in the nation; EPA law requires that GE pay the cost of removing the toxic chemicals, which the agency estimates at $460 million. More than once, the company has told its stockholders it can well afford this sum, as a multinational with a market value of some $500 billion surely can.
Still, it may be premature to pop the champagne corks. This past fall, fearing that Whitman might follow the lead of her Clinton Administration predecessor, Carol Browner, and endorse the cleanup, GE filed a federal suit attacking as unconstitutional a Superfund provision that allows the EPA, if the company refuses to dredge, to do the job itself and bill GE for three times the final cost plus penalties of $27,500 a day. GE has plenty of time (and cash) to pursue this and other maneuvers against dredging, which is needed to remove some 150,000 pounds of PCBs still in the Hudson. The EPA estimates it will take at least three years to work out the project's engineering and other details--e.g., what kind of equipment is needed, how much stirred-up sediment is acceptable and what landfills can safely handle the contaminated mud. Many residents along the banks of the river are divided--sometimes angrily--on these and several other issues. During the EPA's 127-day comment period in 2001 it received about thirty-eight boxes of letters and 35,000 e-mails, many spurred by GE's scare campaign--on billboards, in newspaper ads and on TV infomercials--warning that dredging will destroy the river.
The EPA has pledged that the public will have even more of a voice in the project's design decisions over the coming months--a welcome process but one that GE is likely to exploit with more propaganda. At its enviro-friendly-sounding website (hudsonwatch.com), for example, the company continues to insist, on no hard evidence, that the citizens of the Hudson River Valley oppose dredging "overwhelmingly." Some residents do resist dredging and the inevitable inconvenience it will bring to their communities, and not all have arrived at their view because of GE's PR tactics. But after almost two decades of review by the EPA, the burden of scientific evidence shows that the remaining PCBs, which cause cancer in laboratory animals and probably in humans, continue to poison the river a quarter-century after their use was banned and GE stopped dumping them.
The EPA's December 4 order could be the precedent that requires the company to clean up forty other sites where it has dumped PCBs. This would cost several billion dollars, a hit not so easy to reassure shareholders about. Even with GE master-builder Jack Welch retired and busy flogging his bestselling How-I-Did-It book, don't look for the company to roll over anytime soon.
International solidarity is the key to consolidating the legacy of Seattle.
Bill Gates for President--next time. Now that we've gotten used to
millionaires running for the presidency, why not a billionaire and a
self-made one at that? At least Gates is aware that the biggest problem
in the world is not how to make some Americans even wealthier but how to
deal with the abysmal poverty that defines the condition of two-thirds of
Odd as it may seem, it took the richest man in the world in a dramatic
speech last week to remind us that no man is an island, and that when
most of the world's population lives on the edge of extinction, it mocks
the rosy predictions for our common future on a wired planet.
Gates shocked a conference of computer industry wizards with the news
that the billions of people who subsist on a dollar a day are not in a
position to benefit from the Information Age. He charged that the hoopla
over the digital revolution, which he pioneered, is now a dangerous
distraction from the urgent need to deal seriously with the festering
problem of world poverty. Gates, who has donated an enormous amount to
charity, also made the case that private donations alone will not solve
the problem, and that massive government intervention is needed.
"Do people have a clear idea of what it is to live on $1 a day?" Gates
asked the conferees. "There's no electricity in that house. None. You're
just buying food, you're trying to stay alive."
The "Creating Digital Dividends" conference he addressed was one of
those occasions in which the computer industry indulges the hope that as
it earns enormous profits, it is solving the major problems facing
humanity. The premise of the conference was that "market drivers" could
be used "to bring the benefits of connectivity and participation in the
e-economy to all the world's 6 billion people."
As reported by Sam Howe Verhovek in the New York Times, Gates, who was
the conference's closing speaker, doused that hope by denying that the
poor would become part of the wired world any time soon. In a follow-up
interview, Gates amplified his view of what occurs when computers are
suddenly donated to the poor: "The mothers are going to walk right up to
that computer and say, 'My children are dying, what can you do?' They're
not going to sit there and like, browse eBay."
Gates, who has long extolled the power of computers to solve the
world's problems, criticized himself for having been "naïve--very naïve."
He has shifted the focus of the $21 billion Bill and Melinda Gates
Foundation from that of donating Information Age technology to meeting
the health needs of the poorest, beginning with the widespread
distribution of vaccines.
The New York Times reported that Gates "has lost much of the faith he
once had that global capitalism would prove capable of solving the most
immediate catastrophes facing the world's poorest people, especially the
40,000 deaths a day from preventable diseases. He added that more
philanthropy and more government aid--especially a greater contribution
to foreign health programs by American taxpayers--are needed for that."
Given that Gates is presumably the biggest of those taxpayers, that is
the most provocative challenge to the complacency of the
"free-markets-and-trade-will-solve-everything" ideology that dominates
the thinking of both major parties. US foreign aid to the poor
represents a pathetic fraction of our budget, while we devote ever larger
sums to building a sophisticated military without a sophisticated enemy
in sight. Yet those misplaced priorities went totally unchallenged by the
presidential candidates of both major parties.
Poverty is the major security problem both within and without our
country. These days the have-nots have many windows to the haves, and
resentment is inevitable. It is the breeding ground of disorder and
terror, and it is absurd to think that a stable new world order can be
built on such an uneven foundation.
One of the ironies of the wired world is that those terrorists in
their remote mountain camps are wired into the Internet, which has
facilitated the coordination of their evil plans. The terrorists have all
the laptops and cellular phones they want, but they depend for their
effectiveness on recruiting from the ranks of the alienated poor who
don't have medicines, food or a safe source of water.
If you are the parent of a newborn, beware. Fourteen to eighteen months from now your child will be programmed to nag for a new toy or snack every four hours, "branded for life" as a Cheerios eater or a Coca-Cola guzzler and placed in the loving care of a market researcher at the local daycare center.
That, at least, was the view of early childhood development presented by the 400 children's-market honchos at the third annual Advertising & Promoting to Kids Conference, held in New York City on September 13-14. Conference-goers attended sessions on topics like Building Brand Recognition, Marketing in the Classroom and The Fine Art of Nagging ("40% of sales of jeans, burgers and other products occur because a child asks for the product"). They cheered winners of the Golden Marble Awards for best breakfast-food and video-game commercials.
The marketing confab was held as the government released a report documenting the growing commercialization of public schools and also as the Federal Trade Commission blasted media companies and the advertising industry for deliberately marketing violent films and products to children. Although kids have been targets of marketing for decades, the sheer amount of advertising they are exposed to today is "staggering and emotionally harmful," says Susan Linn, a Harvard Medical School psychologist who studies media at the Judge Baker Children's Center in Boston. Linn and other child psychologists, educators and healthcare professionals led a protest outside the Golden Marble Awards to draw attention to the effects of the $12-billion-a-year kid-ad industry, including the epidemic of obesity in children and increasing violence in schools. "It's appalling that creativity is being rewarded in the service of manipulating children," Linn says. "We hope this is the beginning of a national movement to challenge this."
In fact, this fall has been a good one for grassroots opponents of corporate commercialism. The Madison, Wisconsin, school board voted in August to terminate its exclusive beverage contract with Coca-Cola, making it the first school district in the country to cancel an existing marketing deal [see Manning, "Students for Sale: How Corporations Are Buying Their Way Into America's Classrooms," September 27, 1999]. The board cited "overwhelming public opposition" as the reason for its decision. That action came hard on the heels of successful campaigns to stop proposed school-marketing deals in Oakland and Sacramento, California; Philadelphia; and the state of Michigan, where a cola contract involving 110 school districts was shot down. In October the American Dental Association passed a resolution urging its members to oppose the marketing of soft drinks and junk food in schools, and the American Psychological Association, under pressure from many of its members, agreed to form a task force to examine whether it is unethical for psychologists to advise companies that market to children. Meanwhile, ZapMe!, the in-school marketing company, abandoned its educational business after failing to convince enough schools to accept its offer of free computers in exchange for delivering student eyeballs to advertisers.
"We're seeing a dramatic increase in local resistance to all forms of corporate marketing to kids," says Andrew Hagelshaw, executive director of the Center for Commercial-Free Public Education, in Oakland. "The issue has finally hit critical mass with the public." Hillary Rodham Clinton has jumped on the bandwagon. Citing a "barrage of materialistic marketing" aimed at young children, the Democratic candidate for senator from New York wants the government to ban commercials aimed at preschool children and to prohibit advertising inside public elementary schools. Anticorporate activists welcomed Clinton's proposals but said they don't go far enough. Opponents of a New York City school board plan to finance free laptop computers for students through in-school advertising say her proposals won't protect millions of high school students. Nor would the proposals apparently affect the commercial in-school TV program Channel One, whose market is primarily middle school students.
Corporate lobbyists are already putting the heat on members of Congress who might support legislation reining in children's advertising. Hagelshaw believes the real battles will take place in local school boards and state legislatures, which may be more receptive to anticommercial arguments. There's never been a better, or more important, time for local activists to step up the pressure on corporate exploiters of children.
Activists have achieved power. Now they need to figure out how to use it.