Vincent Fumo (Associated Press photo)
If you’re a Philadelphian who a) is older than 30 and b) ever read a newspaper, you know the name Vincent Fumo.
Vince was the powerful state senator from South Philadelphia, often referred to as the Prince of Darkness, who eventually was nailed by the feds on multiple counts, got convicted and “went away” for a while, as we like to say in the City of Brotherly Love and Chronic Corruption.
(For an update on what ol’ Vince is up to now that he’s out of the slammer, check out this incredible report from my good pal Dave Davies.)
During Vince’s trial, the acronym “OPM” got a workout. The senator had a taste for fine things, and to his palate they tasted even better if he could pay for them with what he called OPM – Other People’s Money. Unfortunately for his career as one of Harrisburg’s most feared and effective power brokers, some of the OPM he used to keep his cupboards stocked with, say, Oreck vacuums was tax money.
I maunder on about Vince only to set up a point about another set of wicked smart but grasping marauders – the corporate captains of America.
A piece in the New York Times this week reports that many American companies are contemplating expansion and investment due to Trump Administration actions. But it’s not primarily that billionaire-stroking tax bill that has them excited.
No, it’s the vast, less-discussed rollback of environmental, financial and labor regulations. This is one vow on which Mr. Trump has been delivering. (Funny how it’s so much easier to stop doing the work of government, than to find ways to do it better. And funny how much more urgent the Trump Administration gets when it comes to delivering on promises made to moguls, rather than on the ones made to the cheering schlubs in MAGA hats.)
I don’t doubt that the businesspeople’s excitement is genuine. (Nor do I dismiss the Times’ reporting as fake news, simply because this story is somewhat favorable to the Trump agenda.)
I just doubt that the jobs spawned by this deregulation will be worth the damage done.
Of course the moguls are excited. Now, they are going to get to do one of their favorite things: run their businesses with more of Other People’s Money.
“What?” you say. “Balderdash!” you object. You go on: “Deregulation doesn’t involve any grants of tax money, any market-distorting subsidies to individual businesses. It’s just getting obstructionist government out of business’ way.”
Nonsense, I say.
I argue uphill, I know, because I’m up against one of the greatest (and best-funded) feats of political framing ever.
Ever since the think tank and the captive journalist were invented, business owners who don’t want to pay their fair share of the costs that their operations inflict on the public weal have paid wordsmiths to argue loudly that business regulation equals governmental theft.
Once that notion becomes as ingrained it has, businesses can go on using Other People’s Money to pay for big chunks of what, seen properly, should be part of their own operating costs.
It’s called externalizing costs – and for businesses it’s a holy grail. Most can’t resist the temptation to maximize the costs they can palm off on society and/or government. Why should they? Their job is to maximize profit and shareholder value. This helps.
That’s why we need a government strong, stubborn and smart enough to push back, to ensure that businesses absorb their proper share of the societal costs that flow from the decisions they make.
Here is the moguls’ view of how the world should work for them:
Foul a stream for generations with chemical runoff from your plants. No problem. OPM, the tax-funded kind, will bear the medical expenses and cleanup costs that result.
Run insane risks with your investment strategy, risks that your puffed-up egos prevent you from seeing, that end up exploding the global economy. No problem. OPM will clean up the mess.
(What’s more, hardly any of you will go to jail, and within a few years you’ll be back to earning 7-figure bonuses, which you can use to buy up enough politicians to roll back the rules that were passed in response to your catastrophic depredations.)
Damage your workers’ health, family lives and security through how you handle working conditions, scheduling, pay and benefits? No worries, OPM will pick up the societal costs for you.
Of course, not all businesses behave like this. And even businesses that do some of these things bring countervailing benefits: innovation, useful products, jobs, grants to build the occasional school playground.
But it’s up to government, and to a lesser degree social activists, to push back to make sure the public ledger of goods and ills balances out. It is the proper role of government to limit the costs that business behaviors inflict on the public weal and treasury, and when harm occurs, to tote it up fairly and ensure redress via taxes, fines or court cases. .
Governments have three main paths to balancing the public’s ledger when it comes to bad behavior by business.
One is preventive regulation – trying to prevent the damages from occurring.
The second is monetary incentives to behave. This could come in the form of tax policy designed either to discourage damaging behavior or coax positive steps. Or, after the fact, it can mean fines or other steps to help fix for the damage.
A carbon tax would be a good and innovative example of the former approach, a market approach to curbing the havoc that unchecked use of fossil fuels wreaks on the climate. The Koch brothers and their ilk spread enough money around the political ecosystem to ensure that sane idea never took root.
The original Superfund, where the polluter paid for cleanups where possible and a fund fed by taxes on petrochemical companies paid for the rest, is a shining example of government using these tools well. The piddling fines extracted from Wall Street pirates for how they crashed the world economy offer a less encouraging one.
Of course business owners complain endlessly about regulation, taxes and fines. It’s in their DNA; they are hard-wired to seek OPM to help pay for costs they (and their customers) should properly shoulder. (In assessing how we came to this sorry pass, many Americans’ tendency to identify themselves as consumers first, but as citizens ninth or 10th, deserves a share of the blame.)
And I should note here that some government regulations do turn out to be overdone, or even just plain dumb. Bureaucrats can tend to over-solve for the last offense, while failing to discern the rising threat.
But could this also have something do with the 40-year GOP project, so deftly launched by Ronald Reagan, to convince Americans that “government is the problem,” that the agencies set up to protect the public interest are just blundering confederacies of dunces, that only dolts enter public service? Pounded home over decades, this mantra scares talent away from government and, when chanted in the Oval Office, often drives good public servants out (cf. EPA and State Department today).
How did so many of us come to believe the ludicrous proposition that all of America’s problems would simply go away if businesses were simply unleashed to do whatever they wanted to do?
It’s a tribute to the power of Reagan’s brilliant framing. Thanks to Ronnie’s genius, even after Enron and Bhopal and Deepwater Horizon and Bear Stearns and Countrywide Financial and Wells Fargo and Equifax and Facebook (yeah, Facebook), millions of working- and middle-class Americans who’ve been whipsawed over and over by corporate fraud and malfeasance still buy the notion that what would really solve what ails their lives is getting government off the backs of those poor, humble, helpful business folk.
Besides regulation and monetary incenties, what’s government other tool for getting businesses to absorb their real costs of doing business. The courts.
Aah, but the tool is being dulled and coated with rust. Not satisfied to dodge taxes, elude regulation and haggle fines down to piddling amounts, corporate America has also pursued a long-term project to choke off that third path of court action.
In state legislatures and Congress, the business lobby has fought and fought to diminish the ability of harmed consumers or individuals to bring meaningful litigation and gain sufficient payment for the negative impacts corporate activities have had on their lives.
In its war vs. consumers, business has lately had a great friend in the Roberts Supreme Court. The high court’s rulings on business litigation don’t get the buzz that ones on abortion of health care do, but they send out huge ripples across the land.
So, to review: On taxes, regulation and litigation, the business lobby now has all three branches of the federal government dancing briskly to its tune.
From where I sit, that music sounds like “The OPM Blues.”