BEAT's Blog

In my last blog, I pointed out that the wages of the average worker in this country have been dropping precipitously since 1980 despite increased worker productivity, that corporate profits have been soaring, and that CEOs are keeping these record profits for themselves with little to no sign of any “trickle down” to workers.

Of course, you might say that this is just the way capitalism works.  In the United States everyone is free to make their own future.  We are admired by those in other countries because here one can climb from the bottom of the heap and become the CEO of a major corporation.  But just how true is that?  Here is a graph showing the likelihood of climbing out of poverty in different countries.

Maybe we used to be the land of opportunity, but those at the top have worked hard at locking in their favored positions and locking the rest of us out.  And exactly who are these poor people?  More and more, they are the most vulnerable among us.

So how did we get here?  What prevented this from happening during the post World War II boom and what has changed since then?

One of the strongest forces in keeping the wages of workers commensurate with those of top executives was the labor union.  Organized labor was very effective starting in the 1930s and was very influential in creating the American middle class.   Unions lobbied for higher wages, stronger benefit packages, and for social-justice issues such as civil rights, fair housing, and increased aid to education.  Labor unions were a force to be reckoned with and were listened to in Washington.  As a matter of fact, they had at least as strong a voice as corporate lobbyists.

For a number of reasons, union membership has been declining since the late 1950s. Part of the reason is the country’s transition from a manufacturing economy to a service economy.  Part of the problem was also an image problem caused in part by a number of corruption scandals involving labor leaders in the 1970s.  Whatever the reason for the decline, by the time Ronald Reagan took over the presidency, the unions were weak enough for his administration to deal a body blow.  He made the air-traffic controllers an example of what could happen to a union if management just said no.  He let corporate executives know that if they aggressively attacked unions, the federal government would not interfere.  And he fostered the perception that unions were greedy, corrupt, anachronisms and were counterproductive to economic progress.

With advocates for labor safely incapacitated, corporations were free to start taking a larger share of the profit pie despite increased worker productivity.

Notice how CEO compensation rises and hourly wages fall as union membership declines.

But if you are a CEO, it’s not enough to take a bigger piece of the pie.  Wouldn’t it be great if the pie itself were bigger too?  But how do you manage that?  Of course the old fashioned way would be to work harder and be smarter, but it turns out that there are shortcuts.

CEOs know about investments and returns on investment.  They know that if they take some of their new-found cash and put it to work, they can make it grow.  So where do they invest it?  Here’s a graph of recent political contributions to federal election campaigns.

If you’re thinking that the average person can’t be donating that much money to candidates, you’re right.  Here’s where the money is coming from.  Note the part of the pie that comes from corporations and trade groups.  Note how small a piece comes from labor and individuals.

So what do corporations get for their investments?  Here’s a graph of corporate taxes over the past 60 years.

In a recent speech, Vermont Senator Bernie Sanders made the following points.

1)      Exxon Mobil made $19 billion in profits in 2009.  Exxon not only paid no federal income taxes, it actually received a $156 million rebate from the IRS.

2)      Bank of America received a $1.9 billion tax refund from the IRS last year, although it made $4.4 billion in profits and received a bailout from the Federal Reserve and the Treasury Department of nearly $1 trillion.

3)      Over the past five years, while General Electric made $26 billion in profits in the United States, it received a $4.1 billion refund from the IRS.

4)      Chevron received a $19 million refund from the IRS last year after it made $10 billion in profits in 2009.

5)      Boeing, which received a $30 billion contract from the Pentagon to build 179 airborne tankers, got a $124 million refund from the IRS last year.

6)      Valero Energy, the 25th largest company in America with $68 billion in sales last year received a $157 million tax refund check from the IRS and, over the past three years, it received a $134 million tax break from the oil and gas manufacturing tax deduction.

7)      Goldman Sachs in 2008 only paid 1.1 percent of its income in taxes even though it earned a profit of $2.3 billion and received an almost $800 billion from the Federal Reserve and U.S. Treasury Department.

8)      Citigroup last year made more than $4 billion in profits but paid no federal income taxes. It received a $2.5 trillion bailout from the Federal Reserve and U.S. Treasury.

9)      ConocoPhillips, the fifth largest oil company in the United States, made $16 billion in profits from 2006 through 2009, but received $451 million in tax breaks through the oil and gas manufacturing deduction.

10)  Over the past five years, Carnival Cruise Lines made more than $11 billion in profits, but its federal income tax rate during those years was just 1.1 percent.

So the government has helped corporations to cut their payroll expenses by curbing labor unions and has helped corporations cut their tax bills, but this hasn’t satisfied corporations or their CEOs and the rest of the 1% of the population who hold half of the nation’s wealth.  They are now looking for their recently purchased legislators to cut another one of their expenses; the expense of having to comply with environmental regulations.

In my next blog I will show how all of these economic and political factors are at the root of most of our environmental problems.

It has never been easy advocating for the environment, but these days it’s especially difficult for BEAT. It seems that every regulation protecting the environment is under attack. Every attempt to clean up environmental pollution is met with resistance. Protecting rare and endangered species annoys the real-estate industry and the lobbies representing developers. Trying to extend the bottle bill means doing battle with the bottling industry. And of course any attempt to get PCBs out of the Housatonic River is met with the full force and money of GE and its well funded allies. Almost every time we meet resistance in protecting the environment, there’s a corporation or well connected business interest standing in the way. Why is it so difficult to protect the environment and the health of all of us? How did we get to the point where we allow and sometimes encourage corporations to endanger our health and that of wildlife? It turns out that this is not primarily an environmental problem. Bear with me while I start down what might at first seem like an unrelated path. But the path I want to take really is the path that leads to the answer.

In 1979 the American worker’s average hourly wage was equal to $15.91 (in 2001 dollars). By 1989 it was at $16.63/hour. That’s right. In ten years, wages went up 70 cents an hour. Over the next six years, wages rose by 8 cents to $16.71. Compared to inflation, wages have not fared well over the years. Here’s a graph showing a year-to-year comparison of wages from 1925 to the present.

Notice that wages in effect dropped suddenly around 1980, and have never recovered. Employers have replied to demands for higher wages by saying that only higher productivity could justify higher wages. Do they have a point? Here’s a graph of American worker productivity over the last 65 years.

So workers are becoming more productive and are getting paid less. Of course that doesn’t necessarily mean that the profits of corporations are going up. But they are. Here’s a graph of recent corporate profits.

So corporations are making larger profits than ever, and they are not passing them on to workers. Where are all the profits going? Here is a graph of the ratio of CEO compensation to worker compensation. In other words it shows how many times greater the CEO’s paycheck is than the average worker’s paycheck.

Notice that CEOs are paid about 300 to 500 times what their workers are paid. The CEO of WalMart makes more in one hour than his average worker makes in a year. Here’s what this ratio looks like in other industrialized countries.

The result of all this is that the wealthiest 1% of Americans now own more than half of all the nation’s wealth. And in case your smiling and thinking that you are part of this elite group, let me be the first to tell you that you aren’t even close. The top 1% of Americans earn on average $1,117,000 a year.

It’s interesting that since 1979, the economies of the U.S. and of the industrialized European countries have grown pretty much at the same rate. However, industrialized European countries do not have the same disparity in pay between CEOs and workers, and as a result, European workers do not have the same wage stagnation as American workers. The European worker has been allowed to share in the economic benefits that have accrued since 1979.

So things are good for the ultra-wealthy. But the question is, can they maintain the status quo? Can they protect the wealth they have accumulated? Can they maybe continue the acceleration into the economic stratosphere? Sure they can. This is where bipartisan cooperation comes in. By bipartisan I mean both government and corporations. Next time: how government created this mess and why it won’t fix it. And yes, all of this does relate to environmental advocacy. In fact, I believe it is the most important environmental issue facing us on the local, state, national, and international levels. I’ll get to that.

I saw this video on YouTube.  Please watch it to the end.  What a testimony to the value of helping wildlife!

A recent story on an environmental page has me concerned.  The story on “Climate Progress” was making the point that small hydro generating stations could be viable if it weren’t for all the red tape imposed by regulatory agencies.  Most of the regulatory agencies cited were state and federal environmental regulatory agencies. I’ve heard the same arguments made for industrial wind power and biomass plants.

I think we need to be careful here.  After all, these are the same arguments made by conservatives who favor offshore drilling and drilling in the arctic.  It seems to me, that if a technology is not economically viable unless environmental regulations are waived, then it’s just not economically viable.  Let’s not put ourselves in a position whereby our strongest allies are the oil industry advocates.

Last October, DuPont, the same chemical company that invented chlorofluorocarbons, began marketing a new, “environmentally friendly” lawn chemical called Imprelis.  You may not have heard of it because only licensed professionals can apply it to your lawn.  Hooray!  An environmentally friendly herbicide!  Well, that’s how it was marketed anyway.

In late May, the reports started coming in.  Trees were dying where Imprelis was applied.  And not on a small scale either.  Imprelis was snapped up by landscapers and lawn chemical companies in amazing quantities.  For instance, The Columbus Dispatch reports that “Industry sources estimate that 75 percent of central Ohio landscapers and golf courses switched to Imprelis this year.”

From Iowa to the east coast and as far south as Georgia, trees are dying, and the “environmentally friendly” herbicide Imprelis is the chief suspect.  After spraying  Imprelis on hundreds of lawns in Michigan, Matt Coats of Underwood Nursery says his company began receiving angry calls.  “The customers are calling: ‘My trees are dying, what’s up?’  Underwood said. “We’ve never experienced anything like this.”

Property owner and Underwood client Teddy Peace complained that 8 of his 50 trees have been damaged.  He’s holding the Underwood Nursery financially responsible.  The nursery is insured, but $500 deductible per incident means that reparations have already cost Underwood $150,000.

Matt Coats told the New York Times, “We’ve made 1,000 applications and had 350 complaints of dead trees, and it’s climbing. I’ve done nothing for the last three weeks but deal with angry customers.”  One lawn-care worker called this the Katrina of the landscaping industry, and it’s just beginning. Read more…

As I’m writing this, my country is dangerously close to defaulting on its debts for the first time in its history.  Standard and Poor says that if this happens, it will lower the country’s credit rating from AAA to D.  We’re in hard economic times and we have to make some tough decisions.  Legislators have decided that one program we can afford to cut is the Environmental Protection Agency. They say EPA’s regulations are costing money and slowing the economy.  The fact that these regulations save lives and protect our health doesn’t often come up in their arguments. If we really do need to cut a federal program, I have a better one to target – General Electric. Read more…

In yesterday’s blog I warned of the dangers of corporate influence in government. This issue is strongly affecting environmental issues. If you doubt this, ask yourself why it is that we have to fight so hard to get GE to clean PCBs from the Housatonic River. If you or I dumped a million pounds of a pollutant in a river, would we be in any trouble? Would there be consequences? Recently the Supreme Court of the United States, in Citizens United vs the Federal Election Commission, decided that we didn’t have quite enough corporate influence in government. Here’s MSNBC’s Rachel Madow putting this decision in perspective.

Corporate influence in government has gotten out of hand. Now you might say, “BEAT is an environmental organization. You focus on environmental issues. Why do you care about corporate influence in government?” Two reasons: regulation and enforcement. Regulation provides the rules that protect the environment. Enforcement ensures that the rules are followed.

We’ve notice a trend lately. Legislators are doing their best to limit the powers of regulators, and the regulators are showing less and less interest in enforcing regulations. This trend is evident at federal, state, and local levels of government. Is this trend related to corporate influence in government? Absolutely. Read more…

I’ve said it before.  There is no climate-change debate.

More than a thousand of the top climate scientists in the world were pulled together by the United Nations and asked to research the issue of climate change. This group, the Intergovernmental Panel On Climate Change (IPCC), submitted their findings to about 100 of their peers who were not members of the thousand, and to UN member nations. The document was revised based on input and sent out again to the same reviewers. The final draft was then made public. In it, the scientists said clearly that climate is changing, we as a species are responsible, there are effective actions we can take to remediate the problem, and the consequences of inaction would be dire. In the face of this wall of unity, Exxon-Mobil almost single-handedly created the climate-skeptic debate. In addition to funding junk science, the oil industry has created the idea that there is a debate going on within the scientific community and that the media should always make sure that they present both sides of the issue. This furthers the perception that there is in fact a debate going on within the climate-scientist community and that “the jury is still out”. Needless to say, this leaves the vast majority of climate scientists very frustrated.(1)

Now, while the rest of the world works feverishly to deal with climate change, our government has apparently decided that chemistry and physics don’t apply here. Congress, led by representatives from oil industry dependent states, have been working hard at rescinding EPA’s authority to regulate greenhouse gas emissions. And just in case that doesn’t work, congress has drastically cut EPA’s budget. The plan agreed upon to avert a government shutdown hit EPA harder than any other agency. They lost $1.6 billion dollars. That’s about one third the tax credit the government gave to GE this year.  Read more…

This amendment affirms that constitutional rights extend only to human persons. Corporations, partnerships, and other organizational entities are not human persons and, therefore, are not entitled to constitutional protections.

This is the current wording of a proposed 28^th amendment to the US Constitution. It simply says that corporations aren’t people. That sounds kind of obvious, doesn’t it? Here’s the problem. In a recent case, the Supreme Court ruled that corporations should be allowed to donate as much money as they choose to political election campaigns because corporations have the same rights as people and giving money to an election campaign is an exercise of free speech.  Of course corporations had an inordinate amount of power in government even before this court ruling, but now, what they used to have to do under the cover of darkness, they can do in broad daylight.

Recently, in the middle of a public debate on how best to approach the cleanup of the Housatonic River, GE chose to exercise its right of free speech by giving $300,000 to 1Berkshires – a group that then publicly advocated for the same kind of minimalist cleanup that GE advocated. Because GE saw this whole debate as a public relations campaign, not as a discussion aimed at reaching the best solution, GE chose to make the donation secretly. For the same reason, 1Berkshires chose to hide the gift. As a matter of fact, they denied receiving it when asked. Right away we see one of the problems with corporations. By law, they are required to do what’s best for their profits and for their shareholders. Truth be damned. We can expect nothing more from corporations. We as a society wrote the rules. If you’re a corporation, profits come first – and second and third. Read more…