Plutocracy Inc.

Here is a counter-intuitive story for you. Why don’t organized corporate interests challenge damage or risks to their clear economic interests?

Think about oil prices for big consumers, not just your pocketbook. Airlines are groaning, limiting flights, and laying off employees because of the skyrocketing price for aviation fuel. Executives in that industry say that fuel costs are close to 40 percent of the cost of flying you to your destination.

The powerful chemical industry is under pressure from the prices they’re paying for petroleum — probably their main raw material.

The powerful trucking industry is beside itself with diesel fuel going to $5 per gallon.

You can add your own examples — cab companies, tourist industry, auto companies, etc.

Why aren’t these very influential lobbies throwing their weight around Washington to get something done about the speculators on Wall Street determining what is paid for gasoline and related petroleum products? It is in their own economic interests.

To do what? Well, for starters, push Congress to legislate higher margin requirements for the speculators at the New York Mercantile Exchange—the same fellows who, based on rumors, took the price of a barrel of oil up another $10 in one day.

Higher margin requirements (and wider disclosure rules) result in dampening speculation by reducing the amount of borrowed money these traders can use in their gigantic commodities casino.

Long-time member of the New York Stock Exchange, Michael Robbins — an astute and fair analyst — says margin rules have historically been used to dampen speculation on stock exchanges. He mentioned a time years ago when the Federal Reserve raised the margin requirement to ninety percent — meaning the traders had to put up 90% of their own money on trades.

There are other moves that can be made by Washington to ease the oil price crisis that is fueling inflation throughout the economy and shocking consumers. Suffice it to say that ExxonMobile testified earlier this month in Congress that absent the speculators, the price of a barrel of crude oil would be half what it is today. That would mean about $65 a barrel instead of $130 a barrel.

What else do these big corporate buyers of oil need?

Another area of major business firms not acting in their own interests involves the proposal in Congress (HR 676) to establish a single-payer health insurance system. That would mean government health insurance, private delivery of health care, free choice of doctor and hospital and saving about half a trillion dollars in insurance company administrative expenses and computerized billing overcharges a year.

Presently, tens of millions of workers have employer-based health insurance. For years, CEOs have complained that this cost puts them at a competitive disadvantage with their corporate competitors abroad and in Canada where there is universal government health insurance.

Former General Motors CEO, Jack Smith, publicly approved of the Canadian Medicare system, which he had experienced when he was head of GM Canada. Under full Medicare, these companies will pay less even with an assessment.

So, what’s up here? We don’t see these weighty corporate lobbies on Capitol Hill supporting the 91 House members who have endorsed HR 676.

Then there is the small business lobby ostensibly represented by the large National Federation of Independent Business (NFIB). Small business is regularly subject to government policies and market discriminations that put them at a disadvantage with their large competitors.

Presently, for example, a Small Business Administration report concludes the following:

“Small businesses in their commercial sector faced a 30 percent price differential for electricity and a 20 percent price differential for natural gas. In the manufacturing sector, small businesses faced a 28 percent price differential for distillate fuel oil, a 27 percent price differential for natural gas, and a 14 percent price differential for coal.”

Are these volume discounts all fair for the Big Boys? Doubtful. Don’t count on the NFIB to protest. More often than not, the NFIB talks small business but walks the walk of the National Chamber of Commerce, which primarily lobbies for the interests of large companies.

So, why the overall reticence to fight for their own economic interests? First, corporations do not like to fight each other because they may need each other on other matters. Second, hey also have exposable skeletons in their own closets. Third, they do not have to initiate a business war of retaliation. Fourth, they do not want to give their traditional labor, environmental and consumer adversaries cause to strengthen their own power by, in effect, siding with these groups’ traditional causes.

If investors in this country had any power over the companies they own — as individuals, or through mutual funds and pension trusts — an inquiring process could open up on this fascinating question.

But as Robert Monks — a leading shareholder activist and writer — has said many times, those same CEOs have their own economic interests — think CEO compensation — in keeping investors powerless.

Ralph Nader is a leading consumer advocate, the author of The Rebellious CEO: 12 Leaders Who Did It Right, among many other books, and a four-time candidate for US President. Read other articles by Ralph, or visit Ralph's website.

16 comments on this article so far ...

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  1. Don Hawkins said on June 18th, 2008 at 9:41am #

    We are like people looking for something they have in their hands all the time; we’re looking in all directions except at the thing we want, which is probably why we haven’t found it.(Plato, 380BC

    Now many will say but look how far we have come. Yes in some things. The way forward if it is short term thinking because it is easy will not work out well. People looking for something they have in their hands all the time. I have watched the Senate in action the last few months and sorry they are people but are looking for nothing. The way forward will not be easy and we need to stop hiding from reality and get started. Again the working together is the hard part but we don’t know if it will work unless we try. In just five years life is not going to be easy to late but still time to slow this down. For me to watch people talk about the future and say in five years or ten years and do that with the same thinking that has got us to this point is far beyond nuts. Last night on CNN the head man from Chevron was on and his bottom line was we need more supply. Sorry we need to start thinking in real terms and make hard choices. The changes are coming one way or the other so stuck on stupid or see what we have in our hands all the time and try. By 2030 the World will need 45% more energy and the moon is made of green cheese.

  2. bozhidar balkas said on June 18th, 2008 at 10:17am #

    we’v been ruled by patricians for at least 10td yrs. american patricians have been ruling US for just 2 cent’s.
    once one experiences being more noble, powerful, respected, or even adored/idolized, one never gives that up.
    revolution or any kind of resistance will not, i conclude, change feelings/mind of a member of the ruling class.
    who wd give up pleasant feelings ab self? i wouldn’t. when i feel good, which is not often, i’m the richest man in the world.
    one bed, wife, pair of shoes, pants, shirt, and 3 meals will do.
    on the other hand, evolution/education may change minds of the plutocrats.
    maybe, nature might change its mind and render us all equal?
    who knows? or, there may be god(s)? thank u

  3. Michael Dawson said on June 18th, 2008 at 12:01pm #

    Amen, Don Hawkins.

    The deeper question is “Why is Ralph Nader focusing on oil speculation rather than Peak Oil?”

    We are up against the wall on energy, and Nader is being massively unhelpful with his petty talk about cutting oil prices.

    We need real leadership, not short-sighted demagoguery.

  4. hp said on June 18th, 2008 at 12:54pm #

    Speaking of the moon, ever hear of helium-3?

  5. Lloyd Rowsey said on June 18th, 2008 at 3:15pm #

    Along the lines of hp’s post.

    Doesn’t it bother you fellow posters, in the least, that El Politico Nader doesn’t stoop to reply to comments at Dissident Voice? That you’re just writing words on a wall?

    Well, concerning long- and short-range political goals, for those of you who subscribe to Monthly Review and receive a hardcopy in the mail, there is presently a wonderful article you can read: Remembering Andre Gunder Frank While Thinking About the Future, by Immanuel Wallerstein.

    Personally, I don’t understand why the current issue of MR is not available online, and needless to add, there is no public posting at their websites.

    Maybe Ralpho or a spokesperson for him would like to comment?

  6. synicab12 said on June 18th, 2008 at 3:32pm #

    To Michael Dawson,

    What Nader is saying is that the CURRENT crisis in oil is the result
    of speculations and gaming the system so the immediate solution should address this angel.
    He is not saying there is no long range energy problem facing us and he
    is not saying do not plan for solutions to it. His immediate attention
    is on the current artificial crisis .

  7. Don Hawkins said on June 18th, 2008 at 4:10pm #

    Long range energy problem facing us have you lost your mind completely. Plato talked of reality in many of his writings and as we all know reality is not high on the list these day’s but moving up fast. Let’s pick a number 8 years to get some of the biggest projects we have ever done well on there way. These floods in the Midwest well in 1993 big floods and talk of fixing the levees and as we see just talk. Much more important things to do like make money for the short term. We are all in big trouble and I have to go now as wheel of fortune is on.

  8. Lloyd Rowsey said on June 18th, 2008 at 5:41pm #

    Yeah. Wherever you come out on “climate change” — the new secular religion I hear is “environmentalism”, not climate change for which there is a lack of scientific evidence (and scientific supporters) — OIL is pretty indisputably a major problem. Politically. Whereas Freeman Dyson in the latest NYR says that ALTHOUGH environmentlism can be agreed upon by scientists and non-scientists alike, even us folks concerned with nuclear weapons and world peace DESERVE A HEARING.

    Now. Is everyone — Naderites and non-Naderites? — cheered up?

  9. Dogwood said on June 18th, 2008 at 6:11pm #

    Kudos to Ralph, as always, for his on-the-money assessments.

    Far and away, the person we should ALL be supporting – and for whom we should all be out there working; get him on the ballots, into the debates, and then, finally, a president of, by and for the people.

    Due to all in our lives that is corporatized and corrupted – this should be our primary focus.

  10. Deadbeat said on June 18th, 2008 at 6:37pm #

    Ralph is correct and I agree with him. Ralph has been a leader on the call for renewables for over 30 years. It is also ironic too to listen to a speech by Jimmy Carter on this subject in 1978 that you can find on You Tube.

    There is also a good article on CounterPunch on the topic of the current rise in oil prices

    Parvez Ahmed

    IMO the “Peak Oil” claim is dubious. There is clearly a problem with the United States consuming 30% of the world’s oil and then go and blame it on China and India. Also the problem with “environmentalism” is that it is tacitly racist. There is a tendency among “environmentalist ” to blame “overpopulation” and ignore U.S. consumption.

    What is true is that much of U.S. consumption of oil is due to the overextension of U.S. Militarism. I find many of the “environmentalist” dubious when they seem to blame the poor, the brown, and the weak and ignore how spending on the military and on wars causes environmental havoc.

    Again, by challenging Zionism, and you’ll be challenging the WAR machine and you not only save lives but the environment as well.

  11. Tennessee-Socialist said on June 18th, 2008 at 8:37pm #

    synicab12: You are right on the MONEY !! The crisis is a capitalist crisis, not an oil crisis. AMericans need to read the paper by Lenin about the last stage of capitalism ‘Imperialism’. And this is so true, we are living in turmoil times, meanwhile most people go about their personal little lives, but just wait for the gasolin prices to get to about 10 dollars per gallon. I dont know what american citizens will do when they will have to get 100 dollars to fill up their tanks, in a country where wages are down like this one, and where unemployment and small businesses are collapsing. My sister and her husband just opened a small Computer store, and they are really doing bad, real bad. Small businesses in this country are being eaten up by the big fish. Even good old K-Mart got shoved by Wal Mart, like comrade Bob Avakian said in one of his talks in Man the situation that the american middle and lower classes are facing is real bad, like a third world country, but again just wait for that Milk to get to 12 dollars a gallon and gas about 10. The question raised by many americans will be: “Now what do we do?”

    “So now you’re a dragon killer, that’s not even original. It was in a wheat field just south of Coffeyville, Kansas, it was late November, it’s a month of mist and we were caught in the open. The sun was setting behind us, there was nowhere to run, twice it came in on us and twice it missed the heart of us, and that’s when I had an epiphany. You see, they have great vision in the day and they have even better vision at night. But in the failing light they can’t focus; magic hour. Coffeyville: it’s etched in American history because the outlaw Dalton boys were killed there, ordinary townsfolk rose up and took ’em down. So maybe you’re the Dalton boys. No, no, we’re the townsfolk.” -Reign of Fire

  12. Kevin Carson said on June 19th, 2008 at 12:48am #

    Corporate capitalists often do support the regulatory state. The coalition behind FDR’s economic agenda, as Thomas Ferguson and G. William Domhoff have both argued, centered on capital-intensive, export-oriented industry. Since labor costs were a relatively small part of their total cost package, but their long planning horizons required internal stability, they were more than willing to trade higher wages and benefits in return for the help of union bureaucrats in enforcing contracts and maintaining labor discipline. FDR’s economic policy team was overrun by corporate lawyers, investment bankers and CEOs (just Google “Gerard Swope” or “Business Advisory Council”).

    Friedrich Engels pointed out over a century ago that the Junker/Fabian model of “socialism” involves nationalizes infrastructures and resources (coal, oil, railroads, etc.) of central importance to the corporate economy, so that the state (as ExCom of the ruling class) can administer them in the joint interests of big business. Probably not by coincidence, those have been the very types of industries targeted by antitrust action in the U.S. (e.g., Standard Oil and AT&T).

    Gabriel Kolko argued that the Progressive regulatory state was created largely under pressure from big business, and was aimed at cartelizing the economy and making stable oligopoly markets possible.

  13. Lloyd Rowsey said on June 19th, 2008 at 4:56am #

    Deadbeat. I agree about enviornmentalist being racist, IF you’re speaking about the movement in the United States. In Cuba, you know, there’s been an extensive move toward environmentalism in agriculture — referred to by most of the “responsible” left in America as “authoritarian” and “a failure” — over the last decade. And as Castro said in his new spoken autobiography, “For us revolutionaries, fighting racial discrimination has been a sacred principle.”

  14. Lloyd Rowsey said on June 19th, 2008 at 5:06am #

    My guess is we’ll see 100 bucks/tank of gas before November, Tennessee. But you can never tell, gas may stay about 140/barrell, or may even be down on election day. Presumably, those latter alternatives would cause a more drastic bulge elsewhere in the system, and the word “system” can’t be forgot. “The system IS working.”

    In any case, it’s a breath of fresh air to read extensive quotations in Dissident Voice from socialists and even frrom leftys further to the left. MAYBE the mix of comments will draw Nader out, but for you posters who are not regular DV readers: Ralph Nader does not comment on his articles and the posts to them put up at Dissident Voice.

  15. Lloyd Rowsey said on June 19th, 2008 at 6:35am #

    Oil company Royal Dutch Shell says it has temporarily stopped production at its main offshore oilfield in Nigeria, following a militant attack.

    The raid took place overnight on the Bonga oil platform about 120km (75 miles) off the coast of the Niger Delta, the company said. It is the first attack on the oilfield, which normally produces about 200,000 barrels a day. Attacks in the inshore Niger Delta have helped drive up the world oil prices. Nigeria’s valuable offshore oilfields had always been considered difficult for most militants to attack, the BBC’s Alex Last reports from Lagos.

  16. Tennessee-Socialist said on June 19th, 2008 at 10:35am #

    Lloyd: I agree with you. I mean we have to be logical, how can Ralph Nader with a political campaign in his shoulders have even a minute of his time to log on to the internet and reply all the posts. Ralph Nader is just like Obama, and Mccain in that they are in a political campaign, a very tasking thing. So we have use our common sense and understand why Ralph Nader doesn’t reply to comments in this website