Tag Archives: corporations

Comparing the Policy Preferences of Unions and Corporations

The recent Martin Gilens and Benjamin Page paper finding that ordinary citizens have, “little or no independent influence on policy at all.” While the paper was covered extensively in the popular press, few bothered to even read the paper which notes, “ the preferences of average citizens are positively and fairly highly correlated, across issues, with the preferences of economic elites.” Gilens’s data look at only those in the top 10% making about $146,000 a year. It’s likely that the superwealthy in the donor class have far different interests, which is suggested by other research by Page, Larry Bartels and Jason Seawright. It is in the top 1% and above where there is a motive for rent-seeking andevidence of it.

The more important finding from the Gilens/Page paper is the influence of interest groups. The authors note that: “Interest group alignments are almost totally unrelated to the preferences of average citizens.” The chart below shows the correlation of different groups with those of the middle class and the group’s influence over policy. We can see that economic elites have more influence on policymaking, but also a stronger correlation with the middle class. Far more disturbing are business interests, which have large amounts of influence, but whose policy preferences differ markedly from the middle class (although there are still caveats).

It’s important to note that the “mass based interest groups” include groups like the National Rifle Association and American Israel Public Affairs Committee which do not share the interests of average citizens. At the same time, one corporate lobbying organization, the American Hospital Association, is actually slightly correlated with the interests of average Americans. To parse out which groups are aligned with the preferences of Americans and which are positively malign, I used data from Gilens’s book Affluence and Influence. I stuck to groups which had at least one statistically significant correlation (either positive or negative) with one group of voters (10th percentile, 50th percentile and 90th percentile). This comparison yields some interesting results. First, we can see that most unions actually take positions that strongly correlate with the preferences of all Americans, although the correlation is stronger for the lower and middle class.

Second, we can see that corporate lobbying groups do not, with one exception.

Corporations also push policies that do not share the support most Americans.

Other lobbying groups differ. The wealthy tend to be more socially liberal than the poor and middle class, which explains the divergence of religious organizations. The NRA enjoys little overlap with the public, while AARP is generally a force working in favor of the preferences of most Americans.

To illustrate these differences, I’ve put the organizations on a scatter plot, divided into four quadrants. The y-axis shows where an organization aligns with the the top 90th percentile. The x-axis shows an organization’s correlation with the bottom 10th percentile. An organization in the upper right quadrant shares the preferences of the wealthy and the poor. An organization in the lower left does is working against the interests of Americans. Here we see that unions are all in the top right quadrant. No corporations are in the right half of the chart, indicating that none share the preferences of the poor.

Finally, I show how well the various groups correlate with the middle class on another chart below. We see the same result.

 

This makes a preliminary case for focusing on corporate lobbying in order to make policymaking match the preferences of Americans. There are some caveats. It’s difficult to tell how well preferences match interests. Gilens notes in an essay for Boston Review thatJohnson’s Great Society was actually a low in terms of voter preference:

the majority of Americans were opposed to many of the other domestic programs of the Johnson years. The Great Society and the War on Poverty were not responses to an upwelling of public concern for the disadvantaged or a desire to expand the role of government in addressing social needs…

In contrast, the Iraq War represents a high:

At least at first, the Afghanistan and Iraq wars and Bush anti-terrorism policies had widespread public backing. The administration also enjoyed support from Americans at all income levels for the Medicare drug benefit, No Child Left Behind (a long-standing Democratic agenda item on which Bush partnered with Senator Ted Kennedy), and the faith-based social services initiative. New federal regulations on funding stem cell research matched public sentiments. The income tax cuts and estate tax repeal adopted in 2001 and 2003 were supported by majorities of Americans at all income levels even though they clearly provided the greatest benefits to those at the top.

Further, Gilens’s data are dated—the most recent are from 2002, before Citizens United,but after along with the rise of inequality. I’ve suggested that this means we should focus on corporate interests, but there is still a strong possibility that the 1% have very different interests than the middle class and 90th percentile (data from the Cooperative Congressional Election Study indicate that the 1% has interests more similar to the 90th percentile than average voters). Adam Bonica argues that the wealthy and corporations tend to donate in a bipartisan or moderate fashion. This does not suggest they share the interests of Americans, but rather that they are attempting to buy influence. Corporations aim to change policy – the best way to do that is to sprinkle donations across party lines. Far more important are their aims, which the data suggest may not be broadly in line with those of average Americans.

We should aim to reduce the influence of money as much as possible. However the data suggest Nietzsche may have been onto something when he said, “In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule.” While most Americans have broadly similar preferences, most corporate interest groups are fighting for an agenda that benefits only them.

Originally posted on Policyshop

How the SEC can stop climate change

Several corporations sit on the boards of powerful business and trade organizations that take positions contrary to  the companies’ purported stance on climate change, finds a new Union of Concerned Scientists report. They are able to do this without public accountability because, currently, trade associations aren’t required to disclose their funders and corporations are not required to disclose their political spending. The report’s author makes clear that in the crucial arena of climate change policy, “the public is still in the dark when it comes to how companies and their trade associations influence government decisions.”

There is a simple way to start to fix this lack of transparency and accountability. The U.S. Securities and Exchanges Commission (SEC) should proceed with its rule making that would require companies to disclose their political activities. While 650,000 Americans of all stripes, including leading investors, have filed a record breaking number of comments supporting this common sense rule, 29 trade groups, including the U.S. Chamber and National Association of Manufactureres, wrote to the agency opposing the proposed rule. Last month, the SEC removed consideration of the rule from its 2014 agenda.

The UCS study recommends that the SEC take action on the rule, and demonstrates why such a rule is so necessary to combat climate change. The study examines major corporations’ responses to an annual survey about their political activities and compares them to the stances of trade associations they support. The study finds that these organizations often hold extreme positions on climate change that are not consistent with the expressed preferences of the companies that fund them. It also finds that many companies did not disclose their positions on a trade association, even when publicly available information shows they are on the association’s board. Ninety-five companies reported that one or more of the trade groups they supported had a climate policy that was not consistent with their own.

As SEC Commissioner Aguilar has explained, “shareholders require uniform disclosures regarding corporate political expenditures for many reasons, including that it is impossible to have any corporate accountability or oversight without it.” A Drexel University studyreleased last December finds that the climate denial movement consists of 91 organizations supported by 140 primarily conservative foundations but that 75% of the funds for the climate denial movement is completely untraceable. These two studies both point to the importance of a U.S. Securities and Exchanges Commission (SEC) rule to require that companies disclose their political activities.

Of the 9,136 peer-reviewed authors who published a paper about climate change between Nov. 12, 2012 through December 31, 2013 only one rejected anthropogenic global warming. The one dissenting author, Russian scientist  S. V. Avakyan, appears to be motivated by a desire to maintain Russia’s dominance as an oil and gas exporter. At this point, denying climate change is like denying the harmful effects of smoking – only someone with a commercial interest would even question the data.

Given the drastic costs to companies that could occur if the carbon bubble is popped through government action, it’s unsurprising that trade associations are lobbying heavily against regulation. It’s important to bring these trade associations out of the dark so that the public can know what companies are funding spurious climate research and policy. Without transparency there can be no accountability, and the SEC should move forward with the rulemaking to require disclosure of corporate political activities.

How states subsidize corporations while cutting education

I wrote a bit ago about how states are “tightening their belts” by cutting education. You may think that’s fair, since most states have to balance their budgets. The problem is where they are spending money: big corporations. David Cay Johnston has the newest scoop on the tax incentives states give to corporations:

The fast-increasing use of tax incentives by all 50 states has failed to increase jobs or investment, two respected experts on state tax policy found after reviewing more than 50 years of giveaways.

This year, state government subsidies to corporations, partnerships, and other businesses in New York state alone will total $1.7 billion, triple the giveaways in 2005, according to the new study. That’s $235 taken from the average Empire State household this year and redistributed to business owners on the theory that redistribution will create jobs.

During those years, the number of jobs in New York declined, the state’s official jobs data website shows.2 The total number of New Yorkers employed in 2012 was down 175,000, or 2 percent, compared with 2005.

Think of it this way: Over nine years, the state of New York gave businesses roughly $10 billion, or almost $1,400 from each household, in a jobs program that eliminated 175,000 jobs at an average cost of $57,000. And that’s just state-level subsidies, not those from industrial development agencies.

The 143-page study by Marilyn M. Rubin of John Jay College and Donald J. Boyd, former director of the Rockefeller Institute of Government State and Local Government Finance research group, was prepared for the New York State Tax Reform and Fairness Commission created by Gov. Andrew Cuomo (D). But its findings apply to all 50 states, where tax incentives have been growing like weeds since the turn of the millennium.

Corporations force states to compete to get factories. Matthew Yglesias reports on how insane it’s getting:

It’s no secret that big companies with lots of jobs to throw around try to strike good deals with state and local governments in exchange for deigning to locate there. ButBoeing’s wish list for building a 777X factory is extremely ambitious. For example, they would like to build the factory in a city that will pay for the entire building of the factory, with the following three points listed as desirable:

— “Site at no cost, or very low cost, to project.”

— “Facilities at no cost, or significantly reduced cost.”

— “Infrastructure improvements provided by the location.”

That’s a little nutty. If your strategy for attracting the construction of an airplane factory to your town includes footing the entire bill for an airplane factory, then you might as well just launch an airplane manufacturing company. You can read the whole list here. They are ideally looking for a highly skilled yet low-wage workforce at a location with a dedicated railroad spur and a seaport. Plus low taxes!

The balls on these companies. Seriously.

 

Corporations Take Battle Against Labor to the States

With gridlock and discord halting the right’s agenda in Congress, corporations have taken the war on labor to the states. The Economic Policy Institute recently released a new report, “The Legislative Attack on American Wages and Labor Standards, 2011-2012,” authored by Gordon Lafer. The report  documents a coordinated corporate attack on unions, workplace production and fair wages led by organizations like ALEC, the Chamber of Commerce and Americans for Prosperity.

Among other rollbacks, “Four states passed laws restricting the minimum wage, four lifted restrictions on child labor, and 16 imposed new limits on benefits for the unemployed.” These laws rarely were demanded by economic circumstances. For instance, Gov. Scott Walker’s famous push to end collective bargaining for Wisconsin’s public workers came after they had assented to “significant benefit reductions.” But the true motivation for Walker’s plan was not closing the budget gap, but rather crushing organized labor.

The report documents a nationwide crackdown on organized labor:

  • Fifteen states passed laws restricting public employees’ collective bargaining rights or ability to collect “fair share” dues through payroll deductions.

  • Nineteen states introduced “right-to-work” bills, and “right-to-work” laws affecting private-sector collective bargaining agreements were enacted in Michigan and Indiana.

Lafer notes that collective bargaining for teachers has been curtailed even in states like New Jersey and New Hampshire that rank in the top ten states for educational attainment.Pension reform, which is too often merely a guise to slash benefits and divert pension funds to expensive hedge funds, occurred in states like Wisconsin, Florida, and North Carolina, where pensions were far from underfunded.

Instead the states all share one thing in common: Republican governors. Similarly, Lafer points to evidence that the states that laid off the most workers were not the states with the highest deficits, but the states with the most far-right legislators. For instance, the 11 “newly red” states (those where the Republican revolution of 2010 gave Republicans total control of the legislature) and Texas accounted for 71.8 percent of the public jobs eliminated in 2011 but only 12.5 percent of the aggregate budget shortfall.

These legislators often follow by the letter the model legislation of organizations like ALEC which are rooted not in economics, but ideology. A recent report by Peter Fisher finds that ALEC, “fails to predict job creation, GDP growth, state and local revenue growth, or rising personal incomes.”

New Hampshire, for instance, repealed the minimum wage over a gubernatorial veto. The House Speaker (who is an ALEC member) cited the need to stimulate job growth – presumably an ALEC talking point. But in truth, economists have found no link between a minimum wage hike and an increase in unemployment, and research indicates that a higher minimum wage can create jobs by stimulating demand.

The attack on unions is incredibly important for national politics. The Organization for Economic Cooperation and Development (OECD) data for 2008 (the most recent year for which all countries are available) shows that the unionization rate for America is far below average. This means that in America we have two parties beholden to corporate interests and no counterbalance. Demos’ report, Stacked Deck, shows how politicians are more responsive to the interests of their wealthier constituents. There should be no surprise thatlower unionization rates correlate with higher levels of inequality. But if the union movement in America remains suppressed by powerful corporations, it’s hard to imagine anything other than ALEC-style legislation winning the day.

Similarly, the cruel austerity practiced by states actually deters growth. Adam Hersh, an economist at the Center for American Progress finds that states that cut public spending face bigger employment losses. After the Great Depression, expansionary federal fiscal policy was undermined by state-level belt-tightening. Across the country, Republican governors pass radical tax cuts and then use the budget hole to justify cuts to public services, which voters assent to feeling they have no other option. But as Lafer notes,

Indeed, if elected officials were simply concerned with closing budget gaps, they had many alternative methods for achieving this end without cutting essential services. For instance, in 2011 the deficits in all 50 states could have been erased entirely through two simple policy changes: effectively undoing the Bush tax cuts for the top 2 percent of income earners by imposing an equivalent income tax at the state level, and taxing capital gains at the same rate as ordinary income.

Instead of pursuing higher revenues, states slashed their most crucial investment: education. Lafer writes, “In 2010–2011, 70 percent of all U.S. school districts made cuts to essential services.” This was coupled with new laws in four states (Idaho, Wisconsin, Michigan, and Maine) rolling back child labor standards.

Lafer argues that rather than being a “localist” strategy tailored to each state, the attack on labor has been a coordinated one, and it has been focused on battleground states: Michigan, Indiana, Pennsylvania, and Ohio. If the corporate money machine can hobble unions and public employees in battlegrounds, they can influence key national elections.