Don't be evil... oh well, perhaps a little bit

Don't be evil was, of course, Google's motto. The New York Times had a piece recently on the firing of Barry Lynn from the New America Foundation, a Democratic think tank that, if memory doesn't fail me, was at least initially connected to the Clintons. The whole thing resulted from the fact that Lynn was favorable to the European Union regulation of Google, a major donor to the think tank.

Given that I've been writing about the influence of corporate money in academia, I thought it was a good idea to link to this other story about Google's perverse influence in the public debate. In my view, Google is not on the cancer-denying or climate-change-denying business simply as a result of a market structure phenomena. And in many ways Google and Facebook (don't get me wrong Amazon is also dangerous, but in a different way, they still sell stuff, whereas the other two sell your information), or Big Internet, are more dangerous than Big Tobacco and Big Oil.

Academic freedom watch: academically disguised lobbying at the University of Kansas

I noted before the news about hiring practices at Florida State being influenced by the Koch's brothers ideological agenda. Now the news suggest that the Koch have been funding an ideologically biased center at the University of Kansas (KU). Art Hall, who worked for the the Koch's, and now runs KU's Center for Applied Economics, has been at the center of the controversy.

There is a new and troubling development in the story. Professor Hall has filed to block a group of students that wanted more information about the relation between him and the Koch brothers. Schuyler Kraus the president of Students for a Sustainable Future, the group behind the information request, suggested that: “It just seems more obvious that there’s something going on that they want to hide.” Indeed.

The connections of wealthy individuals, with strong views on the economy, funding research on economics is always problematic. Not surprisingly, this is happening at a Business School, which are often heavily dependent on corporate donors, who might have a political agenda that conflicts with the research values that most universities profess to follow.

PS: You may want to check the UnKoch My Campus website here. This quote from Charles Koch in their site is telling: "We should cease financing our own destruction and…[support] only those programs, departments or schools that 'contribute in some way to our individual companies or to the general welfare of our free enterprise system.'"

Tim Dickinson on The Biggest Tax Scam Ever

Today, Tim Dickinson was on Democracy Now talking about the ways in which US Corporations have engineered a global scam to avoid tax obligations.  His article in Rolling Stone provides extensive details.

By Tim Dickinson

In July, the American pharmaceutical giant AbbVie, maker of the world's top-selling drug – the arthritis treatment Humira – reached a blockbuster deal to acquire European rival Shire, best known for the attention-deficit medication Adderall. The merger was cheered by Wall Street, not for what the deal will do to advance pharmaceutical science, but because it will empower the bigger firm, AbbVie, to renounce its U.S. citizenship. At $55 billion, the AbbVie deal is the largest in a cavalcade of corporate "inversions." A loophole in American tax law permits companies with just 20 percent foreign ownership to reincorporate abroad, which means that if a big U.S. firm acquires a smaller company located in a tax haven, it can then "invert" – that is, become a subsidiary of its foreign-based affiliate – and kiss a huge share of its IRS obligations goodbye. AbbVie shareholders will continue to control 75 percent of the company, which will still be managed by executives outside Chicago. But the merged company will now file its tax returns on the island of Jersey – a speck of land in the English Channel, where Shire is incorporated. AbbVie, which racked up more than $10 billion in Humira sales last year, will slash its effective corporate tax rate from 22 percent to 13. The cost to the U.S. Treasury? Possibly as much as $1.3 billion by the year 2020.

Read rest here, and for an article by David Cay Johnston on the issue, see here.

Baker & Bernstein on The Incipient Inflation Freak-out

By Dean Baker and Jared Bernstein 

As predictable as August vacations, numerous economists and Federal Reserve watchers are arguing that the nation’s central bank must raise interest rates or risk an outbreak of spiraling inflation. Their campaign has heated up a bit in recent months, as one can cherry pick an indicator or two showing slightly faster growth in prices or wages. But an objective analysis of the recent data, along with longer-term wage trends, reveals that the stakes of premature tightening are unacceptably high. The vast majority of the population depends on their paychecks, not their stock portfolios. If the Fed were to slam on the breaks by raising interest rates as soon as workers started to see some long-awaited real wage gains, it would be acting to prevent most of the country from seeing improvements in living standards. To understand why continued support from the Fed is unlikely to be inflationary, consider three factors: the current state of key variables, the mechanics of inflationary pressures and the sharp rise in profits as a share of national income in recent years, along with its corollary, the fall in the compensation share.

Read rest here.

New Book: Private Equity at Work, When Wall Street Manages Main Street

By Eileen Appelbaum and Rosemary Batt

Prior research on private equity has focused almost exclusively on the financial performance of private equity funds and the returns to their investors. Private Equity at Work provides a new roadmap to the largely hidden internal operations of these firms, showing how their business strategies disproportionately benefit the partners in private equity firms at the expense of other stakeholders and taxpayers. In the 1980s, leveraged buyouts by private equity firms saw high returns and were widely considered the solution to corporate wastefulness and mismanagement. And since 2000, nearly 11,500 companies—representing almost 8 million employees—have been purchased by private equity firms. As their role in the economy has increased, they have come under fire from labor unions and community advocates who argue that the proliferation of leveraged buyouts destroys jobs, causes wages to stagnate, saddles otherwise healthy companies with debt, and leads to subsidies from taxpayers. Appelbaum and Batt show that private equity firms’ financial strategies are designed to extract maximum value from the companies they buy and sell, often to the detriment of those companies and their employees and suppliers. Their risky decisions include buying companies and extracting dividends by loading them with high levels of debt and selling assets. These actions often lead to financial distress and a disproportionate focus on cost-cutting, outsourcing, and wage and benefit losses for workers, especially if they are unionized.

See here.

Noam Chomsky on The Death of American Universities

 

By Noam Chomsky

When universities become corporatized, as has been happening quite systematically over the last generation as part of the general neoliberal assault on the population, their business model means that what matters is the bottom line.

The effective owners are the trustees (or the legislature, in the case of state universities), and they want to keep costs down and make sure that labor is docile and obedient. The way to do that is, essentially, temps. Just as the hiring of temps has gone way up in the neoliberal period, you’re getting the same phenomenon in the universities.

In the past thirty or forty years, there’s been a very sharp increase in the proportion of administrators to faculty and students; faculty and students levels have stayed fairly level relative to one another, but the proportion of administrators have gone way up.

There’s a very good book on it by a well-known sociologist, Benjamin Ginsberg, called The Fall of the Faculty: The Rise of the All-Administrative University and Why It Matters, which describes in detail the business style of massive administration and levels of administration — and of course, very highly-paid administrators. This includes professional administrators like deans, for example, who used to be faculty members who took off for a couple of years to serve in an administrative capacity and then go back to the faculty; now they’re mostly professionals, who then have to hire sub-deans, and secretaries, and so on and so forth, a whole proliferation of structure that goes along with administrators. All of that is another aspect of the business model.

But using cheap and vulnerable labor is a business practice that goes as far back as you can trace private enterprise, and unions emerged in response. In the universities, cheap, vulnerable labor means adjuncts and graduate students. Graduate students are even more vulnerable, for obvious reasons. The idea is to transfer instruction to precarious workers, which improves discipline and control but also enables the transfer of funds to other purposes apart from education.

The costs, of course, are borne by the students and by the people who are being drawn into these vulnerable occupations. But it’s a standard feature of a business-run society to transfer costs to the people. In fact, economists tacitly cooperate in this. So, for example, suppose you find a mistake in your checking account and you call the bank to try to fix it. Well, you know what happens. You call them up, and you get a recorded message saying “We love you, here’s a menu.” Maybe the menu has what you’re looking for, maybe it doesn’t. If you happen to find the right option, you listen to some music, and every once and a while a voice comes in and says “Please stand by, we really appreciate your business,” and so on.

Read rest here.

A classic text concerning this erosion of higher education is Thorstein Veblen's (1918) The Higher Learning in America: A Memorandum on The Conduct of Universities by Business Men

State of Power 2014 and Davos Man

Global elites are meeting in Davos this week. Davos Man is all for 'stakelholder' society, meaning corporate self-rule. New Report State of Power 2014 exposes the abuses of the Davos elites. Above the graph showing the 25 biggest corporations by revenue and by asset value.

 

Academic freedom watch: corporate donors to decide economic hires at Florida State

Academic freedom is in danger at Florida State. At least is what has been reported here. In short:

"A foundation bankrolled by Libertarian businessman Charles G. Koch has pledged $1.5 million for positions in Florida State University's economics department. In return, his representatives get to screen and sign off on any hires for a new program promoting 'political economy and free enterprise.'"

This is bad in any field, but in economics where the incentives to be pro-business and 'free' markets are already huge it's even worse.

This reminds me of what Veblen said, almost a hundred years ago about what at the time where called schools of commerce, and which would fit our business schools now, and most likely this new program in the political economy of the free enterprise. Veblen said in The Higher Learning in America:

"A college of commerce is designed to serve an emulative purpose only -- individual gain regardless of, or at the cost of, the community at large -- and it is, therefore, peculiarly incompatible with the collective cultural purpose of the university. It belongs in the corporation of learning no more than a department of athletics. Both alike give training that is of no use to the community,except, perhaps, as a sentimental excitement. Neither business proficiency nor proficiency in athletic contests need be decried, of course. They have their value, to the businessmen and to the athletes, respectively, chiefly as a means of livelihood at the cost of the rest of the community, and it is to be presumed that they are worth while to those who go in for that sort of thing. Both alike are related to the legitimate ends of the university as a drain on its resources and an impairment of its scholarly animus. As related to the ostensible purposes of a university, therefore, the support and conduct of such schools at the expense of the universities is to be construed as a breach of trust."

It was true back then and is still true now. But at least one would expect that the university would have the freedom of choosing and evaluating its own faculty according to their own criteria. If corporate criteria is introduced, on top of the questionable character of the program, it is difficult to understand what is to be gained. Worse, in this case, it is a public institution.

USA For Sale!

In this animated video (above) created by Mark Fiore for the Center for Media and Democracy’s “Outsourcing America Exposed” project, Outsourcing Eddie shows us the many ways in which America is for sale.

Galbraith on the myth of consumer sovereignty and Big Corporations

From the old, but still essential, The Age of Uncertainty by John Kenneth Galbraith. The myth of consumer sovereignty, created by Paul Samuelson, unmasked and the fact that mainstream economics (as all economic education) is there to protect Big Corporations made clear by Galbraith.