Corporation Watch

Among the disservices performed by the media — and particularly the embedded reporters and editors who cover corporations — is perpetuating a myth that has become pervasive in the American (and to a large part, global) public consciousness: namely, that most corporations are efficiently managed by highly competent people making the best possible decisions on the basis of data, analysis, and professional experience.

But as is the case with most "facts" purveyed in the business media, this idea is based not so much on first-hand knowledge or observation, but rather through second-hand self-reporting from the CEOs and companies themselves, and is frequently disproven by later reports to the contrary that almost always appear long after the hagiographies have been inculcated.

Case in point: The announcement that faltering Internet pioneer Yahoo was replacing yet another CEO — this time for falsifying his academic credentials on his resume (which the company certified as true in an annual filing to the Securities and Exchange Commission) — which came just a few days after JPMorgan Chase CEO Jamie Dimon's admission that the company he runs had managed to lose at least $2 billion (which has since tripled to at least $6 billon) in an effort to "mitigate risk" in its investments (i.e., prevent it from losing money) using credit default swaps — the same volatile financial instruments that had been a key factor in the global economic collapse a few years earlier.

All of this all of this had a depressingly familiar ring to it, and echoed an article in the May 8 edition of Fortune magazine from James Bandler entitled "How Hewlett-Packard Lost Its Way", which offered yet another example of how even when the firmly embedded journalists of the business media finally bring themselves to report that the emperors of our economic aristocracy have no clothes, the myth of corporate competence and efficiency somehow always manages to resurrect itself and keep staggering on, like a hockey-masked killer in a horror movie.

A draft report released by the Federal Communications Commission (FCC) on Nov. 29 found that AT&T's proposed merger with German-owned cellphone carrier T-Mobile would not be in the public interest because it would substantially reduce competition among the four top mobile phone providers and raise prices for consumers.

This followed similar findings from the U.S. Department of Justice, as well as public opposition to the deal from senior members of Congress, and was not a surprise. The real “news” in the report was the FCC's finding that AT&T had publicly lied about the benefits of its proposed merger with T-Mobile — telling the public, media, and federal regulators that the deal was necessary to modernize its wireless phone network and would lower prices and create more jobs*, while its internal documents showed that its public claims were untrue.

A March 24 NY Times article headlined "GE’s Strategies Let It Avoid Taxes Altogether" described how General Electric, the nation’s largest corporation, reported $14.2 billion in 2010 global profits, including $5.1 billion from its operations in the United States, yet not only paid absolutely zero U.S. taxes, but actually claimed a tax benefit of $3.2 billion.

Reporter David Kocieniewski notes that "low taxes are nothing new for GE", and are the result of "an aggressive strategy that mixes fierce lobbying for tax breaks with innovative accounting that enables it to concentrate its profits off-shore. GE’s giant tax department, led by a bow-tied former Treasury official named John Samuels, is often referred to as the world’s best tax law firm".

According to Kocieniewski, nearly a thousand GE employees spend at least half their time exploiting an already porous tax code that allows corporations to avoid paying taxes on income from certain kinds of financial operations abroad, and then use tax credits, write-offs, and depreciation from those activities to off-set taxes on domestic profits.

"But critics say the use of so many shelters amounts to corporate welfare", the article says, and that "the assertive tax avoidance of multinationals like GE not only shortchanges the Treasury, but also harms the economy by discouraging investment and hiring in the United States".

CUNY professor David Harvey gave a presentation in April 2010 to the Royal Society for the Encouragement of Arts, Manufactures, and Commerce (only in Britain could they name something that, right?) called "The Crises of Capitalism", which the RSA then had animated. The result is sort of a "live" cartoon in which Harvey's words are both literally and figuratively animated as he speaks: