Monday, August 27, 2007

When For-Profit Corporations Rule The Day

By now, we've gotten used to hearing voices from lobbyists and politicians for the need to make government less costly and more efficient by outsourcing its services through awarding contracts to the private sector. All for the good of free market competitiveness, thus ensuring better services at cheaper costs - right?

Among many of the dark, sad and tragic tales and lessons that the Iraq War keeps serving us, if not actually reminding us of, there is one which offers us a glimpse into the future of for-profit corporation-provided governmental services and for-profit corporation direct influence, if not control, over our lives.

This future is dystopic and inhuman - frighteningly enough, this is not science-fiction but reality ... today.

As I have stated before, I am all for a free market-based economy. Indeed, competition drives initiative and creativity, leading to better (or new) products as well as to better (or new) services, and henceforth to a better and greater choice for consummers. This in turn will usually translate well into job creation or maintenance, along with better salaries. And this in turn will usually translate into better individual spending powers and higher standards of living.

However, trusting in corporations to "do the right thing" with regards to the welfare of society, citizens, employees, et al., is pure nonsense. The reality is that companies and corporations live by one thing and one thing only: the bottom line. Hence, companies and corporations will do anything, regardless of whether they initially had good intentions or not, to keep profits not only high but also to increase them as well. In other words, companies and corporations will cheat, lie or steal, even go as far as to use spying, sabbotage and violence, as means to protect and increase their profit margins. This is simply the nature of the beast.

Therefore, just like societies need laws to place clear definitions of what is acceptable, non-criminal conduct for their citizens, so must there also be laws to place clear definitions of what is acceptable, non-criminal conduct for companies.

Some call these "regulations". I call these necessities, just like criminal laws for the citizenry. After all, laws serve to maintain the welfare, peace and prosperity of society overall.

To prove my point, behold what happens when a government abrogates its responsibility of competently awarding and overseeing the contracts it grants to for-profit companies and corporations:
"According to the most reliable ­estimates, (the U.S. government has) doled out more than $500 billion for the (Iraq) war, as well as $44 billion for the Iraqi reconstruction effort. And what did America's contractors give us for that money? They built big steaming shit piles, set brand-new trucks on fire, drove back and forth across the desert for no reason at all and dumped bags of nails in ditches. (...) what happened in Iraq went beyond inefficiency, beyond fraud even. This was about the business of government being corrupted by the profit motive to such an extraordinary degree that now we all have to wonder how we will ever be able to depend on the state to do its job in the future. If catastrophic failure is worth billions, where's the incentive to deliver success?"
This quote is taken from Matt Taibbi's lengthy and sobering article from Rolling Stone of August 23, 2007, which details how for-profit contractors have been given no-bid contracts and how they've essentially raided the U.S. Treasury by essentially stealing, cheating and willfully not providing the services they were contracted for, all in the name of maximizing profits - while aided and abetted by the mind-numbing incompetence of the Bush administration.

Need I stress how it is eye-opening and crucial that you read this article?

If anything, what has happened (and keeps happening) in Iraq with contractors constitutes the first and foremost argument for the need to have companies and corporations to obey laws, just like every citizens. As I said above, call said laws "regulations" if you will - nevertheless, laws on due process of contract awarding through an appropriately regulated submission process, as well as rigorous boundaries imposed for the fulfillment of contracts, in addition to codified acceptable behavior by companies and corporations (as in our case) and corporate responsibility, are a matter of necessity for the continuity of our democratic societies founded upon the Rule of Law.

Why? Because, once again, all that matters to a company or corporation in the end of the day is the bottom line.

No noble principles of patriotism, no social obligations, no moral imperatives, nor even basic human decency and compassion, can twart the nature of this beast.

For decades, we have been witnessess to this truism.

Tobacco companies lying about the dangers of tobacco smoking.

Corporations hiding fabrication or design flaws in products like tires, cars, and whatnot, and nonetheless selling them.

Insurance (life, health, fire, theft, etc.) companies always seeking any and all justifications to lower awards for rightful claims, if not actually deny them. Same thing with agreeing or denying life-saving medical treatments or procedures.

Companies and corporations raiding the retirement funds of their employees.

Companies and corporations always skimming on the production/construction costs of their contracts so as to maximize profits - often resulting in shoddy and defective products/services, sometimes with dangerous consequences.

Companies and corporations (such as airlines) cutting back on quality control, safety protocols, maintenance repairs, and inspection protocols - all in order to save more bucks, regardless of the tragic consequences.

And so on and so forth.

Any and all means, rationales and excuses are valid to maximize profit. Case in point (emphases mine):
"For all the creative ways that contractors came up with to waste, mismanage and steal public money in Iraq, the standard remained good old-fashioned fucking up. Take the case of the Basra Children's Hospital, a much-ballyhooed 'do-gooder' project championed by Laura Bush and Condi Rice. This was exactly the sort of grandstanding, self-serving, indulgent and ultimately useless project that tended to get the go-ahead under reconstruction. Like the expensive telephone-based disease-notification database approved for use in hospitals without telephones, or the natural-gas-powered electricity turbines green­lighted for installation in a country without ready sources of natural gas, the Basra Children's Hospital was a state-of-the-art medical facility set to be built in a town without safe drinking water. (Contractor) Bechtel was given $50 million to build the hospital (...) with the price tag soaring to $169 million (a year later)."
Or this (emphasis mine):
"When (contractor) Custer Battles was caught delivering broken trucks to the Army, a military official says the company told him, 'We were only told we had to deliver the trucks. The contract doesn't say they had to work.'"
Or this (emphasis mine):
"In another stroke of genius, (contractor Custer Battles) found a bunch of abandoned Iraqi Airways forklifts on airport property, repainted them to disguise the company markings and billed them to U.S. taxpayers as new equipment."
Or this (emphasis mine):
"(A private construction company) wins a contract from the Coalition Provisional Authority in Iraq to design and build the Baghdad Police College, a facility that's supposed to house and train at least 4,000 police recruits. But two years and $72 million later, (the company) delivers not a functioning police academy but one of the great engineering clusterfucks of all time, a practically useless pile of rubble so badly constructed that its walls and ceilings are literally caked in shit and piss, a result of subpar plumbing in the upper floors (...) when auditors from the Special Inspector General for Iraq Reconstruction visited the college (...), their report sounded like something out of one of the Saw movies: 'We witnessed a light fixture so full of diluted urine and feces that it would not operate,' they write, adding that 'the urine was so pervasive that it had permanently stained the ceiling tiles' and that 'during our visit, a substance dripped from the ceiling onto an assessment team member's shirt.'"
Or this (emphasis mine):
"An Air Force vet, (Russell) Skoug had come to Iraq as a civilian to repair refrigeration units and air conditioners for a KBR subcontractor called LSI. But when he arrived, he discovered that LSI had hired him to fix Humvees (...) Working with him on his crew were two other refrigeration technicians, neither of whom (likewise) knew anything about fixing Humvees (...) Thanks to low troop ­levels, all the military repair guys had been pressed into service to fight the war, so Skoug was forced to sit in the military storeroom on the base and study vehicle manuals that, as a civilian, he wasn't allowed to check out of the building. That was how America fought terrorism in Iraq: It hired civilian air-conditioning techs to fix Humvees using the instruction manual while the real Humvee repairmen, earning a third of what the helpless civilians were paid, drove around in circles outside the wire waiting to get blown up by insurgents (...) After much pleading and cajoling, Skoug managed to convince LSI to let him repair some refrigeration units. But it turned out that the company didn't have any tools for the job."
Yet through it all, we keep hearing the calls to downsize government by outsourcing the basic services it is meant to provide to private contractors.

As the Rolling Stone article illustrates, this is a recipe for disaster.

Not only for the basic functions of our society, but for human beings as well.

Here's one example (emphases mine):
"When civilian employees complained about looting or other improprieties, contractors sometimes threatened to throw them outside the gates of their bases - a life-threatening situation for any American. Robert Isakson, a former FBI agent who worked for (contractor) Custer Battles, says that when he refused to go along with one scam involving a dummy company in Lebanon, he was detained by company security guards, who seized his ID badge and barred him from the base in Baghdad. He eventually had to make a hazardous, Papillon-esque journey across hostile Iraq to Jordan just to survive."
And another (emphasis mine):
"James Garrison, who worked at a KBR ice plant in Al Asad, recalls an incident when Indian employees threatened to go on strike: "They pulled a bus up, got them in there and said, 'We'll ship you outside the front gate if you want to go on strike.'" Not surprisingly, the workers changed their mind about a work stoppage."
And last, but not least, let us check on Mr. Russell Skoug again (emphases mine):
"(...) he impressed the executives at Wolfpack enough to hire him away from LSI for $10,000 a month. The job required Skoug, who had been given no formal security training, to travel regularly on dangerous convoys between bases. Wolfpack issued him an armored vehicle, a Yugoslav-made AK-47 and a handgun, and wished him luck (...) insurgent activity in his area increased to the point where the soldiers leading his convoys would often drive only at night and without lights. Skoug and his co-workers asked Wolfpack to provide them with night-vision goggles that cost as little as $1,000 a pair, but the company refused (...) the soldiers leading the convoy refused to let Skoug drive his own vehicle back to Heet without night-vision goggles. So a soldier took Skoug's car, and Skoug was forced to be a passenger in a military vehicle. 'We start out the front gate, and I find out that the truck that I was in was the frickin' lead truck,' he recalls. 'And I'm going, 'Oh, great.'' (...) The bomb went off about a half-hour later, ripping through the truck floor and destroying four inches of Skoug's left femur (...) Skoug was loaded into the back of a Humvee, his legs hanging out, and evacuated to an Army hospital in Germany before being airlifted back to the States (...) When Skoug arrived, it was his wife, Linda, who had to handle all his affairs. She was the one who arranged for an air ambulance to take him to Houston, where she had persuaded an orthopedic hospital to admit him as a patient. She had to do this because almost right from the start, Wolfpack washed its hands of Russell Skoug. The insurance policy he had been given turned out to be useless - the company denied all coverage, beginning with a $72,597 bill for his stay in the German hospital. Despite assurances from Wolfpack chief Mark Atwood that he would cover all Skoug's expenses, neither he nor the insurance company would pay for the $16,000 trip in the air ambulance. Nobody paid for the operations Skoug had in Houston - as many as three a day, every day for a month. And nobody paid for his subsequent rehab stint in another Houston hospital - despite the fact that military law requires every company contracting with the government to fully insure all of its employees in the war zone. Now that he's out, sitting at home on his couch with only partial use of his left hand and left leg, Skoug has a stack of unpaid medical bills almost three inches tall (...) When Linda Skoug petitioned Atwood for help, he refused, pointing out that he had kept his now-useless employee on the payroll for four whole months before firing him. 'After I have put forth to help you all out,' he wrote in an e-mail, 'you are going to get on me for your husband not having insurance.' He even implied that Skoug had brought the accident upon himself by allowing the Army to place him at the head of the convoy: 'He was not even suppose [sic] to be in the lead vehicle to begin with.'"
These examples, especially the last one, illustrate the inherent danger to employees when they find themselves at the mercy of companies and corporations without any laws to protect the employees and/or laws to keep such practices in firm, legally criminal check.

Such laws are needed because that is how a company or corporation will act when it is not bound by any laws. It is the nature of the beast. We have seen this ever since the dawn of the industrial revolution.

As the Rolling Stone article so accutely states (emphasis mine):
"(The Iraq no-bid contracting situation provides) a window into the soul of for-profit contractors who not only left behind a breathtaking legacy of fraud, waste and corruption but, through their calculating, greed-fueled hijacking of this generation's broadest and most far-reaching foreign-policy initiative, pushed America into previously unknown realms of moral insanity."
When kept unchecked, the need for maximization of profits will inevitably lead to fraud and corruption, as well as to a blatant disregard and abuse of human dignity, human civil liberties and human rights. I repeat here: no noble principles of patriotism, social obligations, moral imperatives or even basic human decency and compassion can twart this.

And now Iraq shows us the truth of it once again.

But of course, this is not just happening in Iraq - we need only look in our own backyards. Two recent examples, among so many:

Via Accidental Deliberations - "(The) private airport security firm Garda had let thousands of airline passengers board Canadian flights with little or no security screening - and (the Harper government) renewed a federal contract with Garda (nonetheless) (...) not only has Garda's track record failed to improve, but the company's employees who took the violations public have been removed from their jobs."

And via yours truly - "Looking for new ways to trim the fat and boost workers' health, some employers are starting to make overweight employees pay if they don't slim down. Others, citing growing medical costs tied to obesity, are offering fit workers lucrative incentives that shave thousands of dollars a year off health care premiums."

I wrote previously that the one and only purpose of government is "to preserve and protect our rights and civil liberties, while dispensing those services that we require - and yes, one such service is the encouragement of the creation of riches and prosperity ... for us. A government is by nature and definition a non-profit organization which we entrust and hold accountable, by giving to it the monies that are necessary for the performance of its function. No more, no less."

What has been happening in Iraq, with regards to contractors there, provides us with a dark, foreboding and cautionary tale by giving a glimpse into a future whereby unchecked for-profit corporation-provided governmental services and for-profit corporation direct influence over our lives, if not actual control, come to rule the day.

Is this what we really want?

Addendum: Let's Talk About It asks: "Where's the money going?"

(Cross-posted at DKos, at NION, at Suzie-Q, at Progressive Historians and at Diatribune)


  1. Mentarch I am glad you wrote this post in the manner that you did. What it does is take away the argument that some make about corporations that are not involved in such practices. That argument is quickly defeated when we see any corporation left without any decencies, not rule, because rules have stopped nothing or any company from doing what they could or would to make more for the corporation.
    From Enron, Haliburton to AT&T, all have rule that governs what can and cannot be done, yet they all broke rules for the dollar. They all are involved with our government to break said rules while money is made not just last year but doing a course until something goes wrong or the government puts a halt to such activity.
    During the War, all companies involved can go on record as saying, yes They have cheated the government and made a profit on the back of America taxes and yes our government knows it, but slowly does anything about it.
    Our Military has joined in with said companies. Look at the equipment that other countries has that can divert a bomb during explosion, yet our Military take bids from companies that do not have the better product because of whatever reason.
    the fact is money is made and corporations profit during war and when a government has the interest of the business at hand and not the consumer.

  2. I'm sorry to break my comment like this but I had another matter to attend too.
    Supply-sider is what this Bush policy is all about, where less taxes are taking from the rich and most everything is put on the average American.
    Look at the the money oil companies stand to make from this war. See Oil
    Energy has made its profit as well with the help of Cheney. See Cheney
    This is just some of what is made by companies during war, that profit corporations and companies doing any and all things under a slow moving government to make money off tax dollars.

  3. The current corporate model is clearly a failure for society - it is essentially akin to "raiding barbarism".

    That companies and corporations are nowadays considered as "citizens" is indeed part of the problem - but it can become instead part of the solution.
    If corporations are citizens, then let them be subjected to the same laws as "regular" citizens.

    Right now, companies and corporations want (and have) the same rights as citizens, but without responsibilities as such.

    Companies and corporations should not be treated as "special" or "privileged" citizens who may stand above the Rule of Law.

    As simple as that.

  4. Mentarch, excellent article.

    Here in the US, our democratic republic has been replaced with a fascist corporate plutocracy. I don't know how far behind us you are in Canada.

    I have argued for years that applying individual to corporations without the responsibilities is bass ackwards. Since the only ethical imperative for a corporation is profit, they should have individual responsibilities with diminished rights.

  5. TC: I would go with equal responsibilities and rights as in our case as individual citizens, as well as the same requirement to follow the Rule of Law (including enforcement).

    And to answer your question: we are not that far behind you guys ... unfortunately enough. However, we do have law-protected unions to counter-balance this.

  6. I'm in agreement with TC, only I'd call our fascist corporate plutocracy the American Federal Empire(TM).

    Mussolini would've been proud.

  7. Oops! I forgot to mention that this article was promoted to the Front Page at NION.



Please feel free to comment on APOV. However, remember to keep in check your tone and respect for all here. Let rational, reasoning, enthousiastic and passionate conversations and discussions rule first and foremost in our participatory democracy, so as to facilitate the free exchange of reality-based facts and ideas. In between, do not forget to have fun and enjoy yourselves ... in other words: keep on rockin'! - Mentarch