Empire of Illusion

by Chris Hedges

  States, facing dramatic budget shortfalls, are slashing social assistance programs, including Medicaid, social services, and education. New Jersey’s shortfall has tripled to $1.2 billion and could soar to $5 billion. Tax revenue has fallen to $211 million less than projected. States are imposing hiring freezes, canceling raises, and cutting back on services big and small, from salting and plowing streets in winter to heating assistance programs. Unemployment insurance funds, especially with the proposed extension of benefits, are running out of money.

  Dolores Williams, fifty-seven, sits in the cramped waiting room at the Crisis Ministry clutching a numbered card, waiting for her number to be called. She has lived in a low-income apartment block known as The Kingsbury for a year. Two residents, she says, recently jumped to their deaths from the nineteenth floor. She had a job at Sam’s Club but lost it. No one, she says, is hiring. She is desperate.

  She hands me a copy of the Trentonian, a local paper. The headline on the front page reads: “Gangster Slammed for Bicycle Drive-By.” It is the story of the conviction of a man for a fatal drive-by shooting from a bicycle. The paper is filled with stories like these, the result of social, economic, and moral collapse. Poverty breeds more than hunger. It destroys communities. In one Trentonian story, a fifty-six-year-old woman is robbed and pistol-whipped in the middle of the afternoon. Another article reports the plight of four children whose parents had been shot and seriously wounded. “Libraries OK Now, but Future Is Murky,” a headline reads. Another reads: “Still No Arrests in Hooker Slayings.”

  “It is like this every day,” Williams says.

  Corporations are ubiquitous parts of our lives, and those that own and run them want them to remain that way. We eat corporate food. We buy corporate clothes. We drive in corporate cars. We buy our fuel from corporations. We borrow from, invest our retirement savings with, and take out college loans with corporations and corporate banks. We are entertained, informed, and bombarded with advertisements by corporations. Many of us work for corporations. There are few aspects of life left that have not been taken over by corporations, from mail delivery to public utilities to our for-profit health-care system. These corporations have no loyalty to the country or workers. Our impoverishment feeds their profits. And profits, for corporations, are all that count.

  The corporation is designed to make money without regard to human life, the social good, or the impact of the corporation’s activities on the environment. Corporation bylaws impose a legal duty on corporate executives to make the largest profits possible for shareholders. In the 2003 documentary film The Corporation by Mark Achbar, Jennifer Abbott, and Joel Bakan, management guru Peter Drucker tells Bakan: “If you find an executive who wants to take on social responsibilities, fire him. Fast.” And William Niskanen, chair of the libertarian Cato Institute, says that he would not invest in a company that promoted corporate responsibility.

  A corporation that attempts to engage in social responsibility, that tries to pay workers a decent wage with benefit, that protects workers’ rights, that invests its profits to limit pollution, that gives consumers better deals, can actually be sued by shareholders. Robert Monks, an investment manager, says in the film: “The corporation is an externaliz ing machine, in the same way that a shark is a killing machine. There isn’t any question of malevolence or of will. The enterprise has within it, and the shark has within it, those characteristics that enable it to do that for which it was designed.”

  Ray Anderson, the CEO of Interface Corporation, the world’s largest commercial carpet manufacturer, calls the corporation a “present-day instrument of destruction” because of its compulsion to “externalize any cost that an unwary or uncaring public will allow it to externalize.”

  “The notion that we can take and take and take and take, waste and waste, without consequences, is driving the biosphere to destruction,” Anderson says.

  The film, based on Bakan’s book The Corporation: The Pathological Pursuit of Profit and Power, asserts that the corporation exhibits many of the traits found in people clinically defined as psychopaths. Psychologist Robert Hare recites in the film a checklist of psychopathic traits and ties them to the behavior of corporations:

  • Callous unconcern for the feelings for others;

  • Incapacity to maintain enduring relationships;

  • Reckless disregard for the safety of others;

  • Deceitfulness: repeated lying and conning of others for profit;

  • Incapacity to experience guilt:

  • Failure to conform to social norms with respect to lawful behavior.

  And yet, under the American legal system, corporations have the same legal rights as individuals. They make contributions to candidates. They fund 35,000 lobbyists in Washington and thousands more in state capitals to write corporate-friendly legislation and defang regulatory agencies. They saturate the airwaves, the Internet, newspapers, and magazines with advertisements promoting their brands as the friendly face of the corporation. They have huge legal teams, tens of thousands of employees, and scores of elected officials who ward off public intrusions into their affairs or lawsuits. They hold a near monopoly on all electronic and printed sources of information. A few media giants, such as AOL Time Warner, General Electric, Viacom, Disney, and Rupert Murdoch’s NewsGroup, control nearly everything we read, see, and hear.

  “Private capital tends to become concentrated in [a] few hands, partly because of competition among the capitalists, and partly because technological development and the increasing division of labor encourage the formation of larger units of production at the expense of the smaller ones,” Albert Einstein wrote in 1949 in the Monthly Review in explaining why he was a socialist:The result of these developments is an oligarchy of private capital the enormous power of which cannot be effectively checked even by a democratically organized political society. This is true since the members of legislative bodies are selected by political parties, largely financed or otherwise influenced by private capitalists who, for all practical purposes, separate the electorate from the legislature. The consequence is that the representatives of the people do not in fact sufficiently protect the interests of the underprivileged sections of the population. Moreover, under existing conditions, private capitalists inevitably control, directly or indirectly, the main sources of information (press, radio, education). It is thus extremely difficult, and indeed in most cases quite impossible, for the individual citizen to come to objective conclusions and to make intelligent use of his political rights.4

  The growing desperation across the United States is unleashing not simply a recession—we have been in a recession for some time now—but rather a depression unlike anything we have seen since the 1930s. It has provided a pool of broken people willing to work for low wages without unions or benefits. This is excellent news if you are a corporation. It is very bad news if you are a worker. For the bottom 90 percent of Americans, annual income has been on a slow, steady decline for three decades. The majority of that sector’s workers had an average annual income that peaked at $33,000 in 1973. By 2005, according to David Cay Johnston in his book Free Lunch, it had fallen to a bit more than $29,000 in adjusted dollars, despite three decades of economic expansion. And where did that money go? Ask Exxon Mobil, the biggest U.S. oil and gas company, which made a $10.9 billion profit in the first quarter of 2007. Or better yet, ask Exxon Mobil Corporation Chairman and Chief Executive Officer Rex Tillerson, whose compensation rose nearly 18 percent to $21.7 million in 2007, when the oil company pulled in the largest profit ever for a U.S. company. His take-home pay package included $1.75 million in salary, a $3.36 million bonus, and $16.1 million in stock and option awards, according to a company filing with the U.S. Securities and Exchange Commission. He also received nearly $430,000 in other compensation, including $229,331 for personal security and $41,122 for use of the company aircraft. In addition to his pay package, Tillerson received more than $7.6 million from exercising options and stock awards d
uring the year. Exxon Mobil earned $40.61 billion in 2007, up 3 percent from the previous year. But Tillerson’s 2007 pay was not even the highest mark for the U.S. oil and gas industry. Occidental Petroleum Corporation Chairman and CEO Ray Irani made $33.6 million, and Anadarko Petroleum Corporation chief James Hackett took in $26.7 million over the same period.

  For each dollar earned in 2005, the top 10 percent received 48.5 cents. That was the top tenth’s greatest share of the income pie, Johnston writes, since 1929, just before the Roaring ’20s collapsed in the Great Depression. And within the top 10 percent, those who made more than $100,000, nearly all the gains went to the top tenth of 1 percent, people like Tillerson, Irani, or Hackett, who made at least $1.7 million that year. And until we have real election reform, until we make it possible to run for national office without candidates kissing the rings of Tillersons, Iranis, and Hacketts to get hundreds of millions of dollars, this cannibalization of America will continue.

  Our elites manipulate statistics and data to foster illusions of growth and prosperity. They refuse to admit they have lost control since to lose control is to concede failure. They contribute, instead, to the collective denial of reality by insisting that another multibillion-dollar bailout or government loan will prop up the dying edifice. The well-paid television pundits and news celebrities, the economists and the banking and financial sector leaders, see the world from inside the comfort of the corporate box. They are loyal to the corporate state. They cling to the corporation and the corporate structure. It is known. It is safe. It is paternal. It is the system.

  Our government is being wrecked by corporations, which now get 40 percent of federal discretionary spending. More than 800,000 jobs once handled by government employees have been outsourced to corporations, a move that has not only further empowered our shadow corporate government but also helped destroy federal workforce unions. Management of federal prisons, the management of regulatory and scientific reviews, the processing or denial of Freedom of Information requests, interrogating prisoners, and running the world’s largest mercenary army in Iraq—all this has become corporate. And these corporations, in a perverse arrangement, make their money directly off of the American citizen. This devil’s deal is an expansion of the corporate welfare enjoyed by the defense industry.

  Halliburton in 2003 was given a no-bid and non-compete $7 billion contract to repair Iraq’s oil fields, as well as the power to oversee and control Iraq’s entire oil production. This has now become $130 billion in contract awards to Halliburton. And flush with taxpayer dollars, what has Halliburton done? It has made sure only thirty-six of its 143 subsidiaries are incorporated in the United States and 107 subsidiaries (or 75 percent) are incorporated in thirty different countries. This arrangement allows Halliburton to lower its tax liability on foreign income by establishing a “controlled foreign corporation” and subsidiaries inside low-tax, or no-tax, countries used as tax havens. Thus the corporations take our money. They squander it. They cleverly evade taxation. And our corporate government not only funds them but protects them.

  The financial and political disparities between our oligarchy and the working class have created a new global serfdom. Credit Suisse analysts estimate that the number of subprime foreclosures in the United States by the end of 2012 will total 1,390,000. If that estimate is correct, 12.7 percent of all residential borrowers in the United States will be forced out of their homes.

  The bailout for banks and financial firms, who feel no compunction to account for taxpayer funds, pulled the plug on the New Deal. The Great Society is now gasping for air, mortally wounded, coughing up blood. Power no longer lies with the citizens of the United States, who, with ratios of 100 to 1, pleaded with their representatives in Washington not to loot the national treasury to bail out Wall Street investment firms. Power lies with the corporations. These corporations, not we, pick who runs for president, Congress, judgeships, and most state legislatures. You cannot, in most instances, be a viable candidate without their blessing and money. These corporations, including the Commission on Presidential Debates (a private organization), determine who gets to speak and what issues candidates can or cannot challenge, from universal, not-for-profit, single-payer health care to Wall Street bailouts to NAFTA. If you do not follow the corporate script, you become as marginal and invisible as Dennis Kucinich, Ralph Nader, or Cynthia McKinney.

  This is why most Democrats opposed Pennsylvania Democratic House Representative John Murtha’s call for immediate withdrawal from Iraq—something that would dry up profits for companies like Halliburton—and supported continued funding for the war. It is why most voted to reauthorize the Patriot Act. It is why the party opposed an amendment that was part of a bankruptcy bill that would have capped credit card interest rates at 30 percent. It is why corporatist politicians opposed a bill that would have reformed the notorious Mining Law of 1872, which allows mineral companies to plunder federal land for profit. It is why they did not back the single-payer health-care bill House Resolution 676, sponsored by Representatives Kucinich and John Conyers. It is why so many politicians advocate nuclear power. It is why many backed the class-action “reform” bill—the Class Action Fairness Act (CAFA)—that was part of a large lobbying effort by financial firms. CAFA would effectively shut down state courts as a venue to hear most class-action lawsuits. Workers, under CAFA, would no longer have redress in many of the courts where these cases have a chance of defying powerful corporations. CAFA moves these cases into corporate-friendly federal courts dominated by Republican judges.

  The assault on the American working class—an assault that has devastated members of my own family—is nearly complete. In the past three years, nearly one in five U.S. workers was laid off. Among workers laid off from full-time work, roughly one-fourth were earning less than $40,000 annually. There are whole sections of the United States that now resemble the developing world. There has been a Weimarization of the American working class. And the assault on the middle class is now under way. Anything that can be put on software—from finance to architecture to engineering—can and is being outsourced to workers in countries such as India or China, who accept pay that is a fraction of their Western counterparts, and without benefits. And both the Republican and Democratic parties, beholden to corporations for money and power, have allowed this to happen.

  Over the past few decades, we have watched the rise of a powerful web of interlocking corporate entities, a network of arrangements within subsectors, industries, or other partial jurisdictions to diminish and often abolish outside control and oversight. These corporations have neutralized national, state, and judicial authority. The corporate state, begun under Ronald Reagan and pushed forward by every president since, has destroyed the public and private institutions that protected workers and safeguarded citizens. Only 7.8 percent of workers in the private sector are unionized. This is about the same percentage as in the early 1900s. There are 50 million Americans in real poverty and tens of millions of Americans in a category called “near poverty.”

  We hear little about these stories of pain and dislocation. We are diverted by spectacle and pseudo-events. We are fed illusions. We are given comforting myths—the core of popular culture—that exalt our nation and ourselves, even though ours is a time of collapse, and moral and political squalor. We are bombarded with useless trivia and celebrity gossip despite the valiant efforts of a few remaining newspapers such as the New York Times and the Washington Post, along with Democracy Now, National Public Radio, Pacifica, and Jim Lehrer of the Public Broadcasting Service. These organizations still practice journalism as an ethical pursuit on behalf of the common good, but they are a beleaguered minority. The Federal Communications Commission, in an example of how far our standards have fallen, defines television shows such as Fox’s celebrity gossip program TMZ and the Christian Broadcast Network’s 700 Club as “bona fide newscasts.” The economist Charlotte Twight calls this vast corporate system of spectacle and diversion, in which we g
et to vote on American Idol or be elevated to celebrity status through reality television programs, “participatory fascism.”

  Washington has become our Versailles. We are ruled, entertained, and informed by courtiers—and the media has evolved into a class of courtiers. The Democrats, like the Republicans, are mostly courtiers. Our pundits and experts, at least those with prominent public platforms, are courtiers. We are captivated by the hollow stagecraft of political theater as we are ruthlessly stripped of power. It is smoke and mirrors, tricks and con games, and the purpose behind it is deception.

  Television journalism is largely a farce. Celebrity reporters, mas querading as journalists, make millions a year and give a platform to the powerful and the famous so they can spin, equivocate, and lie. Sitting in a studio, putting on makeup, and chatting with Joe Biden, Hillary Clinton, or Lawrence Summers has little to do with journalism. If you are a true journalist, you should start to worry if you make $5 million a year. No journalist has a comfortable, cozy relationship with the powerful. No journalist believes that serving the powerful is a primary part of his or her calling. Those in power fear and dislike journalists—and they should. Ask Amy Goodman, Seymour Hersh, Walter Pincus, Robert Scheer, or David Cay Johnston.

  The comedian Jon Stewart, who hosts the popular Daily Show with Jon Stewart on Comedy Central, has become one of the most visible and influential media figures in America. In an interview with Jim Cramer, who hosts a show called Mad Money on CNBC, Stewart asked his guest why, during all the years he advised viewers about investments, he never questioned the mendacious claims from CEOs and banks that unleashed the financial meltdown—or warned viewers about the shady tactics of short-term selling and massive debt leverag ing used to make fortunes for CEOs out of the retirement and savings accounts of ordinary Americans.5