Corporations don’t have to break laws as Volkswagen did to manipulate & cheat the public

Volkswagen’s use of manipulative software to conceal that its diesel engines couldn’t pass emissions inspections is far from the first time that a large corporation has broken the law to cheat the public, not even the first time this year. Cheating can show up in any industry, as demonstrated by the Peanut Corporation of America executives who knowingly sold the public peanut butter tainted with salmonella. 

These companies knowingly broke laws that regulate the marketplace. Weakened as government oversight has been by the general starvation of all non-military government functions over the past 35 years, the American public is indeed fortunate we caught both Volkswagen and the peanut-mongers.  

Most Americans, regardless of their political views, are appalled by Volkswagen’s treachery, although I have yet to see or hear anyone come up with a proposal to prevent these acts of corporate manipulation from repeating. The answer, of course, is obvious:  spend more money inspecting products and facilities and more aggressively prosecute companies that break the law and their executives and directors. But common sense will often ruffle the feathers of large industries and their elected factotums. 

Extremist supporters of the unfettered free market always assume that corporations will uphold the highest standards of ethical behavior and those that don’t will soon be unmasked and ultimately fail. This overarching theory gives no thought to what happens to the innocent people killed and hurt during the period in which the “marketplace” “naturally” removes these bad apples. 

The more reasonable among free market advocates admit the need for regulations, but insist that the regulated industry must develop the regulations.  It’s this approach that leads to phone tariffs and securities regulations that limit damages and emissions requirements that always go into effect years after the laws are passed.  

In fact, industry has so many ways to manipulate individuals and communities that it’s surprising that a company ever feels it has to break the law to make a profit. 

Industry has a great say on the overall policy and economic strategies that the federal government and the states formulate and implement. Reading Street Smart: The Rise of Cities and the Fall of Cars by leading transportation engineer Samuel I. Schwartz, reminded me of how much sway corporations and industries have over government. Take our spending on infrastructure improvement: Almost 80% of it goes to highways and only 20% of it goes to mass transit. Highway spending has established and now reinforces a way of life that is leading to resource shortages and human-induced global warming. Not good for the public, but a car-centric lifestyle helps the automobile industry, the oil industry and suburban developers.  

By the way, Schwartz demonstrates that this enormous decades-long financial support of car-and-mall culture has not been enough to make living in car-centric areas less expensive. While people complain that cities with mass transit are the most expensive in which to live, as of 2010 the average person in New York, Washington, Philadelphia, San Francisco, Chicago and Boston all spent less of their household budget on housing and transportation combined than the average person did in Riverside, Miami, Jacksonville, San Diego, Los Angeles, Phoenix, Houston, Atlanta or Columbus, all of which have lower housing costs but much higher costs to travel from home to work, school and recreation. (Of course, San Francisco and New York have seen real estate booms over the past five years that may change the numbers somewhat). See p. 111 of Schwartz’s book for a chart with details. 

Schwartz’s main interest in Street Smart is to advocate for a series of innovations that will help move people from place to place more quickly and create more mixed-use neighborhoods in which people can walk to retail stores, restaurants and other amenities. But along the way, Schwartz reminds us of other ways that large corporations manipulate the public for their own ends.  

Let’s start with suppressing the competition. Schwartz is far from the first to write about the two companies formed by General Motors, Firestone Tires, Standard Oil of California and other large companies in 1936 that bought electric train and trolley systems in at least 45 cities, including Los Angeles, St. Louis, Baltimore and Newark, and then shut them down in favor of oil-burning buses. The federal government finally realized that the series of ostensibly legal actions like forming a company, buying other companies and reallocating assets constituted a conspiracy to restrain trade and indicted one of the shell companies in 1947. The corporations were convicted of some crimes, but not others, and had to pay fines of $5,000 per company and $1 per chief executive officer.   

Schwartz also alludes to companies putting out false propaganda and supporting phony research. His examples, all financed by the Koch brothers, are climate change (a term I have come to despise, because it is so squeamishly euphemistic), healthcare reform and the United Nation’s nonbinding blueprint for sustainable development called Agenda 21. Without consulting sources, we can quickly add Coca Cola, the tobacco companies, pharmaceutical companies and automobile companies to the list of companies supporting false research, on such topics as the benefits of exercise versus calorie-counting in losing weight; the health hazards of smoking; the efficacy of a number of prescription drugs; and the real cost to install safety measures in vehicles or meet emission standards. 

Perhaps the most disturbing way that corporations manipulate the public, individuals and the government to make more profit is to write legislation and spend money to defeat or pass laws. We know generally that the American Legislative Exchange Council routinely produces model bills which are introduced in state legislatures by the elected officials they control. This legislation generally hurts the public, and includes new laws to reduce corporate regulation and taxation, loosen environmental regulations, make it harder to vote, weaken labor unions and promote gun rights. In Street Smart, Schwartz gives some disgusting examples of what Americans for Prosperity and the Reason Foundation—two Koch Brothers-financed organizations—and their millions did in one year alone, 2014: undermined a Nashville plan for dedicated transit lines; forbade Indianapolis from studying a light rail system; killed Florida’s plans for a high-speed rail system which voters had overwhelmingly approved; and unsuccessfully opposed the expansion of the Washington DC Metro and the LA Exposition Line rail system.   

We haven’t even mentioned how corporations control the political process with political contributions and influence over the news media through advertising and ownership. 

With all these legal ways to fix the game in their favor, it strikes me that only the most venal and stupid of corporate executives ever explicitly break the law the way Volkswagen and Peanut Corporation honchos did.