My Word's Worth: a weekly column by Marylaine Block

vol. 4, #40, May 10, 1999

THE REAL NEWS OF THE CENTURY

As I looked at the Newseum's choice of the top 100 news stories of the 20th century, I thought about how often newspapers miss the real news, the stories that change our lives. You see, the bias of news is toward events: the assassination of a president (#6), Charles Lindbergh crossing the Atlantic (#30), the dropping of the A-bomb on Japan (#1).

All important stories, and yet it seems to me that some stories that matter even more are not discrete events; they are sea changes, series of small events that end up altering our assumptions and our entire way of life. Brown v. Board of Education (#9) is part of a much larger story of race in America that includes Jackie Robinson in the major leagues (#44), the Montgomery bus boycott (#47), the "I Have a Dream Speech" (#50) and the assassination of Martin Luther King (#23). That story could be viewed more broadly still, as the continuing story of human hatred of the outsider, along with the story of the Holocaust (#7), genocide in Rwanda, and ethnic cleansing in Kosovo.

For me, the biggest sea change of all is not touched on even once in those 100 top news stories. I am speaking of "fiduciary responsibility," the corporation's obligation to maximize return of investment to stockholders. Not that long ago, corporate management believed it was obligated to serve its customers, its community, its workforce, and its investors. But in the 1970's, the Wall Street Journal began preaching that shareholders were the only community that mattered. For companies that didn't understand that, Ivan Boesky and his fellow vultures were hovering, waiting to buy up corporations that didn't measure up, sell off their unprofitable operations, and feast on their assets.

Understandably, corporate management began running scared. Over the course of the next 20 years, returning a profit was no longer enough; if they didn't return 20% or more on investment, they'd be swallowed. The consequences of this have changed our lives for the worse in hundreds of ways.

Corporations became lean and mean--or at least mean. Management started looking for ways to cut costs, and the obvious place to start was with salaries. Not its own, of course, because this was when management began paying itself with stock dividends that could amount to $125,000,000 a year. By 1999, virtually all CEO's of the Fortune 500 were millionaires several times over.

When the government broke the air traffic controllers' strike, sending a message that government was no longer on the side of unions, workers were further cowed into submission by corporate downsizing, outsourcing, and the movement of jobs overseas. Hundreds of thousands of Americans lost their jobs. Still other hundreds of thousands have had wages forced down and benefits cut, while Kelly and Manpower have become top Wall Street performers by providing corporations with benefitless temps.

Maximizing profit inevitably meant expansion, and as companies spread out across the country, management also saved money on taxes, playing states off against each other to see which would give away the most to get them to locate there, or not move away. States and local governments competed to offer tax abatements, build roads and other infrastructure for them, and train workers for them. Some of them gave so much away that each job gained cost up to $450,000 in taxes.

This meant that corporate management built factories and offices in places where they themselves did not live, whose welfare they cared nothing about. Shutting down plants that had supported communities for generations was simply good economics to CEOs who did not live there. Skirting around environmental protection laws was sound economics to managers who didn't drink the water they polluted. Declines in government services resulting from them not paying their fair share of taxes did not bother them, because they weren't driving on those roads and their kids weren't going to those schools.

CEOs had no interest in building in existing downtowns, where taxes and square footage were expensive, and civic regulations had to be abided by. Instead they created new suburban malls and office complexes that ate into farmland, and necessitated the building of new roads and sewers and bridges even as the ones in the cities were falling apart. The malls and discounters stole business away from local merchants; in Iowa, ten years after WalMart entered the state, half of our apparel stores had disappeared, and 37% of our hardware stores. If WalMart now decides to close down a store, it can effectively kill its captive communities.

After a friendly congress permitted interstate banking, banks increased their profits with mergers, swallowing thousands of small, local banks. But the megabanks have no interest in making the local loans those small banks used to make, that reinvigorate communities but only generate 5-10% returns. That's why they're fighting to kill the Community Reinvestment Act, the law that forced them to reinvest money within the communities that gave it to them, and financed a great deal of rebuilding of downtowns.

Mergers and acquisitions in media companies have left us with only 9 companies controlling most of what we see on the news, hear on the radio, read in newspapers and magazines. If you've sensed a certain unanimity of opinion of late in the media and the public affairs programs paid for by GE and Archer Daniels, blame it on 20% return on investment, and thank heavens for the internet and small independent magazines where people still feel free to speak their own truths.

The larger these companies get, the less likely they are to be allowed to fail. As corporations have made greedy, stupid decisions and lost money on them, they have demanded bailouts, and we taxpayers have, like it or not, been forced to come to the rescue. We are still paying out on the savings and loan crisis, and if we are not bailing out the mistakes of bankers in the 80's and 90's as taxpayers now, it is because we are bailing them out as bank customers, as they charge us ever more inventive fees for the use of our own money.

The whole corporate financial structure requires us to keep buying, which is increasingly difficult when so many have had salaries and wages forced down. That means that corporations have to get ever more insistent with advertising. There is hardly any public space, hardly any medium, that is not used for ads and sales promotions. They're on our grocery carts, in TV and free "educational" materials in our kids' schools, on every available space at sporting events, even in our museums (the insect exhibition at a major museum was sponsored by Orkin).

If we can't afford to buy, the banks are willing to extend infinite credit to absolutely anybody (my son received offers of gold cards based on his "outstanding credit rating" when he was ten). They're even willing to offer us second and third mortgages on our homes. If we can't keep up the payments, they will simply sock us with 18% interest on our balances or take our homes. We, of course, can retaliate by filing for bankruptcy, but there are now cries in congress to limit that option -- it lets people escape from the consequences of their irresponsible behavior, don't you know?

The constant barrage of advertising has had the insidious effect of making us see ourselves not as citizens but as consumers -- which is to say, we have become passive selectors of the things corporations offer us. We have perhaps come to believe the message of our media -- that what they offer is all there is and all that can be, so don't worry, be happy.

And maybe that's why you and I haven't seen any news stories about fiduciary responsibility -- our economy depends on it too much. Twenty percent return on investment is not news as we have understood it, not an event. It's just one of the only stories that really matter.

NOTE: My thinking is always a work in progress. You could mentally insert all my columns in between these two sentences: "This is something I've been thinking about," and "Does this make any sense to you?" I welcome your thoughts. Please send your comments about these columns to: marylaine at netexpress.net. Since I've written a lot of these, some of them many years ago, help me out by telling me which column you're referring to.

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