Guest blogged by Ernest A. Canning
“We now have the entitlement generation as CEOs. They just plain feel entitled to being wealthy as Croesus with no responsibility, no accountability. They have become literal sociopaths.” - William K. Black on Bill Moyers’ Journal
"When you're rich, they think you really know!" - "If I Were a Rich Man," from Fiddler on the Roof
Californians have been drawn within the cross-hairs of a propaganda blitz bought and paid for by Meg Whitman, the billionaire former CEO of eBay, who, since declaring her intent to run for governor in February, 2009, has already contributed $59 million of her own money to her "campaign" --- a one-sided political phenomenon which has seen a stealth candidate, with disturbing connections to Goldman Sachs, soar to the top of the polls because the electoral process has been emasculated by the absence of mandatory debates and meaningful investigative journalism...
USC study exposes corporate media substance deficit
On March 11 the Norman Lear Center of the USC Annenberg School for Communication & Journalism published its analysis [PDF] of local television news coverage in Los Angeles. Their findings are vital to understanding how the corporate media both creates a substance deficit and facilitates the ability of the billionaire class to deceive the electorate into voting against their own interests.
The TV stations, the report notes, receive their licenses to broadcast over the public airwaves free of charge based on nothing more than a promise to serve "the public interest, convenience and necessity." In practice the stations fail to come close to delivering the type of information that is vital to informed consent in a functioning democracy.
Where 68% of L.A. area citizens rely on local TV stations as their primary source of "news," what they receive, when their attention is not being diverted by celebrity gossip, can in no sense be described as journalism.
According to the report, in a typical, 30 minute "news" segment...
The study contains a graph reflecting that, on average, only 7 seconds out of every 30 minute broadcast is devoted to U.S. foreign policy as compared to 8 minutes 36 seconds devoted to paid-for commercials; another 2:10 devoted to "teasers" asking viewers to stay tuned for coverage to come. The bulk of the remaining time relates to sports, weather, crime and disasters.
Conflict of interest inherent in a corporate media profits and political ads
While the USC study revealed that nearly 29% of each 30 minute local TV "news" broadcast is devoted to commercial advertising, one should not lose sight of the fact that "news" programs provide only a small segment of local television which, while engaged in other forms of "entertainment," relies heavily on commercials throughout all of its programming. State of the media.org reports that, in 2010, 91% of local station revenues were expected to come from advertising. While, like the rest of the economy, 2009 advertising revenues fell sharply, especially in the automotive sector, "political issue ads...may have doubled the total from the previous non-election year of 2007."
The problem goes beyond the fact that paid political ads distort the political process by placing greater emphasis on the ability to pay for the 30 second propaganda slots. A station whose revenue is dependent on an especially wealthy candidate's paid-for political ads will be less inclined to challenge their accuracy, especially when the ad runs in the middle of a "news" broadcast --- ads which, in the case of Meg Whitman --- present a carefully scripted, faux populist image of a successful businesswoman who benevolently intends to rescue economically distressed California, miraculously creating jobs and resolving the state's fiscal crisis by cutting taxes and cutting state government spending.
"Step right in," said the spider to the fly.
The power of a one-sided media pulpit
By evading reporters, ducking a debate with her chief Republican rival, state Insurance Commissioner Steve Poizner, at the state Republican convention --- she would later debate Poizner but only before a well heeled audience at the New Majority California, a Republican organization for deep-pocketed donors who pay a $10,000 annual membership fee --- and by presenting only a carefully scripted image by way of television and radio ads, Whitman vaulted to an early commanding five to one lead over Poizner and a 3% lead over the likely Democratic Party nominee, CA Attorney General Jerry Brown.
The first question any real journalist should ask is why a billionaire would be willing to invest an estimated $150 million of her own money in order to become the governor of California, a state which, at $1.8 trillion, has the world's eighth largest economy?
The answer, I fear, may well be found in William K. Black's The Best Way to Rob a Bank is to Own One. The best way for Wall Street to pillage a state is to have one of their own installed as a governor.
During his April 23 appearance on Bill Moyers Journal, Black, a former bank regulator, deconstructed the Republican-led deregulation of Wall Street as essentially nothing more than the decriminalization of fraud. He skewered Treasury Secretary Tim Geithner's suggestion during Congressional testimony to the effect that the federal government was powerless to prevent it due to the repeal of Glass-Steagall, the Depression era legislation that separated commercial and investment banking, noting that it was the Fed which had "pushed for the repeal of Glass-Steagall":
Black described both the ideology and symbiotic relationship between Wall Street and the politicians they control as "criminogenic" :
Black blasted the nation's business schools for churning out an irresponsible, unaccountable generation of CEOs who feel "entitled" to unlimited wealth; "literal sociopaths" who "take control and destroy massive enterprises and cause global economic crises."
As if on cue, on April 24 The New York Times confirmed Black's assessment by reporting:
The pillage of Main Street
The looting of Main Street was by no means limited to unregulated derivatives in which risky mortgages were packaged, sold and resold. As Matt Taibbi revealed when interviewed on Democracy Now, big banks like J.P. Morgan and Goldman Sachs have employed a ranged of unregulated derivatives --- "credit default swaps, collateralized debt obligations, interest rate swaps" --- in order to extract billions of dollars from local communities by "persuading" them to refinance their debt.
In his Rolling Stone piece, Taibbi focused on a $250 million Birmingham sewer project that was converted into a $5 billion debt obligation to J.P. Morgan:
Birmingham's mayor was convicted of fraud and money-laundering for taking bribes funneled to him by Wall Street bankers...But those who greenlighted the bribes and profited most from the scam remain largely untouched. "It never gets back to JP Morgan"...
As revealed by the Los Angeles Times, in 1998 Goldman Sachs saddled Oakland, CA with an "interest rate swap" which is now costing the city $5 million per year. As explained by Mike Elk at the Huffington Post, the sharks at Goldman persuaded Oakland to exchange their variable rate debt on $187.5 million in bonds for a 5.62% fixed rate. Although the rate of Goldman's payments "dropped down to 0.15 percent...Goldman Sachs is still forcing the taxpayers of Oakland to pay 5.68 percent, and pocketing the $5.2 million difference as profit" --- a pure profit made possible because Goldman borrows money from the Fed at zero percent interest; then loans the money back to local government which then is saddled with a hefty interest obligation.
The San Francisco Chronicle reported, "Goldman is a major player in California state finance. It has been the underwriter of $78.9 billion in bonds issued by the state since 2006." The paper also reported that Goldman sought to privatize the California Lottery and purchase the CA agency which insures student loans.
Meg the Wall Streeter
When the California Accountability Project (CAP) stripped away the adroit PR facade of a brilliant businesswoman who places the word "integrity" in bold letters on her web site, they revealed a picture of the less flattering traits that typify a rapacious class of 21st Century CEOs.
Against the backdrop of a supposedly selfless citizen willing to spend $150 million of her own money in order to rescue the good citizens of California from those evil tax and spend Democrats, CAP noted that for "most of her life, Whitman didn’t bother to even cast a vote in a number of important elections, let alone participate in shaping public policy."
It's not that Whitman was completely divorced from politics. As revealed by the San Francisco Chronicle, in "2008, during the heart of the financial crisis, Meg Whitman was advising Presidential candidate John McCain to support the federal bank bailout" --- no doubt out of the same benevolent spirit that led to her decision to run for governor. I mean, who but a cynic would point to the "20 Goldman Sachs investment funds in which Meg Whitman is an investor or partner" including "more than $1 million each in two Goldman Sachs 'distressed opportunity' funds, or so-called 'vulture funds,' which swoop in on failing assets and recession-ravaged companies?"
The San Francisco Chronicle went on to report:
In 2001, Goldman put Whitman on its corporate board, paying her an estimated $475,000 for little more than a year of part-time service. The company also gave her insider access to the initial public offerings of hot stocks worth millions...
According to Salon's Lance Williams, Whitman received the $475,000 for attending perhaps a half dozen Goldman Sachs board meetings over the span of 15 months, though her stint at Goldman did include service on the board's compensation committee which twice signed off on lucrative bonuses for then Goldman Sachs CEO Henry Paulson. Williams reviewed records which showed that "Paulson’s 2001 bonus package was $11.5 million, more than 19 times his salary," before he left the firm to become George W. Bush's Treasury Secretary.
As Bush's fox guarding the hen house, Paulson, in 2008, led the movement to saddle U.S. taxpayers with the massive debt run up courtesy of the Wall Street casino, otherwise known as the derivatives market in mortgage-backed securities --- an event which Joseph Stiglitz, a Nobel prize winning economist described as "the Great American Bank Robbery."
While it can at least be said that Goldman Sachs was raking it in at the same time Paulson received his bonuses, the same cannot be said of Whitman, whose annual compensation package, as reported by Eric Jackson of The Street.com, spiked during her last two years at eBay, "even as eBay's stock price continued to decline. Peaking at $58 at the start of 2005, eBay's stock price dropped 43% over the next three years. Over that same period, Whitman's total annual compensation almost quintupled to $13.9 million from $2.9 million."
Where Witman touts her own success at eBay, a Brad Stone New York Times piece noted that eBay's growth hinged on the eventually unsustainable practice of raising seller fees, and that Whitman's 2005 decision to purchase Skype, an internet phone and video service, based on the mistaken assumption that sellers and buyers would want to speak with one another before closing deals, ultimately forced eBay to write off "more than half of the $2.6 billion purchase price."
Whitman's tenure on the Goldman Sachs board ended abruptly after she was identified by Rep. Michael Oxley (R-OH) as one of 21 business executives to receive lucrative IPOs from Goldman Sachs, engaging in a practice known as "spinning."
In "Meg Whitman has her own definition of the 'right thing,'" Michael Hiltzik of the Los Angeles Times explains:
Where Whitman denied in her book, The Power of Money (2010), that there was so much as a "conflict of interest," let alone a quid pro quo between the lucrative IPOs she and other eBay executives received and the eBay investment banking business they steered to Goldman, a Delaware judge, in denying the executives' motion to dismiss a shareholder suit, found otherwise, noting that Whitman and her fellow executives "'were not free to accept this consideration from a company' that arguably hoped to induce them to keep funneling business its way. Whitman and the other executives eventually settled the lawsuit by giving up their profits."
The damage wrought by unchallenged propaganda
In "Pew Research Center Shows Elites Have Destroyed America's Middle-Class," Hiram Lee observed:
What has become painfully obvious is that many within these "wide layers of the population" simply do not realize that the source of the middle class demise lies not in government per se but in the carefully thought out, decades long effort of the hard-right to "starve the beast" by massive tax cuts for those who already have too much in order to, in the words of Grover Norquist, reduce government to the point it could be "drown in a bathtub" and in order to privatize the commons so that the privileged few can be enriched beyond the wildest imagination of ordinary citizens.
An American Political Science Association study, cited by Bill Moyers in Moyers on America (2004) referred to a "radical political elite who have...inequality as its mission and has organized 'a fanatical drive to dismantle the political institutions, the legal and statutory cannons, and the intellectual and cultural framework that have shaped public responsibility from social harms arising from the excesses of private powers.'"
Four years before the housing bubble burst, Moyers observed that in "creating the greatest economic inequality in the advanced world, they have saddled our nation, our states, and our cities...with structural deficits...systematically stripping government of its capacity...to do little more than reward the rich and wage war." More recently, in Capitalism: A Love Story (trailer below), Michael Moore touched upon the harsh reality their cynical ideology produced.
If the public airwaves and digital cable TV were not monopolized by a corrupt corporate media which is complicit in the pillage, these misguided masses (aka Tea Baggers) would understand that the answer lies not in destroying their government's control of vital "public functions" --- police, fire, education, parks, health care, environmental protection, access to clean and affordable housing, water, wholesome food and electricity.
In our vice-into-virtue, greed-is-good capitalist society a bevy of snake oil salesmen have convinced the uninformed that a harsh winner-take-all society that places the greed of the fortunate few above the needs of many and even above the ability to maintain a sustainable planet is a good thing; that democratic socialism, a system that extols positive human traits --- empathy, compassion, community, a recognition that we're all in this together --- is to be feared and despised.
The choice before the citizens of California is not simply whether to accept or reject Meg Whitman as their next governor. It is a choice between democracy and what Chalmers Johnson described on the cover of Naomi Klein's The Shock Doctrine as "our headlong flight back to feudalism under the guise of social science and 'freedom.'"
Trailer for Michael Moore's Capitalism: A Love Story follows...
Ernest A. Canning has been an active member of the California state bar since 1977. Mr. Canning has received both undergraduate and graduate degrees in political science as well as a juris doctor. He is also a Vietnam vet (4th Infantry, Central Highlands 1968).