The Case for Nationalization

The Supreme Court says that corporations have the same rights as individuals. When they misbehave, shouldn’t they face consequences as serious as those imposed upon an individual?

It goes without saying that a person who commits a crime ought to face punishment proportional to the offense. Large and midsize corporations, which employ thousands of employees, have far vaster reach and power than even the wealthiest ordinary citizens. So their crimes can be breathtaking in scope. The 1984 industrial catastrophe at a pesticide plant in Bhopal, India killed 15,000 people. An additional 200,000 have since suffered serious injuries. Compared to the boards of directors of Union Carbide and Dow Chemical, which bought the company in 2001, Ted Bundy was small potatoes.

Unlike small-time serial killers, however, corporations get away with murder. For at least a year, management of the Toyota auto company knew that brakes in millions of its cars might fail. A 2009 ABC News investigation found that at least 16 people had died. “Safety analysts found an estimated 2000 cases in which owners of Toyota cars including Camry, Prius and Lexus, reported that their cars surged without warning up to speeds of 100 miles per hour,” reported the network. Yet Toyota did nothing. Instead they blamed their customers, saying they were resting their floormats on the gas pedals.

On May 18th, Toyota finally faced the wrath of the federal government. Its “punishment”: a paltry $16.5 million fine, not one cent of which went to the victims or their families. The fine, which amounted to a ridiculous 5.5 percent of its 2009 profit, went into the U.S. Treasury’s general fund—in other words, to kill Afghans and Iraqis.

Available to Congress and the President is a far more appropriate punishment: nationalization without compensation. Toyota’s American operations ought to be seized and operated by the federal government. The top officials of the parent company in Japan, whose willful negligence murdered at least 16 American citizens, ought to be extradited and face trial in U.S. federal court.

Extreme? Expropriating private property is commonplace—when the target is Joe and Jane Sixpack. Just ask hundreds of homeowners of New London, Connecticut. When the city destroyed an entire neighborhood to build a luxury office development, the U.S. Supreme Court backed them up, radically expanding the concept of eminent domain. Unlike a lot of evil corporations, those homeowners didn’t do anything wrong.

The U.S. government has not only the right but the duty to take over criminal corporations.

A 5.5 percent fine is a slap on the wrist. Nationalizing a company, on the other hand, protects the public interest. Hitting corporations in the balance sheet is a genuine deterrent to the managers of other companies contemplating lawless behavior. It brings in significant cash assets that can be used to compensate the victims of the company’s criminal activities.

Nationalization can also serve the interest of public safety. The mine explosion that left at least 25 coal miners dead in West Virginia earlier this year left members of the public feeling helpless and frustrated at the slow and inept rescue attempt by Massey Energy, the site’s owner and operator. Setting aside the obvious argument that natural resources ought to be exploited for the benefit of the American people rather than private businesspeople, the rescue operation would have benefited from the involvement of top experts at such government agencies as the Army Corps of Engineers.

In 2009 the Upper Big Branch mine received 450 safety violations. Massey Energy paid the U.S. Mine Safety and Health Administration less than $1 million total. That’s less than one percent of its annual profits. That’s roughly $2,000 per violation.

If you get caught speeding in Virginia, you’ll pay more than what Massey Energy pays for deliberately risking the lives of its employees.

British Petroleum is spending $6 million a day on its response to the explosion at its Deepwater Horizon oil drilling platform in the Gulf of Mexico. But that’s a drop in the bucket next to the cost that will be borne by the people of Louisiana, Alabama, Mississippi and Florida. The disaster is spilling the equivalent of one Exxon Valdez wreck into the Gulf every four days—and it’s been three weeks. Thousands of fishermen will be ruined. The tourism industry, already in trouble due to the economic collapse, will be devastated. The full extent of the ecological damage—dead animals and aquatic plants, huge dead zones devoid of oxygen—won’t be understood for years.

BP failed to ensure that a “blowout preventer” at the Deepwater Horizon would work in the event of an emergency. But their real crime was drilling for oil 5,000 feet down in the first place.

Here again, it’s easy to see how nationalization might help. Rather than wait for the clueless execs at BP to come up with a solution, a BP seized by the federal government (its American operations, anyway) would come under the jurisdiction of an organization that could assign experts from NOAA and the U.S. Navy, among other agencies, to stop the leak. After the leak is plugged, the publicly-owned former BP’s profits would help defray the costs of the cleanup and extend benefits to fisherman and other victims.

Imagine the possibilities. What if Too Big to Fail had been turned into Too Big to Resist?

As a nationalized asset Citibank, which received $306 billion in bailouts, would be worth $152 trillion to taxpayers. Goldman Sachs got $15 billion; they’re worth $70 trillion. Sell them off and no one would ever pay college tuition again. Or to see a doctor. Or we could give everyone a 50 percent tax cut. We’re a rich country—the problem is that out-of-control corporations are hogging the wealth.

Businessmen charter corporations for the express purpose of avoiding individual legal liability. Isn’t it high time we started holding criminal businessmen accountable?

(Ted Rall is the author of the upcoming “The Anti-American Manifesto.” His website is tedrall.com.)

COPYRIGHT 2010 TED RALL

Seven Suggestions for Newspapers

I’m on the road. On May 3rd I gave a talk at Wright State University. I showed my political cartoons, excerpts from graphic novels past and future, and something new I’ve been working on the last couple of years: two-minute-long animations for the Web.

But no one wanted to talk about comics. The first audience question was: “How can we save newspapers?”

That happens a lot nowadays. Never mind cartoons; people want to save the papers the cartoons run in (and, increasingly, used to run in). The Q&A session following my April 28th appearance at Philadelphia’s Pen and Pencil Club was dominated by the same “are papers doomed?” question. The thing is, the Pen and Pencil is the oldest press club in America. The audience included reporters and editors at the Philadelphia Inquirer and Daily News. I should have been asking them about the future of media. Then again, their minds were preoccupied. Both papers had just been sold to a new owner no one knew much about.

This newspapers-in-trouble thing is weird. Tens of millions of Americans still want them enough to pay for them. Yet circulation and revenues keep plunging. Normally, when demand exists for a product, it is possible to sell it at a profit. It’s hard to avoid the conclusion that poor management is at least partly to blame for the industry’s problems.

I tell my audiences: If I knew the answer to saving the newspaper business, I wouldn’t be talking to them. I’d be hanging out with Rupert and the other press barons, billing them millions for my sage advice. I certainly wouldn’t be watching my income plunge as my workload expands.

I don’t have answers. But I do have thoughts.

Here they are:

Embrace The New Yorker Theory. I hate The New Yorker. I hate its tone, I hate its attitude, I even hate its font. I can’t stand the cartoons. But I read the magazine anyway. Not because I’m a masochist. Because I live in New York, I’m a media person, and if I don’t read The New Yorker I’ll look stupid at parties. When you’re competing for reader dollars against millions of websites and thousands of publications, you need to become like The New Yorker: so essential that people will buy your product, not because they like it, but because they have to.

Assume smart readers. Editors think readers are dumb. They say so in private. And they make it clear by what they’re doing to newspapers: shorter stories, less coverage of international news, obsessive celebrity gossip, bland opinion pages, boring features. But editors are wrong. Anyone who seeks out and pays for a newspaper in 2010 is curious and intelligent by definition. Newspaper buyers are looking for challenging, deep analysis, not newsbytes that mimic the Internet (which they get for free anyway). Unfortunately, they’re not finding it. Which brings us to…

More analysis, less news. The evening newspaper and network TV nightly news are dinosaurs. Whether you read it online, on your iPhone, or heard it on the radio or from a coworker, by the time you get home from work you already know about the coup in Kyrgyzstan and who won the game. What you need now is someone to tell what it all means. Who is the new Kyrgyz president? How will the coup affect the war on terror? How do the playoffs look now?

With one exception, newspapers should stop trying to break news. They shouldn’t even summarize it. Papers can’t compete with online news sites. They should publish a daily version of what Time or Newsweek could be if they weren’t lame: lengthy analyses, complete with colorful charts and graphs, along with opinions all across the political spectrum.

In a way, this is the hardest advice for papers to follow. They’re set up to break stories and to confirm other outlets’ stories. For a forward-looking paper, out-of-work magazine feature writers might be a better fit than retooling someone who has been working the city hall beat.

The exception? Investigative journalism. Few online sites have the money or time to invest in unmasking the mayor as the corrupt bastard we all know he is. When written well, an exposé can be as riveting as a Robert Ludlum novel.

Stop sucking. Newspaper circulation began falling decades before anyone heard of HTML. The reason is simple: they got boring. Compare today’s paper with an issue from the 1940s, when the industry was at the top of its game. The differences are striking: lively prose, nice mix of high (in-depth analysis) and low (tons of comics and columns). Indian newspapers, still growing as the Web spreads in that country, even deploy cartoonists to illustrate news, thus jazzing up what would otherwise be merely another car crash story. Internet news and opinion sites have learned that people prefer brash, edgy and opinionated to bland and “safe.” (Actually, “safe” is dangerous. It’s a recipe for bankruptcy.)

Stop giving it away. It ought to go without saying that giving away content for free online was an obviously stupid idea when newspapers started it a decade ago. Inexplicably, they’re still at it. Stop it, idiots!

Charge more. As Peter Osnos writes in The Atlantic, the English-language paper Americans buy overseas offers a model for the future: when advertising dries up, charge readers more. “There is relatively little advertising in the [International Herald-Tribune], even less of course than before the crash. But there has never been all that much advertising. The key to revenue is a high cover price,” Osnos says. “In Italy, the daily costs €2.50 (about $3.40), and prices elsewhere are comparable.” Sound like a lot? Cigarettes are ten bucks a pack in Manhattan. “A newspaper specifically shaped for an audience of ‘elite’ readers,” as Osnos describes the IHT, should be able to charge four bucks. “It is eighteen pages of quality news and analysis, with extensive business coverage and enough cultural and sports news to be comprehensive rather than overwhelming.”

Sit tight. The buzzword de l’année is “curate.” Americans, especially those older ones who spend long hours at work and with family, will become increasingly disillusioned with the spin and disinformation that passes for news online and on a thousand channels. Soon they will yearn for someone to figure out what’s important, package it into a digestible format, and deliver it to them—i.e., to “curate” the news. And they’ll pay.

Oh, how they’ll pay.

Of course, it might take 10 or 20 years for people to decide that they’d rather have their news spoon-fed to them than to sift through crap online. But what else do newspaper publishers and editors have to do?

(Ted Rall is working on a radical political manifesto for publication this fall. His website is tedrall.com.)

COPYRIGHT 2010 TED RALL