Corporations and Public Health:
Profits Before People
Martin Donohoe
Am I Stoned?
A 1999 Utah anti-drug pamphlet
warns:
“Danger signs that your child may
be smoking marijuana include
excessive preoccupation with social
causes, race relations, and
environmental issues”
Corporations Dominate the Global
Economy
Almost 6 million corporations
90% of transnational corporations
headquartered in Northern
Hemisphere
500 companies control 70% of world
trade
Corporations Dominate the Global Economy
• 53 of the world’s 100 largest economies
are private corporations; 47 are countries
–Wal-Mart is larger than Israel and
Greece
The Stock Market
• The top 1% of Americans owns 51% of all
stocks, bonds, and mutual fund assets
• Consequences of Differential Stock Ownership
– Corporations are answerable to their
shareholders
– Governments are answerable (at least in
theory) to their citizens (either through
elections or revolutions)
Corporations
• Internalize profits
–$2.1 trillion (2013)
• Externalize health and
environmental costs
Corporate Taxation
• Corporations shouldered over
30% of the nation’s tax burden in
1950 vs. 8% today
• Nearly 1/3 of all large U.S.
corporations pay no annual tax
Corporate Taxation
• Big business claims that U.S. corporations pay
the highest corporate taxes in the world (35%)
• FALSE: The rate actually paid, after foreign
governments get their cuts, money sent to
foreign subsidiaries, loopholes, etc. = 2.3%
(U.S. Treasury Department); 17% for
corporations with assets over $10 million
Reasons for Inadequate Corporate Taxation
• Corporate tax breaks/loopholes
• Corporate welfare
• Cheating and under-payment common
Offshore tax havens shelter capital
• Up to $32 trillion estimated (1/3 of all global
wealth)
• $11.5 trillion in individual wealth
• U.S. GDP = $16 trillion
• Cayman Islands:
• Population 150,000
• Home to 92,000 corporations
Ugland House, Cayman Islands
18,000 Corporations Registered Here
Job Creators?
Corporate Taxation
• 2004: Bush administration offered temporary
tax holiday on foreign earnings
– $300 billion in profit repatriated
• 92% went to dividend payouts, stock
buybacks, and corporate coffers
• Only 8% went to R and D, new factories,
and hiring
Exorbitant CEO Pay
• Median U.S. CEO salary (for S and P 500
corporations) = $11.7 million (2014)
• CEO salaries up 997% since 1978
–Average worker pay up 11%
Exorbitant CEO Pay
• The average CEO makes 373X the salary of the
average U.S. worker (1960 - 41X)
– Mexico 45:1
– Britain 25:1
– Japan 10:1
– US Military: 20:1 (top rank : lowest rank)
– US ratio of average CEO to minimum wage
worker = 774:1
Minimum Wage ≠ Living Wage
• Federal minimum wage = $7.25/hr
– 18 states and DC have higher minimum
wages (Oregon = $9.10/hr, 2014)
– $10,423/yr for full-time job
• Real value down 42% compared with 1968
• Inadequate to pay rent, buy food and clothing
Minimum Wage ≠ Living Wage
• Increasing to $9.25/hr on Jan 1, 2015
• Movements supporting $15/hr (still
inadequate)
• Over ½ of nation’s basic public assistance
funds go to working families (substitute
for benefits, therefore, taxes support
corporations)
Solutions:
Living Wage
• Over 140 municipalities have adopted living wage
laws
– Including NY, LA, SFO, Seattle, Chicago, and
Philadelphia
• 15 states now have minimum wages that exceed the
federal requirement
• 10 states have passed pre-emptive laws forbidding
cities and counties from raising the minimum wage
Corporate PR Tactics
• Advertising
– “The art of convincing people to spend money
they don't have for something they don't need.“
(Will Rogers)
• Astroturf - artificially-created grassroots
coalitions
• Corporate front groups
• Corporate espionage: spying, bribes
Corporate PR tactics
• Invoke poor people as beneficiaries
• Characterize opposition as “technophobic,”
anti-science,” and “against progress”
• Portray their products as environmentally
beneficial despite evidence to the contrary
• Host all-expense paid educational seminars for
federal judges
Greenwash
• Public relations / ad campaigns
– BP invests $100 million annually in
clean energy = amt. it spends
annually to market itself as moving
“Beyond Petroleum”
Sponsored Environmental
Education Materials (Examples)
 International Paper
-“Clearcutting promotes growth of trees that
require full sunlight and allows efficient site
preparation for the next crop”
 Exxon’s “Energy Cube”
-“Gasoline is simply solar power hidden in decayed
matter”
-“Offshore drilling creates reefs for fish”
Sponsored Environmental
Education Materials (Examples)
• American Coal Foundation’s “Power from
Coal”:
– “The earth could benefit rather than be
harmed from increased carbon dioxide.”
Academics/Professional Organizations
Affected
• Increasing corporatization of academia
– ↑Private commercial funding of university
research
– Undone research
– Secrecy/Gag Clauses
– Corporate-sponsored harassment of
scientists
• For-profit colleges growing, marked by
corruption, high interest rates on loans to the
un- and under-qualified
Academics/Professional Organizations
Affected
• Dramatic decrease in tenured faculty, rise
in administrators
• Gagging of researchers at federal
agencies demoralizing, can affect
recruitment of quality scientists
Union of Concerned Scientists (2015)
The Media
• 5 corporations control majority of US
media (down from 50 in 1983)
• Extensive corporate-media links
• American Council on Science and Health
Global Warming: Controversial?
• Of 928 articles in peer-reviewed scientific
journals, none were in doubt as to the
existence or cause of global warming
• Of 636 articles in the popular press (NY Times,
Washington Post, LA Times, WSJ), 53%
expressed doubt as to the existence (and
primary cause) of global warming
Science 2004;306:1686-7
(Study covers 1993-2003)
Lobbying
• Approximately 40,000 lobbyists (11,781
full-time)
• Estimates of return on lobbying range
from $28 to $212 for every $1 spent
(higher values more likely)
• Return on campaign contributions for
elections for the most politically active
companies = $760 per $1 spent
Lobbying
• Federal lobbying groups spent $3.2
billion in 2014
• All single issue ideological groups
combined (e.g., pro-choice, antiabortion, feminist and consumer
organizations, senior citizens, etc.) spent
well under $100 million
Top-Spending Industries, 2014
•
•
•
•
•
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Pharmaceutical industry - $230 million
Business Associations - $163 million
Insurance industry - $151 million
Oil and gas industry - $141 million
Computers/Internet - $140 million
Electric utilities - $122 million
Campaign Cash and Lobbying
• Citizens United
• Lobbying promotes international noncooperation/isolationism
The alliance between GE Medical
Systems and NY-Presbyterian
Hospital
General Electric
• Ranked by Forbes as world’s largest company
(based on equal weighting of sales, profits,
assets, and market value)
• 2014 revenues of $149 billion
– Close to the GDP of more than 2/3 of U.N.
member states
2014 net after-tax profits of $15.2 billion
• Majority from overseas operations
General Electric
• Makes household appliances, lighting,
and medical equipment
–Plastics division, which produced
bisphenol A, spun off in 2008
• Produces jet engines and military
hardware
General Electric
• Charles Wilson (CEO of GE pre- and post-WW
II; helped oversee U.S. military production
during WW II):
– “The revulsion against war…will be an almost
insuperable obstacle for us to overcome. For that
reason, I am convinced that we must begin now to
set the machinery in motion for a permanent
wartime economy.”
General Electric
• Has built 91 nuclear power plants in 11
countries (including the troubled
Fukushima Daishi plants in Japan)
–Including 23 plants at 11 sites in U.S.
• e.g., Hanford
–¼ of GE’s US reactors found to be
defective
General Electric
• Operates coal-burning power plants
–Major releasers of toxic mercury
• Produces nearly 40 technologies used in
fracking
–Increasing investments in fracking
General Electric
• Operates a large financial services group
– Responsible for over 50% of company’s profits in
recent years
– 2015: company plans to sell off majority of GE
Capital (now Syncrhony Financial) over next 2
years
– Under investigation by the Justice Department for
over potential bankruptcy violations
General Electric
• Until recently, owned 49% of a multibillion dollar media empire
–Including NBC, Telemundo, and
Universal Studios
–Comcast owned 51%; bought out GE in
2013
GE’s History
• Conducted unethical human subject
experiments on prisoners, involving
testicular irradiation, from 1940s to
1960s
• Intentionally-released excessive radiation
from its Hanford, WA nuclear reactor in
the 1980s, to determine how far it would
travel
GE’s Record
• Sued radiologist who brought to light dangers
of GE’s contrast agent, Omniscan
– Causes nephrogenic systemic fibrosis (FDA black
box warning)
• Ordered to pay $11.4 million to Bracco
Diagnositcs for falsely/misleadingly claiming
that its x-ray contrast agent Visipaque was
superior to BD’s Isovue
GE’s Record
• America’s largest corporate polluter
• 116 Superfund sites nationwide
• Approximately 13 in NY
GE’s Record
• Between 1947 and 1977, two of its capacitor
manufacturing plants dumped at least 1.3
million pounds of PCBs into the Hudson River
– Probable human carcinogens with adverse
effects on liver, kidney, nervous system, and
reproductive organs (EPA)
– 200 mi of Hudson = Superfund site
GE’s Record
• Eliminated 34,000 US jobs between 2000
and 2010
• Added 25,000 overseas jobs over same
period
–One of nation’s top out-sourcers of
jobs
GE’s Record
• Cited by Human Rights Watch for
“systematic workers’ rights violations” in
the U.S. and abroad
• Extensive record of tax violations,
military procurement fraud
GE CEO Jeffrey Immelt
• 2014 total compensation = $37.2 million (up
from $25.8 million in 2013)
• Named “World’s Best CEO” in 3 separate
Barron’s polls
• 2006 - 2011 - On Board of NY Federal Reserve
Bank
GE CEO Jeffrey Immelt
• 2008 – Named one of the “100 Most Influential
People in the World” by TIME Magazine
• 2009 - Appointed by President Obama to his
Economic Recovery Board
– GE then became eligible, via a loophole, for ¼ of
the $340 billion Temporary Liquidity Guarantee
Program (debt support)
GE CEO Jeffrey Immelt
• 2011 - Appointed by Obama as Chair of his
outside panel of Economic Advisors and of his
Council on Jobs and Competitiveness
• On the board of directors of “The Robin Hood
Foundation”!
GE’s Record
• Named “America’s Most Admired
Company” by Forbes
• Named one of the “World’s Most
Respected Companies” in polls
conducted by Barron’s and The
Financial Times
Concerns About the Agreement between GE
Medical Systems and NY-Presbyterian Hospital
(2003)
• Provides GE with financial incentives to
promote high technology purchases
• Hospital prohibited from purchasing
more effective equipment from other
companies
Concerns About the Agreement
• Augments trend in academic medical centers
to promote the use of expensive, hightechnology care at expense of preventive care
and public health measures
– Highly reimbursable
– Services may be redundant in certain
locations
Concerns About the Agreement
• Patients with developmental anomalies
and cancers caused by GE’s pollution
diagnosed with GE scanners and treated
with GE-manufactured therapeutic
devices, increasing GE’s profit
A macabre twist on “cradle to
grave care”
Health Insurance Industry
• Dubious practices:
– Delisting
– Cherry picking
– Pre-existing conditions
– Limiting coverage of medications for high cost
illnesses
• Often lower quality of care
• High administrative costs
– 15-30% (vs. 2-3% for Medicare and Medicaid)
Health Insurance Industry
• Large profit margins
• Loyalty: shareholders (not patients)
• Corruption
Drug Companies’ Cost Structure
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•
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Manufacturing – 35%
Marketing – 27%
Profits (after taxes) – 18%
R and D – 13%
Taxes – 7%
Pharmaceutical Industry
• Only 10% of new drugs treat lifethreatening conditions
• 90% of new drugs little or no better than
pre-existing agents (or cause harm)
• Thus only 1% of new drugs “life-saving”
Pharmaceutical Industry
• Pay-for-delay costs consumers and
taxpayers $3.5 billion in additional drug
costs/yr
• Over 40,000 drug-related deaths not
reported to FDA, as required, over last
decade
Pharmaceutical Industry
• Influence over physicians through control of
CME, gifts, research funding
– Over $3.7 billion to at about 366,000
physicians and 900 teaching hospitals in 2014
(excluding research funding)
– Physician Payments Sunshine Act –
reporting requirements
Pharmaceutical Industry
• Conduct seeding trials to alter prescribing
patterns
• Secrecy, statistical torturing of data sets,
selective publication
• Data mining of prescribing practices
• Unethical trials in developing world
• Poor compliance with Clinical Trials Registry
rules
Drug Company Malfeasance
• The pharmaceutical industry is the biggest
defrauder of the federal government, as
determined by payments made for violations
of the federal False Claims Act (FCA)
– Accounted for 25% of all FCA payouts
between 2000 and 2010
– Defense industry – 11%
Pharmaceutical Industry
• $240 million dollars spent on lobbying in
2011
–2.3 lobbyists for every member of
Congress
–Revolving door between legislators,
lobbyists, executives and government
officials
Pharmaceutical Industry
• Effectively lobbied and threatened trade
sanctions against developing countries in
order to prevent production and
importation of much cheaper, generic
versions of life-saving anti-AIDS drugs
• Patent extensions
• Promotion of agricultural antibiotic
overuse
PPACA
Patient Protection and Affordability Care Act
• Career arc of Elizabeth Fowler (architect of
plan):
– VP for Public Policy and External Affairs (informal
lobbying) at WellPoint (nation’s largest insurer)
– Chief health policy counsel to Senator Max Baucus
(who drafted legislation)
– Head of Global Health Policy at pharmaceutical
giant Johnson and Johnson
Other Areas of Corporate Malfeasance
• Military-industrial complex
• Energy and chemicals industry
• Law enforcement/prison-industrial
complex
• Payday loan industry
• Genetically-modified crops/biopharming
• Breast milk substitutes
Solutions
• Restructure tax system
• Improve regulation of banks (e.g., enforce Dodd
Frank law)
• Punish corporate scofflaws with large fines and jail
time
– Hide no Harm Act (pending in Senate) would hold
corporate officers criminally accountable if they
knowingly concealed serious dangers that led to
consumer or worker deaths or injuries
Solutions
• Increase enforcement budgets to combat
corporate crime
• Eliminate confidential legal settlements and
confidential business information relevant to
public health and safety
• Eliminate mandatory binding arbitration
clauses
Solutions
• Living wage laws
• Work with corporations
–Benefit corporations
–Healthy PR
–Shareholder activism
–Risks/benefits
Solutions: Fair, Representative Elections
• Publicly financed campaigns and campaign
finance reform
• Overturn Citizens United
• Proportional representation
• Instant runoff voting
• Halt disenfranchisement, overturn voter
restriction laws
• Vote
Solutions
• Activism / Letter writing / Protesting /
Whistleblowing
• Work in groups
• Lobby legislators
• Run for office
Solutions
• Increase funding of public education
• Independent scientific review of school
curricula
• Prohibit use of sponsored curricula
Solutions
• Establish safeguards re corporate
involvement in academic research
• Higher standards of journalism
• Support alternative media
Solutions
• Augment and improve international aid
package
– 0.9% of the total federal budget, 1.6% of the
discretionary budget
– Charitable giving approximately $250 billion/year
(2.5% of income vs. 2.9% at height of Great
Depression)
• Sign, ratify, and adhere to major international
treaties
Solutions
• Based on Precautionary Principle
• Recognize nature’s net worth
• Measure prosperity based on Genuine
Progress Index or Global Happiness
Index, rather than Gross Domestic
Product
• “All men are created equal”
–Declaration of Independence
• “Some people are more equal
than others”
–George Orwell
Voltaire
“The comfort of the rich rests
upon an abundance of the poor”
Hudson River, 2009
Primo Levi
“A country is considered the more
civilized the more the wisdom and
efficiency of its laws hinder a weak
man from becoming too weak or a
powerful one too powerful.”
Günter Grass
“The first job of a citizen is to
keep your mouth open.”
African Proverb
If you think you are too small
to have an impact, try going to
bed with a mosquito in your
tent
Contact Information and References
Public Health and Social Justice
Website
http://www.publichealthandsocialjustice.org
http://www.phsj.org
martindonohoe@phsj.org