Recent events have shown that a corruption culture has taken hold of the dominant corporate business community and their allies in American politics. The corruption culture threatens both our economic way of life and American Democracy.
The criminal charges filed against Republican House Majority Leader Tom Delay, the insider stock trading investigation of Senate Republican Majority Leader Bill Frist, the huge increases in energy prices as a result of deliberate market manipulation of supply by oil refineries and the White House aides (Karl Rove and Cheneys Chief of Staff Libby) role in outing a CIA agent for partisan political reasons have it clear that corruption by the powerful is out of control. The intentionally created California electric energy crisis of Bushs first term, the MCI-Worldcom frauds, the Enron frauds, the charges against Ohio Governor Taft, the criminal trial of former Illinois Governor Ryan, the voter intimidation tactics used by the Republican Party in Ohio and elsewhere are all strong evidence that America is facing a breakdown in business ethics and political commitment to American Democracy.
Americas crisis has two related parts. We have a runaway greed problem in Corporate business circles that has spilled over into American politics and government. The growing financial power of corrupt corporations has helped the most ruthless politicians obtain political power and virtual control of American government at most levels. The power lust in political circles is as strong as the money lust in Corporate business circles. The two have merged in the Bush Republican political machine.
Our Corporate business leaders are following a business ethics approach of charging all the market will bear prices. The concept of a reasonable rate of return on investment has been largely abandoned in less than a generation. The difference in the two approaches to business is critically important and relate to the corrupting influence of corporations in American politics.
An all the market will bear approach does not take into account serving the public good. Private financial gain trumps every other consideration. Our Founding Fathers required that corporations had written in their charters serving the public good as their first responsibility even before making profits or serving stockholder interests! Maximizing profits were not their primary mission or reason for existence. The greed is good code of business ethics is a fairly new and growing cancer on the American economy. Our current Corporate business leaders are not committed to serving the public good enough to even follow our laws or common standards of decency in many cases.
Most oil refineries receive their supplies of crude oil on long-term contracts at prices below or around $20 a barrel. The media has been pushing to the public that oil is trading on the futures market around $60 a barrel. The media has failed to publicize that most oil is not subject to trade in the futures market. The futures market is often known is often known as the spot market and reflects a very tiny amount of the crude oil bought and sold worldwide outside of low priced long-term contracts.
Oil refineries are making operating profits in the 265% range on their products at current prices. These profits are far in excess of a reasonable rate of return. It is questionable if current prices and operating profits are higher than the market can bear in the long run. Reasonable Americans would consider 265% profit margins as price-gouging.
The federal government is currently controlled by oil company interests in the form of Bush Republicans. Under the Bush Republicans, many of the largest oil companies have been permitted to merge in recent years. Chevron and Texaco are no longer competing with each other. Phillips 66, Conoco and Unocal are in the same situation. BP and Amoco are no longer competitors. The oil industry mergers have greatly reduced competition for their products which are considered in economic terms relatively inelastic.
The inelastic economic term means that demand does not fall quickly when prices rise because consumers cannot reasonably do without the inelastic products regardless of price. Without fuel, goods and services cannot reach consumers, stores or businesses. Without fuel, workers cannot get to their jobs. Without home heating oil and natural gas, Americans will freeze to death. Industries that supply inelastic products should be heavily regulated by government to stop price gouging and to foster a competitive business structure in order to hold down excessive profits and prices.
The reasonable rate of return standard should be mandated by law if necessary. In extreme cases where Corporate behavior hurts the national interest and national security, government should even consider taking complete control of these industries. They should be taken out of irresponsible private hand and operated on a governmental, non-profit basis. The American people should come before private profits.
The Delay case shows how in debt the Bush republicans are to Corporate money. Delay seems to have illegally used Corporate money to buy control of the Texas state legislature. The bought state legislative Republican majority then created new safe Republican Congressional seats in a legally questionable manner. These safe new Republican seats have given Republicans a near lock on control of Congress for years to come. The entire process is corruption leading to even more corruption. Legal or not, the entire Delay operation was ethically and morally corrupt!
The Texas Republican Congressional seats thus created will be filled by Bush Republicans representing Corporate interests. The entire Delay re-districting process turned 200 years of American political tradition on its head. The traditional process was essentially ignored in order for the Bush Republicans and Corporate forces to seize power. Campaign financing laws seem to have been deliberately ignored. Money and power were all that really mattered to Delay, the Republican Party and the corporations who financed the whole operation.