Nike’s recent coup d’état to secure itself a virtual exception from paying anything close to a reasonable tax rate for up to 30 years on large scale developments — no matter what fiscal conditions emerge in the future — marks a significant departure from the way big money usually influences state policy.
As if corporate interests didn’t have enough influence in government through back-room deals, lobbyists, campaign contributions, the revolving door, and front groups like the American Legislative Exchange Council, Nike openly and flagrantly signed its company name to a not-so-veiled threat against the State and its embarrassingly pliant lame-duck legislature: “Give us what we want right now or we’ll take our secret jobs to another state!” Because numerous articles have already laid bare Nike’s economic excesses and bad corporate citizenship — like their already astonishingly low tax rate, outrageously high executive compensation, and off-shore tax havens – I am interested in exploring a narrative that extends beyond the debate around tax policy and into questions of what we actually mean when we use the words “democracy” and “representation” in local and state politics. Rather than an exception to otherwise decent policymaking, I see this Nike tax deal as a prime example of a disturbing trend where public process is relegated to something barely more than a formality between the narrow desires of the wealthy and their eventual satisfaction.
Despite Oregon’s progressive reputation, the last few months have shown that we are on the verge of becoming a state where large corporations can simply invent a crisis (or just invoke the word “JOBS” in light of the current economic desperation) and demand whatever concessions they want. In addition, it has become possible that coal will run down our rivers and railways as a “green” state opens the gates to climate suicide, our public water will be sold to private firms so they can sell it back to us at upwards of 10,000 times the price of a gallon of water, and we will waste tax revenue on a bridge that will increase sprawl when we should be developing sustainable cities. In short, the inconceivable became conceivable almost overnight as the veil of progressivism was lifted to reveal a political machine apparently unwilling to oppose bad policy or offer any new ideas in the age of austerity.
As citizens, we’re continually bombarded with all manner of crisis rhetoric, which is largely presented uncritically by the media. Of course, this is exactly the dynamic that Naomi Klein identified and documented in The Shock Doctrine: when powerful interests want something that is unpopular, they wait for or create a crisis, and opportunistically push the agenda while everyone is distracted and/or scared.
That is how the shock doctrine works: the original disaster—the coup, the terrorist attack, the market meltdown, the war, the tsunami, the hurricane—puts the entire population into a state of collective shock. The falling bombs, the bursts of terror, the pounding of winds serve to soften up whole societies much as the blaring music and blows in the torture cells soften up prisoners. Like the terrorized prisoner who gives up the names of comrades and renounces his faith, shocked societies often give up things they would otherwise fiercely protect. Jamar Perry and his fellow evacuees at the Baton Rouge shelter were supposed to give up their housing projects and public schools. After the tsunami, the fishing people in Sri Lanka were supposed to give up their valuable beachfront land to hoteliers. Iraqis, if all had gone according to plan, were supposed to be so shocked and awed that they would give up control of their oil reserves, their state companies and their sovereignty to U.S. military bases and green zones. (p. 17)
Nationally, we see one crisis materialize in the form of the fiscal cliff debate, which, but for extreme public outrage looked as though it would be an excuse to chip away at the last of our social safety net and, though far better than it could have been, still found a way to end with all sorts of corporate welfare. However, because the deal all but ensured a repeat of the debt ceiling crisis very soon, and Obama has revealed a willingness to negotiate on everything, we can expect the safety net to be a bargaining chip again when the next emergency is declared. One of the most audacious uses of crisis preceded the TARP bailout where we couldn’t even attach conditions to the funds, like “don’t use this $800 billion to pay yourselves bonuses”, because we had to act quickly or the world economy would collapse. It seems that each crisis to justify giving up more of our democratic power, social benefits, and civil rights to the richest people to have ever existed is more ridiculous than the last. We can’t know what pressing crises we will face in the future, but we can be pretty sure that we will have to make the poor and working classes give up more to fix them.
For Nike, Kitzhaber, and the state legislature, the invented crisis was the fragile emotional states of Nike’s executives, who weren’t feeling confident enough about the future of tax policy in Oregon to commit to a capital investment in the state. Nike provided the public with no evidence of why their insecurity required such urgent action and simply demanded that the government bend to its will. Is it not ridiculous that Nike, the world’s largest apparel company, can produce multi billion dollar advertising campaigns to create a brand identity around competitive themes like confidence, risk-taking, and toughness while simultaneously conjuring up a state emergency out of a lack of investment confidence? It is nice to imagine these extraordinarily wealthy analysts, lawyers, and executives shaking and quivering with uncertainty about their future in their gaudy global headquarters; however, since Nike was threatening to invest in another state if it demands weren’t immediately met, perhaps it is more accurate to highlight their clear-cut strategy: economic extortion. This threat was, for a Democratic legislature, enough to abandon due process — the rock on which the legitimacy of liberalism rests — on an issue of enormous consequence for the future. One wonders what this institution is good for if we can’t have adequate process on the most important decisions. If all you have to do is make an economic threat and the government will capitulate (and simultaneously issue half-hearted and wretched rationales for it), why does this institution exist at all?
Not only is calling a lack of confidence an emergency an outright absurdity (especially in a time period where plenty of actual crises have presented themselves in the last few months), it reveals a deep cynicism within corporate capitalism and the relation of these overgrown institutions to the government. Our democracy is so broken that this type of secret, preferential treatment is completely legal and according to Nigel Jaquiss, quite normal. In fact, such subsidies, tax breaks, picking up the tab on externalities, etc. provide the only possible way in which American capitalism can remain so profitable. The public domain is simply transferred into the coffers of private industry, but we haven’t seen the openness with which this type of corruption is perpetrated since before the Great Depression. At least the conservatives occasionally call it crony capitalism. In Oregon, the Democratic Party’s elected officials apparently celebrate it as good governance. As Brendan Monaghan accurately put it, passing the law put “Democrats in the awkward position of owning the label as the party of corporate welfare. More important, they implicitly conceded that lower taxes do, in fact, stimulate business growth.” This is not the only time in recent months that elected Democrats have about-faced against purported party positions.
For some perspective, compare the response of Kitz and the legislature to an actual crisis that is already wreaking havoc around the globe: climate change. Keep in mind that the State of Oregon wholly accepts that climate change is real and has committed to doing something about it. At present, at least two major developments stand to strongly impact climate change: coal export terminals and the Columbia River Crossing. Northwest coal exports, if they are allowed, are actually projected to contribute more carbon dioxide to the atmosphere than the contents of the (actively delayed) Keystone XL Pipeline and, in no uncertain terms, represent a commitment of our civilization to climate suicide (as do all major fossil fuel developments including oil and natural gas). With the size of this emergency, you would almost think it fortuitous that Oregon, as such a green state, has the power to stop or significantly impact its chances simply by denying the terminal permits (though there are plenty of other ways it could be stopped). Here, Kitzhaber has a virtual veto and yet the public process goes on with the Oregon Department of Environmental Quality routinely telling packed public forums that they refuse to even consider climate impacts of the exports and won’t take into account the fact that Ambre Energy has already lied to Washington regulators about its proposed developments. (“We won’t hold it against them”, DEQ says.) Furthermore, the DEQ has limited its inquiry to such a narrow scope that it seems almost inevitable that the permits will be granted. Similarly, Kitzhaber and the Oregon legislature have revived an unpopular (and what seemed dead) CRC development proposal despite the fact that to meet our climate goals we need to be drastically reducing, not increasing, the use of the automobile. So much for our commitment on that front!
So why does the location of a manufacturing facility, a relatively routine business decision, receive an emergency legislative session while a huge opportunity to do our part to to stop a global crisis goes not only ignored, but boldly repudiated? The answer is almost too obvious: money owns our government and the electoral process, both parties have accepted the neoliberal worldview, and no one with any ideas or imagination for a new economy can challenge this hegemony from within the system. Instead, the idea that the public good is synonymous with the economic good, as defined by the success of very narrow set of monopoly and individual interests, dominates our political system. If democracy and community interests get in the way of this ideology, as they often do, they are seen as dispensable.
In Oregon, the long-standing legislative power for representatives to decide tax policy has been deemed inconvenient, so it must be sacrificed to the altar of new economic developments. However, there is already talk of extending this “tax certainty” to businesses that might simply threaten to move existing operations if they aren’t guaranteed a permanent tax rate. And, under the ideology that Oregon Democrats have signed on to, why shouldn’t they? If it’s good enough for Nike, why shouldn’t every business enjoy a permanently low tax rate to ensure maximum investor confidence? What arguments will the Democrats be able to make with a straight face after this deal? Only Nike deserves this treatment? Only new facilities require exceptions to the rules? If so, how is that justifiable? What if Nike, or anyone else big enough, demands exceptions to environmental laws for new or existing facilities? The awful precedent has been set, blood is in the water, and I expect a lot more of these discussions to become very regular. The race to the bottom just shifted into high gear.
Of course, not everyone is as torn up about the final stages of gutting our already ineffective democratic institutions as I am. To others, this is just reality. Sal Peralta described the “realist’s” position in a comment in Val Hoyle and Jules Bailey’s article in support of the bill:
With respect to the public policy involved… welcome to the new normal with respect to dealing with massive corporations. The fact is that companies that take in billions in revenue and employ thousands of workers have a great deal of leverage over state & local governments, and if Oregon doesn’t want to sit down at the negotiating table with Nike, jurisdictions in other states will be more than happy to fill that void.
It is important to understand where we are going if we allow exceptions to the rules and bind ourselves from regulating or taxing large businesses. It’s important to note that when we make these commitments via contract, unless there is some legal basis for invalidation that I’m not aware of, we are Constitutionally bound to abide by these decisions. Not even an initiative to amend the Constitution could overturn these contracts.
It is also important to understand the relationship of the corporation to nation-states in the the larger context of “free trade” and globalization. These types of special rules for transnational corporations already exist in so-called developing countries. I have personal experience with legal formulations for exemptions called special economic zones (SEZs are also referred to as free trade zones, export promotion zones, or other names depending on the specific country and technical rules) that have been normalized all across Asia and the Indian subcontinent. Simply put, transnational corporations strong arm sovereign nations into creating geographical zones that become exceptions to the general laws, rules, and regulations of the larger state apparatus. This generally means lowered or no taxes, embarrassingly weak environmental or labor standards, no export duties, etc.; anything and everything to maximize the profit of the corporations. It should come as no surprise that Nike already receives special treatment internationally as many of its sub-contracted production facilities in China, India, Taiwan and elsewhere are located in SEZs. (Subcontracting out its sweatshop operations is also a way that Nike can make claims that its employees earn average salaries of $100,000.) “Qualifying investment contracts” appears to be Nike’s mechanism for weaseling similar exceptions into the norms of Oregon governance.
The international trade and globalization angle is also extremely important for understanding the consistent stagnation in the wages, decline benefits, and decay of social protections of the American working class over the last 40 years — papered over by the mass extension of consumer credit and the crushing debt that accompanies it. As a result: (1) corporations have enjoyed extraordinary profits and the wealthy a greater share of the pie, (2) massive advances in science have been used for social control and simulation technologies rather than those that might give us time to experience more independence and a higher quality of life, and (3) mass society has refused to take meaningful (well, any) measures to interrupt the consumer-cult death march toward global environmental catastrophe.
Consider that the Nike demand on Oregon is on the same order of significance as the attempted elimination of collective bargaining in Wisconsin and the so-called right to work law that just passed in Michigan. Superficially, the Nike deal differs as it is not directly attacking union rights, but instead the revenue stream, which is the source of what funds public employees and their unions. Indirectly, this strategy provides organized capital with an increased ability to lower labor standards and bust the rights and power of labor unions and unorganized workers. When corporations refuse to pay taxes and demand more out of the public coffers, revenue for schools, public employees, regulatory agencies, and pretty much the whole New Deal social safety net disappears as we have to cut, cut, cut. Indirectly, again, more people are unemployed as the wealthy hoard more money or invest some of the money in jobs that will pay far less and give fewer benefits than unionized employment. In practical terms, this trend has been developing for quite some time and the era of American exceptionalism — where a certain portion of this society, the so-called middle class, got to have its cake on the backs of the rest of the world and eat it too – is already over; but most of us just haven’t received the memo yet. As with most problems, the first step is in admitting its full extent. In this case, it’s understanding that within the social realities we’ve created in our society through the capitalist experiment, the working class has almost no institutional power to make change. (A few resources that are indispensable for understanding this history are David Havey’s A Brief History of Neoliberalism, Leo Panitch and Sam Gindin’s The Making of Global Capitalism, Chris Hedges’ the Death of the Liberal Class, and of course, Howard Zinn’s A People’s History of the United States.)
Despite the eruption of a domestic and international resistance to the continuation of this order (brutally repressed in the US by a public/private security-state alliance), the mainstream political dialogue has not shifted except to re-appropriate the language of class war in order to win elections before continuing on a path of austerity – preferentially taking care of the interests of the wealthy in an era of supposed economic crisis. It remains to be seen whether this last round of elections — in which the ideal candidate of the 1% was thoroughly repudiated — will produce bodies that continue to capitulate to extortionists, scramble for positions of authority that are accepted as subordinate to corporate power, sell off the rest of the public domain so it can be sold right back to us in the new incarnation of the company store, continue to make excuses for why we can’t do anything substantive even when “we” win elections, and watch the environment go into free-fall collapse. Call me a skeptic, but I think it’s going to take a little bit more than elections to influence a change of course.
Though I refuse to accept the inevitability of economic and environmental collapse, I also don’t desire to engage in wish thinking or half-heartedly invoke the fantasy of the inevitability of progress. Instead, I want to continue to develop and articulate a vision to utilize remaining institutional power to transition to a system of greater self-determination for human individuals and communities while utilizing technology to achieve actual sustainable cities and trade networks instead of the same ol’ crap in a greenwashed package. Much work needs to be done on the policy side, coalitions need to be built and nurtured, but we first need to orient ourselves in a state of mind that refuses to go along with the popular “wisdom.” We must identify the real emergencies instead of allowing ourselves to be scared into the neoliberal vision of completely unregulated capitalism. Rather than scrambling to protect and further swell the bank accounts of the already enormously wealthy, perhaps we might find other issues more worthy of our immediate attention. Here are a few that seem more crisis-like to me: climate change, the destruction of the public K-12 and university system, the decay of the social safety net, the lack of affordable and readily available health care, ever-increasing food and energy costs, a child mortality rate that is highest among wealthy nations, immense consumer debt, the attack on unions, having 1o times as many empty houses as homeless people (while we create even more with the scary pace of foreclosures and evictions). Adding campaign finance reform as a priority would also make it much easier for any body to concentrate on the issues that real people face.
The time is ripe to form the elusive labor, social, and environmental sustainability coalitions that would instantly serve as a game changer in terms of the political power of the working class and thus, terrify the corporate oligarchy even more than Occupy did. Here, I’d like to invoke the spirit of Rebecca Solnit’s recent article in The Nation which boldly articulated a commitment to the fight against climate change and listed some excellent examples of organized resistance to the course of destruction on which we are headed. 2011 was the year of the global uprising. 2012 saw a continuation of resistance and cultural evolution, despite the fact that it was largely ignored by the mainstream media and established power. 2013 is Year 0; the year we say no more to the exploitation of mind, body, community, and environment while we audaciously forge a new way forward.
At least one citizen group, Solidarity Against Austerity coalition (many of who worked furiously to forge at least some public opposition to the Nike deal) will meet on Jan. 5, 5 PM — location TBA (but will be updated on the Facebook event page ASAP — to discuss next steps. Nike’s actions will take center stage in the agenda.
Also, this great interview with Chris Hedges and Richard Wolff deals with issues around austerity and global capitalism.