reading

EVOKE – exploring the societal effects of technology in a fictional context of the near future

Letters from Ceilia – an intimate story of a career woman’s struggle in a world run largely by men

The Island – situated in duck-hunting country where two strong men clash in a conflict over land

The Dark Side of the Moon – five books of political and social commentary on America’s recent history

Dick Cheney’s Fingerprints – a collection of observations focusing on the Iraq war and its origins

The Smell of Tweed and Tobacco – poems spanning relationships and life in Prague

Corner of My Mind – a more introspective collection also discussing the writing process

Broken Pieces – a mosaic of reflections about nature, hunting, travel, politics and life

Colors – a one-act stage play, winner of 1999 Pennsylvania Playhouse competition

Jim Freeman was born in Evanston, Illinois and now lives and writes in Prague. His work has been published in a number of newspapers, magazines and anthologies. His current political and social commentary is available at www.dark-side-of-the-moon.com

Examples of poetry and fiction as well as plays and travelogues are available at www.praguewriter.com

For print editions of all Jim’s books please visit Amazon, for available e-book formats and to contact Jim, see the author’s website at www.jim-freeman.com

²“A chop shop is a slang phrase for an illegal location or business which disassembles stolen automobiles for the purpose of selling them as parts. It may also be used to refer to a location or business that is involved with the selling of stolen goods in general, or a brokerage that sells non-existent equities, both fraud and stolen goods.”

Tearing down a car, a corporation or a society is an amazingly similar process, much like rendering a pig. Pigs are worth far more as chops and bacon than they are on the hoof. There’s a pretty direct comparison between a 2008 Mustang that’s not been moved from its parking space for weeks and a company whose stock price is similarly marooned, with dust, leaves and twigs all over its corporate windshield. They become targets, the Mustang falling victim to a local gang-run chop-shop and the doldrums³ company to a Carl Icahn or an Ivan Boesky. The mob guys maximize value by separating transmissions from chassis.

Essentially, a Carl or an Ivan does the same thing. Sparks fly and value gets maximized. Similar turf-wars ebb and flow as in the Mafia, but in Carl’s world the food is better and fewer participants end up discovered in the trunk of a car abandoned at the airport. For the uninitiated, it runs a good deal like this;

There are variations as complex and fascinating as the mind of man. But the result is almost inevitably short-term profit at the expense of long-term assets. Burning down the house, piece by piece, may create a decade or more of warmth, but in the end it’s still an ash heap. Mitt Romney may well be President of the United States by the time this book hits the press, but his work at Bain Capital made him very rich in just this game.

There’s a well-known and predictable pattern to this game. Early days may be quite clandestine, but after that, the remainder is wide open to both public and press. In fact, publicity is a necessary ingredient. It’s such a well known and successful scam in corporate boardrooms, that some of the big names like Carl, Ivan or Kirk are regularly offered a significant hunk of dough just to pack their bags, sell back their stock and steal (no pun intended) silently off into the night. ‘Greenmail’ is the newly coined expression, go-away money that is as effective as blackmail, but without the social stigma.

We hail these speculative corporate surgeons as clever, but this was once called extortion and less well-connected were sent off to jail for it. Neighborhood thugs, who threaten to throw a brick through the jeweler’s window unless they’re paid off, are merely small-time Boeskys, Icahns or Kirkorians. But there’s a crucial difference. The former go to jail, the latter to a home in the Hamptons on weekends, chuckling over the pig they’ve just butchered.

In 2006, Kerkorian, the French and the Japanese were about to barbecue General Motors and call it a three-way alliance. Which is pretty much the same as calling those ribs, simmering on the backyard grill, an alliance with the pig. Kirk Kerkorian pulled his chair up to the table and tucked in his bib. It’s long been apparent how much Kirk values the American car industry (or anything for that matter with potential in its stripped value).

The man runs a corporate chop-shop, where everything is worth more in bits and pieces than as a going, job and product producing whole. That’s an elegant corporate truth to most of the raiders, who value earnings maximization over pride, tradition, innovation and superiority of product. There’s only long-term value in that and these are all short-term guys.

In fact, we have become a short-term nation and a huge part of the reason is fear of attack by a corporate raider out there hiding in the weeds. Stock-price is the corporate mantra and stock-price depends upon quarterly earnings. CEOs spend far more time devoted to meeting earnings expectations than they do to the care, maintenance and long-term welfare of their companies.

They have to. Several bad quarters and they’re out on their ass, with a severance package and a stack of unearned stock options. CEOs were once in place until retirement age and those days are not so long gone.

It follows that longevity requires care about the long as well as the short-term health of a company, plus a ‘feel’ for the firm that can only be acquired over time. Over the past three years, the average tenure of a corporate CEO has shrunk from 8 to 6 years. Hence, they are scared; they are exploitive and constantly have their eye on the time-clock, anticipating their next job. More on that later.

So, the Kerkorian raid obscured itself behind the rhetoric of ‘alliancing’ GM up the ramp of the abattoir, where it was to be dismembered, swung up on hooks, stripped of its brisket (pension funds) and loins (union contracts) and roasts (research and development), shrink-wrapped in plastic and put back on the market. GM’s stock price, then staggering without direction or much hope, was frozen at approximately $21 per share. It’s easy to imagine the stock doubling or tripling once all those liabilities are history, along with a couple hundred thousand employees. All parties to the ‘alliance’ were well endowed with both stock and future options.

Thus it made excellent personal economic sense for all the players and, at the same time, was something that could be sold to the public as a ‘best case scenario,’ just so long as you weren’t a retiree or line-worker. And that’s why the Gm Board was zipping off by corporate jet to Tokyo and Paris while there still was a corporate jet. By and large, these were the same board members who had fed the GM pig for decades, petted it and encouraged its porcine ways until it was fit for nothing other than the slaughter-house. CEO Rick Wagoner was already history at this point, even though it would take three more years and some additional lost opportunities for him to slide on down the road. When GM’s only hope was an outsider with a hatchet, they’d unwisely turned to Rick as an insider, but the corporate culture was far too ingrained (and inbred) to change its ways.

CEO Rick Wagoner had paid his dues, coming to the company with a shiny MBA from Harvard. I have said many times (and will debate further in Chapter 8) that Harvard University has probably destroyed more of corporate America with its MBA program than any union or stretch of economic recession. Initially an analyst in the treasurer’s office, Rick can be forgiven for continuing to think GM’s problems were financial. They weren’t. GM suffered the double-whammy of giving away the store to the unions in good times and never understanding that the half-century old tail-fin era was gone forever.

Consider Wagoner’s curriculum vitae and by that, better understand the company’s demise;

There isn’t a single stop along the GM Stations-of-the-Cross that lets in even a faint breeze from the real world. It’s corporate-cocooning as art-form. The 14^th Floor at General Motors Headquarters was the problem at GM and never produced a savior, because a prophet was simply not possible in that corporate culture. These guys wore brown and white wing-tips and dreamed of the next big-engine, big-body, big-profit land-cruisers, twenty years after that horse bolted the race. Then they declared a dividend, played eighteen holes at Bloomfield Hills Country Club and attended one another’s cocktail parties. Meanwhile, the corporate party was nearly over, no matter that the band played on, without a drummer or lead vocalist.

It must have been frustrating, as well as infuriating, to see Kerkorian turn out to be the turd in the punch-bowl that upper-crust Bloomfield Hills GM execs could no longer ignore. This was once America’s greatest corporation and like Death showing up at an anniversary gala, there was Kirk over in the corner with a scythe, a very dry martini and a grin. Like Death, Kerkorian was inevitable. Described as ‘charismatic,’ Carlos Ghosn, CEO of the Nissan-Renault combine was Kerkorian’s pick to dismember GM and maximize shareholder profit, 10% of it belonging to Kirk. The scheme was to sledgehammer it between the eyes and carve up the choice cuts.

Judging by the contrails spewing behind the GM jet, its board was slathering to approve. And why not? Carlos Ghosn was the man to finally axe the company of which it was once said, “What’s good for General Motors is good for America.” In addition to Nissan and Renault, he sat on the boards of Sony and Alcoa and was called by some “the perfect example of a corporate executive working in today's multinational market whose multicultural experiences have taught him the importance of combining various cultural perspectives to do business globally.” Ghosn had taken Nissan (facing bankruptcy) in seven short years to Japan’s #2 automaker. He's a very rare non-Japanese national hero in that country.

Ghosn was born in Brazil, so that’s what it’s come to. Rick Wagoner cut his corporate teeth in Brazil for GM and now a Brazilian vaquero was called in to ride up from behind and knock him off his horse.

Full circle, even though the deal fell apart and GM staggered for another three years, dizzy but not dead from the blow between the eyes. Kerkorian dumped his 14 million shares of GM at $28.75 in late November of 2006 and silently folded his tent.

They stand like dusty-windowed cars on abandoned streets. The choices are virtually boundless among vulnerable corporations idling in stock-price neutral and essentially stranded in otherwise rising markets. One cannot but wonder, as these corporate raiders unfurl their morning paper and peruse the possibilities over a first cup of freshly roasted and ground Jamaica Blue Mountain coffee, what it will be today, or this week or this month. MGM Resorts stuck at $10, Wells Fargo marooned at $30? GM? A year ago it was $30 and this morning traded at twenty-two bucks.

The guy who bolts wheels on Dodge vans (if such a man actually exists in lieu of a robot) has absolutely no control over the destiny of his livelihood. None. Zero. Nada. His battle was once with Henry Ford or the GM guys on the 14^th floor over wages and hours, retirement benefits and health insurance. If Carl and Ivan and Kirk can carve off the portion of GM that owes health and retirement benefits, and bankrupt it, they’ll do so in an eyewink because it lowers liability and raises stock value. If there’s $50 billion of taxpayer money in there somewhere to be had, so much the better. In panic, GM has chosen to chop-shop itself;

“GM is shedding the Saturn, Saab and Hummer brands and cutting 47,000 more workers worldwide -- leaving half as many as when Wagoner took over in 2000. The United Auto Workers union is giving up most of the expensive perks laid-off workers enjoyed to cushion economic downturns and taking on expensive health- care costs.”⁴

So, the bailout pleadings to save jobs (after Detroit was sent home by Congress like wayward schoolchildren) were supported by a plan to lay off 47,000 additional workers to the 30,000 announced in November of 2005.⁵ That announcement brought headlines such as “GM Layoffs Resonate Across U.S.,” along with much well manicured hand-wringing. These latest numbers are met by indifference outside the auto-making communities.

Michigan, of course, is shell shocked. Ultimately, shock is the ‘anesthetic’⁶ of corporate choice. Paraphrasing Joseph Stalin, “the loss of a single job is a disaster; the loss of 100,000 jobs is a news event.”

A close read of Naomi Klein’s wonderfully written Shock Doctrine; the Rise of Disaster Capitalism⁷ gives some idea of how all this promises to play out. The prequel was Indonesia, South America and Russia in the nineties, each of them nearly snuffed out by Milton Friedman’s Chicago School economic medicine. Milt’s cure was unique and never failed by his standards, but his patients uniformly died on the operating table. There are still those who contend there was nothing wrong with the cure, but you do not find them in Indonesia, South America or Russia.

The mantra across Wall Street, Washington and the media for our near economic collapse is “no one could have seen it coming.” Computer models had no configuration for downturns. I saw it coming. Naomi Klein saw it coming. It was just Alan Greenspan and the underwriters who were too otherwise preoccupied to look. In January, 2005, I wrote;

2005 is to be the Year of the Merger. It's been declared such on the front page of the New York Times and who would argue with such a venerable icon as the NYT? Never mind that 1997 was the Year of the Spin-Off. Year end 2004 found worn out old Sears and Roebuck marrying tired and careworn K-Mart, the two of them struggling to the alter after trying to put the best face on Wal-Mart running off with their businesses.

That deal capped 2004, a year that saw IBM pass off their PC business, Sprint gobble up Nextel and Johnson and Johnson … well, you know the scene, we've been there before. The last big year for mega-mergers was 1999 as the bubble was stretched to bursting.

And burst it did. They always do. That's the magic of free enterprise, the escape valve that deflates periodic heads of steam, the sun that melts the wings of Icarus. It's a self-righting system, God bless it, but frequently gets out of balance and then there’s always a leveler out there in the corner of the marketplace, with a scythe and a grin.

The Business Cycle is a known entity and it’s as studied to death as Ernest Hemingway in literature class. Yet here are the Harvard MBA Captains of Industry, goosing their stocks with another round of failed '90's strategy. All the players know that mergers are a failed scheme and an empty promise. Name me a merger that made a stronger player of the merged parties. Daimler Chrysler? You've got to be kidding.

But the players know there's gold in arranging that stroll down the aisle to corporate marriage and if the failure rate is about the same as conventional marriage, the gift-list is larger and the investment bankers get to run off with the silver. Insiders watch a lackluster stock run up a few points (which never hurts anyone all that much) and executives on both sides frost the wedding cake with deferred stock options, early retirement packages and one-time bonus structures that assure no one is likely to fart in the limousine on the way to the reception.

The band plays, everyone talks up how handsome the groom and lovely the bride, agreeing that two can certainly live more cheaply together than apart. The canapés are gulped down and toasts proposed to the future family.

Now consider all of these enticements to merger. They're all, every one of them, powerful inducements to the movers and shakers who dream these things up, yet none have the slightest influence on profit or efficiency. They are made to fail, 'cause there are profits in failure as well. Jobs gone overseas and American productivity shot to hell, but profits to the meat-cutters. Divisions are sold off as the participants rid themselves of the disappointment of the last merger. It's the Great Corporate Canasta Game and winning depends on who picks up the largest discard pile, not giving a damn if the cards match the hand.

No one really worries, because pretty much by definition it can't possibly work. Two huge merchandisers, unable to make themselves profitable (or even sustainable) under present management are unlikely to benefit from a merger that's twice as ungainly and four times as complicated. Their hope (perhaps) is that in the smoke and confusion, private fortunes can be made and public monies will do the making.

The big-hitters don’t rodeo. It’s too sweaty out there in the ring and a guy could get dumped, maybe break an arm and for sure get a $5,000 suit mussed. They swing on insider information and computer programs that reveal a half-point advantage here or there before even the hedge-funds are aware. Then they’re out and those a second or two behind are left with the sawdust and bruises. Quick-trading and the chimera of quarterly earnings have all but ruined our nation. Think about that as you kiss the wife goodbye and head for the factory floor or your seemingly ‘safe’ position in middle management.

It's true that automobiles are worth far more as parts than as functional transportation, else how would chop-shops (Mafia or Wall Street) be such profitable businesses? A pretty good case can be made that investment bankers are the chop-shops of the corporate world and that the bids they encourage for those polished up old family cruisers on the auction block of merger mania aren't intended to take anyone anywhere. The big dough is in the pieces. The big dough is in pulling apart and although it's dirty, gritty work and someone's likely to get a finger smashed or a forearm burned, the guys behind these ruined junkyards always live in the most posh suburbs.

Goldman Sachs chop-shopped on perhaps a grander scale than most, concentrating on entire nations when mere companies became too tame for them. Ireland, Spain, Portugal, Greece; the wreckage is offshore for the moment, but those types of disasters have a history of finding their way home.

I know, we’ve always been taught that the sum is greater than the parts. The United States of America is greater than Alabama, Wyoming and the states alphabetically in between. A-Rod’s ten year, $275 million contract is more than the sum of Rodriguez’s hitting, fielding, throwing and steroid enhanced abilities. I get it. But synergy claims the opposite and its definition takes us right back around the bases to A-Rod.

Synergy (noun) the working together of two things (muscles or drugs for example) to produce an effect greater than the sum of their individual effects.

You can’t say dictionaries are not up to date on the latest steroid or performance drug. Synergy is the love-child of the corporate conglomerate. Every corporate raider out there (and a good many CEOs) made millions taking synergy on the road for an extended tour. And, like the love-child, synergies seldom grow up to meet expectation.

What Chop-Shop business theory, trumpeted by beaming CEOs before their stockholders as the synergy of an announced (or impending) merger, actually produced is a dizzying worldwide churn of corporate takeovers and sell-offs. Citigroup, a favored current target of outrage, elated then deflated investors in a woozy swing from $50-60 all the way down to less than a buck. Citigroup accomplished what appeared to be a spectacular feat of alchemy when they took over Travelers Group in 1998.

It took but ten short years to fly that plane into a mountain. Fasten your seatbelt and flashback to the story of a guy by the name of Sanford Weill.

Twenty-some years ago, Weill was a good bit younger, vastly more hungry and the planets seemed aligned in his favor. A master at acquiring, Weill grew his money-tree from the get-go by grafting branches of other firms to his small tree. His original securities and quite modest brokerage morphed from a small firm with his name on the door, to ever larger deals with his name less and less in the spotlight;

Second largest was never Sanford’s comfort zone, but it’s refreshing to remember that as recently as 1979, $250 million was still a pile of money instead of petty-cash for year end bonuses. I (perhaps like you) am not yet sure how and when millions actually became billions and quickly trillions, three sneaky zeros at a time. In approximately thirty years, like the old Polish zloty, the numbers took on six additional zeros, a ten-fold increase every five years. Weill was doing great while the world in which his investments multiplied through Alice’s looking-glass became more and more hollow. Hollow is an interesting word. Hollow is masked by exterior appearances, as in ‘who expected that mighty oak to fall, it looked so robust?’

Two years later, in 1982, Sanford sold Shearson Loeb Rhoades to American Express. The acquirer had finally been acquired. But president of American Express was not the same as CEO or Chairman and Weill wasn’t happy as AMEX’s second banana. Without getting too deeply into the Weill biography, Bank of America was not interested in his pitch to become CEO. So he went back to basics.

Looking around, which was always Sanford’s long suit, in 1986 he talked Control Data Corporation into spinning off Consumer Credit, a losing subsidiary. It wasn’t AMEX, but he had control.

By the end of the year, he had completely taken over Travelers Corp in a $4 billion stock deal and officially began calling his corporation Travelers Group Inc.

The boogie-years ushering in the new millennium barely stuttered from the dotcom-bubble burst and took off into the new and uncharted territories of such things as hedge fund derivatives, sub-prime loans, consumer debt consolidation, home equity loans, credit default swaps and other Wall Street machinations so complicated they have yet to be clearly defined.

If ever there was a poster-boy for the Chop Shop, it would be hard not to nominate Sanford. The New York Times, putting aside any criticism of political clout, unrestrained lobbyists, the repeal of the Glass-Steagall Act (separating banks and investment banks) or the entirely unregulated hedge fund industry, fairly gushed over Weill in July of 2007;

Tributes to Sanford I. Weill line the walls of the carpeted hallway that leads to his skyscraper office, with its panoramic view of Central Park. A dozen framed magazine covers, their colors as vivid as an Andy Warhol painting, are the most arresting. Each heralds Mr. Weill’s genius in assembling Citigroup into the most powerful financial institution since the House of Morgan a century before.⁹

His achievement required political clout, and that, too, is on display. Soon after he formed Citigroup, Congress repealed a Depression-era law that prohibited goliaths like the one Mr. Weill had just put together anyway, combining commercial and investment banking, insurance and stock brokerage operations. A trophy from the victory, a pen that President Bill Clinton used to sign the repeal, hangs framed near the magazine covers.

These days, Mr. Weill and many of the nation’s very wealthy chief executives, entrepreneurs and financiers echo an earlier era—the Gilded Age before World War I—when powerful enterprises, dominated by men who grew immensely rich, ushered in the industrialization of the United States. These new titans often see themselves as pillars of a similarly prosperous and expansive age, one in which their successes and their philanthropy made government less important than it once was.

Hard to believe that such fatuous praise was heaped on Sanford’s shoulders, from a supposedly autonomous newspaper, not quite a year before the fall. But the Times was not alone. Major media, that bastion of truth and independent thought were all drinking the same fair and balanced Kool-Aid.

In July of 2007, Citigroup stock was selling at about $48, Weill was happily (or at least mercifully) retired and CEO Chuck Prince was all spiffed up to walk out on stage and hear the applause die. Weill retired in 2003 and at the time, Sanford owned 22,777,290 shares of Citigroup with a market value of more than $1 billion. His annual dividend checks then totaled $31,888,206.¹⁰ Unless he was wise enough to very quickly diversify, Sanford has since taken a very expensive bath.

The Times’ near orgasmic references to genius, trophies from victory, the Gilded Age before World War I, titans, pillars, successes and government made less important, belies the disaster just around the corner. Even the soon-to-be Nobel honored Paul Krugman, was caught with his pants around his knees.¹¹

Read Paul’s column and see if you think this Nobel Prize winning economist knows what the hell he’s talking about:

(Krugman, NYTimes, July 27, 2007)

Yesterday’s scary ride in the markets wasn’t a full-fledged panic. The interest rate on 10-year U.S. government bonds — a much better indicator than stock prices of what investors think will happen to the economy — fell sharply, but even so, it ended the day higher than its level as recently as mid-May and well above its levels earlier in the year. This tells us that investors still consider a recession, which would cause the Fed to cut interest rates, fairly unlikely.

So it wasn’t the sum of all fears. But it was the sum of some fears — three, in particular.

The first is fear of bad credit. Back in March, after another market plunge, I spun a fantasy about how a global financial meltdown could take place: people would suddenly remember that bad stuff sometimes happens, risk premiums — the extra return people demand for holding bonds that aren’t government guaranteed — would soar, and credit would dry up.

Well, some of that happened yesterday. “The risk premium on corporate bonds soared the most in five years,” reported Bloomberg News. “And debt sales faltered as investors shunned all but the safest debt.” Mark Zandi of Moody’s Economy.com said that if another major hedge fund stumbles, “That could elicit a crisis of confidence and a global shock.”

I saw that one coming. But what’s really striking is how much of the current angst in the market is over two things that I thought had been obvious for a long time: the magnitude of the housing slump and the persistence of high oil prices.

I’ve written a lot about housing over the past couple of years, so let me just repeat the basics. Back in 2002 and 2003, low interest rates made buying a house look like a very good deal. As people piled into housing, however, prices rose — and people began assuming that they would keep on rising. So the boom fed on itself: borrowers began taking out loans they couldn’t really afford and lenders began relaxing their standards.

Eventually the bubble had to burst, and when it did it left us with prices way out of line with reality and a huge overhang of unsold properties. This in turn has caused a plunge in housing construction and a lot of mortgage defaults. And the experience of past boom-and-bust cycles in housing tells us that it should be several years at least before things return to normal.

I’ve written less about oil prices, so let me emphasize two points about the oil situation. First, we’re now in our third year of very high oil prices by historical standards — prices as high, even when adjusted for inflation, as those that prevailed in the early 1980s, after the Islamic revolution in Iran. Second, unlike the energy crises of the past, this price surge has happened even though there hasn’t been any major disruption in world oil supply.

It’s pretty clear what’s happening: economic development is colliding with geology.

It is (and was) indeed pretty clear what was happening and it hadn’t a thing to do with economic development and the price of oil. Good old fashioned greed, urged on by way too much investment capital searching for a roost, was failing to collide with the laws forged after the Great Depression to prevent just such another disaster.

The phrase ‘zero sum game’ is bandied about a good deal these days. In game theory, a zero sum game is one where all the winnings and all the losses add up to zero.

If there was ever a perfect example, it is the relationship between ‘free trade’ and American jobs. All the winnings accrue to large corporations and all the losses are absorbed by the American job market.

Any duck hunter will confirm it’s hard to count a flock until at least some of them settle onto the water, and yet the daily (and hourly) fluctuations in stock price make it near impossible to value a company, let alone a conglomerate. The flock is in the air constantly, everything essentially owned by something else that is owned by something else, hidden deep within the bowels of a holding company and often as not offshore in a tax-free environment. That’s not only lawful, it’s been supported by congressional legislation over a number of decades.

Paul Abrams makes some interesting points in a recent column.¹² Apparently, something upward of 40,000 Americans own secret foreign bank accounts that shelter their income from taxes. The cost of that to the treasury is estimated to be $100 billion a year, but who knows? Pretty hard and probably futile to estimate something kept so secret. But what was once difficult is now no further away than a mouse-click on a Google-search of tax havens. That, of course, covers only private accounts and is still merely a best-guess.

What corporations actually do is anyone’s hypothesis. Paul goes on to speculate about how many and where Bernie Madoff may have stashed secret accounts. Interesting conjecture. Over the 50 year conspiracy of Bernard L. Madoff Investment Securities LLC, we find that there were never any real investments. Bernie never bought or sold a single share. It was, instead, a Ponzi scheme and all we are left with is the current probable losses by investors (is an investor really an investor if there are no investments?), which may approach $50 billion.

That’s fifty-thousand million dollars gone somewhere. Undiscovered Ponzi schemes are very profitable and Bernie flew successfully under the radar for five decades, which eclipsed the original Ponzi by four and a half decades. Where are those secret accounts? Madoff has apparently decided going to jail is better than ‘fessing up to where he stashed the cash.

We Americans just came a bit late to come to the party, corporate tax avoidance being mostly a post WWII maneuver that significantly aids and abets the decline of America under the flag of free trade. Tax avoidance follows tax legislation like ants show up at picnics and corporate tax dodging is unlikely to be eliminated by a well paid off Congress. Not only because Congress is paid by lobbyists, but also because corporations have the money and patience and doggedness to find and slip through loopholes buried deep within tax legislation.

The tax code entails some 67,000 pages (and more with every Congress), within which well paid accountants graze like fat cattle, looking for an unattended, contradictory or purposely planted wisp of forage.

Carol Leonnig writes in the Washington Post that a recently released GAO report shines a light on the abuses.¹³ Apparently, the huge group of firms practicing perfectly legal tax avoidance includes bailout recipients Bank of America ($45 billion), Citigroup ($45 billion), Goldman Sachs ($10 billion) and American Express (a mere $3.4 billion). Pepsi and Exxon are named, along with Dell, Dow Chemical, Caterpillar, Bearing Point, Boeing, Merck and Kraft. Bearing Point, one of Fortune Magazine’s Most Admired Companies in 2009, filed for bankruptcy almost simultaneously with that honor.

ABOUT THE AUTHOR

Chapter 1 - Chop Shop Theory

Chapter 2 - The Parts Are Greater than the Sum

Chapter 3 - There Is No Sum