Sons of Wichita

The Book of the Week is “Sons of Wichita, How the Koch Brothers Became America’s Most Powerful and Private Dynasty” by Daniel Schulman, published in 2014.

Born in Texas in 1900, Fred Koch was of Dutch ancestry. He pronounced his name “coke” instead of the way the late former mayor of New York City (Ed “cotch”) did. He and his wife Mary bore four sons– Fred Jr., Charles, and David and Bill (fraternal twins), starting in 1933.

Fred was a chemical engineer who moved to Wichita, Kansas and became wealthy in the oil-refining industry. In the early 1930’s, he did business with the U.S.S.R. At the dawn of the 1940’s, he switched to ranching due to legal action over patents that Universal Oil launched against Fred’s company, Winkler-Koch, and also Root Refining. His oil company broke up in 1944.

In 1958, Koch joined the new John Birch Society, a rabidly anti-Communist group who saw Communists everywhere it looked, including those in unions, in charge of government financial programs, and in the United Nations. And the Boy Scouts. It aggressively spread hysteria about these people who were a threat to the American way. Fred had seen the political system in the Soviet Union when he was there, and realized it oppressed people.

Fred, Jr. took after his mother and upon reaching adulthood, moved to New York City and ran with the theater crowd. Charles, his father’s favorite, was groomed to take over the family business, which became Koch Industries. He did so in late 1967, when Fred passed away. The business made acquisitions in the oil industry and its sole goal was growth.

Charles had previously acquired extensive education in chemical and nuclear engineering. In the early 1970’s, he became interested in acquiring knowledge on the political ideology of libertarianism. He became a convert to it in its most extreme form. It espouses the belief that a purely capitalist society is the best economic system. This means total deregulation, no entitlements such as government-administered retirement or medical plans, no unions, no socialism of any kind, no income tax, and a government whose role is only to protect citizens and property from each other and outsiders, and from fraud.

In 1980, David Koch ran for American president on the Libertarian ticket. He knew he couldn’t possibly win but the goal was to plant seeds for future acceptance of his political ideology.

In early 1997, Charles co-founded the Cato Institute, a libertarian think tank. He and his brother David poured money into front groups that aggressively lobbied to reduce the size of government and expand the public’s freedoms. In 2008, the brothers opposed the taxpayer bailouts of companies bankrupted by the subprime mortgage crisis, and opposed deficit spending. They also denied allying with the Tea Party politicians but were secretly supporting them. About a year later, Charles and his henchmen launched fierce opposition to President Barack Obama’s national health care plan.

During his 2012 reelection campaign, Obama viewed the Koch brothers as a bigger threat than his Republican opponent, Mitt Romney. Obama copied the Kochs’ above actions (forming propagandizing front groups) to counteract the libertarians. Successfully.

As a result of their political mentality, Charles and David could have cared less about the environmental destruction and wrongful deaths their company caused due to poorly maintained oil and gas pipelines. Perhaps to salve his conscience, David made huge donations to cultural institutions, especially in New York City. The liberals (hypocritically) gratefully accepted the money, notwithstanding David’s political activities that led to rack and ruin. He also heavily funded medical research on prostate cancer, presumably to enhance the chances of his own physical survival.

Read the book to learn of the lawsuits that started in 1982 that Bill launched against Charles on various causes of action; the details of the Koch Industries’ legal troubles; the brothers’ sibling rivalry; the corporate culture of market-based management that Charles instituted in the family business; and what the siblings did for fun and profit; etc., etc., etc.

The World According to Monsanto – URGENT POST

The Book of the Decade is  “The World According to Monsanto– Pollution, Corruption, and the Control of Our Food Supply” by Marie-Monique Robin, published in 2010.

The author wrote, “When one dissects Monsanto’s activity reports (contained in 10-K forms [annual reports filed with the Securities and Exchange Commission in the United States]) since 1997, one is struck by the place taken up by litigation.”

There are no companies that can fairly be compared to Monsanto in terms of payments to victims for irreparable harm, permanent injury and wrongful deaths caused by the environmental damage done by Monsanto. They couldn’t possibly compete. But the following is a summary of recent expenses of the legal bullying of, and financial punishments handed down, to Monsanto.

Monsanto’s 2017 annual report’s footnotes showed $33 million in expenses associated with “environmental and litigation matters.” The company’s 2015 Restructuring Plan included $167 million of the same kinds of aforementioned expenses and “a SEC settlement.” The cost of goods sold was $101 million. That means, its litigation expenses exceeded the costs of producing its products. Besides, annual reports don’t normally contain the exact phrase “environmental and litigation matters.”

Another item included $32 million of expenses related to “legacy environmental settlements.” Monsanto recorded the settlement of its polychlorinated biphenyls (PCBs) legal troubles for $280 million in fiscal 2016. Lastly (finally!), the “Long-Term Portion of Environmental and Litigation Liabilities” accounts for almost 1 1/2% of the company’s “Total Liabilities” for the year.

What makes Monsanto’s excessive litigation egregious is that it has so much worldwide hegemony that it wins its cases most of the time– the company itself sues everyone who gets in the way of its profit-making, and successfully defends itself against the countless plaintiffs who have legitimate causes of action against it.

Not to mention the fact that it had basically formed a public-private partnership (largely via political contributions and lobbying), with the American government as of the book’s writing. That is why whistleblowers and activists get crushed in its wake.

Sounds familiar… Unfortunately, the reason history repeats itself so often is that human nature doesn’t change. What makes Monsanto’s case so much scarier than the situations with other, similar monstrous entities is that Monsanto has the potential to permanently contaminate nearly the entire world’s food supply, and there have already been significant consequences of that nature due to its unbridled greed. Yes, it is that bad.

Founded as a chemical and plastics company in 1901 in Saint Louis, Missouri– Monsanto went public in 1929. It made DDT, dioxin, aspartame, (and inadvertently but knowingly and ruthlessly, PCBs), among other substances that have done permanent harm to a large number of people.

As of this book’s writing, Monsanto had a presence in 46 nations and owned 90% of the patents for all Genetically Modified Organisms internationally grown. It makes billions of dollars in profit annually.

The author traveled extensively to interview numerous people to gather a voluminous amount of data on Monsanto’s quest to make the maximum amount of money it possibly can, at the expense of humanity. The scientists she interviewed– including friends and foes of Monsanto– all said they wouldn’t eat the genetically modified foods borne of Monsanto products.

The author tells lots of anecdotes about people from all different geographic areas who have been adversely affected by the chemicals and genetically modified organisms sold by Monsanto, plus about several people previously affiliated with the company and U.S. government agencies, who were clearly still loyal to their former employers. One such interviewee displayed the body language of a liar: excessive blinking when answering her pressing questions. She also pored over declassified documents that indicate outrageous corporate wrongdoing.

Monsanto’s employees currently research, apply for patents to, and sell genetically modified seeds for growing soybeans, corn, cotton and rapeseed; plus a herbicide– Roundup, an insecticide– Bt toxin, and the bovine growth hormone rBST.

The author wrote that in 1983, the American federal government set aside funds called the Superfund Program to decontaminate toxic waste sites around the nation. When some of those funds were diverted to “… finance the electoral campaigns of Republican candidates, Congress discovered that documents that would compromise the companies[,] disappeared.”

As might be recalled, the Reagan administration had a reputation for being staunchly pro-business; so much so that it made EPA worker Anne Burford and her colleague Rita Lavelle the scapegoats of a scandal after pressuring them to shred documents (which would have implicated Monsanto) and commit other crimes in connection with the town of Times Beach, Missouri– a dioxin-and-PCBs-contaminated site.

That contamination resulted in the deaths of numerous animals, serious health problems for the people there, and forced permanent evacuation of the eight-hundred family resort town.

The author spoke with several whistleblowers. All were punished by their employers. One from the EPA distributed an inflammatory memo saying Monsanto published false research results on its products. Another from the FDA wrote a report on the flaws in Monsanto’s application for approval of the artificial growth hormone rBST. He was fired in 1989, sued, and years later, won a job back at the FDA, but not one for which he was suited.

Monsanto’s rBST (still currently used at some dairy farms), when injected into cows, causes them to produce more milk (translation: more money). With the hormone, other substances are also likely to get into the milk, such as pus and antibiotics. This is because the injection sites on the cows form abscesses, necessitating the administering of antibiotics to the cows. Further, with rBST, the cows develop serious health problems, like ovarian cysts, mastitis and uterine disorders. Never mind humans who drink their milk.

In an unprecedented move, the FDA changed its own rules and approved rBST in November 1993 without forcing Monsanto to reply to its concerns and recommendations.

In the late 1980’s, a genetically modified dietary supplement sold by prescription only caused serious health problems, killing at least 37 and permanently disabling 1,500. If that kind of harm was done by a regulated item meant to be eaten that was genetically modified around the same time that Monsanto was testing rBST– a part of a product that millions of people would consume, shouldn’t the FDA have been more prudent in its approval process of rBST??

Monsanto sued the dairies that said on their milk-container labels that their milk contained no rBST. The defendants were forced to change their labeling.

In the late 1990’s, there was the TV-journalist-couple who were working on a show with negative coverage on Monsanto, when their employer was taken over by Fox News. They were fired because they refused to switch from telling the truth, to lying about Monsanto.

In 2003, after the couple suffered years of emotionally and bank-account draining litigation, “The [federal] judges considered that no law prohibited a television network or a newspaper company from lying to the public. To be sure, the rules established by the FCC prohibited it, but they did not have the force of law.” No wonder journalism is dead.

Conflicts of interest abounded in the 1990’s , when supposedly scholarly journal (peer-reviewed) articles (like Science, Nature and the Journal of the American Medical Association) declared that Monsanto’s products were safe; those articles were written by people paid by Monsanto.

Reputable scientists pointed out that Monsanto’s scientific testing involved non-standard procedures, and was statistically suspect as it was of too short a duration, and had too small a sample size.

Read the book to learn about:

  • horror stories resulting from Monsanto’s underhanded tactics regarding testing and use of its products, including the herbicide Roundup;
  • its victims in Anniston, Alabama who were subjected to PCBs;
  • which of Monsanto’s products was banned in 2000 in Canada and Europe;
  • how Monsanto is active in the United Nations;
  • how deregulation perpetuates Monsanto’s worldwide hegemony;
  • which ten or so individual American government officials acted on Monsanto’s behalf, but had undisclosed conflicts of interest [there was scant room in the book to list all those who were ethically challenged Monsanto affiliates— wait, that’s redundant];
  • the percentages of all foods genetically modified in specific categories in 2005;
  • how taxpayers footed the bill for Monsanto’s aggressive use of legal and political weaponry against American soybean farmers (whom it seriously harmed by taking away their livelihoods through duress and illegally spying on them in the late 1990’s) from 1999 into 2002;
  • why Monsanto dropped its initiative to introduce a transgenic wheat, even after spending hundreds of millions of dollars in connection therewith;
  • how Mexico has been harmed by Monsanto’s transgenic corn;
  • how Argentina and Paraguay have been harmed by Monsanto’s transgenic soybeans;
  • how India has been harmed by Monsanto’s transgenic cotton;
  • how Canadian farmers have been harmed by transgenic canola;
  • what transpired when, in January 2005, the Securities and Exchange Commission launched a legal proceeding against Monsanto for corruption in Indonesia;
  • why the World Trade Organization should share some blame for allowing the worldwide spread of Monsanto’s tentacles;
  • and much more.

Endnote:  Feel free to browse other posts for additional examples of entities behaving badly under the category “Business Ethics.”

A Lawyer’s Life – BONUS POST

The Book of the Week is “A Lawyer’s Life” by Johnnie Cochran With David Fisher, published in 2002. This is obviously the autobiography of Johnnie Cochran, of O.J. Simpson defense-attorney fame.

Born in 1938, he grew up in Shreveport, Louisiana and Los Angeles, California. Cochran never saw a piece of legal business he didn’t like. He was passionate about the law, handling or assisting with, cases of various practice areas. He conveniently forgot to mention that he wasn’t licensed to practice law in New York State or other states, so he glozed over that by saying he preferred to work with a legal team. He described a number of non-California litigation cases where he was asked to join the team– slap his sensational name on a case– merely for publicity purposes, to scare the opposition. He explicitly stated, “…the one thing I bring to every case in which I get involved is the media.”

When he started practicing law in the 1960’s, the system was rife with discrimination against poor people, who happened to not have light-colored skin. He wrote of those days (sarcastically), “Apparently, the police have an amazing ability to arrest only guilty people, they never make a mistake.”

Cochran was extremely busy after the Watts Riots in California in the mid-1960’s, and again after the South Central Los Angeles riots in the spring of 1992.

For three years, starting in 1997, Cochran was host or co-host of a show on Court TV out of New York that discussed legal issues. Some of the time, he read from a TelePrompTer like everyone else. Concurrent with that, he was helping to represent black plaintiffs who were victims of racial incidents in the city.

The then-mayor Rudy Giuliani tried to sweep police-brutality complaints under the rug. However, the Abner Louima case was too egregious to ignore, so he appointed a committee to research police brutality. A year later when its report was issued, he made excuses as to why no recommendations could be implemented. “Rudy Giuliani stayed as far away as possible from this case.” Further, “Most members of New York’s minority community did not believe the mayor ever acted in their interests.”

Cochran made a couple of rather naive statements showing his lack of historical knowledge; first, saying that the O.J. Simpson trial “… had created… law as entertainment.” and second, saying of the Latrell Sprewell case, “It was an ugly incident, and there had never been anything like it in sports.”

One tyro error to which Cochran admitted was a legal case in Buffalo, New York. He expressed his displeasure with the nature of the jury. Of course, the media twisted his words and the jury wasn’t sequestered. There was a chance that a newspaper headline had tainted the jury, but fortunately, nothing came of it.

Read the book to learn the details of diverse cases with which Cochran was involved. His goal was not only to make maximum money for himself and his client, but according to him, to effect change in a court/political/social system that made racial discrimination possible.

Devils on the Deep Blue Sea

The Book of the Week is “Devils on the Deep Blue Sea, The Dreams, Schemes and Showdowns that Built America’s Cruise-Ship Empires” by Kristoffer A. Garin, published in 2005.

As of the book’s writing, Carnival Corporation and Royal Caribbean were two holding companies that dominated the pleasure cruise industry. The chairman and CEO of the former controlled almost half of the passenger capacity.

The passenger capacity of one cruise ship skyrocketed from less than two hundred to seven hundred fifty in the decade after WWII. Vacation culture was changing from wintertime to year-round Caribbean jaunts. Miami, Florida was the place of embarkation.

In autumn 1965, a cruise fire caused 91 deaths, and put the industry on edge. Negligence and incompetence of the captain and crew were to blame. Nevertheless, even at that time, the travel company owner was able to weasel out of legal trouble because the ship was registered in Panama. He didn’t escape financial trouble thereafter, though.

In 1966, Miami got a new passenger terminal. The 1970’s saw the city’s docks fraught with organized crime, thanks to the port director. Starting in the late 1970’s, the TV show “Love Boat” significantly boosted the number of people of all ages who tried cruising. In 1981, the industry experienced labor trouble.

Read the book to learn how the industry evolved; how Ted Arison earned his less-than-stellar reputation; how business-savvy executives seeking to merge with or acquire distressed cruise-line assets did so through the decades, including the Princess Cruises saga; and the tax, employment and supply-chain tricks they use to maximize profits.

See You in Court – BONUS POST

The Book of the Week is “See You in Court” by Thomas Geoghegan, published in 2007. The author, a labor lawyer in Illinois, argued in this short paperback that the decline of unions in the United States is responsible for all sorts of ills that were plaguing the nation at the book’s writing (and have gotten worse since), such as the replacing of the of Rule of Law, contract law, and anti-trust law– with tort litigation; the risk of the disappearance of retirement funds at the whim of employers, and the growing income gap between rich and poor.

The author failed to differentiate between unions in the private sector, and ones in the government. Beginning in the 1950’s, the unions in the private sector were becoming unnecessary with the way things were progressing in the United States.

Economics 101 says that a nation requires a healthy, well-educated workforce. Unions in the private sector discouraged upward mobility– why should workers want to acquire more training and edification in their careers if they were making a decent living and their jobs were protected? Unions in low-skilled positions especially, fostered complacency. Private-sector unions fostered a lazy, poorly educated nation of low-skilled employees who went to work to collect a paycheck.

By the 1990’s, non-union, private-sector employees needed no protection. Employee satisfaction gets the same score as customer service. Free-market competition usually kept employers in line.

If employees walked off the job en masse, other employers gladly accepted employees and business lost by the wayward employer. Customers and employees could go over to Wendy’s if McDonald’s was unsatisfactory, or to Target if Walmart didn’t deliver. Low pay and difficult working conditions should have encouraged fry cooks and greeters to go to school to get a better job.

In the early 20th century, there was a need to protect workers– who were easily subjected to exploitation because many workers were poorly skilled, poorly educated new immigrants. There was limited opportunity for education, and limited transportation options even if workers were willing to relocate to find a job. Into the 1990’s, workers had more resources than ever to find work or engage in professional improvement if they wanted to.

Unions are always needed in civil service and in a few monopolistic industries (such as couriers, transportation, education and healthcare services), because they are exceptional. They are providing essential services (health, education and welfare), or else the work they provide is a matter of life and death. Government employees who are providing essential services deserve due process, in exchange for not striking.  Striking is illegal, and rightly so. There would be massive economic and/or societal disruption, and possible deaths, if they were to walk off the job en masse. Therefore, civil service unions are a necessary evil.

The unions in the author’s day used to minimize the number of workers’ compensation claims, which have now become tort suits, in which the cause of action (grounds for suing) has become discrimination. Such suits are many more times complex than contract law. The legal bills for these suits keep soaring, as well. Pretrial discovery entails “fishing expeditions”– extremely intrusive investigations of, say, medical records and activities of the plaintiffs, so that the defendants can gain every possible legal advantage.

The author also ranted about various other issues. He wrote that hegemonic institutions such as nonprofit hospitals, Ivy League universities (which get billions of dollars in government grants) and nonprofit organizations sue people for nonpayment but get massive tax breaks themselves.

These entities get away with this because they are allowed to keep their accounting books secret– they file neither tax returns nor SEC documents. The author failed to specify how big a part of the U.S. economy this sector is. That situation has partially changed among the hospitals anyway (but not necessarily improved), due to Obamacare.

The author pointed out that “The more we deregulate, the less stability and civic trust we have… More and more it seems we don’t trust government, we don’t trust business, we don’t even trust each other.”

But– in the 2020’s, after the Trump administration has continued its predecessors’ policies to the extreme–  running the government like one big brand (the president’s own) while allowing monster-sized corporations to ruthlessly profit with regard to neither the workers nor various populations who will be victims of pollution, poor quality education, housing and healthcare– history will have come full circle. There will be a need for unions in the private sector again (!)

Read the book to learn of additional outrages that have arisen in recent decades, such as the replacement of litigation with arbitration imposed by big corporations, how the law has changed to allow widespread usury, why people are suing Social Security to collect disability payments that are rightfully theirs, and how overpaid CEO’s (a redundant phrase) are making U.S. companies’ products less competitive overseas.

Appetite for Self-Destruction

The Book of the Week is “Appetite for Self-Destruction, The Spectacular Crash of the Record Industry in the Digital Age” by Steve Knopper, published in 2009. This is an account of how the American music industry, for the most part, reacted badly to the jarring changes wrought by technological advances starting in the late 1970’s.

For decades prior to the 1970’s, the music market in the United States had had a shady reputation– involving drugs, kickbacks, bribes and cronyism, among other vices.

Even after CDs proved to provide sound that was superior to plastic records, entities in the music industry supply chain resisted making CDs because it necessitated the reconfiguring of their: factories, marketing materials, store displays, etc. Modernizing everything was expensive.

In 1978, the Sony CDP-101 could play the first CD title:  “52nd Street” from Billy Joel. But only in Japan. PolyGram Records, CBS Records and Sony understood the value of the new product. Arista Records, Capitol Records and EMI didn’t.

In addition to the widespread introduction of CDs in America by the late 1980’s, the sale of CBS Records was another disruptive force in the industry, resulting in power struggles and lots of layoffs. The old-school record labels depended on MTV, radio and music stores to distribute their wares for another decade.

The tail end of the 1990’s saw a new technology that really turned the industry on its ear:  the World Wide Web. It enabled people to create software that allowed free (no-cost and no restrictions) electronic-music-file sharing. In December 1999, the organization regulating intellectual property rights on music, the RIAA, sued one of the major organizations doing the sharing– Napster– for copyright violations. By the following summer, the latter had approximately nineteen million users per month.

Read the book to learn of the outcome of the above and other legal battles; the new 1990’s and early 2000’s music conduits and devices, their relationships to the laws on music piracy; and many other actions taken by the American music industry that have fueled the current state of digital music sales.