The politics of business: nowhere is the collaboration between business and politicians closer than in the United States under President George W. Bush; in Canada, the relationship is more subtle. (Politics).

One of the things that Enron had going for it was that the company's chief executive was good friends with U.S. President George W. Bush. The company had made huge contributions to the presidential election campaigns of the current president and his father. Enron certainly was a big player on Capitol Hill: according to one report in 2002, 71 of the 100 senators and nearly half of the 435 congressmen all received contributions from the company. Former CEO of Enron, Kenneth Lay, was generous: he raised at least $100,000 for George W. Bush's election, and Enron kicked in another $100,000 for the inauguration gala. Furthermore, at least four Enron consultants and executives did work for the Bush administration. Between 1990 and 2002, the company or its managers gave $5.9 million in political contributions, according to the non-partisan Centre for Responsive Politics.

Even at that, Enron was 36th in the list of political donors. At the top of the Bush administration, four of his cabinet secretaries are former chief executives of large American companies. No president since Dwight D. Eisenhower in the 1950s has had more than one ex-chief executive in the cabinet, and President Eisenhower had only two. Many staff at lower levels came from big business too.

The Center for Public Integrity in Washington, D.C. has done a lot of research on the links between government and business. The Center reports, for example, that, two years after they left the federal government and one year after a ban that limited their lobbying activities expired, more than half of the top one hundred Clinton White House officials went on to represent, work for, or advise businesses and entities in areas they regulated while they were in office. In fact, the Center reports that the move from government to senior private sector jobs, including lobbying groups for businesses and special interests, is a common one.

Another example of the business-government link is that, currently, of the 30 members of the Defense Policy Board in the U.S., the government-appointed group that advises the Pentagon, at least nine have ties to companies that have won more than $76 billion (U.S.) in defence contracts in 2001 and 2002; four members are registered lobbyists, one of whom represents two of the three largest defence contractors.

It also hasn't escaped notice that Halliburton, Vice President Dick Cheney's former company, is one of five large U.S. corporations invited to bid for contracts in the reconstruction of Iraq. This reconstruction project may turn out to be the biggest since the Second World War. At the same time, Mr. Cheney is collecting "deferred compensation" from the company of up to $1 million a year after his resignation as chief executive in 2000, an option he chose over a lumpsum payment.

Some argue that senior executives who know how to run a corporation can bring efficiency to government. Others claim the mixture of business and politics is more likely to produce government policies favourable to business. For example, according to one report, the U.S. vice president's 2001 energy plan appears to have been largely written by the energy industry. The country's economic stimulus package in 2002, with its three-year investment-tax break, had more to do with boosting corporate profits than developing effective economic policy.

Typically, governments grant favours with the hope of receiving votes in exchange--a "you scratch my back, I'll scratch yours" arrangement. And, it isn't just the American government that operates this way. Wealthy corporations wield lots of power in Ottawa as well. According to Democracy Watch, when the Canadian government needed guidelines for information technology, for instance, the person they hired to help set the rules was a lobbyist representing information technology companies. Special interest groups have the power (that is, money) to run election campaigns and become government advisors at taxpayers' expense, influencing policy changes and regulatory issues on behalf of their clients as well as pitching for fat government contracts. In fact, Democracy Watch, suggests that "It is only a slight overstatement to say that lobbyists run our government."

There's no question that large corporations have plenty of political clout that lead to millions of dollars in government handouts. Critics refer to the loot as corporate welfare. A study by that name (Corporate Welfare: A Report on Sixteen Years of Industry Canada Financial Assistance) was put together by the Canadian Taxpayers Federation (CTF). The group calculates that the government paid out $11.2 billion in grants, loans, and guarantees between 1982 and 1997. Almost half of the money--$5.6 billion--went to 75 of Canada's most profitable and successful companies. And, more than 18%, or $2.1 billion, of that total went to only five companies. The 1998 report looked at 32,000 separate authorizations across 60 major department programs. Thirty of the programs provided direct loans totalling $3.2 billion, and only 15% of that money had been paid back.

One of the lucky corporations was Montreal-based Bombardier. It received $204 million in federal loans for 21 different projects, but had only repaid 5% by 1998. Another recipient of a $2 million loan in 1996 (from Industry Canada) was the Royal Bank, which reported $1.7 billion in profits in 1997. Other companies receiving taxpayer's money included General Motors and Bell Canada, both among the country's most profitable firms.

Corporate welfare might be defined as any action by local, provincial, or federal government that gives a corporation or an entire industry a benefit not offered to others. It can be an outright subsidy, a grant, real estate, a low-interest loan, government service, or a tax break.

In 2003, for example, DaimlerChrysler Canada Inc. wanted $300 million dollars in government support to build a new assembly plant in Windsor, Ontario by 2005, and got it. The plant will create an estimated 2,500 jobs (both in and outside the plant). One argument in favour of government support was that the Canadian government had to compete with multimillion dollar incentives offered by Alabama, Georgia, and Mississippi in the U.S.

"This isn't corporate welfare. It is about how we ensure that we get our fair share of the major new investments that are taking place in one of the most critical industries anywhere in the world," Buzz Hargrove, head of the Canadian Auto Workers union, said.

But, justifying government handouts to corporations to encourage investment in their country or region, or help cover the cost of developing new technologies, of course, has its critics. Yes, the companies create jobs and boost the economy, but many say they are profitable enough to foot their own bills.

Public opposition to corporate control is on the rise worldwide. Demonstrations against globalization and the growing gap between rich and poor are attempting to balance power away from corporations toward a new, more democratic and accountable political process. Tens of thousands of people are hitting the streets to challenge the institutions of corporate globalization such as the World Trade Organization, the World Bank, the International Monetary Fund, and the World Economic Forum. If nothing else, these groups have raised public consciousness on a global scale, an effort that some think could eventually reverse the trend of corporate globalization.

That might partly explain a couple of recent incidents in Western Canada. In 2002, officials in the British Columbia town of Lake Cowichan proposed that corporations be given the right to vote in municipal elections. The idea is to give business owners who didn't live in the town a say in municipal policy. But the Association of Vancouver Island and Coastal Communities (AVICC) said nuts to that. AVICC delegates defeated the proposal, and a similar plan in the city of North Vancouver was also turned down.

SUGGESTED ACTIVITIES:

1. In November 2002, Rick Salutin wrote in his Globe and Mail column that a "major current of world affairs in the past 20 years ... has been the unstoppable rise of corporate power and the achievement of its main goals: deregulation, privatization, free trade etc., through governments such as those of Margaret Thatcher (in the U.K.), Ronald Reagan (in the U.S.) and their imitators in virtually all parties." Mr. Salutin points out that Canadians tried to reverse the current in "1988's free-trade election ... (when) a majority voted for parties opposing free trade but, due to our electoral system, free trade went ahead anyway. Since then, its tide has never ebbed ..." He goes on to say that the world is stuck with "an unavoidable, despicable reality: You cannot be elected in national politics without major concessions to corporate power ..." But what prompted his column was the election in Brazil of the Workers' Party, the PT, which is opposed to corporate globalization. The election represents a growing political movement in Brazil that is systematically delegating power back down to the people at the municipal level. The PT holds power in about 200 municipalities and several states. As a result, many cities allow citizens to participate directly in how government budgets will be allocated: residents vote directly on which roads will be paved, which health-care centres will be built. And that's led to better public services Jar the poor. Research Brazil's situation and find out if any other countries are following a similar path.

2. Review the 2002 book Open World: The Truth About Globalization by Philippe Legrain, a former adviser to the director-general of the World Trade Organization, and before that an economics correspondent at The Economist.

FACT FILE

The Cabinet of Prime Minister R.B. Bennett (1930-35) included 10 businessmen, and Mr. Bennett was the largest shareholder in Imperial Oil and the E.B. Eddy Match Company.

Former New Democratic Leader, David Lewis, coined the term "corporate welfare bums" in 1972.

The American Civil Liberties Union, the National Rifle Association, and the Christian Coalition oppose campaign funding reform on the grounds that control of donations would violate freedom of speech.

In the last U.S. federal election a total of $6 billion changed hands, not including private family fortunes.

Websites

Aurora Institute--http://www.aurora.ca/

Center for Public Integrity--http://www.publicintegrity.org

Centre for Responsive Politics--http://www.opensecrets.org/

CorpWatch: Holding Corporations

Accountable--http://www.corpwatch.org

Democracy Watch--http://www.dwatch.ca/

RELATED ARTICLE: Tightening the reins.

In January 2003, Prime Minister Jean Chretien introduced a political financing bill aimed at dramatically reducing the amount of money that business and labour interests can give to political parties. The bill would cap corporate and union donations at $1,000, a far cry from the $20,000 donations made in the past. Private donations would be capped at $10,000, and a new system of public funding would be based on the number of votes each party receives.

The proposed bill calls for:

* Penalties for companies found guilty of funnelling money through individuals;

* Nomination campaign expenses to be capped at half of what candidates spent during the 2000 federal election;

* A ban on trust funds, which can be used by Members of Parliament to funnel and spend undocumented donations; and,

* Extended financial disclosure requirements to include riding associations, nomination, and leadership campaigns.

The plan is not without its critics, but the proposed legislation is similar to existing rules in Manitoba and Quebec. Both provinces limit how much the public can donate to political parties, and have complete bans on financing by corporations or labour unions.

In addition, the Lobbyists Registration Act was tightened in 1996 "to increase transparency and let Canadians know who is being paid to lobby the government, on which issues, and what departments and agencies they are contacting," according to Industry Minister Allan Rock. Further amendments to the act were introduced in October 2002 to "ensure that Canada continues to have one of the most rigorous and transparent regimes for lobbying in the world."

In the U.S. the new Bipartisan Campaign Reform Act, which came into effect 1 January 2003, has tightened donation rules. There also are limits in Australia and Britain, but Germany has some of the strictest laws on campaign financing: political campaigns receive government funding, and free advertising time on television. Detailed information is required for any private donations of more than $10,000, and anonymous donations must not exceed $500. Any political party caught accepting improper donations must pay twice that amount to charity.