Rich v poor, the power of a 1971 memo, the role of legislation syndicator ALEC

Published 16 April 2012

Rich against poor, the 99% against the 1%, laws favouring big business, laws based on a private organisation’s template spreading through US states….. An article on the Atlantic website yesterday unveils links, untangles some of the spider’s web.

It also explains the role of a memo written way back in 1971 but not uncovered until much later, written by a corporate lawyer & director, Lewis Powell, who was soon to be elevated to the US Supreme Court on the nomination of President Richard Nixon.

Mr Powell sent his memo to his friend Eugene Sydnor Jr, who was director of the US Chamber of Commerce. You can find references to that memo on a number of websites, but one I’ve read the memo on is Reclaim Democracy, an organisation whose aim is “to restore citizen authority over corporations”.

The memo was about Mr Powell’s concern at attacks on the American free enterprise system. Mr Powell cited consumer crusader Ralph Nader as “perhaps the single most effective antagonist”, saying many corporate executives belonged in jail for “defrauding the consumer with shoddy merchandise, poisoning the food supply with chemical additives and wilfully manufacturing unsafe products that will maim or kill the buyer”.

According to Reclaim Democracy, the Powell memo “influenced or inspired the creation of the Heritage Foundation, the Manhattan Institute, the Cato Institute, Citizens for a Sound Economy, Accuracy in Academe and other powerful organisations”.

Mr Powell argued that corporations needed to take specific public relations action to defend the system, but there would be understandable reluctance for any to get “too far out in front and to make itself too visible a target”. He said the national chamber of commerce therefore had a vital role. Mr Powell said defence of the system needed to be taken into university campuses, secondary schools, into the media & the political arena and, “especially with an activist-minded Supreme Court (which he was to join months later), the judiciary may be the most important instrument for social, economic & political change”.

According to the Atlantic article by Nancy Scola, ALEC (the American Legislative Exchange Council), formed in the mid-1970s, was dedicated to advancing free-market & limited-government principles through a unique public-private partnership between state legislators & the corporate sector. To its critics, though, “it’s a shadowy backroom arrangement where corporations pay good money to get friendly legislators to introduce pre-packaged bills in state houses”.

The billionaire Koch brothers have long been funders of ALEC, and have also long been funders of the Cato Institute, a libertarian think tank. The Koch family fortune is derived from control of Koch Industries, which began when Fred Koch developed a new cracking method to refine heavy oil. It’s become an international conglomerate operating in 59 countries, still with a heavy emphasis on oil & chemical businesses.

Koch brothers Charles (76, chairman & chief executive) & David (71, executive vice-president) own 42% each of a group ranked by Forbes magazine as the second biggest privately held US company, which earns an estimated $US100 billion/year. They’ve recently antagonised members of the Cato Institute by filing a suit to gain majority control of the institute. Cato president Edward Crane charged that Charles Koch wanted to turn the “independent, non-partisan research organisation” into “a political entity that might better suit his partisan agenda”.

Mr Koch’s rebuttal was that the institute shares which went to the widow of the institute’s recently deceased chairman should have been spread among other shareholders, and he wanted the institute to stay “true to its fundamental principles of individual liberty, free markets and peace into the future”.

Back to ALEC. One of the state laws it circulated was the “Stand your ground” law, which was the basis for allowing George Zimmerman to go home after shooting black teenager Trayvon Martin dead in February. In January, Republican Florida state house of representatives member Rachel Burgin had submitted a bill calling for the federal government to cut corporate tax rates. She’d forgotten to strip the ALEC boilerplate off the top of her document. Opponents began putting the dots together.

Links: The Atlantic The Atlantic, Exposing ALEC: How conservative-backed state laws are all connected Reclaim Democracy Reclaim Democracy, Powell memo Koch v Cato website Business Insider, Koch brothers’ suit over Cato Cato Institute ALEC exposed

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Attribution: Multiple sources above, story written by Bob Dey for the Bob Dey Property Report.

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