Sunday, April 4, 2010

Companies Externalizing Costs - Who Keeps Them Honest?

If you read as much as I do about Innocence Projects, environmental lawsuits and other civil lawsuits taken on by nonprofit groups to correct a social injustice or to free an innocent person or clean up a mess, you would know that most of these projects are staffed by volunteer law students or university law clinics that want to correct a wrong. You would also learn that in most cases the government or corporate defendant yells bloody murder and accuses the universities or nonprofit agency of "liberal bias." It never fails. Why is trying to correct an injustice or a wrong a liberal bias? Why isn't it "the right thing to do?"

In every environmental case I've read about, I invariably find that the company tried to externalize costs by having somebody else pay for its environmental mess. Companies do this all the time, externalize their expenses for things they don't want to pay for. Usually, tax payers clean up the environmental messes. In this case, University of Maryland is taking on Perdue, the huge chicken producer, and two Perdue farmers who dump their chicken manure and other waste into the Pocomoke River that flows into the Chesapeake Bay. The US Government and states and counties around the Chesapeake have spent billions trying to clean up the bay so that the Chesapeake Oyster and Shrimp will make a comeback - for food. The cleanup also makes for cleaner water. Everyone should want that.

But, that doesn't seem to be the case. This article says somebody is against it. School Law Clinics Face a Backlash - "ANNAPOLIS, Md. — Law school students nationwide are facing growing attacks in the courts and legislatures as legal clinics at the schools increasingly take on powerful interests that few other nonprofit groups have the resources to challenge."

Perdue's Chairman went to Maryland's Legislature to ask for help fend off the law students. Read on and you see who is helping get a law passed to limit the University of Maryland, a Republican, "Michael D. Smigiel Sr..., who represents areas along Maryland's upper shore of the Chesapeake Bay, questioned whether such clinics should be taking sides on controverisal issues." In Louisiana, the oil and gas industry is fighting Tulane University by the same method, through the state legislature. And, guess who's behind that. "'There is no reason that tax money should pay for these law students to act like regulators,' said State Senator Robert Adley, a Republican who submitted the bill in response from his state's oil and gas industry."

There is another way companies externalize costs, and that is by having tax payers ultimately pay welfare to those people who lost jobs in the recession. That happens when a person who should be getting unemployment insurance payments is cheated out of those payments by companies who fight the insurance claim. Companies pay the unemployment insurance, and it is cheaper for them to fight the laid-off worker's claim, as this NY Times article explains. In this case, Equifax, the credit-rating giant, bought Talx Corporation (made up of attorneys), to specifically go after the niche market of litigating unemployment claims for corporations. Every unemployment claim denied means lower unemployment insurance cost to the company. The Federal Trade Commission and the Labor Department are trying to fight Talx, on the one hand Equifax/Talx has monopolized the market, violating anti-trust laws, and on the other Talx causes each claim such delays and creates such a hassle that the laid-off worker simply gives up or runs out of money during Talx's constant appeals.

A PBS Newshour interview, on April 2nd, shows the problem. Only 60-65% of the unemployed in the United States actually receive their benefit, while 95-97% in Europe receive theirs. Among other problems, it pays companies to challenge as many claims as possible.

You get only one guess at which political party had more to do with our current unemployment system than any other. Yep. Republicans, and probably a Blue Dog Democrat or two. If corporations are supposed to pay for these things, why do we keep voting people into office who help them make us pay for it?


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