The 50-State Corporate Agenda to Change the Rules of the Economy

How Corporations Have Bought Control of State Legislatures

Citizens United, ALEC
Photo credit:  Adapted by WhoWhatWhy from North Dakota / Flickr, Wikimedia (CC BY-SA 3.0) and Unknown / Wikimedia.
Reading Time: 17 minutes

Following the 2010 Citizens United Supreme Court decision, a lot of attention has been focused on the ruling’s impact on Washington, DC. However, the most consequential changes have arguably taken place in all 50 state legislatures.

Not coincidentally, political spending by corporations in state campaigns has grown 600 percent since 2010.

ALEC, the American Legislative Exchange Council, is an organization made up of corporate lobbyists from the biggest businesses in the country and state officials, who meet regularly to write laws, working side by side. Since 2010, ALEC has passed over 200 bills around the country.

Gordon Lafer, a former congressional policy adviser and an expert on state legislative politics, talks to Jeff Schechtman about the impact of all of this.

Of the hundreds of laws written by corporate lobbyists, the majority have been to weaken public- and private-sector unions, ease discrimination laws, make it harder to qualify for unemployment insurance and contribute to efforts at gerrymandering. All of this is happening, Lafer argues, while people remain totally bored by state politics.

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Jeff Schechtman: Welcome to Radio WhoWhatWhy. I’m Jeff Schechtman.

Back in 2010, with the Citizens United decision, we thought we were witnessing the beginnings of the dominance of corporations and of corporate power, but long before Citizens United, there were powerful currents of corporations within the body politic. In fact, let’s go back forty plus years and listen to Arthur Jensen talking to Howard Beale in Paddy Chayefsky’s brilliant movie, Network:

“You get up on your little 21-inch screen and howl about America and democracy. There is no America. There is no democracy. There is only IBM and ITT and AT&T and DuPont, DOW, Union Carbide and Exxon. Those are the missions of the world today. What do you think Russians talk about in their Councils of State? Karl Marx? They get out their linear programming charts, statistical decision theories, minimax solutions and compute the price-cost probabilities of their transactions and investments, just like we do. We no longer live in a world of nations and ideologies, Mr. Beale. The world is a college of corporations and execrably determined by the immutable bylaws of business. The world is a business, Mr. Beale.”

Today, add to all of this globalization, technology, artificial intelligence, the power of lobbying and so much money in politics and the stew becomes even more powerful. We’re going to talk about this today with my guest Gordon Lafer. Gordon Lafer is an associate professor at the Labor, Education and Research Center at the University of Oregon. He has served as senior policy advisor for the US Congress and has testified as an expert witness before multiple state legislatures. Gordon Lafer, thanks so much for joining us.

Gordon Lafer: Thanks for having me. It’s good to be here.

Jeff Schechtman: Clearly, this is not an issue that’s a new issue, not even one that begins with Citizens United, but the power of corporations in politics and in so many aspects of our lives as one that we’ve been dealing with for a long time.

Gordon Lafer: Yeah, I haven’t heard that clip from Network in a long time, but absolutely right. Corporations have been powerful and the rich try to make themselves richer and other people poorer, that’s not news. But there are things that are different in our time. One of them is the impact of Citizens United. Corporations already were dominant in politics, but in January 2010, when the Supreme Court said corporations can now spend unlimited amounts of cash on politics, it really created a sea-change, especially in the state legislatures. The political spending of the big corporate lobbies in the country has grown by 600% since 2010 and that’s made a huge different in the laws. They affect a lot of our economic lives.

Jeff Schechtman: Talk about that and what’s happened on the state level and the state legislative level that has made this such a more powerful voice.

Gordon Lafer: I think it’s really important and I think almost everybody in America is bored to death by state politics, so nobody pays attention and then a lot of things happen while we’re not paying attention. The corporate organization that does the most to coordinate corporate politics at the state level is called the American Legislative Exchange Council, or ALEC. ALEC is made up of several hundred of the biggest corporations in the country, some including those named in Network as being the giants in the 1970s: DOW Chemical, IBM, General Motors and a lot of companies that we all know: Facebook, Amazon, Microsoft, McDonald’s, Coca Cola. The way ALEC works is that one-quarter of all state legislators in America are members. They just pay fifty bucks a year in dues; the corporations pay all of the rest of the expenses. They meet several times a year in fancy resorts and they sit in committees that are made up of half elected legislators and half corporate lobbyists and they write bills together. All of the bills have to be approved by a corporate board and then those bills get introduced in cookie cutter fashion in state after state around the country. The same companies that write the laws give money to those candidate’s campaigns, spend their own money on Internet, radio, TV ads and also spend money hiring people to be right up it and be experts on TV or on the news to promote their policies. So, it’s a very well-funded, very smart 50 state agenda to change the rule of the economy.

Jeff Schechtman: And what impact has that had? What are the areas that so much of this effort has gone into?

Gordon Lafer: Almost everything, especially that affects the two-thirds of Americans that who are in jobs that don’t require college degrees. So, that means a lot of anti-union laws, both doing away with public sector unions, undermining private sector unions through so called right- to-work laws, lowering wages in the construction industry, but a lot of things that have nothing to do with unions: lowering the minimum wage, lowering the wage for waiters and waitresses, increasing the hours that teenagers can work in order to substitute teenagers for adult labor, making it harder to sue over race and sex discrimination, making it harder to recover wages that are stolen out of your paycheck, making it harder to collect unemployment insurance. When you have unlimited money, you can be very ambitious and in all these nooks and crannies of economic regulation that most people are too bored by to pay attention to, they’ve been at work and you only see it when your own personal runs into one of those situations and then you’re suddenly like, how come I don’t qualify for unemployment insurance or how come my wage is lower than it’s supposed to be? But, it has a tremendous effect. ALEC estimates that it passes 200 bills a year around the country of bills that were written by corporate lobbyists.

Jeff Schechtman: Does it matter whether we’re talking about red states, blue states, etcetera?

Gordon Lafer: It matters a lot. It’s not entirely a partisan issue and it’s certainly not like democrats have been God’s gift to working people so I don’t want to pretend that it’s just partisan, but in general, the places where the laws that are most aggressive in promoting the economic interest of the elite at the expense of other people have been in states where Republicans control all branches of state government, meaning both houses of legislature and the governor’s office.

Jeff Schechtman: Which is, in fact, the majority of states.

Gordon Lafer: Well, it is. That itself is partly a result of corporate activism. Just a couple of months after Citizens United was passed in early 2010, the US Chamber of Commerce helped create a new initiative called Project Redmap. The goal of that was to raise corporate money in order to flip state legislatures in the fall of 2010 into all Republican control. There were 11 states that newly became entire Republican controlled, including Wisconsin, Michigan, Indiana, Ohio and what we see in the states – one of the places where you can see how corporate power is so powerful at the state level is in almost all of those states, in presidential elections, they’re toss ups. The population is more or less evenly divided between democrats and republicans, but the state legislatures in all the states are very hard right wing and in many cases, super majority right wing. The fact that we have so many states like that is partly the result of corporate money in politics and Citizens United.

Jeff Schechtman: Where, if anywhere have we seen any pushback to this?

Gordon Lafer: Well, the place where pushback has been the greatest is in places where citizens have the right to vote on a single law. People vote for candidates for all different kinds of reasons – you see this in polling but you also see it in ballot initiatives or referenda, that the corporate agenda, while they’re very powerful at buying off politicians at the state level, what they have not succeeded in doing is convincing people that their ideas are good ideas. So, there’s a strong majority of both republicans and democrats who support raising the minimum wage, who support the idea that everybody should have the right to paid sick leave, who support affordable healthcare. So, we see places for instance, in Arizona last fall – Arizona is a very conservative state. It voted for Donald Trump over Hillary Clinton, but by a much wider margin, in the same election, they voted to raise the state’s minimum wage and create a right to paid sick leave. So, some hundreds of thousands of people both voted for Donald Trump and voted for minimum wage and sick leave. I think that’s where we’ve seen the effect of pushback and to me is also the most hopeful grounds for thinking about how to move forward.

Jeff Schechtman: To what extent did this change dramatically in terms of the success of these efforts, post Citizens United. Clearly some of this was going on before. How did Citizens United really amp this up?

Gordon Lafer: I think two ways. We only have one statistical study so far that’s really done in an academically rigorous way that estimates that the impact of Citizens United is to increase the chance of a republican winning a state legislative election by four points. A whole lot of political elections are won and lost by less than four points, but you can also see things like the attack on public employee unions, which was started famously in Wisconsin in early 2011 and then other states took off from that. That comes from ALEC and it comes from the Koch brothers: Americans for Prosperity. It doesn’t come out of the head of any individual politician or right-to-work laws, which are laws designed to do away with private sector unions was really dead before Citizens United. Most of the states that have those laws passed them in the 1940s and ‘50s and the most recent one had been 2001. It wasn’t a live issue at any place. Suddenly, when they were able to flip all of these legislatures, things that that had been on the corporate wish list but not real possibilities became real possibilities and started being enacted in a bunch of states.

Jeff Schechtman: When we look around the country, do we see any states that have been more successful than others in resisting this and is there something that we can learn from that?

Gordon Lafer: Well, I think that California is a state that a lot of people look to for another kind of model, for a more progressive and more humane model. I think that we’re in a time of downward mobility that has been for most people in the country, for forty years, not a cliff but a slow, steady downhill in terms of the ability of people to earn a decent living and support their families and anything like a middle class style of living. That cuts a lot of different ways but it makes people hungry for opportunities to make the economy fairer. So, there are states that have an active progressive legislation. There are states that have overturned their own state legislators: in Idaho and South Dakota, both deep red states. Voters voted by referendum to overturn laws that their legislators passed that did away with teacher tenure and had merit pay based on test scores. But I think we also see something like the Fight for Fifteen, where the first place fifteen dollar minimum wage was won was in Seatac, where the Seattle Airport was but then as soon as they won there, people started thinking well, if you get fifteen bucks for working in the Seattle Airport, maybe we should get that at LAX or maybe we should get that at other airports. So, we’ve seen that wins in some places galvanize the imagination and raise people’s expectations in other places.

Jeff Schechtman: Have unions been a plus or a minus in fighting this battle?

Gordon Lafer: Oh, absolute plus. For the most part not successful, but when you think about what it would be like without unions – you know, one of the things that I look at in this book is trying to understand why are unions so under attack? When we look at something like ALEC, this is not individuals making decisions; this is not personal ideology. These are corporations, each of which at some point – government affairs committee or executive committee – decided in was in their rational interest to put time, money and energy into promoting this agenda. It’s not so clear when you look at the year that Wisconsin public employees lost their right to collective bargaining, the head of ALEC’s labor committee was Kraft Foods. So you think, what does Kraft Foods care about public employees in Wisconsin or Ohio? When you look at what they actually say in some private meetings, what it looks like is one of the main reasons that the big corporations want to get rid of unions is not because of what they do for union members, but because of what they do for non-union workers, which of course is the vast majority of our economy. They say unions even in their shrunken and weakened state are the main opposition to corporate lobbies on things like minimum wage, sick leave, not having more NAFTA style treaties, protecting Social Security, having affordable healthcare – none of these are union issues per se because union members get those things in their contracts, but unions are the only significant political counterweight to the corporate agenda on all those issues and I think that’s the primary reason why unions have been so under attack. So, even though unions continue to shrink and it’s a very difficult time for the labor movement, when we think what would this political battle be like if there was no labor movement, it’s a scary thing to contemplate.

Jeff Schechtman: When we look at it in the context of globalization today and more jobs not so much being outsourced, but really being replaced by mechanization or artificial intelligence, talk a little bit about how this might continue to play out.

Gordon Lafer: One of the things that I think marks our time as different from the 1970s or earlier times is the degree of globalization. The president of GM famously said in the 1950s: “what’s good for GM is good for America.” I don’t know if that was ever exactly true, but it was closer to true when all of GM’s cars were made by American workers and bought by American consumers. Right now, a majority of GM employees and two-thirds of the cars they sell are overseas. They sell more cares in China alone than they do in the United States. They’re still a very big player in American politics. They’ve been active in ALEC and the Chamber of Commerce and the Association of Manufacturers, but their interest increasingly diverged from the interest of the American population. When people sometimes say, why do corporate lobbies want to cut education funding? Don’t they know that they have to rely on these people to be their workers in the future or why do they want to cut the minimum wage? Don’t they need people to buy their cars? Now, America is still important but it’s less important than ever before for many of these big corporations because increasingly, their interests are overseas. So, we’re in a new and weird situation where a foreign corporation, it’s illegal for them to donate money to political campaigns in America but a corporation that is legally American, because it’s headquartered here even if 80% of its business is overseas, can spend unlimited amounts of money. That’s one of the things where we see what looks like disinvestment in America of corporations not wanting to pay for infrastructure or social infrastructure that I think is because their interests have changed by dent of globalization.

Jeff Schechtman: Is there then, a plus in looking at this, although this is, as you say, where so many of the attacks have taken place, but a need to look at this on a more local or at least on a statewide level in terms of addressing some of these issues, because certainly from a globalization point of view, that genie is not going back in the bottle?

Gordon Lafer: That’s right. I wouldn’t look to the federal government right now as a great source of hope and the federal government, even in good times tends to pass a very small number of significant laws in any two- year period, whereas the states pass a ton, partly because there’s no filibuster in the states. I think you’re absolutely right: that the opportunity to move forward lies a lot in local action at the state level and also at the local level. Some of the most important initiatives started as city initiatives: in San Francisco, raising the minimum wage, the right to paid sick leave I think first started as only in the city of San Francisco. It turned out to be okay; it didn’t cost jobs, it didn’t make businesses go out of business and then other places started saying, look it worked there, let’s do it here and then states started adopting it. So, I think it’s crucially important to be active at that level.

Jeff Schechtman: What is the impact, when you look at that level, to what extent do you see the power and impact of money and economic influence from corporations?

Gordon Lafer: Well, it’s always a battle between people and money. I mean, the progressive side of things is not going to outspend the corporate lobbies, even if they’re sometimes sympathetic billionaires who throw money in. In general, there’s just more money on the other side. There’s a lot of popular support for these things. We have been seeing money coming in especially to school board elections because there’s a lot of money to be made in privatizing schools and in the technology to be made in privatizing schools. We’ve seen Wall Street interests putting in money in city elections or even school board elections. That didn’t used to be true. I think this makes local level organizing all the more important because that side is not going to be outdone by somebody outspending them in ads, but in many cases they have been outdone by being out-organized on the ground.

Jeff Schechtman: Does organization still make a significant difference today, particularly with younger voters that tend not to participate in that kind of organization?

Gordon Lafer: You know what, I don’t have any data. I try not to say things that I don’t actually have numbers on, but I think that we have seen places where organizing has worked and not just organizing in the sense of online activism, but actually people meeting each other, people forming real human organizations on the ground. It feels very slow and very local but a lot of things have been won that way.

Jeff Schechtman: Talk a little bit about Citizens United and the ways in which, arguably even some of that hasn’t been tested entirely yet, that there’s even more potential danger there.

Gordon Lafer: It’s made a huge change in state and local politics. Legally, Citizens United said that both corporations and labor unions can spend unlimited money on politics, but there’s no union that I know of that was sitting on a big pile of cash that was just waiting for a legal okay to be spent on politics. But corporations were. Just the Fortune 500 alone has revenues that are 350 times the size of the entire national labor movement, so it’s a very unequal context. Citizens United has unleashed all of that money. We have also seen a privatization of politics itself, not just spending on things, but you see both organizations like Karl Rove’s and the Koch brothers’, which are all based on having huge amounts of money that can be raised from private corporations and spent secretly that is doing things that only parties used to do. They’re recruiting and training candidates, they’re training field organizers in the staff, they’re doing their own polling, they have their own electronic voter file, which usually is the backbone of any political party. Things that not very long ago, only the Republican or the Democratic party could do. Now, the budget of the corporate lobby is larger than either the national Republican or Democratic party and so we’re seeing things move in a direction that is not only more money being given to candidates, but more of a question of who really controls who the candidates are and what they do in office shifting from party to private hands.

Jeff Schechtman: It’s interesting because you see it as kind of an extension of the disruption that we see in so many other sectors of the economy.

Gordon Lafer: Yes, I guess it does look like that and it is disruption in some kind, although it is highly coordinated. It’s not disruption of the kind saying: “We want 1000 little local startups to get working on politics.” That’s not what’s happening. It’s a very high level of coordination through very big corporations. I would say another thing that has happened at the state level as a result of Citizens United is that redistricting and gerrymandering of districts is even more intense at the state level than the federal level. That affects not just who’s in office, but what kinds of pressures they’re under when they’re in office. When most Republicans, just to talk about that party are running in districts when there’s no real chance of a Democrat ever winning and it makes the primary election be the real election. The threat of being primaried from the right is a very realistic threat and we’ve seen that threat be used in places like Michigan. When Michigan’s right to work law was passed, which is the law that destroys private sector unions, the Senate majority leader was a pro-labor moderate Republican who was opposed to that law and he got taken to a back room with a bunch of big money donors who essentially told him if you don’t do what we say, this is going to be your last term in office because we can pull money from you and give it to your opponent. And nobody is really paying attention to state politics, so even in a big state, you can often buy state legislative races for a fifty or hundred thousand bucks, which means the private interests have increasing power because of this, over being able to control what people do in office even when the politicians disagree with the principle.

Jeff Schechtman: Does this leave you totally pessimistic about where this is all going?

Gordon Lafer: This is always the question. How do you talk about this without saying it’s hopeless, start drinking now? It’s bleak. It’s a hard thing to look in the eyes. I think it’s important for us to look in the eyes. I think it’s especially important to not just get caught up in the drama of Donald Trump or other personalities but to be able to see behind the individuals, behind the parties even to what’s the real power that is making things happen, but I don’t think it’s all bleak. The reason I don’t is because when you look at public opinion, there’s a very strong – this is part of what I said before – a majority of people in America say to pollsters that we should redistribute wealth through heavy taxes on the rich. I’m not expecting that to happen anytime soon but it’s a kind of shocking thing to read those polls and realize oh my god, that’s what the majority of people in the country think. A majority of people think that there should be limits on how much corporate executives can make. Through the healthcare debate, most people in the country not only thought there should be a public option, but that there should be single payer. When there’s economic decline, like there’s been for 40 years for most people in the country, it produces a ton of insecurity, of anxiety, of rage, and those things obviously can cut either right or left. So I think it’s a chaotic and dangerous time, but also a time with a lot of opportunity.

Jeff Schechtman: Politicians and electeds tend to be very slow to react. Is there the potential, do you see, for corporations to realize that public attitudes, public opinion has shifted in the ways that you’re talking about and that they need to make changes?

Gordon Lafer: Unfortunately, I think a lot of corporations have realized that. Of course, it’s a big world, so there’s anecdotally things on every side, but the main response of the corporate lobbies to realizing that their policies are unpopular is to try to stop people from having the right to vote on them. A big initiative of the corporate lobbies is to use their influence over state legislators to pass laws at the state level that make it illegal for any city or county within the state to do things like what San Francisco did or what Portland did and say we’re going to vote, whether it’s the city council or the citizen referendum to have a higher minimum wage or a living wage or a right to sick leave or regulate plastic bags or regulate fracking. They’re pushing legislation and have passed it in a number of states that say: “We’re going to take away your right to vote on those things.” In this way, I think that their economic agenda has led to a political agenda which involves the shrinking the scope of democracy so that you may still have fair elections, but the things that are important to them, they’re trying to place in a category to say: “This you don’t get to vote about.” I don’t think we should wait to think there’s going to be a kind of moral awakening among corporate executives, are they going to make their calculations differently? That change needs to come from below.

Jeff Schechtman: Gordon Lafer, the book is The One Percent Solution: How Corporations are Remaking America One State at a Time. Gordon, I thank you so much for spending time with us.

Gordon Laffer: Thank you for having me on.

Jeff Schechtman: Thank you. Thank you for listening and joining us here on Radio WhoWhatWhy. I hope you join us next week for another Radio WhoWhatWhy podcast. I’m Jeff Schechtman.

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Related front page panorama photo credit: Adapted by WhoWhatWhy from Citizens United (DonkeyHotey / Flickr – CC BY 2.0).

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3 responses to “The 50-State Corporate Agenda to Change the Rules of the Economy”

  1. […] Who What Why Following the 2010 Citizens United Supreme Court decision, a lot of attention has been focused on the ruling’s impact on Washington, DC. However, the most consequential changes have arguably taken place in all 50 state legislatures. […]

  2. […] Pro-corporate lobbying group ALEC has reportedly had 200 of its proposed laws passed since 2010. “The same companies that write the laws give money to those candidate’s campaigns, spend their own money on Internet, radio, TV ads and also spend money hiring people to (write up it) and be experts on TV or on the news to promote their policies. So, it’s a very well-funded, very smart 50 state agenda to change the (rules) of the economy.”   https://whowhatwhy.org/2017/06/02/50-state-corporate-agenda-change-rules-economy/ […]