Trust Business above all is David Cameron's motto.

Britain is being rebuilt in aid of corporate power

Trust business, Cameron tells us, self-regulation is a force for social good. Silly me – I thought it was an invitation to disaster

• 
• • George Monbiot
  • guardian.co.uk, Monday 27 February 2012

Illustration by Daniel Pudles

 

They used to do it subtly; they don't bother any more. Last week a column in the Telegraph argued that businesses should get the vote. Though they pay tax, Damian Reece maintained, they have "no say in the running of local or national government". To remedy this cruel circumscription, he suggested that elections in the UK should follow the example set by the City of London Corporation. This is the nation's last rotten borough, in which ballots in 21 of its 25 wards are controlled by companies, whose bosses appoint the voters. I expect to see Mr Reece pursue this noble cause by throwing himself under the Queen's horse.

Contrast this call for an extension of the franchise with a piece in the same paper last year, advocating an income qualification for voters. Only those who pay at least £100 a year in income tax, argued Ian Cowie, another senior editor at the Telegraph, should be allowed to vote. Blaming the credit crisis on the unemployed (who, as we know, lie in bed all day devising credit default swaps and collateralised debt obligations), Cowie averred that "it's time to restore the link between paying something into society and voting on decisions about how it is run". This qualification, he was good enough to inform us, could exclude "the majority of voters in some metropolitan areas today". The proposal was repeated by Benedict Brogan, the Telegraph's deputy editor.

No representation without taxation: wasn't that Alan B'stard's slogan in the satirical series The New Statesman? Votes for business, none for the poor: this would formalise the corporate assault on democracy that has been gathering pace for the past 30 years.

This column is a plea for distrust. Distrust is the resource on which democracy relies. Distrust inspires the scrutiny and accountability without which representation becomes a lie. Distrust is all that stands between us and bamboozlement by people who, like Reece, Cowie and Brogan, channel the instincts of the billionaire owners of newspapers and broadcasters.

Last week David Cameron argued that those who say business "isn't really to be trusted" do so as a result of "snobbery". Business, in fact, is "the most powerful force for social progress the world has ever known". Not democracy, education, science, justice or public health: business. You need only consider the exemplary social progress in Zaire under Mobutu, Chile under Pinochet, or the Philippines under Marcos – who opened their countries to the kind of corporate free-for-all that Cameron's backers dream of – to grasp the universal truth of this statement.

He gave some examples to support his contention that regulation can be replaced by trust. The public health responsibility deal, which transfers responsibility for reducing obesity and alcoholism to fast-food outlets, drinks firms and supermarkets, reaches, Cameron claimed, the parts "which the state just can't".

Under the deal, Subway and Costa are "putting calorie information up front when people are buying". The state couldn't possibly legislate for that, could it? Far better to leave it to the companies, who can decide for themselves whether they inform people that a larduccino coffee with suet sprinkles contains no more calories than the average Olympic sprinter burns in a month. He forgot to mention the much longer list of companies that have failed to display this information.

Another substitute for regulation, he suggested, is a programme called Every Business Commits. Through its website I found the government's list of "case studies of responsible business practice". Here I learned that British American Tobacco is promoting public health by educating and counselling its workers about HIV. The drinks giant Diageo is improving its waste water treatment process. Bombardier Aerospace is enhancing the environmental performance of its factories, in which it manufactures, er, private jets. RWE npower, which runs some of Britain's biggest coal and gas power stations, teaches children how to "to think about their responsibilities in reducing climate change".

All these are worthy causes, but they are either peripheral to the main social harms these companies cause or look to my distrustful eye like window dressing. Nor do I see how they differ from the "moral offsetting" that Cameron says happened in the past but doesn't today. But this tokenism, in the prime minister's view, should inspire us to trust companies to the extent that some of the regulations affecting their core business can be removed.

We are living through remarkable times. The government, supported by the corporate press, is engaged in a naked attempt to rebuild the life of this country around the demands of business. Extending the project begun by Tony Blair, Cameron is creating an economy in which much of the private sector depends on state contracts, and in which the government's core responsibility is to provide them. If this requires the destruction of effective public healthcare and reliable state education, it is of no concern to an economic class that uses neither.

The corporations gaining ever greater powers will be subject to less democratic oversight and restraint, in the form of regulation. Despite the obvious lesson of the credit crunch – that self-regulation is an invitation to disaster – Cameron wants to extend the principle to every corner of the economy. Trust them, he says: what can possibly go wrong?

The cost of our habits

By Ardeshir Ommani

 

Altria Group is the leading cigarette maker in the United States. The stock of the company rose 20% in 2011's depressed markets and it's up 50% over the past two years, nearly four times the market's average gain. About two weeks ago, the stock of the company, which is the parent of Philip Morris USA and that of the Marlboro brand hit a 52-week high of $36.40.

The rise in its stock price is influenced by the company's stable cash flow and a dividend yield of 5.5%. At the time when money market rates are less than 0.5%, and the 10-year Treasury is 
yielding less than 2%, the stocks of Altria Group attracts all the attention of the investors who do not ask how many smokers would die this year because of addiction and succumbing to lung cancer. It is worth noting that on December 23, 2011, from Richmond, Virginia, Altria's operating companies launched "Citizens for Tobacco Rights", a nation-wide website to assist the tobacco companies in promoting lowering taxes on cigarette sales.

Although US cigarette sales have been in a severe long-term decline, to be exact, its shipments dropped by a third over the past 10 years, the industry has been able to offset the volume decline with increases in wholesale prices. Naturally after addicting a large segment of the youth around the world, the owners of Altria Corporation are led to raise the cost of their habits and suffering.

The companies have raised cigarette prices by nearly 35% over the past 10 years, even as smokers shouldered huge jumps in federal and state cigarette taxes. Altogether retail prices and additional taxes hiked the cost of a pack to $5.95. This was more than double the rise in overall consumer prices.

This shows that the high rates of profitability in addictive substances is the ideal method of exploiting not only the workers, but also the consumers. The change in the demographics of cigarette addicts has forced the industry to intensify the rate of exploitation of those who can least afford the habit in a long period of economic stress and high rates of unemployment.

The captains of the stock market seem unshaken. The stocks look rich based on their double-digit price per earning ratios. The high rates of profitability in the industry have led the management to implement the strategy of stock buybacks and huge stock awards for management compensation.

Altria is by far the biggest US cigarette maker in both market weight ($61 billion ) and revenue-wise (over $16 billion a year). A substantial share of the company profits are generated outside the US. Philip Morris International, a subsidiary of Altria, sells Philip Morris brand lineups in about 180 countries around the world.

In other words, the men, women and more frequently, elementary-aged children - often at the cost of their lives - are providing these gentlemen in New York and Chicago with lavish life-styles. (Looking at just a few of the advertisements in major corporate newspapers as the Financial Times, New York Times, The Telegraph, etc. directed at this wealthy 1%, we see a woman's handbag selling for $4,000).

In 2009, Altria purchased the smokeless-tobacco producer UST, which makes Copenhagen and Skoal brands at the cost of $11.7 billion. The reason Altria shouldered such a high cost price is that smokeless tobacco is a much-less regulated part of the worldwide cigarette market. Lack of regulations leaves the smokers at the mercy of the tobacco industry. Altria generates in an average $3.5 billion a year in cash flow, most of which ends in the investor's bank accounts in the form of dividends and interests and conspicuous consumption.

As a group, cigarette smokers have lower household incomes than non-smokers and are nearly twice as likely to be unemployed, says a financial officer of Morgan Stanley, a banking corporation. Studies have shown that in communities with higher economic status, its members send their children to better-financed public schools and private universities where environmental sciences and healthier life-styles are emphasized in the educational curriculum from early grade school through university level.

Anti-smoking campaigns partially financed by higher city and state budgets are more predominant on expensive billboards in these higher income communities.

On average a member of this lower economic class spends more than $2,000 annually, smoking a pack a day, the amount that could be allocated towards the present and future sustenance. Smokers, in their attempts to halt casting a large amount of money to the rich, many have traded down to either cheaper cigarettes or bulk tobacco for rolling their own cigarettes.

For this reason, shipments of roll-your-own and pipe tobacco jumped 30% in the first half of 2011. In the brave new world, particularly the Facebook generation age 21 through 29 is no longer fascinated with that rugged cowboy who was for many decades the symbol of Marlboro.

Alongside Altria in the tobacco market stand such giants as Reynolds American, maker of Camel and Pall Mall as well as Natural Spirit brands selling the ugly and more hazardous chewing tobacco brands. To entice new smokers or keep the old ones in the loop, the cigarette companies constantly hatch out new names with new packets. Recently, Philip Morris USA came up with what it calls the "Marlboro Leadership Program" which puts a price cap on what the retailers can charge for a pack of Marlboro in return for promotional incentives, such as a free pack for every carton sold.

While in the US, after years of public pressure, the federal and state governments have imposed some restrictions on advertising and marketing tobacco products, the same companies in the markets of the developing countries promote and glamorize smoking among school children, going so far as to distribute free packs of cigarettes along the pathways leading to schools, the way they did just a few decades ago in the run-down parts of the big cities and the depressed small towns across the US.

Also, the ruling classes of the countries whose economies are dependent on the US and its partners benefit from such relations through providing lucrative markets for the tobacco products of the major international cigarette producers.

It is telling that the gains posted by these tobacco companies in 2011 was skyrocketing when few other stocks were thriving last year. A group of mutual fund managers who tried to avoid negative performance by the end of the year resorted to placing the shares of several tobacco firms among their top holdings.

Gains of more than 20% among the addiction enablers helped these funds outperform their rivals and attracted the moderate savings and the retirement funds of the employed and retired working class. Such is the political economy of the habit-forming industry, addiction of the oppressed and higher rates of profitability.

Ardeshir Ommani is a writer on issues of war, peace, US foreign policy and economic issues. He has two Masters Degrees in the fields of Political Economy and Mathematics Education.

Public relations companies and law firms work without declaring who their clients are!

Smoke and mirrors: how the tobacco industry hides behind lobbyists

PR firms and lawyers campaign without revealing clients' identity

By Steve Connor, Science Editor
 

Saturday, 3 September 2011 in The Independent

The tobacco industry is covertly using third-party companies to lobby against smoking restrictions and to gain access to health documents held by public organisations.

Public relations companies and law firms are working on behalf of anonymous multinational tobacco companies without declaring who their clients are, according to an investigation by The Independent.

The third parties have refused to confirm they are working on behalf of tobacco firms when they make freedom of information requests from universities and other public bodies, even though the third parties are demanding more openness from their targets.

The public relations company Bell Pottinger and the London law firm Clifford Chance have both requested information from public organisations without making it clear they are working on behalf of tobacco firms.
The Irish PR company Hume Brophy has also carried out a lobbying campaign against the Government's ban on cigarette displays in shops on behalf of the National Federation of Retail Newsagents without stating
that the campaign was being funded by the tobacco industry.

The Independent has established that Alex Deane, a former chief-of-staff to David Cameron, played a key role in attempts to use the freedom of information law against one public organisation involved in promoting awareness against the health dangers of roll-up tobacco. Mr Deane is a director of Bell Pottinger which earlier this year requested documents from a health-awareness organisation funded by the NHS, the Bristol-based Smoke Free South West, following a campaign it ran against roll-up tobacco, which is popular in that part of the country.

Soon after this informal request, Smoke Free South West received a formal freedom of information request for the same documentation from Big Brother Watch, a right-of-centre libertarian group founded by Mr Deane.

Neither Bell Pottinger nor Big Brother Watch declared to Smoke Free South West that they had held discussions with one another or with Bristol-based Imperial Tobacco, which is listed as one of Bell Pottinger's clients in the PR firm's website, and makes Golden Virginia rolling tobacco and Rizla cigarette papers.

Mr Deane was not available for comment yesterday; Bell Pottinger said he was on holiday. David Petrie, the Bell Pottinger executive who sent the email requests to Smoke Free South West, did not return calls. Daniel Hamilton, a director of Big Brother Watch, refused to confirm or deny that his organisation had been in contact with Bell Pottinger or Imperial Tobacco over the FOI request to Smoke Free South West. "We don't work on behalf of other groups. We only work on behalf of ourselves... We've got no formal links with anyone in the tobacco industry," Mr Hamilton said.

This week, The Independent revealed that tobacco companies had demanded access to confidential university research papers on teenagers' attitudes to smoking, as well as meetings within the Department of Health between government officials and experts on smoking and health.

Stirling University, which carries out research on behalf of the Health Department and Cancer Research UK, said Philip Morris, the makers of Marlboro cigarettes, was attempting to access thousands of confidential interviews with British teenagers.

The FOI request was initially made in 2009 through the London law firm Clifford Chance, which tried to keep the identify of its client confidential. However, under the Scottish Freedom of Information Act, which is slightly different to the English Act, a third party must name the client it is working for – in this case Philip Morris.

A spokeswoman for Clifford Chance said she could not comment on whether the law firm was carrying out any further freedom of information requests on behalf of tobacco companies. Under the English FOI Act, third parties can work on behalf of anonymous clients.

Hume Brophy, the Irish public relations company, admitted it was a mistake to conduct a parliamentary lobbying campaign against cigarette displays in shops without making it clear it was paid for by the tobacco industry. In a letter to Stephen Williams MP, John Hume, a partner in the company, said that it will not happen again.

Martin Dockrell of the campaign group Action on Smoking and Health said that the tobacco industry's use of "front" organisations was nothing new.

"Big Tobacco's dirty little secret is how they get others to do their dirty work," Mr Dockrell said. "Some front groups are pretty much wholly owned subsidiaries; some appear to be independent but tobacco companies pay the bills and pull the strings."

Former Cameron crony leading the fight for the smoking lobby
Profile
Alex Deane served as David Cameron's chief of staff when Cameron was shadow education secretary from 2004-2005. A Tory activist since 1995, Mr Deane is now a director of Bell Pottinger, the public relations firm set up by Lord Bell, the Tory peer. He was a founding director of Big Brother Watch, a right-of-centre libertarian pressure group that opposes state-controlled surveillance and what it sees as intrusions into civil liberties. He has opposed CCTV cameras, DNA databases, council surveillance and data chips in dustbins. Big Brother Watch also stoutly defends the rights of smokers to smoke in public places.