Tuesday, June 14, 2011

Evil corporations

I have heard a lot of my liberal friends talk and post articles about how corporations are evil.  The large, multinational corporation has taken on the role of generic bad guy in countless movies from “Robocop” to “Wall Street.”  A memorable “Saturday Night Live” satirical commercial touted the Atlantic Puppy Grinding Company (slogan:  Sure, it’s evil, but think of the jobs).  In real life, liberals have deemed corporations from Big Oil to health insurance companies to be evil. 
Robocop (Karl Palutke)

My opinion has always been that corporations are like tools and other inanimate objects:  They are not capable of being either good or evil.  They only reflect the intentions and actions of the people that control them. 

Health insurance companies are accused of being evil because they allegedly profit from people’s illnesses.  In reality, health insurance companies come in at 90 when Yahoo Finance ranks industries by profit margin.  Ironically, this is significantly behind property and casualty insurance companies (ranked 65) that sell auto and home insurance and are rarely accused of being evil.  Health insurance companies have a net profit margin of 7.8 percent, which is far less than the 52.9 percent net profit margin of magazine publishers (ranked second), but most publishers aren’t considered evil either. 

When carefully considered, it is apparent that health insurance companies do not profit from people’s illnesses.  When people get sick and go to the doctor, the insurance company has to pay money out, so the insurance company loses money if their policy holders get sick.  If too many policy holders get sick and the insurance company has to pay out more money than planned, the company does not make a profit at all. 

Similarly, some insurance companies have been accused of denying claims in order to save money and increase profits.  Claim denials happen for several reasons.  A common reason is that the claims paperwork is submitted incorrectly.  If the doctor’s office puts the wrong code on the claim form, then the insurance company will normally deny the claim. 

A second common reason for denied claims is that the service is not covered by the policy.  Simply put, an insurance policy is a contract and both the policy holder and the insurer must abide by the written contractual agreement.  If an insurer refuses to pay legitimate claims, it will not only find itself without customers, it will also run afoul of the courts and state regulators.  If your health insurance claim is denied you can appeal or complain to state regulators.  In Georgia, you can contact the state Insurance Commissioner at gainsurance.org.  Many claims are paid when resubmitted after an initial denial.

(Chad Teer)
In 2009, Politifact.com examined an ad by a California nurses union that stated that insurance companies denied over twenty percent of claims.  Politifact found that the ad counted numerous claims that were denied to bureaucratic errors such as sending the claim to the wrong company and that were later paid.  Two other studies showed that the actual denial rate was much lower, between two and six percent.

In reality, health insurance companies aren’t evil.  Health insurance companies help people to pool their resources to allow them to cover health expenses without having to drain their bank accounts or sell their assets.  Health insurance companies provide a valuable public service. 

Oil companies are another industry that is commonly believed to be evil.   There are several categories of oil and gas companies on the Yahoo Finance list, but the Major Integrated Oil and Gas Companies, ranking 106, is comprised of what most people think of as Big Oil.  This industry has a net profit margin of 6.5 percent, even less than health insurance companies. 

One reason that oil companies are considered evil is simply because oil and gas prices are high.  In reality, over the last half century many oil producing nations have nationalized oil fields and refineries and renegotiated contracts with oil companies.  OPEC, a cartel made up of twelve of the world’s largest oil producing nations, controls about 75 percent of the world’s oil reserves according to Harvard International Review.   According to National Journal, OPEC members account for over forty percent of world oil production.  This means that OPEC exerts a powerful influence on oil prices.  To a great extent, oil companies must take or leave the price, called the basket price, set by OPEC. 

One way to solve this problem is to expand the supply of oil not controlled by OPEC.  If the US expands oil exploration and drilling domestically, it will reduce the power of OPEC and help to bring oil and gas prices down.  Americans for Tax Reform estimates that offshore oil drilling in Georgia’s coastal waters would be worth $79 million annually to Georgia’s economy.  President Obama opened Georgia’s waters to offshore drilling in 2010, but after the BP oil spill the federal government all but stopped issuing permits for new offshore oil wells.

Oil companies are also considered evil because they are perceived to be polluters and environmentally irresponsible.  It is true that there have been a number of high profile oil spills that were catastrophic in nature.  However, the Manhattan Institute notes that these catastrophic accidents typically occur twenty to thirty years apart (although there are smaller spills on a more frequent basis) and are becoming rarer.  The institute also notes a study by the National Research Council that found that the ocean floor naturally seeps more petroleum than is spilled by humans.  The difference is that this seepage does not normally rise to the surface and is not readily apparent.  Drilling may actually reduce natural seepage by relieving pressure of the underground oil reservoirs. 

Oil companies aren’t really evil either.  They just provide a product that most of need to go about our daily lives.  Without oil, not only would most of us not be able to go to work, we may not have jobs to go to.  In addition to fueling vehicles and machinery, petroleum is used in the manufacture of thousands of products from medicines to cosmetics to clothing.  Further, at present there is no viable alternative to using oil to fuel modern society.  No other energy source is as cheap, plentiful and efficient as oil.

Corporations can do evil things.  Corporations sometimes break the law.  They may pollute, embezzle funds, or mistreat employees.  These examples may be the result of carelessness rather than intentional evil, however.  This might also be caused by a small number of company officers acting on their own rather than representing the policy and goals of the company as a whole.  Doing a bad thing doesn’t necessarily mean that a company is evil.  So are there any truly evil companies?

The closest thing that I can think of to a truly evil corporation or industry is the tobacco industry.  According to tobacco.org, as early as 1855, a report of the New York Anti-Tobacco Society called it a “fashionable poison” and warned against its addictive properties and the high death toll it caused among smokers.  By 1950, scientific studies were showing the links between smoking and lung cancer.  In 1957, Leroy Burney became the first US Surgeon General to publicly state that there was link between smoking and cancer.  In 1965, Congress passed the Cigarette Labeling and Advertising Act which required warning labels on cigarette packages.  By 1999, even tobacco giant Phillip Morris had to admit that “there is no safe cigarette.”

When confronted with the news that their product was killing their customers, the tobacco companies were faced with the choice of changing their line of products or trying to make them safer.  Instead of diversifying into nonlethal products, they chose to cover up how dangerous tobacco is.  Leaked documents cited by “Frontline” on PBS, such as the Addison Yeaman memo, show that the tobacco companies were aware of unhealthy effects of nicotine and tobacco as early as the 1960s, even though tobacco company executives denied, under oath, that tobacco use was addictive while testifying to Congress in 1994 and again when forty states filed a class action suit against the tobacco industry in 1998.  Instead of educating consumers, the tobacco industry created the Tobacco Institute to create friendly research studies and counter reports that showed the dangers of smoking.  The Tobacco Institute also allegedly pressured scientists to “take a more advocative position” against anti-smokers.  The institute was disbanded after the Master Settlement Agreement in 1998, but according to a 2004 Reuters report archived by Action on Smoking and Health (ASH), the pressure on scientists continued as the tobacco industry fought to prove that second-hand smoke was harmless. 

In addition to covering up the effects of smoking, the tobacco industry actively tried to make it harder for smokers to quit.  WebMD cites studies by the Massachusetts Department of Public Health and the Harvard School of Public Health that showed that the average nicotine levels in cigarettes increased by eleven percent over the seven year period from 1998 to 2005.  Nicotine is the substance in tobacco that produces good feelings and causes an addiction for smokers.  By increasing the amount of nicotine that is absorbed by a smoker’s body, the tobacco companies made their product more addictive and, consequently, made it more difficult to stop smoking. 

Among its other effects, nicotine also may increase the body’s metabolic rate, which is why some people smoke cigarettes to lose weight.  However, as howstuffworks.com notes, smoking to lose weight “doesn't give you any of the health benefits that you'd get if you were losing weight by exercising -- it actually does the opposite.”  Nicotine can increase the level of bad cholesterol and lead to damage to the arteries.  This leads to an elevated risk of heart attack and stroke.

The resistance of the tobacco companies helped to make tobacco the leading killer in the United States.  According to the CDC, 443,000 Americans die prematurely from tobacco use every year.  Another 8.6 million live with serious illnesses caused by tobacco use.  Many of these tobacco casualties are nonsmokers, including children, who are exposed to secondhand smoke.  Diseases linked to tobacco include heart disease, lung cancer, emphysema, respiratory infections, cardiovascular diseases, ear problems, asthma, and even sudden infant death syndrome. 

As older smokers died and fewer adults started smoking, tobacco companies targeted children, women and minorities.  The American Heart Association points out that ad campaigns like the one featuring Joe Camel were specifically aimed at young people who could not legally buy cigarettes.  If kids start smoking before they know better, the chances are pretty good that they will be hooked for decades, if not for the rest of their lives.  The AHA notes that other ad campaigns also targeted members of minority groups and women, particularly those of limited education and low socioeconomic status.  The Georgia Department of Community Health agrees that Georgians without a high school education are more likely to smoke than those who have graduated.  Ironically, Georgians without health insurance are more than twice as likely to smoke as those who do. In Georgia, a smoker’s average lifespan is sixteen years shorter than that of a nonsmoker.

Tobacco use is a personal topic for me.  Tobacco cut a giant swath through my family in northeast Georgia.  Both of my grandfathers died tobacco-related deaths.  My father’s father, Pelham Thornton, died in 1965 before the effects of smoking were commonly known.  A farmer in Elbert County, Ga., he smoked Camels, chewed cigars, and rolled his own cigarettes made from Prince Albert tobacco.  In his last years, he coughed and hacked a lot, as well as having problems with his arteries. 

My mother’s father, Lonnie Denney, was a store owner in Vanna, Ga.  He smoked Lucky Strikes.  Lonnie wasn’t a heavy smoker.  My mom says that one pack would last him several days.  After suffering several lip cancers, he began using a cigarette holder.  On a trip to Helen, Ga. my mom heard him say that he was smoking his last cigarette and watched him grind the butt into the ground with his shoe.  Unfortunately, the damage had been done.  The next day he suffered a massive heart attack.  It did not kill him, however.  Lonnie would suffer a total of seven heart attacks and a stroke before he passed away in 1972 when I was one year old. 

Two favorite uncles were also victims of tobacco.  Singleton Jarrett Waters Hunt, lived in Wilmington, N.C. after retiring from the army.  Uncle Sing smoked Chesterfields.  One day while eating in a restaurant, he realized he was having a heart attack and drove himself to the emergency room.  When he went inside, the attendant on duty refused to let him park in front of the ER in spite of his attempts to explain that he was having a heart attack.  When he failed to persuade the attendant, he went back outside, moved his car, and then went back inside where he was finally treated.  After surviving this heart attack, I remember him describing how a doctor told him that he could either “quit smoking or quit living.”  Uncle Sing also quit, but died a few years later in 1993 of another heart attack or a stroke.  I’m not sure which.

Another uncle, James Starr of Royston, Ga. was a retired postal worker who smoked Winstons.  Uncle James was a heavy smoker, but was finally able to quit.  Like Lonnie, however, it was too late.  Several years later, he contracted throat cancer and died two days before Christmas in 1995.  I remember many others as well.  I can only guess how many members of my family were killed by tobacco that I don’t remember.

My own father, Don Thornton, was a pipe smoker and user of chewing tobacco when he was younger.  He successfully quit using tobacco to set a good example for my brother and me when we were growing up.  After having quit using tobacco at a younger age, my dad is still alive and healthy.  He and my mom own Nuberg Bargains and Treasures, an antique and secondhand store, in Dewy Rose, Ga.  I will always be grateful for the extra years that he gained by quitting tobacco, as well as the good example that he set. 

Untold thousands of people around the world grew up not knowing their parents, grandparents, or other relatives because the smoker did not know the dangers of tobacco until it was too late.  How many people, like my grandfathers and uncles, would not choose to live an extra fifteen to twenty years and see their children and grandchildren grow up if they had the chance? 

The good news is that the smoking rate is slowly declining.  The CDC reports that only twenty-one percent of adults currently smoke.  The bad news is that almost twenty percent of high school students have smoked cigarettes within the past month.  Given the addictive properties of tobacco, it seems that the tobacco companies are growing a new generation of tobacco-addicted Americans.  In Georgia, the Department of Community Health estimates that eighteen percent of Georgians currently smoke cigarettes.  Disturbingly, the highest rates of smoking are found in younger Georgians.

Even in the face of overwhelming evidence of the dangers of smoking, tobacco companies continue to sell their products.  The Master Settlement Agreement of 1998 cost the industry $246 billion through 2025, but they continue to sell their products, probably in part because all levels of government depend on the tax revenues from tobacco sales.   As tobacco use has declined in the United States, the tobacco companies have increased tobacco exports to developing nations.

Tobacco is one of the few, perhaps the only product, that when used as intended, results in harm and possibly death to the user.  In effect, tobacco users are paying for the privilege of poisoning themselves with tobacco products.  Even in the case of guns, the product does not necessarily injure or kill people when used correctly, although like many other products, including everything from cars to chainsaws to a simple knife, they can be extremely dangerous when used incorrectly.  A moderate amount of alcohol can be beneficial, but even one cigarette per day can seriously damage your health.  More than anything else, tobacco companies are like the street dealers who sell illicit drugs.  The big difference is that their product is legal.

So when faced with the fact that their product was killing their customers, tobacco companies first covered up the evidence for almost half a century as the people who used their product died by the thousands.  When they could not cover up the dangers of smoking any longer, the tobacco companies increased the addictiveness of their cigarettes to make it harder for smokers to quit.  They also targeted students who were less likely to be aware of, or care about, the long term negative effects of smoking, as well as exporting their wares to other, less developed, countries.  Fifty years after the links between smoking and premature death were inextricably proven, the tobacco companies are still selling billions of dollars worth of tobacco around the world each year.

Maybe some corporations are evil.

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