The Fine Print: How Big Companies Use "Plain English" to Rob You Blind (46 page)

If you want a stronger, wealthier and fairer America, then act. Turn off
Dancing with the Stars
and go talk to others. Vote. Join an organization or organize others yourself. Study. Write brief letters to the editor. Call in to talk-radio programs with concise points. Meet with politicians and, if a little more pressure seems appropriate, badger them some at public forums by salting the room with people who have prepared tough, polished questions in advance. And don’t expect overnight success.

Change is not easy. As Frederick Douglass, the runaway slave who became publisher of the antislavery
North Star
newspaper, observed in
1857, “if there is no struggle, there is no progress. Those who profess to favor freedom and yet depreciate agitation…want rain without thunder and lightning…. Power concedes nothing without a demand. It never did and it never will.”

But consider how far we have come because people just like you acted. People who believed that the world can be a better place and who worked for that to happen. Slavery is gone. Women have the right to vote. We have child-labor laws despite all the factory owners who railed against them. We have minimum-wage laws and environmental laws (though both are under attack under our faux free trade policies).

Progress is not a straight line uphill. We are living in an era of setbacks, an era that the future will look back upon and see for all its follies, especially the naïve idea that markets will just run themselves efficiently and honestly and that cutting wages and taxes is the path to prosperity.

Change takes time, persistence and recognition that knowledge is power. Remember the words of Susan B. Anthony on her deathbed in 1906, after a lifetime of seeking the vote for all women and more than fourteen years before the Nineteenth Amendment was enacted: “Failure is impossible.”

Make yourself informed, dedicated and powerful. Organize or join and support organizations dedicated to a better, fairer, more productive America, where the goal is to give everyone a shot at success.

Real change comes from the bottom up. Popular power can break through any glass ceiling, any artificial barrier, because voters elect our government leaders. So get out the vote. And remember that no one will do it if you do not.

Reform begins with you.

Below are estimated annual costs borne by the average family of four because of artificially inflated prices due to corporate and government policies. Not everyone will face every cost.

Many more people than I will be able to name here helped in one way or another during the four years I researched this book in the United States, Europe and Asia. To those who are left out, my apologies and my appreciation for the time you took to teach and to ferret out obscure records and to interpret them, especially the clerks and other record keepers in government offices and executives and specialists at companies named here who asked not to be identified.

At Reuters, Jim Impoco, who brought me in as a columnist in July 2011, and my editor, Howard Goller. At
Tax Notes
, where I was a columnist for three years until July 2011, CEO Chris Bergin and the editors, including David Brunori, Joseph Thorndike, Jeremy Scott, John Bell, Robert Goulder and Meredith Fath.

At Syracuse University College of Law, all of my colleagues, but especially Dean Hannah Arterian and assistant deans Aviva Abramovsky, Christian Day and Terry L. Turnipseed, professors David Driesen and Rob Nassau and my research assistants since 2009, Megan E. Dodge, Jacqueline S. Lawrence, Jessalyn M. Mastrianni, Fred Pugliese, Kenneth R. Williams and Ju-Hyun Yoo, now practicing law in Seoul. Also, my Syracuse colleagues Keith Bybee, Len Burman and Eric Kingson at the Maxwell School and Joseph Comprix at Whitman School of Management, where I have a joint appointment.

On taxes, John Buckley at Georgetown Law, Professor Michael
McIntyre of Wayne State University, H. David Rosenbloom of Caplin & Drysdale and New York University Law School, Robert S. McIntyre at Citizens for Tax Justice and the rest of the staff at CTJ, and Ed Meyers at the Institute on Taxation and Economic Policy.

At the University of Missouri–Kansas City, professors Bill Black, June Carbone, L. Randall Wray, Stephanie Kelton and John F. Henry. At the University of California–Riverside, Mason Gaffney. At the Tax Policy Center, Gene Steuerle, Jeff Rohaly and Bill Gale, and Elizabeth Boris at the Urban Institute.

On medical and public health matters, Drs. Stephen Bezruchka, Michael J. DeVivo, Art Moss and Marvin Hoffman as well as Nancy Yanes Hoffman.

In Oregon, David Bean, Ann Fisher, Mary Geddry, Bob Jenks, Nigel Jaquiss, Dan Meek, Chuck Sheketoff and my brother Eric, whose blue-collar insights always inform.

On utilities, Charles Acquard, Jim Baller, Dan Berman, Patrick Crowley, Charlie Harak, Robert McCullough, Pat Power, Harry Trebing, Howard Spinner, as well as Judge Richard D. Cudahy of the Seventh Circuit Court of Appeals and Professor William D. Henderson of Indiana University. On contracts, Professor Judith Resnik at Yale Law School, Ralph Nader and many others.

On geology and coal mining, Ronald C. Surdam, the former Wyoming state geologist; on coal mining, Geoff O’Gara, John Meklin and Ray Ring, now or formerly of
High Country Times
; on unions, Leo Gerard, president of the United Steelworkers; on public finance, Irene Rubin; on railroads, Richard White of Stanford University, and Gerald McCullough; on wealth distribution, economists Brad DeLong and Emmanuel Saez of the University of California–Berkeley, G. William Domhoff of UC–Santa Cruz, and Ed Wolff of New York University; on subsidies, Greg LeRoy, Phil Mattera and Bettina Damiani of Good Jobs First, Kenneth Thomas of the University of Missouri–St. Louis and Bruce Fisher of Buffalo State College; and on Census Department data, Steve Doig of the Arizona State University.

On investing, John C. Bogle, the founder of Vanguard, and my stockbroker friends Nannette Nocon and Mike Millard.

For their advice and thoughtful criticism, Dean Baker, Kate Berry, Fred Brock, Lynnley Browning, Pablo Eisenberg, Glenn Hubbard, Emily Kaminski, Sherm Levey, Lauren Lipton, Susan Long, Betty Lukas, Kevin Morrissey, Danelle Morton, Mindy Spatt, Chi Chi Wu, and the great reporters David Burnham, formerly of the
New York
Times
, and Morton Mintz, formerly of the
Washington Post
, for reminders of abuses past.

My Portfolio publisher, Adrian Zackheim, whose idea this book was, showed remarkable patience. My editor for much of the book, Courtney Young, provided valuable help, as did my loyal literary agent, Alice Fried Martell. Hugh Howard polished the final manuscript.

And, as always, those among my eight children who helped, this time Andy, Kate, Marke, Molly, Steven and especially Amy, as well as my wonderful wife, Jennifer Leonard, CEO of the Rochester Area Community Foundation and a guiding light on integrity and compassion whose motto is: always do your best.

Reuters, which hired me after it was largely completed, has no role in this work.

This book is based on hundreds of interviews and the reading of many tens of thousands of pages of official government documents as well as law reviews, corporate and academic studies and innumerable books. Words in quotation marks were actually spoken or written by those named.

Readers who wish additional documentation beyond the Notes should write to the author at [email protected]. The documents, if digital, or references to print will be posted at davidcayjohnston.com in the section for this book’s sourcing.

Chapter One: Jacking Up Prices

3
Kushnick knew a research gold mine:
Bruce Kushnick, “The $300 Billion Broadband Scandal.” Teletruth ebook. www.newnetworks .com/broadbandscandals.htm.

7
Since 1913 Americans:
“Milestones in AT&T History.” www.corp.att .com/history/milestones.html.

9
The worst of these are laws:
http://blogs.reuters.com/david-cay -johnston/2012/04/12/taxed-by-the-boss/ and http://blogs.reuters.com/david-cay-johnston/2011/07/19/paying-taxes-your-employer-keeps/ and www.youtube.com/watch?v=SF4J-y7wJc0 and www.goodjobsfirst .org/taxestotheboss.

10
In deciding Ostrowski’s suit:
Opinion in
Bordeleau v. State of New York.
www.courts.state.ny.us/CTAPPS/Decisions/2011/Nov11/190opn11.pdf.

11
What does it cost banks:
Perdue v. Crocker Nat’l Bank
, 38 Cal.3d 913, 702 P.2d 503 (Cal. Sup. Ct. 1985).

Chapter Two: Corporate Power Unlimited

17
Nearly four thousand years ago:
L. W. King translation of Hammurabi’s Code at www.fordham.edu/halsall/ancient/hamcode .asp.

18
We give the Athenians:
Maureen B. Cavanaugh, “Democracy, Equality, and Taxes.”
Alabama Law Review,
Winter 2003.

19
In ancient Rome:
Cullen Murphy,
Are We Rome? The Fall of an Empire and the Fate of America
. Boston: Houghton Mifflin, 2007.

20
The poor have become:
Miguel Helft, “Google Founders’ Ultimate Perk: A NASA Runway.”
New York Times
, September 13, 2007. www.nytimes.com/2007/09/13/technology/13google.html.

21
Back on earth:
David Cay Johnston, “First Look at US Pay Data, It’s Awful.” October 19, 2011, http://blogs.reuters.com/david-cay-johnston/2011/10/19/first-look-at-us-pay-data-its-awful/ and “The Richest Get Richer,” March 15, 2012, http://blogs.reuters.com/david-cay-johnston/2012/03/15/the-richest-get-richer/.

21
More recently, when the economy:
Author calculations from www.ssa.gov/cgi-bin/netcomp.cgi?year=2009 and http://www.ssa.gov/cgi-bin/netcomp.cgi?year=2008.

23
Among the world’s:
OECD, “Divided We Stand: Why Inequality Keeps Rising,” May 5, 2011. www.oecd.org/document/40/0,3746,en_ 21571361_44315115_49166760_1_1_1_1,00.html.

24
The Southern Pacific Railroad:
Jack Beatty,
The Age of Betrayal: The Triumph of Money in America, 1865–1900.
New York: Alfred A. Knopf, 2008, p.;173.

25
Very much later Associate Justice:
First National Bank of Boston v. Bellotti,
435 U.S. 765 (1978). http://caselaw.lp.findlaw.com/cgi-bin/getcase .pl?court=us&vol=435&invol=765.

Chapter Three: Buffett Buys a Railroad

31
Buffet paid a stiff premium:
Berkshire Hathaway announcement at www.bnsf.com/media/news-releases/2009/november/2009-11-03a.html.

32
A look at government data:
Laurits R. Christensen Associates, “A Study of Competition in the U.S. Freight Railroad Industry and Analysis of Proposals That Might Enhance Competition: Final Report.” Madison, Wis., Nov. 2008 available at www.stb.dot.gov/stb/elibrary/CompetitionStudy.html.

34
In recent public talks:
Mulvey PowerPoint at www.naco.org/searchcenter/pages/results.aspx?k=mulvey.

36
This means:
Hoover’s electric generation guide at www.hoovers .com/industry/electric-power-generation/1856-1.html.

37
Wall Street even measures:
http://news.morningstar.com/articlenet/article.aspx?id=91441, last accessed May 24, 2012.

38
As a result of my work:
David Cay Johnston, “Enron Avoided Income Taxes In 4 of 5 Years.”
New York Times
, January. 17, 2002, www .nytimes.com/2002/01/17/business/enron-s-collapse-the-havens-enron-avoided-income-taxes-in-4-of-5-years.html.

40
This assertion is belied:
John Boyd, “US Railroads Are Holding Up as the Healthiest Segment of the North American Freight Carrying Industry.”
Journal of Commerce
, August 17, 2009.

Chapter Four: Railroaded

44
In a quirky:
“Surface Transportation Board Announces Second Favorable Appeals Court Ruling in ‘Bottleneck’ Cases.” STB release no. 00-11, February 17, 2000.

44
Big railroads also erect:
“Unfair Federal Policies” in
Consumers United for Rail Equity
, www.railcure.org/issue/issue_unfair.asp.

47
The evidence of a lack of competition:
“Railroad Regulation,” GAO, RCED-87-109, June 1987; available at http://archive.gao.gov/d28t5/133518.pdf.

Chapter Five: In Twenty-ninth Place and Fading Fast

57
Braverman later wrote:
Burt Braverman, “Cities Should Stay Out of the Cable Business,” Multichannel News, April 28, 2003.

60
South Korea has taken:
“Pando Networks Releases Global Internet Speed Study.” September 22, 2011. www.pandonetworks.com/Pando-Networks-Releases-Global-Internet-Speed-Study.

60
We do consistently rank:
Product-offering brochures of Orange.com and bills sent to Dana Kennedy in Vieux Nice, France.

61
In terms of job creation:
Michael Spence and Sandile Hlatshwayo, “The Evolving Structure of the American Economy and the Employment Challenge.” Council on Foreign Relations, Greenberg Center, http://b.rw/gEq7Wo.