The battle against corporate influence

Posted on May 1, 2012

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Muhammad Heikal, Jakarta | Thu, 04/05/2012 11:02 AM
As a result of the ongoing economic crisis in the US, the Occupy Wall Street (OWS) Movement, initiated by Canadian activist group Adbusters, led a series of demonstrations on Wall Street.

The protests that began on Sept. 17, 2011 in Zuccotti Park, New York, centered around a philosophy of fighting social and economic inequality, greed, corruption and the undue influence of corporations on the government.

With the background of the late 2008 global financial crisis, sometimes referred to as the Great Recession, current economic conditions in the US continue to deteriorate. Many analysts have said the financial crisis, which was sparked by subprime mortgage mismanagement, was a result of irresponsible, unethical, excessively voracious and illegal business practices over the last few decades.

To cope with the crisis, the US government came up with a solution by issuing the Emergency Economic Stabilization Act of 2008, commonly referred to as a bailout of the US financial system. The act authorized the US Secretary of the Treasury to spend up to US$700 billion to purchase distressed assets, especially mortgage-backed securities, and to give cash directly to banks.

Many objected to the plan’s cost and rapidity, pointing to polls that showed little public support for bailing out Wall Street investment banks. Critics also claimed that better alternatives were not well thought-out, and it was simply wrong to reward the people who were responsible for the problem in the first place. Despite these objections, the US government went ahead with the plan.

Movements like OWS were born to push the government to come up with better stimulus legislation to resolve the crisis in a way that benefits to the community more than greedy business players.

However, as has happened almost in every part of the world, it seems very difficult for the current generation of politicians to identify the right solutions to end corporate-related crises in their countries. And, even if they have the knowledge, politicians often do not have the will to implement them.

In Indonesia, the biggest mud volcano in the world, sparked by the natural gas exploration activities of a renowned company, has affected the East Java town of Sidoarjo since 2008 and is a prominent example of politicians lacking the will for action. Up to now, some communities whose homes were destroyed by the mud flow have received no compensation.

The government should have more bargaining power to force those responsible for the mud flow to fulfill their obligation to pay compensation. With the support of millions of citizens, the government should not hesitate to seek a solution. However, such efforts seem to have hit a giant wall due to the rapid rise of large corporations capable of interfering with the policies of a sovereign nation state.

There are several ways corporations can influence the government policy making process:

1) Campaign endorsements: As national campaigns have become more expensive, we have seen an increased reliance on corporations to donate funds for political campaigns.

2) Direct lobbying of the House of Representatives members, Regional Representative Council members, or their staff. In the case of House politicians, lobbying usually entails getting a bill passed, amended, or killed. When it comes to lobbying the executive branch, efforts usually are aimed at getting regulations written the way corporations or the lobbyist would prefer, or seeing to it that new regulations are not adopted.

3) In several countries where the practices of corruption, collusion and nepotism are prevalent, bribery is often the most effective way to influence the government policy-making process.

By understanding these three factors and addressing them, nascent movements like OWS in Indonesia will have a clear perspective of how policy is being influenced by the private sector, and will be better equipped to formulate ways to contain it.

There are several areas in which the government can be pushed to strengthen its policies regarding the practice of such transactional politics. 1) Push the government to tighten regulations on financial bailouts for the private sector. 2) Demand transparency in the use of bailout funds, which is very realistic since the money comes from taxpayers. 3) Push the government to strengthen law enforcement, especially in preventing transactional politics, by creating regulations which limit the interaction between government officials and private sector actors in day-to-day business.

By getting the government to support the eradication of transactional politics, it is believed that public policy will be rapidly improved, including long-awaited job creation, increased equality in the distribution of income, banking sector reform, and reduction of the influence of corporations on politics in Indonesia.

The writer is a diplomat at the Indonesian Foreign Affairs Ministry. The opinions expressed here are his own.

Posted in: Politik