Tyranny of the Merchant Class

Maximizing Profits on the Backs of the Powerless
By RALPH NADER

There is a reason why, so many centuries ago, every major religion warned its adherents not to give too much power to the “merchant class.” That reason is still here – the commercial drive knows few self-imposed boundaries, especially when it resides in large corporations.

A cruel manifestation of this singular drive for maximizing profit is how companies treat those who are most powerless, most vulnerable or most preoccupied.

Here are some illustrations that highlight the serious failures of law enforcement:

1. Pre-teen children. The direct marketing to children knows no limits of decency. Undermining parental authority with penetrating marketing schemes and temptations, companies deceptively excite youngsters to buy massive amounts of products that are bad for their safety, health and minds. Think junk food – loaded with fat, salt and sugar, that increases obesity, diabetes and predisposition for high blood pressure. (See http://www.cspinet.org.)

Obesity produces sickness, death, disability and large medical bills.

Marketers are selling ever more violent entertainment, and soft porn with delivery systems that escape parental review or supervision. Television is no longer the only route to children. Our fourteen year-old, then-startling book—Children First: A Parent’s Guide to Corporate Predators—now reads as an understatement.

2. The poor. Whether white, African-American, Hispanic or Native American, merchants make the poor pay more. Loan sharks, shoddy merchandise, sub-standard food products and inadequate medical care have plagued the poor and been the subject of many studies and too few prosecutions.

3. People preoccupied by their bereavement are often preyed upon by the funeral industry. The Federal Trade Commission has an ample file on overcharges and deceptive practices from the unscrupulous merchants in that trade.

4. People with rare diseases often require so called “orphan drugs.” Under a 1983 law, drug companies receive a seven year monopoly with no price restraints on these drugs. Drug companies are also given huge tax credits for research and development costs associated with orphan drugs.

The Wall Street Journal (“How Drugs for Rare Diseases Became Lifeline for Companies”, Nov 15, 2005) called these drugs “lucrative niches.” With no competition, these monopoly drugs come with staggering prices for desperate patients.

Here is one story of how your tax dollars are being used for hyperprofit corporate profits. Henry Blair was working on an experimental enzyme under government contract as a researcher at Tufts University Medical School. Working with scientists at the National Institutes of Health, they and he made the enzyme work as a treatment for Gaucher disease, which swells organs and deteriorates bones.

In 1981, Mr. Blair started the Genzyme company, got the government contract to make the enzyme which he brought to market in 1991. The average price was—get this—$200,000 a year per patient!

In 1992, the Congressional Office of Technology Assessment (OTA) (banished by Newt Gingrich in 1995) reported that Genzyme spent $29.4 million on the drug, with much of the initial research funded and done by government scientists at the National Institutes of Health.

Two years later, Genzyme found a much cheaper way of making the drug. In 2005, the Wall Street Journal wrote that the Gaucher drug was still priced at $200,000 per patient each year. The company says it gives the drug at no cost to about 10% of the patients. For the rest, either rely on the insurance companies (good luck), or otherwise pay or die.

5. The Health Uninsured are charged by hospitals full price, which The Wall Street Journal reported “is far more than the prices typically paid by insurance companies.” This is the case, the Journal added, in spite of an annual taxpayer subsidy of $22 billion to hospitals “to care for the uninsured.”

6. Amputees who need prosthetic devices find that the devices in the United States are very highly priced (by comparison with other western countries.) Health insurance companies make these products leading candidates for rising co-payments. This can mean tens of thousands of dollars from the patients or they go without. These shocking co-payment requirements are often in the fine print.

Many of these devices also come about with taxpayer funded research and development. Profit margins are large because of the users’ dire necessity to have them for mobility, for work, for human dignity.

7. Low-credit-score credit card holders. The relentless credit card economy requiring plastic to buy more and more things and services. The credit score becomes the hammer. A story recounted by MSNBC’s Bob Sullivan in his engrossing new book Stop Getting Ripped Off describes: “the card promised an attractive 9.9% interest rate.

But there was a catch buried in the fine print: account setup fee: $29; program fee: $95; annual fee: $48; monthly servicing fee: $84 annually; additional card fee: $20 annually.” Then this clincher sentence: “If you are assigned the minimum credit limit of $250, your initial available credit will be $71 ($51 if you select the additional-card option).”

No wonder the vendors call them “fee-harvesting” cards. Who needs loan-sharks? These credit card vendors fleece the poor wearing a three-piece suit and sitting in air conditioned skyscrapers.

Such is the fate of the poor or the vulnerable under the boot of commercial avarice.