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Private Profits, Public Costs
by George Draffan
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Most studies of corporate subsidies (click here for a list) estimate that they cost American taxpayers about $100 billion per year. But direct taxpayer expenses touch only the tip of the iceberg by ignoring the less easily tracked costs of health and safety problems for workers and consumers, toxic waste clean-up and other pollution costs, and white collar crime -- not just employees stealing from their bosses, but corporations stealing from their communities. David Korten’s The Post-Corporate World points out that all U.S. corporate profits are about $500 billion per year, yet a conservative estimate of the externalized costs of industry runs to about $2.5 trillion per year. Thus corporate profits are dwarfed by externalized costs by a factor of 1 to 5 -- not a very efficient economic system, even from the point of view of providing goods and services. The $2.5 trillion dollar estimate of corporate subsidies is itemized in corporate accountant Ralph Estes' book Tyranny of the Bottom Line (Berrett-Koehler, 1996, pp. 177-178). Below is a summary of Estes’s annual costs in $ billions, adjusted to 1991 dollars: |
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Costs to workers, customers, communities, and the nation |
in $ billions |
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Costs to workers |
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Discrimination |
165.1 |
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Workplace injuries and accidents |
141.6 |
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Deaths from workplace cancer |
274.7 |
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Other workplace illness and disease |
? |
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Other workplace costs (sexual harassment, abuse, etc.) |
? |
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Subtotal of costs to workers: over |
581.4 |
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Costs to customers |
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Cost of price-fixing conspiracies, monopolies, deceptive advertising |
1,166.1 |
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Cost of unsafe vehicles |
135.8 |
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Cost of cigarettes |
53.9 |
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Other product injuries |
18.4 |
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Health/injury costs of personal, health, & food products |
? |
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Subtotal of costs to customers: over |
1,374.2 |
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Costs to communities |
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Stationary source air pollution: |
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Health costs |
225.9 |
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Architectural damage |
13.3 |
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Household soiling |
17.3 |
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Vegetation damage from acid rain |
5.9 |
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Mobile source air pollution: |
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Health costs |
1.7 |
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Crop losses |
3.1 |
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Corrosion and other material damage |
1.1 |
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Additional impairment in property values |
2.6 |
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Water pollution: |
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Impairment of recreational activities (fishing, boating, swimming, |
10.9 |
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Loss to commercial fisheries |
2.4 |
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Damage to health (morbidity and mortality) |
1.1 |
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Damage to fixtures and appliances |
0.3 |
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Aesthetic cost |
2.2 |
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Hazardous waste: |
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Cleaning up existing sites |
20.0 |
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Cost of waste generated currently |
? |
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Noise pollution |
? |
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Aesthetic pollution |
? |
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Subtotal of costs to communities: over |
307.8 |
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Costs to the nation |
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Defense contract overcharges |
25.9 |
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Other corporate crime: |
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Income tax fraud |
2.9 |
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Violation of federal regulations |
39.1 |
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Bribery, extortion, and kickbacks |
14.6 |
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Other crime costs not estimated |
82.5 |
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Subtotal of costs to the nation: over |
165.0 |
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Total (1991 dollars) |
$2,428.4 |
That's a quantified version, carefully compiled by corporate accountant Ralph Estes, now director of The Stakeholder Alliance (http://www.stakeholderalliance.org)
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O.J. Simpson trial: $200 million. "Security" industry: $40 billion per year (before 9-1-1) Gambling: $50 billion per year. Divorce: $20 billion per year. Prozac sales: $3 billion per year. Dieting and weight loss: $32 billion per year. Car crashes: $57 billion per year. Crime accounts for 7 % of the gross domestic product.
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