Fine Print: The Most Important Book of 2012…

Fine Print

…or any other year.

Part
1 of __

Twice this year I’ve been astounded by the carefully crafted work of a non-fiction artist. The first, which I’ll mention later, I’ve recommended or gifted to a smaller subset of those who value my opinions. This book, however, is one that I not only recommend, but will heartily insist that you must read.

I think any citizen who reads The Fine Print: How Big Companies Use “Plain English” to Rob You Blind will join me in becoming an evangelist for the book.

Fair warning: This is the definition of a book for progressive thinkers who know that our system is busted but can’t quite pin down all the ways our commercial society became so inequitable.

David Cay Johnston, a former columnist for Reuters, has cataloged the way that “regulated” industries are ripping us off every day, week, month, and year. Previously he did the same to government subsidies in Free Lunch and to our tax system in Perfectly Legal, both of which you’ll want to dive into after reading The Fine Print.

On consultation, I’ve decided that rather than reviewing Johnston’s latest, I’ll summarize it, chapter by chapter, because I know that most of you won’t actually read the book. Still, these are facts you need to know in order to be an effective citizen.

Honestly, there’s little that is partisan in this book, though it’s ideological slant is purely populist. If you don’t find yourself disgusted (and a bit overwhelmed by the stakes and the odds) after reading this series or this book, then I probably don’t know you.

Herewith, then, is installment 1.

Jacking Up Prices

Most readers will remember the Justice Department’s breakup of AT&T in 1974 and how that antitrust action would usher in an era of competition that would drive the cost of telephone service inexorably downward. Even before the monopoly was shattered, another corporate giant, the Southern Pacific Railroad, began offering a competitive long-distance service by making use of its already existing rights-of-way and microwave communications towers. SP’s service morphed into a company we now know as Sprint/Nextel (SP. Get it?), piggybacking on the railroad infrastructure to lay fiber-optic cable.

The successful Hollywood producer Adam Liepzig (Dead Poets Society, March of the Penguins) sought a strategic alliance with AT&T a dozen years or so ago. During his meeting, the “phone guys” told him that cheap and abundant communications was not their target. Rather, your pocketbook was. ” ‘They said their corporate strategy was that, within a few years, AT&T wanted to draw at least $100 a month from each client household,’ Liepzig recalled.”

Here enters Bruce Kushnick of Brooklyn, New York. While visiting an aged aunt, Kushnick stumbled upon a trove of 20 years worth of her telephone bills. In 1984, she was billed $9.51 for local service. By 2003, her local service bill had grown to $38.90. Not for long distance. Not for Internet. Just for local service. Not exactly the direction promised by the champions of the 1974 breakup.

Beyond the amounts, Kushnick was struck by the growing complication of his aunt’s bills as the years passed. Fee on fee on fee were showing up; many of the charges were for “features” she couldn’t even use with her equipment.

Here’s a list of the incremental gains, all approved by regulators, that the telecom companies achieved in order to fulfill the forecasts Liepzig heard.

PRE-1974

  • Extra charges for phones that weren’t black
  • Extra charges for “Princess” phones
  • Extra charges for Touch-Tone phones
  • Extra charges for Trimline phones
  • Extra charges for 9-1-1 service and, later, for automatic number indicator and automatic location indicator on your 9-1-1 calls, should you ever make one

POST-1974

  • Limits of 10 directory assistance calls, then a fee per use (this was justified to regulators as a boon to consumers, with the phone company claiming that telemarketers were abusing the 4-1-1 system with thousands of calls)
  • Ultimately, charging for any and all directory assistance calls
  • Call waiting, call forwarding, 3-party calling
  • New charges for regional calls that were neither local nor long distance
  • Transfer of line ownership inside the house to you, with the attendant cost for repairs; you could, of course, pay a monthly “line maintenance” fee

A nickel here, a quarter or two there…

  • “FCC Subscriber Line Charge
  • “Universal Service Charge”
  • “Access to Network Charge”

“What Liepzig and Kushnick encountered were early signs that the lower prices made possible by competition and digital technology were just empty promises. This involved more than money, since the telephone industry, together with the cable television industry, quietly saw to it that written into the fine print were laws and regulations that made it easier for them to minimize their investments in new technology and to serve only the customers the companies wanted.

“Since 1913 Americans had enjoyed a legal right to a landline telephone at any address, but by 2012 that right had been legislated away so quietly that my Reuters columns were the first to report this trend. The right to a landline was taken away without any news coverage in Alabama, Florida, North Carolina, Texas and Wisconsin. In Kentucky and New Jersey enough attention was aroused that consumer groups fought the changes, but they face powerful obstacles. AT&T hired thirty-six lobbyists to work the Kentucky state legislature. In California the consumer group The Utility Rate Network (TURN) counted 120 AT&T lobbyists, one for each member of the Golden State legislature.”

The “toll road” thus erected is extremely profitable.

“In the chapters that follow, we’ll look at how legislatures have rewritten basic business laws, some whose principles date back thousands of years. Too often the goal has been to thwart competition, artificially inflate prices, hold down wages by decimating unions, reduce worker benefits and then restrict or bar access to the courts by those aggrieved. Businesses have gotten policies adopted that have allowed some managers to run corporations as, effectively, criminal enterprises, something modern management and economic theory regard as outside their fields of expertise (and at best implausible) but that criminologists have a name for: control fraud. That means, in short, that those in control run the fraud, as we shall see.”

OK, folks. That’s a taste. Allow me to share just one scam that robs you of cash, services, and quality of life.

“…nineteen states…let companies pocket the state income taxes withheld from their workers’ paychecks for up to twenty-five years…General Electric, Goldman Sachs, Procter & Gamble and more than 2,700 other big companies have these deals [including foreign companies.] None of these states requires that workers be told that their state income taxes go to their employees – that they are in effect being taxed by their bosses.”

Next time: Corporations were given protection under the 14th Amendment to the Constitution not by new legislation, not by a court ruling, but by a one-paragraph assertion in the case of Santa Clara County v. Southern Pacific Railroad, made by the clerk of the court, who just happened to be the former president of – you guessed it – a major railroad company.

I’ll be more concise in coming installments because if you found this interesting, you’re going to want the book, for sure. For a limited time, I’ll be giving a $10 gift certificate, good for use in 2013, with every purchase of The Fine Print.

Correction: This piece referred to the author as a current reporter with Reuters. He informs me that he was a columnist for that organization, but is no longer associated with Reuters.

1 Comment

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One response to “Fine Print: The Most Important Book of 2012…

  1. Thanks for the really kind words about my new book, but to keep the record straight I was a columnist (not reporter) for Reuters, but no longer work there. Anyone who reads The Fine Print and would like to arrange for me to talk in their city can reach me at davidcayjohnston@me.com.

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