Pfizer’s Irresistible Urge to Merge

In hindsight, I suppose it’s no surprise that the maker of Viagra would have an urge to merge. But when American pharmaceutical giant Pfizer announced merger plans this week with a smaller company headquartered in Ireland, the arousal Pfizer initiated had nothing to do with flaccid appendages. Widespread criticism of the deal erupted from various corners, as politicians and commentators decried the deal as a brazen tax-dodging ploy.

The details of the merger are indeed unsavory. Even though Pfizer is the bigger company, and even though the post-merger entity will be led by Pfizer’s management, the deal is being arranged in a way that, on paper, has the smaller Irish company, Allergan, taking over Pfizer. This creative “inversion,” as it’s called, will enable the new company, which will be legally based in Ireland but operationally still very much American, to avoid significant American tax liabilities.

The Pfizer-Allergan deal illustrates a point that I make in Fighting Back the Right: Reclaiming America from the Attack on Reason, on why democracy and sensible public policy are struggling in America. The system is dysfunctional, catering to large institutions and ignoring the interests of real humans, because the general population has been disempowered in a number of ways. Meanwhile, major corporations have accumulated so much wealth and power that they can do what they want, when they want, where they want, with very little stopping them. In such an environment, democracy becomes a sham.

Pfizer has made billions by popularizing the term “E.D.,” originally using retired senator Bob Dole in ads to inform American men, often during televised football games, that “erectile dysfunction” is a problem to be discussed publicly. It was awkward at first, but the E.D. commercials are familiar to us now, so that we hardly bat an eye as we sit with the family watching ads that promise potent results while warning of side effects that might alarm him and her. The once-private subject is on the public agenda, even if we may still cringe at getting that uncomfortable question: “Daddy, what’s a four-hour erection?” From a public health standpoint, most would applaud open discussion of these issues, though we can still question the drive to market E.D. products aggressively, especially when done by playing to male insecurities (i.e., “Are you ready?”)

What America really needs, however, is a senator who will talk openly of another acronym: ECP, or excessive corporate power, a vitally important issue that is largely ignored in public dialogue. The Pfizer inversion shows us with no uncertainty that multinational corporations are obsessed only with their own self-interest, utterly incapable of national loyalty and unburdened by moral concerns. ECP directly or indirectly relates to almost every major problem we face: climate change, environmental degradation, the loss of jobs overseas, militarism, health care, anti-intellectualism, and even crime and gun violence. The issue of corporate power belongs on the national agenda.

As I’ve said elsewhere, ECP is not something we should blame corporations themselves for—they are designed to do nothing but seek power and profit, so blaming them is akin to blaming a lion that is let loose in a city for the devastation that occurs. The blame rests with those responsible for securing the lion; or in the case of ECP, those responsible for regulating corporate power.

Ultimately, it is we the people, though our government, who are responsible for regulating corporations, but in real life we simply have not been up to the task. We are far outmatched, in terms of money, time, resources, and will, by the corporate entities that we’re supposed to control. This is why virtually all the lawyers and lobbyists in Washington work for corporate interests, not the interests of you and me. Corporations know exactly what participatory democracy is, and they take it seriously. They immerse themselves in policymaking far beyond the level of ordinary citizens.

Until ECP is recognized as a key issue in political discourse, we can expect little progress on the public policy front. The lion must be put back in the cage, and until then we can only try to minimize damage. In the meantime, there are a few points about ECP that all those concerned should consider:

Don’t confuse ECP with wealth disparity. When we talk about economic issues, particularly in the context of the rich and powerful Wall Street sector being a problem, we often hear about wealth disparity and the much-maligned “One Percent.” This is perfectly understandable, but it’s important to realize that ECP is a systemic problem that requires independent consideration apart from the issue of wealth disparity. There’s no question that ECP contributes to wealth disparity in numerous ways—by squeezing workers, overpaying executives, exporting jobs, and creating speculative wealth that is not grounded in real value, to name a few—but it should be understood as a distinct problem of its own.

ECP is not the product of any evil genius. When we have problems in society we like to have bad guys to blame them on, and progressives can certainly point to many villains: the Koch brothers, the neocon hawks, the Christian right, and others. The problem of ECP, however, is not the brainchild of any evil villain. ECP occurs due to the very nature of corporations. As I’ve said before, if corporations are people, their psychological profile is narcissistic and sociopathic.

Eliminating corporations is not the answer. Let’s be real. We aren’t going to solve the problem of ECP by eliminating corporations, or even nationalizing most of them. We need major change, not just mild reforms, but we need to carefully consider the framework within which major change can happen.

We can acknowledge the positives that corporations deliver. We can recognize that corporations produce most of the products and services that make modern living possible. But that doesn’t mean we should dismiss the negatives as we have in America over the last generation. Left uncontrolled, corporations will naturally seek profit without regard to national loyalty, the environment, the health and well being of workers, or the safety of consumers. It is their very nature to pursue their own self-interests—which is always defined in terms of revenue and profit and nothing else—relentlessly, with singular focus.

For this reason, to the extent corporations must be considered “people” under the law, we should keep their psychological profile in mind—they are totally self-absorbed, void of any innate empathy or compassion, and hungry for power and wealth and nothing else. The systemic pressure for increased earnings, coupled with the bureaucratic maze that is inherent in large organizations, makes them capable of malfeasance that most individuals would never imagine committing. A tobacco executive would never personally hand out cigarettes at his kid’s school, but tobacco companies will aggressively market their products, even to youngsters, when they can get away with it.

We shouldn’t be surprised that a corporation would quickly abandon American residency if it means avoiding taxes. That’s the nature of corporations, and we need to wake up to it.

For more, see Fighting Back the Right.

Twitter: @ahadave


Photo: Kisser’s Embrace by Cristiano Betta

4 replies
  1. Pat Gage
    Pat Gage says:

    While a senior executive at American Home Products, owner of Wyeth Pharmaceuticals, the CEO wanted to change the name of AHP to Wyeth, to recognize that its principal business was pharmaceuticals. The Board Chairman and former long-time CEO, the late Jack Stafford, was concerned about the change as it was scheduled to occur on March 11, 2002. Jack felt it unpatriotic to drop the “American” name. Wyeth was acquired by Pfizer, helping it become the world’s largest drug company and sponsor of one of the largest lobbying programs in congress to protect drug price negotiation by Medicare. Now Pfizer is planning to become an Irish company through an inversion via acquisition of the much smaller company, Allergan. This is to reduce its taxes in the U.S., its largest market, and its long-time home country. The rest of us will have to make up the lost revenue and still pay high prices for Pfizer drugs.

  2. Peter
    Peter says:

    Very well said – this message must become an important part of our nation’s political discourse, before it is too late.

  3. Vic
    Vic says:

    Clearly, you’ve never worked for a corporation or in any environment that was subject to excessive, constant, capricious and politically motivated regulation and supervision. More regulation is not the answer. Nor more government. Companies do good by doing well. We employ legions of people and treat them well, else they’d leave. We pay a lot in taxes, else we’d be in trouble with IRS. We provide something that society wants, else we’d soon be out of business.

    What good do you provide the world, David?

  4. Gary
    Gary says:

    Nations need to continue moving toward value added taxes. These require producers to pay taxes as merchandise moves through all stages. Those bringing value into a nation should pay the tax necessary to maintain those roads, markets and legal system. Then it wouldn’t matter where corporations called home.

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