The US government works closely with thousands of corporations to bring you everything from national security to the drivers of climate change. The connections between these entities are diverse and often quite opaque making it difficult for citizens to tell who is really in charge. Is it the corporations with their ultimate responsibility to make a profit for their owners and shareholders, or is it the government with its ultimate responsibility to the electorate? Do the principles of government or business apply to joint decision making processes when government invests in businesses and sits on their boards, or when government agencies have representatives of business sit on task forces and decision making structures?
The economist and moral philosopher Adam Smith wrote, “people of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”
What happens when the interests of business and government so align, that they are fundamentally, “in the same business?”
Disclosures by whistleblowers have led to a heightened interest by the press in these government-corporate linkages particularly in relation to intelligence gathering. Bloomberg recently posted this article which describes in some detail cooperation between government spies and industry:
Thousands of technology, finance and manufacturing companies are working closely with U.S. national security agencies, providing sensitive information and in return receiving benefits that include access to classified intelligence, four people familiar with the process said. …
Makers of hardware and software, banks, Internet security providers, satellite telecommunications companies and many other companies also participate in the government programs. … Along with the NSA, the Central Intelligence Agency, the Federal Bureau of Investigation and branches of the U.S. military have agreements with such companies to gather data that might seem innocuous but could be highly useful in the hands of U.S. intelligence or cyber warfare units, according to the people, who have either worked for the government or are in companies that have these accords. …
Some U.S. telecommunications companies willingly provide intelligence agencies with access to facilities and data offshore that would require a judge’s order if it were done in the U.S., one of the four people said. [hmmm. think carefully about the ramifications of that statement, could the spy agencies just maybe be evading the law on collecting our information by collecting it from outside of our borders? pfffttt]… The extensive cooperation between commercial companies and intelligence agencies is legal and reaches deeply into many aspects of everyday life, though little of it is scrutinized by more than a small number of lawyers, company leaders and spies.
The article also points out the minimal oversight that these programs receive and quotes Senator Rockefeller’s cybersecurity assistant explaining that most congresspeople and their staffs charged with overseeing these programs lack the technical background and expertise to fully understand what they are responsible for overseeing. Further, the article notes that within the companies that are entering into “arrangements” with the government, knowledge of these agreements is very closely held, suggesting that corporate governance structures are undermined and unable to perform their duty to oversee the activities of their corporation or withhold consent in behalf of the (kept in the dark) shareholders for actions taken by management. The secrecy involved creates a situation where loosely supervised government officials are allowed to compel or conspire with corporate chieftains to hijack corporations and undermine democratic governance structures.
Many of the corporations that have cooperated with the government are now, since being exposed, struggling with the public relations fallout that has come from customers finding out that the corporations have helped the government spy on them. Surely they understood this risk, which is why many of these corporations demanded legal immunity for their cooperation.
So what made it worth the risk, because, as the Bloomberg article reveals, much of the participation by these firms was voluntary? From the same article:
Michael Hayden, who formerly directed the National Security Agency and the CIA, described the attention paid to important company partners: “If I were the director and had a relationship with a company who was doing things that were not just directed by law but were also valuable to the defense of the Republic, I would go out of my way to thank them and give them a sense as to why this is necessary and useful.”
Ah, there was a corporate rewards program …
One is left to speculate about what sort of rewards might be handed out to corporations from a government with trillions of dollars to spend. They probably aren’t just giving out key chains and coffee mugs. Hmmm … Facebook cooperates with the NSA. Was its precipitous rise in the market due to Zuckerberg’s ideas and business acumen or … something else?
The government has a lot of money to throw around and not only rewards corporations for cooperating, it uses those rewards to obtain a degree of control of those corporations. Complicit corporations willing to play ball stand to gain a lot from the deal.
If we’ve learned anything in the past few days it’s that the NSA does precious little of its own spying, relying instead on companies like Palantir and Booz Allen Hamilton. Indeed, Palantir is just one of dozens — hundreds? — of Silicon Valley companies developing and operating the tools used by intelligence agencies like the NSA. …
As the Financial Times’ April Dembosky reminds us, the relationship between the Valley and Homeland Security is nothing new. The Internet started out as a government project, designed to keep communication lines open in the event of a nuclear attack. In 1999 the CIA established In-Q-Tel, a venture capital fund to invest in technology companies that might be useful to the folks in Langley or Fort Meade.
A look at In-Q-Tel’s board of trustees shows how close the relationship between the geeks and the sneaks has become. The board is almost indistinguishable from that of a major Valley VC firm: Jim Barksdale former CEO and President of Netscape sits next to Howard Cox of Greylock, sits next to Ted Schley of KPMG… sits across from David E. Jeremiah, the Chairman of Wackenhut Services Inc and AB “Buzzy” Krongard, Former Executive Director of the Central Intelligence Agency. …
In-Q-Tel’s highest profile investment is Palantir – the data mining firm founded with additional money from Valley uber-Libertarian Peter Thiel – but the venture firm’s entire portfolio includes over 100 companies, all reflecting the CIA’s current big obsessions: “big data,” video surveillance and encryption.
In addition to investing in corporations and placing NSA governors on their boards, the government awards contracts to these corporations, effectively making them a closed loop of virtually guaranteed profits for those participating or co-investing. As this article points out, the NSA and Silicon Valley are in the same business: Read the rest of this entry →