The Sacramento Bee has covered Governor Schwarzenegger’s three day mission to Canada, and noted that of the fifty-two business delegates on the trip “a third of those going represent interests that have donated to Schwarzenegger’s campaign”. As with his other “trade missions” this has been funded by the “California State Protocol Foundation” a special “non-profit” set up by some of California’s major corporations to pay for these junkets. The trip includes many of the usual suspects- among those attending will be a lobbyist for Pacific Gas and Electric, former California Republican Party Chairman Duf Sundheim, and of course California Chamber of Commerce President Allan Zaremberg, who is an officer of this “Foundation”.

Schwarzenegger spokesman Aaron McLear said- apparently with a straight face- that the political donations “had nothing to do with the selection of delegates”, and Zaremberg expects us to swallow the same thing, “”There are people on the delegation who might have given to the foundation and people who didn’t give to the foundation,” he said. “It isn’t a part of the criteria to go on the trip.” Yeah, right.

It seems as if it doesn’t matter how many reputable publications cover the corruption that has crept into the State’s international business policy under the Schwarzenegger administration. They are not listening, and they apparently don’t care. It is important for people to know that this administration is not “pro-business” as they want you to believe – they are “pro-corporation” – and there is a big difference. The State government is absolutely sick with sole source deals and no-bid contracts, and this administration is completely closed to outside input and ideas. These guys are so administratively incompetent they can’t even manage to answer letters written to them by ordinary citizens. Don’t take our word for it, call or write them yourself and see what happens- if you are not a big shot, they are simply not interested.

The Schwarzenegger administration is driven by publicity- not by good public policy. They apparently have no concept of “the greatest good for the greatest number”. It is possible to organize a trade mission in the public interest, especially if it is part of a larger coordinated program, but that is not what this administration is doing- this Canada trip, and Schwarzenegger’s other “trade missions” really have been “junkets” – in the worst sense to the term. What the seem to want is more of that fawning media publicity that seems to feed this behavior. This time, let’s not give it to them.

The American Small Business League has launched a political campaign to try to stop the Federal Government from its despicable practice of awarding small business contracts to Fortune 1000 companies. The Federal Government has always had an absurd concept of what it means to be a “small business”. By some of their definitions, it means “less than 500 employees”. They also noted that Federal procurement for small businesses is centralized within 50 miles of Washington, D.C., and want a more decentralized program that would stop California companies from being locked out of these deals. From their press release:

Small business owners across the State of California are contacting United States Senators Barbara Boxer and Dianne Feinstein and asking for their help to halt the flow of government small business contracts to Fortune 1000 corporations. To date, fourteen different federal investigations have all found that billions of dollars in contracts earmarked for legitimate small businesses have instead found their way into the hands of some of the largest companies in the United States and Europe. The bill, H.R. 1873 the “Small Business Fairness in Contracting Act,” passed through the House of Representatives last week and will allow large companies like Boeing, Lockheed Martin, Halliburton, Rolls-Royce and L3 Communications to keep their existing federal small business contracts for up to five more years. Small business owners are asking Senators Boxer and Feinstein to amend the bill and push for the immediate removal of all Fortune 1000 corporations and other large companies from federal small business contracting programs and to force all firms with existing federal small business contracts to re-certify on an annual basis. The campaign to garner the support of Senators Boxer and Feinstein has been organized by the Petaluma, California-based American Small Business League. If Senators Boxer and Feinstein can convince the Senate to add a provision in the new legislation to close the loophole that allows Fortune 1000 corporations to obtain small business contracts, the ASBL predicts that up to $60 billion a year in federal small business contracts would be re-directed to legitimate small businesses in California as well as every other state in the country.

The Orange County register has given it’s take on junkets being funded by the California Foundation on the Environment and the Economy, a non-profit organization founded by several large Corporations in the Energy and Telecommunications industry. Their take is that this abuse of non-profit status is similar to the Abramoff case and could be considered “bribery” – though it would be difficult to prove. Our take has already been written here. We wouldn’t begrudge Schwarzenegger Administration officials and California Legislators an occasional junket if there were doing a decent job of international business development in the interests of California companies and citizens- but they are not doing a decent job- they are doing a crappy job. Also, where are the “trip reports” for these junkets? I can’t find them, and they certainly don’t seem to be on the CFEE website. How can the recipients of these junkets claim they were in the public interest, if the information they (should have) generated is not available to the public? Excepts from the OC register article:

At the end of March, lawmakers and members of the Public Utility Commission joined corporate executives on a trip to Japan. The expenses, valued at $8,000 to $9,500 per person, were picked up by the California Foundation on the Environment and the Economy – a nonprofit in San Francisco funded and connected to firms represented on the trip.

Lawmakers say trips like these are valuable educational experiences; government watchdogs say they’re attempts to buy influence and circumvent the law, which bars corporations from buying trips for government officials or funneling money through organizations that can.

But without evidence, like a memo or an e-mail, directly linking corporate money to officials’ travel, the law says it’s OK. ‘It’s extraordinarily frustrating,’ said Carmen Balber of the Foundation for Taxpayer and Consumer and Rights. The foundation recently uncovered documents showing the value of the Japan trip. ‘You don’t need a smoking gun in California to know a $10,000 gift to the Speaker of the Assembly is illegal,’ Balber said. ‘But the law does require that smoking gun if that $10,000 gift is funneled through a nonprofit organization. And that’s absurd.’

The Jack Abramoff case illustrates the kind of concrete evidence needed to substantiate such a connection. By now, it’s known the disgraced former lobbyist used the National Center for Public Policy Research and other nonprofits as intermediaries for himself and his clients to pay for trips to Scotland and other things. (At the time, businesses were allowed to pay for House of Representatives trips; Abramoff was trying to dodge a rule that required trip sponsors to be directly connected to the reason for the travel.)

But proving those links required a mountain of documentation and testimony: e-mails showing Abramoff arranging pass-through payments; donations dated the same day trips were taken; sworn statements by insiders. I asked Bryan Sierra, a Department of Justice spokesman, why political corruption cases require reams of evidence. He said the burden of proof can be incredibly high.

For bribery, he said prosecutors have to prove the intent of two parties: the briber, who must be shown to have offered something of value and delivered it, and the bribed, who must be shown to have taken an official action directly because of that thing offered or delivered.

The Los Angeles County Economic Development Corp. has released its annual International Trade Trends and Impacts report. As is usual for this otherwise reputable organization, they have lumped all imports and exports onto one category with frequent references to what that they call “the total value of two-way international trade”. It isn’t until the discussion of individual trade partners is there any mention at all about the huge trade deficits with these countries, and we can only assume that Los Angeles Ports must be shipping a huge number of empty shipping containers back to Asia. With China, for example, there is a regional trade deficit of 83 billion dollars- a nearly 5 to 1 import to export ratio with Southern California. In spite of this, the LAEDC did not even mention the stunning difference between imports and exports in their list of “challenges” facing the industry.

They were eyeball to eyeball, and Schwarzenegger blinked. Earlier this week Governor Schwarzenegger responded to right-wing radio personality Rush Limbaugh who had been taunting him by saying that he is “not a real Republican” and of being a “Democrat pretending to be a Republican”. Speaking during an interview on the today show the Governor said, “Rush Limbaugh is irrelevant. I am not his servant; I am the people’s servant of California. Whether they call me a Democrat or a Republican, or in the center, or I changed, or this or that, that’s not my bottom line”. This “irrelevant” comment was widely praised, and maybe the Governor should have left it at that. Rush Limbaugh is popular among some conservatives but he is despised by progressives and liberals. He was one of the biggest cheerleaders for the war in Iraq and helped the Bush administration make it’s case that Iraq was “linked” to Al Qaeda, along with other frequently misleading and highly partisan reporting.

Limbaugh continued taunting Schwarzenegger, on Tuesday saying, “if he had the leadership skills to articulate conservative principles and win over the public as Reagan did, then he would have stayed conservative” and also mocked the Governor on his Web site by putting up a fake poster with Schwarzenegger’s face titled ‘Total Sellout’ a play on the title of the film ‘Total Recall’. On Wednesday the Governor threw in the towel and called into the show, but the dressing down continued. Limbaugh pressed Schwarzenegger about his the $12 billion universal health care proposal that is opposed by many conservatives, and said that the compromises Schwarzenegger said were necessary were really a “capitulation to liberals”. Schwarzenegger still seemed eager to make up with the talk show host, however, and suggested they get together to smoke cigars, “You and I, we’re going to have a good time again in our next smoke out,” Schwarzenegger said. “We’ll smoke a stogie together, and we will talk about this from here to eternity. The key thing is that people should know that you and I, we don’t have a fight.”

According to Nouriel Roubini the answer is Unregulated Free Market Fundamentalism Zealotry. The Blog “Mish’s Global Economic Trend Analysis” however, disagrees. Though he complimented Roubini for “one hell of a rant” he critiqued Roubini’s position arguing that it is government interference in these markets that is causing the problem: “perhaps the real solution is to get rid of government sponsored ownership societies designed to make renters look and feel like second class citizens, and let the free markets work as they are supposed to. Blaming the free market for this mess is certainly starting in the wrong place. It was a lack of a free market that both started then escalated this mess”. Both blogs are worth a read.

There has been more coverage in the San Francisco Chronicle on Corporations links to “non-profits” that are being used to pay for junkets for Schwarzenegger administration officials and members of the State Legislature:

Some of the same corporate interests that dominate the Capitol through high-priced lobbyists and campaign donations also bankroll nonprofit organizations that in turn spend tens of thousands of dollars a year entertaining state lawmakers and administration officials far from home — gifts that otherwise would exceed state limits.

Since 2002, the largesse has included a weekend at a fashionable beachfront golf resort south of Rio de Janeiro for 14 state officials, including Assembly Speaker Fabian Núñez, D-Los Angeles, and the governor’s chief of staff, Susan Kennedy.

There was also a luncheon cruise on New Zealand’s Hauraki Gulf for two state senators and three Assembly members; dinner at Harry’s Bar in Rome for Núñez and another lawmaker; and golf at the renowned Kapalua Resort on Maui — a treat enjoyed by state Sen. Jeff Denham, R-Salinas, and Bill Leonard, a member of the state Board of Equalization.

The trips, which typically involved study groups and conferences, are sponsored by organizations such as the Pacific Policy Research Foundation, the American Legislative Exchange Council and the California Foundation on the Environment and Economy.

According to a Chronicle investigation, each of these organizations receives substantial funding from major corporations such as ChevronTexaco, Sempra Energy, Pacific Gas and Electric Co. and Altria Corp. (the lobbying arm of Altria Group, which owns Philip Morris tobacco).

We’re disappointed, but no longer shocked to learn about these shenanigans. In truth, if our elected leaders were doing a decent job we wouldn’t begrudge them an occasional junket. In the area of international trade and economic development, however, they are not doing a good job- they are doing a terrible job.

None of the basics for an effective economic development program are in place in California. After more than three years, they haven’t formed any cohesive business development strategy or policies, there is no administrative infrastructure and few effective public services. The few remaining small business programs are listless and bureaucratic. The junkets are the fun part- but they haven’t earned it by doing any of the hard work to justify their little romps.

Another huge question that always seems to go unanswered is what happens to the information that was collected on these trips? Do they even bother to collect it in an organized and professional manner? The Schwarzenegger administration is virtually closed to public input in these areas- presumably unless you are one of the Corporations funding their junkets and other pay offs, so shouldn’t we at least be allowed to see what they came up with?

That’s what the NYT seems to be asking in an article, “For Internet Barons, Uncharted Investment Territory”:

There lies a conundrum for the Internet barons who have turned, of late and en masse, to investing in solar, wind, biofuel and other energy startups. Does their expertise with technology qualify them to take on the world of alternative fuel and power? When it comes to Energy 2.0, are some of the nation’s most successful investors in over their heads? … The key to success, they say, is the Silicon Valley investment vetting process. The venture capital model, they contend, pits great entrepreneurs against one another, invests in the best technologies and creates focused, streamlined companies and new industries.

But their certainty, which can spill into bravado, has stirred criticism even within their own ranks. ‘They’re completely wandering in with no clear idea’ of how the energy industry works, said Paul Kedrosky, a venture capitalist and the executive director of the von Liebig Center for Entrepreneurism and Technology Advancement at the University of California at San Diego.

He argued that the party line — that good investment strategists can apply their principles across industries — did not acknowledge the peculiarities and complexities of energy technology. “The downside? They’re going to blow up this sector before it has a chance to get established,” Mr. Kedrosky said.

It is not as unlikely a possibility as it may seem. Before the dot-com boom “business incubators” were sometimes used to help small business grow. This economic development approach was all but destroyed when the venture capital companies got a hold of it. Companies like idealab in Pasadena used it to pump up multi-millions in investor funding until the entire concept of “business incubation” meant something entirely different. In all likelyhood, the recent flood of VC money into alternative energy projects will be a good thing, but the danger does exist that they could ignore smaller, more innovative but less profitable technologies and companies in the never ending quest for the big bucks.

That’s what you might conclude by reading the latest LA Times report on the favoritism the Governor has given to those who supported his reelection campaign:

Gov. Arnold Schwarzenegger, once a critic of patronage in government, has rewarded 29 aides from his reelection campaign with state jobs, promotions and hefty raises… Administration staffers from the governor’s first term who were employed by Californians for Schwarzenegger in 2006 today earn an average 27% more than they did in January 2006. That is 8 percentage points more than the average salary increase given to aides who were never employed by the campaign, state payroll records show.

Couple the with the revelation that Governor Schwarzenegger paid huge “bonuses” to his Chief of Staff and other senior officials- apparently from Corporate campaign donations, and it is obvious that the seeds have been planted for a corrupt state government. They may not be there yet, but they are getting dangerously close.

The San Francisco Chronicle has written still another expose of Governor Schwarzenegger’s use of business associations and large Corporations to fund his foreign trade missions:

Gov. Arnold Schwarzenegger’s foreign trade missions are paid for by the California State Protocol Foundation. Though neither the governor’s office nor the foundation will disclose the group’s funding sources, tax records filed by other nonprofits doing business with the foundation show that it received $75,000 from agribusiness interests and banking. The foundation is led by two of the state’s most influential business groups — California Chamber of Commerce and the California Roundtable.

The Chronicle quoted Aaron McLear, Schwarzenegger’s spokesman, as saying the governor accepts the gift from the foundation because both share a “passion” for creating jobs in California. He said Schwarzenegger is not influenced by those that pay for the trips and makes his decisions based on what is best for the state.

This is extremely difficult to swallow. There is a huge difference between being “pro-business” and being “pro-Corporation” and to-date the Schwarzenegger administration has not shown the slightest interest in small business concerns. The non-profit organizations he uses to fund his trade missions- including the California Protocol Foundation, The California Chamber of Commerce, The California Roundtable, the California Commission on Jobs and Economic Growth and others are primarily interested in supporting their large Corporate clients, for the simple “Willie Sutton” reason: “that’s where the money is”.

Together, these groups form a private network of Schwarzenegger supporters that have no real interest in diluting their influence with the Government with annoying small business concerns. Since the Governor has essentially used these “non-profit” groups as proxy economic development agencies they have the power, but not the responsibility that comes from being part of government. On the important issue of economic development and international trade promotion, the door is simply not open to the rest of us.

This won’t be the first time that one of California’s big newspapers has done an investigative report on this issue, but we are nearly three and a half years into the Schwarzenegger administration and nothing ever seems to change. Governor Schwarzenegger, who just two years ago said: “I want your ideas, and the more radical the better” now seems to only be interested in input from a few closed groups of his own associates. Since the Governor has not made economic development part of his Government “for all the people” pledge it may be time for the State Legislature to step in and make sure that all California citizens interested in this issue are fairly represented.

The Los Angeles Times has reported that Governor Schwarzenegger racked up more than $2 million in campaign debt in last year’s election. In spite of this, the Governor paid huge “bonuses” to his staff for moonlighting work on the campaign while on the state payroll. After his victory on Nov. 7 the governor paid more than a quarter million dollars in bonuses to four of his senior staff members including a payment of $100,000 to Susan Kennedy, his Chief of Staff. A spokeswoman for the Governor said, “They put in a tremendous amount of hours on the campaign trail before and after work and on weekends, and they were compensated for that time.”

Do they really expect us to believe this nonsense? Even private sector salaried workers are expected to be dedicated to their jobs and are not paid for overtime work. Government employees are never supposed to use their jobs to collect pay offs like this- especially when they involve the obvious potential for conflict of interest. With the responsibilities associated with being senior officials in the California government, exactly how much free time do these guys have? The Governor and his staff are on extremely shaky ground here. As anyone who has tried to contact the Governor’s Office knows, unless you are a big shot they are just not interested.

As the Times reported, the Governor won’t have to struggle to cover his campaign debt, “Now that Schwarzenegger is embarked on another four-year term, he can tap businesses and other special interests whose fortunes depend on state action”. This is just one baby step removed from total corruption. Every decision made by the Governor’s office involving these campaign contributors must now be considered to be tainted. This is just plain wrong, and the money should be returned without delay.

More on the State Government’s South America Junket from the San Diego Reader. This is really a shame, and goes a long way towards explaining why our government is hostile to small business international interests. Why wouldn’t they be- when the big Corporations wine and dine them like this:

“Paid for by an outfit called the California Foundation on the Environment and the Economy, the trip began two days after the November 7 election and wound up November 22, with nights along the way spent in at least five luxury hotels, including the Copacabana Palace in Rio and the Alvear Palace in Buenos Aires. In addition to Saldaña, the high-flying delegation included Assembly Speaker Fabian Núñez, D-Los Angeles; Susan Kennedy, Governor Arnold Schwarzenegger’s chief of staff; a variety of members of both houses of the legislature from both parties; and high-powered lobbyists from Pacific Gas and Electric, Southern California Edison, Sempra Energy, Comcast, and Chevron, all backers of the foundation bankrolling the trip”