Posted: July 20th, 2010 by Militant Libertarian
Yesterday we considered how corporate abuses, and excessive corporate influence on government, were partially to blame for the BP Oil Spill in the Gulf of Mexico – and they are more generally to blame for a host of problems in modern America. How, then, can the corporate juggernaut be contained?
Admittedly, Il Professore is not an economics expert. Neither am I savvy in questions of business law. Today, then, I will simply sketch some broad proposals for how corporate power might be reduced, and how government may be made more accountable to the people.
First, it has always irked me that businesses and corporations enjoy tax advantages over people. People, for instance, pay income taxes on their gross income, with only a few categories of useful deductions. Businesses and corporations, on the other hand, pay income taxes only on “profits.” This is a huge advantage. Moreover, corporations can hire teams of accountants and lawyers, effectively to hide their profits, with the result that corporate tax receipts have been declining for some time. This imbalance in taxation should be eliminated. Perhaps, the whole concept of income taxes should be abandoned, but, in any case, a way should be found to force corporations to contribute their fair share in terms of federal and state revenues.
Second, it is also troubling that corporations enjoy “limited liability” status. That is, generally speaking, the officers of corporations, and their investors, are only liable for the money they invest. Economically, this system may make good sense – it encourages business formation and entrepreneurship – but it has a significant cost: corporate officials, because they are protected by the limited liability provision, are empowered to act in grossly irresponsible ways, and their own fortunes are not at risk as a consequence. Perhaps for this reason, millions of Americans invest in companies they know nothing about, and which engage in activities for which those investors feel no sense of personal responsibility. This is not right. A way must be found to make company owners (including stockholders) take REAL ownership – including moral and legal responsibility – for the companies under their charge.
Third, reforms to the financing of elections are certainly called for. An intriguing proposal has been put forward by Democracy Matters, among other election reform advocacy groups, which calls for “Clean Elections” – that is, elections in which candidates voluntarily agree to accept only small donations from individuals, and in return they receive generous matching funds, or a fixed public stipend, to run their campaigns. Such systems are already in place in several U.S. states.
Such an approach has many advantages over the current system: it reduces the direct meddling of corporations in politics to a minimal level; it requires that less of a public official’s time must be spent raising money; and it makes it possible for small donors, rather than a few big donors, to exercise political influence. For these reasons, it would be marvelous – though extremely unlikely, given the obvious disadvantages for our political overlords – if such proposals were enacted on a national scale.
Unfortunately, even if Clean Elections legislation were to be passed (which, again, seems unlikely), its effectiveness will be negated by the Supreme Court’s Citizens United v. Federal Election Commission decision, which essentially allows corporations to make unlimited “soft money” contributions. In other words, so long as corporations can spend wildly to INFLUENCE elections (without directly supporting a candidate’s campaign), the real effect of Clean Elections laws will be minimal. For this reason, more fundamental reforms are needed in our electoral system, and these we will consider at length at another time.
Lastly, I would suggest two further reforms to limit corporate power, and to humanize corporations more generally. For decades, there has been an almost irresistible tendency for corporations to grow in size. We have simultaneously come to accept “Mergers and Acquisitions” as a natural part of the corporate landscape. The result has been, for example, that America, which used to be home to hundreds of automobile manufacturers, now boasts only three – and probably it will be less than three in the foreseeable future. The same process is happening in many different industries. But we KNOW, as Anthroconservatives, that the larger an institution becomes, the less natural and the less human it will be. For this reason, government, instead of allowing, even encouraging, corporate consolidation, should actively oppose it. After all, capitalism is supposed to be based on competition, is it not? If, at the end of the day, only a few mega-corporations are left, how much competition will there be?
I would also suggest one simple reform that could produce excellent results: more corporations should be employee-owned. Many corporations have policies which allow (or require) employees to accept company stock as part of their compensation. This is done on an ad hoc basis, however, and seldom is ownership of more than a tiny fraction of a given company placed in the hands of workers. There is no good reason why more cannot be done. It is wrong to conceive of a company as the net product of the efforts of investors and corporate executives – on the contrary, workers are just as integral, if not more so, to a company’s success or failure. Thus, workers should be invested (in the fullest sense) in the company for which they labor. In the future, we must hope that this will be so, in a greater number of cases.
These, then, are just a few ideas for how corporate power could be reduced. I would welcome any reactions, or alternative suggestions from my readers. In this case, as in many others, your expertise can (and must!) supplement my own…