Something that conservatives don’t seem to have much of a grasp on is the fact that the corporation is a government defined entity. There is nothing natural about it. In the natural world, if a company sold Thalidomide as a cure for morning sickness for pregnant women and their babies were born with absent or greatly deformed limbs, there would be no personal immunity. The top executives in the company would be executed by mobs of people. The decaying executive heads would be mounted on pikes with signs that read, “This is what we do to people who put profits above people.”
But despite what just about any libertarian you talk to will say, we don’t live in a natural world. We protect capitalist villains and one of the big ways we do that is through the legal construct called the corporation. This is something I understood very well when I was a libertarian. I was the only libertarian I knew who was for the elimination of the corporation. As the saying goes: with rights come responsibility. But for the modern conservative, just the opposite is true: the greater the rights, the less you should be held accountable. But don’t let the ideologues fool you: corporations are a something we give to business owners. And they need to pay us back for it.
The Securities and Exchange Commission (SEC) has a new proposal to clean up the corporate world. And while it won’t make things worse, it fully embraces an idea that is destroying our country and the world. It takes as given a point that is very much contested: that shareholders are the the only stakeholders of a corporation. Think about that for a moment: the society gives corporations all kinds of legal immunity and tax advantages. But the society isn’t a stakeholder. The corporation can rape the society and it is all fine because the society had no part in the success of the corporation. Note also: these are the same corporations that run to the government the moment they get into trouble.
Michael Hiltzik wrote a really informative article earlier week, The Right Way to Measure CEO Pay Has Nothing to Do With “Shareholder Value.” I hadn’t known that it was Milton Friedman who really got going the idea that corporations owe nothing to anyone but their shareholders. And the argument he used was the most facile of libertarian nonsense: basically because that was the only obvious way to figure out what a corporation ought to be doing. Workers aren’t stakeholders, so when Carly Fiorina fires tens of thousands of workers even while driving her company into the ground, she should be paid tens of millions of dollars. It’s just obvious to Milton Friedman and other psychopaths.
It’s fairly easy to see why corporations looking only at shareholder profits is a doomed strategy. It is akin to the paradox of thrift. With every company trying to cut its workforce and move its operations out of the country, you gradually destroy the customer base for your products. As Hiltzik pointed out:
But I don’t blame the corporations. They are like the caribou who were so successful they staved to death. We shouldn’t expect corporate CEOs or stockholders to be any smarter than those stupid animals. This is why we need to regulate companies. We need to stop them from doing what might help themselves this quarter, but will hurt them and the rest of the economy in the long run. “Enlightened self-interest” was always a myth.