Saturday, June 12, 2010

Taking Stock

CORPORATION, n. An ingenious device for obtaining individual profit without individual responsibility.
--from The Devil's Dictionary by Ambrose Bierce, American journalist and satirist, 1911.

Whenever I hear people complain that the Evil Corporation du Jour (at the moment, BP) doesn't have a heart/soul/conscience, I think of the Scorpion and Frog parable:

The scorpion stings the frog even after it said it wouldn't, and even though it leads to both their deaths, because it's a scorpion and that's what a scorpion does.
The tragedy could have been prevented if the frog had understood the nature of the scorpion before trusting the scorpion with his life.

Preventing tragedies like oil spills is a little more complicated but the basic concept is the same.

Corporations have been around for centuries for both business and nonprofit ventures. One of the major advantages of incorporating your business it that it limits your liability:
for instance, if your business goes bankrupt, creditors can only seize the assets of the business, not your private holdings such as your house, car and bank account.

Most of the corporations that have been in the news lately are publicly-owned, that is their shares (pieces of ownership) trade on the stock market.
Shareholders share in profits when the company declares a dividend. If the business isn't doing so well and the dividend is reduced or dropped altogether, the share price will go down because people will be motivated to sell their shares before things get even worse.
If the share price goes down far enough, the company could end up virtually worthless (bankrupt).

This process, maintaining and increasing the dividend and share price, is the main motivating factor behind business decisions. Public corporations are responsible first and foremost to their shareholders.

I'm not saying this is necessarily a bad thing. It is just the way it is, inevitable because of the essence of what a corporation is.

Democratic governments, on the other hand, are responsible to the people who voted them in. Just as corporations cater to shareholders, governments are meant to cater to voters. It's all about getting elected, and then re-elected.

Again, neither good nor bad. One system ideally balances the other.


It doesn't really work that way anymore, particularly in the United States, because it takes a great deal of money to run an election campaign, and nowadays this great deal of money comes largely from:


The US Supreme Court elevated the status of "corporation" to the level of "human being" way back in 1886, so this is nothing new; but just this past January that same court struck down a previous decision which limited corporate spending for political purposes. So in reality, the US government is still dependent on voters but the road between Washington and voters runs through the corporation.

And since corporations aren't really people, Supreme Court notwithstanding*, they don't have a heart nor a soul nor a conscience. Just loads and loads of money.

Now I'm not saying ban the corporations. We need them in order to have some sort of economy and way of life. It's like the polar bears: we don't want them to disappear, in fact we need them to maintain the balance of nature and the ecosystem. But if we run into one on the street (still possible in some parts of Canada) it is best to quietly get out of the bear's way. Good and evil is all in the context.

The first step to regaining some sort of balance between the common good and corporate good is for the public to understand the nature and role of corporations, then find ways to turn government attention directly to voters instead of running through the corporate middleman. And forget about "self regulating markets" - when left to themselves, markets are greedy, like the people who created them, but without a conscience because they were designed as such. People need to demand - loudly - that the government pay attention to the common good first, and only then will things begin to change.

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