Those Evil Corporations!

I agree that corporations should not be allowed to make political contributions, and in that regard, they’re not ‘persons.’ That’s a step too far. But I’m here to defend the concept of corporations. Liberals need to get up to speed on corporate structures and why they exist. The long howling rant against corporations as a general concept discredits the progressive movement.

A corporation mostly isn’t a bad thing. There are non-profit corporations we rely on every day, and plenty of for-profit corporations that bring us everything from electricity to internet to vehicles. Corporations have been the construct by which new inventions in digital technology, medicine, and transportation have come to exist in the modern world.

The commercial incorporator has a specific objective—to streamline the business operation. Under the corporate umbrella, the business owner(s) can partner with other entrepreneurs, obtain materials, hire workers, own property, and produce goods and/or services from one checkbook, that is, the corporate checkbook, without having to do those things in his/her own name.

Likewise, the corporation can pay wages to the owner(s) and all employees and provide the corporation’s required contribution to Social Security and Medicare funds as well as unemployment  and disability insurance (required by law) and in many cases, health insurance—all without involving the owners’ private personal income and spending.

Whatever money the corporation holds in its bank accounts (and other investments) that is not spent on production/operations can be paid out in dividends to its stockholders. ‘Dividends’ is a simple concept: whoever put in money to help the company start and/or grow is paid a divided portion of the profits (usually quarterly) according to the amount paid in. If there are significant profits above and beyond operating expenses, the money paid in dividends can be an important income source for stockholders.

My disabled brother in law, for example, received big oil stocks as a gift from his father who had been at the leading edge of early oil exploration in Texas. Dividends from those stocks have made the difference for him and my sister in raising their family and surviving as they age. Even if we abhor the environmental degradation created by the oil industry, is there something evil about him receiving those dividends?

The concept of the ‘evil corporation’ is so ingrained that the term has its own entry in Wikipedia: “An evil corporation is a trope in popular culture that portrays a corporation as ignoring social responsibility in order to make money for its shareholders. …Evil corporations can be seen to represent the danger of combining capitalism with larger hubris.”

What is social responsibility then, that corporations may find easy to ignore? “Social responsibility is an ethical framework and suggests that an entity, be it an organization or individual, has an obligation to act for the benefit of society at large.”[1]

Walmart, for example, has tried to claim social responsibility by its efforts to reduce waste, streamline shipping, and provide better work conditions and wages. Their 2018 Global Responsibility Report highlighted collaboration “with industry experts, NGOs, suppliers and the company’s own research to address risks pertaining to social issues in the supply chain.”[2] In general, Walmart’s approach to “environmental, social and governance issues goes beyond minimizing our own footprint or mitigating risk. We take a more assertive approach: sparking collective action to transform the retail sector for environmental, social and economic stability.”[3]

While naming laudable goals for one of the world’s largest corporations, Walmart continues to reap massive profits for its shareholders and especially the Walton heirs. “Sam Walton’s descendants have a combined wealth of $163.2 billion, according to Bloomberg. This is more than Jeff Bezos, Bill Gates, and Warren Buffett, and nearly $70 billion more than the second-richest family in the United States, the Kochs.”[4]

Bernie Sanders has remarked that the Waltons earn more per minute than its employees earn in a year, and number crunchers have shown this is true (about $25,000 per minute). That imbalance would hardly decrease even if the company paid its 2.1 million employees $20 per hour. That would increase the total payroll by around $20 million, a drop in the bucket to the Walton heirs’ annual dividend payment of about $3.2 billion.  Such a wage increase would also go a long way to reducing employees’ need for social welfare support at taxpayer expense, currently estimated at $6.2 billion in public assistance including food stamps, Medicaid and subsidized housing.

This kind of inequity in profits versus salaries is one of the reasons corporations are seen as evil. And there’s no question that over the centuries as the corporation has matured as a legal entity, it has also maneuvered ways to embody self-serving benefits into law. It is this unfair advantage of a large, organized, well-financed behemoth versus the unorganized ‘little man’ citizen that drives much of the present-day fury toward corporations.

We can’t rely on corporate conscience to ensure fairness in its wages or environmental conduct, a lesson we’ve learned time and again. Just as environmental laws have reduced egregious corporate pollution, policy makers should pass laws that apportion CEO pay and stockholder dividends according to employee wages to ensure a livable wage. After all, without the employees, corporations would have nothing. Unions used to provide this balance, but right-to-works laws and the move to overseas production has pulled the rug out from under them.

Nevertheless, it’s wrong-headed to blame corporate structure in general for doing what anyone would do, which is to pursue advantages that benefit its goals and rewards. The problem is with those entrusted to make and uphold our laws and their vulnerability to highly paid lobbyists who sell corporate demands on the economic benefits of providing jobs and ignore inequities that place millions of workers in a form of wage slavery.

Local economies have also suffered in cases such as Walmart replacing local businesses supplying groceries, hardware, automobile supplies, clothing, shoes, stationery, and more. Grinding the point home is the fact that most of the profits made by Walmart don’t stay in the local economy but rather aggregate in Walton heirs’ pockets. Just as destructive is the arrival of a Walmart that lasts long enough to drive out  local drug stores, for example, then after a few years moves away, leaving the community without a pharmacy.

Yet enterprises like Walmart, Facebook, Google, Amazon, and massive financial corporations looming over today’s landscape provide jobs, goods, and services that we could not have any other way. Local grocers had no way to provide the assortment and quality of goods available at Walmart. Is it better to have bananas in January or a local grocer stocking a few essentials? These are problems facing a world in transition to a global economy.

Short of catastrophe and the accompanying deprivation it would bring, there’s no clear path to return to a village economy where local farmers are the primary source of food and local craftsmen fashion the only available light fixtures, for example (assuming electricity would be available). Whether we like it or not, we’re accustomed to a world-wide marketplace with advanced delivery systems.

As far as the current political mess in which the Citizens United ruling gave corporations the right of an individual in making political contributions, again we must look to our legislators to remedy the apparent lack of appropriate law. A constitutional amendment may be needed in order to refine the definition of a corporation other than as a ‘person’ with all the same rights as individual citizens.

Citizens United v. Federal Election Commission, 558 U.S. 310 (2010), is a landmark United States Supreme Court case concerning campaign finance. … The ruling effectively freed labor unions and corporations to spend money on electioneering communications and to directly advocate for the election or defeat of candidates.”

With the slow death of unions and other consumer/worker advocacy organizations, the political power of corporations has become an obscene force in politics. While the legal structure of corporations in and of itself is not evil, when large corporations spend obscene amounts to influence elections, there is no doubt that their actions are self-serving and not necessarily of benefit to the common man.

The hue and cry, then, must not be about ‘corporations’ but rather against the actions of corporations that undermine our system of government and its stated purpose to protect the rights of its people. The duty to oversee this Constitutional guarantee belongs to all of us as voters but in particular to our elected representatives. It’s past time for us to hold our legislators responsible for their action or inaction on this subject.

~~~

[1] https://en.wikipedia.org/wiki/Social_responsibility

[2] https://www.supplychaindive.com/news/walmart-corporate-social-responsibility-efforts/521961/

[3] https://www.energydigital.com/csr/walmarts-2018-csr-report-20mn-tonne-reduction-emissions-sustainable-sourcing-and-more

[4] https://www.businessinsider.com/how-the-waltons-spend-their-fortune-2017-7

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