Monday, July 18, 2011

Good News Everyone: Corporations Are Doing Great

The economic recovery isn't going so well for Americans.  The unemployment rate is still over nine percent and hiring is actually slowing down again.  Home foreclosures are still occurring at an alarmingly high rate.  Regular people are not doing well.  In short, as the Wall Street Journal notes: "Across a wide range of measures—employment growth, unemployment levels, bank lending, economic output, income growth, home prices and household expectations for financial well-being—the economy's improvement since the recession's end in June 2009 has been the worst, or one of the worst, since the government started tracking these trends after World War II."

In contrast--stark, ugly contrast--corporations are doing great.  Corporate profits are at an all-time high.  Corporations are holding onto a record amount of cash, around $2 trillion.  The GDP is higher now than it was pre-recession, but virtually all increased income was captured as profits by corporations.  Stocks are the highest they've been since the recession began.  Taxes on the wealthiest Americans are at all-time lows.  The Wall Street Journal astutely noted that there is a "dichotomy between corporate performance and the overall health of the economy."

It is time to stop babying corporate America and the ultra-wealthy, and to stop pretending that their successes or failures equate to general success and failure of everyday Americans.  They are not in the business of creating jobs, protecting the environment, or generally improving economy and the lives of regular Americans.  They are in the business of making profits, and that does not necessarily, or even regularly, translate to better lives for regular people.  Our 30 year experiment in supply-side, trickle down economics should now come to an end.

So what sorts of things should we be doing to take our economy back from corporations?  The first is to skew the tension between the pure profit motive and social responsibility way towards the latter.
Greens believe the legal structure of the corporation is obsolete. At present, corporations are designed solely to generate profit. This legal imperative -- profit above all else -- is damaging our country and our planet in countless ways. We must change the legal design of corporations so that they generate profits, but not at the expense of the environment, human rights, public health, workers, or the communities in which the corporation operates.
The practical solution is "federal chartering of corporations that includes comprehensive, strict and enforceable social responsibility requirements."

Second is for our economy to focus more locally:  "Greens support decentralization, and call for a community-based economics whose aim is local prosperity and self-sufficiency."

The overall idea is to shift power from corporations to people, from national or international to local.  This is a more sustainable way to run an economy.  I also really appreciate the focus on self-sufficiency.  One of the important purposes of self-sufficiency is to be able to help other people.  In our civic lives, we are self-sufficient as individuals and families so that we are stable and comfortable, to be sure, but also so that we can help our neighbors and create a self-sufficient community.  Greens care about self-sufficiency and community welfare because they are tied together.  And large, unwieldy corporations play virtually no part in that scheme.

The current painfully slow recovery for average Americans while corporate America and the wealthiest thrive is further evidence that it is time to reevaluate our economic structure.  It is time to demand social responsibility from corporations and time to stop pretending that that "trickle-down" economics is sound policy.


Anonymous said...

Perhaps you should take your request to your beloved president who has promised time and time again to deliver the very things you seek...but I'm sure it's somehow the republicans fault, right?

Jacob S. said...

If you read this blog you will find that I have been quite critical of Pres. Obama and the Democrats. I see this less as a Dem/Rep issue than a rich/poor issue, or a special interests/regular Americans issue. In that sense Ralph Nader was right, when it comes to special interests and corporate overlording, there is very little difference between the parties.

But of course that doesn't fit neatly into your preconceived narrative, does it? I'll make it easier for you then: Yes, blame the Republicans.

Architect said...

You missed the obvious - corporations have two customers, the public and the government (tax payers). If you want corporations to fail or do less well, the simplest/best way is to stop patronizing them. Secondarily contact your representatives and express your concerns that they are too closely related to corporations and should stop granting them monopoly powers and public/private partnerships.

Without government contracts many corporations would be nothing. Without government protections, corporations would have to fight it out in the market.

As consumers we have choice! Is google too big? Pick another search engine. Don't click on the google ads. Tell webmasters to stop using google. Apple making iproducts in China? Don't buy Apple stuff. Fox got you steamed? Call shows and tell them to stop talking about Fox. Don't buy the WSJ. Stop using fb.

We should not use the tax code to equalize results of corporations or individuals - that is just plain envy. We should vote with our dollars as individuals. Let each individual vote his or her values with his or her money. The only way to give every individual the most choice is to maximize take home pay. Stop phony government insurance schemes that have no assets but future tax revenues. Stop governments from subsidizing friendly corporate masters. Have governments liquidate assets. Does a school district need a bond portfolio bigger than annual operating expenses? Why are large stretches of land unavailable for recreation or other uses?

"The bigger the government, the smaller the citizen." D. Prager

Jacob S. said...

It seems to me we are both concerned with the size and power of corporations. I am less optimistic than you, though, about the power of the free market to correct this problem. I don't think it is as easy as simply choosing to not patronize one corporation or another. A different, equally powerful corporation will inevitably spring up in the place of an old one. The wealthy elites will always prop up corporations that benefit themselves. We have a lot of history that shows that under-regulation of markets has led to very bad conditions for workers and consumers, and that only the collective actions of the many, organized through the government, has in any way been effective in curbing corporate power. I wish it wasn't that way, but I believe it is.

Of course, now the corporations have taken over the government, so there is a different problem, but I find the direct election of government officials to be a more responsive way to deal with the problem than the whims of under-regulated markets.

To be sure, we need some massive changes to our government for this to work, and we've talked about them several times here, including term limits, more political parties, and so on, but I think it is safer to reform the government than, again, to rely on the free market and its supposed self-correction.