If you are paying much attention to global politics, economics, and business, you will hear the term “corporate America” come up frequently. From the political left the term is almost always used derogatorily. Politicians to activists to anarchists point the finger of blame for a myriad of economic and ecological woes at “corporate America” – and there is merit to their allegations.
Here is the problem with corporations as I see it. First off, it is helpful to understand what a corporation really is. Following is the definition from my Webster’s Pocket Dictionary:
cor’po-ra’tion: n. group given legal status of an individual
Why would a group want the legal rights of an individual? There are loads of good reasons for incorporating your business – even if you are just a small fish in the economic food chain. First and foremost, by incorporating your small business, you deflect fiscal risk away from your personal holdings. For example – let’s say you own a pizza parlor. A customer has a slip and fall and breaks their hip. The customer consults a high-paid doctor/attorney who decides they are going to take you to the cleaners. If your business is incorporated, then the attorney can only go after the specific business holdings. If you have not incorporated your business, then the attorney may also go after your personal property in order to satisfy the damages levied by the courts. This could mean you lose your car, your house, and whatever other property of value you might own.
Incorporating your business essentially provides you with a layer of protection. So what’s the big deal? What is so bad about corporate America? Well here is where I’ll get a little more subjective – but my feeling on the matter is that there are probably good corporations, and bad corporations. Unfortunately a bad corporation, particularly a large one, can wreak an incredible amount of damage on the fiscal and ecological environment. Because the incorporated company is its own entity, and because it answers first and foremost to the shareholders, it can become a moral-less and unethical being. It is like a body with no head; or a body with many heads who are all working in their own self-interests.
The underlying economic environment that fuels this unethical being is the relentless drive for profits. These days a company is expected to show a profit every single quarter. Anyone who has been in business understands this is not completely realistic – markets go up, and markets go down. A good, ethical company projects into the future. The ethical company leaders are looking five, ten, twenty five years into the future. It is for this reason that the family owned banks have weathered this financial storm much better than the publicly held mega-banks. (For the purposes of this explanation, never mind the massive corporate welfare in the form of tax-payer funded bail-outs.)
If you are in charge of a business, and you have to report a profit to your shareholders every single quarter, you are bound to make decisions based fundamentally, if not solely, on the generation of profits. If this means cutting down rain forests to grow beef cattle – so be it. If it means polluting rivers in order to produce a certain commodity, so be it. By putting profits above everything else – we have created an environment where it becomes much simpler for decisions makers to step into the gray ethical areas and cross completely over into the unethical and often illegal areas. To deal with this, corporations employ batteries of lawyers. It is easier to make profit by doing unethical and illegal things, and then hiring lawyers to clean it all up, than it is to do things ethically and legally. That’s the mentality anyway – whether or not that is 100% true in all cases – I don’t know.
Whose fault is this? There’s plenty of blame to go around. We all want a return on our investment. If we own stock – we want to see its value rise. If we have money in the bank – we want to collect interest on that money. Anyone who holds a 401(k) owns a portion of the blame.
Most of us want more than we have. That desire is fundamental to the American character. Come to this country and make a life for yourself – it’s the American dream. I don’t know – I don’t have any answers for you here. Why would you be in school, or working at a job, if you didn’t want more for yourself? Why would I be writing this, or you reading it? I really don’t know.
madbob@madbob.com
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