I asked this when Obama spoke to the U.S. Chamber of Commerce a few days ago, to try to “work with” corporations to help the United States.
My quick answer: No. If corporations were people, they’d be the kind that comes over and eats your food and leaves a mess – and steals anything not nailed down.
Here’s a very short course in Corporate Law 101: Corporations are artificial entities created under state law to limit any losses of the owners (shareholders) to what the owners have paid in. Managers are under a legal duty to maximize profits for the owners (shareholders). These profits are tallied quarterly, so there’s a lot of short term, almost emergency-style, thinking going on. If the managers don’t maximize profits in the short term, the shareholders can sue them. Poor performance can lead to firings and pay cuts.
Sure, some states’ laws let managers consider other stakeholders and to practice “CSR” – corporate social responsibility – but the extent to which this is even permissible is part of a longstanding debate in corporate law. One thing is certain: Too much CSR will land managers in hot water. They can only go so far spending OPM (other people’s money).
Corporations generally don’t have to think about protecting the environment (beyond the law) or how their actions affect the community; they generally aren’t even allowed to think about such things (at least not very much). Corporations can’t have friends, and they don’t have to help Obama. By law they’re essentially required to do things such as swallow up their own workers and crap them out (read: lay off workers and move operations abroad) if that will help increase profits.
Don’t be fooled by the flag waving. We the People are the host. Corporations are the ticks that feed off of us. When the host dies, the ticks just find a new “friend.”
In my next post, I’ll propose a solution: a new sort of corporate form, The American Corporation.