Corporations Are Really Not People

Photo courtesy of Jackson Carson

Next Wednesday at the University of Denver, President Barack Obama and Mitt Romney will meet in their first presidential debate. The focus will be domestic policy.

I’d be surprised if the subject of corporations does not come up.

Romney infamously has said that “corporations are people,” and the Supreme Court, in its Citizens United decision, basically said the same thing, with greater consequence.

The question before the candidates is not whether corporations sponsor innovation, provide jobs or serve customers. They obviously do all that. The question is, With unemployment so high, how we can get corporations to do more for the American worker?

The conservative position is clear: The health of the American worker is linked directly to the health of corporations, so if we just cut regulations and cut taxes, corporations will get healthier, and so will the American worker.

Hedrick Smith‘s ambitious book “Who Stole the American Dream?” makes a different case.

Smith describes how business began to mobilize politically in the early 1970s, sparked by future Supreme Court Justice Lewis Powell’s 1971 memorandum to the U.S. Chamber of Commerce.

Powell’s memo took as a premise that business was facing an “assault on the enterprise system.” He wrote to the chamber: “Business must learn the lesson … that political power is necessary; that such power must be (assiduously) cultivated; and that when necessary, it must be used aggressively and with determination — without embarrassment and without the reluctance which has been so characteristic of American business.”

Powell encouraged business to “be far more aggressive than in the past” and said: “There should not be the slightest hesitation to press vigorously in all political arenas for support of the enterprise system. Nor should there be reluctance to penalize politically those who oppose it.”

Powell added: “Under our constitutional system, especially with an activist-minded Supreme Court, the judiciary may be the most important instrument for social, economic and political change.”

Powell’s “long-term game plan,” as Smith called it, led to a political mobilization of American business, as the number of companies with Washington offices grew from 175 to 2,445 in 10 years. At the end of the 1970s, business lobbyists and advocates outnumbered members of Congress by a 130-1 ratio.

The political mobilization of American business coincided with the rise of corporate strategies of cutting wages; cutting jobs; busting unions; closing plants; moving operations offshore; shifting health care and retirement costs onto workers; fighting environmental regulations, worker safety laws and consumer protection laws; squeezing suppliers, sheltering income from taxation; and — painfully demonstrated by lenders leading up to the crash of 2007 — duping the customer. Every one of these efforts boosted near-term corporate profits at the expense of workers, customers, suppliers, neighbors and citizens.

In the years prior to the political mobilization, from 1945 to 1973, Smith writes that worker productivity rose 96 percent, and average hourly compensation rose 94 percent. Yet in the years after the political rise of big business, from 1973 to 2011, worker productivity rose 80 percent, and hourly compensation rose 10 percent. Plainly, corporations used their power to take a share of the gains that used to go to workers.

Smith notes that in 2010, as Congress tried to pass legislation to prevent a repeat of the crash of 2007, Wall Street financial firms hired more than 1,400 former government officials as lobbyists to fight new banking regulations. Also, according to Smith, in the 2010 elections, when Republicans made huge gains in the Senate and regained control of the House, business outspent labor by a ratio of 16-to-1.

Finally, Smith adds that in early 2011, The Wall Street Journal wrote a Page One story titled “No Rush to Hire Even as Profits Soar.” Corporations had year-end profits of more than $1 trillion, up 28 percent from a year before. They were sitting on nearly $2 trillion in cash. They were planning to increase dividends and expand overseas operations while nearly 30 million American workers were unemployed, forced into part-time work or out of the labor market completely.

When corporations are not using their expanding wealth to hire workers, any unrestricted steps to make corporations even stronger would be an unwise, inefficient and even counterproductive approach to creating jobs.

The Founding Fathers favored checks and balances to curb the accumulation of power because they knew that concentrated power would be toxic to democracy. When power is concentrated, the minority can impose its will on the majority, and what benefits the few prevails over what benefits the many.

This is true not only in government. James Madison wrote in Federalist 51, “This policy of supplying, by opposite and rival interests, the defect of better motives, might be traced through the whole system of human affairs, private as well as public.”

If we want a society that fosters “the Pursuit of Happiness,” we need to be wary of what’s allowed in the pursuit of profits. If not, the profit-maximizing moves of corporate leaders will minimize the life of nearly everyone else.

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Chuck Briese, Oak Ridge Now

[avatar user="cbriese" size="thumbnail" align="left"] Chuck Briese has been a resident of South Montgomery County since 1988. He and his lovely and patient wife, Leslie, have six sons, with only one left to finish high school. Chuck has been a Cub Scout leader, a Little League baseball coach, a church youth leader, and a general troublemaker over the course of the past 25 years. He is obsessed with his lawn, and likes restaurants that serve food that fills up the plate. He has a tendency to tilt at windmills, which may explain why he started Oak Ridge Now.

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