Tuesday, October 02, 2007

Clip and Save: Robert Reich on Corporations

Just read Robert Reich's new book Supercapitalism. I wanted to distill a few of his key points on the new "supercapitalist" corporations and what to expect from them.

Reich's thesis is that every American confronts corporations in three roles: as consumer, as investor, and as citizen of a putative democracy. Technology has enabled corporations to become global entities, viciously competing with other global corporations for global markets. This hypercompetitive environment has well served consumers (by driving prices down) and investors (by driving profits and share prices up), but the cost to us as citizens has been high. Unfortunately, in their search for competitive advantage the supercapitalists have so flooded Washington and other seats of power with money that it's become virtually impossible for public interest groups to be heard.

Without further ado, then, here are 11 things you should remember about corporations:

1. Corporations are not charities. If they seem to behave in a way that's "socially responsible," it is ONLY because their executives think this will somehow benefit them. They will not give away their profits and expect nothing in return. Ever. (They literally can't, because if they do, they'll be less competitive; consumers and investors will punish them by taking their money elsewhere.)

2. Pressuring a corporation to behave "responsibly" is a waste of time and effort. The proper way to make corporations behave the way we want them to is via the democratic process: make it illegal to behave otherwise.

3. Corporations should be required to obey the law. That's all they should be required to to. If they're exploiting a loophole in a law, the thing to do is close the loophole, not criticize them.

4. Corporations are not people. They're incapable of acting with "criminal intent." In fact, they're incapable of any intent at all. Only the people who run them are. They are the criminals. Destroying Arthur Andersen because a few of its employees were complicit in the Enron scandal accomplished nothing but putting thousands of innocent people out of work. (Civil penalties for corporate lawbreaking are fine, though.)

5. If you hear a politician publicly scolding a corporation for bad behavior, it is almost certainly because he/she intends to do absolutely nothing binding to stop the behavior. Politicians are good at putting on shows, but they don't like to bite the hands that feed them. (A good question to ask: "What legislation are you working on that will prevent this behavior?)

6. Never believe a corporation when they say that something they're fighting for is "in the public interest." It might be, but you can't take their word for it. It's the responsibility of citizens to determine what the public interest is, not of corporations.

7. Policies that depend on "voluntary cooperation" by corporations are a joke. A bad joke. A really bad joke. Don't even go there. Even if the corporations seem to cooperate initially, as soon as your back is turned, they'll go back to their old ways if they can.

8. Corporations are legal fictions. A pile of paper. They should not have rights to free speech, due process, or political representation. They also shouldn't have to pay income taxes: it's inefficient and inequitable (Reich explains why).

9. American corporations are not more "patriotic" than foreign ones (though it may be in their interest to make us think so.) They will outsource and cut benefits and lay off workers if they have to in order to remain competitive. We should focus on making Americans more competitive, not on making American companies more competitive.

10. Corporations should not be able to challenge duly enacted laws and regulations in court. Currently, this "right" gives foreign owners the ability to overturn U.S. laws. Only actual U.S. citizens—individually or in class actions—should be able to oppose domestic U.S. statutes.

11. Nothing significant is going to change until citizens rise up and get corporations out of politics. Reich: "The most effective thing reformers can do is to reduce the effects of corporate money on politics, and enhance the voices of citizens. No other avenue of reform is as important. Corporate executives who sincerely wish to do good can make no better contribution than keeping their company out of politics. If corporate social responsibility has any meaning at all, it is to refrain from corrupting democracy."

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