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You are here: Home / We are all #Dickwhisperers now

We are all #Dickwhisperers now

by DougJ|  January 11, 201111:16 pm| 95 Comments

This post is in: Going Galt

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Dana Milbank’s column on the return of corporate power is shockingly good. Money quote:

A reporter asked (Chamber of Commerce Head Tom) Donohue for a suggestion of what corporate America, with its record profits, should do to put people back to work. “I got to think about this for a minute,” Donohue said, then added: “I think the most important thing to tell a company is to return a reasonable return to their investors.”

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95Comments

  1. 1.

    2th&nayle

    January 11, 2011 at 11:20 pm

    Sorry guys, I got nothing. Excuse me while I puke.

  2. 2.

    Redshirt

    January 11, 2011 at 11:21 pm

    Makes sense. Profits for the shareholders will trickle down success to the rest of the corporation – by definition. Otherwise, how could they make profits.

    As the Ferengi Rules of Acquistion, #18, states: A Board without profits is not a Board at all.

    Profit!!!

  3. 3.

    freelancer

    January 11, 2011 at 11:26 pm

    @Redshirt:

    And a flute without holes, is not a flute. A donut without a hole, is a Danish.

  4. 4.

    jrg

    January 11, 2011 at 11:28 pm

    I’d find that argument far more persuasive if it weren’t for the multi-million dollar golden executive parachute packages that don’t benefit me as either an employee or a shareholder.

  5. 5.

    guster

    January 11, 2011 at 11:29 pm

    He’s kinda right. Corporations exist to make profits, not employ people. That’s the problem. Pretending otherwise, as Milbank does in the question, just perpetuates the fantasy.

  6. 6.

    Davis X. Machina

    January 11, 2011 at 11:29 pm

    A reporter asked Donohue for a suggestion of what corporate America, with its record profits, should do to put people back to work

    They won’t do it, that’s ok. It’s an adversary world — business, competition, yada, yada. But they won’t let the state do it, either. In their particular vision of the world, the only legitimate function of the state is to provide their getaway cars with police escorts.

  7. 7.

    KG

    January 11, 2011 at 11:30 pm

    the obvious answer is that we need more people investing in the stock market. then everyone can get a reasonable return on their investment and won’t have to worry about working. plus: lower tax rates for everyone!

  8. 8.

    Martin

    January 11, 2011 at 11:35 pm

    Well, it’s a legitimate problem, actually. My biggest stock holding (which is providing a reasonable return to this investor) also sits on a massive amount of cash. They’re hiring rapidly – they’ve nearly doubled their staff over the last 2 years, but in terms of jobs I’m hard pressed to figure out where they should be hiring faster.

    In many respects, labor doesn’t fill the economic gap that it once did. Retail can be handled online with a minimal number of employees. Lots of other clerical and other positions are unnecessary due to providing direct access to end users – web forms, online services, etc.

    Basically the critical areas of the labor economy are in services and engineering and both are hampered by a lack of infrastructure investment. Without that infrastructure, there’s not much room for those jobs to be created. Private industry can’t do what is the role of government.

  9. 9.

    dr. bloor

    January 11, 2011 at 11:37 pm

    @guster:

    Then he should have said as much–“Sorry Dana, corporations don’t exist to create jobs.”

    Of course, had he done that, he’d have exploded the supply-side myth that giving corporations tax breaks and more money to spend is the path to job creation.

  10. 10.

    Mark S.

    January 11, 2011 at 11:39 pm

    I hope Kain shows up to tell us that this is a strawman and real libertarians are offering innovative solutions to these problems.

  11. 11.

    Martin

    January 11, 2011 at 11:41 pm

    @Davis X. Machina: Except that I think CEOs would disagree with the attitudes their investors promote. Hell, even the Chamber has come out in favor of infrastructure spending.

    Corporations aren’t adverse to spending on jobs, but the jobs need to have a point. The US could open up entirely new markets, but instead we’re too busy making sure government does nothing, rather than make sure businesses can expand.

  12. 12.

    2th&nayle

    January 11, 2011 at 11:42 pm

    Ok, I’m back. As a non-believer, I’m fairly hesitant to say this, but I think these blowflies are beyond redemption.

  13. 13.

    Mr. Furious

    January 11, 2011 at 11:42 pm

    He had to “think about it for a minute” because his default answer was “plow all the profits into a fat fucking bonus.”

  14. 14.

    jcricket

    January 11, 2011 at 11:44 pm

    I wonder how embarrassed all the local Chambers (most of which are not filled with right-wing assholes) are by being under the umbrella of the US Chamber…

    At a fundamental level I get it. The richest 5% of people, who run corporations or own 90% of the stock in this country (yep, even with all the 401ks/IRAs, the top 10% of the population own 90% of the stock in America), don’t want to pay any taxes. They don’t want regulations requiring them to pay their workers reasonable wages, cover healthcare or even to protect workers from potential harm. They don’t want to because if they don’t have to, it means more money for them, and b/c they are sociopaths, by and large.

    I see only two possible outcomes of this: We keep giving the chamber what it wants, which works in the short-term, and then demand for goods and services again plummet, causing a deeper Recession (let’s call it Depression 2.0), which hammers stock prices by 70-90% and all the rich people are screwed.

    Or… we tell them to fuck off, use the power in numbers to pass the laws the whiny brats in the Galtian-class whine about, but which give the rest of us a fighting chance (I’m thinking better labor laws, breaking up the big banks, highly regulating corporations, lowering leverage, national healthcare, progressive taxation to pay for shared infrastructure, better safety net, blah blah blah). And in the short-term this lowers corporate profits… but then demand rebounds, and since 90-95% of people are better off, they start feeling more confident, and spending more (and going bankrupt less)… which leads to… wait for it… rising corporate profits, which leads to rising stock prices, which makes the rich even richer. Yay!

    Basically it’s clear that the only way to long-term sustained corporate profit increases is through the success of the middle and lower classes – but the fact that the Chamber and others thinks it can simply fuck everyone over but the already obscenely rich means we’re being ruled by complete morans. Hell, we’re less than 2 years from a near-Depression and here we are again with crazy corporate shenigans. So let’s start treating them that way.

  15. 15.

    jcricket

    January 11, 2011 at 11:47 pm

    @freelancer: I’d find that argument far more persuasive if it weren’t for the multi-million dollar golden executive parachute packages that don’t benefit me as either an employee or a shareholder.

    But the 10 super-geniuses that are the _only_ people who could possibly run MegaCorp will only work for MegaCorp and make MegaCorp rich if we give them everything they want.

    Again – what it goes back to is that 90% of the stock is owned by 10% of the population. The 10% that’s already insanely rich, and is fine if the other rich folks get enriched, as long as they juice the stock price in the near-term (allowing the 10% to sell the stock to the rest of us suckers).

  16. 16.

    Mark S.

    January 11, 2011 at 11:48 pm

    @jcricket:

    The richest 5% of people, who run corporations or own 90% of the stock in this country (yep, even with all the 401ks/IRAs, the top 10% of the population own 90% of the stock in America)

    Huh, I didn’t know that, but I’m not surprised.

  17. 17.

    jrg

    January 11, 2011 at 11:57 pm

    @jcricket:

    But the 10 super-geniuses that are the only people who could possibly run MegaCorp will only work for MegaCorp and make MegaCorp rich if we give them everything they want.

    I buy that argument to some degree. A good executive team can make all the difference in the world, in some industries (certainly tech). My big problems are:

    1) Failing executives should not get large packages to leave. If they suck, the should get the same severance as anyone else who sucks. It’s not my responsibility as a shareholder to take “pity” on some failed CEO who can’t manage his own personal finances.

    2) This ain’t lake Wobegon, where all the executives are above average. Why do they all get paid such an exorbitant amount?

  18. 18.

    Barb (formerly Gex)

    January 12, 2011 at 12:03 am

    @KG: That’s the ownership society. The thing is, they don’t want to bring anyone else up to that, so I’m not sure what they want to do with the surplus population.

  19. 19.

    Tlachtga

    January 12, 2011 at 12:08 am

    @Barb (formerly Gex):

    so I’m not sure what they want to do with the surplus population.

    Honey, that’s what resource wars are for.

  20. 20.

    Martin

    January 12, 2011 at 12:09 am

    @jrg: Yeah, this is a very valid point. The number of top executive teams I can think of I could count on two hands. The sheer volume of inept and incompetent executive decisions that I see is mind-blowing. I’m desperately looking to diversify my stocks, and my top criteria is a first rate management team. Hell, most of the DJIA is getting by on sheer inertia. Sarah Palin and her youngest could effectively keep these corporations on course. That’s not what I’m looking to invest in.

  21. 21.

    burnspbesq

    January 12, 2011 at 12:12 am

    @jrg:

    Failing executives should not get large packages to leave.

    They get those because they negotiate them on the way in, and it’s in their employment contracts. Typically, the only way to lose contractual benefits is to be fired for “cause,” and the way cause is normally defined in the agreements nothing short of stealing the company jet or getting convicted of a felony qualifies.

  22. 22.

    gwangung

    January 12, 2011 at 12:18 am

    @burnspbesq: Yeah, I know, but that’s the problem. The exorbitant compensation isn’t being matched with superlative results. The disconnect is killing American corporation–if the logic applies to the rank and file, it should apply to the brass.

  23. 23.

    Martin

    January 12, 2011 at 12:19 am

    @burnspbesq: But his point still stands – these executives are not so special that they need to be paid so handsomely to take the job. Some of the C-level folks I know personally are fucking morons.

  24. 24.

    E.D. Kain

    January 12, 2011 at 12:22 am

    This is an important point:

    This return of corporate power comes in part because the revolving door between government influence and corporate paydays has begun to turn anew. Even President Obama has submitted to its centrifugal force. His new White House chief of staff, William Daley, comes directly from J.P. Morgan Chase. Daley scored that lucrative gig after serving as commerce secretary during Bill Clinton’s second term.

    As Daley came in through the revolving door, OMB Director Peter Orszag had just gone out. He cashed out to become a vice chairman of Citigroup, where his government expertise should be worth seven figures annually. One of Orszag’s partners on Obama’s economics team, Larry Summers, is returning to Harvard – but that won’t stop him from delivering the keynote address to the Global Hedge Fund Summit in Bermuda.

    I guess I wonder, though, what this whole ‘return of corporate power’ means. Had it gone away?

    What we’re seeing is simply further centralization of both state and corporate power, neither in opposition to the other. You know, I might be more amenable to the state if I believed they really did hamper the influence and power of corporate entities. I just think that with one hand they regulate and tax and so forth, and with the other they enable and entrench these big, anti-competitive corporate entities. How to transform that picture into one where the government and corporations really weren’t sleeping in the same bed is beyond me.

  25. 25.

    DearOldDad

    January 12, 2011 at 12:26 am

    Next you’ll tell me casinos don’t really want anyone to win.

  26. 26.

    Omnes Omnibus

    January 12, 2011 at 12:31 am

    @DearOldDad: They need some people to win. Just enough to maintain the near fiction that it can happen to you too.

  27. 27.

    Martin

    January 12, 2011 at 12:33 am

    @E.D. Kain: Ok, this is a good point here.

    The main problem as I see it is that as our economy has shifted increasingly away from first agriculture and then manufacturing to information (financial is information based), the government has an increasing ability to not only provide that information but to shape it as well, and to be shaped by it. With a more tangible economy, that was true as well but it was limited because things were physical.

    We haven’t figured out how to put up proper barriers here to guard against bad behavior largely because of the first amendment – information is easily wrapped up in speech arguments, as it has been with campaign finance, but also because bad behavior is incredibly easy to hide in an information age.

    That doesn’t mean we should throw up our arms (as many advise) but it does mean that we need to think differently about how to tackle the problem. One of the better mechanisms, actually, is to limit the size and influence of corporations so that the free market actually operates. Swinging the anti-trust stick would do wonders.

  28. 28.

    E.D. Kain

    January 12, 2011 at 12:40 am

    @Martin: I very much agree. Actually, there is a strong argument to be made that corporations as legal entities are a huge barrier to truly open and free markets. Douglas Rushkoff makes this case in Life Inc. (See a video preview for the book here). Now, the problem is getting from point A – a corporate dominated economy – to poing B – a functioning free market system without special protections in place for corporate entities. I mean, that system is almost unimaginable.

  29. 29.

    Martin

    January 12, 2011 at 12:47 am

    @E.D. Kain: A free market requires more than just a lack of manipulation by government, it also requires low barriers to entry for new entities, it requires the ability for corporations to fail without government bailout (by having plenty of others to fill the gap), and when the market doesn’t cause these things to happen naturally, then government, as the only remaining power, has to step in.

    But free marketeers never talk about free markets as being realistically free to competition, just being free from government intervention – even when the only path to a functioning market requires government intervention. It’s maddening.

  30. 30.

    E.D. Kain

    January 12, 2011 at 12:53 am

    @Martin: All good points. I agree entirely that barrier to entry (and exit on the demand side) is vital to functioning free markets, and these barriers can sometimes be caused by government and can sometimes be alleviated by government depending on the scenario, absolutely.

  31. 31.

    Francis

    January 12, 2011 at 12:55 am

    @Martin: Exactly! The essence of libertarianism appears to be “Let’s disempower government.” OK, how? By not relying on it so much.

    But libertarians never seem to address the problem that those with wealth and power have no intention of relying on government less, or disempowering it. So essentially libertarianism asks the middle class to walk away from politics, and let corporations have unfettered access and control.

    Unilateral disarmament is no way to reduce the role of government in the private sphere. We’re still experiencing the outcome of that approach.

  32. 32.

    cmorenc

    January 12, 2011 at 12:58 am

    @DougJarvus Green-Ellis:
    (quoting Chamber of Commerce Head Tom Donohue)

    “I think the most important thing to tell a company is to return a reasonable return to their investors.”

    Actually, Donohue is spot-on correct about what the first duty of a company is under the present American corporate legal framework. The problem with the relationship between American corporations and workers (below the top executive suite) is in fact precisely because he is spot-on correct about that. The key implication Donohue was driving at was that the economic and social welfare of the American work force is an indirect by-product of successfully “returning a reasonable return to investors”, rather than one of the fundamental, primary objectives of corporations under our present structure.

    The substantial possibility that Donohue might actually think the current relationship and its implications are in fact the rightful order of business and society rather than a pathologically warped system doesn’t necessarily mean at all that what he said was an inaccurate description of how things currently are.

  33. 33.

    E.D. Kain

    January 12, 2011 at 12:59 am

    @Barb (formerly Gex): I’ve written extensively on the need to put aside that chronic distrust of government. Here for instance:

    All of which is to lead into the notion of governance itself, and one flaw that permeates modern conservatism which is this deep, deep distrust of all things having to do with the state. This, coupled with far too much faith in markets and corporations and so forth have led to a “shrinking” of government by essentially just contracting out government duties to private firms. In all fairness, this was also a central practice of Bill Clinton who famously claimed that the days of big government were over. Of course, when you shrink government by simply paying private firms to do government work you’re not really shrinking or limiting it at all. What you are doing is displaying a deep distrust of all things political. And this makes it very hard, I would argue, for conservatives to govern competently. Which, conversely, leads to growth of government in ways that simply don’t make sense.

    Now, admittedly a number of things have made me slightly more anti-government since writing this. The TSA, for one. But I really do think the point of markets is that they fail and having ‘faith’ in them is rather silly. Having faith that they will fail and recover in ways that are less damaging than elaborate planning is another thing entirely.

  34. 34.

    4jkb4ia

    January 12, 2011 at 1:02 am

    On the other side of OT, Gil Student has had a book review published in Commentary. I take back everything I said about this publication being driven into the ground :)

  35. 35.

    JasonK

    January 12, 2011 at 1:04 am

    It’s too bad Milbank is such a douchebag. Sorry..that’s all I’ve got left for tonight ;)

  36. 36.

    E.D. Kain

    January 12, 2011 at 1:04 am

    @Francis: I think on the flipside of regulatory capture is de-regulatory capture, which I believe is just as real and perhaps even more dangerous. That doesn’t mean some deregulation isn’t warranted – it often is – but there are real risks in its implementation.

  37. 37.

    4jkb4ia

    January 12, 2011 at 1:05 am

    Al Wynn entertaining clients in the House dining room. Why should it matter that he was turned out for being a sleazeball?

  38. 38.

    Pooh

    January 12, 2011 at 1:06 am

    Actually, Martin and Francis are both half-wrong. (G)Libertarians typically assume that government intervention which hurts “business” interests are unconscionable impositions on personal liberty (note the elision of “persons” with “fictional persons” i.e. corporations), whereas government intervention which benefit said interests (such as, I dunno, the legal fiction of corporate personhood) is simply the natural order of things which must not be altered.

  39. 39.

    Jeanne ringland

    January 12, 2011 at 1:27 am

    @jrg: Ding ding ding!

  40. 40.

    burnspbesq

    January 12, 2011 at 1:36 am

    @Martin:
    @E.D. Kain:

    I mean, jeez, guys. This dialogue you have going on is touchingly naive, but it’s also entirely unhinged from economic or social reality.

    Your fantasy of ultra-free markets depends on the absolute non-existence of information asymmetry, and that is never, ever going to happen.

    If you do away with limited liability and the idea of the juridical person, then only under very unusual circumstances can there be an economic unit bigger than an extended family (the Lloyd’s syndicate grew out of a unique set of circumstances that have never been successfully replicated). Limited liability might not be a necessary condition to economic development, but history shows us that juridical personhood absolutely is. Have neither of you guys read and understood Coase’s “The Nature of the Firm?”

    I thought we figured out a long time ago that Murray Rothbard was as big a crackpot as Ayn Rand.

  41. 41.

    Villago Delenda Est

    January 12, 2011 at 1:42 am

    One thing that is key to understanding the American social experiment is that the Founders were obsessed with balancing power. That’s why you’ve got three more or less co equal branches of government, acting as checks and balances on each other. Now we’ve got, in essence, a fourth branch of “government” in this country…the corporations. There seem to be no checks and balances on them. The Founders, who with their experiences with the British East India Company, distrusted corporations very much, would be absolutely appalled by corporate power concentration today, and aghast at the idea that a corporation is treated as if it were a person, and an immortal one at that. Corporations were chartered for limited periods in the early history of the republic, for specific purposes…like building a canal or a road.

    Jefferson was a huge fan of the estate tax precisely because he wanted to prevent the establishment of an aristocracy in all but name based on inherited, accumulated wealth. The notion of immortal “persons” in the form of a corporation would unquestionably cause him to go into absolute conniptions. This is the guy who thought banks were more dangerous to the republic than standing armies.

  42. 42.

    Omnes Omnibus

    January 12, 2011 at 1:46 am

    @Villago Delenda Est:

    The notion of immoral “persons” in the form of a corporation would unquestionably cause him to go into absolute conniptions.

    Best typo ever.

  43. 43.

    burnspbesq

    January 12, 2011 at 1:48 am

    @Martin:

    it also requires low barriers to entry for new entities

    Aw, come on, now. Except in the case of licensing requirements, barriers to entry are what they are. They depend on engineering, logistical, and similar considerations that cannot be made to magically disappear.

    If it costs a billion dollars to build a state-of-the-art steel mill, you can’t enter the steel industry unless you have $1.1 billion (because you’re also going to have to hire a sales force, build a distribution network, etc.). There are things you can do to make it easier for someone to raise that $1.1 billion (ironically, one of the things that makes it easier to raise substantial amounts of capital is limited liability, and limited liability depends on juridical personality which you seem to hate), but you can’t make it cost less.

  44. 44.

    Villago Delenda Est

    January 12, 2011 at 1:52 am

    @Omnes Omnibus:

    Ah, you captured it before I corrected the typo.

    I looked at that, and didn’t see a problem, then thought better.

    But it works both ways, ya know :)

  45. 45.

    jcricket

    January 12, 2011 at 2:01 am

    @Mark S.: It’s mind-bogglingly what a fraud the stock market basically is in terms of wealth generation for all but the very, very wealthy.

    Read this link for a lot more info.

    Yet our Galtian overlords have us convinced that what’s good for them is good for the rest of us, despite direct evidence that the opposite is happening. What’s good for them is ONLY good for them.

    Of course will have the naifs like E.D. saying “yeah, I know the 30 year progression towards a more economically liberatarian society has resulted in worsening income inequality and crumbling infrastructure along with a massive increase in income shocks for the average person, but that’s just because we haven’t been libertarian ENOUGH”.

    Fuck it. I was done with Libertarians 15 years ago, and now they’re just insufferable pricks who deserve to be condemned in the ash-heap of political theory along with communism.

    Liberty matters, but Libertarianism does not lead to liberty, in theory or in practice. If you care about Liberty, find another ideology that acknowledges the pragmatic limitations and real-world consequences of living in the world of sociopathy, income asymmetry, genetic/health luck-of-the-draw and massive income inequality.

  46. 46.

    Francis

    January 12, 2011 at 2:03 am

    @burnspbesq: Why is it that I have a sneaking suspicion that you are some way involved in representing corporate entities on licensing issues? Something about the way you write.

    btw, on a completely unrelated point, pb is the symbol for lead in the periodic tables. Does your nym make you in some way a lead-burning lawyer? Last I checked, California disallowed lead in gasoline quite some time ago.

  47. 47.

    Stooleo

    January 12, 2011 at 2:03 am

    I know I’m late to the game but, has anyone put forward; “I’m looking forward to our Chamber of Commerce Overlords and toiling in their sugar mines” and “This has got to be good for John McCain”. Bah. The politics is so stupid now. I wish we could all take a break and do a Burning Man festival in John Cole’s backyard.

    Stooleo +12

  48. 48.

    jcricket

    January 12, 2011 at 2:07 am

    @Villago Delenda Est: But you know, corporations are people and entitled to free speech. That’s in the constitution, so says the “originalist” Justice Scalia.

    (scuse me whilst I go throw up in my mouth a little)

  49. 49.

    burnspbesq

    January 12, 2011 at 2:07 am

    @Villago Delenda Est:

    [Jefferson would have been] aghast at the idea that a corporation is treated as if it were a person

    Not hardly. Jefferson is known to have been familiar with Blackstone’s “Commentaries on the Laws of England,” which devoted an entire chapter to the law of corporations. Jefferson may have disapproved of the perpetual life and juridical personhood of the corporation, but those concepts would have been well known to him.

  50. 50.

    burnspbesq

    January 12, 2011 at 2:10 am

    @Francis:

    Sorry to disappoint. PB are my first and middle initials. Although there are doubtless some folks here who are convinced that I ingested far too much lead-based paint as a child.

  51. 51.

    Villago Delenda Est

    January 12, 2011 at 2:10 am

    @burnspbesq:

    If he knew of the concept, I have no doubt he would have disapproved of corporate “personhood”.

    STRONGLY.

    So, my point about his attitude stands.

  52. 52.

    Martin

    January 12, 2011 at 2:14 am

    @burnspbesq: I have no expectation of ultra-free markets, just that simply limiting the size and power of the entities in the markets would go a long way to addressing the problem.

    A lot of the things that really create problems in the current arrangement would be much more tolerable simply by dialing back the scope of large corporations.

  53. 53.

    burnspbesq

    January 12, 2011 at 2:15 am

    @Villago Delenda Est:

    Can you point to something in his writings to that effect?

  54. 54.

    jcricket

    January 12, 2011 at 2:15 am

    @Martin: BTW – one of the best examples of how government regulation can in factor foster free marketism and create wealth is the stock market. If you compare the AMEX to the NYSE you’ll see that the highly-regulated NYSE with its transparency and filing requirements has orders and orders of magnitude more trading volume (and wealth) than the lightly regulated AMEX.

    Basically, regulations create the transparency which leads to investors feeling like they can trust the companies in that market which leads to higher investment, etc.

    I look all around me and wherever I see unfettered corporations, I see monopolies, oligarchies, the destruction of the environment, ignoring the rule of law and general demolishing of any individual liberty of anyone in the way of the corporations.

    On the other hand, anywhere with fairly well regulated corporations, with a healthy and reasonably independent government seems to be doing just fine – both for individuals and corporations.

    I need look no farther than that to decide that Libertarianism, if it ever did have a point, has proven a horrible failure when put to the test, time and again. Perhaps socialism isn’t the answer either, but then let’s have a conversation about the pragmatic limitations of government. Libertarians are today’s silly doctrinaire high-school communists, and should be treated as such.

  55. 55.

    jcricket

    January 12, 2011 at 2:18 am

    @Martin: I can agree with this. Blunt instruments, with limited loopholes, seem to work best.

    See Canadian banks – which are all quite large (kind of the opposite of what you’re saying), but very limited in what they can do (low leverage levels, limited ability to speculate). I’m sure there are plenty of Canadian investment houses that “picked up that slack” and perhaps went nuts (and then under) – but that didn’t bring the whole banking system down b/c Canada was smart enough to force the entities to be separate.

    In our case, simply limiting leverage to 1:10 or 1:12 would go a long way. Forcing banks and speculative investment houses to split would do a lot too.

    And if we can’t fix income inequality at its root, then more progressive taxation it is. New tax brackets at $250k, $500k, $1m, $2m, $5m, $10m, etc. A couple % more at each level and boom, Social Security, Infrastructure and so on at solid footing.

  56. 56.

    Martin

    January 12, 2011 at 2:24 am

    @burnspbesq: Ok, but natural monopolies develop all the time and yet we do fuck-all to address those situations when they come up. Requiring $1B to enter the market might be tolerable but when the cost to enter the market is a significant fraction of the total size of the market, then new entries won’t happen. This is the problem for health insurance in most states – for the share of the 700,000 residents of Wyoming that you could reasonably expect to capture, the cost to rework policies, build provider networks, etc. is prohibitive. Here the problem is that you have an artificial barrier to the market (state boundaries) but you have this develop all the time.

    We’re walking into that situation now in the wireless space where the cost to build out the next generation, and certainly the generation after that, will be prohibitively expensive to build out redundantly. But the government could intervene and set up a common carriage situation which would immediately alleviate the problem and allow competition by massively lowering the barrier to entry. But this will not stand in our current environment, even though virtually every nation we compete with on the world stage does exactly this.

  57. 57.

    burnspbesq

    January 12, 2011 at 2:26 am

    @Villago Delenda Est:

    If Jefferson’s views had prevailed, we would live in a world not very much different than the world in which our ancestors lived in Jefferson’s time.

    The Jeffersonian view lost in the Supreme Court in 1819 in McCulloch vs. Maryland, and the rest is … well, you know.

  58. 58.

    John - A Motley Moose

    January 12, 2011 at 2:26 am

    I’m of the firm believe that anti-monopoly statues would solve much of the problem No single corporation should be allowed to hold more than x% of any market. We would lose some economics of scale, but gain that back through increased innovation and efficiencies as each corporation fights to maintain market share. No more too big to fail. No more holding the economy up for ransom. Higher wages and better benefits as more companies battle over the labor pool.

    This obviously couldn’t be implemented overnight. It could take decades. But the alternative is to keep going the way we are until a handful of corporations control 90% of the world’s resources and revenue. That, to me, is a nightmarish possibility if we keep on this path.

  59. 59.

    Villago Delenda Est

    January 12, 2011 at 2:26 am

    @burnspbesq:

    “I hope we shall crush in its birth the aristocracy of our moneyed corporations, which dare already to challenge our government to a trial of strength and bid defiance to the laws of our country.”

    Thomas Jefferson, 1812

    Here’s an entire article on Jefferson and corporations:

    http://www.thenation.com/blog/37038/thomas-jefferson-feared-aristocracy-corporations

  60. 60.

    burnspbesq

    January 12, 2011 at 2:33 am

    @Martin:

    even though virtually every nation we compete with on the world stage does exactly this.

    If that’s true, why is it that when I walk off the plane at virtually any major airport in the world, my iPhone immediately finds at least three signals?

  61. 61.

    Villago Delenda Est

    January 12, 2011 at 2:34 am

    @Martin:

    The thing is, there IS such a thing as a “natural monopoly”. Telephone systems, for example. Cable companies. Electric companies.

    In these cases, having innumerable strings of telephone lines, cable lines, electrical lines make absolutely no sense at all from a utilitarian point of view. The redundancy of “outside plant” is inefficient in the extreme. This is not to say that “inside plant” should not have redundant backups…if a telephone switch fails, a hot standby is cut in automatically, and the customer never knows the main switch was down.

    Natural monopolies need to be regulated, in order to prevent a firm from basically extorting money out of everyone else…to include other businesses, destroying their ability to grow and thrive and not only return on their investors’ interest, but provide the goods and services need ed by society as a whole.

  62. 62.

    burnspbesq

    January 12, 2011 at 2:35 am

    Can I just say that this thread has been an absolute pleasure to participate in? Smart people engaging on an interesting topic with a minimum of extraneous nonsense.

    Gentlemen, and ladies, thanks.

  63. 63.

    Villago Delenda Est

    January 12, 2011 at 2:37 am

    @burnspbesq:

    Are you a fan of the Santa Clara County vs. Southern Pacific Railway precedent?

    Carl Pope discusses it, and the incongruity of the “strict constructionists” on the Supreme Court being not so strict in light of that particular case.

  64. 64.

    burnspbesq

    January 12, 2011 at 2:44 am

    @Villago Delenda Est:

    Regulation can have other benefits, as well. The inclusion of Bell Labs in AT&T’s rate base, which effectively guaranteed it a small but predictable return on its investment in R&D, facilitated the growth of the greatest scientific research institution the world has ever known.

  65. 65.

    Villago Delenda Est

    January 12, 2011 at 2:51 am

    @burnspbesq:

    The original AT&T was run in a far different way than corporations are now. A return on investment was of course expected, but Ma Bell was run conservatively…so conservatively that when DoD approached them about putting together a phone network to allow computers to “talk” to each other, Ma Bell rejected the idea out of hand. DoD still wanted to explore this, so DARPA got the mission. The idea that they were providing a vital service was every bit as important as making a buck. So they accepted the need for regulation in order to allow them to continue their service.

    This is a far cry from the “loot the body and run” mentality of the modern MBA.

    Having been involved in the early days of the Internet on both the government side (as a signal corps officer) and the private sector side (as an operations manager for a local ISP) I can tell you that the “phone company” was quite slow to react to the Internet and all it brought with it. Still, they managed, slowly, to adapt.

    Now their successors fully understand that they need to get this beast under control, so they can meter it. And profit, profit, profit!

  66. 66.

    burnspbesq

    January 12, 2011 at 3:17 am

    @Villago Delenda Est:

    Pope’s entire thesis in that article is idiotic. It’s a big, stinking barrel of red herring. Santa Clara is irrelevant to the constitutionality of McCain-Feingold.

    It was settled law, long before Citizens United, that corporate speech was protected by the First Amendment. See the numerous cases cited at pages 25-26 of the plurality opinion. As much as I think it’s bad policy, IMO there can be no serious doubt that Citizens United was correctly decided as a matter of First Amendment law.

    Even If the issue in Citizens United had been framed in terms of due process rather than freedom of speech, it wouldn’t have mattered. The Due Process Clause of the Fifth Amendment provides that “No person shall … be deprived of life, liberty, or property without due process of law. The members of the First Congress would have been entirely familiar with Blackstone. There can be no doubt that the drafters of the Fifth Amendment understood the term “person,” as used in the Fifth Amendment, to encompass corporations. If they had meant not to give due process rights to corporations, they would have chosen some other word than “person” to describe who or what was being given those rights.

    Santa Clara is a meaningless little case, and anyone who tells you otherwise is blowing smoke up your ass.

  67. 67.

    sukabi

    January 12, 2011 at 3:23 am

    @E.D. Kain: Major campaign finance reform, removal of corporate lobbying money, revoking a corporations’ “personhood”, and enforcing the laws that are already on the books would be a good start.

    Treating corporate crimes like fraud, like they are actual crimes. There shouldn’t be a get out of jail free card just because the person(s) responsible are part of a corporate entity. There’s a little saying that I’m sure you could get behind… “Do the crime, do the time.”

  68. 68.

    burnspbesq

    January 12, 2011 at 3:23 am

    @burnspbesq:

    ETA: I’ve been a member of the Sierra Club since high school. I love Carl Pope. He just needs remedial instruction in Con Law.

  69. 69.

    Calouste

    January 12, 2011 at 3:28 am

    @burnspbesq:

    __

    If that’s true, why is it that when I walk off the plane at virtually any major airport in the world, my iPhone immediately finds at least three signals?

    Because he was talking about the next generation wireless, and the generation after that, not the current one?

  70. 70.

    Pooh

    January 12, 2011 at 3:58 am

    @sukabi:

    Sounds fine in theory, but when you realize that the “person” to do the time doesn’t really exist…moral hazard anyone?

  71. 71.

    sukabi

    January 12, 2011 at 4:25 am

    @Pooh: corporations are run by people. People make the decisions. People decide whether or not defraud their customers. The corporation is the fiction and only acts to shield the people running it, and wouldn’t exist without the people who make the decisions on what it does.

  72. 72.

    lol

    January 12, 2011 at 4:37 am

    ED Kain has become substantially more tolerable now that he’s wading into the comments with the plebes.

  73. 73.

    sukabi

    January 12, 2011 at 4:38 am

    @Pooh: The person or person(s) that make the decisions to defraud their customers do exist… same as the person that embezzles exists… guess which one will do time in the slammer…

    We don’t (or very rarely) try the crimes perpetrated by the corporation, but almost always try the crimes against the corporation.

    Claiming personhood for the purposes of “free speech” and other “rights” on one hand but rejecting the responsibilities of personhood for criminal prosecutions claiming there isn’t a “person” responsible is bullshit.

  74. 74.

    Pooh

    January 12, 2011 at 5:05 am

    @sukabi: I don’t begin to disagree. The problem is that given that most of these crimes require proof of knowledge of some degree of bad action, the individuals involved all tend to have plausible deniability. Proving a conspiracy tends to be tough without a paper trail. Not to mention that prosecutors tend to (justifiably) be a little reticent to allege criminality in a situation where the alternative explanation of simple incompetence or mismanagement (as opposed to active malign acts) remains plausible.

    Basically unless you have a huge, Enron-style smoking gun, nobody (especially the higher-ups) actually “knows anything” and besides most will be gone by the time the shit hits the fan anyway.

    Conceptually it’s like the brain saying fine, lock my fingers up, they did it…

    To put it another way, how much sense does it make to treat fictional persons, who can’t really be deprived of corporeal liberty in the same way as actual persons, the same way as an individual accused of a crime?

  75. 75.

    Pooh

    January 12, 2011 at 5:13 am

    To be clear, what I’m suggesting is that the legal fiction of corporate personhood has possibly outlived its usefulness and almost certainly needs to be scaled back.

    Though I can’t wait until the claims start to be made that a corporation has SECOND Amendment rights. I for one welcome the arrival of our privately funded military overlords…

  76. 76.

    sukabi

    January 12, 2011 at 5:19 am

    @Pooh: to which I say Xe.

  77. 77.

    sukabi

    January 12, 2011 at 5:21 am

    @Pooh: so I guess if you want to pull a huge fraud the first step is to incorporate. got it.

  78. 78.

    Xenos

    January 12, 2011 at 5:24 am

    @burnspbesq:

    If Jefferson’s views had prevailed, we would live in a world not very much different than the world in which our ancestors lived in Jefferson’s time.

    Actually, we would have been recolonized by a fully industrialized Europe by the early 20th century. Alternate history is a pretty silly pursuit, but a nation of yeoman farmers could not have eliminated slavery, developed an arms industry, put railroads across the continent, or built a navy that could have prevailed in the Spanish-American war.

    The industrial revolution only took place in countries with limited liability and corporate personhood. They were as essential as coal, which also could not be mined in large quantities without limited liability corporations.

    They should make a simplified version of Torts discussing the full historical context part of the undergraduate curriculum. Not only would that make people appreciate why many things we dislike about the modern system were really unavoidable, but could teach people how to think about causality in a disciplined fashion.

  79. 79.

    DougJarvus Green-Ellis

    January 12, 2011 at 7:32 am

    @E.D. Kain:

    I guess I wonder, though, what this whole ‘return of corporate power’ means. Had it gone away?

    I wondered that too.

  80. 80.

    Paul in KY

    January 12, 2011 at 9:13 am

    @jrg: Because the Board members (who approve the compensation packages) all feel they could be the next CEO (if they play their cards right).

  81. 81.

    E.D. Kain

    January 12, 2011 at 9:22 am

    @sukabi:

    Major campaign finance reform, removal of corporate lobbying money, revoking a corporations’ “personhood”, and enforcing the laws that are already on the books would be a good start.
    Treating corporate crimes like fraud, like they are actual crimes. There shouldn’t be a get out of jail free card just because the person(s) responsible are part of a corporate entity. There’s a little saying that I’m sure you could get behind… “Do the crime, do the time.”

    This is all well and good, but smacks of Utopianism to me. I’m all for removing corporate lobbying money – but how? As I said earlier, I think there is a strong case to be made that corporations are actually impediments to free markets – so removing their ‘personhood’ sounds good, too. But we’re talking about a seriously steep uphill battle. I’d say the chances are right up there with the Green Party taking the Oval Office. Not that steps couldn’t be made, of course, but there must be intermediary steps as well.

  82. 82.

    burnspbesq

    January 12, 2011 at 9:50 am

    @Paul in KY:

    If you were to look at the compensation committees of a representative sample of public company boards, I suspect you would see a very large concentration of C-level execs. Everybody takes care of everybody else, and it’s all done with nods and winks and pious platitudes about the need to attract and retain the best talent.

  83. 83.

    burnspbesq

    January 12, 2011 at 9:53 am

    @E.D. Kain:

    “As I said earlier, I think there is a strong case to be made that corporations are actually impediments to free markets – so removing their ‘personhood’ sounds good, too.”

    Saying there is a case to be made is not the same as making it. The latter would be nice, too.

  84. 84.

    4jkb4ia

    January 12, 2011 at 9:54 am

    @burnspbesq:
    As one of the providers of extraneous nonsense, absolutely. I came here today to see how this would all work out. I am still stuck on the capture problem.

  85. 85.

    4jkb4ia

    January 12, 2011 at 10:31 am

    I agree that “corporate personhood” is a fig leaf. In the days of Rockefeller and JP Morgan you did not need to go after corporate personhood. You could see that very wealthy men were towering over the government, and in some cases buying Senate seats for themselves to get the respectability that came from being in government. The answer to this was to strengthen government so that these wealthy men were accountable to the public or had to pay taxes to support the public.

    Goldman Sachs as villain is not particularly one wealthy person. It makes a good villain because it is an organization of great cleverness and great amorality. Great cleverness and amorality could be centered in many small Wall Street organizations that don’t necessarily have to be a public company. But a public company does not have to have an ethic of public service, and is not there for that purpose. The question is how to use these people’s talents for public service when that doesn’t mindlessly mean “the state”. As Yves pointed out in a post, corporate power interfaces with public service if the public service is just a charity by a few wealthy people such as the billionaires’ pledge.

  86. 86.

    ThatLeftTurnInABQ

    January 12, 2011 at 11:41 am

    @Villago Delenda Est:

    The original AT&T was run in a far different way than corporations are now. A return on investment was of course expected, but Ma Bell was run conservatively…so conservatively that when DoD approached them about putting together a phone network to allow computers to “talk” to each other, Ma Bell rejected the idea out of hand. DoD still wanted to explore this, so DARPA got the mission. The idea that they were providing a vital service was every bit as important as making a buck. So they accepted the need for regulation in order to allow them to continue their service.
     
    This is a far cry from the “loot the body and run” mentality of the modern MBA.

    As I see it we are currently experiencing a crisis in quality of corporate governance. C-level officers and their compensation committees have in many cases conspired to loot the corporations they have been granted temporary stewardship of, to the detriment of shareholders, customers, business partners and the general public. They are getting away with this because the market is no longer functioning to punish malfeasance and theft with the failure and extinction of the plundered corporation.

    Sometimes you have to shoot a few admirals corporations Pour encourager les autres and that isn’t happening. Why? Because the development of the info economy pace Martin’s comments above has allowed far too many corporations in this new economic sector (note how few of our recent problems have come from traditional agriculture or industry) to obtain monopolistic positions based on the provision of essential public services without which our very complex and highly urbanized society cannot function.

    This can be seen clearly in the financial services industry where the primary broker dealers for example are, even if replaceable on an individual basis, so tightly coupled to each other than we can’t allow any of them to fail for fear of having the entire system collapse as nearly happened in late 2008 after the Lehman bankruptcy. The govt had no choice but to bail out these unregulated monopolies, and those bailouts are preventing the market from functioning as a clearing mechanism for purging crime and incompetence from the system.

    This is a similar problem to the issues which arose during the railroad era 100+ years ago. And the solution is also similar – any corporations which provide essential public services (and which thus are too big or too complex and interconnect with each other to be allowed to fail) must be treated as highly regulated monopolies. During our late 19th century industrialization it took people a couple of generations to realize that control of essential public infrastructure could not be left in the hands of poorly regulated corporations, because this was a new mode of economic development and it took a while for it to become clear what was essential and what was not. We are currently going thru the same phase in our transition to an info-based economy.

  87. 87.

    sukabi

    January 12, 2011 at 1:04 pm

    @E.D. Kain: just because you don’t know HOW to do it doesn’t mean it can’t be done…. it’s a more realizable goal and based on something tangible to work to remove corporate money from lobbying and the electoral process, than it is to throw up your hands and say “well it’s a good idea in theory, but I don’t know how you’d do it… but, if we take all regulations off corporations they’ll straighten up this mess.”

    Your “Free Market” is the Utopian dream. The only “free market” exists in theory. Which is the only place there are no HUMANS involved. Greed and quest for power will always trump any “free market”.

  88. 88.

    backscratch

    January 12, 2011 at 1:07 pm

    When a public figure responds as Donohue did to a question about the general welfare of the citizenry, he renounces his membership in that citizenry. It would be logical and just to escort him to the nearest border and send him across–with our best wishes but without his ill-gotten assets.

  89. 89.

    Turgidson

    January 12, 2011 at 1:25 pm

    @dr. bloor:

    Of course, had he done that, he’d have exploded the supply-side myth that giving corporations tax breaks and more money to spend is the path to job creation

    That myth has been exploded thousands of times over at this point. But it’s sort of like the bad (machine) guy from Terminator 2. It just reconstitutes itself and somehow gains strength each time.

  90. 90.

    Turgidson

    January 12, 2011 at 1:45 pm

    @E.D. Kain:

    We unwound corporate dominion over the government a couple times, with some success (though the success was not lasting, or total). Both times, a Roosevelt was involved. The second time, it was only after 3 years of brutal, crippling economic crisis.

    After seeing how the panic of 2008 has played out (ie – corporate influence over our government and body politic is worse now than ever), I’m now convinced it would take a cataclysm at least as bad as the Great Depression to really force the kind of structural change necessary to decouple corporate influence from our government in a meaningful way. The crisis of 2008 and lingering economic malaise scared a lot of people and made them angry, but not at the real villains, and not enough to force serious reform.

    I’m not saying I want to see this cataclysm. Just that I think it’ll take something of that magnitude for things to fundamentally change in this regard.

    That’s the only “how” I can think of, really. As we saw with the ACA and Dodd/Frank (both of which I support as the best shit sandwich we could get), any attempt to squelch corporate power, even modestly, is met with furious resistance, no matter how popular the attempt was when it was launched, and no matter how necessary it is.

  91. 91.

    Ruckus

    January 12, 2011 at 2:35 pm

    @sukabi:
    so I guess if you want to pull a huge fraud the first step is to incorporate. got it.
    There may be more truth in that statement than you imagine.

  92. 92.

    E.D. Kain

    January 12, 2011 at 3:55 pm

    @Turgidson: I’m not so sure how historically accurate this is. After the great depression we had massive corporations like GE and GM – big, government-backed corporations. I think sometimes we have a tendency to see the past with rose-tinted glasses.

  93. 93.

    sukabi

    January 12, 2011 at 4:04 pm

    @E.D. Kain: we still have massive corporations, in fact GE is one of the largest

    and we have Goldman Sachs, US Bank, BoA… all gov. backed with taxpayer dollars.

  94. 94.

    Turgidson

    January 12, 2011 at 4:26 pm

    @E.D. Kain:

    That’s why I included the “not total, or lasting” disclaimers. Yeah of course we still had powerful, influential corporations. But the amount of control they could wield over our policy and politics was an order of magnitude different in how pervasive it was then as opposed to now, from what I can tell. (I wasn’t there and I don’t have scientific links to throw out – this is just what my “eye test” based on my historical reading tells me) That’s not to say it was a utopian era of perfectly responsive government and perfectly responsible corporate behavior – just that things did happen that swung the pendulum away from corporatocracy (which the Gilded Age and Roaring 20s resembled) and back towards government “for the people” (which Trust-busting and the New Deal helped to usher in, even if it was incomplete and didn’t last).

    I worry now that the needle is pinned almost all the way on the corporatocracy end and will remain there indefinitely.

  95. 95.

    RobW

    January 12, 2011 at 9:43 pm

    @Stooleo:

    Or better yet, multiple simultaneous festivals in all of John McCain’s backyards.

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