American Elephants

What’s the Matter With Corporations? by The Elephant's Child
March 10, 2011, 8:47 pm
Filed under: Capitalism, Economy, Law, Liberalism, Statism, Taxes | Tags: , ,

Leftist protesters seem to always have it in for Big Business, or Corporations.  There was a lot of shrieking about corporations during the protests in Madison, which seems unusually odd since the whole dispute was about public employees and public sector unions, the governor, the legislature, local government and the law.  No corporations.  But it could be any protest. Leftists have it in for corporations.  They don’t like Big Business either, but it seems to be “corporations” that draw their ire. And I have to admit that I don’t quite get it.

It doesn’t seem to be bigness, I haven’t seen anyone carrying signs about “down with Big Movies”, or “down with Big Football”, or ‘Big Music,” corporate entities they may be, but nobody protests.  Corporations seem to be identified with Wall Street and Exxon, and a few other notable companies. Wall Street is viewed as the location where all the corporations live.  Could the protesters explain what a corporation is and what their specific complaint is? Probably not.  It is not logical, but a matter of seething emotion.

The whole thing undoubtedly segues into liberal hatred for “the rich.” CEO salaries and benefits are published in the annual reports of corporations and often picked up by the media, especially if they are especially large.  Envy is one of the seven deadly sins, and therefore titillating.  Forbes has just published their annual list of America’s richest people; it’s safe to assume that it sells lots of magazines, as other magazines write about the list.

America’s elites, the denizens of the humanities departments of our universities, unquestionably hate rich CEOs.  The elites have struggled to get their PhDs, and because they have them are credentialed as the smartest people — and yet here are ordinary businessmen getting astronomical salaries and golden parachutes — not professors!  Professors are stuck in lecture halls with bored students who don’t appreciate the life of the mind.

That kind of envy doesn’t make much sense.  The tenure of most CEOs is fairly short, ranging around 6 -7 years. You not only have to do most everything right, but you have to have good luck with the economy. Nobody keeps a CEO around for long who isn’t enhancing the bottom line.

So how does big business get big? There’s the business cycle kind of bigness, which means that when the economy is good and the outlook is good; salaries go up and assistants are hired, more machinery is purchased and offices are expanded.  Smaller competitors or suppliers are snapped up, and new products are added to the line.  Overenthusiasm and overreaching mean that some businesses fail.  When sales fall, some will be laid off.

Then there is the recession kind of increasing bigness.  When a large business fails, government often interferes.  If the business has a large number of employees, government often steps in and says this business is “too big to fail.” This is nonsense, but it is what  happens. Very Large Corporation is often encouraged to swallow Too Big To Fail business, and soon you have Enormous Corporation. If the object was to save jobs, it doesn’t work, for consolidated departments don’t need twice the employees. Enormous Corporation becomes too big and unwieldy and soon has to spin-off pieces. And that doesn’t even get into bailouts and subsidies.

Unfortunately when Congress starts making regulations about business, they usually make a mess of it, for they don’t understand business. In the recent Dodd-Frank business reform bill, the idea of “Too Big to Fail”— was never addressed, in spite of the damage it caused in our present recession.

Corporations are run by ordinary people. Some are good managers, and good to their people. Some are not. Public service is not the business of a corporation.  It is the business of a corporation to make money,nothing more. If so, then the people they hire can receive good salaries and the healthy business can generate innovation and ideas and fine products that make the economy grow.

We have NGOs (non-governmental organizations),  whose reason for existence is to do good works for society.  Unfortunately, they conceive their objective as raising money and lobbying governments to do their bidding.  Strange world indeed.

4 Comments so far
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Corporations = Capitalism
Unions = Big Government


Comment by Ron spins

Oh, I know. I just don’t get the mindset. I could never warm up to Ayn Rand though, I just never got the attraction.


Comment by The Elephant's Child


Comment by Ron spins

I have that one all ready to post. Good explanation of public sector unions. Sorry, it’s not a civil right!


Comment by The Elephant's Child

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