Here’s a letter to a DC-area radio station, WTOP:
During today’s 1:00pm hour you played a clip of a listener who is “livid that Americans aren’t up in arms against the devastation that corporations inflict” on us. This gentleman’s anger was sparked by the BP oil spill.
I have little sympathy for BP, it being a firm that has often feasted at government troughs. But some perspective is now very much needed on the costs and benefits of corporations.
Consider that the latest estimated cost of the BP spill is $33 billion. That’s a lot of money, to be sure. But this sum pales in comparison to the amount of money that Wal-Mart’s retailing efficiencies are estimated to save consumers each year: $200 billion.*
Oil spills are compellingly photographable – and, hence, attention-getting and emotion-stirring. In contrast, lower prices for – which, by the way, mean fewer resources used to bring to market – clothing, children’s toys, digital cameras, camping equipment, kitchen appliances, groceries, and other goods that we routinely enjoy are not photographable in any compelling way. The result is that the social benefits of corporate innovations and competition are easily overlooked, ignored, taken for granted, forgotten. But these benefits are enormous. And any assessment of the worthiness of corporations in modern life had best take them into accurate account lest we adopt policies that make us all poor and miserable.
Sincerely,
Donald J. Boudreaux
* See Matt Ridley’s splendid new book, The Rational Optimist (New York: HarperCollins, 2010), p. 113. A few pages earlier (p. 110), Matt observes
Yet for all the liberating effects of commerce, most modern commentators see a far greater threat to human freedom from the power of corporations that free markets inevitably throw up. The fashionable cultural critic sees himself or herself as David slinging stones at vast, corrupt and dehumanizing Goliath-like corporations that punish, pollute and profiteer with impunity.
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Well I can't speak to your assertion about Denmark. I don't know anything about it. So let's talk about post FDR America. Wasn't this the period in our history that gave rise to the military-industrial complex? Wasn't this the period in our history in which multi-national corporations grew into the behemoths we both despise? Which regulations at that time promoted true competition in the marketplace and rewarded real production? And how long did they last before they were shifted into the regulations we both despise today? And why were they shifted? I'd ask more questions but I have to get to work!
Due process.
Crap, another “unlike”, please.
Sam, if he so chose, could shop only at places that accept cash or check and he could ride a bike to work. He could also have friends and find entertainment within a radius of where he lives that would allow him to never need a car.
Is he somehow not allowed to make those decisions by a corporation? NO.
The political organization is real. It is a threat to life, liberty, and property. It refers to itself as a “government”, but it isn't.
Yeah we shouldn't paint all the Enrons, and Worldcoms and United Health Care's and Goldmann Sachs and Exxons and Countrywides with the same broad brush…. Ya know YOU deserve to live in a failed corporate state but many of us don't. We see what's happening and we are fighting the concentration of power. You're just cheering it on. I'm to the point were I've pretty much given up. Things are going to get real real bad because of the stupidity of the American public and the power of corporate influence to control the message.
In the first comment we see a good definition of “corporation”. Governments fit that definition, too. If corporations are all bad, and governments are corporations (as they undoubtedly are) all governments are bad, too.
Equating arguments for limited government to arguments for no government is just stupid.
Equating arguments for free markets to arguments for crony capitalism is just stupid.
You really don't understand how stupid you are, do you? I guess that makes you even more stupid.
When libertarians speak of freedom, we do not mean “free of cost”. I like driving, I don't expect to do it free of cost. I like using my debit card, it means I don't have to carry huge wads of cash. I don't expect it to be free of cost.
$3.10 is not bad at all, especially compared to many other countries which pay much more for gas due to high taxes. I don't expect gasoline to be provided to me at no cost.
Is that what you desire, to have all the people who labor to provide these goods and services do so at no cost to you?
You continue to display your usual perverted insight.
Chelsea is marrying a 31 year old investment banker at Goldman sachs. The Clintons are proud of their offspring. They raised her well.
Well some from BP are DEAD! And I doubt anyone else will ever hire their CEO. Furthermore, there is still the possibility that BP America may have to fold (uhh some people would lose their jobs). I have noticed that government bureaucracies don’t fold. I mean look at the so-called “stimulus”, nearly all of it went to protect public sector jobs, and apparently we need another one because all those government jobs are again at risk. The token folks fired from MMI (if they really have been fired) will find their way into private industry where their expertise will help these companies deal with the morass that is government regulation. That’s the great thing about being a bureaucrat—even if you get fired your mere knowledge of the bureaucracy guarantees that you can find employment elsewhere. I worked in Washington (a place that judging by the naïve nature of your comments you have never worked) and many bureaucrats work in Washington for this exact purpose (they call it “doing a tour”—except for those who are of such exceptionally poor quality that their only hope is to remain in the bureaucracy, which should tell you something about the overall quality of the bureaucracy). I will also point out that when it comes to the federal government there is no such thing as “massive turnover”. If people are removed from jobs they just get parked somewhere for a little while and then quietly resurrected. That’s how it worked from someone who saw, but feel free to cling to fifth grade civics.
Thanks again for the insight into the mind of the statist—the ability of the statist to assume unrealistic and downright dreamy things about the bureaucracy is truly amazing. That being said, I will concede that government bureaucracies have historically proved remarkably good
Help me out here, vikingvista. You seem like a pretty smart guy with lots of answers.
I, for one, lament all corporations. It is my understanding that corporations exist for two main reasons: tax breaks and limited liability. Corporations were born as a union between the ruling merchant class (as A.J. Nock would call them) and the State (not government, but the State) in which the State protects the interests of the merchant class through tax incentives and by limiting the personal liability of said merchants. The limited liability is the biggie in the equation (see BP/Gulf oil spill). Without the existence of the State there would be no corporation. Corporations are the offspring of the marriage between the merchant class and the State.
Now as a libertarian (and an avowed anarcho-capitalist to boot!) I have a real problem defending corporations in any endeavor. At the very least they are creatures of Crony Capitalism, and at worst they are the spawn of full-fledged fascism.
Please tell me where I am wrong.
“Corporation” refers to a very diverse lot. I, for instance, am the sole share-holder, officer, and employee of a corporation. It is completely pass-through, and only has cash assets, and only to the extent I haven't gotten around to disburse them to me (and to the IRS who seems to get nearly an equal share). The limited liability of the corporation does not affect me. All of its income is from my professional services, and there is no limited liability for professionals.
Limited liability is defined by the state. It announces to people that if a financial claim is brought in a state-run adjudication against a corporation's owners, in their roll as the corporation's owners, then the only asset of those owners that the state will award as damages, is the corporation itself.
It doesn't mean a person working for the corp can kill someone, commit arson, or engage in other criminal activities, and get away scott free. Liability isn't limited for those things. If a person is a lawyer, or doctor, or some other licensed professionals, who commits malpractice, there is also no way that person can be protected by limited liability for malpractice.
In the example of BP, if some employee on board the rig had deliberately caused the leak (and lived), e.g., as an act of terror, he would not be protected by limited liability. But his employer, BP, would be liable for his damages (as part of the employment contract). Limited liability would merely protect the shareholders from having their houses and cars and retirement confiscated to pay those damages.
BP is not a good example of limited liability abuse, because the assets within the corporation are enormous, more than sufficient to cover these damages. And since the tax incentives are high to keep assets within a corporation, particularly one that needs access to capital, it is uncommon for shareholders to drain all the assets into their private holdings.
As an anarcho-capitalist, it is easy for you. However people figure out a way to interact with one another, you have no gripe (at least not a violent one) as long as they aren't employing violence. So if people voluntarily came together into an organization resembling a traditional corporation, you'd have to accept that.
How could that happen without the state? If you've been an AC for long, you've realized that for almost every violent state function, a close voluntaryist cousin can be imagined that employs insurance companies.
In a voluntaryist society, there will still be a desire to raise capital in small increments from large numbers of people. The notion of a shareholder would not go away. And a Bronx cab driver who happens to have a few shares of BP in his mutual fund this year, can hardly be expected to give up his cab to pay for the spill. That kind of risk would be covered by experts in risk–insurance companies. Nobody is going to purchase a stock that says he's personally liable for corporate damages. But he may buy a stock that says the corporation has hired an insurance company to cover the costs of all such events, so that the owners won't have to. Poof! You have a voluntaryist form of limited liability.
Of course, the voluntaryist form, unlike the statist form, has all the right incentives. The company insuring BP (and the reinsurance companies insuring them) would adjust the premiums to cover the best estimate of risk.
My point is just that the corporation is no more a siamese twin to the state than mail delivery. The state gives itself that monopoly power, but the motive behind the corporation is to consolidate capital to accomplish a goal. That idea is never going away. And like most (all) things the state is involved with, a corporation is a valuable enough idea that voluntary parties would find a way.
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