Time to Declaw the Tiger
- Thread starter Sukerkin
- Start date
OP
OP
Last night, BillM asked me what I would do to deal with the nightmare scenario of corporations running the world for their own profit, leaving the rest of we hapless mortals with no recourse because the Multi-Nationals had more power than the elected governments.
It's not an easy task - as I noted at the very start, there will be pain and loss involved. But is it the pain of excising infected tissue to save the host or the pain of slow suicide?
It is hard to tell but, historically, super-rich over-classes eventually fall and they do so in such a fashion that chaos and stagnation is the result. So, I would argue, that it is better to try to manage the dismantling of the corporate 'sphere', downsizing it to more human-scale chunks, than to hope for the best until the day the collapse comes unbidden.
Step one to controlling the tendency to corporate bloat and it's attendant economic damage, is to remove certain of the legal statuses the corporation holds that give it some of the aspects of a person in the eyes of the law. As with many things, that came about with the best of intentions (to allow investors to Incorporate in very expensive, long term projects) but it has essentially allowed a corporation to become immortal, gathering more and more resources to itself over the decades and choking out competition and destroying the idea of a level(ish) playing field for free trade.
Step two, making the senior executives truly liable for the actions of the corporation under their control. This is technically the case already but it's enforcement is very dilatory and somewhat haphazard. That one is largely a case of enforcing the laws we have.
Step three is requiring the corporation to have a true base of operations, grounded in a host country and requiring that applicable transactions, profits, taxes and duties for all it's operations, where-so-ever they may be, are presented on the books of that base. What I mean by this is that the corporation will not be permitted to utilise such a scam as Starbucks did to pretend they were operating at a loss and avoid taxation. Because a multi-national is going to be paying taxes on it's operations in the other countries where it has presence this step is one that takes a little finesse so as not to stifle a drive to expand (tho' of course if a corporation does not muscle in to a 'foreign' market then the natural entrepreneurs there have a chance to take a chance).
The fourth step is to have competition laws with some teeth. Growth by acquisition tends to go poorly, leading to more money in directors pockets and less in everyone elses i.e. a poorer economic outcome. It is hard to prevent cartels emerging if you prevent a corporation from devouring it's competitors but there are regulations for that too - if the laws that exist are dusted off and enforced then it is at least a little less damaging to the real economy than the present results.
The fifth step is to require some actual involvement from the investors that become the shareholders in corporations. This has been put forward before as the lack of oversight and control actually shown by share-holders is one of the main reasons for the explosion in CEO's voting each other huge rewards whilst at the same time failing to perform. The general thrust of this is that if an investor buys shares in a corporation they have to carry on holding them for a significant period of time. This was how the system was originally envisaged, rather than the millisecond trading we see now and it encourages a more involved cadre of shareholders with a real interest in good company performance.
Those five points are only meant as 'finger in the air' first ideas. There are clear holes in them and issues of implementation and outcome to be sure. I hope people feel free to spindle, fold and mutilate them but please, please, please, no political idealogue silliness. Altho' politics is at the root of almost everything, when people bring their 'touch-stones' to the table and that is all they have then discourse doesn't move forward, it just goes round.
It's not an easy task - as I noted at the very start, there will be pain and loss involved. But is it the pain of excising infected tissue to save the host or the pain of slow suicide?
It is hard to tell but, historically, super-rich over-classes eventually fall and they do so in such a fashion that chaos and stagnation is the result. So, I would argue, that it is better to try to manage the dismantling of the corporate 'sphere', downsizing it to more human-scale chunks, than to hope for the best until the day the collapse comes unbidden.
Step one to controlling the tendency to corporate bloat and it's attendant economic damage, is to remove certain of the legal statuses the corporation holds that give it some of the aspects of a person in the eyes of the law. As with many things, that came about with the best of intentions (to allow investors to Incorporate in very expensive, long term projects) but it has essentially allowed a corporation to become immortal, gathering more and more resources to itself over the decades and choking out competition and destroying the idea of a level(ish) playing field for free trade.
Step two, making the senior executives truly liable for the actions of the corporation under their control. This is technically the case already but it's enforcement is very dilatory and somewhat haphazard. That one is largely a case of enforcing the laws we have.
Step three is requiring the corporation to have a true base of operations, grounded in a host country and requiring that applicable transactions, profits, taxes and duties for all it's operations, where-so-ever they may be, are presented on the books of that base. What I mean by this is that the corporation will not be permitted to utilise such a scam as Starbucks did to pretend they were operating at a loss and avoid taxation. Because a multi-national is going to be paying taxes on it's operations in the other countries where it has presence this step is one that takes a little finesse so as not to stifle a drive to expand (tho' of course if a corporation does not muscle in to a 'foreign' market then the natural entrepreneurs there have a chance to take a chance).
The fourth step is to have competition laws with some teeth. Growth by acquisition tends to go poorly, leading to more money in directors pockets and less in everyone elses i.e. a poorer economic outcome. It is hard to prevent cartels emerging if you prevent a corporation from devouring it's competitors but there are regulations for that too - if the laws that exist are dusted off and enforced then it is at least a little less damaging to the real economy than the present results.
The fifth step is to require some actual involvement from the investors that become the shareholders in corporations. This has been put forward before as the lack of oversight and control actually shown by share-holders is one of the main reasons for the explosion in CEO's voting each other huge rewards whilst at the same time failing to perform. The general thrust of this is that if an investor buys shares in a corporation they have to carry on holding them for a significant period of time. This was how the system was originally envisaged, rather than the millisecond trading we see now and it encourages a more involved cadre of shareholders with a real interest in good company performance.
Those five points are only meant as 'finger in the air' first ideas. There are clear holes in them and issues of implementation and outcome to be sure. I hope people feel free to spindle, fold and mutilate them but please, please, please, no political idealogue silliness. Altho' politics is at the root of almost everything, when people bring their 'touch-stones' to the table and that is all they have then discourse doesn't move forward, it just goes round.
OP
OP
http://www.bbc.co.uk/news/magazine-20560359
A little more noise on the attitude shift towards tax shenanigans.
This quote from Mr. Walker contains both things that I agree with (simplify the tax system) and also an insight into just why people of his status see nothing amiss with how they do business (blaming the loopholes in the legislation for their own lack of moral fibre) :
"The solution must be simplifying the tax system, not simply hectoring from Westminster. If these firms are immoral to take advantage of tax loopholes, then politicians are surely immoral for creating the loopholes in the first place. Taxes should be simpler to cut down on avoidance and relieve the burden our complex tax code puts on companies who do try to do the right thing,"
A little more noise on the attitude shift towards tax shenanigans.
This quote from Mr. Walker contains both things that I agree with (simplify the tax system) and also an insight into just why people of his status see nothing amiss with how they do business (blaming the loopholes in the legislation for their own lack of moral fibre) :
"The solution must be simplifying the tax system, not simply hectoring from Westminster. If these firms are immoral to take advantage of tax loopholes, then politicians are surely immoral for creating the loopholes in the first place. Taxes should be simpler to cut down on avoidance and relieve the burden our complex tax code puts on companies who do try to do the right thing,"
cdunn
2nd Black Belt
Whatever is done, we cannot continue to pretend that the sole duty of a corporation is to line the pockets of its shareholders.
Corporations are entities which we the people permit to exist because they are, by coordinated, collective action, capable of performing deeds that are beyond our abilities as private individuals, and to cushion the liability of the individuals in that collective from the failure of others in that collective. They do big things that take man-centuries of labor, and they keep the owners from losing their personal shirts and homes if it goes south - they just lose the corporation. These are good, and neccesary things.
But this means that a corporation has duties to much more than the shareholders. It has a duty to provide what it is chartered to provide. Effectively, it has the legal duty to serve its customers, well and effectively. It enters into legal contracts and debts, and must service them. It must meet any duties that the state that privledges it to exist puts upon it through the law that determines the terms of its charter. Only after all these are met may the shareholders be compensated - That is the normal course of business. Profit is what remains when the costs of doing business are met - They are not taken beforehand. There is a fiduciary responsibility to not squander wealth; but it does not carry that it is the sole responsibility of the corporation; and indeed, to pretend that it is so nullifies the very reason we allow them to exist.
No corporation is a private entity. It exists because we the people, through the government we elect, permit it to exist under a set of legal conditions. We the people have the right and the power to set those conditions. And we the people have the right to place new conditions upon a charter when necessary to the public good, and we have the right to revoke the charter and execute the analogue of the death penalty.
Corporations are entities which we the people permit to exist because they are, by coordinated, collective action, capable of performing deeds that are beyond our abilities as private individuals, and to cushion the liability of the individuals in that collective from the failure of others in that collective. They do big things that take man-centuries of labor, and they keep the owners from losing their personal shirts and homes if it goes south - they just lose the corporation. These are good, and neccesary things.
But this means that a corporation has duties to much more than the shareholders. It has a duty to provide what it is chartered to provide. Effectively, it has the legal duty to serve its customers, well and effectively. It enters into legal contracts and debts, and must service them. It must meet any duties that the state that privledges it to exist puts upon it through the law that determines the terms of its charter. Only after all these are met may the shareholders be compensated - That is the normal course of business. Profit is what remains when the costs of doing business are met - They are not taken beforehand. There is a fiduciary responsibility to not squander wealth; but it does not carry that it is the sole responsibility of the corporation; and indeed, to pretend that it is so nullifies the very reason we allow them to exist.
No corporation is a private entity. It exists because we the people, through the government we elect, permit it to exist under a set of legal conditions. We the people have the right and the power to set those conditions. And we the people have the right to place new conditions upon a charter when necessary to the public good, and we have the right to revoke the charter and execute the analogue of the death penalty.
OP
OP
The dangers of multi-nationals forging cartels to avoid genuine competition are brought to the fore once more:
http://www.bbc.co.uk/news/business-20608949
http://www.bbc.co.uk/news/business-20608949
OP
OP
Starbucks realises the fragility of it's brand position in the current economic climate:
http://www.bbc.co.uk/news/business-20624857
They have to show willing for they are a single-string provider of a consumable that customers can easily replace with another at need. Google and Amazon can 'stand firm' and give two fingers to us all because of the diverse nature of the services they provide ... sadly.
http://www.bbc.co.uk/news/business-20624857
They have to show willing for they are a single-string provider of a consumable that customers can easily replace with another at need. Google and Amazon can 'stand firm' and give two fingers to us all because of the diverse nature of the services they provide ... sadly.
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