Friday, July 3, 2009

Corporate vs. Public Interests

The issue isn't that large corporations are evil. It's that they must be profitable. They have a fiduciary responsibility to maximize profits for their shareholders, even when that goal is not in the best interests of the general public.

We like corporations because they stimulate innovation, create jobs and provide necessary goods and services. The legal benefits and protections that help young corporations grow and prosper are the same ones that allow them to run amok when they become behemoths.

The idea behind corporate law is to allow people to form corporations so their businesses will thrive and then benefit society. We give corporations lower tax rates and special deductions. We allow them to establish credit and to raise money by selling shares to investors. We give them life that goes beyond that of the original owners. Then we give the owners protection from nearly all personal liability.

These protections are precisely the ones that allow large corporations to produce shoddy, dangerous products with little accountability, to make outrageous profits while paying little or no taxes, to pay executives obscene salaries, to artificially inflate or deflate stock prices as needed, and to put themselves into bankruptcy or sell out to another corporation for liquidation if necessary.

The real trouble comes when corporations become so big a part of our economy that we can’t control them. Then we’re facing extremely powerful opponents with interests that run contrary to public interests. They have the resources to flood Washington with lobbyists to influence Congress, to run national propaganda campaigns and to support political candidates who are loyal to them.

These juggernauts have dismantled government regulations that were put in place to protect us from them after the last great economic meltdown.

Who represents the public?

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