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Are Corporations People? April 19, 2011

The ‘corporation’ has been an item of controversy in the past, and not only on the left.  This The Economist article, “Peculiar people,” is a good primer on the issue.  I would add that:

1.  Most corporations in America are not ‘big corporations’ but ‘small corporations.’  Most of the small ones, and occasionally a few large ones, are privately held, under the control of their founders or owners.  The effect of regulations on ‘corporations’ in general, as on all business, is like a fly swatter:  swat my behind with a fly swatter, and it stings, but swat the behind of a fly with a fly swatter, and the fly dies.  In other words, the costs of regulation, health and safety or otherwise, can be met more easily by big corporations than by small business; and big business is not entirely unhappy, because the cost of regulation restrains potential rivals.

2.  From a theological point of view, a corporation can die, but it can potentially live forever, and in either case it faces no eternal judgment or reward.  Therefore there is no point in so-called ‘corporate philanthropy’ unless the corporations blow trumpets in the streets, because “they have their reward already” (Matthew 6:2).   As a matter of fact, in some ways big business is easier to control and harness than small business!

3.  Corporate culture is concerned with reputation, and so it frequently supports institutions that are actually more hostile to business.  It often seemed to me that ‘professional’ or upper middle class business cultures were the most like teenagers of any adult culture; more concerned with being what Richard Armour, in Through Darkest Adolescence, 45 years ago called “being more like everybody else than anybody else,” of driving the right car, living in the right neighborhood, wearing the right clothes, etc.  C. S. Lewis, in Screwtape Letters, thought rank hedonism a lesser evil than this:  “You should always try to make the patient abandon the people or food or books he really likes in favour of the ‘best’ people, the ‘right’ food, the ‘important’ books.  I have known a human defended from strong temptations to social ambition by a still stronger taste for tripe and onions.” (Letter XIII.)  Corporations, as such, for all their ‘corporate cultures’ cannot develop tastes for things like menudo [a traditional Mexican soup made of beef stomach in a clear broth] or surfing.  [Golf is an odd hybrid:  both a sport and a ‘relationship-building’ social ritual, so corporations can be fond of it; but it is unique.]

4.  Suppose we did get rid of limited-liability corporations.  We wouldn’t have the stock market, or many other things that we know of.  What would replace it – joint liability, or pure severalty?  If all business liability was ‘joint,’ so that each partner was responsible for the full debts of the corporation just as if he were the sole owner, it would be the end of people of different financial worth [I’m sorry for that word: it has nothing to do with people’s ethical value, or value in the eyes of God, but it’s the word we use] cooperating on any business venture.  For the banks and lenders, once the corporation gets into financial trouble, will treat the wealthiest owner as if he were the sole owner!  And many of our liability laws have, through jury verdicts and other decisions, pushed us in a direction of tort liability according to wealth, not according to fault.  Therefore many of the ‘laws’ under which we live are made by insurance companies.  Proverbs 6:1-5 warns about the danger of co-signing loans for a ‘stranger.’  Yes, corporations, being protected by the corporate veil, are more willing to go into debt than they might be otherwise!  But banks and other lenders have been lending to corporations of their own free will – no one makes them do it.  In my opinion, interest on loans taken out by a corporation or any other business should be deductible only if it is used for plant improvements that will create jobs – not for leveraged buyouts!

5.  In many countries, such as Germany, employees are automatically allowed to sit on the board and exercise partial control over businesses.  This is tolerable in many businesses, but if I hire a maid and a butler, do they automatically become part owners of my house?  I don’t think I would hire a maid or a butler under those conditions.  And I don’t think even Germans are required by law to surrender part ownership of their homes to domestics.

6.  In the end, human beings, made in the image of God, are ultimately morally answerable for all things.  Every corporation is run, in some sense, by human beings.  I doubt that we can eliminate the limited liability corporation, but our approach to it should reflect this fact.

 

One Comments
speotter 04/20/2011

Several good points.  I really like the observation that big corporations can handle government better than small and actually use government to eliminate or make other small businesses uncompetitive.  

I also agree that the “philanthropy” by corporations is merely a PR deal, NOT because it is good for the corporation.  It can be a good PR deal.  It can also reflect the owner’s philanthropy and encourage the employees to do likewise. But clearly this is the same Biblical example of the hypocrites that give in public to show how pious they are.

I think that the whole deductible issue, begets the corporate tax issue.  Corporations do not pay taxes. Their customers and employees do.  

Notice how corporations receive their income anywhere they wnat (Google receives income in the Netherlands).  But whenever there is a dispute regarding property rights, copyrights etc, where do they file a lawsuit…. THE U.S.  We are the protector of rights and liberties.

The U.S. should reduce (down to 10 % or less) or even eliminate corporate taxes.  Every corporation around the globe should have their Headquarters in the US (we are the protectors of property rights).  The taxes are what scare them off shore (like anyone would go to the UAE if money and taxes were not the issue).

Every corporation on the globe would flock here if taxes were reduced (or eliminated).  Look how much more competitive U.S. corporations would be around the world if they didn’t have to pay taxes.  Imagine how many tax attorneys and accountants could go into productive vocations if there were no corporate taxes……

One could only imagine since there is no political will to actually do any of this.

A couple of thoughts anyway.

SCOTT PEOTTER

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