The demonstrators at both of the Republocrat political conventions this year, like those at the WTO meetings last year in Seattle, have been portrayed by unsympathetic commentators as lacking focus, rabble-rousers protesting any- and every-thing. And while that may be true to some extent -- certainly there were a wide variety of banners being waved -- there was unanimity on one area: people are fed up with corporations. They want to re- take control of the public debate, the media, health, safety and environmental regulation, international trade, and all the other areas they see as having been taken over by the multinationals. Corporate power has overtaken the political process, has corrupted the media and enslaved the workers. This is not exactly the freshest of news. In 1979, Agnes George de Mille wrote this, in her introduction to the centenary edition of her grandfather's Progress and Poverty:
The great sinister fact, the one that we must live with, is that we are yielding up sovereignty. The nation is no longer comprised of the [fifty] states... but of the real powers: the cartels, the corporations. Owning the bulk of our productive resources, they are the issue of that concentration of ownership that George saw evolving, and warned against. These multinationals are not American any more. Transcending nations, they serve not their country's interests, but their own. They manipulate our tax policies to help themselves. They determine our statecraft. They are autonomous. They do not need to coin money or raise armies. They use ours.
Yes, corporations are big. The annual revenue of General Motors, for example, exceeds the GDP of Denmark; the annual revenue of Wal-Mart exceeds the GDP of South Africa. Their bigness allows them to spend quite a lot to get the media saturation and the political leverage to remain big. The point that Agnes de Mille made 21 years ago has (at last) made it into the public dialogue. Many people are talking about how sovereignty is being usurped by the Big Corporations. How they have assumed nearly limitless power to pillage and despoil. Yet if those things are true -- and on many levels they certainly seem to be -- it's hard to imagine the rulers of today's commercial empires being anything but amused at the current round of protests.
For what, specifically, is being protested? And at whom are the screams of outrage being directed?
At the corporations themselves? Should they start acting like responsible citizens and clean up their behavior? Their stockholders might have some things to say about that. To be fair, though, some corporations have had success at making their operations friendlier to workers and to the planet. There is a niche market today for investors seeking to buy shares of "socially responsible" firms. There are even mutual funds that invest solely in such companies. But they are, of course, not the majority. The very fact that a market for socially responsible investments exists at all shows that the vast majority of companies are asocial at best. Most companies, indeed, are as socially responsible as they can possibly be -- under existing conditions, and without harming profits.
It has generally been a truism in market economies that it is not the entrepreneur's job to secure the rights of citizens. The entrepreneur's job is to make a profit. We want people to be decent and ethical individuals, yes, but such judgements are relative. My neighbor is free to engage in Satanic incantations, hedonistic excesses, all manner of naughtiness, as long as it doesn't infringe my rights. We generally consider it the job of the government -- and particularly the judicial system -- to secure the people's rights.
If we cannot expect corporations, by and large, to reform themselves, then who shall we scream at? The government? This is where we heard the laughter coming from before. The government has simply been doing, if not exactly what we told it to do, then certainly what we have failed (repeatedly) to prohibit. No matter how powerful they are, corporations are still subject to the laws of nations.
In the United States, our last three Presidents have been elected by fewer than half of the eligible voters, and in midterm elections the turnout is even lower. Congress has routinely failed to enact reforms that a majority of US citizens want. More people know who's getting kicked off of gilligan's island this week than who their Congressional representatives are, or what they have voted for. Corporations, on the other hand, make prudent and effective use of the political process. Are they to be blamed for doing that?
Perhaps in the US we have only ourselves to blame, but what about those little, developing countries who have no choice but to kneel to the corporate lash, lest they lose all job growth? That is how the state of affairs is portrayed, on both sides of the debate, but it is mostly a fantasy. Legislative and Executive decisions in most developing nations today (certainly in those with the largest and worst-performing external debts) are made by ruling elites. Policies friendly to multinationals, and to their real estate-owning cronies, are in their interest.
Now, I don't mean to say that Agnes de Mille was wrong. Indeed, multinational corporations are becoming more "sovereign", more unanswerable, all the time. My point is merely that "they" haven't done it to us. In fact, let's look again at Ms. de Mille's words. She said, "We are yielding up sovereignty." We are. If we repeatedly, openly and habitually invite them to plunder our wealth, how can we blame them for stepping in and taking it?
But perhaps there shouldn't be corporations at all. Perhaps shareholders should be held liable for a corporation's misdeeds. That would be the end of the corporation as we know it, of course. Why would I invest in a company if its employees could perpetrate illegal actions, without my knowledge, for which I could be held liable? The corporation itself can be held liable - - if an honest court can be found to hear the case. An offshore subsidiary with no hard assets is the nominal owner of the nefarious acts? Such practices can be made illegal (where they aren't already). It's very easy to miss seeing what we don't want to look at.
No, in fact a corporation is simply a particular type of business firm, suitable mainly for industries in which a large concentration of capital is efficient. Do they abuse the system? Indeed they do. Baseball bats are also used to assault people -- should we ban them?
If we were to (somehow) stamp out all preferential treatment afforded to corporations -- get rid of the tax preferences, the subsidies, the squirming-free of accountability, the give-aways buried in trade agreements -- who would benefit? Would the working people in rich or poor nations benefit?
Consideration of the most basic facts about wages shows that, indeed, they would not. Employers do not set wage levels because of what they think workers deserve, or how much they like their workers; employers don't set wage levels at all. It is the market for labor that sets wage levels -- and the supply side of that market is determined by the laborers' alternatives. If no better alternatives exist, wages won't go up.
So who will benefit, if the special favors bestowed upon corporations are taken away? Well, the elimination of subsidies and managerial fat will make large companies -- and hence the whole economy -- more efficient. (If some operations cannot survive without their pork supply, so much the better for the general welfare!) Productivity will go up -- and the owners of land and natural resources, which are fixed in supply and needed for all production, will ultimately reap the benefits. The private land-holder, who makes no contribution to production, but collects a reward for making production possible, is "the robber that takes all that is left", in Henry George's words.
So, to make a long story short: if we eliminate all forms of "corporate welfare", subsidy, graft & pork -- but leave our land- tenure and tax systems as they are -- the landowners will be the ones who benefit.
Now it is worth mentioning that in the United States, at least, landowners are not solely latifundistas or multinationals. Tens of millions of individual families own (or have equity in, at least) some land. A rise in overall production that raises land values is surely in their interest; real estate appreciation represents, for many Americans, the hope of a secure retirement and something to leave to the children. So what we are left with is the fact that eliminating "corporate welfare" will benefit one class of landowners (small ones) at the expense of another class of landowners (corporations losing their other privileges and subsidies). And those corporations, who are often the largest landholders themselves, will also reap the rewards of higher productivity in higher land values!
Corporate abuses of the environment, the rights of workers, and the public trust are severe. Nations -- at the democratic will of their citizens -- must use their rightful weapons to combat them. But let us not forget what the largest, most severe and most pervasive "welfare privilege" is: land monopoly. Until we reform that basic injustice, other reforms -- however genuine and just -- can only forestall the inevitable.
Lindy Davies — August 16, 2000
Thanks to Mike Curtis for help thinking this through.
Thanks to Mike Curtis for help thinking this through.
What Folks Have Been Saying: Are you arguing that we should end "corporate welfare" so that we can boost land values (i.e., land prices) for small lanholders, or am I failing to read the English language correctly?
Yisroel Pensack <email@example.com>
San Franciscco, CA USA - Sunday, August 20, 2000 at 01:27:40 (EDT)
All the above is as it is and surging on and gathering force at an exponential(?) rate perhaps. So unstopable until like a boil it will burst, so in a sense we are all helpless onlookers. It will of course be important that someone be around to pick up the pieces and establish if possible economic justice. Depressing as it may seem is there any real other outlook?
Ian M. Lett <firstname.lastname@example.org>
Carlucet, Gramat. 46500, France - Sunday, August 20, 2000 at 06:05:50 (EDT)
You say the private landholder "collects a reward for making production possible." Does this mean, then, that production would be impossible without private landholders? Why not be precise and say that the private landholder "collects a bounty from producers, called land rent, for merely allowing production to occur." Also why simply say "if no better alternatives exist, wages won't go up." You should point out that access to free land is the determinant of economic alternatives for labor; and the way to increase access to land is to heavily tax land values, via a property tax on land values only, which will throw open natural opportunities to labor and thus raise wages! You also say regarding small landholders "A rise in overall production that raises land values is surely in their interest; real estate appreciation represents, for many Americans, the hope a secure retirement and something to leave to the children." I can't believe you are writing this. Do you work for the realtors' association or the Henry George Institute? Herb Lasker says the Henry George movement seems in reality to be the society for the preservation [and increase] of the price of land, and now I see his point. You are suggesting that the single tax will wipe out the hope of a secure retirement for many Americans and prevent them from leaving anything to their children. Down with Georgism! Long live private property in land! Don't you think about the implications of what you write? You also say that ultimately the big corporations themselves will benefit from the elimination of corporate welfare by resulting increases in land values due to increased productivity. Why then end you essay with "other reforms can only forestall the inevitable" -- a meaningless slogan. What you mean is: other reforms can only benefit landholders!
Yisroel Pensasck <email@example.com>
San Francisco, CA USA - Sunday, August 20, 2000 at 14:14:16 (EDT)
Well, well, a visit from "Dr. Tact" himself. I'm honored. I might remind you that the "Land Rants" are primarily intended for readers who haven't yet heard about Henry George's remedy. Such people, unfortunately, are in the majority -- and they do not consider private ownership of land to be a bad thing at all. It's our job to show them the implications of that position.
Regardless of who I work for, it is true that millions upon millions of American landowners expect to take advantage of real estate appreciation, and they will fight to their last breath to keep things that way. It's our job, again, to remind them that were they not robbed of their rightful income via years of taxation, they could provide a more secure retirement for themselves. I do not say that the single tax will wipe out people's hopes; that's a perverse, out-of-context reading of my statements here. I say that the hopes presented by the current system are often false.
My objective in these commentaries is to shed some light on the "cognitive dissonance" inherent in many popular views about political economy -- and then to suggest that interested readers take a course where they can learn more. I cannot teach Progress and Poverty in 1,000 words.
But, since you can obviously do this job far better than I, you are invited to submit essays to this site!
Just testing to see if this message gets posted.
Yisroel Pensack <firstname.lastname@example.org >
San Francisco, CA USA - Sunday, August 20, 2000 at 15:15:32 (EDT)
I fear that my good friend, "Dr. Tact," went too far in assuming that "The Robber Takes All.." advocated ending corporate welfare IN ORDER TO raise land values for small and large landholders. My reading of it was that it simply stated economic principles: "if...then" "if corporate welfare is ended, then the ultimate benificiaries will be landholders." Very true. Perhaps the problem arose in discussing the "millions of individual families" who seem to have a vested interest in high land values. This is a tough one, since, as Lindy says, many readers at this site have NOT already read Progress and Poverty, so he is trying to start where they might be coming from. But perhaps this shows the possible weakness in that approach, because the analysis was NOT clear in that paragraph. Maybe it would be better to simply state what we know, and hope that its inherent cogency will motivate site visitors to read the book or take the course. For all his seeming insults, which I don't think are intended personally, "Dr. Tact" does represent to me a much-needed "cutting edge" Georgism, and I hope he will continue to comment on these pages.
catherine orloff <email@example.com>
Providence, RI USA - Sunday, August 20, 2000 at 20:45:34 (EDT)
Oh, I do too. Many things in this world are worse than being annoyed by Mr. Pensack! And perhaps we should take a look at that paragraph too. Anyone else out there want to weigh in on this?
- Monday, August 21, 2000 at 09:06:16 (EDT)
I liked what you were trying to say, but -- and I hope that this is taken in the constructive spirit in which it is intended -- I think it could have been done better. Are you against subsidies to favored corporations, or the very existence of limited liability corporations? The ethics and expedience of letting people do business as corporations might be another issue worthy of discussion. When you rant against corporate power, just what are you objecting to? The only power most corporations have is the power to hire people who choose to work for them, and to sell goods and services to people who choose to buy from them. I'm much more worried about government power, and concerned with corporations only insofar as they can lobby and bribe to have the coercive power of the state used to grant them favors at the public's expense, and used against their competitors and critics.
Nicholas Rosen <firstname.lastname@example.org>
Arlington, VA USA - Saturday, August 26, 2000 at 21:33:32 (EDT)
That's interesting, Nick. I seem not to have made my point clearly here. I tend to agree that corporate power isn't the problem per se. But I think that government power must be used effectively to take away privileges that have been granted to corporations. Actually, this Rant came in the context of the widespread ferment against "corporate control" of things, and I wanted to point out the deeper injustice. Maybe I should rewrite this, but in the meantime, couldja read the ending again?
- Sunday, August 27, 2000 at 08:49:06 (EDT)
Very good, Lindy, excellent! We, the people of the United States have granted corporations their special privieges, over several generations. But this makes the situation more complex. Over several generations, the corporations have gained huge influence over information (education and the media). This is, no doubt, due largely to public aquiescence. But, can a generation steeped in corporate ideology or propaganda, knowing little else other than the defunct Marxist alternative or its variants, be blamed entirely for the aquiescence of its parents? It seems to me that the present generation cannot be judged completely responsible for the current state of privileged, neofeudal mercantilism, until they are given an alternative view to choose from. The American education system teaches only the alternatives of aristocratic capitalism, socialism, or some blend of the two. Classical liberalism, and the agrarian, physiocratic emphasis on land, is not even considered by these educated fools!
The Agrarian <email@example.com>
- Monday, August 28, 2000 at 18:28:29 (EDT)
I read the ending again, and it's a fine ending. I approve wholeheartedly. It's some of what came earlier that I had problems with.
Nicholas Rosen <firstname.lastname@example.org>
Arlington, VA U.S.A. - Thursday, August 31, 2000 at 21:39:38 (EDT)
MIchael Calhoun <email@example.com>
Flagstaff, AZ USofA - Wednesday, September 06, 2000 at 03:33:36 (EDT)
Absolutely correct. The focus is on BIG corporations and their abuses when it should first be directed to the way land value and land speculation are handled.
Ingo Bischoff <IKBischoff@aol.com>
San Francisco, CA USA - Wednesday, September 06, 2000 at 14:24:04 (EDT)
Yes, corporations are continuing to grow larger (with the help of mergers)and to grow globally. That is evident. So? What are we to do about it? Nothing, it seems. The process does seem unstoppable. And with this growth, corporate power will grow. I do not see anything that says "Stop! You can't go further!" As we have a sort of referee in this USA, in the form of legislatures and courts and government presidents, governors, mayors, etc., the process of corporate strength still expands. All these United Nations' members and present UN concerns (as evidenced as by our just-concluded meeting and statements of world leaders), has shown no interest in stopping corporate growth. I see nothing around that will make any local or global changes in this inevitable business takeover of this earth. Business is capable of hiring the best of our university graduates, and paying them for services rendered. Business is capable of electing the best of our people, and paying them enough through taxes to get whatever services business demands. This earth is going corporate as factory sites are shifted and populations are brought into the business labor pool. Folks depend on the good times. Yes, folks depend. They love how well they are faring, or hope to. Business will cooperate.
Morris Basuk <KUSAB@AOL.COM>
New York, NY USA - Monday, September 11, 2000 at 03:19:25 (EDT)
All true, Morris, except for this: there is something that can stop it. Nations are still sovereign entities. They can pass and enforce laws that will curb corporate excesses and protect people's rights. They don't do so -- in most cases because they are afraid to lose the jobs, the "prosperity". What we are offering here is a way for governments to ensure sustainable prosperity while making sure corporations (or others) do not abuse and steal our common heritage. Interested?
Lindy Davies <firstname.lastname@example.org>
- Monday, September 11, 2000 at 10:37:32 (EDT)
Partiet Herfoelge, d. 14-09-00 Aahmansvej 4 B DK4681 Herfoelge Denmark Having read your very interesting column on the economic development of the post capitalist world we would like to direct your attention to a French journalist Viviane Forrester who has evolved on your ideas in a book called " L’horreur Economique," translated to "The Economic Horror", Polity Press 1999, London. She is becoming the most read author on economic issues since Henry George and Carl Marx. In Denmark little interest has beeen given to these theories, but we are a small group af people who have decided to explore the political consequences for a small country like Denmark. At this moment the only public precaution seems to be a national referendum on submission to a common currency for the European Union, The Euro. For workers and companies within the country nil has been done, but the debate on unemployment seems to grow into the most important issue. Here we are planning on diverting the debate to take into concideration the paragraphs of the Declaration on Human Rights as stated by the UN, in particular §§ 4 and 23, which have parallels in the Danish constitution, § 75. We may start suggesting that workers should be punished if they take more than their fair share of available work - for instance by heavy taxation af labour income beyond (about) 25 hours weekly. In this way there would be jobs for everybody. As it is covernments punish those who have had their jobs stolen, instead of the ones who have robbed them. In a country as organized as Denmark this ought to be a possibility. With high regards On behalf of the Partiet Jesper Haghfelt
Koege, Denmark - Wednesday, September 13, 2000 at 05:01:44 (EDT)
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