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By Joe Campbell
August 22nd, 2008

[Photo by Steven Rhodes licensed under Creative Commons.]

Corporations are considered individuals by the law. Yet they have no conscience to guilt; they have no eternal soul to damn1; they have no empathy, no compassion – no emotion of any sort; they cannot be sent to prison; they can live forever; their single purpose is to make money – and they are legally obligated to make as much money as possible. Yet despite the fundamental differences between corporations and human beings, corporations have been given all of the rights of human beings. They have the right to free speech, the right to assemble, the right to be free from unreasonable searches and seizures – and all those other rights we mere humans take for granted.

Is it any wonder then that all large corporations – once they are no longer the responsibility of a single individual – begin to act as if they have no conscience or compassion – exploiting legal loopholes and damaging society at large? Insurance companies derive enormous profit from denying legitimate claims and every claim that they possibly can. Oil companies lobby and erect barriers and do anything they can to eliminate the possibility of alternative energy sources being developed. Manufacturers externalize the costs of their pollution – spewing toxic chemicals into streams and lakes and the air and the ground – and after paying some negligible penalty, the government (with the people’s money) takes responsibility for cleaning up the mess.2 Big lenders and bankers take unwise risks that allow them enormous profits in the short term – and the American people then pay to bail the companies out of the deficits they find themselves in.3

The companies survive – they thrive. It is the people who work for them and who are their customers – the people that are fired, and the people that get sick, and the people denied coverage. Then to top it all off – it is these same people who have to pay when companies that are too big to fail end up failing due to their own recklessness.

I don’t believe that corporations are inherently good or inherently evil – they are tools that are used for many purposes. But when we discuss economics and public policy it is essential that we acknowledge the limits of corporations. This inevitably leads to certain positions:

Liberals, progressives, and Democrats have come to a broad agreement in recent years on some general steps that need to be taken to protect our economy and our country in an increasingly globalized world. (Some deeper critiques and potential solutions from a liberal perspective can be found in William Greider’s The Soul of Capitalism.)

This includes raising the tax rates on those making over $250,000.00 a year and on corporations to the same rates as at the end of Bill Clinton’s term; focusing on developing a clean energy industry to replace traditional manufacturing; increasing funding for infrastructure maintenance and development; protecting the foundations of the internet through net neutrality; and taking various steps to reform our educational and health care systems. (A thoughtful piece in this weekend’s New York Times by David Leonhardt delves into Obama’s economic worldview.)

Health Care

The best insight into the Democratic consensus on these issues comes from the issue of health care.

Barack Obama has said that if he were to design a health care system from scratch, the system would be single-payer. At this time, however, Obama believes we need to work within the system that we have. As with most issues, what Obama proposes here is to tinker with the current system to try to reduce the problems immediately and gradually move towards a better solution. On health care, this means working with the current employer-based system – and creating incentives to reduce the number of people not covered. These incentives incude a mandate for children, tax incentives for those who seek their own health insurance, penalties for large companies that do not provide health insurance (in the form of payroll taxes), the expansion of existing programs, and support for small businesses to assist them in providing health care for their employees.

In addition to the above and more short-term solutions, Obama proposes to open up the health care plan used by members of Congress to the public – and to create a “National Health Insurance Exchange” focused on assisting people who wanted individual or family insurance plans while providing rules and guidelines for participating companies. In the long-term these two changes have the potential to remake the field of health care. If the government program is able to provide better services for less cost than it’s competitors, then if the market works as it should, more and more people will move over to the government plan – unless other health insurance companies are able to take steps to compete.

This combination of freedom of choice for citizens/customers, government regulation for companies wishing to get into a potentially lucrative market, government competition against private companies, and letting the market decide who wins in the long-term – this combination may be too clever to work. But it has far more potential than the giveaways to health insurance companies that the Republicans are proposing.

What does all of this have to do with holding a grude against the Bank of America?, you might ask. That’s coming up in Part 2.

  1. if you go for that sort of thing []
  2. Much of the analysis and examples given in these first two paragraphs is inspired by The Corporation by Joel Bakan – as well as the documentary of the same name. I do not entirely accept the conclusions of the film or book, or the methods they use to come to their conclusions. The book and the film are both extremely useful and worthwhile but are ultimately limited because they are polemics that do not seek to give a fair analysis but to persuade. Sometimes, the tools they use to persuade are a bit too blunt – as when in the documentary, the filmmakers say that the corporation as a type of instituition was responsible – in part presumably – for the Holocaust and other atrocities – when it is easier to blame “the government as an institution.” As a matter of fact – most of the criticisms of “the Corporation” can be equally applied to the State as an institution. []
  3. This is obviously references specifically the Fannie Mae, Freddie Mac, and Bear Stearns deals which the Financial Times of London called the most deceitful kind of socialism. []