Tom Pittman's WebLog

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2008 May 8 -- The Corporation

Some of the "free" movies I download are shills for some corporate agenda -- often long gone. There were promos for refrigeration and tobacco that I didn't bother to watch. One was a fake cross-country travelog over a thinly disguised promotion of Greyhound bus travel; another praised small-business ownership with special emphasis on selling Coca-Cola. One particularly memorable flic told the story of "The Middleton Family at the New York World's Fair" and could best be described as an infomercial for the Westinghouse pavilion at the 1939 Fair. 79 years ago Westinghouse guessed right about world economics and the advantages of capitalism over Marxism.

Marx is long dead, and the evils he promoted are mostly gone, but a few people continue to be bamboozled by his foolish ideas. One recent example is a 2-reel mockumentary called "The Corporation" blaming all the evils of the world (real or imagined) on corporations. They don't bother to tell you that the film itself was produced by a corporation no more virtuous than their colleagues whom they criticize. They also conveniently neglect to mention that much of the blame should be shared with (or completely borne by) participating governments and individuals. It's a slick video packaging job that depends on the rapid juxtaposition of unrelated visual elements to convey a guilt by association.

Unlike Middleton, history has already proved this fabrication wrong. While corporations may in fact be responsible for much of the pollution in modern America, if there were no such thing as corporations, individual people running businesses would do the same thing. It's not the fault of the corporations as such. More importantly -- and the film does not mention this -- back when there was such a thing as the Soviet Union, the worst polluters in the world were not western corporations but the corporation-free countries under the Soviet thumb. There it was solely the government at fault; there were no corporations to blame. That kind of economy simply cannot survive, and it did not survive. This movie does not say anything like that. At least with the adversarial nature of government versus the corporations, there is some checks and balances. Absent the corporations, there was none.

They list a baffling array of multi-million-dollar criminal fines paid by corporations, barely mentioning how those puny fines compare to the annual profits of the corporations. That's like whining about $50 "criminal" (in the same sense!) speeding fines so many people pay. If you want people to stop speeding, confiscate their cars. That fine would be a substantial part of people's annual income, and therefore an effective deterrent. $50 now and then is just noise. It slows some people down, but not all of them. If you want the corporations to be more careful with the environment, make it painful. That's the government's fault, not the speeders'. People do not demand that kind of oversight from their government because the alternative is unacceptable. This movie neglects to make that point. It's easier to point the finger at somebody other than ourselves and scream and yell and stamp our feet.

They also give an incomplete and misleading picture of what the corporations they report on are doing. The admitted to pulling some Nike documents out of the dump. These documents showed that the labor costs in some third-world country for one particular product were 0.3% of the retail price. While complaining about the low wages there, they nonetheless were forced to admit that the alternative would be starvation. The corporations were actually raising the standard of living in those countries. If those higher wages are still too low for people to live on, their own governments are perfectly capable of setting minimum wage laws. They don't do that for good reason, because it does not serve the people. It tends to drive the industry out of the country and into places where the government is more enlightened. Like communist China. Oh wait, China has figured out the corporations are a Good Thing, so they are now allowed in China too. And the standard of living in China is far better today than it was under Mao (with no corporations allowed). Funny thing about that.

There is a very simple and easy way to force corporations to behave responsibly -- without the governments doing anything at all. Just stop buying their products. Some upscale companies have already succumbed to customer pressure to pay living wages overseas. A few decades ago people stopped buying table grapes grown in California -- until the corporate farmers agreed to pay decent wages. You see, it's not solely the corporations at fault, they are just meeting the demands of their customers. Most customers are unwilling to pay the higher prices. That greed is reflected -- it does not originate -- in the corporations.

Among the ills decried is the 1980 U.S.Supreme Court (a government agency, not a for-profit corporation) decision to permit Ananda Chakrabarty (a person, mind you, not a corporation) to patent a genetic modification to bacteria so it can clean up oil spills. This new bacterium does not and did not exist in nature, it was Chakrabarty's invention. The decision does not generally allow anybody to patent "life" nor any existing organism, as its detractors consistently misrepresent it, but only Chakrabarty's actual novel invention, which was a modification to a pre-existing structure he did not invent. It was a good invention, serving a useful social benefit, and the corporation that paid for this research and development is morally entitled to reap some profit from their investment. Besides, the patent has already expired. Patents are only for 20 years; after that the invention reverts to the public domain. It's a good law and a good patent and a good decision. It's not even about corporations.

The harangue got tiresome and I stopped watching.

Corporations serve a valuable social good in two ways. First, they provide a mechanism for sharing the capitalization cost of doing business among many investors, so more capital is available for product development. This makes the standard of living in the USA the highest in the world and the highest in all of history. Corporations make that possible. Second, they provide limited liability for those investors, so they cannot lose more than their actual investment for "acts of God" or other circumstances beyond their control. In today's litigious environment, nobody would be willing to invest in any business if their entire life savings was continually at risk. The executive officers and agents of the company are still liable for their own immoral acts on behalf of the company -- that's called "piercing the corporate veil" -- but they and the investors are not liable for catastrophes and lottery judgments they cannot prevent. The system works because it is a good system. Maybe the film said all that in the part I didn't watch, but I doubt it.

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