Citizens without obligations?

Original Reporting | By Mike Alberti |

Government for whom?

According to Richard Sylla, however, continuing to operate as though corporations have rights and are entitled to benefits without any attendant duty other than to make profits has profound implications for our political system.

“It begs the question, ‘who are our elected officials there to serve?’” Sylla said. “Is this government of, by and for the people or of, by and for the corporations?”

what about capital controls?

According to many experts, the ability of companies to shift operations, employment, and capital across national borders with relative ease creates what is perhaps the largest barrier to imposing national obligations on corporations. Indeed, said Ralph Gomory, a professor of management New York University, “it’s become basic economic dogma that [governments] should always seek to restrict the movement of capital as little as possible.”

In practice, Gomory pointed out, that “dogma” means that policy makers are dependent on retaining the good will of corporations. Fearful that imposing national obligations would result in capital flight, governments have been reluctant to do so.

Thomas Palley is an economist and policy advisor to the AFL-CIO. Adopting policies that make capital movement more difficult or costly, he said, may well be in the country’s best interest, as when greater investment in domestic infrastructure and industry is needed.

Palley acknowledged that most all corporations would reflexively oppose such policies today, but said that it’s possible to imagine a reality in which corporate executives accepted such policies as part of the cost of being incorporated in the U.S.

If, however, American corporations came to perceive themselves as having broader obligations, they might “understand that they need to subordinate their narrow financial interests to the interests of the country.”

Palley added, “That would be the kind of corporate citizenship we should be moving towards.”

Some observers, however, believe that if corporations have been acting in a way that’s contrary to the interests of the country, it’s only because policy makers have not extended them enough benefits.

Justin Danhof is the general counsel of the National Center for Public Policy Research, a free market think tank based in Washington, D.C. In an interview with Remapping Debate, Danhof explained that serving any national obligations “is not what corporations are there to do.”

The only goal of corporations, he said, is to make money for their shareholders. While Danhof agreed that companies sometimes act against the national interest, as in the case of mass offshoring, he said that it is policy makers who bear the blame for that behavior.

“Why would a company offshore?” he asked. “It’s because the environment that’s been created domestically is not conducive to their competitiveness anymore. If they can be more profitable somewhere else, then they have no choice but to go.”

But according to James Post of Boston University, that mentality leads inevitably to “a race to the bottom, in which every country just tries to do everything it can to cater to corporations, regardless of what they’re getting for it.”

In that framework, said William Lazonick of the University of Massachusetts, “governments have effectively ceded decision-making power to the corporations.” (See sidebar titled “What about capital controls?”)

According to Ralph Gomory of NYU, that framework would be considered “intolerable” by most Americans, and yet “our economic system is based on the assumption that the relationship between the United States and corporate American is one of mutual benefit, and that American corporations will work in the national interest.”

The first step in changing that framework, he said, is to abandon that assumption. “Then you have to really step back and ask, ‘What kind of economy do we want to have?’”

Additional research by Samantha Cook.


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