In Defense of Corporations

Citizens on the Political Left generally consider as suspect, two terms key to America’s economic greatness. Those terms, capitalism and corporation, have a mixed history in service to the “well-being” of the nation.

But as Any Student of Adam Smith knows, nothing inherent in capitalism or incorporation creates the kinds of excesses that we, the people, have wrestled with for at least the last 150 years.

It Is Not “Capitalism” That Is the Evil. It is the deadly sin of “greed” that is the culprit.

Some Few Large Corporations in America subscribe in practice to the more-socially oriented capitalist ideal. We keep our own personal list of American corporations which in practice exhibit the kind of business activities and stakeholder responsibility that would do Adam Smith proud.

Two Favorites, for the purposes of this discussion, are Warren Buffett’s Berkshire Hathaway and John Mackey’s Whole Foods:

BERKSHIRE HATHAWAY INC:
One can hardly read Warren Buffett’s annual letter to the shareholders without an appreciation for what authentic corporate stewardship means. The link below leads to 32 years of such letters. If capitalism and investment mean anything to you, you could hardly do better than to read some of these letters.

For what it’s worth, Mr. Buffett claims to vote Democratic, and believes that we, the people, through our shared government, should limit the legal ability of corporations to damage the overall society.

WHOLE FOODS, INC:
The annual shareholder letter by Whole Foods founder and current CEO John Mackey is less-direct than Mr. Buffet’s letter, perhaps. But these letters convey Mr. Mackey’s sense of a “mission” for the company, which mission goes beyond the mere issue of profit. Mr. Mackey clearly believes in using the structure of incorporation to spread his ideals of healthful living. Mr. Mackey also advocates the “stakeholder” concept, rather than the more-common “shareholder” concept that is honored more in the breach than in practice.

For what it’s worth, Mr. Mackey considers himself to be a Libertarian. He notoriously wrote a letter on health-care reform, which letter was published in The Wall Street Journal in an edited version. Mr. Mackey argued the Libertarian view that health-care is best provided through the structure of the employer. (While his perspective seems naive, given general, corporate practices in relation to employee welfare, his ideological integrity is substantiated by practices at Whole Foods.)

Corporate Links:

Warren Buffet’s Berkshire Hathaway shareholder letters, 1977—2009:

Whole Foods, Inc., annual reports:

John Mackey’s blog 

(In the case of Mr. Mackey’s communication, I appreciated his most-recent blog post, entitled, “Creating the High Trust Organization”)

Regards,
(($;-)}
Gozo!

When Did “Tax” Become Another Word for “Punishment”?

Our Current Distortion of Capitalism isolates management from the real ramifications faced by consumers/taxpayers on one side of the equation and shareholders/taxpayers on the other—one or both of whom will pay the “ax.” A defender of taxes on banks, as punishment, recently wrote, “Banks will pass those taxes onto consumers only if consumers let them. We have a free enterprise system enshrining competition. If Bank A raises fees, then we can go to Bank B.” That’s how capitalism should work, but clearly it doesn’t. Why not?

We Believe that “Tax” Equals “Punishment.” We believe that “Bank A” can be made to operate differently than “Bank B.” We believe (on the Left) that “greed” is inherent in capitalism or (on the Right) that “yes, but it’s a necessary component.”

Neither Side Knows What Adam Smith Had to Say About It. We need to learn the value of taxes. We need to learn the price that each line employee at the bottom pays so that each CEO makes the eight-digit salaries—and bonuses—at the top.

If We Continue to Think of Corporations as the Enemy, then we are sunk. But if we continue to think of corporations as equal to citizens under the law (absent the vote, but free of the risk of incarceration), we will continue to feel enslaved by these very entities that are required, by charter, to serve public need.

If We Continue to Think of Government—We, the People—as somehow doing other than what we send it to do, we will continue racing through the rapids with just one oar in the water. We reward elected officials for limiting the amount that they displease us. We continue to act is if our elected officials operate in a vacuum, like dictators or kings, when in truth, their job is to keep the voters as happy as possible, while keeping the ship of state afloat.

It’s Really All a Failure of Education.

We Don’t Know What We Have Here.

We Don’t Know How It Works.

And We Keep Turning to Expressive Communicators—politicians, pundits, commentators—who don’t really know enough more about it than we do.

Before Any of Us Really Do Anything Else, we ought to get out our Wealth of Nations and see if a better title might not be Well-Being of Nations. Adam Smith’s work is predicated on his first volume, A Theory of Moral Sentiments, which sets the foundation for the civic good that capitalism and corporations serve best.

Says Smith, We Humans Are Motivated to Do Good. Capitalism provides the best engine. But no engine runs itself, and it behooves all of us to read the operating manuals.


Regards,
(($;-)}
Gozo!