Wednesday, January 15, 2014

The Capitalism Papers, chapter 5

(Continuing from this post.) Chapter 5 is on the intrinsic inequities of corporate structure. He said to be fair equality was never part of the structure in the first place, just making money. And that they do produce jobs, at least provide minimum wage, and produce goods and services useful to the economy. They can also include other options like fair labor policies and environmental concerns (triple bottom lines), but that is generally limited to smaller, private companies. The larger corps become, and especially if they are publicly traded, the less likely will they include such other options. And it is the latter that are of concern.

Corporate profits go to the owners and shareholders only, not the employees, other than their salary. Raises in salary used to be tied to performance and productivity, but as studies have shown, productivity keeps increasing and salaries have stagnated. And ofttimes shareholders are not at all involved in a corp, but just speculate on it with little to no interest in its products, services and especially its employees. If enough speculators own enough of a corps stock then they can pull it out at any time, thus creating financial havoc for the employees. This is especially true if stock prices are unethically and/or illegally manipulated, apparently the rule rather than the exception these days. Remember 2008? It's still going on.
Corps also benefit from government subsidies and tax breaks, meaning mooching of the people's hard-earned money. And of course they get these breaks (aka welfare) due to large contributions to influence government. They also get us to pay for the externalized costs of their pollution, as well as food stamps and other services to their minimum wage employees, who cannot afford them. As legal entities they immunize the managing individuals from legal liability, thus creating a moral hazard. They exploit the intellectual commons, as whatever innovations they make are supported by and based on public education and government research. Apple is one example of the latter. Almost everything they sell had it origins in government research, from microprocessors to memory chips. Yet Apple feel no allegiance whatsoever to our government or our people, saying it will take its jobs overseas because it can make more money. And yet when Apple's products are pirated they expect the government to protect their property rights, again the people's money.

And of course corps take full advantage of the natural commons, like water, plants, minerals etc. Not satisfied with that though they must privatize as much of that commons as possible for further profit, meanwhile expecting free water for their huge agribusiness and computer chips company. And when they pollute the commons they should be charged fees for cleanup, as well as to compensate the rest of us for having to live with it. And how about sharing their wealth made from our commons? Alaska for example pays every citizen for oil extracted in their State. What a concept!

Then there is the issue of executive pay, which is now about 325 times greater than the average worker. A ratio that is the height of income inequality not seen since the depression. Such disparity is a direct result of giving less to those who produce the wealth, the workers, and more to those that often fail their companies, as in the financial crises. Executives of the Wall Street banks got huge bonuses for crashing their companies and the entire economy! Even when an executive does produce more wealth for his company, does he really deserve so much more that in fact requires that less be given to the workers? That is, in fact, one way they increase their share, but cutting into the wages and benefits of the worker. And in this job market they can get away with it; take it or go unemployed so we can complain about you mooching off society and cut you off at the knees there too. And/or just move the jobs overseas where they can pay far less and not worry about health benefits or worker safety standards.

1 comment:

  1. I forgot that also in chapter 5 he claimed that big business interests have deliberately lobbied with big money to denude unions, specifically so as to reduce or eliminate benefits and drive down wages. And they've been successful. See this graph on union decline directly correlating to middle-class income decline:


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