Tuesday, May 04, 2010
I distrust big business. Big business does not follow Adam Smith's theory of how free markets impose discipline on the activity of buying and selling. It is implicit in the theory that each entity in the market, whether it be an individual, a small group of individuals (e.g., a family business), or a large group (e.g., a corporation) is motivated to continue existing as well as to make a profit. We have seen that in some large corporations, particularly banks, the individual managers have acted in ways that bring themselves more wealth and at the same time lead to the ruin of the corporation. It seems as though that although our courts have done as much as they can to endow corporations with all of the rights and obligations of humanhood they have failed to recognize that corporations lack a sense of self-preservation. The bankers at Bear Stearns and at Lehman Brothers were making out handsomely with bonuses while their banks were going broke.
Unlike corporations, governments all have a strong sense of self-preservation. A government will fight like hell to keep from being destroyed or overthrown. Unlike a corporation, a government is able to enlist fierce loyalty among the people it governs. Even a repressive government can count on citizen loyalty if it is attacked by outsiders. Corporations often have the loyal support of the workers; they lack the same spirit of support among the stockholders and officers. It is the officers and stockholders who make the decisions that can lead to the demise of the corporation.
Both governments and corporations do mean or cruel things. Governments are motivated both by the fear of being overthrown by outsiders and by the need to maintain the support of a majority of the population. Corporations are motivated to provide profit to their managers and owners. These motivations can led to great cruelty and grievous mistakes. If a government makes a mistake, it is possible for the people to cause the government, or its successor, to atone for the mistake. The American government has atoned for the imprisonment of citizens of Japanese ancestry during World War II. The German government has atoned for the mass execution of Jews during the same war. Corporations are not under the pressure of public judgment to correct and atone for their mistakes. Laws can be enacted that require them to do so; they can evade the laws by simply going out of business.
I expect and welcome expressions of contrary points of view from my conservative friends.