While writing about Boeing threatening to leave the Puget Sound, I’ve had some thoughts batting around my mind about corporations more generally. I think all major (and most minor) corporations have 4 obligations. 3 that I think are necessary to their survival, as well as just decency and one that’s important but not really in the same way. Corporations have obligations to their shareholders and their investors. They have an obligation to their workers. They have an obligation to their customers. They also have an obligation, although probably not at the same level, to the community where they’re based.
I know this sounds naive, and it probably is. Still, I think those obligations, even though they’re sometimes in competition with each other, make corporations worth having as instruments in society. Obviously, we put a lot of emphasis on shareholders and investors. Probably too much, but they do play a role. And if they’re getting paid a reasonable amount for bringing a return on investment, then fine.
Still, businesses must have an obligation to their employees. When companies like Boeing threaten to leave, we keep hearing about the jobs they provide. But we rarely ever hear about an obligation to provide good jobs. When companies are lagging in this, unions, or government regulation like workplace safety and a minimum wage can force a minimum standard. But I think corporations have an obligation to the people working for them to treat them as something more than just cogs.
They also have an obligation to their customers. Ultimately, they’re making a product or service for someone or some group. When I use a good product, it reflects well on the company that made it, and when I have a bad product it feels like a bit of a betrayal. I think that’s part of the reason that people are sensitive to bad customer service.
Finally, and more generally, businesses have a duty to the communities where they’re located and where they do business. When companies give to charity, we call it “corporate citizenship.” As long as we understand that’s a metaphor, and corporations can’t actually be citizens, that’s fine as far as it goes. Still, there ought to also be an obligation not to pollute and to pay their taxes. Basically, it ought to be better for the community that a corporation locates there. Otherwise, why have them?
I don’t really know what my point is here, but I think the discussion is too much on shareholder value or return on investment, and not on the other things that companies ought to do.
In a society governed by law and regulation, corporations do not exist in a vacuum. They are chartered by a governing body…in the US by states. The state may require that a corporation chartered in or operating within its boundaries obey certain rules and regulations. Our challenge is to combat the notion that in order to be successful in attracting and retaining premium business [decent wages, working condition, value-added, etc.] we have to compete with the lowest common denominator venues.
We have corporations for many reasons. A major reason is to limit the liability of the corporation’s owners. Shareholders are only liable for their investment in the firm. Lawyers (usually) can’t “pierce the corporate veil” to go after the assets of the owners. In that sense, the corporation stands as a separate entity from its owners.
Corporations are also useful for many organizations such as labor unions and charities to add legal protection to the people behind the “business.” The corporate form, due to tax laws, also provides certain benefits for retirement and estate planning for wealthy individuals and self-employed persons.
Even though corporations have a bad name generally, they do serve very useful purposes for society.
I’d add that limited liability is a primary issue for corporations. That is, owners are, as was indicated in the prior post, limited in exposure to their investment in the corporation, and their personal and non-company assets are protected.
But corporations also serve a couple of other functions. Unlike partnerships, they do not require restructuring when an owner (partner) leaves or a new one enters the business. AND the provide a forum to concentrate capital from many, many sources, unlike sole proprietorships and partnerships.
The concentration of capital offers advantages in terms of the start up and expansion of large enterprises, but it also presents major problems for the broader society in terms of the nearly unlimited concentration of capital and power — something we see on a daily basis in our politics.
The corporation is a legal form of organization with particular liability and tax ramifications, and is a practical way to organize large scale enterprises. It can do the things Carl describes. Whether it does so, is a function of the character and worldview of the people who run it, not of the organizational format itself.
Not surprisingly, changing individual attitudes toward social responsibility has led to changes in corporate behavior, and in such circumstances, it’s not unreasonable to consider changing the ground rules that corporations must follow to enjoy the benefits of their corporate charters.
Don’t worry schmucko-lunatic you won’t find this on any web site. Butt you can look all you want because as the day before Thanksgiving the cleaned test tube demand is quite low. “happy“, just run along now. Children like you need to play with their Lego blocks!
So Puddy is sure all of you HA DUMMOCRETINS support Hobby Lobby, a corporation, owned by a Christian Family, to reject Obummercare mandates that cross their religious beliefs, as an obligation to themselves as shareholders and investors in their privately held retail chain of arts and crafts stores based in Oklahoma City.
Since Hobby Lobby is privately owned, they can set the employment rules as their social obligation to their workers. People can choose to work there or not. Plain and simple.
They have a social obligation to their customers by setting a fair price. You walk in and determine if the items are worth their price.
They also have an social obligation, although probably not at the same level, to the community where they’re based to provide a craft service where anyone can walk-in and pick and/or choose to buy their craft materials from Hobby Lobby.
Mrs Puddy and Puddy shop there because they are a Christian organization. Bought some items last week!
SCOTUS will hear their challenge to Obummercare after Sotomayor rejected them earlier! Well we all know how the donk will vote against this corporation!
See that was very simple!
It’s not corporate structure that leads to their abuse of power. The Koch Brothers are not a public corporation in that they just have two shareholders and they manage to behave like vicious cancerous dogs without the “inc” after their names. There are corporations that actually behave in a responsible manner. Locally, Costco seems to be a good example, but at some point the founders with the vision retire and the accountants and MBAs take over and will squeeze their employees and suppliers to generate more and more profits. Ultimately the only solution will be to tax the crap out of the executive class and shareholders and hold the companies to strict controls. If they don’t like it they can always set up shop in Somalia where there are no taxes or regulations everybody has a gun and their kids pray (and not much else) in school.
@6 Wasn’t this same argument used to rationalize segregated lunch counters owned by self-described Christians who dressed up in bedsheets at their Saturday night social gatherings?
@7 “tax the crap out of the shareholders”
Oh, no, we shareholders should simply pay the same tax rates as our wage slaves. That’s fair. In the meantime, I’ll take the 50% discount on my taxes the Republicans gave me. They get it, so why shouldn’t I? Why should only Republicans get outrageous tax breaks?
Oh you mean those DUMMOCRETINS y’all want to run away from?
@10 – nice to see you didn’t disagree with post #8. My religious beliefs call for segregation based on race, I can’t wait.
Happy Thanksgiving!
While on this day you may want to feed yourselves to excess, remember, feeding the trolls is a fools game.
Our founding fathers thought limiting the life span of corporations was a good thing. And holding the board legally responsible for the criminal actions of their corporations.
And that game of spreading the decisions making around so you can’t pin down the real culprits of a criminal act. Well I say nail them all. Let God sort them out.
What we as a nation want is good corporate citizens. What we have is a bunch of corporate thugs. Like Koch. Why all the interest building the Keystone Pipeline Project? Sure, a few temp jobs will be created while the pipe line is built. A number of politicians and well connected will make a lot more. But the main reason is that the two Koch brothers will make over $50,000,000,000 off the pipeline. That is why.
Since Hobby Lobby is privately owned, they can set the employment rules as their social obligation to their workers.
Whatever. But they are not free to partake of a federal subsidy (tax treatment of health care benefits) and still claim a religious exemption. If this mandate is so troubling to them, then opt out and pay cash. They also have the option of taking their capital and going somewhere else.
In sum, if they want to feed at the public trough, they have to play by the rules adopted by that public. This is not rocket science.
And what damage will come from the KXL? The Koch advertising machine has promised a rose garden. But what are they not telling us?
A look at the old Tacoma smelter and the arsenic and lead maps of the pollution produced by that which we are still dealing with just might give a clue. And the KXL pipeline and tar sand production that will feed it dwarf the Tacoma smelter in shear size.
Rewriting the GOATBOY@6 a bit.
“Oh you mean those DUMMOCRETINS y’all want to run away from?”
Well, why not? Are you Repunklicans going to embrace Lincoln again? I know how he would deal with Southern intransigence!
The corporate form should be replaced with the co-opreative. Most corporations do their financing with loans rather than issuing stock.
The corporate form should be replaced with the co-opreative. Most corporations do their financing with loans rather than issuing stock.
The corporate form should be replaced with the co-opreative. Most corporations do their financing with loans rather than issuing stock.
@20 Well, sorta-kinda. There is (supposedly at least) a relationship between a corporation’s market capitalization and its ability to borrow money.
In any case, it’s essentially “best practice” in business today to “never put your own money at risk when you can use other peoples’ money instead.”
Puddy is still here? I thought that after Thanksgiving all the turkeys were supposed to be gone.
@23,
Nobody wants him.
Maybe we can convince GOATBOY he is really MOSES and he needs to wander in the desert for 40 years.