February 12, 2014
COMCAST TO BUY TIME WARNER CABLE FOR $159 PER SHARE

 As Jay Yarow notes at the link above, “This would create the biggest pay-TV business by a mile. There’s not exactly a ton of competition in the world of cable, but this would effectively make it nonexistent.”  Comcast and Time Warner are the two largest ISP’s in the United States.   This would be like Coca-Cola and Pepsi merging into one super beverage company.  As a friend of mine said earlier, “if this deal actually goes through, anti-trust legislation is effectively dead letter.”

October 17, 2013
"The annual cost that American taxpayers spend on public assistance programs for the 52% of fast food workers who access them out of necessity: $7 billion. The amount of those workers’ employers—the seven largest fast-food companies—netted last year alone: $7 billion. That’s right: The tax dollars going to keep fast-food workers afloat are more or less equal to the profit their employers are making."

How Low-Wage Fast-Food Jobs Actually Take Money Out of Your Pocket

Perhaps the upcoming congressional discussion on entitlements should consider Big Macs?

(via squashed)

LTMC: The real worth of this data is that people might finally apply the axiom that “there’s no such thing as a free lunch” to low-wage workers.  Yes, if these companies pay their workers more, prices will go up.  But increased wages will disqualify them for public benefits (and ideally eliminate the need for them in the first place), reducing the cost of welfare programs proportionately (this would also have the tertiary benefit of making social services run more efficiently by reducing caseloads).

In the meantime, there’s always that Walmart study.

July 10, 2013
"After the Revolutionary War, Thomas Jefferson proposed a Bill of Rights with 12 amendments, one of which would “ban commercial monopolies,” forever making it illegal for corporations to own other corporations, to do business in more than one specific product or market, and thus forever preventing another oppressive commercial juggernaut like the East India Company from arising again in North America to threaten democracy and oppress the people. But Jefferson’s amendment failed and the corporations fought back. Now those corporations use the club of the amendments that did pass to influence elections and legislation favoring them—in the name of their rights as persons."

AZspot: American Rebellions  

This reminds me of one of my favorite Jefferson quotes:

I hope we shall crush… in its birth the aristocracy of our moneyed corporations, which dare already to challenge our government to a trial of strength and bid defiance to the laws of our country.

Remember that Corporations are creations of the State.  In fact, the state itself is the ultimate corporation, which is why Governments and corporate entities share many characteristics, such as limitations on liability, both civil and criminal.  The Corporate entity creates a state-sponsored vehicle through which people can behave with impunity.  Much like a Government agent, a Corporate agents can behave in a tortious or criminal fashion, yet escape liability under certain circumstances.  This, along with legal duties imposed by law, make them a poor vehicle for the exercise of individual rights.   

I think the corporate form has its uses, and certainly should not be done away with entirely.  The corporate form allows for incredibly fast capitalization of new companies, and provides an efficient vehicle for business management.  Unfortunately, in its current form, it also often results in unfair privileges, legal impunity, and disproportionate aggregation of wealth in the hands of a few.  I’m not sure if all of Jefferson’s proposed amendments are practical, but I certainly agree that reform of the corporate form is necessary to fix some of the flaws that currently exist.

June 5, 2013
Why Are Corporations Different Than People?

Barton Hinkle believes that the resilient backlash against Citizens United is a derangement of sorts, and is worried about the recent rash of state legislatures who have passed resolutions endorsing a Constitutional amendment to repeal the decision:

[These resolutions] assert that corporations have no constitutional rights, period (Arizona); that the constitution protects “free speech and other rights of the people, not corporations” (Florida); that the Bill of Rights applies to “individual human beings” only (Illinois); that the First Amendment does not apply to corporations (Iowa); that the U.S. should “abolish corporate personhood” (Kentucky); that constitutional rights are “rights of human beings, not rights of corporations” (Montana); that constitutional rights “are the rights of natural persons only” (Minnesota); and so on.

Just so we’re clear: This would strip newspapers, magazines, television shows and book publishers of First Amendment protection — meaning the government could tell them what to print or say, and what not to. The same would apply to universities. It means the government could order advocacy groups such as NARAL and the Sierra Club to support legislation they oppose, or vice versa. If a legislature wanted to make charitable organizations like the American Cancer Society take dictation, it could. Ditto for unions. And so on.

Barton continues:

[I]n a legal sense, there is a very good reason for corporations to have certain rights. As Shapiro explains, they do so “not because they are corporations, but because they are composed of rights-bearing individuals.” It is strange to think individuals should “lose all their rights” merely because “they come together to work in unison.” Yet that is where some of those suffering from [Citizens United Derangement Syndrom] would have the country go.

This is all well and good, except that Corporations are not people.  Full stop.

Advocates of Citizens United believe that corporations should be afforded the same rights as any individual citizen, because Corporations are simply groups of citizens who’ve come together for a certain purpose.  

But the problem with this logic is that it conflates collective action with corporate collective action.  People come together to accomplish economic tasks all the time.  But they don’t always do so in corporate form.  When groups of people incorporate, they are not simply coming to together to work towards a collective goal.  They are forming a legal entity, one that literally owes its existence to the state.

This is important, because the umbilical cord that exists between the corporate form and the State is what makes the Constitutional distinction between people and corporations both important and necessary.  The speech of corporations is tainted by legal duties that are themselves the product of legally-imposed obligations which corporate actors cannot escape.  They are, in essence, obligated to speak in a certain way, whereas you and I, as people, are not.  This makes their speech fundamentally different than that of an individual, who thanks to the First Amendment, are under no legal compulsion to speak a certain message, or indeed, to speak at all.

Here’s what I wrote about this issue back in January of 2012, largely in response to something that Ken at Popehat (whom I hold in high regard) wrote, who believed that Citizens United was decided correctly.  I’ve altered the emphasis a bit and cut out some irrelevant portions to make it more directly responsive to the issue:

Corporations are creatures of statute.  They quite literally exist at the will of the government.  People don’t; they exist regardless of whether government exists (although history shows the[y] tend to form them for one reason or another).  Any government could decide tomorrow to abolish the corporate form, and corporations, as we know them, would cease to exist.They would have no right to sue or be sued in Court as an entity, no right to hold property as an entity, no right to, well, anything.  Any and all rights given to a Corporation exist at the pleasure of the government statute which creates them.  To borrow Justice Rehnquist’s phrase: “The Corporate form is an artificial creature of the law, not an individual.”

People, however, are not created in a legislature.  They exist because their parents had relations, as opposed to an act of law which creates the corporate form.  Put another way, people exist because mom and dad got some action,  rather than by legislative action; baby-making, not law-making.

To me, that’s an important distinction:  Corporations are literally created out of thin air.  They are nothing more than a collection of legal conventions which serve as a convenient means to organize a productive enterprise.  Put bluntly:You and I do not have a constitutional right to form a corporation. What even constitutes a corporation differs from state to state.  The same cannot be said with respect to a human being (abortion notwithstanding, which is of course irrelevant for the current purpose).  The rights of human citizens in America exist by virtue of Constitutional enumeration, and some would argue by virtue of endowment from “their Creator,” if one believes in God.  Moreover, virtually every constitutional right other than speech that exists for a person does not exist for a corporation.  Corporations cannot vote.  They cannot marry.  They can own property as an entity only to the extent allowed by statute.  And as Del. GCL 102(b)(7) and its progeny has clearly taught us, Corporations can only sue or be sued to the extent allowed by statute.  Their rights simply do not come from the Constitution.  They come from the legislature.  The Life, Liberty and Property of a Corporation exist by legislative grace. The same is not true for a human being.

As I see it, the problem with ascribing [equivalent] Constitutional rights to the corporate form is that you’re dealing with a form of centralized power.  In fact, when you deal with the corporate form, you are actually dealing indirectly with the government, because the corporate form’s characteristics are based 100% on the whims of the legislature which creates them.  This, of course, creates the potential for massive abuse.  Consider the fact that at common law and in virtually ever state code,corporate officers have a fiduciary duty to act in the best interests of the corporation. A corporation which has an unrestricted 1st Amendment right to petition and lobby the government is a corporation which will always pursue what is in its own best interest, possibly (and in my experience, often) to the detriment of society at large. The speech of the corporate actor is tainted by a legal duty to pursue policies that are in the best interest of the corporation, and it is the government [itself] who creates that legal burden.  Granting corporations a[n] [unlimited] 1st Amendment right to free speech creates a rather vicious feedback loop, in which corporate actors have a duty to act in the best interest of their corporation, and then they are given unrestricted purview to use corporate resources to influence the distribution of public goods in a way that benefits them.  Recall also that shareholders have little say in the day-to-day operation of a publicly-traded company.  So to the extent that a corporation represents the collective voices of the people who own it, the corporate form is generally not an effective place for them to get their voices heard by the political system.

All of these concerns are probably the reason why Thomas Jefferson, no fan of big government, was nonetheless equally concerned about the aggregated power of corporations in America, even before they became a common form of business organization, when he spoke ill of them in his letter to George Logan in 1816:

 We may sometimes have mistaken our rights, or made an erroneous estimate of the actions of others, but no voluntary wrong can be imputed to us. In this respect England exhibits the most remarkable phaenomenon in the universe in the contrast between the profligacy of it’s government and the probity of it’s citizens. And accordingly it is now exhibiting an example of the truth of the maxim that virtue & interest are inseparable. It ends, as might have been expected, in the ruin of it’s people, but this ruin will fall heaviest, as it ought to fall on that hereditary aristocracy which has for generations been preparing the catastrophe.  I hope we shall take warning from the example and crush in it’s birth the aristocracy of our monied corporations which dare already to challenge our government to a trial of strength and bid defiance to the laws of our country.

The only way to “crush” Jefferson’s corporate aristocracy is to place meaningful limits on the scope of their activity.  Granting corporations the same 1st Amendment rights  that we grant to individuals makes that virtually impossible when it comes to getting the money out of politics, something that is necessary if we ever want to break out of the banal 2-party circle-jerk that America’s political landscape has been stuck in since time immemorial.

When the gloriously wealthy, inhumanly prescient, and curiously sexually active mountebanks who wrote our Constitution set pen to paper,  they did so on the assumption that people are endowed with rights by their Creator.  If we work off that assumption, then the “Creator” of corporations is the legislature.  That’s where their legal rights come from.  The impressive aggregation of wealth and resources that occur under corporate organization results in a form of centralized power that can be used to the detriment of both individuals and smaller institutions who can’t afford to, say, pay a lobbying firm millions dollars, or make a SuperPAC for “Mom n’ Pop’s Fork n’ Spoon Repair.”  An unrestricted corporate legal form creates the foundation for an “aristocracy of monied corporations,” in which the legal duties of corporate leadership create political conflicts of interest with society writ large.  It makes sense to allow the government at least some leeway to place limits on the scope of the conduct which can be undertaken in the name of the corporation, inasmuch as it relates to influencing public resources.  To use the language of Federal judicial Standing doctrine: corporate influence in public policy is a political question, which should be left to democratic institutions to deal with.

Does this mean that corporation’s shouldn’t have any rights?  I am certainly not of that opinion.  But when it comes specifically to political speech, and more specifically to money as speech, I think that the umbilical cord between government and the corporate form is tied far too tightly for it to be analogous to the freely exercised speech of a person.  Corporate officers have legally imposed duties to act in the best interests of the corporation.  In many cases, this doesn’t necessarily mean what the shareholders want, but what the board wants.  And modern corporate law has developed to the point where it is enormously difficult and time consuming to file a successful shareholder action to punish a malfeasant board or compel them to act in a certain manner.   Again, this is all by Government design.  And it makes the corporate form a poor analogy to the individual citizen, or to democratic institutions more generally.

And as far as whether such an interpretation of the corporate form would strip necessary institutions—such as the press—of necessary protections, I would simply respond by saying that Supreme Court precedent prior to Citizens United never even came close to such an interpretation.  And such retaliations would almost always involve an individual from the press corporation who had standing to challenge the government action based on his own First Amendment rights as an individual.  So this strikes me as a red herring.  And I don’t think that would actually be the outcome.

May 5, 2013
An honest look at corporate tax rates, 2008-2010.  From McIntyre et al. (2011).
h/t TheFreeLioness / PriceofLiberty

An honest look at corporate tax rates, 2008-2010.  From McIntyre et al. (2011).

h/t TheFreeLioness / PriceofLiberty

December 27, 2012
Did A California Company Just Prove Marx Right?

Morning Star is a California company that is responsible for processing 40% of California’s tomato crop.  They also have no management. (Via Reason.tv):

Morning Star has many of the usual positions that one would expect at an ordinary company: there are floor workers, payroll personnel, folks that handle the mail and outside communications, and so on.  The difference is that, from a bird’s eye view,  no single person at Morning Star is anybody else’s boss.  The entire operation appears to thrive on the power of collective expectations, and by giving workers a direct stake in the success of the company.  Workers at Morning Star make their own decisions about how to perform their job, what tools they need to keep the machines running, and how to structure their work day to keep production running smoothly.  As one employee put it, there is no bureaucracy that he has to fight through if he needs something for his lab.  He just goes out and purchases it.

To some, this may seem like a frightfully inefficient way to run a business.  If employees can make instantaneous discretionary purchases of lab equipment on the company dime, then where is the cost control?  Such a system seems doomed to failure without a hierarchy of some sort to check potentially unwise exercises of indiscretion.

The answer is that these checks are built into the system of collective expectations.  As another Morning Star employee put it, Morning Star’s business model presumes that employees who are closest to a particular business process are the most qualified to make decisions about how to keep that process running efficiently.  Thus, one would expect an unwise purchase to be met with scrutiny by one’s peers on the factory floor.  Morning Star’s firm model thrives by ensuring that one individual is never and uncontested decision-maker solely responsible for decisions related to a business process at the company.  Every worker has a stake in the outcome of everybody else’s labor.  The threat of discipline from management is unnecessary to achieve desired outcomes.

Morning Star is not the first company to adopt this business model.  Valve Corp., a wildly successful Video Game company that currently dominates the Video Game industry through it’s Steam platform, also has no formal management.  Gore Inc., the makers of Gore-Tex, are an 8,500 strong company that has no company organization chart.  Though Gore does retain a few corporate officer titles for various purposes within the company, those officials have little direct power over other employees in the corporation.  Those same officers are also not unilaterally chosen by the Board of Directors, but rather, in a more democratic fashion:

In Gore’s self-regulating system, all the normal management rules are reversed.  In this back-to-front world, leaders aren’t appointed: they emerge when they accumulate enough followers to qualify as such.  So when the previous group CEO retired three years ago, there was no shortlist of preferred candidates.  Alongside board discussions, a wide range of associates were invited to nominate to the post someone they would be willing to follow.  ‘We weren’t given a list of names – we were free to choose anyone in the company,’ Kelly says.  ‘To my surprise, it was me.’

Other firms have shown that “non-management management” approach is feasible.  At IDEO Corp., a Palo Alto engineering company responsible for such ubiquitous inventions as squeezable toothpaste tubes, or the mouse you are using to point & click things on your computers, there are no bosses, and no management structure.  Sun Hydraulics is a $170 million dollar manufacturing firm with no job titles, no organization chart, and even lacks job performance criteria for its employees.  There is a Plant Manager, but their job is not to supervise employees: it’s to water the company’s plants.

How are so many companies, in areas as diverse as tomato farming, hydraulics production, and video game production, running successful businesses without traditional management?  In a society built on Capitalism, the common wisdom is that productive firms require managers with coercive authority to motivate people to do their jobs.  Most ordinary people are shocked when they learn that there are companies who stay profitable with no bosses.  How can this be an efficient way to run a company?

As it turns out, there’s a lot of evidence that top-down management is an inefficient form of firm organization.  Gary Hamel, writing for the Harvard Business Review, noted several reasons to abandon traditional management hierarchies, one of which is the fact that managers add both personnel costs and unnecessary complexity to a firm:

A small organization may have one manager and 10 employees; one with 100,000 employees and the same 1:10 span of control will have 11,111 managers. That’s because an additional 1,111 managers will be needed to manage the managers. In addition, there will be hundreds of employees in management-related functions, such as finance, human resources, and planning. Their job is to keep the organization from collapsing under the weight of its own complexity. Assuming that each manager earns three times the average salary of a first-level employee, direct management costs would account for 33% of the payroll.

Top-down management also centralizes risk-taking in the hands of fewer decision-makers, which increases the likelihood of a disastrous event:

… As decisions get bigger, the ranks of those able to challenge the decision maker get smaller. Hubris, myopia, and naïveté can lead to bad judgment at any level, but the danger is greatest when the decision maker’s power is, for all purposes, uncontestable. Give someone monarchlike authority, and sooner or later there will be a royal screwup. A related problem is that the most powerful managers are the ones furthest from frontline realities. All too often, decisions made on an Olympian peak prove to be unworkable on the ground.

The personal whims of managers can also kill or disincentivize ideas that are good for the company, especially when ideas have to be filtered through multiple levels of management:

…[A] multitiered management structure means more approval layers and slower responses. In their eagerness to exercise authority, managers often impede, rather than expedite, decision making. Bias is another sort of tax. In a hierarchy the power to kill or modify a new idea is often vested in a single person, whose parochial interests may skew decisions.

Then there’s “the cost of tyranny:”

The problem isn’t the occasional control freak; it’s the hierarchical structure that systematically disempowers lower-level employees. For example, as a consumer you have the freedom to spend $20,000 or more on a new car, but as an employee you probably don’t have the authority to requisition a $500 office chair. Narrow an individual’s scope of authority, and you shrink the incentive to dream, imagine, and contribute.

The success of these business models demonstrate one of the fundamental criticisms of traditional Capitalist modes of production that Marx attempted to illustrate when he was writing Das Kapital.  While Marx was wrong (in my opinion) about quite a few things, the success of the companies above demonstrates that Marx was correct to point out that divorcing employees from management decisions related to their own labor is an inherently inefficient means of production.  Divorcing employees from the product of their labor separates them from one of the primary motivating forces to perform that labor.  This process of alienation itself is what creates the necessity for “bosses”—employees whose primary purpose is to oversee & discipline other employees in their assigned tasks.  

Thus, what we really see in Marx’s Theory of Labor Alienation was, inter alia, an argument about firm management: the need for “bosses” in the workplace only arises when employees are completely divorced from the means of production.  When workers have a direct stake in the final product of their labor, they no longer need the threat of coercion from superiors to do their job.  An employee’s direct interest in the outcome, combined with the power of collective expectations of their peers in the workplace, replaces the threat of, and need for, discipline from above.

With all this being said: I am not attempting to argue here that the success of non-managed firms proves that stateless socialism is viable, or validates Marxism writ large.  Indeed, I’m sure that the folks at Reason have a much different view on Morning Star’s success than I do—and moreover, I remain, as I have always been, a fan of mixed economies.  

What I think is clear, however, is that Marxist theorists are right to point out that there is nothing inherently “natural” or “necessary” about the way the workplace is organized in most Western societies today.  There is plenty of evidence to suggest that top-down hierarchies in the workplace are neither necessary for profitability, nor an extension of natural human activities.  Indeed, if Gary Hamel’s observations about the inefficiency of management are true, we appear to have been doing it wrong for quite some time.  Though perhaps we could have come to the same conclusion more easily by just reading Dilbert comics:

February 26, 2012
Apple CEO Tim Cook: "We Have More Money Than We Need."

There’s no doubt that Apple is a cash cow. Just last year, many reports started circulating that the tech giant had a larger bank account than the U.S. government, where Apple ended June 2011 with $76.2 billion and the government had $73.8 billion. Now, Apple CEO Tim Cook is saying that the company has more money than it needs.

At the annual shareholders’ meeting on Thursday, which is the first since former Apple CEO Steve Jobs’ death, Cook tried to determine whether Apple should stop hoarding cash the way Jobs has been for years, or if it’s time to stick a hand in the $97.6 billion cookie jar and pay shareholders a dividend this year.

Money quote:

Another suggestion of what to do with the cash was to buy Greece, which is currently experiencing a debt crisis, but Cook said Apple is not interested.

While Athens burns, the iEmperor plays the fiddle.

January 20, 2012
Citizens United? A Fine Challenge, Sir. A Fine Challenge.

Ken @ Popehat, whose fantastic article on prosecutorial misconduct I’ve linked to previously, has thrown down the gauntlet on Citizens United.  His post is too long to quote in its entirety, but he makes some rather solid arguments in defense of the Citizens United ruling, which I’ll try to justly represent here:

You might have noticed that Popehat blacked out yesterday to join the protest against SOPA/PIPA. (The technical aspect of that effort was all David’s work; if I had tried it … well, suffice it to say all these posts might have been lost, like tears in rain, etc.) The widespread protest seemed to succeed at its aim of raising awareness and led to defections from the ranks of SOPA/PIPA supporters.

All of that seemingly effective advocacy raises a question: did its participants have a First Amendment right to protest that way?

… .

If you think that Citizens United was wrong — if you think that corporations shouldn’t have First Amendment rights — then why, exactly, can’t the government punish Wikimedia Foundation or Google or any other non-human entity for speech that offended its favored lobbyist and contributor, the MPAA?

(Note that I’m addressing people who say corporations have no First Amendment rights, not people who saycampaign donation restrictions do not violate the First Amendment because money is not speech, which is an entirely different ranty post.)

… .

[Now] you might say, “they can’t do that, because you have First Amendment rights, and those corporations are just the vehicles through which you are exercising those rights.” To which I say: exactly. That’s what entities are — vehicles through which people do things. Sometimes they are objectionable things, sometimes they are stupid things, soometimes they are things that, if accepted, would lead to deplorable results. But entities — corporations — are vehicles for human activity, including expression.

So. Advocates of the “corporations have no First Amendment rights” position: why can’t the government punish the corporations that blacked out yesterday?

Well I think, first off, there’s actually a very straight-forward answer to this question: Corporations are creatures of statute.  They quite literally exist at the will of the government.  People don’t; they exist regardless of whether government exists (although history shows the tend to form them for one reason or another).  Any government could decide tomorrow to abolish the corporate form, and corporations, as we know them, would cease to exist.  They would have no right to sue or be sued in Court as an entity, no right to hold property as an entity, no right to, well, anything.  Any and all rights given to a Corporation exist at the pleasure of the government statute which creates them.  To borrow Justice Rehnquist’s phrase: "The Corporate form is an artificial creature of the law, not an individual."

People, however, are not created in a legislature.  They exist because their parents had relations, as opposed to an act of law which creates the corporate form.  Put another way, people exist because mom and dad got some action,  rather than by legislative action; baby-making, not law-making.

To me, that’s an important distinction:  Corporations are literally created out of thin air.  They are nothing more than a collection of legal conventions which serve as a convenient means to organize a productive enterprise.  Put bluntly: You and I do not have a constitutional right to form a corporation.  What even constitutes a corporation differs from state to state.  The same cannot be said with respect to a human being (abortion notwithstanding, which is of course irrelevant for the current purpose).  The rights of human citizens in America exist by virtue of Constitutional enumeration, and some would argue by virtue of endowment from “their Creator,” if one believes in God.  Moreover, virtually every constitutional right other than speech that exists for a person does not exist for a corporation.  Corporations cannot vote.  They cannot marry.  They can own property as an entity only to the extent allowed by statute.  And as Del. GCL 102(b)(7) and its progeny has clearly taught us, Corporations can only sue or be sued to the extent allowed by statute.  Their rights simply do not come from the Constitution.  They come from the legislature.  The Life, Liberty and Property of a Corporation exist by legislative grace.  The same is not true for a human being.

As I see it, the problem with ascribing Constitutional rights to the corporate form is that you’re dealing with a form of centralized power.  In fact, when you deal with the corporate form, you are actually dealing indirectly with the government, because the corporate form’s characteristics are based 100% on the whims of the legislature which creates them.  This, of course, creates the potential for massive abuse.  Consider the fact that at common law and in virtually ever state code, corporate officers have a fiduciary duty to act in the best interests of the corporation.  A corporation which has an unrestricted 1st Amendment right to petition and lobby the government is a corporation which will always pursue what is in its own best interest, possibly (and in my experience, often) to the detriment of society at large.  The speech of the corporate actor is tainted by a legal duty to pursue policies that are in the best interest of the corporation.  It is the government who creates that legal burden.  Granting corporations a 1st Amendment right to free speech creates a rather vicious feedback loop, in which corporate actors have a duty to act in the best interest of their corporation, and then they are given unrestricted purview to use corporate resources to influence the distribution of public goods in a way that benefits them.  Recall also that shareholders have little say in the day-to-day operation of a publicly-traded company.  So to the extent that a corporation represents the collective voices of the people who own it, the corporate form is generally not an effective place for them to get their voices heard by the political system.

All of these concerns are probably the reason why Thomas Jefferson, no fan of big government, was nonetheless equally concerned about the aggregated power of corporations in America, even before they became a common form of business organization, when he spoke ill of them in his letter to George Logan in 1816:

 We may sometimes have mistaken our rights, or made an erroneous estimate of the actions of others, but no voluntary wrong can be imputed to us. In this respect England exhibits the most remarkable phaenomenon in the universe in the contrast between the profligacy of it’s government and the probity of it’s citizens. And accordingly it is now exhibiting an example of the truth of the maxim that virtue & interest are inseparable. It ends, as might have been expected, in the ruin of it’s people, but this ruin will fall heaviest, as it ought to fall on that hereditary aristocracy which has for generations been preparing the catastrophe. I hope we shall take warning from the example and crush in it’s birth the aristocracy of our monied corporations which dare already to challenge our government to a trial of strength and bid defiance to the laws of our country.

The only way to “crush” Jefferson’s corporate aristocracy is to place meaningful limits on the scope of their activity.  Granting corporations the same 1st Amendment rights  that we grant to individuals makes that virtually impossible when it comes to getting the money out of politics, something that is necessary if we ever want to break out of the banal 2-party circle-jerk that America’s political landscape has been stuck in since time immemorial.

So the answer to Ken’s question, in so many words, is basically yes: the government theoretically could punish corporations for participating in the SOPA/PIPA black-out.  For example: what provision of the Constitution would prevent any legislature from abolishing the corporate form tomorrow?  They could do so for any reason, for no reason if they so chose.  The government could literally abrogate the corporate form tomorrow, and there’s no constitutional provision that would save them.  

On the other hand, the government (in theory, anyway) can’t kill a human being for no reason.  The Constitution (in theory) forbids it.  Granted, I understand that we now live in the world of Due-process free assassination, indefinite detention, and pretty soon, if we’re lucky, flexible citizenship.  But not a single one of these issues spins on whether corporations are given 1st Amendment rights.  The government can’t assassinate Google with a Drone Missile.  They can’t throw Wikimedia in Guantanamo Bay.  And the citizenship of those organizations only exists for purposes of determining where they can be sued, and what body of law to apply when they appear in court.  Google can’t apply for food stamps in California, or receive Social Security when it turns 65.

Whether it would be wise or even desirable for the government to punish corporations for protesting SOPA/PIPA is obviously another question entirely.  I of course would oppose it with the strength of five gorillas.  I also think it’s relevant that the purpose of these protests was to demonstrate the impact of what would happen if these corporations, and the services they provide, went away.  If the government actually did punish these companies for blacking out their services, the government would merely be proving their point.

When the gloriously wealthy, inhumanly prescient, and curiously sexually active mountebanks who wrote our Constitution set pen to paper,  they did so on the assumption that people are endowed with rights by their Creator.  If we work off that assumption, then the “Creator” of corporations is the legislature.  That’s where their legal rights come from.  The impressive aggregation of wealth and resources that occur under corporate organization results in a form of centralized power that can be used to the detriment of both individuals and smaller institutions who can’t afford to, say, pay a lobbying firm millions dollars, or make a SuperPAC for “Mom n’ Pop’s Fork n’ Spoon Repair.”  An unrestricted corporate legal form creates the foundation for an “aristocracy of monied corporations,” in which the legal duties of corporate leadership create political conflicts of interest with society writ large.  It makes sense to allow the government at least some leeway to place limits on the scope of the conduct which can be undertaken in the name of the corporation, inasmuch as it relates to influencing public resources.  To use the language of Federal standing: corporate influence in public policy is a political question, which should be left to democratic institutions to deal with.

Of course, the government isn’t going to punish Google, or Wikimedia, or any other company for participating in the blackout.  Why?  Well if you subscribe to public choice theory, Google is something of a big deal when it comes to political contributions.  And with respect to smaller companies like Wikimedia, imagine what would happen if Wikipedia shut down for good.  The panic on the web over just 24 hours was palpable.  If you want to see a bi-partisan coalition of voters come together quicker than you’ve ever witnessed, watch what happens if the government takes Wikipedia off the web.  The parents of paper-writing students everywhere will be voting every stooge out of office who was responsible.  

December 14, 2011
"Think Apple looked at tax rates before it decided to open their stores ? Did McDonalds bring back McRibs because the tax rate was low enough ? Companies make strategic decisions every day. They invest because they want to grow the company. They invest because they are competitive and they want to win. They invest because they want to make more money. They don’t invest because they just had their tax rates lowered."

My Views on Corporations & Taxes — Mark Cuban (via apoplecticskeptic)

Apple is keeping 2/3rds of its massive cash reserves off-shore because it doesn’t want to pay taxes on them here.  That’s money that the company could invest here, but isn’t.  So Cuban is spectacularly wrong.

And as for McDonalds, there is evidence that the McRib reappears in correlation to downward fluctuations in hog prices.  Which suggests that McDonalds’ decisions are extremely price sensitive.  Taxes are a price.  McDonalds gets that.  That’s why their CEO just recently called for tax cuts as a way to repair the economy.

(via jeffmiller)

I need to call you out on the first link Jeff.  At no point in that article does the CEO or CFO of Apple claim that they are keeping cash reserves off-shore to avoid tax rates in America.  Whether that is empirically true is up for debate.  But at no point does Rosenman quote language in which Apple’s Executive Officers claim that their holdings ratios are a result of U.S. Tax rates.  Here is the portion of Rosenman’s article where he quotes Tim Cook and Peter Oppenheimer:

New CEO Tim Cook isn’t opposed to a dividend payout. He said as much in Apple’s conference call: "That said, I’m not religious about holding cash or not holding it. I’m religious about a lot of things but not that one."

However, dividend-yearning shareholders’ hopes were instantly crushed by CFO Peter Oppenheimer’s dose of reality:

"I’d like to add to Tim’s answer, just to remind everybody that a little over $81 billion of cash that we ended in the September quarter were a bit more than $54 billion or [two-thirds] of that was offshore."

Why are so much of Apple’s cash reserves offshore?  Rosenman himself points out the answer:

Although Apple’s wealth is burgeoning, it’s the foreign money that is really booming. More and more, earnings have been socked away in yen, euros and the real as Apple moves into overseas markets. Currently, over two thirds, or $54 billion, lies offshore, a development that has profound implications for Apple and shareholders. Notice that cash is growing much faster overseas than in the United States because Apple’s rest of world business is on fire. At this rate, Apple’s foreign money will tower over its U.S. holdings, probably reaching a 3:1 ratio by 2013.

This, of course, is to the benefit, and not the detriment, of Apple’s American shareholders.  Growth in foreign holdings increases the value of Apple’s shares.  The same thing was pointed out by GE CEO Jeffrey Immelt when he was asked by Lesley Stahl for CBS News why 60% of GE’s revenue was earned overseas:

Stahl: Sixty percent of GE’s revenue is foreign.

Immelt: When I became CEO it was 30. Now, I wish all our customers were in Chicago. I mean everything about the U.S. is easier than doing business [overseas], but this is where the growth is.

Apple is keeping cash reserves overseas because that’s where the growth potential (i.e. market share) is, not because tax rates are lower.  Reducing America’s corporate tax rate would not encourage Apple to bring their cash reserves back to America because their decision to invest (or not invest) in Apple’s business enterprise has more to do with demand and less to do with their tax rate.  And if Jeffrey Immelt’s account is to be believed, then it’s actually easier to do business in America than in Europe or Japan.  But they aren’t investing that money in America because the growth potential is simply not there.

Now we can argue about whether this growth potential is a function of structural consequences inuring from our tax policy writ large.  But the specific conclusion that Apple’s business decisions are a function of quibbles over tax rates is Rosenman’s own conclusion, not that of Apple’s executive leadership.  And to the extent that his analysis may be valid, he contradicts himself by pointing out that Apple’s overseas investment is a function of growth potential in overseas markets, rather than flight from America’s corporate tax rates.

As far as Mcdonald’s CEO is concerned, a recent survey of small business owners suggest that taxes are the least of their concerns when it comes to their hiring decisions.  NPR discovered the same thing when they contacted medium-sized firms about their economic concerns.  The assertion of McDonald’s CEO that business taxes are what’s slowing the economy sown are contradicted by the broader business community he is a part of.

(via jeffmiller)

December 6, 2011
"I am not minimizing government infringements of privacy, but commercial operations are bigger spies than the government ever was. It helps companies’ bottom line and it’s understandable, but why should something that’s an intrusion and unconstitutional if the government does it be okay for a big corporation?"

Mike Lofgren, former GOP Congressional staffer.

You should read the whole interview.  Lofgren has a lot to offer anyone who’s willing to listen.

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