Well of course every day isn’t Christmas for most of us, but I’m beginning to wonder if it doesn’t feel that way for major corporations—and whether such organizations are paying their way or living on welfare.
Yes, I am talking about corporations—NOT people—although I know the U.S. legal system considers that corporations are people in legal terms. I also know that makes no sense at all because corporations are palpably NOT people. They are no more than legal instruments issued by governments (state governments in the U.S.) which convey certain advantages for commerce (and which used to impose certain constraints and obligations).
All in all, corporations are an excellent idea providing they are operated within reasonable constraints by reasonable people equipped with a sense of social responsibility and a moral code. Here, I’m not talking about perfection (or even close). I’m talking about no more than a reasonable balance of interests.
I’m far from sure that there is a balance of interests in the U.S. any more. I think the evidence is fairly clear that corporate power has got out of hand, and needs to be reined-in, if U.S. democracy is to have a chance of functioning in the spirit of “We the people.”
I’m not going to try and prove that point in this piece. I’d merely remind you that corporate greed in the financial sector nearly wrecked the U.S. economy in the recent Great Recession—and that the earnings of the vast majority of Americans are in decline. Beyond that, it is truly remarkable that, despite abundant evidence of malfeasance by major financial institutions, not a single corporate executive has gone to prison. And as for the financial corporations themselves, they are back to mega earnings, bonuses and are bigger than ever. And they are also benefiting from the Federal Reserve spending $85 billion a month on Quantitative Easing.
But surely the Fed’s money finds its way into the real economy?
If you believe that, you are smoking something. Lending to small business, for instance, is actually down (despite being heavily underwritten by the Federal Government). As the Fed itself has admitted, though it hopes it will benefit the real economy, the primary and immediate beneficiaries are the Rich and the corporations they own.
Clearly, we are all not equal under the law. That should scarcely surprise us given that corporate money now virtually owns Congress. So, if you are caught selling hard drugs you will go to prison, but if you swindle trillions of dollars out of billions of people (the Great Recession was global) you will be bailed out by the very people you swindled—and the Fed will continue to subsidize you for years.
Frankly, that doesn’t seem fair to me—and it certainly isn’t justice. Perhaps we should stop referring to the U.S. as a “Nation of Laws.” We are more a “Nation of Special Interests” where some interests are a great deal more equal than others.
Or perhaps we should just admit that this once Great Nation has lost its way—and has become deeply, and systemically, corrupt. Such a message has the merit of getting right to the heart of the matter—and being true.
But let me now zone in on the issue of whether major corporations are really paying their way or not.
- The tax take from corporations has been in decline for years. In 2010, the Federal Government collected 9% of $2.2 trillion from corporations (which I’ll round up to 10% so I don’t have to strain my brain) which amounts to $220 billion. There was a day when corporations paid about a third of the tax take (and, as a matter of interest, the economy was a great deal healthier).
- Major corporation are involved in widespread tax avoidance and are using a mass of tricks of dubious legality. Most involve keeping cash abroad and games with transfer pricing. They get away with it because they have a lock on Congress which makes the rules. That cash abroad totals something like $2 trillion. It would be rather nice to have that invested in the U.S.
- Corporate payrolls are massively subsidized by the Federal Government. Fast Food may be the main beneficiary, but other corporate sectors are helped as well.
- Major corporations are massively subsidized at state and local level to locate in the area. The total annual cost of all these concessions reportedly adds up to $100 billion.
- Major corporations inflict huge environmental and infrastructure costs on the nation which they don’t pay for. Instead, the tab is picked up by the taxpayer. They are also dumping pension obligations and medical costs at a truly alarming rate.
This list is not comprehensive—and would benefit from a great deal more work—but even this quick and dirty look suggests that corporations are not paying their way, and that it is, indeed, Christmas every day for most of them.
But surely the major corporations are really owned by us all?
If you believe that, I’ve got a city I want to sell you. It’s called Detroit—and you can have it real cheap.
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