Diatribes of Jay

This is a blog of essays on public policy. It shuns ideology and applies facts, logic and math to economic, social and political problems. It has a subject-matter index, a list of recent posts, and permalinks at the ends of posts. Comments are moderated and may take time to appear. Note: Profile updated 4/7/12

07 March 2008

Response to CJCalgirl


This is the first time that a comment inspired me to write a whole post.

In a belated response to my Dream Team post, which went up last November, a reader calling herself “CJCalgirl” posed the following questions:
    Dear Jay, Would you share your thoughts about Supreme Court appointments and the restructuring of the Justice Dept. Surely there must be a place for John Edwards, Al Gore, and Dennis Kucinich. What can we do regarding the personification of corporations in our Federal Courts? I believe it is wrong to treat corporations as if they were a single citizen defendant, when that allows them to avoid responsibility for damages. Sorry for the ramble, but your site is truly exciting and I’ve told many people about you because you are a rarity of intellect. Thanks again! CJCalgirl
Here’s my answer:

Dear CJCalgirl:

I’m glad that my “Dream Team” post is finally getting some hits.

The expectation of powerful appointments to the Cabinet is one of the most important reasons I support Obama. He seems a secure and well-grounded human being, and he is one of the smartest people I have ever seen in national politics. So I expect him not to flinch at appointing people as smart and politically powerful as he, just as Lincoln did in facing the prospect of civil war.

In contrast, I think Hillary would do what Bill did—appoint people who are bright but have no independent political power or constituency. Robert Reich (Bill’s Secretary of Labor) seemed the brightest of them, but he was and is an academic with little political skill and no independent constituency. Although Madeleine Albright did a passable job as Secretary of State, she seemed grossly underqualified to me: she speaks English much like Dubya.

People like Reich and Albright, who would never have achieved similar positions or prominence without the “lightning strike” of an appointment, often have trouble exercising independent judgment when the chips are down. We learned that lesson the hard way with Alberto Gonzales, and I hope we won’t have to repeat it. The stakes are too high now.

On Supreme Court appointments, I’ve already written two posts. One suggests that Chief Justice Roberts might be a man for the times. Another concludes that Dubya deliberately exaggerated Roberts’ and Justice Alito’s right-wing proclivities in order to energize his radical Republican base.

So far I’ve been disappointed in the Roberts Court’s narrow and technical approach to great issues like torture and habeas corpus. But I hope that Roberts, once he masters his role, may take on the task of preserving democracy. He certainly has the intelligence and political skill to do so. It sometimes requires a few years for the reality of life tenure to sink in and for justices to take seriously their most important role: preserving the legacy of the Magna Carta and the Constitution for future generations.

The question that you raise about corporations’ role in society is a vital one. In fact, it is one of the chief issues of our day.

Corporations are one the greatest social inventions in human history. By exercising a sort of mini-“sovereignty”—albeit for limited purposes—they disperse real power in society, taking advantage of great talent in areas other than politics. (Bill Gates, for example, helped build the PC industry, but would you want him as president?) Corporations are the prinicipal means by which modern, liberal economies have managed to decentralize almost entirely.

It was corporations, not Columbus, that really “discovered” America in the sense of realizing its vast commercial potential. Throughout the world, the most successful and least brutal colonization regimes were those of the English and the Dutch, who colonized primarily through corporations. Wherever business corporations have had relative freedom of action, and have not been overly burdened by taxes and regulation, societies have been the most productive and prosperous. Corporations are one reason why Northern Europe and English-speaking nations have led the world in productivity and wealth for several centuries.

I hope I don’t seem starry-eyed about corporations. I’m emphasizing their benefits here because most Democrats have trouble seeing the benefits. Politicians like John Edwards rail against the corporations that produce the drugs that cure us, the cars we drive, the food we eat, the planes we fly in, the computers and Internet we use to communicate, the TVs we watch, the music that cheers us when we are low, and virtually every physical manifestation of the “good life” we lead.

If you rail against corporations, you are railing against the source of our wealth and prosperity.

But corporations also create awful social problems, like the release of poison gas in Bhopal, the Exxon Valdez disaster, the Blackwater debacle in Iraq, and the current mortgage-credit crisis. The challenge for this century is how to retain the extraordinary economic benefits of corporations while curbing their excesses.

State ownership of business is not the answer. The abject failures of the Soviet Union and “Red” China proved that. So far, we’ve discovered only two ways to curb corporations without killing the goose that lays the golden egg.

One is litigation. Unfortunately, litigation is terribly slow and inefficient. It also can produce bizarre results: injured plaintiffs become wealthy while society continues to suffer, at least until the next lawsuit.

The other well-established means of curbing corporations is regulation. It worked well in the last century, but it’s beginning to reach its limits. Society and corporate activities have become so specialized and complex that it no longer makes sense for politicians or generalists to try to control and “command” business activities in detail. Neither they nor the people who vote for them have the necessary expertise. Would you want Dubya or Congress, for example—or even a committee of political appointees—telling Steve Jobs or Bill Gates how to design software and computer devices?

In my view, the most promising fresh alternative to litigation and regulation is for government to arrange economic incentives for corporations to “do the right thing” and then stand back and let them do it. The tradable “carbon credits” now being used to address global warming provide an example of this model.

Although enlightened private industry began trading carbon credits without government involvement, the expectation of government mandates is what gives the credits economic value today. Business people (including the traders) rightly expect any new administration to take global warming seriously and to impose some sort of legal regime that gives carbon credits real value and therefore provides powerful incentives to conserve energy and seek alternatives to fossil fuels.

Incentive-based approaches may help solve some problems that corporate excesses create, but there is no easy solution for the most dangerous problem: corruption. Corporations necessarily control most of the wealth in our society because they create it. If we allow their wealth to control our political processes, too, there will be no way for society to direct corporate action away from socially damaging self-interest and toward long-term goals. Moreover, as corporations acquire and wield more political power, we may lose our Democracy just as the ancient Romans lost theirs.

In this respect many Republicans, libertarians and our Supreme Court are fundamentally misguided. Money isn’t speech. Corporations don’t have ideas or human needs; people do. Corporations are just legal abstractions with no flesh-and-blood reality. They act only through their officers and employees. The law shouldn’t treat them like people.

Likewise the law shouldn’t treat money as speech under the First Amendment, whether the money comes from corporations or individuals. Doing so simply gives rich and powerful people more speech and more political power. That approach subverts both democracy and the horizontal “free marketplace of ideas” that the First Amendment is supposed to foster.

Barack Obama and John McCain both understand the danger of corruption in their bones. They know how the political power of corporations and the rich gravely threatens democracy and rational long-term social policy. Hillary Clinton doesn’t seem to have a clue. That’s one of the most important reasons why I’ve never thought much of her, and why I’ll probably vote for McCain if she wins the Democratic nomination.

Jay

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