Are we governed by the electorate or by CEOs?

Indiana’s quick modification of the Religious Freedom Restoration Act shows much clout corporate CEOs have when a state government does something that displeases them.

Many of us liberals worry about the power of the so-called religious right.  But what happened in Indiana shows who holds the real power.

I’m glad the law was modified.  I think it went beyond the legitimate purpose of not forcing people to support or participate in religious rites they don’t believe in.  But I’m not happy about how easily CEOs of large corporations can force elected officials to cave in when they displease the CEOs.

Of course there’s no way of knowing whether the CEOs were bluffing or making symbolic gestures or threatening to do things they were planning to do anyway.  I doubt that institutional investors would tolerate a CEO doing something that would reduce profits just for reasons of personal conviction.

LINKS

A CEO champions gays (and CEOcracy): “The Party of CEOs” is emerging by Steve Sailer for the Unz Review.

The Hypocrisy of Mark Benioff and Co. by Rod Dreher for The American Conservative.

Should Mon and Pops That Forgo Gay Weddings Be Destroyed? by Conor Friedersdorf for The Atlantic.

Indiana and the Constitution by Andrew Napolitano for the Unz Review.  Why the law needed to be changed.

Corporations as privately-owned governments

A large corporation is not like a person.  It is like a government, a privately-owned government.   We Americans make a big mistake when we fail to realize this.

Our American tradition tells us to be suspicious of the power of governments.  We try to limit the government power by means of a written Constitution, and separation of governmental powers among three branches of government and between Washington and the states.   We tend to value individual rights more highly than the common good.

We don’t  have a good way of fitting corporations into this way of thinking.

A public, limited liability corporation is an institution with special privileges and powers established by law, in order to allow people to combine their wealth to accomplish a common purpose.

The power of the corporation comes from the principle of limited liability.  Investors in a company are not responsible for the obligations of the company beyond the amount of money they have put in.   That gives corporate owners a huge advantage they would not have enjoyed as individuals.

This is a good thing when the purpose aligns with the public good, as sometimes happens but not always.   Big American corporations historically have been strong engines of economic growth.   They’ve also been dangerous concentrations of monopoly power and sources of political corruption.

American leaders in the era of Theodore Roosevelt and Woodrow Wilson understood this well.  They enacted anti-trust laws so that corporations were subject to the discipline of competition.  They set up systems of regulation to prevent executives from advancing corporate interests at the expense of the public.

Starting in the late 1970s and early 1980s, American leaders forgot this.  They thought that anti-trust laws and government regulation held corporations back [1] and experimented with giving corporations free rein.

Many adopted the philosophy of Milton Friedman, which was that since the working of the free market produced the optimum result, there was no need to consider anything else.

We’re now living in the results of that experiment.

Corporate power and impunity

Source: Transnational Institute