Moral Obligations of Personhood

 

Elizabeth Warren has a big idea. She wants to nationalize a large swath of the economy. No, really. She has introduced the “Accountable Capitalism Act” [pdf] a bill that will surely go nowhere, but — were it to become law — would require companies with more than $1B in revenue to obtain charters as United States corporations. The charters would create all sorts of batty legal obligations for big corporations. I recommend at least reading the one-page summary linked. This thing is a doozy.

Matt Yglesias at Vox is obviously excited over the idea because this monstrosity would “redistribute trillions of dollars from rich executives and shareholders to the middle class.” Kevin Williamson is less sanguine about the proposal because “it would constitute the largest seizure of private property in human history.” I see it as neither the great hope of humanity nor the end of America as we know it because there is no way something like this could happen in one bill. I’m curious, however, about this statement from the explainer:

American corporations tried to balance the interests of all of their stakeholders, including employees, customers, business partners, and shareholders. But in the 1980s, corporations adopted the belief that their only legitimate and legal purpose was “maximizing shareholder value.”

Yglesias refers to this shift back to a fanciful state of egalitarianism as “the moral obligations of personhood.” As he further explains:

The conceit tying together Warren’s ideas is that if corporations are going to have the legal rights of persons, they should be expected to act like decent citizens who uphold their fair share of the social contract and not act like sociopaths whose sole obligation is profitability — as is currently conventional in American business thinking.

The idea that corporations focus only on profit to the detriment of everything else is where the error of this thinking can be found. It fails to recognize the synergy (I really hate that word) between corporate behavior and profit. Amazon didn’t get as big as it is by enslaving its workers or abusing its customers. Warren and company think corporations serve only their shareholders at the expense of the “public interest,” but they utterly fail to see that the only way corporations can deliver the goods to their shareholders is by discovering and slavishly serving the public interest. As Kevin Williamson explained eight years ago:

Private enterprises, and businesses especially, usually do serve something that might deserve to be called the public interest or the common good, because they create social value. How do we know they create social value? Mostly because of this so-obvious-it’s-ingenious, but still kind of counterintuitive, idea that comes from economics: If people in society did not in fact value what these businesses were producing, they would not give them their money. Social value = the stuff society actually values. The counterintuitive part, at least for you guys who graduated near the top of your classes at very prestigious law schools and made a lot of money in litigation or bond-counsel work or whatever but have not spent a lot of time selling hotdogs or landscaping or painting houses, is this: Profits are evidence of the creation of social value, not deductions from the sum of the common good

Businesses do not create social value because they really want to, usually…

But normally, businesses create social value as a byproduct of the relentless Darwinian pursuit of profit — and the ones that fail to create much social value do not achieve much profit.

The socialists on the left (one might reasonably refer to them as fascist because they now propose implicit rather than explicit control of the means of production) miss the main point of capitalism: mutually beneficial, voluntary exchange. No corporation is using the threat of violence to engage in trade with individuals against their will. That authority resides only in government, and government is the entity Warren wants to bring to bear on these voluntary exchanges. She wants to remove the one motivation corporations have to serve the public interest. We see how well that worked with healthcare. It turned out that both parties to the transactions required a government mandate for the exchanges to occur.

I don’t fear this bill passing. There are too many structural safeguards in our system to prevent spectacularly bad ideas from becoming law barring extraordinary events like the Dems controlling all elected branches of government with a filibuster-proof majority in the Senate. I do, however, fear these ideas taking root. Yes, corporations should always strive to be better “persons.” But, the way to bring this about is more capitalism, more mutually beneficial voluntary exchanges between individuals and corporations, not the arbitrary hand of government.

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  1. David Carroll Thatcher
    David Carroll
    @DavidCarroll

    The moral obligations of personhood should include not stealing from folks, shouldn’t it?  This bill includes theft by regulation.

    Moral?  Hardly.

    • #1
  2. The (apathetic) King Prawn Inactive
    The (apathetic) King Prawn
    @TheKingPrawn

    David Carroll (View Comment):

    The moral obligations of personhood should include not stealing from folks, shouldn’t it? This bill includes theft by regulation.

    Moral? Hardly.

    I’m sure the moral language is just window dressing for a blatant power grab. Williamson nailed it by writing:

    It is worth keeping in mind that the fabulous goose was slaughtered not in spite of the golden eggs but because of them. Politicians are covetous. When the owners of Apple wish to hold on to their own after-tax earnings, they are denounced as greedy. (Apple’s shareholders are corporately the largest taxpayer in the world.) When Elizabeth Warren wants to seize those earnings for her own use, what is that? It is covetousness, which is what you get when you have greed compounded with envy.

    • #2
  3. Al French, sad sack Moderator
    Al French, sad sack
    @AlFrench

    Main feed!

    • #3
  4. Hoyacon Member
    Hoyacon
    @Hoyacon

    “American corporations tried to balance the interests of all of their stakeholders, including employees, customers, business partners, and shareholders. But in the 1980s, corporations adopted the belief that their only legitimate and legal purpose was “maximizing shareholder value.” [Yglesias]

    It appears that somewhere along the line I picked up the wacky idea that public corporations owed a fiduciary duty to their owners (aka, shareholders) to maximize value. I’ll have to go read up on that.

    • #4
  5. David Carroll Thatcher
    David Carroll
    @DavidCarroll

    Hoyacon (View Comment):

    “American corporations tried to balance the interests of all of their stakeholders, including employees, customers, business partners, and shareholders. But in the 1980s, corporations adopted the belief that their only legitimate and legal purpose was “maximizing shareholder value.” [Yglesias]

    It appears that somewhere along the line I picked up the wacky idea that public corporations owed a fiduciary duty to their owners (aka, shareholders) to maximize value. I’ll have to go read up on that.

    You capitalist!

    • #5
  6. Frank Soto Member
    Frank Soto
    @FrankSoto

    Hoyacon (View Comment):

    “American corporations tried to balance the interests of all of their stakeholders, including employees, customers, business partners, and shareholders. But in the 1980s, corporations adopted the belief that their only legitimate and legal purpose was “maximizing shareholder value.” [Yglesias]

    It appears that somewhere along the line I picked up the wacky idea that public corporations owed a fiduciary duty to their owners (aka, shareholders) to maximize value. I’ll have to go read up on that.

    Matty Y at Vox addresses this, and seems to blame Milton Friedman for this mentality.  Because apparently before Friedman the profit motive didn’t exist.

    • #6
  7. The (apathetic) King Prawn Inactive
    The (apathetic) King Prawn
    @TheKingPrawn

    Frank Soto (View Comment):

    Hoyacon (View Comment):

    “American corporations tried to balance the interests of all of their stakeholders, including employees, customers, business partners, and shareholders. But in the 1980s, corporations adopted the belief that their only legitimate and legal purpose was “maximizing shareholder value.” [Yglesias]

    It appears that somewhere along the line I picked up the wacky idea that public corporations owed a fiduciary duty to their owners (aka, shareholders) to maximize value. I’ll have to go read up on that.

    Matty Y at Vox addresses this, and seems to blame Milton Friedmon for this mentality. Because apparently before Friedman, the profit motive didn’t exist.

    Because before Friedman we bought and sold things for the feels.

    • #7
  8. KentForrester Coolidge
    KentForrester
    @KentForrester

    David Carroll (View Comment):

    Hoyacon (View Comment):

    “American corporations tried to balance the interests of all of their stakeholders, including employees, customers, business partners, and shareholders. But in the 1980s, corporations adopted the belief that their only legitimate and legal purpose was “maximizing shareholder value.” [Yglesias]

    It appears that somewhere along the line I picked up the wacky idea that public corporations owed a fiduciary duty to their owners (aka, shareholders) to maximize value. I’ll have to go read up on that.

    You capitalist!

    Let’s go further and use the words of the greatest mass murderer in history, Mao Zedong:  “You capitalist running dog!”

    • #8
  9. Hoyacon Member
    Hoyacon
    @Hoyacon

    KentForrester (View Comment):

    David Carroll (View Comment):

    Hoyacon (View Comment):

    “American corporations tried to balance the interests of all of their stakeholders, including employees, customers, business partners, and shareholders. But in the 1980s, corporations adopted the belief that their only legitimate and legal purpose was “maximizing shareholder value.” [Yglesias]

    It appears that somewhere along the line I picked up the wacky idea that public corporations owed a fiduciary duty to their owners (aka, shareholders) to maximize value. I’ll have to go read up on that.

    You capitalist!

    Let’s go further and use the words of the greatest mass murderer in history, Mao Zedong: “You capitalist running dog!”

    With all respect to the Chairman, I’m pretty much of a capitalist walking dog these days.

     

    • #9
  10. Frank Soto Member
    Frank Soto
    @FrankSoto

    The more I think about this “plan” (it’s really just a cynical way to move so far to the left that no one can outflank her in the 2020 primaries) the more I think Kevin framing this as nationalization is wrong.  At the core of this is an attempt to remove the profit motive from capitalism.  Leave all of the components of capitalism in place, but change it’s operating principle.

    The problem of course is the the profit motive directs you to the price signals that make the whole system work.  It’s like taking an internal combustion engine and replacing the gas with water.

    • #10
  11. Terry Mott Member
    Terry Mott
    @TerryMott

    The (apathetic) King Prawn:

    The socialist on the left (one might reasonably refer to them as fascist because they now propose implicit rather than explicit control of the means of production) …

    This is the textbook definition of fascism, at least as I learned it in my youth: state control of the means of production, while it nominally remains in provide ownership.

    Why is this not regularly called out as explicitly fascist by the various pundits writing about it?  In particular, why didn’t Williamson point this out in his column?

    It’s fascist!  It’s fascist!  It’s fascist!

    • #11
  12. SkipSul Inactive
    SkipSul
    @skipsul

    The (apathetic) King Prawn:

    The conceit tying together Warren’s ideas is that if corporations are going to have the legal rights of persons, they should be expected to act like decent citizens who uphold their fair share of the social contract and not act like sociopaths whose sole obligation is profitability — as is currently conventional in American business thinking.

    The idea that corporations focus only on profit to the detriment of everything else is where the error of this thinking can be found. It fails to recognize the synergy (I really hate that word) between corporate behavior and profit.

    You miss the other massive error Yglesias makes: persons are not obligated to uphold their share of the social contract either.  At least not as he seems to define “their share of the social contract”, which I take to mean things like altruism, community service, charity, whatever.  The entire point of charity or altruism is that it is voluntary for individual persons too.  Yes, it is great when a community all chips in to solve some problem or other, or to provide food, clothing, shelter, or money to the needy, or to volunteer, but these things are not legal obligations.  We do not compel individual persons to serve others, and by extension we do not compel businesses either.

    • #12
  13. Frank Soto Member
    Frank Soto
    @FrankSoto

    In so many ways this is worse than Bernie’s medicare for all plan which, with unrealistically low estimates comes to 32 Trillion over 10 years.  It is at least a thing that could be done.  Warren’s idea is incomprehensible when you try to work out the specifics. 

    Employees can sue if they think a company is not looking out enough for their interests?  If I was a company on the verge of a billion in revenue I would be doing everything in my power to avoid hiring anymore human beings.  You’re successful business can be brought down by litigation out of no where simply because employees can’t read a budget.  The business doesn’t even need to lose the lawsuits, just get hit with enough of them.

    Now I’m viewing this as Warren’s attempt to defacto unionize the entire workforce.

    • #13
  14. Henry Racette Member
    Henry Racette
    @HenryRacette

    What part of “zero-sum” don’t you understand?

    Prawn, I do not know whether it is your glaring economic ignorance that inspired this post, or something much darker and more atavistic, perhaps rooted deeply in your crustaceous nature.

    Elizabeth Warren’s Native American ancestors made pre-Columbian America great precisely with the kinds of policies Ms. Warren has put forth. It was such woke thinking that finally brought Big Bison to heel, and that, until the fateful arrival of cis-European invaders, secured ever-increasing prosperity for the noble savage.

    This continent knew Two-Spirit marriage centuries before Obergefell, my friend. Empowered squaws worked with quiet dignity beside androgynous mates; toxic masculinity and global warming arrived with the European invaders  and their monotheistic, Earth-rejecting dogma. Also whiskey.

    I wonder if the Warren bill would apply to casino gambling.

    • #14
  15. SkipSul Inactive
    SkipSul
    @skipsul

    Frank Soto (View Comment):

    In so many ways this is worse than Bernie’s medicare for all plan which, with unrealistically low estimates comes to 32 Trillion over 10 years. It is at least a thing that could be done. Warren’s idea is incomprehensible when you try to work out the specifics.

    Employees can sue if they think a company is not looking out enough for their interests? If I was a company on the verge of a billion in revenue I would be doing everything in my power to avoid hiring anymore human beings. You’re successful business can be brought down by litigation out of no where simply because employees can’t read a budget. The business doesn’t even need to lose the lawsuits, just get hit with enough of them.

    Now I’m viewing this as Warren’s attempt to defacto unionize the entire workforce.

    That’s a frightening thought unto itself.

    As it is, businesses like mine already run as lean as possible to avoid the various regs that kick in when you hit 25 or 50 employees.  Warren’s bat-guano idea would drive businesses to automate even more madly, and to move even more assets offshore to avoid capture.  

    • #15
  16. Frank Soto Member
    Frank Soto
    @FrankSoto

    Can you imagine the stockmarket crash if this thing was actually close to passing?  If shareholders are no longer who the company is working for, why be a shareholder?

    • #16
  17. Misthiocracy, Joke Pending Member
    Misthiocracy, Joke Pending
    @Misthiocracy

    Corporations do not enjoy all the same rights and privileges as other “persons”.

    Not every corporation that earns zero income is entitled to welfare payments, for example.  Only those precious few corporations who are preferred by government elites are so fortunate.

    I could maybe support Warren’s idea if it were only applied to corporate welfare bums.  Those corporations just might need a jolt of “personal” responsibility.

    • #17
  18. The (apathetic) King Prawn Inactive
    The (apathetic) King Prawn
    @TheKingPrawn

    Misthiocracy, Joke Pending (View Comment):

    Corporations do not enjoy all the same rights and privileges as other “persons”.

    Every corporation that earns zero income is not entitled to welfare payments, for example. Only those precious few corporations who are preferred by government officials are so fortunate.

    Read the second Williamson article linked in the OP (I read it at least yearly.) It explains how such corporate welfare comes about. It spews forth from the good hearts of ignorant bureaucrats who have no idea what they’re doing.

    • #18
  19. rgbact Inactive
    rgbact
    @romanblichar

    Unions have led to a pile of destruction in corporate America. This has resulted in them largely being driven out of the private sector. Theres ample evidence that running a corporation for shareholders leads to better results than running it for the employees, long term. Not sure if that applies in other countries.

    • #19
  20. Misthiocracy, Joke Pending Member
    Misthiocracy, Joke Pending
    @Misthiocracy

    David Carroll (View Comment):

    The moral obligations of personhood should include not stealing from folks, shouldn’t it? This bill includes theft by regulation.

     

    By implication, the federal government isn’t a legal person.

    • #20
  21. Fake John/Jane Galt Coolidge
    Fake John/Jane Galt
    @FakeJohnJaneGalt

    Why billion dollar corps?  Why not million dollar corps?

    • #21
  22. Frank Soto Member
    Frank Soto
    @FrankSoto

    Fake John/Jane Galt (View Comment):

    Why billion dollar corps? Why not million dollar corps?

    Inflation will eventually take care of that.

    • #22
  23. The (apathetic) King Prawn Inactive
    The (apathetic) King Prawn
    @TheKingPrawn

    Fake John/Jane Galt (View Comment):

    Why billion dollar corps? Why not million dollar corps?

    May impact her donors if she lowers the bar too far.

    • #23
  24. Western Chauvinist Member
    Western Chauvinist
    @WesternChauvinist

    The Democrats’ platform for 2020: To create wealth, kill more babies. Then steal people’s earnings to make society more “fair.”

    You can’t make this shtuff up.

    • #24
  25. Susan Quinn Contributor
    Susan Quinn
    @SusanQuinn

    I was just thinking that a lot of this stuff is about every kind of violation of boundary management you can think of, whether it’s the country’s borders/boundaries, our personal economic, spiritual and intellectual boundaries. They are meaningless to people on the Left. Unless we’re talking about their boundaries–then watch out! 

    • #25
  26. Jim McConnell Member
    Jim McConnell
    @JimMcConnell

    Frank Soto (View Comment):
    Frank Soto  

    Fake John/Jane Galt (View Comment):

    Why billion dollar corps? Why not million dollar corps?

    Inflation will eventually take care of that.

    For confirmation of that, see today’s headlines: Venezuela just lopped five zeros off their currency denominations. That’s a good cure for inflation, isn’t it?

    • #26
  27. Henry Racette Member
    Henry Racette
    @HenryRacette

    Jim McConnell (View Comment):

    Frank Soto (View Comment):
    Frank Soto

    Fake John/Jane Galt (View Comment):

    Why billion dollar corps? Why not million dollar corps?

    Inflation will eventually take care of that.

    For confirmation of that, see today’s headlines: Venezuela just lopped five zeros off their currency denominations. That’s a good cure for inflation, isn’t it?

    In fact, that technique does work to curb inflation.

    For about eight minutes.

    • #27
  28. Hammer, The (Ryan M) Inactive
    Hammer, The (Ryan M)
    @RyanM

    The (apathetic) King Prawn: American corporations tried to balance the interests of all of their stakeholders, including employees, customers, business partners, and shareholders. But in the 1980s, corporations adopted the belief that their only legitimate and legal purpose was “maximizing shareholder value.”

    This quote should come as news to anyone who as ever read Dodge vs. Ford Motor Company; a case decided in 1919.

    The ruling of that case was, essentially, that a corporation (by its very nature) is legally obligated to “maximize shareholder value.”  A company might effectively do this by engaging in charitable activities or by lowering costs for consumers, but that is always the end goal.  Even so-called “morally conscious” businesses are always thinking about profit-maximization.  You think Starbucks or Apple or whatever else is just being “morally conscious” and trying to balance their obligations to their communities?  Wrong.  Every so-called charitable move is a highly-calculated PR decision, and the minute it doesn’t pay off, it goes away.

    • #28
  29. Hammer, The (Ryan M) Inactive
    Hammer, The (Ryan M)
    @RyanM

    Frank Soto (View Comment):
    American corporations tried to balance the interests of all of their stakeholders, including employees, customers, business partners, and shareholders. But in the 1980s, corporations adopted the belief that their only legitimate and legal purpose was “maximizing shareholder value.”

    As it will my student loans, thank God.  I’ve been keeping a loaf of bread in the freezer to pay off my student loans after Warren gets elected.  Fingers crossed!

    • #29
  30. TheSockMonkey Inactive
    TheSockMonkey
    @TheSockMonkey

    The conceit tying together Warren’s ideas is that if corporations are going to have the legal rights of persons, they should be expected to act like decent citizens who uphold their fair share of the social contract and not act like sociopaths whose sole obligation is profitability — as is currently conventional in American business thinking.

    Perhaps more context would clear this up, but he seems to suggest that corporations are currently free to do just as they please, while individual citizens are legally bound to do exactly what Faux-cahontas wants them to do.

    That would be a variation on the usual left-wing tendency to equate anything short of Soviet-style central planning with a total lack of any legal limits of any kind.

    • #30
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