Trustbusting 2.0?

As a friend of mine said to me last week, it seems the economic team advising Obama has an unfortunately limited imagination. This limited imagination leads to a limited range of kinds of responses, as all are tied to "getting back to where we were" or "recovering,"--even in the language used there are metaphors of recreating a past, or healing something like a hurt shoulder--recovering after bypass surgery-- instead of creating a different kind of future.

One of the things I hope to do, blogging here over the next month, is try to be imaginative, and hopefully learn from the readers here about a much greater range of ideas about how we might choose to organize our economy: how we organize how things are made, how people are paid, and how risks are punished and rewarded. I think our short term solutions and responses ought be tied to long term structural protections against similar crises.

Recently, much of my thinking has involved antitrust policy. Instead of imposing after-the-fact regulations on corporations, why not pass a new antitrust policy that limits the size to which companies can grow? Current antitrust law limits a variety of anticompetitive behaviors, like price fixing, and is focused on consumer welfare and market manipulation. But antitrust could become a tool for limiting size qua size, not just size when it becomes anticompetitive. It would require a major overhaul, but in the long term a size-based antitrust policy might actually be simpler than the complicated and often unworkable measures of market share and examinations of inchoate consumer needs.

Why? Because economies of scale, which work well for creating widgets, are very dangerous when it comes to influencing political decision-making. Political power amassed by concentrated financial power leads to serious distortions in political decision-making, so that Congress can pass absurd, non-responsive legislation that gives illogical copyright extensions, dangerous environmental licenses, and tax breaks to those who least need it. Antitrust law now limits anticompetitive behavior as between companies within an industry; it could limit corporate power in the political sphere by creating a default maximum size.

Basically, we might want to use antitrust to create collective action problems for business--coordination difficulties and freerider threats--such that companies would be more likely to spend their energies on productive behavior instead of on political influence to modify the rules of the game. I recognize that this would lead to some less efficient production of goods in some areas, but that the cost of this inefficiency is worthwhile.

We enable corporate charters to make us healthier and happier. We believe that without corporate charters, and limited liability, people would not take risks and invest in inventions and infrastructures that improve our lives. There is nothing necessary or innate about the particular corporate form that is now the norm; it is only worth keeping as long as it serves our collective purposes, and we should constantly be remodeling it to ensure that it does serve those ends.

So when it turns out our creation is making us less healthy, happy, and secure, we ought consider tinkering with the shape and size. Efforts to limit corporate power over political processes via campaign finance reform have had limited successes at best (except perhaps public funding programs--but that's a different article).

The connections to the current crisis are obvious: a new antitrust policy, one that takes scale into account, would protect against any corporation becoming to big too fail. It would also protect against some of the systematic lobbying, direct and indirect, of Congress by the major companies. But it might also lead to a society where more people are closer to having a meaningful voice in the company in which they work, which itself has positive political side effects; as John Stuart Mill argued 150 years ago, it is hard work to take a cog in a machine and turn him into a citizen a few days a year, but if someone, in their personal, professional, and familial life is accustomed to making judgments and exercising power, the leap to being a collective political decisionmaker is not so great.

Antitrust is not the only solution, but its a kind of solution that I'd like to hear more about. This crisis ought to cause us to rethink the nature of the institutions we want to exist, not simply the after-the-fact behavior regulations of those institutions. (While the difference between institutional shape and regulation may sound semantic, I think its not, and in debating institutions in terms of What They Are instead of What They Can Do will lead to a productive, collective conversation about what we value, and the kind of world we want to live in.)

As Teddy Roosevelt said, "The great corporations ... are the creatures of the State." If these creatures are causing massive instability, inequality, or environmental ruin, then we ought modify them. Importantly, this is not an anti-corporate argument (to be anti-corporate actually buys into the reification of the corporation as it currently exists.) I happen to think corporations serve incredibly valuable social purposes. But those values are radically limited if we stop understanding the corporate form as deeply flexible, putty in our hands if we want it to be--a flexible tool for human, democratic, societal ends.

Comments (39)

1. Your article, ZT, calls to mind a beloved old sage, E. F. Schumacher. SMALL IS BEAUTIFUL, indeed!

   Shrinking down the corporations to a manageable size would be a boon for competitiveness and for democracy. Perpetually busting not only trusts, but also corporations that get too big (as they can hardly avoid doing) would be a small headache, but not as large a headache we have now dealing with these "too big to fail" monsters.

   The barriers to this recommendable reform are merely ideological, but they are formidable. They include the notion that big is good, which plutocrats ascribe to corporations, but not to governments, a glaring inconsistency that they are trained not to notice. The corollary to this rule is that bigness should be a reward for goodness, so that we are unjustly punishing the best corporations by keeping them small. This may be a variant of the "personification" problem: We regard corporations as if they were living persons who needed to be rewarded with growth in order to be motivated to continue to do good work, rather than artificial entities made up of people who can be adequately rewarded as individuals with varying degrees of prosperity. The "states' rights" argument is a similar deception and a similar barrier to progress.

   Posted by JakobFabian at 04/08/2009 @ 06:41am

2. I wonder whether taxing corporations on a progressive curve on the basis of their size would achieve the same end as simply imposing a limit on size. Indeed, maybe this reform would work even better, because it would create a gradually increasing counter-pressure to grow as a corporation got bigger.

   However, I don't quite understand how the "size" of a corporation would be measured. Would it be the corporation's income divided by the number of employees? This would be the best measure for tax purposes, though it would still allow a corporation to have an unlimited number of employees and would therefore fail to limit its growth.

   In order to limit the number of a corporation's employees, we would have to make this a separate factor in measuring its size. But we'd have to be careful here. Aren't some corporations by necessity more labor-intensive than others? It wouldn't be fair or practical to punish a corporation as "bigger" just because it needs to employ more people than a more mechanized corporation that has only a few people and a lot of machines, possibly including machines that pollute or that degrade the environment.

   Sorry about bringing up these devilish details, but this is the creature that I am.

   Posted by JakobFabian at 04/08/2009 @ 06:52am

3. Zephur, I agree with you that something different must be done. Evidence of that is in the news currently. The pentagon wishes to slow down the production of F-22 fighters. I'm not a big defense spending proponent, but I do think the Pentagon has a pretty good idea about what types of weapons the military needs to meet it's oblgations more than congressmen on the take.

   Watch carefully how many from Congress come out of the wood work to defend their "owners" against Gates' proposals. This truly shows how defense contractors have permeatted our national political scene to the point where they tell our government how much money should be spent, and to who that money should go.

   Anti-trust legislation would be a start, but anti-graft laws need to be strengthened and enforced as well.

   Posted by Wolfgang1 at 04/08/2009 @ 07:00am

4. Another "gradualist" variant of growth-limiting reforms might be to increase a corporation's responsibility according to its size. In this case, we could forget about the mere number of employees a corporation has, because as it acquires more of them, it would have to do more things for them, such as provide nice pensions. The corporations income divided by the number of employees could be the determiner of its size.

   Using this definition, we could increase the responsibilities of larger corporations for environmental efficiency. This would be both practical and just, because the economies of scale apply to pollution and waste production just as they apply to everything else. We could require a more socially responsible pattern of investment from larger corporations, which of course have more money to invest. We could require that larger corporations be unionized, while exempting smaller ones from this rule. Affirmative-action rules for workplace diversity would also become stricter for bigger corporations.

   This reform would operate on the "Spiderman's Uncle Ben" principle: With great power comes great responsibility.

   Posted by JakobFabian at 04/08/2009 @ 07:01am

5. I think the purpose of your new blog is a long time coming. Before Anti-trust is even on the table, however, we should examine the reinstatement of Glass-Steagall or the repeal of Gramm-Leach-Bliley and the Commodities Futures Modernization Act. This will immediately hinder the ability of financial institutions to become "too big to fail" and eliminate the abilty to gamble with non-investment capital, or personal savings and loan transactions. This would also remove the temptation to insure risky investments against default or push "ghost" loans on those most likely to be denied loans when proper checks on credit history and employment are made.

   I also think a maximum 25 to 1 ratio on CEO or other executive pay vs. the lowest paid employees' salaries is now prudent. If policy can dictate the minimum hourly wage for which an employee can support him or herself (yeah right, at 5 something an hour), policy can also dictate the maximum. If executives want to live the yacht lifestyle, they'd have to bring up the bottom with them. Cons can call this socialism if they want, but 25 to 1 is still a healthy incentive for any would-be executive.

   Posted by HAL9000 at 04/08/2009 @ 07:11am

6. I remember recently a small town in Wisconsin whose residents were trying to stop the building of a new Wal-Mart. All kinds of restrictive ordinances were proposed, most of them having to do with square feet of floor space, because the most common epithet used against Wal-Mart and its ilk was "big-box store."

   I remember thinking that this was a mostly esthetic criterion that could be dismissed as a trivial concern of comfortable elites, whereas true blue-collar folks would be happy to accept a new place of work, no matter how unsightly. So I came up with another proposal: Why don't we just require Wal-Mart to accept a union? That would be an ethical rather than esthetic criterion, and it would explicitly take the side of the workers. Of course, the likely short-term effect of this proposal would be to make Wal-Mart run the other way, which is what these small-town residents wanted, anyway.

   Of course, bigness is not always merely an esthetic criterion; at a certain point it becomes ethical as well, because a corporation of a monstrous size respects no human scale and bows to no merely human government. Among other measures, square feet of floor space might be useful to help determine a corporation's size, provided that it was not agricultural. Naturally, it wouldn't be fair to punish farmers or ranchers using this measure, because they require a lot of land by necessity. Still, a bigger farm (by acreage) might be subject to stricter environmental regulations, such as runoff rules.

   Posted by JakobFabian at 04/08/2009 @ 07:17am

7. Thanks for all the great comments so far. I think the idea of a graduated proposal is very interesting--and I agree with Hal on the need for those preliminary reforms.

   To be clear, also, I do not think of this as an aesthetic matter at all, but a recognition of economic power in terms of political power. I think those that imagine economic power existing without understanding that in political terms are frankly naive. In some ways, the challenge that I--and you, and several others--are bringing is a challenge to the very idea of "economics" as a segregated field, separate from politics.

   This is not a "small is beautiful" argument, but a "big is politically dangerous" one.

   Posted by zephyrteachout at 04/08/2009 @ 07:51am

8. "As Teddy Roosevelt said, "The great corporations ... are the creatures of the State.""

   "TR obviously another Commie Demon-crat like his cousin Franklin!"---Posted by comanche soon@anytime

   "RIO, he was a Republican."

   "Look at this article I C&P'ed from the Heritage Foundation on how Obama is going to force you to inflate your tires!"----Posted in embarassment by comanche soon@after.

   Posted by Mask at 04/08/2009 @ 07:57am

9. A perfect example of the tie between economic "bigness" and political clout can be seen in the recent pull of support for EFCA from Arkansas Senator Blanche Lincoln.

   Which giant corporation has its base in Arkansas? Wal-Mart. When re-election campaigns run in the millions of dollars, who is going to receive the most favor? This isn't conspiracy, this is just plain obvious to even the most casual observer.

   Posted by HAL9000 at 04/08/2009 @ 08:50am

10. " it seems the economic team advising Obama has an unfortunately limited imagination".

    I don't think so. I just think that their imagination is directed at keeping wealth in the hands of the banking elites. I don't see any other interpretation of the form of the bank bailout.

    Which is, of course, evidence that Zephyr is right to raise the question of how do we limit the political power of corporations. While limiting the size of corporations might help, especially if combined with other measures, it probably won't be sufficient. One of the reasons the defense lobby is so powerful is because it not only represents the big contractors, but also many, many smaller contractors & suppliers spread all over the place. I read the list of Colorado businesses that got some defense department money in the year 2007 or 2008 and it was truly astonishing, as in thousands of businesses. Some of them got pretty puny amounts and weren't defense related (like hotels & restaurants), but still.

    It seems to me that the problem isn't just that large corporations get favorable treatment, it's that our elected officials won't differentiate between rational public policy and shoveling welfare in the form of special legislation, tax breaks and contracts at their business constituency, regardless of size. The good side of the stimulus bill is that it's shoveling money at groups and projects that represent more legitimate public purposes, at least somewhat.

    Zephyr's point (I think) that it would be easier to prevent collusion among alot of smaller corporations than a few big ones may be partially true, and limiting corporate size probably would slow down some of the really graphic corruption.

    Posted by cdlepthien at 04/08/2009 @ 08:58am

11. Hey, an almost pristine thread devoid of the usual thick smattering of inane posts.

    Almost.

    What the HELL is up with Maskot crow barring a well known knuckle-dragging poster's comments into the discussion?!

    Jesus.

    Posted by b_kool_66 at 04/08/2009 @ 09:49am

12. Fifty years of lobbying have left a sorry toll

    Where corporate lev'rage insulates their business from the poll

    While grassroots takes a backseat now to influences shifty

    We're forced to aggravate our guilt... resorting to the thrifty

    Advantages have long been gained for big business accrual

    So when we step right up to fight... we're sure to look the fool

    To shift the reigns of power from the backrooms to the foyers

    We'll have to regain ownership as Congress's employers

    Sanction now prosperity for ordinary men

    Give us slight advantage over who what where and when

    They've stacked our deck in favor of all centralized incentives

    Thus limiting propriety to inhumane inventives

    Posted by ttr at 04/08/2009 @ 10:03am

13. cdlephian, yes, this is the argument, well put:

    "it would be easier to prevent collusion among alot of smaller corporations than a few big ones may be partially true, and limiting corporate size probably would slow down some of the really graphic corruption."

    Much of my interest has come from seeing the failures in campaign finance reform, and trying to think of new ways to make it more difficult for nonrepresentative institutions to weild disproportionate political power. This goes for the banks, but not just the banks--hence thinking beyond Glass-Steagal.

    Perhaps another way to ask the question is, "what other kinds of hurdles can one create in the definition of the corporate form to make it more likely that companies will invest in productive activities instead of in rule-changing activities?"

    Posted by zephyrteachout at 04/08/2009 @ 10:28am

14. Posted by b_kool_66 at 04/08/2009 @ 09:49am

    Given the only comment YOU've made here is about ME....thanks for the lecture to us kettles, Mr. Pot.

    Posted by Mask at 04/08/2009 @ 10:30am

15. posted by snowball666 at 04/08/2009@9:13am

    "companies drift toward using econs of scale for a reason."

    This is undoubtedly true. However, we have drifted so successfully towards economies of scale in some sectors of the economy that we have to be massively inefficient in others just to keep the unemployment rate down (and keep the profits flowing). I think this is part of the reason that we tolerate our massively wasteful health care system. Also why we get continual stimulus in the form of defense spending. (Not saying we need 0 defense spending, for all you hawks.)

    Well, I'm not going through it here. See Karl Marx, Rosa Luxembourg, the far- above-on-this-thread-mentioned E.F. Schumacher & many others for an analysis of what happens when you try to keep a capitalist social/economic organization going in the face of overproduction provided by economies of scale and brilliant and powerful technologies. The only reason we are not at the final crisis of capitalism is that large ares of the world are still in an earlier stage of organization. (I know I sound like a dyed in the wool Marxist here, which I'm not, but I only have so much space.)

    While I don't think we can expect political miracles from just limiting the size of corporations, I do think that there are lots of ways in which smaller and more labor intensive industrial and especially agricultural enterprises would benefit us all (agriculture as pursued now in the United States is largely an environmental disaster). The problem is sorting out what scales you need in what industries. I don't think this can be done solely by markets. We've already got an environmental catastrophe in the making, partly because we are producing junk very inexpensively.

    Posted by cdlepthien at 04/08/2009 @ 10:44am

16. Maskot,

    My comment was actually more than reasonable and I'm sure that a significant majority here would agree.

    One of the primary reasons this site is so often plagued by long tiresome threads of emptyheaded drivel is that the imbeciles who post here get a rise out of being responded to. So I'm trying to do my part by not responding to the likes of "antisocialist", "comanchenation", "Happy" et. al.

    As I've said before and I repeat it here, I don't particularly dislike you personally Maskot --I'm sure you're probably a fine guy to be around in person-- but you are a significant contributor to the cesspool that often developes on these threads by simply stretching out ad nauseum "debates" that never should have begun in the first place.

    So in closing I issue you a personal challenge, Maskot, to pick up your game and do your best to read a little more widely outside of this site and come back with more appropriate and poignant commentary.

    You're a smart guy, Maskot, I know you're capable of elevating your game. Now let's see you do it.

    :D

    Posted by b_kool_66 at 04/08/2009 @ 10:47am

17. cdlepthien--

    I agree on so many fronts--and the related problem is how to enable a political culture so that these questions are understood as public, political questions. Thanks again for your thoughts.

    ZT

    Posted by zephyrteachout at 04/08/2009 @ 10:48am

18. Posted by b_kool_66 at 04/08/2009 @ 10:47am

    "You're dumb but I think you can get smarter"?.....sounds like Alec Baldwin as Jack Donaghy on "30 Rock".

    Sorry, B_KOOL, but I don't think anybody's going to buy your gear shift from attack to "friendly advice."

    And I think you're probably a fine guy too...but your hypocrisy pushes that. Reminds me of your little lecture on my "distorting" paraphrasing last year...followed shortly by your own paraphrasing of Katha Pollitt on Hillary.

    BTW, on-topic if you like....this is another fantasy article. We aren't going to be breaking up or "putting limits" on corporations anytime soon. Try again when the economy's better, Ms Teachout.

    Posted by Mask at 04/08/2009 @ 11:34am

19. posted by zephyrteachout 04/08/2009@10:48

    Appreciate the appreciation - and your point that we need to widen the sphere of public definition of corporations is very important. As you said, the project of limiting their size would open that whole can of worms. However, the project itself will be subject to capture by a corrupt political process, that is, applied differentially to increase the competitive edge of influential corporations/economic sectors vis-a-vis others. Witness what keeps happening to farm policy, ostensibly aimed at helping the family farmer. This isn't to say that it shouldn't be attempted, just that it would be quite the slog to get the desired results.

    You know, the electricity feeding my computer is being delivered to my house by a cooperative (Rural Electric Association), not a for-profit corporation. That is one all-American alternative to our current corporate scenario (probably limited in usefulness to only certain types of goods & services, though more than it is currently being used for).

    Posted by cdlepthien at 04/08/2009 @ 12:52pm

20. Posted by snowball666 at 04/08/2009 @ 11:54am

    Sorry, snow. This goes back to John Nichols and his interminable impeachment articles...well after it was "off the table" even after the Election of 2008!

    As much as our Right-wing friends proclaim...and our Hard Left friends wish....Obama isn't going to wipe away corporate America. So why go on about it?

    Posted by Mask at 04/08/2009 @ 1:01pm

21. posted by Snowball666 4/08/2009@10:57am

    liked your high-stakes poker game simile & the rest of that post. Yeah, the financial sector is obviously counter-productive in the true meaning of the phrase. Parasitic. dang I'm channeling Marx today.

    Mask, I think the original gist of this article & thread was to start envisioning how to take the political system back from the Big Money, so just pointing out that it is still a captive of it without discussing any of the other ideas kind of misses the point.

    Speaking of productive, I'd better go do something like that.

    Posted by cdlepthien at 04/08/2009 @ 1:41pm

22. Perhaps another way to ask the question is, "what other kinds of hurdles can one create in the definition of the corporate form to make it more likely that companies will invest in productive activities instead of in rule-changing activities?"

    Posted by zephyrteachout at 04/08/2009 @ 10:28am

    Perhaps rewarding companies increasing benefits and pay to their domestic employees (by domestic, I mean U.S. only). Not everything has to be done with a stick. There's nothing wrong with a corporation that plays by the rules and treats it's employees decently. I'm with those who believe that we need to reinstate the old rules though. Banks should stay in the banking business and stay the hell out of the speculation and derivative business.

    Posted by Wolfgang1 at 04/08/2009 @ 4:05pm

23. " ... One of the things I hope to do, blogging here over the next month, is try to be imaginative, and hopefully learn from the readers here about a much greater range of ideas about how we might choose to organize our economy: how we organize how things are made, how people are paid, and how risks are punished and rewarded. I think our short term solutions and responses ought be tied to long term structural protections against similar crises ..."

    --Ms/Mrs. Teachout

    Either you were laughing as you typed this passage, or you are in for a surprise, if you imagine that you are going to learn any new ideas from readers of these web pages about 'how we might choose to organize our economy'. No matter what, bring Ibuprofen and a Super Big Gulp full of Pepto Bismol to each 'learning' session. Best of luck -

    Posted by syfriendly at 04/08/2009 @ 4:45pm

24. " ... Instead of imposing after-the-fact regulations on corporations, why not pass a new antitrust policy that limits the size to which companies can grow? ..."

    -- Ms/Mrs. Teachout, or shall we call you Zephyr?

    (I knew a former minor rock star named "Reek Havoc" for a while.)

    The issue with what you suggest is that it is very difficult to imagine a regime that can a) accurately assess how "big" is OK and how "big" is bad before problems emerge, as a broad policy. In special cases, its believable, but not as a policy regime. Furthermore, such a regime would definitely slow growth (deliberately, in fact) and impact on competitiveness negatively. I am no market worshipper, but I don't know that that USG can competently accomplish what you describe. The USG is so corrupt and incompetent that it couldn't spot or acknowledge spotting a multi-trillion dollar housing bubble that went over several years. And we are to hope that it can pre-empt trusts before they really begin to emerge?

    Posted by syfriendly at 04/08/2009 @ 4:50pm

25. Antitrust law is designed to protect competition (but not particular competitors) in a given market. Thus, it focuses on market power, and is designed to provide a mechanism for preventing a company from gaining so much power over a particular market that it can manipulate that market to the detriment of consumers. In some instances, where so-called "monopoly power" is achieved through legitimate means (such as skill, foresight and industry), antitrust law is designed to regulate that monopoly, rather than to punish its creation, by providing penalties for "unfair" use of that power.

    Campaign contribution limits already prevent any one company (no matter how large) from exerting the political equivalent of "monopoly power" over any legislature or even any particular election, with the possible exception of initiative or referenda campaigns. However, if all of the companies in a particular industry all support the same thing, and all make the maximum contributions, if there are enough such companies (and especially if they have enough employees who support the company position) then together they can influence politicians through the combined weight of their contributions. Thus, limiting the "size" of companies (however you calculate size) would not accomplish your goal. In fact, it would do the opposite. Increasing the number of companies in a given sector of the economy (by limiting the size of any one company) would increase the overall amount of campaign contributions that those companies, as a group, could make. Those increased contributions, in turn, would increase that sector's political influence.

    Posted by taikan at 04/08/2009 @ 7:34pm

26. Posted by HAL9000 at 04/08/2009 @ 07:11am:

    A maximun pay ratio of 25:1? (does this include lawyers? actors? politicians?).....pure nonsense. Big companies? Absolutely required to compete in a national market let alone a global one. It takes enormous amounts of money and incredible infrastructure to design, build, market and service complex systems that society uses - airplanes for one example, there are many more. It seems obvious that many on the left have not a clue how to actually build an industrial society let alone realize the value of one.

    Posted by pyeatte at 04/08/2009 @ 8:31pm

27. It seems obvious that many on the left have not a clue how to actually build an industrial society let alone realize the value of one.

    Posted by pyeatte at 04/08/2009 @ 8:31pm | ignore this person | warn this person

    Ah....but they certainly are proving they are experts at destroying industrial and advanced economic societies just as they have in the past all over the world!

    Posted by comancheamerican at 04/08/2009 @ 9:21pm

28. Living Large

    "Robert Scheer:Larry Summers is convinced he earned every bit of the $8 million Wall Street paid him last year.

    Doesn't anyone in Congress care about the conflict?"

    Larry Summers is the closest thing we now have to Dick Cheney.

    Posted by V at 04/08/2009 @ 10:51pm

29. "Increasing the number of companies in a given sector of the economy (by limiting the size of any one company) would increase the overall amount of campaign contributions that those companies, as a group, could make. Those increased contributions, in turn, would increase that sector's political influence."

    I appreciate your comments, "taikan," but I'm not sure this problem exists. I understood that recent campaign finance law prohibits political campaign contributions from all corporations, period (most pointedly including labor unions). It allows only individual contributions, though the upper limits of these are very generous (much too generous in my opinion). There is of course also the question of political ads, which can still be funded by groups of very few people with very large amounts of money. These groups often pretend to be popular grassroots organizations and give themselves deceptive names. The word "astroturf organization" is useful in reference to them. My solution to this little problem would be to require each advertisement to show, like the Surgeon General's warning on cigarette boxes, in clear print the number of actual people who support the ad.

    If it should happen that you are right, "taikun," and some corporate campaign funding is still allowed, then of course you are also absolutely right that we need to get rid of that immediately if we want to institute reforms that split all the larger corporations up into smaller ones.

    Posted by JakobFabian at 04/09/2009 @ 06:50am

30. Ah....but they certainly are proving they are experts at destroying industrial and advanced economic societies just as they have in the past all over the world!

    Posted by comancheamerican at 04/08/2009 @ 9:21pm

    Wrong you are. Eight years of neocon Bush policies are what drove the final nails into the coffin of the industrialized U.S.

    Offshoring lead to this in a big way. Allowing the oil companies and speculators to manipulate the markets for years forced consumers to quit spending their money on products but rather focus on getting to work because their huge ass SUV's were sucking fuel down at high rates during the $3 and $4 per gallon days....which we'll probably back to soon.

    You wish to point fingers, look in the mirror. It's neoliberal (Friedman actually called himself a neoliberal but we now call it neocon) policies that have lead to our downfall.

    Like Napoleon and Hitler, our idiotic leaders believe that we can rule the world through military might and manipulation of foreign currencies. It ain't gonna happen, and if China or Russia were to try it, they'll fall flat on their faces too. You don't believe this, look at what happened to the former Soviet Union. It wasn't communism that caused it's collapse, it was the stupidity of it's leaders. Same thing goes here.

    Posted by Wolfgang1 at 04/09/2009 @ 09:29am

31. I understood that recent campaign finance law prohibits political campaign contributions from all corporations, period (most pointedly including labor unions). Posted by JakobFabian at 04/09/2009 @ 06:50am

    I make no claim to being an expert in the arcane field of campaign financing law. Thus, you may be correct that the law prohibits direct corporate donations to individual candidates. However, Zephyr's proposal appears to be based on the assumption that a corporation with lots of money can use that money to influence politicians. Whether they can do this through direct contributions to the candidate or through corporate donations to a political party or a groups that is not controlled by a particular candidate but that supports the candidate does not change the logic of the argument so long as there are limits on the amounts of money that any given corporation can give to any party or support group. Unless, of course, Zephyr assumes that financial power equates to political power in some manner other than through donating money to someone in an attempt to affect the outcome of an election.

    Posted by taikan at 04/09/2009 @ 2:36pm

32. I like this approach and have been preaching the same thing to whomever will listen for some time (years?). Controlling their size through taxation is also an excellent idea. All approaches must be on the table and examined for unintended consequences.

    These gigantic corporations hold us hostage and we are at the mercy of their management's decisions while we have no way to affect their management with our votes. This situation is the single biggest threat to our democracy. If we are going to continue to have a democracy, then limiting the size of corporations is tantamount.

    Posted by RustyCannon at 04/09/2009 @ 3:38pm

33. This will be an interesting Blog! The Original purpose of the Sherman Anti-Trust Act was to disperse economic power when it was concentrated in a few hands. If a corporation or cartel controlled a market, they were forced to sell off parts of their business to eliminate their control of that market. If a business was too big to fail, it was too big to exist. When risk is dispersed into smaller similar business organizations, the failure of one business does not threaten other businesses or their market. If one Business controls the market, and it fails, the market fails. This is a traditional American approach to reducing political or economic power by dividing it. In the Constitution, we divide national power between Congress, the President, and the Courts. We also see it in Alexander Hamilton's Report On Manufactures, when he developed our plan for an independent national market that did not rely on trade or other countries for our national needs. If one country's, national economy collapsed, the risk is divided and the world's economy is not threatened. It is protectionism (Dispersion) writ large and small. Related to dispersed markets, management of any business must have a knowledge of their product and their markets in order to successfully conduct their business. The absentee ownership of different businesses means upper management does not know the product or their market. Failure is an eventual certainty.

    Posted by pjcasey at 04/09/2009 @ 3:41pm

34. The absentee ownership of different businesses means upper management does not know the product or their market. Failure is an eventual certainty.

    Posted by pjcasey at 04/09/2009 @ 3:41pm

    You hit the nail on the head with that post to be sure. Take a look at most of the large companies in the U.S today. They are run by people with business degrees that no nothing of the products their companies sell. In many cases, they don't even know how the company goes about manufacturing their products.

    The biggest job of the CEO is to make the board of directors "think" he knows what's going on. That's where all of the bullshit acronyms got started in the first place. Throw a bunch of meaningless acronyms around and no one knows what you are talking about. If they don't know what you are talking about, it's hard for them to asks questions about something you told them nothing about in the first place.

    I've witnessed this first hand. Our CEO's of the companies would give us a quarterly report of how well things were going. Nobody from the engineering group down to the assembly line knew what the hell they were talking about, but boy did they sure sound slick.

    How does the saying go...."baffle em with bullshit"?

    Posted by Wolfgang1 at 04/09/2009 @ 3:57pm

35. Our current antitrust and tax laws, without consciously intending it, seem to have created an economy that reaches equilibrium with three big companies per (nationwide) industry. That's not a good number to have, since the creative destruction of even one of them can cause widespread mayhem. My thinking had focused on how to use the tax code to increase the number to 20 or so. Reading corporate annual reports will suggest a number of things that could be used as a basis for progressive taxation. (My own preference is for the one they brag most about, but that's because I like to cause trouble.) Very interesting to read Ms. Teachout's complementary view.

    Posted by jhoffman at 04/09/2009 @ 6:14pm

36. We once had antitrust legislation on the books, I suppose it got 'deregulated' along with every other sensible thing. Some re-regulation is definitely called for, starting with banks and other financial institutions, as well as healthcare. (Maybe they could put some of that money they spend advertising little purple pills for restless leg syndrome into research. They weren't allowed to advertise until recently.)

    The best way to remove corporate lobbying and other forms of corruption from the process is to have public funding of political campaigns. As it stands now, any Senator or Congressman who wants to keep his or her job is forced to spend an inordinate amount of time fundraising, and corporations or groups of companies, or industries (banking and healthcare for example) are only too happy to help.

    Before we start taking draconian measures such as determing (by what standard?) how large a company can be, we need to take the money out of the political process, limit political campaigning rather than free enterprise.

    Posted by playwrtr at 04/09/2009 @ 6:30pm

37. I am always amazed by Jake Fabian, whose superiority complex and contempt for the individual has no equal, sniffing about whether "taxing corporations on a progressive curve on the basis of their size would achieve the same end as simply imposing a limit on size."

    Oh, and Wolfgang1's true gem, "It wasn't communism that caused it's collapse, it was the stupidity of it's leaders. Same thing goes here."

    [Sigh]

    Why don't we start instead with LIMITING THE SIZE AND SCOPE OF GOVERNMENT? Do any of you realize the only way corporations have any power at all is via GOVERNMENT and POLITICAL collusion? (Psst, if you're confused, think 'Banking Industry'.)

    If government would stick to its Constitutional boundaries keeping the playing field level, consumers would do a fine job keeping corporation "size" in check.

    But what fun would that be for politicians, social scientists and other elitists who fancy their intelligence superior to millions of free people exercising their liberty to make their own decisions?

    Posted by freiheit1 at 04/09/2009 @ 7:11pm

38. If the goal is to limit political influence of one faction, I believe there are better ways than limiting the size of private corporations.

    The better approach, in my view, is to put lower caps on donation levels to candidates and political parties (e.g. say $500 or $1,000 per candidate instead of $2,300 for primary and $2,300 for the general election).

    There also needs to be greater disclosure of funding sources for issues based campaigns.

    In principle the idea of limiting monopolies for anti-competitive reasons is the right idea -- otherwise across the board caps are likely to be arbitrary.

    In terms of the financial institutions we need a Glass-Steagall 2.0 that prevents the emergence of hybrid financial institutions that mix investment banks, consulting, commercial banking, and insurance. We need to curtail conflicts of interest in the financial sector.

    We need to have a check against financial institutions that are "too big to fail" as well. The principle "too big to fail equals too big to exist" should be a guiding idea. An alternative to this would be to have something closer to the Canadian commercial bank model where there are large regional bank monopolies that are heavily regulated. My preference though would be for a "smaller" approach rather than the Canadian model.

    Posted by JHS09 at 04/09/2009 @ 8:01pm

39. "The barriers to this recommendable reform are merely ideological, but they are formidable. They include the notion that big is good, which plutocrats ascribe to corporations, but not to governments, a glaring inconsistency that they are trained not to notice." I wrote this in my very first posting on this thread.

    Now, "freiheit1" has kindly appeared to provide an excellent example of what I meant.

    In my opinion, the problem with our government is more one of quality than of quantity. Whether a government qualifies as "small" is less important than whether it is democratic, constitutional, and just plain accountable. Therefore, what we need to do is strengthen democracy and the Constitution. As I have proposed many times, we need to make our electoral system more proportional and more accurately reflective of existing political diversity. We also need to reform campaign financing. (See above.) The careful fostering of multi-party pluralism (preferably with MORE than two parties) is, to my mind, the public-sector equivalent of trust busting; in other words, no political party (or duopoly) should be "too big to fail."

    The appropriate SIZE of a government is: big enough to regulate the corporations rather than to beg from them. If we want smaller government -- and, don't get me wrong, I believe this idea has a lot to recommend it -- then we must have smaller, more governable corporations. We also need more effective international arms control, if we believe that smaller government entails a smaller MILITARY, as I believe it should!

    Posted by JakobFabian at 04/09/2009 @ 10:17pm