Another Corporate Note

Yes, everybody rails against 'evil' corporations, and so do I. And here are some good reasons that you should, too, especially if you're a 'market fundamentalist', Tea Partier, or Libertarian.

Corporations are political entities. They are ultimately created by the state and given certain rights and privileges above and beyond normal citizens. If you think the government shouldn't be involved in the market, this should already be enough. How else does their special status effect the market? Well, by and large, mostly because they have limited liability. Shareholders and corporate managers cannot be held responsible for damages done by corporate activity. The most an investor could ever lose is his original investment; he or she is not liable for damages beyond that, regardless of how much money they have made in the intermediary. So much of what market fundamentalists argue about concerns moral hazard; well, even if you don't insulate the corporation from bankruptcy, fines, or whatever, if you don't also punish the management and the shareholders, you're maintaining that moral hazard.

Big corporations are big. This is bad. Why is it bad? Because they create faction. Because they have enough power to manipulate the government and bend it toward their own ends. This impacts both the marketplace and our control over our own government. So big corporations are not only dangerous to the market, but also to us.

Big business also skews what we mean by competition. Without actually being better, or more efficient, they can move into a local economy and dominate it simply based on the fact that they are big. They can undercut prices easily since they can absorb losses with their larger network; most people think this just makes their model superior, but this is like saying John is a better boxer than Peter, where Peter is a featherweight and John is ten heavyweights. It warps what we mean by fair competition.

Enough, this will get better over time.