In Their Opinion...

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Colin Read chairs the finance and economics faculty at SUNY Plattsburgh and has published a dozen books on local and global finance and economics. He also runs an economic and business consulting company, and can be reached through his website www.economicinsights.net.

Colin Read: Corporate model has benefits

By: Colin Read, Everybody's Business

I admit I read the reasoning behind Supreme Court decisions like others read paperback novels, especially those that delve into economic issues. 

Many of you probably followed the Citizens United case that was decided in 2010. The case was part of the longstanding debate over campaign financing. I’ve taken on that issue before. There is another interesting aspect of the Citizens United case.

In arriving at their decision, a majority of the justices relied on a long-standing artifact of jurisprudence called legal personhood. This principle of law was designed to afford corporations a limited standing as a person because contracts are enforced between people, and corporations must have the ability to contract and conduct business just as a person could.

This legal convenience may have been stretched too far in Citizens United. Does it mean corporations can vote? They pay taxes, and they can be tried, but they cannot go to jail, even if their managers or directors perhaps could. They don’t procreate, unless you call a corporate spin-off parenting.

And, if you prick them, they do not bleed. 

It is somewhat convenient to conclude corporations are not people. That way, we can rationalize that they need not be motivated by anything but profits, even if enlightened corporations try to incorporate into their actions the values of their shareholders.

Some shareholder groups insist that corporations function with ethics and morals, and with sustainability in mind. Other shareholder groups want profits and nothing else. This is the lowest common denominator among shareholders, and that is what we often get.

Society has accepted this ruthless pursuit of profits. So long as corporations don’t break the law, we at least appreciate their devotion to efficiency, even if we at times resent their tendency to monopoly.

The corporate model has resulted in some fantastic things and has presented some problems. It has created efficiencies that have allowed us to invent machines that can feed a nation with the efforts of only a couple of percent of the population. Its ingenuity has allowed us to travel to the moon and back, and its efficiency allows me to write on a laptop that has almost a million times the memory and a thousand times the speed of my first computer at a tenth the cost. Either are way better than the slide rule I used in high school.

Think about those aspects of innovation we prize: Apple Computer, Tesla Automobiles, SpaceX, the Coen Brothers or Van Gogh, Einstein, and Bruce Springsteen and Leonard Cohen. These are examples of creativity of an individual or of a group of individuals that really wanted to make a difference. They rose to the top of their fields, and they received the accolades or profits they deserve because we love merit in this country — even if it comes from clever corporations.

Because of their creativity and efficiency, we may in our lifetime finally see all the world’s population fed and free of the life-threatening diseases that have plagued them so.

I don’t want to sound like an apologist of corporations, even if I am most grateful of the creativity and efficiency they have allowed our economy to realize. However, I don’t quite understand why, when people suggest that our medical system and our education system could learn something from the corporate model, the suggestion often results in statements of revulsion like “there is no room for corporate thinking in educating our children, caring for the sick,” etc.

Some claim our kids are pawns in the corporate education model. Of course, we all would be concerned about overcorporatization. Grandma deserves our best resources and Joey a good education. But, it is not unjust to ask what our investment will yield, how much it will cost, or, perhaps ask if there is a better way to invest in our children. 

These are not unfair questions. They acknowledge we live in a world of finite resources, and the resources we shower on little Joey are the resources we cannot shower on someone’s Jane. The corporate model is devoted to efficiency so that we can do more. The corporate model is a tool, not a philosophy. I guess I don’t see the fuss.

Colin Read chairs the finance and economics faculty at SUNY Plattsburgh and has published a dozen books on local and global finance and economics.

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