Fiduciary Duty vs. Patriotic Duty

Even with the central role corporations play in today’s key political issues, few people seem to comprehend the way they act and why. Populist outrage erupts at every excessive dime spent on bonuses. Conservatives on the bench recently decided that corporations deserve constitutional protection. Politicians are still wooing their support on health care reform, financial reform and clean energy policy—a courtship that is sure to end in rejection. But corporate viewpoints on politics should, almost without exception, be ignored, because corporations have one motive, and one motive only: higher returns for the shareholders.

Corporations answer to a select group of people, and those are, in descending order of importance (except in the case of financially unstable companies, which answer almost entirely to their lenders): shareholders, board members, executives, and, lastly, their employees. This is important because shareholders’ single biggest demand is ever increasing profits. Flat revenues will not do, and God help you if you dip into negative numbers. Pulling in higher numbers than the previous year, previous quarter, and all the predictions is the only measure of success for any corporation. Yes, even in a recession.

The focus on profits is the only lens through which they look at today’s issues. Health care and financial reform, green legislation—executives see these as damaging to revenue (not to mention brand new and therefore terrifying). Much of health care reform is aimed at chopping down the flourishing income of the large health care companies. Financial reform puts constraints on the hyperbolic profits posted before the crash. Green technologies threaten to take market share away from traditional sources of energy (coal, oil, and natural gas), and cap and trade will put a “tax” on big carbon consumers, such as electric utilities, for what they use to make money—burning coal to generate electricity that they can sell cheaply to their rate payers.

This is why it is so disastrous to give a corporation the same freedom of speech as a human being. A corporation is not a human being in a very key way: its only concern is with making money. It does not have opinions except what is dictated by the market and its shareholders. The only thing it desires is the ability to make more money. If that happens to coincide with doing some good for the world—there are in fact listed companies that create solar power, for example—then it is a but a happy coincidence. They do not feel altruism unless it is a nice PR stunt; they do not support political candidates unless those candidates will help them make more money.

This is also why the voices of corporations need to stay out of discussions about reforming their own industries. A large health care company will only get on board with health care legislation if it thinks it will positively impact the bottom line; a prominent investment bank will only back financial reform that stays out of its way; a multi-billion dollar electric utility will only take up the cause of renewable energy if doing otherwise will hurt them. Accepting their point of view as valid in these discussions is blind, and hoping that they will be supportive of real reform is naive. Any proposal that excites the executives of a particular industry is to be viewed with the utmost skepticism.


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