Tag Archives: corporations

If Corporations Are Evil, Government is Evil Times Five (or more)

Collectivists (communists, socialists, and many liberals) hate corporations for a number of reasons, yet they love government. But in fact, government is the largest corporation. The US government has revenue five times the size of Wal-Mart, the largest US corporation in terms of sales, nine times the spending (due to the huge budget deficit), debt five greater than Bank of America, the largest bank (not including off-budget liabilities such as social security and medicare), and is the country’s largest employer. And this is just the federal government, with state and local figures only adding to the imbalance.  But this government, which the collectivists love so much, perpetrates the same “evils” for which they blame corporations.

The major criticism of corporations is the Divisions between labor, management, and owners. Adam Smith explains:

The directors of such [joint-stock] companies, however, being the managers rather of other people’s money than of their own, it cannot well be expected, that they should watch over it with the same anxious vigilance with which the partners in a private copartnery frequently watch over their own…. Negligence and profusion, therefore, must always prevail, more or less, in the management of the affairs of such a company.

This same criticism applies to government. Government officials spend other people’s money and, as a result, “it cannot well be expected, that they should watch over it with the same anxious vigilance” as which they would spend their own. But there remains a major difference between government and corporations. Corporations only have money to spend if people voluntarily give them money. Either investors must give the corporation funds to expand their business or customers must purchase products from the company. If neither of the two occur, corporations have no money to spend. On the other hand, nobody voluntarily gives money to the government. Government forcibly takes money from a country’s citizens with the threat of imprisonment if taxes are evaded. In theory, the people control the government through the election process, but that would be just as true when it comes to corporation in which shareholders elect the Board of Directors. In both cases, there is a division between the people who are supposed to be represented and the managers of the corporation/government. Yet, the distinction between the two remains: corporations must earn their revenue whereas government simply takes it by threatening to use force.

Another argument is that corporations are anti-democratic:

Chomsky contends that corporations transfer policy decisions out of the hands of the people and into corporate boardrooms, where public oversight is limited. The extensive financial resources of corporations and the extent to which they’re employed to influence political campaigns in the United States has also been implicated as a way in which corporations undermine the democratic institutions in a society[6].

By extension, the large government bureaucracy transfers “policy decisions out of the hands of the people and into” unelected government agencies “where public oversight is limited.” Again, a major difference remains. Corporate heads can be fired by the Board of Directors and the Board of Directors can be fired by the shareholders. Additionally, corporations must “do good” in order to stay in existence. If they don’t sell product, the corporation will go bankrupt. On the other hand, government bureaucrats largely work in secret in which the shareholders (the country’s citizens) do not even know of the bureaucrat’s existence. Furthermore, government agencies that underperform do not go out of business. Instead, they request even more money from the government, which they claim they need in order to properly carry out their duties.

As a result, the government acts even more like a corporation than actual corporations do and without the requirement of actually providing something. Worse yet, government is much larger than any corporation can ever be. Throughout history, liberals complained about a number of corporate monopolies. Yet, government is much larger than any corporation and a real anti-monopolist would attack government for its monopolistic control of our health care system, defense, retirement funds, and education system.