The Unholy Alliance of Corporations and Government

Dear Friends,

It seems to me, using government to stifle the power of corporations, is like smothering a fire with natural gas and oxygen. The principle argument from citizen progressives is that corporations have way too much power, and we need to reign them in, to that end they are willing to put up with ever increasing government power, to balance the influence of those corporations. They believe that if only the government was strong enough it would topple evil corporations and restore liberty to the rest of us. While it may sound like a logical plan to the innocent, the reality is that the very power progressives seek to limit, corporate power, is created and enhanced by government. It is the power of government that corporations harness to destroy competition, control wages, stifle innovation, and enhance the pay of executives. Progressives in government know the truth, but seek a true Marxist government the world over, total government, and are willing to exploit the power of corporations to achieve it.

Under conditions of laissez faire capitalism, corporations would have a very hard time competing with innovative small companies, and sole proprietorship firms. The huge overhead of executive pay in and of itself is a giant road block to effective competition that small businesses don’t have. By their very nature a corporation, run by executives, (agents) for the stockholders, (owners), is inefficient. Innovation is at the bottom of the hierarchy of goals. The cost of bringing a new product to market is exponentially higher for a large corporation than a small business, as is the cost of labor, the infrastructure, (buildings, plant, equipment, office products and vehicles), becomes less efficient and is always underutilized by corporations, while infrastructure by small businesse is always efficiently utilized by small businesses. This is because small businesses don’t have a large margin to draw from to keep trucks, dozers or office space idle. A small business run like a corporation would quickly go belly up.

Government regulations, designed to hold back corporations, actually holds back small businesses instead. If a startup threatens a corporation’s bottom line, the corporation has two options. They can lower the price point of their products and increase quality… or go to government to shut down the competition. Which is why the return on investment for lobbying is far greater than for plant upgrades, innovation or even advertisement. Obviously, going to government is much easier for an executive to do, since he can chat up a politician on the golf course about the “dangers” of that small business. The executive might say, the public is at risk from trucks, equipment, and tools that are over utilized, employees are endangered by the lack of safety equipment, the water quality is lowered by the lack of expensive filtering technology, all of which the small business cannot afford, along with a plethora of other sophist arguments. Then the politician gets a huge campaign contribution and viola! The more efficient competitor is crushed by the bureaucracy.

Executives rarely ever suffer punishment for crimes against shareholders or the public. Barely a month goes by without some large corporation getting a billion dollar fine for some illegal activity… yet executives almost never go to jail. In fact, the people responsible for making the illegal decisions get rewarded with bonuses while the shareholder is punished. Deutsche bank was recently fined billions for manipulating the price of silver, but not one executive lost his or her job, let alone faced jail. That manipulation resulted in trillions of dollars of damage to small investors but the government of the US found it expedient, to punish the shareholders of Deutsche bank, rather than the people who broke the law. The same thing happens regularly to JP Morgan Chase, Citi, Wells Fargo who was recently convicted of stealing money from the customers by opening fraudulent accounts in their names, and others too many to list. Government and executives collude to steal from shareholders and the public.

Government is run on money and large corporations have the money. Politicians need money for their ever more costly campaigns. One only need have a whit of common sense to ask, “why would someone spend tens to hundreds of millions of dollars to get a job… that pays two hundred thousand for two to four years?” That is a negative payout. Unless there is a hidden payoff… and we all know there is. Powerful government creates the principle agent dilemma. The agents, (executives and politicians) screw the principles, (shareholders and the public), along with government officials for their own benefit. Everyone wins… well, except the people and shareholders. Politicians are in the pocket of corporations and if you think they are likely to bite the hand that feeds them… you are special.

It cannot be denied that in reality the more power government is given, to limit the power of large corporations, the more power large corporations and government will wield against the people… but that is the true goal, isn’t it? To evolve government to absolute autocracy, ideally in the hands of administrators, (bureaucrats) and extend it the world over. To that end a little chicanery is in order. The elite have always believed that the ends justify the means and no place is this more true than in government. Increasing the power, scope and reach of government only serves the executives who are the puppet masters of our politicians and bureaucrats. You only need look at the principle agent dilemma that government has set up against shareholders, that corporate money greases the wheels of big government and regulations are designed to limit competition, by creating a barrier to entry for entrepreneurs. So go on believing government needs more power to limit the power of big business, and continue to try and smother the fire with oxygen and natural gas, lets see how that works out.

Sincerely,

John Pepin