On Companies

It's little said now, but in the beginning corporations were created at the state's discretion, granted privileges by the state, and they owed duties to the state (i.e., you and me). Now, in many ways, corporations control the state. What a sea change in our society. Consider:

1. The financial industry wrote its own deregulation, over the past two decades, and we have now all seen the results. It is hard to argue today that the large U.S. financial institutions will operate conservatively and carefully, if left to make up their own rules. In contrast, look at the (heavily regulated) banks in Canada. Not one of them expanded into mortgage derivatives; instead they just continued to do what they do well: take deposits and make loans. Today the Canadian banks are healthy--they never even got sick!--while many of our larger banks such as Citi and B of A are still struggling in the quagmire they helped to create. WaMu and Wachovia and Lehman and Merrill Lynch--huge names--are gone. Really? Gone? (Note: several of our banks, including Wells Fargo and US Bank and most of our credit unions, managed to resist the siren call of overleverage and greed, and they deserve our business.)

2. A recent US Supreme Court decision grants unlimited election spending to corporations (because they are "people"), but the larger companies can easily outspend 99.9% of the individuals who may want to support a candidate. There is a clear correlation between election winners and money spent on campaigns, and of course an elected official cannot forget her or his largest donors! Little wonder, then, that we have thoughtful people believing that this has become a country for the corporations' benefit, not for the citizens' benefit. Little wonder that we have farm subsidies for giant corporate farms that are making nice profits already, or that we build even more nuclear missiles without any clear idea of exactly whom we might shoot the missiles at, or that we subsidize corn ethanol despite the fact that it is a financial disaster, hiking the prices of grains and costing more than the benefits obtained from the resulting fuels. If you dissect most of the recent laws you will find they result in significant benefits to some group of large businesses. Meanwhile, the protests against the decline of America's Middle Class, against the overinfluence of corporate lobbyists, are frail. I have worried about the growing risk of class conflict for some years now, yet I think most people will just grow poorer in silence; this country has more than enough armed police to kill and imprison all those who would complain too strenuously about the ruination of America.

3. Look at Fast Food. The major chains do not even sell, anymore, the kinds of things that we used to call "food." It is alleged that Taco Bell's "beef" contains only 15% cow meat. Flavor-enhancing additives are everywhere, and some have been linked to nervous system disorders. Trans fats (fats not known to nature) are everywhere in fast food, even though we know they clog our arteries. Soda contains phosphoric acid that leaches calcium out of our bones, and so much sugar that it may someday be linked to the diabetes epidemic. Preservatives in meat are known to be harmful to us. A diet of nothing but McDonalds would probably kill a person within a year. An entree salad at a fast food place might contain 1200 calories; there are Starbucks drinks containing more than 800. But fast food is convenient and incredibly profitable, especially as the companies continue to find ways to use cheaper ingredients while making the flavors more irrestistible. Is there a lump of paper pulp in our future, that tastes great? Our palates are being dumbed down because we are all too busy to cook and too unable to resist mass marketing. There are islands in the stream: Burgerville, Chipotle, New Seasons cafe, the turkey sandwich at Subway . . . but you have to really hunt for them.

4. Too much regulation is also not the answer. I haven't seen an American electric utility yet that can approach, even remotely, the efficiency of a smartly-managed Chinese company. But calls for "removing regulation, to allow more jobs" are shortsighted. See #1, above.

5. Corporations have many of the features of people: They can be born (chartered), marry (merge), get divorced (disposition), and die (dissolution). They can own property. They can have personalities (cultures) as distinct as those of individual humans (think Intel, or Nike). They can commit crimes. They are guaranteed the equal protection of the laws. However, they cannot vote (they cannot vote per se, though they can buy all the influence they desire). And they are perpetual; they can live forever (I believe the reigning champ is Sumitomo, at over 300 years old). I could write a book on the amazing dilemma of our giving companies the best minds, unlimited access to opportunity in a free market, low taxes, and STILL more than two-thirds of the S&P 500, as it existed 20 years ago, are no longer in business? Really? It would seem that something is very wrong in corporate America. I submit it is, generally speaking and excluding my own company, a failure in the quality of management. That is pretty ironic, given that many U.S. CEOs earn 50x-100x what their lowest-paid employees earn. What do you think the Netflix CEO is earning this year, while his or her stupid decisions have eliminated about 65% of that company's value? If we are overpaying for failure, there must be a better way.

6. We can argue that our nation's dependence upon consumerism (buying things we may not need) is a direct result of modern marketing practices, honed by companies to drive sales. An extension of that is for us to admit that large companies own our brains--they can make us do almost whatever they want. Is that the world we want to live in?

7. An interesting argument can be made that many corporate employees put themselves into a modern form of slavery, by incurring debt for cars, furniture, homes, second homes, and then they have to work forever to make the payments. A more-rational approach might be to save the cash needed, before buying the item, be it an old car, a used sofa, etc. and to save as much as 25% of your take-home pay. And invest it away from those companies who would "help" you by taking eggregious fees for mismanaging your money. This country would become very different if we all converted from spenders to savers. That might allow many more people to retire earlier, thereby freeing up good jobs for younger people and raising general happiness. It would send most companies scrambling to find overseas markets, but they would probably adjust. Google requires its engineers to spend 20% of their worktime on anything, anything at all that seems interesting to them; the company backs that effort by funding such diverse projects as high-voltage transmission lines to offshore wind farms, and high-speed rail. That is either extreme folly, or brilliance.

8. Gone are the days when employees were viewed as a company's greatest asset, when employees would remain at one company for a lifetime. Now if a company has one bad quarter, the most intelligent decision of which it is capable is to axe 10% of the workers. That is lame; any layoff is proof of poor management; why should the rank and file suffer when the management reveals its inadequacy, yet does not suffer itself? We need better processes for identifying and empowering talent throughout an organization. Few managers know how to motivate people.

Please don't take this piece as criticism, from me, about all companies. I have worked (so far) for eight of them, and for that I am very grateful (they were Gates Hardware, Chevron, Hall Estill, Williams Cos, Destec Energy, Enron, FEI Corp, and VTech). I do think, however, that modern business has not yet found the structure and processes that can maximize the happiness and contributions of its employees. How many of us who are lucky enough to work at a good job, would keep working there if we won $20M in the lottery tonight? Why should we not all strive to create a better form of business, which would make most employees want to stay, no matter what? There is a vision worth fighting for.

There has been too little time passed since most of us were serfs working in the fields. A better way is coming, but it will take a long time to arrive.