Would we be better off without public corporations?

Lithium381

Lifer
May 12, 2001
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Line of thinking drawn from the Apple/Ireland thread, among others.

It seems to me a lot of people think it's "unfair" that companies are stashing money overseas, not wanting to repatriate it at the current 35% rate, or laying off workers to keep profits high. .

Companies have a DUTY AND A RESPONSIBILITY to their shareholders to do everything they can to maximize profit. Sounds to me that that's exactly what's going on. If maybe there wasn't that overriding need, they would have more flexibility to taking care of their employees, or even paying a bit more taxes for the general societal good.
 

DaveSimmons

Elite Member
Aug 12, 2001
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With the right amount of regulation, capitalism (including corporations) works better than any other system that's been tried.

Companies have a DUTY AND A RESPONSIBILITY to their shareholders to do everything they can to maximize profit.
Not exactly. If shareholders don't vote against it, a company can do anything it wants including to run at a loss or donate all of its income to PETA. The stock price might collapse, but that's perfectly legal and shareholders are under no obligation to vote against it.
 

Craig234

Lifer
May 1, 2006
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The corporate obligation to put profits first without any concern for society is a reason why society needs a counterweight, in the form of elected government.

The problem isn't so much public corporations - there are benefits and harms - but rather issues about the democracy, money's role, corruption of regulation, etc.

Look back to the 1940's to 1960's, we have some model - country doing great, middle class doing great, economy doing well, lot of good things.

Then since Reagan, that has been abandoned,with the bottom 80% getting none of the economic growth even as the economy more than doubles, money buys govrenment etc.
 

DaveSimmons

Elite Member
Aug 12, 2001
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Yes, I think the problem is more that corporations (public and private) and other groups have figured out how to influence government too much, to the point where there is not enough oversight.

Corporations complain about "burdensome regulations" but at the same time they are paying lobbyists to write the laws that they want passed, then bribing Congress to pass them.

They've convinced the government that it's acceptable to allow corporations to self-regulate, without the auditing needed to make that work. That gets us results like Boeing's burning 787 batteries and the fertilizer explosion in Texas.

Letting corporations spend unlimited amounts to influence government and allowing tax-exempt, anonymous donations to PACs that influence elections has tipped the balance too far in favor of the corporations.

But other than that, having corporations is better than not allowing them :)
 

techs

Lifer
Sep 26, 2000
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Easy peasy solution. Just change the law so that any profits held outside the country will have an increasing tax rate the longer they stay there. If Apple knew next year the tax would be 5 percent more and then 5 percent more every year the money would be back in the US tomorrow.
 

Craig234

Lifer
May 1, 2006
38,548
350
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Yes, I think the problem is more that corporations (public and private) and other groups have figured out how to influence government too much, to the point where there is not enough oversight.

Corporations complain about "burdensome regulations" but at the same time they are paying lobbyists to write the laws that they want passed, then bribing Congress to pass them.

They've convinced the government that it's acceptable to allow corporations to self-regulate, without the auditing needed to make that work. That gets us results like Boeing's burning 787 batteries and the fertilizer explosion in Texas.

Letting corporations spend unlimited amounts to influence government and allowing tax-exempt, anonymous donations to PACs that influence elections has tipped the balance too far in favor of the corporations.

But other than that, having corporations is better than not allowing them :)

The constant noise about regulation is mostly propaganda used to sell the public on getting rid of good regulation in the public interest that restricts their profit.

Basically no one is saying to get rid of corporations. They're incredibly powerful, useful, important things to have for the good of society. We need to get rid of the flaws.
 
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Pulsar

Diamond Member
Mar 3, 2003
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The corporate obligation to put profits first without any concern for society is a reason why society needs a counterweight, in the form of elected government.

The problem isn't so much public corporations - there are benefits and harms - but rather issues about the democracy, money's role, corruption of regulation, etc.

Look back to the 1940's to 1960's, we have some model - country doing great, middle class doing great, economy doing well, lot of good things.

Then since Reagan, that has been abandoned,with the bottom 80% getting none of the economic growth even as the economy more than doubles, money buys govrenment etc.

That is the biggest pile of tripe I've heard in a while.

From the 1940's to the 1960's, we were doing well because we essentially the only industrialized country in the world. The rest had been decimated by WWII, and were struggling to put the pieces back together.

Oh, and....

http://www.davemanuel.com/median-household-income.php

You're completely wrong on household income since Reagan.
 

bononos

Diamond Member
Aug 21, 2011
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Line of thinking drawn from the Apple/Ireland thread, among others.

It seems to me a lot of people think it's "unfair" that companies are stashing money overseas, not wanting to repatriate it at the current 35% rate, or laying off workers to keep profits high. .
....
Its odd that you talk about Apple but your title has 'public corporations' which refers to govt owned companies.
 

bononos

Diamond Member
Aug 21, 2011
3,911
172
106
.....
Look back to the 1940's to 1960's, we have some model - country doing great, middle class doing great, economy doing well, lot of good things.

Then since Reagan, that has been abandoned,with the bottom 80% getting none of the economic growth even as the economy more than doubles, money buys govrenment etc.
While I agree with you about Reagan, I think its important to note that things weren't doing so well which allowed people like Reagan to take over.
 

IBMer

Golden Member
Jul 7, 2000
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My concerns about corporations aren't so much with taxation but with the limited liability it provides. Its rare that management is brought up on criminal charges for choices that they have made that have lasting negative impacts. Somehow it was the corporations mistake and not theirs even if there is a very clear link to them. They can cash out with huge golden parachutes and still live a luxurious life with no recompense.
 

Craig234

Lifer
May 1, 2006
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While I agree with you about Reagan, I think its important to note that things weren't doing so well which allowed people like Reagan to take over.

(Skip this if you aren't interested in discussing Reagan and related, it's a digression).

That's a good point that needs to be addressed.

Part of the problem is that Republicans are masters as the opposition at attacking and promising all kinds of things if you just give them power.

Remember when Bush ran against Gore, did the country want to continue on the road of Clinton and Democrats? Well, a majority did, but remember Bush's campaign.

He promised no more scandals, a very respectable government, no more of those excessive US military interventions around the world Clinton had done, he said that he wanted a "humble" US foreign policy that would not try to nation-build. He was very pro-peace. He promised integrity and transparency. Economically, after Clinton got the defict down from record levels to zero, Bush said that he would use some of the surplus for a tax cut, and the rest to pay off the total national debt within 10 years.

Are you a little concerned he's only concerned about the rich? He promised to be a "compassionate conservative", so there's no need to vote for Gore.

It's jaw-dropping how much at odds with his policies that campaign was. Reagan was a professional spokesperson, so he was very able to paint a picture of milk and honey. He'd done the same thing running for governor of California - how did a non-politician defeat a very skilled Democratic governor of California in the golden age of the state? It's an educational anecdote.

A key to his election was that he went around attaking the 'radicals'. His advisors said what are you doing? Polls show maybe two percent could care less about that issue, it's not getting you any votes. He told them give him time and they'd care, and sure enough, he pushed the issue over and over, where the press covered it, that he made it into a campaign issue people started to care about, and it fit him very well. (The other key issue as I understand was Governor Brown's opposition to capital punishment).

But with all that, there were big problems - but we also didn't know how well some things were working. After FDR, we'd had zero major banking crises for the first time in American history. Prosperity was shared by all, poor and rich - why would that change? People had no idea.

Fact is, the perception under Carter - who kept us out of war - was that the Iranian hostage taking - a by-product of the Republican removal of democracy in Iran under Eisenrhower - was seen as some terrible foreign policy issue where the US was 'weak', and we needed a 'strong' leader (which they didn't realize meant one who would get Marines blown up in Lebanon, sell missiles to Iran illegally and get 14 top adminitration officials indicted in Iran-Contra funding terrorists and death squads).

And of course there was the inflation, a by-product of problems before him and made worse by the oil embargos from the middle east - a problem Carter inherited, got blamed for, and set the solution in motion with the appointment of Paul Volcker to head the Fed, who Reagan re-appointed and got the credit for the improvements.

So there were problems - but there was a lot very right that was about to get broken.

And there's something that's a problem at times with our voters' judgement, to put it indelicately. With Reagan putting the nation on the wrong course - and borrowing prosperity with unprecedented peacetime deficits - Reagan was re-elected with an enormous electoral majority. 49 of 50 states as I recall, big mistakes. But Bush was re-elected also. Nixon had a massive re-election as well, as horrible as he was, about to become our most despised president in history (until Obama, of course).

But you're right - in part, Carter tried to give some tough talk to the country - about things like the need for energy policy reform - and the country wanted soothing instead.

Probably the most memorable moment of the debates was Reagan using a practiced line he'd saved up on Carter in response to Carter criticizing him on his social security plans - funny thing was Carter turned out to be right, but Reagan got the votes with his polished presentation.

I think to this day most of our country does not appreciate just how much of a wrong course Reagan set the country on. The roots of the massive debt, of the Neocon type security establishment that was behind Iran-Contra and took power against under Bush to push the Iraq war, the anti-labor policies that have hurt workers and unions to today, the deregulation that led to the Savings and Loan crisis and paved the way for more deregulation under Clinton and eventually the 2008 economic crash...

The problems of Carter seem small now. At the time, Reagan was the cowboy the country wanted.

Basically, it was a huge shift away from policies that work and government for the people, towards policies that benefit a few at the expense of nearly all the citizens.

I think Americans feel more powerless to get good government now than they have in many decades - with Obama providing a bit of a reprieve as a compromise.

We've really dodged bullets with McCain/Palin, and Romney/Ryan. 2016 is not pretty.

Your basic point is right, that the issue is the country turning away from its liberal period to Reagan.

Even the two Democrats elected since are not really liberals - Clinton supporting big banks and deregulation, 'the end of welfare and big government' - and Obama pretty close.

The only candidate I recall being very good with a chance in a long time is Howard Dean - the only person I find pretty promising in 2016 is Joe Biden.

Really when you look back at the fact under Carter so much was a lot better about everything from income and wealth distribution, to peace, to corruption (when Reagan was elected, there were about 900 lobbyists compared to over 35,000 today) - but people found Reagan attractive.

Republicans had worked hard in the 1970's to pave the way for a Reagan as well, though, building political organization and right-wing 'think tanks'.

OK, back to public corporations.
 

Craig234

Lifer
May 1, 2006
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350
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My concerns about corporations aren't so much with taxation but with the limited liability it provides. Its rare that management is brought up on criminal charges for choices that they have made that have lasting negative impacts. Somehow it was the corporations mistake and not theirs even if there is a very clear link to them. They can cash out with huge golden parachutes and still live a luxurious life with no recompense.

A good book that has some history on this is Thom Hartmann's "Unequal Protection". It's about the history of the claim corporations are people, but it has the history of how corporations started, under Queen Victoria, when the noble class wanted to be able to run around the world doing bad things to make money and not risk their own funds.

By the crown creating the East India Tea Company and giving it that sort of limited liability, it was a money machine for them. It paved the way for corporations later.

There are some real problems the liimited liability you mention does cause, and it seems worth looking at changes about that, but politically, that's a challenge.
 

Craig234

Lifer
May 1, 2006
38,548
350
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Its odd that you talk about Apple but your title has 'public corporations' which refers to govt owned companies.

"Public corporation" = publically traded, owned by shareholders who elect directors; private corporation = no stock, no public ownership by buying that stock.

A privately held company has far more freedom nothaivng to worry about Wall Street pressure for quarterly profits, all kinds of regulation and disclosure, and such.
 

Hayabusa Rider

Admin Emeritus & Elite Member
Jan 26, 2000
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Amend the laws to allow a greater number of shareholders to have a say. That would make boardrooms more accountable.
 

nehalem256

Lifer
Apr 13, 2012
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"Public corporation" = publically traded, owned by shareholders who elect directors; private corporation = no stock, no public ownership by buying that stock.

A privately held company has far more freedom nothaivng to worry about Wall Street pressure for quarterly profits, all kinds of regulation and disclosure, and such.

http://en.wikipedia.org/wiki/Koch_Industries
In 2011, Forbes called it the second largest privately held company in the United States (after Cargill), with an annual revenue of about $98 billion,[5][6][7] down from the largest in 2006. If Koch Industries were a public company in 2007, it would have ranked about 16 in the Fortune 500

I don't think whether a company is good or bad is determine by whether it is privately or publicly owned.

Easy peasy solution. Just change the law so that any profits held outside the country will have an increasing tax rate the longer they stay there. If Apple knew next year the tax would be 5 percent more and then 5 percent more every year the money would be back in the US tomorrow.

Was the money ever in the US to begin with? Or is it a case of earning the money overseas and keeping it overseas?

If a company earns money overseas why should they be expected to bring it back to the US?
 

fskimospy

Elite Member
Mar 10, 2006
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One important note is that corporations are required to act in the best interests of the shareholders. What that actually means in practice can vary an awful lot, and does not necessarily mean that they have to dodge taxes.
 

bononos

Diamond Member
Aug 21, 2011
3,911
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"Public corporation" = publically traded, owned by shareholders who elect directors; private corporation = no stock, no public ownership by buying that stock.
.....
Gah I confused it with state corporations.

To comment on your long post about the Carter period and the Reagan revolution- I think there were larger problems with the economy apart from the high inflation, it wasn't growing as fast anymore as well. Europe and Japan were past the catching up phase and were the stronger growing economies. That was crucial for political change.
 
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Exterous

Super Moderator
Jun 20, 2006
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Easy peasy solution. Just change the law so that any profits held outside the country will have an increasing tax rate the longer they stay there. If Apple knew next year the tax would be 5 percent more and then 5 percent more every year the money would be back in the US tomorrow.

Not really. They could just invest\continue to hold that money outside the country and never bring it to the US
 

Charles Kozierok

Elite Member
May 14, 2012
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One important note is that corporations are required to act in the best interests of the shareholders. What that actually means in practice can vary an awful lot, and does not necessarily mean that they have to dodge taxes.

I think it really depends on what "dodge" means here.

If management can legally save the company billions of dollars in taxes, how is it not their responsibility to do so?
 

fskimospy

Elite Member
Mar 10, 2006
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I think it really depends on what "dodge" means here.

If management can legally save the company billions of dollars in taxes, how is it not their responsibility to do so?

It might be good management practice to do so, but they are not legally required to.
 

Craig234

Lifer
May 1, 2006
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350
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One important note is that corporations are required to act in the best interests of the shareholders. What that actually means in practice can vary an awful lot, and does not necessarily mean that they have to dodge taxes.

As a practical matter, it basically means they have to dodge taxes.

NPR reported that basically every technology company engages in these tax schemes.

And I don't think they're alone.

It comes down to the financial people offering management options - this one pays more taxes, that one less, which do you want.

The way NPR put it was, no CEO wants to be the one to say 'I volunteered to pay more'.
 

Charles Kozierok

Elite Member
May 14, 2012
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It might be good management practice to do so, but they are not legally required to.

I think it would be easier for me to understand your point if you defined your terms more precisely. You said that they have to act in the best interests of shareholders. It's hard to see how they do that by spending billions in taxes they don't have to spend.

The only way I can see paying the taxes squaring with the shareholders' interests would be if not paying them meant a severe PR setback. And you'd need a lot of bad PR to account for billions of dollars' worth of taxes.
 

Lithium381

Lifer
May 12, 2001
12,452
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It might be good management practice to do so, but they are not legally required to.

I can see where that could be the case; supposing the stockholders wish the company to do "good things" with the money instead of paying dividends or working to increase the value of the company. But, most people who own stock are doing it for personal benefit, to earn money to save for retirement etc... if they wanted to "do good" then they would donate to a charity, not gamble in the stock market.



and i think Craig summed it up, but we're talking about publicly traded corps... private companies, not government entitites.
 

fskimospy

Elite Member
Mar 10, 2006
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I think it would be easier for me to understand your point if you defined your terms more precisely. You said that they have to act in the best interests of shareholders. It's hard to see how they do that by spending billions in taxes they don't have to spend.

The only way I can see paying the taxes squaring with the shareholders' interests would be if not paying them meant a severe PR setback. And you'd need a lot of bad PR to account for billions of dollars' worth of taxes.

My argument is from a legal standpoint 'acting in the best interests of shareholders' is such an incredibly broad term that it is exceedingly rare for any company executives to run afoul of it. I'm not privy to exactly what Apple has set up but it is also likely that such funds can't be brought back into the US without being taxed, therefore Apple could have chosen to pay taxes on that $$ in order to use it to invest in the US, etc.

Long story short, I do not believe it is accurate to say that Apple's management was required to structure their finances this way. Maybe it made good business sense, but it was not forced upon them.