One of the primary purposes of incorporation is to shield investors from liability. Investors can only lose their investments, not be penalized for the wrong-doing of the corporation. So, in essence they are free to participate knowingly in the profits from the malfeasance and irresponsibility of the corporations in which they invest without being held accountable as would people committing the same acts. In order to accomplish this, "corporate personhood" was established, giving each corporation all the rights accorded an individual, without holding the corporation responsible in the same ways as an individual. You can send a corporation's officers to prison for their illegal acts, but the corporation and its investors can skate off scott free. So look around at the state we are in. There is a movement afoot, or "at hand" to change the laws regulating corporations to remove their "personhood."
In any case, this is an issue we should get more acquainted with. Should corporations be afforded more power and influence than real people? You can begin your investigation HERE!
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Umm... Do you have a 401k or other retirement plan with stock in it?
ReplyDeleteIf so, do you want to be liable if the corporation your plan invested in screws up somehow?
The basic idea behind the corporate model is that most of the time investors DON'T know very much about the inner workings of the corporation at all, and are in no better position than any other regular person to know about any malfeasance and irresponsibility.
I mean, do you think the Enron shareholders knew about its malfeasance and irresponsibility?
Should those regular Joes who lost their life savings be responsible for Enron's corporate debts, too?
IMHO, if a company you have stock in participates in any sort of gross malfeasance and irresponsibility, the smart thing to do is sell your stock and invest someplace else because malfeasance and irresponsibility is rarely profitable in the long term and it only takes one class action suit or one new federal law to cost you your investment.
CC
We all have a responsibility to become more aware and invest with an eye to ethics. We seem to be quite good at avoiding a sense of responsibility for the things that make us feel uncomfortable.
ReplyDeleteThe system as it is set up makes it easy to say, "I just didn't know." When maybe we should be bothering to find out. The post "shipbreaking" on the UU site is rather revealing. There are hidden costs to everything, but ignoring the hidden costs has not been such a good idea so far.
Yes, I do have a newly formed 401K with about $200.00 in it. My other investments have been in my own business which I try to run in an environmentally responsible fashion.
ReplyDeleteNo, Enron shareholders probably didn't know. As long as the money is coming, most don't even bother to look.
We are learning that malfeasance has its price. And that unconsciousness also has its price.
The problem with "Corporate Personhood" comes when the government uses that to rationalize deregulation. Because incorporation is used to shield investors from responsibility, there has to be other means to provide security to both investors and the general public. Regulation.
If it were so easy for the average investor to find out about corporate irresponsibility and malfeasance, don't you think financial reporters would find out just as quickly?
ReplyDeleteIf you're the first financial news source to advise the market that some large company is doing something irresponsible and/or evil, then you've just made a lot of money.
So if reporters aren't finding out this information and making names for themselves with it, my guess is that it isn't as easy to find as you think it is.
You seem to be running under the assumption that the Enron shareholders had a place "to look" and if they had only looked in that place, the fact that the corporation was behaving irresponsibly and they were about to lose all their money would have been obvious.
I really doubt they were as stupid as you seem to assume.
I'm not sure why you are now advocating providing security to investors. The system we have right now does that pretty well as long as investors diversify their investments, which admittedly the worst-hit Enron folks didn't.
The usual justification for deregulation isn't so much corporate personhood as it is that regulation is inefficient and expensive all around.
I'm not saying that regulation is a bad idea, but you seem to be conflating several different concepts here.
CC
I just suggested that people look into the concept of corporate personhood, and was not intending to sustain a major discussion with you or anyone else, unless the issue is about the hands.
ReplyDeleteWe are made smarter when our hands are engaged in learning and essential human values have been lost through changes in education, eliminating hands-on learning.
The problems with American corporations is far greater than I have time to deal with on this blog, but if you want to talk about the hands, go for it.
As to it being easy for people to find out things? It is made difficult by the idea of corporate personhood. If you are a corporation, you get to hide lots of stuff.
Now back to the shop. I'm making boxes.