Interesting thread Steven.

Good points.

Here's a simple analogy ...

In us all ...
We have a left and a right and a
head in the middle. The head decides
what is good for the left and the
right, which is the one common body.

So in politics, we need a good head
that decides what is good for
everyone. Not the left or the right.

A united body under a good head will
benefit all.

CORPORATION, n. An ingenious device for obtaining individual profit without individual responsibility.

(Ambrose Bierce, The Devil's Dictionary)

There are so many misconceptions about corporations I don't know where to start.

In a trivial sense, Ambrose Bierce is correct. A corporation does enable investors to reap individual profits without having individual responsibility and THIS CAN BE A GOOD THING.

Who would invest in an enterprise if they were individually liable for every error of judgement, every misdeed, every act of stupidity of every employee?

Imagine if you had to go to prison because your super fund held some stock in a company whose CEO committed fraud.

Imagine if you were personally liable for debts incurred by a company in which you owned a small number of shares.

The joint stock limited liability corporation is what makes large scale enterprise possible. It provides a way for investors to invest a portion of their capital in RISKY enterprises without exposing themselves to ruin. If the enterprise succeeds they reap rewards. If, as happens often, the enterprise fails, their loss is limited to what they have invested.

HOWEVER,

Secondly, corporations actually have no power. PEOPLE exercise power using corporations as a vehicle.

Thirdly, people with power often misuse it to the detriment of everybody else.

Here we come to the sub-prime mortgage crisis. There are PEOPLE who made more money in one year of writing sub-prime mortgages than most of you will see in a life time. What they did was detrimental to the well being of:

--The shareholders;

--Other employees;

--Their customers;

--The economy generally

But they, the senior managers, the bond traders, the mortgage brokers, the directors, made huge amounts of money which they get to keep

It is very hard to prove they did anything illegal for the simple reason that they probably did not.

I have no simple solutions to this sort of thing. In regulating the activities of people who run corporations we need to be aware of throwing out the baby with the bath water.

As an example of what MAY be abuse corporate power consider this case reported in The Guardian.

DRUG GIANTS ACCUSED OVER DOCTORS' PERKS

See:

http://www.guardian.co.uk/society/2008/aug/23/health.pharmaceuticals

"Drug companies are spending millions of pounds every year on all-expenses-paid trips to conferences around the world for doctors and other hospital staff, in what critics say is a massive marketing exercise dressed up as medical education."

Consider the following:

--Doctors do not have to accept these perks. Before we paint the Big Pharma as the sole villain we should consider the doctors as well

--Does this actually cause doctors to prescribe inappropriately? Honestly, I don’t know. I suspect it varies from doctor to doctor.

Should the practice be banned?

Absolutely!

BUT THERE IS ANOTHER ISSUE HERE.

Britain's NHS is notoriously stingy when it comes to investing in the skills and knowledge of their medical employees. Very often the ONLY way doctors get to learn about new medications is through drug company promotions of the sort described here.

So if this practise it to be banned the NHS should pay for doctors to attend a few medical seminars every year. It could prove to be cheaper in the end.

Perhaps the drug companies and the doctors are the villains.

Perhaps they are merely reacting to the counter-productive behaviour of the NHS.

Perhaps a bit of both.

Real life is rarely as cut and dried as the self-righteous, know-it-all pundits would have us believe.

Foxy,

Here's another analogy. A bird with only one wing flies around in tight little circles (or, more realistically, crashes to earth).

Pelican,

"Change will start first at the grass roots just with ordingary people choosing not to take part in the cycle of greed and debt."

True. Collectively, Joe Public has more power to change the dominant paradigm than he actually realises, but will only use it when he gets mugged by reality.

stevenlmeyer,

"... corporations actually have no power. PEOPLE exercise power using corporations as a vehicle." and "Real life is rarely as cut and dried as the self-righteous, know-it-all pundits would have us believe."

Spot on.

When it comes to the injustices you mention, one can count on life itself to apply its own checks and balances (through the Law of Reciprocal Action) down to even the tiniest detail. People in the financial system who have perhaps not broken the written law but have done something immoral - through either a direct or indirect action - will eventually have the fruits of their deeds blow back on them. With interest.

RobP wrote:

"People in the financial system who have …done something immoral…will eventually have the fruits of their deeds blow back on them."

I see little sign of this happening – mainly because the really smart ones take the money and leave the financial system before the brown stuff hits the fan.

Consider this.

You are a 25 year old unmarried financial trader. By taking risks with your employer's money you can make millions. Enough to set you up for life.

If your gamble works you're rich.

If it fails you're a young, articulate, well-educated 26 year old with no responsibilities looking for a job. No big deal.

For you it's a gamble with a huge upside and little downside. You'd have to be a saint to resist the temptation and few of us are.

But here's the thing. If you are REALLY smart you can WIN EITHER WAY.

It's literally heads I win, tails I win.

You bet one way with your employer's money. If the bet comes off you get a bonus of, say, $10 mn. No exaggeration. Those sorts of bonuses are paid. Call this gamble 1.

Secretly, and privately, you bet the other way. Call this gamble 2.

If gamble 1 comes off you collect your $10 mn bonus. You've made a loss of maybe $5 mn on gamble 2 so you're $5 mn ahead.

If gamble 1 goes bad you lose nothing. Your employer may lose $100 mn and you may be out of a job but so what?

On the other hand gamble 2, going in the opposite direction, pays off $5 mn. So now you're $5 mn ahead.

This is illegal but if you're clever about it the chances of being caught are slender.

Suppose gamble 1 comes off. You're $5 mn ahead and still have your job. The following you it turns out the securities you bought, that paid off so brilliantly the previous year, are sub-prime mortgages with a value of zero.

YOU DON’T HAVE TO GIVE YOUR BONUS BACK. Your company has suffered but you're still $5mn ahead.

stevenlmeyer,

I suppose the biggest example of stealing the community's money and getting away with it, is the Government through taxation or the banks through charging interest on loans. At least those two do something for the money they take/make.

There will always be some self-serving and opportunistic rogue traders who do well in a particular financial paradigm - and the example you give exists only in one paradigm - but what happens in the next big one? By then, the $5 million man may have used his money to set up a small business, which eventually goes under, is bought out by somebody else, or is just sold in a fire-sale because the value for that kind of business has dropped in the market. Or else he spends it, thus helping to create a job for someone as well as to pay more tax back to the Government through the GST.

I'm pretty sure that, one way or another or in a range of ways, his ill-gotten gains will eventually come back to those in society who created his gains in the first place. And if there was malevolent or indecent intent in his original actions, that will come back to him personally as well.