“The  business of America is business” – Calvin Coolidge, President 1923 – 1929

Corporatism

“Silent” Cal was one of America’s greatest of Presidents and he is one of my favorites.  When he said the above quote America was coming out of The First World War; an economic depression and the death of a popular elected President – Warren G. Harding after only 2 years.  Coolidge guided America through one of the most exciting, innovative and prosperous decades that this country has ever experienced.  The corporate tax rate was 10% and unemployment was about 4% and we were a happy people.  That happens from time to time.

America is the new Rome.  Rome is more often thought of as an empire built on it’s military might and that is true to a degree.  Their innovation in military tactics, weapons and organization allowed them to dominate battlefields but it was the growth in their commerce and development of markets that paid for those military innovations.  Rome was about commerce.  Then to borrow a Richard Lester movie title “A Funny Thing Happened On The Way To The Forum”.  Corruption set in and rotted the system.  Our system is rotting out the same way.  Capitalism is being blamed but what is at fault is the lack of Capitalism and Free Market practices. Government interference in the market system creates imbalances and ultimately prolonged corrections in the economy.  Government also shows favoritism to certain businesses and sectors of the markets.  A well used phrase is “Crony Capitalism” that describes a close relationship between a politician and a business; it is a misleading label.  Free Market capitalism by definition does not include that as an aspect of a viable market.  It is more accurately put as “Crony Socialism” or as I prefer “Corporatism”.  Politicians enrich themselves and their families with corporations who pay for market share protection through tariffs, tax exemptions, illegal migration flooding the labor market with cheap labor thereby driving down the wages.  These are only a few ways and it does not end with the Federal government.  State and local governments are as guilty as their Federal brethren.  Look at the modern “Roman” colosseums where the modern day gladiator works; all taxpayer built for the benefit of millionaires or in some cases billionaires.  Since the SCOTUS decision in 2005 (Kelo vs. City of New London, Ct) developers can now induce local towns and municipalities to condemn private property for their own enrichment.  Payments to these political “leaders” are made through campaign contributions and also the use of hiring family members for high paying jobs that they may or may not show up for except on payday.  Campaign contributions is the governments main money laundering operation.  One example is Planned Parenthood, they are supported in large part by the Federal government and in turn donate to politicians large amounts of money (primarily to the leftist Democrat Party) and I am sure that the stalwarts on the Republican side of the aisle have their corporate sponsors. A rather new payoff scheme is the hiring of a politicians family member and paying them exorbitant salary or a normal salary with a very liberal attendance policy.  The Chinese government has a name for these people – “princelings” – and in the case of former Vice President Joe Biden the Chinese government made his son a billionaire while good old Joe was negotiating trade deals with them. To show bipartisanship works  Senate leader McConnell’s family has also benefitted from this practice.  Where does all the money come from?  You and me, the consumer and taxpayer.  The taxpayer foots the bill that is seen but the under the table bill is paid by the consumers through higher prices for the commodities we purchase.  How long before it crumbles?

Does Size Matter?

Along with “Crony Capitalism”, a phrase that arose from the 2007/2008 “bubble” pop and subsequent recession,  is “too big to fail”.  A phrase that was used by the  Fed and the Treasury Department to strike fear into the hearts of the elected legislators in order to save companies that had practiced and prospered from bad business practices.  These companies were mainly the large  financial corporations though Detroit (less Ford) also took part.  While a few of them may have failed as they should have, most would have survived but the upper management would have been skewered by the stockholders.  Instead, with the Fed and Treasury running the show, management in these corporations received very large bonuses at the expense of the American taxpayer and consumer.  A big problem is the practice of hiring former management from these companies to run the very governmental entities that are there to watch them and make policies.  Goldman-Sachs is the “management mill” for the SEC for instance.  The term “conflict of interest” does not apply anymore and it undermines the citizen / taxpayer’s security.  For a non-partisan critique of the Bush/Obama policies regarding the great scam of 2008 you should read David Stockman’s “The Great Deformation”; a huge tome but for the most accurate analysis that happened in 2008 and earlier you can’t go wrong with this book.

In business size does matter. It shouldn’t but it does.  The larger the organization the more favorable attention it receives from politicians and government officials.  Critics of Capitalism and the Free Market will not acknowledge that we do not practice either in America and haven’t since the short period after the Civil War to about 1900 when the “Progressives” started to gain power.  The Progressive movement was actually funded by the large corporate entities (mainly the railroad tycoons) that the Progressives professed to rein in but in fact were there to limit competition and protect the established large corporations. In a truly free market system there is nothing that is “too big to fail.”  And that is the beauty of a free market system.  Businesses must make a profit to stay viable but too many companies (especially the large corporate structured) find it easier and in their minds more cost effective to deal with competition through “political” means.  Success comes from outside the marketplace and only enriches and empowers the politician.  What use to be known as graft is now “campaign contributions” and graft has always been a factor in every society.  Some are more blatant than others but all have the same effect; it steals the wealth and corrupts the moral and ethical underpinning of a society.  Unfortunately our society is far down that path.

In order to be successful you have to not only provide goods or services better than your competitors but you also have to do things the right way.  A company can dominate a market by just offering much lower prices but it’s dominance will be short term if it practices unethical and immoral behavior.  The fact that the terms “ethical” and “moral” have been practically erased from our society as being “too judgmental” and absolutely no one wants to be called judgmental (about the only thing worse is being called a Trump voter); does not mean that they do not exist and render consequences.  To a corporatist; ethics begins and ends with control.  Initially control is exercised to limit expenses and add to the profit.  Profit is the lifeblood of business and those who dreamily insist that it should be abolished because it is bad should wake up to the reality that everybody works with the profit motive at some level.  Even in the most communistic countries the profit motive was at work albeit only for the leaders but it was there.  But let’s put profit motive aside for a moment to address the true purpose of corporatism and that is control.

The Corporate Worker

To be an American worker in today’s corporate environment is to feel like a temporary appendage who is only there to serve at the whim of the manager above them and here again size matters.  Bad management is easier to hide and cover up in larger companies.  In fact, the larger the corporation the less good management matters. In my experience the smaller the business the better the work environment as the management is generally the owner or the owner is quite accessible unlike the large corporations.  The further the owner is from the actual management the worse the working environment will be ultimately. Does this mean that every shopkeeper is an honest, amiable boss?  Of course not but in my experience the chances are significantly better when you are working with the owner than with a bureaucrat.  And when the owner is comprised of multiple people called “shareholders” the whole working environment changes dramatically as the focus turns from a long term environment to a very short term bottom line performance based operation.   If the corporate environment has done anything it has made the short term the guiding star for operations and it has been adapted to our society as well.  From the politicians who run our government to many personal relationships; operating from the short term is the standard.  It is seen as the easy path to take whereas long term is the road less traveled.

Short term does not require good relationships.   In the corporate world it is a manager who sees themselves as “boss” and feels that they must yell or be nasty in order to achieve short term goals.  Most managers like this are short term themselves.  Corporations love these types as they are seen as “effective” in meeting the short term goals made by their superiors.  They move on after wreaking havoc upon the workplace and workforce and the manager following has more problems to contend with that were created because of the “effectiveness” of the previous manager.   What is the matter with Corporations that continue to hire these failures?  The food service industry is comical how incestuous management has become; with managers moving from one company to another without any accounting for their ability.  There is example after example of this phenomenon in the sports industry.  Teams rehire managers that fail on a constant basis.  It is a revolving door and each time one of these people are hired we are told that they bring a “new freshness” brought about from their experience.   There is no accountability to those who do the hiring.  It seems that when they hire they are following some cosmic whim believing that they have special powers to change someone whose track record resembles Stalin’s  to become a manager along the lines of Steven Covey.

Corporate Culture

Of course it depends on the Corporate “culture” and it’s “mission statement”.   Most Corporations and companies have statements that define their beliefs. Supposedly the stated goals and beliefs of the “leaders” of the organization which is a nice thing to have but unfortunately most companies have mission statements that describe themselves as followers of Mother Teresa but in reality their actions more closely resemble Vlad the Impaler.  Platitudes about the environment, acceptance of all people regardless of race and now “gender identification”, the rights of all living creatures etc. abound throughout these statements that are written more for the consumption of social activists and do not represent the real life purpose of the corporate management class.  How do they come about?  A board member’s spouse or 3rd. grade offspring suggests that it would be nice and so at the next meeting they raise the subject.  Not wanting to make another member of the Board look or feel bad they agree and give the CEO instructions to see it completed.  The CEO then passes it on down the chain until it arrives at the desk of a newly hired college graduate who has a Liberal Arts degree in English and Social Justice.  Seeing this as their big chance to impress their boss and get out of the mail room they go home and pull out their notes from school.  After getting clearance from the Legal Department it goes to the Marketing department for publication and distribution.

I pay little attention to what these statements say because they have become just another sales gimmick or an exercise in self absorbed masturbation by the Corporate officers.  As usual I can only go on my own personal experience.  I was hired by a small company that did not have a “mission statement”.  The attitude and expectation by the owner was that you come to work everyday and do your best to deliver to the customer.  It was a small crew but we worked together and developed a good reputation in the industry.  We did what it took to get the job done correctly (during one stretch we worked 30 straight days averaging 10 – 12 hours a day).  We made mistakes but they were minor and we were always honest with the customer about any mistakes we made and the honesty was appreciated.  The owner wanting to get away from the daily grind and focus his energy on development brought in his son to run the company.  A very nice guy but he had developed his management skills while at GE ( you can’t get much bigger than GE) and it almost cost them the business.  The company went through an expansion and with that expansion came the inevitable problems which led to a short term focus and away from the unstated business values we had so I walked away.  It was a mistake on my part but at the time I felt there was no other option and within a year the company was found to be falsely reporting data and their reputation for honest interaction with the customer along with their checkbook took a hit.

Currently I work for a large corporate entity who is the largest purveyor of school transportation services in North America and I would say a pretty typical corporation.  They have platitudes and stated commitments coming out of their exhaust systems.  It is all show.  Their motto, “Safety First” sounds like a good caring company but you soon learn that it is applicable only when discussing the bottom line.   We have had drivers chastised for calling in over the radio that one of the buses had no brake lights (the school district supposedly monitors the communications); a door fall off while driving a sports team (the driver had noted a problem with the door but was told that was the only bus that they had); a driver had the brakes fail on his bus twice within a week and that is only a few of the mechanical problems.  These are things that only a few parents and taxpayers know of so the company and School District can easily manage any parental concerns.  Of course in their defense the term “Honest” is not included in their statement.  This company is not the first nor will be the last with the problems they create.  If the problems did not involve the safety of students and drivers alike it would be a “so what” situation.  Part of the problem with this company is that it is a European owned corporation and frankly there are very few good things coming from Europe, anything good had left for America years ago.  Their greatest weakness is the lack of talent at local level management.  Their idea of management is having someone constantly filling out checklists and having their noses in a computer screen.  The information technology available is a two edged sword that is more frequently used to control and punish in many businesses then for anything else.  The effect is a very poor quality of managers who are really just data entry clerks and as such they are paid accordingly but not having any people skills whatsoever.  Since their takeover in 2008  of the company I started with we are on our 4th. “location manager” and with the exception of the immediate predecessor of our current manager (and she quit after 1 year) the managers have ranged from being comically lazy to totally out of their depths.  The effect of bad management is something that is visible but uncalculatable.   For example our employer use to have employee surveys to measure their success and at least at our location ceased using them.  Their stated goal was to become listed in one of “America’s Most Desired Employers” rankings.  I think they gave up on that pursuit.  They instead chose the short road of control and instant profit maximization and on that short road there is no room for employee morale or care.  It is much easier to pay unqualified, unsafe and inept management than to hire and maintain good quality managers and while the corporations such as the one I presently work for are making money, everyone is paying the price.  That price is seen through high absenteeism amongst drivers,  a shortage of drivers in the industry and a high degree of stress on the employees.  The unseen price that parents and taxpayers do not see is the unsafe conditions that are covered up by the corporations and in this case also the School District.  And that filters down through to our society which does not bode well for America.  I used my current employer and mentioned the food service industry but it is a rampant corporate disease, UPS has for the most part horrible management very similar to the Postal Service; Amazon has through it’s expansion proven to be quite the exploiter and the list grows and grows.

Within the Corporate structure two departments are currently the driving force behind the company.  You would think that the Sales department would be one of them but you would be mistaken.  It is the Legal and Risk Management departments.  These two combined have created a corporate illness called “risk aversion syndrome”.  There is such a fear of “risk” that common sense is deemed too risky to be trusted to the people employed.  So much time is wasted in meetings and training sessions but I guess that without them a lot of lawyers and mid level risk managers would have to find work elsewhere.  It should be noted that our society has become extreme in the litigation and perhaps this corporate structure is just a reaction to societal pressures but I tend to believe that is a smokescreen to cover their true motive: control.  The problem with having lawyers and risk managers running the corporations is that the list of “preventable” accidents is endless and has become a means of controlling behavior and draining wealth.  There is a cost to all these actions and that cost is borne by the consumers , taxpayers and the American worker.  Pockets too deep to be ignored by the greedy.

What Can Be Done?

Nothing.  The snowball has grown too large and the momentum is too great that small measures taken to will only have marginal effect on speed and direction of our economy.  Corporate governance has changed over the years with the role of the shareholder not having a voice in the operation.  Upper management has over the decades through litigation and political maneuvering has made the shareholder useful for only one thing and that is a flow of capital.  When you hear of the tremendous and outrageous wealth garnered by these “captains of industry” the cause is not out of control capitalism but just the opposite.

There is an excellent book Corporation Nation by Robert Wright that gives a concise of the history of our corporate history and the various changes in the governance that has taken place.  A little dry in some parts but for a better understanding of how we have arrived at this point this book is essential.  One of the root causes he points out is the over-valuation of stocks themselves.  That is a topic for another conversation though but by over-valuing the stock is how upper management maintains it’s power.  The last threat to management abuse and malfeasance was during the 1980’s with people known as “corporate raiders” (T. Boone Pickens being one of the more notable raiders).  These raiders were painted as nasty, greedy men who cared little for anybody.  They actually served a valuable purpose in keeping a check on bad management.  What happened is corporate executives and  board members placed counter measures that eradicated the danger these raiders posed.  It has help corrupt our economy and the inevitable correction will come just as it did in 1929 and there is nothing they can do to stop it.

The culture of corruption in the corporate world is both a reflection of our society as a whole and a proponent of that corruption.  The only way to combat the corruption is as individuals we have to not invest financially,  intellectually or emotionally in the current corporate system.  I am told I am a cynical contrarian and I suppose I am.  That is a good start.