The corporation serves the State, not the other way around …

The eye catcher ….

During last night’s debate among candidates for the Democratic nomination for president, a number of candidates including U.S. Senator Cory Booker of New Jersey and U.S. Senator Elizabeth Warren of Massachusetts, criticized corporations operating in various industries for the greed they perpetrate on Americans.  From internet to health care to energy companies, the candidates took issue for predatory prices for health care, the anti-trust implications of large internet companies, and the tax breaks companies receive while rank and file Americans struggle.

In short, corporations should be feared …. or should they?

History of the fear ….

As usual when selling a fear narrative it is important to leave out the education component from any assertion that there is a bogey man to be afraid of.  What consumers of the political narrative should be asking is, “What is a corporation?”  “Why should I be afraid of it?”

corporation is an extension of the State.  A corporation’s purpose is to extract resources, process them, convert them into goods and services, and distribute those goods and services using price as the allocating mechanism in order to generate tax income for the state and private income or profit for itself.

To varying degrees this has been the corporation’s role for the last 400 years.  Americans have been so programmed to believe that America was discovered by adventurous Europeans that they overlook or are simply ignorant about its corporate beginnings.

Prior to the 17th century, corporations, originally not-for-profits that received charters from the British monarch, were established to meet some public works need with their duties overseen by government. During the 17th and into the early 18th century, colonial corporations had the primary responsibility of expanding the British monarch’s empire, creating monopolies and controlling trade.  These companies bought or extracted raw resources, sent then to England for manufacture, and then imported the manufactured goods into the colonies for purchase by the colonists.

Americans have forgotten (if they ever knew) that although their ancestors were miffed by the trade monopolies held by these companies and the economic oppression they contributed to, post the American Revolution, corporations were the structure that drove the private investment into the American industrial revolution.

The problem for American government by the 1820s and 1830s that like the monster from Mary Shelley‘s Frankenstein: or, The Prometheus Man, the corporation sought their own version of self-awareness and increased freedom from the strictures of the State.  It has been a back of forth battle between the State and the corporation, with the State taking a more interventionist approach by stepping up regulation in the areas of banking, energy, securities, and telecommunications.  Corporations had been created to carry out the State’s bidding in maximizing America’s resources.  Intervention via regulation is indication that the State fears that it may lose control over the corporate power it relies on to administer the Nation’s resources.

Spreading the fear to the consumer …

It wouldn’t be good social policy for the State to drop the hammer on corporation monopoly over resources if the sentiment of the public were not incorporated in its policy actions.  The optics of an arbitrary application of administrative power does not fare well in a democracy.  There has to be an excuse and in a democracy the excuse should include a discussion on the harms an unregulated corporation could have on the consumer.

Americans may be uncomfortable with the ability of corporations to engage in predatory pricing, but they have a bigger fear of a government that exercises power on a whim.  One can always substitute the product of a corporation with another product, but one cannot easily get away from a State with a monopoly on force.

To stem the fear of arbitrary and capricious application of force, the State gives the impression of fairness and due process in its rulemaking by asking the public to comment on or, when applicable to the decision, to vote.  The State gets the public to buy into regulation of the corporation by painting the corporation as harmful to the public’s interest.  It makes the corporation the bogey man; the entity that transfers wealth from the consumer to its treasury unjustly via high prices or non-disclosure of prices, terms, and conditions.

Conclusion: To serve the State …

By substituting the fear of consumer abuse for the fear of reduced power over the Frankenstein monster, the State accomplishes to goals. First, it keeps the public in check by holding itself out as a consumer protector. Second, it reminds the corporation of its role in the American political economy: that the corporation serves the State and not the other way around.

 

 

 

 

https://www.investopedia.com/ask/answers/041515/what-history-corporations-america.asp

 

The World’s First Corporations

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People don’t want freedom. They want to be led …

To pursue political power is to realize that people don’t want freedom.  They want to be led.  To be successful at obtaining and wielding political power in a consumerist society operating in and governed by corporate-capitalist republic, a politician’s approach is to create a narrative that is bought into by the electorate in exchange for votes or policy approval.

Just like I am not allowed to go behind the front counter of my favorite Chinese food restaurant and tell the cooks how to make the egg rolls, the electorate should not be allowed to participate in how policy is made.  Contrary to popular belief and false narratives, republics are not about the participation of the populace in the practice of governance.

Rather, the people’s role is limited to the qualified selection of representatives to its government and the constitutional officers responsible for its day-to-day operations.  Too many cooks in the kitchen, the old adage goes, creates a mess.  Inefficiencies in governance occur when there is little check on the number of stakeholders identified or created.  Nothing will get done.

Take the men and women running for the Democratic Party nomination for president.  Most of their campaign speeches are littered with phrases implying that they are going to “fight for you.”  Never mind that the individuals, government institutions, or corporations that they are fighting against are American.  They never assert that they, the elected official, will show you how best to defend yourself against these enemies.

Telling the electorate that you are fighting for them taps into the fear necessary for getting the electorate in line with a candidate’s leadership.  The empowered are not going to follow fear mongers.  The empowered are going to ask how candidates got in such a position of influence that they believe they can deliver promises of affordable health care, free college education, and monthly universal basic income checks.

The vast majority of the electorate, fortunately, do not have the energy, time, or critical thinking skills to ask these questions that amount to the balance of power between the leader and the led.  An “honest” politician does not want the electorate to be that insightful.  Such queries mount a clear and present danger to a politician’s power.

Instead, the “honest” politician should keep the channel to her message wide open by posting a fear-filled narrative during every opportunity that presents itself.  Issues must be painted as complex and that only the politician’s guidance and expertise need be relied on.  She should continually remind her constituents that they cannot lead themselves.

Capital. The true digital divide

A couple early morning thoughts on the digital divide.  So far the digital divide narrative has occupied two schools of thought that are not necessarily opposed to each other.

Race and the Digital Divide

The first school of thought revolves around race.  Given that within the black American community there is a higher level of poor households, affordability is keeping blacks from accessing the internet via high-speed broadband infrastructure.  If blacks do not have the income to sustain a broadband business model, then internet access providers are less likely to deploy facilities in poor neighborhoods.  Lack of deployment in these neighborhoods may result in a barrier to valuable information that may lead to greater economic opportunities, according to advocates seeking to close this gap.

Rural Communities and the Digital Divide

The second school of thought revolves around rural communities.  The argument is that lower population density as compared to urban areas makes deploying broadband access facilities in rural areas more expensive.  In addition, terrain, such as that faced by internet access providers in mountain states, has traditionally added to the problem of higher costs to provide broadband access facilities.

An Overlooked Divide

There is another divide, one that is often overlooked and it has to go to what is known as “first-mover advantage.” The real value generated by the internet is the ability to extract, analyze, package, and distribute information, and have that information be available digitally forever.  The focus on a gap between facilities deployed in black neighborhoods versus facilities deployed in white neighborhoods or the gap between rural community deployment versus urban community deployment goes to seeking out new suppliers of information.  The civil right veneer that has been placed over the broadband racial divide hides this supply-side characteristic from the policy debate.  It has also created the opportunity for the political left to craft an electoral package that can be sold to voters.

It is the other side of the equation, the production side, that, in my opinion holds more value.  When we look at the history of the internet, particularly the period when the internet was commercialized, its players included white venture capitalists; Web 1.0 internet service providers, i.e. AOL, CompuServ, Mindspring, etc.; and dial-up access providers such as BellSouth.

Black Americans could always access information from analog sources, i.e. television; print media; or word of mouth, but the efficient extraction, cataloging,  indexing, aggregation, and distribution of information via the internet were the domain of companies invested in and managed by whites.  As whites continued to level their first-mover advantage, this gap between producer/owner of capital and consumer continued to grow.

Capital not only seeks a vacuum, it also seeks a return.  Returns from investing in black or even rural communities were not going to be as high as returns invested in affluent neighborhoods, neighborhoods whose residents probably owned shares in the very companies that commercialized the internet in the first place.  Closing the “digital divide” means first closing the capital divide.

What will Government Do Next?

Government will do nothing from a capital perspective to close the digital divide. The Federal Communications Commission has a number of universal service funding initiatives designed to encourage mobile and fixed broadband deployment in rural areas; to facilitate the delivery of health care via broadband; and to reduce the costs incurred by low-income consumers for accessing and maintaining high-speed broadband service.  By subsidizing the consumer demand for broadband services, the Commission hopes to encourage the delivery of broadband services.  But again, the focus is on consumer demand, not bridging the capital gap.

The philosophical underpinnings of the American economy, where capital is to flow freely to its best use may prohibit government from taking any concrete action for closing a capital gap.  If blacks or rural residents had sufficient capital to purchase, construct, or maintain broadband access facilities, using their intimate knowledge of their communities to distribute services, we might see a decrease in the gap.  We should expect that government will stay on a path of incentivizing capital investment in infrastructure development versus trying to repair capital discrepancies via a capital transfer.