Stupid Corporations
Megan McArdle observes that, “companies quite often do stupid things. The difference between companies and the government is that thanks to market discipline, companies that do stupid things eventually have to stop, because they run out of money.”
Quite.
I think a more realistic quote would be: Governments and Companies quite often do malicious things. The difference is that governments are ultimately accountable to the people they are formed by whereas companies are not.
Example- lets say I need a life saving operation. Let;s further say we have a single payer government health insurance.
Said insurance decliens to pay for my needed operation. I have a city council of four, one mayor, various county officials, ststae representatives, state senators, one governor, one US representative, two US senators, and one president who have at least a small incentive to listen to my complaint (because they;d like my vote).
Same situation private health care- I’m screwed. Said company has no incentive to listen to me. In fact they have a disincentive.
When it comes to responsibility governments outperform private industries. Granted government performance on this measure is still anemic, it’s just better by comparison.
It’s not as if there are no means for demanding accountability for private companies. Insurance companies are subject to the law. And to private lawsuits. And to bad press and people taking their business elsewhere.
Further, if there were a single payer health system, it wouldn’t be run by your municipality but by the central government. And, while Congress and the president would set the boundaries, it would be ultimately run by unelected bureaucrats and damned near immune to oversight.
There are reasons to nonetheless favor a single payer approach, but increased accountability seems unlikely.
None that seem to work well. How well were citizens able to demand accountability from Enron? From WR Grace? From Union Carbide? These companies all committed enormous crimes against humanity and got away either scott free or with slaps on the wrist.
And they are far from the only example, merely some of the most obvious.
To risk a Goodwin violation, what accountability has ever occured of companies like VW and IBM who actively supported the Nazi reich? They are still major companies some sixty years after they helped fund the final solution.
The German govenment was called to account. the various private industries often weren’t.
That’s just not true. Those bureaucrats are quite susceptible to oversite. Remember “heckovajob” Brownie? EVEN BUSH CAN BE PRESSURED INTO FIRING THE INCOMPETENT SOMETIMES. And bush is one of the worst in terms of accountability that we have ever had.
I disagree, improved accountability is a very significant reason. You’re a fiscal conservative, right? You must believe in the power of incentives and disincentives then, right?
Look at the situation and honestly ask yourself which case has incentives to help and which has disincentives. I don’t think you can reach any other conclusion but that private insurance has strong financial disincentives to help their clients, particularly right now when you usually have no option to get a different health insurer (since it comes through your job place) but even if we remove that restriction it is almost always in their benefit to delay and deny coverage whenever possible.
meant to add-
Government may not often have strong incentives to help, but all too often private industry has strong incentives not to help.
One of Megan’s commenters nailed it:
[…]
“There are a lot of stupid things that people want done. We want criminals caught and punished. We want poor people fed. We want the elderly who invested poorly to be provided for. We want food prices to be predictable and food sources to be reliable. We want our environments to be relatively harmless when they appear to be so. We want all sorts of things that no one can make a profit delivering.”
“Something that FDR knew, and many libertarians seem to forget, if you do not give people these things that can not be delivered for profit, they will take away your marketplace. That would really be stupid.”
Libertarian ideologues tend to hand-wave these things away (Megan does this frequently), but students of history know that capitalism’s survival in the US in the Great Depression was by no means a sure thing.
hot damn, that is a fantastic comment.
So, I guess governments have some magical mechanism to ensure an unlimited supply of wealth? Simply not true. Granted, they can *print* money, but that doesn’t make it worth anything. In fact, it’s pretty well documented that when a government starts to run out of money really wacky things start to happen which serve to self correct the out of whack system.
Geebus. It’s amazing that Libertarian and Libertarian-ish people think the government is all powerful and subject to no counter acting forces what so ever.
Sure, we live in a real powerful and really rich country. But guess who lends us the money to do really stupid things like spend a trillion making a mess of Iraq? Guess who was financing the sub-prime boom? Guess who is funding the tax cuts you on the right think are god’s grant to humans?
Lord knows there’s a lot of collusion even between governments who theoretically hate each other which makes all sorts of stupidity possible which would have otherwise been nipped in the bud by forces which may not be “market” driven, but certainly are driven by competition.
Anyone who has ever worked inside a large multi-national corporation can tell endless tales of billions being flushed through fire hydrants on stupidity. The money may run out *eventually*, but it will run out *eventually* for the US, as well – there’s nothing magical about the state.
Geebus. You guys need some perspective.
Tlaloc says
I don’t have the vocabulary to describe just how stupendously ignorant that statement is. Somehow Tlaloc has avoided all contact with reality or any experience with the way things actually are. That can be the only explanation for the creation of a sentence that ignorant.
A few links to give you a brief introduction to how laughable that paragraph was.
A few isolated incidents
The important point of the information at the link is contained in this sentence
Put that in your ultimately accountable pipe and smoke it. Tamp it in with a little sovereign immunity for chaser.
More facts on the ground for Tlaloc. What happens if you actually get into court against a government agency? Here is a good example for you.
Native American Trust Fund Scandal
Tlaloc if you do the math it is 109 years between the government promise and the Indian tribes getting the government into court. Think you could survive 109 years while the government teaches you just how ignorant your comment in blockquotes is
Some more information for Tlaloc to consider.
Interior Secretary and Assistant Secretary for Indian Affairs Held in Contempt of Court
More details
Going from 1996 to 2002 adds another 6 years to the calendar. In other words to get accountability from the government you would have to live to be 115.
Once a person looks at the facts on the ground it becomes obvious that only a massively ignorant, gullible, hopelessly naive tool could write down the sentence
Wow, TJIT, guess you can always leave the country if you’re that pissed off about it.
Hal,
Thanks for your helpful suggestion on relocating. The purpose of the suggestion was?
Maybe you could point out something in the examples I provided that that should make a person happy?
Something that would support the ludicrous idea that government is more accountable for their actions then private companies are?
I guess I just don’t understand what you were trying to accomplish with your post. Maybe you could explain it to me.
I guess I just don’t understand what you were trying to accomplish with your post. Maybe you could explain it to me.
To simply point out what a complete and utter d*ck you’re being. Abuse of authority comes as no surprise. Pointing out that the state abuses their authority in no way makes your case that that everyone is a complete blithering idiot because they point out that the difference between a corporation is that the state is ultimately accountable to the people who form it.
I mean, you’re just an angry libertarian-ish prick who’s counter argument isn’t even approaching the merits of the argument you think you’re demolishing. No one argues that the state does horrific things.
Now go ahead and insult me as your primary form of defense.
In the absence of governments who is a corporation responsible to other than its shareholders?
In the absence of governments, what would make a corporation even responsible to its shareholders?
A casual study of business law shows that its origin comes about because people couldn’t hold each other to their contracts. They needed the state to enforce them.
There simply would be no capitalism without the state.
Kinda true. If the company is caught it is accountable to the customers it wronged. Further if it damages the company then the executives are accountable to share holders. And last, but not least are the customers. It may not be perfect, but governments have done things that make corporate shenanigans pale in comparison.
Now back in the real world, you’d get your operation because hosiptals are legally required to render life saving care irrespective of ability to pay.
This is an empirical question and one that can’t be answered by stupid hypotheticals that have no relation to the real world.
And what accountability has there been for the Tuskeegee experiments, Jim Crow, slavery, or the genocide in Cambodia under the Khmer Rouge?
Yes you would think a quote about how people can use the political process–i.e. government–to institute a totalitarian state would be fantastic. The apparent contradiction just seems to whiz right over your head.
Hal,
You completely missed the point (went whizzing right over your head). TJIT wasn’t saying that the U.S. government is the fount of all evil, but that putting blind trust in it like Tlaloc is coming close to suggesting is a bad idea in that the same venal and stupid people who can end up running corporations can also end up running our government(s).
That is our government has done some horrendous things in the past, and if you were to ask Tlaloc (in a different thread) he’d argue that the U.S. government is currently doing horrendous things, but by golly we should go with government because eventually (4, 6, or 8 years down the road) the voters might fix things.
For example, I’m sure that Tlaloc would argue that invading Iraq in 2003 was a bad idea, a stupid idea, and possibly even an evil idea. Yet here we sit, 4 years latter with well over 100,00 troops in Iraq pursuing an evil policy. Where is Tlaloc’s vaunted “oversight/responsibility”?
TJIT is arguing that the government isn’t as good as Tlaloc seems to think it is. For Tlaloc government is great if just the right people get in there. Of course, others with different beliefs than Tlaloc would see things as bad, stupid, and possibly evil. TJIT, I would guess (I’m putting words in his TJIT’s mouth here and if I’m wrong I humbly apologize) and like myself, would say a pox on both their houses (Republican & Democrat), and go with the market whenever possible…like a great many libertarians.
Oh…and for the Great Depression, a great deal of the blame there can be laid at the feet of the government. Lots of bumbling and stupidity there. Did you know that Hoover actually tried to balance the budget during the depression and raised taxes in 1932? In 1931 the Federal Reserve failed to act as the lender of last resort and allowed many banks to fail. Where is the accountability for that? Oh yeah, Hoover was voted out of office. Did that make those failed banks solvent? And when Congress passed Smoot-Hawley exactly how many of them were voted out of office?
but that putting blind trust in it like Tlaloc is coming close to suggesting is a bad idea in that the same venal and stupid people who can end up running corporations can also end up running our government(s)
Actually, I didn’t miss the point as this wasn’t the point of the post the TJIT viciously attacked. Saying that government is ultimately accountable to the people is *not* putting blind trust int the government. Although our system has a lot of flaws, one of the things it does try to
do is compensate for the crap that goes on – that’s one of the points of three branches of government which have competing goals and can check each other (unless, of course, they’ve all been subjected to the corruption of a single party, as we’ve currently seen, but that’s a flaw in the design).
The problem is that TJIT – and apparently you – believe that *any* faith in the American system of government is *blind* faith in the government qua government. This argument sounds good when you’re drinking beers at the college bash but really doesn’t make any sense at all from the point of view of practical reality. After all, the whole point of the example of three branches is rooted in a fundamental mistrust of individuals and is predicated on the system design to compensate for it.
Heck, designing protocols and such systems is what I do for a living.
TJIT is arguing that the government isn’t as good as Tlaloc seems to think it is. Which isn’t the point Tlaloc made. Tlaloc made the point that what ever the government does, right or wrong, it is ultimately accountable to the people. A corporation is only accountable to whatever laws we manage to hold it to – assuming it’s not incorporated in the Caymans where it can largely escape such constraints. TJIT is arguing that because the government does bad things, it can never be trusted *at*all* and consequently, government in and of itself sucks big donkey d*cks.
…and go with the market whenever possible…
Ah yes, the very same market that gives us the most expensive health care in the world which manages to leave out over 10% of our population while simultaneously giving us less for the money that we do spend than other governments get for their commie socialist government health plans.
Look, Steve, I’m a capitalist. I’ve started and sold my own successful business and have been part of several other entrepreneurial efforts (relative degrees of success) and am currently in the upper levels of a fortune 500 company. I don’t say this to make a big deal of it, but only to point out that my capitalist credentials are likely far better than most out there.
Yet I still don’t believe that the market is the silver bullet and understand quite well that one uses different tools to do different things. The market is a *tool* – a servant. Not a master. It’s not a god to worship. Used effectively, it’s wonderful. Used stupidly and blindly, it’s a terrible master – as bad as any dictator.
So, while you can poo-poo blind faith in the government, I think you should also apply that criticism to blind faith in the market. It’s just as stupid and just as bad.
Finally, again, it’s pretty clear that McMegan either doesn’t understand economics or is purposefully misunderstanding it. Rich entities can do exceedingly stupid things, but as Mexico and a host of other countries have shown, governments *do* run out of money just like corporations. They get bailed out, just like corporations. They even collapse and get carved up and recast in a new life after spending too much on stupid things (it’s called a revolution and/or civil war).
To state otherwise is to be willfully ignorant (to put the kindest face on it)
Minus the government how would the company be held accountable to the customers? Potential loss of business IF knowledge of the pattern of bad behavior becomes well known seem the only likely cost, and the if is big without government or strongly adversarial press. The executive accountability generally amounts to loss of job with golden parachute to lessen that consequence.
Which is of course because of government regulation, not corporate generosity.
There are no end of stories of HMOs denying coverage when they are able. The less the regulation, the more they are able.
TJIT seems to place his blind trust in corporations. In the absence of government regulation this is at least as foolish.
Actually that is the whole point of any kind of “managed care” system be it the government or otherwise. Look at England where they have mandantory wait times up to a few months.
Maybe he does, but most libertarians fall into the “minarchist” catagory. That is they realize some level of government is necessary.
Hal,
Representative government is flawed for one simple reason: if the public has a persistent bias about some issue then any and all policies in regards to that issue will also be persistently biased.
Do people have persistent biases? Sure. There seems to be a bias that any policy that increases the number of people employed is good. There seems a bias that “off-shoring/out-sourcing” is bad. Grewgills and Tlaloc have a persistent bias against the profit motive. If enough people have such a view then profits are viewed as bad and you get bad public policy.
Even when it comes to risks people are horribly, horribly inaccurate at assessing risks. Look at all the hysteria over things like “stranger danger” or pit bull dogs. Most children are in far more danger of being killed by their parents or a family member than a stranger, a pit bull, or any other type of dog. Yet people with children will often be some of the most vocal supporters of laws geared towards these “dangers”. There are some school jurisdicitons worried about running on play grounds. Why? Because 17 kids were killed on play grounds. So the solution is to ban running on play grounds.
Sure you scoff, “Those are ridiculous and extreme.” I and possibly TJIT reply that these are not isolated instances, but are part of a much larger pattern. Reduce risk, real or percieved (usually percieved), for the voters. Politicians are happy to put in place restrictive laws and policies because it keeps them in office.
No, government maybe accountable to the people if 50% + 1 voter decide to hold government accountable. If the people who want to hold the government accountable are less than that, well do damn bad.
Actually our health care system is a mish-mash of government subsidized programs and private health insurance. It is, in reality, not all that dis-similar from the French system which is having some serious money issues of its own. Your very example actually, if anything, hurts your position rather than helps it.
Please spare me your righteous indignation. I can list off a rather boring and tedious list of market failures/problems that if I went into detail would likely put you into a coma for several weeks. Very few people have “blind faith” in markets, it is more along the lines of markets are often better at allocating resources than any government has been.
Hal, you position is ill-thought-out and illogical.
Oh, and we wont drag in the fact that many government agents are immune from presecution/civil action by law. One has to rise to a level of a Michael Nifong before something is done.
The folks who like and trust big government have mostly (deliberately or out of an abundant amount of ignorance) missed the point of my comment. What showed up were a fair amount of strawman arguments regarding corporations even though I did not mention them in my comment.
I was responding to Tlaloc’s blindingly ignorant comment
I provided two examples and two legal concepts (sovereign and qualified immunity) that clearly showed that Tlaloc had not a clue how government actually functions on the ground.
These examples showed how the government has not been accountable in situations that would have resulted in:
1.Company bankruptcy
2.Jail time for company management
if a company had done the same thing.
Those examples crushed the idea that government is more accountable then private companies. Which is why the big government lovers had to ignore the point and construct strawmen to argue against.
Hal in blockquotes
Nice rhetoric but I provided two examples that demolished that argument and clearly showed the government is rarely, if ever, held accountable for misdeeds. Which is why you continue to ignore those examples.
Nice strawman.
Nice combination of strawman and attributing things to me that I never said.
But I guess that is the only thing you can do when you refuse to address the points I actually made.
The examples I provided (and their are many other similar examples) clearly show.
1. Government can do very bad things
2. It is rarely, if ever, held accountable for these bad acts.
Because of this protecting the safety and well being of society and individuals requires limiting government size and power.
Summing up:
Government is a tool and it serves a necessary function in providing a framework for a properly functioning society.
However, government is an exceedingly blunt, powerful, and potentially dangerous tool. The well being of everyone requires government be limited in scope.
Despite all of the strawmen thrown around I never once defended corporations.
In fact one of the most dangerous things to civil society is the combination of business interests and government power.
There are numerous examples of established businesses using government policy to keep them from having to face competition.
If the big government fans on this thread had any real world experience they would understand that big government is one of the best allies and friends big business has.
Hal, Grewgills and others keep throwing up the strawman that a limited government means no government and no rules. For example Grewgills said
How in the world can you make a statement like that when I have never argued for
1. Trusting corporations
2. No government
Why do you folks always insist that a restrained government means no government?
What is up with that?
If the whole point of all managed care system is to deny coverage when possible what is your solution? No managed care? Heavily regulated managed care? Become fabulously wealthy so you don’t need to concern yourself with it?
For SOME treatments in SOME circumstances.
I can only speak for myself here but no. What I have argued and seen Tlaloc argue is that unrestrained profit motive leads to abuses.
If the profit motive determines what medical treatments are covered then the number of expensive treatments covered will be less. If the barrier to treatment is “what treatments can we provide and maintain maximum profit” rather than “what treatment can we provide and maintain a viable system for everyone” you get two noticeably different outcomes.
Thus the importance of a well informed electorate.
Our health care system does have a poorly organized mish mash of subsidized and private systems that operate poorly together and this contributes to the exorbitant prices we pay. There are indeed some parallels with the French system, but there are also significant differences particularly in how they are organized. The money issues the French health care system are dwarfed by our own. His example in no way harms his argument.
TJIT,
If your argument had a point it was that governments are less trustworthy and less accountable than corporations.
And how would the companies have been forced into bankruptcy or have jail time forced on their management? All of the accountability you have posited for corporations rests ultimately on governments, which are in turn accountable to people.
If your problem is with laws passed by governments that limit their accountability perhaps you should exert your effort in reversing these laws. I could support you on a number of these reforms. (Laws limiting accountability grew under the Repub administration and congress.)
Surely you realize that a few anecdotes are incapable of doing this.
As for point number 1, no one has argued against this, as no one has argued that corporations cannot or do not do very bad things.
What your examples do is show that government are sometimes not held accountable. This is the fault of the people choosing not to hold the government accountable. We are able to exert pressure on the government to make reforms in this arena but we have expended precious little effort on this.
Got to go. Hope to complete this later.
grewgills in blockquotes
Going bankrupt is a private transaction that generally involves no government action.
Dead wrong, most corporate accountability is driven by the stockholders and markets, not government action.
The government tried to constrain IBM’s business activites for years and never had any success. The market in the form of Bill Gates and Microsoft is what eventually constrained IBM’s business.
grewgills says
A more accurate assessment would be almost never.
No one should be surprised by this because, people in government write the laws, and people in government enforce the laws. So naturally the government has no real motivation to do anything against itself or his buddy down the hall.
Strongly disagree. Because of the reasons above, it is difficult,if not impossible, for the people to hold a large government accountable.
People are busy and have lots to take care of so it is not surprising that they sometimes don’t have the knowledge or time to adequately oversee government action.
The solution to this is to reduce the size of government. Smaller government has less chance to do bad things and requires less oversight from citizens.
Really? So all those bankruptcy laws are unnecessary?
That leaves out the fact that the company that committed the actions you point out would not likely be facing bankruptcy for the actions you laid out absent government control.
Corporate security kills suspected crack dealer in corporate funded housing.
Corporation rips off Native American (or any indigenous) tribe and few know about it. Add to this that the rip off is over a century old and see how far that goes towards driving them into bankruptcy.
These deals, particularly if competently covered up or spun, would have either positive (ripping off indigenous people) or neutral (killing someone society will quickly forget about) financial impact absent government action. Most shareholders would remain ignorant of these things and those that know generally vote with their pocketbooks. (Look what corporations are doing with indigenous people in South America now.)
It is our duty as citizens to of a republic to educate ourselves. Your argument seems to boil down to you not thinking the American people are not up to the responsibility of living in a representative democracy. Do you agree with Rousseau that a society of our size is best served by a benevolent monarch?
Grewgills in blockquotes
Once again you are arguing against the strawman that limited government means no government. I have never said there was no need for laws or a court system for civil and criminal matters.
You would learn more if you actually paid attention instead of hauling in strawmen by the truckload and beating the stuffing out of them.
Grewgills has apparently forgotten that this discussion was started by Tlaloc’s profoundly ignorant statement “The difference is that governments are ultimately accountable to the people they are formed by whereas companies are not.”
I provided examples that showed how government was unaccountable. These examples where roundly ignored and the fans of big government got busy beating up strawmen.
Now Grewgills says
One of the real world examples I provided was a link to many, many wrong door or poorly executed government paramilitary police raids. People have been killed in these real world government raids.
I also introduced two legal advantages the government has in these situations, qualified and sovereign immunity.
Grewgills ignores those real world examples of government being less accountable then private organizations and comes back with the lame hypothetical above.
So is he not paying attention or just ignoring the clear evidence that government is less accountable then private companies?
Whatever the case the continued pattern of
1. Ignoring what other people actually say.
2. Creating strawmen to avoid discussing what other people actually said
Shows that you can’t have a good faith discussion with him.
I have argued against big business, and against big government.
But Grewgills can’t help himself, he ignores what I have said and creates yet another strawman.
Grewgills grand finale in blockquotes
You said that “Going bankrupt is a private transaction that generally involves no government action.” This statement is every bit as idiotic as you accuse Tlaloc’s comment of being. Bankruptcies are governed by our laws that originate from our government and run through our government run legal system. Going bankrupt in the US involves the government in some way at every turn.
The story you told and I responded to and some other stories were included in your link. I read a ways down the page until I started seeing redundant posts and rambling commentary not related to other examples and got bored with it. I only came to one other story involving a death and that one did not involve sovereign or qualified immunity. The news source that the story you pointed to ultimately relies on is the Jasper Newsboy. I saw no evidence that the case was thrown out for any reason, could you provide a reliable source for this assertion?
Government should be more transparent and more accountable and we should work to improve that. Remember though that virtually all of the transparency and accountability of corporations is government mandated.
I have not seen you argue against big business. You have not done it in this thread, so accusing me of ignoring this makes no sense.
The Rouseau reference was do to your tirade about how big government can’t be controlled and people can’t be bothered to keep an eye on their representatives.