was one futuristic element that I found quite believable, however.
any guide, corporations will grow ever more powerful as they
evolve, and as they change the legal and political systems of their
host countries to become ever more hospitable. The only force left
on Earth that can stand up to the largest corporations are national
governments, some of which still maintain the power to tax,
regulate, and divide corporations into smaller pieces when they get
too powerful.
Economists speak of “externalities”—the costs (or bene ts)
incurred by third parties who did not agree to the transaction
causing the cost (or bene t). For example, if a farmer begins using a
new kind of fertilizer that increases his yield but causes more
damaging runo into nearby rivers, he keeps the pro t but the costs
of his decision are borne by others. If a factory farm nds a faster
way to fatten up cattle but thereby causes the animals to su er more
digestive problems and broken bones, it keeps the pro t and the
animals pay the cost. Corporations are obligated to maximize pro t
for shareholders, and that means looking for any and all
opportunities to lower costs, including passing on costs on to others
(when legal) in the form of externalities.
I am not anticorporate, I am simply a Glauconian. When
corporations operate in full view of the public, with a free press that
is willing and able to report on the externalities being foisted on the
public, they are likely to behave well, as most corporations do. But
many corporations operate with a high degree of secrecy and public
invisibility (for example, America’s giant food processors and
factory farms).
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And many corporations have the ability to
“capture” or otherwise in uence the politicians and federal agencies
whose job it is to regulate them (especially now that the U.S.
Supreme Court has given corporations and unions the “right” to
make unlimited donations to political causes).
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When corporations
are given the ring of Gyges, we can expect catastrophic results (for
the ecosystem, the banking system, public health, etc.).
I think liberals are right that a major function of government is to
stand up for the public interest against corporations and their
tendency to distort markets and impose externalities on others,
particularly on those least able to stand up for themselves in court
(such
as the poor,
or immigrants, or farm animals).
E cient markets
require government regulation. Liberals go too far sometimes—
indeed, they are often re exively antibusiness,
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which is a huge
mistake from a utilitarian point of view. But it is healthy for a
nation to have a constant tug-of-war, a constant debate between yin
and yang over how and when to limit and regulate corporate
behavior.
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