A reader recently suggested that I write a critique of corporations akin to that offered for unions. That is a fine idea, and I begin with a couple points.
My observation about private sector unions was simply that their declining membership marked them for imminent irrelevancy. This is a concern that is shared, if not admitted, by the union’s own leadership. Whatever mischief private sector unions do or do not engage in, it is mostly a private affair. That makes it ripe for political, not policy, action. I write about the latter.
In contrast, public sector unions have left hundreds of American municipalities on the brink of bankruptcy. That is a policy matter, and I will continue to remark upon it.
The point is that I have little to say about private unions and public policy. It is likewise with corporations, whose ill behavior is a matter among consenting adults who either own or work for corporations. Still, it is useful to inventory some of these critiques and assess their reason.
Corporations differ from other business in that their ownership is diffused across people who have purchased shares of the company. Karl Marx referred to these owners as capitalists. It is a sweet and satisfying irony that today more than 60 percent of U.S. households own stock at some point.
Most of these capitalists are like me and simply buy retirement mutual funds. We own tiny portions of hundreds of companies.
This diffuse ownership offers the only coherent criticism of modern corporations. Writing in the 1930s, two economists, Adolf Berle and Gardiner Means, noted that the divergence of interests between owners of corporations and their management led to decisions that enriched the management team at the expense of owners.
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