In a well-argued opinion piece published today by salon.com, Michael Lind, a Senior Fellow at the New America Foundation, and Policy Director of New America’s Economic Growth Program, argues that if the American people now own General Motors and other big organisations, then the time may have come to revisit the idea of their being owned as public corporations.
…The truth is that corporations in the U.S. and other countries have always been quasi-public entities chartered for public purposes. You would never know this from corporate propaganda that treats giant, multinational corporations as though they were simply giant versions of sole proprietorships or partnerships. But history and law alike make it clear that today’s large corporations, like automobile manufacturers, are much more like spun-off government agencies than like large-scale lemonade stands.
In the middle section he gives the reader a potted history of how, over a century or so, what were once heavily regulated chartered corporations broke lose of the ties to government to become wht they are today.
Having done this, he comes to his proposal for how a the old ideas might be given new life.
For example, if we want to have a domestic automobile industry, why not charter companies specifically for that purpose? Other goals like high wages for employees or reasonable executive compensation could be pursued by corporate charter reform, rather than tax breaks or regulations.
This, he claims, is not an especially new set of proposas. Back in 1996, the New Mexican Democrat, Senator Jeff Bingaman and Senate Minority Leader Tom Daschle (Democrat South Dakota) put forward a similar of proposals which the Clinton administration ignored, sponsoring instead the a “corporate citizenship” campaign that turned out to be nothing much more than a public relations exercise for everybody involved. He admits that this proposal were probably not workable anyway.
Nevertheless, the idea of chartering particular kinds of private corporations for particular public purposes is a good one that deserves to be revived. Imagine a USA Corporation, which pays a lower corporate income tax, or perhaps no corporate income tax, in return for locating most of its value-added production in the United States (the economist Ralph Gomory has proposed a similar deal through the tax code). USA Corporations could be chartered only by the federal government, in order to prevent a race-to-the-bottom in standards among American states (yes, that means you, Delaware). The chartering could be done by simple registration with the federal government; separate bills before Congress would not be necessary. And if Goldman Sachs could convert itself into a bank holding company, then existing general corporations should be allowed to convert themselves into USA Corporations, if they were willing to fulfill the requirements.
Would the USA Corporation run afoul of international trade and investment liberalization? Not necessarily. Foreign-based multinationals like Toyota and BMW, provided that they located high-value-added production in the U.S., could own their own USA Corporations and repatriate their profits. And there would be no discrimination among foreign and domestic investors. Indeed, one of the goals of the USA Corporation would be to increase foreign direct investment in building up America’s domestic productive capacity.
New kinds of corporations also could be chartered for other purposes, such as nursing or janitorial companies that receive tax and regulatory breaks in return for paying higher wages and permitting unionization. America’s financial sector has always been characterized by a diversity of forms, from retail banks and investment banks to thrifts. There is no reason why our large-scale corporate landscape has to be limited so much to general corporations.
The power of ownership that the American people now wield in the case of GM and other corporations is both limited and passing. But the power to charter corporations for the purposes we choose and in the forms we prefer will always be a power we wield as a sovereign people. We the people should think about using our power.
One can see why this proposal might appeal to the American public. The whiff of socialism, a whiff Americans seem to fear as much as they would the whiff of plague, is not quite so evident here as it is in other proposals I seen put forward.