Monday, October 31, 2011
Corporate Power & Government Capture
For the past thirty years I have focused my energies on corporate governance and the legitimacy of corporate power. And by legitimate, I mean that the people who exercise power for the corporations need to be accountable to somebody. Over the years, it has become clear that they really are not accountable to anybody, and our experiment in self-regulation and minimal oversight has failed. In practice, this has meant that a small group of individual CEOs exercise power over financing elections and lobbying the passage and enforcement of laws.
Where are we now?
The failure of owners to be involved in overseeing the corporations they own and the failure of government to enforce rules already on the books has led to what is known as capture. Capture means, to me, the power to allocate the resources of government, in this case the U.S. federal government. We’ve seen this in the bailout, in tax leniency and in subsidies. We’ve seen it in deregulation and the failure to enforce regulations that already exist.
Capture is a very predictable and logical outcome of our failures. All the corporate governance efforts I’ve been involved with have stressed the internal accountability of those with power in a corporation. And one of the essential elements of accountability that are critical for long term credibility of sustainable corporations is that they be subject to a governing law, and that they comply with law in a full way and not in a grudging way.
So this is about corporate power – excessive corporate power. The balance of power is not only tipped but so out of skew that we’ve come to accept is as normal. We excuse it by saying that corporations need to be competitive or that they create jobs. We excuse it by saying that CEOs take risks and therefore need outsized salaries to compensate for that. But while some of that may true, corporations also take a lot from our society: educated workforce, roads, subsidies, military protection, diplomatic work done by our government and more. Furthermore, they don’t take responsibility for the by-products or off-products of their work: pollution, health issues, wear and tear on the infrastructure paid for by citizens. Society is a give-and-take proposition but for now, the powerful take much more than they contribute and that is not sustainable.
Business Roundtable: Roadmap For Growth press conference. Dec. 8, 2010.
For me, corporate governance has failed and it’s time to move on. These larger issues are where I see the discussion going so I’ll be writing more on this topic in the weeks to come. Please comment or send me your thoughts. There’s so much to talk about and I look forward to hearing what you think.
October 31, 2011 |
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