CORPORATIONS ARE NOT HUMANS : NOT EVEN CLOSE ----Episode 11

        CORPORATIONS LOVE TO EXTERNALIZE COSTS 

   Neva Goodwin, ecological economist, head of the Global Development and Environmental Institute at Tufts University, and an advocate of cost internalization, puts it bluntly : "Power is largely what externalities are about. What's the point of having power, if you can't use it to externalize your costs---to make them fall on someone else ?" { Recall "economies of scale," a non-economists's  term for theft.} 
   Corporate libertarians tirelessly inform us of the benefits of trade based on the theories of Adam Smith and David Ricardo. What they don't mention is that the benefits the trade theories predict assume the local or national ownership of capital BY PERSONS DIRECTLY ENGAGED IN ITS MANAGEMENT. Indeed, these same conditions are fundamental to Adam Smith's famous assertion in The Wealth of Nations that the invisible hand of the market translates the pursuit of self-interest into a public benefit. Note that the following is the only mention of the famous invisible hand in the entire 1,000 pages of The Wealth of Nations : 

     By preferring the support of domestic to that of foreign industry, he (the entrepreneur) intends only his own security, and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and his is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. 

   Smith assumed a natural preference on the part on the part of the entrepreneur to invest at home where he could keep a close eye on his holdings. Of course, this was long before jet travel, telephone, fax machines, and the Internet. Because local investment provides local employment and produces local goods for local consumption using local resources, the entrepreneur's natural inclination contributes to the vitality of the local economy. And because the owner and the enterprise are both local they are more readily held to local standards. Even on pure business logic, Smith firmly opposed the absentee ownership of companies.

     The directors of such companies, however, being the managers rather of other people's money than of their own,it cannot well be expected, that they should watch over it with the same anxious vigilance with which partners in a private copartnery frequently watch over their own . .. Negligence and profusion, therefore, must always prevail, more or less in the management of the affairs of such a company. 

   Smith believed the efficient market is composed of small, owner-managed enterprises located in the communities where the owners reside. Such owners normally share in the community's values and have a personal stake in the future of both the community and the 
enterprise. In the global corporate economy, footloose money moves across national borders at the speed of light, society's assets are entrusted to massive corporations lacking any local or national allegiance, and management is removed from the real owners by layers of investment institutions and holding companies.