Corporations Shielded from Responsibility

By Donhowe, Peter | St Louis Post-Dispatch (MO), March 21, 1994 | Go to article overview

Corporations Shielded from Responsibility


Donhowe, Peter, St Louis Post-Dispatch (MO)


Somebody once observed that you had to be wary of the things you did only once. The reference was to buying a house (and paying closing costs) - which many of us actually do more than once.

But maybe our focus should be on the familiar things that surround us every day - and we don't talk or think about. Maybe it is the things that are commonplace, things that are everywhere, that deserve our attention. For example, corporations.

In one sense, corporations are as American as apple pie. In another very important sense, hardly a more "un-American" form of organization exists.

As we know, corporations helped settle the land we called America under charter from the king and his legislature. We won the war and gained our independence - but kept the corporation.

We kept it for good reasons. It was a good form of business organization - and not a very important one at the time. We were a nation of farmers and individuals after all. All men were created equal - a radical notion. Corporations were not very important in the scheme of things. We believed in individual, human responsibility.

We still honor that idea today. We still think of ourselves as individuals and value individual responsibility. Corporations really don't. And today they are everywhere. They are big and small. We have individuals who have incorporated for tax reasons and the Fortune 500. We even have corporate farmers. Today corporations - not farmers - dominate the nation's economy.

One reason is the "corporate shield." With it, the incorporated firm can be considered an individual in court - and can cheat death, living long after its founder has passed on. Most importantly, with the "corporate shield," the individuals within the film are not liable for the corporation's debts or sins against others or the environment. In short, the individual is not responsible.

Many times, corporations are not responsible either. In theory they do the bidding of their owners, the stockholders, based on commands of their boards of directors, some of whom may come from outside the firm.

In practice, those who run the firm (and who may not actually own a very large chunk of the company) are really in charge. How else to explain the salaries to corporate leaders, without regard to the financial performance of the firm?

Why did the salaries of executives who control some of our largest corporations rise by 212 percent during the 1980s, while salaries of workers and engineers went up by 53 and 73 percent respectively, while dividends increased by only 78 percent?

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