Big Corporations, Big Unions, and Big Government

Conservatives and libertarians say that in order to make our society better we need limited government. They are partially right. My father used to say that there are three evils, big corporations, big unions, and big government.

Consider the example of China. It is often said that in China, the government is rich and that private individuals including companies are poor. By contrast, in California it can be said that we have state of the art corporations and a backward and inefficient government.

Because corporate leaders such as the CEOs of Apple, Google, and TelMex do not have the common good at heart, they cannot be trusted. Similarly, people who depend on the government for their survival such as the very poor, the marginalized, and the undocumented cannot always be expected to follow the best ethical standards.

This is confirmed by Aristotle's saying that good government requires governing by the middle class.

At the same time, such corporations are very good at using national rules specifically as regards taxes to escape jurisdiction. One example is the  Double Irish Dutch Sandwich

Corporations seem to have forgotten their fundamental role which is economic. For example,
Google London had its employees participate in a same sex marriage announcement at work. Isn't it in China that this is supposed to happen? And whatever happened to the work-life balance?

Companies such as Apple and Google routinely lobby the United States government so as to bring more people to California from abroad. Google has been reported to be visiting  the White House once a week. It's no surprise that seven billion dollars was spent in the 2012 cycle electoral races.

Consider Apple who has become rich by selling unnecessary luxury devices to people all across the world. Didn't Margaret Thatcher say that spending other peoples money would cause it to run out?

Finally, these huge corporations do not respect the basic rule of subsidiarity which is that they are owned by their shareholders. Google is a good example of this. It's no surprise Sergey Brin is an expert in oligarchy, after all Russia was his birth-place.

What is needed is to reduce debt and increase savings of the lower and middle classes as well as to limit wealth accumulation by the very rich. The existing situation, where interest rates are kept artificially low and total public debt is increased, is unsustainable and is harmful to the common good. A good first step would be to introduce a property tax on financial assets for individuals of high net worth.

I have worked at large multinational corporations such as Philips and banked at companies such as HSBC. I won't deny at all the positive contribution these organizations have had over a hundred years, the problem is the trend.

Some sensible first steps would be to require corporations and unions to keep out of politics, to improve corporate and union governance,  and to institute a property tax on financial assets. It would make sense to take the burden of providing health care and retirement away from employers and unions and have funds for this as in France.

Lobbying should be limited and corporations should be encouraged to invest in the common good both in their neighbourhoods, in California, and abroad. The courts need to stop being complicit in scandals such as the Lago Agrio oil field and in manipulations of the international financial system by vulture funds.

The underlying issue is that without a good system of laws and a good government it does not matter how progressive our corporations in California. In fact, due to a convergence of factors things will only get worse as well explained in the Los Angeles 2020 report. At some point, our corporate leaders need to wake up.

Golden State

In her critically acclaimed novel, Golden State New York Times best-selling author Michelle Richmond describes a future in which California is on the edge of secession. In her personal blog, she describes this as an actually possible scenario based on fiscal reasons.

Michelle Richmond's blog

For California to secede would require a disruptive change. As described by Horace Deidu, disruption is when the strong defeat the weak, more precisely when those with unlimited access to resources have them taken away by those with limited or no resources.

Understanding Disruption

For example, the economic development of India and China in the past fifty years can be considered to be a disruptive change which occurs in the case of asymnetric competition.

On the contrary, Scotland and Greece recently attempted disruptive change and it was not succesful. With Proposition 8, California had a taste of the same thing closer to home.

According to Deidu for disruptive change to be succesful, the weak must not be taken seriously by their strong, indeed their actions are initially welcomed. A second factor for disruptive change to be succesful is for it to take place over an extended time period so that mentalities can change.

Recent political events in California, such as a declaration that the consumption of gasoline needs to be halved, the granting of drivers licenses to illegal immigrants, or the statement that Hispanics form the largest group in the population draw a lot of attention. They also contribute to disruptive change.

So-called progressive businesses in California such as Google, Facebook and Apple that contribute to technological innovation also support policies at the national level by political donations.

There is no resulting innovation however in government, education, or health care and the money goes simply down the drain.

What can be expected is that within the next ten years federal taxes will have to increase to pay outstanding debt. There have been suggestions also that private savings in 401-K accounts be redirected to Guaranteed Retirement Accounts

Currently the federal government owes a large amount of money to Japan and China and taxing citizens is a natural attempt at resolution.

Time will tell how people will react given the burden on seniors. Let's not forget what happened with  Proposition 13.