One of the major differences between the Tea Party folks and the establishment Republican Party is the perspective on corporations. Having been a corporate guy most of my career (VP Pabst Brewing Company and Kraft Foods), I find myself increasingly in the Tea Party camp, thinking that common sense and fiscal imperatives need to trump the corporate lobbyists. (Perhaps I have been soured by the Supreme Court's recent decision that Unions and Corporations are people, and that limiting their political contributions would be unconstitutional.)
For the past couple of years I have tried to distinguish between the evil bankers and real corporations that produce and sell stuff that people need - or at least want. Well, BP produces and sells stuff. From my experience, I can say with some certitude that the average leader at BP does not include the people and marine creatures of the Gulf among their real stakeholders - stockholders, yes; senior management, yes; employees, yes; customers, probably; suppliers, perhaps; pelicans, nah. Decisions about safety precautions normally consider the employees, but it should not be at all unexpected that the risk to the environment would fall way below the profit motive - perhaps explained in some strategy presentation as a high cost multiplied by a very low probability. Even then, the calculation would be in terms of the PR costs, the lawsuit costs, and the legislative penalty costs. Effective regulations are necessary.
Back to the evil bankers for a minute, the Swiss legislature's tentative decision this week to allow bankers at UBS to divulge the names of American clients who avoid billions in taxes by hiding their money there raises the question - why do we let such companies do business in our very attractive market? One thing that the Obama administration started to do right a year ago - and which has since languished - was a crackdown on corporate and individual tax cheats. Maybe the Swiss legislature and the Deficit Reduction Commission will add some steam.
More broadly, the advisory and understaffed commission tasked with getting the country out of our deep financial pit needs to take a look at corporate taxes. Yes, we have the second highest corporate tax rate among the developed countries - it is just that the lobbyists have managed it that companies like ExxonMobil, Chevron, General Electric, and Bank of America pay next to nothing here. Some practical economists (Paul Ryan?) need to look at incentives to boost exports and R&D spending, but the rest of the goodies from subsidies for large farmers to oil depletion allowances need to go.
Ironically, the political combination necessary to get regulations and corporate taxes in line is probably the Tea Party folks aligned with many folks from the Democratic Party. That is not a comfortable alliance, but if the common sense fiscal conservatives can align with the Democrats on eliminating tax dodges and with the Republicans on spending, we may have a chance.
This week's video is a cute Song by Ray Stevens on immigration.
bill bowen - 6/18/10