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Originally Posted by EnI  Claiming that the one and only role of a corporation is to make profit for the shareholders only is ... have to put it ... very brave. 
Don't you think a corporation owes something to society?
Why a corporation is able to make profits? Because a state - which is currently the ultimate representation of society as a whole - allows corporation to make a profit. Mind communist countries where corporations & companies haven't got a green light for operating (and making profit). |
Eni, who claimed that the one and only role of a corporation is to make profit for the stockholders? I certainly didn't. The quote from my earlier post that you used was, "It is not the role of business and commercial enterprises to distribute the wealth they create to anyone other than their stockholders." How does that become, "The one and only role of a corporation is to make a profit"? Overextension of the original statement, don't you think?
I'll go one further than Rob. Corporations don't owe society more than what they are legally required to pay, i.e. tax, minimum wage, pension benefits. If a certain corporation wants to go beyond that, great! They can and should, but I still don't think there is something more owing on their part.
Corporations have capital that can move anywhere on the touch of a button. If a state suddenly becomes inhospitable to a corporation, the corporation can move. Now, this does not always work. Many resource developments and mines in politically unstable regions can't be picked up and shipped back home. However, the ongoing capital needed to fully develop those mines can be shut off and redeployed. Similarly, if a businessman owns a widget factory in American and he doesn't like that corporate tax situation, he can do multiple things with the business. He can move corporate HQ to Bermuda, while keeping the plant. He can move HQ offshore, build a new plant in China or even outsource to China. In the meantime, the corporation could pay a lot less tax and radically lower its cost structure. I think corporations are less tied to the state/nation they are domiciled it today than they have ever been.
There are so many ways to invest capital today. It doesn't have to be locked inside a corporation's fixed assets. In the mid-1980s, I think '84 or '85, Forbes did a list of the richest Americans. Twenty-some-years later, I believe 75% of the richest in '84 are no longer on the '06 list. Now, if they had simply taken their capital and invested it in bonds or the S&P 500 fund, most of them would still be among the richest Americans today. With so many new markets, investment products, funds, capital can be shifted out of fixed assets and be able to earn even higher returns.