Agency The Firm and Lobbying
Rogers complains that “bankrupt companies are spending millions on influencing key policy-makers while their destiny hangs in the balance, something is terribly wrong.”
While I don’t disagree that this is a moral issues, I question where the blame lies, should we be pointing the finger at Firms?
The courts and (ironically) legislators themselves have decided that political donations are a form of protected free speech, further, it is the fiduciary duty of every board of directors to act in the best interest of their shareholder. Bankruptcy (in theory, perhaps not in practice) is clearly the worst possible result for equity holders. As such, corporations are obligated to attempt to influence politicians in whatever legal way available.
Our government has clearly set a precedent that if you create enough of a sense of panic, or if your oligopolistic actions have made you enough of a risk to the world economy then you will be bailed out. Not in a fiscally responsible way, a way that maximizes value for the “investors” (taxpayers), but rather by direct equity lifelines for irresponsible companies.
If the money is out there, these corporation are obligated to seek it. I think too often our national obsession with the “free market” ascribes a certain Agency to Firms, the ability to do good and evil, to know right and wrong, to behave benevolently or maliciously. In truth firms are not agents, they do not have agency or will, they cannot be good or evil. They are bound by a single purpose, to maximize wealth. It is incumbent upon us, people, democratic actors to create controlled market environment where we align the interests of shareholder with those of society. So don’t blame the abstract idea of the Firm Roger, cause in fact, blame lies a lot close to home.
