HIST363: Global Perspectives on Industrialization

The readings below are meant only to stimulate your thinking about possible perspectives to take on corporations. Please supplement them with your own research.

1.1 The Corporation as a "Psychopathic" Creature

Bakan, Joel. "Business as Usual," in The Corporation: The Pathological Pursuit of Profit and Power, 28-59. New York: Simon and Schuster, 2004.

Bakan, Joel. "The Externalizing Machine," in The Corporation: The Pathological Pursuit of Profit and Power, 60-84. New York: Simon and Schuster, 2004.

Business leaders today say their companies care about more than profit or loss, that they feel responsible to society as a whole, not just to their shareholders. Corporate social responsibility is their new creed, a self-conscious corrective to earlier greed-inspired visions of the corporation. Despite this shift, the corporation itself has not changed. It remains, as it was at the time of its origins as a modern business institution in the middle of the nineteenth century, a legally designated "person" designed to valorize self-interest and invalidate moral concern. Most people would find its "personality" abhorrent, even psychopathic, in a human being, yet curiously we accept it in society's most powerful institution. The troubles on Wall Street today, beginning with Enron's spectacular crash, can be blamed in part on the corporation's flawed institutional character, but the company was not unique for having that character. Indeed, all publicly traded corporations have it, even the most respected and socially acceptable….

As a psychopathic creature, the corporation can neither recognize nor act upon moral reasons to refrain from harming others. Nothing in its legal makeup limits what it can do to others in pursuit of its selfish ends, and it is compelled to cause harm when the benefits of doing so outweigh the costs. Only pragmatic concern for its own interests and the laws of the land constrain the corporation's predatory instincts, and often that is not enough to stop it from destroying lives, damaging communities, and endangering the planet as a whole…. Far less exceptional in the world of the corporation are the routine and regular harms caused to others - workers, consumers, communities, the environment - by corporation's psychopathic tendencies. These tend to be viewed as inevitable and acceptable consequences of corporate activity - "externalities" in the coolly technical jargon of economics.

"An externality," says economist Milton Friedman, "is the effect of a transaction…on a third party who has not consented to or played any role in the carrying out of that transaction". All the bad things that happen to people and the environment as a result of corporations' relentless and legally compelled pursuit of self-interest are thus neatly categorized by economists as externalities - literally, other people's problems.

1.2 "EPA Costs US Economy $353 Billion per Year"

Young, Ryan. "EPA costs US economy $353 billion per year". The Daily Caller. Last modified December 27, 2012. http://dailycaller.com/2012/12/27/epa-costs-us-economy-353-billion-per-year/.

Transparency is the lifeblood of democracy. Washington needs more of it, especially in the all-too-opaque world of regulation. The Environmental Protection Agency (EPA), for example, is the most expensive federal regulatory agency. Its annual budget is fairly modest in Beltway terms, at a little less than $11 billion, but that's not where the vast majority of its costs come from. Complying with EPA regulations costs the US economy $353 billion per year - more than 30 times its budget - according to the best available estimate. By way of comparison, that is more than the entire 2011 national GDPs of Denmark ($332 billion) and Thailand ($345 billion)…

In the last edition of the Unified Agenda, the fall 2011 edition, the EPA had 318 rules at various stages of the regulatory process. Nobody outside the agency knows how many rules it currently has in the pipeline. All in all, 4,995 EPA rules appeared in the Winter Unified Agenda from 1999–2011. Over the same period, 7,161 EPA final rules were published in the Federal Register. That means more than 2,000 final rules, which have the force of law, came into effect without first appearing in the Unified Agenda. This could indicate an important transparency problem.

That's just the EPA's annual flow of regulations. The agency has existed for more than 40 years. How many total rules does it currently have in effect? Again, the answer doesn't come from the agency. Earlier this year, the Mercatus Center's Omar Al-Ubaydli and Patrick A. McLaughlin ran text searches through the entire Code of Federal Regulations (CFR) for terms such as "shall," "must," "prohibited," and the like. The CFR Title covering environmental protection alone contains at least 88,852 specific regulatory restrictions. The number could be as high as 154,350….

Justice Louis Brandeis correctly believed that sunshine is the best disinfectant. With high regulatory costs contributing to a stagnant economic recovery, it is well past time to shine more light on regulatory agencies. Annual agency report cards would make a good start.

1.3 Press Release from the US Consumer Product Safety Commission

Consumer Product Safety Commission. "Port Surveillance News: CPSC Investigators Find, Stop Nearly 650,000 Unsafe Products at the Start of Fiscal Year 2012". News Release. April 5, 2012. https://www.cpsc.gov/en/Newsroom/News-Releases/2012/Port-Surveillance-News-CPSC-Investigators-Find-Stop-Nearly-650000-Unsafe-Products-at-the-Start-of-Fiscal-Year-2012/.

Investigators Stop Nearly 650,000 Unsafe Products

Investigators with the US Consumer Product Safety Commission (CPSC) prevented more than half a million violative and hazardous imported products from reaching the hands of consumers in the first quarter of fiscal year 2012.

Working with US Customs and Border Protection (CBP) agents, CPSC port investigators successfully identified consumer products that were in violation of US safety rules or found to be unsafe. CPSC and CBP teamed up to screen more than 2,900 imported shipments at ports of entry into the United States. As applicable, these screenings involved use and abuse testing or the use of an X-ray fluorescence (XRF) analyzer. Their efforts prevented more than 647,000 units of about 240 different non-complying products from reaching consumers, between October 1, 2011 and December 31, 2011.

Topping the list of products stopped were children's products containing levels of lead exceeding the federal limits, toys and other articles with small parts that present a choking hazard for children younger than 3 years old, and toys and child-care articles with banned phthalates.

In addition to violative toys and other children's products, items stopped at import included defective and dangerous hair dryers, lamps, and holiday lights.

"We mean business when it comes to enforcing some of the toughest requirements for children's products in the world. If an imported product fails to comply with our safety rules, then we work to stop it from coming into the United States," said Chairman Inez Tenenbaum. "Safer products at the ports means safer products in your home".

During fiscal year 2011, CPSC inspected more than 9,900 product shipments at the ports nationwide and stopped almost 4.5 million units of violative or hazardous consumer products from entering the stores and homes of US consumers.

CPSC has been screening products at ports since it began operating in 1973. In 2008, the agency intensified its efforts with the creation of an import surveillance division.

1.4 "Costs of Air Pollution in the U.S".

Taylor, Timothy. "Costs of Air Pollution in the U.S.," Conversable Economist (blog), November 7, 2011, http://conversableeconomist.blogspot.com/2011/11/costs-of-air-pollution-in-us.html.

What costs does air pollution impose on the U.S. economy? Nicholas Z. Muller, Robert Mendelsohn, and William Nordhaus tackle that question in the August 2011 issue of the American Economic Review. Total "gross external damages" the six "criterion" air pollutants in 2002 - sulfur dioxide, nitrogen oxides, volatile organic compounds, ammonia, fine particulate matter, and coarse particulate matter - was $182 billion.

Since GDP was about $10.5 trillion in 2002, the cost of air pollution was a bit under 2% of the total. The effects included in the model calculations are adverse consequences for human health, decreased timber and agriculture yields, reduced visibility, accelerated depreciation of materials, and reductions in recreation services.

The sectors with the biggest air pollution costs measured in terms of "gross external damages" (GED) (counting the same six pollutants but again not counting carbon emissions) are utilities, agriculture/forestry, transportation, and manufacturing.

If one looks at the ratio of gross economic damages to value-added in the sector, agriculture/forestry and utilities lead the way by far with ratios above one-third. Manufacturing has fairly high gross external damages, but the GED/VA ratio for the sector as a whole is only 0.01.

To me, a lesson that emerges from these calculations is that the costs of air pollution and of burning fossil fuels are very high, both in absolute terms and compared to the value-added of certain industries, even without taking carbon emissions into account. Environmentalists who are discouraged by their inability to persuade more people of the risks of climate change might have more luck in reducing carbon emissions if they deemphasized that topic - and instead focused on the costs of these old-fashioned pollutants.

1.5 "Over-Regulated America"

"Over-regulated America: The home of laissez-faire is being suffocated by excessive and badly written regulation". The Economist. Last modified February 8, 2012. http://www.economist.com/node/21547789.