The Observer, December 7, 2007
Volume XL, Issue 13
Political Connection: Corporations' money controls United States, creates unequal representation
In our deepest roots as the United States of America, one of our most reviled foes is the corporation. The Boston Tea Party was triggered by the monopolistic actions of the East India Trading Company, which was aided by the British Parliament due to the company's powerful lobby. This company, hired by Britain to aid its colonization, was one of the first corporations. Our Declaration of Independence makes multiple indirect references to the effects of that company's excessive influence. Our founding fathers were not dreaming of a land where millions would be enslaved by debt, and the American Dream would be dependent on the strength of one's credit report. Yet by the Civil War, there was enough evidence for a smart man like Abraham Lincoln to predict the increasing control corporations would gain over our government, saying, "Corporations have been enthroned and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until all wealth is aggregated in a few hands and the Republic is destroyed."
Lincoln predicted these consequences for the near future, and in 1886, just over 20 years after his death, corporations became a major force in our economy. The U.S. Supreme Court case Santa Clara County v. Southern Pacific Railroad Company resulted in the precedent that corporations are "persons" with the rights of normal humans. However, the Supreme Court never actually ruled this itself. It had discussed the issue, but eventually decided the case on other grounds. A court reporter, who was president of the board of directors of another railroad company, took the discussion about companies as persons and printed it in the headnotes, or a summary of the ruling. This would normally not happen, but due to that man's corrupt abuse of authority, it was set to the status of legal precedent. This, along with deregulation and privatization of many states, allowed for the corporations to flourish in the early 1900s, particularly before and after World War I.
Since then, globalization has allowed corporations to grow and expand their reach to more corners of the Earth than ever before. Corporations constituted 53 of the top 100 economies in the world as of 2001. The problem is that large concentrations of money in so few places results in monopolies, which are considered to be instances of market failure. Monopolies happen in a traversable world because a company can fill a demand in a given area from far away, with negligible efficiency loss. The result is that the demand is filled by the entity which can satisfy the demand most effectively. Filling a demand costs resources and investment, and a more effective solution costs more brainpower or more money (or more money to fund brainpower). Generally, a full-fledged corporation will have market analysts, marketers, and large amounts of investment capital in its holsters, so without creativity or a generous investment, a start-up will have little competitive advantage. As corporations fill more and more niches, econodiversity suffers, and the only ones left to battle are other corporations. But it isn't profitable to battle if you don't have to, so corporations can just merge, shift niches, or create coalitions until they no longer have the costly overlap of turf.
The consequence is that corporations control unthinkable amounts of capital. The top 50 corporations in the United States control more money than the 50 states, the federal government, and all local governments combined. From an objective point of view, looking forward from 200 years ago, would you not think, "of course the corporations control that country?" The energy lobby spent $255 million in one year (2004) on lobbying, or well over 5,000 median U.S. incomes. The average American has one vote for a few legislators, whereas corporations have direct access to those legislators and thus can more easily sway the vote on a given bill. This is our new taxation without representation. Will we need another Boston Tea Party?
David Noll is a senior cognitive science major.
