Tuesday, November 15, 2005
 
I read with great interest Stephen Bainbridge's article, "The Siren Song of Corporate Social Responsibility."

In my over 20 years of experience as a Registered Investment Advisor, I've only seen corporate management give lip service to "corporate governance" and spend lots of shareholder money on public relations propaganda to advertise "CSR" and "sustainability." It has done absolutely nothing to make corporations more "socially responsible" or more "sustainable."

Management plays the "CSR" song for public consumption only by adopting meaningless and unenforceable voluntary codes of conduct, and as The Economist says, hire lots of "CSR" consultants to improve the corporate image.

Shareholders long ago gave up control for liquidity, cannot nominate corporate directors, cannot vote against management's slate of nominees, and shareholder resolutions are advisory only. Stalin would have loved this style of authoritarian "corporate governance."

Corporate management also continues to use the mantra "enhancing shareholder value" which is basically "corporate speak," while they stuff shareholder's money in their pocket on payday and rule only to create wealth for themselves. Management may "define their role as running the company for the benefit of its shareholders," but in truth, it is as much propaganda and public relations as is "CSR" and "sustainability." Management does not rule to serve stakeholders, or for that matter, shareholders.

Directors are accountable to no one but themselves and management, nominating and electing themselves, setting their own salaries while protected by a battery of attorneys and lobbyists, while given protection from liability; thus making a joke out of director fiduciary duty. They have been able to buy off politicians, control state, local and national governments, including regulatory agencies, violate the law and ignore the global community as well as all of civil society.

Citizens have allowed managers to create their own immortal god (not unlike Thomas Hobbes' immortal Leviathan): a corporate structured legal entity, self-perpetuating, and sovereign, subsidized by taxpayers, and no longer accountable to elected governments, and certainly not accountable to their legal owners, the shareholders.

Shareholders need to take control of managers, reassert their ownership responsibility, and require managers to serve shareholders and civil society in a true market economy, not allowing corporate management to play on a rigged authoritarian, oligopolistic, anti-competitive playing field. It would also help if our elected officials not bought by corporate management, actually enforced the law, required corporations to serve the public by enforcement of charter revocation for lawless management, held directors personally, legally, and financially liable, and put a stop to corporations "feeding at the public trough" by discontinuing the privatization of taxpayer-supported government services.

Adam Smith would never recognize "capitalism" in the 21st Century.

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