“People Over Profit!”
I keep hearing and seeing this phrase and can’t help but think of it as a caricature of college-stoner, Marxist-lite political economy. It’s understandable that it would have gained traction among liberals of a certain streak: it’s pleasant, alliterative, and fits nicely on a bumper sticker. But I do hate to see tens of millions of dollars of our nation’s collective (and publicly-subsidized) liberal arts education fail in the face of a catchy slogan. Aren’t those of us with training in the humanities supposed to be, you know, enriching society with our critical thinking? Wasn’t this sort of why those classes exploring the intersections of Japanese manga, the Cold War, and post-queer neo-colonial theory were worth spending several grand on, even though they didn’t exactly have a “practical” application?
How, exactly, does one put People over Profit? Well, a good first question is: to whom is this exhortation addressed?
Any business consists of Owners and Employees. Owners are the people whose capital is deployed (and risked) in conducting the affairs of the business, and who ‘control’ the business in the sense that they have certain contractual rights that are usually specified in the legal documents that govern the form of the business. Employees are the people who actually do the work of the business from day to day, and who ‘control’ the business in the sense that they perform certain functions that interface with customers, suppliers, or the like. It’s possible to be both an Owner and an Employee, say, if you’re a partner in a professional practice, or a shareholder of the corporation for which you work.
However, for modern businesses of sufficiently large size and scale – let’s call them, for the sake of argument, Evil Global Corporations – it’s unusual for an Employee individually (or all Employees collectively) to own enough of such a business to be an Owner in the sense that I describe it above. The market value of the equity of Exxon Mobil Corporation – your typical EGC if ever there were one – is approximately $370 billion as of the moment I write this. If you owned more than a vanishingly small percentage of this business, for how long would you choose to be an Employee instead of a Happy Retiree?
(As an aside, the distinction between Owners and Employees in the EGC gives rise to a whole host of complications that fall under the heading of “Principal-Agent Problems” — i.e., how do Owners who are not Employees get Employees who are not Owners to act in the Owners’ interests? This subject is far deeper than I intend to cover here.)
So, to my original question: is the exhortation to put “People Over Profit” directed at Employees, Owners, or both?
It would be pretty fatuous to make this demand of Employees. Imagine marching into a restaurant and demanding that your waiter put People Over Profit by serving you dinner for free. Or staging a sit-in at Wal-Mart (another EGC!) until the Assistant District Sales Manager, the highest-ranking Employee you could find, gives you a discount on some clothing you really need. It turns out that we tend to use words like “illegal” and “embezzlement” when Employees put People Over Profits. So that can’t be the request.
What about Employees who have really fancy titles, like Chief Executive Officer, and who happen to be personally Rich? Well, why does that change the analysis? Should they be allowed, even expected, to give away the Owners’ property? Perhaps if to do so were actually in the best interests of the Owners – but, in that case, isn’t it clear that the demand should be made directly of the Owners?
By the way, it doesn’t help if the Employee really passionately believes it would be in the best interest of the Owners to give away their property, but the Owners aren’t enlightened or compassionate enough to agree. This is left as an exercise for the Reader.
So who are the Owners of the EGCs and their smaller but perhaps equally evil counterparts? For publicly-traded corporations, it’s relatively easy to obtain a first-order answer. Here’s an example for Bank of America Corporation, today’s poster child for corporate treachery. The first-order answer for Bank of America, like most EGCs, is: “a whole bunch of financial institutions on behalf of their clients, and investment vehicles like mutual funds, exchange-traded funds, and hedge funds.” In aggregate, the answer looks something like this. But this first-order answer isn’t helpful. A mutual fund, for instance, is itself owned by many Institutions and Individuals. And who are these Institutions? They may be endowments, foundations, pension funds. And the Individuals? Maybe the Rich… but also maybe (hopefully!) middle-class folks through their 401(k)s.
Point is: the Owners of EGCs come in all sorts of shapes and sizes, and serve a variety of constituencies – some of which sound Nice, like Retired Teachers; and some of which sound Bad, like Rich Financiers. In this sense, it’s also fatuous to demand that Owners of EGCs put “People Over Profit” because, well… aren’t there people at the end of this chain, too?
To the extent that people are relying on the stock market to help them save for retirement, or were able to help afford college thanks to a university’s endowment, they are also just shouting at themselves. But I suppose we all contain multitudes.
Fortunately, we have a more coherent framework at our disposal for expressing our desire that stuff be taken from some people and given to other people, whether the former party likes it or not – we call it Taxation.
“Tax Corporations!” is a marginally more coherent rallying cry than “People Over Profit” – but since Corporations are owned by People, we can reduce this even further:
“Tax Some People More Than They Are Currently Being Taxed!”
Not exactly the world’s most novel agenda for social justice, is it? But at least it’s a prescription that can be coherently debated.