Unselfish Politicians

Economics students at George Mason University are mostly taught, and mostly accept, a free-market perspective, where political intervention in society is treated with suspicion.  I’m currently teaching Public Choice, or economics of politics, where you’d expect such student opinions to be especially visible.

In a recent quiz, I asked students to give an advantage and a disadvantage of letting corporations run for political office, relative to the status quo. Most gave an advantage I had described in lecture, that firms could develop a consistent brand and reputation on which voters could rely.  I hadn’t mentioned any disadvantages in class, but 80+% spontaneously said that a disadvantage is elected firms would support self-serving policies.

Wow.  Even GMU econ undergrads, not especially inclined to see the bright side of politicians, see corporations as more intrinsically selfish and corrupt than politicians.  The idea of firms as dark untrustworthy aliens is indeed buried deep in our psyche.  Xenophobia lives.

Added: I guess I need to spell this out.  Humans evolved concern for others because this enabled individual humans to better survive and reproduce, especially by being better respected and liked by others.  Similarly, firms who hoped to succeed in the industry of running for office would seek to create and maintain a clear positive long-term brand, one that voters could respect, like, and embrace.  It is crazy to assume firms will always hurt their customers for any temporary gain just because some paper somewhere declares firms must seek profits.

Added 1p: Consider an ordinary politician who hopes for 15 more years on the job, versus a firm now holding 100 offices that hopes to continue for another fifty years. Which one is more scared that news of a corrupt act would destroy their future political popularity?  Which will try harder to avoid such acts?

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  • Steve

    Hardly xenophobia: corporations are by definition in business solely to make money, but politicians must pretend that paychecks aren’t their motivation for being in office.

    The status quo is that firms can run for office, though. Representatives in the US don’t follow the party line to the same degree as employees of a company, and parties don’t pay dividends from their fundraisers, but it’s close. And thousands of consultants and pollsters do make a profit funded from the party’s fundraising.

    In any case, nothing legally stops a political party setting up as the ‘political wing’ of a corporation: but if you tried that in 2010 America, no-one would vote for it, and a lot of people would boycott the corporation as well.

  • nazgulnarsil

    people are wary of even small value differences when the optimization process in question appears very powerful.

  • Matt Stein

    Which term did you use in presenting the idea, firm or corporation. The word corporation has a lot of negative baggage attached to it. For example, see the documentary The Corporation. I don’t think it’s necessarily a dismissal of the idea of electing a group of people, but the idea of a “corporation” taking power. The word has connotaions of ruthless and immoral profit seeking.

  • frankcross

    Actually, individuals such as politicians are also motivated by ideology and altruism. For corporations, I believe, such motivations would be illegal. They must act in the economic self interest of shareholders.

  • Doug S.

    Well, one reason for that impression is that for-profit corporations are legally required to be as selfish as possible within the law. They have only one duty: maximize shareholder return using any legal method possible – regardless of the other consequences. If that means being unethical, so be it. Politicians have no such legal requirement.

    • Jayson Virissimo

      Who said the corporation had to be for-profit? I was thinking more along of the lines of the ACLU or a trade union, not Google or a oil company.

  • Perhaps the students also believe politicians themselves are self serving. What led you to believe that the students “see corporations as more intrinsically selfish and corrupt than politicians” based on your question?

  • Steven Schreiber

    Yep… fiduciary obligations to maximize the value to their shareholders. Any corporation which ran for political office would represent the capital allocation interests of its political stakeholders; the corporation would have no reason to develop a “public service” brand save insofar as that brand does not negatively impact its business line. You’re basically cutting out the middlemen in special interest politics, politicians.

    The more interesting question is how having “Congresspeople” who are simple proxies for another group would work out. A corporation is not a completely unified entity, it is much less unified than a person, and it would not surprise if the board voted and that vote defined how the company voted. Or if you voted in an industry group; the boards would vote on how the group should vote and then group would vote in Congress.

    At any rate, I’m surprised no one has thought about the obvious winners: universities, foundations and research institutes would become very obvious candidates for office. Even without large amounts of direct money on their side, they have enough social capital to be elected. How much do you want to bet Harvard, Stanford, Yale, MIT and so on end up with a seat in Congress? What about Brookings? The Ford Foundation? Is the Getty Trust the “arts candidate”?

  • Mike

    I would trust Johnson & Johnson Company’s claims over that of a politician. The free market trends to punish companies that lie; where as voters are always willing to forgive politicians for their lies. Why is that?

    • Nick Tarleton

      How does it follow from corporations in the market being subject to different incentives about honesty than politicians in politics, that corporations in politics would be subject to different incentives about honesty than politicians in politics?

  • jsalvatier

    I have thought about this sort of setup a lot, and I agree it is attractive to let “groups” run for office. However, I think if you said “corporations”, the students shouldn’t faulted for thinking they would be more selfish the reason being is that a corporation with an external business could have a much larger financial interest in policies than politicians typically have.

    • Grant

      Most people probably think this as well, so any politician outwardly allying himself with a corporation is treated very suspiciously. We’d assume the same would happen if corporations themselves could run. The optimal strategy would seem to be for corporations and politicians to hide (or at least not be open about) their alliances.

      …and this seems to be what tends to happen.

  • JB

    Why can’t politicians also develop a “brand” & reputation that are tied to their voting records?

  • Bill

    I’m confident you can turn the views of those students around before they graduate.

  • DE

    Forgive me, I’m probably missing something obvious — but why is this either “corrupt” or “alien”? Isn’t the first duty of a for-profit corp to maximize value for its shareholders? Indeed, most free-market fans I talk to believe this is nothing to be ashamed of. If a corporation sells widgets, why should they ever vote for any measure that would in any way compromise their profit? “Hello, I’m Hypothetical Corp. I’m going to vote for something against my interests here, because… I’m schizophrenic.” I mean, a for-profit is not a human being, with many hopes and desires — a CEO may be, but a company is not. It is an invisible entity created to make money. Period. Where are these other politically unselfish purposes coming from? Surely the only reason a corp would even want to run for office would be to look out for its own interests?

    I mean, I’m trying to imagine a board meeting at Hypothetical where someone says, “I believe we should run for the Senate so we can help the citizens of — ” (well, pick your state, since a company is not necessarily confined to a single location; that’s how unrelated its desires are to those of an ordinary Senator who has a territory to answer to) — “in a thousand irrelevant ways that have nothing to do with our aims as a company. In fact, if they conflict with our aims, we should sacrifice our shareholders.”

    And why is this “xenophobic” or “alien”? Those terms relate to the unknown stranger. Corporate profit is entirely familiar, understood, and American as apple pie.

  • Yeah, if you had said “non-profits” or “interest groups”, you would have likely gotten a different response. Anyway, if one wanted to do this sort of thing, I would think you’d want to have (and perhaps end up having) have a coalition of different businesses/groups, so that the seat would have a view on most of the issues, rather than having views only on issues directly relevant to the one group.

  • Mike Prentice

    Even GMU econ undergrads, not especially inclined to see the bright side of politicians, see corporations as more intrinsically selfish and corrupt than politicians. The idea of firms as dark untrustworthy aliens is indeed buried deep in our psyche. Xenophobia lives.

    Once again you have managed to show an utterly un-nuanced view of data and give a flawed example that fails to illustrate your point. I am very disappointed. I came to this blog from lesswrong and expected views that, even when they challenged my own, showed thought and a process of reasoning that I could respect. Instead it is just another echo chamber. I am not surprised, but I am disappointed.

    Of course xenophobia lives. What a ridiculous thing to say. Xenophobia is an intrinsic part of the human psyche, and once again, you have utterly, completely missed an opportunity to use a good example to shock my perspective.

    It is not that people see corporations as corrupt. It is that corporations are not people. Corporations are more intrinsically selfish than politicians, because politicians are people, and as people, cannot help but be less than or equal to equally as selfish as corporations, which are by design and legal status entirely selfish corporate, i.e. group-driven, entities.

    To drop to the level of your un-nuanced perspective for a moment, saying corporations are corrupt and selfish is like saying water is wet. I do not thank you for not contributing.

    In order for your argument to even be coherent, much less valid, you need several more layers of connecting argument that you both have not provided and have shown no inclination to provide.

    This blog had in the past provoked my thought, which is why I have been so frustrated lately that it has not provoked thought and has had incoherent arguments. I hope in the future to read better arguments than the, quite franky, echo chamber drivel you have produced recently.

    • Steven Schreiber

      Frankly, this is the problem I’ve had with this for a while. I followed Hanson from Tyler Cowen but lately I’ve felt like he hit a couple of ideas and puts everything through that lens. Other than that, there’s a lot of speculation and a lot of “we need prediction markets”.

      Even on this topic, where I mostly share the general “well, it could turn out well” vibe, I’m still disappointed that there isn’t a lot said about possibilities beyond… well… Ben Nelson (D-Buffett). “Xenophobia lives” is pretty weaksauce as a tagline, there’s a lot of possibilities other than electing BP to Congress.

      For example, would Hanson be willing to start an LLC consisting of people with similar insights but different expertise to run for Congress under a set of bylaws defining how votes are decided? Not considered or addressed and, if experience is any guide, never would be because it doesn’t sound incendiary.

      • peatey

        Steven, my sentiments exactly echo your first paragraph. Cowen and Yudkowsky saw/see value here, so I keep returning to the prediction markets network. But “my bias overcoming yours” is frustrating to read, compared to the generalized intent of “overcoming bias (even mine).”

    • Grant


      A vote for a politician is a vote for more than one person; an organization. Like all voluntary organizations it must serve the selfish needs of its members.

      Also, shareholder profit is subjective, like all profit. It does not have to be monetary and does not have to be selfish.

      I suspect Robin may have been thinking of this post:

    • Carl Shulman

      Corporate officers and boards are indeed people. Surely there’s no need for the vitriol?

    • Echo chamber? I wasn’t aware there was a big community of blogs all cross-linking to each other echoing the same ideological points as each other than included Overcoming Bias as one of the mainstream members. But I could be mistaken.

  • i think one thing people might not like about corporations is that they are explicitly about profit…and this is fine to me, but i think maybe what people want in a politician–naively perhaps, is someone who is like a brother or a father or a mother–a good friend, basically–someone who you don’t feel is going to trick you in a really bad way–they might manipulate you but you believe it’s by and large because they believe it’s best for you, or they’re not trying to harm you seriously, whereas a corporation maybe feels less like a close friend who feels like family, and more like some random person you don’t know and has little credibility in expressing sympathy for you. they feel like a salesmen who is nice to you because they can make some money, rather than because they sympathize with you. i’m not critiquing the idea of a corporation running for congress, just thinking about the possible psychology people might have about it.

  • Psychohistorian

    The probability that a person values things other than her own financial well being is rather high. Corporations, on the other hand, are not supposed to value anything other than their own profits. They also cannot be effectively prosecuted, and the people who control them can likely act through them with no personal and little professional risk. They have neither souls to damn nor bodies to kick; politicians at the very least have bodies to kick and careers to ruin.

    Moreover, corporations, by nature of being corporations, are also in the business of doing something other than holding elected office. Elected officials, by contrast, are principally (or at least largely) preoccupied with holding elected office. They may have conflicts of interest, but they are not inherently in the business of doing something else, as a corporation would be.

    In short, your students’ intuitions might be better thought of as being totally accurate, even if that’s less exciting than deciding people are deeply xenophobic.

    • Grant

      Corporations are supposed to value whatever their shareholders value; this does not have to be monetary profits.

      Corporate shareholders are immune to some civil liability, but politicians are also immune from the liability of their policies (though I often wish this wasn’t so).

      Shareholders do have ‘souls to damn and bodies to kick’, as well as carriers to ruin.

      I agree its a stretch, but its possible for a corporation to come into existence only for the purpose of holding elected office. Nothing about corporate structure says they have to make widgets or monetary profit.

      • Dre

        I’m sorry, but do you mean to suggest that if there is some horrible political corruption with the elected corporation we should go and punish the shareholders (in a way other than just trashing the stock value). Its a common idea among free marketeers that shareholders that shareholders have power over the actions of a corporation, but this is just obviously not true in any real meaningful sense.

        This is especially true in this case. Presumably, the people making the corrupt decisions did not announce it to shareholders (I can’t see it going in the bulletin), so it seems unreasonable to blame the shareholders, but the executives will inevitably just say they were trying to act in the shareholder’s interest, and there is nobody left to kick.

        As John Joad said in the Grapes of Wrath, “Then who do I shoot?”

      • Grant

        Most people say elected entities are held in check by the threat of not being elected again. This is true of a single politician or a hypothetical elected firm.

        In the case of illegal forms of corruption they are also held in check by criminal law. Corporate limited liability offers no legal protection from criminal charges. It may be the shareholders who are guilty or it may be the employees.

        Are you saying that a problem with elected corporations would be the difficulty in prosecuting them for crimes? If so I would suggest this problem in inherent in any large organization, including current political administrations. In any case that difficulty didn’t seem to be Robin’s point; he seemed to take issue with the assumption that politicians were less self-serving than firms.

  • burger flipper

    “It is crazy to assume firms will always hurt their customers for any temporary gain just because some paper somewhere declares firms must seek profits.”

    such a loaded and clumsy straw man statement for a blog w this name.

    there is certainly a sane argument to be made that firms don’t act to preserve their reputations when decision makers within them have short-termed incentive structures and golden parachutes at hand.

    strange you have no problem believing the clashes between coalitions in the mind produce ridiculous results, but that believe it “insane” that people are leery of firms’ rationality.

  • DE

    Similarly, firms who hoped to succeed in the industry of running for office would seek to create and maintain a clear positive long-term brand, one that voters could respect, like, and embrace. It is crazy to assume firms will always hurt their customers for any temporary gain just because some paper somewhere declares firms must seek profits.

    Okay, there’s some confusion here. Are these corporations “in the industry of running for office”? Is that what they principally do? Like, a bunch of people get together and declare themselves a “political corporation” — i.e., a new sort of organization, similar to a non-profit? Or are you talking about — as I’ve been assuming — Ford, GE, or Apple running for office? That is, a company that is not “in the industry of running for office” but “in the industry of making cars/computers/shampoo.”

    Because, yes, the latter will conflict with the former. There is not a “piece of paper somewhere that declares firms will seek profits.” This isn’t some kind of a vague guideline about life that an academic came up with and wrote down somewhere. There are actual people who create a company for that purpose. There are people who invest in it, for that purpose. There are other people who are hired to fulfill that purpose. If the people running the company are suddenly going to decide to jettison their duty to it and throw their shareholders under the bus for the sake of… what? Abstract altruism? I mean, seriously, where does that come from?

    Or maybe you’re saying it’s not altruism, that anything that makes the life of a citizen of, say, Montana easier, will in the end be good for Shampoo Company X, which is… rather sweeping as a belief.

    • Grant

      To me, the statement “firms who hoped to succeed in the industry of running for office” implied your former description.

      But I have to ask:

      If the people running the political office are suddenly going to decide to jettison their duty to their backers and throw their supporters under the bus for the sake of… what? Abstract altruism? I mean, seriously, where does that come from?

      I’m really not seeing how a corporation would have less incentive to be altruistic than an individual politician. They both have selfish, financial backers with their own selfish goals. They both need voters to elect them. What am I missing? Whats the different between Halliburton running for office vs. Halliburton sponsoring a candidate (other than the former looking a lot worse and not having a chance of getting elected)?

      • DE

        I realize this discussion has moved on, so I may be shouting in the wind here. But FWIW, I thought I should at least clarify my own point of view.

        When Halliburton sponsors a candidate, I assume that they do so because they believe (a) that candidate’s views will be good for Halliburton’s bottom line and (b) that candidate may feel more kindly toward Halliburton, either consciously or unconsciously, after receiving a generous donation, and that kindliness will be good for Halliburton’s bottom line.

        That is, the good of Hallilburton comes first — and why shouldn’t it? I may have issues with political funding, but those issues relate to how best and fairly to set up our rules, not with the company who donates. They’re protecting themselves.

        When a politician runs for office, the good of the citizens they represent is supposed to come first — and indeed, when there’s a conflict of interest, their opponent does well to point it out.

        If Halliburton ran for office… what? Suddenly the company has undergone a change, and they no longer come first? They’re running for office for the good of the citizens of some location, and Halliburton’s financial interests (the reason the company was created) will take a backseat? I hope they’ve notified their shareholders that the company no longer exists to make the best profit it can, but instead to “help people.”

        As for this talk of brands: a politician has one brand: he’s perceived as helping his constituents, or he’s not.

        Johnson & Johnson, running for office, would have two brands: They make good household products, and they want to help people. Why is it crazy and paranoid to think that an entity trying to fulfill two different goals will have those goals come in conflict, and the bigger the company is, the more engaged in many different areas, the more likely this is to happen? And when the very purpose of the company is to create wealth… I just don’t see how you can hijack it for a second and sometimes conflicting purpose. That will by the way not generate wealth. Just because someone thought it would be fun to do some slow afternoon in the boardroom? It just strikes me as bizarre — like, “I’d like to move some water from place A to place B, but instead of using a pipe, I think I’ll use a lightbulb filament! I know it’s designed and created to do something else entirely, but you guys are just paranoid if you think it can’t do this as well!”

  • UserGoogol

    A big factor you’re not taking into account is that corporations have broader interests, and therefore there’s more potential for abuse in the pursuit of self-serving policies. Individuals are small and corporations are big.

    The sorts of things which directly benefit a politicians personal life are rather small. Take in some bribes, benefit the area around your primary residence, whatever. Human beings are small creatures, so the areas where a politician has a direct conflict of interest is relatively small. But large corporations are effected by all sorts of behavior. President Walmart, say, would be “personally” effected by any policies which effect labor law, or trade relations, or any number of other issues.

    This is blurred, of course, by the fact that politicians can be (and often are) major stockholders in large corporations, and therefore are effected by the same things that would effect the corporations themselves. But that’s something that can be (and to an extent, is) addressed through piecemeal regulation and informal policies encouraging politicians to sell their stock or whatever. But, as has been said, a for-profit corporation cannot be separated from its financial interests, because its financial interests are the whole point.

    Now, the idea of a non-profit corporation running for President is an interesting idea, since after all, political parties are non-profit corporations. And ultimately, the difference between a corporation running for political office and a person who promises (officially or not) to represent that corporation is pretty semantic, so the line between corporations directly running for political office and the status quo is really pretty blurry.

    • Carl Shulman

      Legislatures with party-list systems are already quite close to this.

  • Robin, I think your students understand something that you don’t, even if they aren’t explaining it very well on their tests. Even if you held everything constant, self interest by corporations can have a bigger monetary impact than self interest by politicians. When politicians support self serving policies, the size of the impact on their personal finances is generally going to be relatively small in the grand scheme of things even if it is large on a personal level. For corporations, the amendments that they can sneak into bills can benefit themselves far more than they could benefit a typical politician with a much smaller net worth (Millions vs billions).

    Here is another way to think about it: An energy company gets elected to the House of Representatives from a Texas district. How much does its market capitalization change? The “elected official premium” could expose the self interest of all politicians to a greater degree than the current status quo. Of course, the last point might actually be an advantage.

  • Did all the students miss out that there is no difference between parties and corporations?

  • Aaron

    Everyone here is assuming it’s an existing corporation, with outside business interests, running for office. In that case yes, I do believe the common assumption that the potential for conflicts of interest is much greater than with individual politicians. I also worry that the conflict between the business side of the corporation and the political side would be problematic, both in branding and conflicting policies.

    I think a more realistic scenario is a political party arranged in a corporate structure where instead of individual legislators holding seats the party controls them. I think this is more viable and is comparable to how Canadian politics works.

    It’s still individual candidates for each seat, but in practice voters vote for the party, not the candidate. Thus a party with 100 seats can count on those 100 legislators voting with the party with a pretty high probability.

    This may seem less stable since there are fewer entities with the power to make decisions. However, in reality it works out quite well since the parties are trying to protect their brand and are prepared to take a position that might lose a few seats in the next election, but help the party (and country) long-term.

    I could see a system further marginalizing the legislators by giving the party direct control of the seat working quite well.

    I’m not sure I see the added benefit in having existing corporations like Microsoft or GE running for office.

  • Drewfus

    People tend to think about governments in terms of ideas, whereas they think of private citizens and corporations more as concretes, from which they can draw on their experiences. A different mode of thought is at work, in each case.

    Consider for example the term ‘regulation’, which is regularly used in a manner which collapses the distinction between intentions and outcomes – it is effectively thought of as “that which fixes the problem”. Disagree? Ok, so do you believe in regulation of the financial sector? Yes? But what if it doesn’t work? Well, it does work, by definition (“that which regulates”).

    As a consequence of these thinking habits, it is not just that people lack trust in private firms, but more likely that they have a particularly idealistic view of governments and leadership in general.

    Of course, when thinking about politicians, even as a group, the degree of suspicion is as great or even greater than that towards corporations. This is key, i believe.

    People desperately want to believe in governments. Frankly, all those folks who are somewhat disappointed with the Obama administration should consider – if they are more than 35 – why they are still prone to such high expectations of any government, when their records are so poor.

    Governments are just groups of politicians – except in our heads.

    • You seem to be approaching Sowell’s “Conflict of Visions” from an odd angle. Actually, it is progressives who have that “high expectations” view of government (and the many infected with some degree of the progressives view through the mass media). Conservatives view government as they do other institutions and individuals as quite fallible and therefore to be limited in power, in order to restrict the damage they can do. As an aside, the Neo-cons and modern Republicans in general are not very conservative, they are more Judeo-Christian Socialists.

      • Drewfus

        I’ve read the book and i agree with you. I just didn’t want to make a partisan comment in this context – my comments weren’t directed at anyone in particular, especially RH.

        Your last point is noteworthy. A little while ago some data was published on the size of the US federal government as a percentage of GDP over recent decades. For Republican administrations, the average was slightly higher than that for the Democrats. Sort of made a mockery of the “tax and spend liberal” line, i thought, and worthy of broad attention, especially at tea parties.

        My main point was that RH had possibly overdone the response to private firms in describing it as xenophobia, and had underdone the almost innate idealization of governments (but not politicians). If this later trait has evolved, it would seem plausible that it was for reasons other than showing concern for others, and instead about the necessity for general subordination in very social, hierarchically disposed species like ours.

        Btw, it is this tendency for hierarchical organization in humans that broadly explains much of the conservative philosophy of social control (as opposed to more specifically economic control favored by liberals). Perhaps the line between traditional and contemporary conservatives is not hard as you think it is.

  • Anonymous

    Corporations, unlike people, have the agent problem: Management can squeeze their own corporation for all it’s worth and retire to their beach mansion.

    They can do this with any of the corporations assets, including long-term reputation, without proportional harm to their own reputation.

    Human politicians acting for themselves can harm act negatively for short term gain, but the long-term repercussions are much more significant.

  • Philipp Heller

    Actually “letting firms run for political office” is not as radical a policy it is made out to be. Effectively it only means that restrictions of activities that political parties can engage in would be lifted. Of course saying it this way makes it sound much less controversial and simply a question of degree, rather than one of absolutes. I doubt that many firms would even consider running for office. After all, GM makes cars, not food. Similarly, GS is a bank, not a health service provider. Few firms would want to actually run for office, simply because they don’t know how to do it. Only those firms who have a cost advantage would consider it. Who are these firms? Usually, they are called political parties. Effectively all this proposal does is to suggest that there should possibly be more than 2 political parties (who have a shot at having some power), as is the case in many other countries. It’s just they don’t call it “giving firms the passive vote” but rather a multi-party system.

    The question is thus rather unhelpful, as it obscures the actual issues at stake.

  • Corporations are not more intrinsically selfish and corrupt, rather less so than politicians for that the margin to which they can allow external influence is much more narrow than that of human beings. Which is the key difference and disadvantage of corporations in comparison to human beings, the narrow focus of goals that corporations possess and thus pursue. The long-term goal of any cooperation is the transformation of society into a profit maximizer mapping all resources and desires towards the single entity that is the corporation. Where humans possess a wide range of desires prone to fluctuations and depending on a wide range of circumstances, corporations don’t. Corporations are satisfied with circumstances that are merely enough to guarantee their market dominance and profit. These circumstances are not isomorphic to human nature. You might object that the entanglement of profit and democratic election demands the well-being of the consumers. That is not the case. For one, the company could actively work towards the goal of a non-democratic authority of the market or other systems it deems more profitable. But besides more far-future scenarios as changing the consumers themselves, it is also up to the products, i.e. that which is underlying the corporations profit. Would an armaments manufacturer actively support demobilization? Anyway, there is much more to consider. For example, corporations hold stable long-term goals where political parties made up of diverse human beings, that are not subject to company policies and narrow profit ranges, are fluctuating in their range of goals and underlying principles. This allows for the adaption of different advantageous traits that would otherwise not be explored and also allows us to collectively escape from political traps that could otherwise prevail.

    • I have been reading ‘selfish’ as opportunistic. Of course, all and nothing is selfish. But where individual human beings can shift their policy-making based on third-party influence, corporation are rather rigid and inflexible. They have certain objectives entangled with large-scale circumstances, where politicians can subdue to short-term profit regardless of large-scale and long-term consequences.

    • Drewfus

      This allows for the adaption of different advantageous traits that would otherwise not be explored…

      What is the mechanism? Business firms fail and go out of existence. New firms enter the market. There is a continual struggle for existence. Firms adapt and innovate by necessity. In a sense it is the market that does the adapting, and therefore has pseudo-goals that can’t be determined in foresight. Your missing this point because your only considering explicitly planned action.

      Governments by contrast, rarely go out of existence. It is they who are stable and rigid. If governments were so flexible, the Soviet Union would have buried the United States (economically). Your overdoing the introspection, at the expense of attention to real-world results.

  • lxm

    I remember recently reading of court cases that held that the management of a corporation does not always have to follow the best interests of the shareholders. The discussion also suggested that corporations have an existence separate from and beyond the individual shareholders.

    While you might consider an argument based on the change from a government by and for the people to a government by and for the corporations a cheap rhetorical trick, if corporations do have a separate existence from their shareholders, then having corporations represent themselves in government will mean that the government will favor the corporate form over the individual citizen.

    Just as “Humans evolved concern for others because this enabled individual humans to better survive and reproduce…”, so. too, we will see corporations evolving to better survive and reproduce by taking over more segments of our society.

    Just as a future Artificial Intelligence may be blind to the consequences of its actions on humans, so to may corporations be blind in the same way. Corporations may not intend to harm its customers or other citizens, but in its efforts to preserve and grow itself it may not care what the consequences of its actions are on humans.

    If this is what you want, go for it.

    As for myself, I will be voting for Toyota. I don’t care what they say about their cars.

  • scott clark

    I would have thought this was a case of undergrads just putting down a quick answer because they didn’t feel confident enough to say, “realitive to the status quo, I see no disadvantages.”. I would think they were just trying to give the answer they thought they were supposed to give. But the commenters here make me think that your students really might have thought the way you suggest.

  • Jay

    It seems to me that if corporations participated in the political process, and were subject to the usual incentives and restrictions of that process (anticorruption laws, tax-exempt status lost by outside commercial activities, large numbers of voters who base choices on apparent personalities, etc.), they would become largely indistinguishable from political parties.

  • I wonder if the students could also be assuming that corporations are simply better at converting their self-interest into policy. After all, isn’t the point of corporation versus single proprietor to increase effectiveness?

    They could, similarly, assume politicians’ appetites for gain are bounded, whereas corporations’ are not.

    My point being perhaps students are approaching from an Industrial Org perspective, rather than a differential appraisal of evil intent.

  • Robert Koslover

    “Economics students at George Mason University are mostly taught, and mostly accept, a free-market perspective, where political intervention in society is treated with suspicion.” Well, I’m certainly glad to hear that! But I doubt it’s the norm. Do you have any data about the fraction of universities that do that?

  • Steven Schreiber

    Doubtful. Most for-profit organizations would be wary of taking a stance on, for example, abortion or gay rights in a very public way. Corporations would have very large incentives to maintain ambiguous brands that people “can feel good about” rather than substantive ones people can judge.

  • Bill

    Throughout history, we’ve already run this experiment in corporations as electors.

    Substitute “land owning aristocracy” for “corporation” in your proposal.

    Does England sound familiar?

    Land owning aristocracy is what governed for many years.

    Until challenged by the middle class which elected politicians instead.

    • Microbiologist

      Then mass media largely took over the minds of the middle class. Now we are ruled by entertainment. Whoever can entertain Joe America can whisper counsels in his ear the while. Of course, the word entertainment has to be considered broadly. NPR might be less funny than The Onion, but if it feels more status-enhancing, it may actually be much more entertaining (not for me though, since I’m a rightie). In the extreme, for certain people, dredging arcana on Google Scholar may be a more entertaining source of weltanshauung than TV or NPR.

      On the other hand, entertainment rules us only to the extent that our democracy makes much difference. I suspect that it does make some. Note that for our elections to make a difference, GOP policies don’t really have to differ substantially from Dem policies. Even if the policies are quite similar, public opinion can still substantially determine what they are.

      • Bill

        My only reply is that you do not trust your fellow man.

        And, who do you think controls corporations?

  • EEDave

    Your contention that the decision makers in major corporations think in terms of a 50-year time horizon is ludicrous. Two years was closer the that time horizon in the major corporation I worked for before I retired about 10 years ago. I can’t imagine that since I retired, those decision makers have gotten that much more far-sighted in protecting their brand popularity.

  • Don’t corporations already run for office? What are the democrats and republicans but two corporations seeking to maintain a consistent brand image?

    • And isn’t public choice theory about how such corporations vote for self-serving policies?

      The profit motive is a wonderful thing. In a free market it aligns the interest of vendor and customer. The problem is that currently the only way to turn a profit from government is immorally, by rerouting funding to your supporters and electors.

      What is required is to permit politicians to make an honest profit from government, by permitting policy markets a la futarchy, or turning governments into de facto joint stock companies a la MM’s patchwork or anarcho-capitalist PDAs.

  • Bill

    Let’s do a small scale experiment and see where it takes us.

    Instead of the complete government to corporations, let’s just take a segment of the government, a regulatory agency, and give corporations the right to vote.

    If it works there, then, maybe we can extend it into more private spheres.


    Already Done That.

    What do you mean?

    Ever heard of ICC for trucking/railroads; CAB for airlines; etc. Of course, we ended some of these agencies the 70’s, so let’s do a before and after comparison.

    When captured by the corporations, they strangled potential rivals from ever appearing, much like Zeus killing its children.

    Poetic, isn’t it.

  • frankcross

    As for the addendum, tell it to BP.

    And your individual versus corporate horizon ignores the fact that individuals make decisions for corporations. CEOs don’t have much incentive to think out 50 years

  • josh

    Despite its overt corruption, I think its obvious that government was superior in the Gilded Age when the government . Not only is the self-interest of business more closely aligned with the people. The ruling class was small and generally independent. They had cause for patronage.

  • Daniel Morin

    Asking the question “should politicians run the government or should corporations run the government” is like asking the question “which executioner do you want for your death”.

    Corporations live to make money, the same as individuals work to earn their
    living. There is nothing sinful about making money, as long as the money
    received comes from voluntary exchange rather than taken by force, theft, or
    extortion. In a free-market economy, corporation must serve the people in
    order to remain in business. If the corporation does not sell anything
    useful to the population, it won’t have any customers, therefore no income,
    and will go out of business. In a free-market economy, big corporate
    earnings can only be achieved by having many customers purchasing goods and

    On the other hand, government takes your money by force (taxes) and by theft
    (inflation). The more money the government has, the more power it has over
    corporations in need of money. Since corporations want to maximize their
    profits, they will use the easiest possible way. Behemoth corporations find
    it easier to lobby the government for privileges (regulations) and handouts
    (subsidies), rather than working hard producing quality products and
    services and selling them to customers. Corporations are loyal to their
    customers, and when the government becomes the corporation’s biggest
    customer, the corporation stops serving the people and starts serving the
    government. When a corporation starts receiving money from the government,
    it becomes addicted to taxpayer’s money.

    Corruption becomes irresistible. To secure its share of the looting, the
    corporations simply hires (bribe) government officials and adds them to its
    payroll. Bribing is just a regular business expense to secure a good
    business income. To increase its income, the corporation will also request
    its politicians and bureaucrats to introduce new regulations to obstruct

    This is how corporations gain control of the government, however the root of
    the problem is giving our money to the government.

    “Public Choice” is an oxymoron. There is no choice for the people who are forced to pay for the choices made by others. As far as politicians being unselfish, wow, this is the most ridiculous thing I have read. If those people (politicians) want to “serve people”, they should start a business and earn their money by voluntary exchange rather than at gunpoint.

  • Randy
  • Popeye

    Maybe the students are corrupt and self-interested and cannot grasp the idea of the greater good. They see no problem with “xenophobia” if it benefits them personally.

    Is there something with the students’ views? What’s the alternative? That we impose some kind of “intervenionist” “educational” approach to alter their beliefs? I’m sure that whatever they believe, they believe so for a reason. Evolutionary biology teaches us that the human mind is an adaptive organ designed to optimize reproductive success; should we really be tinkering with an elegant natural order to engineer results that we think are “better”?

  • John

    Economists are a confident lot, unafraid to blunder into other disciplines.

  • I can’t believe how badly most commentators are missing the point. Corporations have brands that they uphold. I would much rather vote for a corporation I trusted than a politician who had little reason to care what people thought about him in 5 years. Not all corporations are profit maximizing firms, but all have reputations to protect if they want to be successful.

  • Popeye

    Yes before corporations there wasn’t even a word for “reputation.”