American multi-national corporations long ago abandoned any obligations of citizenship. Emboldened by their success, are they now acting as their own governments? Is Apple's defense of its refusal to open secret software a precursor of multinationals making their own laws and foreign policies -- based, as usual, on the lowest standards in the world?

The New Governments: Corporations Without Citizenship

         By James A. Kidney

America’s multi-national corporations, which means most of the largest companies, long ago abandoned any pretense of citizenship.  Now they are trying to replace the duly-elected governments of the United States with their own domestic and foreign policies.

The leader of this takeover, for the present, is Apple, joined by every other major wireless phone manufacturer except Microsoft (some would not call Microsoft “major” in this area).  In addition to shipping jobs to China and its revenues to low-tax countries, abandoning the United States except for actually choosing to live here, Apple’s CEO Tim Cook asserts Apple alone should rewrite the Fourth Amendment to the Constitution and establish its own foreign policy which, not coincidentally, favors its business interests.[1]

As of now, the courts will decide whether Apple must unlock its iPhone code to allow law enforcement to see if the San Bernardino domestic terrorist communicated with others about his plots.  Whatever the legal and technical merits of Apple’s position v. the FBI, its public relations campaign based on wrapping its business interests in the mantle of freedom is an insult to America and Americans because it cites the failure of other nations as justification for Apple’s actions in the United States.  This is the same scam corporate America has been using for decades to justify a diminution of our own society.  Contrary to its protestations, Apple is not a good citizen.  Sadly, it has much corporate company.

For a corporation, citizenship means, at least, attention to the betterment of the nation in which it was born, nurtured and enjoyed success.  And obeying the nation’s laws.

A Brief History of the Modern American Corporation

Once, the obligations of corporate citizenship were accepted and celebrated.  In the 25 years after World War II, it was commonplace for corporate America to assert that its constituencies were the shareholder, the customer, the employee and the community.  No one complained that this was too great a burden or an injustice.  America was the Land of the Free and stood strong across the globe defending capitalism and economic growth.  Corporations then and now were protected by the nation’s laws, police and courts.  Then and now they enjoyed the benefits of America’s roads, power grids, food and drug laws and other regulatory devices allowing corporate executives to raise healthy children and themselves to live long lives.  American corporations are blessed to live in a domestically peaceful nation.  Even in today’s fearful times, acts of political violence are rare.

It is true that, over time, certain burdens were placed on American companies as the nation recognized its own flaws.  Laws were passed requiring fair treatment of citizens regardless of race, creed or color. Lawsuits were brought enforcing these new standards, which were a bother to corporations which thought they had no stake in issues of equality.  Americans also saw the justice in trying to help The Other America rise out of poverty, sometimes raising taxes on individuals and businesses alike to do so.  Some businesses saw these increased costs as irritants interfering with profits, rather than as contributing to the general welfare. It became clear that our air and water, essential to life, were threatening our health.  Additional burdens were imposed on some businesses to address these matters, too.  Corporate America complained at times, but generally complied with new obligations.

Meanwhile, certain economists in academe, most notably Milton Friedman, espoused the notion that the only economically proper, and even ethically moral, obligation of the modern American corporation was to maximize profit for shareholders.  Friedman misinterpreted the “invisible hand” of Adam Smith to mean that corporate selfishness would result in a better economy for all.

Corporate America was a willing audience for this “business ethic.”  Soon businessmen and their obliging politicians were quoting Friedman, Ayn Rand and a strange pre-war Hungarian school of economists who preached that government was the enemy of business.  Individualism and corporate selfishness became not only theories, but religions.  While Communism and socialism were damned as ideological ranting, somehow the equally ideological and damaging notions that neither individuals nor corporations are beholden to anyone but themselves were adopted by Serious Thinkers of the Establishment.

Even today, most media and politicians see it as unremarkable that individual corporations are not held accountable for their actions or share considerable responsibility for the social and economic decline of the nation.  Those who seek to do so are deemed wholly outside the mainstream — both unelectable and vaguely crazy.

It was no coincidence that benefitting workers and community (and even customers) was increasingly rejected as a corporate goal in the 1970s and 1980s.  The rise of the selfish corporation (and the myth of Nietzchean Supermen to run it) grew as American corporations faced growing competition from other countries recovering from wartime devastation.  The economic challenge to American dominance resulted in a doubling down of the Friedman philosophy, as reflected most clearly in the election of Ronald Reagan in 1980.

How did many corporations react to real foreign competition?

First they abandoned pensions.  Some companies stopped funding them outright.  Then Congress gave them the “out” of the 401(k), putting the responsibility and most of the cost of retirement on the individual worker.  The result:  The average 401(k) retiree has too little money to live on.  Social Security (another target of politicians and businesses) has again become a true safety net.

Then corporations, this time with the active cooperation of state legislatures, destroyed the labor unions.  Corporations argued that without unions, they could compete with China and keep jobs in the United States.

It was another con game.  Once unions were weakened, the jobs moved overseas to the lowest bidding country.  Oh, yes, and also to the countries with the weakest worker and environmental protections.

Decent health insurance disappeared with the unions, too.

Not all companies took this course.  But most did.  We are paying for it today.

Were there alternative possibilities?  Of course.

When confronted with foreign competition, U.S. companies (and unions) could have worked to find better and more efficient ways of manufacturing that would preserve many, if not all, of the well-paying jobs.  Politicians could have imposed tariffs on countries exporting to the United States which did not meet certain standards of labor conditions and, later, environmental protection.  Yes, prices would be higher in the United States than necessary, but people would have the means to pay such prices because they would have jobs in healthy working conditions paying decent wages.  Foreign companies in many industries would see the virtue in bringing their manufacturing to the United States, where they could compete on an equal footing and enjoy the American market.  (This actually happened, to some extent, in auto manufacturing.)

But it was easier and more profitable to just move the whole ball of wax overseas, except for the corporate executives, who preferred to enjoy the personal and family benefits of living in the United States.

Why Not Just Become the Government?

Apple and its like in the digital equipment business were born with the benefit and nurture of America’s freedom.  Jobs and Wozniak followed the footsteps of many other inventors and Big Business founders.  Silicon Valley is a testament to the business possibilities of America.

But Jobs was a notoriously prickly guy who seems never to have felt he was rewarded sufficiently for his design genius.  Perhaps his is why manufacturing of Apple computers, iPads and iPhones was moved so quickly to China.  The labor conditions were terrible at FoxComm and other suppliers, but Apple didn’t care about that until the notorious suicides and health problems of workers became known in the U.S. and Apple responded to what, for it, was a public relations nightmare.

Nor was the highly profitable Apple going to keep its profits in the United States, where they could be subjected to a higher tax than those in other countries, such as Ireland.

Meanwhile, the corporate offices in Cupertino enjoyed good roads, good schools, solid utilities and cooperative zoning, as well as political peace.

Apple did not get much pushback for its corporate conduct.  Its phones are wonderful inventions.  Its iPads are nearly as great.  Love of Apple and digital products manufactured by it and others (nearly all of them overseas) insulated these companies from close examination and any government action which might be contrary to their interests.

With the U.S. and local governments so beholden to corporate America, such that corporate America could abandon old notions of being a good citizen, why should corporations not simply take on the essential duties of government as applied to them and abandon the fiction of national citizenship altogether?

If Apple products are loved by all around the world, isn’t Apple stronger and more admired than the silly U.S. government, which has to perform many tasks other than make popular products?  Apple does not have to engage in warfare, or confront Russia, or enforce laws against drugs or other crimes.  Apple doesn’t have to take money from people to use it for for things those people don’t directly benefit from, such as national defense and Medicare.  Apple gets to make people happy, and people love the happy drug it sells.  Governments are a nuisance.

Thus we get to Tim Cook and the creation of Apple’s own laws and foreign policy.  It should not be surprising that Apple is claiming the sanctity of its own proprietary software against the demands of mere law enforcement.  It should not be a shock that Apple cites the standards of countries who are much, much meaner to their citizens as a reason for Apple to keep its software “key” supposedly unmade and unused.

After all, American corporations have been taking advantage of the existence of much worse countries for the last 45 years.  “Sorry about the fact that China has lower wages and poorer working conditions.  You know, it’s not personal.  It’s just economics and the free market.  Sayonara American worker.”

“Too bad goods can be produced cheaper in China (or Bangladesh, or Vietnam or nearly anywhere but the U.S.), especially since our well-paid executives can’t figure out how to more efficiently manufacture in our union-free domestic plants.  We are going to take care of Americans by being able to sell products at Wal-Mart for a dollar less than domestic competitors.  That’s a good deal?  Right?”

Now Apple is defending its business model by adopting its own foreign policy.  Cooke says: “Apple has to be free to ignore legitimate requests of U.S. law enforcement because of the way those folks in China (always), Iran, Syria and other nasty places run their countries.”

Oh, and by the way, while Apple could take a courageous stand protecting “good guys” in those countries and risk a ban on its products, that would really be abandoning the “good guys” and Apple is a patriot in favor of the First Amendment for all.

“Will you then give away your $300 iPhone to good guys in Syria, etc.?”

“Er, no.”

In any event, the whole Apple defense is silly.  If China wants to unlock Apple iPhones, it will make Apple do it at the expense of losing China as a market.  Apple will comply.  Or it will be banned from the market.  Same for all the other nasties among world countries.  Only the democracies of the West are unlikely to punish Apple economically for intransigence.  Apple’s “heroic” stand is essentially risk-free.

George Orwell not only was about 25 years too early in estimating that 1984 would be the year of a dystopian Big Brother, he erred in concluding that Big Brother would be Big Government.  In fact, in 2016, the United States and much of the rest of the world is being dictated to and controlled by Big Business.  It is the actions of business, including the financiers of Wall Street as well as the off-shore manufacturers calling home the United States, who are damaging the country.

The leaders of one political party continue to blame government and make heroes of corporate moguls (although, it must be said, Apple’s stance in the San Bernardino case has been criticized by all the Republican presidential candidates).   Most leaders of the Democrats are less publicly lionizing of these corporations, but they are loath to do much about their damaging conduct.  Which raises the question:  What could they do?

Is it too late?

Love my Apple.

[1] Spare the complaints that there is some significant legal reason under the Fourth Amendment that Apple can’t be “forced” to create software to unlock the phone.  Warrants require affirmative action by persons all the time, such as unlocking a safe, helping to locate a document — just about any assistance that does not constitute testimony which might violate the Fifth Amendment prohibition on self incrimination.  Apple is in no danger of incriminating itself in this circumstance.

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