Are Corporations People?

Just prior to the Iowa Republican debates, Mitt Romney was ambushed by an organized left-of-center Democratic hit squad. At the event, well-subsidized agitators had bought front-row seats for the speech at the Iowa State Fair in order to heckle the Republican candidate. As he began to speak, they began to shout “Corporations! Corporations!” Uncharacteristically, Romney temporarily lost his cool and shouted back “Corporations are people, my friend!”

Romney had fallen into the trap (although I believe he recovered well). The claque was merely restating Obama's class warfare "corporate jet" mantra in a slightly different form. The trap is to toss out buzzwords that resonate among people who have a minimal understanding of a complicate legal concept, knowing that no simple one or two sentence response can possibly counter the concept that has already been planted in advance. That concept is "coporations are rich machines that steal money from the people to pay for perks like corporate jets." When leftists say "the people," you can take my word for it that they aren't talking about you.

Since I'm not trapped making a political speech while being heckled, and further since we have more time and space to reply, let me discuss the whole misguided effort to demonize corporations in light of the claims of the left and Romney's reply to the hecklers.

Are corporations people? Poor Romney only had enough time to respond to simplistic heckling with a simple answer. On its face, the statement he made is correct, but incomplete. At least he didn't fall into the trap of arguing a complicated intellectual/legal/political/social/philosophical concept with leftist simpletons. Corporations are indeed made up entirely of people. They are not alien machines which dropped out of the sky to suck the life out of the poor and easily-deluded masses.

Romney's full reply included: "Of course they are [people]. Everything corporations earn ultimately goes to people. Where do you think it goes?" That's part of the trap. A good demagogue knows that among those "people" are pampered executives who do indeed fly around in corporate jets, and that's the picture the left wants to paint. Rich (and occasionally overpaid) corporate executives are easy targets, if you ignore all the common shareholders who would be a much larger and more sympathetic target.

As a corporate executive and business owner, Romney is the most vulnerable Republican candidate to this kind of attack. He lives a very cushy life, and the resentful redistributionists think that's evil. The point of this kind of heckling is that if the victim of the heckling isn't careful, he'll be drawn away from the real topics at hand by having to defend his own wealth. And God forbid anyone should be that wealthy when there are poor and starving innocents out there to be saved by government redistribution. The hecklers continued to attack: "The money goes into corporate pockets." Romney shouted back: "Whose pockets? People's pockets. Human beings, my friend." They of course believe that all pockets should be of equal size with equal contents.

And that was about it for the Iowa State Fair. But it was only the beginning for the demagogue Democrats. Debbie Wasserman Schultz, she of the kinky-haired 60s look, immediately jumped on Romney. As DNC chairman, she opined: "It is a shocking admission from a candidate and a party that shamelessly puts forward policies to help large corporations and the wealthiest Americans at the expense of the middle class, seniors and students." Lots of rhetoric, no facts. David Axelrod, Obama's joined-at-the-hip buddy in Chicago said: "I guess the next time you see a corporation you should take them out to lunch." Obviously the simpletons aren't confined to the Iowa State Fair.

The DNC immediately put out a video that showed Romney, corporate jets (not to be confused with Air Force One) and post offices--all to the background singing of Barbra Streisand's "People." Pure simplistic demagoguery. Class warfare is alive and well in the Democratic Party, and corporations are their poster boys. The real trick to this form of attack is that telling the truth can get you into big political trouble among the legally/politically ignorant. Unlike Al Gore's "inconvenient truth" which is actually a lie, Romney's truth is actually, well, true.

Even Hillary Clinton has been embarrassed in the past by stating the truth when it disagreed with the leftist line. "A lot of these lobbyists you're attacking, whether you like it or not, represent real Americans. They represent nurses, they represent social workers, and yes, they represent corporations that employ a lot of people." Naughty, naughty, Hill.

Romney tried to get out his message that he was actually in favor of closing corporate tax loopholes, but unalterably opposed to raising corporate taxes. He supports lowering those tax rates as a genuine stimulus for business. But a determined crowd of hecklers was not about to let him state that position.

From the legal point of view, corportions are "people" of sorts. Romney had the good sense not to try to explain that to an unwilling audience that would hoot at his every word. The very word "incorporation" means that an entity created by law has a legal existence similar to a human being in many ways. It is born, it lives, eats, and dies. It can sue, and it can be sued. In a certain sense, it can even reproduce (spinoffs). "Incorporation" essentially means "to create a body."

The two underlying concepts of incorporation are freedom from individual liability for mistakes, and survival of the entity. The method of creation and survival is to get lots of people (yes, people) to invest in the corporation with funds that would be difficult or impossible for an individual to raise. Then produce a product or service that will produce more money than was originally invested, in an ongoing manner.

Of course it doesn't always work that way. Like any business, a corporation can fail. But the left concentrates on the most glaring examples of how a few corporations out of thousands can go wrong. Enron, Bernie Madoff, the Savings and Loan scandals, GM, Chrysler, AIG and others are held up as the standard-bearers for corporate America. They tend to downplay Fannie Mae and Freddie Mac, the corporate failures which precipitated the housing market crash. After all, they were underfunded and overrated because they were "helping poor potential homeowners" with no credit and no means of repaying their loans. In other words, another Democratic redistribution scheme gone wrong.

There are examples of corporate greed, and anybody who denies that is living in a dream world. But that's only the straw man that the left uses. In fact, they are playing on class resentments to make all highly-paid corporate executives into villains. Why should a corporate executive in charge of managing billions of dollars in investments, production, employment, and sales be paid more than the guy who turns the bolt the wrong way on a wheel at Government Motors? I don't know. You'll have to ask Karl Marx.

And speaking of that, where's the left's indignation over GE chief executive and jobs czar Jeffrey Immelt? His corporation sent thousands of jobs to China, made billions in profits, and paid not a dime in taxes. But then he is part of the Obama inner circle.

Ambush politics are tough to deal with. I have to give credit to Romney for handling it about as well as could be expected. If he had tried even as brief an explanation and defense as I just did in this post, the hecklers would have won by default. I haven't even scratched the surface of the moral and political issues involved in corporate decision-making, and it would put you all to sleep anyway. And that is exactly what the left is counting on.