Power Struggles and Corporate Influence – Article Summary

 

Power Struggles and Corporate Influence

Who holds the power in a capitalistic economy? Is it spread amongst the nation thanks to proper checks and balances, or do a handful of men and organizations with fat pocketbooks hold the metaphorical scepter? Many have begun to wonder if finance has become the main source of power and influence in America. Individuals have condemned modern politics with accusations of bribery, stating that political candidates no longer represent the people, because the people don’t have the most money – but large corporations and organizations do, and politicians will support the organizations that can fund their campaigns. These people have been ridiculed as radicals, conspiracy theorists, paranoid, and anti-government, however, the focus and power of money in the nation is becoming more and more apparent, as the current state of the economy brings the worst out, and the nation becomes desperate.

The constant struggle for power within financial institutions is highlighted in the textbook: The authors describe the system of voting within a corporation, stating that “proxy gives a designated party the temporary power of attorney to vote for the signee at the corporation’s annual meeting.” (Keown 219) They go on to explain that proxy fights often take place, in which rival groups or individuals contend for proxy votes, essentially, vying for power and influence over the organization. “Commons stock is a certificate that indicates ownership in a corporation.” (Keown 218) This ownership is a direct representation of power within the company, especially as the shareholder acquires a high percentage of the corporation’s stock. The more shares they hold, the more leverage they have in influencing the actions of the company. In the same way the corporations mentioned in this article attempt to use their financial leverage against the government itself.

The article “Amazon Offers California-Jobs Plan in Exchange for Sales-Tax Reprieve”, written by John Letzing, sheds light on the topic of finances being used to wield power in a suffering economy. This article was chosen due to the parallel that can be drawn between the textbook’s examples of power struggle within corporations, and the contention between the corporations in the American economy, who are competing with each other, using the same kind of power of influence noted in the book, but against the government.

Letzing writes that Amazon has presented a plan to the state of California to bring 7000 jobs to the state by 2015. In a country that can’t seem to bring its unemployment rate under 9% (which is less than 2% shy of the highest unemployment the nation has seen) , that pledge is quite enticing, but it comes at a cost. Amazon requires the state to remove its Internet sales tax laws until 2014. They have already made this type of offer to the state of Texas, and shut down their operations in the state when they refused to comply.

The larger business entities have begun to “flex their muscles”, as they realize that the government is nearing the end of its resources and ability to sway the economy. In a physical confrontation, the individual with the most physical ability will win, whether he has more speed, agility, strength, or a superior combination of the physical abilities. In a financial dilemma, the individual with the biggest pocketbook wins; the largest cash flow, the lowest debt ratio, the highest profit margin, the lowest overhead, etc.

In this article, the companies with the highest financial strengths have begun to attempt to coerce the government to allow what would they would not before. The examples that are given are Amazon, and AT&T. AT&T made a similar attempt by offering “thousands of jobs” to the economy, in exchange for support (or permission) in its acquisition of their rival T-Mobile. (Letzing)
Have these businesses, and companies in a similar position earned a “right” to use their financial position as a tool of influence?

Should money, and/or the influence of large corporations be kept out of politics altogether?

Is there a balance that can be instilled?

 

 

 

 

 

 

 

 

 

 

Works Cited

Keown, Arthur J., John D. Martin, and J. William Petty. Foundations of Finance: the Logic and Practice of Financial Management. 7th ed. Boston.: Prentice Hall, 2011. Print.

Letzing, John. ” Amazon Offers California-Jobs Plan in Exchange for Sales-Tax Reprieve.” The Wall Street Journal. 2 Sep. 2011. Web. 2 Sep. 2011. http://online.wsj.com.

 

 

 

 

1 Comment

  1. Sammy February 7, 2013 at 4:29 pm #

    Who says money does not govern? Since ancient times money had been the instrument of peace or chaos. Kingdom hungering for more money or resources are pillaging happy, rich kingdom for their treasures and their happy beautiful people. Contentment are dictated by the means of comfortable living money could buy. In poor countries chaos reigns because people are discontented by the little things that they have and they want more.

    Reply

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