Monday, January 6, 2014

Are Political Contributions by Unions and Corporations Comparable?

Unions point the finger at Corporations as the bad guys whose cash undermines democracy.  Corporations point at Unions as the bad guys whose cash undermines democracy.

Is this a wash, are they both equally culpable?  Lets compare them.

Are the organizations themselves democratic?

Unions, theoretically and generally yes.  The dues paying members elect management who make decisions for the union, including decisions on who to support politically.  While individual union members may not like the Union supporting a particular candidate, that seems not much different than individual citizens of the United States paying taxes they didn't vote for because the chose to be citizens of the United States.  Sometimes in reality Unions are less Democratic, when the Union has the political muscle to enforce a closed shop, so if you don't join the Union you don't have a job.

Corporations are somewhat democratic theoretically and not democratic in reality.  In theory the stockholders chose a board of directors who run the corporation, but in reality in modern markets stockholders have little control over large corporations.  Management has the knowledge and leverage to fill the Board of Directors with like minded people, so management runs the Corporation.  It is not a problem for stockholders, if they don't like the way the company is being managed they just sell the stock.

The big difference between Unions and Corporations is the people that own and run corporations are relatively insulated from the consequences of their bad decisions due to the limited liabilty that Corporations enjoy.  So they have much greater capability to ignore the law.

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