America's New Masters
November 2, 2013 9:03 AM   Subscribe

This shift in how companies are governed and raise money is bringing with it a structural change in American capitalism. That should be a matter of great debate. Are these new businesses, with their ability to circumvent rules that apply to conventional public companies, merely adroit exploiters of loopholes for the benefit of a plutocratic few? Or do they reflect the adaptability on which America’s vitality has always been based? - Rise of the distorporation - how changes in the way companies are financed and managed is changing the wealth distribution of America.
posted by Artw (23 comments total) 17 users marked this as a favorite
 
"Are these new businesses ... merely adroit exploiters of loopholes for the benefit of a plutocratic few? Or do they reflect the adaptability on which America’s vitality has always been based?"

...Yes.
posted by Mike Smith at 9:49 AM on November 2, 2013


It isn't just this one form, fewer and fewer corporations are paying dividends.

But they are not our masters. The people who own them have outsized ability to influence things, the corporations are just the way they organize their money.

Its really, really important that we start getting a balanced view of this--and stop putting our own selves into the position of slaves by the very language we use. We are not their slaves and we have the power to change these things ourselves.

The only problem is it will be hard. This isn't a 1-year project. Its probably a 40-year project. And it won't be fun, or usually even inspiring or emotionally satisfying. But it can be done.

It seems like we are in an age of hyperbole and people feel like they have to use hyperbolic language to get the importance of the point across. But sometimes that language ends up putting us in chains. We can subordinate business organizations to the greater good. But we have to acknowledge we have the power and use it--not in giant marches--but in a lot of every day decisions. We must be aware and use the market and the organs of government to our advantage. Indeed, they are set up that way and all this effort by persons with a lot of money is designed to persuade us it is in our best interests to do things that advantage them. We need to participate at every level. Call your city council, call your mayor, governor and the President. More importantly, convince others to also do it.

What amazes me is how constantly people say nothing can be done, yet SOPA went down in absolute flames when people got on the phone or shot off E-mails to their Congressman or woman. Its not going to be fun writing all those letters, but it has to be done.
posted by Ironmouth at 10:09 AM on November 2, 2013 [16 favorites]


"Nothing can be done" is frequently a way of saying "I don't want to." Like a lot of the geeks self-justifying going to see Ender's Game despite Orson Scott Card being awful are coming up with elaborate justifications like "Well he already got paid for the film rights and the movie's already out so it's not like I can do anything anyway so I may as well go see it," which is really just a way of saying "My wanting to see it outweighs the lofty ideals I claim to have."
posted by Ghostride The Whip at 10:30 AM on November 2, 2013 [4 favorites]


Stock symbol AINV is an example of one of the largest BDCs by marketcap, current dividend yield 9.4%, and there are higher ones. Open to regular investors. But the risk is the yields fluctuate a lot (it was nearly 15% a few years ago) and the stock price can move a lot as yield seekers come and go with the tide of dividend profits. Two of the other most popular BDCs are PSEC and MAIN.
posted by stbalbach at 10:31 AM on November 2, 2013 [2 favorites]


I started a corporation recently (don't worry, it's a small one consisting of me) largely as a way to not have to pay personal income tax on a video game I wrote. I was immediately inundated by emails from people claiming they could help me restructure it so I would pay barely any tax at all.

In short, gaming the tax system is a widespread and venerable game that has existed as long as taxes. You bring a regulation, they bring a tax shelter. It's the Chicago way.

Perhaps my favorite example of this is the Supreme Court ruling that tomatoes are a vegetable. Why did that question end up in front of the highest court in the land? Tariffs. Vegetables were taxed, fruits were not and some smart import company pointed out that tomatoes are botanically classified as the latter. Federal court hilarity ensued.

In fact while most people only pay attention to the publicized cases before the Supreme Court a startlingly large number of their total cases are about commerce regulations and the various dodges companies have tried to get around them.

So I sympathize with the people who say the problem is intractable. If there is money to be made helping a little guy like me dodge taxes, imagine the fortunes to be made as a professional tax dodge adviser for the big companies. No matter what regulations you put in place there will be people working 24/7 to get around them. This particular dodge will be restricted soon enough, but it will just be replaced with another one.
posted by Tell Me No Lies at 10:32 AM on November 2, 2013 [3 favorites]


Great comment, Ironmouth, particularly regarding the need for having a generational perspective when thinking of our activism. As Gar Alperovitz likes to say:
There is a problem. The price is decades of your life. If you want to play “transform the system” those are the chips you have to throw on the table.
The only modification I'd make is to this part of your comment:
But we have to acknowledge we have the power and use it--not in giant marches--but in a lot of every day decisions.
I'd change that to "...not only in giant marches..." Let's not downplay the importance of moving forward on all fronts. Great social change movements are not orderly affairs that happen in legislatures alone. The people collectively need to take to the streets, engage in civil disobediance, write letters, support local, state, and national candidates, build parties, help draft legislation... all of it.

Alperovitz frequently uses the example of the early suffragettes, who marched (and were mocked for it), and voted illegally before it was politically possible to change the Constitution. But in doing so, they helped change the political climate that eventually ended up delivering real votes in legislatures across the country.
posted by mondo dentro at 10:38 AM on November 2, 2013 [4 favorites]


These are not companies in any kind of societal sense. They are vacuum cleaners. They aren't clever. They aren't smart. They aren't innovative. They're evil.
posted by Benny Andajetz at 10:58 AM on November 2, 2013 [2 favorites]


I'd change that to "...not only in giant marches..." Let's not downplay the importance of moving forward on all fronts.

No. Too many take that as the most important thing you can do and therefore the only thing they will do. People show up for the personal identity product alone.

These people have to be beat where they are winning. In regulation and legislation, especially regulation. Think Occupy the SEC as a model.
posted by Ironmouth at 11:01 AM on November 2, 2013 [2 favorites]


The problem is that many (if not most) Americans seem to respect businesses that exploit loopholes to gain advantage. It represents American pluck and ingenuity. For example, how many articles are out there detailing how American companies use " subsidiaries" in Ireland and Holland to drastically reduce their tax obligations? And, yet, where's the uproar? Instead of uproar, I usually hear "hey, they aren't breaking any laws."

Maybe they aren't. But they are sure as hell breaking the spirit of the laws. Which defeats the whole fucking purpose of passing laws and regulations in the first place. Attitudes need to change, not laws.
posted by Benny Andajetz at 11:11 AM on November 2, 2013 [2 favorites]


Ironmouth: No.

Yeah. Why am I not surprised?

In regulation and legislation, especially regulation.

For a guy who preaches that nothing matters except counting the votes, this is rather odd. Where are the votes for tighter corporate/financial regulation? Nonexistent.

Think Occupy the SEC as a model.

Yes. Great choice. But, you know, while Occupy the SEC no doubt has lots of insider-type experts in it's core group, it's taking its name from the kind of mass action you started your comment by saying "no" to.

Sometimes your contrarianism is just... weird.
posted by mondo dentro at 11:12 AM on November 2, 2013 [5 favorites]


Not weird. Dependent on not understanding how social change really works.
posted by wuwei at 11:36 AM on November 2, 2013 [1 favorite]


In America, Legal = Ethical. Many people can't conceive of a lawful act being wrong.
posted by blue_beetle at 11:49 AM on November 2, 2013 [4 favorites]


Ironmouth: your comment resonates with me, as I use langauge in a way that keeps me feeling powerless and victimized. Thanks for the wake up call, it's sorely needed for a decent lot of us.
posted by Annika Cicada at 12:03 PM on November 2, 2013


As the baby boomers retire in earnest, and need to convert assets to income generation, REITs, BDCs, MLPs as well as closed-end funds (CEFs) will continue to grow, because by law they must pay out most of their income as dividends, and they are also inherently tax-efficient -- the income is taxed once, at the shareholder's personal rate, rather than being taxed twice, once at the corporate rate, and again at the shareholder's blended qualified and non-qualified dividend tax rate, or capital gains rate if the company retains earnings instead of paying dividends. If Congress further increases the qualified dividend tax rate or the capital gains tax rate, as many are urging it to do, than the advantage of these structures will only grow.
posted by MattD at 12:31 PM on November 2, 2013


I think part of why SOPA when down in flames was because everyone picked one solvable issue and worked on it simultaneously. It was also an issue a lot of big names were behind as well.

What's the next solvable issue that most folks can agree on that the masses can solve in the same way?
posted by aniola at 1:23 PM on November 2, 2013


> This isn't a 1-year project. Its probably a 40-year project.

So if we're good kids, and send lots and lots of letters and phone calls to our lords and masters, in 40 years, when I'm dead, when young people today have become old people, perhaps they'll fix this one issue for us.

Of course, imagine how much damage will have occurred in the meantime. I guess that after that we start our next letter writing campaign: "Limit work to 80 hours a week", "Overseers use whips, not flails", or "Lighter chains."

> Ironmouth: your comment resonates with me, as I use langauge in a way that keeps me feeling powerless and victimized.

The idea that we can't change anything about this system for 40 years, and even then, only after two generations of sucking up to the very architects of our misfortune - that's what makes me feel powerless.

Honestly, if that's the best you can promise us working within the system, then it's clear that we should give up on the system. If we can only effect positive change in 40 years, whereas our opponents seem to score negative points constantly, then what we are doing is obviously ineffective.
posted by lupus_yonderboy at 3:38 PM on November 2, 2013 [6 favorites]


I'm missing something from the explanation of how these things work. Here in Australia, the tax paid on dividends is reduced by the amount of tax already paid by the company. This is called dividend imputation and it means that income is only taxed once, no matter how many companies it passes through. Is that the point of these master limited partnerships? That if they used a normal corporate structure they would pay tax on the dividends received at every corporate level?
posted by Joe in Australia at 4:48 PM on November 2, 2013


Edit: sorry think I misunderstood the question
posted by grobstein at 7:10 PM on November 2, 2013


BUT
posted by grobstein at 7:11 PM on November 2, 2013


yet SOPA went down in absolute flames when people got on the phone or shot off E-mails to their Congressman or woman.

I'm sure it had nothing at all to do with it being opposed by several multi billion dollar corporations with well funded lobbying arms.
posted by empath at 7:26 PM on November 2, 2013 [3 favorites]


Sorry to derail, but I cannot get past that crazy picture of the walking-ships at the beginning of the article. It really framed the way I thought about "distorporations".
posted by zscore at 8:18 PM on November 2, 2013


But sometimes that language ends up putting us in chains.

But most of the time it's actually the power structure which enforces the status quo through socializing people in the two party system and when push comes to shove uses the security state to disrupt any serious political opposition.
posted by AElfwine Evenstar at 9:09 PM on November 2, 2013 [2 favorites]


"Nothing can be done" is frequently a way of saying "I don't want to." Like a lot of the geeks self-justifying going to see Ender's Game despite Orson Scott Card being awful are coming up with elaborate justifications like "Well he already got paid for the film rights and the movie's already out so it's not like I can do anything anyway so I may as well go see it," which is really just a way of saying "My wanting to see it outweighs the lofty ideals I claim to have."

Hey, I enjoyed going to see Ender's Game on opening night...with a ticket stub to The Counselor in my pocket. ^_^

(would have made a donation to 12 Years A Slave but it's not playing anywhere in my entire state yet)
posted by trackofalljades at 11:48 PM on November 2, 2013 [1 favorite]


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