Thursday, June 04, 2009

The "A" Corporation

I don't remember how I wound up at the other day. But I came across the columns of Michael Lind, a man who obviously (to me) tends to come at things from a different direction, politically, than I do . . . and yet, as a result, who challenges me to think new thoughts--something I appreciate deeply.

So I came across his Incorporate this! in which, his subhead suggests, "Now that you and I own GM, perhaps it's time to relaunch a very old concept -- a special kind of public corporation."

I love history. I am "into" economics. I wondered what kind of corporation he might be referring to.

He provides a fascinating overview of the history of corporations (something I had never seen put together in one place before) . . . and--I'd like to give him credit--he offers an interesting public policy proposal:
The shift from legislatively chartered, temporary, single-purpose corporations to registered, immortal, multipurpose corporations has been beneficial for the economy in many ways. . . . However, the increasing flexibility of incorporation has come at the price of a clear link between the corporation and the public interest. . . .

Back in 1996, Senator Jeff Bingaman (D-N.M.) and Senate Minority Leader Tom Daschle (D-S.D.) proposed creating a new kind of corporation, the "A Corporation," in addition to the present general or C corporation and the S corporation (in which individual shareholders are assessed taxes for corporate profits rather than the corporation as an entity). In return for favorable federal corporate income tax treatment and streamlined regulations, the A-Corp would promise to locate half of its new investments or jobs in the U.S., provide portable worker pensions and employee training, negotiate agreements with local communities, and undertake other obligations. . . .

[T]he original A-Corp proposal was so overloaded with complex requirements that it was probably doomed from the beginning.

Nevertheless, the idea of chartering particular kinds of private corporations for particular public purposes is a good one that deserves to be revived. Imagine a USA Corporation, which pays a lower corporate income tax, or perhaps no corporate income tax, in return for locating most of its value-added production in the United States [plus any number of additional requirements, several of which Lind outlines--JAH]. . . . [I]f Goldman Sachs could convert itself into a bank holding company, then existing general corporations should be allowed to convert themselves into USA Corporations, if they were willing to fulfill the requirements. . . .

America's financial sector has always been characterized by a diversity of forms, from retail banks and investment banks to thrifts. There is no reason why our large-scale corporate landscape has to be limited so much to general corporations.

The power of ownership that the American people now wield in the case of GM and other corporations is both limited and passing. But the power to charter corporations for the purposes we choose and in the forms we prefer will always be a power we wield as a sovereign people. We the people should think about using our power.
I thought this was a creative and non-coercive idea for those who would want it.

Check out the details.

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