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Sunday, June 19, 2022

The Sole Goal of a Corporation is to Create Profits for its Shareholders . . .

This dangerously obtuse conclusion is blamed on Milton Freidman, blame he only partially deserves. 
Like the court decision that created [but actually didn't] corporate personhood, this conclusion was due to a corrupt third party falsely titling the real content of the court decision.  In Friedman's case, he went on to say ". . .so long as it engages in open and free competition without deception or fraud [italics mine]".  That dramatically changes the tone of the discussion doesn't it?  Friedman wasn't advocating a market free-for-all.  But most corporate leaders guzzled the truncated view, that the sole purpose of a corporation is to create profits for its shareholders.

In the case of corporate personhood, a corrupt court clerk deliberately mis-labeled the 1886 case Santa Clara County v Southern Pacific Railroad (the clerk's actual employer!) "to state the sense of the Court regarding the equal protection clause of the Fourteenth Amendment as it applies to corporations, without the Court having actually made a decision or issued a written opinion on that point.[5]
Friedman was still wrong, that as long as a corporation hasn't been found in violation of the law it can do whatever it likes to make profits.  Shockingly naïve.  Have all past, present and future ethics been codified into law?  Of course not.  That's why Jack Welch's General Electric had such a spectacular rise and fall:  Short term profiteering that toyed with & blatantly crossed over legal and ethical boundaries.
So that is the pivot point:  Time.  The proponents of deregulation don't tell us over what period of time a corporation should be entitled to maximize profits.  One day?  A month?  One quarter? (the current unbelievably short yardstick)  A year?  Ten years?  Seven generations? (the test Native Americans used to evaluate their plans).  The shorter your time horizon the more corrupt and prone to failure you will be.  For example, if your time horizon were [and you're ignoring Friedman's "deception or fraud" qualifier]:

One Day- Robbing a bank could be very profitable.
One Month- Robbing several banks might work.
One Quarter- You could probably execute a successful pyramid scheme.
One Year- Over this period of time you may actually have to deliver some value in exchange for other people's money.  But a new crypto-currency might work.

And so on.  The point is, I don't think anyone advocating totally unregulated markets has thought it through sufficiently.  Imagine a football game without rules or referees.  Attendance would probably be boosted but players wouldn't last long.  How would you know who won?

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