Are Corporations Patriotic – Or Just Greedy?

By Ted McLaughlin / The Rag Blog / September 6, 2011

Are corporations patriotic? It’s an intriguing question. It seems to be the Republican point of view that it is patriotic to support America’s giant corporations and their need for ever greater percentages of profit. They would tell you that whatever is good for the giant corporations is good for America, because corporations produce jobs and a rising tide of wealth for all Americans.

It’s not true, of course. Most of the jobs in this country are produced by small businesses, not corporations. And most of the jobs created by corporations in the last few years were not even in this country. They were outsourced to countries where workers could be abused by paying almost starvation wages with no benefits. As for that rising tide of wealth, that has been restricted to only the top 1%-5% of the wealthiest people.

But even if it were true (a huge and false assumption), it really doesn’t answer the question of corporate patriotism. Supporting corporations as a patriotic effort and corporations acting in a patriotic way are two separate things, and whether the former is true or false has no bearing on the truth of the latter. The patriotism of a corporation can only be judged through the actions of the corporation. And I believe there are three corporate actions at least that tends to place doubt on their patriotism.

The first of these is tax avoidance (and the accepting of unneeded government subsidies). There are three unavoidable facts in today’s economy. The average American citizen is hurting. The government deficit and debt are growing. And the giant corporations are making huge and many times record-breaking profits. And contributing to all three of these factors is the refusal of giant corporations to pay their fair share of taxes, by using loopholes, subsidies they don’t need, and hiding corporate money in tax-haven countries.

The corporations and their cohorts, Republicans in Congress, would have us believe that the U.S. corporations couldn’t compete with foreign corporations if they were required to pay their full burden of taxes. That is utter horse manure. Income taxes are not a business expense that might prevent a company from posting a profit (like the cost of materials, labor, insurance, etc.). They are a percentage of net profits (after expenses have been accounted for), and if there are little or no net profits then there would be little or no income taxes owed. By their very nature, being a percentage of net profit, income taxes could never keep a company from posting and keeping most of a profit.

Since income taxes would never keep a corporation from turning a profit, is it patriotic for a corporation to hide money in other countries and then use loopholes in tax law and subsidies they no longer need to avoid paying taxes — while the average American pays his/her taxes? I submit it is not. This corporate tax avoidance not only increases government deficit and debt, it places a larger burden on others (real people who must take up the slack). How patriotic is that?

Second, American corporations have a long history of enriching themselves through warfare while ordinary Americans die fighting those wars and civilians sacrifice for those doing the fighting. Whether it’s for the fruit companies wanting cheap produce from Central America or the oil companies wanting cheap crude from Kuwait, this has been going on for a long time. And it’s still happening. Halliburton, KBR, Blackwater, and many others have made exorbitant profits in Iraq and Afghanistan — while American soldiers die, the national debt is ballooned, and nothing seems to have been accomplished outside the establishment of a puppet government.

Now we are simply fighting to keep those corrupt puppet governments in place, especially in Afghanistan where huge untapped mineral resources have been discovered (and a Western-friendly government is necessary for corporate access to that untapped mineral wealth). Is it patriotic to increase corporate wealth on the dead bodies of American soldiers and the sacrifices of American families? I submit it is not.

The third reason for doubting corporate patriotism is the huge and continual outsourcing of American jobs to low-wage no-benefit countries where workers can still be abused. The corporations and their Republican lackeys want us to believe that the cost of American labor is prohibitive, and they could not make a decent profit if they didn’t send the work to a low-wage foreign country.

Let’s look at one of these companies that is outsourcing labor — Apple. I don’t pick this corporation because I have anything against it. I actually like Apple products, and in fact, this post is being typed on an Apple MacBook. But they are a good example of what is happening. For instance, the iPhone is assembled in China, where workers are lucky to get paid $1 an hour for the task. Using that figure, the labor cost of an iPhone is about $6.50. When that is added to the materials cost of %172.46, we find that Apple must pay out $178.96 to build an iPhone. Since the product sells for about $500.00, the company makes a profit of 64.2% on each sale.

But what would happen to their profit if the iPhone was made in the United States? Assuming it would cost 10 times as much to assemble the product in the United States (a reasonable assumption), the labor cost would then be $65.00 per unit. Adding that to the materials cost of $172.46 (which would remain the same) we get a product cost to the company of $237.46. Assuming the phone would still sell for $500.00, the company would now make a 52.5% profit on each sale. Is that a bad profit margin?

As can be easily seen, the company did not outsource those jobs to help them squeeze out a small profit (as most corporations would have us believe). They did it to turn a more than respectable 52.5% profit into a 64.2% profit. I can understand the desire of a corporation to make a good profit, but is it patriotic to outsource labor so an already good profit can be made even better? I submit it is not.

And I’ll bet the same is true of all or at least nearly all of the American corporations that have outsourced jobs (and continue to do so). They are not doing it to make a profit — but to turn a good profit into an exorbitant profit. And in doing so they are acting against the best interests of the country they claim as their own. This is not patriotism — it is greed.

Are the giant American corporations patriotic? No, it takes more than some flag-waving and fancy talk from a CEO to be truly patriotic. Corporations are not people, regardless of what the Supreme Court thinks. They are legal entities dedicated to only one thing — making ever larger profits. They will be patriotic only as long as it benefits their bottom line. When it doesn’t they will abandon doing what is best for America (although they will probably continue to mouth patriotic platitudes). Don’t buy into it — it’s greed, pure and simple.

[Ted McLaughlin also posts at jobsanger. Read more articles by Ted McLaughlin on The Rag Blog.]

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