Is it possible for a corporation to be patriotic?: Chris MacDonald

Can we expect behaviours of national citizenship from business in a globalized economy?

3
The California and American flags hanging in a Walmart in Palmdale, Calif.

The California and American flags hanging in a Walmart in Palmdale, Calif. But what makes a company “American”? (David McNew/Getty)

What makes a Canadian company Canadian? What is it that makes an American company definitively all-American? Is it a matter of where the company is legally registered? Where it earns the bulk of its profits? Who its CEO is? Who owns its shares? And what about companies that have offices in multiple countries? Should companies have to swear allegiance to one flag or another?

The question of corporate nationality has arisen recently, in relation to the matter of corporate “inversions,” or “transactions in which American corporations [for example] move their tax residency abroad by being ‘bought’ by smaller foreign firms, in order to reduce their [for example] American corporate tax bills.” Not surprisingly, perhaps, such inversions are controversial. The notion of an American company (and so far all the controversy I’ve seen has been about U.S. companies) abandoning the homeland to put down roots in a foreign land offends more than a few. For some, the act in itself amounts to a kind of treachery. For others, it has to do with the fact that because inversions allow a reduction in taxes paid, they might (or might not) imply big losses to particular national treasuries.

Naturally, rhetoric on the topic is in full bloom. U.S. Treasury Secretary Jacob J. Lew has apparently said that inversions do violence to what he refers to as “economic patriotism.” And U.S. President Barack Obama has waded into the debate, referring to inverting firms as “corporate deserters.”

On the other hand, the practice has its defenders. If the U.S. corporate tax rate weren’t so high, U.S. companies wouldn’t feel the need to find creative (and ostensibly disloyal) solutions. And inversion is perfectly legal, explicitly allowed for example but the U.S. tax code. Not that legality settles the ethical issue, but it’s odd to call something unpatriotic—disloyal to your country—if your country’s law explicitly allows your behaviour.

To me, rhetoric laced with words like “patriotism” and “deserters” seems hopelessly parochial in a global economy. It rings of jingoism. People want free markets—and the free flow of goods and services across borders—but they don’t want to be told that other places are better places to do business, and they don’t like the idea that another nation might grab a bigger share of corporate tax revenues.

On November 26, join Canada’s Top 100 Women Entrepreneurs at the W100 Idea Exchange! Register Today »

But there’s also a point to be made here about corporate personhood. As I’ve pointed out before, corporate personhood, properly understood, is absolutely essential to modern economies and hence to modern societies. Personhood simply consists in the fact that courts identify corporations as having bundles of rights and responsibilities separate from the people who in some sense make up the corporation. That’s what lets corporations sign contracts and own property and honour warrantees and be sued. Without personhood: no corporation.

Despite this fact, many people claim to be opposed to the very notion of corporate personhood. But that leads to a problem with regard to inversions. If you think you’re opposed to the notion of corporate personhood, and additionally find inversion distasteful, you need to ask yourself: just who is being unpatriotic when corporate inversion happens? Because if you are skeptical about personhood, then it can’t be the corporation that is deserting its country. Is the Board of Directors being unpatriotic? Even if their decision is consistent with their legal duty, and arguably their ethical duty, to do what’s best for the corporation?

As one commentator put it, “Corporations aren’t people, so it’s a lot to ask for them to be patriotic, especially when they operate all over the world.” No, they’re certainly not people, but they are persons. As long as you accept that fact, you can then talk seriously about just what bundle of rights and responsibilities corporations ought to have—that is, what form their personhood should take.

If a corporation is a person in this sense, is it then a thing that is capable of having a nationality? Can it have duties of citizenship, as Lew and Obama seem to imply? This isn’t a metaphysical question, but a practical one. Are the duties of citizenship duties that it would make sense to attribute to a corporation? Would that be conducive to important human ends? And if so, are the humans whose interests matter just the ones who happen to live where you do?

3 comments on “Is it possible for a corporation to be patriotic?: Chris MacDonald

  1. This pager is misleading, for the idea that a corporation is a “person” under the law. This is an American idea because in Canada, a corporation is a legal entity which is not a person. This go back to when the crown owned business in Canada.

    Reply

    • No, personhood is not an American idea at all. It’s a very old idea, present in all modern legal systems.

      Reply

Leave a comment

Your email address will not be published. Required fields are marked *