Aside from his 47% comments at a fundraiser, Mitt Romney’s most famous gaffe from the 2012 presidential campaign was, “Corporations are people, my friend.” This was perhaps the clunkiest attempt to explain a complicated topic in the history of campaigns. And it’s part of what’s wrong with a partisan media. The media just ran with the comment repeatedly without ever trying to make an effort to figure out what he was really trying to say. Here’s what he meant:
No one argues that a corporation is actually a living, breathing person. That’s ridiculous, but a for-profit company is a voluntary association of human beings who come together to pursue profit. About 85% percent of the workforce works for a for-profit organization and a strong majority of them like the company at which they work. A non-profit or a union is the same kind of voluntary association that is viewed in much the same way by the law. All of these entities have come together of their own volition to advance their interests. Some of them want to sell a lot of stuff. Others come together to advance a cause. Unions form to protect worker’s rights. Economic Growth DC was founded to petition the government for legislation and policies that are conducive to faster economic growth.
All of these entities have certain legal and constitutional protections. In terms of these protections, the constitution makes no distinction between for-profit and non-profit corporations. Both have certain rights, among them is the right to engage in political speech. So when a company or a union makes a campaign contribution, or supports a non-profit such as ours, it is a reflection of the employees of that organization exercising their rights under the 1st amendment collectively. The inanimate legal entity, of course, has no rights, but the people who’ve joined together to form these organizations do have the right to speak with one voice.
On a related note, it’s time to stop demonizing for-profit companies. In many circles, the very word “corporation,” has become a sinister four-letter word. Listen sometimes to the way certain TV personalities use it in the context of a sentence. The vast majority of U.S. workers are employed with for-profit companies, partnerships, and sole proprietorships. There are some bad actors, but a strong majority of U.S. for-profit companies are good corporate citizens who strive to take care of their employees. Lumping them all together as a group and demonizing the way they operate is not only unfair, but it’s counterproductive.
For-profit organizations are responsible for a huge percentage of DC and federal tax collections — in the form of income taxes paid by their employees, as well as taxes on capital gains and dividends. When DC businesses feel like they’re under siege, they become more cautious. Caution harms risk taking, which in turn harms innovation, confidence, growth, and ultimately, job creation. They used to say as General Motors goes, so goes the country. That no longer applies to GM, but it does apply to the totality of the for-profit sector of our economy. All DC residents have an interest in a strong for-profit sector as it is the primary source of the revenues that allow the District to do the things it says it wants to do such as expanding the stock of affordable housing, expanding Medicaid, and the providing other important social services..