Musk vs. Trump: American Business and Government at Loggerheads?

When the wealthiest person in the world and the President of the United States cross swords, people are bound to notice. Such a very public clash between billionaires, one of whom is the most politically powerful person in the U.S., should not lead the rest of us to infer that the interests of large corporations and the U.S. Government, including the respective executives and elected representatives, typically conflict. Corporate and individual mega-donations to political campaigns, the proverbial “revolving door” between working in government and at a corporation, the reliance of regulatory agencies on information from the regulated companies invite the exploit of conflicts of interest such that legislation and regulations are even written by corporate lawyers for their respective companies’ financial interest. Furthermore, that many very large American-based corporations have interlocking boards of directors gives corporate America considerable unified force in seeing to it that Congress and the federal president remain friendly to business interests. That both benefit from the status quo and have de jure or de facto vetoes of reform proposals reinforces the staying power of the club. Even as U.S. Senator Bernie Sanders enjoyed considerable media attention and crowds in his speaking tour against oligopoly (i.e., consolidation within an industry such that companies can set prices at will and can thus extract extra profit beyond that which would accrue in a competitive market), it would be wildly optimistic to hope for an onslaught of anti-trust enforcement from a Republican or Democratic administration.

Even though U.S. President Trump claimed in early June, 2025, that he had told Elon Musk to leave the Administration because Musk was “wearing thin,” and Secretary of State Rubio would doubtless attest to that, it should not be forgotten that Musk had spent more than $250 million “helping President Donald Trump win a second White House term.”[1] Musk “also spent more than $19 million in the final weeks of the 2024 election cycle to help Republicans win narrow majorities in Congress.”[2] Even though Musk was the richest person in the world at the time, to spend so much money and yet be inattentive to how his companies could benefit from government contracts and electric-car subsidies defies human nature. Indeed, even though Musk denied opposing Trump’s tax and government spending “Big Beautiful Bill” because of the cuts to EV subsidies, Trump had a point that the negative financial impact on Tesla was not a point in the bill’s favor to Musk. To be sure, Musk’s complaint about too much “pork” and thus deficit spending being major problems in the bill that the U.S. House had recently passed by a single vote is valid. Nevertheless, lest it be assumed that a dispute on public policy between two billionaires is in the interest of the poor and middle-class, Musk registered no complaint about the cuts to Medicaid, which finances healthcare for the poor who cannot afford private health-insurance, and food assistance for the poor.

Even in the midst of an argument between billionaires in business and government, we cannot assume that the conflict of political-economic interests among the elite results in the enactment of public policy that is in the public interest. In Trump’s bill, for example, even though less money would subsidize electric vehicles, there were no reductions of subsidies in the bill that passed the House for coal and oil companies. The grip of those companies in Congress and the Trump Administration could be assumed to be tight in spite of the global average temperature having reached 1.5C degrees, which the Paris Accord of 2016 set as a threshold. The cozy relationship amid climate change puts in stark relief the distinction between private interests and the public interest.

When asked at the Qatar Economic Forum in 2025 whether he would continue making political donations as he had in 2024, Musk replied, “I think I’ve done enough.”[3] It should not be missed that he added, “Well, if I see a reason to do political spending in the future, I will do it.”[4] It would be of value to the American political economy if he would do contribute to political campaigns aimed at breaking up the cosy relationship that CEO’s and (and the corporations) have with elected officials and regulators at both the state and federal systems of government in the U.S.; by “breaking up,” I mean something more substantial and structural than barring government officials and employees from being hired by corporations that have benefitted from the work of the officials and employees.

Instead, I recommend a return to competitive markets and even possibly limiting political-campaign contributions of corporations and the ultra-rich, for the financial influence of large concentrations of wealth on elected officials and appointees tilts the political economy away from being oriented to the public interest, which is not arrived at by the entanglement of certain powerful private interests. To be sure, going so far as trying to eliminate the gravitas of wealth politically would be utopian and thus a fool’s errand, but public policy could be formulated and enacted that is aimed at reversing or countering at least some of the self-interested tilt of the American political economy that so benefits members of the club—Trump and Musk included. Nor is Socialism necessarily the answer to protecting the poor and middle-class from the self-interested endeavors of the interlaced economic and political elites, for Adam Smith’s invisible hand can do wonders to regulate price if only competition is restored to oligopolistic industries, which includes even social-media companies.

Trump’s threat to cut off Musk’s SpaceX from government contracts and Musk’s acknowledgement that he might make sizable political donations even though he was disappointed in Trump’s bill for its pork and probable significant addition to the U.S. federal debt indicate that politicians have considerable discretion being able to benefit companies financially and that CEO’s can make use of such discretion by legally paying off political candidates and those office-holders who are up for re-election and would all too easy exploit a personal conflict of interest by bending public duty to private campaign-interest. Using ambition to check ambition is part of the genius of the American political system of checks and balances, but as the ambitions are solely among the wealthy, it cannot be assumed that the public interest is necessarily being served by the resulting public policies, for collusion even between contending ambitions does indeed exist even if the publicly-aired arguments among the elite of the political economy are more titillating.

1. Kevin Breuninger, “Elon Musk Says He Will Spend ‘A Lot Less’ on Future Campaign Donations,” CNBC.com, May 20, 2025.
2. Ibid.
3. Ibid.
4. Ibid.

Political and Economic Elites

I submit that in virtually every political party, a distinction can be made between the “rank and file” and the political elite. Kamala Harris may have lost to Donald Trump in the 2024 U.S. federal-presidential race in part because Harris had not spoken out enough on economic issues amid soaring inflation on groceries and rents to gain traction with Democratic and Independent voters who had had enough of the “woke” ideological agenda, which includes, for example, moral pressure and even demands that people announce their “pronouns” before speaking. Although President Biden had initiated some anti-trust judicial action, the industry-oligopoly of meat producers, for example, was left untouched. So too were the mega-grocery-store chains. Kroger was later found to have spiked egg and milk prices above the increased costs with impunity, yet Harris did not suggest that the Sherman or Clayton anti-trust acts should be taken out of the garage for spin on the American judicial highways that connect the rank-and-file party-members to party elites mainly in New England, New York, and California. I contend that U.S. Senator Bernie Sander’s anti-oligopoly speeches in conservative Congressional districts gained such numbers in 2025 precisely because the Democratic Party’s elite had lost touch with the party’s “rank and file” voters on economic issues.[1]

In early May, 2025, Faiz Shakir, a top advisor to Sanders, castigated elected Democrats who want “to talk down to” voters as if ordinary people are “just too dumb to understand the general notions of powerful elites running” the show, presumably both in politics and business.[2] I don’t think it is lost on many Democratic voters that Democratic office-holders taking campaign donations from oligopolistic companies have been less than willing to urge the U.S. Department of Justice to prosecute large companies on the basis of restraint of trade. Virtually no elected official in government who takes a significant amount of “corporate cash” would be willing to propose a law strengthening anti-trust law such that governments in the U.S. would have a duty to restore monopolistic and oligopolistic industries to market-competition even if the existing firms are not colluding on price or other matters.

For example, since its early days, Facebook (then Meta) has actively bought out budding potential competitors. Social media became an oligopolistic industry in part because of that strategy. Whether or not Meta has engaged in restraint of trade, the U.S. Department of Justice could be given the legal mandate to break up the large American social-media companies in order to bring about a competitive industry. A monopolistic or oligopolistic industry cannot be counted upon to metamorphosize itself naturally into a competitive market; rather, the reverse tends to occur. Hence the need for government to act to perpetuate competition in industries.

This is not to say that Democratic and Independent voters would or should accept Sanders’ platforms of “Medicare for All” and free college-tuition at public colleges and universities. Rather, his “relentless focus on economic policy” could have improved his party’s chances to retain the federal presidency by countering “swing voters’ belief [that] Democrats are too close to feckless institutions and too obsessed with culture war issues.”[3] U.S. Senator Chris Murphy, also a Democrat, observed about six months after the 2024 election, “We viewed people like Bernie as an outlier threat to the institutional Democratic Party, when in fact what he was talking about and is still talking about is the crossover message. And it pulls Trump voters back into the Democratic coalition.”[4] Both the Hilary-Clinton-dominated party elite in 2016, which was rather unfair to Sanders, and the Kamala-Harris presumptive-nominee fiat in 2024 demonstrate the lack of willingness of the party’s elite to select its nominees for president by competitive (and fair, open) contests. This lack of political competition mirrors the lack of economic competition that has continued to plague many American industries at the expense of consumers.

Lest the attention on price-spikes from President Trump’s tariffs monopolize the public discourse on prices that American consumers must pay to have even staple products, another, more widespread, reason for higher prices may be right under their proverbial noses and yet many Americans, both as voters and consumers, may continue to be oblivious to the bad odor of greed that has fueled collusion not only within industries, but also between business and government. An anti-elite populism preached by Democratic candidates and office-holders who refuse corporate donations could really make a difference in setting the Democratic Party apart from not only Trump’s Republican Party, but also the status quo itself, whose gravitas can be likened to that of the Earth in its magnitude and relentlessness. Elites may have such a foothold in American politics and business that many party-members and consumers may be left with only a vague instinctual sense that “the gig is rigged.” For the powers that are able to frame the contours of debates on issues, including on which issues will be debated publicly, do so with a keen eye on retaining and even gaining power and wealth. Hence making the contours explicit, and uncovering the underlying vested interests, is vital to restoring bottom-up democracy and competitive markets in the United States. Faith in American democracy may boil down to the precipitate of ordinary people resisting entrenched, powerful interests even in their own political parties.

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1. An oligopoly is an industry in which a few companies dominate. An oligopoly is between a monopoly and a competitive market. Prices on products can be higher than necessary, the surplus revenue going to profits. Sellers are price-takers rather than price-setters in a competitive market, whereas companies in an oligopolistic industry have sufficient market-power to set prices because consumers have few choices.

2. Igor Bobic, “Bernie Sanders: Resisting Trump Is ‘Not Good Enough’,” The Huffington Post, May 6, 2025.

3. Ibid.

4. Ibid.

On the Hidden Police Power of Corporate America

After the UnitedHealthcare chief executive “was gunned down by a masked man outside a Manhattan hotel” in New York City, “a days-long manhunt” occurred that “spanned several states.”[1] The fact that only a few days were needed to find the suspect, Luigi Mangione, indicates just how massive and public the manhunt was. For it was not just any murder, as if the murder of a person who is the chief executive of a large corporation were worth so much more than that of the rest of us. I suspect that the influence of the company, and, moreover, corporate America, on local police in any U.S. member state is more than reaches the headlines. The case at hand my even suggest that that influence includes even tacit instructions to treat anti-corporate suspects of murder violently both in retaliation and as a visible reminder to other potential killers that CEOs are off-limits.

As Pennsylvania sheriff employees took Mangione from a vehicle to the back door of a courthouse, at least two of the employees shoved the suspect—and, remember, in the U.S. a suspect is presumed innocent unless or until proven guilty in a court of law—into a wall even though the wall was not on the way from the vehicle to the back door. In other words, the unnecessary violence was not on the way to the back door, and nor was the suspect resisting going into the courthouse. I contend that the unnecessary violence was at the behest of the corporation whose CEO the suspect allegedly shot. At that time, the evidence that would be found had not yet been found, as per the defense attorney’s statement in the courthouse. Whether the violence being maliciously applied by sheriff employees was merely to show the world how a suspect accused of killing a CEO gets treated by law enforcement, or to stop the suspect from speaking to the media present on his way to the backdoor is not clear. It seems to be possible, at the very least, that corporate instructions given to the police in Pennsylvania included: Don’t let the guy get his anti-corporate message out. This would be ironic, given that corporations had at the time the right of free speech, even through spending as if money constitutes speech.

That Mangione was not resisting going into the courthouse and yet was manhandled rougher than suspects were typically treated at the time may give Americans, as well as the world, a glimpse into the power that large concentrations of private wealth (which is what a corporation is) even as translated into raw violence. The use of police by companies in twentieth-century America to beat workers on strike is well documented. What I am suggesting is that local police were still susceptible to wealthy private interests such as corporations into the next century, at least as of the 2020s. I contend that any contact between police departments and the healthcare insurance company would properly have been limited to the police gaining information in the search for the killer.

Another indication of an over-reaction by local police occurred days after Mangione had been arrested, when Briana Boston was charged with a felony “with one count of making threats to conduct a mass shooting” during a phone call with Blue Cross Blue Shield, her health-insurance company, which was denying a claim that she had submitted. Obviously angry, she said, “Delay, deny, depose. You people are next.”[2] The phrase, “delay, deny, depose,” had been written on bullets by Mangione in reference to tactics that insurers use to avoid paying out claims and had become popular online. Because of the popularity, it could not be assumed that the woman was planning on writing the three words on bullets; the phrase had entered the lexicon. In fact, “(a)ccording to a consumer survey by KFF, more than half of insured [American] adults [had] experienced problems with their insurance provider, and some [of those adults] reported serious consequences.”[3] Strangely, the local police in Lakeland, Florida, said that her statement could be taken as probable cause of “making a threat to conduct a mass shooting . . ., according to the affidavit.”[4] A reasonable interpretation of, “you guys are next,” is that if Blue Cross continues to screw policy holders who do their part in paying premiums, someone may eventually go too far in retaliation. She did not say that she was going to take any violent action, or what that action might be. Given that she was momentarily angry, and perhaps justifiably so, the police employee who leapt to the conclusion that the woman was saying she would conduct a mass killing is ludicrous, and yet the police had the discretion (and thus power) to make an example of the woman by charging her with a crime carrying a fourteen-year sentence, without her having done anything. Had being angry at customer-service employees become a crime? Or, had free-speech that is objectionable to big business become a crime? If so, could corporations next go after certain thoughts, using employees of local police departments who dismiss protecting the public as dutiful sycophants?

We can turn the Lakeland police investigation on its head by investigating that department. It is significant that “Lakeland, Florida police said they were contact by the FBI . . . in response to the alleged threat.”[5] That the police did not waste any time and did not seem to second-guess the FBI may suggest that the FBI had been determined to snuff out the “potential” copy-cat. To be sure, the FBI may simply have been over-cautious, but even that could have been due to pressure from Blue Cross or elected officials who have received campaign contributions from the giant company. That both the FBI and the local police department in Florida would knowingly seek to charge an angry policy holder of a crime that carries a sentence of 14 years in prison indicates a grossly disproportionate reaction, which itself could point back to the deference that the FBI (and local police) give to business in doing its bidding, even to scare the public.

As an anecdote, once when leaving a restaurant after barely eating a very badly cooked meal, I was speaking to people in the shopping center’s parking lot about the food. The manager of the restaurant got wind of this and approached me even though I was no longer on her establishment’s property. “The police here are my friends!” she warned me. “Keep talking about my restaurant and I will get them to make you leave.” The manager’s sheer presumptuousness was laughable, so I kept talking as was my right. She did call her friends, who told me I had to leave the parking lot even though that lot was not owned by the restaurant. That the police dismissed my legitimate objection told me enough; I moved to another suburb of Phoenix only months later; Mormon-run Mesa was simply too corrupt (and drug-ridden).

If my small window into the deference that local police pay to small business in falsely enforcing law that is not really law is correct, it is not difficult to conjecture that the FBI as well as local police may be unduly biased towards, perhaps even de facto working for, large corporations. The sort of unaccountability in accusing a distraught policy-holder of mass murder (even without noticing that she had no record of violence and not even a gun!) and being willing to put her in prison for fourteen years, likely to send the public a message from the large corporations, is consistent with the lack of accountability generally on market participants that are so large and wealthy that even competition is stifled that so enrages consumers and thus prompts anti-corporate politics. The connection can be found in Adam Smith’s claim that one of the main rationales for government is to protect the wealthy from the poor, who would otherwise steal the wealth. Does this hold of the governments in the U.S., or is the public to be served? The official answer may differ from the real answer.

That the governments in the U.S. have allowed companies to become so large as to choke competition without anti-trust law being enforced—something that Adam Smith would not like—is yet another indication of the “under the table” power of large corporations in the United States, thanks in part to unlimited political campaign contributions being legal. Perhaps elected officials were the people delivering the instructions from the health insurance company to the Pennsylvania sheriff in Altoona: Be rough with the guy and don’t let him speak to the media. Push him up against a wall if you want. Grab him by the neck. Show the world what happens if someone goes up against corporate America.  Hence the anti-corporate political movement in a democracy that is premised on accountability rather than plutocracy with impunity.

My main point is that institutionally, or structurally, very large and wealthy private companies, whether corporations or privately held, are incompatible with not only market competition, which ensures fair prices (even at grocery stores after a pandemic), but also political democracy, wherein one person has one vote and thus is just as important as the next. Whether a man on the street or a corporate CEO is murdered, the police-response should be the same in terms of the cost and effort in the manhunt and how the suspects are treated. Innocent until proven guilty means that police violence against a suspect who is not being violent or resistant is itself a crime regardless of how rich the victim’s family or company happens to be. 

The case of the health insurance CEO’s murder in December, 2024 was deliberately not supposed to be a vehicle for getting an anti-corporate message out—with even violence being used to enforce this proscription—but how the Pennsylvania police aggressively treated the suspect unabashedly in public view can be seen as a poster advertising the interlarding of corporate power at the expense of accountability in American democracy. Both economically and politically, it can be asked whether large corporations are accountable in the United States; politically, the same question may be asked of the local police departments in the member states. The American governments in the U.S. could do worse than apply anti-trust law to a variety of markets and apply criminal law to local police departments whose actual paymasters can be characterized proverbially as the man behind the curtain—an allusion to the hidden Wizard in the film, The Wizard of Oz. Then again, perhaps Mr. Smith Goes to Washington is a more pertinent film, as the senator played by Jimmy Stuart filibusters for hours and hours against corruption in his home state.

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1. Jessica Parker and Nadine Yousif, “Luigi Mangione Fingerprints Match Crime-Scene Prints, Police Say,” BBC.com, December 11, 2024.
2. Pocharapon Neammanee, “Woman Arrested After Saying ‘Delay, Deny, Depose’ On Call With Insurance Company,” The Huffington Post, December 12, 2024.
3. Ibid.
4. Ibid.
5.Ibid.

Oligarchs in Ukraine Decide the E.U./Russia Question: Big Business on Top of Democracy?

One of the many lessons shimmering in the sunlight from stars such as Gandhi and Mandela is the possibility that popular political protest really can matter after all. Alternatively, managing (or manipulating) the crowd could be a mere front dwarfed in influence by that of a rich and power elite. Although the Ukraine will serve as our case study, democracy itself is under the microscope here.
As 2013 was losing steam and heading into the history books, the people of the independent state of the Ukraine were poised to turn back east or aim toward statehood in the European Union. The matter of who in the republic would decide was at the time obscured by the appearance of power in the pro-Europe protests in the capital city. Peeling off this veneer, the New York Times provides us with a more revealing look.
"Protesters may be occupying government buildings and staging loud rallies calling for the government to step down, but behind the scenes an equally fierce — and perhaps more decisive — tug of war is being waged among a very small and very rich group of oligarchical clans here, some of whom see their future with Europe and others with Russia. That conflict was ignited, along with the street protests, by Mr. Yanukovich’s decision to halt free trade talks with the European Union” in November, 2013.[1] In other words, very wealthy businessmen were very active politically in setting the course of the ship of state.

Petro Poroshenko is a Ukrainian oligarch who sees more money for his conglomerate and himself in greater ties with the E.U. Does it matter what the majority of the Ukrainian people want? NYT

Although blocking government buildings makes excellent news copy, all that visible strife may have been diverting attention from the dark corridors of power in search of a deal that would set a much larger course. To be an independent state between two contending empires is not the safest place to be. If finally moving one way or the other hinges on a certain constellation of wealthy and business interests coalescing enough to pull the strings of state, what the people think really does not matter. As put by the New York Times, “In this battle of the titans, the street becomes a weapon, but only one of many.”[2] Put another way, what the titans do with their arsenals of wealth and power is the decisive point, not what the people in the streets happen to think.
The implications for representative democracy are stunning, if not dire, and for the illusion, utterly deflating. Does not adulthood involve the recognition that something taken hitherto as real is in actuality an illusion? Perhaps it is high time that Toto pull the curtain open to reveal the Wizard as the person pulling the levers for billowing smoke and bursts of flames to divert our attention from his existence, not to mention his manipulation and power.

1.Andrew Kramer, “Behind Scenes, Ukraine’s Rick and Powerful Battle Over the Future,” The New York Times, December 6, 2013

2. Ibid., emphasis added.

Obama and Goldman Sachs: A Quid Pro Quo?

U.S. President Obama nominated Timothy Geithner to be Secretary of the Treasury. While president of the New York Federal Reserve Bank, he had played a key role in forcing AIG to pay Goldman Sachs’ claims dollar for dollar. Put another way, Geithner, as well as Henry Paulson, Goldman’s ex-CEO serving as Secretary of the Treasury as the financial crisis unfolded, stopped AIG from using the leverage in its bankrupt condition to pay claimants much less than full value. At Treasury, Mark Patterson was Geithner’s chief of staff. Patterson had been a lobbyist for Goldman Sachs.
To head the Commodity Futures Trading Commission—the regulatory agency that Born had headed during the previous administration—Obama picked Gary Gensler, a former Goldman Sachs executive who had helped ban the regulation of derivatives in 1999. Born had pushed for the securities to be regulated, only to be bullied by Alan Greenspan (Chairman of the Federal Revere) and Larry Summers, whom Obama would have as his chief economic advisor. To head the SEC, Obama nominated Mary Shapiro, the former CEO of FINRA, the financial industry’s self-regulatory body.
In short, Obama stacked his financial appointees during his first term with people who had played a role in or at least benefitted financially from financial bubble that came crashing down in September 2008.[1] Put another way, Obama selected people who had taken down the barriers to spreading systemic risk to fix the problem. Why would he have done so? Could it have been part of the quid pro quo the president had agreed to when he accepted the $1 million campaign contribution from Goldman Sachs (the largest contribution to Obama in 2007)? Might Goldman’s executives have wanted to hedge their bets in case the Democrat wins. Getting Goldman alums in high positions of government would essentially make the U.S. Government a Wall Street Government—that is, a plutocracy with the outward look of a democracy. It is no accident, we can conclude, that the spiraling economic inequality increased during the Democrat’s first term of office.

1. Inside Job (2010).

Members of Congress Secretly Lobbied the Fed

As of late September 2012, more than one hundred members of Congress had lobbied the Federal Reserve and other regulatory agencies on the Volcker Rule, the part of the Dodd-Frank Financial Reform Act of 2010 that prohibits banks from operating like casinos (e.g., trading with proprietary funds, rather than those of customers).[1] The rule stems from the importance of banks in our financial system. In September 2008, the world nearly witnessed the collapse of that system when banks stopped trusting each other (e.g., via commercial paper market) because of the risks that some of the big ones had been taking with mortgage-backed derivative securities and the related insurance swap securities. Awash in healthy-seeming fees, the banks purchased risky subprime mortgages and bundled them into bond-like securities that could be sold to investors.
Congress passed the Dodd-Frank Act, so it makes sense, and indeed is positive from the standpoint of accountability, that lawmakers remain involve as the relevant regulators (who are not elected) translate the broad legislative language into specific rules for banks. However, the newspaper’s report points to a less-than-salubrious practice wherein members of Congress contact regulatory agencies in private and before even the period for public comment. This raises the possibility that Wall Street was using its connections in Congress to weaken the public safeguards in the bill—essentially putting a narrow private interest in front of the public interest that the bill was designed to protect.

The access purchased comes not only from having information that the regulatory agencies need; banks (and American corporations in general) could contribute unlimited amounts of money from the corporate treasury (rather than from contributions from executives and employees) to “social welfare” non-profit organizations that can spend money on political ads in support of friendly candidates (and against their opponents) without having to divulge the identities of the donors. So Wall Street banks can furtively promote U.S. Senate candidates who support the repeal of the Dodd-Frank Act without any of us knowing it. In fact, the “social welfare” (54c) groups can in turn contribute directly to a candidate’s campaign without divulging the names of the donors. Not even the IRS, which has been concerned about whether the donors pay the required gift tax, bothers the “social welfare” organizations for donor lists after complaints from several U.S. Senators. Nor has the SEC pushed corporations to divulge to their respective stockholders how the political donations have been spent. I suspect that senatorial influence lies behind this inaction too.
It is not as though there were some uncertainty regarding the need for disclosure in a democracy. Even though eight of the nine U.S. Supreme Court justices in Citizens United stress in their opinions the necessity of disclosure, corporations, no doubt well-connected in the halls of power in Washington from the donations already given, have a way to evade the transparency. Political and corporate democracy are both undercut as banks and business corporations can spend unlimited amounts (out of their respective profits) to help “pro-business” candidates for public office. Rather than being speech itself (and thus subject to free-speech constitutional protection), money is power that can be used to skew or otherwise limit the contours of public debate. After the election, the continued influence of the money is also stealth, such as when members of Congress lobby the Federal Reserve to weaken regulation meant to safeguard our financial system from a repeat of the near-collapse in 2008. For deregulation to be urged so soon after a near-depression gives us an indication of how dangerous “money as invisible speech” is to the public good, even if such influence is in the corporate interest.
As creatures of the state, corporations should not have a share in governance, for that function subverts the causal relationship between Creator and creature. That is to say, a corporate management (or board) presuming to influence members of Congress can be likened to the self-idolatry of a creature supposing itself to be God. Interestingly, as going concerns, corporations are immortal, legally speaking. As for us mere mortals, Rousseau reminds us that we are born free but live in chains—only we are under the delusion that we are still free because the confining elements are subterranean qua the furtive influence of great concentrations of private wealth. I suppose one question is whether finite bundles of subjectivity can somehow become aware of that which has been designed to be outside of our awareness, and, if so, whether a society can so move to protect its good in a viable republic.

1. Ben Protess, “Behind the Scenes, a Lawmaker Pushes to Curb the Volcker Rule,” The New York Times, September 21, 2012.

Corporations and Political Debate: Taxation & Regulation

Under U.S. law, the corporation is a legal person, whose wealth can constitute political speech protected by the first Amendment. It is no matter that the corporation is an artifice constructed by the state for economic purposes: to concentrate wealth in order to produce goods or provide services. That such an entity would lobby and spend money (or “speak”) for political purposes may from this standpoint seem strange, or out of place. To be sure, political influence can indeed help the bottom economic line, but is a corporation a political actor if the purpose is economic? 
Large corporations arguably tend to have a strong arm in Congress,  but if that arm is so strong that it dictates the law, even literally, then entities that are part of society are de facto standing as government for the whole. For some parts of something to control the whole is problematic because those parts will naturally put their own particular interests above those of the whole (e.g., society, or the people). 
Even a dominant role in setting the terms of the debate in the public media during a political campaign can sway or tilt the whole to favor the part. If sustained long enough, pro-business values can become salient in a society's culture. That deregulation could have come out as a major winner in the 2010 election following the financial crisis in 2008 is mind-boggling, and yet the scores of new Republican representatives in the U.S. House had precisely deregulation as one of their main objectives. That unregulated financial derivatives based on risky mortgages had almost brought the economy down two years before was strangely forgotten. The debate was not on whether banks that are too big to fail should be broken up. Instead, the public got to talk about whether the existing regulation on businesses in general should be discarded in favor of economic growth. Such is the power of self-interested money in setting the terms of debate at the societal level.
Accordingly, debate on whether the corporate statutory tax rate of 35% should be lowered never bothered with the inconvenient truth that the weighted effective corporate tax rate (taxes as a share of profits) was 27.1% in the U.S. in 2012, hence below the 27.7% average rate of O.E.C.D. members. The weighted average marginal tax rate on corporations in the U.S. was only 20.2 percent.[1] A U.S. Treasury Department report concluded that 82 percent of the corporate tax was borne by capital, while 18 percent was borne by labor. Either American society was tilted in favor of the interests of capital or the electorate was duped into the false narrative that raising the corporate rate would hurt labor. 
General Electric, the sixth largest corporation in the U.S., had profits of $14.2 billion in 2010 and yet the mammoth company did not have to pay any corporate income tax. Even so, the political mantra that large American corporations pay too much income tax resonates in the political culture. Moreover, taxes are inherently bad, or even theft. It is as if American society has had a blind spot concerning the nature of and need for public goods like roads and airports. The competitive market, excellent in allocating goods and services, so eclipses the value of even esteemed public goods. 
In short, where the corporate advertising and lobbying dollars have already had such a significant influence in shaping the values people hold dear, the very society can tilt in favor of its business sector such that its advantages become invisible to large segments of the electorate. The corporate realm lives under democracy's radar, and thus conveniently beyond the reach of real accountability. 

1. Bruce Bartlett, “Some Big Corporations Don’t Pay Taxes,Either,” The New York Times, September 18, 2012.  

On the Political Power of Capitalism in American Society

In his confidential memorandum, “Attack on American Free Enterprise System,” Lewis Powell, later to be a justice on the U.S. Supreme Court, wrote in 1971 that the “leftists” were launching a frontal assault on the “free enterprise system,” “capitalism,” or the “profit system.” Powell saw this as an attack on, rather than a defending of the “American political system of democracy under the rule of law.” That the corporate profit-interest might be a threat to “one person, one vote” apparently did not occur to the future Justice. Rather, what is good for GM he presumed must be good for American democracy. Moreover, both, he presumed, are consistent with, or perhaps even foundational for American values.

Powell goes on to write, “A visiting professor from England at Rockford College gave a series of lectures entitled ‘The Ideological War Against Western Society,’ in which he documents the extent to which members of the intellectual community are waging ideological warfare against the enterprise system and the values of western society.” Powell notes in his report that almost half of the students on twelve representative college campuses favored socialization of basic U.S. industries. He cites Stewart Alsop, who had written that “Yale, like every other major college, is graduating scores of bright young men who are practitioners of ‘the politics of despair.’ These young men despise the American political and economic system.” It is strange, therefore, that, forty years later, the American political and economic system would be so well-undisturbed—having been so un-molested by the minions of educated young voters who had gone on to become leaders in that system. Yale, after all, contains in its mission the intent to educate the future leaders of America (and perhaps the world as well). There must have been a giant collective change-of-mind among the myriads of socialists before the Reagan landslide of 1980.

Powell goes on to suggest that business managers (including executives) “have not been trained or equipped to conduct guerrilla warfare with those who propagandize against the [business] system. . . . The traditional role of business executives has been to manage, to produce, to sell, to create jobs, to make profits, to improve the standard of living, to be community leaders, to serve on charitable and educational boards, and generally to be good citizens.” The practitioners here are the citizens; Powell is not pointing to what would come to be called “corporate citizenship,” a marketing slogan designed to get customers to feel better about buying more widgets. Nor is Powell pointing to the related notion of “corporate social responsibility,” which was invented by businessmen (rather than by “socialists” adding to corporate obligations) in the late 1950s.

Absent from Powell’s description of the businessman is the role of corporations even in 1971 in lobbying Congress for favorable legislation and/or regulation that would translate into higher profits. Powell would be hard-pressed to account for the role of the banking lobby in getting the U.S. Senate to vote down Senator Durbin’s amendment that would have given bankruptcy judges the authority to modify mortgages in foreclosure. This is how the “free enterprise system” has fought back “attacks” from “socialists.” After the Citizens United decision of the U.S. Supreme Court (2010), corporate money in unlimited amounts could go toward political advertising—including for or against a candidate—anonymously through “social welfare” non-profits. This is how corporate America has gone after its “attackers.”

Generally speaking, corporate American knows very well how to shut down its opposition in the halls of Congress. Powell’s memo pushes beyond the need for “public relations” and “governmental affairs” to urge a “scale of financing available only through joint effort” and related “political power” through the U.S. Chamber of Commerce. Business must learn the lesson “that political power is necessary…it must be used aggressively and with determination.” The corporation—created by the government—must, one might say—become the government, necessarily from within—through the system—rather than via revolution.

This sally into the political arena includes funding a highly competent staff of lawyers at the U.S. Chamber to argue before the courts in line with corporate interests. In the 2011 term, the Chamber’s ensuing legal defense department batted 100% on U.S. Supreme Court decisions. Powell could well have added that business’s lobbying and campaign dollars could be directed to not only defeating threatening legislation and regulations, but also influencing the nomination and confirmation of justices to federal (and state) courts. The astonishingly high success rate was therefore no accident.

In short, the threat to American democracy and even to the American principle of market competition may come not from “socialists” in academia and the media, but rather from the supposition that political power oriented to the corporate good rather than the public good is itself a good. That is to say, Powell’s memo may have the story turned around. His antagonists may have been oriented to saving the American system, whereas his proponents would actually subvert it in line with their narrow self-interest.

Source:

Lewis Powell, “Attack on American Free Enterprise System.” Memorandum, 1971. See pdf download at page-bottom of: http://billmoyers.com/content/the-powell-memo-a-call-to-arms-for-corporations/2/

Speculators and Price Volatility: The Case of Gasoline

According to The Huffington Post, “Oil prices took a nosedive [on May 5, 2011] in a historic selloff, erasing weeks of gains and indicating that the months-long climb in energy prices may have hit a ceiling. Crude oil plunged 10 percent as startled investors unloaded their positions and a weeklong decline accelerated into an outright freefall. The price of U.S. crude went from triple digits to double digits, falling below $100 after opening at close to $110. Brent crude, a European benchmark, lost $12 at one point in a sell-off that exceeded the one following Lehman Brothers' collapse.”  The question, for course, is why, the answer of which can lead us to consider some public policy recommendations. Understanding the previous price rise is a first step both to answering this question and for evaluating public policy solutions.

The price of oil had been increasing, according to the Huffington Post, “as fighting escalated in the Middle East and investors feared a supply shortage.” Even as the Organization of Petroleum Exporting Countries was pledging to correct any oil supply disruption, the price of a barrel of crude continued to rise. Before the drop, Brent was up 50 percent compared to the same time the year before. Indeed, the rise could not be explained in terms of actual supply being threatened, as Libya represented only 2 percent of world supply at the time.

The fear was likely of a domino-effect that could potentially compromise even Saudi crude—as if Sunni protesters in Bahrain would spill over into Saudi Arabia (rather than tanks from the latter “spilling over” into Bahrain).  The fear, in other words, may have been exaggerated—even facilitated by speculators taking advantage of the general sense of instability in the Middle East. "Clearly these markets were overblown," said Nariman Behravesh, chief economist of IHS Global Insight. "We've been saying all along the fear factor has probably added 10 to 15 dollars to the price of a barrel." The ensuing “freefall” might have been a correction for this “fear factor.”

However, that the oil-price drop was accompanied by other commodities and even stocks could suggest that larger forces were involved. According to Reuters, “World stocks fell and the 19-commodity Reuters-Jefferies CRB index dropped more than 4.9 percent, heading for its biggest weekly decline since December 2008.” An oil-centered drop alone could be expected to result in higher stock prices as expected lower gas prices would be expected to have a stimulating effect on the U.S. economy. So it would appear that broader factors were at play—things that could have triggered the fear-correction.

Reuters reports that “(w)eak economic data from Europe and the United States fed concerns that have battered commodities all week. German industrial orders fell unexpectedly in March while U.S. weekly jobless claims hit eight-month highs, sparking a fourth day of profit taking in early trade. . . . Additional pressure came from news OPEC was considering raising formal output limits when it meets in June to convince oil markets it wants to bring prices down and reverse the impact of fuel inflation on economic growth.” However, it is not clear that the market was being so rational.

"This is just a market that rolled over and started feeding on itself," said John Richards, head of North American strategy for the Royal Bank of Scotland, according to the Huffington Post. "There was no triggering single event of news that would account for this. It's just much more the market's own internal dynamics taking prices down here," Richards added. “Internal dynamics” sounds a lot better than “feeding on itself.” The latter implies a growing disjunction between price and the “underlying” supply and demand for the commodity, whereas the former intimates a self-sustained system tending to equilibrium. 

Broadly speaking, the question may be whether a market for X tends internally to a homeostatic state of equilibrium or a schizogenic condition wherein a maximizing variable breaches any equilibrium-enforcing features. In ecological terms, by analogy, the question is whether a species tends to maximize its growth even at the expense of the overall ecosystem. In terms of the oil commodity market, the question is whether people simply betting on the price without any intended future use effectively divorce the market price from the actual and expected supply and demand. Moreover, does the disjuncture increase such that the betting acts as a maximizing variable at the expense of any equilibrium-tending mechanisms of the market itself?

Even if the “freefall” drop in the price of oil evinces a return to equilibrium closer to supply and demand, the disjuncture itself caused people to put off vacations and spend less on even necessities, and generally feel poorer. There is thus an ethical question regarding the legitimacy of betting on a commodity that people need. This includes not only oil, but food as well. Specifically, is the freedom to bet on necessities (even if necessities in the short run) worth the ensuing harm to consumers? Moreover, is trading on a commodities market inherently intended or designed for bets or, more narrowly, to arrive at a price whereby consumption demand meets supply? What, in other words, if economic liberty undoes the purpose of a market?

According to Bart Chilton, a top regulator at the Commodities Futures Trading Commission (CFTC), the number of speculative bets on oil and food were at record levels at the time of the price increases in both oil and food. President Barack Obama created an oil market fraud group in April to provide enhanced regulatory scrutiny of potential fraud and manipulation in the oil futures and derivatives markets, but most speculation was perfectly legal at the time so the reach of the group was rather limited in comparison to the problem.

Eric Holder, the U.S. Attorney General, wrote in a letter to the group, "Of course, there are lawful market forces that lead to price fluctuations and to differences between wholesale and retail price trends in these markets.” He urged the group “to identify whether fraud or manipulation played any role in the wholesale and retail markets as prices increased. If wholesale prices continue to decrease, fraud or manipulation must not be allowed to prevent price decreases from being passed on to consumers at the pump." However, manipulation in the form of betting was legal at the time. Even so, the financial reform bill passed in 2010 requires the CFTC to craft rules reining in excessive speculation. Nevertheless, citing inadequate market data, the agency failed to meet a key deadline on those rules in early 2011.

Accordingly, U.S. Sen. Bernie Sanders (D-VT) sent a letter to President Obama on the day of the “freefall” urging that regulators impose limits on oil speculation. “There is mounting evidence that the skyrocketing price of gas and oil has nothing to do with the fundamentals of supply and demand, and has everything to do with Wall Street firms that are artificially jacking up the price of oil in the energy futures markets,” Sanders wrote. “In other words, the same Wall Street speculators that caused the worst financial crisis since the 1930s through their greed, recklessness, and illegal behavior are ripping off the American people again by gambling that the price of oil and gas will continue to go up.” The question is whether “artificially jacking up” prices of commodities that people need ought to be illegal, and, if so, whether such a law could even be enforced.

Should futures traders be required to take delivery and use the commodity they have purchased? If so, people seeking to hedge risk may not be able to do so. Is not the “too big to fail” story about too much risk? Perhaps other means of hedging could be used. Furthermore, it may be that the government officials were not going far enough structurally. Were they to have incorporated anti-trust law, applying it strictly, perhaps a more competitive oil market would obviate the baleful effects of speculators. Even if there would be some opportunity costs in the reduced economies of scale enjoyed by oil companies (and gas stations), a market mechanism running on more competition would be worth that cost to the particular firms. The common good outweighs that of individual companies.

In going after “excessive” speculation or oligopolies, the devil may be in the details. For example, regulation may be difficult to write—assuming the corporate lobbyists do not obstruct it from even getting to that point (e.g., the failure of the CFTC to issue regulations)—not to mention enforcement. In a system of corporate capitalism, moreover, representative democracy may not be able to provide a homeostatic remedy after the horse has run out of the barn.

Sources:

Matthew Robinson, “Oil Crashes 10 Percent in Record Rout,” Reuters, May 5, 2011.

William Alden, “Oil Prices Plunge in Record Sell-Off,” The Huffington Post, May 5, 2011.

Zack Carter, “Eric Holder to Fraud Squad: Oil Price Plunge Should Benefit Consumers,” The Huffington Post, May 6, 2011.

Facebook’s Mark Zuckerberg: Power beyond Corporate Governance

Facebook’s Mark Zuckerberg and Sheryl Sandberg did not attend a committee hearing at Canada’s Parliament on May 28, 2019 in spite of having received summons from Bob Zimmer MP, the committee’s chair. Instead, Facebook sent its director of public policy and its head of public policy for Facebook Canada. “Shame on Mark Zuckerberg and shame on Sheryl Sandberg for not showing up today,” Zimmer said toward the end of the hearing.[1] For sending two representatives rather than themselves, Zuckerberg and Sandberg faced the possibility of being held in contempt. They had testified before the U.S. Congress, so by sending two representatives the two leaders of Facebook may have acted rather dismissively concerning Canada’s federal legislature. At the time, Zuckerberg had virtually unchecked power at Facebook, including over the other stockholders. From his perch, the power may have been going to his head; even after two years of user-privacy scandals, Facebook’s CEO and Chairman of the Board may have determined that summons from legislatures where the company was operating were beneath him. Such a mentality is dangerous for a person with autocratic control of such a large company.

Corporate governance can pale up against a formidable CEO who also chairs the board whose raison d’etre is in part to hold the CEO accountable. Even that such a structural conflict of interest could be allowed persist at a company suggests that its corporate governance system is weak, with too much power going to the management at the expense of the non-management stockholders. In the case of Facebook, Zuckerberg founded it, and on this basis he doubtlessly believed he was justified in being the sole holder of class B stock, each share of which having 10 votes such that he was the majority stockholder. In a show of just how pathetic minority stockholder rights can be, Zuckerberg voted down stockholder proposals “to put checks on Zuckerberg’s ironclad grip on the company he founded.”[2] This took place just two days after Zuckerberg had failed to show up at the Canadian committee hearing.

Zuckerberg was doubtless awash in power, for he had refused a legislature’s summons and could easily control his company’s corporate governance. Lawmakers in Congress and even Facebook insiders were raising concerns not only about whether Zuckerberg had too much power, but also the company itself, given the scandals that had been going on for more than two years. Shareholders argued that Zuckerberg’s holding of the board chairmanship “contributed to Facebook missing, or mishandling, a number of severe controversies.”[3] Stockholders also believed that eliminating the Class B shares (i.e., 10 votes per share) would enable stockholders to limit Zuckerberg’s power and “hold management accountable.”[4] As scandals—even one at the time hinging on Zuckerberg’s refusal to take off a distorted video of Nancy Palosi, the Speaker of the U.S. House—came up, stockholders had no recourse to management, which could safely ignore the complaints even though stockholder value was being affected.

I submit that the business judgment rule accords corporate managements with too much power in corporate governance over non-management stockholders. At the broad policy-level in which boards of large corporations operate, business expertise, while relevant, should not push out the role of non-management stockholders being able to act as a check on a CEO’s power. Fundamentally, even beyond the value of business expertise, ownership of the corporate wealth supersedes its management. As stock options as “firm-aligned” compensation for executives becomes more popular, the role of non-management stockholders becomes more important if accountability, or a check, is to be part of the system of governance. In other words, boards of directors should not be controlled by their respective CEO’s. In the case of Facebook, its breaches of private information and its role in influencing political elections as well as politics suggest that the corporation’s system of governance should include accountability.

In such a case in which a company leaves a huge societal footprint, with a potentially dire downside, and yet the corporate governance is monopolized by one person, it is only natural to look to external accountability in the form of anti-trust enforcement. Sure enough, U.S. House Rep. David Cicilline the chairman of the Antitrust Subcommittee, had called for an antitrust investigation into Facebook, “with a focus on its acquisitions of Instagram and WhatsApp,” both of which had more than a billion users in May, 2019. Even Facebook’s cofounder, Chris Hughes, “called for Facebook to be broken up and raised concerns about Zuckerberg’s ‘unchecked power.’”[5] Alex Stamos, Facebook’s former chief security officer, said Zuckerberg should “give up” some of his power and hire a new CEO.[6] Awash with power, Zuckerberg could ignore such advice. As for the prospect of being broken up, Zuckerberg could use more of the company’s wealth to make political campaign contributions and help lawmakers in other ways. When the lack of accountability in a company senses no threat from corporate governance and the reach of governments, then the exercise of such power can become virtually unstoppable.

See Taking the Face Off Facebook: Strategic and Ethical Issues, available at Amazon

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[1] Donie O’Sullivan and Paula Newton, “Zuckerberg and Sandberg Ignore Canadian Subpoena, Face Possible Contempt Vote,” CNN.com, May 28, 2019.

[2] Seth Fiegerman, “Facebook Shareholders Pressed for Checks on Mark Zuckerberg’s Power. They failed,” Cnn.com, May 30, 2019.

[3] Ibid.

[4] Ibid.

[5] Ibid.

[6] Ibid.

President Obama Took Care of Wall Street below a Public Persona of Reform

In April, 2010, President Obama gave a speech in New York City to counter what he called “the furious efforts of industry lobbyists” geared to weakening or stopping the new financial regulations that Obama claimed would be needed to stave off a second Great Depression.[1]  It is telling that the banks that had contributed to the financial crisis of 2008 were trying to diminish or block any new regulation. The very legitimacy of industry calls for deregulation in the wake of a market failure caused in part by the industry flies in the face of the rationale for regulation. In short, the rationale for government regulation has to do with market failures, which includes fraud and over-zealous profit-taking at the expense of the public good. The root of the rationale is the difference between the interests of an organization and society (i.e., the public good). 

After the financial crisis of 2008, the U.S. President wanted more consumer protections, limits on the size of banks and the risks they could take, reforms on executive compensation, and greater transparency for controversial financial securities known as derivatives.  He maintained that each of these safeguards must be in any bill that he would sign. In giving the speech with some of the banking titans in the audience, the President wanted to confront the financial industry more directly through a sharp speech. After having castigated the bankers' “failure of responsibility” in recent years, he called on them to stop resisting tighter regulation through the army of lobbyists staked out then on Capitol Hill. The president’s address at Cooper Union in Lower Manhattan circled back to another speech he had given at the same location in March of 2008 warning of financial manipulation, market bubbles and the concentration of economic power.

Analysis:

At the time of his speech, the President was actually supporting the bills coming out of Congress. These bills would do nothing to forestall or minimize market bubbles and reduce the concentration of economic power.  The bills would not even limit or reduce bank size; instead, higher reserve requirements for the biggest banks was presumed a sufficient incentive for those banks to willing reduce their sizes. Although this approach, which would become law, incorporated the market mechanism (regarding financial disincentives), the assumption that empire-building Wall Street titans would reverse the "business logic" where in the opposite of growth is bankruptcy is very naive. It is remarkable that the president considered this approach as satisfying his requirement that the bill reaching his desk must include something limiting the size of financial institutions (especially when the systemic risk of one big bank failing and taking down the entire financial system had recently been lived through). Paul Volker, Chairman of the Federal Reserve under Reagan, was urging a decrease in the sizes of the five largest banks. 

I submit that Goldman Sachs' $1 million contribution to Obama's presidential campaign may have had something to do with it, as did Wall Street lobbying in Congress. On the eve of the President’s speech, Obama’s chief of staff had met behind closed doors with representatives of Wall Street firms. Fox News reported that Obama's message was the following: we’ve got to trash you in public, but know that we will take care of you in private.  While Fox News was at the time certainly no friend of the President, the account would explain why the President would eventually sign the Dodd-Frank Act of 2010, which except for staggered reserve requirements and a consumer-protection bureau is pretty kind to Wall Street.  

 

Recalling President Andrew Jackson, who successfully took on the bank of the U.S. by refusing to fund it in 1832, and Theodore Roosevelt, who supported the Sherman Anti-trust Act in 1911, we could certainly view Obama as not having been willing to take on the guys who not only had contributed to his 2008 campaign, but could be useful again in 2012 for Obama's reelection.  

1.  Peter Baker, "Obama Issues Sharp Call for Reforms on Wall Street," The New York Times, April 22, 2010.

Executive Compensation Tied to Firm Performance: A Critique

With robust economies in America boosting companies’ sales, corporate tax cuts, and an increase in stock buybacks lifting stock prices in 2018, the default mantra in executive compensation circles that high CEO pay is justified if it is tied to firm performance could be questioned. Similarly, the typical assumption that high pay would have to get higher for a CEO to be motivated to do the basics of the job, including overseeing mergers and acquisitions, (or that doing the basics warrants a raise) could be questioned. Particularly in 2018, the comfortable, self-serving ways of the business elite in the U.S. were ripe for critique.

An analysis by The New York Times shows that the medium compensation for CEOs in 2018 was $18.6 million, which represents a raise of $1.1 million, or 6.3%, from 2017.[1] Meanwhile, the average private-sector worker got a 3.2% raise, which translates into 84 cents per hour. In short, the CEO compensation increased at almost twice the rate of ordinary wages. The question is whether the increase was justified or a matter of the American business elite taking care of their own.

Years earlier, Congress had given shareholders of American companies a “special but nonbinding vote” on the ratio of a CEO’s pay to that of the medium employee.[2] The nonbinding feature meant, however, that populism would have no weight in corporate boardrooms. If lawmakers had been motivated by corporate campaign contributions, the nonbinding nature of the vote suffered from the start from a conflict of interest exploited by the political and business elites.

Even the (pro-active?) response of corporate boards to pressure from some shareholders and advisory firms is problematic even though it seems to make sense from business perspective. Boards have been tying more of a CEO’s pay to the company’s financial performance as if the CEO has a big impact as distinct from structural forces such as a good economy or a tax cut that help companies’ bottom lines and stock prices. Boards “continue to act as if C.E.O.s have unique powers to deliver better returns.”[3]  

For example, Testla’s board approved compensation as much as $2.3 billion for Elon Musk, the CEO. To be sure, the company’s market value would have to increase 18 times to $650 billion for Musk to see get all “the options in the award.”[4] The board members tied the high compensation to company performance so he would “devote his time and energy” in Tesla rather than “wander to his other ventures, like SpaceX, or that he could leave Tesla altogether.”[5] As pointed out by the Times, this logic is flawed, for he already “owned roughly a fifth of Tesla, [so] his financial interests were already strongly aligned with the company,” according to Analysts for Institutional Shareholder Services.[6] Additionally, a highly paid CEO (without counting the 2018 award, had it been awarded) should be expected to be motivated by the high pay alone (without a 6% raise) to devote a lot of time and energy to the job. To be sure, Musk was at the time considered a visionary at the company. However, using tied-to-firm-performance to motivate him to show up each workday suggests that the criterion or basis undergirding executive compensation is problematic—and this doesn’t even take into account the matter of getting compensated more because of a tax cut or a strong economy, neither of which a CEO should get credit unless he or she had made the political contribution that got the corporate tax cut passed.

[1] Peter Eavis, “It’s Never Been Easier to Be a C.E.O., and the Pay Keeps Rising,” The New York Times, May 24, 2019.

[2] Ibid.

[3] Ibid.

[4] Ibid.

[5] Ibid.

[6] Ibid.