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Home Publications Blogs Beat the Press Corporations Do Not Exist to Create Jobs

Corporations Do Not Exist to Create Jobs

Friday, 26 August 2011 05:08

In an article discussing three trade agreements being debated by Congress, the NYT told readers:

"under the agreements, American service providers would be able to compete in the three countries, ostensibly adding new jobs to the American economy. Because of this, they are widely supported by the U.S. Chamber of Commerce and other business trade groups."

This is wrong, wrong, and wrong. Corporations do not exist to create jobs, nor do they claim this as a goal. Invariably, corporate CEOs will say that their responsibility is to produce returns for shareholders, as they announce large layoffs. If the Chamber of Commerce is supporting these deals it is because it believes that they will increase profits, end of story.

The piece also bizarrely tells readers that the deals are projected to expand exports by $12 billion without mentioning how much it is expected to increase imports. This is like reporting a baseball score by telling us how many runs the Yankees got and not mentioning how many runs their opponents got.

It is net exports, the difference between exports and imports, that creates jobs. If the GM relocates an assembly plant from Texas to Mexico, the export of car parts from the United States is not adding jobs. Any reporter should know this and never print an export projection without including the corresponding import projection.

The piece also wrongly refers to the deals as "free-trade agreements." This is just a term that proponents use to make them sound more appealing. In fact, the deals will increase many forms of protectionism, most notably by imposing stronger patent and copyright protections on the three countries in these deals. A neutral report would just use refer to the deals as "trade agreements."

Comments (7)Add Comment
Baker Switches Support to Rick Perry
written by izzatzo, August 26, 2011 8:27
Corporations don't exist to create jobs? What is this Whose Your Nanny, another creationist theory cloaked in the usual disguise of intelligently designed Social Darwinists?

You do realize you just handed the election to Rick Perry don't you?

Stupid liberals.
written by ComradeAnon, August 26, 2011 8:50
Demand creates jobs. Always has. Always will.
What Reporters Certainly Know — Even at The New York Times
written by Hugh Sansom, August 26, 2011 9:00
It is near impossible to canvas a report from the Times or CNN or NPR or PBS on corporate management without hearing the tired lines about "responsibility to shareholders" (as if there were any evidence of concern about such responsibility among managers today). Any Times reporter is well-schooled in this and related news media dogma.

More to the point, the Chamber of Commerce has made perfectly clear its indifference to job creation — despite, again, well-voiced hat-tipping to the standard dogma about jobs.

The Times sounds more like a mouthpiece for the conservative Congress — endlessly pretending that by serving the rich, the rest of us are also served. Trickle Down Kool-Aid — it's been the drink of choice from right to center (and liberal) in political, media, and academic circles since the Reagan regime.

The Times reporter suggests some awareness of this with the addition of "ostensible". The claim of job creation would better be termed "standard moderate and conservative propaganda packaging" to make one-sidely, pro-business policy palatable to the general population.
written by frankenduf, August 26, 2011 9:06
yo Dean- that yankees line was sweet :)
written by denim, August 26, 2011 9:19
Just like "right to work" is Republican code exploit the workforce and kill unions, "free trade" is to get cheap labor and maximize profits. NAFTA being a first hand example, in my case, of job killing "free trade" agreements. So they can sit on the President's desk til hell freezes over or until they are revised to make economic justice for all happen in real life.
Corporations are legal constructs . . .
written by Carolyn Kay, August 26, 2011 12:02
. . . organized under the laws of states, which in theory are run by we the people. We could require them to put things other than profits into their charters as important, but we either don't know we could do that or we lack the will.

Carolyn Kay
written by urban legend, August 27, 2011 1:35
CEOs and investors may believe the purpose of the corporation is not to create jobs, but the state grants a corporate charter to enhance the wealth of the state -- including jobs -- not simply to produce returns to shareholders. The executive's first fiduciary obligation is to enhance the real value of the corporate entity, not to produce returns to certain shareholders. This has been a dangerous distortion that has led to toxic compensation packages that "align" executive incentives with those of the shareholders -- especially shareholders who prefer to turn as quick a buck as possible. Executives who focus on enhancing shareholder value -- i.e., higher stock prices for traders (and for themselves in the process) -- engage in a huge conflict of interest and violate their primary fiduciary obligation to enhance the value of the corporation itself without regard to short-term benefit for certain stockholders.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.