In Defense of Mitt Romney

I try to stay away from politics on the blog and focus on economics. However, presidential candidate Mitt Romney is being castigated in the media for making a simple, factual statement.

In response to a question from an audience member, Mitt Romney stated, “corporations are people, my friend.” According to NPR, this was “an early Christmas gift” to Democrats because it “made their goal of pushing the narrative that he is a tool of corporate America much easier by providing them with that handy piece of video.”

Color me confused. What did Romney say that (a) suggests he is a tool of corporate America, or (b) is factually inaccurate? Corporations are people. The revenue generated by a firm ultimately goes to individuals whether in the form of wages or profits that go to the owners of the firm (which, in the case of public companies, are the stockholders). Costs beyond wages for a particular firm are paid to other individuals and firms for supplies, services rendered, etc. This is a basic fact and the reason that one will, at times, hear an economist claim that “corporations don’t pay taxes, people do.”

This simple fact, however, has either been misunderstood or misconstrued by the commentariat. In fact, the NPR post explicitly misses this point as the reporter writes:

Anybody these days fortunate to have a 401(k) retirement plan, or even a job with a corporation, understands that when a company makes a profit, there’s a benefit to that firm’s “stakeholders,” as executive-types like to say.

This, however, is only part of the story. It goes beyond profit. Anybody who works for a corporation or who owns or works for a firm that sells goods and services to a corporation benefits from that corporation’s existence. This is what it means to say that corporations are people. Romney was correct.

3 responses to “In Defense of Mitt Romney

  1. Corporations are people, which is factually correct but politically incorrect. As a politician he should be smarter about the choice of his words. Its frustrating but that is the how the game is played.

  2. US corporations are people with well lobbied special rules who have been treated really really well … might even say privileged as compared to US corporations in the 50’s…

    But the interlinked global macroeconomy has forced and is forcing US corporations to become non nationalistic. The coming global deflationary depression will further separate the elite from America’s growing underclass.

    The financial asset class with the greatest market value and greatest global participation is the US debt instrument.

    Observe the weekly composite equity and debt charts.
    Equities are in the midst of a nonlinear collapse. US debt instruments
    are the recipients of that nonlinear collapse and are in nonlinear growth
    going to 150 year low interest rates.

    For fifty years western debt expansion has been offset by
    asset and wage inflation allowing further debt expansion. While there
    are natural saturation limits to this process, the world macroeconomy
    with the new Asian labor force participation has reached a
    supersaturation point of debt and wage dysequilibrium.

    50 years of entitlement promises – most disproportionally benefiting the financial and corporate industries who now go into the asset collapse laden with cash – have reelected Pavlovian politicians.

    There is now a defacto consensus among US
    (and eurobond) debt holders that austerity is needed to maintain the
    quality of US debt. Qualitatively further debt expansion which drives
    the real global economy is dead.

    The deceleration in global GDP will be nonlinear. France’s quarterly GDP is one of the canaries in the coal mine.

    Equities are undergoing exquisitely predictable Lammert quantitative
    fractal collapse.

    The daily fractal pattern for the first segment of the equity
    collapse is 3/8/4 of 6-8/5 days.

  3. Wonks Anonymous

    I agree that corporations are people, but your point about benefiting from corporations is separate. I could work for an individual rather than a corporation, but that’s not what it “means” to be people. I could just as well work for an intelligent alien or computer that we don’t consider to be a person. If the reporter had said “shareholder” rather than “stakeholder” that wouldn’t be so confusing.

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