The Corporation, <em>in Loco Parentis</em>

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Some thoughts on the modern company town

Tennessee Ernie Ford may have lamented owing his soul to the company store, but for many years life in a company town was a cherished situation for thousands of American workers, including my parents and grandparents, residents of Phillips, Texas, whose lives were a lot more “Blue Suede Shoes” than “Sixteen Tons.” Maybe the variable in play was the industry: Life in an oil town was different from life in a coal town.

As Texas-based writer Virginia Pirtle Malicoat tells the story, Phillips was Mayberry without a sheriff — and, in its way, it was an egalitarian postwar paradise: “Part of it was the time we grew up — the 1950s,” she said in an interview with the Amarillo Globe News. “We didn’t have any worries. We had no idea who made what kind of money or who had what kind of job. We were all equal.”

But, of course, they were the opposite of equal; they were in a paternalistic relationship with a multinational energy company. If that felt like family, it was like family: The organizing principle of a family is not the trivial equality among the children but the necessary inequality between children and parents. The people of Phillips found out exactly how unequal they were in the end, when Dad stopped their allowance and took away the car keys.

Phillips had a good high school (with a very good football team, which mattered a great deal) but no school taxes to pay. The company paid for the schools, and, if the football team needed new equipment, the company paid for that, too. The company built the roads and kept them in good repair. The company painted your house if your house needed painting. There was no police department to pay for — and there were no utility bills to pay, either. The company covered all that. But it also owned the land beneath your house and the land your church stood on — and, when the town no longer made sense as a business proposition, Phillips, Texas, ceased to be. Residents who wanted to keep their houses put them up on trailers and hauled them away. They went from being neighbors to being trespassers.

The company town as such is mostly a thing of the past. But the company-town conviction is stronger than ever.

Curiously, there is an especial affection for the company-town model in two political camps that usually consider each other cultural enemies even though they share a surprising number of policy preferences: On the right, the so-called nationalists politically and spiritually aligned with the Trump movement, and, on the left, progressives inhabiting that daft slice of the political spectrum whose notable points include Senator Elizabeth Warren (D., Mass.) and whoever is in charge of the book-banning department at Amazon.

Among conservatives, there are those who like to sneer at the Affordable Care Act provision allowing adults to stay on their parents’ health-insurance plans until they are pushing 30, but who also are eager to see corporations act — to see them forced to act — in loco parentis, providing employees not only with health insurance but also child care, paid parental leave, and other benefits. Apparently, being dependent on your family is evidence of a moral defect, while being dependent on an employer is the height of liberty. There are a lot of us living in company towns without being quite aware of the fact.

Among progressives, the same people who bewail the influence of corporations on cultural and political life also propose to entrench the social role of big businesses by making individual Americans more dependent on them for everything from health care to retirement income. Senator Warren’s schemes aimed at punishing those who might seek to escape from her utopia (her proposed 40 percent wealth tax on certain emigrants) or resist it in their boardrooms (her proposal to dictate to corporations the composition of their boards and control their political activities) are what you get when the company-town model meets mid-20th-century authoritarianism: the company town you can’t leave.

Senator Marco Rubio (R., Fla.) argues for a company-town model of “common good” capitalism that understands employment and wages as part of a social-welfare scheme rather than as a market exchange, and he dreams consequently of a program of corporate subsidies that is practically Goldbergian (Rube, not Jonah) in its unwieldiness and implausibility. Senator Rubio proposes to guarantee both debt and equity investments in certain favored businesses in the hope that doing so will produce the employment results he desires — and here I would like to note how remarkable it is that a senator who complains about the prominent role played by financiers in our economy proposes to create a government program intended to make it impossible for politically favored investors to lose money. If Lloyd Blankfein had proposed something along those lines, Senator Rubio would have had him burned at the stake.

Why not just go straight to the people? If you think that people making $25,000 a year should have $30,000 instead, why not just send them $5,000 checks instead of monkeying around with minimum wages and investment guarantees and the like? Why go through all that theater when there is a much more direct means to your end?

Part of this is the politics of money-laundering. Mandatory corporate paternalism is a good way to provide welfare benefits without enduring the unpleasantness of taking responsibility for their cost. Senator Snout (R., Snoutopia) wants to confer certain benefits on the hardworking folks back in Snouttown, but he is a good fiscal conservative, meaning that he will avoid, if it is at all possible, honestly accounting for his spending by putting the appropriations into the budget or — angels and ministers of grace defend us! — passing a tax to pay for those benefits. Instead, he will pass a law mandating that these benefits be provided by someone else, typically an employer. That is a happy outcome for Senator Snout: He gets to take credit for the benefits, the outlay ends up on somebody else’s budget while he “holds the line” on spending, and the revenue is provided by corporations in their role as national collectors of taxes both direct and indirect. Instead of blaming Senator Snout for higher taxes, those negatively affected instead blame greedy capitalists for the higher prices that are eating into their stagnant wages. Big businesses that have a lot of negotiating power can pass along costs to smaller businesses with less negotiating power, to workers, and, in some cases, to consumers. And if a few smaller businesses get crushed in the stampede, well, here’s Senator Rubio with a bracing lecture on economic patriotism and a fresh dish of subsidies.

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The progressive version of this is much the same but with rhetorical jazz in a different key. Its adherents insist on the fiction that taxes on “the rich” are actually paid by Jeff Bezos and the people on his yacht (or on his yacht’s yacht) rather than distributed throughout society by the real-world workings of the economy. This is a story told by people who are professionally obliged to pretend that most of the federal budget is consumed by defense spending rather than by the programs that actually dominate it: Social Security, Medicare, Medicaid, and other social-welfare schemes that are not exactly characteristic of a pitiless arch-capitalist dystopia.

But, hey, a decade and a half ago Paul Ryan said he likes Atlas Shrugged, so, there’s that.

* * *

Foreseeing something like what we now call “cancel culture” (or what I describe as the disciplinary corporation), the great economist and social critic F. A. Hayek lamented the rise of salaried employment in corporations and other large organizations as a predominating social norm, believing that such institutional life inevitably breeds institutional men, characterized by conformism, risk-aversion, and a managerial mindset that is next door to collectivism. The mental qualities and habits that make for a successful executive vice president of human resources or a good chief marketing officer are different from the mental qualities and habits that make for a successful entrepreneur, small-business owner, or independent tradesman — and a society that is dominated by the management caste will, over time, take on the spiritual aspect of the human-resources and marketing departments.

Hayek hoped that a remnant of independent thinkers would — necessarily among the independently wealthy — persist, immune to the homogenizing pressures of corporate life. But that is not how things have come to pass: The independently wealthy are in many respects the easiest people to push around — ask Mark Zuckerberg, Taylor Swift, or Jimmy Kimmel. An exception to that rule is Elon Musk, who seems to be having a hell of a good time and who is, in many quarters, hated for that.

The challenge to corporate paternalism is not going to come from the billionaires and pop stars. And it probably isn’t going to come from the rest of us, either. The so-called gig economy and a few other commercial innovations related to the rise of the Internet over the past three decades have provided the most significant challenge to such institutional life in a generation, but Americans have mostly recoiled from that challenge in horror. Uber drivers are very low on the socio-economic totem pole, objects of both pity and scorn. But even highly paid independent workers often are looked at with a mix of sympathy and contempt. In my business, a writer who leaves a high-profile publication to work for himself is generally branded a failure, even if he makes three times as much money on his own. (“Oh, he’s on Substack now,” his friends will whisper, with tones appropriate to a discussion of early-onset dementia.) A self-published book that makes a million dollars can be a financial milestone and a reputational millstone. Similar outlooks prevail in other occupations. Part of that is prestige-farming — our elite institutions increasingly define themselves by whom they exclude — but much of it is risk-aversion. We Americans talk a good game when it comes to rugged individualism, but few of us have an appetite for eating what we kill.

We are both economically and emotionally bound to institutions — especially to our employers. This isn’t just about salaries and health insurance. Our employers provide many of us with social status, which is distinct from economic status — a Harvard professor or a Washington Post columnist has social and cultural opportunities far out of the reach of a beverages distributor in a midsized city who earns six times as much money. The same organizations also provide us with stability and community, or reasonably convincing facsimiles thereof. That may rest on a shaky foundation, but we generally prefer employment to the alternatives. Some research has found that a married man’s losing his job is more likely to lead to divorce than is infidelity on his part. Job loss is strongly correlated with suicide, while underemployment and job insecurity are linked to anxiety, depression, substance abuse, and family problems.

It is natural, in that respect, for people to look to employers and other institutions to act in loco parentis — not to simply make good on their side of whatever exchange is taking place but to nurture them, look after them, and (this part is insane but not uncommon) to love them. So it follows that politicians will exploit the employer–employee dynamic as a path of least political and financial resistance.

And this is precisely the poisonous moment for making the most of that: On the right, there are angry and resentful nationalist-populists who are eager to break with, to denounce, and, if at all possible, to punish a business elite that no longer shares their values or tribal affiliations; meanwhile, the Left is dominated by media professionals, academics, and executives (both in business and in nonprofits) who are socially and culturally adjacent to the titans of Wall Street and Silicon Valley but economically nowhere near them, subsisting in many cases on only a few hundred-thousand dollars a year — and no one hates the billionaires as intensely as the single-digit millionaires do.

The natural bipartisan attraction of corporate paternalism reacts with the eternal desire to loot and pillage one’s tribal enemies to create this very peculiar political moment, in which nationalism and socialism embrace each other in a way that is reminiscent of a Greco-Roman wrestling match: You know it’s a fight, but it looks a lot like foreplay.

If we had a Tocqueville of our own, his book would be called National Socialism in America, and Chapter 1 would be titled “Economic Patriotism.”

* * *

There are many versions of the company town in our life right now, and most of them are considered highly desirable addresses: Google, college campuses, employers that offer spa treatments and on-site dentistry, etc. Workers at Patagonia apparently are encouraged to take a work break and go surfing when the waves look good outside their California offices. And that is all to the good: There is more to keeping employees happy than the number on the paycheck, and the line between compensation and paternalism is not always clear.

But there are downsides to corporate paternalism, too. To take one obvious but head-clutchingly difficult example, think of all the economic distortions, family anxiety, and political mischief that have been wrought over the years by employer-based health insurance, which has made American businesses the mediators between patients and doctors for about half the country. It will not come as a surprise to any employed person that an employer has economic incentives that are not identical to those of its employees, and that these incentives sometimes are even rivalrous, meaning that some of your most critical personal decisions are conditioned by a third party that does not have your best interests at heart but upon which you are dependent, often in multiple complex ways. Rather than working to liberate ourselves from such enmeshments, we more often are compelled by our risk-aversion to seek deeper and broader entanglements, or at least to accept such entanglements as an inescapable fact of life as it is now lived.

And, for many people, that life is lived in fear — of expulsion from the company town. Employment has long been weaponized against high-profile nonconformists and dissidents, but the threat of unemployment increasingly is being deployed as a tool of social and political coercion against ordinary people in obscure positions: provincial bank tellers, hotel clerks, Starbucks managers. Access to higher education is being weaponized in a similar way, and against children and teenagers at that.

Surely it has not escaped the gentle souls in our political caste that widening and deepening dependency will make it easier for people with power to coerce those without it while denying that there is any coercion at all. Coercion with subtlety and good taste, implemented by people with the right kind of education, is still coercion. No, we won’t burn your controversial books — but we will make sure they can’t be sold on Amazon, which, in turn, accomplishes the more important task of ensuring that such books in the future are never published in the first place. Nobody is telling you that you can’t have an unpopular political view or practice a religion we don’t like — we’re just telling you that you can’t do that and keep your job. And we think your employer probably ought to intervene in your sex life.

Of course, you can walk away — if you have somewhere to go. But it isn’t enough to have what Don Regan famously called f***-you money. Jeff Bezos is the wealthiest man on Earth but has been bullied into working part-time as a bloodless enforcer of petty orthodoxy. He has f***-you money but not f***-you character. Nobody put a gun to his head. But a gun to the head often is beside the point.

Phillips, Texas, didn’t have a police department. It didn’t need one. Everyone was happy there, because the people who were not happy were not there.


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