Why a corporation isn’t like a person

Imagine if you went to a neighbor and asked to borrow a rake, and the neighbor said “Sure thing, but hey the rake is valuable, so how about paying me $5 a month for it?” and you said “OK that sounds reasonable.”  You use the rake and leave it in your shed.  You figure the neighbor could come over anytime and grab the rake if he needed it.  You paid the one month, and nothing after.  Six years later, the neighbor mentions the rake. “Sure, right here in my shed,” you say.  The neighbor does not collect the $360…

But if your neighbor was a corporation, it would issue instructions to its employees: “Don’t tell our neighbor he has forgotten to return the rake… let’s just keep charging him month after month after month… crikey, this is a great money machine!”

About mkevane

Economist at Santa Clara University and Director of Friends of African Village Libraries.
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