Sidney Jourard was one of the brightest shining lights of humanistic psychology. He was fond of saying, repeatedly, that all human behavior is based on either maintaining or enhancing the self-image. There is, of course, a corollary in US law. Call it the prime directive of American jurisprudence: All law is based on maintaining or enhancing corporate profit.
What, you don’t believe that? Here’s three very recent examples.
Victoria Espinel, the US intellectual property czar, has finally released her “Joint Strategic Plan on Intellectual Property Enforcement” (.pdf; 892KB). It’s an entertainment cartel wet dream, complete with secret treaties, pirate nation watchlists (entertainment cartel executives can nominate countries for inclusion), and evaluations of claims of piracy losses (the US Government Accountability Office has already dismissed these claims as total fabrications).
The document’s section on secret treaties—like the Anti-Counterfeiting Trade Agreement (ACTA)—is especially disturbing. The section starts out by acknowledging the need for transparency and outlines the Obama administration’s plan for it. But the very same section ends with a complete reversal: “... including consideration of the need for confidentiality in international trade negotiations to facilitate the negotiation process.”
As Cory Doctorow notes, intellectual property treaties have traditionally been handled openly and transparently by the United Nations’ World Intellectual Property Organization. The negotiations were made private by George W. Bush’s ACTA. Obama and his administration have eagerly embraced ACTA, going so far as to intervene in a Freedom of Information Act (FOIA) request for the text of ACTA itself, claiming a threat to national security.
BP, like Exxon before it, will likely be able to write off its expenses—including the US$20 billion escrow fund—from its taxes. Meanwhile, recipients of BP’s largesse will be most likely be liable for income taxes on those funds. After Hurricane Katrina, some Gulf coast residents received federal money to rebuild their homes after claiming a casualty loss for the damage on their 2005 tax returns. The IRS ruled that anyone who received the money and took the deduction would be liable for the money as taxable income on their 2007 tax returns. Only in 2008, after tremendous resistance from Gulf coast residents, did the US Congress reverse the IRS ruling. Kenneth Feinberg, Obama’s appointee to oversee the BP escrow fund, has said “it hasn’t been determined if the payouts will be considered taxable income.”
Finally, consider the recent movement by the US Federal Communications Commission (FCC) on network neutrality—the concept that all traffic on the internet should be handled neutrally. After campaigning as a staunch advocate of network neutrality (not to mention transparency), Obama’s FCC is apparently deciding the issue behind closed doors, in meetings limited to the incumbent telecommunication and cable giants. The incumbents were scared to death that the FCC would reclassify them as telecommunications carriers, subject to common carrier regulations, and lobbied in direct proportion to their fear. As a result, they’re in the room—behind the closed doors—and we’re not. As Tim Karr notes on Save the Internet, “Given that the corporations at the table all profit from gaining control over information, the outcome won’t be pretty.”
The expected outcome is nothing less than total regulatory capture.
For its part, the US Congress has also scheduled its own net neutrality closed-door meetings. They’ll almost certainly fall in line with the FCC’s. After all, AT&T isn’t the single biggest political donor between 1989-2010 for nothing. It’s US$44,939,004 greased a lot of congressional wheels, and those well-greased Congresscritters are just itching to rewrite the Communications Act of 1934 and its spawn, the Telecommunications Act of 1996.
Here’s Karr’s nut graf:
“This is what a failed democracy looks like: After years of avid public support for net neutrality—involving millions of people from across the political spectrum—the federal regulator quietly huddles with industry lobbyists to eliminate basic protections and serve Wall Street’s bottom line.”
Corporations were granted fictional personhood in 1886 when the US Supreme Court, in Santa Clara County v. Southern Pacific Railroad, found that corporations were subject to the due process and equal protection provisions of the Fourteenth Amendment. With that decision, corporations were solidly identified with private property instead of the public grants and interests that had been their overarching governance previously. That single decision also significantly weakened the public claims on corporate charters, and is seen by most corporate governance experts as an endorsement of the corporation being a “natural entity” with natural rights, rather than a created fiction chartered by the state for a specific purpose in the public interest, subject to state control.
The US Supreme Court reaffirmed corporate personhood in January 2010 when it ruled in Citizens United v. Federal Election Commission (.pdf; 2.6MB) that the US government may not limit the spending of corporations in political elections.
The sole purpose of a modern corporation—since corporations were granted the rights (but not the responsibilities) of personhood—is to maximize returns to shareholders. This precedent was firmly established by the 1919 decision of the Michigan Supreme Court in the case of Dodge v. Ford Motor Co. which found that “a business corporation is organized and carried on primarily for the profit of the stockholders. The powers of the directors are to be employed for that end.”
As Ralph Estes eloquently pointed out in Tyranny of the Bottom Line: Why Corporations Make Good People Do Bad Things, stockholders do not fund large corporations. What we commonly call “investments” are much more accurately termed “speculations” because the only time a corporation gets money “invested” in stock is when the corporation issues new stock. And that happens very rarely indeed. Federal Reserve data compiled in the 2000 census indicates that only about one percent of money “invested” in the stock market actually reaches corporations. The stock market is analogous to the used car market. When you buy stock, the money goes to the prior owner of the stock, not the corporation in which you are said to be “investing.”
The stock market is not an abstraction, it’s a fiction. The idea that shareholders create wealth is a myth, plain and simple. Shareholders do not create, they extract. When stock is purchased the common myth says that capital is being added to the economy. What’s really happening is that shareholders are buying the privileged entitlement to extract wealth. No one points this out more articulately than Marjorie Kelly in The Divine Right of Capital: Dethroning the Corporate Aristocracy, where she draws comparisons between shareholders and feudal aristocrats: “The most fundamental right of an aristocracy,” she writes, “is a right to income detached from productivity—in other words, to be free from labor.”
In real markets, participants work to keep what they earn; in the stock market, a solitary privileged group called shareholders keeps—through an entitlement—what others earn.
In the early 2000s there was a movement in which I was active for a time—the Code for Corporate Responsibility—to begin to address these and other relevant issues related to corporations and corporate governance. Those efforts seem to have died after proposed legislation in several states—including Minnesota—failed. Has the US’s bastardized version of capitalism finally and forever jumped the shark?
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