The Nancy Pelosi’s of this world are shown, yet again, to have no clue when it comes to how democracy actually is supposed to work here in this country (or anywhere else, if “work” means generically successful in organizing stable, fruitful society for generations on end). A couple years ago, the Supreme Court struck down the constitutionality of section 441B of Title 2 of the US Code (election law), put in place by the McCain –Feingold act of 2002, a legal mistake if ever there was one. This section was the one that introduced a direct suppression of free speech by corporations: it outlawed so-called “electioneering communications” within 60 days of a federal election by any corporation whatsoever. The law was considered problematic to begin with, and President Bush when he signed it did so with publicly stated misgivings about its constitutionality. Now that the SC has struck down this provision in Citizens United vs. FEC, Pelosi and crew are foaming at the mouth and calling for a constitutional amendment:
The People's Rights Amendment Section 1. We the people who ordain and establish this Constitution intend the rights protected by this Constitution to be the rights of natural persons. Section 2. People, person, or persons as used in this Constitution does not include corporations, limited liability companies or other corporate entities established by the laws of any state, the United States, or any foreign state, and such corporate entities are subject to such regulations as the people, through their elected state and federal representatives, deem reasonable and are otherwise consistent with the powers of Congress and the States under this Constitution. Section 3. Nothing contained herein shall be construed to limit the people's rights of freedom of speech, freedom of the press, free exercise of religion, and such other rights of the people, which rights are inalienable.
A brief glance at the first sentence provokes awe and wonderment, that supposedly savvy political operatives can so badly mis-align a mere 14 words, the second part of the sentence, against reality and political intelligibility. Forget, for a moment, that Pelosi is a liberal’s liberal, and you will notice that those words would strike down all sorts of rights dear to liberals. Like, for example, the freedom of all of the media corporations. The First Amendment’s protected freedom of press would cease to apply to the New York Times, but only to humans employed by the NYT. The corporate entity could not claim any relief from suppression of speech, and would have no standing to sue for protection of the press from government interference. Nothing in the 4th amendment would protect the NYT building from unreasonable searches.
To see how this appallingly stupid (yes, evil too, but for the moment let’s just limit it to the stupid part) set of words is justified, let’s look at the website’s justification.
A sharply divided Supreme Court decided that the American people are powerless to stop corporations from using corporate funds to influence state and federal elections. The 5-4 decision ruled that the restrictions on corporate expenditures in elections contained in the federal Bipartisan Campaign Reform Act (known as BCRA or “McCain-Feingold”) violated the First Amendment protections of free speech. The ruling dramatically expands the new “corporate rights” doctrine that has transformed the First Amendment in recent years, and exposes an already-corrupted political process to a new flow of billions of dollars of corporate money.
What’s really going on here is that Pelosi and crew are out to use the public antipathy to corporate profiteerism and make that hatred carry the burden of preventing corporations from having a say in politics. What’s RIGHT about it is that corporate focus on profits can and does pollute politics. What WRONG about it is that it paints the profit motive across the entire spectrum of corporations, which is simply inaccurate, and creates a presumption that associative endeavors are not protected except by explicit positive law. The immediate and outspoken reaction from non-profit corporations was against McCain - Feingold, from liberal, conservative, and non-partisan orgs (including the CA State Democratic Party and the Environmental Defense Fund): the bill freezes them out of the political arena without any profit motive necessarily infecting the political speech. The brush is much too broad.
The People’s Rights group claim that the SC decision fails to note the distinction between associations and corporations.
A corporation is not just like any other association of people. A corporation is a specific creation of state or federal statute that may only be used for purposes defined by the state or federal statute that permitted the creation of the corporation. While Justice Scalia has claimed that corporations are like other associations of people, this is wrong. “Those who feel that the essence of the corporation rests in the contract among its members rather than in the government decree . . . fail to distinguish, as the eighteenth century did, between the corporation and the voluntary association.”
One can be misled by this because it does have some ring of truth, but it falls short of the reality by quite a bit. Corporate law is indeed a construct of the state, and so it need not have been constructed the way it has. But it is simply faulty logic to conclude from this that each corporation is wholly a construct of the state that defines its corporate status. This can be seen easily in the fact that many, many small businesses and associations were in existence well before they incorporated, and they retained virtually all of the essential organizational meaning and purpose when they became corporations. They took on the privileges and constraints of corporation structure by the change, but they did not cease to be associations and small businesses with the same operating practices, the same personnel, the same long term objectives, etc. To become a legal corporation isn’t automatically to cease to have other characteristics, such as an associative history and meaning.
Oddly, although this group seems to think that associations – when not corporations – are somehow removed from the taint of being “creatures of the state” that are limited to only the rights explicitly granted them by law, the proposed amendment does nothing to carry out that point of view. Since associations are no more "natural persons" than corporations are, the amendment would freeze out associations as well as corporations, so the argument that corporateness is a creature of law is irrelevant after all. The big show about corporations is all trumped up, the amendment falls just as heavily on the rights of non-corporation groups.
The fundamental point is that there is nothing about the notion of corporate-ness or association, that makes us want to freeze them out from political speech altogether. One of the reasons people associate as a formal body is to be more effective in making a point known and accepted, such as political parties. According to Pelosi’s amendment, political parties may be frozen out of campaign speech, since they aren’t human persons. If one wants to pay attention to the corporate format, there is nothing about this legal structure that inherently makes it an association that MUST NOT BE PROTECTED in its political speech under the 1st amendment.
And I say that in spite of the fact that I often look askance at the way large groups DO carry out political speech: Organizations which are formed to carry out a purpose that is not directly political will sometimes speak out with an official point of view that is not in keeping with its membership’s points of view on politics – such as business corporations and labor unions. I tend to think that these organizations ought to have limits on their political speech, but not because the first amendment has no bearing on them, but because their MEMBERS have prior first amendment rights that are abrogated when the larger body speaks about an issue that is apart from its basic purpose for existing. Let me take an example: a large business like Target is incorporated, and its fundamental purpose is to provide retail goods for customers and provide profit to its shareholders. One can easily imagine a situation where Target, as a for-profit entity, will be hurt by a certain law, but where its shareholders and employees and customers are, by and large, in favor of the law because the law serves more important goals than profits for the shareholders and/or work for employees and/or retail goods for customers. The fact that Target has a “corporate point of view” about the value of the law should not be allowed to speak in place of the point of view of the people who make up the company, as if Target and its shareholders constitute two separate and equal points of view before the body public. If Target speaks with money that would otherwise go to the shareholders, then those shareholders have to use up their own separate money just to get the playing field back to even, and then begin to have an impact on public opinion – like a body at war with its own cells. It’s irrational. This point is made in a dissent by Stevens, but he draws the wrong conclusion from it. The point isn’t that corporations are being treated just the same as humans, but that nothing about incorporating constitutes an inherent rational basis to limit the otherwise general applicability of 1st Amendment rights of speech and association. You can insist that the 1st Amendment applies without claiming that corporations are to be treated exactly as humans.
To be rigorous, the 1st Amendment must apply to associations (including corporations) because it explicitly speaks to the right to assemble, but the application to associations is inherently secondary to its application to humans. Therefore, application to associations can reach a limit when that protection damages the capacity of humans to accomplish their own free speech and association – which is exactly what happens typically when a for-profit corporation or labor union sticks its oar in on a political question that is larger than the explicit purpose of existence of that entity. A labor union member who must belong to the union in his job, and must pay dues, cannot exercise his freedom to speak and associate in a manner of his choosing if those union dues are used to support a point of view he opposes.
As a result, I don’t think that the Supreme Court has, just yet, located the necessary principles to sort out the best holding in these FEC cases, but Pelosi has found a much worse way to do so. When you form an associative entity explicitly to speak more effectively in the political arena, freezing you out of the arena because you have associated is per se a violation of the First Amendment principles for the rights to speech and association. Nothing about associating under those conditions causes there to be some reason for the First Amendment not to protect your associative efforts to speak.
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Let’s not forget the underlying ultra-left perspective that infects the Pelosi’s of this world: there should be nothing but the state and the individual. All other intermediate entities are to be frozen out of existence. We must have a naked public square, where the family, the church, the neighborhood association, the business corporation, the community charity, and the private university are all to be suppressed. They may be permitted to retain their facades, but only if they lose all independent capacity: they may only speak when the state tells them to speak, they may only act just so far as the state tells them to act by positive prescription. That’s the ultra-left utopian view of society.
Comments (26)
I guess then that gay couples don't have a right to marry, since "couples" are "corporate entities." "Marriage quality" depends on the belief that gay couples are equal to non-gay couples. So, I guess "marriage equality" is gone as well.
Right...................
Posted by Thomas Aquinas | April 29, 2012 6:38 PM
Isn't the problem really that organizations you are not joining for political purposes are using your resources for politics. So, a union member or stock holder are having their resources used for politics with which they may not agree. Trying to figure out how to handle that seems to be trying to unwrap the Gordian Knot. Instead, why not cut the knot? Bar organizations that are not expressly political from acting in politics.
Using your example of Target, it would work in the following way. Target is banned from practicing politics. But, Target may create a wholly controlled political arm called Target Policy. While the company completely controls the positions of the organization, it may not use company funds or require employees to contribute. All funds for Target Policy have to come from donations. Company officials, employees, and stockholders or anyone are free to contribute, but no company resources can be used. It would work the same way with unions. They would be under the same requirements as a corporation. Everything has to be separate.
Posted by Chris | April 29, 2012 8:43 PM
I think you could clean up part of this mess by establishing a legal principle that a corporation has no freedom of speech except where its shareholders have enabled that speech in the charter. Thus, if the corporation's officers lobby the government in the absence of written permission in the charter to engage in that activity it is inherently illegal. I think we could also solve a lot of problems with politics by abolishing tax deductions for giving to non-profits unless those non-profits engage in direct acts of environmental conservation, pro bono legal aid, relief of the poor, relief for unwanted animals, educating the public in fields of genuine academic inquiry and religious services.
Posted by Mike T | April 29, 2012 8:44 PM
Chris, Congress thought along very similar lines, allowing corporations to contribute to political speech using PACs. However, PACs are subject to very intense oversight and regulation, enough so that an ordinary entity just won't want to play. And the Court objected to this as a chilling of political speech through excessive constraint. If your idea is simply that the separate "for politics" entity must get its funding separately from the corporation's coffers, and everything else is standard, I can live that sort of thing.
Mike, I am curious as to how that would be enforced. Generally, an association's officers are empowered to engage in all those activities that further the objectives of the entity (with maybe some set off-limits by a specific listing). What you want is instead requiring a positive listing of authority to speak politically. Problem I see is that there is no tried and true way to set off "political" speech from "almost political" speech off from "nearing political speech but not close yet" sorts of speech. You would be looking at a pother of lawsuits as to whether X advocacy is political or not.
But other than that I like the idea, sort of. I strongly object to for-profit corps getting involved directly in politics typically, and the reason is I see their owners/members not having a singular vision of what constitutes the right politics. Because the profit motive is at 2 or 4 or 12 removes from high political principle, it is readily possible for members of a board of directors of GE to differ greatly on their politics, and so any political statement they make opposes somebody's politics.
Personally, I think that state law ought to provide a specific designation of "for profit" corporation, and ban such corporations from sending any money anywhere that is not a quid-quo-pro arrangement: no gifts, no charitable stuff, no "good-will" anything. Instead, any such corporation can set up a charitable arm, that uses employee and officer and shareholder donations. But again, that would be at the state level, not federal. I don't think that businesses ought to be involved in charitable stuff directly with the business's own funds. Transparency and purity of motivations is much easier to verify that way.
Posted by Tony | April 29, 2012 9:17 PM
Tony, that is exactly what I have in mind. I also like how charity could be handled the same way. The organization has absolute control of how the funds are use, but the funds can't come from organization resources.
Mike, I think your idea would fail in reality. The result would be like the mess of campaign laws we have today which means there are always loopholes and gray areas that some organizations will abuse to no end.
Posted by Chris | April 30, 2012 7:23 AM
Surely that's overly restrictive at the local level, and its restrictiveness is pretty easy to see when we think of a small or family business. I think it's very good for Joe's Used Cars to be able to contribute charitably to the community out of the goodness of Joe's heart, or for Joe to be able to open the till and spontaneously help out someone in need. It's Joe's business, after all. Even if Joe owns it together with his three brothers or something and is going to have to justify what he's doing to them, well, that's part of trust among them. It's like a family, where husband and wife both have access to the money, trust each other, and work out their charitable giving together.
To make a for-profit business automatically _not_ capable of doing charitable deeds except by setting up a separate arm, following separate regulations, etc. seems to me to be sort of defining a for-profit business as cold-hearted and uncharitable and separating such a business from its community in an unnatural way. It would be a bit like regulations that say that you can't give food to the homeless unless you've cooked it in a certain type of kitchen. Spontaneous acts of kindness which people believe they can carry out on an ad hoc basis would be artificially segregated and regulated.
Perhaps it would make more sense to apply such regulations to for-profit corporations whose stock is publically traded?
Posted by Lydia | April 30, 2012 9:30 AM
A whitelist is not that hard to implement. The problem could be solved by leaving the responsibility to the shareholders to define what is legal speech for their corporate officers, with ambiguity leading to strengthening the criminal protection of the officers. Similar to how ambiguity in contracts benefits the person to whom the ambiguity applies.
I think you misunderstand my proposal, if that's what you think. I am advocating making willful non-compliance with the corporate charter by high-level corporate officers a prosecutable offense in some areas. This would go beyond corporate speech to include, for example, "charitable giving" that is not authorized by the shareholders via the corporate charter. This part of a general problem of corporate leaders (business, unions, etc.) doing things which are outside of their delegated authority and for which the common member/shareholder often has no effective personal means to challenge.
Posted by Mike T | April 30, 2012 10:50 AM
Lydia, that's exactly what I was thinking: for-profit corporations. Any business that wants the freedom of action that includes political speech, and charitable giving, should be free to do so - as a sole proprietorship or something like that. But by taking on the statutory framework of an explicitly for-profit corporation, they thereby give up using the entity for activities that are not quid-quo-pro, including both political speech (which, if they ARE quid-quo-pro then they constitute illegal bribes); and charitable giving, which they expect a deduction for when in principle if it is charitable and thus does not inure to the company's profit benefit then the for-profit corporation should not have a motive for doing it, and if it DOES inure to their benefit then they should not get a deduction for it. Every dollar that a for-profit corporation gives to charity could have been passed on to either the customer in savings, or to the shareholder in dividends, and could have been given charitably to good causes by those self-same customers and shareholders (including donated by those person to the "company charitable fund" freely and with clear intention) without any doubt as to the propriety of the activity. I as a customer or Bob as an employee should not have to wonder whether the corporation's profits are going to Planned Parenthood this week as the charity flavor of the week. When the company does it "on my behalf" without either my knowledge or agreement, that is a lot like government doing charity work: it isn't true charity, and it often undermines the point anyway. I promote personal responsibility.
Mike, I have my doubts. Suppose Marriott corp makes a white list that includes "may speak favorably about politician Brutus", and Marc Antony comes along and gives a speech that repeats ad nauseum "and Brutus is an honorable man." "What....I said he was honorable, what more do you want?"
Seems to me every Marriott employee (not just officer) is entitled to hold an opinion about whether Brutus is good for Rome or not. But he need not hold that position in virtue of having a for-profit relationship with Marriott, including employment or being an officer. If even the board of directors concludes by a majority vote that Brutus is good for Rome, not every member of the board has to agree. But having an official "Marriott" stance made public taints every Marriott official's attempt to separate himself from Brutus. Therefore, Marriott as such shouldn't hold a position about the issue. (And in any case, if Marriott is an explicitly "for-profit" corporation whose corporate activities are supposed to be only such as promote the bottom line, publicizing an official Marriott stance should be understood to be an explicit commentary that means, in approximation, "Brutus is good for Marriott's bottom line", that would tend to dilute the value of the commentary beyond the realm of its shareholders and employees.)
Limiting for-profit corporate activity to those that actually are specifically for profits would help clarify the lines of motivation, responsibility, authority, and so on. And promote personal responsibility. (Sole proprietorships are already all about personal responsibility, so the same problem does not crop up there.)
Posted by Tony | April 30, 2012 7:07 PM
Wait a minute, wait a minute. Bob is just the store owner and you are just the customer. You've moved from seeing yourself as a stock-holder to seeing yourself as a customer. I don't at all see that what Bob does with his profits is being done on behalf of the customers! The store doesn't _represent_ the customers. I can more see it with the stockholders, because then they own a share of the company.
But what I actually talked about was not just any for-profit corporation but one that is publicly traded. Even if it isn't a sole proprietorship it could still be a small partnership or some other company that doesn't have stockholders separate from the ordinary owners who control the business. Things only get that abstract when the company's stock starts trading on Wall Street or something and then you can have this split between what the stockholders want done "in their name" and what the people who actually control the money want to do.
Posted by Lydia | April 30, 2012 8:19 PM
Lydia, I don't think there is any significant difference between a mom-n-pop store that incorporates, and one that then involves the kids as shareholders, and then one that invites 20 friends to invest and be part of corporate structure, and one (like a hedge fund) that sells shares only to any of 500 invitees, and one that is publicly traded. Going public isn't the issue, in my opinion, going for-profit corporation is the critical difference. Whether small or large, the obligation of those who make the official corporate decisions for those who are not in charge of the decisions must reflect the for profit purpose. Donations to charity with true donative intent (without any expected return) cannot be part of "for profit", and it is difficult to see how that can be made "for" the others. It is not the publicly traded aspect, it is the "for others" aspect.
If a corporation is "for-profit", then any shareholder should be able to say of his investment "the raison d'etre of my investment is returning economic value." If a choice made by the person in charge cannot support the investor saying that, it means that the person in charge isn't keeping the "for profit" purpose in mind, or it means that the entity isn't really a for-profit entity, but has some other _primary_ purpose of which profits is a partial component or a nice side-benefit. Making statements about politics that are larger than the corporate entity's purpose are, simply, outside the boundaries of the for-profit corporation's reason for existence, the reason for the many associating (pooling) their investments.
OK, maybe I should leave the customers out of it. But I am not sure you can leave the employees out of it. If a corporation has no employees (is just an investment group), then you still have the problem of the directors "speaking for" the many non-directors in making a corporate political statement. But if it has employees, it is impossible for the corporation's political statement to be taken as completely beside and not associated with the employee's opinions. But more generally, anyone who has benefit-based relationships with the corporation become touched by its political statement, even if indirectly. Certainly the employees do.
Posted by Tony | April 30, 2012 9:37 PM
Or, you could have any entity of any sort make political statements, but only if EVERY SINGLE member of the organization agrees to the statement by positive assent. Anything else would curtail the freedom of speech of the one who disagrees.
Posted by Tony | April 30, 2012 9:45 PM
Mike, isn't that a contradiction? If the shareholders are the ones with final responsibility to decide what speech is acceptable and what isn't for the officers, then the "actions" available for shareholder-imposed penalty are those that shareholders have in their quiver: reduction of bonuses, removal from corporate office. Criminal sanctions would imply that the _state_ is in charge of deciding what speech falls within the boundaries, which is exactly what Chris and I are wary of accepting. Generally, failure to comply with a contract is not a subject for criminal sanctions, for good reason.
Also, it would probably become a difficult constitutional issue. Presumably a corporate line item (in its charter) saying the corporation can hold official positions for X (in politics) is a constraint that lands ONLY on the corporation's officers and board of directors (not employees generally). But even among the officers and board: if the corp president simply disagrees with the official Marriott position for X, can he - on his own time and at his own nickel - plug an anti-X policy? If not, his first amendment rights are constrained. If so, what precisely does the corporation policy actually mean? That when he publicly opposes X, he must not say "as an officer of Marriott, I oppose X?" That's a pretty useless limitation for Marriott's sake, in publishing a political statement that its own president is publicly opposing.
Posted by Tony | May 1, 2012 5:15 AM
Tony,
I'm not convinced that it is even practically possible for most shareholders to have an impact on how corporations are run given the incestuous power relationships between the elites. This is why, as a general rule, I'm ambivalent toward corporate rights as the rights of larger corporations (businesses, unions, etc.) strike me as being closer to feudal rights because of the power disparity between those who lead them and the owners/members. For example, a significant amount of union members don't want to be forced to support whatever politician the leadership wants to support, but lack the power to do anything about that. Similarly, most small shareholders may disapprove "Move $X" by a business they hold stock in, but the institutional investors may overpower them at every turn. Those institutional investors.
I would be less ambivalent toward these things if we still had a FBI capable of doing Abscam-like stings on a regular basis against Congress and lobbyists. Since the power plays have effectively castrated the ability of the FBI to bust skulls in Congress and K street, I find myself ambivalent toward the idea of individual freedom for the elites as a matter of principle (meaning I would be down with utterly draconian restrictions on the elites' freedom where I would not on the middle class and majority of the upper class as they don't have real influence).
Posted by Mike T | May 1, 2012 7:52 AM
This has been addressed on a state-by-state basis by legislation saying that union dues must be divided into portions used for bargaining purposes and those used for other (eg political) purposes, and members must be able to have the latter money refunded to them. This, of course, is based on the fact of "closed shop"--that it is almost impossible to become a conscientious objector (though some unions also have that option and let a few people out that way) and therefore that most of these people have to join the union and pay dues to have a job.
Such is not the case for shareholders or stockholders, who presumably invest their money voluntarily.
By the way, Tony, it occurred to me: Surely it could easily happen that shareholders could object to what is done by those who control business practices in order to make a profit, just as much as to charitable acts or political lobbying. So the division between profit-making and non-profit-making activities doesn't solve a problem of directors doing things with which shareholders are "associated" of which they do not approve. And all the more so if you consider that the business "represents" its employees as well.
Posted by Lydia | May 1, 2012 10:14 AM
Interesting discussion. Very lengthy but useful. Cheers!
Posted by Cody | May 1, 2012 12:48 PM
Absolutely, but then it is a disagreement about the very essential guts of the corporate purpose: profits. If I don't like how Mom-n-Pop Corp propose to make money, I will take my money elsewhere, because the very reason for my investment is at stake. If, aside from making money well and suitably as they have done for years (to which I have agreed all along), they decide to support Obama with paid advertising for him, that's using something attached to my money that I DIDN'T agree to. When I buy stock, I am saying I agree to what the officers and executives decide to do to make the corporation profitable. It is not an agreement to support their politics.
Sure, you can say "well just take your money elsewhere." But that only solves the future, prospective evils that I otherwise (if I don't take my money and run) have to be associated with. It does nothing to unravel the immediate evil that they have already chosen to buy with MY MONEY. In my mind, it's mainly just a matter of simplicity of purpose: investing is FOR making profit, so when I invest I consent (for the time being) to the things they are doing about making profit, and if I find they were not as trustworthy as I thought about that limited role, then I made a misjudgment about their profit-making purposes. But since I never agreed to their politics, I should not have to judge their political corporate maneuverings as well as the profit aspects.
As Mike said, its a matter of limited authority. I grant them limited authority, to make decisions about use of my money for profit purposes. I don't grant them carte blanche to use my money "for good" generically.
Mike, I think that generally a business entity should be small (less than 500, as a first stab at a limit), and I doubt that a truly wise culture would support things like GM and GE. But short of making state law that simply outlaws large corporations, I don't know how we might go about making that the norm. The "freedom to assemble" is important. Assembling into large businesses would be justifiable on some grounds (efficiency), and making the argument that these grounds do not outweigh the evils attendant is pretty difficult. I tend to think that the argument is there to be made, but I can't claim to see it in full detail. But if we were limited to small businesses, there would be much less political backscratching between Capitol Hill and K Street.
Posted by Tony | May 1, 2012 7:08 PM
"if we were limited to small businesses, there would be much less political backscratching between Capitol Hill and K Street."
Hear, hear. Also, the negative aspects of corporatism per se would be reduced, in that smaller companies would be less able to externalize costs into society at large.
Conservatives need to start considering the question, "How big is big enough?" But as long as the profit motive is held to be sacrosanct this won't happen. There is a direct correlation between "How big is big enough?" and "How much is enough?" If conservatives won't consider asking the latter, they'll not get around to the former.
Funny that we on the right criticize the Left for not asking these questions about the state, when we ourselves are loath to ask them about the market.
Posted by Nice Marmot | May 2, 2012 8:32 AM
The reason we don't ask is likely because in America every issue is politicized and so there is a connotation that whatever is concluded will have some political implication. There are a lot of issues that people could amiably disagree on, but then the winner-take-all nature of national politics turns them into bitter enemies. There is no love lost between me and Wal-Mart, but I don't want it outlawed. I'll take 10,000 Wal-Marts over one Washington.
Let's say we agreed that e.g. any company with more than 2 billion dollar net worth was too large. Well, then what? What practical policy implication does this have?
Posted by Matt | May 2, 2012 5:43 PM
Well, I am not sure I would attempt to set the limit by net worth, but perhaps by employees or revenue or profit. But net worth is a decent stand-in for those, and better than nothing.
If your question is: HOW do we make the limit effective?, I don't know, because I am not sure establishing it by law is a good idea. Maybe it needs to come organically from business executives simply not choosing to grow without limit. If your question is what CHANGES because we have only smaller companies?, I think that the simplest 2 results are (a) we have some lower efficiencies in many industries (so prices are higher), and (b) we have lot less corporate money in Washington DC. I suspect, though I cannot prove it, that many of the higher prices that come about through loss of large-corporate efficiencies would be offset by other effects that are better. For example, I wonder whether we would have lower advertising costs overall, that are currently passed on to the consumer. And having less corporate spending in DC is bound to improve consumer costs as well.
One of the problems of large corporations is how they side-step the built in checks and balances envisioned by our founders. If (back in Madison's day) a specific business were large enough to be a "big fish", he would only be a big fish in one congressional district, so the owner(s) would only have direct influence over one congressman. Then the many other factions of many other players in the same market (in other districts) would come into play to offset this congressman's efforts to sway things toward his big fish constituent. But when you have national corporations with a store (Walmart) or factory (GE) in every district, the checks and balances notion just doesn't work very well.
Posted by Tony | May 2, 2012 6:45 PM
If NM himself doesn't want to give such a question a political implication, I'm quite sure plenty of people who talk like he does _do_ want to. It would be highly naive to think that questions like, "How big of a corporation is too big of a corporation?" are usually intended merely for purposes of self-examination or meditation by most of the people who ask them. _Of course_ the idea is that this should have practical and indeed legal implications.
Posted by Lydia | May 2, 2012 7:52 PM
Nice, how would you go about making size limitations on corporations? I don't think that a simple state law is a good way to do it, (say, a law forbidding corporations larger than 500 employees) because it fails to recognize differences in different industries that simply have needs that cannot be easily accounted for that way: what about a cruise ship that has 2000 employees? A single nuclear power plant would cost over $5 billion. I generally think small business is better, but I am wary of trying to state a universal principle that simply forbids large entities altogether. I don't know how to do it that doesn't intrude on other important freedoms too much.
Posted by Tony | May 2, 2012 8:34 PM
Nice, how would you go about making size limitations on corporations? I don't think that a simple state law is a good way to do it, (say, a law forbidding corporations larger than 500 employees) because it fails to recognize differences in different industries that simply have needs that cannot be easily accounted for that way: what about a cruise ship that has 2000 employees? A single nuclear power plant would cost over $5 billion. I generally think small business is better, but I am wary of trying to state a universal principle that simply forbids large entities altogether. I don't know how to do it that doesn't intrude on other important freedoms too much.
Posted by Tony | May 2, 2012 8:50 PM
I am wary of top-down solutions myself. I think that what you said above about the scope of businesses having outlets in every district is correct: it makes the checks and balances inherent in the system rather ineffective.
Personally, I tend to side with localist ideas. Get enough people to eschew the corporate giants and patronize local vendors and you might eventually effect a change in the way people think about shopping. This is, of course, a long-haul solution, but we didn't develop the acquisitive-consumerist disease overnight, and we certainly won't cure it overnight (although if there is a major economic collapse, the cure may end up resembling something like a double amputation.)
Throughout the middle ages and up through the early Reformation period usury, fraud, price gouging and hoarding were all considered economic crimes and were punishable by civil governments. We have reduced that group to fraud only. It would be helpful to attempt restore a moral vision to economics wherein these things would be illegal once again. One, I think, could add monopsonist practices to that list, and I'd say that you'd have some grounds for going after megacorporations, since the majority of them are guilty of at least some of those practices.
Of course libertarian-leaning "conservatives" will have none of this, thinking that all's fair up to monopoly. The more I interact with neo-cons the less I like neoconservatism. It is looking an awful lot like libertarianism with a bit of a pale social conservative wash. No wonder the culture is going down the toilet. "Conservatives" attempt to hold the anti-abortion sign with one hand while they count money with the other.
Posted by Nice Marmot | May 2, 2012 9:51 PM
Small businesses are discouraged by law. Zoning laws prevent residents from running small businesses from their homes or other locations within their neighborhoods and lead to the aggregation of larger businesses in concentrated "commercial" zones. Workplace regulations disproportionately affect small businesses, which have to use a greater percentage of their resources to comply (if they can comply at all) than larger businesses, which can cover multiple locations with a team of lawyers and even lobbyists. The proliferation of licensure has a similar effect (due to the costs associated with getting licenses) and acts moreover as a barrier to potential newcomers, as the process of licensing is often dictated or handled by established proprietors (whether barbers, florists, etc.). The politically-connected are more likely to receive "stimulus" dollars and property seized through eminent domain at the expense of those less politically-connected.
One can encourage a change in zoning, an exception in regulation, an expedited licensure process, or a government handout, but politicians allow themselves to be persuaded more easily by larger, established businesses, and voters push for expansions of governmental power, thinking that they're being protected instead of duped. So people want to encourage small businesses--but then they end up encouraging a government more likely to discourage them.
Posted by J. W. | May 2, 2012 11:53 PM
At one time the Church promoted, and there existed, the idea of charitable societies for lending / borrowing. The idea was that you don't pay pure interest on the loan (you don't pay purely for the use of the money) though you might have to pay for (a) risk of default, and (b) for the value of the time of the lender setting up the loan. This would be a fairly small rate of interest compared to the sharks out there today. (In today's world the rate of inflation would have to be added on top, which is different from back then, at least to some extent.)
Of course this would be completely outside of the sphere of "consumer" debt, like credit cards, which nobody would be willing to lend for simply as a charitable proposition. But I can envision something that would make some inroads in the shark-eat-guppy world of debt. Although I don't generally like the notion of state intervention into contracts, and I don't want to curtail loans that poor people need now and again, I don't think that the predatory practices of car-title loan operations need to be tolerated the way they are. I found recently (when a friend in need had her car in hock) that my state permits a rate of 15 percent per MONTH!
Supposedly, these lenders cite the high risk of default to justify the high rate. (Sometimes the title is to a car that the borrower knows is in poor shape, and then they stop taking care of it, so it gets trashed). Well, can we take the air out of their sails? First of all, more often than not the person who "needs" such a loan needs the 15% interest on just the first month too much for the benefits of the loan to be a REAL, long term solution. Often enough, going the route of such a loan is effectively starting down a spiral path to bankruptcy (in one form or another) because it puts them even further behind in some OTHER payment: it gives them only _theoretical_ breathing room without solving the underlying problem in the least. In such cases a loan at 15% per month ISN'T really a help, it is just more problem.
Most reputable lenders will lend at a decent rate of interest if you have a good co-signer. Many people who need a car-title loan cannot get a co-signer for the loan. Not for the whole loan. But, what if you had 5 or 6 people co-sign for a fraction of the loan? Sure, the cost (up front fees, notably) of getting the loan started would be somewhat higher, because the lender would have 5 more credit reports to run. But after that the loan should be on decent terms. Is anyone selling such loans? Not here in the US (as far as I know), but I understand that they do something similar in India for example. I think that a combination of a small charity lender who is local to the community, with a multiple set of co-signers for loans, would go a noticeable way to resolving one small component of the debt insanity we have. It's just one little innovation. I am sure there are more.
Posted by Tony | May 3, 2012 11:33 PM
"This would be a fairly small rate of interest compared to the sharks out there today."
Right. If memory serves the difference between business loans and personal/charitable loans was first put forth in the late scholastic period, but even interest on business loans was quite low. I remember reading somewhere that even in Calvin's Geneva, there was much discussion over whether to raise the ceiling on business loan interest from something like 5% to 6 and a half!
"The idea was that you don't pay pure interest on the loan (you don't pay purely for the use of the money) though you might have to pay for (a) risk of default, and (b) for the value of the time of the lender setting up the loan."
Yes, the entire notion of the pure use of money simply to make more money was seen as inherently avaricious. Again relying on memory, but I seem to recall considerable argument against the practice of compounding of interest.
My father recently got a furniture store credit card in order to buy a lift-chair "on the installment plan." It was one of these one-year same as cash things, and he knew he'd have it paid off over a few months, but the default rate on the damned thing if you didn't pay it off within the 12 mos. was 29.99%. Sorry, but that ought to be illegal.
Furthermore, once he got the card we were surprised to see that it was not a furniture store card per se, but was a GE Money Bank card. My immediate question was, "Since when did GE become a bank?"
Posted by Nice Marmot | May 4, 2012 8:24 AM