Unstoppable

by Ralph Nader

  As Jeffrey D. Clements writes in his fine book Corporations Are Not People, Rehnquist “grounded his dissents in the fundamental proposition that our Bill of Rights sets out the rights of human beings and that corporations are not people. For years, Rehnquist maintained this principled conservative argument, warning over and over again that such corporate rights have no place in our republican form of government.”26 Before Citizens United overturned previous legal precedents, Rehnquist’s views had won over a majority of his fellow justices. This position appeared especially in the Austin v. Michigan Chamber of Commerce case, in which the court upheld a Michigan law regulating corporate spending in elections.

  Chief Justice William Rehnquist remains, after his passing in 2005, a far more authoritative judicial and philosophical figure in conservative circles than does Powell, a corporate lawyer (for the tobacco companies and other giant companies) later turned corporatist jurist.

  Although getting rid of the legal validity of corporate personhood has been a prime object for reform in liberal circles, thanks in no small part to the prodigious writing, lecturing, and organizing efforts of the late Richard Grossman, it is only beginning to take hold in conservative circles, spurred toward this position by their libertarian allies. The Transpartisan Alliance, led by libertarian Michael Ostrolenk, is networking with those of all possible political persuasions to, in Clements’s words, “restrain the government-created and subsidized transnational corporations that wield such power over American lives and communities.”27

  The coming battle over corporate personhood, further provoked by the recent Supreme Court decision in Citizens United and its subsequent anti–states’ rights decision in American Tradition Partnership, Inc. v. Steve Bullock, Attorney General of Montana, which overruled a venerable Montana law prohibiting corporate money in elections, is no internal arcane dispute among lawyers. Without the privileges and immunities of corporate personhood, companies can be subordinated to the priorities and supremacy of “we the people,” that is, the sovereignty of the people so clearly enunciated in the words of the Constitution.

  The radical judicial legislation that has been promoting the idea of corporate personhood since 1886 flies in the face of the bare fact that there is absolutely no mention of the word “corporation,” “company,” or “artificial entity” in the text of the Constitution as amended. Overturning the decisions based on this illegitimate idea of corporate personhood would mean that people, if they chose, could legislatively and judicially redress much of the imbalance of power between them and corporations. If corporations cannot claim the same constitutional rights as natural persons, the people will be able to better control, for instance, harmful and violent commercial marketing to children as well as put an end to the ways companies are taxed, prosecuted, subsidized, coddled, and allowed to prevent people from banding together. This is what I believe Russell Kirk meant when he listed “prudent restraints upon power”28 as a conservative principle and what historical liberalism meant by restraining the state from so empowering large corporations. The way these points, from opposite ends of the political spectrum, echo each other indicates that on this issue there is a convergence waiting to mature.

  18. Control more of the public commons we already own.

  This is a basic principle of capitalism, which has been restricted at times for good reasons, as when it is applied by a government’s eminent domain to take lands needed for public highways, bridges, and other traditional public works. But we’ve already seen how eminent domain has been perverted to take private property for corporate, not government, uses.

  For generations corporations have also been overthrowing traditional notions of property rights in cases in which the property is either held in trust for many or collectively owned by all. I am referring, of course, to the commons—that great reservoir of public wealth known as the public lands, the public airwaves, public works, public investments, and recently the widening commons of the Internet/cyberspace and the oceans. Through astonishing giveaways, as has happened with the people’s hard-rock minerals (gold, silver, etc.) on federal lands, or through bargain-basement leases, giving companies the right to extract other valuable natural resources, corporations get control and profitably use what we own. Also, bear in mind that we are the landlords of the public airwaves; the broadcasters are the tenants. Yet, they pay no rent, get free usage twenty-four hours a day, and unilaterally decide who gets on and who is excluded. Not fair! Major modern industries were created or hugely nurtured by taxpayer-paid research and development monies. These include the aerospace, biotech, nanotech, computer and Internet, pharmaceutical, medical device, containerization, and agribusiness industries.

  Controlling what we own would involve charging market prices, reserving some of the owned assets for direct public use (such as time slots for an audience-controlled TV and radio network), and using public investments or purchasing as leverage to obtain safer products, workplaces, and environments or to help further national missions benefiting all.

  This is a thorny topic, which will split the conservative/libertarian cohort deeply along a whole range of differences. Some will say the government should sell off the public lands and airwaves, get out of industry developing, and just corporatize public works such as highways. Others would argue that government should run these taxpayer assets “as a business,” as long as they hold them in trust for the public.

  On the liberal/progressive side, some would say that the government should take greater control, having, for example, an equivalent to the British Broadcasting Corporation and Canadian Broadcasting Corporation on radio and television, or having a trust fund drawn from royalties earned from mining public lands, which would dispense regular checks to each American, the way the oil trust fund does in Alaska for every Alaskan. David Bollier and his colleagues in the spreading commons movement (http://onthecommons.org) are thinking through many proposals for more conserving, efficient, and equitable management of these public resources. Notably, the largest permanent marine reserve, off the coast of Hawaii, was created at the initiative of President George W. Bush.

  Although we’ve seen that the two sides do not see eye to eye on this topic, there are still opportunities here, there, and everywhere to reach convergence on particular issues, while avoiding a massive, omnibus ideological showdown. Both Lou Dobbs and Bill O’Reilly of Fox News recognized that the people own the oil and gas discovered on public lands, and Dobbs proposed a national version of the Alaska petroleum fund that gives annual dividends to every citizen.

  19. Get tough on corporate crime.

  This demand gets the same support, more or less, from the public as the cry to get tough on street crime, especially when the preventable mass casualties stemming from corporate misbehavior is in the mix. What the public see day after day on the corporate-owned news stations is street crime, not crime in the suites. The rule of law, as applicable to both street-level and boardroom-level crime, is a central theme from Adam Smith to Edmund Burke to Friedrich Hayek, all the way to present-day conservative principles.

  That this is not clear to many people who are interested in conservative law and order discussions, which focus solely on street-level lawbreaking, is due to the corporatist agenda, which occupies the attention of their affinity think tanks and business-allied opinion makers. The corporatists detour these thinkers by steering their funding trajectories away from any concern with corporate wrongdoing; they absorb them by shifting their focus to abuses committed by trial lawyers or the “enemies of capitalism”; they encourage them to blame the state as the cause of just about everything bad in the world. For these thinkers, there are always steady rewards in terms of contributions, lecture fees, grants, and other incentives for such narrowing of focus.

  On top of this, bar associations and the legal profession defend their corporate clients accused of or investigated for possible criminal activities. Meanwhile, the very definition of corporate crime is being blurred by lobbying again
st criminal penalties in regulatory statutes and shifting any sporadic enforcement into the more lenient arena of civil violations. A fast-growing settlement procedure by the Justice Department known as “deferred prosecution” permits the culpable company to avoid admitting guilt and is excused by the very small enforcement budgets in the Justice Department, which leave officials privately saying they can find no other way to begin to keep up with the corporate crime wave. As reported by the Corporate Crime Reporter, they claim not to have the lawyers, prosecutors, and infrastructure to keep tabs on the well-defended companies, who use shareholder assets to pay their expenses. Lacking knowledge of this background, people from all persuasions everywhere cannot see how it is that no major crooks involved in Wall Street’s 2008 crash have been prosecuted and sent to jail.

  Once some conservative officeholders clear their conscience of unwarranted corporatist inhibitions, and some liberal officeholders stop flirting for the same corporate campaign largesse given to their counterparts, their senses of right and wrong can converge. It will be none too soon, because then the enormous toll our country is paying as a result of corporate toxic harms on people’s health and frauds on consumers, investors, pensioners, and the government (e.g., Medicare), in addition to the destabilizing Wall Street and giant bank shenanigans, will be addressed. This liberation of conscience by enough politicians is not likely to occur without the prompting of self-organized communities around the country, who want this marauding at their expense to stop—never mind political labels.

  20. Empower the owner-shareholders of public corporations.

  Here is the demand that captures, in essence, the direct clash between the corporatists at their pinnacle and the intricately powerless capitalist owners who want to have some control of the company they own shares in, if only to receive an adequate dividend and honest accounting. This desire is quickened when they see their shares fall as the company is mismanaged or strip-mined by vastly overpaid executives, compliments of their well-fed, rubber-stamping board of directors. Here is openly exposed the myth and the farce of the “people’s capitalism,” written about ad infinitum in the business press and in thoughtful books by authors such as Robert Monks, Nomi Prins, and Jeff Gates. The earlier work by the brilliant team of Adolf Berle and Gardiner Means back in the 1930s showed, with historic documentation, the dire consequences of the separation of formal ownership from executive control within large corporations.

  When things are going well with sales, profits, shareholder value, and management, discussion of this separation—so inimical to the basic tenets of capitalism—is muted. It creates little static. Take Apple, for instance, which, until 2012, declined to pay a dividend out of its fast-growing $100 billion cash hoard and, because of rocketing share prices, received little flak from investors over this policy. But when trouble arises, as in the 2008–2009 Wall Street orgy-collapse-bailout, shareholder frustration with shattered or vaporized shares erupts. But it is an eruption without any focus or impact. Just ask the devastated individual and institutional shareholders of Citigroup, Bank of America, Merrill Lynch, Washington Mutual, AIG, Fannie Mae, and Freddie Mac or other former blue chips for confirmation. Their losses were brushed aside. In the power calculus surrounding the wreckage, as negotiations went on between Washington and Wall Street, the common shareholders mattered only tactically in addressing the question of whether the companies would be eliminated totally or allowed to survive badly shrunken, with a small chance to recover a little of their looted assets through their rescued or merged company. Author and corporate lawyer Robert Monks characterizes a system in which shareholders have this impotent status as “capitalism without owners.”

  There is no clearer view of shareholder impotence exhibited and no clearer analysis of this situation than that of Republican Ben Stein writing about the numerous instances of private equity or investment buyouts of operating companies, often with the collusion of management. Stein is a lawyer and the son of Herbert Stein, who was chair of the Council of Economic Advisers under President Nixon. No more perceptive and ethical critic of Wall Street’s abuses has written in the pages of the New York Times, the Wall Street Journal, and Barron’s Financial Weekly. In a September 3, 2006, Times column titled, “On Buyouts, There Ought to Be a Law,” Ben Stein took note of the times in the stock market’s corrective process when the asset value of shares is greater than the stock prices. This attracts firms that persuade the managers, with lucrative incentives, to go along with a low-price leveraged buyout. The takeover men then slice and dice the company and multiply what they paid for it many times over. Stein says, “These deals should be illegal on their face . . . as a matter of law.”29

  He gives the following reasons: (1) the assets belong to the shareholders to be managed by their trustee managers as a fiduciary duty to maximize their value; (2) by colluding with outside vulture investors and buying the assets on the cheap, then reaping the personal benefits, the managers are breaching that fiduciary duty and engaging in the ultimate conflict of interest; (3) the lack of disclosure of the memos for the buyout investors, saying how much they expect to make on the deal, hides from the stockholders how much more the assets the new buyers are purchasing are worth (the SEC prohibits withholding such materials); and (4) this secretive, conflicted process reeks of “insider trading” by management.

  He winds up with these words: “If the stockholders have hired you (the corporate managers) and pay your wage to manage their assets, your job is to do that for them—not to buy them out at fire-sale prices and turn around and make billions that rightfully belong to them. The management buyout (with other investment banks, private equity firms, etc.) is a sad and infuriating avatar of a decadent age.”30

  Other than by reading the Wall Street Journal and the rest of the business press for daily confirmation, does anything more need to be said to show people of all political labels that they share a need to ramp up investor power? All that remains is to propose the strategies that will organize the willing shareholder community (individuals, mutual funds, pension funds, and others) to watchdog their out-of-control, self-enriching hired hands. I have a proposal that can make sure that the investor-protection laws are strengthened and enforced.

  My favorite starter idea is to have some former chairs and officials of the Securities and Exchange Commission, and other leading well-known investor power advocates (Robert Monks, John Bogle, Paul Volcker, Arthur Levitt, William Donaldson, Lynn Turner, and Ben Stein among them), get together to urge shareholders to pledge a voluntary one cent per share per year to fund a company-by-company independent watchdog operation whose full-time staff would directly answer to each company’s contributing shareholders group. A mere ten billion shares, out of trillions of outstanding shares, self-assessed one cent per share, would hire a full-time watchdog for each of the top five hundred corporations in the country. Not that hard to get rolling if we had these leaders providing seed money for a group to promote the assessment and going on TV, radio, and the Internet to push for this operation!

  Let’s get some convergence moving. Conservative and liberal shareholders arise to join this penny brigade! You have nothing to lose but your voiceless power to take hold of the company you own and everything to gain by protecting your share values from decline or collapse, engineered by overpaid or looting management.

  The next four areas of convergence concern our health and that of the planet.

  21. Ban the patenting of life forms.

  This was a call that came from all sides, following the 5–4 Supreme Court decision in 1980 in Diamond v. Chakrabarty, which did allow such patents, in this case of a mouse gene. The call has attracted backers from the LC. An initial protest against the patenting of human and other genes came from the Council on Responsible Genetics, started by Harvard and MIT scientists. Both Jeremy Rifkin and Andrew Kimbrell did early work giving cogent reasons to oppose such patenting. Rifkin also reached out to religious leaders, who issued a statement in 1995. In their
Joint Appeal against Human and Animal Patenting (1995), these leaders, numbering about one hundred and eighty, “denounced all attempts to patent nature.” In the statement, some of the members of the Joint Appeal “compared gene patenting to slavery, while others claimed that gene patents treat human beings as marketable commodities.”31

  Commercializing the world’s genetic inheritance—a vastly tumultuous perturbation of Nature—is defended by Monsanto and other biotech companies (all of which have received government subsidies for their research) as providing the proper incentives to companies who will create new products, from food to medicine. The problem is that these rationalizations ignore such serious issues as consent, privacy, safety, profiteering, the possibility of the dangerous migration of engineered seeds, environmental disruption, and what some have called the danger of “playing God.”

  There has been no legal and ethical framework developed to control this global corporate effort that amounts to changing the nature of nature.32 The engineering of genes has been rushing along, moving outside the lab into markets and environments far ahead of the science that has to be its governing or restraining discipline. Unlike academic science, the experiments of corporate science are neither peer-reviewed nor done openly. And this for-profit science is obviously a lot more connected to corporate political muscle in Washington, DC, than what is produced in the academies. More than 90 percent of the American people, for example, want labeling on genetically engineered foods sold in the stores. Monsanto disagrees. It is Monsanto that has prevailed over the many, ensuring that this labeling is not required by law.

  There is too little convergence muscle here, given the available knowledge necessary to justify immediate efforts and tap into the latent public outrage at this commercial control of our genetic heritage. There is plenty on the record; see the website of the Council for Responsible Genetics (see http://www.councilforresponsiblegenetics.org). Now is the time to go on the ramparts of action to occupy a civic values position in an area where the biotech industry and its supporters are already swarming.