Monday, March 28, 2011

The Economist Weighs In On 'Corporate Personhood' or Is General Electric All About 'Representation Without Taxation'? (GE)

Get corporations (and unions) out of politics.
I've been addressing the legal fiction of 'Corporate Personhood' in an oblique [obtuse? -ed] fashion since the November mid-terms, links below.
Here's the Economist's Schumpeter blog considering one aspect of the argument:
Peculiar people 
How far should one push the idea that companies have the same rights as ordinary people?

OVER the past year and a bit the United States Supreme Court has produced two landmark rulings on the metaphor at the heart of corporate law: the idea that companies are legal persons. Unfortunately, the rulings point in opposite directions. In Citizens United (2010) the court ruled that the constitution’s first amendment guarantees companies the same right to free speech as flesh-and-blood people. This means they have the same right as individuals to try to influence political campaigns through advertisements. But in a case involving AT&T the court ruled this month that the company has no right to personal privacy.

The legal conceit that companies are natural persons is vital to capitalism. It simplifies litigation greatly: companies can act like individuals when it comes to owning property or making contracts. Timur Kuran of Duke University argues that the idea of corporate personhood goes a long way to explaining why the West pulled ahead of the Muslim world from the 16th century onwards. Muslim business groups were nothing more than temporary agglomerations which dissolved when any partner died or withdrew. Legal personhood gave Western firms longevity.

The concept of companies as people became ever more vital as capitalism developed. Until the mid-19th century companies (as opposed to partnerships) were regulated by corporate charters which laid down tight rules about what they could do. But reformers used the idea that companies, like people, should be captains of their own souls, to free them from these restrictions. The result of this liberation was an explosion of energy: Western companies turbocharged the industrial revolution and laid the foundations for mass prosperity....MORE
HT: Professor Bainbridge who writes, in part:
...I agree, as regular readers know. I also agree with Schumpeter's implicit concern that US law confers personhood on the corporation without a coherent theory of why it does so or where the boundaries of that legal fiction are to be located. As I complained after the recent AT&T decision:
Chief Justice Roberts could have summed up his opinion far more succinctly: "Because at least 5 of us say so."
The Citizens United decision last term attracted much criticism--not least from Con Law Professor-in Chief Obama--for holding that a corporation is a person and as such has certain constitutional rights. While I agreed with the holding, I was disturbed that the Chief Justice's majority opinion for the Supreme Court so obviously lacked a coherent theory of the nature of the corporation and, as such, also lacked a coherent theory of what legal rights the corporation possesses.
The utterly specious word games that drive this opinion simply confirm that Chief Justice Roberts  has failed to articulate  a plausible analytical framework for this important problem.
Returning to Schumpeter, however, I disagree rather strongly with his chief concern:
Nor is it unreasonable to wonder why the idea of corporate personhood should only cut one way: if companies enjoy the same rights as flesh-and-blood humans then shouldn’t they be under the same obligations? The conservative majority on the Supreme Court is in danger of digging a trap for itself: strengthening the arguments of people who insist that companies have a moral duty to pursue social rather than merely business ends.
It's not clear why Schumpeter is worried on this score.  On the one hand, corporations already have the "same obligations" as natural persons in the key respects. Corporations have the same obligation to obey the law as natural persons. Corporations are taxpayers, just like natural persons....MORE

Corporations are taxpayers, just like natural persons with 975 lawyer corporate tax departments and quarter-billion dollar lobbying expenditures. We'll get around to GE's lobbying on the 2004 tax bill one of these days.

Personally I'd much rather see Goldman Sachs return to its partnership form, risking partners capital would act as a bit of a curb on their "socialize the downside" activities.

See also:
Mar. 25, 2011
"G.E. Getting Off Tax Free"

Mar. 3, 2011
Wearing Robes is so Grammarous (Federal Communications Comission. v. AT&T Inc.) T
Long time readers know I've come around to the thinking that corporations (including unions) maybe shouldn't have the same rights as people, the legal fiction known as Corporate Personhood, links below.

The Supreme Court recently decided a case, FEDERAL COMMUNICATIONS COMMISSION ET AL. v. AT&T INC. ET AL that contained some arguments based in part on corporate personhood.

While the decision did not advance my position it is worth a read just for the explanation of grammar and the etymology of words.

Oct. 25, 2010
"JPMorgan Chase Prevails in Lobbying Battle of Big Banks" (JPM; BAC; C; WFC; USB)
It really is time to revisit the whole Corporate Personhood question. One stupid Supreme Court decision, Santa Clara County v. Southern Pacific Railroad, enshrines the abomination.

The Declaration of Independence was written for
Natural persons. Here's a version for corps.
We hold these truths to be self-evident, that all Corporations are created equal, that they are endowed by their Creator (us by way of state legislators) with certain alienable Rights...
If proponents of the legal fiction can figure out a way to, for example, imprison a corporation for criminal activity I might be willing to change my opinion on the matter.

As far as bank regulation goes, I'm looking for the next Congress to repeal the bought-and-paid-for Dodd-Frank "reforms" and replace it with state anti-gambling and anti-bucket shop laws.
The squealing of the stuck pigs would be music to ones ears....
 Nov. 3, 2010 
Time to Get Corporations and Unions Out of Politics
...Yeah, yeah, I know about that first amendment thing:

...and to petition the Government for a redress of grievances.
regarding lobbying.

 I also know what an abominable decision the Supreme Court made in Santa Clara County v. Southern Pacific Railroad which enshrined the legal fiction of Corporate Personhood which led, directly to the decision in Citizens United.

So let's quit messing around. Let's bring a case to the Supreme Court that lets them correct the 1886 travesty,
[you little bomb thrower, you -ed]

Here's Knowledge@Wharton quoting a gaggle of experts dancing around the issue, getting into the minutiae, with no one (except J.P. Stevens in the dissent and Peter Kinder in the pull-quote) slicing the Gordian Knot by saying "You know, maybe corporate structures shouldn't have the same rights as natural persons"...

Jan. 27, 2010 
The Supreme Court Ruling on Corporate Free Speech is A Win for Incumbent Politicians and Incumbent Corporations
Established businesses use any trick they can muster to stifle competition.

This has been going on as long as business has been transacted and is deleterious to the greater economy. Big business free market advocates are remarkably anti-free market in their actual behavior with negative consequences for innovation and growth in the societies in which they operate.

I don't really care much about the partisan effects of the Supremes 5-4 ruling in Citizens United v. Federal Election Commission. The important effect will be in how big business promotes rules and regulations that hamstring their up-and-coming competitors....
I'm sure we'll come back to this issue.
[oh goody -ed]