Wednesday, 11 January 2006


Aside from revenue questions, in judging what government should do, really the fundamental question is what should government prohibit. Extreme libertarians or anarchists sometimes feign a belief that prohibition is always bad, but I don't really believe them. Everybody has some things they want prohibited.

On the other side, extreme authoritarians want to prescribe a very narrow band of behavior that everyone should adhere to, often following the dictates of some particular religious practice.

But most people recognize, whether consciously or not, that things work best if people and institutions are granted considerable latitude in their choices, but prohibited from making a defined set of choices that are widely considered "bad".

Public debate about what should and should not be prohibited is a good thing, because we benefit from multiple perspectives. How people and institutions are defined politically is largely based on which activities they want to see prohibited and to what extent. Sometimes people get very passionate fighting over tiny distinctions, while at other times behaviors which most would find abhorrent are blithely ignored, while others which most would think to be no big deal are quietly disallowed.

Drawing lines for criminalization

Speaking generally, I believe in granting as much latitude as is practicable to human behavior, but defining clear lines beyond which certain behaviors are absolutely disallowed. For the smaller peccadillos, it is best if the morés of society do the job of regulating behavior. For really objectionable acts, though, the government should intervene, and assess punishment sufficiently severe to provide an unquestionable deterrent. This way government resources aren't wasted fussing with the small stuff, while people are legally allowed to push the limits of societies norms a little, with a strong deterrent from going too far.

This doesn't work for everything. It is vitally important for safety's sake that drivers not careen down residential streets at 70 miles per hour (110 kph), but the posted limit needs to guide the driver, who may not be familiar with the road, toward a truly safe speed, for instance 30 mph (50 kph). Hence we need a graduated punishment schedule ranging from a warning to a fine to a jail sentence depending on extent to which the limit is broken. But it is expensive to hire the cops to enforce these graduated punishments, so for most misbehaviors it is better to rely on the norms of society, rather than law, to encourage goodness, while relying on law to forcefully deter the clearly undesirable behaviors.

The rub is in determining what is clearly undesirable. As a liberal, I am inclined to draw the line more restrictively with respect to corporate and institutional behaviors, and less so with respect to personal behaviors. Often lost in the unnecessary rancor of these necessary debates is the fact that most liberals and conservatives agree on the overwhelming majority of which behaviors should be prohibited and which should not. Murder, rape, property theft, dumping lethal doses of toxins in rivers, forced labor, and blatant consumer fraud should be illegal. Personal insults, bad hygiene, hatred, leveraging a competitive advantage to drive smaller companies out of business, overcompensating executives, and creating waste in manufacture may all be undesirable, but most would agree that criminalizing them is not the appropriate measure for their control.

Examples of even the most blatant offenses on the corporate/institutional side of the equation are more awkward to describe, and so unfortunately defining the best reasonable lines for what should and should not be allowed is complex and nuanced. Where a simple law comes reasonably close to disallowing the undesirable while allowing mostly free commerce, that is preferable to a complex suite of regulations with multiple dependencies. It is reasonable to suggest that law should prohibit the blatant behaviors while industry should self regulate the details where complexity requires that. Unfortunately many industries become controlled largely by the bigger players, and the power they obtain in setting the rules mandates the need for independent oversight. Sometimes that means government intervening to look out for the interests of those without the power to insist on fair treatment.

Unequal Power

My liberal inclination to legislate corporate and institutional behaviors more strictly than personal behaviors has its basis in the fact that larger institutions and corporations accrue power as they grow. This does not make them a priori any more evil than an individual, but common sense dictates that it does make them more dangerous, and if they do misbehave the consequences are magnified. The corporate executives who are tempted to believe the report that the toxic release which would save their company millions over the alternative may not have the murderous intent of the criminal punk who has been hardened by years on the street, but if that report is wrong their choice may be far deadlier.

Economic conservatives often mock liberal "anti-corporatism", but I see their trust that the market is sufficient to control corporate excesses as frighteningly naive. I actually agree with them that the market is a good tool for directing the production of goods toward items which have actual value, but even if the market were truly free, which it isn't, that tool is certainly not sufficient for reining in excesses. And in an age where increasing monetary inequity exacerbates the power inequity, a healthy distrust of corporations should inform our politics. I'd like a show of hands - who thinks that corporations don't have enough power and influence? And yet the tired out Reaganesque arguments about burdensome regulations quashing innovation persist. I'm all for eliminating regulations which don't make sense, and am happy to stipulate that many exist, but give me a break, corporate behavior which is unseemly and ought to be stopped is rampant in our world.

We are hostages to Corporate Personhood & stockholder primacy

Two simple changes to U.S. law could go a long way toward righting the power imbalance between the common people and the mega-corporations. One would be the elimination of the concept of Corporate Personhood (not to be confused with the protection against liability afforded by incorporation), which was created out of a gross misinterpretation of the Fourteenth Amendment (pdf) in multiple court rulings late in the nineteenth century.
While society was grappling with bringing former slaves into U.S society, the power and influence of corporations was also on the rise. While very few people were turning their attention and energy to bringing former slaves into society – indeed, far more energy was being put into NOT bringing them into society – corporations were using a great deal of their wealth to hire lawyers to advance their interests in the courts. The Fourteenth Amendment offered an opportunity to advance corporate interests, and the corporate attorneys set out to exploit it.
Of the 150 cases involving the Fourteenth Amendment heard by the Supreme Court up to the Plessy v. Ferguson case in 1896 that established the legal standing of “separate but equal,” 15 involved blacks and 135 involved business entities. The scope of the Fourteenth Amendment to secure the political rights of former slaves was so restricted by the Supreme Court that blacks won only one case. The expansive view of the Fourteenth Amendment that comes down to Constitutional Law classes today is the result of corporations using the Fourteenth Amendment as a shield against regulation.
These cases sought to establish personhood for corporations, culminating in a statement by Chief Justice Waite in 1886 commenting on Santa Clara County v. Southern Pacific Railway:
The court does not wish to hear argument on the question whether the provision in the Fourteenth Amendment to the Constitution, which forbids a State to deny to any person within its jurisdiction the equal protection of the laws, applies to these corporations. We are all of opinion that it does.
Who believes that an amendment written to grant equal protection to all races really meant that corporations should be protected as citizens? Again I'd like to see a show of hands on that one. Call me a judicial activist, (ok, I AM a judicial activist), but this is one precedent that needs to be shot down, stare decisis be damned.

Stockholder primacy is the other concept which works in concert with a myopic devotion to free market principle to not only work against ethical behavior by corporations, but arguably to legally require it. Lawsuits by investors against corporations frequently cite actions which might go against the interest of investors. Taken to the extreme, such arguments suggest that where money can be saved by doing so, corporations are required to push right up to the limits of the law, even if moral compunctions might argue otherwise. Of course, such arguments can be countered by pointing out that long term investor interest is actually positively served by the good will generated by corporate responsibility. Still, I find it offensive that the interests of stockholders should take precedence over the interests of the workers, the consumers, and the communities where the corporations exist.

I love to imagine a million people marching on Washington holding signs "Eliminate Corporate Personhood" & "Our Interests Trump Stockholder Interests". Not exactly slogans there for a populist groundswell, I know. But the impact of these two legal principles are enormous, and I dare to believe that if you forced every civic minded person to learn about these issues and vote on them, both would be overturned by whopping majorities.

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