Corporations as a Person

You have absolute control over your finger...a shareholder doesn't have absolute control over a corporation....if someone stole your bat and killed someone with it, should you be held liable? Similarly, if an employee at a corporation commits a crime, should the shareholders or the entire organization pay the price?

Note, technically, a corporation is responsible for the actions of its employees - ie, if you drive the company car and hit someone, the company does pay. But if a person does something criminally under the company's name, I really think it depends. For example, if a company colludes with competitors, they should be fined. If that fine causes bankruptcy, so be it presuming the fine is fair....however the only folks going to jail should be the actual colluders...if the threat of going to jail doesn't keep execs from doing illegal activities, how is threatening shareholders going to do anything?

 

But none of those people owned BP when they did anything illegal/unethical. They would be buying the stock because they assume that BP is going to be a better company going forward, right? (on a side note - if they did buy the stock then, they lost a lot of money too)

 

Same reason a Corporation can't vote - it's not a human being. If you can figure out how to physically kill a piece of paper and a bunch of assets, please share.

There is something similar though: bankruptcy. All the owners lose everything they had in it. Or worse - if the corporation is involved in fraud, the people responsible go to jail, as we saw with Enron and Worldcom.

 

Sure, but that undercuts the idea of the corporation. A corporation (and an LLP and an LLC and other limited liability entities) essentialy act as licenses granted by the state. The idea of the license is to encourage the entity to take commercial risks risks with corporate capital that people would not otherwise take on their own. The other thing is that the licensee (the corporation) gets a limited amount of rights as a legal person to enter into contracts, sue and be sued, etc...all stuff you need for commerce.

The other issue is that your ownership of BP doesn't quite entail the same concept of ownership as that of personal property. For example, let's say you own a lemonade stand in your personal capacity. In that case, personal ownership (and personal liability) makes perfect sense.

I mean you exercise complete dominion and control over the lemonade stand and can make it do or not do as you please. If you wanted to say, take all the lemons home and make lemon meringue pie, you could do that. If you wanted to the throw the lemons at a passing car, you could do that. Etc etc etc.

Contrast that with the rights of a shareholder which are far more limited. A shareholder isn't really an owner in the same sense that you own personal property. A shareholder basically is a residual equity holder who stands in line behind all creditors of the corporation, including any judgment creditors. A shareholder can't really, by themselves, dispose of the legal assets. So a shareholder of BP doesn't really own a piece of the Deepwater Horizon rig, a shareholder only owns a bundle of contractually defined and common law rights which are owing to it from the entity BP, and its directors officers etc.

The foregoing reasons are kind of why the Citizens United decision is so stupid - nothing about a state granted-license for limited liability necessitates that the same artificial entity be treated as a person under the bill of rights. A state can effectively kill a corporation by revoking it's charter/certificate for any number of reasons, such as failure to keep proper records or pay a small franchise fee,but yet it can't abridge its freedom of speech? I mean that's just dumb.

 

I get that.

I just don't think the trade offs that it it brings by creating psychopathic quasi-entities who proceed to take a dump on everything as far as the eyes can see is worth the added commercial benefits.

If I could trade some additional universal impediments to commerce in exchange for all the corpses in Bophal and the Gulf Coast shoreline, I think that is a trade I make everyday. Absolute genuflection in the face of commercial goals doesn't seem to be working too well to me.

 

Run off the list of neverending corporate disasters from the last 100 years that can be laid squarely at the feet of the corporate hive-mind. It is one after the other. Radium Girls. The Cuyahoga River on fire. Enron. Love Canal. Tyco. Worldcom. The Texas City Disaster. The entire city of Centralia.

All these and ten times more can be laid squarely at the feet of the corporate group-mind psychopathy.

 

But you also then have to throw in all of the things that have progressed under the infrastructure of a corporation - medication, farming, technology, etc etc.....The above atrocities have been committed by private companies or individuals too...as a whole, having more folks invested in companies is a net positive as not only does it allow folks to share in the wealth but also allows for growth of the country as a whole....just like unregulated capitalism is bad, draconian penalties are counter productive...

 

If you are happy with your current income, then you are happy corporations exist.

 

That is actually the thing. I'm sure you can find one or two incidents that could compare that were committed by private individuals. But if you provide me with a list of the major disasters of the 20th century, I'm willing to bet that upwards of 99% have been committed by corporate entities.

And for that matter, all the talk about guns leaving Texas to Mexico is generally overblown. But at least in the Houston area where it does happen, the overwhelming majority are done by lackeys working behind the counter at nameless faceless corporate chains like Academy and Gander Mountain.

Another example of the corporate mindset would be WalMart. If you don't like WalMart and their business practices, they are essentially a great example of the effects of corporate thought processes. Everything that people rail against them about are the result of the reward structure of corporate thinking.

And finally, this isn't about punishing corporations for being bad people. I'm not interested in sadistically making them hurt for the sake of revenge. What I'm saying that we need to rebalance the equations in such a way that it will be in the best interests of corporations to act responsibly. If the situation rewards corporations for not acting in our collective best interests, the equation needs to be rebalanced so that corporations do act responsibly. You need a system where corporations are terrified of acting negligently.

If a guy is a convicted pedophile, you simply don't get him a job working in a nursery school. If you continue to let him get jobs with children, then you shouldn't be surprised when you find out he's raped more kids. If we continue to let corporations create massive disasters and pawn off the remediation on the state with minimal sanctions, then the next time something like this happens, you've lost your right to be upset.

As far as corporations doing good things, I'm sure that is the case. I'm not saying corporations should be outlawed. I'm just saying if you give them this carrot of profits to chase, you also need to be behind them with the stick to put the fear of god into them if they act irresponsibly.

 

You do acknowledge that our whole way of life is based on corporations - that nearly all of us depend on corporations which is basically the essence of capitalism for our high standard of living?

Corporations do have a death penalty - it's called bankruptcy. And usually it hurts the employees the most.

I don't think the problem is the corporate structure, i think it's the way senior management is willing to compromise the greater good for a quick profit. Decisions are made based on the short-term, not long-term. And that's inherently human.

That is why the gov't has a role to play. I think we need greater regulation of corporations to insure that:

1. They are not putting the environment at risk, and that the penalty for violating environmental rules are severe enough that shareholders would devalue the stock of a company that doesn't have a good environmental record.

You could do this by dividing companies into 5 tiers of environmental compliance. The ones with the best rating pay the lowest tax rate. The bottom ones - out of compliance, would pay a 75% tax on profits for each quarter that they are not conforming to standards. That would work more effectively than any kind of fine.

2. Repeat for financial stability and competitive practices. Companies that engage in collusion, trusts, etc....get penalized with a tax rate on profits or revenue - which ever is greater but that's enough to be crippling to a business until it complies.

Shareholders will then take notice.

 

The inherent flaw in human nature is the problem with corporate structure. That is what I've been saying from page one. So this comment is from my perspective pretty much double-speak, and it appears that you are agreeing with me, but trying to make it sound like you disagree.

Ideals of corporatism, like the ideals that underlie communism, are all built on a 19th century foundation that predates even the most basic information about human psychology and sociology. People don't actually operate in the altruistic and beneficent ways that the people who created the system assumed that they would operate.

The way corporations work, basic human psychology dictates that the people who made decisions will inevitably make decisions that don't properly account for risk. It is basic behavioral psychology. In their world, they operate almost exclusively with respect to reward, with very little potential punishment.

If a corporation in practical terms acts in a way that appears to be "sane" with respect to its personal responsibility, that is such an abnormal condition that it describes what is effectively a type of corporate insanity.

I would prefer the situation be readjusted so that human sanity, and corporate sanity are effectively concurrent conditions.

 

Actually this isn't true. Most corperations are very akin to risk and legal liabilities. They have whole departments reviewing every decision. Take Johnson & Johnson for instance. Or P&G.

The industries that create the problems all have something in common. And that's they are so big and wealthy that they can influence gov't regulation placed upon them through lobbying.

The oil industry, the financial industry, and to a lesser degree the auto industry all do this. They influence the regulations to their favor, and thus in their minds mitigate the risks of liability, but not of human catastrophe.

Shareholder's attention on oil companies will now take in account the risks of a blow-out and oil spill since it will probably destroy BP for a very long time. If you're buying BP stock now, you are definitely taking a speculative risk since no one knows how much this thing is going to cost and what other lawsuits will arise. But one thing is for sure, BP is not a happy camper.

The goal isn't to eliminate corporations, or that human greed and self-interest is something that's "evil" or "bad". To some degree, it's the key component that drives achievement and global wealth. That is the sane route.

We don't need to complete through our system out, all we have to do is prevent corporations from being able to give these massive donations and curtail their influence in gov't. They should have some influence, but at the end of the day, the people's safety and interests have to be represented as well.

 

But the other side is that what you're suggesting is not possible. It doesn't make sense for individuals to take on unlimited risk when they don't have unlimited authority (as SamFisher pointed out). The result of your proposal would be the end of the corporate structure.

You can scrap corporations - that's certainly a route to go. You eliminate the oil spills and the Walmarts and the drug-trials-gone-wrong. You also eliminate all progress in energy, you raise prices for consumer goods, you eliminate all medical advances, etc. All of those things entail risk. If people have unlimited personal liability for funding other people to take that risk, no one will take it.

 

A side note.

I'm watching this documentary "The Corporation" which some of you mentioned. Some interesting information, but there are also errors.

For example, somatropin or Somatotropin isn't harmful, unless they are injecting ridiculous doseages (which doesn't seem to be the case).