Nader's 'Corporate Socialism'

Great Debates
81

I admit that I am quite unconvinced that this is the case.

I am unclear as to how corporations AREN’T held liable, but we’d need a link to what Nader said, which I lack.

Mandlestam, what I do not yet see is why we need such oversight. We already have corporate and civil law that is supposed to rein in criminal and tortious behaviour. I simply do not comprehend what the need is to ensure that XYZ Company doesn’t own 13% of a particular market. I can’t even begin to list the ways such a thing could cause more harm than good.

And while your ideas for getting partisanship out of the way are noble, they still don’t explain the benefit of interfering in the marketplace, nor do they demonstrate why there is a civic need here to interfere in the business and property of the citizenry (and that’s what this is.) Remember, we’re not talking about CRIME or cheating here. We have laws against those things, and those laws need to be enforced, not drafted in redundance. What the Green Party is proposing is essentially oversight over a corporation getting too big, based on a wholly arbitrary notion of “too big.” Laws against monopolies and anticompetitive behaviour are one thing; having a commission break up companies because they decide they’re too big is another.

MY company owns, I would guess, about 15% of the North American market in ISO 9000 registrations. Should we be broken up? It’ll be hard to break up a company that only has two hundred people in it.

No argument from me, which is why a new accounting standard is needed. I don’t see how the Breakup Commission idea helps this, though.

I think you missed the point. Read my comments a little more carefully. I specifically addressed the absurd notion of forcing companies to NOT phase something out.

Of course, it’s reasonable for the government to ban something that presents a real danger to the public and the state. But think about the absurdity of legislation something NOT be phased out, and again, read my little scenario. Subjecting it to a vote in the legislature wouldn’t be much better than a referendum, either.

I guess what a lot of these suggestions come down to, in my view, is frustration with the errors made by a free, democratic system resulting in suggestions for making it less free and democratic. I think it’s awful what happened at Enron and Worldcom, and I’ll be the first to say that changes need to be made in accounting and that politicians and the rich are far too close. But I see the solution as being using existing criminal law to put people in jail and then letting the market work on repairing accounting practices - which, by the way, I’m already seeing happen in the business world. Ralph Nader sees the solution as being, apparently, not to use the criminal law system, but rather to clobber all companies over the head with government power. My honest opinion is that the results are potentially ten times worse than the problems they’re meant to solve.

Depends on the province.
Olentzero:

Beat up that strawman! Go on, whack it!

I don’t think you understood what I was saying; I assume that’s my fault.

The Dow Jones index, or the index for whatever stock market you like, is SUPPOSED to tell you what people value stock at. Hopefully, they value stock at a level that accurately represents the value of the company, or else you get a bubble that will, sooner or later, burst. Hello, E-commerce.

The mass fraud that occured at Enron, Tyco and Worldcom damn well SHOULD make the Dow Jones index fall. The DJI is a thermometer of economic health - a symptom, not a disease. Loss of profit in the stock market will hopefully be one of the things that motivates investors to demand better accounting practices and motivates companies to brag up the honesty of their financial reports. If the DJI stayed stable in the face of these scandals and the attendant fallout, that wouldn’t be a good thing at all. It would in fact, be very bad, since it would mean the stock market really WAS separate from the economy.

82

cite please?:o

83

I’m tied up with work just now, so just a quickie.

flowbark, for now just a point of clarification. I think both jshore and I have made clear at various points that we have bones to pick with the Green Party. New Mexico is a major case in point.

Although the “Ralph” version of the platform sounds good to me from what I’ve seen, that other platform is unrealistic, overambitious, and in many respects wrongheaded IMO. My only claims for it are that 1) the problems it attempts to solve are indeed problems and 2) it’s not tantamount to socialism–though to be as fair as possible to Sam and pld, it’s moving further in that direction than liberal agendas generally do.

Now, on the matter of corporate personhood–which, alas, I’ve garbled by linking too closely to the matter of limited liability.

In 1988 op-ed, Nader and a co-author briefly put forth the argument.

The issue involves corporations enjoying the constitutional rights of persons, not the limited liability protection of persons (though I’m pretty sure that the concept of corporate personhood derived from the former nevertheless).

Some excerpts:

*"Consider a few noxious developments during the last ten years. A group of large Boston companies invoked the First Amendment in order to spend lavishly and thus successfully defeat a referendum that would have permitted the legislature to enact a progressive income tax that had no direct effect on the property and business of these companies. An Idaho electrical and plumbing corporation cited the Fourth Amendment and deterred a health and safety investigation. A textile supply company used Fifth Amendment protections and barred retrial in a criminal antitrust case in Texas.

The idea that the Constitution should apply to corporations as it applies to humans had its dubious origins in 1886. The Supreme Court said it did “not wish to hear argument” on whether corporations were “persons” protected by the Fourteenth Amendment, a civil rights amendment designed to safeguard newly emancipated blacks from unfair government treatment. It simply decreed that corporations were persons."*

[In 1987] corporations received the most sweeping enlargement of their free speech rights to date. In a 5-3 decision, the Court invalidated a California regulation ordering a public utility monopoly to enclose in its billing envelopes a communication from a nonprofit rate-payer advocacy group that financed the insert. The purpose of the regulation was to assist the Public Utility Commission in achieving its authorized goal of reasonable rates. Even so, the Court held that the enclosures violated a new corporate First Amendment right “not to speak.” Associate Justice William H. Rehnquist wrote in a pro-consumer dissent that to “ascribe to such artificial entities an ‘intellect’ or ‘mind’ [for constitutional purposes] is to confuse metaphor with reality.”

*"The corporate drive for constitutional parity with real humans comes at a time when legislatures are awarding these artificial persons superhuman privileges. Besides perpetual life, corporations enjoy limited liability for industrial accidents such as nuclear power disasters. They also use voluntary bankruptcy and other disappearing acts to dodge financial obligations while remaining in business.

The legal system is thus creating unaccountable Frankensteins that have human powers but are nonetheless constitutionally shielded from much actual and potential law enforcement as well as from accountability to real persons such as workers, consumers and taxpayers."*

“To establish [the presumption that humans are favored over corporations] we need a constitutional amendment that declares that corporations are not persons and that they are only entitled to statutory protections conferred by legislatures and through referendums. Only then will the Constitution become the exclusive preserve of those whom the Framers sought to protect: real people.”

Now this is something short of a detailed legal explanation, but it’s clear that what’s being sought here isn’t personal shareholder accountability.

And I have to thoroughly agree with Nader that the constitution was never intended to apply to corporations.

Till later comrades ;).

84

Nader is wack: that was really just rhetoric. Probably ill-advised.

85

It’s interesting you should use that metaphor, because it really illustrates my point as well. I’m not disagreeing with you that the DJI is an indicator of economic health, but to say there’s no harm in the Dow falling is like saying there’s no harm in having a fever. If a fever goes too high and doesn’t get broken, the person can die.
Your response to my post - which, BTW, is not a straw man; straw men are conclusions based on stretched logic and improbable situations - is like saying “If your body temperature shows you have a fever, apply a lot of ice to break it and you’ll never have a fever again” - i.e. completely ignoring the infection that caused the fever in the first place. If you’re near a swamp, stocking up on ice to break fevers isn’t going to prevent further malaria outbreaks. Only draining the swamp to eliminate the mosquito population will do that.
Same thing with the corporate scandals. Preventative measures taken after 1929 didn’t prevent the scandals of 2002; federal legislation enacted to place tighter restrictions on corporate activities can always be chipped away into ineffectiveness. The only way to prevent corporate scandals is to get rid of capitalism entirely.

86

Yeah, but you enjoyed it ;).

In any case, I enjoyed reading both of your posts and look forward to responding when I can.

87

Olentzero, I did not say there was NO harm in the stock market falling. Your claim is, in fact, a straw man argument by definition; you took something I said (“I don’t see a lot of long term harm in the stock market falling”) and exaggerrated it to something with a substantially different meaning (“I see no harm in it.”) which you then argued against in place of what I had actually said. That’s a straw man argument.

And yes, I know you think we should get rid of capitalism entirely; we’ve had those threads before. IMHO, with all due respect, communism is idiotic and those who like the idea are hopelessly divorced from reality. I’m sure you think the same of those who buy into capitalism, so that discussion is pointless. It’s also REALLY, really far from a discussion on Ralph Nader, who is not a communist.

88

OK, if you want to mince words, yes, you did say “I don’t see a great deal of long term harm” rather than “I see no harm”. A difference of degree rather than meaning, to be sure, but both are more than adequately refuted by the example of the Great Depression.

89

With all due respect Olentzero, the 1987 example shows that downturns do not necessarily follow after stock market crashes.

Furthermore, many would say that the US Depression was caused more by a failure of demand management (either monetary, fiscal or both) than by a particularly large drop in asset values. As our understanding of the economy is fundamentally different now, this historical example is rather misleading.

90

flowbark, please back up your assertion with some cites and statistics.

91

Rick, flowbark, I thought that rather than reply further to your recent posts blow by blow I would post
this article which I think you will both find really interesting. It’s about how post-scandal reforms and, indeed, regulation itself, may be better done through the courts: in particular, about what William Lerach, a plaintiff’s lawyer, has been doing to sue the pants off of CEOs on behalf of investors. Lerach himself has a list of reforms, as does the author of the article by the end. This will bring us closer to the topic of corporate welfare, and bring in a few other voices besides Nader’s and that of a Green Party platform that no one in this thread wants to embrace.

Sam, I think you might find this article interesting too, if you’re still reading this thread. The “dogmas” I referred to above alluded to the position you’ve taken in flowbark’s thread: that the market would simply do its magic of self-repair. I just don’t buy that. But the article I posted says it better than I could.

flowbark, on the matter of Nader and protectionism. You may be right that Nader is protectionist–I haven’t studied his specific policies enough to know one way or another. To be sure, there are bona fide protectionists, and you’ve named some of them. I’m not sure what McDermott’s position is–or yours–so I might well be very attracted to your position.

I do want to add though that I hear a lot of otherwise fairly progressive people (Krugman, for example) defending the status quo on the grounds that everyone who criticizes it is protectionist. Often this is deployed as a kind of label as with: flat-earther, luddite, protectionist, hippy and, um, socialist. Only in this case the people using the label are often really smart and ought to do better.

I think there has to be a way to promote globalization without either accepting that the neo-liberal abuse of third world people and their environment is a necessary prelude to their economic growth, or that Western workers have to quietly give up their well-paid manufacturing jobs to get paid minimum wage at Walmart. In the West what we need is better education and training for a very wide swathe of the population, and in the developing world what we need is labor standards that respect basic human rights. I think most people know that yet those who actively support them are often called protectionists. To cut to the quick, that really pisses me off. Particularly in a post-9/11, post-Enron, post stock market crash climate, it’s time to recognize that the globalization status quo has got to change.

Rick, I gather that you’re not interested in debating corporate personhood as it’s now been clarified. No problemo. Just a quick word to say that I agree that there’s no preponderant need to break-up companies with significant market share–at least not on those grounds alone. I do think that competition in certain industries often encourages the worst kind of abuses (viz. Walmart) and results in unaccountable oligopolies. But I don’t think that breaking up Walmart is the answer. I think the article I posted has some good suggestions with regard to irresponsible corporations and I’m eager to know what you think of them.

But certainly there are companies that should be broken up in some fashion: e.g., 1) media companies that should never have been deregulated in the first place; and 2) Microsoft which IMO shouldn’t be broken up as such but should be made to share its “source code” (as I believe techies call it).

92

I think corporate personhood would be an excellent discussion, but really, if you want to discuss it, it’s time to start a new thread. We’re getting towards page 3 of this one and we’re well off topic.

As to the article … it’s article’s from “The Nation.” From Mandlestam! I’m shocked. :slight_smile:

Actually, Lerach’s actions strike me as being one of the two counterbalances against this sort of scam that you absolutely must have in a capitalist system. Strong criminal and civil law systems are the solutions I see as being proper in the cases of Enron and Worldcom-type scams. Grieder throws in a lot of peripheral stuff of fairly little substance, but looking at Lerach himself, I think he and other class action lawyers are serving a significant public role when they attack the directors of Enron, Tyco, et al.

The other, of course, must be criminal action. Sending people to jail. If that doesn’t start happening, there is no solution that will make up for it. I don’t think that can be stressed enough; there is NO replacement for effective criminal and civil action. Regulation won’t do the trick.

To be honest, I’m not sufficiently familiar with either case (in the States) to comment. I do know that government regulation of media ownership in Canada has not resulted in the positive gains you might expect.

93

Olentzero

  1. In October 1987, the stock market crashed. Greenspan then cut interest rates. No recession occurred in 1988. Ergo, recessions or depressions do not necessarily follow stock market crashes.

  2. As for the causes of the Great Depression, I do not wish to deny that the Great Crash played a role. Other factors were, 1) the Feds slowness in cutting interest rates, 2) FDR’s NIRA and subsequent labor policy which essentially delivered an adverse supply shock on top of a demand shock, 3) ordinary cyclic factors and 4) possibly insufficient fiscal policy as well as some ill-timed fiscal retraction in the mid 1930s.

Romer (1993) provides an interesting discussion. Peter Temin has also done good work in this area. Ben Bernanke has a useful link here: http://pup.princeton.edu/chapters/s6817.html

Let me know what sort of cites you want, if the above is not sufficient.