February 07, 2004
New Question
Good morning:
I got up at 2:30 to post my overnight thoughts but got sidetracked by the Dean blog. By the time I had read through the overnight posts, it was obvious that the regulars were getting tired and somebody had to counteract the trolls, who are busy as ever trying to spread dissention.
By "counteract" I don't mean respond. The trolls need to be ignored, but other posts are needed to keep the spirits up.
Though I'm not big on cartoons, the Doonesbury is too apt to pass up.
Now, to my question of the day. Why are corporations bad? They're not, not really. On the other hand, their very essence makes them liable to being used for bad purposes.
Let me explain. A corporation is a fictitious person, as opposed to a "natural" person, to which society--i.e. the state--grants all, or almost all, of the rights that are guaranteed to an individual citizen. Corporations are not allowed to "exercise the fanchise"--i.e. vote--and, as a result of the passage of campaign finance regulating laws, they are also no longer allowed to contribute financially --i.e. give money--to candidates for public office. Of course, the individual natural persons who come together to have themselves designated as a coroporation, can still give money, as long as they use their own. There are also restrictions as to the amount. But, I happen to think these are going to be found to be unconstitutional as restrictions of free speech.
In any event, people come together to have themselves recognized as fictitious persons. Since they then give up some of their rights as "natural" persons, the question is why. What's the advantage of being part of a fiction? The answer, quite simply, is that by becoming part of a fiction, the individual participants avoid liability--i.e. having to be accountable--for their actions. That is, if the corporation messes up and hasn't done anything blatantly illegal, the individual participants can't be hauled into court and made to pay. And, if the corporation has been managed so as to waste or destroy all of the assets or wealth other people (stock-holders and employees) invested, well that's just too bad. If the managers didn't do anything illegal (criminal behavior having to be proved in a court of law) the assets they preserved for themselves can't be extracted. If a fictitious person goes bankrupt, that's just too bad.
So, the long and the short of it is that corporations are a nifty way for individuals to escape responsibility for their behavior. While we can argue whether or not that's moral, there's no question that it's legal.
Of course, since corporations are created by law, the law can be changed and they can be undone. Or, the laws can be changed and the conditions under which corporations can carry out their business can be changed. Even their size and area of influence can be regulated. Which is why, for example, many corporate entities register themselves in Delaware. The restrictions there are less than in some other state. The least restriction seems to be found on some of the island to our south.
The fact that these off-shore corporations can do business on the mainland, as if they were registered in one of our states, is also something that could be changed by federal law. That many of our legislators prefer to vacation on the islands to restricting the activities of their hosts is another matter. It could be corrected, but it probably won't be unless the Congress gets some different leadership and an executive that is willing to take on the burden of enforcing such regulations and laws. Our present executive obviously isn't. One of the Democratic candidates is. Which is why he is scaring the bejesus out of a whole lot of fictitious persons.
Just maybe, if the public figures out that they are being asked to deal with a simple fiction, they'll gird their loins and take on the task. If they don't, then these convenient fictions may just eat their very real lunch.
Posted by Hannah at February 7, 2004 07:07 AM