Guest Post: Are Corporations People?

Tyler Durden's picture

Submitted by John Aziz of Azizonomics

Are Corporations People?

I have always found something inherently creepy about Mitt Romney — indeed, in a choice between Obama and Romney with a gun to my head, the gun looks like an increasingly attractive proposition. Most puzzling is his defence of corporate personhood:

Corporations are people, my friend… Everything corporations earn ultimately goes to people

 Do corporations breathe? Do they eat, sleep, feel and think? Do they require housing? Do they have families? Or medical care? Do they pay income tax? Do they have DNA? Eyes? Ears? Teeth? Has Texas ever executed one?

No. Corporations are not people. Corporations are composed of people, and for a very good reason. From Wikipedia:

Limited liability is a concept whereby a person’s financial liability is limited to a fixed sum, most commonly the value of a person’s investment in a company or partnership with limited liability. In other words, if a company with limited liability is sued, then the plaintiffs are suing the company, not its owners or investors. shareholder in a limited company is not personally liable for any of the debts of the company, other than for the value of their investment in that company.

Corporations essentially exist to allow groups of people to act collectively, without taking personal responsibility if the entire thing goes down like a lead balloon. Sure, if an employee of a corporation behaves in a criminal manner, they are sometimes jailed. Yet corporations — ever since the birth of the modern corporation through Standard Oil — have created what is known as the agency problem. Corporations allow their owners to win, without the possibility of deep losses. And what does this mean in terms of responsibility? It means that things like the BP Oil spill are much, much more likely. Because if you can’t get hurt, you’re not going to exercise diligence in the same way you would if you could get more hurt. This is why the juggernauts of global industry — the titans of Wall Street in particular — blow up so frequently and so violently. Corporations are firewalls, spinning mammoth profits through risky bets, but allowing management and shareholders to hide behind them when their risky behaviour comes home to roost. And what happens if the house falls down? The creditors — or more frequently in recent years since we adopted this perverse bailout culture, the taxpayer — take the hit. The philosopher Nassim Nicholas Taleb wrote on his Facebook page:

Hammurabi’s code, ~3800 years ago, removed the agency problem as a condition for transaction: “If a builder builds a house and the house collapses and causes the death of the owner – the builder shall be put to death. If it causes the death of the son of the owner , a son of that builder shall be put to death.” Everything in past 100 years has been to shield managers from liabilities. Think of Fukushima.

Either limited liability should be abolished  — corporations could still exist, but their owners and management are personally responsible for any debts and destruction incurred — or their behaviour should be taxed punitively to encourage individual and small business initiatives — the real wealth creators, job creators and innovators — over large scale destructo-juggernauts. At the very least, we should completely stop bailing them out when they blow up. That’s responsibility.

Corporations are certainly not free market entities. Their very reason for existence — limited liability — is created through government fiat. Capitalism and markets existed long before the creation of limited liability, and surely will exist for a long time after its demise.

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CitizenPete's picture

Write in RON PAUL

King_of_simpletons's picture

Corporations are people who have a different indoctrinated view of success. For them success is to rob others all the while promoting charities, church and community, family friendly environment, caring and safety. Ah what a nice place to work for, except that you are part of a system that's ass raping society and sucking blood off its host.

Nothing To See Here's picture

Corporations are called "moral persons". That standing allows real persons to commit immoral acts without facing the responsibility. Obviously, moral person really means immoral person. Doublespeak reigns supreme.

War is peace. Slavery is freedom.

 

SGS's picture

This is the one ebook that will describe the strawman, corporations, and in the process change the way you look at the ponzi.  BOOM.

 

http://www.scribd.com/doc/100273022/Mary-Croft

Precious's picture

Corporations have numerous legal rights.  In that small way they are like people.

They are very unlike people in that corporations can theoretically live forever.

Moreover, corporations in the form of foundations, can rape profits without EVER being taxed.  The great tax-free-profit-in-perpetuity invention of the illuminati allows them to not only decide your future, but shield their wealth so as to keep amassing more riches within their foundations, with the unwritten purpose of deciding the economic destiny of every generation to follow your cold, sorry corpse.  

Church Lady says "Isn't THAT charitable !"

Oh regional Indian's picture

How many people are aware that the UNITED STATES is a corporation? 

Or that Corporations were granted personhood in 1886 by a SCOTUS judgement.

http://reclaimdemocracy.org/personhood/

It's one of the key root actions that helped spawn this current mess we inhabit.

ori

truth-about-america-truth-about-us

 

ForTheWorld's picture

Just like Canada is registered with the SEC (http://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000230098...) and voluntarily files certain information with the SEC. Why on earth would a country decide to voluntarily file information with the SEC?

 

 

 

Harlequin001's picture

Ok let's put it this way, if, by investing in this business I might be bankrupted as an investor I'm not going to invest in it. So now kiss your jobs goodbye and then we won't need any oil.

corporations could still exist, but their owners and management are personally responsible for any debts and destruction incurred —' you mean like a partnership then, which we still have?

Why don't we go the whole hog? Anyone who invests in the S&P tracker is personally responsible for all the debts of all the companies, and by that I mean any one of them, and can be bankrupted for whatever reason. That would work well, not.

What an absolute load of fucking drivel...

GMadScientist's picture

What's wrong with the inside-trading officers of the S&P500 companies having to demonstrate some accountability?

Is it worth a million Wal-Mart jobs so that shitheels like John Thain can toss a grenade over their shoulder and move on to the next catastrophe-in-waiting as if it never happened all the while spending millions in golden parachute bucks?

 

Harlequin001's picture

'What's wrong with the inside-trading officers of the S&P500 companies having to demonstrate some accountability?' - what has that got to do with the concept of limited liability?

'Is it worth a million Wal-Mart jobs so that shitheels like John Thain can toss a grenade over their shoulder and move on'... - if the alternative is that you starve then yes it is. Limited liability is the reason why people put their savings to good use. Who is going to invest in anything if it means even the remotest possibility of bankruptcy? And then we ask where does the capital come from?

Limited liability is what makes the world go round. What your talking about is a lack of enforcement of penalties on senior officers who do wrong. It is not the same.

GMadScientist's picture

If you don't understand that investing in a public company contains the risk of "bankruptcy" (as if someone would invest their entire life savings in one company?!), then you should probably be putting your capital in the hands of someone else. Perhaps if people actually knew something about the risks inherent in their investments, they wouldn't invest so poorly.

What fucking "enforcement penalties"?!  Anything that stacks up against the seven figure salaries and megalomaniacandybrain power trips? There is zero accountability on Wall St and in multinational corporations.

Show me the BP execs in the clink. The TEPCO execs that committed sepukku for their failure. A single TBTF head that has rolled. One.

When you've seen a start-up implode, and the employees unpaid and owed promised and earned bonuses, and the execs neglecting to pay the health insurance premiums or SS taxes, and you've even got a judgement against the incompetent assholes from your state labor board, but what you don't have is a penny to show for it, your plaintive little "if we have to address risk we can't be bothered to be in business" bullshit rings very very hollow. The people who ran this company into the ground have started up another one the next state over because of limited liability.

Nothing To See Here's picture

Who said that people are supposed to invest in companies about which they don't know much and of which they don't know the officers?

That premise alone is wrong. The stock market is a sham. From first principles, technically, investors in a company should be those who know the company and who believe in its future. Those who don't and who invest in it anyway deserve to be hit by any loss the company takes.

Starting from there, limited liability is also a sham. Its purpose is to protect the insiders when the do things they could not do otherwise, period.

Harlequin001's picture

Without limited liability the directors can do what they want because the shareholders would be on the hook for everything wouldn't they? so what exactly are you proposing that is better?

Harlequin001's picture

Seems to me that you need to go learn about something called limited liability, because there's nothing here that has anything whatsoever to do with it.

'as if someone would invest their entire life savings in one company?!' -with what you're saying it doesn't matter how many companies you invest in, you can be sued and bankrupted by any one of them, and possibly even all, and for what, because someone made a seven figure salary and you didn't?

I think you need to go think it through a little...

5880's picture

Is it an institution that makes US investments? Then yes

d'uh

covsire's picture

Small business can't build the microchips you are currently relying on to read and write here.  /Thread

Dr. Sandi's picture

They would if they weren't eaten alive by the giant motherfuckers that suck the life out of creative entrepreneurism.

But then, YOUR small business surely couldn't do that.

Don't judge us all by your own miserable limitations.

 

covsire's picture

The people who are good at creating microchips are terrible at motivating themselves.  The managers who motivate the engineers are terrible at sales.  The salesmen are terrible at logistics.  The shipping people are terrible at marketing strategy.  The strategists are terrible at cleaning toilets.  The toilet cleaners are terrible at creating microchips..

If your small business could create a cutting edge lithography spitting microprocessor forge, configure it using the last 50 years worth of micro-op science, produce it, market it, ship it, support it and still compete with the awesome small business guy down the street, hey more power to ya.  In the real world though, monster corps make the world go around.  Not that I don't hate big inefficient monstrocites with a passion but blanketly hating big corps is a bit anti-human in more ways than the SCOTUS decision reveals.

Edit:  I get your point though.  Abolish the minimum wage for small businesses!

Dr. Sandi's picture

Don't abolish the minimum wage. Bring back slavery. It's worked throughout human history, it seems wasteful to give it up now.

francis_sawyer's picture

If corporations are PEOPLE...

& Soylent Green is PEOPLE...

Then CORPORATIONS  are SOYLENT GREEN!!!!

johnQpublic's picture

slavery is way too expensive for the average plantation owner

what we need is wage slaves....that lowers the maintenance costing when you can get the slaves to pay for their own healthcare and what not.

imagine if you could get your car to pay for its own gas and tires...

GMadScientist's picture

Just make sure you only every hire them as temps so they can't unionize and demand air-conditioning in SoCal warehouses or other tomfoolery.

yrbmegr's picture

Hmmm.  The Thirteenth Amendment prohibits involuntary servitude of persons.  I wonder if the relationship between corporations and their shareholders violates the Thirteenth Amendment.

Skateboarder's picture

You speak much sense, covsire. There's no way for technological advances to happen on the global scale without corporations. But is it so hard to ask that they don't loot and pillage the whole place to the ground? An honest and fair corporation goes a long, long way, whether it consists of one person or one million.

However, I will say this. The world is at the stage where manufacturing has caught up for the SMB to be able to lead innovation and progress (true innovation and progress, mind you - not just copycatting and repackaging) more effectively than the large corporations. What will stop SMBs from taking over is the widespread virus known as Intellectual Property Rights and the team of bloodsucking lawyers that come with it.

Good luck to all small and medium businesses - may the force be with you.

Harlequin001's picture

'But is it so hard to ask that they don't loot and pillage the whole place to the ground?' - No you just make it illegal for any government to put public money into private entities.

Done...

Skateboarder's picture

There is no money, and I don't think any amount of reset-button-pushing or otherwise will ever bring it back. The extent of fuckery, starting with our food production... it is so immense as to be incapable of returning to a state of 'good.'

Welcome to the Georgia guidestones future soon? =\

Skateboarder's picture

And to make good use of my accidental double post, I want to remind everyone not to forget the power each of us holds. Take individual responsibility and collective responsibility for our creations and our actions. Each of us now has the power and ability to produce and expand upon what the entire collective of our peers and ancestors have in ages past. One human CAN do everything, but there is not enough time in one's life. Thus we DO need each other, but if we separate ourselves from our brothers and sisters through the artificial barriers that we have been told to erect (money, titles, statuses, credentials), we will only drift apart further.

"O God of earth and altar,
bow down and hear our cry,
our earthly rulers falter,
our people drift and die;
the walls of gold entomb us,
the swords of scorn divide,
take not thy thunder from us,
but take away our pride."

-GK Chesterton's hymn

GMadScientist's picture

"The people who are good at creating microchips are terrible at motivating themselves. "

TRolololololo.

TerraHertz's picture

'Corporations vs small business' is a false dichotomy. The real issue is whether corporations (legal fictions) can OWN STUFF.

If we simply changed the legal system to only allow living, breathing individuals to OWN anything, there would be no problem with immortal self-serving giant evil corporations. They could not exist.

The moral hazard of limited liability is a side effect of allowing legal fictions to OWN things. Since there's no practical limit to how 'fictional' an abstract legal fiction can become, of course such entities can finagle the laws to avoid any responsibility for the disasters they create. And since their 'objectives' are also disconnected from the reality of living, finite lifespan humans and our need for a healthy, functioning biosphere, of course corporations act like eco-cidal psychopaths.

If only living individuals were able to own things, there would still be large businesses, even global in scope. People would still be able to invest in large business, and receive returns on their investment. However the actual control of the business, and thus the ultimate legal responsibility for screw-ups, would rest on the owner. Who might or might not be an arsehole. But at least that person would have a beating heart. Something that can NEVER be said for corporations.

Change the law. Allow only living humans to own anything. Abolish all corporations.

Anusocracy's picture

When you get right down to it, government owns everything.

The idea of ever larger business entities (corporations) means ever easier control by government.

Chain of command is a godsend for those who crave power.

barroter's picture

Most of our technological adavances are from the old Pentagon System.  Tax money used for R&D, and the private corp gets to keep the profits of what they discover. I wonder how much private business would invent IF they had to use their own capital?

Anusocracy's picture

Lots!

Invent or perish. The ultimate incentive.

GMadScientist's picture

"Small business can't build the microchips"

But they can test the chips, assemble the computers, get software written to run on said chips, provide a web backend with varnish caching etc to keep the site for going tits up, provide co-lo or cloud services, manage the CDN for ad content, provide billing to accept donations (you have donated, haven't you?), and even run packages as contractors for the larger carriers to get the machine into your hands.

Now.

Grow a brain or shut the fuck up.

 

GeezerGeek's picture

A few areas in which we disagree:

1) I'd rather have the producer of microchips do the testing. If I were a small business building computers, I'd rely on quality components to reduce my costs and risk. Consider, if you will, the practice of AMD. By pretesting their CPUs, they identified quad-core processors with a single damaged core and sold those as tri-core processors. Would you like to be a small business having to determine that sort of thing for yourself?

2) While many individuals and small businesses are now capable of building computers, that cannot be said when it comes to large systems. What small business could ever have built a mainframe? Moreover, building any significant quantity of reliable servers requires experise not commonly found in small businesses. Servers, with their redundancy (fans, pwoer supplies, RAID arrays, etc.) are more complex than simple single-processor PCs. Companies like HP and Dell exist, in part, because they can engineer these types of systems and build them more efficiently than small businesses.

3) You ignored the infrastructure needed to make computers useful in business these days. Is a small company going to build all your routers, bridges, etc.? Is it going to write the code that runs inside of all these boxes? Will that code be as secure, or the hardware as reliable, as that from a large company like CISCO?

There is a place in the IT economic ecosystem for small businesses. I used to run one myself. It is essential, however, that large companies such as those mentioned above exist to provide the tools for the small businesses. Disclaimer: I do not own stock in any of those companies.

 

Anusocracy's picture

How does the Apple model work?

BigJim's picture

You are quite correct - some products require so much capital investment and such large infrastucture to manage it all, that without them, things like (affordable) microchips almost certainly wouldn't exist.

But he's not decrying large business - he's decrying the government established & maintained limited liability that corporations enjoy that give them an (unfair) immunity the rest of us don't enjoy.

lineskis's picture

Not that I disagree with the lack of accountability and resposability due to the agency problem. However solve the agency problem like it's been ~3800 years ago and you'd have to build your house by yourself... As nobody, nobody would ever take the risk to build yours...

brettd's picture

Theft is liberation.

Mary is my husband.

Peter Pan's picture

The profit that corporations can make is unlimited but the liability of their shareholders is limited. Perhaps this is one reason why corporations are not people. When ordinary people run businesses in their own names they are PERSONALLY LIABLE FOR EVERY PENNY BEYOND THE ASSETS OF THE BUSINESS.

world_debt_slave's picture

yep, did that in 2008 and will do the same again. Sadly, alot of well meaning people are saying vote for Romney.

Dr. Sandi's picture

Even more sadly, a lot of well meaning people are going to vote.

GeezerGeek's picture

I plan on voting against Obama. He poses a far greater danger to my liberty and financial well-being than does Romney, or Paul, or Palin, or any of the other Republicans. That's just my assessment, but Obama's actions have been diametrically opposite what I consider good for me or for the country as a whole. If Romney doesn't work out well the voters can dispose of him at the appropriate time. At least Romney hasn't issued any executive orders gathering absolute power unto himself. Obama has, and I will therefore oppose him in the voting booth.

realtick's picture

The question is is Mitt Romney people?

john39's picture

are zombies people?  maybe at one time they were.  not sure about romney.  obama, same thing...  doubt that he ever had a human soul.

Tijuana Donkey Show's picture

Are zombie corporate banks people?

RockyRacoon's picture

Apparently they are.  And first in line at the government trough, well in front of you and me.

GMadScientist's picture

Zombies have better ethics.