By “too rich to go bankrupt” I don’t mean someone so rich that they never will go bankrupt. What I mean by that is someone so rich that them going bankrupt would destabilize our economy and thus they deserve a bailout if bankruptcy ever threatens them. (Think Bill Gates plus Warren Buffett plus everyone who gets a paycheck from Google.) More on that later . . .
In discussing the role of the federal government in an economic recovery Ronald Hunt and Charles D. brought up the issue of the role of corporations. Charles was good enough to provide links to a 2-part article by Richard Grossman from 1998 (Part 1, Part 2) that did a good job of discussing how corporations have turned into very unwieldy masters over “we the people.” I was amazed when I first realized that these articles, which are so pertinent to our situation of bailing out “too big to fail” institutions was written more than a decade before our massive Bush bailouts.
I especially enjoyed a couple of quotes from the second part of the article:
the Supreme Court of Georgia, in Railroad Co. v. Collins, wrote: “All experience has shown that large accumulations of property in hands likely to keep it intact for a long period are dangerous to the public weal. Having perpetual succession, any kind of corporation has peculiar facilities for such accumulations . . .” (emphasis mine)
And from the end of the first part:
In Richardson v. Buhl, the Nebraska Supreme Court in the late 19th century declared: “Indeed, it is doubtful if free government can long exist in a country where such enormous amounts of money are… accumulated in the vaults of corporations, to be used at discretion in controlling the property and business of the country against the interest of the public and that of the people, for the personal gain and aggrandizement of a few individuals.” (emphasis mine)
In the next century we can see how the situation has been turned on its head as the dissenting opinions of a case remind us of what the truth from those earlier majority opinions
Justices White, Brennan and Marshall, dissenting in First National Bank of Boston v. Belotti wrote: “It has long been recognized, however, that the special status of corporations has placed them in a position to control vast amount of economic power which may, if not regulated, dominate not only the economy but also the very heart of our democracy, the electoral process… The State need not permit its own creation to consume it.”
Chief Justice Rehnquist, dissenting in the same case: “…the blessing of potentially perpetual life and limited liability, so beneficial [sic-R.G.] in the economic sphere, poses special dangers in the political sphere.” (emphasis mine)
With that complete reversal of situation, where the consistent majority opinions of the 19th century are suddenly being expressed in the dissenting opinions of the 20th century, how do people react to the dangers of corporations?
Folks relentlessly tally corporate assaults, study the regulatory agencies and try to strengthen them. We try to make corporate toxic chemicals and corporate radiation and corporate energy and corporate banking and corporate agriculture and corporate transportation, corporate buying of elections, and corporate writing of legislation, and corporate education of our judges and corporate distorting of our schools, a little less bad.
Isn’t it an old story? People create what looks to be a nifty machine, a robot, called the corporation. Over time the robots get together and overpower the people. (links to examples mine)
Now the question is, what is it about the nature of corporations that that makes them so dangerous? Besides the issue of perpetual succession mentioned above, there is this truth which can be verified by even a cursory glance at any information about forming a corporation:
Why do we hang on to the hope that the corporation can be made socially responsible? Isn’t this an absurd notion? After all, organizations cannot be responsible. This is just not a relevant concept, because a principal purpose of corporations is to protect the managers, directors and stockholders from responsibility for what their corporations do. (emphasis mine)
Grossman follows that truth by declaring this as the solution to the problem he has just illuminated for us:
But only people can be responsible. How? By defining ourselves as sovereign people so that we then can define all the corporate bodies that we create (governmental, business, educational, charitable, and civic).
We the People are the ones who must be accountable. We are not accountable when we create monster robots which run rampant in our communities and which, in our names, sally forth across the world to wreak havoc upon other places and upon other people’s self-governance.
Grossman is right in his illustration of how we have been (and continue to be) irresponsible. We have already declared ourselves sovereign legally (in the Declaration of Independence and the Constitution) but we need to begin thinking and acting like sovereigns within our political and economic system and wrest control back from those we have meekly deemed “too big to fail.”
To get back to the idea of “too rich to go bankrupt,” I have a couple of questions. First, is there any such level of wealth where we would consider someone a threat to the entire financial system? What if there were a single person who controlled half of all the wealth in the nation (that is about the total wealth of the most wealthy 3% of individuals in this country). With controlling interest in the nations overall personal wealth would they then be too big to go bankrupt? Second, if there is such a thing as too big to go bankrupt, how would we respond to a person who reached that threshold (whatever it is in your mind)? Third, what steps would you consider reasonable for the law to prevent people from becoming that rich if we truly thought it was possible?
Personally, I don’t think there is any threshold where a person can be so rich that they are a threat to the system simply based on their wealth but we have declared that some corporations are just that big and we either believe that they have more rights than a person or we must decide what a reasonable course of action would be if there were a person in that position.
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