Old Law Could Stop Corporate Dinosaurs

January 24th, 2010

Haplocanthosaurus
Haplocanthosaurus, where it belongs. Cleveland Museum of Natural History
Since U.S. states abandoned their old laws that curb corporate power, many corporations have become dinosaurs — huge beasts that have outlived their time, but that keep on stomping through the world.1 One type of dinosaur is the big oil company, whose products feed disastrous global warming climate change. Such companies should cut back production as the world limits greenhouse gases. Instead, the largest of them, ExxonMobil, has spent many millions to cast doubt on the scientific facts of climate change.2+3 Another type of dinosaur is the for-profit medical insurance company, whose kind controls the gates to health care, shutting out many millions, and canceling the policies of many who need a costly treatment.4+5 Such companies should bow out of the basic medical insurance business, and let Congress improve and extend Medicare to all. Instead, they have hired former government officials to lobby for keeping control, while getting millions of new, healthy customers at taxpayer expense.6 A third type of dinosaur is the Wall Street bank, whose kind sold lousy bonds as AAA-rated, sold vast amounts of bets against those bonds, and sold more bonds backed by those bets — before crashing the economy in 2008.7 Such banks should have gone bankrupt, letting smaller, well-run banks pick up the slack. Instead, those banks deemed “too big to fail” got government bailouts, and are now working on the next bubble and crash, while their lobby — the biggest in D.C. — works to thwart Congress’s tries at stopping them.8+9 All of these corporate dinosaurs have spent much money to skew policy for themselves and against the public. But among the old state laws are those that totally ban corporations from the public policy arena. If the U.S. Congress would pass such a law, it could at last send the corporate dinosaurs stomping into history, where they belong.

Here is an example from Wisconsin in 1905 of a law banning corporate influence on public policy:10

No corporation doing business in this state shall pay or contribute, or offer consent or agree to pay or contribute, directly or indirectly, any money, property, free service of its officers or employees or thing of value to any political party, organization, committee or individual for any political purpose whatsoever, or for the purpose of influencing legislation of any kind, or to promote or defeat the candidacy of any person for nomination, appointment or election to any political office.

Penalty: Any officer, employe, agent or attorney or other representative of any corporation, acting for and in behalf of such corporation, who shall violate [this act] shall be punished upon conviction by a fine of not less than one hundred nor more than five thousand dollars, or by imprisonment in the state prison for a period of not less than one nor more than five years, or by both … and if the corporation shall be subject to a penalty then by forfeiture in double the amount of any fine so imposed … and if a domestic corporation, it may be dissolved, … and if a foreign or nonresident corporation, its right to do business in this state may be declared forfeited.

Similar Ohio Law, 1908

Section 1, That no corporation doing business in this state shall directly or indirectly pay, use or offer, consent or agree to pay or use, any of its money or property for, or in aid, of any political party, committee or organization, or for, or in aid of, any candidate for political office or for nomination for any such office, or in any manner use any of its money or property for any political purpose whatever, or for the reimbursement or indemnification of any person or persons for moneys or property so used.

Section 3. Every corporation which violates section 1 of this act shall be punished by a fine of not more than five thousand nor less than five hundred dollars… Any officer, stockholder, attorney, or agent of any corporations which violates section 1 of this act who participates in, aids, or advises any such violation, and any person who solicits or knowingly receives any money or property in violation of this act shall be punished by imprisonment for not more than one year or a fine of not more than one thousand dollars, or both at the discretion of the court.11

Other Wisconsin Laws

From research by Jane Anne Morris:1

  • corporations were required to have a clear purpose, to be fulfilled but not exceeded.
  • corporations’ licenses to do business were revocable by the state legislature if they exceeded or did not fulfill their chartered purpose(s).
  • the state legislature could revoke a corporation’s charter for a particular reason, or for no reason at all.
  • the act of incorporation did not relieve corporate management or stockholders/owners of responsibility or liability for corporate acts.
  • as a matter of course, corporation officers, directors, or agents could be held criminally liable for violating the law.
  • state (not federal) courts heard cases where corporations or their agents were accused of breaking the law or harming the public.
  • directors of the corporation were required to come from among stockholders.
  • corporations had to have their headquarters and meetings in the state where their principal place of business was located.
  • corporation charters were granted for a specific period of time, like 20 or 30 years (instead of being granted “in perpetuity,” as is now the practice.)
  • corporations were prohibited from owning stock in other corporations in order to prevent them from extending their power inappropriately.
  • corporations’ real estate holdings were limited to what was necessary to carry out their specific purpose(s).
  • corporations were prohibited from making any political contributions, direct or indirect.
  • corporations were prohibited from making charitable or civic donations outside of their specific purposes.
  • state legislatures set the rates that corporations could charge for their products or services.
  • all corporation records and documents were open to the legislature or the state attorney general.

All of these provisions were once law in the state of Wisconsin. And similar ones were on the books in most other states.

Sources

1 ‘Fixing Corporations: The Legacy of the Founding Parents’ by Jane Anne Morris, Madison, Wisc.

2 ‘Some Like It Hot’ By Chris Mooney, Mother Jones May/June 2005 Issue

In 1989, the petroleum and automotive industries and the National Association of Manufacturers forged the Global Climate Coalition to oppose mandatory actions to address global warming. …

[W]ith the release of the IPCC’s third assessment in 2001, a strong consensus had emerged: Notwithstanding some role for natural variability, human-created greenhouse gas emissions could, if left unchecked, ramp up global average temperatures by as much as 5.8 degrees Celsius (or 10.4 degrees Fahrenheit) by the year 2100. “Consensus as strong as the one that has developed around this topic is rare in science,” wrote Science Editor-in-Chief Donald Kennedy in a 2001 editorial.

Even some leading corporations that had previously supported “skepticism” were converted. Major oil companies like Shell, Texaco, and British Petroleum, as well as automobile manufacturers like Ford, General Motors, and DaimlerChrysler, abandoned the Global Climate Coalition, which itself became inactive after 2002.

Yet some forces of denial—most notably ExxonMobil and the American Petroleum Institute, of which ExxonMobil is a leading member—remained recalcitrant. In 1998, the New York Times exposed an API memo outlining a strategy to invest millions to “maximize the impact of scientific views consistent with ours with Congress, the media and other key audiences.” The document stated: “Victory will be achieved when…recognition of uncertainty becomes part of the ‘conventional wisdom.’” …

Though ExxonMobil’s Lauren Kerr says she doesn’t know the “status of this reported plan” and an API spokesman says he could “find no evidence” that it was ever implemented, many of the players involved have continued to dispute mainstream climate science with funding from ExxonMobil. …

3 ‘Put a Tiger In Your Think Tank’ Mother Jones May/June 2005 Issue

ExxonMobil has pumped more than $8 million [from 2000 to 2003] into more than 40 think tanks; media outlets; and consumer, religious, and even civil rights groups that preach skepticism about the oncoming climate catastrophe.

4 ‘Medicare for All: The Only Sound Solution to Our Healthcare Crisis’ By Guy T. Saperstein, AlterNet, January 16, 2007.

The United States has the most expensive healthcare system on the planet. Even including the 47 million uninsured, the U.S. healthcare system costs almost double per capita what single-payer systems in Europe, Japan and Canada cost; in the United States, healthcare costs were $5,635 per person in 2005.

5 Bill Moyers Journal, July 10, 2009

The House Energy and Commerce Committee found that the major private health insurers had rescinded the policies of approximately 20,000 people in a five year period, to avoid paying out approximately $300 million in benefit claims.

6 ‘Familiar Players in Health Bill Lobbying Firms Are Enlisting Ex-Lawmakers, Aides’ by Dan Eggen and Kimberly Kindy, July 7, 2009, The Washington Post

The nation’s largest insurers, hospitals and medical groups have hired more than 350 former government staff members and retired members of Congress in hopes of influencing their old bosses and colleagues, according to an analysis of lobbying disclosures and other records.

The hirings are part of a record-breaking influence campaign by the health-care industry, which is spending more than $1.4 million a day on lobbying in the current fight, according to disclosure records. …

The push has reunited many who worked together in government on health-care reform, but are now employed as advocates for pharmaceutical and insurance companies.

7 ‘An Inside Story of Wall Street Bank Crashes’ The Paragraph, December 26th, 2008

8 ‘Capital City’ by Kevin Drum, Mother Jones, Jan.-Feb. 2010

let’s take a virtual stroll down K Street and see what everyone is spending on the world’s second-oldest profession. It’s all laid out for us by OpenSecrets.org. The defense lobby? Pikers. They contributed $24 million to individuals and PACs during the last election cycle. The farm lobby? $65 million. Health care? We’re getting warmer. Health care was the No. 2 industry, at $167 million.

And the finance lobby? They’re No. 1, with a very, very big bullet. They contributed an astonishing $475 million during the 2008 election cycle. That’s up from $60 million almost two decades ago.

9 ‘Don’t Reinflate the Old Bubbles’ By Steven Pearlstein, Washington Post, October 14, 2009

What we’re witnessing here is pretty simple: another bubble in financial assets. All that “liquidity” created by the Federal Reserve and other central banks has accomplished its task and prevented a global financial meltdown. But unless they move now to begin sopping up that liquidity, the central bankers run a serious risk of reinflating many of the same bubbles that got us into this mess in the first place.

The problem is that because we didn’t get into this recession in the normal way, the normal analysis and remedies are not appropriate. Slow growth and high unemployment are indeed going to be a big problem over the next several years, but they aren’t going to be solved by pumping out lots of cheap money that is used to speculate in stocks, bonds and commodities rather than be invested in the real economy. And if all this speculation has the effect of driving up the price of commodities and driving down the value of the dollars we use for imports, then it is perfectly possible to wind up with high inflation and high unemployment at the same time — as happened in the late 1970s.

The right policy response is for the Fed to begin withdrawing some of this extraordinary monetary stimulus even as the rest of the government steps up its effort to stimulate the real economy. That means more money for extended unemployment benefits; more aid to the states so that they can maintain the most vital public services; and more money to expand mass transit, state college and university systems, efficient energy production and basic scientific research. The economist Paul Krugman estimates that for every dollar in extra debt that will be required to finance this fiscal stimulus, about 40 cents will be repaid almost immediately in the form of tax revenues from higher short-term economic growth. And if the money is invested wisely in quality projects with high returns, the other 60 cents could wind up being a boon to future generations, rather than a burden.

10 ‘Wisconsin statutes. 1919: embracing all general statutes in force …, Volume 2, section 4479a’ edited by Lyman Junius Nash, Arthur Frederick Belitz

11 DEMOCRACY FOR SALE: How Ohioans Kept Corporations out of Politics; How and When They Re-entered’ — American Friends Service Committee

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By Quinn Hungeski – Posted at TheParagraph.com

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3 Responses to “Old Law Could Stop Corporate Dinosaurs”

  1. Deanna Says:

    You stated in your article:

    “Instead, those banks deemed “too big to fail” got government bailouts, and are now working on the next bubble and crash.”

    Thank goodness I’m not the only one that thinks that we should have let the beasts crash and burn! The current mortgage system is indeed a dinosaur and we need to step up to the plate as consumers and demand that our system be reformed before your predicted next bubble destroys us as a nation.

  2. Miranda Smith Says:

    well, these beasts are hard to eliminate cause there is a more powerful beast that protects them, don’t you think?

  3. David Burnham Says:

    I actually think some of the “dinosaur” companies should either split into a couple different corporate entities that are required to handle their own finances. If the company goes under, it goes under. No more bailouts.

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