CHOMP! By Jim Hightower
How a 17th century British scam morphed into a global monster and what we can do about it
Utne Reader, March/April 1998
They tell roe advice sells, so here goes:
· Don't ever buy a pit bull from a one-armed man.
· Never sign nothin' by neon light. • Always drink upstream from the herd. Oh, and one more:
· Never, ever believe the "conventional wisdom," which is to wisdom what "near beer" is to beer. Only not as close.
This is especially true when it comes to our political system. The powers-that-be, for example, tell us over and over that we are not willing to undertake any significant political change. Americans are overwhelmingly middle-of-the-road, they say, and not interested in any kind of "ism." Jim Hightower, the author of this article, wants to change that and the ism he would like you to embrace is called populism. The Populist Party is a U.S. political party formed in 1891 primarily to represent agrarian interests or to protect the interests of the common man from the large corporate entities we call corporations.
Jim Hightower believes that the above opinion is a trick play designed to keep America's political debate from focusing on an insidious new "ism" that has crept into our lives: corporatism. Few politicians, pundits, economists, or other officially sanctioned mouthpieces for what passes as public debate in this country want to touch the topic, but—as most ordinary folks have learned—the corporation has gotten way too big for its britches, intruding into every aspect of our lives and forcing changes in how we live.
Less than a decade ago, for example, your medical needs rested in the hands of a doctor whom you got to choose. But quicker than a hog eats supper, America's health care system— including your personal doc—got swallowed damn-near whole by a handful of corporate mutants called HMOs, most of which are tentacles of Prudential, Travelers, and other insurance giants.
When did we vote on this? Did I miss the national referendum in which we decided that remote corporate executives with an army of bean counters would displace my handpicked doctor, and would decide which (if any) hospital I can enter, how long I can stay, what specialists I can consult? I know Congress did not authorize this fundamental shift. To the contrary, in 1994 Congress rightly trashed the Clinton health care plan on the grounds that it would do exactly what's being done to us now: put the bean counters in charge. Only back then we were warned by the infamous "Harry and Louise" television spots that it would be government bean counters managing our health.
What irony. For years the very companies that financed the "Harry and Louise" ads have flapped their arms wildly to scan us about that old bugaboo, "socialized" medicine, while they blindsided us with something even harsher: corporatized medicine, a new form of "care" in which the Hippocratic Oath has been displaced by a bottom-line ethos. Now our health care is in the hands of people like Richard Scott, a mergers and acquisitions lawyer who headed up the Columbia/HCA Healthcare Corporation, a $20-billion-a-year HMO, until last hi) when he was forced out under a cloud of scandal about Medicare fraud. During Scott's tenure, Columbia/HCA demanded that its local hospital executives return a 20 percent annual profit to headquarters, or else. How did they meet his demand' By cutting back on services, on employees, and ultimately on us patients.
One place Scott did not cut back, however, was on his own paycheck. In 1995, he took a 43 percent salary hike, which meant he drew a million bucks from the till. Every month. But Scott is far less generous when it comes to taking responsibility for meeting the needs of America's sick. "Do we have an obligation to provide health care for everybody?" he recently asked rhetorically. "Where do we draw the line? Is any fast-food restaurant obligated to feed everyone who shows up?"
While it is true that corporations have long been a fact of life in America, since the 1970s they have metamorphosed into something different and disquieting. Corporations have become the governing force in our society, reshaping American life to fit nothing more enlightened than the short-term profile sheets of greedy CEOs. Everything from our amusements to our government, from our public schools to our popular culture—has become thoroughly corporatized.
The true symbol of America is no longer Old Glory, bat the corporate logo. No public space, no matter how sacrosanct, is free from the threat of having "Mountain Dew," "Citibank," or "Nike" plastered on it. Not even space itself is off-limits:
One visionary business enterprise is already working on launching a low-trajectory satellite equipped with what amounts to an extraterrestrial billboard that will be programmed to beam logos back to earth from the night sky. No matter where you live, from Boston to Bora Bora, you'll be able to gaze into the vast darkness, as humans have for thousands of years, and absorb the natural wonder of the moon, the Milky Way, and, yes, an orbiting ad for Mylanta. Lovely.
Every once in a while we come across a news item about a corporation acting contrary to form. For instance, the story of John Tu and David Sun, founders of Kingston Technologies in California, who sold a majority stake in their computer-chip enterprise for one and a half billion big ones and put $100 million of it into bonuses and special benefit programs for their 523 employees.
"What in the name of Ebenezer Scrooge are you two up to?" screeched their high-tech corporate peers. Nothing, it turns out. An amazed media found that this was not a publicity ploy or a tax dodge—it was, simply, sharing. Tu and Sun quietly explained that the hardworking people at Kingston are what made it possible for them as owners to prosper, so it felt right to reward them for their contribution.
Such acts of responsibility are so antithetical to accepted boardroom practice that when they occur it's big news. Indeed, immediately after the Kingston Technologies story broke, business analysts rushed forward to dump cold water on the fantasy that this is the way things should be done in today's complex corporate economy. Kingston Technologies, the critics scoffed, was a privately held company, so Messrs. Tu and Sun could be whimsical with company funds because they weren't subject to the short-term profit pressures from Wall Street investors. The "corporate system," the analysts explained, has no room for beneficence toward employees, communities, or the environment. None other than economist Milton Friedman himself, the patron saint of Wall Street excess, gave academic credence to such myopic thinking by asking and answering his own rhetorical question: "So the question is, do corporate executives, provided they stay within the law, have responsibilities in their business activities other than to make as much money for their stockholders as possible? And my answer to that is, no they do not."
So my question is, if the corporate structure exists only for stockholders, as Dr. Friedman makes clear, and since two thirds of us are not stockholders, why should the larger public be so permissive toward this particular business structure? You don't have to be the brightest light on the block to figure out that if the "corporate system" makes John Tu and David Sun the anomalies (and, in some executive quarters, the pariahs) of American business, then it's time to fix the system. I know the wisdom of the oft-cited aphorism "If it ain't broke, don't fix it," but the equally sagacious corollary to that is "If it is broke, run get the toolbox." What is this thing called the "corporation" and why is it here? It's time to put this basic question back into political play. The corporation has become a given in our culture, not unlike smog and Wayne Newton. It has been with us so long we assume it is part of the natural order.
Not so. Practically all of our nation's founders were appropriately anti-corporate (although you'll never find that in any standard textbooks of American history), and at the time of the Continental Congress, only about 40 corporations existed in our land, and they were kept on a very short leash.
Like powdered wigs and boiled beef, the corporation is a British invention, essentially created by the Crown as a vehicle to amass the capital needed to loot the wealth of its colonies. Of course, looting was nothing new, but this "joint stock" connivance was a devilishly radical scheme. For the first time, ownership of an enterprise was separated from responsibility for the enterprise. If an individual businessperson loots, pollutes, or otherwise behaves illegally, he or she is individually accountable to the community for those actions—that is, they get their sorry asses hauled into court, and get fined, put out of business, and/or tossed in the slammer. But the corporation is a legal fiction that lets the investors who own the business off the hook whenever the business behaves badly (read: steals, kills, poisons, pillages, corrupts, and so on), avoiding individual responsibility for illegal actions done in their name, even when such actions profit them enormously.
Like letting a cat loose in a fish market, this structure invites mischief, which is why the founders of our republic believed corporate charters should be granted only to serve the greater public interest. Through most of the 19th century, states typically limited each corporation they chartered to one kind of business, prohibited it from owning other businesses, strictly limited the amount of capital it could amass, required the stockholders to be local residents, spelled out specific benefits the corporation had to deliver to the community, and put a 20- to 50-year limit on the life of the charter. And, imagine this, legislatures were not shy about yanking charters when a corporation went astray from its stated mission or acted irresponsibly.
But just as America's founders clearly saw the dangers of the corporate entity, greedy hustlers saw its phenomenal potential to help them make a killing. And the latter began early on to lather up politicians with money to try to loosen up the chartering process. During the Civil War, numerous corporations were chartered to supply the Union Army, and the commander-in-chief, Abraham Lincoln, did not find it a positive experience. In an ominous foreboding of corrupt practices among today's Pentagon contractors, many of these corporations delivered shoddily made shoes, malfunctioning guns, and rotten meat. Honest Abe viewed the rise of corporations as a disaster, and warned in an 1864 letter that "as a result of the war, corporations have been enthroned and an era of corruption in high places will follow . . . until all wealth is aggregated in a few hands, and the Republic is destroyed."
Sure enough, during the next three decades, assorted industrialists and corporate flimflam artists known collectively as the robber barons were enthroned and took hold of both the economy and the government. Corruption did abound, from statehouses to the White House, and the concentration of wealth in the clutching hands of such families as the Astors, The Vanderbilts, the Rockefellers, and the Morgans reached proportions unheard of. . . until today.
The power of the modern corporation dates back to this era, aided by two major legal shifts. First was the emasculation of the state "corporate charter," as power brokers goaded spineless and frequently corrupt politicians to remove, bit by bit and state by state, restrictions imposed to protect the public. Today the corporate chartering process is so perfunctory that it can be handled by a phone call.
The other big change came in 1886, when the U.S. Supreme Court essentially made the corporation bulletproof. In a stunning and totally irrational decision made without bothering to hear any formal arguments (indeed, the learned justices said they did not want to hear any arguments), the Court abruptly decreed in a case brought by a railroad company that a corporation is "a person," with the same constitutional protections that you and I have. Dr. Frankenstein could not have done better than the courts and legislators. In only a century, the corporation was transformed into a superhuman creature of the law, superior to you and me, because it has civil rights without any civil responsibilities. It is legally obligated to be selfish; it cannot be thrown into jail; it can deduct from its tax bill any fines it gets for wrongdoing; and it can live forever.
Corporations are the dominant institutions of our time, exercising the sort of power wielded by the church during the Middle Ages or by the nation-state in more recent times. In fact, some corporations are actually bigger than nations in terms of money. Mitsubishi is the 22nd largest economy on earth, ranked ahead of Indonesia. General Motors is number 26, bigger than Denmark or Thailand. Ford is 31st, ahead of South Africa and Saudi Arabia. Toyota, Shell, Exxon, Wal-Mart, Hitachi, and AT&T are all in the top 50.
If you read the business pages, you will find the captains of industry unabashedly declaring their independence from any social contract or community mores, and from nations themselves, even the most powerful nations. Ralph Nader told me about a telling moment at General Motors' stockholders meeting in 1996. The setting was appropriately ceremonious, with CEO John Smith and the board of directors arrayed like ministers of state across an elevated platform in a grand ballroom. At one point, a lone stockholder gained recognition to speak, and noting that GM had eliminated some 73,000 U.S. jobs in the past decade, asked politely if Smith and the members of the board would rise and join him in pledging allegiance to the American flag on display on the side of the platform. After some embarrassed tittering among the board members and scurrying of legal counsels back and forth behind the podium, Smith announced that the bottom line was no, they would not. Of course, even though there was a small army of reporters present, not a whisper of this revealing exchange made the news.