7. Create National Charters for Corporations
Who creates corporations? Most would say "investors." But they only finance a corporation. The creators are the states, who grant corporate charters. These charters, like a corporate constitution, stipulate the rights, powers, and duties of the board, officers, and shareholders. The state makes this agreement on behalf of the whole society.
However, lately the state's side of the bargain has been thin. Don't like what the corporation is doing? Sell your stock. Even though that leaves the rascals in charge.
Didn't used to be that way. The early American corporations were granted charters by specific acts of legislatures (today one simply files papers with a Secretary of State). The charters were granted for a specific mission which must be a worthy public purpose. And charters could be (and were) revoked if a corporation strayed from its purpose.
The corporate response is one we've seen reenacted in the modern day. Armies of corporate lawyers visited state capitols and lobbied to give corporations more privileges and more immunities. States were played against each other – if you don't give us what we want we'll set up our business in a friendlier state. It was a race to the bottom. Delaware won and about 60% of Fortune 500 corporations are chartered there.
That race to the bottom has meant states have abdicated their role as corporate overseer (and corporations still complain about too much regulation). Previous posts in this series have already discussed what corporations do without an overseer.
Since the state system of charters has failed it is time for a federal chartering of corporations. That idea was proposed by James Madison in 1787. He wanted Congress to have the ability to grant charters in case "the authority of a single state may be incompetent." No vote was taken. Around 1910 the idea was again in favor, but strong antitrust and regulatory laws were seen as sufficient substitutes. Another push in the 1930s was interrupted by WWII and the corporate fortunes made by the war allowed them to squelch the idea.
Since WWII the focus has been on regulation, litigation, tort law, and antitrust enforcement. But these have shown to have little effect on the corporate hold on Congress and the rest of society.
Our current system, in short, has returned us to a kind of medieval feudal society – one in which citizens are expected to live in obedient resignation under the thumb of the corporate society – in an uneasy détente between the rules and the ruled.
The ultimate yardstick by which to judge these corporate wealth producers is whether they have delivered for the people – for the families, workers, consumers, savers, and retirees, and for the generations to come – and whether they have been good stewards of our planet. By just one measure – worker productivity – these companies have failed to share.
CorpWatch issued a report of Halliburton's actions during the Iraq war and the legal investigations the company now faces.
Now consider how a federal incorporation could have prevented such a rapacious company from sailing through such investigations unscathed. A responsible federal charter system would have required full public disclosure of all of Halliburton's contracts with the government (redacted only for strict national security considerations). It would have required full disclosure of the company's federal, state, and local tax returns, including foreign tax returns. It would have required full disclosure of all official investigation and audits of Halliburton's activities, and similar disclosure of all filings against the company by government workers, subcontractors, suppliers, and customers. Such disclosure is an early alert tool for internal whistle-blowers, conscientious staff, outside law and accounting firms, journalists, congressional committees, and inspector generals. As the great newspaper publisher Joseph Pulitzer once wrote, "There is not a crime, there is not a dodge, there is not a swindle, and there is not a vice which does not live by secrecy." Federal chartering would put an end to the secrecy under which many corporations conduct their shadiest business.Federal charters would also require corporations to honor union rights and empower shareholders to discipline or replace top management and board members after wrongdoing.
A democratic society cannot long withstand the kinds of massive inequalities in power, privilege, and immunity that exist today between large corporations and individual citizens. Supreme Court Justice Louis Brandeis once observed, "We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can't have both."A charter should contain:
* A ban on corporate lobbying and on donations to electoral campaigns.
* A ban on advertising deadly products, such as tobacco.
* A ban on obstructing a regulator.
* A clause that a corporation may make money for shareholders, "but not at the expense of the environment, human rights, the public health or safety, the communities in which the corporation operates or the dignity of its employees."
* An end to shareholder primacy.
* An end to corporate personhood.
The goals of federal chartering have wide support of citizens, perhaps up to 95%.