Editor's Note — Mr. Cormier follows in a long tradition when he ponders the mixed blessings of settled society. An ancient Sumerian myth reflected similar concerns.
I believe that the idea of civilization has been generally misunderstood. I suggest that civilization is a characteristic not of societies, but of individuals. A highly settled, technological society might be populated by barbaric individuals, by civilized individuals, or by both. The same thing is true of a primitive, nomadic society. Civilization, then, is not a way of organizing society, but a kind of individual human behavior.
• My thanks to Lady Jan the Voluptuous for her ongoing editorial assistance and for her countless other efforts in support of this newsletter and of its editor.
• My thanks to The Affiliate, of Vankleek Hill, Ontario for regularly printing reviews of the Frontiersman.
• My thanks to Sir Donald the Elusive for paying the production costs of this newsletter and for his additional contributions.
— author unknown, provided by Silicon Valley Bob
|The First Step
Sam Aurelius Milam III
Corporations have produced many benefits. They've also caused much harm. If it's possible to prevent them from causing more harm than benefits, then they might be worth keeping. I say "might" because there could still be better ways to achieve the same benefits.
If corporations are to be prevented from causing harm, then the source of that control must satisfy four requirements. First, it must not be subject to the authority of the corporation. Second, it must have authority over the corporation. Third, it must have some sympathetic interest in the corporation, so that it will not harm the corporation unnecessarily. Fourth and finally, it must have some incentive to prevent the corporation from causing harm. These four requirements are necessary and sufficient for the control of corporations.
Some people believe that employees should prevent the corporations from causing harm. However, most harm done by corporations is a result of policy decisions, not worker misbehavior. No individual worker (or group of them) within a corporation has much control over these policies. Also, workers must do as instructed. If they don't, they risk termination of their employment.
Managers have little more latitude than workers. They must "pull together," and be "team players." If a manager objects to the corporation's misbehavior, his concerns will be viewed by higher management as a "personal problem". Any problem that can't be ignored will be turned over to a special task force or study group. These groups excel at solution avoidance and enhance their job security by continuing to study the problem. To actually solve it would reduce their usefulness.
High level executives appear to have more control over corporations than their subordinates. Yet, however eloquently such an executive may promise exemplary performance, he is isolated from the workers by a very good filter — the chain of command. As instructions pass down the chain of command, they're "interpreted" according to unwritten policies. For example, the manager of the shipping department cannot sacrifice the shipping schedule, no matter what the CEO said about containment seal integrity. The chain of command filters in the other direction, as well. Every manager must appear competent to his boss. The boss wants the people under him to be "problem solvers". Accordingly, problems are "handled" at the lowest possible level.
Executives, managers, and workers are all employees of the corporation and therefore they serve it and are controlled by it. None of them satisfy the first two requirements and cannot be expected to prevent a corporation from misbehaving. This failure of control from within the corporations has caused the creation of regulatory agencies.
If regulatory agencies are to prevent the misbehavior of corporations, then they must satisfy the four requirements mentioned above. However, there are many ways in which a corporation might exert an influence over a regulatory agency. It would be interesting to learn, for example, how many agency auditors were once industry designers, have friends there, and might even be auditing their own past work. Watch the news for a few days, and no doubt you will find some report or allegation of industry lobbyists tinkering with the legislative and regulatory machinery. Worse yet, corporate employees can easily come to identify safety and reliability with regulatory mandates. Any safety conscious employee within the corporation might then become a pariah, identified with these mandates. This can sabotage the very resources within a corporation that might otherwise have given legitimate attention to the goals allegedly promoted by the regulatory agency. The result is an adversarial relationship wherein great effort is exerted to appear competent and cooperative, to steer auditors into "safe" areas, and to reveal nothing. Documentation systems are made as complex as possible to impress, confuse, or discourage auditors, but ignored in daily practice.
Indeed, a corporation in a regulated industry need not be concerned with safety at all, but only with compliance. If an accident occurs, the corporation need only demonstrate that it complied with regulations. If it can do that, it is blameless. If an accident occurred in spite of its demonstrated compliance, it can blame the agency for failing to properly regulate it.1
Finally, if a regulatory agency were ever to succeed in regulating an industry into a safe condition, then the agency would find its own usefulness diminished. Rather, an occasional accident is a Godsend, irrefutably justifying expansion of the agency's manpower and authority. The justification process relies upon the existence of risk. The threat of accidents is the lifeblood of the regulatory industry.
It's clear that regulatory agencies have no sympathetic interest in corporations and little or no incentive to prevent corporate misbehavior in any case. Therefore, they fail the second two requirements and cannot be expected to prevent corporations from causing harm. There does exist, however, another possible source of control, and that is the stockholders. Let's see how they measure up to the requirements.
The stockholders are external to the corporation and are not under to its control. Even when an employee owns stock in the corporation that employs him, his vote as a stockholder is separate and apart from his employment by the corporation. In his capacity as an employee, he is controlled by the corporation. In his capacity as a
|stockholder, he is beyond the corporation's control.
Therefore, stockholders, even those who work for the corporation, pass
the first requirement.
From the point of view of the stockholders, a corporation isn't a personality at all, but a piece of property. They own it. They can, potentially at least, control it through the authority inherent in their power to vote. Whether or not they presently exert such control is irrelevant. The fact is that they can if they wish to do so. The stockholders therefore easily pass the second requirement.
The stockholders easily pass the third requirement. Their dividend and the resale value of their stock depends upon the performance of the corporation.
Under present assumptions and conventions, the stockholders fail the fourth requirement. They have no incentive to prevent their corporation from causing harm because they are protected from any such incentive by the doctrine of limited liability. However, this is the only requirement that they fail, and the failure can be remedied.
Consider this. If your dog bites the neighbor's brat, you're screwed. If a visiting evangelist snags his toe on your carpet and breaks his holy neck, you're screwed again. For a natural human being, ownership is a litigation industry. But if a corporation poisons everybody downwind, the owners might lose a few dollars on the next dividend or, at the very worst, the value of their stock. They're immune from responsibility, no matter how many people their property might kill. This is why they fail the fourth requirement.
The treatment of corporations as distinct individuals with personalities of their own is well established by long practice. There are, however, things that corporations cannot do. They cannot love, marry, or get pregnant. They cannot be imprisoned or hanged, although they can be dissolved. In 1245 the pope decided that they could not sin, so presumably Hell, like the jails, will be devoid of corporations. It has been claimed that corporations cannot commit murder, but this is a lie. If I remember correctly, it was the Dow Chemical Company that killed thousands of people a few years ago in Bhopal, India.
Unlike natural human beings, corporations are fictitious entities, creatures of the state. Natural human beings can have rights, but corporations can have only powers. In some regards a corporation may behave like a person, but a corporation feels neither pain nor remorse. In fact it is only property, owned by various people who have bought portions of it. The means by which corporations can be controlled follows from these differences. People make decisions, but corporations do not. Corporations are never responsible for anything they do. Only people can be responsible for the consequences of their actions.
The doctrine of limited liability is a long-standing assumption, but it can be changed or abolished. The doctrine of Alter Ego is a doctrine in which the corporate entity is disregarded and individual stockholders are held responsible for acts knowingly and intentionally done in the name of the corporation. Piercing Corporate Veil is a judicial process whereby the usual immunity of stockholders may be disregarded. This may happen for the defeat of fraud or the remedying of injustice (remember Bhopal, Suisun Bay, Three Mile Island, and the Exxon Valdez). The Instrumentality Rule will allow corporate individuality to be disregarded when the corporation is only an adjunct and instrumentality of a parent corporation. In other words, it's possible for the doctrine of limited liability to be set aside in some circumstances. If it can be done in those circumstances, then it can be done in others. I believe that limited liability should be abolished for all stock ownership. All owners of a corporation should always be personally responsible, without limit and in proportion to their ownership, for any harm caused by their corporations. It's their property and they should be responsible for it, just as I am responsible for mine. I believe that if they were, then the misbehavior of corporations would be controlled.
The end of limited liability would be a big deal. Present stockholders would scream and gnash their teeth. Maybe some of them would even jump out of windows. Stock might not be worth very much for a while because many potential stockholders would be discouraged by the looming spectre of responsible behavior by corporations not prepared for it. Perhaps corporations in hazardous industries would disappear and some things now accomplished by corporations would be accomplished otherwise. Maybe real responsibility would eliminate some hazardous endeavors entirely, thereby showing that they weren't really necessary after all. On those rare occasions when corporations caused a problem, the taxpayers would not need to pay for the consequences because the stockholders would have to do it. This probably wouldn't happen very often because stockholders, faced with real responsibility, would insure that their corporations didn't cause problems. And finally, we could abolish the regulatory agencies. At best they're useless. At worst, they're homes for tyrants and parasites.
I'm not necessarily advocating an end to corporations, although I wouldn't lose any sleep without them. I'm advocating an end to irresponsible ownership of corporations. When I finally understood the nature of stock ownership, as it is presently constituted, I sold my stock. The lost ownership was quickly forgotten and the money spent on better things. The peace of mind which resulted remains with me to this very day.
Letters to the Editor
The problem is not that corporations have artificial intelligence — or intelligence of any kind; they obviously don't. The problem is that corporations are not human beings, and yet they are treated by contemporary society as "legal persons." The result of such an insane use of the legal system, which is supposed to provide justice for humans, on the basis of the "sanctity of the human person" above all mere objects, is that the Bill of Rights, which was supposed to guarantee human freedom, now guarantees the "human" rights of the "corporate person." Is it any wonder that under such a warped system, corporate persons now have freedom of speech, but human persons no longer do? Can you expect a system that treats a legal fiction as a human being to treat human beings like human beings?
Cormier's ideas about the rugged individual, independent of contemporary human (or sub-human) society, are an absurd illusion, perpetuated by Hollywood, to undermine any rational resistance against an inhuman government, which is evil not because it is a government, but because it is inhuman.
— Elliot; N. Merrick, New York
Government is inherently inhuman and inherently evil.
I wish to thank you for your continued sharing with others that which is important to you. I enjoy your writings and appreciate you showing me a view not often reflected ....
— Millie; El Granada, California
Buck Hunter Shoots Off His Mouth
My husband keeps getting "Hunting Fever". What can I do?
— Lonely Wife
Dear Lonely Wife
Give him two aspirin and call me in the morning.
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— Sam Aurelius Milam III, editor