TULE: The Universal Legal Entity

Wenger Swiss Army knife, opened.

Wenger Swiss Army knife, opened. (Photo credit: Wikipedia)

Corporations are TULEs (the universal legal entities). They have become the Swiss Army Knives of legal hacking, government lock picking, treasury robbing, regulation cutting,  jury rigging, and democracy hijacking.

They are increasingly blurring all the  lines between the person, local government, nation state, and international entity. They have almost entirely rubbed out any lines between the private and public sectors.

A corporation can now emulate almost every legal attribute of a person. It can emulate almost every structural and legal detail of  a nation state, with the exception of a dwindling number of national legal powers. Governmental jurisdictions still have a degree of sovereignty or legal superiority over corporations, but things like “international free-trade agreements” are  whittling these governmental powers down.

In some respects the powers and authorities of corporations actually exceed those of nation states and even those of international legal bodies. The most powerful international legal bodies are in fact those constituted by the largest multinational corporations themselves.

All economic and political theories that stress or depend on any of the past distinctions between persons, corporations, and states have become (or are rapidly becoming) obsolete. Little things like democracy, justice, capitalism, socialism, markets, property, and commons, for example.

What does this mean? How does this affect us?

The corruption of campaigns, elections, and political leaders, and the corporate “occupation” of government bodies and agencies mean that  large corporations control the institutions of civil society and make the rules (or control the selective enforcement) of labor policy, taxation, government spending,  financial regulation, food and drug safety, the environment, and so on.

We now have a strongly bifurcated, two-tiered justice system–one set of laws for the rich and one for the rest of us. The laws for the rich give them cover to practice disaster capitalism, creating and/or exploiting economic bubbles or boom-bust cycles that enable the rich to vacuum up assets from all the lower classes and the commons at fire-sale prices.

The rapid co-evolution of corporation law and technology are making the practice if not the concept of governmental regulation obsolete. The majority of government regulations now have the effect if not the intent of granting monopolies, immunities, and other advantages to big corporations over small corporations, local governments, and persons.

The public sector and the commons are being privatized en route to becoming monopolized. In most cases that also means being undemocritized. This invasion of our governments and the commons is producing a new system of ownership and governance of society that in many ways resembles the feudalism and manorialim of the Dark Ages. This has been called plutocracy and neofeudalism.

All the progressive democratic revolutions of the past two thousand years including the Athenian democracy, the Magna Carta,  the European and US revolutions against monarchy, the revolutions of  labor unions against the Robber Barons, and the petit revolutions of social movements and civilian governments against the militarily-industrial-financial-surveillance complex (such as the New Deal, the civil rights movement, and the Watergate and Church Committee Hearings, etc.) are all being rolled back by this universal authoritarian counter-revolution.

Things that will never be the same:

  • elections
  • education
  • the middle class
  • the rule of law
  • law enforcement
  • justice & the courts
  • property
  • contracts
  • markets
  • commons
  • public services and utilities
  • privacy
  • equity
  • civil rights
  • you name it

And there’s no place to run. No place to hide.

Poor Richard

Network diagram showing interlocks between var...

Network diagram showing interlocks between various U.S. corporations/institutions, and four major media/telecom corporations (circled in red). (Photo credit: Wikipedia)

Public Truth

No Fairness Doctrine

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Fox News’ Lies Keep Them Out of Canada

By Robert F. Kennedy Jr., Reader Supported News, 01 March 11

s America’s middle class battles for its survival on the Wisconsin barricades – against various Koch Oil surrogates and the corporate toadies at Fox News – fans of enlightenment, democracy and justice can take comfort from a significant victory north of the Wisconsin border. Fox News will not be moving into Canada after all! The reason: Canadian regulators announced last week they would reject efforts by Canada’s right-wing Prime Minister, Stephen Harper, to repeal a law that forbids lying on broadcast news.

Canada’s Radio Act requires that “a licenser may not broadcast … any false or misleading news.” The provision has kept Fox News and right-wing talk radio out of Canada and helped make Canada a model for liberal democracy and freedom. As a result of that law, Canadians enjoy high quality news coverage, including the kind of foreign affairs and investigative journalism that flourished in this country before Ronald Reagan abolished the “Fairness Doctrine” in 1987.

Fairness Doctrine in the US

In the US, our commitment to free speech even extends to liars. None of us here want a “Truth Police”. That would be too “chilling” on our rights and liberties. The “Fairness Doctrine” ingeniously addressed the problem of biased (and lying) speech on the public airwaves not by limiting speech, but by adding more speech to it.

The Fairness Doctrine was a policy of the United States Federal Communications Commission (FCC), introduced in 1949, that required the holders of broadcast licenses to both present controversial issues of public importance and to do so in a manner that was, in the Commission’s view, honest, equitable and balanced. The 1949 Commission Report served as the foundation for the Fairness Doctrine since it had previously established two more forms of regulation onto broadcasters. These two duties were to provide adequate coverage to public issues and that coverage must be fair in reflecting opposing views.[1] The Fairness Doctrine should not be confused with the Equal Time rule. The Fairness Doctrine deals with discussion of controversial issues, while the Equal Time rule deals only with political candidates.

In 1969, the United States Supreme Court upheld the Commission’s general right to enforce the Fairness Doctrine where channels were limited, but the courts have not, in general, ruled that the FCC is obliged to do so.[2] In 1987, the FCC abolished the Fairness Doctrine, prompting some to urge its reintroduction through either Commission policy or Congressional legislation.[3] Following the 1969 Red Lion Broadcasting Co. v. Federal Communications Commission decision, which provided the Federal Communications Commission (FCC) with more regulatory power, the main agenda for this doctrine was to ensure that the viewers were exposed to a diversity of viewpoints.

n 1974, the Federal Communications Commission asserted that the United States Congress had delegated it the power to mandate a system of “access, either free or paid, for person or groups wishing to express a viewpoint on a controversial public issue…” but that it had not yet exercised that power because licensed broadcasters had “voluntarily” complied with the “spirit” of the doctrine. It warned that:

Should future experience indicate that the doctrine [of ‘voluntary compliance’] is inadequate, either in its expectations or in its results, the Commission will have the opportunity—and the responsibility—for such further reassessment and action as would be mandated.[7]

The Fairness Doctrine has been strongly opposed by prominent conservatives and libertarians who view it as an attack on First Amendment rights and property rights. Editorials in The Wall Street Journal and The Washington Times have said that Democratic attempts to bring back the Fairness Doctrine have been made largely in response to conservative talk radio.[32][33]

On August 12, 2008, FCC Commissioner Robert M. McDowell stated that the reinstitution of the Fairness Doctrine could be intertwined with the debate over network neutrality (a proposal to classify network operators as common carriers required to admit all Internet services, applications and devices on equal terms), presenting a potential danger that net neutrality and Fairness Doctrine advocates could try to expand content controls to the Internet.[34] It could also include “government dictating content policy”.[35] The conservative Media Research Center‘s Culture & Media Institute argued that the three main points supporting the Fairness Doctrine — media scarcity, liberal viewpoints being censored at a corporate level, and public interest — are all myths.[36]

In June 2008, Barack Obama‘s press secretary wrote that Obama (then a Democratic U.S. Senator from Illinois and candidate for President):

Does not support reimposing the Fairness Doctrine on broadcasters … [and] considers this debate to be a distraction from the conversation we should be having about opening up the airwaves and modern communications to as many diverse viewpoints as possible. That is why Sen. Obama supports media-ownership caps, network neutrality, public broadcasting, as well as increasing minority ownership of broadcasting and print outlets.[38]

In February 2009, a White House spokesperson said that President Obama continues to oppose the revival of the Doctrine.[39]


At the end of the day, the Fairness Doctrine only helped to provide more diversity. That’s not the same thing as truth. Its more like truthiness.

(By the way, it is very interesting to me that the conservative Media Research Center considers the public interest a “myth.” Conservatives tend to consider the concept incoherent or ambiguous, but I believe that says more about their own cognitive process than about the public interest.)

Broadcasters always hated the fairness doctrine for a variety of reasons, financial and ideological, but I am not sympathetic to the arguments against the doctrine based on property rights, since mass media (even cable) depends on public resources — spectrum and rights of way. But I am sympathetic to concerns about chilling free speech by placing burdens upon it–even the burdens of truth and decency.

On the other hand, I am deeply concerned about the power of mass media in our culture and its capture and use by the super-rich to promote their agenda and spew their propaganda. Our media is almost all privately owned –for sale to the highest bidder. Don’t huge media monopolies threaten our access to accurate information and undermine the democratic process itself?

We rightly prize our freedom of speech, but we also know the right to free speech comes with a responsibility. We all know about  the “power of the pen”, and we all know that power can cause harm. And not just hurt feelings, but financial and physical injury. That’s why we have laws against libel, slander, criminal defamation, and incitement to violence. That’s why, as every school child of my generation knew, we can’t falsely yell “fire” in a crowded theater.

Of course when it comes to our free press, we rightly bend over backwards to be permissive. The public interest in a free press is often greater than the interests of individuals or even groups that may be harmed by journalistic errors, irresponsibility, and even outright lies. But when lies and inaccuracies become pervasive, isn’t there is a compelling public interest in demanding a certain level of honesty and responsibility, even from the free press?

Yes. The only question in my mind is how to maximize that public interest without unintended consequences. We don’t want to throw the baby out with the bath water or shoot ourselves in the foot.

Truth, Justice, and the American Way

Superman fights for “truth, justice and the American way.”  (“In the 2006 film Superman Returns the phrase was recited by the character Perry White as “truth, justice, all that stuff.” ~Wikipedia)

So what would Superman do? What is the American way (or all that stuff)?


There are three ways to make truth and accuracy available in the media. They can (and should) be used in combination:

  1. Diversity. This is promoted by busting up or regulating monopolies. Then (using this method alone) it is “hands off” and hope for the best.
  2. Regulation. This is imposing penalties, as Canada has done, for lying or for causing harm. We regulate speech and visual content in the US to restrict sex and “foul” speech (the least justifiable intrusion of big government into free speech, brought to us by libertarians and republicans), but not lies. We can’t touch outright lies on media claiming to be news. The Fairness Doctrine was a relatively soft form of regulation, but it may have still been unnecessarily burdensome on private media. We need to explore new regulatory principles and methods (see “Justice”, below).
  3. Public media. By itself, this leaves “hands off” the private media, but offers robust public alternatives that have high standards, public oversight, and a firewall against partisan political influence.


We need methods for regulating private media in minimally invasive, burdensome, chilling ways to minimize the harm that media may do to individuals, to groups, and to civil society. What I propose is in a sense a method of private regulation. In general, I think we need to leave private media alone unless they do harm. Basically, I think we just need to make sure that media is fully accountable for civil torts as well as crimes. We need to insure that anyone unjustly harmed by media has legal standing to pursue a remedy. We need to see to it that there is an adequate statutory framework to address the most common types of injury; that there is enforcement; and that there is judicial due process. There needs to be a single point of entry to the justice system for citizens who claim to have suffered injury by the media. There needs to be public-appointed representation for citizens who can’t afford private counsel. But I think we need to go one step further and give all citizens the right to sue media for injuring the public welfare. Failing to serve the public well is not generally the same as injuring the public but in some cases it might rise to that level, especially where the public has contractual expectations of the media by virtue of spectrum, rights-of-way, tax breaks, etc..

Wherever government has authority to act, citizens should have that authority as well, at least by having standing to bring an administrative or judicial complaint or suit to force the government or court to act. But the scope of government regulatory authority should by no means be the limit of a citizen’s right to sue for an injury sustained. All tort principles also apply.

Will this open a floodgate of excessive litigation? Will big media bullies game the system or turn it against those it is intended to protect? Sure. This has been the problem with the law from day one. It has been the problem with democracy from day one. Democracy is the worst possible form of government except for all the others. What is the alternative? We have to strive to put big business and little people on an equal footing in the law, at every step in the process. Fair play is the American way, but it takes all of us, every day, in every way, to operate as a fair and just society. Legislators, courts, and regulators have always struggled with bias, manipulation, and corruption. Not surprisingly, much is known about how to minimize them. We know much more than we apply. None of this is anything new, and it is only peripheral to the proposals made here. It goes without saying.

Fair Play–the American Way

Bust up monopolies. Our people, from the woman in the street to most of the judges on the US Supreme Court, have generally opposed monopolies. Our country got its start largely due to popular opposition to a Brittish monoploy, the East India Company. Hatred of monopolies is in our DNA. But how can we have a free press if all the presses have been bought up by a few giant corporations, some of which are even based in foreign countries, just as the East India Company was? As we have had to do in many industries in the past, we must break up the giant media monopolies to protect the freedom of the press. This is just as true in the internet age as at any time in the past. The internet is the modern “press”. Though it was created by universities and public institutions, private monopolists are constantly encroaching on it, trying to capture its infrastructure and resources and turn it into a digital version of medieval feudalism. Modern monopolists talk “freedom” and “private property” but they want all the freedom and private property for themselves, not for us.

Public media, public access, public interest

Diversity and regulation are not going to fully satisfy the needs of the public interest.  We need a public media system that has parity with private media.

Perhaps the best example of public media thus far is the British Broadcasting Corporation (BBC), the largest broadcaster in the world, with about 23,000 staff. In the US we have the smaller, weaker Corporation for Public Broadcasting (CPB),  NPR, PBS, and their affiliated local stations. In the US, the public broadcasting system is dwarfed by private players and is under constant attack by conservatives and their corporate masters. The attacks are usually framed in ideological or fiscal terms, but their fundamental motives are political and commercial (anti-competitive). Often, public media are accused of being propaganda organs of the state. For Fox supporters to call PBS a propaganda organ is the height of hypocrisy and irony.

A  fair, open, transparent, and accurate media is a prerequisite for a fair, open, and transparent society. Democracy cannot just leave all of its media needs to private, independent (undemocratic) operators and “hope for the best”. We can’t let the Foxes run the hen house if we want to keep getting any eggs.

For the fiscal year 2010, the budget of the US Department of Defense, including spending on “overseas contingency operations” was $663.8 billion.

CPB’s annual budget for fiscal year 2010 was $422 million. Of course that doesn’t count all those funds donated “by members like you” who must listen to sickening corporate promos, tag lines, and seemingly endless on-air fund-raising marathons.

I propose that a new US Public Media Corporation be funded at parity either with the military budget or with the largest private media conglomerate, whichever is greater. I am convinced that our public access to self-education resources, reliable information, and social networking and collaboration infrastructure is as important to the maintenance and security of our democracy as the military.

The funding for such a corporation should come entirely from the public treasury (no more commercials, corporate promos, or fund-raising marathons) and should be totally isolated from private, commercial, or political special interests.

I suspect that those organizing this corporation could learn a lot from the US Postal Service.

One of the first orders of business would be the provision of broadband and 4G mobile network service to every location and person in the nation. If necessary, some exiting infrastructure should be nationalized by eminent domain. The rates charged for these services would be computed on a break-even basis the way that the Postal Service computes it postage prices.

Wherever technically feasible, the organization and infrastructure built by this public media corporation should be decentralized, local, democratic and peer-to-peer. The network should be modular/cellular, massively redundant, and self-healing. There should be few if any central points of failure. This is not about command and control but about serving the public interest in all the ways the marketplace has failed to do so.

The public media corporation should address all media modalities: broadcast, satellite, mobile, and fiber; networks, platforms, applications, and tools; and last but not least, content.

The “trunk” of the public media system would be a National Public Internet (NPI). (See the related article at the end of this post)

I also think it is time for a National Public Wikipedia that would aggregate many wiki domains including the legacy Wikipedia and forks like Citizendium. This public metawiki would not intervene in legacy wiki editorial and political issues but would establish a universal presentation, user interface, and meta-data standard so it could serve as a two-way portal (editing and presentation) and a single point of access to all participating wikis. This National Public Wikipedia could also have a layer that aggregates and standardizes all the reputation/quality/confidence metrics. In conjunction with this, the same organization could also host a National Public Search Engine and a National Public Social Networking platform based on transparent open source software. Further, the same organization could maintain a distribution of Linux that would include a p2p cloud server node on which all these National Public Internet services could run in distributed fashion.

The private marketplace has had long enough to get its act together and deliver the networks, platforms, and content we want and need. It has failed miserably in comparison with what has been wanted and what has been technically feasible.  The free market is great for some stuff, but it is no panacea, and if we don’t ALL see that by now its probably because we have been dumbed down  by the private mass media–or because we are corrupt, self-serving liars with massive conflicts of interest between our personal greed and the public good.

Of course, in a national public media corporation, there is no constitutional protection for Lies and the Lying Liars Who Tell Them. A lying liar (such as a Rush Limbaugh) could be fired at the drop of a hat. Its a  so-called “morals clause”. The same is also true for any private media corporation (such as a FOX*), and it has been all along.

That is the public truth.

Poor Richard

* FOX = Fraud, Oligarchy, Xenophobia

PS While we’re at it lets start a US Department of Market Failures. It can receive online petitions for goods and services that are not available (for no good reason) in the “free market”, such as a notebook PC with pre-installed Linux, a lawn sweeper with metal (not plastic) gears and wheels, a pull-behind friction-powered sickle mower, a rammed-earth brick machine, photovoltaic window film and roof tiles, and so on. Then it can contract for these goods and services from small and minority-owned businesses and operate an online store for their sale and distribution.

Related Articles

Bill St. Arnaud: Marriage of Facebook & Telcos – and why we need a National Public Internet (NPI)

big, fat, lying liars like Limpbaugh and FOX*

The Consent in the Machine

Manufacturing Consent: The Political Economy o...

Image via Wikipedia

The Consent in the Machine: An Allegory

The title “The Consent in the Machine” is meant to invoke an association with The Ghost in the MachineArthur Koestler‘s 1967 thesis that the mind of a person is not an independent entity, temporarily inhabiting and governing the body, but something integral to and inseparable from it.

In that context I want to compare and contrast two versions of consent:

  1. “Manufactured Consent”, a kind of mindless, mechanical conformity created by mass media by gradually displacing  natural organic consent and replacing it with a fake, manufactured substitute, described by Noam Chomsky in Manufacturing Consent: The Political Economy of the Mass Media (1988), and
  2. “Manifested Consent”,  evoked by re-taking the status quo “Machine” (state or corporation) and cultivating a natural, organic consent throughout its parts by a revival of the public interest. This vision might be represented by The Greening of America (1970), a paean to the counterculture of the 1960s and its values by Charles A. Reich

Consent of the Governed

The preeminent feature of a valid, legitimate, and just government is the consent of the governed. That is what true libertarians are all about, although they admit that the very words government and governed imply submission to authority. We rightly prefer the authority of impartial law to the authority of particular men. (Note: Where some libertarians (you may not know who you are) go off the tracks and into the ditch is that they decide to put arbitrary limits on what laws and public enterprises we the people have the right to establish in the public sector, or they quibble about what constitutes consent to the point that no law could ever be enforced. At the same time, they tolerate and ignore many laws and contracts which are actually insults to freedom and decency. For example, many libertarians don’t seem to mind a legal system that allows people to sell themselves or to sell, waive, or alienate their basic legal and human rights. The common consensual “employment at will” contract does all of those things. One can argue that if the alternative to a contract is starvation it isn’t consensual (it is entered under duress) and/or that persons do not “own” and therefor cannot sell themselves, and/or that certain legal and human rights really shall be inalienable under any circumstance and no consent to the contrary shall be enforcable.)

The frontispiece of Thomas Hobbes' Leviathan

But this isn’t about libertarians. Its about consent in the state, in governance, in commerce, and in society in general.

The dying of the light and the death of consent

The inalienable right of consent we think we have has been conjured away and in its place is the zombie version, a mindless conformity, brainwashed into us by mass media. The zombie doesn’t really make choices, it follows subliminal suggestions. The zombie thinks it is making choices because that is what it is told it is doing.

Resurrecting Consent

How can we bring the zombies back to life and restore their natural, organic, and inalienable right of consent? To do this we must transplant true, organic consent back into the machine, back into all the zombies that make up the machine and that operate the machine at the direction of the mass media. We must somehow get that consent even back into those zombies that work inside the mass media itself, so the mass media will cease to follow the commands of the Great Pirates and their off-world Reptilian Overlords.

But How?

Most people see the modern state or a nation as divided into a public sector, a private sector, and, often, the civil society. But I see that the divisions and distinctions between the public sector, private sector, and civil society are progressively dissolving. Perhaps rightly so.

My theory is as follows:

A modern theory of society and property as a network of relations

The machine is made up of a “state” and many corporations full of zombies. A state can be viewed as a special corporation that operates certain “natural monopolies” for the people of a geographical area. All other corporations are subsidiaries of the state which charters, regulates and taxes them. The state’s charter is its constitution and its bylaws are its statutes. Corporations can be related hierarchically and/or horizontally. Their internal structure, management, and operating procedures are defined by their charters and bylaws as well as by the constraints imposed by the state, by any other corporations by which a subordinate corporation is held, and by their contracts with other corporations or individuals.

These charters, bylaws, and contracts are formal specifications of relations that can take many forms that sometimes defy classification; but which can often be categorized by where they lie on various continua or axes. One such axis is autocratic-consensual (or similarly, authoritarian-egalitarian). Democratic is somewhere between autocratic and consensual. Another axis is open-closed (which can apply to any number of matters such as information transparency, membership, employment, accountability, etc.)

The “public interest”, whether expressed as general welfare, as life-liberty-happiness, as life-liberty-equality, or some other type of utility, is best served, in general, by the greatest possible consent of We the People. Consent is served by transparency and accountability. This is an oversimplification of utility, but the public-private axis should be redefined as a composite index of public-interest factors that are satisfied by any given corporation, including the state.

Put another way, the public interest spans everything public, private, and civic. It is only served by corporations, including the state, to the degree that they satisfy such functional public-interest criteria as consent, transparency, symmetry, accountability, democracy, inclusion, opportunity, sustainability, reciprocity, human dignity & etc., etc., etc.

But the mass media has cast the public interest into the outer darkness of the underworld. These magic words, consent, transparency, symmetry, accountability, democracy, inclusion, opportunity, sustainability, reciprocity, human dignity & etc., etc., etc., are spells and incantations that conjure up the public interest from the underworld.

Note: if the word “corporation” is too odious and frightful to some, a word like “association” or group can be substituted as long as its understood to include corporations both as we know them and as they might become. The word is not the thing. The important thing is the web of functional relationships between people.

When the zombies in the mass media and in all the other corporations have been brought back to life by the awakening and spreading of the public interest, and organic consent is restored to one and all throughout the land, the corporations will  once again be called by their true and natural  names: Guilds, lodges, societies, commons, commonwealths, cooperatives, partnerships, communities, communes, villages, tribes, families, etc.

Poor Richard

Related PRA2010 post:

The Property Problem

Private Property, Taxation, and Corporate Personhood

Dear cons, neocons, and libertarians:

Your notions of private property, property rights, and taxation seem a little naive to me.

I am not a lawyer but I know something about the laws of real property (real estate law). I proposed and lobbied for the Tennessee Conservation Easement Act of 1981 and some TN legislators and lawyers considered me one of the state’s best experts on property law at the time. While my legal, historical, and philosophical knowledge of property ownership mainly concerns real property, many of the same principles apply to personal property, too.

I am a progressive, but several of my close friends have been Ayn Rand Libertarians, “lazy-unfair”capitalists (thanks to Natural Lefty for that turn of phrase), and free-market fundamentalists. If I  mis-state any of your beliefs please correct me.

The arguments I have seen  in support of absolute private property ownership fall into two categories: appeals to natural law and appeals to utility.

I. The appeal to “natural law” and “natural rights“. Libertarians and some conservatives view private property rights as the foundation from which all other natural rights extend. There are several problems with this:


From The Jungle Book by Rudyard Kipling. (Click image for full quotation)


A. Despite the musings of many erudite (if old-fashioned) philosophers, in the state of nature there is but one right: “might makes right” (Vae victis). Any other right can only be the result of imposing positive (artificial) law.

B. In the state of nature there is but one law: “might makes right” (Vae victis), again. Any other result can only be:

1) another case of imposing positive (artificial) law, or

2) the “law” of unintended consequences (this includes all biological and physical laws such as gravity, etc.)

C. In nature, possession is 100% of the law. The only private property is that which one can take and hold by force. If you can take it from someone else it becomes yours. If they can take it back or induce you to give it back it is theirs again. Natural social behavior might seem to introduce more laws, such as in the “law of the pack” and “pecking order”, but in nature these are simply either:

1) proxies for force which must be regularly backed up by force–there is no court of law, or

2) they are the product of genetically encoded, involuntary, instinctive responses to chemical or physical signals as in the case of social insects and bacteria.

D. Without the rule of law, predictably and impartially managed by society, property is nothing but a temporary possession maintained by private force. If the existence and persistence of private property depends upon a public legal infrastructure, then private property as we know it is a public creation. The public, which creates the “privateness” of the property and preserves it by force of law, always has a proprietary interest in any such property–by the principle of natural law! If this is too hard to wrap your head around, consider this–in any contest between private force and state force, the state wins. The only exception is a successful revolution or coup (Good luck with that!).

E. Many of the philosophers who have argued for “natural law” have conflated it with divine law, nature simply being a proxy for the divine creator. This attitude has passed by inheritance to modern-day conservatives and libertarians. Property, once the divine right of kings, is now the divine right and manifest destiny of whoever has the latest legal claim. In this tradition, the owner has an absolute (thus divine) right to his property which supersedes all other claims. The public interest, the interests of future generations, or the survival of the planet be damned. There are two problems with this argument:

1) This is thinly veiled religion which, in the possible absence or indifference of the necessary deity, amounts to little more than anarchy.

2) This “absolute” natural right can be magically dissolved by signing a piece of paper, just as any other so-called natural right of man can be signed away or even automatically abdicated simply by accepting casual employment. This reveals that the natural right, just like the natural man (the supposed “king of his castle”), is actually nothing more than chattel (from the word cattle–in law, any movable property; also used to refer to slaves, wives, and minor children).


Many of the categories above include additional rights or attributes not listed. (Click image for article on “Bundle of rights”)


II. The appeal to utility

A. Proponents of the absolute right to private property claim that it promotes the common good in the same way that greed supposedly promotes the common good in the “free market”. They rely on an  “invisible hand” to make everything work out for the best even if each person acts purely out of greed, ambition, paranoia, malice, delusion, or any other form of vice, depravity, or pathology.

B. To be fair, they assert that an owner will always act in his own best interest and that the utility of absolute private ownership follows from this (with a little invisible helping hand still required). They assert that an owner will rarely fail to act in his own self-interest. However, only if every property owner acted in his fully enlightened self-interest could the appeal to general utility succeed. That test is clearly unmet. Most owners are not only unenlightened they are predictably irrational. The “rational agent” theory has been fully discredited in psychology, sociology, neuroscience, and even in economics (which tends to fall somewhat behind the curve in theories of human behavior).

C. Science has debunked the invisible hand  for failing to deal with irrational agents, externalities, and information asymmetry:

1. Nobel Prize economist Joseph E. Stiglitz wrote:

“Adam Smith, the father of modern economics, is often cited as arguing for the “invisible hand” and free markets: firms, in the pursuit of profits, are led, as if by an invisible hand, to do what is best for the world. But unlike his followers, Adam Smith was aware of some of the limitations of free markets, and research since then has further clarified why free markets, by themselves, often do not lead to what is best. As I put it in my new

book, Making Globalization Work, the reason that the invisible hand often seems invisible is that it is often not there.

Whenever there are “externalities”—where the actions of an individual have impacts on others for which they do not pay, or for which they are not compensated—markets will not work well. Some of the important instances have long understood environmental externalities. Markets, by themselves, produce too much pollution. Markets, by themselves, also produce too little basic research. (The government was responsible for financing most of the important scientific breakthroughs, including the internet and the first telegraph line, and many bio-tech advances.)

But recent research has shown that these externalities are pervasive, whenever there is imperfect information or imperfect risk markets—that is always.

Government plays an important role in banking and securities regulation, and a host of other areas: some regulation is required to make markets work. Government is needed, almost all would agree, at a minimum to enforce contracts and property rights.

The real debate today is about finding the right balance between the market and government (and the third “sector”—non-governmental non-profit organizations.) Both are needed. They can each complement each other. This balance differs from time to time and place to place.[11] (Wikipedia: Invisible Hand)


(click image for article on “Invisible Hand”)


2. Noam Chomsky, while acknowledging the intelligence of Smith’s thesis, wrote:

Throughout history, Adam Smith observed, we find the workings of “the vile maxim of the masters of mankind”: “All for ourselves, and nothing for other People.” He had few illusions about the consequences. The invisible hand, he wrote, destroys the possibility of  a decent human existence “unless government takes pains to prevent” this outcome, as must be assured in “every improved and civilized society.” It destroys community, the environment, and human values generally—and even the masters themselves, which is why the business classes have regularly called for state intervention to protect them from market forces.[12] (Wikipedia: Invisible Hand)

3. The political economist E.K. Hunt:

[Hunt] criticized markets and the externalities emerging from market exchanges as being a route for self-advancement at the expense of social good. Hunt helped contribute to the literature on heterodox economics, helping to coin the term “invisible foot” in contrast to a presumably beneficient “invisible hand”. Hunt wrote:

“If we assume the maximizing economic man of bourgeois economics, and if we assume the government establishes property rights and markets for these rights whenever an external diseconomy is discovered [the preferred “solution” of the conservative and increasingly dominant trend within the field of public finance], then each man will soon discover that through contrivance he can impose external diseconomies on other men, knowing that the bargaining within the new market that will be established will surely make him better off. The more significant the social cost imposed upon his neighbor, the greater will be his reward in the bargaining process. It follows from the orthodox assumption of maximizing man that each man will create a maximum of social costs which he can impose on others. D’Arge and I have labeled this process “the invisible foot” of the laissez faire … market place. The “invisible foot” ensures us that in a free-market … economy each person pursuing only his own good will automatically, and most efficiently, do his part in maximizing the general public misery. “(Wikipedia: Invisible Hand)

D. Without an invisible hand, the only interested party left around to represent the common good, the public interest, future generations, and the planet, and “to promote the general welfare” (as per the Preamble to the US Constitution), is (no big surprise to progressives) the public. The public interest is a proprietary interest in a portion of the bundle of rights which make up ownership. The public owns this proprietary interest by virtue (as stated before) of natural law!

E. For the appeal to utility to succeed, owners must put their property to its “highest and best use”. This condition is clearly not satisfied. The proponents of absolute private property rights often argue that it is government interference, (zoning, environmental regulation, nuisance laws, etc.), which prevents private owners from achieving the highest and best use of their property, and that such interference is a “taking” of their property. There is law on both sides of this argument and owners are free to file their claims in the proper court of jurisdiction– the venue which they argue is the only proper source of remedy.

Corporate ownership of property

Corporations are chartered by state law. Originally, the justifications for corporate existence were 1) to carry out a specific, narrow set of activities which the state agreed would serve a public need, and 2) to limit the personal legal liability of the investors and operators which might otherwise inhibit achieving  that public good for which the corporation was chartered. Classic examples are the early railroad corporations and hospitals. These served fundamental public needs and the liability issues acted as serious impediments to private developers and operators.

Today, the typical corporate charter includes a catch-all “or for any other legal purpose” article. Now, if corporations were intended to operate “for any other legal purpose”, the entire idea of a charter listing the intended purposes is entirely superfluous. Obviously, a corporation was originally intended to operate only for a very limited set of explicit, pre-defined purposes and those purposes were expected to serve an explicit, pre-defined public need, not simply any private purpose that a corporation might improvise from day to day.

In addition to limiting liability (thus removing a disincentive to meeting a critical public need) the state grants certain other privileges (not rights) to the corporation which are essential to conducting its business:

1. The privilege of acting as a party to such legal contracts as may be necessary for the conduct of its explicit, pre-defined business activity.

2. The  privilege of owning such tangible and intangible property (such as cash, real property, and intellectual property) as may be necessary for the conduct of its explicit, pre-defined business activity.

Now, unless an explicit pre-defined public need is to be served, what is the incentive for the state to specially limit the normal legal liabilities of the corporate investors and operators, including the liabilities incurred by its power to enter into contracts, and to grant it the privilege to hold property in perpetuity without any of the taxes that natural people and families must pay to transfer property among themselves and their successive generations? There are none. Such a charter, uncoupled from any explicit, pre-defined, compelling  public need, would serve no legitimate purpose for the state, and could only be considered a form of fraud, graft, or corruption.

Any extra grant of rights to a corporation beyond those described above, or any post hoc, improvised expansion of its scope of operation, is a direct contradiction of the core raison d’etre of corporations and is blatantly contrary to the public interest.

The privilege of corporate property ownership is subject to an explicit lien held by the state in the form of the corporate charter and the explicit Constitutional duty of the US Government, whose boss is the We The People,  to serve the public interest and to promote the general welfare.

Nevertheless, over the years government was motivated to liberalize the purposes for which a corporation might be granted a charter because it could impose double taxation by taxing both the corporate income and the dividends paid to investors. This was little more than institutionalized bribery–the state granted perpetual property ownership and limitations of liability in exchange for double taxation.

It has not been a fair exchange. In the intervening years since chartered purposes were broadened to include such things as “making shit loads of money” and “any other legal purpose”, corporations have grown increasingly powerful and the contribution of corporate taxes to the public treasury have steadily eroded away.

The Corporate Tax Dodge

By Cassandra Q. Butts, April 10, 2004

The news that more than 60 percent of U.S. corporations failed to pay any federal taxes from 1996 through 2000 when corporate profits were soaring and that corporate tax receipts had fallen to just 7.4 percent of overall federal tax revenue in 2003 – the lowest since 1983 and the second-lowest rate since 1934 – is an outrage. But it should come as no surprise to anyone who has been paying attention to national tax policy over the past few years. The General Accounting Office (GAO) report also found that an astonishing 94 percent of corporations reported tax liability of less than 5 percent of their total income during the same time period…

With Tax Day (April 15) fast approaching and the Bush administration continuing to make the case that the Bush tax cuts have benefited American families, the GAO report could not be timelier in painting a far less rosy picture. Both the GAO study and the historical record support the conclusion that any benefit working families have received from the Bush tax cuts has been more than offset by the additional tax burden they must bear because corporations no longer pay their fair share of taxes.

As the GAO study documents and the historical record proves, corporate tax dodging is directly linked to the reduction of corporate tax revenues. Corporate tax receipts dropped from an average of 4.8 percent of GDP during the 1950s to 1.3 percent of GDP in FY2003. Treasury Department figures show that actual corporate income tax revenues fell 36 percent from FY2000 to FY2003. And while the statutory corporate income tax rate is 35 percent, the effective corporate tax rate – the actual share of corporate taxes paid on corporate profits – has averaged just 26 percent since 1993, according to the Congressional Research Service…

Estimates of the cost of corporate tax loopholes have been projected at upwards of $50 billion a year, according to Citizens for Tax Justice.

As corporate tax receipts decreased, payroll taxes, the most regressive of all taxes, increased dramatically. Specifically, payroll taxes increased from 1.6 percent of GDP in FY1950 to 6.8 percent of GDP in FY2002, surpassing both corporate income taxes and excise taxes in their contribution to total federal receipts. This rise in payroll taxes represented a 30 percent increase in the contribution of payroll taxes to overall federal revenues.

At the same time, individual income taxes also increased in the past half century as both a percentage of GDP and in their relative contribution to total federal tax receipts. Individual income taxes rose from 5.8 percent of GDP in FY1950 to 8.3 percent of GDP in FY2002.

During the Bush-Cheney years, the largest corporations (now transnational entities with no allegiance to the US) completed the process of taking the US Government (at its own invitation) captive, as both Thomas Jefferson and President Dwight Eisenhower had predicted they would.

The original reasons for corporate existence and corporate privileges have gradually dwindled away. The only justification that remains, according to conventional wisdom, is jobs. That justification is false. The corporate enterprise has no inherent advantage as a creator of jobs other than its advantage in destroying unincorporated employers and self-employment by leveraging its special advantages of perpetual life, limited liability, market monopolization, and corrupting political influence to force out competition. This is diametrically opposed to the long term public interest and maintaining a balance of power between popular sovereignty (democracy) and rule by the wealthy (plutocracy).

“The word plutocracy is derived from the ancient Greek root ploutos, meaning wealth and kratos, meaning to rule or to govern.”

“Before the equal voting rights movement managed to end it in the early 20th century, many countries used a system where rich persons had more votes than poor. A factory owner may for instance have had 2000 votes while a worker had one, or if they were very poor no right to vote at all. Even artificial persons such as companies had voting rights. In the US, it would take until 1945 before persons living on welfare and persons in personal bankruptcy would get voting rights.” (Wikipedia)

Michael Moore’s recent movie, “Capitalism – A Love Story” mentioned secret reports that Citigroup circulated to their wealthiest clients explaining a concept they called “plutonomy” –a blend of pluto– (wealth) and economy. A plutonomy is a system in which economic growth is both powered by and consumed by the rich. In other words, a plutonomy is a society of the rich, for the rich, and by the rich.

The Secret Citigroup Plutonomy Reports:

“We [Citigroup]… posit that:

➤ The world is dividing into two blocs – the plutonomies, where economic growth is powered by and largely consumed by the wealthy few, and the rest.

➤ We project that the plutonomies (the U.S., UK, and Canada) will likely see even more income inequality…”

Full report:  Citigroup-Oct-16-2005-Plutonomy-Report-Part-1

“Revisiting Plutonomy: The Rich Getting Richer

➤The latest Survey of Consumer Finances, for 2004, has been released by the Federal Reserve. It shows the rich continue to account for a disproportionately large share of income and wealth in the US economy: the richest 10% of Americans account for 43% of income, and 57% of net worth. The net worth to income ratio for the richest 10% of Americans increased from 7.4x in 2001, to 8.4x in the 2004 survey. The rich are in great shape, financially.

➤We think the rich are likely to get even wealthier in the coming years. Implication 2: we like companies that sell to or service the rich – luxury goods, private banks etc. Favored names include LVMH and Richemont.”
Our whole plutonomy thesis is based on the idea that the rich will keep getting richer. This thesis is not without its risks. For example, a policy error leading to asset deflation, would likely damage plutonomy. Furthermore, the rising wealth gap between the rich and poor will probably at some point lead to a political backlash. Whilst the rich are getting a greater share of the wealth, and the poor a lesser share, political enfrachisement remains as wasone person, one vote (in the plutonomies). At some point it is likely that labor will fight back against the rising profit share of the rich and there will be a political backlash against the rising wealth of the rich. This could be felt through higher taxation on the rich (or indirectly though higher corporate taxes/regulation) or through trying to protect indigenous laborers, in a push-back on globalization — either anti-immigration, or protectionism. We don’t see this happening yet, though there are signs of rising political tensions. However we are keeping a close eye on developments.

According to Jamess at the Daily Kos Blog on 10/04/09

“Those [Citigroup] reports, since leaked, plainly discuss the power of the Plutonomy in America, and how it would only strengthen, as long as the “the rest us” (the non-plutonics) could be kept in the dark about the Plutonomy existence, its role, and its over-arching control in the American Economy”

Even though the Plutonomy (the top 1%) control over 50% of the net worth in America — they don’t control the Votes!

The thing they most fear is the principle of “one person — one vote”.

You see despite their extreme wealth and power, they only have 1% of the vote; “the rest us” control the other 99% of the votes.

We, the People

Plutocracy and plutonomy are not the same as democracy and they are not compatible with democracy. They are antithetical to democracy and the liberty of  “We, the People“.

The Preamble to the US Constitution reads:

“We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.”

Plutocracy and plutonomy produce ever greater concentrations of wealth (private property) in fewer and fewer hands. If one wanted to design a system or process by which a democracy would gradually be subverted and transformed into an aristocracy or oligarchy, (society dominated by small elites) plutonomy would be perfect for the job.

Wikipedia: Oligarchy

The word oligarchy is from the Greek words “ὀλίγος” (olígos), “a few” and the verb “ἄρχω” (archo), “to rule, to govern, to command”…  Oligarchies have been tyrannical throughout history, being completely reliant on public servitude to exist. Although Aristotle pioneered the use of the term as a synonym for rule by the rich, for which the exact term is plutocracy, oligarchy is not always a rule by wealth, as oligarchs can simply be a privileged group, and do not have to be connected by bloodlines as in a monarchy.

Economic Inequality

Economists and political scientists tend to agree that a certain amount of economic inequality and disequilibrium is good for a society. It stimulates fluidity, creativity, competition, and motivation. Most economists and political leaders have also come to agree that too much inequality is bad. Monarchy, monopoly and plutonomy represent too much inequality.

Beyond some point, the greater the disparity of income and concentration of wealth (private property) in a society, the greater the degree of servitude of the masses. Mass servitude is not what the US was founded for. That was not the original meaning or original intent of the Constitution. No version of originalism dares claim such an intent.

At some point, the greater the inequality of income and concentration of wealth (private property) in a society becomes, the less healthy, happy, and free the people of that society are.

A study published in 2009[1] has shown that negative social phenomena such as shorter life expectancy, higher disease rates, homicide, infant mortality, obesity, teenage pregnancies, emotional depression and prison population correlate with higher socioeconomic inequality. (Wikipedia: Economic Inequality)

Thus, almost every aspiration expressed in the Preamble of the US Constitution is directly thwarted by the unlimited concentration of wealth.

The principle tool the public has to prevent the excessive concentration of wealth is taxation.



Law and Taxation: balancing public and private interests


The natural, proprietary interest which the public retains in all private property is the basis of the people’s right to tax income, property, and inheritance. If tax rates are too high, the burden may stifle economic activity. If rates are too low, especially in the top tiers, concentrations of wealth may grow large enough to stifle activity in the lower economic tiers (plutonomy). Democracy can not endure if we abuse the power of taxation, nor can it  endure if we use this power too little.

At big holiday gatherings at my grandparents’ house, meals were eaten at two tables–the grown-ups’ table and the kids’ table. There is a social parallel:

At the kids table, political conversations are ideological–ideals are black and white and principles are expressed as simplistic clichés, such as “Government is not the solution, government is the problem”, and “Taxation is theft”. For every complex problem there is a simple solution.

At the grown-ups table, ideals are tempered by reality, complexity, and  pragmatism. Simplistic ideologies and sophomoric theories are subjected to historical and empirical criticism. Black and white values become shades of gray when seen in terms of complex trade-offs between various competing interests. At the grown-ups’ table, the social confiscation and redistribution of wealth through taxation is not an evil in and of itself. It is founded on natural law and it can be used to establish justice and balance. It is an evil only if carried too far.

The potential for evil lies equally in taxing too much or too little.

Well-regulated taxation is as fundamental to the preservation of democracy as the rule of law.

Corporate Personhood

The 14th Amendment of the US Constitution says:

Section 1. All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside. No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.”

Corporations are neither born nor naturalized and thus are neither people nor citizens. They are also not citizens in that they are not issued passports and they do not have the right to vote.

If corporations were persons, then by virtue of the “equal protection” clause of the 14th Amendment, all rights and privileges afforded to corporations, such as immortality and limited liability, would have to be extended to all natural persons as well.

Corporations are not persons. They may act as artificial or virtual persons for the purpose of contracts and holding property, period. This is a limited, artificial, legal device created by statutory law–not one created either by natural law or the US Constitution.

There are a few narrow ways that corporations may act similar to persons. But there are many ways in which corporations, special interest groups, and rich persons are all very different from ordinary working persons.

As the Citigroup plutocracy reports correctly point out, the money is on one side and the votes are on the other side. To remain free and democratic, we must steer the bus of state between the ditches of public tyranny and private tyranny.

Anyone is free to argue, with their speech or their vote, that any particular exercise of taxation, zoning, environmental regulation, or other public-interest restrictions on the absolute ownership of private property are bad public policy. However, the argument that all such exercise of law is categorically evil is patently absurd and has no place at the grown-ups’ table. And when wealthy corporations, big associations, or rich people bribe or buy politicians or spend millions on propaganda designed to trick average working Americans into acting against their own enlightened self-interest, that kind of behavior is un-American.

That is not speech. That is not democracy. That is information warfare, and those who commit such acts are enemy combatants.

Poor Richard


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