Stuff You Should Know - How Corporate Personhood Works

Episode Date: November 20, 2008

Corporate personhood is an ancient legal custom tracing back to Roman law, whereby a corporation is legally considered a person. Learn more about your ad-choices at https://www.iheartpodcastnetwork.comSee omnystudio.com/listener for privacy information.

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region that attracts monsters and paranormal activity. There's something beyond our understanding going on here. Starring Supernatural's Misha Collins, The Walking Dead's Melissa Ponzio, and Rogue One's Alan Tudyk, written by Lauren Shippen and created by me, Aaron Mankey. Listen to Bridgewater on the iHeart Radio app or wherever you get your podcasts. Welcome to Stuff You Should Know from HowStuffWorks.com. Hi and welcome to the podcast. Hi everybody. Chuck, how are you doing? Good. That's Chuck by the way, and I'm Josh. We're going to be your guides through this next 15 minutes of total mind expansion. Right. Tell you some stuff you should know. Yeah, and this one's actually pretty cool. The one we're doing today, I guess they're all pretty cool. We like to make

them cool, but this one's something that probably a lot of your friends won't know about, so you can wow them at the next cocktail party, the next kid's birthday party. Any kind of party? Yeah, that's very succinct Chuck. Chuck, let's talk about legal fiction. Okay. Okay. You want me to talk about it? Yeah, you're not talking about John Grisham. No, no. No, sorry, that was Crichton that died. Right. I think John Grisham is alive and well. Yes, and he's an attorney and a novelist. Right, yeah, and he's pretty good too. But no, we're not talking about Grisham's work. We're talking about, it's actually a legal term that's used basically to describe any time a court says something is true that's not true just for the sake of moving things along, right, keeping things

tidier. It's kind of like if you and I were having a conversation Chuck and I said, you know, my right jab is a million times better than yours. And we were kind of debating that rather than stopping and saying that that's hyperbole. I don't agree with that. It's going to kind of nod and we're going to stick to the meat of it, right? Or we should punch each other and we can find out. It's one way to find out. Yeah, although as everyone knows, we're not big fighters. No, I would miss your your face. That's how bad I am. It'd be clumsy. Well, let me give you an example of legal fiction specifically. There's there's this thing called a renunciation of a legacy. Have you heard of this? No. So basically, let's say I find out that I'm in your will. Okay.

And I'm just like that Chuck, he's far too generous. I can accept this. You know, maybe if I take myself out of his will, he will go ahead and give that money to the poor or orphans or something like that. Right. Okay. The thing is, is you're sticking to your guns. I'm in your will. You love me. You want to leave me some money, right? There's something I can do. I can renounce that legacy. Okay, I go to the court and the court says, okay, you're dead. You have the Chuck has outlived you as far as this will is concerned. I've pre deceased you, which means that any claim I could have is no void since I'm no longer alive. Right. See what I'm saying? I do. That's legal fiction. Right. They as far as that will concern, I'm dead. You're still alive. Interesting. Isn't that interesting?

It is. There's another piece of legal fiction called corporate personhood. That's right. Yes. This is the meat of what we're talking about. Indeed. Corporate personhood is exactly what it sounds like. There is a legal custom not just in the US, but it dates back to the Romans, I believe the ancient Romans, not today's Romans, right? The original Romans, right? Where a corporation, which is really just a pool of investors money that's that's that's taken together and used to conduct business, right? Is it's considered an actual artificial person under the law? Yeah, this is kind of blew me away. Me too, to be honest. Yeah, there's this guy named Tom Hartman, who I heard years ago on NPR talking about this, and he wrote this great book.

And it's worth a read. I can't remember what it's called right now. I've got it written down on one of my notes that I can't find. But he turned me on to this. He has this radio show out west and he is very much against corporate personhood. A lot of people are. Here's why. Corporations, if you treat him as a person, well, our punitive legal system, Chuck, that keeps us from, you know, stabbing old ladies for their purses or, you know, just walking into grocery stores and opening up cash registers, right? There's a little thing called prison. Sure. There's also a thing called the gas chamber, the electric chair, the hangman's gallows. There is punishment out there for our actions. And this punishment is designed to keep us from crossing that line from upstanding

citizen to, you know, anarchistic criminal. Right. And so we don't do things in large part because there's prison. There's consequences. Right. If not, I would be hitting old ladies over the head every day. Who wouldn't? Exactly. Prison keeps our society intact. Right. I'm joking. It's as clear as that. Right. So with a corporation, you have to kind of look at it since it's an artificial person. You have to look at it as a superhuman person too. Right. It doesn't need food. It doesn't need water. You can't put it in prison. It doesn't feel pain. Right. It has no lifespan. Right. Can't die. It's limitless. As long as there's those shares are out there and it's making a profit. Right. A corporation can live indefinitely. Right.

Right. So this is why it's kind of a sticky discussion. This is why people like Tom Hartman are very much against corporate personhood. Right. And the whole thing actually, this has been going on for a while. Jefferson, Thomas Jefferson, was very much an advocate of putting lifespan limits, restrictions, including lifespan limits on corporations in the Constitution. Right. And he failed. Yeah. He failed. On each count. Yeah. So actually we almost had a constitutional provision that said corporations can only last this long and there's this limitation. Right. Because Jefferson, in his usual capacity, saw far into the future and all the problems that this random aspect of American society or global society will have. He was a pretty insightful

dude and he was absolutely right. We've run into some serious problems with the concept of corporate personhood. Right. And I know the 14th Amendment is kind of where it all comes together. Yeah. Actually, the irony of the whole thing is that rather than being restricted by the Constitution, corporations were actually protected by the Constitution. Right. As artificial people under the 14th Amendment, which I know you pointed out, the last word of the 14th Amendment equal rights protection under the law to every person. Every person. That is a very significant word. Right. Because of course, corporations are artificial persons. Right. Right. So in very rapid succession, though, I think 1868, when that was ratified, the 14th Amendment, very quickly, a court case

came to the Supreme Court for a decision that had to do with applying that to corporations. Right. Santa Clara County, the Southern Pacific Railroad. Yeah. And if you think about it, basically applying a constitutional amendment that protected freed slaves, newly freed slaves, and trying to get it to apply to corporations, isn't that the pinnacle of tastelessness? Yeah, I think so. Yeah. Well, 19th century Robert Barron's weren't above anything. And one of the things they did was, in that case, the Union Pacific case, they finally applied it. The Supreme Court, I can't remember who was at the head at the time, basically said, you know what? We realized what this case is saying. And ultimately, what the case did was it upheld the longstanding

custom that it was up to a state, to tax, right, and to charter corporations. Right. And that's still going on today. Like as President-elect Obama excruciatingly pointed out in, I think, the second debate, Delaware is a big haven for credit card companies, which is where the Vice President-elect hails from. Because of the tax benefits, correct? Yeah, it's set up in a certain way so that credit card companies benefit the most from that state. Same as Florida's a tax haven for, I think, real estate businesses or something like that. Right. I think Florida doesn't have an income tax. Is that right? No, they don't have that either. They don't have an income tax. Yeah, no, they just operate on borrowed time. Right. I'm moving to Florida. Yeah, same here,

buddy. So in this case, Santa Clara versus Southern Pacific, Union Pacific, one of the two. Southern. Southern Pacific, thank you. That was established. But here's where everything just gets totally hinky. I know. And I couldn't believe this. This is crazy. Yeah. The court reporter for the Supreme Court wrote a little headnote, which is exactly what sounds like it's a note at the head of the briefs of the ruling. And it said court decides that under the 14th Amendment, corporations are afforded protection, equal protection under the law. And that was it. Right. But where it gets hinky, as you say, is that the Chief Justice did not say this. No, he actually wrote a personal note that was uncovered later on that said that the court specifically did not rule on that. Right.

He knew that that's what the case came down to. It was just written down and prepared to do that. Right. Just written down by the court reporter. By the court reporter, who turned out to be, I believe, an ex-president of ex-Robert president, which I this is that a step back to go to court or not. You know, there's a long tradition of high finance of huge industry putting their own people into public government. Interesting. As somebody said recently, you know, Paulson's from Goldman Sachs. Right. Somebody said recently there is a revolving door between private and public service. Right. Very linked. And apparently, this has been going on for a very long time. Yeah. Well, it worked in this case. It did. Because since it was a headnote,

it wasn't law, but it did set precedent. Right. And I don't understand how that works, to be honest. Well, somebody can say, look, it's written right here. And you can use it as part of your argument. And they did. I think two years later, there was another case. I think another railroad case or something. They pointed to it. And the Supreme Court finally ruled and said, yes, corporations have equal protection under the law as artificial persons. Because this Schmuck wrote it down. Because he wrote it down at the headnote of a ruling that had nothing to do with it. Yeah. I had no idea that the court reporter was such a position of power. Well, apparently, no one else did either. But yeah. So that's how we've gotten to the point where corporations

have the same protection as you. Chuck, the cops can't just come into your house and start looking around in the hopes that they find something incriminating. Because you're a person and you're protected under, I think, the Fourth Amendment from unreasonable search and seizure. So two are corporations. Right. Yeah. There was a case in the 70s where ocean inspectors, you know, they could just walk into a corporate headquarters business, something like that. Right. For inspection and yeah, looking for violations, that kind of thing. Somebody sued that, you know, the corporations enjoy the same protection under the law in the Fourth Amendment and one. Right. So now, if you want to find violations, you have to make an appointment with the, you know,

a manager, the store that one of the corporate officers. Right. And I know I don't think this applies for food restaurant inspections because I used to work in restaurants and I remember we were always caught very much off guard when the health inspector showed up. Yeah. Yeah. I don't know why that would be any different, but yeah. Well, maybe just we'll take a restaurant to file a suit for it to happen. Maybe so. Maybe so. There's also a really sterling example. I love Nike. Yeah. Nike. As we all know, as is common knowledge now, Nike was running some really abusive corporate practices overseas in their factories. It's one word for them, definitely. In the 90s, this is not widely known. Right. I mean, a certain subversive section of

the society understood this. Right. People that did their homework. Right. Most people didn't really walk around going, oh, Nike run sweatshops over in, you know, I think Malaysia. One MIT student actually managed to break it into the public view. And I can't remember, do you remember when this was when Nike would allow you to have anything you want stitched on their shoes? Which I don't, I don't remember that, but it was in 2001, you could get something stitched, a personal message or whatever your name. Something. Yeah. Yeah. And this guy from MIT wanted the word sweatshop embroidered on his Nikes. Yeah. And they said no. They said no. So he forwarded the email around and in a very short order, it got picked up by some of the major news services. Right.

And people started investigating Nike's practices more and more. Right. Well, Nike, it started this huge PR blitz. Right. Where they said, no, that's absolutely not true. This is this is completely unfounded. We treat all of our employees very well. I mean, just lie after lie after lie. Yeah. Finally, somebody went to Malaysia, some of these countries, these developing countries where Nike was running these sweatshops and filmed the practices. Right. And somebody made a pretty decent documentary out of, I can't remember what it was called, but apparently the living conditions were important. Factory workers were living in Shantytowns next to the factory and their roofs were made of discarded souls. Right. Like the stuff they used for the souls of

the Nike. Uh-huh. You know, it's just really bad business practices. So finally, Nike is forced to say, okay, fine. You know, maybe don't. Well, a man sued them. Yeah. That's right. Yeah. A lawsuit was brought by a man in California in 1998. And what was Nike's defense? Nike's defense was, and this is just unbelievable, was that because they are granted the same rights as people, they are allowed to lie under the Fourth Amendment. First freedom of speech. Yeah. Yeah. So they are falsely advertising. You can't be sued for it because you're allowed to lie because you're a corporation and an artificial person. Yeah. It didn't really hold water though. It didn't. And, uh, but no one ever ruled on it. Well, it's because they settled.

Nike settled smartly. Yeah. And so they, I think shelled out like 15 million or something like that. Actually just 1.5 unless your decimal point was off. Yeah. It's terrible. Um, well, it did go to some sort of labor protection group, but 1.5 million. Yeah. That's not a lot. It's not a lot of although that will buy a couple of houses in Malaysia. I imagine. Yeah. Um, but the fact is it's still the jury's still out on whether or not a corporation can lie. The fact that that's, that's how this whole thing has been established over time. It's been kind of whittled away and added to and taken from the, the, the, I guess, happy ending to this story is Nike was finally put in such a bad light that they wrote a lengthy report on the working

conditions of their factories, all of them. Right. And basically, you know, self reported that they were mistreating their workers overseas and clean up their acts. Yeah, I believe so. Yeah. Freedom of speech goes both ways. And in our litigious society, it's good to have good lawyers if corporations have the same rights as you. It's a shame it took that kind of action though for Nike to, to realize that, you know, the greed that was going on. Agreed. That's just my opinion. No, I agree with you. I don't know who wouldn't. Well, thanks for listening. Go tell everybody that all corporations have the same constitutional protections as you just do it. If they exactly, and if they don't now, they soon will. Well,

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