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Tuesday, February 22, 2011

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Bill Totten

Thursday, February 17, 2011

The Coming Misery ...

... That Big Oil Discusses Behind Closed Doors

by Steve LeVine

http://oilandglory.foreignpolicy.com/ (February 14 2011)

http://www.countercurrents.org/ (February 15 2011)

 

When big-thinkers at companies with the most skin in the energy game are behind closed doors and they discuss how the world really looks going forward, do they say that there are bumps in the road but that things will be fine, just fine, as they suggest publicly? Three years ago, we got a glimpse into the room when Royal Dutch/Shell issued a scenario forecasting the world in 2020. Based on current economic and energy-use patterns around the world, Shell said that energy supplies will be so tight that they will tip the world into a full-blown crisis in which governments will force their populations to reduce driving, use less electricity, and pay an extremely steep increase for what they do consume. There will be a massive, decade-long economic slowdown, and geopolitical power will shift dramatically to energy-producing nations, the company said.

Today, Shell returned with an update {1}. The company said that the 2008 financial crisis interrupted the slide it predicted, but that the clock has begun ticking again. If the world does not change how it uses energy, its scenario will hold true.

In recent weeks, we've heard almost identical energy-consumption projections from ExxonMobil {2}, BP {3} and now Shell: The world will use about forty percent more energy by 2030. The difference is that Exxon and BP more or less just toss out the numbers, while Shell suggests that one might consider running for the hills, oh, sometime around 2016 or 2017 before everyone else shows up. You all can plan to return home around 2030, Shell has said, when the world has come to its senses and adopted all the efficiency and price-signal mechanisms that some forward-thinkers are suggesting now.

There is some optimism in the report, such as descriptions of actions by nations like Japan and Norway and companies like Wal-Mart to lower greenhouse gas emissions. But the United States, for example, has not reversed energy-use practices that helped lead to the Shell scenario, the company says.

I myself tend to believe that, although it looks otherwise at the moment, nations will not put themselves in the collective position of unhappiness described by Shell. For example, there will be an even greater than projected shift to plentiful natural gas, thus tempering Shell's projections. Yet, it's worth reading on to the jump for more about the reports. Meanwhile, for the visual-minded, here is Shell's glossy video presentation {4}.

Shell's 2008 and 2011 reports actually contain two scenarios. The one described above, called "Scramble", is what it projects will happen if the world continues on its current course. A more optimistic version, called "Blueprints", includes a squeeze but far less despair because the world acts to reduce energy consumption and carbon dioxide emissions.

Shell's latest, 78-page report confirms its previous finding that in just four years, our usual sources of fuel are not going to meet growing global demand, so that there is going to be much switching to dirty coal, plus more use of agricultural-based biofuels.

Specifically, Shell foresees total energy demand - including fuel for transportation, manufacturing, electricity, heat, and so on - rising to the equivalent of about 317 million barrels of oil a day, about 22 percent higher than the approximately 259 million barrels a day consumed last year. In 2030, the number rises another twelve percent, to 358 million barrels a day, in Shell's scenario.

As the earlier report described what happens next, that's not going to be enough energy either, so:
governments react with draconian measures - such as steep and sudden domestic price rises or severe restrictions on personal mobility with accompanying disruptions in value chains and significant economic dislocations. By 2020, the repetition of this volatile three-step pattern in many areas of the energy economy results in a temporary global economic slowdown ... Although change must and does occur, the turnaround takes a decade because large-scale transformations of the energy system are required.
The 2008 report was also interesting in describing the geopolitical result - that "major resource holders are increasingly the rule makers rather than the rule takers. They use their growing prominence in the world to influence international policies, particularly when it comes to matters they insist are internal such as human rights and democratic governance." In other words, no Egypts or Tunisias in the scarce-energy age. No one will object, Shell said, because they will need sweetheart deals with the energy-producing countries in order to obtain what they can and "do not want to rock the energy boat they have just managed to board".

The new report suggests that all is not lost - there are signs, if slow ones, of attention to climate change. Whatever the case, Shell sticks with its prediction that eventually - after about a decade of misery - people come around and decide to act:
High domestic prices and exceptionally demanding standards imposed by governments provoke significant advances in energy efficiency. Eventually, locally developed alternative supplies - biofuels, wind, and thermal solar - also contribute on a much greater scale than before. By 2030, healthy economic growth is restored, with particular vibrancy in the new energy sector that has received a massive stimulus to innovation through this difficult period.
Links:

{1} http://www-static.shell.com/static/aboutshell/downloads/aboutshell/signals_signposts.pdf

{2} http://www.exxonmobil.com/corporate/files/corporate/energy_outlook_slides.pdf

{3} http://www.bp.com/liveassets/bp_internet/globalbp/globalbp_uk_english/reports_and_publications/statistical_energy_review_2008/STAGING/local_assets/2010_downloads/2030_energy_outlook_booklet.pdf

{4} http://www.youtube.com/watch?feature=player_embedded&v=Yc5t5xro7RA


http://www.countercurrents.org/levine150211.htm

Bill Totten http://www.ashisuto.co.jp/english/

Wednesday, February 16, 2011

Demented Democracy

by John Kozy

Global Research (February 04 2011)

Ah, democracy, rule by the people, the promised path to just government and the end of tyranny. What ever happened to it?

Finian Cunningham writes,

From 1945 to 1997, there was at least the semblance that the British Labour Party in particular represented the interests of the working and lower middle classes. But under the 'reforming' leadership of Tony Blair and his successor, Gordon Brown, 'New Labour' has become indistinguishable from the other main parties in terms of slavishly fawning over big business and the wealthy elite. Prior to the 1997 election, which brought Labour to government, one senior Conservative smugly noted that, in terms of economic policy, there was 'not a cigarette paper between' the Thatcherite Tory Party and Blair's New Labour.

In America, this has been the reality for decades. How many times have the people had to choose between the least evil of two candidates? America has but one political party - the Republicrat.

A recent report in the Guardian goes,

While the US and Britain slide towards oligarchy, the forced elections in Afghanistan and Iraq have brought no good. The west's proudest export to the Islamic world this past decade has been democracy. That is, not real democracy, which is too complicated, but elections. They have been exported at the point of a gun and a missile to Iraq and Afghanistan, to 'nation-build' these states and hence 'defeat terror'. When apologists are challenged to show some good resulting from the shambles, they invariably reply: 'It has given Iraqis and Afghans freedom to vote'.

But democracy has taken an even more sinister turn - fraud and the rejection of results.

When Hamas won the election in the Gaza Strip by a large majority the results were rejected by Fatah and the western nations that had previously advocated that very election and had agreed to abide by the result.

The AP reported that

Hassan Turabi, the leader of the Islamic Popular Congress Party, said ... his group would reject the results of [the] vote [in the Sudan] and challenge them in court ... Election observers say the vote fell short of international standards.

The BBC writing on Iran's last election reported that

Mahmoud Ahmadinejad ... won some 62.6% of the vote in an election marked by a high turnout of 85%, official figures show. Supporters of pro-reform candidate Mir Hossein Mousavi have cried foul and clashed with riot police in Tehran, despite a ban on public protests.

It was widely reported that the 2009 presidential election in Afghanistan was characterized by lack of security, low voter turnout and widespread ballot stuffing, intimidation, and other electoral fraud. Two months later, under heavy US and ally pressure, a second round run-off vote between incumbent President Hamid Karzai and his main rival Abdullah Abdullah was announced for November 7 2009. However, Abdullah announced that he would no longer be participating in the run-off because his demands for changes in the electoral commission had not been met, and a "transparent election is not possible".

When former Prime Minister Ayad Allawi's Iraqiyya list won the election in Iraq by two seats, Nouri Maliki mounted a legal challenge and suggested that six of the winning candidates should be disqualified because of alleged ties to the former Baath government.

And now Paul Craig Roberts writes,

The hypocrisy of the US government is yet again demonstrated in full bore force. The US government invaded Iraq and Afghanistan, laid waste to much of the countries including entire villages and towns, and massacred untold numbers of civilians in order "to bring democracy" to Iraq and Afghanistan. Now after days of Egyptians in the streets demanding 'Mubarak must go', the US government remains aligned with its puppet Egyptian ruler, even suggesting that Mubarak, after running a police state for three decades, is the appropriate person to implement democracy in Egypt.

What is one to conclude from all of this? Is it that democracy is wonderful so long as those already in power remain there?

This democratic dementia is the result of a long term trend.

Aristotle, one of the world's deepest thinkers, is often blamed for defining mankind as rational even though he never did. He did, however, consider mankind as rational, and he used that notion in an example when writing about definition, which is, I suspect, the source of the misbelief.

That Aristotle chose to use the word man in this context suggests that the notion of mankind as rational was quite common in classical Greece, so common that no one would question it and sidetrack the discussion about definition. After all, Aristotle was a student of Plato's and Plato's Dialogues provide us with a model of a rational man - Socrates. But most of the characters in the Dialogues are not rational to the extent that Socrates is. They are, however, persuadable when presented with evidence and logical argument. And I suspect that that's what Aristotle means when he writes, in the Nicomachean Ethics, that human beings have a rational principle; he means that human beings are persuadable.

The Greek notion of rationality, however, was quite different from ours. In the phrase "zoon logikon" (animal-rational) "logikon" is not exactly what we mean by "rational". That term, to the Greeks, refers to the power to think and other attributes needed to distinguish humans from all other animals. At least one of these attributes is believing, as, for instance, in the statement man is a believing animal. So to the Greeks, a person whose mind is cluttered with beliefs would be a zoon logikon. The Greeks would have distinguished such a person from a logical person, and at least Plato and Aristotle valued a logical person more highly than the merely rational. Not so today!

Today, at least in America, beliefs, which are often merely unsupportable opinions, seem to be valued higher than knowledge which is based on evidence and supported by logic. So, in a sense, creedal man has replaced rational man. Belief has come to trump knowledge. Mankind has become creedal, ideological.

Ideological groups, however, consist of true believers who cannot be persuaded. When an ideology is adopted, it is as though evidence and logic are no longer needed. The ideology contains an answer to every question, a solution to every problem. Evidence, logic, even truth become irrelevant.

In doing so, however, mankind has divided itself into impersuasible groups that clash with each other. Ordinarily, people consider such groups to be religious. Where their ideologies differ, for instance, Moslems and Christians will never agree. People holding incompatible notions cannot agree. Sooner or later, the result is either a religious war or total separation. But antagonistic groups arise everywhere ideology is used to guide human behavior. Capitalists and Socialists will never agree; Capitalism and Socialism are incompatible ideologies. Neither will Democrats (who truly represent the people) and Republicans (who represent the commercial class) or environmentalists and exploitationists. Every ideology becomes a religion, and every religion has its own solution to every problem. Because mankind has abandoned knowledge for belief, peace on earth has become an impossible dream.

Even logical enterprises like science have become creeds. Just as Christians believe that the second coming will solve all of mankind's problems, many now believe that technology will. But no one knows that; it's a mere belief. When the results of technology are examined, it becomes obvious that technology is at least as harmful as it is beneficial. It, after all, has given mankind weapons of massive destruction which may be used to annihilate everyone. It has also given mankind the means that enable governments to watch everyone. Technology has provided governments with totalitarian tools that are more effective than any mankind has previously known.

Plato and Aristotle surely must have known how important belief was even in the minds of their fellow Greeks and the deleterious effects of it. So, both Plato and Aristotle sought to replace belief in people's minds with knowledge which is what every Platonic dialog does. Plato and Aristotle knew that only when mankind adopts evidence and logic can people become persuasible, and only persuasion can remove the ideological conflicts that divide mankind into antagonistic groups.

Recently, Christopher Hitchens and Tony Blair debated the question, Can religion be a force for good in the world? On the one hand, Hitchens stated that we don't need divine permission to know what good action is, but he also stated that we can't rely on people to be innately good. So then what standard do we rely on? He never tells us.

Blair, on the other hand, argued that we shouldn't blame religion solely for the world's problems. So then, what is it about human nature that causes some people, in the name of religious and political systems, to do bad things? This question is also never answered.

Blair admitted that some people have committed evil in the name of religion, but this has been completely outweighed by its goods. Hitchens continually denounced religion as fostering a mentality that makes "good people do unkind things".

The question debated was never resolved because both debaters argue from their beliefs. Each debater talks past the other. But the most interesting part of the debate came when instead of making a closing statement, Blair and Hitchens decided to take one last question: 'Which of your opponent's arguments do you find most convincing?'

Blair answered first. "I think that the most convincing argument is - and the argument that people of faith have got to deal with is actually the argument Christopher has just made - which is that the bad that is done in the name of religion is intrinsically grounded in the scripture of religion. That is the single most difficult argument." He must have had in mind the Torah's exhortations to exterminate whole nations, men, women and children and other similar passages.

Hitchens said: "The remark Tony made that I most agreed with this evening, I'll just hope that doesn't sound too minimal, was when he said that if religion was to disappear, things would by no means, as it were, automatically be okay."

In the end, Blair recognized that religious ideologies in the form of scripture contain evil aspects. Hitchens, on the other hand, admits that the elimination of religion alone will not make mankind good.

Both, of course, are true, but both also fail to see that the elimination of belief and its replacement by truth arrived at by evidence and logical argument is the only way to resolve the question, for otherwise, neither side can persuade the other. Without the willingness of people to accept only logical evidence based on fact or agreed upon assumptions, no one will ever persuade anyone of anything. It is this unwillingness based on unquestionable ideologies that makes persuasion impossible.

The topic of this debate could just as well have been either of the following two: Can belief be a force for good in the world? Can ideology be a force for good in the world? And the answer to the original and these two is no. Only knowledge sought and applied in moral ways can effectively be a force for good in the world.

Recently, members of Congress and the President have been at odds over compromising which seems difficult to achieve. The Republicans are willing to accept something the Democrats want only if the Republicans get all of what they want, which is a paradigm case of an ideological conflict. Nothing good can come of it. But nothing good can come from compromise either. Combining some of the beliefs derived from two antagonistic ideologies always results in unworkable policies. For instance, when the right opposes social programs that the left advocates and a compromise occurs in which the right accepts some limited social programs and the left accepts the limitations, the result is inadequate and ineffective policy. The same is true of most of the social problems that afflict America today. All attempted solutions are compromised into ineffectiveness. This won't change until the ideologies are abandoned and problem solving relies on evidence and logic. In all cases religion, in the wide sense of ideology, can never improve mankind's condition.

This addiction to opinion, each person being entitled to his own, and the unwarranted notion that those who fight for their beliefs are "principled" is why democracies teeter between antagonistic belief systems and are unable to resolve any social problems. Each party strives to repeal the policies enacted by the other which paralyzes the political process. The problem is worldwide. Democracy itself is falling into this ideological abyss. When elections are held the losers now routinely reject the outcome yelling "fraud"! Often it leads to demonstrations and violence. When people reject the grounds for persuasion, conflict is the inevitable result. Democracy cannot function when people are not persuasible.

_____

John Kozy is a retired professor of philosophy and logic who writes on social, political, and economic issues. After serving in the US Army during the Korean War, he spent twenty years as a university professor and another twenty years working as a writer. He has published a textbook in formal logic commercially, in academic journals and a small number of commercial magazines, and has written a number of guest editorials for newspapers. His on-line pieces can be found on http://www.jkozy.com/ and he can be emailed from that site's homepage.

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Bill Totten http://www.ashisuto.co.jp/english/

Tuesday, February 15, 2011

Gangs of America

The Rise of Corporate Power and the Disabling of America

by Ted Nace

´╗┐Berrett-Koehler Publishers (2003, 2005)

http://www.amazon.com/Gangs-America-Corporate-Disabling-Democracy/dp/1576753190

Chapter Seven. Superpowers: The Corporation Acquires Nine Powerful Attributes (1860-1900)

For better or for worse, we human beings are stuck with the attributes that nature gave us. That doesn't mean we can't imagine new ones - after all, isn't that what comic books are all about? Consider the following top ten items from a Web site entitled "The Top 47 Super Powers You Wish You Had" (www.keepersoflists.org):

1. X-ray vision
2. Invisibility
3. Telepathy
4. Ability to mute people on command
5. Ability to teleport
6. Power to freeze time
7. Ability to fly
8. Superstrength
9. Ability to change the weather
10. Power to make telemarketers quit calling my house

But corporations aren't like us. Because their powers are determined by laws, not by nature, it is possible to engineer them with all sorts of qualities, including some attributes outside the realm of human possibility. In theory, that programming can go either way: society can make corporations stronger by removing restraints and adding new legal powers, or it can make them weaker by doing the reverse. The key lesson is this: corporations are only as powerful as they are legally designed to be.

As the previous chapters described, the engineers of the American political system deliberately created a framework of laws to keep corporations politically weak. That framework was subsequently undermined by the ingenious maneuvers of Tom Scott and other businessmen, lawyers, and sympathetic legislators. So extensive were the changes in the legal framework that the corporation of 1900 was quite different from the corporation of 1860. This chapter summarizes that transformation. As shorthand, I'll call the corporate institution that existed before the Civil War the classic corporation. And I'll call the corporation that emerged by the end of the nineteenth century the modern corporation. Table 7.1 compares these two institutional forms.

Table 7.1 Differences Between the Classic Corporation (Before 1860) and the Modern Corporation (After 1900)

ATTRIBUTE
CLASSIC CORPORATION
MODERN CORPORATION

Birth
Difficult:requires a custom charter issued by a state legislature
Easy: general incorporation charter allows automatic chartering









Life span
Limited terms
No limits





"Shape- shifting"
Corporations not allowed to own stock in other companies; restricted to activities specified in charter
Corporations free to pursue acquisitions and spin-offs











Mobility
Usually restricted to home state
No restrictions







Adaptability
Restricted to activities specified in charter
Allowed to pursue multiple specified lines of business and initiate or acquire new ones at company's discretion













"Conscience"
Actions constrained by shareholder liability and by threat of charter revocation
Fewer constraints due to limited liability, disuse of charter revocation, and tort reforms











"Will"
Managerial action hampered by legal status of minority shareholders and of corporate agents
Legal revisions enable consolidation of management's power











Size
Limited by charter restrictions
Asset limits removed; antitrust laws generally not effective









Constitutional rights
Functional only
Steady acquisition of constitutional rights



As the table shows, the differences are extensive and highly significant. Indeed, they may be likened to the differences between Star Wars' C-3P0, the fussy, awkward, highly specialized droid who possesses excellent manners but little else, and Arnold Schwarzenegger's Terminator, a more robust, more focused, faster, more adaptable being.

Change #l: Creating Corporations Gets Easier

By 1902, anyone in the United States could receive a corporate charter merely by filing some papers with the state. The new system was a dramatic change from the incorporation system that existed prior to the Civil War, when charters required specific legislative approval and many contained special provisions unique to that entity.

This new system of automatic approval for new corporate charters, known as general incorporation, had actually first been introduced in the late 1700s as a means to allow churches to receive charters without the need to seek specific approval from the state legislature. The goal was to let churches enjoy the functional benefits provided by corporate ownership of land and property while at the same time avoiding the potential impingement on religious freedom that might have resulted if church charters were subject to the political process.

In 1811, the first general incorporation statute was passed by the state of New York for certain types of business corporations, including manufacturing, textiles, glass, metals, and paint. It allowed companies with capital of up to $100,000 to be automatically incorporated for a life span of up to twenty years. In 1846, New York offered general incorporation to all companies. (See Table 7.2.) But for decades, charters issued under general incorporation laws continued to contain a variety of restrictive clauses, which explains why corporations in states such as New York began fleeing to New Jersey in the 1890s, even though both had general incorporation standards. Though New York began offering general incorporation much earlier, New Jersey was quicker to drop most restrictive features from its law. Only when truly modern-style general incorporation, with no restrictions, was introduced by New Jersey and then by Delaware, West Virginia, and other states, did it become impossible for states to control corporations in the way they had when a customized charter was required for each new corporation.

Table 7.2 The Spread of General Incorporation Requirements in State Constitutions

1846
New York 1864
Nevada 1875
Maryland
1846
Iowa 1864
Louisiana 1876
Colorado
1848
Illinois 1865
Missouri 1876
Texas
1848
Wisconsin 1866
Nebraska 1889
Idaho
1849
California 1867
Alabama 1889
North Dakota
1850
Michigan 1868
North Carolina 1889
South Dakota
1851
Ohio 1868
Georgia 1889
Montana
1851
Maryland 1870
Tennessee 1889
Washington
1851
Indiana 1871
Arkansas 1890
Mississippi
1855
Kansas 1872
West Virginia 1895
Utah
1857
Minnesota 1874
Pennsylvania 1897
Delaware
1857
Oregon 1875
New Jersey 1902
Virginia
*Source: Liggett v. Lee (1933).

Change #2: Corporations Acquire an Unlimited Life Span

The classic corporation was chartered for a limited term and had to apply periodically to have its charter extended - every-six to fifty years, depending on the type of business. After the advent of general incorporation statutes, states gradually began to replace limited terms with perpetual terms; almost half had done so by 1903. Thus, a key difference between the classic corporation and the modern corporation is that the latter, at least in theory, enjoys an unlimited life span. This does not mean that modern corporations can never go bankrupt, or that one corporation can't absorb another. According to a study by Royal Dutch/Shell Group, the average Fortune 500 company survives about forty to fifty years before it vanishes, sometimes due to bankruptcy but more often because it is swallowed up by a bigger fish. If we consider the acquisition of one company by another to be a continuation of both companies' lives, the estimates of corporate life spans become significantly longer, especially for the largest corporations. Among the top twenty-five corporations on the Financial Times Global 500 list for 2002, the median age is 113 years. Only six companies among the top twenty-five are younger than fifty (Microsoft, Wal-Mart, Intel, Vodafone Group, Cisco, and Home Depot).

From a social and legal perspective, perpetual existence creates tremendous difficulties in holding corporations accountable for criminal behavior; in addition, it allows corporations to benefit indefinitely from behavior that once was legal but now is not. For example, despite the destruction of the Nazi and the Japanese fascist regimes, a number of German, Japanese, and even American corporations that benefited from the use of slave labor in the 1930s and 1940s can be found on today's Global 500 list, including IBM (#12), Siemens (#57), Daimler-Chrysler (#81), Deutsche Bank (#100), Ford (#157), BMW (#167), Bayer (#175), BASF (#187), Volkswagen (#211), General Motors (#308), Mitsubishi (#380), and Mitsui (#472). IBM bears a particularly heavy historical burden; evidence uncovered by historian Edwin Black describes how IBM's data processing technology helped the Nazi regime implement its genocidal policies.

With many corporations having roots extending back earlier than the American Civil War, it is not surprising that at least one Canadian and seven American companies on the Global 500 list also benefited from the use of slave labor prior to 1865, including American International Group (#11), JP MorganChase (#44), FleetBoston (#109), Lehman Brothers (#283), Union Pacific (#285), Gannett (#212), and Tribune (#327).

The point here is not that corporations that engaged in murderous practices in the past deserve to be smeared by the broad brush of history. Rather, the point is that the legal attribute of indefinite existence makes the corporation truly a different sort of social actor than you or me. For example, when evidence emerged that Kurt Waldheim, former United Nations secretary-general and then president of Austria, had played a leadership role in military units responsible for World War Two atrocities, much of the world responded by ostracizing him, and he did not run for a second presidential term in 1992. In contrast, a corporation such as IBM, whose close involvement with the Nazi regime produced suffering on a vastly larger scale than anything Waldheim could have done, has experienced no lingering reproach other than calls for reparations.

Although perpetual existence allows corporations to outlive their own crimes and atrocities, it also has a very practical benefit in ordinary political and legal affairs. Consider, for example, the antitrust litigation against Microsoft initiated by the United States Justice Department under the administration of Bill Clinton. Such cases usually last at least a decade, often longer, and this gives companies such as Microsoft the chance to roll the dice with a new administration. In Microsoft's case, the Bush administration arrived in time to apply a more lenient philosophy to the case - and the company slipped the noose.

Change #3: Corporations Learn to ShapeShift

As useful as it is, corporate immortality becomes even more potent when used in combination with the modern corporation's ability to morph dramatically in any number of ways. Corporate governance expert Ralph Estes has termed this morphing ability "indefinite entity", which he describes as "the ability to disguise itself, to run and to hide, or to reorganize into a whole new entity ... sell off divisions and subsidiaries, be taken over and absorbed into a different company, or ... rename itself and emerge as, seemingly, a completely different company". Estes cites the example of Drexel Burnham Lambert:

Its image befouled with six felonies plus the legacy of junk bond king Michael Milkin, Drexel used a tax loophole to give itself a whole new identity as the spanking clean New Street Capital Corporation. Drexel, with its felonies, couldn't get a license to run a gambling casino in Puerto Rico it wanted to take over. New Street could - even though it emerged out of Drexel's hide.

Prior to the Civil War the sort of maneuvering described by Estes would have been beyond the capacities of any company. Under the charter system, a classic corporation was not allowed to own stock in another, so both hostile takeovers and spin-offs from one corporation to another were ruled out. Charters tended to be quite specific about the activities that a given corporation was allowed to undertake. In order to go beyond the terms of its charter, a corporation had to return to the state legislature and receive approval for a charter amendment.

By 1900, all those restrictions had vanished. As noted in the previous chapter, the key changes that undermined the antebellum charter system were Tom Scott's innovation of the holding company as a political tool in Pennsylvania in 1871, and the 1889 legislative change in New Jersey that made the holding company an option for any corporation chartered in that state.

By loosening their corporate statutes, New Jersey and the states that mimicked it created a new environment in which, according to historian Lawrence Friedman,

the corporation had torn free of its past - it could be formed almost at will, could do business as it wished, could expand, contract, dissolve.

Change #4: Corporations Gain Mobility

A key feature of the classic corporation was its firm link to the chartering state. That connection was reinforced by a number of factors, including a prohibition on one corporation owning stock in another, and ultra vires, a legal doctrine under which any contract outside the activities permitted in a corporation's charter was considered null and void by the courts. Although ultra vires lingered in theory into the 1930s, judges had mainly abandoned attempting to enforce it by 1900. Of course, once a corporation could both act beyond the legal definitions of its charter and change its legal location to a venue far removed from the communities where it conducted its operations, the ability of states to hold corporations accountable was greatly diminished. Indeed, the ability of corporations to go "venue shopping" encouraged states to compete with each other to create the most permissive corporate atmosphere. For example, when Connecticut's legislatures held the line with strict corporate rules, including a provision requiring that a majority of the board of directors of any company be Connecticut residents, the state "drove from her borders not only foreign enterprises but also her own industries". New Jersey, with a combination of low taxes and loose statutes, became "the favorite state for incorporations". Another corporate favorite was West Virginia, a "Snug Harbor for roaming and piratical corporations", the "tramp and bubble companies of the country".

Change #5: Corporations Become More Adaptable

Charters issued by legislatures prior to the Civil War were quite specific about the activities that a corporation could pursue. Just as states restricted the mobility of corporations, they also made it illegal for a corporation to alter its activities without seeking a change in its charter. After the Civil War, those restrictions were lifted, often a decade or two after the change from special chartering to general incorporation. For example, New York switched fully to general incorporation in 1844, but the statutory change that permitted incorporation "for any lawful purpose" came in 1866. Illinois made the conversion to "any lawful purpose" in 1872, Massachusetts in 1874, Maine in 1876. Other states followed shortly.

The removal of clauses that defined and limited what a company was permitted to do, combined with new rules permitting holding companies, opened the door to the creation of two kinds of corporations that were not permitted under the classic corporation system. One was the conglomerate - a holding company that owns a diversity of companies. The other was the vertically integrated company, which attempts to control the entire life span of a certain product group from production through distribution and retail. Both approaches led to immense, potentially monopolistic corporations.

Change #6: Corporations Shed Their "Conscience" Mechanisms

Science fiction writers who have imagined the introduction of intelligent automatons into society have recognized the need for building at least a rudimentary "conscience" mechanism into robots and androids. Isaac Asimov imagined a solution in which robots were programmed with simple rules, such as, "A robot may not injure a human being, or, through inaction, allow a human being to come to harm".
Because corporations are complex systems, in which large numbers of people and machines interact with the real world in myriad ways, it is a difficult challenge to program into them a "conscience" - that is, mechanisms to ensure that human beings aren't trampled. But that does not mean it is impossible, and indeed a major preoccupation of the law is to develop various ways to protect people from being harmed not just by corporations but by institutions in general.

Much of this sort of programming is simply an extension of the legal provisions that protect humans from hurting each other, such as civil and criminal laws. Of course, criminal law never had any teeth in the first place when it came to corporations because of the obvious uselessness of the corporal disincentives that the law has traditionally relied on - flogging, imprisonment, and so forth. Instead, the designers of the classic corporation relied on the limitations contained in corporate charters and on the ultimate sanction of charter revocation. But by around 1875, general incorporation had largely replaced the system of individually issued charters, and charters ceased to provide a means for controlling corporate behavior.

The end of the charter system also marked the full arrival of the doctrine of limited liability, which ended any legal incentive for corporate shareholders to concern themselves with the behavior of the businesses in which they owned an interest. As described in Chapter Five, investors in some British corporations had enjoyed limited liability as early as the 1660s, but limited liability protection as a universal feature did not occur in Britain until 1855. Even then, Parliament required that a company "announce its members' irresponsibility" by appending the phrase "LLC" (limited liability company) to its official name. In America, limited liability was highly controversial prior to the Civil War. For example, in Maine, the law changed back and forth nine times between 1823 and 1857 - between no liability and full liability, depending on whether the Whigs or the Democrats had a majority of the legislature. Between about 1810 and 1860, judges began to develop a doctrine that conferred limited liability on shareholders in the absence of any charter provision to the contrary. Usually, however, charters were not silent. Some required that shareholders be exposed to unlimited liability for debts or legal settlements against a corporation; others required "double liability", which meant that shareholders' exposure was limited to twice the amount of their investment.

Of course, the ultimate effect of shielding stockholders from risk is to shift potential losses onto society at large. Such a shift also occurred in areas of civil law such as the law of torts, as summarized by political scientist Arthur S Miller:

As with constitutional law, so with the private law of contracts, of property, and of torts. Judge-made rules in those fundamental categories had the result of transferring the social costs of private enterprise from the enterprise itself to the workingman or to society at large. Tort law provides apt illustration. Under its doctrines, a person who willfully or negligently harms another's person or property must answer by paying money damages. The analogue of contract, which is a consensual obligation, a tort is a nonconsensual legal obligation. Who, then, bore the costs, in accidents and in deaths, of the new industrialism? Not the businessman. Not the corporation. The worker himself. (Often those workers were children.) And who bore the costs of pollution and other social costs? Society at large. How did this come about? In tort law judges created doctrines of "contributory negligence", "assumption of risk", and the "fellow servant rule", all of which served to insulate the enterprise from liability. By "freely" taking a job, said the judges, the workers "assumed the risk" of any accident that might occur.

Change #7: Unleashing the Corporate Will

In the context of corporate law, legal scholar Paul Vinogradoff has defined will as "the faculty of taking resolves in the midst of conflicting motives; a governing brain and nerves, in the shape of institutions and agents; a capacity for the promotion and the defense of interests by holding property, performing acts in law, and exercising rights of action in courts".

One of the least noted differences between the legal framework of the classic corporation and that of the modern corporation is the relative status of shareholder and management. According to legal historian Gregory Mark, shareholders played a dominant role in the classic corporation, but in the modern corporation a clear trend developed toward managerial supremacy. With managers winning the role of "governing brain", decision making became far more streamlined and definitive, and managers could undertake strategic maneuvers such as mergers and acquisitions without fear of being blocked by a small minority of balking shareholders.

The elevation of the power of management occurred as a result of a variety of legal changes. In 1890, New York became the first state (followed by New Jersey in 1896 and Delaware in 1899) to rescind the common law doctrine known as "the rule of unanimous consent". According to that doctrine, any fundamental change of corporate purposes, especially the sale of corporate assets, required unanimous approval by the shareholders. In practice, the rule of unanimous consent significantly hampered the creation of large corporate conglomerates, at least in cases where ownership of a corporation whose assets were being acquired were widely dispersed. Combined with the removal of restrictions that had been built into the charters of the classic corporation, the elimination of unanimous consent allowed the modern corporation a new degree of nimbleness, even though the size of the largest corporations at the end of the nineteenth century was far beyond that of earlier firms.

Court decisions also served to make shareholders subordinate to managers. A key case was the 1884 decision by the federal district court in Saint Louis involving Jay Gould's Wabash, Saint Louis, and Pacific Railway. Setting a new precedent that dramatically increased the powers of management over shareholders, the court agreed to Gould's request that his representatives be appointed receivers for the railroad company. Prior to that time, prevailing doctrine gave control over bankruptcy proceedings to impartial receivers, who were to balance the interests of stockholders, workers, and creditors. The Saint Louis court's decision, however, affirmed and legally reinforced the control of management over a corporation's fate.

Change #8: Removing Restrictions on Size

In many cases the charters of the classic corporation placed explicit limits on size. For example, the 1818 charter of a Massachusetts company, the Main Flour Mills, limited the total property the corporation might hold to $50,000, of which the land could not exceed $30,000 in value. Most state constitutions also featured limits on the amount of investment capital that a single corporation could control, as shown in Table 7.3.

As we've already seen, many common charter provisions also indirectly limited the size of corporations. Such provisions included restrictions on the activities that a particular corporation could pursue; prohibitions against owning land not directly connected to a company's activities; prohibitions against owning stock in other corporations; geographic restrictions; requirements in some states that excess profits be used to buy back stock, so that eventually stockholders would be eliminated and a corporation in effect would return to public ownership. In addition, the doctrine of unanimous shareholder consent for major decisions such as acquisitions or asset sales provided a brake on rapid conglomeration, because it allowed a small minority of dissident shareholders to block such action. With the modern corporation, all those constraints were lifted, opening the door to the wave of mergers around 1900 described earlier.

Table 7.3 Nineteenth-Century Statutory Limits on Amount of Invested Capital a Single Corporation Could Control

New York until 1881 $2,000,000
New York 1881-1890 $5,000,000
Pennsylvania until 1863 $500,000
Pennsylvania after 1863 $5,000,000
Alabama until 1876 $200,000
Alabama 1876-1896 $1,000,000
Arizona after 1864 $5,000,000
Illinois 1852-1857 $300,000
Illinois after 1857 $1,000,000
Maine 1862-1867 $50,000
Maine 1867-1876 $200,000
Maine 1876-1883 $500,000
Maine 1883-1891 $2,000,000
Maine after 1891 $10,000,000
Vermont $1,000,000
New Hampshire $1,000,000
Massachusetts 1851-1855 $200,000
Massachusetts after 1855 $500,000
Michigan 1846-1885 $100,000
Michigan after 1885 $5,000,000

It might be argued that the framework of antitrust laws - beginning with the Sherman Antitrust Act in 1890 and followed by the Clayton Antitrust Act in 1914 and the Celler-Kefauver Act in 1950 - functions to place a ceiling on size. And antitrust legislation has indeed produced occasional results, most notably the breakup of Standard Oil in 1911, American Tobacco, also in 1911, and AT&T in 1982. Of course, to deal with the complexity of business, such legislation must be written in broad terms, which means that enforcement and judicial interpretation are both highly subject to political ideology. Under Chief Justice Earl Warren in the 1960s, the Supreme Court viewed the intent of antitrust legislation as incorporating broad goals. These included the traditional goal of curbing monopoly pricing power, but also two key social goals: concern for the viability of locally controlled industries and small businesses, and other social effects, such as undue political influence. Thus, the Warren Court in the 1962 Brown Shoe case blocked the merger of two shoe companies, Brown and Kinney, even though the merger would have given Brown only 5.5 percent of total US shoe production and allowed Brown to move from fourth to third among US shoe companies.

With the arrival of the Burger Court in 1974, followed by the Reagan administration in 1981, judicial and executive antitrust philosophy shifted dramatically. In 1982, the Justice Department relaxed the standards for mergers, citing the need to allow American corporations to compete internationally, especially against large Japanese companies. The head of the Anti-Trust Division, William F Baxter, rejected the idea that large corporations "by virtue of their size have something called economic power".

The result of this more lenient policy on mergers has been a rapidly accelerating trend to concentration. In 1980, there were only three acquisitions larger than $1 billion in value. In 1986, there were thirty-four such mergers. As late as 1992, total US merger activity remained under $100 billion. But in the late 1990s, acquisitions exploded, topping $1 trillion in 1998. In 2000, a single merger - the $166 billion acquisition of Time-Warner by America Online - was larger than the combined value of all mergers and acquisitions in the United States from 1970 through 1977.

By any measure, corporations dominate the world economy, and among the largest corporations, an overwhelming majority are based in Japan and the United States. According to Martin Wolf, chief economics commentator at the Financial Times, thirty-seven of the top one hundred economies in the world, measured on a value-added basis, are corporations. That analysis, however, may understate their economic clout. A different comparison - of the revenues of corporations and the budgets of governments - finds that sixty-six of the one hundred largest economic entities in the world are corporations; only thirty-four are governments. In 1999, among the top two hundred companies, ranked by sales, fifty-eight Japanese firms accounted for 39 percent of total sales, while fifty-nine US firms accounted for 28 percent of sales. Ranked by market value, however, nineteen of the top twenty five firms worldwide in 2002 were US - based. (See Table 7.4.)

Table 7.4 The Top Twenty-Five Corporations in the World, Ranked by Market Value

1 General Electric US 372
2 Microsoft US 327
3 ExxonMobil US 300
4 Wal-Mart US 273
5 Citigroup US 255
6 Pfizer US 249
7 Intel US 204
8 British Petroleum UK 201
9 Johnson & Johnson US 198
10 Royal Dutch/Shell Holland/UK 190
11 AIG US 188
12 IBM US 179
13 GlaxoSmithKline UK 145
14 NTT DoCoMo Japan 138
15 Merck US 131
16 Coca-Cola US 130
17 Vodafone Group US 127
18 SBC US 125
19 Verizon US 125
20 Cisco Systems US 124
21 Procter & Gamble US 117
22 Novartis Switzerland 114
23 Home Depot US 114
24 Philip Morris US 113
25 Total Fina Elf France 109
* Source: Global 2002 list, Financial Times
(May 13 2002)

Change #9: Corporations Win Constitutional Rights

There can be no doubt that the changes from classic corporation to modern corporation allowed greater business flexibility. For example, as described by historians John Mickelthwait and Adrian Wooldridge,

Nowadays, nobody finds it odd that, a century after its foundation, the Minnesota Mining and Manufacturing Company makes Post-it notes, or that the world's biggest mobile-phone company, Nokia, used to be in the paper business.

But the same changes that made corporations more flexible in their business operations also made them a far more potent force in the political realm. To make sure that this growing corporate power did not overwhelm the ability of state legislatures to control corporations, it would have made sense in the late nineteenth century for courts to affirm the constitutional authority of those legislatures to regulate corporations as they saw fit. Instead, the opposite took place, as courts systematically developed doctrines that allowed corporations to block unwelcome state laws and taxes.

In England, corporations had never been protected from state action, even when that action was of a highly arbitrary nature. Centuries of English legal tradition had established firmly the principle that corporate charters were revocable and alterable at any time. As described by Ron Harris, a historian of English constitutional law:

The larger the corporation and the more consequential the effects of its activities, the more likely was the State to interfere in its business at one point or another. Incorporation itself was not considered a protectable property right. The State could, at will, withhold an incorporation franchise which, in many cases, was of limited duration. Such withdrawal was not common, but it conformed to the Stuart conception of the constitution, which held that granting and revoking incorporation charters lay within the King's prerogative and discretion. It also conformed to the post-1689 constitutional settlement which made the Parliament supreme and, as such, free to enact and repeal incorporation acts, according to changing circumstances or majorities.

Although 1886 is universally considered the year in which corporations won their first constitutional right - in the Santa Clara decision, already mentioned in Chapter One - as early as 1819 the Supreme Court had begun to establish a legal status for corporations in America that exceeded the traditional legal status enjoyed by corporations in England. The case that marked the first departure from the principle of corporate subordination to the will of the state was the 1819 case Dartmouth College vs New Hampshire. Encouraged by Thomas Jefferson, among others, New Hampshire had enacted legislation converting Dartmouth College from a private college into a public one. Jefferson had written to the governor, "The idea that institutions, established for the use of the nation, cannot be touched or modified ... may perhaps be a salutory provision against the abuses of a monarch, but it is most absurd against the nation itself". To make a corporate charter sacrosanct, said Jefferson, would amount to a belief that "the earth belongs to the dead, and not to the living".

Seeking to block New Hampshire from making the college public, Dartmouth's trustees went to court, arguing that the 1769 charter between the college and King George qualified as a contract entitled to protection under the contract clause of the Constitution (Article 1, Section 10), which prohibits states from "impairing the obligations of contracts". The New Hampshire Superior Court agreed with the state. "These trustees are the servants of the public", declared the court, "and the servant is not to resist the will of his master, in a matter that concerns that master alone".

The trustees then appealed to the US Supreme Court, where they had better luck. They were represented by the most renowned attorney of the day, Daniel Webster, a moving speaker. Though it was not recorded, Webster's oratory - "It is ... a small college, and yet there are those who love it" - aroused such emotion that some members of the audience were said to have fainted, and Chief Justice John Marshall openly wept.

In its decision, the Court agreed with the trustees of Dartmouth that the charter they had received from King George in 1769 should be considered a contract protected by the Constitution. This decision, Justice Story later wrote, was intended to protect the rights of property owners against "the passions of the popular doctrines of the day".

Dartmouth cut two ways. In practical terms, legislatures quickly figured out how to get around the problem. They added a new clause to charters stating that the state reserved the right of revocation. Moreover, the ruling included a clear statement by Justice Marshall that corporations remained subordinate to state power. Marshall wrote that the corporation is an "artificial being, invisible, intangible and existing only in contemplation of law". On the other hand, the case marked the beginning of a long process by which the Supreme Court steadily elevated the legal status of corporations above anything that had previously existed in Anglo-American law. Thus, it opened the door for a steady erosion of state sovereignty over corporations, allowing them to begin to carve out a legal zone of immunity from state legislatures.

By 1860, that process was still in its infancy. Most notably, corporations failed to win protection as "citizens" under the Comity Clause (Article IV, Section 2), which states: "The Citizens of each State shall be entitled to all Privileges and Immunities of Citizens in the several States". That strategy was turned down by the Supreme Court in the 1839 Bank of Augusta decision. The 1844 Louisville, Cincinnati decision did give corporations the right to seek review of state laws in federal courts. But until the late 1870s, the attitudes of judges toward corporations remained consistent with revolutionary era wariness of corporate power.

By 1900, the prevailing judicial philosophy had shifted dramatically. A new generation of judges had embraced the corporation as the engine of American economic progress, and a series of cases had been decided giving corporations the right to challenge state legislation under the Fourteenth Amendment and federal legislation under the Fifth Amendment. The following chapters examine this shift, including the role played by Supreme Court Justice Stephen Field, and they look more closely at the twists and turns of the Santa Clara decision, the strange case that gave corporations their first constitutional right.

http://jayhanson.us/Gangs_2.pdf

Bill Totten http://www.ashisuto.co.jp/english/

Gangs of America by Ted Nace

Nace has done a great job of assembling the history of how corporations gained control our political system. If you want to know what happened, buy his book and read it. Here is a snip from the introduction.
-- Jay Hanson

Gangs of America: The Rise of Corporate Power and the Disabling of America (2003, 2005) by Ted Nace http://www.amazon.com/Gangs-America-Corporate-Disabling-Democracy/dp/1576753190


On the morning of August 2 2002, millions of Americans turned on their TVs to see an unusual spectacle: a high-level corporate executive in handcuffs, being paraded by law enforcement officials in front of the news media. The executive was Scott Sullivan, chief financial officer of the telecommunications firm WorldCom. Along with fellow executive David Myers, Sullivan was charged with hiding $3.85 billion in company expenses, conspiring to commit securities fraud, and filing false information with the Securities and Exchange Commission. The combined maximum penalties from the charges were sixty-five years. In response to the arrests, Attorney General John Ashcroft told reporters, "Corporate executives who cheat investors, steal savings, and squander pensions will meet the judgment they fear and the punishment they deserve".

Now consider a different crime, committed by the leadership of General Motors together with Standard Oil of California, Firestone Tire and Rubber Company, B F Phillips Petroleum, and Mac Manufacturing. In 1936, the five companies formed National City Lines, a holding company that proceeded to buy electric trolley lines and tear up the tracks in cities across the nation. Each time it destroyed a local trolley system, National City would license the rights to operate a new system to a local franchisee, under the stipulation that the system convert to diesel-powered General Motors buses.

By 1949, more than one hundred electric transit systems in forty-five cities had been torn up and converted. In April of that year, a federal jury convicted GM and the other firms of conspiracy to commit antitrust violations. But the penalty turned out to be negligible. The judge set the fine at $5,000 for each company. H C Grossman, treasurer of General Motors and a key player in the scheme, was fined one dollar. After the conviction, the companies went back to purchasing transit systems, removing electric trolley lines, and replacing them with buses. By 1955, 88 percent of the country's electric streetcar network was gone.

Both the Scott Sullivan case and the National City Lines case fit the traditional definition of crime: laws were broken, the legal system intervened. But the second case suggests that the larger the crime, the more the boundaries between "crime" and "business as usual" begin to blur. As Atlanta mayor and former United Nations ambassador Andrew Young once said, "Nothing is illegal if one hundred businessmen decide to do it".

Young may have overstated things a bit, but the observation encapsulates a basic truth about American society. Business does tend to get its way, acting by means of a nebulous force known as "corporate power" that drives much of what happens in both the public and private spheres. But there are a few details to work out. What is the nature of this power? Exactly how does it work? Does the law instantly conform to the needs and wants of those one hundred businessmen? What happens when corporate America finds its wishes thwarted by constitutional barriers? Who decides what is "public" and what is "private"? Who defines the nature of "crime" versus "business as usual"?

In order to answer such questions, one challenge is merely to begin seeing a phenomenon that surrounds us so completely and continuously. I've spent most of my working life in the corporate world, founding and running a company that publishes how-to books about computers. In that world the corporation is the air you breathe. There is no questioning whether it is a good thing or a bad thing. It just is. Nor is there any thought about where the corporation - this particular institutional form - comes from. You assume that corporations have always been a natural part of the American system of "democracy and free enterprise". But even as I pursued my business, questions lurked in the back of my mind, some of which had been triggered as early as my high school years.

I grew up in southwestern North Dakota, and my first summer job was building trails in the Badlands for the US Forest Service. One day, I learned that a large energy corporation had applied to strip-mine a spot called the Burning Coal Vein, a rugged area where at night deep fissures emitted a glow caused by smoldering veins of coal, ignited long ago by lightning strikes or prairie fires. Along the hillsides, columnar junipers reminiscent of the trees in Van Gogh's "Starry Night" stood like silent watchers draped in tunics. Piles of scoria - brilliant red, orange, and purple ceramic shards - covered the ground, the metamorphosed products of shale baked by the intense underground heat. It was like being in an immortal potter's workshop, where every footstep made a tinkling sound as the scoria broke under your feet. That someone could dare propose destroying a place of such beauty in exchange for a few thousand tons of low-grade coal stunned me. But, of course, the entity planning the mine wasn't a someone but a something - a corporation. Although people in the company may well have cared, the corporation itself didn't.

After college, I started working as a community organizer for a group of farmers and ranchers in North Dakota who were opposed to a vast expansion of strip-mining being proposed by a number of large companies. The shadow cast by these corporations across farms and ranches was not just a metaphorical one. The machines used in strip mines are quite literally of an awesome physical scale. When I saw Jurassic Park I experienced a feeling of deja vu - it reminded me of being in a strip mine. To extract the coal underneath millions of acres of productive farmland and ranchland, the mining companies have to peel away the overlying layers of plant-nurturing soil, water-bearing aquifers, and rock. The peeling is done by immense, crane-like earth-eaters called draglines, which soar into the air the length of a football field. Like long-necked dinosaurs, the draglines make their way slowly amid ridges of rubble. Using tooth-edged buckets large enough to hold three Greyhound buses, they perform a drop-drag-lift-swivel maneuver, dropping the giant bucket, dragging it until it overflows, then suddenly jerking tons of dirt and rock high into the air, swiveling with surprising grace, and finally dumping the load onto the spoil piles. Especially at night, when intense lights illuminate the machinery and the rubble, the impression is hair-raising - a specter of monsters feeding upon the earth. And then you remember that the rubble being moved and dumped had been someone's pasture, favorite hillside, or alfalfa field. Reclamation? The companies promised that they would restore the land, but given the semiarid conditions, the fragility of the soil, and the complexities of such critical factors as hydrology and salinity, such assurances rang hollow.

You couldn't help but be affected by the courage of the families who carried on a daily existence next to the mines. I recall sitting in the kitchen of a wheat farmer named Werner Benfit and his elderly mother Anna, looking out at the advancing edge of North American Coal Company's Indian Head Mine near Zap, an ordinary town except for its Dr Seussian name. Even though the towering spoil piles of the mine had come literally to the edge of the Benfits' property, chain-smoking Werner never lost his sense of humor. Anna brought out a plate of cookies and Werner told about the "suit" from North American Coal who had recently paid a visit. The executive had told Anna that she could name any price in the world for her land. "I don't know about that", replied Anna, "but do you think you could move your spoil pile back a little ways so the rocks stop rolling onto my lawn"?

My boss was a genial Norwegian-American rancher named Randolph Nodland. Randolph had spent years fighting a company called Nokota, which had surreptitiously acquired the mining rights to thousands of acres of land and now threatened a number of farms and ranches with the possibility of an immense strip mine and an accompanying synthetic fuels plant.

One summer evening, as Randolph and I passed the time over pitchers of beer in the Shamrock Bar downstairs from our small office, he told me about a funeral he had attended the previous week at his local country church, Vang Lutheran. Flowers had been brought by the family of the deceased, but as Randolph took his place in the pews, a particularly large bouquet caught his eye. On a card the inscription read: "With deepest sympathies, Nokota, Inc".

The memory of the funeral raised a mixture of emotions, which passed like prairie clouds across Randolph's weathered face - disgust, anger, amusement. The funeral bouquet was just one of a variety of "personal" gestures by the company, including congratulatory cards sent to graduating high school seniors, booths at local fairs, and sponsorship of sports teams, all designed to ingratiate Nokota Inc. with the local community.

This particular gesture, though, crossed the line, and I knew Randolph would make sure the story of the grotesque social miscue made the rounds. In relating the encounter with the bouquet, the mere raising of an eyebrow would be enough to define and convey the insult - and having delivered that cue himself, Randolph could be assured that the message would pass from person to person. Such is the nature of a rural community.

But it occurred to me that Nokota's weird social gesture also stood for something else. In a curious way, the ineptness of the funeral bouquet dramatized the mindless persistence that only a corporation can sustain. Randolph's own energies, along with the combined energies of all his neighbors, were ultimately limited. In contrast, the energies of the corporation had no clear bottom. Maybe all the public relations activities of the company weren't really about making Nokota popular.

Maybe they were simply a way of saying, "We're here, we won't go away, get used to it". You can laugh at or hate a corporation, you can turn it into an object of contempt. You may experience it as a tenacious foe, you can get mad at it one day and ignore it the next. Nothing you may feel or do really matters, because in the end there is no getting around the fact that you are not fighting a normal opponent - your opponent is simply nobody. As Baron Thurlow said some three centuries ago,

Did you ever expect a corporation to have a conscience, when it has no soul to be damned, and no body to be kicked?

From the inside, the view is different. I've repeatedly been struck by the paradox that even the most destructive corporations are populated by friendly, caring people. Sure, there are exceptions to that - corrupt companies, companies with poisonous internal cultures, even companies that ought to be classified as instances of organized crime. But in general, far more harm is caused by corporations acting in ways that are utterly legal and that seem, from the perspective of those inside the corporation, to be perfectly appropriate. Quite obviously, if corporations do harm, it is not because the people inside them lack souls. Rather, it's because the company as a whole, like any organization, is a complex entity that acts according to its own autonomous set of motives and dynamics.

http://jayhanson.us/gangsofAmerica.pdf


Bill Totten http://www.ashisuto.co.jp/english/

Monday, February 14, 2011

America 2.0

From Private Greed to Public Service

by Jay Hanson (October 06 2009)

with minor revisions on January 11 2010

This paper is the culmination of almost twenty years of study - working almost full time - to understand why our civilization is self-destructing. My brevity here is not due to my lack of understanding or scholarship.

Link to high resolution image: http://jayhanson.us/AmericaSchematic.html

We must all hang together, or assuredly we shall all hang separately.
-- Benjamin Franklin, 1776

The aim of every political constitution is, or ought to be, first to obtain for rulers men who possess most wisdom to discern, and most virtue to pursue, the common good of the society; and in the next place, to take the most effectual precautions for keeping them virtuous whilst they continue to hold their public trust.
-- James Madison, Federalist #57, 1787

Abstract

The "bad news" is that "peak oil" marks the beginning of the end of capitalism and market politics because many decades of declining "net energy" {1} will result in many decades of declining economic activity. And since capitalism can't run backwards, a new method of distributing goods and services must be found. The "good news" is that our "price system" is fantastically inefficient! Americans could be wasting something like two billion tonnes (metric tons) of oil equivalent energy per year!!

In order to avoid anarchy, rebellion, civil war and global nuclear conflict, Americans must force a fundamental change in our political environment. We can keep the same political structures and people, but we must totally eliminate corporate-special interests from our political environment. A careful review of the progressive assault on laissez faire constitutionalism and neoclassical economics, from the 1880s through the 1930s, explains how this can be done legally and without violence. These early progressives showed how we can save our country. All that is lacking now is the political will. I call this adjustment of our political environment "America 2.0".

The reason that America 2.0 is so important and should be implemented as the first in a series of many political reforms is because it's "constitutional politics" (politics that changes politics). The modification that I am proposing would fundamentally alter the nature of politics in America.

To achieve America 2.0, we must first separate and isolate our political system from our economic system so that government can begin to actually address and solve societal problems rather than merely catering to corporate interests. The second step is to retire most working American citizens with an annuity sufficient for health and happiness, as government begins to eliminate the current enormous waste of vital resources by delivering goods and services directly. This would allow most adults to stay at home with their families but still receive the goods and services they need to enjoy life.

America 2.0 is based on the biological principle that organisms respond to environmental cues. If one changes an organism's environmental cues, then one also changes an organism's behavior. If the voting public and political decision-makers only receive cues designed to mitigate our crisis, then all choices they make will be aimed at mitigating that crisis. This is an extremely simple way to implement a science-based government.

After America 2.0 has been implemented, all the choices made by elected officials will be, by best calculations, "good" for the public. Officials will decide among a selection of public "goods". Corporations will become the public utilities that they were before 1860.

Preface

To the free man, the country is a collection of individuals who compose it ... He recognizes no national goal except as it is the consensus of the goals that the citizens severally serve. He recognizes no national purpose except as it is the consensus of the purposes for which the citizens severally strive.
-- Milton Friedman, Capitalism and Freedom (1962)

We may well call it 'the tragedy of the commons', using the word 'tragedy' as the philosopher Whitehead used it: 'The essence of dramatic tragedy is not unhappiness. It resides in the solemnity of the remorseless working of things.'
-- Garrett Hardin, The Tragedy of the Commons (1968)


The criterion of "profit" has shaped our political decisions since the founding of our country, but now that we are facing peak oil, new "scientific systems" criteria must replace "profit" or our civilization will "collapse" {2} like so many others have throughout history.

In order for America to survive this crisis, a moderate, "doable" modification to our political environment is required. This paper does not attempt to describe a complete system to replace state-sponsored capitalism and market politics. My modest goal here is to show a way forward which could avoid the worst.

The Bad News

"Net Energy Cliff" Which Leads to The End of Capitalism
http://jayhanson.us/Murphy.html

Our present "business-as-usual" model, which requires endless economic growth and endless job creation, is no longer physically possible. Here's why:

1. Business-as-usual depends upon jobs and markets to distribute goods and services.

2. Economic growth and increasing job availability require increasing net energy.

3. Net energy correlates with peak oil and both are expected to decrease for decades. See the "Net Hubbert Curve" in David Murphy's graph above and read footnote {3}.

4. Decades of decreasing net energy will cause job opportunities to decrease for decades because less and less energy will be available for economic development.

5. Globally, millions of new workers enter the job market each year, but job availability is expected to decline by millions of positions each year. Eventually, the projected high unemployment among young men will cause catastrophic political failures similar to those that led to Hitler's takeover of German democracy. Therefore, business-as-usual is no longer a viable method of distributing goods and services and a new method must be found - and soon!

Historians will say that "peak oil" marked the end of the second free trade episode. If we don't abandon capitalism now, we will be forced into another global war over resources:

By the fourth quarter of the nineteenth century, world commodity prices were the central reality in the lives of millions of Continental peasants; the repercussions of the London money market were daily noted by businessmen all over the world; and governments discussed plans for the future in light of the situation on the world capital markets. Only a madman would have doubted that the international economic system was the axis of the material existence of the race. Because this system needed peace in order to function, the balance of power was made to serve it. Take this economic system away and the peace interest would disappear from politics ... By the end of the seventies the free trade episode (1846 to 1879) was at an end ... The origins of the cataclysm lay in the utopian endeavor of economic liberalism to set up a self-regulating market system.
-- Karl Polanyi


The Good News: The Market is Fantastically Inefficient

Yes, that is correct: The "market system" is fantastically inefficient! {4} Our present way of distributing goods and services wastes enormous amounts of natural resources, but gigantic resource savings are possible. As an illustration, let's make a rough estimate of per capita food energy requirements and current waste:

If we wanted our government to distribute food directly instead of using the market, how much energy would be required to produce and deliver provisions to each and every American?

Adults need about 3,000 nutritional calories of food each day. Let's allow 30,000 calories to produce and another 3,000 calories to deliver food to every American. That's a total of 36,000 calories per day.

Just how much energy did the American "price system" actually consume? In 2006, Americans consumed an average of 231,008 calories per day, so 231,008 minus 36,000 equals 195,008 calories wasted each day. This simple calculation suggests that Americans could be wasting something like two billion tonnes of oil equivalent per year! {5} That's far more oil wasted than all the oil produced in the Middle East!

If we change a few of our founding beliefs and assumptions - and reorganize politically - more than enough energy remains to mitigate the worst.

Founded on Tragic Assumptions

The United States was founded on several assumptions. A key assumption, which led to several others, was that "the sum of individual interests" was equivalent to "the common interest". In practical terms, this meant:

1. Individuals know best how to solve their own problems.

2. Government should promote economic growth to create jobs so that individuals can solve their own problems.

3. The best way for government to promote economic growth is to ask business leaders what can be done to help them make more money. That's why today, lobbyists are absolutely necessary to the function of our government. Without lobbyists, our unqualified elected officials and their appointed cronies would have absolutely no idea what to do!

Today, we know that our founders were fundamentally wrong on this point. The lesson of "The Tragedy of the Commons" {6} is that "the sum of individual interests" is not "the common interest". In his classic, The Tragedy of the Commons (1968), Garrett Hardin illustrated why freedom in the commons brings ruin to all:

Visualize a pasture as a system that is open to everyone. The "carrying capacity" {7} of this pasture is ten animals. Ten herdsmen are each grazing one animal to fatten up for market. In other words, the ten animals are now consuming all the grass that the pasture can produce.

Harry (one of the herdsmen) will add one more animal to the pasture if he can make a profit. He subtracts the original cost of the new animal from the expected sales price of the fattened animal and then considers the cost of the food. Adding one more animal will mean less food for each of the present animals, but since Harry only has only one-tenth of the herd, he has to pay only one-tenth of the cost. Harry decides to exploit the commons and the other herdsmen, so he adds an animal and takes a profit.

Shrinking profit margins force the other herdsmen either to go out of business or continue the exploitation by adding more animals. This process of mutual exploitation continues until overgrazing and erosion destroy the pasture system, and all the herdsmen are driven out of business.

Most importantly, Hardin illustrates the critical flaw of freedom in the commons: all participants need to agree to conserve the commons, but any one can force the destruction of the commons. Although Hardin describes exploitation by humans in an unregulated public pasture, his commons and "grass" principle fit our entire society.

Private property is inextricably part of our commons because it is part of our life support and social systems. Owners alter the properties of our life support and social systems when they alter their land to "make a profit" - for example, when they cover land with corn or concrete.

Neighborhoods, cities and states are commons in the sense that no one is denied entry. Anyone may enter and lay claim to the common resources. One can compare profits to Hardin's "grass" when any number of corporations - from anywhere in the world - drive down profits by competing with local businesses for customers.

One can see wages as Hardin's "grass" when any number of workers - from anywhere in the world - can enter our community and drive down wages by competing with local workers for jobs. People themselves even become commons when they are exploited (are made the best use of) by other people and corporations. Everywhere one looks, one sees The Tragedy of the Commons. There is no technical solution to the problem of the commons, but governments can act to limit access to the commons, at which time they are no longer commons.

In the private-money based political system we have in America, everything (including people) becomes the commons because money is political power, and all political decisions are reduced to economic ones. In other words, we effectively have no political system, only an economic system - everything is for sale. Thus, America is presently one big commons that will be exploited until it is destroyed.

America 2.0: The Essence

I hope we shall ... crush in its birth the aristocracy of our moneyed corporations which dare already to challenge our government in a trial of strength, and bid defiance to the laws of our country.
-- Thomas Jefferson, 1816

Thomas Jefferson, along with James Madison worked assiduously to have an Eleventh Amendment included into our nation's original Bill of Rights. This proposed Amendment would have prohibited 'monopolies in commerce'. The amendment would have made it illegal for corporations to own other corporations, or to give money to politicians, or to otherwise try to influence elections. Corporations would be chartered by the states for the primary purpose of 'serving the public good'. Corporations would possess the legal status not of natural persons but rather of 'artificial persons'. This means that they would have only those legal attributes which the state saw fit to grant to them. They would not; and indeed could not possess the same bundle of rights which actual flesh and blood persons enjoy. Under this proposed amendment neither the Fourteenth Amendment of the US Constitution, nor any provision of that document would protect the artificial entities known of as corporations.
-- Dr Michael P Byron {8}


In order to prevent collapse on the downside of the net energy curve, Americans must force corporate-special interests completely out of our political environment. A careful review of the progressive assault on laissez faire constitutionalism and neoclassical economics, from the 1880s through the 1930s, explains how this can be done legally and without violence {9}. These early progressives showed how we can save our country. All that is lacking now is the political will. I call this adjustment of our political environment "America 2.0".

The modification that I am proposing could reduce natural resource consumption by something like ninety percent and greatly reduce, or possibly eliminate, civil violence caused by the inevitable post-peak-oil-economic collapse.

Our present method of distributing goods and services works something like this:

* Our government loans money to banks, so bankers can operate businesses (which require buildings, computers, furniture, lights, air conditioning, employees, commuting, et cetera).

* The bankers then lend money to other businesses, like restaurants, real estate developers, et cetera (which also require buildings, computers, commuters, advertising, accountants, et cetera).

* So the employees of these restaurants, real estate developers, et cetera. can buy a car and drive to the store (with even more buildings, computers, commuters, et cetera).

* Just to buy a loaf of bread!

The "price system" has to be the most inefficient organization possible!

Why not simply have government pay someone to pick up that loaf of bread at the bakery and deliver it to the consumer? This is a form of distribution that would eliminate the banks, most of the other businesses, and all the stores. Most Americans would no longer need a car to commute to work or run to the store! However, some private businesses that provide critical services would still be operated but at our government's direction.

We could use the same efficient method of distribution for everything that Americans really "need". Shoppers would order provisions online, in the same way that Amazon or Netflix works now, and then their orders would be delivered the next day. And a medical care caravan could regularly drive through neighborhoods, filling teeth, giving checkups, and so on.

But first we must separate and isolate our political system from our economic system so that government can begin to actually address and solve societal problems rather than merely catering to corporate interests. The second step is to retire most working American citizens with an annuity sufficient for health and happiness, {10} as government begins to eliminate the current enormous waste of vital resources by delivering goods and services directly. This would allow most adults to stay at home with their families but still receive the goods and services they need to enjoy life.

Unless something is done now to prevent it, America will face anarchy, rebellion, and civil war on the downside of the net energy cliff. In order to maintain public order, the state must do one thing: take corporate-special interests totally out of politics. {11}

The urgency, necessity, and practicality of this proposal should be apparent to all sectors of society if they could be brought to understand how our social systems are depleting our physical systems. I am convinced that if Americans were given the honest science and engineering behind what needs to be done, the vast majority would willingly make a peaceful transition to a "sustainable retreat".

Besides wanting to sell their ephemeral products and services to an unsuspecting public, corporate-special interests also want to prevent the state from solving social pathologies because they can profit from treating the symptoms. These special interests can do no better because they are machines programmed to create profits! {12}

All corporate-special interests - even universities, charities, and churches - depend on perpetual economic growth for their budgets, but the laws of thermodynamics tell us that perpetual economic growth is physically impossible. Therefore, all corporate-special interests must be removed from the political environment.

The first simple step is to remove the "personhood" Constitutional protections from corporations, which could probably be done by the President acting alone, via his "police powers". Certainly it could be done by the Supreme Court or Congress if they had the political will to do so. Once corporations are firmly under democratic control - in essence, "public utilities" - the federal government can begin correcting the abuses of capitalism as gracefully as possible. We want to preserve and include the great achievements of capitalism while removing its pathologies.

What follows are six political steps, listed in order of priority, that are designed to mitigate the societal disruptions of the net energy cliff:

1. Remove the "personhood" Constitutional protections from corporations.

2. Make it a federal crime for corporations to advocate anything (including, but not limited to, advertising) in the mass media.

3. Make it a federal crime for anyone employed by a corporation to lobby elected or appointed officials directly or indirectly.

4. Mandate public financing for elections.

5. Assemble teams of the country's best and brightest medical doctors, scientists, engineers and other thinkers - but no representatives of religious groups, economists, or other corporate-special interests - to recommend public policy. (We do not need a Manhattan Project for economics - on how to save the corporations and their outrageous profits; we need a Manhattan Project on how the country can survive the net energy cliff!)

6. Encourage public debate on proposed changes.

(Number 5 above is the key difference that I am advocating. Public policy recommendations would come from medical doctors, engineers and scientists who are looking at the entire system instead of from a room full of fat salesman trying to sell worthless shit to an unsuspecting public. It's based on the recognition that if one changes the environment in which political decisions are made, one changes the political decisions.)

National Goal

The "goal" of our society should be to make our citizens healthy and happy while using as few natural resources as possible (especially energy). The methods needed to attain this goal can be determined by teams of medical doctors, scientists and engineers. Capitalism should be dismantled as gracefully as possible and any natural resources that are not required health and happiness, should left to nature.

With modern technology, probably less than five percent of the population could produce all the goods we really "need". A certain number of qualified "producers" could be selected by a peer group to produce for five years. The rest can stay home and sleep, sing, dance, paint, read, write, pray, play, do minor repairs, work in the garden, and practice birth control.

Self-Determination

Any number of alternative cultural, ethnic or religious communities could be established by popular vote. Religious communities could have public prayer in their schools, prohibit booze, allow no television to corrupt their kids, wear uniforms, whatever. Hippies could establish communities where free sex was the norm. Writers or painters could establish communities where bad taste would be against the law. Ethnic communities could be established to preserve language and customs. If residents didn't like the rules in a particular community, they could move to another religious, cultural, or ethnic community of their choosing.

In short, the one big freedom that individuals would have to give up would be the freedom to destroy the commons (in its broadest sense). Couples would be allowed only one child. And in return, they would be given a guaranteed income for life and the freedom to live almost any way they choose.

Tactics

"Mob in the Square in Romania" Which Led to the End of Communism http://jayhanson.us/America_mob.gif

The changes I am proposing can be accomplished without rewriting our Constitution or violence. The two quotes at the end suggest tactics that worked for the anti-Vietnam War and civil rights movements. Sign-carrying activists should fill the streets of DC, "like the mob in the square in Romania" {13}, until the city is gridlocked. Activists should just stay there until the powers-that-be concede.

I expect that organizing this movement will take a few years. It's asking a lot. It can't happen overnight. We know that with "cliffing" net energy, our society is just going to keep getting worse and worse until something big changes.

Let's hope the "big change" is something "progressive" instead of a new "President For Life", who has a "prayer breakfast" every morning where he makes up lists of "evildoers" that are to be rounded up and shot. (That's still my most-likely scenario. We came close with "W".)

No progress is possible until we can get the corporate-special interests - all of them - out of our politics and out of the mass media! - Jay - http://jayhanson.us http://www.dieoff.com

You don't communicate with anyone purely on the rational facts or ethics of an issue ... It is only when the other party is concerned or feels threatened that he will listen - in the arena of action, a threat or a crisis becomes almost a precondition to communication ... No one can negotiate without the power to compel negotiation ... To attempt to operate on a good-will basis rather than on a power basis would be to attempt something that the world has not yet experienced.
-- Saul Alinsky, Rules for Radicals (1971)

The big corporations, our clients, are scared shitless of the environmental movement. They sense that there's a majority out there and that the emotions are all on the other side - if they can be heard. They think the politicians are going to yield to the emotions. I think the corporations are wrong about that. I think the companies will have to give in only at insignificant levels. Because the companies are too strong, they're the establishment. The environmentalists are going to have to be like the mob in the square in Romania before they prevail.
-- William Greider, Who Will Tell The People (1993)

'Capitalism' is a money-based political system which creates dissatisfaction, while converting natural resources into garbage, in exchange for IOUs, which will be worthless when the oil peaks and the country goes up in flames.
-- Jay Hanson

Notes:

{1} Life on Earth is "political" http://jayhanson.us/p1.html and conforms to universal thermodynamic laws. We mine our minerals and fossil fuels from the Earth's crust. The deeper we dig, the greater the minimum energy requirements. The most concentrated and most accessible fuels and minerals are mined first; thereafter, more and more energy is required to mine and refine poorer and poorer quality resources. New technologies can, on a short-term basis, decrease energy costs, but neither technology nor "prices" can repeal the laws of thermodynamics:

* The hematite ore of the Mesabi Range in Minnesota contained sixty percent iron. But now it is depleted and society must use lower-quality taconite ore that has an iron content of about 25 percent.

* The average energy content of a pound of coal dug in the US has dropped fourteen percent since 1955.

* In the 1930s, a barrel of oil invested in finding, drilling and pumping could yield about one hundred barrels. By the 1970s, that number had dropped to about twenty-five barrels. Within a couple of years, that number will become one for one. At that point, even if the price of oil reaches $500 a barrel, it wouldn't be logical to look for new oil in the US because it would consume more energy than it would recover. Decreasing net energy sets up a positive feedback loop: since oil is used directly or indirectly in everything, as the energy costs of oil increase, the energy costs of everything else increase too - including other forms of energy. For example, oil provides about fifty percent of the fuel used in coal extraction.

Every day, about 85 million barrels of oil are burnt: http://www.nationmaster.com/graph/ene_oil_con-energy-oil-consumption . Every day, less oil exists on planet Earth than the day before. The handwriting is on the wall: "capitalism" is running out of energy! Here is a small, silent animation which will illustrate the "net energy" principle: http://jayhanson.us/oil.html .

Imagine having a motor scooter with a five-gallon tank, but the nearest gas station is six gallons away. You cannot fill your tank with trips to the gas station because you burn more than you can bring back - it's impossible for you to cover your overhead (the size of your bankroll and the price of the gas are irrelevant). You might as well put your scooter up on blocks because you are "out of gas" - forever. It's the same with the American economy: if we must spend more than one unit of energy to produce enough goods and services to buy one unit of energy, it will be impossible for us to cover our overhead. At that point, America's economic machine is "out of gas" - forever. More on energy basics at http://dieoff.org/page175.htm .

{2} http://dieoff.org/page134.htm

{3} David Murphy's graph is an "educated guess" to illustrate the point that net energy falls faster than gross energy. Precision here is impossible because the data is not available. His Oil Drum piece can be found at http://netenergy.theoildrum.com/node/5500 .

{4} Although economists claim the market is "efficient", they actually mean "efficient allocation" of money - not the "efficient use" of materials. "Economic efficiency" is completely different than "materials efficiency".

{5} Here is an oversimplified example to give us an idea of how incredibly inefficient the "price system" really is. Suppose that the only thing Americans had to do was to eat. How much energy would be required to feed them?

In 2006, Americans consumed about 334,600,000 Btu per capita, per year: http://www.eia.doe.gov/pub/international/iealf/tablee1c.xls . This converts to about 84,317,785 nutritional calories equivalent per year: http://www.onlineconversion.com/energy.htm or 84,317,785 / 365 = 231,008 calories per day. But adults only require something like 3,000 calories of food energy per day to survive, so it seems we, very roughly, waste something like 231,008 - 3,000 = 228,008 calories per day, per capita.

Studies show that food grains produced with modern, high-yield methods (including packaging and delivery) now contain between four and ten calories of fossil fuel for every calorie of solar energy. So we will allow ten calories of energy to grow and process each calorie of food delivered, so 3,000 * 10 = 30,000 calories per day is required to keep an adult alive. Thus, 228,008 - 30,000 = approximately 198,008 calories are still being wasted each and every day, by every American.

Let's allow the equivalent of 3,000 nutritional calories (about one tenth gallon of gas) per day, per capita to collect and deliver food and water to each and every household in the country, so 198,008 - 3,000 = 195,008 calories equivalent wasted per day, per capita in the US.

The estimated population of America on September 22 2009 was 307,511,668: http://www.census.gov/main/www/popclock.html . So 195,008 *307,511,668 * 365 = 21,887,999,529,837,200 nutritional calories wasted every year in the US, or 2,188,799,953 tonnes - over two billion tonnes - of oil equivalent are wasted each year in the US feeding people! In 2006, oil production in the Middle East was only 1,221,900,000 tonnes: http://tinyurl.com/mfwndm .

Every year, the "price system" in the United States, wastes almost a billion tonnes more oil than is produced in the Middle East! Obviously, there is more to life than eating, but equally-obviously, the price system is the most inefficient organization in human history!

Excel spreadsheet: http://jayhanson.us/America.xls

High resolution image: http://jayhanson.us/America_xls.htm

{6} http://tinyurl.com/ycg7wss

{7} An environment's "carrying capacity" is its maximum persistently supportable load (Catton 1986). If the load exceeds capacity, then the environment is damaged and carrying capacity is reduced. http://dieoff.org/page74.htm

{8} http://tinyurl.com/c28c87

Ted Nace, Gangs of America: The Rise of Corporate Power and the Disabling of America (2003, 2005) http://www.amazon.com/Gangs-America-Corporate-Disabling-Democracy/dp/1576753190

http://jayhanson.us/gangsofAmerica.pdf
http://jayhanson.us/Gangs_2.pdf

Differences Between the Classic Corporation (Before 1860) and the Modern Corporation (After 1900):

Birth
< 1860: Difficult: requires a custom charter issued by a state legislature
> 1900: Easy: general incorporation charter allows automatic chartering

Life Span
< 1860: Limited term
> 1900: No limits

"Shape Shifting"
< 1860: Corporations not allowed to own stock in other companies; restricted to activities specified in charter
> 1900: Corporations free to pursue acquisitions and spin-offs;

Mobility
< 1860: Usually restricted to home state
> 1900: No restrictions

Adaptability
< 1860: Restricted to activities specified in charter
> 1900: Allowed to pursue multiple specified lines of business and initiate or acquire new ones at company's discretion

"Conscience"
< 1860: Actions constrained by shareholder liability and by threat of charter revocation
> 1900: Fewer constraints due to limited liability, disuse of charter revocation, and tort reforms

"Will"
< 1860: Managerial action hampered by legal status of minority shareholders and of corporate agents
> 1900: Legal revisions enable consolidation of management's power

Size
< 1860: Limited by charter restrictions
> 1900: Asset limits removed; antitrust laws generally not effective

Constitutional Rights
< 1860: Functional only
> 1900: Steady acquisition of constitutional rights

Here are some organizations, books, and web resources that share the same goal - ending corporate governance: http://www.ratical.org/corporations/ReadingLinks.html

This timeline of corporate personhood (the gain and loss of rights and powers) is particularly interesting: http://www.ratical.org/corporations/ToPRaP.html

{9} The "Progressives" are still making constitutional changes. See Cass Sunstein, The Second Bill of Rights: FDR's Unfinished Revolution - And Why We Need It More Than Ever (2006) http://www.amazon.com/Second-Bill-Rights-Unfinished-Revolution dp/0465083331 .

* In 1900, it was clear that the Constitution permitted racial segregation. By 1970, it was universally agreed that racial segregation was forbidden.

* In 1960, the Constitution permitted sex discrimination. By 1990, it was clear that sex discrimination was almost always forbidden.

* In 1930, the Constitution allowed government to suppress political dissent if it had a bad or dangerous tendency. By 1970, it was clear that the government could almost never suppress political dissent.

* In 1910, the Constitution prohibited maximum hour and minimum wage laws. By 1940, it was clear that the Constitution permitted maximum hour and minimum wage laws.

* In 1960, it was clear that the Constitution allowed government to regulate commercial speech, which was not protected by the free speech principle. By 2000, it was clear that the Constitution generally did not allow government to regulate commercial speech unless it was false or misleading.

* In 1970, it would have been preposterous to argue that the Constitution protected the right to engage in homosexual sodomy. In 1987, it was well settled that the Constitution did not protect that right. By 2004, it was clear that the Constitution did protect the right to engage in homosexual sodomy. More in http://jayhanson.us/fortyAcresAndAMule.pdf

http://jayhanson.us/FDR2.pdf
http://jayhanson.us/theMythOfLaissezFaire.pdf

´╗┐
Barbra H Fried, The Progressive Assault on Laissez Faire: Robert Hale and the First Law and Economics Movement (Harvard University Press,1998)
http://www.amazon.com/Progressive-Assault-Laissez-Faire-Economics/dp/0674775279

Edward N Kearny, Thurman Arnold, Social Critic: The Satirical Challenge to Orthodoxy http://jayhanson.us/thurmanArnoldSocialCritic.pdf

Thurman W Arnold, The Folklore of Capitalism (Yale University Press 1937), Chapter VIII: The Personification of Corporation
http://jayhanson.us/thePersonificationOfCorporation.pdf

Robert H Nelson, Reaching or Heaven on Earth: The Theological Meaning of Economics (1991)
http://www.amazon.com/Reaching-Heaven-Earth-Theological-Economics/dp/0847676641

http://jayhanson.us/gospelOfEfficiency.pdf
http://jayhanson.us/haleAll.pdf

{10} Human health and happiness are the products of our biology and environment.

{11} In order to understand why people act as they do, at a minimum, one must understand "politics" among social animals. See http://jayhanson.us/p1.html

{12} http://jayhanson.us/c1.html

{13} http://en.wikipedia.org/wiki/Romanian_Revolution_of_1989

_____

This paper is hereby placed in the public domain and may be reprinted without further permission.

This paper is the culmination of almost twenty years of study - working almost full time - to understand why our civilization is self-destructing. My brevity here is not due to my lack of understanding or scholarship.

Jay Hanson (October 06 2009)

This file is archived at http://jayhanson.us/america.htm

A "no flash" version designed to copy and paste into an email is at http://jayhanson.us/americaNF.htm

A "no graphics" version is at http://jayhanson.us/americaNG.htm

A pdf version is at http://jayhanson.us/america.pdf

A word version is at http://jayhanson.us/america.doc


Bill Totten http://www.ashisuto.co.jp/english/