Monday, April 26, 2010

Corporate Citizen

Synonyms: Feeloader, leech

Category: Euphemism

Definition: Euphemistic phrase used in certain attempts to legitimize manipulation of public institutions by private monied interests. This phrase has been in use more or less constantly since the mid 20th-century, but has become especially prominent lately as the nation attempts to put in place regulatory measures needed to prevent future economic decline from corporate malfeasance, such as deceptive marketing practices1, reckless speculation within the banking sector2, or general corporate irresponsibility with regard to worker safety3 and the moral hazard inherent in being "too big to fail"4.

The description of a corporation as a 'citizen' gains some of its currency through a legal fiction known as 'corporate personality'--the notion that a body of persons formally committing resources to acheive some objective in accordance with state law may, through the actions of their chosen officers, enter that corporation into legally enforceable transactions, much as a natural born person may.5

With the down-to-earth realism and suspicion of unaccountable tyrannies that Americans like to ascribe to their forbears, earlier generations placed important limits on the scope of corporate activities. No dobut they would have appreciated common sense appeal of the legal dictum "Corporations have neither bodies to be punished nor souls to be condemned; they therefore do as they like."6

Generally, early charters granting existence to business corporations were required to specificity the exact purpose for which they were organized and that the corporate existence must expire upon the acheivement of that purpose or a date certain.7 However, increasing technological advances in the post- Civl War United States resulted in seductive economies of scale and fantastic personal fortunes which mitigated against adequate public oversight. Gradually, state legislation became less restrictive to the point where charters need only state in very imprecise terms the purposes for the corporation has been organized, and perpetual existence is now largely presumed. Corporations have, in effect, been given an undying existence.8

But immortality is not the only super-human power claimed. Recently they have assumed unlimited political speech as well9. However, though many of these cases remain highly controversial among legal scholars and public policy analysts 10, it seems that the general American public can barely conceive of the time when such extraordinary privileges were not automatically assumed corporate perrogatives.

Use of the term "corporate citizen", therefore, has become a traditional strategem in to put a benign human face on amoral corporate policies which would otherwise be seen for what they truly are--impersonal programmes designed solely to provide controlling shareholders with increasingly large, near-term profits.11 By describing the corporate entity as a 'citizen', it ironically claims a type of moral virtue that was originally associated with the heroic self-sacrifice of pious individuals for the benefit of the wider community in which they lived. The civic mythology of early Rome held out the general Cinncinatus as just such a noble example. He is said to have humbly relinquished dictatorial powers upon the conclusion of Rome's war against the Aequians, Sabinians and Volscians in the 5th century B.C.E.

But the actions of such antique heros are pretty far indeed from contemporary corporate behaviour. Shocking though they should be, the examples of recent corporate behaviour discussed in footnotes 1-4 are merely specific incidents, picked more or less at random from a vast pool of such occurrences, to illustrate much larger, more pernicious trends. However, given the current debates about financial responsibility measures before the Congress, two further examples merit inclusion:

1.) Since 1965, when the United States was the undisputed leader of the Free World, and even after John F. Kennedy's historic 1963 tax reforms, the financial contribution to costs of governance decreased from 21.8% to 14.4% in 2007 13, even as the size and influence of this same corporate sector increased at an astonishing rate.14

2.) Corporate lobbyists currently both oppose public oversight of its most risky derivatives instruments and refuse to contribute to the cost of administering corporate insolvency. 15

Etymology: Uncertain, probably dates from early 20th century


1 Goldman Sachs charged with deceiving customers regarding risk of certain securities sold

2 Merrill Lynch, Citigroup, UBS, JP Morgan Chase assumed vast, unhedged risks in the Magnetar scandal

3 Concerns about the safety record of the company employing 29 miners who died in recent tragedy



6 Traditionally attibuted to Edward Thurlow, 1st Baron Thurlow (1730-1806)

7 For example, even as late as 1895 the state of Missouri declared in State v Payne that, " . . . general legislation, is unfavorable to the unlimited duration of purely business corporations, and all doubts in corporate charters will be resolved against an intention to grant perpetual existence."

8 The U.S. Supreme Court precedent typically cited for allowing perpetual corporate existence is 1819's Trustees of Dartmouth College v. Woodward. However, the specific subject matter of that case (i.e., interpretation of the charter of an educational organization granted by a British monarch before U.S. independence) precluded ready application to the business corporation. In fact, perpetual existence was given only gradually, on a state by state basis through legislative acts. In reality the main import of the Dartmouth case was probably its reinforcement of the presumption that validly established contracts inviolable. Also note that the court's conclusion that Dartmouth College did have a perpetual existence was very controversial at the time. Thomas Jefferson is quoted as responding that such presumptions as perpetual corporate existence " . . . suppose that . . . the earth belongs to the dead, and not the living." (Letter from Jefferson to New Hampshire Governor Plumer, quoted at footnote 4, page 230, Chapter V, volume IV, "The Life of John Marshall", by Albert Jeremiah Beveridge

9 U.S. Supreme Court decision in 2010's Citizens United v Federal Election Commission invalidated limits on corporate political spending

10 Center for Responsive Politics; former Supreme Court Justice O'Connor's comments; Harvard's Journal of Law and Technology's consideration of unlimited corporate advertising spending and coordination strategies

11 In fact, due to the wide diversity of enterprises in which corporate conglomerates typically engage today, from traditional manufacturing and distribution to financing and even speculative trading in exotic instruments, and the insistence of capital markets on measuring indices hourly and daily, increasing short-term profits seems to be the only coherent objective the large multinational corporation can articulate.


13 , Office of Management and Budget Table 2.2

14 See discussion of increasing significance of the large corporation within the "business community" at

15; Note that in a further irony, these same shills and lobbyists blatantly mischaracterize the insolvency fund provisions as "bailout funding".

Monday, April 5, 2010

Business Community

Synonyms: Entrepreneurs, The "Holy" 18

Categories: Euphemism, Rationalisation

Definition: The term "business community" is a term often used by political pundits or the advocates of corporate influence in order to put an acceptable face on their ideology of plutocratic patronage. By misidentifying the "business community" at large with the sympathetic figure of the lone, poorly capitalized entrepreneur risking everything on his American Dream, these unscrupulous actors promote policies which actually undermine the interests of the true small entrepeneur and, in effect, pervert some of our most cherished ideals like "competition" and "free enterprise".

We should have every sympathy for the struggle of the independent small business person, and do everything we can to make sure that we as a society provide as level playing field as possible. That is the American way. But that requires us first to truly understand the power dynamic currently prevailing in the real "business community".

"Where Will The Jobs Come From?" is a recent economic survey of the employment environment published by the Ewing Marion Kauffman Foundation, a $2 billion organization whose mission is to promote entrepreneurship.1 While the report clearly emphasizes the importance of the small start-up to innovation, the report also notes that, as of 2006, the traditional wisdom that about half of all employment comes from small businesses is somewhat misleading. Misleading because what it fails to say is that larger businesses (traditionally defined as companies with 500 or more employers), employ the other half of the American workforce and comprise only 0.3% of all employer firms. 2

Figures within the Kauffman report seem to reflect that power of a relative handful of large firms is increasing at a disproportionate rate. While comprising a mere 0.3% of all emloyer firms in 2006, they accounted for approximately 22 percent of net job creation in 2007.3

The significance of this trend seems magnified when one considers that, according to Kauffman's reckoning, " . . . most young firms will tend to be small; very few grow to enormous size in their first three years of existence, "4 and that, ". . . roughly a third close by their second year in existence, while half will make it to age five."5 The obvious implication: the long-term job creation effect of small firms is very likely ephemeral in comparison to the effect of the large firms.

Yet even this analysis may understate the out-sized impact of these very few powerful firms. Kauffman does not present a specific estimate, but does generally acknowledge the skewing effect of large firm power on data.6 It is unclear how, if at all, it has reflected the direct control of small subsidiary companies within larger corporate groups in this dataset.7

The nature and extent of indirect control exerted by larger firms over small firms in their day-to-day dealings is the subject of many different analyses, although it is given only the most cursory treatment within the present Kauffman report. Estimates vary widely and the sophistication of methodology required to fully analyze even a small sample of them would be well beyond the scope I have set for this definition. But there can be little doubt that the influence of these large firms is out of all proportion to their number. It strains credulity to believe that there would be a properly level playing field in an analogous population of 6,000 persons where a mere 18 of them control at least half of the available resources.8

How robust could the principle of 'one person one vote' really be in a nation where the wealthiest 0.3% control at least as many resources of the other 99.7%? Those numbers seem much more characteristic of a banana republic than the world's great democracy. In such an environment, is it realistic to suppose that there could be truly free enterprise or that an individual can have a meaningful 'vote with his dollar'?

Etymology: Precise origin unknown. Variation of a persistent rhetorical schema whereby patricians attempt to manipulate populist themes (e.g., the aristocratic military dictator Julius Caesar's leadership of the populares party).

1 ;

2, Table 1
3 ibid, Figure 5

4 ibid, Page 6

5 ibid, Page 5

6 ibid, Page 11

7 ibid, Page 10

8 This seems to actually be the case in the U.S. with regard to employment. The 0.3% of employer firms discussed by Kauffman at the linked within fn2 totalled ~18,000--out of a grand total of ~6,022,000. Additional supporting data from "us_6digitnaics_2006.xls" at , top row indicating total number of employer firms.

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