Archive for October 2011

Let’s amend Constitution to clear up corporations’ status

10/31/2011

John Howell
Letters
Athens News
May 4 , 2011

May 10, 2011, marks the 125th anniversary of a monumental error made by the U.S. Supreme Court. The case was Santa Clara County v. Southern Pacific Railroad, the case that made corporations persons, giving them protection under the Bill of Rights.

As most readers will recall, the Citizens United decision of the Supreme Court (1/21/10) overturned laws limiting corporate spending in elections, on the grounds that such laws violated the freedom of speech of corporations, provided for by the First Amendment of the Constitution. President Obama criticized that decision, claiming that “the Supreme Court reversed a century of law” The criticism was valid in that the decision overturned many local and state laws around the country, as well as the McCain-Feingold Bipartisan Campaign Reform Act of 2002, all of which had barred or limited corporate spending in elections.

The Supreme Court majority, however, had argued that they were being faithful to legal precedents, which prohibited the government from limiting the free speech of corporations. Their claim, too, is valid, in that many court cases over the last 100 years have accepted the idea that corporations are persons under the law. The problem is that these cases were all based on a single court case that contained an epic error.

In the Santa Clara case, the county sued the railroad for back taxes. The railroad lawyers included in their arguments that California law, which set taxes for railroads differently than for other businesses or individuals, was unconstitutional because it violated the 14th amendment guarantee of equal protection under the law for all persons. Prior to the Santa Clara case, this argument had been rejected by courts, because it was understood, from English common law dating back to the 1600s, that corporations were not natural persons, meaning they were not people.

Corporations were regarded as legal or artificial persons, because they needed some of the legal privileges of people in order to do business, namely to own property, to enter into contracts, and to sue or be sued, but no one considered them people. They were creations of people. Courts had rejected the argument by railroad lawyers that the 14th amendment, written after the Civil War to guarantee equal protection for freed slaves, applied to corporations.

That all changed with the Santa Clara decision. The case was actually decided in favor of the railroad on a technical matter. The State Equalization Board had erroneously included in its assessment the cost of fences, whereas California law called for taxing railroads only for the roadway, the roadbed, the rails, and the rolling stock. Writing for the majority, Justice Harlan was careful to specify that they had not ruled on the constitutional issues the railroad lawyers raised. Nevertheless, this case has been taken as having established that corporations are persons and are therefore entitled to equal protection under the 14th amendment.

This happened because the summary of the case, called a “headnote,” written by the court reporter included the following:

“One of the points made and discussed at length in the brief of counsel for defendants was that Corporations are persons within the meaning of the Fourteenth Amendment to the Constitution of the United States.

“Before argument, Mr. Chief Justice Waite said: ‘The court does not wish to hear argument on the question whether the provision in the Fourteenth Amendment to the Constitution, which forbids a State to deny to any person within its jurisdiction the equal protection of the laws, applies to these corporations. We are all of opinion that it does.'”

The chief justice, Morrison Waite, from Ohio, let the headnote stand as written. When lawyers are working on cases, they often simply refer to previous cases by reading the headnotes, rather than reading the lengthy opinions. Thus Waite’s personal opinion became law without approval by elected representatives of the people and without consideration by any court.

Corporations have used this ill-gotten constitutional protection as “persons,” not only to open the floodgates for corporate spending in elections, as in the Citizens United decision, but for other purposes as well: 1) for defending their right to lie (free speech) in advertising (Kasky v. Nike, 2000, 2) for blocking inspections by regulatory agencies in order to conceal criminal activity, under the Fourth Amendment protection against unreasonable search and seizure, and 3) for preventing local communities from favoring local small businesses by means of differential tax rates and zoning restrictions (Liggett v. Lee, 1933).

Corporations were originally limited by charter to certain economic pursuits and to limited periods of time; the charters issued by state legislatures were revocable. The corporate ability to concentrate wealth was limited by forbidding any one company from owning any other. Over the years, politicians, supported by corporate dollars, have allowed these constraints to fall away, leaving us with a government not “for, by and of the people,” but a government run by corporations. It is no wonder that government looks bad to many people; it is no longer their government in service to them. It is a corporatocracy, not a democracy.

The only recourse to correct the court’s error is by constitutional amendment. Something like this is needed:

The human rights specified in the Bill of Rights shall apply to people, and only to people, not to human creations, such as associations, partnerships, or corporations, and that all references in the Constitution and its amendments to “persons” or “citizens” shall be understood to refer to people, and only to people.

Such an amendment would have no effect on normal business, but it would make it harder for corporations to hide criminal activity. It would allow Congress and state and local government to rein in the excesses of corporations, such as the practices of large banks, which triggered the 2008 economic collapse, and the practices of companies that threaten the environmental sustainability necessary for the human race to have a future on the planet.

For more information on this issue on the web go to movetoamendohio.org or reclaimdemocracy.org.

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Country’s Banking System at the Heart of Economic Problem

10/31/2011

John Howell

Athens Messenger

Oct. 6, 2011

Thanks to the Messenger for giving some coverage to the protests now occurring on Wall Street, and elsewhere around the country. These protesters have it right; the basic economic problem is the banking system in this country. The fundamental problem is that the system allows private banks to create money, which it then lends to the rest of us, including the government. The greatest portion of the money supply in this county is created in this way – as debt. That is, it is generated by being loaned out by a bank. The bank expects both the principal of the loan and interest to be paid back. The debt, then, is greater than the amount of money that was created. It can only be paid back by borrowing more money or getting it from someone else who has taken out a loan. The total debt can never be paid back!

It is absurd for the U.S. government to be in debt. It can issue money debt-free, as it did during the colonial period and again under Abe Lincoln during the Civil War. The government can use its own money to pay people for services rendered to it – soldiers, bridge builders, the power company, etc. – and the money gets into circulation. Government can also loan it out, as it did during the colonial period, and use the interest to cover its costs, eliminating or reducing the need for taxes.

The quantity of money in circulation determines the value of the money – too much and the value falls (inflation), not enough and the value rises (deflation). It has been argued that Congress can’t be trusted to get the amount right, and, given the present Congress, that concern seems legitimate. But history suggests that government has actually done a better job than private bankers. With money creation in the hands of bankers we had the Great Depression of the 1930’s and we have the present catastrophic situation; the bankers clearly haven’t done a good job. And they can’t, because they can only create money by creating debt.

Congress that can get us out of this debt mess, by taking on its rightful, Constitutional role of creating money, by taking it away from banks and by eliminate the practice of fractional reserve banking which only amplifies the debt. This doesn’t eliminate the need for private banks, but it gets them back into banking instead of money creation.

The necessary act of Congress has been introduced. You can read about it on the web at monetary.org. What the present super committee should do is to endorse that legislation. The spending it will cut is the spending incurred by governmental borrowing.

Country’s Banking System at the Heart of Economic Problem