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3 ofof and the CorporationsCorporations DeteriorationDeterioration Democracy

4 …focusing less on the INSTITUTIONS AND RULES enabling corporations to apply that power to harm the Earth and its inhabitants. …focusing less on the INSTITUTIONS AND RULES enabling corporations to apply that power to harm the Earth and its inhabitants. The people of the United States have historically focused more on the environmental and public health EFFECTS of corporate power, while…

5 wealth & power of transnational corporations have grown. All the while, the Corporations use trade and investment rules to dominate processes for managing commerce. In the U.S., legal doctrines such as corporate personhood have shifted the power to corporations over natural persons.

6 ON THE ENVIRONMENT… Many corporations despoil our forests, degrade the land, pollute the air and water, and resist public health regulations. ON OUR CULTURE… Corporations promote consumption and materialism to the detriment of civic values. The Consequences of Concentrated Corporate Power Source: Challenging Corporate Rule, United for a Fair Economy, January 2000

7 IN THE EXCHANGE OF IDEAS… The concentration of corporate media ownership limits political debate, the diversity of viewpoints presented, and media access. ON GOVERNMENT… Large corporations wield enormous political and electoral power. Source: Challenging Corporate Rule, United for a Fair Economy, January 2000

8 ON SOCIETY… Corporations are usurping civic space. Public functions are being privatized. ON THE MARKETPLACE… Mergers and monopolies eliminate competition and remove jobs. Source: Challenging Corporate Rule, United for a Fair Economy, January 2000

9 Outline of Presentation I. Examine the nature of the corporation - legally, economically, and politically. II.Explore the history of how corporations acquired such wealth and power. III. Cite examples of how corporate power affects the concerns of the people of the United States.

10 Outline of Presentation IV.Review tactics that citizens and non-governmental organizations are using to hold corporations accountable and to redefine the relationship between citizens and corporations. V.Identify corporate accountability challenges for the people of the United States.

11 What is a Corporation? LEGAL DEFINITION An ARTIFICIAL PERSON or LEGAL ENTITY, Created by or under authority of the laws of a STATE OR NATION, Composed, in rare instances, of a single person and successors. Ordinarily, an ASSOCIATION OF NUMEROUS INDIVIDUALS, Regarded as having a PERSONALITY AND EXISTENCE distinct from its members, Source: Blacks Law Dictionary

12 Vested with the capacity of CONTINUOUS SUCCESSION, irrespective of changes in membership, in perpetuity, or for a limited term of years, Acting as a UNIT OR SINGLE INDIVIDUAL, in matters relating to the common purpose of the association, Within the scope of POWERS AND AUTHORITY conferred on such bodies BY LAW. Source: Blacks Law Dictionary

13 Source: Challenging Corporate Rule, United for a Fair Economy, January HUMANSCORPORATIONS AWARDED RIGHTS OF NATURAL PERSONS YESYES CAN EXIST FOREVER NOYES OWNERS PERSONALLY PROTECTED FROM FINANCIAL LIABILITY NOYES People v. Corporations

14 Tax Effort By Corporations Size & Power Corporate Pork Barrel Merger Mania – Consolidations and Layoffs Influence of Money in Elections How Wealthy and Powerful Have Corporations Become?

15 Corporations Have Acquired Tremendous Wealth and Power In 2002, 52 of the worlds largest 100 economies were corporations. Approximately 60% of all world trade is between firms within the same parent corporation. Sources: Institute for Policy Studies, 1999, 2000 and 2001 Reports, Global, Inc.

16 With 2002 sales of $246 billion, Wal Mart is larger than 150 countries, including… WAL MART Source: Institute for Policy Studies, 2005 Report. Poland $187 Billion Norway $189 Billion and Greece $132 Billion

17 The gap between average CEO pay and worker pay has risen from 42 to 1 in 1982 to 301 to 1 in The gap between average CEO pay and worker pay has risen from 42 to 1 in 1982 to 301 to 1 in Field Guide to the Global Economy, 2005.

18 In 1999, over 1/2 the sales of the largest 200 corporations were in just 4 economic sectors. In AUTOS, the top 6 firms produce 75% of the worlds motor vehicles. In ELECTRONICS, the top 5 firms have garnered over ½ the global sales. Merger Mania Has Led to Consolidations and Layoffs Source: Global, Inc www.inequality.org

19 From there were $3.7 trillion in mergers in the United States. The total value of cross-border merger and acquisition transactions in 2000 was $1.1 trillion, about 50% higher than in Source: Too Much, Winter 2000, p.9; Jeff Gates, Shared Capitalism Institute, Jan. 16, 2000; Adbusters, Aug/Sept 2000, p. 40;

20 In 1998, 678,000 Americans were laid off from their jobs, the highest total in a decade. In 2001, a total of 986,424 people were laid off worldwide from the top 500 U.S. companies. Source: Too Much, Winter 2000, p.9; Jeff Gates, Shared Capitalism Institute, Jan. 16, 2000; Adbusters, Aug/Sept 2000, p. 40;

21 TAX BREAKS Credits Deductions Exclusions DIRECT PAYMENTS Subsidies Assistance Child Welfare Food Stamps Nutrition Block Grants Housing Public Assistance 1994 CORPORATE $104.3 SOCIAL $75.1 $ BILLIONS Corporate Pork Barrel v. Social Welfare Source: Office of Management and Budget, 1994.

22 NONE of the 44 U.S. corporations in the year 2000 Institute of Policy Studies Top 200 Study paid the full corporate income tax rate from According to the U.S. General Accounting Office, between 1996 and 2000, 61% of all U.S. corporations paid no taxes at all. Source: Institute of Policy Studies, 2000 and 2002 Report. Field Guide to the Global Economy, Corporate Giants Adept at Avoiding Taxes

23 33% 43% 31% 49% 27% 57% 21% 66% 15% 72% 15% 73% 40s 50s 60s 70s80s90s Corporations Individuals Percent of Federal Tax Collections from Individual & Corporate Income Taxes Source: Bartlett and Steele; America: Who Really Pays the Taxes?, p. 140 (The Growing Divide: Inequality and the Roots of Economic Insecurity, p. 19, United for a Fair Economy, May 2000).

24 WHAT IS THE GROWING ECONOMIC DIVIDE?

25 +116% +100% +111% +114% +99% +86% Bottom 20% In 1979: up to $9,861 Second 20% $9,861- $16,215 Middle 20% $16, ,972 Fourth 20% $22,972- $31,632 Top 20% $31,632 and up Top 5% $50,746 and up Percentage Change Sources: Analysis for Census Bureau data by Lawrence Mishel and Jared Bernstein, The State of Working America p. 37. Income Ranges in 1979 dollars from March 2000 Census Current Population Survey, Table F-1. (The Growing Divide: Inequality and the Roots of Economic Insecurity, United for a Fair Economy, March 2004). We Grew Together 1947 to 1979 – Real Family Income Growth by Quintile and for Top 5%

26 We Grew Apart Bottom 20% up to $24,117 Second 20% $24,117- $42,0577 Middle 20% $42,057- $65,000 Fourth 20% $65,000- $98,200 Top 20% $98,200 and up Top 5% $170,082 and up -2% +8% +15% +26% +51% +75% Percentage Change 1979 to 2003 – Real Family Income Growth by Quintile and for Top 5% U.S. Census Bureau, March 2001 Census, Current Population Survey, Tables F-1 and F-3. Income ranges in 2001 dollars. (The Growing Divide: Inequality and the Roots of Economic Insecurity, United for a Fair Economy, March 2004).

27 Source: Changes in family income in 1998 dollars for the upper limit of the lowest, second, third, and fourth quintile, and the lower limit of the top 5% of families by income. Annual data from U.S. Census Bureau (Dollars & Sense, May/June 2000). DISTRIBUTION OF FAMILY INCOME PERCENTAGE CHANGE IN FAMILY INCOME Percentage Change in Real Family Income 1960s v. 1990s

28 38% 79% 73% Many families are forced to live on the edge. Source: Melvin Oliver and Thomas M. Shapiro, Black Wealth, White Wealth (1995), p. 87 (The Growing Divide: Inequality and the Roots of Economic Insecurity, March 2004). Percentage of Families Whose Savings Would Run Out in 3 Months or Less

29 Ownership of Household Wealth in the United States In only 25 years, the Top 1% gained 10% of the pie. The Bottom 99% got squeezed. Wealthiest 1% Bottom 99 % For 1976: Edward N. Wolff, Unpublished data. For 2001: Arthur B. Kennickel, A Rolling Tide: Changes in the Distribution of Wealth in the U.S , Jerome Levy Economics Institute, November United for a Fair Economy.

30 Source: Distribution of U.S. Wealth Ownership, 2001 (by population segments)

31 Source: Edward N. Wolff, Recent Trends in Wealth Ownership, Calculations based on the 1998 Survey of Consumer Finances, conducted by the Federal Reserve Bank. (The Growing Divide: Inequality and the Roots of Economic Insecurity, March 2004). Share of Total Ownership of Stocks and Mutual Funds, 2001

32 % Increase in Income In 2003, the wealth of the worlds 587 billionaires was greater than the combined incomes of the poorest half of humanity. Source: Rachels Environment and Health Weekly, Field Guide to the Global Economy, Global Inequality

33 In the 2000 Federal election campaigns, corporations out- spent labor by 15-to-1. In the 2004 federal election cycle, finance, insurance, and real estate corporations led all sectors, giving $331 million to federal candidates. Source: Center for Responsive Politics; Capital Eye, Vol. 6 No.4 Corporations Have Used Their Wealth & Power to Sway Elections and Lawmaking

34 Between 1998 and 2004, both Verizon corporation and General Electric corporation each spent over $100 million in lobbying expenditures. Source:

35 Corporations Use Governments to Distort the Public Interest In June 2005, the U.S. Supreme Court approved the use of eminent domain for business development - making it legal for local governments to seize homes and businesses, against the owners will, for the construction of residential, commercial, and manufacturing developments by giant corporations such as Wal-Mart and Target. Eminent domain had previously been limited to development for public use, such as schools, roads, and bridges (Kelo v. City of New London (04-108)). In June 2005, the U.S. Supreme Court approved the use of eminent domain for business development - making it legal for local governments to seize homes and businesses, against the owners will, for the construction of residential, commercial, and manufacturing developments by giant corporations such as Wal-Mart and Target. Eminent domain had previously been limited to development for public use, such as schools, roads, and bridges (Kelo v. City of New London (04-108)). June 2005

36 The public sphere of decision making is shrinking with the increasing privatization of services formerly provided through the public sector. Corporations are Increasingly Usurping Civic Space/Democracy Sources: Recent Trends in Wealth Ownership, Edward Wolff, April 2000; Business Week, Mar. 11, 1996, p. 65; The End of Politics, Carl Boggs, 2000, p. 11; Institute of Policy Studies 2000 Report. A September, 2000 Business Week/Harris Poll showed that 77% of U.S. adults believe corporations have gained too much power over American life.

37 abc C N N Disney owns CBS Viacom owns General Electric owns AOL Time Warner owns Source: United for a Fair Economy NBC Who Owns the News Media?

38 1936: Sit-Down Strike in Flint, MI 1937: Wagner Act World War II 1947: Taft- Hartley Act Manufacturing Declines in U.S. 1981: Reagan Breaks PATCO 1998: 13.9% Unionized Percentage of the workforce represented by a labor union Source: Bureau of Labor Statistics, published in The Growing Divide: Inequality and the Roots of Economic Insecurity, United for a Fair Economy, March U.S. Labor Unions Have Historically Confronted Corporate Power. 2002: 13.2% Unionized

39 Trade treaties like NAFTA, GATT, CAFTA and GATS set rules favoring corporations resulting in: Well paying unionized US manufacturing jobs shifting to low-wage countries Lower wages and living standards everywhere Weakened worker rights in all nations Environmental damage domestically and in other countries Cuts in social safety nets FOR SALE Source: The Growing Divide: Inequality and the Roots of Economic Insecurity, p. 19, United for a Fair Economy, May Global trade treaties represent corporations over the environment, workers, and communities.

40 On the Rise: Big Campaign Contributors Corporate Lobbyists Corporations Investors Wall Street In Decline: Voters Labor Unions Wage Earners Employees Main Street The Power Shift since the 1980s Who has been setting the agenda for economic policies? Source: The Growing Divide: Inequality and the Roots of Economic Insecurity, United for a Fair Economy, May Q: Why Has This Happened? A: A Power Shift Led to Rule Changes

41 HOW DID THIS HAPPEN?

42 These Crown Corporations, such as the Massachusetts Bay Corporation, and: Global Corporations, such as the East India Company established vast systems of trade and governance ravaged lands killed and enslaved millions of people Source: Challenging Corporate Rule, United for a Fair Economy, January : Joint Stock Companies and Royal Charter Corporations Established Trade Monopolies for Colonization

43 Corporate Directors could: wage war seize the commons force human labor judge and punish redefine the rights of the corporation Source: Challenging Corporate Rule, United for a Fair Economy, January These Corporations had Powers Like Dictatorial Governments

44 No Rights were held by: employees subjects neighbors victims Source: Challenging Corporate Rule, United for a Fair Economy, January These Corporations had Powers Like Dictatorial Governments NO RIGHTS

45 Source: Challenging Corporate Rule, United for a Fair Economy, January : The American Revolution The American Revolution dismantled the Crown Corporations and transferred them into states. The Virginia Co., which ran the Virginia Colony, became the Commonwealth of Virginia.

46 Source: Challenging Corporate Rule, United for a Fair Economy, January Following the American Revolution: The People in each of the 13 states wrote state constitutions including rules on: elections lawmaking judiciary education

47 Under self government, corporate charters were limited: States routinely revoked the charters of corporations that broke the law or abused their privileges. Corporate charters were issued for only a limited time and were subject to periodic review by the state. Source: Challenging Corporate Rule, United for a Fair Economy, January The People of the 13 States Bestowed Limited Privileges Upon Corporations

48 Source: Challenging Corporate Rule, United for a Fair Economy, January Shareholders were personally liable for the debts of the corporations and the harms inflicted on the general welfare. States had authority to govern the financial dealings of corporations (for example, corporations could not own other corporations). Not for Sale!

49 Source: Challenging Corporate Rule, United for a Fair Economy, January The charters limited many corporations to not for profit status. Corporations were created to meet public purposes such as canal digging and building roads (upon completion of the prescribed tasks the corporations were dissolved).

50 Corporations were not granted constitutional rights: Source: Challenging Corporate Rule, United for a Fair Economy, January Corporations could not lobby. Corporations could not donate money to political candidates. Corporations could not claim 1 st Amendment rights to free speech. Corporations could not claim other Bill of Rights protections (i.e. from unreasonable search and seizure, etc.)

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

52 Corporations were the vehicle for consolidating and increasing privileged wealth at the expense of the broader society: Source: Challenging Corporate Rule, United for a Fair Economy, January Throughout the 19 th Century, a Struggle Ensued Between Commercial Interests Wishing to Expand Property Rights and People Seeking to Expand Human Rights During the Civil War, fortunes were made by industrialists who had acquired corporations to provide war materials. These robber barons used the judiciary to increase the power of corporations on behalf of their financial empires.

53 I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of our country. As a result of the war, corporations have been enthroned and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until all wealth is aggregated in a few hands, and the Republic is destroyed. I feel at this moment more anxiety for the safety of my country than ever before, even in the midst of war. -President Abraham Lincoln, November 12, 1864, in a letter to Col. William F. Elkins

54 One of the most important Supreme Court cases you may never have heard of… Santa Clara County vs. Southern Pacific Railroad In 1886, the Supreme Court ruled that a private corporation was a natural person, entitled to the same rights and protections as human beings under the Bill of Rights. Source: 118 U.S. 394 (1886): 183, 323N.89 (56), 328N.110 (61). 1886: A Turning Point

55 The Courts sided with corporations. In 1886 alone, federal courts struck down 230 state laws regulating corporations. Corporations took advantage of laws written for human beings. The 14 th Amendment was passed to protect freed slaves. Of the th Amendment cases brought before the Supreme Court between 1890 and 1910: -19 dealt with African Americans -288 dealt with corporations …and the Corporations… Source: Challenging Corporate Rule, United for a Fair Economy, January Then What Happened?

56 The people lost control over corporations States could no longer tell corporations what they could and could not do. Advertising became Free Speech. The New Deals regulatory thrust shut off debate about the legitimacy of corporate power. Source: Challenging Corporate Rule, United for a Fair Economy, January BUY!

57 Examples of How Corporate Power Affects the Environment

58 Example #1: Corporate Personhood THE PROBLEM Santa Clara v. Southern Pacific RR (1886) gave corporations rights of natural persons (personhood). Since Santa Clara, those rights and privileges have been expanded to exceed those of the natural persons creating them.

59 Example #1: Corporate Personhood EXAMPLES Before Santa Clara, corporations could not exercise 1 st Amendment rights such as lobbying or contributing to political campaigns. Also, chemical corporations could not claim the 4 th Amendment right of protection from unreasonable search or seizure to withhold information about the environmental impacts of their products or production processes.

60 Example #1: Corporate Personhood THE CONSEQUENCES By granting personhood rights to corporations, courts have allowed them to grow and maximize profits in ways that harm the environment, public health and democracy.

61 Example #2: Corporate Manipulation of Government Regulatory Agencies THE PROBLEM Corporations use their wealth and power to get regulatory agencies to carry out their will. Governments shield corporations from and represent them over the public interest, environmental quality, and the public health.

62 AN EXAMPLE In 1986, Monsanto Corp. officials urged the Reagan Ag. Dept., EPA, and FDA to issue rules governing genetically modified food to reassure the public about its safety. The Reagan Adm. complied and gave Monsanto rules favored by industry. In 1992, Monsanto wanted to throw off the regs and speed food to market. The Bush Adm. created a generous policy of self policing.

63 THE CONSEQUENCES Public confidence in the government regulatory process has been diminished. Citizen energy has been exhausted while popular outrage has been deflected from the corporation to government. Corporations get what they want while escaping accountability.

64 Example #3: Chapter 11, North American Free Trade Agreement (NAFTA) WHAT IT DOES Expands the rights of property to include intangible property rights, including current and future profits. Gives corporations the right to sue national governments to protect these anticipated profits from natl, state, or local govt actions, no matter how legal or for what purpose they have been taken.

65 AN EXAMPLE Metalclad, a US-based waste-disposal corp., sued Mexico for $90 million under Chap. 11 after the town of Guadalcazar in the Mexican state of San Luis Potosi refused to issue a permit for a waste-disposal facility on an alluvial stream, deeming it a threat to the local water supply. In Aug 2000, a NAFTA tribunal found that Mexico had breached Chap. 11 and awarded Metalclad $16.7 million. Metalclad then began construction on the facility without having local approvals, claiming assurances from Mexico. In Oct. 2001, the Mexican govt dropped its appeal of the NAFTA tribunals decision.

66 THE CONSEQUENCES Chapter 11 can have a chilling effect on state or local govts considering passing laws or regs to protect the environment and public health. Guarantees profits to polluting corporations; violates the concept of a free market economy; and undercuts democratic decision making.

67 WHAT CAN WE DO?

68 Confront Corporate Crimes Directly Research, expose, and educate others about abuses of corporate power and behavior. Encourage corporate campaigns, shareholder actions, consumer boycotts, and socially responsible investment. End Corporate Pork Barrel Significantly restrict corporate tax breaks and subsidies. Source: Challenging Corporate Rule, United for a Fair Economy, January Actions to Reassert Popular Sovereignty Over Corporations

69 Encourage Tax Reform Shift tax burdens more fairly to corporations and off individual taxpayers. Encourage Campaign Finance Reform Enact substantive campaign finance reform legislation prohibiting corporate campaign donations. Source: Challenging Corporate Rule, United for a Fair Economy, January 2000.

70 Put the People in Charge of Defining Corporations Write state/local laws defining and limiting the rights of corporations. Establish and enforce social and environmental criteria for corporate charters. Initiate state Three Strikes and Youre Out charter revocation laws. Re-regulate corporate investment through anti-trust legislation.

71 Change Corporate Charters Amend state corporation codes to extend liability and revoke charters of renegade corporations. Limit Personhood Rights for Corporations Challenge the Santa Clara US Supreme Court decision via public education leading to a constitutional amendment or court challenge. …and the Corporations… Source: Challenging Corporate Rule, United for a Fair Economy, January Corporate Charter

72 Expand Human Rights in Relation to Corporations Grant Bill of Rights powers to include employees in corporations (free speech, freedom of assembly), citizens in shopping malls, etc. Reassert Citizen Sovereignty in Global Economy Re-negotiate trade deals (NAFTA, GATT, CAFTA, FTAA) and re-structure global trade and financial institutions (WTO, IMF, World Bank). Source: Challenging Corporate Rule, United for a Fair Economy, January 2000.

73 Encourage Grassroots Pro-Democracy Movement Go beyond tactics challenging one regulation or one corporation at a time to work with others nationally and internationally to challenge the rules giving corporations undue power and influence. Source: Challenging Corporate Rule, United for a Fair Economy, January 2000.

74 Engage in Democratic Discussions Promoting a Just Society and an Environmentally Sustainable Economy Support Local Currencies & Community Banking Encourage Community Supported Organic Agriculture Foster Equitable Health Care Programs Create Cooperatives & Worker Owned Firms Recycling Local Waste as a Resource Nurture Pedestrian & Bicycle Transport Develop Local Renewable Energy Systems Buy Small & Local Institute Community Forestry Practices Demonstrate Voluntary Simplicity in Individual Activities Prepared by David C. Korten, The Positive Futures Network (206) ,11/13/96 Encourage: Build Sustainable Local Communities

75 1.Confront individual bad actor despoiling and polluting corporations via focused, highly visible campaigns. The Corporate Accountability Challenges for the American People are three-fold:

76 2. Challenge domestic laws and court decisions that unfairly enable all corporations to exploit the Earth and its inhabitants. Seek passage of laws to hold corporations accountable to citizen defined and government enforced environmental standards.

77 3. Join with other movements to challenge the unfair trade and capital investment rules proposed by the WTO, IMF, World Bank, and incorporated into such agreements as the Central American Free Trade Agreement (CAFTA).

78 The struggle for justice should never be abandoned because of the apparent overwhelming power of those who have the guns and the money and who seem invincible in their determination to hold on to it. That apparent power has, again and again, proved vulnerable to human qualities… - Historian Howard Zinn

79 …We have been fighting fire on the well- worn lines of old-fashioned politics and political economy, regulating corporations, and leaving competition to regulate itself. But the flames of a new economic revolution run around us, and we turn to find that competition has killed competition, that corporations are grown greater than the State, and have bred individuals greater than themselves, and that the naked issue of our time is with property becoming master instead of servant… - Henry Demarest Lloyd, Wealth Against Commonwealth, 1894

80 THE END

81 Produced by: Jim Price, Senior Regional Staff Director Powerpoint Graphics by: Lisa Evans, Administrative Coordinator Robin Nelson, Christa Taylor Sierra Club Southeast Office st Way South, Suite 100 Birmingham, AL Phone: 205/ Fax: 205/ Updated August 2005

82 Alliance for DemocracyAlliance for Democracy Center for Popular EconomicsCenter for Popular Economics Center for Responsive PoliticsCenter for Responsive Politics Council on International and Public AffairsCouncil on International and Public Affairs Democracy Unlimited of Humboldt CountyDemocracy Unlimited of Humboldt County International Forum on GlobalizationInternational Forum on Globalization Institute for Policy StudiesInstitute for Policy Studies Program on Corporations, Law, and DemocracyProgram on Corporations, Law, and Democracy Public Information NetworkPublic Information Network Sierra Club Corporate Accountability CommitteeSierra Club Corporate Accountability Committee Sierra Club Confronting Corporate Power Task ForceSierra Club Confronting Corporate Power Task Force Sierra Club Environmental Justice CommitteeSierra Club Environmental Justice Committee Sierra Club National Environmental Justice GrassrootsSierra Club National Environmental Justice Grassroots Organizing Program Sierra Club Southeast OfficeSierra Club Southeast Office United for a Fair EconomyUnited for a Fair Economy for their assistance in the preparation of this workshop and related materials. Special Appreciation is extended to:


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