This is a loose continuation of last week's discussion of Moloch Math and the bizarre nature of capitalism and its blind spots. Figured we might as well take this thing across the goal line.
Catch up here if you missed the first bit: Money for Nothing (or Something?)
(Note: there's a bunch of links here unpacking key points in this essay. Take the time to read them and you will end your day more informed about a bunch of stuff that matters right now. Promise.)
It's that or keep scrolling your algorithmically weaponized newsfeed. #occupyyourmind #curationFTW
***
If you're wondering how our dear, sweet democratic republic (the US of A for you foreigners on the list) got so thoroughly sideways of late––how fat cat corporations can rape and pillage the planet, short change workers and hide all their profits off shore, how shadowy Super PACs raise billions of dollars to install political puppets brazenly subverting the will of their constituents (looking at you Kirsten Sinema, and Joe Manchin, and Mitch McConnell, and...and...and...), or how we genuflect at the altar of an only-free-in-theory "free" market, it all comes down to three key legal decisions, stretched over the span of a century, that have conspired to nearly destroy American democracy.
So for anyone losing hope about how utterly f*cked things have gotten, take heart! It wasn't destiny. It's not even structural. And it didn't need to happen this way. Once we understand these three key decisions (made by very human, very fallible judges) we can take the initiative to unmake them, and unf*ck democracy. Yay!
A few months ago I gave a talk on the future of existential risk. But right before me, Vivek Ramaswamy was speaking on his newly released Woke Inc. I had vaguely heard about the book when it came out, and settled in for what I thought would be a st🐂ory about social justice politics run amok, pious try-hard HR departments, Diversity Equity and Inclusion trainings gone wild––that sort of thing.
Now, it needs to be noted upfront that Vivek is S.M.ooooth. Child of Indian immigrants, high school valedictorian, Harvard undergrad, Yale law, Forbes cover by 30. Big exit from a biotech firm he founded. He's the classic brown-skinned contrarian (second only to hot blondes in the Murdoch ranking system) that Fox and the alt-right love to trot out to speak the unspeakable.
(#RIPHermanCain)
And Vivek had his schtick down pat.
The first half of his argument was unimpeachable. He called out the craven lip service that many large corporations had been paying in the #Metoo and George Floyd era.
You remember––that time billionaire CEO of JP Morgan Jamie Dimon "took a knee" in his office in solidarity with his black brothers, or Larry Fink at Blackrock Capital (one of the largest funds on the planet), made a proud pledge to only invest in companies with women and BIPOC on their boards (long after the winds were already blowing that way)?
Or any late-to-the-party corporate "ally" posting a black square on Instagram that one week everyone was doing it?
He criticized the "pay no attention to what my other hand is doing" arm waving for SJW causes by big corporations that obscured the deep structural inequalities of their actual business practices in the most cynical and calculated way possible.
So far, so good. I love me some ball-busting of the money changers in the temple!
But then, what had begun as a gleeful skewering of the sacred bulls of Wall Street took a turn.
The change in thesis was so subtle, and so smoothly navigated, that if you blinked you missed it. Now that Vivek had established the bad faith of the Jamie Dimon's and Larry Fink's of the world, he went in for the kill. The recent spate of Environmental, Social and Governance (ESG) directives, those ill-conceived but well-intentioned efforts to right some of the worst wrongs of naked capitalism, were, according to Vivek, robbing "the people" of their god-given right to maximal profits.
Any efforts to include triple bottom line accounting (people, profits, planet), or any other metrics beyond maximum financial return for shareholders was, to Ramaswamy, an abomination.
To prove his selfless dedication to The Cause, he's launching the $300 million dollar Strive Fund with partner Peter "Lord of the Trollz" Thiel.
($300M is a tiny amount compared to the BlackRocks and JP Morgans of the world, but enough to play a gadfly role as activist minority investors who can then sue to overturn corporate precedents)
From an interview with Bloomberg:
"A Zelig of the conference circuit, [Ramaswamy’s] cultivating the red-state governors, treasurers, and pension officials who decide where the public’s money flows…
He says [his new fund] "will speak for the “forgotten,” the “disempowered,” the “abused”—for the 100 million-plus ordinary investors whose voices are being drowned out by elitist big money."
And all of his "how dare they try and pervert the holy contract of capital and capitalists to maximize shareholder value" went largely unquestioned by the audience. They happily nodded along to his hypnotic 1%er populism.
Except it wasn't really populism. His "regular Joe" hedge fund investor was a mirage. Really, it was a revisionist argument, cunningly framed in the terms of the MAGA v. Snowflakes culture wars to walk us back to a prior time when the business of business was business, without apology or pretense for any broader social or ethical concerns.
Except isn't that kinda what got us into this trainwreck in the first place? #externalities
At a time in history where we are running headlong into a global meta-crisis and huge swaths of the world are buckling under the imbalances of late-stage capitalism and the excesses of the carbon boom, this is hardly the corrective we need––more lop side extraction, damn the collateral damage.
(For a bracing update on the state of global crises, check out this incredibly poignant UN speech by Colombia's president on the drug war and deforestation of the Amazon, and this New Yorker essay by a British-Pakistani journalist lambasting our utter inattention to their recent flooding.)
Seriously. Scan those two links before reading the rest of this. It's our obligation to listen when leaders bare their souls and speak truth on behalf of the voiceless. If we can't be bothered, we deserve what's coming. And then some.)
Back to the story…
(to be clear: I come to bury ESG goals, not to praise them. They’ve got all sorts of problems in concept and application. But Vivek's argument reflects a reactionary virus on the opposite side of our dilemma that needs to be dealt with first)
Because looming over the whole of Ramaswamy's pitch was the ghost of Milton Friedman, that free-market icon and University of Chicago economist who single-handedly did more to decouple our markets from our morality than maybe anyone in the modern era.
That whole time that Vivek was returning to the soothing catechism that "the sole responsibility of corporations is to return maximal shareholder value to shareholders" (AKA "profits") no one, not the least of all, Ramaswamy, thought it was remotely necessary to explain or justify that bizarrely lopsided ethical claim.
But in reality, that commitment to put profit above any and all other purpose––didn't even exist until 1970. That was when the aforementioned Milton Friedman published a little essay in the New York Times magazine saying he thought "The Social Responsibility of Corporations is to Increase Its Profit."
The essay made a big splash, but remained solely in the realm of op-eds for another fifteen years. (Check this 50 year retrospective in the NYT from current CEOs on the impact of the Friedman Doctrine on their careers. It's had that big of an impact, pro and con).
It wasn't until 1986 that the Revlon beauty company got sued for blocking a hostile takeover that things got really real. That judge’s ruling asserted that a company's board was solely obligated to negotiate the highest possible short term price possible for the company, never mind any other interests (including protecting the company from hostile takeovers).
That ushered in the Gordon Gecko "Greed is Good" era of go-go 80's corporate raiders, leveraged buyouts and chop-shop acquisitions. Business has never been the same since.
It also explains why the current Twitter board, when faced with a near mutiny of their people and a possible gutting of their business, voted to accept Elon Musk's well-above-market offer to buy their company this year anyways. They couldn't not. It was an offer they literally (and legally) could not refuse.
No horsey heads in beds even required.
But really, Friedman simply put the cherry on top of a much older pile of poo that goes back to the end of the Civil War and the venerable Fourteenth Amendment.
Which was a tragic mistake we should repeal immediately.
Wait! What's that, you say? (vaguely recalling something from high school history) Isn't that the one that freed the slaves? Why on earth would we want to abolish abolition?
Not that part. We should definitely keep that part. (though kind of imagine it goes without saying these days?)
The other part. The super duper fucked up part that almost no one knows about. That slippery little bit that, right after freeing all those dispossessed Black folks, somehow implied that Corporations are People Too???
Because that’s what set us up for all of the contorted corporate profiteering and whacked legal protectionism we've seen in the last century.
"How exactly did corporations come to be understood as “people” bestowed with the most fundamental constitutional rights?" UCLA Law professor Adam Winkler writes in the Atlantic. "The answer can be found in a bizarre—even farcical—series of lawsuits more than 130 years ago involving a lawyer who lied to the Supreme Court, an ethically challenged justice, and one of the most powerful corporations of the day."
It all came down to an 1881 lawsuit against the Southern Pacific Railroad owned by robber baron Leland Stanford (who money-laundered his way to a good reputation founding the school of the same name). Trying to dodge a new tax on railroads, Stanford’s lawyer Roscoe Conkling claimed that the fees violated the railroad's rights as a "person" no differently than the freed slaves.
That was a ballsy legal argument, but here's where it gets crazy…
"In the 1860s, when he was a young congressman, Conkling had served on the drafting committee that was responsible for writing the Fourteenth Amendment. Then the last member of the committee still living, Conkling told the justices that the drafters had changed the wording of the amendment, replacing “citizens” with “persons” in order to cover corporations too. Laws referring to “persons,” he said, have “by long and constant acceptance … been held to embrace artificial persons as well as natural persons.”
He even produced a musty old journal as "proof" of his wild claim. Except the journal never said any of that.
The case was dismissed and Conklin was thrown off the legal team. But then the law clerk (also in the tank for the railroad companies) lied on the legal transcripts of the case, to state that the judge had in fact ruled to uphold corporations as persons under the 14th amendment.
In subsequent trials the same judge, (armed with the fake paper trail created by the clerk) proceeded to cite the Southern Pacific Railroad case as established legal precedent, and everyone just took his word for it. No one ever bothered to go back to the original case law to verify it.
His brazen gambit worked. In the following years, the case would be cited over and over by courts across the nation, including the Supreme Court, for deciding that corporations had rights under the Fourteenth Amendment.
(this part's worth quoting in full)
“Indeed, the faux precedent in the Southern Pacific case would go on to be used by a Supreme Court that in the early 20th century became famous for striking down numerous economic regulations, including federal child-labor laws, zoning laws, and wage-and-hour laws. Meanwhile, in cases like the notorious Plessy v. Ferguson (1896), those same justices refused to read the Constitution as protecting the rights of African Americans, the real intended beneficiaries of the Fourteenth Amendment. Between 1868, when the amendment was ratified, and 1912, the Supreme Court would rule on 28 cases involving the rights of African Americans and an astonishing 312 cases on the rights of corporations."
So how's them apples? Utterly mindbending!!!
One of the most pivotal legal precedents supporting equality turned into the most powerful instrument propping up inequality. And it was all a lie (corporations have inalienable rights) based upon another lie (“I was there when the Supreme Court wrote the 14th Amendment and this is what they really meant”) based upon a final lie (a later court upheld this in a landmark railroad case so it’s now legal precedent we don’t have to re-litigate).
Jee-zus H!
Onto the homestretch of this loopy tale.
We've covered the 1986 "Revlon Flex"––enshrining Milton Friedman's bizarre assertion that corporations have no responsibility to other people––only to shareholders, and that to consider anything more is actually criminal.
We’ve established that the only reason corporations were given the rights of personhood in the first place was due to a double-whammy of deceit in the 19th century, decades after the 14th Amendment was actually written.
Now we need to wrap up with the more recent 2010 Supreme Court decision on Citizens United to get the full picture of how our republic got so thoroughly pwned.
That case overturned decades of campaign finance rules preventing Dark Money (AKA anonymous corporations and billionaires) from polluting our politics.
Instead of defending that common-sense notion, the conservative court bizarrely argued that:
a) since corporations were persons and entitled to all the civil rights of personhood due to the Miraculous Deception of the 14th Amendment
b) that disclosing which corporations bought which politicians might be awkward for them
c) they were protected, as persons, by their First Amendment right to free speech!!!
Justice John Paul Stevens dissented, arguing that the court's ruling represented "a rejection of the common sense of the American people, who have recognized a need to prevent corporations from undermining self government."
Unsurprisingly Tippy Turtle Mitch McConnell loved it, calling it "an important step in the direction of restoring the First Amendment rights."
So now you know the rest of the story.
Three judges who broke America.
It didn't (and doesn't) need to be this way.
Or stay this way.
Corporations aren't, in fact, people. But people sure are. Maybe animals and rainforests and watersheds should be too (See what’s happening in India and Ecuador right now)
Corporations are entities that people create in order to further the goals and aims of our societies. They should be beholden to us, not us to them. This is not radical, or complicated.
Despite what Milton Friedman said, there are obviously a whole bunch of things we value that are not and cannot be met by singular pursuit of extractive profits.
Corporations’ role should be to enrich our lives, not to extract their profits.
And in a democracy, our rights as persons to be able to trace the flow of money into our political parties and candidates coffers, and to assess who's buying access or favor, feels a good bit more important than protecting the entities trying to do those very things.
Regardless of which side of the political aisle, we’re on–we should all be on board for that, no?
Then we can vote with our wallets and our ballots.
But only if we know the score.
So if you wake up some days and somewhat despondently ask yourself “how has it all come down to this utter clown show???” We can seek some consolation in the knowledge that it was neither predestined nor inevitable.
There have been a handful of inflection points in the past century that have had outsized impact carving the deep contours of the playing field.
(won’t even get into gerrymandered voting districts and the contorted math of the electoral college, but add them to the shortlist of things to unf*ck)
Structural inequalities in a nominally free society don’t just emerge. They are built. One plank at a time, typically by those most invested in gaming the game.
It’s on all of us to dust off and recommit to this Republic’s original intentions.
A return to a time when people are people (and corporations are our creations), the Commons are our birthright (and our legacy), and votes must be earned, but can never be bought.
Still a TON to do after we get that right, but at least it’s a place to begin again.
#bornagainpatriots
Jamie
P.S. Super sad post script. Hilaree Nelson, one of the world’s top mountaineers, a longtime member of North Face’s athlete team, and a former Telluride neighbor (and local legend) just lost her life attempting a ski descent of Nepal’s Mansalu. She was swept off the wrong side of the summit by a small slide, and into a large crevasse. It was not an error in skill or judgment, and more attributable to the increasingly unpredictable conditions brought about by changing climate and weather patterns in the Himalayas. She is survived by her climbing partner Jim Morrison and her sons, Graydon and Quinn.
High consequence and mortal stakes are a huge part of what makes extreme sports so rich in Flow states and so rewarding to engage. But Kali is a harsh mistress. We are insignificant in the face of her wrath. RIP Hilaree.
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