Corporate personhood. It’s an idea that politicians and court justices alike have traditionally touched only with a very long stick, yet recent corporate transactions have sparked newly heated debates on the personified corporation, most of it centering around political influence, responsibility, and ownership. Today we’ll take a journey through the last of these three concerns.
From a employee’s point of view, when a company is ‘bought out’ by a group of investors, confused questioning often takes place along the lines of: why do we owe these people millions of dollars, why must we pay for the privelage of being ‘owned’ by investors we didn’t ask for, why are all of my friends fired? It’s a rough ride for many,
In the spirit of the ‘corporate personhood’ idea, the following story illustrates the path of a typical corporate buyout, with one twist…
Because corporations are treated as ‘persons,’ in many respects, we’ll take a look at the process of one corporation buying another… using people.
Jim Buys Janet
Jim likes the looks of Janet, so one day Jim sets up a meeting in which he offers to buy Janet.
Janet says ‘no thanks buddy,’ and adds ‘I would cost you $50 million anyway, you don’t have that kind of money.’ True, Jim only has $5 million, but being a crafty businessman, he is not to be deterred so easily.
The next day, Jim rounds up four wealthy friends who each agree to put $5 million in the pot to buy Janet. But that’s still just $25 million, only half of what Janet claims she is worth.
So Jim goes to the bank, and he takes out a loan of $25 million to cover the rest.
With $50 million in hand, Jim and his friends conduct a ‘forced buyout’ of Janet, first buying everything she owns and then buying her outright. Janet, along with her possessions, are now ‘owned’ by Jim and his friends, and not only this, but she is also now in debt to the tune of $50 million, plus interest.
Generally, after a takeover such as this, several things change for Janet:
- Janet’s life is now under the direction of Jim and his friends
- Janet must get rid of any friends that Jim and his buddies don’t like
- Janet must make new friends with Jim, his buddies, and their friends, even if she detests them
- Janet is on the hook to pay back the bank $25 million plus interest, this is the amount that Jim loaned from the bank to buy her
- Janet is on the hook to pay Jim and friends back the $25 million in cash that they used to buy her, plus she must give them a significant return on their initial investment
Sounds like a pretty raw deal for Janet, but here’s the clincher: if Janet defaults on her obligations, doesn’t work hard enough, or is in any way displeasing to Jim and his friends, Jim can legally: kill her, take $25 million back (minus funeral costs), and walk away from the $25 million in loans that he initially made, making Janet’s friends and family pick up the tab instead.
Most people would never wish for the above scenario to be played out for anyone they know, yet this happens between corporations every day.
And it will continue to happen in the foreseeable future, as United States corporations – due to their extreme monetary sway and intense lobbying efforts — enjoy a wide range of legal protections and tax loopholes which were not available to them previously.
Not only have corporations strayed quite far from their original roots as providers of goods and services, but they’ve been given rights of individuals, while shedding responsibilities along the way.
Reconsidering the role of the modern corporation is where America finds itself today, and individuals are asking what rights corporations should be afforded, and how best to govern — or not govern — them.
In demonstrations this month in New York City, San Francisco, Chicago, and other cities around the nation and world, it is becoming apparent that the general population is realizing something particularly dangerous for corporations: in the end, these corporations exist firstly to serve the general public, not to serve CEOs and investors.