To Shore Up The 1% They Were Willing To Destroy Democracy

They hate the government for taxing them and regulating them, so they decided to destroy it, which means they decided to destroy our democracy because that’s the kind of government we have here.

It began in the 70s with a memo Lewis Powell wrote to the US Chamber of Commerce. Workers had rights, polluters were being regulated, corporations didn’t like being taxed and regulated by a public sector that inhibited them from predatory practices.

You can read up on Lewis Powell at Bill Moyers' website, and learn more about Powell's influential memo that stole the economy back for the plutocrats. Powell went on to sit on the Supreme Court and help convert it into a law firm for the wealthy.

In the 70s the super-rich decided enough was enough and decided to fight back.

Slowly, over the past 3 or 4 decades, workers’ incomes have flatlined and infrastructure, schools, and trusted institutions have been deliberately degraded.

The Right knew that the only way to destroy democratic government was to defund it, degrade it, discredit it, make it not work, make people distrust and dislike it.

Now the Congress is owned by the people who own for a living. The Court works for the people who own for a living. And the president is one of the people who own for a living.

The Citizens United court ruling turned democracy into a proxy operation by which ordinary people voted for their government but wealthy corporate clubs owned and operated one major party and dominated the Supreme Court through the Heritage Foundation and the Club for Growth and a whole zoo of upliftingly and patriotically and vaguely named non-profits devoted to free market absolutism.

Bill Moyers has some very good analysis of the powerful octopus of tax-free lobbying operations led by Heritage.

They had a single goal: the total levitation of the owning classes above the bothersome social responsibilities that constitute citizenship, the stuff contained in the social contract by which you contribute of yourself and expect decency and fair play in return. The corporate absolutists who drove this Big Idea felt no obligations beyond themselves and felt the average citizen and his or her government owed them absolute freedom of action and total obedience. When you’re very very big and powerful your dreams are big too. The 1% now own the world.

The Levitation of the Owning Classes

A conference was convened at Harvard Business School recently to sort out the problems with the theory of the corporation. I have suggested in numerous essays on this blog that many of our recent problems have been caused by shifts in corporate theory, which have led to shifts in our moral philosophy. Shifts that have made our moral philosophy less moral.

I think a tipping point was reached at around the time of the Lewis Powell memo, when the owning class (the minority of people who own for a living) decided that the working classes (the majority of people who work for a living) were controlling politics and policies and the legal system.

They may have had a point. After all, in a democracy it is contradictory for a minority of people to overrule the majority, especially based upon wealth and income. A certain amount of deception is required to achieve the desired contradiction. What made the regaining of power most distasteful was the means by which the wealthy classes did so: they did it via hate politics, via the Southern Strategy of dividing working class people by racial and religious animosities and suspicions.

(This practice did not die with Lee Atwater’s deathbed confession and apology; it persists with the baldfaced racism of the current Republican Party in Washington and the states where anything and everything proposed or espoused by the black man in the White House is automatically anathema. Because he is black, Obama is “other”, he is foreign, not-Christian, a half-breed, the antiChrist. The ugliness of this was barely discussed in the press out of deference to the party of Lincoln. All of this ugliness was financed out of the vast reservoir of wealth accumulated during 35 years of Reaganomics, which meant mouths were kept shut on the ugliness of the politics of the right out of deference to the vast accumulated wealth: it is unwise, even dangerous, to speak ill of the system that controls the money.)

But this is the political side of the problem. The important shift took place in the moral and ethical side. Our sense of morality changed during the Reagan and post-Reagan period. For most of the 20th century corporations were progressive innovators. They tended to be more evolved on issues of gender and race and the rights and security of the worker. Healthcare became a right at corporations. Whole packages of benefits emerged through a sometimes tense partnership with unions, but the benefits were not all to the employee: the company benefited too, and the idea of mutuality emerged and became part of the corporate DNA. Corporations had obligations to employees first, then to shareholders, then to the community and the customer. Sometimes the ranking shifted but a rough parity was maintained because the three categories overlapped and their interests overlapped.

At some point, however––and here I cite the Powell memo––the worker and his “pushy” demands became the enemy of the corporate elite and the shareholder. A new calculation became an ethical determinant. Efficiency was the sole imperative, efficiency being achieved by eliminating all obligations not payable to the shareholder by way of profit. Anything that subtracted from immediate profit was counted as a negative, a loss, a harm to the corporation. Worker income and benefits subtracted from profits and were counted as a negative, almost a moral wrong. Benefits to the community could be disguised as public relations but even these charges were harmful. Unless they could be used to subtract from taxes––which meant a benefit to the community could be used as an instrument to avoid paying taxes to the community. Obligations to anything but profit and shareholder dividend had become a moral wrong. Whatever made a rich person richer was morally imperative. It was either stupid or unethical to not maximize the profit stream, which also meant avoiding obligations outside of one’s self interest that would subtract from profit. Even if it made the economy healthier and fairer and might increase future profit, if it subtracted from immediate profit it was wrong and should be avoided.

To rationalize this evasion other “moral reasonings” were invented: the community and its government and its bureaucracies were labelled “inefficient” or wasteful or corrupt––which some were to varying degrees, but reform was not the goal. The corrupting influences were, after all, money and power, which the monied could not disparage or repudiate. The problem, according to the new wealth-centric philosophy, was simple: the public sector was less moral and correct than the private sector. The public sector was not “properly” focused on profit, an incorruptible and pure goal, but was focused instead on an impure goal of public good, one that did not obey the profit imperative. That was the corruption.

We began to see the movement on the Right to demolish the public sector altogether, to privatize it, to place it into “more responsible hands” where its responsibilities could be properly carried out not for the benefit of the public but for the purer moral benefit of profit. This ultimately meant the crude profitization of public needs and vulnerabilities. That was the ultimate goal––see a need or a vulnerability and squeeze that for profit, because where will you find a more pliable and obedient consumer than one that is hungry or ill-housed or ignorant or in pain or afraid of death (or all of the above)? The new corporate “morality” applauded this new predatory model.

Another shift occurred. The responsibility for paying for public needs that would now be more profitably (and expensively) satisfied by private companies needed to be borne by someone other than the private companies themselves via taxes––tax obligation would erase the gain achieved by the newly appropriated area of profit. The taxes needed to be borne by the public, by the individual, and preferably by the individual who worked for a living rather than the individual who owned for a living.

In the past three decades the owning classes have achieved a rare kind of levitation above public obligations, above the worries of ordinary people, above any concern for the needs or sufferings of the world––unless that concern could be converted into cash via a tax deduction. (An entire industry emerged to feed and fleece the generous and helpful impulses of humanity rather than efficiently managing those obligations as a public sector function, where they would be managed for usefulness. Profit subtracted from the useful mission but the mission and usefulness were no longer the goal; profit was the goal.)

The shift of wealth from the many to the few and the shift of obligations from the wealthy to the working poor has been achieved almost invisibly. Certainly the public watches and is entertained by various forms of wealth porn on television and in print but the effect on their lives is blurred and obscured. Instead the wealthy few are portrayed as admirable and enviable, the poor as ridiculous and blamed for their squalor. The rich lives are the lives to aspire to. These are the moral paragons. What they have is justified by the new morality described above. And what others suffer is justified by their inability or refusal to behave in a sufficiently moral way that would make them rich. Television preachers extoll the righteousness of selfishness and greed and parade their expensive suits and cars and jets and mansions before their worshippers, all of it tax free, because all public need is immoral and inefficient and corrupt.

We saw the inefficiency and corruption of this “efficient and less corruptible” rearrangement of wealth in the financial crisis of 2008-2009. How did this emerge without warning? I suggest that paying attention only in one direction, toward what serves shareholders and concentrates wealth, leaves us two thirds blind. We ignore the interests and rational demands and considerable contributions of the greater part of our system. When corporations devote all their attention to shareholders and ignore and deprive the employee and the consumer/community constituencies they are planning and acting on dangerously limited information. If you are a human being you judge this as a less moral way of behaving. If you are a money minded corporate mandarin you should see this as less efficient and shortsighted. A longterm shift in corporate and political thinking over-rewarded one narrow part of our population and under-rewarded the majority. By depriving and impoverishing workers by slow degrees it subtracted economic vigor from our markets. The result being (and only a 2/3 blind ruling class would fail to see this) that the hugely increased pools of investment capital in the owning classes were left in a difficult situation: too much investible capital was chasing too few plausible investments––plausible investments being ones based on robust consumer demand––because consumer demand was no longer as robust. What robustness remained was fueled by debt which was quickly seized as a new category for implausible investment which spawned a whole menagerie of implausible fabricated instruments backed by unsupportable debt.

This was damnfoolishness and overreach and hubris and unreason on a far greater scale than could ever have been attributed to the “overreaching” working classes that had precipitated the Lewis Powell memo. There is a reason for a balance of powers in an economy and a society as much as in a government. The overreach of the owning classes had created a top-heavy and fragile edifice. One that had changed its function from serving people to one that preyed on them; eventually it would eat itself out of a food supply. The collapse was avoided in 2009, but the rescue saved the perpetrators first, blamed the victims, and kept the malfunctioning system in place, compounding the wealth of the too-rich and enlarging the too large. This is the sort of foolishness that causes revolutions. We can see from the present political scene that revolution can arise in benign or dangerous forms. We have one revolution that seeks to repair and reform the wrongs of the Reagan revolution. We have another that seems bent on compounding them with a bizarre mixture of fascism, know-nothing-ism, gangsterism, hucksterism, and fraud.

Meanwhile, short of a violent upheaval, what persists is a brutal concentration of wealth and power that enforces its primacy over all the machinery of public life, legal, financial, political, compounding that dour money minded force I call The Rule of Accumulated Advantage.

Did The Lewis Powell Memo Create This Mess?

History unfolds from hinge moments. I have been wondering lately about the Lewis Powell memo and what larger things have unfolded from it. If a private memo is a small thing consider its effects if it galvanizes far greater powers and undoes important precedents.

Did the Powell memo (and the doctrine that it made) make corporate and wealthy America immune to their obligations to society, enabling them to levitate away from tax obligations and the necessary support and protection of institutions and infrastructure and the environment? Did it enable them to hoist (permanently, it appears) the justice system and the financial apparatus out of the reach of the vast majority of Americans? Did it then enable the justice system and financial system to be reorganized to prey on the wider population rather than serving it? (Granted, the law has a recurring habit of acting to protect property from people, to become an instrument of property without a primary obligation to people.)

Did the Powell memo make corporations and the belief system of wealthy Americans immune to inconvenient science? Did it make science subservient to the profit imperative? Did the Powell memo obligate all businesspeople to ignore and defy any science that might diminish their profits? Not just reverse their profits but cut into them. Did the Powell memo lead to the mindset that made the profit imperative the single obligation, the only sacred idea?

I got on this train of thought after seeing the story this morning where NASA scientists are now convinced climate change will unfold more suddenly and devastatingly than previously thought. That is moreso than we were previously led to think by the corporate deniers. I began to think how colossally stupid we’ve become in the space of a few decades. What was the off button on the American genius? I think it was the Powell memo’s assertion of money, overruling intelligent discourse. (The assertion of what I’ve called Moneythink on my blog. A dangerously corrupt and corrupting philosophy, if you can call it a philosophy.)

Business and Money and Markets and Corporations and the whole apparatus of our financial side used to obey basic norms to correct folly and regulate the “animal spirits” that cause problems. Those regulators were turned off subsequent to the assertion of corporate power and veto that followed the Powell memo.

One chief example of a useful regulator that was turned off is the insurance industry, which was bought and harnessed by large financial companies and told to make its functions serve the profit of the larger company rather than do its job, which was to place a cost on risks. The insurance business didn’t raise the costs of insuring harbor facilities or coastal properties or the longer term risks climate change represented to our agricultural infrastructure (civilizations are based upon reliable climate, and our civilization is therefore at high risk.) The insurance industry was told to keep its mouth shut and to tailor its charges for risk to suit the profit demands of the shareholders and the corporate parent, which probably was investing decades of premiums in very profitable fossil fuel investments.

If nothing else, the Powell memo gave Money a veto over Reason. It allowed the shareholder class to veto the warnings of scientists in the matter of climate change and to veto the legitimate demands and grievances of people who work for a living because they might limit the return on investment to people who own for a living. The only loyalty was to return on investment, no other obligation mattered. That was the central justification for Lewis Powell’s memo which evolved into a fiat: that concentrated money ought to assert the deciding vote on all of our public decisions, because money had a better brain than people did. This breathed legitimacy into the ludicrous Citizens United ruling that stated Money = Speech. And the similarly ludicrous Bush v Gore decision that stated that equal protection required the Court to intervene to protect the interests of George W Bush from irreparable harm by the voters who had voted against him. Money and patronage (the values the Powell memo places uppermost) were again the pollutant in that decision: how many of the justices who stepped in for Bush Jr. were appointed by Bush Sr.?

Once you make Money immune to intelligent discussion you give it control over the public conversation. Which is why we have a billionaire of low cunning dominating one of our political parties right now. Who are we non-billionaires to question his right to rule us? We have learned not to embarrass Money with difficult questions. The galvanizing moment in Ronald Reagan's presidential run came early, when he faced down the annoying challenge of some journalist, saying: "I paid for this microphone!" Except he hadn't. General Electric and a few decades of other corporate sponsors had. Reagan had been employed as their spokesmodel. He was the political incarnation of Lewis Powell's memo.

Are we all to blame? We voted for Reagan, and all his works and all his ways. We liked him. Half of us still worship him even though he presided over the theft of our prosperity via Reaganomics. He organized the redirection of wealth from the many to the few. Money isn't speech, but it can buy a lot of it. And it can buy the likable voice of an aging actor. Money isn't speech any more than Money equals thought or intelligence. By delegating more of our decisions to our money, which the Lewis Powell memo urged, we stopped thinking. And that is why we are surprised to learn the oceans will rise and there is no longer anything we can do about it. Maybe that is also why a handful of billionaires are using their tax-immune billions to build personal rocket ships.

How Corporations Became People (Or Did They?)

A brief clear video summary first.


What’s interesting is that the crucial decision in Santa Clara County v. Southern Pacific never stated that the corporation was a person entitled to rights of personhood.

How it became the invalid cornerstone for every corporate personhood claim since is a mystery. Either the judge erred and prejudged the case or the clerk assigned to summarize the decision invented corporate personhood. Was he in the employ of the railroad? This excellent article about the case sorts out the case and finds nothing written in the decision supporting corporate personhood, an issue that wasn’t even properly argued. Was this creation of corporate “persons” done out of bias or error or conflict of interest?

The point is all the subsequent law saying that corporations are persons is based upon a fiction. And corporations have become "super persons" as a result, with rights larger than other citizens. Despite the fact they cannot be jailed, cannot be poisoned by their malfeasance or that of other corporate “persons”, cannot be killed except by their own hand, and are granted extraordinary methods of evading the obligations and hazards that living, breathing persons cannot evade. Today they represent a special class of protected super persons, more powerful than the rest of us and held to fewer obligations. A class virtually above the law. A class, as we see in the case of their proxies in the lobbying group ALEC, that writes the laws the rest of us must live under.

And the point is it was never made law by the Constitution or by Congress or by the courts. Is it possible to undo something that was never done in the first place?

One thing we can do is amend the Constitution. Join the movement. Join MoveToAmend.org and right this wrong.