ERS a century and a half ago realized they needed more power to operate and wanted to remove some of the constraints that had historically been placed on the corporate form the 14th amendment was passed at the end of the Civil War to give equal rights to black people and therefore it said no State can deprive any person of life liberty or property without due process of law and I was int to prevent the States from taking away life liberty or property from black people as they had done for so much of our history and what
happens is the corporations come into court and Corporation lawyers are very clever and they say oh you can't deprive a person of life liberty or property we are a person a corporation is a person and supreme court goes along with that and what was particularly grotesque about this was that the 14 18 th amendment was passed to protect newly freed slaves so for instance between uh 1890 and 1910 there were 307 cases brought before the court under the 14th Amendment 288 of these brought by corporations 19 by [Music] African-Americans 600,000 people were killed to get
rights for people and then with Strokes of the pen over the next 30 Years judges applied those rights to Capital and property while stripping them from [Music] [Applause] [Music] people everybody makes a mistake once in a while but I just can't be personally responsible that's one of the weaknesses of a partnership isn't it Sid well maybe you better incorporate the store incorporating yes incorporating would give you the big advantage of what you want right now limited liability you start with a group of people who want to invest their money in a company then these people
apply for a charter as a corporation this government issues a charter to that Corporation now that Corporation operates legally as an individual person it is not a group of people it is under the law a legal person Imperial Steel Incorporated many of the legal rights of a person it can buy and sell property it can borrow money it can sue in court and be sued it carries on a business Imperial steel along with thousands of other legal persons is a part of our daily living it is a member of our society having acquired the legal
rights and protections of a person the question arises what kind of person is the corporation corporations were given the rights of immortal persons but then special kinds of persons persons who have no moral conscience these are a special kind of persons which are designed and by law to be concerned only for their stockholders and not say what are sometimes called their stakeholders like the community or the workforce or whatever the great problem of having corporate citizens is that they aren't like the rest of us as Baron thuro in England is supposed to have said that
they have no soul to save and they have no body to incarcerate I believe the mistake that a lot of people make when they think about corporations is that they they think you know corporations are like us General Electric is a kind old man with lots of stories Nike young energetic Microsoft aggressive McDonald's young outgoing uh enthusiastic Monsanto immaculate dressed Disney goofy The Body Shop uh deceptive very lovely do you know what the body shop is no they think they have feelings they have politics they have belief systems they really only have one thing the
bottom line how to make as much money as they can in any given quarter that's it of course they make a profit and it's a good thing that's the incentive that makes capital ISM work to give us more of the things that we need that's the incentive that other economic systems lack people accuse us of only paying attention to the the economic leg because they think that's what a business person's mindset is it's just money and it's not so because we as business people know that we need to certainly address the environment but also we
we need to be seen as constructive members of of society there are companies that that do good for the communities they they produce services and goods that are of value to all of us that make our lives better and that's a good thing the problem comes in in the profit motivation here because these people there's no such thing as enough and I always counter point out there's no organization on this planet that can neglect its economic Foundation even someone you know living under a banon tree is dependent on on support from someone economic leg has
to be addressed by everyone it's not just a business issue but unlike someone under a banion tree all publicly traded corporations have been structured through a series of legal decisions to have a peculiar and disturbing characteristic they are required by law to place the financial interests of their owners above competing interests in fact the corporation is legally bound to put its bottom line ahead of everything else even the public good that's not a law of nature that's a very specific decision in fact the judicial decision uh so they're concerned only for the short-term profit of
their stockholders who are very highly concentrated to whom do these companies owe um loyalty what does loyalty mean well it turns out that that was a rather naive concept anyway as corporations are always owed obligation to themselves to get large and to get profitable in doing this it tends to be more profitable to the extent it can make people other people pay the bills for its impact on society there's a terrible word that econ use for this called externalities an externality is is the effect of a transaction between two individuals on a third party who
has not consented to or played any role in the carrying out of that transaction and there are real problems in that area there's no doubt about it running a business is a tough proposition there are costs to be minimized at every turn and at some point the corporation says you know let somebody else deal with that let's let somebody else Supply the military power to the Middle East to protect the oil at its source let's let somebody else build the roads that we can drive these automobiles on let's let somebody else have those problems and
that is where externalities come from that notion of let somebody else deal with that I got all I can handle myself a corporation is an externalizing machine in the same way that a shark is a killing machine each one is designed in a very efficient way to accomplish particular objectives in the achievement of those objectives there isn't any question of malevolence or of will the Enterprise has within it and the shark has within it those characteristics that enable it to do that for which it was designed so the presses on the corporation to deliver results
now and to externalize any cost that this
