Somewhere between Santa Clara and Citizens United, we the people lost our confidence. We lost our dignity. We rolled over to America Inc. Job One now is to get back some of that arrogance and boldness we had 150 years ago, when misbehaving corporations were ferociously slapped down.
One way to do that is to use the Promethean tool in the palms of our hands to float a flurry of wild new ideas, catch corporate America flat footed, and fight a protracted, slowly unfolding meme war of audacious, beguiling, actionable ideas.
A hundred years ago the state broke up oil companies or railroads if they got too big — because too much market concentration is bad. Yet here’s Google controlling 90% of Internet searches. Here’s Amazon hoovering up more than half of online purchases. Most industries are way more clotted today than in the time of the robber barons. Airlines, telecom, banking, pharma, hospitals, agribusiness, waste management: a handful of big players dominate them all.
Bust them up! Except you can’t. Teams of high-priced lobbyists swarm the regulators. (Facebook has more lobbyists than there are senators.) They spin irresistible “consumer welfare” stories. Mergers are very rarely turned down. Antitrust laws are useless. We’ve tried this experiment for four decades and no one thinks it’s working.
Our leaders will never break up the mega-corporations. It’s up to us.
Society must make a blanket commitment: We don’t want any corporation to have this much power. What Schumpeter called “creative destruction” needs to happen in every industry in every corner of our lives.
We float a simple, across-the-board metameme: No company should ever be allowed to have more than a 25 percent market share in any industry, period.
This is an audacious idea that will be fiercely countered by the hundred corporations that now rule the world, but sometime soon, as surveillance capitalism tightens its algorithms on us, there will come a moment when we the people suddenly cry “Enough!” and push the 25% Rule through.
To this day, economists have yet to calculate the true social cost of a Walmart coming to town, Google dominating Internet searches, Facebook commanding people-to-people communication and Amazon monopolizing online sales.
So here’s a way to stop the concentration of power at the top: We slap a Size Tax on mega-corporations — a gradually growing, progressive tax that corporations must pay once they grow beyond a certain size.
It’s a brazen idea that the classical economists will dismiss as exactly the wrong move. So is turning in the direction of a skid. But it works. And it would unleash a tsunami of grassroots entrepreneurial zeal.
The deal for investors used to be: enjoy this company’s profits, but if the company fucks up and does damage, it’s on you. That’s the way it worked — risk it for the biscuit – until the mid-19th century.
Then a landmark legal decision came down that shielded shareholders from personal liability for corporate missteps. It was rocket fuel for the stock market — because now that investors could only lose their initial bet, they jumped in in droves. Corporations could now shoot for the moon without worrying too much about future fallout. If a tanker runs aground or a chlorine plant blows up, or an ecosystem is destroyed, everyone’s free and clear. Win-win! For executives and shareholders, anyway.
For everyone else and the planet, shareholder immunity has been a disaster.
We need to break this racket up.
What would happen if we rewrote the rules of incorporation so that every shareholder was partially on the hook again, just like they used to be? Oil spill? Poison in the food chain? Opioid epidemic? Get your check book out: time to pay your dues.
I’ll tell you what would happen. Financial markets would heave — immediately. Investors would drop those stocks immediately. Too risky.
They’d put their money instead into different kinds of companies. Ones with strong environmental track records and no record of human-rights abuses. Both shareholders and corporations would be grounded. They’d be forced to take care and responsibility.
And what about the executives themselves? How is it that after what Purdue Pharma has done — 450,000 overdose deaths — CEO Richard Sackler walks away a free man? And still a billionaire? Sorry, that’s not going to happen anymore.
We the people created the corporate charter and the rules for buying stocks and shares. Now we can change those rules.
Of all the metamemes put forth in this piece, this might be the hardest sell. It’s like: You freakin’ doorknob, Lasn — stock markets would disappear. Commerce would grind to a halt! Shareholder protection is so baked into the current business model people can’t even imagine it disappearing.
Well: imagine it.
Yeah, I’m sorry, but we’re gonna talk about Pfizer. The company a US federal judge called “the world’s worst recidivist.” They conduct illegal medical trials on critically ill children. Pay a fine. They defraud the Medicaid system. Pay a bigger fine. They sell the wrong drugs to the wrong people for the wrong thing (with horrific side effects), are caught, admit guilt, vow earnestly never to do it again, pay the largest criminal fine ever (2.3 billion), and carry on. No Pfizer executive has ever faced charges for any of these violations of the public trust.
If this were a human being they’d be in leg irons. For life. They might even lose their life. That’s what happens to repeat offenders who do heinous things. They most certainly would not be walking around free to offend again. But today corporations routinely get away murder. There is no penalty they fear. Fines don’t faze them, and there’s no brand damage that can’t be mopped up in-house.
The penalty has to be existential.
If most people, of whatever political stripe, look into their own hearts, they’ll know this one’s hard to argue against.
The people have rallied around it before. In 1890, the highest court in New York State revoked the charter of the North River Sugar Refining Corporation with these words:
The judgment sought against the defendant is one of corporate death. The state, which created, asks us to destroy, and the penalty invoked represents the extreme rigor of the law. The life of a corporation is, indeed, less than that of the humblest citizen.
Three Strikes And You’re Out isn’t an idea whose time has come. It’s an idea whose time has come again.
Read Part 1 - here
Read Part 3 - here