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Thursday, August 30, 2007

Returning Corporate Power to the People

In the 19th Century corporations had to re-certify themselves regularly with a government (state) to make sure that they were serving the public good and keeping to its charter. I believe it was every 40 or 20 years.*

By the mid to late 19th Century this was done away with, giving corporations effective immortality and their owners cover from accountability and liability. Corporations have more rights now than humans do, and their owners profit from this at public expense.

We should re-institute regular corporate re-certifications and make the re-cert periods much more frequent, such as every five years, to make sure that corporations use their privileges, that they enjoy at public expense (Rule of Law, the SEC, the FTC, the DoC, the Departments of State and Attorneys General, the DoD, the police departments, the FBI...), use their privileges responsibly.

Corporation Re-certifications should evaluate whether the corporation is serving the public good, following its charter, following local and national laws, and causing domestic job growth or preservation. Re-certifications should be on both the state and the national levels.

In the 19th Century corporate recertifications were on the state level only, but interstate commerce is quite normal now, and some states would compete to be the easiest state to be re-certified in, much like Delaware is the number one incorporation state now due to its ease of registration and low state incorporation filing fees.

Re-certifications can be staggered so that regular National Corporate Re-certifications happen a few years apart from their State's periodic Re-certification, to reduce reporting burden, and if a corporation loses its national trading privileges, it could still trade in-state, or vice-versa, giving the corporation a chance to have a turn-around, as well as apply to its home state or another one for another chance.

One only has to look at 1974's Community Reinvestment Act (CRA) to see the effect on the banking industry and how banks' philanthropy, lending, and investing where they do business has benefited the creation of probably hundreds of thousands of units of affordable housing managed by local community organizations, as well as financing supermarkets in the inner-city, mortgages for low-income families, bank branches (rather than check cashing rip-offs), and local entrepreneurs.

Despite this great effect, CRA is largely toothless! It's greatest 'enforcement' is implied. When banks seek to merge, they rely on their CRA ratings as a trend suggesting that such mergers won't harm local businesses.

Imagine if CRA ratings affected whether banks could continue to do business at all! We'd see much more investment in our local communities and in our states and our nation.

Imagine if states and the nation regularly evaluated corporations for their public service, and their compliance with laws and regulations, in exchange for enjoying the rights to do business and be protected the way citizens are supposed to. Imagine if the corporation's "lives" depended on this recertification.

We'd see a lot less corporate polluting, fewer jobs shipped overseas, more cooperation with unions, more accountability for executive fraud, more employee volunteerism encouraged, more family-friendly policies, more philanthropy and matching gifts, and more cooperation between corporations and the places and people where they do their business.

It is time to bring back and strengthen corporate re-certification, and to not accept corporate immortality and privilege as inevitable, but as a responsibility that must be earned after accounting for it to the public which makes corporations possible and profitable.

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