Practically a Solution

Practically A Solution

For Ameliorating the Discord Inherent in a Society of Economic Inequality

In recent months, before winter and sanitary needs set in, a stroll in a familiar park was disrupted or totally prevented in cities and towns throughout our nations (and others) by protesting occupiers of those spaces. By self-proclamation, they represented the economically lower 99% of Americans disproportionally removed from the nation’s financial wealth, as embodied in investments principally owned by the other 1%. While this 1% owns 43% of the interest in corporations (and the next 19% owns another 50%), the vast majority of Americans have only a small slice of control over corporate actions which define their jobs, income, goods and services to purchase, and general economic world in which they live.

At the beginning of the 19^th century, there were only 300 corporations in America (and only eight were in manufacturing). Now, a bit over 200 years later, there are nearly 6 million of these legal fictions allowed to act with the privileges and obligations granted to a “person” under civil law. With the ability to gather the resources and powers of many “natural” people into a single “corporate person”, these entities conduct vital business in our society in a coordinated and self-perpetuating manner beyond the scope of mere human individuals.

But whether with fear, resentment, and/or envy, we are reacting to the corporate Pinocchios not only escaping the control of their human creators, but grasping the strings to dictate the stage and the play of our human drama. Their collective lobbying and legal actions over the last two centuries have extended their privileges seemingly beyond those of natural citizens while avoiding, or at least diminishing, the extension of their obligations. It is right that they have done so, for their fiduciary responsibility required them to gain value and better advantage for themselves (and thus, indirectly, for their owners). It is what made (and still makes) America grow. But both the owning and non-owning human citizens of America now share their relative disadvantage to our fellow corporate citizens.

Recently I was asked by a learned friend if I might apply my modest skills of research and analysis to examine this issue. The nature of the situation has been studied and discoursed upon by many before me, both scientifically and emotionally. For somebody to come forward with a plan to balance the dynamic needs of an economy for investment of otherwise unencumbered funds and the incentives of prosperity to drive productivity and progress with the egalitarian desire for all society members to participate contentedly in our shared community would be worthy of universal praise. Humbly, I present such a plan herein, not for fame, but for the simple benefit of restoring our American unity and pride.

While the reason it has been overlooked heretofore is unclear to me, the solution is obvious. Natural persons need to become corporations. Humanity has run its course as a basis for society and its exchanges.

My fair reader may ask, how does the flesh and soul of our humanity holds us back from the benefits of the artificial embodiment of corporations?

Mortality. Unburdened from the frailty of flesh, the corporation is prepared to be immortal. While in actual fact an incident of unfavorable cash flow can be as lethal to a corporation as excessive loss in blood flow, the lifetime of a corporation is independent from those of its mortal owners (and employees).

Liability. Bound by personal responsibility, humans have the consequences of their actions able to tap into (and deplete) all their available resources for recompense, whether related to the actions or not. Corporations limit the liability felt by its owners to only those resources invested in the corporate enterprise. Buy a million dollars of stock – risk a million dollar loss, but never a larger one.

Criminality. While corporations are persons of legal standing, corporations lack the body to serve the time. Even the managers of corporations seem rarely to serve punishments for the “white collar” criminal misbehavior and malfeasance; they are more often seen to be rewarded with retention bonuses and stock options for their clever (albeit failed) stratagems to test the bounds on the behalf of the corporation. Owners not employed by the corporation are clear of personal risk of such charges, bearing only (limited) financial risk. The corporation picks up the tab for any penalties and changes its practices to avoid (being caught) committing such offenses again.

Taxation. The corporate citizen pays its taxes. But the rules for income and gains versus expenses and losses recognize the long term nature of the corporation and its needs to perpetuate, grow, and even thrive beyond a mere tax season. A person receiving $10,000 in income and spending $5,000 to feed and clothe the demanding body required to earn that income is still liable for taxation on the full $10,000. But a corporation selling $10,000 of goods to produce its income and spending $8,000 for raw materials, equipment, and labor (by self-clothed/-fed employees) to manufacture and deliver the goods has tax exposure merely on the net profit of $2000. The allowable necessities of human life are limited to standard and well-defined itemized deductions, while the necessities to conduct business life are less confined in definition and volume in their cost subtractions. At the federal level, taxable income of large multi-billion dollar corporations are treated essentially equal in tax rates (34-35%) as all but the smallest corporations (net income less than $335,000) without the disincentive of progressive taxation to limit their entrepreneurship, growth, and contribution to the societal economy.

Sexuality and Sensuality. Lacking anatomical and metabolic components, Lust drops out of the cardinal sins that tempt and drive corporations. While the same may not be possible to say for its human owners and employees, the goals and motives for corporate actions are not thrown into disarray by hormonal surges. Similarly, the corporation does not fall prey to the carnal whims of hunger, thirst, nor pain.

Morality and Religion. The moral duties of the corporation are defined by the fiduciary trusts in its founding charter. In the very many cases of “for profit” corporations, that chief responsibility is to manage the owners’ investments to maximize financial return. All corporations must act within the rules of Law, but are not generally bound by the diverse sets of non-secular rights and wrongs of our many competing religions. Corporations derive their moral code from that which can be agreed upon by all religions and non-religions, not their differences. That and what their accountants and market research tell them.

How does our society convert humanity into negotiable corporate commodity?

One of the greatest beauties of the proposal offered here is that its requirements for implementation have already been enacted in our American jurisprudence. The replacement of the word “person” with “corporation” in our legal and constitutional documents is established law under the prevailing interpretation of the due process of the Fourteenth Amendment. The simple completion of the process from an implicit application of our laws to an explicit literal statement in the laws is a mere find-and-replace operation away. Any word processing software on the market can achieve this task. It is but a mild additional complexity to search for “people”, “man” and “men” (“woman” and “women” if such exist) to perform similar substituting edits.

As our Declaration of Independence proclaims, all corporations are created equal and endowed by their creator with certain unalienable rights (life, liberty, and pursuit of happiness (profit)). To secure these rights, governments are instituted amongst corporations, deriving their just powers from the consent of the governed (corporations).

While initially people of all ages will need to file their incorporation documents to ensure their rights under the United States of America Inc., henceforth the process of citizenship would commence at birth (or as the final step of naturalization – hereafter called “citizen acquisition mergers”). Following a two-week investigation and review period triggered by the IPO filing for the newborn, the parent corporations will issue the standard (and universally equal at creation) one thousand shares in the new incorporation. Such issuing corporations may elect to retain full or partial ownership in their progeny under market rules, but, after standard processing fees and commissions, they would share equally (or as stipulated in a procreation contractual agreement between the parties) in the net proceeds of the sale. Such funds as are so raised (supplemented as decided in subsequent transactions) should be prudently managed to ensure the rearing of the new corporate resource to a productive and autonomous adult entity.

At the attainment of adulthood, the shares in an individual corporation shall be doubled (to two thousand, or more as necessary to accommodate earlier stock splits and allowed subsequent issuances) with the new half assigned to the newly matured entity. Again, the new owner may elect to retain all, part, or none of these new shares dependent of its own desires and decisions related to the prevailing free market value at that time. It would be common practice for most adult individuals to retain at least partial ownership in themselves to allow for some future free will.

Thus, no individual will lack value and presence in the affairs and conduct of business in America.

What advantages will society and civilization gain by converting to a corporate basis?

Commodity. Even the poorer citizens will have something valuable of their own. While all human resources will not be of equal total value, the marketplace will ensure a merit-based evaluation of their portfolio.

Government. The derivation of legislative, executive, and judicial powers of the government from corporations will eliminate the often messy process of elections by the populace. While the tabulation of corporate opinion may still be more efficiently implemented with term-selected officers mandated with the management duties to make and enforce intercorporate laws, the politics of such selections would be streamlined to simple concensus amongst shareholders deciding each corporate vote. Most individuals may not even be troubled to express their opinions with their proxies having been assigned on controlling ownership by holding companies and other corporations.

Incarceration. With the shielding of personal responsibility under corporate ownership, the practice of imprisonment of offenders will disappear (or at least greatly diminish). This will be a huge cost savings in America where more than one person out of every two hundred adults is residing in our jails and prisons on the average day. The switch to civil penalties instead of criminal-corporeal punishment will not only eliminate these expenditures, but also develop a robust source of revenues for the operations of our federal, state, and local governments.

Civil Agreement. The existing law covering merger, acquisition, and divestiture will become the basis for the often emotionally entangled relationships between humans. Parenthood, marriage, and divorce are the most obviously improved under properly drawn contractual agreements. Freed of overriding personal issues of gender, religion, age, race, etc., corporate mergers will allow all unions considered in the best interest of the owners to be negotiated and implemented (with customized clauses and riders as agreed by the parties).

Perhaps less obviously, but certainly as dramatically, affected are employment relations. The daily value of a human resource's production is a necessary commodity for which an employer must compete. Without contractually granted rights to draw upon these resources, the employer has no employees. Other organizations seeking membership and contributions (churchs, charities, even leisure/recreation clubs) will also be in the bidding for favorable agreements with the owners of these resources.

Reinvestment. There has been considerable controversy and agitation over inheritance following the demise of persons. The heirs of the deceased feel entitled to the fruits of his/her lifetime of accumulation and often argue (or at least complain) about a division of assets based on the capricious “will” left behind. But under corporate ownership rules, the division of the assets retained by the deceased are dictated clearly in the proportional shares of ownership in that individual. Whereas individuals enter into the incorporation of USA Inc with one thousand shares, their departure (and revocation of corporate charter and its associated privileges) should similarly, in balance, require an absorption of one thousand shares at their current market value at time of death by the government (to control inflationary pressure due to overissuance of stock in the total market). The reinvestment of value is thus ensured into both the private and public sectors of the economy.

Do we need to give up our humanity to achieve peaceful accord in our society?

There may be some who argue that tweaks of the status quo are all that is required to calm the tensions and discord we are experiencing. It is difficult to share their enthusiasm and belief after witnessing the gridlock and morass that has stymied past efforts. Who can still hold hope that the government will enforce the existing regulations, that industries will calculate favorably the profitability of self-policed restraint, or that corporate chartering will return to a requirement of public good as one of the fundamental fiduciary duties in equal or greater importance to profits? Does anyone expect that human managers of faceless corporations will truly be held to account to the public for the subversion and destruction of our economy in the pursuit of corporate profits? What new regulations can be promulgated without funding or staff to enforce that will divert the corporate world from its well-trodden, although ill-advised, paths?

I offer this adaption of our society without prospect for personal gain on my part. My wife and I are neither impoverished nor wealthy under the current system and should have no more political nor economic power as two small corporations amongst 325 million than are afforded to us now.