Yesterday, bonddad provided some scary figures on the
health care crisis in the U.S. and the connection between medical costs and bankruptcy. As most here know, Congress also recently enacted a "reform" of the bankruptcy laws that greatly favors credit card companies and other creditors over the citizens who file bankruptcy claims. Part of the reason that this kind of squeeze is happening now is the Republican power bloc in Congress and the White House, but as the actions of Sen. Joe Biden (D-MBNA) show, this isn't the whole problem.
Below the fold are some thoughts on how the concept of rational self-interest – as used in our economic life – and the legal rights granted to corporations as persons might be effecting the economic vampirism currently in vogue.
Suppose you are a bank president. The accounting department gives you an analysis of recent sources of profit and loss that shows that bankruptcies have become more of a problem. You review recent changes in the bank's credit policies to convince yourself that the problem does not result from mismanagement; you order a thorough audit of some key departments to make sure there's not some kind of fraud going on; but, no, it doesn't seem to be a problem internal to the bank. You check the national statistics on bankruptcies and find they have been rising for several years; talking to other bank executives you find out this is a problem for them too. A thinktank does an analysis of credit policies across the country and finds that the rise in bankruptcies is not a result of any action on the part of the banks.
Now, it's not your job to worry about why people go bankrupt – it's your job to keep the bank profitable. The current policies work well; instituting tighter standards for extending credit would hurt profits. You consider whether this might just be a change in the economy, that the banking industry might just have to take its lumps here. After all, if it affects all banks, it doesn't reflect on your leadership.
Then some new earnings figures come out from the oil sector: those bozos are making record profits. Investors, large and small, are going to see the banks tightening their belts and the oil companies swimming in lucre when they make their decisions. Deciding now, that your overall industry shouldn't have to suffer competetively for a problem they didn't create, you and your bank buddies start sending lobbyists to Washington to say to a few likely looking Congresscritters, "Look, some risk has been introduced to the system from somewhere outside our industry, but we're the ones getting hurt by it. Shouldn't the government change the rules so that this risk is carried by the people causing it?" (Then, as is the tradition, lawyers mumble some arcane formulas, bureaucrats make eldritch gestures with their pens, and lo, large quantities of cash magically appear in various campaign funds.)
Well, Congresscritters being what they (often) are, (and being impressed by the flashy monetary legerdemain), they sympathise with the helpless banking industry. However, they don't want to look too closely at what's causing the problem for fear of displeasing the last set of industry reps who came through and who might start inviting different Congresscritters to their dog and pony shows. So, (as Lenin put it) what to do? "Well", say the critters, "if we put together legislation that simply removes this particular risk from the banks then figuring where the real issue is becomes somebody else's problem."
Now, I'm just making this all up. I have no idea how close this scenario really is to how the bankruptcy bill came about. (I am trying to be plausible though, feel free to point out any significant problems in the comments; not that anyone around here is shy about that or anything...) I'm just trying to illustrate that the kind of situation represented by the bankruptcy bill does not necessarily require any kind of conspiracy. Nor does it require an exceptional level of rapacity or corruption. It requires only the ordinary pursuit of rational self-interest by actors in the economic marketplace.
My point is neither to defend the odious bankruptcy bill nor to make any kind of sweeping condemnation of capitalist markets, but rather to raise the question of how our economic life, as currently structured, invites this kind of offloading of risk from corporations to private citizens (and sometimes government agencies). Economies are woven together in complex ways. Those individuals and families who face economic hardships as a result of the new bankruptcy provisions will search for some way to ease their difficulties. Whatever solutions they find, whatever legal loopholes they exploit, will no doubt cause some other industry to feel itself victimized, and a new cycle will start. This seems to me the picture of how economies are no longer structured to serve human needs, but rather human needs are being reorganized to serve economies.
(I also wonder how this sort of thing will end up playing out when it becomes a case of two titanic industries clashing as is the situation currently brewing between the auto industry and the health care industry.)
Now, of course, important responses to these issues include the attempts to make sure the truth of how this type of deal is made is available to people through media and other sources (especially in those cases where there is more going on than the usual economic banalities), and also the attempts to elect critters to Congress who are willing to look through the glitzy lobbyist floorshow to figure out where the real needs of their constituents are. I want to look at a slightly more abstract issue for a moment though, that of the legal rights of corporations.
For the purpose of defining legal rights, a human being is ontologically a limited, mortal entity. We have a body that is localised; we require air, water, food to survive; our lifespan is limited. We also require enough to do, enough stimulation, enough interaction with the world, to prevent us going mad and losing the meaning of our life. It seems to me that these ontological strictures are at the basis of our concepts of civil rights, crime, and of how our rights may be curtailed in response to our criminal actions.
Over the past couple of centuries, more and more of these rights which are founded on the localized, limited nature of the human condition, have been extended to apply to fictive created entities, "legal persons", the most important of these being corporations. While a corporation can be "detained" in the sense of having a body of assets that can be frozen, it has no natural lifespan, and responsibility for the actions of a corporation does not localise to the "body" of the corporation in the way it does to an individual human. In fact, action against the assets of a corporation can have negative effects for people, both employees and customers of that corporation, who may have no connection to the reasons why those actions are taken.
A corporation is just ontologically different from a human being, so any attempt to transfer the concept of rights to an entity which exists in order to function as a legal convenience needs to take that into account.
Though I haven't really provided any sort of real conclusion, I suppose I'll end here. I don't have a clear concept of how the relationship between the economic relations discussed above and corporate rights fits together, my intention is more to see if I can spark a useful discussion.