The New Constitution: Amendment IV – public interest standard
Amendment IV
No corporate, commercial, private or governmental entity shall be licensed, accredited or incorporated absent a binding commitment to serve the public interest; nor shall any collective entity be accorded the rights and privileges attending citizenship, which are reserved expressly for individuals.
Rationale
In 1919, the Michigan Supreme Court ruled in the Dodge v. Ford case that Henry Ford had a responsibility to the shareholders of the Ford Motor Company to operate the business to profit shareholders, rather than the community or employees. More recently, the Citizens United case decreed that corporations are people. These cases comprise the endpoints of an arc that has seen the common good subjugated to the narrow material benefit of the few.
While it would be beyond naïve to expect that adoption of a broad new public interest standard (perhaps one in line with the principles underlying the new Benefit Corporation laws passed by 13 state legislatures) would lead corporations and their shareholders to embrace an approach to commerce that insists on emphasizing the “triple bottom line,” it’s critical that we overturn the Dodge v. Ford/Citizens United paradigm and insist that wealthy and powerful companies begin acting to the benefit of their communities instead of to their detriment.
The health of our nation’s commerce is obviously of value to all citizens, as each of us aspires, if not to wealth, at least to a measure of prosperity sufficient to ensure a basic level of financial security. In no way should this amendment be interpreted to suggest that shareholder interest is somehow unimportant. However, it is not the only value, and we must acknowledge that all spheres of our society suffer when our economic system ignores the interests of the public at large.
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lullaby pit 
Dodge v. Ford: This is the case where Henry Ford was sued because he wanted to lower prices and pay employees higher wages? The Dodge brothers argued this was philanthropy.
“In no way should this amendment be interpreted to suggest that shareholder interest is somehow unimportant. However, it is not the only value, and we must acknowledge that all spheres of our society suffer when our economic system ignores the interests of the public at large.” I’m not sure this amendment achieves this balance. On the other hand, I am not sure it is achievable.
This is the most problematic amendment for me so far. I will have to ponder it a bit but my initial impulse is that this is not the best way to get to your stated goal — which is probably a good one. I do not have the faith in the free market and Adam Smith’s “invisible hand” that many people espouse (I also do not believe most of them do either but that is another argument.) but this may be tinkering more than I am comfortable with. Conversely, if the Supreme Court can rule that companies are people there is no telling what they could rule is in the “public interest”. “Well hell”, says Donald Trump, “now you can see my building from 50 miles rather than 25. That is certainly in the public interest.” And I can see Roberts agreeing with him.
I’ll be interested in what you come up with. And there’s no doubt that a great deal of effort would be expended trying to end run this one. But at a minimum, the shareholder value assumption would be dead once and for all, providing corporations with no place to hide on a lot of their misbehavior. That alone would be a huge win.
The devil in the details: Who gets to define the “public interest”?
That would fall to the Federal government, which has decades of precedent in broadcasting to draw upon. The extensive groundwork that informs B Corp legislation should also prove incredibly useful, as well as things like the Ceres roadmap for sustainability. There is no shortage of solid thinking on the subject.
>>which has decades of precedent in broadcasting to draw upon.
Funny (I actually laughed out loud), I would cite that particular example of irrational paternalism as a reason NOT to entrust this task to the federal government…
There’s no doubt that the system had issues, but they were largely a result of every broadcaster in America actively working to circumvent the rules.
These days everybody laments how completely out of control “the media” has gotten. And they’re right. The thing is, it all began in the early ’80s when Reagan’s FCC neutered the public interest standard.
You can argue that the public interest era had problems, but you have to be nigh-on barking to argue that the unregulated system we have today is better, don’t you?
What does this do to religious organizations? Are they implicitly included in the definition of private institutions?
Brian: The way I think this would likely be interpreted is that government is explicitly not in the business of recognizing religious entities. So they aren’t subject to accreditation or sanction, etc.
I need to think about this one a little, then. I think you may have created a system where religions are specifically set apart from all other organizations, and that makes me a little nervous, for reasons related to the taxation and corruption of government discussion between myself and James in the Amendment III comments.
>>These days everybody laments how completely out of control “the media” has gotten.
“Out of control” in what sense?
>>You can argue that the public interest era had problems, but you have to be nigh-on barking to argue that the unregulated system we have today is better, don’t you?
Are you talking about entertainment (we’re probably in a golden age of scripted television)? Or the non-news news programming? Or profanity creeping onto the air? Not sure what you’re referring to.
Rush: You’re kidding, right? You’ve never been known to bait me in bad faith before, but seriously?
Okay. I could go on for hours here. Literally – I have a PhD in Mass Comm and actually HAVE gone on for hours on this topic. But let’s keep it brief.
Deregulation has given us “news” agencies that not only lie with intent, they then declare in court that it is their RIGHT to do so. And they WIN.
We have radio outlets whose content is little more than a daily spew of hate speech.
Media ownership rules once assured an opportunity for independent local voices in media. The elimination of those rules has exerted a significant negative influence on things like our shared music culture.
The lack of a public interest standard in media has hitched corporate media to corporate campaign finance in a way that guarantees none but the wealthiest get a say in determining who will be elected to any office more important than dog catcher. Here you have a nasty interaction with campaign finance and the two party system, which are addressed elsewhere in the New Constitution.
One more thing. Yes, there are good things going on in the world of contemporary media. You use the term “golden age,” and it’s apt when we talk about things like the explosion of high quality dramatic program on cable these days. No doubt. But this is hardly an objection to the amendment – there is nothing good happening right now that would be in the least impeded by a public interest standard. Indeed, I imagine that it would be hard to find too many liberal elitist media scholar critics who’d argue that something like THE WIRE is anti-public interest. On the contrary, intelligent drama of that sort is very much in the public interest.
>>Indeed, I imagine that it would be hard to find too many liberal elitist media scholar critics who’d argue that something like THE WIRE is anti-public interest.
And they are the only arbiters and constituents that we must concern ourselves with, are they? I thought you were creating a work to govern all of the citizenry equally?
(Anyway, you’ve misconstrued my comments, which I hope I’ve made clear in another response. It comes down, again, to who gets to define and impose their definition of the “public interest.” Many people offended by obscenity, violence, nudity, etc. on television would argue at length that these shows are not in the public interest. You can ignore/dismiss their perspective, but it exists, is significant in the population you are trying to govern, and will come back to bite your new constitution on the butt if not accounted for from the start. Make no mistake, I’m not arguing for appeasement, but for prophylactic wording of your text.)
And they are the only arbiters and constituents that we must concern ourselves with, are they? I thought you were creating a work to govern all of the citizenry equally?
I was using that example to illustrate the extreme case – many would object to this based on the idea that I’m making it all about what the elitist libruls deem good for the rabble. If you don’t want to go there, don’t invite it with code words like “paternalism.” 😀
The point is that EVEN that crowd would find the examples you use to be great ones.
(Anyway, you’ve misconstrued my comments, which I hope I’ve made clear in another response. It comes down, again, to who gets to define and impose their definition of the “public interest.” Many people offended by obscenity, violence, nudity, etc. on television would argue at length that these shows are not in the public interest. You can ignore/dismiss their perspective, but it exists, is significant in the population you are trying to govern, and will come back to bite your new constitution on the butt if not accounted for from the start. Make no mistake, I’m not arguing for appeasement, but for prophylactic wording of your text.)
There is no ambiguity about who oversees these things. It’s the government. Now, that’s a term we need to take in context. By the time this process is over, it should be clear that I’m trying to engineer productive changes in a lot of places. I’m keenly aware that the government we’re used to can be counted on for all manner of abuses and idiocy. You have certainly read enough of my stuff by now to know how I feel about a broad range of government activity and you rarely hear me saying nice things about public servants.
So I understand your concerns, and if we’re talking about executing it within the current context, never mind. The current context is the one that decreed, and I quote: “The public interest is what the public is interested in.” In the current context, we could rest assured that the worst elements in DC would dictate that spending all our money on the products of the corporations that elected them was in the public interest.
>>There is no ambiguity about who oversees these things. It’s the government.
But I think that is *tremendously* ambiguous! The government in a democracy reflects, to a greater or lesser degree depending upon various factors, the will of the people. And “the people” are a diverse and amorphous group that is ever-changing. Even if you get enough of exactly the “right” kind of people to implement your new Constitution, you have to safeguard it against meddling and misinterpretation and other abuse by wrong-thinking, misguided, or idiotic citizens. This is what the Founding Fathers did so brilliantly (not perfectly) with THEIR Constitution, and any replacement that doesn’t work at least as hard to defend itself against social pendulum swings and reinterpretation by the self-interested is doomed to fail rather spectacularly.
You have a view of the specificity level of the Bill of Rights that I just don’t follow. How brilliantly clear was “cruel and unusual punishment”?
Again, here, I think there remains some vagueness in your wording that you, as the author, aren’t seeing. I agree with the existence and join you in condemning every one of the examples you now cite! But it was not at all clear that it was that sort of thing that you were referencing in your original comments (and it would be cheating for me to make assumptions based on my knowledge that you are a progressive type–it’s got to be clear from the WORDS alone). Not everyone is in agreement on what constitute the failings of the “lamestream media,” and a significant portion of the population would cite VERY different problems (that you and I, likely, would not acknowledge as problems). If you want this project to go beyond preaching to the choir and be a document intelligible to all, you’ve GOT to be willing to spell things out to the point of unambiguous clarity!
(And, no, I have no faith, good nor bad. If I ask a question, I am genuinely trying to facilitate communication and understanding. I will never attack you–or anyone else–but all IDEAS are fair game, as I want to probe their weaknesses to make them stronger. I’m enjoying and intrigued by your work here and looking forward to further amendments.)
You seem to want a constitutional amendment to act like a law, which dives into every minute detail imaginable. As I stated in the prologue, that is NOT what this is nor should it be. These are broad doctrines and the attempt to weed out specifics only creates problems. Between the amendment as stated and my comments as framer intent, I don’t really see nearly as much ambiguity as you’re suggesting.
>>You seem to want a constitutional amendment to act like a law, which dives into every minute detail imaginable.
I hardly think an extra word here or there can be construed as “every minute detail imaginable”! The fact is, there are some holes here big enough that others will happily drive huge, destructive trucks through them if this were implemented as is, and I think a little more work on expressing the essential stuff initially would derail decades of contention and confusion later.
Sigh. And you were doing so well.
I’m starting to pick up an anti-corporate thread here, and it’s time to weigh in.
Corporations do not exist to serve the public interest. They exist to serve shareholders. Having said that, most corporations (publicly held ones, that is) do serve the public interests.
They do so in several ways and for several reasons.
1. They serve the public interest by doing things more efficiently than the government itself could do. Now this is not always the case, e.g., prisons, but often the private version of a service is far more efficient than the public version. Take transportation of mail between post offices, a service contracted out by the Post Office to various companies competitively.
2.They serve the public interest through corporate philanthropy, roughly $30 bil a year, and through corporate programs in organizing and funneling individual philanthropy into non-religous channels.
3. They serve the public interest by leading the fight for civil rights for their employees. If you look at the emerging black middle class, I’ll wager that many of the jobs that have fueled its growth over the last thiryt years are provided by corporations, not by small businesses or government.
4. The respond rapidly and effectively to changes in the public conciousness, e.g., “green” products. Many times the market leads regulation and does so more flexibly and completely.
They do so because:
1. Some people are moral, some people are immoral, but corporations for the most part are amoral. That is, they’re not good or evil, just pragmatic. In a world where there are so many immoral assholes like the Koch Brothers, a force for amoral is a force for good. (Sadly.)
2. They tend to be run by educated, thoughtful, and basically good people who have worked hard to get where they are and understand their obligation to others. It’s fun to paint the picture of CEO as vampire, but I’ve known fifty of them and it’s simply not true. For the most part, they’re good, caring people who do what they can to use their corporations for good.
>> For the most part, they’re good, caring people who do what they can to use their corporations for good
I find it hard to even take this claim seriously enough to respond to.
I will agree with your point that we should not demonize any party in the discussion. But the facts themselves are more than adequate to condemn the behavior of corporations as a whole over the past 30 years (and a few case studies don’t invalidate the statistical whole) and to call into question the fundamentally morality of the underlying corporate structure. You may be willing to have faith in a corporation’s willingness to overlook its basic mandate to profit in order to stay within certain ethical boundaries lacking adequate rules and oversight to ensure that they do; many of us are not.
Ah, there you are. We’ve been waiting for you.
Let’s start with this overall observation: the New Constitution is not anti-corporation. It is anti-corporate excess and it is very much opposed to anti-social behavior. These are not the same thing. Many businesses are actually pretty good corporate citizens, and a public interest standard would free them to do even more of what they and their shareholders clearly feel is worthwhile.
So let’s nip that meme in the bud right now.
A few more comments.
Corporations do not exist to serve the public interest. They exist to serve shareholders.
That is the result of the legacy of Dodge v. Ford. It is not a natural or necessary occurrence. The amendment explicitly overturns that legacy not because I’m ignorant of it, but instead because I’m aware of it.
Having said that, most corporations (publicly held ones, that is) do serve the public interests.
Agreed.
1. They serve the public interest by doing things more efficiently than the government itself could do. Now this is not always the case, e.g., prisons, but often the private version of a service is far more efficient than the public version. Take transportation of mail between post offices, a service contracted out by the Post Office to various companies competitively.
True. And there is NOTHING in this amendment that impedes a corporation’s ability to do precisely what you’re saying.
2.They serve the public interest through corporate philanthropy, roughly $30 bil a year, and through corporate programs in organizing and funneling individual philanthropy into non-religous channels.
Again, nice. And again, nothing changes this. In fact, these activities automatically become evidence that a corporation can offer in demonstrating its adherence to a public interest standard.
3. They serve the public interest by leading the fight for civil rights for their employees. If you look at the emerging black middle class, I’ll wager that many of the jobs that have fueled its growth over the last thiryt years are provided by corporations, not by small businesses or government.
This is in some cases true and in others not so much. But again, this amendment in no way changes any of this. On the contrary – the new system REWARDS these sorts of pro-social behaviors.
4. The respond rapidly and effectively to changes in the public conciousness, e.g., “green” products. Many times the market leads regulation and does so more flexibly and completely.
Heh. Well, you’re being damned generous here. We might just as easily (if not more easily) argue that they create environmental problems and them respond to public outrage with greenwashing. But for the sake of argument, let’s assume that you’re completely right – again, these companies benefit from TNC because such efforts are obvious and undeniable evidence of their service to the public interest.
1. Some people are moral, some people are immoral, but corporations for the most part are amoral. That is, they’re not good or evil, just pragmatic. In a world where there are so many immoral assholes like the Koch Brothers, a force for amoral is a force for good. (Sadly.)
You seem to be arguing that “less evil” is a thing we should celebrate. Those companies who benefit society through their pragmatism are going to be just fine under the new system, if not better. The rapers and pillagers and looters, though, shouldn’t be tolerated under any circumstances.
2. They tend to be run by educated, thoughtful, and basically good people who have worked hard to get where they are and understand their obligation to others.
If you like, I can introduce you to some people who aren’t like this at all.
It’s fun to paint the picture of CEO as vampire, but I’ve known fifty of them and it’s simply not true. For the most part, they’re good, caring people who do what they can to use their corporations for good.
You really are projecting a bit, I think. You have clearly interpreted this as a document that aims to jail all the CEOs and that casts business as a Bad Thing. But it isn’t that at all. Remember, I’m a businessman myself. Sort of. Not a very good one, but that’s beside the point. I have worked in and with Fortune 500s and some of the best people I have ever met work in those environments. Caring, thoughtful, committed, progressive types dedicated to a better society.
But we both know – YOU KNOW – that the legacy of Dodge v Ford routinely creates situations where these good people are legally compelled to do things they know are bad. Not amoral, but IMmoral. If you wanted to, you could probably rattle off 20 examples off the top of your head right now.
Let me start: Al Dunlap.
If you want to object, that’s fine. But so far you’re mostly arguing with a case that I’m not making.
I suppose that this depends on how expansive you want the concept of “public interest” to be. I’d argue that corporations, unfettered by externally-enforced and explicit limits on behavior, are inherently biased against the public interest. As I see it, this amendment would serve to put explicit limits on their behavior that are not presently in place.
Modern corporations essentially exist to make money. They do this by providing goods and services cheaper than their competitors. That’s all well and good. But the cheapest goods may well be made in China instead of the United States, which doesn’t serve the public interest of full employment. The cheapest services may well be performed using toxic chemicals that are disposed of in the nearest stream, which doesn’t serve the public interest of having a healthy citizenry. And large corporations are almost always more efficient than small ones, which leads to consolidation and ultimately to monopolies, which don’t serve the public interest of having inexpensive goods and services.
As you also said, corporations are ultimately pragmatic. But that very pragmatism means that they can’t self-regulate when it comes to “commons” issues like pollution and climate disruption. Corporations will not, absent a very strong leader or an external force, voluntarily account for the costs of externalities because doing so puts them at a competitive disadvantage to their competitors. And that same pragmatism is the reason why most corporations are not innovative – they tend to stick with what works, and with good reason. In the US today most innovation comes from universities, not corporations, although it is small businesses and large corporations that are best positioned to turn an innovation into a viable product and then drive the price through the floor.
I also think the very corporate philanthropy you’re touting as an example of serving the public interest is, in fact, merely a pragmatic way to escape paying corporate taxes.
Modern corporations in aggregate don’t do anything they’re not required to do, either by the government, their shareholders, or their customers. It’s not unreasonable to hold corporations to a higher standard than mere pragmatism, and to write that standard into a major governing document like a new Bill of Rights.
OK, I like this. This is getting somewhere. And I can speak to some of these issues too. I start with the premise that much that is wrong with the US these days derives from the decision by the Reagan people to stop enforcing anti-trust legislation. I did a post on this, as I recall. The game got changed. That’s why we have the media concentration we have now, which are hugely dangerous to democracy. But not just media. It’s everything. Didn’t Jefferson or Madison or someone want to put something in the Constitution about banning monopolies?
And corporations are not people, period.
Now, on to some other points of contention, mainly with Otherwise:
1. They serve the public interest by doing things more efficiently than the government itself could do. Now this is not always the case, e.g., prisons, but often the private version of a service is far more efficient than the public version. Take transportation of mail between post offices, a service contracted out by the Post Office to various companies competitively.
I bet this is an urban myth. I would love to see some large, data driven study that actually looked at this. I’m unconvinced. I was even going to do a post on it, but never got around to it. Corporations, especially those dependent on federal money like the defence industry (which I have followed as an analyst for several decades now) are horrendously wasteful. So it’s going to depend on the activity. But the experience in the UK has been decidedly mixed on privatization of things that were formerly run by the government. Moreover, the reason why the government owned those things in the first place–British Steel, British Rail–was because of the failure of corporations to get the job done in the first place when economics changed. I’d like to see a serious study that determined which services are better provided by the government, and which are better provided by the private sector. For the past 35 years or so we’ve been governed by the mantra that government can’t do things as well as the private sector. I seriously question that. Someone must have looked at this.
2.They serve the public interest through corporate philanthropy, roughly $30 bil a year, and through corporate programs in organizing and funneling individual philanthropy into non-religous channels.
Change the tax laws and see what happens. There’s no tax break in the UK for this–and there’s virtually no corporate philanthropy either.
3. They serve the public interest by leading the fight for civil rights for their employees. If you look at the emerging black middle class, I’ll wager that many of the jobs that have fueled its growth over the last thiryt years are provided by corporations, not by small businesses or government.
Um, no, the government had an awful lot to do with this–both in terms of the legal assurances that needed to be passed, and in term of employment opportunities (especially the military, by the way.) This was not corporations who did this. The “emerging black middle class” is hanging on by its fingernails, largely because of the sweeping local government cuts the past few years. http://www.businessinsider.com/us-black-middle-class-is-suffering-2012-10
4. They respond rapidly and effectively to changes in the public conciousness, e.g., “green” products. Many times the market leads regulation and does so more flexibly and completely.
Three words: Global warming. Exxon. Oh, and one more: banks.
This is an astonishingly lucid comment thread. Applause to you all … I’m a-learnin’ a lot here.
Sammy
No, the shareholder mandate is not at all derived from Ford and Dodge, it’s derived from the the very history of joint stock companies, e.g., the joint stock companies act of 1856 (UK.) If a CEO or Board does not act in the best fiduciary interests of shareholders, he or she is liable and can be sued. That is defined as maximizing value within legal bounds. Believe me, I’ve been sued for $16 mil, and aside from not having $16 mil, it’s scary. You guys have spun yourselves up over this Ford/Dodge nonsense.
Your example suggests that this particular legacy of American law began in the UK. Not sure I get that. I don’t necessarily argue that the concept of fiduciary duty was invented in Dodge v Ford, but that does seem to be the focal point for where our current interpretation of the concept comes from.
Regardless, this doesn’t change the substance of the argument in favor of the amendment.
I’m pretty sure I’m over my head here but what the hell.
“Corporations do not exist to serve the public interest. They exist to serve shareholders. ”
“… the shareholder mandate is not at all derived from Ford and Dodge, it’s derived from the the very history of joint stock companies, e.g., the joint stock companies act of 1856 (UK.) If a CEO or Board does not act in the best fiduciary interests of shareholders, he or she is liable and can be sued.”
If those two statements are true then the basis of the argument that corporations exist to serve shareholders is based in the legal system and, therefore, fair game for TNC.
I also see something of an incongruency in the fact that the argument about corporate responsibility seems to target the CEOs when Dodge v Ford and the joint stock companies act both indicate that the barrier to seving public interest is the shareholders rather than the CEOs.
I think Sam makes an interesting argument for the success of “public interest” laws and that is where I do not have enough knowledge of that history to evaluate. But I still have to wonder if the goal of encouraging corporations to serve the public interest could not be better pursued through the tax code. But that may be falling into the niggling trap.
Anyway, I do not disagree with the intent but am having trouble seeing how it gets us there.
“The public interest” is a tricky phrase and certainly can be opened to all sorts of political interpretations, so there likely needs to be some technical fleshing out here but i think i get Sam’s point.
I think the goal should be separating corporations from government to every extent possible. Remember, Smith was adamantly opposed to monopolies which he posited mostly came from government/corporate collusion. It’s probably not in the public interest to start and run a whoopee cushion company, but i don’t think we should stop people from doing so. Perhaps what we’re looking for is to bar corporations from doing things that are directly opposed to the public interest.
For example, companies that made asbestos products knew that it killed people as early as the late 19th century. They hid that fact. As late as the 1950’s, the US government was producing films extolling the virtues of asbestos. It too knew the health consequences of exposure and aided the corporations in covering them up and marketing the program. The asbestos laws we have actually came from torte cases against manufacturers, only then did the government act.
So what we need is to find a way to keep the government from being in the pocket of corporations and allowing them to act in a manner that harms the public interest. Neutral value stuff like whoopee cushion empires really don’t matter. I know that other amendments will address some of these issues, but i also wonder if Sam’s goal here was less to build a corporate structure that somehow only did good than to look for a way to keep it from doing bad.
What about the argument that large defense contractors serve the public good by building guns and planes, even though they’re mostly badly run leeches on tax revenue that have less economic positive outcome than non-defense manufacturing and don’t operate in a free (i.e. truly competitive) market. I’d say that they don’t serve the public interest, but i think a lot of flag-waving patriots would disagree.
There is a forthcoming amendment that serves as a disincentive to corp/govt collusion, although I’m not at all sure that it goes far enough. Will be interested to see everyone’s response.
>>I’d say that they don’t serve the public interest, but i think a lot of flag-waving patriots would disagree.
Unfortunately, a term like “the public interest” is a semantic chimera. Any corporation, whatever its negatives (and I’d agree that the defense industry has many significant ones) could be said to serve the public interest by providing employment, or “jobs,” if this is the yardstick one uses to determine value. Until the issue is settled of who gets to determine what does and does not serve the public interest (or what, indeed, the public interest IS), there’s virtually no force behind the idealism of this wording. I can’t see an easy fix, alas.
I would agree that providing employment is a step toward the public interest, so long as they’re good jobs, well paying, provide benefits, etc. There is an amendment coming later that will work to assure this.
And companies that outsource jobs are most assuredly not working in the public interest unless doing so enables some other contribution.
Please don’t overlook my earlier comment. “Public interest” isn’t a term I made up out of thin air. It has a long tradition in this country and, as I note, there are resources in place that lend substance to how it’s interpreted (B Corp foundations, Ceres Roadmap, etc.)….