Three strikes for Big Business

Corporations should not be above the law

The author is a retired Chico State economics professor.

The news remains full of corporate misbehavior. Banks, energy companies, Internet innovators, etc., have been charged, fined or otherwise settled with, but their behavior doesn’t seem to change much. The executives at the helm of these giants are almost never prosecuted for the acts they sanctioned, ordered or ignored.

“Developed countries,” especially the U.S., seem to have first allowed, and then accepted, the economy as a dominant part of their culture. Morality is too often absent. The supposed “free market” seems amoral at best and often borders on immoral territory. Current sanctions seem to have little effect on corporate behavior. I suggest eliminating the worst of the offenders.

There are rules throughout the U.S. governing much of our behavior. For example, I am licensed to drive a car after passing a test. If I am caught breaking the rules of the road too often, my license is revoked.

Corporations enjoy privileges through charters from states. Charter shopping is employed to find the least restrictive states. These charters allow corporations to enjoy perpetual life through transferable shares. They are not reorganized when owners die or sell their shares. Owners have their liability limited to what they have invested in the firm. Their other assets are not vulnerable. Due to these and other incredible advantages, some corporations have grown in size to rival moderately large nations. They can easily dominate smaller firms.

Corporations’ abuse of their economic power is difficult to challenge and curtail. But why not revoke the charters of corporations when they accumulate, say, three felonies over five years? If the three strikes law is good enough for cheap drug dealers, it must be fair for corporations. Without a charter, bankruptcy would be required through an established liquidation process. The bad apples would be eliminated and the better apples would note the consequences of misbehavior.

If some of the readers of this newspaper don’t like this proposal, well, have a nice life. But as you live that life, notice the following: monopoly prices, unsafe products, unsafe workplaces, low-wage jobs, a worsening income distribution, no abatement in global warming and corporate control of “democratic” processes. Three strikes for corporations is one place to begin long-overdue reforms.