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When Corporations Take Precedence Over People

Politics / Social Issues Mar 27, 2014 - 04:15 PM GMT

By: Jesse


"There is felt today very widely the inconsistency in this condition of political democracy and industrial absolutism. The people are beginning to doubt whether in the long run democracy and absolutism can coexist in the same community; beginning to doubt whether there is a justification for the great inequalities in the distribution of wealth, for the rapid creation of fortunes, more mysterious than the deeds of Aladdin’s lamp." -
Louis D. Brandeis, The Opportunity in Law, Speech to Harvard Ethical Society, May 4, 1905

I was curious about this current US Supreme Court Case of Sebelius v. Hobby Lobby. The basic contention is that a for profit corporation with no other religious responsibilities can claim an exemption to the law based on the religious beliefs of the owners of that corporation.

I should add that, at least in my own perspective and apparently that of the legal precedent, there are organizations specifically dedicated to the fulfillment of a religious purpose that can claim such exemptions where the law conflicts with some of their deeply held beliefs. Indeed, individuals can also claim such exemptions in some cases as well, as in the case of conscientious objectors.

I am interested because of the general trend of providing corporate entities in the US with the same level of privilege and protections as individuals, but without all the commensurate obligations of a citizen. Therefore it could be rightly held that corporations would be superior in the eyes of the law, having the same rights but without having to go to war, or to send their children to war, and be required to offer their last full measure of devotion to the Constitution and their nation.

Let us not kid ourselves. A corporation exists merely as a legal invention, to provide certain protections and conveniences to individuals who own those corporations, most notably access to preferential tax and bankruptcy treatment, and protections against certain types of risks and liabilities. To give that legal invention the same regard, or as I point out above a higher status, than a person is to degrade the nature of the individual human being under the law, and essentially to deny them equal status. Is a man four-fifths of a corporation?

I am not being facetious. If corporations were treated as equal to people, the Too Big To Fail Banks would probably be in prison, instead of living large on public subsidies. And a few corporations might even be sitting on death row. As it is, that they are too big to punish has become an unspoken tenet of American justice. And for this unaccountable power, they deserve to enjoy the greatest and most sacred freedoms of the individual as well? Can you imagine a more certain recipe for injustice?

I see the human individual as under attack in this society, where the law is twisted to promote the ascendancy of power of organizations over the rights of individuals. In reality it is individuals behind the corporations pulling the levers from behind the legal protections and subsidies of the corporate entity. It is just another form of leverage, and too often an abuse of power and privilege.

In politics these days, it sometimes seems to be all stick and no carrot, all threat and little incentive, unless you are one of the privileged, protected by a swath of money, legal representation, and corporate power.

It reminds me sometimes of The Planet of the Apes, where the gorillas have all the weapons and horses, and they ride around capturing or killing the human beings.

This is nothing new. I grew up under the canard that States' Rights allowed certain areas of the country to intimidate and oppress certain whole classes of people as a matter of public policy. There are those who even now will say that a business person has the right to refuse service to an individual on the basis of the color of their skin, or their religious beliefs, or their choice of partners.

Freedom of conscience does not give one the right to inflict their private conscience on the rights of other individuals under the law. But there are corners of the Constitution that have long been the refuge of scoundrels, who would kill freedom in its own name in order to advance their own selfish prerequisites and privileges.

But being woefully out of touch on the case law and legal trends, I asked le Café's Samoan attorney for his opinion of this issue, and he has responded as you can read below.

I think that we might find the position of Hobby Lobby in Sebelius v. Hobby Lobby Stores to be almost nonsensical, but consistent with our currently fashionable mental diseases and defects. If our central bank thinks QEternity is actually benefiting the masses, our 'intelligentsia' believes that either there is no systemically driven income inequality, or that if it exists, it does not matter, socially or economically, I should not be surprised that we either will accept, or come close to accepting, the argument that purely legal entities have religious rights.

While my rant-o-meter can go off the charts when I start talking about this sort of sophistry, the case represents something potentially much more bothersome, which is the use of bogus First Amendment arguments to gut government legislation and regulation. I believe that le Café had linked to an article on precisely that subject not that long ago. How Corporations Hijacked the First Amendment

Between 1895 and 1937 (the dates are imprecise but reasonably accurate), a conservative Supreme Court had engaged in social engineering, especially in the economic arena, by imputing substantive rights into the due process clause of the 5th and 14th Amendments. In various cases, the court held that certain rights were so fundamental and inalienable, that government could not legislate in those arenas. Indeed, legislating in those areas was deemed to be equal to depriving someone of the right to life, liberty, or property without due process of law. Hence, that line of jurisprudence became known as substantive due process ("SDP"). A five- or at most six-justice majority used the 14th Amendment to strike down government legislation that benefited society as a whole, but harmed the interests of the monied interests and big business in general.

Not surprisingly, during that 40-year period, the Supreme Court Justices were obsessed with the principle of "freedom of contract." To protect that quaint notion, the court struck down minimum wage laws, child labor laws, maximum hours laws, and the like.

The most famous case involving substantive due process was Lochner v. New York, 198 U.S. 45 (1905), in which the court struck down by a 5-4 vote NY legislation governing the maximum hours that bakers could work. The five justices in the majority concluded that bakers had an absolute, inviolable right to contract to work long enough hours to harm their health. Here is what Justice Rufus Peckham wrote on behalf of the five buffoons:

"The question whether this act is valid as a labor law, pure and simple, may be dismissed in a few words. There is no reasonable ground for interfering with the liberty of person or the right of free contract by determining the hours of labor in the occupation of a baker. There is no contention that bakers as a class are not equal in intelligence and capacity to men in other trades or manual occupations, or that they are able to assert their rights and care for themselves without the protecting arm of the State, interfering with their independence of judgment and of action. They are in no sense wards of the State. Viewed in the light of a purely labor law, with no reference whatever to the question of health, we think that a law like the one before us involves neither the safety, the morals, nor the welfare of the public, and that the interest of the public is not in the slightest degree affected by such an act." (198 U.S. 45, 57.)
Having concluded that the law could not be upheld as a labor law, Justice Peckham concluded that it could not be upheld as a health law either:

"We think that there can be no fair doubt that the trade of a baker, in and of itself, is not an unhealthy one to that degree which would authorize the legislature to interfere with the right to labor, and with the right of free contract on the part of the individual, either as employer or employee. In looking through statistics regarding all trades and occupations, it may be true that the trade of a baker does not appear to be as healthy as some other trades, and is also vastly more healthy than still others.... But are we all, on that account, at the mercy of legislative majorities? .... No trade, no occupation, no mode of earning one's living, could escape this all-pervading power, and the acts of the legislature in limiting the hours of labor in all employments would be valid, although such limitation might seriously cripple the ability of the laborer to support himself and his family." (198 U.S. 45, 59-60.)
That rationale was just as nonsensical then as it is today. It is worth noting that the three New York state courts that had reviewed the law had upheld it.

The case is now remembered primarily for its famous dissents. John Marshall Harlan, who is most famous for his solitary dissent in Plessy v. Ferguson, dissented with two other justices that the state certainly had the right to legislate and regulate for the common good and that the "freedom to contract" was hardly inviolate. Harlan noted that:

"It may be that the statute had its origin, in part, in the belief that employers and employees in such establishments were not upon an equal footing, and that the necessities of the latter often compelled them to submit to such exactions as unduly taxed their strength. Be this as it may, the statute must be taken as expressing the belief of the people of New York that, as a general rule, and in the case of the average man, labor in excess of sixty hours during a week in such establishments may endanger the health of those who thus labor. Whether or not this be wise legislation it is not the province of the court to inquire." (198 U.S. 45, 69.)

Justice Oliver Wendell Holmes had the last word then as he does today:

"This case is decided upon an economic theory which a large part of the country does not entertain.... The liberty of the citizen to do as he likes so long as he does not interfere with the liberty of others to do the same, which has been a shibboleth for some well known writers, is interfered with by school laws, by the Post Office, by every state or municipal institution which takes his money for purposes thought desirable, whether he likes it or not. The Fourteenth Amendment does not enact Mr. Herbert Spencer's Social Statics.... Some of these laws embody convictions or prejudices which judges are likely to share. Some may not. But a constitution is not intended to embody a particular economic theory, whether of paternalism and the organic relation of the citizen to the State or of laissez faire." (198 U.S. 45, 75.)
Justice Holmes' dissent is only two pages, but it gets to the heart of the matter. The 14th Amendment does not enact Mr. Herbert Spencer's Social Statics. In other words, the constitution does not require us to adopt Social Darwinism, that being the survival of the fittest, or laissez-faire as our national ideology.

By 1937 or 1938, SDP was dead. It is so dead today that even Justices Scalia and Thomas have spoken out against it as judicial overreach. For example, in United States v. Carlton, 512 U.S. 26, 39 (1994), Justice Scalia referred to SDP as an "oxymoron" in a concurring opinion that Justice Thomas joined. Unfortunately, that is little more than hypocrisy in my opinion. A similar group of conservative justices is imposing its own conservative, and I would argue reactionary, world view by expanding the scope of the First Amendment disingenuously to do exactly what the justices were doing during the Lochner Era.

Ultimately, what these five men are doing will fail, just as SDP failed 80 years ago because it is as illogical now as it was then. The court cannot thwart the will of a nation to govern itself in a more forward-looking and rational manner. Justice may be deferred, but it will not be denied.

By Jesse

Welcome to Jesse's Café Américain - These are personal observations about the economy and the markets. In plewis

roviding information, we hope this allows you to make your own decisions in an informed manner, even if it is from learning by our mistakes, which are many.

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Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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