Announcer: Welcome to Stuff You Should Know from HowStuffWorks.com.
Josh Clark: Hi, and welcome to the podcast.
Chuck Bryant: Hi, everybody.
Josh Clark: Chuck, how are you doing?
Chuck Bryant: Good.
Josh Clark: That's Chuck, by the way. And I'm Josh. We're going to be your guides through this next 15 minutes of total mind expansion.
Chuck Bryant: Right, tell you some stuff you should know.
Josh Clark: Yeah, and this one is actually pretty cool. The one we're doing today - I guess they're all pretty cool. We like to make it cool, but this one is something that probably a lot of your friends won't know about, so you can wow them at the next cocktail party, the next kids' birthday party.
Chuck Bryant: Any kind of party.
Josh Clark: Yeah, that's very succinct, Chuck. Chuck, let's talk about legal fiction.
Chuck Bryant: Okay.
Josh Clark: Okay, you want me to talk about it?
Chuck Bryant: Yeah, you're not talking about John Grisham.
Josh Clark: No. Who? No. Sorry, that was Crichton that died.
Chuck Bryant: Right.
Josh Clark: I think John Grisham is alive and well.
Chuck Bryant: Yes, and he is an attorney and a novelist.
Josh Clark: Right, yeah, and he's pretty good, too. No, we're not talking about Grisham's work. We're talking about is actually a legal term that's used, basically, to describe any time a court says something is true that's not true just for the sake of moving things along, keeping things tidier. It's kind of like if you and I were having a conversation, Chuck, and I said, you know, my right jab is a million times better than yours, and we were kind of debating that. Rather than stopping and saying, "That's hyperbole, I don't agree with that," you're just going to kind of nod, and we're going to stick to the meat of it.
Chuck Bryant: Or we should punch each other.
Josh Clark: We could find out.
Chuck Bryant: Get down to brass tax.
Josh Clark: That's one way to find out. Yeah. Although as everyone knows, we're not big fighters!
Chuck Bryant: No, I would miss your face. That's how bad I am.
Josh Clark: It would be clumsy. Well, let me give you an example of legal fiction, specifically. There's this thing called a renunciation of a legacy. Have you heard of this?
Chuck Bryant: No.
Josh Clark: So basically, let's say I find out that I'm in your will. And I'm just like, "That Chuck, he's far too generous. I can't accept this. Maybe if I take myself out of his will, he will go ahead and give that money to the poor or orphans or something like that." The thing is you're sticking to your guns. I'm in your will. You love me. You want to leave me some money. There's something I can do. I can renounce that legacy. I go to the court. And the court says, "Okay, you're dead. Chuck has outlived you as far as this will is concerned. I've pre-deceased you," which means that any claim I could have is null and void since I'm no longer alive. See what I'm saying?
Chuck Bryant: I do.
Josh Clark: That's legal fiction. As far as that will is concerned, I'm dead. You're still alive.
Chuck Bryant: Interesting.
Josh Clark: Isn't that interesting?
Chuck Bryant: It is.
Josh Clark: There's another piece of legal fiction called -
Chuck Bryant: Corporate personhood.
Josh Clark: That's right, Chuck. This is the meat of what we're talking about here. Corporate personhood is exactly what it sounds like. There is a legal custom, not just in the US, but it dates back to the Romans, I believe. The ancient Romans! Not today's Romans. The original Romans where a corporation, which is really just a pool of investors' money that's taken together and used to conduct business? It's considered an actual artificial person under the law.
Chuck Bryant: Yeah, this kind of blew me away, to be honest.
Josh Clark: Me, too. Yeah, there's this guy named Tom Hartman who I heard years ago on NPR talking about this, and he wrote this great book, and it's worth a read. I can't remember what it's called right now. I've got it written down on one of my notes that I can't find. But he turned me on to this. He has this radio show out west, and he is very much against corporate personhood. A lot of people are. Here's why. Corporations, if you treat them as a person - our punitive legal system, Chuck, that keeps us from stabbing old ladies for their purses or just walking into grocery stores and opening up cash registers, there's a little thing called prison. There's also a thing called the gas chamber, the electric chair, the hangman's gallows. There is punishment out there for our actions, and this punishment is designed to keep us from crossing that line from upstanding citizen to an archaistic criminal. And so we don't do things, in large part, because there's prison. There's consequences.
Chuck Bryant: If not, I would be hitting old ladies over the head every day.
Josh Clark: Who wouldn't?
Chuck Bryant: Exactly.
Josh Clark: Prison keeps our society intact. It's as clear as that.
Chuck Bryant: Right. I'm joking, of course.
Josh Clark: Right. So with a corporation, you have to kind of look at it. Since it's an artificial person, you have to look at it as a super human person, too. Doesn't need food. Doesn't need water. You can't put it in prison. It doesn't feel pain. It has on life span.
Chuck Bryant: Can't die.
Josh Clark: It's limitless as long as there's those shares are out there and it's making a profit. A corporation can live indefinitely. So this is why it's kind of a sticky discussion. This is why people like Tom Hartman are very much against corporate personhood. And the whole thing actually - this has been going on for a while. Jefferson, Thomas Jefferson was very much an advocate of putting lifespan limits, restrictions, including lifespan limits on corporations in the constitution.
Chuck Bryant: And he failed on each count.
Josh Clark: Yeah, he failed. So actually, we almost had a constitutional provision that said corporations can only last this long, and there's this limitation because Jefferson, in his usual capacity, saw far into the future and all the problems that this random aspect of American society or global society will have. He was a pretty insightful dude. And he was absolutely right. We've run into some serious problems with the concept of corporate personhood.
Chuck Bryant: Right and I know the 14th amendment is kind of where it all comes together.
Josh Clark: Yeah. Actually, the irony of the whole thing is that rather than being restricted by the constitution, corporations were actually protected by the constitution.
Chuck Bryant: Right, as artificial people under the 14th amendment, which I know you pointed out the last word of the 14th amendment, equal rights protection under the law to every person.
Josh Clark: Every person. That is a very significant word because, of course, corporations are artificial persons. So in very rapid succession, I was to think 1868 when that was ratified, the 14th amendment. Very quickly, a court case came to the Supreme Court for a decision that had to do with applying that to corporations.
Chuck Bryant: Right. Santa Clara County V. Southern Pacific Railroad!
Josh Clark: Yeah, and if you think about it, basically, applying a constitutional amendment that protected freed slaves, newly freed slaves, and then trying to get it to apply to corporations. Isn't that the pinnacle of tastelessness?
Chuck Bryant: Yeah, I think so.
Josh Clark: Yeah, well, 19th Century robber barrens weren't above anything. And one of the things they did was, in that case, the Union Pacific case, they finally applied it. The Supreme Court - I can't remember who was at the head at the time, basically said, "You know what? We realize what this case is saying," and ultimately, what the case did was it upheld the longstanding custom that it was up to a state to tax and to charter corporations. That's still going on today like as president elect Obama excruciatingly pointed out in, I think, the second debate. Delaware is a big haven for credit card companies, which is where the vice president elect hales from.
Chuck Bryant: Because of the tax benefits. Correct?
Josh Clark: Yeah, it's set up in a certain way so that credit card companies benefit the most from that state. Same with Florida is a tax haven for, I think, real estate businesses or something like that.
Chuck Bryant: Right, I think Florida doesn't have an income tax. Is that right? Or sales tax!
Josh Clark: No, they don't have that either - or they don't - they just don't have an income tax.
Chuck Bryant: They just don't have an income tax.
Josh Clark: Yeah, no. They just operate on borrowed time.
Chuck Bryant: Right. I'm moving to Florida.
Josh Clark: Yeah, same here, buddy. So in this case, Santa Clara versus Southern Pacific, Union Pacific, one of the two!
Chuck Bryant: Southern.
Josh Clark: Southern Pacific. Thank you. That was established. But here is where everything just gets totally hinky.
Chuck Bryant: I know, and I couldn't believe this. This is crazy.
Josh Clark: Didn't this just irk you?
Chuck Bryant: Yeah.
Josh Clark: The court reporter for the Supreme Court wrote a little head note, which is exactly what it sounds like. It's a note at the head of the briefs of the ruling, and it said, "Court decides that under the 14th amendment, corporations are afforded equal protection under the law," and that was it.
Chuck Bryant: Right, but where it gets hinky is that the chief justice did not say this.
Josh Clark: No, and he actually wrote a personal note that was uncovered later on that said that the court specifically did not rule on that. They knew that that's what the case came down to. They weren't prepared to do that.
Chuck Bryant: Right, just written down by the court reporter.
Josh Clark: By the court reporter who turned out to be -
Chuck Bryant: I believe an ex-president.
Josh Clark: Ex-railroad president.
Chuck Bryant: Ex-railroad president, which - is that a step back to go to court reporter?
Josh Clark: Apparently not. You know, there's a long tradition of high finance of huge industry putting their own people into public government. As somebody said recently, you know, Paulson from Goldman Sachs and so is Cash Kari. And somebody said recently there is a revolving door between private and public service.
Chuck Bryant: Right, very linked.
Josh Clark: And I - apparently, this has been going for a very long time.
Chuck Bryant: Yeah, well, it worked in this case.
Josh Clark: It did because since it was a head note, it wasn't law, but it did set precedent.
Chuck Bryant: Right and I don't understand how that works, to be honest.
Josh Clark: Well, somebody can say, "Look, it's written right here," and you can use it as part of your argument, and they did. I think two years later, there was another case; I think another railroad case or something. They pointed to it, and the Supreme Court finally ruled and said, "Yes, corporations have equal protection under the law as artificial persons."
Chuck Bryant: Because this schmuck wrote it down.
Josh Clark: Because he wrote it down at the head note of a ruling that had nothing to do with it.
Chuck Bryant: Yeah, I had no idea that court reporter was such a position of power.
Josh Clark: Well, apparently, no one else did either, but yeah. So that's how we've gotten to the point where corporations have the same protection as you. Chuck, the cops can't just come into your house and start looking around in the hopes that they find something incriminating because you're a person and you're protected under, I think, the 4th Amendment from unreasonable search and seizure. So to are corporations. There was a case in the '70s where OSHA inspectors, you know, they could just walk into a corporate headquarters, business, something like that.
Chuck Bryant: Right, for inspection, and -
Josh Clark: Yeah, looking for violations, that kind of thing. Somebody sued that corporations enjoy the same protection under the law in the 4th Amendment and won. So now, if you want to find violations, you have to make an appointment with a manager, the store that - one of the corporate officers.
Chuck Bryant: Right. And I know - I don't think this applies for food, restaurant inspections because I used to work in restaurants, and I remember we were always caught very much off guard when the health inspector showed up.
Josh Clark: Yeah. I don't know why that would be any different, but yeah.
Chuck Bryant: Well, maybe it will just take a restaurant to file a suit for it to happen.
Josh Clark: Maybe so. Maybe so! There's also a really sterling example that I love.
Chuck Bryant: Nike.
Josh Clark: Nike. Yeah, Nike! As we all know, as is common knowledge now, Nike was running some really abusive corporate practices overseas in their factories.
Chuck Bryant: Right, sweatshops.
Josh Clark: That's one word for it, definitely. In the '90s, this was not widely known. I mean certain subversive section of society understood this.
Chuck Bryant: Right, people that did their homework.
Josh Clark: Right. Most people didn't really walk around going, "Oh, Nike runs sweatshops over in, I think, Malaysia." One MIT student actually managed to break it into the public view, and I can't remember. Do you remember when this was when Nike would allow you to have anything you want stitched on their shoes? That whole campaign!
Chuck Bryant: Yeah, which I don't remember that, but it was in 2001 you could get something stitched, a personal message or something, your name.
Josh Clark: Your name, something.
Chuck Bryant: Yeah, and this guy from MIT wanted the word sweatshop embroidered on his Nikes. And they said no.
Josh Clark: Yeah, and they said no. So he forwarded the e-mail around. In very short order, it got picked up by some of the major news services, and people started investigating Nike's practices more and more. Well, Nike started this huge PR blitz where they said, "No, that's absolutely not true. This is completely unfounded. We treat all of our employees very well." I mean just lie after lie after lie. Finally, somebody went to Malaysia or some of these countries, these developing countries where Nike was running these sweatshops and filmed the practices. Somebody made a pretty decent documentary out of it. I can't remember what it was called. But apparently, the living conditions were poor. Factory workers were living in shantytowns next to the factory, and their roofs were made of discarded soles, like the stuff they used for the soles of the Nike. It was just really bad business practices. So finally, Nike is forced to say, "Okay, fine."
Chuck Bryant: Well, a man sued them and got -
Josh Clark: Yeah, that's right. Thank you, Chuck.
Chuck Bryant: A lawsuit was brought by a man in California in 1998.
Josh Clark: And what was Nike's defense?
Chuck Bryant: Nike's defense was, and this is just unbelievable, was t hat because they are granted the same rights as people, they are allowed to lie under the, what, 4th Amendment.
Josh Clark: First. Freedom of speech!
Chuck Bryant: Yeah.
Josh Clark: So they were false advertising. You can't be sued for it because you're allowed to lie because you're a corporation and an artificial person.
Chuck Bryant: Yeah, it didn't really hold water, though.
Josh Clark: It didn't. But no one ever ruled on it.
Chuck Bryant: Well, that's because they settled.
Josh Clark: Nike settled.
Chuck Bryant: Smartly.
Josh Clark: Yeah. So they shelled out like $15 million or something like that.
Chuck Bryant: Actually, just 1.5, unless your decimal point was off.
Josh Clark: God, is that it?
Chuck Bryant: Yeah.
Josh Clark: That's terrible. While it did go to some sort of labor protection group, but $1.5 million, that's not a lot.
Chuck Bryant: That's not a lot of protection.
Josh Clark: Although that will buy you a couple of houses in Malaysia, I imagine. But the fact is the jury is still out on whether or not a corporation can lie. The fact - but that's how this whole thing has been established over time. It's been kind of whittled away and added to and taken from. The, I guess, happy ending to this story is that Nike was finally put in such a bad light that they wrote a lengthy report on the working conditions of their factories, all of them, and basically self-reported that they were mistreating their workers overseas and cleaned up their acts.
Chuck Bryant: Yeah, I believe so.
Josh Clark: Yeah, freedom of speech goes both ways. And in our litigious society, it's good to have good lawyers if corporations have the same rights as you.
Chuck Bryant: Yeah, it's a shame it took that kind of action, though, for Nike to realize the greed that was going on.
Josh Clark: Agreed.
Chuck Bryant: That's just my opinion.
Josh Clark: No, I agree with you. I don't know who wouldn't. Well, thanks for listening. Go tell everybody that all corporations have the same constitutional protections as you.
Chuck Bryant: Just do it.
Josh Clark: Exactly. And if they don't now, they soon will. Well, you can read all about corporations having the same rights as you by just typing in a few magic keywords in our search bar at HowStuffWorks.com.
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