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Fiat Shuffle

December 6th, 2005 · 6 Comments

There’s a post by Brad Plumer at the Mother Jones blog that makes the following argument for the “corporate death penalty” (i.e. dissolution of corporate charters for companies that misbehave):

Wal-Mart, along with other corporate interests, gets involved in politics precisely to neuter the legal system that’s supposed to act as a “remedy”–trying to limit its liability from class-action lawsuits through tort “reform,” and trying to weaken workplace regulations, and so on. More to the point, the legal system as currently structured is inadequate for dealing with corporations like Wal-Mart. The company has shown no remorse for anything it has done, any of the workers it has mistreated, any of the laws it has broken, and considers paying fines simply a cost of doing business.

This is why many people support the death penalty for corporations. In the short term it would be disastrous for many people, not least the company’s 1.3 million employees, if Wal-Mart’s corporate charter was revoked and its assets auctioned off. But understandably, many people feel that drastic action is necessary to teach corporations that you don’t lock workers in the store after hours, you don’t treat undocumented workers like indentured servants, and you don’t let children operate heavy machinery just so that economists can gush over your “productivity growth.”

Now, there’s a problem with the logic of the argument—one that crafty debaters used to occasionally employ on purpose back in my days of collegiate geekery. I used to call it the “fiat shuffle,” and it works like this: You propose policy X for debate. Now, quite possibly X is politically impossible (right now) for one of any number of reasons, but that’s OK, because the folks proposing that we do it get to fiat (yes, among debaters, “fiat” can be a verb) that their proposal could be implemented.

The trick of the fiat shuffle is to then re-import the political barriers you’ve assumed away to argue for your position. So (to pick a round I vaguely remember being in): You propose that kids from affluent schools be required to switch places with kids from poorer schools nearby, and offer as an argument for the program that the more politically powerful rich parents will then be motivated to agitate for improvements in the poorer schools. Except, of course, if they’re powerful and motivated enough to do that, they’d be even more likely to use their influence to block such a program in the first place.

The same problem characterizes the example above. The problem with addressing corporate misbehavior on a case-by-case basis is supposed to be that they use their political power to gut the tort system. But somehow this is supposed to be a less serious problem than the company’s opposition to a remedy that, by Plumer’s own admission, would be “disastrous” for 1.3 million employees, not to mention millions more folks who kind of like shopping at Wal-Mart.

Tags: Law



6 responses so far ↓

  • 1 Brad Plumer // Dec 7, 2005 at 12:13 am

    Okay, I admit, it’s a good point!

    On the other hand, in some cases it should be somewhat easier to implement the corporate death penalty — state AGs just need to be convinced to start revoking corporate charters — than it would be to reform the tort-system in a seriously anti-corporate way. (Of course, if AGs ever started doing that, every single company in America would just rush to incorporate in Delaware and that would be the end of that.)

    At any rate, I mostly think of support for the corporate death penalty as way to express frustration with the current system rather than a remotely serious policy proposal, although obviously not everyone supports it for that reason. But you’re right, it’s on some level an illogical way to express frustration.

  • 2 Carlos // Dec 7, 2005 at 11:23 am

    Julian has a good point, but sometimes in politics it’s easier to overcome a big, visible obstacle than a lot of small, less visible ones.

  • 3 Yoni // Dec 7, 2005 at 1:09 pm

    What you’re neglecting is that government often helped create segregation in the first place! How could you neglect that? It’s key!

  • 4 fling93 // Dec 7, 2005 at 6:40 pm

    I think it might be better to focus on incentives that more specifically target shareholders. One-time penalties don’t affect future revenues, so maybe some sort of ongoing “behavior tax” or something?

  • 5 fnook // Dec 8, 2005 at 3:44 pm

    Something less drastic than the “corporate death penality” would be a federal law permitting an appropriate federal agency to attach serious punitive conditions on the corporate charters of companies that engage in systematic violation of federal laws, e.g. WalMart. Sort of like a permanent consent decree, or something.

  • 6 Steven // Dec 11, 2005 at 12:41 pm

    And on the other side of the practicality coin, (and I cannot believe that I get to be the one making this point on a blog like this), what exactly keeps the system of dissolving or even seriously punishing companies in the manners suggested from being a gross misuse of government authority? You don’t think Target would line pockets of people to give Wal-Mart the death penalty? A lot more of corporate money would go from investment in running hteir business to trying to have their competition offed by the government and to avoid being offed themselves.
    I still think that a better course is to stop pretending that corporations have the same rights as persons do. It’s a joke distinction given all the ways that people and corporations don’t have the same rights, and if the government could actually stop corporations from crushing whistleblowers or bombarding the airwaves with ridiculousness (we can call this the Brown and Williamson playbook in the post-Wigand Congressional investigations), I think a lot of these problems would be mitigated. But talk about a practically challenging problem! It looks like right now the most effective consumer group is in the same party as most large business interests and the opposition party contain many who would refuse to abridge speech on coroporations because they feel it’s a civil liberties issue. Oh, and the companies themselves are still big and powerful and can influence the system. grr…