Archives for May 2003

Reclaiming the Bill of Rights, Building a Movement

May 17, 2003 by staff

Published in the winter 2002-2003 issue of
By What Authority, the journal of the
Program on Corporations, Law and Democracy.

Jeff Milchen is the founder of ReclaimDemocracy.org, a young but increasingly influential organization in the Democracy Movement. Molly Morgan interviewed him about their strategy and campaigns.

BWA: What is the focus and mission of ReclaimDemocracy.org’s work?

Jeff Milchen: Well, our tagline is “Restoring Citizen Authority Over Corporations,” and like POCLAD we focus on effecting long-term structural change that cuts across many different issues. An ongoing part of our work is delivering radically democratic perspectives through mass media to people who don’t necessarily consider themselves radical or even progressive. We dissect current issues to expose how problems are rooted in the illegitimate power wielded by corporations and moneyed interests, and we try to show clearly how changing the system could directly improve people’s lives.

Another major component of our work is building concrete tools for change and replicable models that decentralize power so that average citizens and communities have more influence in the decisions that affect them. We think the more people experience democracy close to home, the more likely they are to value it and work to expand it. People across the political spectrum who may disagree on outcomes still have common goals in creating a more democratic society, but their differences may hide those shared interests. One reason is that so much of the “news” is alienating and disempowering — it obscures the work and impact of ordinary citizens while exaggerating the power of those in official positions.

BWA: How do you get your message out?

JM: Our media outreach has focused primarily on print media plus some talk radio programs. We’ve had significant success — from op-eds in mainstream newspapers like the Washington Post, Newsday, and the San Francisco Chronicle to strategy and solution-oriented pieces in publications like The Ecologist, Black World Today, and major Spanish-language newspapers like La Opinion and La Prensa. As an example of how revoking illegitimate corporate power concerns people across the political spectrum, our work has been written up in business magazines and conservative tabloids like American Free Press as well as progressive magazines like Utne Reader.

BWA: Describe your campaign to revoke corporate free speech.

JM: We’re helping to instigate what we hope will be the broad national coalition necessary to put this issue on the radar screen. We believe that corporate free speech is a desecration of our Constitution and that this is an especially good time to generate public debate about it because a case called Nike v. Kasky stands an excellent chance of being reviewed by the Supreme Court in 2003. The case centers around the issue of commercial speech — a category of communication created by the Court.

The Supreme Court is a political institution that responds to major shifts in public opinion. Our goal is to use Kasky to make the issue of corporate free speech a high-profile controversy, framed as a matter of justice, like other struggles for civil rights. We need huge numbers of citizens generating pressure on our courts and influencing their thinking, and it’s a challenge because the injustice is less direct and obvious than for other abuses of our rights.

Our initial focus in this effort is on the American Civil Liberties Union (ACLU). We want to persuade their leaders that their mission to defend civil liberties for human beings is undermined by their consistent support of corporate “rights.” This is especially disturbing when our civil liberties are under siege by the Bush Administration and Congress. The ACLU also expends resources to oppose most significant campaign reform efforts by supporting the doctrine that spending money to influence elections is protected “free speech.”

Our position is that all communication by for-profit corporations is inherently commercial speech and that no constitutional protection exists — it’s up to We the People, working through our democratic institutions, to decide what privileges commercial entities should enjoy. The Bill of Rights was intended to protect only human beings, but previous Courts have claimed that speech itself is protected by the First Amendment — that a thing is protected rather than the right of a person — which goes against any reasonable interpretation of the Bill of Rights.

BWA: Wouldn’t revoking corporate free speech diminish the First Amendment and limit opportunities for organizations like the ACLU and ReclaimDemocracy.org to speak?

JM: No. The Supreme Court has distinguished explicitly between advocacy groups and profit-centered corporations in two cases: Austin v. Michigan Chamber of Commerce (1990) and FEC v. Massachusetts Citizens For Life (1986). In FEC, the majority said: “Massachusetts Citizens For Life was formed to disseminate political ideas, not to amass capital. The resources it has available are not a function of its success in the economic marketplace, but its popularity in the political marketplace.”

It’s worth noting that in colonial times, the word “speech” often described discourse — an interactive communication, as in, “I’d like to have a speech with you.” The Constitution writers likely wanted to protect dialogue, not just broadcasting one’s views. How can people dialogue with something like the Nike Corporation, which has no mouth or ears, let alone a mind?

Restoring a reasonable definition of free speech would actually amplify the voice of small organizations like ours with a genuine human constituency. Individual citizens and grassroots organizations can never speak as loudly with our own voices as corporations can with the unlimited amplification of money. But if our relative impact corresponded to the quality of our ideas and how effectively we worked to promote them, rather than how much money we spend, we’d have a very different country.

Of course, corporate speech has been key to amassing wealth and power for corporations, and their hirelings will fight to retain it. Public relations departments will churn out messages framing corporations as the defenders of liberty. Corporate lawyers will argue about slippery slopes and the freedom of speech being sacrosanct. They’ll say even speech we don’t like needs to be protected and use examples of unpopular speakers like the Ku Klux Klan. Our work is to properly frame the debate: the Constitution protects the rights of human beings, not things, and only people have rights to free speech. The popularity of a speaker is not an issue, but the speaker’s humanity is!

BWA: How does corporate free speech affect public policy?

JM: Virtually every issue of consequence is affected by the illegitimate influence of corporations derailing democracy, but here’s one: both of the dominant political parties constantly espouse the value of “free trade,” yet they pass laws that preclude or destroy competition in countless industries. Take pharmaceuticals. The government creates and enforces monopolies [patents] on drugs, not for the benefit of taxpayers who fund the development of two-thirds of the most medically significant drugs, but for corporations. As a result, Bristol-Meyers-Squibb Corporation can gouge cancer victims for 20 times the production cost of its patented drug, Taxol. Did cancer patients and citizens have an opportunity to participate in the decision to give away the patent? Hell, no. We were never even informed that we paid for its development!

Squibb exercises its “speech” by spending millions for paid lobbyists in Washington, who shape issues and frame debate in ways that bypass the most critical questions entirely. This is why we never hear ideas like “let’s keep public control of these drugs and contract a corporation to produce it at a modest profit.” As long as we allow corporate wealth to translate readily into political power, these abuses of the public interest will be the norm.

BWA: What kinds of positive alternatives to corporate power do you work to create?

JM: Ultimately, corporate power comes from a single source — our money — so we work to divert money and power away from absentee-owned corporations and toward community businesses that are locally rooted. It’s tough to hide from the consequences of your business decisions when they have a visible impact on your neighbors and the town you live in. We show people that there are many alternatives to giant corporations — that, in most cases, local businesses can provide the bulk of communities’ needs and do it as well or better.

A few years ago we started the Boulder [Colorado] Independent Business Alliance (BIBA) with the goal of helping the community to stop chainstores from continuing to displace local businesses. We organized collaborative campaigns funded by independent local businesses, including public education, direct pooling of resources for group purchasing and marketing, and political organizing to promote local policies favoring community-rooted businesses. BIBA opened a lot of doors for democratic conversations that included many people and organizations who would have been difficult to engage through, say, POCLAD or ReclaimDemocracy.org.

We consciously worked to develop a model that others could employ, and last year we launched the American Independent Business Alliance (AMIBA) to help other communities use it. There are four more IBAs now with substantial paying memberships — Salt Lake City, Utah; Corvallis, Oregon; Austin, Texas and Santa Fe, New Mexico– and several other communities are in earlier stages of organizing. We’re helping to seed and connect these groups to build a national network that eventually will change trends on a larger scale.

I believe that owners of farms and other small businesses are essential to the success of the Democracy Movement. These folks know as well as anyone how destructive giant corporations can be, but not only have most activists failed to forge alliances with small-business owners, we tend to alienate them with broad-brush attacks on business. Sloppy use of language like “business interests” does great harm to our cause.

A long-term goal of ours is to develop a powerful counterforce to entities like the US Chamber of Commerce, which gains its legitimacy from thousands of small member businesses, but actually exploits them to promote the agenda of the transnationals that drive its agenda. We should seize the label of “pro-business” for ourselves, making it clear what kind of business we’re for and why. After all, small-business owners already know that “corporate speech” only helps those big enough to hire lobbyists and public relations firms.

Learn more about POCLAD at POCLAD.org

Book Review: Unequal Protection

May 17, 2003 by staff

by Thom Hartmann

Unequal Protection offers some valuable new insights into the role of corporations in early U.S. history and the process through which corporate lawyers successfully promoted the “corporate personhood” doctrine.

We often have written the application of Bill of Rights protections to corporations arose from the 1886 Supreme Court ruling in Santa Clara County v. Southern Pacific Railroad, but Hartmann’s new research has added rich detail to the story.

You may have read accounts of Santa Clara citing the Court record that “The Court does not wish to hear argument” on the question of whether the 14th Amendment applies to corporations, and “we are of the opinion that it does.” But the Court made no such decision because the Constitutional question never arose in deciding the case (though arguments on the topic were heard). Justice Field, an adamant supporter of corporate personhood, proved as much in his concurring opinion when he lamented that the Court did not rule on the matter.

In fact, the Court record that subsequently was cited to claim Bill of Rights protections for corporations reflects nothing more than the spoken opinion of one Chief Justice Waite and a clerk. Notably, Justice Waite was appointed directly to the Supreme Court with no experience as a judge–he came straight from a position as a railroad lawyer.

The truth behind Santa Clara is just one of many engaging stories presented in Unequal Protection . Beyond illustrative history, Hartmann explores the real-life impacts of corporate personhood, including how corporations: hide accounting crimes and evidence of cancer-causing products by claiming the “right” against self-incrimination; block inspectors investigating toxic emissions and workplace dangers by claiming the “right” of privacy; defy local, state and national attempts to regulate the worst of their abuses by claiming the “right” to be free of discrimination.

Hartmann also provides a compelling argument that the current corporate hegemony was not what the American revolutionaries, be they Federalists or Democratic Republicans, envisioned for the United States . Even better, Hartmann offers specific actions to remedy the usurpation of our sovereign right to govern ourselves and the institutions we create. He helps deliver our message of why citizens must move beyond single-issue struggles and towards the assertion of democratic control of our economy and institutions.

Unequal Protection is recommended to all readers who wish to expand their knowledge of history relevant to our struggles against illegitimate corporate power or who wish to gain new insights on solving current problems in that realm.

Editor’s note: You may also be interested in checking out Thom Hartmann’s 2004 illustrated story book, We the People: A Call to Take Back America, which covers corporate personhood and other topics in an entertaining and easily accesible format.

Local Ownership Pays Off for Communities

May 16, 2003 by staff

By Jeff Milchen
Published May 2003

Editor’s note: While this article remains relevant and popular many years after publication, we also recommend visiting the American Independent Business Alliance’s web page on the local multiplier effect for a thorough analysis and more recent references.

We’ve written frequently about the importance of independent and local ownership of businesses to enhance both community economic prosperity and democracy, but the studies available for economic evidence have been less specific and older than we’d like. So we were excited to see new studies in this realm that provide up-to-date information.

The Multiplier Effect Quantified

First is an economic impact study done by Civic Economics in Austin, Texas (population 657,000). It revealed that each dollar spent at two locally owned book and music stores, Book People and Waterloo Records, creates more than three times the local economic activity of dollars spent at a typical Borders Books & Music Corp. store.

The study was initiated to provide hard data with which to evaluate a potential 25,000 square foot Borders store as part of a new retail development on the same block as those independent businesses. The two local retailers opened their books for the study. Civic Economics utilized numerous sources to determine the Borders impact, including interviews with former employees, the company’s public records, and studies of similar stores conducted by Bank of America.

The factors accounting for the difference in community payback are familiar to our readers, but we ‘re glad to bolster the empirical evidence behind common sense:

The local businesses have larger payrolls, employing their own ad writers, buyers, accountants, and other positions that chains centralize in a single headquarters.
Locally owned businesses make more of their own purchases locally.
More of the profits at locally owned businesses recirculate in the community.

The study also included the competitive impact of the proposed Borders store and projected that half of Borders’ sales would be siphoned from Waterloo and Book People. The development that includes Borders is slated to use $2.1 million in public subsidies–another hole blown in the myth of the “free market.”

Bigger Isn’t Better for Economic Return

The second study demonstrates that growth does not necessarily mean increased net revenue–in fact, many types of development actually drain local economies. Tischler & Associates studied various types of residential and commercial developments in Barnstable, Mass (population 48,000) and compared the tax revenue they generated with the cost of providing additional required services. The findings? Big box retail, shopping centers, and fast-food restaurants cost taxpayers more than they produce.

The biggest drain is fast-food restaurants with a net annual deficit of $5,168 per 1,000 square feet, with big box retail developments at a loss of $468 per 1,000 square feet, and shopping centers at $314 per 1,000 square feet.

Smaller specialty retail (not big box “category killers”) was found to generate positive returns, returning $326 per 1,000 square feet to the community. Other positive producers include business parks, offices, and hotels.

So why the higher costs from big box and fast food development? The biggest expenses generated came from higher road maintenance costs and greater demand for public safety services–especially police calls for commercial crime.

Hidden Costs

One commmunity that openly embraced chain superstores in the past decade was was Pineville, NC. But Pineville now has put the brakes on such development growth. It recently tightened its zoning rules and turned down two retail developments, including a Wal-Mart Inc. “supercenter.”

The decision came after city officials had to raise taxes to subsidize all the added public costs generated by big box stores and strip development. They projected that Wal-Mart would create the need to hire two new police officers at a cost of $120,000 per year, far exceeding the municipal revenue the store would generate. Commercial properties account for 96 percent of all police calls in Pineville. Even though a growing number of communities now charge impact fees for the initial costs generated by big box developments, the public pays for their ongoing drain on resources.

Stacy Mitchell, senior researcher at the New Rules Project explains why locally owned businesses typically create less demand for police services. “Criminals passing through seem to prefer the anonymity of a Wal-Mart store along the highway to the intimacy of Bob’s Hardware on Main Street. Local retailers don’t usually call the police for every bad check or shoplifting incident, while chain stores often have a policy of prosecuting every offense.”

Many more communities are coming to grips with the public law enforcement costs created by big box stores. In East Lampeter, Pennsylvania, District Justice Ronald Savage has added two days to the monthly court calendar just to deal with crimes at Wal-Mart, which account for about one-quarter of the town’s non-traffic citations, criminal misdemeanors, and felony complaints.

Updates– September 25, 2003:

Once the people of Austin learned the true costs of the proposed public subsidy for the Borders development, the subsidy was blocked. Left to try to compete in a free market against a successful local business, Borders decided it could not — the store was not built.
A survey published in September, 2003 produced results nearly identical to those in Austin regarding the multiplier effect for dollars spent at locally owned businesses. The analysis by the Institute for Local Self-Reliance and Friends of Midcoast Maine tracked the revenue and expenditures of eight locally owned businesses in the Maine towns of Rockland, Camden, and Belfast and compared their economic impact to that of two corporate chains; Target and Wal-Mart. The local businesses represented a range of goods and services, and collectively employed 62 people and had sales of $5.7 million in 2002.

The survey found that the businesses spent 44.6 percent of their revenue within the surrounding two counties. Another 8.7 percent was spent elsewhere in the state of Maine. The four largest components of this local spending were: wages and benefits paid to local employees; goods and services purchased from other local businesses; profits that accrued to local owners; and taxes paid to local and state government.

All eight of the surveyed businesses banked with locally owned banks. They purchased some inventory from local manufacturers, advertised in local newspapers, and hired local accountants, printers, internet service providers, and repair people.

The other 46.7 percent of their revenue left the state. This out-of-state spending included inventory purchased from out-of-state companies, mortgage interest, rent, credit card fees, supplies, insurance, and equipment leasing.

A similar expenditure profile was created for a big box retailer. Because national retailers do not reveal detailed financial information, the study estimated expenditures (payroll, supplies, services, utilities, taxes, etc.) based on national data, statements by company officials, and employment and property tax information on one of its Maine outlets.

The survey found that the chain returns 14.1 percent of its revenue to the local economy, mostly in the form of payroll. The analysis concludes that expanding local businesses would be a better economic development strategy for the region than bringing in large chains.

The survey also found that the local businesses contributed 0.4 percent of their gross revenue to charity. That’s four times as much, relative to overall sales, as Wal-Mart gave to charity in 2002, and twice as much as Target gave.

Editors’ note: The Maine study involves a sample too small to use for drawing broad conclusions, but in combination with related studies, it provides strong support.

The Austin study cited is available at: liveablecity.org. See the American Independent Business Alliance (an organization initiated by two ReclaimDemocracy.org staff to help communities support their independent businesses and resist corporate displacement of local businesses) or the New Rules Project for much more related information.