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Corporate Crime Reporter

Yes, corporations steal other people’s money. But that’s not all that they steal.

In his new book, Corporateering: How Corporate Power Steals Your Personal Freedom (Putnam, 2003), consumer advocate Jamie Court argues that corporations routinely rob us of our personal freedoms, including privacy, security, the right to legal recourse, and more.

Court says it’s not enough to prosecute individual corporate frauds. We must challenge the emergence of corporateering — the domination of commercial gain over individual, social and cultural gain.

Court is no mere theorist.

While writing the book, he helped craft corporate three strikes and you’re out legislation, currently making its way through the California legislature.

We interviewed Jamie Court on May 15, 2003.

CCR: How long have you been with the Foundation for Taxpayer and Consumer Rights (FTCR)?

COURT: Ten years.

CCR: What is the Foundation?

COURT: We are a consumer watchdog group that works to reform insurance companies, HMOs, energy traders, banks and corporate accountability laws.

This year we have a corporate three strikes bill, for example, that is making its way through the California legislature. Under this proposed law, on the first strike, after the first criminal conviction, the corporation would have to take out advertisements in newspapers across the state, letting the public know of its crime. On the second strike, the corporation would actually have to pay a big fine to the state treasury. On the third strike, the corporation would lose its charter. And if it is a corporation that is chartered outside of California, it would lose its right to do business in California.

CCR: Must the conviction be a felony?


CCR: There are probably only two or three companies that have three strikes.

COURT: Well, we found only one that has four strikes — Teledyne. Tenet has two within a ten year period. But the point is deterrence — encouraging corporations to admit their guilt, and to make sure that if corporations do commit even one felony that the public knows about it. We expect to get the Governor’s signature on a bill like this because it is about deterrence. We have had some good hearings in the Senate.

CCR: What’s the outlook?

COURT: It is positive for that bill.

CCR: Will the Governor sign it?

COURT: Not clear. It is moving this year, though. It moved out of the Senate Judiciary Committee on a party line vote and is in the Senate Appropriations Committee now. We have another bill this year for whistleblower protection that is almost certain to succeed. We put a similar but more ambitious one onto the Governor’s desk last year, but he vetoed it. That bill was both a carrot and a stick for whistleblowers. The carrot, also in this year’s bill, was anti-retaliation protections for whistleblowers and an 800 hotline to the Attorney General of the state. It also requires employers to post notices in the workplace about their rights to protection.

The Governor is likely to sign the carrot, as he said he would last year when we had a carrot and a stick in the legislation he vetoed. The stick, which he objected to, was that if an employer knew about financial fraud, and didn’t come forward within 15 days, they would face personal six figure fines. The Governor vetoed the bill, saying that he liked the carrot but didn’t like the stick. So, this year, we are going to put just the carrot on his desk and see what happens.

CCR: What are the biggest victories of your Foundation?

COURT: The biggest victory was insurance Proposition 103. That’s where our founder, Harvey Rosenfield passed, against an $80 million industry opposition campaign, a sweeping insurance reform ballot initiative that is still the gold standard of insurance reform.

In 1999, we passed the toughest HMO reform in the nation, including the right to sue an HMO for unlimited damages.

We managed to stop a $3 billion bailout of California’s electric utilities in 1998. Those are probably the biggest ones.

We passed a number of reforms in the wake of some insurance scandals we had in California, under our insurance commissioner, Chuck Quackenbush, who was forced to resign — making a lot of insurers’ information public.

We have also created the nation’s first flat rate auto insurance program for the poor. Insurers are required to sell insurance at cost in Los Angeles and San Francisco.

CCR: You are the author of a new book, Corporateering: How Corporate Power Steals Your Personal Freedom and What You Can Do About It. (Putnam, 2003). What was the genesis of this book?

COURT: An awful lot of breakfasts with Jeremy Tarcher who is a publisher and is the father of the independent thinking movement in America. He had his own publishing house for years, before selling to Putnam.

CCR: What is the independent thinking movement?

COURT: He published many books that opened peoples’ minds to new age thinking. Not just spiritual self-help, but getting people to think in different ways — books like The Aquarium Conspiracy. He was a founder of a place in Big Sur called the Esalen Institute. His wife was Sherri Lewis, the puppeteer who created LambChop and passed away recently. He even co-wrote with her Star Trek episodes.

He is really a remarkable man. He gets people to think in different ways. So, we had a couple of years worth of breakfasts about the problem of corporate power in America and the problem with the ways people have analyzed corporate power in America.

Much of the analysis has been simply about the economic problems — the way corporations are not accountable to shareholders. We started to talk about what are the assumptions and the tactics and the strategies that corporations have developed over the last 20 to 30 years that are really historically different and that have been impacting the public in ways that are different from before the 1970s.

From our reform campaigns, and from working on corporate accountability campaigns, I had some knowledge of the kinds of tactics that corporations use to put themselves about society, the individual and culture.

Jeremy asked some important questions about what has been different in the last couple of decades. We started to take a look at the big picture. We started to focus on the gap between those who know how corporations really think — effective activists, lawyers, reporters — and what the public knows. And we looked at the public’s ignorance about corporate power, particularly the corporation’s cultural power.

CCR: Did you come up with the word “corporateering”?

COURT: I came up with the word. It is a new word. I felt there needed to be a word to describe when corporations prioritize their commercial gain over individual, societal and cultural gain. The phenomenon that has been most devastating to the public, which the public rarely sees, is that corporations in the last 20 years have changed social mores, the rule of law, and ethical custom to their advantage and to the individual’s detriment.

There is no word describing that yet. There is no word describing when corporations change fundamental tenets of our democracy, or when they steal our private information without our permission, or when they market to our kids in schools without our permission, or when they take our right to trial as a condition of commerce through a mandatory arbitration clause.

There is no word to describe these very bold cultural takings that the corporations have engaged in. And so, the goal is to try and get people talking about where there is inappropriate corporate influences in their lives, when corporations step over a line, beyond a market, into an individual’s private life, or public life, or the nation’s cultural life.

The word is hopefully a facility for people to start to identify when the hidden hand of the corporation takes something that is really beyond the realm of commerce — such as the 7th amendment right to trial or our children’s consciousness. It is taking something that is the individual’s, or the society’s, or the culture’s, that before the 1970s, a corporation would never think of taking.

CCR: There is so much information about corporate wrongdoing, about how corporations abuse the public’s trust, and yet it doesn’t seem to break through the public’s consciousness. This book is your attempt to try and break through?

COURT: It is our attempt to try to make the public see corporate power for what it is. This is our attempt to try and get the public to understand that there are connections to the television commercials playing at the urinal and the cosmetics company that sponsors their kid’s textbook and the rampant identity theft, and the corporate corruption of politics. They spring from the same problem — which is that corporations have tried to control culture through inappropriate means. And they have stepped out of their rightful place in the market to change how the public thinks of the corporation, how the public thinks of itself. We try to peel back the hidden hand of the corporation — undo what the trillion dollars per year in marketing says about the corporation as an institution.

The book tries to expose the hidden astro-turf groups, think tanks, publishing houses, and litigation centers as the concerted corporate strategy to control the way this democracy deals with corporate power, to limit the media as a critic, academia as a critic, politicians’ desires to reform corporations.

The book tries to take the smallest aggravation that an individual citizen feels at the hand of a corporation and tries to show how it is tied to the some of the biggest problems in our society — the corporate corruption of our society.

CCR: What are we going to do about it?

COURT: In the back of the book, we deal with both a personal and a political plan for reform. The first step is for the public to call a corporateer a corporateer. We each get hundreds of pieces of junk mail every year, but how many of us actually mail back that the business reply envelope empty — which would mean that the corporation would pay an extra price? If enough of us did it, we would stop getting junk mail.

Every time an unsolicited telemarketer calls you, and you ask to be on a do not call list, and they call again, you can collect $500. If we all did that, we might see fewer unsolicited calls.

Every time you get an unsolicited junk fax, and we get probably one a day, you can collect $500 and we do. We have sued and won. There are laws that can help. But mostly the public has to wake up.

When they feel that corporate commercial priorities have inappropriately intruded in their lives, they can start to use the word “corporateering,” start a debate and start a word of mouth campaign.

The second level is political reform. This includes making sure whistleblowers have a safe place to speak within the corporation, and that managers have a duty to come forward when they know of a danger to the public. It includes creating new laws that make the individual’s responsibility to society have an equivalent in the corporate world.

If a person can go to jail for stealing a slice of pizza because it is their third felony, then a corporation should lose its charter for a third felony. We have to start to reopen this debate.

CCR: We are being inundated by credit card applications, true, but we don’t have to sign up for them. Much of the problem lies with us. We keep falling deeper and deeper into debt. Yes, we are being deluged with television ads and corporate news. But we can shut off our televisions and get our information elsewhere. There are other sources of non-commercial information readily accessible to most people. By opting out of the corporate economy, we could solve the problem.

COURT: We could if we realized how big the problem is. The public largely doesn’t see the connections. To the degree we can see the connections and how big the corporation looms in our cultural life as a nation, or that it is even a threat, the public will have more of an intellectual basis to fight back.

Look at the text of the Declaration of Independence, the founders who raised cultural grievances. The King took the right to trial, the King obstructed justice, the King called legislatures to convene far the public and fatigued them into complying with his measures.

These are grievances that easily apply to the corporation today.

There is not in public discourse even an acknowledgment that corporations during the last 20 to 30 years have inappropriate cultural power. In polling, the public says it likes what corporations do for them commercially, but it feels that there is an invasion of privacy, there is a problem with corporations cheating them, or there is a problem with greed. But the public has yet to realize that at core this is about corporations going on a cultural power grab.

CCR: Wasn’t there a Business Week poll?

COURT: There was a Business Week poll that said the majority of people gave the corporation big credit for commercial convenience, but two-thirds of the public felt that there was something the corporation took away in terms of stepping over certain lines.

The public feels the greed of executives, the invasion of privacy, the insensitivity of HMOs, but it doesn’t see that these are all part of the same equation. The corporation is putting itself above the individual, the corporation is putting itself above the society, and above the culture.

The public is bombarded by $1 trillion of marketing worldwide with the message that the corporation has human values. McDonalds wants to see you smile. But the public suspects that there is something else behind the smiley face. But it doesn’t have a lexicon or perspective to discuss it. And it doesn’t have a clear political theory that says that over the last 30 years, corporations have been mucking around in our culture in a way that they hadn’t before.

There is definitely a consciousness of the problems. But it is a consciousness that is not informed about the root of the problems.

CCR: There are a group of activists who believe that the problem has to do with the DNA of the corporation, and the way to fix the problem is through genetic engineering of the corporation. So, you have Richard Grossman saying we have to go back to strictly enforced corporate charters, revoke the Constitutional rights of corporations, you have Robert Hinkley saying we have to change state laws so that corporations aren’t focused exclusively on the bottom line for shareholders, that they also take into account the environment, consumers, workers and communities. What about the DNA argument?

COURT: It presumes the corporation is a person. It would be wonderful to give the state the type of power to control corporations that it had prior to the 1880s. But we will not get there in one quick legislative or litigation strike. It is going to be through gradual education.

Corporations have the same legal rights of individuals, and therefore they must have the same responsibilities. And that’s what the three strikes law is about. Why should any corporation be able to exist if it breaks the law three times when an individual has to go to jail for a lifetime for having three felonies?

It is not going to be a quick fix. There have been some movements to revoke corporate charters, but they largely have not been successful. It would be great if we could get there tomorrow. But I really think the way to get there tomorrow is to start to open the public’s eyes to the rights, privileges and immunities that corporations have gained.

Very educated people do not understand that a corporation has the same rights of people under the Constitution, and since the 1970s, under the full Bill of Rights. That is the reason we can’t enact a full campaign finance law in this country.

CCR: Because money is speech and they have a right to speak?

COURT: Yes. The public’s awakening to that fact would help us get back to a point in our history where the corporation was the servant and we are the master. But we are a long way from that.

And the other side has erected a structure that sends a message out about why corporations should be entitled to these rights. In the Democratic state of California, we recently tried to pass a bill to require state approval of HMO premiums similar to what happened to auto insurance premiums under the ballot initiative Prop 103.

The liberal Democrats said regulation won’t solve this problem. Part of the response was based on the money they were getting from the HMOs and the industry. But part of the response was based on the assumptions that a free market was far more efficient than a government that kept a corporation in check.

It is the power of those assumptions and the logic that we have to go after if we are going to be effective at reforming the corporation at every level, more than just at the level of one industry.

CCR: Grover Norquist was asked recently — how big should the size of the federal government be? And he said — big enough so that you can take it into the bathroom and flush it down the toilet. They can talk about getting rid of government without fear of political retribution.

COURT: That’s Washington and that’s the Republican Party. But I’m saying that this reaches all the way to the most liberal state in the nation with the most Democratic legislature in the nation. They have the same assumptions.

CCR: You can try and couch this as corporateering and corporations. But it gets back to the aged old argument of government vs. business.

COURT: It is not just government. Individuals have been turned against their own right to organize in unions. The public thinks there are too many frivolous lawsuits when the number of such lawsuits continues to decline, and they want to limit their own access to the courts. That is a phenomenal form of jujitsu that the corporateering machine is engaged in.

The corporateers have turned the public against itself. That is an incredible turn of events. That is the discrediting of every countervailing power. And it has been not just with one political party. It is with both parties.

To undo that on limited resources requires us to start having a discussion how this happened. Who put the words “greedy trial lawyers.” “corrupt labor union boss,” “elite environmentalist” “big government” into the popular lexicon?

It was the corporate machine. Until we discuss why that happened, those institutions that are countervailing forces to the corporation will never be legitimate in the public’s eye.

CCR: It is not as if the public’s not aware of the problem.

COURT: The public thinks the problem is the greedy lawyers, the corrupt labor bosses, the frivolous lawsuits, big government, the chilled business climate.

CCR: You say that this point of view you raise in your book hasn’t gotten a fair airing, but — ?

COURT: What hasn’t gotten a fair airing is the hidden influence of the corporation over the culture and the way that corporations work consciously to turn the public against every countervailing power that has a chance to limit the corporation’s influence.

For instance, it may be some years since you read the Powell memo. That was a memo written by Lewis Powell in 1971, one year before he was appointed by Richard Nixon to the Supreme Court. He was a corporate lawyer representing Phillip Morris. His firm was Hunton Williams.

He wrote a memo to the U.S. Chamber of Commerce and said that the reformers at the time had been making corporations out as the bad guys, and it was time that the business community turned the tables. He laid out a blue print for the last 30 years.

Powell said that it is remarkable how corporations which sponsor the media through advertisements, pay taxes which pay for college campuses, haven’t effectively stifled criticism of the corporation.

He lays out a plan that targets the campus, the media and the politicians. He laid out a blueprint for the whole growth of corporate think tanks, publishing houses and propaganda machines. We quote it extensively in the book. He says in 1971 no politician wants to be associated with a corporate executive. They are running to the consumer reformers and the environmentalists. We have to change that by playing hardball and taking out those politicians that don’t listen to us. Everything that was said in that memo was carried out by the Chamber of Commerce over the next thirty years. In 1972, the Business Roundtable grew up, which was an association of corporate executives to further accomplish those goals.

And all of those goals were not about commercial advances. They were about cultural control — limiting the criticism of the corporation and promoting the philosophy of the corporation. By the early 1980s, the end of the Carter administration, the corporations had reasserted control. The Heritage Foundation, Cato, American Enterprise Institute were up and running. And largely they have controlled discourse ever since.

CCR: There is a picture of a puppeteer on the cover. Is the implication that the corporation is like a puppeteer — that they are controlling society and we don’t see it?

COURT: It’s the institution. The corporate institution is transmitting values that are greater than any individual. If you look around today all of the abuses of the Wall Street bubbles are being blamed on greedy individuals. Greenspan says it is about infectious greed.

That is not all it’s about. It is about an institution that says the corporation is greater than the individual, that the market is equal to the society, and a free market, where corporations aren’t regulated, that’s the equivalent of having a free society.

The logic, tactics and assumptions of corporate power outlive any executive. Corporate culture has also had a tremendous impact on the workers inside the workplace. Workers have learned over the last 20 years that the corporation is more important than the person, that in order to serve the corporation, one must give up one’s future employment rights through these anti-competition agreements, to give your intellectual property to the corporation. Workers know that you are being watch in the corporate workplace — your e-mails will be monitored, your voice mail will be listened to, there is no privacy in the workplace.

The public swallows to some degree the loss of privacy. If you want to make a phone call on the corporation’s dime, you can be prosecuted. There is no respect for dissent in the corporation. In the 1990s, there was a shift from a view by CEOs of a stakeholder system — where community, labor and consumer were respected — to a view where CEOs demanded tremendous loyalty to the corporation.

Whole professions — lawyers, accountants — have been asked to put the corporate interest about those of the public interest. And they have done this, and that is why we have had such widespread abuses.

CCR: You are not opposed to corporations, you are opposed to for profit corporations?

COURT: I’m not opposed to for profit corporations if they compete and don’t cheat. I’m opposed to corporations getting together and trying to influence the cultural life of a democratic society.

CCR: So, they should not be allowed to lobby, for example?

COURT: Well, corporations that spend money on lobbying and influencing politics should be exposed and ostracized. There needs to be some competition based on respect for the culture. And we won’t get there until we have a debate on the corporation’s role in society.

CCR: But we have had the debate and it is ongoing. Michael Moore, who wrote an introduction to your book, and sold millions of copies of his book, Stupid White Men, which deals with this issue. Arianna Huffington’s book, Pigs at the Trough, has sold more than 150,000 copies. Who says we’re not having a debate?

COURT: Did anybody talk about corporate control of the culture, or were they talking about the outrageous abuses of politicians and their ties to corporations?

In the case of Huffington’s book, a number of rogue executives. I would argue that the critique is about the individuals in Pigs at the Trough and the Stupid White Men, but not about the way the institution itself has taken power in our culture in the last 20 to 30 years. I liked those books very much. They opened the eyes of the public to the greed of individual executives and politicians . But when you get past the individuals to the assumptions, logic and tactics, those have been far less explored.

CCR: In the book, you talk about Robert Putnam’s book Bowling Alone. What’s the point there?

COURT: I discuss how people have turned away from civic activity toward commercial activity. One of the real symptoms of a corporateered society is that the efforts that people give to their communities evaporate because they are overwhelmed with commercial values.

I agree with Putnam’s main point: people are moving away from civic values, from civic involvement, because they are turning inward toward television. I see the generational values being largely influenced by the corporations. I try and show that Putnam’s findings, while they don’t go as far as I go, lead to the same conclusion.

CCR: Are you saying that corporations represent the true axis of evil, that we must defeat it before we can build a truly representative democracy?

COURT: No. We have to look at corporations for what they do commercially to help and for what they do culturally that takes away from us. We have to have a standard for judging good and bad corporations on a cultural basis. It can’t all be about stock value or honesty in accounting. When we can create some kind of competition based on respect for cultural life of our society, then we can start to have the good corporations pressure the bad corporations to change their ways.

There are good corporations that do bad things and bad corporations that do good things. But we don’t have an adequate yardstick to judge their influence over ethical custom and the rule of law.

CCR: Do corporations have too much power?

COURT: They have far too much power, both culturally and economically.

CCR: How would you define a limit?

COURT: There are two sets. First, we have to create more economic competition. Six companies control almost every major industry in America. On the cultural front, we can start to set certain limits. No corporations in the classrooms. The student movement is beginning to set limits on sweatshop labor. Keep corporations out of our private lives. Keep corporations out of the electoral process.

CCR: Is there any evidence on the ground that people are heeding this call?

COURT: There is the beginning of an awakening. There is true outrage over privacy violations, hyper-commercialization, on HMOs, on gas price gougers. Even naming rights has met resistance. In Boston, the community shut down an effort to name a subway stop after a company.

There is a lot of energy, but it hasn’t been focused.
Jamie Court
Foundation for Taxpayer and Consumer Rights
1750 Ocean Park Boulevard, Suite 200
Santa Monica, CA 90405
Telephone: (310) 392-0522 x327
E-mail: [email protected]

Consumer Watchdog
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Providing an effective voice for American consumers in an era when special interests dominate public discourse, government and politics. Non-partisan.

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