WEBVTT - How Corporate Personhood Works

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<v Speaker 1>Welcome to Stuff you Should Know from House Stuff Works

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<v Speaker 1>dot com. Hi, and welcome to the podcast. Hi everybody, Chuck,

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<v Speaker 1>how are you doing good? That's Chuck by the way,

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<v Speaker 1>and I'm Josh. We're going to be your guys through

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<v Speaker 1>the next fifteen minutes of total mind expansion. Tell you

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<v Speaker 1>some stuff you should know. Yeah, and this one is

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<v Speaker 1>actually pretty cool, uh, the one we're doing today. I

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<v Speaker 1>guess they're all pretty cool. We we like to make

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<v Speaker 1>them cool. But this one is something that probably a

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<v Speaker 1>lot of your friends won't know about, so you can

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<v Speaker 1>wow them at the next cocktail party, the next kid's

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<v Speaker 1>birthday party, any kind of party. That's very succinct. Chuck, Um, Chuck.

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<v Speaker 1>Let's talk about legal fiction. Okay, okay, you want me

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<v Speaker 1>to talk about You're not talking about John Grisham. No, no,

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<v Speaker 1>who No, sorry, that was Creon that died. I think

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<v Speaker 1>John Grisham is alive and well, yes, and he's an

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<v Speaker 1>attorney and a novelist, right, yeah, and he's pretty good too.

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<v Speaker 1>But we're not talking about Christam's work. Um, we're talking

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<v Speaker 1>about it's actually a it's a it's a legal term

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<v Speaker 1>that's used basically to describe, uh, anytime a court says

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<v Speaker 1>something is true that's not true, just for the sake

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<v Speaker 1>of moving things along, keeping things tightier. It's kind of

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<v Speaker 1>like if you and I were having a conversation, Chuck,

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<v Speaker 1>and I said, you know, um my uh my right

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<v Speaker 1>jab is a million times better than yours, and we

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<v Speaker 1>were kind of debating that rather than stopping and saying

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<v Speaker 1>that that's hyperbole. I don't agree with that. You're just

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<v Speaker 1>gonna kind of nod and we're gonna stick to the

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<v Speaker 1>meat of it, right, Or we should punch each other

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<v Speaker 1>and we can find out that. It's one way to

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<v Speaker 1>find out. Yeah, although as everyone knows, we're not big fighters. No,

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<v Speaker 1>I would miss your face, that's how bad I am.

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<v Speaker 1>It would be clumsy. Uh. Well, let me give you

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<v Speaker 1>an example of legal fiction specifically, Um, there's uh, there's

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<v Speaker 1>this thing called a renunciation of a legacy. If you

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<v Speaker 1>heard of this, No, So basically, let's say I find

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<v Speaker 1>out that I'm in your will and I'm just like

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<v Speaker 1>that Chuck, he's far too generous. I can't accept this.

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<v Speaker 1>You know, maybe if I if I take myself out

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<v Speaker 1>of his will, uh, he will um go ahead and

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<v Speaker 1>give that money to uh the poor or orphans or

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<v Speaker 1>something like that. Okay, Um, the thing is is you're

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<v Speaker 1>sticking to your guns. I'm in your will. You'll love me,

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<v Speaker 1>You'll want to leave me some money. There's something I

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<v Speaker 1>can do. I can renounce that legacy. I go to

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<v Speaker 1>the court and the court says, Okay, you're dead. You

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<v Speaker 1>have the chuck has outlived you. As far as this

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<v Speaker 1>will is concerned, I've predeceased you, which means that any

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<v Speaker 1>claim I could have is no one void since I'm

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<v Speaker 1>no longer alive. You see what I'm saying. That's legal fiction.

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<v Speaker 1>They as far as that will concerned, I'm dead, You're

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<v Speaker 1>still alive. Interesting, isn't that interesting? Is there's another piece

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<v Speaker 1>of legal fiction called corporate person That's right, this is

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<v Speaker 1>the meat of what we're talking about. Indeed, Um, corporate

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<v Speaker 1>personhood is exactly what it sounds like. Uh. There is

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<v Speaker 1>a legal custom, not just in the US, but it

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<v Speaker 1>dates back to the Romans. I believe the ancient Romans,

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<v Speaker 1>not today's Romans. The original Romans um where a corporation

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<v Speaker 1>which is really just a pool of investors money. That's

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<v Speaker 1>that's that's taken together and used to conduct business. Is

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<v Speaker 1>it's considered an actual artificial person under the law. Yeah,

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<v Speaker 1>that that this is kind of blew me away me too,

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<v Speaker 1>to be honest. Yeah, there's this guy named Tom Hartman,

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<v Speaker 1>um who I heard years ago on MPR talking about this,

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<v Speaker 1>and he wrote this great book, um, and it's worth

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<v Speaker 1>a read. I can't remember what it's called right now.

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<v Speaker 1>I've got it written down on one of my notes

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<v Speaker 1>that I can't find. But um, he turned me onto this.

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<v Speaker 1>He has this radio show out west and he is

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<v Speaker 1>very much against corporate personhood and a lot of people are.

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<v Speaker 1>Here's why corporations if you treat them as a person. Well,

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<v Speaker 1>our punitive legal system, chuck. That keeps us from you know,

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<v Speaker 1>stabbing old ladies for their purses or you know, just

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<v Speaker 1>walking into grocery stores and opening up cash registers. There's

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<v Speaker 1>a little thing called prison. Sure, there's also a thing

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<v Speaker 1>called the gas chamber, the electric chair, the hangman's gallows.

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<v Speaker 1>There is punishment out there for our actions and these

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<v Speaker 1>these this punishment is designed to keep us from crossing

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<v Speaker 1>that line from upstanding citizen to you know, anarchistic criminal. Um.

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<v Speaker 1>And and so we don't do things in large part

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<v Speaker 1>because there's prison. There's consequences if not, I would be

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<v Speaker 1>hitting old ladies over the head every day. Who wouldn't. Exactly,

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<v Speaker 1>it's prison keeps our society intact. I'm just as that. So, Um,

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<v Speaker 1>with the corporation, you have to kind of look at it.

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<v Speaker 1>Since it's an artificial person, you have to look at

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<v Speaker 1>it as a superhuman person too. It doesn't need food,

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<v Speaker 1>doesn't need water. You can't put it in prison. It

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<v Speaker 1>doesn't feel pain, right, Um, it has no life space.

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<v Speaker 1>It's it's limitless. As long as there's those shares are

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<v Speaker 1>out there and it's making a profit, a corporation can

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<v Speaker 1>live indefinitely. Um. So this is why it's kind of

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<v Speaker 1>a sticky discussion. This is why people like Tom Hartman

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<v Speaker 1>are very much against corporate personhood and the whole thing. Actually, um,

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<v Speaker 1>this has been going on for a while. Jefferson, Thomas

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<v Speaker 1>Jefferson was very much an advocate of putting UH life

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<v Speaker 1>lifespan limits restrictions, including UH lifespan limits on corporations in

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<v Speaker 1>the constitution. And he failed. Yeah, he failed on each count. Yeah.

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<v Speaker 1>So actually we almost had a constitutional provision that said

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<v Speaker 1>corporations can only last this long. And there's this limitation

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<v Speaker 1>because Jefferson in his usual capacity saw far into the

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<v Speaker 1>future and all the problems that this random aspect of

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<v Speaker 1>you know, American society or global society will have. He

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<v Speaker 1>was a pretty insightful dude, and he was absolutely right.

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<v Speaker 1>We've run into some serious problems with the concept of

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<v Speaker 1>corporate personhood, right, and I know the Fourteenth Amendment is

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<v Speaker 1>kind of where it all comes together. Yeah. Actually, the

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<v Speaker 1>irony of the whole thing is that rather than being

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<v Speaker 1>restricted by the Constitution, corporations were actually detected by the

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<v Speaker 1>Constitution as artificial people under the Fourteenth Amendment, which I

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<v Speaker 1>know you pointed out. The last word of the Fourteenth

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<v Speaker 1>Amendment equal rights protection under the law to every person.

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<v Speaker 1>Every person. That is a very significant word, because of

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<v Speaker 1>course corporations are artificial persons, right right. So, um in

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<v Speaker 1>very rapid succession that was I think eighteen sixty eight

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<v Speaker 1>when that was ratified the Fourteenth Amendment. Very quickly, a

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<v Speaker 1>um A court case came to the Supreme Court for

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<v Speaker 1>decision that had to do with applying that to corporations.

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<v Speaker 1>Santa Clara County, the Southern Pacific Railroad, and if you

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<v Speaker 1>think about it, basically applying a constitutional amendment that protected

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<v Speaker 1>freed slaves, newly freed slaves, and trying to get it

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<v Speaker 1>to apply to corporations. And I didn't have the pinnacle

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<v Speaker 1>of tastelessness. Ye. So yeah, Well, nineteenth century Robert Barons

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<v Speaker 1>weren't above anything. And one of the things they did

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<v Speaker 1>was in that case, the Union Pacific case. Um, they

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<v Speaker 1>they finally applied the the Supreme Court, I can't remember

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<v Speaker 1>who was at the head at the time basically said

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<v Speaker 1>you know what, we realized what this case is saying.

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<v Speaker 1>And ultimately what the case did was it upheld the

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<v Speaker 1>longstanding custom that it was up to a state to

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<v Speaker 1>tax and to charter corporations. And that's still going on today,

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<v Speaker 1>like as UH President elect Obama excruciatingly pointed out. And

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<v Speaker 1>I think the second debate, Delaware is a big haven

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<v Speaker 1>for credit card companies, which is where the vice president

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<v Speaker 1>elect hails from, because of the tax benefits. Correct. Yeah,

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<v Speaker 1>it's set up in a certain way so that credit

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<v Speaker 1>card companies benefit the most from that state. The same

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<v Speaker 1>Florida as a tax haven for I think real estate

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<v Speaker 1>businesses or something like that. I think Florida doesn't have

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<v Speaker 1>an income tax, is that right? Don't They don't have

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<v Speaker 1>an income tax. Yeah. No, they just operate on borrowed time. Right.

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<v Speaker 1>I'm moving to Florida. Yeah, same here, buddy. UM. So,

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<v Speaker 1>in this case, Santa Clara versus Southern Pacific Union Pacific,

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<v Speaker 1>one of the two Southern Southern Pacific thank you. Um

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<v Speaker 1>that was established. But here's where everything just gets totally hinky.

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<v Speaker 1>I know, and I couldn't believe this. Yeah, the the

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<v Speaker 1>court reporter for the Supreme Court wrote a little head

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<v Speaker 1>note which is exactly what sounds like. It's a note

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<v Speaker 1>at the head of the briefs of the ruling, and

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<v Speaker 1>it's said, court decides that under the fourteenth Amendment, UH,

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<v Speaker 1>corporations are afforded detection equal protection under the law. And

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<v Speaker 1>that was it, right. But where it gets hanky, as

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<v Speaker 1>you say, is that the Chief Justice did not say this. No,

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<v Speaker 1>he actually wrote a personal note that was uncovered later

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<v Speaker 1>on that said that the Court specifically did not rule

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<v Speaker 1>on that. I knew that that's what the case came

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<v Speaker 1>down to, written down, prepared to do that, right, just

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<v Speaker 1>written down by the court the court reporter who turned

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<v Speaker 1>out to be I believe an ex president, which I

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<v Speaker 1>this is that a step back or not? You know,

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<v Speaker 1>there's a long tradition of high finance, of huge industry

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<v Speaker 1>putting their own people into public government. And as somebody

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<v Speaker 1>said recently, you know, um Paulson's from Goldman Sacks, and

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<v Speaker 1>somebody said recently, there is a revolving door between private

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<v Speaker 1>and public service, very linked. And I apparently this was

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<v Speaker 1>been going on for a very long time. Well it

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<v Speaker 1>worked in this case. It did because since it was

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<v Speaker 1>a head note, it wasn't law, but it did set

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<v Speaker 1>precedent right, And I don't understand how that works, to

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<v Speaker 1>be honest. Well, somebody can say, look, it's written right

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<v Speaker 1>here and and you can use it as part of

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<v Speaker 1>your argument, and they did. I think two years later

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<v Speaker 1>there was another case, I think another railroad case or something.

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<v Speaker 1>They pointed to it, and the Supreme Court finally ruled

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<v Speaker 1>and said, yes, corporations have equal protection under the laws,

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<v Speaker 1>artificial person, because this schmuck wrote it down, because he

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<v Speaker 1>wrote it down at the head note of a ruling

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<v Speaker 1>that had nothing to do with Yeah, I had no

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<v Speaker 1>idea that the court reporter was such a position of power.

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<v Speaker 1>Well apparently no one else did either, But yeah, so

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<v Speaker 1>that's how we've gotten to the point where corporations have

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<v Speaker 1>the same protection as you, chuck. The cops can't just

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<v Speaker 1>come into your house and start looking around and the

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<v Speaker 1>hopes that they find something incriminating because you're a person

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<v Speaker 1>and you're protected under i think the Fourth Amendment from

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<v Speaker 1>unreasonable searchers. So to our corporations, yeah, um, there was

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<v Speaker 1>a case in the seventies where ocean inspectors, you know,

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<v Speaker 1>they could just walk into a corporate headquarters business something

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<v Speaker 1>like that for inspection and yeah, looking for violations, that

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<v Speaker 1>kind of thing. Somebody sued that, you know, the corporations

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<v Speaker 1>enjoy the same protection under the law in the Fourth

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<v Speaker 1>Amendment and one. So now if you want to find violations,

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<v Speaker 1>you have to make an appointment with the you know,

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<v Speaker 1>a manager the store. Um, that one of the corporate officers, right,

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<v Speaker 1>And I know, uh, I don't think this applies for

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<v Speaker 1>food restaurant inspections because I used to work in restaurants

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<v Speaker 1>and remember we were always caught very much off guard

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<v Speaker 1>when the health inspector showed up. Yeah yeah, um, I

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<v Speaker 1>don't know why that would be any different, but yeah,

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<v Speaker 1>well maybe just we'll take a restaurant to file a

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<v Speaker 1>suit for it to happen. Maybe so maybe so, um,

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<v Speaker 1>there's also a really sterling example. I love Nike. Nike

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<v Speaker 1>um as we all know, as is common knowledge now, uh,

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<v Speaker 1>Nike was running some really abuse of corporate practices overseas

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<v Speaker 1>and it's one word for him. Definitely in the nineties,

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<v Speaker 1>this is not widely known. I mean a certain subversive

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<v Speaker 1>section of the of society understood this right. People that

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<v Speaker 1>did their homework right. Most people didn't really walk around going, oh,

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<v Speaker 1>Nike run sweatshops over and you know, I think Malaysia

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<v Speaker 1>UM one M I T student actually managed to break

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<v Speaker 1>it into the public view. And uh, I can't remember.

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<v Speaker 1>Do you remember when this was when Nike would allow

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<v Speaker 1>you to have anything you want stitched on their shoes.

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<v Speaker 1>I don't remember that, but it was in two thousand one.

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<v Speaker 1>You could get something stitched, a personal message or whatever

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<v Speaker 1>your name something yeah, yeah, And this guy from M

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<v Speaker 1>I T wanted the word sweatshop embroidered on his Nikes yeah,

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<v Speaker 1>and they said no. So he forwarded the email around

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<v Speaker 1>and in a very short order got picked up by

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<v Speaker 1>some of the major news services and people started investigating

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<v Speaker 1>Nike's practices more and more. Well, Nike, it started this

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<v Speaker 1>huge pr blitz where they said no, that's absolutely not true.

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<v Speaker 1>This is this is completely unfounded. We treat all of

0:13:19.200 --> 0:13:23.000
<v Speaker 1>our employees very well. I mean, just lie after lie

0:13:23.200 --> 0:13:28.080
<v Speaker 1>after lie. Finally, somebody went to Malaysia some of these countries,

0:13:28.240 --> 0:13:31.120
<v Speaker 1>these developing countries where Nike was running these sweatshops and

0:13:31.240 --> 0:13:35.079
<v Speaker 1>filmed the practices. Somebody made a pretty decent documentary out

0:13:35.080 --> 0:13:36.880
<v Speaker 1>of I can't remember what it was called, but apparently

0:13:36.920 --> 0:13:41.040
<v Speaker 1>the living conditions were important. Factory workers were um, living

0:13:41.080 --> 0:13:44.360
<v Speaker 1>in shannytown's next to the factory, and the roofs were

0:13:44.440 --> 0:13:47.880
<v Speaker 1>made of discarded souls, like the stuff they used to

0:13:47.960 --> 0:13:50.520
<v Speaker 1>for the souls of the Nike. Um. You know, it's

0:13:50.520 --> 0:13:54.240
<v Speaker 1>just really bad business practices. So finally Nike is forced

0:13:54.240 --> 0:13:59.840
<v Speaker 1>to say, okay, fine, you know that's right. Was brought

0:13:59.840 --> 0:14:03.040
<v Speaker 1>by man in California. And what was Nike's defense. Uh,

0:14:03.240 --> 0:14:06.679
<v Speaker 1>Nike's defense was, and this is just unbelievable, was that

0:14:06.840 --> 0:14:10.000
<v Speaker 1>because they are granted the same righteous people, they are

0:14:10.080 --> 0:14:16.440
<v Speaker 1>allowed to lie under the uh fourth Amendment first freedom

0:14:16.480 --> 0:14:20.880
<v Speaker 1>of speech. Yeah, so the sadvertising, you can't be sued

0:14:20.920 --> 0:14:23.640
<v Speaker 1>for it because you're allowed to lie because your corporation

0:14:23.720 --> 0:14:26.720
<v Speaker 1>and an artificial person didn't didn't really hold water though

0:14:27.040 --> 0:14:30.880
<v Speaker 1>it didn't and uh, but no one ever ruled on it. Well,

0:14:30.880 --> 0:14:34.040
<v Speaker 1>it's because they settled. Nike settle smartly. Yeah, and so

0:14:34.080 --> 0:14:36.320
<v Speaker 1>they I think showed out like fifteen million or something

0:14:36.360 --> 0:14:38.520
<v Speaker 1>like that. It's actually just one point five unless you're

0:14:38.560 --> 0:14:41.880
<v Speaker 1>decimal point was off. It's terrible. Um, well it did

0:14:41.920 --> 0:14:46.200
<v Speaker 1>go to some sort of labor protection group. One point

0:14:46.240 --> 0:14:47.720
<v Speaker 1>five million. You know, that's not a lot. It's not

0:14:47.760 --> 0:14:50.360
<v Speaker 1>although that will buy you a couple of houses in Malaysia,

0:14:50.400 --> 0:14:54.440
<v Speaker 1>I imagine. Um, But the the the fact is that

0:14:54.600 --> 0:14:57.360
<v Speaker 1>still the jury is still out whether or not a

0:14:57.400 --> 0:15:00.440
<v Speaker 1>corporation can lie the fact that. But that's a how

0:15:00.920 --> 0:15:04.000
<v Speaker 1>this whole thing has been established over time, it's been

0:15:04.240 --> 0:15:07.080
<v Speaker 1>kind of um whittled away and added to and taken

0:15:07.160 --> 0:15:11.120
<v Speaker 1>from the the The I guess happy ending to this

0:15:11.200 --> 0:15:15.160
<v Speaker 1>story is Nike was finally put in such a bad

0:15:15.280 --> 0:15:19.960
<v Speaker 1>light that they wrote a lengthy report on the working

0:15:20.000 --> 0:15:23.920
<v Speaker 1>conditions of their factories, all of them, and basically, you know,

0:15:24.040 --> 0:15:27.560
<v Speaker 1>self reported that they were mistreating their workers overseas and

0:15:27.600 --> 0:15:31.160
<v Speaker 1>clean up their acts. So yeah, freedom, freedom of speech

0:15:31.160 --> 0:15:34.320
<v Speaker 1>goes both ways. And in our ligitious society, it's good

0:15:34.320 --> 0:15:37.240
<v Speaker 1>to have good lawyers if corporations of the same rights

0:15:37.240 --> 0:15:39.680
<v Speaker 1>as you. It's a shame it took that kind of

0:15:39.720 --> 0:15:42.720
<v Speaker 1>action though, for Nike to to realize that, you know,

0:15:42.760 --> 0:15:46.680
<v Speaker 1>the greed that was going on. That's just my opinion.

0:15:47.000 --> 0:15:49.440
<v Speaker 1>I agree with you. I don't know who wouldn't. Well,

0:15:49.440 --> 0:15:53.080
<v Speaker 1>thanks for listening. Go tell everybody that all corporations have

0:15:53.240 --> 0:15:56.600
<v Speaker 1>the same constitutional protections of you. Just do it. If

0:15:56.640 --> 0:15:59.880
<v Speaker 1>they exactly and if they don't now they soon will. Well.

0:15:59.880 --> 0:16:02.640
<v Speaker 1>You can read all about corporations having the same rights

0:16:02.680 --> 0:16:05.320
<v Speaker 1>as you by just typing in a few magic keywords

0:16:05.320 --> 0:16:10.920
<v Speaker 1>in our search bar at how stuff works dot com.

0:16:10.960 --> 0:16:13.480
<v Speaker 1>For more on this and thousands of other topics, visit

0:16:13.520 --> 0:16:16.760
<v Speaker 1>how stuff works dot com. Let us know what you think.

0:16:17.040 --> 0:16:22.480
<v Speaker 1>Send an email to podcast at how stuff works dot com.