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How Corporate Personhood Works · Stuff You Should Know

• 0:01
  Speaker 1: Welcome to Stuff you Should Know from House Stuff Works
• 0:04
  Speaker 1: dot com. Hi, and welcome to the podcast. Hi everybody, Chuck,
• 0:10
  Speaker 1: how are you doing good? That's Chuck by the way,
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  Speaker 1: and I'm Josh. We're going to be your guys through
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  Speaker 1: the next fifteen minutes of total mind expansion. Tell you
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  Speaker 1: some stuff you should know. Yeah, and this one is
• 0:22
  Speaker 1: actually pretty cool, uh, the one we're doing today. I
• 0:25
  Speaker 1: guess they're all pretty cool. We we like to make
• 0:27
  Speaker 1: them cool. But this one is something that probably a
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  Speaker 1: lot of your friends won't know about, so you can
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  Speaker 1: wow them at the next cocktail party, the next kid's
• 0:35
  Speaker 1: birthday party, any kind of party. That's very succinct. Chuck, Um, Chuck.
• 0:42
  Speaker 1: Let's talk about legal fiction. Okay, okay, you want me
• 0:46
  Speaker 1: to talk about You're not talking about John Grisham. No, no,
• 0:50
  Speaker 1: who No, sorry, that was Creon that died. I think
• 0:54
  Speaker 1: John Grisham is alive and well, yes, and he's an
• 0:56
  Speaker 1: attorney and a novelist, right, yeah, and he's pretty good too.
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  Speaker 1: But we're not talking about Christam's work. Um, we're talking
• 1:03
  Speaker 1: about it's actually a it's a it's a legal term
• 1:06
  Speaker 1: that's used basically to describe, uh, anytime a court says
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  Speaker 1: something is true that's not true, just for the sake
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  Speaker 1: of moving things along, keeping things tightier. It's kind of
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  Speaker 1: like if you and I were having a conversation, Chuck,
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  Speaker 1: and I said, you know, um my uh my right
• 1:25
  Speaker 1: jab is a million times better than yours, and we
• 1:28
  Speaker 1: were kind of debating that rather than stopping and saying
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  Speaker 1: that that's hyperbole. I don't agree with that. You're just
• 1:35
  Speaker 1: gonna kind of nod and we're gonna stick to the
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  Speaker 1: meat of it, right, Or we should punch each other
• 1:39
  Speaker 1: and we can find out that. It's one way to
• 1:41
  Speaker 1: find out. Yeah, although as everyone knows, we're not big fighters. No,
• 1:45
  Speaker 1: I would miss your face, that's how bad I am.
• 1:48
  Speaker 1: It would be clumsy. Uh. Well, let me give you
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  Speaker 1: an example of legal fiction specifically, Um, there's uh, there's
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  Speaker 1: this thing called a renunciation of a legacy. If you
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  Speaker 1: heard of this, No, So basically, let's say I find
• 2:01
  Speaker 1: out that I'm in your will and I'm just like
• 2:03
  Speaker 1: that Chuck, he's far too generous. I can't accept this.
• 2:07
  Speaker 1: You know, maybe if I if I take myself out
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  Speaker 1: of his will, uh, he will um go ahead and
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  Speaker 1: give that money to uh the poor or orphans or
• 2:16
  Speaker 1: something like that. Okay, Um, the thing is is you're
• 2:20
  Speaker 1: sticking to your guns. I'm in your will. You'll love me,
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  Speaker 1: You'll want to leave me some money. There's something I
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  Speaker 1: can do. I can renounce that legacy. I go to
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  Speaker 1: the court and the court says, Okay, you're dead. You
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  Speaker 1: have the chuck has outlived you. As far as this
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  Speaker 1: will is concerned, I've predeceased you, which means that any
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  Speaker 1: claim I could have is no one void since I'm
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  Speaker 1: no longer alive. You see what I'm saying. That's legal fiction.
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  Speaker 1: They as far as that will concerned, I'm dead, You're
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  Speaker 1: still alive. Interesting, isn't that interesting? Is there's another piece
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  Speaker 1: of legal fiction called corporate person That's right, this is
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  Speaker 1: the meat of what we're talking about. Indeed, Um, corporate
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  Speaker 1: personhood is exactly what it sounds like. Uh. There is
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  Speaker 1: a legal custom, not just in the US, but it
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  Speaker 1: dates back to the Romans. I believe the ancient Romans,
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  Speaker 1: not today's Romans. The original Romans um where a corporation
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  Speaker 1: which is really just a pool of investors money. That's
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  Speaker 1: that's that's taken together and used to conduct business. Is
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  Speaker 1: it's considered an actual artificial person under the law. Yeah,
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  Speaker 1: that that this is kind of blew me away me too,
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  Speaker 1: to be honest. Yeah, there's this guy named Tom Hartman,
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  Speaker 1: um who I heard years ago on MPR talking about this,
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  Speaker 1: and he wrote this great book, um, and it's worth
• 3:46
  Speaker 1: a read. I can't remember what it's called right now.
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  Speaker 1: I've got it written down on one of my notes
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  Speaker 1: that I can't find. But um, he turned me onto this.
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  Speaker 1: He has this radio show out west and he is
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  Speaker 1: very much against corporate personhood and a lot of people are.
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  Speaker 1: Here's why corporations if you treat them as a person. Well,
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  Speaker 1: our punitive legal system, chuck. That keeps us from you know,
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  Speaker 1: stabbing old ladies for their purses or you know, just
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  Speaker 1: walking into grocery stores and opening up cash registers. There's
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  Speaker 1: a little thing called prison. Sure, there's also a thing
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  Speaker 1: called the gas chamber, the electric chair, the hangman's gallows.
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  Speaker 1: There is punishment out there for our actions and these
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  Speaker 1: these this punishment is designed to keep us from crossing
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  Speaker 1: that line from upstanding citizen to you know, anarchistic criminal. Um.
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  Speaker 1: And and so we don't do things in large part
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  Speaker 1: because there's prison. There's consequences if not, I would be
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  Speaker 1: hitting old ladies over the head every day. Who wouldn't. Exactly,
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  Speaker 1: it's prison keeps our society intact. I'm just as that. So, Um,
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  Speaker 1: with the corporation, you have to kind of look at it.
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  Speaker 1: Since it's an artificial person, you have to look at
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  Speaker 1: it as a superhuman person too. It doesn't need food,
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  Speaker 1: doesn't need water. You can't put it in prison. It
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  Speaker 1: doesn't feel pain, right, Um, it has no life space.
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  Speaker 1: It's it's limitless. As long as there's those shares are
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  Speaker 1: out there and it's making a profit, a corporation can
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  Speaker 1: live indefinitely. Um. So this is why it's kind of
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  Speaker 1: a sticky discussion. This is why people like Tom Hartman
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  Speaker 1: are very much against corporate personhood and the whole thing. Actually, um,
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  Speaker 1: this has been going on for a while. Jefferson, Thomas
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  Speaker 1: Jefferson was very much an advocate of putting UH life
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  Speaker 1: lifespan limits restrictions, including UH lifespan limits on corporations in
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  Speaker 1: the constitution. And he failed. Yeah, he failed on each count. Yeah.
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  Speaker 1: So actually we almost had a constitutional provision that said
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  Speaker 1: corporations can only last this long. And there's this limitation
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  Speaker 1: because Jefferson in his usual capacity saw far into the
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  Speaker 1: future and all the problems that this random aspect of
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  Speaker 1: you know, American society or global society will have. He
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  Speaker 1: was a pretty insightful dude, and he was absolutely right.
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  Speaker 1: We've run into some serious problems with the concept of
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  Speaker 1: corporate personhood, right, and I know the Fourteenth Amendment is
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  Speaker 1: kind of where it all comes together. Yeah. Actually, the
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  Speaker 1: irony of the whole thing is that rather than being
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  Speaker 1: restricted by the Constitution, corporations were actually detected by the
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  Speaker 1: Constitution as artificial people under the Fourteenth Amendment, which I
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  Speaker 1: know you pointed out. The last word of the Fourteenth
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  Speaker 1: Amendment equal rights protection under the law to every person.
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  Speaker 1: Every person. That is a very significant word, because of
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  Speaker 1: course corporations are artificial persons, right right. So, um in
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  Speaker 1: very rapid succession that was I think eighteen sixty eight
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  Speaker 1: when that was ratified the Fourteenth Amendment. Very quickly, a
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  Speaker 1: um A court case came to the Supreme Court for
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  Speaker 1: decision that had to do with applying that to corporations.
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  Speaker 1: Santa Clara County, the Southern Pacific Railroad, and if you
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  Speaker 1: think about it, basically applying a constitutional amendment that protected
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  Speaker 1: freed slaves, newly freed slaves, and trying to get it
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  Speaker 1: to apply to corporations. And I didn't have the pinnacle
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  Speaker 1: of tastelessness. Ye. So yeah, Well, nineteenth century Robert Barons
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  Speaker 1: weren't above anything. And one of the things they did
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  Speaker 1: was in that case, the Union Pacific case. Um, they
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  Speaker 1: they finally applied the the Supreme Court, I can't remember
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  Speaker 1: who was at the head at the time basically said
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  Speaker 1: you know what, we realized what this case is saying.
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  Speaker 1: And ultimately what the case did was it upheld the
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  Speaker 1: longstanding custom that it was up to a state to
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  Speaker 1: tax and to charter corporations. And that's still going on today,
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  Speaker 1: like as UH President elect Obama excruciatingly pointed out. And
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  Speaker 1: I think the second debate, Delaware is a big haven
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  Speaker 1: for credit card companies, which is where the vice president
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  Speaker 1: elect hails from, because of the tax benefits. Correct. Yeah,
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  Speaker 1: it's set up in a certain way so that credit
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  Speaker 1: card companies benefit the most from that state. The same
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  Speaker 1: Florida as a tax haven for I think real estate
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  Speaker 1: businesses or something like that. I think Florida doesn't have
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  Speaker 1: an income tax, is that right? Don't They don't have
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  Speaker 1: an income tax. Yeah. No, they just operate on borrowed time. Right.
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  Speaker 1: I'm moving to Florida. Yeah, same here, buddy. UM. So,
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  Speaker 1: in this case, Santa Clara versus Southern Pacific Union Pacific,
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  Speaker 1: one of the two Southern Southern Pacific thank you. Um
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  Speaker 1: that was established. But here's where everything just gets totally hinky.
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  Speaker 1: I know, and I couldn't believe this. Yeah, the the
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  Speaker 1: court reporter for the Supreme Court wrote a little head
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  Speaker 1: note which is exactly what sounds like. It's a note
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  Speaker 1: at the head of the briefs of the ruling, and
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  Speaker 1: it's said, court decides that under the fourteenth Amendment, UH,
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  Speaker 1: corporations are afforded detection equal protection under the law. And
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  Speaker 1: that was it, right. But where it gets hanky, as
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  Speaker 1: you say, is that the Chief Justice did not say this. No,
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  Speaker 1: he actually wrote a personal note that was uncovered later
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  Speaker 1: on that said that the Court specifically did not rule
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  Speaker 1: on that. I knew that that's what the case came
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  Speaker 1: down to, written down, prepared to do that, right, just
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  Speaker 1: written down by the court the court reporter who turned
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  Speaker 1: out to be I believe an ex president, which I
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  Speaker 1: this is that a step back or not? You know,
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  Speaker 1: there's a long tradition of high finance, of huge industry
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  Speaker 1: putting their own people into public government. And as somebody
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  Speaker 1: said recently, you know, um Paulson's from Goldman Sacks, and
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  Speaker 1: somebody said recently, there is a revolving door between private
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  Speaker 1: and public service, very linked. And I apparently this was
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  Speaker 1: been going on for a very long time. Well it
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  Speaker 1: worked in this case. It did because since it was
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  Speaker 1: a head note, it wasn't law, but it did set
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  Speaker 1: precedent right, And I don't understand how that works, to
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  Speaker 1: be honest. Well, somebody can say, look, it's written right
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  Speaker 1: here and and you can use it as part of
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  Speaker 1: your argument, and they did. I think two years later
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  Speaker 1: there was another case, I think another railroad case or something.
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  Speaker 1: They pointed to it, and the Supreme Court finally ruled
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  Speaker 1: and said, yes, corporations have equal protection under the laws,
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  Speaker 1: artificial person, because this schmuck wrote it down, because he
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  Speaker 1: wrote it down at the head note of a ruling
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  Speaker 1: that had nothing to do with Yeah, I had no
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  Speaker 1: idea that the court reporter was such a position of power.
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  Speaker 1: Well apparently no one else did either, But yeah, so
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  Speaker 1: that's how we've gotten to the point where corporations have
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  Speaker 1: the same protection as you, chuck. The cops can't just
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  Speaker 1: come into your house and start looking around and the
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  Speaker 1: hopes that they find something incriminating because you're a person
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  Speaker 1: and you're protected under i think the Fourth Amendment from
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  Speaker 1: unreasonable searchers. So to our corporations, yeah, um, there was
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  Speaker 1: a case in the seventies where ocean inspectors, you know,
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  Speaker 1: they could just walk into a corporate headquarters business something
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  Speaker 1: like that for inspection and yeah, looking for violations, that
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  Speaker 1: kind of thing. Somebody sued that, you know, the corporations
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  Speaker 1: enjoy the same protection under the law in the Fourth
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  Speaker 1: Amendment and one. So now if you want to find violations,
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  Speaker 1: you have to make an appointment with the you know,
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  Speaker 1: a manager the store. Um, that one of the corporate officers, right,
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  Speaker 1: And I know, uh, I don't think this applies for
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  Speaker 1: food restaurant inspections because I used to work in restaurants
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  Speaker 1: and remember we were always caught very much off guard
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  Speaker 1: when the health inspector showed up. Yeah yeah, um, I
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  Speaker 1: don't know why that would be any different, but yeah,
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  Speaker 1: well maybe just we'll take a restaurant to file a
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  Speaker 1: suit for it to happen. Maybe so maybe so, um,
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  Speaker 1: there's also a really sterling example. I love Nike. Nike
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  Speaker 1: um as we all know, as is common knowledge now, uh,
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  Speaker 1: Nike was running some really abuse of corporate practices overseas
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  Speaker 1: and it's one word for him. Definitely in the nineties,
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  Speaker 1: this is not widely known. I mean a certain subversive
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  Speaker 1: section of the of society understood this right. People that
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  Speaker 1: did their homework right. Most people didn't really walk around going, oh,
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  Speaker 1: Nike run sweatshops over and you know, I think Malaysia
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  Speaker 1: UM one M I T student actually managed to break
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  Speaker 1: it into the public view. And uh, I can't remember.
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  Speaker 1: Do you remember when this was when Nike would allow
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  Speaker 1: you to have anything you want stitched on their shoes.
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  Speaker 1: I don't remember that, but it was in two thousand one.
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  Speaker 1: You could get something stitched, a personal message or whatever
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  Speaker 1: your name something yeah, yeah, And this guy from M
• 12:50
  Speaker 1: I T wanted the word sweatshop embroidered on his Nikes yeah,
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  Speaker 1: and they said no. So he forwarded the email around
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  Speaker 1: and in a very short order got picked up by
• 13:00
  Speaker 1: some of the major news services and people started investigating
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  Speaker 1: Nike's practices more and more. Well, Nike, it started this
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  Speaker 1: huge pr blitz where they said no, that's absolutely not true.
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  Speaker 1: This is this is completely unfounded. We treat all of
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  Speaker 1: our employees very well. I mean, just lie after lie
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  Speaker 1: after lie. Finally, somebody went to Malaysia some of these countries,
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  Speaker 1: these developing countries where Nike was running these sweatshops and
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  Speaker 1: filmed the practices. Somebody made a pretty decent documentary out
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  Speaker 1: of I can't remember what it was called, but apparently
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  Speaker 1: the living conditions were important. Factory workers were um, living
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  Speaker 1: in shannytown's next to the factory, and the roofs were
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  Speaker 1: made of discarded souls, like the stuff they used to
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  Speaker 1: for the souls of the Nike. Um. You know, it's
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  Speaker 1: just really bad business practices. So finally Nike is forced
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  Speaker 1: to say, okay, fine, you know that's right. Was brought
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  Speaker 1: by man in California. And what was Nike's defense. Uh,
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  Speaker 1: Nike's defense was, and this is just unbelievable, was that
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  Speaker 1: because they are granted the same righteous people, they are
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  Speaker 1: allowed to lie under the uh fourth Amendment first freedom
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  Speaker 1: of speech. Yeah, so the sadvertising, you can't be sued
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  Speaker 1: for it because you're allowed to lie because your corporation
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  Speaker 1: and an artificial person didn't didn't really hold water though
• 14:27
  Speaker 1: it didn't and uh, but no one ever ruled on it. Well,
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  Speaker 1: it's because they settled. Nike settle smartly. Yeah, and so
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  Speaker 1: they I think showed out like fifteen million or something
• 14:36
  Speaker 1: like that. It's actually just one point five unless you're
• 14:38
  Speaker 1: decimal point was off. It's terrible. Um, well it did
• 14:41
  Speaker 1: go to some sort of labor protection group. One point
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  Speaker 1: five million. You know, that's not a lot. It's not
• 14:47
  Speaker 1: although that will buy you a couple of houses in Malaysia,
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  Speaker 1: I imagine. Um, But the the the fact is that
• 14:54
  Speaker 1: still the jury is still out whether or not a
• 14:57
  Speaker 1: corporation can lie the fact that. But that's a how
• 15:00
  Speaker 1: this whole thing has been established over time, it's been
• 15:04
  Speaker 1: kind of um whittled away and added to and taken
• 15:07
  Speaker 1: from the the The I guess happy ending to this
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  Speaker 1: story is Nike was finally put in such a bad
• 15:15
  Speaker 1: light that they wrote a lengthy report on the working
• 15:20
  Speaker 1: conditions of their factories, all of them, and basically, you know,
• 15:24
  Speaker 1: self reported that they were mistreating their workers overseas and
• 15:27
  Speaker 1: clean up their acts. So yeah, freedom, freedom of speech
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  Speaker 1: goes both ways. And in our ligitious society, it's good
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  Speaker 1: to have good lawyers if corporations of the same rights
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  Speaker 1: as you. It's a shame it took that kind of
• 15:39
  Speaker 1: action though, for Nike to to realize that, you know,
• 15:42
  Speaker 1: the greed that was going on. That's just my opinion.
• 15:47
  Speaker 1: I agree with you. I don't know who wouldn't. Well,
• 15:49
  Speaker 1: thanks for listening. Go tell everybody that all corporations have
• 15:53
  Speaker 1: the same constitutional protections of you. Just do it. If
• 15:56
  Speaker 1: they exactly and if they don't now they soon will. Well.
• 15:59
  Speaker 1: You can read all about corporations having the same rights
• 16:02
  Speaker 1: as you by just typing in a few magic keywords
• 16:05
  Speaker 1: in our search bar at how stuff works dot com.
• 16:10
  Speaker 1: For more on this and thousands of other topics, visit
• 16:13
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• 16:17
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