The Candy Man Can
4 April 2001
I had an epiphany today. During negotiations to settle a dispute, the lawyer on the other side said to me, "You are looking at this from a moral perspective. I am looking at it from a legal perspective." Enough said.
All of my life I thought that moral and legal were bound together like DNA in the double helix. Despite all of the inequalities and injustices that exist in our country, the law was the great equalizer. Growing up Roman Catholic, I carried the Baltimore Catechism under my arm secure in knowing that God made the rules. It was a sin to break his commandments. Common law, even though passed down through a system of self-perpetuating authority, established a code of ethics and morals. At a young age, I understood injustice and learned that our system of laws did not ensure justice. Despite knowing that some of the most heinous acts of injustice were codified in statute, I believed that the fault lay in acts of omission and commission of fallible human beings. I found comfort in the knowledge that legal and moral were intertwined.
Now I know the truth. The law and morals are on two different planes. The legal system in the United States has advanced to such a state that the agents of corporations, often lawyers, do not have to pretend that what they do is moral. They remain aloof from morality. They know no shame. What they do, and their clients do, however, is legal.
Corporations have the status of artificial legal persons. From a legal standing corporations may own assets, enter into contracts, can be held responsible for committing crimes or torts and can initiate court actions. Most importantly, they have something we as individuals lack: limited liability. With that limited liability comes power, and power corrupts. The entity concept allows a corporation to be a corporate Sybil, so it can play Pontius Pilate in response to its alter ego's most egregious acts. Individuals who act in that way are called nuts. Corporations are called wise, because they have limited their liability.
When officers or agents of corporations overstep, by design or through negligence, the corporations disavow any knowledge of their actions. The individuals, of course, have lacked authority. A corporate officer could be on tape clearer than Marion Barry smoking crack and it won't do a bit of good. The directors go into Sergeant Schultz mode: "I know nothing". Directors of corporations also protect themselves through mechanisms such as the "business judgment rule." Directors are required to act in good faith and with reasonable belief that their conduct legally and legitimately assists in achieving the corporation's purposes. They must also exercise their honest business judgment after due consideration of what they reasonably believe to be the relevant factors. It is their job to throw morals out the window when it is in the corporation's interest. Directors also use the business judgment rule in form over substance when they enhance their own interest over the interest of their shareholders. Directors like to limit their personal liability by getting legal and third-party advice to support their decisions.
During the Middle Ages and the early years of the Industrial Revolution, the corporate form of ownership for business organizations was available only as a very special privilege. The 1886 Supreme Court decision in Santa Clara County v Southern Pacific Railroad Co held that corporations were "persons" thanks to the 14th Amendment to the constitution. This ruling, and several that followed it, accelerated the formation of capital and helped create the economic growth that the United States continues to prosper from today. But in the process we lost our soul. A deal is no longer a deal.
There was something about my conversation with the lawyer that took me back to a movie I loved watching with my kids. Based on an original work by Roald Dahl, "Willy Wonka and the Chocolate Factory," released in 1971, is one of the all-time great children's movies and remains to this day a personal favorite. Willy Wonka, played to perfection by Gene Wilder, is the eccentric owner of a candy factory. Wonka drives the children of his town into frenzy when he announces that he has hidden among his Wonka Bars five gold tickets. The five people who find them are promised a lifetime supply of chocolate. Before receiving their prize Wonka promises to personally escort each winner through the top-secret chocolate factory. At the end of the tour Charlie, a well-behaved boy from meager means, has survived while the other four have not. Charlie's grandpa, who accompanied Charlie on the tour, approaches Wonka whose demeanor has turned sour.
GRANDPA JOE: Mr. Wonka?
WONKA: I am extraordinarily busy, sir.
GRANDPA JOE: I just wanted to ask about the chocolate. The lifetime supply of chocolate, for Charlie. When does he get it?
WONKA: He doesn't.
GRANDPA JOE: Why not?
WONKA: Because he broke the rules.
GRANDPA JOE: What rules? We didn't see any rules, did we, Charlie?
WONKA: (In anger) Wrong, sir, wrong! Under Section Thirty-Seven B of the contract signed by him it states quite clearly that all offers shall become null and void if--and you can read it for yourself in this photostatic copy: "I, the undersigned, shall forfeit all rights, privileges, and licenses herein and herein contained, et cetera, et cetera..fax mentis incendium gloria culpum, et cetera, et cetera . . . memo bis punitor delicatum!" (The print fades to a miniscule font) It's all there, black and white, clear as crystal! You stole Fizzy Lifting Drinks. You bumped into the ceiling which now has to be washed and sterilized, so you get nothing! You lose! Good day, sir!
But this is a children's story. In children's stories morals do matter. The dialogue continues:
GRANDPA JOE: You're a crook! You're a cheat and a swindler! That's what you are. How can you do a thing like this? Build up a little boy's hopes and then smash all his dreams to pieces. You're an inhuman monster!
WONKA: I said, Good Day!
GRANDPA JOE: Come on, Charlie, let's get out of here. I'll get even with him if it's the last thing I ever do. If Slugworth wants a Gobstopper, he'll get one. (Long pause.)
CHARLIE: Mr. Wonka . . . (Charlie leaves the Gobstopper on Willy Wonka's desk.)
WONKA: So shines a good deed in a weary world. Charlie... my boy... (Exuberant) You won! You did it! You did it! I knew you would; I just knew you would. Oh, Charlie, forgive me for putting you through this. Please, forgive me.
"THE CANDY MAN CAN 'CAUSE HE MIXES IT WITH LOVE AND MAKES THE WORLD TASTE GOOD."
The candy man isn't a lawyer.
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