Stateless Corporations

October 24, 2011


On July 20, 2011, Ralph Nader wrote an article in the Chicago Tribune arguing that while the Supreme Court granted corporations new rights as though they were loyal citizens of the US, corporations have shown little to none of the same loyalty back.

Back in 1996, he put his suspicions to the test.  He wrote to 100 of the largest US corporations, urging CEOs to lead the company in the pledge of allegiance at their next shareholders’ meetings.

Arco, Amoco and Delta refused. Allstate claimed it would not be appropriate. Busch, Aetna, Dayton-Hudson and 3M were concerned about offending global participants.  Hewlitt-Packard, Kodak and Caterpillar asserted it would not be productive. Boeing declared it unnecessary.  Finally, Coca-Cola, AT&T and Bristol-Myers said they might consider it.

“(D)emanding recitations of allegiance—in language that may not reflect the beliefs of all persons present—is actually contrary to the principles on which our democracy was founded,” thundered Dick Huber of Aetna.

Allstate professed that the pledge of allegiance would be “inappropriate at a business meeting.”

August Busch of Anheuser-Busch declared, “While our company headquarters remains in St. Louis, we are a global company.” The company’s shareholders’ meetings, he went on, “include many international employees, shareholders, representatives and visitors.”

Defense contractor Hewlett-Packard maintained that a pledge of allegiance to the flag would “not be a productive use of time.” Similarly, Boeing contended, “It is the opinion of the board that it is not necessary to institute the practice you propose.” Two years ago Boeing’s CEO Phil Condit expressed his hope that the world twenty years hence would no longer see Boeing as an American company but a global one.

Bristol-Myers found the suggestion of a pledge of allegiance “an interesting one which we have not considered before. … We will have to carefully consider whether the proposal advances the best interests of the company, its shareholders and employees.”

Calling itself an “international company,” Coca-Cola stated, “If a share owner were to propose that we pledge allegiance, we would certainly consider it in the context of our global business.” Kodak cited global conflicts of interest, wishing to “maintain a global perspective to compete effectively in a global economy.” Ford Motor does “not believe that the concept of ‘corporate allegiance’ is possible.” 3M said it would be “disrespectful” to other countries where it operates “to ask them to be bound by a pledge of allegiance to a country not their own.” But to what country does 3M belong?

On another occasion, when challenged by the then US Secretary of Labor Robert Reich, Alex Trottman, former CEO of Ford, whether he felt that Ford had an obligation to create jobs in America, Alex Trottman replied, “Ford isn’t even an American company, strictly speaking.  We’re global.  We’re investing around the world.  Forty percent of our employees already live and work outside the United States and that’s rising.  Our managers are multinational.  We teach them to think and act globally.”

However, when Ford got into trouble during the global financial crisis and asked the government for a $9 billion line-of-credit and a $5 billion loan from the Energy Department, it suddenly recalled that it really was a patriot.

Outside the United States, the story is the same.

For example, when Rolf Breuer, head of the Bundesverband deutscher Banken, the private-sector banking federation, was asked whether German banks should support the German economy even if it came at the expense of shareholders, he answered primly, “We do not deny our roots.  We stick to our history and tradition.  But the majority of our customers, the majority of our employees, the majority of our earnings are not German.  So why should we be the German icon?”

Even Chinese companies are no longer parochial.  Lenovo is a Chinese computer-maker that went global in 2005 and two years later squeezed into 499th place in the Fortune 500 with worldwide revenues of $16.8 billion.  “We are proud of our Chinese roots,” said Yang Yuanqing, Lenovo’s chairman, but, he continued, “we no longer want to be positioned as a Chinese company.  We want to be a truly global company.”  True to his word, Lenovo has no headquarters in China or anywhere else for that matter.  Instead, meetings of senior managers rotate among its offices around the world, the firm’s global marketing department is in Bangalore, and it counts ten nationalities among its top twenty executives.  Currently, Yang Yuanqing says he has based himself in North Carolina to deepen his appreciation of American culture.

It was Thomas Jefferson who said that, “Merchants have no country,” yet we keep fooling ourselves that they are loyal citizens, despite all the evidence to the contrary.

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