TT's Lost in Tokyo — by TokyoTom

Further to my preceding posts on corporate “free speech”, let me copy here for those interested some parts of a post by legal blogger/law prof Kimberly Hauser, and excerpts of the comment thread (emphasis added).

Says Hauser:

Justice Kennedy stated in the majority opinion: “If the First
Amendment has any force, it prohibits Congress from fining or jailing
citizens, or associations of citizens, for simply engaging in free
speech.”  Hold on, Emily Litella, since when is a corporation an
“association of citizens.”  The last time I checked, they were
state-chartered entities organized for the purpose of operating a
business, making a profit, and sheltering the organizers of the
business from personal liability.  I don’t think anyone would mistake
one for an “associations of citizens.”  This decision is a travesty on
a number of levels, but as I discussed with my classes today,
corporations are not humans.  Thomas Jefferson stated: “A bill of
rights is what the people are entitled to against
every government on earth, .  .  .”  These rights are human rights,
essential to our type of government.  They should not be cheapened by
their extension to corporations.  (I do understand that corporations
have been given “rights” over the years by the Supreme Court, starting
with Santa Clara County v. Southern Pacific Railroad Company.  I just don’t agree with that line of decisions.  And while I agree with Stevens’s Dissent in Citizens, I don’t agree with his adherence to the “corporations are people too” position.)

From the comment thread:

… The root of the problem is that corporations are divorced from their
owners, who have been given a grant of limited liability for the risks
they shift to society, a cloak of anonymity by which they can behave
irresponsibility and seek favors from government, as well as unlimited
lives and deep pockets to make persistent efforts to corrupt.

… You mentioned the Santa Clara case as the start of
corporate personhood, without mentioning that it was sleight of hand
and not a real ruling on the subject. That’s exactly what the clerk was
counting on, and why it worked. Just thought I’d tell the rest of the
story.

Actually, long before the Santa Clara case, the legal fiction of
corporations as people was established to include five legal rights—the
right to a common treasury or chest (including the right to own
property), the right to a corporate seal (i.e., the right to make and
sign contracts), the right to sue and be sued (to enforce contracts),
the right to hire agents (employees) and the right to make by-laws
(self-governance). They were given the rights they needed to do the
only thing they were designed to do. Conduct business.

They are amoral, profits and self interest as highest priority are
mandated by law to be part of their design, and they have limited
liability. This gives them the “personality” of a sociopath, and makes
them unsuited by design to using free speech responsibly.

With the current design, the only solution I can think of is to have
Asimov’s “three laws of robotics” made part of all corporate charters. ….

One commenter defended the Court with a straight face:

A
Corporation IS an “association of citizens”– those citizens are the
shareholders, i.e., owners of said corporation, who associate ever so
often (annual meetings, and other special occasions)….

And as for objections to “corporate personhood”, as a person is
created by human parents and grows in a mother’s womb, so too is a
corporation. It is created by the (human) people who sign its original
charter, and the “womb” that allows the corporation to be ‘born’ is
that of the [government] agency that grants corporate charters. The difference
between the two different types of “births” are, in my opinion,
negligible.

(Eventually, human embryos won’t have to be implanted into a person
in order to be born– so the “birth from a human” objection will cease
to have merit.)

As for Lampie’s argument that corporations have “the personality of
a ’sociopath’, (which) makes them unsuited by design to using free
speech responsibly”, this argument that discriminates against REAL
sociopaths (who as far as I know, STILL have their free speech rights
unencumbered by the SCOTUS decision or any comments you’d make to the
contrary). Sociopaths have rights, too!

My sense of humor is a bit underdeveloped, so at first I ignored the “sociopath” assertion and penned a straight response regarding the “association” assertion:

Shawn, several points:

– while real people do associate to form a corporation, a corporation
remains a legal fiction created by governments, not the people
“associating” with it. It is legally separate and distinct from them and their
ownership right is considered property.

– Since a corporation is peoples’ property, those [people who own it] have
Constitutional rights to make sure their property is not unjustly or
without due process taken by government.

– Other forms of property, like human slaves, were not considered
citizens and did not have Constitutional rights, including a right to
speak. If slaves and inanimate things couldn’t/can’t speak for Constitutional
purposes, neither does it make any sense to argue that corporations – as
opposed to the people in them – can “speak” under the First Amendment.

– Further, it is crystal-clear that the Founding Fathers hated
corporations, and the ability of states to closely restrict them and to
impose conditions on the privileges and rights they received was
uncontested. It is a radical and profoundly non-originalistic step to
conclude, as the Roberts/Scalia court did, that the Founding Fathers
intended [in the Bill of Rights] to provide Constitutional speech rights to corporations.

Then, getting the joke about sociopaths, I couldn’t resist making a didactic point:

Shawn,
presumably your comment is wholly tongue-in-cheek, but let me note that
we hunt down and lock away (and even execute) sociopaths – thus
depriving them not merely of their speech, but of their ability to harm
us and even their existence in some cases.

If corporations are by nature sociopathic, then we by all means ought to do the same.

Note that we don’t need to lock up corporations; we can find various
ways to change their nature, control their bad behavior and limit their
ability to hurt us – the simplest way, of course, would be to simply
eliminate the limited liability of their shareholders, who would then
have every incentive to control what their [not-so-]little Frankensteins do.

After decades of loathing nuclear power as the ugly, monstrous child of a big government Dr. Frankenstein, climate-change-fearing enviros like George Monbiot are finally coming around to the relative benefits of nuclear power.  This is a welcome change – as it is clear that coal has generated and continues to generate much greater environmental impacts (not only in extraction, but in acid rain, particulates, heavy metals, released radiation and fly waste) – but that doesn’t mean that libertarians or conservatives ought to support throwing any more taxpayer dollars at nuclear power.

Rather, as Jerry Taylor (a senior fellow at the Cato Institute and well-regarded energy/environment expert) argues (as noted in the excerpts below), we should push nuclear power off the federal dole, deregulate power markets, and – IF we decide that climate change risks merits a constraint on greenhouse gas emissions  – we should do that through pricing mechanisms rather than by having the federal government further involved in the business of trying to guess what technological approaches will be successful via massive subsidies for nuclear or other “clean” technologies.

I pretty much agree with Taylor in principle (including on tackling power market regulatory issues), but believe that he both (1) dodges the massive pollution costs imposed by and rent-seeking conducted by coal firms and coal-fired utilities and (2) understates the economic case for carbon pricing, as I have noted elsewhere.

For those interested, I’ve collected below a few pieces of analysis and debate from Jerry Taylor on nuclear power:

– at Cato.org on June 21, 2003:

The federal government has always maintained a unique public-private partnership with the nuclear industry, wherein the costs of nuclear power are shared by the public but the profits are enjoyed privately. In an attempt to resuscitate this dying industry, the current Senate energy bill proposes unprecedented federal support for nuclear power. …

But nuclear power was ultimately rejected by investors because it simply does not make economic sense. In truth, nuclear power has never made economic sense and exists purely as a creature of government.

In fact, a recent report by Scully Capital Services, an investment banking and financial services firm, commissioned by the Department of Energy (DOE), highlighted three federal subsidies and regulations — termed “show stoppers” — without which the industry would grind to a halt. These “show stoppers” include the Price Anderson Act, which limits the liability of the nuclear industry in case of a serious nuclear accident — leaving taxpayers on the hook for potentially hundreds of billions in compensation costs; federal disposal of nuclear waste in a permanent repository, which will save the industry billions at taxpayer expense; and licensing regulations, wherein the report recommends that the Nuclear Regulatory Commission further grease the skids of its quasi-judicial licensing process to preclude successful interventions from opponents.

But even these long-standing subsidies are not enough to convince investors, who for decades have treated nuclear power as the pariah of the energy industry. Nuclear generated electricity remains about twice as expensive as coal- or gas-fired electricity. Although the marginal costs of nuclear are lower, the capital costs are much higher. In light of this resounding cold shoulder from Wall Street, the federal government is opening the treasury wider than ever before.

– at NRO on Jan. 26, 2006:

Nuclear power is solar power for conservatives — an energy source with every merit in the world save for the most important — economic merit. Investors — not environmentalists — are the parties that have turned against nuclear and there’s no reason for government to second guess the businessmen …

– at a Rountable on Nuclear Power and Energy Independence at Reason Foundation on October 21, 2008: [worth reviewing in whole]

Nuclear energy is to the Right what solar energy is to the Left: Religious devotion in practice, a wonderful technology in theory, but an economic white elephant in fact …

But nuclear power plant construction costs are so high that it would take a very, very long time for nuclear facilities to pay for themselves if they only operated during high demand periods. Hence, nuclear power plants are only profitable in base-load markets. Gas-fired power plants, on the other hand, can be profitable in either market because not only are their upfront costs low but it is much easier to turn them off or on unlike nuclear.

Nuclear’s high up-front costs don’t just mean delayed profits, it also makes nuclear a more risky investment, especially since 20 states have scrapped policies that used to allow investors to charge rates that would guarantee their money back. This means that investors in new nuclear power plants are making a multi-billion dollar bet on disciplined construction schedules, accurate cost estimates, and the future economic health of the region. Bet wrong on any of the above and the company may well go bankrupt. Bet wrong on a gas-fired power plant, on the other hand, and corporate life will go on because there is less to lose given that the construction costs associated with gas-fired power plants are a small fraction of those associated with nuclear plants. …

Investors are also wary of nuclear plants because of the construction delays and cost over-runs that have historically plagued the industry. …  Nor have these construction delays had anything to do with regulatory obstruction or organized public opposition.

If nuclear power plants are so uneconomical, how then to explain the blizzard of permit applications for the construction and operation of new nuclear power plants that the Nuclear Regulatory Commission has received? Easy: These applications cost little and oblige utilities to do nothing. Industry analysts maintain that federal approvals will not translate into actual plants without a federal promise to private equity markets that, in case of default by power plants, the taxpayer will make good on the full sum of all bad nuclear loans.

Nuclear supporters often counter that construction costs would be a lot lower if regulators didn’t impose insanely demanding safety standards, byzantine and time-consuming permitting processes, or endless public hearings, any one of which could result in the plant being stopped in its tracks. Investors would also be more likely to invest, we’re told, if there were a high-level waste repository in place or more political support for nuclear power.

I would love to tell that story. I do, after all, work at the Cato Institute, and blaming government for economic problems is what keeps me in business. But what stops me is the fact that those complaints are not echoed by the nuclear power industry itself.

On the contrary, the industry in the early 1990s asked for – and got – exactly the sort of safety regulations, permit review process, and public comment regime now in place. Both public and political support for nuclear power is running so high than even a majority of Democrats in Congress are happy to not just tolerate nuclear power, but lavish even more subsidies upon it. And while Yucca Mountain may not be open now or ever, everyone seems reasonably content with the current on-site waste storage regime.

Indeed, if government were the reason why investors were saying “no” to their loan applications, I would expect that industry officials would be the first to say so. But they do not.

There’s another good reason why the industry is not protesting government intervention these days — the industry would not exist without it. Take away the 1.8¢ per kWh production tax credit available to the first 6,000 megawatts of new nuclear generation built prior to 2021, for instance, and Metcalf calculates that the levelized cost of new nuclear power plants jumps by 30 percent. Replace accelerated depreciation tax rules with regular depreciation rules and costs jump another 9 percent. Even zero taxation on nuclear power would increase costs by 6 percent because right now nuclear power enjoys a negative effective tax rate. Indeed, this jump by itself would make nuclear much more expensive than conventional coal, “clean” coal, and natural gas. Finally, repealing the $18 billion in federal loan guarantees recently promised the industry and eliminating regulations that relieve nuclear plant owners of the responsibility to pay third-parties to accept the risks associated with waste disposal would dampen market interest in nuclear power even further.

But the final nail in the coffin for the industry would be if the federal cap on the liability that nuclear power plant owners face in case of accidents (the Price-Anderson Act) were to be lifted.

Given all of this, how do France, India, China and Russia build cost-effective nuclear power plants? They don’t. Government officials in those countries, not private investors, decide what is built. …

Conservatives project nuclear power as the solution to greenhouse gas emissions. But they should resist that argument. If we slapped a carbon tax on the economy to “internalize” the costs associated with greenhouse gas emissions – the ideal way to address emissions if we find such policies necessary – then the “right” carbon tax would likely be about $2 per ton of emissions according to a survey of the academic literature by climate economist Richard Tol [As noted in the update further below, Taylor has subsequently moved from this low figure after reviewing Tol’s more recent work]. That’s not enough to make nuclear energy competitive against coal or natural gas according to calculations performed by the Electric Power Research Institute. In any case, if nuclear offers a cost-effective way to reduce greenhouse gas emissions, it should have to prove it by competing against alternatives in some future carbon-constrained market.  …

Those who favor nuclear power should adopt a policy of tough love. Getting this industry off the government dole would finally force it to innovate or die – at least in the United States. Welfare, after all, breeds sloth in both individual and corporate recipients. The Left’s distrust of nuclear power is not a sufficient rationale for the Right’s embrace of the same.

– follow-up discussion on Reason Foundation’s “Out of Control” blog, involving Jerry Taylor and co-essayists William Tucker and Shikha Dalmia (also moderator) and various blog commenters. 

    One interesting point made in the follow-up discussion was that while our regulatory scheme is much tougher on nuclear power over risks that so far have been speculative, Taylor ignores the much heavier health damages (on the order of 25,000 deaths per year) generated by coal.  Taylor’s response:  perhaps so, but coal’s extra environmental cost should be directly addressed by being tougher on coal, not by subsidizing nuclear power.

[Update:  On the carbon pricing issue, subsequent to the October 2008 Rountable referred to above, I pointed out to Jerry that his reference to Tol was dated (based on a 2005 study rather than on Tol’s more recent 2008 study.  Jerry reviewed and summarized Tol’s most recent study at Cato in December 2008;  in this, (1) Taylor notes Tol’s conclusions that (a) the social cost of carbon emissions
is positive, that (b) there is so much uncertainty regarding costs that “a
considerable risk premium is warranted,” and that, (c) consequently,
“greenhouse gas emission reduction today is justified,” and (2) Taylor concludes that “Given our skepticism about the underlying logic of discount rates of 1%
or less, any number between $3 per ton and $24 per ton seems
defensible.”  However, Taylor remains conerned that “the political and economic transaction costs associated with imposing a carbon tax … likely exceed the benefits,” and argues that “there may be less expensive ways of reducing harm.”]