Ralph Nader, The Last New Dealer

...One of the items at the top of Ralph Nader’s agenda for legislative action is a special Federal Corporation Agency (FCA), which would replace individual state governments as the issuer of legal charters to all major corporations...

...Until now, certificates of incorporation have been issued by the individual states...

...They boast that it would hasten the millennium when Washington would no longer be what Nader has called a “bustling bazaar of accounts receivable for industry-commerce...

...And so it is that charter proponents are as enthusiastic as Harold Ickes once was in articulating the populist nostrum that the public through its government should (and can) “take control” of things...

...With respect to a more fundamental issue, however, the outlook is not necessarily so bright...

...The scheme for reform tells a great deal about the kind of America Nader wants to build...

...It is almost superfluous to add that the executives at the conference did not profess special concern about the prospect that they regarded as politically inevitable...

...The Big Case Yet the odds are high that the concept of the federal iharter will soon become law...

...They understood well that “federal charter” was merely a label, and that what mattered was not the label of the package but the contents and, especially, how and by whom the law would be administered...

...There is no magic in the notion of a federal corporate charter that could lift the FCA above the constraints that inhibit other regulatory bureaucracies...

...It would, they say, radically alter national patterns of economic and especially political power...

...The Great Leap Backward Surely these are not all unworthy goals...

...Indeed, federal chartering received its most sustained and serious political attention during the Republican administrations of Theodore Roosevelt and William Howard Taft...

...Morton Mintz is one of the best investigative reporters in Washington...

...The new populists, symbolized by Ralph Nader and his organization, want to structure the American political economy in a way that will minimize its vulnerability to special-interest domination...

...Morton Mintz and Jerry Cohen, both close associates of Nader, added to this list in their bestseller Arnekica, h c . a ban on corporate conglomeration that would mean that “RCA could be compelled to get out of book publishing and CBS to free the New York Yankees...

...Among its most influential boosters were Judge Elbert Gary of U. S. Steel (famous for “Judge Gary’s dinners” at which all members of the steel industry gathered and cordially agreed on the price they would charge for their products), John D. Rockefeller of Standard Oil, and George Perkins, prime minister of J. P. Morgan’s financial and industrial empire (which included the Steel Corporation...

...Nader, and his new populist legions in general, ascribe quite marvelous qualities and effects to the prospect of a “tough” antitrust attack on big business...

...The FCA would be no more likely to revoke the charter of GM for monopolizing auto sales than the FCC recently proved willing to consider revoking the license of WNBC-TV for flouting commission standards for broadcasting of anti-smoking spot commercials...

...Instead of a functioning grand design for controlling “corporate America,” federal chartering seems more likely to yield just one more captive federal regulatory agency...

...The reformers deserve more blame for the flaws in their next series of regulatory innovations...

...It would soon find itself administering a highly general set of standards backed by conventional civil and criminal sanctions, doing its best (or its worst) to stretch its thin political and financial resources to meet exorbitant enforcement responsibilities...

...His obsession with corporate bigness, itself an incident of the federal charter campaign, is one thing...

...The scheme displays all the worst features of the old grand design mentality, and therefore seems fated to come to the same dismal end as the early Federal Trade Commission (FTC) and the National Industrial Recovery Act...

...get, the national dairy lobby, is a Whether they realize it or not, the confederation of very small entre- new populists are investing most of preneurs...

...Enduring Change vs...

...Though their hopes for a legalized corporate state now seem somewhat overblown in view of the feckless career of the NRA in the early 1930s, their basic assumption seems as valid now as it seemed then...

...It is simply a delusion to expect objective standards or mechanical enforcement procedures in a scheme so general in its objectives and scope as this one is...

...But Nader’s second tar- change but for the “big case...

...Once they become as well- their antitrust resources into building organized as these milk producers, precisely the kind of popular mood small entrepreneurs appear to be just that Teddy Roosevelt handily as ruthless and effective as an ITT...

...Yet New Deal ideology was itself a variant of the populist tradition, rather than a departure from it...

...But the sad fact is that the structure of national power has roots rather too deep to be shaken by a few, or even a good trust but the way it is promoting many, suits under the Sherman Act...

...These standards would surely stop short of expressly requiring any major changes in existing corporate policies or structures...

...The reformers’ gaudy label would be allowed to remain attached...

...The first generation of 20thcentury reformers did not share $he New Dealers’ hubris about “taking control” of things...

...If the corporation ceased to be responsive to those “well-defined public interests,” whatever they might be, then it would be...

...Federal chartering,” Mintz and Cohen quaintly conclude, “would allow the public government to regain its proper role as quarterback of the economy...

...appeased with his “symbolic” victory The auto industry will be no less over the House of Morgan in the powerful in Washington or Lansing if Northern Securities prosecution of the variety of corporate labels on auto 1903...

...If giant companies had to get their charters in Washington instead of Wilmington, Nader says, the requirement would cease to be a mere formality...

...Their understanding of those simple facts is perhaps ultimately the surest guarantee that the proposal will, in some form at least, be enacted...

...The New Deal version of the populist ideal was, if anything, more naive than the version nurtured by the old Populists and Progressives...

...They are as familiar as any two men in the United States with just how free from “undue influence” regulatory agencies can be...

...The Progressives had a tragic sense about democracy, a sense that some inherent fault might make it impossible for democratic government to fulfill itself...

...This would be handed over to a new bureaucracy which, like the old FTC, would inconspicuously and, if necessary, gradually eviscerate the new law...

...Nader’s theory appears to be that, in creating a new FCA to issue corporate charters, Congress could persuaded to impose a slew of restrictions on corporate behavior that it would not otherwise enact...

...They believed that it was, as Woodrow Wilson said during the 1912 campaign, “an open question” whether government was “strong enough to overcome and rule” the private interests that dominated politics and the economy...

...Policy as well as politics would ensure that any federal chartering statute for the nation’s biggest companies offer vague, not to say vacuous, principles for determining the requisites of getting and keeping a license...

...punished or even perhaps lose its charter altogether...

...Federal incorporation, or “federal chartering,” means having the nation’s 200 or so largest corporations obtain their certificates of incorporation, or legal charters, from the federal government...

...At a conference he staged in Washington in October, 1971, to launch his campaign for the FCA, he said that federal chartering would mean “strict” antitrust standards to keep corporations from retaining more than 12 per cent of their markets, “corporate democracy” provisions to “reduce the dominance of [management] oligarchies” over shareholders and bondholders, “disclosure” rules that would “end corporate secrecy,” and a “constitutionalization” of the rights of corporate employees against their employers...

...factory doors increases from three to Ralph Nader’s vision of the future six or eight (or 80 for that matter...

...But many new populist spokesmen would have us believe that waving a big antitrust stick would do much more...

...The plain truth is that federal chartering can be seen as an inspiring cause only by those whose vision is impaired by the grand design mentality...

...They distrust it and at the same time they feel obliged to rely on it...

...The federal charter, he explains, would “make the grant of corporate status conditional on a responsiveness to well-defined public interest [not just private securities holders] and a social accounting of corporate performance...

...democracy, the notion that the public Accordingly, the striking aspect of the can, through legislation and regulanew populist antitrust campaign is not tion, exercise affirmative sovereignty that the movement is promoting anti- over corporate power...

...His strategy is to whip up public opinion to so intense-if ephemeral-a frenzy that Congress can only appease it by enacting his proposals as fast as his pro bono publico legislative draftsmen can turn them out...

...antitrust...

...Death to Delaware Nader and his colleagues should not be overly faulted for the afflictions which have beset the first generation of new populist reforms...

...More in line with the relevant precedents would be a scenario in which Senator Eastland and his populist opponents collaborated in hoodwinking the public...

...for which he is aiming, insofar as that What a spate of antitrust lawsuits, vision is revealed through most of his whether or not spurred by a new current propaganda and legislative antitrust statute, could produce, apart activities, is that which motivated his from some marginal improvements in Progressive and New Deal antecedents...

...But intriguingly enough, one does find in the political struggles of the Progressive era considerable attention devoted to the object of Mintz and Cohen’s ardor...

...Though this agency would in theory be permitted to invoke the new enforcement tool of revoking a company’s charter, in practice this sanction would be an entirely empty threat...

...Ths central insight of the Progressives and the original Populists has been rediscovered...

...Yet they still blithely predict that the Federal Corporation Agency will write “goals and priorities” into the charters of the corporate giants, and that the corporations in their turn will instantly comply-from top management to division head to subsidiary to sales manager to union local...

...The legitimate government should set these goals and priorities free from undue influence by the corporation...

...Most corporations obtain their charters from Delaware, whence they are lured by a corporation law tailored to the needs of corporate managements desirous of minimizing interference from obtrusive shareholders...

...the efficiency of certain selected It is the ideal of the grand design for industries, is high political drama...

...Ralph Nader has portrayed the proposal as vital to his plans for building a more democratic America...

...And even the heralded “deconcentration” lawsuits to break up “tight oligopolies” like autos and cereals and aluminum might improve economic efficiency in those (relatively few) markets...

...In fact, it was then the pet project of Wall Street leaders, because they believed that it would cement a cooperative relationship between the federal government and big business...

...The remarkable thing about that informal poll is that it was taken before any legislation was introduced, and indeed before much general publicity had been given to the federal chartering idea at all...

...In short, the new populism has brought back to left-ofcenter politics a profound distrust of government-not just as prosecutor or censor, not just as a threat to minorities or individuals, but as a foe of the majority, of the public itself...

...This is a political “natural”-perfectly attuned to liberal ideological and rhetorical convention, and an apt vehicle for accommodating the political needs of all the affected interests and participants in the enactment process...

...It is far from clear that the artifacts of this reform period will show more durability than their predecessors...

...Inspired by Richard Hofstadter, many liberals still understand “populism” as an epithet ~ connoting the naive moralism which they believe stymied early 20thcentury reformers...

...But the new populists have not managed in any systematic way to reexamine regulation as a technique of reform...

...The goal implicit in new ITT, one of the two most prominent populist propaganda tactics seems less targets of Nader’s efforts to expose the modification of routine adminisand punish big-time bribery in con- trative policy than the preparation of temporary Washington, is a very large public opinion-not for enduring corporation...

...His goal-which even Richard Nixon could endorse if popular sentiment were to grow strong enough-is to achieve a kind of third New Deal...

...But it would grace a legislative pastiche that, like the original Clayton and FTC acts of Woodrow Wilson’s first term, would comprise mainly innocuous provisions...

...Unfortunately, there is considerable evidence to support this conclusion in other facets of Nader’s program and in his tactical modus operandi...

...Instead the law would pass the buck to the new agency...

...Ralph Nader, the Last New Dealer by Simon Lazarus One of the most perverse habits of the postwar liberals was their inclination to revere the New Dealers, while scorning those earlier reformers, the Progressives and Populists...

...To be sure, wider enforcement against price-fixing (which is done by the corner druggist as much as by the steel oligopoly) would be a good thing...

...This nrticle is adapted from his book, The Genteel Populist% to be published this month by Holt, Rinehart, and Winston reformers could actually work out new social arrangements in tune with expert definitions of the public interest...

...Like the Progressives, the new Populists are schizophrenic about government...

...The legislative and administrative achievements of the current reform movement already approach the records established in Woodrow Wilson’s first term and Franklin Roosevelt’s first two terms...

...In particular, they want “fail-safe” mechanisms that, like the initiative and recall, will permit outside forces to interrupt the routine of government and set it back on a course faithful to the public interest...

...To the extent that splashy legislative reforms like federal chartering fire his enthusiasm, Nader appears to be an utterly traditional-and conventionalreformer...

...They also suggested that some sort of general injunction against environmental offenses could be written into the charter...

...A rational society,” affirm Mintz and Cohen, “has long-term goals and priorities...

...The most attractive feature of the current recrudescence of populist thought is precisely this skepticism about government, this sense that American democracy is flawed...

...Jerry Cohen, as counsel to Senator Hart’s Antitrust subcommittee, spent five dramatic years exposing corporate political shenanigans in the federal bureaucracy...

...Glib New Deal promises of a new regime conjured a moratorium on politics, during which well-intentioned Simon Lazarus is a Washington lawyer...

...There is nothing in the legal or political structure of the Environmental Protection Agency or the National Highway Traffic Safety Agency which encourages confidence that their zeal will long survive the passing of the popular passions that now support them...

...The movement has barely passed its adolescence, and the 1970s could prove to be the century’s most productive decade, a triumph of the populist spirit, at least from the standpoint of the number of legislative victories won...

...When, at an assemblage in Boston in 1971, chief executive officers of major national corporations were asked whether they expected to be covered by a federal requirement to hold a federal corporate charter, over one-half replied that they expected such legislation to pass before 1980...

...Even in Progressive rhetoric it would be difficult to find a flight of populist fancy as unalloyed and unselfconscious as this athletic metaphor...

...But the mystery that remains is how Senator James B. Eastland will be hoodwinked into letting them pass his Judiciary Committee wrapped in a “federal incorporation” package when he would not do so if they were introduced separately as antitrust amendments or corporate freedom of information bills...

...Like their forebears, they have invested much of their time, energy, and prestige in championing grand regulatory designs to subject private interests to affirmative public control...