Recovering Corporate Patriotism

Yishai Schwartz

Current Issue

The video was blurry. It was February 10, 2016, and a company executive appeared on the floor of an Indianapolis Carrier factory to tell the workers, blue-collar producers of furnaces and heating equipment, that their jobs were being sent overseas: "The best way to stay competitive and protect the business for long term," he explained, "is to move production from our facility in Indianapolis to Monterrey, Mexico." The crowd erupted in boos, drowning out the executive as he tried to continue. Within hours of being posted to Facebook, the video had gone viral, blurriness and all.

Three days later, Donald Trump appeared on a Republican debate stage in Greenville, South Carolina. Responding to a question about tariffs, Trump shifted into attack mode:

[T]hey have a video of the announcement that Carrier is moving to Mexico....1,400 people that are being laid off — they're laid off. They were crying. They were — it was a very sad situation....I'm going to tell them right now, I am going to get consensus from Congress and we're going to tax you when those air conditioners come. So stay where you are or build in the United States.

In the following weeks, references to Carrier and condemnations of companies that were shipping jobs overseas became fixtures of Trump's presidential campaign.

Within nine months, as the country was still reeling from his surprise electoral victory, President-elect Trump announced that he had reached "a deal" with Carrier and its parent company, United Technologies, to keep about a thousand of the jobs in Indiana. "This is the way it's going to be," Trump explained. "Corporate America is going to have to understand that we have to take care of our workers also."

The 2016 presidential-election campaign revealed a wave of populist anger — but not of a generic kind. Instead of simply condemning the wealthy, this wave made a billionaire its standard-bearer. Its targets were trade agreements and globalization, and the anger was fueled by a sense that America's corporations — and the government over which they have so much influence — had long ceased to be concerned with the American worker, and with America itself.

These critics of contemporary corporate America are right, and President Trump's bluster may only fan the flame of public anger. But those who want to address the concern that has sparked that flame must grapple with the public's fury in a serious way, analyzing its causes and recognizing its fundamental logic. The patriotic commitment of America's great corporations has dramatically declined in recent decades. And that decline represents a betrayal of the social contract and the logic that underlies the corporate form itself.

WHAT ARE CORPORATIONS FOR?

Our story begins with the rise of the corporation. In the late Roman Republic, as the central government faltered under the financial weight of empire, it looked for ways to outsource its costs. The Romans, however, also felt that certain types of public property — including the theaters, racing stadiums, and even small towns that they were trying to offload — could not be entrusted to private individuals. They therefore developed a novel legal right, "corpus habere" (literally "to have a body"), for the corporate maintenance of utilities and public infrastructure. With the conferral of this new legal status, an association was transformed into a legal entity distinct from its owners — one that could pursue business (by making contracts, incurring debts, filing lawsuits, and the like) in its own right, and that denied its shareholders an automatic claim on its property.

Initially, as legal historian Max Radin argued, these corporations were "not organized for business purposes but were distinctly of a public character, in whole or in part, performing services which in most modern communities are the functions of the state." But over time, this special corpus habere status spread to business associations that pursued exclusively private interests as well. These new profit-driven corporations quickly came to dominate a variety of industries, particularly mining and shipbuilding. Nevertheless, even these new corporate actors still existed by special grant of the emperor and the Senate, with a status that depended on their loyalty and contribution to the people of Rome.

Centuries later, the corporation gained its most distinctive characteristic: limited liability. Today, we take this principle — that the owners of a corporation cannot be held responsible for its debts or damages — for granted. In doing so, we gloss over just how strange and novel the concept truly is. The idea that by signing a piece of paper one can gain infinite profits from an investment, but cap one's liability, seems bizarre and unfair.

Even in the modern era, incorporation and limited liability continued to be understood as a unique privilege. The creation of a "juridical person" was a novelty, an act of state power and favor. Corporate charters were awarded selectively, as by Parliament to the British East India Company, and these charters often granted not only protections against liability, but also territorial monopolies. Until recently, then, corporate charters were tools of the sovereign. So even as the modern corporation became increasingly profit-focused, in contrast with the public association of Rome, it remained a distinctly national institution. It existed by favor of the sovereign, and was offered — implicitly or explicitly — in exchange for something of value to crown and country.

This all changed in Britain in the mid-19th century with Parliament's passage of the Limited Liability Act of 1855. For the first time, limited liability became generally available as a matter of right, ushering in an age of rapid corporate expansion. The expansion was defended in economic terms as proponents argued that the security of limited liability would unleash investment, innovation, and industrial development. Opposition was fierce. Critics questioned the economic arguments, and they lamented the likely effect on morals and culture. But the world had changed. Corporations no longer needed to make special application to a nation's government. And they no longer needed to explain why incorporation served the national interest.

This shift in corporate identity, which began in Rome and continued in Britain, reached its crescendo on this side of the Atlantic. Its reach can perhaps be best understood through the lens of Dodge v. Ford Motor Company, a landmark Michigan Supreme Court case still taught in corporations classes at every law school in the country.

In 1903, Henry Ford joined together with a number of business partners, including John and Horace Dodge, to create the Ford Motor Company. The company's initial capital stock value was $150,000. Under Ford's leadership, the company expanded rapidly, amassing a fortune in annual profits. By 1916, the company's capital surplus was nearly $112 million. During the first decade of this massive growth, the company paid millions in special (often monthly) dividends, making its shareholders fabulously wealthy. But in October 1915, the special dividends stopped. Henry Ford, as president of the company, owner of 58% of its stock, and the unchallengeable dominant force on the board of directors, had made a decision. The company's "settled policy" was now decidedly against special dividends. All future earnings (other than the regular, monthly dividend of 5%) would be invested back into the business.

Ford announced the new policy proudly, publishing an explanation in the press both in Detroit and throughout the United States. "My ambition," wrote Ford, "is to employ still more men; to spread the benefits of this industrial system to the greatest possible number, to help them build up their lives and their homes. To do this, we are putting the greatest share of our profits back into the business." This policy was of a piece with Henry Ford's oft-articulated general view with respect to social responsibility. A strident nationalist and passionate philanthropist, Ford believed in spreading the benefits of industry to his countrymen. Writing in 1920, Ford exhorted workers to hold their employers accountable to the general welfare:

We must get a conscience as to the things we work on. Not only must we make certain that the day's work will give us the day's pay, but we must be certain that after we give the day's work to our employer, he in turn will use it to the advantage and service of society.

Years later, in founding his "Museum of American Innovation," Ford once again cast his purpose in patriotic terms: "When we are through we shall have reproduced American life, and that is, I think, the best way of preserving at least part of our history and our tradition."

Contemporary observers noted admiringly that the Ford Motor Company's care for workers and community far exceeded the demands of profit. "One of the most interesting institutions of the Highland Park Factory is its educational department," wrote John Horgan in Studies: An Irish Quarterly Review. The courses included not just practical engineering, but "such subjects as chemistry, electricity and metallurgy in their varied aspects." The Ford Schools granted diplomas, distributed scholarships, and provided complete medical and dental care — and by 1921, they had already produced 16,000 graduates. And they were only one instance of Ford's far-reaching concern for the surrounding community.

But in 1916, Ford's conception of his company's role clashed sharply with that of the Dodge brothers, two of his largest shareholders. Outraged by Ford's decision not to pay additional dividends and their own powerlessness on the board of directors, the Dodges filed suit. They charged that Ford was seeking to operate the corporation as "a semi-eleemosynary institution and not as a business institution." They sought an injunction compelling Ford to limit the reinvestment of revenue for the sake of dropping prices. The Dodges insisted that their interests as "stockholders should not be put in jeopardy by the reckless ventures proposed to be entered upon in connection with the carrying out of the policy of expansion of the said Henry Ford."

The Supreme Court of Michigan agreed, finding that "[t]he record, and especially the testimony of Mr. Ford, convinces that he has to some extent the attitude towards shareholders of one who has dispensed and distributed to them large gains and that they should be content to take what he chooses to give." Somewhat admiringly, the court observed that Ford had concluded that his company had "made too much money, has had too large profits, and that, although large profits might be still earned, a sharing of them with the public, by reducing the price of the output of the company, ought to be undertaken." While the court readily admitted "no doubt that certain sentiments, philanthropic and altruistic" were "creditable to Mr. Ford," it ruled that acting on these "humanitarian motives" constituted a violation of his duties as corporate director.

The decision came as a thunderclap. For decades, courts had repeatedly held that corporate directors' decisions were essentially unchallengeable. The era's great scholar of corporate law, William Cook, emphasized in his treatise on corporations, "The board of directors declare the dividends, and it is for the directors, and not the stockholders, to determine whether or not a dividend shall be declared." Even the Michigan Supreme Court itself had explicitly articulated the same principle: "Courts of equity will not interfere in the management of the directors unless it is clearly made to appear that they are guilty of fraud or misappropriation of the corporate funds." Even now, the "business judgment rule" guarantees boards of directors vast discretion and insulates them from second-guessing by the courts.

But in Dodge v. Ford, the Michigan Supreme Court announced an exception to this general rule of deference to corporate judgment. Directors' discretion runs out, ruled the court, where their actions are no longer motivated by shareholder profit. Philanthropy was simply not an acceptable justification for corporate action. As the court explained,

A business corporation is organized and carried on primarily for the profit of the stockholders. The powers of the directors are to be employed for that end. The discretion of directors is to be exercised in the choice of means to attain that end, and does not extend to a change in the end itself, to the reduction of profits, or to the nondistribution of profits among stockholders in order to devote them to other purposes....[I]t is not within the lawful powers of a board of directors to shape and conduct the affairs of a corporation for the merely incidental benefit of shareholders and for the primary purpose of benefiting others.

The court's decision thus represented not just a legal loss for Henry Ford, but also a blow to his vision of what a corporation might be: an institution that acted — at least in substantial part — for the good of the nation.

AN ARTIFICIAL MONSTER

The actual legal effects of Dodge v. Ford have been limited, but the cultural significance has been profound. Overconfident, Henry Ford left himself uniquely open to litigation with his transparent, public statements of corporate philanthropic purpose. Subsequent corporate philanthropists can — if they so choose — engage in similar practices in more circumspect ways. And as long as they justify their philanthropic work in terms of community relations and brand-building, courts will defer to their judgments. But with Dodge the ground shifted, along with our norms.

The 17th-century French thinker Francois de La Rochefoucauld once observed that "hypocrisy is the homage that vice pays to virtue." He meant that we demonstrate our values through what we feel compelled to conceal. The adulterer who lies about his affair, through his act of lying, both reflects and reinforces a norm in favor of faithfulness. So too, there is some small redemption in the lies of the war criminal who denies having targeted civilians: Through his lie, he helps maintain our commitment to fundamental principles of humanitarian law. Rochefoucauld's maxim holds true for today's corporate philanthropists as well. No doubt, many corporate leaders still act partially out of charitable impulses, but the need to frame their giving in profit-maximizing terms matters. Inevitably, it reflects and shapes the way a society thinks about the proper role of the corporation.

We cannot know if the Michigan Supreme Court's Dodge v. Ford decision was primarily a driver of or a response to changing social norms about corporate charity. After all, law and culture exist in a constant cycle of interdependence and mutual influence. Over time a society's values are reflected in the decisions of courts, and at the same time those courts can exert influence over our values by shaping the legal and political environment within which we operate. As in so many instances, Dodge v. Ford likely represents a bit of both.

But the case also reminds us that there was a time when the limits of corporate purpose were still being deliberated. American law and culture once had room for a Henry Ford, a corporate president who could speak unapologetically and without concealment about his company's civic purposes. That debate is now dead. And Dodge v. Ford — whether it represents the cause or effect of that demise — now marks its grave.

Even after all this time, we should not accept that change uncritically. For one thing, we ought to recognize how strange the Michigan Supreme Court's conclusion actually was. The corporation began as a means of ensuring the proper maintenance of public goods. Rather than turn the functions of the state over to individuals, they were given to corporations who could act for the public welfare. And even when corporations became profit-focused, their special privileges — indeed, the inherent strangeness of a "created person" — were justified by their national benefit. But after Dodge, the national good cannot even be a secondary corporate interest.

Beyond the historical oddity, there is a deeper, conceptual, difficulty: A corporation, we are constantly told, is an independent legal entity. And it is not just any sort of creature or entity; it is a juridical person. Indeed, this legal "personhood" is what justifies the protection of its stockholders through limited liability.

The general rule — enshrined in the American law of tort and contract — is that a man is liable for his own actions: He must return the money he borrows, fulfill the contract he signs, and pay for the damages he causes. Crucially, the law's conception of "a person's actions" has always been broader than the immediate effects of our physical conduct. Humans are liable not only for our own debts and damages — but also those of our possessions and creatures. This principle is basic, and it is as ancient as the Bible: "If a man...shall let his beast loose, and it feed in another man's field; of the best of his own field, and of the best of his own vineyard, shall he make restitution. If fire break out, and...the field [is] consumed; he that kindled the fire shall surely make restitution."

But the Western legal tradition has long understood that what holds true for fire and beasts does not hold true for free persons. When my employee strikes his neighbor, I bear no liability. Historically, even that vicarious liability that employers today do bear for the actions of employees (limited to those actions taken within the scope of employment) has its origins in the "master-slave" or "territorial lordship" relationship of the ancient Frankish nobility. Indeed, for hundreds of years, the law understood a deep difference between the slave and the freeman: While the lord would be liable for the actions of the former, he would not be for those of the latter. A defining characteristic of human freedom — that which separates the free person from the beast and the slave — was the exoneration of the "master" and the liability of the individual. Even in modern tort law, the role of human action in limiting liability is critical. The intervention of an additional free human actor is often a crucial factor in identifying when a "superseding cause" has disrupted an earlier chain of causation, exempting a prior tortfeasor and creating a new cause of a liability.

The novelty of limited liability, therefore, lies not just in the creation of something new, but in the creation of a new and free person. It is only by considering a corporation a human entity — so bold a legal fiction that only a sovereign would dare — that limited liability becomes coherent. This, then, is the logic of the corporation: The corporation is not merely the creature of its owners, the shareholders. For if it was simply their creature, the shareholders would still stand accountable for its actions. Rather, the corporation is an independent person — with its own rights and duties, and the necessary agency to shield its owners from liability.

But the holding in Dodge v. Ford is antithetical to a proper understanding — or imagining — of the corporation as a person. Perhaps the single most distinctive characteristic of the human individual is our capacity — and our need — for diverse goals. Humans are not motivated by a single thing. We pursue money, power, food, sex, love, friendship, transcendence — not to the exclusion of one another but in addition to one another. Indeed, if all of a person's actions were directed at just one goal, we would think that person mad.

And what holds for material goals, holds true of values too. No one understood or articulated this better than the philosopher Isaiah Berlin. Writing in his Two Concepts of Liberty, Berlin famously assailed "the conviction that all the positive values in which men have believed must, in the end, be compatible, and perhaps even entail one another." For Berlin, the reality of conflicting, unrankable values meant that we must maximize liberty so that individuals can choose their own paths. But there is also a corollary conclusion that follows directly from Berlin's magisterial analysis: An essential feature of personhood is the reality of conflicting values and goals.

If we are to imagine the corporation as a person, and grant it the rights and duties of a person, then there is something very strange about prohibiting corporations from acting in the manner that practically defines human action: the pursuit of a diversity of goals. Human persons may pursue profit voraciously; indeed, our economic, policy, and legal models usually assume they do. But in reality, the frenzy of that pursuit — even in our economic lives — is complicated by other concerns and goals. We hire underqualified family members out of love; we pay above-market wages out of social concern; and we close our shops on the Sabbath in obedience to God. We do so because we value things other than profit.

But under Dodge, corporations can do none of these things, at least not for the simple reasons that humans do them. Critics of the corporate form have, I believe, long intuited this oddity, even if they have failed to adequately articulate it. It is unsurprising, then, that for years they have denounced the corporate form as a kind of monstrosity — an embodiment of the worst instincts of capitalism.

There may be some cause to hope that our legal culture has begun to awaken to this damaging incongruity. In the last few years, some courts have finally begun to chip away at the strange principle underlying Dodge. Recognizing — and seeking to accelerate — this trend, the American Law Institute's most recent Principles of Corporate Governance even suggests that corporations "[m]ay devote a reasonable amount of resources to public welfare, humanitarian, educational, and philanthropic purposes."

Most important, the U.S. Supreme Court itself recently endorsed this shift. In Burwell v. Hobby Lobby Stores, Inc., the Court famously addressed the religious free-exercise claims of a for-profit corporation, finding that the company was in fact protected under the Religious Freedom Restoration Act. The Court acknowledged that "[s]ome lower court judges have suggested that RFRA does not protect for-profit corporations because the purpose of such corporations is simply to make money." But in the majority opinion, Justice Samuel Alito wrote (rather matter-of-factly) that change was afoot:

While it is certainly true that a central objective of for-profit corporations is to make money, modern corporate law does not require for-profit corporations to pursue profit at the expense of everything else, and many do not do so. For-profit corporations, with ownership approval, support a wide variety of charitable causes, and it is not at all uncommon for such corporations to further humanitarian and other altruistic objectives. Many examples come readily to mind. So long as its owners agree, a for-profit corporation may take costly pollution-control and energy-conservation measures that go beyond what the law requires....States have increasingly adopted laws formally recognizing hybrid corporate forms. Over half of the States, for instance, now recognize the "benefit corporation," a dual-purpose entity that seeks to achieve both a benefit for the public and a profit for its owners.

This argument marks a seismic shift in the legal principles that have governed corporate identity and practice since Dodge. So while American progressives have condemned the Hobby Lobby decision for empowering corporations, they have missed Hobby Lobby's deeper legal and cultural meaning. The decision permits corporations to devote resources to goals beyond the mere maximization of raw shareholder economic interest. Hobby Lobby announces a shift from a conception of the corporation as a single-minded pursuer of profit to an entity that — like any other person — can balance and aspire to multiple ends.

The decision is recent, and its logic and holding are fragile. But over time, perhaps we can hope that the shift it represents will seep out and transform corporate culture. And perhaps we can yet hope for a revival of Ford's vision of an industrial corporation that sees at least part of its mission as the service of the public.

The view of corporate purpose that underlies Dodge, and that dominated our legal and cultural understanding of corporations for the last century, offers us the next installment of our story. The conception of corporations as ruthlessly profit-driven represents a key driver of corporate disregard for the public interest — and thus of the popular backlash we are currently witnessing.

But the problem is more particular than a diminishing concern for the general welfare; it is, rather, so many American corporations' apparent disregard for American interests. Profit maximization, Dodge teaches, leaves no room for a humanitarian impulse. But it also leaves little room for the patriotic impulse. And to study that, it is worth turning to the context in which patriotism is usually most pronounced, and where its absence is most acutely felt: national security.

CORPORATE CITIZENS

On December 2, 2015, Syed Rizwan Farook and Tashfeen Malik walked into Farook's office holiday party in San Bernardino, California. The couple were heavily armed, and within seconds of their arrival, they started shooting. A few minutes later, 14 of Farook's coworkers were dead and another 22 were wounded. Farook and Malik were killed in a shootout with police about two miles from the scene of the initial massacre. It was the deadliest jihadist attack on American soil since 9/11.

The FBI leapt into action, investigating the couple's motives, ideological leanings, and ties to terror groups, particularly ISIS. But soon investigators hit an obstacle: In early February, FBI director James Comey appeared before the Senate Intelligence Committee to announce that the agency had recovered an iPhone issued to one of the shooters, but was unable to access its content due to encryption. For months, government officials had met repeatedly with executives and attorneys representing Apple, seeking the company's assistance. But by the time Comey appeared before the Intelligence Committee, the discussions had broken down. Even in the face of intense government pressure and an investigation into one of the country's deadliest terror attacks, Apple refused to help develop code that could weaken iPhone security.

Undeterred, Comey turned to the courts. One week after the Senate hearing, a federal magistrate judge acting under the authority of the "All Writs Act" ordered Apple to assist in circumventing the encryption and accessing the iPhone's content. Current and former intelligence-community officials joined Comey in a public pressure campaign. Matthew Olsen, a lecturer at Harvard and former general counsel at the National Security Agency, declared to the Washington Post that "[t]his is the kind of case where companies like Apple need to demonstrate that they're good corporate citizens and comply with lawful court orders."

Apple refused to back down. In a fiery, 1,100-word "Message to Our Customers," Apple CEO Tim Cook accused the FBI of demanding that the company build something "too dangerous to create....a backdoor to the iPhone." Decrying the government's demands as "chilling," Cook assailed the FBI for an "unprecedented" attempt to "[expand] its authority" and "undermine the very freedoms and liberty our government is meant to protect." In court documents, Apple warned that the FBI was "seeking through the courts a dangerous power that Congress and the American people have withheld" and pleaded that the government not be given the authority to "conscript and commandeer Apple." Rallying to Apple's side were not only civil-liberties groups, but also the nation's biggest tech companies (and Apple's usual rivals), including Microsoft, Google, and Amazon.

A month later, the FBI succeeded in circumventing the iPhone's security, apparently with the help of an Israeli company, and withdrew its demand for Apple's assistance. The impending legal showdown had been averted.

We should not, however, allow this episode's anticlimactic conclusion to obscure what the opposition of Apple and its allies represents. The brief standoff reflects a strikingly adversarial stance in the relationship between some of the most prominent corporations in contemporary America and their home country. This adversarial stance contrasts with the intensely close relationships that exist between many European companies and their governments. But it also represents a particularly sharp contrast with another, mostly forgotten national-security episode from decades earlier. That episode, too, concerned a government request for assistance from American communications giants — a request that resulted in a highly secret NSA program known as SHAMROCK.

SHAMROCK traces its origins to the aftermath of World War II. During the war, American telegraph companies had operated under a system of military censorship in which they turned over copies of all international telegraphs to military intelligence. But with the growing specter of the Soviet Union in the war's aftermath, the government asked the major American companies — RCA Global, ITT World Communications, and Western Union International — to continue providing the material. Assured that the program had the approval of President Truman and Attorney General Tom Clark, the companies agreed. Each morning an NSA courier would arrive at the companies' offices to pick up the punched tape used to create electronic transmissions. As the decades passed, memory of the program faded from upper levels of management, while the couriers continued their daily trips between the companies and the NSA.

Remarkably, there were no incentives, no threats, no legal mandate — simply a government request and patriotic compliance. As Louis Tordella, the longtime civilian deputy director of the NSA, would later tell congressional investigators, "[N]one of 'em ever got a nickel for what they did." What these companies did, Tordella insisted, they did for patriotic reasons. Or as one longtime executive for RCA Global explained, when the Army came asking for help, "by damn, that was enough [for him]." Beyond the initial assurances from the Defense Secretary about the program's importance to national security and the president's and attorney general's support, there was no hesitation — not even an inquiry into how the government was handling the information provided.

A CHANGING CORPORATE CULTURE

The contrast in corporate behavior in these two episodes is stark. For the great communications companies of mid-century America, patriotism could be a corporate purpose. Consumer privacy and shareholder profit were, no doubt, the key concerns of these industry leaders, but they also permitted themselves to balance those interests against the demands of the country.

The executives and directors of Western Union and ITT had fought and sent their sons to die in the world wars. During World War II and the early decades of the Cold War, RCA manufactured radar sets and early warning systems to detect ballistic missiles, winning multiple awards from the Army and Navy. Its wartime president, David Sarnoff, simultaneously served on General Eisenhower's staff during the invasion of France, and was promoted to the rank of brigadier general by President Roosevelt. These companies were American, not just in the contingent sense that they happened to have been started in the United States and employ large numbers of American workers, but in the deeper sense of the manner in which they understood their own identity and purpose.

Apple and its executives are of a different breed. Tim Cook's open letter announcing Apple's decision to fight the FBI and the federal court order was not a letter to the American public; it was a "message to our customers" — American or otherwise. The company has sheltered billions of profits in tax havens overseas, putting it in similar standing with 30 of the country's largest multinational corporations. And in a fascinating interview with the Washington Post, Cook revealingly responded to a question about his responsibility "to publicly take on such issues as civil rights" with his own discourse on human rights. The difference between the two terms is subtle but significant. It reflects the difference between a worldview that places the nation — and the rights that citizenship affords — at the center, and one in which moral concern and loyalty are diffuse and globalized.

Nor are Apple and Tim Cook outliers. On the contrary, they are of a piece with the other new captains of industry that inhabit Silicon Valley. Facebook and Yahoo have fought bitterly against national-security letters demanding precisely the sort of information that phone companies turn over regularly. Microsoft famously — and successfully — resisted a search warrant by claiming that keeping data on Irish servers shielded the company from complying with American law. The CEOs of Apple, Google, Amazon, and Facebook all explicitly describe their companies as actors on a global stage. It is hardly surprising that these companies — despite their intense rivalries with one another — locked arms with Apple in its confrontation over the San Bernardino iPhone.

To be sure, Apple and its allies do not understand themselves as motivated exclusively by profit. These companies cultivate an image — and likely a self-image — as defenders of individual privacy and "information security." Indeed, this is how the tech giants defend not only their opposition to the iPhone order but also the difficult standards and systems they have implemented for when they do comply with government orders and emergency requests. But individual interests are not the same as national interests, and these companies' unwillingness to even consider creative solutions to the dangers of encryption reveals their limited appreciation of the latter.

Perhaps the most incisive observer of the shift in the self-conception of our economic elite is Chrystia Freeland, the sometime journalist and current foreign minister of Canada. In her 2012 book, Plutocrats, Freeland notes that "America's business elite" are rapidly joining what she calls the "transnational community." She writes that "[t]oday's American chief executives are twice as likely to have worked abroad as their predecessors of a decade ago."

Paul Volcker, the legendary economist and former head of the Federal Reserve, has said that he is increasingly struck by the global outlook of "so-called American companies" who "don't think of themselves as American anymore." As an example of this new cosmopolitan elite, Freeland offers Mohamed El-Erian, the former CEO of Pimco, the world's largest bond manager. El-Erian, Freeland argues, "is typical of the global nomads" that are coming to dominate the top spheres of the U.S. business world. Born to an Egyptian father and French mother, raised in Paris, Cairo, New York, and London, El-Erian holds three passports. Despite living in Newport Beach, California, and running a U.S.-based company, he told Freeland, "I don't belong to any one country. I belong to many and to the world." The new generation of American industrial titans see themselves less as leaders of distinctly American companies than as global citizens accountable to global customers and shareholders.

The shift has been gradual, and not always linear. In the period after 9/11, the assistance of American financial institutions was the "singular factor" that permitted the FBI to identify the hijackers and trace their movements. As later recounted by Justice Department attorney Jeffrey Breinholt, these banks "immediately inundated us with enormous amounts of customer financial information...these actions were not based on a request, a subpoena or a national security letter. They were simply provided spontaneously by the banks on the assumption that they had something in their records that we wanted to know." And from 2003 to 2013, AT&T voluntarily provided the government with critical support, granting the NSA access to billions of emails and providing technical assistance in wiretapping massive quantities of internet communications, including most of the communications occurring at the United Nations.

The aftermath of 9/11 was a unique time. It is hardly surprising that American corporations were at their most patriotic during this period. As Breinholt notes, "The financial community was hit personally by the events of 9/11. They bent over backwards to assist us." But more important, there are deep cultural differences between our centuries-old financial institutions or the Bell-descended AT&T and the new giants of Silicon Valley. Indeed, when it comes to cultural shifts, we would expect these more venerable corporations to lag a bit behind.

The "exceptions" thus serve to highlight the rule. Increasingly, corporate leaders have come to view the U.S. government as an adversary to be fought, and they have come to see the national good as a parochial interest, rather than a core company value. But if we maintain a sense of history, perhaps SHAMROCK and corporate conduct after 9/11 can serve as a reminder that it has not always been this way — and that it need not be this way in the future.

CORPORATIONS AND THE NATION

Despite origins steeped in sovereign favor and national interest, the modern corporation has increasingly seen its capacity for civic duty and engagement diminished. Over time, concern for the national interest has been squeezed out by the twin forces of profit maximization and cosmopolitanism.

If a company conceives of itself as duty-bound to maximize shareholder wealth, and if its leaders barely see themselves as American at all, what room is left for patriotism? Today's populist movements — for all of their incoherence, frenzied emotion, and lack of decency — sense this shift, and they are angry.

They have a point. The turn away from corporate patriotism is in some instances not only a betrayal of national trust, but of the corporation's origins. It also reflects an incoherent approach to the concept of corporate "personhood." And yet, that shift is contingent. As demonstrated by the ancient Romans, by Henry Ford's vision, by SHAMROCK, by Hobby Lobby, and by the actions of AT&T and banks after 9/11, corporate patriotism is not an impossible myth. It is a tradition that can be, and should be, recovered.

Yishai Schwartz, a student at Yale Law School, was an associate editor at Lawfare


Insight

from the

Archives

A weekly newsletter with free essays from past issues of National Affairs and The Public Interest that shed light on the week's pressing issues.

advertisement

Sign-in to your National Affairs subscriber account.


Already a subscriber? Activate your account.


subscribe

Unlimited access to intelligent essays on the nation’s affairs.

SUBSCRIBE
Subscribe to National Affairs.