Kodi Nelson
Pols 1100 / 1pm
Dr. Joshua Gold
Summary-Critique
The Gangs of America: The Rise of Corporate Power and the Disabling of Democracy
was written in 2003 by Ted Nace as an expose of the American Corporation’s transition from its
highly regulated beginnings on into the controversial present day political and economic
powerhouse. The first and second main points being discussed will be from the Introduction
exploring instances of corporate crime, as well as the experiences that helped shape Nace’s
popular democratic views on the modern corporation. The third focal point under scrutiny will
be Chapter 8: The Judge where the questionable actions of Supreme Court Justice Stephen J.
Field helped empower the corporation through the fourteenth amendment. The criticism offered
will be in agreement with the author’s views on how corporations participate in criminal activity
often avoiding any real consequences, the pro-corporate interpretation of the fourteenth
amendment, and the inside view of a company becoming a living entity know as a corporation.
Ted Nace begins his book with acts of criminal activity by corporations and the idea that
this type of behavior is “business as usual”. Nace leads off with the image of Scott Sullivan, CFO
of WorldCom, being arrested in August 2002 for “hiding $3.85 billion in company expenses,
conspiracy to commit securities fraud, and filing false information with the Securities and
Exchange Commission” (Nace ’03, p.7). Sullivan, along with Corporate Executive David Myers,
was looking at a maximum sentence of 65 years for their crimes. Nace recalls another set of
crimes dating back to 1936 when the Executives of General Motors, Standard Oil of California,
Firestone Tire and Rubber Co., B.F. Phillips Petroleum, and Mac Manufacturing created a
holdings company, National City Lines, that proceeded to buy up and destroy electric trolley
lines in order to lease the new system to franchisee’s with the stipulation that they convert to
diesel ran General Motors buses. In April of 1945 a federal jury convicted GM, along with the
other four partners in crime, for conspiracy to commit anti-trust violations fining each company
$5000. Nace states that obviously both are crimes, yet the bigger the caper, and the more
businessmen behind it; the more likely big business will get its way flaunting their “corporate
power” and avoid any real punishment.
The authors description of how unlawful activity performed by a select few in a
corporation warrants the full wrath of the legal system, yet the combined criminal activity of
multiple corporations gets a slap on the wrist, is as evident today as it was when described by
Nace. The evidence supporting this claim is two high profile fraud and insider trading cases:
Enron President Jeffery Skilling and Countrywide Financial CEO Angelo Mozilo. Enron was
responsible for successfully lobbying for deregulation of electricity, playing a major role in the
rolling blackouts in California between 2000 and 2001, costing California residents billions of
dollars in manipulated electric costs (Miroff, ’10, p. 39). In 2004, Enron President Jeffery
Skilling was indicted on 35 counts of fraud, insider trading, and crimes related to the highly
publicized Enron scandal that was responsible for the loss of over $60 billion in shareholder
value. In October 2006, Skilling was sentenced to 24 years in prison and $45 million in fines
(Wikipedia.org, Jeffery Skilling). In 2008, Countrywide Financial Corporation CEO Angelo
Mozilo was brought before Congress to answer for the large salary and bonus package he
allowed himself during the financial crisis (Miroff, ’10, p. 51). Mozilo, being investigated by the
SEC, was allegedly committing unlawful acts such as fraud and insider trading. In 2010, a
settlement was reached by the SEC fining Mozilo $67.5 million, and in 2011 the Justice
Department decided it would not prosecute Mozilo for some of the same charges Skilling faced
in 2004. The settlement by the SEC was a mere penance compared to the half a billion dollars
Mozilo made, with the help of Ex-Fannie Mae CEO Franklin Raines, Ex-Fannie Mae CEO Jim
Johnson, and other “Friends of Angelo”, using predatory sub-prime lending tactics that helped
bring about the Great Recession of 2009 (Callahan, ’10, Huffington Post). Andrew Young is
quoted as saying “Nothing is illegal if 100 businessmen decide to do it” (Nace, ’03, p. 8) a
statement that points to the problem with unaccountable corporate power.
The second point of interest is the understanding of the events that helped construct
Nace’s ideology on the modern corporation. Nace’s early years of high school pits him opposite
a large energy corporation applying to strip mine a piece of the Badlands he reveres as beautiful
to just after college when he worked as a community organizer helping locals fend off the
advancements of corporate ran strip mining in North Dakota. Nace goes into detail about the
unyielding efforts of the corporation to implant itself into the local community, not to necessarily
gain popularity, but to establish dominance. Realizing the people that make up a corporation
may be good, and a corporation itself may be bad, it is not a person with a “soul to be damned,
and no body to be kicked”, but rather an entity, acting on its own motivations (Nace ’03, p.11).
Later Nace moved to California and started a computer book publishing company, Peach Pit
Press. Peach Pit Press started to grow, started changing into a life of its own to the point where it
was time to incorporate and eventually sell to the same big business types he holds so much
animosity towards. Nace developed a popular democratic view on the modern corporation from
two polar opposite view points, watching as large energy conglomerates strip a small town of
natural resources, and creating a business from the ground up watching it grow into a corporation
all its own.
The author has some good points about the existence of a corporation. The corporation
itself does not feel remorse for the strip mining described in North Dakota it is simply playing its
role in corporate capitalism. Nace points out the fact that more harm is done with corporations
acting well within the law pointing to the real problem of the corporation having its own political
influence. As Nace describes the creation of his own publishing company, a home based
business slowly growing larger eventually becoming incorporated, the notion of it taking on a
life of its own is understandably awkward. Nace is faced with the realization that his company is
growing into an entity with the prime directive to generate profit. The corporation is regulated
by the laws that govern it in an attempt to control corporate behavior. In order to continue with
the goals of maximizing profits, corporations have adapted to seek political influence
undermining the regulations placed on corporations by society.