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For a small state, Delaware corporations have a huge impact on how they are run around the world. The new book looks at the state monopoly on corporate formation, with a skeptical look at how Delaware politicians, regulatory agencies and law firms will continue to seek to join there.
This comprehensive legislative process is good for the corporate business that controls other U.S. states. Delaware sometimes attracts foreign corporate filmmakers, who are seen as a safe haven for copyright protection. It is also good for the state, which uses the revenue and legal fees from corporate documents to fund the work. But it’s not good for society, says Hal Whiteman, a former Financial Times journalist and now director of intellectual capital at the University of Chicago’s School of Business.
Whitzmann sees Delaware’s success in this area as a waste of corporate governance, transparency, and even democracy. Located on the Greater Corridor between New York City and the Washington, D.C. power plant, this small three-county state has made itself ideal for business, and unsuspecting corporations around the world can now do whatever they want without fear. Whitzman said in his book that their owners would be exposed.
Delaware is on the news today for two main reasons. First, it is the home of President Joe Biden, who has spent the last several decades representing Capitol Hill. (Wetman entered the Biden Senate vote and how his support enabled Delaware to continue to dominate the corporate business.) Written by an unelected State Senior Advocates Committee and Greenwich is the least controversial issue in government legislation – a rule that governs when companies compete with each other.
This was recently highlighted on Twitter, with Delaware Corporation signing a deal with Tesla and Mars billionaire Elon Musk, the founder of Papal. Any attempt by Musk to revoke the agreement must go through a Delaware Chamber of Commerce court, where a merger will be decided.
Wetzman identified several internal problems with how Delaware works.
The state’s first trademark is a cooperative system, known locally as “Delaware Road.” This means you can be more efficient at doing things, because there is less conflict, but important differences are ignored on paper. One example is the pre-separation racist conflict that turned into a school bus (Biden opposed federal bus efforts, especially during the civil rights era, although he said he was anti-discrimination in schools).
In a corporate forum, Delaware Way usually means that all parties work together to protect Delaware’s “Frances”; Inclusion work is known. This means that the team will do little to tackle the effects of attracting this business to streamline regulation and encourage companies to continue sending out inclusion documents. Whitzman highlighted the many international law enforcement and anti-money laundering efforts that are inconsistent with Delaware’s corporate law, and noted that government laws are known to help protect corporate owners from liability.
If Delaware changes its system to promote transparency and openness and uses a more democratic system, it may lose some corporate jobs, especially to malicious companies. But, Whitzmann argues, that country – and the corporate world – may just need it.
Hall Whiteman, What about Delaware? How the First Empire supported the rich, the powerful, and the criminals – and how it cost us all. Princeton University Press, 282pp, 2022
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