The Rogers’ Feud—glimpses of feudalism within capitalism
The media are all agog as a truly rich family is having a spat in public. They are fighting each other over which of them should be in control over a corporate organization which is valued at $30 billion. The outcome does not matter. We should not care who wins the fight. Whoever wins, there will be no significant change. A handful of people, a few descendants of Ted Rogers, will control a huge amount of wealth. That wealth not only allows them to live in luxury but also to wield economic, political and cultural power. The way in which they accumulated (and continue to accumulate) that wealth and how they are permitted to use it undermines every principle by which the rich tell the working class they should live. It contradicts the idea that, all individuals, regardless of who they are, are to take responsibility for their actions. It mocks the idea that private wealth-chasing and wealth-creating private actors are individuals engaged in fierce competition with each other. It makes nonsense of the idea that none of us should be in a position to enable us to get special favours from governments.
Personal responsibility
Capitalists have never liked the idea that they should be responsible for their conduct as they chase profits. The corporation, a legally created vehicle, helps them, the rich, out. It allows them to walk away from the wrongs they do to fatten their wallets. The law states that, when investors do their business by means of a corporation, it is the corporation which, as a separate person with full legal capacities, is the person engaged in that business. The investors, known as shareholders, are merely bystanders, even though they get a vote on who should run the corporation and, therefore, how it should maximize the profits in which they will share. The peculiar result is that the corporation may be held legally responsible if something goes wrong but the shareholders, the real profiteers, are not responsible. The most that can happen to them is that the costs incurred by the wrongdoing corporation will diminish the return on their investments. They are off the hook.
Now you see them—in their Lamborghinis, on their yachts.
Now you don’t—when the law wants to get hold of them they become invisible.
So, if the Rogers corporation engages in, say, anti-competitive conduct or tax avoidance or exerts undue influence on politicians, neither Edward Rogers nor his mother, Loretta Rogers, will be held personally responsible. They would be, in legal terms, viewed as squeaky clean because the bad behaviour had nothing to do with them even as they bought another yacht or two with the proceeds.
The rich constitute the most legally irresponsible sector of a capitalist society. The Rogers family feud is not about anything except which of them should enjoy the pleasure of making decisions for which they will not be held responsible at law.
Democracy lite
How come that, inside the vast Rogers corporate business, it is the Rogers family who are the only ones who truly count? The Rogers family members own only one-third of the shares in the Rogers’ corporate organization. Why do those others, the two-thirds who constitute a majority of shareholders, not control the Rogers corporation? Basic democratic theory says they should. But, in capitalism, everything is upside down. The corporation being a creature designed to serve capitalism and capitalists, does not care a fig about democracy. The Rogers family feud brings this out in spades.
The corporate vehicle is a malignant tumour in the body politic. Whereas all of us are taught that democracy demands that a properly chosen majority should hold sway over the minority, this does not apply in the world of corporations. Shareholders’ power inside the corporation depends on how much they have invested. The equation is one dollar, one vote, not one person, one vote.
Let me stop for a moment to hammer home how the Rogers case brings out some points worth remembering as left activists fight the corporations and their agenda. First, it is now clear that, like any shareholders, the Rogers folk are not legally responsible for actions taken on their behalf. More, they thrive because they are the happy beneficiaries of legal rules and practices which are thoroughly anti-democratic. Shareholder democracy—about which shareholders prattle endlessly as they seek protection from other, even richer, shareholders—is a misnomer. Shareholder democracy, in practice, amounts to the manner in which rulers governed a feudal state, one in which, by dint of feudal law, the few lord it over the many. Those who have the most shares, those who have spent the most money, get the most votes, even though, usually, they constitute a minority of shareholders.
The architecture of the system on which capitalists rely, that is, the general concepts on which they rely, builds a house of cards. We should be able to blow it down. More: specific aspects of wealth-privileging laws revealed by the Rogers saga make it clear that it is vital to blow that house of cards down.
Side-stepping competitive and merit principles
In Canada, corporate law makes it possible to allocate shares without giving them any voting rights of any kind, providing there exists at least one class of shares to which voting rights are attached. This is the rule which lies at the centre of the Rogers’ family feud. Although the Rogers corporation is a business that allows other investors to participate, that is, contribute money in the hope that Rogers’ efforts will yield them a profit, it does not allow them to have any say in the running of the business (even though they probably think of themselves as entrepreneurs!). Virtually all the voting power, that is, the right to appoint directors who, in turn, appoint executives and who, collectively make decisions about what kinds of businesses ought to be pursued and how this ought to be done, is given to the disputing Rogers clan. They hold 97.5% of the shares to which voting rights are attached. This was the way in which the founder of the Rogers firm, Ted Rogers, ensured that his family would inherit what he had created. Feudalism is alive and well.
Similar arrangements characterize the top ranks of Canada’s elites. A few examples should suffice: Paladeau, Desmarais, Thomson, Stronach, McCain, Irving, Weston, Bronfman, Bata, Sherman, Shaw Communications, Fairfax Financial Holdings, Bombardier, Canadian Tire….They are rich people who inherited huge amounts of wealth wrapped in do-not-see-through wrappings. They are not so much emperors without clothes as they are people who have been bequeathed fancy clothes which render them invisible until they decide to tear those fancy clothes off each other. Canadian readers will know that quite a few of these families, just as the Rogers tribe is doing just now, have had tawdry, drag-out fights over the spoils, spoils, which all too often, they have done but little to earn.
One thing is for sure: they did not have to compete for their wealth, for their power. Not for them the fierce risk-taking, the striving, the facing off with competitors, not for them any of the things that their class prescribes as virtues by which the working class must live. The closest they come to competing is plotting in comfortable rooms against each other and/or battling each other in courts where lawyers do their fighting.
This desire to avoid competition, to become immensely wealthy without relying on their own talents or merit is, naturally enough, perceived by them as laudable. They embrace the anti-competitive principles it in all their daily practices. One aspect of the Rogers controversy shines a bright light on this less than praiseworthy feature of mature capitalism.
It turns out the current Mayor of Toronto, John Tory, is an advisory member of the Rogers family trust. It is that family trust–whose members include all of the family members locked in dispute, plus some directors they have chosen–is the actual owner of the shares which give the Rogers family control over the behemoth called Rogers Communications Inc., RCI to its friends.
By the way, note how the creation of a trust through which to hold the shares creates another hard-to-permeate wall between the real owners and the acts and conduct of the corporation. We know who they are, where they are, but they remain safe from us.
What that Trust decides to do by way of appointing of executives, identifying the direction of the business, selling or taking-over of assets, determines what RCI will do. When Edward Rogers decided to use his clout to oust the then CEO, one Natale, he eventually was confronted by his mother and siblings who tried to use their clout on the Trust to reverse the decision. In response, Edward had another go and then they went to a British Columbia court to determine which of them had used their clout according to the rules of corporate law and the by-laws of the Trust. A procedural reading by a judge has determined which of these rich people will control RCI. It is to be Edward, to the dismay of his mother and siblings.
Incidentally, these judicial rulings are handed down instantly as the needs of the rich are considered urgent, unlike those of indigenous children who try to get some justice. This is to be expected under capitalism. It was also the case under feudalism.
During these fractious manoeuvres, John Tory has been acting as an advisor. This has struck some people as a little weird. John Tory’s PR machine first said he was merely mediating; subsequently the story got a new spin. Tory was honouring a promise he had made to a man he revered, Ted Rogers, the patriarch of this squabbling family. He had undertaken to protect his legacy. The suggestion is clear: John Tory is rather noble. His intention to be true to his solemn promise surely cleanses the otherwise unfortunate fact that a sitting mayor is involved in the internal affairs of a private business which has many dealings with the city over which he presides.
It would be nice to believe that. Yet, how did John Tory find himself on this board of the Rogers family trust? It is hard to know, but certain things are known.
He was, and continues to be, a carefully chosen member of the feudal estate that is RCI. He is the grandson and son of one of the founders and partners of one of the more prominent capitalism-serving law firms in Canada. His father was Ted Rogers’ lawyer and eventually came to sit on the Rogers’ Board of Directors. Our current mayor got jobs as a broadcaster for Rogers’ outlets at various times. Early in his career he became the CEO of a department of RCI, Rogers Communications’ branch. In short, it is conceivable that he was chosen as an advisor simply because he is a man in public life who has earned the Rogers’ family respect. But it may also be the case that whatever merit he may have was noticed because he had the inherited pedigree and proven political convictions to make it safe to install him as an intimate member of the family compact that makes up Rogers’ controlling owners’ group. And while he elicits sympathy by saying that he does not stint in any way on his obligations as mayor, even as he feels that he must push himself to his physical limits to honour his obligations to his mentor and friend Ted Rogers, it is also true that he is remunerated by the family trust, to the tune of $100,000 per year. Bay Street would chortle about the naïve folk who would think that such a trivial sum might colour the relationship in any way, that it might throw doubt on objectivity and fair dealing. It is a mere pittance by the standards of the high and mighty, such as the Rogers family, or even by the standards of the CEO of Rogers, Natale, who is thought to be not very competent by some of the duelling Rogers clan and whose remuneration was noted to be $11 million last year. Still, John Tory’s annual fee for meeting his devotional obligations to the late Ted Rogers will not sound like chicken feed to Rogers’ cable and internet subscribers. And what should not be forgotten is that John Tory earns this ‘paltry’ $100,000 p.a. as an extra: it is the wage he earns at his second, part-time job. Uber drivers, eat your hearts out.
While John Tory may well have talents that the Rogers family could not find in others, it is manifest that John Tory did not have to prove himself while competing in a fierce competitive market for a plum job. He is a member of the governing trust because he is trusted by the family. His antecedents and connections make him trusted. He is what Warren Buffet calls a member of the lucky sperm club. In another, much less salubrious, setting, he might be known as a trusty, someone who can be counted on to favour the governors rather than the governed.
Feudalists as purveyors of the beauty of market competition
It has been shown that competition is not favoured by the rich and powerful. But it is well understood by those very same rich and powerful that to have countless numbers of people compete fiercely for the jobs the rich and wealthy are willing to offer, suits them very well. They actively promote the virtues of ‘fair’, individualistic competition. Their hatred for unions and the lies they tell about their corruption and narrow-mindedness are justified on the basis that unions set out to kill the greatest virtue of them all—unfettered competition between individuals which brings out the best in human beings. In a parallel way, the love showered on small businesses stems, in large part, from the need to create an impression that competition among them is alive and well and approximates the holy grail, fierce competition between rugged, self-reliant individuals. Small business is seen as a model for a decent society. From this moral premiss, it is but a short step to herald small business as the backbone of the economy. Of course, these non-competing propagandists know all of this is all untrue.
We have seen that small family groups like the Rogers control huge corporate organizations. But, even where close-knit families are not involved, a very small group of shareholders (from one to five) control most of the largest 500 corporations in the country. They run the economy, even though there are over a million of truly small businesses. Not only do a small number of people occupy the commanding heights of the economy through these market dominant corporations, they do not—as the Rogers story tells us they do not like to do– compete much with each other. In Canada, 4 retailers control 72% of the market; 2 warehouse firms control 91% of the warehouse business; Air Canada has 65% of the market; 2 firms account for 80% of bread-making and manufacturing;3 firms control 78.2% of the office supplies’ market; one movie theatre business has 75% of the theatres under its wing; 4 corporate outfits have 74% of the market for glasses and contacts…A few tightly controlled firms run each major sector of the economy; the myriad of fiercely competing small businesses in these sectors are subjugated to these powerhouses’ dictates. Competition takes place but it is only ideologically significant; economically it is peripheral. The Bryce Commission on Corporate Concentration concluded that “free markets composed by many small firms…have never existed…the Canadian economy has been composed of large firms and oligopolistic markets”.
As it happens, the Rogers play an influential role in propagating the idea that fierce, fair competition—in which they are careful not to engage—is something to be admired, something to which non-wealth owners should aspire. They do this through the sport teams they own. RCI has 37.5% ownership of a corporation called MLSE. MSLE owns the Raptors, the Maple Leafs, the Toronto Argonauts and Toronto F.C. There are two (two, to reinforce the point made above) other owners of MLSE. One is Bell Canada (supposedly one of Rogers’ fiercest competitors!) which has, like Rogers, a 37.5% stake and a firm called Kilmer, owned by the Tanenbaum family, which owns the remaining 25% of MLSE. And, oh yes, RCI owns 100 % of the only other major league sporting team in Ontario, the Blue Jays.
Note how far away the Rogers family is, in legal terms, from the on-the-ground assets and actors. Yet a statue of Ted Rogers stands at the entrance to a major stadium where some of the teams perform and it, in turn, is called the Rogers Centre. Legally distant; functionally inextricably intertwined. Legally irresponsible, factually in control.
Games are competitions with rules which bind all the contestants in the same way. People may bring their own talents and capacities, nothing else. There is to be a struggle on a level playing field and this will allow the best people to win. This, of course, is what a competitive market is supposed to do. Loyal fans absorb all the lessons of the beauty of fierce competition systematically and continuously taught by the ups and downs of the various team, the lessons being hammered home by media pundits, broadcasters and television. As this is done, the idea that a few should be allowed to own most of the assets by parasitic, but influential, opinion moulders is not questioned.
The Toronto Star, when reporting on the Rogers family feud, will always insert a sentence somewhere in their reports. Typically, it is put in parentheses, as in “(David Peterson, who is one of those independent board members, is also vice-chair of Torstar Corporation, which owns the Toronto Star)”. This disclosure acknowledges the close links between the elites, via corporate boards and media, with governments. Here it should be noted that Tory’s father left the family law firm to act as chief financial advisor to Ken Thomson during the expansion of the Thomson Corporation before he sat on the board of the fledgling Rogers Communications Inc. at the invitation of close friend Ted Rogers. The Star’s bracketed acknowledgment is an implicit admission that such links might have corrosive impacts on the working of democratic institutions, making it, well, feudal like. The bracketed acknowledgment suggests that the Toronto Star understands that this danger is to be averted and that its disclosure is evidence of the fact that its reports have not been unduly swayed by its connection with the rich and privileged. As a side-product, it also reveals the fact that John Tory and David Peterson, political enemies in political party terms, are both seen as allies-to-be-relied upon when it comes to the protection and furthering of private property interests.
There is something quite disturbing, even annoying, about the fact that a family which got to the top of a heap without too much effort is in a position to urge everyone to pit themselves against all others in order to survive. And, after inheriting their wealth, the Rogers are in a good position to accumulate even more wealth. Maybe, just maybe, it is possible that their links to public powerbrokers may play a helpful part. Speculative though this is, it may not be idle speculation.
Consider here the fact that Rogers bought that Toronto stadium, the Dome in 2005 when it had fallen on hard times. Rogers paid $25 million for a building which a decade earlier had cost $570 million ($1,04billion in today’s dollars). It paid less than 4% of that original capital cost which had been furnished almost entirely by the federal and provincial governments. Of course, this could be put down to the shrewd people running Rogers who know how to take advantage of a market opportunity. Or it could be down to luck. Or it could be that their links to powerful Conservatives and Liberal helped them to this windfall. For that is sure what it looks like.
There have been recent reports that the RCI and Brookfield have been contemplating cutting the Rogers Centre’s playing fields down to move them a little and use the vacated land for housing and developments. Presumably, these corporations believe there is some profit to be made. Their connections with politicians (such as Tory and Peterson) may prove to be helpful. This is speculative, I know, but why else have these folk around?
Lesson
We should be grateful to Edward Rogers, his mother and siblings. Their spitting and snarling has brought out the fact that the owners of the means of production are not just distinguished from the rest of society by having more money. They are also privileged by law, shielding them from taking legal responsibility for their conduct. Their instincts and practices are consciously anti-democratic. They require the working class to fight for every morsel while they are spoon-fed. They knowingly mould the working class to accept ideas that serve the wealthy and harm those without any wealth. They are able to co-opt elected politicians and ideologues to serve them. They constitute a feudal force inside a pretend democracy.
In capitalism everything is upside down.
Harry Glasbeek
8 Nov. 2021
Toronto.