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February 3rd, 2010
The Misplaced Ire of Citizens United
photo credit: Ned Vizzini
The U.S. Supreme Court recently announced a ruling which has been divisive both among the justices of the Court and the people at large. In Citizens United v. Federal Election Commission, the Court determined in a 5-4 vote that corporations could independently spend money to support or oppose a candidate for a federal office.
Citizens United is a conservative nonprofit organization which wanted to run TV commercials promoting its documentary “Hillary: The Movie” which was critical of then-Senator Clinton. Additionally, they desired to broadcast the film just before the election. Both of these actions ran contrary to the onerous restrictions imposed by the notoriously anti-free-speech McCain-Feingold bill. After the appellate process, the case made its way to the Supreme Court, where the divided justices ruled in favor of Citizens United, overturning the previous restrictions on corporations to independently promote election-related information.
For all of the fuss being made by those who both support and oppose the Court’s ruling, few people have bothered to address the underlying forces at work to determine why all of this is even an issue to begin with.
Why do corporations want to become involved in politics? Why does a for-profit entity feel the need to spend its tightly-controlled resources on a political candidate? Why do elections matter to CEOs and shareholders?
Elections are, of course, the process through which individuals are placed into a political office which has a certain amount of authority. As such, the spending of a corporation to support or oppose a candidate is an attempt to ensure that their preferred individual obtains that office, ostensibly to secure a preferable outcome for their business in some aspect.
To understand the reasons behind this action, though, it is important to analyze the subsequent part of a corporation’s political activity. Current elected officials are very often courted by lobbyists who are simply paid corporate liaisons. Lobbyists have one fundamental objective above all others: ensure that legislation is passed that is favorable to their employer’s operations.
All of this political involvement by for-profit corporations is merely a symptom of what is the underlying disease: corporatism.
Corporatism is, much like the word sounds, the domination of the political process by corporations. Put more simply, it is an effort by companies to try and use the legislative process to see laws enacted that will help them be profitable. Opponents of the Court’s recent ruling are angry and worried that the proverbial flood gates will now be opened for corporations to essentially buy candidates. Witness one Fred Wertheimer, president of Democracy 21:
Today’s Supreme Court decision in the Citizens United case is a disaster for the American people and a dark day for the Supreme Court.
The decision will unleash unprecedented amounts of corporate “influence-seeking” money on our elections and create unprecedented opportunities for corporate “influence-buying” corruption.
However, what the opponents of the Court’s ruling fail to understand is that it is corporatism in the first place that impels companies to get involved in the process. When government spending becomes a game whereby influential lobbyists can court politicians and obtain for their employers favorable subsidies, regulations, tariffs, and other economic interventions, it only makes sense that a company who wishes to succeed would participate.
Thus, corporate influence is not the effect of the Court’s ruling, but rather is the cause. Our problem is not companies participating in the political process—after all, companies are merely a group of individuals who each retain their right to free speech, and can collectively exercise that right—but rather the tolerance by every American of elected individuals abusing their authority of office and exceeding the limits placed upon them by the Constitution and the oath they swore to support and defend it.
Misguided reactions are now springing up as a result of the Court’s ruling, such as Lawrence Lessig’s push for the Fair Elections Now Act which would effectively neuter political free speech altogether—one’s donation of personal money (a representation of their time and actions) most definitely being a form of speech and support. These and related efforts miss the point altogether and instead try to advocate for further regulation and restrictions on one’s ability to support his or her preferred candidate. These propositions will not fix the underlying problem, and thus corporatism will continue as it has for so long.
So, what’s the answer? More regulation, or less?
As always, the answer lies with the American people, and their desire (or lack thereof) to clean house and elect only those individuals who will refrain from approving legislation that favors one group of people over another. The responsibility is ours, while using the free speech that the Court has with this ruling protected, to work tirelessly to ensure that those who are voted into office have the will to do what’s right for the Republic, not what’s right for a for-profit entity.
10 Responses to “The Misplaced Ire of Citizens United”
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I believe the Vietnam veteran and illustrious recipient of the Purple Heart award, John F. Kerry, has recently indicated we need to begin proceedings to bring about a constitutional amendment to overturn the Supreme Court on this issue.
On the issue of a politician funded by and favoring a corporation: case in point?
Just moments ago, Lawrence Lessig sent out an announcement of another initiative he’s pushing for in response to Citizens United: a constitutional convention.
And this video by Reason hits a couple of the points I’ve highlighted here, as well as a couple more that are worth considering.
I don’t follow your logic here Connor. There are a plethora of actions a political officeholder can take or refrain from taking that are perfectly constitutional by even a restrictive definition but would still benefit a corporation or even an entire industry. Even if we stopped officeholders from “exceeding the limits” placed on them by the Constitution (which we are not ever going to be able to do of course), it would still be in the bottom-line interest of big corporations to dominate our political process.
The problem here is the definition of a corporation. If we are to apply the Constitutional test, then we need to understand what a corporation was in the eyes of the Founders. A corporation was a legal entity chartered by an individual state for a defined period of time to perform specific economic or other activities. If the entity failed to perform those activities or violated the law, the charter would be revoked. To consider that legal entity to be a person and to apply the rights enumerated in the Constitution and Bill of Rights to that entity is the mistake here.
The individuals who own shares, or works for, or directs a corporation are and should be free to speak and assemble and otherwise participate in the political process. The legal construct with which they are associated is not a person and should not be endowed with the rights of a person. As Thomas Jefferson wrote, “I hope we shall… crush in its birth the aristocracy of our moneyed corporations which dare already to challenge our government in a trial of strength, and bid defiance to the laws of our country.” No profit-making corporation can claim to be a free association of citizens, nor can its bank accounts be construed as the collective contributions of its employees and/or shareholders to be used on their behalf.
One last note, I disagree with Professor Lessig. We are far too polarized a nation and far too dominated by corporations to engage in a sane process of Constitutional reform.
One thing that’s ironic about “corporatism”, is that, like a drug, it damages the very businesses that participate in it. At least that’s my belief.
The first way this happens is that it forces corporations to “cast the die”; in other words, capitalize on a highly inflexible business strategy. So when markets (and laws) change like they always do, suddenly the company doesn’t have a leg to stand on. Example: Chrysler and GM.
The more fundamental problem is the complacency, mediocrity, and illusion of control that is fostered inside a corporation by legal favoritism. A great example of this is the anti-trust exemption enjoyed by for-profit health insurance companies here in the US. It’s my observation that sometimes corporations develop the attitude that the government is their “customer,” and customers are not. In my opinion, abandoning basic respect for your customers is often the first step towards bankruptcy.
Josh, what exactly do you mean by “corporatism” that forces corporations to capitalize on a highly inflexible business strategy. There are some industries that require a very large capital investment to be made before any revenue can be generated, and significant time and capital outlays to change course – the auto industry for example. That’s why US corporations tend to simply buy up businesses in what they think are emerging markets and sell off divisions that are lagging and are costly to re-tool. That strategy costs the economy jobs every time.
In the for-profit health insurance industry, the customer is the entity that is making the decisions about purchasing insurance – in general the corporation, not the individual. While more government anti-trust control might be helpful, it would not solve the key problems of the health insurance market: inability to provide universal coverage, and rapidly escalating costs.
While I agree with your sentiments Connor, I don’t think the only solution to this is to elect persons with integrity. That’s making the assumption that unintentional personal bias will not enter into the process. It will and would be taken advantage of even for the most principled elected official. Even assuming that this were true and we could elect leaders who ignore this, because we live in an imperfect society, choices between two different groups of people will always have to be made. You come dangerously close to the “let’s make it fair for everyone” fallacy when you say “…clean house and elect only those individuals who will refrain from approving legislation that favors one group of people over another.” That’s an impossible (or maybe overstated) position to take, decisions of any signifigance will always have consequences on both sides.
We’re not perfect, that’s the problem in the first place, and why we’re in this situation. The point of laws to limit this kind of abuse is so that we (collectively) don’t have to worry about this on a continuous basis. It’s not practical and arguably not sustainable. I agree that we do need to be engaged and involved, but this is a side-effect, as you point out, of an even greater problem. That problem needs to be fixed and this issue will more or less go away.
That said… Unfortunately I don’t have any better solution to propose here either. =)
While I strongly agree with the free speech arguments, I don’t believe that the majority of corporations work in the best interests of their owners (shareholders), employees, or our nation.
While this guy is over the top: http://marketplace.publicradio.org/display/web/2010/01/28/pm-fox-commentary/
I like his conclusion that if corporations are people with 1st amendment rights, they should be committed to an asylum for being crazy.
Corporations are run by old boys clubs and the people who run them have too many exemptions from liability. Shareholders are given a sanitized slate of board members with different specialties (who don’t identify with employees at all because only a couple can actually be company employees) by the existing board and management. Executive management is chosen by the boards. Management hires their friends and dilute shareholder value by loading them up with giant pay packages of cash, stock, and options, which come regardless of performance.
This is exemplified by derelict banks like Citi paying out more in bonuses than they brought in as revenues. Vanguard fund managers, who own (by proxy) as many shares as anyone (aside from the federal government) complained about having no power to stop management from stealing the assets of the company they own. “Incentive” Payment beyond a certain level passes up the law of diminishing returns, and there has to be plenty of competent, out-of-work bankers in this economy to take the jobs if they want to.
There has to be a corporate governance way to handle the varied political interests of corporate stakeholders (Share and debt owners, management, employees and customers). Allowing a few people in management to blow other peoples assets to buy air time or lobby congress for their whims and short term gain at the expense of society at large is anything but FREE speech. Like every other large organization, a little bit of sunlight and full transparency works wonders. Public companies should file a lobbying plan, objectives and outlays with the SEC (and broadcasters can file the political income side with the FCC as well).
The other side of this equation is making management responsive to owners. Large national corporations are pursuing congress for special treatment, so the interstate commerce clause needs to be brought to bear to protect owner rights over the use of their assets.
Here is a video explaining why the Supreme Court was right and Obama is wrong about the Citizens United case.
As long as government wields immense power, those with money will try to buy it. The only way to prevent corporations from buying government influence is to give the government less influence over our lives. Giving the government more power to prevent coercion from special interests is an oxymoron.