Friday, January 22, 2010

Supreme fallacy

Contributed by Auggie
Concerned human being

The Supreme Court this week reversed legislative restrictions on the role of corporations in political campaigns, ruling that companies can spend as much as they want to support or oppose individual candidates. The decision was made on the grounds that corporations have the same rights as individuals when it comes to freedom of speech. As a concerned citizen of the United States I find this philosophy extremely disturbing. If we can’t rely on the Supreme Court to be intellectually honest then who can we rely on?

A corporation is not a person in any way, shape or form – it does not exist in corporeal form. A corporation is nothing more than a bundle of contractual agreements filed in some office or database, and it has no more rights to participate in the democratic decision making process than any other piece of paper. You could write a book on this topic, but in the interest of blogging etiquette I’ll limit my remarks.

Many states already have “paycheck protection” laws whereby no union dues can be spent for any political purpose such as lobbying and campaign donations unless the union members specifically agree, but shareholders and other stakeholders have no such protection. They may in fact be contributing to political causes they do not agree with. Even if a shareholder agrees with the corporate view, an individual citizen has nowhere near the political clout of a corporation (where the actual decisions are being made by a small number of people with power). Investors, consumers and employees etc. already have the right to challenge and influence the democratic process individual citizens.

Furthermore, most large corporations rely on pools of capital from investors around the world, and by treating the corporation as a person we are essentially allowing non-citizens to have a say in American laws and regulations. My concern is naturally with the U.S. because I live here, but I would think that any country arriving at decisions through a democratic process would not want those decisions overturned by foreigners.

The Supreme Court ruling produced vastly different reactions from the two major political parties, but my viewpoint is completely non-partisan. And believe it or not has nothing to do with my opinion on campaign financing. My real concern is the anthropomorphizing of corporations and how it blurs the boundary between capitalism and democracy.


  1. Anonymous1/23/2010

    Auggie-- I have the same concerns as you. Having voted republican about 95% of the time, I am still disturbed by this decision for the reasons you cite. Well said... JD

  2. Jeff Ryer1/24/2010

    I am not so sure I agree with your entire post. (Surprised ?)

    First off - I agree that corporations do not have the same rights as individuals, as in corps do not have the right to vote.

    You are correct in stating that most large corporations have many owners. But most "corporations" in the US are controlled by only a few individuals. It is important to note that your average individual, when they hear or read the word corporation, immediately associate the word with a large company such as General Electric. Your average citizen has no clue that anyone, in theory, could start their own bank, insurance company, or any number of complex organizations that just appear one day.

    So if you own a corporation and the governor, who is running for re-election, takes a position that he is going to raise taxes on businesses, how can you (as the business owner) fight back? Do you not have a right to use your corp $ and back a better candidate?

    Again, I believe that your average voter has no interest in lower tax rates for corporations. And as evidence I offer up the fact that the US corporate tax rate is one of the highest in the developed world.

    That said, I am not a fan of all the corporate lobbying and special interest lobbying that goes on by just about every special interest group, whether its dentists, polluters, or the association of one armed bowlers.

  3. This is one of those topics that seems simple but isn't. Here are some key considerations that must be factored into the discussion:

    First, while many individuals face daunting social pressure to join a union (making it necessary to pass laws protecting the union members against certain uses of union dues), there is no equivalent pressure driving individuals to become shareholders in a particular corporation. Anyone who doesn't like the way the corporation is spending their funds can divest their holding and invest elsewhere.

    Second, corporations have Boards of Directors, the members of which each bear a fiduciary duty to protect the financial interests of the shareholders. They are personally liable if they allow the corporation to spend money on political advertising that is not aligned with the financial interests of the share holders. It is true that a shareholder may invest in a specific company based on its prospects for earning a return only to find they are at odds with the required political strategy for achieving that return. In that case, the investor has a decision to make about whether or not to stay invested but, importantly, the power to decide is with the individual.

    I hear Auggie's cogent point about foreign investors underwriting the cost of corporate lobbying in America to support an agenda that might not benefit Americans. This is no different than Toyota advertising that their cars are better than Detroit's -- it is paid messaging on a mass scale aimed at diverting US wealth abroad.

    Our founding fathers wrestled with the notion that the masses may not be informed nor engaged enough to make decisions that support their own best interests, but ultimately, they decided to let the messages swirl freely (free speech) and the people will sort out what they want. And so it is today, corporations, owned by foreigners, loaded with capital, can advertise and lobby in accordance with the law, and the individuals will vote on what they want. Certainly they will have been influenced but that's the way it is.

  4. These are all good comments about a corporation's role in the political process. If the Supreme Court engaged in similar discussions to arrive at it's decision then I have no problem with it. After all, thats the process we have for making laws. My ONLY beef was they decreed that corporations are protected by freedom of speech. Giving corporations the rights of individual citizens is a slippery slope, and this is the topic I said that someone could write a book about (maybe someone has). If I were smart enough I would write the book myself.