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Democracy, Incorporated

This article was written by in Society. 27 comments.


The following is at least as much opinion as fact, but if I say something that isn’t factual, please tell me.

Our American version of democracy has never been pure or particularly representative. From women’s suffrage to civil rights to lobbyist influence to rumors that can spread around the world before truth gets up off the couch, something has always gotten in between a citizen’s wishes and her elected leaders.

I had thought things were moving in a positive direction with the proliferation of the Internet. It’s never been easier to encounter dissenting opinions or do your own research. I’ve been having some healthy (and some insipid) debates through Facebook for the last couple of years, the kind that would’ve otherwise happened only with friends or co-workers. I like having those. It’s incredibly important to be available to hear other points of view. Not to mention the continued release of government data available for analysis by anyone. Together, we can help each other get to the truth.

A giant step backward

Yesterday, our Supreme Court ruled that since money is considered a kind of free speech, and because corporations are considered a kind of people, (I’m not sure I agree with either of those assumptions), then corporations are free to spend as much as they want to promote or condemn a particular political candidate.

The problem, from my point of view, is that corporations only ever have one priority: increase profits. And especially in America, they want to increase profits in as short a time-frame as possible. We don’t take a long view in this country, as they tend to do in Europe and Asia. That’s why, for example, the electric car took an extra few decades to go into production, and why we’re still dumping toxic chemicals into otherwise useful water. We avoid doing the right thing, because that would be expensive, and shareholders would not be pleased.

You and I, as individuals, are limited to donating $2,400 to a federal candidate. Corporations can now spend as much as they want. Not in donations, exactly, but in other creative ways.

Two days ago, the Shell Corporation would’ve been unable to produce and distribute a feature-length movie explaining that oil is the obvious and only logical way to fuel your car, and therefore you should vote for Sarah Palin.

Clearly, I made up that example. But I feel confident that if Shell could spend a billion dollars to elect a candidate that would help them realize $4 billion in profit, they would.

Is this a partisan issue?

(For the record: I’m registered Independent, and always have been. I tend to vote Democratic, because Republicans push me away with their talk about abortion, civil rights, lower taxes in the face of enormous deficits, and the general idea that individuals fending for themselves is more American than people coming together to help each other out.)

The Supreme Court didn’t have to make such a large ruling. They specifically asked to review the long-standing precedent while in the middle of a much smaller case. Conservative opinion holds a majority in the Supreme Court at the moment.

In 2008, Barack Obama was able to raise more than John McCain by switching from federally-supplied election funds to private sources. The Obama campaign raised a previously-unheard-of amount through “micro-donations”, such as the $160 I donated over the course of three or four months.

But corporations, because they are almost always motivated only by profit, will want Republicans to win more than they want Democrats to win, because Republicans tend to vote to protect profits more than anything else. And corporations will always have more to spend on candidates than individuals will.

I acknowledge that some corporations, while incapable of having their own ethics, are run by ethically-minded people. Not all of them want to see America continue its dependence on foreign oil, High Fructose Corn Syrup, ammonia-laced beef and unnecessary medical tests.

But really all it comes down to is who is willing to spend the most money in an election. It could be Starbucks, it could be Walmart, it could be Sichuan Tengzhong, that previously-obscure Chinese business that recently bought the Hummer brand.

Wait, foreign-owned corporations?

Yes. There’s no difference, according to the law. Chinese, Saudi, German, Australian, it doesn’t matter. Any corporation operating in the U.S. is equally unrestricted.

What about unions?

Yes, this recent ruling also allows unions and other advocacy groups to spend as much as they want in a given election. But who has more to spend, the American Federation of Teachers, or Microsoft? There’s no contest between unions and corporations.

Is there a silver lining?

One possible silver lining to what the SCOTUS did yesterday is that the already-existing problem of “corporate personhood” will be apparent to more people. I’ve never much liked that precedent. It’s illogical to equate a business with a person. A business is a collection of contracts and bank accounts. It doesn’t have a brain with which to generate opinions, so I don’t think free speech applies to it.

Additionally, before the millions start flowing, the Federal Election Commission will have to come up with updated regulations and enforcement processes. I don’t really know what to expect here, though.

What can be done?

To begin with, I’m throwing my lot in with a group who is pursuing a Constitutional Amendment to clarify that corporations are not people. Frankly, I’m worried for my country that it’s come to that: we have to write down that a business and a person are different things. But in general, once the Supreme Court has spoken, changing the Constitution is the last thing you can try.

Here’s a pretty good video explaining what happened, what it means, and what can be done:

Landmark Supreme Court ruling allows corporate political cash, Reuters, 21 Jan. 2010

Free Speech for People

Published or updated January 22, 2010. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Smithee formerly lived primarily on credit cards and the good will of his friends. He is a newbie to personal finance but quickly learning from his past mistakes. You can follow him on Twitter, where his user name is @SmitheeConsumer. View all articles by .

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{ 27 comments… read them below or add one }

avatar David

Thank you for this. This is an issue that both sides will suffer for. Liberals right away, Conservatives in a few years. Eventually all of us “we the people” will be left out of the Democratic process. Sayanora, USA.

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avatar DD

I disagree that a corp will spend a billion for only the chance to make a few billion more. But they might spend $50 million on that chance.

At first I had the same feeling on this as you, I feared that the courts totally sold out our political process( it was only mostly sold before). But then I thought that this could be a “tipping point”. What if we citizens get so fed up with added corporate messages that it backfires on them. Like a song that gets played too much on the radio, you like it at fist but after a while you get sick of it.

Perhaps the added money will be good for the newspapers and other media and they can be the public’s watchdogs, fact-checking all the new ads for us.

Of course the cynic in me thinks that the media is ruled by the same advertising $ that the corps will be using to try buy their political favors with. If that’s the case, what a bummer.

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avatar G

For the record, if you look at large corporate donations they go to both parties, but mostly to the incumbents. Democrats rake in a ton of money from corporate donations and to say that corporations give mostly to republicans is wrong. For example, in the 3rd quarter of 2007 (a trend which continues to today), top 10 corporate PAC recipients list leads with Steny Hoyer (D-Md.), Charles B. Rangel (D-N.Y.), James Clyburn (D-S.C.) and Nancy Pelosi (D-Calif.). These don’t look like republicans to me. Citibank, for example, gave 63% of its political donations that year to democrats. Bottom line is corporations support both parties (to do so otherwise is a huge risk) but tend to favor incumbents and the party in power.

There are problems as well with small donations from private sources. President Obama never released his donor list. We have no idea how much of this money was from foreign sources or multiple donations from a single individual. This is not regulated. McCain-Feingold didn’t end political corruption – it just moved it into the shadows and forced people to get creative. Hence entities like Moveon.org or the infamous Swiftboaters in the 2004 campaign.

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avatar Madame X

Thank you, great post.

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avatar SteveDH

Does the candidate who raises the most money always win – I think not. Its true there is a huge influence on the electorate before they go to the poles, but once there, they control the outcome. Look at the most recent vote in Massachusetts. Spending 164% of last year’s Federal Budget and a backroom designed Health Care bill were probably more of a factor than any corporate funding could have overcome.
I thought, (but I went to College some 40 years ago) that corporate entities were considered “persons” for tax purposes. Although I disagree with this sweeping decision I doubt the doomsayers will see nearly the dire consequences being projected.

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avatar MoneyEnergy

And if you read one of today’s or yesterday’s posts on the SCOTUS blog, you’ll see they’re even considering allowing corporations to vote, since corporations have or can have expanded “personhood” status. I’m not sure if this is already part of the current ruling – I don’t think so – because this is even worse. Let’s hope people aren’t actually that insane, because once corporations can vote like individuals it’s all downhill in terms of setting ugly precedents. I hope some other cultural logic comes to take over sooner rather than later…

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avatar Peter

I think you may have read that wrong, it was saying that justice stevens in the minority was writing that somewhat tongue in cheek:

Supreme Court Justice John Paul Stevens may have had his tongue in his cheek, or perhaps wanted merely to taunt the majority, when he wrote in Thursday’s opinion on the role of corporations in national politics: “Under the majority’s view, I suppose it may be a First Amendment problem that corporations are not permitted to vote, given that voting is, among other things, a form of speech.

The majority didn’t say anything like that. just wanted to point that out.

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avatar JC

Smithee,

I believe you are mistaken on your reasoning regarding the supreme court issue.

The supreme court issue deals only with express advocacy and electioneering communications, not with direct contributions to candidates (which are STILL BANNED). Before, Corporations could not directly use money from their treasuries on ads urging the election or defeat of a federal candidate (express advocacy). They were limited to making donations to Political Action Committees (PACs), and the max contribution from the Corporations (as well as employees and family of employees) was $5,000. Furthermore, they could fund ads through the PAC that mentioned the candidate, but those types of ads were banned 30 days before a primary and 60 days before a general election (electioneering communication). In addition, even though typical corporations were barred from these types of communications, media companies (radio, tv, and newspapers) were not.

In essence, what the previous law had held was that in certain circumstances, government could restrict freedom of speech. The supreme court, wisely in my opinion, held that this was in direct violation of the first amendment. It correctly stated that freedom of press is not “more applicable” to media companies, and with the ubiquity of ways to publish nowadays, the distinct line between what “press” meant in the 18th century and now in the 21st century is very different.

“Two days ago, the Shell Corporation would’ve been unable to produce and distribute a feature-length movie explaining that oil is the obvious and only logical way to fuel your car, and therefore you should vote for Sarah Palin.”

Your statement is mostly true here. Two days ago, Shell could have been able to produce that movie as long as it didn’t endorse or discredit a candidate. Think about “An Inconvienent Truth”, a great movie about the global warming issue, would’ve been banned from distribution if Al Gore said at the end: “Vote for Candidate X.” That’s all it would’ve taken (yes this really was the government’s argument). T. Boone Pickens’ “Pickens Plan” ads would’ve been banned if he had tried to endorse a candidate (or urge the defeat of a candidate).

“The Supreme Court didn’t have to make such a large ruling. They specifically asked to review the long-standing precedent while in the middle of a much smaller case. Conservative opinion holds a majority in the Supreme Court at the moment.”

While it is true that 6 of 9 justices were appointed by republican presidents, Stevens and Kennedy tend to be centrist on most issues, shifting the balance to the majority on practically any case before them. In this case, Kennedy went with the majority while Stevens (Ford’s appointee) went with the minority.

“In 2008, Barack Obama was able to raise more than John McCain by switching from federally-supplied election funds to private sources. The Obama campaign raised a previously-unheard-of amount through “micro-donations”, such as the $160 I donated over the course of three or four months.
But corporations, because they are almost always motivated only by profit, will want Republicans to win more than they want Democrats to win, because Republicans tend to vote to protect profits more than anything else. And corporations will always have more to spend on candidates than individuals will.”

I think you imply that if the campaign were held today that Obama (in a vacuum) would raise less money than John McCain. As I pointed out, this ruling has NOTHING to do with donations directly to campaigns as they are still banned. Your opinion on “profit=republican” is yours to have, I personally disagree, but remember this law affects labor unions as well, which are very well funded, wield massive amounts of soft power, and tend to back democratic candidates.

“Any [Foreign] corporation operating in the U.S. is equally unrestricted.”

In my opinion I think you over-estimate the importance U.S. elections have on foreign based companies. Again, they are STILL BANNED from directly contributing to campaigns.

“Yes, this recent ruling also allows unions and other advocacy groups to spend as much as they want in a given election. But who has more to spend, the American Federation of Teachers, or Microsoft? There’s no contest between unions and corporations.”

That statement isn’t necessarily true. (http://www.opensecrets.org/news/2009/08/liberal-political-action-commi.html) (sorry, I’m web illiterate).

In the end, America stops being America when it starts banning books, which is exactly what this law had previously allowed. This is the reason SCOTUS struck down this law.

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avatar Mike Piper

I’m in agreement that this ruling opens up a proverbial pandora’s box.

But I think that an amendment declaring corporations not to be people is way off base. First, they’re not people. That’s why they don’t vote. Second, the treatment of a corporation as separate from its investors (that is, its treatment as its own entity) is one of the most fundamental drivers of economic growth. If every investor were liable for the debts of a business, who would invest?

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avatar Peter

I know that many on the left are upset about this, but even the ACLU has stated that they thought the law was unconstitutional as an abridgement of the freedom of speech?

http://www.aclu.org/free-speech/citizens-united-v-federal-election-commission

I honestly don’t think this decision is going to have as much effect as you might think. if you look at corporate donations, as G mentions above, you’ll see that both Democrats and Republicans get donations, and usually the party in power – incumbents – get more because the corporations want to be on the good side of whoever is in office. Will this mean that corporations give more during the election season? possibly. But I don’t seeing it having an appreciable affect on the elections themselves. People can think for themselves, and both parties are going to have groups putting out advertising/documentaries/etc that support their position.

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avatar Brian

Is this the future of Consumerism Commentary? I certainly hope these sort of posts are reigned in, I come here for financial reading, not political reading.

Rant aside, let’s just take a small section of the post…

“But corporations, because they are almost always motivated only by profit, will want Republicans to win more than they want Democrats to win, because Republicans tend to vote to protect profits more than anything else. And corporations will always have more to spend on candidates than individuals will.

I acknowledge that some corporations, while incapable of having their own ethics, are run by ethically-minded people. Not all of them want to see America continue its dependence on foreign oil, High Fructose Corn Syrup, ammonia-laced beef and unnecessary medical tests.”

Including a disclaimer about assumptions is not permission to then freely assume whatever you feel supports your opinion. Hell, for someone arguing against the corporation being labeled a person, you sure write like they already are. You write that they feel, are motivated, have desires… I’m not sure what the issue is with the Supreme Court making it official, it appears you already believe it. Either they simply agree with you, or you really don’t know much at all about what you’re writing.

Given your multiple statements on policy issues, you don’t sound anything like an independent, which to me is someone who works to bring sides together and prefers compromise, even if some parts aren’t in line with his/her own policy beliefs. The old “I’m an independent, always have been…” is all too often thrown in to lend credibility where none exists.

There’s this little bonus: “…general idea that individuals fending for themselves is more American than people coming together to help each other out.”

PEOPLE coming together to help each other out is great… Government FORCING people to come together through taxation, policy, and programs is not what I would call American.

The whole post reads like a MoveOn e-mail rant… here’s another goodie: “But I feel confident that if Shell could spend a billion dollars to elect a candidate that would help them realize $4 billion in profit, they would.”

If you have any fact that leads to that conclusion, by all means share, because at least there would be a shred of reasoning as to why you feel this way. Did you work for Shell? Have you examined their political contributions and subsequent profits from policy decisions? Do you have a friend on the Board?

Your statement sounds a lot like your political leanings just help you assume that confidence, I’d be welcome to hear if it’s otherwise.

Hope I can come back tomorrow and read more about finances.

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avatar Jacqueline S. Homan

Politics is economics’ b*tch, under classical totalitarianism. What we’re entering is inverted totalitarianism in which economics is politics’ b*tch. The political becomes the personal. Just like the fiscal becomes the personal.

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avatar Edwin

It’s interesting how the original concept of corporations being separate entities to take liability away from owners has been warped to corporations being a sort of “person”. I do have to disagree that republicans get more corporate donations than democrats. I DO agree that their policy leanings are more favorable towards corporations and in a cost benefit analysis they could potentially get more support. I’m doubtful this will have as much impact as some people are saying. My political leanings are democratic but that has more to do on my policy positions than anything else.

Given how prominent support of politics is already in the corporate scene (in the form of MSNBC and Fox News) it’s not like this is some new problem we just ran into, it’s only an extension of what exists.

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avatar David

Yea Smithee – stick to only finances. Jeez. After all, this situation has nothing to do with money at all. ;)

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avatar NCN

If the government is going to regulate business, via the laws it passes, shouldn’t corporations have the right to advocate for their own positions?

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avatar Eric

“(For the record: I’m registered Independent, and always have been. I tend to vote Democratic, because Republicans push me away with their talk about abortion, civil rights, lower taxes in the face of enormous deficits, and the general idea that individuals fending for themselves is more American than people coming together to help each other out.)”

I like this schpiel lol

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avatar Erica Douglass

I do not favor the addition of political commentary to this blog. :(

-Erica

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avatar Investor Junkie

Erica, I agree. Unfortunately finances and government are becoming very closely intertwined. I think it shows some general trends with our government, business and society.

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avatar Eddie

Excellent news on this front Friday: two representatives introducing Amendments, 25,000 online supporters of call to revoke corporate personhood in 2 day: http://reclaimdemocracy.org

As for those who say “shut up about politics,” this is far too important to worry about offending anyone. Full speed ahead Smithee!

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avatar Kyle

Everyone is all up in arms abou this decision and I guess I just don’t get the problem. No one can force you to vote one way or the other. If you don’t like who the corporations are supporting don’t vote for them. You are in charge of you so make your own, educated decisions and screw how much money someone threw at a campaign.

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avatar Santos Berrios

Please stick to finances. I get my politics from real politics.com and don’t need opinion from a liberal amateur.

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avatar Smithee ♦1,358 (Quarter)

I’ll try to be concise, here. I have a lot to respond to. When I wrote the original article, I was boiling over with rage and covered in fear. I’m still very fearful, but I’m no longer seeing red. So to speak.

1) Relevance to Consumerism Commentary

I think it is relevant. Elections mean significant changes to the economy, and money drives elections. I wish that wasn’t the case, but it is. This has an indirect effect on how money flows toward you, and a direct effect on how your money impacts elections.

My prediction is that with this new deregulation, personal contributions to any given state or federal campaign will amount to maybe 1% of the total money spent on a candidate or issue. Again, I’m just guessing. We won’t know until after November. But if I’m right, it means our representatives will have no good reason to listen to their constituents, because their constituents will not be relevant to their re-election process.

If it helps, I don’t have plans to write more about public policy vs. finances, but this seemed too important not to write about. (And Flexo already wrote about the other huge story of the day.)

2) Donations usually go to incumbents

So far I haven’t found much research to back that up, but I’ll keep looking.

But aside from that, the SCOTUS ruling doesn’t affect donations, just other kinds of spending. Mostly, I suspect, television ads. Really expensive ones. You know those “Get a Mac” ads? Compare that with the last time you saw an ad for a pro-union position. Corporations are excellent at producing persuasive ads. Nobody else has the kind of money, knowledge and resources that they do to try and sell the people on something.

3) Corporate Personhood

The expanded free speech granted by this ruling is not at the core of my disagreement. It’s because it assumes that corporations have similar rights as individuals, but fewer responsibilities than individuals. I understand and accept that it’s been a long-standing precedent in this country, but that doesn’t mean I have to agree with it. It just means I have a long road ahead of me.

In short, a corporation doesn’t have a brain of its own, so it is incapable of forming opinions. Therefore, free speech doesn’t apply.

The people that work for that corporation, on the other hand, I want them to have as much free speech as they can handle. But you’re never going to find a situation where every employee of a large corporation agrees with the decision the CEO makes to spend the company’s money on a political ad. If that happened, you’d refer to them as The Borg.

4) The Constitutional Amendment

That may not be the best way to fix what I think is the problem. I’ve also signed up to learn more about the Fair Elections Now Act. I’m casting a wide net for possible solutions.

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avatar rocketc

Smithee, I appreciate political commentary and I think that people need as much information as possible about how our government impacts finances. I posted a reply to your article on my blog . . . for what it’s worth.

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avatar merehoff

One thing I think that is over looked in this debate is the influence foreign owned corporations will now have. So expanding the corporation as voter argument, you now how non US “citizen” corporations holding influence in a new and powerful way. When looking at countries with much longer histories than ours, they are better able to see long term effects than we are. I don’t consider myself a xenophobe but by extending this sway over the political scene to foreign individuals and entities I can foresee disastrous repercussions for our country.

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avatar Dustin

Personally, I completely agree with the SCOTUS decision to stand up for the First Amendment. I do see many disadvantages to this thanks to your post, but these can be mitigated if we further embrace our constitution and the Bill of Rights.

I think these disadvantages highlight the underlying issues with many of these campaigns for “reform.” Many a great political campaign have been based on limiting lobbyists and “unethical” influence on government. The root issue is that the government has too much power. If we reduce the power of the government to something closer to what is envisioned in the constitution, then superficial reforms to limit unethical influences on the government are also limited.

I don’t really like the idea of foreign influence on our government, but if we reduced the size and scope of government power, then we would be able to minimize foreign influence all while guaranteeing our freedoms… and I am one that believes a human life is a human life, regardless of citizenship lottery. Corporate personhood has its issues, but corporations serve the interest of individuals that do have true personhood; their liability should be limited because they should not be held personally liable for law breaking of employees that they are many times removed.

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avatar Andy

This website used to be one of my favorites. Now it’s becoming nothing more than another outlet for liberal talking points.

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avatar lynn ♦155 (Cent)

Andy, There’s a lot to learn on this site. You don’t have to agree, just be informed.

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