The Aristocracy of the Moneyed Corporations

In Citizens United v. FEC on January 21, 2010, the US Supreme Court held by 5 to 4 that because US corporations are legal persons, they can contribute to political campaigns.   The assumption here is that corporations are more than the sum of an aggregate of persons—that is, more than citizens associating.  The corporate entity has rights in itself.  Ginsberg and Sotomeyer questioned in oral arguments whether free speech applies to spending money, and, moreover, whether corporations should be considered legal persons, much less citizens.  After all, they can’t be drafted, or vote.

A corporate is essentially privately owned wealth.  To say that wealth counts as speech seems spurious to me.  In fact, the whole legal person designation seems contrived.  Whereas the Roman republic fell to dictatorship, our republic may well have already fallen to oligarchy or corporatism.   So I agree with Barak Obama that the decision is worrisome.   Sen. Dick Durbin said that the banking lobby owns Congress after that lobby had sunk Durbin’s amendment to allow bankrupcy judges to modify mortgages in foreclosure (the banks want a veto, even if they contributed to the sub-prime mess).

If Goldman Sachs can spend virtually unlimited amounts of money on political campaigns, we can expect to see that bank’s influence over the government expand even beyond what influence it has over its own alums who occupy high policy-making positions in the US Government (e.g., Hank Paulson and Neil Kashkari at Treasury under Bush II).  If our republic is already compromised under the weight of huge concentrations of private capital, the US Supreme Court’s decision may well be enough to sink the republic…ironically in the name of liberty.  But liberty for whom?  Or does “whom” even apply here.

I contend that corporations are not citizens associating for political purposes.  There are indeed non-profit political organizations whose function it is to influence policy.  This is not a business corporation’s function.  Nor is spending money itself political speech.  Any CEO can stand outside his or her building and give a political speech for free.  But which citizens does the CEO represent in his or her association of citizens?  Stockholders?  They don’t approve corporate public affairs spending.  Employees?  They don’t either.  Customers?   We don’t approve what a CEO says just because we have purchased a bar of soap.  The US Supreme Court’s majority might well say that the CEO represents the legal person that is the corporation, but then it is not an association of citizens because associations are not said to be persons (rather, they consist of persons).  Is this too logical?  Too reasoned?  Maybe so. But maybe it shows the duplicity involved in referring to an account of private wealth as a person.  It seems to me that it is rather blatant case of anthropomorphism.  …humans treating our artifacts as having our characteristics.  We must really think we are something.

A Tax Unfair to Big Banks?

In a political economy in which large concentrations of privately-held capital, such as that of a bank or large corporation, can legally make political contributions, curiously as "free speech," even the President of the United States may actually be a paper tiger. Even when the federal government comes to the resue of a bank, Wall Street can evade any "strings" and even use the funds to pay out bonuses. Meanwhile, the American people take their elected representatives' speeches at face value, and this suites Wall Street just fine.  

Seeing to its own interests, Securities Industry and Financial Markets Association claimed that the bank tax proposed by the Obama Administration as part of the Financial Reform Act of 2010 might be unconstitutional because the levy would unfairly single out and penalize big banks.  For his part, President Obama urged the financial lobby to stand down when he introduced the tax proposal. “Instead of sending a phalanx of lobbyists to fight this proposal or employing an army of lawyers and accountants to help evade the fee," he said, "I suggest you might want to consider simply meeting your responsibilities.”[1] The banks had tried to head off criticism by starting new charitable programs and by structuring executive bonuses in line with principles set by the federal pay adviser, like paying bonuses mostly in stock instead of cash and deferring the payout of some bonus money in case business declines again.

However, new charities and stock compensation should not obfuscate the fact that banks too big too fail precipitated the financial crisis of 2008 and returned soon thereafter to trading on their own equity (e.g., Goldman Sachs), thanks in part to the TARP funds from Teasury.  

That the bank lobbyist organization was oriented nevertheless to void the new tax through lobbying and litigation, claiming it would hurt the big banks disporportionately, demonstrates that the bankers just didn't "get it." They should be glad that the resulting Reform Act left undisturbed the very existence of banks too big to fail. 

1. Eric Dash, "Wall Street Weighs a Challenge to a Proposed Tax," The New York Times, January 18, 2010.

Hints of a Shift Back to Federalism?

 In the US Senate race in Massachusetts between Scott Brown and Martha Coakley, there was some resistance to the proposed federal health care legislation. This pushback was in line with reinvigorating a federal system for the United States.

Several independent voters said they wanted to elect Mr. Brown to block the health care bill being considered by Congress.  They denounced the US House and Senate bills as full of deals for special interests — though several said they thought Massachusetts’ law extending near-universal coverage, one of the models for the national bill, had been largely a success. “It’s not perfect, but why should we have to pay again when we have health care?” said Ms. Grenham, who works as a physical therapist.[1]

That it is easier for a state government than the federal government to legislate on something like healthcare is no accident; the founders designed the US Government to be cumbersome precisely so most of the domestic legislating would be done by the state republics, which are closer to the people.  Hence Massachusetts has close to universal coverage while the majority of Texans might want to pass.  One size does not fit all in a heterogeneous empire-level Union.  For the US Government to go beyond its enumerated powers to duplicate what is already in Massachusetts would be to demonstrate the folly of consolidation and the related fallacy that every political unit in a federal system must have the same policy.  Although I firmly believe in universal coverage as a right rather than a privilege, I respect the right of the people of, say, Texas, to disagree and have a republic without it.   Such tolerance is necessary to a viable federal system.  Too many people imposing their agendas far from home must surely end in consolidation, which entails duplication where state governments are not already impotent.

1. Michael Cooper, "In Senate Race, Massachusetts Bucks a Political Stereotype," The New York Times, January 17, 2010.

Political Campaign Coverage: A Question of Substance

Popular election presumes meaningful discourse on current issues and political philosophy so the voters can distinguish the candidates.  Too often, however, the media takes its eyes off the ball and orients its coverage to the process rather than the content.  

For example, on the eve of a U.S. Senate special election in Massachusetts, The New York Time reported, “Volunteers and campaign workers staffed phone banks for each of the candidates in the Senate race here, as they concentrated on energizing voters to get to the polls on Tuesday.”[1]  Besides being rather obvious, this topic carries with it an opportunity cost—namely, the article that could have been written on the candidates’ political philosophies that go beyond, and thus do not reduce to the obsession on the health-care bill that was before Congress at the time.   To be sure, although it is short-sighted to use a Senate election as a referendum on a current issue, even that would be better than a focus on the campaigns’ mechanics.

Too often in presidential campaigns, media reports are on the process rather than the issues (forget political philosophies).  Because such campaigns are mostly retail rather than grass-roots (after the first few primaries), most voters rely on the media for information on the candidates.   There is a saying that might be pertinent: garbage in, garbage out. If an electorate has too much garbage to eat, the powers behind "the throne," such as those on Wall Street, can rest easy that their prerogatives will not be debated, and thus put at risk. Also, demogogues and corrupt officeholders thrive when the media is preoccupied with process over the candidates themselves. 

1. Katie Zezima, "Get-Out-the-Vote Pitches in Massachusetts," The New York Times, January 18, 2010.