If companies have a right to free speech as a legal person, why stop there? Maybe companies should also have the rights to vote like a real person. In the matter of fact, we should subject the unions or special interest groups to same restriction as companies. It should not be a race to the bottom that who has the deepest pocket wins.
Sep 8th 2009 – The Economist
Do companies have a right to free speech?
“HILLARY: The Movie” broke no box-office records. Nor, for that matter, is it believed to have played much of a part in the failure of its subject, Hillary Clinton, to become president—though the documentary, released in early 2008, cannot have helped. (Among its many claims was that the former First Lady was “no Richard Nixon, she’s worse”.) Even so, this White House of Horrors flick may forever change American politics, and the role of business within it, depending on the outcome of a special hearing before the Supreme Court on September 9th.
At issue is a decision by America’s Federal Election Commission (FEC) to ban television screenings of the movie, or even trailers of it, within 30 days of Democratic primary elections, on the grounds that Citizens United, the group behind the movie, had received donations from companies. That, ruled the FEC, made them subject to campaign-finance regulations prohibiting public endorsements (or denigrations) of specific candidates by companies—or, for that matter, by trade unions.
Lawyers for Citizens United argue that companies have a constitutional right to use their economic power to play whatever role they want to in the political process, under the same constitutional right to free speech enjoyed by every American citizen. The Supreme Court seems to be taking this claim seriously. It first heard arguments in the case on March 23rd but John Roberts, the chief justice, then took the unusual step of ordering the case to be reargued on September 9th. He specifically asked for both sides to address the legitimacy of the two main precedents that currently restrain—at least to some extent—the involvement of firms in politics.
Until 1978 companies and unions had been subjected to increasing regulation of their political activities, a trend that the Supreme Court seemed happy to go along with. That year, however, in First National Bank of Boston v Bellotti, it voided a Massachusetts law restricting corporate spending on state referendums on the grounds that it interfered with a corporate right of free speech. To justify this, the Supreme Court cited what appears to be its only previous comment on the matter, during a railway company’s tax-assessment case in 1886. The then chief justice stated (in what reads as an aside) that: “The court does not wish to hear argument on the question whether the provision in the Fourteenth Amendment to the Constitution, which forbids a State to deny to any person within its jurisdiction the equal protection of the laws, applies to these corporations. We are all of opinion that it does.”
This ruling was later clarified by the Supreme Court under Chief Justice William Rehnquist, who had dissented from the Bellotti ruling, noting that a “state grants to a business corporation the blessings of potentially perpetual life and limited liability to enhance its efficiency as an economic entity. It might reasonably be concluded that those properties, so beneficial in the economic sphere, pose special dangers in the political sphere.”
In 1990, in Austin v Michigan Chamber of Commerce, the Supreme Court ruled that a state could prohibit a company from spending corporate funds in support of a political candidate. In 2003 it threw out a challenge to the newly introduced McCain-Feingold act’s restrictions on corporate donations, ruling in McConnell v Federal Election Commission that “issue advertisements” paid for by companies could also be restricted if they were the “functional equivalent” of “electioneering communications”. It is the Austin and McConnell precedents that Justice Roberts has asked to be debated on September 9th.
“The idea that corporate and union speech is somehow inherently corrupting is nonsense,” wrote Ted Olson in a recent op-ed in the Wall Street Journal. “Most corporations are small businesses, and they have every right to speak out when a candidate threatens the welfare of their employees or shareholders,” said Mr Olson, a former Solicitor-General under George W. Bush. “Any decision that determines that corporations have less protection than individuals under the First Amendment would threaten the very institutions we depend upon to keep us informed.” Mr Olson will argue on behalf of Citizens United before the Supreme Court.
“It is scarcely conceivable that the drafters of the constitution had anything resembling corporate entities in mind when they drafted the Bill of Rights”
Yet the word “corporation” appears nowhere in the constitution or Bill of Rights. “It is scarcely conceivable that the drafters of the constitution had anything resembling corporate entities in mind when they drafted the Bill of Rights,” argue Robert Monks, a veteran corporate-governance activist, and Peter Murray, in a recent essay. All the individuals with a stake in a company have the right to express their views freely, the argument goes, so there is no need for the legal fiction of the corporate person to have such rights.
Besides, the two authors point out, even under the current regulations, corporate influence has been growing rapidly in Washington, DC. The number of registered lobbyists in the capital increased from 3,400 in 1977 to almost 34,000 in 2006. In the 2008 House and Senate races $400m was raised and spent for candidates by political-action committees, mostly linked to businesses. “Sadly, it appears that our judicial tradition of constitutional restraint with respect to issues affecting politics may be out the window when an opportunity arises to increase the power and influence of America’s corporate entities,” they write.
In recent years the Supreme Court has made a growing number of rulings that seem to reflect a “pro-business” bias. Throwing out restrictions on corporate speech would certainly confirm that impression, and some. This tendency to favour business is widely regarded as originating under Lewis Powell, who was appointed to the Supreme Court in 1971 by President Nixon, and who wrote the majority ruling in the Bellotti case.
Shortly before he was appointed Powell wrote a private letter to the head of the US Chamber of Commerce (a business lobby that is supporting Citizens United on September 9th), calling on corporate America to play a bigger role in politics. As he put it, “One should not postpone more direct political action, while awaiting the gradual change in public opinion to be effected through education and information. Business must learn the lesson, long ago learned by labour and other self-interest groups. This is the lesson that political power is necessary; that such power must be assidously (sic) cultivated; and that when necessary, it must be used aggressively and with determination—without embarrassment and without the reluctance which has been so characteristic of American business.”
How ironic it would be if Powell’s strategy were to come to fruition at a moment when the public standing of business is arguably at its lowest since the era of the Robber Barons a century ago. After all, it was then that progressives such as President Theodore Roosevelt tapped into public anger to introduce the first regulations on the use of corporate funds to influence politics.