Sunday, January 24, 2010

Welcome to the Corporatocracy. . .

Justice Kennedy may well have secured his place in history as the man who killed our democracy. Time will tell the amount of political power that shifted to corporations as a result of the Citizens United case decided yesterday, but a huge shift is afoot.

I cannot say I am surprised at the outcome, as I predicted a 5-4 vote in favor of corporatocrcy. But, I am disturbed. As Professor Richard Hasen makes clear this power shift is simply the outcome of a hyperactivist conservative court. According to Professor Hasen the Court "had to go out and grab this one" ignoring stare decisis and the prudential limitation that the Court avoid constitutional issues. Hasen is hardly alone in these views. Even supporters of the specific outcome of the case feel the Court overreached and are disturbed by the implications of the decision. The Election Law Blog has a complete inventory of comments.

Given that corporations are ideally suited for raising capital, in terms of law, expect them to rationally engage in more rent-seeking conduct through political activities with their vast wealth. In the future I will be blogging further about this case. For now the point is this: this is a bad case for American democracy.

I would like to think that conservatives can join President Obama on this issue. He has issued a call to arms for all Americans wishing to preserve our democracy and I personally applaud his leadership and rapid response to this critical issue:


  1. This Supreme Court decision seems appalling. Way to respect precedent by the sitting "activist" conservative bloc on the Court.

    Can shareholders exert any control over the amount of money contributed to political campaigns in the form of "waste" claims against a corporate board?

  2. With "big business" being the responsible party for the U.S. economic recession, I am surprised these educated individuals would approve corporate financing in campaigns. I can only imagine the "voice" individual U.S. citizens will lose because our economic power will never be able to stand up against those of corporate businesses. Further, the influence that could be imposed by the corporate world will be unimaginable. Mr. Ramirez is correct in naming the blog post "Corporatocracy." The whole world can see who will be running our elections, except maybe the few who work in a chamber at the U.S. Supreme Court.

  3. I have to disagree with the above post and comments. My biggest gripe is that corporations can spend as much as they want individually, but people cannot contribute as they wish to candidates. I think that is where the problem lies.

    When a few individuals can support a campaign, more people can run. No longer does a candidate need to attend endless fundraisers and appease endless special interests to raise the funds to run. If you think limiting corporate donations in the past limited corporate influence, you're fooling yourself. There is a possibility that a corporation could "buy" a candidate, but they is also a possibility that a candidate could run a more altruistic campaign that is funded by a few, and not be beholden to hundreds of interests that all financed his/ her campaign.

    Additionally, I don't think you'll see a lot of publicly held companies really taking risky stances. Before the decision, corporations could finance PAC's, technically sidestepping supporting a particular candidate, but obviously coming down on one side of an issue, practically supporting a candidate. This just allows them to be honest and come out for or against someone. While some corporations with activist boards may try and take advantage of this change, I think most boards will be cognoscente to the fact that their shareholders will be unhappy if they try and use corporation funds to push overtly political goals.

  4. Americans should be able to spend their money how they want. Corporations should be able to spend money as they please for purposes that are not illegal. What is interesting to me is that the Supreme Court is giving a liberty here, not taking one away... I think the real problem here is that big business can tend to have a more conservative agenda. I don't belive that those that are against this ruling are against it for the right reasons. If this ruling would cause a lot of money to pour in for certian candidiates (and issues) they support, this outcry would not be heard. It comes down to good old party politics as usual.

    I also agree with Bill that the shareholers of companies have the opportunity to keep the corporation in check. We can't forget about our role as consumers and/or shareholders to influence a corporation's decision making.

  5. What will happen in the future remains to be seen but we know that there obviously was a need for the previous legislation based on what has already happened. It amazes me that this new decision overturns two recent precedents from the 90's and as recent as 2003...what has changed since then to make the Court rule differently now? This new decision slaps statutes like the Tillman Act in the face and I agree that this is the beginning of the end of our democracy.

    It is nice of you Bill to be so optimistic about what the corporations will do with their new power but we do not know what will happen the next time they are faced with someone such as President Obama and want to prevent them from becoming President. Will it really matter if individuals were able to spend as much as the corporations since most individuals do not have the money to be able to do so anyway?

    Amanda, I agree that people might feel differently if the ruling supported something they stood for and this is why there was a need for the limits in the first place. Now we are left with a one sided benefit instead of it being fair and equal for everyone.

    I am honesly not surprised that this is happening now after President Obama was elected and he was able to raise historic amounts of money.

  6. I guess I wouldn't say that I'm so much of an optimist as I think the situation hasn't really changed all that much. Under the prior law, corporations could form PAC's and attack "issues," which were pretty thinly veiled attacks on candidates really. I also think that there is as much as a chance that a candidate who is good, but otherwise couldn't run, will win as much as a corporate financed schill win. As I said, I would like to see individuals to be granted this liberty as well, which would give some added power to individuals that they curretly lack.

    I do agree that where people come down does have a lot to do with politics. On the other hand, unions can now spend all the money that they wish as well, which almost exclusively will be money towards democrats.

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  8. I disagree that this expands personal liberty. Corporations are not people they are merely artificial entities created by state law to facilitate investment.

    Shifting power from real people to artificial "persons" that are not even created for political purposes harms real people and diminishes their liberty.

    There is no need at all to endow corporations (as opposed to shareholders) with First Amendment rights. That takes legal fiction too far.

  9. It is amazing to see the amount of power that these corporations have as it pertains to making a substantial influence on our nation. I am very unsure as to what were the deciding factors as to why the justices ruled the way that they did. The country is not in its best condition, and there were certain fundamental principles that have been set in place for the advancement of our entire country. I am truly curious to see how the country on a whole will respond to this ruling and what kind of effect it will have on all of us. I think that it is a bit early to see the impact, but I think our current President has done a great job in responding so quickly to address the issue. I doubt this will be the last of this issue, and certain that there will be quite a bit of opposition, however, the highest court in the land has a made a ruling, and we as a country will most certainly see what shall develop.

    -David H. Kenton

  10. Sandra Day O'Connor penned an opinion banning corporate donations seven years ago. It was overturned by the Court's recent campaign finance decision. Yesterday, on NPR, O'Connor criticized the new decision.

    Lifting bans on campaign donations by corporations is going to influence the judicial elections that take place in 80% of states. Even the appearance of impropriety through corporate donations in judicial elections is a serious negative consequence of the practice. For more on O'Connors criticism link to:

  11. I personally would not want to make this out to be the "People v. Justice Kennedy" because the Supreme Court's ruling is more political than just one swing justice. The fact that 5 justices felt compelled to call corporations people in the physical sense as well as the business sense is not good policy in my opinion.
    The fact that this ruling is one which will overturn prior precedent cases that saw the inability of corporations to govern themselves points to a misinterpretation by the majority of the Supreme Court.
    This issue is quite complex because it does not divide Americans on the conservative vs. liberal side, rather it is more about a division over the interpretation of individual rights. Corporations, as "individuals", have proved time and time again that they need to be restricted and governed just like the people they wished to emulate. The simple fact that a corporation has more power, wealth, resources, publicity, clout and access to resources already places them ahead of 99% of individuals in this country.

    This would mean that while votes may be equal, the pockets of the voters will not be. In an election or two, the affect would not be substantial but over a course of a decade or two, this could coations have already gotten to them toompletely overhaul the political process which is pretty frightening for those who believe in some text which claims for all Men to be created equal.

    Let us just hope Congress will do their best to limit its impact...unless the corporations have gotten to them too.

  12. Meredith L. NorrisJanuary 28, 2010 at 1:12 PM

    When SCOTUS ruled on Citizens United v. Federal Election Commission, McConnell v. Federal Election Commission, the 2003 decision, was overruled in large part on Thursday. In voiding the checks on campaign spending the majority in has demostrated that the problem of campaign contributions in not only legislative, but judicial elections, will very possibly - and quickly - become considerably worse and quite soon.

    Laws in 24 states are directly or indirectly called into question by the ruling, including North Carolina.

    Justice Stevens aptly stated it best: In his dissent to the 5-to-4 ruling, he spoke to the problems states will face:

    “The court operates with a sledgehammer rather than a scalpel when it strikes down one of Congress’s most significant efforts to regulate the role that corporations and unions play in electoral politics,” he wrote. “It compounds the offense by implicitly striking down a great many state laws as well.”

  13. Tiffany Mack

    Ok... so I am torn on this issue. Corporations as "individuals" in a political sense may pose issue in this “so called” Democracy. Corporations, however, are treated as an "individual" in civil suits and situations related to civil matters. So in a sense it MAY make sense to give corporations the title of an "individual." Now from what I have interpreted from reading the decision it is still prohibited for corporations and unions from using general treasury funds to make direct contributions to candidates. What the Court has overruled in Citizens United is the prohibition of expenditures that expressly advocate the election or defeat of a candidate, through any form of media, in connection with certain qualified federal elections restricted by 441(b). So while it is legal for corporations to now fund commercials, advertisements, etc. for political candidates, it is still illegal for these corporations to directly give money.

    For the Court to allow corporations to constitute "individuals," the first amendment may now apply to them. That is why the courts believe corporations may fund money for advertisements and such; due to freedom of political speech by the first amendment. So funding this commercial is not "exactly" giving money to a candidate’s campaign. All I am saying is that, I understand their reasoning. Not saying I agree. Again, I am torn.

    Now after the election of Obama, it has been shown that the use of media is extremely effective in campaigning. This may be the ultimate issue after the ruling of the Court. This may pose an unfair advantage to those who cannot afford this type of political campaigning and may cause those who are campaigning to make promises to corporations in order for these corporations to fund their advertisements in campaigning. But in reality, is this not already an issue in campaigning? While lobbying is illegal, it still happens.

  14. I don't agree with this decision because it overturns 100 years of precedent, and has the potential for being a disaster, but I am hopeful that the impact won't be as significant as we fear. First, this decision still doesn't allow corporations to make donations directly to the campaigns, but only to fund independent ads and advocacy efforts. Second, corporations risk polarizing their customer base by endorsing a candidate. I'm not entirely convinced that this will be the disaster we are making it out to be, because Congress will probably put out some new legislation countering it. Let's at least hope so! If not, hopefully the American people will take the initiative to think for themselves and see through corporate-funded ads.

  15. This topic has certainly sparked a lot of conversation. I agree with Mr. Ramirez that corporations are artificial creations of the law. I think that clearly it will have some negative impact but I agree with Ms. Styons that the fear may be overblown. The reason is this, Corporations were already entitled to give a massive amount of money to campaigns. This ruling only struck down parts of the campaign finance law, specifically those dealing with the time frame in which corporations can donate. Left in place were some safeguards such as identifying where the money coming for political ads is from. That in and of itself may prevent the drastic outcome predicted by the dissent. Corporations may find incentive to support a candidate favorable to their business, but I don't think corporations will risk alienating a portion of their costumer base by supporting controversial topics or candidates.

    To me there are two interesting things to watch for with this decision. The first will be what innovative legal practices corporate lawyers come up with in testing this new found "personhood" of their corporate employers. The second will be if this ruling generates enough outrage to spark a constitutional amendment. It has only happened three (arguably 4) times in American history.

    Also I find it interesting that the justices held this decision over until this term shortly before elections....

  16. Oh! Also as to an earlier comment about this being "political" an insinuation that this is democratic whining, this ruling also means that labor unions (historically left leaning) can make unlimited donations, so this ruling I think really draws bipartisan ire

  17. I think it is important to keep in mind that on some levels we may not see the influence of major corporations. The mere threat that they can unleash billions against any politician that defies them will frequently be enough to intimidate our leaders.

    With this new ruling, If I were a Senator, up for reelection, I would want the Citigroups and Goldman Sachs of the world on my side.

    I actually think that financial reform may now stall for this very reason. Elections are 9 months away.

    My prediction: no financial reform before the election. After that it may well be an afterthought. Here's hoping I am wrong.