In a 5-4 decision this week, the Supreme Court ruled that the government cannot prevent corporations from spending money on behalf of political candidates. This decision overturned two longstanding precedents, and will have an enormous impact on future elections. As President Obama described it, the decision was “a major victory for big oil, Wall Street banks, health insurance companies and the other powerful interests that marshal their power every day in Washington to drown out the voices of everyday Americans.” Supporters of the decision defended it on free speech grounds, asserting that the Justices rightly applied the protections of the First Amendment to corporations.
I find this decision frightening. Imagine, if you will, a candidate for high office (new or incumbent) who dares to suggest that a large corporation (or group of corporations) should pay a slightly higher tax. For example, a carbon tax on fossil fuel products in order to pay for remediation of global climate change, maybe a modest surtax like an additional 1% of profits. For a corporation like ExxonMobil, that would translate into a $450 million tax (based on 2008 figures). In order to save $450 million, wouldn't you imagine that ExxonMobil would be willing to spend tens of millions of dollars to defeat said candidate, perhaps even $100 million? Now combine ExxonMobil with the rest of Big Oil, and you can rapidly collect many hundreds of millions of dollars to defeat an environmentally-minded Presidential candidate. For comparison, candidate Obama spent about $740 million in the 2008 election cycle, while candidate McCain spent about $330 million. Thus, it's easy to see how one industry sector could equal the entire spending of a single candidate! Now combine Big Oil with Wall Street firms and health insurance and pharmaceutical companies, and the dollars could quickly climb into the billions.
There are two equations at work here that enter into the Supreme Court's calculus on behalf of corporate political spending: money = speech, and corporations = persons. I consider both of these equations to be erroneous and in serious need of rethinking. For now, however, I want to focus on the latter equation, the legal fiction of corporate personhood – that is, the notion that corporations are to be treated like “persons” under the law. This concept originally arose not as a benefit to corporations, but rather as a benefit to their creditors (or those who would seek to recover damages inflicted by the actions of a corporation). Before this concept existed, corporations could argue that since they were not “persons” under the law, they could not be subject to lawsuits, and furthermore, other legal protections guaranteed the limited liability of shareholders of corporations, meaning that they also could not be sued for actions of the corporation. In such a scenario, creditors could not seek legal relief for claims against corporations. Enter the corporate personhood fiction. If the courts treated corporations as persons under the law this dilemma is resolved, and individual people (“natural persons”) feel safe doing business with corporations, banks feel safe extending credit to corporations, and corporate businesses thrive.
Over time, however, this legal fiction of corporate personhood has expanded far beyond its original intent, such as in this week's Supreme Court case. What's more, the Court has completely flipped the original intent of holding corporations liable for their actions, and now appears more interested in protecting corporations rather than those who do business with them (i.e., “natural persons”). The evolution of this concept has been ongoing, and this isn't the first Court decision to move the concept further down what I consider to be a troubling path. It is, however, a major leap forward along that path, a truly “activist” decision by a group of Justices supposedly dedicated to a “non-activist” judicial philosophy. Where does that path lead, and what will America look like at the end of the road? Let's just say that if you think politicians are bought and paid for by corporate interests now, you ain't seen nothing yet.