Granting Corporations Bill of Rights Protections Is Not "Pro-business"
Statement on Citizens United v FEC (updated January 11, 2012)
While news coverage often refers to expanding corporate political power as a “pro-business" activity, independent business advocates are likely to disagree. In fact, two of the three broad-based national business organizations submitting amicus curiae (friend of the court) briefs in Citizens United v FEC at the U.S. Supreme Court argued against allowing corporations to engage in direct electioneering.
The American Independent Business Alliance (AMIBA) says such a change would badly harm the majority of America’s independent businesses. AMIBA’s brief to the U.S. Supreme Court, written by Demos, argued that even with present limitations on corporate political power, large corporations have converted their economic power into political favors that consistently harm small businesses.
The tendency of powerful corporations to lobby for lawmakers to erect or sustain barriers to entry* is another problem acknowledged by conservatives and progressives alike. To enlarge corporate political power further, AMIBA's brief notes, would both harm the political process and undermine genuine market competition.
The Committee for Economic Development brief argues giving corporations the ability to dominate electoral campaigns would, in reality, harm many companies by subjecting them to an endless series of shakedowns by politicians. “Each corporation,” states the brief, “would be helpless to get out of the political game, fearful of losing out in the economic marketplace to competitors that were willing to play ball.”
The U.S. Chamber of Commerce filed a brief arguing the prohibition on direct corporate electioneering should be abolished and that the century-old precedent serves to “suppress the business viewpoint.” The Chamber's brief ignores existing law, which fully protects the political speech of citizens and allows corporations to form political action committees that can spend freely. Few Americans of any ideology would argue that corporate interests have been muted, never mind silenced, under the status quo.
In its Citizens United brief, the Chamber claimed to represent 3,000,000 businesses, but its purported constituency promptly shrank by 90% when its membership claims were exposed as false (most small businesses that comprise local Chambers of Commerce have no relation whatsoever to the U.S. Chamber). In truth, the U.S. Chamber is dominated by a handful of major corporations, many of which gain advantage through exercising political power that distorts markets and harms smaller competitors.
Many shareholders’ rights advocates express an additional concern: corporate managers would have license to make political investments with other people’s money -- an invitation to personal opportunism and abuse. This argument is among those made by Domini Social Investments in a brief to the Montana Supreme Court in Western Tradition Partnership v Montana. See “Compelled Speech Is Not Free Speech.”
Also in the WTP v Montana case, the AMIBA, Mike's Thriftway and Home Resource Center (all Montana-based), along with Free Speech for People and the American Sustainable Business Council, joined to submit this brief on behalf of the State of Montana. The brief makes arguments similar to those in AMIBA's Citizens United brief, while addressing particulars of Montana and the pending lawsuit.
In sum, laws protecting election integrity also help ensure a competitive marketplace in which businesses succeed based on business performance, not political favors. Allowing corporations to readily translate their economic power into political power is both bad for democracy and bad for legitimate businesses.
Addendum: April 2, 2014: Today, the U.S. Supreme Court (McCutcheon v Federal Election Commission) struck down long-standing limits on the total amount of money individuals can invest in all electoral candidates, committees and political parties (some limits on direct gifts to individual politicians remain). Unlike with Citizens United v. FEC, AMIBA did not engage in submitting an amicus brief to the Court, but we are disturbed by this precedent, the damage it will do to free market competition, and to our small business constituency.
Jeff Milchen, AMIBA's co-founder, issued this statement: "The five Justices who voted to expand the Court's 'money equals free speech' doctrine through their recent rulings have made the democratic republic, promised to us by our Constitution, impossible. Citizens' votes are stripped of power when the wealthiest few can pre-determine the acceptable candidates and parties from among which the rest of us get to choose."
"The Court majority also does immense harm to America's independent businesses. Their ruling allows corporate executives and lobbyists to convert their economic power easily into countless political favors. These favors consistently harm our small business constituents by extracting subsidies for the largest corporations, stifling enforcement of anti-trust laws, dismantling regulation, and systematically giving anti-competitive advantages to the largest donors."
Hear AMIBA co-founder Jeff Milchen discuss the McCutcheon ruling on Radio New Zealand (13 minutes).
A survey (PDF) released on January 18, 2012 showed that small business owners, by a margin of 7 to 1, believe that allowing corporations to engage in direct electioneering harms small business. Related commentary (Sep. 2013): Secret political spending is bad for honest businesses, efficient markets.
* "Rent-seekers" are one class of corporations seeking to distort the market. Aaron Renn of the Urbanophile blog notes: "Rent seekers are individuals or organizations that have succeeded with existing business models and look to the government and regulators as their first line of defense against innovative competition. They use government regulation and lawsuits to keep out new entrants with more innovative business models. They use every argument from public safety to lack of quality or loss of jobs to lobby against the new entrants. Rent seekers spend money to increase their share of an existing market instead of creating new products or markets. The key idea is that rent seeking behavior creates nothing of value.
These barriers to new innovative entrants are called economic rent. Examples of economic rent include state automobile franchise laws, taxi medallion laws, limits on charter schools, auto, steel or sugar tariffs, patent trolls, bribery of government officials, corruption and regulatory capture. They’re all part of the same pattern – they add no value to the economy and prevent innovation from reaching the consumer."
** Though it's illegal for corporations to fund Political Action Committees from the company treasury, the Federal Election Commission has rendered this limitation meaningless, due to it being controlled entirely by Democratic and Republican party operatives.