Corporations Are Not People: Why They Have More Rights Than You Do and What You Can Do About It (14 page)

Corporations can claim no equality with individuals in the enjoyment of a right to privacy. They are endowed with public attributes. They have a collective impact upon society, from which they derive the privilege of acting as artificial entities…. Law-enforcing agencies have a legitimate right to satisfy themselves that corporate behavior is consistent with the law and the public interest.
³⁷

For more than a century until
Citizens United,
most states and the federal government banned corporate political contributions
and spending. Some states, such as Kentucky, even made the control of corporate political activity part of their state constitutions.
³⁸
With the exception of Justice Powell’s early foray into corporate rights in the 1978
First National Bank of Boston
case, this basic understanding of the place of corporations in American democracy guided the Supreme Court, even as Justice Powell’s “corporate speech” cases worked away at creating the new corporate rights doctrine.

The one time before
Citizens United
when the Supreme Court went off the rails with respect to corporate political spending occurred with Justice Powell’s maiden corporate rights decision in
First National Bank of Boston,
striking down a state law banning corporate spending in referendum elections. That exception should have proved the rule, in large part because of the force of Justice Rehnquist’s dissent. Rehnquist concluded that the “Fourteenth Amendment does not require a State to endow a business corporation with the power of political speech.”
³⁹
Instead, Rehnquist forcefully pressed the truth that corporations are not people with rights but are entities defined by the states, with restrictions that the legislatures find appropriate. Congress, he wrote, and numerous

States of this Republic have considered the matter, and have concluded that restrictions upon the political activity of business corporations are both politically desirable and constitutionally permissible. The judgment of such a broad consensus of governmental bodies expressed over a period of many decades is entitled to considerable deference from this Court.
⁴⁰

Again, the different opinions of these two Richard Nixon appointees—William Rehnquist and Lewis Powell—showed the stark gap between the corporatist and the conservative understanding of our American republic. For a time, the conservative
Rehnquist was able to form a majority on the Court. In 1990, the Chamber of Commerce in Michigan attacked a law restricting corporate political spending and lost. The Court upheld the right of the people to keep corporations out of politics. In that case,
Austin
v.
Michigan Chamber of Commerce,
Justice Rehnquist’s dissenting views in the corporate speech cases became the majority view.
⁴¹

Rehnquist joined the liberal Thurgood Marshall, who wrote for the Court in affirming Michigan’s regulation of corporate spending in elections. Marshall’s words for the Court were drawn from the earlier Rehnquist dissents:

State law grants corporations special advantages…. These state-created advantages not only allow corporations to play a dominant role in the Nation’s economy, but also permit them to use “resources amassed in the economic marketplace” to obtain “an unfair advantage in the political marketplace.”
⁴²

Even as late as 2003, before Chief Justice John Roberts and Justice Samuel Alito replaced Chief Justice Rehnquist and Justice Sandra Day O’Connor, the Court agreed that the same corporate election spending law that the Court would later strike down in
Citizens United
was perfectly fine under our Constitution. In that 2003 case,
McConnell
v.
Federal Election Commission,
the Court affirmed that the people’s representatives in Congress were entitled to “the legislative judgment that the special characteristics of the corporate structure require particularly careful regulation.”
⁴³

Citizens United:
Corporations Back
on the Track, People to the Back

We then come to
Citizens United
a mere seven years later, posing again this fundamental question of American democracy: Can Congress and state legislatures make laws distinguishing between the American people spending money in politics and corporations
spending money in politics? What had changed since 2003, 1990, the New Deal, Theodore Roosevelt’s presidency, the 1800s, or the days of Madison, Jefferson, and President Washington’s Supreme Court justice and national founding father James Wilson?

Is
Citizens United
different because that case involved a nonprofit corporation? Although that point may have been worthy of examination, it made no difference to the Court. The Court in
Citizens United
made very clear that its decision applied to all corporations (or, as Justice Kennedy’s decision called them, all “voices” and “speakers”). That is why Koch Industries, Target, News Corporation, and other global, for-profit corporations fun-neled hundreds of millions of dollars into the November 2010 elections and are gearing up to do even more in the 2012 elections.

While sympathy for a nonprofit corporation seeking to express the views of its members is understandable, corporations, whether for-profit or not-for-profit, are creatures of the state. Take Citizens United, for example. Citizens United is a corporation organized under Virginia law. It exists as a nonprofit corporation because the people of Virginia passed an incorporation law. Under this law, people may create a nonprofit corporation only if they file with the state a set of articles of incorporation containing elements that the state requires, pay a filing fee of $75, designate a registered agent to deal with the state’s annual assessment packet, and comply with record-keeping and other requirements set out in the Virginia law.

Without all of these steps, Citizens United (or any other nonprofit corporation) does not exist. In fact, the state provides the equivalent of the corporate death penalty for noncompliance with these laws. No one forced people to incorporate their activity as Citizens United, the nonprofit corporation, but once they chose to do that, is it too much to ask that the corporation comply with the laws on the books?

That does not mean that the people who support Citizens United, who work there, or who believe in its mission lose any rights whatsoever. They have all the same rights they had before they decided to incorporate and the same inalienable rights of all Americans. The corporation, however, does not, and we are not required to pretend that the corporation is the same as the people.

Once we recall that the rules for corporations come from us, for the betterment of our nation, the idea of “corporate rights” will be exposed as ridiculous. If we return to recognition that corporations are policy tools, rather than people with constitutional rights, we can then begin to realize many possibilities to improve the tool so that it better serves the purposes for which we Americans permitted the corporate entity in our laws in the first place. We can begin to rethink and reinvigorate our incorporation laws.

We might decide that the 306 million Americans who do not live in Delaware should have as much say about corporate law as the 900,000 people who live in Delaware now have. We might decide to create new and better corporate entities under the law, such as for-benefit “B Corporations,” and options for sustainable “low-profit” hybrids between for-profits and nonprofits. We can change the rules to make real shareholder democracy and to make corporations justify their corporate charters and show how they have served the public and complied with the law. We can use the corporate chartering and charter revocation process and other features of corporate law to prevent and punish corporate crime and misconduct. We can insist on accounting for externalities—the dumping onto society of costs from pollution, destruction of our global ecosystem, and financial bailouts.
⁴⁴

That’s not all. When people—voters, legislators, businesspeo-ple, everyone—take responsibility for the public tool of incorporation, we are not only saving our republic; we may also be saving our economy. With new corporate rules, we can make corporations
more effective at business, protect innovation and competition, create more jobs, and free human creativity.

In
Chapter Seven
, I will explore these ideas in more detail, along with the tools to enact a constitutional amendment and many more things you can do to take back our rights, our republic, and our democracy. This will succeed because more and more Americans know just how badly unbalanced corporate power and the Powell-Chamber vision of a “corporate marketplace” country has corroded our political system and how costly that corrosion has become. In the next chapters, I will examine more closely how these costs are imposed on the nation as a whole and on so many people who can no longer count on their government and elected representatives to stand up for them.

The strength of America is in the boardrooms, country clubs and Lear jets of America’s great corporations. We’re saying to Wal-Mart, AIG and Pfizer, if not you, who? If not now, when?

—Murray Hill Inc., Candidate for United States Congress
¹

Not long after the
Citizens United
decision, a corporation chartered under Maryland law announced its campaign for Congress. Leading with the slogan “Corporations Are People Too,” Murray Hill Inc.’s statement explained: “Corporate America has been driving Congress for years,” and now “it’s time for us to get behind the wheel ourselves.” Proposing to “eliminate the middleman,” the corporation promised “an aggressive, historic campaign that puts people second, or even third.” The corporation explained that it would use Astroturf lobbying, avatars, and robocalls to reach voters, concluding, “It’s our democracy. We bought it, we paid for it, and we’re going to keep it.”
²

The satirical Murray Hill congressional campaign was the inspiration of a real person, the company’s president, Eric Hensal. As with all good satire, the jest works because it hits so close to the truth.

Corporate Money Changes Everything

Transnational corporations now dominate our government. That statement should shock us, yet it is now a commonplace with which few Americans would disagree.
³
Uncontrolled corporate money and power in politics are fast transforming our republic of people into what may better be described as a corporate state. People may no longer need precise numbers to appreciate the government takeover by narrow corporate interests, but the numbers still appall (see
Table 1
). The top twenty spenders alone spent close to $4
billion
over the past decade to gain or keep advantage in Washington. Those numbers do not include the massive lobbying in the states, campaign spending, or the massive funding of corporate “grassroots,” “foundation,” and “think tank” front groups.

Corporations spend these billions of dollars not to advance any “special interest,” at least if “special” is meant in any ideological sense. The interest is not “business,” “jobs,” “free market,” or anything quite so noble. Corporations spend those billions of dollars to block reforms or enact favors for the profit interest of a very few specific corporations and the people who control them.

Take the U.S. Chamber of Commerce, which is the biggest spender by far. Despite the innocuous name and its self-description as a “business” lobby, the Chamber of Commerce does not promote a positive American business environment or conservative points of view. In large measure, the U.S. Chamber acts for and is funded by a few global corporations. It is far removed from the local chamber of commerce in any American town.

The U.S. Chamber brags that it is a $200 million “lobbying and political powerhouse with expanded influence across the globe.” Its president, Tom Donohue, says the Chamber is “so strong that when it bites you in the butt, you bleed.”
⁴
This biting is not done to benefit most American businesses or communities but to promote the interests of the largest transnational corporations in the world. The bleeding is for the rest of us.

Table 1
Top Twenty Spenders on Lobbying in Washington, 1998-2010

In some recent years, 83 percent of the Chamber’s contributions were $100,000 or more; 40 percent came from just twenty-five contributors; the top three contributors provided 20 percent of the Chamber’s dollars—anonymously.
⁵
In 2009, a single contribution accounted for 42 percent of all contributions to the Chamber. That came from the health insurance corporate lobby, which funneled $86.2 million to the Chamber to make sure no public option or other reform would hurt insurance company profit.
⁶
A former Federal Election Commission member explained why the insurance groups would use the Chamber as a front: “They clearly thought … it would appear less self-serving if a broader business group made arguments against it than if the insurers did it.”
⁷