This article is from Dollars & Sense: Real World Economics, available at http://www.dollarsandsense.org
This article is from the March/April 2012 issue of Dollars & Sense magazine.
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How important is Citizens United?
Dear Dr. Dollar:
People in the Occupy movement and many others are quite concerned about “corporate personhood,” and especially about the Citizens United decision. Did that Supreme Court decision in fact make a crucial difference with regard to the role of money in elections?
—Dan Schneider, Boston, Mass.
Crucial? No, I wouldn’t say crucial. The Citizens United decision of 2010 was, however, one more important link in the long chain securing the role of money in U.S. politics.
In Citizens United v. the Federal Election Commission, the U.S. Supreme Court, dividing along well-recognized conservative-liberal lines, voted to strike down restrictions that limited corporate (and union) donations to political action committees, so-called “super PACs.” Plus, the ruling made it possible for the donors to keep their identities secret. The impact of Citizens United has been evident in 2012, with huge amounts of corporate cash flowing into the super PACs, which use the money for a deluge of campaign ads that are ostensibly independent of the candidates they support.
The Court’s majority based its case on the First Amendment, arguing that corporations (and unions) have the same rights as individuals to take part in election-related activities. While the majority’s argument does not use the term “corporate personhood,” it was based on the long-established position of corporations as legal persons. Corporate personhood is of course nonsense. A corporation is a legal entity in which investors pool their money and share ownership. The owners obtain corporate status from the government, and this status gives them limited liability, which means they are not liable for the financial obligations of the firm beyond their investments in the firm. Corporations have long been “legal people,” in the sense that they have had the right to enter into contracts, sue and be sued—all necessary to engage in commerce. But to jump from this to the idea that corporations are just like real people is, well, nonsense.
However, through the late 19th century and up to Citizens United, the courts have extended the rights of these “legal people,” treating them increasingly like real people. One particularly important step prevented local communities from treating outside corporations differently than local (non-corporate) firms. Citizens United has been another important step.
Yet corporations are not treated the same as people in many realms—they are treated better! For example, corporations are subject to very different bankruptcy laws than are real people, giving them advantages that real people don’t have. Also, tax laws provide many advantages to corporations that real people don’t enjoy. (By the way, because the government has the authority to grant the privilege of corporate status, even with corporate personhood, much could be done to limit corporations in return for this privilege—if the government would do so.)
The concept of corporate personhood is odious and the Citizens United decision harmful. Yet the huge, undemocratic role of money in politics is not dependent on either. Between 1999 and 2009, lobbying expenditures grew by 89%, in inflation adjusted terms, to $3.51 billion. In 2009 alone, health-care firms spent $552 million on lobbying. All before Citizens United. Add to this the direct campaign contributions from the wealthy, and the way politicians, top aides, regulators, and other policy makers move from government to high-paying positions with private firms.
Then there’s the influence of money and corporate power on the way the media shape ideas about political affairs. As a former president and CEO of the New York Times reminded us in 2002:
“Today’s news media are themselves frequently a part of large, often global corporations dependent on advertising revenue that, increasingly, comes from other large corporations.... It is both impractical and unrealistic to expect news media companies, including newspaper firms, to retreat from their positions as increasingly large, diversified business enterprises.”
One could add the way large foundations controlled by very wealthy individuals (e.g., the Gates Foundation) have dominated the “school reform” movement. This movement that has spread the idea that teachers’ unions and government bureaucracies are what damage the education of our children. The damaging impact of poverty? Not on the agenda.
Perhaps most important, the power of large corporations lies in their role of making decisions about investments and jobs. Policy makers believe that they must do the bidding of corporations in order to keep the economy going. So we get excessive tax breaks and other favors for these powerful firms and their owners.
Getting rid of corporate personhood and overturning Citizens United would be good, important steps towards democracy. However, the problems run deeper. Ultimately, we cannot have democracy when we have such an unequal distribution of income and wealth.