Corporations Are People, Too | The Big Money

The Supreme Court's 5-4 decision that rolled back longstanding restrictions on corporate campaign finance donations has already generated a lot of sturm und drang from proponents of campaign reform and the White House itself. At the crux of the decision was a determination that corporations have a right to free speech. The Court ruled that limiting the amount companies can spend promoting their favored candidates is tantamount to denying First Amendment rights.

Since when do corporations have civil liberties?

Actually, this concept has been coalescing into its current state since about the late 19^th century, and we can thank railroad barons for this precedent. While corporations had always been afforded limited rights, such as property ownership or contract-making, since the Renaissance, the idea that an inanimate entity was eligible for rights of personhood sprung from the 1886 case of Santa Clara County v. Southern Pacific Railroad. The corporation in this case was able to wield the newly minted 14^th Amendment to argue that it, as a corporation, was entitled to the same tax benefits as individuals.

Southern Pacific was hardly the only corporation to invoke the Bill of Rights in the name of deregulation; although the law had been added to protect the rights of African-Americans following the Civil War, only 19 individuals invoked it for protection between 1890 and 1910. Businesses, on the other hand, claimed 14^th Amendment protection 288 times during the same time period. A 1976 Supreme Court case, Buckley v. Valeo, explicitly ruled that political donations were free speech and constitutionally protected.

Media such as the Canadian documentary and book The Corporation have explored this curious anthropomorphism of corporate America, going so far as to bring in a psychiatrist who conferred a diagnosis of psychopath on the average modern commercial enterprise.

Other aspects of the law treat companies as though they were people. In last year’s settlement with the SEC, Bank of America (BAC) agreed to pay $33 million in fines, although no individuals were charged with wrongdoing. The inability of the prosecution to lay the blame at the feet of any actual individuals exasperated the judge, who sarcastically asked the agency’s lawyer if a ghost was responsible for the malfeasance.

Ironically, businesses eschew personhood when it comes to other areas, such as paying taxes. As an individual, you pay taxes on what you earn as well as on what you spend. If you buy a new TV or hire a nanny, you pay taxes on those dollars twice. Corporations and some think tanks disagree with applying this two-tiered taxation system, arguing that it inhibits commercial efficiency.

Whether you find the idea of company-as-person and the resulting freedom on political spending troublesome hinges on whether or not you believe more money buys you a louder bullhorn in the political arena. At least one ardent capitalist thinks so. Billionaire Michael Bloomberg, three-term mayor of New York City, is estimated to have spent hundreds of millions of dollars of his own fortunes winning his position, breaking records with his spending every step of the way.

Some people—including five Supreme Court justices—believe the political theater is a level playing field, a street-corner basketball court where anyone can join a pick-up game. Others see it more like a country club; unless you have the means to pony up for a membership, you can't play. This worries those in the latter camp. In his dissent, Justice John Paul Stevens argued that since companies are without feelings, consciences, or desires, they shouldn’t benefit from laws that protect ordinary citizens.

He’s two-thirds right. Corporations don’t possess a conscience or feelings (no matter what that cause-marketing campaign tells you). They do have one desire, though: earning money. This troubles opponents of the Court’s ruling, who predict that companies will flex considerable economic muscle to chip away at legislation that limits earning potential in the name of things like environmental preservation and public safety.

The prospect of these protections undermined in the pursuit of profit has proponents of corporate regulation—not to mention campaign finance reform—discouraged. On the bright side, though, freeing corporate coffers to spend all they want on political campaigns may have come just in time to save the advertising industry.

Explainer thanks Joel Bakan of the University of British Columbia.

via thebigmoney.com

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