Citizens United

The Supreme Court's decision in Citizens United continues to reverberate around the corporate blawgosphere. David Post notes that:

So here’s a cute little trademark dispute. Those stalwart defenders of free speech, Citizens United, apparently are not so crazy about being on the receiving end of the First Amendment’s free speech guarantee. The group, which as you know won a huge victory last month in the Supreme Court in its First Amendment challenge against the FEC’s interpretation of the federal election rules, has now apparently threatened, on grounds of trademark infringement, a Wisconsin group who have issued an online petition (and facebook group) named “Citizens United against Citizens United” as a protest against the Court’s decision. 

He thinks "It’s unseemly, at best. And probably a loser, too."

Eugene Volokh points out that unions are the likely winner from Citizens United:

In California, one of the 26 states where independent expenditures for and against candidates have long been legal, a recent Fair Political Practices Commission report suggests that — among the top 10 independent spending committees, which together spent nearly half the total amount that was independently spent — unions probably outspent corporations by roughly 2 to 1 (click on the link for more details).

He goes on to provide typically Volokesque disclaimers and cautions.

Larry Ribstein has devoted so much e-ink to Citizens United that he's created a blog archive category for it. He also provides a convenient summary of his main points:

1. Corporations are not "people too," they are artificial legal entities.

2. Citizens United is about the speech rights of real people acting through associations. If you take away the speech rights of people acting through corporations, you have to decide which other types of associations you want to apply that to. Unincorporated firms? The ACLU? You might be surprised that your theory is more likely to apply to the ACLU than to Citizens United.

3. To summarize: "Corporate" speech is about real people speech.

4. Got that straight? Here it is again: Corporate speech is about real people speech.

5. Let's try that one more time: Corporate speech is about real people speech.

Todd Henderson explains at great length why he thinks Citizens United was correctly decided. he concludes:

In Citizens United, the Court decided that we cannot trust the government to tell us what we should be hearing about our political system. In the view of this corporate law professor, this is a victory for our democracy.

But you've really go to go read the whole thing. Excerpts can't do it justice.

JW Verret has posted his testimony before a Congressional hearing on Citizens United. He explains that the anti-Citizen United bill under consideration is seriously flawed:

There are two types of shareholders in American publicly traded companies.  The first are retail investors, or ordinary Americans holding shares through retirement funds and 401(k)s.  Half of all American households own stocks in this way.  The other type of investor is the institutional investor, including union pension funds as well as state pension funds run by elected officials. The “Shareholder Protection Act of 2010” seeks to give those institutional investors leverage over companies for political purposes at the expense of retail investors.

Today’s legislation attempts to hijack the securities laws to regulate campaign finance.  It would limit the ability of companies to communicate with legislators by giving Union shareholders power to stop those communications.  This bill does not, however, limit Union political spending in any way.  Further, it has nothing to do with the investor protection goals of the Securities Exchange Act. ...

The structure of American corporate law rests the authority to manage the day-to-day affairs of the company, including decisions of how to invest the company’s funds, with the Board of Directors.  Putting corporate expenditures to a shareholder vote, as today’s legislation requires, is the first step toward turning shareholder votes into town hall meetings.  Some shareholders may want the company to locate a new factory in their town or give away free health benefits for employees without regard to whether the expenses risk bankrupting the company. [Tjis has been my main complaint, as well]

Today’s bill has absolutely nothing to do with reforming financial regulation in response to the financial crisis, and is indeed a distraction from that vital work.  It is a power grab by union pensions funds and state elected treasurers in an attempt to enhance their leverage over the retirement savings of ordinary Americans.  To call today’s bill a “Shareholder Protection Act” is fundamentally misleading.”

Precisely right.

Comments

[David Welker]

Corporations are not MERELY associations of people. They are associations of people who have a very special privilege in the form of limited liability. This means that this association of people can impose greater costs on society than the benefits they produce, and yet not be personally responsible.

I do not think that freedom of speech should be identical for associations of people who do not take full personal responsibility for the negative effects of their collective actions. I further think that Citizens United is based on bad law in the form of Buckley v. Valeo. Money is not speech. It shouldn't be treated exactly like speech. Since we have a conservative court with little or no respect for precedent it doesn't like, I don't see why future liberal courts should respect precedents that liberals don't like either.

It should be further noted that limiting the ability of an association of people from spending money through a collective entity whose actions they do not take personal responsibility for does not prevent these persons as individuals from spending money as individuals. Or even forming a non-corporate associaton consisting of the same exact people as the shareholders of the corporation and spending non-corporate money.

That said, while I think Citizens United is bad law, I think it is good policy. I think as long as Buckley v. Valeo stands, we should increase money in politics, not decrease it. The problem, as I see it, is not money in politics per se, but the influence that money buys. While we are supposed to have equal votes for our democratic representatives, money buys unequal influence.

However, increasing the money in politics would actually decrease the influence of donors for a couple of reasons. (1) The marginal benefit of an additional dollar spent on politics decreases as the number of dollars increases. Indeed, oversaturing the airwaves could even cause a backlash. The amount of influence money has on politics is going to tend to depend on the importance of the marginal donor. (2) Donors and lobbyists have maximal influence when politicians have to spend countless hours working on fundraising rather than public policy. It is the case that a large donor can improve a politician's life in very concrete ways by decreasing fundraising pressure. It is only natural for a politician to reciprocate by making a donor's life easier when the donor has made the politician's life easier. But, if there was more money in politics, politicians would have less pressure when it comes fundraising.

So as a liberal, here is my position on Citizens United. It is bad law and it disrespects established precedent. But it is good policy. If money is speech, it is better for it to be less regulated. After all, the more regulation there is, the more influence it gives to specialized players that are experts in regulation compared to other influences. Also, if it is easier to get money into the political process, then the marginal donor will have less impact.

[Allan]

If individuals want to pool their money together to support speech, all power to them.

But that is not what a corporation is. A corporation exists to make a profit. There can be thousands of shareholders. If each shareholder wants the corporation to speak in one voice, ok. But if one shareholder objects, then the speech is not the speech of the shareholders. The same would apply to unions.

Why not have the corporation offer to give a percentage of its profit to shareholders and give the shareholders the right to use the money for speech (by paying into a PAC or something). I don't think anyone would have a problem with that system.