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A delicious example of Sauvignon Blanc falling on the citrus rather than the grass/herb end of the flavor spectrum. Bright, clear straw color. Aromas of lemon, pear, and honeydew melon. On the palate, much the same plus a touch of flinty minerality and stone fruits. Crisp mouthfeel. Very refreshing. Very food friendly. A definite winner. Grade: B+/A-
Fully mature. The tannins have softened, leaving behind an interesting mixture of dark fruit, earth, leather, cedar, and tobacco. Reminded us of a fourth or fifth growth Bordeaux. Lingering finish. Only negative comment was that this bottle was a pain to decant, as it had thrown a lot of loose sediment that had refused to settle into the bottom of the bottle despite having been standing upright for two days. Grade: A-/A
Montana's constitutional amendment setting it as state policy that 'corporations are not people' has a wide lead for passage right now with 53% of voters saying they support it to 24% who are opposed. Democrats (67/13) and independents (59/25) both stand strong behind the 'corporations are not people' movement, while Republicans are pretty evenly divided with 32% of them supporting it and 35% opposed.
Here's the text of the amendment and a link to a supporting statement:
(1) It is policy of the state of Montana that each elected and appointed official in Montana, whether acting on a state or federal level, advance the philosophy that corporations are not human beings with constitutional rights and that each such elected and appointed official is charged to act to prohibit, whenever possible, corporations from making contributions to or expenditures on the campaigns of candidates or ballot issues. As part of this policy, each such elected and appointed official in Montana is charged to promote actions that accomplish a level playing field in election spending.
(2) When carrying out the policy under subsection (1), Montana’s elected and appointed officials are generally directed as follows:
(a) that the people of Montana regard money as property, not speech;
(b) that the people of Montana regard the rights under the United States Constitution as rights of human beings, not rights of corporations;
(c) that the people of Montana regard the immense aggregation of wealth that is accumulated by corporations using advantages provided by the government to be corrosive and distorting when used to advance the political interests of corporations;
(d) that the people of Montana intend that there should be a level playing field in campaign spending that allows all individuals, regardless of wealth, to express their views to one another and their government; and
(e) that the people of Montana intend that a level playing field in campaign spending includes limits on overall campaign expenditures and limits on large contributions to or expenditures for the benefit of any campaign by any source, including corporations, individuals, or political committees.
It is, of course, an even more deeply anti-capitalist statement than the usual versions of these amendments. But even setting that issue aside, it is deeply flawed.
For most purposes the corporation is treated as though it were a legal person, having most of the rights and obligations of real people, and having an identity wholly apart from its constituents. Corporate law statutes, for example, typically give a corporation “the same powers as an individual to do all things necessary or convenient to carry out its business and affairs.”
Although the corporation’s legal personality obviously is a fiction, it is a very useful one. Consider a large forestry company, owning forest land in many states. If the corporation is not a legal person with the power to own land, who owns the land? Presumably the shareholders of the company. If the company were therefore required to list all of its shareholder on every deed recorded in every county in which it owned property, and also had to amend those filings every time a shareholder sold stock, there would be an intolerable burden not only on the firm but also on government agencies that deal with the firm. But did anybody in Boulder or Madison pause to consider that undesirable outcome of their proposal?
An even more useful feature of the corporation’s legal personality, however, is that it allows partitioning of business assets from the personal assets of shareholders, managers, and other corporate constituents. This partitioning has two important aspects. On the one hand, asset partitioning creates a distinct pool of assets belonging to the firm on which the firm’s creditors have a claim that is prior to the claims of personal creditors of the corporation’s constituencies. By eliminating the risk that the firm will be affected by the financial difficulties of its constituencies, asset partitioning reduces the risks borne by creditors and thus enables the firm to raise capital at a lower cost. On the other hand, asset partitioning also protects the personal assets of the corporation’s constituencies from the vicissitudes of corporate life. The doctrine of limited liability means that creditors of the firm may not reach the personal assets of shareholders or other corporate constituents. Just how do the brilliant legal minds behind this movement propose to preserve this feature of corporate personhood if they succeed?
Maybe proponents of this amendment will argue that they're limiting their attack on corporate personhood to questions of constitutional law. The trouble with that is that corporations have constitutional rights beyond just political campaigns, as I note in my book Corporate Law
As a legal person, a corporation has most of the constitutional rights possessed by natural persons. See, e.g., First Nat’l Bank of Boston v. Bellotti, 435 U.S. 765, 784 (1978) (corporation has First Amendment right of free speech); Hale v. Henkel, 201 U.S. 43 (1906) (corporation gets Fourth Amendment protection against unreasonable searches and seizures but not protected by Fifth Amendment privilege against self-incrimination); Blake v. McClung, 172 U.S. 239 (1898) (corporation not covered by the privileges and immunities clause of the Fourteenth Amendment or of the comity clause of Article IV); Minneapolis & St. Louis Ry. Co. v. Beckwith, 129 U.S. 26, 28 (1888) (corporation entitled to due process of law under the Fifth and Fourteenth Amendments); Santa Clara County v. Southern Pacific Railroad Co., 118 U.S. 394, 416 (1886) (corporation entitled to equal protection of the law under the Fourteenth Amendment).
If you want to exclude the corporation from having First Amendment rights, you've got to explain why the Corporation gets all these other rights. If you want to exclude the corporation from having any constitutional rights, you're engaged in a striking act of activism entailing overturning countless precedents handed down over many decades.
You're also depriving the people who make up corporations of essential protections. Government regulation of corporations obviously impacts the people for whose relationships the corporate serves as a nexus. (You see how hard it is to even talk about the corporation without reifying it?) It's useful to allow the corporation to provide those persons with a single voice when seeking constitutional protections.
Indeed, doing so is not just useful, it is necessary to protect the rights of the parties to those various contracts. As Larry Ribstein explained in Corporate Political Speech, 49 Wash. & Lee L. Rev. 109, because "a corporation is a nexus of contracts, these contract rights should be constitutionally protected to the same extent as other contract rights. Thus, the state must show why intervention in the corporate contract is constitutionally justified given the availability of self-protection through private contracting." He continued:
The Court must begin to base its decisions on well-developed modern economic theory rather than on unsupported assertions about corporations and the political process. It is particularly important to understand that any regulation of corporate speech or of the electoral process can have far-reaching consequences in terms of both the costs of governing the firm and the deadweight costs of effecting wealth transfers among interest groups. Until the Court understands these consequences, its decisions may be the proverbial bull in the china shop, particularly as pressure builds for more extensive reform of campaign financing and of corporate political activity.While it may be useful to allow the corporation "person" standing to assert collective rights, however, it is very important to remember that this is still a fiction that we embrace to facilitate protection of the rights of individuals. As Ribstein once blogged:
In a nutshell, viewing the corporation as an entity for First Amendment purposes actually serves to push the speech rights of owners and managers under a rug. Abandoning entity reasoning would focus on what matters for the First Amendment analysis. My article and blog post just linked show that once you do that, and put the arguments for limiting speech rights under an analytical spotlight, they look pretty weak.
Finally, let's look at the politics of the amendment. The proponents claim to be worked up about the Citizens United decision. But their left-liberal bias shows up in the fact that they're only worked up about half of the Citizens United case.
Unions were also freed by Citizens United to make independent political expenditures. Unions, however, are uniformly organized as unincorporated voluntary associations. The corporate peronhood proposal thus would leave unions unaffected. Which means a main source of the left's financing would remain free to spend on campaigns and political ads.
Having said that, however, the left is being mostly stupid here. Lots of pillars of the liberal political movement are limited liability entities with the status of legal persons. The NY Times is run by a corporation. Daily Kos is owned by a LLC. The Washington Post is a corporation. Moveon.org is a (nonprofit) corporation. And so on. If the goal of preclude corporations from having constitutional rights by denying them the status of legal persons were to succeed both politically and legally, all of these liberal stalwarts would lose -- among other things -- the First Amendment rights they presently enjoy.
The new September 2012 issue of The Journal of the Delaware State Bar Association has a review by Richard Forsten of my book Corporate Governance after the Financial Crisis
Download Review of Bainbridge Corporate Governance After the Financial Crisis.pdf (408.1K)
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