When I think about the many threats to the quality of our democracy, the growing influence of corporations in public policy always tops my list. Up until last fall, I naively assumed that influence was mostly contaminating national politics. But as my focus shifted to North Carolina and BlueNC, I have been stunned by the role corporate money plays in how our state government operates. On one hand, you have the Puppetmaster, illegally buying and selling elections with corporate money. And on the other hand, you have Chuck Taylor, running campaign commercials fully funded by the US Chamber of Commerce. And in between, you have a swirl of corporate contributions to politicians that is absolutely mind-boggling.
How did this happen? How did we allow our democracy to be hijacked by corporate interests? And what can we do about it?
I don't claim to have all the answers, and the legal and philosophical issues are complicated and wide-ranging. But as I've explored the issue over the past month, I've found some good briefs of how we landed in this miserable state of affairs. One of the best explanations I found was in this interview with Jan Edwards.
What is corporate personhood? It is corporations having rights in the constitution that are normally meant for human beings. Those rights include rights in the Bill of Rights, the Fourteenth Amendment, and civil rights laws.
How did corporations gain these rights? The founding fathers of the United States were not interested in giving constitutional rights to corporations. In fact, they wanted to regulate corporations very tightly because they had had bad experiences with corporations during colonial times. The crown charter corporations like the East India Company and the Hudson Bay Company had been the rulers of America. So when the constitution was written, corporations were left out of the Constitution. Responsibility for corporate chartering was given to the states. State governance was closer to the people and would enable them to keep an eye on corporations.
In the eighteenth century, corporations had very few of the powers that we now associate with them. They did not have limited liability. They did not have an unlimited life span. They were chartered for a limited period of time, say 10 or 20 years, and for a specific public purpose, such as building a bridge. Often a charter would require that, after a certain amount of time, the bridge or road be turned over to the state or the town in which it was built. Corporations were viewed differently in early America. They were required to serve the public good. But over time people forgot that corporations had been so powerful and that they needed to be strongly controlled. Also, corporations began to gain more power as the wealthy elite.
After the Civil War, Congress passed several constitutional amendments relating to slavery. The Thirteenth Amendment freed the slaves, the Fourteenth Amendment gave the newly freed male slaves equal protection and due process under law, and the Fifteenth Amendment gave voting rights to these same former black male slaves. The Fourteenth Amendment used the word "person" in the body of the amendment. This caused some confusion about who "persons" were. Did women qualify? Or corporations? The Supreme Court responded by saying that the word "person" in the Fourteenth Amendment meant just black males.
That, however, wasn't the end of it. Corporations had a lot of money and a lot at stake, and they took case after case to court. In 1886, corporations gained a victory. Before the Supreme Court session to announce the decision in the case Santa Clara v. Southern Pacific Railroad, Chief Justice Waite said that the court wouldn't hear arguments on whether the Fourteenth Amendment clause on equal protection applied to corporations; they all believed that it did.
The case was decided on other grounds. But, the principle that corporations have Fourteenth Amendment rights was inserted by the Supreme Court reporter in a header in the published report of the case. A couple of years later, in the case Minneapolis & St. Louis Railroad v. Beckwith (1889), the Court cited the Santa Clara case as the precedent for corporations having due process and equal protection under the Fourteenth Amendment. With that, corporations became legal persons in the United States, and gained the ability to challenge in federal court regulatory actions at the state level.
Federal regulatory agencies were also being created during this time. In 1893, corporations won a case called Noble v. Union River Logging, which gave them Fifth Amendment due process rights against the federal as well as state governments. For the first 100 years or so of U.S. history, Supreme Court decisions regarding corporations were made under the artificial entity corporate theory. But from 1886 or 1889 on, the justices wrote their opinions in terms of personhood, and they considered corporations to be corporate persons.
What is the lingering importance of corporate personhood? Corporate lawyers began to go through the Bill of Rights and claim more and more of these rights for corporations. The Fourth Amendment right against search and seizure, for example, is used to keep corporations like Enron from having to open up their books. Corporations' Fourth Amendment protections require OSHA [the Occupational Safety and Health Administration] to produce a warrant to check for safety regulations, which gives employers time to clean things up. It also requires the EPA to produce a warrant before checking for environmental infractions.
What kind of First Amendment rights do corporations have? They have the right to spend unlimited amounts of money on overturning referenda, established by the Boston v. Belotti decision in 1976. Buckley v. Valeo, in 1977, said that political contributions, including financial contributions to candidates and parties, are equivalent to speech. This applies to both corporations and human persons. Corporations have the right not to speak. This argument was used to overturn a law in Vermont requiring the labeling of bovine growth hormone, with the courts ruling that because the Food and Drug Administration has not required such labels on health grounds, corporations could not be required to label their products.
In many of the important cases establishing corporate personhood and corporate rights, the Supreme Court has not been unanimous. For example, Boston v. Belotti was a 5-4 decision, with Justices White, Brennan, Marshall and Rehnquist dissenting. Over the past 75 years, Justices Douglass, Brandeis and Black made some insightful dissents.
In what other ways does corporate personhood affect concrete policy or government's ability to restrict corporate power? It's like a roadblock that needs to be removed before all sorts of other options to limit corporate power can be pursued. The fundamental issue is: Who makes the rules? Who governs the country? Do the corporations govern as people, or do the people govern? Are the corporations subservient to people or not? After corporate personhood is eliminated, we could begin to challenge many other sources of corporate power. If you redefine who is a person, if you redefine what a corporation is in relation to We the People, then you open up a lot of avenues now blocked by this strange concept of a corporate half person entity that shapeshifts between public and private as suits it.
What can people do about this? I believe that a constitutional amendment is needed to clarify who is a person in the United States. All living, breathing human beings would be included, but no non-human beings.
I know a constitutional amendment is very difficult, but that is what we think is the proper way to change things -- in the constitution, not in the Supreme Court. At some point, the Supreme Court might hear a case and they could overturn corporate personhood. But we think that the question, "Should corporations have the rights of legal persons?" is a political question, a question for the people.
We're starting at the grassroots level. We're encouraging people to pass resolutions in their towns to create corporate personhood-free zones -- to build up strength at the grassroots level. Moving on from there, we hope to do a state-wide constitutional amendment, and once we get some of those we would go for the federal amendment. That sounds like a lot of work, but that is the proper way to do it, the democratic way.
Do you think corporations should have more rights than people? Do you think the US Chamber of Commerce should be able to pour money into advertising for Charles Taylor that would be considered illegal for an individual to do? Do you think Art Pope, the CEO of Variety Stores, should be able to buy elections using corporate money? Do you think Senator Burr should be more worried about what his corporate contributors want then what We the People want?
As a person who has created and run a handful of companies over the past 25 years, I have a deep appreciation for the power of private enterprise. I love businesses and entrepreneurs, and I'm all for public policies that encourage value creation and reward investors. But I see no reason that those policies should extend to granting corporations the ability to contaminate public policy.
PS John Hood over at the John Locke Foundation is writing this week about philosophy and government. It will be interesting to see how far he's willing to stretch his core principles to make the case that the founding fathers intended for corporations to have the rights of persons.