Citizens United v. FEC is ultimately a pretty simple issue, and it’s pretty clear, when you cut through it all, that there are two camps: one camp wants more speech, and one camp wants to suppress speech. That latter camp is a tough sell. Thus the search for new reasons for speech suppression. One they’ve been trying to make a go of is shareholder rights. That has required some serious contortions by the regulatory lobby, but ultimately it, too, is a non-starter.
The latest exhibit of the wailing and gnashing of teeth for the poor, unfortunate shareholder (who for years has been scorned by the “reform” lobby for trying to “drown out” the voices of others, for amassing great “war chests,” for being a “special interest” and usually the ultimate villain in discussions of campaign finance) is a column by the Brennan Center’s Ciarra Torres-Spelliscy appearing in Forbes.
Ms. Torres-Spelliscy is concerned that her 401(k) investments will be spent by corporations on political advocacy that she doesn’t like. She’s worried that they will spend her money to “defeat health care reform, resist new regulations on financial instruments or combat environmental controls.” (Notice how in the end, it’s rarely the principle, but the specific issues. She’s not, it appears, worried that, like the big pharmaceuticals, they’ll spend her money to promote health care reform, or call for excessive regulation and promote extreme environmental controls — it pretty much always comes down to content).
But this already happens. Corporations can give money to charities, including controversial charities, such as universities that bring in controversial speakers such as Ward Churchill or Ward Connerly; art museums that feature displays by Robert Mapplethorpe; or groups that promote abortion, such as Planned Parenthood, or limit participation by gays, such as the Boy Scouts.
In fact, many large corporations, including Bear Stearns and Enron, have supported the Brennan Center over the years. Where are the complaints? When did the folks at the Brennan Center return those contributions out of concern for the poor shareholders who may oppose their 401(k)s being used to further the Brennan Center’s agenda? No, not only doesn’t the Brennan Center mind, they actually are quite active in soliciting such corporate support, with no regard whatsoever for the shareholders whose 401(k)s are being used in this manner. There’s a word for that which, by the way, starts with “H.”
Large corporations will spend at least 10 times as much money lobbying as making political contributions, and those lobbyists may lobby “to defeat health care reform, resist new regulations on financial instruments or combat environmental controls.” But of course, though there may be some regulation of lobbying, we can’t ban lobbying — as Ms. Torres-Spelliscy knows, lobbying (the right to petition) is protected by the First Amendment. Oops! — so is speech.
If concern over shareholders were the issue, these restrictions would appear in laws on corporate governance, not campaign finance. Her 401(k) funds may be invested in corporations selling products she thinks should be illegal, perhaps tobacco or various chemical products; or following business practices with which she doesn’t agree, perhaps outsourcing jobs or failing to provide “adequate” health insurance to employees; or sucking at the government teat when she thinks it shouldn’t, such as auto makers; or who knows what all else. The fact is, we have rules for corporate governance that provide management with broad discretion to act in the best interest of the shareholders. Only now does the reform lobby suddenly decide that drastic steps are needed.
The reformers’ new tack also demonstrates the overkill involved. The ban on corporate spending includes not just large companies in which Ms. Torres-Spelliscy thinks maybe she has some 401(k) money, but ideological corporations that people join precisely to further their political views; and closely held corporations in which there are no dissenting shareholders.
Perhaps the biggest jujitsu comes when Ms. Torres-Spelliscy cites a study that “found that large corporate political expenditures are linked with lower shareholder value.” We don’t quibble with the study — I haven’t read this particular study, but other studies have reached similar results and serious campaign finance scholars have long since concluded that political spending generally plays far less of a role in shaping policy than “reformers” would have us believe. But for a staffer at the Brennan Center to say such a thing is stunning. After all, for years it has been an article of faith in the “reform” community that corporations would never spend money if they didn’t expect to gain something from it. Apparently it is now Emily Litella time: “never mind.”
Here’s the bottom line: it’s not about protecting shareholder rights, for if it were the Brennan Center would immediately stop soliciting and accepting corporate contributions. It’s about limiting speech that they think they will not like. You know it, I know it, and they know it. Let’s trust that the Supreme Court knows it, too.
