The recent Supreme Court decision Citizens United v. Federal Election Commissionpermits corporations to directly donate to political parties as well as run political advertisements. Yet more shocking than the Court’s blatant partisan split on the issue is the degree to which public anger about the decision has been bipartisan. From left-of-center to right-of-crazy, both liberal activists and tea party protesters are incensed with a decision they see as allowing even more corporate influence over Washington. Yet while many would like to see this decision overturned, the truth of the matter is that the legislative system in the United States is already corrupted by private interests, and the Court’s decision, while appalling, does not affect the incentive structure in place which undermines and stymies Congress on many of the nation’s most pressing issues.
Lobbyists and public action committees already exploit the need for members of Congress to fret about re-election almost the nanosecond they are elected. The amount of money pushed into politics already makes a mockery of the ‘one person, one vote’ contract implicit in a democratic system. Indeed, on key political issues of the day, the financial lobby is busy trying to prevent the establishment of an independent consumer protection agency, and the insurance industry spent roughly one million dollars a day on lobbyists and contributions to block the public option. From oil companies trying to prevent climate change policy to automakers buying up and destroying public transportation systems to pharmaceutical and food companies lobbying against FDA regulations to no-bid contracts for American companies in Iraq to mortgage lenders protecting their ‘loan shark’ profit margins, it is evident that while corporations are for profit, governments exist to remain distinctly in the service of the people.
Yet while the notion of corporations as legal persons has made me uneasy for as long as I have understood the concept, I admit I am humbled by the legal ramifications involved in denying corporations- and by the same token unions- rights of personhood. Instead of adopting a ‘reverse or uphold’ legal approach, it would treat the problem more substantially if we challenged the underlying incentive structure in place, limiting financial influence over public servants, raising the costs of social harm, and maintaining an adamant regulatory system.
One idea, which is not new, is to even the playing field by eradicating private financing of elections altogether, and instead maintaining a national fund for elections. Before images of a socialist march come to mind, this system is already practice in the United States, albeit piecemeal. If a candidate privately raises $5,000 in each of at least 20 states and agrees to spending limits, the government subsidizes a dollar for dollar “match”. Yet without an even playing field as witnessed in the 2008 election, candidates who take public money often fall far short of what their competitors can privately raise.
We must alter elections from privately-funded popularity contests to publicly-financed issue-based contests open to all. This would transform the democratic system currently in place, where dollars are more powerful than votes and those who have the most money inevitably have the most influence. Prohibiting all private financing would additionally hamstring corporate influence without violating corporate free speech. Campaign finance reform would also engender greater transparency as ads run by corporations and unions would be based on the stances political parties or candidates take (for or against oil for example), and not on who has or hasn’t accepted undisclosed funds.
It would serve us well to examine an analogous example of where money corrupts politics. The ills that plague the oldest and the largest democracies in the world are not all that different, and the solution to help remedy them is surprisingly similar. India is known for being the world’s largest democracy and a ray of hope in a region blighted by political instability and military rule. But when I went to cover the largest elections in the world in April of 2009, pride in this democracy was the least of what I found.
Instead of the rosy picture of millions of people voting (418 million actually did), what I consistently encountered as I spoke with NGO leaders, academics, voters, journalists, ministers, and candidates was the increasing political influence and success of common criminals – thugs – in the elections. According to the Association for Democratic Reform, 28% of elected Indian MPs have criminal cases pending against them (more than one in five), while 14% have serious criminal indictments. More alarming is the fact that this number has increased by 31% since the 2004 elections.
It seems that those who have long lived beyond the reach of the law have figured out that if they manage to delay the adjudication of the cases against them in court (not very difficult in India for those who have money and power), and get elected in the interim, they can enjoy the fruits of parliamentary immunity. Indian election rules do not prevent those charged with criminal cases from standing for electoral offices, only those who have been convicted. Unscrupulous candidates use all the nefarious tools in their thuggish panoply, from bribery to extortion to intimidation to rioting and even murder and incitement of gang wars, to get the votes they need. For a village thug charged with a crime, the best thing he can do to free himself of accountability is to get elected. Along with the power of patronage that comes with vaunted ministry positions, an air of untouchability comes with electoral success (and not in the Hindu caste sense of the term, but rather Al Capone’s).
Historically, the term “thug” referred to a member of an organization of robbers and assassins in India who typically strangled their victims. Corporations are certainly not thugs in the literal sense: they are legal entities created by the State, endowed with rights of legal personhood, shielded from personal liability, and can exist in perpetuity. Armed with these benefits and shareholder funds, corporate executives and managers can generate wealth, which often does benefit society at large. Without these privileges, risk-averse individuals would not assume high levels of debt and risk bankruptcy to endeavor to make things. Thus, while the existence and life of a corporation is crucial to higher standards of living, their categorical incentive – self-interest, which maximizes profit for shareholders – can also do harm.
The near collapse of the global financial system at the hands of profit-maximizing investment bankers in 2008 illustrates this point well enough. Many concerned with avoiding another financial crisis argue that the root causes have not been addressed, and Wall Street continues to incentivize reckless risk. A lack of accountability and extremely close ties (some would say a revolving door) with Washington, conflicts of interest (such as the relationship between Goldman Sachs and Greece) and expectations of huge personal profits continue to endanger the world economic system.
One thing remains sad and true. Whether you are looking at the American Congress or the Indian Lok Sahba, reform falls into the hands of the very people who have incentives to stunt it. In other words, those who stand to gain from a corrupting system are the very ones who hold all the power to change it. Will we see campaign finance reform in our lifetime? The answer unfortunately lies with those who have the money: thug Parliamentarians in India and corporate entities in the United States. Can we trust them to regulate themselves as we naively did with respect to Wall Street?
Recently-elected Indian Parliamentarians with criminal offences boastfully refer to themselves as baahubali, which literally translates as “muscle men” or gangsters. Characteristic of these legitimized ruffians is a general desire to amass vast amounts of wealth, use this wealth to attain power, capture more wealth with this newfound power, and so on. Isn’t this essentially the same motivation for maximizing profit? It doesn’t take much of stretch to see that profit maximization is not always innocuous, and without regulation can endanger human lives, the environment, and even jeopardize competition itself. AsRalph Nader has argued, “from pollution, medical negligence, procurement fraud, product defects, and financial fraud, to antitrust, public corruption, foreign bribery and occupational homicide, corporate crime is widely ignored by politicians – yet acutely felt by all Americans.” American corporations, especially those that operate abroad, such as United Fruit, Halliburton, Nike, Enron, Blackwater, Dow Chemical, Goldman Sachs, AIG, Arthur Andersen, Hollinger, and a host of others throw around massive amounts of wealth, bribe, intimidate, tamper with and bend laws to suit their interests, silence whistleblowers, engage in patronage, squeeze out competition, and instill fear in their workers so as to avoid rebellion from within. All of these behaviors can be learned from a baahubali handbook, if ever one was literate enough to write one.
We have for far too long allowed the incentive structure in the American political system to tilt toward private money. It doesn’t take a genius to understand that eventually those with the most money will carry the greatest influence, and those who depend on those large caches of cash will be beholden to the dictates of their cash cows. It reminds one of that proverbial parental slogan: ‘as long as you live under my roof, you will do as I say.’ Just as children must move out and make their own money to gain their independence, so too should Members of Congress move out of the ‘care’ of their financial supporters. In order to free our lawmakers from the need to accumulate vast resources and then repay those supporters in kind, we must institute a system which publicly funds the campaigns of those who are eligible. The goal here is to even the playing field, dissuade lawmakers from using their time in office to obtain fresh funds, and use that time instead to make and vote on laws – their actual jobs.
It was never the intention of the Founding Fathers that America’s lawmakers would be beholden to financiers, and it seems doubtful that they would allow corporations to take center stage in our political system. The private sector is adept at many things; financing political outcomes shouldn’t be one of them. Glenn Greenwald, in pointing out how little healthcare reform hurts private interests or insurance companies, emphasizes, “Corporate control of the Government is one of the most serious problems, if not the single most serious problem, the nation faces. Every future bill — from “financial reform” to energy bills to national security and surveillance legislation — is dominated by that central fact.” Yet the idea that financial and political power should rarely mingle is still considered radical today.
In his dissent to Citizens United, Justice John Paul Stevens asked why corporations, which are not members of society and cannot vote or run for office, should be allowed to crowd out those who do. What is the point of voting at all if members of Congress are more indebted to their financial base than to their electoral base? Corporations alone seem to have the amount of cash required to fund campaigns, and they often fund both parties in order to ensure that their views are represented in debate on any legislation that would affect them. In India, thugs behave in the same fashion. They meet in secret with other Parliamentarians, give and trade favors, and do this with the extra cash and muscle they acquire from their positions. It is a negative feedback loop built around rational responses to incentives.
America is a capitalist democracy, and if we endear ourselves to the notion of proper incentive structures as well as free and fair elections, we should demand both! What actually and ironically seems the most self-evident about corporate influence in politics is that it has the power to corrupt absolutely.