Xiaorui Huang
WR 123 College Composition III - Academic and Research Writing
Research Essay
Grade: A
The Wolf in Sheep’s Clothing: Corporations and Corporate Personhood
On January 21, 2010, according to the First Amendment that guarantees freedom of speech, the United States Supreme Court decided that it was legal for corporations to spend unlimited amount of money on “electioneering communications.” This 5-4 split decision in the case of Citizens United v. Federal Election Commission (FEC) marked a triumph for corporations and corporate personhood, yet, the ruling poses a huge threat to democracy and the public interest. Some voices praise the righteousness of this ruling in restoring the freedom of speech for corporate persons while the others worry about the potential long-term damage caused by the reinforced corporate personhood on our democratic society. Corporate personhood impairs democracy and infringes on public interests because it steers political elections, jeopardizes policy making, places corporate interests above public interests and instigates the abuses of corporate power by providing both legal and normative exemption from liabilities.
Corporate personhood refers to a status that corporations possess the same constitutional rights as natural human beings. Summarized by freelance writer Ted Nace, American corporations has gained various constitutional rights from judicial rulings through a process of more than one hundred year (16-17). Begin with the Santa Clara v. Southern Pacific case in 1886 in which corporations became encompassed by the Equal Protection Clause, almost all constitutional rights have been entitled to corporations by judicial creation (Nace 16-18, 167-168). In 1976, the Supreme Court equated political donation with freedom of speech in the case of Buckley v. Valeo, and virtually invalidated restriction on indirect corporate spending on campaigns, which started a upsurge of corporate influence in politics. Nevertheless, as shown by the pro-regulation court decisions in Austin v. Michigan Chamber of Commerce in 1990, McConnell v. Federal Election Commission in 2003, and several other cases, direct corporate spending on campaign speech was somewhat restricted in judicial rulings due to its highly contentious association with both the inviolable freedom of speech and sensitive political democracy. In the case of Citizens United v. FEC, however, the Supreme Court overturned several precedents and greenlighted unlimited corporate spending on direct campaign speech, which installed a new powerful weapon on the armor of corporate personhood.
Through the cloak of corporate personhood, corporations have gained legal permission for unlimited campaign spending in both direct and indirect ways, and become unprecedentedly powerful players in politics who can steer democratic elections.
This is because corporations with their abundant capital actually dominate costly battlefield of campaign advertising on mass media. According to a study on 2004 U.S. presidential and Senate election by political science professors Michael Franz and Travis Ridout, such political advertising has significant impact on voter perception of candidates’ abilities and positions (485-486). Since such advertising is very effective in change public acceptance of candidates, the competition on mass media could probably shape the election results. Brian Lane, a leader of a social justice advocate group, in his study discovered that in 94% of the races for 2000 elections in House of Representatives, the candidate who raised the most funds won. As this reveals, with the control of this battlefield in hand, corporations gain the power to steer political election.
By using their person-like constitutional rights to steer elections of legislators, corporations jeopardize democratic policy-making. In supporting campaigns of politicians, corporations usually require their future favoritism in policy making. Consequently, the results of such campaigns are very likely to be pro-corporation legislative bodies. Thus, the legislative become crony of corporations and tend to approve policies that are beneficial to corporations while hinder the enactment of business regulations.
Even in a pro-corporation legislative, regulations that restrict corporate power sometime get passed. When this happens, corporations always use their personhood as a trump in litigation to dismantle these anti-corporation regulations. Specifically, corporations can always found these regulations violate their constitutional rights as human and appeal to the court to outlaw these regulations (Nace 12). A typical example of how corporations play this trump card is the case of Citizens United v. FEC. In this case, the corporation Citizens United intended to broadcast a film and related advertisements through mass media to criticize then Senator Hilary Clinton within 30 days before a primary election, which was ruled by a local court as violating the 2002 Bipartisan Campaign Reform Act (BCRA) that restricts corporate spending on “electioneering communications.” In order to defend its political influence, Citizens United appealed to the Supreme Court and argued that the BCRA infringed its freedom of speech. The court favored Citizens United and outlawed the BCRA. Based on the decision of the Supreme Court, corporations can spend unlimited money on “electioneering communications”. This case shows that even when some anti-corporation regulations passed legislative, they are likely to be dismantled by corporate personhood in court. In this sense, corporate personhood jeopardizes policy-making by both offensively creating corporate favoritism in legislative and defensively deregulating enacting anti-corporation regulations in judiciary.
By influencing elections and legislation, corporations ultimately aim to maximize their own interests. During this process, public interests are unavoidably compromised or even sacrificed. Several methods have been used by corporations to do this, among which the most effective way is the “revolving door”. According to the Appointments Clause in the U.S. Constitution, heads of executive departments and agencies are assigned by the president with the approval of the Senate. As discussed above, corporate personhood gives corporations the power to influence all elective positions including the president and senators. Therefore, heads of executive departments and agencies are selected under the indirect influence of corporations. To please their corporate donors, politicians tend to choose candidates favored by corporations to direct executive agencies. A large part of these candidates are ex-employees in industries. These people, with their personal connection in corporations, tend to be partial to corporations in their terms of office. James Connaughton, former chairman of the White House Council on Environmental Quality and former director of the White House Office of Environmental Policy, is a notorious “revolving door” figure. He served as corporate attorney and lobbyist for utilities and chemical industries before entering George W. Bush administration. As unveiled by author and activist Jim Hightower, Connaughton involved in cutting down the restrictions of the usage of arsenic in drinking water, and has contributed to the administrations’ reluctance in addressing the industrial causes of climate change through his advising to the president. Many “revolving door” examples exist between food industries and governmental watchdogs like the Food and Drug Administration, between energy and chemical industries and environmental regulatory agencies, and between defense contractors and the Pentagon. All these officials somewhat align governments’ goal with corporate interests. Governments no longer mean to protect people but to protect corporations, which usually acts under the mask of promoting economic growth. In this sense, to regulate corporations for public interest, people not only have to get regulations pass the corporate-steering legislation, but also need to bypass the throttling hands of all these officials, which is extreme difficult. In contrast, corporations can easily invalidate existing regulations through the same mechanism. Consequently, an unlevel playground that favors corporate interest over public interest is created in administration offices.
Besides the “revolving door”, corporate personhood also effectively helps defend corporate interests in court, which can be demonstrated in the case that diary industry in Vermont filed a lawsuit against a state legal act that mandated labeling of milk produced through recombinant bovine growth hormone (rBGH) (Lane 25). rBGH is a genetically modified hormone commonly used in American dairy to increase milk production. According to the study of noted medical science scholar Samuel S. Epstein, although rBGH itself has been approved by the U.S. Food and Drug Administration as safe to use, the injection of rBGH into cows induces significantly increase in the rate of udder infection, which necessitates high-dose-antibiotic injections that causes inevitable residues in milk. Because of this hazardous side-effect, most developed countries have banned the use of rBGH in dairy industry (Akre). Considering the well acknowledgement of health hazards of using rBGH to produce milk, it is at least justified if not urgent to label the products using it in marketplace for the sake of consumers. However, the dairy industry appealed to the court and argued that this law violated its right of negative speech derived from the First Amendment, and the judge favored the industry and invalidates the labeling requirement (Lane 25). This case clearly shows that corporate personhood enables corporate interest to override the public interest in court.
Other than making democratic legislation and public interest in jeopardy, corporate personhood also instigates the abuse of corporate power by exempting them from consequent liabilities. In the case of The Unraveling of People v. Pacific Lumber and People v. Debi August in 2004, Pacific Lumber company was charged for purposely reporting faulty data to the California Department of Forestry in order to log 100,000 more trees on a unstable slopes, which increased the possibility of landslides by nearly 50 per cent and endangered nearby communities (qtd. in Bevington 101-02). This case was filed by the district attorney for the interest of local residents. However, the company’s argued that based on the right to petition the government listed in the First Amendment, it was constitutional to deceive when lobbying the governments (Sims). Eventually, the judge accepted Pacific Lumber Company’s argument and dismissed the case, and the company remained unscathed after lying to state government and imperiled several villages under the dangers of landslides. It is apparent that corporate personhood provides constitutional shields and grants corporations liability exemption for what they have done, which encourages the abuses of corporate power.
Other than directly supporting the abuse of corporate power, corporate personhood also reinforces a “corporation first” mindset and encourages the abuse in a subtle way. As psychologist Dennis Fox points out, through portraying corporations as persons, corporate personhood excludes the influence of personal social responsibilities of corporate executives on corporate operations by defining these executive as parts of the corporate person rather than distinct natural persons (342-343, 349). Consequently, any responsibilities other than maximizing profits are detached from the whole chain of corporate commands and a dangerous “corporation first” mindset is formed. This mindset, manifesting as Milton Friedman’s argument that the only responsibility of business corporations is to maximize profits within the legal framework of a society, falsely justifies and encourage corporate malfeasances because these malfeasances, even though unethical, are usually profit-oriented and constitutional (154).
When considering the society as a whole, corporate personhood as the primary booster of corporate power is harmful. A trend of expanding income inequalities of American society along with the rise of corporate power has existed for more than two decades. From late 1970s to early 2000s, the corporate power has increased and politicians’ opinions toward corporations gradually became positive (Nace, 139-150). During the same period, compensation for corporate executives has increased 600% while the average American's median wage and purchasing power have slightly dropped (Lane 26). Besides, the GINI ratio of America (after taxes and transfers) has increased from 0.316 to 0.357, which indicates a national trend of expanding income gap among different social classes (OECD). In 2000, America has become the second most unequal countries among OECD countries in terms of wealth distribution (OECD). These statistics show that corporate power has risen with the stagnation of the general well-beings of Americans. In other words, corporate personhood undermines the public interest of Americans through its significant contribution to corporate power.
In spite of all the destructive impacts of corporate personhood on democracy and public interests as discussed above, voices exist arguing that corporations should enjoy all constitutional rights of natural person because they legally equates person at the first place. As legal scholar Bradley Smith claims, corporations should possess similar constitutional rights as natural person because they are entities created by natural person. Besides, Smith argues that it is unreasonable to deprive constitutional rights of corporations just because they enjoy benefits like limited liability and perpetual life that are legitimized in the state and the federation.
However, even leave along all the harmful side-effects of corporate personhood, corporations are essentially non-human as shown in their disrespect to this identity. In the ongoing case Kiobel v. Royal Dutch Petroleum that 12 Nigerian plaintiffs sue Royal Dutch Petroleum for aiding and abetting former Nigerian military government to suppress protestors through violence, Royal Dutch Petroleum argues that being a corporation instead of a “natural person”, it should be exempted from the liability for international human rights violation (Sacks). In this case, fundamental contradiction exists between corporations’ denial of personhood and their passionate claim of human rights in previous cases. This contradiction reveals that corporations have no concern about their personhood once their corporate person identity hurts their profits, which disproves their personhood as we natural persons will never deny our human identity even if its associated liabilities may lead to losses. Therefore, corporations’ disrespect for their divine identity of “person” unveils their inhuman nature.
Corporate personhood enables corporations to steer elections, jeopardize democratic legislations. Besides, it helps place corporate interest above the public interest and instigates the unethical use of corporate power. Ultimately, corporate personhood impairs our political democracy and infringes on the public interest. If the corporate personhood continues to be reinforced and associated constitutional rights extended, the integrity of our society may collapse. To address the threat posed by corporation and corporate personhood, the foremost step is to invalidate the notion of “corporate person” by proposing new constitutional amendment. As suggested by social justice activist Jan Edwards, a bottom-up approach should be used to outlaw corporate personhood from local town, to state, and eventually eliminate corporate personhood in the Federal Constitution (32).
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