Saturday, September 22, 2018

Citizens United, Thoroughly Debunked

I admit I haven’t paid too much attention to debates over Citizens United, since I regard the direction taken by regulation, control over who may contribute to political campaigns and how much they can put up, to be misguided.  I would like to see comprehensive control over how much money can be spent on behalf of candidates, period.  (I would also like to see a mandate that all such contributions be funneled through an intermediary, like a public political finance fund, that keeps the identities of donors hidden from recipients.)  While CU has been yet another blow to democracy, the demand that plutocrats use one vehicle to flood the system rather than another is second best.

That said, I was struck by this new critique of CU.  Its authors, Jonathan Macey and Leo Strine, base their analysis on a point I was familiar with in the context of economic debates over the Jensenian shareholder rights theory of the firm, but its application to CU is obvious once you think about it.  The article ranges over a number of topics, but here’s the core, taken from the abstract:
In this Article we show that Citizens United v. FEC, arguably the most important First Amendment case of the new millennium, is predicated on a fundamental misconception about the nature of the corporation. Specifically, Citizens United v. FEC, which prohibited the government from restricting independent expenditures for corporate communications, and held that corporations enjoy the same free speech rights to engage in political spending as human citizens, is grounded on the erroneous theory that corporations are “associations of citizens” rather than what they actually are: independent legal entities distinct from those who own their stock.....[C]orporations do not have owners, they have investors who have contract-based, financial interests in the firms and limited management rights.
The best ideas often seem obvious once they are put forward, but the trick is to see them in the first place.


LetUsHavePeace said...

Corporate shareholders are most definitely owners; they alone have the authority to sell their shares or the company's assets. Their rights are based not on contract law but statutory rules of franchise. They are guaranteed rights of assembly abd representation, and they cannot legally surrender those rights even if they elect Directors who vote to do so.

Peter Dorman said...

LUHP, did you read the article? What part of their analysis is wrong?

LetUsHavePeace said...

To deny corporations 1st Amendment rights you have to distinguish them from labor unions and churches and agricultural cooperatives - which all have them and all are creatures of statute. That is why the authors have to turn corporations into creatures of contract. I was offering a few facts to the contrary.

ProGrowthLiberal said...

LUHP - you clearly have not read this paper. Save yourself some time and head to page 18 and read that section as well as the literature it references in footnote 34. That BTW is just a start of the incredible literature that followed Coase's seminal paper.