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March 12, 2010


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Michael F. Martin

This analysis seems to gloss over the most difficult and interesting questions raised.

For example, you ask "Do you think Nike is going to risk its brand by spending billions to elect politicians that may offend 49% of the population?"

This is not the relevant question. Managers are supposed to agents not of their customers, not of the population in general; managers are supposed to be agents of the owners of the corporation. The governance system implemented by the current law of corporations in the various states does not (at least in my view) always provide adequate protections for the diffuse plurality of retail shareholders that constitute the owners of many corporations. Institutional shareholders ought to shoulder some of the burden here. But states compete for manager-friendly corporation law; not for corporate law friendly to retail shareholders.

In this vein, you poo-poo the claim "that business are creatures of the state and therefore the state should be able to tell them what to do"

What state? Or you mean the United States? The issues of federalism here are complex and there are reasonable arguments that federal authority is needed to sort out these kinds of messes. See Farrell and Ribstein on the insurance industry, for example.

For the record, I like the Citizens United decision. Opponents seem taken with some romantic ideal of Vermont town hall meetings as democracy. That is not how our democracy has worked in the U.S. for a long time. Per Judge Posner, we have a Schumpeterean democracy, and we need vehicles for organizing and representing aggregates in politics. Town halls work for Dunbar-number sized democracies; we simply don't know what will work best for ours. This experiment is worthwhile.


That's one way to look at Citizens United and is certainly more in line with the SCOTUS point of view. But I can't get over that it's essentially a justification for corporations to influence the election process more than they are do. There's an interesting discussion going on about it on this blog: http://lawblog.legalmatch.com/

Nell Minow

While your essay raises a number of interesting issues, it does not engage directly with my testimony. I am going to assume, therefore, that you concede all of my points.

I do not concede all of yours, but will focus here on just one, your argument that if shareholders do not agree with the political expenditures made by corporate managers, they can influence these decisions or at least provide some market response by selling their shares. I would dispute this Panglossian assertion, but even if we assume arguendo that it is correct, you should explicitly endorse the recommendation in my testimony that information about these expenditures, whether direct or indirect, should be made available to investors so that they can make that evaluation. In addition, you should support my other market-based recommendations, like requiring that director candidates not be allowed to serve unless they receive majority support from shareholders. That is a far more effective way for the market to respond to failures by corporate directors than selling the stock – presumably already depressed in value as a result of these bad decisions. For an institutional investor with a significant stake, possibly an index holder who does not have the option of selling, it makes far better micro- and macro-economic sense to replace the board and realize the value of the holding.

I am a strong supporter of marketplaces for ideas and for money. But sometimes the government has to ensure that the information required for optimal efficiency is made available or address conflicts of interest – or sometimes just remove market impediments previously imposed by government as a result of corporate-sponsored lobbying efforts.


I am just an interested observer in this whole issue. I do happen to think that the outrage over the decision was over the top and phony.

What I see that is wrong is the existence of the PACs because it is much easier to launder money and campaign donations through them. It is much easier to create an elaborate system by which people can donate to multiple PACs in order to favour one candidate.

It was Justice Thomas who raised some very interesting points regarding some of the impacts of the BCRA that were raised but not necessarily relevant to Citizens United. The issue that he raised, which I understand was part of the challenge relates to the disclosure of donor names, a disclosure which led to harassment and in some cases the loss of a job (in California this occurred with regard to the campaign over Prop 8).

Considering that unions spend funds without the permission of members I am at a loss to understand why unions are not considered to be corporations e.g. the expenditure by the SEIU during the MA Senate campaign, where they released a leaflet that twisted the position of Scott Brown, as a part of the Coakley campaign. How is that expenditure by the SEIU different from the expenditure by Citizens United.

I am currently reading through the Stevens opinion. From the beginning of the opinion it seems to be written by a party hack, rather than by a justice with a reasonable argument.

The position of the majority in this decision seems to hang on to the fact that there was a punishment attached if Citizens United did not obey the FEC. I think this is what led them to overturn Austin in the first place.

Also, I think the expenditure by corporations is vastly overrated since it is individuals such as Soros through a number of different organizations that he has been funding e.g. MoveOn.org that has been wielding influence and has been a corrupt power broker. I would suspect that there are others on the other side of the political spectrum that could be accused of the same thing. However, with Soros it is the vast tentacles that stretch out even into countries such as Australia that is cause for concern.

I doubt that this would be the case for say Nike or even Microsoft.


maybe I've completely missed the point - but when did corporations acquire natural law rights?

The corporations as "merely groups of people" argument is a bit odd when everyone knows corporations are separate legal entities. Does SCOTUS's ruling mean nobody needs to pierce the corporate veil in future - because we all know it's merely a group of people?


Regarding corporations are “people”, I have no trouble with this analysis except I insist that corporations should be recognized as fully human and not just partly so. Therefore, all corporations are to be pronounced dead and buried by the age of 70-80, legally sanctioned to marry (merge) with only one partner at a time, eligible for the draft when duty calls, required to register as individuals in order to vote, expected to pay taxes and follow the local laws where they actually work and not where they domicile, and endowed with other human traits and limitations that make us truly human/people.

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