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Defending Citizens United?

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2 Responses

  1. Brett Bellmore says:

    “A third group claims that political activity is just another corporate decision protected by the business judgment rule.”

    A forth group claims that, while all the discussion seems to focus laser-like on for profit corporations, the real target of efforts to stem political speech by corporations seem to be corporations like the NRA, not ADM, and it’s probably a mistake to talk about this as though for profit corporations were the real concern of lawmakers. Rather than finding a way to gag those pesky interest groups.

  2. Jay Kesten says:

    Brett,

    Thanks for the comment. There are certainly other potential criticisms of Citizens United (and the response thereto) than the ones listed in the post. In case I wasn’t fully clear on this point, I’m not taking a position on the merits of the underlying decision. I take it as given that corporations – both for-profit and otherwise – now have a relatively unfettered right to engage in political activity. Given that, some internal governance mechanism is required for determining what those corporations will say.

    My aim in this paper is to explore the normative merits of a specific decision-making process within for-profit entities, with a particular focus on public companies. There may well be interesting internal governance issues in the non-profit context, but I think they raise substantially different considerations.

    As to legislators’ intent, I hesitate to offer a comprehensive or monolithic account. I’m sure that some lawmakers are indeed concerned with non-profit interest groups. It is worth noting, though, that the debate on banning or regulating corporate contributions was often focused on the ‘other people’s money’ problem, which is much more prevalent in widely-held, for-profit entities. (Adam Winkler has a great historical account – http://papers.ssrn.com/sol3/papers.cfm?abstract_id=805504). Moreover, several of the major campaign finance laws were enacted in the wake of what Larry Ribstein described as “flagrant shakedowns” of for-profit corporations by political fund-raisers. These laws were supported, and lobbied for, by large for-profit entities such as Monsanto, GM, Ford, and Time-Warner. If one likes public choice explanations, one might argue that such laws reflect – at least in part – those companies’ desire to minimize the rent-seeking arms race and/or the risk of political extortion.

    That’s all a long way of saying that I think it’s quite important to think about the pros and cons of different internal governance structures in the context of for-profit companies’ corporate political activity. Keep the comments coming — I’ll try to make my case!

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