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Home > Blogs > Anthony Harrington > A blow for free speech, or the end of free speech?

A blow for free speech, or the end of free speech?

Finance Blogger: Anthony Harrington Anthony Harrington

On January 21st the US Supreme Court overturned a long-standing ban on corporate entities using their financial muscle to fund prospective candidates to Federal office. Why does this matter? The banks are among the richest companies in the US. Until the Supreme Court decision, they were restricted to making their anti-regulation case heard by funding armies of lobbyists. In future they will be in a position to fund preferred candidates to political office as lavishly as their war chests allow.

It remains to be seen just how this will enable US banks to resist the current enthusiasm for enhanced regulation of banks, but it certainly won’t help moves to reign in the banks, slim them down and get rid of the “too big to fail” free ride, whatever President Obama might say.

Of course, banks still have to persuade the electorate to vote for their candidates in sufficient numbers, but then again, that’s what campaign advertising is all about—and this is where the big bucks go.

The fact that money, via massive ad campaigns, can influence voters is news to no one, of course. The reason why the Federal Election Commission in the US was given the power to block corporates from funding candidates directly, on pain of criminal sanctions, was stated in the clearest terms by a famous judgment, known as Austin, which the Supreme Court judges overturned in their January 21 judgment. The Court in the Austin case recognized that the Government had an interest in preventing “the corrosive and distorting effects of immense aggregations of [corporate] wealth … that have little or no correlation to the public’s support for the corporation’s political ideas.”

So what led the Supreme Court judges, who cited the point made by Austin, to decide that, hey, that doesn’t matter, when common sense says that it definitely does matter? The judgment [PDF, 2.57MB] is clearly argued and I’d highly recommend reading at least the summary introduction. Learned counsel may construe the judgment differently, but my take is that the judges’ argument is roughly as follows.


  1. Free speech is essential to a democracy.
  2. The First Amendment is designed to stop Government imposing restrictions on free speech which disadvantage certain speakers.
  3. Corporate entities are “persons” for the purpose of free speech.
  4. Corporate entities are disadvantaged by Austin.
  5. Austin must go, and corporate entities should be free to speak, i.e. fund candidates to speak for them.

A second strand of their argument is that restrictions on political speech tend to “chill” political speech and that such chilling adversely impacts the democratic process. If you take the argument that being a (mega-rich) corporate entity distorts free speech, then “Congress could also ban political speech of media corporations,” the judges point out. Media organizations accumulate wealth and their views may not correlate with the public’s support for those views. Yet they can speak. So why not banks?

Personally, I find the US Supreme Court argument less than compelling, in fact, downright odd. But that is beside the point. The Court has spoken and until and unless its judgment is reversed in some other action, the deep pockets of the S&P 500 will now be brought to bear on the US political process directly. Is this likely to (a) help to protect the US and the world from the formation of future asset bubbles and financial crashes, or (b) make it more likely for such bubbles and crashes to occur? Feel free to comment…

Further reading



Tags: banking , politics , regulation , transparency , US , US Supreme Court
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  1. Anonymous Comment says:
    Wed Jun 20 15:36:55 BST 2012

    I'm glad you liked it! I think it's so important for moms (and dads) to step out of that jeduemgntal headspace and recognize that we're all doing the best we can for our kids, and that looks different for every family.
  2. AnthonyHarrington says:
    Thu Feb 18 11:39:24 GMT 2010

    The supreme court decision has inevitably put everyone into uncharted territory when it comes to trying to predict the public reaction to a congressional candidate who is openly funded by, say, a particular extremely large investment bank. There is also the small matter of the voters in the congressional candidate’s state. Does he or she represent them first and the sponsoring bank or corporation second? Or will the candidate try to convince the electors that he or she can ride both horses simultaneiously? Will voters prefer unencumbered candidates who unambiguously represent their state to such an overwhelming extent as to render corporate sponsorship irrelevant, at least to the election process? How much are voter preferences in fact shaped by expensive TV and press campaigns rather than by any thoughtful analysis on the part of the majority of voters. Then there is the complicating factor of how this plays out when large numbers of candidates all have direct and particular corporate sponsorship. It would be surprising if losing candidates did not find something to litigate over in this new dispensation. Finally, there is the question of how sponsored candidates are perceived to act in Congress, and whether they are seen as ‘bought’ and tainted. It seems likely that this particular Supreme Court judgement will be tested again and again before the US voting system settles down once more. Business and politics have long been covert bedfellows. Whether their marriage can survive being ‘normalised’ remains to be seen.
  3. bill-sharon says:
    Wed Feb 03 12:25:53 GMT 2010

    I would suggest that all this decision really does is remove the patina of campaign finance reform from the process of injecting hundreds of millions of dollars into the electoral process. The influence of corporate money has been around for some time; now it will likely be clearer which corporate entities are backing which candidates.

    The crux of the issue lies in a decision made by the Supreme Court in 1886 (Santa Clara County v. Southern Pacific Railroad Company) where Justice Morrison Remick Waite declared:

    “The court does not wish to hear argument on the question whether the provision in the Fourteenth Amendment to the Constitution, which forbids a State to deny to any person within its jurisdiction the equal protection of the laws, applies to these corporations. We are all of opinion that it does.”

    And so, without any debate, corporations became persons. There is nothing in our constitution that provides for this privilege and there is certainly a great deal of distinction between what a corporation can do and what an individual can do but this precedent has stood the test of time with very little outcry in the public square.

    It may be that this decision by the Supreme Court will be useful in that it makes it very clear that the influence of corporations and their wealth distorts the democratic process. The last Presidential election cost $1 billion. The next one will undoubtedly cost more. It is useful, however, to remember that here in New York City our billionaire mayor spent $102 million on his re-election to a 3rd term and nearly lost to a lackluster opponent. While it is doubtful that we can stem that tide of corporate money in election campaigns it is possible that voters will be less inclined to pay attention to expensive advertisements when they understand where the money is coming from.

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