University Economics Society
February 2, 2010
Awkward Intros
Discussion: Political Free Speech
Jeff: I want to start with a story that is semi-unrelated. Not everyone is a basketball fan, but everyone knows who LeBron James is. He is a free agent after this season. He’s been on the Cleveland Cavaliers, a small team, and hasn’t won any championships. A lot of teams will try to get him. Nike, who sponsors LeBron James, said they would give him an additional 10 million dollars for signing with the NY Knicks. This has never happened before, a company trying to influence sports. It will be very interesting to see what happens. It’s kind-of like how corporations will now be able to influence politicians.
Derek: I am actually going to come on the other side of this. One thing I constantly heard is that candidates have to spend their careers raising money-$75,000 a week for a Senate member. They don’t get to legislate, they have to raise money. It’s going to take a lot of pressure off of the candidates. I think it’ll free up a lot of their time.
Rafael: Do we as consumers get to control companies who control these politicians? If we don’t like what candidate or legislation McDonalds is supporting, for instance, we can buy Burger King.
Jeff: I don’t think there’s enough transparency for consumers to do that.
James: As Jon Stewart said: Newsflash: companies can now use money to influence elections. I think he’s wrong for once. I think this is a big deal. This will be really good for politicians, not as good for corporations. The decision was made on the 24th. I took the change between the end of Friday and the opening price on Monday and NewsCorp went up about 3%, NBC 2%, Dow Jones, 2.78%. You can see how much of a difference this is already making.
Derek: The Supreme Court is singlehandedly lifting us out of the recession. Congratulations.
James: Companies used to say to politicians, “we are on your side, but we can’t give you more money.” But now I fear for the companies. We know how it is with construction companies. The legislators get the lower people and hit them up for money. It would be on a much larger scale.
Jeff: This decision I saw coming when they added it to their docket. It brings up two major issues: 1. Corporations running the political scene, thus corporations taking over. 2. The other is the freedom of speech issue. Is donating money a type of freedom of speech? I think it’s hard to argue otherwise. There’s really 2 issues at play there.
Rafael: The court was talking about corporations having freedom of speech like individuals do. We have to decide if that’s right.
James: They use the 14th amendment to justify that the corporation is a person. They use the equal protection clause. It isn’t spelt out. It’s a scam basically. Nowhere in the Constitution says that a corporation is a person. The founders’ intent was to protect individuals from the corporations’ power.
Jeff: I think that what I was trying to get at was that John Roberts, I don’t know if anyone reads the New Yorker, but they wrote a long article about him and how quietly he is steering the court to the right. More importantly than the 5-4 decision, it’s the fact that they chose the case.
Rafael: I work on a lot of congressional campaigns and I am blown away that the case did not deal with a corporate donation to a campaign. The court used the free speech and equal protection of cases involved to overturn a case of Feingold saying you can’t write checks to this campaign. From a legal semantics stand point I thought the court was over-reaching. Is it legal? Absolutely, because they did it.
Derek: It’s disconcerting that they broadened the scope. There were two boisterous voices dissenting, and those two voices were Scalia and Roberts. Anytime they change law, they do it with the “case law is important” except for everything we care about.
Rafael: Just wait until they bring up abortion and other things people will get riled up about. Personally I think they are testing the waters. Someone was just talking about them moving the court to the right; I think that whether you agree or disagree with that, it’s important for us to be aware that this is happening.
Jeff: The two justices that will retire first are conservative, but they are still relatively young, so it could be awhile.
David Goldenfarb: As long as there is disclosure, I don’t think it’ll be that big of a deal. If McDonald’s was pushing for a certain candidate’s election, as long as I know they are doing it, that’s ok.
Derek: I think you are missing the issue. I think the scary thing is that McDonald’s could threaten you.
David Goldenfarb: We go on the assumption that everyone is stupid. We can see who they are donating to, these are public records. It might take a while, but people will put the dots together.
Derek: You wanted to talk about the effects of this: 97% retention rate in Congress.
David Goldenfarb: Money doesn’t make the difference, incumbency does.
Rafael: It all goes back to media. Television is the easiest way to reach the most people. There are real costs in campaigning that need to be paid for.
David Goldenfarb: No one is disputing that there are high costs, but realistically, according to academic papers that I have read, more money is not going to be very important.
James: You said that I thought companies are being conspiratorial. I think we need to protect companies from politicians. At the end of the day money might not influence them, but you still have to pay for these campaigns.
Derek: Is the voter going to say, the place that employs everyone in my town is going to vote for them, so I’m not going to vote for them?
Rebecca: Basically, I think that this is all bad.
Derek: I would very much like UES to come on the liberal side of this issue.
James: I’d get pissed at any company stock I hold that would spend money on a commercial because that money could be used for dividends.
Derek: It seems that when it’s unlimited, it can get ridiculous.
Jeff: It’s not truly unlimited. The only thing you really have to worry about is a crazy billionaire, buying ridiculous advertisements; with companies or corporations giving money, it’s always a tradeoff. They could spend money for a campaign, or capital expenditures.
Rebecca: Doesn’t that put small companies at a disadvantage?
James: The thing is: a corporation is not a person. There is nothing stopping stockholders from using their dividends to give out money to Planned Parenthood or wherever they choose. Why does it have to be a corporation giving out money?
Rebecca: I almost feel like the law will protect free speech, like small states have just as many votes as large states. It gives the corporations more power than other interest groups. I think it’s bad.
James: What if you look at it like the prisoner’s dilemma? This gives power to corporations and unions.
James: GM was making $10 million in profits and the workers were making their money, but now there is an opportunity to sway politicians one way or another. They could come out and say “I love John McCain because he believes in a higher minimum wage, etc.” This is helping the news more than anything else, it’s not adding value.
Nathan: There’s no reason for a major corporation to make a donation that won’t be recouped. At a certain point, some parties will say it’s not worth this much.
Jeff: So it’s going to be a more efficient marketplace?
Nathan: No.
Matthew Lytton Hughes, the Great: Should we put the bills on eBay and whoever has the most money can vote for the legislation they want?
James: Marijuana would be legalized so fast.
Jeff: So I think I will be more interested in seeing where LeBron James ends up.
Derek: There are three legislators trying to draft a Constitutional amendment stating that corporations aren’t people.
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