Sunday, January 24, 2010

Hope After The Storm? by Anthony McCarthy

It’s been such a bad week that it seems almost painful to have to point to a few faint glimmers of hope. Apart from the modest move by Barack Obama to do to banks what he should have done last winter, there is the news that Elizabeth Warren was asked to call in. I think she will not let us down the way the boy’s club for growth has. If she becomes a more obvious influence in this administration and, more importantly, if policies she has called for replace those of the Wall St. insiders, it could save this administration from complete disaster. That change will be the decisive indication that Obama’s populist move is sincere and not just optics.

Warren has spent her career laying the groundwork for what might be called progressive populism. From her perch in Cambridge, she’s excoriated the unfair credit and lending practices that, in part, gave rise to the current crisis. She was the architect of the Consumer Financial Protection Agency, which, if created, would regulate credit cards and mortgages in the same way home appliances are regulated now. (Full disclosure: Warren once wrote about the agency in the publication I help edit.) And well before the bubble broke in the summer of 2007, when America was still riding high on George W. Bush’s economy, Warren was speaking out against the incredible pressure the 21st century economy was putting on the middle class. She was derided as a Cassandra, but she was right.

The election of Brown to the Senate was just one slap in the face for the Democrats in Washington this week, the other one is the “Citiziens United” case. If for nothing but their self-preservation even corporate Democrats have an interest in curbing that sell off of electoral Democracy by the out of control, partisan Republicans who hold the majority on the Court. There are ideas of how to get around it, most interesting so far is the proposal to change the definition of what is and isn’t legitimate activity for corporations. As entirely artificial, legal entities, corporations can only exist through the legal mechanisms of their creation. If those are changed, their legitimate functions can be curbed. This idea from Kent Greenfield, professor of constitutional law and corporate law at Boston College Law School gives some hope that it would be possible to cut the legs out from the court created monster before it destroys democracy.

Instead of using the tools of constitutional law, we need to use the tools of corporate law. Such a change could be put in place tomorrow, by a simple majority vote in both houses of Congress followed by the President”s signature.

Corporations are chartered “for any lawful purpose.” To address the mistake of Citizens United, the only change required would be for charters to include: “except that any entity created by this charter shall not have the power to expend money to influence the outcome of any local, state, or federal election.”

This change would simply condition the benefit of incorporation itself on the waiver of the “right” of corporations to participate in political campaigns. The Court has often upheld the ability of government to condition benefits on the waiver of rights. The Court has not always been clear in all the nuances, but the basic rule is that if the government gives you something, it can limit the uses you make of it. It makes sense to assert that prerogative here: if the government creates corporations, it can pick and choose what powers those corporations embody.

The real obstacle is the state of Delaware. Most big corporations go there for charters, primarily because Delaware doggedly protects managers from shareholder lawsuits. And Delaware has no interest in limiting corporate speech.

So real change would have to come at the federal level. Congress could simply say that as a condition of being listed on a national securities exchange, corporations would have to be chartered at the federal level. And federally chartered corporations would be limited to doing what corporations are intended to do: create wealth by producing products and services and prohibited from trying to skew the democratic process.

That way, corporations would stay where they belong, in the marketplace. The “marketplace of ideas” will be left to the rest of us.

There are other ideas coming out of the House for restricting the Federalist Society judicial rewrite of the Constitution.

I would, of course, add restrictions on the ability of TV and radio stations, both broadcast and cable to lie on behalf of the corporate elite. Nothing about democracy is secure or automatic, it has to be constantly watched and tended. And that is a job too important to leave to the legislative, executive or the judicial branches. It is too important to leave to lawyers and legal scholars, there are few of those who have raised their voices to oppose this latest assault on democracy. In the end as in the beginning, democracy depends on The People, on their grasp of reality on their morals and good character. If you cynically deny those are important than you have already given up on the possibility of democracy. At bottom it is the mass media, unrestricted and let off its obligations to the American People who have fostered the rot in its foundation. And they’ve done it for exactly the same reasons of corporate self-interest that makes the corporate beneficiaries cynically named “Citizens United” so dangerous to democracy.