Saturday, November 3, 2012

On the Death Spiral of the American Republic

In 1976, in the Buckley v. Valeo decision, the Supreme Court ruled that individuals can spend (but not contribute) unlimited political money, on the basis that it is an exercise of free speech. This has come to be known as the “money equals speech” doctrine. TV and radio ads that advocate for or against a candidate are still regulated by campaign finance laws, but if there is no clear-cut advocacy, the ads are not regulated. 

Political advertisers quickly learned that they could avoid certain “magic words” such as “elect” or “defeat” and say pretty much whatever they like. Then, in 1979, a new loophole is discovered, whereby corporations, unions, and the wealthy can give unlimited sums of money to political party organizations, provided that the money is intended for “party-building” activities and not explicit advocacy for or against particular candidates (source). 

Both the Democratic and Republican national committees quickly explored new ways of exploiting the new financial landscape. During the 1996 re-election campaign, President Clinton and his challenger Bob Dole found creative ways of interpreting the rules, and two years later, the Federal Election Commission had time to sort through the records and concluded that both campaigns had misused campaign money (source). 

The McCain-Feingold campaign finance legislation attempted to limit “sham” issue ads that were aimed at defaming candidates. It was upheld by the Supreme Court, but shortly after, the Court reconsidered and found sham issue ads permissible as long as they steered clear of the magic words that would indicate advocacy for or against a candidate. 

What is amusement to them, injures and kills us (image source).
Political Action Committees (PACs) sprung up to locate and solicit wealthy donors, and use their money to the optimal political advantage. Since 1978, the amount of PAC money spent in elections has increased by a factor of five. 

As the tragedy is still fresh in the minds of most of us, there is little to be said of the infamous Citizens United decision, which ruled that combinations of private interests who aim to conspire against the public good have special privileges in terms of choosing who will hold political office. The unmitigated evil of that decision is proof of the Supreme Court’s state of corruption, and will likely be remembered in history as the omen that signals the imminent demise of the Republic. And, sadly, what will also be remembered is that the American people did not rise en masse to demand immediate redress, but instead, stood idly by, pretending not to see, as liberty was menaced and raped.

The Constitution

If money equals speech, the logical implication is that more money equals more speech. If the wisdom of the Supreme Court is to be faulted, one must admit that the First Amendment provides very limited guidance, stating only that, “Congress shall make no law ... abridging the freedom of speech.” However, campaign finance reform is not a freedom of speech issue. Instead, it is a matter of equal protection under the law. In the Fourteenth Amendment, it is stated that “No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.” 

PAC spending, in millions of dollars (source)
The Fourteenth Amendment was passed in 1868 in the wake of the Civil War. This amendment was invoked in the 1966 case Harper v. Virginia Board of Education, when the Court struck down the practice of levying poll taxes. Poll taxes, consisting of a payment made in exchange for the opportunity to vote, were, in the eyes of the 1966 Supreme Court, a violation of the equal protection clause. The logic is unassailable. If people who are too poor to pay the poll tax cannot vote, they cannot defend their own interests, and inevitably, they will not receive equal protection under the law. There is really no practical distinction between the right to equal protection and the right to vote. 

Were the Fourteenth Amendment and the ban on poll taxes consistent with the spirit of the Founders’ ideals? That is a difficult question, given the fact that the people who ratified the U.S. Constitution hadn’t been able to settle the question of property qualifications for voting. However, one has only to dig a little deeper to understand the minds of the Founders. John Adams defined an aristocrat as anyone who had the ability to influence more than one vote. I will not offer additional examples of anti-aristocratic sentiment among the Founders, but simply refer the reader to my earlier posts.

Therefore, whenever the question of campaign finance reform arises, one need only ask, “Is there a danger that a monied private interest has greater influence over the outcome of an election than a single mother living in Alabama, or an unemployed auto worker in Michigan?” If the answer is “yes,” then the principle of equal protection under the law has been violated. 

Opposing Interests

The Founders were not starry-eyed idealists. They knew that most Americans will vote in favor of what they perceive to be their own self-interest. The poor will vote for increasing aid to the poor. The wealthy will vote for a lighter tax burden, and shun inflationary policies that will reduce the value of their assets. They recognized this as human nature. However, they sought to design a form of government in which people who are motivated by diverse interests come together to consider what will best serve the public interest – that is, the interest of all Americans. If more money equals more speech, the fundamental premise of Republican government has been violated. Private interests will be able to speak more loudly and more persuasively than private citizens. 

GINI Index, as a measure of wealth inequality, since 1978. The inequality effect of taxation is far less significant than change in income (source).
During the late 1970’s, the floodgates were opened, and private money has flooded politics. To contemplate the resulting harm that has come to the United States, one need only consider changes that are most likely to benefit the private, monied interests at the expense of the public good. 

Let us say that a manufacturing firm earns a reasonable profit from its productions. If the president of the firm is modest in his or her requirements and concerned for the well-being of employees, a reasonable profit is sufficient. If, however, the president suffers from pride and greed, and enjoys the enlargement of his or her wealth for its own sake and with little regard for his or her employees, a reasonable profit will never satisfy. The firm will go public, and Wall Street financiers will be invited to participate in the game, and all manners of tricks will be played to run up the profit on shares of stock. 

To impress shareholders, the president of the firm may simply lie, as was the case with Enron and Worldcom, and claim assets and profits that do not exist. Or, the president may lay off paid employees while maintaining productivity, by driving the remaining employees to work longer hours at less pay. Once this trick has been played, and the shareholders fail to see a continuing increase in the profit margin, it may be necessary to lay off the remaining paid employees, and rely instead on slave labor, which can be found in China. Once this trick has been played, the president must move aggressively against any competitors who might offer the same goods more cheaply. When the Chinese slaves begin to revolt, countries such as Cambodia will step in to fill the gap. 
In millions, U.S. Balance of Trade (BOT), overall, and with respect to goods (source).

The more creative players of this game may decide to bankrupt a company, knowing that the value of the stocks will plummet. Once the company is ruined and the staff sent to queue up at the unemployment office, the stocks and assets will be purchased at a bargain price and the ruined company can be resurrected and made profitable once again. There are endless cheats and feints that can be played. 

Political Parties

Career politicians are entrusted by the voters to defend the public interest. The voters know better than to place their trust in such unworthy persons, but they have no choice. Both parties rely on contributions from Wall Street, and both parties accept this money knowing that the donors will expect something in return. 

If one poses the question, “why would the government support the exportation of jobs to China?” the only answer is that politicians are doing the bidding of private interests. Each job that goes to China increases the trade deficit. As the trade deficit increases, the national deficit increases, the national debt increases, and it becomes increasingly difficult for government to find the money to pay for education, Medicaid, and Medicare. It becomes more difficult for government to replace the money it raided from the Social Security trust fund. None of this benefits the public interest. All of it benefits private interests.

This is merely the latest re-enactment of a very old struggle. In 1744, Matthew Decker wrote, "It is a Maxim, that in free Countries Monopolies are absurd, inconsistent, and destructive, as encouraging Idleness, Villainy, and extravagant Demands for Wages and Goods, whereby the Many are deprived of the Advantages of their Birthrights without having committed any crime to forfeit them, and for the Benefit of a few only."

Additional Readings:
The 14th Amendment and Voting Rights

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