Requiem for the American Dream (6)

Large corporations and super-rich individuals can spend more money in a single election than the vast majority of people will earn in a lifetime. While one citizen can cast only one vote, concentrated wealth can allow you to shape the views of thousands of voters. Campaigns are expensive, and the availability of funds is often the decisive element. A candidate who is able to outspend his/her opponent wins the election nine out of ten times. Even if your favorite candidate doesn’t win, the money you’re able to contribute to the winner’s next election campaign can still buy you a significant amount of influence. Corporations tend to support both political parties, though their relative contributions can vary from one industry to another and also from one election cycle to another. This means that corporate funding is important not just for participation in elections but also for the day to day management of the party structure. Since both major political parties are constantly in the fundraising mode, they have little choice but to pay attention to the likes and dislikes of their big money donors.

Chomsky returns to a point he made earlier in the documentary:

Concentration of wealth yields concentration of political power, particularly so as the cost of elections skyrockets, which forces the political parties into the pockets of major corporations.

The U.S. Congress has tried to limit how much control big money interests can have on the electoral process, but it has not been able to go very far, thanks largely to a whole series of corporate-friendly decisions by the Supreme Court going back to the nineteenth century. Most people are at least vaguely aware of the Citizens United decision, but that particular Supreme Court ruling didn’t come out of the blue; it has, rather, a very interesting backstory. Chomsky suggests that we take a close look at history, so that’s what we’ll do.

“Corporations,” says Chomsky, “are  state-created legal fictions.” Basically, a corporation is an imaginary entity that is brought into existence when State agrees to give it certain legal rights. A corporation is considered a “legal person,” because it has the right to own property, make contracts, and hire employees, and because it is subject to applicable laws, just like an actual citizen. Everybody understands that corporations are not really persons—they don’t eat, drink, breathe, feel sad or happy, get sick, or die; rather, they are treated as persons only for the purposes of law, taxation, and so on. Throughout the nineteenth and twentieth centuries, however, corporations have acquired more and more rights that were originally intended only for real persons.

The first major step in this direction was Dartmouth College v. Woodward, the 1819 Supreme Court decision that turned the corporate charter from a government-granted privilege into a contract that cannot be altered by government, making it difficult for the government to control corporations; it also held that corporations have standing in the Constitution. However, the most important developments in the expansion of corporate personhood rights took place after the Civil War, when corporate lawyers decided to take advantage of the word “person” as used in the Fourteenth Amendment.

In the wake of the Civil War, the Congress passed three amendments to the Constitution. These were meant to (1) abolish slavery, (2) expand the rights of personhood to former slaves, and (3) to give African American men the right to vote. Thus, the Thirteenth Amendment (1865) said in part “Neither slavery nor involuntary servitude, except as a punishment for crime whereof the party shall have been duly convicted, shall exist within the United States, or any place subject to its jurisdiction.” The Fourteenth Amendment (1868) said in part “All persons born or naturalized in the United States and subject to the jurisdictions thereof, are citizens of the United States and of the States wherein they reside. 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.” The Fifteenth Amendment (1870) said in part “The right of citizens of the United States to vote shall not be denied or abridged by the United States or by any State on account of race, color, or previous condition of substitute.”

The context of these three amendments make it abundantly clear that the word “person” was used in the Fourteenth Amendment with reference to the legislature’s concern for safeguarding the civil rights of former slaves in particular and African Americans more generally. There is no ambiguity here. Yet, as Noam Chomsky says in “Requiem,” that’s now how it was interpreted.

The fourteenth amendment has a provision that says no person’s rights can be infringed without due process of law. And the intent, clearly, was to protect freed slaves. So, okay, they’ve got the protection of the law. I don’t think it’s ever been used for freed slaves, if ever, [may be] marginally. Almost immediately, it was used for businesses, corporations. Their rights can’t be infringed without due process of law.

The issue first came up in San Mateo County v. Southern Pacific Railroad, an 1882 Supreme Court case. Among the railroad company’s lawyers was Roscoe Conkling, a former U.S. Senator and Representative from New York who had served on the committee that drafted the Fourteenth Amendment. Arguing before the Supreme Court in 1882, Conkling claimed that the drafting committee had decided to use the word “person” instead of “citizen” so as to ensure that corporations were covered under the equal protection clause (which turned out be a lie). The Court did not address the issue of corporate personhood in its ruling. Soon afterwards, in a related but separate case, Santa Clara County v. Southern Pacific Railroad (1886),the Chief Justice was reported to have said before the hearing began: “The Court does not wish to hear argument on the question of whether the 14th Amendment to the Constitution, which forbids a State to deny to any person within its jurisdiction the equal protection of the laws, applies to corporations. We are all of the opinion that it does.” This opinion of the Chief Justice was not included in the Court’s final ruling, yet it was recorded by the court reporter in the “headnotes” and was subsequently treated by other courts as if was, in fact, part of the Supreme Court’s official verdict.

The rest, of course, is history: Since Santa Clara County v. Southern Pacific Railroad, corporations steadily increased their power and were even able to successfully claim for themselves the various provisions of the Bill of Rights, sometimes at the expense of the rights of natural persons. Chomsky finds this phenomenon a moral outrage.

So they gradually became “persons” under the law. Corporations are state-created legal fictions. May be they’re good; may be they’re bad. But to call them “persons” is kind of outrageous. So they got personal rights back about a century ago, and that extended through the 20th century. They gave corporations rights way beyond what persons have. … While the notion of person was expanded to include corporations, it was also restricted. If you take the Fourteenth Amendment literally, then no undocumented alien can be deprived of rights, if they’re persons. Undocumented aliens who are living here and building your buildings, cleaning your laws, and so on, they’re not persons, but General Electric is a person—an immortal super-powerful person.

In relation to the engineering of elections, the most relevant Supreme Court rulings are those that applied the “free speech” clause of the First Amendment to corporations.

In 1971, the Congress passed the Federal Election Campaign Act (FECA), requiring candidates to disclose sources of campaign contributions and expenditures. A scandal erupted in 1972 when an insurance magnate, W. Clement Stone, contributed $2 million to President Nixon’s election campaign, prompting Congress to thoroughly revise the FECA in 1974. The amended law included statutory limits on contributions by individuals to election campaigns as well as to political action committees (PACs), new disclosure requirements, campaign spending limits. It also created the Federal Election Commission (FEC) as an enforcement agency.

The provisions limiting campaign expenditures, however, were soon declared unconstitutional by the Supreme Court. In Buckley v. Valeo (1976), the Supreme Court ruled that political spending was equivalent to speech, and the First Amendment’s protections included financial contributions to candidates and political parties. Earlier, in Grosjean v. American Press Co. (1936), the Supreme Court had ruled that a newspaper corporation had a First Amendment liberty right to freedom of speech. In First National Bank of Boston v. Bellotti (1977), the Court decided that non-media corporations had the right to spend money on ballot initiative campaigns.

Given the consistent tendency of the Supreme Court to give more and more rights of natural persons to for-profit corporations, the Citizens United ruling in January 2010 did not come as a complete surprise. That case, essentially, centered on the constitutionality of “soft money.” In the late 70s, the FEC had allowed donors to contribute unlimited money to political parties (but not to individual candidates) so long as it was used for “party building activities” as opposed to election campaigns. In reality, both the Republican and Democratic parties freely spend this “soft money” to support candidates, and efforts at bringing such spending under control by Presidents George H. W. Bush and Bill Clinton did not succeed in Congress. In 1995, Senators John McCain (R) and Russ Feingold (D) started working on campaign finance reform to address the problem. The resulting legislation was blocked by Senate Republicans in 1998, but it passed the Congress in 2002 as the Bipartisan Campaign Reform Act (BCRA) and was signed into law by President George W. Bush .

In Citizens United v. Federal Election Commission (2010), the Supreme Court overturned most provisions of the McCain-Feingold legislation that restricted corporate money in federal elections. The Supreme Court ruling declared as unconstitutional the prohibition on corporations (both for-profit and nonprofit) as well as unions regarding political advocacy through “independent expenditures” and the financing of electioneering communications. The ruling allows corporations and unions to spend unlimited sums on political advertising and other forms of advocacy aimed at convincing voters to support or reject particular candidates. Neither corporations nor unions were permitted to donate money directly to election campaigns or political parties, but they were now free to spend as much money as they want on promoting or undermining a candidate so long as there was no “coordination” with any campaign. As a result, the Citizens United decision made possible the rise of Super PACs—which are basically PACs on steroids.

Political Action Committees or PACs are organizations that collect funds and make them available to political parties of their choice, or donate them to a candidate’s election campaign. There are various legal restrictions on PACs in terms of who can donate to them and how much they can spend. For example, donations to traditional PACs are capped at $5,000 per year.

Two months after the Citizens United ruling, the federal Court of Appeals for the D.C. Circuit held in Speechnow.org v. FEC that PACs that did not make direct contributions to candidates or political parties were allowed to receive unlimited contributions and to spend those contributions for political advocacy.

This decision, along with Citizens United, led to the proliferation of “independent expenditure only committees” or Super PACs. Such organizations can receive unlimited donations from individuals, unions, and corporations (both for-profit and nonprofit), and they can spend these funds to support a cause or a candidate, but are prohibited from “coordinating” their activities with any political party or election campaign. They are also required by law to disclose who their donors are.

The above rulings have not only opened the floodgates of political spending by both wealthy individuals  and business corporations, they have also created a legal loophole that allows unlimited spending by donors who prefer to remain in the shadows. This phenomenon has been aptly named “dark money.” Certain nonprofit organizations—mainly 501(c)(4) “social welfare” organizations—can act as Super PACs so long as political advocacy is not their primary function. Since these nonprofit organizations are not required to disclose who their donors are, they can receive unlimited money while shielding their donors from public scrutiny, and, at the same time, channeling these anonymous donations to political action committees. This nonprofit loophole has given rise to a relatively new phenomenon called “dark money.” Probably no one has exploited this loophole more than the Koch Brothers and the billionaire members of their secretive network.

The following chart (courtesy of Open Secrets) depicts political spending by outside groups. The term “outside spending” refers to political expenditures made by groups or individuals independently of a candidate’s election campaign. Groups in this category include conventional party committees, super PACs, and 501(c) nonprofit organizations. Notice the impact of Citizens United by comparing outside spending in the 2006 midterm elections to that in the 2010 midterm elections.

Another major blow to the proponents of campaign finance reform came in 2014, when the Supreme Court declared Section 441 of the Federal Election Campaign Act (FECA) to be unconstitutional. The relevant law dealt with aggregate limits on individual spending per election cycle. For the 2013–14 election cycle, for example, an individual could give no more than $2,600 to a candidate for federal office, with an aggregate limit of $48,600. Moreover, individuals were prohibited from donating more than $74,600 to political parties and PACs. The total aggregate limit was therefore $123,200 per election cycle. In McCutcheon v. Federal Election Commission, the Supreme Court upheld the spending limit per candidate per election cycle, but struck down all the aggregate limits—allowing individual donors to support as many candidates per election cycle as they want. This decision paved the way for “joint fundraising committees,” which allow candidates to band together and legally raise large sums of money from the same individuals.

Chomsky identifies the eighth principle of the concentration of wealth and power in terms of the necessity, from the viewpoint of the elite, to prevent the working class from organizing and demanding its rights.

There is one organized force which [has] traditionally … been in the forefront of efforts to improve the lives of the general population. That’s organized labor. It’s also a barrier to corporate tyranny. A major reason for the concentrated, almost fanatic attack on unions, on organized labor, is that they are a democratizing force. They provide a barrier that defends workers’ rights, but also popular rights generally. That interferes with the prerogatives and power of those who own and manage the society.

The working class constitutes the overwhelming majority of the population. Unlike the plutocrats and the oligarchs, however, the working class is not as organized as it needs to be in order to safeguard its collective interests. There have been periods in the U.S. history when the working class did manage to organize itself through labor unions and socialist parties, and whenever it was so organized it was successful in gaining new rights. These include some of the most common features of the American workplace that we today take for granted, such as minimum wage laws, an 8-hour workday, overtime pay, lunch breaks, paid vacations, sick leave, wrongful termination laws, health insurance, sexual harassment laws, pensions, workers’ compensation, unemployment insurance, and the weekend. From the viewpoint of the elite, of course, this tendency of the working class to organize and successfully demand rights and seek improvements is simply intolerable. The United States has a long and violent history of repression against workers who dared to protest their conditions or sought to organize. By the 1920s, much of the labor movement had been successfully crushed by business interests. It was only in the wake of the Great Depression that it was able to resurrect and reorganize itself.

Chomsky explains how the credit for the New Deal can’t be given solely to President Roosevelt or the Democratic Party. These reforms would never have been implemented without the popular pressure from the masses, i.e., from organized labor and socialist parties.

Franklin Delano Roosevelt, he himself was rather sympathetic to progressive legislation that would be in the benefit of the general population, but he had to somehow get it passed. So he informed labor leaders and others, “force me to do it.” What he meant is, go out and demonstrate, organize, protest, develop the labor movement. When the popular pressure is sufficient, I’ll be able to put through the legislation you want. So, there was kind of a combination of sympathetic government, and by the mid-30s, very substantial popular activism [which made the New Deal possible]. There were industrial actions. There were sit-down strikes, which were very frightening to ownership. You have to recognize that sit-down strike is just one step before saying, “we don’t need bosses; we can run this by ourselves.” And business was appalled. You read the business press, say, in the late 30s, they were talking about the “hazard facing industrialists” and the “rising political power of the masses,” which has to be repressed.

Chomsky notes that the business interests returned to the task of marginalizing labor unions in the immediate aftermath of the Second World War. At that point, quarter of the workforce was unionized, and the labor movement’s promise to avoid going on strikes during the war was no longer in effect. Prompted by business lobbies, the Congress passed the Taft–Hartley Act in 1947, severely restricting the power of labor unions. It amended the National Labor Relations Act of 1935, also known as the Wagner Act and nicknamed the “labor’s bill of rights.” The earlier law had given workers the right to organize and join labor unions, to strike, and to bargain collectively. It had also prohibited business owners from attempting to dominate or influence a labor union, and from encouraging or discouraging union membership through any special conditions of employment or through discrimination against union or non-union members in hiring. In effect, the Wagner Act had permitted a “closed shop” (when an employer agrees to hire only union members) as well as a “union shop” (when an employer agrees to require new employees to join the union). When the Republican Party gained control of the Congress in the 1946 midterm elections, one of its first priorities was to attack and weaken as many New Deal laws as possible. The first target was labor unions, hence the Congress’ gutting of the Wagner Act.

The Taft–Hartley Act, also known as the Labor Management Relations Act of 1947, was the first step in the decades long process of dismantling the New Deal. It prohibited jurisdictional strikes, wildcat strikes, solidarity or political strikes, secondary boycotts, secondary and mass picketing, and monetary donations by unions to federal political campaigns. Closed shops were prohibited and union shops were heavily restricted. States were allowed to pass “right to work” laws that outlawed closed or union shops. The act allowed the president to block or prevent the continuation of a strike on the grounds that it would endanger national health or safety. Democrats denounced the law as s “new guarantee of industrial slavery.”

Chomsky continues:

Then McCarthyism was used for massive corporate propaganda offensives to attack unions. It increased sharply during the Reagan years. I mean, Reagan pretty much told the business world, if you want to illegally break organizing efforts and strikes, go ahead. It continued in the 90s and, of course, with George W. Bush, it went through the roof. By now, less than 7% of private sector workers have unions.

The union membership in the private sector reached a peak in the 1950s and has since been on the decline. In 1954, about 35% of private sector workers were unionized; today, that figure is only 6.5%. The public sector unions have remained stable since the 1980s at about 11–12%. Labor unions act as barriers to economic inequality. When unions decline, the rich get richer while the working class incomes stagnate or plunge downwards, as depicted in the following chart. Notice how the share of income going to the richest tenth of the population (red line) came close to 50% on two occasions—1929 and 2008—just before the system crashed.

According to Chomsky, the post-WWII attacks on labor unions have virtually dissolved the main counter-force to the expanding power of the business class. As a result, when worker productivity and real wages started to diverge in the 1970s, there was no organized labor to speak of that could challenge the exploitation.

The decline of labor unions is also correlated with a decline in class consciousness among the working people. In sharp contrast, class consciousness is alive and well among the elite. In the United States, the plutocrats and oligarchs are busy exploiting the working class, which is the only reasonable explanation for the fact that all economic indicators show rising inequality. Yet, anyone who mentions this is immediately accused of causing division or fomenting class warfare. Strangely enough, Americans have, for the most part, grown allergic to the word “class.” The only time it is okay to use the word  is when someone is referring to the “middle class.” Apparently, neither the upper class nor the lower class exists anymore—we are all part of the middle class.

Chomsky explains how class consciousness has declined since the late nineteenth century, when the Republican Party represented the progressive element in the U.S. politics and regarded wage labor as nothing more than a type of slavery.

Now, if you’re in a position of power, you want to maintain class-consciousness for yourself, but eliminate it everywhere else. Go back to the 19th century, in the early days of the Industrial Revolution in the United States, working people were very conscious of this. They in fact overwhelmingly regarded wage labor as not very different from slavery, different only in that it was temporary. In fact, it was such a popular idea that it was the slogan of the Republican party. That was a very sharp class-consciousness. In the interest of power and privilege, it’s good to drive those ideas out of people’s heads. You don’t want them to know that they’re an oppressed class. So this is one of the few societies in which you just don’t talk about class.

The concept of class has to do with three main variables: wealth, income, and power. Your location in the class hierarchy is determined by how much of these you possess. Chomsky, in his inimitable style, simplifies the concept down to its bare essence: “Who gives the orders? Who follows them? That basically defines class.”