The Human Condition:

Money and Politics – April 24, 2016

Franklin bills

When I was growing up in the 1950s and ’60s, I remember something called the “equal time rule,” which kept radio and television stations from giving free airtime to campaigning politicians or selling airtime disproportionately. Newscasters would mention the rule often enough during election season that you understood it was a brake on potential wall-to-wall campaign ads.1 Nothing like the equal time rule seems to be in effect today, and the resulting battle for media coverage is one reason running a campaign is so expensive. And it’s a truism that where people of means care about something for which money is required, money will be provided by one route or another.

People bemoan the cost of campaigning today: the way it channels attention and resources to only a few well-backed candidates, and how it turns candidates into part-time fundraisers subject to full-time pressure for donor consideration and favors—if not outright corruption. Oh, if only we could get the money out of politics!

Too often, however, the object of that lament bears on the other side of the aisle. The politicians and commentators on the left want to get the corporate money and gifts from wealthy donors out of politics as a way to hobble the right. While those on the right want to curtail labor unions and their support of the left through contributions from union dues. Oh, if only we could throttle our enemy’s money supply!

The attempt on the left often connects to complaints about “corporate personhood.” This argument says that corporations are not really people and so do not have the same rights under U.S. law and the constitution as flesh-and-blood citizens. The left sees the legal fiction that corporations have the same legal standing as a person as a gift to the moneyed classes. However, if you remove the legal standing of corporations, you remove the ability of any group of people to come together to function as a single entity. Without legal standing, any group, organization, corporation, company, or other association could no longer acquire and own property, sign contracts, employ workers, or otherwise function in the economy.2 Only individual people, one by one and on their own, could act with any legal standing.

In this sense, the union organization also has the form, if not the legal requirements, of a corporation: a union is a group of people coming together for a purpose—to bargain collectively for better wages, benefits, and working conditions. However, under neither federal nor state law is a union considered to be a business: it does not file articles of incorporation or pay taxes. The organization collects dues from its members to cover operating costs, but the dues are not considered revenue. With these exceptions in mind, the left would like to see a philosophical distinction between the collection of people functioning as a single entity in a union and the typical corporation, which they regard as a vast and faceless entity devoted to the non-human task of making money.

But—again philosophically, if not legally—the distinction between a union and a corporation is not clear. Both represent the interests of a particular group: the workers in the union, the investors in the corporation. While the union might not file articles of incorporation, it must have some founding documents or charter; otherwise, the union could claim to represent and demand dues from whomever it wants at any time. Without some statement of purpose, the bus drivers union could suddenly decide it’s representing municipal groundskeepers as well and demand bargaining rights and dues from them, and only an equally strong or stronger groundskeepers union could contest the issue.

While the shares of some corporations may be closely held, say, by a single individual or family, most—and especially among the largest corporations—are publicly traded. As owners of the company, the various shareholders vote by proxy to elect board members who direct its operations. Shareholders also vote on any changes to the articles of incorporation, and sometimes they even are asked to vote on major changes in strategy and operations. Many shareholders don’t own the stock directly but invest in a mutual fund, whose managers move their investors’ collective funds into and out of a range of stocks as market conditions change, and then the fund managers vote to represent the investor’s best interest. Still, individual investors have the choice of where to put their money, and they can refuse to invest in companies with whose principles and operations they disagree.3 And when they decide to quit the arrangement, by selling their stock, they get their money back—at least at its current market value—plus any dividends paid by the corporation.

In contrast, a union member has no freedom and no ownership. He or she must pay dues to the union which has jurisdiction over his or her workplace. When the worker quits the job or exits the union, there is no payout based on past dues. And aside from voting for the union leaders and voting up or down on a contract renewal, the worker has no ongoing say in how the union’s management represents his or her interests.

But these differences aside, both corporations and unions remain essentially alike when it comes to political influence: a group of people who came together for a defined purpose and who want to use part of their funds to affect the government’s approach to issues of the day. Whether it’s the steelworkers union supporting candidates and lobbying to raise tariffs on foreign steel, or a corporation that buys large amounts of steel and wants to see lower tariffs on cheaper imports, the money given to influence candidates and to promote the cause still comes, ultimately, from people: the members of the union through their dues, or the shareholders in the company through a lower earnings per share or lower dividends on their investment.

The biggest difference between a union and a corporation—and this is where politics gets involved—is the class of people associated with each type of organization. People with money to invest are usually professional and management-level employees in jobs with a defined-contribution pension plan (i.e., you pay into an individual account), or people with excess wealth to manage. And so, generally, shareholders are members of the middle and upper classes. People who pay union dues are usually hourly workers and government employees in jobs with defined-benefit pension plans (i.e., the company pays for retirement based on your seniority and years of service). And so, generally, union workers are members of the middle and lower classes.

Traditionally, in this country, if you vote on the left, you side with workers and the poor. If you vote on the right, you side with management and the moneyed classes. But, viewed strictly as organizations representing large groups of people with a vested interest in one side of an issue or the other, there is no more reason to deny corporate shareholders their say in politics than to deny unionized workers. Forming groups and staking claims is how human beings organize themselves in a modern society to deal with conflicting viewpoints and varied interests.

Or you could just bring back the equal time rule and take the argument off the airwaves. That would get the money out of politics.

1. This was a provision of the Radio Act of 1927 that was later written into the Communications Act of 1934. It has since been modified to allow exemptions for news coverage of political events such as presidential press conferences and campaign debates. While the rule has never been formally revoked, it’s clear that enough workarounds now exist to inundate us with political advertising on the airwaves.

2. See When Corporations Are People Too from November 6, 2011.

3. The exception would be employees with a defined-contribution pension plan in a tax-deferred account like a 401k, SEP, or IRA. There, the choice of investments may be limited and include a large amount of stock in the employer’s company.