The American political system is built on simple but revolutionary principles from our founding Fathers. These principles state that self-governance is an absolute right and the governments purpose is to serve the interests of the people. Characteristics which are essential to a healthy, functioning democracy. But America has stumbled upon a formidable roadblock to the realization of our founding fathers dream, as Lincoln said, of a country that is “of the people, by the people and for the people”( Citizens at Work, 2003).
There are many factors that distort this reality and the main culprit is the multi- national corporations that are stealing the voices of the people which threatens the interest of American citizens. A good example would be how banking and oil interests have used lobbyists to limit regulatory over site in their prospective industries. Their undue influence has resulted in the biggest financial and environmental disasters in our nation’s history. The following is an overview of the history of corporate interests, the impact that corporate influence has on the Democratic process and society as a whole.
In recent years, corporate influence on our government has dramatically increased. Corporations represented by special interest groups and lobbyists have increased substantially, along with their influence on politicians. This undue influence has given the appearance that the government is now more representative of corporate interests than those of the people it is suppose to represent. The result has been a disparity in wealth between the rich and poor which is now at its highest rates in American history, and still growing.
As you will see, the influence and power yielded by the corporations have been detrimental to our democracy. This has not always been the case. In the early history of the United States, corporations had very little influence over government or elections. Corporations required a charter to exist which placed limitations on what it could and could not do. That all changed in 1886 with the Supreme Court decision in the case of Santa Clara County v. Southern Pacific Railroad. This ruling , based on the Fourteenth Amendment that protects the rights of freed slaves, gave corporations the rights of a person (Shah, 2002).
Which meant that they were now afforded protections under the Constitution. This also meant, that corporations were afforded all the opportunities of individual citizens, such as the right to purchase land, and influence the government in their own interests, among other things (Shah, 2002). The result was, corporations could use the same constitutional rights as citizens to challenge attempts to their power. The fact that corporations were granted same rights as a person, would seem unconstitutional. According to the Thirteenth Amendment, “Neither slavery nor involuntary servitude shall exists.
If this is true then how can a corporation be owned shareholders and still be constitutional. Shareholders own corporations and corporations own corporations, so if in fact a corporation was a person, to maintain its corporate structure, slavery would have to be made constitutional. The importance of this new corporate status of personhood cannot be overstated, corporations gained constitutional rights of free speech, protections from search and seizure and freedom from discrimination. All of which, can manifest itself into legalized corporate abuses (Citizens at Work, 2003).
As stated by Richard Robins in, “Global Problems and the Culture of Capitalism”, the Supreme Court ruling of 1886, set the stage for full scale development of capitalism, by handing to corporations the right to use their economic power in a way they never had before. A more recent Supreme Court ruling in Citizens v. Federal Election Committee affirmed more power for corporations to influence the electoral process, even more than they already had. Corporations are now able to spend unlimited sums of money in the electoral process by funding political commercials and other propaganda to use for or against a candidate.
Campaign donations and lobbying are other methods used by corporations to influence government officials and policy. A good example, in the election cycle of 2000, there was an estimated $1. 2 billion given to congressional campaigns in both parties, by corporations. . Unless you are rich, it is nearly impossible to run a viable congressional campaign without corporate financial backing, since their donations make up about 75% of the money that candidates receive . In the most recent election, the candidate who raised the most money won 94% of the time (Citizens at Work, 2003).
Without corporate money, it is very difficult for politicians to win elections and maintain their office. Once elected, politicians are inundated with constant reminders from lobbyists, of whose money helped elect them. According to the Office of Public Records, in 2009 there were almost 14,000 lobbyists who were supported by $3. 5 billion of corporate money (geekacademy. com, 2010). With the combination of lobbyists and political donations, corporations are able to pressure politicians to help frame issues that are more favorable to them.
And at the same time, keeping critical issues from being brought before Congress which those corporations are against. Political donations and corporate lobbying have proved to be an excellent investment for corporations due to the billions in tax breaks and subsidies they receive yearly. The Department of Treasury estimates that between $70 and $155 billion disappears into the “Bermuda Triangle” of off shore tax havens each year (Citizens at Work, 2003).
A decline in corporate taxes means less revenue for the federal budget and places the burden of making up that revenue on the US workers, through payroll taxes. How do corporations use lobbyists to influence policy decisions in Congress? Lobbyists depend on special relationships they have with members of Congress and the Executive Branch. They maintain these special relationships by keeping in regular contact with key individuals, and having served in the government themselves, lobbyists may have worked with the very same people they are now lobbying.
These relationships give them valuable insight into the inner workings of how things get accomplished in government. A good example is, there is a high demand for retired members of the House or Senate to serves as lobbyists for major corporations. These retired members of Congress know the laws and regulation relating to their new employer’s industry, and they know the inner dealings that went into making those laws. What’s more, former representatives and senators maintain the privilege of going on to the floor of their old chambers.
That means that during a vote on a bill, they can go on the floor and lobby current senators or representatives as the case may be. No other lobbyists can do this. So these former legislators have a greater ability to influence the process than someone who doesn’t have the privilege of the floor, or the other connections they do. Thus ex-senators and ex-representatives are often valued as lobbyists (Triebwasser, 1998). Many corporations use their government influences to manipulate free trade agreements, so they can enter into international markets that have little regulation and even less monitoring.
Corporations use trade agreements to circumvent national safety and environmental standards by claiming these are barriers to free trade. The problem is, this not only reduces our sovereignty, but is a danger to our democracy, as well. A good example would be NAFTA, which has been devastating to the safety of workers and has lessened environment protections on corporations. During its negotiations, human and labor rights, environment protections, and democratic accountability were consciously excluded (Citizens at Work, 2003).
The result was the loss of hundreds of thousands of manufacturing jobs, suppressed real wages and reduced worker benefits. Corporations on the other hand, have saved billions on labor costs and costly environmental regulations and have effectively canceled their social contact with the public. Jeff Faux writes in the American Prospect, “NAFTA thus represents the most extreme example of the so-called neoliberal model, in which supranational rules liberate the private corporate investor from the constraint of democratic public values” (Faux, 2003).
The general purpose of why corporations exist, is to maximize shareholder value. This economic imperative translates into, corporations will do whatever it takes to maximize their gains while externalizing all possible costs onto society. The result has been that workers and the environment have become the victims of corporate irresponsibility. With the recent wave of corporate mergers, wealth has been consolidated down to a small number of corporations. In fact, 51 of the world’s 100 largest economies are corporations, while only 49 are countries (see Appendix B).
The result is that unaccountable corporations and corporate dominated institutions like the IMF, World Bank and the WTO have more power and influence over governments than the country themselves (Triebwasser, 1998). There is a growing sentiment that a majority of Americans believe there should be less corporate influence on government. According to a recent Gallop poll (see Appendix A), The large majority of Americans (62%) want major corporations to have less influence in the United States.
While this is down from a peak of 68% in 2008, it remains well above the 52% recorded in 2001. Relatively few Americans would prefer to see corporations gain influence, but the 12% recorded this year is the highest to date (Saad, 2011). Voter’s have pushed back against the Supreme Court decision in Citizens United, which took away government power to limit campaign donations and effectively overturned laws in 24 states that banned political expenditures from corporations. Legislative initiatives now require that corporations have shareholder approval of corporate political spending.
Other voter tactics include referendums supporting an anti-corporate personhood amendment to the Constitution, which would take away corporations rights as a person. And encouraging shareholders to adopt resolutions for corporations to adopt corporate accountability. Fighting to ensure that public officials are independent of corporate influence and are beholden only to their voting constituents, activists and public interest advocates throughout the twentieth century have championed various campaign finance reforms aimed at curbing corporate influence in government.
Since the Supreme Court decision allowing expanded opportunities for corporations to contribute to election campaigns, the debate surrounding political donations has become increasingly visible and the necessity for reform clear to the public. Theodore Roosevelt once said,” let us prohibit in effective fashion all corporations from making contributions for political purpose, directly or indirectly”. It is up to the people to decide if they wish to live in a democracy or a plutocracy (Citizens at Work, 2003). Political finance reform is needed to prevent corporations from benefiting from political donations.
Eliminating corporate money from the electoral process is one of the reforms that can help eliminate corporate influence of government. The ultimate goal of campaign finance reform is to move to full public financing of federal and state elections. Two thirds of Americans favor public financing of election campaigns, if it means eliminating corporate and special interest money. A conservative estimate in fixing the political system by removing corporate money and replacing it with taxpayer dollars, is about $5. 2 billion a year, representing one tenth of one percent of federal revenue (Sayles, 2010).
Corporate influence would be seriously in the political system would be seriously curtailed, making it possible for solid candidates from all backgrounds to compete. Appendix A The new data come from a Jan. 7-9 Gallup poll. The same survey found 67% of Americans dissatisfied with the size and influence of major corporations in the country today, the highest level since Gallup first asked this question in 2001. Of seven aspects of the United States rated in the poll, Americans are the least satisfied with corporate influence. Appendix B
The following are collected from a report by the Institute for Policy Studies. The report is called Top 200: The Rise of Corporate Global Power. Over time, additional facts and stats will be added from other sources as well. 1. Of the 100 largest economies in the world, 51 are corporations; only 49 are countries (based on a comparison of corporate sales and country GDPs). 2. The Top 200 corporations’ sales are growing at a faster rate than overall global economic activity. Between 1983 and 1999, their combined sales grew from the equivalent of 25. 0 percent to 27. 5 percent of World GDP. 3.
The Top 200 corporations’ combined sales are bigger than the combined economies of all countries minus the biggest 10. 4. The Top 200s’ combined sales are 18 times the size of the combined annual income of the 1. 2 billion people (24 percent of the total world population) living in “severe” poverty. 5. While the sales of the Top 200 are the equivalent of 27. 5 percent of world economic activity, they employ only 0. 78 percent of the world’s workforce. 6. Between 1983 and 1999, the profits of the Top 200 firms grew 362. 4 percent, while the number of people they employ grew by only 14. 4 percent. 7.
A full 5 percent of the Top 200s’ combined workforce is employed by Wal-Mart, a company notorious for union-busting and widespread use of part-time workers to avoid paying benefits. The discount retail giant is the top private employer in the world, with 1,140,000 workers, more than twice as many as No. 2, DaimlerChrysler, which employs 466,938. 8. U. S. corporations dominate the Top 200, with 82 slots (41 percent of the total). Japanese firms are second, with only 41 slots. 9. Of the U. S. corporations on the list, 44 did not pay the full standard 35 percent federal corporate tax rate during the period 1996-1998.
Seven of the firms actually paid less than zero in federal income taxes in 1998 (because of rebates). These include: Texaco, Chevron, PepsiCo, Enron, Worldcom, McKesson and the world’s biggest corporation – General Motors. 10. Between 1983 and 1999, the share of total sales of the Top 200 made up by service sector corporations increased from 33. 8 percent to 46. 7 percent. Gains were particularly evident in financial services and telecommunications sectors, in which most countries have pursued deregulation. Bibliography citizensatwork. org (2003, Feburary).
Corporate Dominance: Defining the Problem. Retrieved from Citizens at Work, Web site: http://www. citizenworks. org/corp/handbook/solutions. php geekacademy. com (2010, June 01). Corporate Influence on U. S. Government and Politics. Retrieved from , Web site: http://www. geekademy. com/2010/06/corporate-influence-on-us-government. html Saad, L. (2011, Feburary 01). In U. S. , Majority Still Want Less Corporate Influence. Retrieved from , Web site: http://www. gallup. com/poll/145871/Majority-Wants-Less-Corporate-Influence.
aspx Sayles, J. (2010, November 17). Corporate Special Interest Influence Can Be Eliminated from Politics – Here’s How. Retrieved from oregonlive. com, Web site: http://topics. oregonlive. com/tag/broken%20political%20system/index. html Shah, A. (2002, December 05). The Rise of Corporations. Retrieved from globalissues. org, Web site: http://www. globalissues. org/article/234/the-rise-of-corporations#globalissues-org Triebwasser, M. (1998). How Corporations Influence The Government. Retrieved from http://www. polisci. ccsu. edu/trieb/InfluGov. html