Hannah Arendt Center for Politics and Humanities
26Oct/120

Corruption Takes Root

What is the essence of corruption? This is a question raised by the recent Supreme Court jurisprudence around Citizens United v. FEC. For Justice Kennedy and the Court has concluded, as a matter of law, that only quid pro quo corruption is corruption. An out and out bribe is corrupting, but throwing a congressman a $100,000 party or treating them to fancy meals and trendy restaurants, that is just exercising the right to freely speak with one's elected representatives. That such lavish expenditures come with expectations is, the Court insists, improvable and simply part and parcel of our democratic system.

In Republic, Lost: How Money Corrupts Congress—and a Plan to Stop It, Lawrence Lessig explores fully the impact of such "soft" corruption. He writes that the enemy we face today is not a Hitler or even the good Germans who would enable a Hitler. "Our enemy," Lessig writes, "is the good Germans (us) who would enable a harm infinitely less profound, yet economically and politically catastrophic nonetheless. A harm caused by a kind of corruption. But not the corruption engineered by evil souls. Indeed, strange as this might sound, a corruption crafted by good souls. By decent men. And women." Such a crime, he insists, is banal, but "not the banal in the now-overused sense of Hannah Arendt's The Banality of Evil—of ordinary people enabling unmatched evil (Hitler's Germany). Our banality is one step more, well, banal."

Lessig is right to worry that Arendt's phrase is overused, but what is more banal in the banality he so penetratingly describes in his book? In any case, his book better describes the kind of endemic corruption that infects our political system than any other. It should be read.

It is also important to remember that real corruption still exists in our world. It may be more a rarity at a time when one can accomplish so much corruption through legal means, but examples of bold and brazen corruption remain.

Lance Armstrong's web of corruption that silenced and intimidated dozens of his colleagues for over a decade is one example of how corruption can succeed, against all odds, but only for a time.  Rumors of Armstrong's drug use floated around for a decade, and yet he still denies it. It took years for the web of deceit to break. As the NY Daily News wrote in an excellent review of the scandal:

The Armstrong myth was so lucrative that suppressing the truth came to require an endless behind-the-scenes campaign to bully and intimidate people into silence. Some of it bordered on gangsterism. Some of it was dressed up in the respectable wardrobe of elite law firms. But mostly it was just hot air - a fact that by 2010 had become clear enough to Floyd Landis that he stepped up and burst the bubble, blowing the whistle on the whole big fraud.

We tend to ignore corruption because it seems so inconceivable in our age of transparency. Corruption requires that the truth be kept hidden. This is extremely difficult and possible only through force and violence and even terror. But eventually, the truth comes out. As Hannah Arendt wrote in another context, "holes of oblivion do not exist." Eventually, the truth will emerge, no matter how many interests and how much money and violence is spent in the futile effort to prevent that from happening.

What brings to mind these brief reflections on the continued efficacy of corruption as well as its eventual failure is an article recently published in The Nation on the Hershey Trust. The author of the story is Ric Fouad, who is also a member of the Arendt Center's Board of Advisors. He is a graduate of the Milton Hershey School and together with a handful of other activists has been fighting a lonely battle against what he sees as the corruption of the Hershey Trust's Board, a fight that for him is inspired by Hannah Arendt's insistence on both truth, courage, and public action.

A little background. Milton Hershey was not just a brilliant chocolatier who had a radical vision of making chocolate—previously marketed only to the wealthy—available to the masses. He was also profoundly philanthropic.  Unable to have children, Hershey left his entire personal fortune to the Hershey Trust, whose mission was to administer The Milton Hershey School, a school that Hershey founded to help and educate orphaned boys—the school is now coed and serves children with living parents. That fortune is now worth nearly $8 billion.

By his own account, Milton Hershey's life work would be to help orphaned children, whose plight touched him deeply. Hershey wanted his school to bring orphans into a revolutionary new kind of school, free from industrial buildings common to orphanages. The children were to live in beautiful homes in a bucolic paradise on 12,000 acres of land. They were to work on farms to learn character and attend a school that includes a vocational curriculum as well and have great teachers. It had all the potential to be  an extraordinary facility set in truly magnificent settings.

So what is not to like? Well, for one thing, the Hershey Trust has been under investigation for six years, with no resolution and amidst plenty of accusations and charges about misspent funds and broken trust. The bucolic community-wide children's home was telescoped into a crowded centralized campus; the farms were all closed; the vocational program barely survives; and the poorest children, wards of the court, and foster care children came to be rejected in favor of what the administrators deemed a "better" class of child. Local developers made tens of millions in the process.

Tasked with administering the Milton Hershey School, the Trust's incredible resources enabled it to do much else besides. This could be an amazing opportunity to do good. It could also and become a magnet for powerful and connected people who finagled their ways onto the Hershey Trust board in order to access and control the vast wealth the Hershey Trust possessed. And that is what the article in The Nation, as well as numerous investigative articles here, here, and here, in The Philadelphia Inquirer, have alleged. You can also watch Ric Fouad's Harvard Law School lecture "Hershey's Broken Trust" here.

In Republic, Lost, Lessig writes:

The great threat to our republic today comes not from the hidden bribery of the Gilded Age, when cash was secreted among members of Congress to buy privilege and secure wealth. The great threat today is in plain sight. It is the economy of influence transparent to all, which has normalized a process that draws our democracy away from the will of the people. A process that distorts our democracy from ends sought by both the Left and the Right: For the single most salient feature of the government that we have evolved is that it discriminates against all sides to favor itself.

As true as that is about government, it is also true for cycling legends and political clubs. When corruption of all kinds pervades institutions throughout our society, it is only natural that cynicism abounds and we lose faith in the process of government as well as in the integrity of business. It is time to take corruption seriously in this country, and not explain it away as something that happens elsewhere in less civilized and less democratic countries.

You can read an excerpt of Lessig's Republic, Lost...  here, at Amazon.com, where you can also buy his book.

-RB

Roger Berkowitz
Roger Berkowitz is Associate Professor of Political Studies and Human Rights at Bard College, and Academic Director of the Hannah Arendt Center for Politics and the Humanities. He is also the author of "Gift of Science: Leibiniz and the Modern Legal Tradition", as well as co-editor of "Thinking in Dark Times: Hannah Arendt on Ethics and Politics".
19Oct/122

Campaign Finance Laws and the First Amendment

The Arendt Center recently hosted Professor Zephyr Teachout to speak about Citizens United v. FEC and campaign finance reform. The talk was in honor of Constitution Day, which Professor Teachout joyfully informed us may very well be unconstitutional. We carried on.

Teachout began her talk by announcing that the "First Amendment is a terrible thing." Less provocatively, she argues that the First Amendment plays a "dangerous role" in our constitutional culture. Above all, she presented her argument that the Supreme Court's increasing reliance on the First Amendment to invalidate campaign finance laws is, ironically, used to shut down meaningful public debate around the proper role of lobbying in our politics.

She began by telling a story of the Supreme Court case Trist v. Child from 1874. The case involves Mr. Trist who had a claim against the U.S. Government for about $15,000 (about $100,000 in current dollars). Trist hired Child, a lawyer, to represent him and convince Congress to honor its debt. Among other things, Child encouraged Trist to have his friends write to Congressman threatening not to vote for them if they didn't honor this debt to Trist. Child also personally lobbied Congressman.  He eventually succeeded in getting Congress to appropriate Trist's money.

Trist, however, refused to pay Child the fee agreed to in their contract. Child sued Trist to get his agreed upon money.

In the Supreme Court decision refusing to enforce the contract, the Court holds that Trist need not pay Child; a number of reasons are given, a few very technical. But the majority of the opinion by Justice Swayne rejects the legality of lobbying with a broad brush.  Trist need not honor his contract with Child, Swayne writes, because there was no valid contract. In short, the original contract hiring Child as a lobbyist was immoral and illegal, and thus unenforceable. Justice Swayne argues that the very immorality of the practice of lobbying nullifies the contract between Trist and Child.

Teachout helpfully describes the issue this way. Child says something like: Our contract was just like a contract for me to sell you a car and now you don't want to pay me for the car now that you have it. Trist responds that, in Teachout's colorful analogy,

No, this is like we made a contract for prostitution, and you can't go to the cops after we made a contract for prostitution and get them to enforce that contract. Because lobbying is like prostitution. It is so corrupt that there is no way courts are going to enforce it.

Writing for the Supreme Court, Justice Swayne puts it this way:

The agreement in the present case was for the sale of the influence and exertions of the lobby agent to bring about the passage of a law for the payment of a private claim, without reference to its merits, by means which, if not corrupt, were illegitimate, and considered in connection with the pecuniary interest of the agent at stake, contrary to the plainest principles of public policy. No one has a right in such circumstances to put himself in a position of temptation to do what is regarded as so pernicious in its character. The law forbids the inchoate step, and puts the seal of its reprobation upon the undertaking.

If any of the great corporations of the country were to hire adventurers who make market of themselves in this way, to procure the passage of a general law with a view to the promotion of their private interests, the moral sense of every right-minded man would instinctively denounce the employer and employed as steeped in corruption and the employment as infamous.

There are two remarkable things about Justice Swayne's argument. First, as Teachout notes in her talk, there was nothing remarkable about it in 1874. Many states and governments throughout the U.S. made lobbying illegal. It was seen as an act of corruption. And few if any courts in the U.S. would find this unusual, at least before the turn of the 20th century.

The second remarkable thing to note is how utterly remarkable Justice Swayne's argument is today. To speak of the millions of lobbyists in the US as "adventurers who make market of themselves" as offending the "moral sense of every right-minded man" is a painful reminder of how far our political system has fallen. Not only is the moral prohibition against lobbying something of the past, but also the idea that the Supreme Court would invalidate contracts based on lobbying is nearly unimaginable.

The reason for this change in the legal and even moral status of lobbying is, Teachout argues, the rise of free-speech jurisprudence in the 20th century. Specifically, the Court's acceptance of the basic claim freedom of speech is the fundamental foundation of our democratic system has made lobbying not only legal, but morally defensible. If democracy depends on a marketplace of ideas, then having corporations and individuals hire lawyers and public relations firms to buy and sell influence in politics is at the very foundation of democratic governance. What Teachout forces us to consider is that our elevation of the First Amendment to foundational status in our constitutional firmament is predicated on a political theory that founds democracy on the unfettered marketplace of ideas. If we are to take back our government from corporate adventurers and their lobbyists, we will need to rethink our commitment to free speech, at least as the Court currently understands it.

Teachout's provocative talk attacks less freedom of speech itself than the Court's elevation of free speech to the first amongst all constitutional provisions—the foundational right in our constitutional and democratic system. She traces the rise of free speech jurisprudence to the point where, today, free speech is the paradigmatic right in our democracy. Free speech has become equated with democracy, so that "free speech is democracy."

It is important to see that Teachout is really pointing out a shift between two alternate political theories. First, she argues that for the founders and for the United States up until the mid-20th century, the foundational value that legitimates our democracy is the confidence that our political system is free from corruption. Laws that restrict lobbying or penalize bribery are uncontroversial and constitutional, because they recognize core—if not the core—constitutional values.

Second, Teachout sees that increasingly free speech has replaced anti-corruption as the foundational constitutional value in the United States. Beginning in the 20th century and culminating in the Court's decision in Citizens United, the Court gradually accepted the argument that the only way to guarantee a legitimate democracy is to give unlimited protection to the marketplace of idea. Put simply, truth is nothing else but the product of free debate and any limits on debate, especially political debate, will delegitimize our politics.

This view that free speech is the fundamental bastion of democracy is the basis of Justice Kennedy's decision in Citizens United. In Kennedy's opinion, laws regulating campaign finance regulate speech, and not just force, it prohibits Congress from fining or jailing citizens, or associations of citizens, for simply engaging in political speech." If we believe that fair elections require a free airing of all opinions, than restrictions on campaign finance are the most dangerous forms of censorship. Which is why Kennedy can worry that "The censorship we now confront is vast in its reach."

What he means is that all those corporations regulated by the campaign finance reform law invalidated by Citizens United—including large multinationals and also small mom and pop stores and even unions and non-profit corporations—are prohibited from expressing their views about political candidates during an election. In Kennedy's telling, corporations are part of the country and, what is more, an important part of the country. The Government has “muffle[d] the voices that best represent the most significant segments of the economy."

It is helpful to recall Justice Felix Frankfurter's concurring opinion in U.S. v. Congress of Industrial Organizations. The Smith Act had forbidden unions to use funds to pay for politicking, very much like the limitations on corporate funding in the 2002 Bipartisan Campaign Reform Act.  In U.S. v. CIO, the Court refused to rule on the Constitutional question of whether the Congress can forbid unions from political speech. Frankfurter, however, does consider it. He argues that we must take seriously the evil of corporate and union speech in politics. The corruption of elections and federal officials by the expenditure of large masses of aggregated wealth But that evil, he counters, "is not one unmixed with good." For Frankfurter,

To say that labor unions as such have nothing of value to contribute to that process and no vital or legitimate interest in it is to ignore the obvious facts of political and economic life and of their increasing interrelationship in modern society.

Replace "Labor unions" with "corporations." That is what Justice Kennedy did in Citizens United. What he said is that corporations have a voice in our political landscape, just as do unions and non-profits. When such corporate entities engage in speech, there is a danger of corruption. But we cannot deny their speech is politically important. Instead of then balancing those interests in a practical way, Justice Kennedy simply said that the First Amendment insists that political speech never be abridged. Our Constitutional system, he argued, demands that the marketplace of ideas be allowed to work unimpeded.

The overriding desire to protect political speech proceeds under the assumption, with Oliver Wendell Holmes Jr., that "the best test of truth is the power of the thought to get itself accepted in the competition of the market.” What Zephyr Teachout helps to make clear is that this elevation of free-speech to the first amongst constitutional provisions is fundamentally at odds with the desire to regulate political speech to keep politics free from corruption.  If we want to get serious about fighting corruption in politics, we need to take seriously the need to question the now unquestionable faith that democracy is founded upon freedom of speech.

To fight against Citizens United and uphold the legal rejection of campaign finance limitations requires that we break the bi-partisan stranglehold that an extreme view of the First Amendment currently has on our constitutional jurisprudence.  Only once we do so can we return to a meaningful public debate about when lobbying is and when it is not corrupting. And only once we free campaign finance laws from the First Amendment can we, as we must, have a serious discussion about how much money distorts and corrupts our political process.

These are difficult issues, and weakening the scope and impact of the First Amendment is risky. As Teachout argues, it is a risk we must take to save our democratic system.

To see why, I encourage you to watch Zephyr Teachout's talk here. You can also read the essay on which the talk is based here. Together, they are your weekend reads.

—RB

Roger Berkowitz
Roger Berkowitz is Associate Professor of Political Studies and Human Rights at Bard College, and Academic Director of the Hannah Arendt Center for Politics and the Humanities. He is also the author of "Gift of Science: Leibiniz and the Modern Legal Tradition", as well as co-editor of "Thinking in Dark Times: Hannah Arendt on Ethics and Politics".
9Feb/123

A Brief History of Campaign Finance

The NY Times penned one of those editorials Wednesday that makes one wonder who is home. The Times takes President Obama to task for forming a Super PAC--or for having someone form a Super PAC for him, because we know there is no coordination between the Super PAC and the Super PAC's beneficiary.  As cynical as the current Super PAC frenzy is, and as disheartening as the crush of money being spent by the Republican Super PACs and hoarded by Karl Rove's Super PAC is, what would be served by President Obama refusing to feed at the trough? Recall, he is the first Presidential candidate since 1974 to opt out of the public matching funds system. The idea that he might run as an anti-big-money candidate is hard to imagine, so how could he meaningfully run a campaign claiming on principle to be opposed to the influence of big money, as the Times editorial suggests.

I am in Berlin where on Monday I gave a Keynote Talk to open the State of the World Week in Berlin, sponsored by the European College of Liberal Arts of Bard. My talk was on the Citizen United court case, the case that opened the door to Super PACs. I'll be blogging more about Campaign Finance Reform as the election progresses. But for now, here is a short excerpt of one part of my talk that offered a condensed history of Campaign Finance and Campaign Finance Reform in the United States.

We can divide the history of Campaign finance in the U.S. into 7 stages.

     1. The first stage is the pre-History involving the 1787 Constitutional Convention. As Zephyr Teachout has shown, "Corruption was discussed more often in the Constitutional Convention than factions, violence, or instability. It was a topic of concern on almost a quarter of the days that the members convened." Teachout and Lawrence Lessig have argued that there was a strong sense among the founding fathers that the great threat to new Constitution was corruption. And they have pointed to a number of practical responses to that threat in the Constitution itself. These include Article I, Section 6, Clause 2, which prevents members of Congress from holding civil office while serving as a legislator, or from being appointed to offices that had been created—or in which the compensation was increased—during their tenure.  The point was to prevent members of Congress from using their posts to enrich themselves and their friends.

Another innovation aimed to prevent corruption was the decision to have those in the House of Representatives serve only for two years. According to Teachout and Lessig, this was designed to counter the formation of bonds between legislators and the President. By turning over the members of the House on a regular basis, it would be less likely that the Representatives would form strong alliances with members of the Executive branch, thus helping to maintain their independence. The founding fathers would surely be astounded by the incumbent advantages apparent today.

     2. The Second stage of American campaign finance history runs from the passage of the Constitution until the election of Andrew Jackson in 1828. In early U.S. elections, most campaign expenses were paid directly by the candidates using their own money. Such expenses were relatively minimal, going toward an occasional campaign pamphlet and, sometimes, for food and drink at rallies. As Bradley Smith writes, "Though free from the "corrupting" effects of money, elections in this early period were generally contested by candidates representing aristocratic factions standing for election before a relatively small, homogeneous electorate of propertied white men."

     3. The financing of American political campaigns begins to become interesting in 1828, with the election of Andrew Jackson. Jackson's presidency is rightly seen as the true beginning of modern American democracy. And Jackson's campaign for President was the first presidential campaign that appealed directly to the voters and not simply to party elites. Jackson's campaign was organized by Martin van Buren (who later served as his Vice President and thereafter as President). Van Buren was one of the original machine politicians from New York who created the machine concept Boss William Tweed would perfect later in the century at Tammany Hall.  What Van Buren did for Jackson was to organize a campaign aimed at the people. This cost money. And what he and Jackson did was to raise money from those who were seeking jobs in the government.  This was the beginning of the spoils system, whereby political campaigns were funded by current and prospective government employees; these employees in turn expected to be rewarded with jobs once their candidate won the election.

     4. The spoils system lasted until the passage of the Pendleton Act, in 1883, which inaugurates the fourth stage of the development of campaign finance. The Pendleton Act professionalized the Federal Civil Service, instituting an exam for entry into the service and outlawing the Spoils system. The result was that campaign funds from federal officeholders dried up, and politicians needed new sources of funds. The obvious sources were wealthy individuals and corporations. And oh boy did corporations jump into the breach. By the late 19th century, the government was giving grants of land and cash to corporations, and in return the corporations were generously funding political campaigns. In 1888 40%, of Republican national campaign funds came from Pennsylvania manufacturing and business interests. By 1904, 73% of Teddy Roosevelt's presidential campaign funds were raised from corporate contributions. (I take these numbers from Bradley Smith). The age of corporate funded campaigns was here, and it has never left.

     5. Once he was elected, Teddy Roosevelt made it a priority to reform the broken campaign financing system that he had exploited so well. With his support, Congress passed the Tillman Act in 1907, which made illegal all campaign contributions from corporations. The Tillman Act opens the Fifth stage of the development of Campaign Finance Reform in the United States.

While the Tillman Act carried penalties for its violation, it instituted no enforcement mechanism. The result is that not much changed. To take only one legendary example, in 1968 and 1972 Clement Stone contributed up to $10 million to President Richard Nixon's Presidential campaigns. Stone's contributions caused a scandal that, together with the outrage over Watergate, led Congress to finally institute a serious attempt at campaign finance reform.

     6. The key moment of modern campaign finance reform is the passage of the Federal Election Campaign Act (FECA) in 1974, and  the Supreme Court's partial upholding and partial overturning of that law in Buckley v. Valeo in 1976. In the wake of Watergate and the loss of trust in government, the Congress passed FECA which: limited individual contributions to individual candidates to $1,000; limited the amount candidates could spend on a campaign; established a system of public financing of campaigns that required a voluntary limit on campaign expenditures; required that candidates, parties, PACs and groups engaging in express advocacy disclose their fund-raising and spending; and created the Federal Elections Commission, to regulate and enforce the new rules.

In a landmark decision that still controls all legal approaches to the regulation of campaign financing, the Supreme Court in Buckley v. Valeo upheld the disclosure requirement and the limits on individual contributions. It also upheld the limits on campaign spending when those limits were voluntary and in conjunction with the decision to accept public financing. But the Court struck down compulsory limits on spending both by individual candidates and by PACs and other groups. While the Court recognized that limits on campaign spending were a kind of censorship that limited the rights of people and corporations to speak about the most central political issues of the day, it also acknowledged "large contributions threaten the integrity of our system of representative democracy." Because large contributions, especially to individual candidates, at the very least appear to suggest a kind of quid pro quo corruption, the Court accepted that Congress has the right to censor such expressions of support. More general expenditures not given to or coordinated with a specific candidate were, the Court argued, not examples of the kind of corruption that would allow Congress to override the fundamental free speech interests of individuals and corporations who would want to influence the political debate. Thus, post-Buckley, the rule was: The Constitution limits censorship of political activity, political speech and political spending on campaigns. Any limit is censorship that violates the First Amendment. And yet the Court carved out One Narrow Exception: speech or activity that either is or gives the appearance of quid pro quo corruption could be regulated and banned.

In the aftermath of Buckley v. Valeo, money continued to pour into politics. Candidates and their supporters made use of "soft money," money given to political parties and other groups and thus not subject to the limits imposed on individual contributions to individual candidates. PACS began to bundle large sums of money that, while not individual contributions to candidates, nevertheless carried the tint of influence peddling. In the year 1993-94, the Democratic Party received $45 Million dollars in "soft money" and the Republic Party received $59 Million. By 1999-2000, the numbers were $92 Million and $244 Million respectively. In  2001-2002, the Democratic Party took in $200 Million and the Republicans $421 Million.

     7. The failure of FECA to stem the tsunami of money in elections led Congress to try again, and in 2002 it passed the Bi-Partisan Campaign Reform Act (BCRA), also known as the McCain-Feingold Act—the seventh and until now final stage of the effort to regulate campaign finance in the United States.  The main innovation of BRCA was to prohibit unlimited soft money contributions by corporations and unions. And it was this provision that was held to be unconstitutional by the Supreme Court in the now infamous case of Citizens United v. FEC.

The core of the Citizens United ruling was Justice Anthony Kennedy's argument that "If the First Amendment has any force, it prohibits Congress from fining or jailing citizens, or associations of citizens, for simply engaging in political speech." For Kennedy, "The censorship we now confront is vast in its reach." What he means is that the law bans all those corporations—including large multinationals and also small mom and pop stores and even non-profit corporations—from expressing their views about political candidates for either 30 or 60 days leading up to an election.

In Kennedy's telling, corporations are part of the country and, what is more, an important part of the country. The Government has “muffle[d] the voices that best represent the most significant segments of the economy." Here Kennedy channels Felix Frankfurter, who in the 1941 case of U.S. v.s. Congress of Industrial Organizations, wrote:

To say that labor unions as such have nothing of value to contribute to that process and no vital or legitimate interest in it is to ignore the obvious facts of political and economic life and of their increasing interrelationship in modern society.

U.S. v. C.I.O. dealt with the anti-Union Smith Act, which forbade unions and corporations from using treasury funds to pay for politicking. In this regard, the Smith Act was very much like 2002 Bipartisan Campaign Reform Act. While the majority of the Court refused to consider the Constitutional Question and decided the case on narrow grounds, Frankfurter did.  In his telling, the Court must take seriously the evil that Congress sought to address: namely, the corruption of elections and federal officials by the expenditure of large masses of aggregated wealth. And yet, Frankfurter saw that "the claimed evil is not one unmixed with good."  The expression of corporate or union speech in elections is, he writes, a good thing! "The expression of bloc sentiment has always been an integral part of our democratic and legislative processes."  Replace "Labor unions" with "corporations." That is what Kennedy did.

 -RB

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The Hannah Arendt Center at Bard is a unique institution, offering a marriage of non-partisan politics and the humanities. It serves as an intellectual incubator for engaged thinking and public discussion of the nation's most pressing political and ethical challenges.