Corporations from Apple and Angie’s List to Walmart and Wells Fargo exercised their power last week against laws that give aid and comfort to bigots. But don’t be too quick to praise their actions.
Commendable as these corporate gestures were, they also illustrate how America is morphing from a democratic republic into a state where corporations set the political agenda, thanks to a major mistake by Democrats in Congress. What they did has resulted in Supreme Court decisions that would infuriate the framers of our Constitution.
The framers distrusted the corporate form. And they made plain their concerns about concentrations of economic power and resulting inequality, worrying that this would doom our experiment with self-governance. Surely they would be appalled at the exercise of corporate influence last week. For the companies opposing “religious freedom” laws in Arkansas and Indiana were concerned with human rights only in the context of profit maximization, which is what economic theory says corporations are about.
Where are the corporate actions against police violence? Or unequal enforcement of the tax laws, under which workers get fully taxed and corporations literally profit off the tax laws? Or gender pay discrimination? And when have you heard of corporations objecting to secret settlements in cases adjudicated in the taxpayer-financed courts, especially when those settlements unknowingly put others at risk?
The so-called religious freedom restoration statutes in Arkansas, Indiana and 18 other states reflect a growing misunderstanding of the reasons that American law allows corporations to exist, a misunderstanding that infects a majority on our Supreme Court.
Corporations, which have ancient roots, serve valuable purposes that tend to make all of us better off. We benefit from corporations, but they must be servants, not masters.
Confining corporations to the purposes of limiting liability and creating wealth is central to protecting our liberties, as none other than Adam Smith warned 239 years ago in The Wealth of Nations, the first book to explain market economics and capitalism.
There is no fundamental right to create, own or operate any business entity that is a separate person from its owners and managers. Corporations exist only at the grace of legislators.
But in 21st-century America, corporations are increasingly acquiring the rights of people, which is the product of an unfortunate 1993 law championed by Democrats that now helps bigots assert a Constitutional right to discriminate in the public square.
Concern about corporations and concentrated power that diminishes individual liberties has become increasingly relevant since 2005, when John Glover Roberts Jr. was sworn in as chief justice of the United States.
Roberts and other justices who assert a strong philosophical allegiance to the framers’ views have been expanding corporate power in ways that would shock the consciences of the founders — especially James Madison, the primary author of our Constitution, Thomas Jefferson and John Adams.
In 2010, the Supreme Court ruled that corporations could spend unlimited sums influencing elections in the Citizens United decision. Now, as a practical matter, no one can become a Democratic or Republican nominee for president without the support of corporate America.
And, central to the Arkansas and Indiana legislation, the Supreme Court last year imbued privately held corporations with religious rights in the Hobby Lobby case.
The Roberts court invented all of these rights. Principled conservatives should denounce such decisions as “judicial activism,” yet nary a word of such criticism appears in right-wing columns and opinion magazines.
Today’s corporations have their roots in ancient trusts created to protect widows and orphans who inherited property. Hammurabi’s Code provided for an early version of trusts. Later the Romans created proto-corporations to manage public property and the assets of those appointed to oversee the far realms of the empire.
Managers of these early corporations had very limited authority, what the law calls agency, over the assets entrusted to them. Today, corporate managers have vast powers to buy, sell and deploy the assets they manage. They can do anything that is legal and demonstrates reasonable judgment.
Spending money to elect politicians (or pass anti-consumer laws) is perfectly fine under current law if it advances the profit-making interests of the company. Last week, we saw companies denounce bigotry against LGBTQ people, but of course they did so in terms of protecting their profits.
Walmart, the nation’s largest employer, opposed signing the Arkansas bill into law: “Every day in our stores, we see firsthand the benefits diversity and inclusion have on our associates, customers and communities we serve.” Apple CEO Tim Cook said, “America’s business community recognized a long time ago that discrimination, in all its forms, is bad for business.”
But creating efficient vehicles to create wealth by engaging in business does not require political powers, as none other than Supreme Court Justice William Rehnquist noted in a dissent.
Where we have gone furthest astray under the Roberts court is in last year’s Hobby Lobby decision. It imbued privately held corporations with rights under the First Amendment, which says, in part, “Congress shall create no law respecting the establishment of religion or prohibiting the free exercise thereof.” Based on Hobby Lobby, both the Arkansas and Indiana laws were crafted to provide a defense for bigoted actions by businesses.
Yet laws requiring businesses to serve everyone, without regard to their identity, do not inhibit the free exercise of religion. A law that requires a florist or bakery to serve people in same-sex weddings as well as different-sex weddings may trouble the merchant, but it does not inhibit religious activity.
The corporate power on display in the so-called religious freedom restoration cases stems from a Supreme Court case that upheld the doctrine of laws of general applicability.
In 1990, the Supreme Court held that Oregon jobless benefits were properly denied to two Native Americans who worked at a drug rehab facility and who also, as part of their well-established religious practice, ingested peyote, a controlled substance.
Justice Antonin Scalia, who claims to follow the original intent of the Constitution’s drafters, wrote the opinion. He held that “the right of free exercise does not relieve an individual of the obligation to comply with a ‘valid and neutral law of general applicability’” such as denying jobless benefits to drug users.
Scalia cited an 1879 Supreme Court ruling in a test case known as Reynolds in which a Brigham Young associate asserted that federal laws against polygamy interfered with the “free exercise” of the Mormon brand of Christianity.
In that case, as Scalia noted, the high court had rejected the claim that criminal laws against polygamy could not be constitutionally applied to those whose religion commanded the practice. “To permit this would be to make the professed doctrines of religious belief superior to the law of the land, and in effect to permit every citizen to become a law unto himself,” the conservative justice wrote.
Two years later, Congress undid that sound decision with passage of the Religious Freedom Restoration Act, a sloppily crafted bill introduced by then-Rep. Chuck Schumer (D- NY), and championed in the Senate by another Democrat, the late Ted Kennedy (D-MA).
It was this law, undoing Scalia’s sound Supreme Court decision, which enabled corporations to exercise their power for a particular cause that is in their interest, namely ending bigotry. Such actions may be laudable, yet still dangerous.
Corporations are valuable and useful vehicles for creating wealth. But they are not and never should be political and religious actors. As artificial “persons,” they should not be imbued with political or religious rights.
We need to keep corporations in their place. Otherwise, next time, their profit maximization may work against your liberties.