25 January 2010. David Caploe PhD, Chief Political Economist, EconomyWatch.com.
On January 21, the US Supreme Court, aka SCOTUS, overturned the most recent attempt to put some kind of limits on political campaign finance activities – the so-called McCain Feingold Act of 2002 – with a far-ranging decision that insures the already broken and corrupt American political system will become even more so almost immediately, barring the unlikely passage of new laws by the current Congress. While this shocking, if not surprising, decision has already occasioned much commentary, especially in the US, relatively little has been written about the ruling’s equally disastrous likely effects on the US and world economies. In this context, there are six points important for all observers of the world economy to bear in mind about the significance of this strange and unnecessary judicial intervention into the ongoing deterioration of the American political economic scene.
1) The first is that, as we have often noted, the US remains at the center of the world political economy, and is likely to remain so for the next decade at least. Even China is dependent on the US as its key export market, especially if it hopes to avoid the massive property- and asset-bubble there that many observers feel is imminent. While the Beijing leadership has so far navigated the post-Black September 2008 world with impressive skill – recently raising interest rates to cool down those potentially overheating real estate and stock markets – they will need a healthy US economy to continue to be able to absorb their ever-growing manufacturing capacity.
2) In that context, as we have also noted previously, the biggest economic problem currently confronting the US is its broken and corrupt political system. Put bluntly, almost every initiative that needs to be taken in order to get the American economy back on its feet is being blocked by the political power of major interest groups – eg, the Too-Big-To-Fail banks and other financial structures like AIG, the ever-dominant “health” insurance companies etc. This bizarre and unwarranted decision will only increase the ability of these highly organized and very liquid special interests to both buy the loyalty of individual legislators and, perhaps even more important, structure public discourse about these key issues in a direction amenable to their own preferences.
3) As we have also recently argued, the biggest problem confronting the ENTIRE world economy is the lack of monetary velocity – the speed with which it changes hands – due to the increasing IN-equality of income distribution, a fact that affects not just emerging countries like China and India, but the world’s central economy, the United States. We need not re-hash that significant point here. But we DO need to stress unequivocally that income IN-equality is already high in the US, and is growing larger all the time – a direct result of the Cheney / Bush policies that, for reasons that remain unclear, the alleged purveyor of “change,” President Obama, has continued almost unabated.
This decision will further strengthen the power and influence of corporations and wealthy individuals over the political process, hence accentuating and aggravating the unequal distribution of resources within America that – aside from being unjust and, potentially, politically de-stabilizing – ALSO weakens the “vital spirits” of entrepreneurialism and consumer demand, whose re-animation will be absolutely necessary for the US to come out of its seriously stagnating economic situation, which in turn is a crucial pre-requisite for sustained recovery on the global level as well.
4) From a principled point of view, this decision perpetuates the confusion in American public discourse between FREE speech and PAID speech – a misunderstanding that has already created problems for both the US and world economies.
One of the truly great and distinctive features of American life is the First Amendment right to FREE speech – which means, very simply, that no one need fear any sort of government reprisal for their political opinions. That is, you can say whatever you want without fear of being harassed or thrown into jail merely for expressing an opinion unpleasant to those with political and economic power.
This is quite different from PAID speech – that is, the bombardment of the public space with, and the domination of public discourse by, messages coming from centers of economic and political power specifically calculated to advance their own particular interests. The whole theory of FREE speech is that an open marketplace of ideas provides the best structural opportunity for a free people to be able to inform themselves about the issues of the day and come to a reasoned view of what constitutes the best interest of the public as a whole.
This is quite different from a situation in which those with very narrow interests are able – as a result of their access to huge revenues generated by corporate activity – to drive out competing viewpoints by overwhelming the public space with unreasoning appeals to emotions like fear and greed – both of which may be legitimate as motivations in a private-interest sphere like a stock market, but are much less constructive in the larger arena of society as a whole.
Public discourse in America has been dominated by such forces since the early 1980s, with not just political but also economic results that have created the havoc the global economy has experienced directly since Black September 2008, and in which it remains enmeshed to this day. This decision will only increase the power of those able to bend public opinion in the direction they want as a result of the massive concentration of PAID speech – with predictably negative results for the US AND world economies.
5) From a historical point of view, this decision marks the latest distorted interpretation of the 14th Amendment to the US Constitution – originally passed after the Civil War to insure full rights to ex-slaves, but almost immediately transformed into a vehicle for the untrammeled expansion of corporate “rights” by treating them as legal “persons.” This is not the place to go into an extensive examination of how this cruel perversion of an Amendment intended to give freedom and dignity to real people, whose lives had been dominated by the abomination of slavery, somehow became the legitimation for the attribution of the rights of “people” to the legally-constructed, artificial economic entities of corporations. Here, all we need note is how bizarre it is that a tool whose purpose was to rectify the “original sin” of American public life has become the legal instrument by which corporations have been granted many, if not all, the “rights” belonging to individuals – in this particular case, “free” speech, which, as we have noted, is in fact not “free” in any substantive way, but, rather, PAID speech of the most venal and self-promoting sort.
6) In this context, finally, this ruling exposes the utter hypocrisy of American right-wing cant about wanting judges who will “interpret” the law, not “make” it – their alleged campaign against “judicial activism”. Just as in Bush v. Gore – the equally outrageous decision in which a compact Republican majority on the Supreme Court ignored ALL past precedent, including their own previous rulings, to create an outcome conforming to their ownpolitical prejudices – this decision marks one of the most egregious examples of judicial overreaching in the history of the American jurisprudence.
As the New York Times Supreme Court correspondent Adam Liptak so eloquently put it:
So much for judicial minimalism.
Thursday’s big campaign finance decision, arguably the most significant of the Roberts court, showed just how bold that court can be.
The majority converted a minor and quirky case about a movie almost nobody had seen into a judicial blockbuster. “Essentially,” Justice John Paul Stevens wrote for the dissenters in the 5-to-4 decision, “five justices were unhappy with the limited nature of the case before us, so they changed the case to give themselves an opportunity to change the law.” … [M]uch of Justice Stevens’s 90-page dissent was devoted to complaints about how the majority got to that result. Those points drew a defensive and defiant concurrence from Chief Justice John G. Roberts Jr.
The chief justice’s decision to respond separately indicated that “he felt the sting of Stevens’s dissent,” said Heather Gerken, a law professor at Yale. The dialogue between the two justices about how the court conducts its business revealed the depth of the divisions on the court and the jurisprudential juggernaut that the Roberts court may be in the process of becoming. Pamela S. Karlan, a law professor at Stanford, said Thursday’s decision, Citizens United v. Federal Election Commission, was a telling indicator of the direction of the court.
“This is a deeply divided court with a strong pro-corporate wing,” Professor Karlan said, pointing to a 2008 decision slashing the punitive damages award in the Exxon Valdez oil spill of 1989. That is a big shift, she said, from the sort of conservatism espoused by the Rehnquist court. Chief Justice William H. Rehnquist, who died in 2005, “was not someone who thought corporations had strong rights claims,” Professor Karlan said.
And while this is first and foremost a problem for Americans, for all the reasons cited above:
- the centrality of the US to the world economy
- the broken US political system being its major economic problem
- the implications of this decision for the further increase of income IN-equality in the US, and the negative economic impact of that key fact
- the confusion of FREE speech and PAID speech, with its predictable increase in corporate domination of the US political system, and
- the continuing MIS-interpretation of the 14th Amendment in favor of expanding the “rights” of artificial “people” like corporations
the radical judicial activism of a right-wing Supreme Court augurs a continuing deterioration in all of the factors that have already put both the US and world economies in the precarious and weakened state in which they find themselves today. And that is truly bad news for just about everyone connected in any way, direct or indirect, with the US-centered world economy that we have today, and for the foreseeable future.
David Caploe PhD
Chief Political Economist