The Shareholder Crusade: Taking Back Corporate America
Written by Nicholas Mager
For decades, Americans have witnessed corporations, unions, and the extremely wealthy deluge our democracy with special interest cash, denying citizens their right to have their voices heard. This problem has only worsened with the Citizens United v. FEC ruling in 2010, which opened the floodgates to special interest spending in our campaigns. After seeing SCOTUS strike down a century-old Montana law banning corporate spending in politics, and the DISCLOSE Act die on a party line vote in Congress, it’s becoming increasingly difficult to stay optimistic about the future of our democracy.
There is, however, a light at the end of the tunnel—the Shareholder Protection Act of 2011. Introduced on July 13, 2011, and currently before committee in Congress, it’s only a matter of time before it becomes fodder for partisan politics.
The bill requires public corporations to do three specific things: (1) disclose all political spending to shareholders, including who is receiving the funds and in what quantity (2) provide shareholders with the rationale for giving to a specific candidate (3) get shareholder approval for any amount of proposed political spending.
With the passage of the Securities and Exchange Act in 1934, and the establishment of the Securities and Exchange Commission, Congress, for the first time in history, created an agency specifically tasked to regulate corporate-to-shareholder relationships.
Most of the SEC’s disclosure regulations, however, focused on releasing executive pay and risk taking strategies to shareholders; never did they apply directly to corporate political spending (primarily because it wasn’t nearly as bad in 1934 as it is now). The influx in political spending from public corporations over the past 4 years, therefore, makes amending the 1934 bill and getting the SEC to hold corporations accountable for their spending an absolute necessity.
At its core, the concept behind the bill is fairly elementary. If you are a part owner of a company—i.e. a shareholder—then obviously you ought to have a say in how the company spends its money. At the moment, executives are making decisions about political spending without input from, or consent of, the owners. In other words, they’re taking investors’ money and using it to advance their own interests—a clear moral hazard.
Although the Shareholder Protection Act won’t completely stop the spending binge on its own, it will help return political power to the American public, and it will help stop the assault of corporate money on our democracy. And most importantly, it will help preserve the democratic principles this country was founded on: government for the people, of the people, and by the people.
Nicholas Mager is a senior at the University of California, Davis, pursuing a degree in Managerial Economics. He is currently an intern at the Common Cause national office, where he hopes to contribute to the organizations efforts towards corporate accountability and gain practical experience within the national political arena. In addition to his internship, he is also taking classes over the summer at the UCDC center as a student in the UC Davis Washington Program.