Monday, November 17, 2014

It's time to make corporate political contributions public information

This caught my eye this morning. Maryland is working on a bill that requires among other things:

  • Corporate contributions to any political campaign must be posted on the corporations website within 48 hours of the contribution.
  • Corporations must show that a majority of shareholders approved the contribution.
  • Corporations must show that a majority of their shareholders are permitted to make political contributions.
Such a law would make anonymous political contributions by corporations illegal. Publishing information about political contributions from corporations would allow their customers to see if they're making a purchase that works against customers' interests. It would also allow the employees working for that company to see that management has an interest aligned with theirs, and if not, workers are free to work somewhere else or strike.

Such a law would also subject every political contribution to a vote by the shareholders. This is a big part of corporate governance that is often ignored. Why should the board of directors be the sole arbiters of the value of a political contribution? Everyone who has skin in the game gets a voice in the ultimate fate of the business. Besides, board members have been shown to make mistakes and sometimes, they need parental supervision. You know, better corporate governance.

The last bullet point is very interesting. As the article notes, in most Fortune 500 companies, the majority shareholders are institutions and those institutions are not allowed to make political contributions.

It is telling that Congress refuses to pass any meaningful election reform, particularly with Obama in office. It is also telling that during the last midterm election, many states passed very liberal initiatives while increasing a conservative majority in Congress. Several states raised the minimum wage and legalized marijuana yet returned or added conservatives to Congress. This suggests that gerrymandering played a significant role in building and maintaining a conservative Congress.

90% of Americans believe there is too much corporate money in politics. If big conservative ideas have such broad political support, then having a fair election, without corporate money involved, or even making corporate contributions public information wouldn't be a concern. Unfortunately, for many in Congress, it still is. Imagine what would happen if every state passed such a law as the one being considered in Maryland.
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