Corporate Influence on Governmental Action

Governments can maximize the quality and efficiency of society by fulfilling many beneficial functions and by providing many essential services, such as health care facilities, infrastructure projects, educational programs, and protection services. However, the government can only help improve the conditions of our society if the politicians that the people elect are making decisions that can most effectively benefit their constituents and improve the quality of life for the majority of society. In the recent decades, corporations have exercised extraordinary power over the government and our society by using their wealth to directly write legislation, contribute abundant amounts of money to political campaigns, and develop lobbying groups that impel politicians to act according to corporate interests. The United States and many other governments around the world have become dramatically impaired as a result of corporations and financial organizations asserting an overwhelming influence on the political system to ensure that the legislative decisions being made benefit the profit margins of corporations and not the lives of citizens.

The powerful ability of corporations to influence the political system of the United States was significantly enhanced in 1886. In an 1886 Supreme Court case known as Santa Clara County v. Southern Pacific, the Court established that corporations can exercise similar rights as individuals, and these additional rights and expanded powers enabled corporations to have a dramatic impact on the political operations and governmental policies of the nation.

The 1886 ruling increased the ability of corporations to spend corporate money in the political process, restrain government regulations on business or economic issues, and limit the power of the EPA and OSHA (Shah). Thus, the 1886 ruling significantly strengthened the political power of business interests by allowing corporations to inject money into the political system, manipulate legislative decisions and minimize the regulatory power of the US government.

Corporations continued to expand their control of the government over the succeeding decades, and in the 1970s the development of powerful business lobbying organizations strengthened and solidified the influence that corporations had on public policy. For instance, in the 1970s the BRT began to exercise power over the government by manipulating public policies to minimize government control of business regulations, allow businesses to assert a direct influence regarding the establishment of legislation, and improve the public perception of corporations. These lobbying organizations accumulated massive numbers and extraordinary political power, for by the end of the 1970s the BRT had acquired a group of 192 members that consisted of most Fortune 100 companies and the CEOs from the most profitable corporations in the country. Additionally, the members belonging to the BRT possessed almost half of the nation’s total gross national product and more wealth than many countries throughout the world (Beder). The BRT’s strategy of including the wealthiest corporate leaders into the organization was implemented to most effectively influence a vast number of politicians and to maximize the organization’s impact on society. Thus, the inclusion of such wealthy corporate and business leaders into the organization soon enabled the BRT to become one of the most powerful and influential organizations in the nation. Over the following decades, many corporations, business leaders, and lobbying groups have become a dominant force on global politics and have perpetually enhanced the range of their political and cultural influence.

The new governance and corporate citizenship of modern America have enabled many lobbying groups that represent wealthy corporations or financial industries to meet with congressmen, pay for campaign funds and generous gifts, and provide advice regarding how to write legislation and vote on the issues. The excessive money and gifts granted to the congressman served to impel them to vote according to the interests of the lobbyists, which are often motivated by increasing profit margins for the corporations or industries that the lobbyists represent (The Growing Power of Lobbyists). Although lobbying is protected by free speech, the excessive and powerful influence that lobbyists now have over the US government has created a situation in which decisions are being made to benefit the interests of the lobbyists and not the interests of the people, which increases the corporate influence over the rules-setting process of the nation.

For instance, in 2011 there were approximately 13,000 lobbyists in Washington, and the lobbying groups spent a combined 3.5 billion to advocate for their causes and persuade congressmen to write laws and vote on legislation that is preferable to their respective groups. For each important legislative issue, thousands of lobbyists attempt to influence the laws written by the government, as over 2,000 lobbyists were involved in the financial regulation bill of 2010. Additionally, in 2011 commercial banks, financial organizations and credit companies spent approximately $50 million on lobbying efforts regarding financial regulators who were developing the laws of the financial reform bill following the financial crisis. The strategy was successful, as the money was able to persuade legislators and regulators to alleviate restrictions on the financial industry and reduce limitations pertaining to the amounts that banks could charge retailers on debit-card purchases. Although estimates indicate that the effective lobbying strategy helped the financial industry save about $3.5 billion, the deregulation of the business industry harms the majority of the American people by making them vulnerable to be victimized by excessive credit fees, predatory lending practices, and risky investment activities. Additionally, the deregulation of the financial industries and corporate activities also eliminates regulatory protections that would help prevent another financial collapse resulting from abusive tactics of the financial industry (The Growing Power of Lobbyists). Thus, the lobbyists were able to manipulate and establish regulatory laws and standards in a manner that would benefit the wealthy financial industry and potentially harm the majority of working-class citizens.

Lobbying is a big problem in our society because it creates a dramatic imbalance of political influence. Although legislators are charged with the obligation to make decisions and form policies that would benefit their constituents and the majority of American citizens, the abundance of money that is required to win elections and that is provided by lobbyists impels the politicians to eagerly receive the money and make decisions that benefit the corporations represented by the lobbyists and to refrain from making decisions in the best interest of their constituents. Additionally, lobbying creates a system in which only wealthy organizations can influence the political system, as groups that advocate for the poor often lack the resources necessary to compete with the corporate lobbying groups. This imbalance of political influence caused by corporate and financial lobbyists ensures that politicians only focus on issues that involve high amounts of money for business organizations and only act in the best interests of corporations (The Growing Power of Lobbyists). Because a lot of money is required to successfully lobby for causes, the system guarantees that only organizations with a significant amount of wealth can influence the political process and establish legislation. Thus, lobbying enables corporations and wealthy financial organizations to directly write the laws that govern our nation, with the result being that our government is forming laws that exclusively benefit the profit margins of wealthy corporations, entirely neglect the needs of the middle class and dramatically intensify the struggles of the poor.

Laws are the most essential and powerful forces in a society, for laws establish the values that we appreciate, the standards we must adhere to and the behavioral patterns that we exhibit. In turn, any agent who writes laws for a society has the immense power to significantly influence the values and actions within the entire society. One method in which corporate leaders are directly influencing public policy is by writing the specific laws that govern the American culture. For example, the American Legislative Exchange Council (ALEC) is a policy organization that enables many business interests and corporate leaders to actively participate in the process of deciding and establishing official legislation. In 2011, Exxon Mobil and Koch Industries were permitted to join and participate in a conference in which elected congressmen and policy analysts were discussing and developing energy legislation. This invitation enabled the corporate leaders to directly write the specific details of the legislation in a manner that minimizes government regulation on energy practices. After paying a membership fee of approximately $25,000, ALEC then allows the business and corporate leaders to join the organization’s legislation-writing task force and to write ideal legislation so the elected politicians associated with ALEC can then transfer the legislation into US law. In the past decade, members of ALEC have directly influenced our government and our society by writing laws regarding agriculture, energy, environment, commerce, civil justice, education, foreign relations, taxes and telecommunications (Fitzgerald). Thus, decisions concerning many crucial aspects of our society are being determined and established by corporate leaders who are motivated by corporate interests instead of societal advancement.

A significant problem of elected officials allowing corporate leaders to actively write legislation is that this practice leads to the development of laws that do not benefit the majority of the people but instead only benefit the particular business interests and profit margins of the corporations writing the laws. The conservative ideals of ALEC include the elimination of governmental regulations and the minimization of corporate taxes, both of which help improve profits of wealthy corporations and both of which harm the majority of US citizens, for the American people would benefit from regulations that can effectively prevent corporations from abusing the economic system and that can protect citizens from being harmed by detrimental and destructive business practices (Fitzgerald). Because the primary purpose of legislation and the essential goal of government is to establish laws that help improve the lives of the citizens, allowing corporate leaders to write laws that only benefit themselves is impairing the functionality of the American government and diminishing the quality of our society.

Campaign financing is another method by which new governance and corporate citizenship have enabled wealthy corporations to directly influence the laws that are established by the US government. Campaign financing is a form of political bribery in which wealthy donors and large corporations spend significant amounts of money on the campaigns of congressman, senators and presidential candidates, and after the politicians win the elections, the implicit deal requires the politicians to then make policy decisions according to the desires of their wealthy donors (Blumenthal). Furthermore, politicians are inevitably reluctant to make decisions against their wealthy donors, for failing to fulfill their desires might cause the donors to refrain from contributing to the politician’s next campaign and might cause the donors to instead support his competitors, which would diminish the politician’s chances of obtaining reelection during the next cycle. Campaign financing is a form of political bribery because the excessive campaign donations motivate the politicians to neglect the obligations of their job, to ignore the needs of their constituents and the people, and to instead form legislation that only benefits the wealthy donors and large corporations that funded their campaigns.

The Supreme Court’s Citizens United ruling in 2010 further exasperated and amplified the immense power that wealthy corporations possess over the nation’s political system. In the Citizens United decision, the Supreme Court determined that corporations can be considered as people, can give unlimited amounts of money to fund political campaigns and that the politicians are no longer required to disclose the sources of the donations. The non-disclosure clause provided in the Citizens United ruling is very detrimental to the political system. Requiring politicians to disclose the source of their donations helps the government and the constituents hold the politicians accountable when they unfairly manipulate legislation to benefit their donors, and this campaign accountability increases the ability of the government to detect political corruption and take measures to eliminate the corruption (Blumenthal). Additionally, accountability helps the American people and the constituents detect bribery, which would enable them to protest the grievances and express their displeasure by voting for other candidates in the next election. However, receiving large donations from anonymous sources and secret donors prevents us from being able to detect the influence that the donors are having on the decisions of the politicians and diminishes the country’s ability to hold the politicians accountable for corruption.

The ability to give unlimited funds to campaign donations is another way in which the Citizens United ruling intensifies the problem of campaign financing. Since the ruling, dramatically more money has been injected to fund campaigns for elections than ever before in our nation’s history. The expensive nature of modern campaigns requires politicians to acquire as much money as possible from wealthy donors and large corporations, which in turn makes the politicians drastically more susceptible to the bribery of campaign financing and extremely more likely to make policies that benefit their wealthy donors (Blumenthal). Thus, the unlimited amounts of money wealthy donors can spend on political campaigns enhance the ability of corporations to pay for elections and to ensure that politicians form legislation that benefits the wealthy donors instead of their constituents.

For instance, during the 2012 presidential election, a record $400 million was spent on campaign donations during the election cycle, with a large portion of those donations being made by organizations that advocate for corporate interests and low corporate taxes, such as Karl Rove’s Crossroads GPS organization and Grover Norquist’s Americans for Tax Reform. Excessive amounts of money have also been provided for congressional races since the Citizens United ruling. Corporations have been utilizing donation groups to spend an abundance of money on congressional campaigns and to protect their secretive status as anonymous donors, including donation groups such as FreedomWorks, Heritage Action for America, the Club for Growth, and the Senate Conservatives Fund. Reports indicate that the Republican Party has received distinctly more money than their Democratic counterparts, and the excessive amounts of money that Republican politicians are receiving has forced them to adhere to the desires of the extremely partisan and extraordinarily wealthy donors who are funding their campaigns. Thus, campaign financing has caused the Republicans to make terrible decisions that harm the American people, obstruct all political progress and diminish the ability for the country to recover from the economic recession (Blumenthal).

The excessive influence of campaign financing, lobbying, and law-writing abilities has enabled many large corporations and financial organizations to manipulate and determine the tax code. By using their wealth and political resources to advocate for reduced income tax rates on corporations and on the wealthiest Americans, over the past decade the business community successfully impelled the government to establish the lowest tax rates for the US since the 1950s, and the current tax laws especially minimize the tax rates of the wealthiest banks and corporations. Additionally, corporate influence on the US tax code legislation has provided the code with an abundance of loopholes that allow wealthy organizations to receive unnecessary subsidies and excessive deductions that further reduce the tax rates of corporations (Beder). The low tax rates on the wealthiest companies and individuals is a severe problem. The middle class and the poor would benefit dramatically if the government had more tax revenue, as the revenue could be used to improve communities and increase employment by investing in infrastructure projects, transportation projects, scientific research projects, and energy projects. Additionally, the government could improve the education system to strengthen the thinking skills of our kids, empower students to come up with great ideas, and prepare excellent workers to effectively execute those ideas (Beder). However, our society is unable to solve these difficult problems and implement these crucial investments because the tax code written by corporate interests allows the wealthiest Americans and corporations to pay minimal tax rates, and the lack of revenue acquired by the US government prevents the government from being able to adequately invest in these necessary projects either.

The international nature of corporations and the globalization of the financial industries have enabled corporations and wealthy financial organizations to influence many political systems around the world. Although the governments of different countries were traditionally responsible for developing legislation, the globalization of the business community and of multinational corporations have enabled corporations to have an increasingly dominant role of participating in the rule-setting process for many different countries and for the international business community (Koslowski and Pies). Thus, corporate governance and corporate influence over global politics have enabled wealthy financial organizations and large corporations to determine the laws regarding the financial industry standards and international trade regulations.

The globalization of corporate influence and the power of corporations to write laws is a problem because the wealthy business interests are ensuring that the laws provide them with unbridled freedom in their business practices and that the laws are designed to maximize their profit margins instead of helping the people of the various countries. The primary goal of the legislative decisions for corporate governance is to improve the operations of the organizations, to minimize regulations that restrict risky business practices, and to maximize the potential profit margins that corporations can obtain (Koslowski and Pies). For instance, multinational corporations have had a dramatic influence on contract regulation, as laws have been formed that allow business and corporate organizations to arrange and modify contracts in ways that can maximize the relationship between the companies, financial investors and shareholders.

Multinational corporations have also been able to develop and implement policies that eliminate business regulations and expand the business activities that financial organizations and corporations can engage in to earn more profits (Koslowski and Pies). The globalization of the economy and the influence of corporations on legislative decisions have provided a global economic system that benefits the business community and harms the average citizens, for the deregulation laws provide multinational corporations with the ability to engage in risky activities that can yield destructive consequences for average citizens. Thus, the deregulation laws being written by the multinational corporations and globalized financial organizations fail to prevent risky business activities and fail to protect the citizens from being victimized by those activities.

The primary motivation of businesses is to obtain impressive profits, satisfy the shareholders and encourage more investors to support the company. Although the motivation and determination to maximize profits and the increased influence corporations have on forming legislation has enabled the corporations to develop laws that only benefit the business community while harming the majority of the people, many companies choose to be productive forces for the people by demonstrating social corporate responsibility. Social responsibility refers to self-regulating aspects of a business that enable a company to ensure that the business improves the quality of life for society and serves a social benefit while also making profits (Thorpe). It is very important for corporations to demonstrate social responsibility because their beneficial actions can improve the success of the business by solidifying a good reputation for the company, encouraging more people to support the business, and by increasing the number of people in society who are financially capable of spending money on the company’s services.

One method by which corporations can exhibit social responsibility is to actively help enhance the conditions of life for the American people. In the US, many companies invest in programs that would help provide jobs for unemployed citizens, increase the availability of educational resources and alleviate the hunger problem that many families experience. Additionally, many corporations also provide funding to help enhance the recovery of injured veterans, improve accessibility to the justice system and provide assistance for underprivileged children (Thorpe). Making efforts to effectively improve society is important, for regardless of how much profit a corporation makes in the short-term quarterly reports, if the middle class of the US suffers from excessive poverty rates and from a drastic lack of resources, the inability for the middle class to spend money would harm the entire economy and would also cause the large corporations to suffer from profit losses. Thus, although corporations should help improve the lives of the American people for the basic humanitarian reason of helping others, the corporations should also provide help for the people because developing a stronger society in which most people are financially comfortable and able to inject money into the economy would also benefit and increase the profit margins of the companies.

Another strategy that many corporations utilize to demonstrate corporate social responsibility is to help protect or improve the conditions of the environment. A significant problem of large corporations and massive energy companies writing legislation is that they ensure that their companies are not hindered by significant environmental protection regulations that would help preserve the environment but also diminish the profit potential of the companies. However, if dramatic environmental problems are ignored and intensified, the problems can cause the American people to suffer from significant domestic and financial distress, which would prevent people from being able to purchase goods from the corporations. Because helping to protect the environment improves the quality of life for the members of the corporations, the average citizens, and the long-term profits of the business community, many corporations are demonstrating corporate social responsibility by providing beneficial funding to help protect and improve the environment. Environmental projects that some companies support include programs that help to provide communities with clean water, healthy air and flourishing vegetation (Thorpe). Reports indicate that most companies that provide social services are experiencing significant profits and exceptional revenues, and thus corporations are very capable of executing beneficial social services that help improve the quality of society and that do not prevent the companies from enjoying enormous profit margins.

The government is supposed to establish legislative policies that benefit the majority of people, provide essential services for the society, and maximize the opportunities that all citizens possess to achieve success and to enjoy financial stability. However, lobbying groups, campaign financing, rule-setting positions and the globalization of the business industry have all allowed corporations to ascertain a powerful influence over government and to directly establish laws of our society. This has led to the creation of policies that benefit the wealthy corporations, impair the quality of life for the people, and diminish the progress of society. To help ensure that the government is establishing laws that benefit the majority of the people and that maximize the progress of society, the people must elect effective politicians and must support legislation that would limit the corporate influence on our government and encourage corporations to demonstrate social responsibility.

Works Cited

Beder, Sharon. Suiting themselves: how corporations drive the global agenda. London, UK: Earthscan, 2006. Print.

Blumenthal, Paul. "Here's How One Dark Money Group Keeps Its $22 Million Donor Secret." The Huffington Post. N.p., 19 Nov. 2013. Web. 21 Nov. 2013. <http://www.huffingtonpost.com/2013/11/19/dark-money-karl-rove_n_4303739.html>.

Fitzgerald, Alison. "Koch, Exxon Mobil Among Corporations Helping Write State Laws." Bloomberg. N.p., 21 July 2011. Web. 16 Nov. 2013. <http://www.bloomberg.com/news/2011-07-21/koch-exxon-mobil-among-corporations-helping-write-state-laws.html>.

Koslowski, Peter and Pies, Ingo. Corporate citizenship and new governance the political role of corporations. New York: Springer, 2011. Print.

Shah, Anup. "The Rise of Corporations." Global Issues. N.p., 5 Dec. 2001. Web. 18 Nov. 2013. <http://www.globalissues.org/article/234/the-rise-of-corporations>.

"The Growing Power of Lobbyists." The Center on Congress at Indiana University. N.p., 30 Sept. 2011. Web. 20 Nov. 2013. <http://congress.indiana.edu/the-growing-power-lobbyists>.

Thorpe, Devin. "Why CSR? The Benefits Of Corporate Social Responsibility Will Move You To Act." Forbes. N.p., 18 May 2013. Web. 20 Nov. 2013. <http://www.forbes.com/sites/devinthorpe/2013/05/18/why-csr-the-benefits-of-corporate-social-responsibility-will-move-you-to-act/>.