Rational Coercion: Citizens United and a Modern Day Prisoner's Dilemma
| Citation | Vol. 27 No. 4 |
| Publication year | 2010 |
Georgia State University Law Review
Article 8
3-13-2012
Rational Coercion: Citizens United and a Modern Day Prisoners Dilemma
Anne Tucker
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Recommended Citation
Tucker, Anne (2010) "Rational Coercion: Citizens United and a Modern Day Prisoner's Dilemma," Georgia State University Law Review: Vol. 27: Iss. 4, Article 8.
Available at: http://digitalarchive.gsu.edu/gsulr/vol27/iss4/8
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RATIONAL COERCION: CITIZENS UNITED AND A MODERN DAY PRISONER'S DILEMMA
Anne Tucker *
I. Introduction
This paper proposes neither a critique nor a review of the 2010 Supreme Court decision in Citizens United v. Federal Election Commission. Rather, this paper acknowledges that the Supreme Court has spoken on the issue of corporate First Amendment rights in the context of independent expenditures and asks the question: What happens next? While there are undoubtedly First Amendment and election law implications from the case, there are also important consequences for corporate law and for citizen shareholders.1 Instead of debating the merits of the case, this article asks if a corporation spends to influence political messages, what is the effect on shareholders? In answering that question, this article describes the "rational coercion" created in the prisoner's dilemma and applies it to the issue of corporate political expenditures in an attempt to identify the effects of the Citizens United decision.
* Anne Tucker is an Assistant Professor at Georgia State University College of Law in Atlanta, Georgia. Professor Tucker would like to express her gratitude to the participants of the Georgia State Law Review Symposium held on November 11, 2010, whose comments and presentations informed this article, as well as to the student editors who hosted a terrific event. Additionally, Eugene Volokh and Charles O'Kelley deserve to be recognized for their contributions in shaping the final version of this article.
1. This article uses the phrase "citizen shareholder" to discuss the questions of corporate political participation raised in Citizens United because the case implicates the participatory rights of citizens as well as their economic interests as shareholders. The phrase was first introduced by Jamie Raskin in a 2003 book review of Voting with Dollars: A New Paradigm for Corporate Finance by Bruce Ackerman and Ian Ayers, and in Jamie Raskin, The Campaign-Finance Crucible: Is Laissez Fair?, 101 Mich. L. Rev. 1532, 1549 (2003) ("What is at stake is not just the rights of 'dissenting shareholders,' for this phrase trivializes the structural transgression. Dissenting or not, citizen-shareholders in democratically chartered corporations have a right not to have their money put to the management's partisan political uses.") (emphasis added). The comprehensive category of shareholders of publically traded companies in the United States certainly includes other groups such as non-citizen shareholders (i.e., those living and working here with a visa or a green card) as well as foreign nationals who neither live nor work in this country.
2. See infra Section III.
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The prisoner's dilemma demonstrates the pressure on corporations to participate in politics via their checkbooks. That pressure existed before Citizens United (i.e., political action committees and affiliated non-profit foundations, and charitable contributions), but was exacerbated with the expansion of corporate political speech through independent expenditures. Increased corporate political spending impacts both the participatory rights and the economic interests of citizen shareholders. The individually rational choice of corporations to make political expenditures creates irrational results, which will impact the price and efficiency of political messages as well as promote the inefficient allocation of corporate resources. An additional by-product of increased corporate political speech is the threat of shareholder-funded speech that is politically objectionable to some shareholders. Future debates of Citizens United must address these consequences of the decision. This article attempts to address both questions—the economic and the political—in part, by applying the prisoner's dilemma to analyze the choice to be made by each corporation and the likely consequence. The intuitive outcome post-Citizens United is that more corporations will spend via independent expenditures. By utilizing the prisoner's dilemma, this paper suggests a framework to understand why.
As more corporations enter the political arena through expenditures, the actual cost of influence increases as does the overall costs of campaigns. Viewing the escalation of corporate political expenditures through the logical lens of simple game theory techniques like the classic prisoner's dilemma suggests that the greater dedication of corporate resources to political communications will not improve the position of citizen shareholders, and may even harm shareholders by promoting an inefficient allocation of corporate resources. The conclusion is that the individually rational choice of corporations to make political expenditures leads to irrational results where our democratic structure may be harmed, where corporate resources are allocated to politics instead of production, and where shareholder wealth is comprised.
3. See supra note 2.
2011]
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A. The Issue of Corporate Political Expenditures
The Supreme Court, in Citizens United, overturned restrictions on corporate independent campaign expenditures that were codified in the Bi-Partisan Campaign Reform Act in 2002.4 After a rare re-
argument and revived facial challenge to 2 U.S.C. § 441b, the Court—in a 5-4 opinion—overturned § 441b's restriction on corporate independent expenditures and overruled Austin v. Michigan
Chamber of Commerce, a prior decision upholding such restrictions. In overturning the restrictions, the Court in Citizens United argued that independent expenditures—any expenditure made by
corporations and labor unions but which are not coordinated with a
4. 2 U.S.C. §§ 434(f)(3)(A)(i), 441(b)(2) (2006). "Section 441b makes it a felony for all corporations—including nonprofit advocacy corporations—either to expressly advocate the election or defeat of candidates or to broadcast electioneering communications within 30 days of a primary election and 60 days of a general election." Citizens United v. Fed. Election Comm'n, 130 S. Ct. 876, 897
(2010).
5. Citizens United, 130 S. Ct. at 889-96; see also Adam Liptak, High Court Poised to Rewrite Spending Rules, N.Y. Times, June 30, 2009, at A12, available at http://www.nytimes.com/2009/06/30/us/politics/30movie.html. Justice Stevens' dissent highlights that Citizens United expressly abandoned its facial challenge in its motion for summary judgment at the District Court. Citizens United, 130 S.Ct. at 931-32 (Stevens, J., dissenting); Plaintiff's Memorandum Opposing FEC's Summary Judgment Motion & Replying on Its Own Summary Judgment Motion, Citizens United v. Fed. Election Comm'n, 530 F. Supp. 2d 274 (D.D.C. 2008) (No. 07-2240), 2008 WL
2675855.
6. Austin v. Mich. Chamber of Commerce, 494 U.S. 652 (1990). Citizens United also overruled parts ofMcConnell v. Fed. Election Comm 'n, 540 U.S. 93, 257-58 (2003); Citizens United, 130 S. Ct. at
913.
7. The Federal Election Commission ("FEC") utilizes a three-prong test to determine whether an expenditure is coordinated by examining the payment source, the content of communication, and the conduct of the communication's funder and creator. Federal Election Commission, Coordinated Communications and Independent Expenditures Brochures, Feb. 2011, available at http://www.fec.gov/pages/brochures/indexp.shtml#CC. Any communication paid for in whole or part by a party or individual other than the candidate or the campaign satisfies the payment prong. Id. To establish coordinated content, the FEC evaluates whether the communication is (1) express advocacy for the election or defeat of the candidate, (2) an electioneering communication, (3) contains campaign materials or images, or (4) clearly identifies a federal candidate and is distributed within the voting jurisdiction before a general election or primary. Id. Any one of the five following conditions satisfies the coordinated conduct prong: (1) the communication was made at the request or suggestion of the candidate or committee, (2) the candidate or committee were materially involved in the creation of the communication, (3) the communication was created after a substantial conversation with the candidate or the committee, (4) the communication was created by a vendor working with the candidate and that vendor shared information regarding the campaign's needs or messages, or (5) the creator or funder of the communication was a former employee or independent contractor for the candidate or the committee. Id. An independent expenditure on the other hand is an uncoordinated communication that expressly advocates for the defeat or election of a federal candidate that is clearly identified. Id. (citing 11 C.F.R. § 100.16(a) (2010)).
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candidate or the candidate's committee or party—do not raise corruption concerns, the only recognized compelling justification for restricting political speech under the current First Amendment jurisprudence.8
Before the 2010 decision in Citizens United, individuals were limited to $2,000 direct candidate contributions and were allowed to make...
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