A Wall Between Corporation and State

Madison knew that we shouldn’t mix religion and government just to protect ourselves against the rise of theocrats, but also to preserve religion itself in its purest form, free from political meddling. Both entities are better off when they’re separated entirely from each other.

This same maxim holds true when it comes to Corporation and State. When mixed, both become corrupted. Our Founding Fathers knew this all too well, as they rebelled not just against a monarchy, but also against the world’s largest transnational corporation: The East India Company.

Just before the American Revolution, virtually all of the members of the British Parliament were stockholders in the East India Company, a tenth had made their fortunes in the company, and the company generously funded parliamentary elections. Sound familiar?

With Parliament completely captured, the East India Company was able to get what was then the biggest corporate tax cut in the history of the world, allowing them to undercut independent tea distributors in the colonies. Colonists responded by dressing up like Indians, boarding ships, and throwing a million dollars worth of tea into Boston’s Harbor, triggering the American Revolutionary War.

That might explain why our Founding Fathers, after independence, specifically chose not to give corporations any rights in our Constitution or even mention the word “corporation” at all in the entire document. It also explains why Thomas Jefferson was so wary of corporate power. He tried, but failed, to include freedom from monopolies in the Bill of Rights and wrote extensively of the dangers of an “aristocracy” rising up to take down our democratic government.

But corporate power in America is relentless. Within 100 years of American independence, morally-bankrupt corporate slave masters in the South and rich banksters and industrialists in the North tore our nation apart into a Civil War.

Lincoln was forced into an unholy alliance with those corporations in the North giving them enormous subsidies to build railroads across the nation to help the war effort. And once the war was over, the railroads were controlled by just a few corporations that were largely owned by an even smaller number of families. The Vanderbilts, and the Goulds, and other railroad elites rose up with their fortunes and corrupted our government. The Ulysses Grant administration is widely regarded as one of the most corrupt in our nation’s history, and with corporate power and our government in lock-step, the Robber Baron Era flourished.

Alarmed by this, in his 1888 State of the Union address, President Grover Cleveland – the only Democrat to serve as President during the Gilded Age – described the grim situation in America saying:

As we view the achievements of aggregated capital, we discover the existence of trusts, combinations, and monopolies, while the citizen is struggling far in the rear or is trampled to death beneath an iron heel. Corporations, which should be the carefully restrained creatures of the law and the servants of the people, are fast becoming the people’s masters.

But by the turn of the 20th Century, working people were fighting back. Labor movements and grassroots populism were remembering Jefferson’s warning about corporate power. As President Teddy Roosevelt said in 1912, “To befoul the unholy alliance between corrupt business and corrupt politics is the first task of the statesmanship of the day.”

Roosevelt finally constructed a wall separating corporation and state. It was known as the Tillman Act, passed in 1907, and it was the very first law ever limiting corporate money in our elections. As the law states, “It shall be unlawful for any national bank, or any corporation organized by authority of any laws of Congress, to make a money contribution in connection with any election to any political office.” Those corporations that broke this law were subject to big fines and executives faced hard prison time.

Roosevelt was keenly aware of the nation’s fouled history of corporate and state relations. Corporate-corrupted government had lit the fuse to war twice, and ruled during an era of unprecedented abuse against working people in America. With the Tillman Act, he hoped a complete separation between the two would defend against the same mistakes of the past. Unfortunately, he was wrong.

A decade later, Republican Warren Harding won the presidency on a platform that literally promised, “less government in business, more business in government.”

In his book Only Yesterday, historian Frederick Lew Allen describes the scene in Washington, DC with Harding in the White House, “Blowsy gentlemen with cigars stuck in their cheeks and rolls of very useful hundred-dollar bills in their pockets began to infest the Washington hotels. The word ran about that you could do business with the government now——if you only fixed things up with the right man.”

Had he not died two years into his administration, Harding would have likely been kicked out of office by a number of scandals, most notably the Tea Pot Dome scandal, which came to light after his death.

Business was corrupted, too. Having gotten what they wanted in fewer regulations and lower taxes, corporations went on a speculative frenzy. The 1920’s “roared,” creating massive real-estate and stock market bubbles that eventually burst in 1929, triggering the Republican Great Depression and adding to the rap sheet of the consequences of the unholy alliance between corporation and state.

And today, that rap sheet is even longer.

In 2010, with its Citizens United decision, the Supreme Court overturned that wall separating corporation and state known as the Tillman Act. For the first time in over a century, corporations could spend unlimited money influencing our elections and government. The Robber Barons, this time under names like Koch and Adelson, returned with their corporate war chests overflowing with political blood money.

Americans today are well aware of corporate money’s corrosive impact on our government. There’s the lobbying, the revolving door, the crony capitalism, the SuperPACs, the dark money groups, the undeniable slant of all legislation favoring the billionaire class over the working class.

But fewer Americans are aware of the similar corrupting influence back on business itself. Remember, Madison advocated for a separation of church and state because he knew both stood to be corrupted by the other.

If there’s one thing the corporate elite who gave hundreds of millions of dollars to Karl Rove to buy the election should have learned from last Tuesday, it’s that they would be better off just focusing on their own damn business.

Coal baron Robert Murray recently announced he’s laying off 163 of his employees because, he says, President Obama was re-elected. He claims that due to an Obama second term his company must, “go into survival mode.”

Yet his company wasn’t in trouble just weeks before the election when Robert Murray shelled out $100,000 in campaign contributions to Karl Rove’s SuperPAC. And Murray Energy spent another $3 million on lobbying and other political contributions over the last year. After all those failed tries to buy seats for Republican politicians, Robert Murray claims his company just can’t afford to keep workers on the payroll anymore. But what if he had all those political contributions back? He could easily keep those people employed.

And there’s Applebee’s franchisee Zane Tankel, too, who gave thousands to Republican politicians this election cycle and is now promising to lay off workers because he doesn’t want to comply with the Obamacare mandate of providing employees health insurance.

This election alone, with the wall of the Tillman Act in rubble, outside groups financed mostly by corporate money spent over a billion dollars trying to defeat President Obama and progressives. On top of that, the U.S. Chamber of Commerce opened up its coffers this year and spent an additional $95 million lobbying our government. In 2009 and 2010 the Chamber spent roughly $150 million each year.

This flood of corporate money in our politics, whether through lobbying or electioneering, happens every single year in America, corrupting our democratic institutions – but also corrupting our private sector economy.

How many more millions of Americans would be working today if, rather than investing a billion dollars in Mitt Romney, the corporate elite had invested a billion dollars in research and development, new factories, new workers?

Rather than spending one hundred million dollars lobbying this year, what if the corporate elite used that money to give their workers health insurance, pensions, better wages?

Sure, by unwinding their tentacles around Washington, DC the corporate elite might lose some of their own individual fortunes. They might have to pay a little more in taxes and subsidies for shipping jobs overseas might disappear. But in the long run, with a healthier, more productive, and more satisfied workforce, their businesses would grow and flourish. And so, too, would their own wealth.

It’s time to re-build that wall separating Corporation and State, for which Teddy Roosevelt laid the cornerstone more than 100 years ago.