CRONY CAPITALISM = MONOPOLY POWER

The vote in Great Britain to exit from the European Union and the support that Bernie Sanders and Donald Trump received in the U.S. presidential primaries all reflect a strong belief among voters that corporations and the economic elites have rigged our economies and governments to work in their favor. Workers and average citizens struggle to make ends meet while the rich get much richer. Corporate welfare is maintained while the safety net for individuals is shredded. “Trade” treaties expand corporate power while workers see their jobs shipped overseas.

These are examples of how our economy and government regulation of it are rigged in favor of large corporations and wealthy individuals. Close relationships between corporate executives and government officials (both elected and appointed) result in policies that favor large corporations and wealthy individuals. This is “crony capitalism.” There is self-dealing and collusion between the private sector and the public sector that sometimes rises to the level of outright conspiracy and corruption.

In 1964, just 29% of U.S. voters thought government was “run by a few big interests looking out for themselves,” according to the American National Election Studies survey. Today, almost 80% of Americans think so.

A study published in the fall of 2014 by Princeton professor Martin Gilens and Northwestern professor Benjamin Page confirms the reality of this sentiment. They examined 1,799 public policy issues to determine the relative influence on them of economic elites, business groups, and average citizens. They found that the influence of the economic elites and business groups almost entirely overwhelmed that of average American citizens.

Their conclusion was that “The preferences of average Americans appear to have only a minuscule, … non-significant impact upon public policy.” On the other hand, wealthy individuals and big business strongly influence policy. [1]

There are many, many examples of how large corporations and the wealthy influence public policies to their advantage. One is that they have gotten our government officials to essentially stop enforcing anti-monopoly (aka anti-trust) laws. As a result, corporations have gotten bigger and bigger and have much more power, both market power (including over prices) and political power (including over regulations, tax laws, and trade).

Therefore, our democracy looks more and more like a plutocracy, oligarchy, or corporatocracy as the political power and influence of the economic elites grows. Our founders’ vision for our democratic republic was quite different. They wanted economic as well as political power dispersed as widely as possible. Jefferson and Madison, in particular, greatly distrusted concentrated power, both private and public. Furthermore, they envisioned a government that structured markets to promote the common good, not private interests.

The fight against companies exercising monopoly power has a long history in America. The Boston Tea Party was a rebellion against the effective monopoly on tea granted to the British East India Company by the British King. The Populist Movement of the late 1800s and early 1900s revived this anti-monopoly sentiment. It fought against the efforts of large corporations to monopolize commerce and natural resources through the power of concentrated wealth (i.e., capital). President Teddy Roosevelt and later President Woodrow Wilson (guided by future Supreme Court Justice Louis Brandeis) implemented strong anti-trust, anti-monopoly laws. Preventing the development of monopolies was, for them, less about achieving economic efficiency and low prices for consumers than it was about protecting political equality and democratic governance. [2]

The goals of anti-trust laws and their enforcement were both to limit corporations’ political power and to ensure that they were small enough that the competition of the market place would provide effective control of corporate behavior. Thus, the need for government intervention in the economy, which can be complicated and have unintended consequences, could be avoided.

Strong enforcement of anti-trust laws continued into the 1960s. In 1962, for example, the merger of two shoe companies was blocked by anti-trust laws because it would have given a single company 2% of the national market. This is in stark contrast to today’s economy where a few large corporations control many national markets and where effective monopolies exist in some local markets.

By the late 1970s, policy makers from both parties supported greatly relaxed enforcement of anti-trust laws under a revised set of economic goals based on a theory of efficiency through deregulation, free markets, and economies of scale. This has allowed unprecedented corporate growth and with it the growth of corporate power in our markets and political system.

In my next post, I’ll share some examples of how monopolistic corporate power affects some of the goods and services we all use, such as Internet service, banking, air travel, food, and health insurance.

[1] Reich, R., 6/19/16, “A Big Idea for Hillary,” (http://robertreich.org/post/146169929945)

[2] Lynn, B.C., & Longman, P., Summer 2016, “Populism with a brain,” Washington Monthly (http://washingtonmonthly.com/magazine/junejulyaug-2016/populism-with-a-brain/)

SOLUTIONS TO THE PROBLEMS ELECTIONS CREATE FOR JUDGES

State court judges are facing unprecedented challenges to their ability to deliver fair, impartial justice due to growing campaign spending, including the rapid increase in unlimited spending by outside groups and individuals.

There are two policy solutions to this problem:

Appoint judges using a good, non-partisan process with reasonably long or lifetime terms (with a mandatory retirement provision); or
Establish partial public financing and effective regulation of judges’ elections including:
- Public financing in exchange for limits on spending and the size of contributions;
- Regulation and disclosure of outside, truly independent spending; and
- Strong conflict of interest and recusal standards for judges.

In 2009, Wisconsin passed the Impartial Justice bill, creating a partial public financing system for judicial elections. It provided up to $400,000 of public financing for supreme court candidates. To qualify, judicial candidates had to raise $5,000 to $15,000 in donations ranging from $5 to $100. They then received $100,000 for the primary election and $300,000 for the general election. [1]

If any opponent declined public financing and outspent them, candidates using the public financing system were eligible for up to $300,000 of additional public funding for the primary and $900,000 more for the general election. This additional funding would allow them to be competitive with the candidate opting out of the public financing system who, therefore, could spend unlimited amounts of money on the campaign. The law also reduced contribution limits for candidates who opted out of public financing from $10,000 to $1,000.

Unfortunately, the Wisconsin public financing system was defunded in 2011 as part of an intense, partisan battle over election laws, including voter ID requirements.

North Carolina passed a model campaign financing law for judicial elections in 2002. It provided candidates for the supreme court and the court of appeals with the option of partial public financing if they agreed to strict fundraising and spending limits. Candidates who did not participate in the public financing were limited to $1,000 contributions from individuals. Contributions from corporations were prohibited. Unfortunately, this campaign finance law was repealed recently in a partisan battle over voting rights and voter ID laws.

New Mexico in 2007 and West Virginia in 2013 created voluntary systems of partial public financing for judicial candidates. Under these public financing systems, candidates agree to limit their spending and to take limited funds from sources other than the public financing system.

A good appointment process is probably the best solution for avoiding the corrupting effects of large contributions and expensive campaigns. However, this may not be politically feasible in some states. Voters and wealthy campaign supporters may oppose moving from elections to appointments because of their loss of influence and power.

For elected judges, as for other elected officials, a system for financing campaigns is needed that allows candidates to effectively communicate with voters while avoiding the corrupting effects of large contributions and expensive campaigns. Given the U.S. Supreme Court’s rulings on campaign spending and free speech, currently the only solution is a public financing system. In such a system, a candidate agrees to limit spending and the size of contributions in exchange for partial public funding of campaign expenses.

A fair and impartial justice system is the bedrock of our democracy. If judges are elected, they need to serve the greater good of the public and not be beholden to wealthy special interests. Therefore, nowhere is it more important than in judicial elections to have partial public financing systems that limit spending and the size of contributions.

[1] National Center for State Courts, 2016, “Judicial Campaigns and Elections” (http://www.judicialselection.us/)

HOW JUDICIAL ELECTIONS AFFECT CRIMINAL SENTENCING

My previous post outlined the challenges to the impartiality and integrity of state judges due to the growing spending on judicial elections. It highlighted civil cases where campaign money has the potential to influence (or appear to influence) judges’ decisions and to create conflicts of interest.

In criminal cases, there is statistical evidence that the pressures of election campaigns and negative ads affect judicial decision-making. When facing imminent re-election, judges are more likely to impose longer sentences, affirm death sentences, and change jury sentences of life in prison to death sentences.

As spending has grown in judicial elections, the use of television advertising has increased dramatically. A study of 15 years of television ads in state supreme court elections found that increasingly the ads focused on the candidate’s handling of criminal cases. In 2013-14, a record 56% of ads either attacked candidates for being “soft on crime” or touted them as being “tough on crime.” These types of ads tend to focus voters’ attention on criminal cases, often in a misleading, overly simplified, and emotional way. [1] The need for judges to be viewed as “tough on crime” to win an election has contributed to the problems of over-incarceration and disproportionately harsh sentencing of Blacks and Hispanics.

The study also compared judicial decisions of elected and non-elected (i.e., appointed) judges. And it looked at judges’ decisions in terms of their proximity to an election. It found that:

Appointed judges reversed death sentences roughly twice as often (26% of the time) as judges who ran in an election. Judges with contested elections reversed death sentences only 11% of the time and judges with uncontested elections reversed them 15% of the time.
In Alabama, judges were more likely to override jury sentences of life in prison and instead impose a death sentence in election years.
In Pennsylvania and Washington, judges sentenced those convicted of serious felonies to longer sentences when they were closer to an election.
The greater the use of TV ads in an election, the less likely judges were to rule in favor of a criminal defendant.

In summary, judges are facing unprecedented challenges to their ability to deliver fair, impartial criminal justice that is free from the influence of elections and campaign ads. The rapid increase in spending on judicial campaigns, including the unlimited spending by outside groups and individuals, has exacerbated the challenges to judicial fairness and integrity.

[1] Berry, K., 12/2/15, “How judicial elections impact criminal cases,” Brennan Center for Justice, New York University School of Law (https://www.brennancenter.org/publication/how-judicial-elections-impact-criminal-cases)

IS JUSTICE FOR SALE IN STATE COURTS?

There is widespread recognition that a fair and impartial judiciary is essential to the maintenance of public trust and confidence in our court system and our democracy. In 39 states, at least some judges are elected; in aggregate, 87% of state judges nationwide run in elections. (In some states and for the federal judiciary, judges are appointed and not elected.)

The impartiality and integrity of our state courts is critical because they handle the vast majority of criminal and civil cases in the U.S. For example, 94% of felony convictions occur in state courts, including 99% of rape cases and 98% of murder cases.

The rapidly growing spending on judicial campaigns brings with it the potential for money to influence (or appear to influence) judges’ decisions and to create conflicts of interest. Elected judges are routinely raising campaign funds from and benefiting from spending by those who will appear before them in court as lawyers or parties in a case.

Between 2000 and 2009, over $200 million was spent on elections for state supreme court justices in 22 states. This was more than double the $83 million spent in the previous decade. This growth in spending appears to be accelerating and has been exacerbated by the U.S. Supreme Court’s Citizens United and related decisions, which allow unlimited contributions to and spending by supposedly independent groups, including corporations.

As with other elected offices, spending by outside, supposedly independent groups is growing in judicial races. Furthermore, the frequency of very large contributions and high levels of spending by a small number of wealthy individuals and organizations is increasing. For example, in the 29 most expensive judicial elections in the decade from 2000 to 2009, the top five spenders averaged $473,000 while all others averaged $850. [1] As with other races, much of the outside spending is on negative advertising. Negative advertising tends to undermine trust in elected officials and to reduce voter turnout. Outside spending also fuels an arms race with special interests spending more and more to out-spend competing interests.

As a result, there is the appearance, if not the actuality, that campaign money is influencing elected judges’ actions. As retired U.S. Supreme Court Justice Sandra Day O’Connor said, “In too many states, judicial elections are becoming political prize fights where partisans and special interests seek to install judges who will answer to them instead of the law and the Constitution.” [2] For example, in Alabama, the primary sources of campaign funds for supreme court candidates have been businesses and trial lawyers as they battle each other over tort reform. In 2006, candidates for the chief justice position raised $8.2 million. (Tort reform refers to changes in the laws governing the ability of victims to get court-ordered compensation for damages or personal injury.)

My previous post highlighted a case before the Wisconsin Supreme Court where a 4 to 2 decision found that Governor Walker and his campaign had not engaged in illegal coordination with two supposedly independent business groups that spent millions of dollars supporting his campaign. Two justices, who participated and voted with the majority, had been asked to recuse themselves because the two groups whose support of Walker was at issue had also spent millions of dollars on their campaigns. They refused to recuse themselves and this case is now being appealed to the U.S. Supreme Court.

West Virginia is another state where business interests are spending millions of dollars on judges’ elections and where a state supreme court justice refused to recuse himself in a case where he had a conflict of interest. The case is Caperton vs. Massey where a jury verdict that had ordered Massey Energy Co. to pay $50 million was being appealed. Massey’s CEO, Don Blankenship, knowing the case was going to the court, spent $3 million supporting the election of Justice Brent Benjamin in 2004. This was over 60% of the total spending on Benjamin’s campaign. After he won the election, he was one of the majority votes in a 3 to 2 decision that overturned the $50 million award against Massey. He refused to recuse himself. This was appealed to the U.S. Supreme Court and it ruled in June, 2009, that Justice Benjamin had to recuse himself because of the “serious risk of actual bias.” [3]

In May 2016, Justice Benjamin was up for re-election. Outside groups spent $3 million in the election. The biggest spender, at $2 million, was the Washington, D.C., based Republican State Leadership Committee, despite the fact that the election was supposedly non-partisan. It spent its money in support of the eventual winner, Beth Walker, who won with 39.5% of the vote in a five-person election. In addition, various outside business groups spent almost $500,000 supporting her. This $2.5 million in outside spending was many times the $200,000 she raised for her campaign and still many times what she may have spent including $500,000 in loans from her husband. [4]

In summary, judges are facing unprecedented challenges to their ability to deliver fair, impartial justice that is free from the influence of special interests and partisan pressures. A major driver of the threat to judicial integrity is growing campaign spending, including the rapid increase in unlimited spending by outside groups and individuals.

My next post will take a look at the effects of judicial elections on criminal cases. After that, I will present some policy solutions to the problem of elections and campaign financing that can undermine a fair and impartial judiciary.

[1] Sample, J., Skaggs, A., Blitzer, J., & Casey, L., 2010, “The new politics of judicial elections 2000-2009,” Justice at Stake (http://www.justiceatstake.org/media/cms/JASNPJEDecadeONLINE_8E7FD3FEB83E3.pdf)

[2] Justice at Stake, 2016, “Money & Elections,” Justice at Stake (http://www.justiceatstake.org/issues/state_court_issues/money-and-elections/)

[3] Brennan Center for Justice, 6/8/09, “Supreme Court reverses decision in Caperton vs. Massey,” Brennan Center for Justice, New York University School of Law (https://www.brennancenter.org/legal-work/caperton-v-massey)

[4] Brennan Center for Justice, 5/6/16, “Outside spending in West Virginia Supreme Court race nears $3 million,” Brennan Center for Justice, New York University School of Law (https://www.brennancenter.org/press-release/outside-spending-west-virginia-supreme-court-race-nears-3-million)