SEC disclosure petition makes half of America insane

The other, much more fun SEC that this post is not about

The other, more fun SEC that this post is not about

Last Thursday, House Republicans introduced a bill that would make it illegal for the SEC to require publicly-held corporations to disclose their political spending. They did so in response to a popular petition asking the SEC to require publicly-held corporations to et cetera etc. At this point, the GOP is by far the most responsive party in American politics. The people issue a petition, and before the relevant government agency can even take it up, the Republicans have drafted a law demanding that it never be satisfied. They cited free speech. Welcome to the extremely ironic world of modern campaign finance.

Proponents of disclosure appeal to the long-standing principle of American securities law that shareholders be given any information they might need to evaluate their own companies. Shareholders are owners, in theory, although in practice they function more like subscribers to a British soccer club. They are not the ones who, for example, decide to give millions of dollars to Crossroads Grassroots Policy Strategies so they can run attack ads against whatever Senate candidate doesn’t like coal.

Shareholders are responsible for that decision, though. As anyone who has tried to put together a green portfolio will tell you, you own the companies in which you buy stock, and what they do is your fault. That’s why contemporary American finance is a toxic moral dilemma for all involved, and I have decided to remain morally pure by keeping all my assets in checking: stockholders are responsible for what their held stock does, but they exert almost no control over the companies they hold.

For example, consider the enormous failure met by shareholder attempts to force political spending disclosure through proxy actions. Earlier in April, the Chamber of Commerce, National Association of Manufacturers and Business Roundtable issued a joint letter to the heads of Fortune 200 companies urging them to resist such actions. In theory, the shareholders own the company, but in practice their relationship with management is often adversarial. For a busy chief executive, those people are the enemy, and you don’t tell the enemy what you’re doing. Consider this explanation from Blair Homes, speaking from deep within the Chamber itself:

The Chamber believes that the funds expended by publicly traded companies for political and trade association engagement are immaterial to the company’s bottom line. [The advocates’] apparent goal is to silence the business community by creating an atmosphere of intimidation under the cover of investor protection.

There are two assumptions there, one of them obviously dishonest and the other maddening. First, the funds expended by publicly traded companies for political engagement almost certainly affect their bottom lines; that’s why they expend them. It’s not because large corporations have strong personal feelings about particular candidates. Second, by warning of an “atmosphere of intimidation,” the Chamber presumes that shareholders will not be happy about whatever disclosed information they learn.

Phil Kerpen of American Commitment makes a similarly depressing assumption when he says that disclosure requirements are “about outing donors and scaring them into not giving to political groups that they’re opposed to.” That is probably what it’s about: shareholders preventing the companies they hold form doing things to which they object. As with campaign finance, Republicans and members of the business community argue that anonymity is a key element of free speech. What they’re really describing, though, is consequence-free speech—the kind of speech that comes at no cost to the speaker, because nobody knows who’s talking.

There is no amendment to the Constitution protecting Americans from being held responsible for what they say. To insist that anonymity is a crucial element of free speech is to fall into the dumb argument, familiar on the internet, that freedom of speech means no one can criticize what you just said. It doesn’t. Speaking critically about others’ free speech is what makes the whole marketplace of ideas work.

In that context, there is an argument to be made that anonymity is inimical to free speech, particularly when the anonymous “speech” being protected is merely the provision of money for others to speak. I cannot argue with speech when I don’t know whom I am talking back to. I can express my disapproval of some anonymous statement, but the exchange of ideas that the First Amendment is designed to protect becomes impossible when I cannot identify my interlocutor.

Just as a shareholder cannot exercise his right to influence the company he partly owns when he doesn’t know what it’s doing, I cannot match my speech against millions of dollars worth of corporate-sponsored advertisements when I don’t know who’s talking. It’s the difference between participating in a public debate and getting heckled from the balcony. Those people have a right to say whatever they want. I cannot see how it serves free speech, though, to make it illegal for me to peer up into the darkness.

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