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Jon Talton

Analysis and commentary on economic news, trends and issues, with an emphasis on Seattle and the Northwest.

January 21, 2010 at 10:05 AM

Supreme Court’s momentous decision will derail any financial reform

Top of the News: Conservative Supreme Court justices believe in following precedent and narrowly interpreting the Constitution, except when they don’t. Today’s decision on corporate campaign spending is such an example and it will have far-reaching consequences.

The five-justice majority set aside a century of precedents and conveyed essentially full First Amendment speech rights on corporations in ruling that campaign finance limits are unconstitutional. It could unleash up to $1 trillion in corporate money for attack ads in the next election cycle. It also is the culmination of a century of creeping personhood conveyed on corporate entities, beginning with a case involving the Southern Pacific railroad.

Points made in John Paul Stevens’ dissent, are instructive: He said the new ruling is dangerous for democracy and risks having average citizens believe their votes don’t matter against the power of corporations in elections. “The Framers thus took it as a given that corporations could be comprehensively regulated in the service of the public welfare…they had little trouble distinguishing corporations from human beings, and when they constitutionalized the right to free speech in the First Amendment, it was the free speech of individual Americans that they had in mind.”

Stevens again: “The Court’s blinkered and aphoristic approach to the First Amendment may well promote corporate power at the cost of the individual and collective self-expression the Amendment was meant to serve. It will undoubtedly cripple the ability of ordinary citizens, Congress, and the States to adopt even limited measures to protect against corporate domination of the electoral process.”

Corporations — including foreign ones — already spend hundreds of millions of (their shareholders) dollars lobbying Washington in a way that ordinary citizens can’t match. The result has been a policy environment that already tilts to their interests. E.g., the coal and utility industries on climate change. Bottom line: Any thoughts by President Obama or lawmakers of effectively re-regulating the financial giants that brought the world economy to the brink of collapse died today. And much else.

The Back Story: As I reported on Tuesday and yesterday’s jobless report reinforced, Washington’s unemployment situation is now as bad or worse than in the famous 1969-70 SST/747 recession. We’re still doing better than the nation as a whole, which is a measure of the damage done by the great recession.

What’s more sobering is the lack of realistic prospects for the economy to begin creating significant numbers of new jobs for years to come. Today saw a “surprising” jump in claims for new unemployment benefits. Surprising to whom? I guess to the legions of economists and pundits selling fake sunshine to their corporate and media masters.

In 1970 and in 1982, the American economy was the unchallenged leader in the world. Jobs were secure, well-paying, in many cases unionized, providing pensions that weren’t dependent on stock-market gambling. Companies by-and-large were engaged in real productive activity, as opposed to moving money around. We were either a net creditor or running a trade deficit that resulted in world re-investment in the U.S. economy. None of this is true today.

So persistent joblessness remains the biggest drag on the economy, and no real recovery will happen until companies start hiring in a big way. As the Massachusetts senate election showed, this created a volatile political climate, too.

Today’s Econ Haiku:

Vente good news here

If Starbucks is back in stride

Hey, add some sprinkles

Comments | More in Jobs/Unemployment, Macro/Big picture, Politics and the economy


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