Can Government Compel Factual Speech?

One of my all-time favorite Supreme Court decisions is West Virginia Board of Education vs. Barnette. That 1943 case was brought by Jehovah’s Witness families whose children had been punished by their public school for a refusal to salute the flag–a refusal based upon their religion, which forbids such a salute as idolatry. Despite the religious basis of their refusal, the case was decided on free speech grounds, with Justice Robert Jackson penning words that would would be repeatedly quoted.

The very purpose of a Bill of Rights was to withdraw certain subjects from the vicissitudes of political controversy, to place them beyond the reach of majorities and officials and to establish them as legal principles to be applied by the courts. One’s right to life, liberty, and property, to free speech, a free press, freedom of worship and assembly, and other fundamental rights may not be submitted to vote; they depend on the outcome of no elections. . . . We set up government by consent of the governed, and the Bill of Rights denies those in power any legal opportunity to coerce that consent. Authority here is to be controlled by public opinion, not public opinion by authority. .

If there is any fixed star in our constitutional constellation, it is that no official, high or petty, can prescribe what shall be orthodox in politics, nationalism, religion, or other matters of opinion or force citizens to confess by word or act their faith therein. If there are any circumstances which permit an exception, they do not now occur to us.

The case established the principle that freedom of speech includes freedom from government-compelled speech. Now,  corporations opposed to disclosures mandated by agencies of government, are asserting that principle in order to avoid making required disclosures.

These companies are challenging regulations that require them to disclose emissions or inform the public of other data relevant to consumer and public health protections. They are claiming these regulations are unconstitutional–that they violate the compelled speech doctrine, which they assert protects them from government mandates forcing citizens to say something they disagree with.

Experts say the large corporations using this strategy are undermining efforts to regulate corporate behavior. They say these arguments limit states’ ability to act on matters not covered by federal law — and threaten everything from consumer warnings on toxic products to nutrition labels for restaurant food.

This argument is currently being used to challenge California’s emissions disclosure law, which requires companies doing business in the state to disclose how much pollution they create throughout their supply chain. Challengers argue that such laws unfairly compel them to engage in “controversial speech” — and argue that climate change is still controversial.

Right-wing groups have weaponized this “compelled speech” argument before, using it to defend organizations that refuse to give their employees adequate reproductive health care benefits and support unlicensed pregnancy centers that intentionally mislead their clients. The argument has impeded the government’s ability to investigate financial wrongdoing. Foreign kleptocrats and domestic companies have allegedly exploited this lack of transparency to launder money through real estate investments and shell companies.

Corporations are employing the argument in a wide variety of situations– from concealing the source of online political advertisements, to deterring states from addressing climate change. These efforts are being spearheaded by trade groups intent upon reducing or evading regulation, and the approach includes social media platforms.

A pending decision in the U.S. Supreme Court involving the strategy could decide the future of all social media platforms.

An advocacy group funded by Meta, Google, X (formerly Twitter), and other tech companies challenged a number of laws in Texas and Florida that would regulate how large social media companies control content posted on their sites. The companies argue that choosing the type of content that appears on their platforms is an editorial decision, and therefore protected by the First Amendment.

An amicus brief filed by the Knight First Amendment Institute at Columbia University, an educational organization that researches and promotes freedom of speech, points out that accepting the social media platforms’ argument would make it extremely difficult, if not impossible, for governments to govern user privacy, promote competition, and ensure smooth information exchange.

If the current Supreme Court majority included Justices who shared Robert Jackson’s intellect and ethical probity, rather than corrupt ideologues like Alito and Thomas, we could anticipate issuance of a decision carefully analyzing the difference between compelling the endorsement of beliefs and opinions, and requiring the disclosure of facts –the difference between respecting the integrity of conscience and facilitating the misleading of consumers.

The law often requires drawing intellectually-defensible lines–something the current Court majority seems incapable of understanding–or doing.

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Stakeholders Versus Shareholders

Several people who regularly comment on this blog are extremely critical of capitalism. That’s understandable, given the distorted version currently practiced in the U.S., but I would caution that broad-brush diatribes against a market economy and calls to abolish the entire system are misplaced.

The culprits that have led to what we actually have–a “system” more accurately described as “corporatism” or “crony capitalism” are twofold: a lack of understanding of  where markets work and where they don’t–and public policies based both on that misunderstanding and on the outsized influence of monied interests.

A good deal has been written about the lax enforcement of anti-trust laws, and the concentration of economic power, but there has been less attention paid to structural problems that provide perverse incentives.

Earlier this month, Elizabeth Warren introduced a bill intended to address those problems. Titled The Accountable Capitalism Act, Warren’s plan “starts from the premise that corporations that claim the legal rights of personhood should be legally required to accept the moral obligations of personhood.” Warren has described herself as a “huge” proponent of capitalism, whose goal is to make the system work properly for all stakeholders.

And “stakeholder” is the operative word.

Shareholder primacy—the belief that everything a corporation does must be for the benefit of shareholders (who should extract as much wealth from the company as possible) and no one else—is the dominant legal framework operating within firms today…. Ignoring the contributions of all stakeholders to corporate success, the shareholder primacy model has driven the deep-rooted economic inequality that we live with in America today.

The linked discussion from the Roosevelt Institute traces the origin of this focus on shareholders to the detriment of others who have important interests in the operation and health of the corporation.

Part of the problem is that in the U.S., states charter corporations. As any corporate lawyer will confirm, larger enterprises “shop” for states in which to incorporate by looking to see which states have laws that are most beneficial (i.e., least restrictive). States woo new businesses, and so corporate law has become a race to the bottom (which is Delaware).

Warren’s bill would require large corporations–those with revenues over one billion– to be chartered by the federal government.

Under current law, corporate boards are elected by, and represent, shareholders. The consequences are predictable:

Board members who want to hold onto their seats are going to do what they can to please short-term oriented shareholders. And chief executives are now largely compensated in ways that are tied to the price of shares, so they have an additional incentive to steer the board towards decisions that push up short-term share prices. The existing shareholder primacy model means that boards focus too much on increasing their share price. That’s why Goldman Sachs estimated that American corporations are on track to spend $1 trillion dollars in 2018 on stock buybacks,essentially propping up the entire stock market by repurchasing their own stock.

Stakeholder governance would recognize that many different groups contribute to a corporation’s success. Employees, customers, even the public, have a stake in that success along with the shareholders, and they all should play some role in the corporation’s decision-making, as they do in a number of other countries.

This means that employees have real representation on corporate boards, so that decision-making is shared among stakeholders, instead of shareholders electing all board members. Accountability to stakeholders also means that the board has to consider all of the company’s stakeholders when making decisions, including customers, suppliers, and the broader public.

The focus on shareholder returns to the exclusion of all else hasn’t always been a part of corporate behavior, as Vox points out. That single-minded focus has come to mean that

for executives to set aside shareholder profits in pursuit of some other goal like environmental protection, racial justice, community stability, or simple common decency would be a form of theft. If reformulating your product to be more addictive or less healthy increases sales, then it’s not only permissible but actually required to do so. If closing a profitable plant and outsourcing the work to a low-wage country could make your company even more profitable, then it’s the right thing to do.

There is nothing about market competition that requires government to allow rapacious business behaviors. For that matter, markets only work properly when government works properly– insuring a level playing field and requiring obedience to laws and regulations.

When government fails to work, capitalism devolves into what we see around us.

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