John Bogle: Investors It’s Time to Stand Up to the Supreme Court

Original source: SimoleonSense.com .

This is a bit old and I confess to being a poor blogger fiduciary..either way it’s worth reading!

Summary (via BW)

The court’s decision to let public companies spend freely on elections simply isn’t fair to shareholders. But there’s a way to push back

Introduction (via BW)

In January the U.S. Supreme Court ruled that laws limiting corporate political contributions were a violation of constitutional free speech principles. “The First Amendment confirms the freedom to think for ourselves,” wrote Justice Anthony M. Kennedy in his 5-4 majority opinion, which is sure to unleash a flood of corporate spending on ads for and against political candidates.

But public companies aren’t people. As Justice John Paul Stevens, writing for the minority, observed, the court committed a grave error in treating corporate speech the same as that of human beings. The notion that the same freedoms should apply when a public company, often with tens of thousands of owners, speaks in matters beyond the scope of its business affairs offends common sense.

We can justifiably suppose that the individuals holding shares in these giant corporations hold a broad spectrum of opinions, and corporate political contributors can hardly honor them all. Past experience also suggests that corporate managers are likely to try to shape government policy in a way that serves their own interests over that of their shareholders. (For example, managers have opposed most attempts to limit executive compensation.)

Common sense and experience also suggest that, given the enormous revenues of today’s giant corporations, these companies will make their political contributions generously. (Disclosure might help allay this generosity somewhat.) The tenet that “nothing seems expensive when you can pay for it with other people’s money” comes to mind.

Excerpts (Via BW)

Such a check on unfettered political contributions is essential now that our corporations are no longer controlled by “persons” (i.e., individual shareholders). Some 70% of the shares of big publicly held corporations are held by “agents”—the institutional investors who manage our mutual funds, pension funds, insurance and trust companies, and endowment funds.
Most institutional money managers today are owned by giant U.S. and global financial conglomerates with their own shareholders. Of America’s 40 largest, 23 are owned by conglomerates, 8 are publicly held, and only 9 remain privately owned. Money managers who share my fears about unlimited corporate contributions to politicians must enter the arena with clean hands. Before they stand up against political contributions by the companies whose shares are held in their portfolios, they must publicly pledge a no-political-contribution policy of their own. This may sound like a tall order, but it’s the only avenue that presents itself for, in effect, overriding the Supreme Court’s unwise decision.

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