Frankensteins and Freeloaders

Citizens United enunciated a holding that takes the corporation's status as a person to its logical end, giving it the same First Amendment rights that humans have. While the logic is satisfyingly simple, elegant even, I believe it is fundamentally wrong.

Besides the fact that corporations don't feel, a portion of Stevens' argument that I think isn't given enough attention, I think the best argument against it is as follows:

Through economies of scale, the number of people adversely affected by an unfavorable (from the consumer's perspective) law or political outcome sought by a corporate entity through lobbying or political expenditures is great. That is, the cost of the outcome (which translates as the profit for the corporation) is spread across many people. The number of people adversely affected is so great that it makes economic sense for the corporation to spend money (a lot of money) on the outcome they desire. And because the cost of such an outcome is borne by so many, each individual is really not having to pay that much if they just let it happen. In fact, they pay less than they would if they tried to fight it. Freeloaders exacerbate the costs borne by the few who are silly enough try to fight it.

Consider the following. Say corporation X spends $1,000,000 on a lobbying campaign to get a law passed on the Hill. That corporation has determined that it makes economic sense because they will bring in or save $2,000,000 off of the effects of the legislation (making $1,000,000). Corporation X is a national corporation, with 10,000,000 customers. The legislation spreads the cost at $.20 per customer of the corporation. Of course, there are no incentives for individuals to try to stop this law. They just pay the 20 cents. Rational apathy. Moreover, if anyone wanted to, the fact that so many are unwilling to fight it adds additional costs to the fighters...the freeloader problem.

Now perhaps the overall value of Corporation X to society outweighs this 20 cent cost, but there is something fishy about all of this. In the aggregate, does this cost and all the other costs we acquiesce to add up to a significant number? Probably. A more interesting question to me is what the aggregate effect of such acquiescence costs us in terms of human dignity. Perhaps it's still outweighed by the benefits that the corporations add to our lives. I don't know. On an intuitive level, it seems we are giving corporations more life than they deserve. We created them. They are supposed to serve society. And, for the most part, I think they do. (And I plan to be a corporate lawyer.)

But I am not under any illusion that there is not a real danger that we are creating Modern Prometheuses.

Facts don't exist without stories

Wittgenstein's Duck Rabbit

"Words are not defined by reference to the objects they designate, nor by the mental representations one might associate with them, but by how they are used."

Facts don't exist without stories. A fact is a phenomenon differentiated from other things by the story attached to it, by what we say it is. That is, we give phenomena meaning by giving them stories.


The lawyer's realm of expertise--where the lawyer adds value to people's lives-- is in crafting stories for the patterns of phenomena before them that are cognizable by substantive legal principles. A lawyer's zeal is most beautifully expressed in telling stories that place the facts before them in categories that interact to require a logical end in favor of their client.

Consider the following. Imagine a government lending institution that sells bond-like certificates of participation on the capital markets to investors, and then channels that money to an overseas entity. Imagine further that the government lending institution guarantees the repayment of the principal and interest to the holders of the certificates. Imagine further that the government entity's guarantee is risk-less, that is, unless Jesus rides in on thunder and lightning and destroys this world before the maturity date of the certificates, their holders will be repaid. Imagine further that the country of that overseas entity requires that a tax be paid in order to get a stamp on the documentation of a loan from foreign individuals for the documents to be admissible in court in the event of an enforcement scenario. Imagine further that there is a bi-lateral investment treaty between the government of the lending institution that is guaranteeing the certificates and the country of origin of the overseas entity that is borrowing the money which waives the tax in question for the government lending institution. If you are the foreign government, you may want this tax to be paid. If you are the borrower, you probably don't want to pay the tax. The issue is thus: Who lent the money?

One story you could tell is that, in substance, the money is coming from the investors in the certificates. That even though the money is channeled through the government lending institution, the money is still coming from private parties, thus the documents need the stamp as a precondition for admission to a court in an enforcement scenario because the individual holders of the certificates are the actual lenders of the money. Any lender will want their documentation to be admissible in court. So, if this is the story that prevails, then the borrower will have to pay the tax.

Another story you could tell is that even though the capital is coming from these certificate holders, they bear no risk and thus are not really lending the money to the overseas entity. Risk, the story would go, must be taken on by the entity(ies) lending as a precondition for the categorization as "lender." In the absence of such risk, therefore, an entity cannot be considered a lender. Thus, the holders of the certificates are not really lenders. This could be (at least the beginning of) the story you would tell if you didn't want to pay the tax.

A lawyer is given a task to advocate for this or that. They then become storytellers, manipulating the phenomena of the world around them and fitting them within the categories cognizable by the relevant substantive law. They exploit the margins of meaning within the language of the substantive law and tell stories to expand or contract that margin, fitting the facts within or outside the categorical boundaries they've created according to their desired end. They tell two stories: one describing what categories there are and what those categories are like, and another describing the particulars in question in light of those categories. Lawyers lay out the facts, that is, tell the story, in such a way that the only conclusions possible are those consistent with the goals of their client. The best storyteller wins.