December 19, 2016
all Street Journal columnist Kimberley Strassel has written an insightful, important book on the Left’s efforts to drive market-friendly voices from the public square. A skilled investigative journalist, Strassel documents the extensive efforts to suppress political opposition, intimidate dissidents, and weaken the First Amendment.
Strassel notes that attacks on speech—and defenders of it—have come from both parties. She traces the history of campaign “reform” initiatives, accompanying court challenges, and bipartisan support for “transparency” and “accountability.” Readers will gain clarity, but little comfort, from her chronicle of culture and politics conspiring to weaken free speech.
Intimidation Game begins with the San Fernando Valley Patriots, a small public policy group that sought 501(c)4 tax-exempt status from the Internal Revenue Service. A routine matter taking only a few months for most non-profit organizations, the Patriots’ application was delayed as they were required to meet a series of demands for supporting information. The Obama administration, it turns out, was displeased with right-of-center groups’ opposition to its initiatives, and that attitude worked its way down to federal agencies.
For many years, commercial speech has been regulated to prevent fraud, but the newer goal of regulating political speech was a harder climb. Courts, in particular, protected political speech for much of the nation’s early history. Still, given the growing distrust of big businesses, campaign finance laws gained political momentum. As Strassel notes, some free speech advocates came to favor disclosure of advocacy organizations’ donor information. After all, what could be wrong with “transparency?”
Republicans were slow to recognize the threat posed by such mandates, though it has been clear for more than half-a-century. In one of the key court cases, Alabama officials, irate over the NAACP’s role in the 1956 Montgomery Bus Boycott, demanded the state chapter disclose its membership and donors. The U.S. Supreme Court struck down this attack as a violation of the rights to privacy and free association.
Yet when the issue shifted to business and free-market public policy groups, Republicans and the Court mounted little opposition at first. Strassel examines the harassment of Tea Party groups by a key Internal Revenue official, Lois Lerner. She relates the administration’s cover-up efforts when the resulting IRS scandal broke, Republican congressman Jim Jordan’s partially successful efforts to investigate, and subsequent efforts by the Obama team to concentrate on other political opponents, including the U.S. Chamber of Commerce, the Wisconsin Club for Growth (an ally of Governor Scott Walker), and the Koch Brothers. Some of these attacks alleged federal or state election campaigns rules, or IRS policies, had been violated. Others took the form of threatening letters from administration allies in Congress.
Strassel also describes how politicians attacked for serving “special interests” often seek redemption by championing laws meant to prevent such transgressions. Teddy Roosevelt, criticized for relying on corporate donations to his 1904 presidential campaign, pushed for laws to check corporations’ ability to influence elections, signing the nation’s first campaign finance bill in 1907. Senator John McCain of Arizona sought to repair his reputation, damaged by helping campaign donors embroiled in the “Keating Five” scandal, with the McCain-Feingold campaign finance law of 2002, an assault on free speech.
Strassel notes that most campaign reforms focus on monetary contributions to campaigns, even though the more serious threats to free speech often come from disclosure mandates that dissuade donors who seek anonymity or fear retaliation. “Shaming” tactics, for example, accuse donors of supporting some politically incorrect policy positions, and entail boycotts, picketing (sometimes at the donor’s home), and attacks that harm reputations and sometimes threaten targets’ physical safety. Little wonder that America has long valued the secrecy of the voting booth.
Strassel extols Bradley Smith, a law professor and member of the Federal Election Commission during George W. Bush’s presidency. Smith alerted conservatives to the risks of disclosure, helping them understand and challenge this policy. His work on campaign finance laws and disclosure requirements strengthened Republican resistance.
Campaign Finance Reformers Fight Back
The Supreme Court’s 2010 Citizens United decision largely vitiated the McCain/Feingold donations limits, but did less to curb disclosure pressures. In 2010 the Obama administration sought legislation mandating even more stringent disclosure regulations, but the desire of one group after another to be exempt from its provisions, and then a Senate filibuster, doomed the bill. Efforts to force disclosure need not be legislative, however. Critics of corporate political activity can also engage in shareholder activism, buying shares in public companies in order to file proxy statements advancing a social or political agenda that may do little to advance shareholders’ interests.
The American Legislative Exchange Council (ALEC), a membership organization of market-friendly state legislators, has long been a leftist bogeyman. In recent years, ALEC’s critics have gone after the group’s funders, deriding it as a shadowy organization that pushes ready-made legislation to advance a corporate agenda. Strassel demonstrates that the attacks on ALEC are part of broader campaign to silence champions of limited government. ALEC’s critics condemn its practices, but in reality they abhor its principles.
Why Is It So Easy to Shame Business Leaders?
Is it possible to persuade capitalists to advance their case confidently rather than apologetically? Perhaps, but often the business community cedes the moral high ground to leftist critics. Business does well at communicating its contributions in the economic sphere, but has failed to develop a moral and intellectual defense of its role in modern life.
One Strassel column praised Verizon CEO Lowell McAdam and General Electric’s Jeffrey Immelt for responding firmly to Bernie Sanders’s attack on business and capitalism. She notes, however, that they and many of their peers were passive for too long. “The usual business behavior is to sit quiet,” she notes, “while expecting the free-market activists and congressmen (their Little Red Hens) to step up and defend them in Congress, or the public sphere.” Since businesses routinely engage in both short- and long-range investment strategies, Strassel observes, they could also consider long-range strategic investments in the political world. Freight railroads made exactly such an investment—one that yielded significant profits as freight rail was deregulated. Firms in other firms should take note.
Economist Deirdre McCloskey has pointed out that business spends a vast proportion of its resources on “persuasion”—marketing, advertising, deal-making, negotiating with suppliers and distributors, bargaining with unions, and interactions with regulatory officials. Devoting a small fraction of those persuasive talents to demonstrating the moral legitimacy of economic activity might greatly reduce firms’ political vulnerability. As Strassel makes clear, the “intimidation game” is not only a political struggle but a culture war, one the intimidators have dominated.
Strassel’s account would benefit from a deeper examination of why businesses typically fold like a lawn chair. In his essay, “Can Capitalism Survive?” the economist Joseph Schumpeter noted that by the late 19th century capitalism’s vast economic growth had created the world’s first broad middle class. This development, in turn, led to an increasingly influential intellectual class comprising people who would come to envy and resent entrepreneurs’ material success. The knowledge that a more politicized economy would create great numbers of prestigious advisory roles they could fill, Schumpeter argued, guaranteed intellectuals’ hostility to capitalism.
In the late 19th and early 20th century, American Progressives were inspired by the welfare/regulatory state Bismarck established, especially by the way it provided intellectuals respect, power, and rewards. Inspired by their travels to or studies in Germany, Progressives sought to replace America’s “chaotic” laissez faire capitalism with a technocracy. They captured key cultural institutions, including the universities and the media. Entrepreneurs continued to create wealth, but America’s culture became more critical of business. As antipathy to commerce grew, so did government intervention in the economy.
Strassel rightly criticizes business leaders’ failure to defend themselves, and the historical record is not reassuring. The American Liberty League, a well-funded, business-led campaign against the New Deal, enlisted prominent business and political leaders and published significant intellectual arguments. That effort was soundly defeated, however. Progressives demonized League members—pro-market business leaders, academics, and politicians—as “special interests” intent on thwarting the “public interest.”
America is still in many ways a capitalist economy, but the Progressives succeeded in introducing an anti-capitalist element into its culture. The growing number and stridency of business critics in the media and academy, popular culture, the regulatory agencies, the judiciary, and Congress illustrate this reality, as do attacks by Democrats and even some Republicans in the recent political campaign.
Unsurprisingly, businesses’ regulatory burden has grown steadily from the Sherman Antitrust Act to the Dodd-Frank and Obamacare rules of today. Compliance and accommodation does nothing to mute criticism of the private sector. Rather, from the Muckrakers to Naomi Klein, businessmen have been caricatured as greedy, shortsighted villains. Even the most honorable business leaders have become reluctant to defend their social role. Intimidating a group that doubts its own moral legitimacy is not difficult.
Strassel laments that lack of faith among business leaders, as did Schumpeter, who noted how business leaders “snatch at every chance of compromise.” Like Schumpeter, Strassel diagnoses a problem without offering a specific solution. Her analysis does, however, reinforce Schumpeter’s uncharacteristically optimistic observation that “history is full of small groups who, believing in their cause, were resolved to stand by their guns.” The cultural and political power of capitalism’s detractors has been durable, but may yet yield to the vigorous, confident arguments of its defenders. If so, we will all owe a debt to Strassel for writing this in-depth, historical investigation of the threat posed by intimidation to a free society.