Business in Politics

This session: Explains how corporations, now and in the past, have exercised political influence.

The Structure of American Government

Several basic features of the Constitution shape the political system: Sets up a federal system, or a government in which powers are divided between a national government and 50 state governments. Establishes a system of separation of powers. Provides for judicial review. The First Amendment protects the right of a business to organize and press its agenda on government.

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A History of Political Dominance by Business

The Revolutionary War of 1775-1783 that created the nation was, according to some historians, fought to free colonial business interests from smothering British mercantile policies. The noted historian Charles Beard argued that the Constitution was an economic document drawn up and ratified by propertied interests, for their own benefit. Yet the record since adoption of the Constitution in 1789 is one of virtually unbroken business ascendancy.
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Laying the Groundwork

The economy was 90 percent agricultural, so farmers and planters were a major part of the political elite. Under the leadership of Secretary of the Treasury Alexander Hamilton the new government was soon turned toward the promotion of industry. As the young nations economy expanded, so also did the political power of business.

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Ascendance, Corruption, and Reform

In the period following the Civil War, big business dominated state governments and the federal government in a way never seen before or since. Through ascendancy in the Republican Party, corporations had a decisive influence over the nomination and election of a string of pro-business Republican presidents from Ulysses S. Grant in 1868 to William McKinley in 1900. In Congress, senators were suborned by business money and corruption was rampant. Late in the century, farmers tried to reassert agrarian values through the Populist party.
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Ascendance, Corruption, and Reform (continued)

Business adversaries that emerged: The populist movement Organized labor The Anti-Saloon league After 1900, reforms of the progressive movement curtailed overweening corporate power. Big business feared giving women the vote. The great political reforms of the progressive era were reactions to corruption in a political system dominated by business. While business was more often checked after the turn of the century, it remained preeminent. Corruption continued.

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Business Falls Back under the New Deal

Conservative business executives argued that the depression would correct itself without government action. After the election of Franklin D. Roosevelt in 1932, corporations fought his efforts to regulate banking and industry, strengthen labor unions, and enact social security. Corporate opposition to New Deal measures ran counter to public sentiment. Roosevelt was hurt by all the hate and felt that through his major New Deal programs, he had saved capitalism in spite of the capitalists. One lasting legacy of the era was the philosophy that government should be used to correct the flaws of capitalism and control the economy so that prosperity would no longer depend solely on unbridled market forces.

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Postwar Politics and Winds of Change

In the 1940s, industries patriotic World War II production record and the subsequent postwar prosperity quieted lingering public restiveness about corporate political activity. During the 1950s, corporations once again predominated in a very hospitable political environment. During the 1960s and 1970s, national politics became dominated by a liberal reform agenda.

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The Rise of Antagonistic Groups

During the 1960s, the climate of pressure politics changed with the rise of new groups focused on consumer, environmental, taxpayer, civil rights, and other issues, changing the political arena for business. The rise of groups hostile to business is part of a broader trend in which new groups of all kinds, including business groups, have been stimulated by growth of government. In the 1990s there were an estimated 23,000 organized interest groups, roughly 400 percent more than in the 1950s.

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Diffusion of Power in Government

A second change in the climate of politics, besides new groups, has been the diffusion and decentralization of power in Washington, D.C. caused by:
Reforms in Congress
The decline of political parties Increased complexity in government

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The Universe of Organized Business Interests

Literally thousands of groups represent business. The most prominent groups are peak associations that represent many different companies and industries. More than 6,000 trade associations represent companies grouped by industry. More than 700 corporations have staffs of government relations experts in Washington. These Washington offices are set up mainly by big companies. Business interests also form coalitions to create broader support.

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Lobbying

There are two broad areas of business involvement in politics:

Government relations, or lobbying The electoral process

Lobbying Advocating a position to government.

A lobbyist presents the position of a corporation, interest group, or trade association to a government official. Lobbyists provide critical intelligence to lawmakers. In Washington today, legislators are receptive to lobbyists. Lobbyists are only loosely regulated.

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Lobbying Methods

Major lobbying efforts now resemble political campaigns in the way they combine a broad range of methods including: Direct contact Background lobbying Public relations Legal support Polling Policy analysis Grassroots work

Grassroots lobbying The technique of generating an expression of public, or grassroots, support for the position of a company or lobbyist.

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Paths of Pressure

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Efforts to Limit Corporate Influence

An effort at reform came after the election of 1904, when Republican Theodore Roosevelt, who campaigned as a reformer, was embarrassed by his opponent, Democrat Alton B. Parker, for taking large cash contributions from corporations. In 1907 progressive reformers pass the Tillman Act, making it a crime for banks and corporations to directly contribute to candidates in federal elections, and this is still the law today. After 1907 the spirit of the Tillman Act was quickly and continuously violated. Since the Tillman Act did not limit individual contributions, wealthy donors stepped in.
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The Federal Election Campaign Act

In the years following the Tillman Act, Congress added to the body of election law although none of these measures limited the influence of what continued to be the main source of campaign funding corporations. Democrats angry at Nixon passed the Federal Election Campaign Act (FECA) in 1971 to stiffen disclosure requirements on campaign contributions and expenditures. In reaction to Watergate, Congress extensively amended the FECA in 1974. The intent of the amendments was to limit corporate influence; however, over the next 30 years it failed to do so.

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How PACs Work

To start a PAC, a corporation must set up an account for contributions. Corporate PACs get their funds primarily from contributions by employees. The money in a PAC is disbursed to candidates based on decisions made by PAC officers, who must be corporate employees. There are no dollar limits on the overall amounts that PACs may raise and spend.

Political action committee A political committee carrying a companys name formed to make campaign contributions.

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Soft Money and Issue Advertising

In 1979 Congress amended the FECA to encourage support for state and local political parties by suspending limits and prohibitions on contributions to them. These contributions came to be known as soft money. Although corporations are barred from contributing to federal campaigns, a series of advisory opinions by the Federal Election Commission opened the door for them to give unlimited soft money contributions to national party committees. In 1996 the Supreme Court held that soft money could be used for issue advertising.

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Reform Legislation in 2002

Senators John McCain (R-Arizona) and Russell Feingold (D-Wisconsin) pushed through a bill that was enacted as the Bipartisan Campaign Reform Act of 2002 (BCRA).
National parties are prohibited from raising or spending

soft money. Corporations can give unlimited amounts of soft money to advocacy groups for electioneering activity, with restrictions during blackout periods. Contribution limits for individuals are raised.

The main purpose of the new law is to end the use of corporate soft money for issue ads run just before elections.
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Testing the New Law

The 2004 election cycle was the first under BCRA rules. The new law did not stop the rise in overall spending. Hard money contributions went way up. New advocacy groups formed to take in the soft money that corporations, unions, and individuals could no longer give to parties. Independent expenditures for and against candidates increased. So far, the new restrictions of the BCRA have worked to cut the flow of unregulated soft money into federal elections, but overall growth of campaign giving and spending has not been slowed.
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Tension Over Corporate Political Expression

Tensions exists between two strong values in the American political system, freedom of speech and political equality. Regulation to silence speech, including corporate speech, goes against the grain of the First Amendment. Restraints on corporate giving have been permitted to ensure political equality in elections and the implied duty to maintain elections free of corruption and the appearance of corruption. Dissenters have argued that corporations have the right to unlimited speech.

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Concluding Observations
There is significant imbalance of resources between corporate interests and other interests such as poor people, small farmers, environmentalists, and consumer advocates. Business today is forced to deal with more, and stronger, opposing interests than in the past. The rise of soft money and refinements in lobbying methods create a perception that corporation money is undermining the independence of officials. Because of disclosure rules, American politics is cleaner than the politics of most other nations and cleaner than in past eras.

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Political and Government Environment Case study of India

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Constitution of India

The Constitution of India was adopted by The Constituent Assembly on 26th November 1949. It came into effect from 26th Jan. 1950. Our Constitution contains 395 articles and 10 schedules.

It is divided into 22 parts containing articles and schedules.

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Constitution of India

The most important parts and articles are: Part II- Containing Articles 5-11 relating to citizenships

Part III- Containing Articles 12-35A relating to Fundamental Rights

Part IV- Containing Articles 36-51 relating to Directive Principles of State Policy.

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Constitution of India

Part V- Containing Articles 52-152 relating to Union. Part VI- Containing Articles 153 relating to the state.

Part XVIII- Containing Articles relating to Emergency Provisions.

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The Preamble to the Indian Constitution

The Constitution of every country has its own preamble. The preamble reflects the intention, views and objectives of the constitution maker. It also contains the basic values of the country.

It serves as a guide in the interpretation of a Statute(law) when it is vague.

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Preamble to the Indian Constitution

The Preamble to the Indian Constitution states that , We the people of India having solemnly resolved to constitute India into a Sovereign, Socialist, Secular, Democratic, Republic, to secure to all its citizen: Justice, social economic and political.

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Preamble to the Indian Constitution

Liberty of thought, expression,belief, faith, and worship:

Equality of status and opportunity and to promote among them all: Fraternity assuring the dignity of individual and integrity of the Nation.

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Basic Characteristics of Indian Constitution

Sovereignty Democracy Secularism Socialism The Parliamentary System Separation if Powers

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Fundamental Rights
Fundamental Rights enumerated in Part III of the Constitution are:
1. 2.
a) b)

Right to Equality Right to Freedom

Freedom of speech and expression; Freedom to assemble peacefully and without arms; Freedom to form association or unions; Freedom to move freely throughout the territory of India;

c)
d)

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Fundamental Rights
e)
f)

Freedom to reside and settle in any part of the country; Freedom to practice any profession, or carry on occupation,

Trade or business 3. Right against Exploitation 4. Right to freedom of Religion 5. Cultural and Educational Rights 6. Right to Constitutional Remedies

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Legal Environment in India

With expansion and diversification of business the legal system of India has become quiet comprehensive and complex. Some of the laws are as follows :

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Legal Environment in India

The Contract Act 1872 The Partnership 1932 The Companies Act 1956 The Industries Act (Development & Regulation) 1951 The Competition Act 2002 The Income Tax Act 1961 The Consumer Protection Act 1986

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Legal Environment in India

The Foreign Exchange Management Act, 1999 The Patents Act 1970 The Trade Marks Act 1999 The Environment Protection Act 1986 Indian Sale of Goods Act 1930 Industrial Dispute Act 1947 Minimum Wages Act 1948

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Legal Environment in India

Monopolies & Restrictive Trade Practice Act 1969 SEBI Act 1992 IT Act 2000 RTI Act 2005 MSMI Development Act 2006 Central Excise Act 1944 Banking Regulation Act 1949 Land Acquisition Act 1894

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Legal Environment in India

Environmental Acts Air Act 1981 The Water Act 1974 Noise Pollution Rules 2000 Hazardous Wastes Management Rules 1989 Foods Food Safety and Standards Act 2006

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Indias Feudal Democracy To realize its peoples potential, industrialization and modernization are imperative
by Markandey Katju

Times of India,29th Jan 2013

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The Indian Constitution, following the British model, created a system of parliamentary democracy. Up to 1947, when India became independent, it was still a largely feudal, agricultural country.
The British policy was to keep us largely unindustrialised, since an industrial India, with its cheap labor, could become a powerful rival to British industry.

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The Indian Constitution was based on western models. We borrowed parliamentary democracy and an independent judiciary from England, federalism and the fundamental rights from the Bill of Rights in the US Constitution, the Directive Principles of State Policy from the Irish Constitution etc. Thus we borrowed a modern Constitution from western models, and transplanted it from above on our largely backward, feudal society.

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Democracy is a feature of an industrial, not feudal, society. But the intention of our founding fathers- Pandit Nehru and his colleague was that democracy and other modern principles, such as liberty, equality, freedom of speech, freedom of religion, liberty or equality, as well as modern institutions such as parliament and independent judiciary etc would pull our backward, feudal society into the modern age.

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They set up a heavy industrial base (which the British had prohibited). Consequently India became partially industrialised and made some progress since 1947.
We produced a large pool of engineers, technicians, scientists, doctors, women got education, and so on. However, midway between 1947 and now our democracy and hijacked by the feudals.

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Caste and religious vote banks, which could be craftily manipulated by many of our politicians to serve their selfish ends, emerged and became a normal feature of elections and other political activity in most parts of India.
Everyone knows that in most parts of India people vote on caste and religious lines, instead of looking at the merits of the candidate.

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It is for the reason that many persons with criminal background have often been elected. Democracy was never meant to be run in this manner, and this has blocked our progress. Hence fundamental social and political changes are now required. The unfortunate truth is that most of our people are still intellectually very backward, with faith in casteism, communalism and superstittions. Honour killing, dowry deaths, female feticide, etc are prevalent in large parts of India.

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Child malnutrition at 48% is higher than in the poorest sub-saharan countries of Africal such as Somalia and Ethiopia. The Arjun Sengupta report states that 77% Indian lives on less than Rs.25 per day. A UN report estimated that 2.1 million Indian children die before reaching the age of five years, that is four ever minute.

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Unemployment is massive in India, with even postgraduates seeking a peons job. Healthcare for the masses is abysmal. Poor people in India can hardly afford doctors or medicines, and hence they resort to quacks. Education is in a shambles.

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Our national aim must be to make India a modern, powerful, secular, highly industrialized country, in which all its people (and not just a handful, as is the case today) get decent lives, and the great social evils like poverty, malnutrition, unemployment, skyrocketing prices, lack of healthcare and good education, etc which are widespread today in India are abolish forever.

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Backward and feudal ideas like casteism, communalism and superstitions must be replaced by modern scientific and rational thinking. How is this is to be achieved? To my mind this can be achieved by the struggles of the people using their creativity. All patriotic people in India must strive for this goal, and join in this great historical task. This will no doubt call for great sacrifices, and will probably require a long, painful and sustained struggle for about 20 years or so.

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But if we do not do this we will be cursed by our descendants for having betrayed the nation.
The writer, a former Supreme Court Judge, is

chairperson of the Press Council of India

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