Wednesday, April 6, 2011

Ban on Corporate Political Donations: Bad Idea?

The Irish Times reports that the government is proposing to ban corporate political donations:
... corporate donations will not be allowed, the new law when enacted cannot prevent any individuals making donations as long as they remain below the allowable limits. Among the issues to be addressed by the Coalition in finalising the Bill are possible measures to prevent donations from a significant number of individuals from one corporate body.

All of this might play well to the gallery and appease popular sentiment but a ban on corporate political donations is a terrible idea. First, corporations are legal persons and have the right to free speech and expression. A ban is an abridgement of that right, is overbroad, and not reasonably necessary to achieve the purpose advanced. Second, there are perfectly good reasons to allow corporate donations. After all, they are frequentlly those having to bear the costs (monetary and otherwise) of various pieces of legislation and have a direct interest in ensuring that ill-advised legislation is resisted. Legislators have little (or no) skin in the game and might under-appreciate the problems caused by bad laws. Corporations can play a salutary role in protecting legitimate activity from government interference. Campaign donations are an essential tool for this mission.
The report also notes that [t]here is also the question of whether or not trade union subscriptions to the Labour Party should be considered as corporate donations.

Fine Gael Minister for Agriculture Simon Coveney said last week that trade union funding to political parties should be banned while a number of Labour representatives have argued for their retention, asserting that such funding is not analogous to corporate donations.
This illustrates perfectly the pitfalls of such efforts to police speech: when it suits certain political interests, donations from aggregate entities are acceptable but when they might support positions against those interests they become anathema.
Why should corporate donations be banned when trade union donations are not? They are both advancing aggregate interests and should be treated alike. Discriminating against corporate donations is merely a political preference masquerading as benign law reform.
To be sure, there are reasonable grounds to impose some restrictions on political donations. These must be restricted to disclosure of donations and size of individual contributions.