Apparently, there are always plenty of people who can’t help but engage in college dorm room quality philosophy when they don’t truly understand a current event. In this case, there is a mushroom farm of moral skeptics claiming Google (GOOG) is truly challenging the Chinese government because they will never beat Bidu (BIDU) and are simply trying to get some free PR as they shutter their Chinese division.

Really? Have American talking-heads become as short sighted as Wall Street?

Google is a very young company. In their short existence, they have become arguably the most powerful company in the world. In China, they definitely have less market share than Bidu. However, they have spent vaults of cash establishing an infrastructure in China.

Moreover, JPMorgan analyst Imran Khan estimates Google’s China revenue at around $600 million this year, with segment margins around 15% to 20%. That’s hardly a project worth purging.

This, my friends, is called planting a seed in fertile soil. At the moment, Google is most known for their search products. However, Google’s innovation and deal-making is relentless. Nobody can predict what Google will invent or sell in the future. Given Google’s intellectual capital, the odds are good that (like Microsoft) Google will continue to play in many new business sectors (e.g., mobile). Why would Google leave now and have to start from scratch if they later decide to work in China? It doesn’t make basic business sense.

The moral skeptics are 100% wrong. I think Henry Blodget nailed the Google strategy:

Google’s decision to make a big public threat now, when it controls 15%-20% of China’s search market and is known to most Chinese Internet users, will put far more pressure on the Chinese government to relax its policies than a boycott of the country five years ago would have.

Google matters in China now.  The announcement that Google was threatening to pull out spawned public support for the company in China.  It got Secretary of State Hillary Clinton into the act.  It forced the Chinese government to respond with a statement.  It has grabbed the attention of investors, as well as the hundreds of other companies that do business in China and are forced to play by Chinese rules.  It will focus more public attention on the reality of China’s censorship policies than any boycott ever could have.

In short, by playing ball with China until it had some real leverage, Google has a much better chance of actually forcing the government to change.

Sometimes I think writers like to vomit interesting ideas simply for the sake of trying to be unique. This is one of those times. If you disagree, go start a business in a new market, spend hundreds of millions of dollars, turn a profit, then pullout because you don’t have dominant market share in the first 4 years. When your shareholders tuck you into a straight-jacket, you’ll have plenty of time to reflect on why a longer term perspective would have been best.

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This week, Google (GOOG) shockingly announced it will disobey the Chinese government and (after 4 years) refuse to censor searches on the web. Although the company said it will be discussing the matter with Chinese officials, they are prepared to give up google.cn and even close offices in China.

From a monetization standpoint, Google is choosing to forgo monetization of censored search in favor of the democratic ideal of free speech. Those of us fortunate to live in countries with legally protected speech rights can empathize with Google’s decision. As Patrick Henry said, “Give me liberty or give me death.” Apparently, he was speaking on behalf of at least some legal entities as well.

China’s leading search company Bidu (BIDU) shot up over 13% on the news. This may be nice for investors, but just think of how much the stock would have soared if China gave Bidu a legal monopoly over all web search in China? We may even start reading about a new white hot pairs trade: long fascism, short democracy.

Although some people are disappointed with Google’s stand, I applaud the move. Google makes billions of dollars and provides an excellent livelihood and income to many people. If we learned anything from the recent global credit and housing debacles, we may have learned there’s a healthy boundary where we value more important things than the game called business.

In the case of Google, I’m glad to see they’ve drawn that line in front of possibly the most important human right. Since we value the Constitution more than economic transactions (at least in theory) in the US, I think Google’s move is a patriotic one and a great example for others aspiring to add value to societies across the world.

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Dean Erwin Chemerinsky

Last week I covered the incredibly important yet widely unnoticed update on the corporate speech case before the Supreme Court (Citizens United v. Federal Election Commission). This week I want to follow up and share my exclusive interview with top Constitutional Law authority, and Dean of UC Irvine School of Law, Erwin Chemerinsky …

“This case will have a profound effect in changing the nature of elections in the United States.”

Damien Hoffman: Dean Chemerinsky, what is the issue before the Supreme Court in Citizens United v. Federal Election Commission?

Dean Chemerinsky: The Supreme Court asked for briefing over the summer in new arguments on the question whether corporations have a First Amendment right to spend money in election campaigns. Previously, the Supreme Court has upheld the ability of the government to  restrict corporate expenditures in political campaigns. Now it appears there are five votes on the Court — Chief Justice Roberts, Justice Scalia, Justice Thomas, Justice Kennedy, and Justice Alito — who want to overrule those precedents and uphold that corporations do have a First Amendment right to spend money in election campaigns.

Damien: If the Court overrules the precedent, will the new law have an impact on elections?

Dean Chemerinsky: This case will have a very significant effect on federal, state, and local elections. Corporations have tremendous wealth and they could then use it to get the candidates of their choice elected or the candidates they opposed defeated.

Citizens United will be a very significant change in unleashing corporate wealth to be spent, but future cases will deal with the concept of contributions.

For example, there are probably five votes on the Court who will hold that the restrictions on corporate contributions to candidates violates the First Amendment. However, during oral argument, Justice Kennedy indicated he wouldn’t want to go that far in this case — that’s for a future day.

These same five Justices will also probably vote that any limits on contributions other than disclosure requirements violate the First Amendment.

Damien: This begs the question for the Court to consider whether there exists a distinguishing characteristic between human beings who can vote in elections and corporations which cannot.

Dean Chemerinsky: In First National Bank of Boston v. Bellotti, the Supreme Court stressed the reason for protecting corporate speech was to inform the public. The public’s ability to hear and learn would be enhanced if there are more speakers. Ever since, the Supreme Court has been less willing to draw a distinction between corporate speech and individual speech.

Obviously, the Bill of Rights was meant to protect individuals, not corporations. I think protecting corporate speech would be very troubling to those on the Court who are Originalists. Ironically, those are the same Justices who are likely to give corporations Free Speech rights.

I think the Court is going to accept corporations have First Amendment rights and therefore the right to spend money in election campaigns.

Damien: From a policy perspective, does it matter that human beings have a much broader set of interests in our society including social interests, religious/spiritual interests, environmental interests, familial interests, quality of life interests, etc? While corporations operate under one focused mission to create a profit for shareholders? Doesn’t giving corporations the same Constitutional protections as humans mean we are creating a society which will look more like a corporate utopia since they can outspend individuals in Washington?

Dean Chemerinsky: Giving corporations the right to unlimited amounts of money in elections is troubling for many reasons. It’s troubling from the shareholders’ perspective. Corporate wealth is the wealth of their shareholders. Spending money in campaigns may be spending money against the political desires and interests of their shareholders.

Also, corporations have accumulations of wealth unmatched in our society. Corporations can simply outspend all other interests and drown out all other voices in the political process. There are many different interests in our society, but like you said, corporations have zero interests other than maximizing the wealth of their shareholders.

The bottom line is this case will have a profound effect in changing the nature of elections in the United States.

Damien: I don’t understand why corporations need Free Speech rights in elections if all the human beings which comprise what we call a “corporation” already have full Free Speech protections under the First Amendment. Technically speaking, there is no abridgment of anyone’s speech insofar as anyone who either works for or owns shares in corporations.

Dean Chemerinsky: Certainly, from the Originalist perspective corporations would not be protected by the First Amendment or any of the other rights in the Constitution. Yet, a long time ago the Supreme Court went down the path of giving corporations some, although not all, Constitutional rights.

Damien: Well, I’d like to ask the Supreme Court a few questions. Dean Chemerinsky, congratulations on your Deanship at the new UC Irvine School of Law. Thank you for taking the time to educate me.

Dean Chemerinsky: Anytime. I enjoyed speaking with you and thank you very much.

An irony of Shakespearean proportions is unfolding as I write this: the Town Hall discourse revolves around complaints government is getting too big, yet in the quieter halls of the US Supreme Court corporations are on the verge of capturing the largest swath of power since they were ruled legal persons. Let’s take a closer look before we wake up in an Orwellian distopia:

The Issue: Whether corporations have a First Amendment right to spend money in election campaigns?

According to UC Irvine Law School Dean Erwin Chemerinsky, the nation’s leading Constitutional Law expert, “Previously the Supreme Court upheld the ability of the government to restrict corporate expenditures in political campaigns. Now it appears there are five votes on the Court — Chief Justice Roberts, Justice Scalia, Justice Kennedy, Justice Thomas, and Justice Alito — who want to overrule those precedents.”

Although corporations have stuffed cash into tons of loopholes such as Political Action Committees, a change in the current law would allow corporations to siphon off money from their wealth-creating machines and directly turn politicians into outsourced independent contractors. If you are pissed about the financial crisis and what Washington allowed to happen, you ain’t seen nothing yet.

The proponents of expanding corporate speech insist the current law is an unconstitutional abridgment of First Amendment protected Freedom of Speech. However, speech is curtailed in instances where it can be an extreme detriment to our society (as opposed to our feelings). For example, we do not have the right to go into a crowded place and scream, “Fire!”

Before offering more examples of limited speech rights, this begs several incredibly critical questions about the society we are trying to create under the Constitution. First and foremost, should the legal fiction called a “corporation” be inherently endowed with the full set of rights entitled to human beings under the Constitution? If so, we are saying corporations are now equal citizens under the law and our society should boldly reflect their values and interests even if they compete with those of human beings.

I immediately wonder why corporations even need unlimited Freedom of Speech rights. They already have reasonable Freedom of Speech protections (First National Bank of Boston v. Bellotti, 435 U.S. 765 (1978)). Further, everyone who works at a corporation and all the shareholders already have the highest level of Freedom of Speech rights protected by the Constitution. If we give corporations the same Freedom of Speech rights as humans, we are functionally giving extra powers of speech to corporate executives in the C-Suite. After watching how they ran our economy into a shitpit, should we allow this handful of business people to use their out-sized coffers to drown out the incredibly less financed individual citizens?

If we allow robots to influence elections, that society will reflect the values of robots. If you let corporations influence elections, that society will reflect the values of corporations. Unlike human beings, corporations do not have values. Instead, by law, corporations are legal fictions which operate solely to produce profits for shareholders. Therefore, human values such as life, liberty, happiness, health, spirituality/religion, kindness, relationships, the environment, etc. will all compete with the myopic legally mandated interest of corporations.

Given that the Founders never once mentioned the word ‘corporation’ in the Bill of Rights, I find it impossible to believe they intended to elevate businesses to the level of human being. Such an expansion of stature is like remaking the movie The Terminator and substituting the androids with C-Suite controlled parchment charters against which humankind battles for survival as we know it.

There are many other issues for you to chew on while daydreaming through your next meeting or commute:

Should corporations influence the electoral process if they do not have the right to vote and are not human beings?

Can corporations spend money supporting political persons and issues which conflict with the wishes of shareholders?

Is bringing corporations under the protection of the Constitution the most extreme example of judicial activism?

In the weeks to come we will address these questions with some exciting interviews. Until then, I highly recommend this quick read …

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