No! Not the Dark Money!

No! Not the Dark Money!

“Dark money” sounds menacing and foreboding – a financial nomenclature suggestive of gothic masterpieces like “The Raven” and “The Black Cat.” Whereas Poe’s tales actually contain sinister elements, the phrase dark money is employed by activist shareholders much like the villains of countless “Scooby Doo” cartoons devised illusory ghosts, werewolves and vampires. The evildoers wanted to scare those meddlesome Mystery Machine kids from nefarious moneymaking schemes.

The anti-capitalism messages of “Scooby Doo” are repeated by those ominously intoning the perceived evils of so-called dark money in politics. In ordinary political usage, dark money refers to funds raised to finance an election campaign or ballot initiative without any requirement of public disclosure before voters decide the question.

Shareholder activists have torn a well-worn page from the “Scooby Doo” playbook by adopting the tactics of the show’s bad guys. These tactics include attempts to frighten voters with the dark money bogeyman, who lurks behind other pet issues such as genetically modified organisms and fracking (hydraulic fracturing).

In the dark money universe, according to clergy and religious advocating for full disclosure of anonymous contributions, donors should be “named and shamed” regardless of the best interests of companies, shareholders and employees. This includes As You Sow and Interfaith Council of Corporate Responsibility proxy shareholder resolutions demanding companies cease donations to free-market think tanks, the U.S. Chamber of Commerce and the American Legislative Exchange Council.

Wait, readers might ask, how does dark money – from now on referenced here as the more neutral and therefore more correct “funding” or “donations” – pertain to matters of faith? Good question, to which no satisfactory answer exists. But those priests, nuns and other religious seeking to circumvent the U.S. Supreme Court Citizens United decision file their resolutions and protests faster than Shaggy and Scooby snarfing pizzas whole.

For example, the Sisters of the Immaculate Heart of Mary community in Monroe, Mich., include the following on their website:

Religious institutions, labor unions and SRI [socially responsible investing] mutual funds can influence corporate management through formal dialogues during which shareowners advocate to improve corporate practices and ethical standards. Shareowners can also write letters to corporate executives and board members to advocate actions or to support or object to a corporation’s activities or policies. When shareowners are not satisfied with the results of these strategies they can go to the next level and introduce shareholder resolutions, a legal process regulated by the Securities and Exchange Commission.

As You Sow weighs in on corporate spending on the current Washington ballot initiative to force companies to label foods containing GMOs:

‘We believe that political contributions are a poor investment and are calling companies not to spend opposing legislation that would give consumers labeling information,’ said Lucia von Reusner of Green Century Capital Management, manager of environmentally focused mutual funds.

As a lever of action, Behar [Andy Behar, As You Sow spokesperson] and von Reusner said their groups would file shareholder resolutions to prevent companies such as Monsanto from engaging in advocacy about GM labeling.

AYS’s press release lists companies targeted by shareholder resolutions which would in effect, stifle corporate speech:

To date, As You Sow has filed resolutions at Monsanto, E.l DuPont de Nemours, and Dow Chemical, and intends to file a shareholder resolution at General Mills and Abbott Laboratories, which combined gave over $17 million to defeat the CA [California’s defeated 2012 Proposition 37 ballot referendum] labeling initiative. The Green Century Equity Fund plans to file at Kraft Foods Group, which gave $2 million, and Environmental Working Group plans to file at Coca-Cola and Pepsi, which combined donated $4.2 million. Other companies being contacted by investors include ConAgra Foods, Kellogg, Campbell Soup, J.M. Smucker, Hershey, Hormel Foods, Dean Foods, McCormick & Company, Mondelez International, Dole, Hillshire Brands, Mead-Johnson Nutrition, Bayer, Syngenta AG, Nestle, Smithfield, Del Monte Produce, H.J. Heinz, Mars, Unilever, Grupo Bimbo, Bumble Bee Foods, Ocean Spray Cranberries, Sara Lee, Cargill, Welch’s, Land O’ Lakes, Sunny Delight Beverages, Wrigley, and Tree Top.

How does AYS know which companies to target? It seems they had a bit of help from officials in Washington State, according to an Oct. 23  email blast from the Green America nonprofit:

Last Friday, Washington state Attorney General Bob Ferguson succeeded in forcing the Grocery Manufacturers Association (GMA) to disclose which companies contributed to funding their ”No on 522″ campaign – which would block labeling of GMOs in Washington.

Using his subpoena power, something that wasn’t available to the moms and activists who filed the original complaint against the GMA, Ferguson uncovered strong evidence that the GMA intentionally side-stepped Washington state election law that requires groups raising money for a specific political campaign to reveal their donors. [emphasis in original]

No word, however, whether AYS, “moms and activists” and their allies in the AG office filed protests against such companies as Dr. Bronner’s Magic Soaps, which contributed $1.8 million to support the Washington labeling initiative. It appears AYS and its cohorts desire only a one-sided public debate on labeling GMOs.

In the dark money scenario, capitalism is vilified much as it was on the Saturday morning animated program featuring a talking dog and his human posse of indeterminate income and unlimited free time. The capitalist villains of “Scooby Doo” – like Washington’s activist moms, AYS and their anti-corporate-speech advocates – exploit scare tactics that bend the unsuspecting to their will. Unlike Scooby’s nemeses, the real-life activists oppose capitalism, employing the dark money bogeyman and GMO misinformation to scare the daylights out of low-income parents seeking affordable foodstuffs with which to feed their families.

  • Sam

    “…according to clergy and religious advocating for full disclosure of anonymous contributions, donors should be “named and shamed” regardless of the best interests of companies, shareholders and employees.”

    Notice how this list excludes society, or any notion of the common good. The reason faith-based shareholder advocates engage in these debates is largely because they argue that self-interest does not necessarily dovetail with what is best for society. Market failures do occur. That is especially true when consumers have less information on which to make purchasing decisions. Throughout this series on shareholder advocacy, Walker has criticized efforts to make firms that engage in the political process more transparent. Yet while such transparency may hurt individual firms, I have yet to see a cogent argument that transparency will harm society at large, beyond speculative asides to consequences such as food price increases, which, if they did occur, would largely be because of changes in consumer preferences given additional information–not in the added costs that transparency imposes. Why is providing more information about firm behavior and the products we buy bad for society?

    • BruceEdwardWalker

      Your comments only make sense if you believe there are these two opposing forces called “business” and “society.” I don’t believe that is the correct way to understand this question. Furthermore, name and shame campaigns benefit no one when debate is shut down completely, and real science and economics (as opposed to so-called “settled science” or “scientific consensus” and Occupy Wall Street econ) aren’t considered in, say, the climate change and GMO kerfuffles.

      I have repeatedly warned about the consequences to shareholders, employees and owners if this phony “disclosure” campaign were to succeed. At the risk of pointing to the terribly obvious, these shareholders, employees and owners are knit into the very fabric of our “society” in America. Their welfare is tied to everyone’s welfare. The “common good” or if you will the hope that our society will flourish in innumerable ways is in many significant respects tied to a prosperous business sector. That shouldn’t be news to anyone either.

      Should this business culture live in a moral framework? Absolutely. That’s what the Acton Institute has been advocating for almost 25 years.

      As for consumer preferences, I fail to see how these are tied to a hyper-political lobbying campaign by the religious left which wants to give labor unions and other progressive political groups a free pass. Where is the transparency there?

      The Chevy Volt’s sales were down 32 percent in October. Was that because shoppers learned something about GM’s political spending?

      • Sam

        Nobody is suggesting that businesses are not a part of society, but it’s also disingenuous to suggest that the interests of businesses are necessarily in line with those of society. Oftentimes they are, but sometimes they are not. As I said in the previous post, market failures occur–that’s an empirical reality. What these campaigns are getting at are cases where there is at least a perception that the interests of businesses are in conflict with those of society. When businesses want to continue practices that are environmentally destructive–ie. externalizing costs but reaping private benefits, there are people who believe that this is bad economics, even if it serves to benefit companies and their shareholders.

        Political spending is a reflection of these practices. If private activity is perceived to be harming others, government is a recourse citizens have to stop that activity, whether it be something blatant like murder, or something more subtle like pollution. If public policy is not addressing negative externalities, then it is a reflection of the political process, and that process stagnates without information. The less information we as citizens have about our political process, the less redress we have to change practices that are perceived as harmful. But this is a two-way street. Just as campaigns are launched against businesses that support certain candidates, so too do businesses and free-market groups have the same ability to launch campaigns against unions and other left-leaning groups that are spreading information they disagree with. There’s nothing wrong with that. But that’s not your message–rather, it’s to shut down debate instead of encouraging it. Why?

        Moreover, the larger point that I’ve made before remains unaddressed. Information failure is an example of a market failure, and it occurs when consumers lack the requisite information needed to make informed choices about what they purchase. Business practices (including involvement in the political system) are part of what at least some consumers make informed purchasing decisions on. You may not care, and many people don’t–that’s fine. But many consumers do, and these campaigns help to spread more information to consumers about what they buy (albeit information that businesses may not appreciate). Why is it in the interests of consumers and society for people to know less about what they buy? Such transparency, mind you, does not preclude efforts to make other institutions, like labor unions, more transparent. Are you suggesting that more information is harmful to consumers? That consumers should not strive to be more rational and more informed, and instead rely solely on information companies provide about their products?

        • BruceEdwardWalker

          Your response has me scratching my head, Sam, as I’ve addressed each of your cavils in previous posts as well as that above. If, as you’ve written, you have read my previous posts, you’ll note I agree that business/society interests may be at odds at times, but more often than not society benefits from businesses as the latter provide the jobs, shareholder profits, economic footprint on which societies thrive. Should they be held accountable? Of course. But to write that I advocate shutting down speech is absurd, as I’ve consistently advocated for robust conversation, which is very much the opposite of those who operate left-of-center with their name and shame campaigns against companies that donate to ALEC, Chamber of Commerce, American Council on Health and Science and nonprofit think tanks — often employing what is anything but “settled science.” For more on this see my piece on the Battle in Seattle wherein Brian Cartwright debates Bruce Freed. Cartwright, imho, nails it when he says the larger gov’t becomes and the more intrusive its regulations the more necessary it becomes for corporations to protect their interests and those of their employees, shareholders, customers and the communities in which they conduct business.

          • Sam

            This may be where we’ll need to agree to disagree. I see shareholder activism as tending to spur conversation about topics that are not otherwise discussed by companies because of its demands for transparency, and I don’t think it shuts down debate because firms can (and very often do) respond to these criticisms publicly. Political engagement may serve to defend a firm’s interests, but it is also an activity that is worthy of debate as to its merits for society, because not all political activity that protects firm interests is good for society. But that debate cannot happen without some measure of transparency. That’s why shareholder activism is necessary. You may disagree with the messaging that is included, or the evidence used on issues such as climate change or GMOs, but if the allegations are defensible, then companies can defend against them and engage in public discourse. If not, then firm practices are likely to change for what is perceived to be the betterment of society.

          • BruceEdwardWalker

            Fair enough, Sam, but I might add the conversations you suggest are avoided by companies are in reality front-and-center in the public square at all times, necessitating those companies to engage in political activity in the first place. As I’ve noted in the past, much shareholder activism negatively impact company resources that harm the majority of shareholders and furthermore drive up costs for consumers least able to adapt — and to what end? Shutting down debate with bullying, naming and shaming, and other Soros-funded PR campaigns? It seems to me more a highly politicized activity than anything having to do with transparency in the best interests of society.

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