Remember when Elon Musk claimed that he could sue people for tortious interference if they said they would no longer purchase from Twitter advertisers until they dropped the company? Ultimately, it didn’t even make the top ten of embarrassing things Musk did this week, but it did underscore the dangers of non-lawyers glibly Tweeting their way through a legal minefield. There is, of course, no tortious interference claim against protected speech. And a political boycott — like telling advertisers that you will stop buying their product if they keep advertising on an unmoderated haven for hate speech — is very much protected speech.
But what if someone changed what free speech means!
That’s the new goal for corporate lobbying organization the American Legislative Exchange Council (ALEC), which is working hard to whip up votes in state legislatures across the country to clarify that the freedom of speech is a sacred right for all Americans unless it mildly inconveniences its member corporations. Per the Guardian:
According to the text of the proposed law, which is written by Alec’s lawyers so that all a legislature has to do is fill in the name of its state, it is a response to banks, investment funds and corporations refusing to invest in or do business with industries that damage the environment or are aligned with oppressive laws.
Whoa! This goes way beyond the standard “political boycott.” The law would certainly cover the case where consumers threaten to change potato chip brands unless the company drops ads with Tucker Carlson or something. That should be the very heart of free speech, but we live in wild times!
But this legislation tries to go even further and penalize financiers and other companies for making private investment decisions based on considerations that inconvenience ALEC members. If a major bank thinks handing money to a massive polluter is a bad deal — because of future regulatory risk, or because the market favors cleaner alternatives, or because the bank simply prefers branding itself as more environmentally friendly — ALEC wants the law to hurt that bank.
It’s like making it a crime for J.P. Morgan to go all “woke” and invest in Thomas Edison’s work instead of the whale oil industry.
The model legislation follows an Alec meeting in Atlanta in the summer at which participants launched a push against “woke capitalism,” claiming that boycotts may break financial laws.
That’s not pushing against “woke capitalism,” that’s straight up pushing against “capitalism.”
It used to be all about gutting regulation and freeing up the market… now it’s about using Republican control of governmental agencies — the model legislation demands, among other things, any entity doing business with a state government entity from police to universities to pledge that it won’t engage in any boycotting — to constrain free market behavior.
It’s a shift that isn’t necessarily surprising. With the Trump administration keeping action clamped down over the last few years, investors have taken a leading role in promoting good corporate governance by directing their money at companies set up to succeed in the 21st century. They don’t need regulation to see that getting neck deep with a gun manufacturer is bad business in 2022, and ALEC wants to use every big government tool its red state allies have to put a stop to those private actors. In addition to using state procurement as a cudgel, the proposed law also authorizes state attorneys general to launch probes of companies who don’t throw money at ALEC members, which echoes the recent letter from GOP senators threatening to drag companies into hearings if they keep passing ESG initiatives. Whatever the mechanism, right-wingers are laser-focused on using the law to make the market do their bidding.
Laws aiming at constraining political boycotts have historically earned a cold reception from the courts. As soon as some state legislature passes this law, some investor will absolutely raise a challenge and should win.
But the judiciary doesn’t look like it used to and if “free speech” means Yale Law School should punish students for protesting, it can pretty easily slip into punishing hedge funds for not opening their wallets for a state senator’s preferred donors.