What the Hobby Lobby Ruling Means for America (Published 2014) (2024)

Last month, as you’ve probably heard, a closely divided Supreme Court ruled that corporations with religious owners cannot be required to pay for insurance coverage of contraception. The so-called Hobby Lobby decision, named for the chain of craft stores that brought the case, has been both praised and condemned for expanding religious rights and constraining Obamacare. But beneath the political implications, the ruling has significant economic undertones. It expands the right of corporations to be treated like people, part of a trend that may be contributing to the rise of economic inequality.

The notion that corporations are people is ridiculous on its face, but often true. Although Mitt Romney was mocked for saying it on the campaign trail a few summers ago, the U.S. Code, our national rule book, defines corporations as people in its very first sentence. And since the 19th century, the Supreme Court has ruled that corporations are entitled to a wide range of constitutional protections. This was a business decision, and it was a good one. Incorporation encourages risk-taking: Investors are far more likely to put money into a business that can outlast its creators; managers, for their part, are more likely to take risks themselves because they owe nothing to the investors if they fail.

The rise of corporations, which developed more fully in the United States than in other industrializing nations, helped to make it the richest nation on earth. And economic historians have found that states where businesses could incorporate more easily tended to grow more quickly, aiding New York’s rise as a banking center and helping Pennsylvania’s coal industry to outstrip Virginia’s. The notion of corporate personhood still sounds weird, but we rely upon it constantly in our everyday lives. The corporation that published this column, for instance, is exercising its constitutional right to speak freely and to make contracts, taking money from some of you and giving a little to me.

Since the 1950s, however, the treatment of corporations as people has expanded beyond its original economic logic. According to Naomi Lamoreaux, a professor of economics and history at Yale University, the success of incorporation led states to broaden eligibility to advocacy groups, like the N.A.A.C.P. and the Congress of Racial Equality, which then became “the first corporations to convince the Court that they deserved a broader set of rights.” Ever since, the court has intermittently extended the logic of those rulings, and in 2010 it ruled that an advocacy group called Citizens United had the right to spend money on political advertising — and that every other corporation did, too. Last month, it added religious rights to the mix.

The basic justification is that corporations, owned by people, should have the same freedoms as people. And in many ways, of course, they already do. Chick-fil-A does not sell sandwiches on Sundays. Interstate Batteries tells prospective employees, “While it is not necessary to be a Christian to be employed, it is a part of the daily work life for Interstate team members.” In 1999, Omni Hotels said its new owner, a Christian, had made a “moral decision” to stop selling pay-per-view p*rnography.

But corporations, as F. Scott Fitzgerald might have put it, are not like you and me. Those special legal powers, which allow them to play a valuable role in the economy, can also give them the financial power to tilt the rules of the game by lobbying for particular legislation, among other things. “Those properties, so beneficial in the economic sphere, pose special dangers in the political sphere,” Justice William Rehnquist wrote in a dissenting opinion from a 1978 ruling that is a precursor to Citizens United. “Indeed, the States might reasonably fear that the corporation would use its economic power to obtain further benefits beyond those already bestowed.”