Corporate Social Credit Scores Mirror China, Risk the Republic

When the United States commenced serious trade relations with China in the late 1980s and early 1990s, policymakers hypothesized that a capitalist market in China would segue into a Western-style, democratic, representative government.

As China carries on its 20th Chinese Communist Party Congress this week, where Xi Jinping is expected to be granted an unprecedented third term and named “President for Life,” Americans can now only regret the naïveté of the leaders who enabled and empowered the rise of the communist regime that is now an existential threat worldwide.

But as we bemoan the naïveté of George H. W. Bush, Bill Clinton, and the 106th Congress, Americans should also take heed. For we have not only failed to “convert” China from communist authoritarianism to the ways of a democratic society, as we had hoped, but also we have made our own society more authoritarian in a manner that mimics some aspects of China.

A Private-Sector Silencing of Speech

John Locke, the 17th-century philosopher who so influenced the Founders, wrote in “A Letter Concerning Toleration”: “The toleration of those that differ from others is so agreeable … to the genuine reason of mankind, that it seems monstrous for men to be so blind as not to perceive the necessity and advantage of it in so clear a light.”

While Locke was writing about religious tolerance among different sects, his notions were so embraced by the Founding Fathers that they became the basis for James Madison’s derivation of the First Amendment that prohibits Congress from abridging the freedom of speech or the press.

Today, though, tolerance of speech is at risk. And it is private sector corporations that are limiting speech in ways Congress cannot—and ways the Founders likely never considered.

As I reported earlier this month, private company PayPal maintains a policy that allows the company to debit $2,500 from accounts of users who promote “hate, violence, racial or other forms of intolerance that is discriminatory.” Your account can be closed if you “provide false, inaccurate, or misleading information.” Determinations as to whether you meet those thresholds are, of course, made solely by PayPal.

Earlier this year, Mike Lindell, the “My Pillow Guy,” had bank accounts he maintained with Minnesota Bank & Trust terminated after the bank described him as a “reputation risk.” The bank apparently found Lindell’s continuing doubts about the integrity of the 2020 election to somehow be a threat to it.

Lauren Witzke, a candidate for the U.S. Senate in Delaware and a self-described “Christian nationalist” who opposes the LGBTQ movement, was denied access to her account at Wells Fargo. She claims she had banked with Wells Fargo for years but only had banking services denied when she became a candidate and had a platform to espouse her views.

These “blackballings” of opposing speech by financial institutions all seem to go against conservative groups. Left-wing groups like Antifa and Black Lives Matter don’t seem to have been sanctioned by financial institutions, even though they have been accused of engaging in violence. ActionNetwork, a turnkey social and contribution platform for all sorts of “progressive” causes, big and small, allows contributions via credit cards.

A Virus Launched in 2013

This all seems to have begun with “Operation Choke Point,” a clandestine regulatory policy that the Obama administration commenced in 2013 that was purported to target money laundering but also targeted arms and ammunition sellers and so-called “payday lenders” (who make loans that are due to be repaid on the next payday). Documents discovered in a lawsuit showed that some regulators in the Obama administration abhorred these kinds of businesses, notwithstanding that they are legal.

Dennis Shaul, CEO of the Community Financial Services Association of America, wrote an article for The American Banker in which he described regulators’ animus toward the industry, which he said they tried to obfuscate when it came to light; then he wrote:

“A dangerous precedent has been set here. If government regulators under one administration can target businesses they personally disfavor, any subsequent administration can do the same. Personal prejudices cannot be the standard for regulation, and the government should never disregard due process or regulatory procedures to choke off lawful businesses.”

Thankfully, the Department of Justice ended Operation Choke Point in the first few months of the Trump administration.

But that does not appear to have ended the communist-style social credit regime imposed by financial institutions. Some banks continue to impose barriers to financial services based on their own subjective views of legal businesses and controversial opinions, even though they are no longer under the cudgel of government regulation. Most doing so are encouraged by ESG-conscious private equity managers and public employee pension funds.

Just last month, for example, the attorneys general of California and New York wrote to the three major credit-card companies asking them to establish a merchant category code for gun and ammunition retailers. Public employee pension funds soon jumped aboard the initiative, citing purported “regulatory, reputational, and litigation risks that may harm long-term shareholder value” in the credit card issuers. One can easily imagine how, if banks acquiesce to this demand, they might well be asked to “de-bank” controversial political movements, political parties, and religious institutions.

Financial Services Companies Are Public Utilities and Common Carriers

Nobody should be de-banked or frozen out of their credit accounts because they support controversial political views or engage in legal activities that unelected bank executives or regulators abhor. It is an extra-judicial punishment that offends the very nature of First Amendment guarantees and the sensibilities of a democratic society. While obscenity, defamation, fraud, incitement, true threats, and speech integral to already criminal conduct are clearly illegal, other speech—even abhorrent offensive and “hate speech”—is legally protected, so long as it is not incitement. And if Congress wishes to adopt a constitutional amendment to change that and make certain speech illegal, as it is in some countries in Europe and Canada, there is a process for it. But Congress, which regulates banks, should not permit the process to be circumvented by bureaucrats and bankers.

Harry Truman, the plain-spoken  Missouri Democrat who became an unintended president, once said of measures to restrict dissent (in his day, the threat of the Red Scare):

“Once a government is committed to the principle of silencing the voice of opposition, it has only one way to go, and that is down the path of increasingly repressive measures, until it becomes a source of terror to all its citizens and creates a country where everyone lives in fear.”

The next Congress should establish a national financial services bill of rights to limit the power of banks and regulators to deny credit, close accounts, or impose the kinds of fines that PayPal has in its terms. It is clearly a role more suited to a court, with guarantees of due process and appeal than to bureaucrats and businessmen.

Evelyn Beatrice Hall, an English writer who wrote a biography of Voltaire, summarized the philosopher’s view on speech by attributing to him this quote: “I disapprove of what you say, but I will defend to the death your right to say it.”

In a nation as deeply divided as ours, where outliers tend to command the greatest notice, and speech we abhor is commonplace, it’s important that we remember Voltaire’s quote. And Truman’s. And abide by both.

If we do not, we might ultimately sacrifice the republic.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.