“Market failure” is one cause of environmental problems, but “democracy failure” is even worse.

Russia and China aren’t the only examples. It also happens closer to home, as illustrated by last week’s decision by California’s Humboldt County to abandon Measure T, a local law banning non-local corporate money from local elections.

For years Humboldt County, like many rural counties in lumber or mining areas, was dominated by a single corporation — Pacific Lumber, a subsidiary of Texas-based Maxxam, Inc.

For local voters, the last straw came when Maxxam spent several hundred thousand dollars on a recall initiative against District Attorney Paul Gallegos after Gallegos prosecuted Maxxam for fraudulent timber harvest filings. In 2006, after Gallegos survived the recall, the grassroots campaign that had organized to support him pushed through Measure T on a 55-to-45 percent vote.

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The drafters of Measure T were aware of the U.S. Supreme Court’s Bellotti decision (1979), which established the precedent that corporations could enjoy First Amendment rights under the U.S. Constitution. In Bellotti, the Court invalidated a Massachusetts statute similar to Measure T that prohibited corporate spending on referendums. But the author of the Bellotti decision, Justice Lewis Powell, suggested that in situations where the “relative voice of corporations has been overwhelming” or where corporate influence has threatened “the confidence of the people in the democratic process and the integrity of government,” limits on corporate political money would be acceptable.

Both exceptions seemed to fit the situation in Humboldt. For example, in 2004, research conducted by Humboldt State University indicated that four out of five local voters felt that heavy corporate contributions made political corruption more likely.

Not only was Measure T popular with local voters, it was seen as a template for anti-corporate activists across the country. That makes all the more stunning last week’s capitulation by the Humboldt County board of supervisors in response to pressure by the Pacific Legal Foundation, a right-wing think tank. In a settlement signed on November 7 [PDF], the supervisors not only declared the ordinance null and void, but also promised to pay the Pacific Legal Foundation $44,000 within 60 days.

Why did Humboldt County cave on a matter that had passed by such a large majority and that had been crafted to meet the requirements of Supreme Court precedent? The probable answer is that the county simply couldn’t afford the fight. In September, Federal District Court Judge Susan Illston, a Clinton appointee, had granted PLF’s request for an injunction [PDF] against Measure T, agreeing that the measure was “underinclusive” (because it targeted only non-local corporations) and that it should have made an exception for ballot initiatives (ignoring Powell’s statements in Bellotti). Faced with the likelihood of spending large legal fees on a case where the judge appeared to have made up her mind, the County decided to bow out of the fight.

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What’s sad about the demise of Measure T is that the principle that corporations don’t belong in politics was actually a mainstream feature of American law for the first 200 years of the country’s history. As late as 1970, for example, the state of Wisconsin had a statute that stated, “No corporation doing business in this state shall pay or contribute, or offer consent or agree to pay or contribute, directly or indirectly, any money, property, free service of its officers or employees or thing of value to any political party, organization, committee or individual for any political purpose whatsoever, or for the purpose of influencing legislation of any kind, or to promote or defeat the candidacy of any person for nomination, appointment or election to any political office” (Wis. Laws, Lection 4479a (Sec. I, ch 492, 1905).

It is only since the late 1970s that Supreme Court decisions have established new corporate First Amendment rights, extending the Fourteenth Amendment rights won by corporate attorneys in the 1880s. This sort of corporate hegemony is bad for public morale, bad for democracy, and ultimately bad for the environment.