Tag Archive for: campaign finance

Take the Politics out of Money

You have to admire the moxie of a man that flies a gyrocopter on the Capitol lawn and risks being shot Capitol Police to protest corruption and demand campaign finance reform.

Laudable though his intentions may have been, campaign finance laws are less about reform and more about protecting incumbents from challengers. If we truly wish to reform government, we should be less concerned with getting the money out of politics and more concerned with getting the politics out of money.

The government spends gigantic amounts of money and regulates large swaths of economic activity. These actions create powerful incentives for affected interests to lobby politicians for privileges. As long as the political process has the power to create and destroy fortunes, people will compete to manipulate the system. This incentive problem is inherent to politics and cannot be eliminated by campaign finance reform.

Such “reforms” mean little else than incumbent politicians writing the rules today for the elections they will run in tomorrow. No one should be surprised when they write rules that subtly shift the odds in their favor. One example is the rules limiting individual contributions.

These rules force candidates to draw small amounts of money from a large pool of donors. Incumbents have the advantage of name recognition and established fundraising networks. The longer they have been in office, the more developed this network will become.

These rules benefit incumbents by putting challengers and unknowns at an immediate and even greater fundraising disadvantage, making it hard for them to get the traction to even have a shot at the election.

If someone wants to run outside the current two party duopoly, they put themselves at a huge fundraising disadvantage because third parties lack an established fundraising network. The clichéd version of politics is a smoke filled room where billionaires quaff brandy, but the reality is that the support of the existing party structure is much more important than any one donor. No outsider can appeal to the Elon Musks or Mark Zuckerbergs of the world to fund their campaigns against such entrenched networks. By keeping individuals’ money out of politics, we are ensuring politics as usual.

Campaign finance rules strengthen the role of political parties in choosing candidates. Political parties are not obligated to support everyone that runs under their name. If the goal is reform, one must recognize that political parties benefit from the status quo because they were instrumental in creating it.

What this means is that anyone that strays too far from the party line risks losing indispensable party support. (Former Sen. Jim Bunning’s career was cut short in this way when his own party leadership deliberately torpedoed his fundraising.) Campaign finance rules can have the impact of forcing candidates to work with political parties, thereby strengthening the power and influence of the party system.

Under the guise of creating a level playing field, the current system instead rewards those that find (or create) loopholes and push the envelope on what is legally permissible. Unexpected campaign contributions are the performance enhancing drugs of modern politics. Lobbyists gain power when they find creative ways to circumvent the law and funnel large amounts of money to candidates in need, gaining the perfectly legal influence and access to affect policy.

This is also why those who can bundle contributions are so valuable and why their downfall can create such a ruckus. While small increases in spending have a negligible effect on outcomes, someone that can exploit a loophole or bend the law can raise substantially more funds than an ethically constrained competitor.

Lastly, we must remember that even if a rule is ideal in theory, humans must enforce it. As the newly elected Governor of Wisconsin, Scott Walker made many political enemies. In retaliation, a prosecutor convinced a judge to authorize home invasions and police raids of prominent Walker supporters.

Such incidents should serve as a reminder that the law is a cudgel that those with power will use to bludgeon those without, given the opportunity. Lois Lerner and the IRS targeted the tea party because complex rules allow for such discretionary abuse. Grassroots organizations now need lawyers just to get off the ground. Incumbents use these rules to their advantage, strangling opposition in the cradle.

As long as politicians remain free to reward their friends and punish their enemies, they will never want for a gourmet meal or a drinking buddy. The problem of corruption is a symptom of the disease of big government.

Politicians control so much of the economy, either outright or indirectly, that those with the most to gain will always find a way to persuade politicians that what’s in their interests is the same as to what’s in the public interest. Campaign finance laws are just the insult to injury: extra power introduced to a system that is supposed by “reformed” by its exercise.

The solution to politicians being bought is to ensure that they have less power to put on auction.

Stewart Dompe

Stewart Dompe is an instructor of economics at Johnson & Wales University. He has published articles in Econ Journal Watch and is a contributor to the forthcoming Homer Economicus: Using The Simpsons to Teach Economics.