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Campaign Finance Follies


Imagine you open a store fully stocked with goodies. Lo and behold, people show up with money eager to buy. Would you be surprised? Of course not.

That is the sum total of what is called the campaign finance problem. Politicians have goodies, legislative favors, to sell, and people are eager to buy them with campaign contributions. The quid pro quo is a little harder to see, but the principle is the same.

Of course, there is a big difference between a store and the government. In a private store the proprietor sells things he owns. In the government store, politicians sell what they have first taken from productive citizens (subsidies). They also sell promises to help some citizens by restricting other people in their peaceful pursuits (regulations). Sometimes, as economist Fred McChesney points out in his book, Money for Nothing , politicians take money in return for a promise not to do something that would have hurt the donor. Whichever is the case, officeholders reap campaign contributions for interfering with people who have a right to be left alone.

For example, Congress has passed legislation that authorizes quotas on imported sugar for the purpose of keeping the price artificially high. That is done to benefit the small group of American sugar producers and Archer Daniels Midland, which makes an alternative to sugar, corn syrup. Would anyone be surprised to learn that the people who benefit from quotas on imported sugar make campaign contributions to incumbent candidates and give soft money to political parties in the hope that the quotas will continue? It would be amazing if it didn’t happen.

With the government ladling out billions of dollars in subsidies every year and passing intrusive regulations, Washington is like a gigantic bazaar, with buying and selling going on at a frantic pace. And considering that what is being bought and sold is the power to restrict or to take from productive citizens, it is no wonder that H. L. Mencken, one of America’s most astute observers, likened elections to an “advance auction sale of stolen goods.”

What is amusing about the campaign finance “scandal” is that so many people believe it can be solved on the demand side rather than the supply side. In other words, they think that it can be cleaned up by outlawing soft money or enacting spending and contribution limits or interfering with free political expression, as the McCain-Feingold bill would do. It is understandable that they only want to talk about contributions. They want the government to transfer money from those who earn it to those who don’t. So that power won’t be questioned; it won’t even be acknowledged as a possible source of campaign corruption. They can’t imagine what government would do if weren’t allowed to give away other people’s money.

But that approach lacks a certain logic. If we want business and labor to stop corrupting elections, we’ll have to stop government from selling favors. That seems pretty straightforward. No one will slip the Democrats and the Republicans hundreds of thousands of dollars if there’s nothing to get in return. The price of coffee at the White House will plummet when the president of the United States lacks the power to shift resources from outsiders to insiders. Take away the subsidies, and sleeping in the Lincoln bedroom won’t be that big a thrill.

The root of the money is power. Vastly restrict the power, and you remove money as an important factor in elections.

But if all you do is restrict campaign contributions and spending, the problem will persist. First, the restrictions will handicap challengers in elections. Incumbents have built-in advantages, which is why they are reelected in overwhelming numbers. Limits on spending and contributions will only multiply the advantage of incumbency.

Second, those limits will only address explicit contributions. Never underestimate the ingenuity of people to get a bargain. As long as government has the power to give subsidies, potential beneficiaries will find a way to influence the process.

You want money out of the political process? Get the political process out of the business of dispensing other people’s money.

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    Sheldon Richman is former vice president and editor at The Future of Freedom Foundation and editor of FFF's monthly journal, Future of Freedom. For 15 years he was editor of The Freeman, published by the Foundation for Economic Education in Irvington, New York. He is the author of FFF's award-winning book Separating School & State: How to Liberate America's Families; Your Money or Your Life: Why We Must Abolish the Income Tax; and Tethered Citizens: Time to Repeal the Welfare State. Calling for the abolition, not the reform, of public schooling. Separating School & State has become a landmark book in both libertarian and educational circles. In his column in the Financial Times, Michael Prowse wrote: "I recommend a subversive tract, Separating School & State by Sheldon Richman of the Cato Institute, a Washington think tank... . I also think that Mr. Richman is right to fear that state education undermines personal responsibility..." Sheldon's articles on economic policy, education, civil liberties, American history, foreign policy, and the Middle East have appeared in the Washington Post, Wall Street Journal, American Scholar, Chicago Tribune, USA Today, Washington Times, The American Conservative, Insight, Cato Policy Report, Journal of Economic Development, The Freeman, The World & I, Reason, Washington Report on Middle East Affairs, Middle East Policy, Liberty magazine, and other publications. He is a contributor to the The Concise Encyclopedia of Economics. A former newspaper reporter and senior editor at the Cato Institute and the Institute for Humane Studies, Sheldon is a graduate of Temple University in Philadelphia. He blogs at Free Association. Send him e-mail.