Thanks for very good comments. First, my apologies to Senator McCain for a typo in the spelling of his name.
Campaign contributions do involve rent seeking, but they are not all socially wasted if they lead to desirable political outcomes. If I knew of an effective way to cut down contributions without affecting outcomes I might support it. But no one has ever come up with proposals that do not have huge loopholes. Since I indicated in my discussion that total spending on campaign contributions is rather small, I believe we are better off allowing great freedom to contribute rather then trying to cap them, or in other ways cut down on wasteful components of contributions.
It is not useful to say that democracy should involve cooperation rather than competition. Every system of government must have a method for actually reaching political decisions, as opposed to simply describing our hopes for how decisions should be reached. Most modern approaches to democracy since Joseph Schumpeter's discussion in Capitalism, Socialism, and Democracy have involved important aspects of political competition as a way of reaching political decisions.
The reason political freedom is useful is not that top leaders always emerge, but that one avoids the sometime terrible policies of totalitarian leaders. A free press and political competition do not guarantee good outcomes, but it helps reduce the likelihood of the really awful outcomes produced by a Stalin, Mao, or Hitler.
Advertising in politics or the economy helps unknown leaders or unknown firms break into a political or economic market. To me that is a great advantage of all advertising. Nor is it clear that advertising raises prices of the products advertised (see the discussion of the theory and evidence in G. S. Becker and K. M. Murphy, "A Simple Theory of Advertising as a Good or Bad", Quarterly Journal of Economics, Nov. 1993).
I agree that I should have been more careful in distinguishing self-financing of campaigns from campaign contributions more generally. The evidence I cited on the small effect of campaign contributions on outcomes refers to general contributions. James Snyder gives a good summary of this evidence in an article in the Winter 2003 issue of the Journal of Economic Perspectives.