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11/06/2005

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DEAN BERRY

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Peter Pearson

Please consider the merits of allowing unlimited contributions, with the only constraint being that contributions be "laundered" in a way that would prevent the donor from showing that he had made the contribution.

A candidate would open a special account with some trustworthy bank, into which supporters could make unlimited but anonymous contributions. The account would aggregate contributions and report only periodically, so that contributors could not signal recipients with unusual quantities or timings. Laws could prescribe penalties for breaking the anonymizing process.

Cutely, the worst part aspects of human nature work to help this approach. When you go to wink at the Senator and hint to him that the big contribution last month came from you, you'll have to stand in a line of fraudsters trying to get the same credit.

TC

I have always thought that the soft bribery concern is the most significant, and don't think it is really addressed by observing that in certain circumstances such "soft bribery" is socially useful because it allows for the expression of preference intensities. As you acknowledge, concentrated private benefits vs. diffuse social benefits is a situation vulnerable to exploitation by soft bribery. In addition, I tend to think this is not an uncommon situation.

I thought the most elegant proposal at the time the current law was being debated was the following: (i) allow unlimited contributions BUT require that they be made anonymously to a fund administered for this purpose; (ii) enforce anonymity by very strict penalties, akin to those for bribery; (iii) allow people to run their own ads for candidates, but strictly enforce the "no coordination" rules.

Of course, this may reduce campaign contributions, but for all the right reasons, i.e., people will not contribute for the quid pro quo, but because they support the policies etc. This does not completely address the "concentrated private benefits vs. diffuse social benefits" problem, but it does take out the bribery aspect of it.

Will campaign contributions be lower under this system than the current law, perhaps. This may have the effect -- as the current law does -- of making the political machines more important and making it harder for outsiders to mount a credible challenge. Wouldn't it be ironic if we concluded that soft bribery was good for the political system net-net because political interest groups were numerous and conflicting and their self-interested soft bribery simply resulted in an arms race that had some, but not a concerning level, of "pay-offs" but had the effect of lowering the barriers to entry to political participation.

Peter Pearson

TC and I are *not* coordinating our campaigns.

TC

Under the anonymous contribution system we may worry still that people with concentrated private benefits will contribute disproportionately more to support their favored policy, but this may not be such a huge problem since people support/vote for a candidate ñ who represents a package of policies ñ rather than one policy. If we think that concentrated private benefits ñ perhaps of different sorts ñ line up on each side, then the net effect may not be worrisome.

John

A candidate x who has a greater war chest than a candidate y may indeed have the benefit of having wealthy patrons, thereby implying the sort of public-choice dilemmas which campaign finance reforms are designed to address. That said, the hefty funding could also reflect the fact that he is viewed as a better overall candidate--not just for special-interest reasons. If so, donations made to candidate x could simply be a function of the disposable income rich voters have vis a vis others, and would suggest that reform laws harm the overall campaign process (by, as posner and others observe, increasing the costs of money acquisition). This observation would presumably be more plausible in candidates who have a greater number of "individual" wealthy donors as opposed to those whose funding comes from corporate blocs.

Chris

Are these jokes?

"McCain-Ferguson"
"McCann-Feingold"

Michelle

A crucial 'transition block' of this problem is the utility of advertising. Advertising is a 'science' most scientific because no one can figure out a way to accomplish select ends. Besides, with such a divided nation its practically impossible to build a banner of universal appeal.

Yes, more money means that one has more choices and one can have more human resources but spending on an unsound candidate like most boring Al Gore is simply filling a cracked bucket.

A lot of the time, campaign contributions and the success of a campaign line up for good reasons. People are more or less rational and if they're willing to give money they're also willing to give time. Time really makes a difference, with TiVo its easy to skip over advertisements.

What is not easy to do is to skip over the 'nice middle aged woman' who is standing at one's doorstep and helping one with voter registration.

One reason Kerry would have made a lousy president is that no one was 'all over' Kerry.(yes, many squirreley professors with their anti-sytem rhetoric but they're just democrat)
Kerry was pathetic, his 'metro/retro' campaign was stupid and when he appeared on television in his swampy advertisements I for one wanted to see not and hear not. :)

Johan Richter

to the extent that advertising by contenders is not offsetting, it increases demand for their product--that is, it increases the amount of voting.

A lot of political advertising is usually considered worse than offsetting. It is often said that negatice advertising, where you attac your opponent, reduces voter turnout. How would that affect your analysis?

N.E.Hatfield

It has been said, that the U.S. has the best Congressmen and Senators that money can buy. This particuliar idea has been around since the first election. I really don't think any kind of campaign finance reform is really going to change the basic equation. It hasn't in the past.

As for the electorate itself, there are those who have a high opinion of it. As some would say, "You can fool some of the people some time, and some of the people all of the time, but you can't fool all of the people all of the time." As for another perspective, P.T. Barnum put it best, "There is a sucker born every minute." When it comes to campaigning, I'm in the Barnum camp. ;) But more importantly, all campaign advertising is not to get people to vote or to establish support, but is intended to disenfranchise voters and to get them in the frame of mind so that they don't vote. Nothing scares the "bejesus" out of the party pols more than an electorate that votes. I hate being such a pragmatist.

Campaign finance reform, it's going to be delivered still born and the politics will still be as usual.

Michelle

The problem with P.T. Barnum is that he's a very, very, innovative genius who went all out to find the freakish to infinity. He's hard to imitate because people tire of 'the strange.' After all, the very element of the strange does battle with time.

An example, at first, the metro/retro balance of powers that Kerry's campaign managers relied upon sounded cute. Seeing it too often, and noticing how 'dumb' it really was for its 'oh so dumb' invisible audience made me 'unfortunately' more and more cold towards Kerry. Also as well, voters tend to grow more sophisticated over time, 'all that's true is that people tire of the new.' Senior citizens matter a lot, and they vote with full force. Young adults are often too conflicted to lend weight to either side.

Personal appeals matter, and you really can't rely on television any more for that.

David

As others have noted, the "bribery" aspect is of course the most troubling side effect of our current campaign finance system. Perhaps lobbies do not "buy" bills, but they certainly buy access to congressmen, senators, and presidents by contributing to candidates and parties. I don't think an anonymous system will work, for 2 reasons. First, I doubt that it will truly be anonymous; donors will find some way of making it clear who contributed to whom. After all, donors do not contribute out of the goodness of their hearts (at least not most big-time donors); they want the access that the contribution provides. Second, if the anonymity project does, somehow, manage to keep the secrets, donations will dry up. Because big donors want access, they will view anonymous donations as worthless.

I don't see any practical or constitutional way to keep interest groups from running ads that, one way or another, help a particular candidate. But we could start by taking away the tax exemptions for 527s.

I hate to come to this conclusion, but perhaps the best way to ensure clean gov't is through public financing of campaigns. I wouldn't make it complete public financing - candidates should have to demonstrate some capacity to raise money and support on their own. But if the public election fund gave all candidates, for instance, 10 times what they raised on their own, they would be much less beholden to donors. This might seem like an expensive program, but it is probably well worth the cost, especially if it takes away the incentive for the winning candidates to repay their donors with ill-advised tax breaks and corporate welfare. Public financing (that is, matching funds) worked in presidential elections for a while, but now the formula provides too little money to be helpful, so candidates are opting out. The program has to catch up with the times.

Wes

Third, and greatest, is the concern that campaign contributions, when large in amount, are a form of thinly disguised bribery...The other day I got a call from some kind of "Sheriff's Association". For something like a hundred dollars I could get a "Sheriff's Association" sticker to put in the window of my car. I had a friend visiting from a developing country who was shocked. Apparently my friend didn't realize that bribery is also prevalent in the United States.I recently submitted applications for some jobs and apartments. In all cases they applications ask for criminal record. Now, I've never even received so much as a speeding ticket so it doesn't really apply to me but, as with the "Sheriff's Association" situation, it is part of a worrying trend. If the "Sheriff's Association" sticker doesn't have any effect then why is it offered as an incentive for donation and if criminal record doesn't count against a person then why is required on the application?Both cases are implicitly justified as ordinary citizens helping the government with law enforcement. Ordinary citizens that side with the government over criminals are being "good" citizens. The trend that people are siding with the goverment rather than with each other is troubling. There should be a wall of impartiality between the government and the people.Campaign contributions are not a problem specifically . The problem is that given the choice between getting cozy with the government in order to benefit personally (through donations, etc.) or maintaining an impartial wall in order to protect the rights of other citizens, most people these days choose getting cozy with the goverment. Campaign finance will continue to be a problem as long as people are more suspicious of each other than they are of their governments.

Joe Merchant


The first requirement for any political contribution, from a "free lunch" all the way to major campaign contributions should be transparency - the electorate deserves to know who has bought their politicians and in what amount. Of course, major contributors have a multitude of ways to hide from any accounting system - most easily by contributing through "politically correctly" named third party entities (imagine Haliburton funding wildlife preservation foundations in every state, and they in turn contribute to a particular presidential campaign...)

Inasmuch as I despise needless bureacuracy, rules, accounting, etc. the process of limiting size of campaign contributions does increase the "hassle factor" for the wealthy to buy political clout, and some of the wealthy probably just won't be bothered to make as large of a contribution if the rules make it difficult. This is by no means giving less affluent citizens unfair access to their politicians, they still have the same one vote they always had.

The easier it is for the wealthy to buy political access, the less those "poor votes" will matter in policymaking. Drive this too far and we revert into a concentration of wealth for the wealthy, and an enriched (but not enlightened) few making all the decisions. That runs counter to the "free market" ethos wherein resource allocation decisions are controlled by everyone.

Jeroen

It seems to me that many of your arguments, while effective against laws limiting contributions, at the same time support a more radical policy: limiting expenditures. Such a policy has been implemented in some European countries. I wonder what your economic views are in that respect (aside from the legal issue of free speech).

David, as a person living in a country that has public financing of campaigs, I can assure you that it comes with its own problems. Personally, I would rather have some vote-buying among competing interest groups than the quasi government agencies that our polical parties have turned into.

W

1. POSNER: [T]o limit advertising would be to deny sellers full use of an important competitive tool.

A prominent scholar from the University of Chicago -- his name is Richard Posner, if I correctly recall, once argued to the contrary. Posner argued that in oligopolistic markets where a supracompetitive price is being charged by those with market power, typically a member of the oligopoly will try to siphon off the market share of another by pouring cash into advertising or other activities that increase brand recognition (e.g., Colgate bashing Crest during prime-time). Even if the oligopoly is maintained by signalling behavior rather than by intentional coordination, i.e., cigar-chomping CEOs hashing it out in a smoke-filled back-room, advertising is a safer way to compete than price-cutting, which results in a loss for all involved: the supra-competitive price becomes competitive and so on down the line. In cases of natural oligopoly, where no explicit horizontal agreement is formed and, say, efficiency or economies of scale are responsible for the arise and particular composition of the oligopoly, one can look to see if any of those with market power have excess capacity. If so, it suggests that they could be selling more and so, all other things being equal, the price could be lower. Just to extrapolate the important correlation: as the competitiveness of a market decreases, its quantity of advertising increases.

2. POSNER: Limiting the amount of money that a candidate can spend on advertising his candidacy discourages new entry into the political market.

Given the above paragraph, this conclusion is misleading. If one were to limit competitors in an oligopoly from blasting each other with negative advertising, they would start slashing prices instead. They'd offer rebates and package deals and free merchandise and prizes. Consequently, the barrier to entry would be higher. A lower price for consumers means greater efficiency demands on new market entrants. This is easy enough to prove. If you can sell your product for 5, then you can spend 4 to make it and turn a profit of 1. If, suddenly, you can sell your product for no more than 3, then spending 4 to make your product no longer turns you a profit. So far Posner's bolded statement above seems sensible: inefficient companies are barred entry. But one might say that it is good when less efficient companies are prevented from entering the marketplace -- if you can't compete, you don't belong in the market. Not to mention that natural oligopolies often form precisely because those competitors who collectively possess market power are the most efficient competitors. In other words, banning advertising doesn't discourage new entry; at most, it kicks out inefficient parasites to the natural oligopoly. So long as the price is competitive, who cares that inefficient companies are prohibited from entering? They shouldn't be in the market!

3. POSNER: [V]oter interest and turnout are likely to be greater the more campaign advertising there is....

By analogy, sales for Crest and Colgate rise when both companies polarize the public into camps of toothpaste buyers, i.e., Those Who Prefer Crest and Those Who Prefer Colgate. One could argue that subjective value is added to the purchase of a tube of toothpaste when one believes he is buying "the best." But if negative advertising between toothpaste companies is banned, or regulated by litigation, via false advertising claims, then the price for toothpaste comes down, because Crest and Colgate cannot tacitly agree to keep the price of toothpaste supracompetitive by refusing to slash prices and instead engaging in phony Toothpaste Wars. Instead, they must slash prices. While it is true that the public will be less polarized, and less people will visibly register their preference by rushing to the stores to purchase toothpaste, the cause of the reduced toothpaste sales will unlikely be due to people abandoning the practice of brushing their teeth. It will more likely be the result of an increase in bulk buying of toothpaste now that the price is so low. In other words, people will stock up in anticipation of the next phony Toothpaste Wars. Likewise, though people may not turn out during an election they find to be unimportant, they may participate in politics in other ways that compares to "buying in bulk."

4. POSNER: The second source of the fear of unlimited contributions is that they undermine democratic choice.

Regardless of who funds your campaign, you still have to appeal to voters in order to win. Bloomberg isn't beating Ferrer because he is rich; Bloomberg is beating Ferrer because Bloomberg has been an excellent mayor. Then again, there is no reason for Bloomberg to be able to avoid debating Ferrer by paying for unlimited amounts of advertising to which Ferrer cannot reply. There is something to be said for compelling candidates to talk about substance and giving the public a chance to hear both sides in equal measure.

5. POSNER: [F]orcing a candidate to raise money from a multitude of people rather than from a rich people limits the field of selection of candidates by forcing candidates to spend a great deal of time in fund raising.

This is untrue. Candidates pay professionals to accomplish this for them. Kerry issues major speeches while he is having dinner at French resturants, i.e., his staff faxes it out without his supervision.

6. POSNER: Third, and greatest, is the concern that campaign contributions, when large in amount, are a form of thinly disguised bribery--corporations and wealthy individuals would not give substantial money to a political candidate without an expectation of a quid pro quo.

Posner here seems to think that explicit labeling is enough. That might be true in a world where labeling is painstakingly accurate. But labeling can be deceptive. When Spain seeks to compel Britain to label its chocolate as from the United Kingdom, is it mere nationalism -- "Don't Buy British" -- or is it signalling to those consumers who care about nutrition that they're purchasing milk chocolate instead of the raw cacao product produced in Spain? One can always set up a committee with a pleasant name, The Committtee To Ensure Fairness In The Judiciary or The Council For Educational Alternatives. But only those in-the-know recognize that "fairness" means abortion-on-demand or that "educational alternatives" means creationism in the schools. To the extent that such duplicitous labeling is funded by gargantuan campaign contributions from multimillionaries and billionaries, doesn't it make especial sense to regulate them when many of the persons on these Committees and Councils are also lobbyists who move in congressional circles and are oft appointed to ambasssodrships or called in to re-draft controversial sections of laws while in conference? For example, C. Boyden Gray, who once ran the Committee for Justice, has hand-picked many of the conservative judges now on sitting the federal judiciary. As a long-time lobbyist for energy and tobacco companies he has, literally, drafted sections of our environmental laws. Soon Gray will be confirmed as our ambassador to the European Union. There is certainly the appearance of impropriety, don't you think? Wouldn't a rational, credible economist follow the trail of greenbacks?

Cicero

You wrote, "Campaign contributions are a method of expressing intensity of preference. . ."

Is this really so? Yes, but it may be misleading. If you took two individuals that had an annual income of $100K per year and examined the amount of their political donations, you are likely right that the individual who donates more money is likely a more intense supporter. But suppose that we examine two people again, one that makes $1M a year and one that makes $30K a year. Are we prepared to say that the million dollar man is more "intense" about his cause when he donated $30K and the poorer man donated $10K. You see my point - political intensity is a the importance of politics relative to life's other worries; percentages seem to matter.

I'd have to think more about where that leads me with respect to the Campaign Finance laws, but I thought it worth pointing out.

Cicero

TO "W"

"This is untrue. Candidates pay professionals to accomplish this for them. Kerry issues major speeches while he is having dinner at French resturants, i.e., his staff faxes it out without his supervision."

You are wrong. Posner's response will be that candidates wouldn't need to pay people to do fundraising; they could pay them to do something else - or not pay them at all, and fire them!

I'd go through your other statements, but it will take to long; this response was rather easy to point out and short. Hopefully the judge will make an effort to debunk your other statements.

Michelle

On Cicero: Good point, it reminds me of a King's remark on peasant gifts, something like, 'the cheese may be the best that the peasant can give but I still hold my nose when I smell it.' 'Normal'(Love that word!) everyday, average, everyman Joes, can't give that much. Yet, there are many, many, more everyman Joes who can't give that much than the super rich person who can give 30,000.

I think the two types are simply not comparable. Usually, it took a lot of hard work to scale the pyramid. Sadly, one barely rises to the levels of individualism(making intensity useful, valid, important) and the other is enmired in the snares of sociology.(one of many, useful only when harmonizing with the many, depressing...blah, blah :)

Maybe campaign contributions work a lot like church donations. In areas when there is a strong source of social pressure, i.e. rural mexico, there are beautiful cathedrals built by the humblest of the humblest. When the 'little people' lose touch, lose contact, with the greater entirety, then there's definitly a problem. For the one and for the many.

Yeah, intensity doesn't matter that much in terms of 'monetary donation' but hey, blogging is free and so is the right to volunteer for a specific campaign.

Otto Klemperer

With liberalism underlies freedom, with freedom we have democracy, but is freedom always good? what about when in countries like bolivia, venezuela, etc. We do not have the privilege the U.S has of having "farily descent" people running for office. When we have uneducated people, who is highly influenced by fake promises made by lousy polititians, and we end up with a Hugo Chavez in office, is it good to have freedom? or in other words, is it good to have freedom to worse of the whole nation in the name of democracy...?

W

Lazy Debater: You are wrong. Posner's response will be that candidates wouldn't need to pay people to do fundraising;

The question cannot be answered hypothetically. It is not a "would" question. Nor is it a question os necessity, It is an empirical question of sufficiency.

It is untrue that I am wrong. It is a matter of fact that politicians pay other people to do their fund-raising. In fact, that Kerry example is from an Associated Press article. It happened in reality.

You can conceptualize to the contrary all you want, but your conceptualization is little more than jawboning. Nor is it responsive to my factual claim.

As for your refusal to respond to my other points, the obvious weakness of your boldfaced argument above does not imply that any of your other hypothetical rejoinders would have any persuasive force.

talbot

I agree, W. If Posner does not take the facts as they are, he is not a pragmatist. If Posner's theory cannot take the facts as they are into account, then it is incoherent.

Pino

By analogy to advertising for products, advertising by politicians helps to bring down barriers to entry. One can think of Korzine and Bloomberg as examples of persons who, without having invested decades into their political brandnames, advertised their product/their candidacy and won elections.
Yet, this doesn't hold up very well. US senators and congressmen are nearly unbeatable; the incumbent is nowhere in the western world as safe as in the US (in terms of probability of keeping her/his seat once the candidate decided to hold on to it), while campaign finance rules are stricter everywhere else(or almost).
My guess is that the argument of bringing down barriers isn't too strong as the ability of the incumbent to raise money tends to be higher so that they can typically outspend a challenger (exc Korzine, Bloomberg). So while campaign finance freedom helps challengers overcome barriers to entry, it raises these barriers at an even higher rate.

Martin Bento

Judge Posner,

First of all, the market certainly does not provide a mechanism for measuring differing intensities of preference if the money of the players is unequally distributed, which is rather central to the issue here. The market treats money according to its nominal value, but "intensity of preference" is a form of utility, which declines for any given quantity of money, the more you get of it, because you are moving down your preference curve into lower and lower opportunity costs. For example, the your first ten dollars saves you from starvation; your ten millionth lights a cigar. These are clearly not equal in value to you, though they are equal in nominal value. By the same token, if I donate $100 to a candidate and Donald Trump donates $200, it does not mean that Trump cares twice as much as I do. $200 is "not as much money (not as much utility)" to him as it is to me.


As for the argument from self-funded candidates, as you stated the problem yourself:

"The second source of the fear of unlimited contributions is that they undermine democratic choice. A handful of very wealthy people could, if allowed to do so, provide a candidate of limited popular appeal with a campaign war chest of hundreds of millions of dollars, and by sheer volume of advertising could generate substantial electoral support for him. "

In other words, democracy could be undermined by the wealthy having greater influence then others, which undermines the premise of Democracy that all have an equal say in determining group decisions. In attempting to refute this, you cite the self-funded candidates and find that the donations of the wealthy would be more effective going to third parties. However, the problem is precisely that the donations of the wealthy are too effective and distort the political process. Making their donations more effective worsens rather than solves the problem. You have unwittingly skewered your own argument.

The notion that restrictions on political advertizing, direct or indirect, amount to mass media subsidies relies on the assumption of a "lump of political attention" - that people want a given amount of political communication, and can be given no more. Really? So if billboards were banned, people would seek other ways to have names and slogans thrust into their faces at random? This is an assertion that would certainly need to be argued. Even at that, it is not clear that media coverage, which has to at least claim fairness and try to make that claim credible, is inferior to the frankly partisan nature of political advertising.

Martin Bento

I wrote and posted my previous comment in haste, and, although I stand by the substance of everything I said, it strikes me that its tone could be taken as more aggressive than I had intended. I hope, then, that I have given no offense, as I would not like to see a substantive discussion descend to personal conflict.

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