Should Campaign Contributions Be Limited? Posner

Congress, most recently in the Bipartisan Campaign Finance Act (McCain-Feingold), enacted in 2002 in time for the 2004 presidential election, has tried to limit campaign contributions and, more broadly, to regulate campaign tactics. For example, a provision of the Act requires people or firms that spend more than a certain amount of money on campaign advertisements to reveal their identity to the Federal Election Commission, where the information is available to the public; and ads sponsored by the candidate himself or his campaign committee must so acknowledge, so that the reader or viewer doesn’t think that the ads are disinterested. The most important provisions of the Act, however, concern the size of permitted contributions. These provisions (1) raise the limit on individuals' campaign contributions ("hard money") from $1,000 to $2,000 per candidate and (2) forbid "soft money" contributions, that is, contributions not to a candidate or his party but instead to "independent" groups that buy ads during political campaigns but do not expressly endorse candidates. Most such ads actually are closely coordinated with the campaigns of particular candidates. The efficacy of the prohibition of soft-money contributions has, however, been greatly reduced because of "527" groups; section 527 of the Internal Revenue Code grants a tax exemption to groups that seek to influence federal elections, and it is as yet unresolved whether McCain-Feingold's prohibition of "soft money" contributions encompasses contributions to such groups. The higher hard-money limits, the increased use of the Internet to obtain small donations from a large number of people, and the 527 loophole have assured that elections will be just as expensive as they were before the McCain-Feingold Act went into effect, notwithstanding the purported abolition of soft-money contributions. However, the goal of the Act is not to limit total campaign expenditures, but rather to reduce the influence of the wealthiest donors (even before McCain-Feingold, corporations and labor unions were not permitted to make campaign contributions). A secondary goal is to make campaign advertisements less misleading by forcing disclosure of their sponsors, whether the candidate or someone else. So the main question that campaign-finance reform raises is whether it is desirable to limit the contributions of the wealthy. To put this another way, would allowing contributions without limit have good or bad consequences, on balance? Generally, we would think it inefficient to try to place limits on advertising. It is true that advertising has something of an arms' race character; to the extent that the advertising of competing products is mutually offsetting and so does not shift consumers from one product to another, it has no net social product. But to limit advertising would be to deny sellers full use of an important competitive tool. It would have a particularly deleterious effect on new entry into markets, since a new entrant may have to spend heavily on advertising to overcome settled consumer preferences for existing brands. The political market is similar. Candidates "sell" themselves as leaders or representatives, plus their programs and policies, to the electorate; campaign advertising helps the voters decide which candidate, which package, to buy. Limiting the amount of money that a candidate can spend on advertising his candidacy discourages new entry into the political market. Campaign finance laws like McCain-Feingold do not limit the candidate's expenditures directly, but do so indirectly by forcing him to raise money from many different individuals. Limiting campaign advertising, whether directly or indirectly, operates as a subsidy to newspapers and other news media, which report on political campaigns. The less political advertising there is, the more dependent the public is on the media. This may explain why the media strongly support campaign finance reform. Not that McCain-Ferguson is well designed to limit aggregate political advertising; but it could be a step toward such limitations. The fear that animates the imposition of limits on campaign contributions has three principal aspects. First, the incentive to engage in fraudulent and otherwise misleading advertising is greater in the political market because voters are less wary than consumers. The instrumental value of voting is nil (no nonlocal elections are decided by one vote), and its consumption value modest (as evidenced by low turnover), so the voting public has little incentive to invest heavily in learning the truth about candidates and policies. So maybe it would be a good thing if voters got more of their information from the media rather than from political advertising. But this argument for regulation overlooks the fact that voter interest and turnout are likely to be greater the more campaign advertising there is; to the extent that advertising by contenders is not offsetting, it increases demand for their product--that is, it increases the amount of voting. 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. Wealthy people are allowed to spend as much of their own money on their campaigns as they want, which indeed has attracted some eccentric candidacies, and the prospects for "buying" elections would be enlarged if they could contribute unlimited amounts to others. But what this shows is the inefficiency of allowing the wealthy to spend money only on their own candidacies. It produces underspecialization. If the wealthy person is allowed to contribute to another candidate, his expenditure on campaigning will be on average more productive, because wealth and the ability to be an effective political candidate are not well correlated. Moreover, forcing 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. Remember that campaign finance reform does not limit aggregate expenditures, but merely increases the cost of obtaining contributions by limiting the amount of the individual contribution. By making candidates work harder to raise the same amount of money, it actually increases the cost of fund raising, though an offset may be that slightly less is raised overall; in general, any increase in the cost of a commodity will result in less being demanded. 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. Of course, some would give, out of conviction, but in smaller amounts than they would give if they had an expectation of a personal benefit. Bribery is illegal, but the kind of "soft" bribery that consists of campaign contributions that the recipient knows will diminish or disappear in the future if he constantly votes against measures important to his contributors undoubtedly exerts some influence on politicians. Yet even here there is some offsetting benefit. One weakness of democracy as a method of allocating resources is that votes are not weighted by intensity of preference, as they are in the market. Campaign contributions are a method of expressing intensity of preference and so help to direct the allocation of governmental resources to those who may benefit from them the most. The problem of course is that private and social benefits may not coincide, and the more concentrated the private benefits and the more diffuse the social benefits, the less likely is an allocation of resources guided by the weight of campaign contributions to produce the social optimum. My conclusion is that efforts to limit the size of campaign contributions are probably mistaken. I am more kindly disposed to requiring the revelation of the identity of the sponsors of political ads. It is true that one effect is to reduce the amount of political advertising, but to the extent that this comes about because disclosure of the backers of the candidate (or the candidate's connivance in an untruthful ad) makes the advertising less effective, rather than because the sponsor desires anonymity because his support of the particular candidate would be unpopular in his firm or his community, this is all to the good. And because voters have so little incentive to study political ads carefully, there is something to be said for inducing skepticism in voters by forcing the revelation of the names of the sponsors. For then it may be transparent to even the inattentive voters that the sponsors seek a private and inefficient transfer as a fruit of supporting a particular candidate with their campaign contributions.

Comments

[robert]

One, every legislative enactment intended to regulate campaign finance has always been circumvented and this includes McCain-Feigold. Therefore, accepting this premise, campaign finance legislation is a product of fatuousness.
Two, I am in favor of complete disclosure rather than limits on raising money and/or spending money--with the latter being found unconstitutional viz. BUCKLEY v. VALEO. At least with complete disclosure the ultimate consumer, i.e., the voter, can know the identity of the supporter and the amount given and make an informed decision (if he or she wishes) on the basis of such information.

[shiva]

What Judge Posner said about intensity of preference does not fail because of the differences in utility coming from a dollar. Contributions are still a way to express intensity, even if a dollar from one person expresses a different degree of it than a dollar from another person. So limitations really do restrict one form of that expression, whether it bothers you or not.

As for the concern with liberal democratic principles, I am sympathetic with you, and I do believe it is obscured by a law-and-economics approach, even if it is not completely ignored (Posner's analysis did mention the potential difficulty in reaching the social optimum due to concentrations of private benefits).

[David Welker]

There is one major flaw with Posner's point concerning intensity - the market is NOT is not good enough at measuring "intensity" to make it worthwhile to allow the wealthy to make unlimited contributions. If someone who is wealthy makes a large contribution and someone who is not wealthy makes a small contribution, this obviously does not mean that the "intensity" of the more wealthy citizen's preferences is greater. You could only plausibly make that claim if you controlled for income.

The more significant and overwhelming result of allowing unlimited contributions by the wealthy is clear -- their preferences, however strong or weak in intensity, will far outweigh the preferences of less wealthy individuals.

Posner might respond that different wealthy individuals will counter-balance each other. One wealthy person might support a Republican, another a Democrat. There are two responses to this sort of point. First, this is an empirical matter and it is clear that income patterns and political preferences are not unrelated. Second, even if wealthy individuals did balance each other out, with respect to inter-party competition, it is quite clear that they would not weigh each other out with respect to intra-party competition. Of course, there are factions within parties, which makes this point a little more complicated, but to the extent that you think that wealthy individuals may have common backgrounds, interests, perspectives, and preferences, it seems that there is a danger that those preferences will be magnified, even if they are much less in intensity compared to the intensity of preference of lower income individuals.

Finally, there is another objection. This one is principled rather than utilitarian and contingent. While it is rather clear that from a utilitarian perspective, objection two above gives us every reason to think that it is a bad idea to allow wealthy individuals to buy influence, even if this did not occur, it violates equality norms and any reasonable principle of justice to weigh the political preferences of one individual several orders of magnitude greater than the preferences of another individual when the intensity of those political preferences are the same.

[Trucchi e Guide]

Is good to know it.

[Martin Bento]

Shiva wrote:

"What Judge Posner said about intensity of preference does not fail because of the differences in utility coming from a dollar. Contributions are still a way to express intensity, even if a dollar from one person expresses a different degree of it than a dollar from another person. "

Yes, it does fail, as a simple matter of mathematics. To claim that a result measures the influence of a variable, one must first isolate that variable. If the nominal size of a contribution measures both intensity of preference and marginal disutility of money for the donator, then it cannot be taken as "expressing" the first variable, as any possible size of donation can correspond to any nonzero intensity of preference, depending on utility.

Robert, to say that the fact that campaign finance laws are fatuous because they are circumvented is itself fatuous. Every law against murder has also been circumvented. Shall we then abandon our objections to murder?

[shiva]

Martin,
Ok. I get it. Is this line of complaint kind of similar to the problem with making interpersonal comparisons of utility? Bare with me, I am a little new to this.

In light of the problem, can I instead say that the dollar amount of a campaign contribution measures the intensity of votersí preferences for a candidate simply as a matter of empirical fact? That campaign contributions measure the intensity of preferences seems like a totally plausible social scientific hypothesis. I would imagine there is a meaningful relationship there. Does that work? You would have to control for a varying utility of money. I mean contribution amount would express intensity, just not quite as lucidly as one would like. But even then, what Posner said would still hold, wouldn't it?

As others have already said, there may be better ways to express intensity of preferences, without the unfortunate side effects like "soft bribery" that contributions seem to have.

[Martin Bento]

shiva, yes, this is an instance of the problem of comparing utilities, though there are other problems with comparing utilities, and the market can be regarded as a solution to some of them, but not this one. Magnitude of contribution could probably be considered a reasonable measure of intensity of preference for a given donor at a given time, but not between donors, which is the primary issue here.

The only way one could say that contribution magnitude can, even crudely, map to intensity of preference would be if there were no correlation whatsoever between one's wealth and the substance of one's preferences. If political preferences were distributed equally across the income spectrum, then one could say that utility differences would average out. The problem with this assertion is that it is empirically false. Tax, trade, fiscal, and welfare policies affect classes differently. Often, so does foreign policy. Even in cases where it is not obvious that there is a difference in private interest among income groups, there seems to be a correlation. For example, it is not obvious that gay marriage particularly benefits or hurts any specific income group. Yet I believe polls did show a correlation between income and support for gay marriage, possibly as an artifact of another variable such as education, but for this purpose the cause of the correlation does not matter. If the correlation, for whatever reason, is nonzero, then magnitude of contribution does not map to intensity of preference, even approximately. It also does not matter, by the way, whether the correlation is linear across the entire income spectrum, or any other secondary attributes; only that there be a correlation. It is clear that such correlations generally exist, and I would be curious to know whether they have been any major contentious issues of the last ten years where there was no such correlation. It's possible, but I can't think of any likely candidates.

[MT]

Advertising at this time is now free. It's called the World Wide Web. What we have been calling advertising up to now is intrusive and parasitizes the attention we mean to pay to other things--the TV show we're watching, the news story we're reading, the patch of roadside we're looking at when a billboard appears. I don't even want to see such campaign advertising on the Web, and there's no need for it. People will blog and link and Google and they will have their fill of the candidate and commentary. We are no longer a society of town squares and meeting halls. We don't need to pay for fireworks and banners and trucks to bring people in. Let campaign spending be set to zero!

[N.E.Hatfield]

"intensity of preference" has got noting to do with it. It's really all about tax write-offs and power politics. As Machivelli put it, "it's really a matter of Virtu, fortuna, & neccessite."

[Corey]

"Advertising at this time is now free. It's called the World Wide Web."

That is a gross overstatement of the level of access to the WWW. It may seem like the whole world to people who spend all of their free time on it, but it is not the whole world. Nor is it free, don't be delusional about the reach a blog can have.

I read Posner's post and thought to myself, wow, what a great argument for campaign limits, then I came to the sentence:

"My conclusion is that efforts to limit the size of campaign contributions are probably mistaken."

Well I am not in the habit of internalizing the bare preferences of judges, so I am not convinced.

If you believe that rich people "earned" or deserve their wealth then it makes sense to think that rich people should have superior influence over campaigns and politicians. However, if you yourself are NOT rich and believe that, then I pity your false-consciousness. Keep working hard, you will be rich too I am sure.

[lincoln fan]

A true reform would be to have campaigns totally funded by the taxpayers and to have the voters disperse the funds to the candidates of their choice.
This could work this way:
1. The congress would appropriate an amount based on the cost of the previous comparable campaign.
2. An equal share of these funds would be credited to a special account for each registered voter.
3. Each voter would electronically transfer credits to the campaign accounts of the candidates of his choice. No other credits to these accounts are allowed.
4. All campaign expenses would have to be paid from each candidates' account.

This system would provide a paper trail to assure that no "outside" money was used. Also, a check could easily be made to determine if the total spent was not more than the amount approriated.

[Pi˘ Messenger]

Gracias a Dios alguien que informa sobre algo!

[Simon]

Perhaps this is a separate issue, but I have always considered the issue of public funding of elections and campaign finance limits as intertwined. Many of the issues contribution limits fail to address (more competetive elections, "soft bribery," incumbency advantage) would be most effectively solved by dramatically limiting campaign expenditures and providing full public funding. Eliminating the need to fundraise by providing all candidates with a fixed amount on which to campaign would address these issues.
Whether this solution is constitutional is a completely different issue.

[calico bass]

i dont think a lot of people want publicly financed campaigns. in fact, the majority of people have an inate distrust for politicians and dont want to support either candidate and find supporting any politician as a waste. second of all, by having publicly financed campaigns i would implicitly be supporting someone i dont want in office. seems kind of counterintuitive to american democracy.

[Anonymous]

بنت الرياض

[Anonymous]

protect the freedom of speech

[Anonymous]

nice
مركز تحميل

[Anonymous]

thanks for your post.perhaps you will like ed hardy

[Anonymous]

thanks
بنت الزلفي

[Anonymous]

العاب
___
ÿ¥ÿßÿ™

[Anonymous]

ÿßÿ®ÿ±ÿßÿ¨
___
دليل

[Anonymous]

العاب
___
ÿ¥ÿßÿ™

[Anonymous]

العاب
___
ÿ¥ÿßÿ™

[Anonymous]

Thank you, you always get to all new and used it
شات صوتي

[Anonymous]

Thank you, you always get to all new and used it
ÿ¥ÿßÿ™

ÿØÿ±ÿØÿ¥ÿ©