All Commentary
Monday, May 1, 2000

Campaign-Finance Reform Will End Corruption?

If Politicians Had Nothing to Sell, No One Would Be Buying

People with an investment in government power will torture logic like a medieval inquisitor rather than face the facts. Consider campaign-finance reform.

The standard reformist wisdom is that campaign contributions corrupt the democratic process: Candidates need money to run for office. Corporations and wealthy folks offer to provide the money in return for favors when the candidates take or resume office. Politicians pay their debts by writing tax loopholes, subsidies, and other goodies into law. The “little guy” can’t compete in the bidding for favors and, worse, ends up financing the payoffs to the big contributors.

The proffered solutions to this problem range from strict limits on contributions all the way to a ban on them, with campaigns financed by the taxpayers.

The public hasn’t shown much interest in the matter. But it’s a favorite of reporters, pundits, and editorial writers, whose influence, coincidentally, would be magnified if campaigning were restricted. Time magazine ran a cover story February 7 by the famous reporting duo Donald Bartlett and James Steele, the first in an occasional series titled “Big Money and Politics: Who Gets Hurt?” The editorial pages of all the major newspapers have solemnly weighed in on this threat to the republic. Typical was the Washington Post of February 4 in a discussion of presidential candidates (whose names have been elided so as not to imply a dignity they do not warrant): “The scope of market freedom is defined not just by how much government meddles with business, but also by how much business meddles with government—by lobbying, by slipping loopholes into legislation and by the other corrupt practices . . . . One goal of the reform . . . is to curtail the lobbying system that exists precisely to ensure that favors and distortions continue to flourish.”

Before getting to the meat of the matter, let’s consider the solutions to this problem. Limits on contributions are limits on peaceful (though probably not creative) activity. In a free society you wouldn’t expect it to be illegal to give as much money as you wish to someone else so that he can campaign, that is, speak to voters in an effort to get elected. Participating in campaigns, even by giving money, looks like a form of expression protected by the doctrine of natural rights and reflected in the First Amendment to the U.S. Constitution. In a Supreme Court ruling upholding a state’s contribution limits last winter, Justice John Paul Stevens wrote, “Money is property; it is not speech.” That’s too glib. Speech may require spending money. Surely Justice Stevens would not overlook other restrictions on the use of money that had the effect of suppressing speech. Besides, why should property receive less protection than speech? Ultimately, the right to engage in speech is a property right, since it includes the use of property, beginning with one’s larynx and the spot on which one stands.

The idea of having the taxpayers pick up the tab for campaigns is so outrageous it’s hard to believe anyone really favors it. You’d think that even the watered-down notion of a free society most people accept today would include the freedom to abstain from contributing to candidates. Thomas Jefferson said compelling a person to support a cause he disagrees with is “sinful and tyrannical.” I can’t even imagine a rebuttal. Being forced to give money to politicians one despises is the kind of thing that would have driven the Founders to revolution had taxation alone not done the trick.

It doesn’t take much intelligence to see that limits or bans on contributions must help incumbents at the expense of little-known challengers. Considering, as James Payne has written, that incumbents become bigger spenders the longer they are in office, this is bad news to anyone wishing to see government power curtailed.

If the solutions are ghastly, the grasp of the problem is worse. To paraphrase: People buy government favors through campaign contributions, so let’s restrict or outlaw campaign contributions. What’s missing from this picture? The favors that politicians have the power to sell, of course.

It hasn’t occurred to the reformers that if politicians had nothing to sell, no one would be buying. On the other hand, if there is something to sell, outlawing its purchase won’t put a stop to the trading. (See the War on Drugs.)

We live in a country where politicians can arrange for particular interests to get tax exemptions, cash subsidies, and other favorable special treatment from the tax and regulatory machinery. As long as that’s so, people will eagerly invest money in the politicians most likely to make such arrangements. They will also invest to prevent politicians from doing them harm. Fred McChesney describes this phenomenon in his aptly titled book Money for Nothing. (I hasten to note that there is an immense moral difference between paying to stave off state aggression, for example, buying a tax loophole, and paying to get a subsidy—someone else’s money.)

The irony is that the very people who decry the corruption of money in the political system wish to expand the scope of government and give it more favors to sell. How can they propose that government be a comprehensive service center, then object when people try to buy its services?

This is an old story. Frederic Bastiat wrote about it in The Law (1850), pointing out that legalized plunder and the distribution of booty go hand in hand. Trying to separate them is like trying to have fire without smoke. (See Lawrence Reed’s column in this issue for Bastiat’s own words.) In The Road to Serfdom, Hayek wrote, “In a planned society we shall all know that we are better or worse off than others, not because of circumstances which nobody controls, and which it is impossible to foresee with certainty, but because some authority wills it. And all our efforts directed toward improving our position will have to aim, not at foreseeing and preparing as well as we can for the circumstances over which we have no control, but at influencing in our favor the authority which has all the power” (emphasis added). Hayek was referring to a society in which government presumes to plan all economic affairs. But the principle is in force when the government’s ambitions are more modest. If the government has make-or-break tax and regulatory power over business, potential beneficiaries and victims will look after their interests.

The opposite principle follows: if government is scaled down to, at most, constitutional dimensions, the campaign finance issue will vanish. But the people who feel our pain can’t conceive of a government without favors. Thus they refuse to see that they—not money—are the source of the corruption.

H. L. Mencken reduced political science to a single pregnant sentence when he wrote, “every election is a sort of advance auction sale of stolen goods.” The rest is elaboration.

There’s a simple way to keep money out of politics: keep politics out of our money.

—Sheldon Richman

  • Sheldon Richman is the former editor of The Freeman and a contributor to The Concise Encyclopedia of Economics. He is the author of Separating School and State: How to Liberate America's Families and thousands of articles.