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Want Money Out of Politics? Eliminate Government Discrimination

by Matt Mitchell on August 2, 2012

in Crony Capitalism

In my work on government-granted privilege, I have repeatedly emphasized the surprising degree of harmony between left and right on this issue. Both abhor the tawdry nexus between corporate power, money, and politics.

(As evidence that I am not the only one who sees such agreement, note that Occupy.com recently reprinted an article highlighting the Mercatus project).

In an article from Friday, progressive blogger Ezra Klein seems to bolster this point:

According to Harvard law professor Lawrence Lessig, only 0.26 percent of Americans give more than $200 to congressional campaigns. Only 0.05 percent give the maximum amount to any congressional candidate. Only 0.01 percent — 1 percent of 1 percent — give more than $10,000 in an election cycle. And in the current presidential election, 0.000063 percent of Americans — fewer than 200 of the country’s 310 million residents — have contributed 80 percent of all super-PAC donations.

“This, senators, is corruption,” Lessig said Tuesday, in testimony before the Judiciary Committee. “Not ‘corruption’ in the criminal sense. I am not talking about bribery or quid pro quo influence peddling. It is instead ‘corruption’ in a sense that our Framers would certainly and easily have recognized: They architected a government that in this branch at least was to be, as Federalist 52 puts it, ‘dependent upon the People alone.’ You have evolved a government that is not dependent upon the People alone, but that is also dependent upon the Funders.”

There is much in here with which I agree. Campaign spending begets access. Access begets privilege. And privilege, in my view, “misdirects resources, impedes genuine economic progress, breeds corruption, and undermines the legitimacy of both the government and the private sector.”

The same article, however, also highlights the ways in which progressives and libertarians disagree about money, politics, and power. Klein quotes and quickly dismisses Cato scholar Ilya Shapiro. In his own testimony, Shapiro argues:

To the extent that ‘money in politics’ is a problem, the solution isn’t to try to reduce the money — that’s a utopian goal — but to reduce the scope of political activity the money tries to influence. Shrink the size of government and its intrusions in people’s lives and you’ll shrink the amount people will spend trying to get their piece of the pie or, more likely, trying to avert ruinous public policies.

This, Klein argues, is impractical. Moreover, he says, “between the dismantling of the social safety net and the destruction of our military might, the cure might be worse than the disease.” Instead, Klein’s preferred solution is campaign finance reform, perhaps necessitating a Constitutional Amendment to get around First Amendment concerns.

I’ll admit I favor Shapiro’s solution. If we shrink the size—and more importantly, the scope—of the government, the wealthy and well-connected will have nothing to gain from playing politics. I also happen to think that Klein’s solution—controlling political speech—is, in fact, “worse than the disease.” (I think Madison would agree…he even used similar language). Moreover, I think that there are plenty of programs to shrink or eliminate before we get to cuts that eviscerate the safety net or threaten our security. To pretend otherwise is to “shoot the cocker spaniel.”

But in the interest of finding common ground with my progressive friends, let me suggest a modest compromise: the abolition of favoritism in government policy. In an interview with James Buchanan, F.A. Hayek once remarked:

[The First Amendment] ought to read, ‘Congress shall make no law authorizing government to take any discriminatory measures of coercion.’ I think that would make all the other rights unnecessary.

This quotation appears in the beginning of an excellent—but often overlooked—book by Buchanan and Roger Congleton called Politics by Principle, Not Interest: Toward Nondiscriminatory Democracy.

Buchanan and Congleton brilliantly trace the political and economic consequences of forgoing favoritism. What happens when government adheres to a sort of “generality” principle by which all policies are required to apply to all equally? What if there are no carve-outs in the tax code? No special favors in the appropriation process? Notice that this need not be the sort of libertarian paradise that Shapiro and I favor. Government might still spend a lot of money and it might still tax a great deal. But it would be constrained by the generality principle to tax and spend in a nondiscriminatory way (Buchanan and Congleton make an allowance for a safety net by proposing “a flat rate of tax on all income combined with a set of equal-per-head demogrants,” p. 161).

Generality would require both sides to give up their own pet projects which favor particular segments of society. No more “targeted investments” in particular green technologies. No more tax credits for people who have kids. No more subsidies for farmers. No more favors for manufacturing. No more bailouts of some firms and not others. Under such a constraint, a majority of Congress could elect to subsidize industry A, but it would also have to subsidize industries B-Z.

The proposal has an intuitive moral appeal. Government, after all, is constituted to promote the general welfare of the entire population, not the specific welfare of certain segments of society. But as Buchanan and Congleton show, it also has economic appeal. For under a generality rule, “no participant has an incentive to invest resources in efforts to secure differential or discriminatory advantage at the expense of others in the collective enterprise.” (p. 44). And that can make the difference between a society that prospers and one that stagnates.

We all—right, left, libertarian, and progressive—seem to agree that something is wrong when wealthy individuals donate to politicians and politicians hand out privileges to these donors. Klein and Lessig think the answer is to regulate donations. Shapiro and I think the answer is to limit the scope of government.

We can continue to talk past one another while the nation slips deeper and deeper into the grips of the pathology of privilege. Or, we can roll up our sleeves and think of alternative solution that might be acceptable to both the left and the right. How about the abolition of favoritism in government policy?

  • Ken Presting

    Let me begin by applauding the spirit of intellectual cooperation in Matt’s post.  I couldn’t agree more with that general goal, and with the specific suggestion to avoid favoritism.  I’d say his idea echoes the “equal protection” clause of the 14th Amendment.

    Also, I appreciate the attitude of those like the ACLU who
    agree with Justice Kennedy that freedom of speech must be absolute.  The
    problem is how to maintain that commitment, while also recognizing that
    equality is at risk.  Persons are not equal anymore when not only
    elections but also every step in the legislative process is influenced by
    campaign financing.  Here is the problem: five justices concluded that
    equality must be sacrificed to preserve free speech. 

    I believe that if we understand the doctrines of equal
    protection and free speech from the correct perspective, we can see that they
    are orthogonal, independent issues.  We can simultaneously maximize our
    commitment to both.  As I read Stevens’ dissenting opinion, this
    perspective is already implicit in the Bill of Rights.  Any new amendment
    need only clarify the Founder’s intent.   

    The key is in Justice Kennedy’s own view that access to
    information is the true goal of the First Amendment.  Freedom of speech
    has never entailed that advertisers can place unlimited billboards in any
    public space, nor that they can play messages at any volume at all hours. 
    Every municipality regulates expression – it’s the content which is protected.

    To me, the centerpiece of Lessig’s view is that we should demand a
    higher standard of confidence that our government avoids corruption.  It’s
    not sufficient to declare bribery a crime.  Simply by exercising its
    police and national defense functions, the government will always be a target
    for opportunists.  Add to that the regulation of commerce and the budget
    for public works, and the legislature becomes an irresistible magnet for
    influence-peddlers.  Each loophole for a special interest could generate
    huge profits.  “Smaller government wouldn’t solve this.  Our Congress
    is almost prostrate before its contributors.  Legislators need both the
    motivation and the tools to keep themselves honest.

    Here is the text I would submit for a clarifying Amendment:

    1.       All persons are guaranteed absolute
    freedom to learn and share public information. Congress shall make any laws
    necessary and proper to protect fair and open access to information.

    2.       All natural persons shall have equal and
    unimpeded opportunity to vote in every election for which they are otherwise
    qualified. Every vote cast in any election shall have an equal effect on the
    outcome. Congress shall make any laws necessary to protect the equal influence
    of every voter upon their elected representatives.

    3.       The most essential duty of any government
    is to retain the trust of its citizens. Therefore, Congress and every agency
    shall conduct their deliberations and operations in such manner as to display
    to any unbiased observer that beyond a reasonable doubt, both freedom of
    communication and equal protection under law are consistently upheld.

    Specific rules and limits for campaign finance can be
    addressed by legislation, rather than by an amendment.  What this
    amendment would do is undercut Supreme Court originalists arguing that any
    legislation to restrict campaign spending is inherently a law limiting speech. 

    Section 1 clarifies the First Amendment freedoms of speech
    and press.  Hopefully, it satisfies the concerns of Justice Kennedy and
    the ACLU.  It also subtly changes the responsibilities of Congress from
    the “hands off my free speech” prohibition against censorship, to being a
    positive power to protect open access.  This could, perhaps, influence the
    fate of Net-neutrality legislation and whistleblower protections.

    Section 2 states that the concept of equal protection works
    both ways between voters and representatives.  Not only are citizens all
    equally subject to the laws, but also equally sovereign over our
    legislators.  It’s unnecessary to say anything about corporations once
    it’s clear that only real people vote — as long as those votes count equally,
    unobstructed, all the way onto the floors of the Capitol.

    Section 3 is “radical transparency” – it recognizes that a
    government is inherently dangerous, prone to overreaching and to corruption of
    every kind.  We could never be sure beyond a reasonable doubt that our
    legislature is free of all corruption.  But we can establish fair
    procedures, and verify that they are followed.

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