The Economics of Campaign Reform
Kazman, Sam & Reynolds, Alan
Sam Kazman & Alan Reynolds The Economics of Campaign Reform l~rill the new election laws put an end to influenoe-peddling or merely Mmnge its forms? The Federal Election Campaign Acts of 1974...
...Limitations on campaign contributions can be partially circumvented by such expedients as hiring the candidate's law fu'm or giving honoraria for speeches...
...It was an anticapitalist revolt, yes, but it never embraced the shibboleths of Northern social reformers...
...So it was with the South's agrarian rebels...
...In this case, the mere creation of the Federal Election Commission was in itself an act of capture by the agency's creators --the incumbent parties and politicians...
...If candidates receive campaign money from the government," asks Prof...
...They didn't spout rhetoric about abolishing poverty or eradicating the pains of existence...
...The Election Commission ruled that the League of Women Voters could donate hundreds of thousands of dollars, and the networks could forego $2 million apiece in revenues, because the debate would be "nonpartisan...
...Moreover, corporations, unions, and anyone else can spend as much as they like advertising a candidate, so long as such spending is made independently, without any control by the candidate...
...Endorsements by popular organizations or political figures are yet another form of nonmonetary contribution that will become more important under the new laws...
...They didn't place their faith in the idea of progress...
...Since contributions of time are exempt from any limits, celebrities can donate a few hours and raise a lot of money and Sam Kazman is an attorney with the Pacific Legal Foundation...
...They didn't get themselves raveled up in the yarns of liberal abstraction...
...The hope or theory behind the subsidy is that if candidates don't need to take bribes to finance campaigns, they will no longer take bribes...
...0 0 0 0 D I O 0 I a 0 0 0 0 0 b m 0 O 0 0 0 Q ~ Q Q D m 0 Q i g g Q Q Q Q 0 0 I P I 0 Q I 0 0 D D 0 0 0 D Q 6 O 0 0 0 I D 6 Q ~ 0 0 Q Q Q 0 Q 0 Q ~ D 0 0 0 0 0 O m Q 0 D D D O 0 0 Q 0 0 0 Q m m 0 o 0 g o 0 0 Q 0 6 6 I ~ Q 0 I Q I i Q Q 8 t ~ 6 0 g 0 O g Q Q ~ 0 9 D Q Q Q00 DDDOIOgOQO Robert IV...
...Poorer candidates are more dependent on contributions, and are therefore more adversely affected by increases in the costs of raising funds due to the new laws...
...The campaign laws also give wealthy candidates and incumbents an even greater advantage than they had before, and therefore might easily lead to less responsive government and increased corruption among office-holders...
...Two 14 The Alternative: An American Spectator May 1977 econometric studies suggest that to outweigh the advantages of incumbency a candidate for the House of Representatives must outspend the incumbent by around $200,000...
...Now comes a book by Jack Bass and Walter DeVries, with the revelation that these institutions have crumbled (The Transformation of Southern Politics, Basic Books, $15.95...
...disfranchisement...
...In order to evaluate the probable outcome of campaign reform laws, it is useful to apply the analytical tools of economics...
...and malapportionment of state legislatures, which concentrated power in the hands of rural conservatives...
...Are we to suppose that the New South, liberated from its old political straitjackets, will now join forces with the liberal North just in time to go under with Abe Beame's titanic mess...
...Them That Has In Congressional races, there is no limit on how much of his own money a candidate may spend...
...Four institutions, Key believed, helped to perpetuate conservative hegemony: the one-party system...
...Of course the South's resistance to the onslaught of modernity had its ugly side...
...Since subsidies are distributed on the basis of performance in past elections, which in turn reflects past subsidies, it would be extremely difficult to form a successful new party...
...To those Presidential candidates outside the established political duopoly--from independents like Eugene McCarthy to minority party candidates like Roger MacBride of the Libertarian Party--such massive public exposure could hardly appear nonpartisan...
...And the hostility and meanness the white South directed against the region's blacks illustrate the power of the reactionary impulse...
...and that if it was not evident in subsequent years, it was because conservative "Bourbon forces" had suppressed the Populist alliance by disfranchising the blacks and otherwise setting the poor of both races against each other...
...In the process, however, the relative political clout of organized interests is increased...
...These increased obstacles to entry into the political market should tend to lengthen the average stay in office and augment the potential payoff from lobbying efforts and bribes, since investments in an incumbent are not apt to be lost in the next election...
...To suggest, for example, that this movement represented a Robert IV...
...Because individual campaign contributions are only one of many desirable things that can be offered to politicians, however, the new laws may simply shift political influence among individuals and groups without substantially reducing the total of such influence-peddling...
...Nonmonetary Contributions The campaign laws limit campaign contributions by individuals to $1,000 per candidate, $20,000 a year to a political committee of a national political party, $5,000 a year to any other political committee, and $25,000 in total...
...These costs include, in addition to strict limits on individual contributions, requirements for public disclosure of receipts and expenditures...
...The reduction in political competition, brought about by limiting the costly campaigning required to unseat incumbents, may also have the same effect as a reduction in market competition--namely, a reduction in responsiveness to the demands of consumers of political services...
...And they knew that the merchants and bankers back in town who held the lien on next year's crops--and would soon have a lien on the following year's as well--were robbing them of the dignity of their toil...
...Corporations, unions, and political committees become vital devices for gathering many smaller contributions...
...liberal strain in the region is to miss the point...
...Efforts by labor unions to mobilize their own memberships, as well as their public education campaigns, are not inhibited by the new law, and so labor unions gain in their relative ability to purchase influence...
...These provisions would probably reduce the number of individuals who make large campaign contributions by raising the price of buying politicians m include the risk of fines up to $25,000 and/or imprisonment of up to one year...
...But they knew from hard experience that capitalism was a callous, impersonal, exploitive system, just as the Southern mind had sensed it would be long before Tom Watson began collecting followers...
...Reducing the need to cater to potential donors of campaign contributions might have another curious result...
...But Southern Populism would reassert itself, he maintained, as soon as these institutions crumbled...
...publicity for candidates ("The new political king-makers," predicted the Wall Street Journal, "will be rock musicians...
...Buttressing Incumbency Incumbents have always had an advantage in any election, particularly with the growing importance of media exposure and such Congressional privileges as franked mail and taxpayerfinanced newsletters to constituents...
...This obviously gives wealthy candidates a substantial edge, since Congressional aspirants are now subjected to tight limits on contributions...
...In short, politicians can still trade their influence for nonmonetary campaign advantages, and this further shifts political influence away from private wealth toward organized wealth, and toward celebrities and incumbent politicians...
...Well, this is a little difficult to believe when liberalism is manifesting little more than a faint heartbeat even in the North...
...A new amity conjoins the races, however wary it may be beneath the surface...
...But corporations and trade associations can solicit voluntary contributions from stockholders and executives, and labor unions can solicit contributions from members...
...In his influential book of 1949, Southern Politics in State and Nation, Key had argued that the South's native liberalism was evident in the Populist uprising of the 1880s and 1890s, an alliance of poor whites and blacks against the moneyed capitalists...
...Advocacy organizations" also become more important vehicles for the promotion of policy views associated with certain candidates or for ads supporting specific candidates...
...And so they banded together and rebelled, just as they rebelled a couple of generations later when it was the abstractionists and moralists who invaded their homeland and assaulted their heritage...
...The Federal Election Campaign Acts of 1974 and 1976 were designed m curb the sorts of influence-peddling that were revealed in the Watergate investigation...
...A 1975 report by the Americans for Democratic Action notes that over the preceding four years an average of 95.5 % of the Representatives who ran for re-election, and 83.7% of the Senators, were victorious...
...The arguments over the Ford-Carter television debates provide an example...
...Politics thus becomes a competitive industry which requires scarce resources, such as time, energy, and money...
...Merry is a staff wrfter for the National Observer...
...There can be no question that Bass and DeVries are correct in perceiving major changes in the region this past generation, but in drawing upon Key's thesis they fundamentally misinterpret the character of the South, beginning with the character of Southern Populism...
...Roger LeRoy Miller of the University of Miami, "why would they have to face up to the issues...
...lost causes always do...
...Today the South has a new perspective on all that...
...The profound conservative antipathy to capitalism is also disThe Alternative: An American Spectator May 1977 15...
...But to say that race hatred fomented by the Bourbon interests prevented the South from going liberal is to misunderstand the Southern mentality...
...But the value of political influence is no more determined by a politician's need than the market value of a house is determined by its owner's need for money...
...Merry New South, Old Sensibilities Gone is the rawial polities of the Old South, but the antique courtesy, the love of plaee, and abborrence of abstraction remain...
...With the election of Jimmy Carter, everyone's been talking about the New South, especially liberals only too happy to congratulate themselves for their longstanding faith in V.O...
...Political influence remains a valuable commodity, of course, but the new laws attempt to prevent individuals from offering large campaign contributions in exchange for such influence...
...With the new restrictions on raising and spending money, it will be exceedingly difficult for anyone who is not very wealthy to unseat an incumbent...
...the use of blacks as political scapegoats...
...Politicians are treated as ordinary human beings who respond to monetary and nonmonetary incentives much as the rest of us do...
...Finally, there is the familiar tendency of regulatory agencies to be captured and controlled by those whom they are supposed to regulate...
...Regardless of how financially secure politicians are made by subsidies, they are still in a position to sell a commodity for which buyers will pay dearly...
...All things considered, the enormous faith that many have in campaign reform laws seems unwarranted...
...Alan Reynolds is a Vice President and Economist with The First National Bank of Chicago...
...As Richard Weaver has shown so well, the tragic role of Southern culture has been to stand athwart history, issuing a plaintive protest against the onslaught of Western rationalism and materialism...
...More accurately, it was the South's inherent hostility toward the modern liberal ethos, and its devotion to a dying order, that intensified Southern whites' feelings on that issue, the most profoundly complex the nation has faced or will face...
...Independents and minor parties who do not expect to become eligible, for subsidies will be at a severe disadvantage relative to their many subsidized opponents, so that fewer new parties will be formed and existing minor parties may drop out of the race...
...Key and the South's inherent liberalism...
...Political influence is treated as a valuable commodity which is supplied by politicians and demanded by others...
...Social reformers may have battled capitalism in the rest of the nation, but the South dismissed both camps, clinging instead to older valuesmspirituality, chivalry, kinship with the soil, an appreciation of tragedy...
...But even if limitations are successful, they will have many unexpected drawbacks...
...The authors do not spell out exactly what the "transformation" will mean in policy directions, but they do suggest it will lead to more "people programs," more governmental intervention, more domestic social spending--in short, more of your standard liberal fare...
...Presidential candidates are eligible for $21,820,000 in federal campaign subsidies if they agree not to accept outside contributions or spend more than $50,000 of their own money...
...Wouldn't they then be able to do things strictly for window-dressing and/or attention-getting...
...The result could easily be more, not less, corruption...
Vol. 10 • May 1977 • No. 8
