Full disclosure

October 18, 2010 1:29PM

Allyn Milojevich, research fellow at the Tennessee Center for Policy Research, discusses the best approach to campaign finance in Monday’s Nashville City Paper. by Allyn K. Milojevich During this election cycle, extensive campaign finance laws affect every political campaign. These laws are complicated, archaic and do little to achieve their purported goal: preventing the corrupting potential of large donors on political candidates. Campaigns were financed with private money well before the United States was an independent nation. Take George Washington’s 1757 campaign for a seat in the Virginia House of Burgesses, in which he gave a quart of beer, cider and wine to each voter in his district. As campaigns have become more expensive, laws up to and including the most recent overhaul in 2002 have created a tangled web of confusion. Today, campaign finance laws represent little more than legalized money laundering. A more effective solution would be to eliminate spending or contribution limits altogether and simply require full disclosure of each candidate’s donors. Representative democracy is itself remarkably market-like, relying on voters to choose the representative best able to advocate on their behalf. Voters, like consumers, make basic predictive cost-benefit analyses about where they should best spend their resources (votes) based on the products (candidates) they believe will best fit their needs. Campaigns are inherently important because they allow voters to determine which candidate most exemplifies their policy preferences. But voters are not acting simply like consumers, voting for whichever candidate is the “best buy.” Rather, they are making an investment in a candidate and hoping their investment will pay off in terms of returns to the district and their personal well-being. And as in most market-based systems, government interference complicates matters and distorts the flow of information. There are three failures inherent in elections that can destroy their ability to accurately register voter demand. First, elections are time-locked, while economic markets are perpetually open. Second, although most federal elections are constrained by geography, elected representatives can affect parts of the country far outside their constituency. Third, elections that give equal vote to every citizen have no way to register the intensity of each voter’s support. The money spent on electioneering is not in and of itself one of these failures. Despite this, campaign finance laws were originally put in place to correct the latter concern. The goal was to prevent the corruptive influence of large donors on politicians by placing contribution caps on individual donations to candidates, PACs and political parties. But from the first attempts at campaign finance reform in 1910, corruption was rampant and led to shady, backroom deals. When a law was passed to limit overall campaign spending, the Supreme Court struck it down as unconstitutional. This did not stop campaign finance reform advocates, as new laws cropped up that still severely limited individuals’ and groups’ ability to monetarily support candidates of their choice. By focusing merely on the total spending in elections, campaign finance reform proponents misplaced their concerns. Voters are smart enough to disregard obviously biased information presented in advertisements such as television and mailings. “Excessive spending” also fails to offer the major effect man y believe it does. In the 2004 campaign, Democratic-leaning 527 groups far outspent Republican-leaning groups on issue-advocacy ads, and yet they lost the presidential election. Voters are able to see advertisements and disregard them if they believe the arguments presented are skewed or self-serving to the paying group. Further, by allowing the opposition to spend its own money, more information — not less — will eventually come to light. Eliminating spending caps and donation limits, and instead requiring full disclosure, will lead to a more effective, transparent system. Allyn K. Milojevich is a research fellow at the Tennessee Center for Policy Research, the state’s free market think tank.