Notes on Money in Politics

This evening I’m scheduled to talk about money in politics with a local college class. As I’m looking up some articles for this purpose, I thought I might as well provide some links and discussion here.

The main point of this evening’s discussion is to debate Amendment 65, about which I have written and spoken at length. Please see my collected commentary and links. However, my hope is to take the conversation in a broader direction tonight. The main question I want to examine here is how much “big money” actually influences politics. Of course, this issue represents only a small slice of the discussion, but a relevant one.

The main thesis in this regard is a simple one: People have brains. We are not mindless automatons, zombies passively influenced by whatever advertisements impinge on our senses. Rather, we have the capacity for reason, for thinking critically about the messages we see. When we’re talking about money in politics, we’re talking about people spending resources in an effort to persuade others (voters) to behave in a certain way. Because people have reasoning minds, the impact of money in politics is necessarily limited.

Let’s begin with some comments from Steve Simpson (shown in the photo), whom I interviewed this summer:

There are too many examples of expensive advertising flops or rich candidates who lost elections to take seriously the claim that money buys elections. Ross Perot, Michael Huffington, Meg Whitman, Jon Corzine—the list of candidates who have spent huge amounts of money and lost goes on and on. A certain amount of money is necessary to be a contender in an election. Beyond that, candidates win or lose because they have messages and support policies that the voters like.

To take a Colorado example, last year, Colorado voters rejected Prop. 103, a school tax measure, by a margin of 63 to 37 percent—an overwhelming defeat by any measure. And yet, as the Denver Post reported, “Supporters raised more than $600,000 in the effort to pass 103, while opponents raised less than a tenth of that.”

In 2003, Colorado voters rejected Referendum A, concerning water bonds, by even bigger margins: 67 to 33 percent.

A Denver Post article from November 5, 2003 (“Colorado In ‘No’ Mood,” by Joey Bunch) reviews:

Referendum A appeared headed for easy passage. Owens put his campaign aces on Referendum A and helped raise more than $750,000 to promote its passage.

He collected huge donations from corporations and residential developers.

The opposition group Vote No on A raised less than half that. High-profile opponents included Attorney General Ken Salazar and former governors Dick Lamm, Roy Romer and John Vanderhoof.

Moving to broader studies, Stephen Dubner summarizes a paper by his Freakonomics coauthor Steve Livitt finding that a candidate can double or halve campaign spending and impact the outcome only by a point in either direction.

Dubner continues:

What Levitt’s study suggests is that money doesn’t necessarily cause a candidate to win—but, rather, that the kind of candidate who’s attractive to voters also ends up attracting a lot of money. So winning an election and raising money do go together, just as rain and umbrellas go together. But umbrellas don’t cause the rain. And it doesn’t seem as if money really causes electoral victories either, at least not nearly to the extent that the conventional wisdom says. For every well-funded candidate who seems to confirm that money buys elections (paging Michael Bloomberg), you can find counterexamples like Meg Whitman, Linda McMahon, Steve Forbes, and Tom Golisano.

Dubner also rounds up the views of other economists, including Jeff Milyo, who writes:

[L]arge shocks to campaign spending from changes in campaign finance regulations do not produce concomitant impacts on electoral success, nor do candidates with vast personal wealth to spend on their campaigns fare better than other candidates.

These findings may be surprising at first blush, but the intuition isn’t that hard to grasp. After all, how many people do you know who ever change their minds on something important like their political beliefs (well, other than liberal Republicans who find themselves running for national office)? People just aren’t that malleable; and for that reason, campaign spending is far less important in determining election outcomes than many people believe (or fear).

But what of the left’s endless incantation, “Corporations aren’t people!” Besides the obvious fact that corporations are composed of individual people, each of whom with rights, it just ain’t true that corporate spending dominates politics.

Steve Chapman writes for Reason: “Of the $96 million donated to these political operations [Super PACs], 86 percent has come from individuals and less than 1 percent from publicly traded corporations. Major companies almost unanimously have concluded that they have more to lose than gain by wading into polarizing political campaigns.”

“But what about the rich people?!” The advocates of Amendment 65 explicitly call for the censorship of “the rich”—so apparently the wealthy aren’t people, either.

The problem of money in politics is not much of problem. But the “solution” of censoring political speech is extraordinarily dangerous. Liberty can survive stupid campaign ads. It cannot survive censorship.


Image of Steve Simpson: Institute for Justice