The Case for Small Government

A Libertarian Perspective on Economic and Social Policy

March 17, 2006

Campaign Finance Regulation

House Republicans have introduced a bill that imposes new restrictions on 527 groups, the independent organizations that attempt to influence politics. Under the new restrictions, individuals would face strict limits on their contributions to these groups. Republicans support these restrictions because rich donors like billionaire George Soros have given millions to Democratic-oriented 527s.

The proposed restrictions, along with all campaign finance regulation, are fundamentally misguided.

Campaign finance regulation does not reduce money’s influence in politics; interest groups always find ways around the regulation. A perfect illustration is 527s, which arose in response to pre-existing restrictions on contributions to candidates and political parties. 527s now spend large amounts on “issue ads,” communications that address political topics but do not explicitly endorse candidates. This has changed the way money influences politics but has not reduced that influence.

Money’s influence on political outcomes, moreover, is not necessarily bad. Some monied interests support bad policies, but others support good ones like reduced regulation and taxation. No mechanism consistent with the Constitution’s guarantee of free speech can limit one kind of influence without also limiting the other.

The best campaign finance regulation, therefore, is none at all.


At 11:20 AM, Blogger Tom C said...

In a perfect world, you might have a point. But this is more of a question of "Abuse of the Commons", and, as such, one of the major headaches in Libertarianism. My reason for goverment intervention is the same as for preventing overgrazing: all of the private incentives will drive us towards the destruction of the Commons.

This applies to Campaign Finance because the primary vehicle for "speech" is television ads. All television is regulated in one way or another, but most specifically the over-air frequencies are parcelled out to keep the system working without interference. Thus, the "Commons". Unlimited money can essentially purchase all the available commercial time, shutting out other proposals, especially those that don't appeal to monied interests.

But I wouldn't choose to regulate by limiting financing, I would (when I am king) take the profit motive out by

1. Requiring stations to sell air time at the average rate they achieved over the last 2 years for that time slot.

2. Ration access based on opening a certain number of slots per time period per qualified, independent applicant.

Is this "unfair"? Sure, to people who want to use their money to shut out everyone else's message. Just seems more evenhanded to me.

At 12:17 PM, Anonymous Anonymous said...

If someone tried to buy all the air time on television, on all the networks, that would cause an enormous rise in price of commerical time, eventually reaching a point where it is just too expensive to buy commericals. And why would one candidate have easier access than others to television ads?

Furthermore, if candidates were so desperate for ad time that they were paying enormous sums such that there was no more commerical time left, new networks would arise to show them. But I find it hard to believe that over all network and cable channels that they would sell out all their ads.

This "Commons" idea doesn't make sense.

At 2:28 PM, Blogger Tom C said...

In any given election cycle, there are limited places where people can buy ads that would be effective. The "new" network you're talking about would not have the right frequencies, programming, etc. in any useful timeframe. As we've been taught so well recently, each election matters. In 2006, there's only one place American Idol is on, and don't think the money can't buy all the ad space on it.

TV air time is a limited good controlled by the public. For most of the time, we allow companies to make a profit from it. This is not a natural law. It's a choice we make. Air time on our frequecies can either be sold to the highest bidder or we can choose another rationing scheme. During election season, I'm suggesting the latter.

At 2:35 PM, Blogger Mike Huben said...

Government (especially policymaking) and audiences (because there is limited attention) are both commons, and both need regulation lest there be a tragedy of the commons.

Because the FCC manages the airwaves and other communications, we could reinstitute equal time provisions. Or alternatively, we could provide matching government money against campaigns that rely on large donors or that are outspending by a large proportion.

As Tom points out, libertarianism has no real solutions to most commons, and there are quite a few that are extremely important. Not only the physical commons of infrastructure, air and water, but also biological, epidemological, social, labor force, government, legal, intellectual, and cultural commons play major parts in our lives. And having no solution, libertarians instead prefer to scoff. After all, if you can convince people that there is no commons, then you can abuse it to your profit at will.

At 8:31 AM, Blogger Ananda said...

"Audiences need regulation" -- a better summing-up of Mike Huben's fascist worldview could not have been made up.

At 9:15 AM, Blogger Mike Huben said...

I don't know what tyrranical daydreams you have Ananda, but I was thinking of "don't call" lists, equal access for opposing viewpoints, truth in advertising, and a host of other small measures which allow audiences to protect themselves from (a) bombardment and (b) propaganda. That's regulation too.

It would be nice if the simpleminded weren't just looking for excuses to label enemies "fascist", and instead attempted to think beyond kneejerk responses to opposing ideas.

At 9:33 AM, Blogger Ananda said...

That's pretty rich, for he of the "Four legs gooooood, two legs baaaaad" comment style. You might try practicing just a tad of what you preach.

How precisely do you intend to enforce "truth in advertising" on political communications? Who determines which viewpoints are entitled to equal access? And are you seriously proposing do-not-call lists with *political* restrictions (as opposed to current DNC lists that only prevent sales calls)? Any answer that explicitly or implicitly invokes an idealized FCC, immune to politicization and budget pressure from a party-dominated legislature, gets a zero.

At 4:56 PM, Blogger Bob Schubring said...

The principal abuse of the commons that has arisen from the squandering of ever-increasing sums of campaign money has been the introduction of sham issues (such as flag desecration, Monica Lewinsky, and gay marriage) which mobilize unlikely voters to turn out and vote, but do nothing to inform the public about the issues that really matter, and in fact, crowd out all rational debate.

The best solution advanced so far is a free-market approach that penalizes moneyed special interests for obfuscatory campaigns, by requiring that all new legislation be subject to a seven-day public-comment period before it is voted upon, and creating private rights of action in the courts against legislators who cause public harm if they bypass the comment period to address some alleged public emergency.

The Read the Bills Act, proposed by Downsize DC, once enacted, will guarantee that grassroots opponents of any measure will have sufficient time both to learn of its impending passage and to bombard their representatives with emails and telephone calls registering their disapproval.

Under current House and Senate rules, there are no private rights of action for those harmed when a relationship between a lobbyist and some members of the Congress gives birth to bad legislation. The only concern a member of the Congress faces is censure by the Ethics Committee.

Worse yet, the federal courts are clogged with lawsuits that result from conflicts of laws. When the Congress enacts statutes that are self-contradictory (after all, who actually read every page of the NAFTA Treaty or the Patriot Act? Probably not even the teams of writers who generated these voluminous documents...), it falls upon the courts to decide which statute takes precedence over the other(s)...usually leading to lengthy appellate process, and the occasional circuit split, requiring the Supreme Court's attention.

So, under the present system, a moneyed special interest need only hire itself a prominent K Street lobbyist, write some language that it wants introduced into a bill, wait for a good sham issue to arise and provide camouflage, then give away enough campaign money to get its pet bill passed...usually as a rider on some other bill that is highly popular and unlikely to suffer a NO vote. Since the public has no input into the conference committee process that often generates such compromise bills, special-interest legislation usually sneaks through the process without any public scrutiny or comment.

When the Read the Bills Act becomes law, those incentives will change. A moneyed special interest can waste all of its available funds to buy the construction of a bill in committee. When the bill moves to the floor for a vote, full public comment may well erode support for that bill to such a degree that it cannot pass. Thus, moneyed special interests will be given a strong incentive to investigate the public's concerns over any putative legislative scheme, before spending a nickel trying to promote it. Washington may have to reinvent itself from the ground up, but the end results will be shorter bills, language that is easier for nonlawyers to comprehend, more effort by moneyed special interests to find ways to benefit the public interest while seeking to benefit themselves, and the replacement of today's political climate of obfuscation and polarization with a new political climate of inclusion and consensus.

At 8:04 AM, Blogger Mike Huben said...


A "Four legs gooooood, two legs baaaaad" comment is extremely appropriate for three repetitions of "What libertarians oppose is government policies" by Miron.

But perhaps you're satire-impaired.

Repetition is a key component of propaganda: you should read about it some time. At worst, you'd learn how to improve the effects of your propagandizing; at best, you might free yourself from the grip of libertarian propaganda.

At 3:14 AM, Anonymous Anonymous said...

Mike: sorry, but your statist hand-waving at commons as a refutation of libertarian positions is tenditious at best. You see, when a government is allowed to interfere in the market, that creates a commons. The tragedy of that commons is capture of regulations by special interests. In this particular case, campaign finance regulation is a form of capture by incumbents.

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