Just finished Can American Capitalism Survive? by Steven Pearlstein. He’s a smart guy, knowledgeable, and a good writer. He is certainly on the left, but he acknowledges the benefits of capitalism. His main argument is that, in order for American capitalism to survive, the fruits of capitalism need to be distributed more equally. The rising inequality we see today should, he believes, offend our moral sensibilities. And extreme inequality will, he argues, lead to less prosperity, undermining the justification for capitalism.
While I agree with some of Pearlstein’s points (he advocates a universal national income, which has possibilities), I disagree with quite a bit of his analysis. One is his exaggerated and largely unwarranted fear of money in politics.
Like many liberals, Pearlstein is infuriated by campaign money spent by conservatives. “[B]usinesses and wealthy individuals have elected and captured a Republican majority in Congress that is committed to protecting their interest and pushing through their agenda, even if most of that agenda is opposed by a majority of voters.” There is the obligatory bashing of the US Supreme Court’s decision in Citizens United v Federal Elections Commission: “Under the guise of protecting free speech, the Court has now created a constitutional right to bribe elected officials, with the prize going to the highest bidder.” Of course the Koch brothers appear, and you can almost here the theme from Jaws: “When a small network of billionaires headed by brothers Charles and David Koch is both able and willing to spend $900 million in a single election cycle, it’s not unreasonable to wonder if the United States has crossed the line into plutocracy.”
Campaign spending by rich liberals such as George Soros is hardly mentioned, except to regret that liberals must similarly debase themselves. “The only thing that stands in the way of an unchecked plutocracy in America is that liberal special interests also make use of the same corrupt system of financing elections.”
This is an oft-repeated canard, that wealthy Republicans have significant control over elections. But it is, quite simply, false. Here are 5 facts about money in politics:
Fact 1: Democrats out-raise and out-spend Republicans. The liberal narrative that their candidates are cash-starved underdogs battling the endless money of Republican candidates is a fabrication. Understandably, liberals like to play poor Democrat David to rich Republican Goliath, but the fact is that Democrats consistently raise more money than Republicans. In the 2012 presidential race, Democrats raised $738 million compared to the $630 million raised by Republicans. In the 2016 presidential race, Democrats raised $800 million to Republican’s $647 million. And while liberals lament the nefarious so-called “dark money” – money given without disclosure of the donor – Democrats raise more of that too. In the 2018 mid-term elections, NBC News reported that Democrats raised 54% of the “dark money” donated.
Fact 2: Donations Don’t Buy Candidates. Michael Williams, who served as Special Assistant to the President and Staff Director for Legislative Affairs during the Bill Clinton administration, calls the idea that money influences policy a “myth.” People and organizations donate in order to support candidates they agree with, not to change a candidates position. “I don’t know anyone,” says Williams, “who was a ‘no’ on something until they got a contribution and then became a ‘yes’.” Which makes sense. Why would anyone donate money to candidates they dislike or causes they oppose? There are plenty of like-minded candidates available to support.
Fact 3: We Spend More on Snack Chips. While the amount of money involved in politics sounds like a lot, let’s put it in perspective. Americans spend more on snack chips – $4.8 billion on Cheetos, Doritos and Funyuns alone – than on political spending in a typical federal election cycle. Money is hardly flooding into politics.
Fact 4: Money Doesn’t Always Win. It is often said that the candidate who spends the most wins the election, implying that elections have been reduced to money-raising contests. But the bigger spender does not always win. If they did, Democrats would win almost every time (see Fact #1 above). In the 2016 Presidential Campaign, Hillary Clinton’s campaign came up short despite spending nearly 50% more than Donald Trump’s campaign. And while statistically the candidate who raises the most money usually wins, that doesn’t mean the money is the reason he won. Money raised is more likely a reflection of the candidate’s popularity, not the cause of the popularity.
Fact 5: Less Government Regulation Would Mean Less Money in Politics. Government regulation creates incentives to spend money on politics. If the government reduced the regulatory burden, there would be less reason to spend money on campaigns in the first place. Take tariffs imposed on imported products such as cane sugar, and price supports and regulations to help producers of certain domestic products such as corn. Because government’s heavy hand is there dispensing benefits, businesses will spend money to keep those benefits coming, or to try to get some government goodies directed their way. Get rid of the tariffs and special supports, and businesses could get back to producing goods and services instead of worrying about what the government is doing. The same is true of so many business licensing laws, zoning regulations, the absurdly complex tax code, the burdensome Dodd-Frank Act, and the myriad other regulations that businesses have to endure.
The World Bank publishes an annual report on “Ease of Doing Business” in which it ranks countries around the world by the regulatory burden their governments impose on businesses. In 2009, the United States ranked 3rd best in the world. But now, 10 years later, the regulatory burden in the United States has grown, dropping the United States down to 8th in the world. It is not a coincidence that as the regulatory burden has increased, so has political spending. Cut back on excessive regulation, make rules clear, simple and fair, and much of the motivation behind campaign spending will go away.
And one final point: let’s not be so eager to give up on freedom. As a free person, I should not be prohibited from donating to a cause or a politician I like. I may not want to attend rallies or give speeches or sit at a phone station cold-calling voters, but I might want to support a good cause and a good candidate. And I would suggest that the libertarian Koch brothers – and the liberal George Soros – give their money to politicians and causes because they agree with their politics, not because they expect a kick-back. So do the vast majority of people contributing to candidates and causes. Why should our freedom to do that be limited?