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Campaign Finance Reform Won't Work

By James K. Glassman
Tuesday, March 18 1997; Page A17

With new White House fund-raising scandals breaking each day, practically all proper-thinking pundits and politicians (including President Clinton himself) say they want to reform the campaign finance system. There are proposals to limit soft money, do away with PACs and put caps on total spending – even if it means rewriting the First Amendment.

But would such changes slow the flood of money to politicians – and end the temptations for corruption that wash along with it? Not on your life.

Campaign money and corruption are merely byproducts of the increasing size and power of government. Donations to candidates are a logical economic response to a system that gives politicians the power to bestow (or deny) cash and regulatory benefits worth billions of dollars on corporations and favored groups.

Think of campaign contributions as an investment – and a fairly inexpensive one – toward securing those government benefits.

Through donations, a company is either trying to influence politicians to vote its way on a specific issue, such as telecommunications reform, or (in a more benign manner) trying to get people elected who share its general views.

Either way, the company or union or rich person is seeking government largess. It wants to get its share – fair or not – of taxpayer dollars or regulatory munificence. Cut the scope of government, and you'll cut the flow of dollars (or substitutes for dollars, such as donated labor). Nothing else will work. Nothing.

I've held this theory for a long time. I saw it in action nearly every day during the five years that I was editor of Roll Call, the congressional newspaper. But it was only last week that I discovered academic research that backs the theory up.

John R. Lott Jr., an economist at the University of Chicago, has written a convincing new paper whose title says it all: "A Simple Explanation for Why Campaign Expenditures are Increasing: The Government is Getting Bigger."

Using reams of data and sophisticated regressions, Lott examined spending in federal races since 1976, as well as legislative and gubernatorial races in 10 states. What he found confirmed the hypothesis that "as the government has more favors to grant, the resources spent in trying to obtain those favors should increase."

Does he think that tougher campaign laws would reduce the flow of money? "People will find ways around them," he told me, in the same way that businesses and consumers always find ways around price controls. "It's like a dam," he said. You can change the course in which the water flows, but it will still get downhill.

It's a global phenomenon – even in democracies that have tried tight restrictions on campaign finance. The New York Times reports, "The world over, it seems, governments can't outlaw the relationship between money and power any more than they can outlaw lust."

In fact, Lott predicts that, while the campaign dollars might decline under severe new laws, the resources that society devotes to campaigning would not – in fact, they might rise, since those resources (such as time and labor) would be spent less efficiently than cash.

Corporations, for instance, could mobilize their employees to stuff envelopes, ring doorbells, make phone calls and give speeches (as unions already do). Such contributions, just like cash, would win the approval of politicians, the companies' target benefactors.

"By focusing on the symptoms and not the root causes of ever higher campaign expenditures," writes Lott, "the current public policy debate risks changing the form that payments are made in rather than actually restricting the level of competition."

The key cause is demand for government goods. It's powerful, and it will always find a way to be satisfied. In economics, that's the law.

The demand is easy to understand. Despite the slowdown in defense spending, the Commerce Department reports that state and federal "government consumption expenditures and gross investment" have quadrupled in the past 20 years. But just as important are the protection and prof\it-making possibilities that governments offer favored rent-seekers (such as TV broadcasters) through regulations – and, conversely, the costs that regulations impose on the losers.

There's another reason that campaign finance rules won't work: If donors and their beneficiaries can't obey the current set of rules – mostly enacted in 1974 in the wake of Watergate – how can they possibly be expected to follow even stricter ones?

In their excellent 1996 book "Dirty Little Secrets," Larry J. Sabato, the University of Virginia political scientist, and Glenn R. Simpson, a Wall Street Journal reporter, uncovered copious examples of what they called the "persistence of corruption in American politics." But the authors concluded that changing the campaign finance system is futile.

"The last two decades," they wrote, "have produced greater regulation of politics than occurred in all of the preceding two centuries, and yet many critics contend that the problems are worse now than they have ever been. Is the logical step really more regulation?"

The answer, for Sabato and Simpson, is "eternal vigilance against misuse of power." Yes, certainly, the press should do a better job exposing and embarrassing. But it's sheer fantasy to expect the level of money and corruption to fall until the scope of government does.

© Copyright 1997 The Washington Post Company

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