Serious Money- Part I

Campaign Finance is a pain in the caboose!  

We have an established political infrastructure and media that judges the “seriousness” of a candidacy based on how much money it can raise.  While this is not completely out of place, as it takes some money to get one’s message out, it may be naïve given the amount of dollars in politics today. 


First, let’s look at the prevailing methods for campaign finance.  One is to focus on larger dollar amounts from a smaller pool of donors (rich folks or PACs), likely to represent the special interest of the elite.  Consider this reporting from Politico, describing a donor meeting with Vice President Pence’s Chief of Staff Nick Ayers: 


"As the meeting came to a close, one female attendee asked whether she understood Ayers’ message correctly, saying: “Are we all willing, in order to get the tax bill passed, to contact all the people we donate money to — which is a long list — and tell them the money stops coming if they don’t get something done!

The room burst into applause."


This intuitively makes sense, as this group of donors will look to get a return on investment for its donations.  That return on investment requires a policy prescription that is narrowly defined by a return to the actual investors, not a return to society (Principal Agent Problem).  A slight variant of this method, is to draw upon networks of professionals, for example, donations that are coming from individual lawyers rather than a lawyer’s association. 


The second method is to do broad based crowd sourcing.  There is a lot to like about this method, a broad spectrum of donors with small dollar amounts, so candidates are not beholden to just a handful special interests.  From that perspective it is great, but from the perspective that we are asking the middle class to fund a level of politics to compete with the level of large donors, this method may not be too great.  Consider that the latest annual BankRate survey said that 57% of Americans don’t have enough cash to cover a $500 unexpected expense, so asking them to be a sustaining donor is asking a lot.  This segment of our population may be experiencing wage stagnation that isn’t keeping up with inflation or may be shouldering a higher comparative tax burden.  So, asking this segment of the population to donate, may be asking for a disproportionate amount of commitment to shoulder our political campaign costs.  Moreover, the fact that these campaigns rely on sending repetitive mass email solicitations for every wedge political headline may serve as a deterrent rather than a stimulus for political engagement.


Finally, let’s consider the self-funded campaign.  While this type of campaign finance in theory sounds great it can also be problematic. Instead of a fair and independent voice, we may get a candidate whose bias may be worse than that of a candidacy beholden to a group of elites, simply because it is the bias of one and beholden to no one.


So, I started by saying it is naïve to think that a campaign’s ability to raise money is a good measure of its seriousness. My feeling is that an argument can be made that a candidate’s ability and focus on raising money is probably negatively correlated with their level of seriousness in making significant changes to political or structural systems.  The most successful large donor candidates have a vested interest in keeping the political system in its current state.  As such, they are likely not going to push policy that impacts donors negatively, or change a system for which they know how to “play”.   Thus, the truly serious candidate is left in a difficult spot. If that candidate hopes to make a significant change, they will need to push policies that are largely counter the positions of major donors. As a result, by pushing these positions, they will likely leave themselves without the necessary resources needed to get out their message.  Also, it is worth noting that these candidates aren’t merely going against the direct campaign funds of their opponents.  Beyond PACs and Super PACs, we are going against daily resources of lobbyists, lawyers, think tanks, consultants and associations, all committed, if not simply held by inertia, to the current system.