As the presidential election draws nearer, commentators are already wringing their hands about the amounts of money being raised. Banner headlines decry the possibility that President Obama will raise a billion dollars for his campaign.
This obsession with the amounts of money spent on campaigns runs deep in American politics. Indeed, our entire system of campaign finance—if you could call it a “system” after a series of Supreme Court rulings have gutted the existing rules—revolves around regulating the amounts and increments of contributions.
The instinct is that we should prevent fat cats from bankrolling candidates and buying influence.
The instinct is fine; the thinking is faulty. Part of the problem is that fat cats have a way of circumventing any rule that seeks to stem the tide of money flowing into campaigns. The fact is that campaigns need money and donors will find ways to deliver the goods—either under or over the table. Rules that are bound to be broken serve no purpose, other than eroding our faith in the rule of law.
The problem, however, runs deeper than practical concerns about implementation (or the lack of it). The problem is conceptual. The danger of campaign contributions does not lie in the amounts of the contribution; the potential threat stems from the liquidity of campaign finance markets. If campaign finance markets are liquid—meaning money is widely available from lots of different sources—then there is less reason to believe donors will gain significant political advantages from their largess. Why? In liquid markets, candidates will be able to replace any individual contribution. When campaign finance markets are not liquid, candidates grow dependent on a small number of donors. It is that dependence which sows the seeds for political pandering and worse—not simply the amount of the check.
The implication is that we should be doing everything in our power to enhance the liquidity of campaign finance markets, either by making more money available (by reducing restrictions on private contributions and/or beefing up public financing) or by reducing the costs of campaigns (by, among other things, offering free air time to candidates). Of course, our current laws, if they work at all, do just the opposite. (It should be added that improving the system’s transparency also does nothing to improve the liquidity of campaign finance markets. It may serve other goals, but it won’t make donors more fungible.)
So, when I hear that an unpopular president during tough financial times is expected to raise a billion dollars, I don’t wring my hands. I applaud.