The first lesson in economics — incentives matter! — applies well beyond citizens in their role as taxpayers, employees, business owners, and the like. And one of the key lessons of public choice economics — a lesson that Ed and I discuss in detail in our book — is that incentives matter in politics, too. Politicians do not leave their self-interest at the door when they step into the legislature.
This seemingly obvious point is too often ignored in the debate over campaign finance reform. Let’s take a look at how including it could enrich that debate.
Writing in the Huffington Post, Steve Gillman deserves an honorable mention for pointing out the problems with most attempts to regulate campaign finance. You know, like the limitations imposed on regulators by the First Amendment…
Gillman worries about those who finance right-leaning candidates and is less concerned about those who finance left-leaning ones. Still, he admirably offers a dose of reality:
“Looking at the attempts to regulate political expenditures and the many laws passed over my lifetime, I have to ask, “So how is that working out for us?”
He then tries to understand why these reforms fail:
“The desire for campaign contribution limits ignores the simple fact that such laws simply reorganize the flow of money, without any meaningful effect on the nature of elections or the corruption that potentially follows them.”
That’s not a bad start. Gillman seems to recognize that it does little good to change a law or two if we do not also change the incentives for bad behavior. Changing campaign finance laws without changing the incentives faced by politicians — and everyone who wants to influence them — ultimately will do little good.
In short, the problem is more fundamental in nature. Money will continue to flow into political markets as long as politicians control how money is made in all other markets.