Campaign Finance Reform Charade

Last week, the Cain-Feingold bill couldn't muster enough votes to stop a mostly Republican filibuster. The bill would have banned unregulated "soft money" that flows by the millions to national political parties from corporations, labor unions and individuals. Even if the Cain-Feingold measure became law, it wouldn't mean much for Americans because it doesn't address the issue at the heart of campaign contributions.

One doesn't have to be a rocket scientist to discover why corporations and unions fork over millions of dollars to politicians. Politicians are in the position to grant corporations and unions special favors. My colleagues, in the Economics Department at George Mason University, use the unlikely term "rent-seeking" to describe this buying and selling of political favors that add to corporate and union bottom lines.

Rent-seeking abounds. Florida physicians obtain laws making it difficult for physicians from other states to practice there; U.S. automakers obtain quotas and tariffs on Japanese auto imports; dairymen and sugar producers seek to reduce foreign imports of dairy products and sugar; New York dairy producers seek to prevent or reduce New Jersey milk from entering the state; labor unions seek laws banning home work and employment of non-union workers in certain jobs.

What's the motivation behind all this? Again, no rocketry science: sellers want to restrict the choices of buyers. Doing so allows them to charge higher prices and earn higher profits or wages. Using the legislative powers of the congress and state legislatures is one way to restrict buyer choices. But sellers can also use violence as a means to keep other sellers out of the market. That was Al Capone's tactic and the tactic of today's drug dealers. The difference is solely one of legality. If Archer-Daniel-Midlands' CEO used goons and violence against competitors, he'd risk a jail sentence. He accomplishes the same outcome by paying congressmen to pass restrictive laws. Whether it's goons or congressmen, the bottom line enforcement mechanism is the same: intimidation, threats and coercion.

How much are unions and corporations willing to pay for special favors? Another easy answer. Say I'm a sugar producer. Restricting Caribbean sugar imports means that I can jack up my sugar prices and maybe earn a million dollars more in profits. Therefore, paying anything under a million dollars to politicians who deliver sugar import restrictions results in a net gain to me. I can get help in buying off congressmen by going to the union leader at my plant and telling him that import restrictions also benefit sugar workers through greater employment and higher wages, so do your part.

Some campaign "contributions" are not motivated by a desire to restrict competition. Instead, they are a result of congressional extortion. It's the bad cop-good cop sham. A congressman lets a CEO know there's a bill pending that's going to be very costly to his corporation. It could be environmental or worker safety regulation, import restrictions, etc. The congressman tells the CEO that a campaign contribution will help him in his efforts to defeat the bill.

As long as we permit congressional extortion and special favors, justified by all manner of nonsense, there are going to be buyers. We Americans might not deserve decent statesmen-like politicians. We all want a special favor that comes at the expense of our fellow citizen, whether's it's tax credits for our kids' college education or food stamps. It's only when Americans summon the moral courage to disavow congressional favors will we see an end to shady campaign practices and Washington sleaze.

Walter E. Williams
c11-98
March 1, 1998
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