Electoral finance: the principles III – equal money for equal influence

datePosted on 06:00, February 4th, 2009 by Anita

Why would someone give $100,000 to a political party? Because they know that money makes a difference in politics, even if they don’t want a personal pay back, they believe that the money will help the party advance its agenda. 

One of the principles of democracy is described as “one person one vote”, which is to say each voter should have equal influence. If money can help buy a party influence, then the amount of money each person can given to political parties should be equal. This requires capping political donations to a level everyone can afford, which is going to be pretty low.

The usual counter argument is that I’m suggesting restricting free speech, but I’m not. Everyone can speak as often as an loud and as enthusiastically as before, what they can’t do is buy political influence: that’s not free speech.

Principle III: equal money for equal influence – individual’s donations to political parties should be capped at a level every voter can afford.

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28 Responses to “Electoral finance: the principles III – equal money for equal influence”

  1. Lew on February 4th, 2009 at 08:41

    Anita: I have a couple of somewhat pedantic objections.

    One of the principles of democracy is described as “one person one vote”, which is to say each voter should have equal influence.

    The primary historical importance of this principle is in its symbolic value as a means of distinguishing those with the right to vote from those without; I seem to recall that the original formulation was `one gentleman, one vote’, with the purpose of excluding anyone not considered to be a `gentleman’. Women were excluded on this basis for a long time; foreigners, especially those of the dusky hue, and so on. Even now we exclude certain people from franchise; most notably foreigners and those under 18. Note that I’m not really trying to argue a case for genuinely universal suffrage – but whether or not you think younger people should vote, you can’t deny that they’re people.

    If money can help buy a party influence, then the amount of money each person can given to political parties should be equal. This requires capping political donations to a level everyone can afford, which is going to be pretty low.

    Again, if you genuinely mean every voter, it means capping it at zero. I don’t think that’s what you intend, but if you place the cap any higher than zero, you implicitly exclude a portion of the electorate whose budget doesn’t stretch that far. Of course, the smaller the proportion of the electorate excluded the better, but determining the optimal level at which to set such a cap is a non-trivial matter.

    L

  2. Anita on February 4th, 2009 at 09:09

    Lew writes,

    Again, if you genuinely mean every voter, it means capping it at zero. I don’t think that’s what you intend, but if you place the cap any higher than zero, you implicitly exclude a portion of the electorate whose budget doesn’t stretch that far. Of course, the smaller the proportion of the electorate excluded the better, but determining the optimal level at which to set such a cap is a non-trivial matter.

    I’m personally happy with setting it at nearly $0, but there’s probably some research to be done on how close to $0 we should set it.

    My only reason for not saying an absolute $0 is the “This needs to be at the Electoral Commission by the end of the week, does anyone have a stamp?” and “I’ve got some spare cardboard from when we moved, how about we use that?” issues. From time to time it is perfectly sensible (and I don’t think exclusionary) for people to give some low value stuff to the cause, and the paperwork of making sure they’re paid back would be unreasonably onerous on small parties.

    I reckon everyone in NZ could at some point during a year, give a small amount of stuff to a party.

    I’d be tempted to set money at $0 and stuff at a very low threshold, but that invites workarounds without any real benefit. So I reckon a very low cap and stuff is counted at value.

  3. Lew on February 4th, 2009 at 10:21

    Anita:

    Aside from those two objections to the verbiage of the post (attentive readers such as rainman have noted how I value unambiguous writing), I’m also not sure I agree with the second premiss, that constraining individual or third-party electoral spending to a value low enough for any average voter to afford it would make elections more democratic.

    Elections are (in principle) contested on the basis of information (and massaged statistics, biblical references, character assassinations, bald assertions of unprovable fact, other symbolic matter, etc, all of which I’ll lump in together for these purposes). For the election to be contested by a well-informed electorate, that information has to be made available to the public by some means, and those means often have a market cost roughly commensurate with their effectiveness at communicating information to a given audience. There are exceptions to this – but the rule-of-three with publicity is more or less “high impact, large audience, low price: pick any two”. Setting the bar to entry so low that anyone, or even most people, can afford it will necessarily constrain the means by which people can access information about the election to those which are cheapest and hence least effective; home-made signs, handicam-and-amdram electoral videos which can only be aired on youtube; etc. This would result in an information deficit – outside of information from the incumbent parties – and that means a less-informed, less-aware, less-engaged electorate. That’s not good for democracy. The libertarian lunatics went characteristically too far when they called the EFA `democracy rationing’ legislation, but they’re not entirely wrong in principle. I don’t know about you lot, but I likes me some good slick electoral propaganda once in a while.

    I’m all for regulating spend to prevent those with the resources to do so from extracting the urine, but I don’t think this is the way to do it. I can see merit in the system we have now – which allows people to donate up to a given limit to a local association, a lobby group, a party or whatever, which can then spend the money according to its agreements with its given constituents. If every elector donated $100 every three years to the party, association, organisation or lobby group of their choice, we’d soon have elections funded at near-US-like levels. But for this system to work with very low thresholds would require a phenomenal cultural shift in the NZ electorate, to whom politics is something that giveth, not to which they give. At least not willingly.

    L

  4. Anita on February 4th, 2009 at 10:46

    Lew,

    I will happily trade inequality-producing direct personal funding to political parties for equitable state funding. That way you can have your shiny electioneering but the quantity and quality won’t be determined by the wealth of the parties’ supporters.

    The thing that gives me a headache is working out how to apportion the spend across parties so that it doesn’t provide an unfair advantage for incumbents, but also doesn’t create an incentive to set up fringe parties. I wonder if the banding system used for electoral broadcast funding gives us a possible model, although I’d like to see some additional support for newly formed parties setting up.

    My other thought about state funding is it would allow the state to directly address the areas of low democratic participation. We could identify groups with low participation rates and provide some separate funding to parties to target those groups. At the moment parties are less likely to bother communicating with those groups, so it creates a vicious circle. If parties were offered the opportunity to access additional funding for the specific purpose of communicating with a low participation group I reckon they’d take it, and it would lead to the development of new more effective ways of communicating with a wider cross section of our country.

  5. What would Hayek say on February 4th, 2009 at 10:52

    The amount of money spent at elections is a red herring. There is a correlation of money and winning, but not causation. Policies and personalities attract voters and money. Witness exhibit number one is Prseident Obama who was backed by the billionaires and the average punter. In liberal democratic elections essentially money likes winners, but does not create winners. Witness two is the reasonably high reliability of betting markets (example of ipredict) in predicting electoral outcomes.

    A bigger concern is the process for legislation making/operationalising policy. It is in this area that weak governance/transparency can result in the influence of money by unions, individuals and business to extract a regulatory rent through sector/group/individual targetted interventions. This is where effort is better directed if you want effective, fair and free government.

  6. Anita on February 4th, 2009 at 10:57

    What would Hayek say write,

    The amount of money spent at elections is a red herring. There is a correlation of money and winning, but not causation.

    Are you saying money has no causal connection to electoral outcomes? If so,

    1) Do you think a party with a charismatic leader, popular policies, poor supporters and $10,000 would do as well as the same leader with equally popular policies, wealthy supporters and $3,000,000?

    2) If money doesn’t help a party succeed, why do they ask for it and why people give it to them?

    A bigger concern is the process for legislation making/operationalising policy. It is in this area that weak governance/transparency can result in the influence of money by unions, individuals and business to extract a regulatory rent through sector/group/individual targetted interventions. This is where effort is better directed if you want effective, fair and free government.

    I agree, and I would address that at least partly through electoral finance restrictions. How would you address it?

  7. Lew on February 4th, 2009 at 11:10

    WWHS:

    The amount of money spent at elections is a red herring. There is a correlation of money and winning, but not causation.

    A correlation is enough to buy political influence, though. Anita did not say money bought political success. Partly your argument that money likes winners is a catch-22 – to look like a winner to those with money you first have to have some money at your disposal. It’s a complex system.

    L

  8. Lew on February 4th, 2009 at 11:25

    Anita,

    I will happily trade inequality-producing direct personal funding to political parties for equitable state funding. That way you can have your shiny electioneering but the quantity and quality won’t be determined by the wealth of the parties’ supporters.

    State funding only funds political parties. I’d argue that non-contesting parties such as lobby groups also have a right to make their case for or against certain policies, parties or politicians. To allow that we would have to have state-funding-plus, which is what we have now. (I understand this is partly relitigating an earlier principle in this series).

    My other thought about state funding is it would allow the state to directly address the areas of low democratic participation. We could identify target groups with low participation rates and provide some separate funding to parties to target those groups.

    How would you determine this? It’s a horribly messy political bun fight. National and Labour (most obviously) claim to represent `all New Zealanders’, so they would have a valid claim to this funding, would they not? And groups like RAM would want to argue that they are the only voice for the downtrodden urban working class; should they get more money just because they appeal to a fringe of (I would argue) the disenchanted and politically naïve? There are plenty of other groups who meet that description who’d just love to take advantage of such a system.

    L

  9. What would Hayek say on February 4th, 2009 at 12:11

    Anita

    re your point 1) you say a leader with popular policies but only $10,000. That would suggest a bigger problem such as organisational skills, therefore the leader is not likely to be successful. Lots of good ideas are thought up every day in bed. 99.99% are not thought of beyond the point in time of making toast.

    So I would effectively dismiss point 1. The issue you have there is organisational, not money. If the policies really were as popular as you suggest, then they would gather greater support and probably wil under a differeny leader who has more organisational skill and drive.

    Lew – you say Anita, did not say money bought success. Without perfect re-reading of the original case put forward by Anita, I would say that is the “impression” presented by the argument.

    So its not quite catch-22, money does tend to chase success, but the factors that generate success are not completely dependent on money. Leadership, organisation, policy have a higher effect in generating a polity that supports a poarty/objective. With that comes money.

    And since money does not buy success why are you wasting time worrying? There are better things to do, its still summer and there must be a BBQ to organise.

  10. Anita on February 4th, 2009 at 12:43

    What would Hayek say,

    re your point 1) you say a leader with popular policies but only $10,000. That would suggest a bigger problem such as organisational skills, therefore the leader is not likely to be successful.

    Are you saying that two identical leaders could spend the exact same amount of time and get the exact same money out of the exact same number of supporters if one group of supporters is relatively wealthy and the other is very poor?

    If so, how?

    And since money does not buy success why are you wasting time worrying? There are better things to do, its still summer and there must be a BBQ to organise.

    Where are you? It’s raining here :)

  11. Anita on February 4th, 2009 at 13:00

    Lew writes,

    State funding only funds political parties. I’d argue that non-contesting parties such as lobby groups also have a right to make their case for or against certain policies, parties or politicians. To allow that we would have to have state-funding-plus, which is what we have now. (I understand this is partly relitigating an earlier principle in this series).

    What do you mean this is what we have now? My understanding is that we have explicit SSC guidelines preventing state funding being used for lobbying.

    [Re: extra funding to allow parties to target low participation communities]

    How would you determine this? It’s a horribly messy political bun fight. National and Labour (most obviously) claim to represent `all New Zealanders’, so they would have a valid claim to this funding, would they not? And groups like RAM would want to argue that they are the only voice for the downtrodden urban working class; should they get more money just because they appeal to a fringe of (I would argue) the disenchanted and politically naïve? There are plenty of other groups who meet that description who’d just love to take advantage of such a system.

    I’m pretty sure the Electoral Commission currently has a mandate to identify low participation groups and target electoral advertising, so hopefully they already know how :) Looking this this they seem to be doing their analysis along ethnicity and age lines.

    But yes, direct funding to political parties would make it more tempting for political interference. That might mean strengthening the oversight of the process and making it all as transparent as possible (like the boundary drawing process).

    I’m not suggesting that communication targeted at “all New Zealanders” would be enough, it would need to be targeted to the low participation group. Say for example the EC identified recent migrants from non-Western countries as a group with low participation there would be funding available for parties to do things to reach those communities.

  12. Lew on February 4th, 2009 at 14:11

    Anita:

    What do you mean this is what we have now? My understanding is that we have explicit SSC guidelines preventing state funding being used for lobbying.

    Oh, it is – I mean state funding for the parties, plus private funding for whatever else (including lobbying).

    L

  13. What would Hayek say on February 4th, 2009 at 14:15

    Hi Anita – by further response.

    If yu have two leaders who the same size of supporters then money will not effect the outcome. What matters is the size of supporters.

    I think your current framing of the argument is setting up and equity vs equality vs outcomes debate where only one of the three is achieveable thereby always leaving someone unhappy.

    So lets go back to first principles of policy analysis – what is the problem?

    Is it ensuring healthy debate of policies and the ability for the public to be involved in the politics, or something more like -are modern political parties lacking the organisational skills to engage with the public and build effect support (issue of party elites and group think), if so what are the causes and what can be done to mitigate? One solution is the concept of a limited term prime minister who is selected by societal lottery (I pity the fool).

    I will acknowledge our system is not perfect and i do have issues with the current electoral system and the advantages of encumbancy to utilise the state sector to attempt to crowd out/frame the poltical discussion.
    In part the public sector tries to prevent this, but that is dependent on the leadership qualities of individual CE’s. The failures in the banking sector indicates how easily CE’s can fail the leadership test and instead follow the herd and incentives of decision makers (shareholders in private sector/ministers in public sector).

  14. David Farrar on February 4th, 2009 at 14:59

    Not everyone can afford to spend lots of hours volunteering for a political party. By the logic above, no person should be allowed to spend more than 1 hour a week helping a political party, as that is all every voter can afford.

    I also note that Anita’s proposal would move us closer to the US system of political finance. They have a cap on individual donations and it has resulted in a much dirtier political finance system.

  15. Anita on February 4th, 2009 at 15:06

    David Farrar writes,

    Not everyone can afford to spend lots of hours volunteering for a political party. By the logic above, no person should be allowed to spend more than 1 hour a week helping a political party, as that is all every voter can afford.

    We should work very hard to have a society where everyone has time to put back into the community in whatever way they choose. What do you see are the current barriers preventing people participating in political parties?

    I also note that Anita’s proposal would move us closer to the US system of political finance. They have a cap on individual donations and it has resulted in a much dirtier political finance system.

    As I said when someone made the same point after I talked about banning not-people from donating, it’s dirty in the US because the politicians want it to be dirty. We are entirely capable of drafting legislation that has very few loopholes, or actively searching for and patching any loopholes, and of naming and shaming anyone who exploits them. If we really want a clean electoral system we have to have a culture of electoral cleanliness.

  16. Ari on February 4th, 2009 at 15:12

    State funding only funds political parties. I’d argue that non-contesting parties such as lobby groups also have a right to make their case for or against certain policies, parties or politicians. To allow that we would have to have state-funding-plus, which is what we have now. (I understand this is partly relitigating an earlier principle in this series).

    Non-contesting groups can fund themselves without causing problems as long as they endorse policies not parties. The only niggle is that you have to prevent “throwaway” groups used to hide the identities of those involved- hence the third-party limits and registration requirements of the EFA.

    If yu have two leaders who the same size of supporters then money will not effect the outcome. What matters is the size of supporters.

    Are you saying that the same candidate with the same initial support base will do the same regardless of the extra money spent on campaigning? Are you saying political advertising, high-profile political rallies and events, and attack ads have no influence on undecided or wavering voters? Because you would be widely criticised by any half-decent political strategist, pollster, or even pundit for that conclusion. Advertising has an effect- not on those with firm convictions, but it will help you remember candidates and parties, it will inform undecided voters, and it will lend name recognition in the polling booth.

    Money matters.

  17. Pascal's bookie on February 4th, 2009 at 15:37

    An idea:

    We have compulsary registration of voters. This registration gets confirmed every cycle. Why not allow each citizen to allocate $20 of tax payer funding to the party of their choice, at the same time they register to vote.

    Call it something like “Citizen directed public financing”

    Advantages:

    All the advantages of public financing, minus the easy and percieved gerrymandering by incumbants.

    Supporters and sympathisers of fringe parties can allocate the money without fear of it being a wasted vote, (as it can be in elections). People might give money to a party they want to hear more about, rather than the one they are most likely to vote for.

    Disadvantages:

    Fringe parties still need to get noticed to get the funding, but they face that same problem now. I don’t think this makes it worse. With the registration form, have an official bio of eac of the registered parties of about 500 words, if that’s too expensive, put it on the internet. Something.

    Parties will be campaigning for this funding. Don’t let them.

    I’m sure it’s deeply flawed somehow.

  18. Lew on February 4th, 2009 at 15:39

    Ari:

    Non-contesting groups can fund themselves without causing problems as long as they endorse policies not parties.

    That’s quite a constraint, because of the fine line between parties and policies. The lack of certainty around it had a chilling effect in the recent election.

    L

  19. Socrates on February 4th, 2009 at 15:42

    One of the principles of democracy is described as “one person one vote”, which is to say each voter should have equal influence. If money can help buy a party influence, then the amount of money each person can given to political parties should be equal. This requires capping political donations to a level everyone can afford, which is going to be pretty low.

    For a start, I would disagree with this. “One person one vote” does not mean equal influence and has never meant equal influence. Besides to get a true instance of equal influence you would have to adopt the system advocated by the Direct Democracy mob. As soon as you vote for someone else to act on your behalf you lose influence.

    Also philosophically speaking I strongly object to State funding of political parties. It is NOT the states roll to do this. Politics is a contest of ideas, and the emasure of of the success of ideas is in membership and funding of parties.

  20. Socrates on February 4th, 2009 at 15:44

    We have compulsary registration of voters. This registration gets confirmed every cycle. Why not allow each citizen to allocate $20 of tax payer funding to the party of their choice, at the same time they register to vote.

    Interesting idea. Will think on it, but first question: What happens if there is NO party you wish to fund?

  21. Anita on February 4th, 2009 at 15:47

    Pascal’s Bookie writes,

    We have compulsary registration of voters. This registration gets confirmed every cycle. Why not allow each citizen to allocate $20 of tax payer funding to the party of their choice, at the same time they register to vote.

    How is that different from allocating funding along the proportion of votes cast for each party in the election?

    Either system seems destined to advantage the incumbent parties. You might need to allocate seed money to baby parties and perhaps skew the system, your first so many votes get you $20 each, your next however many $18 and so on.

  22. What would Hayek say on February 4th, 2009 at 15:48

    Ari – if both groups have the same committed level of supporters, then they have the same level of vote = same level of influence on political outcome.

    I’m not mentioning campaigning, just the specific reference made by Anita.

    Note I have previously referred to the importance of the organisational skills of a leader/party as being important. DPF points out the immense importance of volunteer labour (essentially it is money as it is the use of a resource – all money is, is resource).

    So really this discussion should be rephrased more in the line of a discussion on what barriers are there to participation (if any), what factors support/weaken those barriers and how do we improve involvement of the public in political decision making.

    Money matters, but only in how you use it – it is just an indicator of resource. I have already demonstrated above that money/resources flows to the leader/party whose policies appeal to the public.

    I think you are at risk of equating money=bad but missing the point that it is just a measure of resource and what matters is the organisational skill and policies of the leader/party.

  23. Anita on February 4th, 2009 at 15:49

    Socrates writes,

    Interesting idea. Will think on it, but first question: What happens if there is NO party you wish to fund?

    Unallocated money gets split evenly? That would help reduce the bias toward incumbents

  24. Socrates on February 4th, 2009 at 15:55

    Unallocated money gets split evenly? That would help reduce the bias toward incumbents

    Ok, but what if you don’t want to fund any party? Or if while not seeing any party you would support through funding there are parties you would activly NOT want to see receive funding?

  25. Lew on February 4th, 2009 at 16:02

    Socrates: A “no party” option would seem reasonable.

    L

  26. Ari on February 4th, 2009 at 16:03

    That’s quite a constraint, because of the fine line between parties and policies. The lack of certainty around it had a chilling effect in the recent election.

    I personally don’t mind if they endorse a policy that clearly refers to a particular party. The line is when they invoke political branding.

    Ari – if both groups have the same committed level of supporters, then they have the same level of vote = same level of influence on political outcome.

    Only if there are no uncommitted supporters. I think the point you’re missing is that committed support is less important than uncommitted support, and uncommitted voters are more likely to be influenced for better or worse by more expensive campaigns.

    I think volunteer labour is much more fairly distributed, much like free publicity is. Even parties with disproportionately wealthy voters manage pretty well. Money is the main issue, but I agree it’s not the only one.

  27. Lew on February 4th, 2009 at 16:24

    Ari:

    I personally don’t mind if they endorse a policy that clearly refers to a particular party. The line is when they invoke political branding.

    An even more vague test! (Though probably harder to satisfy).

    L

  28. Pascal's bookie on February 4th, 2009 at 20:38

    Socrates:

    Interesting idea. Will think on it, but first question: What happens if there is NO party you wish to fund?

    I think the best thing would be to not allocate your $20. The state will usually find something else to spend it on :) , which solves this:

    Or if while not seeing any party you would support through funding there are parties you would activly NOT want to see receive funding?

    Anita:

    How is that different from allocating funding along the proportion of votes cast for each party in the election?

    Because voting for a party and donating 20$ to it are different questions. So why not just ask that different question?

    Going on the past election’s results entrenches incumbancy, and is corrupted by tactical voting, (eg RAM supporters that vote Labour to keep National out etc). If you want to know how the voters want public financing allocated, give them the control over it. Simplistic? Yep. But doesn’t require any crystal ball formula’s for guessing who should get what, based on data collected answering a very different question with different strategies at play.

    The idea assumes many of the points in your post. It simply removes the need to set limits at a level anyone can afford to donate by ‘donating’ $20 of the tax that people are assumed to have paid.

    If we assume that political parties are a good thing, (or even that they are an unavoidable thing), and that financing them is problematic given the uneven distribution of discretionary spending, then some form of public financing seems like a solution.

    The obvious objection is that public spending is determined by, well, politicians. This method removes the control over allocation from politicians and puts it directly in the hands of the citizens.

    I think it could, over time, increase participation in the process. (perhaps you could tick a box to let the electoral commission tell the party you donated to that you want to join, or otherwise become involved. Most people wouldn’t have a clue how to do this, who to call, what’s involved or even what party membership is.)

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