Intellectual Ammunition — Campaign Finance, Cronyism and Inequality

Recently, I debated Professor Rick L. Hasen of UC Irvine School of Law at a Federalist Society event at Southwestern School of Law in LA. The subject was campaign finance law, and Professor Hasen took the opportunity to outline the case he makes in his new book, Plutocrats United: Campaign Money, the Supreme Court, and the Distortion of American Elections. From the title, you might guess that he is both not a fan of the Supreme Court’s Citizens United decision and that he thinks money in politics is leading to a kind of plutocracy, in which the wealthy end up influencing government far out of proportion to everyone else. In his view, this can only exacerbate inequality in America and the solution is better campaign finance laws. (A video of the debate is available here. The video quality isn’t great (I definitely don’t talk quite that fast), but it’s good enough to follow the discussion). One sticking point for Professor Hasen and his allies, of course, is Citizens United and a number of other recent decisions in which the Supreme Court struck down key parts of the campaign finance laws as unconstitutional under the First Amendment. This has led a number of commentators, Lawrence Lessig of Harvard and Bernie Sanders, among them, to call for a constitutional amendment essentially overturning these cases and allowing Congress to regulate political spending. 

Professor Hasen has a different view. A constitutional amendment is too difficult to get passed and will take too long. Instead, he argues, let’s just change the composition of the Supreme Court.

When we had the debate a few weeks ago, that might have seemed like a bit of a pipe dream. But with the recent passing of Justice Antonin Scalia, it looks like Hasen might just get his wish. 

At this point, there’s still a great deal of uncertainty about the vacancy on the Court. The Republicans have claimed they won’t allow it to be filled until after the election. And even if President Obama fills Scalia’s spot, it’s highly likely that the next President will have the opportunity to fill one or more vacancies on the Court relatively quickly, as a number of justices, most notably Justice Ginsberg, are getting along in years. But however the dispute about the current vacancy shakes out, it is clear that the supporters of campaign finance laws are not going away anytime soon and that they may have the opportunity to revisit many of the arguments that the Supreme Court seemed to put to rest in recent years, whether through legislation that a future Supreme Court may uphold or through a constitutional amendment. So now seems like a very good time to review the issues in this important area and to understand Ayn Rand’s and ARI’s unique perspective on those issues.

Let’s start with a simple question: Why do people care so much about campaign spending and political influence? Few people worry about the amount of money being spent on television advertisements during football season (which rivals that spent in political races) so why worry about how much people spend supporting campaigns?

My answer is that they have good reason to care. Government today can influence our lives in so many ways that it makes sense to try to influence it back. As I often say, the problem is not that money controls politics, but that politics controls money — and pretty much everything else. Government has vast power over our lives. That makes it essential — for some, unavoidable — to try to influence what government does.

Today, thanks to about a century’s worth of bad Supreme Court precedent, the government’s power is barely limited at all. The “principle” on which it operates is essentially majority will. If the “people,” through their chosen representatives, support a particularly law or policy, they can typically ram it through. For one example of how this idea manifests itself, consider the fact that after every presidential election, we are told that the new president enjoys a popular “mandate” to enact pretty much any program he wants. This is held as a kind of legitimizing principle, as though it would be immoral to oppose a president who enjoys popular support.

This is obviously not how our government was supposed to operate. So to understand why government is going wrong, it’s always good to start by understanding what government is supposed to do in the first place. In my view, Ayn Rand’s best essays on the nature and purpose of government are “The Nature of Government,” “What Is Capitalism,” and “Man’s Rights.” (In addition to the essays themselves, ARI also features a lot of other content, such as videos and courses, devoted to giving you a deeper understanding of the themes in many of Rand’s works. Check them out at ARI Campus).

To summarize, the purpose of government is to protect individual rights, which it does by abolishing the initiation of force among men. As the Founders put it in the Declaration of Independence, governments are instituted among men to protect rights, among which are the rights to life, liberty and the pursuit of happiness. To carry out that function, government passes criminal laws that define violations of rights and it creates mechanisms for catching and punishing criminals (i.e. the criminal justice system). It also passes civil laws and creates a civil justice system that allow individuals to settle disputes peacefully and sensibly. And it creates a police force and a military to protect our rights from aggressors, both at home and abroad. 

But consider what happens when government goes beyond these basic functions, as it has done steadily over the last century. Let’s take two simple examples from policies supported by candidates in the presidential race. Bernie Sanders wants government to provide free education for college students, which, he believes, is in the “public interest.” The Wall Street Journal estimates the cost will be on the order of about $750 billion (if you add up all of Sanders’s proposed new programs, the cost would run into the trillions). That money will have to come from someone. Sanders wants to tax the rich, but eventually, the middle class will have to pay as well. How will all those people react to yet another tax to pay for yet another obligation to care for someone else (added to the list of the elderly, the poor, foreign refugees, the environment, etc.)? The answer is that they will form or join lobbying groups or start giving money to those politicians who promise to lower their taxes or foist the burden on someone else. (Which is exactly what Donald Trump has said he’ll do — he’ll foist the burdens on immigrants and companies that move their manufacturing concerns overseas, among others. In my view, the constant demands on the middle class to sacrifice their values to a seemingly endless list of needy groups is one reason Trump is enjoying so much support.)

For the second example, let’s use Donald Trump. I’ve written before about Trump’s efforts a couple decades ago to use the power of eminent domain to take the home of a woman in Atlantic city so he could use it as a casino parking lot. Again, the justification is that it’s a “public good.” Imagine yourself in her position. You want to stay in your home, you don’t want to sell, you want just to be left alone to live your life. What would you do if the city came along and said it was going to “make you an offer you couldn’t refuse?”

The answer is that you would fight back. You would join interest groups, lobby your representatives, speak to voters, prevail on bureaucrats to find tax dollars or locate public works projects somewhere else. If all that failed, you’d hire lawyers (if you could afford to).

If we play both these scenarios out and imagine the many ways that government uses its power to tax and redistribute income, grant subsidies, and regulate and restrict businesses, we end up with a kind of war of all against all that plays out in the political realm through pressure group warfare and influence peddling. The process is entirely predictable and, for those who are trying to defend their businesses and incomes from the grasping hand of government, entirely justified. 

As Ayn Rand said in “The Pull Peddlers,” an indispensable essay on this topic, when government has the power to dispose of people’s fortunes and businesses in the name of the “public interest,”

then all men and all private groups have to fight to the death for the privilege of being regarded as “the public.” The government’s policy has to swing like an erratic pendulum from group to group, hitting some and favoring others, at the whim of any given moment — and so grotesque a profession as lobbying (selling “influence”) becomes a full-time job. If parasitism, favoritism, corruption, and greed for the unearned did not exist, a mixed economy would bring them into existence.

This is what Bernie Sanders and many others are complaining about when they complain about money in politics and influence peddling. Yet it is their view of government — one that is bounded by little more than majority will — that causes this phenomenon.

It’s tempting to say politicians themselves are to blame for influence peddling and cronyism, and although there are plenty who support it, politicians as such are not the fundamental problem. Given the premises of modern government — that its purpose is to serve the “public interest” by, in essence, sacrificing some people to others — influence peddling, cronyism, and pressure group warfare are unavoidable. It’s worth quoting Rand from “The Pull Peddlers” again, because she is the only thinker, to my knowledge, who understood that the “public interest” is an impossible standard even for the best politicians to administer. Referring to the undefined power that government’s today grant to officials, she pointed out that:

The worst aspect of it is not that such a power can be used dishonestly, but that it cannot be used honestly. The wisest man in the world with the purest integrity, cannot find a criterion for the just, equitable, rational application of an unjust, inequitable, irrational principle.

Politicians are asked to choose among the many outstretched arms grasping for special favors and to decide which taxpayers, businessmen, and other groups will be sacrificed to satisfy these groping masses. As Rand points out, there are no rational standards for deciding whom should receive the sacrifices and whom to make them. So why should we blame politicians when they follow lobbyists who argue that it is their constituency — businesses, the middle class, the elderly, students, the working man, environmental conservationists, etc. — that truly represents the “public interest”? Don’t we hear every day that more jobs, taxpayer relief, entitlements, and conservation are all values that government should pursue?

Of course, we shouldn’t fail to hold those who actively support this sort of government accountable. I’ve provided examples of the most blameworthy in recent writings, among them the Donald Trumps and Bernie Sanders of the world.

But one mistake people often make in assessing problems like pressure group warfare and cronyism is to blame those who participate in this process defensively. Primarily, this includes businesses and taxpayers, who are typically the targets of those who use government power to plunder the wealth and values they create. I wrote about one recent example involving United Airlines here. For another, be sure to read Rand’s essay “Have Gun, Will Nudge.” 

The fundamental problem, then, is not that a government subject to influence will promote “inequality” as Professor Hasen and many others have claimed. The problem is a government with unchecked power and the mandate to use it to serve “the public interest,” which in practice ends up meaning to sacrifice some people to others. It means using the force of law to take what some people have produced and to hand it over to others. Simply put, it means legalized plunder.  

“Inequality” is a vague term typically used to mask the fact that wealth has to be produced by someone. As the opponents of inequality see the world, wealth and all things that make life in modern society amazing just exist or are produced by everyone in general (“society”) but no one in particular (that’s what “you didn’t build that” means — “you didn’t build it; everyone did”). Under this fantasy view, it is government’s job to promote justice by spreading the wealth around “equally.” (In practice, this means taking it from those who earned it and giving it to those who did not.) That can’t happen, under this view, if the rich are allowed undue influence, because they end up distorting the system and keeping all the wealth for themselves. That’s where campaign finance laws come in. Get the money out of politics, the argument goes, and government will finally be able to eliminate inequality, by giving everyone their fair share.

As I’ve noted, there’s definitely a problem with government possessing the power to redistribute wealth and violate rights in other ways, but that isn’t an issue of inequality, at least in the way that today’s critics of inequality mean (which is typically described as “economic inequality”). It’s just as much of an injustice for the poor to use government to take from the rich as it is for the rich to do the same to the poor. They are both stealing. What we need is a government that doesn’t take from anyone for anyone else’s benefit, but protects the rights of all.

In other words, the most important form of equality is equality before the law. Notice, though, that this is the one form of equality that must be jettisoned in order to promote economic equality. The reason is simple. In order to realize their vision of a “just” society in which wealth is equal, the advocates of economic equality have to create special classes of citizens to whom the law applies differently than everyone else. The first is the political class, which possesses the power to govern the lives of others and to dispose of their wealth, business, and livelihoods in “the public interest.” The second is the beneficiaries of this power, which often shifts but typically consists of those who claim they “need” handouts because life is unfair or they lack the luck or special power to succeed that others possess. This class by no means consists exclusively of the poor, by the way. Indeed, in Atlas Shrugged, Rand showed many businessmen who use the power of government to plunder others. For a good essay on the types of businessmen who operate this way, and, importantly, those who do not, check out Rand’s “The Money Making Personality.”

If you want to know where a society envisioned by the inequality warriors ends up, look to Venezuela. And read Rand’s essay “The Roots of War” for insights about how such a society functions and where it must lead if it continues to function that way. Another good essay of hers on the topic of consequences is “Let Us Alone!” Her description of the process by which a society in the throes of regulation and plunder destroys itself is poignant:

A man who is tied cannot run a race against men who are free: he must either demand that his bonds be removed or that all the other contestants be tied as well. If men choose the second, the economic race slows down to a walk, then to a stagger, then to a crawl — and then they all collapse at the goal posts of a Very Old Frontier: the totalitarian state. No one is the winner but the government.

I don’t want to end on a dark note, though, so I’ll remind you that John Adams and the Founders envisioned America as “an empire of laws” as contrasted with the many empires of men that had preceded it. They gave us a government that, at least in its basic structure, realized that ideal. What we need to do is rediscover the principles on which that type of government is based. Reading the essays I’ve mentioned in this post is a good start.

But you should also read two experts on the inequality debate, Don Watkins and Yaron Brook. Their book, Equal is Unfair: America’s Misguided Fight Against Income Inequality, is not out yet, but it will be soon, and you can preorder it now. I’ve read most of it in early drafts and it’s terrific (and I’ll read the final version when it’s out). It will really shake up your whole view of this debate. If you’re impatient and don’t want to wait that long, be sure to check out Don’s blog posts on issues related to inequality and the essays that introduce many of the ideas in the book, which you can find here. You’ll also find talks by Yaron on the topic here, here, and here. And you can now watch the awesome book trailer here.

So as you might have gathered, we have reams of content to arm you in the ongoing battle for a free and rational society. Read, listen, and enjoy, with emphasis on the last point. Fighting for a better future is not just necessary and worthwhile, it is enjoyable. Good luck! 

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