I just finished listening to a speech by Lawrence Lessig on the influence of money in politics. He is a very smart man, an eloquent speaker and if you get a chance to listen to him speak, it’s well worth your time. I especially recommend his work on copyright. However, I think his views on the role of money in politics while well informed are missing the point.
If you have never heard him on the topic, listen to his fascinating interview of Jack Abramoff, or read his Rolling Stones interview. The likes of Rod Blagojevich who actually engage in giving and receiving bribes are not a significant problem. On the other hand, there are systemic forces which push elected officials to adjust their position in order to curry favors from those who make significant campaign contributions or those who control significant independent expenditures in the wake of Citizens United. You won’t hear any argument from me on this. However, Lawrence Lessig makes the mistake to conclude that the root problem is the money in politics and that therefore the solution must focus on the money. Specifically, he wants to favor public campaign finance through the use of “democracy vouchers” and a Constitutional amendment to repeal Citizens United.
The mistake he makes is to look at the system the way it exists today, identify the mechanism that creates the bad and formulate a solution to remove that mechanism. But this is an emergent system. One must therefore ask not just what is the mechanism which creates the bad, but what is the mechanism which created the mechanism. In other words, one must look at the incentives of the players.
When I look at the Government, I see an entity with very broad powers that are controlled by very few people. It takes only 279 people (218 Congressmen, 60 Senators and the President) to exercise the tremendous power of the federal government over a population of more than 300 million people. When you look at regulatory agencies, the power is even more concentrated. The Securities and Exchange Commission which has very broad authority to regulate the financial sector is made up of 5 people. When it comes to power, federal elected officials are the 0.0001%.
Instead of thinking about what allows corruption, think of what motivates it. To the right person, influencing even a single one of those regulators or politicians has enormous value. Place yourself in the shoe of a bank manager realizing that the SEC could regulate one of your competitors out of existence. Or perhaps look through the eyes of a manufacturer who realizes a Congressional earmark can make you fabulously wealthy. There is so much to gain by influencing the government if you are the right person.
On the other hand, if you are not that person, you have very little to gain. Most members of the public have a very small stake in the fight. The costs of government tend to be very diffuse. The tax which subsidizes a manufacturer will be small on any one individual. The price increase from reduced competition will also tend to be fairly moderate. And anyways, there is a free-rider problem. We have jobs, families and lives to live. Let someone else fight the good fight. Let someone else pay enough attention to figure out what the good fight is.
So here, forget about the existing mechanisms for corruption and think about incentives. The payoff to influencing government is very high for special interests and very low for the public at large. If there is any crack in the armor, the highly motivated special interest groups will find it while it will take a very long time for us to get around to fixing that crack. By the time Lawrence Lessig gets his wish, government relations experts will have run around him a dozen time and found a million new ways to influence the most powerful men in the country.
So should we throw our hands up in the air and give up? Absolutely not. There is a way: decentralize the power. Make the friendship of a Congressman so worthless that nobody will seek it. Render the President so weak that no-one will seek to have his ear. Bring down the SEC commissioners so low that bankers won’t bother inviting them to lunch. When power becomes dispersed, we will see a true change of the way politics operates. Until then, we will just be hacking at the branches, missing the root entirely.